2008 Legislative Session: Fourth Session, 38th Parliament

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

Wednesday, October 29, 2008

9 a.m.

Room 480, Rix Boardroom, Morris J. Wosk Centre for Dialogue

Vancouver, B.C.

Present: Randy Hawes, MLA (Chair); Bruce Ralston, MLA (Deputy Chair); Robin Austin, MLA; Harry Bloy, MLA; Dave S. Hayer, MLA; Richard T. Lee, MLA; Diane Thorne, MLA; John Rustad, MLA; John Yap, MLA

Unavoidably Absent: John Horgan, MLA

1. The Chair called the Committee to order at 9 a.m.

2. The following witnesses appeared before the Committee and answered questions regarding the accommodation proposal by the Statutory Officers:

3. Resolved, that the Committee meet in-camera to discuss the accommodation proposal. (Harry Bloy, MLA)

4. The Committee met in-camera from 9:54 a.m. to 10:04 a.m.

5. Resolved, that in view of the "Joint Leasehold Accommodation Proposal" dated October 29, 2008 and presented to the Committee ("Lease Proposal"), the Committee approves execution by the Ombudsman, the Police Complaint Commissioner, the Merit Commissioner and the Information and Privacy Commissioner (collectively, “Officers”) of a binding agreement to lease the newly-constructed premises described in the Lease Proposal: (a) for a term of 15 years, with the lease commencing during fiscal year 2010-2011; (b) with rents and capital costs materially as set out in the Lease Proposal. (Harry Bloy, MLA)

6. The Committee recessed from 10:06 a.m. to 10:12 a.m.

7. It was moved by Bruce Ralston, MLA that: in view of the statements of the Minister of Finance made Tuesday, October 28, 2008 and reported in the media that “we have seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars” that the Minister be asked to appear before this Committee urgently and provide an updated forecast of provincial revenue in order that this Committee be able to provide full and meaningful recommendations to assist in the preparation of the next provincial budget. The motion was defeated.

8. Resolved, that the Chair invite the Minister of Finance to present to the Select Standing Committee on Finance and Government Services an update for the financial situation for the Province of British Columbia. (Harry Bloy, MLA)

9. It was moved by Bruce Ralston, MLA that: given the statements made Tuesday by the Minister of Finance and reported in the media that “we have seen projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars”, and in order to comply with the Budget Transparency and Accountability Act, that the Committee direct that all advertisements of the Ministry of Finance promoting the budget consultation, whether print, radio or television, cease immediately since the description of the province’s present fiscal circumstances contained in those advertisements is both inaccurate and misleading. The motion was defeated.

10. Resolved, that the Committee meet in-camera to discuss preparation of its draft report to the House on the 2009 Budget Consultation process. (John Rustad, MLA)

11. The Committee met in-camera from 10:43 a.m. to 11:41 a.m.

12. The Committee adjourned to the call of the Chair at 11:43 a.m.

The following electronic version is for informational purposes only.

The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

select standing committee on
Finance and Government Services

Wednesday, October 29, 2008

Issue No. 89

ISSN 1499-4178

[ Page 2201 ]

WEDNESDAY, OCTOBER 29, 2008

The committee met at 9 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): As you can see, the first item on the agenda is "Accommodation requirements of the statutory officers." We have a written presentation here, and we'll get some verbal presentation too.

I think the Privacy Commissioner is going to lead the discussion on behalf of the statutory officers. They're hoping that we won't leave them homeless.

With that, I'll turn it over to you.

Statutory Officers
Leasehold Accommodation Requirements

D. Loukidelis: Well, thank you, Chair, on both counts — Deputy Chair, members. I'm joined here today, as you know, by the Ombudsman; the Merit Commissioner; the Deputy Police Complaint Commissioner; and by Lanny Hubbard, director of corporate services in the Office of the Ombudsman, who provides administrative and corporate services supports to all of our offices. He'll be available as a resource to speak to any questions you might have that I'm not able to answer.

We appreciate the opportunity to appear in front of you today. The purpose, as you've said, Chair, for our being here today is to seek the committee's expression of support — indeed, approval — for our execution at this time of an agreement to lease leasehold accommodation for all of our offices beginning in 2010.

Before I explain in some detail why it is that we must execute an agreement to lease, a binding commitment to lease, at this time, even though the lease doesn't actually start until 2010, I'd like to give an overview of how it is that we came to this point.

By way of context, we have shared services since 2002 and have shared space since 2005. The Merit Commissioner joined us in this arrangement just last year. So now we have four offices that, through the good offices of the Ombudsman, share services such as IT, accounting, human resources and other support services, including reception and clerical services.

This has allowed us over the last six years now to pursue a prudent and cost-effective strategy of sharing services amongst our offices in a way that has reduced our budget demands for each of the offices considerably over the past six years.

As I mentioned, we also share space. The situation has evolved in the last couple of years, through modest staff growth in order to meet increased demand for services of each of the offices, to the point where our main shared space at 756 Fort Street in Victoria is simply too small.

We have run out of room there. For that reason, we have three other office spaces at this time, which means that we have staff spread across four different locations in Victoria. Most recently, for example, the administrative staff — again, staff of the Office of the Ombudsman — have had to move out of our main shared space to a location just down the street.

What is happening is that as we fragment across different office accommodation, we are finding already that this is creating inefficiencies in the sharing of services. It is also creating inefficiencies in the sharing of space. For example, there is already duplication in terms of reception areas, washroom areas, elevator space and so on. Across these four different locations these duplications of space would of course not be necessary if we were in one building and sharing space as well as services together.

Because of the inadequacy of the existing main shared space at 756 Fort and the factors that I've just touched on, we've determined that in order to continue with an effective program of shared services and to efficiently share space and meet anticipated, projected, modest staff growth over the coming years, we need to find new leasehold accommodation, or else the benefits of shared services and shared space are, we believe, in real jeopardy.

Looking at the current rental market situation in Victoria, there are no buildings that at present meet our need. I should at this point pause and emphasize that the current lease for 756 Fort Street does not expire until March 31, 2010. But even if we were able to sublet that space and find new shared accommodation, or to try and find new shared accommodation, it is the case that there are no buildings that meet our needs at present in downtown Victoria.

Our real estate advisers, DTZ Barnicke, have advised that the rental market situation in Victoria is, as they put it, ultratight with an acute undersupply of leasehold accommodation. They passed on this advice, I should point out, on October 1 of this year, and their letter explicitly addresses the current market conditions that are prevailing in the financial markets. Nonetheless, their opinion is that the acute undersupply, with vacancy rates at historic lows, is likely to continue certainly in the near term in Victoria.

[0905]

Because there are no buildings that could house us in light of our current, much less anticipated, shared-space needs, we hired DTZ Barnicke earlier this year and, with their advice, issued a public invitation for proposals for new leasehold accommodation. Of the six proposals we received, four were qualified. Of those four, ultimately, with the advice of DTZ Barnicke, we were able to select a preferred proponent.

We're at the point where we have now come to terms on the essential features of an agreement to lease. Our lawyers have drafted an offer to lease, and we would like
[ Page 2202 ]
to be in a position in the very near future, once that offer to lease is settled with the prospective landlord, to execute that agreement to lease so that the building can be financed and construction can begin.

Before giving you the particulars, which you'll find in the proposal before you, of why we believe the proposed lease is a sensible and prudent way to proceed, I should emphasize that we find ourselves in this situation, as I've already indicated, because of the modest growth in staff in our respective offices and the anticipated modest growth in staff over the next 15 years — which, as we'll see in a moment, is the life of the lease that we're contemplating.

This is something that has come upon us because of the situations in which we find ourselves because of our ongoing operations. That's another way of saying that this is not an expenditure that reflects a choice to enter a new line of business, if you will. It's not as if we're moving into a new area of endeavour. It's simply that existing operational conditions have led us to the situation where this expenditure is a necessary one, including in view of the fact that our current lease ends at the end of March 2010, as I've said.

Now, a couple of points, if I may, about why we believe the proposal that we're putting before you today is a sensible and prudent one.

First, I'd like to outline what the projected costs of the proposal are, and I would refer to the table on page 3 of the proposal document that you have before you. You'll see there in column 4 — the fourth column from the left — under "Current space," that the current gross rent for all four offices in the aggregate is $658,000-odd per year.

As you move three columns to the right to column 7, you'll see that the projected annual total costs for all four offices in years 1 to 5 are $1.87 million. As noted in the table there, this figure includes the amortization of leasehold improvements, which of course have to be undertaken in order to make the new space habitable for us. The idea there is that the leasehold improvements would be paid for by the end of the first five years of this lease.

In years 6 to 10, looking at column 9, which is the third column from the right-hand side there, you'll see that the total annual cost for all offices declines to $1.644 million. Ultimately, in column 11, for years 11 to 15, you'll see that the annual cost is $1.768 million, reflecting increases in rent that would be triggered for the final five years of the lease.

I think it's worth noting as well at this point, if you were…. This is something that's reflected in the proposal document at the top of page 4 in items 1 and 2 — bottom of page 3, item 1 and top of page 4, as well, in item 2. Even if we were somehow able to stay in the existing leased premises — which, as I say, are too small — the advice we have from DTZ Barnicke is that lease rates are increasing or have increased dramatically, as they put it, in Victoria in recent years, and they're likely to increase further in the coming years.

Ultimately, if you were to combine those increases in rent along with increases in occupation costs, the gross rents — even if we could stay physically where we are — would lead to substantial increases in rent, even if we didn't move to these new premises. So the difference that might appear on the surface between the current space costs at this time and the anticipated costs for years 1 to 5, 6 to 10 and 11 to 15 is simply not as great.

[0910]

I'll illustrate that now by turning to how it is we got to the terms that we've arrived at with the prospective landlord and then illustrate for you how it is that the proposal is, in fact, an advantageous one, including when you factor in these increases in rent for the existing premises.

Turning again to the proposals that we received this year in response to our request for proposals, the average of the base rents that were proposed to us — and that means net of any operating costs or property taxes, for example — was $33.88 per square foot. DTZ Barnicke has advised us that the base rents — again, net of operating costs — for other projects that are currently on the table or underway in Victoria are being negotiated from the low $30s per square foot to up to $40 per square foot.

By that measure alone, we believe that the base rent of $31 per square foot that we have negotiated with the landlord is realistic and reasonable, in view of where the market is at and where it is likely to move, according to our advisers, over the next couple of years.

As we've already seen, the sharing of space is really key to the ongoing sharing of services in any efficient manner. Obviously, the sharing of space reduces the costs and, therefore, the budget line items that we would individually have to be meeting if we were to have separate occupied space. So first of all, we have negotiated, we believe, a realistic rent in light of where the market is at.

But the second key factor is….

R. Hawes (Chair): Before you go on…. And Kate just pointed it out. In the last page, in the second-to-last paragraph…. This meeting at this time is being conducted in public. Would you not think, in light of what you're saying here, that we should be moving into an in-camera situation because you have not yet finished negotiating your lease?

D. Loukidelis: Thank you for raising that. We, in the last couple of days — just earlier this week, in fact, after this was provided to you — have come to terms on the rent with the landlords. We're certainly content, I think, to proceed on a public basis. Thank you for that.
[ Page 2203 ]

The second key factor that I've already touched on — which I think bears emphasis — is that if we cannot continue to efficiently share space and therefore effectively share services, the alternative is the wasteful, I believe, renting of separate accommodation. In turn that would require us, to some degree, to staff up separately so that we would have reception staff and clerical support staff for the different locations spread across Victoria.

Ultimately, that would have an impact on the costs in terms of the comparison between what it is we're proposing and what the alternative is. That is something that we've reflected for you on page 4 in the table you'll see there.

What the calculations show you there, if you look at the second column under "Required space," is that if we were to have separate space, as I've already mentioned, we would need separate reception areas. There would be separate washroom facilities. There would be a duplication of certain kinds of rental space across the various locations, which is something that we're already encountering.

That, modestly — and this is a conservative estimate on our part — would require us to pay, across the four offices, for a further 3,382 square feet of space, thus adding, materially — indeed, significantly — to the overall rental costs on that basis alone.

Further, if we were to cease sharing space in a single location, we conservatively estimate that we would have to add staff positions — again, clerical, reception — so a minimum, we believe, of three additional staff to provide those kinds of services at each of the locations. This would — again, this is a conservative estimate — add between $180,000 to $250,000 a year in unnecessary additional costs — salaries for those staff, their benefits, associated costs for computers, desks and other costs of that nature.

So you'll see here, reflected in the table on page 4, the impact of having to acquire additional space and to acquire and pay additional staff. As you move across the chart on page 4, you'll see what the impact is. If we can share space and avoid having to hire these additional staff, the total annual cost of the proposal would be slightly less in years 1 to 5. But as you go out over the term of the lease, you would see that in years 6 to 10 we would save $250,000 per year spread across the four offices by pursuing the proposal that we have in front of you.

[0915]

In years 11 to 15 the additional savings would be $270,000 per year spread across the four offices. Ultimately, there would be a total estimated saving over the life of the lease of some $2.605 million, as opposed to having to pursue these fragmented further staff cost options that I've already described.

Ultimately, we believe again that when viewed in light of the current market rents that are being negotiated in Victoria, in light of the fact that the proposal would allow us to continue to efficiently share a space and services and give us certainty as well over the longer term, the proposal is in our view a prudent one.

There are additional factors as well. It is important to note — and this is discussed in the proposal before you — that the rent we're negotiating here reflects that the building will be LEED gold certified, so that the LEED gold design and construction costs are reflected in the rents set out in the proposal.

This is because we're proceeding consistent with the requirement, as part of the energy-efficient buildings strategy, that all new or leased provincial government buildings must meet LEED gold or equivalent green standards.

It also should be emphasized that any additional cost attributed to the LEED gold certification has to be balanced against the anticipated reduction in energy consumption, and therefore costs, and lower operating costs as compared to non-LEED gold premises — with, in addition, the reduction in greenhouse gas emissions that results from pursuing the LEED gold option being, I think, a relevant consideration.

So for the reasons I've given, we're here before you today seeking the committee's support for our execution at this time of a binding agreement to lease premises on terms that are materially consistent with the figures and the parameters that are set out in the proposal before you for a lease of 15 years commencing in 2010.

I should emphasize in closing that the actual financial impact of this proposal would begin only in the fiscal year 2010-2011, but that the commitment to lease is necessary now in order for the project to be financed by the landlords' lenders and in order for the construction to begin as quickly as possible in order to meet a tight completion date by the spring of 2010, which is of course not even 18 months from now.

We've taken the liberty of proposing a possible resolution for the committee's consideration on the final page of the proposal, if you'd like to refer to that. I won't read it aloud to you, but this is, as I say, offered for your consideration.

We do recognize, of course, that the committee may wish to take time to deliberate on the matter. But we respectfully ask the committee to bear in mind the very tight time lines that we're under for the reasons that I've just mentioned, noting again that a draft offer to lease is in hand with the business terms having been settled on. We would like to be able to present that offer to lease to the landlords in the next couple of days.

R. Hawes (Chair): Questions.

J. Yap: Just a few questions. You say in your submission that there is no space, and I'm just wondering, just for our assurance: what steps have you taken to ensure
[ Page 2204 ]
that there are no government buildings or provincial buildings in Victoria or Crown corporation buildings that might be coming up, which would offer the kind of space that your offices might need?

D. Loukidelis: We had been in discussions beginning at the start of this calendar year with ARES about the prospect of their being able to assist us in finding space and ultimately made the decision that we would go to market. It's my understanding that government may be looking itself at going to market for space in Victoria, but that hasn't happened yet.

At the end of the day it was, again with a considerable amount of discussion with ARES, our conclusion that there was not going to be any prospect — given the time lines we face and the expiration of our current lease — of succeeding in that option. So we did go to market.

[0920]

The conditions in Victoria are very, very tight — a historic low vacancy rate of less than 2 percent. There is something like 70,000 square feet of inventory available, spread across the Victoria area, out of a total inventory of 1.4 million square feet.

That 70,000 feet is itself fragmented, and DTZ Barnicke advises us that there is nothing existing that would come close to accommodating the collective needs of the four offices. And in the next year or two things are also extraordinarily tight. There are buildings that are scheduled for completion in 2008, but the largest single space that might be available is around 10,000 feet, which again doesn't meet our needs.

Any buildings that are underway that are likely to be completed in 2009 and into 2010 are either substantially preleased or again simply don't meet our needs. So that's why we're looking at the option of pursuing this particular lease for 2010.

J. Yap: Okay. The total square footage is proposed to go from 21,500 approximately to approximately 33,000 in total. The 21,500 — that's total square footage right now, including the three outlying offices?

D. Loukidelis: Yes, that's correct.

J. Yap: That's the total? So I have it clear in my mind, we're looking at about a 50 percent increase in space, going from 21,500 to 33,000?

D. Loukidelis: That's correct. And what we would be anticipating doing, if at all possible, is entering into a sublease arrangement so that unless and until we need all of that space, we could make use of it that way. Lanny Hubbard may have some….

L. Hubbard: Basically, we started from a base of determining what the existing staffing was and then allowing for some growth. Realistically, we've looked into the five-to-ten-year horizon there.

So whether it's ultimately adequate for 15 years is a question. One of the advantages about this proposal is that there is actually another floor on the building that would be leased to some other tenants, and we're proposing in the lease agreement that we would have the first right to acquire that extra space, say, ten years out if it turned out that we needed it.

But it is an estimating game to try and figure out what kind of space you're likely to need. We don't want, clearly, to be in a situation where we just fit on day one and then immediately are into a problem of having to find other pockets again, and then you rapidly lose that....

K. Carter: If I could respond, too, to that because I think it's a good question.

Currently, we don't have enough space, certainly not in the Ombudsman's office. One of the things that isn't explored here is the fact that we have telecommuters in the Lower Mainland who, as I anticipated, after a period of time of telecommuting are starting to move on to other positions and retire. When that happens, we have to replace those positions in Victoria. And so in our office, with no expansion, we still will have an increased requirement for space that's happening now and is there in the foreseeable future.

I also think that, reasonably, with some of the offices there are outstanding issues — and perhaps Bruce Brown could talk about that — where the amount of space that they have today is not reasonable to look at being adequate. Quite frankly, in the Ombudsman's office right now, if I have one more telecommuter who retires and I have to fill, I don't have an office. I've got people doubled up in cubicles in the support staff and students right now.

So I think that 21,000 to 33,000 is not really an expansion. It's truthfully allowing enough space for the operations, in many respects, that we have already.

B. Brown: I'll just briefly add to Kim's comments that the new Police Act amendments, which may come into effect in the next year or so, will likely require our office to double in staff due to the proposed amendments. So that alone will increase our office substantially.

J. Yap: A couple more questions, Chair. I calculate your renovations of the leasehold improvements to work out to about $12 a square foot over the first five-year period.

[0925]

So taking that into consideration, your base rent would be, in the first five years, $56 less $12, so $44. Is my number-crunching correct here?

L. Hubbard: You're on the right track. There are also the operating costs. So you take off that $12 per square
[ Page 2205 ]
foot, which is the amortization of the capital. Then also, the operating costs and taxes have to come off there.

J. Yap: So what would the base rent be?

L. Hubbard: The actual base rent for the first five years was $31, with $34.50 for the second five years and $36.75 for the last five years. Those base rents were the subject of negotiation from the time we first received the proposal to the point where we're now at the stage of signing an offer to lease being reduced by approximately $2 a square foot on the basis of going to that 15 years.

It was with DTZ Barnicke's assistance and advice that we could achieve those kinds of savings, which is quite substantial over the 15-year life of the lease.

J. Yap: Last question, Chair. In the vernacular of leasing, they refer to commercial space as triple-A space or A space or B space. This space you're proposing to go to — what category would it be?

L. Hubbard: It would probably be A class. It's not in the sort of category of the new building that's being built on the corner of Blanshard and Yates. But it's going to be, obviously, a new building with, hopefully, a decent air-conditioning system and the LEED gold provisions. I'm told that our space that we're in now is C-plus to B, so we're thinking it will be a bit better than that.

D. Hayer: What is the location of the building?

D. Loukidelis: It's on Fort Street, downtown.

D. Hayer: Close to the other building?

D. Loukidelis: Relatively close, yes. A few blocks.

D. Hayer: The other part is on page 3. When I look at your total cost in the first column, it's $658,640. Then, years 1 to 5, it will be $1.87 million. So we're looking at an almost three times — about a 300 percent, or 283 percent — increase in total, even though the lease would change at that time?

D. Loukidelis: I guess two factors to emphasize…. The $1.87 million figure again includes the amortization of the leasehold improvements at roughly $12 per square foot, so that bumps that total figure up, of course.

The $658,000 figure for the total rent for all four offices in the present space would itself increase materially if we were physically able to stay in the same location and renegotiate at the then current market rates. Operating costs would, of course, be on top of that as well. That then diminishes the difference between the two quite substantially, I believe.

D. Hayer: I was just looking at the rest of the government ministries — when they come in, if they have to make the same type of moves. The changes…. If this is what's to come, that's a huge shift in the cost of leases overall, because the lease rates will go up. And if there's any new, expand the government staff — right? That will mean more space, and this will be a similar type of scenario?

K. Carter: If I might respond. I think, first of all, if I can echo what David said, which is…. The real comparator is, I think, on page 4, between the new building and stand-alone. These numbers were put in, but that $658,000 isn't a number that will exist in 2010.

[0930]

As we've said, the current rent is going to increase and will increase to those rates that are set out at the top of page 4 — $31, $35 a square foot.

The other thing I have to say is that I would expect that there are very few organizations that have actually functioned within the constrictions we have functioned in for the past few years. And so I don't think that this is a precedent and you would expect that a lot of other organizations would come and say: "We need to expand dramatically."

When I walk through a number of ministry offices, I see space. In our office we would immediately enclose and put someone in. The spare area in our office is a place that's big enough for a two-foot-round table and two chairs, and it's affectionately known as palm court, because that's the only space that we've got that's open in the office. So I just think that's something…. I don't see that we're a precedent or a model for that, because I don't think, from what I know, that anyone else is in quite the same position as us.

L. Hubbard: Just to illustrate the cost of the rents going up, though, the existing base rent for 756 Fort is $13.42 per square foot. That is expected to go up to $22 per square foot just as a base rent in 2010. That's not just a guess. That's based on an actual proposal to lease that space that DTZ Barnicke has seen.

D. Loukidelis: And to clarify, you'd have occupancy costs on top of that, and that would bring you….

L. Hubbard: Operating costs and taxes.

D. Loukidelis: Operating costs, I should say, and taxes. That brings you much closer to the numbers you see for the going-forward space, because the numbers in column 4 — $1.87 million — include those operating costs, not just the base rent that Lanny's just described. You're much closer than….

D. Hayer: No, I appreciate that. Just from the taxpayer's point of view, somebody's going to ask me the
[ Page 2206 ]
question. I want to make sure we ask the question on behalf of our constituents — right? Even the other one, I guess, the way you reflect…. It went from $13.42 net rent to $22. That's the same thing — the costs going from $658,640 per year to $1.7 million. So it sort of doubles by itself. I mean, that's a huge shift either way it's going. That sort of reflects on where the expenses are going.

Another thing is that some of the builders are having some problem trying to get the financing, we've been hearing. Do you think that in a case like this…? Hopefully, it's a very short-term financial crunch going around. Will these builders have any issues with that? Once you do sign the lease, you probably need to have time lines to get the construction going. Any issues on that or discussion?

L. Hubbard: We're advised that — and that, of course, feeds into the need to get this decision so that we can get on with that — the developer, who is a well-known developer in the Victoria area, will be able to access the financing on the basis of a signed lease from our offices.

H. Bloy: One of the things…. When you went looking for a building, you stayed within the Victoria area. But did you consider Langford? My question is: how many employees will work in that building in total, and where do they come from?

D. Loukidelis: My guesstimate…. I think we're around a hundred staff, probably, across the four offices — approaching that, anyway. I can't say how many live in Langford or Colwood or what have you. I don't think that many do.

One of the considerations is that — like other offices of the Legislature, indeed, other departments of governments — we have a lot of dealings at the Legislature and elsewhere, including with ministries. Like most government departments and other offices of the Legislature, it was felt desirable to be in the Victoria area.

When you look at rents at other premises in some of the sort of, if you will, suburban areas, I'm not convinced that we would necessarily achieve much savings that way. And there are other implications as well.

[0935]

B. Brown: I can tell you that I live in Colwood, and there's probably, out of the hundred staff, a handful — perhaps four or five, if that — that live in the Western Communities. Most of the people who work in the office I see coming and going either on foot or on bicycle, back and forth from the downtown office. So it's a very small number who live out in the Western Communities.

K. Carter: I'll just echo what Bruce has said. One of the rationales for trying to stay in the downtown area, besides the one that David has eloquently put forward, is that we do have staff from different areas and to maximize transit use. Transit is set up to get people from outlying areas to downtown. We do have a fair number of people who cycle using the Galloping Goose or walk to work.

H. Bloy: Okay. It's just that I see the Ministry of Labour advertising now for the Western Communities. Some surveys that have been done don't reflect anywhere at all what you claim to be your staff requirements. The staff requirements of the people living in suburbia, as you call it, are much higher. They're working, and they would like to have government offices out of the downtown core.

It's too late, but I just pass that on, and I don't see the reflection in it.

B. Ralston (Deputy Chair): Thanks very much. It's a very thorough presentation, and you certainly appear to have done your due diligence.

I had a question about the leasehold improvements. There's an estimated cost of $2 million, and it's an older building. Sometimes things pop up when you're working in an older building. Any cost overrun on the leasehold improvements would be borne by us rather than by the landlord, I take it.

L. Hubbard: The proposal is to build a new building — LEED gold. Within the base rent, the developer is allowing $30 per square foot for tenant improvements, but that's the basic stuff — you know, your basic distribution of air and lights and so on. Beyond that, we've estimated — and the developer has costed this out — that the total cost for tenant improvements would be about $85 per square foot. So there's a difference there of $65 a square foot.

Based on other minor tenant's improvements that we've seen, the going rate in the last couple of years in Victoria has been in the $90-to-$100-a-square-foot range for tenant improvements to create offices. We've costed on that basis across that space, then.

That extra $65 results in the approximate $2 million for those tenant improvements, which would be a capital cost that's reflected in the proposal. We would propose to put that in the budget as a capital request, and then it gets amortized back over five years — paid back, essentially, over five years, which works out to $12 a square foot.

The advantage. The developer would finance the total cost of the tenant improvements but at 8½ percent interest, I think it was, whereas if we use government capital, essentially, then the interest rates and the cost to the taxpayer will be less. The downside of it is that you pay it back over five years instead of over the life of the lease.

For those first five years it increases the payments, but then after that, it drops off because that's all paid back.
[ Page 2207 ]

B. Ralston (Deputy Chair): I had misunderstood. You were sufficiently cryptic about the location of the building that I did not understand that it was new construction.

The other thing would be just on the LEED gold. I understand that LEED gold will lead to lower operating costs, but in terms of the leasehold improvements, are you able to say what additional increment is attributable to moving to LEED gold standards, at least at the front end?

L. Hubbard: I don't think it's possible to say that. This is still a bit of a new area. What I've been able to learn, reading about it, is that the actual capital costs aren't that much greater. There is some, but it's offset by your reduced operating costs over the subsequent years.

B. Ralston (Deputy Chair): I know I'd heard that 5 to 8 percent was sort of….

L. Hubbard: Five percent?

[0940]

B. Ralston (Deputy Chair): Five to 8 percent was sort of a rough estimate. I just wondered whether your experience was the same, but I don't think it's essential to approval or not, to know that.

J. Rustad: Thank you for the proposal. On the surface, this makes a lot of sense, obviously — the synergies of combining the offices as you've had and going to a larger space to allow for that expansion.

The one thing I have concern about, I guess, is…. Kim had talked about it briefly. It's the telework that her staff has been doing in the past and how that seems to be changing in terms of the trend. That has some pretty significant budget implications, I would think.

We're talking about an increase of about 50 percent of the space you're going from. If you've got about a hundred staff, you're going from about 200 square feet to 300 square feet per staff member.

When you're talking about growth, assuming that you stay at 200 square feet per staff member, you're talking about a 50-person growth. That's pretty significant growth on the budget over the coming three or four years. That alone has some pretty significant implications in terms of our Finance Committee, given the constraints that we are in provincially with revenues, with the economic downturn.

I recognize also the issue of the timing and that your lease is coming up and you need to make a move. But how much of an assumption is built into the space need that you have calculated, based on what you are hoping for in terms of growth, on budgets?

K. Carter: I can obviously only address my office and say that frankly, from my point of view, it's not a big expansion. I'm not looking at a 50 percent increase in terms of staff. I'm looking at getting some space for some of the activities we engage in.

For example, we've established systemic investigations. One of the things we need is a space to spread things — very simply, a room half the size of this room, which is not a large room, just for the record, where we can have a file cabinet, spread things out and leave them spread out, rather than having people trying to do it in separate small offices.

I had that until about a month ago. I managed to carve it out from the last move of people out of my office, which was January of this year. I've now, after six months, had to give it up in order to find space for people. This isn't an expansion with the telecommuters. These are people who operate out of their homes in the Lower Mainland.

You can't hire a new person and train them and develop them by phone. I'm sorry. With all the technology in the world, you've got to bring people in, develop them in the office, assess them and everything else.

As in fact I said to this committee last year, when I was talking about re-establishing the Vancouver office, if it doesn't happen, we will lose the telecommuters. It's happening, and it's not a surprise. It's eminently predictable. You can't operate for more than coming up to five years now completely separate from your organization. Whatever we do to try and integrate them, it won't be sufficient.

It's not a big increase in terms of people that I'm looking at. It's really trying to just house effectively the staff we've got and to have a modest plan for what I know is going to happen so that I don't have to have people sitting in individual offices in different buildings trying to communicate with each other.

Our latest move…. I said to our admin staff: "The good news is that at the moment you can wave across three buildings to our systems staff, so you have a method of communication with them." I don't really think that's what I want to set up for efficiency, and we can't do it for much longer.

D. Loukidelis: For my part, when we were doing the calculations here, I anticipated — and this is a 15-year lease — growth in staff from the present of 23, including me, to 30. If there are, for example, changes in the Lobbyists Registration Act that lead to a need to increase staff there, that would be in addition to that. So 23 to 30 over the life of this lease. It's not in my view a substantial number.

[0945]

R. Lee: Thank you for the presentation. I assume that you have the space requirement for four offices — projected first, right? — to get the proposed future requirement. Those are independent numbers. Also, the studies are realistic. You're arriving at the projected
[ Page 2208 ]
cost of $1.7 million, say, for the years '11 to '15. That's an average cost per year.

My question is…. On the proposed building, you also arrive — for the new building — at the same number, or a very similar number. Is that a coincidence? The negotiation is based on the projected old expense.

D. Loukidelis: Taking your last question first. If I understand correctly, you're comparing the table on page 3 with the table on page 4.

R. Lee: That's right. The numbers are the same. It seems that the space requirement actually is perfect for the new building, and the cost is actually the same.

D. Loukidelis: Well, the table on page 4 reflects the impact of having what we call "stand-alone" space — each office having its own rental premises, but at the same time sharing services to the extent that we can, recognizing two things: there'll be duplication of facilities if we each occupied our own rental premises, because we would have duplicate washrooms, reception, file rooms and so on; and then added staff costs.

R. Lee: No, no. I think this is a new building. I'm not talking about stand-alone. So the new building…. The total cost for years '11 to '15 is $1.769 million. That's the cost per year.

Then this is for the new building, with the space requirement, and there's some negotiation with your new landlord.

Also, on page 3, under the proposed space and the existing buildings…. If you want to expand it to the 33,000 square feet, you also are arriving at the same numbers….

R. Hawes (Chair): Because, Richard, it is the same. It is the same building. They've just allocated the cost to each of the offices within that building to arrive at the $1,768,900, which is rounded…. They've just rounded it up by a hundred dollars, on the graph on page 4.

R. Lee: But I assumed the…. The table on page 3…. You said you are projecting some kind of a negotiation — without a new building.

L. Hubbard: Those costs on the proposed space reflect the result of the negotiations. Those are based on the negotiated lease rates that we've….

R. Hawes (Chair): That's the negotiated price. Then on page 4, they compare what it would be, on a stand-alone model, to what they have negotiated — okay?

R. Lee: Okay. Stand-alone model. So it's more costly?

L. Hubbard: It's more costly on a stand-alone basis because of the inefficiency of having to occupy multiple spaces plus have additional staff to service those — reception and so on — different spaces.

R. Hawes (Chair): The question I would have is…. The Merit Commissioner moved in last year. How much space do you now occupy?

J. Illington: You'll see in the table on page 3 that the space that we currently occupy — it says "MC" — is 1,596.

[0950]

I'm not expecting a huge increase in staff, but I currently have no meeting places. We received a warning from the occupational safety and health committee in our building because we had bankers boxes, following our audit, stacked five feet high all around our offices. That was considered both a fire hazard and an impediment to the safety of the staff.

L. Hubbard: Joy's working space is an office/warehouse.

R. Hawes (Chair): Where you worked…. Prior to your move in last year, where were you?

J. Illington: I was sharing space with the IT team of the Ombudsman's office. So because there was…. I added one person, an in-house auditor. If they added one person, we couldn't share space any longer; we were so tight for space.

R. Hawes (Chair): Yeah. Okay.

R. Lee: Actually, the question that comes up for me is: are there any negotiations…? For example, the Ombudsman's office. Have you tried to, say, negotiate a market rent for the future space requirement? Say, just one trial case so it can compare the market condition with the proposed condition?

D. Loukidelis: Well, what we've done…. The figures that you see in the table on page 3 reflect what we've negotiated. And the current market conditions — there are two ways of looking at that. One is the average base rent that we receive as a result of our invitation for proposals. The average of the qualifying proposals of the four was $33.88 per square foot for a five-year lease.

And then the advice we've received from DTZ Barnicke in their letter to us of October 1 of this year is that base rents for leases starting in 2010, which is what we're looking at here, are now being negotiated at rents in excess of $30 per square foot, going as high as $40 per square foot.
[ Page 2209 ]

R. Hawes (Chair): It might be helpful, for the record…. DTZ Barnicke — perhaps you could explain who they are and what your relationship is. What is their relationship in this lease agreement?

D. Loukidelis: We've retained them as our advisers in the conduct of a public invitation for proposals. They are our advisers in negotiating the terms of a lease. We have legal counsel as well. So they're our representatives and expert advisers.

R. Hawes (Chair): They are not getting a commission from the landlord?

L. Hubbard: No. They provide services to us, but ultimately, they don't charge us any fees. Ultimately, their fee comes from a commission. They're a commercial real estate company, but they're representing us. At the end of the day, whichever proposal would have been successful…. They would take a commission from the landlord on that.

R. Hawes (Chair): Okay. Has everybody got enough information now to…? On the last page the officers have given what their suggestion of a motion might be. Does anyone want to…? I mean, one of the other options we have is to go in camera to discuss this.

H. Bloy: I would move we go in camera, and we do it as a committee.

Motion approved.

The committee continued in camera from 9:54 a.m. to 10:04 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): We are back in the public portion of the meeting, so if someone wants to make a motion with respect to this.

[1005]

H. Bloy: Okay, I'll make the motion.

In view of the Joint Leasehold Accommodation Proposal dated October 29, 2008, and presented to the committee — lease proposal — the committee approves execution by the Ombudsman, the Police Complaint Commissioner, the Merit Commissioner and the Information and Privacy Commissioner — collectively, officers — of a binding agreement to lease the newly constructed premises described in the lease proposal: (a) for a term of 15 years, with the lease commencing during fiscal year 2010-2011; (b) with rents and capital costs materially as set out in the lease proposal.

Motion approved.

R. Hawes (Chair): That's unanimous.

We'll have a recess for a few minutes.

The committee recessed from 10:06 a.m. to 10:12 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): We'll go back now. We'll reconvene, and we'll start with Bruce. You had some comments that you wanted to start with.

Provincial Fiscal Forecast Update

B. Ralston (Deputy Chair): Just before we begin our deliberations on the recommendations, I wanted to make some comments and propose a motion.

Under the statute that directs this process, the Budget Transparency and Accountability Act reads as follows — section 2: "Not later than September 15 in each year, the minister must make public a budget consultation paper. (2) The consultation paper must (a) present a fiscal forecast, including a description of the major economic and policy assumptions underlying that forecast for the government reporting entity."

Now, the minister appeared before this committee on September 15 and described the challenges as how to absorb extra unanticipated revenue over this fiscal year and the next fiscal year. As recently as September 22, the Minister of Finance said — and I'm quoting…. This is on October 22: "We are still running ahead of what we were anticipating at the time of the budget." He said that in the briefing following the Premier's address on October 22.

On October 23 — that's just six days ago — the Minister of Finance was quoted in the Globe and Mail as saying: "The bottom line as we look at the revenues — we are still ahead of where we were at the time of the budget."

What seems clear from what the minister is saying is that nothing had appreciably changed between the 15th of September and as recently as six days ago. Yesterday on a radio show, the minister was interviewed by the former cabinet minister Christy Clark, and he said: "We have seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars."

[1015]

That is a very dramatic shift in the position that the minister is taking about his forecast, and I think it's important that before we begin and make our recommendations that we invite the minister back to explain what he meant by "a collapse in the last six weeks to the tune of billions of dollars."

I want to propose a motion. I have copies here, and I'll read it to you:

"In view of the statements of the Minister of Finance made Tuesday, October 28, and reported in the media that 'we have
[ Page 2210 ]
seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars,' that the minister be asked to appear before this committee urgently and provide an updated forecast of provincial revenue in order that this committee be able to provide full and meaningful recommendations to assist in the preparation of the next provincial budget."

If I could speak briefly to that. Given that the purpose of this committee is to provide meaningful recommendations to assist in the preparation of the budget, and given what is described in section 2 of the Budget Transparency and Accountability Act that an essential premise of that is a fiscal forecast, and given the very, very dramatic changes that the minister's just spoken of only yesterday, I think it's important that he come back and explain just how that fiscal forecast has shifted.

Only six days ago, everything seemed to be on track according to his public statements, and I think we have to take the Minister of Finance at his word. He has, obviously, a very important fiduciary duty — the lead economic spokesperson for the province — and would not be making those statements if he didn't believe them to be true, I'm assuming.

Given what he has said yesterday, I think it's very important that he come back here to this committee and provide an updated forecast in order that we, as a committee, can properly do our job. With those comments, I conclude my remarks.

R. Hawes (Chair): Before we head to questions…. Just by virtue of — and I can't speak for the Finance Minister, other than…. What I certainly heard from him was, first, a fairly significant revision in the forecasts in terms of the growth in the economy. It was downscaled several times over the past month, and the projected surplus was downgraded several times in the past month, although it's still ahead of what was in the budget. So I think he has already accounted for, I guess I'll call it…. Well, I don't know about "collapse" but….

B. Ralston (Deputy Chair): That is an accurate quote transcribed from….

R. Hawes (Chair): That could well be. That could be, but it's….

B. Ralston (Deputy Chair): I think we have to take him at his word.

R. Hawes (Chair): Bruce, as you and I both know, there's often, in the full context of what would be said on a radio show…. To pick a snippet sometimes can take things out of context. I did not hear the radio show. Probably numbers of us did not hear the radio show. I don't have a problem with asking the Finance Minister to come back and explain if there's been some significant changes. Frankly, I don't see a problem with that, and I'm sure that he would accommodate that.

I'm not so sure that we need a motion that has…. And I don't know if I would support a motion. I can't speak for the others, and I'm sure they will have their own thing. But I don't know if I can support a motion that bases the reason or the rationale for asking him back on a snippet from a talk show on the radio that may or may not reflect the full context in which the comments were made. I don't have a problem with asking him, but now I'll let others speak.

H. Bloy: You know, based on the economic times, I would support having the Chair of this committee ask the minister to come back and speak to us.

R. Austin: I think a lot has changed since we started this process. Let's face it. In the last month there's been such an economic collapse — not just in the United States, but the reverberations around the world have been so dramatic. It's obvious to conclude that that will have had a huge effect on our own finances here in British Columbia.

[1020]

With that, I think also I would agree with you that we would like to have an update. I think we need to have an update. Otherwise, we're basically going to be making a series of recommendations when we don't have any of the facts at hand. And then we could end up doing a lot of work only to find out that the Finance Minister says to us afterwards: "Well, I'm sorry. There's no money in the kitty for any of these things." That wastes a lot of time.

It would be very useful for us to have a very accurate, up-to-the-minute — or as close as we can get — update before we start this process.

J. Yap: Yeah. I don't have an issue with inviting the Finance Minister to come and give an update to this committee. Reflecting what Robin just said, the financial picture has changed in the last several weeks with the world financial market meltdown. I think British Columbians will expect us to proceed with prudence in looking at proposals, recommendations on behalf of British Columbians to the government, to the Finance Minister.

It may well be that our province's capacity to do a lot of the things that had been recommended to us…. We've travelled the province and heard people basically say spend more money on this program or that program or do more of this or more of that. It may be that we have to reflect back that the picture has changed. I think an update could be helpful.

I agree with the Chair that I don't see a need to have to have a motion that refers to a specific media event to invite the Finance Minister to come in and give us an update. So I would support the suggestion by Harry to ask the Chair to invite the Finance Minister and have him come and give an update to our committee, but I don't believe that we need to have a motion that was proposed.
[ Page 2211 ]

R. Hawes (Chair): But we do have a motion on the floor, so….

D. Hayer: I agree with Harry that we should ask the minister to come and speak, ask the Chair to do that.

I didn't hear the radio station. The last thing we want to do is something we haven't heard and putting it in the motion. I will not support that. Also, in the radio station, then, we know if the talk is 15, 20 minutes and you take one little word out of one sentence out of it, sometimes it is misrepresented. It takes it out of the context.

I do agree with Robin. The world financial crisis, financial crash around the world — it has changed. I mean, it's changing every day. Look, the dollar is now 82 cents. A few days ago it was at 77 cents. Then, not that long ago it was a dollar something.

So things are changing. It's better for us to know, for a minister to come over and explain where we are financially under the current projection compared to the beginning of September. I will support that part as the Chair asking it, but I will not support the motion.

J. Rustad: There's absolutely no question the fiscal situation has changed since we last heard from the Finance Minister. There is absolutely no question about that. Anybody can see that.

Would the presentations that have been presented to this Finance Committee have changed based on new information from the Finance Minister? I would say, having attended most of them, that those presentations would not have changed.

Now, I'm one that believes that we always should have the best information available to us before we make decisions, but I would ask the members here: would the recommendations that may or may not come out of the process of the debate change based on an updated financial situation from the minister?

If we're talking about…. For example, we heard from Advanced Education that they'd like Advanced Education as a priority, and they'd like to see some spending in there. We've heard from others about capital spending. We've heard others about tax reductions, etc. If those are recommendations that come forward, how is that going to change based on new information provided by the Finance Minister about the current situation?

I would love to have the Finance Minister come and give us another update, because like I say, it's better to have that information for making recommendations. But quite frankly, in the context of the work that we are doing in terms of bringing forward some recommendations for direction, I just don't know how relevant it will be.

[1025]

We know what the financial situation is. We know the challenge that we're facing. I would leave it to the discretion of the Chair whether he would want to call the Finance Minister in for that, but I would not support the motion as read.

R. Hawes (Chair): What I'm hearing, before we go to a vote on this….

B. Ralston (Deputy Chair): I was going to close.

R. Hawes (Chair): Yeah, you can.

Before the mover closes debate, what I'm hearing is that perhaps an amended motion might be something that would make sense. Something along the lines of…. If someone were moving that in light of the rapidly changing international financial situation, we invite the Finance Minister to return to see if there is some updated information that would assist us in making sure that our recommendations are more in line with changing fiscal realities — something like that….

If someone were making an amendment…. If that's a friendly amendment, perhaps the mover would consider it as being a friendly amendment and would let it stand.

H. Bloy: Could we make a friendly amendment, Bruce, or do you want to…?

B. Ralston (Deputy Chair): No, I'd rather just stick with the motion as it is.

R. Hawes (Chair): Okay. Go ahead. You can close debate.

B. Ralston (Deputy Chair): I think the concern here is not…. I think everyone is aware of the dramatically shifting financial circumstances globally and across the country. What this motion focuses on specifically is the response of the Minister of Finance.

I'll quote again. On October 22 at the Premier's address briefing, he said: "We are still running ahead of what we were anticipating at the time of the budget." That's October 22. What he said on the radio show was: "We have seen projections for provincial revenues collapse in the last six weeks to the tune of billions of dollars."

In the space between October 22 and yesterday the minister has changed the projections for the provincial budget very, very dramatically in public statements that he's made.

Beyond a general sense of conditions changing, I think we need some precision from the Minister of Finance as to where we're at. Rather than a global statement that's thrown out casually, we need to have him come here before us in a formal manner, as a Finance Minister is obliged to do, and advise exactly where we're at, as best he can provide that information. Obviously, he's getting weekly, if not daily, revisions, briefings, on updated projections of revenue.
[ Page 2212 ]

I think that's important. Whether it's good times or bad, or whether it's an NDP government or a Liberal government or a Social Credit government, one thing is constant. The Minister of Finance has an obligation to be straightforward, honest and open with the citizens of British Columbia as to what the financial situation is.

Rather than throwing out politically charged statements on talk shows, the minister needs to come before this committee and provide that kind of full, accurate, objective disclosure that's necessary for us to properly make full and meaningful recommendations to assist in the preparation of the budget on behalf of the public.

R. Hawes (Chair): With that, I'll call the question.

Motion negatived.

H. Bloy: I would like to make a recommendation that we ask the Chair to invite the Minister of Finance to come and speak to the Select Standing Committee on Finance to give us an update on current financial projections for the province of British Columbia in light of all the financial information that's available in the news these days.

J. Yap: Is that a motion?

H. Bloy: I can make it a motion if you want.

R. Hawes (Chair): That's a motion, I guess.

D. Hayer: I will support that motion. I will second the motion.

R. Hawes (Chair): Okay. We don't need a seconder.

I think it's the same motion without the hyperbole.

A Voice: Isn't it the same motion?

R. Hawes (Chair): No, it's not. It's removing the hyperbole that was in the first….

B. Ralston (Deputy Chair): They want him to move away from what the minister said.

[1030]

R. Hawes (Chair): I think what we want to make sure of is that…. While there's likely merit in having another discussion with the Finance Minister to see how dramatic the changes should be in order to make our recommendations realistic, I think it doesn't do us any good at all to move into a political realm, where we're taking snippets from radio shows. Again, I say that I didn't hear the radio show. I personally could never support this motion because it's out of the full context, perhaps, of the remarks that he made.

D. Thorne: I heard it.

B. Ralston (Deputy Chair): Anyway, we're in favour of the motion, so I think maybe we should move to….

R. Hawes (Chair): We'll move to the question on that motion.

Motion approved.

R. Hawes (Chair): I will ask the Finance Minister. Now, we're meeting next week in Victoria. I will find out what his calendar is, and hopefully, he can come and have a chat with us prior to or as part of the meeting, which I think is scheduled for the fifth.

If that is happening, it could be that that meeting…. I hope everyone will check their calendars. If we're scheduled from nine to one, it may be that we need to extend that meeting a little bit longer.

D. Thorne: Can we decide that now, or pretty soon, because of helijets and things?

R. Hawes (Chair): We don't know if the minister is available, so I'll let you know as fast as I can.

Ministry Advertising Regarding
Budget Consultation Process

B. Ralston (Deputy Chair): Before we move on, I have another motion I want to put forward: given the statements made Tuesday by the Minister of Finance and reported in the media — that "we have seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars" — and in order to comply with the Budget Transparency and Accountability Act, that the committee direct that all advertisements of the Ministry of Finance promoting the budget consultation — whether print, radio or television — cease immediately, since the description of the province's present fiscal circumstances contained in those advertisements is both inaccurate and misleading.

Given what I think everyone has agreed to in terms of the province's fiscal situation — the debate that just took place — it makes little sense for government advertising to continue suggesting that there's a huge surplus and that the only issue before the province is…

J. Rustad: Can I just make a point of order.

B. Ralston (Deputy Chair): …the issue of where to cut taxes. I believe that's the first question in the consultation document.

It's very clear that the context and the thrust of those advertisements is completely wrong. It has completely
[ Page 2213 ]
changed, and I suggest that we recommend to the ministry and the minister that those advertisements cease immediately — and save the money as well.

Point of Order

J. Rustad: As a point of order. That motion, I believe, is out of order because it is outside of the scope and mandate of this committee, from my perspective. So I would ask that that motion not be approved for debate and discussion here.

B. Ralston (Deputy Chair): I'd like to speak to the point of order.

R. Hawes (Chair): Go ahead.

B. Ralston (Deputy Chair): The Budget Transparency and Accountability Act, section 2(c), says that the consultation paper must include information on how members of the public may provide their views on those issues. The mechanism that's being done to request that information from members of the public is through advertisements — print, radio and television — in a very extensive campaign throughout the province.

That is within the mandate of the committee. That's the mechanism by which information from the public is being solicited in these ads, and I think it's appropriate that it be ceased immediately.

R. Hawes (Chair): I think what I would say is that the committee does make recommendations to the Finance Minister, and this is a proposed recommendation that I think probably does fall within the ambit of what this committee could do, so I would suggest that we discuss the relative merits of what is being suggested here and then vote on this motion appropriately.

Does anyone have any comments first?

Proceedings Continued

R. Lee: I'm not sure about the advertisement out there, but we have the consultation process completed already — I believe on the 24th of this month. So I don't know if that motion is relevant to the work of consultation from today.

R. Hawes (Chair): I think, Richard…. I don't know if, in order to comment, I should pass the gavel, perhaps, to the vice-Chair.

B. Ralston (Deputy Chair): It would hardly be appropriate, since I'm moving the motion.

[1035]

R. Hawes (Chair): Very clearly, this is a motion that's made that is, as I'm sure the mover knows, pretty political. I certainly am not going to support it, and I doubt very much whether any members on the government side would support it.

First, we're talking about something that was said — as I said in the previous motion, a snippet from a radio show. Frankly, I think most of us do not react to what we hear on talk radio shows, particularly when things can be taken out of context. Unless it's in the fullness of the entire dialogue that took place in that radio show, I'm not sure there's any relevance of any kind.

I would also point out that the government…. I do know that in terms of the budget process, we continue to be in surplus. We continue to have a forecast allowance that's unspent. The minister did point out to us very clearly in his conversation with this committee that the projected surplus is lower now than what it was, but we continue to be in surplus. I think those are the comments that he has continued to make all the way through.

This is not a thing where there's been a financial collapse of the government, where we have moved from being in a surplus position to being in a deficit position.

Again, the motion that was made in the first place — to ask the Finance Minister to come back and see if there are some changes that we should hear — I think is a relevant motion, and I think it's a good thing that we do in terms of the advertising that may be happening.

Frankly, I do believe that that's within the ambit of the Finance Minister's ministry and PAB, and they will make decisions as they see fit. I don't think that it is out of line. Those are my comments, and I'll take the gavel back.

H. Bloy: I call the vote.

R. Hawes (Chair): We have a couple of comments.

J. Rustad: First of all, as I have stated earlier, I don't think this is something that should even come to the floor, as we are asking the Minister of Finance to not advertise, which is not within the purview of this committee.

However, having said that, the advertising that was done after September 15, when the budget consultation was out, was after the third-quarter update. The information we had was the best information that was available at that time. It went out for input. The input session that we have had is over. There is no longer an opportunity for people to have input into this process. We are now into deliberations. I see no rational reason why this motion would come forward, other than for making a political statement.

Quite frankly, it's unfortunate that it's even on the floor, but certainly, I will not be supporting it.

D. Hayer: I agree with John on this. I think we have worked very well as a committee from both parties. Today is election day in two ridings. Maybe that's the reason we're hearing this statement.
[ Page 2214 ]

I had no problem asking the minister to come and talk to us, which motion has already been passed, to get the information at this date. There is no more input being allowed in the committee anyway, because that date has already passed. Therefore, I think that we should go on with our Finance Committee, working on deliberation to get the report ready. I think we should also try to get the minister in next time, on November 5, if he's available, to give us an update on it.

On the other hand, I can tell you this much. When I went outside, many people said: "You know, it's time to cut taxes." When you talk about getting political, the statement made by the Premier…. I tell you that most of the people I talked to came back and said: "Thank you very much. If somebody's listening, that was the right direction."

I shouldn't be saying that, because we shouldn't bring politics in here. On the other hand, since the vice-Chair from the NDP has brought this, I just wanted to say what I've been hearing.

J. Yap: I also cannot support this motion. It's not the place of this parliamentary committee to be directing or ordering any ministry to do or not do its job, which includes communicating.

I think enough has been said about what we should do. We should move on with the work that we've been charged with, which is to complete our deliberations with the best information we can get — including an update from the Finance Minister, if possible — and put together a report to the Legislature, which is our function in this process.

[1040]

B. Ralston (Deputy Chair): Just briefly, to respond to the Chair's comments. When the minister came before the committee on September 15 — I have the report of the proceedings from Hansard — he spoke of additional revenue. "So that is also adding to the projected surplus that was announced last Friday." He was referring to additional revenue from natural gas and from an increase in corporate income tax revenue. So the picture that he brought to the committee then was not only a surplus but a bigger surplus than anticipated.

As recently as October 22, just seven days ago, at the briefing he provided after the Premier's economic address, he said: "We are still running ahead of what we were anticipating at the time of the budget." So as recently as a week ago his position on the revenue projections for the province had not changed. Yet just yesterday he made a very dramatic statement. His words are quoted accurately.

J. Rustad: Sorry.

Chairperson, relevance to the motion?

B. Ralston (Deputy Chair): I have the floor, I believe, unless the Chair says otherwise, Member.

He said: "We have seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars."

This committee does control its own processes. That's set out clearly in section 2 of the act. The method by which this committee communicates with the populace, with the citizens of British Columbia, is under our control, I would suggest, and we should be recommending to the minister and the ministry that any further advertisements be ceased, given that they grossly misrepresent the actual state of the province's finances.

H. Bloy: I call the vote.

R. Hawes (Chair): Call the question.

Motion negatived.

R. Hawes (Chair): We will move on. We're going to talk about the general outline and how we're going to proceed with shaping what the report will look like. We're not going to be discussing specific recommendations today but rather just headings under which the report will…. To do that, I think, we are going to want to move in camera, so I would entertain a motion to move in camera.

Motion approved.

The committee continued in camera from 10:43 a.m. to 11:41 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): We are on the record. We're back in the public part of the meeting.

Just to summarize, we have agreed that the Deputy Chair and myself will meet on Tuesday to go through the recommendations that our members feel are appropriate. We'll try and sort out the ones that we have in common and bring those to the meeting on the fifth. That meeting will run from nine in the morning until five in the afternoon — perhaps earlier, depending on how people feel and the progress we're making.

We are also going to meet again, if required, on the sixth from nine to noon. Then — again, if necessary — we will meet on Monday the tenth from nine to three, with a final meeting on Wednesday, November 12, at which time we are going to have sign-off and a finished product that can go to print.

There is an awful lot of work to do between now and next week. To get there, it's going to require, of course, everyone's cooperation in getting their recommendations in, and we'll move from there.

I don't think there's anything else that we had to discuss today. With that, we'll take a motion to adjourn.

The committee adjourned at 11:43 a.m.

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