Finance and Government Services — Issue No. 31

Present: Dan Ashton, MLA (Chair); Mike Farnworth, MLA (Deputy Chair); Eric Foster, MLA; Gary Holman, MLA; Marvin Hunt, MLA; Lana Popham, MLA; Jackie Tegart, MLA; John Yap, MLA

2. The following witnesses appeared before the Committee and answered questions:

3. Resolved, that the Committee meet in-camera to consider the request for supplementary funding from Elections BC. (Marvin Hunt, MLA)

6. Resolved, that the Committee recommend that Elections BC be granted access to contingency funding in the amount of $2,969,000 ($1,100,000 ongoing operating; $1,719,000 event; and $150,000 capital) for fiscal year 2014/15 in order to defray expenditures for the expansion of its mandate as a result of the passage of the Local Elections Campaign Financing Act (Bill 20), and of the Local Elections Statutes Amendment Act (Bill 21), and further, that the Chair advise the Minister of Finance, as Chair of Treasury Board, of the recommendation of the Committee. (Marvin Hunt, MLA)

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


CONTENTS
Page
Elections B.C.: Supplementary Funding Request	687
K. Archer
N. Western

D. Ashton (Chair): Good morning, everyone. Thank you very much for coming. Thank you very much to those who are phoning in and, also, to everybody that is here. We do have a quorum.

What we'll do. Dr. Archer, it's my understanding that yourself and Ms. Western would like to make a presentation. Do I start with you, sir, first of all?

K. Archer: Okay, thank you, Mr. Chairman. Good morning to you and members of the Select Standing Committee on Finance and Government Services. I'm joining the meeting today by teleconference while present with the members.

In the committee room are Nola Western, deputy chief electoral officer for funding and disclosure, and Anton Boegman, deputy chief electoral officer for electoral operations. I'm joined in my office by Sherry Hyde, who's our comptroller.

Amongst other things, Nola is responsible for overseeing the electoral financing mandate of Elections B.C. Consequently, the provisions of the Local Elections Campaign Financing Act, known by the acronym LECFA, have the greatest impact on her and her staff within our organization.

Our presentation this morning begins with some comments from me in which I outline the requirements that LECFA imposes on Elections B.C. and the extent to which it changes our organization. As we'll see, administering LECFA will have a significant impact on our staffing requirements on an ongoing basis. It will also have an event-related or a cyclical impact, as both the year in which local general elections are conducted and the following year will have event-related staffing and spending requirements.

Nola will then review our spending requirements in more detail for the 2014 fiscal year and will drill down in some of the spending categories to provide the committee with a deeper understanding of the way in which we will fulfil our responsibilities.

All three of us will then be available to respond to your comments and questions.

Before presenting my comments, however, I should explain to the committee why I'm joining by teleconference rather than attending the meeting in person. As you probably know, on May 9 the Electoral Boundaries Commission was appointed. I am one of the three members appointed to the commission, and the commission's second meeting is being held today at the offices of Elections B.C. I've excused myself from that meeting so I can join you by teleconference.

However, I wish to advise this committee that Elections B.C. is housing commission staff at our offices and is providing administrative support to the independent Electoral Boundaries Commission over the next 18 months. This sharing of resources with the commission is expected to provide a very substantial cost saving to the people and to the government of British Columbia and reflects our commitment to seek efficiencies in the provision of services.

Again, please accept my apology for not being present in person at the meeting this morning. My connecting by teleconference is in no way a diminishment of the importance to me of reviewing with this committee our new spending requirements as a result of the new campaign financing rules for local elections.

Prior to the passage of LECFA, Elections B.C. had no mandate and, therefore, no formal role to play in local elections. Our activity was limited to sharing the voters list with the local community when requested to do so by them.

At the conclusion of the election many local authorities would, in turn, provide us with revisions to the voters list as a result of updates made by voters in conjunction with the local election. But since there were no local election responsibilities in our mandate, we had no staff in the area and no interaction with candidates for local office.

With passage of LECFA, now candidates for all elected local positions must comply with new reporting requirements. They must report on their contributions, as well as their expenses. So too, must elector organizations, which are active in a number of local communities, as well as third-party election advertisers.

Furthermore, the specific electoral financing rules and reporting requirements are different at the provincial and local levels, so a different knowledge base is used in the two circumstances.

In addition, there is a need not only to receive financial reports from political actors — that is, candidates, elector organizations and advertising sponsors — but also to review the reports to ensure that the reports are accurate and that they comply with campaign financing requirements, such as imposing election expenses or limits on anonymous contributions.

…for a moment the nature of election cycles at the provincial and local levels to further illustrate the need to separate staffing between provincial and local levels. The next provincial general election is scheduled for May 2017. In the year leading up to the general election, prov-
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incial electoral finance officials provide significant training to financial agents and election advertising sponsors to ensure everyone knows the rules and they're able to comply with requirements.

Following the event, candidates, parties and election advertisers must submit financial statements within 90 days. These are then subjected to detailed review over the following 18 months. Simultaneously, provincial electoral finance officials continue to receive the annual financial statements of political parties. They review these reports for the period in which reporting requirements and training materials are systematically reviewed and adjusted accordingly. Then the process begins anew for the subsequent general election.

This schedule also was suggested to accommodate financial reporting requirements for by-elections, leadership contests, recall and initiative petitions, and initiative or referendum votes in the interelection period.

Now, in this period during which provincial election finance officials are reviewing 500 to 600 financial reports from the 2017 general election, the local election finance officials will engage in outreach and training opportunities for the over 3,000 individuals and organizations that will be required to file financial reports for the local election in 2018.

Following the event, their activity will shift from education and training on reporting requirements to review and compliance, based upon the specific provisions of local election campaign finance requirements.

Again, this, in turn, is done while also administering the election campaign financing provisions — by-elections, referendum votes and the like. This will be done in conjunction with the review and assessment of the training materials, guides, forms and other materials used to administer the act, following which, the cycle will begin anew.

Hence, the logistics of administering the election financing requirements for provincial events outlined in the Election Act and of local election campaign financing outlined in LECFA require that we develop both provincial and local election financing units. Budget requirements outlined in my letter to you of May 28 reflect both this addition to our organizational structure and our current position in the local election cycle.

The budget requirements have three elements. First, the operating budget requirement is $1.175 million, of which $75,000 has already been provided as bridge funding for the period of April and May 2014. This funding is anticipated to constitute an ongoing requirement for Elections B.C. to administer LECFA.

Second, we have a requirement for 2014 of $1.719 million in events funding. This requirement is expected to increase considerably from year to year. It will be the highest in the year of local general elections, as we increase our training and advertising requirements, and in the event year in which we focus on reporting and compliance.

Then it will return to lower levels in the following two years, with the caveat that there could be legal fees and/or litigation expenses associated with ensuring compliance in the years between events.

The third funding requirement for 2014-15 is $225,000 for capital expenses, of which $75,000 has already been provided as bridge funding for April and May 2014. At the moment we do not have local election campaign financing reporting software built in to our electoral management IT infrastructure and, consequently, have a need to build this, as we discussed at our April meeting with the committee.

I hope my comments provide you with a high-level overview of the changes that are required at Elections B.C. to implement LECFA — changes that we welcome wholeheartedly. I now turn to Nola Western to review our 2014-15 requirements in more detail.

D. Ashton (Chair): Nola, welcome. Thank you. Go ahead. And thanks, everybody, for joining in.

As you know from the debate in the House, this new legislation includes extensive responsibilities for Elections B.C., and it gives our office a greatly increased mandate. Essentially, it makes us responsible for administering, investigating and enforcing all of the campaign financing and third-party rules in British Columbia.

Although there are no hard statistics, the Ministry of Community, Sport and Cultural Development estimates that at the last local general elections there were over 3,300 candidates and an unknown number of elector organizations and campaign organizers involved. As a comparison, in the last provincial general election in May 2013 there were 376 candidates representing 19 political parties.

Furthermore, there are 257 local jurisdictions which hold elections. Elections B.C. will have to liaise with every one of those jurisdictions to ensure that we receive the information we need about: who are the candidates, who are the elector organizations, and who are their agents?

As for by-elections and assent voting or local referenda, again, there are no statistics on how many of those occur each year, but we're told that there are many. So the increased mandate is an ongoing one, as Keith mentioned in his comments. It's not only one that comes into play once every four years.

Although the sheer increase in the number of clients for local elections is enough to greatly increase our workload, as I mentioned in April when we met, the legislation itself is significantly different in many respects from the provincial electoral finance legislation in the Election Act. This means we have to develop an entirely new program with a new set of tools, both for ourselves and for
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our external clients.

Now let's turn to the budget document that you have before you. You'll see from the document that the format is similar to our annual budget requests that we present in the fall of each year. There are three budgets: an ongoing budget, an event budget and a capital budget.

The ongoing operating budget is on page 2. Salaries and benefits are for the new staff necessary to administer the Local Elections Campaign Financing Act, or LECFA. When the local elections task force issued its report in 2009, Elections B.C. worked with an HR consultant to identify what were then, potentially, our new staffing needs and a revised organizational structure.

Although at that time we were working from the task force report and we're now working from the actual legislation, the structure reflected in this budget isn't significantly different from that identified in 2009. This number includes the salaries and benefits for those new staff. The benefit rate is 25 percent of the salaries. That's paid directly to the B.C. Public Service Agency to administer employee benefits.

Amortization, as you'll know, is just a different term for depreciation. It's the allocation of the cost of a capital asset to operating expenditures over its expected useful life. I'll address the capital asset budget itself in a moment.

Building occupancy is office rent and maintenance. We do not have sufficient room in our current office space to take on this new mandate. However, there is space available on the floor immediately above ours in the building we currently occupy, so we'll be able to take a portion of that space for local elections. This way we avoid the need to find space in another building.

Office expenses and telecommunications are those costs related only to the new mandate. They include telephones, office supplies, furniture and equipment, such as a photocopier and the many new filing cabinets that we'll need.

The travel budget is a small amount to allow travel to deliver training to external clients in the event of by-elections or assent votes.

The Local Elections Campaign Financing Act establishes that the CEO must conduct reviews and investigations of the financial affairs of the local election participants. The professional services amount includes costs for that audit, investigation and legal fees.

The corporate information systems budget will cover increased costs for our IT service provider to supply the necessary support for our additional staff, the new ongoing e-mail accounts, the new computers and MS Office software and the additional fees for our website, since it'll necessarily be much larger.

On the following page you'll see the estimated cost for the November 2014 local general elections. As I mentioned earlier, this election will bring thousands of new clients to Elections B.C., and we're going to endeavour to provide them with the same level of service and support that we provide to our provincial clients. This means staff, and you can see that reflected in the number.

We expect to hire a team of client support specialists in September who will be the face of Elections B.C. to the candidates, the electoral organizations and the third-party sponsors. These people will provide one-on-one support and advice so that all the participants can comply with the new rules. The support will take the form of telephone calls, e-mails, conference calls and, in some cases, in-person meetings. We expect thousands of such contacts, especially this first time around, as the candidates and everybody else become aware of the new rules.

To give you a sense of scale, during the last provincial election the electoral finance staff logged over 4,000 contacts, and for that election there were only 376 candidates. For local elections we will have almost ten times the number of candidates to serve.

Remember, too, that there are over 257 jurisdictions involved in the local elections, and these new temporary and permanent campaign finance staff will be responsible for working with every one of the local chief election officers in all of those jurisdictions — and actually taking over some of their previous responsibilities, including answering questions about the financing rules and receiving and disclosing the campaign disclosure statements.

Office expenses are the same type of expenses as in the ongoing budget, but they're solely related to this event — things like telephones for the temporary staff, office supplies, etc. It also includes printing the thousands of forms and guides that will be provided to every candidate and every electoral organization in British Columbia.

Travel costs will allow us to attend training opportunities for election participants. In fact, some of the budget that you gave us in May was used to send the then acting manager of local election finance to some of the local government management association election workshops.

Legal fees, especially since this is new legislation, are likely to be higher for this first local general election than for future ones.

The advertising amount of $150,000 will allow us to do a minimum of advertising across B.C. to help increase awareness of the new financing rules. Although you guys are MLAs and you're already fully aware of the new act, and the Ministry of Community, Sport and Cultural Development has issued press releases and information about the new act, it can always be rather surprising how many people don't hear about such things.

There are several offences in the legislation, for things like incurring election expenses without authority; acting as a campaign organizer — they were participants in the old legislation but no longer exist under LECFA; and conducting election advertising if you're not previously registered with Elections B.C. So we need to make sure that the public, not just the candidates, understand
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these changes.

Finally, corporate information systems. Again, the types of expenditures in this line are largely the same as those in the ongoing operating budget, but these are related to the temporary work and the temporary staff for the election only — things like additional e-mail accounts, computers, office software and the extra amount that we pay our service provider to support those computers and staff.

The capital budget is on page 4 of the document. This $225,000 is the amount necessary to amend our electoral information system and financial reports and political contributions system to allow for the management of local candidates, electoral organizations and third-party sponsors.

LECFA requires us to post all the disclosure statements on our website. To do this, we need to be able to create the new client types in EIS and FRPC. As we talked about in our meeting in April, currently there's no ability in those systems to include local candidates, electoral organizations or third-party sponsors, so the systems must be modified. We've been able to leverage our existing systems by building new modules onto those systems rather than entirely new systems, therefore minimizing the capital costs.

LECFA is a big piece of legislation with over 100 sections and some very detailed regulations. It presents an enormous change for our office. Since the Local Elections Task Force first recommended that Elections B.C. take over administering campaign finance and enforcement for local elections, we've been anticipating and planning for this change. These plans rely heavily on our existing infrastructure, and this budget reflects that.

Having existing staff and expertise in election financing and other areas — such as IT, human resources, communications, and finance and admin — means that an entirely new agency for local election campaign finance wasn't necessary. We believe, as the task force clearly did and the Legislative Assembly did when it passed the act, that with the necessary resources, Elections B.C. can add value to the local electoral process in British Columbia.

J. Yap: Thank you to both of you for your presentations. In regards to the ongoing core services budget, you've got $714,000 total, salaries and benefits. That's roughly about an eight to ten increase in FTEs. Is that something that came out of the consultant's review that you mentioned earlier?

N. Western: It's 11 ongoing new staff. I think that the consultant's review recommended ten. Then, when we actually saw the legislation and reviewed our needs, it ended up being 11. A lot of those staff, as you can tell from the dollar amount, are not highly paid.

Now, because this is the biggest line item, ongoing, was some consideration given to the fact that initially there will be a real demand on your service and that, ongoing, it would fall off? I guess what I'm getting at is…. We're living in an era when we want to be careful with taxpayers' funds. I'm wondering: did you look at, potentially, contract staff to get started with and then, eventually, a more stable complement, ongoing? How did you arrive at the 11, in those terms?

K. Archer: First, a general comment, then I'll turn it to Nola to provide some more detail. The basic model we have for our staffing is that event staffing is typically short-term contract staff. So the event request in this budget gives an indication of a considerable increase in staffing as we move into September, October and November. Those staff will be with us for a fairly short period of time in an educational capacity, and then we'll shift over to a more compliance role. We'll see that in the post-event year as well.

For the staff that we hire for our ongoing obligations, both for provincial events and now for local events, our
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business model is one in which we have a fairly small set of core staff members who provide us with the capacity to ensure that as we expand, we're positioned to expand, and that as we contract, we contract to, again, a fairly small….

Staff members. I think the model that you're seeing here, John, reflects that general approach that we take at Elections B.C.

Nola, you may have some more detailed comments about how we arrived at the number of staff that are outlined in this request.

J. Yap: If I could just respond to that. The 11 is an add, and it will be ongoing. So it's an ongoing increase, a lift to your FTEs, to your budget, into the future, right?

J. Yap: What is implicit in that is that there's…. You did touch on this in your earlier comments, Keith, regarding that your present expertise does not include local government and that this is all new. I understand that. But I guess implicit in what we're hearing is that there's no capacity right now with your current complement, your current structure, to shift resources over from what you have to this new endeavour, as well as add needed new resources. Is that what we're hearing — that you really have to add basically from scratch?

K. Archer: I guess I would respond to that by, first, providing a broader context, and that is that this budget includes, for example, one new junior staff member in our communications department. That person, again, will assist in providing an ability to interact with, really, a huge number of political actors who will have obligations for compliance with the new financial requirements. That person will be drawing upon the more senior people within communications to support them in their work. So while that's a net additional position, in fact we're putting more resources into this task than just that new position.

Likewise, in our human resources area we're not asking for any new positions in HR. We're not asking for any new positions in finance and accounting to process payrolls, for examples. We're bringing a considerable amount of current resources to bear in this task, and where our current resources need to be supplemented, we're asking for additional ongoing support.

If I may, Chair, one more question, on the event budget. I'm wondering why there's no building occupancy. Would you not have to pay rent for the voting locations around the province?

K. Archer: No. Our responsibility is for financial reporting of the candidates, not for actually conducting the vote. We have a part of the responsibility for conducting local elections, and that is on the campaign financing side. We certainly have a need to bring in our temporary staff, and we have the ability to adjust our space to accommodate these additional 35 staff members that Nola referred to who will be staffing, for example, a new call centre within our facility. But that's the same space that we currently use for establishing a call centre for general elections within the province.

We have no responsibility for actually conducting the vote, and consequently, there's no budget requirement for that.

N. Western: I'd just like to add a bit about the permanent staff, the 11 people. Believe me, we don't want more staff. I personally don't want more staff under me. This is not an exercise in empire-building. I have quite enough to do without having 11 more reports. But the legislation is so different than the provincial legislation. We really need to build up the expertise in order to support the temporary staff that Keith just mentioned.

There are more than ten times the number of clients that we will experience than we do at the provincial level. We have not asked for ten times the number of provincial electoral finance staff. We've really tried to keep it to a minimum.

Of course, if we do find that 11 is too many, we will adjust as necessary. We haven't guaranteed any of these people jobs for life. If things change, things change — just like they always do.

M. Hunt: Nola, I really appreciate those last comments, because those last comments are precisely where I'm going. I'm pleased to hear that that's the attitude. From my experience in local government, yes, 3,300 candidates sounds daunting when you're used to under 400 — no question about that — and yes, there is a volume issue there. No question about that.

In what I'm going to call the gearing-up budget — which, to me, is what you're doing and you're calling the core budget at this point in time — working towards the event, I have no question in the challenges, in the work that needs to be done, that sort of thing. But of those 3,300 candidates, my expectation is that 80 percent of them will spend under $500, so in real terms, reviewing those statements is not going to be a critical issue for the vast, vast majority of them.

It's in the highly populated urban areas where you get the higher expenses coming in, and even those become
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debatable. I won't ask former mayor Ashton how much he spent on his election. Anyhow, it's those more urban areas, particularly mayors, where you get the greater expenses and that sort of thing.

Over time, I'm really wondering, because we're now on a four-year cycle, what those 11 are actually going to do past the election and the review. I'm pleased to hear that the attitude is: "No, these will be adjusted as we go on in future." That's No. 1.

Number 2 is that there was a lot of reference to printed materials. Now, I don't know how other people work in their elections, but I know, speaking for the city of Surrey and the majority of the candidates in the city of Surrey, we would receive the paper stuff, and the paper stuff would get put down on a desk, and it would collect dust for the entire election. There are very few people that actually work through that material.

I really want to encourage electronic rather than printed, because I think that's where the reality is. Certainly, there's the technicality of having the printed for those who choose it, but I think you'll see electronic is going to work better.

I don't have a lot of challenges with the budgets before us and the event budget. It's when we get around to next year and we actually see after an election what the numbers are. That's where I think the challenge is going to be. It's sort of the hindsight and moving forward. Yes, this is the first time around. The first time around there are lots of changes that have to be made.

M. Farnworth (Deputy Chair): I just wanted to say I'm pleased with what I've heard as well. But I would put a caveat on, slightly different than Marvin's. I actually think you are going to need it, because I think the big…. It's going to be extremely complicated, particularly those few municipalities where they actually have civic parties. They usually have an organization in place that can deal with these kinds of things. There's a lot of crossover with provincial politics.

After that, I think it's often an individual and their spouse or a friend, and I think you are going to be fielding a lot more questions than you may initially anticipate. I think we need to err on the side of the request, because if we don't, and it comes back that there aren't enough staff, it's not going to be local government that's going to wear it. It's not going to be individual candidates who'll wear it. It will be the province that will wear it.

G. Holman: Thanks for the presentation today. Just a couple of questions. Does the event budget fall to zero after the local election, so all that continues on is the ongoing? It also seems to me that, especially for the event, the travel dollars seem quite low. Is that because, for the most part, the temporary employees that you're hiring are local so don't have high travel costs?

N. Western: First of all, I don't expect the event budget to fall to zero for next fiscal year — and we'll present that budget in the fall as part of our normal, ongoing budget presentation — because we will still have temporary staff next fiscal year, which starts April 1. The financing reports will be due the middle of February, and the review of those reports will necessarily go into next fiscal year. So we will have temporary staff next fiscal year. Also, investigations that may result from these local elections will probably go into the next fiscal year as well. So I don't expect it to be zero.

Just like we do with the provincial model, if there are by-elections or assent votes and we need additional staff, depending on the volume — we don't really know what to expect — then you may see sort of on-demand event budgets as well.

As for the travel, you're right. I think $8,000 is not very much. You folks know how much it costs to travel around British Columbia. Most of the support will be distance, by on line or telephone.

D. Ashton (Chair): Any other committee members with questions for the presentation? Is there anybody else?

Okay, we're going to have to go in camera here. I just want to thank everybody. But before you scoot away — lease space. You said that there is additional space available. Now, are you in a government building?

N. Western: No, we're not. We're in the old B.C. Ferries building up at Fort and Cook streets. The tenant on the fourth floor immediately above us has recently vacated, so we're going to take a portion of that floor.

D. Ashton (Chair): Okay. Just a question, and I know this is one of the things that has come up before in discussions. Is there an opportunity that we have space elsewhere? I know specifically of an agency that's moving where we're on the hook for, I think, 18 months or something like that, if I remember correctly. I would just ask that consideration be given to lease space that we may already have in inventory, please.

D. Ashton (Chair): Okay. Dr. Archer, Nola and Anton, thank you very much for coming this morning. We are going to go in camera, and then dissemination of the direction will be given from the Clerks.

To the committee, if you can just give us 30 seconds or so, we can get everybody out, and we'll go in camera.

M. Hunt: I move that the committee recommend that Elections B.C. be granted access to contingency funding in the amount of $2.969 million — $1.1 million being ongoing operating, and $1.719 million is event, with $150,000 for capital — for the fiscal year 2014-15 in order to defray expenditures for the expansion of its mandate as a result of the passage of the Local Elections Campaign Financing Act, Bill 20, and of the Local Elections Statutes Amendment Act, Bill 21. Further, I move that the Chair advise the Minister of Finance, as chair of Treasury Board, of the recommendations of the committee.

D. Ashton (Chair): Okay, seconded by Gary. Is there any other discussion on this, then?

K. Ryan-Lloyd (Deputy Clerk and Clerk of Committees): Not at this time. We will proceed to draft a letter to the chair of Treasury Board and also to Elections B.C. advising them of the recommendation of the committee and the other direction discussed.

To the members of the committee: thanks for your time this morning. Greatly appreciate it. Have a great summer, if I don't see you. Don't forget that if you're in the Okanagan, swing by and say hi. Have a good day, everybody.

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Chair:	* Dan Ashton (Penticton BC Liberal)
Deputy Chair:	* Mike Farnworth (Port Coquitlam NDP)
Members:	Mable Elmore (Vancouver-Kensington NDP)
	* Eric Foster (Vernon-Monashee BC Liberal)
	Scott Hamilton (Delta North BC Liberal)
	* Gary Holman (Saanich North and the Islands NDP)
	* Marvin Hunt (Surrey-Panorama BC Liberal)
	* Lana Popham (Saanich South NDP)
	* Jackie Tegart (Fraser-Nicola BC Liberal)
	* John Yap (Richmond-Steveston BC Liberal)
	* denotes member present
Clerk:	Kate Ryan-Lloyd
Committee Staff:	Byron Plant (Committee Research Analyst)

Witnesses:	Dr. Keith Archer (Chief Electoral Officer)
	Anton Boegman (Elections B.C.)
	M. Nola Western (Elections B.C.)

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES