Public Accounts — Issue No. 16 — Thursday, February 5, 2015 (HTML)

Hearing Room 605, Labour Relations Board Office
1066 West Hastings Street, Vancouver, B.C.

Present: Bruce Ralston, MLA (Chair); Sam Sullivan, MLA (Deputy Chair); Kathy Corrigan, MLA; Marc Dalton, MLA; David Eby, MLA; Simon Gibson, MLA; George Heyman, MLA; Vicki Huntington, MLA; Greg Kyllo, MLA; Mike Morris, MLA; Lana Popham, MLA; Linda Reimer, MLA; Selina Robinson, MLA; Ralph Sultan, MLA; Laurie Throness, MLA

Others Present: Carol Bellringer, Auditor General; Matthew O’Rae, A/Executive Director, Financial Management Branch, Office of the Comptroller General

2. The following witnesses appeared before the Committee and answered questions on the Office of the Auditor General Report: Follow-up Report: Updates on the Implementation of Recommendations from Recent Reports (June 2014):

• Matthew O’Rae, A/Executive Director, Financial Management Branch, Office of the Comptroller General

3. The following witnesses appeared before the Committee and answered questions relating to the Office of the Auditor General Report: Summary Report: Results of Completed Projects (December 2011):

• Matthew O’Rae, A/Executive Director, Financial Management Branch, Office of the Comptroller General

5. The following witnesses appeared before the Committee and answered questions on the Office of the Auditor General Report: Summary Report: Winter 2014 (Health Shared Services BC and K-12 Funding Allocation Model) (February 2014):

7. The Committee resumed consideration of the Office of the Auditor General Report: Summary Report: Winter 2014 (Health Shared Services BC and K-12 Funding Allocation Model). The following witnesses appeared before the Committee and answered questions:

• Brian Jonker, Executive Director, Education Sector Organizations Excellence, Ministry of Education

• Deborah Fayad, Assistant Deputy Minister, Resource Management, Ministry of Education

• Michael Lebrun, Senior Funding and Policy Analyst, Funding and Allocation Branch, Ministry of Education

8. The following witnesses appeared before the Committee and answered questions on the Office of the Auditor General report: Distinguishing Between Government Program and Partisan Political Advertising: An Update to our 1996 Report (November 2014):

• John Paul Fraser, Deputy Minister, Government Communications and Public Engagement

• Mary Dila, Executive Director, Marketing and Communications Support Services, Government Communications and Public Engagement

• Denise Champion, Assistant Deputy Minister, Strategic Initiatives Division, Corporate Services Division, Government Communications and Public Engagement

10. The following witnesses appeared before the Committee and answered questions on the Office of the Auditor General Report: Summary Report: Results of Completed Projects and Other Matters (December 2012):

• Matthew O’Rae, A/Executive Director, Financial Management Branch, Office of the Comptroller General

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
PUBLIC ACCOUNTS


CONTENTS
Page
Follow-up Reports: Updates on the Implementation of Recommendations from Recent Reports	611
R. Jones
M. Gaston
C. Bellringer
M. O’Rae
Auditor General Report: Summary Reports	620
C. Bellringer
R. Jones
M. O’Rae
S. Dodds
B. Gilhooly
M. Gaston
D. Kent
D. Fayad
M. Lebrun
B. Jonker
Auditor General Report: Distinguishing Between Government Program and Partisan Political Advertising	641
C. Bellringer
B. Gilhooly
J. Fraser
D. Champion
Auditor General Report: Summary Reports	651
R. Jones
C. Bellringer
M. Gaston
M. O’Rae

B. Ralston (Chair): Good morning, Members. We have an agenda for Thursday, but we’re going to continue briefly to finish up several items that were left from yesterday.

We were considering the June 2014 follow-up report, and there were three progress audits that the Auditor General’s office had conducted that we had not discussed. We’re going to start with health benefits operations — I see it on the screen — and we’ll go from there.

Follow-up Reports: Updates on the
Implementation of Recommendations
from Recent Reports

R. Jones: I was remiss yesterday in mentioning to members that in the follow-up report where we do our progress reports, what you will find is our progress audit, and then right behind it you’ll find the initial response from the ministry. So it does provide some context to what was there before we chatted with them and then where we got to at the end. I know there’s a lot of paper in this report. Sorry, I should have mentioned that yesterday.

The health benefits operations. In 2013 we audited whether the benefits expected from this contract were being achieved and how effective the ministry had been in monitoring and reporting to ensure their achievement. This was the Maximus contract that we’re talking about. The work was in response to a request from the Public Accounts Committee, actually.

One of our findings recognized that the service provider had implemented a number of new privacy and security practices. However, the ministry had not implemented the proactive controls necessary to ensure that privacy breaches are not going undetected by the ministry or that the ministry’s data is not being stored or accessed from outside of Canada.

One of the members from PAC here asked us to take a look to see if the ministry had made sure that that was being looked at. As a result, we assessed the recommendation as only partially implemented, because when we did go back and chat with the ministry, we found that they still needed to do some audit of the subcontractors that were involved in working with Maximus and to take a look at whether or not the risk of privacy breaches and data storage outside of Canada was actually being monitored — and ensured that that wasn’t happening.

We’ve concluded in this follow-up that it’s just partially implemented. They still have some work to do in that area.

G. Heyman: Thank you for that report. I find it regrettable that the audit report does not jibe with the responses to similar questions in the Legislature by the minister responsible. Despite the fact that they’re only partially implemented, do you see within the ministry a plan that you would consider acceptable if it was fully implemented? Or did you consider the plan to, in fact, be “half-measures”?

M. Gaston: We looked at the work that they’d done in relation to Maximus. As we’ve said in our report, they’d engaged an external auditor to go and look at certain security procedures that were in place. The report from the external auditor in relation to Maximus provided sufficient assurance. But what we were saying is: “Well, you still have some subcontractors. There’s data that relates to that, which is held elsewhere, and you need to make sure that those security measures in place around that data are sufficient.” That’s work that they are working on just now.

We had a meeting with them as recently as last month, and it’s very much work in progress, but we’re not in a position just now to say whether their plan is sufficient because at that stage they were still trying to identify exactly how much needed to be done.

G. Heyman: Ironically, given our discussion yesterday about self-assessment of compliance with Auditor General recommendations, that in fact was the nub of the whole question. It was around a contractor, and it was around the reliance of the ministry on the subcontractors essentially auditing themselves and reporting — with no control mechanism within the ministry whatsoever to determine if the scrutiny was sufficient, if it was accurate or anything else that one might expect in a public contract concerning the privacy of very sensitive personal medical information that, when the contract was first let well over a decade ago, was the subject of numerous assurances from the government about the precautions and protections that would be put in place.

I have two questions. One of them is: was the ministry actually taking steps to appropriately audit subcontractors as a result of the first report, or in response to follow-up questioning from the Auditor General? The second question is actually on a related but distinct matter. So I might hold that till you’ve answered that.

M. Gaston: Well, the follow-up work that we did showed that the work that had been undertaken had been as a result of the audit but that more work needed to be done in relation to the subcontractors.

G. Heyman: Just to be clear, the ministry did work that it thought was adequate and that you thought was not.

M. Gaston: It did work around Maximus that we found was sufficient, but they hadn’t addressed the issue of subcontractors.
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G. Heyman: Subcontractors was the main point in the audit report. How could that have been missed?

G. Heyman: I’d be happy to, and in fact, I addressed it to the minister. The answer was: “The information is secure, and we have appropriate measures in place.” But that’s not a matter for this committee.

The second question — and I asked the then acting Auditor General to follow up — was whether, in fact, the ministry’s assumption that Maximus holding information in servers in Canada was sufficient to withstand a FISA court order under the U.S.A. Patriot Act.

I wonder if the Auditor General — or the Auditor General in conjunction with the Information and Privacy Commissioner, who I know has also been looking at this issue — has made any headway on determining if in fact information held on servers in Canada is secure from a FISA court in the U.S., under the U.S.A. Patriot Act and, therefore, assuming that the appropriate security audits were put in place by the ministry, British Columbians could be assured that our information is safe or if in fact we can have no such assurance.

R. Jones: We haven’t determined that, and we will talk to the Privacy Commissioner and see if they can help us out in that area.

G. Heyman: I believe the Deputy Privacy Commissioner has been looking at it on behalf of the organization. I would be very interested in hearing back.

R. Jones: We will follow up with him. I know we had discussions with him, and they were thinking of doing something, but we just haven’t followed up with him yet. Just to sort of close the loop, because we have done this progress audit, we will be following up on the “partially implemented” to ensure that the ministry does do what they say they’re going to do around those subcontractors.

G. Heyman: Perhaps someone from the ministry would be pleased to join us here to answer some questions directly.

B. Ralston (Chair): We’ll make a note of that. Kathy is next, and then I have a question.

K. Corrigan: Just on that, I just want to be clear. I know it’s been awhile since we dealt with this. We established that all the data is kept within Canada, then. That’s the end result: that the data is kept within Canada. Correct?

K. Corrigan: Okay, so that’s clear. It doesn’t end up in the United States at all. We’re clear with that. We’re comfortable with that.

R. Jones: Well, I think that was the nub of the question here. It was to try and ensure that it can’t be accessed, even though it’s in Canada, by the U.S., I assume. Is it not, Member?

G. Heyman: We are assured by the ministry that the information is (a) held in Canada and (b) safe from any prying eyes in the United States or elsewhere, and I think the point that’s being made by half measures being implemented by the ministry in terms of auditing the subcontractor as well as the unanswered concerns about the reach of U.S.A. Patriot Act indicate to me, at least, that we don’t have that assurance.

K. Corrigan: Just for clarification, we have the assurance with regard to the main contractor — with regard to Maximus — correct? But not the subcontractors. Is that right?

K. Corrigan: Okay, thanks. I was going to ask a different question. We may not be able to get the answer to this, but it’s something that I would be interested in: recommendation number 6. This is a part of the self-assessment, not the progress audit.

This is on page 34: “Publicly report results by contract objective with sufficient information to enable readers to understand what is being achieved for what cost.” There is partial implementation. And I am just wondering. It says, in terms of the self-assessment: “A redesigned report is planned for release during the 2014-15 fiscal year,” which is almost over. Do we know whether this has happened or not?

K. Corrigan: No idea? So maybe we can find out. How do we…? Are we going to be following up?

B. Ralston (Chair): Ron Wall is taking note of the concerns that have been raised by members, and then we’ll have a discussion about how we’ll deal with those. My
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recommendation would be that in most cases someone from the ministry come to answer the questions that have been posed by the members of the committee. Right?

L. Throness: Mr. Gaston, you referred to a meeting you had last month. There was a report from the contracted auditor in May 2014 that provided assurance that Maximus was applying controls to adequately mitigate risk, and you talked about a subsequent meeting last month. Could you just elaborate a little more on what transpired at that meeting and just what Maximus is doing to further mitigate these risks?

M. Gaston: Okay. Well, I wasn’t actually at that meeting myself, but staff from the office were. It was just really to keep in touch with what the ministry is doing in relation to the part that we still saw as outstanding, so I don’t think there was any discussion in particular around Maximus. It was more just to get an idea of where the ministry are in relation to the subcontractors, and at that point the ministry were in the process of identifying how much work needed to be done.

G. Heyman: I’d like to respectfully ask the Deputy Auditor General if he’d like to qualify his response to Ms. Corrigan with respect to our assurance that the information held by Maximus itself is secure, because actually, if in fact the U.S.A. Patriot Act can reach into Canada through a partially owned, American-owned company or a subsidiary of an American company, that is, in fact, the nub of the whole question.

At one point these speculations might have been considered paranoid, but if the United States government can monitor the cell phone calls of the German Chancellor, I actually think is a very pertinent point. We need an answer to the question, and we’ve been waiting for one, in some sense, for over ten years.

I don’t feel certain that the information held by Maximus is secure until we get a response from the Information and Privacy Commissioner or other legal minds about exactly what the potential reach of the U.S.A. Patriot Act is into Canada, notwithstanding Canadian laws.

R. Jones: Thank you, Member, and so noted. I agree: 100 percent assurance — probably not at this point in time. We do need to get that information, as the member has pointed out, from the Information and Privacy Commissioner, and we will endeavour to work with them to see where they’re at on their investigation into this.

B. Ralston (Chair): I had a question. The Maximus contract was extended, I believe, for an additional five years. Perhaps I can be corrected on that. I’m just wondering to what extent these considerations raised by your office…. Are you aware to what extent they were a part of the negotiations to extend the contract?

One would think that that was the point at which one could leverage some compliance, if you’re talking about extending a fairly lucrative contract. I believe it was extended for five years. I’m just going from memory on that. Could anyone comment on that?

M. Gaston: We actually met with senior ministry officials when we had the findings of our report. We were actually in the reporting stage, and we met with them and gave them our findings, which were included in the report. The timing of that really was to make sure that they were aware of anything that we were picking up as part of our audit, as part of their contract renegotiation discussions. But we didn’t actually audit the contract extension itself. We just made sure that the ministry was aware of all the issues that we were picking up, because they were due to complete the contract extension before the report was published.

B. Ralston (Chair): As far as you’re concerned, you advised those who would have the power to authorize and negotiate the extension of the contract of the concerns that you’d identified. So they had those concerns.

B. Ralston (Chair): So the opportunity to do what I’ve suggested was there, and whether it was acted upon, I guess, is something that only someone from the Ministry of Health could answer.

K. Corrigan: I had another question, and it refers to a few of the recommendations. I’m seeking some sense from the office about comfort levels in terms of, overall, the monitoring, the enforcement, the clarity of the contract and the terms therein in terms of things like change orders — just the whole clarity, because that was certainly clear from the original audit, which I don’t have in front of me today.

There are a number of things in the self-assessment which look good, but it’s tough for us to evaluate how effective these changes are. How does your office feel about this self-assessment in terms of really clarifying the contract more, tightening it up, being able to clearly demonstrate value for money, oversight, monitoring and so on? I know it’s just a self-assessment, but just on the basis of the self-assessment, does it address the problems that your office found in this audit?

R. Jones: I think I’d have to say, Member — thank you for the question — that when we did our progress audit, we focused solely on that one point. As you well know,
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in these self-assessments we did not go in and take a look at anything else around this contract at this point in time. But any of the alternative service delivery contracts like Maximus, like IBM — we’re well aware of a lot of the risks and value-for-money issues around these contracts, and we do have them in our plans going forward, to look at ASDs.

I guess what I’m seeking is that because you’ve done an audit, and because of the expertise of the Auditor General’s office, you would be much better placed than we are, reading this, to see whether it looks like — not that you’ve audited it — these measures that have been taken in response to the audit would, in fact, address the issues that were raised. I guess that’s what I’m asking. Does it look like it, on the face of it?

C. Bellringer: I don’t mind if Malcolm or Russ want to add something that they’re able to, but that’s exactly at the heart of the nervousness I have with the self-assessments. We don’t even do it to that level. We don’t even look at it for plausibility. Unless we choose to do the further work, we’re giving you nothing additional. I mean, to do it on the spot, they might know something they can share with you. But at the end of the day, we haven’t done what the member’s asking.

I feel a little bit put on the spot as an office because the witnesses from the ministry are not here to answer the questions that they do have the information to.

I hope we’re not appearing to be not wanting to share information with you. Quite the contrary. Anything we know, we’re more than happy to bring forward.

B. Ralston (Chair): No. I think it’s important that staff not speculate. I think the answer that you’ve given is the right one — that the ministry would be better placed to answer those questions. That’s something that the committee will have to consider.

Are there any further questions, then, on this section? Okay. Seeing none, then we’ll move to The Status of Enterprise Risk Management in the Government Ministries of British Columbia. Go ahead.

R. Jones: Effective risk management is integral, of course, to the success of any organization, and risk management and enterprise risk management are the process of identifying, assessing and managing risk to achieve desired outcomes. Good risk management can mitigate risks and contribute to efficient, effective government and programs. Poor risk management can result in economic loss, missed opportunities or even loss of life.

Our 2011 audit was comprised of three different reports that examined enterprise risk management in all ministries from three different levels: central government, ministry and the program level. In their follow-up response to the ten recommendations in our report, the ministry reported six as fully or substantially implemented or alternative action taken, and four as partially implemented and no action taken.

We agreed with the ministry’s self-assessment for all but one recommendation where they originally identified that alternative action was taken, whereas we found that “partially implemented” was a more accurate assessment of the progress made to date. The ministry agreed with our assessment.

S. Robinson: Thank you very much. I do have a question about recommendation 2, where the ministry…. No action was taken. There’s just one sentence in the report. I guess it’s page 36, the last sentence in recommendation 2: “While these actions will improve accountability, leadership, nevertheless, needs to set the ‘tone at the top’ to ensure ERM implementation.”

I’m wondering if the Auditor General can, I guess, elaborate what you mean by “tone at the top” and what that would look like.

M. Gaston: This is something that was referred to in the original report on enterprise risk management. It was something that came up from our work — the importance of leadership in making sure that risk management is appropriately in place. It was one of the reasons that we made this recommendation in that report.

As we’ve pointed out in our audit work here, while this hasn’t been implemented, to an extent some of what we were getting at here is addressed through 3, 4 and 5. But there’s still no formal accountability.

If you look at page 39 of the follow-up report, in the self-assessment from government it does say that this will be considered as new accountability letters are produced, along with other strategic goals. But we don’t have any more information as to when that is likely to happen.

B. Ralston (Chair): Okay. I’m also going to ask Mr. O’Rae from the comptroller general’s office. I would imagine they have something to do with risk management in government. But go ahead.

C. Bellringer: The “tone at the top” is a commonly used phrase in audit-speak and in internal control reviews and so on. It’s sort of the first test within any control structure.

M. O’Rae: When much interest was expressed on this topic yesterday and it was delayed, I spent time last night
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e-mailing staff of the risk management branch to try to get you some answers. We obviously weren’t aware that there was a deep level of interest here, or we would have had somebody here.

Unfortunately, the executive director is on vacation, but I was able to get some good responses to a lot of the information. I’ll do my best to fill in some of the updates for you, and if there are any outstanding items I’m happy to take them away and get those answers for you.

Would you like me to address No. 2 first, or go through them all, if that’s okay? Happy to dive in. I’ll address No. 2 first.

As was pointed out, it is addressed partially through other recommendations. When I got an e-mail back from staff over the night, it is my understanding, too, that although it’s not in policy, the deputy ministers actually sign off on the respective ministry risk registers as well.

So although not embedded in their accountability letters, they do have to sign off on the risk registers for their respective ministries. I know it doesn’t answer the question fully. We will get a formal answer once executive is back to fully answer the question. But I did want to put that piece in, that that was missing.

Chair, I’ll defer to you if you want me to maybe cover off some of the updates on the other items that might answer some of the questions or if you would just like to field questions.

B. Ralston (Chair): Why don’t you do that? That may give rise to further questions.

M. O’Rae: Okay. Regarding recommendation No. 1, it says “partially implemented.” When I e-mailed the staff last night…. The self-assessment tool has been developed, and the first reporting back is expected this year. I think, as one would expect, “partially implemented” would be appropriate, given that the first ministry risk self-assessments are due back in early 2015. I think if we were to have this conversation at the end of the year, we would be moving much further along to the “fully” or “substantially.” Depending on how we define those terms on the spectrum, we would get there by the end of the year.

Regarding recommendation 3, it does reference “fully/substantially implemented.” The annual ministry risk register process of reporting back to RMB is in place. That does take place. There was reference by the Auditor General about the quality. I think we had some discussion yesterday that the process is in place and the quality will improve as this marches along. I did want to address that.

Recommendation No. 4. It says “partially.” I think the staff would now feel that No. 4 has moved along to “fully implemented.” Although not reported to the deputy ministers committee in June 2014, as stated, it was done in December of 2014. There was a slight delay in timing versus the language that was there, primarily due to spending some extra time, making sure that staff had the format and the content right before they delivered it to that committee. Again, information that the Auditor General obviously wouldn’t have until they have a follow-up conversation. I just wanted to share those with you.

Recommendation No. 5, “partially implemented.” I understand that there was a correction here. It should actually state “in our staff’s opinion, June 2015.” Until the ministry self-assessments are done…. These risk maturity self-assessments are determined on that, so we would need that information in order to conclude and address recommendation 5.

I think you’ll see that as 2015 marches along, this one will move further along, from “partially” to “substantially.” I think we talked about it yesterday. Some of these solutions aren’t just a quick-flare answer. They’re a little bit more dynamic, and they take a little bit of time to implement and do them right. I just wanted to comment on that.

Recommendation No. 6 states “fully/substantially implemented.” Comments here. RMB does prepare an overall risk register compiled from the ministry risk registers. That process is in place and happening. That’s how they meet the “fully substantial.”

Recommendation No. 7. Although fully or substantially implemented, I just want to comment that all risks are rated to according to likelihood and consequence. So that one is taking place.

Wrapping up the last three. On recommendation No. 8. Ministries do utilize the tools that are prepared and the guidance and training that is done by the risk management branch, our risk experts in government.

Recommendation No. 9. Although fully or substantially implemented, all ministries have identified an enterprise risk management coordinator and an executive lead on that very topic.

Number 10. As we would all agree, as recommendations come forward, management has, obviously, three options: agree with it; disagree with it; or implement slightly different actions that cover off the recommendation as well. On item No. 10, the staff response at this juncture is that the decision to maintain program-level risk registers is up to the discretion of the respective ministry executive, and as such, is not prescribed in the revised chapter 14 core policy. That said, risk management practices are to be found at the program level in absence of this strict requirement.

If there are follow-ups on that one or any of the other ones, happy to get those answers for you, either written or have an RMB expert come in and answer your questions. Hopefully, that gives you a little more colour to the questions that you might have. I did sense some interest yesterday, so I tried to spend some time over the hours last night and collect as much as possible for your information.
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B. Ralston (Chair): I think it is a little bit less pallid. Let’s put it that way.

In order to have a ministry-level risk register, do you not need to have a program-level risk register in every case? You’re assessing the risk across the ministry, and the only way to do that is to evaluate each of the programs. Am I misinterpreting this as saying that that’s not necessarily the case at the program level? If so, how can you have an across-the-ministry risk register?

M. O’Rae: That question might be better placed with the experts. My assumption is that every ministry is slightly different. Every program area carries a different level of risk. That needs to be assessed. Perhaps not every program-level risk register is required. I don’t want to presuppose that that is the case. I think it would be appropriate for RMB and perhaps some of the respective ministries. We can get an answer for you on that and compile it or bring someone back and just fill in some of those holes for you.

K. Corrigan: Maybe just an answer to that question would be…. Ron is keeping track of all our questions.

I have another question, going back to recommendation No. 2. I’m just curious about why it was…. This might be for the Auditor General’s office. This sentence: “Our 2011 audit found that RMB” — risk management branch —”is not in a position to hold ministries accountable for establishing an ERM process and that further measures were required to ensure accountability.” Yet we hear that deputy ministers are signing off on the risk register. What is the process? Why can they not be held accountable? Is that a self-assessment, or is that something that the Auditor General’s office determined?

M. Gaston: Well, risk management branch provides guidance. They provide the framework that the ministries use for producing their risk assessments. Risk management branch doesn’t actually hold each of the ministries accountable for the risk management process that they have in place. That was one of the reasons, as I said earlier, for the recommendation. Deputy ministers are responsible for what happens within their own ministries.

Risk management branch provides guidance, the framework. They will provide assistance if ministry staff want help with implementing the risk management guidance that’s in place. In terms of accountability, that, as we can see from the lower recommendations, is into the Deputy Ministers Council.

K. Corrigan: You’re saying, essentially, that the risk management branch can’t give direction. They don’t have the authority to give direction, right? But the accountability…. I mean, this would be a general recommendation to government — would it not? — that could be followed if there was a desire. I mean, the ministers could then say: “Well, this is going to be in your….” I don’t know. Is it the ministers who do the accountability letters for the deputy ministers? I’m not sure how that works.

It just looks to me like, you know, it doesn’t matter where it comes from. It could be there. Just been a decision that it won’t be there. Is that right?

V. Huntington: With regard to recommendation 7, you didn’t speak to the desirability of looking at mitigating the risks and keeping track of those types of mitigation actions. Do you know if that’s part of the registry and the work that’s being done?

M. O’Rae: Just one second here. I just want to take a quick peek. I’m just going off the notes, too, that I crafted quickly overnight from staff.

Your question: inside the risk register, are all the risks appropriately rated and assessed? Is that correct?

V. Huntington: Well, the recommendation and the comments are: “Beyond the identification and assessment of risks, however, is a crucial next step: mitigating those risks to an acceptable level. As noted under recommendation 3, the tracking of actions to mitigate risk could be improved.” Has that occurred?

We’ll move, then, to the next one, B.C. Hydro: The Effects of Rate-Regulated Accounting.

R. Jones: This dates back to our 2011 report around B.C. Hydro. We had two recommendations in that report, as members may have remembered. One was around: at the earliest opportunity we recommend that B.C. Hydro develop a plan that shows how they will recover the net deferred costs in its regulatory accounts. Then the second recommendation was that B.C. Hydro should start applying generally accepted accounting principles.

We went back and took a look at those two. On this slide you’ll note that we have $2.2 billion as the net regu-
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latory asset amount as of this past year. I think it’s now at $4.7 billion, if I’m not mistaken, so they have increased. We found that although B.C. Hydro had some plans to recover these amounts, it still lacked a comprehensive plan defining how these amounts would be recovered and over what period.

They have since come up with a report that does clearly show how they’re planning on recovering close to 80 percent, I think, if I’m not mistaken, of the regulatory accounts. They do publish this on their website and in one of their documents, so the plan is there.

What I guess we can say about it is only time will tell whether or not it works, because as you well know, the recovery of these rates is over an extended period of time, anywhere from six years to…. It could be even longer than that for some of the other accounts.

We also want to recognize that, for the second recommendation, currently the international financial reporting standards are looking at whether or not rate-regulated accounting should be allowed across the world. They are going to come out with a recommendation, I think in 2016, as to whether or not that will still be allowed. But currently B.C. Hydro is following what is allowed in generally accepted accounting standards at the moment.

I had one — page 44. The plan that you referred to…. “As stated before, we have not audited this plan.” Is there a plan to audit the plan? That $4.7 billion seems to be a fair chunk of change.

R. Jones: It is a fair chunk of change. We don’t have plans currently to audit the plan. We did inquire as to the assumptions underlying the plan, but we haven’t audited those assumptions to ensure that they’re complete. But we did have discussions with B.C. Hydro and have read through the plan that they have in place.

C. Bellringer: On the financial statement side we’re required to do a fair bit of work on the numbers. They have external auditors who are auditing the financial statements, and we’re having to rely on that for the purposes of signing off on the Public Accounts. So on the numbers side that’s one issue.

Following what’s going on internationally with the accounting standards is going to be an important piece because it can substantially change the bottom line in the Public Accounts. That’s a numbers discussion.

The other half of this is about management, and it’s about how costs are allocated. Should they be today’s ratepayer or tomorrow’s ratepayer? We don’t make comment on the policy, but the processes around it are still of importance to us.

We’re looking at, in our coverage plan, putting something in with regards to Hydro. I’m not sure that would be the most critical area that we’ll focus on, but there are any number of really high-risk and significant areas within the hydroelectricity that we could look at.

B. Ralston (Chair): The other thing on that page is that you make reference to a 1 percent change in the discount rate used to calculate pension obligations. You calculate that the cost of that would be plus or minus $300 million. Is there any plan to audit that, or is there any follow-up work being done on that, given that, again, that’s a fairly substantial number?

B. Ralston (Chair): Page 44, second paragraph. It’s one of the specific regulatory….

R. Jones: Right. Yes, it’s an example of what can happen, and it is one of the ones that is in one of the deferral accounts. It could go up. It could go down. And it’s looked at by KPMG when they do the audit of B.C. Hydro as to the validity of the number.

L. Throness: Mr. Jones, you were just saying that the CASB, I think, is still deciding whether or not to allow regulated accounting in the future and will come back with a report in 2016. In the report, in the fourth paragraph, it says: “In April 2014 the CASB adopted this standard…. We expect this standard to remain in place for many years….” Can you reconcile what you said with what is written in the report?

R. Jones: The CASB, the Canadian Accounting Standards Board — this was back when we looked at this, back in June of 2014 — was allowing all of the Canadian hydro companies to use what is currently in the U.S. standards around rate-regulated accounting until deliberations at the international level were complete. As you can see, the deliberations are going to take till…. They say 2016. It may take longer. So, yes, at this point in time the Canadian Accounting Standards Board has allowed all the hydro companies to continue to use rate-regulated accounting.

I mean, it gets very complicated when you start talking about ones that have moved to IFRS versus not to IFRS and all that stuff, but in substance, the companies in Canada are still allowed to use rate-regulated accounting.

L. Throness: Will you, or will the Auditor General, have input into those discussions?

R. Jones: Through the Public Sector Accounting Standards Board. The IFRS has got a discussion paper out that has asked for comments around the ability to use rate-regulated accounting, and they will be responding to that.
[ Page 618 ]

L. Throness: And you’re willing to say what the response of the Auditor General will be?

R. Jones: I haven’t completely read…. It’s about an 80-page document at the moment that has a number of questions, and the questions really relate to whether or not these deferral accounts, the regulatory accounts that are set up, are actually assets or liabilities. That’s really the crux of the argument, and it’s a complicated discussion. I mean, it’s not…. I’d like to say it was black and white. In this case, it isn’t, and that is the nub of the discussion right at the moment.

K. Corrigan: Just a question about the rate-regulated accounting. The impact has been, basically, a deferral of expenses of billions of dollars, which some people would say is more of a debt. I know technically it’s not. Or maybe technically it is. But it’s a debt.

So if the decision is made to use rate-regulated accounting…. Once a decision has been made, is it then sort of a hard thing that this is the number that gets spit out as a result, or can it be massaged in any way? Can you use some of it here, some of it there?

We know what the impact has been, and we have real concerns about that. We’ve expressed concerns about it. But how manipulativeable is it? Do you get what I’m asking?

There are very specific standards in the U.S. that say…. You just can’t take an expenditure and, just because you want to, put it into a regulatory account. There are conditions that have to be met to be able to do it.

When KPMG does the audit of B.C. Hydro and when we look at their working papers, we always look and they always look to make sure that any new regulatory accounts that are set up meet those conditions that are in the standards in the United States. For instance, if all of a sudden you had to give a 1 percent wage increase to your employees, it’s not something you can just sort of say: “Oh, we need a regulatory account for that.”

There are, as you say, a number of accounts here in this province — 27 or 28, I think, at the moment. They really represent, in theory, when B.C. Hydro puts forth their revenue request and their budget, deviations from those budgeted numbers that they’ve put forth to get rates for. For instance, one of them takes into account water levels. They go up and down each year, which impacts the amount of power and when it’s available. If it’s off their budgeted amount, then they take that amount and put it into a regulatory account.

There are also regulatory accounts for revenue as well, so it works both ways. Most of them are on the expenditure side, but there are some revenue ones as well.

K. Corrigan: I guess I’m trying to figure out how much discretion there is in all of this.

R. Jones: Usually most of these — sorry to butt in — have to go through the Utilities Commission as well. If the commission doesn’t approve them, they can’t be set up.

K. Corrigan: Okay. I had another question. I can’t remember what it was, though.

B. Ralston (Chair): In the meantime, then, I have one. The focus of the original report — and there was a pretty dramatic graph that made some comparisons to other public utilities across the country — was a very rapid escalation in the total dollar amount of deferral accounts. You said it was $4.7 billion now, in 2015, yet four years ago it was $2.2 billion, which is a very rapid escalation. And the projection in the report was a fairly steep curve into the future.

Obviously, I think the concern was expressed about the ongoing viability of the enterprise. How do you recapture that, and what is the impact on rates to industrial consumers and to residential consumers? It really does focus, ultimately, on future rates.

You say that KPMG…. When they’re the other external auditor, they look at this. Do you feel that there’s need, given the size of this enterprise and its public impact, that your office be further involved in auditing the plan? I know we’ve established that so far you’ve decided not to. I sense that the Auditor General had other priorities in dealing with B.C. Hydro, perhaps more urgent. But it does seem to me to be a pretty central question to the ongoing operation of probably one of the most, if not the most, important Crown corporation in the province.

R. Jones: I must admit that in this case I think this is another one of those circumstances where it would be very useful, if you want to really understand how this mechanism works, to have someone from Hydro come in and explain it. I think it would be probably very informative. They do have the plan in place, and I think when they explain to you, it may not get rid of all your concerns, but it will certainly let you understand how they’ve developed the plan, what their assumptions are and how they plan on recovering it.

B. Ralston (Chair): I’m sure what would be, in my view, of assistance to the committee is yes, to have someone from Hydro, preferably the CEO, come and explain it but also have, at the same time, the view of the Auditor General’s office about the efficacy and likelihood of the plan being achieved. To have that conversation, armed with that analysis, would be, I think, more fruitful ultimately.
[ Page 619 ]

C. Bellringer: We’re certainly staying on top of the deferral account. One of the parallels…. I don’t know if it’s an exact correlation, but as capital plans are in progress, as construction is taking place, the deferral account is going to go up.

I have a particular interest in the capital plans, which then…. By virtue of the fact of looking at a capital plan, you in fact end up looking at the deferral account. That was kind of where I was going in terms of saying that I’m not sure we’ll do a direct audit of how the deferral account is going to be taken into the rate-paying system but, rather, what the risks are around the overall capital rollout.

B. Ralston (Chair): And everyone knows that there’s a major proposal, Site C, costed variously at $8 to $9 billion, and speculation that it might exceed that if it proceeds — or when it proceeds, depending on your point of view.

L. Throness: I just note on page 42 of your report that as of March 31st of last year, 19 of the 27 regulatory accounts representing 80 percent of the total balance are being recovered in current rates. Does that mean that 20 percent were not being recovered in current rates or were delinquent in some way?

R. Jones: I know a couple of the accounts that aren’t being recovered in current rates, currently. One of them is around aboriginal costs. The information we’ve been given — and you’d have to ask Hydro, I think, around the rationale for it — is that they were awaiting government direction on how to try and recover some of the aboriginal costs.

L. Throness: I was just wondering if that 20 percent represented a gap in knowledge or you have knowledge that these accounts are not being recovered properly.

K. Corrigan: I wanted to go back to page 44 and the example that you used, that a 1 percent change in the discount rate used to calculate pension obligations would result in a change of approximately $300 million.

We know from various P3 projects across this province that in order to justify them, government uses discounts to net-present-value these 30, 35, 40-year contracts. In those cases as well, a 1 or 2 percent change — which seems to be very arbitrary; the discount rate can range from as high as 8 or 9 percent down to government borrowing, right? — makes a huge difference.

I don’t know if you’ve looked at this. This may be another thing that we would ask B.C. Hydro if we had somebody representing them here as a witness. Do you look at all at whether or not that discount rate is the appropriate rate? Is it something close to the government borrowing rate, or does it fluctuate, or is it defensible? I’m just wondering about that discount rate.

R. Jones: Yes, these discount rates are actuarially determined and in accordance with the standards set by IFRS. It was more just to give an example of the impact, and it could go either way. For the deferral account or the regulatory account they have for this, it could go down just as easily as go up, depending on those….

But no, it’s actuarially determined, and it’s looked at every year in the audit.

B. Ralston (Chair): Any other questions? Okay. We’ll then conclude our discussion on that topic.

Before we leave this, I think you touched on this in your opening remarks — the other self-assessments. There’s an opportunity if members have questions on any of the other topics that are self-assessed.

V. Huntington: I’d just like a bit of a discussion on the B.C. Transit ridership growth self-assessment. I’d like also to refer to both the Crown agencies board of governance self-assessments of 2012 and 2014, which was further…. Generally, I’d just like to get a sense of whether the Auditor General’s office felt that there was any real interest by Transit in the audit that you did and whether they were responsive or cooperative or less than interested in the fact of your being there and less than interested in taking advantage of what you had to offer.

R. Jones: Thank you, Member. Malcolm was involved in these audits as well as myself from a financial standpoint, because we audit B.C. Transit. I’ll let Malcolm talk first, and then I may add something at the end.

M. Gaston: Well, first of all, B.C. Transit was very interested in these audits and cooperated fully with them. In fact — I would say “unusually” when we’re auditing an organization like this — I attended two or three board meetings to discuss, initially, our plans and then our findings with the board.

R. Jones: I was just going to add, as well, that the two you mentioned we have in these reports. We also issued a third one about a year and a half ago, I think. It was a report that didn’t have recommendations. But it looked at governance, it looked at funding, and it looked at, I think, planning, if I’m not mistaken, and had a bunch of questions that we have put before the committee. It might be useful to get B.C. Transit to come in and maybe take a look at all three reports together and do that, because it is a very important topic.

I think I’ve mentioned before that the third report we put out is really a good one to stimulate some conversation and questions, I think, by the committee.
[ Page 620 ]

V. Huntington: That report is subsequent to the February 2014 self-assessment document you have?

V. Huntington: The reason I comment is that their responses in the audit of ridership growth were very pro forma, didn’t answer the specific recommendation. In a number of cases, where you were recommending that the Ministry of Transportation develop performance guidelines, Transit comes back and says: “Oh well, we’re doing this.” It’s just that their self-assessment is repetitive, doesn’t seem to answer all of the recommendations — sort of the specifics. I was curious. It seemed to me that there was just a total lack of interest, but you’re saying quite otherwise. They were specifically interested in what you were doing.

V. Huntington: All right. Well, that’s good, then. Thank you. You’re satisfied with the self-assessments and with what they’ve not done according to the recommendation?

V. Huntington: I think perhaps looking at TransLink from…. What is the date of the new report? Have we received that one?

R. Jones: Yes, you do have it. It’s on, I think, the list of reports to maybe take a look at in the future.

K. Corrigan: Just for clarification: this is B.C. Transit, which does not include TransLink — correct?

B. Ralston (Chair): We’ll move, then, to what was the first item on our Thursday agenda: the summary report. There’s also completed projects — that’s the December 2011 report, which has been dumped from our agenda a few times, so I’d like to deal with that now.

C. Bellringer: In addition to our public performance audit reports, we issue the summary report to communicate other matters that have come to our attention.

You’ll see from the presentation that follows that the nature of those matters is varied. Some are the result of what I call off-ramps. We may have something to report, but we decide not to complete a lengthy audit. Others of them are providing background information about our progress on such things as investigations. We intend to continue the practice of issuing these summary reports.

Today we’ve got three of them that we’ll take you through — issued December 2011, December 2012 and February 2014. Russ will take you through those.

B. Ralston (Chair): I think there are witnesses for the winter 2014 who are present, so we’ll get to them. I know they’re waiting — I’m sure expectantly. Okay. Away we go.

R. Jones: Thank you, Chair. Just before we start in on this first one…. I was looking at the reports over the weekend. Some of these date back to six years ago, and a number of them, you will see, also have had follow-ups done, which are the same self-assessment types. So here we go. But some are very interesting topics, too. In fact, they all are.

The first one is about organizational costing of fee-based goods and services. Fee-based goods and services, as you probably know, across various sectors can go anywhere from birth, death and marriage certificates all the way down to fishing and parking permits and all sorts of licences. Revenue generated on a yearly basis exceeds about $4 billion from these fees and licences, so it’s a substantial revenue producer.

We undertook this audit to determine whether the province is using appropriate costing models to make informed decisions in setting fees for goods and services and that they consistently apply those models and it’s transparent to everybody what these fees are. During our audit we noted a lack of transparency to stakeholders with respect to the fee-setting and approval process. At the time we did this, of the 2,332 fees tracked, nearly 30 percent had not been revised in over ten years. Overall, we found that guidance on fee-setting will not ensure that appropriate costing models are used or are applied consistently. This is when we were doing the audit.

The audit included six recommendations. You see the recommendations here, and you see the current self-assessment of those recommendations. I will just add that as of October 2013, according to government, all of the recommendations have been fully or substantially implemented, as you can see on this chart.

M. Dalton: You mentioned that quite a few of the fees haven’t been revised or looked at for the past ten years. Is there potential that there isn’t cost recovery on many of the fees, or don’t we know?

R. Jones: Thank you, Member. That was, as I say, at the time we did the audit. One of our recommendations, I think, was around the ministries taking a look at those fees and making sure that they were up to date. The self-assessment says that they’ve implemented it. We haven’t looked, so I don’t know.

M. O’Rae: No, I don’t myself. We’re happy to bring somebody to talk about that, or we can reply in writing to the committee to let them know that that is in fact the case, that the self-assessment is in fact as stated.

L. Throness: The government raises about $40 billion a year in tax revenue. Does that include the $4 billion in fees, or is that over and above the $40 billion that it raises? That’s as of the report in, I guess, 2011.

L. Throness: But they’re not included in the budgetary predictions of the government, the estimates.

S. Sullivan (Deputy Chair): I believe that some of these fees are actually taxes, or they’re considered taxes legislatively, and that you need to actually change the legislation, I guess, if they’re beyond cost recovery. Do you know if any of these get caught under that definition?

R. Jones: I’m fairly certain that these were under the category of fees. It’s separate from those that may be looked upon as taxes. They’re shown separately in the financial statements anyway.

S. Robinson: Actually, I just want to, I guess, get on the record some concern around the process. Even though the Auditor General has done a really fine job of qualifying when this happened, three years ago, we really don’t have up-to-date information. It almost feels, from my perspective, a little moot, because we don’t have any accurate up-to-date information to invite the ministry back to sort of see where they’re at.

There are so many years now that have passed that it almost feels like a fresh audit would need to happen because so many years have passed. I would hope that this committee could find its way to meet more regularly, to be more efficient and more accountable to the Legislature and to those who elected us to be here to hold government accountable. So it feels a little bit moot, from my perspective, to be going through this.

V. Huntington: I guess more for the benefit of, perhaps, the government members on the committee, I obtained…. It wasn’t easy, but I finally got a copy out of Finance of the master list a couple of years ago. I remember at the time thinking that we’ve looked at red tape thoroughly two or three times since the government took over, but they have never looked at whether or not these fees and structures are costed properly or are even necessary and needed anymore.

When you’re looking at over 2,080 separate fees, there’s a huge pull from the taxpayer from these accounts — $4 billion a year. I guess it also includes MSP, does it not? Does this include MSP as a fee?

V. Huntington: You don’t think so? I thought maybe it did, but if it doesn’t, that makes it even more significant.

V. Huntington: I won’t argue with that, but I’ll still say it’s $2 billion in fees and services. I really would think there should be a review by government of the necessity of all of these or whether they’re appropriate just as the recommendation is from the Auditor General. This has to be reviewed, I think.

L. Popham: Would the members of this committee be able to have an updated list, a master list of the fees?

R. Jones: You’d have to ask government for that, I think. I’m assuming it’s available, but I don’t know.

V. Huntington: Well, they can’t really hide it from us, even though I had to argue that point.
[ Page 622 ]

K. Corrigan: I’ll pass. I was just going to ask about the MSP, whether that was included in the $2 billion in health.

L. Throness: Just following on Ms. Corrigan’s comment, I think the committee would benefit from further explanation of how much of the $4 billion is accounted for by MSP and by tuition, which would probably be the two largest chunks, and there might be not that much left over. So if we could get more explanation on that from the Auditor General, that would be helpful.

R. Jones: The second audit in our 2011 report was on the family maintenance enforcement program. This program was created by the Ministry of Attorney General back in 1989. Its purpose is to monitor and enforce family maintenance orders or agreements. Anyone who has obtained a valid maintenance order or agreement can enrol in the program. It’s not just for situations in which maintenance has not been paid. It’s a program that’s offered to anybody that has one of these agreements.

In 2009-10 the family maintenance enforcement program served approximately 84,000 parents and 67,000 children and collected $173.5 million in maintenance payments. On average, recipients receive close to $400 per month, but the major problem was that late or missed payments are a concern.

In 2009 we began an audit of the effectiveness of the design and delivery of the program. This was phase 1. A closer look at the effectiveness of the program, based on outcomes and the governance model, would be the subject of future audit work if and when we undertook that.

Although administrative processes were found to be timely and accurate, we identified that poor contract management practices were exposing the ministry, the program and the contractor to unnecessary reputational risks.

In our report we explain that the ministry could improve contract management practices by defining goals and objectives in the contracts; establishing contractually binding performance measures and targets in contracts; ensuring that key decisions, discussions and approvals impacting the complex contracting arrangements for FMEP are adequately documented; monitoring contract performance and keeping records; reviewing management fees and operating expenses that are paid under the contract and subcontract supporting the program to ensure that value for money is achieved and demonstrated.

Our findings were communicated to the Deputy Attorney General in a management letter. That’s where we were at with that. There were no recommendations.

K. Corrigan: You know, I was surprised, actually, to see that something as important as family maintenance enforcement — the program — is contracted out by government, and it’s even more disturbing when you see the results of this audit. It seems like another example where there’s a major, major contract with government where there’s poor management of that contract and a lack of accountability.

We’re talking a lot of taxpayer dollars. We’re talking about increased levels of risk, poorly documented contractual changes, lack of ministry oversight regarding contract payments, etc., and then the response is pretty vague: “We’ve improved.”

I wanted to express my concern about it — that this seems to be just another major contract with government that is not being properly managed, or was not a few years ago.

One of the things that the Ministry of Attorney General, the Attorney General’s office, said is that some of this could only be improved if we have a new contract. It said that negotiations for such a contract are currently underway. I guess what we hear is that taxpayers’ money has not been looked after, but we’re going to do better in the future, which kind of concerns me.

I guess my question…. I don’t know if the self-assessment…. We don’t have a self-assessment associated with this one. Has it been self-assessed, and do we have any knowledge of an update? Was a new contract negotiated? I assume it was. Is it better? I mean, it’s the same thing that Selina said before. It’s so far back that everything could have changed, and it may be wonderful now.

R. Jones: Thank you for the question, Member. Because there were no recommendations in this report, there wouldn’t have been a follow-up done because there was nothing to self-assess against.

I have with me today Sheila Dodds, who worked on this. I’m not sure if, Sheila, you have anything else that you could add.

S. Dodds: Yes. When we were finishing up this work…. You’re right. It’s similar to an alternative service delivery arrangement, a large contract for that program. The contract had not been renewed for a period of time. There had been contract extensions at the time that this work was done.

We did maintain contact with the ministry. I’ve checked in from time to time to see where the contract negotiations have been at, and the ministry was taking
[ Page 623 ]
the findings that we have from that work and considering that in negotiating the contract. But actually, the last time that I had spoken to the key contact there, it had still not been finalized. It had been going on for a number of years.

It would really be a question to the ministry now to identify that it actually has been concluded. I don’t know for sure, but I think the last time I spoke was probably a year ago.

K. Corrigan: Just a follow-up, Chair. We have a contract. The Ministry of Attorney General has said that the only way we can fix this is to negotiate a new contract, and then they’ve gone three more years without negotiating a new contract. That’s essentially what you’re telling me.

S. Dodds: They were under negotiation on the contract with the organization, with Themis, at the time that this work was underway. Those contract negotiations were quite extensive, took a long time. You would have to ask the ministry at what point they were concluded.

K. Corrigan: So it may be that the contract has now been…. Oh, I misinterpreted. I thought you talked to them fairly recently.

B. Ralston (Chair): No. She said a year ago. So it may be premature to arrive at the conclusions that you’ve enunciated. But it’s certainly worth noting that there should be some follow-up here.

L. Throness: I just note on page…. It doesn’t have a page number. Anyway, on the second page of the thing it says that the contractual relationship was being executed in an inadequate way, exposing the ministry to an increased level of risk. When you find that there’s an increased level of risk that is not a finding of actual loss, of financial loss, that’s simply the potential for loss. Is that correct?

V. Huntington: Excuse me. Could I just ask whether there was any sense of privacy concerns throughout your audit? Did you express any indication that the ministry was not adequately protecting privacy of individuals through this contract?

R. Jones: The third one that we took a look at was management of student loans. Back at the time we initiated this audit, the loan administration process allowed students to apply for two distinct types of loans, one provincially and one federally. The eligibility criteria for both were the same. The objective of our audit was to determine whether the B.C. student loan program was being managed both to ensure that eligible students have equitable and consistent access to funding and to ensure that the necessary controls were in place to manage the loan portfolio.

We had planned to focus on examining whether eligibility requirements for receiving British Columbia student loans and loan reductions align with the province’s goal of reducing financial barriers; the province’s policies and procedures ensure that student loans are going to those who are eligible; and the province is effectively managing its student loan portfolio.

During the audit we discovered that the loan program was undergoing a number of changes, and there were plans to integrate the provincial and federal student loan programs. An agreement on integration was completed in December 2010 and came into effect in August 2011. The agreement includes the development of an accountability framework that will report on a broad range of program indicators, including measures of program outcomes.

With the changes in the program, we decided not to issue a public report, as our findings and recommendations would have had little relevance once it was integrated. We did summarize our findings and provided our observations to the ministries of Advanced Ed and Finance. Example: we had some performance reporting suggestions, scope of the internal audit process and management of default rates.

In conjunction with our audit of the annual summary financial statements, we continue to monitor how the management of student loans is done in the province. That’s all I can tell you on that one.

L. Throness: So 25 percent of the student loan portfolio four years ago, of $1 billion, was assessed as uncollectible. That’s really a huge number. How do you define an uncollectible? Or how do you arrive at the decision that it’s an uncollectible loan?

R. Jones: We don’t arrive at it. Government arrives at that number, and then we audit whether or not the judgment seems reasonable.

L. Throness: Did you look at the criteria for their judgement of uncollectibility? Can you comment on that?

R. Jones: Yes. We do look at that when we’re assessing the estimate. We look at the underlying rationale that’s used in coming up with that number.

L. Throness: How did the ministry decide that a loan was uncollectible? It’s a long time ago, I know.

B. Gilhooly: Essentially, it’s like what you do in the private sector. You look at the age of the accounts, and that determines the likelihood of collectibility, and what collection efforts have been successful or not in achieving getting some or all of the money back. A lot of it is on a case-by-case basis and a rollup of that as well.

B. Ralston (Chair): I think the report does note that HP Advanced Solutions has been hired to, I suppose, soup up the collection process, but I don’t expect there’s anything to report on the efficacy of that step or not.

M. Dalton: Assuming there’s over $1 billion now in outstanding debts and, as was mentioned, $250 million that’s uncollectible…. Is this since the beginning of time, or is it over the past ten years, as far as this figure? Secondly, how is this reflected on the books?

R. Jones: Each year that number will change. It’s a rolling number. The one that you see in this report was at March 31, 2011. I’d have to grab the public accounts to take a look at what they were for last year.

M. Dalton: Right. You don’t know how long this number goes on for? You don’t know if it’s from the 1960s or from…? How long does this carry on?

R. Jones: Again, when you’re assessing the collection of accounts receivable, you could have some in there that are greater than one or two years if you still feel that they are collectible. Normally, it might be 60 to 90 days if we’re talking about accounts, say, for commercial enterprises. But for loans like this, it may be one or two years or the life of the time that they’re in the university. It really depends. We’d look at the underlying assumptions as to how collectible those amounts are.

M. Dalton: I would assume that student loans, though, are after you’ve completed university, so it goes on for quite a few years afterward.

R. Jones: With my daughter as an example, once she is done university, she’s supposed to start repaying. That’s when you start assessing whether or not there’s going to be that repayability.

S. Gibson: Just kind of more of a process question. The Auditor General started to do a study of the management of student loans. As it was in progress you determined, because of the congruency between the federal government and the provincial, that it was inadvisable to proceed and prepare a report because it was in process. But you must have set a budget at the beginning.

All of these things we’re studying — they all have a budget. You could even attach that if you wanted to, couldn’t you? You could say: “Okay, we studied family maintenance enforcement programs. We budgeted $45,000, but we actually spent $55,000.” That’s probably something you do internally.

My question is: on something like this, where the process has been stopped, how do you budget for that internally? That would be of interest to me to know. Of course, you’re holding everybody else accountable, but you probably hold yourselves accountable internally as well. How does that work? That’s my question.

C. Bellringer: Certainly, we have that information available internally, and it also flows into our budget that’s submitted to the legislative committee that looks at it. We modify the kind of information we provide each year.

We certainly are looking at the extent to which it makes sense to show the cost per audit. Some of it depends on comparisons — compared to what? — and then you have to benchmark. We haven’t gone into it in a lot of depth, but across Canada the legislative auditors do compare some of that information to get a sense, and we would like to share some of that with the members.

S. Gibson: In the case of this one, you would have been under budget, presumably.

C. Bellringer: Yes. We’ve got 120 people moving in numerous directions at the same time. As soon as one thing stops, they get reassigned to something else right away. We have very little gaps in our scheduling.

B. Ralston (Chair): It’s a good discussion. I’m just mindful of the time. We’re making steady but pretty slow progress, and we do have witnesses that are waiting here. What I’m going to suggest is that we finish. We’ve still
[ Page 625 ]
got a couple more topics on this one. Then we’ll move to the Winter 2014 — skipping over the December 2012 paper, just because I do want to get to the witnesses that are here. It’s not to cut anyone off but just be respectful of their time.

L. Throness: Just a quick question. Is there a place in the public accounts every year where the government writes off some uncollectable student debt?

R. Jones: The next one is Managing for Results: Post-Secondary Accountability Framework Audit. B.C. public post-secondary accountability framework is a structured performance management and reporting program for the province’s public post-secondary system. At the time of our audit it included the Ministry of Advanced Education, four research universities, seven teaching-intensive universities, three institutes, and eleven community colleges.

The post-secondary accountability framework was designed to manage for results in five strategic areas. They’re outlined on page 15, I believe, of our summary report: capacity, access, quality, relevance and efficiency.

The purpose of the audit was to evaluate the extent to which the public post-secondary accountability framework has been effectively designed and is operating successfully to influence performance and achieve results.

After we carried out the audit, the Ministry of Advanced Education underwent significant changes in organization and adjustment. We therefore decided that preparing a management letter for the ministry in this summary report for legislators would be of more value than producing a full public report.

We found that the ministry’s governance and accountability mechanisms were not clearly linked, making it challenging for the ministry to monitor and hold institutions accountable for results that matter the most. It was also not clear whether the ministry was effectively coordinating with institutions to improve performance results.

There are the five recommendations. All of the recommendations have since been self-assessed as fully or substantially implemented by the Ministry of Advanced Education.

S. Robinson: I guess it’s more of a comment. Perhaps if there is some more substantial follow-up at some point or conversation….

At the very end — I guess it’s page 17, in the “Response from the Ministry of Advanced Education.” They respond in saying that they have surveys and that 94 percent of respondents were either satisfied or very satisfied with the education they received. The main flaw in that is that if you don’t know what other alternatives there are…. If this is the only place you’ve ever gone to school or you’ve only ever gone to one school, you don’t know whether or not….

I mean, you can say, “Yeah, that was great,” but it was your only shot at it, and you have no comparison. So it’s not actually a great response in terms of accountability, in terms of comparatives. I wonder if you might have some thoughts as the Auditor General, around…. Is that accurate, or are there better measures?

C. Bellringer: Just an overall comment. It depends what you’re trying to measure. And that was something that was included in the ministry’s response. We didn’t assess it any way.

G. Kyllo: To the Auditor General. With respect to the performance audit, I see there was a post survey that indicated, as you mentioned…. Overall, I guess what I’m trying to get at is…. When you complete your education, part of it is obviously to get a degree certificate. The university is tracking post education to determine those who’ve actually completed. Was there any work done on those that have actually found employment after?

Obviously, the goal and objective of the university isn’t necessarily just to give somebody a degree certificate but also to move them into a family-supporting job. I know that some post-secondary institutions or universities do a great job of assisting students with job placement, others not so much. I was wondering if that was part of the audit, or is that something that you’d give consideration to?

M. Gaston: That wasn’t part of the audit, no. We were looking at what was in place and to set clear targets, monitor accountability and so on. The audit didn’t look at the effectiveness of what was happening.

G. Kyllo: Okay. As far as universities, as far as post education surveys, are those done just two years post graduation, or are those done every year and each year — say, in five years after — to make a determination as far as which graduates are actually finding employment in their respective fields?

R. Jones: Member, I don’t know. I think you’d have to ask the ministry that.
[ Page 626 ]

V. Huntington: Very briefly. On page 17 under the response from the ministry they indicate: “While the Auditor General’s report focused on processes rather than outcomes….” Did they even understand what the recommendations were trying to get to — the issue of connecting delivery with outcome and performance? Is that the root of what you were trying to find? If they didn’t understand that, then have they even assessed themselves correctly?

M. Gaston: The audit was more looking at: were the right systems in place to have the right level of accountability there?

M. Gaston: But the audit didn’t look at how the universities or colleges were actually performing. I think the response that we have here is just extending into performance, but that wasn’t actually something that was covered as part of the audit.

V. Huntington: Yeah, I understand that. I just wondered if they understood what you were trying to get at. Thank you.

R. Jones: Thank you, Chair. The next topic that we took a look at was accountability for special education services. As you can see from the slide, in 2009-10 there were approximately 60,000 students in British Columbia in the public education system that were identified as having special needs — 10 percent of the total student population.

As many of you know, the purpose of special education services is to enable the equitable participation of students with special needs through the educational system. The Ministry of Education’s policy on special ed defines a student with special education needs as one who has a disability of an intellectual, physical, sensory, emotional or behavioural nature; a learning disability; or a special gift or a talent.

While conducting our work, we determined that rather than solely examining processes to ensure accountability for service effectiveness, the audit would provide more value if it focused on the actual effectiveness of special education services. As you probably noted, the report said that that would be the subject of a future audit. We considered the work completed to date to be phase 1, and it will inform our planning going forward in this area.

B. Ralston (Chair): In the audit plan, then, can I take it there is a plan to do a more comprehensive audit of this area of service delivery by the Ministry of Education?

B. Ralston (Chair): Understandably. I just thought that given what you said, that would be appropriate.

M. Dalton: One of the recommendations or discussions you have in the paper is about the communications and the understanding of special needs within the district as a whole — that the individual schools are doing a good job but just the communication of the needs within district is more in a deficit.

That was under BCeSIS. I know we have ministry staff. I’m wondering if you can comment if the new system that we were implementing — a lot of the schools, pretty much across the province — is going to be addressing some of these needs with regards to special needs and be able to track some of the students. Is that a question I…? We have ministry staff here. Are they to answer some of these questions?

B. Ralston (Chair): I don’t think that’s the prerogative of an individual member of the committee, but perhaps. Sure. I don’t know whether anyone here can answer that question, but perhaps we can inquire.

R. Jones: I was going to say that you probably need to ask the ministry staff as to whether or not that’s possible.

B. Ralston (Chair): I think the difficulty is when someone hasn’t had the opportunity to prepare an answer in such a critical area. It’s a little bit unfair to ask people to come forward with a wave of the hand, so I’m going to decline that temptation. But I think you do raise a legitimate point, and we may want to have someone prepared with an answer to come forward to the committee at a future date.

L. Reimer: That was one half of my question as well — was with respect to whether or not you could keep good records on BCeSIS and that sort of thing.

My other question is regarding the next phase that you’ll be doing. You looked at three districts in this particular report. Will you be expanding upon that, or will you be looking at those same three districts? What are your plans?

R. Jones: As we said, it is in our planning mix, but we haven’t determined yet whether or not we are going to actually be doing anything in this area. It may be one of
[ Page 627 ]
the topics we choose, but we have a huge list of topics.

S. Robinson: I do have a question for the Auditor General’s office. It refers to the comments made on page 21 about the provincial data and some concerns about educational outcomes. The Auditor General points out that the office will continue to monitor the issue. What does that look like, when you say “monitor the issue”? Does that mean that we’ll be getting another one of these updates?

S. Dodds: The “monitor” is really part of our planning exercise. We’re continuously, as an office, looking at risk areas and informing on what those performance audits will be in that coverage plan that Carol referred to. So every cycle when we’re looking at audit topics, we are, at a very general level, looking at that.

In an audit right now that we’re doing in education there is a place where we actually…. Part of our population is students with special needs. But it’s at a very general level.

B. Ralston (Chair): No further questions? Then we’ll move on to the next topic.

R. Jones: The next topic is looking at wireless networking security — No. 3. As you well know, we look at wireless networking every year in some respect. This report was in 2011. As we have reported previously, government organizations increasingly rely on wireless technologies to deliver services, provide access to information and improve communication and collaboration.

Just one thing to remind everybody. With the benefits of wireless technology, of course, come risks. When a wireless connection is used to transmit information, security precautions are essential.

Since wireless devices transmit signals freely through the air, anyone with the correct equipment and know-how could intercept transmissions and capture the information if appropriate security measures are not in place. As technology improves and we better encrypt and protect information, so do the tools to try and break through that encryption and whatnot.

The purpose of this, our third audit on the topic, was to assess whether two government organizations — in this particular one, the University of British Columbia and Camosun College — were adequately protecting the confidentiality, integrity and availability of information exchanged in their wireless networks.

One of the things that we do when we do these audits is we walk inside and outside campus buildings with special equipment and software to detect unauthorized wireless access and to determine the level of security that is installed on those wireless-access devices. We summarize the findings and recommendations in two detailed management reports to both institutions.

We also assess the adequacy of the security of the wireless connections when users were logged on to a network through wireless-access points. What we didn’t look at were security processes behind access points, users’ computing devices configuration and handheld devices.

The report contained several recommendations for both entities, and on this slide you’ll see that they’re grouped under the three headings that we looked at. A summary of our audit results is also shown on page 24 of the report. Progress continues to be made on the recommendations. Our last follow-up was done in October 2012, and the results are reflected here.

I have a question, then. Camosun College — from the look of it, there are several, it seemed to me, pretty basic things listed as not achieved. You say that was reported in 2012. Has there been any subsequent follow-up on some of these fairly basic…? Like assigning responsibility for wireless security.

R. Jones: The most recent follow-up was October 2012. I mean, I believe…. We do the audit of Camosun College, so our IT department does follow up on the ones that Camosun hasn’t been doing. I think the one that’s still outstanding is the passwords.

R. Jones: They still haven’t done anything according to the recommendation we have around changing passwords on a regular basis.

B. Ralston (Chair): Isn’t that…? I mean, I’m far from being an IT professional, but it seems to me that’s a very, very basic requirement of security.

R. Jones: It is a basic requirement, and I think probably you would need to ask them why they don’t think that that can be done.

B. Ralston (Chair): Okay. Well, I’d like to make a note of that. Maybe the president will want to come and explain that.

Okay. What we’ll do, then, is set up for the…. I think what I’d like to do is simply skip the summary report for December 2012 and move to winter 2014, because we have the witnesses here. I don’t want people to go too far, but we’ll take a very brief break, recess while we set up. We’ll get going in a real five minutes, not a notional five minutes.

B. Ralston (Chair): We’re going to now deal with the Summary Report: Winter 2014. The first topic is Health Shared Services B.C. We have with us Doug Kent, who’s the interim chief operating officer, Health Shared Services B.C.; John Andruschak, vice-president and consolidation lead, pathology and laboratory medicine, Lower Mainland laboratory services. And I understand that Manjit Sidhu, assistant deputy minister, finance and corporate services, Ministry of Health, is close by and will be here momentarily, but I’d like to get started nonetheless. So away we go.

R. Jones: The first topic in this report is on Health Shared Services — HSSBC, as everybody calls it. It was created to centralize the province’s health authorities’ non-clinical services, such as supply chain management and employee, finance and technology services. As identified in HSSBC’s mandate, the goal of this integration was to create enhanced value to the health care system through increased process efficiency, standardization, capital avoidance and leveraging of buying power.

A key element in creating enhanced value is the ability of the organization to provide cost savings through its control and management of contracts, especially those relating to the supply chain function. The supply chain function is responsible for purchasing, inventory, warehousing and delivery of health care supplies, and it accounts for over $1.9 billion in expenses annually. The projected procurement savings due to supply chain contracts from February 2009 to March 2013 was approximately $230 million.

We started planning an audit to determine if HSSBC’s publicly reported projected procurement savings were reasonable and a reliable indicator of HSSBC meeting its goal to provide enhanced value to the health care system. Given the complexity and limitations of the process and systems used by HSSBC to calculate the projected procurement savings, we determined that conducting an audit of the reported savings would be too costly to us and not an efficient and effective use of our limited resources at the time we were looking at it. Also, the projected procurement savings reported by HSSBC is an approximation and not a precise figure.

We are concerned that these limitations do not enable HSSBC and the health authorities to assess whether value for money is being achieved from the contracts in the overall shared-services arrangement.

Our recommendations, which you can see here on the screen, include that Health Shared Services enhance its public disclosure of projected procurement savings by — and as you can see, clearly indicating that the savings number is an approximation — including details about its calculation methodology and identifying the limitations of reliance on this approximation as a performance metric; and, secondly, that the Provincial Health Services Authority work together with HSSBC to address the limitations noted in our report, including the capture of baseline information on a go-forward basis for contracts that have not already expired since the creation of HSSBC.

We will continue to monitor the progress, and we may do a follow-up with additional work.

Just as a side note, during the planning we considered including the information technology part in our audit as well, because we’d heard a number of suggestions from across the landscape about that contract. Within the scope of technology services is oversight of contracts for desktop management services in the Kamloops data centre, for acting as the agent for the health authorities. The contract for DMS is part of a provincial contract with IBM. HSSBC and the health authorities were mandated to participate in using that. We will consider a future audit on IBM IT shared services going forward as well.

B. Ralston (Chair): Before I turn to Mr. Kent, I understand that John Andruschak was here and has left. Frankly, I’m surprised. I thought that he was here to appear before the committee. He seems to have taken it upon himself to leave. I apologize to members of the committee. I wasn’t aware that he…. He certainly didn’t speak with me before he left.

In presenting to the committee, I thought, first of all, we could just give you a bit of background about Health Shared Services B.C., and then we can speak to the Auditor’s findings.

We were formed in 2009, as was noted, to find savings through, basically, providing shared business services. We are a division of PHSA, but as a division of PHSA, we get strategic direction from a management board. The management board consists of the CEOs from the six health authorities and the Ministry of Health. As well, we have two independent members that have extensive experience in a shared service in private industry.

We’re member-funded. Often people are confused by our structure as a division. The best way to look at it is we’re a cooperative. We’re directed by the members, but the managing partner for that cooperative is PHSA. The funding we get on an annual basis is from the health authorities, so as we deliver as per our mandate, the savings that we generate through efficiencies or cost avoidance flow directly back to the health authorities.

As well, as you’ll note from our last point, we do our procurement activities through the enterprise resource planning systems of the health authorities so that any contractual savings, the difference between what was previously the price of a product and what is the new con-
[ Page 629 ]
tracted product, actually flow directly back to the health authorities. Because we use their systems, those cost reductions flow directly into the departments that are using that product. HSSBC itself actually doesn’t receive any of the advantage of the work that we do.

You can see that we’re a provincial service. We have a number of services. Supply chain was the first. And as I’ve noted, we deliver these services using the enterprise resource planning software, the ERP systems of the health authorities.

These ERP systems vary in age as well as capability. The other thing that they have is that we continue to use their nomenclature for the products that we’re purchasing. The reason for that is because clinicians and others get used to the nomenclature in those systems, and when they’re referring to “I want product X,” they refer to it as the nomenclature that’s in the system. If we were to change that…. One of the things that we considered when we first were set up was changing that, but one of the feedbacks we got from the clinical practitioners was that they would prefer we didn’t. So we continue to use their systems.

What we do is that when we do a sourcing initiative, we actually pull the data from their systems, and then what we do is go through a process of synchronizing, cleansing and coordinating that data so that we can understand what the provincial spend is and what the provincial utilization is on the particular product.

The other thing to understand is that we’ll do it for a particular area of practice. We’re trying to standardize the procurement of items across the province for a particular area of practice. So while we may contract for stents for cardiologists, we would not necessarily include in that stents for interventional radiologists. Another process would capture that.

We also have to work extensively with clinical practice to try and understand which of these products actually fit within their area of clinical practice and which ones are excluded. So there’s quite a lot of work in truly understanding the profile and portfolio of products that we’re trying to contract for before we launch into a contracting process.

This really speaks to the overall observations of the Office of the Auditor General in that with six different systems and with quite an extensive engagement in doing our data synchronization cleansing and then validation with clinicians, for somebody external to come in and do that work, they would basically have to redo that whole work.

The other thing is you’d have to actually understand the nomenclature within each of those systems. You’d actually have to sit with somebody within our organization and have them translate for you what that nomenclature meant. So it really takes away that independent perspective in that situation. Recognizing that, if you can’t do an independent audit of the work we’ve done, it’s difficult to state that it’s an independent review.

Of course, the projected savings. We use a standard supply chain mechanism of assessing the value of a contract that we write. We basically take this data, and what we do is we take historical consumption, historical utilization values. We take the price difference between the two, and we do a projection of what the value for the life of the contract is. It’s a standard practice within supply chain areas. The purchasing association has a well-defined practice.

Again, it’s a projection. It doesn’t guarantee that’s exactly how the health authorities will use it. If clinical practice changes in the life of that contract, then clearly, the amount of savings or the amount of procurement cost reductions that the health authorities will realize will change through the life of the contract. But it is a standard way of expressing the value of a contract within the supply chain area.

We do note the findings. The first one is that we needed to make sure that we were clear that this was a projection and that it was not accurate. We actually have done that. We have addressed that. In all our publications and on our webpage we have been clear about how it’s calculated, and we’ve stated that it’s a projection, that it’s an estimate rather than a hard, actual, realized savings.

The other point was to clean up our data as best we can. So we are in the process of actually launching a provincial procurement system for health care. With the provincial procurement system, it takes…. All of this translation, which currently we do manually, you’ll have through a standard procurement system. So it’ll be easier for external auditors to come in and audit the validity of our data consolidation, because it actually takes that whole process out of the loop.

The one area, though, that still will be a challenge will be the consultation with clinical practice about whether this product is used in their practice or not. Again, I would presume that an external organization could consult clinical practice independently of us and wouldn’t be reliant on us to do the translation.

In summary, we appreciate the audit and the observations. We have addressed the observations that were made. We’re in the process of implementing a procurement system. We certainly appreciate the value that it’s been given, the profile that it has raised and the complexity of actually generating the procurement savings.

B. Ralston (Chair): I have a number of questioners. I wanted to ask a question myself first.

I think this is a big idea. It’s a great idea, and it’s something that everyone would think would be effective in reducing costs — combining the purchasing power of all the health authorities.

I guess I’m just having difficulty understanding this variation in nomenclature. I don’t see that you would call a surgical gown or swabs or anything else other than a
[ Page 630 ]
single name. Where does the disparity in the nomenclature come in? Is that in specific drugs or surgical instruments? It’s just hard for someone who’s a layperson to understand. Perhaps you could explain that.

D. Kent: Some of the systems that we use, the health authority systems, are a 1980 version of computer software. They actually have limited fields, so they’ll only have 128 characters to put a description. If you’re actually trying to describe a drug with all of the different variables, what we do is we shorten up the words. If you ever watch Shaw or any of those TVs that have radios, you’ll often see that they — because they, too, use an old computer system — shorten the words up. It’s like texting, right?

The thing is that there was no one standard that said: “This is how you should shorten up a drug, with all its variables, into 128 characters.” So some health authorities would choose to do it differently. Let’s choose “needle.” Some would say that needle is NDL. Some would actually decide it should be n-e-e-d-l-e.

If you then say, “Well, I want a two-millimetre needle,” how do you do that? That’s the challenge. Each data field in each of those of ERPs — we have six — has a completely different description than what is used in a different health authority.

Our staff know that “NDL” in Northern Health means needle and know “NL” means needle in Fraser Health. When we pull data from those systems, we start to synchronize.

L. Popham: I have two questions. The first one is regarding the procurement contracts that are being signed. There’s a directive from government that 30 percent or more procurement contracts should be…. The goal is small business contracts. Is that something that is in consideration when you’re planning your procurement?

D. Kent: It’s something in our consideration when we plan procurement. In health care a lot of the health care products are not locally produced. But when we go to market, we certainly try and structure our RFPs to allow for local innovators. Clearly, local innovation, as well as just innovation — period — is a huge factor to be considered when we go to procurement.

L. Popham: Okay. My second question is around food procurement. Are food services part of the contracts you’re signing up?

D. Kent: We do contract for food. We typically use large distributors for our food.

L. Popham: Is there a breakdown on how much money is spent in the health authorities on food procurement?

D. Kent: Because we go through distributors, the distributors actually have that kind of information on how much is local and what isn’t. We get invoices from the distributor. They don’t break it down for us at the invoice level as to whether it was local or not. We have done a number of studies for the health authorities to support that, but it’s not directly and easily obtainable through these current systems.

D. Kent: Previous people have made freedom-of-information requests, and we have responded. It’s best to request that directly through the health authorities.

L. Popham: Just one more question. Would I be able to get a total of moneys spent and not broken down, through you?

D. Kent: Through us? Once again, because it’s through the health authority systems, it’s better to make the request to the health authorities. For us, we’d have to go around and consult. If you make the request to the health authorities…. It’s their system, and they can provide that information.

L. Popham: Maybe I understand it incorrectly. I would think that you would have a certain budget to work from, and would you not have line items that showed where money was spent, although maybe not detailed? Would there not be a food services line item?

D. Kent: Not within HSSBC. Within each of the health authorities there are line items.

B. Ralston (Chair): I’m having difficulty understanding your response. I understood that the purpose of the agency is to centralize purchasing and that you’re coordinating that purchasing on behalf of the six health authorities. Surely it’s pretty straightforward for you to compute a gross figure of something as basic as food without breaking it down into any other categories. Surely that’s something that you can do and provide to the committee, Mr. Kent.

D. Kent: If the committee was to request that, we could make the…. What I need to explain is that because we use the six different health authority systems to issue the purchase orders and they pay for it at a departmental
[ Page 631 ]
level, the actual cost of the food is actually within each of the health authorities’ systems at a departmental level.

Where we negotiate is the contract with the distributor. We make sure the pricing for the different food items is in the ERP. But if you’re looking for the individual cost items, that’s buried within the actual books of each health authority.

B. Ralston (Chair): When you say at the departmental level, then, you mean within each authority there are a number of departments and that there’s no aggregate number? I find this hard to follow, frankly.

D. Kent: Okay. I actually don’t know how the food accounting is done within the health authorities. Because we’re issuing the POs from each of the health authorities’ systems, the actual payment for it is done through the health authority systems. It’s not done through….

B. Ralston (Chair): What I’d like to get is what’s been requested. It’s simply the annual cost of food procurement for the health system as a whole for the total of all the six health authorities. I’m hoping that’s something you’ll be able to get for the committee.

S. Robinson: My question is related. If I understand correctly, you said it operates like a cooperative. So there’s sort of one procurement centre for all six authorities, if I’ve understood your description. How do you allocate costs or the savings to each of the health authorities? How does that get cost back?

If Fraser Health purchases more of this kind of needle, this very expensive needle, but Vancouver Island prefers a different kind of needle, do they each get costed separately? Or it is sort of one pot and then gets divvied up? How is that played out?

D. Kent: We use each of the health authorities’ systems — their PO and billing systems. If Fraser Health wants to choose a needle that’s under contract, we will issue POs from that from the Fraser Health system and we will pay for it from the Fraser Health system.

S. Robinson: I just want to make sure I understand correctly. So each health authority just buys its own, but it’s through a central purchasing group, which is what you do. But they each just sort of purchase, in some ways, from you.

G. Kyllo: My questions had to do around differentials with exchange rates between the U.S. and Canada. Obviously, there has been lots of change over the last four or five years. Are purchases always made in Canadian funds? Or are you running….? Or are the health authorities purchasing some products directly from U.S. distributors in U.S. pricing and some in Canadian?

D. Kent: The majority of purchases are made in Canadian dollars. There are some purchases that are made in U.S. dollars.

G. Kyllo: When there is a significant fluctuation with the exchange differential between the Canadian and U.S. dollars, how are those allocated as far as gains? Or potentially, now…. With the reducing value of the Canadian dollar for U.S. purchases, obviously the cost is going up significantly. Are you taking the exchange differentials into consideration when you’re identifying the potential savings that you’re providing to the health services?

D. Kent: For contracts that we’re signing now, we do take that into consideration. If, because of the exchange rate change, the price was actually to go up on a product, when we calculate our savings, we actually show that as a cost increase rather than a cost reduction. What we report is the sum total of both cost increases and cost reductions.

G. Kyllo: Do you keep track of what percentage of purchases are products that are largely manufactured in the United States versus those that are manufactured or produced within Canada? And is there, I guess, a plan or focus on trying to increase your procurement for Canadian goods and services?

D. Kent: The challenge is that while we may purchase a product from a Canadian company, it actually may have been made in Europe or the U.S. or Asia. If you’re wanting us to track origin of manufacture, that’s difficult to do.

G. Kyllo: So there’s no real consideration of that, but you are able to determine, obviously, Canadian versus U.S. companies you’re procuring from.

K. Corrigan: I have a few questions. When you’re procuring, how do you deal with the issue that a particular health authority, or even a subgroup of that, had preferred a particular type of product? Do you run into problems because of that, that there are preferences?

If you’re buying in bulk, essentially — you’re using the purchasing power, I would assume — has that created
[ Page 632 ]
tensions with various health authorities or groups of doctors or whatever because there’s more of a limitation on flexibility in terms of what products can be purchased?

D. Kent: The process we use — I talked about it — is we engage the people, knowledge leaders in their area of clinical practice, when we start our sourcing initiative. What we really talk to them about — and we talk to a group of them — is: where are the opportunities to standardize on the products within your area of practice? We ask the question: what products do we need to be differentiated, because of clinical outcomes, versus which ones could be standardized because they have a limited impact on clinical outcomes?

That committee that guides our whole sourcing initiative — we go through that. If it needs to be differentiated for clinical practice, then we contract recognizing that differentiation, but if it can be standardized, we contract based on the standardization opportunity.

Because the physicians and clinicians have been involved in that process, for the most part we get support. They’ve had a voice through the whole of whether you standardize or differentiate. It can be explained to other practitioners as to why you standardized and differentiated. While almost intuitively you’d believe that there is a tension, the process actually takes most of the tension out.

Does that prevent tensions with some practitioners who have a particular favourite product that their knowledge leaders felt could be standardized and they feel it doesn’t? We have staff that we engage with and work with, and we engage with the health authorities, clinical practitioners and VPs of medicine to work through those processes.

K. Corrigan: Thanks for that. I wanted to go back to this savings of $230 million, the approximate savings of $230 million, and the inability of the Auditor General’s office to validate that. I understand that there’s a difference in terms that are used, but I’m not sure how it is that if the Auditor General’s office can’t in some way validate that, that you can.

Would you not be able to provide the information to the Auditor General’s office to say how you got that number, at least? I mean, maybe we wouldn’t get to the audit level of assurance, but surely some level of assurance. I’m just trying to figure out what that process was and how, if they can’t do it, you can say it was $230 million.

D. Kent: I’ll let the Auditor General’s office speak to that. But we pull the data. We do have good data through a multimonth effort to clean and synchronize our data. We’re pretty confident of the data that we have and the utilization, so we’re confident about the number that we’re publishing. But the auditability, I think, is more in that area.

R. Jones: It was the auditability that we were having a great deal of difficulty with. We were told, in a number of cases, it could take several months to pull all the data that we needed to come up with a baseline number to compare against even to determine whether or not the savings were accurate.

They did provide us with the methodology, in terms of how they went about it, but it was just going to take so long for us to even try and audit it that we felt it wasn’t worth the effort at this point in time.

K. Corrigan: Just a follow-up on that. Were you confident at the Auditor General’s office that in fact the data did exist, if you could get at it, to have some level of comfort that the work had been done? I don’t understand. If they can’t pull it out, how can it be that they even know that there’s $230 million?

Did you ask those questions about, “Okay, how do you get there? Where’s your data?” — even if we can’t. There’s some system that’s saying $230 million somewhere.

R. Jones: We did ask the questions. As we’ve stated in our report, they are projections. As you’ve heard Doug explain, the big problem was trying to know whether we had complete…. You know auditors. We like to be very complete in what we’re looking for. With the various ways that products are labelled across the six different health authorities, it’s a huge task.

As Doug has alluded, a lot of it was manual, and when we took a look at the cost-benefit to try and gather all of that audit information for us, I mean, it would have taken probably more dollars than the savings, maybe, to get fulsome enough data for us to audit it properly.

V. Huntington: I also have a couple of questions. But just to follow-up on Kathy’s comments…. Judgment and experience are always part and parcel of any good organization, but I don’t know how a purchasing organization with the complexities of your buyers — i.e., the health authorities — can possibly do the job without some standardized format.

I think that you’re just going to have to take the bull by the horns and tell the authorities: “These are the standard purchasing numbers. You’ve got six months to figure them out and get back to us, and that’s what we’re going to be doing.” Otherwise, there’s just chaos out there and chaos within your organization.

Now, an individual might have the judgment and experience to know NDL versus needle versus needle 341012. But if that individual — poof! — disappears, then the judgment and experience you are totally relying on is out the window. You have no succession plan, so to speak. I just don’t know how the organization can be effectively and efficiently run without a standardized procurement system.
[ Page 633 ]

D. Kent: I’m delighted with your support, and that’s why we’re installing a standardized procurement system.

V. Huntington: Let me perhaps say, respectfully I think, that it flabbergasts me that an organization as large and as important as yours would be in the business without some sort of mature data collection and mature procurement system. I really hope that there is a lot of attention being paid to getting this on line and standardizing so that you don’t have to rely on judgment and experience.

I just personally find it difficult to accept the comment here, where completion of an audit would rely on the judgment and experience and would thus threaten the independence of the audit. That just can’t be allowed to exist and be maintained. Business practice requires you to standardize these approaches, I would think. At any rate, that would be my comment.

I’d like to go back to the discussion, and Greg alluded to it, on Canadian distributors or innovators and Lana’s comment about this requirement somewhere within government that purchasing be 30 percent B.C. innovators and businesses wherever possible. You said — and I think I’m quoting — that you try to structure the RFP for local innovation. Could I have your opinion on the extent to which bundling in big contracts thus eliminates local innovation?

D. Kent: Okay. Our standard policy is to try and not bundle because of the impact it has on innovation, okay? If there’s a good business reason for bundling….

The other thing that you have to appreciate is that clinical products…. There aren’t a lot of local manufacturers that make a lot of our products. There’s also the fact that often you get the local innovator who’s trying to generate a product, and they need to go through the Health Canada process. We need to purchase products that both meet regulatory standards but also that are clinically acceptable. So we do that process.

When we structure the RFPs, when we structure competitive bids, we try to structure it in a way that allows for local as well as small innovators to build and contribute and participate.

V. Huntington: I’d like to pursue this a little bit. Perhaps I’ll pursue it more formally with the organization itself, because this is not happening.

If, for instance, you’re negotiating a contract with Johnson and Johnson yet you know that a response to an RFP is going to come in from a local manufacturer that is already certified by Health Canada, who is a specialist in a single product, who can meet a decent bid, why do you not structure your contracts to eliminate from the bundling the single product that a local manufacturer wants to bid on?

The bundling is absolutely negating the ability of any small company in this province from participating in your RFPs.

D. Kent: I think it would probably be more useful to deal with the specifics because I can think of a number of situations where we have gone to market, which has allowed local as well as Canadian innovators to contribute, and we haven’t bundled. I mean, without knowing the specifics of your example, it’s hard for me to respond.

V. Huntington: Well, I’ve certainly been in discussion in some depth with your organization about this. I’ll come back, then, Mr. Chair.

B. Ralston (Chair): There are a number of other questioners. I’m going to go to first-time questioners.

L. Throness: You estimate that you save about 10 percent of expenditures on $2 billion worth of expenditures, which is, I think, a really good news story. From where does the bulk of these savings come? Are there opportunities for further savings, for more than 10 percent? What do you look at in the future as being further opportunities?

D. Kent: Again, the number we use is an average. First of all, not every initiative we do generates savings, okay? Some generate significant savings.

Where do we focus? When we prioritize our work, we focus on where the biggest amount of money is spent within health. That has a tendency to be in what we call the high physician preference areas — cardiac, orthopedics. So those are the areas that we focus on. Drugs are where we focus on. We think there’s a bigger opportunity there because of the fact that they’ve…. They’ve been difficult to contract for before because of the fact that we have physician preference.

Those are actually where we’ve received some of the most significant savings, if we can use that, or reductions in cost. If you can get physicians engaged in a standardization conversation, you can then actually get significant savings through that process.

There have been some non-clinical preference items — food is an example, tongue depressors, gloves. All procurement organizations in health care have contracted those for years, and the opportunity to drive savings in that area is low. So we focus on the biggest bang for the buck and where the most bucks are spent.

L. Throness: What do you see as a future opportunity or opportunities to increase savings even more?
[ Page 634 ]

D. Kent: The opportunities on the procurement side are in really continuing to look at those high physician preference items and continue to work with the physicians on standardizing where we can. That actually gives us the potential to deliver the most savings.

R. Sultan: Just to confirm again the scope of what you’re trying to manage here, the total dollar volume each year and the number of items that are in the system — can you give us a rough idea?

D. Kent: The total dollar is about $1.9 billion that we deal with, that we’re contracting, that we manage on a day-to-day basis. We do about 1,200 contracts a year. The number of items that are in the systems — there are about 60,000 items that we purchase every year.

R. Sultan: Does that involve some sort of a bidding in the negotiation process, I assume?

D. Kent: It involves bidding in negotiation process. Of course, in pharmaceuticals you also have branded drugs where they are truly a sole supplier because they have the patent.

R. Sultan: With all the data you’re centralizing, I assume you can start to form some pretty good opinions, not just on price but on consumption patterns. Are you pursuing that efficiency angle?

D. Kent: That’s one of the reasons why we’re pursuing the provincial procurement system and a single procurement system, in that that will provide us those patterns, which provides us the next opportunity.

L. Popham: I’m just wanting to get back to the food procurement again. So $1.9 billion in total, but we don’t know how much is spent on food contracts.

D. Kent: I think I’ve committed that I’ll come back to you. I just can’t tell you off the top of my head how much is on food.

L. Popham: But if we needed to break things down into different health authorities or request the type of contracts or sourcing of food contracts — which province, if it’s from the United States — it’s almost impossible to get that information from the health authorities. It’s completely…. I’ve tried. In most cases it is not information that’s disclosed at all.

How then do we know if we’ve had any savings at all in food procurement if we have no idea what the health authorities are doing? Or perhaps the health authorities share that information with your department. I don’t know. Who’s looking at these numbers to see if there are any savings?

In the Lower Mainland I know, for example, hospital meals alone — it’s about $50 million a year. That’s including the Sunshine Coast and part of the valley. That seems like a really big number to not be one of the highlights in your work.

D. Kent: I don’t want to leave the committee with the impression that we haven’t contracted for food. We have contracted for food. We contract with distributors. Food is an interesting situation because it’s a commodity that’s volatile, right? When you do food contracting, you have to allow for that volatility. But we have the contracts with distributors for food. I don’t want to leave you with the impression that we haven’t contracted for food. It’s the detail. How much did which health authority spend and how much is local — I don’t have that information.

L. Popham: Just one follow-up. If it’s that volatile, I would say that it’s pretty hard to project any savings.

D. Kent: What you can do, though, is you can project savings based on the administrative fees that are charged for procuring and distributing the food.

L. Reimer: I’m just trying to get a sense of the system, as well. So you work very closely with the health professionals. Let’s pretend, for a moment, you’ve procured a contract for heart stents, and then a physician may decide that he wants a different type of stent. Then he’s going to come to you to tell you that he wants a different type. How often does that happen, and what is the process for that, if somebody wants to change something that you’ve already made arrangements for?

D. Kent: Stents is a good example. For the most part, it doesn’t happen that often, but based on patient condition it might occur. Certainly, we aren’t in the job of telling a doctor what they can and can’t buy based on…. We don’t practise medicine. If they come along and say, “We need this stent for this patient condition,” we’ll buy it for them.

D. Kent: It’s fairly quick, yeah. There’s another PHSA agency, Cardiac B.C., that does review those with the clinical practitioners, but we will purchase it if a doctor asks for it.

S. Gibson: I had the privilege of being involved in a manufacturing company. The people who purchased from us would order ahead of time. We would manufacture a particular item for them, and then we would store it in our warehouse. We’d give them an extra better price for that, so if we had a quiet time — when maybe the week wasn’t going quite as busily as we thought — we would make more of these particular items, and then we’d store them. Then when our fax machine came up with the PO, they were all ready to go.

Is that an innovation that you look at? Will you talk to your suppliers and say: “Look, we’re going to order way ahead of time. You can make these, and we’re going to order sporadically throughout the year. We don’t know how many we’re going to order, but we are going to order from you”? We found that was great for us, because we made good production, kept our employees working, but we also gave them a price advantage. Do you use that kind of…?

D. Kent: Yeah. And where there’s volume — things like gloves, gauze, IV solutions — we follow that practice. Where it’s cardiac pacemakers and stents, we don’t follow that practice. In fact, with those what we do is we ask the manufacturer to hold it, and we draw from them on an as-required or a request basis.

Those are expensive items, and you don’t want to be building…. Technology changes on those as well, so you don’t want to be pre-buying a lot of those.

But on IV solutions — that stuff we pre-purchase and they pre-deliver, and we get savings through that. We’re able to streamline our logistics systems as well.

B. Ralston (Chair): Members will have noticed that it’s past 12, but I propose to keep going to address this topic. Then what I’m going to suggest is that we adjourn very briefly, grab some food and then continue with the other topic. There are people who, I think, want to get away early in the afternoon at the very least. So we’ll just continue, if that’s agreeable.

G. Kyllo: Doug, obviously there are considerable savings that have been achieved by the consolidation of the buying within British Columbia. I also understand that when procurement contracts are signed with drug companies, there’s a confidentiality agreement which precludes you from sharing pricing with other provinces. You may think we’re getting the best price on the planet for a particular drug, but Ontario may be paying a fraction of that cost.

Have you looked at expanding the buying group to include other provinces, where three or four provinces might look at consolidating their purchases together?

D. Kent: Yeah, there are a couple of things that we do in that space. First of all, if we could talk about oncology drugs, because they have the tendency to be the most expensive of the drug portfolio.

There’s actually a pan-Canadian procurement organization that does oncology drug purchases now, so we collaborate with all the provinces across Canada. We really manage the overall of what’s called the listing process so that we can negotiate the best price for Canada, not just B.C. Each province takes their turn at negotiating the best price for Canada, rather than B.C. That’s actually been a great program and has delivered significant savings for health care on oncology drugs.

The other thing that we do is we participate in a national group purchasing organization. Most of our generic drugs are actually procured through that national group purchasing organization. That’s where we have…. Again, we’re a member. It’s a cooperative.

They go out and contract for all their members. The one that we belong to has got the vast majority of the provinces in Canada participating in it. So for generics, we’re pretty comfortable that we get the best price for Canada. B.C. gets it, but also we’re getting the same price as Ontario for those generic drugs.

Then there are some specific ones. What we do, the way clinical practice…. There is a difference in clinical practice between central Canada, eastern Canada and western Canada. From time to time we collaborate with Alberta, Saskatchewan and Manitoba on the procurement of drugs that are more specifically western Canadian–based.

V. Huntington: I just wondered if…. I guess the bundling. I just want to make one other comment with bundling, perhaps to the Auditor General. When you’re negotiating a contract — say, for gauze and bandages — where the volume is high, and Johnson and Johnson says, “Okay, we’ll give you that price if you take these other products too” — and that’s the bundling — does the Auditor General ever look at that level of procurement to determine whether there’s any risk for conflict in those types of negotiations?

C. Bellringer: It’s a complicated area. I’d say the one part of it that I still have difficulty with is the extent to which there’s non-disclosure of pricing and the non-disclosure of procurement. It’s something I certainly push to the extent I can. I appreciate that it gets included in agreements, but to the extent that it can be removed from that, that actually is probably — in my view, and it’s anecdotal — the greatest cost driver if that information is out there. We did see that a lot of the value-add practice was something that’s changed across the country in the last couple years.

V. Huntington: I just think it’s open to nefarious activity, too, and that’s one of the things that concerns me.

I’ll go to your comments in your reply that the savings projections rely “on the health authorities using the contracts we negotiate.” But your mandate is to provide health care with the opportunity to reduce their costs, not to enforce the reduction in their costs. What percentage of your purchasing contracts aren’t taken up by the health authorities?

D. Kent: The contracts that we tracked and have done studies on and chosen to do deeply — we actually find our compliance rates are fairly high. The point of that comment was similar to what was asked before, which is: if a doctor says, “This stent is required” or “This pacemaker is required,” and it’s not under contract, we’re not going to force the doctor to use the contracted pacemaker. They need to make the decision that’s most appropriate for the patient. The contract is there to provide the health authorities the opportunity to save.

V. Huntington: Okay. So the health authorities aren’t required, on even the volume items, to purchase through you?

D. Kent: Because we are the purchaser as well, on volume items they’re almost 100 percent compliant because we manage that side of the business.

V. Huntington: So in that case, there’s not a…. It’s not like food, where you’re saying the health authorities go straight to the distributor you’ve contracted.

D. Kent: Let’s be clear on food. We contract with a distributor, and the health authorities use the distributors we contract with — 100 percent.

D. Kent: Correct. The volume items we purchased outright. With food we use a distributor.

K. Corrigan: I have two questions. I was wondering if you take into account the loss of, maybe not flexibility, because you’ve talked a little bit about that, but time and the added piece in the chain. Whereas health authorities — or even hospitals, I think, at one point — used to be able to directly purchase…. They could go locally and purchase, and it would be right there.

Do you evaluate and take into account the fact that through central purchasing there are savings, which are a good thing, but then timeliness is perhaps lost, to some degree, for the health authorities or individual hospitals because they have to go and purchase somewhere else? Particularly I’m thinking of Northern Health or Interior Health or something. Then there are delivery issues and so on. How do you manage that, and do you take it into account?

D. Kent: We haven’t put any additional barriers on an individual purchase basis. If you’re a nurse who requisitions, on a doctor’s instructions, a stent, that requisition flows to our staff. Our staff will purchase off contract if it’s on contract. If not, we’ll purchase off contract. It gets delivered. We haven’t changed that system at all. From an overall responsiveness perspective, I would say that system is just as responsive as it always has been.

Interior and Northern. I would suggest that what we’ve tried to do on bulk items is actually improve the logistics system and make it more responsive to those needs. On unique clinical items, the fact is that Prince George is a long way away from Vancouver. If you’re shipping a knee in that’s unique, it’s going to take just as much time as before HSSBC.

K. Corrigan: So you’re saying that there is not added time, because there’s essentially an added step in some cases. Somebody doesn’t come and say, “I need product A,” but you can’t get to their request for four days or something like that.

D. Kent: We haven’t done that. Those people who cut the POs still exist in those health authorities. They still use their systems, so it’s still just as responsive as before. I would say that in some cases we’ve improved the responsiveness.
[ Page 637 ]

B. Ralston (Chair): Okay. Well, unless you’re going to ask it now…. I don’t have any other questioners on the list, so I’m going to….

Unless there’s any summary that Russ or Doug Kent want to make? No. Okay, then we’ll consider that one finished.

What I’m going to suggest is that we recess until about 20 to one, and then we’ll resume a little bit early just because I’m trying to accommodate the people who’ve come over from Victoria and want to get back there sometime this afternoon.

M. Dalton: We’re actually scheduled until one o’clock. Our Deputy Chair isn’t here. We’ve actually gone over it by 20 minutes. I can appreciate that there other visitors here, but if we could start at our scheduled time, that would be appreciated.

B. Ralston (Chair): Well, if there’s not a wish to accommodate them by starting early…. I don’t know.

G. Kyllo: In all fairness to our vice-Chair, who’s away, I think that we should probably reconvene at the scheduled time.

B. Ralston (Chair): Okay. Thank you. We’ll reconvene at one, then, given that view.

B. Ralston (Chair): Good afternoon, Members. We’re going to resume consideration of the Summary Report: Winter 2014. This section will be considering the report on K-to-12 funding allocation model. We have with us from the Ministry of Education: Brian Jonker, executive director, knowledge management and accountability; Deborah Fayad, assistant deputy minister, resource management; and Michael Lebrun, funding analyst, resource management division. Welcome to everyone.

I’ll turn it over to Russ to lead off on behalf of the Auditor General’s office.

R. Jones: The second topic, the final one to conclude on in this report, is the K-to-12 funding allocation model. This wasn’t an audit that we did. The purpose of our project was to produce an information resource that would help the public and legislators better understand how the K-to-12 funding allocation model works. The question of whether there is enough money in the system and whether it is allocated effectively was not within the scope of this project. Just to make that clear.

During the planning phase we determined that completion of the originally intended project was not the best use of our resources as the Ministry of Education already produces numerous documents. The fact is it was just that the information is fragmented and not always easy to find.

What we did was we provided the ministry with our recommendations in a management letter to help them enhance the funding model information going forward and to better meet users’ needs. I’ll let Deborah tell you all about that.

D. Fayad: This audit was information about the K-to-12 funding allocation model. As the assistant Auditor General said, we received a management letter. We agreed with all of the recommendations and are taking action.

The recommendations. The first one centred on making the information easier to access, to help stakeholders understand the model and the impacts that the model has on school districts, stakeholders and students. They recommended that there be more information about independent schools so stakeholders would better understand the independent school system and the funding provided, and disclosure of adjustments to the K-to-12 funding model and the role and composition of a technical review committee that made recommendations about funding model changes.

The first recommendation. The ministry is committed to providing better information to stakeholders and the public in a transparent way to better understand the funding allocation model. We have redesigned the webpages to better consolidate the information. These webpages will include information and links to operational funding for both public and independent schools, capital funding, managing facilities, how funding decisions are made and other topics, accessible from a one-stop shop, one single location. This website redesign is scheduled to be completed by March 31, 2015.

For independent schools, again the recommendation was to make it easier to understand information. There is information about independent school grants in the public accounts supplementary schedules, but we are looking to provide more information about independent schools and, again, redesign the website and consolidate that information in with public school funding information.
[ Page 638 ]

We have developed a report, and since we filed this presentation, there is a report now on our website. It provides summary information about independent school enrolment and funding. That is now available on our website.

The third recommendation is regarding adjustments to the K-to-12 funding models so that those are transparent. The technical review committee is a committee of myself and ministry staff with three superintendents and three secretary-treasurers from school districts. The terms of reference for that committee and the names of the members are now on our website. Letters advising secretary-treasurers of changes to the public school operating grants, formulas, will be placed on our funding webpages for the ’15-16 school year in March, when we announce the grants.

That was all the recommendations and our actions that we have planned and have completed.

L. Reimer: This actually is going to be very helpful for MLAs because we deal with a lot of this type of information on a very regular basis, so I’m really pleased about it. Thank you.

My question is with respect to adjustments to the K-to-12 funding model. I’m just wondering when that came about. Obviously, we know sort of when it’s going to be completed, but I wasn’t aware of it.

D. Fayad: There are no planned adjustments. I think the recommendation surrounded around making sure that if there are adjustments, they would be posted to the website. The committee, on an ongoing basis, takes input from various stakeholders about changes to the funding model, analyzes those and then makes recommendations to the minister. There haven’t been any changes to the model since, I believe, the ’12-13 school year.

L. Reimer: Okay. So these changes to the public school operating grant formula that you make reference to here…

B. Ralston (Chair): Michael Lebrun, you look like you were going to chime in there.

K. Corrigan: I was a school trustee for many years, so I closely watch what’s happening in the world of public education, and I think it’s the most important thing that we do — educating young people.

I wanted to ask about this providing more information on websites and so on and how detailed it’s going to be. An overall explanation or a breakdown of the model is a good thing. I’m assuming that’s available. That would be globally saying, “Here’s what the operating grants are going to be. Here’s what the variations are. There’s geography, transportation — the various things. Enrolment decline. All the components and so on,” which is also good. But is that going to be broken down to district by district? It is? Good. Centrally, on the…?

D. Fayad: Yes, it already is. All of this information was actually acknowledged by the Auditor General as being available. It’s just that it was fragmented, so some information was on different websites or a different webpage. What we’re doing is bringing it together.

We have made some progress, but it’s still…. But all of that information, on a district-by-district basis, is available. There are also school district profiles that provide a lot of information about each school district: their operating funding, their capital projects, some of their educational outcomes. That’s all available on our website as well.

K. Corrigan: As a follow-up, if, for example, a district has a certain amount in the operating grant…. Then some of the other factors that affect location and so on — that’s broken down. Is there an explanation available now and pretty accessible about how that formula works?

D. Fayad: Yeah, we have a one-page summary that talks about the various factors and what percent of the funding makes up those factors. Most of it is from the basic allocation, but there are the unique geographic and unique student factors.

So we have an explanation. Again, it probably could be improved, so we’d be happy to get any input.

K. Corrigan: So I could, as a resident in Burnaby, take a look at that information, then, and figure out why it was, essentially, that Burnaby got less or more in a particular area. It would be self-explanatory to some degree — like, not just what the factors are, but how it’s figured out and what the formulas are. Is that stuff on there as well?

D. Fayad: I’m going to pass it over to Michael. I’m not saying that it’s always easy, because you may need to have a bit of mathematical ability to be able to actually take the factor descriptions and then see how the math works to get the actual allocation. But it is explained, and it’s avail-
[ Page 639 ]
able. How easy it is to understand — I’ll ask Michael to maybe comment on that.

M. Lebrun: We have several things on the webpage now. We have an operating grants manual, which describes in text how the formula is calculated. We have a set of operating grants tables, which contain every district’s allocation that goes by the individual supplement. So basic allocation, and then there are 60 school districts. It shows how the basic allocation is distributed.

We also have a single one-page summary that summarizes each individual school district’s funding allocation, so you can see that in a one-page summary at a glance. Also, on the website it goes back to 2001, so you can compare these single-page summaries to a single-page summary of a year past.

K. Corrigan: And Burnaby has the lowest allocation in the province. Just thought I’d mention that.

B. Ralston (Chair): That’s because the administration is so efficient, I thought.

I did want to ask, then, since it usually falls to the Chair when there’s a lull in the action…. I think there was a comment in the report on page 10 at the top. “Independent school funding totalled $293 million. This increased funding to independent schools” — and that’s because of a 1 percent to 2 percent annual growth per year — “coupled with the commitment to maintain public school block funding at $4.725 billion has constrained the availability of funds to support other educational programs and ministry operations.”

D. Fayad: The public school operating block is a fixed block, so there is no…. It’s announced every year. That’s the amount of money that we allocate to public schools. So there’s no real impact from independent school enrolment or rates on the public school operating block.

B. Ralston (Chair): I think the reference was not to the operating block but to other educational programs and ministry operations. So outside the funding of block — that’s what I took the sentence to mean.

D. Fayad: From what I have seen from the history of the spending and budget, the ministry has always been able to accommodate all of the educational programs that were planned in the funding.

There may have been contingency support or something provided by government at different points in time to support pressures from growth in independent schools.

B. Ralston (Chair): On the previous page it says enrolment in independent schools has grown at an approximate rate of 1 to 2 percent per annum. Can you quantify that in terms of the increase to the budget for independent schools?

B. Ralston (Chair): I’m just wondering what order of magnitude we’re talking — hundreds of thousands of dollars or millions?

S. Robinson: I’ve been looking at the website, and it’s not as terrible as it sounded in here. That’s good, I suppose. There have been some changes here. But I didn’t see anywhere, and perhaps I missed it, anything that alludes to the funding model’s relationship to cost. The paragraph that certainly jumped out at me in this report has to do with how the funding model is not really about what the actual costs are to operate schools. It’s completely separate, and I think that the public ought to understand that. That’s one of the challenges that I don’t think there’s enough appreciation for.

Is there going to be that sort of descriptor as part of the website so that the public understands that we have this block funding and that although there might be some increased allocations in total dollars over the years, the increased costs haven’t necessarily been considered? Is that relationship going to be part of the website, part of the information to the public?

D. Fayad: Yeah, we probably could improve the description and include some of the comments made in this report about how the funding model is, basically, a per-pupil allocation. It’s allocating a fixed dollar amount across the sector for school districts to manage their costs.

S. Robinson: I would just encourage recognizing that the school board then has to look at their actual cost of running the school and make choices accordingly. Usually when people budget, they take a look at what their expenses are and the revenues, and they make decisions accordingly. But school boards don’t get to control the revenues. That comes in as a funding block, and then they have to make decisions accordingly. I think something that describes the relationship would be really helpful to the public.

L. Throness: Just to point out, on page 9, that independent schools receive a percentage of the public schools — 35 or 50 percent — yet they’re still held to the same educational outcomes. Is that true?

L. Throness: So that really represents an enormous savings to the taxpayer. And I want to point out that it says at the end of the paragraph that independent schools are receiving an expanding amount of available education funding. However, that’s not a disproportionate increase because the rates — 35 and 50 percent — have not changed. So they’re receiving an expanding amount because parents are choosing to send more of their children to independent schools, right?

K. Corrigan: My understanding is that that’s part of it, for sure. But my understanding is also that around the edges there have been some changes over the last years that have meant that more money is flowing to the private system through some of the funding formula, where there was money that was not allowed before that is being allocated. I can’t think of some of them. Some of it may have to do with special needs and other things like that. Is that correct — that over the years there have been some slight changes that have funnelled proportionately more money into the private schools that is not accounted for entirely by the increasing private school population?

D. Fayad: The public school funding has continued to grow, and the enrolment has declined, so that has increased the rates to the independent schools. But again, they’re getting 50 and 35 per cent of that, and that is completely outside the public school funding envelope. So if that has grown, whatever has been supported by government has been funded.

K. Corrigan: Just a clarification on that. I haven’t looked at this closely for years, but it’s my understanding that there actually has been more than that, in that there have been some funding areas where a little bit here and a little bit there that were not previously allocated to the private school system are now, through various grants and categories, going to the private school system, which has represented more than just an increase as a result of the overall increase to the system — which, by the way, does not pay for the increased cost to school boards.

D. Fayad: I’m not aware of…. I mean, there have been increases to rates for special needs. Brian, maybe you can comment on some of the historical increases. There have been increases to rates for independent school students, special needs students and some of the distributed-learning programs.

B. Jonker: If I may jump in, I think probably what you’re referencing is a policy decision made by government — I think it was last year or maybe a year and a half ago — for example, to fund adult non-graduates in independent schools, where in previous years that hadn’t been the case. That was a policy change, and that was something that definitely did happen. So I think that’s what you’re referencing — some of those little policy pieces that may have shifted over time.

B. Jonker: Yeah. To provide more context on that, even though that policy decision was made, those schools are still only getting 50 or 35 percent of whatever the adult rate might be for the public system.

D. Fayad: And then shifts in enrolment, obviously, on a school district–by–school district basis would impact…. You know, if students are moving to independent schools, then the allocation to a particular school district may go down, so that may be what you’re hearing.

S. Gibson: Well, I think, as someone who has a number of large independent schools in his riding, I would be remiss if I didn’t mention the fact that all capital — this only mentions operating — is funded entirely by supporters and parents, which is a huge, dramatic saving to government. If you look around the province, it’s probably into the billions of dollars for schools, amazing schools built exclusively through the philanthropy of parents and others. I think it’s good to note that.

M. Dalton: Having visited about 80 or more independent schools in the past couple of years, and in my parliamentary secretary position, I’ve just been very impressed with what I see. There is certainly a savings.

As far as the special needs, you made reference — I think it was in 2005; you can confirm that — that the full funding for special needs students above the base, so the extra portion…. Identified students do receive that funding. And there are some special needs schools, independent schools.

If you can just confirm that the LIF funds, the learning improvement funds, again, for the allocated public schools, for special needs students, are not…? The independent schools do not receive it. Is that correct?

D. Fayad: That’s correct. They don’t receive any part of that grant.
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L. Throness: I just want to confirm…. When you say that some extra bits have been added to independent schools, is that simply bringing them up to parity with public schools — for instance, for special needs?

B. Jonker: I would say it’s recognizing that we want to support parents’ choice in educational programs, and special needs is one of those.

L. Throness: But the independent schools are not now getting benefits that the public schools don’t.

B. Ralston (Chair): I think that’s it for questions. Thank you very much. Sorry to make you wait into the afternoon, but that’s the way it went.

Okay. We’ll probably need a minute or two to set up, but we’ll consider the report of the Auditor General, November 2014, Distinguishing Between Government Program and Partisan Political Advertising: An Update to Our 1996 Report.

We’re going to proceed with the consideration of the report of the Auditor General of November 2014, Distinguishing Between Government Program and Partisan Political Advertising: An Update to Our 1996 Report.

I want to welcome John Paul Fraser, who’s the deputy minister, government communications and public engagement. I’ll turn it over to the Auditor General’s office to begin.

Auditor General Report:
Distinguishing Between Government Program
and Partisan Political Advertising

C. Bellringer: In 1996 the office produced the report Public Communications: Distinguishing Between Government Program and Partisan Political Communications. This report is an update to that one. It was not an audit, but rather a review of policy, instructions and legislation around partisan government communications across several jurisdictions.

Government spends public money to inform taxpayers about its programs, but sometimes the line between providing useful information and partisan advertising can be blurry. Clarity is needed to better delineate what type of publicly funded advertising is acceptable. To date, British Columbia has no clear guidelines regarding partisan communications, including advertising, in government. This report recommends that B.C. create a policy and set of guidelines that prevents the use of public funds for partisan messages and establishes procedures to ensure that such guidance is adhered to.

With me today is Bill Gilhooly, assistant Auditor General. He’ll provide you with a brief overview of the report.

B. Gilhooly: Great. Thanks, Carol. Governments spend money to inform taxpayers about government programs. Citizens should not pay for communications of a partisan political nature. With no formal guidance or policy, it can be challenging for those producing government communications to determine what is appropriate and when boundaries are crossed into partisan promotion.

The B.C. government communications and public engagement office’s role is to inform the public about government’s programs and services through strategic communications, planning and advice, media relations, on-line communications and advertising. In the prior fiscal year this office spent $24 million on communications.

We took a similar approach as we did in our 1996 review, which examined policy and legislation in other Canadian provinces, at the federal level and in Commonwealth jurisdictions, including the U.K., New Zealand and Australia. As Carol said, this was not an audit, but a review of policy, instructions and legislation around government partisan communications across several jurisdictions with similar governance roots to B.C. We’re also not advocating that our office review government partisan advertising messaging, as is done in several jurisdictions that we examined in this review.

We looked at other jurisdictions regarding their government communications. Canada’s national policy forbids the use of public money for partisan communications. Alberta has followed suit and adopted similar communications policies.

Ontario is the only province in Canada that currently has clear legislation around partisan advertising, and the Auditor General of Ontario also reviews all government advertising before it runs, to declare whether it is partisan in nature.

The United Kingdom created guidance on paid advertising back in 1985, and New Zealand created its advertising guidance in 1989. Australia introduced guidelines in 2006, which it also revised in 2008.

Although the policies around government advertising vary widely between jurisdictions, we have found some common themes. One is clear language that puts partisan communications out of bounds. Most policies or legislation clearly state that partisan messaging is not allowed in government advertising.
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Conversely, other principles point to what communications should do, which is use explicit, principle-based language to define advertising goals. It should provide truthful, accurate and politically neutral information about government’s programs and services.

A third principle is defining government communications and explaining exceptions. Most guidance defines what constitutes government advertising and communications and explains what kinds of notices are not considered ads.

Independent oversight for evaluating content and auditing expenditures was present in a few examples that we examined, including Ontario and New South Wales.

Evidence suggests that implementing policy or legislation can make an impact, as seen in New South Wales. This audit office looked at the issue of government advertising in 1995 and concluded that guidance was insufficient to prevent misuse of public funds for political purposes.

In 2007 they revisited the issue and came to the same conclusion, and the state passed robust legislation regarding government advertising in 2011.

In 2013 the New South Wales Auditor General also analyzed two government advertising campaigns and found that both were carried out effectively, economically and efficiently, and government spending on advertising in 2013 was the lowest in 14 years.

Our first recommendation to government has been carried forward from our 1996 study, which is to establish a general policy that explicitly prohibits the use of partisan political information in public government communications and provides specific guidelines which set out criteria as to the information that should or should not be included in these communications.

We also recommend that government ensure that the policy and guidance to be established is adhered to. Having clear guidance, policy or legislation would support public servants in balancing their need to be impartial with the duties of their jobs and give them a clear boundary to point to if they’re ever put in a position of potential conflict.

There is a wide variety of policies and legislation across the Commonwealth that could provide a basis for developing policy or legislation on partisan government advertising here in B.C.

Just before I ask Mr. Fraser to proceed, I omitted to introduce Mary Dila, who’s the executive director of marketing and communications support services, and Denise Champion, who’s also at government communications and public engagement as well. So, welcome.

I turn it over to Mr. Fraser, who’s the deputy minister, government communications and public engagement.

I am joined by, as you mentioned, Denise Champion, who’s our assistant deputy minister at GCPE. Denise’s particular responsibility as assistant deputy minister is with an organization called the strategic initiatives division, which we inherited at GCPE about a year or so ago from the Ministry of Technology, Innovation and Citizens’ Services, which really does — I can talk about this later — help advance a lot of the work that we do in terms of our digital platforms. Denise is a 37-year veteran of the public service and has been with GCPE, and also its previous incarnations, for almost two decades.

I’m also joined by my colleague Mary Dila. Mary, in comparison to Denise, is relatively new to the public service — three years. Mary was a business owner, in Ottawa, of a marketing and advertising firm and brings the government a very unique perspective on creating compelling and important communications programs.

At GCPE we’re governed by a core policy that requires us to focus our communications activities on issues and matters pertaining to the priorities, programs and services that are administered by government. We work closely with ministries in developing information campaigns. The ministries are responsible for the programs and services that we are tasked to help them communicate. Our responsibility is to identify the appropriate approaches and methods that ensure that the public can be aware of those programs and services that people can benefit from.

As members of the public service, we take an oath of employment. I brought copies of that for everyone to see. That oath says that we must serve the government impartially. We’re required to abide by that oath, and that oath is also part of the government’s standards of conduct.

Just a few moments, if you don’t mind, on our core policy. About a year ago, a little over a year ago, we looked at that. Chapter 18 of the Core Policy was where we were, within a section called “Administration.” It was one line in that section that referred to government communications and then a hyperlink over to our organization’s website. That was not sufficient. So early last year we worked with the office of the comptroller general to establish our own chapter, chapter 22, of the Core Policy Manual, which I’ve also brought. It creates a real, dedicated section for government communications.

It’s baked now in the Core Policy who we are and what we do, and that was instituted, again, in consultation with the office of the comptroller general in February of last year. It provides much clearer information about how we engage government, how government can engage us and what kinds of services and programs we have available to government in support of their objectives. It much more clearly defines the work that we do.

It also links to an improved GCPE information site, again allowing our clients — when I say that, I mean
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government; we treat them as client groups — to download, review material, get information about how to work with us. On this site you can also review and seek guidance with us on how to develop what we call communication project approval — or, as we lovingly refer to it, a CPA. That’s the heart. That’s the beginning of almost all of our campaigns.

Where in government are you? What program and service are you interested in promoting? Do you have a line item in what’s called STOB 67, which is our budget item that we administer? Here’s how we’d like to work with you. And then we begin a process of engaging them in developing a marketing brief.

I wanted to bring it to the attention of the members that we do have, we feel, a much-improved core policy.

We also have criteria. That’s the third bullet on the bottom. Now, criteria is based on three categories. We have to be factual with the information that we’re putting forward. We have to make sure that we’re pointing people to a program or service that they can benefit from. And we want people to have the opportunity to engage with us. That’s really important. I would say that of the three, we’ve worked really hard on that third one. That’s one of the exciting reasons that strategic initiatives division is with us. It really helps us create platforms for more public engagement on the programs and services that we want people to be more aware of.

I would say that in considering the Auditor General’s report, I’m thankful for that report. We’re going to more formally integrate that criteria that I just talked about into our marketing briefs. I brought a draft of it with us today, of what we’re thinking about doing. Those three key elements — be factual, point to a program, give the public an opportunity to engage — right into our marketing briefs so that when we have that source material, that basically commences our work. It really is integrated all throughout our efforts.

I would like to say one more thing. Furthermore, I had the opportunity to meet with the assistant Auditor General this week. It was a very good discussion. It was informal.

But I made it clear to him that I’m very interested and certainly very open to sitting down with him in the office to talk about the recommendations. I believe we’ve made a lot of improvements at GCPE in terms of how we communicate. I’m certainly very open to any improvements that we can make further.

D. Eby: We’ve seen some significant growth in the department responsible for public communications of the government. The numbers that I have are 180 full-time equivalents in 2003-04, now 214 as of ’07-08. I apologize. That’s the most recent number that I have. It’s a significant amount of money — $26 million.

I’m trying to understand. To Mr. Gilhooly: why did you not recommend independent review of advertising? Ontario’s got it. You listed New South Wales, where they’ve got the lowest spending in 17 years on government advertising, after they introduced an independent review. Why does your second recommendation just say, “Please follow the policy,” instead of saying, “This should be independently reviewed, if not by our office,” which you clearly state you don’t want to do, “then at least by peers or somebody independent of government”?

B. Gilhooly: The purpose of this report wasn’t an audit. It was a study. It was a refresh. Or even if you think of it in another sense, it was a follow-up report that was 18 years between follow-ups. We didn’t actually do any internal audit work. It was really just to encourage government to deal with what we see as an ongoing risk in this and other jurisdictions about that blurry line between what could be considered partisan advertising and what could be considered proper government communication. So we didn’t actually dig in and talk to them about that.

I would argue it’s not up to us to tell government how to implement something, but we have provided a lot of useful links and information that will hopefully guide them in considering whether they want to implement any legislation, policy or process.

D. Eby: Follow-up, Mr. Chair. Clearly, the public is concerned about this. The follow-up didn’t take place in a vacuum. There was the jobs plan advertising that was a significant concern, certainly, in the opposition. When I google Mr. John Paul Fraser’s name, I read the public’s concern that he’s a former Enbridge lobbyist, that he worked on the Premier’s leadership campaign. And now here he is, presenting to us about the impartiality of government advertising.

I wonder about that context of your report and why you didn’t ask for independent review as a suggestion about the policy the government should follow of all advertising campaigns, given the concerns they have about the history of the people who are running this department.

C. Bellringer: The first recommendation…. I mean, it was more steps, if you will, in terms of getting the policies in place and following them. By not mentioning it, we’re not suggesting that it should be ignored. We’re not suggesting that we don’t think it’s a good idea. It just wasn’t where it went. And it is identified as one of the common threads in other jurisdictions that has made it effective elsewhere. So we would expect it to be considered, but we didn’t go as far as making a recommendation.

M. Dalton: Again, on the spending this last year, the lowest it’s been in 14 years, is that in 2014 dollars or just in actual dollars?
[ Page 644 ]

Then, also, what, too, are some of the…? How did it impact as far as how we had to bring it down? Were there staffing reductions within the organization or what? How were they able to bring it down as far as they did, the numbers and the overall spending?

B. Gilhooly: For the purpose of our report, we just illustrated for the last two fiscal years what the spend is to give people some context about the size of the organization relative to government communications. We didn’t do any special work inside the organization to verify any aspects of that spend.

M. Dalton: Maybe, John Paul, you could answer how you brought that down and maybe comment on the staffing levels now as opposed to before.

J. Fraser: Sure. Before we inherited the strategic initiatives division about a year and a half ago, the staffing levels went down from — I’m going to look to Denise here for some help because she was there in 2001; I was not — about 370….

J. Fraser: It was 322 when we inherited, down to about 201. So the staffing levels were decreased significantly in that department. The blue book amount was also quite dramatically reduced.

M. Morris: Just looking at this, it appears to me that there’s a significant amount of oversight in the whole process here. I’ve done a little bit of advertising and whatnot since I’ve been an MLA, and I’ve never had such oversight over that kind of activity. I haven’t seen a gap, I guess, from my perspective.

Just a comment pertaining to what Mr. Eby was talking about with your qualifications and your background. I would think that we would be looking for somebody with your qualifications and background to be deputy minister of government communications and whatnot.

We’re looking for that level, Mr. Chair, in oversight and looking after this part of the organization, so I certainly don’t find any fault with that. Just from what you’ve said, the standards of conduct, the chapter 22 and whatnot…. I guess I’m not seeing where that gap is and where the concern lies.

All these other countries might have some great policies and processes in place, but the level of oversight that we have here in British Columbia, to me, looks pretty rigorous. Just a comment.

G. Heyman: I just want to follow up with the Auditor General on Mr. Eby’s questions. I note that you did highlight other jurisdictions that have an independent audit of government advertising. We, at least, note some of the success of that.

It seems to me that there would be all-party — I don’t mean partisan party, but all-party — interest in this so that the government understands that they’re not open to accusations of partisan advertising. The public understands that the advertising is, in fact, genuinely about government business and, therefore, are perhaps more likely to pay attention to it. Everybody’s interested in ensuring that money’s being properly expended.

Let me flip the question a little bit. You haven’t particularly recommended that that model be followed, but in your review of other governments and jurisdictions attempting to deal with the question of appropriateness of government advertising expenditures, did you find a model that you thought was as successful or more successful than an independent auditor–type review of advertising?

B. Gilhooly: If I could maybe start. There’s quite a continuum of practice: from no guidance, no information, which is probably more than half the jurisdictions, because a number came back blank — there wasn’t anything in the public domain — through to varying levels of guidance, which is non-authoritative — there are no consequences for not following it — all the way to black-letter legislation, where there are consequences.

We weren’t prescribing any particular model. We’re just showing the range of possibilities that are there. It might be likely that whatever’s adopted, if something is adopted, is relative to what inherent risks the jurisdiction thinks there are that now, or ten years or 20 years from now, there could be opportunities where staff are put in the position to do something contrary to their oath.

What we’re speaking to is putting in place sort of a shield to protect them from any time in the future where that could happen — just as another bit of protection that can be done to give them that protection where that situation could occur.

G. Heyman: Sure. I don’t think the basic underlying situation is going to change that much. It’s a pretty straightforward question of whether advertising is appropriately being used for government business or whether it’s partisan.

In terms of setting up a shield for staff to protect them, in what you looked at, did you see anything more effective than an independent audit in guaranteeing that?

B. Gilhooly: I came across a few policy documents from, I think, the U.K. The national office of the U.K. was a good one in terms of the clarity of the wording of it. You’ll notice in the report we talk about themes or prin-
[ Page 645 ]
ciples that were common across a number of jurisdictions. We’ve highlighted a number of those in the report.

We think that if those principles were adopted in some way — through either legislation, policy or guidance — that would be helpful in providing that protection.

B. Ralston (Chair): I have a question. Mr. Fraser, you referred to the standards of conduct, and that was circulated. I understand that that’s applicable to, it says on the first page, “all persons and organizations covered by the Public Service Act.”

In the report itself it refers to a document that was, apparently, introduced in April 2014, Standards of Conduct for Political Staff, which you haven’t provided. I don’t assign any particular significance to that. But what it does say…. There does seem to be a concern in the report that political staff were in a different category and that there are some special guidelines that are there to, I suppose, guide their conduct.

It does say in this report, on page 12…. The standards state that relations and communications between political staff and ministry staff should be done through the deputy minister’s office.

In developing an advertising campaign, can you explain how that would come about? You provided a document here, I think — a marketing brief. Where does that originate from, and how does it find its way through the ministry to your desk?

J. Fraser: Thank you for the question, Chair. I didn’t provide a copy of the Standards of Conduct for Political Staff because I’m not a member of the political staff. I have read that document. I do find it an important document. I did note that it was defined as “inappropriate conduct” for anyone in a political role working for a minister on your side of the street to do anything inconsistent with their obligations under the standards of conduct. In effect, you’re not to put on anyone in the ministry — compel them in any way — to exercise any partisan activity. I thought that was an important step forward.

In terms of the process in how we engage in campaigns, we have many different kinds of information programs. But there’s always a first step, and it’s typically a telephone call or an e-mail, I guess, from someone in the ministry responsible for a program, or it’s us approaching someone in a ministry responsible for that program, particularly if they’ve had identified in their STOB line item an interest in communicating one of their programs.

We have a really good idea at the beginning of each fiscal year what each ministry is interested in having a public communication campaign on, and we’ll work with them to see if there’s an opportunity to do that. My colleague Mary Dila in particular is the lead in her staff in those initial outreach discussions.

The first document that we seek is that communications planning document, that CPA, which is very formulaic. It’s like a form you would maybe take if you’re at a government office — who you are, what ministry, what money dollars do you have in the budget, what programs are interested to communicate, where do you think your audiences are, who are they, and some ideas — from your vantage point, not ours — you think that need to be reached or can be reached.

Then it’s passed over to us, and then we work with them through that CPA in developing the marketing brief, which is an iterative process, and it goes up and down in the ministry, from program level, director level, manager level, sometimes all the way up to the deputy minister level to get it right. It’s a dialogue.

Then we will usually engage, at that senior level and often with the minister him- or herself, to ensure that the entire client group…. And that’s what I’m talking about here when I say “client group.” Who are the people that would be involved in that particular program? We then engage with them, seek everyone’s comfort and then execute based on the budget that has already been established.

B. Ralston (Chair): I understand you are relatively new to your present position, so you may not know the answer to this. On page 8 of the report there’s a reference to an advertisement promoting B.C.’s LNG industry. I see there’s a picture of the Premier there in the screen grab, and it talks about growing the LNG. Could you, as an example, explain how that came about?

J. Fraser: I would add that that was not a paid ad. That would have been an article of communications. That would have been communicated through one of the channels existing or in channels through one of our ministries. So I want to make that point clear.

B. Ralston (Chair): Well, it refers to, in the report, “an advertisement. See exhibit 2.” So is this…?

J. Fraser: That particular spot was created for the liquefied natural gas conference that we have on an annual basis. It would have resided also on the ministry website. There were no advertising dollars put behind that. There were dollars expended to create the communications product that was used at the conference, but it was not an article that was…. There was no paid media associated with that spot.

B. Ralston (Chair): Just if I could ask the Auditor General’s office or representative. It’s described on page 8 as an advertisement. Why would you choose that if what Mr. Fraser says is accurate, that there was no payment to create this product?
[ Page 646 ]

B. Gilhooly: These weren’t picked based on the basis of whether they were paid ads or not. They were just shown as some topical examples to get readers understanding the different types of communications activities that go on through their office.

C. Bellringer: It’s more of a question, actually, than an answer to this. My understanding from that is it is taxpayers’ money still paying for it; it just isn’t flowing through that particular budget.

J. Fraser: Yes, sir. There were obviously government communications dollars applied to that. For that particular program, I couldn’t say right now from where.

J. Fraser: I don’t have the answer to that right now. It’s possible that could have come through a STOB line, through the Ministry of Natural Gas Development. It’s also possible that that particular piece could have been produced through the budget that was set aside from the liquefied natural gas conference.

We do have a robust program with the LNG task force within the Ministry of Natural Gas Development. They have a budget to help produce communications materials for the purpose of promoting B.C.’s natural gas opportunity. I’m going to make a strong guess that the money for that particular program came through there.

D. Eby: Just to follow up — and I apologize, Mr. Chair; it’s because I’m new to this — just to ask Mr. Fraser to explain a little bit more. The CPA form that you were discussing — is there a long form for that? And if you said it, I apologize. I missed it.

J. Fraser: It’s in that package. You’ll see it in there. I don’t believe that’s…. There it is. Communications project approval form.

The second question is in relation to something that Mr. Fraser said as well — that in his experience, ministries often have a good idea about how they’re going to spend the money and what they’d like to communicate.

I’d have to say that at least in Advanced Education, my experience was the opposite, where there was a million dollars in the budget and there wasn’t really an understanding of what would be communicated except for something very vague about trade seats at colleges.

I wonder, to the Auditor General, whether other jurisdictions look at essentially putting slush fund money into the budget — a million dollars for advertising, nice round number — with no understanding of how that would be allocated during the year, whether they have any way of dealing with that in advance. Because you do need to budget. You don’t want to say: “Well, we went over budget advertising.”

You need to have money for advertising. But is there some expectation before you put it in the budget that you know what it’s for before you put it in the budget? Does that make sense?

B. Gilhooly: The scope of our study didn’t include looking at things like that, but there are references, if you follow some of the links here, to examples where there’s an expectation based on certain thresholds that there be certain due diligence done for certain types of campaigns. It might be a business case that would try to find the outcomes from the advertising expenditure relating to the government program objectives. But we didn’t look at that or include that in any discussion of the report.

D. Eby: If I might ask one short follow-up, in this particular example — and I won’t ask you to comment on the example; I’ll just ask as an illustration of what you’re talking about — there were 456 trades seats on which the minister was planning to spend $1.8 million in advertising.

The business case would evaluate whether or not there would be a justification for a $1.8 million ad spend for 456 trades seats. Then there’d be some evaluation afterwards that maybe there was 5 percent utilization before and now they’re 100 percent utilized or something like that. Is that what the business case would look at?

B. Gilhooly: Speaking very generically, any program where you are spending money or defining the outcomes relating to the money, you’re always looking for that linkage. Of course, there are different levels of attribution you can make to certain activities and how they relate or don’t relate to program outcomes.

For example, if you were going to have a campaign maybe for smoking cessation, would that million dollars have resulted in that many people quitting if you didn’t spend that money? There are a lot of attribution factors that can affect that.

L. Throness: A couple of questions and a comment. A couple of questions for the Auditor General.

I would note that your first report on this was brought up in 1996, which was during the NDP era. Is it not the occupational hazard of any government to be accused of partisan ads when they’re promoting government programs that they have won an election on or whatever?
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B. Gilhooly: That’s part true. If a jurisdiction doesn’t have well-defined definitions for what constitutes government advertising and non-government advertising or partisan advertising…. Any government in the world runs that risk if that’s not in place.

L. Throness: Second question. Given that each individual within the public service takes an oath of office saying that they will not be partisan, and given that GCPE is within the public service, do you not think that the issue of partisan advertising is in a sense self-regulating?

I guess I am in the trust-but-verify camp. And that would go for anything. Where that particular ad was funded out of I think was a good example of the need for a definition around advertising. It’s a pretty basic thing that we’re recommending in terms of that. It’s not because we’re saying that we’re not trusting the public service.

At the same time…. And it’s broader than just core government. It’s all the way through to all of the programs that are funded by government. It’s a big deal to pull this together, and it would be more than what is already in place, which forms a good base for it.

L. Throness: My final comment is that I think it’s very unfortunate that a member of this committee, Mr. Eby, would imply that a public servant, who’s a man of honour, would break his oath in order to push partisan ads just because of his prior involvement in politics.

D. Eby: I definitely did not say that, and I encourage him to check the transcript if he thinks I did say that.

L. Throness: There are many people throughout the public service who have legitimate political involvements from both political parties or maybe many political parties, and we should trust their oath.

K. Corrigan: It is a tough subject. Forgive the opposition for sometimes being a little cynical. I mean, starting with the fact that in the 12-month period before the last election the government advertising budget was $36 million. The next year, after the election, it was $24 million, which I think is interesting. On the issue of self-regulation, we have a whole report that talks about the lack of self-regulation by members in this very department.

I wanted to ask about how the decision is made in terms of allocation. I know that there was discussion and questions about putting forward proposals and so on. Maybe I’ll start off by saying…. In the last year what percentage of the budget goes to the Premier’s office? Do we know?

K. Corrigan: The Premier’s office cannot make a request for advertising through you?

J. Fraser: We work with many organizations within government. The Premier’s office would be one. We would consult, as needed, on the programs that initiate through ministries.

GCPE does have a STOB line as well. There are about eight other ministries that have STOB lines through 67 budget allocations. But the Premier’s office does not have one.

K. Corrigan: Okay. So you’re telling me that of the…. What is it this last year? The 2014-15 is the most recent. That’s not in this. Was it $26 million?

J. Fraser: We don’t want to confuse — I’m not suggesting you are, Member; I apologize for that — the overall budget for GCPE and the budget that’s been allocated for advertising. The overall budget for the program is about $24 million. The allocated budget for advertising is about $8 million. I would also note that we have a freeze in place on all advertising, through the STOB 67.

K. Corrigan: Okay. I didn’t realize that. I thought when we had these numbers in the report — and the report is about advertising — that, essentially, that money
[ Page 648 ]
was $24 million. But it’s not; it’s $8 million. So when you’re saying that…. What did you say? You don’t have a “stop”? Is that the word you used?

Ours is 67. There are STOB 50, STOB 60. There are many different…. That’s the line item that pertains to us to collaborate with ministries to engage in communications programs for the purpose of communicating their programs and services.

K. Corrigan: How would the Premier’s office get advertising done that it wants — as the Premier of the province? How would that happen, then? It sounds like there’s no ability to make the request from the Premier’s office.

J. Fraser: The Premier’s office…. We have the opportunity to work with ministries to communicate those programs. They’re priorities of government that get established. Economic priorities are, clearly, high on the list for government. We would work with the ministry to develop maybe an economic information campaign, and we would consult, depending on the program, with the Premier’s office on the direction, on the approach, and get their input, if warranted for that particular program. But they do not have a particular STOB item in STOB 67.

K. Corrigan: There’s no way of knowing whether ideas for government advertising came from the Premier’s office. I’m just trying to get a sense of how much control there is from the Premier’s office. I mean, ultimately, the reality is the Premier pretty well controls — I would think, has a fair amount of control — what advertising there is in government. Would that not be the case?

J. Fraser: On occasion. I would have briefed the Premier or brought forward my advice. As a public servant, you bring forward the best advice you can. You seek input. But very rarely would I have briefed the Premier on any campaign — ministers, on occasion. Senior ministry individuals, we would brief.

As I mentioned earlier, there are various individuals that we bring together in our client group. I think it’s fair to say that particularly on our higher-profile campaigns, we’ll engage with the Premier’s office to ensure that we understand what their perspective is.

S. Gibson: Maybe just a quick observation. I have a fair amount of experience in local government, and one thing I’ve learned is never underestimate the intelligence of the public. You do that at your own peril. If there’s an ad that goes out that’s obviously partisan, it’s right there. It’s visible, and all the detractors will make you know about it. They’ll alert you to that concern.

To some extent, although not exclusively — I realize that — it is self-administering. If somebody does something foolish that’s partisan and overtly so, the public or detractors who are critical of that will certainly make their views known. So to some extent, it is self-regulating in that manner. I just wanted to share that.

S. Robinson: I actually have a very different perspective on the risk of partisanship and the covert nature and the risks. Given the whole conversation, especially from this morning, around risk and risk enterprise — stuff that goes on in government about mitigating risks — I’m still sort of stumped about why government wouldn’t be interested in establishing a general policy.

I haven’t heard a good enough reason, given optics, slippery slope, just risk of being accused or being challenged and then getting in the way of doing government — perhaps Mr. Fraser can explain — why there wouldn’t be acknowledgement that the Auditor General’s report has some value. Other communities, countries and provinces have said: “You know what? We need to mitigate the risk of these accusations.” One way to do that is by having a well-established policy. I’m still not convinced why that would not be something that would be welcome.

J. Fraser: Just to echo my other comments. I believe we have a strong core policy. I tabled it here today. I apologize if members didn’t have a chance to review that in advance. It’s much more descriptive than our previous core policy on who we are and the kind of work that we do.

I believe that our oath is very strong. We take it very seriously. It’s the law, and it’s very clear in the oath that you can’t engage and should not engage in partisan political activity.

I am very keen to integrate our criteria for campaigns into our marketing brief so that we have those three pillars in all our campaigns: be factual; point to a service; give the public an opportunity to engage. I have also indicated a willingness in my conversations this week with the Office of the Auditor General to explore further their recommendations to see if we can continue the improve-
[ Page 649 ]
ments that I believe we have made in our programs and services.

S. Robinson: How many, I guess, complaints or legal issues have their been in the last, let’s say, ten years around the slippery slope?

J. Fraser: No, sorry. I’ve been the deputy minister since December. I was appointed into an acting role three or four months previous. I’ve been the assistant deputy minister at GCPE since May 2011, and I can only recall one. There was an incident related to one of our campaign spots as it related to the B.C. jobs plan.

We had an information campaign that talked about our lowest-tax jurisdiction: finance information pointing to the fact that British Columbians earning under $120,000 a year experience the lowest personal provincial income tax in the country. There was a complaint against the factual nature of that in the way that that material was presented. We’ve dealt with that complaint. That’s the only one that I know of.

S. Robinson: So the historical ones are part of…? Just since you were there for the last few months.

S. Robinson: There’s no tracking of complaints? Is there any tracking of complaints about risk of partisanship that your department does?

J. Fraser: I’d have to go back and look, Member. I’m sorry. I don’t know if prior to my time there were complaints.

S. Robinson: I would be very interested in finding out the number of complaints there might have been.

J. Fraser: Okay. I will commit to going back and seeing if there are any on the record.

D. Champion: I can just say I’ve been there for 18 years, and I don’t recall any other complaints.

B. Ralston (Chair): I think, generally, that kind of discussion forms part of the political discourse rather than specific complaints, but I could be mistaken.

V. Huntington: You mentioned that your advertising budget was $8.6 million out of $24 million for the department. Is that correct?

V. Huntington: Is that just for buy, or does that include creative, development, printing, etc.?

V. Huntington: Then I’m misunderstanding something. Can you then develop advertising on behalf of another ministry, and do you bill them back for the costs?

J. Fraser: Those dollars reside with GCPE in association with the ministries, but we have authority over those dollars.

J. Fraser: The ministries will have an allocated budget within the STOB 67, which GCPE administers on their behalf.

J. Fraser: That’s correct, Member. So we’ll work with them on how we would then allocate and expend those dollars according to their budget item.

How the dollars are broken out in terms of production — there are fees that we would pay for an agency to support us in a campaign, production costs, and then there are fees associated with placing content in paid channels.

If I may, one of the things that I am particularly proud of, under Ms. Dila’s leadership, is that over the last three years we’ve worked very hard to reduce the production costs by bringing more professional service in-house. We’ve relied much more on our own strategy and our own abilities to produce the materials ourselves to then go to market, as opposed to an agency.

V. Huntington: Does that cost, then, fall into the $24 million rather than the $8.6 million?

J. Fraser: Those costs would be still within that $8.6 million — those STOB line items within STOB….

J. Fraser: For example, if we were working with the ministry and the program budget was $500, we would then allocate that $500 towards earned media channel production costs, the things that would be necessary to implement by campaigning.

V. Huntington: I guess where I’m having a bit…. I’m missing something. Surely the government of British
[ Page 650 ]
Columbia’s advertising budget is not just $8.6 million. Is that what you’re saying?

J. Fraser: Well, in the past there have been contingency allocations that would go through a Treasury Board process that would be outside the STOB 67 but then made available.

V. Huntington: Could I ask just one more to try and…? If we’re going through the financial statements, the total advertising budget in all the ministries would add up to $8.6 million.

D. Champion: Unless they had gone forward with a Treasury Board submission for a draw on contingency, yes.

K. Corrigan: I’m sorry I misinterpreted the information before. Of course that makes sense about that being the total for the office: the $36 million in 2012-13, then $24 million in 2013-14. Maybe if you could let me know what portion of that, going back a couple of years before, was advertising. Advertising is $8.6 million for 2013-14? Or is that 2014-15?

K. Corrigan: So $16.3 million. So in fact, the advertising budget for the election year was double what it was the following year, almost. Thank you for that information.

D. Champion: Approved internal reallocations and draws on contingencies for ’14-15 are $312,000.

D. Champion: In ’13-14 it was $3.689 million, and in ’12-13 it was $21.036 million.

K. Corrigan: That’s interesting. I had another question. I wanted to ask about hiring in the GCPE office. I know that there’s hiring through the Public Service Agency. Who gets hired through GCPE is the decision of you, as the deputy minister, or your senior staff. How much of it is done, or is it all done at all levels through the Public Service Agency?

J. Fraser: I have very little participation in the recruitment. Perhaps that’s a fault. Denise and her team do a terrific job looking for people to fill the various positions. We panel. We work closely with our communications directors to help part of that process, to vet candidates.

Very often the candidates come to my desk with a letter offering employment. My assistant deputy minister, Kelly Gleeson, is very involved in our talent management process as well. That’s effectively the process. I will sometimes be involved, depending on the level of the employee. Particularly at the director of communications level I will be involved with that.

K. Corrigan: So essentially, the decisions about employment are made by senior staff in the office.

J. Fraser: I receive recommendations from senior staff, and ultimately the decision is mine.

D. Eby: I just wanted to note, further to the context of this discussion, that in September of this year there were charges against Brian Bonney, and the offences relate to the time he was the director of government communications and public engagement.
[ Page 651 ]

My question to the Auditor General is: in the context of Election Act charges related to GCPE directors, what do you see as the barriers, having looked at other jurisdictions, that they were able to overcome in order to get these policies in place?

I would argue that we are in a crisis related to partisan activities on the part of GCPE here in B.C., and yet we still don’t have a policy. If we can’t get past it now, I don’t know how we’ll get a policy. When you look at other jurisdictions, how were they able to get there? What barriers were there? And how did they overcome them in terms of getting their policies in place?

B. Ralston (Chair): Just before you comment, I would say that the issue of Mr. Bonney and the other person, whose name I forget, is sub judice, and therefore, I wouldn’t expect a comment. But I think you can answer the general question.

B. Gilhooly: That wasn’t in the scope of what we looked at. Our review was outward-looking. It was basically just a research scan refreshing what we did in 1996.

B. Ralston (Chair): I had myself on the list next. I just wanted to clarify something that Mr. Fraser said.

I understood you to say that other ministries — I think you said about eight — had STOB 67s, that is allocations in their budget for spending on advertising. I understood you to say that your agency or department or division — I’m not sure how to describe it — administered those budgets on their behalf. Is that correct?

J. Fraser: That is correct. Through core policy, GCPE has the responsibility to both support and authorize communications programs, information programs — in this case, advertising.

B. Ralston (Chair): Just so I’m clear, then, the $8 million plus that you’re talking about — is that the sum total of the STOB 67s in GCPE and the eight ministries? Or is that just simply the $8 million in GCPE?

V. Huntington: Could I just ask, Mr. Chair, what is the other $24 million in the ministry? Is that press releases…?

D. Champion: Salary and benefits, operating costs, technology costs, travel — yeah.

Okay. If there are no further questions, then I want to thank Mr. Fraser and Ms. Dila and Ms. Champion for coming and Mr. Gilhooly for presenting.

We have one remaining report — December 2012. I had deferred it. I’m not sure that there will be a great appetite to proceed with it now. I’m willing to if the group is willing to.

Okay. So there’s a feeling of doing it. Why don’t we take five minutes right now?

B. Ralston (Chair): We’re going to resume consideration of the final report of December 2012, Summary Report: Results of Completed Projects.

I’ll turn it over to the Auditor General’s office. It looks like Russ Jones is going to be taking the lead on this file. Go ahead, please.

R. Jones: Thank you, Chair. We’ll try and go through these last five reports that are in this December 2012 one. The first one is taking a look at… It’s more of an information piece around our investigations unit in the office, which is currently two people at the moment that do it not on a full-time basis but as and when we get questions that may require us to look into things. However, in the March 2012 report we just outlined that this is work that we might undertake under section 13 of our Auditor General Act if we do take a look at investigations.

Citizens, MLAs and all sorts of people often contact us with information and concerns. They’re usually submitted through our website. So if you know of anybody that wants to submit something, do it through our website. Each submission is reviewed. We consider it, and, where possible, we respond to it. Being responsive to external suggestions is important to us, and we do take it very seriously. One of our key performance indicators measures the proportion of audit reports that is initiated outside of the office by external suggestions.

Often people simply need to be put in touch with us, to talk to us, and we never forward information provided to us by a person or an organization without first receiving the consent from the person that has sent us the information. Where a submission does fall under our man-
[ Page 652 ]
date and appears reasonable to pursue, we start doing preliminary inquiries. These inquiries will either resolve the matter or suggest that maybe more work is necessary.

In cases where a matter is before the courts or is already being investigated internally within government or within Crowns, our investigators hold back, and staff may build what we call a watching brief. Sometimes those watching briefs can last a fair amount of time, as you will see from one of the investigations we’ve undertaken.

If no events are in motion, the Auditor General may authorize a special investigation or a performance audit. Because the Auditor General is accountable solely to the Legislative Assembly, the office does not share any information gathered during an investigation with the person or the organization that raised the concern.

Two significant investigations were conducted in 2012, one being the Ministry of Health and one that we call organization A.

In March 2012 we were notified by an anonymous source regarding concerns about a range of alleged activities within the pharmaceutical services division of the Ministry of Health. The information provided raised questions about compliance with legal and government policy requirements as well as good contracting practices. As a result, the Auditor General authorized an initial investigation to validate basic facts and determine if future work was warranted.

During these initial inquiries we made the ministry aware of the concerns. The whistle-blower subsequently came forward voluntarily and was required to provide information to us in keeping with section 16 of our act.

The Ministry of Health committed to an internal review, and our office began building a watching brief. Early results of the internal review resulted in a variety of staffing and administrative actions within the ministry. We’re currently assessing all of the reports undertaken by government and will determine if any further actions are necessary, as there are a number of reports out there and I think there are still a couple coming.

In July 2012 we were contacted by a number of employees of a public body that we’d previously audited. They were granted assurance that under confidentiality provisions of the Auditor General Act we’d keep their identities confidential. During interviews with each of them they raised concerns, and we’ve taken those concerns into account in further work that we’re doing.

B. Ralston (Chair): I have a question just to begin. On page 10 of the report you talk about looking ahead. You say, “We see the need to protect whistle-blowers, and the lack of protection currently provided concerns us,” although you do say in your report that someone who comes forward is granted anonymity.

C. Bellringer: It’s two separate things, Mr. Chair. In terms of our own process, we continue to provide anonymity when someone comes forward. As Russ mentioned, we also can’t report back to that individual. They provide us with information; we take it into account.

The whistle-blower. In fact, the use of the phrase “whistle-blower” is one that’s being used as just a general term, because there is no definition around it within legislation or other policy. That was the concern raised at the time of this report around…. Because there is no process in place to provide a safe mechanism for people to come forward within the department, within the ministry, within the normal course of their work, that was of concern. Of course, they can still come to us.

D. Eby: My question is: when would this type of activity described under organization A rise to the level that that would be reported either to this committee, in camera or otherwise, or to the public through a report? It’s very concerning to me that we might approve a follow-up report where the Auditor General may have received notice from a number of employees saying, “There are problems here,” and yet we wouldn’t necessarily know that. In fact, we don’t know who organization A was.

D. Eby: I’m not asking who organization A is. I’m just wondering: when does it rise to the level when it’s worthy of reporting to this committee or putting it in the reports, for example?

C. Bellringer: There has to be an outcome to it, I’d suggest. We will follow anything that comes to us. We have a lot of matters that are brought to our attention, and we are trying to figure out how to make sure they don’t fall through the cracks. So we’re trying to respond to them all in one way or another.

As soon as there’s a risk brought to our attention, we do take it into account within, as Russ mentioned, the context of the financial statement work. So we’re making sure that…. If what it does is highlight to us that there’s a potential for a problem to be out here, we’d better be on high alert, so we’ll do more work. But we don’t let them go until we’re assured that they are resolved. At the point where we have….

I’m also uncomfortable to disclose the fact that someone has raised a concern, because the disclosure of it in and of itself doesn’t prove to you that there is a problem.
[ Page 653 ]
Until we have enough information to know that it is a problem, we’re not going to be bringing it forward in a public way. At that point we would want to have enough information to provide you with how it was resolved, which is the case with the first issue that Russ mentioned. We don’t have enough information yet to add anything, and we’re still assessing how far we’re going to go with our work.

R. Jones: I’ll just add that when we’re doing financial audits, we always try and figure out when we should bring something like this to the attention of, say, the audit committee.

In a number of cases we’ll get some concerns raised, possibly around a possible fraud, for example. It would be very simple, as soon as it’s raised to us, to run to the audit committee and say: “You may have a fraud here.” But what we tend to do is we will, first of all, take a look at the allegations and see if there is substance, and if there is substance, then we have a responsibility to report to the audit committee that there is a problem and what we’re doing about it.

I’m not sure it answers your question as to when it would come here. In our investigations group now, we’ve been discussing how we might disclose in the future the work that we do. We’re thinking possibly something like one of our summary reports, where we do just a summary report on investigations we’ve undertaken, what they were and what we came to a conclusion on.

V. Huntington: A couple of things. I guess I don’t quite understand what the role of this committee is then in relationship to the Auditor General’s office. In the legislation, which I should know better, are you then permitted that level of independence where you don’t have to report to this committee on items being undertaken in your office?

C. Bellringer: I don’t have the act in front of me so I don’t have the exact wording, but we are required to report to the Legislature on those matters that we believe are of significance to them. The judgment call comes in differentiating between something that’s just been raised…. I mean, we get members of the public reading a newspaper article and then submitting it to us, saying: “I’m worried.”

At the point, though, where there are facts available, we ensure that they are available to the Legislature. They may, in fact, have gone through a route through a ministry to already be reported to you, in which case we wouldn’t duplicate that. For example, it’s already taken into account in the context of the financial statements. There’s a note to the statements — that kind of thing. But if we feel that it has been omitted, we’re required to report that to the Legislature.

We have to report directly to the Legislature, and the reports that go to the Legislature are then referred to this committee. Again, it’s through the Legislature as a whole and then to the committee, as opposed to directly to the committee.

V. Huntington: Right. But, for instance, in the case of organization A, would it not be the business of the Legislature, through this committee, in camera or otherwise, to understand if there were a significant problem within a Crown or a government organization that merited your attention?

R. Jones: As I mentioned, we did meet with the individuals that had the concerns. We have taken those concerns into account when we’ve been looking at our follow-up process on one of the audits we did, because it related to an audit we had done. We’re satisfied that by doing that, we’ve taken into account the concerns they raised.

V. Huntington: Okay. The other issue I just wanted to comment on…. I’m sure a number of us have had dealings with whistle-blowers. The fact that you don’t report out at all to the whistle-blower is extraordinarily frustrating to them. They have absolutely no context in which to think you’ve taken their comments seriously, that you’re trying to look into it, whether anything is resolved. Is there no way you can set up some sort of vague policy that allows them to have some satisfaction?

They’ve risked. They put a lot at stake when they whistle blow, in some situations, and they deserve to understand what the outcomes are.

C. Bellringer: It would take a change to our legislation. The rationale behind our choice not to report back to them individually is directly related to the way our legislation is written. We’re only permitted to report to the Legislature and to officials within government where it’s a matter that’s of interest to them, and it doesn’t extend to members of the public.

V. Huntington: Which is strange if you can take advice from members of the public on what issues should be audited. I think it’s a failure in the legislation that you couldn’t even just say, “We are looking into your concerns, and we can’t do too much more than that at this point,” and then forward them a public document once it’s done or something.

C. Bellringer: I don’t believe there’s that kind of legislation in a legislative audit act across Canada. Because of the nature of…. I mean, the work of our….
[ Page 654 ]

C. Bellringer: I totally accept the fact that there is that frustration. We’re exposed to that daily, so I’m well aware of it, and I appreciate the comment.

The fairness component of it and whether or not the individual has had their individual situation dealt with fairly — we’re almost always directing them to the Ombudsman’s office. That would be more of the nature of an individual concern that the Ombudsman would deal with. What we’re looking at is the overall practice and the systemic issues within a ministry in terms of the administration.

C. Bellringer: That complication is there, and the only thing we can say to them is to watch for our public reports. At the time where we are reporting the matter to the Legislature, if we have gone forward with it, that information will be available to them as soon as we’ve issued it to you first.

K. Corrigan: Raising, again, the issue of whistle-blowers, the sentence in the report that says: “We see the need to protect whistle-blowers, and the lack of protection currently provided concerns us.” I think that’s worth highlighting. It comes as close as I’ve seen the Auditor General’s office to making a policy suggestion, I would think. Maybe not. Sounds to me like whistle-blower legislation might be a good idea.

K. Corrigan: Good practice. Yes, thank you very much. I appreciate it. I think it’s good advice.

I just wanted to delve a little bit further into how the office sees its role with regard to, using as an example that you have used, the Ministry of Health firings. Maybe just a little bit more about where the office would appropriately place itself, given all the things that have happened in that. What would you see as your obligation?

Now, there was talk that it was going to go to the RCMP, and it looks like it never went to the RCMP — pretty serious stuff and pretty serious outcomes for some of the people involved.

As an Auditor General’s office, where do you see your ongoing obligations? How close is that watching brief that you’ve got now, and then what kind of options — not what are you going to do but what kind of options — would you have for the future in terms of that kind of file?

C. Bellringer: When I first got to the office, I wasn’t aware of the issue. The first thing I asked for was a briefing on what our involvement has been, what’s going on, what the issues are. There’s a lot of public information out there. I’m not so sure it’s available in any one place for someone like me walking in and not knowing what’s going on, so that is something I see us having a role to play in. Can we just pull it together? Tell me the story. I want to know what happened.

There are a number of investigations that have taken place. What are they? What were the outcomes from those? What are the key findings from those that someone should be monitoring somehow?

I do see that we have a role to play in pulling that kind of information together and possibly identifying whether, having looked at it all in that full context, there are still gaps where we think something more should be done, and is it something that we should be doing?

That’s the determination we haven’t made yet, but I do believe we will be issuing that kind of summary analysis so that it’s all in one place and the full story is included in it.

I appreciate that possibility because I think your office, this office, and the people who work in that office have a high degree of credibility. This has been one that’s very contentious, and there have been sides — this story from this side and that story from the other side — and so on. It’s been very complicated. I think the credibility of the office would be really useful to the public to add to what has happened so far. So I appreciate that. Thank you.

R. Jones: Chair, I was just going to add one thing. I should have mentioned it earlier. The comptroller general and I meet once a month, and one of the topics of discussion that we do have monthly is about investigations that his office is doing as well as what we’re doing.

One of the things in the health area that we’re just waiting for at the moment is the investigation that he’s done. The person that did the investigation is just getting back from holidays right now, and that report will be coming to us, I think, fairly shortly. Yes. I’m getting the nod from Matt.

I don’t see any further questions on this topic, so we can move to the next one, which is very brief, a single page.

R. Jones: It is very brief. Thank you, Chair. It’s something that…. In 2005, due to concerns about how complaints about municipal police officers were managed, the provincial government asked Justice Josiah Wood to undertake a comprehensive review of the police complaint process. This review resulted in 91 recommenda-
[ Page 655 ]
tions, which were largely adopted by the government in 2010 with the amendment to the Police Act.

One amendment required a special committee of the Legislative Assembly to follow up on the police complaint process within three years, which would have been January 1, 2013. The Special Committee to Inquire into the Use of Conducted Energy Weapons and to Audit Selected Police Complaints requested the Auditor General to conduct an audit to determine whether the outcome or resolution of randomly selected complaints and investigations were, in all significant respects, completed in compliance with part 2 of the act. Part 2 is overseen by the Police Complaint Commissioner.

We provided an audit opinion to the Chair of the special committee, asserting that between April 1, 2010, and August 31, 2012, the Police Complaint Commissioner’s management and oversight of complaints and investigations complied in all significant respects.

B. Ralston (Chair): Okay. I think that’s pretty self-explanatory. Maybe we can move to the next one, unless there are any questions.

R. Jones: The next one is around the implementation of the B.C. reporting principles. Malcolm’s going to help me out here if you have questions.

Government organizations in B.C., as you know, are required to account for the funding they receive through two documents each year: an annual update of the organization’s three-year plan; and an annual service plan report — annual report, for short.

The annual reports should tell an easily understood story that allows readers to evaluate an organization’s performance and hold management to account for its successes and failures. In order to assist the public sector entities in the preparation of these two documents, in October 2003 the government created the B.C. reporting principles. The principles were a joint initiative of the government, legislators and our office, in an advisory role.

Since the B.C. reporting principles publication our office has been tracking and supporting the transparency of government performance reporting through a variety of initiatives and reporting on our results.

We’ve done a number of Building Better Reports reviews. We’ve done a trends-and-opportunities report, which was published in April 2008. In it we reiterated the importance of the principles and noted how the annual reports of most ministries fall short of those standards.

In December 2010 we issued a guide to help government organizations develop relevant key performance indicators. Unfortunately, it doesn’t appear to have resulted in overall improvements in the annual reports being produced by government.

In 2012 we evaluated the 2010-11 annual reports of 28 government organizations, along with the guidance provided to those organizations for preparing the reports.

In 2013 just after this report — the B.C. reporting principles, believe it or not, had been in place for ten years — the examination showed that little had changed since we last looked at the government-produced annual reports. None of the reports examined met all of the reporting principles. Crown corporations were generally better and more consistent in the principles than ministries. Actually, the Crown reports met most of the principles, while most of the ministry reports didn’t.

We concluded that the governmentwide adoption of the B.C. reporting principles is still stalled, and the full potential of these reports to enhance government’s transparency and accountability to its stakeholders isn’t being achieved.

R. Sultan: Mr. Chairman, this is about the most damning report I’ve heard since resuming membership of this committee — a complete zero, a 100 percent failure rate. I would ask the Auditor General what she proposes to do about this. I guess we could ask ourselves if maybe these principles, since they are so universally ignored, should be officially abandoned.

We’re not responsible for the guidelines, nor the implementation of them. Will we do a further audit of it? We definitely build it into individual audits when we do them.

I’m seeing that over a period of time doing an audit hasn’t produced results, so that’s not going to be a good solution — do another audit and find out the same thing.

Are there suggestions as to how we can help move that forward? Maybe the committee is looking at some of them. I’m not sure.

S. Robinson: I agree with the member opposite around how damning it is. I think it’s incredibly problematic. I spent 20 years in the non-profit sector, and these were the kinds of reports we generated all the time. It was sort of accepted practice. So it’s disappointing.

I do have a question about, in your experience, the difference between the Crown corporations getting it and appreciating it and valuing it and seeing it as good business practice and the ministries not adopting it — if you have some sense of why one group would adopt and perform and another group less so.

M. Gaston: The first report I was actually involved with when I joined the office ten years ago was the fifth Building Better Reports. That’s mentioned in here. It’s a
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great way of learning about how good government has done in B.C. — reading 60 annual reports.

The office has been looking at this for a long time, and it has been pointed out that nothing has changed. A consistent point that we’ve made throughout that as well, though, is that the guidance that goes out to Crowns is better than the guidance that goes out to ministries, and the ministries will follow the guidance.

We’ve raised this many, many, many times — that if ministries get guidance that lays out quite clearly what they’re supposed to follow, then generally, that’s what they’ll do.

M. Gaston: Guidance would come out from the Crown agency research office for….

M. O’Rae: Yeah, Cheryl that was here yesterday from Crown agency resourcing office, CARO.

M. Gaston: In fairness to individual organizations as well, Crowns generally have a more simple business. They’re focused on a particular area. Writing an annual report is generally easier to do, because you’re a bit more focused. Some ministries have huge mandates. But that doesn’t mean to say that they can’t produce a good annual report.

M. Morris: Right at the beginning of your presentation you talked about…. All of these organizations are required to account for their funding through these things. To me it seems that it’s a cut-and-dried kind of situation here.

I saw situations like this in the police force where we had all kinds of reports that had to be generated for a variety of different organizations both federally and provincially. A paper exercise, basically, is what it turned out to be, in a lot of senses.

Is this something that can be automated, where they can just fill in the blanks on a form and submit it to account for the funding they have, or is this an intensive document? I’ve read through a couple of them. It looked like a lot of work was involved in those, and the ministries are strapped for resources and whatnot.

Is there a better way that can be done, and did the audit show anything, indicate any reason why these weren’t done? Is it just a flat-out refusal, or is there a systemic reason why none of the ministries are following through on it?

M. Gaston: We didn’t find out the reasons when we were doing this. We would have fed back to each organization the results of our assessment of the annual report.

In answer to your question about numbers…. The B.C. reporting principles, really, are looking for a lot more than just numbers. Instead of plugging numbers into a spreadsheet…. That’s not going to produce a good annual report.

For example, principle 4, which looks at risk and capacity, historically, I think, has been the one that we’ve assessed as the poorest. But these are quite hard areas to talk about. It’s not just numbers. It’s really thinking through what the risks are that this organization faces, what the risks are that we don’t deliver the services effectively, and so on.

Quite a lot of work does have to go into that. It also requires quite a high degree of honesty and transparency. I’ll not say any more than that.

K. Corrigan: I remember in my years as a school trustee that we used to have to produce accountability reports every year, I think it was. The thing that we found about that…. Although it was a lot of work — and I was involved in it — not only does it force you to think about what needs to go in the report and report out as you should, but it also is a real opportunity to really evaluate what we were doing.

We took that very seriously: “Where are we trying to go?” It was really taking a look at where we were at any particular point, and it was a real opportunity to take a good look at the organization and see what we were doing and what we could do better. I think there can be a real value.

I wanted to ask specifically, or point out first…. It’s pretty key that only five of the 14 ministry reports in the assessment had met the fundamentals-in-place level for any of the principles examined. That is a pretty damning comment. Fundamentals in place doesn’t mean fully incorporated, either. It’s lower, right? So five didn’t even meet that level, which is unfortunate.

I wanted to ask about performance indicators, because you don’t break it down in this report about where the real problems are. It sounds like they were all over the place, from what you said. But it seems to me, from looking at reports from ministries, that performance indicators can be really, really weak and not, to me, be particularly central to the work of the ministry. They seem to be kind of pulled out of the air. So I’m just wondering if there are any comments about the performance indicators and the level of sophistication that there is in choosing those.

M. Gaston: We look at KPIs as…. Part of what we’re looking for is line of sight, so from the mission of the organization — its goals and so on — and down to, then,
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performance indicators. If we don’t see that clear line of sight linking key performance indicators back up into what its core business is, then we would see that as not meeting the basic principles. But at the same time, we’re not going as far as to say: “You’ve got the wrong indicators, and these are the right indicators.”

As the report does mention, we produced a guide just, I think, about three or four years ago looking at key performance indicators and putting forward some help as to how you arrive at those. That’s actually one of the guides that we produced in the last few years that has had a very high number of hits on our website, so it’s obviously been looked at quite a lot.

V. Huntington: I’d just like to follow up with the comptroller general’s office. Is there any indication from your discussions within your office that you would be issuing some instructions with regard to reporting requirements?

M. O’Rae: I just want to go back and make sure I talk to everyone — obviously, the Crowns. Carol alluded to a lot of the enhanced guidance on the Crown side of things. Obviously, our primary focus is the overall public accounts and reporting out at an aggregate level, so there’s a lot of discussion and transparency in the public accounts overall and across the various ministries as well. So before I go into any detailed comment on a particular ministry, the comptroller general’s office, hand in hand with each of the ministries and the chief financial officers, would…. There may very well….

V. Huntington: I don’t think this is any particular ministry. It seemed like it was just blanket.

M. O’Rae: No, no, no. Fair enough. I wanted to make sure…. I myself am not aware…. It’s not really my area of focus, so my apologies. If I can, I’ll understand what activities are underway or are in place. This report, I believe, is two years old, like a lot of them, so there may well be some things in place. I’ll check and get back to everyone.

B. Ralston (Chair): Thank you. We’ll move to the next one, then — B.C. Transit ridership audit.

R. Jones: I think this is an interesting report. I’ll make some comments after I go through the initial part as to how I think you might want to proceed with this one, but I’ll leave it up to the committee.

Expanding public transit was a key strategy in the provincial government’s climate action agenda. In 2008 the office of the Premier and the Ministry of Transportation and Infrastructure released the provincial transit plan, a strategy aimed at substantially expanding public transit provincewide by the end of 2020.

Specific goals for B.C. Transit included to double ridership and increase transit market share across the province by 2020 in order to achieve a 4.7-million-tonne reduction in greenhouse gas emissions.

I think — as somebody mentioned earlier today and I’ll just re-emphasize it here — it’s important to remember that B.C. Transit is responsible for transit in all areas outside of the Vancouver area. So TransLink is not part of this.

So 81 systems, 130 communities, and they provided about, at the time we did this, 51.6 million trips, so a lot of transit.

We focused on B.C. Transit’s achievement of ridership growth since the launch of the transit plan, and we wanted to determine if B.C. Transit had met its ridership targets through the implementation of its growth strategy. Overall, we concluded that B.C. Transit is not on track to meet the government’s 2020 ridership targets. We also found that clear targets and collaboration were lacking.

The Ministry of Transportation and Infrastructure was not providing B.C. Transit with clear performance expectations for meeting the goals of the transit plan. The ministry’s monitoring of the progress was inconsistent with the intent of the plan, and there was insufficient collaboration between Transit and the ministry that resulted in a lack of understanding about what is needed to be done to achieve the plans and goals.

We also noted gaps in the evaluation and measurement of the impact of initiatives at both levels — the transit system and organization-wide. This lack of evaluation leaves B.C. Transit short of the information that would be valuable in guiding and supporting decisions. B.C. Transit appears to have limited ability to implement or adjust the strategies required to meet yearly growth targets.

Lastly, B.C. Transit’s ridership data is not of sufficient quality to meet all of its information needs at the system or route levels.

On the next page we’ve shown all of the recommendations that we had and the self-assessment that has been done. As you will note, there are some that are fully implemented, and there are three that aren’t. They’re partially implemented.

As I mentioned earlier today, in October 2013 we published a report, Shaping Transit’s Future in British Columbia, which you have before you for a future meeting. As I mentioned, it deals with three areas of key importance going forward — policy and governance, funding, and design of services — which tie into this summary report a bit, so it might be a good thing to sort of combine this and that report and get the ministry and B.C. Transit in to discuss the recommendations we’ve got here.
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S. Robinson: I just have a question about a recommendation that was alluded to in the description but that didn’t actually make it into a formal recommendation.

In the report you talked about that the Ministry of Transportation and Infrastructure didn't provide clear performance expectations, that they weren’t monitoring consistent progress and that the ministry developed a model to support targets set in the plan but didn’t share it with B.C. Transit, and vice versa. But you didn’t put in a recommendation, something about communication — that there needs to be something really basic, some sort of communications structure.

I’m wondering: is it just implied that that will happen? I worry about implied recommendations, because I don’t know that they’ll be understood. I’m wondering what to do with that notion that these folks aren’t communicating with each other.

R. Jones: Thank you, Member. I would think it is probably part of No. 3 around a framework. Both parties, as I think Malcolm will attest to, are keenly aware of the need to communicate more.

V. Huntington: I think what strikes me with this and a number of the other reports that we look at is that here we have an organization that is supposed to be a specialist in moving people, yet they haven’t been tracking data effectively. They aren’t communicating with similar organizations in a matter where they can effectively learn from them. The whole professional organization, in terms of the expertise they should be exhibiting, just isn’t there.

I feel like these are real problem areas. I don’t know what you can say to that. It’s just that these recommendations are so axiomatic of what should have been there in the first place that it troubles me.

R. Jones: Thank you, Member. What I might say is: remember that this, again, is a couple of years old. We have done this….

R. Jones: True. That’s probably why it would be a good idea to have them come in and answer that question for you. There has been a lot done.

V. Huntington: I’d like to know what it is, Mr. Chair, if we could arrange for that sometime.

B. Ralston (Chair): I think we have. You would recommend B.C. Transit and staff and the ministry come in as well. There seems to be a bit of back and forth in terms of your report.

R. Jones: I think you’re right, Chair. We have some recommendations for the ministry here. We have some for transit.

V. Huntington: And we would see this report back in front of us, then, that we can refer to?

M. Gaston: There’s also a follow-up that was discussed before lunch. Well actually, I think it was the one that we dealt with this morning. At the end there’s the self-assessment in relation to a governance examination that was carried out, and there are still, I think, a couple of recommendations outstanding in that that relate to B.C. Transit and the ministry.

V. Huntington: In that respect, I felt that they failed to follow the recommendations or understand that the recommendations impacted them and the ministry. I just thought that we should talk about that a little bit too.

B. Ralston (Chair): Okay. I don’t see any other questions, so we’ll move on then to the final one, which is school district 40, which is New Westminster — their business company. Perhaps you can set out a little background.

R. Jones: At the time we did this they did have a business company. They don’t currently have one anymore. When I get through the little preamble, I’ll sort of summarize what we think are some lessons that could be learned by any of the other school districts that maybe do have business organizations still in place.

The final project covers the examination of School District No. 40 New Westminster Business Co. The School Act was amended in 2002 to allow school districts to become involved in entrepreneurial activities. School district No. 40 was one of the first to set up a business company. It was called SD40BC, and it’s incorporated under the Business Corporations Act. It provided offshore school programs in China, offshore English language training programs and education, and education and training for teachers and education administrators working offshore.

Although several school districts now have these companies, this was the first to develop a significant offshore operation. It was a significant amount of funding that came to the school district through that. For the year ended June 2012 it reported earned revenues of about $2.1 million from that operation.

In the spring of 2011 we examined the governance, financial processes and legislative compliance of SD40BC.
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The end of our examination resulted in detailed reports being presented to both the board of directors and the school district’s board of education. As I say, that is no longer in place — that organization.

Some of the lessons that were learned from our review which could apply to other business companies in other school districts. First of all, ensure that an appropriate governance relationship between the board of education and the business company is established right from the outset. That was one of the weaknesses we found in this one, the one we looked at.

For anybody that’s in the legal business around here: assess all legal risks to the board of education and the business company resulting from the nature of the relationship. One of the concerns was a perceived agency relationship and what that meant.

The board should also oversee any director appointments to ensure that appropriate skills and objectivity are there to hold management accountable.

I think those are probably the four key things that come out of our review that could be used by any of the business companies that are currently out there.

B. Ralston (Chair): I think I know the story a little bit, but could you just advise why this particular company was folded up and what the issues were that lead to that decision by the board?

B. Ralston (Chair): Really? It was making money, and they decided to fold it up?

B. Ralston (Chair): Okay. It’s not one of the randomly selected targets of audit and hasn’t been in the last five years? Are there any school boards with an overseas agency or company like this that are the subject of your ongoing audit? I know you select a number of school districts each year to audit.

R. Jones: We do audit five now, I think. But I don’t think we have any that have a business. I don’t think there are any at this point in time. We usually talk to the Ministry of Education to see if they have any concerns around any of these business entities.

B. Ralston (Chair): Over the time on the committee, I think there has been concern about when provincial agencies or arms of government establish overseas. There are sometimes higher risks, especially when you have local hires and a different legal environment. Generally, it’s perceived to be an area of increased risk. So I’m surprised that in your selection of school districts you haven’t selected at least one where that kind of an entity is operating.

R. Jones: I think we definitely have something to put in our plan. We’ll take that under recommendation.

G. Kyllo: You mentioned there’d be obviously some value in providing some of these recommendations to other schools that actually have a business operating entity. Are you guys proactive in sharing, identifying where those others exist and making sure they get a copy of the report, just for their review?

G. Kyllo: …but most businesses might not know that an audit was even completed or be looking to this. There might be an opportunity maybe to be proactive in providing them copies of the report and saying: “Here’s what we found in another operating entity, and it might be of some value to review it.”

C. Bellringer: That’s a great suggestion. We’ll go back and do that, if we haven’t already.

R. Jones: I’m sure that in the school district environment they are probably aware of it anyway, but it wouldn’t hurt for us to get something out there. That’s a great suggestion.

L. Throness: Were the revenues from these enterprises allowed to supplement regular school district funding? Was there any limit to that? For instance, if an enterprise could make $10 million a year instead of $2 million, would that still go to…?

R. Jones: Bill was just mentioning to me that it really was more of a loss-leader. It generated revenue, but in the end it probably cost more than what they were bringing in. But it was to get the international students to come, in some cases.

V. Huntington: I think it fell out of that government initiative to use creativity in your funding. I mean, Delta has them, and it’s running into trouble. I think they’ve just folded their Chinese overseas company. Got a whole bunch of things going on in Delta.
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B. Ralston (Chair): I don’t see people urgently trying to get my attention to ask a question. They’re all wound down. Well, I think then we’ll consider that one closed.

That really brings us to the end of our agenda. I want to thank members for their participation and forbearance during I think a productive two days. We’ll be back to you to talk to you shortly about our future schedule.

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Chair:	Bruce Ralston (Surrey-Whalley NDP)
Deputy Chair:	Sam Sullivan (Vancouver–False Creek BC Liberal)
Members:	Kathy Corrigan (Burnaby–Deer Lake NDP)
	Marc Dalton (Maple Ridge–Mission BC Liberal)
	David Eby (Vancouver–Point Grey NDP)
	Simon Gibson (Abbotsford-Mission BC Liberal)
	George Heyman (Vancouver-Fairview NDP)
	Vicki Huntington (Delta South Ind.)
	Greg Kyllo (Shuswap BC Liberal)
	Mike Morris (Prince George–Mackenzie BC Liberal)
	Lana Popham (Saanich South NDP)
	Linda Reimer (Port Moody–Coquitlam BC Liberal)
	Selina Robinson (Coquitlam-Maillardville NDP)
	Ralph Sultan (West Vancouver–Capilano BC Liberal)
	Laurie Throness (Chilliwack-Hope BC Liberal)
Clerk:	Kate Ryan-Lloyd

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