Finance and Government Services — Issue No. 84 — Wednesday, November 4, 2015 (HTML)

Present: Wm. Scott Hamilton, MLA (Chair); Carole James, MLA (Deputy Chair); Dan Ashton, MLA; Spencer Chandra Herbert, MLA; Eric Foster, MLA; Simon Gibson, MLA; George Heyman, MLA; Mike Morris, MLA; John Yap, MLA

2. Resolved, that the Committee meet in-camera to consider its draft report. (Dan Ashton, MLA)

6. Pursuant to its terms of reference, the Committee began its review of the three-year rolling service plans, annual reports and budget estimates of the statutory officers.

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

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

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES


CONTENTS
Page
Draft Committee Report	2053
Office of the Conflict of Interest Commissioner	2053
P. Fraser
Office of the Auditor General	2058
C. Bellringer
K. Hall
M. Lefebvre

C. James (Deputy Chair): Just before we recess…. I think we talked about this in camera, but I just want to express our appreciation to Lisa for the work that’s been done on the report.

C. James (Deputy Chair): This is not an easy committee to try and wade through all of the presentations, and I think we’re very well served, so thank you for the work that you’ve done — and Kate and others who’ve supported us.

L. Hill: There’s actually quite a team working away in the committees office, including Aaron, who some of you know, and Andrea, who has come to work with us.

S. Hamilton (Chair): As we know, we are here to discuss the operations and budgets of our independent officers of the Legislature. I’d like to take the opportunity to welcome this morning Mr. Paul Fraser and Ms. Linda Pink from our Conflict of Interest Commissioner’s office. Thank you very much.

Good morning and welcome. As we discussed a little earlier, Mr. Fraser, we’ve got about an hour, so you can spend as much time as you like within that hour to present to us how your office has been operating the last little while, since the last time we met, and we can have discussions about your budget, and then we can go to questions and answers from the committee.

P. Fraser: Thank you, Mr. Chair. Thank you for the invitation to appear in front of the committee. I’m privileged to be, I guess, the first on your list, for the next week, of independent officers. I thought about what it would be like to be first in this group, and I remembered my grandfather, who had a small, homesteaded farm in Manitoba, saying to me, as he showed me a stream that went through his property, gently dropping towards the end of the property and then into a larger river: “Always drink upstream from the herd.” It’s really important advice, which I’d ask you not to share with my colleagues who are coming after. [Laughter.]

Linda and I are both delighted to be here. If you don’t mind, I’ll say that it’s a pleasure to be here with you for the second time in this, sort of, calendar period. The first time, as you recall, was at the request of the committee, when all of the officers had an opportunity to give you an indication, I think, of what their plans were for the forthcoming year so that you would have an indication from all of us of what it was that we hoped to achieve.

All of that was in the name of dealing, as best we all can, with the whole issue of accountability from the officers and our boss. I mean, this is a report to shareholders because we report to the Legislative Assembly. We don’t report to anybody else, and we take our direction from the Legislative Assembly. It would follow from that that the more information we can exchange, the better, in the course of the year. This committee I thank for having, through its leadership, taken the initiative to make sure that that happens. I know my colleagues share in that.

As you all know, ours is the smallest of the offices, which means that we’re closer to where the sausages come out, I suppose. There should be no excuse for not having an intimate, if not pathological, explanation for all of the money that we have to spend — it being a modest knoll in the mountains that surround us, with my colleagues. I hope that today we can fairly quickly, because this is straightforward, deal with the monetization of our work.
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I do have to tell you that in the course of the fiscal year, there was a dramatic event that has had a huge impact on our fiscal reporting and our fiscal abilities. It was, essentially, like a comb-over showing up in an unexpected gust of wind. It came in the form of the commissioner — who, to that point, was 75 percent occupied — becoming 100 percent occupied. All of that happened, I think, on April 30 of this year and had not been anticipated or expected. Notice I didn’t use the word “deserved.” But it certainly didn’t feature in what we had set up as our fiscal plan for this current fiscal year and for the three years before us.

That event really leads me into saying what’s a penetrating glimpse of the obvious. It is that, in our situation, you can easily see that we have, from the numbers that you’ve been given, really two categories of expense. One is the so-called non-discretionary category, which is salaries and benefits and so on. All of that is prescribed.

In the case of the commissioner, it’s prescribed by what the salary is from time to time of the Chief Provincial Court Judge. With respect to our loyal and hard-working staff, although the act provides that we can make whatever arrangements we wish with them outside of any arrangement government may have with its employees, as a matter of policy and practice over the years, we have paid attention to what’s occurring elsewhere in the balance of the public service.

With that in mind, I thought it would be important to indicate that we’re here because of the moment of increase in my compensation. We’re here to discuss two things. The first bit of bad news, from the point of view of results, is that as a result of that — and you’ll see what the detail of that was in a little while — we are going to have, on the basis of the numbers for this current fiscal year, a shortfall predicted by the Ministry of Finance of about $72,000, understanding that my salary was in the range of about $200,000, I think, when I was 75 percent time, and now it’s gone up to 25 percent above that.

I notice from the newspapers that the whole issue of judicial compensation is again on foot. I don’t quite understand where it is. I remember talking to a good friend of mine who went to the bench, and I said: “Well, what do you guys and gals talk about in the coffee room?” He said: “You mean what’s the most important thing?” I said: “Yeah.” He said: “Judicial salaries.” Then he told me it sort of blends from there, morphs from there, into gossip.

In any event, I’m the beneficiary of the fact that my salary — together with the Auditor General, whom you’re hearing from this morning, and others, I think — as a matter of practice has been pinned to the salary of the Provincial Court Chief Judge.

That leads me to this. We have, on the first page of the submission, a budget request, as a supplement to the current fiscal year, of $72,000. Then we have a budget request — that is to say the allocation request — for the next fiscal years of $701,000. How we come up with that is described fairly briefly in the executive summary, which I hope you’ve had an opportunity to look at, so I won’t spend a lot of time on it.

Our expenses are divided into two categories, as I mentioned. For the 25 years of our office’s existence…. And it is 25 years. November 18 of this year will be the 25th anniversary of the introduction of the Members’ Conflict of Interest Act.

At that time, the legislation was, together with Ontario, the gold standard across the country. It was used as a kind of a precedent or a template for other jurisdictions right across the country until we reached, in 2007, the federal government, who finally came in with a regime not unlike our own.

Across the country, we have probably the most comprehensive conflict-of-interest legislative regime or regimes of any of the developed countries, frankly, in the world. I think and hope that the public and the processes that we all hold dear have benefited from that.

The whole question of asking for funding in circumstances where the officer involved is presiding over either a complaint-driven process or a request-driven process is, of course, a little bit tricky, because you don’t know what’s lurking in the wings. When people are on stage and the results are actually at hand, then there’s always litigation that may or may not follow thereafter.

The situation in B.C. is even more complicated because in this province, all members of the population, all British Columbians, have access to our system. That is only true in three other jurisdictions across the country — Alberta, New Brunswick and, I think, one of the territories.

What that means is that you can hardly anticipate what several hundreds of thousands of concerned citizens may want to consult you about, and we get a large number of requests from members of the public. Whether that leads to any investigations or, subsequently, inquiries depends, of course, on the seriousness of the allegations and the extent to which they’re actually documented.

Every committee such as yours doesn’t want to hear the word “contingency” or “slush fund” or anything else. I can understand that. But I say as a matter of straightforwardness that when we characterize what we think the costs are going to be on the operating side — not the, if you like, salary and benefits side — we have to take into account those uncertainties.

And where those uncertainties turn out to be less, or more minor, than we had expected, then what happens, of course, is that any moneys left over at the end of the year, as we all know, are turned back. Most recently, for example, in fiscal ’14-15, our office underspent its allocation of $567,000 and turned back $39,000 to the provincial treasury.

I think it’s well known, because of the distinguished
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predecessors that I have, that the office has a long history of being thrifty and careful about expense. I’m proud to say that that history has continued.

We find ourselves in the unusual situation in this particular year of having an overrun, which, if I can put it this way, is not of our making. I don’t want to appear to be ungrateful, but you’ll understand that it’s a bit difficult to talk about budgets when they have such a direct impact on at least one of the people in this room.

The executive summary really describes all of that in some detail. What it comes down to is that if you were to give us the cover that we need in order to finish the year — at least finish the year on the basis of what the Ministry of Finance is expecting our results will be — based on current spending and trends from the past of $72,000…. Here we are coming to look for more. It’s important, I think, to understand that the $72,000, if it’s given to us, would then become part of our base.

That is important because, essentially, what the rest of this is all about is that all we’re asking for in addition to that is another amount of money to take us to $701,000, by the arithmetic — an amount of money that would top up the existing salaries and benefits in this forthcoming year. It’s really that simple.

One other bit of information which is of some interest, in coming to look at our present situation and trying to understand how the benefits costs — which are pegged, really, at a percentage of about 24 percent or 25 percent of salary — can be as high as they are now and are becoming and how we have budgeted we are going to be able to pay them, based on amounts that have been requested, is the information that we have come to realize has an impact. It was that, apparently, for a period of time in the Ministry of Finance, the benefits for me were not actually charged against the office.

If you ask me, “Who paid them, and how did all of that happen?” then you will be sharing in the great mystery that is mine. But that’s the situation. If you ask the question, as you may, looking at these numbers, “How can you possibly go, in benefits, that far up?” the answer to that appears to be that this recording, or the failure to record, is part of the explanation.

I do want to say, though, because I think we’re at that point, and I don’t want to forget it…. For example, if you look at what is Table 1 in your very helpful templates — which I think are a great benefit, not only to you but to anybody that comes to look at this material, especially with its being standardized across the whole of the officers’ world — it means, it seems to me, if I may say so, that we have a reporting arrangement and requirement that the public would be proud of.

If you look at what is page 7 of the submission and you look at the salaries and benefits, bold, which is on the left-hand side, and you look up, you’ll see there’s “Employee benefits.” Then it says: “Total budget approved” — this is for ’15-16 — $52,000. Then you look at the proposed budget, and you see that it goes up to $125,000.

I’d simply point out to you that while the budgeted figure was $52,000, we actually have spent $91,000. That, if anybody cares, is apparent on page 9, in the employee benefits column, STOB 52. That, it seems to me, was something that clearly required a straightforward explanation, and I hope you find that straightforward enough.

We don’t know, quite frankly, what the total amount of the increased salaries for the fiscal year that we’re now dealing with, the proposed allocation, will be, (a) because we have at this stage, no understanding of where we are, where the province is, in respect of the chief judge’s salary, because what was recently determined by the Court of Appeal, I think, had to do with the commission’s recommendations for 2014-15.

I’m guessing that, pending the litigation that surrounded the commission’s recommendations for that period, all other proposed commission recommendations have been put on hold. But I don’t know that.

I don’t even understand, at this stage, what the result of the Court of Appeal’s decision is, but I think we’re talking in the area of 4½ or 5 percent. I think that’s what the commission’s recommendations have now been found to be by the B.C. Court of Appeal.

In any event, it’s simply another way of having to say…. And it’s not entirely satisfactory, but the explanation is what it is. We are simply proceeding on the basis that what there will be in terms of salary obligations — and then calculated from that, benefit obligations — has yet to be determined in respect of (b).

In respect of the staff, we have always done what we have to do, to do two things. One, make sure that we retain people who are working in an environment which, because of the confidentiality that it requires, should be a stable workforce. You need to have people staying rather than people coming and going.

Secondly, we’ve always, in terms of salary increases for members of the staff, looked at what the general increase is for the public servants in the province so that there isn’t a discrepancy that cannot be explained. Otherwise, it would be, it seems to me, unfair to one group or the other.

That’s basically what we’re here to ask for. If the top-up is given to us for non-discretionary current salaries and benefits, we’re able to say to you that that would add to the numbers that we have been discussing — about $62,000 of new spending, non-discretionary. That would be what we are adding to the base.

So if we’re starting at the current allocation, which is $567,000, and asking you to give us $72,000 to make up the difference for this year because of what has occurred, you get to $639,000. If you take $62,000 as the amount of money going forward that largely would be based on what the non-discretionary spending is likely to be, that’s how you get to $701,000.
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I should also say to you that in coming up with these numbers and trying to figure out what’s real as opposed to what’s apparent, you’ll see in the material that’s been provided that the actual operating costs, year over year, for the office have gone down. It’s forecast in the allocation that we’re asking that they would go down again this year by $20,000. Over the years, that’s been explained by shutting the Surrey office, which became unnecessary; the travel that was incidental that resulted when I was commuting from the Lower Mainland; and so on.

In the forecast year of 2016-17, the operating expenses would be reduced by $20,000. That is, as you can imagine and given our history, I think likely to indicate that our costs are well controlled.

We had a gap, the office did, for a long time on the HRfront. When I became commissioner, it was clear to me that we were understaffed in the sense that people couldn’t be away, together. We couldn’t cover for illness, for vacations — that sort of thing.

Quite frankly, what we were doing was we were hiring people on contract to do work that needed to be done on an expedient basis without having, really, a plan going forward that would see people on the staff as public servants and enjoying the benefits of that.

The result now — and you’re interested in FTEs in your template — is that we have three people who are in the FTE category. Linda is our only full-time FTE, and we have two part-time FTEs, our legal officer and our executive assistant. We have one contractor who is the receptionist in the office. She is not included in FTEs. I am not included in FTEs, as I understand it. So the answer to your question of what our FTE situation is, is that it’s 2.2.

We are now…. This committee last year assisted us in reaching that plateau by giving us sufficient resources so that we could move our legal officer from a contract situation into an FTE situation. The result of all of that is that, going forward, I’m satisfied that we have made the right HR decisions so that we have some job security for people and we have some incentive for them to continue to stay.

We have had virtually no turnover, certainly not among the FTE people, and we have but one contractor in the office now.

Mr. Chair, I hope that will be a sufficient but not didactic way of dealing with the numbers. I’m happy to answer any questions that any of the members have.

Was the request to expand from, I guess, 0.75 of a position to full-time a request that came through your office to the, I guess, Finance Minister because of workload issues, or was it just an out-of-the-blue: “Here, you’re now full-time”?

P. Fraser: It was in, I guess, April of 2013 that I was reappointed based on the recommendation of a select standing committee that had met in the fall of 2012. I accepted the appointment happily, but in the way in which these things work or don’t work, the committee that selects you does not come up with the terms of reference. It then disappears, I think, into the hands of people who do decide these things.

I’m the only, except for the Merit Commissioner…. I don’t know what the situation is now, but then the Merit Commissioner was basically working on an hourly contract. Everybody else was 100 percent except the Conflict of Interest Commissioner.

The background — forgive me for giving you, perhaps, a longer answer than you’d hoped for — was that Mr. Oliver had been at 50 percent and had recommended, when he left, to the committee that first appointed me that it should be 75 percent based on actual workload, and I was first appointed at 75 percent.

When I was told that I would be reappointed — that is to say that the committee was recommending my reappointment — I was very pleased with that news. There started a sort of a discussion — I’m going to say a discussion as opposed to a negotiation — about how we would proceed. There were a number of issues that had to be dealt with. Pension was one of them and a few other things.

In any event, I indicated that I thought the work and the workload were beyond 75 percent and that I would be pleased if people would agree, and if they thought 90 percent was appropriate, then I would certainly agree that it was. Nothing happened, so we carried on in the other arrangement.

Every year — maybe it was every second Friday — I thought to myself: “I wonder when the call is going to come.” It never did, but I realized then that, while nothing is perfect, there wasn’t really anywhere to go and make the suggestion. The last thing, frankly, I wanted to do was to find myself in a position where I was asking the government to do that, given the nature of the work. Anyway, I had conversations with members on both sides of the House from time to time without, I hope, complaining or being too direct about it. There was an election that intervened and so on.

Anyway, the short answer to your question, Spencer, is that, when it finally did come up on somebody’s radar, I said: “Well, thank you very much for this. The fact is that we’re now 27, 28 or 29 months down the road.” When they said, “Okay. We’re sorry that this has happened. It’s nobody’s fault, etc.,” I said: “Fine.” It was me that suggested — given the passage of time and the inaction, given what was left in the term — it would align a little
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bit with my 90 percent suggestion to give me 100 percent for the last half of the term. That’s how it went about.

The process of appointing officers is, I think, absolutely exemplary in the way in which we do it with respect to these committees. Jurisdictions all over Canada and in the United States, in discussions I’ve had with them, have used it now as a model of how you can actually have a so-called independent officer appointed. Gone are the days of the Prime Minister, for example, deciding who the conflict-of-interest adviser would be. I think Alberta is the most recent to have adopted a kind of plan such as ours. I think that’s exemplary.

There is a bit of difficulty on the administrative side in the sense that that committee doesn’t — and maybe it shouldn’t — recommend what the salaries and so on should be. The working conditions were agreed. I did agree with the committee with respect to working conditions and so on, and some of that discussion is ongoing. But the actual salary was not part of a discussion I had with the committee — except, for fullness, I said to the committee when I met with them that 75 percent was probably a low estimate of the time. It was probably more than that, and I may even have suggested 90 percent to the committee. I, frankly, can’t remember that. In any event, that wasn’t part of any recommendation that they made.

M. Morris: Just a couple of comments with respect to the employee benefits, Paul. Are they a set percentage of your salary, or is there some way to determine it based on your salary? How does that work out?

P. Fraser: It’s a straight percentage, as far as I know. It’s a straight percentage of the salary, so it’s a calculation.

The only two things that are in there…. One is more obvious than the other. Instead of taking the deputy minister’s car benefit and getting an amount of money every month, which had been the practice, I took advantage of the special arrangement that the government has.

If you lease a hybrid vehicle, then there’s, in the end, a kind of an equivalent benefit from what would otherwise be your car benefit. The government actually pays the lease payments for you and so on, but it all gets charged back against your office. So that’s in there.

The other thing is that when I was appointed the first time, one of the working conditions that was agreed was that I would be able to access group insurance. It turned out that I had aged out. I was just a moment or two more than 65, for those of you who are writing this down. So they couldn’t deliver on that, but I was able to make an arrangement that proved to be satisfactory. I’ve had every cooperation imaginable from the Clerk’s office, I have to say, in these sort of mechanical things.

What has happened is that I privately pay for a certain amount, and there’s a base amount that the province pays for. I topped that up. I’ve forgotten what the group benefit would be, but it’s about $400,000 or something. Everything else above that, I’ve paid.

The cost of that payment — which in my special case, I guess, shows up in the benefits — is included there. Believe it or not, those premiums go up as you get on. I think, for example, that it’s at about $12,000 annually now — the government’s portion. I mean, it’s amazing how quickly the numbers go up.

E. Foster: Mr. Fraser, if my memory serves me correctly, when we had this discussion last year and there was a big bump in the benefit package, did you not switch some of your employees from a contract basis to a salary basis?

E. Foster: Would that not account for a big chunk of that? That’s what happened?

P. Fraser: Yes. That’s right. The legal officer — she was a contractor. She’s now, as a result of what you did last year, a 0.6 FTE. The executive assistant — same thing. You’re absolutely right.

S. Chandra Herbert: Just one question. I don’t recall you coming to the Finance Committee this year to speak to us about budget submissions. I’m just curious. In the priorities for 2015, you refer — and I know we’ve talked about this many times — to amendments to your act and the need for change. Is that something, of course, that you still support? Can you give us an update — any sense of if there’s interest in that at this point?

P. Fraser: I’m pleased to do that. There is a reference to that in the annual report, a muted reference to that. I’m pleased to say that from what I’m able to tell, speaking to officials in the Attorney General’s office, work is taking place on proposed amendments.

What’s important in all of that is it seems to me that when you have — as we did have — a special committee struck with respect to potential amendments to the act and that special committee is unanimous, you’re then in the happy position of being able to say: “You know, these are” — through that committee — “amendments that one can assume are acceptable to both sides of the House.”

The reality was…. I think the report of the special committee was published in February of 2013. There were lots of other things going on then. The report is a good one. It’s well considered. We spent a lot of time informing the committee on what our recommendations were. The
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committee was very well served by its staff. At the end of the day, I think that the work product was exemplary.

But it was election time, and I was actually then so naïve as to think that there might even be room in our system for a non-partisan bill. I’m sorry to have to admit that to you, but I thought that, until somebody wisely said to me: “Look, any bill that requires any amount of spending must be a government bill.”

I abandoned any idea of trying somehow to get everybody on side. I did have a commitment — which I referred to, frankly, the last time we got together with the committee — from the then Leader of the Opposition, from the then Premier, that there would be support for the recommendations.

Since then, enquiries, from time to time — you’ll understand, from my point of view, they have to be at the departmental level as opposed to the political level — have been infrequent.

Now, I hope, as a result of my comments in the annual report and the fact that Ted Hughes, of all people, has been advocating amendments — not a bad pal to have along on this issue…. And Bert Oliver, not actually on his deathbed but close, said that he was in favour of this, that and the other thing. There’s never been any kind of resistance to it.

Interestingly enough, what the act now lacks, and one of the amendments on which the committee unanimously agreed, is that there would be a mandatory review provision, and there isn’t. Even getting, frankly, the standing committee on law reform, etc., to take the task on, was something that required some stickhandling, especially when that same committee’s report in 1999 — which was a brilliant report, I thought — went nowhere. It was unanimous, and it went nowhere.

Anyway, I’m hopeful that we will have some legislation come forward. As far as I’m concerned, taking the committee’s recommendations of and by themselves would be sufficient. I can imagine that others might disagree and think that there were other areas of amendment that the committee didn’t discuss, but I am hopeful that there will be something in the spring.

Seeing none, I’d like to thank you for acknowledging the hard work that our Clerk’s office put into the financial reporting template that you utilized. We’re trying to find some uniformity, when it comes to that level of reporting. It helps our committee, so I’m glad you found that report helpful as well. I know they put a lot of work into it. So I appreciate that.

Seeing no further questions, Mr. Fraser, thank you very much for appearing before the committee. Continue all that great work that your office is doing, and we look forward to talking to you again in the very near future.

P. Fraser: Thank you all, on behalf of Linda and myself. Linda is, of course, in charge of the hard part. If you saw her hand come up my back occasionally, you’ll know that you were getting the straight goods because she was promoting.

S. Hamilton (Chair): I welcome Carol Bellringer and Cornell Dover from the Office of the Auditor General.

Good morning. We look forward to your presentation, to let us know how your office has been doing, and we look forward to hearing all about your financial situation.

Now, Cornell, during the year, took over the full responsibility for corporate services — so all of our infrastructure in the office — and also, on the side, does a few IT audits.

Katrina Hall is our comptroller for the office and has been for a couple of years now. She’s not a stranger to this committee, as is Mark Lefebvre, who’s in charge of our HR department in the office. Any of the questions that they can answer, or myself, we’re happy to do so.

To quickly summarize what’s in the report that we’ve provided to you. This is now my first full year as Auditor General. We did mention to the committee last year when we were here that we were going to be doing a strategic plan, which we have done, and we’ve completed that.

We included a couple of extracts from that, just an overview of the plan and our office values at the back, as appendices to the report. What it drove was a couple of things that are still in progress around some of the operational areas in the office — in particular, the coverage plans that cover the two main areas of work of the office. Those two documents are included in this package, but they’re public documents. They’re available on our website for anyone to see.

The Performance Audit Coverage Plan that we included in here — it’s the first time that we have circulated it publicly. It’s a three-year plan of all of the various projects that we identified that we’re hoping to start within that period. It also lists the various performance audits that were underway at the time that we put the plan together. That’s been circulated, as I said, but it differs from the next plan, which is the financial statement coverage plan.
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That plan is one that we are required to provide to the Public Accounts Committee. Those members who are on both committees will recognize it as something that we presented to that committee just this past Monday. The Financial Statement Audit Coverage Plan is required to be approved by the Public Accounts Committee, and that was done on Monday.

The financial statement work in our office is a little over half of the work that our auditors do. It is the work that we need to do in order to have sufficient coverage to be able to sign off on the financial statement opinion for the public accounts, the full statements that consolidate all of the organizations that are included in the government’s accounts.

That’s, if you will, a bit of the traditional, more technical thing. The result of that work is that we issue a financial statement opinion, and we state whether or not we believe the financial statements are, just to use common language, complete and accurate.

The performance audit work is at our discretion. We have quite a lengthy process internally and a lot of discussion externally. We take into consideration a lot of the concerns that have been brought to us throughout the year. But it is our choice as to what we believe to be of risk and significance, of interest to the Legislature, of importance to ministries and something that the public is asking for.

We have done that plan keeping in mind that we have a budget to stay within. There were about 140 that we did not put on the list but that we considered seriously. There are good reasons why we could put those on, but we did limit it. It’s a little over 60 that end up in the plan.

Some of the other highlights for the year. This is now approximately one year that we have been in the new location. The committee had recommended funding for LEED gold. I’m not going to get into what LEED is, because if I had to, I would pass that one over to Katrina to be more articulate about it. We did undertake that through the design.

Then as we got into the building, we identified…. You have to have 42 points under the way that the certification is given out, and we had 46. Did I get the numbers right? As a result, we have been given that certificate, and the little plaque sits at the front door. We actually unveiled it yesterday.

The overall budget that we’ve presented to you on the operating budget side is 1 percent over what you provided to us last year. It’s quite a bit lower than what we thought it was going to be for the period. The amount that you gave us last year did not include sufficient funding to cover our occupancy costs.

So we made decisions last year to shift things around and not hire certain people. We left vacancies open. We haven’t quite finished the year, but we do anticipate that we will not have any problem completing the year within the funding envelope that we were provided with for operating.

For next year, it won’t be so easy. There are a number of things that we’ve pushed off that are starting to get quite urgent. In fact, some of the people we’re hiring now we’re anticipating that we’ll be able to keep, and if so, we’ll need the budget that we’ve presented.

When we entered into the lease, there were a number of categories in the way that we’re making the lease payments that were contingent on certain things. We are now able to provide a more accurate estimate of the occupancy costs, and it’s about $100,000 less than what we had projected originally. But that original projection is, as I’ve pointed out, higher than what you had funded last year, just to make it clear. But when we’re asking for the restoration of that occupancy cost as it flows into the full budget, the full budget still remains only 1 percent more than what you did approve last year.

That will allow us to complete both the financial statement coverage plan and the Performance Audit Coverage Plan as we’ve presented it. Let me just see a few other highlights in here.

In ’17-18 — so, not next year, but the year following that — we did assume a 2 percent wage increase for the management-excluded employees. That’s the majority of our employees, and they’ve been under a wage freeze for years. We’re not able to do that until that is lifted, but in anticipation of that, we did put that increase into the budget for future years.

I can explain if you want…. I’ll wait to see if you have questions around it, but we put a table within the text of the document that includes a comparison of what we had asked for versus what you gave us and then what we had anticipated, in the year we’re now providing the budget for, as contrasted with where we’ve now landed with that same budget. We can go through that with you if you like. It differs slightly from the template that we filled out, which is the one that you had asked for.

The capital budget is a bigger issue. Our ask is quite a bit larger than what we had been given last year. We had asked for 215,000 and were provided 100,000. We were able to do that because of timing on some things. We had funds from the previous year. We could move some forward. But at the end of the day, when we looked at it for the budget coming up, we’re now seeing some of the implications of that.

So it’s quite a large increase. It’s 300 and something — 370 — that we’re asking. The largest amount of that, actually, is for some software for IT that we have not made the decision to go forward with. But we put this in as a request because if you do agree to the budget, then we’ll proceed with further analysis. We wouldn’t go forward with it unless we were absolutely sure that it was a useful IT software product for us to have.

In ’17-18, however, we have a different problem. The software that we use to support our audit staff…. Nothing
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we do is on paper anymore. And I have to say…. We were joking about this the other day. We used to have accountants that are in my generation who used to use 14 column and pencils and erasers. Now we use computers, and there’s nothing…. Well, there are a few things on paper, and then they get scanned in.

So our reliance on computer software and hardware — but in this particular ask, it’s about the software — is significant, and we absolutely need to keep it up to date. What we’re looking at right now is what we rely on for our financial statement methodology. We are taking a look at the methodology being used by OAG Canada and hoping to be able to piggyback on that. That actually saves us a lot of time and energy in keeping it up to date, making sure that it’s reliable and that kind of thing, but it does require a significant investment in software.

So that’s the increase — not for the year that we’re asking for currently. It’s for ’17-18. That increase stays in the capital as a high number. The next ones are about the foundational methodology software that we’re using, whereas this year it’s more optional. But it is definitely something that the IT and audit staff are recommending that we move towards, and it will give you better information in the way that our audits are displayed, both on the Internet as well as the way we’ll be able to access better information, mostly from our performance audits.

Internally, it gives us a better tool to do things more effectively. It isn’t something that is more efficient. It doesn’t replace people. The people that we do have can do their job better, but it’s not a trade-off. We’re not able to…. If we spend the capital, it does not mean a lower operating budget.

That’s it on explaining the key points. Just a couple of things. We did quite a lot of work throughout our strategic planning process and just in general to make sure that we are never spending more than we need to. We have a philosophy of being fiscally prudent. We do what we expect others to do, and we are very cautious to make sure that when we come upon something where that is not the case, we remedy it.

We did do a comparison to other jurisdictions in Canada, and we included that in here. It’s a very difficult thing to compare. The type of work that we do jurisdiction by jurisdiction does vary quite significantly, but it isn’t a bad test to just step back and say: “Where do we stand in comparison?” We did it on an average and did not try to compare one particular jurisdiction and so on. Relatively, it’s in the 60 percents and then the 70 percents as to how we compare, whether you look at it on average or a per-capita comparison.

Just to say we’re not big spenders when you compare us to other offices, but there are lots of reasons for that, and I don’t want my colleagues in other jurisdictions to come back and say: “What? Are you saying we aren’t?” Some of it is just that you need a certain base. Even for the very small offices, their numbers look really high per capita because there’s a certain base that you’ve just got to do, regardless of how large your office is.

I’m quite comfortable with where we stand. I’m quite comfortable with the budget overall. I don’t think we need to increase it in a significant way to continue to maintain…. It’s excellent. I am impressed and continue to be impressed with the performance level of the people in the office. Walking into the office, I’m able to make an assessment that it really is excellent. People are doing excellent work.

One thing that we did not put in this budget. We had a notification last week that there may be a change in the shared-services technology services pricing model. We were told our costs might change, but we’re not sure of the magnitude of that. I’m thinking we’re talking in the $20,000 range, give or take. We did not have that information when we put the budget together, so it’s not included in here.

The other is a Court of Appeal decision increasing the salaries for chief justices, which will impact all of the independent officers. In our case, it could impact more than one individual. It could be one, two and/or three. That, too, is not included in here. It could be up to $50,000 because of the number of individuals we’re talking about.

We’re recommending that you bring forward a budget for us of $17.1 million to fund the operations for the year ending March 31, 2017, and $370,000 to fund the capital expenditures for the year ending March 31, 2017.

S. Hamilton (Chair): Thank you very much. I appreciate that. I’ll go to the committee for questions.

You are proposing to increase your FTE by five, from 115 to 120. I was looking in your write-up here on staffing, and I couldn’t find any reference to what staff type you’re looking at. I’m curious. Will this be a mix of professional staff or support staff? Could you give us some…?

K. Hall: It’s primarily our auditors, at the auditor level, that we’re looking at increasing.

J. Yap: And this is to cope with anticipated turnover or an increased workplan? I’m sorry. I haven’t read your workplan.

C. Bellringer: No worries. I’ll make one comment on it, and then ask either Mark or Katrina to add to that.

The one thing we are trying to do is…. We have, in the last…. I didn’t go back and figure out how many years it
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goes back to, but in several years we’ve lapsed a significant amount of money. Part of that is because we aren’t anticipating our turnover as well as I think we should. We have to hire more in anticipation of the turnover, bringing it down, on average, during the year.

I do think that even with 120…. It’s not going to be 120 throughout the whole year. It’s not going to be even 115 throughout the whole year. If we don’t staff up to that level, we know for sure that we’re…. Well, the probability is so high that we will, indeed, lapse funds by the end of the year, and we won’t be, on average, as high as I’d like it to be.

There are two positions included in that total that are, if you will, completely new to the office and that we’re considering. We’ve got probably five that people want and two that we’re saying we’re hoping to go forward with. The debate in the office continues as to which the two will be, because we have more demand than….

We don’t need to go forward with all five, but we do have to make some choices. I can’t even say which ones it’ll be until we do the next part of the plan, knowing what the budget is going to be.

E. Foster: Further to that, I just looked down through your numbers here. Your professional services have dropped by $467,000. Would some of that be taken up with the new employees? Is that the intention there?

C. Bellringer: Yes, indeed. That’s directly related to financial statement audit work. There is a large one that we were doing directly. We’ve now got it shifted on the financial statement coverage plan, for it to be done by…. Actually, the organization will appoint the auditors directly and not do it through us, and that is freeing funds up for us to use for staffing.

S. Gibson: I notice from your reports and even from last year that you continue to lament the turnover. Already it’s ahead of your anticipated figure and exceeds the public service in general.

My background leads me to believe that, in many cases, people do not leave positions strictly for money reasons. I’m not trying to be mysterious here or allege anything. Please don’t hear that. However, for the most part….

I’m sure you’re doing exit interviews. You’re losing people all the time. I know that this gentleman here is in charge of HR. It’s been my experience that when people leave, money may have been some factor. But often it’s other reasons that lead to that, and money may be the tipping point. You’ve got people coming and going, and I know it’s tough. You train somebody, and then they leave.

I’m wondering if there’s something more systemic here. Again, this is not…. Do not hear me trying to imply anything mysterious. That’s not my purpose. But is there something that you can diagnose to discourage people from leaving or encourage longevity? My experience has been that long-standing employees are happy. They’re more content and add significantly to the culture of an organization.

C. Bellringer: It’s certainly a fair question. I’ll let Mark get into some of the numbers, and I’ll add a bit to it.

M. Lefebvre: I’ll try not to get too excited about the metrics of it all, but it’s actually been a really fascinating kind of an issue to have.

Our turnover doubled when the hiring freeze was lifted. Our folks are well in demand in the public service in general. Yes, we do a lot of exit interviews, and I do most of them myself, actually. They all have great things to say about the office, but in general, they’re leaving for promotions within government, and there’s a lot of pent-up demand. Of course, our folks are eminently qualified for those jobs. I just can’t compete with that level of promotion.

Now, we have a very good internal promotion rate. Actually, that’s one of the reasons I think our turnover is probably less than the firms but still much higher than the public service in general — because of the accountants, mostly. They want to move.

As you say, money is not a motivator, but it is a de-motivator. Being at 2009 wage rates for the last several years has been really trying on our office, in terms of being able to give people more money in any regard. People will leave the office for a promotion.

S. Gibson: A supplementary question. The vast preponderance of your employees are management or excluded employees. You only have a small group that are indirectly part of a bargaining unit, as I understand. Is there a way that you can bring entry-level….? Again, I’m just asking the question. I don’t have the answer.

Is there a way that you can bring entry-level employees in, perhaps for a significantly lower amount, in terms of less painful for your organization, the budget and the taxpayers in general — bring people in at a lower level to do more elementary kinds of responsibilities and then allow them to be promoted through the organization in a more aggressive manner, thus giving them those challenges at the same time as reducing your entry-level costs? When you have management employees, the benefits in general are quite a bit higher, as we know.

M. Lefebvre: Most of our staff…. They’re classified similarly to what they would be at internal audit in the Ministry of Finance, in those classification bands. Most of them are in what we call the applied band, which is the
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lowest band. It would have equivalent salaries to people in the schedule A jobs. Just because they’re in the management classification, most of them are actually what we call applied leaders, and they’re progressing. We do hire them at the most entry level. That’s where most of our hiring is done, at the entry level.

In fact, we’ve actually put in some structural changes, too, around our associate or student program, where we’re requiring more of a return to service. We are looking at ways to sort of bind people a little bit more to the organization.

In the end, though, we’re also one employer. Because we’re all Public Sector Act employees, our folks have access to the full gamut of in-service competitions. It’s been challenging since the hiring freeze was lifted. The hiring freeze has been…. When it was in place, people were…. They’re still really pleased to have been with the office, but I can’t compete with that level of progression.

C. Bellringer: We’re not unaware that there are other reasons as well. We participate in the WES survey, in the workplace engagement strategy survey, and we have actually seen a decrease in satisfaction. We are trying to get to the bottom of it. We’re not entirely sure why.

We do believe that…. How do I put this? We had some advantageous arrangements for some of the individuals, salary-wise, that we eliminated, because we thought they were pushing the envelope a little too much, in terms of whether that’s permitted or not. So we eliminated it. We said we’re not going to do that anymore. I mean, they weren’t really bonuses, but they were in effect bonuses. I just said no, we’re not…. As a group, the executive agreed that it was just not on. We eliminated that, and it had a significant downward…. People understood it, but they weren’t happy with it. I think we’re still living with that.

We also know that there are ways to make it a happy place for people to be. There is a stress related to the work, which we acknowledge. Sometimes — I wouldn’t say the most senior people in the office but somewhere around the middle — people get to the point where they go: “I just don’t feel like auditing anymore.”

Those of us who’ve stayed around don’t get it at all. But we are acknowledging that’s also causing some of the turnover.

M. Lefebvre: We’re not unique in Canada in that regard. All the other legislative offices would have a similar turnover rate. It’s basically…. They call it wanderlust, right? They don’t want to know…. “Maybe audits are just not for me. Maybe I better try another kind of accounting.”

S. Chandra Herbert: I just wanted to say thank you for your comprehensive presentation. Also, I’ve noticed…. I used to sit on the Public Accounts Committee, and your performance audit coverage plan — I really appreciate how it speaks in clear language. It’s easy to understand what you’re looking at, and that’s just very helpful, so thank you.

J. Yap: I thought I heard you say, Mark, that there’s a difference in the pay scales between your office and government. Can you clarify?

M. Lefebvre: No, actually it’s very similar. An IT auditor would be making the same in the Ministry of Finance as they would in our office.

J. Yap: So it’s the sheer size comparison of your office, the number of positions that you can get promoted to, versus government. When the hiring freeze came off, ministries, different departments, could start hiring, and then these opportunities came up for your people to apply. That’s what happened.

C. Bellringer: We do avoid the temptation of promotion creep, because that would be a way to keep people, to just keep moving things up and up. Then, as someone pointed out last week, at the end of the day, they’d all be in my job. In avoiding that, we do lose people to the outside, because we don’t move them up unless we have a vacancy. We haven’t changed the overall structure significantly, so we only have so many at each level and so on.

M. Lefebvre: We also had trouble attracting people at the newly qualified level last year, which was new to us. We’d been pretty successful at hiring people with qualifications. This year we’re currently running a competition that seems to be going quite well, so we’re very encouraged by that, but last year we tried to hire five auditors, and we only got one.

G. Heyman: I usually have a number of questions, but the quality of the presentation was so thorough that I actually don’t have any, which I know you’ll find unique, having witnessed my questioning at other committees. But I do want to say that I appreciate the efforts and the creativity you’re bringing to the issues of recruitment and retention. I think, in particular, if recruitment resurfaces as an issue, that’s a concern for all of us.

There are a number of us around this table who also sit on Public Accounts, so we appreciate the thoroughness and quality of the work that comes from your office, the reports that we have to review and the fact that they, largely, get straight to the point, which is helpful for those of us who have large numbers of documents to read and juggle at the same time.

Having both qualified staff and retaining ones who have developed on the job I think is important to all of us, so thank you for highlighting and paying attention to that.
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S. Gibson: Super-quick questions. Do you use job rotation? A friend of mine is a CEO of a public sector company, and when he introduced job rotation, morale increased quite dramatically. I don’t know whether you have any comment on that.

S. Gibson: Yeah, like where people are allowed to work in different…. If they have responsibilities that are …. They can work in different offices if they’ve got similar skills. He found that with his employees, the morale increased. I’m just wondering…. I don’t want to belabour HR. I realize this is more of a financial function, but it’s of interest to me.

C. Bellringer: There are elements of it. Within the financial statement area and the performance audit area, we do try, to the extent possible, to cross over between those. We also ensure that nobody stays on the same audit for too long. It’s a familiarity risk that we have in audits. We try to move them through different ministries and so on. So it’s built into it that way.

We also have a couple of people on a temporary assignment, in or out. We can’t do too much of that because, again, we have a conflict with the…. They have to remain independent of the ministry, so if it’s within a government ministry, it causes complications, and then they can’t work on anything in that area for a while. But we do it from time to time.

We do have a couple of…. As vacancies have arisen, we’ve brought people in on temporary assignment to get through things quickly, which allows for some different arrangements. We are exploring any kind of a flexible arrangement that’s not too outrageous, if you will, for people who need to work from home on occasion.

We actually staff audits out of Vancouver. Our entire office is in Victoria. We don’t have an office anywhere else. So the work done in Vancouver…. Some of the people working on that will primarily just stay. They live in Vancouver, and so they will not have office space in Vancouver, but that gives them arrangements there.

We’re looking at new ones now to come up with some ideas on how to make it what people are looking for.

Mine continues to be…. The number that jumps off the page relates to occupancy costs. We’ve had the discussion over the last couple of years. Could I ask: with respect to this increase, how much of that is directly attributed to achieving and maintaining the LEED gold certification?

K. Hall: There are no ongoing costs. Once we receive our certification, that is our base occupancy, rent, property taxes and hydro. That’s the cost for the building.

S. Hamilton (Chair): Okay. So may I ask, then, how much of that was attributed to the achievement of the gold standard, because this has gone up by some $300,000?

K. Hall: We paid for the tenant improvements as capital costs in the year that we were provided the funding. So it’s our square footage that we negotiated right at the very beginning and then just whatever the property taxes and hydro…. So there are no costs in there related to maintaining the LEED or that were incurred to get to the LEED standard.

S. Hamilton (Chair): That leads me right to my next question. That has to do with the discussion around underutilized or unoccupied space in your facility. Are we still struggling with that? Is everything filled to the brim now?

We don’t have unused space. What it is, is there’s a basement level, a main floor level, and then the second, third and fourth are where the offices are. It was designed for the staff level we were at with the, give or take, five…. It’s actually more people than that over the course of the year. We’ve got extra people. We’re anticipating, if the budget is approved, there will be extra people in the office than the number of people it was designed for. We can fit them in by moving some of the configurations around, but it’s not empty space, if you will.

The basement and the first floor was space that was not anticipated when the original discussions were taking place. So when we came last year — I don’t have all the numbers in front of me, so we may have to go back and get some more information to you — what we had thought the square footage would be, because they built the building for our use, ended up being slightly larger, square footage–wise, than we thought it was going to be.

There was an element of the overall square footage that was higher. But some of that is on the main floor, which is a large meeting room, a large kitchen area, then the bank of elevators and then quite an open front space. That part is right at the front. You walk in the front door, and there’s a full glass window, and there’s an empty space. That’s what I would call the empty space in the building. Other than reconfiguring things and possibly moving a reception area down there — but then that would cause other complications — we don’t know what to do with it.

Then the basement. We don’t have any parking in the building at all. Like, there’s no parking at all attached to that building, but they have put in space for 60-plus bicycles. There’s a bike ramp. That was designed in. It’s full.
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Well, I wouldn’t say there are 60 every day, but there is a good number.

I confess that I am the only executive that doesn’t ride a bike in. I apologize, but at my age, it’s one thing I’m not going to start taking up. But it is well-used.

It is a benefit to being in the design that they put in. There are showers and so on in there for the people who have ridden their bikes in. That’s kind of what goes on in the basement. Then the rest is all mechanical.

The only other space in the actual building that is used by others is the storefront. There’s one occupied and two that are vacant that they’ve not yet rented out. So there is some common area in the basement level that is shared with us and the storefront. That’s to do with the mechanical and the heat and light and all that stuff.

You know, we really did give some serious consideration to: what could we do to, if you will, share the space? The problem is with the design. Could it happen? Yes, it could happen. I mean, I’m not going to say no, because there are ways to reconfigure it, but it would take a designer to come in and literally reconfigure.

Given that we have a lot of confidential information, we have a lot of security within the building. The only way I could see it happening is for a whole floor to be…. Move everybody off one floor to somewhere — so you’d have to redesign certain areas and move them — and then have access to that floor be secure. We’d lose some security by losing the security coming in the front door. We’re the only ones who can use that, and we control that access. But we could do that.

I think that would be an expensive way to do it. Someone would have to cost out whether it was worth doing. We didn’t find anyone who was needing space within the independent officer group that we could think about talking to about that.

We have offered up the use of our meeting rooms to anybody within government — independent officers first. Some of the ministries have used it, and we just offer it to them. Again, you have to watch how they get in, and someone has to be around. It’s a little bit complicated, but not that big of a deal.

I’m understanding the concern. Having come in after the design was done, I don’t know really what to do about it.

D. Ashton: Carol, thanks very much for your presentation, and to the others that have come today.

Did I just pick up that you said that with the additional staff, you’re going to be challenged for space? Did I hear that?

C. Bellringer: Not challenged for space, but we have to make a few changes to how we have it set up to find them space. We have lots of options. In the main staff areas, there are no walls. There are dividers, so those can be moved around.

It’s not set up for them to come in. It’s not like we have an empty office that they just slide into, but we can move things around. A couple people will lose a few feet here and there. It’s doable.

C. Bellringer: Yes. I mean, there are a few spots in the office that are duplicates. We have a coffee room on every floor, as an example. We could not have a coffee room on every floor, and it would actually help. One of the problems right now is that people are isolated by their floor. We’re trying to figure out how to get them to mingle more. So we could say: “No, everybody has to go down to the main floor if you want a coffee.”

C. Bellringer: Exactly. But they are currently built in, so we would have to remove them in order to use that space for something else.

Seeing none, thank you very much for taking the time. I also want to thank you for utilizing the financial reporting template that our Clerk’s office worked very hard in putting together. It really helps this committee compare apples to apples. We’ve had the discussion over the last few years, so we do appreciate you utilizing that.

I will call for a brief recess, first of all, and then we’ll have a little discussion for another day.

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Chair:	Wm. Scott Hamilton (Delta North BC Liberal)
Deputy Chair:	Carole James (Victoria–Beacon Hill NDP)
Members:	Dan Ashton (Penticton BC Liberal)
	Spencer Chandra Herbert (Vancouver–West End NDP)
	Eric Foster (Vernon-Monashee BC Liberal)
	Simon Gibson (Abbotsford-Mission BC Liberal)
	George Heyman (Vancouver-Fairview NDP)
	Mike Morris (Prince George–Mackenzie BC Liberal)
	Claire Trevena (North Island NDP)
	John Yap (Richmond-Steveston BC Liberal)
Clerk:	Kate Ryan-Lloyd

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES