Public Accounts — Issue No. 19 — Wednesday, June 3, 2015 (HTML)

10-20 ICBC Salon, Morris J. Wosk Centre for Dialogue
580 West Hastings Street, Vancouver, B.C.

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

Others Present: Carol Bellringer, Auditor General; Stuart Newton, Comptroller General

2. The following witnesses appeared before the Committee and answered questions regarding the Follow-Up Process draft Action Plan template and procedures of the Office of the Auditor General:

4. It was moved by Kathy Corrigan, MLA that the Committee adopt a new follow-up process as proposed by the Office of the Auditor General as presented on June 3, 2015. The new follow up process will include a regular receipt of detailed action plans from audited government ministries and agencies, with regular updates as required on an annual basis. Further, the Committee will retain its ability to meet with witnesses on the action plans, and their related audit reports, or to request further information in writing; and to endorse Office of the Auditor General report recommendations.

6. The Committee resumed debate on the motion and the question being put, it was defeated on the following division:

7. It was moved by Mike Morris, MLA that the Committee adopt a practice of receiving detailed action plans in conjunction with its review of audit reports as referred to the Committee by the Legislative Assembly.

That the Committee adopt a practice of receiving detailed action plans with regular updates as required on an annual basis in conjunction with its review of audit reports as referred to the Committee by the Legislative Assembly.

12. The following witnesses appeared before the Committee and answered questions regarding the Office of the Auditor General Report: Management of Cumulative Effects (May 2015):

• Jennifer Psyllakis, Manager, Land and Resource use, Resource Management Objectives Branch

13. The Committee recessed from 12:05 p.m. to 1:06 p.m. and from 2:15 p.m. to 2:23 p.m.

14. The following witnesses appeared before the Committee and answered questions regarding the Office of the Auditor General Report: Follow-up Report: Environmental Assessment Office (May 2015):

• Paul Craven, Executive Director, Policy and Quality Assurance, Environmental Assessment Office

16. The following witnesses appeared before the Committee and answered questions regarding the Office of the Auditor General Report: Follow-up Report: Updates on the Implementation of Recommendations from Recent Reports (April 2013) – Aspects of Financial Management:

17. George Heyman, MLA asked the Auditor General questions relating to correspondence from the Office of the Auditor General dated April 27, 2015, regarding the protection of personal information.

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
Adoption of Agenda	687
Follow-up Process for Office of the Auditor General	687
C. Bellringer
L. Hatt
Office of the Auditor General: Management of Cumulative Effects	700
C. Bellringer
P. Nagati
T. Ethier
A. Lidstone
M. Sydor
J. Psyllakis
Office of the Auditor General: Follow-Up Report: Environmental Assessment Office	720
C. Bellringer
M. Sydor
P. Craven
Office of the Auditor General: Follow-Up Report: Updates on the Implementation of Recommendations from Recent Reports	727
R. Jones
S. Newton
C. Bellringer
Other Business	732
C. Bellringer

B. Ralston (Chair): Good morning, Members. A draft agenda has been circulated. Unless there are any proposed changes, I’ll consider that adopted and our plan for today. Any proposed changes? Okay.

Our first item is…. The item that was deferred from our last meeting was discussion about the follow-up process. I’ve asked the Office of the Auditor General to briefly reacquaint us with the document that they prepared. It has been circulated. We have had some preliminary discussion, so I think most members will be familiar with it, but I thought just in order to focus the discussion it might be useful to run through it quickly once again.

I’ll turn it over to the Auditor General. I believe it’s Laura Hatt, who’s the director of performance audit, who’s there with the Auditor General.

C. Bellringer: Yes. Laura has been doing most of the work for the office, so she’ll go through the timeline at the end.

We won’t go through the full set of slides because we’ve been there. Having said that, just to fill you in a little bit on what has happened since the first presentation, on February 5 of this year we had put forward a proposal for an improved follow-up approach to the Public Accounts Committee. In the proposal we had included recommendations to enhance both your role as well as the effectiveness of our role in adding value to the existing follow-up process.

Following that, at the request of the Chair and Deputy Chair, we were asked to work with the Deputy Clerk to provide a more fulsome description of the process. Our office has met with the Clerk’s office as well as the office of the comptroller general to gain agreement on the administrative details of what the process would look like. We’ve come to an agreement on the administrative details but recognizing it would be a new process and there may be some need to make adjustments as we go along.

We’ll just get into the basics of it. The main change is the use of action plans. That is really…. Previously we had been requesting self-assessments from ministries or agencies, boards, commissions following an audit. This would shift the accountability not to us for following up on those but rather to you for the ministries and ABCs to provide you with their progress in implementing the recommendations. There’s a role for our office, the comptroller’s office and the Clerk’s office in making it work.

We’ll go straight to this. Do you want to go through a couple of the steps in here? I mean, really, I’ve just in effect said it. Other than just going through the timeline that this would suggest…. Do you want me to do it, or do you want to do it?

I think, as Carol mentioned, that if we can focus on the main changes, which is really the action plan template…. The first action plan will be prepared when audited entities are called to the Public Accounts Committee. When the report has been released, and it’s going to be discussed at the committee, we will request that all entities provide an action plan along with their presentation to the report. The action plan would include their planned actions to address recommendations, the timelines when the recommendations will be complete.

In terms of the follow-up, we will ask for a second action plan approximately a year after the original action plan is requested, and they’ll be requested twice a year. Included in that will be the actions that were planned, what they’ve done since the first Public Accounts Committee, timelines and assessment of their own progress.

C. Bellringer: This was the same slide that we had circulated a couple of months ago now. The one thing to note is that this was a complete summary of all of the various changes that potentially could be made. The one that is, in effect, at your option would be…. In order to make the switch over to action plans, you kind of have to do everything except for the one purple box on the right, which is your choice as to whether you want to make additional recommendations and so on.

So that is a slightly different add-on that need not be done in order to switch over to doing action plans. Just to identify, that’s for you to make that final decision. But we aren’t suggesting that is a necessary step in order to make the switch.

I think that really does sum it up, I mean, other than getting into administrative details that I’m assuming you do not feel a need to suffer through. Having received the action plans, our office will do an assessment twice a year to decide which ones we want to re-audit, and that would be….

We gave you a template for how we actually go through doing the assessment. We look at risks, significance and so on, and then we would bring to you an indication of what we’re preparing to do, just for information. We’re not required to do so, but we’d like to share that with you.

B. Ralston (Chair): Just in terms of the role of your office in assessing the follow-up reports, there would be an assessment of the status of following up and then a
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decision as to whether or not to conduct an audit-level assurance of steps taken or not taken. Then that would be provided to the committee.

I mean, I appreciate it’s difficult to estimate how frequently that might occur, but I take it the plan envisages that that is a relatively infrequent likely step, in the sense that the, I suppose, prospect of it… Wouldn’t it, perhaps, encourage compliance in a way that it wouldn’t be necessary to actually do a full audit in most cases? Would that be a fair summary?

C. Bellringer: Yes, it would. We started doing what I describe as re-audits only just a couple of years ago. We were, previous to that, only publishing the self-assessments. When we started doing those we were doing the coverage plan now for the next couple of years, and we’re kind of….

I mean, again, we don’t know for sure, because obviously, it depends on what we’re getting back. But it’s in the, sort of, two to four a year range of the number of them that we would consider to be significant enough that we have some concerns that we feel we need to go in and do a re-audit and not just purely rely on the action plan.

S. Sullivan (Deputy Chair): Yeah. Perhaps I could also give a little context with the discussion.

I had been phoning around to different people involved in public accounts committees across the country and people from previous years. You know, I’d asked their advice on how we can improve our processes. I think there’s quite an appetite to do things better and have more impact.

The number one thing that was told to me was that the thing we have to avoid is making the Public Accounts Committee a forum for partisan political differences. We really want to be able to focus on the reports of the Auditor General and what the Auditor General brings to us.

I had discussed a whole bunch of different options, and I know several are put up here. One is the action plan, which we have not had. The other is endorsing recommendations. The other is adding new recommendations. Discussing it with a number of other members of the committee, we thought what we should do, really, is approach it one at a time. Let’s try to make one innovation at a time and just make sure that we maintain the ultimate goal of making it not a partisan forum.

I know the CCAF has joined us here a couple of times. In phoning around, I was reminded that they are a lobby group and that they represent the accounting industry. I did check, actually, with the registrar of lobbyists, and they are, indeed, a lobby group, but they don’t register. Apparently, because they lobby for under 100 hours a year, they fit under a loophole in the law.

I still do think that given they are representing the highest and the best interests of integrity, they should consider registering. They are doing a good job promoting good things, but they will push hard. We have to make sure we take things gradually.

The thing that I was able to get as unanimously from everybody I spoke to was the need for an action plan. This is one of the reasons this has come forward at this time. What we do believe — and I think it’s unanimous — is that we need to get more accountability from the different ministries. I would certainly endorse moving forward with the action plan.

I’ve reviewed the bureaucratic procedures that would go on. It would give us more to work with. It would give the ministries much more accountability. They would have to come forward with what they’re planning to do. It would give the Auditor General a better idea of which has the highest risks and which ones we should perhaps re-audit or do more work with.

I just wanted to thank the Auditor General, the office, for doing what they’re doing. I think we should proceed gradually, incrementally. This is the right way to go.

S. Robinson: I do agree that this will afford us greater accountability. At the end of the day, I think that is the task at hand for us. It’s really hard and challenging to review a report, recognize that there are recommendations, endorse those recommendations and not be able to know in due course whether or not those recommendations have been acted on — because then what’s the point? I do appreciate this direction, and I think we need to move in that direction.

I do want to add one thing, and that’s the timeliness of when this committee meets to review the report. The report comes out, and it’s a year or 18 months or even two years before we review it. That really stretches out the timeline. I do think we have a responsibility to the organizations that get audited to also endorse the recommendations in a timely fashion so that they can actually act in an appropriate fashion and so that there’s a real sense of continuity and a feedback loop.

I would actually like to ask the Chair and, I guess, the Deputy Chair if that’s something that we could also look at — that we have a commitment, that we develop some sort of, I guess, accountability about how timely we will be in reviewing these reports as they come out.

B. Ralston (Chair): Just briefly on that, clearly we’re dealing with the cumulative effects report basically about eight days after it was tabled in the Legislature. If that’s the new benchmark, I think we can go forward from there. I don’t know whether it will always be possible to achieve that, because the Auditor General releases reports throughout the year, and the Legislature doesn’t always meet in the fall. But I agree with you that that should be a goal, and I think we’ve endeavoured to clear the backlog and bring it right up to date.
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B. Ralston (Chair): Well, no. You’re on the list. I’ve got Vicki and Marvin, you and then Mike.

V. Huntington: Perhaps I don’t understand the vice-Chair — some of his comments. If they’re meant as a suggestion that this committee constrain itself on recommendations for a fear that recommendations might be partisan, I guess I’d like some further discussion around the table about that.

I don’t think recommendations that are dealing with one ministry and a request that that ministry consider a more specific type of assessment or follow-up is likely to be that partisan, but I would like further understanding of what the vice-Chair is suggesting. He mentions: “One recommendation. Go slow. We don’t want to be partisan.”

Could you explain a little more what you mean by that? I feel that you’re suggesting the committee and the members constrain themselves with regard to the new process.

M. Hunt: I find it interesting that we’re discussing cumulative effects. I’m looking at the new pieces here, and I’m just wondering about the cumulative effect. I’m new to the committee. I’m new, as you all know, to the provincial government as well, and I find the bureaucracy amazing, just amazing.

I’m looking at this, and I’m going: “Reporting every spring and fall on the action plans and new action plans — how much bureaucracy is this going to create?” I have no problem with the concept of action plan, and here’s how we’re going to deal with it, and we have that piece of accountability. I’m just looking at that twice-a-year report back, and I’m going: “Hold it a second.” New action plans and all the rest of this….

I tend to like to do incremental stuff, so I support the action plan concept. I’d like to, from my ignorant position…. And I admit that. Let’s walk out the action plans, see what they look like and get a little bit of familiarity with this.

I know that on the finance committee at local government, we had an interesting process of accumulating ideas, and it just created a massive pile of work. What was the net effect of it? I would like to take this incrementally. That would be my perspective on it. Let’s do the action plans, see how they walk out and then see how reporting back works.

B. Ralston (Chair): Before I turn to Sam, the Auditor General wants to say something.

C. Bellringer: It’s just a quick clarification on one aspect of the twice-a-year part. It would actually be twice a year that the requests are made to the organizations, but not to the same organization twice. It would be, in effect, half at one point in the year and the other half at the other point in the year. All of the other things….

L. Hatt: I think that allows you to know that there will be a spring and a fall follow-up, so it helps in terms of timing the committee’s meeting agenda. The idea would be that from the perspective of the organization, they would only be reporting once per year. But they would know that every spring and every fall there would be that process in place. That’s the idea.

S. Sullivan (Deputy Chair): Just responding to the member, we don’t have any problem with the actual politicization of the reports. What we have a problem with is that perhaps some of the processes we would engage in would lead to partisan bickering. We want to avoid that. In the calls that I made around, this was one of the things that was said to me.

A couple of the things that happened just in the last couple of months that we’ve dealt with, with our committee is that we had some pretty sharp discussions at our subcommittee about meeting times, for example. This committee has met more hours than any committee in history. In the last two years we’ve had more hours per year than any. One of the reasons we do these two days at a time, three days…. At one time we even did four days at a time.

What I realize when I phone around to different legislatures is that when you meet during the legislative session, for example, the governing party always wants to meet during the legislative hours. The opposition always wants to meet not during the legislative hours. So in our case, it’s Wednesday morning. The opposition wants to meet on Wednesday morning. The government doesn’t want to.

We had a meeting. We tried it on Wednesday morning, and I had three requests for leave. It was difficult.

The other one was that last time we met, we had about six reports that were coming forward by the time of this meeting. We said: “We will have lots of time to fill up our two days. We’ll have lots of reports.” Those reports didn’t all show up. So as a result, we’re only meeting for a day and a half. That is something I try to commit to, to the people who come from long distance. They really stress to me if we could try to make sure we fill up our two days, that we have enough reports.

The take-away for me is that I think we should have the reports in hand before we actually schedule the meetings, because we don’t know for sure, as we saw. On this one, we’ll be going home early tomorrow. That will be a little bit of a challenge for some of the people who’ve come a long distance.

B. Ralston (Chair): That’s not strictly on the follow-up process, but fair enough.

M. Morris: In relation to the continued process of making additional recommendations, I’m just a little cautious with respect to that particular step. I know that when the Auditor General or anybody determines what entity they’re going to audit, they also determine the framework in which that audit is going to take place. They will risk things out, and they’ll risk things in.

Once we hear from the entity and we have our first session and we go through the report, I don’t know if we can legitimately make any recommendations to an entity because we don’t know what the framework and parameters were in the discussions at the early stage of developing the framework for the audit.

I certainly don’t see anything wrong with going back to the Auditor General and saying: “We see some gaps here. Was this looked at? Was this part of the framework that you audited? If it wasn’t, why wasn’t it? Maybe it’s something you can look at yourself.”

I think it would behoove us to interfere with the process where you may not have had all of the information in the first place because of the framework of the audit itself. I don’t know. Just from my audit experience, when we present our findings, we get comments back sometimes that the audit didn’t go far enough.

K. Corrigan: I have an incredible amount of faith in the quality and the ability and the capacity of staff — the Auditor General’s office — and, indeed, MLAs. I think we’re capable of multi-tasking and doing more than one new thing at a time.

I like the idea of the action plans. I think that they provide some structure and clarity. What I sometimes find in response to the recommendations is that the responses — the government, the ministry responses — have a tendency to be a little bit like Jell-O sometimes. Not often. Not always, certainly, but they’re really hard to align with the recommendations.

There’s some very good writing, but sometimes it’s a little bit creative. I think a little more clarity in the action plans would be helpful for all of us to move forward. I think that that is a good idea. I think that would be an improvement.

I am concerned about the feeling from some members…. The suggestion was made that we don’t want to be partisan, but there does seem to be a line that goes right across the room about who thinks that it’s a good idea to have recommendations come from this committee and those that don’t.

We do this all the time in special committees. I think probably every single person in this room has sat on a special committee — every MLA has sat on a special committee — where the job of the special committee is to make recommendations, to come up with their own recommendations.

Mike, you were talking about a process. I liked your idea and your suggestion that we could check back with the Auditor General about whether or not a possible recommendation would be something that would be precluded. It wouldn’t make sense within the parameters of that particular audit or if there’s another reason why it wouldn’t be appropriate.

I think we would make the whole process more robust and more effective if we were at least thinking about additional recommendations that could be made. I would always want to check with the Auditor General about what the opinion was and what the feedback was, because the expertise is in that office.

I’m not afraid of making recommendations. I think it would make us more effective. We would have to think more about the reports. It would provide an added service to the Legislature and to the people of British Columbia.

L. Reimer: Well, I fully support the principle of accountability and transparency that’s built into this follow-up process. I support the concept of the action plan.

I am concerned. I will be honest with you. I think Sam made reference to the time issue and the fact that this committee has met an awful lot. I am concerned about the time that this follow-up process is going to add.

I’m wondering, from the Office of the Auditor General, as well, whether this is going to impact upon, for instance, the number of audits that you’re able to complete and if it’s going to impact the number of audits we have the ability to see here as this committee.

I fully support the principle here of increasing the accountability. I like the idea of an action plan and a follow-up process, but I do have concerns about the time.

With respect to the additional recommendations, I’m of a couple of minds. Kathy mentioned the fact that there are other committees that are making recommendations, and that’s true. The Office of the Auditor General…. I mean, I see that office as being the experts in the area. You’ve determined your framework. You are really the ones who are the experts in the area. Therefore, I question whether or not…. I think we need to follow up, but whether we should be making additional recommendations, I’m unclear about that.

G. Heyman: A couple of comments and, I guess, a couple of questions to the Deputy Chair.

First of all, my assumption with respect to the Auditor General noting that the committee may make recommendations is that if we were to make recommendations, they would be…. I mean, any recommendation or suggestion that we make to the Auditor General is a suggestion, because that’s the only power we have.

I think we do have the ability, if we decide to do so by
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vote of the committee, to make a recommendation of the Legislative Assembly. So in a sense, it’s moot. We either will or we won’t on any given issue. Any member of the committee can raise it at any time is my understanding. We’ll have a discussion, and we’ll have a vote. So whether it’s there or not is, I think, moot.

I think in some ways one of the failures of the process has been, aside from the period of time where we weren’t viewing Auditor General reports in a timely manner…. The report comes. We review it. Some time later we may know both the ministry’s view and the Auditor General’s view on what follow-up has actually been done and whether the ministry response is an accurate representation of the follow-up.

We have an example we’ll get into later of the environmental assessment office saying they fully or substantially completed work on all recommendations. The Auditor General agreed with four out of six of those and on two said: “No, don’t agree. It’s partially implemented.”

I think there is importance and value consistent with the mandate of the committee to report to the people of B.C. and the Legislative Assembly on our take on the work of this committee in standing back and looking at the commentary of both the Auditor General and the ministries. I think the Auditor General, whose specialty is accountability, has provided us with a framework.

So I’m unclear, from the Deputy Chair, what exactly he means by: “Let’s do this incrementally.” Does that mean let’s take the first part of the process, and in a year let’s decide if we’re going to do the second part of the process? Or is the Deputy Chair actually in favour of this proposed follow-up process? The only way we’re going to know if it works is to try it, and the only way we’re going to know if it’s too onerous from a time perspective is to try it and adjust it as need be.

Frankly, we’ve been discussing meeting follow-up and everything else for a year and a half, and it’s beginning to feel a little bit like water torture. I’d like to know what the plan is and get on with it.

B. Ralston (Chair): I’m not going to encourage cross-debate. At some point someone will move a recommendation, and we’ll get on with it.

C. Bellringer: Okay. We had thought through whether or not this was going to be something that would take additional time, but we think not. It’s just a bit of a shift over. We think that action plans themselves within the ministries should already be there, so we’re not looking at that as an additional step.

We are already selecting a few a year, and we continue to do so, so we don’t see that as a change. It would replace, for us, the production of the self-assessments in a document with something where we’re producing and providing to you our review of the action plans and what we make of it.

Also, doing a re-audit, when we do them — and we have done a few — does take us much less time than doing the original audit. The only risk for that for us is if we have staff turnover for the individuals who actually worked on the audit. Then we run into a bit of trouble. But we haven’t had that problem yet.

L. Popham: I just want to address a couple things, some of what the Deputy Chair mentioned. I think this looks excellent. I’m fully enthusiastic on follow-up and reports that are coming from the Auditor General. I, personally, think that this is one of the most important committees that we have operating in the Legislature, one of the more important official legislative committees.

It concerns me that we, possibly, may be making decisions not guided by the mandate or the intention of this committee but by our time constraints as members. So my question to the Chair and the Deputy Chair is if perhaps in the future, when we’re considering assignments to this committee, an interview could be done to see if a member, perhaps, thinks this committee may be too much of a burden before they’re assigned.

G. Kyllo: It’s been pretty apparent from the different meetings we’ve had in the past that the audited organizations take the recommendations and the reports of the Auditor General very seriously.

For me, the piece I think is most important is the fact that in the future, if we’re willing to adopt a new proposed process, the audited organization will actually provide their action plan to us, so we can actually review that action plan as part of our discussions. To me, that is probably the most important part.

I’m concerned about this committee providing and making additional recommendations, further to MLA Morris’s comments, in that we don’t necessarily have the same amount of background. We don’t necessarily have all of the information on what portions of the organization were necessarily audited. I’m concerned that if we make additional recommendations, although they’ll just be recommendations to the Auditor General, we could be putting additional pressures on them.

With the audited organization there may be additional fiscal pressures with respect to timelines and milestones and with respect to the expediency with which they’re going to undertake to remedy some of the recommendations that are coming forward, let alone us making additional recommendations over and above.

I’m fully in support of seeing action plans submitted to this committee as part of our review process, but I’m not sold yet on the idea of this committee making additional recommendations.

I guess further to what our vice-Chair has suggested — also MLA Reimer, her comments, and MLA Morris — I think that the incremental step will be that if we move forward with the requirement of the action plan being provided to this committee as part of our deliberations in review of the Auditor General report, that in itself is going to be a huge improvement over the existing process.

My recommendation would be that we’d actually review that and have a look to see the timeliness of the recommendations and the follow-up that’s provided by the audit organization before we look at expanding it to include additional recommendations.

S. Sullivan (Deputy Chair): When I was doing my research, what I found out was that several years ago this committee did do most — well, at least versions — of this, and the situation got very bad. The result is we ended up with the way we do things now. There was a process that got us to this point. And there is a strong opinion among some that it’s been working for several years. Why don’t we just keep doing what we’re doing? That is one option. Let’s just carry on as we have done for several years. It’s worked very well.

But there is a sense from others that we need to get more accountability. Let us go incrementally to a new system. And you know, there are a couple of reasons for that. The number one reason is we want to guard against creating a political partisan forum.

Yet there are lots of other reasons. Time — what will this add to time? We already meet more hours than any others, and we don’t mind that. We want to carry on. But there are many other things that we might want to think about. So it is a good idea to move incrementally. That’s what I think we should do.

K. Corrigan: Well, taking the Chair’s suggestion, I move that we adopt this process, including the ability of the Public Accounts Committee to endorse Office of the Auditor General recommendations and make additional recommendations.

B. Ralston (Chair): Before I create a new list, I would say that in order to have an action plan endorsing the recommendations as the basis on which the action plan would proceed, I do have some comments on the comments of the vice-Chair. I’ll try not to be too distracted by them, because citing some anonymous sources that the work of the committee was bad I don’t really think is fair to the committee or to its members and to the work that it has done.

I would say that endorsement of the recommendations was put in abeyance while we had this discussion at the request of the vice-Chair about a year and a half ago. That’s axiomatic for the process to proceed. The action plan would follow, and whether or not we want to make further recommendations is at the discretion of the committee as a part of the power of the committee. It’s quite common in other jurisdictions, but that’ll be the debate here.

Any recommendation would have to pass by the majority of the committee. Now, in a non-partisan environment political considerations would not prevail, and the government members would not vote as a block, I’m sure, to block a good recommendation.

I think that could be…. Anyway, I just want to make sure that we understand what we’re voting on here. The discussion has been, I think, a bit circular. So I’ll create a new list, and we can start again.

K. Corrigan: I do, in fact. I’m not entirely clear, Chair — mostly because I probably wasn’t listening to you properly. You’re always very clear in what you say.

The Clerk just came and informed me that we can make independent recommendations. Is that correct? That’s the first thing.

Just to clarify, of course, all parliamentary committees, being advisory bodies to the Legislative Assembly, can at any time make recommendations by motion. I think it’s helpful to note that the recommendations are always directed to the Legislative Assembly. That is the body to which this committee reports. That being said, the recommendations could include observations or opinions of the committee on the activities or actions of certain government agencies. But all parliamentary committees have that power.

If it’s the intent of the committee, I don’t think a motion would be required to assert the committee’s ability to do that. The question seems to be whether or not the committee has an interest in pursuing a different approach in terms of considering its audit reports.

K. Corrigan: I’m going to digest that for a second. I also want to, just in terms of the comments and the
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reasons to not move that step…. An approach, I guess, would be more the way to put it. Several members have talked about time constraints. The Auditor General responded to that and said: “As a result of our discussion….”

This is the Auditor General’s plan that has been put forward to us. We are, on the one hand, it seems to me, saying we need to leave things to the Auditor General because the Auditor General is the one that knows best. But when it comes to the Auditor General’s plan about how we could move forward, we’re not trusting the judgment of the Auditor General quite so much.

The Auditor General has made it clear that this would not, as some members have suggested, create additional time constraints. I guess, in addition to that, given what the Clerk has just said, maybe it is moot whether or not we include in the motion reference to making recommendations if we can already do that.

If that’s an amendment that we need to make, then…. If it’s a moot thing — I’m not clear that it is — then I don’t care whether it’s in there or not.

B. Ralston (Chair): Well, the process would be that the committee would endorse Auditor General recommendations, and then at the time of coming to the committee, there would be an action plan. Then it would follow administratively in the way that it’s set out here.

I think, really, you’re just endorsing the plan as presented with no explicit reference to making additional recommendations, because that’s in the inherent power of the committee in any event. It seems to be surprisingly contentious, so it might facilitate agreement and a recommendation here that passes more easily if that’s simply omitted. That’s my suggestion.

V. Huntington: I have to admit that I wish I was speechless at this point, but all I can say to start my comments is that since I was elected, I don’t know when I have been more annoyed or more disappointed in a discussion than I am right now with this one.

The Auditor General’s reports are done by an independent officer. We have never and the Chair has never accepted, since I’ve been here, additional recommendations. I’ve wanted to make them. I’ve thought the committee had a right to make them. I think we are responsibly charged to make them if we feel that there is something that is missing within the requirements to be accountable to good governance in this province. But so far we have never made an additional recommendation, to my knowledge.

The Auditor General comes forward with recommendations on how we can create a more efficient and accountable follow-up process. That’s all this is. Right now the entire process is in the hands of officials, both in government and in the Auditor General’s office. It has never been placed in our hands.

We sit, we read these reports, and we say: “Yes, sir. No, sir. Three bags full, sir. Come back to us in a year or so with a follow-up. If we have time, we might get to it within that year, but usually we’ll take three or four years to get to it.”

Here we have sitting in front of us a process that would create some efficiencies, some accountabilities and no more time. What we’re doing is we’re organizing a process that instead of a self-assessment is now organized into a framework in which self-assessment can occur and can more easily be followed within more specific language.

That’s what we’re doing here. We’re creating an efficiency for this committee and for the Auditor General’s office and, I would think, ultimately for the ministries, once they realize that we want to see some real answers here, not just wordsmith bafflegab, which is what almost all of the replies are that we get. Yet we have never said anything. We’ve never dealt with it.

I guess I don’t understand where the members opposite are coming from. That’s what you’ve done here. You have created a partisan discussion on something that ought not to be partisan at all. You have split this committee, when all we want to do is have the right, the ability, to say: “Mr. Chair, I would like to make a motion recommending that….” It would require a seconder. It would require debate, and you guys can vote it down.

You know, you’re in your majority. You’re part of this process. You run the process, ultimately, which is what you’re doing right now. I have to say I am incredibly disappointed, because to me it’s an indication that requiring good governance and good fiscal management and good program management from the ministries within the province of British Columbia is not what you’re interested in doing.

I just think the whole thing is being blown out of proportion. If we want to make a recommendation and we accept a recommendation after debate and a vote, then we should be entitled to. Already we have that ability. To now say, “We’ll strike that ability out of a formalized process of response and follow-up,” is just beyond me.

I guess if we’ve got an amended motion, well, we’ll just strike that whole thing about making a recommendation out and we’ll carry on as usual. That’s fine. But I think this has been a really disappointing discussion.

M. Morris: I agree with amending the motion so that we’re not including those recommendations. You know, keep it simplified. I think we’re taking a step in the right direction here by going to these action plans. It adds a
[ Page 694 ]
significant level of accountability that wasn’t there before with the self-assessments, and it gives us an opportunity to review the action that’s done on it.

The Clerk made a comment there that we already have the ability to make recommendations to the Legislative Assembly, but do we have the legal ability to make recommendations to the audit entity, which that infers?

Again, I go back to my original comments where, if we do, we’re making recommendations without benefit of all the information that the Auditor General has had in determining the framework for the audit in the first place. I wouldn’t want to see us venture down that path, because I can see some problems arising from that. The audit may not have included enough of those details to form that recommendation.

I would support the simplified version that we adopt the practice of receiving detailed action plans in conjunction with the review of audit reports.

M. Hunt: At the risk of proving the fact of “wordsmith bafflegab,” I would like to ask the question to the Auditor General if it makes a great deal of difference in the particular section that I’ve raised my concern with. My concern is that we create new action plans every year, walking through, versus an update “on the” action plan.

Now, I see your head is nodding up and down. Is that what you believe the intent to be of what you said there, or do you believe the intent to be a new action plan?

C. Bellringer: The intent was for it to be an update on the individual action plan.

M. Hunt: So you wouldn’t call it just wordsmithing if I was so brash as to suggest that it should be the words “on the” added in there. That would make me happy.

C. Bellringer: It would make you happy. It would be accurate as to what we were proposing.

G. Kyllo: I take some issue, Chair, with your comment that if we were to vote, it would deem to be, potentially, a block. I sit here, and I will vote based on my past experience and my suggestions moving forward. I guess I have concerns about your comment and your hopes that if a vote was to happen a certain way, you would speculate and you would determine that to have been a partisan vote.

I don’t know if you have anything to add to that, but I have concerns that if certain members were to vote a certain way, you would determine that — or you’re almost predetermining that — to be a partisan vote.

B. Ralston (Chair): Well, I don’t know whether we want to engage in a lot of cross-debate. I guess my concern was that since the vice-Chair has raised this issue and the spectre and the boogeyman of partisan politics in the Public Accounts Committee when I’ve endeavoured, as the Chair, to reduce partisanship as much as I can and develop a good working relationship with members of the committee….

I think the committee has done a lot of good work. I think we perhaps have been distracted in this debate by those comments at the outset. I think we’re on the verge, I hope, of adopting a process that will make the committee more effective in its oversight mandate and in its accountability to the Legislature and to the people of B.C.

If that’s perhaps inelegantly expressed by me, then I’ll modify that in accordance with what I’ve just said.

K. Ryan-Lloyd (Clerk of Committees): Just for the clarification of members — and I’m certainly open to members’ suggestions — I have a draft motion, if it meets the needs of the committee: “That the committee adopt a practice of receiving detailed action plans in conjunction with its review of audit reports referred to the committee by the Legislative Assembly.”

If members wish to add any other details, I’m happy to have that. I’m not sure if that’s a fair description of Kathy’s intent to move.

B. Ralston (Chair): Well, she’s moved a motion, so I’d prefer that we debate the motion that’s moved. I don’t know whether it’s been recorded or not.

K. Corrigan: My exact wording I don’t recall. I guess we could look in Hansard.

I was just discussing with the Clerk a moment ago off line that that seems a little bit limited and doesn’t seem to incorporate the process that was presented. The amended motion referred more to adopting the proposed process as presented by the Auditor General — I think the process that is on that slide — removing the specific mention that I made before about the endorsement of Office of the Auditor General recommendations. The reason for this is because we have been told that we already have that ability. Given that, I was willing to remove that part of it.

B. Ralston (Chair): I had understood that you were simply removing the idea of making additional recommendations.

K. Corrigan: Sorry. Additional recommendations — yes, that’s what I meant.
[ Page 695 ]

B. Ralston (Chair): Okay. But endorsing Auditor General recommendations would be an inherent part of the process and indeed required because the action plans would be measured against those recommendations.

K. Corrigan: Yes. Thank you, Chair, for that clarification. Absolutely. So it’s wider than just receiving the action plans.

B. Ralston (Chair): Does the Clerk, then…? I think, for the committee, prior to voting we need the wording of the recommendation that we’re going to vote on. Do you have that, then?

K. Ryan-Lloyd (Clerk of Committees): I would be pleased to have further advice from Ms. Corrigan.

For further clarification, I’ve amended the working draft to read: “That the committee adopt a practice, as proposed by the Office of the Auditor General, of receiving detailed action plans in conjunction with its review of audit reports, with regular updates as part of an annual process.”

I would defer now to the wish of the members. If there is a wish to also include some wording around recommendations, I don’t have that wording at this time.

K. Corrigan: I think the difference is, as the Chair has pointed out, actually, that when I was talking about the proposed process, it was everything except for the ability to make additional recommendations. So that would include making recommendations. That is more than just the action plans. That’s the proposal. It would need to, however it’s worded….

Maybe it could just be that the committee endorse the proposed process as presented by the Auditor General, on slide whatever, with the exception of the ability…. I don’t want to say “with the exception of making additional recommendations,” because we can already do it. I don’t know how word that.

K. Corrigan: I don’t want to make that sound like we’re removing that ability.

B. Ralston (Chair): So the process would be “as in the slide,” simply deleting the words “and make additional recommendations” in that arrow on the right-hand side there.

B. Ralston (Chair): Is that clear, then? “This is the process,” with that particular phrase deleted, right?

M. Morris: Yeah. I’m not in favour of endorsing, providing any kind of an endorsement. I think just the fact of the reviewing and requesting of the witnesses and whatnot adequately states the position of PAC. I like the plain-Jane version of the motion rather than including that.

B. Ralston (Chair): So you’re suggesting that we would not endorse the Auditor General’s recommendations? Is that what you’re suggesting?

B. Ralston (Chair): Then how do you have any authority or power to require anyone to follow up on an action plan directed by the committee when you haven’t endorsed the recommendations on which the action plan is based?

M. Morris: The authority for follow-up on the action plan rests with the Auditor General’s office.

S. Sullivan (Deputy Chair): Can we have a process here where we don’t have back-and-forth, that each person can speak?

B. Ralston (Chair): Well, I’m a little bit gobsmacked by the suggestion that we wouldn’t endorse the Auditor General’s recommendations because that’s been an inherent part of the discussion for the last number of months. That’s the first time I’ve heard that.

B. Ralston (Chair): I think that’s not the recommendation. The recommendation is to endorse Auditor General recommendations.

Madam Clerk, could you then put the motion, as moved by the mover, forward, and then we can vote on it and see where we go from there.
[ Page 696 ]

K. Ryan-Lloyd (Clerk of Committees): My understanding of the committee’s wish, then, would be, as I noted earlier, that the motion would be that the committee adopt a practice as proposed by the Office of the Auditor General of receiving detailed action plans in conjunction with its review of audit reports referred to the committee by the Legislative Assembly and, further, that…. And then I would use the wording from the slides. I don’t have it written down. I’m happy to bring it back to the committee, if that’s easier, for your consideration.

I would then go to the fourth bullet down, that the Office of the Auditor General, further, undertakes a risk assessment to determine what audits require additional follow-up work and that the Office of the Auditor General discusses risk assessment with PAC.

Those elements of the proposal seem to be all component parts of a strengthened follow-up process. They all revolve around the action plan. If I understand correctly, the wish of committee is to leave off the upper right-hand purple arrow, which is the endorsement of audit recommendations and the ability to make additional recommendations, within this motion.

If the member wishes to incorporate that in the motion, then I’d be happy to type one up for clarity. But I don’t have the precise wording at this time.

K. Corrigan: Chair, I’m wondering if we might suggest…. That doesn’t quite reflect what it is that I was….

K. Corrigan: Clarify what the motion was. The motion was to adopt the processes as set out in the slide. If that’s not an appropriate motion, that’s fine. We could mention each component.

But the part that was not quite reflected is that what I had said would be amended…. The amendment was to remove the ability to make additional recommendations — take that out of the motion but not the part of the proposed process that would have the Public Accounts Committee endorse Office of the Auditor General recommendations.

I do appreciate the office has said that this whole bullet is up to the PAC to decide….

B. Ralston (Chair): Okay, can I make this suggestion, given that I’d assumed that the recommendation was being followed and written down? So can we take a recess? You and the Clerk can work out the wording of the recommendation, and then we’ll bring it back to the committee here. Then we can have a further discussion if need be or a vote, and then we’ll go from there.

B. Ralston (Chair): We have a written copy of the motion, but for clarity for the record, I’m going to ask Member Corrigan to read the motion as it is written now.

“I move that the Committee adopt a new follow up process as proposed by the Office of the Auditor General as presented on June 3, 2015. The new follow up process will include a regular receipt of detailed action plans from audited government ministries and agencies, with regular updates as required on an annual basis. Further, the Committee will retain its ability to meet with witnesses on the action plans, and their related audit reports, or to request further information in writing; and to endorse Office of the Auditor General report recommendations.”

B. Ralston (Chair): So moved and seconded. Any further discussion on this recommendation?

S. Gibson: Not to be argumentative, but isn’t the last paragraph tautological?

B. Ralston (Chair): Well, that may be so, but that doesn’t make it out of order.

B. Ralston (Chair): It’s in the power of the mover to make it, so it’s in order as far as I’m concerned.

S. Gibson: Without being overly critical, it seems somewhat extraneous to what we’re trying to do here. But I’m just wondering.

V. Huntington: Just to ensure that everybody has read…. The issue of endorsement. That purple box that everybody is so concerned about is a permissive statement: “They can endorse.” It’s not “shall endorse.” I just wanted to bring that to everybody’s attention.

B. Ralston (Chair): I think the wording of this is “will retain its ability to….”
[ Page 697 ]

B. Ralston (Chair): It doesn’t necessarily imply that it has to, but it would have the power to.

G. Kyllo: The first paragraph says: “I move the committee adopt a new follow-up process as proposed by the Office of the Auditor General as presented on June 3.” That would mean that this recommendation is to adopt that, and then it provides some further clarification.

B. Ralston (Chair): The idea was that it would be specific so that…. There did seem to be some uncertainty as to what that implies. The aim is for greater certainty, that there be these subsequent….

G. Kyllo: But my interpretation would be that this motion actually adopts the recommendations that were made with some further clarification, not any exclusion. So am I correct and that is the motion?

B. Ralston (Chair): I would say that this would prevail over the report in general. This has the specifics of the process as set out by the mover.

K. Corrigan: In discussions with the Clerk, what the Clerk has said to me — and she may want to confirm that — is that we as a committee always have the ability, apart from anything that we do today, to make recommendations, and we have the ability, as well, to endorse. It’s part of our mandate, if we choose to do that. It hasn’t been the policy.

So just on a practical basis — because of the concern of some members of the committee about making additional recommendations, basically saying, “This is our policy as of now” — we’ve taken that out. But the understanding is that we’ve always had the ability…. I guess that making additional recommendations is a new step that we haven’t actually done, whereas endorsing the OAG recommendations is something that has occurred in the past. I’m not sure.

Anyway, we’ve taken out one part and not the other. But that doesn’t mean that the committee does not have the ability to do both of those. It’s part of the mandate of all committees.

C. Bellringer: Just in terms of the slide that we presented, we put the word “new” against three of the actions. In referencing the new follow-up process, I would suggest that the new part is only those three things. Then the other — “retention” — is previously existing things.

G. Kyllo: If I understand what’s been said so far, it’s that the ability of the committee to make recommendations is to the Legislative Assembly. I think what this slide presents is that we’d be able to make recommendations directly to the Auditor General. If the Clerk could just provide clarification. The ability of this committee is always to make recommendations to the Legislative Assembly. But my understanding, by the way this slide deck is presented, is that we’d actually be able to make recommendations to the Auditor General directly. Or am I missing something?

K. Ryan-Lloyd (Clerk of Committees): I think that the slide suggests that the committee would undertake the practice of making recommendations, but it would have to be understood, in the context of reporting to the Legislative Assembly, that the committee reports to the Legislature. The committee could pass a motion expressing its opinion on an audit report or the work of a government agency, but that recommendation is really properly placed back to the Legislative Assembly as an expression of the views of the members of this committee.

I think that the committee can and has, in the past, made requests of the Office of the Auditor General but wouldn’t necessarily have the ability to direct the work of the Auditor General, with one exception within the Auditor General Act: for a formal report to be undertaken. But generally speaking, no. Your committee does not direct the work of the Auditor General.

C. Bellringer: When we wrote it, we were not envisioning a recommendation to us. Not to suggest that couldn’t also take place, but that wasn’t…. We were thinking of it in the context of — given what the Clerk has pointed out around “you have to make it to the Legislature” — a recommendation aimed at the audited organization, not a recommendation about us and our work.

S. Sullivan (Deputy Chair): On a procedural level, Mike Morris read out a motion which was the one that had been prepared by the staff — the simple motion. Is it better to have him amend the motion that’s on the floor? Or is it better to just go to a…? Is it a separate motion?

B. Ralston (Chair): It’s a separate motion, so we’ll deal with this one way or the other.

S. Sullivan (Deputy Chair): So if this one is voted down, then this separate motion would be considered.

B. Ralston (Chair): Or if it passes, then the other one, I think, would be unnecessary.

M. Hunt: I just find the first purple box, which is also part of this last question…. I won’t use the big, fancy, technical word for it that’s way over my vocabulary, which is why I don’t do crossword puzzles. But I find it
[ Page 698 ]
interesting that when I look at our terms of reference, our terms of reference don’t tell us that we are to endorse anything. Our terms of reference simply say that we are to report from time to time our observations and opinions. That’s what we do. I just find it interesting that we’ve got that set of words up there, but there’s an implication in that set of words that by our actions we’re endorsing the recommendations. I find that a much different position than us being able to make observations and opinions.

I recognize that the operative word is “can,” and I recognize “we will retain,” but we could have paragraphs and paragraphs of what we could possibly do. I just find it unhelpful to list all the possibilities of what we could do. I tend to walk into this…. I’m sort of surprised at the debate so far this morning, because I tend to think that this should be a group that’s working together, looking at reports and giving our opinions and ideas. I find it unhelpful to list off all the “cans” instead of just saying: “We can express our opinion when we want to, thank you very much.”

G. Heyman: May I request a five-minute recess to have a short discussion with the Clerk and the Chair?

B. Ralston (Chair): I suppose so. We did have a break, but you’re entitled to talk with the Clerk. Go ahead.

B. Ralston (Chair): Unless there’s any further discussion, and I don’t think there is, I think we’re ready to vote on the motion that’s before us.

M. Morris: I move that: “The Committee adopt a practice of receiving detailed action plans in conjunction with its review of audit reports referred to the Committee by the Legislative Assembly.”

B. Ralston (Chair): Do you want to just circulate that? There’s a written version of that too. Maybe people can have that in front of them.

Once the motion has been circulated, I’m going to ask Mike to speak to his motion, and then we’ll take a list.

M. Morris: I think this motion speaks to the general principles behind the new proposed process there. It’s broad enough that it incorporates all of the new action requests in there. We don’t make recommendations to the specific audit entities, and we don’t make recommendations to the Auditor General. We make recommendations to the Legislative Assembly.

By leaving that out…. We already have a bunch of authorities and the ability to do a lot of things. I think this just says, basically, we adopt the action plans, which is a significant step forward in improving the accountability aspect.

G. Heyman: In order to give a context to this motion, should it be adopted by the committee, I’d like to ask the Clerk to read into the record some of the terms of reference of the committee, as contained in the standing orders that pertain to the ability to endorse or recommend.

K. Ryan-Lloyd (Clerk of Committees): No. As noted before, the committee retains broad powers as a select standing committee of the Legislative Assembly, powers granted to it under the provincial Constitution Act, with reference as well to the Legislative Assembly Privilege Act. There are statutory bases for your powers to meet and to provide advice to the Legislative Assembly that are supported by standing orders of the Legislature and, specifically, a motion that is adopted at the outset of each parliamentary session, a pro forma motion that confers your ability to meet and to express your opinions.

The specific referrals of reports by the Legislative Assembly to your committee come by way of your terms of reference — another motion, a second motion that is moved on a sessional basis. That is the one that actually gives you the substance of your work, your audit reports that are referred to you. The powers that you hold, as I mentioned, are based within statutory provisions and in the standing orders of the House.

V. Huntington: Could I just ask the mover of the motion whether “detailed action plans” means the processes outlined by the Auditor General on page 2 of the proposed follow-up process, less the purple box? I mean, detailed action plans…. What action plans?

M. Morris: The detailed action plans that the Auditor General will be receiving from the audit entities.
[ Page 699 ]

V. Huntington: So we’re not authorizing the type of action plan. We’re just leaving it to the Auditor General.

B. Ralston (Chair): I think it’s within the power of the committee to do that, yes.

D. Eby: I’m just trying to understand. We, as a collective, pay the Auditor General and her staff a considerable amount of money to be expert in process, to make recommendations about efficient process. They have come forward to us with a specific recommendation about how to make the process more efficient, and which we all agree could be made more efficient.

The objection, as I understand it, is that the purple box is too specific about what our powers are and not broad enough to encompass all the various powers of this committee. I don’t see any problem with us just dropping off the purple box and adopting it as it stands. This motion does not do that. This motion proposes something else; it’s not totally clear what. Detailed action plans that will be determined at a later date by the Auditor General.

I would prefer that this committee have a clear understanding about what reports we’re going to get, what we can expect from the Auditor General — if she doesn’t deliver it, there’s some accountability — as opposed to saying: “Well, whatever you want to bring forward to us is fine.”

She’s set out a detailed process. I would suggest a friendly amendment. I think we’re all in agreement that this process…. There’s nothing objectionable about it — except for, as I understand from the other side, the purple box. I agree that it’s more restrictive than our actual powers, and I think there’s no problem in dropping that purple box. Can we come to an agreement that everything except for the purple box is good? Then we have a clear path forward, for both our committee and for the Auditor General’s office.

M. Morris: Yes. There’s a bit of a contradiction, Mr. Eby. The Auditor General’s staff is very professional. There’s no doubt in my mind. I certainly don’t underestimate their ability in determining what an action plan should look like and what it should be comprised of.

If we keep it broad, “…receiving detailed action plans in conjunction with its review of audit reports referred to the committee by the Legislative Assembly,” I think the terminology is concise. It says “detailed action plans.” So I think that’s pretty descriptive.

K. Corrigan: I have a suggestion, following up on what David said. What we could do — I won’t move this amendment yet, but just as a suggestion to the committee — is just add to what Mike has said.

The new motion potentially could be: “The committee adopt a practice of receiving detailed action plans in conjunction with its review of audit reports referred to the committee by the Legislative Assembly. The process would include regular receipt of detailed action plans from audited government ministries and agencies with regular updates as required on
[ Page 700 ]
an annual basis.” Or even just add “with regular updates as required on an annual basis.”

That would capture a little bit more of the process that’s being referred to. It doesn’t limit it simply to having action plans but talks about a follow-up process.

K. Corrigan: Yes, I am. If I see general nods, then that would be a suggestion. Does that make sense?

B. Ralston (Chair): Just so we can keep this debate on track, it needs to be in writing, and then we’ll have to circulate the amendment.

M. Hunt: It’s the middle paragraph, isn’t it? Isn’t that what you read — the middle?

K. Corrigan: Essentially the middle paragraph of my motion, but I wouldn’t say the words “the new process,” because then it sounds like we’re replacing….

K. Corrigan: How about “this follow-up process will include regular receipt of detailed….” Well, that’s already there, actually, right?

K. Corrigan: Okay, here’s a suggestion, and there’s no tautology involved in this motion.

B. Ralston (Chair): It’s an amendment, right — a proposed amendment? Move your amendment, then.

K. Corrigan: It’s an amendment. The amended motion would read: “The committee adopt a practice of receiving detailed action plans with regular updates as required on an annual basis in conjunction with its review of audit reports referred to the committee by the Legislative Assembly.”

B. Ralston (Chair): Any further discussion on the amendment, then? Does anyone want to have it read one more time, just so we’re crystal clear?

K. Ryan-Lloyd (Clerk of Committees): I have it in my hands now. Just for clarification, the motion is that “the committee adopt a practice of receiving detailed action plans with regular updates as required on an annual basis in conjunction with its review of audit reports referred to the committee by the Legislative Assembly.”

B. Ralston (Chair): The motion as amended is before you. Any further debate on the motion as amended?

S. Robinson: I’m trying to figure out how this is different than what our current practice is. If someone can explain that to me, I’d be most grateful — how this motion in front of us is different than our current practice. That’s all I’m looking for.

K. Ryan-Lloyd (Clerk of Committees): The committee does not currently receive action plans.

The next item on the agenda is…. Perhaps we’ll just take a recess while we change staff, and we’ll set up for the management of cumulative effects.

B. Ralston (Chair): I’ll call the committee back to order. We’re now going to consider the report of the Auditor General entitled management of cumulative effects. It’s a report dating from May of 2015.

Let me introduce, formally, for the record those who are present. From the Office of the Auditor General: the Auditor General herself, Carol Bellringer; Morris Sydor, assistant Auditor General; and Peter Nagati, who’s a director of performance audit. From the Ministry of Forests, Lands and Natural Resource Operations: Tom Ethier, who is the assistant deputy minister, resource stewardship division; Allan Lidstone, director, resource management objectives branch; and Jennifer Psyllakis, manager, land and resource use, resource management objectives branch.

Welcome, everyone. I’ll turn it over to the Auditor General to begin the presentation.

C. Bellringer: The government of British Columbia has committed to pursuing economic growth, most notable through the mining and liquid natural gas industries. Achieving government’s intent to develop the economy in a sustainable manner does require the managing of cumulative effects of natural resource development.
[ Page 701 ]

Simply put, cumulative effects are the impacts from human activities which over time add up and change the environment. If not managed, these changes can harm the environment.

I’ll share with you an example of CE from page 15 of our report. Imagine a watershed with a stream that provides spawning habitat for salmon and drinking water for a nearby community. A logging company builds a road in the watershed, and sediment from the construction enters the stream.

A few years on, the road enables a rancher to have his cattle access rangeland. The cattle trample the stream banks, and their waste enters the stream. Later, water is diverted from the stream to supply a new mine and irrigate nearby crops.

Each of those activities — forestry, ranching, mining and agriculture — are individually regulated and managed to limit and mitigate their environmental impacts. However, residual impacts can combine and have a greater effect than any one individual activity could.

Because managing CE is so important for B.C.’s economy and the environment, we decided to audit whether the government of B.C. and the Ministry of Forests, Lands and Natural Resource Operations has established a sound basis for managing the cumulative effects from natural resource development. What we found was that it has not done so, and Peter will go through the findings in more detail in a few minutes.

We acknowledge that efforts to consider and manage the cumulative effects of natural resource development remain a fledgling practice in Canada. But managing CE will become even more complex than it already is as development pressures on the province’s land continue to increase.

We were pleased to find that the ministry is working to improve the management of CE through an initiative called the cumulative effects assessment framework. But for it to succeed, more work needs to be done and done soon. This includes clarifying how the framework will be applied to achieve government’s expectations for the sustainable development of natural resources.

I’ll turn this over now to Morris and to Peter, who will take you through a brief summary of the report.

P. Nagati: B.C. has a long history of natural resource development, including forestry, mining, oil, natural gas and hydroelectric. It’s an important sector of the B.C. economy, one for which government intends significant growth. Government has stated it is their responsibility to develop the economy in an environmentally sustainable manner. Sustainable development in the natural resource sector requires managing environmental impacts.

Natural resource development in B.C. is regulated and managed to limit and mitigate environmental impacts. However, residual impacts — that is, effects expected to remain even after mitigation — can combine and have a greater effect than any one individual activity.

Cumulative effects from human activity such as natural resource development can add up over time, causing changes to the environment. If not carefully managed, cumulative effects can damage ecological systems that are essential to our economic growth and well-being.

Carol mentioned that we conducted this audit to determine whether the government of B.C. and the ministry have established a sound basis for managing cumulative effects, or CE, to the environment.

We did this by assessing three things: first, whether the government of B.C. and the ministry have established clear direction and responsibilities for managing cumulative effects; second, whether the ministry is considering and addressing CE in its decision-making, as demonstrated by recent activity in the northwest region of B.C.; and third, whether the ministry is working to improve cumulative effects management.

The ministry is the province’s designated one land manager that authorizes most natural resource use. Therefore, we expected the ministry to coordinate the management of CE with B.C.’s other natural resource sector ministries and agencies.

We found that no existing legislation or other government directives explicitly require the ministry to manage CE when authorizing the use of natural resources. Current legislation and directives do not effectively support the management of cumulative effects across all of B.C.’s natural resource sector ministries and agencies. Instead, each body operates under its own mandate and may undertake its decisions and activities without considering the impacts on or by other sectors.

We found that the ministry collaborates with other natural resource sector entities to coordinate and streamline the processing and assessment of natural resource development proposals but not for the purpose of managing cumulative effects. We also found that the ministry has not provided staff that are responsible for making natural resource use decisions with guidance or training on cumulative effects management.

From a selection of land use plans and related material that were reviewed for the Skeena region of B.C., the area of our audit, we concluded that government has not provided decision-makers with information that they need to manage CE. That information includes values that define what is important to manage for, the condition of those values as well as the amount of change to the values that is deemed acceptable.

These gaps in information make it difficult for decision-makers to interpret risk and make informed decisions about development proposals. The sample of resource development proposals that we examined confirmed this. We found that ministry decision-makers had not adequately evaluated resource use proposals for cumulative effects.

The ministry has developed a cumulative effects assessment framework to support CE management and also to help B.C.’s natural resource ministries make informed decisions that are consistent with government’s intent to balance economic development with protection of our environment. We found that this framework has the potential to improve CE management, but to be of value, the assessments must be used.

At the time of our audit neither ministry staff nor government had resolved how the framework will be used to inform and support natural resource development decisions across ministries and agencies. Also, the assessment framework will be phased in and not fully implemented until 2021. Decisions about natural resource development continue to be made without fully understanding the implications.

As a result of these conclusions, we came up with nine recommendations. That’s what they look like in the report. I won’t go through them in detail. I’ll summarize. We made four recommendations to government and five to the ministry.

Recommendations for government are aimed at establishing tools, such as legislation and policy, to support CE management across natural resource ministries and agencies. This includes clarifying how social, economic and environmental expectations apply to managing Crown land and also establishing how assessments resulting from the framework will be used to inform and support natural resource development decisions.

The recommendations for the ministry are aimed at developing and supporting effective and transparent CE
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management within the ministry and ensuring successful implementation of the CE framework. Implementing these recommendations to address CE management will help government achieve its social, economic and environmental objectives for sustainable natural resource development.

That concludes our summary of the report. We would like to thank the ministry for their cooperation and support throughout the audit.

T. Ethier: It’s a pleasure to be here in front of you this morning to go over this important audit. I want to thank the Auditor and her team for the audit on managing cumulative effects. I think we’ve learned a lot through this audit, and I’d like to take you through our response now.

There are nine recommendations in total. For the most part, we are partially or fully underway in delivery on those recommendations. Although there are already multiple regulatory and management tools that are in place for managing values that are important to government and to British Columbians on the land base and cumulative effects, overall, we agree and accept all of the recommendations.

As you know, we are in the process of developing a framework for assessing and managing cumulative effects. So it was nice to see our path confirmed by the Auditor General’s recommendations, which also bring attention to this important work. The policy and procedures for the framework will be in place by 2016, not 2021, as the Auditor reports. But we will continue to add assessments for different values and complete reports for regions through that time. In 2021 we will have completed assessments provincially and will begin our first cycle of reassessment, which is our milestone for signalling full implementation.

I’ll now move on to the key findings of the Auditor General and then quickly summarize government’s overall response. I will then review specific recommendations.

So as key findings, the Auditor noted a lack of clear direction and powers necessary to manage cumulative effects and a lack of consideration and management of cumulative effects in decision-making, based on audited work in the Skeena region, and acknowledged the work on the cumulative effects framework.

To highlight the specifics of where we are at with respect to recommendations, as noted, all nine are being acted on. Five will be completed by fall of 2015. Three will be completed by the end of fiscal or March 31, 2016. One, monitoring, though underway already, will be part of regular business. We will begin in specific relation to cumulative effects assessments when the periodic review begins. At this time, we are anticipating a five-year cycle, on average, for completing the trend monitoring on the key values.

I’d like to emphasize now that cumulative effects are already managed at multiple scales within the current stewardship framework in B.C. We recognize there are challenges within that model, however, and it’s on this foundation of values of resource stewardship that the cumulative effects framework is being designed to reduce the risks of unintended impacts and proactively avoid cumulative effects. By fall clear roles and responsibilities will be established through our first policy, and by April 2016 the full policy and procedures will be complete.

Now I’ll focus directly on the responses to the recommendations. On that note, in a specific reference to recommendation No. 1, government has already established the Ministry of Forests, Lands and Natural Resource Operations, and interagency committees and teams already function at the regional level to support this type of work. We do need to be more specific in how those teams operate and what accountabilities they will have with respect to cumulative effects management. To that end, we will complete a model terms of reference that will be adopted into current terms of reference or stand on its own by the fall of this year.

With respect to tools, we’re in the process of completing our initial cumulative effects policy for the fall, which is informing the full policy and procedures that are underway for April of 2016. At the same time, we have completed an assessment of legislation and are now evaluating how the policy works underneath those statutes and regulations to determine if legislative changes are needed.

Finally, we are working with the natural resource permitting project, which is a large initiative within the natural resource sector, to lead sector transformation and to develop systems to manage and make available information on cumulative effects for government staff, proponents and the public.

The third recommendation, training, is also underway. Training in extension is an important part of extension of the early policy, and this work will continue throughout the year to support provincewide implementation. Support will continue, of course, beyond that.

Government does already consider cumulative effects and authorizations, but there is variance depending on the regulatory and policy context a decision-maker is working within. The policy will improve consistency of these considerations as well as how that consideration is documented.

We agree with the Auditor that values are at the foundation of cumulative effects assessment and management. To that end, we have selected several values and are nearing completion of provincial assessments for old forest, forest age distribution, watersheds, grizzly bear and moose.

At a provincial scale we need to keep the set of values to a manageable number, and we anticipate having around 11 to 15 provincial values identified and have committed
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to that in the next two years as part of our ministry service plan. Additionally, regionally specific assessments may also be completed, which is not really surprising given the diversity of British Columbia.

We have not started monitoring of values in the specific context of the CEF, but it is an important part of our regular stewardship business. We’ve already started to inform monitoring priorities based on cumulative effects assessments completed, and those assessments are also providing important baseline information for regular updates. This business process will help inform emerging risks and provide that advice to decision-makers.

I’ve already spoken to the policy work underway, which is key to establishing how assessments will inform and support natural resource decisions.

So the recommendation with respect to reporting to the Legislature. We are right now currently reporting biannually to the environment and land use committee, a subcommittee of cabinet.

Finally, we have committed to complete an options analysis to accelerate implementation in assessment of values to submit a proposal to government this fall. That’s responding to the recommendation to essentially fast-track this initiative.

In summary, I do want to note that these timelines were, for the most part, already commitments made as part of implementing the cumulative effects framework. These timelines are ambitious, and given the overall complexity of change and the need to develop the organizational readiness to implement this work, there’s a great deal of effort and work that needs to be done. Extension training in change management, understanding these values, understanding these analyses and being able to properly explain this information to proponents and to the public is an ongoing mission that we have.

We are optimistic, though, that all the pieces are in place to support the success of the management of cumulative effects.

In summary, from that perspective, the alignment of the OAG’s recommendations to the work underway in the ministry and within this sector are helpful in highlighting this priority for the province, and we appreciate the efforts made by the Auditor and her staff. That takes us to questions.

D. Eby: A clarification question in relation to the dates of implementation. It seems like an important thing that we know when this is going to be in place, and there seems to be a disagreement between 2021 and 2016. I heard the assistant deputy minister give a bit of an explanation about that, that the framework would be in place but that the actual implementation wouldn’t be until 2021. I wonder if you could clarify that and whether the Auditor General has a response to the suggestion that they were simply incorrect in that 2021 date.

T. Ethier: The work that is…. When we say “complete,” we will have the policy, we will have the direction to statutory decision-makers, we’ll have the training in place, and we’ll have a better understanding of what the decisions are that are captured under a cumulative effects assessment, so that that training and that support will be there.

What won’t be there in its entirety will be all of the values completely fleshed out. So we’ll not have some values that we need to still work out in how we’re going to build that information to be able to properly capture what we’re saying when we’re managing for value X. So there will be some values that we’ll still be building and still pushing out until 2021. But the actual framework for the process will be in place by 2016.

C. Bellringer: We put a chart on page 33 of the report to show the timeline from 2011 through to 2021. Where we are quoting the 2021 year, we’re referring to full implementation provincewide and not just in selected areas. I wouldn’t suggest that we are wrong, but we see it differently.

B. Ralston (Chair): Did you have any further comment, then, Mr. Ethier? No? Okay.

To the ministry: on page 9, the last paragraph, you have an aversion to the use of the word “thresholds.” I’m wanting to understand the aversion and what “thresholds” means to you and why you’re adverse to it. It’s just clarification, on my part. As you saw, we had a two-hour debate over semantics beginning this meeting, so I want to clearly understand what you’re meaning by those.

Second question is…. The review was done in the Skeena area. My question is: is the process in Skeena representative of where you are? Is it more or less advanced? I just didn’t catch an essence of that from your responses.

A third one, just to throw a match in here: how are you going to deal with forest fires in this process? It’s something that’s out of our control. It’s something that happens naturally. How would that get brought into the issues of cumulative effects?

T. Ethier: Those are great questions. The reluctance to use thresholds within the cumulative effects framework goes to: what is the management response to a threshold? We’re comfortable working within the idea of trend of a value — so the condition trend. We report out on: where is…?

For example, a value around old growth — we will have information on the current status of that and what is the
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current trend, and we would provide that as information to a stat decision-maker. We would expect that decision-maker to take that information and incorporate it into whatever actions or whatever conditions they put on the authorization, or they may even use some operational funds to try to do some silviculture strategies to enhance it.

There are a number of management reactions to the condition of that value. We don’t debate that part. The concern is that the threshold would mean that this is now a red light to any further actions or any further authorizations associated with this value. That is the real sort of sensitivity around the use of the term “threshold.” Does that make sense?

The second question — in the Skeena. I may have to turn it over to my knowledgable colleagues here, but I think the Skeena was selected by the Auditor because of the identification of a lot of proposals and projects underway, or proposed projects. Is it indicative? I’m not sure if it would…. I don’t know how to, actually, answer that, because it’s so different in different parts of B.C.

There are, potentially, land use plans that have been in place longer elsewhere in the province, where we’re more familiar with that, and staff are more familiar with the values there. I’m not sure….

A. Lidstone: Skeena is representative in many ways. It’s advanced in some others in terms of some of the land use planning that it’s done, work with First Nations. In terms of the cumulative effects framework, if that’s what you’re speaking directly to, the north area, in general, is probably more aggressive than other areas of the province in advancing the framework and approaching it collectively across the north.

They’re putting in place processes and doing work that I think has them on track in terms of meeting our timelines, if not beating those timelines.

T. Ethier: Maybe I just would add that I think that the Auditor — whether she chose the northwest, the northeast, the southeast — in doing the file review, report review, plans review, talking with staff, probably would’ve landed with similar conclusions. The initiative of cumulative effects has been something we’ve been piloting and working out the bugs, but we haven’t engaged all staff within the sector on what it is and how we’re planning to manage it.

That time period was really this time period where government had said, “Go ahead and proceed with the framework. Build it out,” but we hadn’t brought up all the work together. So I’m not surprised if we hear that staff had said, “Hey, I haven’t heard about cumulative effects and how I should be considering it,” because we really hadn’t been given the green light to start providing that direction, as we do now have.

A. Lidstone: Fire is a disturbance agent. In our approach to cumulative effects, we’re assessing both human impacts as well as natural disturbances. Fire is an integral part of how we assess impact on values and is one of the underlying processes that we take into account when we assess the condition and trend for those values.

M. Morris: Some of the questions Marvin asked. When did the audit initiate? Was it 2011 or 2010 or…? You know, cumulative effects have become forefront as a result of the pine beetle epidemic and a whole bunch of things. I have noticed that the ministry has done a lot of things in the last three or four years to address cumulative effects. Is this audit from a four- or five-years-ago period that the report has just been comprised, or is it a very recent audit?

P. Nagati: It is a recent audit. We carried out our audit work between November 2013 and July 2014, and the sample decisions we looked at are predominantly very recent decisions.

G. Heyman: I’ve got a number of questions, so just stop me when it’s time for me to get to the back of the line.

B. Ralston (Chair): Well, two or three, and then we’ll move to someone else and come back to you.

G. Heyman: First, I’d like to just comment on the apparent difference between the implementation date, or the date of 2016, versus 2021. If I understand the ministry correctly, the ministry is saying that you’re going to begin work on test-driving a framework and then add values to it over time, until 2021, at which point, there’ll be a full framework.

It seems to me to indicate that the date of 2021, for all practical purposes, in assuring the public that there’s a cumulative effects framework in place, is in fact accurate and that 2016 is more of an indication of a stepping stone on the way towards there.

I have a question around the issue of thresholds and values. When I look at the comments of the Auditor General…. I think there’s a statement in the executive summary that says: “The current condition of most values is also unknown, and few thresholds…are in place.” If I think about the application of science to other concerns about damage….

Let me use as a parallel example the issue of occupational exposure limits to hazardous substances. Most
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jurisdictions accept the fact that once you look at the value of protecting workers from harmful exposure to a carcinogen, for example, you do that by setting an occupational exposure limit above which regulations say you can’t go.

It seems to me that you’re suggesting that in the area of cumulative effects we express a value and leave it to a variety of different government agents and agencies around the province to decide what would implement that value. It seems to me to be not a particularly scientific approach and, when we’re talking about the potential for a significant environmental degradation or interference with human enjoyment and use or First Nations rights, not the direction to go.

You’ve essentially rejected, in my view, the Auditor General’s recommendation, and I’d like you to expand on that.

B. Ralston (Chair): Well, then, perhaps just let him answer that, and then you can move to your next question. That’s a long question.

T. Ethier: There are certainly regulations in place for discharge of pollutants. There are guidelines that are in place, on pollution permits, that are set. Those aren’t the values that we’ve necessarily captured here in cumulative effects. We’re talking about larger landscape-level objectives that we’re trying to measure and report out on the trend and ensure that those values are sustained in that landscape.

What we’re saying here by not just simply identifying a threshold upon which we can’t go past is that we’re not in a position to land on a number of, for example, moose that need to be in a certain area to satisfy the interests of First Nations and hunters and the ecological processes that moose provide. We have chosen to look at the condition of the habitat components that support moose as being the key…. Those are key indicators for the description of the values that support moose.

It’s a bit complicated, because it’s not just one simple measure here. These are a combination of indicators that come out and report on the performance of that value. When we track that, it’s around an adaptive management approach, so we know where we’re going, and we make adjustments accordingly. It’s not simply a 0-1 game.

A. Lidstone: You may want to look at this, too, in terms of…. How we’re setting up the framework is a more strategic approach to managing cumulative effects. We are looking at risk, and there are different risk categories to those values. There’s low, medium and higher risk. That is part of it.

What we’ve chosen to do, based on a lot of work and engagement with various folks, is to look at management response levels. Based on policy, based on science or based on existing legal objectives or whatever, we know, based on assessment of all of that, that we’re moving, in terms of the condition of that value, from a lower-risk category to a moderate- or a higher-risk category. The way the framework works is that it then puts in place a basket of management responses. We may need to go and get more information, or as you get into higher-risk categories, there may be stronger management responses. Some of it may lead to looking at the specific legal objectives for those values and changing them.

What we’ve chosen to do is to separate the work on cumulative effects from the authority. And the process that government puts in place, the set objectives to put limits on things or whatever, feeds into that process. That then moves us away from this debate about thresholds and go or no go. It helps us support better-informed decisions and puts in place options rather than just one answer.

B. Ralston (Chair): Just before you go back, does the Auditor General have anyone who may have a comment on that? You don’t have to if you don’t want to, but I just want to give you the opportunity.

G. Heyman: At the risk of putting the audit team in an unfortunate position, it seems to me that there is a conflict with one of your recommendations, and I’d welcome a comment.

P. Nagati: Through the audit, we did learn that the concept of thresholds is fundamental to CE management. At the same time, I do appreciate the comments from the ministry that coming up with a defined line in the sand, if you like, is challenging. Execution of a threshold may be difficult.

On page 21 of the report we provide an example under exhibit 5, managing for water quality and water quantity. Here we specify, in this hypothetical example, some acceptable conditions. Very precise numbers. Maximum amount of sediment, 200. Also, the minimum amounts of water discharge, 50.

In managing CE, these numbers don’t necessarily need to represent a hard line in the sand — where, if you have 199 instead of 200, it represents a go versus a no-go decision. What thresholds do represent is where you have
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an increasing risk that should kick-start a discussion of what should happen and result in informed decisions.

G. Heyman: In looking at the ministry’s response on page 9 of the report, the ministry says: “Inventory and monitoring activities help inform how practices should be adapted to better achieve sustainable resource management.” Yet according to ministry reports, by 2010 three-quarters of the province’s forest lands had inventories that are now 30 or more years out of date.

My question to the ministry is: given the state of forest inventory, how do you intend your stated intention of inventory and monitoring activities to inform practices about cumulative effects management to actually work?

T. Ethier: The current status of inventory is always one of discussion internally. Starting in 2013 we did have an infusion over the next ten years of $80 million to improve the status of forest inventory in the province to try to understand what’s happened as the result of pine beetle, to make sure that we are making the changes accordingly where we’ve had stands — you know, their condition change as a result of pine beetle. We are trying to bring within the ten years that backlog, if you will, of inventory up to speed.

So it is work that we’re currently underway and we think we’re making good progress on. But your question stands. As always, do we have enough information? That gets into a good discussion around how we use that information, how we use other information, how we use the expertise on the ground to help inform and what that information means.

B. Ralston (Chair): George, we’ll come back to you, I think, because I’ve got a number of people…. Kathy will be next.

I wanted to speak about the last paragraph on page 11 of the report, which says “acceptable conditions.” That sounds like we’re talking about standards or thresholds. So acceptable standards for these values “are defined by existing objectives through legislation, land use plans and policy, not defined through a cumulative effects assessment.”

What that seems to say to me, in combination with the other responses, is that we are not willing to look at some kind of external — in some ways, absolute — standards, but instead: “Trust us that whatever policies or legislation we put in place, that’s going to represent what we think the acceptable standards are.”

Is my reading of that…? To me, that’s really sort of the nub of the whole concern about the government’s response on this — essentially saying, “We don’t want to put absolute standards in place. We want to look at each situation individually,” which I understand, but then, “We’re going to define what the standards are by whatever policies we put in place,” which is a pretty circular way to approach things.

I guess that’s my first question. Am I misinterpreting what is said in that paragraph?

T. Ethier: Okay, that’s a great question. What we’re trying to get at here — and I have staff here who will correct me, but I think I’ve got it — is that the objectives are set through legislation, through policy, through case law, through understanding of aboriginal rights. We know what they are.

What cumulative effects assessment is doing is assessing the condition of those values. But the actual cumulative effects assessment process, in and of itself, does not set the objectives. We take that direction from government. We built a cumulative effects assessment framework to try to understand the trend and condition and to bring that information to decision-making across the natural resource sector.

K. Corrigan: As a follow-up to that, isn’t what the report is saying is that we have to have some more objective standards so that government as well as the public can, in an open and transparent way, look at a particular area or a particular project and say: “Here are the standards, and you’re not meeting them”?

It’s backwards to me. I may be misinterpreting that, but it seems to me it’s backwards. We’re going to have the policies. We’re going to go through this process, and then we’re going to say, “Have we met our standards or not?” rather than having some kind of independent set of standards.

T. Ethier: The assessments are based on the best available scientific method to determine the actual condition of that value, and those assessments will be made available to the public through the website.

If you’re looking at a specific area and you have a concern for the value of old growth in that area — or maybe it’s young seral stage or seral stage distribution — that information will be made available to you, and you’ll be able to assess that. You’ll be able to see how it’s done. The methodologies to get at how that’s done will also be available to you.

K. Corrigan: Just one more question on this. That’s not what the paragraph says, though. That paragraph says nothing about independent scientific assessment. It says just the opposite. It says: “Acceptable conditions or standards are defined by existing objectives through legislation, land use plans and policies.”

It says nothing about science. It says basically, whatever we as a government decide we want to be those accept-
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able conditions, we will then do it. Maybe that’s arrived at through science, but, anyway, that’s a concern.

We plan not only…. One of the principles behind this process is full transparency. Not only are the assessments available to all, but what we propose to do over the next few months as we roll out the initial assessments — we’re calling it the beta version of those assessments — is to evaluate what we’ve done, the approaches that we’ve taken, the management response levels that we’ve chosen and to get that feedback before we bring these back for finalization.

There will be a rigorous, fully transparent and open review of our methods. As well, once we start doing the assessments, once they’re in place, we will have more discussion about the approach that we take and how that’s acceptable to the scientific community and others.

We’ve also engaged our scientists across government in terms of putting forward the proposed procedures that we have in place. Some of them are more tied to specific objectives. If you look at old growth, for example, we do have existing targets that are based on going back to things like our Biodiversity Guidebook and so on.

We’ve put those requirements in place across the province. There’s a fairly clear kind of management level that we’re managing to, and we need to see how we’re doing with respect to that.

When it comes to old forest age distribution, though, I think there we’re looking at, probably, a much more flexible and broader approach to understanding the condition of that value. We look at policy. We’ll look at the science around the composition of forests. That assessment will probably have a much broader and more either policy- or science-based approach to how we set the management response level.

J. Psyllakis: I sense that this is a really important area, so I’ll dive a little bit more technically to try and explain just the cumulative effects assessment approach and why it’s so important for government to separate that from the objectives-setting process.

The essence of the definition of cumulative effects is the combined effect of multiple development activities and human disturbances. And there are multiple components that may be measured and assessed relative to the status or condition of a value.

As government, we tend to set our objectives at different levels in that structure and hierarchy around a value. An objective might be set for a standard, and it might be very explicit in terms of the threshold and what’s acceptable — for example, with water quality. We may have an objective that’s set around a number of cattle that can be within an area, and it’s very specific. We can measure how well we’re doing towards that and whether or not it’s acceptable. Then there could be another objective that’s set around forest harvesting in riparian areas.

We have to take those collectively and then look overall at what the impacts are at the system level and then determine…. Our objectives may all be met. They might individually be acceptable from a legislative and policy perspective. Collectively, though, there may be issues in terms of how well the system is functioning.

That information, from a cumulative effects assessment perspective, is really how innovative and transformative this approach is. That process can then come back to government and say, “Hey, maybe we didn’t get it quite right,” if that’s the case. But that sits outside of the cumulative effects assessment.

S. Robinson: I have a question about this idea of threshold. I do understand the adaptive management framework, and I’ve worked in a watershed in my community using this model, this framework. The challenge with it is that the politicians get involved. That becomes problematic, because it does require a tremendous amount of political openness and a lot of science in terms of understanding what’s going on. I do worry about how politicians get in there and can actually influence.

My question is more about this idea of thresholds. Anticipating a report that we are going to be looking at or are supposed to look at this afternoon, I’m just jumping ahead to the Follow-Up Report: Environmental Assessment Office, page 9.

In that report — you wouldn’t have this, necessarily — it talks about the Auditor General recognizing the continued use of the word “minimize” in 12 of 17 EAO certificates, “which may impact the enforceability of the certificate conditions.” They express concern, and then they “encourage the EAO to follow its own draft guidance, which states: ‘If a condition refers to ‘minimizing’ or ‘reducing’ a specific impact…a measurable empirical threshold should be stipulated.’”

On the one hand, we have an environmental assessment exercise that looks at thresholds, and now we’re talking about this other process. I’m just looking to see how you reconcile that — what you’re stipulating is to not do thresholds, but we have another system — and how you anticipate addressing that.
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A. Lidstone: I can take a crack at that. In making a decision on land use, level of old growth, road density or, specifically, the impacts on communities and economies, a number of them have been in the realm of land use discussions and plans setting legal objectives. That still can happen, in terms of setting thresholds or setting some limit or some opportunity level or whatever — however government chooses. Those have tended to be…. Many of those have been in full consideration of the social and economic impacts.

In how we’ve described this approach and process — so that we can get on with it, so that we can get on with doing the assessments and get critical information on the table in a consistent way, which stakeholders, industry groups and government agencies can use and inform those decisions — we have, in our description of the framework, separated the two. The framework itself will not come out with government objectives. In and of itself, it will not come out with limits on development or growth. It will provide really good, consistent information, available to all, to inform those decisions.

S. Robinson: If I might…. The threshold idea would be left to, I guess, decision-makers, who will determine thresholds. So there won’t be some sort of scientific, outside…. Will there be recommendations that come out around…? I’m just trying to wrap my head around how this….

A. Lidstone: It could well be that through the management regimes that we have in each region — we’re setting up these strategic advisory groups — they’ll look at the results and they’ll say: “Hmm. There are some issues with our existing objectives in this area that have been established by government. It could be a regulatory issue.”

The broader system is set up to take that information and then make recommendations back to statutory decision-makers, government, authorization people or whoever: “Based on the information that we have here, you may want to consider some options.” At the far end of that, it might be to change existing objectives either one way or the other, actually.

I want to go to recommendation 8. I’m just looking at page 7 of the slides that you’ve presented. The recommendation was to “annually report to the Legislative Assembly on progress.”

The response is that the ministry is already reporting to the environment and land use committee. Now, that, in my understanding, is not a Legislative Assembly committee. It’s a different body.

So in essence, that isn’t actually an adoption of the recommendation. There is a reporting process, but it’s not to the Legislative Assembly. Am I correct in making that leap?

S. Robinson: It’s a committee of cabinet. What are the thoughts about annually reporting to the Legislative Assembly? That, I think, is a really important missing piece here.

T. Ethier: Our response is that we are going to ELUC, the environment and land use committee, twice a year, but the reporting will become much more public as we build out the values and have that information available to the public and to applicants. There is also a service plan that the ministry will complete on an annual basis on how we’re doing in implementing this.

The specific response was to ELUC. There’s also the normal government reporting out on delivery of its service plan on an annual basis.

S. Robinson: The way I understand the response is that you’re not adopting that recommendation to report to the Legislative Assembly. You’re going to report to the public, not to the Legislative Assembly in its own report.

Vicki, you’re next. I don’t know whether you want to start, or would you…?

V. Huntington: I can start. Then I do have a number of questions, as most people do.

V. Huntington: I want to go back to this whole discussion, as almost everybody has, of the concept of values and how you’re dealing with those values as you look toward the complete cumulative impact assessment.

You say that the concept is to ensure that the values are sustained over the long period. However, what I’m seeing is that everything — correct me, please — within the ministry is basically responding to the overarching government policy of balancing the economic development with the environment. In determining the values and how they’re being impacted, you’re not looking at thresholds that would then create the need to have a finite response. You’re looking at values where you can manage the response that government or the department or a ministry might have on the condition of those values or the impact of the project on the condition of the values.

Just to sort of be black and white here. Is there ever a point at which your examination of a permit and the impact of a project would be such that you would look at
[ Page 709 ]
the impact on the values and say: “No. We will not permit it based on what we perceive as the cumulative impact on these values”?

Do you ever see yourself making that decision, or is your job to manage the mitigation of the condition of those values and the impact of that project on the values? Are you setting forward to manage the environmental impact, or are you setting forward to protect the values?

T. Ethier: I can see an application not getting approval based on the impact of a key value.

One of our hopes here is that we’re being more transparent in getting applicants information sooner in the process so that they can see what the values are and what the current trends are and what things they need to be considering as they’re building their application, because we will be using that value set as a part of making the decision. We’re hoping that they’re able to see this and design their application accordingly.

But yeah, there might be times where we’re in a place where we’re not able to accommodate that application, and we’ll have to be saying no. I don’t see that another answer to you on that question would be reasonable.

We are trying to develop a policy framework here that lays clear what the rules are, what the trends of those values are and how we’re thinking about the landscape that we’re charged with managing on behalf of British Columbians.

V. Huntington: What you’re engaging in basically, then, is an environmental assessment of a project. Why is that not part of the environmental assessment office’s approach? If you’re working on the science of developing the values and the conditions attached to those values, why wouldn’t you separate the approval process?

This is like putting compliance and enforcement and permitting all in one barrel, which government tends to do both locally and provincially and, occasionally, federally. The approval of a project, if you’re really doing an environmental assessment, would be done independently at the environmental assessment office. You would create the values and the science around them and make those publicly available to the project developer but not make the decision on whether those values are being protected. That would be left to the environmental assessment office.

T. Ethier: This policy was a joint initiative with Ministry of Environment, so very closely. Environmental assessment office has been very much a part of the development of this policy and has welcomed it, because this will then allow for them to see, beyond just the project footprint, what the values are at that landscape level. It’ll be a consistent data set, and it’ll be an objective data set. They’ll be able to depend on this information.

Which projects stream into environmental assessment office? They have some clear rules around the size of the project, whether it’s IPP or it’s the size of a mining operation. If they themselves, being the proponent, elect to be part of the EAO, they can make that request as well. Or the minister can look at a project and say: “No, that should be in the EA process.”

You have to understand that a lot of what cumulative effects are about is that below-threshold stuff, right? We are wanting to pay attention to these smaller projects and think about the cumulative effects of these smaller projects and how they add up. I think what Jennifer was saying is that there’s a series of these that, you know, looked in one ministry in one way, or a new decision came along. A decision-maker showed up two or three years later and may not have thought about the combined effects of these small projects.

B. Ralston (Chair): Yeah. It will be the last question, and then we’re going to recess for lunch.

Are you then suggesting that this process, this framework, may then cause a change in government legislation surrounding environmental assessments where it is no longer project by project, which is what it is federally and provincially now? There is no cumulative assessment left in the process anymore. Are we now introducing that back into the process eventually?

J. Psyllakis: Well, if the cumulative effects assessment is still a requirement within the project-by-project perspective…. This is a different scale, though.

J. Psyllakis: The cumulative effects assessments that we’re developing through the framework are regional scale. They can help inform the project-scale impact assessment process through how values are selected, how they’re defined, how the current condition, as well as the foreseeable future condition, is described, based on what information government holds, not what information the proponent holds.

This has been very welcomed in terms of progressing the EA process, not only from the agency but also practitioners and the business community. In terms of whether or not this will inform legislative changes, it’s part of our project and our program development. We’re going to evaluate how well we do from a policy perspective and through the organizational structures that are now in place, just to determine whether or not those changes are needed.
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V. Huntington: If this works, it’s wonderful. If people really are interested in proceeding with this process, it’s extremely good.

A. Lidstone: One added benefit is that we’re hoping to be able to capture the information that comes out of environmental assessments in a consistent way and use that information to build up a better cumulative effects framework, better knowledge about the values. Right now that isn’t happening as well as it should.

B. Ralston (Chair): Thank you. We’ll recess for lunch and resume at five after one.

B. Ralston (Chair): We’re continuing our discussion of the report on cumulative effects of natural resource development in British Columbia.

L. Throness: I have a few questions for our ministry experts. Thank you for coming.

I think the cumulative effects theory is sound. I wanted to ask about the incremental change. A project today would monitor, on an ongoing basis, say, sediment in a stream and how it affects fish. It does that now. Isn’t the incremental change, the new and different part of the process…? Doesn’t it occur prior to a development being put in place? So you would project the cumulative effects in the future, over time, and then the development would not take place if the cumulative effects would be too high.

A. Lidstone: Through the tools that we’re using, we can project and add different scenarios into our assessments — either a single project or multiple projects — different factors to determine what the change in the trend of that condition for the value is, over time. Certainly, that’s a part of our standard approach — yes.

L. Throness: When I was reading it over, I thought that this would add several additional layers of work and bureaucracy and study to the already existing environmental regulations. Are we helping development in some way, for instance, by laying out standard values, standard conditions to be met — for, say, a certain kind of fish in any stream — so that a project could go to and work out their own cumulative assessment in a short time?

A. Lidstone: I think one of the goals is to streamline and make more efficient current decision-making, better applications for proponents up front so that they not only have information that they can factor into the design of whatever proposal they’re putting in place and show up front how they’re going to deal with some of those conditions that are out there.

Even from the point of view of common terminology…. Right now we use different terms for things. We store information in different formats. Sometimes we don’t talk to each other, and we’ve got to start all over again. From that point of view, that kind of efficiency was one of our key goals for the initiative.

L. Throness: Who monitors? A project will do their own monitoring, say, for their own project, but they’re not going to monitor for the other person’s project across the other side of the stream. Which is the body that monitors for everybody and determines the cumulative effect?

A. Lidstone: I’ll turn it over to Jen, but from more of a broad perspective, I think government is going to manage this framework. We’re going to design it so that we can take advantage of existing information that we have available and build in new as it comes on stream.

In terms of a provincewide framework that we apply in a consistent fashion throughout the province, we’re going to have to be practical and try and use the sorts of data sets that we already have in place and that are available through government websites.

We certainly will be running reassessments of the methods on a regular basis or as needed. But that’s not to say that industry or stakeholders couldn’t also run these methodologies or processes that we’re talking about. I think the short answer is that it will rest with the province, in terms of maintaining the information, the standards, the storage data.

J. Psyllakis: Well, I’ll just add, because it came up in a previous question as well…. In terms of monitoring, the information is helping us prioritize those actions and activities as well. We’re able to be more strategic in how we spend those limited resources to do the monitoring in areas where there are high potential risks or high potential conflicts. It’s allowing us to be more effective in terms of how we spend our limited resources as well.

If there were two projects on either side of the stream, and the ministry measured the cumulative impact and it was too high, how do you distinguish the impact that either project has on it? How do you attribute, and what would you do if the cumulative effects were too high?

J. Psyllakis: Well, it would depend on some factors — whether or not it was a compliance and enforcement type of issue, if it was a condition related to their certificate or their permit for that activity. Overall, if it was too
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high and both of the permitees were in compliance, then it would be a question of looking at what options there are for mitigation and changing. But you can’t go back in time on the permit application.

L. Popham: My question is around a possible conflict between government policy and cumulative effects. I’m specifically thinking about hydrology. Up in the Chilcotin there was recently a challenge regarding a change of hydrology due to forest practices and logging. I believe there was a settlement that was made in favour of the rancher who was being affected. The logging practices significantly affected the hydrology and annual water cycle of his ranch, making it very difficult for him to carry out his business.

Given that the cumulative effects studies would show that that’s a possible outcome and acknowledge that it’s a real possibility, would there be any legal or financial implications for the government, given that this would be proof of a situation that the government might be going to court to challenge, due to its policies?

T. Ethier: I’ll try and answer it. I don’t think it’s the answer, but maybe, back and forth, we’ll get to it.

I’m somewhat familiar, not really familiar, with just the news accounts of the situation you described. We can think of, as well, situations where there have been decisions that had unintended consequences for other values that government cares about.

This is sort of the background rationale for why we’re moving forward here — to be able to pull this information out and make it available to decision-makers. They’d look across the suite of values that government has established, that these are the things they care about and want to sustain through time. Course corrections can be made or decisions can be adjusted before they’re actually put in place.

There are always going to be some times where these consequences can’t be completely modelled. We can’t completely foresee what’s going to come out of some of these decisions. But this is an attempt to begin that, to start to learn from it and then to incorporate more and more of this kind of thinking into decision-making.

In terms of your question around potential financial and legal exposure around it, we’re not really set up here to answer that question.

B. Ralston (Chair): It’s probably not a good idea to answer either. There is actual litigation on cumulative effects, is there not? Treaty 8 has an active case before the court, so I think some prudence would be probably in order.

A. Lidstone: In a scenario in terms of the work in the Cariboo that we did recently with some First Nations and forest companies, we actually used the assessments to bring those people together to have a conversation to work out an approach that was acceptable to both First Nations and the forest companies. I think the information that we provided through the cumulative effects assessment facilitated a successful outcome. That’s an ideal scenario.

B. Ralston (Chair): I put myself on the list next. I had a question about values. It’s been used a fair bit. I suppose values can be a bit undetermined or unclear. When one speaks of values in this context, are you speaking about provincewide values or are you speaking about local values? Certainly, in a resource development issue there very well may be, arguably, different sets of values in different parts of the province that might conflict with, say, the views of people down here in the metropolis, for example.

A. Lidstone: I think the framework is set up so that, to be efficient, there are some values that we know are pretty prevalent throughout the province. Efficiently, we can deal with them at a provincial level and try and set it up so that it’s consistently dealt with across the province, and we can run those assessments anywhere in the province.

We also know, as you said, that regionally and locally there are values that are unique to those locations and very important, so we put in place an approach that will allow regions to develop regional assessments for those specific values.

B. Ralston (Chair): Do you foresee this process requiring another level of First Nations consultation? Obviously, that obligation of the Crown, with the Williams decision, has expanded somewhat. Where do you see the cumulative effects framework fitting in with those potential obligations?

A. Lidstone: We’re eager to engage First Nations. We’ve done it locally, in terms of developing the framework and the methodologies, and we want to pursue that more actively. We want to engage First Nations at all levels, provincially and locally, on both specific projects as well as the framework and the methodology. We do think it will be a fundamental tool or a fundamental source of better information about the values that we all care about, including First Nations. We think it’s important in terms of an important added element in our relationship with First Nations.

We have been engaging. We’ve been directed to engage more with them as we develop this and to make sure that the framework accommodates the interests of First Nations. That’s a priority in terms of developing the framework itself.
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B. Ralston (Chair): Recommendation No. 2 refers to introducing tools such as legislation and policy. You may not be able to or may not wish to comment on this, but my question would be: is legislation contemplated to enact or enable this framework?

A. Lidstone: We have done some analysis of existing legal statutes and regulations to see if there are any roadblocks to implementing a cumulative effects framework, and we think, for the most part, under most statutes we could apply this framework and could support decision-making. There may be some areas where we need to do some further analysis to see if there could be some improvements or some tweaks to the legislation to allow decision-makers to use the results of the assessments, but there are few of those. So there are few, really, obstacles to us applying this framework and using it in decision-making right now.

B. Ralston (Chair): So the answer is probably not, then? Would that be a fair summary — that there will be a requirement for or a perceived necessity for further legislation to implement that? That is one of the recommendations, recommendation No. 2.

A. Lidstone: In our assessment, the bureaucrats, the existing legal framework does not put any significant roadblocks in front of decision-makers using cumulative effects assessment right now. There may be some ways to make that better in certain statutes, a couple. We’ll continue to assess that, and we’ll be able to make more specific recommendations once we get that information.

B. Ralston (Chair): Does the Auditor General have any comments, given that that’s one of the recommendations, recommendation No. 2, to introduce tools such as legislation and policy? Presumably, given that it’s a recommendation, there was a sense or a perception that legislation should be drafted and implemented.

C. Bellringer: It was directly related to what we found and that we had not found…. I mean, there were different things in different places within separate sectors but not in any one place, and that clear direction just wasn’t there. We did leave it open to not being prescriptive about it needing to be legislation. It can be through policy but very clear and in one place.

A. Lidstone: We clearly and strongly agree with that recommendation, and one of the fundamental pieces of the framework is developing the policy, which is not in place yet, to guide statutory decision-makers to ensure consistency around the province and to look at all the other pieces. So there is a definite deficit in terms of approved policy right now.

B. Ralston (Chair): A final question, then. Are there other jurisdictions that are models and that either the Auditor General or the representatives of the ministry would regard as more advanced or worthy of emulation?

T. Ethier: We’re not aware of any other jurisdiction within Canada that is as advanced as we are. I think the history of values management in B.C. going back past the last two or three decades has really positioned B.C. well in a place where we understand what the values are.

You know, lots of decisions have been made in terms of protected areas and all these other kinds of different land use designations that are in place, but we’re now seeing that we need to have this tool to fully manage these values in and outside of these kinds of areas.

C. Bellringer: We didn’t do a full analysis, but Peter does have some examples that we became aware of in our research.

P. Nagati: Through the audit we became aware that other jurisdictions are doing work in this area, including Alberta, Northwest Territories, government of Canada and the Yukon. As Carol mentioned, we didn’t assess where they’re at or do a comparison to British Columbia, but we understand that it is a work in progress.

G. Heyman: If I look at the ministry response on page 9 of the report, it states, “Over the past decade government has taken progressive steps toward an integrated approach to land and resource management that enhances its ability to effectively manage cumulative effects,” and then goes on to talk about public processes through which regional land use plans have been conducted.

Recently West Coast Environmental Law, in conjunction with the Northwest Institute for Bioregional Research, co-hosted a series of eight dialogue sessions on cumulative effects in communities across the north, from Prince Rupert to Fort St. John, coincidental with the coming proposals for LNG pipeline and development.

They say that they overwhelmingly heard from a variety of participants from different backgrounds and professions, including First Nations, that people feel alienated from environmental decision-making processes and are concerned and anxious about the rapid pace and scale of development that is occurring in their communities, particularly with respect to proposed LNG developments.

My question is: is that the ministry’s view? Has the ministry heard anything similar, or are measures being taken to make public consultation processes more robust and accessible in the context of enhanced cumulative impacts assessment?

The corollary to that is: how will those processes, as well as cumulative impacts assessment, be applied to the
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development of liquid natural gas pipelines and compression facilities, which is, at least potentially, on a fast track?

J. Psyllakis: I would agree that there is an incredible level of interest from the public, First Nations, ENGOs and industry around cumulative effects. There are processes in place as part of our regular business that engage and include public participation or public comment within what we do now.

To complement that, partially because of LNG and other activities, the government has committed to the environmental stewardship initiative, which is looking at regional forums to help enhance that engagement process and look at opportunities to build relationships with First Nations around stewardship and environmental values. That also has opened the dialogue with communities that are potentially affected around LNG.

The federal government is also very committed around energy development in ensuring that there is open and transparent engagement. They’ve also partnered with the province to do that collaboratively so that we’re now going into a process where everybody wants to engage and we do it efficiently and together. That is, from a cumulative effects perspective, also very beneficial because many of these decisions happen at different levels of jurisdiction. The more that we establish commonalities and coordination around what our desired outcomes are, the more likely we will be successful.

So there is a desire, and it is increasing. We have the opportunities and structures in place to involve a greater emphasis on public engagement.

G. Heyman: Well, recent experience…. You mentioned coordinating with federal assessment processes. We’ve recently witnessed, in the case of some of the federal assessment processes with respect to pipelines, interested party interveners withdrawing because they claim the processes are a sham — they’re not open, and they don’t allow proper examination of witnesses.

I’m wondering if you can be more specific about how you plan to give the process legitimacy. What specific measures would you take? Other bodies have assessed people’s faith and comfort with existing public consultation processes, and the answer is: people feel alienated and excluded.

J. Psyllakis: I can’t comment on those processes that the federal government is running. From the perspective of the cumulative effects framework and the importance of engagement, we are operating under a principle of openness and transparency in providing the opportunity for that dialogue to occur, not only with industry but also First Nations and environmental organizations. It’s helping us inform our policy development and the procedures and the approach that we take, ultimately, as part of the framework.

G. Heyman: How, specifically, would that involve doing something different going forward than you’ve done in the past?

A. Lidstone: I think the cumulative effects framework is not focused on developing a public consultation framework. It is incorporating engagement and consultation in terms of how we develop it — the values, the assessment methodologies. But it doesn’t put in place a…. It doesn’t substitute for the decision-making processes the environmental assessment processes and so on that have requirements for public engagement. That’s not part of the focus of our work.

Our work is about providing better information for those existing processes to proceed — more consistent information, more universally available information. Then those processes will kick in.

K. Corrigan: Well, that’s perfect, because my question was very similar. Part of it has been answered, but my question is: how will the cumulative effects framework apply to projects where environmental approval has been delegated or handed to the federal government under the equivalency agreement?

One of the concerns that I would see is that if the work of the approval has been given to the federal government, presumably all of the work is being done there as well. How can we be confident that the cumulative effects framework can be effectively managed if the provincial government is not in possession of all the information? Maybe it is. I’d really be interested in getting an understanding about what the process is going to be and how we can be assured, as members of the public, with regard to the cumulative effects framework when environmental approval is not being done by the provincial government.

A. Lidstone: We are cooperating with the federal government in whatever way we can in terms of developing the framework. We’re working with Environment Canada, having discussions with NRCan. We’re working with DFO in the marine environment. Wherever we can, in terms of aligning our approaches and maximizing the use of available resources, we’re working on that with them — not just in terms of environmental assessment but on all fronts that are open to us.

I think in terms of our own environmental assessment process or the federal process that we would certainly encourage and work towards common standards, com-
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mon data standards, access and use of the information that we’re providing. We have no control over federal regulation or processes, but we certainly would encourage cooperation and collaboration.

We would certainly discuss with them how we could design this process so that they could take maximum advantage of it. I’m sure the proponents working inside their process would see significant benefits to some consistent approaches, terminology, data gathering and presentation of assessments on cumulative effects.

K. Corrigan: Okay. Well, let’s specifically talk about one project, which is obviously of concern in my community of Burnaby — the Kinder Morgan project, for example. Is the provincial cumulative effects framework, which this report said is already in operation in a lot of ways…? That means it’s in process, but it is already there. That’s what this report says. Is that framework being applied to the Kinder Morgan project?

A. Lidstone: Not to the project in and of itself. But if the pipeline…. I’m not familiar with the route, but for example, if the route passes through an area where we’ve done some piloting on the cumulative effects or have come up with some initial work on it, then they would have access to that information and use it in the process.

A. Lidstone: Proponents or the federal government. Once we finalize the assessments and get them in play through the next year, then that information would be available to that process — to the proponents, to the regulatory agencies and so on to use as part of their assessments.

K. Corrigan: My understanding from reading the report is that some pieces of the cumulative effects framework are already in place. My question, then, is: is that not being…? I mean, some of these projects are huge projects. My colleague from Vancouver-Fairview referred to LNG projects. Decisions are being made as we speak about LNG projects. Decisions are being made as we speak about the Kinder Morgan pipeline — or the process, at least, is in place.

I just want to be clear. Is what you’re saying that, whatever form it’s in at this point, it’s not being applied to the Kinder Morgan process? If the province of B.C. wanted to apply the framework, would it have the ability to gather, to have access to, all of the environmental assessments and information that the federal government has in order to make its own determination based on the framework?

J. Psyllakis: It’s in its process now, and all of the current legislation and regulatory rules apply. We have not completed a cumulative effects assessment at a regional scale relative to Kinder Morgan.

We have opened a dialogue with Environment Canada from the perspective of monitoring cumulative effects and the science of cumulative effects. That’s one of their areas of interest. But that process is ahead of where we are at from the perspective of applying the framework. That’s not to say that cumulative effects are not being considered, because they are considered apt from a project scale. If I understand you correctly, it was in the federal process.

K. Corrigan: Okay. I have more questions, but if you want to go to somebody else first….

V. Huntington: Just to start, I have two questions. Are the assessments of each of the values intended to be something like the NorthEast Water Tool, for instance, so that it becomes public data, primarily for the use of the proponents, to assess whether or not the water availability is there for a specific project? Is that how you’re going to handle each of these 11 to 15 values?

I’d really like to know more about what you’re thinking of in terms of values — whether they are those values shared by British Columbians or they’re values that are of interest to proponents. How do you anticipate making this information available to proponents and decision-makers? I’m not quite sure, really, where your ministry fits in, except as a permitter, and to what extent, then, you would make decisions based on these values. Do you know if…?

T. Ethier: The actual product that we plan on providing is, essentially, a map of the geographic extent. Then there’ll be a rating of the condition of that value across that geographic extent. The way we build it, we may not be able to directly measure what we’re calling that value. We will have to use indicators. We have good access to that data — two or three or four potential indicators. Then we’ll sum up to the condition of that value.

T. Ethier: Yes, and the methodologies behind how we build this are public as well. We’re dependent upon the scientists back and forth, having it peer-reviewed about how we build these so that we are confident that what we’ve done can withstand scrutiny. Often information can become very much a part of the argument: whether it’s cor-
[ Page 715 ]
rect or incorrect, or was the right thing included? That’s the sort of generic description, or my understanding of how we’re getting to put that information out and to the public.

V. Huntington: Yet you have no thresholds upon which to make the decision upon the condition of the values. If you’re only reassessing the value every five years or so, how do you intend to stay on top of the impacts?

T. Ethier: Well, the condition of that value will be the primary consideration for the decision-maker — and the trend of that condition. Those are the two things we really are trying to pay attention to. What’s the long-term direction of this particular value in terms of its trend, and what’s its current condition? That would become a component of that decision, associated with the project, which may or may not have an impact on that value.

A. Lidstone: It’s a risk management approach, so we’re looking at risk. We are categorizing risk to the value. That, in a way, tells us where that value is in terms of its risk currently and what the trend of that risk has been — improving, getting worse, staying steady.

That information will be available, and we’ll be able, where necessary, to run scenarios, what-ifs, in terms of development and impacts. From that point of view, that information will be available to people who make decisions either on authorizations of projects or on strategic decisions of government. That information could inform any of those levels. That information is relevant to all those kinds of discussions and decisions.

J. Psyllakis: Current condition is point in time, and that is our baseline. Then we’re using our desired future condition as what we measure risk against — so our assessment end point. That’s where we put our categories for risk.

V. Huntington: May I ask another? It’s somewhat similar to Kathy’s last question. Not all economic development projects are extractive in nature. Where you have an industrial project that has not had the cumulative effects assessed yet you have provincial values and interests at stake, how do you intend to assess how these projects are being managed from an administrative point of view?

I can be explicit, and I’ll do it from my hometown. We have a situation where Deltaport is being doubled in size with a second island — not adjoining but a second whole island. It will double the size of the port. It’s at a wildlife management area. It impacts the agricultural land reserve. It impacts three wildlife management areas.

Part and parcel of that project has been the development of South Fraser Perimeter Road. It’s bordered by the B.C. Ferries terminals. It’s in the middle of the primary fish migration route. Yet nobody — nobody, including the federal impact assessment — is looking at cumulative impact.

Do you foresee — probably not for this project — opportunity for agencies to look at your data, to assess whether or not there’s a cumulative impact that’s unsustainable? There is in this case, in my mind and in a lot of other minds, but nobody is assessing it. It’s not an extractive industry, but would it fall into the nature of your material?

A. Lidstone: I think the unique thing about our approach is we’re focusing on values. Rather than focusing on projects, we’re looking at certain types of wildlife, watershed conditions, old forests, biodiversity — those sorts of fundamental values that we’re all aware of — and looking at both the condition and the risk to those values based on natural processes.

We can also build out what would happen if we add in new wind farms, new roads, additional forest harvesting and so on. Those are the types of tools that we’re going to put in place.

For example, if there were a major expansion of an industrial facility or whatever, the information we would provide is showing the condition of those values in that area — what’s been happening to those values in terms of the risk and what might happen if we add in additional impacts or projects, change natural disturbances or if a forest fire comes through. We would be able to, if necessary, run scenarios that show that trend and that change to risk.

V. Huntington: Could I just follow up with one quick question to sort of close the loop?

One of the things that is concerning to me and, I think, to others — certainly, it was part of the Auditor General’s recommendation — is that legislation be proposed so that it, in a sense, obligates cross-ministry decision-makers to look at the values and to make decisions based on the values when they’re looking at cumulative impact.

In this situation, there is a picking and choosing of the values that they want to look at. That’s why I feel that legislation is critically important, because in this case, decision-makers are picking and choosing. Other impacts on provincial interests aren’t being looked at deliberately. Legislation becomes a necessity if we want to make this work consistently.

I would just leave that with you and with the members of the government party. Right now picking and choosing is possible. Without legislation, it will remain possible.
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G. Kyllo: Values are very subjective. I guess the question I have is: how do socioeconomic values dovetail into this process? The values of First Nations or environmentalists are going to be definitely different from the values that might be placed on job creation and the communities — the ability for creating employment and even creating government revenues. The revenue source provides all kinds of other supports for social programs throughout the province.

How do we weight the need, the necessity and the concern for the environment and the supports for the critters and wildlife with the other competing demands that we have as a population in this province?

T. Ethier: When we do talk about cumulative effects assessment, we want to bring in the social and economic values as well. It’s a work in progress. We talk about it at lunch, and we talk about it all the time: how are we going to do this in a way that we can portray it in an objective way and that decision-makers can actually see what the trend is in these values?

We’re not there yet on that value. But that’s a value that…. How we build it and how we express it and how we bring our decision-makers into thinking about it is very much part of our plan of implementation.

Jennifer, I don’t know if there’s more to add there, but I know that that’s something that you are working very hard on as well.

J. Psyllakis: I’ll just add that it is a comment or a question that comes up frequently. We’ve got some placeholders for natural resource sector values that are economic, both for timber and range, and social, with visual quality and cultural heritage. Those are queued for a year 2 value assessment or year 3. They’re already on the list. That doesn’t capture all of what you said in terms of the economic indicators and community well-being types of indicators.

What we’ve heard through engagement is sort of two sides of the coin. We hear strongly from some groups that the right place to consider communities and the economy is at a higher level, a strategic scale of decisions where objectives are set or policy is set by government, as opposed to at the authorization scale on individual permits. From the framework perspective, it doesn’t mean that we’d take it out of the overall framework, but the types of decisions that we are supporting are more focused at the strategic scale. Then on the other side of the coin is that it’s all balanced and all values are considered consistently with each decision.

There are trade-offs and questions that we need to answer from both procedural and policy perspectives on what approach we will ultimately end up with.

When you say values are subjective, I get that. We talk about different…. It could be different members of the public or just different members of government saying: “Why isn’t this value being considered?” What we’ve been trying to do here is to look to these land use plans, look to case law, look to existing legislation that tells us what the value is that government has established they want to see managed sustainably through time in these particular areas. That’s the stuff we’ve been coming back all the time with: here are the values, and this is what we’re focused on.

Yes, it is subjective, but the decision is made at the right level around which values are captured and which ones we’re following.

G. Kyllo: I think that the concern or the caution is that cumulative effects…. If this framework was in place 50 years ago, cities like Vancouver wouldn’t exist, largely, not in the way they currently are. I think we just need to be very careful and cautious moving forward that we’re not pigeonholing ourselves and restricting development based on pre-set values or notional values that are always subjective and largely would also change depending on the government of the day.

G. Heyman: First of all, let me back up a minute. The ministry appears to have rejected the idea of specific legislation. The report notes that only one statute provides explicit direction to assess the cumulative effects — that’s the Environmental Assessment Act — but that the majority of natural resource use proposals are not large enough to prompt an environmental assessment.

In that context, how does the ministry see the cumulative impacts of a number of small development proposals or natural resource extractive proposals in combination with other development proposals being effectively assessed and effective action being taken to mitigate or eliminate potential risks?

T. Ethier: It goes back to an earlier part of the discussion, where we think — having done this scan across the different statutes within the sector and the authorities that are there for statutory decision-makers — that they can consider the values that we’re describing here in the cumulative effects framework as part of their decision-making. They could attach conditions to the authorization such that the values are fully considered and impacts are mitigated.

What we’ve also said is we may discover in this, as we continue to work it into being operational, that we may need to amend some statutes to allow that stat decision-maker to consider cumulative effects.

I think we were a little bit more worried earlier on, to be candid, when we were developing this, that we would need that kind of approach. We seem to keep finding out
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that we actually do have the authority under the existing statutes to be able to use cumulative effects information in stat decision-making. But we may still find that we have to amend EMA or some other act at some point.

G. Heyman: The report also states that the ministry is not coordinating the management of cumulative effects with other natural resource ministries and agencies when making natural resource use decisions. Presumably, part of the framework will be to address that issue. Have any concrete steps been taken to begin that?

T. Ethier: Well, we mention the environmental land use committee. It has the ministers and members of government focused on issues important to the natural resource sector. Underneath that is the NR board, the natural resources board, which consists of the deputies of the ministry. This policy has gone back and forth in its development through those bodies.

As well, at each of the regional levels we have struck committees of managers and stat decision-makers to begin to focus on how they’re going to take the cumulative effects framework and apply it to their area of business.

Maybe the one piece I have missed is that the establishment of the Forests, Lands and Natural Resource Operations Ministry was to shift away from the siloed-under-one-statute approach to managing the landscape to being a coordinated land manager that considers all the kinds of development opportunities and environmental values in one place and builds some consistency in decision-making.

G. Heyman: Thank you. I’m going to preface my question with a comment with respect to Greg Kyllo’s general discussion about values. I think one of the generally accepted principles of not significantly addressing risks to ecosystems — otherwise known as environmental risks — is that there’s a pretty steep cost if irreversible harm is done. It’s an economic cost. It’s not just a feel-good cost. Ultimately, if we’re going to have a discussion about economic development, all these costs have to be internalized.

There are two significant areas in the report where I sense, at least, a difference of opinion between the ministry response to the Auditor General’s report and the statements of the Auditor General. One of them is whether 2016 or 2021 is really the effective date of when we’re going to have a meaningful cumulative impacts assessment regime in place, as opposed to a process. The other one is about the need for thresholds and a clear delineation of what those are that can guide decision-making.

My question is really to the Auditor General. If I’m correct in my assumption that these are two of the significant differences between what your audit found and the opinion of the ministry as expressed in their response, what impact do you think this difference will have on moving forward in a meaningful way the establishment of a cumulative impacts assessment regime and the resultant actions that we presume would follow from applying it?

C. Bellringer: I’m always reluctant to speculate. We did the audit at a point in time and gave you the findings from that point in time. I think this is a good example of something that…. Dare I use the word? The action plan on it is going to be very meaningful going forward, because it is something that’s going to be happening as opposed to something that you can see right now.

G. Heyman: Maybe I won’t ask you to speculate. I’ll just say: am I correct in my assumption that these are two areas of a significant divergence of opinion between the AG and the ministry?

K. Corrigan: I’m briefly going to go back to the Kinder Morgan project as an example where I believe that there are some challenges with the interface between the provincial and federal government.

Robyn Allan, who is the ex-CEO of ICBC, a highly respected economist, removed herself from the federal process recently and very publicly did so. She said she had no faith in the process whatsoever.

One of the things that she specifically pointed to was the fact that cumulative effects were not being considered. She included in what she wrote: “The cumulative impact and risk of this entire system is of concern to the public but not to the NEB. The panel has excluded from its assessment the impact and risk of the 60-year-old legacy line, existing terminals and storage tanks. These are outside the scope of its review.” She said later that it is only looking at the new facility. Then she also talks about other limitations with regard to cumulative impact.

I know that I’m bordering on policy and so on. I guess my question is, then: is it not true, if she’s correct about the approach — many people have expressed the same concern about the approach of the National Energy Board process — that that approach is inconsistent with the cumulative effects framework approach that we are professing to embrace in the province of British Columbia?

How is that we could then say that we’re going to leave that to the feds, when it’s completely inconsistent with where we say in British Columbia we are going to go, because we’re going to consider cumulative effects?

T. Ethier: I’m just not sure how best to answer your question. It’s a federal process. It’s a comment by someone I’m not familiar with — her observations on what’s happening there.
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We’re here around a framework that we’ve built, values that we’re talking about. If the project proceeds and there are permits that are going to be issued as a result of that, we would probably be using the cumulative effects framework as we consider those permits.

The other part I want you to understand is that…. Maybe it goes to MLA Huntington’s point here. If there is development that affects one of the provincial values, even if it’s outside of a provincial decision-making process, during the time of assessment, that would be captured at that time as being an impact on that value.

K. Corrigan: It’s happening right now. The assessment is happening as we speak. So I’m trying to figure out how this framework that we said we’re living by and is the way we’re going to judge things is applying to that. Or is it just simply that it’s too early? That is of real concern, because the decisions are being made now.

You said that if it impacts a value, it will apply. Is that happening right now, then?

A. Lidstone: It doesn’t apply in a regulatory or a legal sense. It’s available. So if we have developed information through our pilot projects…. Again, we’re still in the final stages of approving some of the first values as a provincial standard. But we have done work in pilot areas that may or may not be a part of the route. I don’t know the details. If that information would be useful to the process, they’re welcome to use that information.

A. Lidstone: Yes, we wouldn’t hold it back from the feds or anyone else. That information, in terms of the pilot projects, has been available to the public, to stakeholder groups and so on. So we’ve assessed — for example, in the Merritt area — visual quality, mule deer winter range, grizzly bear and a couple of other key values. They’re welcome to that information.

K. Corrigan: To get away from Kinder Morgan, because I understand that it’s…. I’ll speak more in generalities. If it is a project where the decision has been made to allow the federal government to do the environmental assessment, then theoretically how hands-on does the framework become in those processes?

You say that there are not thresholds. This is to inform things. But exactly where are the teeth in it that are going to apply to those federal projects? Is there no way to say: “Oh this is inconsistent” or “The impacts are not consistent with our values”?

You said theoretically there could be a decision to not allow a project, right? I think that was said earlier. Theoretically, there could be an impact. So how is this going to fit in with federal projects, where we’re not doing it? Do we, using the framework, say no to some of these projects?

T. Ethier: I feel a bit at a loss how to answer. If it’s a federal project, their policies and their legislation apply. We can provide information, and that information is available, if they so choose. We try to make it readily available.

L. Reimer: I find this very interesting, and it’s certainly a topic that I wouldn’t have thought about auditing. So this discussion has been very interesting to me.

My question is: has this sort of framework for cumulative effects been done in other provinces? I guess my question is also to the Office of the Auditor General. Have there been audits of this nature performed in other jurisdictions too? Is there any best practice existing in other jurisdictions that we can draw upon for our own province?

M. Sydor: I think some of the fundamental expectations are very similar across jurisdictions. As Peter indicated earlier, when we had a look at what was going on, we noted that the Yukon, Northwest Territories and Alberta had frameworks in place.

In fact, the Yukon has had a cumulative effects assessment act in place since about at least 2000. There’s an oversight board responsible. There are a number of district offices that are responsible for carrying out assessments as projects are developed. My understanding is the Northwest Territories, as well, has legislation.

Certainly, in Alberta they’ve been looking at cumulative effects since about 2004. In fact, they established an oversight body — the cumulative effects management association, I think it was called, CEMA. That was recently disbanded. So even though they had an approach in place, there are questions about how effective it is.

The reality is that we’re looking at a concept, a process, a system that has been in place generally for maybe 20 years, so there’s still a lot of learning to do. But some of the concepts are very similar in terms of threshold, acceptable conditions.

I think recommendation 7 is the one we’ve just been discussing. How do we use the results of the information provided in decision-making? So the questions around Kinder Morgan are basically around that. As you see, what we’ve identified in our report is the fact that that isn’t clear yet. That’s something that needs to be established.

The ministry people have talked about values. They’ve talked about monitoring. They’ve talked about trends, current conditions, risks. Those are all valuable pieces of information that have to be pulled together. But then, in the end, that goes into the decision-making framework. Then how are the decisions going to be made using the information from the assessments?
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I don’t think we see that there’s one particular model, but certainly, what we’re seeing here is that what B.C. has established are elements of good practice that we’ve seen other proponents suggest and that we see working in other jurisdictions.

M. Sydor: We don’t think there are any other audits that have been done. B.C., as usual, is leading the pack on this one.

K. Corrigan: Why am I always the final question and have, like, eight more to go?

K. Corrigan: Time is limited. Okay. A couple, Chair, please. Really, this is going to be a stretch.

I wanted to get straight the idea of what values are. There seems to be going back and forth between…. We are talking about environmental values and standards, and we’re talking about other things.

This audit used the word “environmental” or “the environment” regularly. The standards, the values that the government has established as potential values, all have to do with the environment when it’s talking about cumulative effects. But some of the land use plans and some of the discussion today has talked about other values like hunting and recreation and tourism and purely economic or business-type values, which are also important.

I just want to get clear what it is we’re talking about when we’re talking about the framework. They’re very different things. One looks more like a cost-benefit analysis, and the other, what I thought of as cumulative effects, deals specifically with the environmental impacts. Is there agreement on that, or is that still discussion that’s going on within government?

Also, I’m just wondering what the understanding of the Auditor General is when this report was done, what we’re talking about.

B. Ralston (Chair): Before you respond, might you also include…. There’s a suggestion of ten priority values on page 32, which are all environmental values. In your answer perhaps you could refer to that as well.

J. Psyllakis: With the province’s definition of cumulative effects, we recognize environmental, social and economic values, and we also recognize not only human development activities but also natural disturbances. Those are areas where we differentiate provincially from the Auditor’s definition, which focused on human disturbance and environmental impacts. Our basket of values is broader. We’ve discussed where we’ve selected or identified those values from legislation, policy, land use plans, etc. They do go outside of only environmental values.

A. Lidstone: We’re working on it now. We’re doing some policy analysis and research. There is an intent to include values that speak to economic well-being and community well-being, but we have work to do in that area. We need to bring the experts together — the economists, the social scientists and so on — to get a handle on what kind of data we would use and what kind of methods are out there right now. That’s a little ways down the road for us, but it is on our radar screen as something that we intend to continue working on.

K. Corrigan: I’m interested in whether either the Auditor General or Morris has any comment on that. My concern is that if you’re talking about all those values, all of which are important, it in some ways dilutes the consideration of environmental impacts, which I think is primarily what most people think of when they’re talking about cumulative effects.

M. Sydor: A lot of the other values that we’ve been talking about — hunting, fishing, recreation — in fact depend on making sure we’re doing as best we can with the environmental values. You know, some of what we’ve called values might be viewed as benefits of maintaining the environmental values. So hunting and fishing is dependent on ensuring that there’s sufficient habitat.

Grizzly bears, for example, are one of the values that has been identified by the ministry, so obviously, we need to make sure that the habitat available is suitable to make sure that they continue to sustain themselves. Fishing — we’re looking at water quality. We’re looking at the quality of habitat, making sure it’s maintained.

I think that focusing on the environmental values first provides a venue for us to then make sure that we have
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available to us the other values or benefits, as they may be called.

Now, we have noted in our report on page 30 that when some of the land use plans were being developed in the Skeena area — some of the values you had identified are, in fact, there. So there are references in some of the plans to hunting, fishing, recreation, social amenities.

They are interrelated, but our sense is that the focus is initially on the environmental values, and then the rest of it is benefits. We monitor how well we’re doing there, and are people actually taking advantage? Do we still have the number of people who want to fish coming along — hunting, etc.?

The two are intertwined, but clearly, I think, the public concern, the concern of government as well, is making sure that the environmental values are being maintained, because that’s what projects have the main impact on.

C. Bellringer: If I could just…. There’s no disagreement between the ministry and ourselves around definition and on values itself. The context within the report is quite a broad one.

L. Popham: Just a quick question. When we were looking at the ten things that are included in the cumulative effects and the three different animals that are listed, why are we only using those three? I guess I’m thinking specifically around logging practices around areas that there’s fur trapping and the cumulative effects of that type of logging on fur-bearing animals.

J. Psyllakis: Those species were selected early as part of case law from the 2007 Tsilhqot’in decision, and this is just what we’re working on now. It’s not the list of potential values. We are also considering species at risk and other important values that may nest under forest biodiversity. For example, many of the fur-bearing species would be nested under that.

A. Lidstone: We will also be doing, again, regional assessments for values that are unique to those regions, so there will be some more tailored assessments that might apply only in some parts of the province where those values are a priority.

T. Ethier: The entire intent of this work is to provide a decision support tool for our stat decision-makers when they’re considering authorizations and also when they’re considering budgets to spend on important work on an annual basis.

But we don’t hang all of our environmental goals on the cumulative effects framework. We depend on the overall system that governs how we manage for values that include protected areas and other areas of the province that we’ve identified, either for species at risk or ungulates or old-growth management areas.

This is a tool — I’m going back to where I started — that sits inside this overall framework for managing the values provincially.

B. Ralston (Chair): I want to thank you, then. I think we’re finished. The discussion — obviously, this is very much a continuing project, and we’ll look forward to the follow-up report when it comes.

I would suggest a brief recess, maybe five minutes, and then we’ll move on to our next report.

B. Ralston (Chair): The next report that we’re considering is the environmental assessment office progress report of May ’15. Along with the Auditor General is the assistant Auditor General, Morris Sydor, and from the Ministry of Environment, Paul Craven, executive director, policy and quality assurance, environmental assessment office.

I think in Paul’s case…. In both cases it’s welcome back. I think both have been before the committee fairly recently.

Office of the Auditor General:
Follow-Up Report: Environmental Assessment Office

C. Bellringer: I’ll just make some brief comments and then turn it over to Morris to take you through the report.

In 2011 we audited the environmental assessment office’s oversight of certified projects, where major projects such as mines or power plants must be considered for an environmental assessment prior to their development. This is the third follow-up to the original report. We decided to go beyond publishing the typical self-assessment, and we completed a re-audit. We included in this report the EAO’s self-assessment, unedited, from October 2014 as well as our audit findings regarding the EAO’s progress in addressing the original six report recommendations.

Just an overall comment. We were encouraged by the EAO’s progress to implement our recommendations to improve the oversight of certified projects. I’ll let Morris take you through the specifics.

As the Auditor General indicated, we conducted this follow-up to have an idea of the EAO’s progress in implementing the six recommendations from our 2011 report.

Now, major projects such as mines or power plants must be considered for an environmental assessment prior to their development. This assessment, which comes from the EAO, weighs the potential economic, social,
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heritage, health and environmental effects of a project. In 2011 we carried out an audit to determine whether the EAO was providing sound oversight to ensure that any potential significant adverse effects of major projects were avoided or mitigated. Overall, at that time we concluded that the EAO’s oversight of certified projects was not sufficient to ensure that potential significant adverse effects were avoided or mitigated, and we made six recommendations to address our findings.

Now the EAO has made progress in implementing our six recommendations. They have substantially implemented four of the six, and recommendations 5 and 6 are partially implemented — with recommendation 5, in particular, being more involved and, therefore, taking longer to implement. To fully implement recommendation 5, we expect the EAO to evaluate whether project outcomes have been achieved for environmental, health, social, economic and heritage conditions. Of course, we urge the EAO to continue in their implementation of the two recommendations.

Overall, EAO’s oversight of environmental assessment certificates has improved. Environmental assessment certificates are written more clearly, so they can be measured and enforced. A new compliance and enforcement team monitors actions of proponents to ensure compliance with conditions.

Improving the EAO’s performance is important as government’s focus on natural resource development increases. There are currently 73 major projects in the environmental assessment process, potentially worth billions of dollars, with significant social, economic and environmental impacts to our province.

That concludes our summary of the follow-up report. As before, we’d like to thank the EAO for their cooperation in this follow-up audit.

P. Craven: We have a brief summary and presentation. Thank you, Morris, and to the Office of the Auditor General. In the follow-up report, we found working with the Auditor General quite helpful as we continue to meet the six recommendations that were made in the actual audit.

I want to stress, first of all, that — out of the six recommendations and the four that are substantially completed or met — that isn’t the end of the road for us on those four recommendations. We’ll continue, in the form of continuous improvement, to develop our program, develop how we implement conditions and write our conditions and further elements of those recommendations, as well as work on recommendations 5 and 6 in terms of meeting and fully implementing those recommendations.

I’ll just briefly go through our deck here and then open up to some questions. I’ve just come out with this overview. I think Morris has actually handled the key findings, so I’ll just take us to a bit of an overview of our program, which is on slide 4. When we set out to build our program, we built it on some leading practices from other agencies and jurisdictions. As Morris mentioned, we now have a dedicated C-and-E program, including compliance officers, program assistants and a compliance manager.

Since we’ve been established, in 2011, we’ve now conducted 77 field inspections. As of May 2015 we are adding to that as we are entering inspection season now, in terms of our office. We enforce warnings, advisories and enforcement under the EA Act, stop-work orders, remedy orders and compliance agreements. We’ve had examples of those since 2011. The fact that we conduct 77 field inspections is one indicator of the work we do, but it’s not fulsome in all of the work that we do.

Just working our way through the recommendations, then, on slide 5. Measurable, enforceable conditions have been a key area of our effort. We appreciate that that effort has been recognized in the follow-up report. We are now, in terms of next steps, moving to finalize an expanded policy in terms of how we draft our EA certificates so that we can broaden that and make sure that there’s understanding by proponents, there’s understanding by other participants in the EA process as well as understanding by our own staff in how you develop enforceable and clear conditions.

On the next slide, the environmental mitigation policy was developed with the Ministry of Environment. We continue to train on the policy. A few weeks ago for new staff members, we had the Ministry of Environment come and talk about the mitigation policy. It’s just another indication of how you have to continue to work on these things. It doesn’t just end because the mitigation policy is in place.

The next slide, clarifying our monitoring responsibilities. I think we’ve done a good job of addressing that in terms of making it clear what agencies are responsible for follow up and in working with our other partners in the natural resource sector.

An area of growth that we anticipate in the future and in helping us monitor is developing an aboriginal liaison program within C and E. There’s interest in aboriginal communities and First Nations to be involved in compliance and to know more about compliance. We think that that’s an area we’ll be focused on in the future.

Recommendation No. 4 is just the actual development of the compliance and enforcement program. These are the four areas of our focus.

Our compliance operations, which does include inspections, complaints, investigations; compliance self-report reviews — for every certificate, a proponent is required to provide a self-report on their compliance with certificates at certain time intervals; and, of course, enforcement.

We are busy and involved in information-sharing and outreach with proponents, partner agencies and aboriginal groups to spread the word on what we do and how they can be involved.
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Measurable, enforceable certificates take a lot of time, particularly when the office is busy, as we are now, with lots of projects to go through. We are involved in the vetting and a view of all those draft certificates.

Effective management is another area which is a focus of the audit and a focus in terms of one of the recommendations. That’s the idea of continuous improvement in our EA and our compliance oversight and also monitoring the effectiveness of our conditions. I’ll get into that in terms of recommendation No. 5.

Just a footnote. We have developed a C-and-E policy. It’s now available on our website. It explains the process of enforcement, which will help in our outreach efforts and understanding of our program.

Recommendation No. 5 is an area where we are continuing our work. Part of the reason that this is only partially implemented is that it takes time for our new certificates, our new enforceable conditions, to work through the system and evaluate the effectiveness. We take and accept the advice of the Auditor General in terms of developing an effectiveness program where we evaluate whether those conditions have been effective in mitigating those effects — environmental effects, social effects, heritage effects — that we discover through the course of the EA.

We do have a standard library of conditions that’s now in development. What we’re doing with that standard library…. That assists project staff in identifying conditions that may have worked in the past and other ones that may not have worked in the past.

Recommendation No. 6 deals with providing public information about our EA projects. We are starting to post the various pieces of our inspection reports and inspection investigations. We have to do that in concert with the rest of the natural resource sector and compliance and enforcement across that sector, so we do it in a manner that is consistent with what they do. That’s why it’s taken a little bit of time, but we are moving towards it.

It’s our intention to ensure inspection reports and other compliance matters are available on the EAO website and accessible. There is usually a time lag between the actual inspection and when they are posted. That’s for two reasons. Usually, for administrative fairness, we do provide our inspection reports to the proponent for them to have an opportunity to comment. Also, if we are finalizing an investigation and we’re in the midst of an investigation, we’re obviously not going to be releasing those publicly. But we hope to do that more fulsomely in the future.

That’s our summary. Again, I think it is a focus on continuous improvement on all six recommendations, with a focus, obviously, on the two that are only partially implemented. We did find the audit progress update process to be very effective and a valuable process, and we thank the cooperation of the Auditor General, once again, to allow us to go through that process.

L. Throness: Thank you for that, Mr. Craven. We just considered an audit on the cumulative effects, and from page 9 of that audit it says: “The environmental assessment office requires proponents to complete project-scale cumulative effect assessments.” So you already do that, as I understand. From page 7 of this audit it says: “The EAO is responsible for monitoring certified projects throughout their life cycles to ensure that certificate holders comply with environmental assessment certificate conditions.”

Does the EAO have the capacity to undertake the cumulative effects process since it’s involved so integrally, it appears, in both the first projection and also the monitoring later?

P. Craven: You’re correct. We do conduct cumulative effects analysis on a project basis where it’s appropriate, and that is usually when there is a residual impact on the value that you’ve looked at after you’ve considered mitigation measures. In some instances the cumulative effects analysis would not be required because the mitigations have indicated that there is no residual impact.

We do have capacity, and we do address those. Certainly, the creation of the cumulative effects framework will assist us in that work. It will assist proponents in that work and the general public in evaluating that work.

The work that we do in terms of cumulative effects will also, ideally, feed into that framework, because we do get information in the context of an environmental assessment. That should feed into the broader framework when the framework is completely implemented.

In terms of capacity for enforcement, certainly if there are mitigation measures through our certificate to address those cumulative effects, as with other conditions we have the capacity and will enforce. We are a small unit, but we also build on our compliance partners throughout the NRS sector, particularly Forests and FLNRO in terms of their people on the ground, so that’s how we build capacity.

K. Corrigan: Sometimes we ask a lot of tough questions in this committee, as we should, and we are concerned about some of the reports that we get. But we also have to say “well done” when there’s significant improvement. I think this is a good report — from a report that was pretty critical of the environmental assessment office to one that says that most of the recommendations have been substantially completed and implemented. That’s a starting point.

I just wanted to ask a couple of questions. Recommendation No. 6 talked about accountability, and part of that is making information public. It sort of goes together with the cumulative effects report as well. There are a few pieces to this.

The comment was made earlier, when we were dealing with that report, that there was going to be more infor-
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mation made public. There is a suggestion here that, for example, “warnings, advisories and results from field inspections” should be made publically available in order to fully implement recommendation No. 6.

You’ve spoken a little bit about that, but I’m just wondering if you could give us a little bit more of a picture about where we are in terms of making that kind of information public, where we’re going and, also, with regard to public accountability, maybe some comments about the interplay that you were talking about between the environmental assessment office and FLNRO.

P. Craven: Thank you very much for your introductory comments — much appreciated. I’ll start from where we want to go in terms of public access to our records.

The environmental assessment office, just generally, in terms of assessment, provides a great deal of information on our website during the assessment process. While we’ll admit that it’s not always easy to navigate that website and we are anticipating improving that, it’s our intent on the compliance side to make that information on a project basis also available in terms of inspection reports and what the Auditor General has recommended.

We’re not there yet in terms of doing that in a systematic way. In the early development of our program, we are just getting our feet under us in terms of the timing it takes to get the inspection reports completed and extend it to making it public. We’re not there yet, but we want to, over the next little while. I think, short…. I’d say in six months to a year we should be in a position where that’s more systematic.

There are certainly areas where there is a great deal of public interest in projects — on compliance matters. We have made sure that those records are available to the public on an expedited basis.

G. Heyman: It seems to me — and I’d ask the Auditor General to confirm — that we have this process of six recommendations, a response from the ministry and identification in the follow-up report from the Auditor General that they agree with four out of the six responses that things were complete or substantially complete and disagree with two that, in your opinion, were partially complete.

The environmental assessment office has responded, I took from your comments, appropriately or in a way that you thought was moving towards completing substantially a response to that recommendation. Am I right in that assumption?

C. Bellringer: Yes, we did see progress on both of those. Recommendation 5 is a matter of time. It’s just that we couldn’t consider it to be substantially or fully complete until such time as some of those assessments are done. And 6 is getting into some fine-tuning. There is additional information that we would be looking to see — the accountability information being sufficient.

But there is a lot of information available. One of the things we included in the report…. In appendix A, if you look at this report on line, you’ll see the actual links to the environmental assessment certificates, which include a great deal of information but not at the level as specified in where we’re disagreeing. Not so much disagreeing. We didn’t at the issuance-of-the-report point. We agreed where we landed. It was the original self-assessment that indicated it was fully complete. Then we talked about it and said: “No, okay, it’s not there yet.”

G. Heyman: The follow-up report notes that the environmental assessment office has signed agreements with FLNRO and the Oil and Gas Commission to clarify monitoring and responsibilities. There’s essentially an agreement for cross-compliance activity between the ministry, the commission and the office to have the powers to undertake each other’s responsibilities.

My question is: is there any potential for conflict of mandate in that situation?

P. Craven: I don’t think so. I think by being clear in our certificates about responsibilities — that’s the first step. Then the second element in terms of doing inspections and stuff — it is about resource-sharing. The roles may differ — for example, with a larger force in FLNRO in terms of compliance. If we needed to be on site quickly, and with most of our officers stationed in Victoria, then we can take advantage of those resources, for example.

There are areas where they have expertise and training that we don’t have. And it’s more aligned with permitting, so it’s more appropriate and may be our best place to do that. But there are other areas that are specific to our function that we would ensure…. We would want to do the inspection or follow-up investigation. That is sort of a case-by-case approach.

M. Sydor: No. I understand what Paul was getting at, and yeah, I was trying to think of whether there would be conflict as well. I’m not sure, unless there was some specific case that we could discuss. You know, if we’re using people from the Oil and Gas Commission or from FLNRO and they’re looking at a mine, for example, there would be no link to their particular mandate. I guess it would be on an individual basis, depending on who you’re actually using from the other agency.

G. Heyman: My final question is…. The report notes that before the EAO can assess whether the certificate conditions are effective — I’m at page 12 — and ensure the proponent achieves project outcomes, they require
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a rigorous compliance and enforcement framework and that the EAO is working on their compliance program.

My question is to the EAO and also the AG, if you wish to comment. Is there the internal capacity to bring this on line as quickly as you’d like?

P. Craven: Well, I think our first step is to determine an approach that will allow us to evaluate that effectiveness. Now that we have some projects that have conditions based on more enforceable and clear conditions, we can embark on that. That’s where we’re at in terms of the stage of designing that approach.

Then we’ll need to determine how we deliver it and how often we deliver it in terms of how…. We are essentially doing some auditing, in some respect, and we may need to take some lessons from that model in terms of determining that. That may require outside resources, or maybe we’ll be able to do it internally. We haven’t decided yet.

C. Bellringer: We don’t have anything to add because we haven’t assessed the adequacy of that.

M. Hunt: First of all, I just want to say how much I appreciate recommendations 5 and 6. To me, one of the biggest problems I’ve had in dealing with environmental issues is the whole issue of effectiveness. With some things sometimes you just argue: yes, we can comply. But the compliance is useless because we’re not going to get the outcome we want. It’s like: how do we get to the outcome?

I think effectiveness evaluations are critical versus compliance per se, okay? I think sometimes we can get into compliance and not deal with effectiveness. I really appreciate that in this re-evaluation the Auditor General put the last sentence in, which says that to fully comply, you need to do this. One of the most horrible things is to get an evaluation and not know, “This is what I’ve got to do to make you happy” — right? It’s good. So thank you, all the way around.

Having said that, my question comes to the evaluation of 5, and that is: what kind of timeline can we realistically look at? You know, history is an awful long time. Heritage is a huge pile of time. But in real terms…. I mean, we can sort of see the environment a little quicker because those responses come more quickly. Economic? Well, that can be the business up and running or whatever.

What kinds of time frames are we realistically looking at to be able to do a proper effectiveness evaluation for health, social and heritage?

P. Craven: Good question. I don’t have a number or a time frame for you today. Some of the certificates…. They focus on phases of the development too. We have preconstruction, construction and then getting into operation and development. The certificates go as far as decommissioning in some instances as well.

Going at the far end of the scale, unless we have projects that are decommissioned, and we have conditions related to that, that could take some considerable time to evaluate effectiveness on elements related to that.

On the other end of the scale, where we’re dealing with construction conditions, now that some of the new certificates are projects that are moving forward to construction, we would be in a position to look at the effectiveness of those conditions through some program.

M. Hunt: Could I get a reply of what the Auditor General’s expectations might be?

C. Bellringer: No. Unfortunately, we didn’t get that prescriptive, but it is the kind of information we’d expect to see in the compliance and enforcement framework. It should be worked through in that process and identified by EAO.

M. Hunt: Just a final comment is I agree with the last comment on 6 — that there needs to be that public awareness if there are errors that have happened and there are fines or enforcement or whatever. I think it’s really critical for the public to know that that’s what’s gone on and that’s what’s happened and that’s how it’s being adjusted. I really value these two recommendations in where they’re going.

S. Robinson: I, too, am appreciative of the progress that’s been made. I just have a question about the process. The EAO perspective started off as, “We’ve partially completed the last two recommendations,” and then with further discussion with Auditor General, it’s like: “Well, maybe not so much.”

It’s that conversation, that piece that I’m interested in trying to understand. Part of it is about a self-assessment — about how there’s this belief that you’ve achieved something, and then the Auditor General will come back and say: “Well, not quite. That’s not what we had intended.”

I’m just looking for understanding of what that gap is and how things changed to the point where slide 3, through the valuable feedback from the Office of the Auditor General progress review, appreciates that we’re not quite there yet. I’m just trying to understand what it is that can happen through the initial process that would facilitate better understanding so that when the review does happen, it’s a more accurate reflection and you don’t actually need to re-audit the review. Does that make sense?
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P. Craven: Sure. And with all self-assessments and like all report cards, I think you try and achieve a perfect score. I think we felt at the time that there were rationales to argue that we did fully complete. Part of it, also, is in the interpretation of what is expected.

What I think we found valuable in the process of the follow-up report is that some expectations were made more clear to us — and also through our experience of going through trying to implement these and then evaluating. Evaluating and taking that opportunity to really self-evaluate and have an external evaluation helps you appreciate where the ultimate goal is, which you may not have appreciated in the first instance. I think it’s a bit of an evolving process.

I appreciate the comments of the other member, who talked about, in the follow-up, making it clear what the expectation is. It’s helpful to us.

C. Bellringer: I’ll add that it’s not unusual, when we do the re-audits, to find the difference between the self-assessment and then where we land. It’s somewhat wrapped up in the use of a status by saying: “Is it done or not done? Is it fully implemented?” Or is it: “We haven’t done a thing”?

Then we get into where you draw the line between “Well, it’s substantial enough to be substantially implemented” or, in our view: “No. It’s not substantial enough. It’s still partial.” It gets into a huge debate over words.

I think the improvement of going to an action plan that’s going to be more specific about actions…. We’ll still be having discussions around: are the actions that are being listed on the action plan sufficient to resolve the recommendation? We’ll still have some discussion over it, but it will be easier to review.

S. Robinson: Just a follow-up, and I think it relates to what Marvin was saying. It’s this idea of outcomes. We’re looking for specific outcomes. While we might ask for certain actions, if they don’t achieve the outcomes, then the action, in some ways, is moot, because we’re really interested in the outcome.

I’m trying to figure out how we help ourselves get there — to being outcome-oriented and outcome-based rather than just action-oriented and action-based. That’s part of what I’m saying.

C. Bellringer: We do try in the reports to indicate what would satisfy implementation of the recommendation, but we’re not always perfect on that. We also don’t want to be so prescriptive as to tell ministries how to fix something. At the same time, a recommendation that says “Go fix it” isn’t very helpful either, so it’s getting that right balance. It’s a real art to taking the findings and then concluding on a recommendation that’s meaningful.

Kathy. I don’t have any other questioners at this point, so I think we’re — not to put any pressure on you — getting near the end.

K. Corrigan: I want to just ask a question again about conditions and what it is that is taken into account in an environmental assessment.

Recommendation 5 says at the end: “To fully implement this recommendation, the environmental assessment office will also need to evaluate the outcomes of health, social, economic and heritage conditions.”

Frankly, I haven’t looked at more than two or three certificates in the past, so I’m not really familiar with this scope of them. What I want to understand…. When we’re talking about the fact that, previously, we’ve looked at environmental mitigation, but we need to now look more at health, social, economic and heritage conditions, we’re talking about it still through an environmental lens. Is that correct? We’re saying: what are the, for example, economic implications of this environmental impact? We’re not looking at the whole range of impacts.

Maybe I’m not making myself clear. We’re looking at the economic impact, for example, of an environmental condition. Is that right? Or are we looking at everything? That, again, looks more like a cost-benefit analysis rather than an Environment Ministry analysis. I’m trying to understand that.

P. Craven: Our act is broadly based. Because we’re the Environmental Assessment Act, people assume that we look at environmental impacts only. That’s not the case. We look at the broad suite related to health, heritage and socioeconomic as well.

What we focus in on is: by building this project, is there going to be an effect or an impact that may cause an adverse impact that would need to be mitigated in some way? A lot of our focus is on the environmental pillar, for obvious reasons, dealing with the projects that we deal with, but it’s not exclusive.

In the process of that, when an adverse effect or a potential effect is addressed, then the proponents, based on guidance from folks from ministries or from the public or from First Nations, may find mitigation measures to eliminate or address that impact. When it’s important for that to be mitigated, you see it appear as a condition in the EAC.

Just to take it further, in terms of the effectiveness. Then we need to evaluate whether or not that particular condition met that aim, right?

You’re trying to keep grizzly bears away from the project site, so you require as a condition that they have a Bear Aware program, and they’re to make sure that there’s not garbage and food and that. I’m just using a very simple example. Evaluating the effectiveness of that is: if that was in place, did that prevent the grizzly bears from being
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on the project site and being domesticated, for example? Just to use a very simple, non-technical example.

K. Corrigan: So that’s the broad definition. The Auditor General spoke earlier to that. That was a bit of confusion that I had. That’s clear now, and I thank you for that.

Would the scope of the office go as far as to say: “If this project is built, here are the potential economic impacts and social impacts. If this project is not built, here are the corresponding social and economic impacts”? In other words, does it do a bit of a cost-benefit analysis, or does it just simply say: assuming this project is built, here are some of the impacts that could result?

P. Craven: I think the focus is on this project and what impacts would result from that.

Now, ministers, in making their ultimate decision on a project, have a broad public interest requirement, and they address the broad public interest in determining whether a project will be approved or not.

V. Huntington: Could you explain how the EAO looks at residual impact? You’ve looked at the impacts you feel can be mitigated. Then what you’re doing, I’m assuming, is assessing whether there will be residual impacts that cannot be mitigated. How do you assess the project as a whole, and your recommendation to proceed or not proceed, based on those residual impacts? What are your guidelines there, and do you have thresholds? How do you analyze the residual impacts?

P. Craven: There’s a process we go through in terms of evaluating the significance of an impact. Also, you would address the significance of the cumulative effect if there was a residual impact. Depending on what information’s available, then you can make determinations there.

There’s no magic formula or threshold, but those things are noted in our report for the consideration of ministers in terms of: if there is a residual impact in this area, does that impact your decision on whether the project goes ahead? That’s made clear in our assessment reports.

V. Huntington: It is. Do you make recommendations to the ministers based on those residual impacts and your analysis of them?

P. Craven: An analysis is contained in the assessment report. Then the executive director for the environmental assessment office can make recommendations to the ministers in terms of approval and the public interest considerations.

V. Huntington: But always we’re looking at mitigating an impact, first and foremost.

P. Craven: Well, that’s part of the process, the iterative process, that where we can identify mitigation measures, we’ll try and identify those.

V. Huntington: I mean this quite seriously because I’ve seen situations where some of the requirements to look at impacts have not been considered. Maybe the interest of the EAO has changed, but how seriously do you look at the social and heritage values?

I know you look at the economic values. You look at the environmental values. But I have seldom seen much analysis — and in some cases no analysis — of heritage and social factors, which are part of the legislation. How do you go about examining those elements of an assessment?

P. Craven: It varies by project whether those issues arise and whether value components are identified to look at. Then they are looked at, and they are evaluated in a similar methodology.

This is straying a little bit from compliance and enforcement elements, but the methodology is there and the mechanism is there. There certainly is a lot of focus on the environmental components, but that’s usually based on the impacts that have been identified through our process.

V. Huntington: You leave the identification of impacts up to the proponent, primarily?

B. Ralston (Chair): I think we’re concluded on this one. Thank you for appearing, Mr. Craven.

We’ll take a brief recess. We have one more follow-up report that we’re going to deal with. Stuart is already in place.

B. Ralston (Chair): We’re going to deal with the report entitled Follow-Up Report: Updates on the Implementation of Recommendations from Recent Reports — hardly poetic, but descriptive. This one is “Aspects of Financial Management.” We’ll start with Mr. Jones of the Auditor General’s office, and then I think Stuart Newton, who’s the comptroller general, will respond.

Office of the Auditor General:
Follow-Up Report: Updates on the
Implementation of Recommendations
from Recent Reports

R. Jones: Good afternoon, Chair and Members. It’s great to see you all. This is a follow-up that we talked about in the February meeting, and there were some questions that couldn’t be answered at the time by the representative from the office of the comptroller general, so Stuart has come back to answer all those questions.

It was centring around the five principles that we had said we were suggesting that government should adopt in fraud risk management and that they had been partially implemented and not fully implemented yet. At the time we mentioned that there were three key elements within those five principles that we still were hoping government could implement.

I’ll just remind you that those three were that a central risk register should be brought into play, that it might be a good idea to have a central fraud hotline, and also that public reporting of the risk management activities that government undertakes would be good to see happen. Stuart is going to answer all the questions that you had at that meeting.

S. Newton: I’ll just get to the first slide. We agreed with the principles that were put in place. They’re broad. They will lead to a good and effective fraud risk management program. We’ve stated in our official response: “Generally agreed with the intent of the principles.”

The reason why we are responding is because there’s only one recommendation: adopt the principles. We are adopting the principles. I think there’s a difference in implementation, and I can talk about those implementation items next.

Actually, no. First, I’m going to thank the Auditor General for all the good comments around all the things that we did implement. We did release a new fraud policy in core policy just to clearly highlight the roles and responsibilities of individuals in government in relation to fraud, fraud awareness and their role in detecting and deterring fraud and making clear where that responsibility lies.

We have been doing outreach with ministries in order to provide fraud presentations as far as fraud awareness. Those do tend to lead to additional work, which is both a good thing and a bad thing. But I think it’s been quite effective.

Risk management branch has improved, and we got recognition for that. Their GILR report, their loss reporting that gets reported out regularly, is more fulsome. We’re getting regular copies in order to be able to look at it to determine if there’s anything we need to do.

Specifically around the three areas, having a central fraud risk register…. Based on another report that the Auditor General did as far as improving enterprise risk management, one of the issues that should be included in a risk register in a particular ministry or entity is risks related to a whole bunch of things, one of which is fraud. If you look a risk register for any ministry that might have a compliance and enforcement area, chances are they’ve got risks that relate to whether or not the right things are happening within that ministry.

I can tell you that in the Ministry of Finance’s risk register we have one in relation to the health of the control framework, from a financial perspective. So risk does show up in the risk assessment process.

My concern would be: why would you set up a separate risk assessment process outside of the existing enterprise risk management focus? One, you’re creating an extra burden. Two, you want people to actually do it, so embed it in an existing process already. And three, in relation to putting out the original enterprise risk management, fraud was one of the things that should have been considered.

I wouldn’t want to start advocating within government that I would like to see a separate fraud-risk register. I think it’s already included in the enterprise risk management process. That’s the place where it should live.

Secondly, and that was in relation to a hotline, about six years ago we did some work looking at hotlines. I think the state of Washington at the time had one, and it was getting close to a million bucks — I think it was $900,000 at the time — to run the fraud hotline. In relation to the value that they got out of it, it was very expensive.

In relation to a control or something that you put in place to make sure the right things happen, it has to be cost-effective in relation to the dollar value of the risk that you’re assessing. So although that’s one of the tools that we could use in the principle around a good suite of fraud-risk management products, right now I don’t see that as a cost-effective tool. Should, in the future, we end up with a particular type of bizarre transaction that keeps popping up, then maybe there is a value in spending that money.

Certainly ministries that have compliance and enforcement processes and capabilities…. Some ministries do have a hotline where they can phone in relation to, maybe, a lack of compliance with regulatory requirements. But in relation to pure fraud or financial fraud, I don’t think the costs warrant that right now.

The last one in relation to public reporting. A number of the things that we do…. If I’m looking at a potential fraud, there’s an overtone that there might be something criminal related to that. Typically, if there is something that goes to term as far as we’re going to take action, there’s an HR component attached to that. The HR component is a personal matter. We wouldn’t report out on that.

Certainly, something that is criminal would go through the courts. After going through the courts, it would be
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a matter of public record. From that perspective, wanting to publicly report on the results, I think we would be really limited in that. There are a number of things we couldn’t talk about. For some stuff, if it’s before the courts, we’d have to work through that process.

Although it’s a tool that could be used, we do, as we find issues, report out to those elements within government that need to know about it regularly to say: “You might have a problem. You need to look at this and get back to us.” Certainly, the system — when we sit down with the chief financial officers, because I meet with them monthly — would be well aware of some of the financial issues that we are encountering on an ongoing basis.

The last piece related to the third part is that when you look at the things you can do in order to deal with fraud and potentially eliminating fraud, one of the best tools you have is a good, well-functioning control framework that’s catching things at the beginning — appropriate sign-off, appropriate management review, those types of things. If we’re getting to reporting out what we found at the end, I would prefer to put my resources on the front end. We actually are doing a lot of work in relation to that.

There was the comment, at least in Hansard last time around, that maybe resourcing is causing some of the comptroller general’s office to not be able to get to certain things. Certainly, resources are an issue, but what you do when you have a resourcing issue is you start looking at the areas where you can get the best benefit for the dollar spent.

We put a lot of time and money into continuous control assessment, out of my office; the fraud training and awareness, so people are aware of the roles and responsibilities; and the reporting out to the ministries as we find issues so that they can deal with them. Then selectively, if we have an issue, we would actually have staff go out and do investigative work.

I think my last slide is questions, and I’ll move chairs in case you forget where I am.

B. Ralston (Chair): Yeah. Please don’t confuse me any more than I’m already confused.

Russ, did you have any response, then? I think, clearly, the comptroller general hasn’t accepted the Auditor General’s recommendations, at least directly. So just in order to guide the discussion, perhaps, if you wish, you could offer some comments.

R. Jones: The Auditor General does have some comments, and I may add some in as well.

C. Bellringer: Just a couple of things. I do agree with the comments around the risk register, around it not needing to be a separate thing. But there should be an element of it taken into account in the other risk registers. I wouldn’t have a concern with that.

On the hotline issue. I don’t think there needs to be a hotline specifically, but I do think there needs to be a mechanism somewhere so that people know who to alert in the event that they’re aware of something. Within the system that’s set up for them to alert that person, they need to feel safe. It’s often taken into account in the context of a piece of whistle-blower legislation. Again, it doesn’t necessarily need to be that, but the elements that make that up are important ones. I would still say that’s an important area to address, but it does not need to specifically be a hotline.

On the resources and where the resources should go. Certainly, I am definitely in agreement with the view that prevention is much better than working at detecting things after it’s too late. I’d still recommend some reporting on what those activities are and the outcomes of that — which is, again, worded slightly differently than the original recommendation but the meaning of it being: what are you putting your resources into? Is it effective? How are you going to measure whether or not it is?

We haven’t actually had a follow-up dialogue on it. It’s not that we’re in disagreement. It’s just that it immediately came to mind. Those are my comments on it.

S. Newton: Absolutely, we’ll have the conversation in front of you. [Laughter.]

B. Ralston (Chair): We’ll all be witnesses. Then I have a question from Simon after that.

S. Newton: Certainly, on mechanisms to alert, there are some that exist currently. One is under the standards of conduct of government employees. If they’re aware of an issue — and there’s a variety of issues in the standards of conduct that you could have — they are to make the Auditor General’s office aware, they are to make their supervisor aware, and in some instances they’re to make me aware.

In the Financial Administration Act there’s also — in section 33-point-something; I don’t know the exact reference — an obligation to report to my office, on the part of every government employee, if they’re aware of an expenditure or an expense that has occurred or is about to occur that is inappropriate, which means it’s not meeting the FAA requirements. I’ve got some responsibilities around that — to either deem the transaction inappropriate — or there’s a larger process, through Treasury Board staff and the Attorney General, if people think I got it wrong. So there is a way to sort through that.
[ Page 729 ]

S. Newton: A couple. We tend to find more of our issues through the direct review that we currently do.

In relation to discussing activities and outcomes as far as, “Here are the activities that the investigation unit does and the outcomes that we think we get from it,” I think it’s a fair point. I think that’s something that we can work on. That’s kind of a more reasonable sort of approach than public reporting.

We are looking at the resources that we do have and at what approach we can take going forward. We’ve got a couple of projects on the go that we hope to complete and then spend the summer, early fall looking at: “Given what we’ve got, are we focusing on the right things anyway?” I think we would be in a good place to talk about: “Here’s how we think we can be more effective, going further.” I think that would be a good conversation, once we’ve done the internal work, that I can have with the Auditor’s office. I think we can get some valuable insight on that as we go forward.

S. Gibson: I find this comforting. I look through this, and I feel that you guys are right on top of this.

I used to work in the banking industry, and where the fraud took place in financial institutions is fake payments. We cut a lot of cheques here, lots of electronic cheques now. A lot of money goes out of here. If I’m an officer in some department, and Greg’s my client here and I cut him a cheque for $2,500, but it’s actually to me, where Greg and I have a relationship, that's an area that I think is problematic.

It's in all sectors, not just in the financial industry but in the government, where people are cutting cheques, and somehow part of that money is being re-routed back to the person. I’m sure you’re on top of that.

The other thing is kind of anecdotal. I got a call the other day from Visa. They said to me: “Simon, did you just make a $7,000” — what do you call it? — “cash advance?” I said: “No.” They said: “We didn’t think so.” So they keep track of my spending habits.

My question to you is: do we have…? There must be software available that this…. I mean, this is pretty cool — that they could phone me and tell me that. Do we have software? Somebody is kind of departing from the norm. Suddenly a red flag goes out, and somebody in your department — Stuart’s — gets an e-mail and says: “Simon Gibson in the credit department.” A message comes out.

Tell me about that, because that’s…. I think there are all kinds of new programs out there now. They’re not very expensive, and I’m wondering if that’s something we do.

S. Newton: Okay. In relation to testing, we do 100 percent verification of all purchase card and travel card transactions. We run them through a series of scripts that detect things like round, even-number cash advances for large amounts, Staples invoices two days before school starts, weekend transactions. We also have looked at supplier codes for types of purchases so that if you’re purchasing something from a supplier code that doesn’t really make sense with what your job is, we would track that as well.

For all of those anomalies that come up, we then create what’s called a CFO alert. We let the chief financial officer of the ministry know: “You’ve got a problem.” That would also include things like large, running unpaid balances on a p-card or large unpaid balances or cash advances that don’t match travel on the part of an individual’s travel card. Those all go back to the CFO. We look for the CFO to answer the question. We found something unusual. There may be a reasonable explanation for it. There may not. It may be a mistake. It may be something purposeful.

The CFO, as the first pass, would look through that and get back to our office on whether or not that’s appropriate or inappropriate. From there, if it’s inappropriate, we would look to the ministry recouping the funds from the individual and also taking whatever necessary disciplinary action is required. That’s a process that’s been in place, at least on a 100 percent verification, for…. I think we started that a year ago. Prior to that it was sampling.

On other transactions, like invoices and supplier payments, we do a random sample basis of supplier payments, vendor payments and employee payments outside of the p-card and travel card and keep stats on where we see the issues. It’s a representative sample, so we know we’re getting good coverage. Those, too, go through the same process — alerts to the CFO, an expectation that those would be cleaned up.

Some of those end up in the forensic investigation unit group that I have as issues that are being tracked. We expect the ministry to report back to my office on a periodic basis around: how did it happen, what did you do to deal with it, and how are you going to ensure that it doesn’t happen again? And they’re expected to get back to my office with that.

Stuart, when you were speaking in your earlier remarks you talked about HR. We don’t want to talk about that.

I don’t have any problem with talking about a concern of an HR function, as long as you don’t reveal the person’s name. If something systemic is happening in one department and 13 employees are problematic, we don’t want to identify those employees, and they’re gone. I think that’s fair. But I don’t have any problem with releasing information that is of general interest that can help government do a better job and support you in your work.
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B. Ralston (Chair): Have you considered offering your services to the Canadian Senate? [Laughter.]

S. Robinson: I appreciated hearing about some of the controls that are in place around, I guess, the whistle-blower idea — that there does exist in the bureaucracy itself some requirement to report out. I’m just curious about: how do we know that staff know that that exists? How do we know that they know and that they understand (a) what their obligations are and (b) who to report to? Is there some way to measure that? Are we sampling that?

S. Newton: A couple of things. When we changed to — this goes back a few years — the statistical sampling methodology that we do use, one of the requirements was that all expenditure authorities in government get EA training, which included the obligation to report. I was new to the role in the financial management branch and had to meet with a lot of ADMs to tell them that they’re responsible and accountable, which was always fun when you’re meeting people through the door the first time.

Also, anybody who gets access as an expenditure authority to our corporate accounting system needs to take EA training, and that has the obligation to report in it. A number of ministries where, say, they’ve had concerns around a purchase card or some purchases, based on either things they’ve identified or things we’ve identified, have put, as a matter of course, all their staff through EA training. So we do know that it’s a requirement, and it’s out there.

Another piece that we’re starting to do — we’re probably a year away from it — is a bit of a broader self-assessment across all of government around how well ministries think control is working. That also includes a bit of work done internal to their ministry to confirm that people understand what their roles and responsibilities are.

S. Robinson: A follow-up to that, or just an observation. Just because people take training doesn’t mean that they actually know or remember.

S. Robinson: Right. They could be the culprit as well. But the idea is that there are several sets of eyes sort of monitoring. I would just encourage a way to sort of double-check that we…. I could take an algebra course. That doesn’t mean I’m particularly good with algebra.

S. Newton: We also make sure, at least with transactions, that they’re not single-person events. So if I’m going to purchase goods and services, I would authorize a transaction. Somebody else should be receiving the goods and matching it to what I authorized. We should also get an invoice from a third party. There is the ability to pay direct invoice, but that direct invoice should still have evidence in the system of a qualified receiver and expenditure authority.

The other piece is…. If I, as the expenditure authority, am not doing my job, there’s still the qualified receiver, who’s under the same obligations as me, to make sure that they rat me out if I’m doing the wrong thing. We’re increasing the likelihood. There’s no guarantee that an individual understands the role, because we can’t get into their heads. So we’ve devised controls around that in order to be able to monitor.

R. Jones: I was just going to mention…. This is one of those reports where it has been really good for the Crown corporation sector out there, because when we released it…. Whenever we go to an audit committee meeting or whatnot, at the time — and we continue to do it — we sort of say: “Here are the principles around how to manage fraud and fraud risk in your organization.”

In most cases now I think the Crown corporations have on their website whistle-blower directions on where you go, who you report to. Each year they follow up and make sure that staff are aware of it — any new staff joining and whatnot — which is really, really good. I’m noticing, even still now, that the Crown corporations are just getting enterprise risk management plans in place. So they’re all taking this very, very seriously.

That’s why the principles are there to guide. As Stuart said, they are guidelines. How you implement them is entirely up to the organization. But these are really good guiding principles.

L. Throness: Two questions for Mr. Newton. Since the audit in 2012 have incidents of fraud gone down or up?

S. Newton: I might have that answer. In ’12-13 and ’13-14, no change; ’14-15, down.

S. Newton: Yeah, but I mean, the down is…. We go 24, 24, 20. So what may happen…. There are two things that happen: you increase awareness; you increase the likelihood that people are going to report more. As we implement the principles, go out with policy and start beating the bush as far as saying, “Hey, you need to be aware of your roles and responsibilities,” you should see a bit of an uptick. I would say around ‘11-12, which was during the time of the audit, we saw an uptick and then a bit of a slope down.
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In relation to economic downturns, typically the fraud is most prevalent on the upswing if the upswing is taking too long. You don’t usually see it in the trough; you see it on the slope. If it’s taking too long, you get back to where you were. So we’re probably a year or two out of what we’d expect to be a bit of an increase.

L. Throness: Okay. I’d just point out that 20 or 24 incidents is not a large number, given the number of employees that there are in the government.

One more question. I may have missed this. The fraud risk management group hasn’t met in four years. Is there a reason for that?

S. Newton: Yeah, a couple. It was set up in response to the report, to get a fraud group together. In relation to that, a number of the fraud groups were compliance and enforcement units. Subsequent to those meetings, that compliance and enforcement group has been meeting as a separate entity.

There was a period of time where we had some competing meetings. The compliance and enforcement group is focused on a lot of similar things: how you are enforcing regulations, how your people are staffed, the tools. They tend to coalesce together and are doing some pretty good work.

Ours is more specifically around financial fraud risk. From that perspective, we’re relying more on our connection with the CFO community than that committee.

S. Newton: Yeah, but that’s more towards the regulatory compliance, not necessarily financial fraud.

R. Jones: I was just going to jump in again with the Crown side of things. This is audit committee time of the year for me, so I’ve been at a fair number of them.

A lot of the internal audit departments now — if you look at their results for the year in terms of what they’ve looked at — if they’ve done six or seven different things, there’s usually one or two of those that are investigations into allegations from whistle-blowers. So it’s not unusual for internal audit now to be getting involved in these things.

They don’t always pan out as actual frauds, but there are a lot of investigations going on out there by internal audit departments as well.

V. Huntington: I think most of us would agree that it’s absolutely essential an employee feels safe when reporting. I was curious — where you say the cost benefit has to be there and that the expense of a hotline wouldn’t be justified. How expensive is a hotline? I can’t imagine that it would be so expensive that the benefit just would not be there for people who would feel safer reporting in that respect.

S. Newton: The hotline doesn’t guarantee safety, and there are other methods by which you can safely provide information to my office or any office. We’ve had the brown envelope with the detail in it. Hotmail is another interesting way that we get tips. Where it’s a Hotmail account, we never know who the other person is. We’re able to do some degree of questioning of the individual to make sure that they can support what they’re saying, and then we start determining whether there is work to do.

With the hotline, the actual setting up the phone number is not expensive. It’s the nature of the calls, how they’re triaged to determine whether or not you actually have something you need to work on. The experience that we had looked into in another jurisdiction was that there was a lot of chasing down of things that didn’t amount to anything.

S. Newton: I think it’s a volume issue. If you make it easier, you may get a higher volume of spurious complaints. I think if people have to take the time to write it out and send it in, (1) we’ve got something that’s more evidence-based because we’ve got it written; and (2) it’s a little more well-thought-out, and we can actually start asking for backup information before we even decide what to do.

K. Corrigan: Well, that’s partly answered my questions already. Your suggestion with regard to recommendation 2, that the things that are in place already are sufficient…. The Auditor General doesn’t agree. I’m trying to figure out what the difference is.

The Auditor General said that you still think there should be a hotline or something similar to that, some way to ensure that people have access. I’m trying to figure out: are we in agreement that what’s in place is appropriate now, with regard to recommendation 2, or not? Maybe I misheard.

C. Bellringer: We have not done a re-audit. The comments I made were just off the cuff right now as I heard the comments. Really, they are meant for the comptroller general and, certainly, for the committee to consider. I just didn’t think it was quite there, but it was moving in the right direction.
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There’s an audit that we’re doing coming up. I have to be honest. I’m not sure we’ve announced it formally, but certainly, government is aware of it because we’ve started doing the planning. It’s on the ethical framework. I’ll just put it on the record. It’s looking at an ethical framework across government. It’s looking at things from a different lens, but it would get at some of the same things. It would look at…. We’re contemplating doing an actual quite large survey to see about getting some feedback from the public service.

K. Corrigan: Just a second question that’s similar. With regard to No. 3, when you’re looking at fraud, public awareness of fraudulent events…. To me, there is a value, even if you’re not looking specifically at individual events…. I can understand there are all sorts of privacy concerns. But I’m wondering, Stuart, if you could explain why it is that it wouldn’t be worthwhile to have some public reporting, even at a high level, and why you say it’s more effective to focus on fraud awareness and training and the existing reporting mechanisms.

Wouldn’t it be even more effective to add on top of that some level of public reporting that would ensure that there’s a wider awareness of the fact, particularly for the sake of the employees, that they can report or that that’s a possibility? Is it the fact that it takes too many resources to report publicly? What’s the downside?

S. Newton: On the public reporting piece, I would be concerned if we’re talking about a recurring situation that people might want to try to copy. That is one issue. There’s that concern, because what we would be doing is revealing a weakness that we might not have actually got a handle on. So there’s that piece.

The other piece is…. Actually, let me back up. The part that I would think would be most useful, thinking about this, would be more public — I’d not say reporting — advertising about what you can do and where you can go as far as being able to report a concern that you do have. I don’t mind that we would talk about the activities we undertake.

Actually, the way the Auditor General phrased it — around maybe a bit of “here are the activities we undertake and the outcomes” — would probably have a similar effect. I think that’s worth considering, based on that reframing, versus how I understood public reporting to be when it was first put forward in relation to the principles.

B. Ralston (Chair): Those are all the questions. Thank you very much. That concludes that one.

The last item is any other business. I think George has something briefly that he’s going to raise.

G. Heyman: I do. On April 27 the Auditor General sent a letter to the Chair and Deputy Chair with a response to questions that I had asked on February 5 with respect to the security of personal medical information that flowed from a 2013 report of the Auditor General on health benefits operations. It had to do with the information held on servers in Canada, whether or not that information was secure from a Foreign Intelligence Surveillance Act court under the U.S.A. Patriot Act.

The letter says in part…. First of all, it references a statement by the Information and Privacy Commissioner that section 30.1 of the Freedom of Information and Protection of Privacy Act states:

“A public body must ensure that personal information in its custody or under its control is stored only in Canada and accessed only in Canada….”

“Personal information stored in Canada may be accessed by foreign governments where a company that has custody or control of the personal information is a subsidiary of a U.S. company or otherwise amenable to the jurisdiction of the FISA court. The FISA court or government that is authorized by legislation or a rule of court may order a company that is subject to its jurisdiction — i.e., a company that is American-owned — to produce records, even where the information is located in Canada.”

If we go back to the initial report on health benefits operations, there was a finding that stated that “the contract specifies that data storage and access should not occur outside of Canada, to mitigate the risk of disclosure under the U.S.A. Patriot Act. Although the ministry and the service provider have put several controls in place, the ministry does not know if the service provider is fully complying with this contract term.”

If we go forward to February 13, I think, there’s a progress report that notes that full implementation will require that the ministry audit its subcontractors to assess the risk of privacy breaches and data storage and access outside of Canada. The ministry response to recommendation 4, which was that the ministry obtain assurance over significant results reported by the service provider…. There was also a recommendation that said the ministry should monitor and enforce all significant contract terms and deadlines.

The ministry response stated that an “expanded scope for the 2013-14 audit will include additional work to provide assurance over the key gaps identified in the Auditor General’s report,” which were a “potential for unauthorized access to Maximus B.C. systems and data from outside Canada, privacy breach detection and reporting, and data access and storage outside Canada.”

I have two questions for the Auditor General as a result of any follow up that she or the Auditor General’s office may have done with the Ministry of Health and also in light of the recent comments by the Information and Privacy Commissioner which she reported back to this committee in response to my question.

First of all, are you satisfied with the ministry response that adequate measures are now in place so that
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the Ministry of Health is monitoring and enforcing this contract term with Maximus, the term that the information be secure and only accessed in Canada?

Secondary, a corollary question of that is: given the recent comments by the Privacy Commissioner that the Patriot Act does in fact apply — and so storing the data in Canada or more recently, with the potential for tokenization, only storing token logs in Canada — are you satisfied that the measures that the ministry has reported to you, if in fact they have reported any to you, are adequate? Would you expect there now to be necessary a follow-up plan to ensure that there is compliance with the Freedom of Information and Protection of Privacy Act, section 30.1, given the clear statement by the Information and Privacy Commissioner that the Patriot Act basically trumps the measures that were taken initially to protect information?

B. Ralston (Chair): I’m not sure that I would expect the Auditor General to answer today. I think it’s important that those questions be placed on the record, and then perhaps if you want some time to reflect and prepare an answer, then that would be totally reasonable.

On the other hand, I know you’ve had some discussion with Mr. Heyman, so if you’re prepared to answer now, that’s fine.

C. Bellringer: I can answer the question, Mr. Chair, but I won’t have the answer to the question, if you appreciate…. I don’t have the information to provide you with assurance over both of those questions that you raise.

We had some preliminary questions of the ministry over time, since we did the original audit. But it isn’t specific enough to be able to say to you…. We do not have enough information at this point. We’ve not tried to do enough work to be satisfied that adequate measures are in place. It doesn’t mean to say that they aren’t. We just don’t know.

We will have to give some thought and can report back to this committee on exactly how we would propose proceeding in order to get that assurance to provide to you. I wouldn’t mind a little bit of input from the committee around if you are asking this as a formal request, which then obligates us to do so, or if it’s something you just want me to consider, and we’ll do something. But I, at this point, don’t know what that would be.

C. Bellringer: I don’t know your protocol around a request, as to how you have to proceed with that.

C. Bellringer: I’m referring to a request under the Auditor General Act. There’s a section in our act that requires us to do an audit in the event that we’re requested by the committee.

C. Bellringer: We would have to do audit work in order to get the information, which, unfortunately, is an audit request, and it takes a formal motion, I think.

B. Ralston (Chair): Rather than debate that here, why don’t we just adjourn that request until tomorrow morning and we can consider it. I wasn’t aware that a formal request would be required, and that would probably require a motion of the committee.

C. Bellringer: It doesn’t mean we won’t choose to do it. It just means that it then is up to us to decide.

G. Heyman: While we may continue this discussion in the morning and may or may not, as a committee, reach the conclusion that we want to make a formal request, I think the issues that are contained in here, as you originally pointed out in your first audit, are extremely significant. You go to the privacy of information for every British Columbian.

There is new information that states that even in addition to what were identified as inadequate measures, about which we have no assurance that mitigation has actually taken place, there is now a new identified risk, which, in fact, is the risk that the ministry was warned about 11 years ago and effectively chose to deny or ignore.

I would hope that there is some follow-up on this in the sense of a follow-up to your audit. I, personally, would love to have ministry staff here to ask them some questions directly.

B. Ralston (Chair): Let’s adjourn the consideration of whether there will be a formal request until tomorrow, and then perhaps the Auditor General can reflect on what position she might take given what the discussion has been so far.

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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)
	David Eby (Vancouver–Point Grey NDP)
	Simon Gibson (Abbotsford-Mission BC Liberal)
	George Heyman (Vancouver-Fairview NDP)
	Marvin Hunt (Surrey-Panorama BC Liberal)
	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

Yeas (6)	Nays (7)
Corrigan	Sullivan
Heyman	Morris
Eby	Hunt
Robinson	Throness
Popham	Reimer
Huntington	Gibson
	Kyllo

YEAS — 6
Robinson	Corrigan	Popham
Huntington	Eby	Heyman
NAYS — 7
Reimer	Morris	Hunt
Sullivan	Kyllo	Throness
	Gibson

REPORT OF PROCEEDINGS(Hansard)

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REPORT OF PROCEEDINGS
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