The committee met at 9:05 a.m.

[R. Glumac in the chair.]

R. Glumac (Deputy Chair): My name is Rick Glumac. I’m the Deputy Chair of the Select Standing Committee on Public Accounts. I’ll be chairing the meeting today.

I’m joining you today from the traditional territory of the Coast Salish peoples.

On the agenda today, for the committee, we have two reports. The first report is the March 2021 report on financial audit work for the 2019-2020 fiscal year.

With that, I will turn things over to our Auditor General, Michael Pickup, to introduce his team and take us through this first report.

Consideration of
Auditor General Reports

Report on Financial Audit Work
for the 2019-20 Fiscal Year

M. Pickup: Thank you so much, Deputy Chair.

I do want to acknowledge, before I introduce folks, that I’m coming to you from Victoria today, the traditional territory of the Esquimalt, the Songhees and the Lək̓ʷəŋin̓əŋ people as well.

I also want to acknowledge the special day it is today, with May 5 being Red Dress Day, a national day of awareness for missing and murdered Indigenous women and girls. I am sporting a red tie today for that special day. On a personal note, as the son of an Indigenous woman, who is the daughter of an Indigenous woman, the health and safety of Indigenous women is very important to me. I wouldn’t be sitting here, literally, today if they hadn’t survived and succeeded. So I do want to acknowledge the special day that it is today, May 5.

Now I will introduce the team that we have with us today. Russ Jones, the Deputy Auditor General, will be probably an hour late joining us due to a personal commitment that he had. But on the call with us are lots of qualified people who will take all the questions anyhow. With me are Stuart Newton, the assistant Auditor General; Molly Pearce, principal; Laurie Selwood, principal; and Lisa Moore, principal as well. They’ll be the ones doing the presentation and taking all the challenging questions that you may have.

I also want to extend a thanks to the people who aren’t here today and remember…. It may seem somewhat of a minor point, but this financial audit of the summary financial statements of the government of British Columbia is the biggest audit in British Columbia in the private or public sector. This is a huge audit, particularly for Molly and Laurie and Lisa, who are running this audit, essentially, and all the components of the audit. This is a major achievement for all of them and the people who are working with them.

Some of the people who aren’t with us today that I want to extend a thank-you to — we wouldn’t be here today without them — are Chris Lawson, director; Paul Nyquist, director; Chris Thomas, senior manager; Denver Wigg, senior manager; Spencer Goodson, manager; and Mark Vinnish, manager. The one person who I’ve left to the last is Peter Bourne, who had been the principal and with the office for decades and who retired, after a long career, in January. I was fortunate enough to be here to be able to promote Molly to be principal and to take his position. I did want to mention that.

I’m going to turn it over. In keeping with our traditional approach, which is, as I said before, always open to adjustment, if you feel adjustment is necessary, in terms of the length of the presentation or detail, I’m going to turn it over to Molly, who is going to walk through a brief presentation with you.

M. Pearce: Thank you, Michael.

Good morning, Vice-Chair and committee members. Thank you for the opportunity to brief you on the report of the results of our audit of the province’s summary financial statements for the fiscal year 2019-20 and related audit work.

The summary financial statements indicate the financial health and annual results of the province. The audit of these statements is required under the Auditor General Act.

[9:10 a.m.]

As Michael said, this audit is the largest annual audit in British Columbia. It includes over 160 organizations and takes over 50,000 hours of staff and contractor time to complete. We are grateful for everyone’s efforts, especially given the challenges of this pandemic.

The report outlines our audit opinion on the financial statements of the province. The audit opinion on the government’s summary financial statements provides the public with assurance over the province’s financial reporting. Reliable financial statements with a clean audit opinion allow comparability between jurisdictions and over time.

For our audit opinion, we concluded, except for one significant qualification, that the statements presented fairly the financial position and the financial results of the government as at March 31, 2020. Our qualification is a result of how government recorded the revenue it received for capital projects, primarily from the federal government. Government did not record this revenue according to generally accepted accounting principles.

As of March 31, 2020, government understated its revenues, annual surplus and accumulated surplus by $5.7 billion and overstated its liabilities and net liabilities by the same $5.7 billion. Correct financial statements would have shown a surplus of $5.4 billion rather than the reported deficit of $300 million.

This is the ninth consecutive year that we have differed on this important issue, and we continue to urge government to comply with generally accepted accounting principles designed for the public sector. Not following these accounting standards results in under-reporting of revenue, which clouds the province’s true financial position.

There is more to the audit of the financial statements than opinion. Through this report, we highlight items of significance that are not always apparent when reviewing the financial statements.

The report discusses the impacts of the pandemic on the audit. In 2019-20, the government had to make estimates at a time when the full economic impact of COVID-19 was still unknown. For example, the amount of personal income tax recorded in the financial statements is approximately $10.6 billion, with a measurement uncertainty of plus or minus half a billion dollars. The accounting is appropriate, but it is worth understanding.

Also in the report is a discussion of government’s purchase of FortisBC’s interest in a power project for $991 million. Government borrowed money to make the purchase, noting that it will ensure local ownership of all hydroelectric projects and secure increased revenue for the future.

We mention in the report the estimated costs of environmental cleanup of contaminated sites. So $505 million was recorded in the summary financial statements for this, but actual costs are unknown until remediation occurs. We noted that a majority of the estimated cleanup costs — 62 percent — relate to mined sites. Additionally, the number of orphan oil and gas sites managed by the B.C. Oil and Gas Commission are increasing, along with related liabilities.

Finally, the report provided information on new ac­count­ing standards that will be implemented over the next few years that will impact the summary financial statements.

Thank you very much. That concludes my briefing.

M. Pickup: Thank you, Molly.

R. Glumac (Deputy Chair): Thank you. I think now we will invite Carl Fischer, comptroller general, to introduce himself and his colleagues to present government’s response to the report.

C. Fischer: Thank you, Deputy Chair. I’m Carl Fischer. I’m the comptroller general. The role of the comptroller general is to assume responsibility for all the things that go into reporting out on government’s financial accountability to the public. The culmination of that is the preparation and release of the public accounts.

With me today is Diane Lianga, who is the executive director of financial reporting here in the office of the comp­troller general. Her role is to be the chief accountant of the province. I’ve had the great pleasure to work with Diane for over 20 years now. I rely on her so much on a day-to-day basis that I can’t begin to congratulate her on her work.

[9:15 a.m.]

What I really want to mention is that one of the most important relationships — or maybe the most important relationship — for a preparer of financial statements is the relationship with the auditor. It’s important, because nobody can audit their own work to make sure it’s free from error or mishap. Working without an auditor would mean that we are working without a net, so it’s very important for us to have a strong auditor, a good, proactive relationship. I will say that currently, in the year that we’re working through, so far things are going great.

I’ll pass it on to Diane to walk through a brief presentation. We recognize that many of the committee members are new this year, so we’ve tried to pepper in some important background information. As always, we’re here for any question or follow-up you have.

D. Lianga: Thank you very much, Carl, and thank you for those kind comments.

Good morning, Deputy Chair and Members. Thank you for the opportunity to discuss the Auditor General’s report on their audit opinion on the 2019-20 summary financial statements.

The year-end process is when we work most closely with the Office of the Auditor General. The assurance that they provide is a critical element to support that the financial information presented in the public accounts is complete, comprehensive and free of material misstatement. They are an essential piece of the financial accountability process.

For your information as a new committee, there are four publications released as part of the public accounts. The main public accounts document includes the financial statement discussion and analysis section, which is a plain-language summary of the financial results and impacts for the fiscal year. The audited summary financial statements, supported by descriptive notes, are in that volume.

There are also some additional statements and schedules included in consolidated revenue extracts and the provincial debt summary. There are two additional vol­umes that are published online that contain a detailed level of information on the core government revenues and expenses that have been considered useful for users and legislators such as yourselves. The last report released for the public accounts is the report on ministerial account­ability.

The public accounts are government’s main account­ability document to the public. It involves an accounting consolidation process that conforms and collates the financial reporting of over 200 entities, including ministries, Crown corps and agencies and the SUCH sector, which are the schools, universities, colleges and health organizations.

The financial consolidation process is structured as a subcertification model. It relies on the contributions of thousands of employees across the government’s reporting entity to certify and validate the information provided to us. This necessarily complicated work comes with the risk of misstatement.

However, the accounting process we undertake ensures that the results as reported are complete and correct. The independent audit conducted by the Auditor General and his office tests those results to ensure the statements are fairly presented. The production of the public accounts takes about four months.

The summary financial statements are prepared in accordance with the Budget Transparency and Accountability Act. The act requires Treasury Board to set the ac­counting policies of government. Those policies are based on the Canadian public sector accounting standards, often referred to as generally accepted accounting principles or the acronym GAAP.

In British Columbia, all entities within our government’s reporting entity follow the same public sector accounting standards. This is different than in other jurisdictions, which may use alternate, not-for-profit standards for parts of their government entities.

Treasury Board has issued regulations to direct the application of the province’s accounting policies. This includes a regulation in 2011 that continued the practice of deferring government transfers that contained external restrictions on how the transfer was to be used.

The reasons Treasury Board continued this practice were that it better reflected the legislative financial framework established through the Financial Administration Act, the Budget Transparency and Accountability Act and the Balanced Budget and Ministerial Accountability Act. It also better represented the transfers provided to the SUCH entities for infrastructure investments, and it faithfully represented management’s responsibility for funding versus borrowing over the long term.

[9:20 a.m.]

If the practice of deferral was not continued, it would be impossible to communicate the financial accountability to the public for this funding through our financial statements. The recognition of deferred contribution is the item noted by the Auditor General.

The Auditor General identified one point of qualification in the opinion on the 2019-20 summary financial statements. The long-standing qualification on the deferral of government transfer revenue has been noted as a point of reservation each year since fiscal 2011-12, when the Public Sector Accounting Board issued a new standard on government transfers.

Accepting the Auditor General’s recommendation would not meet certain public interest objectives. Actual results would no longer be directly comparable with bud­gets and spending authorities. The source and obligations arising out of contributive funds would no longer be transparent to stakeholders. The misalignment between recognized revenue and related expense would artificially constrain available funding in downturns, when government programs and services are needed most.

British Columbia continues to recognize restricted contributions when the service delivery obligations are fulfilled. This approach better reflects the economic substance of the restricted funding arrangements and best serves the public interest.

The government transfer standard has been a point of much debate for over ten years now because preparers, like myself, and auditors apply the standards differently. Saskatchewan and Manitoba recognize revenue when funds are received. New Brunswick, Nova Scotia and Newfoundland recognize revenue when the funds are spent. Ontario, Quebec and Alberta report restricted contributions on the same basis as British Columbia, as the service obligations are fulfilled. British Columbia is the only jurisdiction to receive a qualification on deferred contributions.

The accounting standard setters are aware of this issue. In August 2016, the Public Sector Accounting Board published an article that concluded that sufficient flexibility existed in the standard to support all three applications.

The good news is that there is ultimately a resolution in the new conceptual framework just released for comment by the Public Sector Accounting Board. When implemented, it will provide direction on how these types of non-financial liabilities are to be reported. We will continue to work with the Auditor General as the process unfolds.

Within the report, the Auditor General has noted a number of items of interest that may be found within the summary financial statements. The report does a good job of describing the accounting of those items. Throughout the year, our working relationship with the Office of the Auditor General allows us to maintain our strong financial reporting to the public.

Our accounting policies are long-standing. From the preparer’s perspective, policies that are internally consistent and consistent over time provide the necessary continuity that is important for financial statements to meet the needs of our user.

Accounting standards will evolve. We will continue to work with the Auditor General through the significant changes being proposed by the standard setters on the way financial performance is reported to the Legislature and the public in our financial statements.

That concludes our presentation today. I know Carl and I would be happy to take any questions you may have.

R. Glumac (Deputy Chair): Thank you, Diane.

Thank you, Carl.

I will open up the floor for questions from members. Does anyone have a question?

I see MLA Mercier.

A. Mercier: First, I’d just like to give a kudos to everyone involved both in preparing the financial statements and doing the audit in what must have been an extraordinarily difficult time, logistically, to pull everything off. I think that’s a credit to the calibre of the teams that you’ve each assembled, respectively.

Obviously, there’s a lot going on here that is somewhat overshadowed by what I think some people refer to as an ideological dispute present in the qualification or the application of the generally accepted accounting principles.

[9:25 a.m.]

I have a question for Carl and Diane which is in response to the OAG’s qualification. One of the things that you’ve pointed out is that the lack of direct comparability would lead to future program spending being artificially constrained during economic downturns, when services are urgently needed.

I’m wondering if you can take some time and unpack the practical ramifications of what that means using examples of programs.

C. Fischer: Certainly. Thanks very much, Member.

What that means is…. The issue of the recognition of government transfers…. A lot of them come from the federal government. When the federal government has a surplus, it hands out money to the provinces for specific purposes. We also get significant amounts of transfers from local governments. For example, the regional hospital districts contribute 40 percent of the construction cost of hospitals in those districts. Another big source is research funding and grants to universities from various levels of government.

The issue is whether or not those contributions are restricted for a specific purpose that can only be performed in a future year. In the old days, we used to talk about that as matching. Everyone agreed it was important to match revenues to expenses because that gave a good picture of where the money is coming from and where it’s going to.

In the case of our current situation with government transfers, we do get a considerable amount every year. If we were to, all of a sudden, shift from recognizing the over-the-use period to the period when we receive it, the actual year-to-year change would be quite small. Inevitably, good economic performance turns around, and those government transfers are no longer available.

We do have, in the financial statement discussion analysis, a chart on the degree of dependence on government transfers — or federal transfers, in this case. That’s a metric that we watch very closely because it can be quite significant if you are used to receiving half a billion or $1 billion of additional funding from the federal government every year and all of a sudden that stops.

If we maintain the long-existing practice of matching it up to when the expenses occur, there’s little impact on the province. The expenses and the revenues offset each other, and there’s no impact on British Columbia’s balanced budget metric. It wouldn’t drive us into a deficit or surplus.

If we delinked the period that the revenue was received from when the expenses occurred, eventually you would hit a point where there would be an artificial deficit of $500 million or $1 billion that would impact the province in a year. Because of our legislation and the BTAA, which require government to spend no more than it expects to receive, government would have to grapple with the decision of either not complying with the BTAA or reducing the budgetary expenditures in that year by the amount of shortfall from revenue.

The hard part is…. That’s going to occur in hard times, where the economics of the province aren’t as robust as they are today. That’s also the time when people are most in need of the programs and services that are funded as caseload pressures on an annual basis. That includes social assistance, health care, education programs or the supports for vulnerable people in our society. Unfortunately, because they’re not the programs that are committed by long-term contracts for construction or development or amortization, they are the programs that are most likely to be impacted.

We have looked at a lot of different options for dealing with this issue. Ultimately, it is a question that government has to deal with. It’s a policy decision of Treasury Board, enabled by the Budget Transparency and Accountability Act.

[9:30 a.m.]

It is in the hands of you as legislators to decide how to approach fair, consistent reporting to the public.

R. Glumac (Deputy Chair): Thank you. I see a question from MLA Sharma.

N. Sharma: Thanks for that answer. Along the lines of what MLA Mercier was asking, I’d like to dig a little deeper in my understanding of this part. Can we get an example? Like, let’s say that we’re getting payment from the federal government for a road. Now, my understanding is that it wouldn’t show up until we started to get expenses on it, and then it would only be the expense per year over the life until the construction is done. Is that right?

C. Fischer: Yep. That’s correct. So if the federal government provides funding for a significant piece of road than the funding requires, that money would be used for the development of that road. The position that we take, pretty consistently, is: no, the federal government is not paying anyone to build that road. They are paying or contributing to the province — the funding — to provide that transportation corridor because transportation does lots of great things for our society.

The important thing to remember is that road is a capital asset. So the expense doesn’t occur right away as it’s constructed. The expense occurs over 40 years. Right? That’s called amortization. We recognize a little bit each year for 40 years.

It would really be a disconnect if the federal government provided a contribution and said, “You have to use this for this road,” and the cost of the road was recognized over forty years, and the revenue, or that contribution, would be recognized all in the first year. To us in the accounting world, an asset is an asset. It doesn’t matter whether it’s cash or a road. If they could build a road in Ontario and ship it out on a giant air barge and drop it down, it should all impact us the same way.

That’s why we strongly believe that where a contribution…. We don’t agree that all contributions should be randomly deferred. But where a contribution is restricted for a specific purpose, it’s very important to match the recognition of the revenue on the same basis that accounting tells us we have to recognize the expense. If it makes sense to recognize the service potential of a road over 40 years, logic says that it has to make sense to recognize the contribution of that road effectively over that same 40-year period.

N. Sharma: Okay. So just a follow-up there. If I’m a member of the public, and I’m taking a look at how much the government received from the federal government for this road, and I take a look at the financial statements, what I would see was the portion for that year over the life of that road. So would I be able to see what the federal government gave for that year, matched up with expenses for that year?

C. Fischer: Not just that. You would be able to see that in expenses. But the other benefit is that you would see deferred revenue contributions from the federal government for the remaining amount.

One of the problems with immediate recognition is that it effectively means that the amount of contribution from the federal government, for which we have a service obligation to provide that road over 40 years, gets buried in equity — the big, dark well of accounting from which no information ever emerges. A better approach would be to be very thoughtful about disclosing the nature of that commitment, the amount of the obligation and the period of time that the province has that obligation.

Now, the good thing is that for the current year, 2020-2021, we have worked with our colleagues at OAG, and we’ll be expanding the disclosure for government transfers to do just that: to disclose to the public where the money comes from, what programs it’s related to and when it will be used. I think that is a really important step forward. I’ve been advocating for that direction with my colleagues across the country.

N. Sharma: Gotcha. Yeah. I think you answered my next question, which would be: what would be a possible fix for that? It sounds like that’s a way to show transparency but also understand how you can do that in a way that makes sense.

[9:35 a.m.]

C. Fischer: Disclosure — very important. We’ve gotten good feedback from the OAG team. I guess, in October, when it comes to you again, and you get a chance to look at it and think about whether or not it answers your questions, we’ll get good feedback.

Some other things that are very positive are to keep working with standards-setters in other jurisdictions, both on the comptroller side and the Auditor side. Accounting standards-setting is a pretty involved conceptual process, and not everyone is immediately seduced by its beauty and elegance. So it’s a little bit of a struggle to work through, as we’ve seen.

The Public Sector Accounting Board, as Diane said, has released a proposal for a revised conceptual framework. One of the elements that’s important to us is that they have recognized that they really need to include non-financial liabilities. The question of whether you can have financial and non-financial liabilities is a big part of where this disagreement or this application issue hangs up for our respective offices. The resolution of that question, when it goes through the exposure process and then becomes standard, is, I think, where we’ll be able to resolve our difference.

I do think we still need to focus on good disclosure and providing transparency, because it is one of those areas where accounting can become a little bit obscure. Our obligation is to make sure that we are exposing the significance and impact of those transactions well.

R. Glumac (Deputy Chair): Thank you, Carl. I see a question from MLA Coulter.

D. Coulter: Thank you, Mr. Fischer. What I’m hearing from you — and it was a very brief snippet here, before you got into the seduction of accounting — was that basically, what the Auditor General is asking here is…. Basically, he’s recommending legislation, right? In order for you to institute GAAP, or general accepted accounting procedures, we need to pass legislation. Is that correct?

C. Fischer: Well, there would need to be a regulation, right, to amend the regulation that says that we’re going to do it this way. Further to that, the Auditor General says that government should follow GAAP. If that were to be enshrined within our framework, that would mean removing the provision or requirement in the BTAA for Treasury Board to establish amendments or transitionary guidance for the accounting policies of the province.

Internally, within government, we do not recommend that, simply because we have seen too many issues where guidance has evolved over a number of years or has not been ready and in place when we have made transitions to be able to rely on the national standards-setter to meet the needs of British Columbia consistently, year over year.

D. Coulter: Okay, that’s great.

Chair, if I may, I have a second question.

R. Glumac (Deputy Chair): Absolutely. Go ahead.

D. Coulter: I have a second question. This one’s for Mr. Pickup. Other jurisdictions use the accounting procedures or principles that British Columbia does. However, their Auditors General don’t issue qualified audits. Why do you or your office continue to issue qualified audits based on GAAP?

M. Pickup: Sure. I will start the response to that question and then, of course, invite Mr. Jones or Mr. Newton or Ms. Pearce to adjust, add to, supplement anything I say.

[9:40 a.m.]

As the comptroller general has said and as Molly said in her presentation, this is a long-standing issue that I’m coming into new, obviously — inheriting this. I think, from our perspective, we have to talk about the British Columbia interpretation, the OAG interpretation, here — less so in terms of the details, which we wouldn’t be able to speak to in such great detail in other provinces as to why an auditor general, say, made that decision.

I think fundamentally here, what it comes down to…. I agree with where the comptroller general was outlining where we are and where we want to go. I just want to remind people — from my perspective in reviewing this and coming in new — that fundamentally, this is not an attempt to manipulate the financial statements or to have a disagreement. The comptroller general and his crew are following the legislation. But for us, we are giving an opinion on financial statements in accordance with how we interpret generally accepted accounting principles, not in compliance with: “Are these account financial statements prepared in accordance with legislation?”

So I think that is, to some extent, the root of the differences that start the whole situation — to say we are interpreting financial statement preparation in accordance with GAAP. The interpretation has been, over the last decade, that the presentation, the accounting treatment of this, while it may meet the requirements legally in the act, isn’t meeting our interpretation of the accounting principles.

The example — and there were great examples given — if I would simplify, I guess, the other side of that, is the perspective that the office has taken over the last decade. If you’ve got $1 billion, for example, from the federal government to build schools and roads and other things, you would recognize that money once the schools, roads and other things you got the money for have been built, are up and running, are happening. The fact that you might have those in use for 20 years or 30 years or 40 years — or change that, over that period of time — doesn’t relate to when you would recognize that chunk of funding that is coming in.

That’s some of the history, Dan. I’m going to, if I can, invite Russ or Stuart or Molly, if they want to add anything to that — or adjust the new person who is giving the historical explanation of that, being me, if there is anything that needs adjustment there as well.

Russ, do you have anything you want to add?

R. Jones: I can add a little bit to what Michael has said. This standard has been controversial, as you can probably tell from the discussion around when you recognize and when you don’t recognize this revenue. Across the country, it’s not just one or two provinces that don’t follow this. It’s a number of provinces that follow what we’re saying across the country.

One of the key things that…. When the federal government, years ago, gave us money to, say, build parts of the Trans-Canada Highway, there used to be, in their agreement, something that said you must use the highway for ten years or you have to pay us back the money. There was a definite liability that was there. But once that ten years was up, there was no liability back to the federal government to give them any of the money back. That’s when all of the revenue should have been recognized — at that point in time — if you followed the standard the way that we interpreted.

I wasn’t here for the discussion that Diane was talking about with the new proposal by PSAB. But yes, there will be some changes, probably, if the new reporting model comes into place.

[9:45 a.m.]

It’ll be nice to see these liabilities, as they stand at the moment, recognized as non-financial liabilities. Right now, if you look at the statements — and I’ve said this in prior years — you end up with a net debt number that basically, because of the way these grants are recorded, makes it look like, for instance, one of the Crown corporations owes a whole bunch of money, which they’ve got to get revenue in the future for to pay down, because it shows up as net debt. This is not debt, the money that comes in from government transfers.

As Carl said, disclosure may help, but I don’t think that we have changed our mind very much on the way that the standards currently are. We think that what we’re proposing in terms of the way it should be recorded is correct. It should be shown as revenue once the asset is built.

M. Pickup: Thank you, Russ.

Do Molly or Stuart want to add anything, or are you good?

S. Newton: I can add a bit of perspective, coming from a rather unique position, having sat on both sides. When you’re looking at preparing financial statements for users, you’re looking at your understanding of user needs. You’re looking at the basis of how the communication flows between government and the public and back. So from that perspective, you are looking for how best to meet that need. The regulation that was put in place provides the flexibility to be able to provide financial information in a particular way.

The standards are written broadly for the whole country. They’re written with very specific language. One of the more interesting things about professional judgment is that specific language can be challenging. But if you take a very strict interpretation of the standard…. When it was put in place, the intent was to have the standard be clear and more, I guess, superior to a lot of other general statements.

As an auditor being required to audit things based on GAAP — and it’s in our legislation — we take a strict interpretation of the words that are there. That leads to a different perspective, depending on where you are sitting, in looking at financial statements. With this new piece of work coming up, there is an opportunity, once we filter through all of the comments in relation to non-financial assets and what that means, to actually get to a pretty good dialogue around how this can be resolved.

The interesting piece is that although this has been in place ten years, I think I remember being at a comptroller meeting where they said: “Look, we debated this for a number of years” — I think more than ten — “before it was even put in place.” So we’re looking at something that’s had a 20-year track history across government around how this should be resolved. As we can see — which is why the standard-setters are looking at it again — it has not been cleanly resolved in any jurisdiction and consistently across the country.

M. Pickup: Thank you, Stuart.

Molly, did you want to add anything, or are you good?

M. Pearce: Well, I think you guys have said everything that I would say myself.

M. Pickup: Okay. Well, I wanted to make sure you had the opportunity.

If I was just going to summarize one thing there…. I think Russ put it well. Although it’s difficult, I guess, to put myself in the shoes of a non-accountant who may be trying to understand this, I think that if I try and do that, my comment would be, building on what Russ said to the non-accountants: right now the province’s financial statements are showing a big chunk of debt — $5 billion debt — as essentially a liability back to the federal government. Whereas our perspective on it is that you don’t owe that back to the federal government, because you’ve built the assets. You’ve done what you said you were going to do with the money.

The fact that you’re still using those assets and those assets are going to provide service to you over time…. That’s wonderful. That’s great. That makes sense. But you don’t owe that $5 billion back to the federal government. You’ve met the liability to the federal government to do A, B and C. If suddenly you shut down all of those assets that you built, the question I would leave the non-accountants would be: would you pay that $5 billion, then, back to the federal government, if you made subsequent decisions with those assets? I think the answer would probably be no.

I think that is an interesting non-accountant, I guess, perspective, to the extent an accountant can put themselves in a non-accountant’s shoes. I hope that helps.

R. Glumac (Deputy Chair): We have another question from MLA Mercier.

[9:50 a.m.]

A. Mercier: I’d like to thank you for the explanation, Carl, just in terms of the work that’s being done to look at different standards to try to resolve the issue. I think I come from the perspective of a reasonably informed member of the public, in an economically very different time right now. Hearing that the impact that switching the accounting standard on this type of revenue would have on program spending, creating an artificial need to make those cuts would be worrying, I think, to a reasonably informed member of the public.

So the crux of it, Carl, if I’m understanding this correctly, is the only way to avoid that outcome — which is getting to a point where you have an artificial, then, deficit that you would have to potentially cut services — to me, would be to either repeal or significantly amend the Budget Transparency Act as it currently stands. Is that correct?

C. Fischer: That would be an important technical part, but the reality is: in British Columbia, what metric or measure can government think of that will be convenient or easy enough for the public to evaluate their performance? That’s always the crux.

We always talk every year about balancing the books. Did you increase debt or decrease debt? I take a different perspective. We have a complex technical issue that we are struggling with. It comes across as a great disagreement, but it’s actually a very collaborative examination between our office and OAG. We’re at the point where we see enough imperfection in the treatment of this type of business transaction where we cannot conclude that there are any less than two very important perspectives. Preparing financial statements using accounting policies and describing a qualification is the way that accounting provides public notice that this is a complicated thing.

We don’t have a perfect solution for either side, right? It’s not satisfying to the auditors. It’s imperfect and not satisfying to government. You know the result of that has been standards-setters thinking: “Gee, we have to think a bit harder on how we can develop our reporting model to make this work out and address some of those issues.”

I think that over the next two years, collectively, we will be looking through their proposals and their models and providing feedback to them and recommendations about how we can make this work to minimize the negative impacts on either the audit perspective or the financial accountability perspective for government. From our perspective, that’s a great place to go, but if government wanted to take a different direction, it would be…. Yeah, there would need to be a legislative change.

R. Glumac (Deputy Chair): Thank you.

We have a question from MLA Anderson.

B. Anderson: Auditor General, you’ve mentioned something really interesting: that once something has already been built and it is in use, is it likely that we’re going to then remove that and give the money back? I think of it like a bridge. So we’ve built a bridge, and we’ve spent, say, hundreds of millions, whatever — however much a bridge costs. People are using that bridge. Has there ever been a case where we have actually demolished an asset and given the money back?

It just seems to me that this is something that would likely never happen, so that those principles confuse me a little bit. I don’t know if that makes sense, or if I just have a very limited understanding of this.

M. Pickup: Thank you for the question. The comptroller general may want to supplement/correct my answer as well. Russ may want to as well.

I think your question is a good one. When Russ was giving an explanation earlier, he was talking about a time, for example, where contributions may have come in to build something — a school or a road — where you had to keep it in service for X number of years and had to show that. You only really had the right to that money over that period of time because you would have had to pay it back.

[9:55 a.m.]

I would guess, and this is where I’ll look to the comptroller general, that in a typical fashion, running an organization the size of the province of British Columbia…. When these estimates are made, in terms of funding, and assets are built — whether they’re a school or a road or a hospital — there is an estimate of how long that asset is likely to last. I doubt, in reality, that it’s very common that the actual life that something lasts is exactly what was anticipated at the beginning. That’s why these things are esti­mates.

That’s why I think your question is so good. It would not be uncommon, I don’t think, for an asset to have an actual life that may be shorter or longer or different then what was anticipated when the money was received.

My understanding of it is, and part of the issue here is, that money comes in. That money from the federal government is not tied into keeping that road, for example, operational for 52.5 years. If something happens and somebody decides to close that road in 12.5 years, then that money is not going back, even though it was envisioned that would be open for 50.

That’s a more general answer to your response. I’m guessing that the controller general or Russ want to add to it. But that’s a guess on my part.

C. Fischer: I can think of one circumstance where we were asked to repay a significant amount of money to the federal government. That is when the province decided to depart from the HST arrangement and were forced to repay for revenues of $1.6 billion at the conclusion of that.

Internally, the financial statement impact is driven largely by external partners like the federal government. What’s more administratively significant for us in the prov­ince is that it’s an important part of the budgetary mechanism for managing capital spending in the schools, universities, colleges and health authorities.

The governing legislation for all those entities does definitely say that, yes, when you receive capital funding you have to use it for a school or a hospital. If you fail to use it for a school or a hospital you have to pay it back, unless you get the agreement of the minister to redirect it in another area.

I think those measures are there. I think it’s wrong to look at it simply as a matter of: “Do you have the characteristics of a financial liability?” The alternative to giving $100 million up front to an entity to build a school or a hospital or some good thing would be to say: “You go ahead and do that, and we will increase your annual operating budget by $1 million each year so you can pay for the amortization.” Perfectly fine.

The reason that we don’t do that is that it is much cheaper for senior governments to borrow the money and provide it up front as a financing transaction, much like you would take out a mortgage to build something rather than borrow the money to pay contractors individually.

You know, up until 2011, the accounting standard did say that when you have something that’s in the nature of a financing transaction, you should recognize it this way. I think a big mistake in the development of the current standard that led to all these problems is that standards-setters felt that that while they were so clever in talking about eligibility criteria and stipulations, they no longer needed to provide guidance on what to do when you had something that was akin to a financing transaction.

I hope that the next step in the developmental reporting model and conceptual framework provides a good solution, but I’m not absolutely convinced that we may not have to go back to PSAB and say: “No, really, you need to include guidance that recognizes the characteristics of a financing transaction.” Whether it’s a contribution, whether it’s a forgivable loan or whether it’s any other type of imaginative financial instrument that we could come up with, they should all be treated the same, because they accomplish the same purpose.

[10:00 a.m.]

J. Tegart: Thank you to the Auditor General and to Carl for the comments in regards to a 20-year issue that, likely, we’re not going to solve today. I have limited input to give, but it’s great to know that there is good discussion happening as we move forward.

In your report, Michael, it has some comments on looking ahead. I wonder if someone could give us a little bit of discussion around the personal income tax revenue and the uncertainty and why it is so high at this time.

M. Pickup: Thank you for the question. I am hopeful, over my next seven years or so that I have left, that we are able to resolve this issue. Thank you for recognizing that, of course, we’re not going to resolve it today.

I’m going to turn it over to Molly. But I’ll take a quick opportunity, again, to reinforce what the comptroller general has said. These are very professional differences of opinion, each recognizing where the other one’s coming from. One of the things I’m pleased, in having been here now for seven or eight months, is that this is not impacting our ongoing relationship. Us working through a pandemic, for example, as folks pointed out earlier….

This is very important, I think, both for the comptroller general and his staff and for us here in the office and our staff as well — that this is not souring our relationship or working through getting things done. I think that is important, and we each see where the other is coming from. Neither one of us, as you can tell today, is trying to minimize the perspective of the other person or where that other person is coming from. I think that’s important.

I’m going to turn it over to Molly to take the lead in responding to your question.

M. Pearce: I’m actually going to turn it over to Laurie, because Laurie is our finance revenue guru. She can speak much more eloquently to this.

L. Selwood: When government prepares the financial statements, it’s really trying to use the best information they have at the time in order to provide timely reporting to the public. There’s a cost-benefit analysis. The benefit of timely reporting is very important for the public, but it means that the information does require some estimates to come up with the best number that is available.

Personal income tax, in particular, is based on two calendar years. It’s based on that first three quarters — so January to March in the 2020 year. So it was January to March, 2020, and then the three quarters from 2019.

When government does the personal income tax estimate, they don’t have all the assessment notices from all the individuals. They have to make some assumptions in determining what personal income tax revenue will be, and they have a lot of information to make those assumptions. They’ve got information from CRA. They use modelling. They really do use the best information they have, but it’s really a difficult situation to be in when they’re trying to estimate a $10.5 billion revenue stream.

When the personal income tax revenue estimate is made, government is making the best estimate that they can. Really, it’s about coming up with the best estimate in a timely manner, so a cost benefit of timely financial reporting.

R. Glumac (Deputy Chair): All right, thank you. I don’t see any other questions. I will ask a couple of questions.

[10:05 a.m.]

In listening to some of the responses, I heard that this accounting practice would make Crown corporations, on the books, look less financially viable, due to these liabilities that are on the books. Am I correct in what I heard on that? I guess the question is for Michael.

M. Pickup: Do you want to take that, Russ? You were ready to jump in there, so go ahead, please.

R. Jones: I can if you want. Thank you, Deputy Chair, for the question. Yeah. For instance, whenever we went, say, to a school board audit committee meeting to present — you know, to go over the financial statements with them — it would show that they had net debt on their books. The question we used to get, from a number of the trustees, was: “But we don’t have net debt.”

Then we had to explain the whole process: “Well, you got this money to build a school, and it shows up as a liability on your financial statements. That’s why your net debt is so high. Don’t worry. You don’t have to raise extra revenue to pay down that debt.” We went through the whole discussion with them, and the explanation, and we sort of got some blank stares, in a number of cases: “Then why are these statements like this?”

It boiled down to the fact that the regulation that the government put in place required them to set these up as debt. If they’d been following what we say the standard was showing, then it wouldn’t have been there. So it really confused a lot of the audit committees that maybe didn’t have as much financial expertise as other, larger Crowns. It did. It created a bit of a problem in terms of what it was actually telling the trustees, as well as other members of the school boards, health authorities and whatnot.

R. Glumac (Deputy Chair): Thank you. I appreciate that clarification. That is interesting.

I have another question. I see that other matters that are going to be considered in the report are the cleanup of contaminated sites, including orphan oil and gas sites. My question around this is: is this subsidy something that is budgeted by the government? Will there be an audit of what the ongoing commitment of government is to pay for this, in accordance to whatever programs it has in place and in terms of requiring companies to pay for this themselves? Is there going to be any sort of analysis of this, either as part of this audit or as its own audit?

M. Pickup: Perhaps what I could suggest, then, is putting the budgeting question aside, because that would be better for Carl, I think, to take on — on how these things get budgeted for.

It’s probably worth, Molly, explaining, from a financial audit perspective, in simple terms, as to what the accounting for these things is, what that means for our financial audit, and what it doesn’t mean, from a financial audit perspective. Then we can sort of park the performance audit area of it. Do you want to start with that, Molly, in terms of the financial audit?

M. Pearce: For the oil and gas sites, the commission is tasked with the cleanup of orphan sites. What our report was saying was that the number of sites that had been designated as orphan sites is increasing, as well as the estimated cost to remediate those sites.

When a site has been designated as an orphan site, there is, from an accounting perspective, various information pulled together to make an estimate of what that liability will cost to fix it in the future, but until the work is actually done, you don’t know what the costs are going to be.

[10:10 a.m.]

From the perspective of the remediation, there’s work done around what the base costs would be, sort of extrapolated over a population and a number that we audit to make sure that the assumptions going into those calculations are valid and are reasonable. From an accounting perspective, we want to make sure that there is a liability recorded on the books so that it can be budgeted for in the future.

R. Glumac (Deputy Chair): To clarify, I guess my question is that…. I would assume that oil and gas companies would set aside money to pay for remediation. So there would be a net…. There wouldn’t be a cost, necessarily, to government. Setting aside the money and then using that money later — will that process be audited?

S. Newton: I can answer that, if you’d like, just from the Oil and Gas Commission perspective, because I’m involved in the audit of the Oil and Gas Commission.

The Oil and Gas Commission takes a producer- or polluter-pay perspective, so the expectation is that anybody actively producing or still fully owning the well is required to clean up. Government gets involved, at least on the oil and gas side, when they either accept liability because it’s something that they own or the organization that was the producer is insolvent or cannot be found. There’s a specific declaration by the oil and gas commissioner to declare that well orphan.

Under regulation, with…. I can’t remember the specific piece of legislation, but producers are required to provide a levy to the Oil and Gas Commission that they hold to be able to remediate contaminated sites. So there are two pieces. One is looking at the revenue side of the funds that were received and ensuring that that is correct or collected appropriately via appropriate processes that are in place. But as Molly described it, the Oil and Gas Commission itself will do an assessment by property. Then we go and audit the validity and consistency of the assumptions.

Two key pieces. Active polluter-pay. Where that can’t be determined and government ends up on the hook for contaminated sites or orphan wells, there is a fund within the Oil and Gas Commission to be able to support remediation.

I saw that the comptroller general had his hand up as I was talking, so I think he’s got more for the answer.

C. Fischer: No, I think you’ve covered it, Stuart.

R. Glumac (Deputy Chair): Thank you. I think that’s all for my questions.

N. Sharma: A follow-up to that. I was curious, when I read that section on oil and gas and abandoned wells, about any lens that was put to it about First Nation impacts and which lands those abandoned wells are on. If that was anything that we do with audited, given the lens that we’re trying to apply for different impacts….

S. Newton: We’re focused on the costs and the number and ensuring the estimates are correct so that the recorded number in the financial statements, speaking from a financial statement audit purpose, is correct and the assumptions are valid. There are some other policy things rolled into that that aren’t assessed as part of a financial statement audit. That would be more of a performance audit.

R. Glumac (Deputy Chair): Right. Well, thank you very much. I think that’s all our questions for today.

Thank you, everyone. Great questions and really good answers. We will move into a recess here, but I’m going to have to step away from this meeting.

D. Coulter: I move that MLA Andrew Mercier take the Chair for this meeting of the Select Standing Committee on Public Accounts until such time that the Deputy Chair is available.

[10:15 a.m.]

R. Glumac (Deputy Chair): Excellent. Thank you.

We’ll vote on that, everyone.

B. Banman: Point of order. I just want to ensure that we’re actually legislatively allowed to do that. Can staff please comment on that?

J. Arril (Clerk of Committees): Yes. Thanks, Bruce, for that question.

In the event that the Chair and the Deputy Chair are unavailable, a member could move a motion to nominate another member of the committee to take the Chair until such time that the Chair or the Deputy Chair becomes available.

B. Banman: Okay. Just want to make sure we’re legal. Thank you.

R. Glumac (Deputy Chair): Everything is on the up and up.

Motion approved.

R. Glumac (Deputy Chair): Handing it over to you, MLA Mercier.

[A. Mercier in the chair.]

A. Mercier: Thank you, Rick.

I guess the next order of business is…. Are we going to go into a brief recess before considering the next report?

The committee recessed from 10:16 a.m. to 10:29 a.m.

[A. Mercier in the chair.]

A. Mercier: I’d like to thank everyone, and I invite Michael, our Auditor General, to introduce his team and to present the second report on the management of forest service roads.

[10:30 a.m.]

Management of Forest Service Roads

M. Pickup: Thank you so much for the opportunity to be here today to discuss this audit with you. Joining me today from our office are Russ Jones, Deputy Auditor General, whom you all know well; Malcolm Gaston, assistant Auditor General, whom you are getting to know as well; and Melissa Miller, who is a director with professional practices, here in the office, and who very much led this audit, from start to finish and up unto today.

I also want to extend a thank-you to folks not with us today who were part of the team: Sara Van Steinburg, an analyst who was part of the audit team; Michelle Crawford, a data analytics specialist; and a special thank-you to Peter Nagati. He was an executive director, leading performance audits here with the office, who retired in January after a lengthy career in the public service, including a significant amount of time here in the office.

At the risk of giving out one special thank-you, I am going to give out that special thank-you to Melissa, who really has seen this project through from start to finish. I think extra-special recognition goes to her, because this was one of the first audits that I became involved in upon my arrival. Melissa and the team very much piloted the Audit at a Glance that you see in the report, pages 7 and 8, which really summarizes things down to one page for you. That’s the Audit at a Glance.

I want to acknowledge her for keeping with this, for going and working through the transition and for producing such a great report. Melissa is going to walk through it quickly with you — essentially walking through that Audit at a Glance the highlights.

I would point out that since I’ve been here, this audit is probably the one that we have received the highest level of interest in, whether it’s people emailing me to talk about the importance of this work to them or the thousands — and I do say thousands — of views and impressions and use of the social media that we are using as well. There’s a lot of interest across the province on this roads audit, which is important and partially, if you will, validates why we do these audits — you know, primarily for you, but also to make a difference for the people across the province.

I also want to say a special thank-you to the organization that we audited. Some of the folks are here with you today. I fully get that undergoing an audit is extra work on top of everything else that people have to do. I appreciate the approach of the organization. I appreciate their responses, the fulsomeness of the responses, to the recommendations. We look forward to taking your questions and comments today.

On that, I’m going to turn it over to Melissa to do a quick walk-through of what we found in this audit.

M. Miller: Good morning, Chair and committee members. Thank you very much for your interest in our report on the management of forest service roads in B.C., which was tabled in January. I’ll be walking through the information in the Audit at a Glance document, like Michael mentioned, which provides the highlights of what we examined in the audit, and our key findings.

In B.C., there are approximately 58,000 kilometres of forest service roads, which I’ll refer to as FSRs. FSRs are roads built on Crown land to access timber for forestry operations. Once built, they are often used for other industrial and commercial purposes, such as mining, trapping and guide-outfitting, for example.

FSRs also provide access to Indigenous and other communities, private residences, and recreation and wilderness areas, even when they’re no longer needed for industrial use. FSRs are maintained by forest companies under road use permits, or by the Ministry of Forests, Lands, Natural Resource Operations and Rural Development when there is no industrial user responsible for maintenance.

The ministry’s district managers and B.C. Timber Sales managers are required to oversee FSRs, within their respective natural resource districts and business areas, until they deactivate them. The ministry’s engineering branch develops and monitors the forest road engineering program to ensure that the ministry complies with relevant acts, regulations, policies and engineering standards. While FSRs aren’t built or maintained to the same standards as roads intended for public use, proper upkeep is critical to help ensure the safety of road users and reduce the risks to the environment.

Our audit assessed whether the ministry managed safety and environmental risks by inspecting, maintaining and deactivating FSRs in accordance with policy. We determined what work had occurred by analyzing ministry data, reviewing ministry records and interviewing and surveying ministry staff. The team visited a selection of districts, where we drove the roads with district staff to understand the management complexities on the ground, and also met with local representatives from industry, Indigenous communities and municipalities.

[10:35 a.m.]

Overall, we concluded that the ministry did not manage safety and environmental risks on FSRs as required by its policies. The shortcomings in maintenance work and the lack of reliable information increase risks to road users and the environment and make it difficult for the ministry to assess whether the roads are inspected and maintained as required. We made nine recommendations, which focused on asking the ministry to review its policies and practices so that it can meet its own expectations for inspecting and maintaining FSRs.

I will now highlight some of the key findings that support this conclusion, starting with the ministry’s work to identify and assess risks on FSRs.

We found that the ministry’s information on FSRs was inconsistent and difficult to share. Several data systems were being used, and the information was inconsistent, which made it hard to know if the inventories were complete or up to date. The operational land resource management systems were not consistently used by all natural resource districts in B.C. Timber Sales’ business areas. We also found that B.C. Timber Sales lacked ready access to information on whether its business areas or road use permit holders were responsible for maintenance, which impacted the reliability of its road management data.

We also looked at inspections and if they’d been done according to the required frequencies. We noted that the key policy documents guiding the districts provided contradictory requirements for inspection frequency and timelines for completing repairs.

On the district side, we couldn’t rely on the data in the management system because it was a new system that wasn’t yet being used by all districts, so we sampled eight of 23 districts. We found that there was no standard process for tracking inspections. The records were inconsistent and incomplete, and we could not determine if they were inspecting their FSRs at the required frequencies.

For B.C. Timber Sales, its data showed that approximately 40 percent of its roads had not been inspected at the required frequency, but the true extent of the deficiency was unclear because the data wasn’t reliable. It included roads that were supposed to be inspected by road use permit holders.

The engineering branch is responsible for inspecting FSR bridges and major culverts, including those under road use permits. If an inspector determines that repairs or replacement are needed, engineering branch staff review the inspector’s report and send it to their road use permit holder, B.C. Timber Sales or the district to complete the recommended work.

We were able to rely on the ministry’s data for this work, and we found that between 2000 and 2019, the ministry inspected 87 percent of bridges and major culverts according to the frequency set in its policies. The 851 that had not been inspected were mostly bridges on active crossings. As of May 2019, there were 340 structures overdue for inspection by, on average, 635 days, which is around 21 months.

Moving on to the second page of the Audit at a Glance, we also looked at how the ministry was mitigating risks on its FSRs, specifically through maintenance, including oversight of road use permit holders and deactivation of roads when they were no longer needed for industrial use. Similar to our findings related to inspections, we found that the districts we sampled were not keeping consistent or complete maintenance records. The records didn’t show if the maintenance and repairs work met policy timelines, and two districts provided us with no maintenance tracking records for the period we were looking at.

Ultimately, we could not determine from these records if the districts were meeting the ministry’s required timelines for repairs, but we were able to conclude that the districts were not maintaining roads according to policy by doing a detailed analysis of the districts’ funding requests, which are based on a risk-based funding policy. We found that the districts did not receive the funding from the ministry that they identified as necessary to maintain and repair priority roads according to policy.

From 2017-18 to 2019-20, the districts received between 14 and 20 percent of their total budget requests for FSR maintenance. During this period, budget allocations for district road maintenance remained stable at $5.5 million to $5.7 million, while district requests ranged from $28.6 million to $40.2 million. To make the most of the funding it had available to distribute to districts, the engineering branch prioritized maintenance funding for capital roads providing access to communities, rural residences and high-value recreation sites. However, in 2019-20, the funding allocated by the engineering branch covered only 26 percent of the total amount requested by districts for priority capital road maintenance.

[10:40 a.m.]

According to some district staff, funding for maintenance was inadequate to maintain FSRs providing access to rural residences or high-value recreation sites. Unfunded work included almost $9 million in high-priority maintenance and repairs.

For maintenance of B.C. Timber Sales roads, the system data showed that 43 percent of planned maintenance was completed, but we couldn’t rely on their system data because only ten of the 12 business areas used it for tracking repairs. Plus, as with inspections, the data captured roads that road use permit holders were responsible for maintaining.

We looked at maintenance of bridges and major culverts and found that 48 percent had overdue high-priority repairs, and 583 structures were overdue for replacements by an average of five years. In order to reduce safety risks, the ministry had reduced load ratings on 585 structures. Similar to what we found with roads in 2019-20, $2.7 million of the district’s requests for high-risk bridge and culvert maintenance was unfunded.

We also found that the ministry’s oversight of FSRs under road use permits was limited. There are no requirements for the districts to monitor road maintenance by road use permit holders. According to ministry officials, the district managers’ limited authority to order road use permit holders to conduct maintenance and confusion over roles and responsibilities for monitoring make it challenging to ensure that industrial users adequately maintain and do not damage FSRs through use.

Finally, ministry policy recognizes that FSRs that are no longer required for industrial use need to be deactivated to reduce environmental risk, address public safety and reduce ongoing maintenance costs. We found that the districts and B.C. Timber Sales followed risk-based planning processes to identify FSRs that were not needed for future industrial use and deactivate them. Nevertheless, pressure to keep roads open for non-industrial users is increasing both the need for ongoing maintenance and the resources needed to meet the ministry’s maintenance requirements.

I would also like to point out that the Auditor General’s questions are included in the Audit at a Glance. In its response, the ministry indicated that these were the right questions and that they could inform the ministry’s discussions with the new government. It has been several months since we completed the audit, and we’re eager to see how the ministry has progressed in improving its FSR data management, which I believe it expected to completed by this spring.

This concludes my presentation. I would quickly like to thank the dedicated staff at the ministry for their support and cooperation throughout our work on this audit. We are particularly grateful to the ministry for continuing to work with us to complete the audit during the pandemic. It was not easy to deal with all the changing conditions.

Thank you very much for your time.

M. Pickup: Thank you, Melissa. Great summary.

A. Mercier: I’d like to thank Michael and Melissa and the team for the presentation on the audit.

I’ll now ask Rick Manwaring, Deputy Minister for Forestry, Lands, Natural Resource Operations and Rural Development, to introduce his staff and present the government’s response to the audit.

R. Manwaring: Chair and committee members, I am Rick Manwaring, Deputy Minister for the ministry. With me is Sarah Fraser, assistant deputy minister for rural opportunities, tenures and engineering — our lead division on FSRs and forest service roads in the province. I’ll do a brief lead-in here and turn it over to Sarah to cover the details of our presentation.

As Melissa outlined, the ministry manages a very large and growing network of forest service roads in British Columbia, almost 60,000 kilometres of roads, involving bridges and drainage structures across the province. As also mentioned, we do this through a headquarters engineering branch, partnered with a large decentralized team located in districts and regions, made up of B.C. Timber Sales and district staff in communities across the province as well.

I do want to thank the Auditor General for the audit of the forest service roads. We welcome the independent review of this very large and complex network. The audit was very useful to the ministry and is helpful, actually, in combination with other reviews by arm’s-length organizations such as the Forest Practices Board.

We do accept the audit findings. You will hear today that, as Melissa kind of mentioned at the end, the guidance, the reporting and system updates in the recommendations are underway as part of our response.

[10:45 a.m.]

These recommendations will definitely complement what we do on the ground, the work our teams do every day to maintain and manage forest service roads in the province.

Before I turn it over to Sarah, I just want to ensure the Chair and the committee and the Auditor General that our commitment to public safety and environmental protection of all of our staff across the province is at the centre of everything we do with FSRs and the work we do every day on this road network.

I want to thank you for your time today, and I’ll turn it over to Sarah to cover some of the details.

S. Fraser: Great. Thank you, Rick. Hopefully everybody can hear me all right.

First of all, I’d also want to thank you for this opportunity to present today and to really thank the Auditor General and his team for their diligence in reviewing our program — the forest service road audit. And I’ll probably just say FSRs throughout this presentation to keep it simple. If I do use other acronyms that you aren’t familiar with, please stop me. We tend to do that a lot in government.

The FSR audit report has really helped us to identify and to prioritize policy work needed to ensure our polices align with the work that’s happening in the field and is reported thoroughly. To address the majority of the recommendations, we’ve initiated a thorough review of existing policy and reporting protocols to determine opportunities for improvement. That was mentioned earlier — that we’ve already begun that process.

The audit did reveal some gaps in how we reflect our policy and reporting that we will be prioritizing. I would stress that these gaps do not reflect safety concerns on the roads themselves. Our integrated electronic land resource management systems are already under development and will be implemented over the next three years. That will improve many of the deficiencies that have come up in this report.

Together, the resource management system implementation and policy review will allow us to better reflect the actual field conditions with our reporting. It’ll also help us to prioritize funding in a transparent way that demonstrates road and bridge safety is being achieved.

The audit reviewed the systems and policy, but it didn’t include a field component, so I want to assure you that safety and environment are our priority. The recent Forest Practices Board field audits show good performance on the ground and that safety issues are addressed when identified.

There were three of those audits that were done — one released as recently as last week. They all found that we were complying with all legislation. However, it’s really important that we see the strong results in the reporting and policy as well.

I’m going to go through the recommendations, and I’m grouping them in the themes that came up. The first theme is really about policy. That’s recommendations 2 through 9. Over time, the funding and maintenance policies have not remained consistent with one another, and we’re working to bring these two sets of guidelines into alignment.

A cross-program team is already reviewing these policies with a completion target of this spring. This will include review and potential revisions to how we conduct and record road and bridge inspections, maintenance planning and implementation and project tracking. One result will be to eliminate conflicting guidance of FSR inspection frequency, timing of maintenance and deactivation.

For example, a bridge inspector might record something on a bridge as needing eventual replacement to ensure that it is addressed when necessary, even though there may be no immediate requirement to do that replacement. An example of that is reflective bridge delineators that are important but don’t need to be dealt with immediately. This keep-an-eye-on-it approach can result in a repair being categorized as immediate repair when it actually reflects a priority item where future work may be required.

We will review guidance provided to inspectors to ensure they accurately identify risks to user safety, community access and environmental risk and assignment of repair priority. While these actions will address overall policy shortfalls and conflicts, the issue of road use permits, which are issued for industrial log haul, which is recommendation 9, are more complex.

[10:50 a.m.]

Step 1 for that will be to require discussions between engineering branch, our B.C. Timber Sales, resource districts and the compliance and enforcement branch in the ministry to identify options collaboratively. Ultimately, broader stakeholder and industry outreach would be required if significant changes to our road use permits are identified. Any such change would have broader ramifications to industry and program costs, so this is not to be undertaken lightly.

Many of the recommendations — and those are recommendations 1, 4, 5, 7 and 8 — speak in one way or another to data systems. Historically, FSR data has been informally tracked by resource districts in a variety of means, including older electronic systems and even in paper spreadsheets. So we acknowledge that there’s work to do in order to integrate all of those systems. One of the challenges identified is the different data systems, which don’t reconcile across agencies. The land resource manager regional operation system will be comprehensive for tracking all FSR assets and attributes and requires a staged implementation.

To increase consistency, the new resource road system supplies all road authorizations information to the new system that we’re doing, the land resource management system. The first phase of the overall forest service road data systems development is focused on implementation of the resource road system for road use permit administration, and that will be completed in the spring of this year.

The land resource system is a three-year project and will eventually corporately track inspections, maintenance and deactivation for all 23 resource districts. Once the system is in place, all ministry staff, including B.C. Timber Sales, will have access to the rural road permit information. This corporate system will improve data tracking and clearly record who’s responsible for required maintenance, whether it’s BCTS or the primary road use permit holder.

Work is also underway to improve consistent tracking of inspections and maintenance in the B.C. Timber Sales system. We target the date for that in November — so the fall of this year. Once in place, updated policy and systems will make a resource district review, which is recommendation No. 5, more effective, creating better standards to measure against and better data for review.

Recommendation 6, as well as some of the broader questions from the Office of the Auditor General, speak to funding and overall program mandate issues. The Forest Planning and Practices Regulation limits FSR maintenance under the road use permit to the road’s structural integrity, drainage systems and safety for industrial users. However, at all times, our management of forest service roads is rooted in all users’ safety and environmental protection, and funding needs are informed by that priority.

Beyond industrial use, the ministry focuses on community access and rural residences, as well as high-value recreation sites. Interest in funding for high-value sites exceeds available funding, and we acknowledge that there is far more interest, and it’s growing, in access to that country. So that’s something that the ministry is certainly considering.

Rural community FSRs account for the majority of the program’s capital and operational maintenance budget. FSR standards are not equivalent to public highways, and it is an ongoing challenge to reconcile community expectations with our focus on basic access and safety. We have an ongoing dialogue with rural communities and are always willing to hear local priorities and how they may be incorporated into the planning.

Our review of the funding policy, as part of recommendation 3, will help define the scope of this work by ensuring that reporting of required maintenance is accurately reflected. And our review of how to reflect high and very high priorities in reporting will clarify what is critical maintenance now versus anticipated maintenance in the future.

[10:55 a.m.]

We know, through site inspection as well as recent Forest Practices Board audits, that legislation, policy and safety standards are being maintained, and when issues are identified, immediate action is taken. But these could not be reflected in the nature of this audit, which was looking at the policy and the data collection and systems.

While district engineering staff risk-manage their FSR networks to ensure user safety and environmental protection, we agree that being able to clearly demonstrate safety is important for public confidence in the system. When assessing the FSR inspection and maintenance documentation, we will work to provide better clarity around two things: that safety standards are being met and funding requests are being accurately reflected against policy requirements.

Just to summarize again — Rick touched on this earlier — guidance, reporting and system updates are already underway and are being informed by the audit. When complete, this work will ensure various road data tracking systems are consistent with one another. It will also reconcile our funding and road bridge policies and ensure that the good work being done in the field is also reflected in the data systems. Much of this work will be complete within the next fiscal year.

Some other elements — district compliance review and road use permit oversight — will take a little bit longer, but they will be informed by the first phases of the policy and systems review and implementation. One thing that will not change is our commitment to safety and environmental protection on the ground.

Thanks for your time today. In particular, thanks again to the Office of the Auditor General for their guidance and insight into our program. The insight will help inform the foundation for better policy maintenance and reporting. It also underscores the complexities of FSR use and maintenance and the importance they hold for rural communities. We’d be pleased to take any questions that you might have.

A. Mercier: Thank you, Sarah and Rick. We’ll open up the floor to questions. It looks like MLA Tegart has a question.

J. Tegart: Thank you so much for the report. Nice to see you, Rick, and thanks, Sarah, for your report.

Real concern in rural B.C., of course, in regards to forest service roads. You only have to look at what’s happening in the Quesnel area to know that road maintenance is a huge concern. I look at the audit, and I look at the requests for maintenance and the different areas that are receiving funds. When we’re receiving 14 percent of what was requested, and when we look at where it is distributed and how it’s prioritized, as we improve systems, the question is: are we going to have the dollars to actually do the work?

As was stated in the report, the public expectations are becoming much more broad, much more loud. That’s the push-and-pull that the ministry is continuing to feel. My comments are not reflective of people on the ground who are doing the best they can do with what they’ve got, but I think that the report shows that there’s lots of work to be done. The other thing is that it shows is that there are lots of dollars that need to be redirected into forest service roads as British Columbians, post-COVID, realize how beautiful the province is that we live in.

My colleague in Quesnel, MLA Oakes, has been on TV in the last week talking about the challenges of the constituents in her riding and how important the 200 roads that they’ve identified in her area that are in desperate need of maintenance are to the economy and what happens in their area.

[11:00 a.m.]

I wonder if you could make a comment in regards to priorities, in regards to what the future looks like for funding for road maintenance. Also, as we put together systems, how transparent those reporting systems will be to anyone who wants to look at what the priority is of the road that they travel on every day.

S. Fraser: Thank you for that, MLA Tegart, and very good to see you.

In addition to the budget that we have every year for the roads, in the last few years there has been some additional money as well. The ministry is responsible for a forest employment program, and much of that money has been going towards resource roads. In 2019-20, there was almost half a million dollars that went towards resource roads. Then last year, there was just over $4.7 million that went to resource roads. That’s in addition to our budget.

As well as that, we had a rural resource road program that was part of StrongerBC. That was an additional over $8 million that went to resource roads. There’s been a fair bit of maintenance done in the last couple of years that’s in addition to our regular ongoing maintenance.

We do prioritize. All of the regions…. We’ve got a fantastic team. I just want to acknowledge the engineering team out there, the headquarters team as well as the regional district teams. They do a fantastic job of inspecting. They record all deficiencies, and they cost them out. The Auditor’s report did mention a shortfall, but I think that part of that is the procedure that we have in the ministry to bring forward some of those deficiencies.

Everything is recorded, everything is costed, everything comes forward, but not everything needs to occur in a given year. So the team gets together, and they go through those lists, and they determine which things need to happen in a fiscal year, and that is what is budgeted for. So we do prioritize.

As I said earlier, we prioritize based on: is the road an access road for a remote community? If so, that’s No. 1. The safety and environmental piece. We do that. As soon as something is discovered, we take care of it. It’s absolutely foundational. If something cannot be repaired immediately, the road is closed temporarily until we can fix it and ensure that road users are safe.

The second priority, of course, is rural residents. There are a lot of rural residents that are out utilizing forest service roads scattered around the province. That’s our second priority. Then, of course, as I said, the higher-use recreational areas are our third priority for those roads. Every year, we’re considering, we’re prioritizing, and we’re ensuring that we’re getting to those things that are really important and urgent in nature.

R. Manwaring: Good questions, MLA Tegart. Thanks for them. Maybe I’ll just emphasize a couple of things Sarah said here under the category of priorities.

When we had the opportunity to access some StrongerBC funding, for example, our teams in the districts and regions, B.C. Timber Sales engineering branch, knew exactly, to re-emphasize Sarah’s point, where we would put that money. It was based on the framework of priorities that Sarah just mentioned here.

We feel pretty good about being able to tackle a whole bunch of maintenance opportunities, structural opportunities, around the province in this past year and do an even better job of focusing on some of the maintenance pressures that we know we have on this vast network.

Just to your last point, to your question around transparency, we get asked all the time, by lots of residents, about road maintenance on a particular road that they’re interested in. Hunters call us in the spring by the hundreds, I would say. We’re also very aware that the pandemic has produced a significant increase in pressure for British Columbians to access the back country and beautiful B.C. generally and the pressure that puts on the road networks.

[11:05 a.m.]

Our team has…. I wouldn’t say we anticipated the pandemic response, but we have responded to it with the focus that we need to in the places that we need to.

I’ll kind of wrap that up by saying that if people are interested in maintenance records or what we’re investing in a particular forest service road at any point in time — their travelling, their hunting, their recreating — we always provide that.

M. Pickup: If I could just add one thing to the question and the discussion that took place. The audit was essentially done in November, and then we reported it in the new year, once the Legislature came back. One of the many things that I appreciated in the responses from the organization to the audit — I just want to draw your attention to it again: I really appreciated the openness of the responses. It may be relevant to your question and, perhaps, worthy of some comment in terms of where things stand now.

In recommendation No. 6, on page 17 of the report, the response from the government was: “We understand and accept this.” It goes on: “We will…continue to seek appropriate levels of funding consistent with government priorities.” So it may be an interesting discussion to say: how has that unfolded? Likewise, on recommendation 9, the response on page 18, in the second paragraph, the department said: “We will use this opportunity to consider the Auditor General’s statements in the context of our priorities and seek guidance from the forthcoming government to help provide that direction.”

This was in November when the responses were written, and now we are in May. I really appreciated the openness and frankness of these responses, but I think it may sort of beg a relevant question to say: what has happened on those two points? I just wanted to add that, acting Chair.

A. Mercier: Thank you, Michael.

Jackie, do you have any follow-up questions?

J. Tegart: I’ll save them till the end, thanks.

A. Mercier: Okay, thank you. Dan, go ahead.

D. Coulter: I was just wondering, Sarah. The first bullet of your presentation mentioned that the audit didn’t include fieldwork. Do you think that that would have changed the findings of the audit, or — maybe this is a question for the Auditor General — that the methodology would have changed?

S. Fraser: I’ll respond to that, Dan. We appreciate this audit. We appreciate it particularly because of the type of audit it was. We do have manuals and policies that have been around for many, many years, and things change. So we really do need to review our policy. That is really the intent of this audit: looking at our policy and our reporting. So it’s going to be very helpful to us for enhancing our systems, enhancing the way in which we report things.

The Forest Practices Board audits were quite different. They were field audits, so they were looking to see that we were taking care of things on the ground, and all of those audits said that we’d complied. They were, as we say, good audits for us in ensuring that we are taking care of things on the ground, but this audit is really important to us because it was looking at the policy and how we record things. Both are important audits and are going to be helpful to us as we move forward.

M. Pickup: I think I should probably make a comment there as well, if I could. Thank you, Sarah, for those comments. There’s no disagreement on my end, but as the Auditor, I did just want to point out that the question on going into the field and doing fieldwork is a question of what the audit focus is and what the audit objective is.

[11:10 a.m.]

Now, having said that, as Melissa pointed out earlier, the team did go into the field, if you will, during the planning phase of the audit, and visited several sites just to get a sense of what was happening and met with local representatives, saw examples. Again, this audit was an audit on the effectiveness of controls that were in place to ensure that policies were being met.

If you look at the type of findings that are here and what we were looking at, these types of things wouldn’t have changed whether we spent three days in the field or 300 days in the field. Because of the things that we are looking at, the focus was different.

I just want to be clear on that. This is not an opinion that might have changed had we spend more time in the field. That’s consistent with what Sarah has said as well and acknowledged. But I did just want to, as the Auditor, point that out again.

A. Mercier: Thank you, Michael.

Dan, do you have any follow-up questions?

D. Coulter: I get that that would be a totally different audit. This audit isn’t necessarily reflective of the state of our roads, bridges, culverts, etc., even when it does talk about funding those different projects. I’m right there, right?

S. Fraser: Yes. As I said in the presentation, what happens is our engineers go out, and they record all deficiencies. It’s a list of deficiencies. They cost them all out. That comes forward.

We don’t reflect well, in our system, the priority or describe those well in our system. It doesn’t show whether or not they are urgent items that need to be taken care of right away or whether they’re important but they are something that we need to replace three years down the road. That’s not captured.

The other thing is, in the budgeting, as I said, because we cost everything out, it all comes forward, and it looks like there is a large gap in our funding. But it’s not necessarily a large gap. It’s just that everything is costed out and comes forward, and then that further filter happens.

In our systems, we do need to align things. We do need to collect the data better, and we do need to describe things. We also need to look at our policies. Are they up to date? In many cases, they’re not up to date, so we need to improve those. We also need to take a look at our engineering manual and make sure that’s as up to date as it can be.

M. Starchuk: I read this report with a completely different lens than some people will. I have to preface this by saying that when we understand climate change and the emergency that we’re in, we have to all agree that it affects everything that’s inside of this report with regards to those roads.

Then I take a look at the capital roads that you have identified inside of there and the way that they’re used. As a person who has actually been in a fire engine during a fire, the last thing I wanted to worry about was whether or not the road was going to handle the water that was in the tender so we could get it from point A to point B.

My question is more around the policy that you have that’s there. You’ve kind of got capital roads, if I remember right, maybe third on the priority list. But capital roads in emergency responding, whether or not it’s because you need to reroute the traffic off of a main road because there’s been flooding, as Jackie has talked about as well….

A lot of those roads…. I make the assumption that the standards to which they were built are so long ago that they wouldn’t meet the way the weather patterns have focused in today’s world. [Audio interrupted] roads for emergency evacuations or for the people that are going to go into the forests when the ability is there to put out those fires that are there.

A. Mercier: I’m not sure if everyone caught your full question there, Mike. You froze a bit there at the beginning. Maybe if you could just repeat it.

S. Fraser: I think I caught the gist. If I didn’t, then you can repeat it. But I think I caught the gist.

Just so you know, I’m certainly having discussions with the engineering team, because climate change does have an impact on roads. We do need to consider climate change when we’re doing our maintenance as well as when we’re renewing roads. That is something very important, very top of mind.

Egress is also very important. Are there abilities for alternate access in case of floods or fires? That’s something that we do think about as well.

A. Mercier: Do you have a follow-up, Mike?

I see Rick’s got his hand up.

[11:15 a.m.]

R. Manwaring: Just maybe a follow-up. I think the MLA was maybe centering the question on engineering standards — I think that’s where you were focusing — and whether they properly anticipate climate change. Do they anticipate things like emergency management? The answer is yes.

You’ve described one of the interesting challenges that we have in many parts of our ministry around climate change. When Sarah described the annual inspection and cataloguing of work that we need to invest in our forest service road network, one of the big pieces is engineers looking at structures and whether they are designed and how they are reacting — for example, following the big flood of 2017, a complete review of our road structures and bridges on a lot of those highly susceptible streams and whether the engineering rating and the flood rating that they were designed for were appropriate anymore.

When we talk about capitalization, those are some of our focus points. But you can be assured that if our engineering team has decided that a structure isn’t safe and we don’t have the ability to replace it right now, then it gets downgraded in terms of its status for use and what it can carry, and that’s universally communicated. Or, in some cases, if we don’t need the road and the structure, we will deactivate and pull it out. But we will not continue on with unsafe structures, structures that weren’t designed for the conditions.

M. Starchuk: I think, Chair, that was pretty much what I was trying to get at — that access and egress and whether or not climate change is part of it. Whether or not it’s access during the dry season to stop something before it gets larger or whether or not it’s early snow melt and the culvert size that was not calculated 20 years ago, when the road was put in there…. When we saw the fires of 2018, it pretty much cut the province in half.

When those other main roads aren’t available, I think a lot of people would have an expectation that there’s a plan B and that these capital roads are actually plan B and they’re safe to use. Those are my comments.

B. Anderson: Thank you for so much for this. As a rural MLA, I greatly appreciate our forest service roads, and I appreciate the report. I also appreciated MLA Starchuk’s commentary — again, how climate change is really changing everything. It’s making everything more expensive. So by not addressing climate change — and, of course, we’re a part of that — it’s making it a lot more expensive in other areas.

One of the questions that I had was if there was any…. With recommendations 4 and 5, I was just wondering if there was any discrepancy between districts, if some districts had either the capacity or were tracking things better than other districts. I know that there were some inconsistencies. I think two districts were not tracking at all, and others seemed to be tracking a bit. Just what that discrepancy looks like between districts….

Then also, there’s mention of the high-value rec sites. I didn’t see anywhere a definition, and I’m not aware of a provincial definition — if that’s a common term that we use and something that’s actually identified. I was just curious. What’s considered to be a high-value recreation site in the province?

S. Fraser: High value is really determined by usage. We do monitor usage of sites. We also have a recreation sites and trails group in the ministry, and they do monitoring to see which sites are being used more. We also work with our colleagues in the Ministry of Tourism and Culture, so we do gather some data on that. That really is how we determine the high-value sites — by usage.

As far as discrepancy, that has varied. Historically we’ve had districts that may have used paper spreadsheets to identify deficiencies. Some are using databases.

[11:20 a.m.]

That’s really the intent of our new system that we are enhancing and implementing in order to make sure that that is consistent across all districts. I don’t have the details at hand on which district, but that’s something that we will be rectifying.

I also wanted to just follow up on the climate change issue. When our engineers are redoing a bridge, rebuilding a bridge, they have climate change and adaptation in mind — and mitigation — when they’re going through that. Whether it’s a bridge or a culvert or maintenance on the road, they are considering climate change and the future. We also work with FPInnovations, who look into ways that we can make improvements as well, in looking at climate change.

A. Mercier: Any follow-up there, Brittny?

B. Anderson: Yes, please. Thank you so much for that. I am so glad to hear that we are considering climate change.

I’m just curious, again, with the high-value sites. In a rural area, we might have something that we would consider high value, but of course, the usage is comparatively lower compared to something that’s adjacent to a larger centre. Is that also part of that consideration? There are some sites that we would consider high value. But maybe, if you’re looking at number of users per year…. Some sites might not even be accessible for eight months out of the year due to snowfall, but we would still consider them very high-value sites.

S. Fraser: Yes, absolutely. Because the forest service roads are managed in individual districts, they know their roads better than we would know them in headquarters, so they’re also determining what’s high use. Our recreation sites and trails people are also located around the province, as well as the district engineering teams. So yes, they take that into consideration. It’s not just sites that are highly used and close to urban centres. It’s those highly used sites throughout the province that we’re looking at.

B. Anderson: Thank you. Sometimes I think what I would consider a high-value site is maybe because there are not a lot of users.

J. Tegart: Just a couple of other comments, as the questions have been out there and answered. I have to say that, as an MLA, we call the Ministry of Forests “the Ministry of Everything.” It seems that everything that is happening goes to the Ministry of Forests, so I really appreciate the work being done by the people in the ministry. It also reflects, I think, a little bit of our confusion of who’s responsible for what. I’m looking forward to seeing processes put in place and a little bit more clarity around that.

I wanted to make a comment on the climate change. As someone in the Interior who went through the fires of 2017 and ’18 and saw a fire that burned so hot that it scorched the earth, trying to bring it back as we watch water tables rise because the land isn’t taking in the water and we’re seeing significant landslides…. I know that everyone is seeing that, and people on the ground are dealing with that. As everyone on the committee has said, climate change has to be the top priority as we look at our plans in the future.

Rick, on your comment around how many phone calls the ministry gets in regards to roads and priorities, etc., as you put in place some of the recommendations from the Auditor General — and systems — will you have that transparency online, where somebody can look up the forest service road that they’re interested in and see the pertinent information? Or do they have to actually phone the local forestry office or the local MLA office?

[11:25 a.m.]

R. Manwaring: Which is usually the case…. I’ll tell you what, MLA. We can talk to the team about, when we modernize the system, whether we could have an online portal for access to information.

I think, as you’re aware, on a lot of our business — for example, B.C. Wildfires — you can go through our online website and access information on any of the fires that are there. We do post and advertise things like road closures and access restrictions, for example, publicly. But I’ll take your point and talk to the team about whether, in designing this, we could create something where people could see that online, just like they can view our biogeoclimatic information or our hunting zone and regulations and see what the opportunity is for that.

I will make just a quick a comment. You’re obviously referring to Elephant Hill and the wildfires and the significant…. It was the largest single wildfire in Canadian history, I think I’m told. We have a large team of people, because of that unique situation, looking at everything from hydrology and research, soil science on how much of the soil profiles we’ve seen consumed, the reaction of the hydrology as a result of the loss of the overstory on such a large area….

Without going on at length, there’s an awful lot of work going on post-wildfire rehabilitation and understanding what the response of the landscape will be on various things, including wildlife habitat, moose numbers — wide range of things. We’re putting a lot of energy into that. That includes the scope of this audit and what it means for engineered structures that have to handle the water flow that comes off of these large burn areas every spring or works it way through the water table.

Thank you for the question.

A. Mercier: Seeing no further questions, I believe that concludes our discussion on this report. I want to thank Michael and his team at the OAG, and I’d like to thank Rick and Sarah for shedding some light on it for us from the government perspective.

Before we wrap up today, is there any other committee business?

Seeing none, I would invite a member to move adjournment of the meeting.

Motion approved.

The committee adjourned at 11:27 a.m.