1993 Legislative Session: 2nd Session, 35th Parliament HANSARD
The following electronic version is for informational purposes only. The printed version remains the official version.
(Hansard)
MONDAY, JUNE 7, 1993
Afternoon Sitting
Volume 10, Number 21
[ Page 6887 ]
The House met at 2:05 p.m.
Prayers.
P. Dueck: In the members' gallery today are three women who are very important to me: my dear wife Helen and my two sisters, Olga from Abbotsford and Dora from Lethbridge, Alberta. I would like to tell the House that these two sisters are not accustomed to the energy we exert here in arguing; they still think we're a very happy family. I wish all members would take this into consideration so that they don't pollute their fresh minds with the risks that appear here in this House. Would the House please make them welcome.
B. Copping: In the gallery are two women who are here today to meet with me. I'm pleased to introduce Louise Dowty, a constituent, and Dr. Sue Penfold, clinical director of the child psychiatry in-patient unit at Children's Hospital. Would the House please make them welcome.
Hon. A. Edwards: I wish the House to join me today in welcoming two officials from Centra Gas: Ken Rekrutiak, president, and Brian Farley, director of marketing. Please join me in saying welcome.
D. Symons: It's my pleasure to introduce Chartee and Jim Plyler from Greensboro, North Carolina, who are visiting our fair city today. They're travelling up-Island tomorrow to see some of B.C.'s magnificent scenery before heading over to Vancouver to visit their son, who is working on a movie that's being filmed in our Hollywood of the north. Would the House please make them welcome.
Hon. A. Charbonneau: I would ask the House to make welcome my wife Alice, a former resident of Minnesota, and three friends from Minnesota: her long-term friend Ginny Holder, Tom McHenry, her partner, and Virginia Yarusso. I would ask the House to make them welcome.
Hon. J. Smallwood: I've just seen in the House a good friend and a constituent who also happens to be married to my MP. I would like all of you to join me in welcoming Lily Karpoff here today.
HUMAN RIGHTS AMENDMENT ACT, 1993
Hon. A. Hagen presented a message from His Honour the Lieutenant-Governor: a bill intituled Human Rights Amendment Act, 1993.
Hon. A. Hagen: Racial violence and racially motivated attacks are on the rise around the world. We do not want this kind of hatred to take root in British Columbia, a province of ethnic, cultural and religious diversity. The amendments proposed today will provide meaningful protection to individuals and groups that are the victims of hate propaganda and activity. The bill will prohibit the publication, issuance or display of any communication which is discriminatory or likely to expose a person, group or class of persons to hatred or contempt, based on the prohibited grounds of discrimination contained in the act.
Bill 33 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
VANCOUVER ISLAND NATURAL GAS PIPELINE
Hon. A. Edwards: Hon. Speaker, I rise to make a statement on the subject of the Vancouver Island natural gas pipeline. Last week the hon. member for Surrey-White Rock pointed out that the exposure of the provincial government is absolutely mammoth in connection with this project, citing last year's independent financial review. If the hon. member had read the report thoroughly, he would have noted that the Peat Marwick people, who did the report, also recommended that we renegotiate our contracts. We have done so.
I am pleased to announce that the government, Pacific Coast Energy Corp. and Centra Gas British Columbia Inc. have agreed to restructure the government's financial support for the Vancouver Island natural gas pipeline. The agreement will reduce the financial exposure for B.C. taxpayers by more than $100 million and will allow the companies involved to avoid potential penalties under the earlier arrangements. The new agreement will maintain the existing competitive pricing formula for consumers. It also marks our determination to resolve some major financial and regulatory concerns that we have had with the project. The need for ongoing government financial support over the life of the project has been cut by more than half, from a projected $203 million to $92 million. Last year, for example, the province made loans to the tune of $31 million to Pacific Coast, and we were expecting to lend a further $37 million this year. Under the new arrangements, we are expecting a refund of $20 million and a reduction in this year's loan to $7 million. The new arrangements represent a reduction in risk as well as a substantial saving for government.
You will recall that, in opposition, the New Democratic Party opposed the pipeline deal of the former government because it was yet another example of Socred fiscal irresponsibility. With the restructuring that we have now agreed to, I am pleased to say the government can now fully support the pipeline.
Agreement came after a tough set of negotiations. This agreement in principle is the first step. Over the coming months we will finalize the details and revise the existing contractual arrangements. The new arrangements demonstrate the ability of government and industry to get together to solve a mutual problem, and to have all parties come out winners. All parties are
[ Page 6888 ]
now better off. Government financial support for the project has been dramatically reduced, and Centra Gas and Pacific Coast have been given the freedom and accountability to get on with the job of developing new natural gas markets. Centra Gas and Pacific Coast will be focusing on market development opportunities such as cogeneration, natural gas for vehicles and conversion of public sector facilities.
These initiatives that improve the long-run economics of the project and generate regional economic spinoffs will be supported by government. Government continues to stand behind its commitments to natural gas consumers. Natural gas will still be sold at a discount to the price of fuel oil and electricity, in order to ensure fuel savings for those who purchase natural gas furnaces, water heaters and other appliances. The Clean Choice program will be revamped to reinforce the economics of conversion.
This government firmly believes in the economic and environmental benefits of natural gas. I've committed government to review natural gas conversion opportunities within the public sector and move quickly to take advantage of fuel savings and lower pollutant emissions where natural gas can offer them. Energy savings in the public sector demonstrate our continuing commitment to energy efficiency, conservation and reducing the costs of government.
[2:15]
W. Hurd: I am pleased to rise today to respond to the statement from the Minister of Energy, Mines and Petroleum Resources. Since the minister has suggested that the opposition hasn't read the Peat Marwick Thorne financial review, hon. Speaker, I thought it appropriate to read into the record what they had to say about the Vancouver Island natural gas pipeline. Under the category of lurking expenditures, they point out that with the Vancouver Island natural gas pipeline, under terms of an agreement between the federal and provincial governments and Pacific Coast Energy Corp., the province is obliged to contribute an uncapped amount in loans to the company to stabilize the consumer price of natural gas by covering any project operating deficits. The potential liability of the province under this provision has been increased by a construction cost overrun of approximately $105 million, with the prospect of further cost overruns. The rate stabilization liability, which is the price by which natural gas is fixed below any other fuel source, originally estimated at $36 million, is now estimated at $186 million and could be as high as $672 million.
Given those lurking expenditures, the opposition continues to be baffled as to why the government would go out and invest $100 million through the endowment fund in a company which will directly benefit from these lurking expenditures that the taxpayers of the province will have to pick up. We continue to believe, on the opposition benches, that this is a massive conflict of interest and government cannot invest $100 million in 8 percent of a company that has this kind of debt obligation to the taxpayers or people of the province. It's the reason why the opposition raised this issue, calling it a massive overrun and massive conflict, because that's exactly what it is.
J. Weisgerber: It's a pleasure for me to rise and respond to the ministerial statement. There's no question that construction cost overruns added substantially to the cost of the Vancouver Island gas pipeline. They also added substantially to the province's exposure in ensuring that rate increases were not unreasonable. I think it bears repeating that it was the NDP in opposition who proposed changes to the route of the gas pipeline that would have added a further $60 million to this project. The minister seems to have forgotten that in her review of the history leading up to the natural gas pipeline.
I think the government should be commended for having been successful in renegotiating the terms of the agreement. I take the minister at her word that it was in everybody's interests and that there were concessions made by all parties. I will be looking with more interest to see exactly what concessions the government made as part of that agreement.
At the end of the day, the Vancouver Island gas pipeline will benefit British Columbia, and particularly Vancouver Island, both economically and environmentally. This gas pipeline took seven pulp mills off bunker fuel that was polluting the air, reduced oil barge traffic in the Strait of Georgia by 50 percent and created economic opportunities on Vancouver Island that we will continue to take advantage of for generations to come. It's an expensive project, but I am absolutely convinced that at the end of the day it will show a substantial positive benefit for British Columbia.
WELFARE FRAUD
W. Hurd: I have a question for the Minister of Social Services. Last week a 25-year veteran of the RCMP, who has worked on welfare fraud for the past five years, said he and his colleagues were demoralized and frustrated by this minister. Mr. Bryan Olsen offered proof that fraud is running at 15 percent of all claims, or a whopping $240 million, yet the minister continues to cling to the idea that it's running at only 1 percent of all claims. Who is the public to believe in this province, the minister or someone involved in welfare fraud investigation for 25 years with the RCMP?
Hon. J. Smallwood: I should start off by saying that I also am very interested in hearing from this investigator. The House should know that the figures I have quoted have been supplied by the investigative team from our ministry. If this investigator is saying that he has additional information, I would be very pleased to hear that information. It has been a call that I have put out consistently not only to the ministry but to everyone in this province: if there are concerns, we want to hear about them.
W. Hurd: I don't think the minister heard the first part of my question, which was about the claim by the
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RCMP officer that he's being ignored and frustrated in his attempts to point out welfare fraud. Mr. Olsen now brings to three the number of senior RCMP officers who say they cannot deal with this ministry and this minister. Would the minister commit today to pick up the phone and call this RCMP officer -- and also the two officers in Surrey -- to find out what information they have?
Hon. J. Smallwood: Mr. Olsen is an employee of this ministry. He is currently a member of the investigations team for our ministry. Ironically, we have an agreement between the BCGEU and government personnel services that would provide an avenue for the investigative team or any other employee of this ministry who has a concern. It identifies their responsibility to put forward that concern in the public interest, and a process if they do not have that concern addressed. I am particularly interested that that avenue of the collective agreement has never been used by the investigators in our ministry.
The Speaker: Final supplemental, hon. member.
W. Hurd: Hon. Speaker, I don't know if the minister has seen the news reports on CKVU. They point out that a Mr. Mel Weisgerber -- believe it or not -- of the RCMP's income assistance fraud section has statistics on welfare fraud that support the figure of 15 percent. Will she ask for those statistics from Mr. Weisgerber and table them in this House?
Hon. J. Smallwood: Mr. Weisgerber is a senior employee with our ministry; he is not with the RCMP. He brings all the statistics together from investigators around the province. I have asked him for, and have been receiving from him, a fraud report each and every month, starting December 1992. It is those statistics that I have been quoting; they are the statistics provided for me by the investigative staff of my ministry.
BAMBERTON DEVELOPMENT AND CONFLICT OF INTEREST
G. Wilson: Hon. Speaker, I have a question for the Premier. Last Thursday I asked the Minister of Municipal Affairs whether or not he believed, in light of the fact that two of the principals in South Island Development Cooperative were intrinsically involved in his election bid, that he was in a conflict-of-interest position, given that his ministry -- indeed, his signature -- will have to approve such a project. Would the Premier tell us today whether or not he believes the Minister of Municipal Affairs is in a conflict of interest on this development?
Hon. M. Harcourt: The answer is no.
G. Wilson: I wonder if the Premier could tell us what the substantive differences are between his removal from his cabinet office during the protracted strike of teachers on Vancouver Island and the potential benefit that the Minister of Municipal Affairs may find himself in, given that two of his principal political supporters may benefit out of Bamberton.
Hon. M. Harcourt: Out of an abundance of caution, because my wife is a teacher who was on leave and hadn't taught for well over a year and a half.... I think the conflict commissioner made it very clear that if I had participated in any discussions directly related to the Vancouver School Board situation, that could have been perceived as a conflict. There was a potential direct pecuniary relationship, even though my wife had not been teaching for a substantial length of time. With the minister, there is no such direct pecuniary relationship.
G. Wilson: One could argue that there may be such a pecuniary relationship during an election if one principal is a fundraiser for the said minister. I note with interest that the Premier took the trouble to have Mr. Hughes actually rule on that. In a letter to me dated June 7, Mr. Hughes has indicated that section 15(1) would indeed be appropriate for review of this matter. Will the Premier join me in a request to Mr. Hughes to ask if there is such a conflict?
M. Harcourt: I understand that process is underway.
TREE-SPIKING
C. Serwa: My question this afternoon is to the Attorney General. Can the Attorney General confirm that in the Crown's opinion it is a criminal offence to advise or instruct anyone to engage in tree-spiking?
Hon. C. Gabelmann: We will deal with specific matters when they are drawn to our attention. I cannot and will not answer a hypothetical question of that kind.
C. Serwa: I have in my hand a legal opinion from Mr. Ace Henderson of Davis and Co. which suggests that it is a criminal offence to counsel or instruct anyone to spike trees. In view of this particular opinion, has the minister decided to instruct his staff to obtain a ruling and perhaps an independent legal opinion on this matter of counselling tree-spikers?
Hon. C. Gabelmann: If matters are drawn to the attention of the criminal justice branch through the police authorities or otherwise, the prosecutors will examine the case to see whether or not criminal proceedings should be initiated.
The Speaker: Final supplemental, hon. member.
C. Serwa: I will table the document after question period. But in view of the seriousness of this particular act, it appears more than prudent to act now and prevent injury or perhaps death before it happens. Will the minister act on this and ask his staff to come forward with a definitive ruling?
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Hon. C. Gabelmann: It's not a matter of a ruling. If someone is involved in criminal activity and the evidence is before the criminal justice branch, then the appropriate action will take place at that point. I would like, however, to take advantage of this occasion to say that tree-spiking is illegal. It is a violation of a provincial statute and, in my opinion, a violation of the Criminal Code of Canada. It is an act that no one in this House and no one who holds responsible views in this province would advocate. I'm sure, if anyone is involved either in the act itself or in counselling it, that the appropriate action will follow.
SURREY SCHOOLS LABOUR DISPUTE
G. Farrell-Collins: Last Sunday in debate on Bill 31 the Liberal opposition stated that the bill was flawed and that it would not serve the students of other districts outside of Vancouver very well. Hon. Speaker, it's now clear that the bill has failed and that it's full of loopholes big enough to drive a truck through. The students and the teachers in Surrey are now at risk of yet another walkout. Will the Premier bring in an immediate amendment to that bill to ensure that those students continue and that the teachers continue with their collective agreement in the interim, before the contract is settled?
The Speaker: The member for Fort Langley-Aldergrove.
G. Farrell-Collins: Hon. Speaker, We're seeing the same kind of leadership we've seen from this Premier for the last three weeks. What we are asking the Premier to do is protect the teachers of Surrey in the interim, before this arbitration comes to fruition. Those teachers are without a collective agreement as we speak and are at risk of walking out. Will the Premier give them the same provisions that he granted the Vancouver teachers, so that they will continue with their present collective agreement until such time as the mediator-arbitrator books out?
Hon. M. Harcourt: Aside from the question being hypothetical, aside from the question being future policy, and aside from the fact that the students and teachers are back in school, the bill is there and it is being applied.
G. Farrell-Collins: This is exactly the type of inept government we've seen in this dispute for the last six weeks. The fact of the matter is that the teachers in Surrey are meeting today to determine whether they're going to walk out tomorrow because of the legislation that this Premier and this government brought in. Will he bring in amendments today to ensure that we don't have another walkout tomorrow in Surrey and that the students don't lose yet another day of their classes?
[2:30]
PROSPECT OF CONFRONTATIONS IN CLAYOQUOT SOUND
A. Cowie: A question to the Premier. Considering that Greenpeace was practising civil disobedience this weekend in Clayoquot Sound, what is the Premier doing to ensure that we will not have a summer of roadblocks, protests and demonstrations as well as civil disobedience?
Hon. M. Harcourt: This government has set up a province-wide process that for the first time allows British Columbians to get involved in a legal and positive way in land use decisions. That's what CORE is doing. The citizens on Vancouver Island have an opportunity to work with the commissioner of CORE, Stephen Owen, with whom we have had an exchange of ideas and views. Most of his ideas have been accepted in terms of how we will carry out not only the continued process in Clayoquot but also the CORE process on Vancouver Island. I suggest that the appropriate way for British Columbia citizens to behave is lawfully and democratically, through the processes that have been established by this Legislature.
A. Cowie: The opposition feels that the Clayoquot issue should have been sent to CORE. This problem and this possible confrontation could have been avoided. What concrete steps is this government taking in the Clayoquot -- not the whole region -- to ensure that we do not have a great deal of confrontation, as we did last summer?
Hon. M. Harcourt: Well, again, we find it very difficult to keep up with the twists and turns of the opposition. One minute they want us to spend more money, the next minute they want us to save money. One minute the hon. member for Vancouver-Quilchena says that the Clayoquot issue should not be sent to CORE, and now he's standing up to say that it should have been. One thing that people in B.C. would finally like to see from this Liberal opposition is some consistency.
AIRCARE LABOUR DISPUTE
A. Warnke: I have a question for the Attorney General concerning the AirCare strike, which, it appears, may be winding down. There's one aspect of it I'd like to pursue. John Shields, the president of the BCGEU, has stated on more than one occasion that a contract could be abrogated if the company responsible for the administration of AirCare actually goes under financially. Would the Attorney General reassure us that attempts are being made to resolve this dispute in good faith?
Hon. C. Gabelmann: I understand that a number of discussions are underway. As far as the labour relations are concerned, that matter is not directly under my responsibility. Nonetheless, I obviously have a keen interest in the issue. I'm hopeful
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that the parties will be able to continue discussions and reach an agreement.
C. Serwa: Would leave be granted to table a document, hon. Speaker?
Leave granted.
W. Hurd: I request leave to table a document.
The Speaker: It is helpful to the House if members would briefly mention the topic of the document. In the first instance members were aware because it was referred to, but I ask the member for Surrey-White Rock to mention the title of the document so we could ask leave.
W. Hurd: It is a welfare expos� by CKVU TV.
Leave granted.
Hon. A. Charbonneau: I rise on the matter of a proclamation. I hereby proclaim this week of June 6 to 12 as Transportation Week in B.C., in cooperation with other provinces, territories and the federal government who are celebrating the same period as National Transportation Week.
Hon. C. Gabelmann: I call second reading of Bill 27.
MISCELLANEOUS STATUTES AMENDMENT ACT, 1993
Hon. C. Gabelmann: As members know, Bill 27 is the Miscellaneous Statutes Amendment Act. Given the long tradition in this House of pursuing miscellaneous bills in committee, and given there is no principle in a miscellaneous bill, I would move second reading.
A. Warnke: I appreciate the Attorney General's remarks when he first introduced this bill that he was not going to refer to it as a housekeeping bill, but as a minor bill. Somehow I like the term a little better as well. The purpose of the bill, essentially -- as the Attorney General had mentioned -- covers.... Perhaps I will pause, hon. Speaker.
The Speaker: Yes. It would be helpful if the House would come to order so that the hon. member can continue with his remarks. Please proceed, hon. member.
A. Warnke: Essentially, the bill amends a number of pieces of legislation. I would like to pursue a number of them once we get into committee stage. It would be a good idea to clarify those. If there is any minor point I would like to make at this stage, it's that there is a concern that perhaps the government, while making changes to some different acts.... As an example, let us suggest that the Insurance (Motor Vehicle) Act changes are consistent with the pattern that has taken place in the past. This government has some desire to concentrate authority within the cabinet through regulations. Henceforth, what we're seeing in this particular bill is that the government is continuing its move towards a government by regulation. Perhaps it's not so overtly done, given that it is a miscellaneous act. Nonetheless, we are still cautioning that the government, which obviously has pursued its mandate in the name of open government.... Perhaps when other bills have been introduced, the government is concentrating more regulatory power in the cabinet, thus eliminating the opportunity for public debate in the Legislature. As we look over the bills, we really want to raise that point. The most critical part I would like to pursue would be more appropriate at committee stage.
C. Serwa: Regarding second reading of the Miscellaneous Statutes Amendment Act, I agree with the Attorney General with respect to the tradition of the House not engaging in debate on the philosophy and principles. It doesn't really make a great deal of sense. We will make our remarks in Committee of the Whole.
The Speaker: Seeing no further speakers, I call the vote on second reading of Bill 27.
Motion approved.
Bill 27, Miscellaneous Statutes Amendment Act, 1993, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Hon. R. Blencoe: I call committee on Bill 14.
RAILWAY AMENDMENT ACT, 1993
The House in committee on Bill 14; R. Kasper in the chair.
Sections 1 to 25 inclusive approved.
On section 26.
J. Weisgerber: I understand that section 26 essentially allows the minister to vary from time to time regulations related to issues such as fencing, gates and cattle guards -- those issues peripheral to the railroad. This kind of uncertainty makes it difficult for people who have property adjacent to rail lines. There won't be the same confidence when erecting fences along the railway, knowing that they are not going to be changed.
Before we get to that, can the minister advise whether or not fences constructed according to standards that exist now would be required to be changed if the minister were to change those requirements at some later date?
Hon. R. Blencoe: I will try my best. My staff are on their way. I will try to give a clarification to the member, as I see it.
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The purpose of section 26 is to require fences, signs and other works to be constructed as specified by a code. We will be introducing a safety code that will specifically lay out the criteria. As you know, there is no safety code now; it has to be a legislated change, and of course you can't get those issues through. It will enable the minister to vary fencing requirements or to provide exemptions, if required -- more flexibility. Also if a fence is required for protection, I can act more quickly.
The significance of this, according to my notes, hon. member, is that it removes the inappropriate technical requirements from the act, enables them to be set by the code and allows the minister to respond faster and more effectively to the safety issues.
J. Weisgerber: I have two points, I guess. First, when you increase flexibility, you sacrifice certainty. It seems to me that if you're now looking at property that is affected by railway and fencing, associated with that you can examine the legislation, determine whether or not the fencing that's there meets the code and know whether or not you as an owner or a potential buyer or lessor of that property might be liable for some substantial costs in bringing the fencing into line with the code. That's the point I'd like to make.
The question is: should the regulations that are brought in vary significantly from the existing legislation, will there be some kind of grandfathering? If somebody built a fence to meet the legislative requirements, are they going to be expected to tear it down and start over, for example, because it doesn't meet the code?
[2:45]
Hon. R. Blencoe: No.
H. De Jong: Regarding fences on rights-of-way along farm properties, is the railway company required to build and maintain those?
Hon. R. Blencoe: If deemed fit by the review and the code that, where appropriate, those that are protecting the railways.... Obviously there will be some requirement for those companies to provide that safety mechanism.
H. De Jong: Further to my question, would B.C. Hydro fall within the category of a railway with regard to maintaining those fences?
Hon. R. Blencoe: That's my understanding. If I had some staff here, we could get definite clarification, that's for sure.
H. De Jong: I would very much appreciate it if that could be confirmed sometime today.
Interjection.
H. De Jong: Thank you.
Sections 26 and 27 approved.
On section 28.
C. Serwa: It appears that the way this section has been rewritten, even though the minister has given approval for the plans, if at any time during construction he becomes dissatisfied with them, he can halt construction. That seems entirely inappropriate. If I'm reading it correctly, that's the impression I get. Perhaps the minister would clarify that for me.
Hon. R. Blencoe: Staff are here now. I'll try to give an answer to section 28. The purpose of this section, hon. member, is to require plans to be submitted to the minister for the construction or alteration of any railway bridge, tunnel or viaduct before such work is commenced and to require the minister to provide the appropriate orders or directions respecting the proposed projects within 30 days of receiving the plans.
My understanding is that the construction or alteration of bridges, tunnels and viaducts which exceed 18 feet in length is currently subject to the minister's approval. The bottom-line significance of this section is that it removes the requirement of a minister to approve engineering plans for construction or alteration projects and requires a timely response by the ministry to project proposals. If you have some more specific questions to do with the nuances of this section, we have staff who can give you some of those answers.
C. Serwa: Going back again to my original question, it appears from this section that even though the minister's approval has been given for major works, if the minister becomes dissatisfied with the project subsequent to that approval, construction can be halted while it's in the process. Could the minister clarify that for me?
Hon. R. Blencoe: Yes, the minister will still have that authority.
C. Serwa: It hardly seems the act of a responsible minister, if I may say that. The minister has the time to scrutinize the plans, and it goes through the approval process. Perhaps tenders are called, construction starts and then the minister has the final authority to halt construction because he becomes dissatisfied with the plans. Surely the minister has to accept responsibility. He has a competent staff; we've got a competent minister. Once that is done, then surely it should go ahead. You cannot have an approval process that is arbitrary or meaningless.
Hon. R. Blencoe: I'm obviously not an expert in tunnels or construction, but apparently what happens in major construction is that plans, particularly for geological situations, have to be altered, and therefore there have to be some changes.
C. Serwa: I can certainly understand it if we run into unforeseen circumstances. When we're into the ground, a variety of things come to pass, but I think they're clearly evident. The ability of the minister to halt
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construction seems an inappropriate hammer. I'm confident that the railway, for example, is just as concerned as the minister with safe construction and the ultimate safe quality of the facility, be it a bridge or a tunnel. It seems that what this is about is some very strong power to halt actual construction. If, because of underground water, perhaps, or poor rock or something else, some modification is required to the foundation or through tunnelling, then an amendment is obviously the option, and that will transpire. It again has to be approved by the minister and staff; I appreciate that. But it appears that this section gives the minister the opportunity to actually halt construction on the project.
Hon. R. Blencoe: I suppose the member is referring to the minister's power to perhaps hold a project up. My understanding of the section is that a review of the original plans -- major plan shifts or a revamping of the plan -- would be required under extreme circumstances. It's basically protection of the public interest to have some review where possible. My understanding is that 99 percent of the time the review would go on at the same time as the program continued. But if there was significant shift, obviously there may be a time where the minister would say: "Hold it. In the interest of the public, let's just be cautious here."
C. Serwa: I appreciate the last remarks. It puts it in perspective and provides some parameters with respect to the expansive power or authority that the minister has. I would have a great deal of difficulty if the minister wielded that power in a ruthless and callous manner, but with the minister's explanation in mind, I certainly will accept it.
H. De Jong: Substantial pressure has been put on the agricultural community regarding bridges and that kind of structure on farm property and the safety measures of the Workers' Compensation Board. I don't think the farmers have any problem with that, but quite a number of farms have private crossings on the railway tracks of CNR, CPR, B.C. Hydro -- you name it. Because these railways have gone through the country not recognizing property, quite often they cut right through the middle of them. So we have a lot of private crossings now. Many times it's like pulling teeth for the farmers to get the railways to repair those crossings so that they're reasonably safe. Is it within the minister's power to notify the railways and urge them to bring those crossings up to a standard that's acceptable to the Workers' Compensation Board?
Hon. R. Blencoe: Apparently this is standard procedure. Nothing has changed here. The railways, for various reasons, wouldn't allow private citizens to work on the railway, so what happens now is that the railway does the work, and of course the bill is sent to the owner, and the railway is compensated by the private owner. It's my understanding that that is the situation we have now.
H. De Jong: I wasn't quite clear what the minister meant by his answer. Really, what I'd like to know is: is the railway responsible for making those crossings safe in terms of the requirements of the Workers' Compensation Board? These are private crossings, but as the minister noted, the farmer cannot go on the railway and improve or repair them; that's only within the jurisdiction of the railway management. Surely, if the regulations are going to mean anything, then the railway crossings, dangerous as it often is to cross them, must be as safe as possible. Having said that it has been very difficult to get these crossings improved to the standards they should have, is there now more power with this minister so that they will be improved to those standards?
Hon. R. Blencoe: That's a very good point. One of the key ingredients of this legislation is the development of a safety code, and that code is now being developed. There will be standards and requirements for all crossings. One of the specific areas -- which I know is of interest to you, of course -- is the farm property crossings. If the hon. member would like to get information on how we're developing that, I'd be pleased to share that with him. The point is extremely well taken, and it has come to my attention.
Please be assured that in our code development, farm properties will be consulted. Since there is a history of concern there, I think we could probably devise a system to make sure they are brought in for discussion. It's an excellent point, hon. member.
Sections 28 to 36 inclusive approved.
On section 37.
A. Cowie: I'd like some clarification as to speed. I notice that one deals with miles per hour here. Are we moving into kilometres per hour, or are we staying with miles per hour?
Hon. R. Blencoe: That's a good question. Apparently the Canadian railway industry is still very much tied in to the American system, which, as you know, is still using the old measurements of feet and inches and of weight. At this point, unless our friends south of the border decide to shift to where the rest of the world is, I suspect that our railways will continue to be monitored in this old-fashioned way.
A. Cowie: So I take it we're staying with the American rather than Canadian legislation. It's just a comment; I won't ask for a response.
Hon. R. Blencoe: Compatibility.
A. Cowie: I see.
The Arbutus railway line has been thought of as a possible public transit line. If it were a public transit line, I would think we'd want the vehicle to go more than ten miles per hour. Since there are lots of crossings, would the line therefore have to be aboveground? It could not be a level crossing.
[3:00]
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Hon. R. Blencoe: That's an interesting question that I wish I could answer in more detail. I should point out to the member that the Arbutus line is federal; it's under Canadian Pacific jurisdiction. Whether we have compatibility in this area.... I'm not sure if they have the same clause, but it is a federal responsibility.
A. Cowie: It's just another stumbling block, which I approve of, in putting public transit through there. It would be easier for the Minister of Highways to put the line down Cambie, which is where it should go.
C. Serwa: The speed requirements are being expanded to cover not only highway crossings but access crossings. There are a number of access crossings and a number of different standards with respect to those access crossings. Often the only means of access to some properties is to apply to the railway for specific access. There is a technical term for that crossing that escapes me at the moment, but it has something to do with a legal or non-legal crossing. Nevertheless, you do get the railway's permission to have that crossing in place. It may be for a farm and for specific utilization.
If this speed and access requirement is treated in a similar manner to highway crossings, obviously the railway companies -- with their rights-of-way and need to protect train movement -- will resist construction of an access, simply because they would have to reduce speed. Has the minister taken that into consideration? How will that requirement in section 37 be accommodated so that it won't impose any undue hardship on the railway because of these very infrequently used access crossings?
Hon. R. Blencoe: I think there was a question there. If the member looks at section 37(3), it says: "A train must not enter, at a speed greater than 10 miles per hour, a highway or access crossing at rail level unless (a) the crossing is constructed, maintained and protected in accordance with orders and directions specifically issued by the minister with respect to the crossing...." We issue an order for each crossing.
C. Serwa: Then there would be no speed restriction issued in the case of a rather remote or seldom-used crossing. Am I correct in assuming that?
Hon. R. Blencoe: Yes, unless there has been a recent accident at that site, and then we would put in a temporary restriction order and maybe even lower the speed. We would put our own restrictions on it until there was a full investigation.
C. Serwa: This is a fairly important issue. While the power is here, I would hate to see it utilized indiscriminately. There will always be some pressure to utilize it. Because of the nature of the province and the fact that the railways travel in our valleys, we run into conflict all the time. It appears that if efforts were taken to ensure that the visibility, site distance and all of those other things were there, it would very seldom be necessary to enforce a speed restriction on a private and seldom-used crossing.
Hon. R. Blencoe: The staff who administer this on a daily basis tell me that it's very rare to go below the ten miles per hour. We probably do it three or four times a year, depending on some incident, accident or something that has come to our attention.
Sections 37 to 53 inclusive approved.
Title approved.
Hon. R. Blencoe: Hon. Chair, I move the commitee rise and report the bill complete without amendment.
Motion approved.
The House resumed; the Speaker in the chair.
Bill 14, Railway Amendment Act, 1993, reported complete without amendment, read a third time and passed.
Hon. R. Blencoe: I call second reading of Bill 23.
HOME OWNER GRANT AMENDMENT ACT, 1993
Hon. R. Blencoe: It is my pleasure to put forward Bill 23 for second reading this afternoon. This is very important legislation in this province. It contains several provisions relating to British Columbia's homeowner grant program. In total, they represent major reform of the homeowner grant legislation. Most of the provisions are amendments to the Home Owner Grant Act. Two others are consequential amendments to the School Act.
As we all know, the purpose of the homeowner grant program is to help homeowners meet school taxes on their principal residence. However, research indicates that too many homeowner grants have been claimed by ineligible persons. Pay-outs to ineligible claimants place an undue burden on other taxpayers in the province. British Columbia's taxpayers cannot afford to subsidize out-of-province property owners and others who do not qualify but who have, in the past, claimed the grant -- particularly when the savings gained help reduce the provincial deficit.
Provisions in this bill clarify the terms of eligibility, specifically those related to residency in British Columbia and the definition of principal residence. By tightening loopholes in the present act, the new legislation will ensure that the grant goes only to deserving homeowners and saves the taxpayers of this province -- we estimate -- at least $5 million per year. I want to make it quite clear that if there is more to be found or saved, we will find it.
Let me be clear, however: the proposed amendments do not -- and I emphasize this to members who may misread this legislation -- change who is entitled to receive this grant, the amount of the grant or the eligibility of owners for the grant, nor add any new classes of owners.
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The proposal will improve our ability to ensure fairness in the way grants are delivered, and also improve the overall efficiency of the program administration. The grants are administered independently by 150 local governments, which has impeded the cross-referencing of applications. We will continue to expand our development of cross-referencing techniques to try to ensure that if there are those who are seeking this grant and are totally ineligible, we will be able to see that those dollars....
This bill will establish an office within my ministry to furnish this cross-referencing capacity, provide improved information on the program rules and standardize grant criteria in all jurisdictions. A special administrative unit within this office will have a mandate to investigate and make decisions in relation to eligibility. There has always been a question in the past as to whether, indeed, the government had that ability. In this legislation we now have the ability to create the office and the full authority for the provincial grant administrator to investigate and collect. The new unit will also be responsible for recovering grants that are wrongly or incorrectly claimed. At the same time, these amendments provide for the establishment of a provincially supervised system of appeals to ensure that British Columbians have access to due process.
This legislation was developed in consultation with local governments in B.C. It responds to their needs, and to the need of the taxpayers of this province for fair and efficient management of public funds. It should be noted, too, that much of the background work was done by the former government. Since my taking office in November 1991, we've continue to expand. Within the last year, for instance, we've been successful in reclaiming close to $1 million in actual money claimed back, plus, we estimate, savings of close to $2 million from warning people to be extremely careful. With the greater authority that we're giving ourselves now, we feel that we can administer this program in a far more beneficial way and apply the dollars that we save in a far more efficient way.
A. Cowie: This bill could incite a great deal of discussion if one confused it with Bill 29. I've gone over this bill, however, and I have to agree that it's mainly setting up a system where one can cross-reference various measures to deal with the homeowner's grant. It does set up an office in Municipal Affairs which, I think, is a good idea. I hope that in one of its cross-references it doesn't become a big bureaucracy, especially with computers that shouldn't be necessary.
Just for my own enlightenment, this morning I phoned Municipal Affairs, the Assessment Authority, the Finance ministry as well as a couple of municipalities just to ask a few questions about the homeowner's grant. Each one of them was very cautious, of course, but said that I could get that information from one of the other authorities. It took a great deal of piecing together to get the information I wanted -- just finding out how many homes will get the homeowner's grant this year, and how much money was distributed last year through the homeowner's grant. Well, you can get it out of various publications.
There's a great deal of emotion on this right now because the tax notices have just gone out. And, as was mentioned, the Minister of Finance has sent out his expensive, half-million-dollar letter to all homeowners, which also incites some discussion on it. I will not go on any further and say what I've already said. But we will support this, because we think it is a good way of coordinating information.
J. Weisgerber: On Bill 23, the Home Owner Grant Amendment Act, we would support any legislation that would help reduce abuse or misuse of the homeowner grant system. Clearly that's the intent of the legislation, so let me start by saying that I support the intent.
As I look at some of the sections of the bill, particularly the one that deals with the requirement of permanent residence in order to be eligible for a homeowner's grant, I'm not as enthusiastic as I am with the general intent. It seems to me that previously, in order to qualify for a homeowner's grant, the owner of the property had to be a resident in British Columbia. As I read the act now, that requirement has been removed. Certainly we'll have an opportunity to pursue that in some greater way.
[3:15]
Interjection.
J. Weisgerber: The minister is suggesting that perhaps my interpretation is wrong. We'll get a chance to look at that as we get into committee stage of the bill.
The government has an obligation to ensure that programs like the homeowner grant are not abused, to ensure that the people qualified to collect the grant are able to do so and to reduce the possibility of people abusing the system. It's an approach that the Minister of Municipal Affairs might well want to chat about with the Minister of Social Services, because I think there are some parallels. I see a great deal more enthusiasm in Municipal Affairs for making sure that homeowners don't abuse the grant system than there appears to be with the minister responsible for welfare in ensuring that the welfare system isn't subjected to the same abuse. If the reports we hear are any indication, the problem with welfare in the Social Services ministry is probably much greater than it is in the Ministry of Municipal Affairs with the abuse of the homeowner grant.
Having said that, these are appropriate measures for government to be taking, and we'll look forward to committee stage of the bill.
D. Mitchell: I too would like to say a few words in second reading of Bill 23. I think the Home Owner Grant Amendment Act really shows the government's legislative program is in a bit of a confused state. Very early in the session Bill 6 was brought in, and it made some significant amendments -- very significant reforms I think the government would call them -- to the homeowner grant program. Then Bill 23 was brought in, which is the bill we're debating today. Bill 6 is now going to die on the order paper, according to the Government House Leader, and they've brought in a
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new bill, Bill 29, which again makes some significant reforms -- virtually identical to the reforms that were in Bill 6. Why this couldn't be done in one legislative action is beyond me, but the government's legislative program is mystifying to many.
As far as it goes, Bill 23 does tighten up the eligibility rules with which the government administers the homeowner grant program. I think it can be supported for those reasons. It does beg some questions, though. As the minister says, it's not a major reform of the program. Yet it seeks to do some things: it seeks to save money, which is good; and it seeks to prevent abuse in terms of who receives homeowner grants. I think that's useful.
The minister indicated in his second reading comments today that research indicates that many ineligible pay-outs occur. I hope that the minister will be able to table such research during the committee stage of this bill. It would be most interesting to members of this House to have access to the research that the minister is indicating he has access to, which identifies the abuses within the existing program. In fact, if $5 million per year can be saved, that would be useful, and we should commend the minister for seeking to save up to $5 million. One hopes that the special administrative unit that the minister has referred to, which he is now establishing in his ministry, will not eat up more than that $5 million per year. If that's the case, this is not the approach we would like to take in this House.
If the government did as well in seeking out abuses in the social services system and in pay-outs from government, I think we could applaud the government more generally. But if this reform works and helps prevent abuses in terms of homeowner grants, as well as establishing an appeal process, then we can applaud that.
There are some rather specific concerns about the bill that I would like to save for committee stage; they are rather technical in terms of the draftsmanship of the bill. One I would like to mention at second reading stage is that disentitled recipients who don't pay up may now have any overpayments to their tax assessment applied to any property in British Columbia, not just the property that was being assessed. It's worth asking whether or not that action is perhaps a little excessive. We can pursue that further in committee stage. But the appeal process and the attempts to save money and prevent abuse are all things that we can support. I look forward to committee stage.
Hon. R. Blencoe: Not to belabour the debate in second reading, because we will have the opportunity in committee, some of the points made today by my critic from the Liberal Party in terms of being able to seek those that are abusing and therefore collecting, while at the same time making sure the bureaucracy is not too large.... It is, obviously, always a balancing act. This is a very small unit. There are six people in my ministry who currently administer the entire homeowner grant. They write the rules, do the checking and will also have to do the investigation. There is a capacity.... I have been given the authority under the Treasury Board to add three more staff for investigations as we pursue this.
I have given estimates of what we think we can save to those members and my independent colleague. When we get better investigation capacity -- and we are now doing the cross-referencing and seeking public information to cross-reference with -- it could very well be considerably more. It's an area that we will move into; we have to do the work. In terms of why the legislation is under my ministry, my ministry administers it and sets the time frames and rules. That's why it's here today.
I now move second reading of the bill.
Motion approved.
Bill 23, Home Owner Grant Amendment Act, 1993, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Hon. R. Blencoe: I call committee on Bill 28, hon. Speaker.
ENERGY, MINES AND PETROLEUM RESOURCES STATUTES AMENDMENT ACT, 1993
The House in committee on Bill 28; R. Kasper in the chair.
Sections 1 to 3 inclusive approved.
On section 4.
W. Hurd: Just a question under interpretation in section 4. I wonder if the minister could describe exactly the rationale for the change of wording in that interpretation section for an energy device, as opposed to the previous definition. One assumes that it somehow describes a wider variety of energy-saving devices, but the committee would welcome an explanation of what exactly is meant by that particular term.
Hon. A. Edwards: Yes, that is a good question, because that is really the essence of this clause. In the previous act we were regulating energy-using devices. But if you're looking at energy conservation in a broad way, a number of other devices can save energy, if you like, for which we could provide standards and for which manufacturers are interested in prescribing standards -- devices that do not use energy but nevertheless conserve it, such as windows and doors. You don't plug them into an electrical outlet or anything like that. But if you have standards for how windows are built and if those are met and you can put a sticker on them where they are retailed, the consumer knows the standard of that window. They can take it home, and it will in fact increase the conservation of energy. That's the goal of changing this definition.
Sections 4 and 5 approved.
[ Page 6897 ]
On section 6.
W. Hurd: I have a question on subsection (b). The following paragraph was added: "Providing for information to be reported by persons who manufacture energy devices for sale in British Columbia in respect of the energy consumption or efficiency...." Can the minister tell us exactly how this new requirement dovetails with the Canadian Standards Association, as far as reporting the energy efficiency of various energy-saving devices? Is it not already a requirement to identify that? Perhaps the minister can explain exactly what is meant. What type of information will have to be reported by persons who manufacture energy devices is concerned? How does that dovetail with the reporting done to the Canadian Standards Association?
Hon. A. Edwards: Generally, right now there's no particular requirement for a manufacturer to report to government whether they are meeting the standards in the numbers sold, and those kinds of things. The Energy Efficiency Act requires that products that are regulated will be marked or labelled by the manufacturer. This will help us do that.
Actually, I don't think that what I was just going to say really fits your question. Your question was: how will this help? This will help because previously a number of things were done, but there was no particular requirement that it be sent to the government and that the government be told about what was happening. When we work with manufacturers to try and put standards together, we will now have better information about the numbers being sold, about what the current standards are and those kinds of things. We have worked with manufacturers to determine what will be needed in order for us to continue to work together to set these standards. So that's the kind of information we will have.
W. Hurd: I'm still somewhat confused. I believe that energy devices such as refrigerators or stoves, or any other type of appliance, have a CSA sticker identifying whether they're an energy-efficient product or not. Is the minister saying that under this section they are required to identify exactly what is being saved? I guess the question is whether this particular requirement will in any way add to the cost of manufacturing these products in the province. Or are we just dealing with a simple reporting schedule to the ministry?
Hon. A. Edwards: Right now there is no requirement that anything be reported to the government, except to pass safety requirements. You may have seen things on refrigerators like EnerGuide, and there is no way of testing whether that appliance meets that guide. There are a lot of holes in what happens right now. If they have to report to government and have to assure that whatever sticker they put on an appliance is a correct sticker, we will have a better control of what goes on.
W. Hurd: If I understand the minister's remarks correctly, it's not a requirement that the manufacturer identify exactly how much energy is saved in the course of the normal usage of this appliance; it's just a matter of identifying it as being an energy-efficient product. Will there be any additional burden placed on the manufacturer of these products to meet this particular subsection under section 6 of the bill?
[3:30]
Hon. A. Edwards: The previous legislation required that appliances meet a certain standard, but the fact that they met those requirements was not required to be reported on a sticker. They have to go through a certain process of testing anyway, but this will fine-tune it. A sticker was not previously required saying that it met the standard. In other words, there was no particular policing of it. They put an EnerGuide on which it might or might not meet. They said that they were to meet it. Now they have to meet the standard and they have to put on a sticker which must accurately reflect the standard that they meet.
W. Hurd: Not to belabour the point, I am still a little bit confused as to exactly what they are putting on the sticker. Are they saying that this particular product saves X amount of Btu or something? Are we dealing with provincial standards or CSA standards? In the minister's mind, what exactly constitutes the kind of information that should be on the sticker, other than identifying it as an energy-efficient product?
Hon. A. Edwards: One of the problems is that we are dealing with a number of different appliances, so in the regulations you have different kinds of measures. You don't measure a shower head the same way that you measure a refrigerator. It could be kilowatt-hours per month for a refrigerator, and a water heater might be Btu per litre. That is not the same type of measure. From appliance to appliance, you've got a different measure.
We work with the standards association to reach the standards set out in the regulations. Not only must you meet the regulation in order to put the appliance on the market, but you must also label it according to that standard.
R. Neufeld: Just so I understand a little further -- as I understand it, and as I read it -- you are allowing cabinet to make regulations requiring manufacturers to report information on energy consumption. It allows you to make regulations. Do you have a standard now that is set out for shower heads, water heaters, furnaces and all that, and now you are trying to meet those standards, or what?
Hon. A. Edwards: We currently have standards in the act for everything except shower heads, windows and doors -- which have been added. The window and door manufacturers almost initiated this themselves, but we are working with them to set the standards for this. And this is enabling legislation, so the standards will not be required until such time, of course, as it gets
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into the regulation. So we intend to work with the manufacturers, the retailers and so on before the standards get there. Once the standards get there, there is a requirement not only that the appliances meet the standard but also that they be labelled to meet the standard, which will be in the regulations under the act.
W. Hurd: At this point I'd even settle for an opinion from the minister as to whether this will add in any way to the costs faced by manufacturers of these products in the province.
The Chair: Shall section 6 pass?
Hon. A. Edwards: Don't rush me on these things, thank you.
It shouldn't create any additional burden except to have the labels printed and to assure that they are applied to the appliance correctly. They will already have some numbers. We believe that they already have the information that they will now be required to give us. The requirement, then, is that they will have a label, it will go on, and we will have a closer way of knowing just exactly what we can do. So as we work with them to fine-tune some of these standards, and so on, we will have better information.
Sections 6 and 7 approved.
On section 8.
R. Neufeld: Maybe the minister could quickly explain section 8, so that I understand it a little bit more before I ask any questions about it.
Hon. A. Edwards: This is the act that allows B.C. Gas to do what the Utilities Commission directed it to do, which is to separate its activities as a regulated utility from its activities as a general company investing in economic development within British Columbia. When B.C. Gas was at the Utilities Commission, the Utilities Commission said: "You cannot take certain degrees of risk with your capital when you are expecting a certain rate of return. That degree of risk would be borne by consumers." Since they want to continue to invest in the economic development of the province, B.C. Gas was told that they should separate the two functions. This amendment simply allows them to do that. It sets up a holding company that B.C. Gas will have, and that holding company will own the utility company. In fact, B.C. Gas will have its gas subsidiaries, its other business subsidiaries and its Trans Mountain Pipe Line. So it basically will have a number of subsidiaries. The utility itself will be separated so that it can go to the Utilities Commission for regulation without getting involved in other activities that the company might want to do.
W. Hurd: Just so I have it straight, is the intent of this particular section to allow a utility to separate its non-regulatory businesses from its businesses that are regulated by the B.C. Utilities Commission?
Hon. A. Edwards: That's fairly close. To add a detail, it already owns Trans Mountain Pipe Line, which is regulated federally, and it is separate. Now it will take B.C. Gas as the distribution company, which is regulated by the Utilities Commission, and it will be separately held.
W. Hurd: I assume, then, that the special company under this particular section refers to that part of the business which is regulated. My next question is again about the intent of the section and why limits would be placed on the voting shares of the special company, which I assume was in the previous legislation.
Hon. A. Edwards: As the member probably knows, the Hydro and Power Authority Privatization Act came into place to allow B.C. Gas to buy the gas section of B.C. Hydro. In doing that, the government required that there be a certain structure to ensure that the shares of the company were widely held throughout the province, and this continues that requirement.
Section 8 approved.
On section 9.
R. Neufeld: Just a quick question. Previously, only one exemption was allowed per investor, and it's now being changed to two. Can the minister explain the rationale for that, please?
Hon. A. Edwards: Section 38 of the act restricts to 4 percent the number of voting shares of a special company that may be held by one person or a group of associated persons. Subsection (3) permits exception to that rule through a designation by the L-G-in-C. If the Lieutenant-Governor-in-Council allows that exception, it can happen. Since the holding company will own all of the shares of the utility company -- a special company -- an exemption is required. Section 38(3)(a) was used by Inland for the acquisition of B.C. Hydro's mainland division, and I say parenthetically that Trans Mountain Pipe Line had a major ownership in Inland. Section 38(3)(b) then allowed one further designation, which was used at the time of the amalgamation. Since no exemptions are possible, changing the act to read "not more than 2 designations" gets around this problem.
Does that answer your question?
R. Neufeld: I think so, yes.
Hon. A. Edwards: Good.
Section 9 approved.
On section 10.
R. Neufeld: On the legal definitions, can the minister explain to me what's really being changed here? I know there are two systems in use, but I'm not sure by the bill which one we're going to.
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Hon. A. Edwards: The repeal of schedule 1 is related to the adoption of an updated, more accurate survey standard. There are consequential amendments to the Coal Act and the Geothermal Resources Act as well. The new standard that is now used throughout the province is not interchangeable with the method of describing petroleum and natural gas tenures, which was based on a 1927 survey reference. The amendments will allow us to define in regulation a grid that is based on the new standard without altering the actual location of the tenures, so no changes will be required in the 7,500 tenure documents that currently exist. It is an attempt to make the system work better without impinging on what is required of the people who hold the tenures.
R. Neufeld: Just for a little further clarification, in the Fort Nelson area of British Columbia we go by.... I'm not sure of the name that describes it, but I can give you a description of a lease. It would be A83L94P12. In the Fort St. John area we will go by legal description; block such and such, latitude and so on. Is that what's being changed here? Are we changing one system to the other, or are they being left alone? I still don't quite understand what the minister is saying.
Hon. A. Edwards: We're still working only with areas outside the Peace River block, so where we're describing by section, township and range, which is....
R. Neufeld: That's Fort St. John.
Hon. A. Edwards: Yes, the Fort St. John area. Outside of that area we're changing it, but that area is not changed.
R. Neufeld: Then the area outside of Fort St. John and Dawson Creek will change to the same way that it's done in the Fort St. John and Dawson Creek area?
Hon. A. Edwards: No. This is more complex than even I had originally thought it was. We have adjusted the standards for the 1983 North American datum for the tenures that are held outside of the Peace River block. The Peace River block doesn't change. The others change to adjust to this new standard, but we will still have two systems.
[3:45]
Section 10 approved.
On section 11.
W. Hurd: There probably is a logical explanation for section 11, but I would certainly welcome the opinion of the minister on the rationale for allowing employees to act on behalf of the commissioner in reviewing geophysical exploration of projects. Is this particular amendment a reflection of the workload of the commissioner, or is there a more logical explanation than that for this particular amendment?
Hon. A. Edwards: It's partly just a matter of attempting to make the decisions where they are best made and partly taking out a step in the process. In this case we're allowing the authority to approve geophysical exploration to go to a senior manager in the regional office. The present practice is that a decision must come, of course, after consultation with regional staff or other ministries that need to be consulted. Currently, the geophysical operators have to submit applications both to the regional office and to the commissioner in Victoria. We are eliminating one step in the process, which means that there doesn't have to be an application made to the commissioner in Victoria. It should reduce the administrative cost for government and industry both. Going along with that, there really should be no loss of regulatory control.
Section 11 approved.
On section 12.
R. Neufeld: With respect to the application fees that are described, I think the minister spoke during introduction of the bill of some numbers in the range of $120,000 a year. Is that in addition to any other fees that the geophysical exploration companies already pay, or could she maybe explain the need a little bit more?
Hon. A. Edwards: Our ministry currently has no fees for these kinds of applications. There may be some fees through Crown lands. I'm not saying the government has no fees; I'm saying the ministry has no fees. There are approximately 200 applications per year; at $200 an application, we expect this will raise $40,000. That's a small number compared to some of the others that we deal with here -- which doesn't mean we let it pass without examining it -- but it covers some of the costs to our ministry in processing these applications.
R. Neufeld: So are you not sure, then, whether the government already charges the geophysical companies some fees? Are you just saying that your ministry doesn't, and this is what your ministry will charge those companies?
Hon. A. Edwards: Yes. Basically I can't say that in all of these processes the companies have to go through there might not be something connected with forestry permits or whatever. But I can tell you that currently this ministry charges no fees on these applications, and we are attempting to set a fee that will recognize some of our administrative costs.
R. Neufeld: So already the companies that have bid for the right to do some exploration on that land have paid a fee and an upset price to do that. On top of that, is this one of those extra fees that the Minister of Finance, during his prebudget, said some ministries may be able to find and be able to keep within their ministry? Would this be related to that activity?
Hon. A. Edwards: I continue to learn about this industry. Some of these activities will take place on
[ Page 6900 ]
Crown land where they have not already bid on a lease or other form of tenure. Some of it does not, but frequently it will be work taking place on Crown land.
R. Neufeld: Would this then be only on Crown land? What happens on Crown land of a geophysical nature that we would be dealing with? I can understand the companies buying the right to explore on the land. But for geophysical companies just to go out and work on Crown land.... I don't quite understand that.
Hon. A. Edwards: Frequently companies will apply to do some exploration work before they decide whether they want to bid on a property. This would take care of those situations where they have applied to do work in an area and haven't yet bid on it. They might ask the Crown later to put it up for bid, but they haven't yet decided whether they have any interest in that particular area.
R. Neufeld: My understanding has always been that the companies -- let's take Husky Oil, for instance -- will bid for the right to explore on land that's put out for tender by your ministry. Are you telling me now that you're going to change that system, so that geophysical companies can go out and test Crown land first to find out whether they want to bid on it? Is that the change that's happening?
Hon. A. Edwards: It's not a change. Companies have been able to make an application to do geophysical exploration before such time as that land has been offered for some kind of tenure.
Section 12 approved.
On section 13.
R. Neufeld: Can the minister explain the change in the size of a permit area to one block?
Hon. A. Edwards: This may have very little impact on what happens. The term "grid area" now defines the maximum permit size, but that term will no longer be used in the method of describing tenures. So the reduction to a maximum of a block is not significant as there is no restriction on the number of permits that may be applied for. It's an administrative change more than anything else, and a change in terminology, but not a change in what a company can do.
R. Neufeld: What term will be used instead of the grid?
Hon. A. Edwards: A block is the term that will be used.
Sections 13 to 15 inclusive approved.
On section 16.
R. Neufeld: Could the minister please explain section 16 a little bit?
Hon. A. Edwards: Currently petroleum and natural gas leases are issued for ten years. They may be continued for three additional one-year periods if the holder pays a cash penalty. Under the current legislation, the penalty is refunded if a well is drilled during the continuation period. The intent of the program was to encourage well-drilling. A typical refund under that program was about $20,000, but it has been found not to play a significant role in the decision of whether a company does or does not drill a well that may cost $1 million or more. The province feels that it can eliminate the program without a noticeable impact on the level of oil and gas drilling. It will also save the province an average of $120,000 -- which is where that figure came from -- by eliminating a program that is no longer effective. It doesn't do what we wanted it to do. It doesn't seem to have any impact at all. Over the last ten years, the amount spent on the program has ranged between $75,000 and $250,000. It is averaged at $120,000 a year. What we're saying is that this is the average amount that we would probably save the province. Also we're not, in fact, having any impact with the program as it is now.
R. Neufeld: So on average it's $20,000, and there's only, by your estimate, about six in the past year that have had to pay the $20,000. What you're going to do now is keep that amount of money instead of returning it to the company if they drill.
Hon. A. Edwards: What we're doing is simply taking away the forgiveness of a penalty. We're not taking away the penalty. So you have ten years, and then if you want to renew for a year, and a year, and a year you still pay a cash penalty for not having brought it into production. We will not forgive that penalty if, in fact, they drill the well.
R. Neufeld: With today's technology I guess it's probably a little different than it was a number of years ago, but given the volatility of pricing, some companies may decide to drill afterwards. Instead of reimbursing them, you're really just going to keep the penalty that they pay as an incentive if they drill after ten years. By the numbers that you've given us, what you've actually done in your budget this year is pick up just under $200,000, which would normally not have been revenue to this ministry before. Is that correct?
Hon. A. Edwards: If you put the two subsections together, I guess that's what you're talking about. We're talking about probably $120,000 with this one and $40,000 in the other. That's just cleaning up ends. If an incentive doesn't work, you might as well put your money somewhere else, where it works better. So that's step 1.
[4:00]
W. Hurd: I just have one additional question about section 16. Assuming that the tenure can be transferred from one licensee to another during the period of the tenure -- I'm sure the minister will correct me if I'm wrong in that interpretation -- is there not a potential
[ Page 6901 ]
for this particular amendment to be a disincentive for a new company that's taking over the lease after a tenure period, or can these leases be transferred, as is a forest licence, for example?
Hon. A. Edwards: There's no question that leases can be transferred. Somebody can buy a lease, but you would wonder why someone would buy a lease if they didn't intend to drill. It's very probable that they would buy expecting to drill. What we're looking at is whether or not this incentive is effective, and we find that it has not been effective.
W. Hurd: Can the minister tell the committee, then, whether it's very prevalent for a company, for whatever reason, not to take action on a lease for a tenure period but to transfer it in year nine or ten to a company that may do so? One would assume that this would add to the cost of the new company doing business, which might be more interested in drilling on that lease location than was the predecessor company. Is that the effect of this amendment?
Hon. A. Edwards: I would just assume that if the purchasing company was interested in doing that, they would have to buy the lease at a price that made it attractive to them. The previous company didn't want to drill, presumably. We're speculating here.
R. Neufeld: Just one more quick question. The $120,000 figure that the minister used was probably, I assume, from a stat of about a year ago. Would that $120,000 figure be consistent through, let's say, the past ten years, or is it quite a bit higher or lower in some years? Maybe you could go back a ways and see just exactly what this could mean in revenue for your ministry.
Hon. A. Edwards: The figures that I gave you were for ten years. It was a ten-year average. The lowest was $75,000, the highest was $250,000, and the average has been $120,000. I don't know that you could track it year by year.
Sections 16 to 18 inclusive approved.
On section 19.
R. Neufeld: Could the minister please explain this section to me.
Hon. A. Edwards: It's my pleasure. There are three forms of petroleum and natural gas tenure: there are permits, drilling licences and leases. Only leases allow for the full production of oil and gas. The other forms of tenure must be converted to leases if the operator wants to produce a well. I imagine the member knows that already. But that's the basis for this.
The minister may allow production from permits and drilling licences for up to 90 days. This usually provides the company sufficient opportunity to evaluate what's there and to do a test that is enough to direct where the company is going to go in future.
However, in certain cases -- and I would say this has been found particularly in wells that have been drilled to produce coal-seam gas, or coal-bed methane -- the period is not long enough. So the amendment allows the minister to specify a production period, which can be longer than 90 days if the minister decides that such a period is reasonable and necessary.
R. Neufeld: Okay. So really this does not pertain to natural gas. I don't know of companies that will tie in a gas well to produce it for 90 days. What they usually do is just burn off the gas and get their figures that way, not tie in a well to see whether it's worthwhile tying in or not. So this really pertains not to the natural gas industry so much as the coal-seam gases. Is that correct?
Hon. A. Edwards: Well, again I'd like to be quite close with how we're doing definitions. Coal-bed methane is natural gas. Also, you will note that this does not take away the minister's power to designate a certain period. It doesn't say that there is no period anymore; it simply says that when it's necessary or reasonable the minister may designate, and it could be longer than 90 days. Frequently that's found in coal-bed methane.
Sections 19 to 21 inclusive approved.
On section 22.
W. Hurd: I have just a quick question on section 22, which extends the duration of a licence and conditions, where the licence holder has been delayed by a land use determination process. I'd certainly welcome an explanation from the minister as to how widespread a problem she feels this will be for those involved in natural gas exploration in the province. Are we dealing with significant difficulties vis-�-vis the protected-areas strategy, for example? Does this also include the aboriginal land claims issue? Are those the types of issues we're dealing with under section 22?
Hon. A. Edwards: We hope and expect that this section would be used rarely. However, in a case such as a protected-areas strategy, where a designation was made and there is work that the company agreed to do and which they have to do -- it's time-limited, so they have to do a certain amount of work in a certain length of time -- what this section allows the minister to do is extend the period of time so that they don't lose their tenure because they're not allowed to do the work. As I say, it is not a clause that we would expect to use often, and we may not use it at all. But if the situation came up, it would not be correct to be in a position where someone would lose their tenure because there was no mechanism to extend that period in which the work would be accepted. So that's the intention of the section.
W. Hurd: Would that also apply to the previous section of this act -- that beyond ten years the ministry was or was not waiving certain performance penalties? Would the effect of this particular section also weigh on that previous section where no activity had occurred on
[ Page 6902 ]
a lease for ten years if the protected-areas strategy impacted on that determination as well, or are we dealing with two different issues?
Hon. A. Edwards: The previous one said that if the company has a lease, and then they drill, they will no longer have the penalty returned. In this case, if they have paid the penalty they will have the time extended, but they will not have the penalty returned to them, even if they do drill later. This simply allows you to extend whatever period the company has currently applied for. If it were the first ten years and you extended that until such time as they were no longer designated and able to do the work, then they would still have the same ability to apply for extensions under the same rules as otherwise. This one simply allows you to give a longer time period within the regulatory framework that already exists.
W. Hurd: In the opinion of the minister, would this section be triggered by the aboriginal land claims issue in any way, or is this strictly related to such issues as the protected-areas strategy -- parks and wilderness preserves? Is it strictly related to the existing land use and environment strategy of the government, or would the aboriginal land claims issue result in this type of extension occurring?
Hon. A. Edwards: It was our intention to have the protected-areas strategy process. It is simply not designed for anything else; that is the main reason for it. To amend my previous comment, it does say that the minister can cancel the rental and work requirements. You could do that if that were a preference for what the company and the ministry decided was wanted. You could extend the time or cancel the requirements. So I correct that in my last statement. This was designed to deal with a designation under the protected-areas strategy process being put in place, which may or may not remain there.
R. Neufeld: This section bothers a lot of people in the north. In the protected-areas strategy, there are areas in the Peace River country with development on them that have potential for natural gas and oilwell drilling. In those areas that have been the busiest through the years -- because it's not all over the map; you know that as well as I do that there's Boundary Lake and Nig Creek and hundreds of them around, but they're pockets -- the protected-areas strategy plan is drawn around most of those areas where the activity is. What this section does -- or what we fear it will do -- is give the ministry the authority to remove all well-drilling licences and all permits to do any work in areas these companies have been in for years. Would that be correct? Does that give the minister the authority to do that?
Hon. A. Edwards: This allows the ministry to extend tenure; to attempt in every way to assure that the tenure that was granted is extended to meet the tenure that was originally offered and to answer the needs of the tenure holder. This is an attempt to assure that we can, in the most reasonable way possible and with as much leeway as is reasonable, answer a problem that could come up with a land use study of some kind. If that land use study is going to go on, this allows the ministry a way around the current regulations, which do not give you a way around time frames or those sorts of things. If there is a designation where that area would be included in a land use study of some kind, then we are able to allow the tenure holder to have the full benefit of that tenure.
R. Neufeld: Are we working a bit in reverse here? You're saying that you're going to remove the tenure first. Is that what government is going to do? And this section gives you the authority to reinstate the tenure to those companies to go in and finish their programs? I'm a little confused by what you say about continuing to work in those areas. In the protected-areas strategy plan that's in place, the companies are continuing to work, although a little harder. It takes a little longer to get permits, to build roads, get pipeline rights-of-way and those types of things. We understand that. The process takes a little longer, but it's already being done. Is the minister saying that they're going to remove tenure and then return it to them in certain areas?
[4:15]
Hon. A. Edwards: The intent is to assure that the tenure remains. In order to hold a tenure, a company often has to carry out certain work. If they can't carry out that work because there is a land use designation which prevents them from doing that work, we will extend the tenure. We're trying to assure that they have the opportunity and don't have to pay extra to extend their tenure. As I say, the goal is to avoid this kind of situation as frequently as possible, but if you get a situation where a company holds a tenure and there needs to be a land use study, until such time as there is a determination of how that land will be used, the tenure holder does not lose tenure because of that study.
R. Neufeld: I appreciate that. When they go into the ten-year term, where they would have to pay a fine, that would not apply? If it did stretch into that length of time -- let's say they're into their eighth year now -- after ten years they would not have to pay the province that penalty? Is that correct?
Hon. A. Edwards: I'm sure there would be an attempt to relate the amount of time in which they were not allowed to do work to the extension. But the intention is to not get them to that point without having been able to do their work.
Section 22 approved.
Sections 23 and 24 approved.
On section 25.
W. Hurd: I'll settle for a brief opinion from the minister on this particular section, understanding the
[ Page 6903 ]
desirability of having the Utilities Commission encourage wider participation in hearings by paying participant costs. I guess the opposition would be more comforted if the minister would pledge to agree that maybe monitoring is required when it comes to applications by independent power producers who may wish to build facilities in the province and seek application to export excess energy. In the event that some of these independent power plants do get off the ground in the province in the near future, one would assume that the commission could, in the case of a hearing, order that the participant costs be paid by the independent power producer. Is that what could happen under this particular amendment?
Hon. A. Edwards: Yes, that could happen. The amendment allows the Utilities Commission to allocate costs in any hearing. It could allocate the costs otherwise; it could allow itself as a commission to pay participant costs or intervener costs.
As you may know, there are a number of criteria for participant funding, and applicants have very clear rules. This is a broad, general government policy which requires that any applicant for participant funding must demonstrate that they have a significant interest in, or the potential to be directly affected by, the issue or the project under review. They must also show that they could make a substantial contribution to the proceedings. They must show a willingness to work jointly with other groups that have like interests. They must demonstrate financial need, and they have to document that they have made every attempt to secure funding from other sources. Finally, they must provide a clear description of the intended use of the funds, and they must provide proof of financial controls for ensuring that the funds are spent for the purposes for which they are provided. So they must meet a number of criteria in order to be considered for participant funding.
There are also rules around what expenses are eligible. I could go into those, too, but only if the member wants that information. There are some very close controls over how this money can be spent. It is a broad policy that spreads across government. It is the same policy that the Utilities Commission, if it decided it would be in the public interest, would be allowed to use to allocate some funding for interveners or participants in hearings by the commission.
W. Hurd: So it would be difficult, then, for the ministry to predict whether or not the independent power producers and their projects would be affected by this. It would really depend on a specific application. In the final analysis, the Utilities Commission would be the one to determine that the participants' costs needed to be offset because of the reasons the minister has offered.
Hon. A. Edwards: I think it's clear to all of us that in many cases it's very easy to get into a terribly escalating situation with this kind of funding. Nevertheless, we basically feel that it's a very important resource for those who can demonstrate that they actually have an interest and that they can make a substantial contribution to a proceeding. If you have a body which is responsible, such as the Utilities Commission, then it is charged with making sure that these requirements are met before any funding is allocated. We feel very strongly that this is a plus, that it is a move that will improve the activity that goes on at commission hearings, and that there are very clear and fair limits put on how much funding there will be and how it will be handed out.
R. Neufeld: In your explanation during second reading, you talked about travel, meals, accommodation -- at current BCGEU rates -- dependent child care, per diems and the participants being able to hire experts. Some of that seems a little bit much to me, but I understand from the minister's explanation that there are going to be some tight rules on how you can get it. Hiring expert help -- how are you going to determine expert help, and how are you going to determine an amount for it? It could become tremendously expensive as some participants try to get expert help into some of these hearings. I just wonder what process is going to be used there.
Hon. A. Edwards: What would happen is that there would be prehearing conferences with the participants. If you want to participate in a hearing, you have to register with the commission, right? So the commission knows who the participants would be. These participants will have conferences before the hearing, and those kinds of things will be agreed to there.
I personally agree that this is needed, following an experience on Vancouver Island in a hearing into a transmission line, where the argument was about electromagnetic fields. Citizens on the Island had to bring in their own expert to deal with what was currently believed to be what could possibly happen because of EMFs. I think it would have been legitimate to have given them some assistance in getting that information there, which otherwise was not presented at all. That is the kind of situation where I think experts might agree upon something in prehearing meetings.
R. Neufeld: That's what bothers me. Some experts say that electromagnetic fields don't cause any health concerns for people, and others say that they do. How is that determination going to be made? There are experts from all over. You could take a row of lawyers, and they would be on one side or the other. Who is going to be the person to determine whether that expert testimony can be interjected and whether it can be paid for by the participant?
Hon. A. Edwards: The commission would make that decision for their hearings. They are currently very capable of knowing the direction in which a hearing is going to go. The chair of that panel said at the time said that he wished he could have awarded costs for that particular expert. The expert evidence that came in was overwhelmingly one way, when it was not an issue that had been widely accepted by anyone. So basically the
[ Page 6904 ]
commission would do that. It has certainly said that it would give very modest awards, and that's the intent. But there are certain situations for which that kind of help would be as useful as helping ordinary citizens get to a hearing when they have something they feel would contribute to it or when they would be significantly affected by a decision.
Sections 25 and 26 approved.
Title approved.
Hon. A. Edwards: I move the committee rise and report the bill complete without amendment.
Motion approved.
The House resumed; the Speaker in the chair.
Bill 28, Energy, Mines and Petroleum Resources Statutes Amendment Act, 1993, reported complete without amendment, read a third time and passed.
Hon. R. Blencoe: Hon. Speaker, I call Committee of Supply.
The House in Committee of Supply B; R. Kasper in the chair.
ESTIMATES: MINISTRY OF TRANSPORTATION AND HIGHWAYS
(continued)
On vote 58: minister's office, $410,000 (continued).
D. Symons: I would like to welcome the people from B.C. Rail. Unfortunately, they have had a bit of a wait, but I hope we'll be able to cover what I have to do in the remaining time. It's going to be nip and tuck, but we'll see if we can make it.
To begin with, in the last fiscal year there was a $13 million contribution to B.C. Rail from the Ministry of Transportation and Highways. I was told then that this sum was to cover the money-losing passenger service and the Fort Nelson extension. I don't see that contribution appearing in the book this year. Is it no longer needed? Is B.C. Rail making enough profit now to cover its losses, or are these losses being covered in some other way? If not, how are these operations being funded?
Hon. A. Charbonneau: Before taking the member's question, I'd like to introduce Mr. Paul McElligott, the president of B.C. Rail, and Roger Clarke, vice-president of finance, B.C. Rail.
With respect to your question, a Treasury Board decision was taken to have B.C. Rail fund the necessary expenditures for passenger service out of their other revenues.
D. Symons: It's encouraging to hear that it's a stand-alone company in all respects at this time. In the audited financial statement of the company, a reference is made to government assistance being made available to the company and, in particular, to contributions relating to the operations of Fort Nelson passenger service. I guess that's just a leftover from past years, then, sort of as a footnote.
[4:30]
Last year B.C. Rail made a contribution to general revenue of $10.3 million, and it's doing the same this year. Considering that there have been considerable acquisitions, it is quite impressive that they have managed to continue that contribution through general revenue. Company net income was down $4.6 million. The corporate capital tax cost B.C. Rail -- or rather its customers -- $3.1 million. How has the corporation been able to maintain that level of contribution in light of these other expenses that seem to be upon it?
Hon. A. Charbonneau: The acquisitions were financed by a combination of internal cash flow and debt financing.
[F. Garden in the chair.]
D. Symons: There was a study on the possible purchase of Southern Railway. What were the results of that study?
Hon. A. Charbonneau: A determination was made not to proceed with that acquisition.
D. Symons: This is going extremely quickly.
A month ago the Transportation Safety Board of Canada found that many railway tank cars go as many as ten years without thorough safety inspections. Many of them have suspension problems that create real accident potential. What steps are in place to ensure the railworthiness of B.C. Rail's rolling stock?
Hon. A. Charbonneau: B.C. Rail has relatively few tank cars. Those cars, along with all other cars, receive regular preventive maintenance at the rail facilities in Squamish and Prince George.
D. Symons: I was using the federal study and tank cars; I wasn't referring to B.C. Rail's tank cars or limiting the question to tank cars. Years ago B.C. Rail did have quite a few problems along the Howe Sound route with derailments and all the rest because of the carriages of the cars. I gather this hasn't happened recently, and B.C. Rail seems to have a very enviable safety record. I hope that the program of regular maintenance and checking up is paying off.
At the time of B.C. Rail's purchase of Vancouver Wharves, we heard of a $15.75 million purchase price. There was little mention of the $60 million debt load, so it really makes a price of about $75 million. If the previous owners were having financial difficulties, why is B.C. Rail so confident that it was a good acquisition?
Hon. A. Charbonneau: B.C. Rail purchased the outstanding shares of Vancouver Wharves for about $15 million. In purchasing 100 percent of the shares of a company, you also acquire the company's liabilities.
[ Page 6905 ]
Given the total value of the shares plus the outstanding liabilities, it was still an attractive purchase for B.C. Rail. It met all of our investment criteria, and we are confident that it will be a good and strong acquisition for the province.
Vancouver Wharves had been having certain difficulties. It is very important for the rest of B.C. Rail's operation that we maintain a strong and viable port -- dock and wharves -- at that location, as many of the commodities that are shipped out through Vancouver Wharves come down on our system. It made a great deal of sense to get the wharves while we could still maintain the credibility of shippers -- and shippers have approached us to congratulate us on this move -- so that we can hold on to that product 37ming through Vancouver Wharves. As well, the port of Vancouver has congratulated B.C. Rail on the acquisition.
D. Symons: I hope the people of B.C. Rail have not got into something that is going to end up being a money-loser. I will keep my fingers crossed -- as I am sure you will -- that it will be a profitable venture.
At the time of the purchase of Vancouver Wharves, it was stated -- and I'm quoting here from a newspaper article: "Our strategic plan for five years is to diversify around the railway assets into things that will generate more rail traffic." I emphasize "more rail traffic." However, B.C. Rail has gone into direct competition with private trucking firms in Williams Lake to haul wood chips to the new Northwest Energy plant in Williams Lake. This has no connection to rail traffic. Is this also a new direction that B.C. Rail is going in?
Hon. A. Charbonneau: It is important to realize that there are tremendous benefits from diversification. We see that over this last fiscal year the federal railways, both CN and CP, have lost enormous amounts of money -- I believe the total might run toward $1 billion -- whereas B.C. Rail had a profit. We have to look toward coming years, when the situation might not be so rosy in the rail business. So we're looking at a strategy that entails diversification -- be it into trucking, intermodal, real estate, wharves, or other possible investments -- all of which is designed to ensure the long-term profitability and survival of B.C. Rail.
R. Neufeld: I want to take further what the Liberal critic asked about going into the trucking industry and diversification. I can understand part of what the minister is talking about. But when we talk about getting into the trucking industry and what's happened in Fort St. John, we're talking about subsidizing the trucking division through the rail division. That's pretty clear from some of the rates that have been quoted. The minister shakes his head no, but I tend to disagree with him. People in the trucking industry have always felt, whether you were in government or not, that they didn't like competing against the railroads, especially in the north, where the trucking industry is having a difficult time.
Back in November, I wrote to the minister about Peace Wood, a specific issue in Fort St. John. I've asked for a reply again regarding B.C. Rail buying equipment to haul some stuff for Peace Wood, but I can't seem to get one. Those truckers who bid against B.C. Rail feel that it's not fair. The rates quoted by B.C. Rail are far under what it would really cost, and there is subsidization not specifically from government but from the rail section to the trucking section. Maybe the minister could explain that a little bit further.
Hon. A. Charbonneau: I can assure the member opposite that there is no cross-subsidization within B.C. Rail on this issue. We've had an independent evaluation done to confirm that. I would also point out that B.C. Rail has been in competition with trucking firms for many years. In fact, trucking firms, I'm told, have taken about $35 million a year in revenue away from B.C. Rail.
I appreciate that the trucking industry is under substantial duress. Deregulation has visited great hardship on that industry, and I sympathize with it. At the same time, I feel we have a responsibility, for the long-term health of our highways, to move as much freight by rail -- on steel -- as possible. On the one hand, trucking companies point out that they are under duress and are looking for additional business. On the other hand, all railways point out that the trucking industry is in effect heavily subsidized through the provision of the highway system. The rail companies, by and large, would claim that that is the unfair subsidization and is driving transport off steel onto our roadways and causing substantial wear-and-tear rehabilitation problems. So the arguments can go both ways. But in this instance I am convinced that there is no cross-subsidization within B.C. Rail.
R. Neufeld: We could argue for a long time on that one; there are arguments on both sides. Being the Minister of Transportation and Highways and knowing that the budgets have been cut severely in Transportation and Highways over the last couple of years and that it definitely affects any new work or real upgrading and maintenance on our highways.... I saw a report a while ago that said our infrastructure is really going downhill. Would the minister, for pure profit, bid against other trucking companies, knowing that it would affect our highway system? The contract in Fort St. John is moving lumber from Taylor to Fort St. John -- it's only eight miles. Could he tell me how much money that would involve for B.C. Rail? Also, was the contract in Vanderhoof a large one? Could the minister tell me what that one is in a dollar amount per year?
Hon. A. Charbonneau: First, I'd like to clarify and, I suppose, contradict the statement made by the hon. member. Our infrastructure is not going downhill. We're not shortchanging the system on maintenance on the highway side. Maintenance, of course, is done through the privatized maintenance contractors. It has been fully funded. On the rehabilitation side, we have protected our rehabilitation dollars. Yes, I wish there were more, but we have been able to maintain -- in fact, slightly enhance -- approximately the same total
[ Page 6906 ]
rehabilitation dollars. It isn't that our highway system is going downhill quickly. That is not the case.
[4:45]
Do I expect that B.C. Rail will pursue contracts for profit? Absolutely, yes. We are in competition with pipelines, trucks on the long haul, CN, CP and Burlington Northern. I expect them to go out on every contract and attempt to make a profit for their shareholders, who are the residents of British Columbia.
D. Symons: I want to revisit the answer previous to the minister's last one, because I found some problem with what he said. He was indicating how they want to move as much as possible on rail -- to move it by steel rather than by road -- but at the same time, the hon. member from the north and myself are discussing how B.C. Rail is moving into moving something by rubber only. It seems that the two are a bit in contradiction with each other, that B.C. Rail is getting into the business in order to preserve the roadway and that they shouldn't be going into a business that is simply moving by truck.
I guess the concern I'm trying to express is that the Crown corporation seems to be going into competition with private enterprise. I wonder if it is the role of a Crown corporation to be in competition with private firms in the province, particularly because of its magnitude and size and the fact that in the past, the taxpayer's pocket ended up as a backup monetary resource for it. Because of these factors, it seems to be a bit of an unfair competition in a sense. I wonder if the minister might comment.
Hon. A. Charbonneau: With respect to your first comments, the economic reality of transportation is that up to a certain haul distance -- it might be 300 or 400 kilometres even, in some instances -- trucking is cheaper. In instances on the short haul, of course we're going to be competing with truckers for that element of the business. There is also the reload intermodal, where we must haul by road a certain distance to a reload point, then go on to our steel system -- CN, CP and Burlington Northern. They all do the same thing, and for good reason. If we didn't do that, we would progressively lose business to the other rail carriers, and I'm not about to allow that to happen.
With respect to the question of competition, B.C. Rail has been in competition for the last 25 years in a variety of areas in which we offer services: in telecommunications, along the B.C. route; in trucking, in the intermodal aspect of it; in real estate, along the line primarily; and, of course, in the fundamental business of rail. We are in competition with the private sector and with the federal Crown corporation, and we will continue to be, because we have been more successful at finding profits in that competition than they have been.
D. Symons: What I notice is that there seems to be a more aggressive movement now on the part of B.C. Rail into this private sector, non-related rail type of moving. Going back to Williams Lake, there was some suggestion that that contract may have been underbid and indeed that it's non-compensatory. I believe that the minister was asked by a firm to investigate. Is B.C. Rail making money on that contract, and what were the results of that investigation?
Hon. A. Charbonneau: There is no cross-subsidy on that contract. The contract stands on its own; it will make money. We have had an independent evaluation of this issue that confirms there is no cross-subsidy involved.
D. Symons: If I might press the point a little further, it might not be a case of cross-subsidy from rail to trucking. But is that particular one contract in the trucking part of it a money-making contract, or are some other contracts making up for any losses they're having there?
Hon. A. Charbonneau: As an individual contract, it makes money. And, of course, it is related to the broad mandate of B.C. Rail as a transportation company. Other railway companies have diversified into different elements of business that are related to their core business -- and so has B.C. Rail. The specific contract to which you are referring is a profitable contract on its own.
D. Symons: In April B.C. Rail bid on and obtained a contract from Kelly Douglas to haul foodstuff from Vancouver to northern B.C. -- by truck, I might add, rather than by rail. Kelly Douglas also backed out of a warehouse contract with B.C. Rail for a lease in Prince George. Was Kelly Douglas charged the $200,000 cancellation fee on that lease? If not, did B.C. Rail win the trucking contract fairly against its competitors, since they didn't have the same leverage regarding a lease cancellation?
Hon. A. Charbonneau: The contract to haul for Kelly Douglas is by truck, because they require delivery overnight and we cannot move on steel to Prince George overnight. There are constraints on that track due to gradients and curvatures.
With respect to the question of the warehouse, we will have to obtain the information and provide it to you.
D. Symons: I'm sorry, I didn't quite catch that. I would have to do what on that?
Interjection.
D. Symons: You are going to supply it when it becomes available. Fine, thank you. I'll pass on....
R. Neufeld: To go back a little on the Fort Nelson extension, the Liberal critic asked a number of questions about $13 million not being given to B.C. Rail, but B.C. Rail still paying $10 million in benefits to the province. I don't have a lot of trouble with that. But I lived in Fort Nelson for many years, and there has always been a feeling of insecurity about the Fort Nelson extension. It was under study, or somebody was looking at this part of it or that part of it; maybe it
[ Page 6907 ]
would be pulled, maybe it wouldn't -- that type of thing. There's beginning to be a fair amount of industry in Fort Nelson, some of which is going to use rail. Is the minister able to say that he's going to include the Fort Nelson extension in the whole operation of B.C. Rail and quit calling it the Fort Nelson extension, making those corporations and companies -- and the ordinary people of Fort Nelson who work for those companies -- feel a little bit better? I've always said that it should be part of the whole operation. It's an extension because you can go from point A to point B and it doesn't go anyplace else. It makes it very hard.... I know it would make the people and the corporations up there much happier if they knew it was going to be included as just one part of B.C. Rail operations.
Hon. A. Charbonneau: The member opposite will be pleased to know that for about a year and a half the extension has been referred to as the Fort Nelson subdivision, partly at the request of the mayor of Fort Nelson. It is part of the system, like any other part. Of course, as you know, they are all subdivisions. This is now the Fort Nelson subdivision.
As for assurance of its continued existence, you have that assurance. The key here, of course, is to develop some additional business -- additional mills, additional freight to be hauled either way. We have a system there with the capacity of many trains a day that carries only three trains a week. We've got to do work on the other end of the equation to get more product flowing, and then the subdivision will, on its own, be contributing to the profit of the corporation.
R. Neufeld: I'm sure the mayor of Fort Nelson will be very happy to hear that you're calling it the Fort Nelson subdivision. I call it the Fort Nelson extension because that's what I've known it to be for years.
The Fort Nelson extension and the passenger deficit, which is the part that the government always subsidized to B.C. Rail, is not going to happen anymore. I'm pleased to hear it. I'm pleased to hear the minister say that it will not be curtailed. In the winter we probably have more than three trains a week. It's not that long ago that I worked there and we had a train a day other than Sunday -- six a week. It was a good service. I must say, B.C. Rail into Fort Nelson has always been a good service. But even until a year ago studies were going on. In fact, during estimates last year I asked the minister about the Fort Nelson subdivision or extension and a study that was going on to find out whether it was profitable or not, and the minister's reply to me was that yes, it was, and that if it were not profitable he would look at curtailing service there. I'm pleased that within the last year the minister has totally changed and that we're now going to include it all as one operation.
The Chair: Shall vote 58 pass?
Hon. A. Charbonneau: I will just acknowledge the points of the member opposite about the subdivision going to Fort Nelson.
D. Symons: Hon. Chair, you were a bit fast with: shall the vote pass?
Are there any other fields the company is considering entering into in the next 12 to 24 months? We have seen that they're into the intermodal, which of course is to be expected; they're certainly moving more into trucking; and they're now involved in telecommunications. I'm just curious. There seems to be a lot of interest in them expanding their operations. What areas are you possibly thinking of moving into that are now covered by private enterprise?
Hon. A. Charbonneau: There are no investments or acquisitions contemplated in areas outside our current range of business.
D. Symons: Aside from the entrance into the intermodal transportation field, the company decided that it would become a reseller of long-distance calls. Who decided that B.C. Rail should enter into that market and compete against other resellers in the private sector? It seems to be another intrusion, so to speak, into the private sector. They seem to have the ability to provide those services already.
[5:00]
Hon. A. Charbonneau: First, just to offer a correction to the member opposite, B.C. Rail's new subsidiary, Westel, is not a reseller; they're an equipment-based or facilities-based telecommunications company, and they have been in the field for 25 years and in the area of selling private-line services for eight years.
D. Symons: I thank the minister for correcting me on that. What type of capital expenditure will have to be made in order to enable the BCR Group to adequately compete under its Westel Telecommunications arm that was created in April 1993?
Hon. A. Charbonneau: The business plan for Westel has not yet been considered by cabinet. At this point in time, I would say that the intended expenditures will be open to public scrutiny after such time as cabinet considers it.
D. Symons: I will lump the next two or three questions together. I gather that in setting it up, it was created by transferring some employees and assets from B.C. Railway's existing telecommunications departments. I'm wondering what employees have been transferred, and how many, and what assets have been transferred, and if we can just fit into that the value of the assets that were transferred to Westel. Who is the president and chief executive officer of the newly created subsidiary? When will there be a budget? I guess you referred to that -- when cabinet decides. It seems that it's a cabinet decision rather than a decision of B.C. Rail. I thought this was a Crown corporation that would be making decisions of this sort on its own. Is cabinet second-guessing them?
[ Page 6908 ]
Hon. A. Charbonneau: The primary reason the telecommunications portion of B.C. Rail was moved into a subsidiary was to.... Telecommunications is federally regulated, and we did not wish B.C. Rail to become federally regulated. By moving the telecommunications elements into a new subsidiary, the subsidiary will be subject to federal regulation but not the parent firm. That was the fundamental reason for doing that. About 75 employees have been moved over, and the assets relating to the commercial telecommunications activities of the corporation have been moved over. We are presently searching for a general manager of the new corporation. The asset value that has been transferred is approximately $20 million.
With respect to cabinet approval, in any major redirection or thrust of any of the Crown corporations, cabinet reserves the right to approve or not to approve those endeavours.
D. Symons: I have just one question, and maybe I should have asked it in the other raft of questions. You mentioned that 75 people have transferred over from B.C. Rail to Westel. Have any positions been eliminated? Is 75 the working number that Westel will be using, or will there be a larger number of employees taken on? Are there any B.C. Rail positions that haven't been transferred but have been terminated, and will there be a larger complement than 75 under the WesTel operation?
Hon. A. Charbonneau: No positions have been eliminated. They have been scooped up and transferred over to the new subsidiary. Following the time that the business plan is considered by cabinet, other announcements may be forthcoming.
K. Jones: Further in the Westel area, could the minister tell us what the specific role of Westel is within B.C. Rail, and within the government?
Hon. A. Charbonneau: As I have mentioned a couple of times, B.C. Rail has been in the telecommunications business for decades. The purpose of Westel is to put those operations into a subsidiary in order to escape federal regulation.
K. Jones: Does the ministry or B.C. Rail have any other intentions for the expansion of the Westel role?
Hon. A. Charbonneau: As I have mentioned, Westel has prepared a business plan, which will be considered by cabinet in due course.
K. Jones: Could the minister give us detail on the relationship between Westel and B.C. Systems Corporation?
Hon. A. Charbonneau: There is no relationship.
K. Jones: Are there no connections, service arrangements, service agreements or any partnerships with regard to provision of telecommunication services, or renting of telecommunications, data or computer systems?
Hon. A. Charbonneau: There are a variety of arm's-length commercial agreements between Crowns, but there is no relationship between them, other than arm's-length contracts.
K. Jones: Could the minister detail the types of arm's-length arrangements between Westel and B.C. Systems Corporation?
Hon. A. Charbonneau: B.C. Systems provides a very minor amount of revenue to Westel. There is the provision of some circuits from North Vancouver up to Prince George and a few other commercial contracts, but it is a minor part of Westel's business.
K. Jones: Could the minister tell us whether the major trunk of services between the ProvNet switches in Vancouver and Prince George is provided through Westel facilities?
Hon. A. Charbonneau: No, there is a tiny portion.
K. Jones: Could the minister tell us what relationships there may be between B.C. Tel and Westel?
Hon. A. Charbonneau: I'm not certain what the member is getting at, but, under the CRTC ruling, at the interconnect a certain percentage of the cost is paid by B.C. Tel and a certain percentage is paid by whatever interconnector there may be -- in this case, Westel. But there are none, other than those according to CRTC arrangements.
[E. Barnes in the chair.]
K. Jones: Could the minister tell us what relationships there may be between Westel or B.C. Rail and Rogers Cantel or other associated agencies?
Hon. A. Charbonneau: There are no corporate relations. However, on a contractual basis, we will make capacity in, say, our microwave system available to any other corporation, including Unitel, B.C. Tel or anybody else who wishes to purchase some capacity from us.
K. Jones: Does B.C. Rail or any of its subsidiaries currently have agreements to provide such services with any of the Rogers partners?
Hon. A. Charbonneau: Other than commercial agreements for the purchase of capacity that may exist between Westel and Unitel, for example, to our knowledge there are no contractual arrangements with any of Unitel's partners.
K. Jones: Does B.C. Rail or any of its subsidiaries currently have any arrangements or relationships with any other company within the telecommunications, data transfer or computer business areas?
[ Page 6909 ]
Hon. A. Charbonneau: With regard to corporate relations, none whatsoever.
K. Jones: Going beyond corporate relations, what about alliances, liaisons, agreements, business agreements or any other similar form?
Hon. A. Charbonneau: There are no current affiliations, connections, corporate interconnections or anything like that. The potential of looking at future strategic partners is a consideration, as expressed through the business plan, which I have said has not yet been considered by cabinet.
K. Jones: Why does B.C. Rail want to be in the long-distance phone business?
Hon. A. Charbonneau: I think the short answer is to make money for the taxpayer of British Columbia, who is the shareholder of B.C. Rail and Westel. But let me remind the member again that B.C. Rail has been in the telecommunications business for decades. In fact, there are some communities up our system that have had their service only from B.C. Rail. Many railways around the world, and certainly in Canada, have had a telecommunications component to their business, first to service their own needs and then, having the facilities in place, to service the needs of others on a contractual basis.
Furthermore, as I said earlier, before the member entered the House, I want to see diversification of B.C. Rail for its long-term survival. The transportation industry is a viciously competitive business, and I like to see them diversifying into trucking, intermodal, real estate, property management, telecommunications and the wharves. I encourage all of it in order to give us a strong, diversified company.
[5:15]
K. Jones: Based on what you have just stated, that it was intended to make money for the province, and based on the fact that there are other telecommunications processes throughout B.C., run by the province and private industry, could the minister tell us why, based on that premise, he wouldn't be going for expansion of the facilities to take in all government operations in the telecommunications field -- namely the ones that are operated by B.C. Systems Corporation? Why doesn't he go into other facilities that B.C. Hydro operates? Why doesn't he enter into liaisons with other suppliers of telecommunications in the province in order to become an economically feasible unit, to make lots of money? Does the minister seriously think that a unit as small as B.C. Rail's telecommunications side, now called Westel, could possibly be an economic unit within the competitive market that's coming forward in the telecommunications field?
Hon. A. Charbonneau: The member sounds as though he may have some affiliation with the telecommunications industry himself. Westel will stand and make a profit on its own. As to whether or not it expands, again, that is a matter of their business plan; and that is a matter of future policy not yet considered by cabinet.
K. Jones: Granted, there have been long-term customers along the rail line and services provided that were extensions in northern parts of British Columbia in competition with other suppliers in the telecommunications field -- going back, as I myself recall, to the Peace River dam project in the early sixties. But they were really token. They were just a little bit of the surplus microwave space that you had on your system. It wasn't intended to be a competitive process; it was just supplying some additional circuits for, specifically, government operations such as B.C. Hydro's hotline down to Vancouver from the dam project itself, and other things like that. Currently you are moving into a very competitive field. You are moving into the supply of long-distance telephone interconnection to your network, and you're really in with the big boys now. Do you seriously think that you have a role to play in that competition, and that as a very small player you can compete? Isn't there a possibility that other suppliers would come in and run parallel with you if there was anything in your area to make it worth their competing for? Is there anything within your current corridor that would be so profitable that it wouldn't be worthwhile for a major company to move in, pick off that particular profit centre and leave you with just the rural servicing?
Hon. A. Charbonneau: As I have indicated, we're in competition with major firms in a variety of other areas. We're in competition with major rail firms that dwarf us in size. We're in competition with trucking firms and intermodal firms that are much larger than we are. We're in competition in instances on the real estate and property side with others that are larger. We're in competition with wharves that are much larger. But we do very well and, in fact, turned a tidy profit last year, when many of the giants lost money by the hundreds of millions of dollars.
If this is the segment, be it a small segment or a larger segment, that B.C. Tel can make some money in and turn some profit in, and make itself a more viable corporation as a result of that diversification, then I encourage them and back them up fully in their attempts to do so. I would just add that we're not afraid of competition. For the 135-plus commercial customers that we now have up our line, we have been in competition with major companies for that business for many years. We have been able to build and to hold on to that portion of the telecommunications business against all comers.
K. Jones: Could the minister tell us, with regard to the spinning off of this subsidiary so that it could be dealt with under the federal regulation, whether the employees under that regulation will be falling under the Labour Code of Canada or under the British Columbia labour code?
[ Page 6910 ]
Hon. A. Charbonneau: The employees of Westel, with Westel being a federally regulated company, will be subject to federal labour law.
K. Jones: Could the minister tell us whether there will be substantial changes in their operation, and how the employees will be compensated for changes of the provisions under their contracts? Have they got a new contract as a result of this?
Hon. A. Charbonneau: At the present time the telecommunications workers in B.C. Rail are not unionized. I have indicated that that may be an opportunity for a union, but at present they are not. As to the future, I mention again that a business plan has been submitted, and in due course it will be considered by cabinet.
K. Jones: Does the minister have provision within his budget for Westel's operations?
Hon. A. Charbonneau: No, not within my budget.
K. Jones: What budget would that new operation come under?
Hon. A. Charbonneau: It would come through the operating budget of Westel, which is a subsidiary of B.C. Rail.
K. Jones: If it's a subsidiary of B.C. Rail, it should be included in the books of B.C. Rail; therefore it should come under the minister's jurisdiction through B.C. Rail's operating budget. Is that money included in that?
Hon. A. Charbonneau: B.C. Rail and Westel fall under the responsibility of this ministry but not within the budget of this ministry. B.C. Rail, as a Crown corporation, is responsible for its own budget. It is not within either my minister's office or the ministerial budget.
K. Jones: Could the minister then indicate to us what portion of the B.C. Rail budget will go to this company?
Hon. A. Charbonneau: Westel perhaps represents about 1 percent of B.C. Rail's budget. The specifics within the budget of Westel would be subject to the inspection of and oversight by the board of directors.
K. Jones: I need clarification from the minister. Is it the board of directors of B.C. Rail or the board of directors of Westel? Is the board of directors of Westel one and the same as the board of directors of B.C. Rail? Who do they report to?
Hon. A. Charbonneau: As a subsidiary, it would be subject to the overview of its own board -- that is to say, a Westel board. The Westel board is formed and seeded from the board of B.C. Tel -- I'm sorry, B.C. Rail. But I am contemplating adding a member to the board of Westel in order to bring some specific expertise to that board.
K. Jones: I was beginning to wonder whether B.C. Tel had added another subsidiary to their group of corporate members. Several times we've had this organization referred to as B.C. Tel. I'm glad the minister found the difference there.
With regard to the structure, I just want to clarify this once more. Did you say there is a common board between B.C. Rail and Westel at the present time? And are you just going to add one person of expertise to the Westel board?
Hon. A. Charbonneau: I'll have to go back through the transcript to find where I intended to say B.C. Rail.
B.C. Rail has nine members on its board. Three of those members are serving at the present time as the board of Westel, and I'm contemplating adding a fourth member to the Westel board.
K. Jones: Would the person you are contemplating adding to the board be the chief executive officer, president or general manager?
Hon. A. Charbonneau: No, we're contemplating finding some outside expertise -- someone who is independent of the corporation but who has expertise in telecommunications.
K. Jones: Going back to the employees, what is the status of the employees' pensions, and how will they be dealt with in regard to the formation of the new company?
Hon. A. Charbonneau: At the present time they all remain members of the B.C. Rail pension plan. But at an appropriate time, without any loss of vested rights or benefits, they will be transferred to a separate pension plan.
[5:30]
K. Jones: With regard to the capitalization of the Westel operations, will they be receiving funding from Build B.C.?
Hon. A. Charbonneau: No, there will be no funding from Build B.C. Whatever capital requirements Westel has they will obtain either from cash flow or from debt financing.
K. Jones: I have one further question for the minister. How often has the Crown corporations secretariat done a study within B.C. Rail?
Hon. A. Charbonneau: As with all Crown corporations, there is an ongoing relationship of information that flows back and forth; but to my knowledge there have been no studies done of B.C. Rail.
[ Page 6911 ]
K. Jones: Could the minister please indicate to us what that ongoing relationship is between the Crown corporations secretariat and B.C. Rail?
Hon. A. Charbonneau: The secretariat is charged with and has a mandate of some general oversight, and there may be communication between the Crown secretariat and the CEO every month or two. If I need information, I might request it directly from B.C. Rail or I might request it of the secretariat and have the secretariat obtain the information. I don't know if you are fishing for something that I am not aware of, but at the present time that's all I can advise you.
K. Jones: I have no intentions to fish; I'm just asking straightforward questions. Has the Crown corporations secretariat been requested to do any work with the B.C. Rail operations?
Hon. A. Charbonneau: As I said earlier, the secretariat has a general mandate for overseeing all of the Crowns. The Westel business plan, for example, would be reviewed by the secretariat and they would pass comments back to the corporation and to me. In other similar instances where I feel that I require an opinion on something, I would do the same thing, but there have been no studies done per se. The strategic plan of B.C. Rail was in existence before the secretariat. Its evolution and refinement carries on independent of the secretariat.
K. Jones: Has any senior officer been asked, or in the past two years have they done a review of any Crown corporation or ministerial operation?
Hon. A. Charbonneau: I'm not certain I can help the member opposite on this. There was a review of some management policies and management of B.C. Transit that the president of B.C. Rail participated in with members of the secretariat. Perhaps you could say that we have been involved in some studies of another Crown, but there has been no study of B.C. Rail by the secretariat.
K. Jones: Could the minister please indicate the results of that study of Transit and who the report was given to?
Hon. A. Charbonneau: B.C. Transit falls within the responsibility of the Minister of Finance.
K. Jones: That means, I take it, that the minister didn't want to answer the question.
One further question and then I'll turn it over to my colleague. What bonus provisions were provided for in the contract for the head of B.C. Rail?
Hon. A. Charbonneau: There is no employment contract with the president. With respect to the bonus, there is a performance-based bonus that last year amounted to some $36,000.
K. Jones: Could the minister gives us the details of the performance bonus arrangement? What are the conditions under which that bonus arrangement is made, and when is it triggered?
Hon. A. Charbonneau: In the general sense, it is performance-based on the rate of return of the corporation. I would point out to the member opposite that that performance has been the best in the industry. Furthermore, with respect to that performance, I would say that the demonstrated abilities of the president, particularly during the negotiations with Teck Corp. on northeast coal, have today probably paid back that bonus hundreds of times over.
K. Jones: There is usually a threshold when a bonus arrangement comes into play, and then there are percentages based on performance at different steps. Could the minister give us the details of the threshold, the percentages and the levels at which those percentages are triggered?
Hon. A. Charbonneau: A fairly standard industrywide procedure is followed whereby, as I've said before, performance is measured as a rate of return of the corporation -- budgetary, revenue and expenditure targets. How well was that done? How accurately? Were they exceeded or not? If they were not, then there's no bonus. If they were, a compensation committee of the board meets, does the evaluation, looks into a matrix and pinpoints the bonus that would flow.
D. Symons: I'm somewhat afraid that if Mr. McElligott continues to earn such a nice reputation, we may lose him from B.C. Rail -- and that would be a shame. So I don't know if I should wish him success or not in that case.
Going back a little way to some comments and answers given previously, I'm somewhat confused, I guess, because we seem to have an authority in a board of B.C. Rail directors; we seem to have a cabinet that's involved in decision-making with B.C. Rail; we indeed have the ministry; and we have this Crown corporations secretariat. This Crown corporations secretariat seems somehow superfluous; it seems to be covering what already is available through other organizations. It makes me wonder: where does this fit in? You've mentioned it comes in and looks over your shoulder every so often. But why is that necessary? Are not whatever services it performs not already possible through either cabinet or the ministry itself? I don't see how this Crown corporations secretariat fits in there.
Hon. A. Charbonneau: If you have questions with respect to the Crown corporations secretariat, they have to be delivered to the minister responsible, the Minister of Finance.
With respect to cabinet involvement, cabinet only gets involved in the most major of policy decisions. That's fair enough. If B.C. Rail wishes to take over CP, we would probably like to know about it and debate it at cabinet level first. Other than that, 99.9 percent of the
[ Page 6912 ]
decisions made by this corporation are made by the president in concert with the board of directors and the chair. From time to time we have other oversight responsibilities with the Crown corporations secretariat. I find them very valuable for some analyses and opinions. Of course, I put my bit in from time to time. Again, only on major policy decisions would cabinet ever be involved.
D. Symons: I have one last question on that Crown secretariat. Do B.C. Tel, Westel, or any of those organizations involved with it, have to contribute in any way to the operation of the secretariat's office? Are they funding a portion of that office?
Hon. A. Charbonneau: I see that the member opposite has caught the virus and is now referring to B.C. Tel as well. I think you meant B.C. Rail.
All Crown corporations pay a levy to sustain the operation of the Crown secretariat. Again, I would remind the member opposite that his questions with respect to the Crown secretariat must be addressed to the responsible minister.
D. Symons: Moving on a bit, you mentioned a few minutes ago that the board of B.C. Rail has nine members. I found that interesting, because so many Crown corporation boards that have been appointed over the last two years seem to have twice that number of members. One question I'm asking is: are you finding that nine...? You're suggesting that through Westel -- I'll get it right this time -- you might have one more member on it. To me that number seems to be optimal for good operation of a board, and yet I see so many boards that are so much larger.
Secondly, I wonder if at a later date you might supply us with the remuneration -- and packages for expenses, etc. -- that these board members receive.
Do you think that nine is the optimal figure for a board? That leads into the other question, of course: why are all these other boards much larger?
[5:45]
Hon. A. Charbonneau: I can only speak for this board, and of course it's optimal. With respect to the other boards, you will have to ask the responsible ministers. As for the compensation of boards members, I would be pleased to provide you with the schedule of either the per diem or the expense allowances.
D. Symons: Thank you for that answer.
At what stage are the negotiations between B.C. Rail and its council of trades? The annual report mentions that they have been without a contract since the end of the year. Have those negotiations been settled now, and if they have been, what was the across-the-board increase in wages?
Hon. A. Charbonneau: There is not a contract in place at this time. The negotiations at the trade tables have been underway for some time. They'll be wrapping up shortly, and then the negotiations will move to the main table.
D. Symons: It seems they have been a long time coming. Let's hope that they will be successful.
I will move on now to Squamish. There was an environmental study on the Squamish estuary because B.C. Rail wants to expand its port facilities there. I'm wondering if that study has been completed, and what the status is at this time of the port development at Squamish.
Hon. A. Charbonneau: The Squamish estuary management study has been ongoing, with public hearings. The final report will be forthcoming shortly.
D. Symons: I wonder if the minister might share with us the rationale for the move of 45 jobs from the Squamish repair and rebuild centre to Prince George. It would seem that with the development of the Squamish port project -- which seems imminent, if the report is coming out shortly -- it would have been beneficial to have Squamish as a hub in the operation instead of a spoke.
Hon. A. Charbonneau: They are two completely separate things, one being maintenance operations for the railway, the other being a potential port operation. In consolidating some activities in Prince George, we are simply following an industry-wide pattern of consolidation for efficiency.
D. Symons: Just a very few last questions here. We're coming very near the end. It seems that the major railways in Canada.... This is not to downgrade B.C. Rail, but Canada's two large national railways have closed quite a few lines over the last number of years. Has B.C. Rail closed off any of its feeder lines, or is it contemplating doing this? I guess you can't answer the second on future policy, but what is the status of B.C. Rail feeder lines? I know of some extension that was built a few years back. Have any lines been closed?
Hon. A. Charbonneau: In contrast to the national railways, which had tremendous branch line networks throughout the country and are now in the process of pruning, B.C. Rail never had a large assembly of branch lines. There have been no line closures, other than that of Dease Lake ten years ago.
D. Symons: I have one last question, and then my colleague has one more as well. This is one that impinges, I suppose, on many of the ministries and Crown corporations. Will aboriginal land claims have an effect on B.C. Rail or any of its subsidiary companies? Will they have to settle claims where property is in question or be in any way involved with land claims?
Hon. A. Charbonneau: The right-of-way of B.C. Rail is held as fee simple with a few exceptions where we may be in some minor trespasses, which we are prepared to negotiate. I do not see a major involvement.
[ Page 6913 ]
K. Jones: Could the minister please table with the House the remuneration and benefits for senior executives of B.C. Rail and its subsidiary companies? On March 18, 1992, the salary of the president and CEO was listed at $229,000. Could you tell us whether that has been changed and what the current level is, and what the benefits such as pensions, severance and bonus provisions actually amount to?
Hon. A. Charbonneau: I would be pleased to table that information for the member opposite. There are no severance agreements, because there are no employment contracts.
I would point out that you have set a record for a member not having a B.C. Rail line in his district.
K. Jones: I appreciate the minister's compliment for my knowledge of the area of the rail company operations, beyond the fact that it doesn't operate within my riding.
I would also like to ask if there was any benefit package to be presented in that information.
Hon. A. Charbonneau: Along with any salaries, I will table any benefit provisions.
D. Symons: The last comment about the railway not being in my colleague's riding reminded me of a song. I forget the exact words, but it has something to do with the railroad running through the middle of the house.
I have come to the end of my questions on B.C. Rail in the House here today. I would like to thank the gentlemen for being here to assist the minister with his answers, and I move the House rise and report progress.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Hon. A. Petter moved adjournment of the House.
Motion approved.
The House adjourned at 5:55 p.m.
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