1993 Legislative Session: 2nd Session, 35th Parliament HANSARD

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, JULY 15, 1993

Morning Sitting

Volume 12, Number 7

[ Page 8747 ]

The House met at 10:03 a.m.

Prayers.

Orders of the Day

Hon. M. Sihota: I wish to call committee on Bill 49. I also wish to advise all hon. members that Committee A will be convening in the Douglas Fir Room to debate the estimates of the Ministry of Finance.

ADULT GUARDIANSHIP ACT
(continued)

The House in committee on Bill 49; H. Giesbrecht in the chair.

On section 19 (continued).

G. Wilson: When we adjourned last evening we were looking at the provision of powers by a court to a guardian. In reviewing the balance of last night and this morning, I think the optimum word here is "may." I think that might give some comfort to those who have expressed concern about these powers.

I wonder if the minister might comment on two areas that are of some concern. The first is the provision with respect to the adult's work, which I think we just started last night. Would the minister just remind us of what that situation is. The second is a question about subsection 19(g): "authorize the adult's admission to a Provincial mental health facility or psychiatric unit under the Mental Health Act...." Having read and reviewed the Mental Health Act, I see that that's an involved procedure. In fact, in this instance it looks like the individual's right in that respect could be removed or weakened if a court should give those powers to a guardian who may be less sensitive to the individual's need. Would the minister tell us what safeguards there are against that in this section.

Hon. C. Gabelmann: We're fortunate in being able to draw on ten or 15 years of experience with this wording in other jurisdictions that are ahead of us on this matter and have used exactly the same approach as spelled out in 19(g). Just to remind members, the court will only order those elements of these provisions that are appropriately conveyed to the guardian. With provisions such as this, the authorization would only be provided to the guardian if the court was convinced that the adult was unable to exercise the kind of discretion or decision-making that needs to be made in these circumstances. Once it happens, the Mental Health Act provides the same kind of protection for the individual in this case as it does for any other individual who may come under its ambit. I'm not sure what more I can add at this point.

G. Wilson: Given that, section 19(f) says that a court may empower a guardian to make a decision on whether or not an adult should receive health care. Surely there must be a provision for practitioners to make some decisions as to whether or not health care is in the best interests of an individual.

Hon. C. Gabelmann: Clearly the actual health provisions would be determined by the health care practitioner, but the overall responsibility for making a decision about seeing a health care practitioner could be, if the court so chooses, delegated to the guardian in this case. What is more likely to happen in a court order -- it's certainly the intent of all of this legislation -- is the transfer of power from the adult to a guardian in those areas where the adult is incapable, and clearly proven to be incapable, of handling all of their affairs themselves. They may be able to handle financial affairs but not health care matters, or vice versa. This is a bit of a shopping list to give the courts some sense of the kinds of issues that could be set out in providing a guardian terms of reference.

Section 19 approved.

On section 20.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 20,

(a) in the proposed paragraph (a) by deleting "section 34(e)" and substituting "section 34(f)", and

(b) by deleting the proposed paragraph (g) and substituting the following:

(g) to invest the adult's assets in investments that a trustee is not authorized to make under the Trustee Act, or.]

Amendment approved.

On section 20 as amended.

C. Serwa: I move the amendment standing in my name on the order paper.

[SECTION 20, is hereby amended by adding the following subsections:

(i) to alter in any way the adult's will.

(j) to move the adult's place of residence outside the Province of British Columbia.]

There are two items that I feel should be covered with respect to latitude. One is specifically to do with altering a will, and the other is to do with moving an adult's place of residence outside the province.

Hon. C. Gabelmann: On the surface I don't think I see any particular objection, but given the way we've done this legislation, which is with the active and thorough involvement of the community groups that have been helping us now for four years in respect to this, I would like to suggest that I take the two provisions suggested by the member directly back to those groups. As I say, on the surface the alteration of a will and the removal from outside the province make sense. I'll ask them for their views on the matter and see if a consensus can be reached between the government and the groups, and the member as well; we would 

[ Page 8748 ]

certainly involve him in those discussions. Should we reach an agreement about how to proceed on those issues, I would be very happy to come back next year with whatever amendments are appropriate.

[10:15]

It's difficult on our feet in a debate to recognize all of the implications that may exist. There may be another section in this bill or in another bill that may impact or also need to be amended in order to make these amendments work. I would undertake to have a careful look at it over the next six or eight months. Next year, when some amendments are introduced, as I'm certain will happen in respect to this package of bills, we will take these under consideration too.

The Chair: The member may wish to withdraw the amendment rather than have it voted down.

C. Serwa: On that basis, I will withdraw the amendment standing in my name on the order paper.

Section 20 as amended approved.

On section 21.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 21, in the proposed section 21 by deleting everything after "but in that case" and substituting "section 19(1) and (2)(a) of the Health Care (Consent) and Care Facility (Admission) Act applies."]

Amendment approved.

On section 21 as amended.

G. Wilson: Would the minister briefly describe the relevance of the section to be added and why it substantively provides in a positive manner what is in section 21 as it is now?

Hon. C. Gabelmann: The member will recall that we did an amendment to section 18 last night. In order to make this section consistent with the new section 18, this amendment was required.

C. Serwa: Who will decide and how will it be decided if there is substantial agreement among the health care providers? How will you make a decision on that with respect to health care?

Hon. C. Gabelmann: Again, this is a subjective matter. "Substantial agreement" doesn't have a precise definition. But the protection is that if there is disagreement among one or more of a group of people who are advising, they have the opportunity or the right to go to the public trustee and state their case. Also, either the public trustee or that individual has the right to go to the court to have his or her perspective on the issue heard, considered and decided by the court.

C. Serwa: I accept the explanation. My concern comes in when I recognize the responsibility imposed on the public trustee and the necessity to act in a timely manner, with the expressed concern for the best interests of the adult. My concern is about the logjam, because as we continue with this legislation, and as the public becomes more aware and starts to utilize the opportunities in this legislation, the public trustee will be confronted with a greater job. I don't know what the plans are for increasing staffing to handle this load.

Hon. C. Gabelmann: First of all, there isn't an expectation in section 21 that a lot of people will be involved. It's a matter that won't involve many people; but yes, there will be an added obligation on the part of the public trustee's office. We have acknowledged from the beginning that as we move into this guardianship legislation, there will be additional costs. The member knows that we have talked about costs, when it's fully operational, in the order of $11 million or $12 million. Some of that will go toward adequately funding the public trustee's office in order to deal with issues of this kind.

G. Wilson: Coming back to a point raised by the member for Okanagan West, recognizing that it's a somewhat subjective decision that has to be made, presumably there has to be somebody who has final authority. Are you suggesting that the final authority in that decision rests with the trustee? Or does it rest with the guardian? Who has final authority?

Hon. C. Gabelmann: The final authority rests with the court. But the decision-making will hopefully be determined in a consensual way with the people involved in the team making the assessment. They may use the trustee's office, which will help and provide some guidance, but the final authority is in the hands of the court.

J. Tyabji: I missed the first few minutes; I was listening in the office. I'm not sure if the Attorney General answered this at a time when I wasn't listening. I heard him referring to legislation in other jurisdictions, with regard to one of the earlier sections. Is this section typical of legislation in other jurisdictions, and if so, when has it been exercised?

Hon. C. Gabelmann: Unlike the provision I referred to earlier, this is a more recent development in guardianship legislation. This particular provision is in the Ontario legislation, but it hasn't had a lot of experience in the way that some other provisions have. But it's very much the consensus of groups involved in shaping guardianship policy in various parts of the world to have a provision of this kind.

J. Tyabji: Could the Attorney General give an illustration of when this section would be used? Has there been a precedent where this has come into effect? On initial reading, it's a bit alarming. If there's an illustration that could perhaps help us visualize when it would be necessary, I think that would be useful.

Hon. C. Gabelmann: This is an everyday occurrence in our lives. Physicians are often in a very 

[ Page 8749 ]

uncomfortable position of having to make health care decisions about their patients without anybody with legal authority to help them make those decisions. I am sure that physicians will agree that this is a provision which will give them greater security and certainty, and a reference point as they make these very difficult decisions, as I say, on a daily basis.

J. Tyabji: I know that when Bill 51 was before the House and we were debating the issue of consent, there was some concern that there was a very broad-based definition of consent. As the Attorney General said, this happens every day in terms of discretion on the part of the physician or the person. I guess the Attorney General is saying that the decision-making authority is now being shared by the guardian and substitute decision-maker. Is it correct that they are now in a position to give some more authority?

When you look at the definition of consent in Bill 51 and the way consent can be interpreted, in effect you can assume consent on the basis of conduct; it doesn't even necessarily have to be verbal or written. If there is some sort of visualization, that would be extremely helpful. Even though the Attorney General says it happens on a daily basis, it's still a little bit difficult to understand a concrete example of where this would be used.

Hon. C. Gabelmann: In considering this legislation, I think members first of all have to understand the basic principle. The guardian only has powers to make decisions following a court determination that the adult is unable to make those decisions. It's very narrow to begin with. In a normal situation where a physician makes a decision if there's a health care issue, they would consult with their patient, if they could -- if that consultation was available -- and the patient would make the decision or give the guidance. In this case, the courts have determined that the adult is unable to make that kind of determination. Therefore the individual's authority is transferred to the guardian, and the guardian acts as if they were the individual patient. It's really very straightforward.

In a practical situation, the physicians -- probably more than one in a life-threatening situation -- would discuss appropriate care for the individual. They would talk to and take direction from the guardian on matters that are or should be beyond the ability of the physicians to determine -- those issues that would normally be a decision of the individual or the close family. But in this case, if the power were transferred to a guardian, the guardian would make that decision.

J. Tyabji: Obviously the guardian has the right to refuse consent to health care in a life-threatening situation. Last night we had a preliminary discussion about the case of a person trying to appeal the determination of capability and maybe the guardianship itself. What would be the case if the individual in question were to say that personally they would like the health care? They're not legally in a position to say that, but they happen to have that opinion. Is there some avenue for appeal?

I know these are time-sensitive things. But when a guardian refuses consent even if the health care is necessary to preserve the adult's life, I think the adult whose life is in question, even though they don't have any legal rights with regard to consent, should have some avenue of appeal. I don't know if we're talking about organ transplants or painkillers; that's why I was asking for a concrete example. With something of this magnitude, surely the adult who is involved, even though that person may have been deemed through psychological exams to not have the rights to make financial or asset determinations, might still be someone who'd say: "If I had my choice, I would consent to it. My guardian has said no." Where does that person go? Do they have to go to the courts? This is a very time-sensitive issue.

Hon. C. Gabelmann: The guardian has an absolute obligation to always, as best as possible, find out what the adult's wishes are in a particular situation. If that didn't happen, the physicians would not go ahead and exercise the guardian's conclusions. That's the safeguard that's built in here.

Section 21 as amended approved.

On section 22.

J. Tyabji: In this section as well as many of the other sections, and in Bill 50 more than any other, we talk about asset investment and the ability to manage the person's affairs. I see some amendments in Bill 50, and when we get to the consequential amendments, I see a lot of reference to securities investment. We'll canvass the role of the government guardian a bit more in Bill 50. But here, in the event of the guardian taking things in a different direction than the adult, is it also incumbent on the guardian to consult with the adult, or does the guardian have free range?

Hon. C. Gabelmann: The guardian always has an obligation, a responsibility and a duty to consult as extensively as possible with the adult.

Sections 22 to 24 inclusive approved.

On section 25.

C. Serwa: I have difficulty rationalizing this particular section. It seems to me that at this point, the court has appointed a guardian. We can presume that the guardian in this particular case is responsible for the financial aspects of the adult's property. If the adult is incapable, the responsibility has to be on the court-appointed guardian to make these decisions. It doesn't seem appropriate for an incapable adult to make a transaction. Even if market value is deemed to have been realized, it may be a family possession that, while having a tangible market value, has a very high value with respect to the family concerns. Either an adult is incapable and should not make a transaction, or is capable and may make a transaction; but I have difficulty rationalizing the intent of this. It should be 

[ Page 8750 ]

either one or the other, but not rationalizing a sale, a disposal of goods, even if market value is in fact realized.

[10:30]

Hon. C. Gabelmann: First of all, this provision is taken directly from the existing provisions in the Patients Property Act that have been in place for some time. That act is being replaced by this bill. Secondly, this provision only applies in the period prior to the appointment of a guardian -- in that intervening period, not after the appointment of a guardian.

A. Warnke: Just to follow up on that, there is a view that perhaps this section might constitute a bit of a loophole. Perhaps the best way to approach this is by asking a question of the Attorney General: how does a reasonable person make such an assessment, particularly if the reasonable person sees the opportunity to profit from this situation?

Hon. C. Gabelmann: The safeguard here, as elsewhere, is that in the final analysis the court could make a decision suggesting that the purchase or the business decision was not made in the best interests of the adult. The member talks about a possible loophole. It's covered by the ability of the court to make a determination.

Sections 25 to 27 inclusive approved.

On section 28.

J. Tyabji: I note that section 28(2) says: "If a conflict of interest or a potential conflict of interest arises between an adult and the adult's decision maker or guardian, the decision maker or guardian must (a) promptly notify the adult, the adult's monitor, and the Public Trustee, and (b) follow any instructions the Public Trustee gives about the conflict." That's wonderful if the guardian feels inclined to do that. What is the other monitoring body? How would it be monitored in the event where a conflict of interest occurs and the guardian doesn't notify anyone?

Hon. C. Gabelmann: If the guardian fails to perceive the conflict or decides not to initiate any action as a result of a possible conflict, the monitor can raise it. Any individual who's aware of the possible conflict can raise it with the public trustee. I think we commented on this last night. For example, a bank may note that something unusual is happening and would simply call the public trustee's office. The public trustee would then have the opportunity to investigate and make any instructions that were necessary.

J. Tyabji: I just have one point of clarification. Will some of the institutions like banks or, for example, securities investments...? I think that is where the greatest potential for conflict lies. With a guardian who is handling the assets -- driving the securities -- and who maybe personally also has some interest there, are the people handling that going to be informed that they have this avenue to pursue and can contact the public trustee directly?

Hon. C. Gabelmann: There will be several ways in which the institutions in our society will be aware of the issue the member raises. First of all, there will be a public education program around this whole issue so that there is a greater public understanding of these issues.

Secondly, the institutions will be notified of guardianship relationships because of the fact that they are then dealing with a guardian rather than with the individual whose money or assets are being dealt with. So they know. If anything unusual is happening, those institutions would, as a matter of course, make contact with the public trustee. As I say, there will be an educational program that will deal particularly with bodies such as financial institutions that need to know.

I must say that I regret very much that two members of the House didn't take advantage of our many offers for consultation on this bill, because it would have made the debate a lot smoother. Many members did take advantage of the consultation with the drafters of this legislation and, as a result, have a far better understanding than members who, for the first time now, are trying to plow their way through the legislation.

J. Tyabji: Perhaps if we weren't flooded with such an avalanche of legislation, some of us would have had time to attend the innumerable briefings. But some of us are trying to monitor every bill as it comes through, and we don't have time for all the briefings.

With regard to the last question on the conflict-of-interest section, how serious a situation is it when a guardian is found in a conflict-of-interest position but hasn't notified the public trustee?

Hon. C. Gabelmann: The seriousness of it would depend on the issue itself. The remedy, if one is required, is through a civil procedure.

Section 28 approved.

On section 29.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 29,

(a) in the proposed subsection (1)(b) by deleting "and in the adult's best interests", and

(b) in the proposed subsection (2) by deleting "or in the adult's best interests".

(c) in the proposed subsection (4) by deleting "subsection (3)" and substituting "subsection (2)".]

Amendment approved.

On section 29 as amended.

C. Serwa: By deleting "and in the adult's best interests," I am a bit concerned that the decision-maker -- the court-appointed guardian -- has the potential to 

[ Page 8751 ]

leap very quickly from the current wishes of the adult to the best interests as determined by the court, the public trustee, or the guardian. I have some concern about the change from "current wishes" to "best interests." Perhaps the minister would enlighten me on that.

Hon. C. Gabelmann: This amendment -- and therefore this section, if it's amended -- is designed to provide extra protection for the adult. The first thing looked at is the current wishes, so that would override "best interests." Best interests would be looked at subsequently if you are unable to determine the current wishes. The best interests are secondary to the current wishes.

C. Serwa: In section 29(2) the statement is: "If the adult's current wishes cannot be determined...." What type of reasonable effort is implied? There appears to be nothing in the section that encourages some form of reasonable effort. What effort is envisioned with respect to determination?

Hon. C. Gabelmann: I think the words in section 29(1)(a) provide the guidance for section 29(2): "to the greatest extent possible." That's a pretty high obligation on the part of the decision-maker or guardian.

Section 29 as amended approved.

Sections 30 and 31 approved.

On section 32.

C. Serwa: If the confidences are not held, in spite of the duty to keep information confidential and private, what happens to the decision-maker -- the adult guardian?

Hon. C. Gabelmann: There are several possible remedies. First of all, they could be sued; a civil remedy exists. Beyond that, an application could be made to the court to have that person removed for failing to act in the best interests of the adult.

G. Wilson: I am sure that in the comments made earlier by the Attorney General he wasn't suggesting that ministerial briefings should be a substitute for open and full debate in this House. His responses are recorded in Hansard, and therefore provide an ability for people to refer to the intention of the government. I am sure that he doesn't think that ministerial briefings should be a substitute for full and open public debate in this House.

Having said that, section 32 -- "Duty to keep information confidential" -- would seem to be an exceptionally important section of this bill. All kinds of duties and obligations are provided to a trustee and guardian. I don't see anything in here that provides for a consequential effect of failure -- outside of remedies to the court -- from an individual who may want to go through civil litigation. The act doesn't stipulate, given that somebody discloses confidential information, that there can be some direct remedy taken. I wonder if I've missed it in the bill, and if not, why it isn't here. As the minister knows, civil litigation is an expensive and timely proposition, particularly when a person is encumbered in some way and therefore not able to act. In this act the powers of the guardian are substantial. Surely there has to be some kind of remedy stipulated in the act.

Hon. C. Gabelmann: Even if there were a provision prescribing a penalty or a consequence of failure to adhere to the confidentiality section, there would still be access to the court. The individual who is being questioned would argue, and the courts would decide whether or not the charges or allegations were correct. So there's no need to have a particular provision with respect to this.

[10:45]

Going back to my earlier comments, I don't want to make this a political debate. The bill is too important and significant for us to fall into partisan chippiness over it. I agree entirely with the member for Powell River-Sunshine Coast when he says that we should have a full debate in here and that it should be recorded by Hansard so that people can understand what the issues of consequence are and what the answers are with respect to them. But when we have these debates, it's important that they are informed debates and that people know what they're talking about. The public would then be so much better served. That's the purpose of having briefings. They're not to provide answers that we don't want to provide on the floor, but rather to provide an understanding of the concepts and principles, how one section links to another and how one bill integrates with yet another. Then we can have the kind of fully informed debate that is so very important in our parliamentary system. Unfortunately, when members refuse to participate in finding out what the legislation is all about, we have the kind of ill-informed debate that occurred for a while last night and continues again this morning. I very much regret that.

Sections 32 to 36 inclusive approved.

On section 37.

Hon. C. Gabelmann: Hon. Chair, I move the amendment standing in my name on the order paper.

[SECTION 37, by deleting the proposed subsection (9)(c) and substituting the following:

(c) inform the parties who were served with the application that a copy of the report is available for inspection.]

Amendment approved.

Section 37 as amended approved.

Sections 38 and 39 approved.

On section 40.

[ Page 8752 ]

J. Tyabji: I'd like to pursue my totally uninformed and ignorant debate. Under section 40, it says: "If a decision maker or guardian dies, becomes incapable or is for any other reason unable to act...." With regard to "is for any other reason unable to act," where does that discretionary power lie -- with the public trustee? In the event of it lying with the public trustee, are there regulations which guide that discretion?

Hon. C. Gabelmann: The trustee can step in temporarily, but it's up to the court to decide whether or not a new guardian needs to be appointed.

J. Tyabji: So section 40 is making a provision when this situation is already before the courts. How does it end up in the courts? I don't see any reference to that.

Hon. C. Gabelmann: As is referenced in section 40, that would work under section 10. The member would need to go back to section 10, and the answer is there.

J. Tyabji: Actually, I'm referring to the first part of this section, where it says: "If a decision maker or guardian dies, becomes incapable or is for any other reason unable to act...." That part of the section activates the rest of the section. I'm just wondering where the discretion lies in "is for any other reason unable to act." Who decides, and on what basis?

Hon. C. Gabelmann: This is designed to catch a situation where a guardian is out of the country for six months, let's say, on an extended trip for some reason, or where they have perhaps refused to act for some reason. Then the public trustee can step in to temporarily manage the affairs and arrange, under section 10, for the court to appoint a new guardian.

J. Tyabji: To go back to the question, where does this discretionary power lie -- with the public trustee? What is the action of the public trustee that activates the beginning of section 40? The minister has said, for example, that if the guardian is out of the country, if the guardian refuses to act.... But who is monitoring that? Through what process? When do they decide to act? What is the basis for this section?

Hon. C. Gabelmann: A decision will need to be made, and somebody will say: "Well, where's the guardian?" The guardian doesn't exist, so you phone the public trustee; and then what I have talked about flows.

J. Tyabji: I still don't understand. So this is a completely arbitrary section to cover the event of someone deciding they are going to call the public trustee and say there is a need for a guardian to act? Who is saying: "Where's the guardian?"

Hon. C. Gabelmann: It's not at all arbitrary. This is a safeguard for the individual, so that a decision can be made if a decision-maker isn't available. If a decision-maker either opts out, decides they aren't interested any more or are out of the country, and a decision needs to be made, then the adult -- who this legislation is all about -- has some protection. They -- either on their own, if that's possible, or someone else on their behalf, whether it's a physician, the family, a banking institution, or whatever the situation may be -- will get in touch with the public trustee's office and point out that there's a failure to act on the part of the court-appointed guardian. The process would then begin to have the courts appoint a replacement.

J. Tyabji: Is there provision for the public trustee to decide that the discretion is with regard to "unable to act," or is it something that's driven from outside of the public trustee's office? What I'm getting at is, who is the person who says: "The guardian is unable to act. Therefore under section 40 we can now move through to section 10 and appoint someone new"?

Hon. C. Gabelmann: Anybody could alert the public trustee to the absence of a guardian, and then the trustee would do as I said earlier.

C. Serwa: One small concern that I have in section 40 is that while the public trustee is given added responsibility, there is no indication of the speed or the urgency of acting in a timely manner. It comes back to a previous question that I asked with respect to the type of loading that the public trustee is going to have. Would it not be appropriate to have some reference to "act in a timely manner"? Is that expressed or implied in some other section? It's not here, in any event.

Hon. C. Gabelmann: The member makes a point that I was giving more serious consideration to than the people I consult with. I think the technical answer here -- and I think it's the real answer -- is that the public trustee has an obligation to act quickly. If the public trustees fails in that obligation, then they fail in their public duty and fail in their office, and probably shouldn't hold the job any more.

Section 40 approved.

On section 41.

Hon. C. Gabelmann: Hon. Chair, on section 41, I move the amendment standing in my name on the order paper.

[SECTION 41,

(a) in the proposed subsection (4), by adding "written" before "approval", and

(b) by deleting the proposed subsection (5) and substituting the following:

(5) The Public Trustee is entitled

(a) to be heard if the litigation guardian applies to the court for approval of a settlement or compromise of a claim referred to in subsection (3), and

(b) to any costs the court orders.]

Amendment approved.

Section 41 as amended approved.

[ Page 8753 ]

On section 42.

A. Warnke: I want to pursue the question of the relationship between British Columbia and other jurisdictions. I strongly suspect the Attorney General has been well informed on this with regard to the prospects of reciprocal agreements and that sort of thing. How necessary and extensive are reciprocal agreements with jurisdictions outside of British Columbia? How far has this been explored? I think there are still some questions about other jurisdictions, such as how they would recognize how we make orders and that sort of thing.

Hon. C. Gabelmann: First of all, both Alberta and Ontario have similar provisions to this one in their legislation. Other jurisdictions that have legislation generally comparable to ours so far include, in Canada: Alberta, Saskatchewan, Ontario and Quebec. Outside of Canada there are: New Zealand, several Australian states, several American jurisdictions, and several, if not all, Scandinavian countries. These countries have or are very close to having this kind of legislation -- maybe at a similar stage to us. So in those jurisdictions orders would be accepted; from others without this kind of legislation they would not.

A. Warnke: As a quick follow-up, those American states I have in mind.... Without this kind of arrangement or jurisdiction -- and other provinces, for that matter -- how is the ministry dealing with that?

Hon. C. Gabelmann: The point is that where there is comparable legislation, the orders developed there would be accepted. Where there is not comparable legislation, then a fresh application would have to occur here in British Columbia under our legislation.

Section 42 approved.

On section 43.

A. Warnke: To follow up on our discussion on section 42 on the appointments of persons outside of British Columbia, there is some concern as to how to hold such people accountable. Has the ministry explored this?

Hon. C. Gabelmann: The first point to make is that this section is very similar and is in fact taken from the Patients Property Act, so the principles are not changed from what exists now. In the absence of protocols with other jurisdictions, there is no ability short of a civil remedy to accomplish what the member talks about.

Section 43 approved.

On section 44.

Hon. C. Gabelmann: On section 44 I move the amendment standing in my name on the order paper.

[SECTION 44, by deleting "to stop the abuse or neglect" and substituting "to seek support and assistance".]

On the amendment.

A. Warnke: Since the words are quite different, I would appreciate a quick rationale for the change.

Hon. C. Gabelmann: The wording has been changed to reflect "seek support and assistance" rather than the term "stop the abuse and neglect." It's made a more positive duty. The change will provide greater latitude to the community response networks -- the teams of people who may be involved -- to respond to adults who are abused or neglected. But this does not imply that except for restraint or disability, adults are able to stop the abuse or neglect. It's a more positive way of creating the obligation.

G. Wilson: As a reflection on last evening, I find it interesting that the minister, who has obviously been in briefing after briefing, suggested that one day this House might be reformed in such a way that we would allow those who know the answers to actually provide them to us directly. That would absent the minister entirely, and perhaps we might get this thing done a lot faster.

[11:00]

At the risk of once again seeming uninformed, let me ask another question. The minister says that doesn't imply that those who are able to seek support or assistance but are unable to stop the abuse are no longer contained under the purposes of this section. I wonder, because while it may be possible for somebody to seek support and assistance, they might not be taken seriously or be able to access any assistance; they would therefore be unable to stop the abuse or neglect. Effectively that says you can access it if you can't get to somebody who might help you, but not if you can get somebody and can't convince them that you're in need of help.

Hon. C. Gabelmann: The amendment takes into account the fact that many adults are unable to stop the abuse or neglect beyond those limiting subsections.

C. Serwa: I don't know if it was covered; I wasn't paying quite as close attention. Section 44(c) makes reference to their ability to make decisions about the abuse or neglect. Shouldn't that be their ability to make decisions to stop the abuse or neglect?

Hon. C. Gabelmann: That's what it means. It's about the ability to make decisions about stopping the abuse or neglect. We're actually still on the amendment, but I don't think it matters. This section, read with the amendment incorporated, will make that clear.

Amendment approved.

Section 44 as amended approved.

[ Page 8754 ]

On section 45.

G. Wilson: Section 45(1) says this Part applies whether an adult is abused or neglected in an public place, in the adult's home or any other place, except a correctional centre. Could the minister tell us if the definition of "correction centre" is broad enough to include where a person is incarcerated because of a mental illness that has created criminal activity or behaviour that resulted in a court ruling?

Hon. C. Gabelmann: No, absolutely not. Only correctional centres as defined under the Correction Act.

G. Wilson: Could the minister tell us what the relevant section is? To be honest, I'm not fully conversant with the Correction Act, but presumably there must be some provision in there that gives the minister comfort that abusive individuals who may be incarcerated, especially those who are incarcerated for long periods of time, would not necessarily be potential recipients for this kind of assistance, if indeed there is abuse and neglect. Is there something in there that says that in those institutions there is some other provision for that prevention?

Hon. C. Gabelmann: I'm told that the Correction Act is full of remedies for that potential situation.

C. Serwa: I move the amendment standing in my name on the order paper.

[SECTION 45, is hereby amended by adding to subsection (1) the following: "to which only section 46 in this Part applies."]

The purpose of the amendment is to propose that physical and sexual assault that occurs in correctional centres has to be reported. It makes reporting mandatory. That is not evident or clear in this particular section.

Hon. C. Gabelmann: I think the member is getting ready for a more significant amendment he has to the next section, dealing with "may" versus "shall" with respect to reporting. He has decided to try and cover all his bases here by proposing an amendment under section 45. Whatever the answer is on "may" versus "shall" in section 46, this amendment wouldn't be appropriate in this case, because we're dealing with correctional facilities where other more appropriate remedies already exist.

Amendment negatived.

Section 45 approved.

On section 46.

A. Warnke: I believe that the member for Okanagan West might want to say something on this subject. I will jump to section 46(2). The wording of this section is: "A person must not disclose or be compelled to disclose the identity of a person who makes a report under this section." Perhaps this is just a picayune point, but the word "person" is used in two different ways here. It creates a bit of confusion, especially when there are other persons, such as a chronic complainer or someone who is jealous and wants to be involved in some way, who transmit information without disclosure. Just to help here, it would perhaps be best if the Attorney General could define the two uses of the word "person" here. That would help clarify it.

Hon. C. Gabelmann: I'm not at all sure there are two different uses of the word "person." "Person" is a word that shows up in drafting language to refer to essentially anyone. In fact, in some instances it's not even a human being; "person" sometimes refers to something different than that -- an institution, for example. In this case it's just very general language, so that any person must not disclose. I don't think there's anything more than that here.

A. Warnke: I also want to follow up a bit on the prospects of chronic complainers and nuisances constantly bringing in information or being a nuisance by bringing in information once -- false information and rumours, for that matter. I can think of all kinds of hypothetical examples. To what extent can that be dealt with?

Hon. C. Gabelmann: The final words of section 46(3) are: "...unless the person made the report falsely and maliciously." Hopefully, that would capture the kind of situation the member is describing.

C. Serwa: I move the amendment standing in my name on the order paper.

[SECTION 46, is hereby amended by adding to subsection (1) the following:

"and must report all such circumstances to a designated agency where the information indicates:

(c) physical or sexual assault, or,

(d) (i) deliberate psychological abuse or mistreatment, or

(ii) other mistreatment or neglect,

reasonably likely to cause irreparable physical or psychological harm."]

On the amendment.

C. Serwa: We have a great deal of concern with the lack of mandatory reporting and also that the reporting is to a designated agency. Again, this concerns us in that that designated agency may or may not transmit the particular report. I would like to hear the minister's comments on that.

Hon. C. Gabelmann: First of all, what the member is describing here is a potential criminal offence. Under section 50 the agency has a duty to report to the police the possible occurrence of a criminal event. That is a clear and positive duty, as spelled out in section 50.

The broader issue here is where it may not be a criminal offence.... I think it's worthwhile having a few minutes' debate on this. I think this is one of the 

[ Page 8755 ]

legitimate differences of opinion that exist regarding how to approach the issue of mandatory versus voluntary reporting. The community groups have spent a considerable amount of time discussing that issue. In the early stages of developing the legislation, some individuals were of the view that it should be a mandatory obligation to report. Those discussions continued, particularly intensively, over the course of the last year or so. In the final analysis, the conclusion reached by the broader community groups was that mandatory reporting was not effective or appropriate. In fact, apart from being expensive, the results of it would not be worthwhile. So the report that was produced concluded that mandatory reporting should not be included in the legislation. Following the report, there were yet more discussions leading to the actual development of the legislation. That view was confirmed by PRAG, the public group that was involved in developing this.

Even in Criminal Code activities outside this legislation there isn't a mandatory duty to report. It used to be in the Criminal Code, but it isn't now. Policy discussions not only here but in other jurisdictions have led to the clear and virtually unanimous conclusion that the more effective way of dealing with reporting is to make it voluntary.

C. Serwa: We continue to be very concerned. A lot of people simply do not want to get involved, and that often nullifies voluntary reporting. I'm pleased that the Attorney General pointed out the mandatory reporting in section 50. But nevertheless, abuse or neglect is a substantial area of concern. It appears to me that if someone is aware of the situation, it should be mandatory. I suggest that because of not wanting to get involved with the problems, perhaps the potential exists for continuation of abuse or neglect. Again, the victim in this case would be the incapable adult.

Hon. C. Gabelmann: I'll make two more points on this issue. First of all, under the Community Care Facility Act there is a duty to report if someone is being abused in a care facility or if there's a problem of the kind the member is talking about. So there is a duty to report in a care facility, and that's under the CCFA. People more knowledgable than many of us in this area have expressed an additional concern. Given the complexities of the issue, given perhaps the less than comprehensive understanding of the legislation on the part of any member of the public, there's a concern there will be a considerable number of reportings to the public trustee, creating a very onerous and expensive responsibility on the office, and often wild goose chases perhaps. Clearly -- not quite, but virtually unanimously -- the feeling is that the best way to proceed is by voluntary reporting.

Having said all that, I know this is one of the more controversial areas in this legislation. As long as I have the responsibility, it's one that I would continue to monitor, although I suspect we won't know this for some years to come. No doubt there will be a new minister responsible by the time this becomes a real issue. But I suspect that in years to come, as we think about how the legislation can be improved, people will review the Hansard debate. I think any responsible minister would always make sure that this particular provision is examined each time the legislation comes up for renewal.

G. Wilson: I'm speaking in favour of the amendment. I find the minister's arguments a little difficult to fathom. If 46(1) read, "Anyone who has information indicating that a child is abused or neglected, and is unable to stop the abuse or neglect," they would be required to report it; but if it's an adult, they're not. That's inconsistent, in my judgment. Secondly, to say that an individual "may report the circumstances" doesn't stop anybody who wants to send the trustee on investigations that are wild goose chases. I would argue that if it's a voluntary reporting system rather than a legal obligation, only those people that have an interest, one way or another, will actually make reports. Although I don't have any statistical information to prove it, I suspect that on a voluntary system you're likely to find people who do have an interest that is not necessarily the interest of the individual. It underscores the concerns addressed earlier by the member for Richmond-Steveston.

[11:15]

My last point in support of this amendment is that we're dealing here with an individual, not an agency. I heard in the minister's comments that agencies have a duty under section 50, and that's true. But we're talking about individuals. Section 44, which we've just passed, talks about the purposes of this part. It's followed up by 45, which says: "This Part applies whether an adult is abused or neglected in a public place...." Still, there is a reasonable expectation that somebody could see there is an abusive situation that should be reported. To me, it would be inconsistent for the statutes of the province of British Columbia to say that if child abuse is known you have to report it, but you don't have to report it if it's adult abuse.

Hon. C. Gabelmann: The member makes the point that somehow it's inconsistent to have mandatory reporting for child abuse situations but not for adults in these situations. I think the member either doesn't understand or disagrees with -- either one; I'm not sure which -- the fundamental principle behind this legislation, which is that all adults should be treated in a way that recognizes their dignity and, to the very best of our possibilities, their right to exist as full adults in our society. The paternalism that is available for reporting child abuse is essential. A child, particularly a young child, is unable to act on his or her own behalf. But there are assumptions made in adult guardianship that all adults are capable unless -- and then it flows from there. So that's the assumption contained in this issue.

I have already made the point that if this doesn't work, then certainly I and, I'm sure, any responsible minister would reconsider this issue. I just want say that people who have spent four years of their lives, many of them almost all their volunteer time, have come to these conclusions. I respect the time, effort, 

[ Page 8756 ]

involvement and knowledge that those people have brought to this process and to these conclusions. They have spent a lot of time on this issue, and they have concluded that we are better served now by voluntary reporting instead of mandatory. I am prepared to take their advice at this point in the development of this legislation.

A. Warnke: I would like to support the amendment. But I must admit I am extremely torn, because I know that just as soon as the amendment is passed, it is really unacceptable in legal language. The reason is, perhaps due to the oversight of the person who moved the amendment, that if we accept the amendment right now, it reads: "and must report all such circumstances to a designated agency where the information indicates...." Then, "(a) is abused or neglected, and (b) is unable...." That is inconsistent with "(c) physical or sexual assault, or, (d)(i) deliberate psychological abuse or mistreatment, or (ii) other mistreatment or neglect."

What I am suggesting is that if we accept the amendment, then the language is inconsistent. Right off the bat we have a problem if we accept the amendment. I would like to support the hon. member for Okanagan West, who raised the amendment. I certainly support the intent of what he is bringing forth. As a result, there will have to be a further amendment to make the language consistent.

V. Anderson: I also rise to support the amendment. In response to the minister's comment, we have already discovered, with regard to other sections of the report we understood there was consensus and agreement on, that this was not exactly the case. In the community there was disagreement on how it was interpreted, which could well be the case here, but it seems to me that it's better to err on the side of making sure that the report is tabled and the complaint made rather than have the possibility that it might not be put forward. In many cases involving both children and adults, I know that the idea that a person "may".... If a person is going to report when it's a "may," then they have to be 100 percent sure that there's abuse before they'll report it. If it's a "must," then they must have some feeling that it's there, but not the same probability. I take it that this is similar to the example of where the police in a local community continually say to us: "If you think a robbery is taking place, it's not up to you to prove it; phone us so that we can deal with the possibility of a robbery." So the police are continually encouraging us. If an item needs to be checked out, give them the opportunity to check it out. Don't check it out yourself, and then leave it.

I take it that it's the same principle here: if there's a balance of probabilities, it is better to have too many people reporting than too few, so that those cases that really need to be reported are reported. I would go along with the amendment.

Hon. C. Gabelmann: I think there's a genuine and legitimate difference of opinion at this stage. I understand the concerns expressed by the members; I understand also that some people in the community share that view. Rightly or wrongly -- and history will be the judge -- I have chosen to accept the unanimous view of the working group that considered this particular issue, which is that we should make it voluntary. That's the side I've chosen at this stage in the development of the legislation.

J. Tyabji: I also support the amendment. My question in the debate on this amendment is that the minister talked about the fundamental principle of the bill being recognition of the dignity and rights of the individual, and I'm not actually sure how that is consistent with the legislation. On the point of supporting the amendment, the amendment seems to be consistent with one thing that the bill tends to do.

It seems to me that what we have in this bill isn't a fundamental recognition of an individual's rights or their dignity per se, although I don't know how you judge dignity. In terms of the purposes of this bill, it seems that once it is determined that they're incapable of making reasoned assessments to do with financial transactions and living their life, then there's a whole list of rights -- confidentiality rights, property rights, decision-making authority, the ability to refuse consent to medical treatment even if it means losing their life. There are many rights that are set aside on the assumption that once someone meets a certain set of criteria for not being able to make a decision, then the decision-making authority passes to another person. At least, that's my perception of what happens throughout this bill.

It seems to me that it would be consistent to have an amendment where.... In the event that a person does not have discretionary power even on something as fundamental as accepting or refusing medical treatment, then if the person who doesn't have the discretionary power is being subjected to sexual or physical abuse, that person should be protected. If someone else sees it, it should be incumbent on that person to report it. Contrary to what the minister said, I think the amendment is in keeping with the principle of the bill, and I would like the minister to expand on his perception of how the amendment is inconsistent.

Hon. C. Gabelmann: I think we may be a little offtrack here, because we're not talking about people who are under guardianship. The heading of part 3 is "Support and Assistance for Abused and Neglected Adults." We're not talking about people who have been declared incapable. When I think back to some of my own comments in response to a different question, I may have misled members earlier. If I've done so, I apologize. We are talking about part 3 -- support and assistance for abused or neglected adults, not adults who are under guardianship.

J. Tyabji: I have a point of clarification. Is this any adult? Would it also include the adults who would fall under the first section of the bill?

Hon. C. Gabelmann: Yes, that's true. But in that event there would be a guardian or a decision-maker 

[ Page 8757 ]

who would protect the adult as well. This section applies to every one of us in our society.

J. Tyabji: I have two questions. Would this also apply to adults under section 44(c) of part 3, which says that because of "an illness, disease, injury or other condition that affects their ability to make decisions about the abuse or neglect..."? With regard to all adults, including guardians, what would happen in the event that the guardian or the person responsible for making decisions perpetrated the neglect or abuse?

Hon. C. Gabelmann: As we have talked about before, any person who has the sense that the guardian is behaving in such a manner would then report. If it was criminal or potentially criminal activity, then a report to the police would obviously be required. Otherwise, a report to the trustee is something that any citizen could do.

C. Serwa: I thank the Attorney General for his information that the people involved in the Project to Review Adult Guardianship have given their blessings to this section. However, we have to pick up our area of responsibility and concern to the public as well, and the hon. Attorney General recognizes that.

Even with the situation as it applies to individuals in cases of abuse and neglect, it's abundantly clear that as some people age -- in facilities or in homes -- they are abused and neglected; we read about this in the paper. It is not necessarily that they are proven incapable or capable. The reality is that people age and, not unlike a situation involving an infant, they are subject.... My concern is that it seems to increase the necessity for mandatory reporting.

One of the basic precepts of British law, as I understand it, is that it's better to allow 100 guilty men to go free than to hang one innocent man.

Interjection.

C. Serwa: Or woman, I'm sorry.

I presume that the lesson in this story is that it's better to have a fail-safe mechanism. In this particular case, I do not feel that this section is fail-safe. I continue to believe that the individual must report.

[11:30]

Hon. C. Gabelmann: I understand what the member is saying. It's not a question of me or the member being right or wrong; I think both positions have validity. We have opted to move slowly and very cautiously with respect to this issue. The public review group is concerned about balancing the rights of the adult. That's always been the central focal point. The rights of the adults are crucial, and we need to ensure that they're protected. The balance here is the decision that protecting the rights of the adult is better dealt with by making the reporting voluntary.

A more significant factor is probably that the group really wants to move slowly as we get into this legislation -- to see how it works and not overload the system at the beginning. As we get experience with it, if it turns out that this needs to be tightened up, I'm sure that there would be a response to that. We could debate it all day. I'll simply say that at this stage of the development of this legislation, my conclusion is to go with the advisers from the community.

Amendment negatived on the following division:

Sections 46 to 49 inclusive approved.

On section 50.

C. Serwa: Section 50 is related to section 46, as we discussed earlier. Again, the concern I have is with the process. The implication of section 50 is that there would have to be an investigation on the part of the designated agency. We contend that this will take altogether too much time and that the abuse and neglect, or the criminal activity in this case -- whether it's physical or sexual abuse -- will continue with that delay. That's our concern with this section.

Hon. C. Gabelmann: We're talking here again about institutions and about the staff and professionals at the institutions. If they have any reason to believe that a criminal is act taking place, they have an immediate duty under this section to report that to the police. They will also be trained in not tampering with evidence, in order to protect the ability of the police to put a case together if there is one. There's no investigation per se. If there's a suggestion or a thought that there is criminal activity, they call the police, and the police do the investigation.

Sections 50 and 51 approved.

On section 52.

[ Page 8758 ]

A. Warnke: This section provides for the adult's involvement in rectifying, I suppose, incidents of abuse or neglect. If the adult is determined to be incapable, is the person removed at that time, and are charges laid?

Hon. C. Gabelmann: Later sections of the bill set out what can be done in that event.

Section 52 approved.

On section 53.

V. Anderson: When a designated agency is preparing reports and doing the work involved, who is going to be paying them for that? Where will the resources come from?

[11:45]

Hon. C. Gabelmann: The costs would be provided, as always, by the taxpayer, but through the public trustee's office and budget.

Section 53 approved.

On section 54.

A. Warnke: Provisions are made in this section for the court to make a decision within 72 hours after the application is filed in the court. What happens to the adult in the interim, which could be an undetermined amount of time? I recognize that section 59, to a certain extent, also addresses this.

Hon. C. Gabelmann: The member has in fact answered his own question. It's dealt with in section 59, "Emergency assistance."

Sections 54 to 57 inclusive approved.

On section 58.

A. Warnke: This section allows for the person against whom an order is made to apply to the court to change or cancel the order. Is this hearing separate from or concurrent with the application?

Hon. C. Gabelmann: They would be involved at the time. They could argue at the time, and they also have the option of going back to the court later to appeal the decision.

A. Warnke: If time is a consideration, what does this procedure do to the best interests of the adult individual in question?

Hon. C. Gabelmann: It would be expected that the court would make an order in the best interests of the individual, so I'm not sure that the question applies.

Section 58 approved.

On section 59.

J. Tyabji: I appreciate the intent of section 59, the emergency assistance section. It reminds me a lot, though, of Bill 38, in the way that the legislation has been drawn up. The reason I say that is because we have here:

"(1) A person from a designated agency may do anything referred to in subsection (2) without the adult's agreement" -- an adult being defined as anyone over 19 -- "if (a) the adult is apparently abused or neglected" -- and there's no reference as to who determines that -- "(b) it is necessary, in the opinion of the person from the designated agency, to act without delay in order to (i) preserve the adult's life, (ii) prevent serious physical or mental harm...or (iii) protect the adult's assets from significant damage or loss, and (c) the adult is apparently incapable of giving or refusing consent."

I find the way this is worded quite disturbing, unless there's going to be some regulations accompanying it. If the adult were out of the country, the adult is incapable of giving or refusing consent to the person to take the actions. The actions by the designated agency are listed as:

"(a) enter, without a court order or a warrant, any premises where the adult may be located...; (b) remove the adult from the premises and convey him or her to a safe place; (c) provide the adult with emergency health care; (d) inform the Public Trustee that the adult's financial affairs, business or assets need immediate protection; (e) take any other emergency measure that is necessary to protect the adult from harm."

I understand the intent of this section, but the way this is worded here, in effect, you could end up with the person from the designated agency having wide and sweeping powers to do anything that they deem necessary -- it could be on the spur of the moment. I'm assuming that the intent of this section is to allow a person from a designated agency to act in a time-sensitive situation to take whatever measures they consider necessary. For example, under section 59(1)(c), where it says "the adult is apparently incapable of giving or refusing consent," if it said instead that "the adult is determined to be unable to do that due to the conditions outlined in..." and the set of conditions was then outlined, that's understandable; but not the way that it's worded here.

As the Attorney General said earlier when we were canvassing the section about the guardians and the guardian being unable to act. "Well, if the guardian were out of the country...." If we're consistent with our interpretation of the section, then the person's incapability to respond to the issue of consent is wide open, because it has been in the rest of the bill. Although I personally support the intent of this section, I cannot possibly support the legislation because of what it does. If we take a worst-case scenario from the way it reads -- and I think we have to do that -- we could have a person from a designated agency saying that because the person can't give them consent, and because they perceive that the adult's assets are in a position where there could be a loss, they have full rights to search and seizure in emergency measures. We know that in the companion bills we have the ability for investment in securities; we could actually have a trust invested in securities somewhere and a potential loss of 

[ Page 8759 ]

that. That doesn't seem to be the intent of the section, but it is fully enabled by the powers given to the person from the designated agency.

Hon. C. Gabelmann: The member seeks to read into this awesome powers that don't exist. The authority is simply to preserve the status quo until a court can make a determination either to appoint someone or to make some other decision. What we're talking about here is a real emergency. You have to go back to section 44 and read that in conjunction with section 59. It seems to me that it primarily deals with a situation where an adult's life is in imminent danger, a decision needs to be made and there's no capability of making that decision. This section can then come into effect. But it is to preserve the status quo; in that case, preserving someone's life would be preserving the status quo.

With respect to financial matters, it's not to go and do something beyond anything other than protecting the status quo in an emergency situation where someone is determined to be incapable of giving or refusing consent. If the member doesn't want to have this provision in the legislation, the member leaves potentially vulnerable many people who deserve to have protection of this kind, which isn't intrusive. It simply conserves the status quo.

J. Tyabji: The minister made two points about preserving the status quo and saving a life. I understand that that is the intent of the section, and I support the intent. I believe that we need a section like this in here. I understand the kinds of things that have been going on in the past with regard to the inability of those who need to be able to go in and preserve the status quo.

The minister referred us back to section 44. If we look under section 44(c), we see support and assistance provided for adults who are abused and neglected, because of, for example, "an illness, disease, injury or other condition," which is undefined. So section 44 itself is not the tightest legislation we could have. There's no reference to the preservation of the status quo in section 59. Section 59(1)(b)(iii) refers to assets and an economic situation being the only reason for the conditions being.... It gives (i), (ii) or (iii) -- (iii) being an economic factor -- as conditions for allowing a search and seizure under emergency measures.

I understand the intent of the section, and that's why I said that there are a couple of weaknesses here. One is that "or" is used in subsection (1)(b)(ii) instead of "and." The other weakness is that in subsection (1)(c), you've got "apparently incapable" undefined, rather than determined by a certain set of factors. In section 59(2), you've got full discretion, given those circumstances, including taking any other emergency measure that is considered necessary.

I understand that the Attorney General has a lot of faith in the people who will be using this section. But we have to assume that any legislation that comes before the House is going to be in place for a long time. We can assume that 20 years from now, this will be sitting on the books. There are full rights given here to any person, on the basis of wide-open criteria. The Attorney General is saying no. I understand what he is saying in debate. I'm saying that according to the words written here, we have the same problem we had with Bill 38, where not only individual rights -- for example, the protection of an individual's health -- but also complete and total rights in terms of property ownership and assets are being abrogated on the basis of two very weakly defined conditions.

I'm not sure if the Attorney General has considered amendments or if regulations will come in to accompany this. If that possibility is there, the regulations should be with regard to the people who will be subject to enacting this section of the act. They should very strictly lay out the conditions under which this section would come into effect.

Hon. C. Gabelmann: In developing our process for preparing regulations, the member's comments will be taken into account; I can assure you of that. The member suggests that these powers are available to any person. They are only available to a person from a designated agency. At first glance, it seems to me there are going to have to be regulations around that which will be developed.

We are talking about a situation where there is no time to do anything other than act within minutes, in order to do a variety of things -- not things linked with the conjunction "and," but various things either preserving a life or protecting assets. You don't want to have both situations involved, because obviously they are different -- it may be one and not the other. That's why the word "or" is used in subsection (2). We are talking about providing protection in emergency situations. The powers that are granted are what I would describe as conservation of the status quo rather than an ability to make any change.

V. Anderson: I appreciate the concern. Perhaps there need to be emergency powers. If somebody phoned the police and said they were in an emergency, and the police come.... I think we are concerned about the meaning of "designated agency." If we were to say that the police or the fire department, or somebody who already has position and requirements is accompanying somebody from a designated agency without a court order or warrant, then you have some assurance of what's happening. But to have somebody without a uniform or without any authority walk in, even in an emergency, is to put that person in danger. Not only is the person in need of assistance in danger, but in many family disputes, if some person other than a policeman comes to the door and says, "I want to come in, or I'm going to force myself in," then there is danger to that person. What we are getting at is not only what is intended but the process by which it is undertaken.

Hon. C. Gabelmann: I acknowledge the concerns of the member, and I think they are valid. We always need to make sure that when emergency powers are necessary and used, those powers aren't abused in any way. It's incumbent on us -- and I undertake to make sure that we do it -- to design the regulations in a 

[ Page 8760 ]

way to ensure that the kind of protections sought are in fact in place. Beyond regulations, it's also our intention to develop protocols with the police and others, so that understood and agreed-to procedures would occur in the event of the use of this emergency assistance section.

G. Wilson: In the interest of providing some constructive assistance in the process toward regulation, I could be specific with respect to the points that I think have caused concern for the members for Okanagan East and Vancouver-Langara. Under subsection 59(1)(a), where it says "apparently abused or neglected," there's a question of determination with respect to an apparent abuse or neglect. This isn't a current state of abuse; it's essentially that they have been abused -- we're dealing with the past tense. Therefore one could argue, if there is apparent abuse, that these powers are invoked. And they are pretty sweeping powers, because you can "enter, without a court order or a warrant, any premises where the adult...." I think that needs to be tightened up by regulation, in conjunction with the designated agencies being defined.

[12:00]

The second thing I would suggest is that there needs to be some determinant of what assets we're talking about. What defines assets here? Clearly, if we're talking about physical or capital assets -- houses, those kinds of things -- that is one thing. If we're talking about other assets -- i.e., investments or whatever -- I think that needs to be looked at.

Under subsection 59(1)(c), the question again being "apparently incapable of giving or refusing consent," again I would say that that's a determining factor that has to be weighed in some form of regulation. That's what's causing our concern, because the powers under (2) as they read now are pretty sweeping unless we have them clearly defined.

Hon. C. Gabelmann: I agree with what the member has said. I think it's essential that both the regulations and the protocols -- in particular the protocols -- are very carefully worded. Given the fact that there's no time at the occurrence of the event, there needs to be an understanding of what the rules are around these provisions in advance. I undertake to ensure that the concerns expressed by the members on this section are taken fully into account when we develop both the regulations and the protocols.

Section 59 approved.

On section 60.

A. Warnke: Section 60 allows for an appeal from a Provincial Court decision, and subsection (5) says that the appeal "suspends the effect of the decision under appeal." What's suggested here is the possibility of an individual's worst nightmare. What happens to an adult where an appeal is launched? I'll give you an example. A parent is in the home. The son spends the parent's social security cheque for his own personal use and abuses the parent. The parent is removed from the home through an agency, and the son appeals the decision. What happens to the parent? Is the parent returned to the home? Who looks after the parent until the appeal is heard?

Hon. C. Gabelmann: The court always has the ability during the period between the decision and the appeal, at which time the decision isn't in place, to make whatever decisions are necessary -- on application, presumably -- to ensure that nothing untoward happens.

Section 60 approved.

On section 61.

C. Serwa: Section 61 outlines a number of options and alternatives that the public trustee has to secure agencies, whether they are public bodies, organizations or persons. My first question is on subsection (a). Why should the public trustee not be mandatory? Why should it be "may designate" rather than "shall designate"? Why shouldn't we have that list of agencies designated by regulation so that both the courts and the public have access to the designated agencies?

Hon. C. Gabelmann: The member makes an interesting point. Designation is really de facto. Without designation the legislation can't work. Therefore the trustee must designate. Why it says "may" is drafting policy. It's not a policy question with respect to the legislation but a drafter's policy to use this kind of language to make it more discretionary. The reality of the matter is that it's not discretionary at all if the legislation is going to work. If it read "must," it wouldn't change the effect.

Sections 61 to 91 inclusive approved.

On section 92.

C. Serwa: Section 92 allows the court, on application, to dissolve a partnership. I presume that is from the adult guardianship side of things. What about the other partner? Does that partner lose the right to apply for dissolution of the partnership according to this section?

Hon. C. Gabelmann: The other partner still has the right to apply to dissolve the partnership, or whatever.

Sections 92 to 100 inclusive approved.

Title approved.

Hon. C. Gabelmann: I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; the Speaker in the chair.

[ Page 8761 ]

Bill 49, Adult Guardianship Act, reported complete with amendments.

The Speaker: When shall the bill be considered as reported?

Hon. C. Gabelmann: By leave, hon. Speaker, now.

Leave not granted.

Bill 49, Adult Guardianship Act, reported complete with amendments to be considered at the next sitting of the House after today.

Committee of Supply A, having reported progress, was granted leave to sit again.

Hon. C. Gabelmann: I call committee on Bill 50.

PUBLIC GUARDIAN AND TRUSTEE ACT

The House in committee on Bill 50; H. Giesbrecht in the chair.

C. Serwa: I need a moment to get my notes. I was under the impression that, as we normally would, we would break for the lunch hour. I wasn't prepared.

Hon. C. Gabelmann: Didn't they bother to tell you?

C. Serwa: No one bothered to tell me.

Section 1 approved.

On section 2.

A. Warnke: Section 2 indicates the public guardian and trustee is a corporation. I'd like some clarification as to why this was done.

Hon. C. Gabelmann: A corporation sole is a legal entity in the form of a corporation which is constituted in the single person who holds an office. This legal framework allows for a distinction to be made between the individual holding the office in her official capacity and the individual in her private capacity. As an official, she has certain rights or duties. She may also hold real or personal property, and she may sue or be sued. This structure is especially suited to the functions required of a personal representative, such as a committee, guardian, administrator or trustee for private individuals. The effect of being a corporation sole is that the public guardian and trustee is a unique legal entity separate from government and can be held to account -- i.e., be legally liable for her actions as the personal representative of individuals in the same way private trustees can be held accountable by the courts.

V. Anderson: We've been moving in the area where persons have fundamentally important functions in the community. Some of these appointments are done through the legislative committee process rather than the Lieutenant-Governor-in-Council, as we have done with the freedom-of-information commissioner and ombudsman appointments. I'm wondering why, with this particular trusteeship -- which is so important and significant to people -- we are going through the Lieutenant-Governor-in-Council, rather than through the legislative process, which has worked out so well and has had total support from the community.

Hon. C. Gabelmann: This is an issue, too, on which there are a variety of views. I think many in the community would have felt comfortable if we had made the public trustee and guardian an officer of the Legislature. I acknowledge that.

It was the government's view that we are in the developmental stages of very complex legislation. There is a lot of direction yet to be given with respect to establishing the office and the budget, which is crucial to its operation, regulations and protocols. There will probably be further amendments. In my considered view -- and the government shares my view -- at this stage in the development of this legislation, the public trustee and guardian should continue to be an appointee of the government of the day. That's what we have maintained.

I don't discount the notion at all that at some future date, when this is up and running and the wrinkles are ironed out for the most part, the office may move to a different relationship to government and to the Legislature. It wouldn't be unlikely to assume that the position may well become an officer of the Legislature.

In recent years we have expanded very dramatically the number of positions that are officers of the Legislature. In my experience, there are some problems. There are budget and reporting problems, and there are a number of issues that haven't been worked out yet. Ombuds have noted that a report is dropped in the Legislature. Where does it go? It goes into a black hole, because nobody is accountable to do something about the report or about the needed issue.

[12:15]

In this developmental period, this enables us to ensure that the government is in fact responsible to move on with the issue. While the trustee is independent, she nonetheless has a relationship with the government that will enable us to work together to develop the very best program possible around this legislation.

V. Anderson: I would just like to respond in the positive. I thought that the principle was important for the future. It was not in any way to question the present public guardian and trustee. In fact, because of our confidence in the present guardian and trustee, I feel that present process should be moved ahead as the minister has outlined it.

Section 2 approved.

On section 3.

[ Page 8762 ]

C. Serwa: I would like the hon. Attorney General to explain why there are no limitations on deputies. There appears to be the ability to appoint one or more deputies, without any prohibition in the number. Would the minister explain to me why this is set out in this section?

Hon. C. Gabelmann: The answer to the question -- and this isn't an answer, in itself -- is that that's the way it is now. I realize that doesn't count for very much in the scheme of things, as a way of arguing a point. But as we develop rather complex legislation, it leaves the flexibility in the hands of the public guardian and trustee -- obviously within her budget; that's always going to be a constraint -- to structure the office in the way that best meets the needs and demands of the services to be provided.

V. Anderson: Following up on that same concern, it would seem to me that this is an area where the public guardian and trustee might be requested in the future to make these appointments in consultation with the advisory board. I think it would strengthen the public guardian and trustee and the deputies, who in effect have the same power as that person. I think it also would protect the guardian and trustee. If anything goes wrong with the deputies, it's always better to have that support in the advisory board rather than in that individual person.

Hon. C. Gabelmann: The member makes an excellent point, with which we agree, and I'm certain that the relationship between the advisory board and the public trustee will be such that what the member asks will in fact happen.

Section 3 approved.

On section 4.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 4,

(a) by deleting the proposed subsections (1) and (2) and substituting the following:

(1) to ensure the public interest is served, the Lieutenant Governor in Council must appoint an Advisory Board to provide advice and make recommendations to the Public Guardian and Trustee about the matters specified in subsection (3) and (4) and in section 27(2), (5) and (6).

(2) The board is to consist of not less than 6 and not more than 12 members selected by the Lieutenant Governor in Council to reflect the cultural, geographic and diverse needs of the people served by the office of the Public Guardian and Trustee., and

(b) in the proposed subsection (5) by deleting "sufficient information" and substituting "all information necessary".]

Amendment approved.

On section 4 as amended.

C. Serwa: The concern I have is with the numbers of the board members. Perhaps the minister can enlighten me as to why we have this latitude, from six members to 12 members, and not a fixed number.

Hon. C. Gabelmann: The first thing to note about the number is that it's relatively small. Six to 12, as far as advisory boards go, is a small number, given the wide variety of interest in the community. I can't quote what PRAG used as their motivation for coming up with this number. But in my experience, for an advisory body or an executive body to function well, it needs to be relatively small. I think all members understand that. If you have 30 people on a board, it becomes a debating society rather than an advisory board.

The range of six to 12 is to enable us, at the low end, to have a really tight group that can provide the kind of advice that's necessary. But it may be that we will want to move into the higher numbers in order to allow more representation from other groups in the community. The numbers are arbitrary -- no question about that. But they were not picked out of a hat; there is some reason for this range, and it gives some flexibility. My guess is that we would start smaller and leave room for expansion as needs are noted.

V. Anderson: On 4(8), perhaps the minister might explain the style of board members that it's suggesting: some appointed under the Public Service Act, and others not. What is the difference between those two designations?

Hon. C. Gabelmann: We envision the possibility that some members of the board may be public servants who work for the government and are appointed under the Public Service Act. This is to ensure that they would not get remuneration, a per diem, for serving on the board, such as a voluntary board member would receive.

Section 4 as amended approved.

Section 5 approved.

On section 6.

A. Warnke: I want to pursue something that was drawn to my attention. Perhaps we just need some clarification here, considering that there's some concern. That's with regard to the term "executor." Executor does not appear in the definitions and doesn't need to; I think we can go by the prevalent definition of executor. Yet some concern has been expressed about: "The Public Guardian and Trustee may act as an executor...." It's the phrase "may act as an executor" that's in question here. Perhaps the minister could give us a bit of clarification: are they executors or what?

Hon. C. Gabelmann: This simply means that the public guardian and trustee would be enabled to act as an 

[ Page 8763 ]

executor when approached to do so, as is now the case. In fact, the public trustee now acts as an executor in certain instances. That ability would continue as a result of this provision.

Sections 6 to 9 inclusive approved.

On section 10.

A. Warnke: This section stipulates that the Public Guardian and Trustee "must establish a committee to advise the Public Guardian and Trustee on" investment development, implementation and monitoring. What would the qualifications of such appointees be?

Hon. C. Gabelmann: Highly skilled people in financial matters would be the primary objective. It would be limited to six people. The expectation -- this isn't spelled out yet, and we're still developing the regulations around this -- is that it would include a senior financial officer from the Ministry of Attorney General, which is responsible for the legislation; the senior financial officer in the office of the public guardian and trustee; two external investment experts who are free from conflict of interest -- these would be people drawn from the financial and business community, people who presumably are expert at investment-related issues; and also a layperson, someone to reflect the views of the general public. That's five categories, I think. There's an opportunity for the board to be five, or six if there's a need to add some other kind of expertise to the board.

A. Warnke: How soon after enactment would they be appointed?

Hon. C. Gabelmann: The plan is to appoint this advisory committee prior to enactment so that they will be functioning -- up and running -- when the legislation takes effect.

C. Serwa: I wonder why this section is necessary. Why couldn't a simple, straightforward protocol agreement be reached with the Ministry of Finance, which handles investments of $7 billion or more and is very competent in its work? They have the best people that the civil service has. They are quite capable of doing a most competent job within the restrictions of the Trust Act. Why do we have to set up a special committee and go through all of the hoops to do that?

Hon. C. Gabelmann: Essentially, in recognition of the reality that the money that is being managed is not the government's -- or the public's, in a collective sense. This is money that belongs to individuals, not the state or society through government; it belongs to individuals. There needs to be some protection of that fact by way of having an expert citizens' advisory board to give advice. The day-to-day management would be through the Ministry of Finance, but this is a necessary requirement to ensure that the public, as expressed through individuals, have some protection. This advisory committee would be designed to protect those individual rights.

Sections 10 and 11 approved.

On section 12.

A. Warnke: I just have an inquiry about the purpose of using the common fund within the trust fund account. Why this approach?

Hon. C. Gabelmann: I'm sure the member could visualize the difficulty of managing perhaps thousands of separate accounts. The costs of doing so would be extraordinarily high. On the other hand, the pooling of the moneys would provide an opportunity for better protection and better return on the moneys that are being invested.

Sections 12 to 16 inclusive approved.

On section 17.

Hon. C. Gabelmann: Thank you hon. Chair. I was slow on the uptake here. Before we debate this section, I'd like to move the amendment standing in my name on the order paper.

[SECTION 17, in the proposed subsection (1) by deleting "the assets of the young person or adult may be at risk." and substituting "that the interest in the trust, or the assets of the young person or adult, may be at risk, or that the attorney, representative or decision maker or guardian has failed to comply with his or her duties."]

Amendment approved.

On section 17 as amended.

C. Serwa: The responsibilities of the public guardian and trustee in this section are extensive. It's difficult to see how the public guardian and trustee can keep track of all of the affairs, dealings and accounts that are mentioned in this section. Is the hon. Attorney General quite comfortable that all of those responsibilities can in fact be handled by the public guardian and trustee?

[12:30]

Hon. C. Gabelmann: Yes, I am comfortable with this. The public trustee operates now with this kind of provision, as I understand it. The provision says "may investigate and audit." This is not a proactive activity; it's simply one in response to a need that has been noted.

C. Serwa: What is meant by "may investigate" someone's affairs? What does that include? How extensive is it?

Hon. C. Gabelmann: This provision is in the Patients Property Act now. It's very broad, clearly, but it relates to the affairs, dealings and accounts of a trust, so it's limited to financial matters. The word "affairs" 

[ Page 8764 ]

evokes this broad brush, but if you read the legislation altogether, it relates simply to financial matters.

A. Warnke: I had exactly the same thing in mind as my distinguished colleague from Okanagan West. It's downright scary.

Another thing that I want to pursue here is a concern for the privacy of individual records and that sort of thing. How is that to be maintained? Could the Attorney General comment on that?

Hon. C. Gabelmann: The trustee is obligated to keep confidential all matters that are learned as a result of an investigation or audit, subject to the need to present certain information to the court if that's what follows from an investigation or an audit. Obviously the public trustee herself or her agent has the right to go in and fully examine, so there's no privacy in that sense, but there is full privacy beyond that. The public has no access to this information, and there's confidentiality involved except when it leads to a court case.

Section 17 as amended approved.

On section 18.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 18, in the proposed subsection (1)(d) by adding ", monitor" after "decision maker".]

Amendment approved.

Section 18 as amended approved.

On section 19.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 19, in the proposed subsection (3) by adding "or a shorter period set by the Public Guardian and Trustee" after "7 days".]

Amendment approved.

On section 19 as amended.

C. Serwa: The word "apparently" is not defined anywhere. What is meant by "apparently abused"? Apparent to whom?

Hon. C. Gabelmann: In the final analysis, it would be the public trustee who would determine, following an investigation, whether or not there was abuse or neglect.

Section 19 as amended approved.

On section 20.

A. Warnke: Under the power to delegate, what is the criterion for such a delegation? Delegation to whom, and also, acceptable to whom?

Hon. C. Gabelmann: This is a relatively standard kind of provision in a function of this magnitude, where one individual would clearly not be able to do everything required by the statute. There is a need, therefore, to delegate a variety of powers that are conveyed to the trustee to another individual, who works within the office of the public guardian and trustee, to act on behalf of the trustee, whether it's for an investigation or for whatever other matters are spelled out in the legislation.

Section 20 approved.

On section 21.

A. Warnke: This section stipulates: "The Public Guardian and Trustee, or an officer or employee...is not liable for any loss for which a private trustee would not be liable in similar circumstances." The question I would like to pose to the minister is: can the public trustee enter the office of a private trustee to review documents and so forth?

Hon. C. Gabelmann: That goes back to a previous section, the power to investigate. Under the terms of that section, there is the ability in certain circumstances for the public trustee to take that action.

Section 21 approved.

On section 22.

A. Warnke: I am a bit unclear about subsection (1): "After consulting with the board, the Public Guardian and Trustee must deliver to the Attorney General, for approval, a service delivery plan not later than 3 months before the beginning of each fiscal year." In what form would this delivery plan appear?

Hon. C. Gabelmann: This is a business plan, and the public guardian and trustee would prepare the plan, precisely in what form I don't know, presumably on paper, typed, or these days, word-processed. What would be included in that plan would be what's listed in (2)(a) to (f).

Section 22 approved.

On section 23.

C. Serwa: This section allows for the creation of a schedule of fees. Is it the intention that all services provided by the public guardian and trustee should have a fee and service charge attached to them?

Hon. C. Gabelmann: No, it's not the intention for all services to have a fee attached to them. They don't now. Some services would and some wouldn't.

C. Serwa: I hope the cabinet will be making regulations with respect to the fees that will be charged. Is it the intention that the fee structure work on a cost 

[ Page 8765 ]

recovery for the office of the public guardian and trustee?

Hon. C. Gabelmann: It will not be the intention in those areas where there are fees charged.... It would not be fully cost-recoverable. I don't think that would work. To determine a fee structure, both where and how much, the public guardian and trustee will consult with the advisory board and bring forward recommendations to the minister responsible. The minister will take those proposals to Treasury Board and on through cabinet.

Section 23 to 25 inclusive approved.

On section 26.

A. Warnke: This particular section introduces the auditor general and the Minister of Finance and Corporate Relations into this. It allows yet another agency or ministry to become involved. I would also like to relate this to what I talked about earlier in section 17: access to individual records, and so forth, assumed to be private. Here there is involvement of two other agencies of the government. Individuals may have some concerns as to how widespread this is.

Hon. C. Gabelmann: This audit would not be of the individual's holdings or accounts but rather of the accounts of the office of the public guardian and trustee.

Section 26 approved.

On section 27.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 27,

(a) by deleting the proposed subsection (1) and substituting the following:

(1) The Public Guardian and Trustee must arrange for

(a) periodic independent evaluations of the effectiveness of the Adult Guardianship Act, the Health Care (Consent) and Care Facility (Admission) Act, the Representation Agreement Act and this Act, and the regulations, policies and procedures enacted or developed under those Acts and this Act, and

(b) the preparation of interim and final reports on each evaluation.,

(b) in the proposed subsection (3) by deleting "The" and substituting "An",

(c) in the proposed subsection (4) by deleting "The evaluation" and substituting "Each evaluation",

(d) in the proposed subsection (4)(c) by adding at the end "and other ways of achieving those objectives", and

(e) in the proposed subsections (5) and (6) by deleting "of the evaluations" and substituting "of an evaluation".]

Amendment approved.

Section 27 as amended approved.

On section 28.

Hon. C. Gabelmann: I move the amendment standing in my name on the order paper.

[SECTION 28,

(a) by deleting the proposed paragraph (b) and

(b) in the proposed paragraph (g) by deleting everything after "complaints about" and substituting "services delivered to people and decisions made on their behalf by the Public Guardian and Trustee."]

Amendment approved.

On section 28 as amended.

V. Anderson: In 28(a) I raise the question I raised earlier about the legislative committee being involved. I trust that in the future, "the criteria for eligibility for appointment as Public Guardian and Trustee...." It might also go into the legislative committee process; I think that was part of what we were discussing earlier.

Hon. C. Gabelmann: If the office became an office of the House, the appointment process would be by legislative committee, as it is with the other officers of the House.

Section 28 as amendment approved.

Sections 29 to 34 inclusive approved.

On the Title.

A. Warnke: I want to take the opportunity here not to question the title but to thank the Attorney General for his contribution, especially the appropriate amendments. I would also like to compliment my colleague for Vancouver-Langara who worked on this. Most importantly, I want to compliment the groups who had direct input into this package of legislation. It was a fine effort indeed.

Hon. C. Gabelmann: I have to say this. On behalf of all us in the House, I simply want to once again take this opportunity to thank the public bodies, groups and individuals who've worked so hard in doing this monumental and important task. I want to take particular note, as well, of the contributions of the members for Okanagan West, Richmond-Steveston and Vancouver-Langara, who I think contributed in a really thoughtful and appropriate way. On behalf of the community groups, I thank them too for their participation in this really important legislation.

Title approved.

Hon. C. Gabelmann: I move the committee rise and report the bill complete with amendments.

Motion approved.

[ Page 8766 ]

The House resumed; the Speaker in the chair.

Bill 50, Public Guardian and Trustee Act, reported complete with amendments.

The Speaker: When shall the bill be considered as reported?

Hon. C. Gabelmann: In deference to the member for Okanagan West, at the next sitting, hon. Speaker.

Bill 50, Public Guardian and Trustee Act, reported complete with amendments to be considered at the next sitting of the House after today.

Hon. C. Gabelmann moved adjournment of the House.

Motion approved.

The House adjourned at 12:45 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The House in Committee of Supply A; D. Streifel in the chair.

The Committee met at 10:13 a.m.

ESTIMATES: MINISTRY OF FINANCE AND CORPORATE RELATIONS
(continued)

On vote 35: minister's office, $335,102 (continued).

F. Gingell: I wonder if the minister could turn his attention to the issues of debt management and advise us what average costs were in 1992-93, and what he anticipates they will be in 1993-94 with interest rates dropping.

Hon. G. Clark: I'll get the exact numbers formally for you in a minute. Basically, the yield curve is steepening in terms of those short-term interest rates dropping, and the long-term interest rates have come down only marginally. So in terms of our borrowing strategy at the 20-year bond level, there have not been huge windfalls to the province, because the yield curve hasn't come down in that respect. With respect to short-term interest rates, as you know, there has been some relief with our new medium-term note program -- the first in the country -- which has given us more relief than some other provinces. To try to give you some comfort about our borrowing strategy, it is really one of diversifying our borrowing sources over the yield curve. So what we try to do is have, as you can imagine, a fairly sophisticated mix of short- and long-term borrowing so that maturation and refinancing takes place in some kind of rational way.

[10:15]

We have big lumps of refinancing coming up as a result, I think, of not pursuing a diversified strategy over the last 20 years. Some big Hydro bonds are up for refinancing, for example. We've got the short-term note, the medium-term note, some American borrowing, and a global bond; and as you can see, there is a diversifying both over the yield curve and of our sources of borrowing. So the interest rate costs for our borrowing program this year are: long-term, new-borrowing all-in costs are about 9 percent; long-term, existing all-in costs are 9.18 percent; commercial paper interest rates are now about 6.5 percent, or have been on average; and the T-bills are around 6.5 percent.

F. Gingell: Does the province have any policies whereby you try to restrict foreign currency borrowings to foreign currency revenue streams? Or are we borrowing in foreign currency?

Hon. G. Clark: There isn't a lot of foreign currency borrowing in British Columbia. There were some American currency borrowings about eight years ago; B.C. Hydro fully hedged against income streams from the United States. Very recently this year -- the first in eight years -- we did a $500 million Yankee bond, as they call them in New York, American borrowing. With the new financial instruments and the swap market, you don't need a foreign income stream to hedge against the foreign borrowings. This year our provincial exposure in total is about $400 million (U.S.). So we've hedged some but not all of it.

The Ministry of Finance, of course, is always looking for an opportunity to hedge if it's advantageous to the province. This seems to make sense because of the Bank of Canada's policy of driving interest rates up significantly higher than the United States. American borrowings at American interest rates are what the Ministry of Finance does, obviously. The key question is: what's the break-even point? How far does the Canadian dollar have to drop before we're even, with respect to interest rates? The Canadian dollar, when they launched the issue, would have to drop below 69 cents.

Interjection.

Hon. G. Clark: Yes, below 69 cents, we're worse off than if we borrowed in the Canadian market and the domestic market.

Interjection.

Hon. G. Clark: That's the average -- yes, exactly. When you start hedging some of that, the break-even point for the remainder goes up. That's the call that Treasury has to make, on a fairly sophisticated basis. We're exposed $400 million, which in terms of our portfolio is obviously fairly modest. We're very 

[ Page 8767 ]

conservative in Treasury, and I guess I am as well personally, in terms of making sure that we're not exposed to foreign currency fluctuations, generally speaking.

There are some opportunities, and other provinces have taken opportunities to borrow in other currencies. That is under active consideration by Treasury, but only if they can be fully swapped or almost fully hedged into Canadian dollars. That is the kind of thing that they are looking at very carefully. I don't see any increase in borrowing in different currencies from that pattern. I suspect there might be. If the differential in Canadian and American interest rates stays, there is a possibility of some further American borrowings, but again, we will try to protect ourselves.

On the exposure question, in terms of it being security against future income streams, we do have that natural hedge at B.C. Hydro. When I said that our exposure is $400 million, I was overstating it, because we still have an American dollar income stream from B.C. Hydro which one could use against that. For our purposes we try to keep it pure and say that if B.C. Hydro is borrowing, it has an income stream; if the province is borrowing -- in this case this is a provincial borrowing -- we have hedged some of it and left the rest exposed. It is a bit of an artificial distinction, because there is still a natural hedge with B.C. Hydro, and we don't anticipate exposing the province to that fluctuation in any dramatic fashion over the next year or two.

F. Gingell: You were very pleased with the original issue of B.C. bonds, although I think we had some concerns as you kept pushing the interest rate up to respond to the market. Perhaps there was a question of whether you were pushing a little too high, which is why it was oversubscribed. I understand that the first renewal period was April this year. Can you please advise us on what happened in the renewal?

Hon. G. Clark: First of all, it was oversubscribed because of the tremendous confidence in British Columbia, because of the kind of commitment that investors made. The interest rate was competitive, but I don't believe it was too high. It was a dramatic success. We are planning to do another issue this fall, and I might as well advise the House and the committee that we are going to try to deliberately bring down the amount that we borrow on the B.C. savings bonds.

Interjection.

Hon. G. Clark: The member is correct: we can be even more conservative and try to raise less. But the other way that we are going to try to bring down the amount, for good policy reasons, is by limiting the maximum. Last year you could borrow $100,000 in B.C. savings bonds, so we had a fairly high rate of cancellation -- 25 percent -- at the six-month interval. That was predicted, because the stock market equity market was doing really well. High-net-worth individuals who have that kind of money are always looking in a sophisticated way for alternatives to investments.

What we really want to do is develop the retail market for the province of British Columbia. We want to try to build the retail case and, hopefully, many more smaller deposits. It's a good investment. It's like a Canada savings bond. It's not one where you get the kinds of cancellations that more sophisticated investors might make, for tax reasons or otherwise. Almost all the cancellations are people in the fairly high net-worth category with large volumes as they move to other instruments based on the market. There's nothing wrong with that. We had the money for six months, and that's success. But what I think would be preferable is to try to raise maybe $300 million from more smaller investors where there is a real stability question and where we're really tapping into a retail market that the province heretofore hasn't been in, and it's a really solid base.

[D. Schreck in the chair.]

Alberta has had more experience in this with their capital bonds. They have supplanted Canada savings bonds as the instrument of choice for a lot of average Albertans, and we'd like to do that. Through a combination of being fairly tough on the interest rate side, reducing the maximum one can buy, using more aggressive marketing in the retail sector -- credit unions in particular -- and those kinds of things, if we can raise about $350 million, we think that would be very good success. It would be a bit more long-term with probably less cancellations, and we could build on that over time.

F. Gingell: Is there any intention with the new issues to change any of the other terms for example, are they retractable?

Hon. G. Clark: Yes, that's obviously something we're always looking at and reviewing, but we have no intention of changing it at this time. We think there is a market for the six-month interval, and obviously the advantage of Canada savings bonds is the redemption at any time. That's not something we can do feasibly, at least in terms of the cost to the province and the fluctuation we have. So we're monitoring it. Again, the first issue was a success. We're going to alter it in order to build that base, and we think it will be successful with a smaller amount. We don't have any intention of changing any of those terms right now.

F. Gingell: Are you giving any thought to making whatever changes may be necessary to allow a secondary market?

Hon. G. Clark: There is a small secondary market, in the sense that they are transferable to other British Columbians, so you can sell them back to brokers. I am not an expert in this, but I think that a six-month term doesn't really allow for a very big secondary market. It has to be long-term bonds that can therefore be more sensitive to interest rate fluctuations, 

[ Page 8768 ]

and can create a premium demand for certain types of bonds. Again, others have more expertise in this area, but I can't see there being a big secondary market in B.C. savings bonds, because of that essentially six-month term of interest rates. But we allow it, and I know there is some. With the electronic ability, there could be some fluctuation buying and selling, and we certainly don't discourage it at all. In fact, we have encouraged it, but it is just not going to be big.

F. Gingell: Could we perhaps now turn to the province's record last year on rates of return on investments? You could perhaps make some comparisons to l991, which I know was a record year, because you have spent a lot of time telling us about that. How have you done this year?

Hon. G. Clark: I will have someone get them right now. We don't have them right here; they are about five minutes away. They are slightly over market, so we are doing well, but I will get the exact numbers for the hon. member. Do you want the returns by fund?

F. Gingell: Yes.

Included in the minister's responsibilities are matters of loan administration and collection functions -- all part of the provincial treasury. There were a lot of criticisms in the Peat Marwick report about previous practices, and about how well the government had done in the past. I wonder if the minister would like to tell us what progress has been made in the 15 months or so since the Peat Marwick report came out on the issue of collections, and all of the areas that the minister is responsible for -- students loans, and certain other acts.

Hon. G. Clark: There have been virtually no loans given out under this administration, although one could argue we have had a couple of success stories in the loan program. We have talked before about the B.C. Trade one; they are estimating about a 3 percent default rate. It's not that high, but that's a very good program, and it's fair to say that has been advanced.... There are a few more loan guarantees on the export side.

On the question of the loan guarantee, there isn't really much of one. We did do some, with Canadian Airlines and some others. From time to time, we have looked at it if we think there's some public policy reasons for it, or the like. With respect to collections, our commercial loans are coming down dramatically because they are being written off as we go through it, and we are not issuing many new ones.

[10:30]

The student loans are up rather dramatically. I think it's fair to say that the problem, which Peat Marwick identified, has not been rectified. At the moment, this loan program is probably the only program available for student assistance, and that has been under active consideration. But until such time as we have decided either to replace it with something or to modify it, loans are still being given out, and we still have a bit of a problem. On the collection side, however, we have been quite successful at collecting student loans in the sense that, in many cases, all that's required is to advise the individual that they are required to pay. Some people perceive student loans as not being repayable, for some reason.

We have abolished the mortgage assistance program, which I really didn't want to do, but we saved a couple of hundred thousand dollars on the operating side. We also capped our liability exposure to the guarantee that existed in the mortgage assistance program. That amount was $280 million, the last time I looked, of government-guaranteed debt that we carry on the books and that the credit agencies look at. It is obviously highly successful and very little risk, but it is still debt that is guaranteed by the province. That has been capped now and will come down over time, and we did save on the operating side. As we are on that subject, the reason we were able to cancel it without having much of a negative effect on the market, and were able to deal with the problems that it was initially designed to help, was the federal program. I'm not exactly sure of the name; it's FLIP or something. The federal program initiated about a year ago did much the same thing that we were doing with the mortgage assistance program. So rather than have that kind of duplication, we decided to eliminate it here.

I just had a note here that we have had 20 home defaults out of the thousands that were made. It was a good program, but there is now a good program run by the federal government, so we chose to save some money and duplication.

F. Gingell: During yesterday's discussions we did touch on the issue of the B.C. Endowment Fund. I hadn't intended to at that point; I think someone else came up with it. I wonder if you could give us a brief view of where we have gotten to. You did mention the question of the status of negotiations with the merchant bankers. Perhaps you can advise us on the rates of return that have been earned on that and where the Endowment Fund has got to.

Hon. G. Clark: I will get the rate of return in a minute. As I said, the Endowment Fund is about $550 million. It is fully diversified now. I haven't seen the numbers lately, but my suspicion is that the rate of return would, of course, be higher in the Endowment Fund than anywhere else. There is a little more risk, but a much higher return. Some of the very impressive investments were made in the last year. It's fully diversified, it's growing and it's about $550 million.

We have earmarked $100 million for a B.C. focus. The negotiations, as you know.... In terms of the process, we've put out a request for proposals and suggested that the Endowment Fund is prepared to put 50 cents in -- if the private sector is too -- under certain terms and conditions, to promote that gap in the capital market in British Columbia. This would be in both the venture capital stage and, more importantly, the merchant banking stage, which would probably best be defined as expansion capital for existing small and medium-sized firms. We are negotiating with about four merchant banking funds and are happy with the terms and conditions they are prepared to offer us. Our money is there to be matched by the private sector. 

[ Page 8769 ]

They are busily raising the private sector funds to match it.

I'm very pleased that one venture capital fund with $10 million of provincial money and $10 million of private money will be closing shortly. It took a little longer than we liked for the private sector to come up with the $10 million. In this case Michael Brown from Ventures West was the successful bidder. It was primarily his job to raise the $10 million in private capital to match the province's $10 million. That has been done and we're working on closing the deal.

In the fall we should be in a position to announce a new venture capital fund and four new merchant banking funds in British Columbia. Although the province will own 50 percent, we will not always be in an equity position in terms of direct equity. We will put 50 percent of the money in, and probably have one member -- but not a majority or even half -- on the board to monitor the situation. Our intention is not to pick the winners and losers in this kind of business but to have the private sector do that. We will lever their money with our money.

We are optimistic about closing with one of the largest funds in North America, which I can't identify right now. That fund would easily match $10 million from the province; obviously we would not be a major player in that fund. They would simply be saying that there are opportunities in British Columbia for investment, and that they are delighted to have a shared offering with the province so that we can lever it. We're quite excited by that.

We're in commercial negotiations now. In September we will be able to announce four new merchant banking funds and a venture capital fund for British Columbia. This commercial transaction is an exciting way to go. We expect a rate of return. There are no subsidies involved. Government is playing a constructive role in filling the capital markets with the private sector that exists in British Columbia. When we make some announcements in September, we'll be a model for other provinces to look at -- there's a lot of interest.

F. Gingell: From memory, it seems to me that the merchant banking share of the $500 million was $50 million. Is that changed? Or have the rules changed?

Hon. G. Clark: As you know, we've committed about $100 million for the B.C. focus of the fund. The member is correct that we can notionally put that aside, and we're trying to match it. But that number will change. That number can change depending on negotiations, how much the private sector has put up, their track record and the like. I think that $50 million is about right at the moment, but because of the interest in this we're looking at other merchant banking funds. I guess the short answer is yes, it's about $50 million to start. We have earmarked $100 million for a B.C. focus, and that gives us some flexibility if we see some exciting possibilities in this area -- we can allocate up to $100 million to this kind of activity.

F. Gingell: It's an opportunity for me to give one of my little lectures about speculating with the taxpayers' money. When the province is $20 billion in debt, you shouldn't be playing around with a $500 million endowment fund. I'm sure in the minister's own home the most important thing to his family is to get his mortgage paid off on his house, and that's the approach he should take to government finances too. I've said it before; I guess it's not really going to do me any good.

I'd also like to just touch briefly on one other thing. Yesterday, during the course of the discussion about grants in lieu of taxes and about B.C. Hydro and other Crown agencies that don't pay property taxes, I got the distinct impression that the minister doesn't understand that municipal taxpayers are the same people who are provincial taxpayers. It is the same group. One of the problems we have in our tax system is the inability to tie the delivery of services to the payment of taxes. If Crown corporations do not pay their proper and fair share of municipal taxes -- and I appreciate the anomaly of how much taxes you should pay on an earth dam -- one gets further and further away from the relationship between the payment of taxes and the delivery of services.

Perhaps this is a better way of moving funds to municipalities than through the revenue-sharing grants, on which the provincial government's not living up to its obligations anyway. It's quite clear. It seems strange that we hear this minister on every occasion stand up and talk about downloading from the federal government to the provincial government; we hear it ad nauseam. But he never once talks about the province downloading on the municipalities. They're doing exactly the same thing, by not allowing the funds to flow through -- which are percentages of resource revenues, 1 percent from each of the income taxes and 5 percent of the social services tax -- that were intended for the use of municipalities. Anyway, that's beside the point.

I'm wondering if the minister now has some information on the rates of return on investments? Or shall we leave that for a moment?

Hon. G. Clark: Actually, I don't want to talk about that yet; I want to respond to the member opposite on some of his outrageous claims. First, the amount of money the province is giving to municipalities is more this year than last year, and was more last year than the year before that. We've given more money to municipalities than in previous years, and frankly, that has become increasing difficult to justify in a difficult fiscal environment. So first of all, that is incorrect.

Second, the Endowment Fund makes 4 percent more than the cost of borrowing. The Endowment Fund reduces the deficit. Eliminating the Endowment Fund does not assist in terms of dealing with our current account deficit; in fact, it does the reverse.

Third, in terms of grants in lieu of taxes, it is an interesting question as to whether or not this is equity. It would be a bit of a lottery if we went to Crown corporations paying taxes. Why should a dam valued at a billion dollars or something, for which the municipality provides no service -- zero service; there's nobody there, no water service, no drain on the 

[ Page 8770 ]

municipal taxpayer.... Why should B.C. Hydro pay millions of dollars -- in this case $80 million of provincial tax money essentially -- to a few municipalities that have a dam? I'm not saying that there isn't a case for some consideration of that. I'm simply saying that one has to be careful in arguing that this is an equity argument. All it means is that we are taking money from some other part of the province to give to some municipalities in which, by virtue of luck or accident, there is a dam for which there is no cost.

As I said the other day, I'm much more sympathetic to the argument that Oak Bay and Saanich make with respect to the University of Victoria, where there is a cost to the municipal taxpayer in the sense that there are fire services provided by those municipalities, and that university pays no property tax to those municipalities. So I think there are cases to be made for grants in lieu of taxes and for Crown corporations to pay property taxes, but it is by no means as simple as the member opposite says: they should pay full taxes and that would be fairer. I think that's a very debatable point. We are very much interested in looking at it, but I caution the members that the cost to the provincial taxpayer is large, and there are equity considerations to be made.

[10:45]

With respect to the last question, we have the annual rates of return for April 1, l992 to March 31, l993. On the pension funds: B.C. Rail, 10.1 percent; B.C. Hydro, 11.5 percent; colleges, 11.7 percent; the municipal pension fund, 14 percent; public service fund, direct, 14 percent; and the teachers' pension fund, 11.3 percent. Our bond pool, which everybody shares in, is a pool of....

F. Gingell: Is it reflected in those rates?

Hon. G. Clark: Yes, but it is also reflected in other funds. Last year it had a 16.7 percent rate of return. The benchmark that we use to measure ourselves is 15.9 percent -- the ScotiaMcLeod benchmark. The Endowment Fund's rate of return last year was 14.5 percent. Those are phenomenal rates -- unbelievable.

The Chair: Before recognizing the hon. member, the Chair will remind all hon. members that while a wide range of topics are covered in these estimates, in the last few moments we've touched on several topics that have been previously canvassed under other votes and on expenditures that are actually allowed for in other ministries. I would urge the members to confine themselves to matters in the estimates of the Minister of Finance.

F. Gingell: I would like you to advise us which subjects we've touched that are not covered by the responsibilities of this minister -- which gives me a few moments to look up some more stuff.

The Chair: Hon. member, as much as the Chair would love to enter into this debate, the standing orders prohibit the Chair from entering into debate, and the ruling of the Chair is final.

F. Gingell: It was the Chair who entered into the debate. I still don't know which subjects I mustn't deal with that do not come under this.

Hon. G. Clark: Do you want me to speak so you can work?

F. Gingell: No, that's fine.

I must admit that I am really pleased to hear of those rates of return, recognizing that towards the end of this period, interest rates were dropping. I am sure this includes some capital appreciation return. We all know that we will maybe discuss this at greater length next year if interest rates have gone up, and the rates of return have come scooting down.

Relative to the municipal revenue-sharing fund, which may be in the area that doesn't come under your jurisdiction, I just want to make two quick points. Number one is that the unconditional grants are the ones that contribute to the operation of the municipalities, and the amount has remained stable. Number two is that as we all know, when we have a growing population and inflation, real per capita grants are in fact coming down. With those few words, I would like to move on.

There has been some discussion between the minister and me about fairness and equity in the collection and administration of taxes. I have written to him about consumer taxation issues, but here in estimates I would like to bring up issues to do with the payment of property transfer taxes that arise shortly after a property has been acquired by a family group -- normally it is a husband and wife. For certain reasons, a property may have been originally registered in the name of the husband -- in one instance, because the wife worked for the financial institution that was putting the first mortgage on the property -- but normally the intention in these things is that properties are jointly owned. My house is in my wife's name, but I don't think she is going to throw me out of it because it happens to be totally in her name. We as a family think of it as being jointly owned. There have been instances where, for certain reasons, the title has been transferred from a husband to both.... And I believe property transfer tax has been assessed on certain transfers from the husband to the wife, even within a relatively short period of time.

Interjection.

F. Gingell: Do I understand the minister to say that a transfer from a husband to a wife -- married or common law -- is exempt from property transfer tax? This is not a capital gains issue, but property transfer tax.

Hon. G. Clark: I will get that confirmed for the member, but there is a list of exemptions from the property transfer tax. It is not a long list of exemptions, but husbands and wives are exempt. I believe that there is a cap on how much -- I think they are exempt for $200,000 -- so that part of it is exempt. But essentially, the purpose of the exemptions is to allow for precisely 

[ Page 8771 ]

the point the member is making -- that is, the transfer from husband to wife. I believe children are also exempt from the transfer tax. We get appeals for brothers-in-law, cousins and uncles, which we've resisted, even though from time to time a case is brought to my attention that I have some sympathy with. Effectively, for the narrowly defined family unit -- if that's not politically incorrect -- there is an exemption from the property transfer tax.

F. Gingell: That exemption covers all property; it isn't restricted just to a principal residence?

Hon. G. Clark: It is restricted to principal residences and cottages or recreational property, I believe.

F. Gingell: The issue that I wrote to the minister about before was one that dealt with an investment property, a rental property, but the circumstances were still the same. When it was acquired, the reason it was put in the husband's name was that the wife worked for the financial institution that loaned the mortgage funds, which she was not allowed to apply for by the employer. When she left the employ of the financial institution, they went to transfer it to just reflect in the title what the real facts of the case were. They had it done, of course, before they realized that they were subject to the property transfer tax. So I was wondering whether the minister might consider a further exemption, where there is clear evidence that the transfer does nothing more than reflect the actual ownership facts of the case.

Hon. G. Clark: As you can imagine, the property transfer tax is probably the single biggest appealable item that I deal with. I can tell the member that every year I very seriously look at changes to this tax, because we want it to be fairly applied. The problem with exemptions, particularly exemptions like the one the member has alluded to, is how to make sure it is fairly applied. If you say that you are just reflecting reality in this case, that's an argument that could be made by many others -- lawyers particularly would make that argument, say, for the benefit of the member for Parksville-Qualicum, who I'm sure has made some himself. That circumstance would apply in a broad range of cases. All I'm saying is yes, we look at the exemptions.

I can advise the member here that tonight, when we do the homeowner grant legislation -- if we do -- I am going to bring in an amendment to deal with the question of the homeowner grant applying to someone who owns a duplex and rents half of it out. This is a classic example of the kind of thing the member is talking about. If you own two halves of a duplex, and you rent one half out, the one half that you own is your principal residence and you get the homeowner grant. But if you own both halves of the duplex and you haven't strata-titled it, and you rent one half out in exactly the same circumstance, if the value of the whole thing is over $400,000, then you'll lose your homeowner grant. We'll be bringing in an amendment to try and fix that. Not very many people are involved, and it's not an amendment which the tax people in the Ministry of Finance are very keen on, because it again opens the door up to interpretation and potential abuse. It's a question of trying to be as fair as you can, but have rules that are clear and aren't open to abuse. That's what we're constantly looking for in the Ministry of Finance. Every budget year we'll be reviewing this again to see if it's possible to make exemptions without affecting the integrity of the tax.

F. Gingell: The minister sits as the final arbiter of appeal in many of these instances.

Hon. G. Clark: Do you want the job?

F. Gingell: I know what my own batting record on these matters is. I wonder if the minister would like to advise us if he has allowed any appeals in the past year either on property tax or on consumer tax?

Hon. G. Clark: The answer is yes, and of course, it is the cause of much consternation when that happens.

F. Gingell: One?

Hon. G. Clark: No, there have been several -- I'd say about one a month since I took office. Essentially, the people who are doing the tax collection try to apply the same rules fairly. Generally, I believe they do.

When there are appeals to the minister, the staff justify their position, and I take it very seriously and review the submissions, which are usually from, unfortunately, lawyers. But I try to review them as carefully as I can. We have very strict rules on remission and allowance of appeals, which I also take seriously. In other words, the test for allowing an income tax remission or a sales tax appeal is very high, but I can tell you that a small percentage do get overturned and are reviewed by senior staff. Sometimes that also results in some review. It is a small number, because any change the minister might make by way of precedent has potential consequences. So I try to make sure that I don't overturn it lightly, because it will have consequences for the integrity of the tax system.

The key to the administrative fairness of any tax is not whether the tax itself is perceived to be fair -- because very few taxes are -- but whether the rules are absolutely clear and applied consistently to every taxpayer. I think that's the important question on the administrative side.

F. Gingell: I appreciate that this....

Hon. G. Clark: What are you reading?

F. Gingell: The ombudsman's report on the Ministry of Finance.

I appreciate that this isn't the place for us to debate the particular merits of specific cases, but I can clearly see that there's a difference between the minister's interpretation of the word "equity" and ours. It is not 

[ Page 8772 ]

necessarily the equity between taxpayers, I don't believe; it is that the individual is seen to be dealt with fairly.

[11:00]

Most of these appeals come about because of a lack of knowledge or understanding by unsophisticated businessmen and in many cases a technical fault in the way they have carried out their business. This is particularly true from sales to the agriculture industry. If you do it in this fashion -- and a sophisticated businessman does -- then it's a tax-exempt sale. If you don't know quite what you're doing and you just do it -- you buy the stuff and install it, and you've got only one corporation and you haven't carefully divided the contracts -- then the taxation treatment is different. Somebody goes along for seven or eight years believing themselves to be doing it the right way, and all of a sudden they are hit with an assessment that just knocks them out of business. It seems to me that that is the question of fairness which the minister needs to give a little more weight to, rather than the issue between taxpayers -- particularly when it is clear from the evidence that the business has not charged the tax and pocketed it or when the tax has never been collected.

Moving on and dealing with the ombudsman's report.... Or would you like to wait till you get it?

Hon. G. Clark: No, that's okay.

F. Gingell: Actually, the only issue here is that the Ministry of Finance comes out very well in the ombudsman's report, but the Securities Commission doesn't. There are some issues in relation to the speed with which the Securities Commission has dealt with complaints and issues that have been brought to them. The concerns about the ability of potential investors to have good information seem to me to be very real. Perhaps the best way I can deal with this at the moment is to ask the minister if he will give us a commitment that they will look into this, and ensure that his ministry will follow up on these issues that are brought up in the ombudsman's report. I'm sure he will.

Hon. G. Clark: Yes, absolutely. The member is correct that the Ministry of Finance came out very well in the ombudsman's review, and I also agree with him that the Securities Commission did not come out quite as well. As minister, I get a fair number of complaints about the Securities Commission, most of which are unfounded, in my view. The real challenge for the Securities Commission, and what I frankly think Mr. Matkin is going to have to look at, is the fact that the Securities Commission does the investigation and then also tries the case, if you will. There aren't too many cases where the Securities Commission has overturned the results of an investigation by its own staff, and that's a cause of some concern. I'm not sure it's a well-founded concern; it may not be. But in terms of investors' perceptions when you're looking at the question of fairness, you also want to look at the question of people being perceived to have a full and independent review of decisions, and full information. So I am concerned. I will give you a firm undertaking to follow that up with the commission. The general question of administrative fairness and how the Securities Commission operates is part of the purview of Mr. Matkin's inquiry, which is not just the VSE, but also looking at the regulation of the VSE with respect to the Securities Commission.

F. Gingell: I would like to turn just briefly to the land tax deferment account. It had been anticipated that in the year 1992-93 you would have a requirement of $7.5 million outflow and $4 million receipts, for a total increase of $3.5 million. I'm wondering if you could advise us what the final results were, roughly.

Hon. G. Clark: There has been a steady growth in the number of deferees, as they call them. There were 5,439 deferees last year, of which about 1,800 were deferred for the first time. A total of 692 taxpayers, on the other hand, repaid their accounts in full last year. Disbursements of 1992 taxes to municipalities were $9.3 million compared with $7.5 million in the estimates, and the overage is due to the additional publicity which we undertook in the media in 1992. In fact, I think there really is a direct correlation to the exposure of the opportunity. In 1992-93, repayments by deferees were $4.7 million compared to the estimated $4 million. We anticipate that this coming year -- and this is just an anticipation -- it will increase again moderately from last year, probably to a bit over $10 million. That is our working estimate. I think this is good news, and I don't mind saying that. The deferment program is underutilized and is a good program for people who are asset-rich and cash-poor. That was brought in by the previous NDP government, actually, and was increased dramatically by the last administration when they reduced the age requirement from 65 to 60. As a member of the opposition I supported that move, even though the Social Credit opposition filibustered the enactment of the initial legislation. It's a good program. It helps protect seniors in particular. Unfortunately, sophisticated investors always take advantage of it and less sophisticated investors are inclined not to. With their level of income, individuals who have properties adjacent to tennis courts don't have to take advantage of this program. Otherwise, it's a good program.

F. Gingell: The gross disbursements last year were $9.3 million. Later this evening perhaps, we will deal in committee stage with the act taking the homeowner grant away from certain property owners. This will make a fairly substantial difference -- up to $470 -- to people paying their property taxes.... Perhaps the minister has underestimated substantially the requirements for funds. They went up by 50 percent from the previous year, from somewhere in the area of $6 million to $9.3 million -- people who deferred last year. The amount they'll be deferring this year is probably going to be greater on each individual unit. In many cases there will be greater taxes due to no homeowner grants. Taking away homeowner grants creates additional pressures. Does the minister need to make an amendment to the financing section of the budget to deal with this?

[ Page 8773 ]

Hon. G. Clark: No, they are budget estimates. I'd be delighted if more people took advantage of it. This is not a current account problem. It is a financing transaction. The money is paid. It's an excellent program and I'm inclined to advertise it at every opportunity. We don't anticipate it going higher. If it does, that would be good news.

I would like to take the opportunity to say that the transfer of property to a direct relative, children and parents in particular, is exempt from the property transfer tax. There is a $200,000 limit on recreational property transfers between relatives. Otherwise, recreational property is also exempt. Family farms are also exempt. Finally, there is an exemption for transfer of property to charitable organizations, corporate amalgamations and in some cases for subdividing. Recreational exemption applies only up to the $200,000 limit.

[D. Streifel in the chair.]

F. Gingell: Is the employee suggestion program in your ministry's purview limited to your ministry or does it cross all ministries? I see there are rewards. How are they determined?

Hon. G. Clark: The entire government is run out of the Ministry of Finance. It's an excellent program that provides cash payment to those who make suggestions which save the government and the taxpayer money. We changed it a little bit by decentralizing the administration of the program. It is still housed in Finance and still monitored there. I'm still the minister responsible, for a few weeks yet anyway, of the employee suggestion program.

I am just looking for the way in which it is calculated. There are committees in each ministry, and they have to quantify the savings. Then there is a scale of payment, which can go reasonably high, but generally it is very modest. I can get that if the member wants it.

I will say that the employee suggestion program has saved many millions of dollars, and it is a very successful program. I know the staff in British Columbia look across the country and we are doing extremely well: we are saving lots of money and giving modest rewards. Washington State really blows everybody away with their success. Something like 20 percent of the people who work for the public service there have taken advantage of the program. So it is a real model.

We did make some other changes. The previous administration gave tax-free awards, but I have changed that this year to require that tax be paid on any awards. It is not a very popular change, but it is one that I think is consistent with the Ministry of Finance. I see the Chair nodding.

So there have been some modest changes: a little more decentralization of the budget requirements; a tough quantification of the benefits to the taxpayer; award taxes are now paid. But we still administer the program in the Ministry of Finance.

F. Gingell: In estimates last year we had a brief discussion about zero-base budgeting, and discussed thoughts on what you might be doing this year on that subject. I wonder if you would like to tell us what has happened.

Hon. G. Clark: In the Ministry of Finance we have come to call it strategic zero-base budgeting, simply because of the costs involved in trying to do zero-base budgeting in every ministry. We have done two things. One, we have intermittent Treasury Board secretariat -- and to some extent, internal -- value for money auditing. We do some zero-base budgeting on major programs, and we are going to be engaged in about 20 right now as we move forward toward the budget process. Two, we give people targets in the budget process. We use 85 percent targets for most ministries, which effectively means that we very intensely scrutinize 15 percent of almost every ministry in the budget process. So in that respect, 15 percent is subject to detailed scrutiny right into the base budget. We do strategic zero-base budgeting all year round. So we've made significant progress in this area, and it's paid significant dividends. I'd be the first to say we'd like to do more. But the Ministry of Finance likes to set an example in terms of fiscal responsibility, so we don't generate significant expenditures in the Ministry of Finance. We're trying to do it within fiscally responsible means.

[11:15]

F. Gingell: I appreciate getting that from the minister.

If we may just quickly turn to the Build BC Act, through the legislation that has been produced you've now created a revenue stream for the Build BC Act or B.C. 21 -- firstly, I think, some $33 million -- that is outside transfers from other appropriations and from the gas tax. Do you intend to borrow against those future revenue streams?

Hon. G. Clark: There are two things. First, the Build B.C. special account is $100 million. I think the member is referring to the Transportation Financing Authority, which has an income stream -- just so we're clear. The board of directors of the Transportation Financing Authority consists of myself; the Minister of Highways, who is the chair; the Deputy Minister of Highways, Vince Collins; and the deputy of Treasury Board, Tom Gunton. It's a financing authority, as opposed to a major Crown corporation.

Second, we are intending to treat the Transportation Financing Authority the same way we treat other financing authorities. We're not trying to hide the borrowing out of that. But I don't think it's a surprise to the member that the Transportation Financing Authority, as fully self-financed, will be borrowing funds. That's a requirement we have: it has to be self-financed with revenue dedicated to the financing authority. Sources of revenue currently are 1 cent a litre for half the year, which is about $60 million. Secondly, the $1.50 a day for car rental is, I think about $6 million -- a little higher maybe. And finally, any tolls, if tolls 

[ Page 8774 ]

were decided upon, would be revenue to the Transportation Financing Authority, which would allow some borrowing attached to that income stream. So there will be borrowing attached to that income stream, and it will be fully accounted in the same way that financing authorities are in government. We're not intending to hide that. Every year there's an appropriation for borrowing.

With respect to the financing authorities this year, we will be allowing up to $80 million in borrowing associated with the Transportation Financing Authority. I'm not sure that that full amount will be actually expended. The board has just been constituted, and the Ministry of Highways is just getting a strategic plan together for the purpose of financing certain projects, as well as making sure that it's self-financed by the income it has.

F. Gingell: When the minister speaks of self-financing, does he speak of the revenue from the tolls being sufficient to service the debt to create the infrastructure on which they're charging the toll? The question that I had originally was that this $33 million from the gas tax the first year and the greater amount in the full year and the tax on automobile rentals.... Using that income stream, which is not dedicated to one particular project -- an Island Highway or a third crossing of Burrard Inlet -- but is a general stream, do they intend to dedicate that income stream to service debt or to just use those funds for getting these other projects going and built up to the point where they can be, in effect, mortgaged?

Hon. G. Clark: I'm sorry, I'm not quite sure what you're asking. One way of describing it is that the net present value of the expenditures equals the net present value of the revenue. In other words, a $60 million gas tax can accommodate roughly $600 million of borrowing, and that is exactly the point I've made consistently. But it can't go and borrow $2 billion....

Interjection.

Hon. G. Clark: Well, I don't have any hesitation in saying that. The point is, however, that the Transportation Financing Authority cannot go and borrow $2 billion. It simply can't do that. It can borrow only what it has enough to pay in sinking funds and a payback of debt associated with borrowing.

F. Gingell: The difference that we're having is that.... I wonder whether there's a string tied from the revenue source of the infrastructure built to the funds borrowed to pay for it. When the minister talks about self-funding, is he talking about the revenue stream from tolls from this particular facility that must service a debt borrowed to build that specific facility, or are they going to use this $60 million income stream to fund the Island Highway, for instance?

Hon. G. Clark: Funny you should mention that. It's actually set up so it's really in the aggregate, but it does allow for the possibility of dedicated project funding. If, to use another example, a private company wanted to finance construction of the Lions Gate Bridge and had a toll approved by the government which would pay for the cost, that's something we could consider. In fact, I would not say "could," but "would" consider, with respect to ensuring that some of the key infrastructure developments take place. We're not opposed to that, but generally it's an aggregate number where the revenue has to equal the expenditures; it's not tied to any particular project.

J. Weisgerber: Before we get back into Transit.... The original budget included about $37 million in revenue from the property surtax. The minister wisely stepped away from that very unpopular tax. I think it's a tribute to him that he was willing to acknowledge it was a poorly thought-out, poorly conceived tax. So I have no argument with his decision not to pursue that particular line of taxation. I recall that when the minister was bravely standing up to that issue, he announced there would be no increase in the deficit as a result of the decision to forgo that revenue. I have been watching the estimates as they've gone through. We are now down to the last one, and we are looking to see where that $37 million showed up in reduced expenditures. To my knowledge, that hasn't happened yet. So I am rather anticipating that the minister, sometime during his estimates, will indicate that he has in fact cut $37 million in spending from his own estimate figures. Could the minister perhaps clarify how he is going to achieve that?

Hon. G. Clark: It's not a matter of reprinting all the estimates. I assure the member that we have engaged in an exercise to cut spending across ministries to achieve the savings and efficiencies that are required to bring the budget in on target. We are in the middle of that exercise now, and I don't think it's an unusual exercise. Treasury Board is consistently reviewing budgets to see where there are efficiency gains. We obviously have a target now which we have to achieve, but it's not a requirement. As that member knows in particular, over the course of the year there are spending pressures and there are savings. Obviously, at the end of the year we want to achieve it as we brought in the budget.

Just to give the member one particular example, which I know he's familiar with, on the Island pipeline, the agreement with Westcoast Energy reduces the current expenditures required under that agreement by some $20 million this fiscal year. Of the $37 million which is required in savings to deal with our deficit question, $20 million exists right there. So as we move forward, we are confident that we will find those efficiencies, those savings. In fact, I can tell the member that we've already accomplished that.

J. Weisgerber: I'm delighted with the opportunity to pursue a bit further the pipeline issue -- the Island Highway will have to be pursued by another government, I'm sure. The reality is that it is not often in a government that a revenue measure is abandoned as early in the process as this one was. So I think it is 

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perhaps unique, and one would anticipate the government also identifying the savings. The minister says that there was a $20 million savings on the pipeline issue. My recollection is that part of that agreement was the forgiveness or the forgoing of about a $10.5 million penalty payable by a corporation that the minister had the government invest in. Is the $20 million net savings? I would be interested to know what kinds of savings were anticipated over time. Clearly there were some penalties and some guarantees. As part of those trade-offs that were announced as being good for both sides, I expect that we have only heard about the side of the agreement that was beneficial to the government. We haven't heard the government talking about the $10.5 million in penalties that it forgave as part of that agreement.

Hon. G. Clark: These are not my estimates, but I don't mind talking about it. The $20 million savings is a net savings, including forgoing the penalty associated with Centra Gas non-compliance.

The member is quite correct: there are two sides to it. This year there are some significant savings, because the company wanted to end the uncertainty associated with the agreement, and so did the government. Secondly, there was some leverage on the government side with respect to Centra Gas not complying with the terms and conditions of the licence, and we have reduced our exposure. They have gained certainty and reduced some of their potential costs.

The question of who is better off as a result of this negotiation depends on what happens with gas and oil prices. Based on the best-case numbers, we are better off. In the worst-case scenario, we are still better off than in the worst-case scenario under the previous agreement. But there is still some future risk associated with this agreement. There is no capping of our risk, depending on what happens with prices. In this fiscal year we are clearly better off, net of all of those questions, by $20 million. In future years, oil and gas prices will determine whether we are better off in total or not, but in almost all circumstances, we are. Again, these are not my estimates.

Also by way of comment on the question of savings, I will just remind members of the committee that we saved $316 million in the middle of last year. We were the only government in Canada to come under budget on the expenditure side, so we have a proven track record of bringing expenditures down to meet the budgeted numbers. We will do that again this year.

J. Weisgerber: Perhaps where we are failing is to pressure the government to eliminate more taxes. With the minister's proven ability to bring his expenditure side in under budget, I suppose that we can then anticipate a lower deficit, and maybe that is better. But I suspect that the Island pipeline issue was in negotiations long before the minister decided to abandon the property surtax. I guess the minister is saying that he's simply going to leave it up to the forces of budgets to find a way of eliminating the $37 million, and that he doesn't have a plan to reduce $37 million out of the budget specifically to compensate for the lost revenue on the surtax.

[11:30]

Hon. G. Clark: No, quite the opposite. In due course we'll be announcing savings initiatives which will demonstrate where and how we've achieved the targets. Right now we're working with ministries -- as Treasury Board, we're working; there's always a euphemism with respect to Treasury Board -- to achieve efficiency gains, and we've made significant progress.

The Chair: Recognizing the hour, if the committee would bring forward the appropriate motion.... I always forget we have to do that here.

Hon. G. Clark: For members of the committee, then, could we just clarify and make sure that we have canvassed and completed all of the estimates with respect to questions from members, with the exception of Transit? That was our intention, and I just want to advise members of that. It is not for the purposes of staff. I know that's the case for the official opposition; I'm not sure about the members of the Social Credit Party. Our intention would be to come back after question period and complete the estimates questions of the opposition with respect to Transit, or any other matter, in the hour or so after question period, and then -- again, just for the advice of the committee -- come back on Friday and complete the votes in the Finance estimates, with the exception of some questions from members on the government side with respect to Transit as it's related to my responsibility. That's sort of our working assumption. I just say that for the members of the committee in case any members opposite want to add to that after we adjourn.

So with that, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The Committee rose at 11:33 a.m.

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