1994 Legislative Session: 3rd Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
WEDNESDAY, MARCH 30, 1994
Afternoon Sitting
Volume 13, Number 18
[ Page 9699 ]
The House met at 2:05 p.m.
Prayers.
G. Brewin: Hon. Speaker, I would like to introduce to the members this afternoon my very excellent constituency assistant, Bruce Fogg, who is accompanied today by Ms. Karen Gallagher. She is a social work practicum student who has been in my office for the last six months and has been an absolute tower of strength, intelligence and good humour. I'm going to miss her when she leaves. Would the House please make them welcome.
Hon. A. Petter: It's my pleasure to introduce a number of visitors to the House today. We all know how important it is to have good staff in our constituency offices, and I've been very fortunate to have a social work practicum student from the University of Victoria working on a part-time basis on constituents' problems. Meg Bonney is here along with my constituency assistant, Tony Gibb. I'd ask the House to make them welcome.
Also, on behalf of Elizabeth Cull, I would like to introduce a student from the Bridges Employment Training Project, Connie Whittaker, who has been assisting in the Oak Bay-Gordon Head constituency office for nine weeks. She's here with Elizabeth's constituency assistant, Lynda Reid.
Hon. Speaker, this is the day for Saanich; there are 25 students from Spectrum Community School in my constituency, who are in the precincts and will shortly be joining us in the gallery. They are from a social studies 11 class and are studying federal and provincial government. They are here with their teachers, Peter Brelsford and Jeff Marchi. I would ask the House to extend a very warm welcome to all these people.
M. Lord: Hon. Speaker, I have the pleasure today of welcoming some visitors from the beautiful Comox Valley. Visiting us today in the gallery are 51 students from Georges P. Vanier Secondary School. Accompanying the students are their teachers, Mr. Geoff Horn and Mr. Ti Reis. Vanier Senior Secondary is the largest senior secondary in my riding, boasting some 1,300 students and a long record of achievements, including an excellent basketball program and an excellent drama program. In fact, they recently won 13 awards in the North Island Drama Festival. I'm proud to have such a school in my riding, and I bid the members make them welcome.
G. Campbell: I'd like to introduce to the House Gurbax Singh Malhi, who is an MP from Bramalea-Gore-Malton. He's here visiting Victoria, and I'd like the House to make him welcome.
Hon. M. Sihota: Joining us today to watch the proceedings of the House are a number of people from my office here in the Legislature.
Interjection.
Hon. M. Sihota: Actually, I was going to say that and then I thought: "No, you really shouldn't." But I'm sure they're listening today, if nothing else.
In any event, joining us are Darla Cooper, Laura Henderson and Shelly Mar from my office, and joining Miss Mar are Wayne and Alma Thompson from Regina, Saskatchewan. Would all members please make them welcome.
L. Stephens: Visiting in the precincts today are some members from my Langley constituency, Mr. Grev Edgelow and friends. Would the House please make them welcome.
H. Lali: I too would like to join the Leader of the Opposition in welcoming Gurbax Singh Malhi, who is the first turbaned Sikh to be elected to a parliament in Canada. Would the House please join me.
F. Randall: In the gallery I see Gordon Dowding, who was the MLA for the riding that I now represent and who also was Speaker. I would like the House to please say: "Hello, Gordon."
Hon. A. Charbonneau presented a message from His Honour the Lieutenant-Governor: a bill intituled School Amendment Act, 1994.
Hon. A. Charbonneau: The bill before you contains amendments to the School Act that reflect the public's desire for increased accountability and reporting in the education system. The bill includes: amendments with respect to the passage of school bylaws; the requirement for boards to submit an estimate of their debt servicing surplus or deficit in each fiscal year; provisions for the adoption by boards of both a preliminary and final budget; amendments to the sinking fund debentures provision; and the clarification of the auditor's reporting responsibility with respect to school boards.
Bill 10 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
B.C. HYDRO STAFF INCREASE
G. Campbell: My question is for the Premier. At a time when families across British Columbia are tightening their belts because of this government's tax policies, could the Premier explain how the NDP government could have allowed his friend, Marc Eliesen, to increase the staff at B.C. Hydro by 6.7 percent in just one year?
Hon. G. Clark: It's interesting that the Leader of the Opposition thinks his track record is written in invisible ink. When we look at his record, the Leader of the Opposition....
Interjections.
Hon. G. Clark: I want to remind members of the House that when he was the head of the GVRD the Leader of the Opposition supported the splitting of the head office to Burnaby and Vancouver. His members opposed that, but he supported it when he was mayor.
Interjections.
Hon. G. Clark: Mr. Speaker, I'm having a hard time....
[2:15]
[ Page 9700 ]
The Speaker: Order, please. Will the minister please take his seat.
The purpose of question period is to seek information. I refer all members to standing order 47A, if they are having any problem with respect to the boundaries. It is difficult for the Chair when we have argumentative preambles. All members understand that the purpose of question period is to seek information and give answers. Will the minister please proceed.
Hon. G. Clark: My only point is that the Leader of the Opposition wants to have it both ways. On the one hand, he stands up in this House and preaches conservatism; on the other hand, when he was the mayor of Vancouver, his first act was to give himself a 12 percent raise.
Interjections.
The Speaker: Order, please.
Will the minister please answer the question.
Hon. G. Clark: Actually, his first act was to abolish fair wages; his second act was to give himself a wage increase.
B.C. Hydro is subject to the scrutiny of the Utilities Commission. It is one of the most efficient corporations in Canada. It now has a private sector rate-of-return test which we are very proud of. It makes money for the people of British Columbia. It's a well-run corporation.
The Speaker: The Leader of the Opposition on a supplementary question.
G. Campbell: At a time when Hydro was increasing its staff by 6.7 percent in one year, I reduced mine by 50 percent in the mayor's office. However, Mr. Eliesen is clearly out of control at B.C. Hydro.
My question is for the Premier, who is supposed to be in charge of this government and its Crown corporations. No one in this government is holding B.C. Hydro accountable. The 6.7 percent staff increase is exactly equivalent to the 6.7 percent rate increase that Hydro announced in the last 12 months. To the Premier: why should B.C. taxpayers be shouldering the bills run up by his NDP friends?
Hon. G. Clark: We saw the three largest budget increases in its history when that Leader of the Opposition was chair of the GVRD. We want to look at the record, and I'm delighted to look at the record in the House.
I would like to say that B.C. Hydro has a private sector test applied to it. As a government, we're proud of that -- one of the first governments in Canada to apply such a private sector test. This is a growing province, with 3 percent population growth and significant demands for electricity. As a growing province with the strongest economic record of any jurisdiction in North America, we need hydro power. We need an efficient Crown corporation to deliver that power, and we have it in B.C. Hydro.
The Speaker: Final supplementary.
G. Campbell: It's clear, hon. Speaker, that neither the minister responsible for Hydro nor the Premier is in touch whatsoever with what's going on in the private sector in British Columbia. The private sector test, which is recorded in the government's own budget document of this year, points out that in 1993 paid employment in the private sector went up by 0.5 percent. How can you possibly justify the number of B.C. Hydro public sector employees going up 13 times faster than the private sector? How much longer are B.C. taxpayers going to have to pay for this Premier's friends' mismanagement?
Hon. G. Clark: British Columbians have the third-lowest hydroelectric rates in North America, which are among the lowest in the world. We have a tremendous competitive advantage. In addition, not only did we put B.C. Hydro on a private sector test but we put a rate cap on it to ensure that the rate increase could not be 1 percent beyond the rate of inflation. B.C. Hydro has invested more in Power Smart and energy conservation. Those are more labour-intensive jobs. B.C. Hydro is moving. It has a great reputation in British Columbia. We have a job to do. I want to assure all members that over the next couple of years there will be many more exciting projects to deliver electricity in British Columbia, and we will maintain our position with the third-lowest hydroelectric rates in Canada.
B.C. HYDRO OFFICE EXPENDITURES
G. Farrell-Collins: Is Hydro ever doing more, hon. Speaker. The Liberal opposition has just learned that while taxpayers have been hit with huge hydro increases, senior Hydro executives have been given the added perk of the use of new Jeep Cherokees at Hydro's expense. Does the Premier believe that this is a good use of taxpayers' money?
Hon. G. Clark: Mr. Speaker, one of the best tests of the efficiency of a corporation is the O, M and A test. Administrative costs at B.C. Hydro are actually down. As we move forward to make sure this corporation is efficiently run, all of those tests are subject to open public hearings by the Utilities Commission. There are interveners. I invite the Liberal Party to intervene at a Utilities Commission hearing. All these matters are subject to public scrutiny through the Financial Information Act, the Freedom of Information Act and the Utilities Commission. In terms of costs, the track record of B.C. Hydro is among the most efficient of any utility in North America.
G. Farrell-Collins: The Liberal opposition is intervening where we were elected to intervene, which is in this chamber, and we can't get any answers out of the Premier or the Minister of Finance.
I have another little tidbit to top off three weeks of outrageous expenses and revelations about Mr. Eliesen's mismanagement of B.C. Hydro. The Liberal opposition has learned that in order to celebrate the last hydro rate increase, B.C. Hydro actually held not one but two celebratory cocktail parties: one at the Vancouver yacht club and the other at Canada Place. Does the Premier believe -- the Premier, not his righthand man -- that the taxpayers should be paying for Mr. Eliesen to celebrate the fleecing of taxpayers?
Hon. G. Clark: As I said before, B.C. Hydro has a track record that stands up against any utility in North America. It has 6,000 employees; it is the largest corporation in British Columbia; it has the third-lowest electricity rates in Canada, among the lowest in North America; and it has been consistently scrutinized by the Utilities Commission in open public hearings. The members opposite are just reaching in and looking for things to raise about B.C. Hydro.
I'd be delighted to answer all of these questions in estimates, but the record of B.C. Hydro and the rates they
[ Page 9701 ]
charge consumers in this magnificent, growing province show they are doing a good job for British Columbia, both in terms of hydroelectricity rates and in terms of economic development.
The Speaker: Final supplementary, hon. member.
G. Farrell-Collins: I don't know how the former Minister of Finance -- the current Minister of Employment and Investment -- can stand up in this House and tell the public that those are valid expenditures.
My question is to the Premier, and I hope he will be as brave in answering questions as the Minister of Employment and Investment is. In light of three weeks of expose about Mr. Eliesen's mismanagement of B.C. Hydro and the fleecing of the taxpayers, is the Premier prepared to cut his losses, send B.C. Hydro to the Select Standing Committee on Crown Corporations and ask Mr. Eliesen to do the honourable thing and step aside?
PHARMACARE PROGRAM CHANGES
L. Fox: My question this afternoon is to the Minister of Health. The changes in Pharmacare were introduced at a moment's notice, without any reasonable period for adjustment by patients, pharmacists or physicians. Will the minister agree now to defer the implementation date for at least 30 days to give everyone a chance to understand how the new policy will affect them directly, and allow them time to have their questions and concerns addressed?
Hon. P. Ramsey: We're very proud of the low-cost alternative program that we've introduced to contain costs in Pharmacare. It enhances the ability of the Pharmacare program to protect British Columbians from catastrophic drug costs, and, in connection with other changes we've made, will ensure the future of this very valuable program.
I've been in touch with many pharmacists and their organizations around the province, both previous to the introduction of these changes and since the introduction, and we are discussing right now whether we should be extending the period for implementation.
L. Fox: I'm pleased to hear that the minister is discussing with pharmacists the idea of extending the implementation date. However, some of the drugs listed under the new program as mandatory substitutes for the brand-name drugs aren't even available at this point in time. For instance, Eric 333, an antibiotic for treating respiratory infections, is no longer covered under the new direction, but the generic replacement isn't even available yet. Would the minister not agree that those kinds of problems should have an opportunity to be addressed prior to the implementation date?
Hon. P. Ramsey: I must say it's a pleasure to actually have a question asked in this House that is a real question about some real situations facing real people in British Columbia.
There are ongoing discussions between the Pharmacare branch of my ministry and the Pharmacists' Society. This program will be brought in as quickly as possible, but it will be brought in in a way that is respectful of the realities of the marketplace and drug acquisition.
The Speaker: A final supplementary, hon. member.
L. Fox: As April 1 is the date that this new program is supposed to be implemented, is the minister aware that section 30 of the Pharmacists Act states that where a practitioner indicates on a prescription a drug of a specific manufacturer, no interchangeable drug is to be dispensed, otherwise the pharmacist would be considered to be acting illegally? Is the minister aware of what section 30 of the Pharmacists Act implies, in order for a pharmacist to comply with the present Pharmacare program?
Hon. P. Ramsey: I'll take that part on notice and get back to the member.
L. Reid: My question is to the Minister of Health as well, and it refers specifically to the low-cost alternative drug program brochure put out by the ministry. The brochure talks about low-cost alternative drugs as being safe, effective and economical. My question is: what policing is currently in place in this province for comparing generic products to brand-name products?
Hon. P. Ramsey: I think the hon. member opposite knows that earlier this year this government instituted the therapeutics initiative at the University of British Columbia to give Pharmacare exactly the sort of information the member is asking about: detailed, arm's-length scientific and medical information about the best drug therapies.
I must also say, though, that in the area of drug substitution, my information is that in most cases this is not a dark mystery. The active ingredients in many categories of drugs are the same. In many cases the only thing that differs is the shape of the bottle and the price.
The Speaker: The hon. member, being on her feet at the time the bell was rung, can proceed, but the bell ends question period. Please proceed, hon. member.
L. Reid: Again to the Minister of Health. One of the key recommendations of the Pharmacare review last year was that drug pricing be based on the ability to pay. Since then, we have learned that your MLA for North Vancouver-Lonsdale has rewritten the report and takes pride in his greatest electoral achievement to date. My question to you is: if you cited the report as being a reasonable document, why would you move away from the question of seniors' ability to pay?
[2:30]
Hon. P. Ramsey: The report that was completed last fall by the Pharmacare review panel was indeed comprehensive. We have put many of those recommendations into effect already, and we plan to put in many more in the future. The question of ability-to-pay pricing for the Pharmacare program was a recommendation that, quite frankly, I believe requires more review. The hon. member may know that most seniors' groups oppose the introduction of ability-to-pay measures. That was their reaction to that part of the Pharmacare review report. The hon. member should also know that when we costed out exactly what ability to pay would mean for seniors, given the current financial resources of the Pharmacare budget, it would mean that a senior with an income as low as $15,000 a year would be paying as much as $400 to $500 a year for drugs. We think the measures that we introduced work better. They protect Pharmacare, and they protect both seniors and ordinary British Columbians from catastrophic drug costs.
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DISCREPANCIES IN VOTERS LISTS
Hon. D. Marzari: I have a response to a question taken on notice on Monday of this week, hon. Speaker. The Municipal Act provides clear opportunity for anyone to challenge a civic election and have their concerns and allegations vetted by the courts in an impartial judicial forum. The local elections legislation was completely revamped prior to the '93 civic elections, and it was quite successfully implemented. The election in Surrey was challenged, and while there were some problems, Justice Catliff did not find any evidence to overturn the election itself. I'm aware of the petitioners' concern and I have met with them, but I have no reason to question the wisdom of the court in this matter. Over the course of the next few years we will be looking at the elections provisions of the Municipal Act as they pertain to civic elections, and we will consult fully with local government. We will be prepared to make amendments to that act, but as of this time there is no reason for an investigation or inquiry.
J. Tyabji: I rise to table a petition from the residents of Winfield, with regard to an airborne substance that has been deposited for over a year and a half, requesting a follow-up to a preliminary investigation by the Ministry of Environment.
Hon. C. Gabelmann tabled the annual report of the Ministry of Attorney General for 1992-93, the annual report of the B.C. liquor distribution branch for 1993, and the office of the public trustee's year-end review for 1992-93.
Hon. G. Clark: I call committee on Bill 24.
SUPPLY ACT (No.1), 1994
The House in committee on Bill 24; D. Lovick in the chair.
The Chair: I'm going to give members an opportunity to leave the chamber before calling the committee to order, so I'll ask those members who are leaving to please do so quickly.
I'd like to call the committee to order. Before calling upon the minister to introduce Bill 24, the supply act, I'd like to do two things. First, I'd like to remind all members of the Legislature, both sides of the House, that our proceedings are governed by some very specific rules. I would refer all members to chapter 7 in our Clerk of the Legislature's excellent book Parliamentary Practice in British Columbia, specifically pages 105 to 109 on standing orders 59, 60, 60A and 61. I would suggest that all members who are not familiar with those pages might like to review them.
Secondly, I'd like to simply provide a little information to members in terms of how we shall proceed with this supply bill. I'm going to remind you of the current practice in the B.C. assembly. By tradition we begin supply motions by voting on the sections of the bill. In this case we're looking at three sections. We will deal with those individually and will have a vote on each section. We will then proceed directly to the six items in the schedule. All of those nine items are debatable. I would advise members in advance that if you have questions and concerns about particular parts of the bill, you would probably find it most helpful to reserve those questions and concerns to the schedules, because they refer to particular ministries. We then proceed to the sections, go on to the schedules, and then, in a curious usage, we go to the preamble and then to the title.
On section 1.
F. Gingell: I didn't speak during second reading of Bill 24, because I recognize and understand that supply bills are a necessary part of government. This one ensures that the government carries on after April 1. But I cannot let the opportunity go by to say that this government really isn't telling the whole story.
One budget issue is the expenditures that are going to be made under the Transportation Financing Authority. I take it from the calculations that I made and that were made in preparing section 1 that no amount has been included in this supply bill to cover expenditures by the Transportation Financing Authority. I make the plea that this government and this minister consider maintaining the accounts of this province on a consistent basis from year to year. Proper comparisons should be made. I do believe that expenditures made under that authority should be included in this supply bill. This action shows the transparency of this government in avoiding having the expenditures of that fiscal agency from being voted on in this House.
Hon. G. Clark: I agree with the member that we want to have the books of the government dealt with in a consistent fashion. In fact, that's one of the arguments in favour of capitalizing highways. We in British Columbia have capitalized the value of assets over time since 1963. School construction, health care, correctional facilities, any justice facility and government buildings are all borrowed and paid back over 20 or 30 years. That's the way we've been doing it in British Columbia for 20 years.
One of the things the auditor general, the comptroller general and Peat Marwick talked about was why we would do some capital assets that way and pay others on a current account basis. So the capitalizing of highways is consistent with the treatment of all capital assets in British Columbia. There's an added potential advantage to highways, if one wants to put a toll on them; in other words, they can generate an income stream. But they're still a capital asset that lasts for 20 or 30 years.
Just to follow this up, a couple of other areas are outstanding. Members from Social Credit might remember, because I've seen the briefing notes for the government of the day; I'm not sure it came to cabinet. It was a discussion about capitalizing silviculture. The same argument applies there: that it's an investment which pays off over a long period. Therefore capitalizing the value of that -- making sure you're making that investment on a capitalized basis and paying it off because of the long time horizon -- is appropriate. We've chosen not to capitalize silviculture investment. I think the Forest Resources Commission recommended a Crown corporation -- similar again -- to provide that kind of more businesslike footing to the forests assets we own as a province.
In any event, I agree with the member: you want to be consistent. We think we are being consistent by capitalizing the value. It's probably not really the right time to debate this question. I'm sure we'll have other times in my estimates; I'd be happy to do it at that time. But just to let the member know, I think he's generally correct. We need to be consistent in our application or treatment of these kinds of assets.
[ Page 9703 ]
J. Weisgerber: Having gotten into the debate, I think we perhaps will continue with it for a while. I believe the point being made by the Finance critic for the official opposition was that if you have consistently paid for highway construction out of the current budget it distorts comparisons with previous years to start to capitalize highway projects now.
I believe also that highway construction is significantly different than building schools and hospitals. You build a school or a hospital, and it is essentially functional for a decade or two or three. Almost immediately after highways are constructed they start to require significant amounts of maintenance. They are not stand-alone assets in the sense that buildings and other facilities are. I think that was the reason the previous government, when it was considering capitalizing silviculture and highways, rejected both of those: there wasn't the parallel between highways and schools or hospitals.
Furthermore, the government has taken advantage of this opportunity to lower its deficit by moving off.... Governments will only enjoy that advantage for a short time, until the annual capitalization costs catch up. Of course, this government will be long gone before that happens. I understand the logic in taking advantage of that situation.
Sections 1 and 2 approved.
On section 3.
K. Jones: Could we ask the acting Minister of Finance to give us a detailing of why this overage of $28 million is shown here?
Hon. G. Clark: It's not an overage. It's a working capital account, like any working capital account in a private company. The Purchasing Commission working capital account allows the purchase of minor capital investment over time and is recovered from selling to ministries or other agencies of government. So it doesn't need a float, but it needs some working capital in order to finance its activities before it recovers the money from the agency for which it's purchasing on behalf of. It has a $28 million working capital account, and it purchases capital goods and then resells them, if you will -- it's almost a paper transaction -- to the various ministries or agencies it's servicing. This has been in as long as I've been here -- seven or eight years now, I believe, although it feels like longer. The working capital account appropriation for the Purchasing Commission has always been a section of the Supply Act.
[2:45]
K. Jones: Hon. Chair, this interim supply bill is supposedly for a very short term. Could the minister tell us why the entire amount of the Purchasing Commission's working capital account for the year is included in this? Actually, it's more than that. I believe that only $24 million is called for in the accounts.
Hon. G. Clark: Actually, I don't know the answer to that, but I'd be happy to get that information for the member promptly. But I want to assure the member that there's nothing nefarious in this. It's a working capital account in order to finance the corporation, and it gets recoveries. It's not part of the budgetary appropriations of the government; it's part of the financing transactions of government.
The Chair: The member for Surrey-Cloverdale.
K. Jones: Perhaps the minister has something more to say.
Hon. G. Clark: Mr. Chair, just to expedite the discussion, I don't mind standing down this section and coming back to it shortly. I'll have staff come back and do that.
The Chair: So ordered.
We'll turn now to the schedules. The first one is for the sum of $28,760,000 under the Ministry of Attorney General.
On the schedule, warrant 1.
Hon. C. Gabelmann: I might just make some opening comments. There's not as much detail in the warrant illustrated in the bill as I think members should have. If members would like, I'll just give a bit more information before we get started.
Under vote 20, which is the first of the warrants, as members will see, is $28,760,000. The largest component of this additional funding is $14.16 million for additional costs in the corrections system with respect to overcrowding in both the adult and youth custody centres and with respect to some security upgrades to certain centres. We can talk more about that later if you like. Also in this amount is $6.8 million for the Legal Services Society, which is beyond the $85 million that was included in the budget this year, because of their additional pressures.
There is also $1.5 million to fund the 7 percent social services tax on contracted and ad hoc legal fees. This additional cost, which obviously goes back to the consolidated revenue fund, will not be incurred in 1994-95, as we anticipate that demands for most legal services will be met by staff lawyers. In other words, we were still in the situation where there were a lot of employees who weren't employees. The member for Peace River South will know what I'm talking about when I put it that way.
There is $4 million in this warrant to establish a contingent liability to pay the employer's share of pension costs for those lawyers who convert to the public service and decide to buy back previous years of service. There is also $2.3 million included for a variety of program overexpenditures, and I'll just list those: $600,000 for the opening of disclosure courts and small claims courts; $800,000 for the costs of provincial prisoners held in municipal lockups; $500,000 for information systems; $200,000 for additional board of review costs; and $200,000 for increased food and residential attendants costs, which I think is a corrections issue as well.
I will say to members in respect of this year's budget -- the one that starts later this week -- that all of these ongoing costs have been identified and built into the base budget for the coming year.
With that, hon. Chair, perhaps members would like to ask some questions.
J. Weisgerber: It seems to me that the special warrants which are particularly objectionable are for expenses that should have been anticipated -- or perhaps were anticipated and put forward in the budget process for the year previous and turned down at Treasury Board, only to reappear in a special warrant without benefit of debate in the Legislature.
It seems to me that issues such as overcrowding in jails certainly are expenses that should and must have been anticipated. Security upgrades in those quantities are unlikely to appear as a surprise to the system. It seems to me that indeed there must have been budget submissions last year for those kinds of security upgrades, which were for
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some reason or another turned down by Treasury Board. Perhaps the minister can give us some explanation as to why these kinds of issues had to be dealt with midterm, when they hadn't been anticipated.
Hon. C. Gabelmann: First of all, this is not an issue of me going to Treasury Board, being turned down and then coming here today. That's not what happened. In fact, on the security upgrades issue, staff in some of the adult prisons in particular had some difficulties in respect to staffing levels and security concerns, which developed during the year following the preparation of the budget last year.
Regarding overcrowding, we hit a big curve. The curve just took off like a rocket this past year, particularly in respect to the severity of violent crime. As a result, there were far more people in the system under sentence for longer periods than had been anticipated or expected. One of the real pressures that we face in our ministry has to do not with the increased crime -- because the crime rate is flat; in fact, it's lower than population increases -- but with the increased severity.
Increased severity produces a number of things. It produces longer sentences, so there are more days you need to have space for. It also increases the kind of security provisions you need to have. That hit us this year, and we didn't anticipate the full extent of it. So there were no games being played in respect of the budget.
J. Weisgerber: I suppose it again points out the inadequacy of this process. I'm not convinced that an increase in severity in crime could happen so quickly as to cause that kind of impact on the system within a current budget year. It seems to me that it would have been far more appropriate for us to have come back and debated those kinds of issues had there been a process to do that. I want to underline that this is a system that should be changed. With that, I'll accept the explanations.
F. Gingell: Is any part of the $14.16 million in the corrections systems category for what we would think of as a capital expenditure? Does it include any additional buildings, or is it all daily operating costs?
Hon. C. Gabelmann: I was sure of the answer, but I double-checked. This is all operational; there are no capital components in this at all.
F. Gingell: What does the $14.16 million represent as a percentage of normal operating costs? Have your costs gone up 1 percent, or have they gone up 15 percent?
Hon. C. Gabelmann: It is a 6.9 percent increase in the voted expenditure. In other words, we have an overrun of 6.9 percent in this particular item. This is for both youth and adult facilities.
F. Gingell: Could the minister advise us what long-term concerns he has on seeing a 6.9 percent increase in one year?
Hon. C. Gabelmann: I have a lot of long-term concerns. Everybody on this continent is seeing a situation where crime -- while in our jurisdiction it is not increasing -- is, as I said before, increasing in its severity. We have to deal with that in a very serious way. We can't solve the problem simply by building more jails, hiring more police officers or through any of the traditional ways of throwing money at the problem. We have to find different ways of doing it. With that in mind, last year I asked the ministry to begin work on an effective kind of crime prevention program, which would involve communities much more in crime prevention measures, in order to get at some of the root causes and deal with a whole range of issues. I hope to be able to bring this forward in a comprehensive package sometime this year.
We have a lot of work to do, but it must be done at the front end rather than the back end. In the Attorney General ministry in this province and across the country, the traditional response has always been to see the Attorney General as a sort of last resort. We pick up the pieces and repair things after they've gone wrong. We have to get in at the front end of the system and find ways of preventing trouble rather than just dealing with it after it has happened.
F. Gingell: From the responses of the Attorney General, I take it that this total of $14.16 million is due to an increase in the number of hours, and in no way is any portion of that increase due to salary or wage increases to staff.
[W. Hartley in the chair.]
Hon. C. Gabelmann: We budgeted money for whatever increments may have occurred with the normal staff complement, and the House voted for it. What the House didn't do last year was provide an allocation for an increase in the number of people. We've increased the number of people working in the institutions.
[3:00]
Let me add some other information to this. The most recent information I have goes to the end of February. We budgeted on the basis of an anticipated average adult count of 1,857. It was actually 2,088 -- an increase of 231, which is up 12.4 percent. I'm sorry; when I talk about count, I'm talking about the prisoner count. I've only been here for two years, and I'm already using the jargon. On the youth side, we budgeted for 295, and the actual count -- again to February -- was 356. That's 61 more young people, or an increase of 21 percent. So in terms of the average number of people who were incarcerated, we increased 21 percent on the youth side and 12 percent on the adult side. We increased the budget by 6.9 percent to pay for the additional resources required to handle those increased numbers.
F. Gingell: I must say that I didn't realize that the numbers of people incarcerated under the provincial jurisdiction rather than the federal jurisdiction was so low. The amount of increased wages is a substantial number. Recognize also that this increase has taken place over a year. Back in May and June 1993, which is the start of the fiscal period, you didn't have the need for increased staffing. The numbers grew. I was wondering if the minister has available what, if anything, this has done to the cost per day of each incarcerated adult and youth.
Hon. C. Gabelmann: I don't have the cost-per-day figures available here, but I will undertake to get those figures and provide the member with that by way of correspondence, if that's satisfactory. One would assume, however, that because your building costs are basically fixed, the cost per inmate will have come down. That should also flow from these numbers. Given the 21 percent and 12 percent increases in inmate populations and the 6.9 percent increase in costs, my simple arithmetic tells me that the per capita cost has come down. I don't know what the numbers are, but I will provide those to the member.
J. Dalton: Welcome, ministerial officials.
[ Page 9705 ]
The member for Delta South has hit upon overcrowding in the facilities. That's an issue I want to get a little more information on. The Attorney General has indicated that these are all operating costs. Does that include, for example, the double-bunking that is occurring in the facilities?
Hon. C. Gabelmann: Most of the unfortunate double-bunking issues are in the Surrey and Vancouver pretrial centres. Some double-bunking has occurred in the youth centre at Willingdon. We're trying to deal with that with another temporary solution. But yes, the costs that are associated with the additional people required to handle that crowding is covered by these amounts.
J. Dalton: It's an issue that we will no doubt go into in more detail when the real estimates come up this spring. I hope the Attorney General has some long-range thoughts or plans about the implications of double-bunking. I do agree with his comments, by the way. We can't throw more money at the problem; we have to address the social and other issues behind it. As I'm sure the Attorney General is aware, double-bunking is not a very happy solution to an already unhappy situation for the people who are incarcerated. In fact, I would suggest that in the long run, double-bunking will prove to have an adverse effect, even though I recognize that we do have to provide facilities. I don't know whether the Attorney General would like to comment on that now, but it's certainly something that we'll have to deal with later.
Hon. C. Gabelmann: I would like to comment now, because it's of very deep concern to me that this situation even exists. I really find it very uncomfortable that I'm responsible for a ministry in which this happens. It's a problem that we need to address. We need to look very carefully at who we have in prison -- I'm talking about both adult and youth facilities, and I'm not going to exclude pretrial from that, either. We need to look very carefully at whether or not certain individuals actually need to be in prison, rather than out, in certain circumstances, with an expanded electronic monitoring program, more extensive community supervision or other alternatives that we have to develop.
I'm still of the view that we imprison too many people. We imprison far more people per capita than any European country. We are second to the United States in terms of how many people are imprisoned. Americans have a view of the world where you put everybody in jail and leave them there for a long time. What's the result? One of the worst crime rates in the world. That's not the only reason, but it's certainly a factor. We have to get at these problems in a constructive way. I'm always pushing -- and I don't mind saying this here -- the people in the corrections branch to deal with the question of whether or not people really need to be imprisoned when we can find other alternatives that may be more effective for society, the individual concerned and the taxpayer in the long run.
The opposition critic reminded me of something I didn't do initially and that I should do, and that is simply to introduce the staff that I have with me here in the House. On my left is Deputy Attorney General Brian Neal; on my right, Deputy Minister Maureen Maloney; Rick McCandless, who is in charge of budgets and things like that; and Barb Kaiway, who also works on our budget side.
G. Wilson: I understand that the overcrowding resulted in -- and I just want to make sure that we have the figures right -- a 12.4 percent increase in adult incarceration and a 21 percent increase in youth incarceration. What proportion of that $14.16 million is a direct result of the Clayoquot Sound protest arrests and incarcerations?
Hon. C. Gabelmann: I don't have a precise number; it is negligible. I think the fair answer is that almost none of this is as a result of Clayoquot. Most of the people who were convicted of an offence in respect to the Clayoquot issue were put on electronic monitoring. So I don't have a number; that's the honest answer to your question. But I can say that it's virtually nil, in terms of the count, because of the alternative sentencing and the short duration of sentences. People don't actually go as long as their sentences, I'm sure the member knows. I'm told the actual cost to the corrections branch -- as opposed to the whole justice system -- for costs that can be attributed to the Clayoquot issues is $200,000 so far.
G. Wilson: Yesterday in the second reading debate, I think I made it very clear that remarks today from the Alliance opposition would not be made in an accusatory way or implying in any way that there has been mishandling here. But we are very concerned at this overcrowding aspect. I wonder -- particularly with the 21 percent increase in youth incarceration -- if the minister might tell us if there is an opportunity to see data that tells us specifically the type of crime that is more responsible than others. If it is regionally broken down in the province, vis-a-vis the lower mainland or other centres, that might give us a handle on why this is occurring.
Hon. C. Gabelmann: Again, I can't provide a specific, really detailed answer here, but I think we might be able to do more by working with the member and the corrections branch to get a more accurate assessment. In general terms, it's not specific to any region. The increases are general throughout the province.
In respect of what kind of offences, I don't have that now. It's something I'm interested in too, and we will endeavour to get as good a reading on that as we can for the members.
A third thing I want to say is the amazing increase in the remand count, relating back to the pretrial issue. The numbers there have just gone out of sight.
G. Wilson: I either didn't hear or wasn't clear. Of the $14.16 million that you have attributed to overcrowding in adult and youth correctional facilities, did that also include the additional costs and the retendering of correction branch food and residential contracts? Or was that a separate proportion of money? What was involved in that retendering process?
Hon. C. Gabelmann: There were, I understand -- don't hold me to the exact number -- a couple of retendered programs, which accounted for $200,000 out of this $14 million -- if I heard the question correctly.
G. Wilson: All right. So that $200,000, which, I am assuming, is coincidental with the Clayoquot cost but not the same, is out of the $14.16 million. Is that correct? Or is it just an incidental amount beyond the $14 million? Two hundred thousand is not a huge sum in light of the $28.7 million we're looking at.
Hon. C. Gabelmann: This may help or it may not. I said this overcrowding was $14.16 million. Within that figure is $200,000 for increases in retendering....
[3:15]
[ Page 9706 ]
Let me break these down again. Leaving aside security upgrades, corrections overcrowding was $13.66 million. You add $500,000 for security upgrades, then to the $14.16 million you add $200,000 for the retendering results. I think I was in error a moment ago when I said that it was within the $14.16 million; the $200,000 is in addition to the $14.16 million.
G. Wilson: How does that plus or minus $13 million for the overcrowding break down? I think that this was what the member for Delta South was getting at, and if I missed your answer, I apologize. Could you restate, for the record, what the $13 million plus or minus, excluding the security upgrade, is specifically for?
Hon. C. Gabelmann: I would like to make sure I understood the member's question: in the $13.5 million that was for overcrowding, what was that specifically for?
This may not be enough detail, but we spent $10.5 million on the adult side and $3.2 million on the youth side. Most of that money went primarily for additional staffing and other costs -- extra food and all of the things that are required in a prison to support an individual -- but I don't know the exact numbers for each category. There is a considerable number of extra staff, which eats up most of this money.
G. Wilson: Rather than belabour that here, if I understood the minister, this is now going to be included in this current year's budget. So in this year's estimates, presumably, we will get a handle on staff increases and those kinds of things.
I have one other question with respect to this section of warrant 1. What was the reason for the needed retendering on correction branch food and residential contracts? Why did we have to go back to retender? It begs the question of why the original process was not sufficient.
Hon. C. Gabelmann: Contracts had expired and were put out for rebidding rather than just being renewed automatically.
G. Wilson: In the tabling of the budget, I would have anticipated -- and presumably the ministry would have anticipated -- that expiration of contracts and the renegotiations would occur and there would be some inflation factor or increased factors. What I'm hearing from the minister is that in the final determinant of that contract, it was simply $200,000 more than the built-in inflationary costs that were anticipated. That's what I understand.
The Chair: Just before the minister responds, members are finding it difficult to hear. Perhaps people could raise their voices a little until we get the mikes adjusted.
Hon. C. Gabelmann: I think it's a question of some members raising their voices and other members lowering theirs.
The answer for the member is yes.
M. de Jong: The minister already alluded to some of the changes being undertaken at the Legal Services Society. I think the figure he gave was $6.8 million, which is being transferred to the Legal Services Society. I'm wondering if he can indicate what portion of that amount pertains to the new in-house counsel? The minister will know that that is quite a controversial issue. How much of the cost overrun pertains to excess of tariff-billed matters? How much of it pertains to expenses relating to these new personnel that the Legal Services Society is hiring?
Hon. C. Gabelmann: None of the $6.8 million is attributable in any way to changes that the Legal Services Society is embarking upon. Those changes are just in the formative stage and haven't yet had a budgetary impact.
One of the real problems that members need to know about with respect to budgeting for legal aid is the delay. Legal aid has not used an accrual accounting method. I don't know why, but the expenditures are booked in the year in which the expenditure is made rather than in the year the expenditure was incurred. As a result, each year's budget is paying for cases that may have occurred in the last year and, in some cases, two or three years before. It's very difficult to get a handle on expenditures as a result of that. From my perspective, I find it very frustrating, because it's been difficult to know where the budgets are going in legal aid.
To go back to the member's question, we still don't know what the expenditures are going to be this year, because people still have another couple of days this month to send in bills. How they get paid and whether they're paid out this year or from next year's budget is beyond my control because the Legal Services Society is independent. They make their own decisions. I don't know what the final figure is going to be for the fiscal year with respect to legal aid. Our best attempt was to provide an additional $6.8 million for this fiscal year that is now just ending.
As I say, it's a very inexact science. I want it to be a more exact science. I want them to change how they're doing their accounting. Significant changes are beginning to happen which will hopefully enable us to get a proper handle on expenditures in the years to come.
M. de Jong: If I understand the minister's response correctly, the funds are being provided as a result of overruns from the application of the old tariff system.
Hon. C. Gabelmann: Essentially yes, but all expenditures aren't tariff. Total expenditures are predominantly, but not exclusively, tariff. I can't tell you, as of this year, how much of that overrun would be tariff related and how much would be other costs that may have been incurred. What I can tell the member is that it's not to do with changes in the delivery model.
M. de Jong: I'm referring to another section of warrant 1. I don't know if that's appropriate. The minister also referred to some additional costs relating to small claims court. I'm wondering if he can indicate whether that's incurred as a result of the introduction of the pretrial conference model or whether it's a result of the allocation of more judicial resources. From where do those additional costs result?
Hon. C. Gabelmann: Members -- and this member in particular -- will remember that the former government increased the limit for small claims to $10,000. Following that decision, the number of cases heard in small claims courts increased, and then began to increase fairly rapidly to the point where there was a large backlog. So last year -- I believe in April, May or thereabouts -- we embarked on a program to address the backlog in the courts by providing additional resources to the Provincial Court to deal specifically with the backlog.
This was designed to be a one-shot effort to catch up, and that's where this cost occurred. At the time of preparation of the budget we didn't anticipate doing that. As members will know, budgets are generally prepared in the fall and then printed at the end of February or beginning of March.
[ Page 9707 ]
Interjection.
Hon. C. Gabelmann: You'd need to ask the member from Surrey.
So the problem -- crisis may be too strong a word -- in respect of the backlog in small claims wasn't anticipated, nor was the solution anticipated in advance of the budget-setting, so we did that during the course of the year.
M. de Jong: Along a similar line are the costs relating to the expansion of the disclosure court process. Can the minister indicate in general terms the nature of those costs, and particularly where the expansion of those services took place?
Hon. C. Gabelmann: There are a couple of reasons why the disclosure courts are costing more at this stage. This won't be a long-term problem; it's a short-term problem for a couple of reasons. One is that it's very much an experimental process at this stage. There are additional resources in the disclosure court that don't exist in the normal court, as I know the member knows. Those additional resources, in particular to make sure that we get it right in the early going, are costing more money.
We can't take out of the regular system the extra money that we're using for disclosure. Because of the backlog in the regular system it just backfills. No money is freed up in the court system to put into the disclosure courts, because the backlog just gets infilled. There are two reasons: firstly, it's new money; and secondly, it's more expensive as a result of trying to do it properly in the very early going.
For members' information, so far the results of the disclosure courts indicate a substantially higher percentage of cases now being resolved at Provincial Court before the hearing.
M. de Jong: One further question for the minister, perhaps stemming out of personal frustrations more than anything. The additional funds referred to for improvements to the information system -- what, pray tell, is that?
Hon. C. Gabelmann: I hope I understand the answer after I've finished delivering it. I'm told that this money is being used to upgrade old systems in the courts and for the judiciary, where they have 14-year-old equipment. The money is being used both for hardware and software upgrading of the systems within the courts.
M. de Jong: Were those unanticipated costs or something that came along through the year? Presumably they relate to the scheduling hardware that the judiciary has available to it.
Hon. C. Gabelmann: I don't know that I've got a good answer for why we didn't know in advance that this was a needed expenditure. Frankly -- this isn't an excuse, but it's a reason -- it's a big ministry. There are a lot of issues and considerations, particularly when you're dealing with equipment. Suddenly you realize you've got a problem, and you begin to do an assessment of the problem and solutions. I understand that the money that we're talking about is actually not for the systems themselves but for design and preparatory work in anticipation of trying to bring in a more modern system in the courts.
I hope the member is satisfied with that answer, because I'm not.
K. Jones: I'm not satisfied with that answer, either. It's not getting to the real nub of an overage, because it's obviously something that could have been planned for next year rather than this year. It certainly wouldn't be something for which you would have to get warrants. Most planning processes would take those things into consideration.
What were the additional costs for the courtroom openings in Robson Square? Why are they being asked for in this warrant?
Hon. C. Gabelmann: I just wanted to make sure that the numbers I gave you earlier are the same as the numbers I'm going to give you now, and they are.
[3:30]
We're talking about $300,000. First of all, let me just tell members what we're talking about: four additional family and small claims courtrooms -- we went from eight to 12; and two additional settlement conference rooms -- we went from two to four. The money that was not provided in the budget was for five staff, which was $190,000, and for furniture, which was $110,000.
K. Jones: Could the minister tell us what date those courtrooms and additional staff were required to come on stream?
Hon. C. Gabelmann: I remember it very well, but I don't remember the date. I remember it well because I couldn't understand why we hadn't budgeted for the furniture, and I pursued that question at the time. My memory was that it was two or three months into the fiscal year. I'm just glancing at this to.... Oh, I remember the issue now that I read the note. It was actually a year ago in a day or two. It was year-end, and the courthouses were scheduled to open.... No, in fact, it was on March 1, not March 31. The Robson Square courthouse was going to open to the public on March 1. I think we had some problems with that. We were using a building on Yale Street that we had to get out of because our lease had run out, and we had timing problems. But it was around the end of February and the beginning of March last year.
K. Jones: Does that mean that for the whole year the Attorney General's staff did not know they were having this extra $300,000 in costs and didn't take that into consideration in their budget planning?
Hon. C. Gabelmann: It was our hope at the time of this additional expenditure that we would be able to cover it by not spending money somewhere else. You always spend more on some things and less on others, and at the end of the year you tote it up and see whether you've done it within the budget. We didn't do it within the budget, obviously; that's why we're here today. But in respect of this issue, it was over, and we didn't have any other underages that would have enabled us to pay for it. So we had to come to the House.
[D. Lovick in the chair.]
K. Jones: When you expend money at the beginning of the year, doesn't that mean that the money is spent and that when you end up with an overage, it's the items at the year-end that they're over? Are you perhaps attributing this overage to something that should have been identified as a year-end overage, not something at the beginning of the year? What should we have been getting here, rather than this item?
[ Page 9708 ]
Hon. C. Gabelmann: I think there are a couple of answers. First of all, when the budget was prepared last year, this was an unanticipated expenditure -- both of these items. I can't say why. Having spent the money, the hope was that we would be able to recover that amount by savings elsewhere. We were unable to do that.
K. Jones: Would the Attorney General, as a good administrator, not see that he stayed within his budget when he knew he had an overage coming in at the beginning of the year, and would he not have reduced some of the expenditure in other parts of that operation so that he would be prudently within his budget in this area? I think we have to take responsibility for every segment of our operation. Where we have an opportunity to adjust programming, we should certainly take that into consideration, I would think, as a prudent administrator.
Hon. C. Gabelmann: When it was obvious to us during the course of the year that the increased court caseload and the backlog were going to create problems, I advised the Finance minister and Treasury Board of the cost pressures we were facing and the anticipation that we would be unable to operate within the budget allocated to us. As a result, the Finance minister and Treasury Board made decisions which had other ministers spending less than their budget allocations so that at the end of the fiscal year we would come in underbudget, which we've done, as the member heard yesterday during comments by the Minister of Finance. If the member is asking whether I have failed, as the person responsible for the ministry, because some items have gone over budget, that is for members to say and for the public to judge. But had we not made the additional expenditures, limited as they are, given the pressures, we would run the risk of having cases thrown out of court because of the Askov decision, which essentially says that if you wait too long after the charge to go to trial, the charge may be thrown out. Where would we be then in a justice system where we're not processing trials? It's a tight balance.
I can tell members that the backlogs have increased in a way that produces a lot of anxiety on my part. But we haven't let them increase so much that we run the risk of having these cases thrown out of court. In order to prevent that risk, we have spent some additional money. I don't apologize for that. We didn't anticipate the number of serious charges that would have to be laid in this fiscal year.
K. Jones: From my recollections of the job postings over the last year, your ministry has probably had by far the largest number of new staff appointments. It has also had the highest additional operating costs. I would think that by reducing even a couple of those new staff appointments, you would have been able to keep within budget. Why were you not willing to do that? This has nothing to do with dealing with the number of court cases; it really has to do with the fact that you have increased the bureaucracy in your administration.
The Chair: Before I ask the minister to respond, member, I'd like to remind you to please direct your questions through the Chair: "Will the minister please answer?" rather than "Will you please answer?"
Hon. C. Gabelmann: We all need to remember that there are no first persons in this House; there are only third persons. I think that's what the Chair was trying to remind us.
Should we not have hired the additional correctional officers to ensure prison security? The member would suggest that we should not hire those people; my suggestion is that we should.
K. Jones: On another area, the minister mentioned that there was an additional cost resulting from additional people in remand areas -- I don't know whether you can actually call them prisoners; they aren't prisoners per se. You indicated that there was a 12.4 percent increase in the adult population and a 21 percent increase in the youth population. Could the minister tell us how many additional FTEs resulted from that? Because of the fact that double-bunking did not occur until this year, you've had hardly no additional staffing costs for that. Why are you claiming that this is the reason for the extra costs? The double-bunking in the Surrey Pretrial Services Centre hasn't even been completed yet. I understand that the work at the Vancouver Pretrial Services Centre has just been completed. When we toured them in January, neither pretrial centre had any double-bunking facilities in place.
Hon. C. Gabelmann: I realize now why the member for Okanagan East and the Chair were laughing at me about my "first person" comment. I was thinking about the member, and that made me think of first person when I meant second person. My apologies for forgetting my high school grammar.
I'm not sure I fully understood the member's question about dealing with the problems at the Vancouver and Surrey Pretrial Services Centres. Let me come back to that in a moment. I can talk in general a bit about how we're trying to deal with the high counts. Before I do that, let me say that the approximate increase in the number of staff as a result of overcrowding in the corrections branch is about 190 people. I believe 190 is the number of FTEs.
Let me tell the members about the plans that we're focusing on to deal with the high counts. We're trying to expand the electronic monitoring program and use it more often. We're using the so-called terminal temporary absences -- or TTAs, as they're referred to -- for non-violent, low-risk offenders. In other words, we are letting people out a little earlier if they're non-violent and low-risk. We're discouraging the use of provincial resources for federally sentenced offenders who are on remand for additional charges. Under the current exchange of services agreement with the feds, we're transferring about ten to 15 inmates to federal resources. We provided an additional 47 beds at Nanaimo Correctional Centre by opening Campbell House and Guthrie House, which again requires more FTEs and more money. We've provided an additional 36 secure beds at both Surrey and Vancouver Pretrial. Perhaps this was where the member was going. Currently, each of those has an emergency capacity of 168, and a second bunk will be installed in 36 rooms at each centre. These additional 72 beds will require another 47 FTEs annually. The impact this fiscal year will be about 40 FTEs, about $200,000 in construction costs and $2 million in salaries. As members will know by references in the media, we are also using an unoccupied wing of the Burnaby Correctional Centre for Women for use by males so that we can reduce some pressures elsewhere.
Those are some of the things we're beginning to do. As I said earlier, I'm not particularly happy that we continue to throw all this money at the back end, but we have these pressures and we have to deal with them as they arise.
[3:45]
[ Page 9709 ]
G. Wilson: A $31.2 million cost overrun is pretty serious, but this minister should consider himself lucky. After all, if he were the Attorney General in a government headed by the current Leader of the Opposition, he'd be personally liable for it. In this case he is at least able to enjoy some portion of his pension and won't personally have to cough up the $31.2 million, which he would have to do in a government of the current Liberal Party.
Could the minister talk about the information systems expenses? I recall from the estimates debate last year a fairly lengthy discussion about the information systems expenses that were anticipated, yet you indicate here that there are substantial cost overruns in that area. I wonder if you could explain what went wrong, because I recall a fairly lengthy discussion on that in last year's estimates.
Hon. C. Gabelmann: First of all, in the estimates last year we were talking about a program called ICPS -- integrated case processing system -- which was a grand scheme for an integrated system throughout, from police right through to corrections. We are not embarking on that grand scheme for a variety of reasons. We are planning to fix some particular problems we have, and we're embarking on this in a different way. I would very much like to have an opportunity to sit down privately with the member and give him a fuller answer about this -- with some staff around. The member will then understand why I'm having some difficulty in responding to this question.
G. Wilson: If some things are better done that way, then I accept the invitation.
The last question I have with respect to warrant 1 has to do with the Crown Counsel Association pension costs, which we are told amounts to $4 million in overruns because of converting private pensions into public sector pensions. My memory is going back to the last estimates debate -- I tried to look it up prior to this debate and couldn't find specific reference to this particular item -- but I would have thought that the general kind of cost for carrying those pension conversions would have been an ongoing rotational expenditure in government. It would not have required $4 million; that's a substantial sum of money. How many people, for example, required the $4 million, and why was that not part of the original budget that was brought down?
Hon. C. Gabelmann: In the agreement we reached with the Crown Counsel Association on this issue, an agreement was made to offer -- to those who chose to take advantage of it -- a one-time buyback of their pension arrangements. This is our best guess of the cost of that one-time buyback. We didn't know with much certainty, because we didn't know how many people would choose to participate in the program. We are getting closer to numbers on that now, and I think we're on track. But it's because it's a one-time buyback provision.
G. Wilson: As I understand it, negotiations were concluded and the offer has been made. Is there some closing time when we will have a better handle on that, and therefore is the $4 million talked about here simply money put into an account as a contingency? Do I understand that correctly?
Hon. C. Gabelmann: I hope I heard the whole question -- I have two ears, and I was listening to three voices. The deadline for choosing is June 1996, so we're looking at that period of time. I'm not sure I heard the rest of the question.
G. Wilson: That was part of the question: is there a cutoff at which people have to make up their mind as to whether they wish to join or not?
But the second part was: is the $4 million basically sitting in a contingency fund waiting for people to come into this, to buy in or not? So this is not money that is committed and now has to be spent, on the basis of those already having taken advantage. In other words, in a sense the money hasn't already been spent, although it's been committed to be spent if enough people come forward and take advantage. Do I understand that correctly?
Hon. C. Gabelmann: First of all, it's an accrued liability -- our best guess as to what may occur. None of it's been spent. If we don't need it all, then obviously we won't spend it.
On the cutoff question the member asked, it varies in terms of the number of years of seniority. So it's different in different cases.
G. Wilson: Then probably this is the last question I have on this warrant 1. It's because it's an accrued liability that it has to be carried in this particular warrant, as opposed to being carried in next year's budget. Now I understand. Is that correct?
Hon. C. Gabelmann: Yes. I think we're now on the same wavelength. This is an obligation that belongs in this fiscal year, the one just ending. Therefore it belongs in this warrant rather than in next year's, because of the accrual nature.
K. Jones: The Attorney General stated just a few minutes ago that the non-occupied wing at the Burnaby Correctional Centre for Women is being used for men. Could the minister tell us what date that occurred? When I was there in January or February no persons were in that unoccupied wing.
Hon. C. Gabelmann: The best answer I can give is that it's imminent. It may not have happened yet, but it will be happening imminently. The order-in-council has passed, there's been reference to it in the newspapers and arrangements have been made, but I don't know that any prisoners have yet been transferred.
K. Jones: Therefore the hon. Attorney General is saying that that cost item does not belong as part of this special warrant, because no expenditure was taken -- because no people are there.
Hon. C. Gabelmann: That's the trouble you get into when you're nice. I was trying to give members more information earlier, and I talked about our contingency plans in respect of overcrowding. There is no money in this warrant for the transfer of male youth to the women's jail. That's not a warrant item. I was simply trying to give members a sense of what we were doing to deal with overcrowding.
K. Jones: I'm glad to have that clarified, because it sounded like it was being used as a reason why we were in this extra cost of $14.16 million for correctional over-crowding and readjustments.
Could the minister tell us, with regard to this over-crowding situation, if the real problem is the fact that the remand centres are getting overcrowded -- particularly the Vancouver and Surrey remands -- as a result of delays in the court system? The courts are not processing people in an appropriately expedient manner; they are then being
[ Page 9710 ]
referred back into remand on a continuous basis. Because of unnecessary delays generated by some people in the legal profession for their own client moves or whatever, the result is that we are ending up paying more as taxpayers than was budgeted for. Therefore the profession and the courts themselves could correct this, if they were to put their minds to it.
Hon. C. Gabelmann: I'm of the view that you can correct anything if you put your mind to it. Sometimes it takes a little while. We're working on getting a better handle than we've traditionally had on why there are backlogs and what we can do to speed them up. We're moving to different ways of doing things and trying to get things out of court. I'm very interested in pursuing alternative dispute resolutions in a variety of circumstances, so as to get things out of court.
At the federal-provincial justice ministers' meeting last week we talked about some other ideas in respect of reducing pressures on courts. We're doing all those things. The reason, I suspect, that the pretrial centres are more overcrowded now than we want them to be is partly a result of backlog. I wouldn't attribute it to the lawyers who have these people as their clients, because I think that they would do whatever they could to make sure their clients didn't spend any more time in a remand centre. But if the member is making a general point about problems in the legal system in respect of delay, I think there are lots of problems. We're determined to get at them as best we can.
Scheduling is a problem. You might schedule a courtroom and the people attendant for a two-week trial, and discover five minutes before the trial starts that there has been a settlement. You have then wasted resources in a sense, because it's hard to backfill. We are trying to find ways of doing all those things more efficiently and more effectively so we don't have that kind of problem, which adds to the delay problem.
J. Tyabji: Earlier we were talking a little about some of the costs in corrections and the overcrowding. The Attorney General mentioned a few things about some court costs. Were there any unexpected expenditures in the general court system -- the Attorney General talked a little about small claims courts -- as reflected in warrant 1?
Hon. C. Gabelmann: We've managed, by and large, to keep the cost of running the court system basically within budget. Where we haven't managed to keep it within budget is in the increased numbers in corrections. But on the court side, with the exception the member mentioned of the small claim initiative last year, we've generally managed to keep on budget. I have resisted requests for more judges and more resources, again based on my view that we don't want more resources thrown at the problem. We want more creative solutions within the existing framework so that we don't solve problems by throwing more money at them. So we haven't been doing that.
J. Tyabji: I can appreciate a proactive approach to the justice system. The reason I was asking the previous question is that I'd like to go back to the question about the Clayoquot Sound demonstrations and the cost to the court system. The Attorney General at that time indicated that of the roughly $14 million in costs due to corrections overcrowding, only a minimal part was with regard to Clayoquot Sound. However, there was an associated cost through the court system. I don't know if the Attorney General is prepared to reveal that or if he has that, but I would certainly appreciate hearing how much it was.
Hon. C. Gabelmann: There was no additional expenditure as a result of the additional volumes created by the Clayoquot situation. What happens, of course, is that the lists get longer and the delays increase, and that's the kind of price we pay rather than a dollar price.
J. Tyabji: Later on in the regular estimates, we can look at the total cost of the Clayoquot protest.
I'll go back to the proactive approach to the corrections system. Since the Attorney General is very keen on keeping down costs in reacting through the court system with additional judges, were any programs initiated by the Attorney General's office with specific regard to youth and ways of circumventing the court system or finding a different way to deal with potential young offenders?
Hon. C. Gabelmann: The answer is yes, but not enough, if I can put it that way. We are embarking on a number of initiatives. Diversion is an obvious one. The member for Powell River-Sunshine Coast will be familiar with the diversion program, which the mayor of Sechelt, I think, is very involved in. We're pushing hard at more diversion programs in a number of communities. We spent another $909,000 in the last fiscal year on alternatives to incarceration for young offenders.
[4:00]
I've really insisted on finding programs that are non-traditional and that use the community to assist youths who are in trouble for various reasons. It's better for the kids involved, and it's cheaper for society, both in the short term costs of the traditional way of doing things and in the long term, because you're going to reduce the recidivism rate if you involve the community in the solutions. We're working on a number of initiatives.
I want to do a lot more than we've been able to, but you generally need more money to do more. You get the old problem: anybody trying to change the direction of an institution has to spend money on the old system while trying to spend money on the new system. As everybody knows, we don't have the resources to find new money to do new things, so we're scraping it up here, there and everywhere. We're trying to find additional resources to start new programs. We haven't done nearly as much as I'd like to, but we're going to keep pushing and squeezing and trying our best to move on a variety of fronts with respect to youth in particular.
J. Tyabji: To what extent are some of the overruns in the ministry attributable to some of those changes in direction? Were any expenditures related to changing the direction of the family courts and enforcing the family maintenance enforcement program? I know the Attorney General works with the Minister of Social Services. There is a very significant and proactive approach coming to the family courts. I'm just wondering if any of that is reflected in the warrant, and if so, how?
Hon. C. Gabelmann: We didn't spend any additional money this past year on family courts. We did spend more on the family maintenance enforcement program, but we covered that with savings we were able to find in the ministry, so it's not in the warrant.
As the member knows, we are embarking on a series of pilot projects for family justice centres. We hope to transform the way family justice is done in this province, from the
[ Page 9711 ]
adversarial system to one in which, hopefully, people will work together or will at least have the opportunity to do that. So we're at the beginning of what could be a radical transformation of family justice issues, which I think will be very useful to everybody in our society.
J. Tyabji: I'd like to put the Attorney General on notice that I'd like to pursue this line of questioning in estimates.
K. Jones: I'd like to go back to the Attorney General to get an additional cost item. How much money did the province pay the city of Vancouver for escort services by the Vancouver police?
Hon. C. Gabelmann: Hon. Chair, I'll answer that question in estimates. It's not part of the warrant. I'm not being cute. I don't know here and now, because it's not information we have here. We are prepared for a special warrant debate, not for an estimates debate.
The Chair: I'll just emphasize, member, that the Attorney General's point is well taken. We are indeed entitled to deal only with the items specifically referred to within the warrant.
Would the member continue, please.
K. Jones: We're relating directly to one of the items mentioned: security upgrades and costs of overcrowding and prisoner programs. I believe this is definitely a factor in that, and I understand it is a very high cost factor as a result of various problems that are resulting in Vancouver police having to come in and provide special services for escorting prisoners. I understand that Vancouver is charging the people of British Columbia on an overtime basis, and therefore it is definitely a concern in this area. It will impact very definitely on that figure.
The Chair: Member, I'm listening very attentively and intently to your comments. The point remains, however, that the specific question you refer to does not deal with anything stipulated in the particular warrant under discussion. Therefore I cannot really allow that line of questioning; it's simply not in order. I would ask the member to continue by focusing on items within the warrant, please.
Are we content, then, with warrant 1? We can move on to warrant 2 if that's agreeable to members.
On warrant 2.
G. Wilson: I've gone back through last year, and I'm sure I haven't been able to see every single piece of legislation and be aware of it, but I don't remember approving increases for Provincial Court judges or for masters' salaries. All I can say is that it's a good thing they came up last year, because this year I might have a different opinion on them -- if I had an opinion at all.
Could the minister tell us when we approved them? How much were the increases, and how were they negotiated? In fact, are the salaries even a matter of public record?
Hon. C. Gabelmann: I think it's fair that the member doesn't remember what the House did at certain times last year. The member had a very busy year last year and had other things on his mind on occasion.
On June 28 the chair of the Select Standing Committee on Justice, Constitutional Affairs and Intergovernmental Relations reported to the Speaker, by way of motion, the conclusions of the committee with respect to judges' compensation. The committee had made a series of recommendations, some of which, in order to be effected, had to be approved by the House by way of motion. Just to remind the member, the committee recommended that effective from January 1, 1993, judges receive an annual salary of $118,402, the Chief Judge have his remuneration increased by $1,000, and the Associate Chief Judge's, from $4,000 to $6,000.
The major impact of the motion was the increase in salary to the approximately 128 or 129 Provincial Court judges.
G. Wilson: I understand the figure is roughly $118,000. I would imagine that the salary range would fluctuate -- or perhaps not. Is that a consistent flat rate? How does that work?
Hon. C. Gabelmann: All judges of the Provincial Court, other than the Chief Judge and the Associate Chief Judge, receive the same pay, which is now $118,402. That's it. As a result of the motion, that applies from January 1, 1993, for a two-year period -- if my memory is correct. All of this is a result of the provisions in the Provincial Court Act.
K. Jones: The Attorney General said that this increase agreement was implemented effective January 1, 1993. When was the budget drawn up?
Hon. C. Gabelmann: The budget was presented to the House in March 1993. It was drawn up in the preceding six or seven months. There could not be a budgetary allocation for this retroactive payment, because the decision wasn't made until June 28, 1993. It would have been very difficult in our budget-making around Christmas, the New Year and into March to have figured out what was going to transpire on June 28. What did transpire became retroactive to January 1. We had no way of knowing what the House would do, if anything, with the report of the standing committee.
K. Jones: Is the Attorney General saying that in regard to any negotiations that are underway he never puts any provision into his budget to accommodate an increase throughout his budgeted year?
Hon. C. Gabelmann: I had no way of knowing that there might be an increase in judges' salaries during the course of the year. We put the figure in the budget which reflected the amount of money being paid to the judges at that time.
If the member ever becomes a member of a government -- which I think is unlikely -- I hope he will avoid signalling in the budget to potential groups how much money he intends to offer at the bargaining table, or how much money he intends they should receive by way of settlement after negotiations or discussion, and giving away all the cards ahead of time. The member will soon find the ante upped in any event, because that will be seen as a starting point rather than an ending point, and probably as a result of all of that, he will also be faced with special warrants.
K. Jones: I realize that it would be improper to put in the full amount you would increase it by. But certainly with the development of a very serious situation at the time, when the judges were threatening to go on strike or at least withdraw services, there was definitely going to be some increase. The minister is indicating to us that the whole amount of the increase is now an overexpenditure in his ministry. Is that the case with increases given to CUPE and the corrections
[ Page 9712 ]
officers in the BCGEU? Is this what all of our budgets are -- overruns -- whenever we've got a contract to be settled?
Hon. C. Gabelmann: The answer to the last question is no. I didn't put a lesser number than existed the previous year for this item in the budget in anticipation of a recommendation from this House to reduce their wages. I could have done that just as easily as putting in one that had the House increasing their salaries. The obvious thing to do in a situation like that is to put in the amount that you know and not make any assumptions about increases or decreases in salaries, in particular when it's a voted item that is set aside like this and would stand out like a sore thumb.
[4:15]
K. Jones: I'm sure that the wage packages given to all the other staff in the government services -- BCGEU contracts, for instance -- are quite identifiable amounts of money that are put into the budget. It probably takes up something like 85 percent of the government's operating costs. It definitely stands out like a sore thumb, as the minister says. But you still put something in there. You have to realize that you're going to have to pay something, and you put an approximate figure in there. It may not be beyond the negotiating point or anything like that. You may have to top it up, but you certainly include something in your budget if you're a prudent administrator. This government is claiming through the budget speech to be a prudent administrator. They should have been prudent throughout the past year in order to keep within the allocated budget. To come back with another $2.5 million as an overage definitely indicates that you either tried to ignore this item -- you felt you weren't going to have a recommendation for any increase in costs -- or tried to keep your deficit down last year by not counting one of the items that was definitely in your budget. I wonder how many other items are not counted in the budget from last year.
The Chair: Order, please. Member, you will recall that I began by calling the committee to order, and I asked members to please review certain pages within MacMinn's Parliamentary Practice. If you read page 107, you will discover that one of the items that is not proper for Committee of Supply is legislation. I would remind you that judges' salaries were established by a vote of this Legislature, and therefore they're not a matter of negotiation, if you will. I therefore wonder whether your line of questioning is in order or, dare I say, relevant to this particular warrant. I just extend that caution to you. I'll certainly give the Attorney General an opportunity to respond, but I can see this becoming a debate that goes nowhere. It's questionable whether it is indeed in order. I just give you that caution.
Hon. C. Gabelmann: I need to say one more thing. The member may remember that I said very clearly in estimates last year that this vote did not include any projected pay increases or decreases for Provincial Court judges. Had I put in any other number, I would have been tampering with the independence of the committee established under the statute to review and make recommendations to this House. By setting a number, I would have given an indication as to what I thought that committee should conclude. I would not do it, nor will I ever interfere with a statutorily declared, independent committee. The member might, but that's on the member's shoulders.
K. Jones: I congratulate the Attorney General for taking that position. It's probably appropriate that he do so.
On warrant 3.
G. Wilson: In the emergency assistance supplement to vote 22, with respect to emergency response preparedness, I'm curious to know if there has been any attempt to gain a greater federal share in the emergency preparedness program. I understand there is a federal share in this program. British Columbia was late in signing on to that through no fault of this government, but the previous government did not sign on for a long time. Can the minister tell us whether or not a portion of the $250,000 was matched, or is in any way connected to the federal share of the program?
Hon. C. Gabelmann: The program that the member is making reference to is part of another item for which there is no reference here. This is about the provincial emergency program office expenditures. Let me read the description of the vote from last year so that we both know what we're talking about: "This vote provides for salaries, operating costs, grants and contributions pertaining to emergency preparedness and response for the protection of life, property and the environment during real or imminent emergencies and natural or other disasters. Recoveries are received for the provision of services to other agencies." I'm told that none of the available federal moneys impact on the expenditure that we're discussing now. That program is separate. The $250,000 is part of an estimated $1.05 million expenditure in the coming year.
I should back up and say that over the last three years the government -- including the previous government -- has budgeted approximately $800,000 each year for the emergency assistance vote, and each year we've had an overrun. In the first year, 1991-92, there was an overrun of approximately $100,000, and in each of the last two years -- including this one -- we estimated a $250,000 overrun. We have fixed that for the next fiscal year, as members will note if they check the estimates for the coming year. When we prepared the budget last spring, we had hoped that we could reduce the expenditures and get them back to the $800,000 level rather than $1 million-plus. We were unable to do so, and therefore we have the warrant.
The estimated number of incidents -- things like search and rescue, land, sea and air; dangerous goods; oil spills; some motor vehicle accidents; and other incidents such as floods and fires -- increased by 16.6 percent over last year. In the previous year the increase was 13.5 percent in the number estimated, but increase this year over last year. The previous year the increase was 13.5 percent in the number of incidents. So the costs are driven by the need to respond, and the number of incidents has driven.... They haven't driven the costs up. We have managed to keep the expenditure level the same, but nonetheless, it's higher than the budget. I'm not prepared to come back next year with a special warrant on this item, so we have set the estimates to more closely reflect what we think the reality now is.
G. Wilson: I was trying very hard to follow what you were saying. I understand that this is separate from the PEP program that is funded through a joint provincial-federal program, and that here we are dealing strictly with the administrative costs of actual emergency response. Is that correct?
Hon. C. Gabelmann: That's right. I failed to understand the member's question properly the first time. The
[ Page 9713 ]
federal-provincial JEPP -- joint emergency program -- is a preventive program. This is a response program.
F. Gingell: What action does your ministry take in recovering costs that have been expended through these things by citizens?
Hon. C. Gabelmann: There is no cost recovery under this program.
The Chair: I understand the member for Yale-Lillooet seeks leave to make an introduction.
Leave granted.
H. Lali: I would like to take this opportunity to introduce three constituents of mine. To my left is Mr. Poul Hansen, the manager of Highland Valley Copper; Mayor Al Kemp of the district of Logan Lake; and the administrator, Doug Fleming. Would the House please make them welcome.
The Chair: If there are no further questions on warrant 3, we will move to warrant 4, Ministry of Employment and Investment.
On warrant 4.
G. Wilson: Maybe we should wait for the minister to take his seat, because he's going to need to respond to this question. I realize how rare an occasion it is for the NDP back bench to get a chance to talk to their ministers. However, we are....
The Chair: Now, member, you know we have been proceeding swimmingly thus far.
G. Wilson: Perhaps the minister might outline this expenditure before we commence questions.
Hon. G. Clark: In some ways, this not a normal special warrant request. There was a source of discussion with the local transit commission, which the now Leader of the Opposition was on. We have had a great deal of difficulty coming up with an arrangement which would satisfy a deficit that was being incurred by the transit commission. The commission, particularly the Leader of the Opposition, was demanding more provincial support. We were looking at how we could devolve more authority to the regional authority. At the end of the day, I believe we'd be better off if what is essentially the bus company in Vancouver was managed locally rather from Victoria. That's always been my intent. Many of the municipal politicians, of course, always say they're in favour of that. But they want to make sure the province is paying the bills.
So we had this debate over a couple of years. At the end of the day -- about a year ago, you might recall -- I suggested that we allow the transit commission to levy a property tax on paid parking. That was rejected by the transit commission, even though it passed in the House. Then, as Minister of Finance, I brought in the sales tax on parking -- which raises about $10 million -- and I offered it to the transit commission. I said: "The government will give you that tax base. We will allow the sales tax on paid parking in the lower mainland to flow directly to the transit commission."
I didn't think they'd turn that down, seeing as I as Minister of Finance -- the government -- had raised the tax on parking and they could accept that tax source, which is about $10 million. To my surprise, the transit commission -- of which the Leader of the Opposition was one member -- refused to accept the sales tax revenue. They said no, they would not be responsible for that tax; that was a provincial tax. So I did something against my better judgment, in some respects. We decided that we, the province, would levy the 7 percent tax on paid parking in the lower mainland and then give them the proceeds.
So because it's not a tax which is.... The revenue from that tax is not flowing to the transit commission anymore; it's flowing to the consolidated revenue fund. Essentially, we're giving a provincial grant of $10 million to the transit commission, and that's where this comes in. I'd anticipated that revenue would not have to come into the government and then be given out in the form of a cheque -- that we could have the revenue directed directly to the transit commission.
[4:30]
That's the case with, for example, the gas tax. If the transit commission asks us to raise the gas tax and the province accedes to that request, there's an order-in-council to that effect. It doesn't show up in the consolidated revenue fund or in revenue to the province and expenditures of the province. It goes directly to the transit commission. So in this case -- because they rejected the suggestion that they receive the revenue directly -- it comes into the government, and it goes out now. It had to go out in the form of a special warrant, because we didn't have the expenditure item in the budget.
But I want to assure members that this is not a warrant like some of the other ones, perhaps. As a result of it, there's not a $10 million increase in the deficit. The revenue is completely offset. In fact -- I shouldn't say this as the Minister of Finance is here, but I think the minister knows -- it raised just slightly more than $10 million. But they chose not to take the revenue directly, so we rounded it off to $10 million.
I have one last comment. It's kind of ironic, but after our having solved this problem for the regional authority and now given them $10 million, they actually end up with a bit of a surplus in the transit commission, because of a lot of the work B.C. Transit's done to reduce costs and to generate some efficiencies. The transit commission, to be fair, has dealt with some of the really uneconomic routes, so they have a bit of a surplus in their share.
Again to be fair to the transit commission, just recently -- I don't know if the members are aware -- the transit commission agreed to spend some of that share on some new services in Vancouver -- the Broadway expresses particularly, something we recommended to them. They've now agreed to fund it. I think that's positive. It's all a bit notional, but out of their share of revenue they've agreed to put that towards something that normally would be cost-shared with the province. They've agreed to take it, because they have a surplus as a result of this very warrant.
This warrant will not be required next year. There is an annual $10 million which we will be giving to the transit commission. It's now, as it should be, appropriately included in the estimates for this ministry and B.C. Transit in particular; and the revenue is shown as revenue to the province. I don't think it's a hugely controversial matter. I hope it explains the genesis of this particular special warrant.
G. Wilson: My understanding -- for those who may be listening and trying to understand how this thing works -- is that the commission funds Vancouver transit. I understand that it is split 55-45. I know the levies were increased last
[ Page 9714 ]
year in order to meet the costs of expanding and operating transit. If we hear what the minister is saying, it seems to me that the people got hammered twice: they got hammered once at the municipal level, and they got hammered again when they wouldn't accept the money coming from the provincial government. Now we're finding out, through this special warrant process, that the government is having to hand over money that should have been raised initially through a tax that will be applied directly to the commission. Is the minister saying that the people have been hammered twice because of decisions taken by the transit commission?
Hon. G. Clark: I think that's right. I apologize if I wasn't following it. Let me just explain it. The member is absolutely correct that transit expenditures are 45 percent provincial and 55 percent Vancouver Regional Transit Commission. Speaking as a provincial representative, that's a seductive number that isn't really fair, because a lot of the Vancouver Regional Transit Commission's revenue is made up of provincial tax sources, like the gas tax, the hydro levy and fares. If the commission's funding sources exceed expenditures, the excess goes into a local transit fund.
In 1992 there was no agreement between the province and the Vancouver Regional Transit Commission with respect to the gas tax and other things they had requested, so we allowed the fund to incur a bit of a deficit. You might recall that debate in this House. I wasn't doing that because I wanted them to incur a debt but because I wanted to resolve a longstanding problem. In the meantime, though, B.C. Transit initiated about $25 million of expenditure cuts -- operating efficiencies. It's a provincial Crown corporation. It's ironic that fare revenue goes to the local share of the split. If the provincial Crown incurs more expenses by being more efficient in generating that revenue, or if it cuts costs, then the extra money goes to the commission. It's an ongoing debate that we're having.
I'm a bit off the topic, but I'd like to make one point. If we were to put in turnstiles at SkyTrain stations to deal with fare evasion -- which is under consideration -- we pay for the turnstiles, and any extra revenue goes to the local transit fund. It's not dysfunctional, but it is a problem. I have consistently been of the view that we should rationalize this if we can, and have the Vancouver regional transit authority take more ownership and responsibility for the system.
The biggest single problem we have is that because these are largely provincial sources of revenue, the only truly local source of revenue is the property tax. One could argue that the fares are generated locally. In every municipality in British Columbia other than the lower mainland and southern Vancouver Island, people pay property taxes for transit. People in Prince George and Kamloops pay a fairly significant property tax for transit. But what's very important is that the municipality has ownership of the system, and they manage it. Provincial transit helps them by marketing and providing the buses, etc., but these communities really manage it in their own interests. I think that makes sense.
The property tax burden is difficult. People feel very stressed by that. As a property owner and MLA in Vancouver, I certainly wouldn't want increased property taxes either. But as a result of the absolute rigidity and resistance of the transit commission and local municipalities -- the leader of which was the current Leader of the Opposition -- it has been very hard to try to get a more rational structure whereby the local people, the local municipal governments, would take ownership of this system. I think you would then get better transit planning and more efficiencies, because they would be paying for it. As long as the province is paying the bills and they are asked to do the service routes, you will have some fundamental problems.
I want to say, though, that we are improving it. I think we've made very good progress in Victoria. We have eliminated the hydro levy, which was kind of dumb in the first place. What has that got to do with transit? We eliminated that levy and put it on the property tax. It's very modest. In Victoria it is about $20 a year now in increased property taxes for transit, and it's a saving of $20 a year on your hydro bill. Now that that principle has been established in southern Vancouver Island, it seems to me it will be much easier for the province to engage in the real discussion with municipal governments in southern Vancouver Island about whether they would like to have the responsibility of running the transit system. There are benefits to that in terms of transit planning and improved service, etc. There are responsibilities that go with it because of the incremental costs they would have to bear from their tax base. That's the discussion I'd like to have with them over the next couple of years.
In Vancouver we have not progressed that far. They have opposed eliminating the hydro levy for transit, and they've opposed flipping it onto property taxes, even though I think we're saving $300,000 in GST in Victoria. We're saving money because the GST is applied on top of the hydro levy, not on top of property taxes. So there are some benefits that we haven't been able to gain in Vancouver, and that is are part of the ongoing debate that we're having. Nevertheless, I don't believe they've been charged twice, except to say that because there's a modest surplus now in the local fund, one could argue that they're paying more than they should; the fare increase didn't have to be as high. That's a legitimate discussion.
On the other hand, there's clearly a demand for more service. That demand is important because the population growth in the lower mainland is so dramatic -- some 4 or 5 percent -- that bus service, in my view, has not kept pace. The local authority now has a surplus. I think that is important. Probably because the Leader of the Opposition is no longer mayor of Vancouver, we have a much better arrangement. They've agreed to apply that surplus to improve bus service in the lower mainland. I think that's a positive and constructive step.
G. Wilson: I realize that that was a somewhat wide-ranging discussion, and it was perhaps made necessary by the need to clarify that point. I think that the minister has essentially underscored my point. Given that surpluses can be generated through increased revenues that are forced upon the government by decisions taken at the local level, there is no incentive for the rate to be diminished when surpluses occur. As a result, the people get hammered twice. They're not paying twice, but they get hit by inadequate or bad policies made at the transit commission level by municipal politicians who can fairly easily point a finger at the provincial government with respect to the provincial share. That was my point. It seems that that is what has occurred in this particular instance.
When we get into the actual estimates debate on this year's budget, we will need to have a much more detailed examination of this relationship, because I think that there are more cost-effective ways for us to be doing this. Secondly, we need to act on some of the issues that the minister was raising with respect to transit in communities like Kelowna, Kamloops and Prince George, where low-bid
[ Page 9715 ]
operators are coming in and disrupting some fairly longstanding companies.
Let me just close on this point by saying that we recognize what the $10 million is for. I'm delighted that it doesn't give credence to the rumour that this minister had gone out and bought two catamarans to start a fast-ferry service to Gibsons, which I understand is about to commence shortly. But that's another matter. I'm also pleased that in the final estimates debate we might get a handle on exactly what the relationship has been. I believe that the people have been hammered twice on this question, and it has been largely as a result of insensitivity -- and I use that term because I think it's the kindest way of describing it -- at the local level on this question.
F. Gingell: Mr. Chairman, I hope you will allow me a little bit of latitude in responding to the minister, who was given a great deal of latitude. I sat here in wonder, because one gets the message from the minister that the Leader of the Official Opposition is the only member of the transit commission; he's the only one the minister seems to refer to.
[4:45]
I'd like to put it to you this way. When the minister was very young and I was first appointed to the parks commission, I looked at everything from a parks commission viewpoint. In the early 1960s, when I was elected to the school board, I looked at everything from a school board perspective. Subsequent to being on the school board, I was appointed by an NDP government to the college board at Kwantlen, and I looked at everything from a college board viewpoint.
Hon. P. Ramsey: Keep relevant.
F. Gingell: I am responding to the minister, and I am being relevant.
We all come to our public service from different perspectives and deal with the issues that are of concern to the people we represent. If someone were the mayor of Vancouver or chairman of the Greater Vancouver Regional District, I'm sure they would bring to that position the somewhat narrower interests that may be....
If you come to political life with no background on a council or on a school board -- as this minister has -- and no history of public service dedication in the days when you didn't get paid for doing any of these things, then I guess you would bring only that perspective. You wouldn't have the understanding that many of us who have served in various roles have. I would be disappointed if the minister continually brought up things I said when I was a school trustee and looked at things from the narrow perspective of Delta.
I understand that this $10 million warrant is not an additional expenditure; it is money that the province has received from the taxpayers only in the area that is involved -- exactly the same as with the gas tax and the hydro levy. These funds are paid by those taxpayers to support their transit system. With that, as far as I'm concerned, I don't have any further questions on warrant 4.
The Chair: Are there any other questions on warrant 4? Seeing none, I suggest we move to warrant 5.
On warrant 5.
Hon. P. Ramsey: I have just a few comments about this special warrant. It's in the amount of $62.5 million. It's required by the Ministry of Health to cover overexpenditures in two areas. First, expenditures in the Medical Services Plan were higher than anticipated. More money than was allocated in the 1993-94 budget was needed to pay for fee-for-service physicians in the alternative payment branch and also in the budgets allocated for supplementary practitioners, such as massage therapists, physiotherapists, chiropractors and podiatrists. Most of those additional expenses are related to increased utilization of medical services.
As you know, we now have a fully functional Medical Services Commission with subcommittees under it for each of the practitioners' groups, including the supplemental practitioners. One of their main tasks it to look at utilization pressures and ways of addressing those pressures. They are developing long-term plans for utilization management, while continuing to maintain the range of services that we have covered under the MSP.
Utilization issues were also a key aspect of the agreement between the British Columbia Medical Association and the government that was entered into during the last half of the fiscal year. Adjustments in the budget to help cover the costs of utilization under that agreement have necessitated the special warrant. The BCMA and the government are now mutually working to address utilization issues and to squeeze out some $780 million from what would be normal utilization increases over the next three years. Those results are going to begin to accrue in the coming 12 months.
The second reason for the special warrant is higher-than-anticipated costs for the Pharmacare program. As all members know, Pharmacare is an area of the budget that has been subject to severe cost pressures over the last few years, with increases ranging from 16 to 20 percent a year in some cases. This has mainly been due to the increased cost of new drugs, and only secondarily to increased utilization of the program.
[G. Brewin in the chair.]
With the introduction of the 1993-94 budget, it was the government's intention to introduce cost-saving measures fairly early in that budget year to keep Pharmacare within its prescribed budget. Those changes were not implemented. Instead, we moved forward with a broad-ranging Pharmacare review that gave us a variety of recommendations to bring Pharmacare costs under control and preserve this very valuable program. Because of the timing, there was no chance to bring in those new cost-control measures before the end of the fiscal year. The results are seen in this special warrant and in the need for increased resources to cover overruns in the Pharmacare budget. With that brief overview of what this special warrant is about, I'll take my place.
Before I sit down, I want to introduce my officials: Mr. Lawrie McFarlane, my deputy minister, and Mr. Bob Cronin, assistant deputy minister for corporate services.
The Chair: The hon. member for Powell River-Sunshine Coast.
G. Wilson: Thank you, hon. Chair. As an aside, the terminology "hon. Chair" allows me to recognize in a gender-neutral way that the gender of the Chair has changed. Hopefully, we can use "hon. Chair" and "hon. Speaker" in that capacity.
The minister recognizes two particular areas of the anticipated Medical Services Plan expenditures and talks about Pharmacare. Payment to fee-for-service physicians is also identified in this warrant. I wonder if the minister
[ Page 9716 ]
would give a more detailed breakdown of the $62.5 million. What portion is related specifically to the Medical Services Plan? What portion of that is directed to fee-for-service physicians, and for how many? And what is the Pharmacare portion of the $62.5 million? This is so we have an idea of the moneys we're talking about in those categories.
Hon. P. Ramsey: I think the member is right: "hon. Chair" works well; regardless of gender, all Chairs are honourable.
This special warrant allocates $34 million for overruns in the Pharmacare budget and $28.5 million for additional expenses in the Medical Services Commission budget. There were further expenditures necessitated under the Medical Services Plan, but those have been offset by savings from elsewhere in the ministry budget.
G. Wilson: Are alternative payments and fee-for-service physicians part of the $28.5 million? If that's correct, then maybe the minister might tell us what the fee-for-service-physician component is. How many? How was that introduced? What was the reason for those overruns?
Hon. P. Ramsey: It's $22.5 million.
G. Wilson: So if I understand this correctly -- and I'm just trying to break out these figures -- of the $28.5 million, $22.5 million is in fact made up of the fee-for-service physicians. If that's correct, then perhaps the minister might explain not only exactly what the fee-for-service-physician component is -- and not only for those of us on this side of the House who might like to hear that explained -- but also, given the introduction of perhaps one of the most detailed health care plans this province has seen, why those overruns were not anticipated and what the cause of the $22.5 million was.
Hon. P. Ramsey: Just a touch of history. As the member knows, we concluded an agreement with the British Columbia Medical Association last summer which resolved a dispute of some 18 months over fees and levels of service and utilization that would be covered by the fee-for-service budget. In the budget that was tabled in this House last year at this time, the figure that was put in there for fee-for-service physicians for the BCMA agreement was actual expenditures for the previous year. There was nothing booked in the '93-94 budget that would cover either utilization pressures or an increase in fees for fee-for-service physicians. So the $22.5 million is attributable to the booking of money now to cover the cost of the agreement with the BCMA.
G. Wilson: This is why I wanted that explained, because I think it's important for us to try and get a handle on it -- particularly in light of the lumping in of chiropractors and other services, which I'd like to come to in a moment. If I understand correctly, it was the BCMA agreement that resulted in the increase. Is that what the minister is saying? Or was it the demand? Was the overrun demand-driven, or was it contract-negotiation-driven?
Hon. P. Ramsey: The answer is both -- both the agreement with the BCMA, in which both sides sat down to assess what was a reasonable fee increase and what increase in budget should be counted for utilization, and also increased utilization. It has really become apparent in the last few months, in part due to the meningitis epidemic which has appeared in several health units in the province. As you know, while the number of fatalities has been relatively small, the increased call on physician services and hospital services as a result of public awareness of the increased number of meningitis cases has been substantial.
G. Wilson: That's rather disturbing information, and obviously outside the parameters of this debate, but I appreciate the comment from the minister.
Because he went through them fairly quickly, I wonder if the minister might go back to the other services that would be included in the balance of that $28.5 million, which I think were chiropractic services and other kinds of services, and outline to the members of this House and to the people of the province what that proportion is. There has been a great deal of anxiety in that sector of medical service provision about their lack of inclusion. In fact, we know that there is already a patient fee being directed by them for services they're providing. So maybe that could be clarified in terms of this particular warrant.
Hon. P. Ramsey: There are a number of very valuable professional health services that are also included in the Medical Services Commission budget. Under the rubric of supplemental benefits, they include chiropractic services, physiotherapy, massage therapy, naturopathy, podiatry and optometry. That's the group of services. Each of those benefit groups, or practitioner groups, has its own budget allocated within the Medical Services Commission, which is managed by a tripartite committee composed of members ofgovernent, of the Medical Services Commission and others; members representing the health profession, whether it's the physiotherapists or massage therapists; and members of the general public. They are charged with managing the budgets that are allocated to them in a way that ensures access to those services for the people of the province.
As I am sure the member is aware, over the last year there has been considerable concern among members of the public who use those services and among some of the practitioners in those professions that the utilization of those services is growing faster than the financial resources the budget allowed. This resulted in a decision last fall by the committee that was looking after massage therapy to prorate fees for service for massage therapists for a period that extended, I think, from around September to the end of the year. More recently, in January and through March of this year, the committee charged with looking after utilization of the physiotherapist budget found that they were going to be running over their budget, and it had to prorate fees by 10 percent. In both of those cases, hon. member, what the ministry did was try to offset this increased utilization by allocating additional money to those budgets.
[5:00]
We asked the committees that were looking after utilization to look at measures to keep within budget, but we also increased the budgets allocated to them. We put additional money into them to assist with taking care of the utilization pressures.
L. Reid: I'm pleased to welcome to the chamber the support staff of the minister, as well.
We understand that approximately 1.6 percent of the overall health care budget goes to supplementary services. What percentage of that would have been impacted by the decision -- I believe it was on January 1 -- that put a 10 percent cap on physiotherapy funding? It seems to me that if we're talking about the fourth quarter of last year, some of that reduction should be reflected in the $62.5 million. Perhaps you could comment on that.
[ Page 9717 ]
Hon. P. Ramsey: I'm not quite sure what information you're after. Let me explain a little about what happened and how we dealt with the increased utilization pressures, and maybe we can focus on what additional information either I or my officials can provide.
The overall budget for supplementary practitioners last year was approximately $104 million. During the course of the year it became very clear that several of them were going to be going over budget. In an attempt to make sure that there was as little prorating as possible, we took a decision to increase our contribution to supplemental practitioners by just over $10 million. We covered some $6 million of that from savings in other portions of the ministry, and $4 million of it is included in this special warrant. There was substantial pressure on all supplementary practitioners. It became most acute in massage therapy and physiotherapy. The others managed to take measures to stay within budget, with some additional contributions from other areas of the ministry budget. In those two instances, prorating for short periods of time was necessary.
I've gone into a fair bit of detail. I hope I've addressed your issue. If not, let me know and we'll try again.
L. Reid: I'm specifically interested in the effect of the 10 percent cap on the special warrant today. I understand from your comments that consideration was given to increased utilization, if you will, of massage therapy and physiotherapy services. Basically, I'm interested in knowing why the 10 percent rollback was not sufficient to offset what we see today in terms of a warrant for supplementary services.
Hon. P. Ramsey: Let me try again. The special warrant is needed because we consciously increased the budgets allocated for all supplemental benefits in the last year, particularly physiotherapy, massage therapy, chiropractic and naturopathy. We did that to prevent as much of the prorating as we could. At the end of the day, the committee charged with overseeing these budgets for physiotherapy found that even though additional money had been provided.... I can get the exact figure for you, but my officials don't have it here. I can give you the initial allocation for physiotherapy and the additional money that government put in to mitigate the effects of increased utilization and the cost saving that was achieved by that 10 percent prorating for a period of three months. That cost saving was necessary to stay within that overall budget, even though additional millions -- and it was millions -- had been contributed to it.
L. Reid: If I can clarify the minister's remarks, it seems to me that, on the one side, we had a 10 percent reduction that dramatically impacted directly upon physiotherapy services and massage therapy in the province. On the other side of the question, we had the minister willing -- under special warrant -- to increase funding to those areas. That seems to be the status of where we are in debate.
The question looked more at why the 10 percent rollback wasn't sufficient to cover the utilization. It seems to me that the patients, physiotherapists and massage therapists in the field -- who beat a steady path to your door as well as mine -- said that should have been sufficient. So my question pertains to the necessity for the special warrant. In their minds they believe that the 10 percent rollback covered the increased utilization.
Hon. P. Ramsey: This is not one up and one down. Both measures were taken to stay within budget. There was no decrease in the amount of physiotherapy available to citizens of British Columbia. Everybody who wanted to take advantage of physiotherapy services had an opportunity to do so. Unfortunately, for a period of three months it was necessary that practitioners of physiotherapy receive 10 percent less in medical service fees for the service they provided. The special warrant is needed because this government decided that these services were so valuable that we wouldn't ask physiotherapy and massage therapy to stay within the budgets that were allocated in 1993-94, but that we would increase the budgets allocated for them. Unfortunately, in spite of those increases, there still was not enough net budget -- and I can get you the figures, practitioner group by practitioner group -- to cover the increased utilization demand. To stay within budget, the three party panels charged with overseeing those budgets therefore decided that proration of fees was necessary for a short term.
L. Reid: I appreciate the minister's comments. However, what's most unsettling is the minister's comment about 10 percent less in fees going to physiotherapists. Basically, you are saying that utilization was increasing: there were more patients and no patient was turned away; we expected physiotherapists in this province to deliver that service for 10 percent less. That is basically what the minister has just stated. That will not be reassuring to physiotherapists in this province.
In terms of the creation of the tripartite Medical Services Commission, what percentage of this special warrant would refer directly to the administrative costs of setting up such a commission and how many of these dollars would relate to the cost of administration in all the supplementary practitioner areas?
Hon. P. Ramsey: No part of this special warrant is related to the administrative costs of running the Medical Services Commission. Those costs have been very small. The only costs that have been incurred so far have been the per diem and travel expenses of the members of these panels. They have met quarterly over the last year to look at budget utilization issues and to advise the Medical Services Commission and the ministry on steps that need to be taken.
L. Reid: So there are administrative costs, however small. I'd be interested in a breakdown of the $28.5 million that was suggested earlier as being the allotment under the special warrant to the Medical Services Commission. What portion of that would be administrative costs? I appreciate that you may not have that available now, but I would welcome that at your earliest opportunity.
In terms of fee-for-service physicians, you mentioned that $22.5 million was necessary for delivering physician services in the province. I'd be interested in knowing what the process is and whether or not any of those dollars will continue to be cost-shared by physicians in this province or if there is any other way to generate savings around physician services.
Hon. P. Ramsey: Firstly, on the administrative component, I believe that this is a topic that you and I ought to explore more during the estimates, when we have a view of the overall Medical Services Commission's budget and the objects of expenditure that it is being allocated for.
[ Page 9718 ]
I have asked my officials to give me some information on the physiotherapy budget that you requested. The amount saved by the 10 percent proration of fees during January to March was approximately $738,000. In addition, the government topped up the physiotherapy budget by $1.012 million. With those two initiatives, we think that the physiotherapy budget will come in under allocation in '93-94.
You asked what measures are being taken to decrease utilization. One of the real features of the agreement that we reached with the B.C. Medical Association last summer -- which was ratified in November and led to the setting up of the commission in February -- was a new era in managing the medical services' budget for fee-for-service physicians, whereby both partners to the agreement, the BCMA and the government, have a vested interest in staying within a budget that has been set by negotiation. As the previous Minister of Health used to say, that budget is capped and set by this Legislature, not by the pressures of utilization.
[5:15]
We have set ourselves a challenge to reduce what would be normal increases in utilization by some $380 million over the life of our agreement with the British Columbia Medical Association. That challenge is now being taken up by the members of the Medical Services Commission. Through the work that they are going to be embarking on, the large task before them will be to identify procedures which are unnecessary in some circumstances to help educate the public regarding the appropriate use of physician services and to work with other sectors of the medical community and other health professions to see what should and could be done by physicians and what could and should be done by other parts of the health system. It's a large challenge. I would hope that the challenge will be successful and that in the future special warrants of this type will not be necessary.
L. Reid: In terms of the contract that was negotiated, could the minister tell us the actual percent increase and what portion of that increase went to the physicians' fee schedule in the province? What percentage of the increase to the fee schedule relates directly to the special warrant that's under discussion today?
Hon. P. Ramsey: The physicians received a contract with the government which provides for a 1.5 percent increase to fees and some increase to benefits. The dollar value of the 1.5 percent increase in 1993-94 is just under $19 million, and the dollar value of the increase to benefits is just under $2 million.
L. Reid: I thank the minister for his comments. In terms of Pharmacare, I understand from your earlier comments that it amounts to $34 million as part of the special warrant of $62.5 million. I would be interested in a comprehensive breakdown of that $34 million, because I understand that it reflects higher-than-anticipated Pharmacare expenditures. I would appreciate some specific details.
Hon. P. Ramsey: As the member knows, there are several components to the Pharmacare plan. I can give you a breakout by those various components; I think it might be useful to you. Plan A, the seniors' plan, was overbudget by some $6.7 million. Plan C, which is provided to social service recipients to pay for drug use by them, was overbudget by some $4.3 million. Plan E, the universal or family plan, which is available to all British Columbians, was overbudget by some $14.2 million. The final element was program management, which was overbudget by some $8.8 million.
Let me elaborate on that briefly, because I suspect that's the first thing you'll want to ask about. It's really a result of two large decisions. One was for the installation of the pharmanet computerized system around the province. A decision was made late last year that this should be done by a purchase of the appropriate software, rather than by lease. After tendering that contract, the difference between leasing and purchasing that we allocated last year was some $7 million. So that was a substantial increase to program management over what was anticipated.
Incidentally, I should say that another thing that caused the cost overrun was working with the freedom-of-information commissioner; the cost was approximately $1 million. So those are the two large objects that have caused significant overruns in program management.
I should point out that even with these overruns the percentage of the budget for Pharmacare that's actually allocated to program management is very small. Last year it was some $8.5 million on the base of $350 million. The actual expenditure was $17.3 million, so you're looking at a budget of around 2.5 percent. We had some extraordinary items last year that caused an overrun, but even with those overruns a small proportion of the budget goes to program management.
L. Reid: In terms of a series of questions, let's begin with plans A, C and E in terms of $6.7 million, $4.3 million and $14.2 million, by my recollection. When we talk about a special warrant and have higher-than-anticipated utilization, what is the formula? What sense does the ministry have in terms of setting anticipation and utilization levels? It seems to me that $34 million is the greatest chunk of the $62.5 million special warrant. Is there any way for this ministry to calculate more carefully and accurately what the true costs of that program are going to be?
Hon. P. Ramsey: I think Health ministers have gone a little crazy trying to estimate utilization of Pharmacare budgets over the last few years. As the member knows, actual expenditures in Pharmacare have more than doubled over just five years. So even with the best will in the world, sometimes projections don't live up to reality.
As I said in my introduction, one reason this special warrant is required this year is that when the budget for Pharmacare was tabled last year, we were anticipating putting a number of measures into place to decrease utilization and contain costs. Instead of taking those actions at that time, we embarked on a review of the entire Pharmacare program. That was completed last fall, and it made a number of recommendations, some of which we are starting to implement with this budget.
As we look at next year's budget, I hope that because we put these measures into place we will be closer to the mark.
L. Reid: You made special reference to a program management, and I believe you quoted $17.3 million. You also made mention of the pharmanet program. I have to question how prudent it was to purchase that computer system when I understand that the B.C. Pharmacists' Association was more than prepared to take on that project.
You mentioned privacy and information. Once it becomes a government database, it raises all kinds of questions that I know you and I will debate in some detail through the estimates process.
In terms of the Pharmacare aspect of the Ministry of Health, can you tell me why the decision was taken to purchase computer equipment and create a pharmanet
[ Page 9719 ]
system for $17.3 million when there were agencies interested in building such a program?
Is there going to be any linkage between the B.C. Pharmacists' Association and the Ministry of Health?
Hon. P. Ramsey: Let's try to keep the apples separate from the oranges here. In the total program management budget, all aspects of Pharmacare for last year was $17.3 million. Total cost of the pharmanet program, which will be spread over a couple of fiscal years, will be in the neighbourhood of $13 million. Seven million of that has been allocated for 1993-94; it's one of the items included in this special warrant.
The decision to purchase rather than lease was based on our analysis of what the costs would be over time for lease versus purchase. This was felt to be more fiscally sound. The other thing that needs to be said very clearly is that pharmanet is going into place for good health and good financial reasons. This initiative will save the Pharmacare program dollars over the next few years. It will increase the responsiveness of the Pharmacare program to drug consumers by providing prompt reimbursement. It will eliminate the necessity for them to pay costs that are covered by the Pharmacare program, and it will have other abilities to improve the appropriate use of drug therapy.
We think that this needs to be, and is becoming, a joint effort of this government, the pharmacists of the province and the College of Pharmacists, which will really be the custodians of the data that the network provides. There are different goals, obviously, from those of the pharmacists themselves and the Pharmacare program. At the end of the day, after extensive discussions with them, we felt it was best that we have this program as a government program; the pharmanet system would be our system that others could use. Therefore we've moved ahead, in partnership, I think, with the pharmacist to implement.
L. Reid: Perhaps I'll close by providing some notice that when proceeding in the estimates debate, I would trust that the ministry will come back not only with some ability to look at anticipating costs but also some ability to come back with cost per patient per annum, because that, as opposed to fragmenting the service in different ledger columns, will allow us to have a better understanding of how these dollars are spent. I think that is the issue British Columbians are concerned about. So, hon. minister, I thank you for your time.
G. Wilson: I have only one question with respect to the Pharmacare portion in this particular special warrant. It goes back to what the minister alluded to. I'd like him to clarify, because I believe it's at the heart of what we're really debating here in this special warrant, why the government abandoned the measures that they were going to put in place? I recall a lengthy discussion in debate as to how those were to be implemented. What prompted them to abandon that and initiate the review, which, by virtue of this warrant, would seem to have allowed for cost overruns and demanded more money? Why were those measures not put in place last year? I think that is really at the heart of why this year we're having to go to special warrant to spend more money.
Hon. P. Ramsey: Most of the measures proposed for containing costs in the Pharmacare have some tinge of controversy or debate about them. We wanted to consult with people as widely as possible before we put some of those into place. Even with that consultation, I think the member will agree that some of them have remained controversial. The period of time and the work of the Pharmacare review panel has been valuable for the Pharmacare program, the ministry, pharmacists and users of the Pharmacare program to get a sense of what challenges this program faced. Here we have a program, hon. member, that for the last 20 years has sought to provide reasonable access to drug therapy for the citizens of British Columbia and protect them from catastrophic drug costs. It has done that well. But the pressures on the program have increased astronomically in recent years. The review was undertaken for two reasons: to let the people who were being consulted know more broadly what challenges this program faced, and to seek as much consensus as possible about what measures should be taken to try to contain those costs and preserve this valuable program.
G. Wilson: Having said I only had one question, I'm going to make this a half question. I think it comes back to comments that the member for Richmond East was alluding to. I don't hear, and I would have liked to hear, from the minister that the reason was that they were going to look to a more diagnostic approach to why people were in need. Rather than trying to fix the pricing and supply, we have to start to address the whole question of demand. That, really, is at the heart of this issue. I was hoping I might hear that, and perhaps I will.
Hon. P. Ramsey: One of the reasons I didn't get into it is that it's almost next year's estimates.
I will speak briefly on the therapeutics initiative that we put in place at the University of British Columbia. This initiative has several goals. It is to provide the best advice possible to Pharmacare on the scientific and medical usefulness of drug therapies in order to determine what should be covered by Pharmacare and what should not. It is to provide a way for drug manufacturers to get their drugs assessed. We also built in an appeal if they think the assessment isn't right.
[5:30]
It does other things that I think are almost more important. They are also charged with embarking on a long-range program of education for physicians in the general population of British Columbia concerning therapeutic drug usage. After assessing particular therapies, they are going to be working with the BCMA, the College of Physicians and Surgeons, and the College of Pharmacists to distribute information about the appropriate use of particular drug therapies in an attempt to change prescribing patterns in communities around the province. This was integral to the recommendations of the Pharmacare Review Panel. I think it is the most significant part of that review panel's recommendations, and we've put it in place. I hope it's going to benefit both the broad health of people of the province in the coming years and the financial health of the Pharmacare program.
T. Perry: I'd like to ask a couple of brief questions. The minister is aware, I'm sure, that a number of members have received calls in the last day or two from practising pharmacists in B.C., and I'm hoping he can allay some of their concerns. I've recently been on the telephone with a couple of pharmacists -- not from my riding, interestingly, but from other parts of the province -- who raised concerns similar to those raised by the member for Prince George-Omineca, who I see is listening right now. They reflect a technical glitch in what is otherwise a relatively
[ Page 9720 ]
moderate response by government to a severe cost problem. Other provinces are taking a much more draconian response to this problem. For example, if the drug expenditures exceed the amount budgeted in the Liberal-governed province of Nova Scotia and, I gather, New Brunswick, physicians will see their incomes decline. It's of interest that it's a physician Health minister in Nova Scotia who has undertaken that initiative. It may or may not be a bad one, but it's certainly a courageous one -- perhaps conditioned by a relatively desperate financial situation in Nova Scotia.
These are generally good proposals that the minister recently announced, but there appears to have been a technical glitch in that pharmacists are finding themselves with large inventories of brand-name drugs, which may have a substantially lowered value after April 1. They're telling me, interestingly, that they don't expect too many of their customers will want to pay the higher price for the brand-name drug. I always wondered whether or not the market would be that elastic. The pharmacists I've spoken to seem to feel that the market is highly elastic. In other words, confronted with an honest, open choice between paying a lower price for the same product, their customers actually prefer to pay the lower price. Anyway, I can understand their concern that the implementation is so close to the announcement that they've not had time to plan and have found themselves caught with large inventories. I wonder if the minister could provide any reassurance, as he did in question period, that he's looking at that.
If I may, I'll just pose the other question and then sit down. The other was....
The Chair: Hon. member, I hesitate to interrupt you, but we're dealing with a particular special warrant that has to do with "anticipated Pharmacare expenditures," according to the wording in the text. We're not dealing specifically with the issue that was announced by the minister separately. It is an interesting and important question, but I'm not sure.... I would leave it to the minister, I suppose, if he wishes to respond. But technically speaking, it's really not on our topic today.
T. Perry: I understand that, hon. Chair. I'm leaning towards voting in support of this special warrant, but I would just like to reassure myself that I can vote that way in full conscience, so it's very important to me to hear the minister's response.
I had one other minor and quick question. I just got off the phone with the dean of the faculty of pharmaceutical sciences at UBC, who was concerned that the practice of charging the 100 percent dispensing fee might lead to increased wastage of large prescriptions. I had thought that the government was considering some kind of limit on the size of the initial prescription. I wonder if the minister could describe how the government intends to deal with that issue.
The Chair: Hon. minister, your discretion is on the table at the moment.
Interjection.
Hon. P. Ramsey: Actually, you'll like the answer, and I think we can put this to bed.
Both of these questions are very interesting. I recognize that putting the low-cost alternative program into effect has placed some strain on pharmacists, as I said in question period today. I'll be glad to talk to the member about steps that I intend to take.
As for the value of limiting the amount of prescription drugs in any scrip, elements of that are already in place; further elements have also been proposed in the Pharmacare review process, and I hope we'll be putting some of those additional measures into place as well.
I think we've stretched it enough, hon. Chair.
The Chair: Thank you, hon. minister. I think that's appropriate.
If there is no further discussion on warrant 5, we'll move to warrant 6.
On warrant 6.
Hon. E. Cull: I'm going to handle this on behalf of the Minister of Skills, Training and Labour, who unfortunately cannot be here. Just before members start to ask their questions, I thought I'd briefly explain what the warrant is about.
The student financial assistance program is a $64 million program which provides financial assistance to students in post-secondary studies through a variety of programs. The student assistance program is demand-driven. That means if a student qualifies for support, then the loans or grants are provided. It's that straightforward. If they are eligible students in post-secondary institutions, they are eligible for these grants.
The student financial assistance program experienced a projected shortfall in 1993-94. The Ministry of Skills, Training and Labour actually managed to cover a certain portion of that pressure by reallocating spending from within its ministry operations budget. They did what they could to offset the cost pressure through internal savings, but unfortunately it wasn't sufficient. The ministry, of course, requires a special warrant of $3.5 million to fully meet the program demand.
[D. Lovick in the chair.]
The unfunded pressure in the program relates to the loan remission program. That program is designed to ensure that students who graduate from post-secondary institutions and have received loans during the course of their studies are not unnecessarily burdened with a huge loan at the end of their course of studies. There's a ceiling limit set. The debt ceilings are $15,000 for a first degree and $20,000 for students graduating with a second degree. Beyond those amounts, the loans are forgiven and do not have to be repaid by students. The demand for this program has increased dramatically over the last couple of years, and it is estimated to overdraw the budget for '93-94 by $3.5 million, and that's the purpose of the special warrant.
F. Gingell: As I understand it, nowadays the government current-values these loans to take into account the amount of forgiveness that will take place in a subsequent year. The future forgiveness is provided for at the time the student loans are made. Would the minister please advise me if I'm correct in that?
Hon. E. Cull: I hope the members will be understanding of the fact that, as this is not my portfolio, I am going to be depending fairly heavily on staff for answers to the questions.
I don't believe the way you've described it is correct. There is not a calculation made each year of what the remission will be. Obviously the loans are given in one year,
[ Page 9721 ]
and the remission occurs at graduation. There isn't an amount set aside at the time the loan is made, if I understand your question correctly.
F. Gingell: From what you're saying, there isn't any reserve or provision kept in the accounts for the future remissions. Has there been any change in the regulations in the past year that takes into account the increase in costs and the amounts of loans that students are receiving -- i.e., to compensate for inflation -- or are the remissions still made on old bases?
Hon. E. Cull: The debt level ceilings are established on an annual basis, and they are reviewed annually and adjusted in accordance with CPI. As you may have heard when I made my introductory remarks on this, as of August 1, 1993, the ceilings are $15,000 if you have earned one degree, $20,000 if you have a combination of degrees and $30,000 if you have earned a combination of three degrees or professional degrees as designated by the ministry. In fact, $45,000 is the ceiling if you have earned a combination of four degrees, diplomas, certificates or professional degrees as designated by the ministry.
G. Wilson: Given that this is not her portfolio, I hope the minister will be able to answer. Last year there was a very serious problem in the approval and allocation of student loans in B.C. It largely had to do with a new process that was being implemented to try to centralize and streamline the process. I think it is fair to say that there were a lot of bugs in the system. In terms of actual costs, I wonder whether this is an accurate reflection of the dollar figure, or is this a projected figure. I understand that there are still some unresolved issues in the system with respect to student loan remissions that have not been fully accounted for and dealt with. Is that a fair reflection of what we're looking at here?
Hon. E. Cull: The changes to the loan administration that the member refers to didn't affect this part of the program. They didn't affect loan remissions. The amount of the overrun is an estimate, because obviously it hasn't been fully closed off. At the end of the year we're still going to be processing some of those loan remissions, so this is as close an estimate as we can make at this point.
[5:45]
G. Wilson: Given the new system that is in place, is it safe to say that we are not going to.... I recognize that in her opening comments the minister indicated that the demand was met. Nevertheless, there is a caveat which talks about qualification. One has to qualify and be eligible for these loans. Perhaps the estimates is a better place to deal with this, but given the kinds of cost overruns that we're looking at, and recognizing that within the new budget there are an additional 8,000 spaces being created, are we not likely to see the government walk itself into a more compounded situation if there aren't some kinds of restrictions on those who may be eligible? Not that I'm advocating it. I'm just saying that as a budgetary measure one can only estimate with a certain degree of accuracy. Obviously we have to be quite concerned that this isn't an ongoing and recurring annual problem.
Hon. E. Cull: The member is correct. This is probably a better item to be canvassed more extensively during the estimates debate. All I can say on behalf of the minister is that the ministry is aware, of course, that the additional spaces will mean additional demand and has provided for that in their budget deliberations this year. When you get into the estimates debate for this ministry, you'll have an opportunity to canvass that at length.
M. de Jong: The minister has described one of the processes or variables that can contribute to an unforeseen overrun, and that's the remission rate. I think I have understood her correctly. Another variable that can contribute is the default rate. I'm wondering if any of the amount that is the subject of the warrant pertains to amounts that have been defaulted on by students.
Hon. E. Cull: There isn't anything in terms of this overrun that relates to the default rate; it's all additional demand for the loan remission program.
M. de Jong: The minister may have answered this in part earlier in discussing the administrative aspects of the remission program. I'm wondering if during the course of this past year or in anticipation of the year coming there will be changes made within the ministry to better project what the rate of remission is going to be. I recognize that the minister may have answered that in part earlier.
Hon. E. Cull: The Ministry of Skills, Training and Labour has been working with people in my ministry to improve their ability to predict the demand on this program. While no forecasting system is ever entirely perfect, we think that we're getting closer to a more accurate prediction of what the demand will be.
Schedule approved.
The Chair: We earlier stood down section 3. Shall section 3 pass?
Section 3 approved.
Preamble approved.
Title approved.
Hon. E. Cull: I move that the committee rise and report the bill complete without amendment.
Motion approved.
The House resumed; the Speaker in the chair.
Bill 24, Supply Act (No. 1), 1994, reported complete without amendment, read a third time and passed.
Hon. G. Clark: If I may take the liberty, let me advise members of the House of the business tomorrow. By discussion and agreement of the members, we will call the budget debate tomorrow and have the vote on the budget at 12 p.m. The Lieutenant-Governor will be here to proclaim the Supply Act. One last thing: question period will be at ten.
Hon. G. Clark moved adjournment of the House.
Motion approved.
The House adjourned at 5:51 p.m.
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