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)
TUESDAY, APRIL 12, 1994
Morning Sitting
Volume 14, Number 1
[ Page 9885 ]
The House met at 10:04 a.m.
Prayers.
J. Doyle: Today, on behalf of the hon. member for Shuswap, I have the opportunity to introduce 30 students and their teacher, Dagmar Watkins, from M.V. Beattie Elementary in Enderby. These students and their teacher travelled a long way to be here to observe the workings of the Legislature this morning. I'd like you all to give them a big welcome to the Legislature.
The Speaker: Hon. members, before calling the Clerk I would like to report on the matter raised by the hon. member for Powell River-Sunshine Coast. The member rose on a matter of privilege, alleging that the motion adopted by the House authorizing the Committee of Supply for this season to sit in two sections denies the fundamental right and privilege of a member of this assembly to fully participate in debate and have access to ministers of government during their financial estimates debates. In the hon. member's opinion, membership of Section A of Committee of Supply is restricted, thereby denying members the right to enter into debate and the right to vote.
I have carefully considered the hon. member's arguments and the contributions of other members. Any process which denies or threatens members' rights to fully and freely speak or participate in debate in the chamber or Committee of the Whole is a situation which the Chair views with concern. Before determining whether the hon. member's application based on an alleged breach of privilege is, on first impression, sufficiently established to set aside the regular business of the House, I should like to briefly review with members the intent and rationale behind the use of committees by the House.
According to Sir Erskine May's Parliamentary Practice, twenty-first edition, page 611, committees are "composed of a number of members specially named, are regularly appointed to consider, inquire into or deal with particular matters or bills. Successive parliaments have found in them a flexible means of accomplishing a wide variety of different purposes. Select committees may be given different powers to meet different circumstances."
Select standing and special committees in this House are appointed pursuant to standing order 68(1) by a special committee of selection of the assembly, which reports to the House. The Committee of Supply is appointed pursuant to standing order 60.
It has always been the practice in the United Kingdom and in most Canadian jurisdictions that the membership of committees is allocated in generally the same proportion as that of the recognized political parties in the House itself. Other parties and independent members obtain representation through negotiation with recognized parties.
I should like to remind hon. members that the establishment of Section A of the Committee of Supply and its operating mechanism and powers was accomplished under strict adherence to and in conformity with the standing orders and recognized practices of this House. To accept the principle of a parliamentary committee system is to accept and recognize that inevitably only a fraction of all the members of the House will become members of any particular committee.
Under the Ottawa experience, members not appointed to a particular committee are not precluded from participating in a committee's deliberations. They "are entitled to be present at sittings of all committees," and "may participate during the committee's examination of witnesses," according to Beauchesne's, sixth edition, paragraph 766(1). It is significant for members to appreciate that the Ottawa practice is at variance with the United Kingdom practice, which is stated in Sir Erskine May's Parliamentary Practice, eighteenth edition, at page 636, as follows: "A member of the House of Commons, who was not named of a committee, may not address the committee, put questions to witnesses, or interfere in any manner whatever in the proceedings...."
In any event, in both jurisdictions, matters referred to any committee of the House do return to the House for final approbation, thereby affording all members the opportunity to vote. Additionally, the motion in question provides that substitution of members will be permitted to Section A with the consent of that member's Whip, where applicable, or otherwise with the consent of the members involved.
In my opinion, this substitution mechanism provides ample opportunity for members to participate to the fullest extent in committee work. Furthermore, the unanimous consent provision respecting the referral of bills at the committee stage to Committee A is yet another control which the House may exercise in its consideration of legislation.
In view of the gravity of the matter raised by the hon. member, the Chair wishes to point out that the House is the master of its own proceedings. After debate on the proposed motion and the adoption of amendments proposed during that debate, the House made the decision to debate estimates in two sections of Committee of the Whole. The substitution rules are designed in such a way as to prevent any member being denied access to any estimate he or she chooses to debate. As with debates in the House or any committee thereof, it is incumbent on the member seeking to be heard to be present and to conform to the rules as interpreted by the presiding officer.
To a certain extent the matter raised by the hon. member for Powell River-Sunshine Coast anticipates an inequity that has not occurred. If the Chair at some future time were advised that a member had been improperly denied access to any section of a Committee of the Whole, the Chair would redress the situation forthwith.
With the indulgence of the House, the Chair would also observe that the business of supply and how it is handled varies considerably from parliament to parliament. Some parliaments and legislatures place a strict time limit on the completion of estimates debate, and if all estimates are not completed by the date indicated they are deemed to have passed. In other parliaments, the official opposition selects several ministries for detailed examination, and only those specifically selected ever reach the debate stage. For example, Alberta sets aside 25 days for estimates, with an average of two and a half hours per day. After the twenty-fifth day a mandatory vote is taken and the estimates are passed. Manitoba devotes 240 hours to the business of supply, including all committee time necessary for interim and final supply bills. Ontario refers all estimates to a Standing Committee on Estimates which has a fixed membership, with substitution rules similar to those in this House. Further, members will note that in Ontario only 12 of 28 ministries are selected for debate, and by a fixed date all estimates are deemed completed.
By contrast, in this assembly there is neither a time restriction nor an exclusion of any ministry in our estimates procedure. The questioned motion provides for the
[ Page 9886 ]
examination of a portion of the estimates in a branch of the traditional Committee of Supply, with provision for substitution. The Chair has great difficulty with the suggestion that this arrangement restricts any member's rights so as to amount to a prima facie breach of privilege, and I so rule.
[10:15]
Hon. G. Clark: I call Committee of Supply. In Committee A, Ministry of Small Business, Tourism and Culture; in Committee B, Ministry of Attorney General.
The House in Committee of Supply B; D. Lovick in the chair.
ESTIMATES: MINISTRY OF ATTORNEY GENERAL
(continued)
On vote 16: minister's office, $424,063 (continued).
J. Dalton: Here we are into day two of the AG's estimates. A lot of people ask me how long I think we're going to be. Of course, I can't answer that. I did indicate to the Attorney General yesterday some of the things that I expect to canvass, but I'm only one of many people here. Of course, I'm the opposition critic, and I will try to indicate as much as I can to the Attorney General and his officials what I expect to cover on a day-to-day basis. But I don't have control over the agenda, so people will have to bear with us as much as they can.
I wish to canvass some issues regarding the Legal Services Society this morning. I'm sure other members may have concerns about this as well. In fact, yesterday there were a few questions raised about this. I have a series of things that I would like to canvass. I think it might be appropriate to ask why we see a community justice item in vote 17 of the ministry estimates this year. There's a lump sum figure of $108 million and change, and there is no specific reference to the Legal Services Society in that item. Yet a year ago in the '93-94 estimates, under justice support programs, there was a specific Legal Services Society line item.
Of course, we see the horror story that I will ask about later; or maybe we can ask it now. A budget in the '92-93 year that was voted at $71 million and change escalated to a horrific figure of $85 million. It is going up by the minute, because members will remember that we approved another $6 million in special warrants for this society up to the end of the last fiscal year. So my question in particular, to start, is: why is the Legal Services Society no longer a line item in the ministry's budget? Why isn't the Legal Services Society mentioned anywhere in the AG's annual report? He filed his '92-93 report recently, and the same is true in '91-92. Are we to infer that the Attorney General was a bit nervous about the Legal Services Society? It seems to be getting buried, both in the estimates -- or the lack of them -- and in the lack of reporting.
Hon. C. Gabelmann: I take two questions from the member's comments. One is: why isn't there a line item in the blue book this year for legal aid, as there was last year? That decision is out of the Attorney General ministry's hands. Treasury Board staff and the Minister of Finance make decisions about how to lay the estimates book out. For reasons that they may be able to explain -- which I can't -- the decision was made to include the total of $85 million, which will be allocated to the LSS as part of the community justice branch.
Secondly, why isn't there an annual report? The Legal Services Society does an annual report. It's an independent body that delivers a service as called for by statute. A variety of other community agencies deliver services for government, and they aren't referred to in annual reports either. I haven't looked at the report, but I doubt very much whether agencies that deliver government services, like Elizabeth Fry and John Howard, are covered in the annual report. The annual report is a record of the activities of the Attorney General ministry. Our activity in this respect is simply to transfer money to an independent agency that delivers a service.
J. Dalton: I appreciate the point about Elizabeth Fry and other independent organizations. But I might point out to the minister that the family maintenance enforcement program is described in his 1992-93 annual report, and that's an independent body. So why doesn't the minister comment on the Legal Services Society?
Hon. C. Gabelmann: The comparison is not valid. The family maintenance enforcement program director is an employee of the ministry, and ministry employees are involved in a component of the delivery of that program. Another significant component is contracted out, it's true, but family maintenance enforcement is a ministry program.
J. Dalton: I'm not going to belabour that topic. I would make a general editorial comment that the opposition's main focus in the estimates of all ministries is on accountability -- or, I guess, the lack of it. Quite frankly, there's certainly some demonstration right here of a lack of accountability.
But let's get into legal services. To put it mildly, the Legal Services Society is looking like a disaster. It's certainly a disaster financially. Let me retrace some of the history of this society, which was formed back in 1970, I think, in its original form. However, the society as we know it today was started in 1979, with a budget of $3 million. In 1994-95, I understand -- with this lack of line items, as I commented in the estimates -- we're looking at $85 million. In fact, I've seen figures as high as $88.5 million. I've heard rumours that the Legal Services Society, for the fiscal year just finished, may have gone over $100 million, taking into account that the Law Foundation and other sources of revenue are added to the government contribution. The government, of course, contributes the bulk of the budget, and other organizations throw in some money when it's needed.
So would the minister care to tell this committee and the people of British Columbia what has happened over the years with the Legal Services Society -- other than the breakdown of law and order, I suppose; that may be part of it. Well, the hon. minister may laugh, but if he steps out into the streets.... When I talk about the breakdown of law and order, I'm not joking. I made some caustic comments yesterday about dictums and people who are fed up with the process, but I don't want to belabour that. Let's get back to this topic.
What has happened between 1979, with a budget of $3 million, and 15 years later, when we're at a budget approaching $100 million? This is serious financial stuff.
Hon. C. Gabelmann: I agree, hon. Chair, this is serious financial stuff. It's true that when the present model was put in place in 1979, the budget was some $3 million. That budget
[ Page 9887 ]
has increased to a point where in the fiscal year that has just ended the expenditures of the Legal Services Society will be more than $90 million. I don't believe that the precise number is known yet, but it should be in the next few weeks, as the final calculations for the fiscal year are concluded. It is true that we allocated $85 million dollars from the government. We supplemented that by way of a special warrant, which we debated a week or so ago, of $6.8 million. The final numbers are not in yet as to whether or not there will be more required than that. However, the Legislature has voted its appropriation, and we have concluded that part of it. Why have the expenditures gone from $3 million to more than $90 million in roughly 15 years? I think it's fair to say there are a variety of reasons. I'm not going to try, as I'm on my feet here, to give weight to each of the various considerations.
To go back to the beginning, I think that legal aid was historically seen as something many lawyers would do as part of their work, on a pro bono basis. The idea of legal aid being fully paid for has only emerged in very recent times -- in the last decade or two -- in a major way. Since 1979 a couple of court cases have required that certain immigration and criminal matters are required to be covered by legal aid. Those requirements were not present in the early days, in and around 1979 and subsequent to that. As a result of the court cases, legal aid must be provided in certain situations where it was not needed before, such as in the immigration and criminal cases I mentioned. Just so they're on the record, the two cases were Gonzalez-Davi and the Mountain case. The volume has increased fairly dramatically over the last few years for a variety of reasons. Apart from the legal requirements to provide legal aid, there is an increased public awareness of the availability of legal aid. But even today many people are not fully aware of the availability.
The member made a comment, which evoked a bit of a response here, about crime increasing. Crime per se has not been increasing in recent years; the severity and the types of crime have changed. The severity has changed, and the number of cases that would require legal aid have increased, but the general crime patterns are relatively static given the population. I think we need to remind people of that. I spoke yesterday about the prevailing public mood being dominated by visions of violence on television screens, partly as a result of news stories coming from the United States and partly as a result of the fact that it appears to make good television. I think that's something we need to bear in mind.
[10:30]
The single biggest issue in respect of increased costs was the decision of the former government in 1991 to double the tariff that was in place. Again, as I said yesterday, that doubling didn't impact immediately, because it took some time to work its way through the system. But the impact of doubling that tariff was noticed in a dramatic way in the '92-93 fiscal year, which is the period when we did the review of how legal aid is delivered and we worked on some changes to the model.
I'm concerned about the costs, which are approximately 10 percent of the ministry's budget. That is a huge amount of money. Let's not forget that it provides a very valuable social service to a lot of people. It is a very important feature of the safety net in our community, and we need to ensure that the net is in place and fully available, and that everyone who has a need to be covered can be covered. Early on in this position, my greatest fear was that if the costs continued to spiral in the way they had, the pressures would be such that there would be legislative initiative to curtail coverage. People would go without legal aid as a result, and I did not want that to happen. So I was determined that we would do whatever was necessary to continue to provide a comprehensive service, especially in the areas of family and so-called poverty law. To do that we needed to make some dramatic changes, which we're in the process of doing -- one way or another.
J. Dalton: I thank the Attorney General for those remarks, because certainly he has filled in some of the background. There are no surprises there; there are some factors that have to be taken into account as to why this budget has escalated so rapidly over the years, and I'm not suggesting that fault lies with this ministry. He made a good point about the previous administration doubling the tariff just before they exited the political scene. That was a bit of a payoff, I guess, to the legal profession, which was putting them under a lot of pressure. They were looking for some votes, so they went out and bought a few. They didn't buy enough to get them re-elected, for which the people of this province are thankful.
However, that was then and this is now. We have to deal with the escalating costs that, whether the Attorney General likes it or not, have been dumped into his lap. I'll be getting into some questions later about the Agg report and the blended model that is coming down the pipeline, which may or may not be the answer to this budget problem. Personally, I don't think it is, but we'll get to that later.
The minister made the good point -- and all members should be aware of this -- that 10 percent of his annual budget is exhausted on the Legal Services Society. We in the opposition do recognize the need to provide legal counsel. Nobody quarrels with that or with the need to provide legal education and deal with poverty law issues, aboriginal issues and all the other things that society has to struggle with. Certainly, the more a citizen of our society has access to the legal system and understands it, the better off we are.
But I guess that at the end of the day, as with any other government program, if we're getting to the point where we can't afford it, then we're either going to have to rethink our priorities or make some pretty serious changes and re-examine where we are headed. Quite frankly, personally and politically, I am very disturbed when I see the figures that leap out of the Legal Services Society. Tim Agg refers to it in his 108 recommendations in this rather weighty document that appeared in August '92. In his examination he admits the mismanagement. Maybe it's a bit ironic that he recently was appointed as a director of the Legal Services Society. I want to ask the minister about that later.
However, let me ask this, because we now see -- even though we didn't see it in the line item, because it wasn't there -- that the budget for the '94-95 year will be $85 million. That's the same as for '93-94, which we did see as a line item in the budget. What assurance can the Attorney General give us that we won't be back next March, just before the end of that fiscal year, dealing with another special warrant? I personally cannot see, given the escalating costs of legal aid in the Legal Services Society, how we're going to avoid going over the $85 million budget that is provided.
Hon. C. Gabelmann: I'm determined that the Legal Services Society put its mind, in the most disciplined way it can, to dealing with costs. In my view, that means a variety of initiatives that need to be embarked upon quickly, including rapid transition to a mixed model so that some of the high costs associated with a predominantly tariff model can be reduced quickly. They have to continue to put their minds to issues around the tariff. They have in the past made two
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reductions in the criminal tariff -- one of 15 percent and one of 5 percent, if my memory is correct. But there needs to be a serious continuing examination of particular line items within the tariff in order to ensure those costs come down. Based on evidence from other jurisdictions, the studies that have been done and the report that Mr. Agg did as well, I'm persuaded that we can reduce the costs dramatically by changing the way the system is delivered. That's the challenge that I've put squarely in front of the Legal Services Society.
The old tradition was that you got a line in the budget, spent whatever you got and then came back for a special warrant. Those days are over. I'm not prepared to continue to do that, and I've said that to the Legal Services Society. I've said that clearly and unmistakably. I hope to be able to take some initiatives later this session that will make that even more clear. We are simply not going to spend willy-nilly without some strict budget controls. It's going to be tough to do, because the society has legal requirements to provide service. It's demand-driven, and it's hard to control -- no question about it. But that's true for a lot of other services in our society, too, and we find ways to manage and curtail the costs in those areas. People are going to pay a bit of a price. Lawyers who have traditionally earned a fair return for providing legal services through the tariff are going to find that there won't be as much money available to them for the services that they have traditionally provided.
There is going to be a general tightening up. Can I give the member assurance that the LSS won't overrun its budget? I can't give that kind of assurance absolutely. Can I give the member assurance that there won't be a special warrant next year? Yes.
J. Dalton: That's good news. At least we know that next March we won't have to struggle with that one -- presumably not.
I was going to bring this example up later, but let's throw it out now. The Attorney General made reference to instructions to the Legal Services Society to keep its costs down. Certainly all of us taxpayers are happy to hear that, and we hope that it's adhered to. I've had the opportunity to sit in on some of the planning meetings and sessions discussing the possibility of opening a North Vancouver office. I understand that's one of 15 throughout the province that may or may not be opened under the proposals that Tim Agg and others have put forward. I mention that not just because it's in my community but also because I did have the opportunity.... I've sat in on several of the meetings, in fact. One thing that I still remember from one of the planning sessions -- and I think the Attorney General should hear this, because it deals with money and an attitude.... I didn't bring my package with me; it got misplaced. Murphy's law kicked in this morning and I lost some of the material I was going to bring to the House, but I can remember what it was. Around October of last year several people -- including Law Foundation representatives and local people such as Pearl Mackenzie, the executive director of the North Vancouver office -- were sitting around in the community services office in North Vancouver. My wife is a director of that community services, and I have recently learned that Pearl Mackenzie is leaving.
Somebody from the Legal Services Society mentioned the salary scale a lawyer might be hired at. I can't remember how many lawyers the North Shore may require, but that's not important right now. They were talking about -- for the sake of argument -- hiring a lawyer at step five. Then someone asked: "What happens if this lawyer doesn't work out or chooses to leave?" The response was: "Don't worry about that. If we have to hire another lawyer, we'll just go out in the marketplace, find whomever we need and hire him at whatever." I didn't raise it at the time because I was sort of playing my cards close to the vest. They knew who I was, but they didn't know that I might be standing on my feet today citing this example. They said: "Don't worry about that. Our budget isn't a concern. After all, we've got to open this law office, we've got to serve the community and we've got to ensure that the Legal Services mandate is adhered to." As a taxpayer and MLA, I am thinking: what about budget concerns?
Quite frankly, I do not believe that the Legal Services people have a true handle on what is happening. When we start implementing the things that are coming out of the Agg report, I predict that we are heading down the road to something that is not going to be as happy as the Attorney General might have us think.
Hon. C. Gabelmann: I can't comment on secondhand references to discussions at a meeting last year. So I won't do that, other than to say that I hope the directors of the Legal Services Society and the staff at the LSS clearly hear the message I have been delivering to them. I hope they hear it again, by way of reading the Hansard of this exchange. We are serious about getting hold of the costs. I make no bones about that, and I don't pretend that it is going to be easy for them. The top 50 legal aid billers are private practice lawyers. They have offices to maintain and their own infrastructure, which costs them money, but they are also able to do private sector legal work as well as legal aid work. The top 50 billers averaged $223,000 in billing. The top biller was $416,000 in the '92-93 fiscal year. The lowest biller in the top 50 -- in other words, the fiftieth-ranked biller in the province -- billed upwards of $170,000. We can hire a fair number of staff lawyers who can do full-time legal aid work at considerably better prices than this, and we need to get on with that in a hurry.
J. Dalton: Fair enough. I'm well aware of these. It's just like when we talk about the medical profession: there are doctors who overbill, if that's the right expression. I don't quarrel with that. Lawyers know it. Lawyers are professionals, and some in that profession -- like any other -- are guilty of misconduct, or there is the suggestion of it. When public money is involved -- and that's the excellent point that the Attorney General is making -- we all have to stand up and be counted. However, that isn't really the central issue that I wish to get at this morning.
We have to be concerned about tariffs and how much legal aid money is going out to the bar. There's no point dancing around this issue; let's get into it right now: we have to discuss the Agg report and its implementation. That's what we're really here for today. As the Attorney General himself has admitted, we all recognize that the budget is out of control. The provision of services is paramount to the people of this province. They expect legal services, just as they expect medical services, a good system of education and all of the other important social services. We must keep in mind whether or not we can we afford them.
[10:45]
I agree with the Attorney General that we cannot afford someone who is allegedly billing $416,000 out of tariffs. That's a pretty fair income. I guess that not even some heads of Crown corporations are earning that much money. The person in fiftieth position, as the Attorney General told us, is billing the lowly amount of $170,000. But we're getting off the track here, so let's forget that.
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Tim Agg was commissioned by the Attorney General's ministry to author a report, which he has done. It is dated August 28, 1992. There are 108 recommendations in this document. That of itself is a bit overwhelming. There are some interesting things in here, and there are some things in here that are of less interest. The first thing I will ask the Attorney General does not concern the report itself. Having heard from Mr. Agg in detail, why did the ministry feel it necessary to appoint him as a director of the Legal Services Society on Valentine's Day of this year? There are people at the bar, and not just a few of them, who are unsettled by the implication of Tim Agg being on the board. I think there's a conflict of interest there.
Hon. C. Gabelmann: Tim Agg was appointed to the board to fill one of the vacancies that existed in the government's roster. As members know, seven members are appointed by the Law Society of British Columbia, and seven members are appointed by the Lieutenant-Governor-in-Council. There were two vacancies at the time. One vacancy was filled by a lawyer in private practice in Vancouver, and the other vacancy was filled by Mr. Agg.
I wanted cabinet to appoint Mr. Agg to the board because of the experience he had picked up over the previous couple of years. I felt that it would be valuable to have him directly on the board because of his work with the review and his continuing work with legal aid issues for natives. There is no conflict, and there's no money involved in this. Members of the House know better, but often the impression that is left is that somehow there is some payoff involved in being appointed. All you really do is get a lot of work when you get these appointments; you don't get any money for them. So it's to have his expertise there and to ensure that the board has the benefit of that expertise.
J. Dalton: I wasn't meaning to indicate in any way that Mr. Agg was being paid off, if that's what the Attorney General is trying to suggest. That was not my intention, and I'll certainly correct the record if that was the impression created.
Let's perhaps get away from Mr. Agg's report and look at another document, "Reforms and Proposals for Reform," by the Legal Services Society board of directors. I don't know the date, because this report is undated, but it was done earlier this year I guess. Coming out of the Agg report, of course, we get down to the key issue of where this society is headed and what the model of delivery will be for the future.
There's a letter dated January 10, 1994, in this document, which is about 80 pages in length. I'm just going to briefly refer to the letter; it's to the key Legal Services Society stakeholders, and there's an attached list -- I don't know that I have the list.
"Options for Reform." Now this is coming out of the Agg report, and it comes back to my point that I think it is inappropriate for Mr. Agg to be sitting on the board of directors. There are three options for reform, of which the Attorney General is well aware. Number one is a change to client eligibility -- a vertical cut. There are four lines, so we don't get a lot of detail as to whether we might like that one, because we don't know anything about it. Option two is a reduction of tariff fees, which the Attorney General will probably like, because he cited examples of lawyers overbilling. This would be a horizontal cut. There are two lines for proposal two. Guess which one number three is, folks. It's the blended approach: balance workload between staff and the private bar. This is the mixed model that we all know will be the one. Isn't that a surprise? We have a whole paragraph of details on this one, and if you go back in the Agg report, you'll find much more.
I'm suggesting that Mr. Agg had a game plan and that the board of directors of the Legal Services Society has a game plan: the mixed model, moving to a public defender, American model. Isn't it a surprise that that one has been picked? Isn't it a surprise that Tim Agg, against the wishes of many members of the bar...? For example, I understand that at a meeting of the B.C. section of the Canadian Bar Association held in Jasper in February of this year, a motion was passed that Mr. Agg's appointment be rescinded. Again, I ask: is there no compromise here? Certainly it has been suggested that it was inappropriate to put someone on the board who clearly had his own agenda in mind, and that agenda is the one we are now arguing about.
Hon. C. Gabelmann: The LSS board is clearly independent from government. The only way government can have any influence at all is by way of legislation, budgets and its appointments. I don't shy away at all from the notion that I, on behalf of government, should be recommending people to sit on the board who have a view and value that reflects the view and value of government. They're there to reflect the position of the government of the day. That's why those seven members are there. There is no doubt that in many ways there's consistency between the Agg report and the recommendations contained in the document the member refers to -- again, a report of the independent LSS staff, which went to the board of the LSS on February 18. A motion was approved to implement this document by a vote of 12-0. So it wasn't just Mr. Agg; it wasn't just the seven representatives appointed by government. It was twelve representatives, including all the representatives of the Law Society, who voted in favour of implementing what is described here as the blended approach.
I want to correct the member. The blended approach is not a move toward the American public defender system. If we were to adopt it, the public defender system would have us create another branch in the Attorney General's ministry comparable, in a sense, to the criminal justice branch, which would be the public defender branch. The lawyers who work in that branch would provide legal aid. We are not doing that. We are not having the government provide legal aid services in this province. We have an independent process, delivered by an independent agency, and we are not moving toward a public defender model. We're not even moving toward a Saskatchewan-style model, where 95 percent of legal aid services are provided by staff.
We are moving -- and the LSS board is in unanimous agreement with this -- to a blended model of approximately fifty-fifty delivery of services between staff and tariff. The 12-0 vote supported an approach consistent with the approach taken by the government, so in this case we are both on the same wavelength.
J. Dalton: I agree that the government is on the same wavelength as the people who wish to put this in place. That doesn't mean the rest of the province is on the same wavelength.
The Attorney General is quick to remind us of the independence of the Legal Services Society, but the $85 million we're arguing about certainly isn't independent. That's our money. My concern as the opposition critic -- and I'm not alone -- is that this money.... We have to be very careful about how it's spent and about where we're headed in the future spending of more money -- and it's certainly not going to go down. Whether the vote was 12-0 or
[ Page 9890 ]
whatever, I could care less right now. My concern is whether the proposals of Mr. Agg and the board of directors are going to work, whether they're going to best serve the people of this province and best serve the taxpayer, which is just as important. Again, I remind the hon. Attorney General, all cabinet, all members of government and all the bureaucrats: if you can't afford it, you don't do it.
I made some comments yesterday about another item that appeared in the newspaper -- throwing $100,000 parties to celebrate SkyTrain -- and about all the glossy brochures and everything else that are floating around out of this government. How much money are we going to waste before somebody wakes up and realizes we may be going down the road of Alberta? All the members opposite, in their budget replies, are quick to throw Ralph Klein at us. I don't know what Ralph Klein has to do with the B.C. Liberal Party, but I can tell you....
The Chair: Excuse me, member, I'm not sure I know that what you're presently saying has to do with the Attorney General's estimates. So I would just caution you to bring it back on track, please.
J. Dalton: I'm talking about taxpayers' money. Public expenditures, that's what I'm talking about. Back to the implementation of the Agg report. It's easy to get off the rails, and let's get back on the rails for a moment.
We know there's a blended approach. I take issue with the Attorney General. He says this is not a public defender model; I think it's halfway there. Whether that's a good or bad thing is maybe for another debate in another forum.
Let me really get down to the crunch of some of the criticisms, then, and after one or two other questions I'll step aside for other members who wish to direct questions to the Attorney General. There was last year, as the Attorney General will recall, a pilot project agreed to whereby three communities -- Abbotsford, Burnaby and Coquitlam-New Westminster -- would be put into place to see whether a blended approach would work or not. A year later we're told: "Well, don't worry about the pilot projects. Let's accelerate to one year what was originally planned to be a three-year implementation. Let's increase the legal services staff from 40 to 200 in one year. In the meantime we'll all save money, and everyone will be happy." Quite frankly, hon. Attorney General, I do not see any happiness in this. The Attorney General is well aware of this. He must be getting the same letters I'm getting; we're not working in isolation here. Naturally, the bar and, in particular, the legal aid lawyers have a vested interest. Let's not kid ourselves about that. They have a livelihood. But they also wish to provide a needed service to the client. The client should have the opportunity for a choice of counsel, which is one thing that I think has been abandoned -- at least half of it -- through this mixed model.
For example, let me ask the Attorney General some questions from a letter I received the other day from a practising lawyer in Burnaby. He's asking all the same questions that the legal aid lawyers' society and many other people are asking. One statement is that 50 percent of the legal aid services now being referred to the private bar, of course, will become part of the mixed model. Keep in mind that this is all going to happen within one year. Maybe, just in passing, I could remind the Attorney General that there are some rather interesting caseloads and file closings contained in the Agg report. I don't think they're realistic, but perhaps we can get to that later.
[11:00]
Here's the point that he makes to start. He says that they -- referring to the Legal Services Society -- have not yet explained how this new delivery is going to save us money. I don't expect the Attorney General to get on his feet right now and tell us how we're going to save money. But I am suggesting.... I'm not alone, as I remind the Attorney General that many criticisms and concerns are generated out there as to how the savings are going to occur through this plan. I'd be the first to congratulate the government if at the end of this trial run, when we're back here next spring arguing the 1995-96.... Maybe we'll have an election in the meantime, hon. members. Wouldn't that be a happy thought.
Again, I'm referring to this letter: "The program...will cost the NDP government about $110 million during its first fiscal year...." Is that a fair comment, hon. Attorney General?
[J. Beattie in the chair.]
Hon. C. Gabelmann: I don't believe so. I've heard that number suggested by some members of the legal fraternity. The number that we are expecting the society to live within is $85 million -- plus the other recoveries that they generate, including Law Foundation money and recoveries that may come from a redesigning of the eligibility and contribution side of the issue. Any number of figures are out there, and various people have various numbers. I think some of the numbers are concocted in order to try to defeat the decision of the LSS to move with this option.
The member started his comments by discussing the pace of change. That's a decision that was made exclusively and independently by the LSS; it's not a decision that was taken by government. As I said earlier, they have decided by unanimous vote that they want to get on with it and do it in this first year. Part of the motivation for that, I'm sure, is to deal with the financial realities. The member should be happy that we're embarking on all of this, because much of what we're doing is designed to get hold of the costs, which, as we started talking about at the beginning of this morning's discussion, were spiralling out of control. We had to get hold of it, and this is the means of getting hold of it.
J. Dalton: Again, we're hearing the same story. I guess we'll probably be hearing the same story when we close this debate.
I understand that this lawyer says the start-up grant is $9.7 million. Is that correct?
Hon. C. Gabelmann: I don't know. I've seen those letters and those suggestions as well. There are endless combinations of numbers and figures. Some of those numbers are produced as a result of our estimates, some are produced through the report of the LLS, and others are drawn out of the air by people trying to defeat the decisions of the LLS board.
The budget we are debating contains a total of $85 million for legal aid, $3 million of which is designed to assist in the implementation of the blended model. The reason for the cost in establishing a new model is that as you retain staff counsel, you have to pay their wages. At the same time, you are paying bills for last year's work -- in some cases from work two or three years ago. As I said in the special warrant debate a week or so ago, the LLS has not used an accrual accounting method. As a result, the year in which the payment is made is the year it is charged to. In a year of transition, we have costs attributed both to previous tariff work and current staff work, as well as the ongoing tariff
[ Page 9891 ]
work, so there is a blip. Whenever you decide to make the change, you are going to have a blip in expenditure.
The $9.6 million or $9.8 million the member referred to is one of the numbers that has been identified as the cost of start-up. Those costs will vary, depending on what resources the society has available to it and how it sees it can live within those resources and at the same time make the changes. I don't know what their decisions are going to be. There are a lot of different estimates and a lot of fearmongering out there at the present time.
J. Dalton: It is our understanding that 15 new offices will be opened and other offices will be expanded -- and this comes to the start-up costs. You can't open an office without someone producing some money to pay the rent, purchase the furniture and all the other things, and pay for staffing. That's built into the $85 million, I presume.
When we talk about start-up grants, I'm not happy to hear that it's independent and that the society will take care of these things. We're talking about $85 million of public money. Is that not important? We sort of say: "It's independent and let them do it. If they open 15 offices, they'll figure out how to pay the rent, and over time they will figure out how this blessed, blended model is going to work." Maybe it will, and I'll be more than happy to applaud it if it does, because I'm speaking on behalf of the taxpayer, and the legal profession will look after itself. They're quite capable of doing that. I'm sure the board of directors of the Legal Services Society will take care of itself, and all the people in the communities who will find work in these new offices will take care of themselves. And the poor old taxpayer -- just like the victim I was speaking on behalf of yesterday -- is a victim when we talk about estimates.
Interjection.
J. Dalton: And B.C. 21 will rear it's ugly head somewhere in this process too -- that's right.
Can we please have a little more specific answer from the Attorney General as to what the anticipated start-up costs might be? I am horrified to hear that there will be 15 new offices and we don't know what the start-up costs are. You don't open a business without an idea and a game plan. Isn't this a business?
Hon. C. Gabelmann: I'm going to give rough numbers, because I would need to take a few minutes to get the precise numbers.
The Legal Services Society has estimated that the start-up costs in this fiscal year, which include offices and hiring new staff, will be in the $16 million range. About $3 million is required for systems changes on top of the $16 million. So counting the systems changes, it's $19 million. That will be offset by anticipated tariff savings this fiscal year of about $9.8 million. The fairest way of looking at this is to leave the systems change aside, because it would have to occur in any event. The start-up cost of $16 million is offset by almost $10 million in tariff savings, which leaves a start-up cost of $6 million. Adding another $3 million that they had to expend on systems changes in any event gives you a one-time-only cost of $9 million plus.
The member talked earlier about the number of new offices. It's my understanding that there will be five new offices opened this year. If I can find that piece of paper again, I'll name the communities. This is subject to negotiation, but the plans are to open offices in North Vancouver, Richmond, Langley, Duncan and Vernon in this first year. The costs for all of those offices have been identified and are included in the amounts that I referred to a minute ago.
J. Dalton: Thank you. I hate to make a facetious observation, but all of the communities listed are represented, in part or in full, by opposition MLAs. Isn't that a happy thought, members? North Vancouver is part of my riding, there are three Liberal MLAs in Richmond, the hon. member for Langley is sitting down the way from me, and there's Vernon, too. That's four. Boy, we're doing well, folks.
Five, fifteen -- whatever. Let me just ask the government about other things that have come out of this letter. I don't cite this letter because it's the only one I've got in my possession; I've got files of these things. As I indicated earlier, I left half of it behind me as I came down for this morning's session.
The lawyer also comments on the three pilot projects and asks why we didn't let those run their course before implementing a rather interesting mixed-model process that may or may not work. Another important point, which I think is a fair comment for everyone to consider, is: what about the guaranteed choice of counsel? Isn't that a factor that this government should take into account when it is providing legal services for the many people in this province who need them? Whether it be in criminal law, poverty areas, administrative law, aboriginal problems or whatever, the mixed model is not going to provide.... In the ideal world, everyone would have the right to legal counsel. This is not an ideal world, and nobody can suggest that it is. Is the guaranteed choice of counsel not a factor that we should take into account as we head into this model?
Hon. C. Gabelmann: I believe in the notion of choice of counsel. I think it's an appropriate right in our society, but there are obvious limitations that one has to take into account. Let me give an example. If you're arrested and charged in Prince Rupert on a minor offence that has the potential of a jail sentence, and you're therefore eligible for legal aid, do you have the right to ask for the most expensive criminal defence lawyer in Vancouver to fly up to Prince Rupert to conduct this rather minor case? I would argue no. In particular, I would argue no if there are qualified criminal defence lawyers in Prince Rupert who can and will handle the particular case. The right to counsel is an important notion, but it is limited. It has to be constrained by those realities; otherwise we'd be spending money that does not need to be spent and putting the whole program in jeopardy once again. There have to be some constraints. I think that all the lawyers -- by that, I also mean all the lawyers in ALL, the Association of Legal-aid Lawyers -- would agree that there are those constraints. Members of that part of the defence bar argue that a significant number of people wish to choose their own counsel. We disagree about how many people actually know the name of the lawyer they want to represent them, unless they've had some assistance figuring out that name in the courthouse following their awareness that they need a lawyer -- or in the police station.
The duty counsel provision that the LSS intends to implement will, I think, dramatically reduce the number of specific requests for particular lawyers. I think, in fact, that we'll go back to the more realistic situation we all know as MLAs from our constituency offices: when people come in and the MLA or the constituency assistant realizes that this person needs legal advice, not political advice, and we say to them: "You should go and see a lawyer." Almost inevitably the person says: "I don't know the name of a lawyer. Can you
[ Page 9892 ]
recommend one to me?" Every MLA has been through that, I'm sure. I've been through it for years. People have heard of lawyers: but they don't know what kind of law they practice or whether they'd be appropriate counsel for their particular case or situation. So they ask for advice.
[11:15]
What I'm trying to achieve out of all of this is an attempt to retain the notion that people do have the right of choice of in reasonable circumstances. The Prince Rupert example I cited would not be a reasonable circumstance. There's a fine balance that has to be achieved here, and it's one that the Legal Services Society board will have to grapple with.
I hope that helps the member with respect to the issue of choice of counsel, but clearly, if someone is eligible for legal aid and is facing a murder charge, and they want a particular lawyer and know exactly who they want for that kind of case, I can't imagine anyone saying: "No, you can't have that lawyer. You have to take somebody else who is assigned to you or you have to take a staff lawyer." I think choice of counsel is very important in that kind of situation.
J. Dalton: I'll just make one other point and then step aside for my colleagues, who, I'm sure, want to have a go at it as well.
This is a letter, not from a lawyer but from a woman who has five and a half years of volunteer work experience in youth court. I hope that her judgment is reasonably impartial and not legally biased from a professional point of view. She's worried about the program being hurriedly implemented. She's worried about the lack of choice, particularly by the clientele she sees: the youth. She asked: "Why are youth being deprived of the right of choice?" I agree with the Attorney General's comment about most people not knowing which lawyer they may or may not like, because they don't necessarily come across the legal profession. In fact, probably good advice to most people is: if you can avoid the legal profession, well be it -- and I used to be one of those -- because it's going to cost you money, whether it be for good or bad advice. Whether you're up on a murder charge or trying to incorporate a company, it's going to cost you some money. However, that's not the particular issue. The fact is we're talking about public money here.
This woman is concerned. If the minister cares to respond, he can, and then other people will carry on. Is it not a valid comment that this woman with five and a half years of volunteer experience in youth court is making: youth are being deprived of the right of choice? She goes on to say: "What kind of message does this send from adults? They are not important enough to be given the same rights as adults." Is that a fair comment?
Hon. C. Gabelmann: I wonder if the member would just take another minute and help me with this. Is he concerned about the automatic right of representation for people charged under the Young Offenders Act?
J. Dalton: She doesn't specifically refer to that. But given her background of five and a half years of volunteer experience in youth court, yes, I think that's a fair inference -- if that's helpful.
Hon. C. Gabelmann: Without reading her letter, I'm not sure where she is heading with this issue, and I'm really not sure where the member is heading with it, either. It may be that he's not entirely clear. On the question of whether there should be a right of representation for YOA offences and on the question of choice of counsel in those situations, I'm not quite sure where the letter-writer is going. If she has written to me, I will respond to her in detail. If she hasn't, she may want to.
L. Fox: I want to discuss a more philosophical approach to some of the issues that have arisen out of the discussions yesterday and today. It seems very clear to me that when we look at the budgets in the Attorney General's estimates, we see rising costs in terms of legal aid, we see increased needs in terms of court time and we see an increase in the number of court facilities needed throughout the province. The member for Powell River-Sunshine Coast spoke yesterday about increased requests for policing throughout the province, and we see increased demands in specific sites, for specific reasons. In my view, it appears that this particular ministry has a very difficult time being proactive when dealing with these issues.
Many of the concerns are outside the direct influence of the ministry, and the ministry is reacting to needs rather than trying to solve them by being proactive and identifying the problems. Therein lies, in my view, one of our largest problems within the government. We see increasing demands in your budget, in the Social Services budget and in all other budgets that are delivering services, when, to me, they're only symptoms of the real problems. We're not really addressing the problems, because of other influences out there that are helping to create the problems.
That being said, I do have one or two questions with respect to the specifics in this budget. One of my concerns is with legal aid. I've had a number of individuals who have modest incomes, who own or have mortgages on modest homes, who do not qualify for legal aid, while their spouses do qualify because of the existing situation. So the tax dollar is being used almost to a point, in some cases, where the individual could qualify to be called a fictitious litigant, and the individual who does have property and does have a modest income is losing to the system and is unable to defend themselves against the tax dollar being provided to those who are on social assistance or who don't have any means of paying. I'm wondering if the Attorney General has noticed that particular concern growing and how he might see that being addressed.
Hon. C. Gabelmann: First of all, on the member's general point about the role of this ministry, it's true that we pick up the pieces in our society. That's what the Attorney General's ministry seems to do a lot of. One of the things we have been trying to do more of in the last couple of years is to be more proactive with the establishment, as I said yesterday, of the community justice branch and the initiatives we are taking with respect to crime and personal and property security issues. We're trying to get ahead of the issue and do the preventive work so that we don't have the big costly problem at the end of the system. That's far easier to do if you have lots of money. We don't have any money to do it with: that's the real struggle. We have to continue to fund all our back-end costs while at the same time trying to find some money for front-end preventive work. There just isn't much flexibility in our budget and in the government's budget in general.
Very easily and without wasting it, I could spend another $50 million in this budget very effectively. Most of it would go to alternatives to sentencing. We would have more community supervision, more community programs and more attention to programs like Block Watch and other community activities where ordinary folk get involved. We just haven't had the resources to do that. We're moving, we're pushing; we're trying to squeeze the back-end costs
[ Page 9893 ]
and get them under tighter control so that we can free up a bit of money for the front-end, proactive work. I think that's what has to happen in a more major way.
With respect to the point the member made where one family member is eligible for legal aid and another isn't, but that family may not have a lot of money because of the low threshold for the cutoff for legal aid eligibility, it's not an issue that's been drawn to my attention very often. I'm aware of it, I've heard it mentioned and I probably have had a letter or two on that subject, but not very many. I don't have any sense of whether it's a developing problem that is going to increase, but it's a difficult one to deal with. The eligibility line has to be drawn somewhere. One of the things the LSS board is looking at is that instead of having an arbitrary "You're in" or "You're out," there would be a grey area in the middle where partial payment may be made by an individual who may have sufficient income to pay part of the bill but not the rest of it. So we have a grey area in the middle -- from being fully subsidized, through to being partially subsidized, through to being ineligible. Whether that will deal with the particular concern or not depends again on the level of income or assets that one of the partners has in that situation. The theory is that legal aid is designed to try to make more equal the power of the two individuals. If one has no resources, no property and no income, or very little -- they may be on social assistance; a common situation is where the woman is on social assistance and the man still has a job and some assets -- what we're trying to do through this notion is what we're trying to do through legal aid: redress the imbalance that would be created there. I'm sure that people can find instances in every situation that don't appear to be equitable. Given how low the threshold is for becoming ineligible for legal aid, it's no doubt going to happen that people without a lot of resources are going to find that they aren't eligible -- and therefore are going to have a hard time paying for their counsel. That's just one of the hard realities of a society that doesn't have a bucket of money to throw off the back of the truck.
L. Fox: I thank the Attorney General for his response. Let me just say very quickly that it's rather ironic that in the two instances I'm aware of within my riding where that has happened, in both cases it is the woman who has the assets and the modest job, and it is the husband who has used legal aid to take away those assets through the legal process. It was not so much in terms of a settlement, but the long legal battle that ensued was something that detracted from the women's assets and, in my view, put both ladies at a disadvantage in the system. I would just draw that to the attention of the Attorney General.
[11:30]
The other issue with respect to being proactive -- and I recognize there are some overlaps between the Attorney General and the Social Services ministries -- is that it seems to me that what we've done in society, and therefore in government, over the last ten years is take the responsibility for the actions of children away from the parents and the family. We could point to specifics. I suppose one might do that, but the general thrust will not allow the family to discipline the child, given the systems and laws we are facing today. If we are to be successful in dealing with a lot of these concerns, we have to give the family the tools required to be a family. I recall not too long ago -- and it was pretty widely broadcast on BCTV -- that a family was unable to discipline their ten- or 11-year-old boy and deal with the fact that the young man was out stealing cars. They didn't have the tools, within the law, to deal with that.
I understand there is some overlap between your ministry and the Social Services ministry, but I think there has to be a will. We need the will to strengthen the family unit and strengthen the responsibility of parents, give them the opportunity to raise their children within the law of the land and the tools with which to discipline their children. We have removed that, to a large degree. I will agree that we don't want to see abuse situations. We certainly don't want to condone that, and I understand that it's a narrow line. But when we as a society have come to a point where we're looking at creating no-spank zones, I think we're looking at more and more problems in the future.
I have had the privilege of raising three children, and I spanked my children -- out of love, not out of hate -- in order to teach them right from wrong. And today I'm very proud to stand in this House and say that my family and my children are indeed a very cohesive unit who respect others, respect the law, and certainly respect their parents. If we're going to gain credibility as a family unit and raise our children within the laws of the land, I think we have to be proactive and come back from where we've been going.
Hon. C. Gabelmann: We could spend the day having a philosophical debate about the role of parenting, the role of corporal punishment and a whole range of issues. I suspect we would find, at the end of the debate, that the member and I have differences of opinion on some of these issues and agreement, perhaps, on others.
In recognizing the basic point that the member makes, one of the roles of the family justice centres that we're piloting -- I referred to them yesterday -- is to provide counselling and assistance to families dealing with "problem" children, equipping them to better work out the issues in their relationships. That's not the only answer; it's part of it.
I don't want to get into a debate about corporal punishment with the member, but for my own conscience, I am obliged to say this: I think that many -- but not all -- of the problems we have with youngsters in our society come from what they have learned at home. They have learned that if you have a problem, you strike out; you hit. Men beat their wives in far too many homes in this society. What do children learn when men beat their wives? They learn that when you're angry, you hit; you strike out. It's not too far down the road before you get into some pretty heavy-duty striking out, which sometimes ends up with some kids using weapons.
A lot of kids have been physically and sexually and emotionally abused from very early on in their lives, and they are going to repeat those patterns when they become older. It's so clear that this is a treadmill, it's generational, and it's a problem that so many young kids have. They act out in their teen years. Their anger is at authority, at parents, at the school system and at society. Where does it all come from? All too often it comes from the way they were treated as children, particularly in the first three or four years of their lives but throughout their pre-adolescent years. If we're going to break some of these cycles, that's where we have to get at the problem. We have to get at violence at home and issues of sexual and emotional abuse. I have to say to the member that I'm not a proponent of spanking children. My wife and I have two children who were never spanked -- ever -- and they're fine, upstanding citizens too. Does that prove that the member's spanking or our non-spanking is right or wrong? No, it doesn't; it doesn't prove anything. Those are anecdotes, and you can't draw anything from that.
[ Page 9894 ]
But I'm persuaded that if you get beaten up as a kid or watch your mother getting beaten up at home, you're going to beat people up when you're angry. That's the way it works out there. That's as much the source of the problem with teen violence as anything, and that's where I'd like to get at it. That's not the role of the Attorney General's ministry, obviously; it's the role of society, all of us, to try to get at the issue. But I think we should talk about it more often and put the cards on the table more than we do. By that I mean we should talk about the sexual abuse that goes on in so many families, where so many children are battered emotionally and physically to a point where you can't possibly expect they're going to live an upstanding life in the way I assume all members of this House are able to live their lives. We've got to recognize those kinds of realities too. That's not a liberal, bleeding-heart response to a problem. It's just a fact of life. It's a reality out there.
L. Fox: I want to respond very briefly that I recognize there are abusive situations of all kinds. Perhaps I should make it more explicit. That's one of the reasons we as a society have, to a degree, taken away a parent's right to discipline or even spank his child. I don't believe that spanking is beating. In fact, I would debate that all day, and this isn't the forum to do that. But while we do have a number of very sad situations -- and I am aware of the statistics as much as the Attorney General is -- the statistics point out a very serious problem that has to be addressed. I am talking about the average citizens and the parents who do not beat their children or abuse their spouses and still lack the ability to discipline their own children. That was the point I was trying to get to.
I will quickly ask a question on another issue, because others are waiting to get into the debate. Yesterday the member for Powell River-Sunshine Coast was talking about policing needs in his constituency and some of the difficulties faced by municipalities meeting those needs and the costs municipalities that are over 5,000 or have reached the 5,000 trigger face in having to supply those needs. I am as aware as the Attorney General that a number of communities in British Columbia have either come to that 5,000 number or are on the verge of coming to it, and are looking very seriously to the future and how they are going to meet the policing costs. Smithers is one community that I know has identified concerns to the Attorney General about the rising costs of policing.
Given the fact that there has been a tremendous downloading of responsibilities onto the local taxpayer, has the Attorney General looked at addressing the costs in a more regional manner, rather than specifically on the borders of a smaller community? Smithers, Williams Lake and Quesnel are good examples, where the region contains as large a population as the municipality does and for all intents and purposes creates much of the demand for police work within the municipal borders. Has the Attorney General looked at how he might soften that approach on those municipalities and spread those costs over a regional basis, which I would consider to be much fairer.
Interjections.
The Chair: Before the Attorney General responds, I'd like to say to hon. members that the Chair is unable to spank them, but I would request them to please stop having conversations in the House and perhaps carry on their conversations in the lobby.
Hon. C. Gabelmann: The member raises a really important issue. I've long felt that the arbitrary nature of the 5,000 cutoff is unfair. A municipality with 4,900 pays zero, and a municipality with 5,100 can easily pay $400,000 or $500,000. A number of communities in the province are at the threshold. They are just below or just above, and it's really problematic for them.
Through the ministry, we established a committee with the Union of B.C. Municipalities, and it is chaired by a senior member of the ministry. I believe that Patti Stockton, who is head of the public safety and regulatory branch of the ministry, is chair of the joint ministry-UBCM committee. I'm expecting a report from them this spring. Their mandate is to deal with how policing costs are apportioned. Of course, the moment we make a change -- if we do -- somebody else is going to potentially be out of pocket. We're going to have the situation where if somebody is complaining now and we make a change, somebody else will be complaining. We have to try and find a way with the UBCM of coming up with an agreement that everybody thinks is fair and appropriate. I'm looking forward to getting that report this spring.
R. Neufeld: I just want to go back quickly to legal aid and ask a few questions about that. Yesterday you were reading some statistics and, if I remember correctly, you stated that the cost per case for legal aid had increased 183 percent over a number of years. Can you just confirm for me how many years that is?
Hon. C. Gabelmann: I'll ask for that piece of paper back. The period of time we were talking about is 1986-87 through to 1992-93. In that six-year period, my memory is that the cost was increased by 366.2 percent, a lot of which had to do with the doubling of the tariff in '91. Much else had to do with the court-imposed requirement to handle more cases, and also with the volume increases because of the increasing severity of the crimes being committed.
[11:45]
R. Neufeld: The minister spoke earlier this morning about not going the way of the public defenders model in the U.S. I tend to think, from some of the minister's comments about legal aid and in-house lawyers, that it's probably not going to be long before we're in almost the same position, or at least in a position where legal aid is no longer provided by a society and all work is done in-house, as opposed to the way it is now. I tend to think this because the minister said the high billing for legal aid was $416,000. One of the lower figures he quoted was about $170,000. I wonder if the minister could comment.
It's easy to throw these numbers out -- and they're astronomical numbers; the Liberal critic said it was far too much -- but there's a lot more in a number than just stating a number. It's just like saying a doctor billed $420,000 or $500,000. You have to know what that doctor performed and everything that goes along with it. Maybe the Attorney General could provide -- maybe hypothetically, because I don't think he'll have the number in the back of his head.... Of the $416,000 that was billed by one firm, how much of a savings would there be if you had an in-house lawyer do it, taking into consideration the salary, benefits, space allocation, support staff and other amenities that the person would receive in order to perform the same number of cases, and taking into consideration the severity of the cases and the number of cases that were handled by that firm? Is there some magical number that the Attorney General has for me?
[ Page 9895 ]
Hon. C. Gabelmann: I'm reluctant to get into arguing about how much money would be saved between a particular tariff biller compared to a particular staff lawyer. They are going to be doing different work. Obviously, the more severe and serious cases will be done predominantly by tariff lawyers who are skilled at that particular kind of case. Many of those are going to be more expensive than the more routine cases that can be handled by staff lawyers. Simply taking a particular biller -- let's say anyone in the top 50 -- and comparing that to a typical staff lawyer in an office wouldn't work. There's just no way you can make that comparison. First of all, you'd have to determine the nature of the cases that the tariff lawyer took. You'd have to determine how many hours a day that lawyer has decided to devote to their working life as opposed to their non-working life. They may work 12 hours a day. Even though many government lawyers work that number of hours a day, we really don't have any right to expect that. A whole bunch of variables make it really difficult to determine on the basis of measuring one person against another.
What you can do is look at the overall system and see that a lot of things that are now done -- I think of duty counsel in particular -- at a fairly expensive rate can be done much more efficiently by staff lawyers. What the model is going to try and do is take the matters that can be done in a more regular manner by staff lawyers out of the tariff, where it's obviously more expensive. That's not going to mean that the tariff will disappear. It will still be in place in approximately 50 percent of the cases.
How much money will be saved overall? Again, it depends on lots of issues. Does the severity of the crime that we are experiencing continue to increase? Are there court cases that demand a higher standard of coverage? Are the eligibility rules changing? A whole variety of issues have to be worked out. There is no question, however, that much of what is now done on a tariff can be done by staff, and it can be done cheaper and more effectively.
One of the things we want to do in all of this is make sure that cases that should not go into the court system don't. Intake workers in community legal aid offices, together with paralegals and staff lawyers, can often have some discussions with a person who comes in that lead to non-litigious solutions, which is in everybody's interests. That may happen if you go into a lawyer's office -- lots of lawyers are going to recommend a non-litigious solution -- but it doesn't always happen, and it isn't always the first focus. The private law office doesn't always have the resources available to support a non-litigious solution.
Those are the kinds of savings that can be gained. There are many others. I don't profess to be able to stand up and talk about all of them. Based on experiences in other parts of the country, we think that the mix is going to provide a better service for less money, and that's the objective here.
R. Neufeld: I guess the Attorney General just supported my argument against his earlier statement when he said that $416,000 for a high biller is astronomical, and we could hire an awful lot of in-house lawyers for that amount of money. It's a simplified term to use for a situation that's awfully difficult to work out. Is it the intention of the government to take over the Legal Services Society in such a way as to provide almost all of the lawyers in-house for legal aid work?
Hon. C. Gabelmann: There are two questions there. The first is: is the government going to take it over? No, we're not going to take over the provision of legal aid. The second question is: will most of them end up being staff? In answer to that, the plan being developed by the Legal Services Society is to have it balanced, roughly fifty-fifty.
H. De Jong: I was going to do a little more questioning on eligibility; however, given the hour, I move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. C. Gabelmann moved adjournment of the House.
Motion approved.
The House adjourned at 11:55 a.m.
The House in Committee of Supply A; H. Giesbrecht in the chair.
The committee met at 10:22 a.m.
ESTIMATES: MINISTRY OF SMALL BUSINESS, TOURISM AND CULTURE
(continued)
On vote 51: minister's office, $342,000 (continued).
W. Hurd: When we left off the estimates yesterday, Mr. Chairman, we were discussing the Working Opportunity Fund. Upon reviewing the discussion in Hansard, I was still somewhat confused about the reporting relationship or the accountability that rests with the Ministry of Small Business, Tourism and Culture with respect to this fund. During the debate yesterday, the minister suggested to the committee that he had responsibility for the Working Opportunity Fund. I wonder if he could, on a basic level, advise the committee of the manner in which he has responsibility for overseeing the fund.
Hon. B. Barlee: Mr. Chair, I thought I clarified that in one of the other answers. WOF is a private -- I emphasize that -- taxpaying company which is owned and controlled by 12,000 shareholders and has an elected board of 11 directors. I think I mentioned -- I didn't go over Hansard -- that as a courtesy I did see David Levi occasionally. I think I said approximately once every two months.
W. Hurd: As the minister directing a small business investment or financing strategy in the province, does he see this fund as a companion piece to the government's investment strategy? Or is it meant to substitute for the absence of a small business financing program by government? Even
[ Page 9896 ]
though it is at arm's length, how does he see the fund meshing with the overall strategy of enhancing small business in the province?
Hon. B. Barlee: It's simply one of a number of initiatives that are inclined to help small business in the province. I mentioned three or four yesterday; WOF was simply one of them.
W. Hurd: Perhaps the minister can advise the committee whether to the best of his knowledge the B.C. government provided $600,000 in start-up funds and loan guarantees of $2 million to help the fund get established. As the minister concerned about small business, can he tell us whether those loan guarantees are still in place for this particular fund which invests in small business? What is the status of those loan guarantees?
Hon. B. Barlee: Some of those loans have been repaid. The guarantees will flesh out or protect those loans that have not been repaid and are still outstanding, and that are at risk for the government.
W. Hurd: Can the minister tell us whether his ministry has responsibility for monitoring the performance of those loans? Is he accountable for the loan guarantees which were originally set up under his ministry? Or does that fall under another ministry of government?
Hon. B. Barlee: We guarantee some of those loans. The banks actually make the loans, so this is simply a guarantee to the banks that we will back that loan.
W. Hurd: It's your money.
Hon. B. Barlee: Yes. But I'm looking over the four investments we've made so far, and to my knowledge -- and I can come back with that -- I don't think any of these loans are at risk: the $400,000, the $275,000, the $880,000 and the $550,000 loans. I don't think one of those companies is in difficulty.
W. Hurd: The minister advised us yesterday that, of the $45 million subscribed or invested in the fund, it had made approximately $2.5 million in loans to small businesses in the province. I believe that was the figure used.
Hon. B. Barlee: Yes.
W. Hurd: Can the minister tell us whether the $2 million loan guarantee fund is in fact backing those particular loans? In reality, has the Working Opportunity Fund really only placed $500,000 with B.C. businesses as risk capital that is not fully guaranteed by the provincial government?
Hon. B. Barlee: I don't have the particulars of that; I can get back to you on that. The figures I gave yesterday are correct; approximately $45 million has been raised. We spent about $2.1 million to provide equity capital for corporations that the board thinks are going in the right direction.
W. Hurd: Point of clarification on the minister's remarks: he's referring to the $600,000 in start-up funds but not to the loan guarantees of $2 million. Is it fair comment to say to the minister that with a $600,000 start-up fund and $2 million in loan guarantees, the Working Opportunity Fund, which is designed to invest in small businesses in British Columbia, has in fact taken no risk with any of the money that subscribers have put into it? Clearly, the amount of money invested in B.C. businesses is less than the initial subscription that was offered by the provincial government. Can the minister advise us why this fund, which was designed in the press release to be a wonderful catalyst for investing in small business in the province, is in fact showing such meagre results?
Hon. B. Barlee: Of course, any member of the House has the opportunity to write the president, who is David Levi, and get that information if he so desires. I don't find any great flaw in exercising due diligence and prudence in investing money, as this fund has done. All four of those companies have prospered. They have increased their workforce significantly. As far as I know -- and I'm quite sure this is correct from my last meeting with the CEO -- they're up to date on everything. We could have followed the pattern of the previous government; if we had, of course, the taxpayer would have essentially anted up $320 million in bad debts. We don't intend to do that. I think it's a prudently run company and a carefully run company. The criteria have to be met before they will invest, and I don't think that's bad business.
[10:30]
W. Hurd: I must confess that I am somewhat troubled and disappointed by the minister's defence with respect to the success of this fund. Perhaps I can read into the record the comments of his predecessor, the previous Minister for Small Business and the member for Cariboo South, who stated that:
"Small businesses are the engines that drive regional economies. By investing in small businesses, we are supporting regional and local economies.... The Working Opportunity Fund is expected to raise in excess of $100 million over the next five years and will provide essential equity financing for young companies which need support if they are to grow and expand into new markets."
Clearly, this tells me that two and a half years ago this fund was designed to be the catalyst, the driving engine, for investment and financing support of small business in the province.
"'The objective is to diversify our economy, stimulate the creation of new jobs and encourage a more internationally competitive business community'...extensive negotiations with business, labour groups and government resulted in 'a well-structured fund that will benefit both investors and recipient B.C. businesses'."
With two and a half years gone in the five-year mandate, this fund hasn't even met the minimum requirements of the press release. As the minister explained to us yesterday, he doesn't see his ministry being involved in small business financing in the province. That leaves us with funds like the Working Opportunity Fund, so I will ask him again as the Minister of Small Business, is he satisfied with the progress of this fund, given the lofty principles and objectives that were contained in the government's press release of January 8, 1992?
Hon. B. Barlee: We track all the time. I mentioned yesterday -- when I don't think the member was here -- that small business in British Columbia is in the best shape in Canada by far, and it's probably in the best shape in North America, followed only by Utah and Nevada. Bankruptcies are down slightly over 20 percent; new incorporations are up 14 percent. If you look at the Federal Business Development Bank, they lose money in every other province in Canada
[ Page 9897 ]
-- all nine provinces -- except British Columbia. They make such a profit here that they I don't think that the taxpayer should be at risk. Previous governments put the taxpayers at risk when they loaned out $320 million of public money paid by the average taxpayer. I don't think that's the taxpayer's responsibility; I think that's the responsibility of business. The WOF fund fills in some of that area that we have to look at very closely. WOF is providing money to small business that meets the criteria set down -- I say again -- by a private, taxpaying firm.
You may think that government should have the responsibility to pour $200 million to $300 million into there and take the risk. I don't happen to think so. I think the taxpayer is shielded by this type of fund. WOF is not the only fund we have working for us, but I think it's better for the taxpayer as well as the government. In the long run I also think it's better for private business.
W. Hurd: That's a very interesting answer. But the sad reality is that the Working Opportunity Fund, which two and a half years ago was subject to the kind of burgeoning press puffery that we see from the government, has in fact invested less than $2.5 million in B.C. businesses, which is less than the money originally subscribed by the B.C. government. In other words, the Working Opportunity Fund, which was supposed to be the investment vehicle for small business in this province, has not placed one dime -- not a dime -- of its subscribers' money at risk in investing in small business, because there's still $2 million in loan guarantees and I suppose $600,000 in seed capital. The total business investment has been $2.5 million.
I would suggest that's more than just prudence; that's the kind of deal even the banks wouldn't demand from a small business before they placed an investment. I certainly welcome again the comments of the minister, but surely he has to be disappointed by the progress of this fund to date and by the fact that it appears to be willing to take no risks on behalf of small and medium-sized businesses in the province.
Hon. B. Barlee: I would be disappointed if they had put $20 million into a company that went down the drain; that's when I would really be disappointed, because that would be taxpayers' money going down the drain. But they haven't done this; there's no flaw in their plan. They are slow. That's fine; that's prudent management. Governments have done this right across the country. We can go to province after province where, with no difficulty at all, they've invested hundreds of millions of dollars of taxpayers' money. Frankly, I think those days are gone. I think the responsibility of the major banks.... I said the major banks lose 1.38 percent; from my memory yesterday, it was 1.43 percent. That is essentially in the banks' field; this is not. As minister, I don't think the problem of the taxpaying public is to fund small business.
I think we can make it easier for small business. We have negotiations going on with the big five now. I have one of the major credit union players coming over and seeing me next week. We're going to use our good offices to make sure small business is supported by those institutions that should be supporting small business. But that is not the provincial taxpayer.
W. Hurd: The minister has not listened to a word I've said. He just finished saying the fund was a private fund. I mean, there is no taxpayers' money at risk. I'll tell you, the only taxpayers' money that's at risk with the fund is that investors in the Working Opportunity Fund receive not only a B.C. tax credit but also a very generous federal tax credit. Obviously, I suppose you could say the loser in this case is Revenue Canada, which is allowing generous tax deferrals and deductions for people who invest in the Working Opportunity Fund and who upon subscription are told that their money is going into medium-sized and small businesses in the province. There is no taxpayers' money at risk, other than what would be invested in Revenue Canada.
I really cannot understand how the minister can defend a fund, which is paid for by Revenue Canada -- reverse downloading, something the government should be trumpeting -- that has invested a total of $2.5 million to date, after two and a half years in existence. I think this fits the criterion the minister is talking about: no provincial tax money, other than the tax credit for individual investors, is being placed at risk. It's a private fund, as he's indicated. By statute, its mandate is to invest in businesses in B.C. with a total asset value of less than $35 million and that must employ British Columbians as half of their workforce, I believe -- or 80 percent, or something like that. I just can't understand why the minister is not deeply troubled by the fact that this fund, which two and a half years ago appeared to have so much going for it, has not invested more money than the government subscribed in it to help start it up.
Hon. B. Barlee: As I said before, I would be deeply troubled if this company had imprudently invested $45 million, because then we would be hit very hard.
Every company listed in this has done extremely well. Canadian Oil Filter Recovery Corp. of Kelowna and Pro Carry Systems have done extremely well. Stone Electronics is doing well and Photon Systems of Burnaby is doing extremely well. There are three or four more they are looking at closely.
This is due diligence; this is prudence. This is investment the way it should be done. In the past -- you can go over hundreds -- literally billions of dollars have been invested by the federal government and the various provincial governments because they have not exercised due diligence.
I'm saying that this is a private company, as I have stated before. The member knows that. It is a taxpaying company. It is true that there is a cooperative agreement between the Liberal federal government and the government of British Columbia so that investors will invest in this because they are given certain tax breaks. I fail to see why the member says all this money should be invested immediately. I don't think it should be. I will leave it to the people who are doing this extremely carefully and are going over all the criteria. That's why there haven't been any mistakes.
W. Hurd: I am not going to belabour the point, but it is astonishing that a private fund that I understand received $45 million in total investment from individual British Columbians and perhaps from pension funds -- who themselves have received very generous B.C. and federal tax credits and who will learn that the money they have invested in the Working Opportunity Fund has not even been invested in small businesses -- has not even invested the money it received in seed capital from the provincial government and in loan guarantees of $2 million. The minister may call that prudence. Even the banks, who are, as we know, not universally sympathetic to small business, would be prepared to take a bigger risk than that on behalf of small businesses in the province.
The opposition, having reviewed the facts, is exceedingly disappointed in the progress of this fund and that the
[ Page 9898 ]
province has invested $2.6 million or $2.7 million in it, as the minister has indicated, and that still after two and a half years, we have less total investment in the small business sector by the Working Opportunity Fund than the total amount subscribed by the B.C. government. That doesn't represent a prudence or a lessening of the risk; that represents no risk on behalf of small business in the province.
Hon. B. Barlee: Perhaps I should clarify the issue a little more. I'm a very careful manager. When I was Minister of Agriculture, Fisheries and Food, because their insurance schemes held up I returned $16 million to the provincial treasury the first year, $22 million the second year and $20 million the third year, for a total of $58 million. That was prudence, because our insurance schemes held up. Frankly, I don't find any problem. If this company were going in the other direction, where they were investing left, right and centre without watching the guidelines and without watching the criteria and without due diligence, then I would be worried. I'm not worried, nor are the 12,000 investors. They happen to get a break from the federal government and the provincial government; that's true. That's why they're making the investment. We still have $43 million to invest. There are more people investing all the time. I think the CEO of that company is extremely careful, and I think he's doing an excellent job.
W. Hurd: I was going to let this issue go, but those comments have renewed my enthusiasm for the debate. Mr. Chairman, I'm looking at the amount of B.C. and federal tax credits for investors in the Working Opportunity Fund, and I dare say that this is a tax-sponsored fund if ever there was one. People are getting a generous credit equal to 20 percent of the amount invested in the Working Opportunity Fund for a B.C. tax credit and 20 percent as a federal tax credit.
People who invest in the Working Opportunity Fund, if they're at the 50 percent tax bracket, for example, are doing very well with their investment in WOF. I'm deeply troubled by the fact that given the generous tax incentives that they've received, they're not taking any risk at all. As the minister well knows -- being an entrepreneur of note himself -- surely the higher the return, the higher the risk. Isn't that the standard definition? It seems to me that investors in the Working Opportunity Fund who have benefited immensely from the public purse in terms of tax deferrals are in fact taking no risk at all on behalf of small business in the province. That troubles me, because in the absence of any other strategy from government, and given the trumpeting that went on with the creation of this fund, it is fair to pronounce it to be a dismal failure after two and a half years.
It's also a failure in that it has been subsidized by Revenue Canada. I'm certain that in due course they will want to take an interest in the fund to find out whether or not it represents something akin to the scientific research tax credit of small business, where money was being poured into an investment fund.
[10:45]
After two and half years, the fund appeared to have interest in taking a risk on behalf on B.C. business. I reiterate that this fund obviously has not succeeded for small business so far. The minister may call it prudence; I say that it represents no risk-taking on the part of a fund which was set up to invest in companies with paid-up capital of less than $35 million in the province. I have no hesitation in saying that -- given the track record to date -- if we do nothing else in this set of estimates, we should raise the alarm about this fund and express it to be a dismal failure so far.
Hon. B. Barlee: Because this is a private, taxpaying firm in British Columbia, any member of the House and of the public has the opportunity to phone the CEO and say: "Look, I don't like the direction you're going." So this is a matter of opinion. I think he should be very prudent; you say he should take much more risk. Possibly that's so. The investors made 18 percent since the fund has been brought into fruition. That's 9 percent per year, and 18 percent over two years.
Interjection.
Hon. B. Barlee: That's not bad; it's a good return. And it's absolutely ironclad. You can't find any flaws with the investments he's made. The investments they've made have been superb investments for the province and the businesses concerned. So I'm not about to advise him to go in there and throw $10 million or $15 million or $20 million or the whole $45 million into an imprudent investment.
W. Hurd: I hope the minister will phone the chairman of the Working Opportunity Fund and offer his heartfelt congratulations when he passes that magic threshold of $2.6 million which is the point at which the fund will actually be taking a risk on behalf of small businesses in the province of British Columbia. And I must confess that is an impressive rate of return for the investors who have benefited from provincial and federal tax credits and who so far, after two and a half years, have taken absolutely no risk on behalf of business with their investment -- because, as we pointed out, with the combination of the seed capital and the loan guarantees, the fund to date has taken no risk.
As an investor -- and I'm sure the member for Delta South will want to comment on this -- that's about as good as it gets for an investor in the province of British Columbia. I look forward to the minister commending the chairman of the Working Opportunity Fund when he passes that threshold when, after two and a half years, he's actually taking one shred of risk on behalf of small business in the province.
C. Tanner: Mr. Minister, thank you for the figures you have given us on the community projects grants. I wonder if you would turn to the second page and look at the grants that have been made to the Vancouver-Mount Pleasant constituency, which I think is the Premier's constituency. He -- or, at least, his constituency -- has received four grants so far, each one of which is a year's of money, as I understand it, in round figures. Can we assume that he's not accumulating past his term of office, that he's had it all, that there will be some left, perhaps, for Saanich North and the Islands, where there's been not a penny spent yet? Could the minister tell me why the Premier's constituency has $602,400 and some others haven't had anything at all? That's question No. 1.
Question No. 2: could the minister tell us how my constituents -- or the constituents of any MLA -- make an application and to whom? Because while the minister said yesterday that this has been well publicized, in truth it has not been well publicized. It hasn't been publicized at all, as far as I know. I have received various applications across my desk -- I see that there are six -- and I have made comment on them, and I have done it in all sincerity in what I thought was the most prudent way, using the minister's words, in spending public money. I have been so prudent, apparently, that nothing's been spent. Could the minister give us the same assurance about the Premier's constituency?
[ Page 9899 ]
Hon. B. Barlee: That's a fair question. When you look at the list of the approximately $7.5 million, the 158 grants that have been given out always met the criteria. There are certain criteria they have to meet. All members of the House understand that. It's true that a few constituencies haven't applied at all, but that doesn't mean there aren't applications from those areas. I don't think there's an area or a constituency in the province that has not applied. There are some who do not fit the criteria, so it is equal opportunity. And as I said yesterday, each member gets about $133,333 a year; that's the average. I'm over that myself. If you look at Okanagan-Boundary, I'm at $179,000; I'm approximately $40,000 over. Well, I won't get that next year, even though I'm co-chair of that particular committee. And that applies right down the board; if you look at the three constituencies that are over $300,000, two are NDP and two are Liberal.
Some Hon. Members: There are four.
Hon. B. Barlee: No, excuse me, one is Liberal, two are NDP and I think one is.... One is Skeena at $365,000, one is Vancouver-Mount Pleasant, one is Nanaimo, and one is North Vancouver-Seymour.
F. Gingell: And one's Columbia River-Revelstoke.
Hon. B. Barlee: No, I said over $300,000, not over $200,000. So there are three major ones -- three out of four, and that's about right. You will find that after two years of this it will equal out; there's not much doubt about that at all. I track it all the time. That's why you are given this list. I'm not holding any secrets, or holding anything back from you.
C. Tanner: I'm not going to get into that game that used to be played around this House about whether the NDP members get it or Socred members get it or the odds and sods get it or the Liberals get it.
What I'm asking you -- and it's a fairly straightforward question -- is why the Premier's constituency has got four years' supply already. That's question No. 1 -- could I have a straight answer to that? Question No. 2: is he cut off because he's gone to the end of his term? Question No. 3: how do other constituencies that haven't got it...? Have they accumulated up to now...? Does Saanich North and the Islands have a little -- about $260,000 -- ready to spend?
Hon. B. Barlee: Yes, if those applications and projects indicate that they fit the criteria, there is no reason why Saanich North and the Islands won't get its fair share. I've followed that so far. There a number of members who have gone above the $300,000 mark; they will be dealt with extremely closely because they go above the average, and the average is $133,000 a year. So I think you'll find that will leaven the loaf. These are good projects, and all four projects above $300,000 met criteria that we felt were quite important. But they also realize that if they climb above that threshold, then they have to pay in the long run.
C. Tanner: Let me make it easy for the minister. I'll just ask him one question. The constituency of Vancouver-Mount Pleasant, which by coincidence happens to be the Premier's, has spent $602,000. Is the Premier now cut off? Is there any more going into that constituency?
Hon. B. Barlee: I think I made it rather obvious in my answer that those constituencies which are significantly above the $300,000 mark would be treated rather differently than other constituencies.
C. Tanner: Mr. Chairman, I know why this member and this minister is a success in business and in politics: he never gives an answer. It's a fairly simple question.
An Hon. Member: Is that your reason for success as well?
C. Tanner: The reason I don't do so well is that I give answers.
Is the constituency of Vancouver-Mount Pleasant cut off?
Hon. B. Barlee: No constituency is cut off, but any constituency that goes above the $300,000 mark would find it very difficult to receive any more moneys.
F. Gingell: Yesterday we determined that the annual budget for the B.C. 21 community project grants was $10 million. I presume $7.6 million was expended for the year ending March 31, 1994, and covers only that one year -- I'd like that to be confirmed. Will the shortfall of $2.4 million be added on to this year's $10 million?
Hon. B. Barlee: No, there would be no carryover of $2.4 million. Obviously it's from year-end to year-end, so we would start again with $10 million next year.
C. Tanner: In that case, I think we're finally getting an answer from the minister. In Saanich North, where no money has been given, will there be $260,000 next time or $133,000?
Interjection.
C. Tanner: Would the minister like to put that on the record?
Hon. B. Barlee: That's not as easy to answer as it appears. You didn't get any grants at all -- not one. As co-chair, I think I would be rather lenient to Saanich North, because they did not apply and did not receive $133,000 -- as I would be to any other constituency.... There are constituencies that went over last year, and I would be evenhanded about it and make sure that those constituencies that did not take advantage of this fund would be treated in a different light next year.
C. Tanner: Could the minister tell me, then, in that case, how the constituency of Vancouver-Mount Pleasant, in the circumstances he just outlined, managed to get four times as much as anybody else? This is the only one that's got anything like that. There are others at $300,000-odd, but this is $600,000-odd -- four times the amount they were due. Is it because it's the Premier's constituency -- God forbid -- or is it because the minister is scared of his boss? Is it because he applied more often? It doesn't look like it; there are four from his constituency and six from mine. The only reason I'm comparing the two is because they jump right out at me. We had six applications from my constituency, none of which were granted. The Premier's constituency had four and got $600,000 -- more than twice as much as anybody else. Why?
Hon. B. Barlee: First of all, the applications from the member's riding of Saanich North were incomplete; they didn't have the necessary information. It's very difficult to grant public moneys if the applications are not properly made out. That's one major reason there. We're quite willing
[ Page 9900 ]
to entertain further applications from Saanich North; I have no problem with that. The total applications from Saanich North were $351,000. You're concentrating on the Premier's riding; that's true. I concentrate on about four ridings that are over $300,000, and all four of those ridings, regardless of their politics.... If we look at Nanaimo at $459,000, that sum represented six grants, one of which was a major grant. The next one was North Vancouver-Seymour, held by a Liberal member, which received $367,000. I think that was for Camp Jubilee, which was very necessary. The next one is Skeena at $365,000. The next one is the Premier at $602,000. So all of those individuals who have received over and above what I consider a reasonable and fair share have to bear in mind that that will not continue, and I think I've made that fairly plain.
[11:00]
F. Gingell: The fund underspent last year by $2.4 million. Was that intentional?
Hon. B. Barlee: No, it was not intentional. I wasn't trying to spend less than the money available. I was exercising, I hope, due diligence. We went over virtually all of these not once or twice but a number of times to see if they fit the criteria and affected a number of people in the area. I think I can safely say that it was a fair attempt at evenhandedness. I think you'll find that out as the fund progresses into this fiscal year. Where people have had more than $133,000, they won't get it. I am an example right here; I'm around $40,000 over. Fine, I'll take that cut this year; I have no problem with it.
F. Gingell: I wasn't going to use this forum as a method of dealing with a specific application, but according to the information that has come out to this point, it does concern me to discover that the budget has been underspent.
There was a particularly high-profile issue from Delta South to do with the Delta Gymnastics Society. You may remember this one. Certain promises had been clearly made by the previous administration. Evidently some of the i's had not been dotted and some of the t's had not been crossed with respect to agreements from other municipal bodies to do with building a gymnasium that would also be used for school purposes. Their subsequent applications to replace that one.... They went ahead and built this major facility without any provincial funding whatsoever and took on a huge commitment. They then put in an application to help pay for the gymnastics equipment which they were previously going to pay for on their own. I appreciate that this isn't the forum to deal with a specific application, but it's hard for me to understand -- when an application seems to fulfil all the requirements, the budget was underspent and the applications have been in your ministry for two years -- why it would have been turned down. I wonder, Mr. Minister, if you'd like to comment on the situation with regard to the ease of applicants understanding the philosophy, rather than the strict rules, behind this program.
Hon. B. Barlee: The gymnastics club is free to appeal that, and we look at appeals very closely. If it was for equipment, as the member says, equipment does not properly belong under this. It's for capital projects. But whether that's accurate or not I don't really know, because I haven't looked at that particular application in awhile. There's leave for appeal, and they're allowed to do that. We'll take a very close look at it to see if it hits the criteria, as we do with all of the appeals. And sometimes the appeals are let through; either they've added something or they've put in the criteria that should have been there in the first place. So I have no problem with that.
As I say, if you take a very analytical look at it, you'll find that I am tracking it -- which I am -- and I think you'll find it will be evenhanded in the long run.
F. Gingell: I look forward to a successful appeal.
R. Chisholm: The minister will probably remember this question from last year in his previous portfolio; the question was asked of this same ministry and of the Ministry of Aboriginal Affairs. It pertains to the Working Opportunity Fund and the moneys available there.
The federal government approved a $5 million loan, subject to private sector participation. If you recall, Penfund in Ontario authorized $10 million if the provincial government would guarantee a 75 percent loan to the Native Brotherhood of British Columbia. They're requesting a loan, as you remember, for the fishing industry. To date they haven't received any loan. The fisheries and the aboriginal brotherhood are not asking for a loan; they're asking for guarantees. At that time it was stated that there were no guarantees and that the Ministry of Agriculture, Fisheries and Food, of course, could not.... In the meantime, the Minister of Labour has gone to the Brotherhood in the last few months and stated categorically that they are going to get the loan.
My question is: why didn't this happen sooner? It's taken four years. There's no money out of the coffers of British Columbia; we have the fund to guarantee that type of guarantee. These people would be in business and the fisheries would be enhanced. We've turned our wheels for another four years, and these people are still out in the cold waiting for answers.
Hon. B. Barlee: First of all, if you guarantee a loan, that is a risk. I think the member understands that, and of course, I do too. And essentially, this particular project -- which I'm quite familiar with -- is really not under the aegis of this ministry. It is under the aegis of Agriculture, Fisheries and Food. I didn't hear the comments by the minister that you mentioned, but I assume that has been resolved now. Certainly it does not fall under the mandate of this ministry.
R. Chisholm: If it doesn't fall under the mandate of this ministry, then you should change the name of this ministry. We're talking about small business and economic development, and this is exactly what this guarantee is for. I realize there's a risk even with guarantees. But the fund is available, and they could be in business now. They're not, due to the bumblings of whatever ministry in this government. With a bit more cooperation between ministries, possibly some of these problems we seem to have developed would be solved. It's just a matter of ministers talking to each other. After all, the Brotherhood has talked to all of these ministries and to the ministers, and they've come up with absolutely no results in four years. My suggestion is that the ministries start talking to each other. And if this is the ministry of economic development and small business, then possibly it is under your mandate.
Hon. B. Barlee: I would love to be able to discuss it and talk about the guaranteed loan to the Indian fishing association. But essentially we are under vote 51, and that does not even come near to being discussed under vote 51. I think the member did mention that that has been resolved
[ Page 9901 ]
now, so evidently the minister made a public comment. If that was so, I imagine that would be followed through on.
R. Chisholm: For the record, it has not been resolved. One minister came out and said it was resolved, but that was months ago, and it still hasn't been resolved.
I believe that the Working Opportunity Fund is under vote 51, so the subject is viable.
Hon. B. Barlee: That may be so, but the Working Opportunity Fund has nothing to do with Penfund, which the member was just talking about. There is absolutely no connection at all.
R. Chisholm: I will reiterate that Penfund guarantees the Brotherhood $10 million if the provincial government comes up with the 75 percent guarantee. The federal government has already come up with the $5 million, but will not release it until the provincial government does something. The province of British Columbia is the only organization that has held this up for four years, and it's about time that the pertinent ministries involved did something about it and got on with the job.
C. Tanner: I am going to go one more time to the community project grants. Since he doesn't want to give us a guarantee that the Premier's constituency is not going to get any more loans, would the minister give us a list of the four that have been distributed in Vancouver-Mount Pleasant so that we can make a judgment as to whether or not there has been preference shown to the Premier of the province?
Hon. B. Barlee: I have no difficulty sharing this list with the opposition. I stated yesterday that you should have equal access to it -- and indeed you do. I have made it fairly plain that this will be an evenhanded process, and if you watch the process over the length of this year and next, I think you will be quite happy about it.
C. Tanner: We will obviously be keeping an eye on it, and I am not unhappy that this minister is chairing the committee.
Yesterday the Minister of Small Business made a large point of the fact that he has been travelling around the province talking to chambers of commerce. I would like to make a couple of comments about the results of his travelling.
I have in my hand the British Columbia Chamber of Commerce brochure they put out every month, and something is amiss here. This is the bulletin put out by the chamber of all chambers, the B.C. Chamber of Commerce, not a specific one. Maybe the minister should spend some time with this particular chamber, because in a recent bulletin put out in March 1994, they say, "The chamber concurs concerning the provincial budget," and they are making a response to it. This is the response to the budget from the B.C. Chamber of Commerce, and something is awry. Either they don't know what they're talking about -- which I doubt -- or the minister is not spending his good time travelling around the province talking to them, because this is what the B.C. Chamber of Commerce says....
Hon. B. Barlee: What's the date on there?
C. Tanner: March 1994.
"A cut in spending growth is not good enough. The British Columbia Chamber of Commerce is concerned that the provincial budget indicates a 3.5 percent spending increase over 1993-94 forecast expenditures, a rate higher than the rate of inflation expected during the same period. 'In addition,' stated Dean Cooper, president, 'the government projects overall revenues to increase by 5.9 percent, a very ambitious forecast considering it is based on such items as a 23.1 percent increase in corporation income tax, mainly due to expected growth in corporate profits.'"
What the budget and the chamber of commerce are saying is that you are projecting a 23.1 percent increase in corporate income tax from profits that can be anticipated in the provincial economy this year.
They go on to say:
"'These higher taxation revenue projections are due in part to increased tax rates imposed in previous budgets,' Mr. Cooper commented."
There are a couple of good things in here, but not very many.
"'The chamber is pleased that the Finance minister has recognized the need for our province to be more competitive and some of the measures included in the Skills, Training and Labour ministry and the Small Business, Tourism and Culture ministry are focused to help achieve this goal.'"
So you have done something when you were travelling around.
"'The changes in the corporation capital tax are a step in the right direction,' Mr. Cooper said, 'however, even with these adjustments the tax continues to be a deterrent for capital investment in this province.'"
However, he finally ends his discussion by saying:
"'Our main concern remains the climbing cumulative debt the provincial government is incurring,' Mr. Cooper reflected. 'The total direct and guaranteed debt has increased by 59.3 percent since 1991. This coming year, an additional $2 billion will be added to bring the total to $27.4 billion. It is costing $1 billion a year to manage this debt.'"
Could the minister tell us what he's been talking about when he's been travelling around the province, other than getting kudos for himself and his own department? Is he representing the government, or is he just talking about promoting small business to the exclusion of everything else?
[11:15]
Hon. B. Barlee: When I travel around the province, I tell people not to listen to the government; I tell them not to listen to the opposition; I tell them not to listen to virtually anyone except the professionals. And the professionals? The professionals have hundreds of millions of dollars at stake. And the professionals in this province are Moody's Investors Service. They go over our budget with a fine-tooth comb, and then they go over our budget with a fine-tooth comb again and again, because they are at risk. You are not at risk, I am not at risk, nor are the taxpayers at risk. This is Moody's' job. They haven't got any political axes to grind, as me and thee do.
So what do they do? They say: "My God, the province of British Columbia has the highest credit rating in Canada by far. The other provinces aren't even in the same field. And the per capita debt is the lowest by far." If you don't believe me -- I haven't got it in front of me -- I would suggest it's probably on page 52 of the budget release presented in the House.
So Moody's Investors are the professionals; these are the gnomes that sit down hour after hour and comb over the figures. They're not friends of ours, but they say -- because they're at risk -- that we have the best credit rating in Canada, period. We have one of the best economic climates in North America, period. So I would suggest that Moody's has it right. I would suggest that we may not have it right, you may not have it right, but Moody's will have it right.
[ Page 9902 ]
C. Tanner: The minister, as usual, is talking about an entirely different subject than I am, and the president of the chamber, who happens to be an accountant, is talking for all the chambers. All the minister has to do is turn to page 2; he doesn't have to go to page 54. Go to the second page in his budget, and it says right there in very large type: $27,422,400,000. That's the total accumulated liability of this government, and it has gone up by 57 percent since this government took over. So what's the minister talking about? By his own admission, he travels around the province telling people to pay no attention to the opposition. What is his ministry for then? Why does he need $20 million if he's going around saying don't pay any attention to anything we do?
Hon. B. Barlee: I appreciate that remark, because your party Whip has already said that this ministry should be done away with. Of all the ministries, the Ministry of Small Business, Tourism and Culture should be disbanded. I find that rather amazing because, for instance, the government's job in Tourism is to bring tourists to the door in British Columbia. The job of Small Business is to hold them here. It's a cooperative agreement.
When I discuss this with the chambers of commerce, they think it's an excellent idea. But when I read the Chilliwack Progress of March 23, 1994.... I was absolutely astonished, because this ministry spends that much in comparison to government spending -- almost insignificant. And what do we bring in to government? We bring in about $5.5 billion.
C. Tanner: You don't bring anything in; the industry brings it in. What are you talking about?
Hon. B. Barlee: Excuse me, I'd like to answer the question.
We bring in $5.5 billion in tourism revenues per year -- members should relax; I'm just trying to explain what we're doing -- and we think we'll bring in $6 billion this year, with an infinite amount more.... We've got about $12 million more in the budget this year. We will bring in at least $400 million more in tourism alone. That will benefit every business in British Columbia. It will benefit the taxpayers, and it will certainly benefit the government coffers. People don't mind paying extra taxes if they make an extra profit. And they will make an extra profit if we bring $400 million this year and another $500 million next year in tourism, which we surely will do. I think the member should be very happy; we're both working in the same direction. Tourism is the biggest business in the world -- $3.5 trillion. It grows at $135 billion a year, and the competition out there is brutal. Are we capable of handling the competition? I think we are. I think you'll like our initiatives. When you see them coming down the pike in about 90 to 120 days, I think the member will be quite congratulatory about it -- not here in the public record, of course, but privately.
C. Tanner: You know the sad thing about what the minister says is the fact that he's the best they've got on that side, and he's all they've got. He's the only one they've got in there that has had any business experience, and he mouths that sort of nonsense. The president of the B.C. Chamber of Commerce says you're all wet. He says you're not accomplishing anything.
Another bulletin came out in March from the same gentleman:
"On March 16, 1994, the Thompson report entitled Rights and Responsibilities in a Changing Workplace: A Review of Employment Standards in British Columbia was released. The full Thompson report is available at employment standards or government agents.... The long-awaited report of Professor Mark Thompson on the review of the Employment Standards Act is out, and it's bad news for small businesses. Thompson's 118 recommendations virtually ignore the advice of B.C.'s small business community."
This is on the thing you sent out.
"Over 70 percent of the presentations Thompson received were from small business and small business organizations, yet his report represents only a very one-sided view of the workplace."
He goes on to castigate the government for what the Thompson report suggests. He's also telling you, first of all, that you're financially inept, and secondly, you're politically inept in this sort of stuff. So what's the minister talking about when he's running around the province wasting our money?
Hon. B. Barlee: I find this quite interesting. It seems to me that the opposition is speaking on both sides of the issue. Some members of the opposition don't want this ministry to be here at all. Other members of the opposition want us to represent small business and tourism right down the line. Here's what the Liberal Party Whip says in the Chilliwack Progress: "While the government is dumping some agencies, it should go farther and put some ministries on the chopping block." This is the ministry that shows the most growth in the entire world. Does that make economic sense?
F. Gingell: In the world?
Hon. B. Barlee: Certainly. In the general sense, this is the ministry that is locked into tourism. Tourism is the leading business in the world at $3.5 trillion. That's obvious; nobody can dispute those figures. It grows at $135 billion a year, and you want to put it on the chopping block? The Ministry of Small Business, Tourism and Culture should be the first to go? With the addition of $13 million to the budget to all three parts of this ministry, we think that in one area alone we will bring it up $400 million. That will provide thousands of jobs to British Columbians and will provide a profit to the treasury of at least $40 million. It will put more people back to work, it will benefit all small businesses, and you have the audacity to say this ministry should be put on the chopping block. It astonishes me. By the way, I will use this. I will certainly mention this to every chamber of commerce that I go to. I've only been to 21 so far, but I have another 45 lined up.
F. Gingell: I'm going to change the subject. But now I do understand why these curtains all close: so the minister can take credit for all the growth in tourism in this province, instead of the true matter, which is the beautiful scenery and lovely environment that we all have the advantage of living in. But this government will take credit for it, I'm sure.
I was wondering if the minister could talk very briefly about his responsibilities as far as immigrant investors are concerned.
Hon. B. Barlee: We have an interest in immigrant investors, but that doesn't fall under the aegis of this ministry at all.
F. Gingell: Perhaps the minister could advise me if it falls under the aegis of the Minister of Finance or the Minister of Employment and Investment. The provincial government does have very real responsibilities in approving and dealing with applications, and I'm interested in knowing who.
Hon. B. Barlee: I think that falls under either E&I -- Employment and Investment -- or Education. It is surprising
[ Page 9903 ]
that it used to be under Education. But I can't give you further information on that. I can probably get it for you.
F. Gingell: In your pamphlet described as a "Commitment to Small Business," you talk about the role of your ministry, which will be to help new small businesses get established. I was wondering how you might plan on helping them get established.
Hon. B. Barlee: That's a fair question. I think we have a number of ways to help small business. We have to use our good offices to make sure that corporate lenders -- that is, the Big Five banks and the credit unions -- are more amenable to lending to small business. I mentioned yesterday that I had attended a symposium by the Big Five banks last week and that the credit unions would be coming over to see me. They are also taking another look at small business. Part of the reason was, like everyone else, they took a bit of a beating in the early 1980s and became a little bit gun-shy.
Our trend lines indicate that small businesses and home-based businesses are the way to go and certainly are the creators of significant jobs. That's why we use the advantage of our economic development officers and government agents to help small business.
We have had a number of symposiums on small business in various parts of the province, and they have generally been effective. We are concentrating on a number of areas, including women in the workforce, who, as one of the members mentioned yesterday, are rather more efficient as business people than men are. We will be announcing an overall small business initiative at the B.C. Chamber of Commerce meeting in Powell River next month. We have a number of other training initiatives, including apprenticeship training, marketing, general management, business planning, and human resource management.
Coupled with quite a positive economic climate in the province because of in-migration, which averages 2.8 percent per year, the businesses in British Columbia are always at risk, and we know that. The average business only lasts about 60 months. That's the average, and 50 percent of businesses after five years have closed their doors. That is a risk. Some of the most fragile parts of that business community are the restaurant industry and other parts of that fast-moving part of our economic complex.
[11:30]
We are being careful. We are aware of tracking all the time, to see which businesses are having difficulty, to compare ourselves with our neighbours both to the south and to the east, and to coordinate with the the Federal Business Development Bank and Community Futures and so on. We have a short-term strategy and a long-term strategy, watching, of course, all the indicators. One of the indicators is bankruptcies, which are down significantly. The other indicator is the formation of new businesses, which is up significantly. These are susceptible to world trends as well. We are aware of that.
We are going in the right direction and not making any moves that are precipitate. If small business in B.C. does as well in 1994 as it did in 1993, I will be quite happy. We have undertaken other initiatives which we think will help them in the long run.
F. Gingell: I'm pleased to hear that you are in contact with and are dealing with the Federal Business Development Bank. I noticed that on page 15 of your booklet, "Commitment to Small Business," you talk about the state of Michigan's program, whereby the state puts a percentage into banks making loans in small business portfolios. They are in effect using taxpayers' money to subsidize the small businesses. I take it from what you have said just now and in the past that this government is in no way planning any programs of that nature. You believe that the FBDB has a role and you encourage that, but you are not planning on any added programs in that area.
Hon. B. Barlee: That's an interesting question. At the present time that is true, but it is an option. Anybody in any ministry should be flexible so that we do look at programs advanced by either other states or other provinces and examine them very closely to see if they have worked. That isn't written off entirely, but at the present time we are not embarking upon that. That could change. It depends on circumstances. It depends on the value of the Canadian dollar and on the effect of NAFTA, which we discussed at some length yesterday.
I mentioned yesterday that we are with NAFTA, and that it is a fait accompli -- or words to that effect, and that we therefore should make the best of it. And I stated that I thought it should be evenhanded. Well, as I was coming back on the plane last night from a meeting in Vancouver, I happened to read the Globe and Mail, and here's what the United States is intending to do, which is kind of interesting....
F. Gingell: Oh, I understand all those problems, but I think that's not the issue. Let's deal with the world the way it is.
Hon. B. Barlee: Well, the way the world is is rather interesting. And I stated yesterday that we can either accept.... You said we should accept this agreement as it's written -- well, the agreement is so written, and here's what the United States is going to do: they are proposing tariffs that are so high they could block all trade, according to George Brinkman, an agricultural trade expert at the University of Guelph. The U.S.-proposed tariffs include -- believe it or not -- 126 percent duty on peanut butter brought in from Canada. They also include a charge of $1.81 per kilogram for butter; $1.44 per kilogram for cheese; $1.01 for skim milk; and a tariff -- and this is really laughable -- on sugar. Sugar sells on the world for 10 cents a pound; the Americans don't want the Canadians to send sugar into the United States, so they're going to impose a 14.5-cent-a-pound tariff on top of that. This is really astonishing.
Then the United States goes on to say this: "But the United States argues that the Canada-U.S. Free Trade Agreement doesn't permit new tariffs" -- except on their side. And Ottawa's Department of Fisheries and Oceans had 17 treaties with the United States, and they broke 14 of them. We live by the letter of the agreement; the United States has no intention of living by the letter of the agreement, except when that agreement gives them an advantage. So out of those 17 fisheries treaties, they broke 14 with impunity.
We're wrestling with them right now over the Pacific Salmon Treaty. And why are we wrestling with them? That comes under NAFTA, which you people voted for -- you must love it, because they've destroyed the fishing runs on the Columbia River. We've kept the Fraser River, one of the best rivers in the world. So the free trade agreement....
[ Page 9904 ]
C. Tanner: Point of order. This Chairman isn't as diligent as the one we had yesterday, when two or three times people on this side of the House would talk to the subject.... The minister is a long way off track right now. Perhaps you could bring him back.
The Chair: The point is well taken. The minister will be guided.... I might take the opportunity to suggest that we are, by the rules, required to rise and report at 30 minutes prior to the fixed adjournment time for the House. I don't want to interrupt the line of questioning, but the Chair would entertain a motion to rise and report from the next speaker.
F. Gingell: I so move.
The Chair: The member for Delta South has moved that we rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 11:39 a.m.
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