1994 Legislative Session: 3rd Session, 35th Parliament
HANSARD

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, MAY 5, 1994

Morning Sitting

Volume 14, Number 25

[ Page 10559 ]

The House met at 10:05 a.m.

Prayers.

J. Doyle: In the gallery today I am pleased to present 15 students from the social studies class of Revelstoke Secondary School. They are visiting the Legislature with the vice-principal, Richard Baham, and Ms. Eve Fisher, their teacher. I'd like the Legislature to make them welcome to Victoria.

Presenting Petitions

T. Perry: I present this petition on behalf of the hon. member for Vancouver-Burrard, who could not present the petition directly today because he's in the Speaker's chair. The petition is addressed to the Vancouver City Council and to the provincial and federal governments. It is sent from the Rev. Dr. Bruce Milne, the senior minister at the First Baptist Church in downtown Vancouver, and signed by approximately 450 parishioners of the First Baptist Church. It reads:

"We, the undersigned, are profoundly concerned about the recent proposals to establish a casino in downtown Vancouver. The proposed site is within the immediate parish of our congregation, and we want you to be aware that the suggestion of such a development is totally repugnant to our large and representative congregation. We hope and pray that you and your colleagues will do everything in you power to stop this project which would seriously reduce the quality of life and well-being of our entire city centre community."

W. Hartley: I have a petition to present that has been sent to me from the congregation of St. Andrew's United Church, and it expresses the same sentiments as the previous speaker's.

Orders of the Day

Hon. G. Clark: I call Committee of Supply in Section A for the purpose of considering the estimates of the Ministry of Transportation and Highways. In the House today, I call continued debate of Bill 32, BC Forest Renewal Act.

BC FOREST RENEWAL ACT
(continued)

The House in committee on Bill 32; D. Lovick in the chair.

On section 3 (continued).

W. Hurd: As we left off debate in the House yesterday with respect to section 3, the opposition had expressed considerable concern about what we felt was the lack of accountability with respect to the appointment of directors of this new Crown corporation and the fact that, when it came to appointing the directors and to reflecting the broad-based makeup of the forest interests in British Columbia, there was no commitment on the part of the government to necessarily reflect those values in the appointment of a board.

Given the considerable attention that has been focused on the makeup of Crown corporation boards in the province over the past couple of years -- particularly in the last six months -- we're exceedingly disappointed that the government has not chosen to accept any sort of reasoned amendment to this section that would require that form of accountability. Last night, having reviewed the forest renewal strategy booklet more closely, I noted that when it came time to appoint the Forest Sector Strategy Committee -- which, of course, did so much seed work for this particular bill, we understand -- the government made the following observation:

"An early priority of this government was to address the challenges facing our forests. On April 3, 1993, Premier Harcourt announced the creation of the Forest Sector Strategy Committee to advise and assist in finding forest solutions. Representatives of industry, labour, first nations, environmentalists, academics, communities, and government came together to consider strategies for revitalizing our forests for the benefit of all. Their work has been invaluable in the development of the forest renewal plan."

Given the fact that their work has been invaluable, and that the opposition feels that they certainly could contribute to the smooth functioning of the new Crown corporation, the opposition has proposed a further reasonable and friendly amendment to section 3(1), which I would now read into the record. It does not stand in my name in the order paper, but would be moved at this time. After the words, "all to be appointed by the Lieutenant-Governor-in-Council," add the following: "and must be representative of industry, labour, first nations, environmentalists, academics, communities and government, as well as reflect the regional diversity of British Columbia." This amendment would certainly address the concerns that have been raised not only by members of the official opposition but also by the hon. member for Peace River North yesterday, I recall, who expressed the concern that his region of the province may not in any way be reflected on the Crown corporation board of Forest Renewal B.C. In proposing this amendment, we have chosen to use the words that the government used to promote the work of the Forest Sector Strategy Committee. Therefore we would look upon this as a favourable and friendly amendment that would, again, address the serious concern of accountability on the Crown corporation board.

On the amendment.

Hon. A. Petter: I know that the opposition is now trying to find ways to identify themselves positively with this initiative, and we commented about this yesterday. As the member says quite correctly, it was the government who appointed the Forest Sector Strategy Committee. It was that committee that produced -- at least in part, along with others who provided input -- the proposal that is now before us in the form of a bill. It was that initiative that the member and his colleagues voted against. So I continue to be perplexed that the member extols a committee whose product he cannot support in principle. Nevertheless, I know the member is trying to find ways to escape the dilemma in which he finds himself.

[10:15]

The fact is that the government is committed to this being a fully representative body, a partnership agency; that has been made clear. Industry and other groups will be represented on this agency, and the government will no doubt be judged by the choices it makes and the input it seeks. I'd certainly be happy to invite the member and others to make recommendations on this matter, and as we get further into the bill, there are many mechanisms to provide for full accountability.

For those reasons, while I don't have any difficulty with the spirit of it, I don't think this is a helpful amendment, nor do I think it merits support.

[ Page 10560 ]

W. Hurd: I'm reading more into the minister's remarks than he's offered in rejecting the amendment. I'm certainly puzzled by the observation in the forest renewal strategy document that the work of the committee has been invaluable in the development of the forest renewal plan. It seems almost nonsensical now to suggest that their work wouldn't be equally invaluable when it comes to providing direction for the new Crown corporation. Forgive me for being a cynic, but I'm not reassured by the minister's suggestion that the government knows best about appointing the board and that they may well be judged by their appointments. They've been judged before and found guilty of some rather partisan and politically oriented appointments to these boards.

This particular reasoned amendment allows the government to suggest that they are meeting the spirit of openness, honesty and commitment that supposedly went into developing this plan. I cannot understand why the minister would choose to reject a reasoned amendment like this, when he's now saying that, as an alternative, we will pursue the same sort of path we've pursued with other Crowns in the province -- appointing friends and political insiders of government, people who will do the bidding of the ministry and government on certain issues. There is absolutely no assurance that this Crown corporation, which will be spending $2 billion of taxpayers' money over five years, will have any more accountability than B.C. Hydro -- or any other Crown Corporation -- which has been identified as lacking in certain areas.

It starts with the appointment to the board. I know from experience that most corporations, private and otherwise, function best when they have a strong independent board that is able to act unilaterally to identify opportunities that exist and is not beholden to the government for its appointment. This particular amendment really meets the bare minimum. All it does is suggest that the government needs to seek to represent these interest groups on the board of directors.

I find it troubling that, when it came time to develop a so-called forest sector strategy renewal document for the province, all these players contributed mightily; but when it comes time to make a commitment to re-create that so-called balance on the board, the minister has chosen to reject any and all amendments that would seek to do that. I really can't fathom it.

Hon. A. Petter: We had a full discussion on these issues yesterday. I really don't want to retread it, but the member's argument makes little sense. The member himself acknowledges -- surprisingly, given his position on the principle of the bill -- that the government brought together a very effective committee that helped and assisted in the development of this proposal. We have fully indicated our intention that the essential nature of this board be representative. It needs to be representative of all interests, and we will ensure that we seek consultation on that.

In terms of accountability, there are many mechanisms for accountability in this bill. The ones we will get to with reference to the standing committee suggest that we have gone the extra mile on accountability. The Forest Sector Strategy Committee, as I indicated yesterday, was and continues to be a policy committee whose work will continue. The board will certainly have representation from industry, along with the other groups mentioned. But it's now time to open up to all British Columbians and to make sure that this board is fully representative of all British Columbians and is a true partnership. This government has indicated -- as the member himself has -- that we have been very responsible in the appointments we have made, on the policy component of this initiative, in putting together the Forest Sector Strategy Committee. I can assure him we will be equally responsible and happy to be judged by him and held accountable, through this Legislature, for the appointments we make to this board. We will want to engage in a full process of consultation and make sure that those appointments are fully representative.

Amendment negatived on division.

G. Wilson: It's quite clear where the government is headed on this. I'm not sure that it's going to be very productive to sort of spin our wheels on the general principles. It's also clear that I and the Alliance are not in support of the creation of a Crown corporation. However, that's what the government wants to do, so I think we need to understand why it has set up the Crown corporation the way it has. In this section, I'm curious to know if the minister might answer two very specific questions.

In the establishment of this Crown corporation, why is there such a direct line of control to the minister? It is somewhat unusual, I think he would agree, given that the directors -- and the executive council that are made up of these 15 directors, through the appointment -- are going to be largely at the disposal of the minister and the Ministry of Forests.

Clearly also, to talk about what is meant by Forest Renewal B.C. being an agent of the Crown, I think we need to understand the distinctions made between a Crown corporation, constituted as other Crown corporations are constituted, and what is considered to be an agent.

So can the minister speak specifically to those three points -- firstly, about the direct control in this corporation and why it has opted to go that route? Secondly, why was the decision taken to use the corporate model and set up a corporation -- as opposed to, say, doing it through the land use secretariat, which would be our preference? And thirdly, what is the distinction with respect to it being an agent of the Crown?

Hon. A. Petter: Let me deal with the last point first, because we did discuss it a bit yesterday. The agent of the Crown is to ensure.... Clearly these are public funds being raised, and it's appropriate that the agency therefore be one that has an agency relationship to the Crown. It also ensures that the agency wouldn't be subject to federal taxation, for example, as a private corporation might.

On the question of why a corporation, I did discuss this at some length yesterday. It's our view that the corporation model provides the best vehicle for a number of objectives. First of all, it achieves a true partnership, in which representatives of all groups with an interest in the forests can work together to achieve a program that will speak to the future of forest renewal. The fact is that a corporation can enter into those kinds of arrangements that ensure that these funds are directed in the most effective and efficient way possible -- and we'll get to some of the powers that the corporation will enjoy in order to accomplish that. The corporation will have the capacity to accumulate funds and carry those funds over. In other agencies of government, it's difficult to accommodate that. It's essential that it have that capacity if we're going to have an agency that can plan for an 80-year horizon in a cyclical industry. Those are the principal reasons.

[ Page 10561 ]

What the member terms control I would call lines of accountability. It's important that this agency have a high level of autonomy, but it's also important that there be political accountability. As I discussed at some length yesterday, in this bill we have provided for accountability directly through to the Legislature in a number of, I think, rather creative and significant ways. Also, on a day-to-day basis, there clearly must be lines of accountability to responsible government officials. As the Minister of Forests, I or my successor would clearly be the obvious representative of government to act in that capacity, along with cabinet as a whole, in some respects, under this legislation.

G. Wilson: Can I come back to this question of the agency and concentrate on that for a moment? If there's an accumulation of funds to be carried over, one might argue that that is also a proposition for this Crown corporation to be able to run a deficit. The minister might want to comment on that. It's clear that we have a cyclical nature.... Later on we're going to get into how the financing is going to occur. The minister must know full well that there is no Crown corporation in British Columbia or in Canada that does not run in the red. Crown corporations cost money and, as the minister correctly points out, the agency provides for tax relief and recognizes that public funds are going to be used in the downturn of the cycle, given that there is a proposition built in for corporate financing on this. Surely, what this does is provide the best of both worlds. If it doesn't, then the minister can clarify that.

Hon. A. Petter: We'll get into some of the other sections around the powers of the agency. It's clear that the agency does not have the capacity to borrow; it does not have the capacity to run up a debt. What we have designed here is an agency that we believe can achieve a sustainable program of expenditures that will not require debt. That will be helped by the fact that there will be a start-up time for the agency. The revenue flow started on May 1. Assuming this legislation passes, that revenue flow will come to the agency. Therefore there will be a period of time, while the agency is becoming fully operational and the programs are being developed, for the agency to accumulate some surplus. Then the agency will have to plan expenditures that maintain an actuarially sound and consistent program that will achieve a steady flow of investment through the downturn but not deplete its resources.

That is the intention of the act. As we'll find as we get to those sections, we have specifically not empowered the agency to incur a debt or deficit -- because we don't believe that's necessary, and because we're sensitive to concerns and don't want another agency that would create a debt against public revenues.

G. Wilson: With all due respect to the minister -- and I have a great deal of respect for this minister -- that's a bit of doublespeak, because this Crown corporation will be initiated with an immediate demand against the central revenue fund, which is going to effectively indebt it to at least the government that is financing it, unless one wants to look at the agency as one and the same. Secondly, if there are recommendations, between the 15 directors that recommend on programs and the subcommittees -- as we will talk about later -- when there is a downturn in the economy, if a dependency is created through this Crown corporation for employment or opportunities for investment, the government is going to have to come up with the money. If this corporation isn't allowed to carry its own debt, it's going to have to continue to finance it off some fund. If it can't borrow for itself, it's going to have to borrow from government. How else is it going to stay solvent?

Hon. A. Petter: I hear what the member is saying, but perhaps he misses the point. The point is that Forest Renewal B.C. will be charged with the responsibility of maintaining a program of investment that does not incur debt and that takes account of the cyclical nature of the industry, just as a private business that has to provide for ups and downs -- if it's operating effectively -- will ensure that it accumulates surpluses in good times in order to pay for continuity of programs when times go bad. That is the mandate of this agency. That mandate is to achieve its expenditure program in a way that does not entail the need for debt. That means that the agency may be more conservative in its expenditure program; but that's fair enough -- it will be more conservative. There is no provision in this plan for the agency to incur debt, and due to the cyclical nature of the industry, the agency will have to accumulate surpluses when prices are high in order to ensure a steady flow of investment when they are not. We believe that is attainable, and this legislation ensures that the agency operates within those parameters.

G. Wilson: Under section 3(3), where the agent is an agent of the Crown, presumably the minister is saying that it is going to have to accrue some kind of financial assets to be able to provide for ongoing services or operations. Virtually every company operates through the proposition of some kind of debt servicing. In order to operate, one has to borrow, usually from banks or some other kind of financial institution. Given that this corporation cannot carry on-line debt, is the minister honestly trying to tell us that after the initial seed capital, the taxpayers of the province will never again be asked to put money into this Crown corporation? Is he making that commitment to us today?

[10:30]

The Chair: I'm going to allow this question and allow the minister to respond, but I must advise the member that the rules governing committee are pretty specific. In section 3 we're talking about the establishment of Forest Renewal B.C. It seems to me that all the questions the member is raising fall directly under section 10 of the bill. I would just offer that caution: they are legitimate questions and deserve answers, but under section 10, I think. I will let the minister respond, albeit briefly.

Hon. A. Petter: Let me respond in a general way, and then we can revisit the issues more specifically. First of all, if you're referring to the $75 million which comes up later, that is not a contribution from general revenue; that is an advance that will be repaid to general revenue. The short answer to your other question is that the agency must operate on the flow of funds provided for it through this legislation. It does not have the power to borrow. We do not wish this agency to become a large bureaucracy or to establish large amounts of capital investment or structures. It is to facilitate the flow of these funds to communities and initiatives that can be developed through industry, and through existing structures -- community colleges and others, in terms of the skills training component and the value-added sector. The whole purpose of this initiative is not to create another bureaucracy or a bunch of cement in Victoria or Vancouver. It is to provide for the distribution of these funds back into forest-based communities through existing structures that can best invest them for the future of 

[ Page 10562 ]

those communities and for forest renewal. We very specifically want to prohibit this agency from incurring and accumulating debt. When we get to that section, I think the member will find some comfort in the fact that this agency will not be given that power. It is there to facilitate; it is there to design a program. But that program is to be delivered through existing agencies, and perhaps through some that will have to emerge in communities, not through this agency.

G. Wilson: I take your direction on this business of debt and financing. We will get to that, because I don't buy that at all; I think that's just a lot of nonsense.

My question then is specifically on 3(1) and the appointment of 15 directors. If this is just an agency to facilitate the distribution of funds, why do we need to create a Crown corporation and why 15 directors? Why not two, four or six?

Hon. A. Petter: I did answer this yesterday, but I'm happy to repeat it just to bring the member up to speed. Some opposition amendments asked us to expand the board -- something I found a little surprising. We're trying to provide for a board that will be sufficiently large to be truly representative, representing both geographically and in terms of interest those who have a direct interest in the forests and their renewal. At the same time, we don't want the board to become large, unwieldy and costly; we want this to be a small and effective agency.

It seemed to us that the number 15 achieved that balance. Obviously one could have picked another number, but we wanted to resist the notion that we would open this up to become an unwieldy and costly agency. On the other hand, we wanted the number to be sufficiently large to provide for that balance of representation from the various sectors and interests that need to be accommodated in order to have a true partnership agency that can function on behalf of all British Columbians.

G. Wilson: With respect to section 3(2), is it intended then that the Lieutenant-Governor-in-Council appoint one of the directors as chair from a list supplied by the directors for the minister, from council, from cabinet, or are they going to put the names in a hat and pull them out?

Hon. A. Petter: I think the intention will be to find some one individual who will have the confidence of all those who sit on the board and of the larger sector of British Columbians, who has the capacity to act as chair in this kind of agency, who will act responsibly on behalf of British Columbians, and who will have the credibility and the capacity to carry out this initiative.

L. Fox: I have a few questions with respect to section 3. This is, to me, one of the most important clauses of this bill. I spoke with some concern at second reading stage about the setting up of a Crown corporation to take on a responsibility that had, since 1987, been successfully administered through the Forests ministry but carried out by the industry. It seems to me that if we really are concerned about regional reforestation and intensive silviculture, the dollars collected through this legislation could have been easily and perhaps more certainly distributed in the regions by just enhancing the existing programs by that amount of dollars. It doesn't seem necessary to me to have a Crown corporation, when there was already a mechanism within the Forest Act to deliver those programs.

That has got to be the number one question on my mind: why do we need a Crown corporation to do something that we've been doing successfully in the last few years? We've been very, very cost-effective in the Ministry of Forests, whether it be tree-planting, intensive silviculture or whatever. Why didn't we just expand those programs within the ministry?

Hon. A. Petter: I did answer these questions yesterday in response to one of the colleagues of the member opposite, and I really don't want to retread all of this ground. But to make it as simple and succinct as possible, it has to do with two principal concepts: the concept of permanence and the concept of partnership. Through this agency we can ensure that there is a true partnership in which representatives of the various groups who have an interest in the future of our forests can work together in partnership, cooperatively, with an actual role in the decision-making and design of how this investment strategy is pursued.

There's also the question of permanence. The Crown corporation model allows for an agency that can plan not just for a two- or three-year horizon -- or a one-year horizon, as in the case of the normal budget cycle, under all the normal political pressures -- but also for the long term. To quote Mr. Bentley at the announcement: "It's the first instance I'm aware of in my 45 years in the industry of any provincial government coming up with a plan that goes beyond the political cycle between elections." The reason for that is because we have this model. Mr. Bentley or anyone else here could not have said that but for the fact that we have provided, through legislation, this capacity for an agency with some independence -- although it deals with public funds and is therefore a Crown agency -- that can plan beyond the short-term political horizons that tend to preoccupy the normal budget cycle and start thinking in the 80-, 90- or 100-year horizons that we need to plan for a true forest renewal strategy.

L. Fox: If I'm to accept that argument, then I guess I have to accept the argument that the Ministry of Forests doesn't do long-term planning, and hasn't been, and that it can only be done through a Crown corporation. I have some problems with that argument. It seems to me, in my limited experience within that ministry, that indeed the chief forester and the Ministry of Forests have been involved in trying to do some long-term planning for a considerable length of time. To be very upfront, I have a very difficult time buying that argument. Now, if I misunderstood the minister, perhaps he could clarify it for me.

Hon. A. Petter: The problem is not with the Ministry of Forests; the Ministry of Forests certainly does aspire to do long-term planning. The problem is with the political structures, which, quite understandably, look at budgets on a year-to-year basis. The problem is that we have had many so-called permanent silvicultural initiatives in this province that have evaporated within years after being introduced. This initiative goes well beyond them in its scope; but we are determined that it also go well beyond them in its permanence. What seems like a priority today has, in the past, changed.

Let me put it this way: accommodating this kind of priority within the normal budget cycle results in a situation in which, when the government's priorities shift due to short-term thinking around the next election, there's a temptation to claw back funds and compromise so-called permanent or long-term funds. The reason this agency is being established is to make it very difficult for a 

[ Page 10563 ]

government to do that, and to get out of that short-term political thinking.

The problem is certainly not with the Ministry of Forests; the problem is how, in a system which encourages people to think in terms of relatively short-term political horizons, to provide for the long-term commitment that we need to renew our forests. As I said yesterday, many -- industry and royal commissions, including the recent Forest Resources Commission -- have looked at this. The recommendation that has come back is that we need some structural change in order to ensure that degree of permanence. That's why this structural change is being proposed.

L. Fox: I might be able to buy that if the minister can assure me that in 1991, which was an election year, there was less emphasis placed on the reforestation act which was passed in 1987 than there was in 1988. It seems to me that if his argument has any foundation to it, we have to see that there was less reforestation done in 1991 under the act passed in 1987 than there was in 1988. What he's inferring is that there was political interference into the program and that the legislation of 1987 does not work. I don't think the minister can, in fact, substantiate that. But if he can, I'd be pleased to hear it.

Hon. A. Petter: I think this will be my last run at this issue. This is an initiative that goes well beyond basic forestry, basic silviculture; this is an initiative which speaks to a fundamental change. In the past, governments have talked about this kind of initiative. Indeed, they announced initiatives that didn't go this far but sought to go this far; but they foundered. I grant the member that the commitment to basic silviculture and basic forest management is one that is sufficiently well established. While I believe that the commitment of previous governments was inadequate, it did achieve some minimal level from which they could not retreat.

We're talking here about a major new initiative to fundamentally redirect our approach to forestry: to reinvest back in the land; to enhance the productive value of the land; to enhance the timber supply that flows from that land; and to enhance the jobs that flow from that resource, so that instead of getting less jobs per cubic metre, we get more.

In the past there had been a lot of talk about that from governments. There had been announcements made, but they withered very shortly after being made. Part of the reason they withered -- and this is why you hear statements like those of Mr. Bentley and others -- is that there has been a problem. I encourage the member to look at the Forest Resources Commission report on this. There has been a problem in that the political cycle does not provide for the kind of stability and continuity that is required in order for people to have the assurance that once government acts, there is, in fact, a permanent commitment. This initiative does, and that's why it has the broad support of those in the industry along with many other British Columbians.

The Chair: On section 3, hon. member? Could I just caution this member -- and I don't mean to pick the member out particularly, because I think a number of us are falling into the trap. We're canvassing ground here that perhaps, it seems to me, has been adequately canvassed in section 2, which went on for four hours yesterday -- I've just been reviewing the Blues. We're also anticipating debate and discussion of what will fall under section 4 and other sections. So I would just remind members that section 3 deals with the establishment of Forest Renewal B.C., and that's about all it does. I hope the member will heed that caution and conduct his questioning accordingly.

L. Fox: Thank you very much, hon. Chair, for your guidance. Indeed, we are talking about the establishment of the corporation in section 3, and that's exactly what I'm trying to justify. That's the key section, as far as I'm concerned, within this bill. The one area of concern that I've heard consistently around the province is: "Why do we need this establishment?"

[10:45]

The minister just spoke on the principles. He gets no argument from this member on the principle and the intent of this legislation. What I'm talking about is the establishment of a Crown corporation that, in my view, takes over the responsibilities that should be done within the Ministry of Forests. I know that this was canvassed at some length yesterday, but as I said at the outset, at this point I'm not satisfied in my own mind or comforted by the minister that the Crown corporation part of this bill is indeed a need.

I'll just get on to another side of the issue with respect to this Crown corporation and section 3. In this province we have a skills and training ability established within the college network and within industry through apprenticeships. We have all those kinds of things out there in terms of establishing retraining, yet one of the responsibilities of this corporation, as I read further -- and we'll get into it at later stages -- is retraining. The other one is the allocation to reforestation and advanced silviculture practices and job creation.

Earlier the minister said this corporation would have the ability to set up reserves so that we could have a more consistent program. In the statement just previous to this, he said there's a need to set up a structure that pulls it away from the political arena and allows it to have more consistency in its application. I guess, in fact, when you look at the establishment of a board that is done by the executive council.... Well, I'm not suggesting that all of these individuals will be of the political persuasion of this party or government. There obviously will be some biases there; I think that's only natural. We've seen it in every other corporation, at least where the Chair has a pretty good link with the minister responsible. There's no question in my mind that it can still be used at the appropriate times to spend some of those reserves just prior to an election, to create an image in a specific area.

I've had no guarantee from the minister, in the discussions up to now, about how regional representation is going to be considered in the formation of this board. That, as he knows, is a major issue in my region and certainly in the rural parts of the province. They want to be sure that there's some control on a regional basis of how these moneys are being expended and that the moneys collected are in fact going to go back into that.... I'm going to....

W. Hurd: Move an amendment. See how far it goes.

L. Fox: The opposition critic says: "Move an amendment. See how far it goes." I've seen what has happened to amendments over the course of the last two days, hon. member, so I'm not sure that....

Interjection.

L. Fox: Yes, I know.

In any case, to get back to the debate, hon. Chair, my concern is that there should be more specific commitment than what's in this legislation to address those concerns that 

[ Page 10564 ]

I perceive. I'm still not sold, and I know that my region in the province is still not sold, on the fact that this corporation will not be able to be manipulated by the government of the day to advance its own agendas.

C. Serwa: It's rather interesting to get into this debate, with respect to section 3, on the establishment of an entity. It's always strange when we're dealing with a minister who has absolutely no faith or confidence in his own ministry. It's clearly evident in the striving to establish this Crown corporation that that's precisely what exists in the minister's mind.

I guess the great deal of difficulty expressed by the minister in this display of non-faith in the Ministry of Forests is simply that the practical people who are engaged on a day-to-day basis in the Ministry of Forests don't meet with the intellectual approach of the minister. The reality is that a person can be bright but sometimes not very smart. When I hear the comments of the minister with respect to the rationale for the establishment of a Crown corporation.... I suggest that when he was talking about the financing requirements, stability and imperviousness of this Crown corporation to political interference, he was not being very smart about the whole process. We have to be realistic and practical. Referencing the intellectual type of approach, which is great in theory but will not work in actual practice, is a trap the minister has fallen into. There's an abiding faith in his own ability. Perhaps it's well-founded, but I suggest that there is a considerable amount of naivety in the approach toward this particular establishment. It may be well-intentioned, but I've referred in the past to a place to which the road is paved with good intentions -- and it's not a desirable destination.

The reality is that the Ministry of Forests is well-established and able to hold this. The reality, when we talk about the establishment of a Crown corporation.... We can even look at the establishment of the B.C. Energy Council by this minister's government. They found that it is not relevant at the present time. There is nothing more permanent than the good intentions of government, which is chosen to represent the people collectively.

The minister talks about the opportunity for partnership. It appears that the partnership opportunity is to reap resources out of the forest industry and have others in the partnership spend those resources on some social adaptation or modification of society at large. If there was a sincere belief and commitment to forest renewal -- as there has been in the past with the establishment of programs and extensive replanting procedures.... This particular program is ill-founded. The emphasis is on silviculture, as if it's some sort of a panacea. Nobody has extrapolated the cost of this extensive silviculture and the type of return that you would have to get from the end product per hectare. If you look at it on an 80- to 120-year rotational period, you'll find that the economics simply don't work out. It's an exercise in futility.

What we're also seeing with this establishment -- and I'm concerned about this -- is a moving target that the public will not be able to identify. It's an evasion by the government of the day of the responsibility they were charged with by the electors. Perhaps the minister can respond and indicate to me why he is so confident that the Crown corporation that they are going to create is going to be permanent and impervious to political influence -- and not subject to a number of political flacks of your persuasion from a wide variety of sources as a payoff to them and not to forest renewal. Because if you were concerned about not establishing more bureaucracy, you sure as heck wouldn't establish another Crown corporation.

Hon. A. Petter: Let me respond briefly. I guess the member's cynicism is born out of his own experience in government. If the member wants direction on a Crown corporation, I suggest he read the report of a commission established by the previous government, the Forest Resources Commission, which, after deliberating for many months -- indeed, years -- on this matter, suggested such a vehicle. It was the outcrop of one of the previous government's initiatives -- and not a bad initiative, actually, in my view. The Forest Resources Commission did some excellent work and that was their deliberation. If I'm naive, I guess they're naive and the Forest Sector Strategy Committee is naive. Perhaps the member is the only member who is not naive -- I don't know. But if that's the measure, I'll stand with all the naive folks over here and he can stand by himself over there.

I find this notion incredibly contradictory -- that establishing a Crown corporation is somehow undesirable, that the money should go through the regular ministry of government and somehow that is going to make it impervious to political interference. That doesn't make any sense to me. Let me say to the member that I have tremendous confidence in the Forest Service. In my tenure as minister, I have been incredibly impressed at the commitment of Forest Service personnel. What we're talking about here is something that goes beyond the Forest Service mandate, although it will be very closely involved in these initiatives because government is one of the partners. What we're talking about here is a partnership. It won't just be me as minister leading the ministry through the normal channels of government, but partners coming together from various sectors and regions, working together in a way that's going to be far more visible, far more accountable and far less susceptible to political interference than if these funds were simply turned over to one ministry.

I have absolute confidence in the Forest Service and in the work that it does. It is because of that confidence and much of the work of the Forest Service that this initiative has been made possible. In terms of the member's observations about silviculture and other investment initiatives, these initiatives are very much the product of the work done by the Forest Service and the work that's fed into the Forest Sector Strategy Committee, and all of the expertise around that table, working collaboratively together to determine how best to invest in order to maximize the return -- how we do that in a way that ensures the partners maintain involvement, and how we do that in a way that maintains continuity. If the member chooses to call me naive, call me naive, but it's a naivety born out of a lot of deliberation, not just by this member or this minister, but by many people over a long period of time.

The Chair: I'm going to allow this to proceed a little bit longer, but I must advise members that we are moving dreadfully close to the area of the principle and purpose of the bill rather than the specifics. In committee, as we all know, the rules are very specific. We are to focus on what is embraced in the particular section of the bill, and I am having considerable difficulty seeing how it connects. I don't want to impede the flow of debate, but I insist that the debate must be germane to the issue before us.

C. Serwa: I take your advisement, and recognize that while the section may be relatively short with respect to the 

[ Page 10565 ]

creation of the entity, the reality is that there is a great deal of concern on this side of the House with respect to the creation of the entity. The format and the debate has to be such that it has to be fulfilled in this section.

The Chair: Member, please take your seat for a moment, and we'll abide by the rules. Let me just remind you that your difference of opinion with the intent, purpose and philosophy of the legislation is not what's at issue. What we are discussing is your opportunity as a member of this Legislature to ask questions about this bill clause by clause. There are opportunities here to deal with particular issues, the most significant of which was in the purpose section of the bill. Your disagreement with the direction and purpose of the bill does not provide licence to have the debate over again on any particular section of a bill. Those are the rules of the chamber, and I think the member knows them well. I detect that he's challenging my ruling, and I hope he isn't doing that. That is not going to serve our interests well. I would advise members again: please abide by the rules of committee. We're on section 3.

C. Serwa: I certainly wouldn't challenge the ruling of the Chair or the Speaker in this Legislature; that would be unparliamentary, at the very least, and the function of this depends on abiding by the ruling. I'm certainly not going to enter into debate on philosophy and principles, but on the establishment of this entity, hon. Chair.

[11:00]

I will again ask how the minister believes that this partnership will have the opportunity to represent the views of society. If the government is responsible for listening to the views of society collectively, then the minister knows full well that a Crown corporation has a specific mandate and a specific area of responsibility involving public land -- in this case, forest land. Society may or may not like monocultures, for example. The entity may decide that they like monocultures and that that is the most productive way. In the creation of the entity, what opportunity will society have for a voice in the direction? That has something to do with the creation of the entity, as opposed to the retention of the responsibility in the Ministry of Forests.

Hon. A. Petter: Again, it comes up later in the act. There are mechanisms, alluded to previously, for government to provide direction to the agency concerning the general public interest. It's obviously going to be an interplay involving the partnership among the board and the committees of the agency, which will itself be representative of society; the communities and other interests with whom the agency links and delivers its funding; and the government as well as the legislative committee that reviews the business plan. So there are here a wonderful, harmonious collection of opportunities for all the institutions that comprise government and society to work to achieve the appropriate balance that I think the member is referring to.

G. Wilson: With respect to section 3(1), I've heard the minister's arguments about the need for continuity and for trying to remove political interference, and I'm not going to get into the philosophical debate on that question.

If that's the case, I just want to know why the language doesn't say that there would not be more than 15 directors appointed for a term of three years or five years. And if you want to have continuity established through appointment, why would you not set those terms to have half elected on a three-year basis and half on a five-year basis, so they wouldn't all be appointed at one time and there would be continuity within the directorship? That would preclude wholesale dismissal of the board and the bringing on of new directors when the government changes, which is exactly what we saw with a whole series of Crown corporate boards when this government took office.

Hon. A. Petter: I think the member is mixing apples and oranges. The purpose of having the structure is not so much a question of political interference, but to ensure that the natural political cycle -- the three- to four-year cycle of a parliament, of a government, and of the way we as members all think of that -- does not impede long-term planning. Therefore that's a structural issue.

Continuity has to do with the continuity of funds and investment. Clearly, however, there must be opportunities for governments and indeed legislators to influence how the program accommodates itself from time to time. The program itself must have continuity, but there must also be a balance of accountability back to government, and through government to the Legislature, and very creatively -- if we ever get to the section that provides for it -- direct accountability through to a legislative committee. So it's a balance and a tension. But the continuity that we are seeking to achieve through the establishment of this agency is of the commitment to the program itself, in that the program can be influenced by those longer-term considerations because of the security of funding. That doesn't mean that there mustn't also be mechanisms of accountability back. Indeed there must be, and we've tried to effect the appropriate balance.

G. Wilson: So in section 3, the appointment of 15 other directors is purely at the discretion of government. There is a deliberate intention not to establish a term of office for these directors. At the change of government, all 15 directors could easily be cast off and another set of 15 directors brought on. Is that correct?

Hon. A. Petter: The intention is to have an agency that is broadly representative of the public. If government achieves that, I think it will be exceedingly difficult for any future government to interfere in any way with that basic composition. There has to also be flexibility. Different interests may emerge. Groups need to have the opportunity to make changes. A good example is the Forest Sector Strategy Committee, on which some of the representatives have changed because their positions within various groups and sectors that have an interest in the forest have changed. So there's a need for flexibility.

It's our intention that this be an agency that has a broadly representative structure. That will act as the surest form of protection against any kind of cataclysmic interference of a political nature in the composition of the agency.

G. Wilson: I want to get a very specific answer to this because -- talk about cataclysmic interference -- B.C. Hydro was one of the best-run Crown corporations prior to this government coming into office, and there was cataclysmic interference with it. And we've seen what's happened. Is there anything to preclude, in the language of this, and was it considered...? Can the minister tell us two things? Did the minister consider the proposition of appointment of directors for a term of office? If that was considered, was it rejected because it would allow government to have discretion in their appointment and therefore allow, on the change of government, a complete dismissal of 15 directors and a bringing-in of others? Is there anything to preclude a government from doing that, other than public opinion?

[ Page 10566 ]

Hon. A. Petter: The member says "other than public opinion." Like any initiative of government, this initiative will succeed because it has a broad measure of public support and legitimacy. This government has already demonstrated that it understands that the legitimacy of this initiative depends upon demonstrating, in deed as well as in word -- perhaps even more in deed -- that we intend this to be a partnership. And that's what it will be.

It isn't just a question of government. It's also ensuring that the board remains representative of a very dynamic set of constituencies -- communities and things. If communities are to be represented on the board, for example, it may be through elected representatives. Those elected representatives change. There needs to be flexibility, so there is flexibility.

The clear commitment is one of a partnership agency that represents the dynamic, changing, evolving partnership over time of those who have an interest in the forests. This agency will not succeed and have legitimacy unless this government demonstrates that through its appointments. Future governments, I believe, will be very loath to displace that basic principle.

G. Wilson: Okay. I have a last shot at this one. Very specifically, did the minister and/or those drafting this legislation on behalf of the minister consider the implementation of a term of office for the directors? And was it after consideration of that that it was rejected? Or has it just never been considered?

Hon. A. Petter: Everything is notionally considered. But it wasn't given serious consideration, because the nature of the agency is designed to be a partnership that will evolve over time. Therefore to have some kind of fixed term that would give the agency some independence -- not only from government, which is desirable, but from the very partners who are supposed to be involved in the agency -- would have been counterproductive. So in that sense it wasn't considered, because it would have been counter to this notion of an evolving partnership.

C. Serwa: A question on the 15 directors. Earlier, in section 3, the minister alluded to the decision with the selection that it would be a workable board. I think it's a large board rather than a workable board, but that's my own belief. In coming to the conclusion that you require 15 members.... Would the minister indicate the rationale behind the decision to choose 15 members?

And how -- when the minister continues to talk about a partnership -- will the specific choices be made about where these individuals will come from? How many will be from the forest industry, and what sections of the forest industry? How many will be from the environmental, aboriginal and local communities? What is going to happen there? Perhaps the minister can elaborate on the basis of the choice of 15 representatives.

Hon. A. Petter: Again, this ground was well trod yesterday. Let me briefly say first of all, on the question of the size, that the member for Surrey-White Rock indicated yesterday that he thought 15 was too small. Some now say it's too big. So maybe we've found that correct middle point.

The purpose of the agency will be to be broadly representative of all sectors that have an interest in the forest. That means that industry, both large and small, will certainly be represented. The value-added sector clearly will have to be represented. First nations, environmental groups, local communities and workers will have to have representation. That will have to be worked out as the agency is formed. We will want to make sure that there is geographic representation as well as sectoral representation. But that is clearly the intent and commitment: that this be a broadly representative agency. It's obviously going to require some careful discussion and consultation to make sure we achieve that.

Interjection.

Hon. A. Petter: The member says: "Amend it." Amending it in a way that could limit the flexibility to achieve the right balance would be counterproductive at this stage.

C. Serwa: What the minister has just said is consistent with his concept of the partnership. But in the drafting of the legislation, has the minister specifically identified where these individuals will come from? If the minister hasn't, the difficulty is the concern that is out there. In this broadly representative group, only some members will be directly involved. Will they be underrepresented or overrepresented in this general partnership?

The difficulty is that any time you're spending someone else's money, it's easy for members in that group to do so. For my clarification, has the minister specifically identified numbers and where those individuals will come from? Will the industry have a choice of putting forward the large integrated, the independent and the small value-added members? Those are specifics.

Hon. A. Petter: I have no particular numbers in mind, but we have made it very clear to everyone in all the sectors that we are looking to them to propose names and representatives.

I must take issue with the member's comment about someone else's money. This is a public resource. I know the previous government sometimes didn't view it as such, but this is a public resource whose value has increased due to favourable market conditions. As a result, this initiative is taking some of that enhanced public value and investing it on behalf of the public. All sectors with an interest in the forests have a stake in this. These are not the resources of anyone but the public of British Columbia; therefore it is appropriate that they be directed through a public agency.

L. Fox: I want to follow up on a couple of questions and some of the minister's answers to the member for Powell River-Sunshine Coast. He seemed to be assuring that member that this new Crown corporation would be different than the other corporations and the many college boards and so on around the province, and that the independence of this 15-member board would have to be such that when a government changed it wouldn't fire all the directors.

[M. Farnworth in the chair.]

When this government came into power it didn't matter whether the director or the board member was a good, solid board member and had the interests of the province at heart or not. The fact of the matter is that he or she was appointed by the previous government and was fired. That happened right around the province in hundreds of cases. The member standing up and heckling across the floor rather than sitting in his chair used to be the Minister of Advanced Education, and he did that -- in spades -- to very good, community-minded people who were contributing to education. Given 

[ Page 10567 ]

the practices of this government when it took power, how can we have any comfort that this board, without definite terms prescribed to the directors, is going to be autonomous and something that will be out of that control of government?

Interjection.

The Chair: Just so that all members know, the Chair recognizes an individual on a point of order when they rise and say: "Point of order."

On the point of order.

T. Perry: The member for Prince George-Omineca ought to know that what he just said is not correct. No board appointee was fired while I was Minister of Advanced Education. If he can cite an example of that...

L. Fox: I can.

T. Perry: ...then I think he should. But in the meantime, I think he ought to withdraw that comment, because it's grossly unfair and impugns my reputation in a way that is highly unparliamentary -- and it's also not true.

[11:15]

C. Serwa: I was just going to indicate to the Chair that in my perspective, that is not even close to a point of order.

L. Fox: Hon. Chair, I wonder if you might indulge me in putting the evidence on the table that the previous Minister of Advanced Education asked me to put on the table.

The Chair: Hon. member, I would indulge any comments and questions to the minister on section 3. Anything in that, you can do.

Hon. A. Petter: I think I'll make this my final contribution. I really don't know that I can add much to what I've already said, other than to say that if the members are worried that as a result of a change of government -- which, God forbid, I certainly hope doesn't happen in the near future -- there might be some interference with this board, perhaps they would care to table some undertaking, since they have aspirations in that regard, that they would not act in that way.

L. Fox: That's a welcome challenge, I'm sure. We'll look forward to that in the near future. There's no question that there will be a change of government, so perhaps the challenge to the parties would be to come up with that commitment over the course of the next few months.

Let me ask one further question on this section. In all the discussion around this clause over the course of the last two days, the ministers never once paid attention to the fact that we have a very active and good silviculture industry within the province. You know, that's one industry which was not consulted and not represented on the particular group that formulated this plan. The industry itself has complained that they had no input into this forest renewal plan, and I haven't heard the minister give us any assurance that he sees them as a valuable partner in the development of this board. Perhaps he might want to reassure us.

Hon. A. Petter: Well, I have met with the president and other members of the silviculture association and reassured them that all existing commitments to silviculture will not be displaced by this initiative. Clearly that group has much to offer, and I'm sure that their advice will be sought. I don't want to presuppose what that involvement might be. In this agency, as we'll find, there is not only the board but subcommittees, which will look for representatives with expertise in particular areas. We certainly intend to maintain a good line of communication, and we'll seek the input of the silviculture association along with other groups.

[D. Lovick in the chair.]

Section 3 approved on the following division:

The Chair: I'll give members a moment to escape these precincts if they aren't participating in the debate.

On section 4.

Hon. A. Petter: I would like to move an amendment to section 4 that would delete the proposed subsection (1)(a) and substitute the following: "plan and implement a regionally equitable program of expenditures in order to carry out the purpose of this Act, and...." The amendment recognizes the regional nature of the work to be undertaken by Forest Renewal B.C. It is consistent with statements that have been made by the Premier and myself, and it is indeed reflected in the plan that was released a few weeks ago.

I believe it is a very helpful amendment, because it confirms this government's commitment to ensuring that the funding which comes through Forest Renewal B.C. is distributed in a manner that is equitable on the basis of the regions of this province. I know that members have expressed concerns on behalf of their constituents that that be the case. I have given that assurance, but I believe it's appropriate to build that assurance into the legislation itself to provide some further security to those who have this concern, because it is the intention of this government. It also responds to representations that have been made by communities and those in industry who, in the past, have seen governments take the resources out of resource-based communities and funnel them into other parts of the province.

[11:30]

Our commitment under this plan is to ensure that the funds coming from those communities are invested back into those communities and into the resource, and that it be done 

[ Page 10568 ]

in a regional, equitable way. Therefore I am proposing this amendment.

On the amendment.

W. Hurd: I must say that, while I recognize the spirit of the amendment from the minister, I'm completely baffled as to why he would introduce an amendment to the mandate of Forest Renewal B.C. and not seek to reflect that in the board of directors of the corporation. Clearly the concern has been raised during this debate with respect not just to the mandate but also to the makeup of the board, and that it reflect regional diversity in British Columbia. I'm detecting from the minister's amendment a recognition of that concern. But I fail to see how, by simply inserting it before "program of expenditures," regional equity will in any way allay the concerns, given the fact that later in this section, under (b), the plans to which he refers are subject to the approval of the Lieutenant-Governor-in-Council, or the cabinet.

I must confess that while I recognize that the government realizes there is concern out there about balancing the needs of the regions, I fail to see how inserting this particular amendment into the mandate section, section 4, will necessarily achieve that. Other members of the committee may have differing views on that, but I want to go on record again as saying that I would have preferred to have seen that regional equality built into the terms of reference for the board in some way.

C. Serwa: The term that was just moved by the minister in his amendment is very interesting. Perhaps the minister would enlighten me on what he means specifically by "regionally equitable." I heard him say two things -- first, that the forest revenues from a region would be returned to that region. That is one thing. He also said that they would be returned on a regionally equitable basis, which is another thing.

We have regions; we have districts; we have communities. We have the Prince George forest district, for example. It's a very large region. Will the money that comes out of that be returned to that region and those communities? What does the minister really mean by this particular term he has brought in?

Hon. A. Petter: First of all, I think including this amendment in the mandate section, which directs that Forest Renewal B.C. must plan and implement a regionally equitable program, provides the greatest degree of assurance that could be provided that the expenditures -- which, after all, is what the communities are most concerned about -- flow in a regionally equitable way. I think this is the most appropriate place to include this amendment.

In terms of regional equitability, we want to ensure that over the program there is some correspondence, some relationship, between the value that is generated for this program from a region and the value that is returned to it. Obviously, on specific elements of the program, it makes good sense to direct revenues into particular regions to a greater extent. I've given the example of around the Prince George area, where marginal agricultural lands can be brought back into production. I could give you other examples around the province where one wants to make sure that particular investments are steered into areas where they'll produce the maximum return.

I think the regions of the province want two assurances. First of all, they want an assurance that what has happened in the past, where governments have taken the wealth from resources and siphoned it away into other initiatives or into the lower mainland or into the southern part of Vancouver Island, won't occur. I suggest that inherent in the overall program is this direction to reinvest in forest communities and in the forests.

Beyond that, they want an assurance that it will be done equitably; it won't be one region being played off against another, or the value of one region being diverted into another region. What this amendment assures is that as it designs its program of expenditures, Forest Renewal B.C. must take account of the issue of regional equitability and must satisfy itself and this Legislature that its program is one that does, on an equitable basis, return to the regions the wealth that those regions generate.

C. Serwa: I'm having a little bit of difficulty comprehending what the minister is saying. If the minister were confident of what he was saying, rather than incorporating this "regionally equitable" term in there, he would have specifically said in his amendments that forest revenues that come out of a region will go back to that region -- period. He hasn't done that. He uses an ambiguous term, and he hasn't said that forest revenues that come out of a region will definitely go back to the region. I think that was the concern expressed in a lot of the resource-based communities in our province. Obviously the minister is well aware of that concern, and that is why he has addressed it. But he has not given me the confidence that in this section he is really doing what I think he is speaking about, where the funds that come out of the Williams Lake area, for example, go back into the Williams Lake area. He keeps talking about regional equitability. To me, that means that there is a tendency here to create a situation where, for example, funds can go into Port Alberni because of political reasons more than any other reasons. Perhaps the minister can indicate to me why he has chosen this regional equitability, rather than a reference to how the moneys that come out of a region must go back into a region.

Hon. A. Petter: It flows from the fact that equitability is one of the five principles that were announced when the forest renewal plan was announced. Many have made the point that that principle, in their view, ought to be incorporated in the legislation in order to ensure equitability. Obviously, there's a recognition that in making its investment strategy, there will be particular components of the strategy that will speak more to some regions than others -- and fair enough. One doesn't want to so straitjacket the agency as to prevent it from making sure investments are directed in an effective way.

But the principle of regional equitability is an important one, for some of the reasons that the member indicates, to ensure a correspondence between the wealth that is generated from regions and flows into this fund, and the return from the fund to those regions. That's what we believe this amendment will accomplish. It will establish that as a core principle which the agency must take into account and be judged upon.

G. Wilson: I guess the question is: who determines what's equitable? Is it intended that the 15 directors that we just voted on are going to determine what's equitable? Is it the minister who determines what's equitable? Is it the people in the communities who are going to determine what's equitable? I think that I hear the minister saying that this mandate must now be complied with. How is that going to 

[ Page 10569 ]

relate to section 4(3), where Forest Renewal B.C. must comply with any general or specific direction by the Lieutenant-Governor-in-Council? Can cabinet override the decided regional equitability of the distribution of funds? This is quite vague.

Hon. A. Petter: I suppose the best is always the enemy of the good -- I don't know. The answer to the member's question about who will decide is: all those groups will decide, and the legislative committee will decide as well. This provides a measure through which everyone -- government, this Legislature and the public -- can make their determination as to equitability.

In terms of the direction from the Lieutenant-Governor-in-Council, certainly my best understanding of the statutory interpretation would suggest -- although I don't want to anticipate what interpretation the courts might give -- that this crucial mandate of the agency is one that the Lieutenant-Governor-in-Council would have to respect and that its direction would have to be consistent with the mandate of the agency. Otherwise, it would overstep its bounds. I believe that this provides guidance not only to the agency but to the Lieutenant-Governor-in-Council, this Legislature and others -- all of whom will have a role in reviewing and commenting upon the program of expenditures mentioned in the amended section.

G. Wilson: This minister is a lawyer, and lawyers like to deal in words. Let me say that this member is a geographer and likes to talk about regions. So we've got a real problem here.

The notion that Forest Renewal B.C. must do this implies that if it doesn't do this, if it fails to meet that, there is some penalty. That is why I come back to the comments made by the member for Okanagan West, who has a point. By the term "regionally equitable," if the minister is talking about forest regions and if he's looking at expenditures of moneys going back into the forest regions -- because this is, after all, a forest renewal act -- then it would seem to me that an empirical measure could be looked at on an annual basis, regarding what moneys have gone into each region. If the minister is only talking about a subjective assessment or a finger to the air as to who is complaining the most, then this means nothing. Maybe the minister can tell us. Are you really talking about an empirical measure of dollars to forest regions in this? If that's the case, then I would say that it's a good move; but if not, then it really is a political platitude to try to keep peace among people who think they're not getting enough.

Hon. A. Petter: No, it's here to assure people that everything that the government, the Premier and I have been saying, and have indicated through the plan, about the desire to ensure an equitable distribution of these revenues throughout regions is not a platitude. It's in the legislation; it is part of the mandate of the agency. That means it legally defines the scope of the agency's powers.

It's true that it is stated as a general principle, but much of our legislation is; that doesn't make it less effective. Indeed, probably the most effective piece of legislation in this country is the Charter of Rights, and it's defined in very general terms. But what it does do is provide some legislative assurance of the seriousness of this government's commitment to the principle of equitability. There will be any number of opportunities to apply any number of empirical measures through the legislative committee that will scrutinize the expenditure plan, etc. But the determination of equitability will be one that we will all have to make, and ultimately, I suppose, if one wanted to take it to that point, one could ask a court to make it as well.

G. Wilson: My last comment on this amendment picks up exactly on the last comment the minister made with respect to a review of expenditures by the standing committee. Will the minister commit, then -- given that the mandate now says there must be regionally equitable expenditures -- that those expenditures will be reported to this House as dollars expended by region? Is there a commitment to that? There's nothing in here that even suggests that this Crown corporation has to establish a regional analysis. So if there's a commitment to doing that, maybe we can move on.

Hon. A. Petter: Well, certainly to the extent that they can be provided, yes. There may be some provincewide expenditures that are difficult to break down. But it's our intention to provide to the legislative committee as much information as we possibly can, and certainly information that's relevant to the mandate. So to the extent that I can influence the information that's provided to ensure that it's as open as possible in terms of the regional aspect of that expenditure, yes, you have my assurance.

L. Fox: I think I support the amendment, but I want to just clarify it. Not being a lawyer, I have to try to come at it from a different perspective, so I can be satisfied that this is going to address the concerns brought to me by my constituents.

We presently have some inequities in the stumpage formula, in that we have a coastal and interior stumpage rate. Because of that, the interior industry envisions that this new program is going to be less costly to the coastal people than it will be to the interior people. In fact, we're looking at a cost of something in the vicinity of $11 per cubic metre on the coast and $15 per cubic metre in the interior. That is one inequity already in the system.

[11:45]

To satisfy myself that I support this and that it is going to address the concerns that have been brought to me in my constituency, I first have to find out how many regions the minister envisions with respect to this clause. We could have just two regions -- interior and coast -- which would not address the issue. The municipal sector may want as many as 20 regions, because they're concerned about their economies in the regional areas of their communities. What are we talking about in terms of numbers here? That's number one, and then I will go on from there.

Hon. A. Petter: I don't think there is any magic in being a lawyer unless it's black magic perhaps, but the term "regionally equitable" is one that I think all members can understand. Obviously, there are six forest regions. That may be some measure, but I tend to think of the term in a more generic sense. That is, we look at the province as a whole and we make sure that the distribution of funds corresponds to the value being generated from those areas.

In terms of the differential in stumpage, that's simply a function of the varying price and value established by the market for various kinds of wood. I think regional equitability is a broad principle that speaks to all the concerns the member has raised.

Having said that, I'm aware of some other business that needs to be conducted before we adjourn. I would therefore move that the House rise, report progress and ask leave to sit again.

Motion approved.

[ Page 10570 ]

The House resumed; the Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

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

Hon. M. Sihota: May I have leave of the House to make an introduction?

Leave granted.

Hon. M. Sihota: It's a pleasure for me to introduce to all members of the House Ann Hillyer, from the West Coast Environmental Law Association, and Jerry Lampert, from the Business Council of B.C. Both representatives of their organizations are here in the gallery today. Would all members please give them a warm welcome.

Introduction of Bills

ENVIRONMENTAL ASSESSMENT ACT

Hon. M. Sihota presented a message from His Honour the Lieutenant-Governor: a bill intituled Environmental Assessment Act.

Hon. M. Sihota: This is a bill that is designed to better protect the environment of British Columbia. The bill proposes a provincial environmental assessment process that will provide certainty for environmental interests, business and industry, and the public. The bill combines existing processes for the review of major energy projects, mine developments and industrial projects into a single environmental assessment process.

A regulation under the bill will provide for the assessment of major projects in those three sectors plus large transportation, tourism, aquaculture, food processing, water and waste projects, and controversial activities. Copies of this draft regulation are available at the Environmental Assessment Review Office. There will be ongoing consultations with regard to these regulations. The bill provides an opportunity for project proponents, the public, the federal and local governments and first nations to work together to ensure that the proposed projects are sustainable.

Last year, as members may recall, my predecessor did not proceed with the environmental assessment bill so that we could consult further on the legislation and draft regulations. This has been done, and that is in part why Ms. Hillyer and Mr. Lampert are here to join us as we present this bill. The consultation process has included representatives from industry, environment groups, labour, local and federal governments, and first nations. This bill will promote sustainability by protecting the environment and fostering a sound economy and social well-being for the people of British Columbia.

Bill 29 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Hon. M. Sihota moved adjournment of the House.

Motion approved.

The House adjourned at 11:52 a.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The House in Committee of Supply A; G. Brewin in the chair.

The committee met at 10:14 a.m.

ESTIMATES: MINISTRY OF TRANSPORTATION AND HIGHWAYS
(continued)

On vote 55: minister's office, $420,000 (continued).

D. Symons: I have to find out where I left off yesterday. I think we were under operations, and the total line was $20 million more. I think we've discussed all that.

[10:15]

Now we're on STOB 10, under operations. The one thing I note there is that travel was up three times the original estimate last year. I'm not sure if the restated one, which I don't have here, would indicate that the figures were closer. The restated one does come out closer. Again, what you might enlighten me on is why the restatement should increase the travel by quite a large factor. The restated relationship to the new figure for the coming fiscal year seems to be somewhat in line, but between the original and the restatement for the last fiscal, there was a big jump. Could we have some explanation as to why that travel portion went up considerably?

Hon. J. Pement: Again, this is the transfer from capital over to operations -- that $40 million. The staff transfer is a sort of interministry transfer. That comes up from the capital side, and includes the travel cost.

D. Symons: If I look down on that same STOB, under capital construction, I find that last year it was $2 million; in this year's estimates it's down to roughly $600,000. You're saying that part of that $2 million is now picked up in restatements; it's in here somewhere during the year. Okay, that follows.

With the increased salary costs in the original estimates, one would expect that the utilities and supplies under STOB 50 would also go up, but this year they're one-quarter of last year's. I'm wondering how you managed that reduction. When salaries have gone up and people have been transferred in there, you would think their supplies would have gone up rather than down.

Hon. J. Pement: Actually, that area is up at this time with the movement of staff through to the other area, and again, it's through the restatement of the estimates.

D. Symons: I'd just like to take another stab at it, because the original figure last fiscal year was over $3 million. This year I note that it's down to a little under $800,000. Was it put down in the restatement process? There's been a considerable drop from last year to this year. I don't have the restatement figures in front of me, but it seems that there's been a big drop. I'm just curious as to how your supplies, utilities and so forth can end up taking such a drop when you 

[ Page 10571 ]

indicated earlier that the staff has been increased because of moving people from capital into the operations line.

Hon. J. Pement: I'm going to have the deputy go through this to agree.... Again, it's the restatement of the estimates that is causing some difficulty, so we're just going to go through some of these numbers with you.

V. Collins: As we've indicated in the past, with regard to this subvote as well as the others, there has been considerable restatement of our estimates relative to last year. To reconcile the numbers that the member is asking for, it would be necessary to go through line by line. When we accumulated all of those, in excess of $2 million came out of this code 50 as a result of restatement. If we compare on a bottom-line basis after restatement, $82,000 more was actually spent in the operations subvote than previously. But if the member would like a reconciliation of all those line items, the pluses and the minuses, I'd be happy to go through that.

D. Symons: We're looking at the total figure of approximately $400 million. Is it there at the bottom of STOB 50? You're saying that overall spending is basically the same, minus.... Could you give me in writing, at some future time, some of that information, rather than take the committee's time now? I'd appreciate that so that I can see how these things are bouncing around, because I'm going to ask some general questions on the restatement later on. It would satisfy me if we could have a bit of clarification of that.

Hon. J. Pement: We'd be happy to provide a written statement to clarify those issues.

D. Symons: That might answer my next half-dozen questions also. The next one was in STOB 68, also under operations. I notice an increase from $250,000 last year to $4 million, and that seems like a large jump. I suspect there's going to be a restatement here, so if you could just tell me what line the extra almost $4 million being budgeted for that came out of, I could probably figure out the rest myself.

Hon. J. Pement: Actually, this is an area in which there is an increase with regard to computer enhancement programs.

D. Symons: Well, I understood that a few years ago there was a quality assurance program put in, and I would have thought that all these things would have been updated and upgraded prior to this time. That's a fair increase there.

Anyway, let's take a look at the next line, highways maintenance. Again, I notice that the salaries have remained much the same, but your professional services figure in STOB 20 has almost doubled. The salaries portion of the line appears to be similar to that of past years; taking into account inflation and other things, that seems fairly reasonable. But why would the service part go up by a considerable amount?

Hon. J. Pement: Again, the majority of this is restatement. There's $59,000 in professional services.

D. Symons: Restatement from where? I wonder what you've moved into maintenance from some other line and whether or not, if it's a restatement, that amount of money for professional services is coming from another area where you used to get professional services. What has now moved into maintenance and what's happened in maintenance that would entail doubling the professional services you had before?

Hon. J. Pement: Two areas have been moved from highways operations into maintenance: the transfer of electrical utilities and the manager and staff of maintenance programs.

D. Symons: I thought professional services would entail people actually hired from outside the ministry. Would these tasks not usually be performed by ministry officials and therefore still have to come from some other line? I don't see the corresponding drop elsewhere. I would also be curious as to why it now comes under the maintenance line. It would seem to be a way of changing the books so that certain lines look smaller, but basically the work is still being done in the same way it was before.

[10:30]

Hon. J. Pement: Basically, what we've done with these two areas that I talked to you about -- the transfer of electrical utilities and maintenance programs out of highways operations into the maintenance area -- was to put those programs closer to the area they really correlate with. Electrical is signals and that sort of thing; therefore it's more in the maintenance area. That's the reason for the move.

D. Symons: Would those tasks then be performed by the maintenance contractors who have been hired in the various districts, or would these be contracted outside the contracts these people have been assigned by the ministry? Basically I'm asking if it is an increased workload on their contracts.

Hon. J. Pement: These are not put onto the maintenance contractors; these are outside contracts. Sometimes they're with B.C. Hydro in terms of some work being done -- and other firms as well.

D. Symons: Last year your predecessor initiated a study on the maintenance programs in the ministry and on privatization. I believe it's the Burton report, and the minister has received that report. Where would the costs of that appear in the estimates? I assume they would have been budgeted for last year. Can you give us a figure for what the Burton report cost the ministry?

Hon. J. Pement: This type of report would be through administration costs.

D. Symons: Do you have a figure for the cost of that particular report?

Hon. J. Pement: The total for this report, which right now is in draft form, is $74,000.

D. Symons: When will the report be made public? If it's in draft form, I assume the minister has had it. From my understanding, she has had it for a few months now. Will it be made public in the very near future?

Hon. J. Pement: It will be made available as soon as possible. It's still in draft form and will be a cabinet submission.

D. Symons: I should have asked this question a little while ago to clear something up. In looking at the explanation of the various STOBs, I notice that STOB 50 

[ Page 10572 ]

includes vehicles. That seems to come under operating costs, but STOB 75 also includes vehicles in its description. What's the distinction? Why would some vehicles fall under one and some under the other? Just to clear it up in the future, is there a reason for that? That's a general thing throughout the book, not just in this particular ministry.

Hon. J. Pement: Code 50 covers the daily costs of operation and maintenance, and code 75 covers the acquisition of vehicles.

D. Symons: Would STOB 50 also include rentals and that sort of business as well?

Interjection.

D. Symons: Okay, fine. That will save me asking later.

Salaries and benefits under the rehab line have gone down by about 25 percent. That's going from the originals; I don't think your restatements have affected that line to any great extent. Yet I notice that the office and business expenses in STOB 30 have gone up by 35 percent. When your salaries and benefits go down, it would imply either a reduction in salaries or a reduction in staff, yet business expenses for operating that department seem to have gone up by 35 percent. There seems to be a discrepancy here, when one goes down and the other goes up.

Hon. J. Pement: Actually, our increase is $88,000, which doesn't equate with the 35 percent. These figures were based on the actuals of what our costs were in 1993-94.

D. Symons: Which has gone up by that? Is that the salaries or the operating costs? My figures had gone down, but I wasn't using restated or actuals because I didn't have access to those. Can you give me a rough idea of what each of them were -- just round figures? I had the salaries down by about 25 percent and the office and business expenses up by about 35 percent. This is under rehabilitation. It was $11.9 million last year, and it's $9.1 million this year for salaries and benefits. That's about a 25 percent drop. I was comparing that to STOB 30, which is the other one for office and business expenses.

Hon. J. Pement: I want to clarify the last answer I gave. The $88,000 is with regard to office expenses in maintenance, so that's clarified. In rehabilitation our salaries are down by $2.2 million, and our office expenses are basically the same budgetary amount.

D. Symons: If they are the same, then that must be after a restatement. The figure I had from last year's books was $95,000, and now it's $135,000. So that's where I got my 35 percent increase, but there has been some restatement in that.

If we go to STOB 40, I notice that you have approximately $600,000 worth of advertising this year, and I'm very pleased to see that there are no ads this year. I'm just curious: there's nothing -- not that I'm suggesting that you go out and do a lot of advertising -- budgeted under there, yet last year you had some.

V. Collins: Under rehab?

D. Symons: This is still under rehab. Did you not have $584,000 last year? Did I read it wrong? My mistake, sorry.

Hon. J. Pement: We didn't have anything budgeted last year or this year in that STOB for rehabilitation.

D. Symons: I suspect my finger must have slipped from line 40 to 42, because I see that this year you have $500,000 budgeted in line 42 for statutory notices. That is similar to the figure I had in 40. I'm sorry for that.

Where does the close to $13 million in recoveries that we find in STOB 97 come from? I'm curious that we haven't had recoveries under rehabilitation before, and this year we are managing to bring in $13 million. That's a good feat.

Hon. J. Pement: The $13 million is SHIP, the strategic highway improvement program; this is federal funding.

D. Symons: That was the question I was about to ask later, when I get into federal-provincial ones, so that answers that one. Therefore the roughly $30 million that is being budgeted year by year for provincial and federal.... The federal contributions will appear in the books here. And is the $30 million that the provincial government is putting in also going to appear under rehab or capital construction in these lines? Do they appear in the books also?

[10:45]

Hon. J. Pement: Yes, that's correct.

D. Symons: I'm jumping ahead to some questions that I was planning to ask this afternoon. Basically, if the figures we're reading in these two lines -- rehabilitation now and capital construction next -- are roughly the same as they were last year, then the spending on this infrastructure program with the federal government doesn't represent new moneys at all. It's simply what we have been spending in the past on rehab, and it's called a shared program, but it's not new moneys.

Hon. J. Pement: I just want to go back to the SHIP program. The recovery of the capital dollars will go back to the Transportation Financing Authority, just so you're aware of where that type of recovery will go.

As for infrastructure money, again, that's through to the Ministry of Employment and Investment. But prior to that, there were the revenue-sharing programs with the Municipal Affairs ministry, where the moneys had originally come from with regard to that municipal program. It will now be looked at in the infrastructure program. These are new moneys in the sense that there are more moneys coming in from the federal side of it. I think that's looking at trying to stretch our dollars further so that we can do other projects.

D. Symons: What I was getting at is that it seems that the overall spending, in spite of the fact that we're now getting $13 million from the federal government, is basically still the same. We're getting $13 million, but if you come out with the same number at the end of the line, the provincial portion that normally went into this seems to have been cut back by $13 million.

Hon. J. Pement: First of all, with the SHIP program, that is a different envelope; it's not the infrastructure one. Those are two separate programs, so it's not a case of taking from the SHIP program and putting it in the infrastructure. Regarding the total of highways work to be done, we're looking at capital rehab as well as the infrastructure dollars, which will show that we are putting more money into infrastructure in all ministries.

[ Page 10573 ]

D. Symons: I don't know if I follow that, but let me take a bookkeeping lesson. When we add these numbers across and we come up with the total expenditures for the rehab line, we have $139 million and a bit as the final figure. Going back a line, we have total recoveries. I gather that all these numbers would add up to $13 million more than $139 million. So the number we have at the end includes the $13 million that the federal government is putting into assisting with some of the rehab programs. I will get into those particular programs later. The final figure includes the $13 million that the federal government is giving and is approximately 20 percent less than the figure I believe we had last year. We have $13 million found money from federal government. Our overall spending, including the found money from the federal government, is 20 percent less than it was last year. We seem to be cutting back on rehabilitation, which is a vital and necessary part of the highways programs in this province.

Hon. J. Pement: The rehab dollar amount is $139 million. The SHIP program amounts to $12.7 million. The total comes to $151,830,000. There are some major rehab projects that will also be funded through the TFA.

D. Symons: Earlier you said that overall it's an increase in the ministries. I gather that the Transportation Financing Authority and B.C. 21 -- where some of these moneys might be coming through other federal-provincial programs -- are not line items in the ministry. In that sense I'm not sure if your statement about an increase in spending this year on those items is correct. I see that the provincial commitment to rehabilitation programs in this province is down from last year by 20 percent.

Hon. J. Pement: In my opening statement I talked about the total of the capital projects we have and the fact that there will be more money spent on highways and rehabilitation this year in total. In the TFA there's also a rehab portion for $39.4 million.

D. Symons: I'll be looking at that later.

I'm reading from Hansard, July 16, 1990, where the hon. member for Nanaimo was stating to the then-Minister of Transportation and Highways during their estimates:

"We have not injected the kind of capital we need to maintain the system at the level it ought to be. The Delcan study, I'm sure, Madam Minister" -- it happened to be a Madam Minister at that time -- "you'll recall the study, effectively told us that the transportation infrastructure was something like a basket case and would cost us literally billions of dollars to bring it up to the level it ought to be at."

That study, the N.D. Lea study, which was done in 1988, concluded that the proper highway rehabilitation would cost about $250 million a year. My concern here is that I have not seen the kind of money spent on rehabilitation in this province, when we go back over the last few years, that would mean we're keeping the infrastructure up to the level it ought to be. I don't see the figures I would like to see as far as rehab goes in this province.

If we take a look at the 1987-88 fiscal year, $120 million was spent on rehab; in 1990-91 it was $162.9 million; and in 1991-92, the first year of this government, which we shared with the previous administration, it was $180 million. At least we're getting closer to the $250 million minimum required to maintain our infrastructure.

Then we go downhill from there: for 1992-93, it was $173 million; for 1994-95, the figure we have in the book is $139 million, and you tell me the federal money added to that brings it up to $152 million. So the ministry's commitment to rehabilitation seems to be down considerably, roughly to 50 percent of what the Delcan study implied was needed.

If we read further we find that the Peat Marwick report, which this government commissioned when it took office to show where things were going in the province, came up with the same conclusions. There are a number of factors involved. The Peat Marwick draft report of January 15, 1992, said:

"Many of the province's highways are reaching or have reached their design lifespan and are deteriorating rapidly and losing their effectiveness. Increased traffic and axle loads are accelerating the wear on the roads. Many bridges are wooden or at least 40 years old and will require replacement. Many bridges were built before today's earthquake-resistance standards were in place and need to be retrofitted. Many bridges have load limits which restrict the efficient movement of goods....The matter of maintaining the roads and bridges was addressed in a value-for-money audit by the auditor general of British Columbia. He did not comment on the amount of funds required, but concluded that better information is required to make appropriate decisions" -- and an information-gathering system is now in place. "He said: 'The ministry is just starting to evaluate systems that will manage the information needed for making investment decisions about roads and bridges on a least-lifetime-cost basis. At present, there is no assurance that the infrastructure is being protected on a least-lifetime-cost basis'."

Hon. minister, I'm suggesting that that is the problem today. The ministry, although they have these reports -- one prior to them taking office, so they had it when they were in opposition; one commissioned by them immediately after they took office, which is now two and a half years ago -- has not moved in the direction of looking after our highways. It's not a case of building new highways; it's a case of maintaining the highways that are already there so that we don't lose in the process and have the huge costs of rebuilding those highways in the future.

Hon. J. Pement: Certainly $250 million would be a good figure for us to look at in terms of a top-dollar figure for rehabilitation work. I'll say to the member that we are dealing with a deficit, as our Legislature knows; we are working as best we can with the dollars that we have.

Our total dollars in rehab, inclusive of SHIP and the TFA, really total $191 million. So in actuality we have not gone down from the previous year. As you recall, in terms of identifying the works that need to be done throughout the system in the province, we talked previously about computer programming and the increase in those programs. Those programs include programs that will identify the different needs within the system and how we can address and prioritize those needs. So the increase for those types of programming will have a value in the future with regard to identifying the priorities and the needs in terms of rehab work and capital works that need to be done.

We also are looking to the federal government for some responsibility with regard to some of our highway systems, particularly with regard to trans-Canada systems. That's another area that we've been pushing for in the national highways program. We're looking at somewhat limited dollars, which I think we all recognize is a concern of all British Columbians. However, we're also looking at how to partnership those dollars. The Transportation Financing Authority is looking at capital projects and major rehab projects that we can finance and see the benefits of for the economics of the future.

[ Page 10574 ]

D. Symons: I still have some concerns in that area. It seems that if we don't put in the money needed to maintain the infrastructure at the level needed -- and that figure of $250 million in the Good Roads Cost Less study seems to be an accurate figure, or close to it; it may have become more in the years that have passed since that report was done.... In fact, I have an admission from the previous Minister of Highways. He stated on April 23, 1992, in Hansard: "...we have enhanced slightly our rehabilitation budget in order to take proper care of the infrastructure we have.... We have, frankly, not provided enough to even do that task properly." So we seem to have an admission on the part of the previous minister that we're not doing it properly. It seems it's a continuation of not doing it properly.

[11:00]

The other concern I have is that we lose in the long term if we talk about the fact that we have financial difficulties and that's why we can't put into it what we have. In the long term it's going to cost us more. What we're doing is mortgaging the future by not paying the piper in the present. In doing that, we're going to end up having more difficulties in the future. If we add your figure of the approximately $40 million that is going to come from the Transportation Financing Authority..... That's money borrowed outside of the ministry; it's borrowed money that's supposedly going to be recovered in who knows what manner in order to be self-liquidating. That money is hanging over the heads of future taxpayers in this province.

We have a double jeopardy here: first, we have borrowed money to pay for some of the work to be done now; second, the infrastructure is deteriorating, which is also going to impact on taxpayers in the future. I am concerned that unless we address the problem year by year and somehow get it in hand, we're really creating some problems for future governments in this province.

Hon. J. Pement: In terms of the concept of paying the piper, I'll remind you that one would definitely like to pay as one goes. The hon. member pointed out yesterday that the past government paid as they went, which is not so if you take a look at the deficit this government had to deal with when we came into office. It was not paid.

What development of the Transportation Financing Authority has done is to take a look at the needs of the infrastructure of this province, recognizing that there are economic benefits of doing it today and not tomorrow, and that through revenue streams, it can be financed to ensure we can meet the capital infrastructure needs of the province. There are economics in the future, and if you take a look at your statement, you're contradicting yourself. On the one hand, you're saying you want it; on the other, you're saying you don't want to pay for it. I really don't know how we can accommodate you on that.

We have to identify what our problems are. We have a system that goes back to the fifties and sixties, and we recognize that past governments haven't kept up with meeting the needs of that system. We're trying to do a catch-up. It's economically difficult in these times, and I think all British Columbians recognize that. We therefore prioritize. We look at traffic safety issues and at the economic side of them. Considering the dollars we work with, I think we're doing a fairly good job.

D. Symons: I find it interesting how the minister differentiates between the previous government, which used to deficit-finance some of these things, and the fact that we're going into a Transportation Financing Authority that's borrowing money against some future revenue streams. It seems to me that the a government would have to pay back that deficit through some future revenue streams. I'm not sure there's very much difference between the two. One's a deficit and the other's a deficit, as far as I can see. The money we're spending now has to be collected in the future, one way or the other. To call it a Transportation Financing Authority, then move it off the books of this ministry and put it somewhere else so that it doesn't appear as part of this year's deficit is nothing but cooking the books, in a quackery sort of manner, to try to fool the people of this province that we're somehow not running the deficit up.

The Chair: Excuse me, hon. member. You're impugning motives. I'm not sure that "quackery" and such words as that are entirely appropriate.

D. Symons: I think it describes precisely what's going on.

The Chair: You may have some dispute with how the numbers are written, but....

D. Symons: I was going to move on to another one, but that's fine.

Hon. J. Pement: There is a difference between capital financing and deficit operations and funding. When the estimates come up for the Ministry of Employment and Investment, it would be best to talk to that minister on financing of capital projects, and it will be made clear to you that the financing is set up in a very commonsense, upfront and open manner. It's a far better way of financing our system and of recognizing and meeting those needs, as I said, today rather than tomorrow.

D. Symons: I will indeed be speaking to the minister when he gets up and asking him about B.C. 21 and the Transportation Financing Authority.

In Good Roads Cost Less, it says that 1,000 kilometres per year need to be rehabilitated. That comes up to this $250 million we talked about earlier. We've been falling behind that each year as funding shortfalls accumulate. How many kilometres of road are being funded for rehabilitation this year?

Hon. J. Pement: In rehabilitation, we are looking at repaving and other projects. We don't have the numbers right now for what we're spending per year or on how many kilometres per year. We would need to know specifically which areas you want us to look at in order to give you those numbers -- repaving, other upgrading, widening, alignments, that sort of thing.

D. Symons: I am just going by the comment in Good Roads Cost Less that 1,000 kilometres need to be rehabilitated one way or the other. If we use the guidelines in that report for what we mean by rehabilitation, and if you can give me an idea of the moneys you're putting into rehabilitation this year, we can see how that translates into kilometres to correlate to their 1,000 kilometres. I think that might involve going back into something, so I would be pleased to have that given to me sometime in the future, so as not to take the time to do any arithmetic right now.

I have just one other question on that business. Is the amount of money that has been dedicated in this year's estimates to rehabilitation -- and you're saying some is from the Transportation Financing Authority -- based on highway needs, or is it based on the funding available?

[ Page 10575 ]

Hon. J. Pement: We're always basing our projects on highway needs, and we look to get that work done within the funding available. It's really a case of looking at the infrastructure in each region of the province, identifying each region's priorities and bringing those forward for a budget. Then we submit our budget. We work at trying to meet the needs accordingly.

D. Symons: Carrying on in the same line with rehabilitation, the Public Accounts Committee, in discussing the auditor general's report on protecting roads and bridges, heard of the need for the balance between maintenance and rehabilitation to achieve this thing they call "least lifetime cost." Mr. Morris Sydor from the office of the auditor general said something to the effect that once a road or a bridge is built, keeping it serviceable on a least-lifetime-cost basis requires coordination between maintenance and rehabilitation. The right decisions need to be made at the right time. Spending too much may waste funds, while spending too little may lead to more rapid deterioration, thereby increasing future costs. Spending the right amount at the right time will minimize costs and contribute to a least lifetime cost. I am concerned that that's not really occurring, because somewhere there's a decision being made based on the dollars that are being committed to this and that, and it becomes a political or an economic decision based on where you have decided to put your resources. I am just saying that our roads are deteriorating because we're having a shortfall in there.

In relation to that comment, another concern I have is that more things now seem to be expected from maintenance that were previously covered under rehabilitation, when maintenance was covered by the Highways ministry rather than being contracted out. Again, I'm wondering if we're not getting into problems here in the distinction between rehabilitation and maintenance. Maybe more of it isn't being put under the maintenance program -- filling potholes -- when we're getting to the stage when that road really needs to be rehabilitated rather than patched up.

Hon. J. Pement: Just to remind the member, maintenance is identified as the day-to-day upkeep of the system. At some point within that scenario of upkeep, we look at the reinvestment of more major works money into the system. The identification of repairs is done on a regional level through visual inspection and taking safety issues into account.

I'll take you back to the computer programming that is now coming on stream. That programming will help us identify even more quickly areas that we should be looking at more closely, so that the priorities are really identified well and dollars are not wasted on doing something that we don't have to do.

D. Symons: I'll skip the next section, which is just more chastising of the ministry for their shortfalls. I'll go on to a question that gets into specific ones, because I think there is a line that is not firmly defined between maintenance -- I mentioned earlier filling in potholes and some shoulders that have washed away, that sort of thing -- and the rehabilitation and resurfacing of roads. I have some concerns, and they have been expressed to me by other people as well, that there are some portions of the province where what we should really call patch-up maintenance moves into the rehab stage.

In this province there are four of what we'll call hot-in-place trains for replacing and redoing the surface. These will add five or so years to the life of a highway. They seem to be greatly underutilized. What we need is a regular and adequate program of using them, firstly, to extend the life of our roads, and secondly, to keep these firms in a viable position so that the machinery will be there to do the job when we need it. As I mentioned before, if we have high and low years, we're going to get into real problems having companies out there that will have the equipment for doing the jobs when we need them. It's basically a win-win situation if we can level this out, keep these firms working and have the equipment there, because we have roadbuilders in this province who are hurting.

[11:15]

The previous minister made a comment on April 23, 1992, which was: "...we are not undertaking any new major projects in our ministry -- for that matter, any new minor capital projects." What we had in those years was basically carrying out only those projects that had been committed to by previous governments. We've had two years of not doing what has traditionally been done in the past. There has been a continuation of capital projects, and those also involve -- I guess to some extent -- utilization of this equipment that is used in rehabilitation.

I am wondering why the government can't get into a program where there is more continuity year to year in doing this, so that companies will have some idea of what sort of equipment is needed when they bid on these projects. That way we can get the best use out of the equipment in the province, and it would be good for the province, good for the government and good for the companies.

Hon. J. Pement: These pieces of equipment are really quite amazing and certainly have added value to the system. First of all, I want to remind the member that when we do works, we do them based on need and priorities. That's the reason why we use equipment of this sort. Last year we did 500 lane-kilometres, and we will be doing the same this year.

The ministry has been a co-sponsor of ensuring the expansion of this system throughout Canada, because it is so good. I want to remind the member that this equipment is used only in rehabilitation and not capital works.

D. Symons: That's 500 lane-kilometres last fiscal year. What is the projection for the amount of use you'll make of those hot-in-place machines in this fiscal year?

Hon. J. Pement: It's the same.

D. Symons: I had another quote here which I was going to read, but I think I'll move on. It was from the member for Cowichan-Ladysmith, who was chastising the previous government for its lack of commitment to the rehab programs. I was just going to hit you with your own member's statements, but I'll move on. I will come back to some of the rehab problems later, but I think we've covered most of those.

Under capital construction, last year we voted a total of $96 million in that line, but only $70 million was spent. I'm just curious. Something is wrong here, because my figures don't match with what I'm looking at in the book. I'm wondering what cuts or postponements were made. Is this a restatement in here? I'm not sure, but I think that last year we voted -- or was it the previous year? -- $96.2 million. This year it came out to $70 million at the end of the year. I'm looking at estimates a year ago, and then I'm looking at the left-hand figure in the capital construction line, which I suspect is the restated figure at the end of the year -- $70 million. So about $20 million was initially budgeted last year 

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and didn't get spent. I'm wondering if you could tell us what projects that were budgeted for weren't carried through with.

The Chair: Hon. members, that is a division call. We will have to recess at this time and come back after the vote.

The committee recessed at 11:20 a.m.

The committee resumed at 11:33 a.m.

Hon. J. Pement: You are looking at the restatement, and moneys with regard to the TFA.

D. Symons: Thank you. We discussed this in the short break. There will be many other items across this line that were traditionally done through the ministry. Though responsibility for capital construction will now fall to the TFA, I feel that things to do with transportation and the capital construction of highways belong in the ministry rather than somewhere else. Such is not the case at present. Perhaps we will have to wait till some future time when it can come back home.

I note that the base salaries and benefits were down marginally this year from last, but the supplementary salary costs are about three times as much. The TFA could account for the drop in the base salaries. But why should supplementary salary costs go up? If you're taking responsibility for capital construction away from the ministry, I would think that supplementary salaries also could drop.

Hon. J. Pement: First of all, in the capital portion of financing capital projects and highways, TFA finances capital projects. This ministry still has the responsibility of identifying and carrying out the major work of those projects. We haven't lost that responsibility in any way. With regard to the supplementary costs, they're actually down from $5.5 million to $1.7 million, again having to do with the restatement.

D. Symons: I must have found the wrong figure again, because I had it up by a considerable amount. Unfortunately, this sheet I was given for the original estimates doesn't have an entry in that particular line, so that doesn't help. We'll just have to leave that for the moment.

I assume that the same sort of thing will also account for the professional services in STOB 20. Can you tell me whether the supplementary salary costs in STOB 20 are for people who are hired...? What constitutes a supplementary salary cost? Also, I suspect if you have the TFA doing things, you might be bringing people in rather than having them on staff, which could affect your professional services. What is the distinction between STOB 2 and 20?

Hon. J. Pement: STOB 2 is for such things as shift differentials, people with first-aid tickets, that sort of thing, and STOB 20 is for the actual buying of the professional services.

D. Symons: I notice in STOB 30 that your office and business expenses seem to have doubled, and yet you were telling me earlier that because of transfers into the TFA we've had some slight drops in staffing. Why would the office expenses go up in that way, and are these restatements? If so, I would think it should be reduced rather than going up.

Hon. J. Pement: Again, we'll have to look at the work that's going to be done this year. We have an increase in capital programs from $145 million to over $350 million. Therefore we have to have the support within our offices to do that. But that number includes basic office allocations as well.

D. Symons: We're nearing the end of the financial portion of this interrogation. The total operating costs, I note, seem to be up by roughly 75 percent, and they're shown just after STOB 65. I'm wondering, again, why there is an increase if we're moving things into the TFA. Last year operating costs were $23.9 million, and they are now $42 million. Why?

Hon. J. Pement: I'll remind you that we are having an increase in our capital program this year and that these costs are actually recoverable to the Transportation Financing Authority. We get the pleasure of spending the money and transferring it over.

D. Symons: The increased costs of doing the construction are going to turn up in STOB 99 a little later on, I suppose, with the recoveries from there. That may answer some of the other questions.

I note in STOB 71 that our capital roads costs and so forth have doubled. All that is increased capital spending, because in the past years we've spent virtually none on capital construction. Now you're upping it, but it is being financed in a different manner. The figures are here, but it's going to be a negative figure when we come into the STOB 99 recovery. I'm assuming, in STOB 99, that this represents the recoveries from, or the moneys to -- whichever way we want to put it -- the Transportation Financing Authority's contribution toward the Highways ministry capital costs. Is that correct?

Hon. J. Pement: That is correct.

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

Motion approved.

The committee rose at 11:44 a.m.

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