1994 Legislative Session: 3rd Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
MONDAY, MAY 30, 1994
Afternoon Sitting
Volume 15, Number 21
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The House met at 2:07 p.m.
Prayers.
F. Gingell: Mr. Speaker, it is with sadness that I rise this afternoon. Last Saturday, Tom Goode died -- a relatively young man. We met in 1964 when we were both elected to the Delta School Board. Tom went on to become the Member of Parliament for our community. He served as mayor of Delta and on many community organizations. Tom will be sadly missed. His daughter, Caroline Welling, is a legislative intern with us this session. I ask that the House join me in sending our sincere condolences to his family.
F. Randall: I would like to announce the passing of a former mayor of Burnaby, Tom Constable, also on the weekend, due to cancer. Tom had served as mayor of Burnaby for about six and a half years and also as a councillor for about three and a half years. I spent about four and a half of those years working with him on Burnaby council. Of course, as most mayors do, he served on numerous committees. Certainly I want to recognize his contribution as an elected person. We all know it's not an easy task.
The Speaker: The Chair will undertake to send condolences to these respective families on behalf of the hon. members.
J. Beattie: In the gallery today are three constituents of mine, Joan and Ron Mason and their daughter, Diane. They've been in Victoria this past weekend to get their volunteer training for the Commonwealth Games. These three people are avid and active volunteers in my community. I've had the pleasure of working with all three of them. They're certainly a great example of British Columbians who involve themselves in the community. I ask the House to make them welcome today.
Hon. G. Clark: It's my privilege today to introduce to the House the Hon. Rosemary Varty, secretary to the cabinet in the state of Victoria, Australia. I ask all members to make her welcome.
S. Hammell: I'd like to introduce Ms. Simmonds, a teacher, and grade 7 students from K.B. Woodward Elementary School and their parents. They are a French immersion class whose tour this afternoon is being conducted in French. I'm making this introduction on behalf of the Minister of Housing, Recreation and Consumer Services. Would the House please make them welcome.
G. Farrell-Collins: I received clear instructions this morning from my parents that I wasn't supposed to introduce them in the House, so I won't. But I will introduce some good friends of the family, Don and Donna Parr, visiting from Moose Jaw, Saskatchewan -- a great city -- and my sister, in from Hong Kong, Joanne Politis.
ATTORNEY GENERAL STATUTES AMENDMENT ACT, 1994
Hon. C. Gabelmann presented a message from His Honour the Lieutenant-Governor: a bill intituled Attorney General Statutes Amendment Act, 1994.
Hon. C. Gabelmann: I'm pleased to introduce Bill 49. This bill contains amendments to 12 statutes. They are the Builders Lien Act, the Creditor Assistance Act, the Evidence Act, the Income Tax Act, the Land Title Act, the Liquor Control and Licensing Act, the Municipal Act, the Provincial Court Act, the Sheriff Act, the Tugboat Worker Lien Act, the Vancouver Charter and the Woodworker Lien Act.
Given the two-minute time limit, I will elaborate on these bills during introduction of second reading.
Bill 49 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.
PACIFIC SALMON TREATY NEGOTIATIONS
Hon. D. Zirnhelt: This statement is with regard to the current state of the Pacific salmon treaty negotiations with the United States. Between Wednesday and Friday of last week, federal Fisheries minister Brian Tobin and I took the initiative to meet with key members of the U.S. administration, the Senate and the House of Representatives, and with the Canadian Ambassador to the United States, in Washington, D.C.
[2:15]
I offer my personal thanks at this point to the Hon. Brian Tobin for including me in the Canadian delegation. We were determined to make sure that the interests of Canada and British Columbia were clearly understood by the American decision-makers. We made it clear that what's badly needed is a treaty settlement that addresses the principal issues of conservation and ensures that catches resulting from interceptions are brought to an even balance over time.
At each meeting the Canadian delegation sought assistance in addressing this issue and expressed deep concern about the lack of a 1994 international fishing plan and the potential harm this may cause to all Pacific salmon stocks -- ours and theirs. We were hoping to find the same will on their part to reach a cooperative resolution to the current impasse. Unfortunately, we found little, if any, such willingness. It has become clear that this issue is becoming a significant irritant to Canadian-U.S. relations.
As members of this assembly are aware, the major obstacle to resolving this dispute is the regional division between salmon negotiators from Alaska, Washington and Oregon. What's agreed to by one state can be vetoed by another. As a result, the American chief negotiator is unable to present positions that address both conservation and interception concerns.
At each meeting this week, we stressed that Canada and British Columbia have worked hard to meet the treaty conservation goals and that we are ready to cooperate with the United States to protect weak stocks. We also made it clear that we want an agreement which begins to address the existing imbalance between the amount of Canadian fish taken by Americans and vice versa. The scale is currently tipped $65 million in favour of the United States. If the
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American negotiators had their way, it would be tipped even further this year.
Where do we go from here? With little hope of reaching a bilateral agreement, I'm undertaking the following steps. First, all lines of communication with the U.S. will remain open; the Canadian Embassy in Washington is prepared to facilitate any discussions that may help us get through this difficult situation. Second, I will continue to work closely with my federal counterpart as a made-in-Canada fishing plan is finalized. Third, consultations with the fishing industry are vital, and dialogue between my office and industry stakeholders will continue. Fourth, I will continue consultations with directly affected cabinet colleagues to ensure that all stakeholder needs are examined and considered as the 1994 fishing plan is finalized. Fifth, I will examine methods to raise the profile of this issue in the U.S. Pacific Northwest and to upgrade the knowledge base of the influential northwest U.S. media.
Terms such as fish war and aggressive fishing conjure up emotional, frightening images, but these are the realities that we now face. What I find personally upsetting is the lack of U.S. cooperation to manage Pacific salmon at a time when it is most urgently needed. We need to show that we have learned from recent history: we have witnessed the decimation of the east coast fishery and the impact of resource mismanagement upon maritime communities. To the south, we have watched American dam building, timber harvesting and water diversion eliminate over 100 salmon stocks; the result is a complete shutdown of salmon fishing in the U.S. Pacific Northwest in 1994. What is particularly sad is that the U.S. has its own conservation crisis. A valuable resource in California, Oregon, Idaho and Washington has been ruined primarily by habitat destruction and water diversion. It is blatantly unfair that the U.S. now looks to catch our salmon and tries to justify its right to do so. To the north we see our Alaskan neighbours harvesting coho and steelhead from the Skeena and Nass Rivers without regard to conservation.
British Columbians have a large investment to protect, not to mention the cultural significance tied to salmon. We have forgone hydroelectric projects in order to preserve our salmon habitat. All along the B.C. coast, from Sooke to Prince Rupert, community groups and school children have devoted countless hours to creek restoration and salmon enhancement projects. These contributions may be put at risk by unregulated fishing.
I returned from Washington late Friday, discouraged but no less determined to ensure the protection of B.C. salmon from American overfishing. I intend to maintain a close working relationship and arrangement with the federal Fisheries minister, Brian Tobin, and to support his efforts to resolve this issue. Our work will continue. As I have said before, at the end of the day it may be up to the highest levels of government to bring about a satisfactory conclusion to this dispute.
I would again urge the Prime Minister, as the Premier has done before me, to quickly approach the President of the United States of America in order to prevent what could prove to be a devastating summer for Pacific salmon stocks and the British Columbia fishing industry.
Hon. Speaker, I thank you for the attention this House has given to this matter, and I thank the House for the strength it has given me by providing an all-party resolution to take with me. It was often referred to by the federal Fisheries minister. I hope the federal House itself shows the same unanimity that British Columbians are showing toward this issue.
R. Chisholm: I must thank the minister for his timely ministerial statement. Representatives of the Pacific Salmon Treaty cancelled an early March negotiating session and now refuse to discuss it in Washington with the provincial and federal ministers. This is evidence that the U.S. is not prepared to deal with equity negotiations with a pragmatic and realistic approach.
On average, U.S. fishers have been taking close to nine million Canadian-origin salmon annually, compared to the Canadian interception of less than four million annually. As the minister said, that figure represents some $65 million per year. By refusing to deal with the issue, the U.S. is in violation of the primary article of the agreement. That article reads clearly that each party shall receive benefits equivalent to the production of salmon originating in its waters. The treaty also states that if it is determined that one country or the other is deriving substantially greater benefits than those provided from its rivers, it would be expected that the parties would develop a phased program to eliminate the inequity within a specified time period.
Since the treaty was signed, Canada has been very successful in increasing the production of salmon stocks in the Fraser as well as in some of the northern rivers. Over the same time period, the U.S. production of coho and chinook has been going down steadily. They now have a zero quota in Oregon and Washington. The balance of interception which existed at the time the treaty was signed has become significantly altered. This is indisputable.
Canada is saying that the U.S. made a commitment that there would be an equitable balance of interception, and the U.S. wishes to ignore that. They want significantly more of our resource. The U.S. is trying to get more Fraser River sockeye. They also want fishermen to take less U.S.-origin coho and chinook, for U.S. conservation reasons. We are saying that conservation is part of this treaty, too. The U.S. wants it both ways: they want Canada to cut back for conservation, and they want to get more of our Fraser River fish. It just doesn't make any sense.
One of the key problems with the U.S. negotiators is that various U.S. interests cannot agree among themselves about who's going to reduce interceptions. The U.S. does not have the will to try to deal with Canada as a single negotiating partner, so we end up negotiating with Alaska and turning around to deal with Washington, Oregon and treaty tribes.
B.C. and Canada have made a very firm statement and put their positions forward very clearly to the U.S. British Columbia has advanced its position at a number of different levels, both at the Salmon Commission and at senior diplomatic levels of government, and we will continue to do that. It is fundamentally in the best interests of both parties -- and of the fish.
I met this February with federal Fisheries minister Brian Tobin to discuss this subject. B.C. Liberals have informed him that we are very firm on protecting the fishing resources of British Columbia and that he should remain very firm in his negotiations with the Americans on this point. I met with him again in May in Vancouver on this very subject and impressed upon him the critical nature of the situation. We will continue to support and urge the provincial government and the Fisheries minister to continue the discussions, if possible, and to implement the Canadian plan to protect our fisheries and the Pacific salmon stock.
I strongly urge the Premier to get involved and approach the appropriate state governors, and I urge the Prime Minister to approach the President of the United States, to quickly prevent a disaster with the Pacific salmon stock. A
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$700 million commercial industry and a $500 million sports industry are in jeopardy.
Fish have been managing themselves quite adequately for millions of years; unfortunately, in his greed, man hasn't learned to manage the resource in the meantime.
L. Hanson: We in the Reform Party strongly support the province's efforts to protect B.C. salmon stocks. It's a shame that both levels of government were not able to better communicate British Columbia's and Canada's concerns to the United States.
We reject any suggestion that a fish war should happen. We reject it because it would ensure that no salmon make it through our coastal waters to U.S. waters, with the eventual result that our own industry would fail. Overfishing, in the name of a fish war, must not be allowed to threaten our own fish stocks for the sake of retaliating against U.S. fishers.
The problems we are experiencing point out the need for British Columbia to gain constitutional control over our own fisheries. We believe we can work better with Washington State, Oregon and Alaska -- in fact, better than Ottawa can -- to protect the mutual interests of Canada and British Columbia. We support the efforts of the Minister of Agriculture and hope that he will continue to fight the battle to preserve our fishing industry on behalf of British Columbia.
The Speaker: The hon. member for Powell River-Sunshine Coast rises on what matter?
G. Wilson: I seek leave to respond to the ministerial statement.
Leave not granted.
PUBLIC OPINION POLLING BY GOVERNMENT
F. Gingell: My question is to the Minister of Finance, and it concerns the infamous prebudget $42,000 poll. It's clearly inappropriate to gauge yourself before gouging the taxpayers. I quote the minister: "...I think it is important in terms of building our budget to find out whether people are satisfied with the job I'm doing as Finance minister." Could the minister please tell us: how is undertaking a big money popularity poll at all relevant to building a provincial budget?
Hon. E. Cull: I'm glad that the member asked that question. I thought I had explained that at some length last week. As part of one of the most comprehensive prebudget consultations in the history of this province, we went out and talked to people in the province about what it was they wanted to see in the budget. We talked to business, labour and community groups; we held public meetings. We did surveys as well, and that survey was part of the overall process of finding out what people wanted to see in the budget. They told us they wanted to see more emphasis on jobs, they wanted to see the deficit down and they wanted to see taxes frozen or indeed cut. Based on that information, that's the budget we delivered.
The Speaker: Supplemental, hon. member.
F. Gingell: In responding to the press, the minister clearly showed her lack of judgment by saying: "We are in politics, folks; this is all political." The NDP are showing that they are as bad as the Socreds when it comes to governance by poll. To quote the member for Nanaimo: "There is something frightening about government by opinion polling." That member was absolutely right. Why has the NDP changed their tune now that they have their hands in the public till?
Hon. E. Cull: Hon. Speaker, I guess the member finds it strange to suggest that anything like politics would actually take place in this particular building. Perhaps he's confused about the difference between political and partisan. Politics is definitely the nature of government, and I don't make any apologies for that. What he's talking about is partisanship, and there's nothing partisan in that poll.
[2:30]
The Speaker: Final supplementary, hon. member.
F. Gingell: We have now learned that at this moment Viewpoints Research is doing another poll for the government on its performance. Could the Minister of Government Services please tell us whether this wasteful poll went to tender and how much the taxpayers will be paying for this pre-election poll by the NDP?
Hon. R. Blencoe: Hon. Speaker, I'll take that question on notice and get the information for the member.
ALLEGED INTIMIDATION OF OPPOSITION LEADER
M. de Jong: Last month it was the head of B.C. Hydro who threatened the Leader of the Opposition with legal action for exposing his grand pension payoff. This week it's the Minister of Employment's former employer, the Iron Workers' Union, that threatened the Leader of the Opposition with legal action for raising the issue of potential abuse of Island Highway funds. It's a blatant attempt to browbeat the opposition. It's anti-democratic, it's a blow to freedom of speech, and quite frankly, it's reprehensible. My question to the Minister of Employment is: when did he learn of this union's -- his former employer's -- decision to threaten the Leader of the Opposition, and what advice has he proffered them on that point?
The Speaker: The member has a question within the minister's responsibility? Please proceed.
Interjections.
M. de Jong: I thought it was the fertilizer outside that smelled bad, but it's obviously much closer to home.
A member of this government's back bench introduced a bill to stop this kind of intimidation -- the Public Participation Act -- and protect individuals from powerful and wealthy interests who seek civil damages for criticisms expressed in a public forum. Will the Minister of Employment confirm whether or not he supports that act? If so, how does he distinguish the tactics of his former employer from the actions prohibited in the bill presented by the government backbencher?
Hon. G. Clark: Private members' bills, as members should know, are brought into the House by private members; they're not government bills. The government has taken no position on those bills. As House Leader, I would like to say on behalf of the government that we fully intend
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to bring forward private members' bills for debate in this session of the House.
The Speaker: A final supplementary, hon. member.
M. de Jong: Well, let's cut to the chase then. The Leader of the Opposition is being bullied and threatened by this minister's former employer. This minister was in opposition previously; he's undoubtedly going to be there again. Does the minister not see this type of bullying as being, quite frankly and simply, undemocratic and reprehensible?
Hon. G. Clark: Just to correct the record, I have never at any time worked for Local 97 of the Iron Workers' Union, and I don't know the details the member is referring to.
REGISTRY OF SEX OFFENDERS
J. Weisgerber: A question to the Attorney General. The federal government is apparently looking at establishing a national registry of sex offenders. Can the minister tell us whether his government is participating in that process and, more importantly, whether or not his government is committed to establishing a British Columbia registry, regardless of what Ottawa decides to do?
Hon. C. Gabelmann: Yes, we are working with the federal government in the establishment of a national registry, which would be more effective than having ten separate registries across the country, given the ease with which people move in this country. We are also embarking on a number of other initiatives in respect of known abusers, and I hope to be able to make an announcement about that in the very near future.
The Speaker: Supplemental, hon. member.
J. Weisgerber: Some time ago the government established a task force, chaired by Richard Isaac, to make recommendations to the government on this particular subject. I understand that cabinet rejected the recommendations made by Mr. Isaac. I wonder if the minister could tell us the status of that task force, and whether or not Mr. Isaac recommended the establishment of a provincial registry for known and convicted sexual offenders?
Hon. C. Gabelmann: The decisions of cabinet will be made very clear in a very few days when the announcement is made.
The Speaker: Final supplemental, hon. member.
J. Weisgerber: The state of Washington has adopted a three-tier process for providing information to constituents and residents on known and convicted sexual offenders. That process provides a system where the greater the threat to the public, the greater exposure given to the identity of the offender. Conversely, the more a person responds to rehabilitation, the less exposure and greater protection of privacy there is. Can the minister tell us whether he has examined that model, and whether or not he supports the concept of that model?
Hon. C. Gabelmann: Without getting into the details of the announcement, which we will do in the very near future, I can say that we have looked at what has been done in Washington State. We have looked at what has been done in a number of other jurisdictions as well, and we have taken the discussion much beyond that. I'm sure the member will be looking forward to hearing what we have to say about it.
MUNICIPAL ELECTION EXPENSES
C. Tanner: I have a question for the Premier this afternoon. During the budget debate the Minister of Municipal Affairs indicated that while she was extending by one month the time to submit election expenses for the recent municipal elections, she would not forgo the $500 fine for late filing. Has the cabinet, on reflection, changed its decision?
Hon. M. Harcourt: I will take that question on notice.
The Speaker: The question is on notice.
A different question, hon. member?
C. Tanner: Yes, a different question, Mr. Speaker. Does the Premier understand that many municipal councils elected by acclamation were advised by their senior bureaucrats that no return was necessary?
The Speaker: The member has a further question? Final question, hon. member.
C. Tanner: To the Premier again: tomorrow many municipal politicians elected by acclamation are faced with a $500 fine brought down by brand-new legislation and poor local administrative advice. Many are not prepared to pay the fine. Is the Premier prepared to have these representatives who were elected by acclamation face new, costly elections?
GAMING POLICY REVIEW
D. Mitchell: I have a question for the minister responsible for gambling. Yesterday in the North Shore News in my constituency, a two-page ad was taken out by the proponents of the casino gambling megaproject at Seaport Centre. The ad refers to Seaport Centre as if it is a fait accompli, as if we are going to have legalized gambling in Vancouver.
The question for the minister is: what do the proponents of the Seaport Centre casino megaproject know that we don't, in spite of the fact that the minister has told us there is a gaming review ongoing right now and for-profit gambling is not legal in our province?
Hon. R. Blencoe: I haven't seen the ad, but I give the assurance of the House that no decisions are made. There is an objective, fair review underway and no specific proposals are under consideration. A policy review is underway.
D. Mitchell: Supplemental to the minister. The previous commission of inquiry into gaming in our province, the Lord and Streifel report, did not receive one presentation of any kind from a proponent of for-profit gambling in our province -- not a single one. Could the minister tell us about the current ongoing gaming review that he is responsible for. Is he aware of the Seaport Centre making any representation to this commission of inquiry?
Hon. R. Blencoe: I'm very aware of the representation that was made to my colleagues and of their report. I'm very aware of the number of issues that are in front of the public, the concerns that are being expressed and the views that are there. That is all being taken into consideration in our fair and objective review of gaming in British Columbia.
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The Speaker: Final supplemental, hon. member.
D. Mitchell: The minister says it's a fair and open review, but I can tell you it's a selective review. The ongoing inquiry that this minister is responsible for is selective; it's not a full and public inquiry. There are many people coming forward who cannot make representation. Can the minister tell us why citizens who are very concerned about for-profit gambling in our province are not being allowed to come forward to the inquiries that he is responsible for?
Hon. R. Blencoe: I think the member should be careful in terms of the issue that is before the public. If he is insinuating that a decision has been made, I think that's most unfair; indeed, it's inflammatory. The people in British Columbia know that no expansions are permitted. There is full review, and the citizens will have every opportunity -- and we've made that commitment -- to make their voice heard on every issue regarding gambling.
TENDERING PROCESS FOR OGDEN POINT PROJECT
G. Farrell-Collins: Last Thursday in this House the Minister of Employment and Investment, in answer to ongoing questions with regard to the Victoria Line fendering project, stated that the project was cancelled, that the contracting was done in-house and that all those people who had bid were eligible -- and, in fact, were contacted with regard to it -- for the one subcontract that was issued. Today I have a letter from one of the contractors, West Shore Constructors Ltd., where they state quite clearly that no attempt whatsoever was made to contact them. In fact, calls were not returned when they put them through to Victoria Line; indeed, when they showed up to ask for a meeting they were refused.
Can the minister tell us who is telling the truth? Is it him? Is it the Victoria Line? Is it the contractors out there who are being given the runaround by this government and being disadvantaged?
Hon. G. Clark: I'm puzzled by this line of questioning. When the management of the Victoria Line ferry corporation manages a contract in-house and saves the taxpayers $300,000 -- more than 50 percent of the contract price -- I fail to see where there is any kind of problem. I said in the House what I know to be true: the Victoria Line management attempted to contact the three or four bidders, including the low bidder. One of those contractors received a subcontract, if you will, for a small part of the work. As a result of that and of the management of Victoria Line doing the work in-house, they saved the taxpayers $300,000.
Hon. E. Cull tabled a set of statements regarding borrowings from and loans to government bodies for the 1992-93 and 1993-94 fiscal years, in accordance with section 41.5 of the Financial Administration Act.
Hon. G. Clark: First of all, I'd like to call third reading of Bill 14.
BUDGET MEASURES IMPLEMENTATION ACT, 1994
Bill 14, Budget Measures Implementation Act, 1994, read a third time and passed.
Hon. G. Clark: I call third reading of Bill 32.
BC FOREST RENEWAL ACT
Bill 32, BC Forest Renewal Act, read a third time and passed.
Hon. G. Clark: I call Committee of Supply in Committee A, the Ministry of Finance and Corporate Relations estimates. In the chamber, I call second reading of Bill 40.
FOREST PRACTICES CODE OF BRITISH COLUMBIA ACT
Hon. A. Petter: When this government took office nearly three years ago, it promised to significantly change the way we manage our forests, to improve stewardship of our most vital resource and to restore public confidence in the way that resource is managed. Years of neglect by previous governments meant that our forests were being taken for granted, creating a legacy of problems that compromise both their economic and environmental sustainability. These problems include overharvesting -- which in some regions has led to supply shortages and instability in forest communities -- and land use uncertainty driven by conflicting demands on the resource and changing public expectations. They include the failure to develop a long-term economic strategy to secure the future of the forest economy and forest communities, and a poor record of forest management, which undermines public confidence in forestry and the forest industry.
[2:45]
Since coming to office, this government has responded to these problems with a number of new initiatives. Firstly, the timber supply review is addressing the need for long-term sustainability of annual allowable cuts. Secondly, the Commission on Resources and Environment and the protected areas strategy are tackling issues of land use certainty. Thirdly, the forest renewal plan will ensure that more of the wealth generated by our forests goes back into the land and the forest community it supports.
A further challenge we face -- one of grave concern to most British Columbians -- is to transform the way we manage our forests, to improve forest practices by instituting higher standards and tougher enforcement measures. The world has changed dramatically since our seemingly limitless forests first began providing jobs and opportunities to British Columbians. Today it is clear beyond doubt that forest management has not kept pace with those changes. Forest management under previous governments has not adequately taken account of the growing intensity of forest use, the expanding range of forest values or the finite nature of the forest resource. As a result, both at home and abroad, government and industry are saddled with a reputation as poor stewards of our resources, and that in turn is hurting our economic prospects both at home and abroad.
I recognize that many in industry have taken significant steps to correct that impression, but more needs to be done. In particular, government needs to demonstrate that it is prepared to act as a steward of the resource on behalf of the public interest. The Forest Practices Code of British Columbia Act is this government's response to the challenge of ensuring sustainable forest practices.
The preamble to this act speaks to the desire of British Columbians to seek a more balanced use of forest resources -- one that responds to the entire spectrum of current needs without compromising the needs of future generations. The preamble also identifies sustainable use with the conserva-
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tion of resources, including biodiversity, and expressly links forest stewardship to an ethic of respect for the land.
This act provides the foundation for British Columbia's first Forest Practices Code, an entirely new framework for provincial forest management. The Forest Practices Code will replace a mishmash of statues, regulations and guidelines, many of which were overlapping, contradictory or unenforceable, and which created costs and confusion for those who tried to live by them.
Up until now the lack of a clear legal foundation and appropriate penalties for non-compliance have made effective forest management virtually impossible in this province. That will change with this legislation and with the draft regulations and proposed standards that were released today. These regulations and standards are being circulated for public comment in the coming months and will be finalized later this year as part of the code structure. This in turn will continue this government's commitment to greater public involvement in the development of the code and in the stewardship of our precious natural resources.
Bill 40 embodies essentially five major principles. The first principle is that of legal certainty. As I said earlier, the act will replace the existing hodgepodge of statutes, regulations and guidelines with a clear, comprehensive, legally enforceable framework to regulate forest practices. It will eliminate many of the contradictions and gaps that exist within the current regime of enforcement. It is a framework that recognizes the importance of biological diversity, of preserving forest soils, wildlife habitat and riparian zones, and of respecting cultural heritage resources as key values. It's a framework that facilitates the protection of special and sensitive resource features and that ensures that operational planning is consistent with higher-level land use plans, thereby providing an opportunity for greater public review and accountability. It's also a framework which will greatly facilitate those in industry who, frankly, haven't known what rules they must live by because of the chaotic nature of the current regulatory regime.
The second principle on which the act is based is that of responsibility and enforcement, including tougher penalties for those who don't live up to forest practice standards. The Forest Practices Code of British Columbia Act will make those who use our forests responsible for carrying out proper forest practices. It will establish a single enforceable code of conduct for our forests and rangelands, in which the obligations of both forest companies and government agencies are clearly demarked and set out. Forest operators will be responsible for the prevention of environmental damage -- such as landslides and excessive soil disturbance -- and for damage to previously unidentified resource values such as wildlife habitat, community watersheds and cultural heritage resources, as well as recreational features. To ensure compliance with standards, the act also establishes a much more credible set of enforcement powers to deal with infractions, including a wide range of administrative and court remedies to deal with non-compliance. Among administrative remedies is the power of field staff to issue stop-work orders where damage is occurring or cleanup orders where damage has occurred.
There will be a significant increase in offence fines under the act, to ensure that the penalties provide real deterrence and that we have a substantial movement in the direction of better forest practices. A person or company guilty of a serious offence under the code can be liable to a fine of up to $1 million, with a provision to double this amount for second and subsequent offences. That's quite a change from the current regime that provides maximum court-ordered fines of just $2,000, which really cannot be taken seriously by anyone who is concerned about protecting the future of our forest resources. That certainly has not provided any deterrent to bad forest practices.
The expanded monitoring of forest practices will ensure compliance with the final regulations and standards. In addition to the compliance and enforcement teams my ministry has already established in 43 forest districts, a further 200 staff will be reassigned for field enforcement and a further 80 or 90 staff will be provided through this year's additional budget allocation to ensure that the Forest Practices Code is meaningful in the way it's enforced, as well as in its terms. In addition, fieldworkers in the Ministry of Environment, Lands and Parks and the Ministry of Energy, Mines and Petroleum Resources are being given expanded powers to work with Forest Service staff on monitoring and enforcement.
The act also establishes a system of performance-based timber harvesting, which provides that access to future cutting permits will depend upon demonstrated performance on existing cutblocks. Quite simply, that means companies will have to demonstrate that they are able and willing to live up to code requirements before securing cutting rights. It's going to be that simple. If companies are not able to demonstrate that they are able or willing to live up to code requirements, they will not obtain those future cutting rights.
The third principle underlying the act is accountability. The Forest Practices Code of British Columbia Act increases accountability to the public on the part of both government and industry. It will establish a system of independent forest practice audits to gauge the performance of those operating in the provincial forests and the performance of government in ensuring that those operations are consistent with the code.
In addition, it creates a Forest Practices Board with broad powers to investigate public complaints, to oversee the audit process and to report to the public on the administration of the code -- a true watchdog agency that can assure the public that the forest practices being practised in this province are consistent with the requirements of the code. Beyond the powers that might normally be accorded to a watchdog agency, the board will have additional powers to actually bring appeals of forest management decisions through the appeal process on behalf of the public, where circumstances warrant such appeals. These powers, in combination with increased monitoring and enforcement in the field, will ensure performance to higher standards, with improved public knowledge and accountability.
It is our belief that the combination of tougher penalties, along with the auditing process and training initiatives currently underway, will move substantially in the direction of better forest management in the coming months and years. Indeed, I think that we can see the code as an instrument that will not only dissuade those who want to engage in bad forest practices but will validate those who have made, or are now prepared to make, the changes to better forest practices.
The fourth principle underlying the act is that of responsiveness to change. Forest practices must evolve to reflect advances in scientific knowledge as well as changes in social values. This act is structured to accommodate such changes. It will allow standards to evolve as the level of knowledge about forests grow. Additionally, the act enables the creation of a Forest Practices Advisory Council to periodically review the code and recommend changes that
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will facilitate its evolution in light of experience and to involve stakeholders in that ongoing process of review.
The fifth principle underlying the act is that proper forest management should not be limited to Crown lands or to traditional resource values. The Forest Practices Code of British Columbia Act provides enabling powers to regulate certain private forest lands, specifically those in the privately managed forest land assessment classification. This provision responds to widespread public concern that forest practices on private lands should be subject to some form of regulation. Accordingly, this act empowers government to regulate forest practice on these lands. However, I must say that before we proceed to implement such a regulation, we are committed to a process of consultation with the owners of privately managed forest lands to ensure that the form of regulation is suitable to the requirements of those lands.
The act also establishes limited powers to regulate the harvesting of botanical forest products, such as pine mushrooms. Some of the conflicts and concerns around botanical forest products have prompted many in the public to ask for such regulations to be incorporated within the code. I'm pleased to say that those provisions are included. The intent here is to ensure that the increasing demand for these products does not lead to a diminishment of the resource or to a degradation of other forest values.
The Forest Practices Code of British Columbia Act will lead to British Columbia's first forest practices code, which will regulate forest practices through standards that are clearly defined, mandatory and enforceable. It will, in fact, contract the number of regulations and standards from the bulk of unenforceable, confusing and contradictory standards and regulations that currently exist to a much leaner but more effective body of regulations and standards that will be enforceable and mandatory. It will set new benchmarks for performance, thereby creating a renewed basis for public trust and confidence in industry and government. The certainty and increased public confidence that that will produce in both government and industry will be beneficial for all British Columbians. For those in the forest industry, it will mean that they will be able to demonstrate to the public that they are living up to these standards. That in turn will, I think, increase public confidence for future harvesting activity and enable industry to better secure markets abroad. For those in the public who are concerned about the future of the resource, they can look to this code with the assurance that government is playing its role as a strong and effective steward of the public interest in the future of the forest resource, to ensure that that resource will be there, providing both economic and environmental values for future generations.
[3:00]
Clearly there will be challenges during the code's phase-in period as all parties adapt to new ways of doing business. But I am confident that with time and experience, the code will inspire a new order of stewardship and serve as a guarantee at home and abroad of our commitment to manage our forests sustainably. As Minister of Forests, I am honoured and proud to place this act before the House for debate and consideration, and I therefore am proud to move that Bill 40 be read for a second time now.
W. Hurd: I would agree that this is an important day in the history of forest management in our province. I think it's important to acknowledge at the outset that the desire for a strong forest practices code goes back much further in this province than the term of the current administration. I know that for decades, foresters and those involved in the wood products and harvesting industries have been calling for a tough, simplified code that would take the 750 different regulations and codify them into something that could better sustain the harvesting and silvicultural activities on the land base. We have a long history in this province of wanting to see this type of legislation come forward.
It's important for us to reflect on the events of the last two years and how this code arrived today in the Legislative Assembly. Certainly the minister could have mentioned the widespread discussion that went into the creation of a discussion paper and the public meetings held throughout the province, where advice was solicited.
The minister has acknowledged that it will be difficult, from looking at this bill before us in the House, to determine what impact or effect we will see down the road. So whereas in principle we can look back in the history of the province and all support the need for an enhanced code of stewardship for the province's forests, there are several aspects to this particular bill that will really have to be watched closely over the next 18 months, as the minister has acknowledged.
As we know, one of the issues that has not been clearly identified is the cost of implementing a code of forest practices in the province. The minister will know that the consultant studies have ranged from a low of $100 million all the way up to estimates of $1.2 billion from certain sectors of the forest industry. So clearly a lot of work has to be done to identify the administrative costs of implementing a forest practices code. I applaud the fact that the government has elected to phase in these regulations and standards over a period of 18 months. I really don't believe there was much choice, however, given the complexity of that question alone.
The other issue that we have to carefully consider, of course, is what impact the regulations will have on the annual allowable harvest. Given the downward pressure on the AAC from other land use and environment initiatives, there's a great deal of concern out there that the code will have an impact on the annual allowable harvest. I think it's important over the next 18 months to identify what that percentage might be. During his initial press conference, the minister indicated the AAC might be reduced in the range of 5 percent as a result of the implementation of the code. But again, we don't have any exact idea of what the reduction percentage will be. Those two issues are critical to people who make their living in forest-dependent communities in the province.
I think it's important as well to acknowledge at this time that one of the largest cutblock planners in British Columbia is the Ministry of Forests. Fully 11 million cubic metres of the 75 million cubic metres harvested annually in British Columbia are planned by the Ministry of Forests. As the minister knows, the Tripp audit of fisheries-forestry guideline compliance on Vancouver Island clearly identified the ministry as having as difficult a time meeting the terms and conditions of that audit as many of the licensees on Vancouver Island. Clearly this code will impose a tremendous new burden on the ministry operations and operators themselves. Certainly regional managers and planners in the ministry will be charged with the responsibility of meeting the enhanced requirements of this code. I'm delighted that the minister has acknowledged that yes, indeed, the ministry will be forced to meet the same enhanced stewardship guidelines as the licensees and cutblock planners in the province.
I really believe that this bill is obviously supportable at this point. It's a bill that has been called for in the province for decades. But at this point there are more questions than
[ Page 11174 ]
answers. There are questions about cost and about the impact on the annual allowable harvest.
We can't isolate this particular initiative from some of the other initiatives the government is involved in. We've seen the addition of a $600 million stumpage imposition as a result of Forest Renewal B.C. and the revised stumpage fees. We've seen increases in the amount of royalties. Now, of course, we're going to be imposing an additional cost burden with the implementation of the code. I wonder at what point it becomes uneconomic or undesirable to have a forest licence in British Columbia. I wonder if we've thought through that aspect of managing a long-term tenure arrangement with the Crown. The reason I mention it is that it isn't just forest companies that have tenures in British Columbia anymore. The city of Revelstoke, for example, manages a tree farm licence that they acquired when the Westar TFL was basically forfeited to the Crown. There are a number of other woodlot owners, municipalities and regional districts that manage small tenures over a long period of time.
The minister would do well to look closely at what's happened in the forest sector over the past 30 years in this province. One of the things we've seen consistently is a cyclical style of market. There have been times in coastal British Columbia when managing a tree farm and harvesting according to a five-year cut control provision actually has resulted in substantial losses. There have been times in the past 30 years in this province when just meeting the annual cut control provisions of a tree farm licence has resulted in the loss of hundreds of millions of dollars. Of course, as the minister well knows, there's a requirement on a five-year basis to harvest annually regardless of whether the price of the finished product is up, down or even.
So I again say that there is a fine line we have to tread here. It's important that the regulations and the amount of paperwork required can be sustainable over a long period of time, given the wild fluctuations that occur in this particular industry. I wonder, if the ministry found itself planning 20 percent or perhaps 25 percent of the annual allowable harvest in this province, whether with the resources available they would be able to deal with some of the complexities of the Forest Practices Code and certainly some of the difficulties that will be inherent in other requirements of the Ministry of Environment and the Ministry of Forests. We're walking a fine line here. We're assuming that the wood products industry will continue to enjoy good health over the next ten years. I hope that's the case, but historically that hasn't been the case.
Over the next 18 months there are a great many questions to be answered with respect of this particular act. Again, the costs need to identified. We need to look at the impact on harvest levels, in combination with the other initiatives out there. I certainly hope the ministry itself will prove to be a catalyst within its own ranks for quickly reviewing its own management and working plans for the lands it has under its control, in order to determine what costs the public will be facing through the ministry.
As well, the minister has talked about the Forest Practices Board, which I think is a responsible measure that provides public input into the management of our forests and gives them an avenue to launch grievances and complaints, which is an important innovation. I hope that we don't get into a situation where the Forest Practices Board is buried under an avalanche of paper, and that when the public of the province is out on the land base and view something that they feel is not sustainable, they will at least take the precaution of checking with the Ministry of Forests, so that they can do some research before bringing a complaint before the Forest Practices Board.
I am comforted that under this act the board does have some unilateral jurisdiction to decide whether or not a matter is of a serious enough nature to be investigated. But if the board functions in the model of the Labour Relations Board, for example -- where grievances are put forward and there is a mechanism in place that forces a rather time-consuming audit or investigative process -- the Forest Practices Board could find itself either overwhelmed or forced to hire additional inspectors, because ultimately the board itself will have an auditing responsibility.
While the minister has acknowledged that there will continue to be a responsibility for the Ministry of Environment and the Ministry of Forests to do the kind of fieldwork that's necessary -- a proper, independent audit, which is something that forest licensees and the public have been calling for in this province for generations -- that audit will continue to reside, under this legislation anyway, with the newly created Forest Practices Board.
We will be interested to see how the act unfolds over the next 18 months. The standards introduced by the minister today will not have the force of law for another 18 months; they will be subject to monitoring and review. That is responsible public policy, given the complexity of compliance and the fact that the ministry itself will have to review its processes and procedures. The phase-in period is important public policy and certainly supportable, but I hope that the administrative costs and the effects on the harvest levels can be deduced quickly, because in this province we already see widespread uncertainty in the forest sector. We see concerns about where the annual allowable harvest is heading, where employment levels are headed in the industry, and what the impact is going to be from the timber supply review and analysis, which is going on in 38 timber supply areas of British Columbia. There are the effects of the protected areas strategy, the Commission on Resources and Environment, spotted owl recovery areas and special wildlife study areas. When we consider all these initiatives in league, I hope that we can find a way to separate the need and desirability of a forest practices code from all those other initiatives, which are viewed with such concern by the people who must earn their livelihood from our forest resource and who reside in forest-dependent communities.
Upon briefly reviewing the regulations -- which were finally released today, two weeks after the bill was brought forward -- there are some things that we can applaud. The need to immediately reclaim abandoned roads in the province was identified by the auditor general as a critical environmental difficulty in British Columbia: the fact that we had thousands of kilometres of roads which have been effectively abandoned but which have not been properly reclaimed. Of course, abandoned logging roads are subject to slippage and erosion -- and there are thousands of kilometres of them which need critical attention.
There are initiatives that are supportable. I think the concept and philosophy of a code is supportable. I'd like to believe the words of the minister when he tells us assuredly how things are going to turn out over the next 18 months, but a lot more questions have to be answered. While the opposition wholeheartedly supports the Forest Practices Code and joined British Columbians in calling for such a code during the last decade in British Columbia, there continue to be these questions. We'll be exploring some of them in committee.
[ Page 11175 ]
This is one of the longest and most complex bills that has been presented to this assembly -- some 356 clauses of amendments and changes and, one assumes, the standards which will ultimately be introduced by order-in-council -- so we have a lot of material to deal with in committee. There are a lot of questions we will be raising about how the minister and his staff envisage the various aspects of this bill unfolding on the land base -- which is really where it counts. While we support this bill and this code in principle, there will be a number of issues that we will want more answers on in committee. Without answers, we may wish to express our concern or opposition to those.
[3:15]
With those few words, I look forward to committee stage of the bill. I think it's important that we have a code. It's important that there is going to be an 18-month window of input from the public, from the stakeholders and, I assume, from the Ministry of Forests itself to advise the minister as to where they are in terms of their compliance with this code. I look forward to committee stage debate on this important bill.
F. Garden: It's with a great deal of pride and pleasure that I rise to support this bill, which brings in the Forest Practices Code. I'd like to congratulate the minister and the government for this initiative.
This was one of the major planks in our platform while we were running against our opposition counterparts for election. We made a commitment to the people of British Columbia that we would take action as far as forest practices were concerned in this province. As I said, it is with a great deal of pride that we are able to stand here today and discuss this kind of bill, this far-reaching code.
I've been in the forest resource industry for almost 33 years. During these 33 years there has been a real outcry for a comprehensive forest practices code. As was stated earlier by the minister, there has been a mishmash of regulations: over 3,000 guidelines, 700 regulations, 20 provincial statutes and another six federal statutes dealing with regulations in the forest.
The proof of the pudding has been in the eating. We now have arrived at a point in our province where the international community is crying out that the regulations and laws governing our forests over the last 50 years have not been working, to the point where large corporations and the Forest Alliance are having to spend large sums of money to refute some of the charges that have been made by environmental organizations in Europe -- in some cases very irresponsibly. What has happened is that some of these charges have been listened to by our European customers, and it is starting to have an effect on our province's economic well-being through the threat of cancellation of orders. So this kind of legislation is long overdue. We've seen rallies at the Legislature because of forest workers being a little concerned about the future of their jobs, because the government has had to move on controlling annual allowable cuts and that sort of thing. It's only because of the lack of a proper code over the past 50 years that we've come to this impasse in our forests. If something wasn't done now, as we're doing with this code, I would fear for the future of that industry altogether.
But by the introduction of this code and of the forest renewal plan, where some of the resources taken out of the forest will be going back in, I see a bright future for the forest industry in British Columbia and these resource communities. Not only will we see money going back into these resource communities from the forest renewal plan, but we'll have a set of proper guidelines on how some of these moneys need to be spent and how companies, in partnership with us, can work on a set of guidelines through the Forest Practices Code that will ensure a sustainable, stable future for our province. Not only that, but the protection of the wildlife habitat -- the biological diversity of our province -- and of watersheds and streams that has been espoused through this code just means that the international community can look at this province in the future and say: "Yes, they do have a plan. Yes, there is a sustainable development plan in process. And yes, we could buy British Columbia products with confidence."
I heard the previous speaker say he's a little concerned about the cost. I'd like to repeat myself a little by saying the cost of not doing anything in this regard would have been tremendous. He also mentioned that he hoped he wouldn't see this disappear in a blizzard of paperwork. That's what's happening right now. As I mentioned earlier, there are thousands and thousands of regulations that are just.... There's paper getting shovelled around every day, and it's been ineffective. We now have this comprehensive code, and I'm sure the cost will not be as much as what we're now paying in an ineffective way.
I'm very proud as a government member, and especially as an MLA for a resource community, to stand up and support this code today. I've heard nothing but positive remarks in my community from industry, from those who work in the forests and from the people in the community who don't work in the forests but who do derive benefit and spinoffs from the kind of wages and economic activity that flows from forest activity. Sure, there are some concerns that we're getting into a whole new set of regulations. Sure, there's concern that they might be faced with overregulation in certain areas. But once we've done this public review and been out there for the next 18 months assuring people that it's in the best interest of all of us and of the future of the forest industry to make this code work, I'm sure these fears will be allayed to a great degree.
Each of us who are MLAs in this House will probably be able to jot this date down in the annals of our history books. We'll be able to say to our kids: "I was an MLA in the B.C. parliament when historic legislation was brought down." They'll be saying as they stand and support this bill....
Interjection.
F. Garden: I hear one opposition member laughing over here, but I'm sure -- as he stands with us in support of this bill and as we pass it through this Legislature -- that a few years from now he's going to be standing up just like I will be, sticking out his chest with pride and saying: "I was an MLA when the historic legislation came down." So I won't say any more than that I'm proud to be a part of the government and of the initiative on this new Forest Practices Code.
R. Neufeld: I stand to respond to Bill 40, the Forest Practices Code of British Columbia Act, which the government has introduced. I can say, going back a way, to early and mid-1991, before the NDP were elected, that the previous administration had started a process of gathering information and amalgamating statutes and rules and regulations, to come up with a forest practices code. I believe the minister responsible at that time was Claude Richmond. There was a need, and had been a need for a long time, to get into one document, if possible, all the regulations and rules that were needed to govern and look after our most
[ Page 11176 ]
important industry in British Columbia, which is the forest industry.
Since that time, we've obviously had a change of government. The NDP were elected in the fall of 1991, and along with that came a bit of a philosophical change in the direction that had started the process of getting a forest practices code in place. Today, some two and a half years later, we have Bill 40, some 164 pages with approximately 325 sections, dealing with almost everything from mushroom picking to landscapes, roads and forest practices -- hopefully, the government feels, everything that is needed to look after our forest industry.
But unfortunately, there are some questions that come from the Forest Practices Code that all of us should be very concerned about. To be fair, these are probably initiatives from the green side, as I call it, of their caucus, or possibly from the supporters of this government in the radical environmental movement.
The minister talked earlier about what has happened in British Columbia under past forest practices. Mr. Speaker, I can tell you, as I've said in the House many times, that if we want to continue to harm our forest industry's overseas markets, all we have to do is continually stand up, as the Minister of Forests did just recently, and talk about the terrible forestry practices in British Columbia.
Many things change over time, and forest practices are one of them. We could make the comparison between the forest practices that were in place some ten years ago, when the price of lumber was maybe a third of what it is today and the ability to do all the things that we're talking about doing today was not there. We can talk about automobiles that were produced in Canada and the U.S. that were high in pollution compared to what we have today. That doesn't mean that everything was so terrible then. It means that the public is demanding change and that our environment is demanding some change that we have to adhere to. I certainly support the initiative that we have to adhere to the environment on this planet and to maintain a sustainable forest.
Obviously, the rate of harvest was not sustainable, and some changes have to be made; I agree with that. But taking a big stick.... When the Forest Practices Code was released, the minister's release said: "Tough Enforcement the Key to the New Forest Practices Code." That doesn't go far toward saying that we're moving along in the world, that we're moving along in technology and that there are changes in public demand on our forest sector within the province. All we're talking about here is tough enforcement. That may mean something to the minister and the government, but it certainly is not something that the people in British Columbia are all that keen about. Of course, they realize that there has to be a different type of enforcement, but to continually talk about how tough this is going to be on the forest industry is not the way to go.
In fact, if you go to the "Summary of Public Input" from the tour that government did across the province -- where they went to different communities with the Forest Practices Code so people could look through it -- one of the questions was about incentives that could be used to encourage good forest practices. I want to read some of them. One of the responses from the public at large was to increase and maintain the annual allowable cut. Others included reducing stumpage fees, offering tax incentives and reducing planning or licensing requirements. That came right out of the study, the "Summary of Public Input." They don't say that government should take the big stick and increase the fines from $2,000 -- which is minimal, I agree -- to $1 million, or talk about $2 million or $3 million. The public didn't say that at all, and that's where this government is missing the boat. We shouldn't be talking that way continually if that's not what the public is saying.
[3:30]
What we are afraid of -- and I think what will be coming when we listen to the Minister of Environment and when we also go through estimates with the Minister of Forests shortly -- is a bigger bureaucracy with more people and more costs. The last member talked about a flood of paper in permits and regulations that industry won't be able to keep up with -- and neither will the public or the government. That's what people want to get away from. They don't want increased bureaucracy, where a tremendous flow of paper just seems to keep everyone busy. People over here and over there want to see some action. That is a fear, and it should be a fear of the government also -- unless the member for Cariboo North just wants to see an increase in employment within government. I don't think that's the idea. If there needs to be an increase in employment within government, fine, there's no problem. But if there doesn't have to be, then we shouldn't be forcing the issues through so many regulations that we have to increase the bureaucracy and the numbers of people working within it.
There are many concerns across the province with the Forest Practices Code. I understand and our caucus understands that it's needed so that government and industry can work hand-in-hand and in more of a partnership for the good stewardship of our forests and our main industry -- one that provides most of the money for all the things that we enjoy in British Columbia. It is very important to all of us, but there is a tremendous financial cost to it that the government and industry have to deal with.
In fact, if I go back to the 1994 budget manual, I see where it states that some $70 million is set aside for implementation of the Forest Practices Code in this year alone. That's within government, and we're hardly starting on it. How much is that going to be next year? That's what we have to be concerned about. Industry talks about $200 million to $300 million to implement the Forest Practices Code. When you take $200 million or $300 million from industry, another $600 million or $700 million from industry for the renewal of B.C.'s forests and another $50 million to $100 million in government expenditures, it's a lot of money. And they are laudable goals. We should try to do the best that we can with our forests in British Columbia; no doubt about it. But what happens when the price of lumber goes down, if that comes? We're talking about more than a billion dollars in costs to that industry. That industry is and always will be very important to British Columbians.
Coming from a constituency where there are a number of one-industry towns, I can tell you that it's very hard on those communities when those industries die or go away. It's hard on those people, and in the end it's hard on all British Columbians. People in the lower mainland and in the cities may think that forestry does not impact on them. If you take forestry out of the province, it's going to impact on each and every one of us.
Another large concern of industry is the land base. They don't seem to know from day to day -- and haven't for the last three years under this government -- what land base they have to work from. They need to know what they can harvest, where they can harvest, what is theirs to grow trees on and what is not -- something similar to the agricultural land reserve -- so that they know what they can do. When you talk about reductions in the annual allowable cut, timber supply reviews, protected areas strategies and CORE, it's just piled on top and on top. Then we have the Forest
[ Page 11177 ]
Practices Code, with all the regulations that go along with that. No wonder industry is a little bit nervous about what they are going to do in the future and how they are going to do it, because the forestry industry is much different than a lot of the other smaller industries. It takes 80 to 100 years to grow a tree before it can be harvested. They have to have some land base and tenure to work from so they can make the investments needed to rejuvenate our forests.
There are many concerns about the Forest Practices Code, not just from the opposition but from the professional foresters, because the Ministry of Forests and the Ministry of Environment both have a fair amount of control over the size of cutblocks, where they can cut, how they can build their roads and all those associated things. The Association of B.C. Professional Foresters is very concerned. I read from one of its news releases, which says that provision for professional judgment and allowances for differences in professional opinion are needed versus the highly detailed recipe approach and the tough enforcement stance proposed. So there are some difficulties to overcome in melding together the Ministry of Forests and the Ministry of Environment.
That's not just peculiar to the harvest of forests. I come from a constituency where the oil and gas industries have tremendous difficulty dealing with the Ministry of Environment, the Ministry of Energy, Mines and Petroleum Resources and the Ministry of Highways. It's a mishmash of everything. In a smaller, less populated area, you don't see it so much. You see a well being drilled. It doesn't take place on thousands of acres of land, so it's not out there so much for people to see. I think there's going to be some difficulty here with the Ministry of Forests and the Ministry of Environment, and we have to be cognizant of that.
As I stated earlier, our caucus agrees with the Forest Practices Code. We agree that we need one, but we also agree that it has to be a workable document. It has to make sense so that both industry and government understand it, and it should not be a code that two different government ministries are going to try to enforce. With that, I would like to say that we as a caucus are going to look very closely at it during third reading, when we go through all the sections. We will bring out areas that are of the greatest concern to us and that we think will be of concern in our different areas. One concern we are cognizant of -- and I am, specifically, because of where I live and where my constituency is -- is that things are not done in the same way on the Island as in northern British Columbia. We have to take those types of things into account. You don't harvest the same way in the interior or the north as you do on the Island.
The Minister of Employment and Investment talks about voting in favour of it. We are in favour of a forest practices code. But, as I said, we're in favour of a code that is workable, that makes good common sense and that will be affordable for all. With that, I will wait for third reading.
G. Wilson: It is with pleasure that I rise today to speak in favour of this bill. The member for Cariboo North said that this is a historic day in British Columbia. When we look back on this debate, many of those who participated in it will review this as a historic day, because it is for future British Columbians, who have to depend on those of us in positions of authority and power today to make correct and appropriate decisions so that they can enjoy the bounty of this province that we take for granted.
When you're in second reading, on a question of principle, of an act of the magnitude of Bill 40, the Forest Practices Code of British Columbia Act, it's interesting because the regulations, the standards, are perhaps more pertinent and critical to those involved in the industry, and to those who wish to continue to watchdog the industry, than the actual wording of the act itself.
I would like to congratulate this minister for bringing forward the proposed forest practices standards today and for recognizing that there has to be some time for review and adjustment. Quite clearly, the guiding principles of the standards that have been put forward, when read in conjunction with the Forest Practices Code and analyzed within the broader picture with respect to two other major initiatives this government has undertaken.... One is the BC Forest Renewal Act, and the other one is CORE, the Commission on Resources and Environment. We have to recognize that this government has embarked upon one of the most extensive reviews and one of the most extensive development projects in the history of the forest industry of this province. Whether that will be good or bad is going to be determined in large measure by the extent to which there is flexibility and understanding for those people whose livelihood is dependent upon the industry -- if indeed we start to recognize that in the field and in the actual application of what appears to be reasonably good in principle, changes need to be made.
Let me say that in principle we can support what is proposed here, because for the first time we are recognizing that notwithstanding the fact that the forests are a renewable resource -- and they are renewable -- that does not mean they are there for us to harvest without limits, without proper and adequate stewardship. It does not mean that those resources are not confined with respect to other legitimate economic activities that people in this province may wish to engage in. Furthermore, it also recognizes -- for the first time, I think -- that there is a need to heed the very real, very clear environmental warning signs that are out there now, which suggest that we have to place a greater value on that resource than simply its dollar value as timber or fibre. Rather, it's the overall value that a properly managed ecosystem provides us in terms of our air, our water, our land and all of the species that are dependent on them.
If there is an objection that I and the members of the Alliance have, it is simply that the principle of this bill does not clearly identify a limits-to-growth strategy. It does not clearly identify that we must look toward the definition of a working forest and, in the provision of that working forest, understand that there is a limit to our ability to grow.
I suggest that is a critical point. When you look at the guiding principles of the practices standards released today, the wording of the documentation in front of us is somewhat ambiguous. It talks about the need for the provision of responsible stewardship, for the sustainable use of the forests, for the inherent productivity of aquatic and terrestrial ecosystems. It talks about economically viable and sustainable forest industries without providing us with a definition of what that means in light of an expanding population.
[3:45]
British Columbia's population is expanding, not only by virtue of the fact that we are reproducing within the province, but clearly in-migration is happening as people across Canada recognize the value of the lifestyles and resources that we have here. The next major global migration will certainly provide increased populations in British Columbia. So there is going to be an increased demand not just on the wood to build our homes and the fibre to make our paper but on the very land that currently supports the vegetation. We are going to have an increased demand to take greater and greater amounts of land out of the working
[ Page 11178 ]
forest in order to accommodate greater and greater numbers of people.
You see that expansion taking place in the rural parts of British Columbia. You see people moving into what they see now as rural and rather peaceful environments. When they recognize within five or ten years the harvesting plans of those companies that have a legitimate right to access that timber, we start to get conflicts. We start to get community conflict, from the demand to protect watersheds -- which is absolutely critical if we're to establish viable communities -- through to the management of viewscapes. People have often built homes because they wish to look at a view and have the ensuing ambience of that view, and they are going to demand that no logging occur or that a cessation of logging occur if a proposed clearcut may happen to impact their viewscape.
These are the kinds of things we can already see now. We can hear people talking about them now. Within the standards and principles of this Forest Practices Code there is an opportunity for a chief forester, a district manager or a district manager's delegate to make very critical decisions on the protection and provision of those services. Those powers are transferred into the hands of a very few individuals. It suggests that if it is the personal opinion of a district manager or designate, or an environmental official, they can essentially enact regulation that prohibits legitimate harvesting of timber in communities.
[D. Lovick in the chair.]
Those are pretty scary propositions for people in the forest industry. While we recognize that we need limits-to-growth strategy, we must also recognize that we must have a defined working forest. There must be a designated working forest, and we must educate the people of British Columbia as to what that means in terms of silviculture needed to initiate growth where harvesting has already occurred in the set-aside -- if set-aside is required for the protection of old growth, water management or conservation of soils. But most importantly, when timber becomes available in those areas designated harvestable, that harvesting must be permitted. There has to be some guarantee that that fibre will be made available, and there has to be some proposition for the stewardship put in place through this Forest Practices Code to increase the amount of timber over the long term that will be available through the harvesting practices, as we start to become more adept at doing so.
What is really critical in this proposition is that we don't create such an enormous bureaucracy or web of regulations or restrictions that we lose sight of the objective of this plan. That plan is to make sure that we have a viable industry, not only for this generation of British Columbians but for future generations, and that not only do we have that industry intact but we also have the ecosystem that supports all of us and the lifestyles that we enjoy, whether we are engaged in the forest industry or not.
There are three areas of serious concerns. The first area was alluded to already, and it has to do with costs. In this enormous initiative that this government has undertaken with respect to the forest sector, we have seen the creation of a new Crown corporation with ensuing regulations, staff and cost requirements. We have seen the implementation of CORE, with the ensuing costs, regulations, staff and so on. In the creation of this act we see additional entities created for the proposition of looking at and maintaining some kind of forest practice through the creation of a Forest Practices Board: a new board with new authority, new opportunity to regulate, and through an appeal process, with again a board that talks about independent review and independent appeal.
In the legitimate attempt to manage this industry in a better, sounder and more appropriate way, I have a serious concern that we are, in fact, creating a huge bureaucracy that is going to have to be supported in its management. It is the cost of that bureaucracy that drives up government debt. It drives up our annual deficit, and it creates long-term costs to the taxpayer. When I talk about limits-to-growth strategy, it must include a limit to the ability of government to increase its size and regulatory authority and thereby increase its tax demand on the people of this province. When we see what is taking place in these initiatives, the first of my three concerns is that we are creating an enormous bureaucracy, and we cannot afford that. It should be the rule of thumb -- and those in the Alliance believe this to be so -- that it is the role of government to regulate, not administrate. We regulate, not administrate, because through the provision of regulation we can enforce regulation at a cheaper cost than attempting to administrate over a particular economic activity. The administrative cost is what's driving our debt ratio higher and higher. That can be said of the forest, health care and education industries. When government insists on administrating rather than undertaking its proper role, which is to regulate, it is those costs that create the problem. That's our first concern. We're going to address it in committee stage, because we can see many areas where simple regulation could have taken the place of what we believe to be a new and very expensive bureaucratic administration.
The second concern we have has to do with the aspect of community involvement and initiative. We had hoped that we in this province would start to recognize a need for us to move away from the vertical integration of the industry. I've had opportunities to speak on this question with the Minister of Forests on a couple of occasions. We've agreed to disagree with respect to changing licensing within the small business program to make more fibre affordable to small business, to the reman industry. The Alliance is absolutely committed to making more fibre available to the reman and small sawmill industry in this province, because we believe that is the lifeblood of many small communities. The minister disagrees, and that's fair enough. We understand his position. But when we look at the Forest Practices Code we recognize that when they had an opportunity to move toward greater decentralization of this industry into the communities, and therefore enhance the opportunity for operators in small communities to benefit, they missed the mark.
This Forest Practices Code is going to favour the large integrated industry over those that are smaller. It does so in a number of ways, such as through the provision of fines -- notwithstanding the minister wanting to make the fines higher in order to look after the interests of the forests. We don't necessarily take issue with that. But in the provision of those higher fines, consider that if small operators find themselves in breach of this code, they will not have as equal an opportunity to meet those fines as the large major corporations, which have an army of lawyers who can go through appeal and fight the cost of those fines -- long, protracted legal and litigation costs that are very expensive and simply out of the reach of small operators.
So this code favours the major forest companies; let there be no doubt about that. It also favours the provision of a greater supply of timber through the majors into the
[ Page 11179 ]
traditional vertically integrated industry, which we in the Alliance believe needs to be addressed in British Columbia. That's our second concern with this particular code: it doesn't look after the interests of the small operator.
The third proposition we have some serious concerns with is with respect to the actual enforcement teeth this code will have, particularly the enforcement of soil, water and range management in B.C. I congratulate this government to some extent, in that they have attempted to address all of those questions in the forest practices standards.
We certainly give full marks to the riparian management area concept. The riparian management section, where they're talking about wanting to set aside areas along and adjacent to streams, and stream management, is a sensible idea. And to remove harvesting in permitted reserve zones around riparian management areas on lakes and community watersheds is a sensible proposition, where those water bodies are deemed to be larger than five hectares. We wonder in some instances how they're going to make distinctions about the five-hectare size of water, but we'll get to that in committee stage.
We heard a passionate speech in a ministerial statement today by the Minister of Agriculture and Fisheries, who's concerned that the salmon on the coast of British Columbia are going to be depleted because we can't make an agreement with the Americans. That's probably true in part, but what's really true is that we in British Columbia have not looked after that resource over the years -- and it continues even today. Even today, there are many midcoast areas in which salmon streams are being totally eliminated as a result of forest activity, because enough consideration has not been given to the maintenance, management and protection of salmon habitat.
If there's a crusade that every British Columbian should be on right now, today, that should be to protect the viability of the Pacific salmon. If we don't look after the salmon, the herring and the fishery in general -- in particular, the non-pelagic species, the halibut and cod -- we will have lost a major aspect of coastal communities that extends well beyond the bounty covered in this proposed forest practices and standards act.
Yet this government has attempted -- and one needs to give credit where credit is due.... One needs to say that we have taken a major step forward in the protection and maintenance of habitat, particularly with respect to the salmon. And if we do not move swiftly in those areas, we are going to find ourselves in trouble. So we think that the riparian management area is a good concept, which I think British Columbians generally will support.
But what about the enforcement provisions, given the kind of authority that is now going to rest within the Ministry of Forests? We've created this new Crown corporation under the BC Forest Renewal Act -- a very expensive administrative entity, which we did not support, because we don't believe we need that new Crown corporation and its massive costs. The authority is given to district managers, who have woefully inadequate staff levels already, with respect to the fieldwork that needs to be done, both in advance of harvesting and, most particularly, to ensure an adequate and proper assessment and review of the harvesting once it's completed.
We're concerned from the public's point of view because, after all, we deem that the forest is indeed a public resource; therefore we're concerned that the public is not going to have its interests looked after. We're also concerned that the industry is going to find itself in a rather hazardous situation if there is not a consistent, independent and appealable process of enforcement, regulation, control and review. When I talk about independent, I mean independent. I don't mean a review process that can be done arbitrarily through the offices of the Minister of Forests or a district manager. If there is going to be a proper review of forest practices standards -- as put out in the regulation package, which is a companion piece of documentation with the Forest Practices Code of British Columbia -- then there must be arbitration that is truly independent, conducted by people who have sound scientific training and understand what they're attempting to regulate.
[4:00]
Hon. Speaker, you may wonder why my comments address this issue so harshly. If one looks at past practices in my own area, we have seen that the above has not been the case. Sadly, in the past we have found that regulations have been in place and authorities have gone into the field -- but not from the staff of the Ministry of Forests, who I believe to be well-trained and dedicated civil servants. People have been brought in on a consulting basis who clearly have not had the sound training in science to be able to make assessments that are going to have any foundation in science whatsoever.
So as we look at the implementation of the proposed forest practices standards, we recognize that they must be based on sound science. For example, it talks about the setting aside of sensitive areas in a number of categories. "Visually sensitive," it says. What does visually sensitive mean? We need to get at that in committee stage. What does it mean to have visually sensitive areas, or areas containing significant recreational resource values? Who determines that? Who determines the value? Who determines to what extent recreation may in fact be a component part? Does it mean just those people who wish to backpack? Does it mean canoeists? Does it mean people who recreate by way of camping? Does it mean we are going to give provision with respect to park dedication and allocation? Does it mean we are going to review and change the past joint-use proposals that worked so well in some areas?
It says that if "in the opinion of the district manager or designated B.C. environmental official" it is "important for the management of biological diversity," that provides that district manager or their designate with the ability to make determination with respect to treating that land differently. That has to be based on sound science. It can't be based purely on the political whims or wills of any individuals if we are to give any long-term commitment for this industry to be able to grow. If we're to have the support that this Forest Practices Code will require of the communities throughout the province, then we are going to have to make sure that sound science prevails, to protect both the public interest and the interests of those companies that invest in the forest industry.
I have given three areas of concern. I have suggested that this government is to be congratulated in large measure for attempting to implement these measures. I wish to conclude my remarks in second reading by simply speaking to two principles that I alluded to earlier. We in this province must look toward a new economic paradigm. In doing so, we must recognize the wealth of this province. For future generations of British Columbians, that wealth is going to be determined largely by the decisions taken today to protect our primary resources. We have seen that, sadly, we have not done a very good job in the past. We have to recognize that today is the first day of the future of this province. Therefore the decisions that we make today must reflect a sound and sensible commitment to an economic strategy that calls for limits to growth.
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Sadly, this government has yet to move to that initiative. It has gone a number of steps toward it, but it has not embraced the concept or understood that it is the only one that will provide for long-term stability, both from our ecosystem point of view and, more importantly, from our societal point of view.
The second and last remark I want to make on the Forest Practices Code has to do with the issues that were alluded to by the member for Cariboo North and by the minister himself. It has to do with the perception that people in Europe have of the products coming out of British Columbia, and of the role this Forest Practices Code will play in allowing them to know that those products are safe for their purchase from an environmental point of view.
It will take more than a forest practices code. It will take a real commitment to a new land use strategy. It will take a renewed commitment to recognize that this province must start to make decisions for British Columbians that are sensible in their long-term projection but also sensitive to the economic need to protect the fundamental basis of our economy: our forest, fish, agriculture and mining industries. If we do not make that commitment today, and if we allow, through the provision of these practices and standards that we are placing in a review of these.... If we do not recognize that we must, above all, make sure that the wealth of future British Columbians is protected, all we will have done is cater to those people who will forever wish to get access to our resources for the benefit of those abroad. It is high time we had people stand up and fight for British Columbians. It is high time British Columbians moved to make sure that they protect the interests of future generations who will reside in this province, and who will come to reside in this province and, in the provision of that, make sure that we start to truly decentralize the wealth of this great province into the communities that are its backbone.
It's all very well to sit in the cities and determine how we're going to let the rural parts of British Columbia grow, expand and prosper. It takes much more for us to go to the rural regions of the province and listen to the people, to understand their concerns and fears when they see us moving to this new economic paradigm and to recognize that they wish to maintain a lifestyle that is honourable and long-term and that has a history of having built this province -- and, I would argue, this nation -- into what it is today.
It is an arrogant government, indeed, that sits in the halls of the large urban centres and dictates to the rural parts of this province about what they can and cannot do with the land they have managed to date. It is an honourable government that goes to the people and listens to them and, upon hearing their concerns, places back into their hands the public trust we are elected to protect -- to trust people to make decisions for their communities; and to trust that in making those decisions, the people are not only looking after the long-term viability of their communities but are also protecting future generations of British Columbians. We cannot rely on external forces -- corporations registered outside our borders -- and we cannot put our faith and commitment into a global economic community unless we're prepared to put faith and trust in the people of British Columbia.
I hope that this Forest Practices Code is the first step toward that proposition, because it's high time people in British Columbia recognize that we are here to serve them. We are the servants of those people, and they are telling us that they wish to have greater control over their lives and wish to have a future for their children. I appreciate the opportunity to speak on this. The members of the Alliance are in support of the Forest Practices Code. In committee stage we will be taking issue with what we believe to be a serious breach in some of the language, which we think needs to be cleaned up and clarified.
N. Lortie: Hon. Speaker, I seek leave to make an introduction.
Leave granted.
N. Lortie: On behalf of the member for Port Moody-Burnaby Mountain, I would like to introduce 28 grades 5 and 6 students and several adults from Glenayre Elementary School in Port Moody. They are led by their teacher, Mr. Dawodharry. Would the House please make them welcome.
C. Evans: I ask leave to make an introduction.
Leave granted.
C. Evans: Visiting the precincts today are 39 students from North West Community Technical College in the state of Connecticut, and their teacher Ms. Riggio. Would the House please make them welcome.
D. Jarvis: I would like to preface my remarks on Bill 40, the Forest Practices Code of British Columbia Act, by first saying that I will be voting for it. However, I can't let it go by without saying a few things about this government, because they don't do everything perfectly. There are considerable features of this bill that I just cannot comply with or feel are proper. As you're aware, there are 324 sections in this bill plus over 100 regulations, and I believe that some of these features are offensive to the people of British Columbia and this province as a whole.
An old statesman out of England years ago said that this type of legislation is a classic case of socialism, and that socialists promise a workers' paradise but always deliver a bureaucratic nightmare. This bill is a classic case in that sense. Certain sections of this bill, as I said, could also be considered a little draconian to the industry -- a kind of persecution of community and community people through-out this province -- when you consider aspects such as the deactivation of roads under section 64(4). As I said, it's certainly a bureaucratic nightmare when you have to know and consider all those sections.
In any event, the premise of this section -- as you probably are aware, and as I have been informed -- is to return the roads to their original state and topography in order to avoid future possible slides, etc. There is also the hope in this legislation that roads could be replanted and the harvest added to the allowable cut. That's all very well. Some of these aspects are very good and could even be considered admirable. However, I'm suspicious that a true benefit will in fact come from this aspect of the bill.
I can see, for example, room for deactivation of small skidroads or spurs in temporary areas. But for the main roads I find it incredible, and I would have to say that this is not the answer. Main roads must be considered as belonging to the people of this province. They are assets of the Crown. They were paid for through stumpage fees. To destroy these assets is a ludicrous prospect. The value of these roads to this province is really unknown. It's hard to calculate both what they were worth in the past and will be worth in the future -- not just for commercial purposes, such as mining, etc., but for use in hunting, fishing and tourism by average citizens in campers. They will see ditches across these roads, which
[ Page 11181 ]
were paid for by the Crown, for years to come, because it will be a long time before they're back to their original topography.
I disagree with the fact that these roads will be cut off and ditches put across them to prevent the people of this province from exploring their own province. Local tourists, citizens of this province and people who explore and develop B.C. will now be denied access to anywhere that they want to go through the system of old logging roads and all the rest of it.
[4:15]
This government is intending to put in quite draconian road regulations, when it could put in simple regulations for hunters and people walking in the bush. We can all see deactivation on a mountainside with steep crevasses below or steep sides where there are creeks formed by melting snow that could cause potential damage, but they could be attended to on their own. But in an average area in this province, which is not subject to slides and where most of it is in forest, what is wrong with the people who have used this for years walking through the bush and going out hunting or fishing? Now they no longer have access to these areas. This is where the bill becomes somewhat offensive to me.
One wonders if this is not a concise and deliberate plan for some other reason. I don't know. The minister's assistant has already said that this bill will change the accounting of free enterprise in this province. Also, this bill spends a good deal of time on penalties, fines, monitoring and enforcement. When the minister lauds these aspects of the bill, he appears to be telling us about the hundreds of new law enforcement officers -- I believe he said 100 to 200 -- who will be put out into the forests of this province to enforce all the sections of this bill. To me, that is not what you'd call a watchdog forestry police, which is what he pretends to have. My feeling is that as good as this bill could be, and as good as it is, again there is a draconian approach with this forestry watchdog. Instead of providing a shield to protect the province, he is sending out 100 or 200 forestry officials with their swords, looking for people to penalize.
Before I close, I would like to say that this bill leads me to consider the old statement of Dr. Thomas Gunton, a seer of this socialist NDP, about his resource policy. He said that all resources should be controlled by this government and taken out of the hands of private enterprise, and that the quickest, cheapest and easiest way is through overregulation. Well, this is a prime example of overregulation in this province.
I worry that instead of supporting and enhancing the industry, this bill will cause irreparable harm. These are just a few of my concerns. We will go into further detail when we get into committee stage. There will be more questions than answers, I'm afraid, but the big question is tenure. Will there be any tenure left in British Columbia when this government is through? I wonder, and the industries wonder. A workers' paradise is what we should be working for in a free enterprise and free business environment, not the bureaucratic nightmare that this bill could possibly lead us to.
I conclude by saying that I am a fourth-generation British Columbian. I was born in this province. Not only that, I'm concerned for the future generations. My family has been here for six generations, and I'm concerned for their children and their children's children.
C. Serwa: It's a pleasure to stand up and debate the philosophy and principles of the Forest Practices Code, Bill 40. As I listened to the minister speak in second reading on this, he was fairly hard on the former government. However, I have to advise the minister -- and the minister knows this full well, although he's probably reluctant to admit his knowledge for public redistribution -- that work on the Forest Practices Code was initiated by former Minister of Forests Claude Richmond. Certainly there is a valid reason for the code. As I talk, I too will support the philosophy and principles of the code. The former government initiated this practice, along with the old-growth strategy and a number of other components that were moving in this direction.
Why is the code necessary? There has certainly been lack of public confidence in forestry. Part of that was fuelled by reality over a long period of time; part of it is fuelled by radical environmentalist groups with confusing information and misrepresenting situations. Part of it is from the lack of absolute familiarity with forestry and forestry practices on the part of individuals who live in the greater Vancouver area or on the southern part of Vancouver Island. A number of other challenges have created a situation where we've had to develop the Forest Practices Code. The shape of this is perhaps substantially different than it would have been with our government, and we will get into that when we go through section-by-section debate in Committee of the Whole.
I've heard a great many concerns expressed in this Legislature, saying that we've done a lot of things wrong. Perhaps we have, and perhaps we haven't. We look at some of the critics in Great Britain or Germany and recognize that they've done a great deal more wrong than we will ever do in British Columbia. Great Britain was forested. Even in Scotland there were mighty oak forests. But all that has vanished. It has vanished for a number of reasons. One reason, of course, was to build the mighty fleet of Britain that ruled the seas some 300 years ago. The reality is that it also vanished because of the need to support a growing population. They had to clear more land for farming and for agriculture. They have not replanted the forests, and a lot of the land is not used or developed really effectively at all. In Germany a similar situation exists. Perhaps it's a balm for the conscience of those people in Great Britain and Europe to criticize British Columbia for forestry practices. Perhaps it's a very favourable type of an exercise to partake in, because you're not pointing the finger at yourself; you're pointing the finger at someone distant, somewhere distant, and you're quite immune to any type of controversy. The easiest thing in the world to do is criticize.
But there was a tremendous increase in forestry development in British Columbia, starting in the early 1950s. That started out with the vision of W.A.C. Bennet to give British Columbians equal opportunities for economic development no matter where they lived in the province. I see the member for Nelson-Creston smiling, and I'll be talking about that particular area in a little while. In any event, a great deal of the province was opened up for economic development, and forestry at that time provided the mainstay of development. It was good. It fuelled the expansion of B.C. Rail and of our highway systems. It provided the base support and the revenues for very impressive and much-needed structures such as dams and power distribution systems. We continued to build on that format, and on that format we built this mighty province, with opportunities for all people, residing wherever they might in the province, for good medical facilities, health care, educational facilities and certainly a good social service system. As well, we fuelled many other areas, even advanced education. And forestry plays a significant part in this.
Some of the pressures on the industry have come about simply by the need by government for the revenue to fund a
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number of the ministries I have mentioned. Another pressure has come from the fact that we now have, I believe, the highest-paid woodworkers of any jurisdiction in the world. Some might smile and say that's a very good thing. I might question how good a thing that actually is, because we have lost so many of these forestry workers over the years. This has put a great deal of pressure on not only the volume of timber harvested but the manner in which that timber has been harvested. Because of higher wages, we had to use more equipment. Now it's unusual to find people on the ground. In the interior everything is done with feller-bunchers and grapple-skidders. Even the bucking at the landing is done by a man in a machine, and the logs are handled and processed that way.
I worked in the bush one year when I was 15. We put out in a month what most small operations would probably put out in a day, and that's what the large equipment has done. Large equipment has been virtually impossible to work with in selective logging. Even in stands with a number of different species at the lower elevations, short-log logging and selective logging has been virtually impossible. It is driven by the cost-effectiveness of the whole thing; and it must be cost-effective. Those are some of the challenges.
There is a cost component, which we can't ignore. We might say that we are altruistic, perhaps put a moratorium on logging and do all sorts of things, but in reality we can't. As government, we can't continue to provide the services that we have grown to expect and that the public demands. Yet these expectations and demands continue to fall on the shoulders of government. So we need the revenue that forestry puts forward. We also need that revenue to continue to expand and develop British Columbia. It's the stepping stone to the next element of our development, which is to expand our manufacturing capability, and we need to move more rapidly in that direction.
I am confident that the forest industry supports the concept, and that's why I can so readily support the philosophy and principles behind this. The forest industry supports the concept because they have to have a one-stop shopping centre. It was not unusual for one ministry of government to demand one thing of a forestry operation and for another government ministry to demand something quite different, saying that if you do that we will refuse you permission. So you would get two or three different ministries with conflicting regulations, all on the same turf, which was very expensive and frustrating and virtually unworkable for the forest industry. The concept to bring all of the regulations into one-stop shopping is great. We have to have certainty as well as fair and equal treatment of all competing interests so that they can be assured that it's a level playing field.
I have talked about the concern with the foreign markets -- including fibre in the way of pulp -- and some of the hypocrisy that prevails in those foreign markets. The fact is that British Columbia has had a very extensive program in forestry matters as more and more people became more interested in that particular area. The forest is a resource that contains the habitat for the consumptive animal harvest, certainly -- whether it's moose, deer or other ungulates -- but it's also the complete and total ecosystem. We've had the beauty of the forest and the opportunity to use the forest in far more ways as our population increased. So we have a higher standard of expectations by the public. And that's what the Forest Practices Code is going to try to do: satisfy the public and reinstil confidence in the Ministry of Forests and the industry that is harvesting.
[4:30]
But there are a number of questions with the development of this act. The minister has said there has been extensive consultation. But apparently the consultation with the ranchers, for example, has not been very extensive. My understanding is that the ranchers are furious. Much of the area they depend on relates to ranching, and the park policy impacts on areas they have to utilize for Crown range. There hasn't been a great deal of consultation with that particular section.
The concern I have is again a cost component -- and that is not only with the $600 million in additional revenue that is going to be demanded of the forests. Right now it's not a difficult pill to swallow for the forest industry. With the market and the price of lumber so strong, if they don't put it back into the forestry, then it's going to have to go back to the federal government. So part of this plan -- the Forest Practices Code and certainly the forest renewal plan -- is funded by the federal government and other taxpayers in Canada; probably $300 million of that is certainly deferred income taxes. That's where some of the money goes.
But there will be a red-tape cost in this whole thing; the potential here for bureaucracy is incredible. The Forest Practices Code has to work, but it has to be practical. It can't be designed simply to satisfy the people in the urban centres.
I was referring earlier to Nelson. I was with the legislative Select Standing Committee on Forests, and we were looking at one small clearcut in the Nelson area. A couple of environmentalists were with us. Way off in the distance were two small, postage stamp clearcuts. And that literally destroyed their day, because it destroyed the view they had of this vast expanse of green -- and it is beautiful to look at. These people were relative newcomers to that particular area. They did not know or understand that the miners who went through that area had burnt the area clean because it facilitated prospecting. So in the late 1800s, at the turn of the century, all of this beautiful belt of green didn't exist. It was just blackened, fire-killed trees. That's a reality. This was not the way it always was, you see. There are some things here that are reality.
The Forest Practices Code also has to ensure that the rules are made up in concert with those involved in the industry. If only a small number of industry representatives but a lot of the other representatives are gathered at the table, there is no way the industry can continue to survive economically in British Columbia. The pressure and the demands of, let's say, theenviro-industry are such that they are inventing reasons we cannot continue to log and harvest trees in British Columbia. It is in their best interest, because they're catering to a group of constituents who are bound and determined to stop forestry altogether. I know that's not the goal or the ambition of government. But when I look at some of the sections, there's no question in my mind that this particular Forest Practices Code is meant to appease the environmentalists, who have felt very disenchanted with the environmental activities of the current government.
It is important that the elements in the code be based on scientific principles, not simply on academic whim, biases, rumours or hearsay. There is a great deal of concern, because a solid foundation based on facts is required so that they can accept this new cost burden. But looking at this cost burden and recognizing that the lumber market is cyclical, we have to understand that if the forest industry goes into a severe downturn, the taxpayer will have to continue to pick up the bill for this immense bureaucracy that is being created by this forest practices act and the immense cost of the bureaucracy with the forest renewal plan.
[ Page 11183 ]
Well over two billion trees have been planted; I think the two-billionth tree was planted in the province sometime around 1991. So there has been a great deal of work done on that, and we're concerned about the cost. We're also concerned with the extensiveness of the program and its very heavy use of the stick rather than the carrot.
An Hon. Member: Are you voting against it?
C. Serwa: The member asks: will I vote against it? No, I support the philosophy and the principles, but I don't support a lot of the elements. I really believe, when we talk about the carrot and the stick as principles, that we would be far wiser and we would utilize personnel far more efficiently if we used the carrot principle more often than the stick.
There seems to be some immense delight to come up with large fines, as if the reason that people are honest or do a good job is the harsh penalties. Why doesn't government see that there should be encouragement to those who are doing the right job? It should be financially more attractive to do the right job than the wrong job. Just because some of the bad operators create a problem, why should we draft harsher and harsher regulations and legislation to control those bad eggs in any industry? Why shouldn't we, on the other hand, reward those who are good practitioners of solid, sound forestry in the province? We could do this by reducing stumpage fees. We could encourage the right.... It wouldn't take very long for the accountants to see that it's much more cost-effective to do the right thing, rather than do the wrong thing and get away with it. It's a different tack.
I can assure you and the government, hon. Speaker, that if positive utilization of the carrot principle were instituted, we would require far fewer personnel to audit and be involved in forestry than the 200 FTEs the minister was referring to, who are simply to inspect the practices, virtually as enforcement officers, throughout the province. I think that we would have a far healthier situation.
Yes, the code does simplify a complex and diverse array of rules -- there were some 4,000. But they're setting new standards, and they're also setting an incredible number of separate field guides, so it's not going to be all that simple. There has to be the right system for developing the rules. You have to wind up with the right rules. You have to have the right system for administering the rules. You have to have a strategic direction that includes timber supply.
One of the realities is that we harvest, I think, approximately 75 million cubic metres on Crown land annually, and probably with present forest practices we could harvest about 60 million cubic metres annually. But the higher figure was based on intensive silvicultural practices, and they never came forward. There's some question in my mind whether we can actually engage in and utilize the intensive silvicultural practices that are referred to in the forest renewal plan.
When we talk about a vision of sustainable forestry, we have to understand that sustainable development has become a buzzword, and sustainable forestry is potentially the same thing. There are probably 200 to 250 definitions of sustainable development. What is the vision of sustainable forestry? Again, that is very ambiguous and very subjective. It's the subjective nature of a lot of the elements in the sections that we'll be talking about in Committee of the Whole.
There's a great deal of uncertainty. I'm confident that the concerns that I've expressed are valid. We will have a growth in bureaucracy. Some people will be comforted by the fact that there's a Forest Practices Code. This government operates that way. They draft legislation, and they assume the problem is rectified. It will not be rectified unless there are sincere and devout efforts made on the practical considerations. Forestry has to be economical. There are other materials that are now becoming more and more competitive. We're using metal studs in more and more of our buildings, not only in Canada and the United States but throughout the rest of the world. There are a number of other jurisdictions that are growing forests: southern pine plantations in the United States and eucalyptus forests in tropical countries. They substitute their fibre for softwood fibre in paper. So we have to be mindful of the market system and the fact that we have to be competitive.
With all of the other cost increases and with the cost increases from the Forest Practices Code, I'm not confident that this is sustainable. As I say, with a downturn in the market, the taxpayer will once again be faced with a huge bill for a giant bureaucracy with a great proposal and a plan that is not going to be well funded.
The concern I have about the Minister of Forests is simply this. Not too long ago the Minister of Forests, after much thought, deliberation and consultation with the coastal forest industry, indicated that a six fold increase in royalties was fair and reasonable. They had been getting away with too much for too long. He came out in a very strong manner, as he did when he introduced this bill in second reading. All it took was the head of Canfor, Peter Bentley, to indicate in a press release that there had to have been some grave misunderstandings between the government and the forest industry, and that same Minister of Forests back-pedalled. Now he's talking about perhaps a small fraction, perhaps one-sixth, of the increase. I don't have a great deal of confidence in the consultation process that the minister said he has gone through. The reality is that if you lose that much revenue, who is going to pick it up? The evidence is clear that once again it will be the taxpayer.
While I will support the principles and the philosophy of the Forest Practices Code, I will have a great deal of difficulty supporting a lot of the sections in this code.
R. Chisholm: I stand and support this bill in principle. I do have some problems, especially when it comes to the grazing aspects of this act and trespassing livestock. I believe this code is a good way to go, but this is not necessarily the final bill that we need to cover all the bases.
Unfortunately, in this bill we have some areas, such as grazing rights.... For instance, if cattle happen to break out of a cattleman's pastures and go onto Crown land, the rancher is liable for some horrendous costs. I have to agree with the other member. I just wonder if we're going a little too far with the carrot and the stick -- far too much stick. For example, DFO's answer to everything right now is to take the person to court. All we have managed to do there is spend multimillions of dollars and tie up the courts, and we're not accomplishing a heck of a lot. Yet if self-policing were put into place by the Cattlemen's Association and then the Forests ministry stepped in if somebody wouldn't comply, that would make more sense than arbitrarily stating in the bill that you're going to hammer this person. In the end, they can end up losing their stock or their equity in their ranch. This bothers me, so it has to be debated in committee stage.
Another problem is in the areas of liability and privilege. Unfortunately, it seems that an individual is liable to the government and liable for costs, whatever the case may be. But when it goes the other way around -- the government being liable to the individual -- that has been stricken out of the bill. That seems to be rather unfair, because governments
[ Page 11184 ]
have been known to be heavy-handed. I'm afraid that in itself is a bit undemocratic.
The last thing I have to say about this is that we have a bureaucracy which is far too large. We are now talking about adding another 200 people here or adding a Crown corporation there. This bureaucracy just keeps growing and growing -- and to what avail? Are we just taking this money and throwing it into the black hole again? This code will have to have accountability brought with it. But 200 more inspectors? Can the Ministry of Forests not take on some of this? In the area of grazing, for instance, can the BCCA not take care of the initial policing and then have the ministry step in? I think there are better ways to handle this so that we don't have to increase the bureaucracy but we still have the same accountabilities and checks and balances in the system.
[4:45]
In principle I support this bill, but I have some problems with some parts of the act, and we will debate that in committee stage. I'm just hoping that this government is open to amendments and will debate them in an honourable fashion and use some common sense and come to some common ground. Maybe this bill will end up being worthwhile to have in this province because, after all, this is a major industry that is one of the cornerstones of the province. It does need to be nurtured and protected. This is one way we can do it, and it has not been done in the past. In principle I can support the bill, but there are areas that I will address in committee stage.
L. Fox: I am pleased to rise and speak on the philosophies and principles of Bill 40. As my counterpart from Peace River North has stated, the Reform caucus supports the principles of this bill and will be voting for it in second reading. However, in saying that, I must suggest that from day one I have been disappointed with respect to this initiative. Five years ago the ministry and the industry recognized the need for a forest code -- a need to unify all the regulatory bodies under one code so that there could be some decisions made on a day-to-day basis with respect to what was in the best interests of the environment, of forestry and of workers. Those initiatives were taken some time back. Yet in the news release dated November 9, when he unveiled the forest code, the Premier made a statement that was extremely distasteful to me and, I think, to many British Columbians. It in fact fuelled the argument environmentalists were using in Europe and England against the industry. That statement was: "The unsustainable, unacceptable forest practices of past decades must never be used again."
I think that was an extremely distasteful statement by the Premier. It was obviously made to satisfy the environmental movement and supporters of the NDP government. In making that statement, he discredited a lot of the work that had been done by government, the Ministry of Forests and industry, and also the work done through FRDA, an initiative taken by the province and the federal government as early as 1982, when they recognized the need to reforest NSR lands. There has been extreme change over the course of the last ten years with respect to forest practices. The industry itself has been very innovative in designing equipment that respects and protects the environment. We have made huge moves in terms of our forest practices -- in cleaning up the forest floor and specifically in reforestation. The technological advancements in the last ten years have been substantial. So that statement made by the Premier on November 9, 1993, was a great discredit to the Ministry of Forests and the industry collectively.
Notwithstanding that, as I said earlier, there was no question in the minds of all individuals involved in forests -- whether they be guides and outfitters, local hunters, loggers or people in the ministry -- that there was a need for one code which would bring together all the different regulations. It's not unusual, though, to see this government taking a good initiative and turning it into something that accommodates their philosophy. We see this with respect to some of the initiatives contained within this code. We see that we will now be creating three new government bodies: a Forest Practices Board, a Forest Appeals Commission and a Forest Practices Advisory Council. We all know how much patronage this government has engaged in over the course of the last two and a half years, and, as with most other bills, we now see an opportunity once again for that to be enhanced substantially.
We in the Reform caucus reject that the big-state and big-government approach is the right way to go. In fact, we suggest that this could be done in a far more accountable way, with less government bureaucracy, and it could be far more cost-effective. When we look at the initiatives that have been taken by this government over the course of the last few months with respect to how they are going to impact that industry financially, we see a forest renewal package that is going to cost the industry $600 million directly. Estimates for the Forest Practices Code have been anywhere from $200 million upward. It's recognized that the price of lumber today is such that the industry can probably afford this at this time. But what happens in the future? Communities in my constituency are largely reliant on the forest industry for their economic base. I am concerned, as are the workers in my constituency, that this code is going to reduce their opportunities to have the kind of lifestyle that they've been allowed to enjoy over the last 30 years.
What we see here is a code that puts authority in the hands of a few. There is a concern that the interpretation, while meant to be regional in nature, may in fact be personal. We could have situations in many areas of my constituency when, because of a couple of days rainfall, workers would have to quit working to satisfy one of these 200 or more inspectors. That gives rise to the concern -- as the Speaker will know, because he comes from a logging area -- that there are certain seasons which are more conducive to logging than others. In my constituency, the least possible damage to the environment would be in the winter, when the ground is frozen for about four months at best. The concern in my constituency is that this code could force us to take more logs out during those four months of the year and provide less opportunity for employment in the other eight months of the year. That's a very valid concern, because much of my constituency is in a muskeg-type area, and the perception is that the machines would disturb the ground base after a few days of rain and therefore harm the environment. We have to be very careful when we move forward that we don't allow the pendulum to swing to the point that we hurt the very people we're trying to protect.
With respect to the forest renewal plan, I've stood up inside and outside this House before and pointed out that, in order to design a sustainable allowable cut, the number one need in the forest industry is a land base. As long as we have other initiatives -- whether through the CORE program, whether through the parks initiative designed in the past to take 6 percent more land for parks or whether through local protection groups that have designed log-arounds and protected areas.... As long as we have those land bases continually being extracted from forest lands, we're not going to be able to design a yield that will be sustainable. It's high time that we recognize the importance of setting aside a land base for the purposes of managing our forests.
[ Page 11185 ]
That does not mean to say that we cannot respect and work towards protecting other values within that managed land base. I very strongly suggest to you, hon. Speaker, that we must protect all other values with respect to that land base. However, we should also know that we're free to manage those lands in such a way that we can extract a resource on a sustainable basis. We don't have to look far or at too many nations to see that they actually manage less hectares and get a higher yield than British Columbia; but they have a designated land base for the purpose of managing their forests.
G. Wilson: And they don't have a huge bureaucracy, either.
L. Fox: That's right. My friend from the Sunshine Coast just suggested that they don't have a huge bureaucracy, either, and that is absolutely correct. The fact is that this government is hiring 145 new FTEs this year alone in the Ministry of Environment, and we're looking forward to another 200 in future years to enforce and regulate this code. It seems to me that we're taking a step backward rather than a step forward. We're creating a larger bureaucracy, where less decisions will be made and at far greater cost to the taxpayer.
We could have used those dollars to enhance forestry directly by putting it into the private sector, which is there and available. Those kinds of dollars could have been added to the forest renewal initiatives that the same minister put forward. We could have enhanced our silviculture as well as taken accurate inventories of the dedicated forest land, so we could have managed that forest land in a sustainable way. Instead we're going to spend the money, but we're still not going to be able to identify what a sustainable yield will be or the land base that it should be on.
[5:00]
There are many issues involved with respect to this forest code. One of the most important issues, in talking to the industry and to workers in my constituency, is how this code is going to be phased in. It's very important that this minister recognize that we presently have logging plans that were designed for five years using the previous codes. We have logging plans that are an actual prescription for harvesting that were designed for two years. Should this code come to be in October and be automatically placed on November 1, there is a real chance that you could shut down the forest industry in many areas of the province, because their new planning would not be accommodated in time to meet the new regulations. I hope the minister will seek out advice. I know that he's getting advice on the phase-in stage of this code. I hope he'll listen to that advice so we can have a smooth transition and not impact the very jobs that we're talking about with respect to this legislation.
With that, I will take my place. I look forward to third reading of the bill, to go through the clause-by-clause aspects of this legislation.
Hon. P. Priddy: It's with pleasure that I rise to offer support in second reading of Bill 30 -- or Bill 40, sorry.
Interjections.
Hon. P. Priddy: I'm eager for the next bill.
My understanding is that the minister may be on his way and may wish to close. In the meantime, not only for forest workers and the forest industry in this province but also for whole communities.... People often forget that when you develop a forest sector strategy and practices code, it's not only about workers and the forest itself. It's about the strength and the health of whole communities. That means families as well. Workers have partners, sons, daughters and extended families who work in the communities that support the forest industry. So this legislation is also about supporting all of British Columbia -- keeping whole communities healthy for children, for families, for forest workers and for all residents of British Columbia who believe in a healthy, sustainable forest future in this province.
With that, I move second reading.
[The Speaker in the chair.]
Motion approved unanimously on a division.
Bill 40, Forest Practices Code of British Columbia Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Hon. G. Clark: I call second reading of Bill 30.
AGRICULTURAL LAND COMMISSION AMENDMENT ACT, 1994
Hon. D. Zirnhelt: I'm pleased to have placed Bill 30 before this House and to now speak, of course, in favour of it.
I'd like to say that I'm sure the aroma that's permeating the buildings and precincts was sent with love from either the cattlemen or the fishermen. I don't have such a keen sense of smell that I can identify the precise type that has been applied, but I am assured by the gardeners who look after the precincts that the reason tourists can come here and proclaim the grand beauty of the flowers is the organic nature of the fertilizer the gardeners use. They tell me it comes from stables in the vicinity.
Interjections.
Hon. D. Zirnhelt: That would be guessing. I know that when we had the great demonstration at the front here, no one could pin down precisely the type of fertilizer that was applied the night before.
This government and citizens of the province know how important the agricultural land reserve is. It is commonly referred to as the ALR, and it was created in 1973 by a forward-looking and courageous government. The preservation of farmland is the cornerstone of a society that values its people and its resources.
We as British Columbians have benefited from the establishment of the ALR. Approximately 5 percent of the lands of this province have been designated as farmland and placed in the land reserve. This represents only 4.7 million hectares, which is approximately 11.6 million acres.
[5:15]
The ALR was not created in a vacuum. Farmland in B.C. was being converted at an alarming rate to urban and industrial uses for two reasons: (1) there were few controls on land use in rural British Columbia; and (2) B.C. was attracting -- and continues to attract -- immigration both from within Canada and from other parts of the world because of its desirable climate and beauty. It is clear that people value our province as a place to live. In terms of the share of Canada's population, only Ontario and British Columbia have grown compared to other provinces. B.C.'s growth rate is even significantly higher than its proportion. In fact, both rural and urban areas of British Columbia have
[ Page 11186 ]
grown by about 50 percent over the last 20 years. Most of that growth has occurred, and is forecast to continue occurring, in the lower Fraser Valley. Significant growth is also projected for the Okanagan Valley and for Vancouver Island.
These are the areas of B.C. with our best farmlands. The pressures on the ALR continue to mount as increasing numbers of British Columbians seek to meet their land needs for housing, industry and recreation. At the same time, we need these ALR lands to provide the food to nourish our rapidly expanding population. With so little farmland available, and given that there are one million more British Columbians than in 1973, the ALR has served this province well in protecting our farmland.
Local governments have been working with their farm communities and the Provincial Agricultural Land Commission to develop community plans that meet the needs of their citizens without compromising our scarce farmland resource base. Cooperation and consultation have usually produced community plans that reflect the balance of needs of the community.
It's important to remember that the ALR designation is an expression of the larger provincial interest that determines that the highest and best use of the land is for agriculture. The objective of the ALR is not to impede urban growth; rather, it is to protect our foodlands and to ensure that there is room in British Columbia for a vigorous and profitable agriculture sector. There's no reason why we can't protect our foodlands and encourage healthy communities at the same time. This has been, and will continue to be, achieved throughout B.C. by a close partnership between the commission and local governments. British Columbians gain so much from a healthy farm community: the ability to enjoy homegrown food of high standards and quality and the continuation of a way of life that is rural and community-based. The values of farm communities are the kind of values that contribute to a balanced society.
Farming is a critical component of the economies of many of these communities. Farm cash receipts for B.C. were $1.5 billion in 1993, an increase of 5.1 percent over 1992. Total net income for farmers for 1993 is forecast to be up 38 percent, to $430 million. The majority of this wealth comes from areas where farming is experiencing the greatest urban pressure, including the lower Fraser Valley, the Okanagan Valley and Vancouver Island.
Food self-sufficiency is not an issue for this province at present. But in other parts of the world we have recently witnessed changes in political and state structures of an order that many of us would never have anticipated. This is just a reminder that future social restructuring, combined with continued degradation of resources worldwide -- those resources needed to sustain food production -- are factors we must keep in mind. In the future, these may make us as British Columbians needful of and thankful for our ability to produce food for ourselves and our neighbours.
There have been many pressures on the ALR in the last 20 years. It is true that the overall size of the ALR has decreased by only about 0.3 percent in that time, but a large proportion of the losses were in the lower Fraser Valley and the Okanagan Valley. If this trend were allowed to continue, it would result in serious losses to our farmland resource base. The diversion of land away from farming would not just be a loss of land that can be farmed but also a loss to the communities, to the extent that critical numbers of farmers and farm families essential to sustaining and enhancing agriculture would be lost. Once this happens, farming can leave the community.
Past Social Credit governments not only allowed these losses to take place, they encouraged them. In 1977 the legislation was amended to allow a political appeal process to the Environment and Land Use Committee. Decisions of former governments resulted in the regrettable loss of land from the ALR, such as the 523 acres of the Spetifore lands in south Delta, the 522-acre Terra Nova lands in Richmond and the 643-acre Gloucester Properties in Langley. The Spetifore lands are still being farmed, as recent Delta councils have not seen the need or justification for urban development of those lands, despite the fact that they are no longer in the ALR.
Those governments allowed prime farmland in the ALR to be developed irreversibly for golf courses. Many local governments were unable to regulate these golf course developments, as they had trusted that the ALR would prevent non-farm uses in rural zones. In 1992 the former minister of Agriculture, the member for Okanagan-Boundary, introduced legislation that put a stop to losses for golf course developments. This government's reasoned step saved about 7,000 acres of good farmland.
Those same governments ignored court challenges to the integrity of the agricultural land reserve. In two court cases, as long ago as 1978, prime agricultural lands in the middle of the ALR were removed by a court order simply because of a procedural flaw in the inclusion process. For decades provincial governments have responded to procedural errors, often made by local governments, by invalidating what are otherwise good bylaws and regulations. This is done through the Municipalities Enabling and Validating Acts of this Legislature.
The ALR is managed by the Provincial Agricultural Land Commission, whose members bring a high level of skill and expertise to that task. As I noted earlier, the decision-making of the commission was being undermined by decisions being appealed to the Environment and Land Use Committee of cabinet. The assessment of whether or not lands should remain in the ALR was being politicized by that process. The fundamental issues of agricultural potential were being minimized, and at times ignored, during that appeal process. My colleague the Attorney General introduced legislation last session, in 1993, that removed appeals to the Environment and Land Use Committee and decisions of cabinet, leaving the commission as the final decision-maker on most applications regarding ALR land.
You can see that this government's plan to restore the integrity of the ALR is unfolding. The first two components of the plan are now in place, and this bill represents the third. The Agricultural Land Commission Act, which this bill amends, is now over 20 years old. With the exception of some minor changes, little has been done to keep it up to date or to protect its integrity. As with many legislative tools, amendments have to be made from time to time to respond to decisions or points of interpretation raised by the courts and to wording that has caused confusion in the minds of the public on reading the legislation. As the role and administrative practices of the commission have evolved, these, too, should be recognized by changes to the act. Past governments were not willing to make these changes, so due to inaction over the past 20 years, there are now a number of issues that must be addressed.
These amendments to the act will recognize the key role of the Provincial Agricultural Land Commission as a partner in local land use planning, to ensure that local plans and bylaws accommodate and develop positive policies that encourage farm use of agricultural land. The amendments will create a process requiring referral of community plans by local governments to the Provincial Agricultural Land
[ Page 11187 ]
Commission for comment, and they will clarify that local land use bylaws made after these amendments that are inconsistent with the ALR designation have no legal effect.
In ensuring that local governments can have a greater participation in land use decisions within the ALR, the amendments of this bill will also provide for limited delegation of decision-making authority regarding change-in-use and subdivision applications for those local governments that wish to decide these applications. It will also prevent exclusion, subdivision and change-in-use applications from proceeding to the commission where a local government has determined, by bylaw, that the land should be for farm use and where local government does not support the application.
The bill also introduces many changes needed to clarify the wording of the act and to provide greater strength through evolving administrative practices of the commission.
Finally, this bill deals directly with decisions of the courts of this province which placed into question parts of the original designation process that established the ALR boundaries. The legislation will validate the original designation of the boundaries that has been shown since 1973 on all recognized maps of the commission and local governments. For years, ALR status has been indicated on the tax notices of lands owned by persons who lived in the ALR, as well as on titles of land for anyone who purchased land in the ALR. These amendments will do away with any uncertainty with respect to the boundaries of the ALR and do away with any speculation that may arise as a result. I will be dealing with all of these amendments in detail in committee stage of this debate.
In conclusion, let me say that this bill is consistent with this government's commitment to good stewardship of resources. As part of my plan to meet the long-term needs of agriculture and to develop an up-to-date agrifood policy for the province, the resource base must be secure. The amendments in this bill secure the lands of the ALR. Resource security is of primary importance to the development of food policy for British Columbia. Farmers can only farm where they have a secure land base, where they know they can continue their activities in a responsible way. Because this bill protects land for future and present development of agriculture, I think it will go a long way to securing the security of the communities that depend upon that land base as well.
R. Chisholm: This agriculture industry that we're talking about has 211,000 workers. It has a $13 billion infrastructure, and it definitely does need to be protected. This bill, for the most part, is a housekeeping bill that formalizes what the ALC is already doing and what some municipalities are doing. The bill does bring some good points forward -- public notice and that type of thing -- so that people know exactly what is happening to the land around them. But unfortunately, this bill does not do anything to enhance the farmer. Yes, the minister is right that this bill does protect farmland, but the best protector of farmland is the farmer. Unless you protect him, nobody is there to support it, and this is just a piece of paper. It is time for us to realize that when we protect the farmer, the farmer will protect the Crown land and the farmland in the ALR.
The act has been enhanced to some degree, but the other problem is that there is no right-to-farm bill to back this up. We don't have very good right-to-farm legislation in this province, while in other jurisdictions they do have. That would help to enhance the ALC, but there is none in this province, and it has not been addressed.
The amendments in this bill will speed up the process at municipal and district levels and will definitely help this process. It will allow construction to go ahead, or it will derail it if it is on farmland. On approval of the ALC, the municipal level will be able to make that decision, which will speed up the bureaucratic process at that level of government.
This bill will also finally allow the municipality and the ALC to work cooperatively when community plans and plan changes are submitted by municipalities to the ALC for approval before they are put into practice. This will open communication between the two levels of government, which should enhance the commission's ability to do its job and the municipalities' ability to get on with their job, which is the governing and enhancement of their municipalities.
[5:30]
All in all, as I said, this is a housekeeping bill. My disappointment is not so much in this bill but that supporting bills are not here. There is no right-to-farm bill; there is no protection for farmers. We see that orchardists in the Okanagan have voted down the ALC and the ALR due to not having any support from the government. After all, 20 years ago, when they opted to jump into the ALR and allow their lands to become part of that parcel, they expected to be supported. It has not happened. This is the problem with it. Until we support the farmer, until we support the hands-on, this is just a piece of paper. When we do start supporting the farmer, this piece of paper will become something; it will be meaningful. In their AGM, the BCFA voted against the ALR for the first time in its history, due to the lack of support for the farmer by government. When that happens, the ALC will be meaningful.
In the meantime, I have to support most of the amendments they have made to the bill, and in third reading I will debate some of them -- and some of them are debatable. We will be bringing amendments forward.
H. De Jong: It gives me pleasure to rise on Bill 30, although I do not agree with much of it. You know, my father used to say that most of the land in the place where he farmed had to be accessed by water through ditches and canals and so on. They even brought their cows to the various pastures by boat. I'm wondering whether the Minister of Agriculture will have any problems similar to that with the purchase of his property. I would hope not, because that was really a chore.
Talking about Bill 30, I'm not sure whether this bill really addresses the problems with the current bureaucracy and the current way of approving or disapproving exclusions and subdivisions within the ALR. When I talk about a subdivision, I'm not talking about one-acre parcels or half-acre parcels to allow a residential subdivision. There are some commonsense subdivisions required from time to time in order for the farmer or the farmers to achieve their desired results.
The farming community has been diversifying considerably over the last number of years; hence the minister can boast about the higher number of dollars put out by the agriculture industry. But it could have been higher, because most applications -- in terms of subdividing into smaller parcels, be it ten or 20 acres; whichever is essential for a family farm to carry out a certain type of farming -- are for more high-density farming concepts that don't need 40 acres. In fact, many of them don't need 20 acres.
[ Page 11188 ]
I see nothing in this bill that makes the process easier and more accessible for the farmers to undertake. Whilepoliticians from all corners of this country, and particularly from this province, have stood on platforms speaking highly of the retention and expansion of family-operated, family-sized farms, the Agricultural Land Commission is working against that concept. I don't see anything in this bill that will enhance that.
From time to time, the municipalities want to have additional land taken out of the agricultural land reserve for housing or industry, whatever the case may be. Yet the Agricultural Land Commission says there is no appeal process through cabinet anymore. It can block these with the stroke of a pen. It's not enhancing agriculture. In fact, the subdivision would allow for the growth of the sale of their products, because the communities would expand. There would be more people to participate in the consumption of those products.
People often ask why the prices of lots are going up the way they are. Over the last six years the price of an average lot in the Abbotsford area has risen from $40,000 to $120,000. If you have view lots, you pay up to $160,000. We can talk about low-cost housing. We will never achieve low-cost housing in this province as long as the Agricultural Land Commission is going to have the domain to say whether "this land should be excluded for that purpose." In some cases, in order to do proper planning, it probably would take in a couple of acres of good land, but there are many communities surrounded by rather poor land. The minister is saying in this bill that the inspectors can go and inspect the land to see whether it is a certain quality that should be retained for farming purposes. There is no need for that kind of inspection.
Throughout the lower mainland, and I'm sure in other parts of the province in the fertile valleys, all of the land has been classified, whether it's class 1, 2, 3, or right up to class 7. The minister knows full well that it is very unsuitable for farming when it gets beyond class 3 or 4 -- about half of it. Abbotsford is a prime example of a community asking for exclusion from that. They had about 80 acres already sewered before the agricultural land reserve came into place. To this date, they have not been able to get one acre out of the land freeze. I think it was 120 or 80 acres, but I'm not sure. The University College of the Fraser Valley is stymied by not getting some land out of the agricultural land reserve.
The minister talks about cooperation between the local councils. There hasn't been any cooperation, and I don't think this bill is going to provide any cooperation either. What I read into this bill is not that local communities will be able to bring their proposals forward for the Agricultural Land Commission to decide on; it's basically that the Agricultural Land Commission is going to say: "This is what's going to happen." In fact, under this bill the Agricultural Land Commission does not even have to go through a public hearing process. Even worse, the manager of the Agricultural Land Commission can make decisions totally away from its board of directors, commissioners or whatever we want to call them, again minimizing the importance of the applicant. The applicant, for instance -- and this could be a municipal council -- could not even respond to a change that goes before a public hearing. They're not allowed; it's only for the public. Well, we know what the public thinks of the agricultural land reserve. They think the same way about it as the farmers do.
The farmers have had no problem generally with the agricultural land reserve as such, except in some cases I've already mentioned where greater flexibility has to be given in terms of the minimum-parcel-size zoning bylaws of the municipality, because of a change of techniques in agriculture or in the types of crops they're growing, where they don't need excessive land bases to achieve a living on those properties. If they're not allowed to change those minimum acreages, which in many cases are 40 acres in the district of Matsqui as well as in Abbotsford.... Many farmers don't need 40 acres -- in fact, they couldn't afford 40 acres. But there is nothing in this bill that says that those sorts of things will be looked at and accomplished.
The minister said that the previous administration, because of its appeal process, had allowed more land out of the ALR than was added to it. I would like to have the minister check the facts, because I'm quite confident that the minister is absolutely wrong. More acres of land were added to the agricultural land reserve during the total administration of Social Credit prior to this government than were taken away from it. The minister can criticize the decision on the Terra Nova property -- although I believe that's still in the ALR -- the Spetifore property and the Gloucester property. The Gloucester property was bought by B.C. Hydro, specifically for industrial purposes, long before the Agricultural Land Commission came into place. That's why the Spetifore property and Terra Nova property.... They have the same problem as they do in Abbotsford: they can only go up with housing, because there's no other land available. That's what drives the prices up. That's what is wrong with the agricultural land reserve.
Without going into the details of this bill, it looks like it's a step in the right direction, but I do not believe that it will be. There is no uniformity to the process of agreements outlined in the government's bill. Last year I put forward a private member's bill, Bill M211, which gave some regional authority and consistency to the treatment of land in the ALR. That bill was mainly aimed at enhancing operations within the agricultural land reserve, as well as providing land where it was needed for housing, so that people wouldn't have to pay $160,000 to buy a lot.
Too often this government feels that if they don't have a complete handle on it, local governments will be in cahoots with local developers, and everybody will make a pile of money if some land is allowed to be taken out of the ALR or rezoned, or whatever the case may be. Having been in local government for a long time myself, I'm convinced that local governments are more conscious of the real needs of not only the people but also the farmers in their community. That's why I implore the minister to make this bill sensible, so that local and regional needs can be met -- not dictated by centralized government in Victoria.
G. Wilson: I stand up today to oppose this bill in principle, because I believe there needs to be a consistent application of revision to any potential removal of agricultural land. It has to be done in a manner that is consistent across the province. I do not believe that we should be empowering municipalities or regional districts to apply for the removal of agricultural land and essentially be the commission to make that decision on behalf of themselves. That's what this bill says, whether it intended to or not.
[5:45]
This is a complicated bill and one that is difficult to speak to in principle unless one recognizes that it deals with several aspects of the maintenance and protection of the agricultural land reserve -- notwithstanding the 1993 Bill 42, Cabinet Appeals Abolition Act, which has to be reviewed to the end of section 28, including sections 28.5 and 28.6. What this bill says is that in granting those powers to
[ Page 11189 ]
municipalities and regional districts to decide -- if they are granted, which I don't have a problem with as long as the regulations are provided for in a consistent manner across the province.... Let's be clear that we're now moving to alter in principle section 20 of the existing act, to provide the striking out of a hearing of an application and implementing the decision on an application. That's a substantive amendment that has to be looked at in relationship to the powers that we're now granting municipalities and regional districts.
If these municipalities and regional districts are given the power to decide an application.... This is something that is going to be done in agreement between the commission, the Lieutenant-Governor-in-Council and the municipality. There is no consistent language here; one would assume there is going to be some regulation on it. What it says is that sections 28.2 to 28.6, which are the sections relevant to the Cabinet Appeals Abolition Act.... Those applications will be heard as though they were before the commission. In principle we shouldn't be giving a semi-subjudicial power to a board that's able to hear itself, and yet that's exactly what this language does. Maybe that's not intended, but clearly that's what it does. The only way it can be applied in the provision to protect it is through application to an act, the Environmental Assessment Act, that hasn't even been passed in the Legislature yet. We haven't even passed the Environmental Assessment Board. It says that it's going to be a revision to a board in an act that hasn't even passed the Legislature yet -- unless we're going to talk to a commissioner under the Inquiry Act, which is the existing commissioner.
So in principle this is simply not on, as far as the members of the Alliance are concerned, because it simply cannot provide fair and equal treatment for all applicants, whether those applicants be people who are living adjacent to municipalities or regional districts that may be given the power to make application, or whether they may be acting to remove that land from the agricultural land reserve themselves.
Interjections.
G. Wilson: I hear members of the Liberal opposition saying "hogwash" -- or perhaps it was the Reform Party. Excuse me, I take that back; it was the Reform Party. Sometimes it's difficult to distinguish. But the fact is that they say "hogwash." I suspect that they haven't read the bill.
I suspect that the minister isn't clear in this section. The minister needs to go back and review it carefully. In discussion with some of the minister's colleagues, I'm hearing that this is not designed to give differential powers to a municipality or regional district with respect to the removal of land from an agricultural land reserve. Unless the Lieutenant-Governor-in-Council puts it forward to the Environmental Assessment Board -- in an act that has not yet passed this Legislature -- it isn't intended to give differential powers to those municipalities or regional districts with the power to hear themselves. But that's what the language says. When we get into committee stage, we'll talk about that in detail with respect to those provisions under section 28.2. If that isn't what's intended, then I think there's some redrafting to be done here, or there certainly are some amendments to be made.
As we look at the delegation of powers, it is clear that this bill is ripe for inconsistency. If we are going to have a fair and proper assessment of the agricultural land reserve with respect to the protection of that land and the removal of land that should come out of the agricultural land reserve.... Let's be very clear that right now there is land under the ALR that has limited or no agricultural potential and that could easily be opened for subdivision and development. If that's going to happen, it must happen in a consistent way. It must happen in a manner that removes, wherever possible, political influence or opportunity for political influence.
I understand the intent of the bill, and I'm not necessarily opposed to the intent: providing greater local control or powers. Just a few minutes ago, with respect to the Forest Practices Code, I was saying that we have to trust local people to make decisions on behalf of themselves, and I stand by those words. We must avoid a municipality that may have elected to it by virtue of a very small turnout.... And people in this Legislature will know that I have addressed this issue before, where people have been elected with less than 20 percent of the vote because of low municipal turnout. If there is large financial investment by a bloc of electors who are development-oriented and take over a council, this bill will provide that council the opportunity to make a move to exempt and take out agricultural land which can then serve those who have financially elected them to office. This bill may not be intended to do that, but that's clearly what it does. According to this section, as I read it and as the language would imply, the only way you are going to get around that is if there is some protection under the Environmental Assessment Board in an act that has not yet passed in this Legislature; or unless under the Inquiry Act, you are going to have some kind of commissioner present it. That's what the language says, so we have to be very careful.
The other problem with inconsistency in the principle of this bill is that we must make sure that exactly the same criteria apply evenly and equally across the province with respect to agricultural land protection and exemption. It quite clearly suggests in this revised section 20.2 that there is a general manager provision for specified section 20 applications that can, by resolution, establish criteria under which special types of applications under section 20, or those that might be under specified regions, could be approved in British Columbia.
That scares me a little, because I fundamentally believe that we must, above all, protect our agricultural land base. I know that comments have been made by many people -- and my colleague from Okanagan East hears it every day -- that there are farmers who cannot make a living and are shackled to agricultural land they can't develop. That is a problem, but the solution is not to convert that agricultural land willy-nilly into land that can then be put into the real estate market for quick profit. The solution, as I believe the member for Chilliwack so correctly and eloquently alluded to earlier, is that we have to recognize that the person who best protects the agricultural land is a viable farmer who is able to make a living.
That is something we have not done in this province. We have not looked to a way by which people, especially people of a younger generation who may wish to inherit family farms, can take over and run a family farm business. Those industries are not being supported by a series of legislative issues. Some are under our jurisdiction, many are under federal jurisdiction and some are beyond our control because of economic forces -- continental economic forces in particular -- that apply to that agricultural land. Yet this bill allows, by resolution, for the establishment of criteria which may occur.
What is good about this bill -- and I think this is what the original intent was; if so, I think this is certainly valuable --
[ Page 11190 ]
is that it allows local community planning to take the protection and maintenance of the agricultural land base within the community into account. That's a good idea. It provides greater powers to the municipalities, through their planning function, to start building the long-term maintenance and protection of their agricultural land base into their community plan. It also provides an opportunity for those local governments, be they regional districts or municipalities, to build that protection into that planning base through acquisition of greater powers under this bill. I think those are all laudable goals. The problem is that councils that have been provided those powers may exercise them in a manner that would not be desirable, and there's limited appeal -- except through the Supreme Court, as it says here, or you can go through the Environmental Appeal Board.
Hon. Speaker, I have more to say on this matter. However, noting the hour, I move that we adjourn debate.
Motion approved.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. P. Priddy moved adjournment of the House.
Motion approved.
The House adjourned at 5:57 p.m.
The House in Committee of Supply A; G. Brewin in the chair.
The committee met at 2:52 p.m.
ESTIMATES: MINISTRY OF FINANCE AND CORPORATE RELATIONS
On vote 33: minister's office, $342,581.
Hon. E. Cull: Before I begin, I'd like to introduce my staff who are here with me today: deputy minister Michael Costello, who, I think, is well known to you; Neil Muth, director of executive operations in the deputy minister's office; Doug Hyndman, with the B.C. Securities Commission; Brian Mann, who is with our financial services division; and Jo Surich, commissioner of the Public Service Employee Relations Commission.
Before I get into the estimates, I want to just quickly do an overview of the operations of the ministry for the benefit of the committee members. The government has established four strategic priorities this year: fair taxation and sound fiscal management is, of course, the one that the ministry is most responsible for; jobs and the economy, which clearly the ministry has considerable involvement in; skills and training for the twenty-first century; and revitalizing our forests. The ministry has some responsibility for all those areas, although we do support two of them directly.
The primary objective of the Ministry of Finance and Corporate Relations is to provide services to the public that will effectively manage public funds and promote prosperity and well-being through sound investment, tax, budgetary debt and labour-management advice and policies, as well as advice on public policy matters. The ministry also has to ensure that the provincial financial marketplace is fairly and effectively governed through regulations and services provided to provincial businesses and financial institutions and that we support government programs through action and advice on financial management and personnel matters.
In terms of staff and budget, the ministry is probably one of the smaller operations of government, but its mandate, I think you will agree, is far-reaching in terms of its scope of responsibility. In many ways it is the focal point of government. We're the tax collector; the corporate and personal property registrar; the banker and the money manager for the government; the government's chief accountant; the policy adviser on both fiscal and economic matters and budgetary and expenditure matters; the budget and expenditure arm of government; the central human resource and labour relations agency through PSERC; the regulator of B.C. trust companies, credit unions, cooperatives, insurance and real estate markets; and the regulator of provincial securities through the B.C. Securities Commission.
With the reorganization of the government last fall, the ministry also, for the first time, became responsible for two other important central agencies of government. These are the Superannuation Commission, which administers public sector pension plans, and the Public Sector Employers' Council, which has been established to manage human resource and labour relations issues for the broad public sector, including Crown corporations, schools, hospitals and post secondary institutions. Last fall, I also became responsible for the B.C. Lottery Corporation. Although not under the Ministry of Finance per se, it is a responsibility that I took on.
I want to quickly go over the ministry's recent achievements and then I will turn to the committee for the statements of the opposition critic and questioning. The last year's activities have been above and beyond the regular duties of the ministry. The creation of the Public Sector Employers' Council has been a major activity. We are endeavouring to increase effectiveness of the public sector and its labour-management relations through greater control of and accountability for salary costs. The Public Sector Employers' Council provides necessary links that have been either missing or not strong enough between the government and public sector bodies on fiscal matters.
We also have created the Public Service Employee Relations Commission, which brings a new approach to relations with our own employees. There have been a number of bodies in the past, including GPSD, the government personnel services division and prior to that GERB, the Government Employee Relations Bureau. As a result of the considerable work of the Korbin commission, and considerable work on legislation governing public service employees, we have changed the way the commission responsible for public employees operates. It has a much greater focus on human resource development and positive labour relations practices in the public service.
We've also enhanced the ministry's capabilities in program evaluation and value-for-money audits. One measure in this year's budget will continue to enhance the ministry's ability to do program evaluations. We have had a very good internal audit program through the OCG. We've also had a program evaluation unit under Treasury Board,
[ Page 11191 ]
but this year we are moving to increase resources so that we can do better evaluations of government programs and policies to ensure that we are getting the best value for our money.
In October 1993 we had a second successful B.C. savings bond offering and raised $433 million. This has been a success both years that we've offered these, and on this basis we will probably continue to do so.
[3:00]
As we heard last week, our fiscal management plans, which have been unfolding since 1991, have earned us the highest credit rating in the country from all of the major bond-rating agencies. We are achieving greater investment and borrowing diversification through participating in other markets. I will have more to say about that in a minute, but let me go over some of the other highlights. This year we've reduced the budget of the Financial Institutions Commission by over $1.5 million, from $7.74 million in 1990-91 to $6.16 million in 1994-95, and at the same time we've been able to increase services. The spending cuts have been achieved through using technology to our advantage and through eliminating duplication between the regulator and the deposit insurer by concentrating only on important issues and risks.
We've continued to implement the government accounting system's strategic plan initiative. The 1992-93 public accounts were produced using the new system. The Ministries of Housing, Recreation and Consumer Services, Government Services, and Attorney General are all using the new system.
We've expanded our internal audit services to Crown corporations and other government-funded agencies for the first time, and we are continuing our review of public sector pension plans through the advisory boards that have been set up for each of the four plans.
I'm very proud to say that our efforts in the ministry have not gone unnoticed by outside parties. As I said a minute ago, we were very pleased with the recognition from the bond-rating agencies that we've had -- and perhaps some smaller recognition -- which I know is very welcome inside the ministry. The ministry won the national 1993 IPAC innovative management award for work in the personal property registry for doing better with less. As a minister, it's unusual to see a lot of letters cross your desk praising a part of your organization. It's far more common to receive letters that are critical of your operations, and I've been delighted to see the recognition of this part of the ministry coming through correspondence from people who deal with the registry. It has really been very important.
In 1994, IPAC's theme was reshaping government, and we placed fourth for innovations in our revenue division. In addition, two leading financial trade journals have recognized B.C. for its 12-year Euro-Canadian bond issue. The financial publication Euroweek acknowledged this issue as the deal of the year, and the International Financing Review of London called the bond issue the Euro-Canadian bond of 1993. We have also received special praise for being the first issuer to successfully tap European demand for Canadian dollar securities beyond ten years.
In our current initiatives, we are continuing the implementation of the recommendations from Judi Korbin's commission. We are taking a leadership role in defining the new fiscal arrangements between the federal government and the province. We have been very proactive at the federal-provincial finance ministers' conferences in putting forward ideas about how they can deal with their problem without simply off-loading it onto the provinces. We will be continuing to expand our borrowing and investment program into global markets.
As most members know, we are finalizing a new Condominium Act. We have released a discussion paper and have already received considerable input from the public, and we will be finalizing that for implementation next year.
We are also continuing to implement our pay equity and employment equity initiatives. We are going to continue to implement recommendations from the independent financial review done of government in 1992. Some of these recommendations are to increase the number of tax auditors and collection officers in the revenue division; improve tax enforcement, minimizing fraud and ensuring that everyone pays their fair share; increase loan collection activities; perform more value-for-money audits in ministries as well as Crown corporations; and research accounting policies such as the capitalization of the costs to acquire or build physical assets such as highways.
Another major initiative we have been working on for some months is the Matkin commission, looking into the Vancouver Stock Exchange and the B.C. Securities Commission. I know we will have some discussion about that later in these estimates.
As I said at the very beginning of these opening remarks, one of the major strategies of this government is sound fiscal management, and the ministry has the lead responsibility in that not only in the budget process, which comes out once a year, but in our day-to-day activities. I think we are performing those responsibilities very well. No doubt, like all parts of government, we can continue to improve, and we will do that. But at this point I'm very pleased with the progress the ministry has made to date in achieving this objective for our government.
F. Gingell: I'm not going to start with an opening statement except to say two things. I didn't know that you had won an award for innovations in the revenue division. Quite honestly, it's something I'd keep quiet about if I were you. This government talks about no new taxes, yet every other day, every other week, there's another tax that's gone up, another user fee. Anyway, I congratulate you for managing to win that.
The second point I'd like to make is to agree with you about the quality of your staff. I find them bright, intelligent, helpful, thoughtful and always willing to inform me, but unfortunately, never willing to tell me too much. I'm going to encourage them to do that in the future.
Since the chairman of the B.C. Securities Commission is here, perhaps we could start with that issue, if that is convenient. As a beginning, could the minister please inform the committee of the final cost of the Matkin commission report?
Hon. E. Cull: Before I answer that question, I want to assure the member that the award our revenue division won was for improved and innovative management in the division, which has been very proactive in terms of staff empowerment. I think that while revenue may get a chuckle or two out of the member in terms of winning awards in that area, it's important that all parts of government do whatever they can to improve their internal operations, and my staff has certainly done that.
The Matkin commission final cost is $753,000 and change. I've just had late-breaking news here. The figure is $765,294 and the budget was $771,500.
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F. Gingell: I suggest to the minister that you don't ask the commissioner again; it's under budget right now, and it's good to say that.
The report has brought up all kinds of questions. A series of inconsistencies run through it. I am disappointed in the report. I understand the Vancouver Stock Exchange is disappointed too. I'm sure you must have been briefed by your own officials on this subject. Do you see the recommendations of the Matkin commission forming the foundation for new and revised regulations on securities in this province?
Hon. E. Cull: There isn't a simple yes-or-no answer to that question. Some of the recommendations which are not in dispute by any of the groups or agencies that are involved in security regulation would be part of the foundation of our action on the Matkin Report. What I have done -- and I know there has been some pressure on me to make a quick decision on the Matkin report, and I have refused to do that although I don't disagree with any of the groups out there or individuals who are calling for action on the Vancouver Stock Exchange.... There is some urgency and I have no desire to allow the matter to drift for months or years, as sometimes happens after a report is received from government.
Having said that, I think that it is so far-reaching in terms of some of the major recommendations that it requires careful analysis and a very thoughtful response to the recommendations. Besides the obvious of having my staff go back over the recommendations and the analysis -- indeed, they have pointed out some inconsistencies to me and some cases where all the research hasn't been as complete as perhaps we would like -- I have also written to all the other securities commissions across the country, asking them to reflect upon the report. I've received thoughtful and thorough responses from almost all those provinces now. I'm not sure if we got every last one of them.
I've also undertaken to meet with different groups before Mr. Matkin finished his work and also after the report was done, so we could sit down and walk through each of the recommendations. I've got a full listing here with me. Besides meeting with the Vancouver Stock Exchange and the Securities Commission, I've met with the securities chapter of the Canadian Bar Association; I've met with the advisory group that Mr. Matkin used to put his report together, which allowed me to probe some of the internal debates that had gone on in putting the report together; and I've met with a number of other agencies that are interested in this whole area. I haven't totally completed the work of meeting with all these groups. I started in earnest prior to the budget, and I've picked it up again now that the provincial budget has been concluded and delivered.
There is still some more thought, work and research to go on before we're ready to make an official response on the part of government. That's a rather long answer to your question about whether it will be the basis of the decision. At this point I'm attempting -- and I think somewhat successfully -- to determine how much consensus with respect to each recommendation there is in the financial and business community. I'm discovering that when we move beyond the obvious question, "Do you agree with recommendation No. 2 or No. 10?" we can identify an awful lot of common ground where everyone agrees on the elements of it. I think some progress is being made as a result of the continuing dialogue that has taken place since the report was completed. Again, this encourages me that it has been the right approach as opposed to simply saying yes or no to 18 different recommendations.
F. Gingell: That has cut out a whole bunch of questions.
There was a so-called investor survey in the report. Although the commissioner referred to this investor survey, it's hard to get a good feel from what is available in the public domain of how extensive that survey was and a whole bunch of other issues. Can the minister please advise if she has seen it? And if so, have the focus, breadth and quality of the questions all been evaluated by your ministry?
Hon. E. Cull: I haven't personally had a look at the survey, and my staff haven't done an extensive evaluation of it. It was part of a considerable amount of background work that Mr. Matkin did in formulating his recommendations. I believe there is quite a volume of reports and background material that he produced or went through in putting together his recommendations. We haven't gone over everything in his background work.
F. Gingell: We seem to have had a little focus on polls in the last few days. Seeing that this poll was in fact paid for by taxpayers' money -- and it's an interesting document, I think, for people in a position like mine to get a good feel for the basis of many of the recommendations -- would the minister make it available to us?
[3:15]
Hon. E. Cull: Just to correct the record, the poll is paid for out of Mr. Matkin's budget, funded through the VSE and the B.C. Securities Commission, which, in that case, is money collected from the users of those services. There is a bit of a distinction in this respect. However, I see no reason why that poll was other than to produce background information and could not be available.
F. Gingell: I'm sorry, I didn't quite catch the last words.
Hon. E. Cull: With respect to the poll, I see no reason why it wouldn't be available.
F. Gingell: I spent some time developing questions with respect to the specific recommendations. From what you have said, I'm beginning to think that perhaps this is not really an appropriate time to ask them, because you're still in the formation stage. On the other hand, if I don't ask the questions now, I am concerned that the opportunity will be lost. So I'd like to focus on one issue in the report that concerned me. This was the proposal that the appeal role of the commission would be moved out to an administrative law function. I have concerns that this may well affect the development of policy by the commission as they react to things that happen every day in the market and to the latest twists that members of the legal fraternity are able to come up with. On this particular issue, I wonder if you are willing to state whether or not that is one of the recommendations you have decided to bring into operation.
Hon. E. Cull: I understand the dilemma of the member in this regard. I have to say that with respect to any of the recommendations, we have not reached a conclusion as to whether or not we will accept or reject or modify them in some fashion, although I do think it's fair to say that as we have been working our way through the recommendations, we are starting to lean in one direction or another on many of them.
[ Page 11193 ]
I think this particular recommendation has to be wrapped together with a number of others around the entire change of the Securities Commission. I tend to look at this recommendation along with recommendations with respect to the creation of a securities exchange board; they're interrelated. This is probably the most problematic recommendation in terms of trying to work through whether you'll accept it or accept any part of it. At this point I think it's only fair to say that a number of people have raised questions about whether you can separate those roles and whether, if the answer is yes, it's desirable to do so.
I have some questions about whether or not it's desirable to do so. I'm persuaded to some extent by the arguments that it works better with the two functions being integrated. I have to stress that we haven't make a final decision.. We're still looking very closely at this and the particular set of recommendations around restructuring the commission is probably going to require the most work and the most thought before we come to a conclusion. It's much more complex than some of the other ones, which I don't think are going to give anybody much trouble. We will all agree that it's the right thing to do or we may all agree that it's the wrong one for some of the others. They're more cut-and-dried; this one is, as you understand, very complex.
F. Gingell: One can certainly see that if one decided to go in a particular direction, everything could be accomplished through regulation. If you decided that it was going to require legislative change, obviously that's not going to come up this summer. It would be put over to a fall sitting, if you plan on calling one, or to next spring. That gives me concern that the official opposition -- if it's done through changes to the regulations -- would be in a difficult position and wouldn't have any forum other than the media to make our concerns known. The forum of the media on an issue like this isn't exactly the right means. To help me get some assurance on this matter, I wonder if the minister would be good enough to give me some assurances.
Hon. E. Cull: Any significant change will require legislation. My staff advise me that some things could be done through regulation; in fact, some probably could be done through administrative practice. The commission has been planning for some time to put forward a number of things in terms of improving their internal operations and the regulation of the bodies they regulate, which would not require either regulations on the part of the province or legislation.
You're right; major changes will require legislation. I said to Mr. Matkin very early on that it was unlikely that we would be able to bring legislation forward in this session, given the timing of his report and the deadlines for legislation. We thoroughly expect legislation to be coming forward to deal with this, but it will be in a subsequent session, and there will be ample opportunity to debate it at that point.
F. Gingell: I put a cutting from the Vancouver Sun, March 17, 1994, in a file. It said: "Du Plessis's Accusations Scare Cull. Finance Minister Elizabeth Cull says she is alarmed by accusations made by former securities investigator Adrian du Plessis about the B.C. Securities Commission. Cull said du Plessis travelled to Victoria at her request Wednesday after she heard of his sudden resignation from the commission."
My question to the minister is: is it normal practice for the minister to ask an employee of an independent commission to travel to Victoria to brief her directly when they happen to put in their resignation?
Hon. E. Cull: Obviously it isn't normal practice when anyone resigns for the minister to call that person into her office and ask to hear about the resignation. Employees resign -- probably hundreds of them -- on a regular basis for all kinds of reasons. However, the particulars of this resignation were not at all typical and, in fact, had already been reported in the media. I felt that the concerns were very serious and that, as the minister responsible for the Securities Commission, it was important that I hear firsthand, not read these accusations in the Vancouver Sun. I invited Mr. du Plessis to meet with me and my staff so we could hear his concerns firsthand.
I don't know where your next questions are going, but I might as well add to the record right now that we have decided to appoint an independent party to review Mr. du Plessis's accusations. I don't have a name for you, unfortunately, at this point, but we are going to be asking for an external review to satisfy ourselves that absolutely everything that could have been done has been done. We also want to establish for the public that the Securities Commission staff do take their work very seriously; they are a dedicated group, and I know they would like to see the record cleared with respect to their own reputation in this regard.
F. Gingell: I wonder if you would advise me if the chairman of the B.C. Securities Commission was with you when that interview took place.
Hon. E. Cull: No, he wasn't. I subsequently gave the information I received from Mr. du Plessis, after obtaining his permission, to the chair of the Securities Commission and asked him to comment upon it as well.
F. Gingell: So the minister's statements about alarming the government were made at this point without having.... Maybe I should put it in these terms: is it normal practice in your ministry to interview a staff member who has quit and gone to the media without having the person he reports to present?
Hon. E. Cull: I think the member will understand that this is a highly unusual circumstance. In the three years I've been minister, I can't think of any other case where an employee has quit and gone to the media. I have spoken to that employee, and it's difficult to say whether it's normal practice or not. One hopes that this doesn't happen on a regular basis.
When Mr. du Plessis made his statements to the media, the media talked to me about it. Anybody would have had some concern that an employee was making statements like that about a part of the government. It wouldn't have mattered whether it was somebody quitting in the Securities Commission, in a ministry or in any other part of government. When someone alleges that there is negligence in a part of the government, I think it's natural to be alarmed, particularly when you are dealing with people who have had a public presence in criticizing that function in the past, as we all know Mr. du Plessis has had. I thought it was important to immediately hear from Adrian, to immediately hear from the Securities Commission, to obtain some independent advice from my ministry and to then make a decision on how best to deal with the matter.
[ Page 11194 ]
Unfortunately, through internal means, the allegations have remained. I think the fairest resolution for everyone involved is to have a credible external party appointed to give us some advice on whether or not there is any substance to the allegations that Adrian has made. I think it's important to clear the air; I know the Securities Commission would like the air cleared on this one, and certainly I would too.
F. Gingell: The budget for the special account for the B.C. Securities Commission for the year 1993-94 was originally anticipated to come out with a $200,000 surplus, if I may use that word. This year's budget documents indicate that the surplus is perhaps a fraction over $1 million. Of course, that estimate was done reasonably early on; it would have had to have been done in February. Could you tell me the final results for the year 1993-94 -- both the revenue and the expenditure total?
[3:30]
Hon. E. Cull: As a result of significant market activity, the surplus for 1993-94 appears to be $3.4 million.
F. Gingell: Has that caused the ministry to have any feelings about what this year's numbers might be? As you are aware, the anticipated expenditures are $9.344 million. I asked you for revenue and expenses separately, if you happen to have them. I wonder if any additional surplus that's going to be realized is a result of lower expenses than budgeted, or if it will come from increased revenues.
Hon. E. Cull: The number in the blue book, which I'm sure the member has, is $1.455 million. The chair of the B.C. Securities Commission advises me that it's too early in the fiscal year to be able to determine whether or not that figure is going to be accurate at the end of the year. As the member knows, the market has cooled off somewhat, so activity is down, but markets are notoriously difficult to predict. The revenue and expenditures will depend to a certain extent on market activity.
F. Gingell: Do I take it that all of the increased revenue for last year over the original estimate, which was around $200,000, was from additional revenue and not from a reduction in expenditures?
Hon. E. Cull: That's correct.
F. Gingell: I recognize that an organization like the B.C. Securities Commission has to be market-reactive. If the market is busy and there are lots of IPOs coming in and work to be done, then it's critically important for an orderly capital market to be able to deal in a timely manner with those applications, registrations, filings, or whatever they are. I hope the reason there is a special account for these things is that if the market gets busy, there are going to be additional revenues. The B.C. Securities Commission is then in a position to increase staff to handle those things. How government finance and accounting works is not the easiest discovery to make. Can the Securities Commission know the actual amount of the expenditures included as a budget item? If not, they're not in a position to react. Has the ministry considered changing the arrangements so that they would be in a position to react to the levels of market activity?
Hon. E. Cull: That flexibility exists. As you can appreciate, we want Treasury Board to have some control over all parts of our budget, including that of the Securities Commission. There is a budgeted amount set for the Securities Commission, but because of the special account, they have the authority to exceed that budget by 10 percent before coming back to Treasury Board. If activity picks up, they have 10 percent flexibility so they can move into an additional 10 percent of their budget, which would be more than adequate in most circumstances.
F. Gingell: I sat through a couple of the Matkin commission hearings and listened to the statements being made. It seemed to me that if the Securities Commission had some additional funds, they would have been in the position to react in a more appropriate manner. What is it that has held the Securities Commission back from taking advantage of that additional 10 percent to ensure that no accusations can be made about things being a little slow in getting the work done?
Hon. E. Cull: As I said a minute ago, our budget is set, and they have the ability to exceed it by 10 percent, provided the revenues are there. That gives them some flexibility in responding to unforeseen pressures. We still want all agencies of government to set budgets, regardless of the pressures upon them. That's an important discipline all organizations have to go through. Even in the case of 10 percent flexibility, you can't react on a dime, as the chair of the commission just said. You have to be able to hire qualified people, and there is some time involved in staffing up. If you staff up and then staff back down following a market, it does create some organizational difficulties.
Having said all that, Mr. Matkin did identify resources in the review of the VSE and the Securities Commission as one of the issues to be addressed by government, and I am indeed looking at that.
F. Gingell: If I may, I will deal with one other item. Going back to the Matkin report, I was going to say that this really isn't a question raised by Matkin but an issue being raised all the time. An unusual amount of energy and discussion goes on around the issue of what are called reverse takeovers.
I was wondering if they have come up with any means of ensuring what they, and probably the majority of us, think of as an RTO really being one, so that they are in a position to require those circumstances to make filings to their commission to seek the approvals as though it were an IPO. Do you know what I mean?
Hon. E. Cull: I think I know what the member means, and the simple answer is yes. There have been some suggestions put forward that would allow for the degree of regulation Mr. Matkin recommends. Not all the ways of doing that are the same. Mr. Matkin came up with one idea, and there have been other ideas put forward. We are still looking at that area in terms of the final recommendation. We are concerned about the potential for abuse there, and we want to take some action to correct it. The specific method of implementation has not yet been decided.
F. Gingell: This particular issue certainly came up in the Matkin report, but everyone had been aware of it before that. If the minister comes to a speedy conclusion on the best way to regulate that particular issue, will the ministry allow the commission to make necessary changes to the regulations or to its practices and policies without waiting for this time next year? As I understand it, by this time next year the problem may well be gone as the inventory of vehicles that are available to do reverse takeovers vanishes.
[ Page 11195 ]
Hon. E. Cull: I want to assure the member that I have lots more budgets that I want to deliver before this parliament concludes. What I expect to happen with the Matkin Commission is that after I have concluded the review of the report and the recommendations, I will release a comprehensive statement indicating what we intend to do on all of the recommendations. Some can be implemented immediately through administrative practices or internal decisions of government. Some will require orders, regulations or orders-in-council. They can be done at any time; they don't require the House to be in session. Others will require legislation, and there may even be another category for things we may want to do more work on before making a final decision. I expect to be able to set out all of that, and the things that are agreed upon and are easy to do and don't require legislation do not need to wait until next year or another legislative session. Yes, we can break off pieces where it makes sense to act immediately without having to wait to do everything at once through legislation.
F. Gingell: Many of the criticisms levelled at the Securities Commission, both at the Matkin hearings and in the media, seem to regard criminal prosecution of matters that have to do with securities law and market activities. Recognizing that the prosecution of criminal matters is not in the hands of the Securities Commission -- in fact, it has nothing to do with them; they may make some recommendations, but they're all in the hands of the Attorney General's ministry -- could the minister advise me if there have been any meetings, discussions, negotiations or action plans with regard to beefing up the activities of that department with respect to these matters?
Hon. E. Cull: As the member knows, there is a recommendation in this regard from Mr. Matkin to increase resources, or to have a special unit, I think it would be, within the RCMP, or to have a special prosecution division for securities in the Attorney General. There have been staff discussions as a result of the review of the recommendations.
Again, I don't mean to keep saying that there isn't a decision, but as I said at the beginning, there is no decision on all of the recommendations. At this point, I'm not able to give any firm direction until I have finished my discussions with other bodies that I still have to meet with. To do so, would make a mockery out of the remaining consultations that I want to undertake. People must be assured that my mind isn't closed on all of the recommendations, otherwise there's not much point in my consulting with them.
F. Gingell: I would like to suggest to you that this isn't the question of changing regulations, and it isn't a question of changing practice; the practice is already clearly established. I'm not a lawyer, but I would imagine that that can proceed only in the Attorney General's ministry. The issue is to do with getting the Attorney General to give us some resources to carry out what is clearly an important mandate not only for the administration of justice, but also for the protection of an important capital market activity in this province. A great deal could be done with a relatively small amount of money. After all, the commission did make $3.4 million last year. This is my third year in estimates, and every year the Securities Commission has made a lot more money than they had been budgeted to make. Does the minister know of any method by which some of these resources could be made available to the Ministry of Attorney General for the purpose of beefing up criminal actions where such are warranted?
[3:45]
Hon. E. Cull: The member is right that that particular recommendation -- perhaps more than the others -- could stand alone. We have decided that we will give a comprehensive response to Matkin rather than break off any piece, no matter how easy it may seem to break off that piece, so the member will have to be patient. We will be making a comprehensive response to Matkin outlining our actions on all the recommendations, including this one. However, as I just said, we are aware that the Securities Commission does generate a profit. We are also aware of the fact that Mr. Matkin has recommended additional resources not only to the commission but to the AG, and we are looking at that.
F. Gingell: One other issue has come up, not really from the Matkin report but as a result of one of the particular court actions that have been taken. The issue of finding commissioners with an open mind, who come without prejudices, is a very important subject, whatever happens. This particular government has brought in various legislation in which they talk about conflict of interest. I'm going to use this opportunity to ask the minister -- and the drafters of the legislation, if that is what it takes -- to ensure that appointments to the commission can be people who come from a position of experience, knowledge and understanding. When these issues come up, one wonders whether the only people who will be able to sit on some of these boards are people who have never met anybody, who don't know anybody and who have never done anything. I will be most interested in a response from the minister on that subject.
Hon. E. Cull: I agree with the member that it's a very delicate balance. Of all the responsibilities I've had, I think the securities area shows it the most. You need to have knowledgeable people to be able to make decisions on very complex issues; however, I'm discovering more and more that the people who have the knowledge are also in one way or another often connected to the industry in a way that does give rise to the question of conflict. We are struggling with that one somewhat. Mr. Matkin's recommendation was to acknowledge the conflict and put people with conflicts on the Securities Commission -- or the SEB, in his case -- in such a way that all the conflicts would hopefully balance one another off. I suppose that's one way of going about it. The other is to change the process by which people get appointed to the commission, and we are looking at that.
Beyond that, I will acknowledge that it is extremely difficult to find people who are both knowledgeable and free of conflict. I guess the most important thing there with respect to the hearing is ensuring that we have a sufficient pool of experienced people who can be commissioners and can hear a hearing or do an investigation without being linked in some way to any of the parties that are subject to the investigation. That seems to be quite a challenge.
F. Gingell: Hon. Chair, I make a commitment to the minister that I won't bring up the subject of a securities exchange board again if she promises not to, either.
I have come to the end of my questions on the Matkin report and the B.C. Securities Commission. I had expected Mr. Weisgerber to be here to ensure that he got his questions asked while....
Hon. E. Cull: Hon. Chair, I could make a suggestion. I know that the next item the opposition critic wanted to move on to is the Korbin commission. No? I'm sorry. I'm just looking at the list here....
[ Page 11196 ]
F. Gingell: They were not meant to be in sequence.
Hon. E. Cull: Oh. I was hoping that if we did them in sequence, I could arrange to have staff here. If they're not in the sequence you want to do them, you can tell me what sequence you wish to do them in, and I can arrange for staff. If for some reason that's not possible, then we'll just go a little more hit-or-miss at it.
Mr. Hyndman is available to stay a bit longer, so if we want to move on to another subject and Mr. Weisgerber returns....
The Chair: I might remind hon. members that the rules of the House suggest we name folks by their constituencies as opposed to their personal names -- so Peace River South.
Hon. E. Cull: Sometimes in this chamber, hon. Chair, it's hard to remember that we're in a chamber. It doesn't feel like a chamber.
The Chair: We'll do our best.
F. Gingell: I know that one doesn't go off the record. The latest response I sent to the minister's office on Friday said that we would be happy to work to your agenda. I must admit that the Korbin commission issues are not ones that I'm ready to talk about this afternoon. I was hoping they would come up later this week.
The second thing I'd like to say is that I have a meeting of the LAMC at 4 o'clock. I was hoping someone else would come in to deal with some issues during the time that I have to be away. But I will turn to some issues that are general in nature, which I don't think your deputy minister will be able to deal with.
Hon. E. Cull: I would like to clarify as to whether you will be going into areas under PSERC this afternoon. If you're not, then I'll let the commissioner get back to his duties. I'm sure he has many things he would like to get on to today. So you won't be dealing with personnel or FTE issues or any of the others this afternoon? That's fine.
The Chair: Is there any way the Chair could make a suggestion to you that at some point you get together and work out your process?
F. Gingell: Yes, we have.
The Chair: Oh, all right. It didn't quite look like you had, I have to confess, from the Chair's point of view.
F. Gingell: Just before this ends, does Mr. Surich come from Victoria, or has he travelled over from Vancouver?
The Chair: He's from Victoria.
We've done some readjustments here.
F. Gingell: If I may, I'd like to draw everyone's attention to an advertisement in this week's paper in which the B.C. Transportation Financing Authority is advertising for a director of financial operations. This affects your ministry, I'm sure, hon. minister, in that your ministry officials will be responsible for raising funds to make loans, offer debentures, etc., in order to deal with the B.C. Transportation Financing Authority.
I'm presently under a great pile of papers on behalf of the Institute of Chartered Accountants and the Public Sector Accounting and Auditing Board. We're looking at issues they are struggling with about the capitalization of government assets -- the amortization of them and those kinds of things. When I read discussion of those issues, I think about how your comptroller general's department is going to deal with the accounting of the Transportation Financing Authority, and how that will consolidate with our accounts. I struggle with real problems in seeing how it's all going to work. I wonder, first of all, if the minister has the same kind of concerns that I do surrounding the accounting treatment of the Transportation Financing Authority.
Hon. E. Cull: The Transportation Financing Authority will be treated like the other financing authorities for accounting purposes. The overall question of whether we capitalize assets or expenses as we acquire them is an issue that has been looked at right across Canada by this body. Other provinces do things differently. Other provinces are sometimes inconsistent in how they expense capital even within the same province. Sometimes they treat it as we treat it here in British Columbia for schools, hospitals, universities and that type of thing. It's an ongoing debate, one I look forward to getting some consistent answers and policies across the country on. As I understand it, we're not there yet, so we continue to try to do our best here in B.C. to report these matters in a way that we think makes sense for our financial reporting.
F. Gingell: Has the minister received assurances from her officials that expenditures made by the Transportation Financing Authority will appear in the consolidated revenue accounts as a fiscal agency loan and will not be added to and included with the expenditures in the calculation of the deficit in the consolidated revenue fund?
Hon. E. Cull: The answer to the member's question is yes. It will be treated as part of the Treasury Board policies, as the other fiscal agencies are. Treasury Board establishes the policies for the accounting and the reporting of the TFA; that's how it will be done.
F. Gingell: There's a very dramatic difference between other fiscal agency loans and this one. All other fiscal agency loans are to independent parties, to hospital boards, to school boards, or to university boards.
This is a loan to your own family. When you consolidate it, as I believe you must, expenditures are going to pop into your deficit. Those who borrow money through the fiscal agency program are independent bodies that receive grants to perform education, health and university services. They get revenues from other streams. In the end, a chunk of the vote flows through and back in to retire that debt.
[4:00]
This is somewhat different. Unless you make a commitment to put a toll on the Island Highway, you're allocating gasoline tax revenues, which don't accomplish what you think they should. I have been trying unsuccessfully to find out -- the Ministry of Finance is a tight place -- whether or not any funds have been borrowed for the B.C. Transportation Financing Authority. Perhaps you could answer that question for me.
Hon. E. Cull: The member is aware that our comptroller general, Alan Barnard, chairs the national public sector accounting review task force. I am particularly interested in the outcome of that review since we have direct input into what's going on.
[ Page 11197 ]
You say that the TFA is different from other agencies. It is no different from B.C. Buildings Corporation, which is treated in the same fashion and in effect is part of our family too. I fail to see the distinction you're making. Some agencies are different, but others are very similar to the TFA. The books haven't been closed off for last year, but borrowing has been done in the order of about $80 million.
C. Tanner: Eighty?
Hon. E. Cull: Eighty.
F. Gingell: Before going to the LAMC meeting, I'd like to suggest that the first difference is that the B.C. Buildings Corporation is a Crown corporation and this is a Crown agency. With this I will....
The Chair: Thank you very much, hon. member. Your contribution has been appreciated.
C. Tanner: I want to pursue what my fellow member asked about: the financing of all government operations. It is my understanding that there is a financing organization for the B.C. Ferries, one for schools, one for hospitals, one for courthouses, one for municipalities and also the B.C. Transportation Financing Authority. Then the government borrows its own money. Why do we have such a proliferation of borrowing authorities? Wouldn't we be in a better situation if we could coordinate the borrowing of money and get a better price?
Hon. E. Cull: While there appears to be a proliferation of different agencies, there are, in fact, only two. The Municipal Finance Authority is a separate agency which does its own borrowing and has its own credit rating. Borrowing by all other bodies is done through the provincial treasury. We act as a fiscal agent on their behalf, simply to keep track of the money that is being borrowed and for what purposes.
C. Tanner: Is the minister saying that Crown corporations use the same authority to borrow money as other government agencies?
Hon. E. Cull: Yes, the provincial treasury is the fiscal agent for Crown corporations.
C. Tanner: If that's the case, why do we -- for example, in financing highways -- dedicate special funds to be raised for those specific projects, whereas in other cases it all comes out of general revenue?
Hon. E. Cull: Sorry, hon. Chair, I guess I got a little confused with respect to the member's question. When he was listing off all the agencies, I thought he was asking whether all these bodies were raising their own money and doing the financing. The provincial treasury does that on behalf of school financing or health financing authorities and all the rest -- everything but municipal. I don't quite follow the member's last question.
C. Tanner: Setting aside the municipal authority which, I understand, is separate and is being set up by the municipalities -- they weren't very happy with what the provincial government was doing for them some years ago and apparently are quite successful and have a good rating with the rating organizations -- all the other funding organizations or authorities come to the provincial government.
There are differences between them in that some of them are Crown corporations. Some of them -- like the highways one -- are financed on the strength of taxes raised specifically for that purpose, like the gas tax or the extra tax on car rentals.
My question to the minister is: why would the government make that differentiation between the different types of fund raising authorities and the way it raises funds, instead of doing it all the same way -- in and out of the general revenue fund?
Hon. E. Cull: As far as the outside world is concerned, it's very transparent in terms of the borrowing; it's all one agency. We do the borrowing, and we apportion it among the various bodies.
Each of them has a different revenue source. B.C. Hydro has its revenue from the sale of electricity and its other services. The various Crown corporations have different revenues -- sometimes from dedicated taxes, as in the case of the TFA or the rents that B.C. Buildings Corporation gets. In the case of the social capital agencies, their money comes through grants that are part of the operating revenue they receive on an annual basis from the Crown. All of them have different sources of revenue that we raise on their behalf to pay for their portion of the debt. The province does this all in a consolidated fashion because we have an excellent credit rating and an excellent staff and can provide a better service than those agencies would get independently.
C. Tanner: So, in fact, the province is responsible for all the debt that is accumulated by the Crown corporations, the agencies of government and all the other fund raising authorities. The figure we have here of $27,422,000,000 is the total consolidated debt of the province.
Hon. E. Cull: Yes.
C. Tanner: And that's the debt figure we should be quoting. When we say what the debts of the province are, that's the debt figure that is accumulated and underwritten by the province. Is that correct?
Hon. E. Cull: If you add up all the kinds of debt of any particular colour, stripe or description, the full total indebtedness of the province is $27 billion. We are very clear about that. That's reported in the accounts, and it's how we talk about the total debt of the province.
The bond-rating agencies differentiate between tax-supported debt and non-tax-supported debt, so they exempt B.C. Hydro and B.C. Rail from the province of British Columbia. They exempt similar commercial Crowns which are supported from non-tax revenues in the tax-supported debt of other provinces. When we compare tax-supported debt across Canada, each province has its commercial agencies removed. In the case of British Columbia, that brings it down to about $20 billion.
We also differentiate between the accumulated deficit debt of the province and the tax-supported debt. Roughly half of the $20 billion I just spoke of is accumulated deficit.
A. Warnke: I want to follow up on an earlier exchange between the member for Delta South and the minister concerning the B.C. Securities Commission. I apologize for not being here for some of the minister's remarks. One problem in this place is trying to be in three different places
[ Page 11198 ]
at the same time -- I say three, not two. At any rate, if the minister has indeed touched on these, I apologize in advance. Perhaps it would be fair to say that if there is a problem here, I do not mind referring to the Blues.
I would like to follow up a little on the fact that the B.C. Securities Commission has received all kinds of different reports over the years, of which I'm sure the minister is aware. Some of them aren't kind at all about where the B.C. securities community is at. First of all, I would like to know generally what efforts the ministry can get involved in, or has gotten involved in, in order to improve the reputation of the B.C. securities community, and whether in fact these actions were taken through the B.C. Securities Commission or to the extent to which the minister is limited.
Hon. E. Cull: I can't give a lengthy history on this, because my own responsibility goes back only to last September and our government's goes back only about three years. The former Minister of Finance, when he was the opposition Finance critic, was very concerned about the Vancouver Stock Exchange and raised a number of points in the Legislature, and probably in estimates like these. One of his early actions was to establish the Matkin commission, which took a bit longer to conclude than we had hoped; it concluded early this year.
While you were out of the committee room, I indicated that I was making a thoughtful and thorough review of the recommendations, recognizing that everybody wants to see some decisions made quickly but also recognizing that it's a very complicated area which requires us to take our time to ensure that we make the right decisions. I indicated to the opposition critic that I would be making a comprehensive statement on the recommendations of the Matkin report. I hope that won't take much longer, but I have not yet been able to schedule meetings with some groups that have asked to meet with me to discuss Mr. Matkin's recommendations. As soon as I've done that, I will be concluding my recommendations on the report, and we will make an announcement of the government's decision as soon as possible after that.
A. Warnke: I wonder if the ministry has also taken specific steps to allocate expenditures for an assessment of the recommendations of the Matkin commission. I understand from the minister's statement that the ministry is leading up to a comprehensive statement, but I wonder what steps have been taken in terms of spending moneys towards improving the reputation of the B.C. securities community. Has the minister done that?
Hon. E. Cull: I'm not sure whether the member is talking about spending on the part of the Ministry of Finance to review the Matkin commission. He's nodding. It's part of the normal activity of the policy and legislation branch of the Ministry of Finance to undertake such reviews. A number of my staff have been extensively involved not only in reviewing the recommendations since they've come out but in working with the commission. From the time Mr. Matkin was appointed, we've had an ongoing involvement in our observational role with his advisory committee. We have now done some fairly extensive staff reviews of the report, including the work I mentioned earlier while you were not in the committee room, with respect to sending the report to other provinces to ask for their comments and input. We are also following up some of the specific recommendations that require further research or at least discussion with experts.
[4:15]
A. Warnke: I would like clarification on one point the minister mentioned. The minister said the report is being sent to other provinces. Would this be to the security communities of other provinces or to other provincial governments?
Hon. E. Cull: We've sent it to the chairs of the securities commissions in the other provinces.
A. Warnke: When the minister's comprehensive statement is given later on, I'm wondering what form the report or statement will take. Will it be some sort of general public release? Will some of the opposition parties be contacted? Could the minister elaborate on the time line on this?
Hon. E. Cull: I have just been advised that I wrote to the ministers responsible for the securities commissions, but most of what I saw was the responses that came back. They generally came from the chairs of the commissions, so that's where my confusion arose as to whom I asked to respond. In some cases, we received very lengthy responses from the chairs of those securities commissions. We have also engaged outside legal counsel to provide independent legal advice on Mr. Matkin's recommendations, in addition to the budgeted money spent by people internal to the ministry.
At this point, because we haven't made decisions on the recommendations, I haven't fully thought out how we will make the announcement on the Matkin commission. It will certainly be the subject of a cabinet submission. There will be a decision and a position taken by government, then an announcement of the decision. The various steps to implement it will be made in due course.
A. Warnke: I have another point following up on what the minister has said. I appreciate the minister's answer. Is there some point at which the members of the House would be involved prior to you making such a comprehensive statement?
Hon. E. Cull: It's rather difficult to be precise in the answer, and I'm not trying to evade the question, believe you me; it's just that I don't know the answer clearly at this point. If it turns out that we have concluded this work before the House rises, I would imagine that a statement in the House would be an appropriate way of advising the other members. Since I don't know when the House is going to rise, it's not clear to me if we will conclude this work before then. If that's not the case, there will be a press conference, and notification of interested parties will be made in the normal fashion.
A. Warnke: I thank the minister for her answers and, like the member for Delta South, I'll move off the subject.
I want to explore in a more general sense the operations of the provincial treasury. I hope it's not premature to do that. In a general sense, it's quite possible for us to explore it. This touches a bit on what my colleague from Saanich North and the Islands put forward as well. I've naturally, like all members, read the estimates, and we're all aware that one of the provincial treasury's responsibilities is to provide loan administrative services on a cost recovery basis for clients which include Crown corporations and the government. To follow up on my colleague's inquiries, I want to explore where the provincial treasury is responsible for Crown corporations, and in a more general sense this is what I want to get at.
[ Page 11199 ]
Let me elaborate, if I may. A number of people see Crown corporations as an area that is growing, and perhaps there's an impression out there that some Crown corporations are in the midst of expansion and that it's very difficult to maintain some control over the growth and expansion of these Crown corporations. Ultimately, the provincial treasury is financially responsible for Crown corporations. This public concern that Crown corporations are growing is exhibited or symbolized in many different ways. As we've seen in recent weeks, there is public concern over good benefit packages for public servants, and so on. That's not the only problem the public perceives; it perceives that these Crown corporations are growing. The public wants to be reassured, I suppose, that the provincial treasury is not put in a most awkward position of having to underwrite the expenditures of Crown corporations when they are in the process of expanding and growing.
In a more general sense, I'm wondering if the minister could give a brief description of the ministry's strategy and direction for addressing some of these public perceptions about the growth of Crown corporations.
Hon. E. Cull: This is going to be an incomplete answer to the member's question because control of Crown corporations is not one of my responsibilities. The Crown corporations secretariat is the responsibility of the Minister of Employment and Investment. Questions with respect to particular Crowns, or even the overall management of Crowns, have to be put to him.
However, you touched on a number of items which fall somewhat within my responsibilities, and some fall squarely within my responsibilities. You alluded to some concern about compensating the executive of Crowns. The Public Sector Employers' Council has responsibility for that. Under the direction of the Premier, we have issued a freeze on all public sector executive compensation while guidelines are being prepared. The next PSAC meeting is, I believe, early next week, and at that point we will look at putting in place guidelines to ensure that there is full public accountability with respect to executive compensation. So that aspect is being clearly looked at.
The government as a whole does review the capital plans and business plans of the various Crown corporations to determine that their borrowing and expenditures are in line with government policy and sound fiscal management and are within the borrowing limits established in the provincial budget.
A. Warnke: To follow up on that a little, there is an impression that the Finance minister has not exactly control of, but certainly some responsibility for and role in the Crowns. The minister has indicated that the Minister of Employment and Investment is primarily responsible for certain areas within the Crown corporation sector, but the Financial Administration Act currently strengthens the financial control and direction of Crown corporations. What we need is a different strategy whereby the responsibilities that apply to the Minister of Employment and Investment should come under the Minister of Finance. We don't want to get into an area of future policy, and I'm not even sure that it should be advocated as future policy. Nonetheless, exactly what is the relationship between the Minister of Employment and Investment and the Minister of Finance in terms of Crown corporations? How is it worked through the Crown corporations secretariat and all the rest of it? I'm just wondering what sort of role the Ministry of Finance is currently playing and whether that relationship is undergoing any alteration within this year's estimates.
Hon. E. Cull: In a general sense, I guess there is some alteration to the historical relationships. First, the Crown corporations secretariat is a new agency put together by this government to make sure that all the Crowns are in fact being coordinated and managed with a consistent set of policies. Second, as part of this year's budget process, we have -- I think for the first time -- ensured that all the borrowing of government, including the Crown corporations, is dealt with in a comprehensive fashion. In an overall sense, targets are set not only for spending but also for borrowing, and the Crown corporations then have to fit within those targets. So the Minister of Finance has a very clear role in establishing what the overall limit of borrowing can be.
The decision as to whether it goes to transit or schools or some other form of investment is broadly made by Treasury Board and cabinet, but the real work on the recommendations is being done through the Ministry of Employment and Investment with the support of the Crown corporations secretariat. Within any individual Crown -- say, B.C. Transit -- the decision on whether they spend their money on buses or on an extension to the LRT or SkyTrain or anything else is worked on by the Crown corporation and reviewed by the Crown corporations secretariat, and then their business plan or capital plan, as the case may be, will be reviewed by a committee of cabinet.
These things are all linked together, but it may sound somewhat confusing as I explain it right now. The integration that has been done in the last year is a considerable improvement over the system we inherited in 1991. As a member of Treasury Board for three years, I can tell you that what we inherited didn't make an awful lot of sense. It is now much better coordinated and planned than it was in the past.
L. Stephens: I understand that employment equity and pay equity programs are now part of the Ministry of Finance. We had discussed these two particular areas a bit in the estimates of the Ministry of Women's Equality, and I'd like to pursue them a little further here.
Employment equity is about eliminating discrimination, removing barriers and creating opportunities for a number of groups. The government has enacted some employment equity policies. I wonder if the minister could share with us some of the standards and guidelines that are in place for employment equity in the public service.
Hon. E. Cull: Unfortunately, before the member was in the committee room, we canvassed with the critic for her party whether we would be dealing with PSERC items this afternoon. On his assurance that we wouldn't, I've let the commissioner go back to his job.
[4:30]
We can attempt to go over these; I could call him back if you'd like -- he's here in Victoria. Our employment equity policy is evolving. We have just concluded an employment equity survey in order to obtain information about whether employees have experienced barriers in employment. We asked employees to identify themselves voluntarily as belonging to categories that have been known to face these barriers. We will now require each ministry to use that information as a baseline and then evaluate their performance in terms of the number of women employees and those in the other employment equity categories, compared with the overall population. We then will require
[ Page 11200 ]
each ministry to develop a plan to achieve greater employment equity.
The thrust of the program is not quotas or trying to promote certain individuals over others; the merit principle is always the basis of the employment hiring decision. The program is intended to remove systemic barriers that have prevented certain groups from advancing in their employment in the public service.
L. Stephens: We won't continue along this line. We will wait until the appropriate personnel are here.
I would like to pursue pay equity. I understand that there is a pay equity fund within the Ministry of Finance available to supplement wages of non-profit organization employees. Am I correct? I know it's been available to transition house personnel. Does that fall within the ministry?
Hon. E. Cull: No, it doesn't. Pay equity is negotiated with the unions between employers and employee groups. It becomes part of overall compensation as it has with the B.C. Government Employees' Union, so there is no fund. There is a low-wage-redress policy for non-profit agencies, which I think is what the member is referring to. That money is part of individual ministries' budgets. It was in the Ministry of Health's budget when I was the Minister of Health, and it would be in those of other appropriate ministries: Social Services, Attorney General and, through child care payments, Women's Equality. Those are part of the overall voted appropriations for each ministry and not part of the Ministry of Finance.
L. Stephens: Another area is taxation, particularly regarding maintenance payments. Federal decisions made recently mean that this discussion will be ongoing. Has the minister spoken with her federal counterpart about advocating these changes to the taxation policies? If not, is she going to?
Hon. E. Cull: I haven't spoken to Mr. Martin specifically on this since the matter has come up. However, I have had the opportunity to raise it with our local MP and National Revenue minister, David Anderson.
L. Stephens: Would the minister indicate whether or not this is something the government feels strongly about? And would she view this as a desirable initiative advocated from the provincial level to the federal level to instigate some tax reform in relation to single women and maintenance payments?
Hon. E. Cull: As this is a federal matter, we don't have a policy in terms of what we would do on it. However, the government would support change to the tax laws to enforce the decision that single parents have won in the courts.
D. Jarvis: I'd like to talk on a subject that's handled by your ministry, and that is surety bonding or performance bonds. Have we discussed this before? I don't know if you've talked about it before, but it pertains to what I want to ask you about.
There is one aspect of business that I'm fairly familiar with, and that is the real estate business. We see this situation coming to the fore more and more often. I'd like to know what kind of role the ministry is considering taking in situations where demands on the performance bonds have occurred.
Hon. E. Cull: Unless the member can be a lot more specific in his question, I don't have an answer for him here. I don't have any staff in that area with me today, and I'm at a bit of a loss as to what his question specifically is.
D. Jarvis: Specifically it's to do with situations such as Aeon Realty and Vancouver Pacific Realty, which have had their licences taken away. The licensees skipped town with the moneys and ostensibly took $450,000 here and $500,000 there. They have left the purchasers, the vendors and the real estate agents high and dry considering their situation, and there's insufficient money in surety bonding. Perhaps I'll wait until your deputy is aware of this problem and can give you further information on it.
Hon. E. Cull: I'm just wondering if the member is under the impression that the purchasers have been left short of money. Or is he referring to the sales people who would not have received commissions? It's my understanding that under the Real Estate Act purchasers have been well protected. We will check that with the appropriate staff for later in these estimates. But I know there is an ongoing problem with sales people.
D. Jarvis: I was leading up to the fact that times have changed, and the surety or performance bonds are now at $100,000. Values of houses, commissions and deposits are considerably higher nowadays. I was wondering if the minister or her ministry has given any consideration to increasing the amount of surety or performance bonding so that they would cover situations like that.
I understand that with Aeon Realty there was a shortfall of $450,000 after the surety bond and the money in the bank from the deposits that were left were used up. I'm not too sure at the moment whether all the purchasers and/or vendors have been satisfied. I imagine the vendors would be, because there would be sufficient moneys in there for deposit moneys.
Hon. E. Cull: There is a criminal investigation into the matter of Aeon, so I'm somewhat reluctant to make statements which may get me into trouble. It is my understanding that all claims by members of the public will be satisfied and that it is sales people who may find themselves having to accept prorated funds.
Interjection.
D. Jarvis: The member for North Vancouver-Lonsdale was alluding to the fact that I am the only MP or MLA in Canada who still has his real estate licence on the board. That's for a special reason, being that I'm such a nice fellow.
Maybe this is a problem too. Maybe we should also consider the poor salesmen who are out there struggling to stay alive with all the taxation that's coming in from the Finance ministry. Has the minister started any legislation that may change this section of the act?
Hon. E. Cull: As I am personally in the situation of supporting a local real estate agent with the purchase of one house and the sale of another, I'm sure the agents are doing just fine right now, but we are reviewing the Real Estate Act. We continue to work with the Real Estate Association on its concerns with the act. I'm certainly not bringing forward any changes in this session, but there have been a number of requests we've been looking at very seriously.
[ Page 11201 ]
A. Warnke: I want to follow up on a couple of other things. When we were talking earlier about various Crown corporations, public borrowing and what not, the member for Saanich North and the Islands made some reference to that. I want to follow up on another aspect, which is that the provincial Minister of Finance is ultimately responsible for being in contact with her federal counterpart, the federal Minister of Finance. I'll start with a general question on setting up the minister's office and operations with regard to the relationship with the federal Minister of Finance. Is there some sort of ongoing communication between the federal and provincial ministries? It is obvious to everyone that the federal government, especially in the new administration, is facing a very difficult situation in addressing the debt and the growing deficit every year. There obviously has to be some sort of attempt to coordinate where the various governments -- the ten provincial, the territorial and the federal -- are going. I'm wondering if there is some ongoing contact through the minister's office with the federal minister. In what operational context is this relationship?
Hon. E. Cull: The western finance ministers just concluded a meeting in Gimli. The federal-provincial finance ministers' meeting is in June in Vancouver. We met last in January and before that in November, so we do have regular meetings not only of western finance ministers but of all provincial and territorial finance ministers with the federal minister. Beyond that, we have ongoing discussions at the staff level on all kinds of matters regarding taxation policy and the like. We've recently been cooperating over tobacco taxes despite the initial lack of cooperation of the federal government by dropping the tax unilaterally. They have been working with us in terms of reallocating their resources to western Canada, where the provinces are holding their line on taxes. We have a federal-provincial relations division in the ministry that is extensively involved in federal-provincial policy development and provides us with very good support with respect to all matters of the federal government that touch on the provincial government.
[4:45]
A. Warnke: I understand from the minister's response that there is some continued contact and communication with the federal ministry, through a specific subdepartment in the ministry at the ministerial level and that it is primarily restricted to finance ministers' conferences or those kinds of meetings. The minister did mention regular meetings, and I would really appreciate if that could be outlined a little. How regular are these meetings? Is that really the case?
Hon. E. Cull: Hon. Chair, the member should not be under the illusion that just a special division of the ministry has the relationship with the federal government. We have joint tax collection and fiscal transfers. There is joint work on economic policy. Besides the ministers meeting regularly, deputies and other officials meet on a regular basis. There is considerable discussion across various parts of the ministry with their federal counterparts.
A. Warnke: Naturally, one of the minister's concerns has been the whole question of -- I believe the term has been used frequently -- federal downloading. When the discussion of federal downloading comes up, I'm wondering how regularly this concern is expressed by the various deputies who are obviously in contact with the deputy ministers, as well as by the minister with the federal Finance minister and perhaps the other provincial finance ministers as well.
Since this is an obvious concern to British Columbia in terms of the impression that it has some impact on our own provincial budget, I'm wondering if the minister would outline briefly how the whole question of downloading is addressed and whether in fact the forum is a good one to address this problem and to find some sort of resolution in our favour.
Hon. E. Cull: This year my staff estimates that the federal off-loading is costing British Columbia $2.5 billion. Indeed, we would have a surplus this year and we would have had a surplus last year if there hadn't been the unilateral off-loading by the former Conservative government.
In the new Liberal government, we first met with Mr. Martin in November last year, and the provinces made it abundantly clear to the new federal Finance minister that while we appreciated that they had a deficit problem, we didn't believe -- as the finance minister for Saskatchewan put it so well -- that you can solve a debt in the family by giving it to your sister. We didn't think they could resolve anything by simply moving the debt from the federal budget to the provincial budgets.
[D. Schreck in the chair.]
In British Columbia my staff and I have taken a lead role in the discussions with the federal Finance minister and have put forward alternative solutions to the simple off-loading solution, which was the favourite of the former Conservative government. We've put forward a number of ideas on how to renew federal fiscalism to ensure that there will be cost savings at both levels of government and therefore the ability to reduce transfers to be affordable by the province.
When the western Premiers and finance ministers met in Gimli, Manitoba, a couple of weeks ago, a major concern -- which we conveyed in our report to the Premiers -- was that because the western provinces all expect to have a balanced budget by 1996.... The four western provinces will probably be leading the country in that respect; indeed, the territorial governments already have a balanced budget. We suspect that a desperate federal Finance minister may see our good fiscal management as an opportunity to off-load onto the western provinces more than our fair share of federal off-loading.
B.C. has, in fact, had a disproportionate share of off-loading. We have about 12 percent of the population; this year we're experiencing about 14 percent of the off-loading of the deficit. Next year it looks like it will be about 15 percent. So we are taking more than one would expect, even on a population basis. We've made it very clear to the Liberal government in Ottawa that this is unacceptable to British Columbia. We have continued to do that at every opportunity. We haven't simply stood up and said, "No, we don't want your problem"; we have taken some pains to point out alternatives that can be worked on.
You ask whether there is a forum now for resolving this on a cooperative basis; I think it's too early to tell. I have been hopeful that the new government wanted to have a more positive relationship with the provinces than the former federal government had. At this point, it's difficult to tell whether it can deliver on its promise to do that. There have been some statements that sound very unilateral in terms of further off-loading by 1996. There are a lot of concerns about whether the income security review that's now underway will bring about a meaningful restructuring of our national social security safety net or will simply find ways to cut spending in those areas. I think the next few months will tell
[ Page 11202 ]
whether the government is serious about renewing its relationship with the provinces or simply continuing down the path of unilateral action that the former government was on.
A. Warnke: The minister touched on something I wanted to touch on as well: tobacco taxes. That too has been a concern to many British Columbians. Let me put it in the words of the people in British Columbia. Quebec has a particular kind of problem that everyone can appreciate. The federal government had to address a special case in Quebec as well as the immediate implications for the province of Ontario. There was a concern that British Columbia, much like Ontario, would eventually feel the effects of the federal strategy on tobacco taxes, although the federal Minister of Finance made it clear that the strategy was only a temporary measure to address the problem in Quebec.
I'm wondering about the extent to which the Minister of Finance has been reassured of that by the federal Minister of Finance, her counterpart, and whether in fact the whole issue of tobacco taxes in central Canada is temporary and not a problem we will be forced to face somewhere down the line, as Ontario has done.
Hon. E. Cull: I'm delighted to hear the concerns of the opposition with respect to this. I encourage the member to write to the federal ministers responsible, encouraging them to take the action that the western Premiers have asked for -- namely, one tax rate all across the country. Right now we have at last count six different tax rates. It might be seven; I've started to lose count. Every province has its own federal tax now, with the exception of western Canada.
We also asked them to take action to stop the interprovincial transfer of tobacco that is manufactured for sale in one province but is subsequently shipped to and sold in another province. They already do that with liquor; certainly they could do that with tobacco. We have had no assurances whatsoever from the federal government that this is just a temporary measure. It's ludicrous to think that after a few years they'll be able to bring it back in and that somehow the criminal rings will have disappeared. They haven't disappeared in eastern Canada; they've just moved on to other activities besides tobacco. Unfortunately, this has the potential of turning into an interprovincial smuggling problem, not only an international one. We made some suggestions to the federal minister about how he can address this problem. We have had, as I'm sure media reports have made the member aware, a number of seizures of tobacco that was shipped to British Columbia. It should have been for sale in other provinces; taxes hadn't been paid on it. I think we will see, as the months progress, that what was an international problem has now become an interprovincial problem simply because the federal Minister of Finance failed to take the advice of almost all the Finance ministers at our January meeting, with the exception of Quebec and perhaps one other. He acted to solve a problem in Quebec and created a problem everywhere else.
C. Tanner: It sounds like the minister would like to see a further impediment to interprovincial trade by imposing some sort of restriction on moving tobacco across provincial borders. That's happening now insofar as people are mailing tobacco into the province; that must come under the minister's jurisdiction. I understand also that on some reserves across the province stores are being set up by people from outside the province, and they're selling tobacco at a discounted price too.
Hon. E. Cull: There are reports of mail-order tobacco coming into British Columbia and claims by companies outside British Columbia that they're mailing in substantial quantities. Individuals who purchase tobacco that way are required to pay tax and are responsible for it. As you can appreciate, the difficulty is having those purchasers identify themselves and volunteer to pay the tax. They are clearly not going to do so, which is why we have asked for federal support in ensuring that tobacco that is marked for sale in one province is not then sent to another province and sold without having paid the appropriate taxes. The federal decision has compounded that by having different federal tax rates all across the country.
With respect to tobacco sales on reserve land, we were about to implement on May 1, along with the mandatory green stripe on tobacco.... I don't know whether you ever look at cigarettes in the stores. I don't, so I had to make an excursion to see exactly what this looked like. There is now a green stripe on all tobacco sold in British Columbia, which indicates that the taxes have been paid. Tobacco that was to be legally tax-exempt, which would include sale to aboriginal people, customs duty-free and the ships that members of the military have access to, would have a clear stripe.
There were some concerns raised by some of the bands in the Okanagan. I heard them, met with them and decided to delay the implementation of the clear stripe for three months so that we could review their concerns and a way to implement it. The law states that only natives can buy tax-exempt cigarettes. Individuals who are, as you claim, setting up on reserves and selling tax-exempt cigarettes to non-natives are breaking the law and, in fact, would be caught by tax law enforcement. There are a lot of stories about whether there is abuse. Undoubtedly, there is some abuse; I don't know the extent of it. We're working on ways to limit that, but we also recognize the legal right of natives to purchase tax-exempt tobacco.
C. Tanner: The minister gave a fairly lucid description of what's happening now and how her department is trying to enforce the law. I think there were some admissions that they're not entirely successful. It is not necessarily the minister's fault; it's the fault of the situation she finds herself in. However, the nonimportation of liquor across provincial borders is rather different than tobacco because liquor is manufactured, in many respects, in each province and kept within the province, whereas tobacco is manufactured in only two provinces, to my knowledge, and shipped across the rest of the country. I don't know how the minister is able to enforce the law in British Columbia or how her equivalents in Alberta, Manitoba and Saskatchewan are able to enforce the laws in those provinces when they're getting their merchandise from another province.
[5:00]
Hon. E. Cull: The tobacco manufacturers are required to put tobacco for sale in British Columbia in cellophane wrap with the green stripe on it. Other provinces have a striping or marking system or are moving towards one. In a very short time I suspect all provinces will have their own coloured stripe, and the tobacco manufacturers are going to have to manufacture and package tobacco for each province accordingly. It will be one requirement for selling tobacco in each province. I don't believe we were the first to move to the marking system. We certainly won't be the last. Most provinces will go in that direction in the very near future to ensure that taxes have been paid.
[ Page 11203 ]
F. Gingell: Before I left for my brief meeting, we were discussing issues relating to the accounting practices or procedures that will apply to the Transportation Financing Authority. There was an article in the Financial Post on May 28 that people might like to read. In it, they discuss concerns in the province of Ontario. One issue raised -- they're not yet sure exactly how it will be treated in the accounts -- concerns the sale of certain provincial assets to a leasing company called Asset Finance Bermuda.
I was wondering whether the province sold any assets in the past year on a leaseback arrangement; whether you are contemplating any sales in the current year on a leaseback arrangement for financing purposes; or whether you are considering any lease arrangements to acquire assets. I'm not talking about something you own, sell and leaseback, but something that you are acquiring -- for instance, ferries or anything of that nature. Has there been any leaseback accounting or leaseback deals made in the past year or are any being contemplated in the current year?
Hon. E. Cull: The member undoubtedly has the ferries' sale and leaseback in mind. I forget how long ago that happened, but it was some time ago. The tax treatment of that type of initiative is no longer as favourable. It's changed since then, so there is certainly no intent on our part to use a sale and leaseback as a financing arrangement. It's just not in our interest.
I don't believe there was any sale of assets and subsequent leaseback in the last year; in fact, I can't think of any at all in recent years. I'm not as confident when I say there may not be any lease of assets in the next year. It is conceivable that there might be the lease of railcars on a computer rail link, just to give you an example. That's not to suggest that I have knowledge that that's the way they're going to do it, but it is something that one could think might be done that way. In terms of financial transactions, there's no longer any advantage for us to sell assets and then lease them back.
F. Gingell: One can appreciate that lease arrangements did have some advantages in earlier years; they don't now. Working on the premise that the provincial government can borrow at a lower interest than a commercial lender can, unless it is a bank, that would indicate no reason to go into lease arrangement for any asset for purposes other than avoiding the debt being included in the calculations. I'm not sure that's necessarily true, because the account value of the lease may have to be included in our current arrangements. I'm not sure of that answer. Perhaps you might respond to whether or not we are required to include account value of long-term lease arrangements.
Hon. E. Cull: The decision of the day to sell the ferries and lease them back was not an off-the-book advantage, if you like. It was a tax benefit that they received, and that was why the decision was made.
However, should we enter into a long-term lease for an asset, it is my understanding that we have to then treat that as a purchase and report it. If we have all the benefits of ownership, we have to report it as if we purchased it.
F. Gingell: I'd like to now turn to the estimates under ministry operations on page 128. It first deals with the costs of operating all the registries, ministry support services and certain other government organizations. The one that immediately comes to mind, of course, is the B.C. Assessment Authority, which has gone into arrangements whereby they try to raise revenues by making the information on sales they have in their computers....
The Chair: Order, please, hon. member. If you'd complete putting the question, the minister will have the time of this division to consider the answer.
F. Gingell: The question is: has the ministry looked into any ways or means of creating new revenues for government by making the information in the various registries available to the public, other than the normal search process that presently goes on? The B.C. Assessment Authority has clearly gone into a revenue-generating exercise. Has the ministry considered similar...?
The Chair: The committee stands recessed until after the division.
The committee recessed at 5:10 p.m.
The committee resumed at 5:18 p.m.
The Chair: The Chair calls the committee to order, reminding all hon. members that the customary time for this committee to rise, report progress and ask leave to sit again is 12 minutes from now. The Chair recognizes the hon. minister.
Hon. E. Cull: The member was asking about our registries prior to the recess. The registries are fully cost-recovered right now. They receive sufficient revenues to cover all their costs and, in fact, then some. The only recoveries are the ones charged for the services of the registry. They're a user-pay concept, and there hasn't been any investigation since I've been the minister or that I'm aware of into any other revenue-generating possibilities from the registries.
F. Gingell: I haven't done a search for many years now. It used to be a fairly lengthy, ponderous process. Is it all computerized now? Does one have to go into a provincial government office, fill in a form and pay a fee, or are there other means? I know you can set up an account so that you can have your searches done and billed monthly. But is it getting computerized in a manner enabling legal firms and others who need to do innumerable searches to do them in a fairly efficient, direct manner?
Hon. E. Cull: The personal property registry is fully on-line, so that would be much speedier than the experience you may have had in the past. As the member is aware, I've just introduced legislation to be able to put the manufactured housing registry into the electronic era. The Company Act is not yet there, but it is following.
F. Gingell: Do I understand that legislative change will be necessary for the Company Act, the Society Act and others to be put on to computerized record-keeping?
Hon. E. Cull: The answer to that is yes, we do need legislation.
F. Gingell: I wonder if you have any estimates of the costs to your ministry -- both additional costs and the reallocation of resources -- that are caused by the Freedom of Information and Protection of Privacy Act.
[ Page 11204 ]
Hon. E. Cull: We have one and a half FTEs, which doesn't tell the full story of the FOI costs in the ministry. In an area where there's been an FOI request, obviously staff would have to spend considerable time pulling the material and reviewing it with FOI staff in order to ensure that it was within the framework of the legislation and that they did what they were supposed to do prior to releasing the information. I don't have a cost estimate beyond the direct staff that are dedicated to the function of the ministry.
F. Gingell: Do you have any concerns about the freedom-of-information process constipating -- if I can use that word -- your ministry?
Hon. E. Cull: I don't see any evidence at this point to indicate that the number of requests is creating a problem for ministry staff. I think the major issue right now is that this is a new process with which staff are becoming familiar.
As you are aware, over the last number of months errors have been made by staff in interpreting the act. We in the provincial civil service are on a fairly steep learning curve as we sort out exactly what this act means. Once we have gone through the learning process, I think things will flow as smoothly as they do in other jurisdictions.
F. Gingell: Looking at other jurisdictions, is the difficulty in getting started due to a large number of initial requests, and does this number reduce rapidly or climb steadily as more people discover what havoc they can cause government by filling in forms?
The Chair: As fascinating as this topic may be, the Chair cautions members that the proper matters in order are those within the spending estimates of the minister.
Hon. E. Cull: Assuming that the member is asking simply about FOI requests to the Ministry of Finance, my understanding is that there is an initial bulge of requests when freedom-of-information legislation is brought in as people seek to obtain documents and information that they have always been denied access to. Over time, as a climate of openness develops under the legislation, it levels off.
F. Gingell: Under registries and ministry support services, paragraph (a)(iii), it says: "Grants are provided to government employees under the government employee suggestion program." Are the grants provided for in this section of this vote only for the Ministry of Finance, or do they cover other ministries?
Hon. E. Cull: Those grants cover all government employee suggestion awards.
J. Weisgerber: In the hope that we could wind up the VSE things today, it has been brought to my attention by a group called the Peer Protection Against Regulators Association that they believe some of the regulatory authorities adopted by the exchange go beyond the commission's authority. I'm sure everyone is familiar with that group. I wonder if the minister would care to comment on these allegations, which I'm sure she, or at least the commission, are well aware of.
Hon. E. Cull: I will ask the chair of the Securities Commission to answer this question.
F. Gingell: Because she doesn't want to be sued for libel.
The Chair: Order, please.
By the standing orders, I regret that only the minister and deputy minister have standing to answer questions.
Hon. E. Cull: I have five deputies.
The Chair: Perhaps with the guidance of the Chair, the minister could read into the record which staff present have deputy minister status.
Hon. E. Cull: Present are the chair of the B.C. Securities Commission, the commissioner for PSERC, the chief executive officer of PSAC, and my Deputy Minister of Finance. I always say that I have five. I have this terrible feeling that I have forgotten one of the other bodies. I have six, in fact, with the Lottery Corporation chief executive officer and the superannuation commissioner.
[5:30]
The Chair: With that guidance, the Chair can recognize the chair of the Securities Commission.
D. Hyndman: If I understand the member's question, I believe he was referring to comments or allegations made by this peer group to the effect that certain policies of the exchange as well as of the commission are unconstitutional and beyond our jurisdiction; perhaps other adjectives might also be applied to them. We are quite confident that that is not the case. Our policies provide guidance about how the commission intends to exercise its jurisdiction to make decisions under the Securities Act.
The policies of the exchange are issued under its contract with listed companies; these companies are required to comply with them as a matter of contract. A policy in Ontario was found to exceed the jurisdiction of the commission because of the way it was crafted. The court there concluded that it was legislation, not policy. That's a matter of appeal so we may hear otherwise about that in the future. In general, we are quite confident that policy statements of the Securities Commission are valid as far as they go. They are statements to guide market participants as to how the commission intends to exercise its discretion.
Obviously, when decisions are made in individual circumstances, the commission is required to consider the particular facts of the case with an open mind and not apply its policies blindly, but exercise its discretion in the public interest.
J. Weisgerber: I've been led to believe that the policies of the VSE and the B.C. Securities Commission are at least developed in conjunction with the Canadian Securities Administrators. That was the same basis for the policy that was ultimately overturned in Ontario and which may well be under appeal. Can the minister or the chairman tell us what significant difference, in their view, there is between the situation here in British Columbia and the situation in Ontario, which appears to, at least on first round, have violated some of the legal implications?
D. Hyndman: Certainly some of our policies, which are characterized as national policies, are developed jointly with other members of the Canadian Securities Administrators. The particular policy in question in Ontario is what's called a local policy or an OSC policy. That was one the Ontario Securities Commission developed on their own and applied only in Ontario, and certain features of that were found to be structured in a way that made them mandatory rather than
[ Page 11205 ]
as policy guidance. We don't have a policy equivalent to the one they brought in.
J. Weisgerber: Perhaps the commissioner could tell us under what process the local regulations in British Columbia were developed and how that differs from the way those OSC local regulations were developed.
D. Hyndman: I don't think the difference is in the way they're developed. Our policies, as theirs are, are generally developed through a process whereby staff of the commission identify a problem or an issue, work on developing a policy and normally publish it for comment. Virtually every case would be published for comment so that participants in the industry can express their views. Meetings are held with those affected, and so on. Out of that process comes a final policy statement. I believe the policy in Ontario was developed in that way.
I don't think the problems arose because of the process by which it was developed but by reason of some of the wording of the policy and the way in which the commission intended to apply it.
The Chair: The Chair cautions all hon. members that we are past the conventional adjournment time, and we must not allow ourselves to be caught with the main House adjourning. But in consideration of minimizing the cost of the transportation of staff, we might be able to push the limits if there is some expectation of concluding this matter.
J. Weisgerber: Well, I don't think anything I'm going to pursue will get us into trouble with the other House. I am curious, because it's obvious that this peer protection group feels aggrieved by the commission and some of its rulings. Does the minister or the commissioner believe they represent a fringe group or a small minority of traders and stock companies on the exchange? Or do they represent a really significant group of people who are concerned about the exchange and the way it affects their ability to raise capital?
Hon. E. Cull: It's interesting. When I think of the earlier discussions we had about the Securities Commission, I admitted that one of the most difficult things was finding people who were knowledgeable about securities and regulations, but who did not have a vested interest in some aspect of it. It's difficult to be knowledgeable and also not to be either a beneficiary or somehow involved in it. When I hear criticisms of either the VSE or the Securities Commission, I take them very seriously, but I also have to consider that, in some cases, people being regulated have an interest and don't like the way the regulations have affected their particular business. I understand that some members of this group have raised the matter with the ombudsman's office, and I believe they have appealed some of the decisions, but their appeals have not been supported.
What Mr. Matkin said about the B.C. Securities Commission was that they appeared to be too harsh in some cases and not harsh enough in other cases. Part of the overall review that we're doing right now with respect to the VSE and the Securities Commission is trying to strike the appropriate balance between the investors' need for protection -- their need to know that they are not just throwing their money into a hole and that there is somebody making sure that the risks aren't totally unacceptable -- and the company's need to raise capital on a junior venture market. It's quite a balancing act that is being struck here; it's not always right in balance. You would probably find it hard to have everybody agree that the balance that has been struck suits them as well as they'd like it to. What I try to do respecting these concerns is take them seriously, look at them but put them into the broader context of what we're trying to achieve in improving the reputation particularly of the VSE but generally of securities regulation in British Columbia.
J. Weisgerber: Can the minister give me any indication as to whether, in response to the Matkin report, these folks might see something that would give them an indication that the concerns they have raised are being addressed in some way? From my limited discussions with them, it seems they were looking forward to a response from the province on the Matkin report.
Hon. E. Cull: The member was absent earlier when we were talking about the Matkin report, but for the third time for the record, I'll repeat that we are just concluding our review of the recommendations. There are more consultations which I have committed to completing before making final decisions on the recommendations, but we will be making a comprehensive response to all the recommendations at the same time -- hopefully in the not too distant future.
The Chair: The customary motion at this time of day is that the committee rise, report progress and ask leave to sit again.
Hon. E. Cull: Thank you for that prompting, and I move the customary motion.
Motion approved.
The committee rose at 5:39 p.m.
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