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)
THURSDAY, JUNE 2, 1994
Morning Sitting
Volume 15, Number 25
[ Page 11327 ]
The House met at 10:03 a.m.
Prayers.
Hon. C. Gabelmann: For years now, Fort Rupert Elementary School has had a program of bringing students down to Victoria. For many years Mr. Paul D'Arcangelo, a teacher at the school, has been accompanying students to visit the Legislature and other sights in Victoria. I'd like members of the House to make this group of students who are in the gallery welcome this morning.
The Speaker: Hon. members, I am informed that His Honour the Lieutenant-Governor is in the precincts and will shortly enter the chamber.
His Honour the Lieutenant-Governor entered the chamber and took his place in the chair.
Law Clerk:
Architects Amendment Act, 1994
Manufactured Home Amendment Act, 1994
Prevention of Cruelty to Animals Amendment Act, 1994
Family Relations Amendment Act, 1994
Insurance Amendment Act, 1994
Limitation Amendment Act, 1994
School Amendment Act, 1994
Cemetery and Funeral Services Amendment Act, 1994
Budget Measures Implementation Act, 1994
Mineral Tax Amendment Act, 1994
Property Transfer Tax Amendment Act, 1994
Medical and Health Care Services Special Account Act
Taxation Statutes Amendment Act, 1994
Medical Practitioners Amendment Act, 1994
BC Forest Renewal Act
Clerk of the House: In Her Majesty's name, His Honour the Lieutenant-Governor doth assent to these bills.
His Honour the Lieutenant-Governor retired from the chamber.
[The Speaker in the chair.]
Hon. G. Clark: I call Committee of Supply in Committee A, the Ministry of Finance estimates; and in the main House, I call committee stage of Bill 22.
COLLEGE AND INSTITUTE AMENDMENT ACT, 1994
The House in committee on Bill 22; D. Lovick in the chair.
On section 1.
L. Reid: In terms of this government's past record, they have often taken hits on administrators and, indeed, on what it is to be an administrator. Perhaps the minister could give a definition of what he considers an educational administrator to be and comment on the regard in which this government holds administrators in public institutions.
The Chair: Perhaps before we go too far.... We are on the definitions section, are we not? Is the question pursuant to the definition of "educational administrators" -- whether it is sufficient, etc.? Okay.
Hon. D. Miller: Try as I might, hon. Chair, I couldn't follow that question. I don't really know what the member is asking. Perhaps she might want to rephrase it.
L. Reid: This is a continuation of yesterday evening, hon. minister. Perhaps you could comment on your definition of "educational administrator," and if indeed your government has any regard for administrators in the public school system and the public health system.
Hon. D. Miller: With all due respect, the definition is in the act, and I think the question is rather foolish. I don't think I can answer that kind of question.
J. Tyabji: I see the minister is in a very good mood this morning, with his usual polite way. I would like to know why there's no definition for "principal."
Hon. D. Miller: That is covered in the definition of "president" -- the chief executive officer.
J. Tyabji: If the minister will note, section 5 of this bill, or section 12 of the original bill, refers to part 2 of the original bill, in which the word "principal" is used. The definition of president does not state that it defines principal, and principal is not defined in the original act. Could the minister be more specific? How is principal defined, since it's not defined in the first act or the second act and is still within both acts?
[10:15]
Hon. D. Miller: It's a pity that we didn't get the opportunity during debate in principle, p-l-e....
Interjection.
Hon. D. Miller: The Chair says that he knew this was coming.
The explanation is very simple. The heads of these institutions used to be known as principals, but now they're known as presidents. So we're using the definition that applies today, and we say the president means the chief executive officer of the institution.
J. Tyabji: Then the minister might want to note that in section 12 in the original act, there is still the usage of the word "principal." It has not been replaced. Since that is not defined in either act, it is a bit confusing because it does leave one with the impression that both terms are in use and that they mean something different. Although in most sections of the original act the word "principal" is replaced with the word "president," in that case it is not.
Hon. D. Miller: We're off to a flying start. The substance of the bill deals with governance, and I hope we'll get into some useful debate on that and not spend too much time in a debate that I'm having some difficulty understanding. The answer is very, very simple. The wording in section 25 of the old act is: "Each board shall appoint a principal who shall be the chief executive officer." As was already explained, the title, the name, has changed; that's all. Now the title is "president." You'll see by the definition that "'president' means the chief executive officer." It really is very, very
[ Page 11328 ]
simple. I don't think we're contributing much to the debate by trying to confuse it.
J. Tyabji: Perhaps if I talk more slowly, this very, very simple concept that the minister is referring to will become clear to him. Although the amendment to the original act does replace the reference to "principal" with the word "president" in most of it, section 5(a) of this bill says: "...subject to Part 2 and this Part...." If you go to the original act and look at part 2, it uses the word "principal." So the question I'm asking.... Perhaps it was not amended in drafting the amendments. That is the only thing I'm pointing out. The minister is saying that it's the same thing, and they've changed the terminology. Perhaps it would have been easier for him to have said that wherever the word "principal" appears, change it to the word "president," and then define "president." I'm just trying to point out to him that the word "principal" is still in the original act. Again, section 5 refers to part 2 of the original act, and when you move to part 2, the word "principal" is used. For example, 3(o) says: "...established committees consisting of members of boards, principals and employees of institutions and other persons." The word "principal" has not been replaced by "president" in that. The reason I asked the question in the first place is that it was a bit unclear. The minister is now saying that the intent of the amendment is to change the word "principal" to read "president." They have not done so. Perhaps that should be done by an amendment in committee stage.
Hon. D. Miller: Perhaps the member might try to assist us -- because my staff are somewhat confused now -- and indicate very precisely where the word "principal" is used in the act currently being debated.
J. Tyabji: If we read section 5 of this act, where they say that section 12 is amended, it says: "...'and establish committees it considers necessary and advisable;' and substituting ', subject to Part 2 and this Part;'...." When we look at section 3(o) of part 2, the word "principal" is still in use. The minister is saying that it is not in use in this bill. This bill makes a point of replacing the word "principal" with the word "president" in most of the bill, but it has not done that in this instance.
The Chair: Member, I'm sorry....
J. Tyabji: If the minister can't find it, that's fine. The minister has stated....
The Chair: Frankly, we're all confused, hon. member. Could you give us a particular page reference? I can't see the section 5 you are referring to.
J. Tyabji: What I will commit to do, because the definitions.... The minister has made it quite clear that their intent is to replace them all, so it doesn't have to be dealt with in this section anyway. Before we get to the next section, I'll provide the minister with something in writing outside the chamber so that we don't spend any more time on this in debate.
The Chair: I thank the member for that. I appreciate that the confusion is honest; it isn't a political or partisan consideration, I'm sure.
Sections 1 and 2 approved.
On section 3.
J. Tyabji: Section 3 is quite large. I would assume that there will be some more input from other members on this. When we are talking about the designations of colleges, university colleges and provincial institutes, we see that cabinet has a great deal of discretion in determining what a college, a university college and a baccalaureate degree in a provincial institute are. Could the minister tell us why cabinet needed this much discretion in determining what these are? Will there be regulations, will there be something in writing or will it be at the discretion of cabinet?
Hon. D. Miller: Cabinet will designate by order-in-council those institutions that will become degree-granting institutions. We have already named them.
J. Tyabji: One reason that I'd like to canvass this to some extent is that with the apprenticeship programs that are coming in and the new directions the government has been taking, which are a little unclear, it would seem that the cabinet could designate a college independent of the ones that already exist -- something like an apprenticeship college or something in the private sector. Notwithstanding the institutions that exist right now, could the minister tell us if there would be any intent by cabinet to provide designation to bodies other than what we have right now in the way of colleges or provincial institutes?
Hon. D. Miller: No. Apprenticeships are not degrees.
J. Tyabji: As I read this, we're not talking as much about degrees as about designation as university colleges and provincial institutes. In that respect, it has less to do with degrees and more to do with what the function of these institutes would be. Does the minister have any intention of providing designation as a post-secondary institution to groups that...for example, something other than what already exists with his apprenticeship program?
Hon. D. Miller: The linking of apprenticeships is completely irrelevant and immaterial. The bill that exists now is in force until we pass this one, but this new bill will have the same power as the old bill. Under the existing legislation and under the new legislation, cabinet can designate an institute as a college or a university college. That power has always rested with cabinet and with government -- and we have seen the progression since the early seventies, the expansion of the community college system. In fact, other institutions have come on line over the last 20 years as colleges. Now we are taking a very significant step in that we are designating some of our existing university colleges: Cariboo, Okanagan, Fraser Valley and Malaspina, as well as the British Columbia Institute of Technology and Emily Carr College of Art and Design. We are now conferring upon them the autonomous right to grant degrees. So there is nothing different in this with respect to the powers of cabinet to designate than there is in the existing bill.
L. Reid: Section 3 says it has the power to grant baccalaureate and honorary degrees. For my information, is there a standard for the awarding of honorary degrees that is common to all institutions? If so, what might that be?
Hon. D. Miller: You've got me there; I don't really know. I assume that there is some standard. I note with some
[ Page 11329 ]
pleasure that the University of Northern B.C., for example, has decided to confer an honorary degree on Shirley Carr, a woman who has served the labour movement with distinction for many years. I think the criterion is people of prominence who have contributed significantly to the community or the country. But don't ask me to delve into the arcane details of why particular people are chosen. It has nothing to do with me, and it's not something that I would ever want conferred on me.
L. Reid: Thank you for that bit of enlightenment, hon. minister. I appreciate that the minister may not have it today, but if he could be so kind as to provide it at some point, I'd be interested in that. I think the process is important. There may be a lot of individuals who may indeed receive recognition from a college or institute in this province, and perhaps it's possible for people to make recommendations based on their knowledge of those individuals. I think, certainly, all MLAs in the House have been involved in making those kinds of recommendations in the past. If indeed we can aid the process, I think the opportunity should be granted.
Hon. D. Miller: Actually, I would decline that invitation. It seems to me that it would be wrong on my part to advise members of the public or, indeed, the institutions about some basis for conferring honorary degrees. There is autonomy in this issue, and quite frankly, I don't want any part of that. If the member has some questions about how particular institutions choose people, then my recommendation is that she contact those institutions and talk directly to them. I really don't want to play any part in that.
L. Reid: I'm not asking the minister to advise the institutions. I'm simply asking him to advise the House what the process is. If he isn't able to provide that information, I will accept that. I don't think it's a complex request, however.
G. Wilson: The difficulty we have with respect to the designation section is the question of who's driving the agenda. Who drives and who determines changes within the college system as to how this section is going to alter those colleges that may wish to remain colleges but have designated degree-granting status in only some subject matters? The problem with this whole bill is that it allows government to drive the agenda through their funding, because ultimately the source of the colleges' abilities originates through the funding that's made available. Some colleges may wish to only designate certain courses with degree-granting status, and not become a full-fledged university college. Others will argue that they wish to become a university college as designated under this act and that the baccalaureate degree that the college may grant will be determined by the government. So the concern here is that the colleges must have, I would argue, a certain amount of flexibility to do what they do best and to have that funded to a degree-granting status without having to go through the provision of a full-fledged university college status. Is that possible under this act?
Hon. D. Miller: The question was about the various degrees, diplomas or certificates that the colleges can offer. They can offer the three levels that I have just indicated. Try to put this in some perspective. The member may be aware that some of the existing colleges and university colleges have a relationship with existing universities in the province. The student takes the courses at the university college, but the degree is conferred from the university. Don't ask me to describe them all, but those arrangements have been in place for some time. It makes a lot of sense, from a variety of points of view. I think there need to be more of those kinds of linkages. We haven't linked down enough from the high schools into the colleges, and we'll be doing some work around that.
[10:30]
What we are doing here is giving some autonomy to the university colleges and the institutes that I have named to have the unfettered autonomous right to grant degrees from those institutions. We are looking for relevance. The focus should be in the applied areas, particularly where we see growth in our economy where there are opportunities for employment. It's really no more complicated than that. It's a significant move forward. The institutes and colleges that I have talked to are more than pleased at the change taking place. They have been waiting for some time. I see the member for Okanagan West shaking his head. I don't know what he's talking about. I've talked to....
Interjection.
Hon. D. Miller: I was at the University College of the Cariboo and met with some board members and the president, Mr. Wright. They are absolutely ecstatic about this designation. I was over at BCIT, where the Premier and I unveiled the proposed new downtown campus -- a $30 million building in downtown Vancouver that's going to serve the business community. They had a barbecue. The faculty and students...everybody was ecstatic at this new opportunity being created for the B.C. Institute of Technology to offer degrees. I know that there are some plans afoot. For example, at Emily Carr some opportunities may arise with respect to the animation courses that they are offering. At a higher level, looking at linkages with the business community, there is some potential to bring new businesses and new opportunities to British Columbia -- for example, for Disney to locate a studio in the lower mainland area. There is potential to have British Columbia students be on the leading edge in some of these areas by getting the best kind of training in the world and moving from there into real employment -- good-paying, significant, challenging jobs. I can't describe how great the opportunities are for real British Columbians to be engaged in these leading-edge technologies, and our colleges and institutes are going to play a significant role.
I favoured and was overruled.... As you know, I consult widely, and I don't like to impose my own views on people. I preferred the designation of "polytechnic." I like the ring of that name. But the university colleges said no, they wanted to maintain the existing title. That's fair enough; I was quite prepared to let that go. But I like the idea of this technical training. I think it offers unlimited scope for British Columbians and for industry and the business community. It's going to enrich the lives of many British Columbians far into the future.
G. Wilson: I am going to try to stick to the language of this bill rather than the ideological and philosophical bent of this minister, who says he would like to turn all the colleges into polytechnical institutes. I'll tell you, for those of us who are or were involved in academic things and academic freedom in this province, it's going to really get the hair on the back of our necks up to think we are going to turn these things into polytechnical institutes.
[ Page 11330 ]
Nevertheless, if we talk about (d) under section 3.... What is interesting in this bill is that at the moment the objective of the government with respect to the designation of university colleges, college regions and so on is to provide for a process by which the colleges will involve themselves in ongoing discussions with the government, with the ability to provide sound rationales, developed at the colleges by people involved in the provision of those services, as to why they should or should not take on degree-granting status in particular disciplines.
What this is saying is that the Lieutenant-Governor-in-Council will designate the area of the province that is the university college region. Right now in the lower mainland we have Douglas College, Kwantlen College, Capilano College, Vancouver Community College, Fraser Valley College -- I don't think I've missed any -- all within a specified region. If the government is going to grant status to one over the other or start to direct the kind of curriculum that will be enhanced and funded.... That's the key. This minister has to admit that he has all the cards in his hands because he controls funding to the colleges. If they are going to give status and designation to one college over another college, and designate a region within that, that is going to bias the opportunity for those other colleges to be able to provide the kinds of academic, technical and program services that they might otherwise do, because they won't have the money to do it.
The argument will be that we have a university college system now. We are now directing funds into Kwantlen or Fraser Valley or other institutions, and therefore, by directive of this government, we are going to curtail what is to be offered at the other colleges by virtue of the direction of those moneys. That's what's at issue here. It isn't a decision that's going to be taken within the community that traditionally supported that college; it's going to be taken by government.
The problem we have with this section is that all of the language in this section and in sections we're going to be looking at after this provides power to the government to direct curriculum -- to direct money into special types of programs and into special directions on programs. This government has already indicated in this House their intent to move toward programs that are directed more into things like apprenticeship programs, technical institutes, applied sciences and applied programs. I don't have an issue with that if that's going to help a percentage of the population who need to be educated and trained in those areas. But I really do take issue if that means that moneys to go into...if traditionally academic colleges -- colleges that are providing a broader base of academic education -- are going to suffer through this designation process.
The minister hasn't given me any assurance at all that designating areas of the province for this university college region will not, by necessity, bias funds into one college over another through that designation process. The communities will not be well served by this process, and the minister needs to defend that.
Hon. D. Miller: I'm not sure I need to defend it. I'm desperately trying to understand what the member is saying. He's got me confused. Is he...?
C. Serwa: I thought you were the minister.
Hon. D. Miller: As you know, I strive mightily to understand and comprehend all of what I hear from educators and people who've come from the system. Sometimes, I must confess, it's a bit of a challenge.
Let's deal with the issue of funding first, before I go on to the issue of degrees. If I reverse the member's rationale, he seems to be complaining that the province actually has some control over the amount of funding and that we determine globally -- we fund our universities and colleges with over a billion dollars, by the way -- and locally, with respect to the amount that we grant each institution. That has always been the case. If we follow what I think the member's suggestion is -- in other words, to let the institutes drive the budget-making process and the province simply doles out the cash -- whatever you determine your needs are, you come forward and we hand out the cheque. It seems to me the province would shortly be bankrupt.
Secondly, does it not make some sense that some rational thought be given to the range of programs we offer in British Columbia educational institutes? We do it at the high school level, although I understand there's debate and there's flexibility with respect to local programming. Right? Nonetheless, we do have some broader determination that it makes sense to teach our children how to read, do math and those kinds of things. Is doing that interfering with academic freedom? No, it's not. We work with the institutions.
I want to praise the institutions, because I think that by and large they've done a fairly outstanding job of serving both people in their regions.... And by the way, when we designate a college region we don't restrict the ability of any British Columbian to go to any college or institute in this province they want to. Someone from my community of Prince Rupert can go to any university or college in the province, and that's how it should be. What are they doing now?
Well, the British Columbia Institute of Technology, a very fine institution acknowledged to be one of the best in Canada.... I was over there. I toured some of the operations in some of the areas that, believe it or not, have been criticized by my Liberal critic, who seems to think apprenticeship is an old technology. I spoke to Dennis Duffey, the dean of the electronics branch under the apprenticeship area. British Columbia is developing leading-edge technology in electronics. We're actually selling that technology to other parts of Canada and the United States. That's being developed right here at home by British Columbians at the B.C. Institute of Technology -- it's wonderful stuff. Those are the kinds of things that can happen.
So BCIT proposes two new degrees starting in September of this year: a bachelor of technology degree in advanced nursing and a bachelor of technology degree in computer software design. That's a wonderful opportunity for British Columbia students. How can the member criticize? How can he stand up and make these incomprehensible statements about academic freedom and control of the state, when here we have wonderful institutions in this province developing new degree-granting programs in applied areas that are going to do a heck of a lot, both in terms of our economy and available employment opportunities for our citizens?
To carry on down the list, the Emily Carr College of Art and Design currently offers a bachelor of design degree and a bachelor of fine arts degree in collaboration with the Open Learning Agency. They will now be able to do it on their own. The four university colleges all have plans to move into these applied areas that I talked about. It makes a heck of a lot of sense. Where appropriate, my staff in the advanced education side of the ministry work very closely with these institutions on those programs. They're serving the needs of
[ Page 11331 ]
their constituents. I would remind the member that board members of these institutions are appointed to represent the diverse nature and geography of the communities. The relationship between my ministry and these institutions is outstanding, so there's no forcing by my ministry to say they must do this or that. There's flexibility, freedom and autonomy at the college level. But when we're shelling out $1 billion of the taxpayers' money per year, it seems to me that the province should be able to exercise -- and, I think, quite prudently -- some judgment with respect to that money.
[10:45]
In terms of some broader policy issues, we should be able to say we think it's important that we develop these applied degrees and the technological capacity -- not only from the machinery or hardware point of view but also from our citizens' point of view for an opportunity to acquire those skills to make their way in this world and this province, contribute and really fulfil their personal ambitions as individual citizens, and to see that that also contributes significantly to economic development in this province. It makes all the sense in the world. I just have some difficulty because the member seems to want to pursue some arcane theories here that I think are quite irrelevant to the purpose of the bill.
G. Wilson: I think that maybe I should remind the minister that having spent some 20 years in the system....
Interjection.
G. Wilson: He's saying that maybe that's the problem. Right, knowledge is not a good thing; this minister has repeatedly told us that knowledge of a subject is a dangerous problem for this government, because it means we know what we're talking about. This minister is saying the government doesn't direct or control the way that education is being pursued in the colleges and institutions of the province. That's utter rubbish. The government does direct it, because the government controls where the money goes. The money goes into some programs and not into other programs.
So when the minister talks about these fine applied programs.... I don't have a problem with having applied technologies and new degrees if those degrees are necessary, but don't let the people of the province miss the fact that in the reshuffling of cabinet, the Ministry of Advanced Education disappeared into the Ministry of Skills, Training and Labour, which tells you where this government's coming from philosophically on this question.
An. Hon. Member: Jobs.
G. Wilson: Jobs, jobs, jobs. If you look at the Korbin commission and the direction it's taking, and if you look at all the other ways this government is directing what kinds of jobs, what levels of jobs and how those jobs are going to be directed, this government is putting its hands into the pockets of every British Columbian, taking out their tax dollars and feeding them into one level of education and one level of employment: the kind that this government can relate to. That's what it's doing. This process is directing the way this government funds education.
People who are looking out for academic freedom, a concept that this government and this minister constantly scoff at and say is an irrelevant notion.... Unbelievably, when those people who treasure and prize academic freedom look at this section, they have to understand that it makes a difference if programs evolve at the community base through the colleges and institutions in order to respond to the needs of the community. Whether or not the minister is saying they do, the fact is -- I've been there, and I know; we have been through those kinds of institutional reviews -- the government determines what gets the money and what doesn't. It's the government that is directing where this is going.
When we get into these new college regions, you're going to see that the bylaws are approved by the minister. It isn't the institutions that have the academic freedom to develop the kinds of program that they believe, from a pedagogical view, are necessary; it's the kinds of programs that this government, in its labour orientation, want to have taught in these institutions. That's what this is all about. That's what Korbin is all about. That's what the fair wage is all about. That's what this whole process in government is all about. That's what future legislation that we're going to be debating on the question of the process of family services is all about. It's the government coming in and telling us how we're going to do it -- Big Brother coming in and doing it. That's why we're moving to provincewide bargaining for teachers.
The Chair: Member, I resolved that I was not going to interrupt until you finished your statement, but I think I have now given approximately equivalent time to both sides to reiterate their respective positions on the principle of the bill. I want to remind all members of this chamber that we are past the principle stage of debate; we are now looking at the specific sections. We're talking about designation, section 5 under section 3. I'm going to ask all members to please direct their comments much more precisely and specifically to the section of the bill under consideration. I am going to invoke the rules of this House from this point onward and make sure that we are strictly relevant to the section. I give all members that caution.
G. Wilson: Thank you, hon. Chair. I'll consider myself sufficiently invoked, then, and will get down to section 5(1)(d). I come back to the question of area designation, of the university college in a region. Can the minister tell us, under the provisions of this act, if Capilano College, as an example, will, in specified academic programs, be a degree-granting institution without taking on the full title of a university college? That's question one. Maybe I'll stop at question one, and we'll come back for question two.
Hon. D. Miller: For the record, I think there were some substantive questions asked, and I'd like to respond very, very briefly.
This notion of absolute control is not the case. It seems to me, with all due respect.... I realize that the member has, by his own admission, spent 20 years in the system. It's fair to say that sometimes people who come from the system lack the ability to be objective, to stand outside the system and critique it in positive ways -- with all due respect. There's an old adage: sometimes you can't see the forest for the trees.
C. Serwa: Point of order.
The Chair: Hon. minister, I think I anticipate the point of order from Okanagan West. The member is absolutely right to rise to his feet. I have just asked your colleague across the aisle to please restrict his remarks very much to the particular section under discussion, and I must ask you to do the same.
[ Page 11332 ]
Hon. D. Miller: I'll use an actual case in point to illustrate my answer. That is, do we interfere in a kind of gross way and say absolutely that you must do this, that or the other? In my own college region, Northwest Community College, a bit of a public debate is going on right now. The college, the board and administration -- not directed by us, but through their own analysis, input and looking at their region and its needs -- have recently made a decision that has sparked some mild controversy. They had been offering some nursing programs, and they made a decision -- because of factors which I'll list -- that they weren't going to continue to offer that particular program. Without getting into detail, the reasons were that they analyzed it, determined that the intake was not that large and that there was at least a 50 percent dropout of the original intake partway through the program. Finally, as it was a program geared to give people skills for the job market, they determined that a very small percentage of those who came out with the skills could actually find work in the region. So they looked at it and at some other areas in health care, and they made a decision. It's not finalized yet, but I've talked to the president and others, and they think they can offer more relevant programs in health care that perhaps will be more successful with respect to the individuals and that might offer the individuals who take those courses more of an opportunity to acquire employment in the region. That's a local, regionally based decision about programs being offered at the college level. We don't interfere in that. Those things take place every day. I reject the member's suggestion that we direct traffic everywhere, and I maintain that there needs to be some reasonable control on budgets.
There had been some expression from Capilano College that they wanted to be considered for degree-granting status. We've talked to them. I know that my deputy has met with people at the college. They know that that's not going to happen now. It may happen sometime in the future. That's a possibility. We're not limiting ourselves to the ones that are currently designated, but we do think that it's prudent to start with the list that we've identified. As I understand it, Capilano College can offer the opportunity for a degree program through the open university but not through existing universities.
G. Wilson: The point here, though, is that by setting out this rigid designation system -- notwithstanding the Open Learning Institute, which has had some success.... It certainly has provided education to many people, primarily in the outlying areas but also to some in urban centres. The point that I'm trying to make is that this government is removing the flexibility that currently exists in the way that colleges are constituted. To allow colleges that specialize in particular disciplines to go to a four-year degree-granting status within that institution without having the full designation of the college as a university college....
I'll use Capilano College as an example, because that's the one that I'm most familiar with, but it's true of every one. The science programs at Capilano College are outstanding in Canada. They have some of the finest science faculty anywhere in this country, and could -- indeed, should -- be able to provide degree-granting status in that discipline. That may or may not be argued as a desirable thing for some of the social science disciplines. They are perfectly content to work in conjunction with the University of British Columbia, the University of Victoria and Simon Fraser University, for example, on matters such as resource management -- that is the one I'm familiar with -- or in sociology or psychology. What I'm saying is that students are better served in a college system that has the flexibility to allow colleges to excel in the areas where they are best suited to excel, where they have focused and concentrated their energies. I don't diminish the academic qualifications of anybody in sections other than the sciences, because it's an outstanding academic institution -- period. But if you allowed it to excel, it would provide better service to the students of British Columbia at a cheaper cost to the taxpayer than under the designation system that you're outlining under section 3. This bill prohibits that from occurring, unless you go to OLA or some other kind of institution or work out some kind of joint agreement for degree-granting status with SFU or UBC or something, which happens now. It's an unfortunate way to go.
There's no question that the minister would argue that some presidents of some university colleges are ecstatic. Sure, if you get the designation and the classification and are therefore going to be eligible for additional funding, you're going to be ecstatic. Money drives ecstasy in the college system, because it's so hard to get funds. You have to fight because of that archaic formula funding system, which this minister ought to do something about.
The problem here is that this classification system prohibits that level of flexibility. That's why we're opposed to it. It doesn't allow colleges to allow degree-granting status to those particular discipline areas, as do other jurisdictions in North America, without providing that for the entire university college itself. That's what I'm arguing. If the minister would defend his position on that point specifically, we could move on.
Hon. D. Miller: First of all, I want to say that I think all of our institutions, all of our colleges, are outstanding in their own ways. But is it reasonable...? I was going to say that there's no limitation. Capilano College has an outstanding program -- this is a college, mind you -- where people coming out of the University of B.C. with a BA can do a two-year business course aimed particularly at the Pacific Rim market. It's a wonderful program. I was over there, and I talked to the instructors. They've got another program -- again in human terms -- dealing with severely handicapped children. They're using computers to assist them to communicate. It breaks your heart when you see it. It almost makes you want to shed tears to see handicapped children able to communicate, through the use of computers, for the first time. They're doing some outstanding work, and we don't restrict their ability and their right to do that.
Let's use the example that the member talked about. I'll take the member's advice with respect to their superiority in the area of science. We have 15 colleges. What if each one of them determined that they were going to be outstanding in science? Would it make a lot of sense for the government to simply say, "Yes, we will fund you," and have 15 colleges doing the same thing? Would that make much sense at all? I suggest it would make no sense at all -- period.
I'm not suggesting that they would do that, but the member's argument seems to suggest that we should simply let them do what they think they do best. What if ten of them think that they all want to be in the same field and doing the same thing? If the taxpayers, through me and through the cabinet, are shelling out in excess of $1 billion per year to fund our institutions, it seems to me to make just a smidgen of sense that we might want to retain control at cabinet level, and say: "Gee, it doesn't make a lot of sense to have ten colleges that want to excel in one particular field; it might make more sense to have a little diversity." If that is being interpreted by the member as this government somehow interfering with academic freedom, I fail to understand it.
[11:00]
[ Page 11333 ]
In fact, I will give you a guarantee: there will never be a government in British Columbia that does not retain the elements that are contained in this bill with respect to funding our educational institutes. A little political advice from me to you, hon. member, is that I wouldn't campaign on what you're saying. You're saying that there should be no control on spending. It doesn't make a lot of sense to take away any modicum of control with respect to the taxpayers' money. It seems to me we have an obligation to spend it wisely and effectively.
My ministry works well with the colleges, institutes and universities. I think we have a good system here in B.C. Our universities are acknowledged. There's no anti-academic bias. We have marvellous institutions. I have the utmost respect for the people in the universities in this province, and I have a very good relationship with them. I know that some, might I say, anti-intellectual people suggested that simply because I didn't have the academic background that some others have, that somehow was a slight on our universities. I've had long conversations with Dr. Strangway and Mr. Stubbs, and we see eye to eye on so many things. We have a very good and warm relationship.
The universities are feeling quite secure and comfortable in terms of their position in British Columbia. In fact, objective tests.... Last year Maclean's magazine did a Canada-wide poll, which I wouldn't recommend as being too accurate. Nonetheless, every one of our universities -- the University of Victoria, Simon Fraser and UBC -- were all ranked extremely high by faculty, students and business leaders right across Canada. We're opening a new university, which hasn't been rated yet, but it will be, and it will come up to the standards of the others. Our institutions stood up and were ranked right at the top. That's something we should all be proud of, and it's something we're going to continue to encourage. We had a Nobel prize-winner from the University of British Columbia last year. Outstanding!
We're going to continue to maintain those same high standards, to have outstanding universities, and we're going to complement those with colleges, and now with university colleges that can offer degrees. We're going to have an education network. As I remarked yesterday, I was very pleased that a noted author in the field indicated that British Columbia and Quebec stand out as the two provinces that have made the best adjustment with respect to changing to the new, technological economy. This bill will complement that process and make us even better.
The Chair: Let me remind all members that we are on section 3, section 5. In case I didn't make it clear before, we're going to deal with these as section 5 within section 3, section 6 within section 3, etc. I'm sorry if I didn't make that clear before.
G. Wilson: I'm going to resist the temptation to get into the wide-ranging discussion that the minister is baiting me to get into. What I'm trying to get at -- and what this minister might want to apprise himself of, because he doesn't seem to understand it or doesn't know about it, and perhaps he might consult his staff -- is something called a provincewide articulation that's done within the disciplines. That's how professionals in the field know what's going on in the instruction of courses in the sciences, social sciences and humanities. People lecturing in a particular discipline field talk to other people who are lecturing in those discipline fields in other institutions. They get together through a provincial articulation, and those people who are professionally trained in the discipline areas traditionally set the standards of instruction. They talk about course content, curriculum, transferability and all of those kinds of things. They know better than this minister which colleges are putting their energies and creative skills into one particular subdiscipline and which are putting them into another subdiscipline. It is arrogant in the extreme to suggest that the cabinet should be determining for the academic community what discipline areas they ought to be developing -- absolutely arrogant. To suggest that the government is in a better position to know which colleges should be specializing in which academic pursuits than the people who are themselves delivering that academic training is even more arrogant of this minister. Whether the minister is an academic, a millwright or anything else, it's arrogant by any stretch of the imagination.
However, I've resisted going into that wide-ranging debate to come back to the question of section 5(2), and then I'll yield to the member for Okanagan West. No, excuse me, before I get to that, I want to talk about the provincial institute section.
Joint programs are developed fairly frequently. For example, one college that doesn't have skills training in nursing or psychiatric nursing -- that's the one I'm most familiar with -- may enter into a joint agreement with another institution to do a cost-shared program. How is that going to work under this baccalaureate degree program within the provincial institute itself? Flexibility has been provided between colleges. Malaspina College working with Capilano College in aquaculture program development is one example. I know there were shared agreements between Malaspina and the British Columbia Institute of Technology on health nursing and psychiatric nursing programs. The flexibility of those programs is allowed at the moment because of the latitude those colleges and universities have to develop those programs themselves.
The concern we're hearing on this side is that once you get into a rigid classification through this legislation and the designation of colleges, flexibility is going to be diminished. The reason is that the funding tied to those programs is going to be largely the result of the kinds of recommendations and advice coming out of these new education councils. That's a big problem because there are a lot of regions in this province that are served by campuses of the larger institutions -- Powell River by Malaspina College, Sechelt by Capilano College, and so on. You could look at other areas where it's hard enough now to get the programs demanded within the community, without having to fight a more rigid designation system that might eliminate flexibility for those joint programs. If the minister could tell us how this is going to help accommodate that flexibility rather than diminish it, we'd all be much happier.
Hon. D. Miller: No change. I was pleased with the member's comments, because they seemed to me to strongly support the notion of an education council at the university colleges.
C. Serwa: I have a few questions on this section. One of the true tests of good legislation is: if the government were changed, would the next government be comfortable with this piece of legislation? I too am concerned with the concept of colleges. Contrary to what the minister has said, there is a great deal of unease in the system with respect to a lot of this legislation. The ability of cabinet to impose its will on the college system is not met with a high degree of confidence by individuals within that system.
[ Page 11334 ]
The difficulty is that the minister is in a very different position than I am. The college system is obviously funded by the provincial government, and the fact is that jobs are important for the individuals who retain them. So the minister may not hear things stated as objectively as I am inclined to hear them. That's why I ask about this section. It seems to me that rather than the colleges being sensitive to community needs, as they were conceived to be, the choices are now being centralized by big government. Will the minister respond to that?
Hon. D. Miller: Fatuous nonsense! We are not conferring on ourselves any more power than is currently contained in the act. That member was a member of cabinet of the last government. His party was in power in this province for too long, quite frankly -- up until the last election, 16 years. When he was on the government side, in cabinet, not once did I hear that member stand up and complain that his government had too much power. We haven't changed a thing. This member rises to debate any time he hears the word "state" -- it triggers him. There's a spring in his chair, and every time he hears the word "state" he thinks there's a plot going on and he has to rise and make.... Really, hon. member, read the current act and read this one. We're not imposing any greater control from the government level than existed when you were a member of cabinet, so don't give me that nonsense.
C. Serwa: That was a nice -- probably pleasant -- interlude from the minister's comments. I am very pleased that the excellent college and university system in British Columbia, which is a legacy of Social Credit governments, has not come into disrepute in this little bit of debate. I am also pleased with the results.
The fact of the matter is that there was no blatant interference by Social Credit governments with the college or university system. Academic freedom was respected, and that's paramount. When I look at examples of what your party has done in the system, such as the interference in the charity system with the Nanaimo Commonwealth Holding Society, I become very concerned about the objectives of the current government. That is my real concern.
The safety in the system is based on a large number of individuals with different perceptions and different political ideologies striving to do their very best. That's what we had in the system. We had academics and community members who took a vital interest in the college system, just like in a general election. I believe and abide in the wisdom of the majority. What I'm seeing here is an ability by the current government to restrict, to infuse certain courses into the system. They may be on political and community activism, for all I know. It may be a variety of things like that. It may be a master's degree in labour history. I am not questioning the minister's labour background; that's fine. There is room for everyone in the province, and in order to have a healthy society we must understand that we all have different perspectives and perceptions. But to impose those on others, not simply educate, is my specific concern.
The latitude in this section is that the cabinet appears to have the opportunity to impose courses and curriculum on the college system, and that is my concern. Rather than allowing the colleges.... The minister remarked that we can't have redundancy and duplication, because that is not a cost-effective program. It hasn't occurred in the past. There is a sensitivity and an acceptance of responsibility. For example, Okanagan University College came out with courses on water technology with respect to health, clarity, purity and all of those things with respect to our water supply. It is a sensitive community issue and they have established programs in that. I am concerned that the government's interference is not going to be healthy for our community college system.
The Chair: Just before I recognize the minister, I would like to give a first sounding of what I perceive to be happening. I detect repetition. We have been on this question for some time now, and the basic contention from the critics is that this represents centralization of authority; we have denial from the other side. We've heard that a number of times. I would just remind members that I certainly don't mean to restrict debate, but there comes a point at which I think we can say that both sides have had their say and therefore there's no point in carrying on.
[11:15]
G. Wilson: The language in section 3, section 5(2) says: "On designation under this section, an institution is a corporation consisting of the members appointed to its board under section 9." My question, then, is: does that make the college board an employers' association?
Hon. D. Miller: In a strict sense, that question is really not germane to the bill. I'll try to answer it, but I just want to read the legislation that is in force now. Under part 3, subsection 5(2), it says: "On designation under this section, a college is a corporation consisting of the members appointed to its board under section 6" -- unlike the wording here, where it's "section 9." So in other words, the wording is precisely the same as what exists in the current act.
Hon. Chair, I seek your guidance. Do we want to now parlay that into some broader issue with respect to employers' councils? I suggest that we don't.
G. Wilson: I would hope the answer to that is yes, we do, because it's interesting to note -- and we've already gone through the definition section, so I don't want to go back to it -- that you've got two classifications under the Labour Code of what constitutes a faculty member and what constitutes a professional employee. One is covered under section 1, I think, and the other kicks in under section 5(2) of the College and Institute Act. That tells us that there is in fact going to be a change of classification. I am curious to know why we want to do that. That's the first thing we're looking at, and we have to look at it in light of the Korbin commission report about public sector employees. We start to see that there's a bit of a pattern or trend developing.
We then see that there is a designation as a corporation, consisting of a renewed board. The reason I'm interested in asking that is so we can then tab it in relation to how the board is constituted, because for the first time it includes faculty members, students and staff, two of whom -- faculty and staff -- are members of a collective bargaining unit. So I'm curious to know why, under the deletion of "professional employee".... In "faculty member," it applies as a definition under section 1 of the Labour Code for the purposes of bargaining, yet the definition changes with respect to "professional employee" in a subsequent section. In light of the fact that we now have this strange new creation of employers' associations, which is in fact amended under a different piece of legislation before this House with respect to their provisions under the Society Act, we can't look at this in isolation. We're trying to assess whether or not this is indeed going to alter the manner in which those boards will have an effect on collective bargaining and collective bargaining rights in light of the Korbin commission, the
[ Page 11335 ]
revised Labour Code and the Finance and Corporate Relations Statutes Amendment Act, 1994, which is before the House right now, which amends the definition of employers' associations. That's where we're coming from on this question.
Hon. D. Miller: No.
G. Wilson: No to what? Which portion of the question is he saying no to? That's interesting. The very fact that the minister isn't prepared to get into any detailed discussion of this is enough to make us all suspicious that that is in fact exactly what's going on.
Interjection.
G. Wilson: The minister's suggesting it would take less than that. I'm just shocked that the minister would suggest that we would be suspicious of his motives in any way, save and except by his responses to our questions.
It is important for us to know the consequence of the college boards being corporations, given the fact that the employers' associations are now going to have a defined role in collective bargaining for public sector employees, which college faculty and staff are.
Hon. D. Miller: I point out that -- I would have thought the member perhaps attended university -- there's nothing new here. University boards have faculty and student representation on them. Why are you trying to make something out of the fact that college boards are going to have the same thing?
L. Reid: I beg leave to make an introduction, hon. Chair.
Leave granted.
L. Reid: On behalf of the Chair, it's my pleasure to welcome to the gallery today 26 grade 6 students who are visiting from Bothel, Washington, and their teacher, Ms. V. Teague. They're representing Fernwood School. I ask the House to please make them welcome.
Hon. J. Cashore: I beg leave to make an introduction, hon. Chair.
Leave granted.
Hon. J. Cashore: I'd like to ask the House to join me in welcoming several grade 4 and 5 students from Meadowbrook Elementary school in Coquitlam, who are here with their teacher, Ms. Vlismas. I just had a chance to chat with these students in the corridor, and they were asking some very intelligent questions about how government works.
I just want to assure them, as they are here for committee stage of this bill, that the fact that many of these seats are empty is not an indication that anything is amiss. These MLAs are out making phone calls, attending meetings and doing much of the work of what it is to be an MLA. Would the House join me in welcoming these students.
The Chair: I thank the member for Powell River-Sunshine Coast for allowing those interruptions, and now recognize him on committee stage debate of section 3, section 5(2).
G. Wilson: That was a nice try by the minister. But it doesn't fly, because the minister knows full well that the bargaining process under unionized employees in the colleges is different than the bargaining process that sets faculty standards at the university. So nice try, but no fly.
We have to get down to the nuts and bolts of what's going on here. This government has dramatically changed the public sector employers' relationship in the collective bargaining negotiations through the introduction of the Korbin commission. We know that these employer associations are being set up. We know that there are amendments before this House with respect to the provisions of provincial appointment and provincial control over those councils. We also know that this is going to impact on the boards through the manner by which the boards will enter into collective bargaining processes within the college. We know all of that. There is no point trying to deny it, because it's there.
If we have to spend the time to pull out every single piece of legislation and the companion legislation -- which we've got here -- and go through it clause by clause to point out how it's going to happen, we would be happy to do that. But we don't think that we need to. Specifically in relation to provincial institutes and colleges with respect to incorporation of the newly constituted boards, I want to know how this language is going to be changed by virtue of the introduction of these employers' councils, and whether we are now setting ourselves up for this, given that we have changed the membership of that board to include faculty and staff who are members of public sector unions.
Hon. D. Miller: The addition of faculty and staff will not have any impact. The boards are governed under the College and Institute Act. Under section 12 there is clear reference to the duty of the board to make bylaws and to abide by conflict legislation. It's very simple. I hate to say this, but the member seems to take these arcane points and blow them into something that they're not. With all due respect, he is way off track with respect to this bill. Let's try to get into some debate about where there may be differences. If there are objections from the members opposite to the changes in the governance, which is really the heart of this bill.... If they object to faculty and staff being on the board, or to the education councils, which.... Although I don't think this member will object, because not long ago he stood up and made a fairly comprehensive speech about articulation and the fact that faculty are involved in that, and that's the purpose of the education council.
Really, Mr. Chairman, I plead for your assistance in this matter. We are straying. We have now spent almost an hour and a half.... Quite frankly, if there have been ten minutes of substantive discussion relevant to this bill, I'd be surprised. I'm prepared to get onto it, but I've got to tell you, Mr. Chairman, as other members may well know....
The Chair: I'm hoping that all members on all sides of the House are going to echo those comments and urge me to bring us all to order and proceed more quickly. But until that happens, of course, I will continue to recognize members.
G. Wilson: I know that this Chair is well aware that it is the right of the opposition to take whatever time is necessary to thoroughly understand legislation being introduced by government. Certainly the members of the Alliance intend to take all the time that's necessary to thoroughly canvass this question before it proceeds. We don't intend to be repetitious; we intend to try to stick to the point.
[ Page 11336 ]
The fact that this minister is not prepared to talk about employers' councils and the collective bargaining process, under this newly constituted corporation with a newly constituted board, tells me that we ought to be discussing this. If there is a factor that drives costs in education and community colleges, the principal, number one factor is the negotiation process, through a duly negotiated collective agreement that exists at the college levels.
What I'm curious about.... We're seeing the emergence of employers' councils. By other legislation, we are seeing the amendments to the Society Act under which this government may have an opportunity to affect and direct employers' councils -- which we'll deal with when we get to that legislation. I want to know how it is possible for this corporation, consisting of the members appointed to its board under section 9, to negotiate a collective bargaining agreement freely, when two of the voting members of that board sit on the unions that are being negotiated with.
The College and Institute Act, which I have in front of me, with respect to section 12 and the board, talks about what their rules and regulations are. The fact of the matter is that the conflict-of-interest definitions within this act are not specific or germane to a newly constituted board with voting members from the union that it's going to negotiate with. I can't believe that the employers' councils, the Korbin commission and the approach to public sector collective bargaining in this province is not directly part of the movement in this bill to affect community colleges and provincial institutes -- because that's what drives the cost of education. Surely the minister isn't telling us there's no relationship; there has to be a relationship. Could he please explain how that's going to work and whether or not these boards will be considered employers' councils?
Hon. D. Miller: I suspect that no amount of time will allow me to inform that member. We could be here for days, weeks or months, and I don't think that we'd get any better at it. I've answered the question. Where members on a board are in a conflict, the board will deal with that. It's very simple. There is no more answer I can give.
[11:30]
G. Wilson: There is another answer. Can the minister tell us how, in his opinion, the board of this newly incorporated corporation, which includes faculty and staff, will be affected by the introduction of employers' councils, the Korbin commission and the approach that this government is now taking to public sector bargaining?
The Chair: The member continues.
G. Wilson: The fact that the minister is sitting on his chair and won't get up and answer is enough evidence for anybody who wants to review the legislation that it clearly does.... We've hit at the very heart of some of the problems with respect to the way these boards are going to negotiate. Keep in my mind that this is the government that has removed local control by school boards of negotiation, moved to a provincewide bargaining system, put the heavy hand of government into the negotiation of public sector contracts through employer councils and through the Korbin commission, and is now doing exactly the same thing through the College and Institute Amendment Act. It's rather shameful that this minister isn't prepared to at least stand up and defend the government's position with respect to these newly constituted boards. Nevertheless, we'll be able to thoroughly canvass this under section 9, which deals with the board's composition, when we can get down to the nitty-gritty as to how this board is going to function. We'll be prepared to get at it then, because the minister is not going to escape this line of questioning.
Section 3, sections 5 and 6 approved.
On section 3, section 7.
G. Wilson: There was no objection to section 6, because those colleges are established. But we have to come back to the "objects" of a university college. It talks about "post secondary education or training," which is precisely the same as the colleges. Can the minister tell us, with respect to the baccalaureate degree programs that are being established, whether there is an intention that those post-secondary education and training programs at the lower levels -- that's first and second year, presumably, or possibly third year -- are going to be tied to senior-year courses? Is it intended that there be a redirection for lower-year programs and upper-year programs, in light of the fact that the community colleges are already serving very well -- although not enough spaces are available for the students that want them -- post-secondary education or training that is not tied specifically to a degree program?
Hon. D. Miller: They'll offer a comprehensive range of programs.
G. Wilson: This in fact, then, gives some credence to what was argued earlier on: once the designation of university college is given, it is not going to preclude all of the existing operations under the classification of college from taking place. In fact, these colleges will become almost hierarchical in their funding, I would assume. Clearly the moneys needed to fund a university college, given the more comprehensive demand with respect to lab costs and a series of things in the delivery of third- and fourth-year educational programs, will be much greater at the university colleges. So the minister is saying that not only are we going to move some of the colleges into this new classification, but we're going to allow those colleges to directly compete with the existing community colleges that don't get that classification.
My question specifically, then, is: how is the minister going to guarantee that the funding necessary to the community colleges that are not lucky enough to get this minister's blessing to become a university college will still be available in those regions that need them?
Hon. D. Miller: Let me try to put this in a simple way. Right now we have 15 colleges. Some of them offer degrees, in a relationship with existing universities. I stated earlier -- I thought the member paid attention, but obviously he didn't -- that in some cases nothing will change, except that the university college will be the issuer of the degree. In other cases, the university colleges will be developing new degrees. So funding is allocated to the institution based on the kinds of programs they have, the need, etc.
The member seems to be able to manufacture mountains out of molehills, and he completely misses the point. If it's entertainment we're having here and if it's just filling time, fair enough, I'll just take my place and will continue to sit in my place. If that's the purpose and it's just time you're after.... As I said, I suspect that no amount of time that we spend in this chamber, given the kinds of questions I'm hearing, will do anything to inform or satisfy that member. If you want to waste time, let's waste it, but let's at least acknowledge that that's what we're doing.
[ Page 11337 ]
I can't offer any more, Mr. Chair.
L. Reid: Section 7 states: "The objects of a university college are to provide comprehensive (a) courses of study for a baccalaureate degree program...." I would ask the minister to comment on whether or not there has been any progress on a standardized first- and second-year arts program or a standardized first- and second-year science program. There has been discussion in the academic community regarding a program that is common to more than one university college or one college, if you will. It certainly seems to be in keeping with the direction this government is headed, in terms of aiding articulation and aiding the movement of students between colleges. For example, if they were to transfer from a first-year program into a second-year program at a different institution, could they have some expectation that the expectations and program content will be similar? Could the minister comment on whether or not he's headed in the direction of a common first- and second-year arts program or a common first- and second-year science program?
Hon. D. Miller: No. Those issues are handled through a process known as articulation, and they will continue to be.
L. Reid: I appreciate the minister's comments. I'm simply asking him to confirm whether or not that discussion has reached the ministry level. It is being handled through articulation committees across this province. What is the minister's sense in terms of whether or not that will reach a reasonable outcome?
Hon. D. Miller: We don't intend to impose the heavy hand of the ministry. We do leave it to the colleges and institutions to deal with the issues of articulation.
There is a provincial committee -- the Council on Admissions and Transfer, I think it's called. I had a very good discussion with them a few months ago over dinner. They were delighted. They said it was the first time a minister had shown up and talked about the issues that they deal with. There's a very good relationship. I'm starting to pick up on some of the jargon in education. I think "articulation" was one of the first words I learned; there were a few others. I don't want to become one of those educrats. I'm certainly not blowing my own horn, but I think we articulate quite well in this province.
The Chair: The member for Richmond East continues to articulate.
L. Reid: Extremely well, I might add, hon. Chair.
Does the minister agree that it is useful to the exercise to have a common first- and second-year arts and sciences program in this province to aid students who would travel between institutions?
Hon. D. Miller: I must confess that I'm not an expert in the field, and I would leave it to those people in our colleges and institutes -- faculty members, professors and people with that background -- to make informed decisions about that. We do assist, through our committee on admissions and transfers. Quite frankly, judging by what people have told me, we have quite a good process of articulation. That is, a person takes a course at a community college in northern B.C., say, and credit is received for that course with respect to courses offered at university levels. We do a very good job. I know that people in the field are continuing to strive to make sure that we do an even better job, and I'm sure they will succeed.
The Chair: Just before I recognize the member for Richmond East, can I say that after listening to approximately the last five minutes, I'm having some difficulty understanding either the questions or the answers as they relate to section 7. I hope members will endeavour to make it very clear what their questions and comments have to do with section 7.
L. Reid: I am speaking specifically to section 7(a) -- the objective of the university college to provide a comprehensive course of study for a baccalaureate degree. My intention.... If I may be so bold as to tell you, the official opposition does support a seamless post-secondary system, and stands in support of opportunities for students to have some clear understanding, before they move between institutions, what those expectations are for similar programs, and whether it would ever be in the best interests of the student. We always need to focus this discussion on the student and whether it would be in their best interest to have a common program so that they could have some reasonable expectations. So the minister is not willing to confirm or commit.... I'm simply saying that the opposition does support a seamless post-secondary system, and I thank him for his musings on that topic.
Hon. D. Miller: I could just offer the following words of encouragement: after we get through articulating, we then proceed to laddering. I think it creates the opportunities and deals with the issues you have talked about. Someone suggested that we need a seamless web in education. We asked people what they thought it might be like to be caught in a seamless web, but nonetheless we appreciate that there needs to be that kind of continuity between the various systems.
G. Wilson: The minister seems to think that because there are existing agreements -- some very tightly formulated, others somewhat loosely formulated -- between the colleges and the universities with respect to program delivery, particularly in the interior colleges where access to lower mainland universities has been difficult, this designation and the objectives of this new university college are not going to be substantively different. Well, that's not true. If the minister knows anything of this section of his portfolio, he must know that that isn't true. For every seat available in a university, there is a cost. Those dollars are assigned to the institution that will be providing the service and the seat -- the number of faculty, the support staff and the program delivery costs, such as labs and associated costs. All of those costs go up with the number of seats in third- and fourth-year courses. Whether or not there's an agreement with respect to the provision of a degree from a university or college has in the past been determined in large measure through a college-to-university negotiation. That has been a functional part of the amount of money the colleges and universities get in order to accommodate those degrees.
A designation of a university college changes the funding relationship between the colleges and universities in that broader region -- if it's the lower mainland we're talking about -- and it will also change the opportunities and the opportunity cost to the students who are attempting to get the education they desire at the university they choose. That's a fact. For the minister to stand up and say that this new designation system isn't going to change it is just
[ Page 11338 ]
rubbish. It's an insult to anybody who has ever spent any time involved in this process or any student who is attempting to get in.
With respect to section 7, which says the objects of the university college are to provide comprehensive university training, if the program funding provided is similar to what is provided to community colleges or colleges that don't have that designation, the opportunity cost to the students who elect to go to a college is going to be greater than those who elect to go to a university college, by virtue of the need to transfer. It's clear. So you create a class of colleges that will be different from those that exist today.
We want to know that those colleges that don't get the blessing of government to become university colleges will not be unnecessarily discriminated against with respect to funding through this archaic formula funding system, by virtue of the need to provide greater dollars to the comprehensive universities that are set up under section 7 in this act. The minister has given us no assurance or guarantee that will in fact be the case.
[11:45]
The students of this province want to know, because it's their future that's at stake here. It's they who are going to have to make those decisions and face those opportunity costs if they're to be successful in their endeavours. Presumably this minister has an answer other than the rhetorical responses he makes to the opposition when he suggests that this member and other members of the opposition are wasting legislative time because we're trying to keep this government accountable through this process of debate.
Hon. D. Miller: Hon. Chair, maybe I could ask your assistance. I listened carefully to what the member said. It was quite fluid; it seemed to flow with no pauses or interruptions or "uhs" and "ands." But quite frankly, I don't know what he said. We need an interpreter for this member. Perhaps he could help me out, because I don't think it had any relevance to the bill we're currently debating.
G. Wilson: I will try to use words with fewer syllables so this minister can understand what I'm saying. Or perhaps what the minister is doing in seeking the assistance of the Chair is trying in some way to influence the process by which the opposition gets access to a proper response.
I have canvassed people in the community college system, both administration and faculty members. We have had an opportunity to fax copies of this bill to those universities that didn't get it and hadn't seen the actual language of it. We have done our homework and our research. I am asking a legitimate question of concern to students, faculty and administrators at colleges that don't receive the university designation. They want some guarantee that the opportunity cost of education at those colleges that don't get university classification will not go up by virtue of this new designation and by virtue of the objectives that this minister or subsequent ministers of this government may impose upon university colleges, which get grants or moneys on an annual basis from the ministry of skills, training, development and whatever it is except advanced education.
Hon. D. Miller: The final designation, hon. Chair, is Labour. But the answer is that there will be no discrimination. These degrees, I would remind the member, are undergraduate degrees, not graduate degrees. The university colleges are not the same, and will not be doing the kind of research, as the universities. They won't be the research institutes that the universities are, but there will be no discrimination.
We will be fair, as we have been. As I indicated previously from my discussions with the colleges, university colleges and institutes around this province, they're absolutely delighted with this bill. I'm sure they're not happy with that member dragging this out. They want to get it out and get on with the job. Ever since I became minister, the first question they asked me was: "When are you going to get this bill in the House? When are you going to move forward?" I said: "I'm going to do it as quickly as I can, and I hope the opposition doesn't delay it." Hon. member, I know that at the end of the day you're probably going to vote for this bill, so there will be no discrimination. We've got a good system. We treat them fairly, and we will continue to do that.
G. Wilson: I must say that the responses from the minister are less than satisfactory. What it says is simple. Perhaps the minister could look at the wording of this bill that he says is not going to provide graduate degrees, which we don't dispute. It says that the objects of a university college are to provide comprehensive.... That word "comprehensive" means all-inclusive, hon. minister. It means that it is providing an all-inclusive course of study for a baccalaureate degree program, which in its third and fourth year often has a number of associated costs, like lab costs, field costs and many other costs. Similarly, let me be very clear to this minister -- who doesn't seem to understand that there is a limited amount of money available to the college system now -- that there is high competition for those dollars.
What we're concerned about is the fact that under section 7(b) and (c) it says that post-secondary education or training and continuing education programs will also be funded through these university colleges. The difficulty is that when you have students selecting institutions, they are going to go to A, the institution of their choice which they believe provides the best and soundest education in the course of study they choose. But often B is the one where they can get a seat, and that's driven by the amount of money that comes into those institutions. By setting these objectives for the university college system, we want to know whether this proposition is going to allow government to determine which areas of this province will receive post-secondary educational funding -- which institutions will benefit and which ones will not. That's a legitimate question of concern which I'm sure the minister must have heard, because I've certainly heard it as I have consulted with people involved in the college system. It's a legitimate question, and I think this minister needs to answer it.
The Chair: Member, it may be a legitimate question in the abstract, but it is not germane to section 7. Section 7 is very clear; the member knows that. We have had this debate for an hour and 40-odd minutes. I am suggesting to the member that we will not go on ad infinitum. Rather, we will deal with the sections on the order paper, and at some point we will have to invoke the rules of this House about repetition and tedium. We can only spend so long.
The disagreement is legitimate. You have articulated the point, but we're talking about a very specific section -- the objects of a university college. One may disagree with the stated objects; that's fine. One articulates and enunciates that, but we don't have a debate on that, because that's a debate on the principle of the bill. Unless we have specific questions on section 7, I'm going to have to suggest to members that this section ought to be finished with quickly.
Section 3, section 7 approved.
[ Page 11339 ]
Hon. D. Miller: Hon. Chair, given the hour, I move the committee rise, report progress -- albeit remarkably little progress -- and ask leave to sit again.
The House resumed; the Speaker in the chair.
The committee, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. D. Miller moved adjournment of the House.
Motion approved.
The House adjourned at 11:53 a.m.
The House in Committee of Supply A; G. Brewin in the chair.
The committee met at 10:17 a.m.
ESTIMATES: MINISTRY OF FINANCE AND CORPORATE RELATIONS
(continued)
On vote 33: minister's office, $342,581 (continued).
J. Weisgerber: When we finished yesterday afternoon, we were talking about the successes that the government had enjoyed in curbing the smuggling of cigarettes from other parts of the country. I'd like to explore a bit today the policies that the government has implemented in order to manage the sale of tobacco on Indian reserves in the province. My understanding and recollection of the system is that there is a quota established for each band member that regulates the number of cigarettes that the band can buy. The band is then able -- in practice at least, if not under the legislation -- to resell those cigarettes that are not consumed on the reserve. Could the minister give me an update on what those quotas are? How is the calculation made that limits the number of cigarettes sold on reserve?
Hon. E. Cull: The quotas are established for each reserve based on ten cigarettes per day for every resident on the reserve -- man, woman or child. That gives us the overall quota. To obtain the cigarettes, there must be an exempt-sale retail permit, which can be on or off reserve. The exemption is to the natives who purchase the tobacco, and they can purchase tobacco exempt from taxes.
In the case where a dealer may be able to demonstrate that there is a legitimate demand beyond the ten cigarettes per day per person, they can apply for an increase in their quota, and we will consider it. If there is a legitimate case to be made, we will grant that additional quota.
J. Weisgerber: It seems that ten cigarettes a day for every man, woman and child is far beyond the consumption per capita in the province or in the country -- perhaps five or ten times. Could the minister indicate how that quota relates to the average per capita consumption in the province, and whether there have been any exemptions allowed under the appeal process?
Hon. E. Cull: The member is probably correct to say that the number of cigarettes permitted under the quota exceeds what the per capita consumption would be in the general population. About 30 percent of Canadians smoke; it's less in British Columbia -- I think 22 to 25 percent. My memory of the Health ministry serves me well in this regard. The average smoker might consume a pack and a half a day, which would be 30 cigarettes. Averaged over the whole population, that would not equate the quota we've just described to you. There are other uses for tobacco in the traditional native culture, and that is an argument that first nations make with respect to their quota. However, there are concerns that in some cases the maximum is being purchased for consumption not only by the person who is purchasing the tobacco.
J. Weisgerber: It would be interesting in dividing the number of British Columbians -- men, women and children -- by the number of cigarettes sold per day in the province. I expect we'd find that the answer would be much smaller than that quota. It's important to recognize that the sale of cigarettes by the bands isn't a source of revenue; the bands see an opportunity to use their tax-free status as a way of buying cigarettes tax-free and reselling them to raise money by collecting what would in fact be a tax. The differential between what they pay for the cigarettes, plus a reasonable markup, and what they sell them for would be a tax opportunity lost or gained. Can the minister tell us whether there has been a trend over the past five years to increase or decrease the allowable quota per capita for band members?
Hon. E. Cull: In the time the quota has been in place, which is since 1987, the only change to the quota has been the one I commented on about retailers being able to come back and demonstrate a legitimate demand in excess of the ten cigarettes per day per person. Flexibility has been added to ensure that where there is legitimate demand, the demand can be met. That would be for natives who are living off reserve but are purchasing their cigarettes from a store on the reserve. It could be a case of people who are travelling. There are lots of cases that can be made. I am of the opinion, however, that not every case where someone justifies additional tobacco for personal use is a justifiable case.
If you are suggesting in your opening comments that bands or retailers are purchasing tobacco and selling it, and then what is being resold to people at a higher price would not be tax-exempt, you are suggesting that illegal activity is taking place. I'm not sure if that is what you're suggesting or whether you're just talking about the bands who had purchased tobacco from a wholesaler and then sell it on reserve as a normal business to make a profit, which would, of course, be legitimate. When you talk about bands using tobacco as a way of raising additional revenue, I'm not sure whether you're talking about the legitimate business opportunities that are available to anyone to purchase goods wholesale and sell them at retail or whether you are talking about the potential for illegal activity.
J. Weisgerber: It's pretty obvious to me that if bands buy cigarettes tax-free, and we know that taxes make up a significant portion of the price of tobacco, and if those are
[ Page 11340 ]
resold to non-Indian people.... We see the signs as we travel around the province. Service stations and small stores on reserves often have rather large signs advertising cigarettes at prices lower than in neighbouring communities -- but, I expect, much higher than what they are purchased for. I'm saying that I believe that the bands' selling price is much higher for non-Indian customers, and there is a much greater markup than the simple wholesale-to-retail markup. There must be an enormous amount of room created by the lack of tax.
Hon. E. Cull: If an exempt-sale retailer purchases tax-exempt tobacco from a wholesaler and sells it, they have to sell it to a person who is eligible to buy that tax-exempt tobacco, and natives are the largest group having the privilege to buy tax-exempt tobacco. When that individual buys the tobacco, they have to sign that they are in fact eligible to purchase tax-exempt tobacco because of their native status. If an exempt-sale retailer is selling non-tax tobacco to people who are not eligible, such as you or me, they're breaking the law, and they risk losing their licence to sell tobacco. If you, for example, go into one of those retail shops and purchase tax-exempt tobacco, you have to sign that in fact you're a native and that you're eligible to purchase the tobacco legally. If that's not the case and it's sold to you, then the retailer could lose their licence. Obviously that's a very considerable concern for the retailers.
[10:30]
J. Weisgerber: I'd be interested to know, then, what kind of policing of that process is in place. I'm curious to know whether the majority of bands and retail outlets for the bands are routinely buying far fewer cigarettes or far less tobacco than they are entitled to, or whether, in fact, on many bands they routinely buy their full quota. That would signal to me whether or not tobacco was being sold to band members. Quite honestly, I don't believe that if one only sold cigarettes and tobacco products to band members, you would sell anywhere near the ten cigarettes per day per capita. I would find that very difficult to believe. Perhaps we can deal with that before we get on to the exemptions.
Hon. E. Cull: The forms the retailer collects, on which the native signs that they are eligible to buy tobacco -- and they show their native status card, I guess in this case, to be able to do this -- are submitted to the ministry. We review them and are able to see exactly what kinds of sales are taking place. Certainly, not every individual buys their full quota. Some do, some don't -- it varies from band to band and region to region. The potential for illegal sales does not occur so much at the retail sale but afterwards. Because there are sufficient controls in terms of monitoring the retail sales and because the consequence of breaking the law is very significant to the retailer -- losing your licence is a big cost item -- the potential for abuse there is much less than after the cigarettes have been purchased by an individual, when they may enter the black market and be resold. That is no doubt one of the areas of concern.
J. Weisgerber: I guess that would beg the question of what kinds of restrictions there would be on individuals who are eligible to buy tax-free. Can you go in and buy ten cartons of cigarettes? Is there a limit? Is there some way of controlling what the minister has identified as quite an opportunity for leakage in this whole process?
Hon. E. Cull: We are attempting to do a number of things to deal with this problem, and we don't have a perfect solution yet. It's a very sensitive matter, and it is very difficult to find a legislative solution that will work as well as we would like it to. Last year, I believe, the former Finance minister made an amendment to the legislation to deal with the number of cartons of tobacco you could have in your possession that would be deemed to be for personal use. If you have more than five cartons, that's considered evidence that you have tobacco for purposes other than just personal use. When there are more than five cartons in somebody's possession, seizing tobacco is one thing we can do.
The bigger issue is how we enforce a system that provides tax-exempt status for those who are eligible for it and doesn't feed the black market or illegal activity. We have brought in a marking system that is part of the overall strategy to control the sale of tobacco in the province. As I said yesterday, we were going to implement the clear stripe for tax-exempt tobacco on May 1st, but as a result of concerns raised by first nations, I have now deferred that decision for three months. We are working with the exempt-sale retail dealers, the Union of B.C. Indian Chiefs and the First Nations Summit to address the whole question of quotas, exempt sales and marking, and how we actually control this. I'm operating on the assumption that the vast majority of retailers, natives and other individuals in this province want to operate legally. They want to make a regular business profit by operating within the law.
On the basis of that assumption, we are working with the groups that I've mentioned to try to come up with a system that will catch those who break the law but will allow for the fair operation of business within the law as has been established.
J. Weisgerber: Could the minister advise me whether the regulation regarding five cartons of cigarettes -- I assume we're talking about cartons of 200 as opposed to a big case of cigarettes -- applies to status Indian people in that a person qualified to purchase cigarettes tax free still can't have more than five cartons of cigarettes in their possession?
Hon. E. Cull: Yes, it applies to everyone.
J. Weisgerber: The minister's decision to defer the marking system introduced in legislation last year is interesting; I haven't heard of that decision yet. Could she perhaps advise us on the objections that have been raised regarding the system, and why it is being looked at again?
Hon. E. Cull: The decision has been deferred only with respect to the clear stripe. The green stripe, which shows tax has been paid came into effect on May 1. We have deferred only the tax-exempt tobacco marking system. By so doing the green-striped tobacco can be sold tax exempt in legitimate cases to qualified individuals. We deferred the decision because the bands pointed out to me that if you have a rack of any brand of cigarettes with the green stripe on it, and another with the clear stripe on it showing that they're tax exempt, and you happen to run out of, let's say, one particular brand in the green stripe, but you still have it there in the clear stripe, and someone comes into the store and asks for that brand, the retailer has to say: "Gee, I'm sorry. We're all out of Players Light" -- or whatever brand it is. The person can say: "Well, there's a pack over there." You have to say: "I'm sorry, that's Indian tobacco. I can't sell that to you."
The potential for the appearance of discrimination, of segregation, of just the wrong impression being left with the
[ Page 11341 ]
public around tobacco was one that I thought was serious enough, in terms of marketing that we should step back -- three months isn't a very long period of time -- to see whether there was anything else that we could do that would handle the problem in a way that would not involve that apparent discrimination at the retail counter.
I hope by engaging in this discussion we will be able to engage in more meaningful discussions around the quotas, because as you've already indicated in your remarks, the quotas are generous, they are subject to abuse and there are some concerns that need to be addressed.
J. Weisgerber: So that I am clear on what has happened, there's legislation providing for a process to mark cigarettes as being purchased for sale, tax in, with a different marking to indicate the tax is out. The current process allows for the tax-paid but not the tax-free designation to be on cigarettes. So everything now appears, whether the tax is paid or not, as if the tax has been paid.
Hon. E. Cull: The marking system is primarily designed to deal with interprovincial smuggling, not this particular issue of exempt and non-exempt sales. In dealing with the interprovincial problem, we have inadvertently created some problems with respect to the tax-exempt sales here in British Columbia. That's why the green stripe has gone ahead. It makes it very easy for us to determine immediately whether lower-priced Quebec cigarettes, for example, are being sent to British Columbia for resale here. As I indicated yesterday, all provinces will have the marking system in place very soon, and we'll have a different colour stripe for each jurisdiction.
J. Weisgerber: Just a couple more questions in this area. I'm curious about the calculation for the exemption. Is it the number of registered members of the band or the number of members who actually live on reserve? The minister raised the point of people coming back to their reserve or people moving from another reserve. In the case of multiple retailers, I'm also curious to know how one decides how that allocation is going to be divided.
Hon. E. Cull: The quota applies to natives resident on the reserve as opposed to those registered with the band, so it just looks after those who are actually on the reserve.
With respect to multiple retailers, we give the band the option of regulating the quota and the retailers on their reserve. They would then make the decision how to allocate that quota among the different retailers located on the reserve. If the band doesn't wish to take on that responsibility, my ministry does that and deals directly with the retailers.
J. Weisgerber: The final question I have is in the area of exemptions, recognizing that the ten-cigarettes-per-day quota is a very high one. I'm trying to get a sense of the quantum of exemptions that are applied for and granted. It would be very hard for me to rationalize an exemption beyond those very generous quotas that already exist.
Hon. E. Cull: By exemptions, I believe the member means where we make an addition to the quota above the ten cigarettes per day for various reasons. There are a number of quotas that are beyond the ten cigarettes per day per member. I'm sorry, but I don't have the precise numbers here with respect to the number of bands that would have them or the number of additional cigarettes per day or any other way of measuring the quantity. We do, though, have additional limitations. I mentioned the limit of five cartons per person at the time of purchase. There's also a limit of 15 cartons per month per person, which does put another bit of a boundary on it.
I think your line of questioning is leading to: are the quotas very generous? Are they beyond what an individual would be able to smoke, particularly when you consider that children are included in the quota? You're right, they are. The bands make arguments with respect to cultural use of tobacco, potlatch, things like that, but it is a matter of concern. It's one of the reasons why I'm pleased that we are dealing with the First Nations Summit and the Union of B.C. Indian Chiefs to try to come up with a system that recognizes the use of tobacco by natives but also acknowledges that nobody is really interested in abuse or in illegal activity. It doesn't work in anyone's favour, except for those few individuals who are engaged in criminal activity.
J. Weisgerber: I would be interested in data that the minister might have on those exemptions. It seems that 50 cartons a month....
Hon. E. Cull: Fifteen.
J. Weisgerber: I'm sorry. I thought it was 50. One would have to be a very vigorous smoker, even with 15 cartons a month. It seems like a lot.
[10:45]
I wonder if the minister could tell me whether her ministry has looked at the effect of self-government on the process of regulating cigarette, gasoline and alcohol sales and taxes. It seems that one of the biggest challenges in British Columbia arising from the notion of self-government would be the loss by the province of its ability to manage taxation in those three areas. We have 1,700 reserves in this province. Almost every significant population centre has a reserve in close proximity. I wonder whether the ministry has done any projections, studies or work that the minister would share with us.
Hon. E. Cull: I don't have any studies, projections or figures that I can share with you at this point. The transfer of tax powers is part of the self-government negotiations that are in process. This issue has to be addressed as part of the negotiations around self-government.
J. Weisgerber: I thank the minister. I'm sure that she's not particularly interested in me getting into too many details on it. Suffice to say, I think this is one of the biggest issues facing the province in the whole area of self-government, and government particularly has to consider the unique situation in British Columbia. Many will point to reserves in other provinces or states. There is no jurisdiction that mirrors the situation in British Columbia, which has 1,700 reserves spread throughout every corner of the province; most are near other population centres. What works in Manitoba, which I understand was the area the federal government selected as a test site, provides a very poor test case for self-government in British Columbia.
F. Gingell: I'd like to turn to pensions. My first question to the minister deals with the income statement in this year's estimates which indicates an adjustment in amortization of change in pension liability of $25 million. I understand this is to do with the freezing of senior staff' salaries. I wonder if I could have more information on what this $25 million
[ Page 11342 ]
adjustment for both last year and this year is and the long-term consequences of this.
Hon. E. Cull: I've got a solution. I want to introduce John Cook, who is the superannuation commissioner. As I noted in the record the other day, Mr. Cook is one of those with deputy minister status who reports to me in my capacity as Minister of Finance. I think I will ask him to answer this question, because it's not a simple answer. I could give the simple straightforward answer, but I'm sure the member will have further questions and maybe we can get to all of his questions by getting the full answer out here initially.
J. Cook: The answer to that question has to do with the fact that there was an actuarial evaluation done in the public service superannuation fund, and it showed a decrease in the unfunded liability from the previous evaluation. This is the accounting entry to bring that reduction in unfunded liability into the financial statements of the province by advertising it over a 12- or 13-year period, which is the expected future lifetime of that decrease in the unfunded liability.
F. Gingell: To be a little more specific, which particular pension fund is that?
J. Cook: It's the public service superannuation plan that's provided under the Pension (Public Service) Act; it's only that plan, not any other public sector pension plan.
F. Gingell: This gets us directly into some questions that I was going to ask. I take it that the March 31, 1990, actuarial evaluation by Eckler Partners has now been done for March 31, 1993. Perhaps you could tell me the total consequences of that new evaluation, because it isn't reflected in the public accounts and the superannuation fund for the year ended March 31, 1993. In fact, the public accounts state that it wasn't included.
Hon. E. Cull: The reason it isn't reflected is because we received the report in January 1994.
F. Gingell: What are the details of it?
J. Cook: The actuarial report shows an asset base of $6.9 billion, an unfunded liability of $193 million, and....
F. Gingell: Is that $6.93 billion?
J. Cook: The total assets are $6.9 billion -- I'm just giving you rough numbers. The unfunded liability is $193 million, which means the total liabilities are $7.1 billion.
F. Gingell: I must be looking at the wrong page. Public service superannuation plan financial statements for March 31, 1993, extrapolated by your actuaries from the previous financial statements, indicated a present value of accrued pension plan benefits of $4.33 billion at March 31, 1993. Then there are $7.1 billion? What am I missing? I'm missing something, obviously.
J. Cook: I believe that you're looking at the financial statements of the pension fund prior to completion of the actuarial valuation; so it would be the 1993 financial statements of the pension funds that have at that time the unfunded liability in the neighbourhood of $440 million. It's the subsequent actuarial valuation, which was done as of March 31, 1993, that reduced the unfunded liability from $440 million to $193 million, and it's the accounting for that difference now in the province's financial statements that caused the amortization of the change in the unfunded liability to be reflected in the financial statements.
F. Gingell: I understand that, but there's such a dramatic change to the gross numbers. You also indicated that the gross value of the assets, under this strange method you have of adding them -- I want to get into that in another moment -- is up to $6.9 billion, when the extrapolated value at that point was $3.8 billion. I'm wondering where this $3 billion on both sides of the equation has arrived from.
J. Cook: If you want to go through it on a more detailed basis, to start off, the actual invested asset of the pension fund has increased from $3.1 billion in 1990, which is the last valuation that was done. I'm working from the valuation report rather than from the financial statements. In the 1990 valuation it was $3.1 billion; it is now $4.2 billion in 1993. So the contributions made to the pension fund and the investment earnings of the pension funds have increased the fund itself by $1.1 billion over the valuation period.
The second part -- you've referred to the strange way in which the accounting is done -- is that it is common practice in valuing a pension plan to also look at the future contributions that are expected from both employees and employers who participate in the plan. So the second aspect of the pension plan's asset value for actuarial purposes is the present value of the future employee and employer contributions for those employees who are in the plan. There are projections in terms of how long those people will participate in the plan, and then they're discounted back on a present-value basis to indicate their value. For employee contributions, the difference between the valuations is that they've gone up from $748 million to $966 million; for employers, based on the existing statutory contribution rates, they've gone up from $1.15 billion to $1.7 billion. So that's where the increase in the asset base has occurred for assessing the financial health of the pension plan.
If you want to look at it on the liability side, the same sort of thing has happened. People in the pension plan have been in it for a longer time and therefore have entitlement to larger pensions. Their salaries have increased, and they're therefore entitled to a benefit that has a greater value than it did at the previous actuarial valuation. There is also an analysis that's done of that side of the equation to see what change has taken place, not only in the benefits that have been earned to date or that are being paid, but also in the benefit promises that have been made to people who are currently employed and participating in the plan as far as their work time in the provincial government.
F. Gingell: The one thing that we'll all agree on for sure is the actual value of the investments in the fund at March 31, 1993. It's $5.275 billion, and that's at market value, I understand. When we looked at the position of the fund as reported in the public accounts for this year, I looked at what your actuaries had extrapolated as the liability for future pension benefits -- the present value as at March 31, 1993 -- and that number was $4.333 billion, and we actually have $5.275 billion on hand to pay them. When you look at this actuarial valuation of the assets, you start with the $5.275 billion; that's what you actually have there. Treasury branch under this deputy minister has $5.25 billion worth of assets there. Explain how that $5.25 billion worth of assets is irrelevant.
[ Page 11343 ]
J. Cook: First of all, I'd like to tell you that it's not irrelevant -- they are real dollars, and there is $5.2 billion currently invested by treasury branch and the Ministry of Finance. In the pension plan, though, there are two accounts: one that provides for the basic non-indexed pension, and one that provides for indexing to be provided on a defined contribution basis. The $5.2 billion is the sum of those two accounts.
[11:00]
When the actuary is doing his evaluation report, though, he is only doing evaluation on the defined benefit, non-indexed portion of the pension plan, so the assets related to that are the lower value -- in the neighbourhood of $4.2 billion. There is in the neighbourhood of $1 billion currently in the account held for indexing purposes alone.
F. Gingell: So the extrapolated value of the basic account assets at the end of the year, $3.8 billion, compares only to the basic account, which had assets in it at that point of $4.456 billion, if you look at page 63. So we all understand, could you quickly explain how this almost $4.5 billion of assets is valued down to $3.8 billion? Is it because you believe that over a long period of time, interest rates are going to be at certain levels irrespective of what they have been, and this is providing for the future downswings, so that your rates of return are, in fact, what your actuaries have used for the basis of their evaluations?
J. Cook: The number is closer than what I think you're referring to. The 4.4 number is the market value of the assets in the plan. Because this particular plan at this point did not have a diversified investment strategy, when the actuary was looking at the assets, he looked at them on a book-value basis. So the book value of the assets at that same point in time was $4.2 billion, which is what I've indicated to you, not $3.8 billion. So there is a slight difference between the market value and the book value at the point where the actuarial valuation was done. The financial statements used the market value; the actuarial reports used the book value. In future, if we were to diversify the investment strategy for the public service pension plan, we would have to look at a different basis for doing the asset valuation for valuation report purposes.
F. Gingell: The deputy minister and I would not disagree that the book value really isn't relevant, and it should be changed. That doesn't answer the question of what causes the extrapolated future value of these investments to be marked down from $4.4 billion to $3.8 billion.
Hon. E. Cull: We're getting into quite a level of detail here. Even with all the books in front of us, my staff members are not able to give you a complete answer on that. I suggest that the member could move on, and we will return to this when we've had a chance to compare the tables he's looking at with the figures we have.
F. Gingell: Okay. I'd like to make one last point so that this is covered while they think about it. At March 31, 1993, we've agreed that the actual value of the assets hasn't.... I will start again, if I may. The response you gave me earlier about the unfunded liability and the count value of future benefits at March 31, 1993, according to the new actuarial evaluation that's been done, came out at $7.1 billion. That includes all the inflation accounts, too, I presume.
J. Cook: The $7.1 billion does not include any of the inflation-adjustment account assets, because the valuation is done on the non-indexed benefit. It doesn't include any provision for indexing in it.
F. Gingell: I think we are clearly going to have to talk about this on some other occasion.
Within the various pension plans administered by the superannuation commissioner, you used different rates of future earnings and future salary escalations or salary increases. I'd better be careful. Yes, the municipal workers and the public service are both 6.5 percent for earnings and 5 percent for salary; the teachers are 7 percent and 5 percent; the colleges are 7 percent and 5 percent; the Crown corporations are 7.5 percent and 5.5 percent. Can you tell me if the use of these different rates is a definite decision made with an understanding of what other rates are?
J. Cook: The assumptions used by the plan actuary are determined by the actuary independently of input from government or ourselves, but they're done in terms of looking at what he would expect to be the long-term experience with respect to that particular aspect. If he's looking at investment earnings or at salary growth, he would try to determine what the long-term rates would be. One might argue that at least in the short term those don't look very close to what our current experience is. The reason he hasn't often had to change that in the past is the fact that when you value a defined benefit pension plan, you are looking at the difference between the interest rate assumption and the salary growth assumption. It's the relationship between the two that has an effect on the values that come out when the calculations are performed. So it's more important to look at whether it's at a 1 percent or 2 percent or 3 percent spread than to look at the absolute numbers that are used in the evaluation.
What the spread should show is what the actuary expects to happen in terms of that plan. So you should expect to see a wider spread, for example, in the teachers' plan or college plan, where we have a fully diversified investment strategy, than in the public service or municipal plan, where that strategy has not yet been implemented.
F. Gingell: Recognizing that the real rate of return, the difference between these two numbers, is significant -- the difference is 1.5 percent in the municipal and public service plans but 2 percent in the college, teachers', B.C. Rail and B.C. Hydro plans -- does that reflect different actuaries, or does it reflect different investment criteria or investment ability in those other funds?
J. Cook: The answer is both. The actuarial evaluations for the four statutory plans -- public service, municipal, teachers' and college -- are all done by the same firm of actuaries. The Crown corporation plans -- presumably you're talking about B.C. Hydro and B.C. Rail -- are done by different actuaries. There's that difference: different actuaries doing evaluation.
But the principal difference is the one I alluded to in answering the question before -- that is, that the public service and municipal plans at present do not have a diversified investment strategy, and therefore the assumptions for salary growth and interest return are closer than they are in the teachers' and college plans, which do have diversified investment strategies.
F. Gingell: Yesterday, when we were talking to the provincial treasury branch, they indicated that they'd earned the teachers' pension fund 16.4 percent this past year. In
[ Page 11344 ]
brief, can you describe how that 16.4 percent earnings of 1993-94 will affect all these actuarial valuations? Do you have any idea of the consequences?
J. Cook: When an actuarial evaluation is done, the actuary compares the actual experience of the pension plan against the assumptions that were made with respect to various issues on the economic side -- the interest rate and the salary growth. But other assumptions are made with respect to probabilities of retirement, of death, and so on. A comparison is made on the difference between a plan's experience and what the assumption was. Then an analysis is done of the gains and the losses that occur, because one thing you can guarantee in a pension plan is that the experience is going to be different from the assumption.
If provincial treasury is able to earn investment returns in excess of the assumptions, this means there's going to be an experience gain in the pension plan related to that particular aspect of the plan. If this continues, valuation by valuation, and nothing else changes at all, then it will mean that the unfunded liabilities of the pension plan will come down, because we've experienced an investment return that is higher than what was predicted.
F. Gingell: I take it that all the earnings in excess of the assumptions, on both the basic and the indexed accounts, are only applied to the reduction of the unfunded liability, and that's just the way the world is.
[11:15]
J. Cook: Unfortunately, that's not the way the plan provides for those interest returns to be allocated. First of all, the plan says that one of the mechanisms for providing indexing is to see that on the portion of the asset that can be attributed to the pensioners, where pensions already are being paid, that if there are returns in excess of the actuarial' rates, those returns be transferred to the indexing account to be used for indexing purposes. But if there are excess returns on the portion of the asset that is attributable to the non-indexed pension -- the accruing, ongoing pension -- then those gains will be used to reduce the unfunded liability.
It's also important to note that pension plans are not short-term arrangements; they're long-term arrangements, as you would know. Therefore gains might be experienced in the short term, but there are going to be other years in which the experience is going to be the other way. So it must be looked at on a longer-term basis than the experience in this or next year.
F. Gingell: The teachers' pension fund, for example, is a defined benefit plan and not a money purchase plan. Doesn't that indicate that the policy that has been set up is a non sequitur?
J. Cook: I don't think so. Both statutory public sector plans, the teachers' pension plan and the public service plan, are combinations of two plans. Both are a defined benefit pension plan as far as the non-indexed pension is concerned. Both define contribution benefits as far as the indexing arrangements are concerned. There are two separate pension arrangements within the plans, and they are funded separately. If we start to mix the two, then we get into difficulty trying to explain how the funding is actually accruing with a pension arrangement.
F. Gingell: A defined benefit plan is set up so that there are winners and losers. Winners are those people who live longer and therefore stay in the plan for longer periods of time, and losers are those who die earlier. Having done an actuarial plan which determines that this size of annual contribution with these kinds of earnings is going to account for inflation indexing, are you saying that a portion of those earnings, which would normally go to the winners whether they have retired or not, is now applied only to those who have now retired?
J. Cook: Let's step back and start the explanation in terms of where the separation occurs with respect to the funding of the pension plan. There are two accounts that we hold within the pension plan. The basic account provides for the non-indexed pension. A formula in each of the pension plans describes the pension entitlement, when integrated with the Canada Pension Plan, to be 2 percent of an individual's highest five-year average salary times the number of years of participation in the plan.
That part of the pension -- the major part -- is provided through the basic account and is the portion of the pension that is valued when we do an actuary evaluation. The contribution rates are then established to ensure that as the pension accrues over time, there are sufficient contributions coming in to pay for it. There are winners and losers. As long as there are rules in pension plans, there are going to be people who obtain a benefit because they meet the criteria, and others who won't because they don't meet the criteria.
We have an indexing arrangement in these pension plans. Some years ago it was determined that the indexing should not be guaranteed, that it should only be provided if there were funds available. There is a separate account into which the employee and the employer make contributions, and there is -- what I have tried to describe -- an excess interest transfer that takes place between the basic account and the inflation account on an annual basis to reflect the fact that in the basic account the pensions are still there and have been valued at 6.5 or 7 percent, depending on which plan you're talking about. The excess interest transfer takes place to say that those people worked. If an asset is being held on their behalf and it earns more than 6.5 percent, then funds should be transferred over to provide indexing for it. The last part of the indexing arrangement is that the account that exists for indexing purposes is also invested, so it earns its own money.
We've been relatively fortunate. In the 12-year period that we've had the inflation adjustment account in place, we have been able to provide full indexing to plan members, because there have been sufficient funds in that account.
There are two reasons for this. First, we have had very good rates of return on pension funds during that 12-year period. Second, and probably most helpfully, when this plan was put into place in 1982, inflation was at a high of 12.5 percent but has since come down to much more reasonable levels. For most of that 12-year period, inflation had been in the 4 to 5 percent range; in the year ahead, it is under 1 percent. The combination of high interest rates and low inflation rates has led to the accumulation of fairly significant balances. But the promise in the inflation adjustment account is only to provide benefits if money is available. So somewhere down the road, should we return to what we saw in the sixties and seventies there may not be sufficient funds in that account to provide full indexing, and at that point the plan says that retired plan members only get proportionate indexing.
F. Gingell: All teachers who have retired, and all pensions that qualified at the date this started, benefit from this fund. It isn't only for those people who contributed subsequent to creation of the fund. Am I right in thinking that teachers working right now contribute to the indexed
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fund, but those assets may be used up looking after teachers who retired prior to 1990?
J. Cook: Yes, you're right in understanding that the benefits also apply to those people. You should also know, though, that indexing arrangements were in place before 1982. When I described the changes that were made, they were the changes to indexing arrangements in 1982, not the introduction of indexing arrangements.
The teachers' plan and the other public sector pension plans had indexing arrangements in place as early as the early 1970s on an ad hoc basis. In the mid-seventies they were added on a more permanent basis and essentially provided ongoing guaranteed indexing. In 1982, the government of that day determined that this was not an appropriate ongoing policy to tolerate, and it changed the indexing arrangements so that if the money is there, there's indexing, and if the money isn't there, there isn't indexing.
F. Gingell: I'm sure that you've seen this document a lot. It deals with a whole series of proposed changes to the teachers' pension fund. This suggests that they can be paid for by increased earnings. Seeing that under your calculations we still have an unfunded liability of $190 million, wouldn't the first $190 million fund the unfunded liability before we even think about increasing benefits?
Hon. E. Cull: I'm not sure what the date of that particular alert is. I haven't seen that one yet.
F. Gingell: February.
Hon. E. Cull: Okay, that's the February one.
There have been discussions taking place over the last year with the advisory boards of all the public sector pension plans. Proposals have been put forward with respect to reallocating benefits from the inflation indexing account to other areas, but at this point no final decisions have been made by cabinet in that regard. If a decision is made on those proposals, it will be coming forward in legislation.
F. Gingell: That really was the question I had. If the legislation doesn't come down by June 1 -- it's already June 2 -- then one presumes that this won't come forward until next year. Is that right?
Hon. E. Cull: While the House is sitting, I would never make that assumption.
F. Gingell: Are all the management fees that are shown as costs of the pension plan paid to the provincial treasury special account?
J. Cook: There are a number of charges against the pension fund. One charge is the investment management fee that is charged by treasury branch in the Ministry of Finance for managing and investing the funds and for seeing that they're kept safe. Other charges are made against the funds. For example, the professional fees of the actuary are charged to the fund, and a portion of the cost incurred by the Superannuation Commission for administering the plans are charged against each of the pension funds.
F. Gingell: I realize that. They are actually split in the majority of the funds: the administration and actuarial cost are shown as one number, and investment management funds are shown as another. All I was interested in was whether you paid any investment management consulting fees to anybody other than provincial treasury. I take it from your answer that all the investment management consulting functions are performed by provincial treasury rather than by outside consultants. If they want outside consultants, provincial treasury would hire them.
J. Cook: The answer to the question is yes.
F. Gingell: Before we adjourn, can we turn briefly to the MLAs' superannuation fund as a subject for discussion? One looks in these statements and sees that when there was an election in 1991, it required that the people of British Columbia put an additional $6.4 million into the fund. I take it that they could then transfer the money over to the public service account, and the public service fund administers it. Can the minister give me any thoughts on the effective cost in relation to the indemnities that are paid to MLAs? In the normal course of events, one looks at a corporation's fund and says that 8 percent of payroll is going to fund this kind of pension. If you change the defined benefits, you can say that you have pushed up your payroll cost from 8 percent to 9 percent. Looking at the defined benefit paid in this fund, I was wondering if you could relate that to an MLA's salary.
[11:30]
Hon. E. Cull: I'm sorry, I don't have that information. I can't give you that answer right now.
F. Gingell: When could you give it to me?
Hon. E. Cull: Unfortunately, I'm advised by the superannuation commissioner that there has never been an actuarial evaluation done of the MLAs' pension fund, so I just don't have those figures.
F. Gingell: Is your ministry planning on having an actuarial evaluation done of this fund?
Hon. E. Cull: We're not planning an evaluation of the fund, but we are having a look at the MLAs' pension fund overall. If we determine that changes should be made to it, then we would need to have the evaluation done at that point.
F. Gingell: It's not actually an evaluation of the fund I'm concerned about, because of the way the fund works. Nobody pays in until they qualify, which is the logical way to do things. I'm concerned about the cost. I guess some people might pay in before they have qualified, but they have the ability to buy back their past service at some point. It's not an option that's terribly appealing. It's the cost I'm trying to get at, rather than the evaluation of the fund, and I presume that that's basically what we're talking about. Can you advise me if the work of looking at this has actually started, and whether any of it will be done in this current year of estimates under discussion?
Hon. E. Cull: I'm afraid I can't give the member any clearer answer on that than I have already. We haven't started to do any evaluation. The question of MLAs' pensions is one that all provinces are looking at, and British Columbia is no exception. Until there has been a government policy decision to review the MLAs' pension plan, there's not much else I can tell the member at this point.
F. Gingell: Seeing the hour, I would move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 11:33 a.m.
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