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 30, 1994
Morning Sitting
Volume 17, Number 4
[ Page 12571 ]
The House met at 10:05 a.m.
Prayers.
U. Dosanjh: I have the privilege this morning of acknowledging the presence of Sarah Reeder, Nicole Boyer and Gianpaolo Panusa, who are the interns that were assigned to the government caucus for this session of the Legislature. I hope they have learned a few things while being part of the government caucus and working for the caucus. We certainly have enjoyed their association with us, and I'm sure they've found out how the government functions -- or doesn't function. On behalf of the caucus and the House, I want to wish them success in their future endeavours, and I want the House to join me in that.
Hon. E. Cull tabled the 1994 annual report of the auditor general; and five reports on the business done during the fiscal year ending December 31, 1992, in pursuance of the Pension (College) Act, the Pension (Public Service) Act, the Pension (Municipal) Act, the Pension (Teachers) Act, and the Legislative Assembly Allowances and Pension Act, Part 2.
NEW PROVINCIAL HOUSING PROGRAM
Hon. J. Smallwood: Today I have the pleasure to announce Homes B.C., the province's new housing program. This program is part of a comprehensive housing strategy based on the principle that secure and affordable housing is critical to the quality of life for all British Columbians. Housing is an essential ingredient in providing security for families and individuals and in enabling all of us to participate in the community and the economy.
Today we are renewing our commitment. We are providing a program that begins to meet the needs of British Columbians. It is particularly important now, because this year marks the first time since the Second World War that the federal government will not be funding new social housing for Canadians. This shortsighted approach has been rejected by our government. Unlike the federal government, B.C. recognizes the importance of continuing to support housing programs that increase the permanent supply of affordable housing. We have developed a strategy that provides real opportunities to address the housing needs of aboriginal people, women and their children, people with disabilities and others with special needs -- all of whom traditionally have not had equal access to the housing market.
We have developed a strategy which recognizes the important role of local governments in influencing the supply of affordable housing. Our recent Bill 31 enables municipalities to make their land available for non-profit housing and to set building occupancy standards for rental accommodations.
Our strategy recognizes the aspirations of most British Columbians to own a home, as witnessed by the recent budget announcement to waive the property transfer tax for first-time purchasers. It also recognizes the valuable resource we have in our rental stock and the need to support effective relationships between landlords and tenants. Amendments to the Residential Tenancy Act add another piece to the strategy by promoting better communications between renters and landlords and by improving the overall security of renters.
For Homes B.C., the announcement today is part of our overall strategy to deliver government initiatives that support housing needs for British Columbians. Homes B.C. works in partnership with B.C. 21, our initiative to expand and diversify B.C.'s economy for the twenty-first century. B.C. 21 has committed $20 million to ensure a legacy of affordable housing in communities across the province. It creates 4,000 jobs and training opportunities for British Columbians. This commitment has allowed us to stretch our housing dollars and introduce a flexible housing program.
Homes B.C. has three components to expand the supply of affordable housing. This year 150 homes will be built through our homeless and homeless-at-risk initiative, and another 750 homes for low- and modest-income renters are to be built through non-profit housing. The third component, New Options for Home Ownership, is expected to provide 2,000 homes over the next three years. In addition to its three supply components, Homes B.C. introduces additional opportunities for communities to become more active in designing their own housing strategy.
The community housing initiative is a $1.6 million program aimed specifically at supporting and strengthening B.C.'s community groups as active partners in ensuring an adequate supply of affordable housing. This initiative will support advocacy, public education and other housing activities. It will also support projects that develop the skills and strengths of communities to address their unique housing problems.
Homes B.C. acknowledges the important role of community groups in meeting the goals of the B.C. Housing strategy. Homes B.C. will provide funds to increase the supply of innovative non-profit housing, which addresses a range of needs from people who are homeless or at risk, through low-income renters to those who need help taking their first step toward home-ownership. Homes B.C. will showcase the creativity and expertise in B.C.'s non-profit housing sector.
Recognizing the limited resources of government, the Homes B.C. program has been carefully designed to ensure that all direct housing subsidies and most of the funds are targeted to those renters in the highest need. The new home-ownership options are supported only through repayable financing. In return for government assistance, purchasers will accept a limited return on their equity to help keep the housing affordable over time.
Homes B.C. recognizes fiscal constraints by creatively stretching provincial resources. For example, the home-ownership options will provide opportunities for some people currently in social housing to take the next step towards independence in the housing market. This will meet the needs that have been identified by aboriginal and women's groups throughout the province.
Homes B.C. is designed to bring out the best in local innovation. It will support developments that are responsive to the needs of residents and, where possible, will link to services such as day care. We will be holding information workshops in centres around the province in mid-July. We welcome the interest of all members of this House and all communities, both individuals and representatives of the broad housing community throughout the province.
V. Anderson: Housing is a very important aspect of community living -- so important that I could hardly hear the speaker over the din of conversation by government members. I want to thank the minister for the draft that she gave ten minutes ago. I was able to read it, even if I couldn't hear what she was saying over the noise in the House.
[ Page 12572 ]
Because housing is a critical issue for the people of British Columbia, it is important that we have a plan for housing. I commend the government for moving in this direction and for acknowledging this need and beginning to set forth a plan.
The plan is one thing, but we have yet to see how it will operate, when it will operate or where it will operate. We have no indication how this is going to be spread throughout the whole province. We have no indication how the 20 percent of people in the province who are in need of this kind of support will be able to access it or become part of it. They say that they are targeting special persons in the province, and they have indicated who some of those people are. We will have to find out how the selection will be undertaken in order to meet those special needs.
We have here a kind of equity housing program. Whenever you have an equity housing program, questions will naturally be raised about it. We understand that there is going to be a new kind of cooperation with municipalities. I'm not sure, though, how much cooperation and discussion was undertaken beforehand with the municipalities to indicate whether this is a joint presentation of the municipalities and the government or whether it is something municipalities will once again have to respond to or react to after the fact.
[10:15]
The government has indicated that they are moving to work out better relationships between landlords and tenants. As we already know, better relationships are not going to be fostered by an act that is already before the House. We understand that this program is one of many that are coming through B.C. 21, which means that another $20 million will be borrowed and that that will add to the overall mortgage of the province. On the one hand, we will hopefully have a commendable result, but on the other hand, when the young people in my own family begin to look at the possibility of new housing, they are not often able to get what they would like because of the mortgage they would have to pay. So I'm not sure if we're reaching beyond our means in our borrowing power, if you add this to all the other borrowing that this government has been doing.
I understand that there will be 750 homes for the homeless-at-risk. I gather -- although it doesn't say -- that that's probably over a three-year period.
Interjection.
V. Anderson: The minister signifies that it's a one-year period; I get her signal in that regard. And pardon me, it's 150 homes for homeless-at-risk, 750 non-profit homes and 2,000 over three years for new options for homeowners. There's a new option for homeowners, but we don't have the details, which they say will come out later on. Once again, we realize that there are 650 homes in the first year and also $1.6 million for community housing groups for education and program development around housing, in cooperation with community groups.
There are some fine headlines and some fine possibilities, but I learned a long time ago that the test of the pudding is actually in the eating. We have yet to see the test of the reality of this program. We see the headlines, and we see the minister putting forward another election proposal, which we hope and trust will become a reality and won't get bogged down over the coming years.
L. Hanson: I think all of us in this chamber, and most British Columbians, recognize the need for reasonably priced housing across our province. There have been programs such as this in other jurisdictions that have not answered the need that the minister hopes will be the result.
The pessimism that we in the Reform Party have about this sort of thing is that the minister stood up and defended Bill 50 in the House, which is a rent control act. I know the minister doesn't acknowledge that it is, but, as we've said before, it sure looks like a rent control act. The minister also stated that it would not have any negative effect on the supply of rental accommodation. That sort of reasoning makes me very pessimistic about the process that we have here.
I acknowledge that the minister says in her statement that it is a repayable program that will provide loans, providing the people who take out the loans are willing to take a low return on their funds in exchange. But this system has been tried in a number of other jurisdictions and, to my knowledge, has failed totally. But because of the lack of detail in the program, I suppose we'll have to reserve that judgment until we actually see it in process. I am sure that a year or so down the road, when we're talking about estimates, this program will be one of the topics discussed at some length, because it's my initial opinion that it will have little effect on the supply.
The minister said in her statement that we have a bill -- I think it was Bill 31 -- that gave municipalities the authority to provide land at less than market value for housing programs. It seems to me that this government -- who complains so bitterly of the federal government passing on their expenses to the province -- is now looking for the municipalities to participate in social programs such as low-cost housing. That's wrong, because I think it's clearly a responsibility of the provincial government.
I look at this statement with some pessimism. After we have had more details and seen it in operation, I hope I will be able to commend the minister for the program, but at this point it's my opinion that the reverse will be the reaction once the program is put in place.
U. Dosanjh: I have the honour to present the first report of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills. I move the report be read and received.
Motion approved.
Law Clerk:
"Your Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills begs leave to report as follows: that the preamble to Bill No. PR401 intituled Lower Fraser Valley Exhibition Association Amendment Act has been proved, and the committee recommends that the bill proceed to second reading. All of which is respectfully submitted. U. Dosanjh, Chair."
U. Dosanjh: By leave of the House I move that the report be adopted.
Leave granted.
Motion approved.
Bill Pr401 ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
[ Page 12573 ]
Hon. G. Clark: I call Committee of Supply.
The House in Committee of Supply B; D. Lovick in the chair.
ESTIMATES: MINISTRY OF EMPLOYMENT AND INVESTMENT
(continued)
On vote 24: ministry operations, $443,523,600.
Hon. G. Clark: Normally we have the wide-ranging debate on the minister's office. We passed that last night. I don't think that's significant because we still have this other major vote, so we'll dispense with the protocol and have the wide-ranging discussion. We've been working our way through it in a quite orderly fashion. That's the first point.
Secondly, obviously that amount is one vote, but it includes $240 million for B.C. Transit and a variety of other factors. I say that just so there's a sense that the ministry itself, more narrowly defined, is not consuming anywhere near that amount of money.
I'd like to introduce staff here with me. On my far left is Frank Blasetti, vice-president of planning in the Transportation Financing Authority. Mr. Blasetti is a longtime public employee; he used to be in the Economic Development ministry, mostly. Next to me is Doug Hibbins, vice-president of finance in the Transportation Financing Authority. Mr Hibbins was recently Assistant Deputy Minister of Education, capital planning division. On my far right is Brian Dolsen, director of finance for the Ministry of Employment and Investment, and next to me is Admiral Frank Rhodes.
G. Farrell-Collins: At $400 million, I thought it was the minister's advertising budgets for T-shirts, bookmarks, ashtrays and key chains. We haven't see the latter two yet, but we've certainly seen the first two, so I am eagerly awaiting them. They will be collector's items some time in the future, I am sure.
When we talked about the plan for this morning, I wanted to look at the Transportation Financing Authority and try and fold in some of the B.C. 21 stuff at the same time, because they are so linked. We will probably be moving back and forth with that, off and on. I want to ask an overall and general question. Literally billions of dollars are being projected to be spent by the government on transportation and other pieces of infrastructure. The government says we have to get this infrastructure in place and that we have to build the infrastructure for the province for the next century -- or however he wants to put it. That's certainly the line that's advertised out there.
I wonder how long the minister thinks the province can sustain this level of borrowing before it starts to have an impact on us. Everybody in this House would love to have roads, schools and hospitals built in their communities. The wish lists in any community are always much longer than the taxpayers' ability or willingness to pay for them. From a taxation point of view, you reach a point where you can't get any more out of the taxpayer without damaging the economy. You also reach a point where you can't borrow any more money without damaging the economy and the long-term prospects of the province.
There is the start of a concern out there. As I travel around the province and talk to various groups and individuals -- and certainly people who phone and write -- there is a concern that we are getting ahead of ourselves. We are borrowing an awful lot of money to do an awful lot of wonderful projects that everybody wants, but we obviously have to pay for them sometime. Are we spending our future? Are we borrowing on our credit card for the future that we are going to have to somehow end up paying eventually? That only comes in the form of added taxation, whether it's in the form of an income tax, sales tax, increased fees and licences, increased ferry rates or whatever. Somehow we are going to have to pay for all of this.
[10:30]
People are starting to be concerned. Initially they thought that this is the way the NDP works -- they are going to do these types of projects, and that's the way New Democrat governments operate. They borrow a lot of money and spend a lot of money, and generally we end up paying for it. It has gone beyond that now, and it has reached the point where people are starting to wonder where the upper limit of this thing is. How big is this truck that the minister says we're shovelling money off? Is it a pickup, a semi or one of those huge things they use to move ore around in strip mines? How much further are we intending to go?
Hon. G. Clark: I don't entirely disagree with the premise of the member's question. It's unfortunate that there are some aspects of mischaracterization. Part of the undertaking under B.C. 21 and the new ministry is to do a rational framework for decision-making and setting priorities. In part of that exercise, this ministry is responsible for pulling together a consolidated capital plan for the first time in the history of the province. Part of the reason for that is rational planning and for use as a tool for economic development. But another major part of the reason is to control debt. We instituted this year -- for the first time that anybody knows of -- a debt cap. We said we wanted to get a handle on school funding and on all other areas of debt -- all tax-supported debt. We gave a commitment to the rating agencies, for example, around the absolute size that the debt would grow to. We've done that; we're the only province to do that. The debt this year is growing at a much slower rate, obviously, than the past year. We have brought down the rate of growth in debt. We have managed it, and we have a rational framework for analysis within that. We have communicated to the rating agencies a self-imposed limit that we have every intention of meeting.
In addition to that, there is a fundamental distinction -- and I have made this before in the House, and I'll make it again -- between a debt associated with operating deficits and a debt associated with physical assets. Since the 1960s, schools and hospitals in British Columbia have always been funded on a capitalized basis -- always. No one has ever mentioned that this has been a great concern in the past. We are not doing anything differently than in the past.
What's different now is that rather than just having the Ministry of Education -- with all due respect to them -- capitalize school construction the way they have in the past, there is now another filter: the consolidated capital plan and the absolute debt cap that we have imposed upon it. I know that members opposite have been standing up in the House demanding that more money be spent on school construction. It's because of the consolidated capital plan and the self-imposed limits on debt that we communicated to the rating agencies that we are not able to have an unlimited amount of money go into an unlimited number of schools. We have to make these rational trade-offs.
I agree with you that we have to be very concerned about the ability to pay down debt and about the growth in debt, but there has to be a distinction between investment in assets
[ Page 12574 ]
and debt associated with operating costs. We have imposed the only debt cap in the history of B.C. We have communicated that to rating agencies. We have the highest rating in the country now, and the lowest debt per capita. We intend to keep it that way.
G. Farrell-Collins: I found that interesting. Maybe I haven't been listening over the last little while, but I have never heard the government talk about a debt cap before. Maybe they have; I wasn't aware of it. There was extensive debate, for about an hour on Monday, between the Deputy Leader of the Opposition, who is the Finance critic and the member for Delta South, and the Premier on the debt management plan of this government. The Premier never mentioned the term "debt cap" once. I'm intrigued. It's news to me. Maybe it's not news to everybody else, but it is to me, and I think it might be news to the Finance critic. I'm intrigued. I'd like to know what that cap is. What is that threshold? What is the cap? Is it a dollar figure? Is it a percentage of GPP? How is that debt cap arrived at?
Hon. G. Clark: Essentially, on the Premier's instructions, and working with the Ministry of Finance, we took last year's growth in debt and said to the rating agencies that we wanted to gross it down. So we capped it at last year's level -- and, in fact, we started to bring it down. I think it's about $2.2 billion. Again, that's comprised of the $900 million or so deficit, and the remainder is tax-supported debt. In addition to that, there is Crown corporation debt, which we manage as well, but the rating agencies and others would treat that differently. B.C. Hydro is a commercial Crown corporation that has the Utilities Commission mandate, etc. We coordinate debt associated with B.C. Hydro, obviously, but it's viewed differently than the social capital envelope that we call schools, hospitals, justice institutes and the like.
G. Farrell-Collins: I'm a little intrigued. The debt was capped this year at last year's level, which the minister said was $2.2 billion. I would have thought that it would be $2.4 billion. There is a $2.4 billion increase in the provincial debt this year. Of the number of Crown corporations within the ministry, which does it include? What agencies does it include? Does it include any of the Crown corporations or none of the Crown corporations? Perhaps the minister can break that down for us.
Hon. G. Clark: It includes any Crown that has any government subsidies: B.C. Ferries, B.C. Systems, B.C. Buildings, the Transportation Financing Authority and B.C. Transit. It also includes the social capital ministries: Education, Health, Attorney General, and Skills, Training and Labour.
G. Farrell-Collins: The minister said that was capped and is on its way down. What is the schedule over the next five years? I would assume the government is at least looking ahead that far. Considering B.C. 21 is named for the next century, I would assume you're at least looking into the next one. Perhaps you have a ten-year plan for dealing with that debt. Can the minister tell us what those figures are?
Hon. G. Clark: That's part of the annual budget process, first of all. We are working on a consolidated capital plan which looks forward, but we're not there yet. We've been working on the consolidated capital plan since the change in ministries. I think the ministry has done a superb job of pulling together the capital plan for '94-95, taking last year's number and giving that as the cap. This year should be under last year by a couple of hundred million dollars. We're going to look forward, but we're not there yet, and it's all subject to appropriations.
Again, by way of further explanation, the member knows that yesterday we announced the rationalized ten-year plan for Ferries. Obviously, that is now an important element which we can plug into our consolidated capital plan. We're doing that with Transit, with BCBC and with the Transportation Financing Authority, but we're not there yet. So as these ten-year capital plans get finalized -- and they obviously will be reviewed every year.... But as we look forward in all of them and have a vision of where we think they're going, we'll then work those numbers into the consolidated capital plan. If they're too high, we'll go back to those Crown corporations and work on them to bring them down.
That's precisely the exercise we're working on right now: trying to look forward rather than having these huge increases. It's true also in Education, Health, Attorney General, and Skills, Training and Labour. For example, there were no schools built in the early eighties; they eliminated the funding. Notwithstanding that they've had the same debt-financed school construction since the early sixties, for about five years it was literally eliminated. And for a lot of the last year of the previous administration, the first couple of years of our administration, and even now, we've been living with the consequences.
As with any corporation, if you don't invest back into your physical assets when they start to run down, you can buy some time and save some money in the short run, but you'll pay lots in the long run. Similarly, a lot of what we're doing now is really the backlog from what happened in the early eighties. We've got tremendous population growth combined with the backlog still, and that's caused a lot of pressure. So we're trying to put it on a more rational and even footing. Obviously population growth changes, and we're trying to get more of a profile that we can take forward.
It's also important for our credit rating and for the rating agencies, because they don't understand why suddenly it goes to zero and other years it's $500 million. They prefer to see, I think it's fair to say, an outlook over time with some rationale to it in terms of replacing your physical stock, based on the size of your assets, etc. That's exactly what we're working on.
G. Farrell-Collins: The minister said earlier that he had given the bond-rating agencies a guarantee that the debt wouldn't go beyond a certain number -- that there was a cap on this debt. So far, the only cap I've heard from the minister -- which doesn't include the non-subsidized Crowns -- is that this year was capped at last year's figure. Can the minister tell me what the cap is for next year and the year after? I assume the bond-rating agencies wanted to know beyond just this year; I assume they wanted to know somewhere down the line and into the future. Certainly, if the bond-rating agencies are entitled to that information, I would think the taxpayers are entitled to the same information.
Hon. G. Clark: As I say, we have a debt management plan. The commitments were made by me, as Minister of Finance, a year and a half ago, and then again by the current Minister of Finance around October, when the rating agencies were up here reviewing where we are. The commitments we make are as a percentage of GPP and as an
[ Page 12575 ]
absolute number. Those commitments are the same ones I made today.
Our mandate is to cap and reduce tax-supported debt, and that's what we're doing. We've done that this year, and we will continue to do that. Making the distinction between operating debt and asset-based debt is also an important distinction that we've been making with the rating agencies. I haven't said anything here today that I haven't said or that the Premier hasn't said publicly to British Columbians. As the Premier said, we're interested in reducing the overall level of debt and the rate of growth in government debt while being consistent with our expanding economy. We have reduced the rate of growth this year, and we will reduce it over the next few years.
The important issue is not debt supported with assets; the most important issue is operating deficits that add to the debt. That's a serious problem for all provinces in Canada. Of course, we're making more progress than anybody else, and we will have a balanced budget in the next couple of years. The Minister of Finance and the Premier made that commitment. Combined with this new consolidated capital planning process, that will ensure that we maintain the highest credit rating, and any borrowing that goes on, even to build physical assets, will be well within the ability of the taxpayers of British Columbia to sustain.
G. Farrell-Collins: I hear a distinction between tax-supported debt and non-tax-supported debt. I would make the argument that it's all tax-supported debt. Maybe it's a subtlety the minister likes to use, but as far as the taxpayer is concerned, it's all tax-supported debt; they're the ones paying the bill. Maybe it's a distinction the minister chooses to make, but I think it's a distinction that....
Hon. G. Clark: The rating agencies make it.
G. Farrell-Collins: Well, whatever. Perhaps it's a technical definition, but it's not something that means a heck of a lot to the people who are paying.
I wanted to move on and ask the minister another question, if I may. The minister said that the debt cap figure is determined as a percentage of gross provincial product and is also given forth in a real number. Could the minister tell us what that is? The minister said that the debt had been capped at last year's level, and then he turned around and said that we've reduced the debt this year. I'd like to know which it is, and I'd like to know what those numbers are. What is the government's projection? How far into debt does the government plan on going each year? What is that plan?
Hon. G. Clark: A year ago we said that we wanted to cap and reduce the deficit and government debt. We capped it at the last year's level, which I believe was $2.4 billion; I don't have last year's number. This year, for planning purposes, we put in an absolute limit, which was set by Treasury Board and not by myself or even the Minister of Finance. In keeping with the principle that we want to cap and reduce tax-supported debt, Treasury Board set the number. They set it this year. My job, working with the other ministries and Crown corporations, is to make rational planning decisions within that limit set by Treasury Board.
That limit, in absolute numbers, was about $2.4 billion this year. Within that number, we have to allocate how much goes to schools, ferries, health care, etc. That's what this whole rational consolidated capital planning exercise is for. It's to work within in a tough target, as set by Treasury Board, in order to (a) maintain our credit rating, (b) ensure that we're acting prudently, and (c) make sure that it is within the ability of the province to fund. We've made significant progress in this more rational exercise.
[10:45]
I believe that the ferry capital plan, which came out yesterday -- and which I see the oppositions oppose -- is the first real vision and rational planning exercise over a ten-year period that we've seen from that Crown corporation. We do that with all the Crown corporations. Then we have a sense of how we're going to manage the future.
I just want to make the point that the tax-supported net debt is not just jargon. It's a significant distinction. Commercial Crown corporation debt is treated the same as with any other corporation like B.C. Rail or B.C. Hydro, and tax-supported debt is associated with the general taxpayer providing a subsidy. It's a distinction the rating agencies make.
I don't mind saying that I don't agree with the distinction when it comes to the Ferry Corporation. The Ferry Corporation is a huge corporation that generates almost $300 million in annual revenue, has 3,000 employees, certainly covers its operating costs and is well run. But it does receive a $30 million annual subsidy on a base of $300 million; about 9 percent of their revenue comes from the provincial government. As a result, the rating agencies classify it as tax-supported debt. If we were to make an equity investment in the Ferry Corporation, then it would not be classified as tax-supported debt; it would be a commercial Crown. So these are the kind of distinctions we get into.
Nevertheless, for the purposes of planning, there is some government subsidy to the Ferry Corporation, unlike Hydro and B.C. Rail in particular. Therefore we do look at and work within their consolidated capital planning exercise. But it's not part of the Treasury Board level of debt that they set each year.
G. Farrell-Collins: I want to ask a couple more questions on this anyway. The minister, or certainly the government, has said that taxes are frozen for three years. That's what they're saying, whether people believe it or not. The minister has just told us that the debt has been capped. And just yesterday the minister announced another almost billion dollars in capital expenditure in the future.
The logical question is: how can you freeze taxes, cap the debt and go on a multimillion-dollar spending spree all at the same time? One has to ask how you can reconcile those three things all together. Either you're not going to spend the money, or the cap isn't a real cap -- it's a fluid, adjustable cap, depending on political motivation -- or the tax cap isn't a cap. You can't have all three at the same time. That's the first point.
The second point I want to make.... I just have an aside. The minister talks about tax-supported debt. He peels off a Crown like B.C. Hydro, saying there's no subsidy and therefore it's not considered by the bond-rating agencies as a tax-supported debt. But the fact of the matter is -- and this minister knows it -- that due to directives given by this government, there is a subsidy of some couple of hundred million dollars coming from the ratepayers who pay hydro bills that is going back through B.C. Hydro into dividends and into general revenue.
It's the opposite thing, but the fact is that it's still coming out of the taxpayers' pockets. The point I want to make is that one can't distinguish as clearly as the minister is saying between a tax-supported debt and a hydro-rate-supported debt, a ferry-rate-supported debt or -- for industry -- a transportation debt supported by B.C. Rail fees. I know B.C. Rail is a little different.
[ Page 12576 ]
The fact is that all of those capital expenditures eventually have to be paid for somehow. They're either paid by business.... And once they're paid by business, of course, they're paid by individuals, either the consumer or the shareholder of those businesses. So I think the minister is making a technical distinction. The fact is that in the end the taxpayers are going to have to pay it.
So I'd like an answer to the first one: how can you reconcile those three -- a debt cap, a tax cap and a massive multimillion-dollar spending spree -- and say somehow that all of that's working together? I'd be fascinated to see how it works.
Hon. G. Clark: I'm glad you're fascinated, because that's exactly what we're doing. We've got a tax freeze on, which means we cannot look to increased tax revenue for the Ferry Corporation or for anybody else. We have a cap on debt, which means we have to work within that, and everything has to be managed within a much tougher cap than has ever been the case before in B.C., and we have to plan accordingly. How can we make a multimillion-dollar investment? It's because economic growth and passenger growth is growing significantly at the Ferry Corporation. Demand growth and demand management is an important tool we're using at the Ferry Corporation, and we're requiring productivity improvements. Borrowing by the corporation to build new ferries and terminals will be funded through commercial operations of the Ferry Corporation, through increased passengers, through economic growth, which is related to the latter, through demand management, through productivity improvements and through other sources of revenue. When someone buys a cappuccino on B.C. Ferries and we make money on it, that is not tax-supported debt. That's not tax revenue. When we get yoghurt machines on the ferries, we will make money on them. When we increase the sales of B.C. books by 10 percent, we make money on that. That's not tax revenue.
The Premier has indicated -- and obviously we all support him -- that the Ferry Corporation cannot look to the taxpayer for increased subsidy. That's a commitment we've made; that's the tax freeze. The Ferry Corporation is required to look to the users of the system to generate revenue to pay for this capital plan. Fortunately, we have a dramatically growing passenger load, so we've got more sources of revenue. There are user fees for people taking the ferries; they are the lowest in the world, and we're going to maintain them. But the Ferry Corporation has a commercial....
Interjection.
Hon. G. Clark: Yes. Unfortunately, coffee prices are going up; we have to maintain our margin on those.
Interjection.
Hon. G. Clark: It is not a phony distinction, as the member opposite indicates; it is a very significant distinction. We cannot raise tax revenue to subsidize these services; there's no more increased tax revenue. We cannot invest in physical assets beyond the imposed increase in tax-supported net debt that Treasury Board has indicated, and yet we have some significant investments to make in infrastructure. That's precisely the exercise that this ministry, as the lead ministry, is intimately involved in -- along with all these other agencies, including Treasury Board.
F. Gingell: Unfortunately, I don't have the B.C. Ferries financial statements with me. I realize that we've done B.C. Ferries, but the subject has just come up, and it suddenly dawned on me that the minister and maybe even the B.C. Ferries administration don't understand the real world and what is going on.
B.C. Ferry Corporation got a subsidy of $35 million last year and lost an additional $20 million -- something like that. How were they able to lose $20 million and not go bankrupt? They were able to do that because included in those expenditures are $17 million of depreciation -- now appreciate that I don't have the statements here, and I'm going from memory -- and your long-term debt service costs were $3 million. Your debt servicing of the capital portion, or principal repayments, was $3 million. But in the last couple of years you've incurred about $400 million of expenditures, which you haven't yet financed. I wish I had the statements. There is $170 million still sitting in short-term debt that has to be financed, and $244 million of long-term debt that you're only just starting to make payments on. That's going to end. The $170 million short-term debt, which you're presently not servicing other than paying the interest at only 4 percent, is going to go up, and you accept. The $170 million principal is going to start to be repaid, and the principal repayments on the $240 million in long-term debt are going to start kicking in. You are going to be cash-short. You haven't been cash-short in the last couple of years because your capital expenditures have not been turned into long-term debt yet, which you have to service. You've left it in short-term debt.
Interjection.
F. Gingell: No, I'm sorry. There's $170 million in short-term debt that is not subject to principal repayments. That's the only reason that you have been able to get by with only a $30 million subsidy. Unless you increase the subsidy, or something dramatic happens, the moment you start to service that debt, you are suddenly going to be short of cash. You're going to have to go into short-term borrowing to look after your current shortfall. I don't have all the numbers here, but I thought you recognized this, and this morning it suddenly dawned on me that you don't recognize this.
Hon. G. Clark: I follow the member exactly, and he's got the numbers more or less right, but I fail to see what his point is. There is $170 million in short-term debt -- or thereabouts. When it is financed in long-term debt, the cost of the principal repayment on that is very small. It's over 40 years, and it's built into the budget. That's part of the planning exercise.
This is not unique to B.C. Ferries. This is like any corporation, private or public. This is a commercial Crown corporation enterprise, and when it goes to the market to build new ships.... Remember, half the capital plan is replacement of aging vessels that need to be replaced in any event. They don't have to be replaced now; they can be replaced over the next five to ten years. But they have to be replaced. And the other half is the increase in demand and passenger growth. We've got a 4 percent annual passenger growth -- 800,000 new passengers every year for the last five years.
So the member is correct: as long as it's in short-term debt, we avoid capital repayments. When it's financed over long-term debt, there will be some cost attached to that. It's built into our budget forecasts and into our estimates. As we move forward on this exciting ten-year plan for the corporation, all of that will have to be factored in. Is there
[ Page 12577 ]
going to be cost pressure on the B.C. Ferry Corporation as a result of that? Yes. It's not going to be on the taxpayer; it's going to be on the B.C. Ferry Corporation.
[11:00]
We are confident -- in fact, not only confident. It's essential that the corporation become more efficient, get more revenue from other sources and make productivity improvements. The new vessels have significantly improved productivity and are cost-efficient compared to some of the older vessels. So all of that is part of the exact same exercise we go through at B.C. Ferries. I want to assure members that that's precisely the exercise we're now going through at Transit. It's the exercise we're going through at the Buildings Corporation and at the Transportation Financing Authority. That's exactly the kind of detailed business case analysis and capital planning that we're going through at each of those Crowns for the first time in British Columbia. On top of that, this ministry then takes them all and sees if we can fit within the Treasury Board-mandated, tax-supported debt cap.
F. Gingell: Do I understand the minister to say that B.C. Ferry Corporation is going to borrow 40-year money to finance vessels that we've all admitted have a 25-to-30-year life span?
Hon. G. Clark: It's revolving. It's a 40-year depreciation schedule, but the treasury branch of the Ministry of Finance will determine the debt portfolio in conjunction with the B.C. Ferry Corporation, and they'll borrow at varying terms. Over the course of the 40 years, they'll keep rolling over.
F. Gingell: I wasn't arguing the depreciation issue, because we dealt with that yesterday and I was quite happy with the response. I'm surprised and shocked that for vessels that clearly do not have a 40-year life, you're suggesting a plan to repay borrowing over 40 years. That's like the family that keeps putting additional money onto their Visa card without paying it all off, allowing it to build and build and build. To be in good financial shape and serve the people of British Columbia, the Ferry Corporation should operate in the most effective manner by getting their debt paid down over a reasonable period time so they are not in any way restricted in the future from being able to replace other vessels as they become obsolete and as these new vessels become obsolete.
Hon. G. Clark: The term of any borrowing will likely be less than 40 years, but the system cost is spread out over 40 years. Any given asset, like the new aluminum ferries, will be less than 40 years in its life span, but the overall schedule of costs is spread out. The fast ferry forecast is a 25-year amortization. It's the profile of the debt and how they manage it that is linked to the assets that we have; it's not some number picked out of the air. We have auditors, as the member knows; we had this discussion. The treasury branch, under a fiscal agency agreement, looks at it and they borrow on B.C. Ferry's behalf. They borrow at the most attractive terms and lengths of time to give a balanced portfolio.
The only reason we have a significant amount of short-term debt is because treasury has determined -- and I agree with them, although it's not that I have any expertise in it -- that the short-term debt is very attractive right now for both the Ferry Corporation and the government. So there's a significant increase in short-term debt at very low interest rates. That's not directly a decision of the Ferry Corporation but of treasury giving financial advice to the corporation. Now they'll be refinancing that, and all the costs of refinancing, including the principal repayment, are worked into the financial statements of the corporation.
F. Gingell: From the response that you gave me originally I took it that the debt would be repaid over 40 years. You are now changing that to say that the debt will be serviced and repaid over 25 years.
Interjection.
F. Gingell: I'm not talking about the period of time that the cost of the vessels will be written off, amortized or depreciated. The question that I asked was about the period of time that the debt would be paid off, and I'm pleased to hear that the minister has now responded that it's 25 years.
The issue I brought up to start with was that the reason you hope to get by this year with only a $30 million subsidy, when last year you lost an additional $20 million -- and you did -- is purely and simply because you allowed that to be financed through short-term borrowing. You were in a position where you didn't have to service it. We all know that it's short-term and we all know that the effective interest rate was 4 percent. That's going to double or go up by two and a half times, and the principal payments are going to have to be made. What I'm suggesting is that I find it difficult to understand how the Ferry Corporation can stay solvent, with a subsidy that's being reduced by 15 percent every year and a level of losses at this point of $20 million, when you're suddenly going to have to add on the higher interest rates of that short-term debt and the servicing.
Obviously we are not going to solve it this morning, but I want to give this caution: cash planning and cash management is an important function of management. At the moment, I don't see how all the incomes are going to balance with the outflows.
Hon. G. Clark: As always, I take the member's criticism very seriously, and I don't disagree with most of his logic in terms of the handle he has on the short-term debt. There are really three factors. One is that ridership is growing exponentially, which increases revenue growth; two is the operating efficiencies, which we think we are achieving and will be achieving; and the third is that the principal payments associated with the refinancing of that debt are very small over the life of the asset. I don't discount that the finances of the Ferry Corporation, in the sense that it lost $20 million a year.... I don't disagree with that analysis for last year. But I just want to give him some comfort -- and I thought we had done so the other day -- that we have a good management plan to take forward. That's no different from any other corporation.
Interjection.
F. Gingell: Well, you're going to be drinking an awful lot of cappuccino.
In the course of the minister's discussion, he referred to a debt cap, which indicated that there was some maximum ceiling. I wonder if that has a dollar value. If it does, what is it? If it is a percentage of gross provincial product, what is that percentage?
Hon. G. Clark: I think it would be more appropriate to ask the Minister of Finance these questions, because the debt cap is determined by Treasury Board and the Minister of Finance. For this year, it's $2.4 billion, which includes the operating deficit, etc. Within that figure, my ministry then
[ Page 12578 ]
prepares the consolidated capital plan, in conjunction with all the agencies which submit what they would call their programmatic needs. Then we work with Treasury Board to try to make those trade-offs within that cap.
F. Gingell: You aren't talking about a debt cap as everybody else thinks about it, which is a cap on the absolute amount of debt; you're talking about a cap on the rate of increase.
Perhaps later on, when I can get back into these estimates.... We did discuss with the Minister of Finance the amounts of money that have been borrowed under the B.C. Transportation Financing Authority. Recognizing that that was early in June, from my memory, they had only borrowed $80 million at that point. A whole bunch of things are going on, and bills are starting to be paid -- all items that come under your responsibility. I would just like to give notice that I would like to have a short discussion on the B.C. Transportation Financing Authority later on, because I now have to yield. I look forward to getting that information.
Hon. G. Clark: Just to respond briefly, we can have a discussion on the TFA, and I look forward to it. But I will say that we're talking about the increase in tax support on that debt. I think all members of the House should look at this carefully. When you have a population growth of 3 percent a year and....
F. Gingell: It's not 3 percent; it's 2.5.
Hon. G. Clark: It's a population growth of 2.5 percent a year, and 5 percent a year in the lower mainland and some other parts of British Columbia. When you have infra-structure requirements, such as those in the Kelowna area and on parts of Vancouver Island, and a growing population, you have to replace depreciated capital assets, as any business or corporation does. There will always be increases in the absolute amount of the tax-supported debt, and it doesn't matter who's in government. During the Bennett restraint program, they still had to maintain spending on some schools, hospitals, jails and justice facilities. To do otherwise would be very imprudent. So an increase in the absolute amount of the tax-supported debt will always occur in a growing province, regardless of who's in power. It's important that it doesn't grow faster than the GDP or the economy and that you have some management plan to deal with it. I just want to make that distinction. That's precisely what we've been doing in British Columbia.
In the TFA -- and we're going to get to that in a second, I guess -- there has been no increased borrowing as of yet. I'll get the details on that. A lot of what we've been doing is making announcements and commitments to invest. There is about $290 million in the budget for Transportation Financing Authority, and we intend to cash-flow that this year. But the actual borrowing attached to it is about 80.... Just remember that there's a 1-cent-per-litre gas tax that goes to the TFA in addition to the car rental income. That wasn't all spent, so they have some cash reserve there as well that is managed with the borrowing requirements.
F. Gingell: Has the issue been settled of whether or not the borrowing of the British Columbia Transportation Financing Authority will be recognized as tax-supported debt, and whether or not it will be consolidated into the accumulated deficit of the province?
Hon. G. Clark: No, there are continuing discussions with the comptroller general on the subject. Again, this is a matter of great debate, obviously. My contention is that the Ferry Corporation shouldn't be perceived as tax-supported debt, because the tax revenue going to the Ferry Corporation is tiny relative to the size of the operation. There's a percentage issue that gets into the debate. Others feel.... For example, I don't believe B.C. Transit is viewed as tax-supported debt on the....
Interjection.
Hon. G. Clark: Is it? Oh, sorry; it is.
Anyway, there are a variety of accounting debates on some of these questions. Obviously the Transportation Financing Authority has to have non-tax revenue to be construed as a commercial Crown corporation. The Transportation Financing Authority has to receive non-tax revenue, and it has not received any yet.
R. Neufeld: Actually, I would like to get it on record that the Reform Party -- and myself, since I was elected and since I have been in Victoria -- has always talked about the debt of the province. I worry about how we're going to manage it in the long term. I realize -- and I understand what the minister is saying -- that with growth there is going to be borrowing, because there are services that have to be supplied. That rationale worked fine, I guess, for quite a number of years through the eighties, especially federally, until we reached the point with the federal government -- and I'm not picking apart any party -- where we have a national debt that we can't contain.
An Hon. Member: The Liberals started that.
R. Neufeld: Yes. I said I wasn't going to pick any party apart, but that's an absolute fact of life.
If we look at the province, and I realize that we have some tremendous growth.... Let's go to 1991, because I only have the 1994 budget manual with me, and almost every one of these corporations or government agencies come under your ministry, because any time money is spent in the province it comes under the logo of B.C. 21, no matter what ministry it is. So really, you're almost responsible for all of it.
If you look back to the total debt in 1991, and you subtract that from the debt in 1995, we have an increase of just over $10 billion. It was $17 billion in 1991, and in 1995 it's $27 billion. That's what worries people. Let's go back to Ferries, which the minister talked about. If we include the $800 million that the minister announced yesterday, it's going to be a phenomenal debt load. But in 1991 the Ferries debt was $60 million. In five short years, you're up to $470 million. That's a rapid growth curve, whether or not you have cappuccino, catamarans or you name it.
[11:15]
I questioned him a bit about only being legally authorized to borrow $700 million through the B.C. Ferry Corporation. After I read the Blues, I don't think he ever really finished answering how he intends to finance the $800 million that is going to be borrowed, other than saying that some debt is going to be finished off in the next few years. I think the member for Delta South raised some important questions about that debt. Just for my benefit, maybe the minister could explain a little further how he plans on financing that. You can finance three catamarans within that $700 million, but after that I guess it would have to be the Transportation Financing Authority. What other avenues does the minister have to finance the balance of that money?
[N. Lortie in the chair.]
[ Page 12579 ]
Hon. G. Clark: We do have the option of having the Transportation Financing Authority finance the construction of the new ferries. That's something we are exploring. We would then put a tax -- sorry; slip of the tongue -- a user charge on the ticket and display it as a charge for the ferry. That is a possibility. In fact, it's one that I am not unsympathetic to. We are looking at lots of policy decisions. We really are attempting to do something that I would have thought members of the opposition would support: the user-pay principle.
One of the problems with all of modern governments is, in some respects, the cognitive dissonance between receiving benefits and paying taxes or otherwise. These spectacular new superferries -- the first one was built under the previous administration; the second one under this administration -- are very popular. If you say to people that the fares are increasing to pay for them, then they become less popular. You do not have the same connection between what you pay in your fares and the quality of service you get. The notion of building a new ferry and putting on the ticket, "50 cents goes to the Transportation Financing Authority for the purposes of financing this new ferry," has some public policy attraction to me in terms of giving people a direct connection between the user fee they are paying and the benefit they are receiving. That is what the Transportation Financing Authority is looking at.
I have made no secret of the fact that we are exploring tolls. We are exploring private sector partnerships. A lot of private sector companies have said that they want a road built into their property, and they are prepared to pay for it by way of some kind of charge against whatever service they are providing. That is not tax-supported debt; that is self-financing debt associated with a user charge. It's not a bad principle. I probably wouldn't have said this ten years ago, but I think it's probably an increasingly important principle as we move forward in a tougher financial environment. It's important that these transportation capital projects have some source of funding attached to them other than relying on the general taxpayers through general tax revenue.
So all those options are possible, and we are all exploring them. The Ferry Corporation could borrow the money and pay for it through other mechanisms, including fares. The TFA is a possibility and could pay for them and charge back the user of the service. We could do the same thing on the new Duke Point Road. The TFA could build that road quite appropriately -- and it probably will -- and charge back the cost of that road to the users of the ferry system, which will be the first time we have ever done that. From my perspective, I am quite sympathetic to that, but there are a lot of public policy debates and discussions with government before we do that.
R. Neufeld: Is the minister actively exploring private sector-government partnerships, where private industry will build some of these facilities and finance them on a toll basis rather than doing it through the financing authority and having the debt held by the province?
Hon. G. Clark: The answer to that is absolutely. In fact, I had the two staff -- I planned to attend, but I had to cancel -- go to New York to the Forbes conference on infrastructure financing. They brought me back the Forbes "Capitalist Tool Kit," which was much appreciated.
I am sympathetic to the notion of a private company building a road and charging a toll for it. The problems we would have -- and this is a very important distinction -- is that we have the highest credit rating and the lowest cost of borrowing in Canada, and if a private company were to build a road, they would have to pay more for the cost of capital than the government of B.C., but it would not be debt that would go on the government's books. So the problem is how much of a premium are we prepared to pay, or are we prepared to ask the users to pay, in order to remove that debt from the books of British Columbia? You might pay 300 basis points for that privilege, and that may be what the number is -- at least some of the numbers we're looking at. So that's the problem, and it's a real problem. If we were to give any guarantee to bring the percentage down, there's not a lot of advantage to having a private company build and operate it if the government is carrying the guarantee.
F. Gingell: It might be more efficient.
Hon. G. Clark: The Finance critic for the Liberals says it might be more efficient, and I don't discount that opportunity of looking at it to see whether there are efficiency gains. We are taking a very pragmatic approach to it. We are actively exploring all of that. Believe me, a lot of people are making pitches to us about a variety of techniques, and we are looking at them all.
R. Neufeld: I want to jump over to one other area before it slips my mind. The natural resource community fund has been in place for a couple of years. I see that the minister has maintained it at $25 million, although revenue this year is expected to be about $9 million and expenditures about $3.6 million. Could the minister tell me, in a nutshell -- not each expenditure -- what the $3.6 million is going to be expended on?
Hon. G. Clark: For this coming year?
R. Neufeld: Yes. What is it going to be expended on, and what is the need to keep the $25 million. I see you transfer back to general revenue the balance of whatever you don't expend, but is there a real need to keep the $25 million? Or would that be better off back in general revenue, just dealing with it as you need? I know it was brought into place, and it helped Cassiar, specifically. I'm not sure of any other community on the horizon that's going to face the same devastation that Cassiar did.
Hon. G. Clark: The $25 million is a real fund; it's not a bookkeeping entry. There's real money in it, and we take the interest on it to spend. It was intended to be more like a contingency fund to deal with the Cassiars. We did expend some of the money in the Elk Valley to deal with the significant downsizing and problems in the coal industry there. Granisle was another one which we provided some funding for. We are using the fund to provide some planning grants. It's really designed to help those single-industry towns that are in transition. Given that the single-industry towns of the province generate the vast majority of the wealth that we all live off, we wanted to make sure there was some return.
It's important to keep the notion that there is a real fund there. We can draw down the entire $25 million if there is a crisis in a single-industry town. It's a contingency fund, in a way. The amount we are allowed to spend is determined by Treasury Board each year, and each year we give them a list of communities we think are at risk, or communities which we want to assist because of downsizing. They then give us a funding allocation according to that, and that's what we have
[ Page 12580 ]
this year. A number of communities have submitted applications. Trail has submitted an application. I'm not sure they qualify, although they have had some downsizing. Stewart has submitted an application. In the past year, remember, $1.5 million was expended for Elk Valley and the village of Granisle, so it's not insignificant assistance it's providing.
C. Tanner: I wasn't intending to get back into this debate, but I just can't resist making a couple of comments. I have been associated with a number of businesses in the 25 years that I've been in business for myself, and the way we finance those businesses out of my pocket -- that's guaranteed by me -- or the pockets of the shareholders of those businesses is in three ways: the long-term debt, which is guaranteed by buildings; the short-term debt, which is guaranteed by fixtures, furnishings and receivables; and the operating debt, which is guaranteed to the bank by income.
There is no difference between what I'm doing and what you're doing, except that I have to put my hand in my pocket to do it, and you're putting your hand into the taxpayer's pocket. That scares the hell out of me, hon. Chair, because he's a dilettante. He's fooling around and having great fun with a big business with the taxpayers' money, and he has no responsibility for what he does. That's what scares me.
What scares me even more is that on this page right here, page 2 of our estimates, it says that we're in debt to the tune of $27 billion -- and he wants to add to it. I think that if he wants to do that, he should get somebody else to take the risk, not the taxpayers of this province.
Hon. G. Clark: Well, I can't resist that, and I can't wait to go back into Saanich and say that this member is opposed to building new ferries, opposed to the subsidy that goes to his constituents in the southern Gulf Islands and opposed to investing money in assets which are critical to the lifeblood of his constituents. I'm shocked that on the Ferry Corporation's capital planning, he would say that somehow this is the exercise of a dilettante. This is an essential service for people in British Columbia. It's critical to your constituents, above all else, that we have a quality Ferry Corporation, and the government has an obligation, even if the MLA is opposed to it, to provide service to those communities.
I look forward to going into your constituency. I can't wait to go there, and I'll take your comments on the Ferry Corporation into those communities and tell them that you are not in favour of that, that you want to see the private sector provide those services at triple the price to your constituents. I can't wait.
C. Tanner: I can't wait for the day when that member comes to my constituency with that argument, because my argument is that we do not increase the taxes, we do not increase the debt of this province, and that's what you're doing -- at great risk to the taxpayer in a market that you don't know about.
F. Gingell: Debate has broken down.
I have two issues. First of all, when you talk about the price of the services that are going to be delivered, as in the B.C. Ferry Corporation, you're only talking about the relationship with the present subsidy, which would have to be covered by increases in fares. You're not talking about tripling the price of a ferry ticket. At this particular time, the relationship between the amount of the subsidy and toll revenues is about 12 percent, and that would probably be what it is.
I also wanted to get back into the debate because I thought I heard the minister say, when he was talking about the Transportation Financing Authority, that none of the revenues to the Transportation Financing Authority to this point -- which are the 1 cent a litre and the $1.50 on car rentals -- are taxes. That wasn't a logical response, and I just want to make sure that Hansard doesn't have it incorrect.
Hon. G. Clark: No, they are taxes, and what I said was that for it be classified as a commercial Crown it needs a significant amount of non-tax revenue, which it does not yet have.
[11:30]
K. Jones: I'd like to talk to the minister about some comments that a famous reporter made with regard to B.C. 21. He said that "every penny is borrowed, though you won't see that mentioned in the ads." He has pointed out that B.C. 21 was supposed to bring a coordinated approach to public construction. While the coordination is starting to happen, the message has not gotten out to the public. The public sees that various projects are allocated more on the basis of plain, old-fashioned, pork-barrelling politics than actually being distributed with an organized plan that recognizes the needs of the province.
With regard specifically to the allocation of school funding for new buildings, we have the situation where the number one priority in the Surrey School District is ignored because it happens to be in a Liberal riding, and the NDP ridings get additional funding. Could the minister tell us what sort of a plan he is using to allocate this kind of funding?
Hon. G. Clark: First of all, that is incorrect. A lot of our funding for school construction has gone into the Kelowna area, which is not represented by the NDP.
But of course the Liberals are opposed to any of this. They're opposed to debt financing. We've heard it all morning. If it was up to you, we wouldn't spend any money on schools in your constituency. So I don't see why I should get into discussion about allocation of school funding, when you're opposed to debt financing schools.
K. Jones: The minister is taking one aspect of increasing debt, when we're really talking about the need for basic school funding to replace schools that are in such deteriorated condition that they really pose a health risk to our children. He thinks that's comparable to highway construction and ferry construction projects. The minister would favour those over providing a replacement of a substandard school that has our children at risk.
Hon. G. Clark: No. But you need a plan to allocate priorities. I can tell you that if people are dying on a highway because it's dangerous, then it is important. If the lifeblood of a community is a ferry that comes in once a day, and that's their way of getting out to go to the hospital, their source of livelihood and their connection to get the kind of services we all take for granted, then it's of critical importance to them as well. That's what we're trying to weigh in.
It's unfortunate, and maybe the member should talk to his leader and other members of the party, that they've opposed funding of highways where there are safety concerns, they've opposed capital funding for ferries where it's of critical importance to people in British Columbia, and they've opposed funding for school construction where -- the member is correct -- we need to provide badly needed
[ Page 12581 ]
facilities for our young people. It's you, hon. member, who has the problem.
We're doing what we can to deal with these critical problems and investing in the future of the province. Every day we're doing it. And every day we have to suffer the Liberal Party standing up and saying we shouldn't be doing any of that, except once in awhile one of their members stands up and hypocritically demands that we build a school in their constituency.
K. Jones: I'm very pleased to have the minister say it's hypocritical to ask for the funding of a new school in our constituency. I'll be very happy to take that statement back to the electors. That should guarantee my re-election in the riding without any other effort. That is the kind of answer we love to hear from the minister.
The minister is comparing his ferry program to a once-a-day service. I don't see any part of his ferry program that relates to a once-a-day service to a community. He's talking about the connections between Nanaimo and Horseshoe Bay. I don't see them in serious health care problems and things like that. Most of the trucks today aren't going through Horseshoe Bay. They're going through Tsawwassen and taking the Mid-Island Express, because it's much more convenient for them. The people have already developed methods of getting around the risks that you're talking about.
Really, it's a matter of priorities. It's a matter of the minister's private little group that makes the priorities, which has no input even from the rest of his own caucus, or from us, who represent all the people of British Columbia. These decisions are made purely on the basis of the next election, I believe, and that certainly appears evident from the allocations.
Could the minister tell us, with regard to the Q-lot office building, what the great priority is that requires the tendering of parts of that project by June 30, 1994?
Hon. G. Clark: I'm sorry, I've sent the BCBC staff home because we completed that, but I'll have the information for the member very shortly.
K. Jones: I'm surprised that the minister wouldn't know about the tendering of a major project like an office tower in downtown Victoria for government usage -- I believe Forests may be going into it -- or why it's such an imminently scheduled expenditure. When we can't replace schools in our communities, there has to be some question of the complete lack of priorities in the minister's direction. He certainly isn't getting input from the public as to their concerns.
The tendering of that building.... It seems funny even in the way it's tendered. It calls for access floor systems, high-performance windows and luminaire supply for a building that hasn't even been given a building permit. Yet the proposals are supposed to be received by the B.C. Buildings project development group by July 14, 1994, at 2 p.m.
The Chair: Hon. member, there was ample opportunity in these estimates to canvass the B.C. Buildings Corporation. There was an implied agreement that we were past that point in these estimates. If the member has questions on other responsibilities of the minister, he may continue, or we can allow some other member to continue questioning.
K. Jones: We were just relating this to B.C. 21 and its priorities and allocations. It seems kind of odd that a project that was barely across the table of city council this week is already being rushed off to tendering for some parts of it, and it's funny that it's only parts of the project. That seems to be a higher priority than the basic funding of elementary schools in our communities. I will leave that at this point.
I'd like to ask the minister, with regard to B.C. 21, what priority he has in his plans for the South Fraser perimeter road. That road will provide industrial access, and it will tie together Surrey and North Delta and the South Delta industrial areas. It will reduce vehicular traffic through residential areas. It will provide a whole new tax base for the people of British Columbia and the lower mainland. It will link major bridges and other crossings so that there will be a much more efficient flow of traffic, which will save transportation costs and reduce pollution in the lower mainland. What priority has the minister got for the South Fraser perimeter road?
Hon. G. Clark: I'd like to ask the member whether he would give me his priority? Would he rather that we not build any school in his constituency in order to build the south perimeter road?
K. Jones: It would be a pleasure to take over the responsibility of the minister in this role. He obviously hasn't got an answer. He doesn't seem to be doing his job. Maybe the Premier should replace him. He's asking the opposition to try to tell him how to run his ministry, because he doesn't have an answer himself. I would be only too happy, hon. minister, if you'd like to trade places. You seem to be more comfortable on this side of the House, anyway. You haven't really done a very effective job on that side.
The Chair: Hon. member, would you take your seat for a minute, please. I'm going to go to another member in the House and give you an opportunity to cool off and perhaps come back in a little better mood.
G. Wilson: I actually don't have too many questions, and they're rather specific and direct to the minister, regarding B.C. 21 funding. In the first instance, there was a significant amount of discussion in the debate when the bill came down as to how this capital financing was going to take place. From picking up on some of the questions introduced earlier in this morning's debate by the member for Delta South, in terms of capital financing and the debt financing that's going to be put in place, I'm curious to know the strategy with respect to the borrowing policy of the government for B.C. 21 financial capital, in terms of their approach toward procurement of those funds in international markets. I'd like to know whether or not the minister has done a long-term debt-financing strategy with respect to the market availability of moneys. I understand most is borrowed in U.S. capital. If that isn't so, then maybe the minister can tell us that. We are aware that there are some shifting influences in the international markets now, and I wonder if the minister might tell us a little bit about that.
Hon. G. Clark: Actually, this is a more appropriate question for the Minister of Finance. We have a fiscal agency agreement with the treasury branch of the Ministry of Finance. It manages the debt portfolio for all of government. So for any borrowing associated with a hospital or a school, the determination of the profile is done by Treasury, and so is the source.
[ Page 12582 ]
As the former Minister of Finance, I can tell you that Treasury does an excellent job, and one of the things they've been doing is diversifying the borrowing sources. So we're borrowing smaller amounts in, say, Japan, Europe, the United States and Canada. We have the B.C. bond program, so we're borrowing from ourselves here in British Columbia. They have a new program, the medium-term note program.
So all of that is the balanced portfolio measured against the life of the assets that B.C. 21 is investing in. The actual profile is handled by the Minister of Finance and the Finance ministry.
G. Wilson: Fair enough. I know that with this minister, in his former role as Minister of Finance, we did get into a fairly lengthy discussion on this question. I'm not necessarily opposed to long-term capital financing and debt management for capital projects. The government has to have a way by which it can finance those kinds of projects, and clearly it can't be done out of annual expenditure. Therefore you have to put in place some kind of long-term debt management. I'm not opposed to that; in fact, I would advocate that that's the route we should go.
The problem we have, depending on the availability of capital, the cost of borrowing and the long-term cost of debt management, is that there tends to be a strategy that would become almost a self-fulfilling prophecy here. You would suggest that the more you invest in the areas where there is a reasonable amount of direct return, the greater the opportunities for government to be able to adequately manage the debt -- i.e., you put the money where there already is a significant amount of economic activity and demographic activity and where it looks as though we've already got concentrations of capital. The problem we have with this is that if it becomes the strategy, we can see why the Island Highway becomes a higher-priority project, we can see why the B.C. Ferries expansion may become a high-priority project, and we can see why capital financing into the lower mainland becomes a high priority in terms of long-term capital financing. And other essential projects that happen in the interior of the province -- in the Kootenays, the Cariboo, the Okanagan, the coastal regions and Peace River North -- fall onto the lower end of the priority scale by virtue of the kind of debt management system that you have built in. I want to talk about several specific kinds of projects that need to be looked at in the overall strategy of transportation infrastructure development in the province. I want to get that on the table first, because I know that if I don't, that will be the answer I will get when I ask my next set of questions.
Hon. G. Clark: The premise of the member's remarks is incorrect. When we borrow money overseas or in the United States, they look at the overall creditworthiness of the province, and they look at a variety of factors. They don't look at whether that particular capital project is in the Okanagan or in the north or in Vancouver. There is no relationship between our international borrowing and where the highways are. I may have misunderstood the member.
[11:45]
Second, I want to assure the member that the Transportation Financing Authority has a multiple cost accounting, which they review. One of the factors we are very concerned about is regional equity, which -- in spite of the fact that there is a Reform member from Peace River North -- is one of the reasons we have proceeded with a fairly significant investment in the Beatton River crossings. It clearly is a priority; it's not political. For the record, we rank all of these transportation projects on the basis of engineering justification. We do a cost-benefit analysis of public support, social equity, access and regional development. We consider a variety of factors before we make a decision.
Regional development and regional equity are very important, because we are charging everybody in British Columbia 1 cent a litre at the moment. That means for everybody in British Columbia there has be some tangible benefit. The benefits are not all sucked into Vancouver Island or Vancouver. Similarly, as we look at where there may be disproportionate work done -- not in some regions or rural areas -- we move to a self-financing model. If we were to do the south perimeter road -- which has a high cost-benefit analysis; it's a very good project and one which we really should do -- there is a possibility of that being self-financing, either through a toll, a charge on trucks, or a variety of things. So there are more self-financing opportunities in the fast-growing regions than there are in the Beatton River crossings or elsewhere. That's the only skewing I could see happening to some of the fast-growing regions. In our planning, in the tax-supported money that we are investing, we are looking at regional equity as a very important goal for the government so that we make sure that the Beatton River crossings get done, because they need to be done. There is a project on the Sunshine Coast that we hope would be completed as well. So those are factors which we have to weigh into consideration.
G. Wilson: I wasn't suggesting for a minute that the international money markets worry about where you spend the money. I was suggesting that when you embark on long-term capital borrowing programs, if you're going to have to service that debt, you have to make sure that the infrastructure being built is going to be able to provide some level of service that will justify the expenditure. Hence you get into the models where you spend the money in the areas where the most people are, generally speaking -- and that argument has been advanced in the past. Whether the minister is right or wrong, the perception is.... As I travel around the province -- and I think members from interior ridings will tell you, and I know the member for Okanagan East will tell you -- the perception is that the priority given, for example, to a second bridge, which is essential to alleviate major problems in the Kelowna area, seems not to be weighed equally with the $800 million B.C. Ferries project, even though there is an existing service there which could, with a moderate amount of investment, have been upgraded at less cost. So those are the kinds of things I'm talking about.
Now that I have raised that question of the second bridge, could the minister tell us what is happening with respect to that transportation strategy? I know that some research work has been done. I know there was some discussion about financing it. If he could bring us up to date, that would be useful.
Hon. G. Clark: There's what we call a corridor strategy being developed for the Okanagan by the Transportation Financing Authority, so this is under active consideration. I've met with the member for Okanagan East on the subject on more than one occasion. I'm sympathetic to the problems in Kelowna with respect to the existing floating bridge. Again, what we're trying to do is.... There are higher priorities at the moment, which we are proceeding with, but now we're doing a planning exercise in the Okanagan to see where the highest priorities are. It may well be that another bridge in Kelowna is the highest priority in the region. I
[ Page 12583 ]
don't know; other members from the region know more than I do. We're now engaged in that internal review of priorities in the Okanagan Valley, and then we'll go for consultation with the communities and the people affected.
I know there's some work being done in Osoyoos. There's some interchange work, and there are others that were very high priorities. It's about a $2 million project or something in Osoyoos. It's relatively small, but it's a very critical piece, which on a cost-benefit analysis was shown to be very important. We've made an allocation, but it's very modest, and now we're doing an analysis of the whole corridor.
I'm aware of the issue in Kelowna. It is a legitimate one. Clearly it's a very fast-growing region, and some infrastructure investments need to be made there. As I said earlier, if you look at the school capital, you'll see that it's disproportionate towards Kelowna relative to some other areas simply because that's where the fastest growth is.
G. Wilson: I just have a couple more questions. The minister more or less proves my point that the strategy and policy of government is often driven by demographics or local regional concerns, issues that transcend long-term and broader planning perspectives. That's what we have to try to combat. If you live in the rural parts of British Columbia, you have to make sure that you get your fair share, so to speak. More importantly, we must put in place an overall transportation strategy for the province.
History will record one thing concerning W.A.C. Bennett: there was a vision during that period to spend a lot of money on transportation infrastructure in the interior of the province, and if they had done a straight cost-benefit analysis, they would never have been justified. That has clearly allowed the expansion and development in the interior of the province. That now seems to be strangled off, because we are so focused on cost-benefit analyses and very simple kinds of strategies that always look at the bottom line of the ledger in the short term without looking at the long-term implications for the overall economy and how that may grow.
Having said that, can the minister tell us whether or not B.C. 21 is indeed building a long-term transportation strategy that would include the Kootenays and the Prince George, Cariboo and Peace regions as well as coastal British Columbia? This minister will know that for a long time I have been a strong advocate for a new mid-coast port facility, and that port facility, in my judgment, should be in Powell River. It's a deep-sea port. It is not far by road and rail to the interior connectors. A cost-benefit analysis at this moment would suggest that it's completely out of the question, because even if we were to move the B.C. Rail terminus into that area, there wouldn't be enough justification for the expenditure of that money. But 20 years down the road, an investment now would be seen as visionary, in my judgment. Can the minister tell us what the overall strategy is? Then I'd like to talk about two very specific projects before I'm finished.
Hon. G. Clark: I generally agree with most of the remarks made by the member. There is a transportation strategy being developed. I've talked about it. We hope to have a ten-year rolling strategy, if you will, so there's a sense of vision for where we're going. I don't mean this as a criticism of my staff, but we're not as far along as I'd hoped. I'd hoped we'd have one at this point, but I think we'll probably have an integrated transportation strategy in the fall. We'll have Transit, Ferries, B.C. Rail and Highways with a sense of where we want to go. Ferries is out as of yesterday. The other ones are rolling out, and then we'll have the overall picture in the fall.
Just on the port question, I remember this discussion in the back of my mind, and I'm just asking if we've followed up on it. It may be that I'll give a commitment to the member that I'll follow up on the Powell River question, because ports policy is also in the mandate of the ministry, and we've had interesting discussions on some of the big questions -- Roberts Bank, the port of Vancouver and others. I think it may be useful to do a bit of a review of whether there are some other opportunities, like Powell River. I suspect it probably competes with Squamish, but I can certainly take a look. I'll have some staff take another quick look at that and see whether we want to do any further work on it.
G. Wilson: I have a couple of other questions, but just to close off on that, there is a fair bit of information available on the Powell River port facility. I would welcome the opportunity to sit down with the minister and/or the minister's staff and go through that in some detail. There has been a lot of work done with respect to road and rail connection, and I think it should be considered in the long term. Of course, we could start off by docking the new B.C. Ferries ferry at Powell River. That would be an excellent start. The minister might want to consider that.
But I couldn't let these estimates go by without asking what happened to the Gibsons bypass. I have to ask that, because it has been in the mill, I think, for 140 years. No, excuse me; that's an exaggeration. It has been in the mill for at least 20 years. I understand that we have spent somewhere close to $19 million to date on a section of road that isn't connected to anything that you can drive on. It is complete waste of money until that project is finished. It would seem to me that having spent millions of dollars on a section of paved road that nobody can get to, maybe it would have been the priority of this government through B.C. 21 financing and long-term capital financing to finish it to at least stage 3, if not to the fourth stage, to the Peninsula hotel.
Hon. G. Clark: I agree with the member. We've been working hard to see if we can make this happen, and I hope we'll have some news to share with him in the coming two or three years.
Interjection.
G. Wilson: I heard the member say that it's fast-tracked. Yes, we might hear in three years -- maybe just after the next election or whatever.
Without meaning to be facetious on this question, I think this does demonstrate a wise expenditure of moneys now, because clearly the minister will know that the moneys that have been spent are being wasted, and we have to get that road completed. Can the minister tell us whether or not there is going to be any B.C. 21 financing committed to that project within this fiscal year?
[D. Lovick in the chair.]
Hon. G. Clark: I'll have to ask the member to stay tuned on that question.
G. Wilson: I will take that as a yes, and we look forward to hearing when that might be.
My last question, then, has to do with the overall financing of B.C. 21 and capital financing. Many of the projects that are being financed are small-scale in nature. I
[ Page 12584 ]
wonder if the minister might tell us, if he has a copy, what the allocation is by riding. Is there a riding breakdown? I know there is some allegation that some ridings are being favoured over others. I can't make that allegation; I think our riding has done reasonably well. We fought hard to get money, and we have been able to do so. But others argue that in fact there has been a concentration of B.C. 21 funding into ridings held by the government. Is there a breakout as to how those moneys have been allocated?
Hon. G. Clark: Is the member referring to the community grants or to overall B.C. 21 funding?
Interjection.
Hon. G. Clark: We have attempted to ensure that the community grants are spread throughout every constituency and every region of British Columbia, and we'll be giving a full accounting of that to members. I know there have been some grants in Powell River. The member has talked to me about it, and we've been delighted to try to help out. I don't know whether there are a couple that are still being debated or worked on, but.... So we'll have a full accounting for it, but I don't have all of the detailed information here. I don't know if the member is asking for that. We'll send it.
R. Neufeld: Just following up on the grants program, I notice that all members of the new committee that was appointed are from the lower mainland. Could the minister tell us if they use a per capita arrangement? What determination do they use to give grants to different organizations? I know that in my area we've received some grants. We're not disputing or talking about that part at all. I'm asking how you go about deciding where the money goes.
[12:00]
Hon. G. Clark: I can't resist, because I've just had this information: Powell River-Sunshine Coast had six community grants totalling $238,000 -- about the fifth-highest of any constituency in British Columbia in terms of community grants.
G. Wilson: Outstanding.
Hon. G. Clark: We'll have to revisit these, I think.
R. Neufeld: It certainly isn't per capita.
Hon. G. Clark: No, we use criteria to evaluate the various community grants. They are job creation, participation by traditionally disadvantaged groups, regional diversification, investment in assets, innovation and community enhancement. So we have a sort of ranking that we review. There's a committee that has five MLAs on it -- two of whom are cabinet ministers -- and senior staff, and we review it.
We're partly captive of the applications we receive. In some constituencies -- like my constituency, for example, because I'm in the city -- we don't have as many fire halls and local projects that come forward. On the other hand, the city has some very large proposals come forward, maybe a million dollars, which aren't in but clearly benefit my constituency. We have to review the applications we receive. In some constituencies, like that of the member for Powell River-Sunshine Coast, we've had a lot of very good applications -- which is the main reason -- and the MLA has been supporting them. That has meant they've received a higher share.
It is more or less per capita, because every MLA in this province represents roughly the same number of people. Because MLAs are very keenly interested in this, we've tried to ensure that, regardless of party, we listen to the MLAs' input on the grant applications. We look by constituency, which de facto means we're looking at it on a per capita basis.
The big problem we have is what I might call multi-jurisdictional issues, like the Burnaby Arts Centre. It's really not even a Burnaby project, in a way. It's a regional project. Or there are some proposals.... I think there's a Prince George art gallery. Some Sikh temples, for example, are looking for community centres, etc. -- many of them in the lower mainland. They may be in a member's constituency, but they're not necessarily part of that community. That's where the numbers get a little skewed in some cases. So we now have a class we've called the multi-jurisdictional and provincial to try and get a sense of that, so we're not disadvantaging a member because of a large multi-jurisdictional grant in their constituency which isn't directly attributable to them.
R. Neufeld: I think I have only one more question for the minister. I listened with interest to the member for Powell River-Sunshine Coast talk about a strategy, because I talked about a strategy for the whole province, too -- that we don't spend all the money that goes through B.C. 21 in the lower mainland, where the major part of the population resides.
There are some areas in the north.... I'll admit, and the minister has said quite often, that we received some money in Peace River North to finish off a project that was started about six years ago -- some contracts finished off after this government was elected; they were just left to lie, like parts of the Vancouver Island Highway. Now they're saying they're building on these good projects. It's certainly appreciated.
I have a list; I had our research staff quickly pull out a list of the major B.C. capital projects in the province that have spent over a million dollars. Out of $375 million worth of spending, it lists North Vancouver, Vancouver, Vancouver, Mission, Burnaby, Vancouver, Maple Ridge, Port Coquitlam, Burnaby-Willingdon, Richmond, Port Moody, Chilliwack, Victoria, Victoria, Vancouver, Victoria, Victoria, Victoria. I agree, Mr. Minister, with what you said the other day in the restaurant: if you continue to spend on this end of British Columbia, it's going to tip into the ocean. We do have to have a little balancing act in the north to try to even it out a little. When you go through that $375 million worth of spending, $1.2 million was spent in Bulkley Valley-Stikine -- $1.2 million out of that $375 million. And in Prince George, there was $25 million for new courthouses. All the rest of that $375 million was in the lower mainland. That's exactly what the member for Powell River-Sunshine Coast talks about, and that's what I talk about: there has to be some fairness, there has to be a strategy and that money has to be spent around the province.
I want to remind the minister that last year, underestimated revenues from the oil and gas industry amounted to $169 million. That reduced this government's deficit by $169 million. That came out of no other part of the province than the Peace River. We're going to spend $1.4 million on about two kilometres of a six-kilometre piece of road this year, and the people up north are supposed to be really enthralled with that.
Mr. Minister, that's the problem with this government's strategy: you're spending it all in the lower mainland, and you're not looking at the rest of the province fairly. That is a
[ Page 12585 ]
problem, and it's perceived to be not just by me or the member for Powell River-Sunshine Coast but by most people who live outside of the lower mainland.
Hon. G. Clark: First of all, I want to clarify. I think the member was talking about his own comments about southern Vancouver Island sinking, not my comments.
I do want to say, though, that I reject the member's assertion. We're very conscious of regional equity. I just checked, and I couldn't believe it: Powell River-Sunshine Coast last fiscal year had about $230,000, and already this fiscal year it has another $250,000 -- one of the highest levels of community grants in British Columbia, I think. But more importantly, in the consolidated capital plan, for the first time ever, we did a per capita expenditure analysis, because we're very concerned about regional equity -- exactly because of what the member said. On a per capita basis, the government of British Columbia is investing more money in the Prince George region, by far, than any other region in British Columbia. So while it may look like there's some investment in Vancouver, on a per capita basis it's much lower -- much, much lower -- than in Prince George. I have those numbers here. On a per capita basis, the Prince George-Cariboo region is the highest; then the northeast sector, which is the member's concern, is one of the highest. What we've done is try to level that out.
K. Jones: And Surrey-Cloverdale is the lowest.
Hon. G. Clark: Where's the lowest? It's North Coast, actually, and we have to work on that. I think the capital investment in ferries now will probably have an impact on that. The Okanagan, on a per capita basis, up till now has not received as much as some of the other regions. Those are the only two, really, that have had less on a per capita basis.
Again, we are never going to be perfect on this question. There are needs and priorities. But we've been very conscious of regional equity. And I agree with the member that the part of the north he represents generates significant wealth for the people of British Columbia, and we have an obligation to return some of that. I know the member would like more of it to be returned; everywhere you go in British Columbia, people would say the same. But I hope he isn't minimizing the fact that we are doing the Beatton River crossings; we have made a commitment on that. I'm not asking him to sing our praises but to recognize that we have consciously attempted to ensure some regional equity in the B.C. 21 initiatives.
I think we've done that in the community grants. It looks like Peace River North has received two this year and four last year. In Peace River South, there's $110,000. Last year, Peace River North received $80,000, and this year so far, $16,500. Last year Peace River South received very little -- it looks like about $6,000 -- and this year so far, $110,000. That may not be sufficient. It is certainly a small amount compared to Powell River-Sunshine Coast. It's more equivalent to the level of community grants in my constituency, Vancouver-Kingsway -- no, that's not actually true, I guess. But we are conscious of it. We take it into consideration, and we take the member's comment seriously. I know that's a grievance which is strongly held in many regions of British Columbia, and we try to balance that with the infrastructure needs. There are some significant infrastructure needs in the lower mainland.
K. Jones: The minister has some interesting statistics. Could the minister give us the statistics for Surrey-Cloverdale in regard to capital, per capita and community grants?
Hon. G. Clark: I have some numbers for Surrey but not for Surrey-Cloverdale, so I'll have to find out for the member. We don't have the capital broken down by constituency, but we have a lot of the community grants information broken down in some parts of the region. I'll have to get that information for the member.
K. Jones: Did the minister say that he doesn't have any breakdown for Surrey-Cloverdale, either in community grants, per capita or capital?
Hon. G. Clark: Not with us.
K. Jones: Could the minister provide that to us in the next day or two? Thank you. The minister has agreed to do that.
Hon. G. Clark: Yes. I'll provide you with the community grants side; on the capital planning side, I'm not sure we can do that very readily. That might be a big undertaking. We're doing the capital, like school construction, etc., and per capita by region. I don't want to give you a commitment I can't fulfil. I don't know if we can do it by constituency; I suspect we cannot. We haven't, and I'm not sure we can. I'll have them look into it. But we can give you the information on community grants fairly promptly.
K. Jones: Could the minister tell us what the difficulty is in saying zero?
Hon. G. Clark: It's impossible to believe that it's zero for Surrey-Cloverdale, unless we've received no applications from community groups in Surrey-Cloverdale.
K. Jones: I'm not talking about community groups. I'm talking specifically about capital funding. I don't think you've put any money into any projects, including Highways projects.
When you're looking at the various ports, I'd like to remind the minister that the Fraser-Surrey docks and the Fraser River port authority also need to be seriously looked at. It's a very active and vital port facility, and it needs the additional growth that would be required to bring the offshore shipping directly into the centre of the industrial development in the lower mainland and closer to the interior than any other location, as far as the lower part of the province is concerned.
I'd also like to bring to the minister's attention the situation of the Pacific Highway crossing at the U.S. border. I would like to remind the minister of some statistics that are taken directly from U.S. Customs -- so it's northbound traffic -- indicating the number of vehicles coming into British Columbia at the Pacific crossing alone. That's at Highway 15 and 176th Street. Last year, 287,000 trucks went northbound into British Columbia on that highway. We had almost 14,000 buses and 1,633,000 cars coming over that one roadway. Currently, most parts of it are single-laned; it has serious problems, with schools located on the right-of-way, and it has very bad intersections and power outages that cause the lights to not operate. There have been many deaths on that highway. What priority has the minister to improve the safety and usability of that highway for truckers, pedestrians and the tourists -- and also the general community communications that occur as a major part of the traffic flow on that highway?
[ Page 12586 ]
He wasn't paying attention, I guess. The question was: what priority has he got on providing some improvement? He says his priorities are based on all of these factors. I just listed a whole series of factors that seem to fit those criteria. What priority has he got on making major improvements to this highway?
[12:15]
I might also remind the minister that serious deterioration of that existing roadbed is occurring today as a result of the heavy truck traffic operating on that road, which was originally built mainly as a vehicle for communication within the community.
The Chair: I'm sorry, member. Before I take the minister's answer, obviously there is an answer and there are some legitimate grounds for saying that this is within the minister's purview. But when we get into the matter of rehabilitation and maintenance in terms of existing roadways, that clearly goes beyond the scope. That's a direct line ministry responsibility in Highways. We've canvassed those estimates.
I want to caution members that although B.C. 21 is a large category, and therefore all kinds of questions are perfectly legitimate, please be careful that we don't stray beyond it.
Hon. G. Clark: We're developing an integrated plan for east-west connections between Highway 1 and Highway 7 with 17 and 99 south of the Fraser River. This is part of our planning process, and I take the member's concerns about traffic at the border. North-south traffic is important for our economy and for a variety of other reasons, and I think anything we can do to smooth some of the bottlenecks the member has referred to is important.
K. Jones: I'm confused by the minister's response. The minister relates to Highway 7, which has nothing to do with the area in the south that we're relating to. He did not mention Highway 15, which is the one that we're talking about. How does this answer relate to the question we're asking?
To the Chair, the reason we talked about the maintenance aspect was that that is also another justification for major capital expenditures. It's not that we're talking about maintenance that should be done. When you've got a road that is deteriorating to a certain point, it is no longer a maintenance problem; it's a rebuild problem.
Hon. G. Clark: Our view is that the real problem is moving the truck traffic between the two major highway systems, Highway 1 and Highway 99. That's the big area of concern. We're not aware of any significant concern about the border crossing area. The member has mentioned some.
Interjection.
Hon. G. Clark: Well, in terms of priorities the critical concern is moving those trucks between the two major highway systems, and that's what we've been concentrating on. That's the issue at the south perimeter road and in other areas, and they're the things we've been looking at.
I'm quite prepared to take the information you've given us today and the concerns you've expressed around the border crossing and have my staff take a look at some specifics. You made some very specific criticisms, and I'm happy to take them forward and look at them. Our concentration has been on the corridor strategies and also moving that truck traffic between those two. We think that's the biggest priority in the Surrey-Delta region, and that's where most of our emphasis has been in the last six months.
K. Jones: I recognize that the minister has probably been focusing on the south perimeter road area, but that's linking different parts of the traffic flow that comes through the municipality of Surrey and through my riding.
Another problem we have is that the traffic from the United States going north, and the traffic from Canada going into the United States, which is almost equal in volume, goes primarily through 176th Street or the Pacific crossing -- all of the truck traffic in particular. It doesn't come through Highway 99 at all. The major traffic connector of 176th Street terminates at Highway 1 in the north, but it also has the major CN intermodal yard at the north end of it, by the Fraser River. Once again, it's another focus for the truck traffic that comes in and out of that area and goes to the U.S. border directly down 176th Street or Highway 15. The Pacific Highway is a dangerous, highly congested piece of highway that has been allowed to deteriorate because of lack of proper administration by this government. It needs to be addressed, and I'm asking the minister if he could give us some indication of the priority that that section of highway has in his planning program.
Hon. G. Clark: I'm sorry. Is the member saying that it's upgrading that connection or intersection where the truck crossing is?
Interjection.
Hon. G. Clark: He's not saying that; it's the connection to Highway 1. That is exactly the part of the corridor we're looking at -- moving people there and then moving people from Highway 1 to Highway 99. It's all part of the truck traffic problem that we are investigating, and it's the subject of a separate strategic planning exercise that we're undertaking. By the way, the Fraser River Harbour Commission is involved in that. They've been very good. City council and others have been looking at.... The south perimeter road is a key part of that, but it's not the only part. I apologize if I misunderstood the earlier remarks. This is part of the exercise that we're undertaking. Again, we'll take specific comments you made about specific problems and make sure they're part of our study and review.
K. Jones: I have just one final point that I'd like to bring to the minister's attention with regard to that area. There is fairly extensive programming in the United States and, I understand, some in Canada that is leading to increasing the size of trucks that are being used in transport. The result is that, once again, those trucks are adding a much more heavy load onto that roadway, which is going to cause that problem to be exacerbated even more quickly. Therefore there is an urgent need to address this. I recognize that it's going to take a few years, and that's the reason I say it's urgent to get the plans moving well ahead now. Construction is going to have to start very shortly, or the entire transportation network is going to be in chaos, because there is no way to divert that traffic.
Hon. G. Clark: Once again, the member is arguing that we should start immediately, and his party is arguing we shouldn't be spending any money. His party has argued consistently that we should not be spending any money on these questions. In any event, I don't disagree that it is an important area.
[ Page 12587 ]
On the question of the size and weight of trucks, that is the responsibility of the Minister of Transportation and Highways. She has shown outstanding national leadership by limiting some of the big super B-train options for British Columbia. I certainly commend her for that. The size of trucks and other such issues are not my area of responsibility. Given that we have tougher regulations here, I'm not sure that will have an impact. I gather the Minister of Transportation is not going to be allowing some of these super-vehicles on our roads, which would have a significant impact.
D. Symons: I have been champing at the bit to get into the conversation here.
I have a couple of concerns -- three issues, really -- with the B.C. 21 bill that was passed a few years ago. One is that on the surface it appears to be a way of shifting things off various ministry books and doing something that this government, when they were in opposition, complained about greatly when the previous administration brought in something they called Freedom to Move.
We could read Hansard, but I wouldn't want to bore you with your own words about this ability to adjust and move moneys around to where you need to spend it at a particular time. That is precisely what you are doing with the Transportation Financing Authority here, which is the very thing you complained about in the Freedom to Move initiative of the previous administration.
I have a sheath of letters here that are news releases from the government. These are only on the salmonid enhancement programs of last year, again announced under B.C. 21. Previously that was done by one of the other ministries. We find a lot of shifting of moneys that doesn't appear in ministry books. The government can then point to how it's reducing the deficit while the debt continues to climb. That is the important thing that we're paying interest on. That is one aspect has led me to have some concerns with B.C. 21 or Build B.C., whichever name it goes by.
I'm also concerned about it because there seems to be a social program here, maybe even social engineering. We find child care applications sent to schools -- that's fine. But with so many of these, and also with the Island Highway contractors, there seems to be something more than simply building public projects and putting money into public things. Indeed, we seem to be unionizing the province, in the connection of doing business that way.
This government talks about their mandate. I have trouble with a government that had a lower popular vote this time, when they were elected government, than they did when they were in opposition referring to themselves as having some mandate from the people; you had fewer votes in the last election than in the previous one, as a percentage of the popular vote. The fact that you have more members in the House doesn't mean you have the popular support of the province. To be prudent, a government in that position would move in a cautious manner, rather than trying to redefine society in their image. I have that concern about B.C. 21.
The third thing about B.C. 21 is that it appears to be a bit of a slush fund that can be used towards the next election. This government did very little in the first two years of their mandate in the way of capital construction, particularly in highways. They just froze capital construction. Now they seem to be shovelling money out the back door into building new ferries, an Island Highway and completing a lot of projects that should have been done over those first few years. Now they are getting closer to the end of their mandate, and closer to an election, and they are freeing money up through B.C. 21.
I have no problem with some of the projects that are being completed -- before the minister jumps on me and says that -- but it would have been more honest and upright to have done the projects year by year. That was the case in the past when it was funded out of yearly allotments. Now we seem to be mortgaging our future with a fairly large amount of money that is going to have to be recovered in some way. Although you might call a lot of them self-financing, as far as highways go -- which, as you know, is more my field, as a critic -- they're going to be self-financing, in that we're going to put tolls or some sort of money-generating thing on them. Basically, we're taxing the future in order to pay off some of these projects. I don't know if you want to respond to that. I could continue, and that would make things go much faster.
[12:30]
If we look at some of the B.C. 21 newspaper advertisements, there is one here for a floral display on Highway 1. Again, that used to be done by Highways. At the bottom it says that this B.C. 21 project is managed by the Minister of Transportation and Highways. I didn't really get answers to some of the questions that I was asking the minister. Does "managed" mean that that money is in the budget of the Ministry of Transportation, or is it money that's coming from B.C. 21? I wonder if we could have an answer to that first. On quite a few of these, I'm curious as to whether they're funded through B.C. 21 or through the line estimates of the Ministry of Transportation and Highways.
Hon. G. Clark: I was just asking for specific details on what the member was asking about.
B.C. 21 is a broad initiative, and in general, all capital spending is filtered through the B.C. 21 initiative to try to achieve other goals. We've talked about this before. Anything to do with capital investment -- and some of that includes some of the maintenance budgets of parts of the ministries -- comes through the B.C. 21 filter, or purview. It's all part of this strategy to make sure that we're directing capital investment in a way which achieves that. I wasn't aware of what you were referring to. Obviously ministries do a huge number of things with which we're involved. Anytime you see the B.C. 21 logo, it doesn't mean that we've told them what to do; it means that it's gone through that kind of filter and that it fits in with part of our economic and capital strategy. That's why you see that.
I think it's actually working extremely well in terms of trying to ensure that there's a consistent and coordinated approach to spending within ministries. It's really ensuring that there is that consistent and coordinated standard and that it fits within our strategy. In many cases -- in the cases the member has referred to, as opposed to the major capital investment cases -- it's simply the ministry coming in and reviewing with staff their profile of where they plan to invest in certain areas, including some of the maintenance questions. Then we put it into our consolidated plan and make sure that it fits. In the smaller areas, there's a lot of that kind of coordination, and I think that coordination has worked very well.
The Minister of Transportation and Highways is out in the communities talking about different programs and projects, and so is the ministry. They come back, we talk about it in the TFA -- she's the vice-chair of the TFA -- and we work together on it, and my B.C. 21 staff work together on it. I think it has been far better than I actually thought it would be a year or so ago, when we were starting this up. That's why you will see B.C. 21 on a B.C. Buildings Corporation's advertisement for tender. That simply means
[ Page 12588 ]
that it has gone through that coordinated and consistent planning mechanism.
D. Symons: I got an answer somewhat like that when the Minister of Transportation and Highways explained that the logo can mean that there will be job equity, gender equity and all the other equities when hiring for the project and so forth. I was curious whether, on the floral display, you had to have both a male and a female there. That would pollinate the flowers better, possibly.
I also find one here that's a proposal, with the B.C. 21 logo on it, for a Masset ambulance station. Apparently they're trying to lease 1,700 square feet of space for an ambulance station there. I'm not quite sure whether there's gender equity or something in leasing that. The B.C. 21 logo is on it. We have one here with the B.C. 21 logo on it that's a road cut-off at Cowans Point on Bowen Island. Basically, they're simply asking whether this piece of road can be sold off, and I'm not quite sure how B.C. 21 enters into it -- or any of the objectives of B.C. 21.
So it seems that you're using this as a gimmick for saying what wonderful people we are. We've got this new image, and somehow every time we put a B.C. 21 logo on something we're really doing great things for the province. Well, some of these things are normal things that went on anyway, and on some of them I'm not quite sure how you could possibly justify meeting the goals of B.C. 21 -- doing a road cut-off and trying to sell off a lane end that appears to me to be no longer needed by the ministry. So I have those concerns with that.
Also, last year, I think, B.C. 21 did a community partnership for a student summer employment program. Again I'm not sure how the funding came here, but you'll be able to clear up this thing. There was going to be somewhere in the neighbourhood of $3 million put into that program. Was all that money used? You were subsidizing students' wages up to $4 per hour for employers to hire them and have them on for a summer job. I think it's great to give young people the opportunity to start working, to get experience and to earn money to continue their education. What are you doing this year? I didn't notice, so maybe I missed it while the session has been going on. Just while I'm on that particular project, I notice that the letter I got last year telling me about this came out on July 14, which for many students is quite far into the summer. What are you doing this year in that respect?
Hon. G. Clark: First of all, it was $3 million last year, and it's $3 million this year. Last year it was late in the year -- the member is absolutely correct. B.C. 21 was very new, and we worked hard to get it up and running, and it was too late. Having said it was too late, it was also hugely popular and oversubscribed. And this year we obviously made the approval much earlier so we could have a better-managed program.
This is a partnership program with the private sector and with non-profit groups and others. Interestingly enough, in the B.C. 21 special account -- which, as you know, is not debt-financed; it's expensed right on the budget -- we only give a commitment for one year. That's the purpose of a special account. Ongoing program funding is discouraged. That doesn't mean we can't do it, but it's discouraged because we don't want to build in expectations. If this is ongoing funding, it should be moved to the Ministry of Skills, Training and Labour. That's generally the principle. So immediately, of course, near the end of this fiscal year, we start from zero. It's sort of zero-base budgeting.
I receive more letters, more appeals to maintain this program -- and more lobbying, if you will -- from community groups, businesses and others who benefit from it than for virtually anything else in the B.C. 21 special account. Last year it was a very popular and oversubscribed program, and it is again this year.
My only concern about it is that even though that $3 million is levered quite dramatically by the private sector, we could probably put a few more dollars in there and actually generate more jobs. So we've renewed it for a second year, and it's the same amount.
D. Symons: Well, to give credit where it's due, I guess I can give the government credit for that. I think you deserve applause for that.
Last year you announced something called the forest worker development program -- $32 million over a period of time -- and I'm wondering now if that's been rolled over into the various plans that you're now slowly exposing to us to deal with forest issues. Has this plan disappeared, as it was set up, or is it continuing as an addition to the announcements that come out daily from this government?
Hon. G. Clark: No, it hasn't. It's an important principle, actually, to say to the member that with the forest renewal plan we made a commitment to forest workers, environmentalists and companies that we wouldn't off-load, if you will, our ongoing program commitments onto this major new initiative. In fact, the new initiative was incremental -- new money, if you will, to be invested in the forest sector. So the forest worker development program did not fold into the new initiative. Work is ongoing now with the B.C. 21 staff and in government for the forest worker development program, because if we do it, we're now to link it with the skills training initiative. That's more appropriate, rather than maybe some of the.... It's one of these overlapping areas, I guess, but there is a large training component to the forest worker development program. Anyway, the short answer is that if we're to fund it, it will be from B.C. 21 again, working with the Skills and Training ministry, and it won't be pushed off onto the new initiatives in forestry.
D. Symons: Good. I'm again glad that I can commend the government for that project.
I do find, though, that I have some concerns about some of these projects. For instance, $10,000 for a model railway club to construct a model line of the 1930s seems to me a somewhat frivolous sort of thing in these particular times. I think we gave $26,000 to a lawn bowling club for an addition to their clubhouse, among other things. I ask about the propriety in these economic times. We are running the debt of the province up to $27 billion. You know, maybe these are not the types of things we should be having the government invest in. Maybe if we could give back some of the funds we used to have in lotteries, it could go out to charitable organizations. They could use this as a fundraising thing rather than going to B.C. 21 and the taxpayer for that sort of initiative.
Hon. G. Clark: I think it's an unfair characterization by the member. What B.C. 21 community grants do, first of all, is community partnerships. This is highly levered money. We only fund up to one-third, and so no project can go ahead without a two-for-one ratio. From government's prospective, rather than just giving away money or building a program or
[ Page 12589 ]
a community asset, in fact it's the opposite. We're saying: "We'll participate up to one-third. Now you -- the community or your community group -- have to go and raise the funds." This is investing in community assets and physical assets which will go on for some time. And there's another criterion: they have to be able to operate this without any subsidy from the taxpayer.
So while I can appreciate that the member may take a political shot about $10,000 or $20,000 for a lawn bowling club, the reality is that hundreds of hard-working volunteers have raised two-thirds of the money. The government is then topping it up, if you will, to make a capital project happen. Then the ongoing operation of that is free of government funding. It's a very good program.
It's a community initiative. The fact that some of the community projects aren't as good as others is a function of the nature of the community and the projects we receive. But we look at them very hard; we don't approve all of them on the criteria. It's a good partnership program with the private sector, which is important that the government pursue. Most MLAs support that, and I'm surprised if the member opposite doesn't.
D. Symons: I will accept the minister's answer on that, and I'll go along to a great extent with it as long as the community involvement is there. Indeed, I guess it is. I overlooked that, and I apologize for that.
I wonder if we can move on to an answer you gave to the member for Surrey-Cloverdale when he was asking about Highway 99 and the border crossing problems. You made reference to connecting Highways 7, 1 and 99 together. Since Highway 7 is on the other side of the Fraser River, I suspect there was an implication there about having an Albion bridge crossing or something of that sort. You didn't say it, but that's the only way you're going to get Highway 7 into that configuration you were mentioning. It looks like that would tie in nicely with a perimeter road that's being discussed there. I'm wondering if the minister can confirm that indeed he was referring to some new crossing of the Fraser River to the east of Port Mann, and whether this may be something the Transportation Financing Authority is looking at as a possible project to be done on a build-operate transfer arrangement with private enterprise?
Hon. G. Clark: The short answer is that we are certainly actively exploring that. I didn't say we were going to make the connection. I said that's a critical problem in terms of moving people between the various highway network systems. The member is correct: the Albion ferry is part of that study and review. There's been some interest in private sector proposals for a bridge, and as part of our review we're simply analyzing those options.
D. Symons: I believe that on June 16 you had a proposal put to you on that very bridge. Are you also looking at privatization, possibly, of the Lions Gate Bridge? Is it possible there would be private enterprise in that? Certainly two or three of the proponents have brought forth.... The twinning of the bridge, for instance, was brought forth as a build-operate transfer arrangement. I'm wondering if you can give me some information on whether a build-operate transfer -- without asking which of the proposals -- is maybe getting beyond just serious consideration and getting to be the way of doing it, so that we can remove the cost of that from the taxpayer.
[12:45]
Hon. G. Clark: We've had this discussion, and we're open to it. But again, if a private sector project means that the private sector company will have to pay up to 3 percent more than the provincial government's borrowing costs, we're imposing a pretty significant cost on the user of the road, which wouldn't be borne if the government built it. So the question is whether we're prepared to allow the users of the road to pay a premium in return for getting that debt off the books of the province. That's under active consideration. As I've said many times, I'm very sympathetic to doing a private build-own transfer or build-own-operate proposal. But we haven't ruled it in or out; it's under serious consideration.
D. Symons: I would suspect, though, that if you didn't put on the constraints that have been put on the building of the Island Highway -- that it must go through Highway Constructors Ltd. and so forth -- we might find that you could build it for the same cost as this particular government would end up paying for it. So it may not cost the user of that bridge any more to go the private route. Now this is a matter of conjecture, of course, depending on which side of the House we happen to sit on.
There was talk by the previous Minister of Highways about tolls on bridges around Vancouver. Basically, there seemed to be almost a siege mentality when I was asking questions. It was likely that the First Narrows would be tolled to pay for itself. Then there were comments that the Second Narrows would probably be tolled, and the Port Mann would be tolled, and it ended up that pretty well all of Vancouver would be surrounded by toll roads. The previous Minister of Highways, in discussing the First Narrows replacement and in mentioning tolling the lower mainland up in his home riding, got reported quite widely at that particular time. Since more of that now seems to fall under this minister's purview than under Highways because of the B.C. 21 planning for highways, I wonder whether this minister is of that same mind.
Hon. G. Clark: I don't want to comment secondhand on the former Minister of Transportation and Highways. But in general, we have open minds on this question. I think there are very serious problems with tolls, and there are very serious opportunities that tolls provide. I'm not saying that to be cute. There are some equity considerations. There are some bridges that were built in the last few years which don't have tolls on them. If we were to suddenly build new bridges with tolls on them, then we are potentially saying that one community has to pay a toll and another community doesn't. Similarly, tolling all the old bridges doesn't seem to me to be very attractive.
There are a variety of ways of looking at it, and there are a variety of other opportunities besides tolls. On the South Fraser perimeter road, there are opportunities for trucking charges, which is a form of a toll, because they are the principal beneficiaries of it. Some trucking companies have asked for that or suggested it. There are land development opportunities; there are hybrid sorts of opportunities, such as tolls during part of the day and not during another part of the day -- off-peak periods. There could be tolls for single-occupancy cars and no tolls for high-occupancy vehicles. There are literally 50 options, and they are under active exploration. I am sympathetic to looking at them and seeing how we can make some of these self-financing. That's about as far as I can go right now.
I would not say there are going to be tolls throughout the lower mainland. Transport 2021 recommended that, essentially, and other semi-academic studies have as well. I
[ Page 12590 ]
think we need to have a lot more public debate and discussion. We need to narrow down some options and get some of these policy issues out on the table. That is really what we have been doing, as well as analyzing. Then we will have a thorough debate on the question.
L. Hanson: Can I ask the House for leave to make an introduction, please?
Leave granted.
L. Hanson: In the gallery today are two very good friends of mine: one who lives in my constituency, in Vernon, and one who isn't as smart -- he used to live there and moved away. In any case, would the House please welcome Bud Montgomery and Hamish Robertson.
D. Symons: The minister mentioned during his talk about tolls that there are other ways of paying for highway improvements. I'm wondering if one of them might be -- and this seems to be coming to me from people who are concerned about their properties being expropriated or bought by the Highways ministry for the Island Highway.... It seems that often they are indeed buying a surplus. I'm wondering if the ministry is looking at one way of developing land whereby you buy up more land than you need near where an interchange is going in, with the idea that it can be developed later on as recreational or residential lots. They would have considerably more value than what you're currently paying a person for the land, because you're buying it as acreage now and then turning it into lots later. Is the Transportation Financing Authority looking at this as a way of maybe raising money, so you don't go to tolls or gasoline taxes but instead go into land development as a method of paying for highways?
Hon. G. Clark: No. The land we are buying -- or expropriating, in some unfortunate circumstances -- is only for the use of the highway, not for anything else.
G. Farrell-Collins: I'd like to move into an area that I know the minister is interested in -- the Island Highway and the process that was gone through in order to secure that agreement.
At the time the agreement came out, and in the lead-up to it, it appears that there was significant pressure -- and I would say that would be a polite way of putting it -- put on the B.C. Road Builders' Association to come to a union-only collective agreement -- a comprehensive project agreement -- for the Island Highway. I have some significant concern about the tactics that were used and the way in which the government, particularly this minister, on a number of occasions has used those tactics to secure an agreement for a policy position, a plan or a program of the government.
I have a significant number of memos that flowed back and forth at that time. Certainly some of them received coverage, but one of the ones that I found interesting, just to start, is a bulletin that was sent out by the B.C. Road Builders' and Heavy Construction Association on March 18. It was in response to a meeting on March 11 with the minister and the Minister of Transportation and Highways. I believe that the deputy minister to the minister was there also.
It appears that for some time, about four or five months, some pretty heavy pressure was put on these groups to buy into the Island Highway collective agreement. Indeed, what happened in order to secure cooperation and support for the Island Highway agreement -- cool support, I might say -- was that when the issue of highway maintenance contracts came up, it was used as a weapon against those companies that were induced to buy into the Island Highway agreement. In talking to a number of the people who were involved in that process and were in communications with the roadbuilding industry itself, it became quite clear that that was the case: the prospect of deprivatizing or nationalizing, I guess, the road maintenance contracts in British Columbia and putting all of those roadbuilders in the province out of business was used as a means to intimidate them into signing on to the Island Highway agreement.
If I could, I'd like to just quote that bulletin from the Road Builders' Association to their members. It's talking about the debate that was going on from December '93 and into this spring. It says that eventually the two issues -- that is, the Island Highway collective agreement and the deprivatization of the highway contracts -- became interlinked.
"On Friday, March 11, a delegation of the association board members, both construction and maintenance, met with the Minister of Employment and Investment and the Minister of Transportation and Highways and their assistants. The ministers firmly advised that the association's position on a project agreement was linked to the government's position on maintenance."
In addition, if the association wanted to impact upon how the B.C. 21 social objectives would be applied around the province -- local hire, equity, etc. -- then the association would have to cease its opposition to the project agreement.
Discussion carried on for the remainder of the afternoon to obtain more clarification. This minister gave the association a handwritten position on the matter in the form of a suggested press release.
"On Monday, March 14, the board of directors met by conference call. The board rejected the positions as put forward by the minister and instructed that a better deal be obtained or else no deal. Late Monday, Ivan Hanshard communicated his position directly to the minister. The minister agreed to amend the deal to make it more favourable to the association. That evening and the following day, offers and counteroffers as well as threats were conveyed to the group."
I'd like to hear....
Interjection.
G. Farrell-Collins: The minister said: "Threats to me, or threats to the group?" I don't know what threats those people would have had or what cards they had to play against the minister when the minister held the contracts for their continued operation in business. It seems to me that the power arrangement, the power setup, in this bargaining process, if you want to call it that, was clearly in the hands of the government. The government had those businesses over a barrel, and the minister knew he could do whatever he wanted with them. He worked very hard to get agreement on this Island Highway -- or at least no opposition. I would like to hear the minister's comments with regard to the very strong impression that his negotiating tactics and threats left with those people in the industry.
Hon. G. Clark: I reject the characterization the member is talking about. If I had so much power, then why would I bother to deal with it in the manner he is suggesting? Second, why am I continuing to meet with the Road Builders if it was only to secure some kind of agreement?
The meeting to which the member referred that the Minister of Transportation and Highways and I attended did
[ Page 12591 ]
not have deputies in the room; it was a private meeting. It had at least four items on the agenda, as I recall. One was a proposed project agreement, one was maintenance contracts, one was B.C. 21 goals and objectives, and the fourth was general tendering issues we wanted to discuss. They were not linked discussions, but they were all discussed at the same meeting.
The difficulty with the Road Builders in the case that they are referring to is one where they had made an assumption that the government was going to deprivatize highway maintenance. They had a belief that that was what we were going to do. All we were doing at these discussions was giving them what we believed to be the true position of the government, which was that we had no a priori decision to bring it in-house. We were taking a pragmatic approach and were going to review it. We wanted the Road Builders and the various unions and other people involved to be a part of that review. When we suggested to them that we wanted to have a thorough review of highway maintenance contracts in the manner I just suggested, they viewed that as a different position taken by the government. It was not a different position; it was a position that we had always held. But for whatever reason, they believed it was not the case. The purpose of the meeting was to clarify the government's position on all of these issues and to have a dialogue with them about it. I am very pleased that the dialogue turned out that there has been support for the Island Highway agreement. There are ongoing meetings now about tendering, language and documents, and how we can achieve B.C. 21 objectives off-Island. As many members know, Beatton River crossing and other projects are being announced. There is a lot of work off-Island which is not covered by the project agreement.
Finally, the Ministry of Transportation and Highways, which is responsible for highways maintenance, did not make any commitments not to deprivatize. The commitment that the minister made, which is a commitment she has made consistently and strongly, is that we would not act ideologically in this area -- that we would review this process. I don't know; you'd have to ask the minister, but my understanding is that they've had meetings. I know that the minister and myself had a meeting with the Road Builders fairly recently, discussing progress in this regard. Subsequent to that, I believe the Minister of Transportation and Highways and her staff have had meetings with the Road Builders and unions involved, discussing and solving some of the problems associated with privatized maintenance contracts.
G. Farrell-Collins: Anybody who has worked around or opposite this minister over the last little while knows his penchant for big projects and deals and the types of things that he likes to do. That's pretty well understood. It's not necessarily a bad thing. The minister might call it one of his strengths, but all things are best done in moderation. I would say to the minister that perhaps he's going a little overboard these days, but that is yet to be seen.
[1:00]
It's important, I think, to note that the minister states that these items weren't linked -- that, in fact, they were dealt with separately and just happened to appear on the agenda at the same time because they were issues that the government wanted to discuss. I have this statement of the Province of British Columbia and the statement of the Road Builders' and Heavy Construction Association that were brought together and signed at the time. It's quite clear to any sane person reading this that some pretty heated negotiations -- as I say, that's probably an understatement -- and horse trading went back and forth in order to try and secure the real goal of this minister, which was to get a union-only collective agreement on the Island Highway. That was his goal, and he was working at it for a long time. Some heavy negotiations took place. Indeed, it's here; it's all laid out in these discussions. You can see the trading that went on; you can read through the overviews of the meetings that took place. The copy of the handwritten communique that the minister prepared is here.
Interjection.
G. Farrell-Collins: Not really.
It's all here. The story is there, and any sane person reading it can understand what went on. Unless there are a lot of people in the roadbuilding industry who aren't very smart and who misinterpreted a lot of what was said by the minister and by the Minister of Transportation and Highways, I would say that it was hardly a congenial, problem-solving session that took place between the ministries and the Road Builders. Indeed, I would suggest that the late-night phone calls and discussions back and forth were somewhat heated, and I think the analysis of threatening these people with their jobs, with their businesses, with extending the Island Highway or with this union-only contract agreement provincewide.... All those things were out there on the table.
Even if the minister tells us that he didn't have any intention of doing that, the minister certainly didn't go out of his way to tell these people that the government had no intention of doing that. The minister wanted to get his union-only contract on the Island Highway, and he went out of his way to try to achieve that.
Interjection.
G. Farrell-Collins: Well, hon. Chair, this is a good point. I want to address it because he led off at the beginning of his answer with this. If all the good cards were on his side of the table, why stop at the Island Highway? Why stop at discussions on deprivatization? Why not just go ahead and do it? The minister knows full well, because there are always implications when a government does that type of thing. He's politically astute, and he knows that if he came in and rammed a union-only contract for $1 billion worth of construction down the throats of the people on Vancouver Island and the taxpayers, and the Road Builders and heavy contractor groups opposed it vocally, it would be a political nightmare for the minister. He knows that in order to get this deal through, he's got to get those people onside, or at least get them to keep their mouths shut.
Indeed, all you have to do is look through these documents again, and you can see the various options that these people had to consider. This is how intense it was. It wasn't just these people; it was with the G-7, the business groups -- everybody. There was a big confrontation between this minister and the business community over his ideology, quite frankly.
These are some of the possible options that these people had to consider in response to this handwritten memo or communique by the minister: "Agree to the request for support, drop all opposition and issue a joint communique. Try to influence the government on future road maintenance. Continue the current opposition through the Group of Seven directly." This is another option: "Escalate the opposition. Go public with the threats made about the linkage of project agreement with road maintenance." And
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the other one is reduced opposition: "Offer that in exchange for assurances that the project will be limited to the Island Highway project, and road maintenance will not be privatized. The association will discontinue overt opposition."
These negotiations went on for months; this wasn't just a sit-down agreement one weekend or one Friday afternoon. The minister knows that they went on for a long time.
Interjection.
G. Farrell-Collins: Well, they started as early as December, and this came out in March. We can certainly discuss what the government's intentions were even at a much earlier date than that. Those negotiations or discussions went on for months, and they were intense. I knew they were going on, and other people knew they were going on. It was not a congenial set of discussions in which to try and do some problem-solving; there were really some pretty heavy-handed threats and intimidation -- to use their words. If the minister is saying that that wasn't his intent, that was certainly the impression left with the entire business community in the province -- all the major groups. The big Group of Seven....
Interjection.
G. Farrell-Collins: The minister says that he is shocked. I'm sure. That's the impression that was left with those people, and I don't think that's responsible action on the part of a government minister.
He knows that if he were to just force it through, the only power the non-governmental groups have is through public relations in the media. The only card they have is to make a loud noise about it and try to focus public opinion in order to change the government's or the Premier's opinion. Indeed, these groups met with the Premier a number of times to talk about the methods that were being used and about how this was happening. They were told by the Premier that unless they were onside, this contract wasn't going to go ahead. They were certainly left with the impression that unless business people were onside, this agreement wasn't going to go ahead.
The minister was under intense pressure to browbeat, threaten and intimidate these people into submission so that they would decline the opposition and so they would step back and say that it's something they can work with. That's eventually what happened -- some very tepid, some very....
Interjection.
G. Farrell-Collins: Well, the minister says that it works very well. We will get into that in a few minutes. But there was obviously some very tepid support once the agreement actually came out. It was certainly not enthusiastic at all.
I'd just like to know when the minister first got this grandiose scheme of dealing with the Island Highway in this way. When did he start to lay out his agenda, in order to get these people to submit to the will of the minister?
Hon. G. Clark: This idea of a project agreement was recommended to me by staff about a year ago, based on the model of what W.A.C. Bennett did to construct megaprojects in British Columbia. It's a good way of constructing a megaproject. In fact, it's the way that.... Every private company in British Columbia that goes about building a major project signs a project agreement at least with a general contractor, if not with a trade union, directly. So there's nothing unusual about that.
Were there discussions and debates, and were they intense? The answer is yes. That's everyday life in government and in politics, and we have a good arrangement. Incidentally, just for members' awareness, one of the people at one of the meetings I attended was from Peter Kiewit, a large company which was non-union. I think it's now General Workers, or something; it's not a building trades union.
They've just been successful on the Little Qualicum bridge. They were awarded this large first contract under this project agreement. It goes to a firm that is not affiliated with the building trades unions. They are there. I remember that he said to me: "We made money when we were non-union, and we make money when we are building trades; we only bid to make money, and we can work either way." Now they are building a big chunk of the Island Highway under this agreement and are happy and working well.
This is not revolutionary. This is a huge capital project. It's $1.2 billion, and we wanted to build it in a fashion that insulated the government and the taxpayers from strikes or lockouts, that ensured a high level of apprenticeships and that ensured non-union and union companies could bid and compete for this. It also ensured that local people would be hired.
I'm very pleased with it. I think it's an innovative agreement. The fact that we're working very closely with the Road Builders.... They're pleased with it. I think they're very pleased with it. All kinds of companies, union and non-union, are bidding and getting access to jobs on the Island Highway in a nice, rational process. It's working very well.
If the Road Builders wrote memos to each other, characterizing the discussions in such a way as.... They have a lot of internal politics and other internal reasons, as well, for acting the way they do -- as any group does. It's not a criticism. To go now and read a memo about a meeting that took place between myself and them months before the agreement is not doing justice to what is a good agreement.
I would point out, with this notion of browbeating and all kinds of pressure, that the government of British Columbia appointed Ivan Hanchard from the Road Builders to the Labour Relations Board in the middle of all this so-called intense debate. Surely, if we were being aggressive and nasty and everything else, we would have been sort of black-mailing this company and playing hardball. We weren't. We appointed him to the Labour Relations Board on the recommendation of the business community. He's a fine individual. We worked hard on this. There were lots of differences of opinion all through the discussions on this. We arrived at an amicable solution that's working well for the people of British Columbia. We can go on about this for some time, but I think the proof is that things are working well.
G. Farrell-Collins: We'll see how well they work. It's fairly early in the game to be singing the praises of an agreement on a ten-year project that's only several months old. We'll see how well it works over time.
The big concern, which I raised in November or December of last year when word was out that this agreement was being negotiated, is that the government is going against one of its basic principles: that workers decide for themselves whether they want to be part of a trade union and what trade union they want to be part of. Now, if they
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want to work on the Island Highway, they don't have a choice.
Interjection.
G. Farrell-Collins: Well, we can have that discussion at length some other time.
There have been two reports done on the cost impact of the Island Highway and the way it is going to be dealt with. There was one done for the government by Lloyd Little Broder and Burley. I don't know what firm that is. I've never heard of them.
Interjection.
G. Farrell-Collins: Okay, the minister says they're partners with Price Waterhouse.
It was interesting to read their report. There are some very strict qualifications given in their report. They're being what I would consider cautious. They say: "Our approach was limited to a review of certain ministry material. We reviewed materials provided by the ministry, but not the agreement itself." How can somebody do an analysis of the cost of the Island Highway -- a billion-dollar project -- when they haven't even had a chance to look at the collective agreement that's going to dictate the cost of labour? How can they possibly do an analysis and compare it to what it would be if there wasn't a collective agreement, if they can't even see what the collective agreement is?
Hon. G. Clark: They had all the financial provisions of the collective agreement, but it had not yet been printed when we asked them to do the review. Incidentally, we asked them to do a review of the BDO Dunwoody report, which I have as well.
G. Farrell-Collins: I'm sorry, I didn't hear the last sentence the minister said. He wasn't loud enough. I missed it.
Hon. G. Clark: I just said that Lloyd Little Broder and Burley have reviewed the latest so-called study by Dunwoody. As a result of that I have some.... If you want to go through that, we can.
Interjection.
Hon. G. Clark: Sure.
G. Farrell-Collins: I'd be glad to have the minister give us the summation of what their analysis is. I'd be interested to hear it.
Hon. G. Clark: The conclusion is that the report "totally ignored...the offsetting gain from a virtual guarantee of no work stoppages, which may be measured both in accounting terms and in real economic terms for the communities involved." It goes through it in detail, to say: "We question the reasonableness of assuming that a project of this size would be completed by contractors working under non-affiliated union agreements." In other words, they questioned whether you could build a project of this magnitude entirely non-union, which is the assumption there. It's never been done in the history of British Columbia.
They say that they use a base rate for roadbuilding which is different than anything in the collective agreement we've signed; in other words, they use the traditional wage rates in the roadbuilding sector without taking into account the major concessions which took place in this agreement. They assume that there is a payroll fee. What happens is that HCL is the employer, and it does the payroll. They assume that is no savings to the contractors, which is not the empirical evidence anywhere. So they're saying that there are absolutely no compensating savings in payroll calculations, even though the government is doing the payroll. That seems ludicrous.
[1:15]
They say that there are all these costs for room and board and travel allowances, when in fact the whole purpose of the agreement -- unlike the Coquihalla -- is to have local hire. They say: "...it is highly unlikely that a substantial number of employees will come from a distance greater than 100 kilometres away from the site. We note that the BDO report says, 'The amount of the travel allowance is negotiated on a project-by-project basis,' and then ignores the travel allowance in the two cost comparisons other than the HCL." So they are using travel allowances which won't apply to this contract.
"The BDO report makes a comparison between shift differentials in the HCL agreement and no equivalent cost in the other two columns." So they're saying there are no shift differentials in the non-union sector or in the other union contractors. They say they see no evidence of that and no support for that view. In addition, they say there are union and industry funds being paid, but they don't take into account the industry funds that the ICBA charges as well to their members.
They say as well that there is additional staffing. BDO says there will be 10 percent additional staff on the Island Highway because of the project agreement, when there is absolutely no support for that. In fact, the union firms have generally been more efficient. That's how they compete now, even though they have higher wages than other sectors. I don't know where the additional staffing would arise, unless it's because there are more apprenticeships on-site. If that's the case, then they should assume that we would require those apprenticeship ratios in the non-union sector, although that would be very difficult.
I could go through in more detail. They say there are no costs to disruptions; there won't be any disruptions if we build this entirely non-union. The report that BDO Dunwoody has purported to do is really just a political document, by and large, designed to try to prove a political point. So they don't want to give any weighting to local hire. They want to use wage and other inflators which don't exist in the agreement, and they say there will never be any disruption in a non-union environment, even though no project in the history of British Columbia of this magnitude, private or public, has ever been built entirely non-union. It goes on and on. I treat the Dunwoody report the same way I treat the Liberal Party's opposition to this agreement, and that is that it is a political exercise and they are attempting to use this for political purposes. I certainly understand that, but I don't treat it as a serious document.
G. Farrell-Collins: I guess we could bring duelling accountants in here and have them go back and forth at each other. We will have to leave it up to individuals in the public to look at the analyses done by both firms, and see whether or not they think the basic assumptions made are realistic. I believe they are. I think that some of the comments the minister has made.... With more detail and time to look through that, I would refute a number of them and question a number of them. It's interesting to note that when the ministry hires somebody and asks them to do a study of the
[ Page 12594 ]
project that he put together, somehow that's a rational analysis, but when another group -- with really no vested interest other than the best interests of the province at heart, which the minister will say he has too -- does a study...
Interjection.
G. Farrell-Collins: Yes, board of trade.
...somehow it's completely political and unfounded, and has no basis in fact. I find that very interesting and one-sided. I certainly wouldn't for a minute assume that the study that the minister has done is 100 percent accurate or that all the assumptions made are 100 percent accurate. Nor would I assume that the assumptions made by BDO Dunwoody would be 100 percent accurate and 100 percent the same position or focus that another group would take if a third party came in and analyzed it. But I think it raises an awful lot of questions about the process, about how this collective agreement is going to function, about the cost and about whether or not the taxpayers are getting the best deal for the project. I think if people took the time to look through the various studies and analyze them, and to look through the collective agreement for the Island Highway, they would realize that some of the assumptions the minister is making -- not the least of which is the no-strike, no-lockout $30 million savings -- are patently unreasonable, I think, and quite fictional.
There hasn't been a major disruption in the roadbuilding industry for 26 years, and it's unlikely that that would be the case with this project, either. There certainly hasn't been a huge project of this size -- well, there was the Coquihalla, obviously -- done by non-union firms, as the minister says. But that doesn't mean that it couldn't happen; it doesn't mean that it's not feasible. Certainly I would agree with the minister that some of the contractors who will be bidding on this project will be union, and therefore the figure would not be.... There are no absolutes; you don't go all non-union or all union. We are now going all union, according to the minister. And I accept the argument that some of the contractors would likely be union contractors, but they would absorb those costs, and it would be determined on a competitive basis between the two of them. The minister says that the union firms are more efficient, and that's fine. That's a statement he makes, and he'll stand by it. I would suggest that some of them are, and some of them aren't. But the nature of competition would let the marketplace work itself out. I think that many of the companies that will be bidding on this will be good companies and will do good work, whether they're union or non-union. The taxpayers would then know that at least they were getting the best value.
The minister disagrees with me on that. We all know where he stands on this agreement. It's his pride and joy. There is this issue, and now the $800 million for the ferries, and who knows what the next one will be. I guess it's rail transit to the Coquitlam sector. So he's got lots of offspring these days, including his community bank. But he's proud of it, and this is his agreement. He's made some assumptions and determinations. I don't come from the same political side that he does. He obviously sees it differently. I think that the taxpayers will see it differently; I think they will find that they're not getting the best value for their money. They will feel that, they will know that and they will be able to logically make that decision on their own, and in the end they will be the ones who judge. I'm willing to let that court have its day and see what the final judgment is.
We have a few more minutes before we take a brief lunch break, and I did want to ask the minister.... The minister wasn't here yesterday, which was unfortunate, because I had a question that I really wanted to ask him in question period. Unfortunately, I had to waste it on the Minister of Skills, Training and Labour, and it wasn't half as much fun.
There was some discussion earlier in the year about the advancement funds that are paid through this agreement to the various trade unions and where that money ends up. It touched a chord with the minister: he was very upset and angry that we would even make that suggestion. There were all sorts of fairly negative adjectives used to describe the opposition, and I think that was unfortunate. The gist of the argument was that these advancement funds, which are being paid as a result of this collective agreement for the Island Highway.... Advancement funds are not unusual; they are in other commercial agreements. When you take a $1 billion contract and give it to the union sector and the advancement funds are included in that, it raises some questions about value for money. The issue that was brought forward by the opposition was the suggestion that those advancement funds could be used for political purposes. The minister bristled at that suggestion and became quite upset about it, making all sorts of comments.
Outside the House, though, it was a little different. The Premier was quoted a number of times as saying that these advancement funds are not used for political purposes. The minister is quoted as saying that there are no strings attached. Once he was quoted as saying that there are no strings, and then somebody from the ministry came back and tried to change that, saying that there are strings attached, and they're all used for training, scholarships and those types of things. Indeed, he supplied us with a copy of the Iron Workers' agreement, where it described what an advancement fund was. On one side it talked about all the scholarships and training, and when you flipped it over to the other side, it talked about using any means necessary to advance the trade, or something to that effect.
The minister was very upset by those comments being raised by the opposition and by the opposition asking the minister and the Premier to guarantee that none of those funds would be used for political purposes. I believe some newspapers have had lawsuits threatened against them. The Leader of the Opposition had a lawsuit threatened against him by a different local. That was an interesting one, too, because at the same that I asked the minister that question about whether or not he was involved in discussions about that threatening letter and a lawsuit being brought against the Leader of the Opposition, he said he didn't know anything about it. In response to the supplemental question, the minister stated that he wasn't a member of the local that was threatening to sue them. But the fact is that nobody told the minister in the intervening period which local it was. So it was very interesting to find the extent of the knowledge of the minister, and he should review Hansard. He might have gotten himself into a bit of trouble there.
Anyway, the gist of the disagreement was that we felt these funds could find their way back into the NDP's election campaign. We wanted to see the minister.... Indeed, the Leader of the Opposition asked the Premier if he would write a clause into that collective agreement to state that none of those advancement funds could be used for political purposes, and he was refused.
The minister has said that those advancement funds were never used for political purposes. Yesterday in the House the opposition brought forward some Elections Canada data, a report from the 1988 election. It shows that the New
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Democratic Party in 1988 received one of several, but one anyway.... The labourers' advancement fund donated $1,500 to the NDP. The labourers' union is a subscriber to the Island Highway collective agreement. They are in there with advancement funds. The minister may say that's not a significant amount of money. But when you look at the various candidates, Mr. Stupich and Mr. Skelly both received hundreds of dollars from the labourers' advancement fund.
Quite clearly, the minister's and the Premier's comments that the advancement funds won't be used for political purposes are false; it's not true. I'd like to hear from the minister today an admission that those funds can indeed be used for political purposes, and then I'd like to hear the minister state that he will put a clause into that collective agreement to state that no money used on the Island Highway project, paid for by taxpayers, that goes into these advancement funds will be allowed to go for political purposes. Can we get that admission and that guarantee from the minister?
Hon. G. Clark: I think the member has proven one of the points we've been making, and that is that this Island Highway agreement is no different than any other agreement that's ever been reached in the private sector in British Columbia. There's no special advancement funds or special slush funds -- none of that. In fact, the member refers to donations from an industry advancement fund in 1988 -- long before we took office. So if the member is suggesting that we tried to negotiate a special clause in the Island Highway agreement that doesn't exist in any other contract, what about all the schools that are built by union contractors? What about all the hospitals? What about all the roads off Vancouver Island that have a private contractual relationship between the employer and the union which contain these funds that have been in existence for 100 years in some cases in British Columbia?
[1:30]
We simply have picked up the standard language and text in all of those agreements. If we wanted to create a fund for the purposes that the member is alleging, then presumably we would have had to add to what exists in all the private sector agreements. We haven't done that. So we're not changing an agreement that was reached and that is consistent with every private sector agreement in British Columbia. Nor will we put any language in tendered documents that the 50 cents an hour that Philip Hochstein and the Independent Contractors' and Businesses Association charges for every person working in the non-union sector.... We won't put in a clause saying that none of that can flow back to the Liberal Party, even though I'm sure it will. That's a private contractual arrangement between the parties, and we won't interfere with it.
G. Farrell-Collins: The minister misses the distinction. The government has gone out and taken a billion-dollar agreement and handed it to the union sector. I would agree with the minister if a Liberal government, a Socred government or any other government were to hand out a billion-dollar contract and say: "No union companies can bid on this; this is non-union only." If it were the case that it was being limited like that, then it raises questions of ethics with regard to the government. What are the government's motives? Are they acting in the best interests of taxpayers? Whether it's a free enterprise government or a socialist labour government, if you go out there and say that it's going to be all non-union, or all union, and here's some money for these advancement funds, then you've got a problem. If it's open and people are bidding among themselves and the money is subject to the marketplace, that's a different matter.
But when the government takes its biggest project -- at least I hope and think it's the biggest project they're doing; it's over a billion dollars -- and hands it off to the trade unions and specifies what trade unions are involved, that raises questions of ethics. That's a gift -- especially when you can link that money coming back to one of the parties for their election campaigns. That's where the problem arises. I hope the minister understands the distinction, because it's significant and it's important. If the minister had thrown this thing open and said that non-union and union sectors could come in and compete in the marketplace, away you go; if the workers had collective agreements it was great, and if they had chosen not to it was up to them. But let it go out to the marketplace and see what happens -- it's different because there is choice involved there. Here there is no choice. The government is dictating that a billion-dollar contract is going to not just unions, but specific unions that the government is listing by appendix in the agreement, knowing full well that some of the moneys going into those advancement funds are being used for political purposes.
That's the distinction, and I hope the minister understands that. If he is going to take the step of dictating that it's going to be a union-only agreement and he is going to dictate which trade unions are going to be appended to that agreement, it's important that he state quite clearly in that collective agreement that those advancement funds are not to be used for political purposes.
Hon. G. Clark: When W.A.C. Bennett built the dams in British Columbia in the early 1960s, all these industry advancement funds existed.
Interjection.
Hon. G. Clark: The member says they shouldn't have done it. The model of construction of megaprojects in British Columbia is a good one. The only time the government of British Columbia ever attempted to build something without a project agreement of this magnitude was the Coquihalla. It came in 100 percent over budget, with all kinds of disruptions, problems and everything else. I guess there was an attempt at the Expo site, and that was a source of great controversy.
When the previous government built SkyTrain, they didn't even have a project agreement. They built it 100 percent union-only, and it's an important distinction that the member doesn't seem to get. Non-union companies can bid on the Island Highway, and are bidding, and the first tender we awarded went to a non-union company. Non-union companies, other unions, anybody can bid on it; low bid prevails. We have set employment standards, wage standards, apprenticeship ratios and local hire standards. After that, everything is open bid, and lowest bid wins. That's a time-honoured test in British Columbia that has worked well in the construction of dams, and it will work well in the construction of this very exciting megaproject on Vancouver Island.
With that, hon. Chair, I move the committee rise, report remarkable progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
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Committee of Supply B, having reported progress, was granted leave to sit again.
The Speaker: When shall the committee sit again?
Hon. G. Clark: Later today, hon. Speaker.
I move the House do now adjourn.
Motion approved.
The House adjourned at 1:35 p.m.
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