1995 Legislative Session: 4th Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
WEDNESDAY, JUNE 7, 1995
Afternoon Sitting (Part 1)
Volume 20, Number 21
[ Page 15109 ]
The House met at 2:08 p.m.
Clerk of the House: Pursuant to standing orders, the House is advised of the unavoidable absence of the Speaker.
[D. Lovick in the chair.]
Prayers.
W. Hurd: It's a rare privilege for me today to introduce not one but two groups of students and their teachers in the gallery. We have with us a group of 50 grades 1 through 6 students from Crescent Park Elementary, accompanied by their teacher Ms. Davison. Also with the chaperon party are Mr. Bennest and Ms. Nancy Gingell. The second group is a group of students -- 54 visitors -- from South Meridian school, accompanied by their teacher Ms. Parker. They're here to tour the precincts today and listen to question period. Would members of the assembly give them a warm welcome.
G. Campbell: I want to reiterate the welcome to the school children, but specifically I would like to introduce to the House the grandchildren of the deputy leader of the B.C. Liberal Party -- the member for Delta South -- Jessica and David Gingell. We hope that this will give them a chance to meet with their grandfather and enjoy his company as much as we have over the last few weeks.
Hon. J. Cashore: In the gallery today are John and Irene Sproston of Zurich, Ontario. They are here to visit their son Steve, who lives in my riding, and their daughter Janette, who lives in Saanich. Would the House please make them very welcome.
Hon. M. Harcourt: I'm delighted to rise today for what I'm sure will be a unanimously -- and in a totally non-partisan way -- acclaimed set of announcements which I'm going to make. It has to do with a sporting event. It's not the sporting event that the Opposition House Leader is thinking about, but it includes humble representatives of this House and some of our servants who help us along so well, who will be once again playing in the Speaker's Trophy at the seventh annual tennis tournament of the Legislature versus the press gallery.
It will include, of course, the Clerk, showing the captain's leadership that he has for so many years, including the one or two years when we let the press gallery win. The Leader of the Official Opposition will be in attendance, as well as the Minister of Small Business, Tourism and Culture. He will not be filibustering his tennis game the way he does his estimates, I can assure you. It will include, of course, the member for Okanagan-Penticton and past members such as the Hon. Brian Smith.
We should talk about the sponsors of this tournament and a very important event that takes place the night before. Joining us in the gallery today are Cliff Stright from SHL Systemhouse Ltd., the sponsor of this tournament; Sheila Neopole, president of the South Cowichan Lawn Tennis Club; and Loren Stubbs, a board member of Providence Farm. Would you show them a very kind welcome.
In conclusion, as part of the fun and festivities of the tournament, the MLAs and members of the press gallery will help serve at a fundraising dinner at Providence Farm, which, of course, we are all aware specializes in therapeutic riding and horticultural programs for physically and mentally challenged individuals. This year the fundraising dinner will raise funds for a shiny new red tractor.
So, hon. Speaker, I want you to know that the trophy will once again rest in the right hands after this tournament.
CHILD, FAMILY AND COMMUNITY SERVICE AMENDMENT ACT, 1995
Hon. J. MacPhail presented a message from His Honour the Lieutenant-Governor: a bill intituled Child, Family and Community Service Amendment Act, 1995.
Hon. J. MacPhail: Last year the Legislative Assembly passed the Child, Family and Community Service Act, which addresses public demand for change in the area of child protection. This year, prior to proclaiming the act, we are improving and clarifying it in response to recommendations which came from several sources, including the interim report of the inquiry into child protection by Judge Thomas Gove.
I move that the bill be introduced and read a first time now.
Bill 41 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
CHILD, YOUTH AND FAMILY ADVOCACY AMENDMENT ACT, 1995
Hon. J. MacPhail presented a message from His Honour the Lieutenant-Governor: a bill intituled Child, Youth and Family Advocacy Amendment Act, 1995.
Hon. J. MacPhail: Again during the last session, this Legislative Assembly passed the Child, Youth and Family Advocacy Act. That act establishes an independent advocate for children, youth and families who are to receive services pursuant to the previous act, the Child, Family and Community Service Act.
The advocate is an officer of the Legislative Assembly. This year the assembly had the pleasure to recommend Joyce Preston as the first child, youth and family advocate. Subsequently, the Gove inquiry into child protection submitted its interim report, which included recommendations for amendments to the Child, Youth and Family Advocacy Act. Therefore, this amendment act, the Child, Youth and Family Advocacy Amendment Act, 1995, incorporates those recommendations with which the advocate wishes to proceed at this time.
Bill 47 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
[2:15]
[ Page 15110 ]
DOUGLAS LAKE RANCH BLOCKADE
G. Campbell: In spite of the peaceful dismantling of the illegal roadblock at Douglas Lake, this NDP government continues to send out confusing messages to the people of those communities. Last night the Minister of Aboriginal Affairs met with members of the Upper Nicola band. Today there are fears that the minister is negotiating away legitimate property rights, including leases and permits, in response to the illegal blockade. Will the Premier commit today that property rights will not be negotiated away through secret interim agreements as the result of illegal acts?
Hon. M. Harcourt: I think it's unfortunate that that reckless, careless use of language is used by the Leader of the Opposition. He is prepared to behave like a Mike Scott Reformer -- sort of a Rambo of the roadblocks -- and it's not the way to conduct the public's business.
I think we should realize what I have said all along and what the Attorney General has made very clear: that there is one law for all British Columbians and one policy for these types of situations. We don't second-guess, as the Leader of the Opposition does. The experts in this area, who are the police authorities, were there to directly carry out the Supreme Court injunction in this matter.
G. Campbell: What people want to know is what this government's position is. The Premier may think that he has been clear, but he may not be paying attention to his Aboriginal Affairs minister, his Attorney General or members of his own caucus. The government simply has to be clear in its goals. Private property must be protected. This government has not made that clear. Secret negotiations....
Interjections.
Deputy Speaker: Order, members. Order! I would ask the members on the government side to please allow the question to be put, and I would ask the member to please put the question.
G. Campbell: I will put the question, hon. Speaker.
Secret negotiations must simply be open to all affected parties. So will the Premier make a commitment today that no agreements will be signed until all affected parties have been included in any discussions and involved in any negotiations whatsoever with regard to Douglas Lake?
Hon. M. Harcourt: First of all, the Leader of the Opposition's research staff have let him down once again. This is a matter between two parties: the Douglas Lake Ranch and the aboriginal people in the area. The government's role is to facilitate a peaceful resolution of this. We have had a mediator in there. After he had been assured by the police authorities that the roadblocks were down, the minister went to meet....
Interjection.
Hon. M. Harcourt: I wouldn't call it exactly a secret meeting when the Sun and the CBC were in that meeting.
Hon. Speaker, the real issue here is the inconsistency of the Leader of the Opposition. Here he's prepared to be a reckless Rambo, a sort of of the interior. Yet when he was the mayor of Vancouver, he and the police were criticized for not going in and doing exactly the kind of thing that he is recommending. As a matter of fact, in 1987 Chief Justice McEachern was critical that the police didn't go in and clear the way for strikebreakers, and here's what the then mayor and chair of the police board said....
Deputy Speaker: I'm sorry, Premier. I think we have gone beyond the time for the answer.
Hon. M. Harcourt: I will conclude, hon. Speaker, with one sentence.
Interjections.
Deputy Speaker: One sentence. Please, members, order.
Hon. M. Harcourt: This is what he said: "I think the police are there to enforce the law."
Interjections.
Deputy Speaker: Order!
Hon. M. Harcourt: "They have also been very concerned about not exacerbating any violent activities," said the then mayor.
Interjections.
Deputy Speaker: Members, I just want to give everybody a caution. If we can't allow questions and answers to be heard, then the entire point of this exercise is lost. My job is to uphold the rules of the chamber. I am trying to do so, but I need your cooperation.
MINISTER OF ABORIGINAL AFFAIRS' MEETING WITH UPPER NICOLA BAND
A. Warnke: My question is for the Minister of Aboriginal Affairs. Over 43 aboriginal bands and tribal councils have submitted notices of intention to negotiate treaty rights with this government, and are patiently waiting for their opportunity to seek fair and affordable treaties. Meanwhile, the Upper Nicola band has not entered into any treaty negotiations through the B.C. treaty negotiation process. Instead, they set up an illegal blockade and then met with the Minister of Aboriginal Affairs.
Therefore my question is: what message has the Minister of Aboriginal Affairs sent to the bands committed to the treaty process, especially when a band that set up a blockade received a meeting the following afternoon?
Hon. J. Cashore: Most British Columbians are very, very supportive of the fact that that blockade came down, that a confrontation was avoided and that we were able to sit down in a mature way and talk about the way that issues can be resolved at a table. There are different entities with regard to first nations. There's the First Nations Summit, which is the
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process in the Treaty Commission negotiations; there's the Union of B.C. Indian Chiefs, of which this band is a member, which see their primary negotiations as being with Canada; and there are others. We respect the rights of these different first nations to have their own perspective on how to resolve these longstanding issues. But recognizing that, I appreciate the question, because it's an opportunity to point out that the Treaty Commission process is absolutely separate from the process, with regard to the kinds of discussions we are having with the Upper Nicola band, and that there is no connection whatsoever.
Deputy Speaker: Supplemental, hon. member.
A. Warnke: What we're concerned about on this side is that the government is sending the message that if the band gets involved in the treaty process it has to wait in line for a meeting, but if you put up a blockade you meet the minister the next day. A question to the Minister of Aboriginal Affairs: can the minister tell the House if the government told the Upper Nicola band that if they brought down the blockade, they would be rewarded with a meeting the following afternoon?
Hon. J. Cashore: This government will not negotiate while there is a blockade up; that is our position. Secondly, this government will seek to facilitate an orderly resolve to issues such as the one we have seen develop there. Recognize, hon. member, that we are dealing with a legacy of history -- this is the first government in the history of this province to take on these difficult issues, because we know they must be resolved. We cannot leave this confusion to future generations.
The hon. member makes the comparison to the treaty-making process, and he has outlined the Liberal platform with regard to the treaty-making process, but his leader won't come into this House and say that he agrees when this hon. member supports the fact that we've entered into that process.
J. Weisgerber: My question is also for the Minister of Aboriginal Affairs. The Upper Nicola band succeeded in extorting an agreement to negotiate their grievances in exchange for bringing down an illegal blockade. Why would this government ever allow any group to advance their political aims through illegal activities -- through illegal blockades? What are the penalties, if any, for the illegal blockade at the Douglas Lake Ranch?
Hon. J. Cashore: Using this kind of inflammatory language does not help deal with the situation of a longstanding historical problem that must be addressed. We are addressing those issues in the best way that we can possibly address them, and in a way that this hon. member counselled -- as reported in the Vancouver Sun on July 19, 1990 -- when he made a statement, which was quoted, saying that he called on all British Columbians to exercise common understanding in the context of difficult blockades.
Deputy Speaker: The Leader of the Third Party on a supplemental.
Interjections.
Deputy Speaker: Order, please, members.
J. Weisgerber: The member might have quoted a little further as well, because at that time I said that there should be a price for illegal activities. Indeed, Mr. Minister, the government should be sending out a clear message...
Deputy Speaker: Question.
J. Weisgerber: ...that there is a price to pay for illegal activities.
Will the Premier or the minister or somebody commit that this government will not negotiate an interim agreement with the Upper Nicola band until they publicly commit to bring down and keep down the road blockades and not participate in further illegal activities? Will the government adopt a policy of not negotiating any interim agreements with any band that refuses to participate in the provincewide B.C. Treaty Commission process?
Hon. J. Cashore: This hon. member has a very short memory. He forgets that he dithered at Duffey Lake for three months before injunctive relief was sought back in 1990. He forgets that he went to that blockade and offered to negotiate while the blockade was up. He forgets.
The fact is, as I said to an earlier question, that we respect the fact that different first nations do not all follow the same process. We respect the fact that the Union of B.C. Indian Chiefs have a different process.
UNREGULATED NET FISHERY OF UPPER NICOLA BAND
W. Hurd: I have a question for the Minister of Aboriginal Affairs. The Delgamuukw and Sparrow decisions clearly stipulate that resource conservation must take precedence over claims of aboriginal title. Given that net fishing on the two lakes was at the heart of the illegal Douglas Lake blockade, will the minister assure this House that unregulated net fishing was not on the table for discussion when this minister sat down with the Upper Nicola band? As the minister who used to defend fish in this province, will he stand up and defend them today in this House?
Hon. J. Cashore: Conservation is always this province's bottom line; we have no hesitation to reaffirm that.
With regard to the dispute between Douglas Lake and the Upper Nicola band, we are seeking to find a method whereby those parties can discuss their differences.
Deputy Speaker: Supplemental for Surrey-White Rock.
W. Hurd: It has been clearly indicated that those two lakes cannot sustain an unregulated net fishery by the Upper Nicola band. Will this minister stand today and defend conservation in the province and assure the House that this fishery was not on the table for discussion when he sat down for a marathon meeting with the Upper Nicola band -- a meeting, hon. Speaker, which isn't esteemed to be available to any other band in this province right now.
Hon. J. Cashore: Well, hon. Speaker, this hon. member can't have it both ways. He says in his question that he wants us to assure him that we won't discuss the issue, but he also
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wants me to assure him that we'll resolve the issue. Hon. member, we're going to resolve the issue by being able to discuss it as reasonable adults.
[2:30]
DOUGLAS LAKE RANCH BLOCKADE
M. de Jong: British Columbians were indeed pleased to see that the blockade came down without any violence. They were pleased by the action taken by the RCMP. They were shocked, however, to learn at 7:30 this morning that discussions had taken place between this government and the Upper Nicola band while the road between Minnie Lake and the home ranch remained blocked. That was despite the fact that the NDP government said they wouldn't negotiate under those circumstances. My question to the Premier is: why did his government enter into negotiations with the Upper Nicola band while the road to the ranch remained blocked by the band?
Hon. M. Harcourt: The main reason is that.... The minister wasn't going to leave Victoria and go to the area at all until he'd been advised by the proper authorities, who are the police. He received the following communication from Staff Sergeant Smith:
"Please be advised that the traffic situation with respect to the Douglas Lake roadblock has been cleared to both the satisfaction of the terms of the B.C. Supreme Court injunction and the Merritt Royal Canadian Mounted Police."
Hon. Speaker, on the clear assurance, and without any knowledge of the other road situation, the minister proceeded in good faith -- the roadblocks were down -- to try and facilitate the parties to this dispute. Don't forget, this is a private dispute between the Douglas Lake Ranch and the Upper Nicola band. He went in good faith on the basis of this communication from the police authorities in the area, on the ground.
Deputy Speaker: The bell terminates question period.
Hon. A. Edwards tabled the annual report of the Ministry of Energy, Mines and Petroleum Resources for the year 1993-94.
G. Brewin: Hon. Speaker, I ask leave to make an introduction.
Leave granted.
G. Brewin: I would like to welcome to this House a group of nearly two dozen energy experts from the People's Republic of China, led by their Victoria leader, Dr. Wee Chong Tan. I wonder if the House would please make them welcome.
W. Hartley: I ask leave to make an introduction.
Leave granted.
W. Hartley: On behalf of the member for Oak Bay-Gordon Head, I'd like to introduce one of her constituents visiting the Legislature, Mark Beardsell. Please welcome him.
S. Hammell: Hon. Speaker, I'd like the House to welcome....
Deputy Speaker: Excuse me, member. We're beyond standing orders. I need a request.
S. Hammell: I request leave to make an introduction.
Leave granted.
S. Hammell: I would like to welcome to the House another class from South Meridian Elementary School in south Surrey. They are here to watch the procedures.
Hon. G. Clark: I call Committee of Supply in Section A for the purpose of debating the estimates of the Ministry of Finance and Corporate Relations. And in the House today I call committee stage of Bill 46.
COOPERATIVE ASSOCIATION AMENDMENT ACT, 1995
The House in committee on Bill 46; H. Giesbrecht in the chair.
On section 1.
Hon. J. Smallwood: I would like to move the amendment to section 1 that is standing in the name of the Minister of Finance and Corporate Relations on the order paper:
[SECTION 1, in the proposed section 72 (6), by deleting "the date on which the Cooperative Association Amendment Act, 1995 received First Reading in the Legislative Assembly." and substituting "June 5, 1995."]
On the amendment.
D. Mitchell: The minister has just moved an amendment to this bill standing on the order paper in the name of the Minister of Finance and Corporate Relations. It seems to be a technical amendment, but there are some date changes here in terms of when the bill will come into effect. I wonder if the minister could just offer a brief explanation of why this amendment is necessary.
Hon. J. Smallwood: The change the amendment has brought about is simply that the first draft indicated that the amendment would come into effect at first reading. This substitutes the actual date of the first reading, simply to further clarify the date of effect, rather than leaving it open as first reading.
D. Mitchell: I guess this is one of those weird situations where the government is being extremely responsive and changing legislation as we make progress, very quickly, in the Legislature, but it's rather unusual to have done this.
I wonder if there is any other motivation as to why the first draft was unacceptable. It seemed to be fine the way it was. Is it just a matter of legislative drafting to be more precise, or is there any other reason why June 5, the date of first reading, is required to be put into the statute?
Hon. J. Smallwood: The intent of the amendment is simply for certainty, and no other reason.
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V. Anderson: I'm wondering if the minister might comment a bit about the intent of this section so that we may have her explanation about this section.
Interjection.
V. Anderson: On section 1.
The Chair: We are still on the amendment, hon. member.
V. Anderson: I'll wait until the amendment is finished.
Amendment approved.
On section 1 as amended.
Hon. J. Smallwood: Perhaps I might read into the record for the members the explanation of this section. It might help provide members with the background and the rationale and expedite some of the questions in that respect.
This section repeals and replaces existing section 72 of the Cooperative Association Act to close a loophole in the current wording of the section in order to ensure that housing cooperatives which receive public subsidies continue to operate as non-profit housing cooperatives and are prevented from distributing their assets to their members. Section 72, which was initially enacted to assist publicly subsidized housing cooperatives, complied with public funding arrangements. This section enables housing cooperatives to adopt an unalterable provision in their constitutional documents, preventing the cooperative from distributing its assets to its members upon dissolution. Housing cooperatives are required to adopt such a non-profit provision in order to be eligible for funding for public agencies.
This section ensures that the amended section 72 will apply to any housing cooperative which had on June 30, 1988 -- the date on which section 72 originally came into force -- a non-profit provision in any of its constitutional documents that prohibits the cooperative from distributing its assets to its members upon dissolution, regardless of whether the provision was in its memorandum, its rules, or both its memorandum and rules, and ensures that the provision remains unalterable.
To ensure that housing cooperatives which have already dissolved and innocent third parties are not affected by the retroactive amendment to section 72, this section also adds a new subsection (6) which excludes from the application of section 72 those housing cooperatives that were dissolved or had legally commenced dissolution pursuant to sections 293 or 297 of the Company Act before the date of first reading of this bill.
I hope that's of some help to members.
D. Mitchell: Thanks to the minister for that explanation as to what the loophole is here that we're trying to close. Could the minister give a little bit more background on the specifics of this particular amendment? I know that this amendment is proposed in large part because of the situation at one particular housing co-op in the province -- the Bracken Heights co-op in the constituency that I represent.
Can the minister tell us how it is that this loophole has not needed to be closed until now? Is it the case that no housing co-op society in British Columbia, or perhaps in Canada, has sought to take advantage of this loophole to date? I'd be interested in the minister's explanation of that. Also, could she add where British Columbia stands with respect to other provinces on similar legislation? Has this kind of an issue come to the fore in other jurisdictions in Canada, where housing cooperative societies have sought to be dissolved to the benefit of occupants of the housing co-op?
Hon. J. Smallwood: To our knowledge, this is the first. As soon as this particular initiative was brought to our attention, we acted both through order-in-council and now with the changes to the legislation, closing this loophole. This is a significant loophole in that the stock in this province is vulnerable. As we proceed through the legislation, you will see that there are sections that deal with the potential of other housing cooperatives that may have positioned themselves to take advantage of that loophole, and it captures them through the retroactivity, going back to 1988.
[2:45]
We have also spoken at the national housing cooperative association's annual general meeting, bringing it to the attention of their organization and asking them to go back and speak to their respective provinces to check and ensure that they have tended to their legislation. We have been in consultation with CMHC, because we believe there is a potential that other provinces may be in the same situation, and this valuable stock throughout Canada may likewise be at risk.
V. Anderson: I want to commend the minister for her presentation at the annual meeting of the housing co-ops across Canada. I had the opportunity to listen to her and can vouch that she did raise the flag and the warning about this, and she indicated that she would be acting.
Section 1(6) talks about the exemption of those who may have already wound up or are in the process of winding up. Is there an indication that groups have already acted to wind up their housing cooperatives, and are there particular bodies that you are aware of that have acted and to which this exemption does apply? Is it just in case there were some that we didn't know about?
Hon. J. Smallwood: It is simply precautionary. Neither the superintendent of cooperatives nor our ministry are aware of any that have initiated these actions.
V. Anderson: I'm assuming that the minister believes that there are none who have commenced this prior to this coming into effect and who would be affected.
Hon. J. Smallwood: That is correct. The caveat that I would like to put on that is that prior to this government's commitment to non-profit and cooperative non-market housing.... I can't speak for previous governments' diligence on this front of protecting affordable housing.
D. Mitchell: I wonder if the minister could make a comment, generally, about the possible continued dissolution of housing cooperative societies. My understanding of this section and of closing this loophole, which this section is going to
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achieve, is that it's not going to prevent housing cooperative associations or societies in the province from dissolving their societies. What it's going to do is prevent those societies from dissolving them in such a manner that some personal benefit would flow to the current directors or occupants of that cooperative housing. Is that correct? Will it still be possible for housing cooperative societies to dissolve in British Columbia?
Hon. J. Smallwood: Yes, you're absolutely correct. As we proceed through the sections, the way that a housing cooperative can dissolve and what has to happen to those assets will become clear. It's the intent of these amendments to preserve and protect the stock and ensure that this valuable resource of affordable housing is maintained within that affordable-housing stock for the province.
L. Hanson: What I'm still confused about -- and maybe the minister could comment on it -- is that in the case of cooperative housing, the members of the cooperative quite often build up personal equity in the housing. If there were that situation, is there a provision in here that would let them recoup that investment if they dissolved?
Hon. J. Smallwood: The member may be confusing the difference between an equity co-op and a co-op that is in the non-profit housing sector. These changes pertain exclusively to non-profit housing cooperatives; equity cooperatives are not captured in this amendment.
L. Hanson: I take from this that these housing cooperatives you talked about are totally subsidized by taxpayer funding, or totally built or created by taxpayer funding.
Hon. J. Smallwood: The point I want to make with this is that in the constitution of the housing cooperative, it spells out that the cooperative is specifically a non-profit housing cooperative. They receive public subsidies, either through the province or from the federal government when we're talking about the older stock. The key here is that in their constitution, as governed by the Cooperative Association Act, it is clearly spelled out under section 72 that this is non-profit and that it is the intent that this be held as a non-profit housing cooperative. An equity co-op, where there is some building up of personal equity in an individual unit in a co-op, is not affected and not governed by this provision.
V. Anderson: Under 72(2) in the section we are discussing, it indicates that if a housing cooperative does dissolve, it has two choices. If I understand it correctly, one choice is to give the funds to another housing cooperative or to a charitable organization registered under the Income Tax Act, but that registered organization does not need to be a housing co-op. I'm wondering if there is a concern about maintaining the housing funds back to the housing co-op rather than having them go out to some other charitable purpose. I note that this is a standard practice under the charitable societies act, but I am wondering about moneys that have been given specifically for housing now being allowed to go out to non-housing charitable societies.
Hon. J. Smallwood: I'm going to need to ask for some guidance. The member is asking about section 72(2)(a). I have an amendment to that section and would ask the Chair's guidance as to the appropriate time for tabling that amendment.
The Chair: Please proceed.
Hon. J. Smallwood: Having sought that guidance, I appreciate the Chair's recommendation. I would move an amendment to section 1, section 72(2)(a), which I am tabling today, and I will distribute copies to the members in the House. Let me read it for the record, and we will circulate a copy.
"Section 1, section 72(2)(a) is repealed and the following substituted: (a) if it is a housing cooperative described in subsection 1(a) or (b), the property shall be transferred to or distributed among one or more other organizations that are housing cooperatives to which this section applies;"
The intent and the change we have for you deletes any reference to registered charities. The intent of the amendments, as has been stated on a number of different occasions, is to maintain the housing in the cooperative housing stock. The reference to registered charities was not intended.
V. Anderson: I would like to commend the minister on the amendment, because I thought the other was contradictory to the very purpose of the act, and was surprised -- she was surprised, too, if I'm lip-reading.... So I appreciate that she had this prepared to bring in.
Amendment approved.
On section 1 as amended.
V. Anderson: Perhaps I should ask at this point if the minister has any other amendments that we're not aware of. That would save us time in the discussion.
Hon. J. Smallwood: The answer to the member's question is no. That is the only other amendment.
Section 1 as amended approved.
On section 2.
D. Mitchell: That doesn't necessarily mean that there won't be more amendments, but I'm glad to hear that the minister doesn't have any -- nor do I.
Section 2 of the bill is furthering the closing of the loophole that I think the minister referred to in the legislation. It deals with the distribution of assets to members in a housing cooperative society. The minister said, on the previous section, that there is no precedent in British Columbia that we know of, and perhaps not even in Canada that we're aware of, of a housing cooperative society distributing the assets to members in the way that we are trying to prevent with this act. In terms of section 2, why is this section necessary? And in terms of the distribution of assets to their members, are there any precedents in British Columbia where the assets of a non-profit housing cooperative society have been distributed to its members? Are there precedents for that at all?
Hon. J. Smallwood: I'll give the member the same answer we gave earlier on. We are not aware of any. That is not to say that it has not happened in the past. So in some sense this is due diligence. I think many of us were quite surprised that it was even a possibility. The fact that this province has taken the initiative to close the loophole and
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protect the stock, and is providing that leadership across Canada, is important and well worth the precautionary extent of the amendments in this bill. This will ensure that even if we are unaware of co-ops entering into dissolution or, for that matter, any co-ops that have made amendments already to their legal documents -- changes to their rules or memorandums -- this legislation now, even if they have not initiated the process, will require them to revert back to the primary intent of section 72, preserving that stock within the non-profit sector.
D. Mitchell: Thanks to the minister for that answer.
Just another brief question on the registrar referred to in this section that was amended. Could the minister tell us what the role and purpose, or function, of the registrar is? If the minister or her staff are not certain that any such co-op has been dissolved in this manner, then what role does the registrar play? Surely the registrar would keep records of this kind of information. It would seem to be pretty crucial if you're the registrar of housing cooperative societies to know if any had been dissolved and had had their assets distributed to members. It's curious to me that we don't have that information, and I just question the minister as to what the role of the registrar is. Is there something lacking here?
[3:00]
Hon. J. Smallwood: The superintendent of cooperatives' role is to register changes pertaining to the act, so he would only be aware of those that have been submitted to him -- or her, even though it is a man. At this point in time, because we have not surveyed all existing cooperatives throughout history, I'm not prepared to say absolutely.... I simply do not have that information. Again, the superintendent registers the applications for changes. They don't have a proactive or regulatory role, as I understand it.
V. Anderson: If I understand the minister correctly, there is the assumption that some societies may have already made changes in their constitutions. Is she aware that some have actually made changes in their constitutions? I gather from her nod she is saying that some have made changes. So, in effect, what she's doing is making a retroactive statement requiring every society to revoke those changes if they have already made such changes, or else the changes would be automatically revoked -- to be in effect when they first took them out. So they would go back to the original statements as of June 30, 1988.
Hon. J. Smallwood: That is correct.
V. Anderson: I have one other comment on that. Am I to understand, then, that the minister will be notifying all registered housing societies of this act so that they can take action accordingly? My understanding is that this will take place so that they don't make changes in the future, and those that have made these changes will be advised that they need to correct the changes as quickly as possible.
Hon. J. Smallwood: This gives me an opportunity to advise the member of our close working relationship with the Cooperative Housing Federation of British Columbia and CMHC. We will continue that relationship with the sector in bringing these changes to their attention, and we will examine other ways of communicating with housing cooperatives throughout the province, as well.
Section 2 approved.
On section 3.
D. Mitchell: This section deals with the liability of government. It provides immunity to the government from any litigation that arises pursuant to this bill. I'd like to thank the minister and her staff for their cooperation when briefing me on the bill generally, and on this section in particular. But I'd like to ask the minister why this section is in there. Why does the liability of the government need to be dealt with? Why does immunity need to be provided? Is it simply because of the current circumstances dealing with the particular housing cooperative society at Squamish, the Bracken Heights cooperative, and the possibility of legal action arising against the government for that situation?
The reason I raise this is the larger precedent we might be creating here in terms of government receiving immunity from legislation. The other reason I'd like to note is this. Currently, during this legislative session, we're dealing with an important piece of legislation the government has brought forward which deals with class actions. For the first time in British Columbia, it provides the opportunity for groups of individuals to come forward with class-action suits, and that includes class-action suits against the government, interestingly enough.
Hypothetically, I wonder whether this section would take precedence if members or directors of housing cooperative societies in the province decided for whatever reason to come forward with a class-action suit against the government of British Columbia for anything relating to the contents of this bill or to the amendments to the act. Or would the class-action legislation currently being brought forward by the minister's colleague the hon. Attorney General take precedence?
These are important questions. I support what the government is trying to achieve with this bill, but I wonder if this immunity is really required here.
Hon. J. Smallwood: I'm advised by legal counsel that while the amendment is not a necessity, it is simply for greater certainty and pertains specifically to this act.
D. Mitchell: As legislators, though, I think the minister would agree that we have to be careful when we provide any kind of immunity to the government or disallow any possibility that citizens can come forward and take legal action against the government. We need to be absolutely assured that it deals only with a specific situation. There's always a concern when this kind of immunity is provided to deal only with a specific situation, because it's now going to be enshrined in statute. I note the words in section 3(1) stating that this deals only with situations "resulting...by or from the enactment of this Act." I think those are fairly key words. I'd like to get the minister's assurance on the record, in debate in this committee this afternoon, that the words "by or from the enactment of this Act" refer specifically to this amendment to the act provided in Bill 46. Or do they also apply to the act that we are amending?
[ Page 15116 ]
Hon. J. Smallwood: The assurances sought are that it deals specifically with Bill 46, and I give the member those assurances. Again, I want to remind the member that the intent of the amendment is to close a loophole that would see the dissolution of non-profit housing cooperatives to the private benefit of the existing members. That was never intended in the original act. In closing this loophole, it ensures that the non-profit housing cooperative stock is secure and maintained. That is the intent of Bill 46. The provision that we are discussing deals only with Bill 46 and these amendments for that purpose.
D. Mitchell: I wonder if I could ask the minister whether or not this immunity from litigation implies that if any directors or members of a housing cooperative society in British Columbia wish to take legal action against the government in the future, it's not prohibiting that at all; it's only prohibiting such individuals from taking action against the government for closing this particular loophole. Is that what she's saying?
Hon. J. Smallwood: I'm simply going to reiterate that the prohibition on legal action deals only with Bill 46.
Section 3 approved.
On section 4.
D. Mitchell: On the commencement clause, maybe just a point of clarification from the minister. She explained earlier why the date June 30, 1988, is significant in terms of the coming into force of this legislation in the province. But the words, "...and is retroactive to the extent necessary to give it effect on and after that date...." Why is that language necessary? Why don't we just say it's retroactive to the date that the legislation came forward? It's language that I'm not familiar with. I'm always concerned about retroactive legislation. Does this give the government power to go beyond June 30? Or is it necessary to put that wording in there?
Hon. J. Smallwood: I'm really tempted to take a shot at the Ministry of Finance -- not representing them, of course. This is an abundance of caution. Recognizing that the legislation is the responsibility of the Ministry of Finance, I think the drafters have been very cautious, very specific and very clear in the drafting -- very much like some of the other questioning -- simply for greater certainty.
D. Mitchell: I won't make any comments about the minister's colleagues over in Finance. I will, but I won't in this forum; over in Committee A, I can do that.
The commencement clause relates only to section 1. Can we therefore assume that the rest of the bill dealing with other matters, including the liability issue that we discussed, comes into effect on the day that the bill is proclaimed into law? When does it come into effect?
Hon. J. Smallwood: Yes, that's correct.
D. Mitchell: I have one further question on the commencement, because this is fairly important. This bill has gone through the stages of approval in this Legislature very rapidly. The minister introduced the bill only on Monday. We had approval in principle yesterday, and here we are in committee stage today. Can the minister tell us if we can anticipate His Honour the Lieutenant-Governor coming to give royal assent to this bill today or tomorrow? We have gone through this fairly quickly, and we have assisted the minister in her deliberations for that purpose. When can we expect the bill to be proclaimed?
Hon. J. Smallwood: Unfortunately, I don't have that information here. As I shared with the member privately, we are very concerned about the action or the potential of dissolving a particular cooperative in the province, and we have moved very quickly to secure that property. As the member knows, that particular cooperative is in his own riding, and I would like to compliment him and thank him for his interest and support in dealing with this issue. It has been very important and well appreciated.
Section 4 approved.
Title approved.
Hon. J. Smallwood: I move that the committee rise and report the bill complete with amendment.
Motion approved.
The House resumed; D Lovick in the chair.
Bill 46, Cooperative Association Amendment Act, 1995, reported complete with amendment.
Deputy Speaker: When shall the bill be read a third time?
Hon. J. Smallwood: With leave of the House now, hon. Speaker.
Leave granted.
Bill 46, Cooperative Association Amendment Act, 1995, read a third time and passed.
Hon. J. Smallwood: Committee on Bill 18.
FOREST PRACTICES CODE OF BRITISH COLUMBIA AMENDMENT ACT, 1995
The House in committee on Bill 18; H. Giesbrecht in the chair.
[3:15]
On section 1.
D. Mitchell: We are getting into the amendments to the Forest Practices Code, a major piece of legislation that the hon. minister brought forward just a year ago. As an introductory comment, I wonder if the minster could let us know in general -- we have had a good second reading debate -- what the significance of the series of amendments to the code that we're going to be dealing with really represent today in terms of this major piece of legislation. Does it suggest that we are in the early stages of the Forest Practices Code, and it simply needs
[ Page 15117 ]
fine-tuning? Or does it suggest that perhaps the government is moving so rapidly with this new era of regulation in the woods that we're really having to think on our feet a little bit?
I note that Bill 18 represents some significant amendments; they're in some part the process of consultation with industry and other groups. Are there any problems in the minister's mind as to why we're moving forward, simply a year after bringing in the code, with such a significant set of amendments, including section 1 that we're on?
Hon. A. Petter: I think what I would do is simply reiterate what I said during second reading debate in response to similar concerns that were raised. That is that the code is a major innovation in this province. We have not previously had a single piece of legislation that tries to address all of the major concerns around forest practices in the way that this code does.
I recognized last year -- and I think we must collectively continue to recognize -- that this is a living document and, as we proceed, we will learn about how to improve this document. Over the last year, we have conducted further consultations and reviews and have learned from that experience -- and learning from that experience, we act on what we learn.
What we have today, I would say, are amendments that build very much -- they don't represent any major changes of direction or policy under the code -- on the general directions that the code took. They refine, clarify and improve, in some areas, code requirements. In other areas, they move to better protect the financial interests of the Crown with respect to silviculture obligations. In other areas, they respond to concerns about reducing administrative burdens. Certainly it is our goal to see that the code requirements are met, but we want to try and achieve those requirements with a minimum of administrative burden on those who must operate within and under the code. Finally, there is that category of amendments which I guess are normally referred to as housekeeping amendments -- things that were picked up over the last year, here or there, as requiring further clarification or correction, or typographical errors -- those kinds of things.
So this is building on the initiative of last year. It is not a major redirection; it's certainly not a retrenchment. It's a recognition that we have to learn as we go. We're doing that, and we're making amendments in order to reflect that knowledge.
D. Mitchell: I take it from what the minister is saying, then, that the Forest Practices Code is a living document that can likely be expected to receive amendments in each session of the Legislature for the next several years as we learn to use this code with the province's most important resource, the forest resource.
On section 1 of Bill 18, we have a number of definitional changes to the Forest Practices Code. I think some of them are significant. I'd like to ask the minister: what in particular has been driving these definitional changes? What is behind these definitional changes?
I know that the minister speaks of consultation with a variety of groups. It would appear that he has spoken with a few people here -- perhaps ranchers, environmentalists and a few others, and perhaps the industry as well. When we take a look, for instance, at the definition of "community watershed," which is the first definitional change in section 1.... I'd like to ask the minister: why this definitional change? What about the joint management with the Ministry of Environment, and his colleague the Minister of Environment, that he spoke of in the debate on the Forest Practices Code last year? What about the authority of the Minister of Health to designate watersheds and grant water licences?
What's happening with this definitional change? Is it that the Minister of Forests and the Ministry of Forests are really taking greater and much more exclusive authority over the management of the Forest Practices Code? Is this interministerial cooperation that the minister spoke of last year when the code was introduced really being abandoned? Is the Ministry of Environment being edged out? Is the Ministry of Health, which normally has input and a say in the granting of water licences and the designation of watersheds, going to continue to play any role whatsoever? Or is there a centralization of power here within the Ministry of Forests? Is that perhaps what's driving some of these definitional changes?
Hon. A. Petter: The member asked questions about the definitional changes. I think the definitional changes, depending on the definition that's being looked at, are there to clarify and improve the code in a number of different ways, depending on the definition.
With respect to the community watershed definition, the reference is to a section of the act, and perhaps when we get to that section, we can talk more specifically about the nature of those changes. They relate to the fact that there was need for clarity around the area that was being defined as a community watershed, being the area above the intake as opposed to areas that might be below the intake for drawing upon a community watershed.
As for the reference to the Ministry of Health, upon further consultation among ministries it was felt that it would place an undue administrative burden to formally require the Ministry of Health's involvement. Certainly the Ministry of Health is involved in the designation process that leads to community watersheds, and indeed, as we'll see when we get to that section, the Ministry of Environment is involved and continues to be involved in the designation of community watersheds.
D. Mitchell: Just for the record, I wonder if the minister could tell us about the scope that is being contemplated here: the number of community watersheds that have been designated to date in the province, how many will be proposed, and where they're located, just generally speaking. Are they all on the coast, in the interior in particular, or are they throughout the province? Could you give us an idea of the order of magnitude of what we're dealing with here with this concept of community watersheds -- where are they, how many are there currently, and how many are currently proposed?
Hon. A. Petter: Under the code, a number of community watersheds were automatically given designation by virtue of the provisions that were introduced last year. I'm informed that that number is about 488 -- 488 community watersheds, representing about 1.75 percent of the province's land base. I don't have a spatial distribution of those watersheds; there may be some geographers in the room who do. But certainly I'll be happy to try to get that and communicate it to the member at some future time if he requires it.
[ Page 15118 ]
W. Hurd: I just have a brief clarification question under the definitions section with respect to community watersheds. I appreciate the briefing that I received from ministry staff, which was very helpful, and I thank the minister for that opportunity.
But with respect to community watersheds, it's my understanding that a forest licensee was previously required to have a sign-off from the Ministry of Health with respect to the logging plans in a watershed, whereas the change that's being proposed in the definitions section no longer requires that regulatory sign-off. Is that what we're dealing with here? I suppose, if that is the case, I'd be seeking assurance from the minister that the abilities of the Ministry of Health to test for water quality and for the impacts of soil disturbance still remain intact, and that what we're dealing with here is nothing more than a requirement that would allow the licensee to deal directly with the ministry on the plans. But there has been no lessening of the ability of the Ministry of Health -- particularly in watersheds, where residents are depending on the supply of clean drinking water -- to have input into that concern?
Hon. A. Petter: There has been no lessening of requirements. Health sets the standards, and Health's input is reflected through the water licensing process. There was never a requirement of Health to sign off on logging plans; there was an expectation, I think, under the provision introduced last year, that Health would be involved in the community watershed designation. But that, on review, was considered superfluous, unnecessary, by virtue of Health's direct involvement in the water licensing process, which in turn is reflected in that designation process. In consultation with ministries it was felt that it simply imposed an unnecessary additional step to have a formal sign-off of community watershed designations. But the input of Health -- the degree to which Health will continue to remain a presence in protecting health values -- is undiminished by these changes.
W. Hurd: Just continuing with the definition section, then, there are references made to grazing schedules and natural range barriers. I assume that these are designations that already exist in the statutes -- in the Range Act or the Forest Act, for example. Are these terms just being added to the Forest Practices Code for the purpose of consistency with other statutes that affect forest and land use in British Columbia?
Hon. A. Petter: Grazing schedules and natural range barriers are not, I believe, defined elsewhere. In the case of the natural range barrier, it was included in the act last year but wasn't defined, and it is being better defined here for further clarity. In the case of the grazing schedule, this is an industry term which I think is well understood within the industry, but it is not defined as such in other legislation.
W. Hurd: Just continuing with the definition section, section 1(b) refers to defining forest practice to include industrial road use. I wonder if the minister could just clarify whether the term "industrial road" implies a broader definition than a logging road. Are we dealing with any type of road that might be constructed for any use, whether it be mining or to access private property, for example? It just seems curious that the ministry would see a need to include industrial road use. Is it the ministry's concern that there may be some types of roads that the Forest Practices Code previously wouldn't have applied to?
Hon. A. Petter: I think this is more in the nature of a clarification. This is one of these issues where, in fact, the term "industrial use" is used elsewhere in the act in the road section of the code, and to carry that forward into the forest practices definition provides consistency. But obviously, yes, the term "industrial use" is somewhat broader and does embrace other uses of roads which, of course, can cause more damage and degradation than would be the case if they were simply for forestry use. But I want to reinforce that that is already reflected in the road sections, and it is simply being carried forward here into the forest practices definition for greater clarity.
W. Hurd: Finally, under section 1(c), there is reference made to a higher-level plan under the Forest Act. I'm just a little confused by this particular definition, which seems to imply that a plan already on the books of the ministry, so designated under the Forest Act, may in fact be designated as a higher-level plan under the Forest Practices Code. I'm just wondering whether that's a retroactive provision which would enable a licensee, for example, not to have to resubmit plans to be in accordance with the code. I wonder if I could just get a clarification from the minister on that, because clearly one of the concerns out there is that there may be a requirement to resubmit a number of plans that are currently on the books, and this particular definition would appear to be a relaxing of that standard. I would welcome a clarification on that.
Hon. A. Petter: The higher-level plan refers to plans as broad as an LRMP plan or as local as an LRUP plan, local plan or regional-type plan. This provision allows those plans that are currently in place, or that have been in place in the past, to be grandparented into the code.Hhowever, they have to be consistent with the code, and therefore there may be some old plans that would require modification or reconsideration before they are brought within the code. This provision allows for that consideration to ensure that plans are brought in in an efficient way, but not if they are of a nature that would be inconsistent with the code.
[3:30]
W. Hurd: If the minister is suggesting that a local land use plan is, in fact, the type of plan that's envisaged under this section, that surprises me somewhat, because we're dealing with the ability of the regional manager to designate such a plan with this particular section. We are dealing with that type of broad land use plan, not a harvesting plan or a range development plan. It's strictly a broader land use process that may be formulated by community stakeholders, as is the case with the LRMP. It's strictly a broader plan that might be developed by the community. That's what we're dealing with here.
Hon. A. Petter: Yes, we're talking about broader plans, although, as I said, an LRUP can be fairly confined in terms of the area it covers. All this change does is allow us and the chief forester to screen out plans that may prove to be inconsistent with the code. In other words, it doesn't make their
[ Page 15119 ]
designation automatic; it requires attention to the plan to make sure that it's consistent and can live with the other provisions of the code.
Section 1 approved.
On section 2.
D. Mitchell: Just a couple of general questions on section 2. It's a fairly important section of this bill. I'd just like to add my words to those of the member for Surrey-White Rock to say thank you to the minister for his responsiveness in providing and arranging for briefings on this bill by his officials. They did an excellent job, and hopefully that's going to expedite things in committee this afternoon.
On section 2 of the bill, we're dealing with management plans, and we're dealing with the power of the chief forester of the province to require holders of tree farm licences to provide information regarding the inventories on their TFLs. It would be surprising to some to note that up until now holders of TFLs -- licensees who hold that area-based tenure -- have not been required to provide that kind of information about inventories on the TFL to the chief forester. It makes you wonder about management working plans on TFLs and the kind of accountability that takes place. It apparently has not been there.
I'd like to ask the minister about the role of the chief forester in this regard. Does this amendment really suggest the changed role and mandate of the chief forester as an independent officer as a result of the code? I'd appreciate the minister's comments on the role of the chief forester and how the code is impacting on it with respect to this section and generally, and also on whether or not this section is going to provide any extra costs to industry -- in particular to the holders of tree farm licences.
Hon. A. Petter: The member raises a number of questions. First of all, this provision is really designed to fill a gap. The provision of inventory information to the chief forester is already provided for in the code and will occur upon replacement, but there are some tree farm licences that have already been replaced. In the interim, there's a gap in time in which the chief forester might have difficulty obtaining inventory information, and this fills that gap.
In terms of the larger questions.... Let me go to the cost question. Yes, obviously the provision of inventory information to the chief forester may impose an additional cost on licence holders, although much of this inventory information is already within their possession. It's simply a matter of providing it in a way that the chief forester can gain access to it and make use of it.
Finally, in terms of the role of the chief forester, I don't think this changes the fundamental role. The chief forester has many roles: he has a role in determining cut levels, which is quite independent, but he also has a role to carry out the responsibilities of chief forester to ensure compliance with the Forest Practices Code and good forest management. That role has certainly been strengthened and given more substance by the code, but that was always notionally the role of the chief forester, even under the more modest provisions of the Forest Act.
What I would say is that this provision and others give the chief forester the tools he requires to do the job that has always been expected of him. The job hasn't changed; we're just saying to the chief forester: "Here are some tools for you to do what the public has been expecting you to do; but perhaps due to deficiencies in political will and legislation, you've not been able to do it in the past."
W. Hurd: Following up on the questions from the member for West Vancouver-Garibaldi, the minister will be aware that there's some disparity between the tree farm licences in the province with respect to the inventory availability or inventory data they have. I'm aware that some TFLs have become very sophisticated in terms of their long-term growth yields and other such information. I wonder whether under section 2 we'd be dealing with a threshold of information that's spelled out in legislation elsewhere. For example, if a tree farm licence holder had done an enhanced inventory projection, or had an enhanced forestry regime in place, would there be a requirement to submit information beyond the level that might be generally provided by a TFL holder? Would they have to provide computer programs, for example, on long-term growth and yields to the chief forester under this section? Or are we dealing with just a standard level of information which would have to be exchanged?
Hon. A. Petter: The short answer is that it is to a uniform threshold. That is, the amount of inventory information that will be expected is the same amount as is expected with respect to timber supply area licence holders. It does not go beyond that to require the provision of information simply because someone has taken the initiative and acquired that information.
W. Hurd: I have just a couple of other brief questions with respect to section 2. The minister's response obviously invites a question, then, about administrative penalties. One would assume that there would be some penalties that would accrue under the act for a failure to comply with section 2.
I guess I can't let the issue go by without raising the fact that because this enhanced inventory information does exist on some TFLs, it's somewhat of a shame that there weren't some incentives built into the code that would induce TFL holders to undertake those kinds of enhanced long-term projections on growth and yields, and that there is no recognition within the code that they should be rewarded for providing that incremental information.
As we reflect back on the debate which occurred last year with respect to the code, I know one of the presentations the minister received from industry was a concern that there weren't enough of these types of incentives built in. Maybe I can just ask the minister whether he would expect TFL holders to go above and beyond those thresholds, of their own volition, to provide useful information to the chief forester with respect to his abilities to come up with a long-run sustained harvest in the province. Would he hope that enhanced inventory information would be voluntarily forwarded to the chief forester, or does he anticipate that most of the TFL holders in the province will simply comply with the minimum thresholds? It has been one of the underutilized resources in the province with respect to the fact that many TFL holders have information which I think would be of great interest to the chief forester.
[ Page 15120 ]
Hon. A. Petter: First, as regards the administrative penalties, notionally under the act it would be possible for there to be an administrative penalty for failure to provide information. I should say at this time that there is no intention to create such a penalty, and none has been created under regulations. It's certainly our hope that this is a requirement that will be met without necessitating the creation of such penalties; that's certainly the intention at this point.
With respect to information and incentives to provide information, I should clarify that information with respect to timber supply is already required, by virtue of other provisions under the Forest Act. What we're dealing with here is additional information that's required for the code.
I guess what I'd say by way of general comment is that the reward that tree farm licence holders may reap as a result of taking additional initiative and acquiring additional information is in the form of giving themselves a better position to make investments that will produce greater volumes of timber in the future, which will, of course, because of the area-based nature of the tenure, redound to their benefit. So there are incentives for those who hold tree farm licences to acquire additional information, particularly with respect to information that's relevant to enhancing timber supply. That information can produce its own rewards.
W. Hurd: That invites just one other brief question. With respect to situations where there's an area-based takeaway, a reduction of a TFL for any reason, would there be an expectation under this section that the same level of compliance would be necessary for the areas that have been alienated from timber harvesting? Because clearly, as the minister will be aware, there have been incidents where the area-based tenure has been reduced. In fact, it could be argued that one of the real challenges and one of the problems we've had in British Columbia is that there have been a number of area-based withdrawals from these management units that have resulted in considerable problems with respect to sustainable harvest levels, etc. I'm just seeking clarification. Assuming that there was an area-based takeaway in the future, would the same level of requirement for the flow of information apply, even though the area might be, for whatever reason, declared as an area that couldn't be harvested?
Hon. A. Petter: I think the short answer is that if it's an area that is deleted from the tree farm licence for whatever reason -- by virtue of the creation of a park or it's for urban use, or whatever it may be -- then these requirements would no longer apply, and there would be no requirement for provision of information. If it's an area within the tree farm licence, then it's within the capacity of the chief forester to ask for appropriate information that's relevant to the preparation of a management plan.
W. Hurd: Really, my line of questioning was sort of based on the potential for expropriation costs. The minister has indicated that there wouldn't be a requirement to furnish that information if there was a takeaway from the area-based tenure. Would he not agree with the view that that might leave the Crown without sufficient information to deal with an expropriation case? Would that be something that the ministry would be concerned about? When we deal with some of the effects of the land use plans in the province, there will be compensation implications for the Crown. I just wonder whether he feels that the information that he might have on the TFL as a whole would be sufficient information in terms of an expropriation case or a compensation case. Or would the Crown then have to go out and get that information?
Hon. A. Petter: The information that's spoken of here is information that's relevant to forest management. As I already indicated, information on timber supply is provided for elsewhere, and requirements concerning expropriation and compensation are provided for under the Forest Act. I think those are already well provided for and are not really the subject of this section.
R. Neufeld: Briefly, this adds quite a bit to the bill. In fact, when I go back to the minister's comments from last year, he really stated that there wasn't too much to be concerned about in this section, but this adds quite a bit to it.
I'm just wondering about the part about an inventory of the forest, recreation and cultural heritage resources of the tree farm licence area. What happens to the company if some of these cultural areas, or whatever, are missed in the plans -- that no one knows about at the present time, that aren't brought forward? Are we just dealing with the known ones that are here today? How does the ministry deal with those?
[3:45]
Hon. A. Petter: I guess what I would say by way of an answer is that while there is an expectation that inventory information will be provided, clearly that expectation is not an unrealistic one, and it is limited by what information is available.
In the case of cultural inventories, the government itself has indicated it will take a leadership role and provide overview assessments, and work with licence holders in that regard. We will obviously expect licence holders to cooperate and do their best. But the intention here is not to require people to provide information that is not available to them or that was not disclosed during inventory work. Like all aspects of the code, these requirements are ones that must be balanced against the practicalities and realities.
A. Warnke: I just have a quick, short question. Obviously, through this section, the chief forester's ability to increase his administrative capabilities is certainly met. But there are a couple of things I just want to explore. Perhaps this will be dealt with through some sort of ministerial direction, through regulations established later on and so on. It kind of follows up from the point mentioned by the member for Peace River North; that is, the criteria by which it is determined whether the inventory of forest, recreation or cultural heritage resources is really met.
Let me put it in this kind of context. The minister partly answered the question by saying that those who have TFLs have the ability to assess accurately whether they're meeting the provisions. But when we get into recreation and cultural heritage resources, there may be some difficulty in terms of assessing the current state. Indeed, there are the requirements that are met in subsection (3), I understand. I suppose I'm looking further for the criteria for establishing that, especially when we sort of put pressure on TFL holders to assess the
[ Page 15121 ]
future status of where they're going. Again, this is outlined in subsection (5), which certainly plots out the aspirations as to what TFL holders are required to do.
I guess I'm essentially following up on the criteria so that people do not find themselves in a very difficult situation, because the potential is there for them to have their licences taken away if they do not comply with certain kinds of regulations. Therefore I think it's necessary to lay out just exactly what the criteria are so that we're confident that TFL holders will meet them.
The Chair: I believe the member for Vancouver-Langara wishes to make an introduction.
Leave granted.
V. Anderson: I would ask the House to help make welcome a group of students and those who are with them from the Vancouver Hebrew Academy in the Vancouver-Langara riding. Their teacher is Ms. Claire Anderson, and those with her are Judy Epstein, Lisa Estren and John Gruneau. Would the House make them very welcome.
Hon. A. Petter: I think the best way for me to answer the question that was put prior to the introduction is to say that if you go back, the chief forester already expects this information to be provided. There is already that expectation and requirement under the code. What we're trying to do here is fill a gap that existed as a result of the code not covering off these particular situations in which there was a replacement already in place that did not have these requirements. So this is an extension of existing requirements. The provision of these kinds of inventories -- recreation and cultural inventories -- is being set out by the chief forester in a way that is realistic. If the licence holder follows the basic prescription set out, there should be no difficulty. This is not a wholly new enterprise; this is simply an extension of the requirement to fill this particular gap that existed.
Section 2 approved.
On section 3.
W. Hurd: I have a general question that actually could probably apply equally to sections 3, 4, 5 and 6 of Bill 18. It is an observation that all three of these sections, particularly section 3, seem to imply a relaxing of the requirements under the code. Section 3 makes reference to the removal of a requirement that logging plans specify road construction and deactivation. Section 4, which we will get to eventually, removes the requirement that the silvicultural prescription be consistent with the five-year plans.
With respect to section 3 but probably of relevance to the other two sections, I wonder if these changes are the result of problems that have been determined in the application of the code in the field. Do they represent a lessening of the paperwork or of the regulatory burden for forest licensees? I would welcome a general observation from the minister on whether these amendments, particularly referring to section 3, will make it easier for forest licensees with harvest plans or development plans to not have to reinvent the wheel as they seek to ensure that their plans are in compliance with the code.
Hon. A. Petter: I would prefer to see these not as a relaxation of standards but as a removing of unnecessary administrative burdens -- that category I referred to earlier. Under section 3, for example, the information that is no longer going to be required as an aspect of logging plans is provided for elsewhere under the forest road regulation, so it doesn't make sense to require it in both places. What is really happening here is that we are removing redundancies in situations in which the same information need not be provided twice, in a way that would encourage paper flow. It may be good for the pulp and paper industry, but it wouldn't be particularly efficient and wouldn't in any way improve the requirements that are expected. But there is no reduction in the substantive requirements or expectations here; it is simply removing redundancies and streamlining.
W. Hurd: With respect to section 3, I'm assuming that the logging plans definition refers to the harvesting plan that is forwarded to the Minister of Forests for approval of a cutblock plan. I would welcome clarification on that.
Clearly, since one would assume that a number of these requirements in the code carried with them administrative penalties for non-compliance, I'm still curious as to why the ministry would deem it necessary to remove the requirement that logging plans specify road construction and deactivation methods. Is the minister saying that this information is already in the plans that are approved by the ministry, or was this an additional requirement that existed only under the code and is now being changed? I still can't seem to achieve clarification on that within my own mind and would welcome the minister's suggestions on it.
Hon. A. Petter: In the case of road construction methods, those are addressed by road layout and designs required by the forest road regulation, so there is no need for them to be covered off or specified in the logging plan. In the case of deactivation methods, they are addressed in deactivation prescriptions that are required under section 64(5) of the act, so there is no need for them to be covered off in logging plans. As I say, it's not a case of doing away with these requirements but of simply recognizing that they are provided for elsewhere.
W. Hurd: Just to follow up on that, there is no lessening of responsibility by the licensee, even though he or she or the company may forward a logging or harvesting plan that receives approval by the ministry and does not contain a strategy for road construction or deactivation. Even though that may not be the case, because there's a requirement elsewhere, it is considered a superfluous regulation under the code. I guess my only question, then, would be whether there are any administrative penalties or other penalties called for in the other statutes to which the minister alluded that would penalize licensees for improper deactivation or improper road construction. I assume that that is dealt with under the regulations elsewhere and that the same level of penalties would apply.
I think it's an important issue, because the minister, during his second reading debate last year on the code, I think, specified the importance of the big stick, so to speak, that existed under the code. I just wonder whether there has been any lessening or adjustment of the administrative penalties with respect to a road that may be improperly deactivated, or
[ Page 15122 ]
a road that might have been improperly engineered and there's slippage or erosion or some other situation.
Hon. A. Petter: This section does not in any way affect the ability to create or apply administrative penalties, except insofar as, I suppose, the provision is more specific when it's set out in a road layout and design as supposed to a general logging plan. But the other provisions I referred to are provisions of the code. The same administrative penalty provisions would apply to them as they would to logging plans. It's simply a question here of not requiring a licensee to do the same thing twice in two different places.
R. Neufeld: Earlier in discussions on definitions we talked about industrial roads, where the definition of industrial road was the same as for a logging road. Did I understand the minister to say that, and if so...? There are all different kinds of industries that use roads out in the wilderness, such as the oil and gas industry, yet I see logging plans.... How do we correlate industrial roads? Are they just the roads that the logging companies use? Are those the only ones we're concerned about? What about the mining industry and the oil and gas industry? I know the oil and gas industry has an awful lot of winter roads in the constituency that I represent. Some of them go through timber, and of course, they have to go through the Ministry of Forests and log that commercial timber, which is laudable and good. But there is a lot of land they travel through where there is no timber at all. How does this apply to those users?
Hon. A. Petter: I'd like to clarify my earlier statement. I suggested that industrial use is not the same thing -- it is broader than logging use -- but it was already provided for last year in the code under the road provisions. I think the member makes a good point: there are other people who construct roads for other purposes within the provincial forest. When they do so, they must adhere to code requirements. That may be an additional reason -- not the primary one but an additional reason -- that it makes sense to provide for road layout and construction within road layout and design rather than as part of logging plans as well. The road layout and design provisions speak to all road layouts; they're not attached to just those that are part of a logging operation.
Section 3 approved.
On section 4.
W. Hurd: Just a very brief question with respect to section 4, which, as the explanatory note indicates, removes the requirement for a silvicultural prescription, which I assume is the strategy, or at least the legal requirement, for a preharvest silvicultural prescription, which refers, I guess, to the plan before harvest as to how the licensee intends to undertake the reforestation obligations under the act. Why would there be a removal here of the need to have that consistent with a five-year silvicultural plan? I wonder if the minister could just offer us an explanation and an assurance that that in fact doesn't represent a relaxation in any way of the importance of having consistency not only annually but over a five-year period.
[4:00]
Hon. A. Petter: The five-year silvicultural plan is not a direction to silvicultural activities; it really is a summary -- hopefully a convenient summary, for use by government and the public -- of activities carried out under silvicultural prescriptions and stand management prescriptions over the preceding five-year period. Therefore, to make silvicultural prescriptions consistent with the five-year plan really would have accomplished nothing and would simply have imposed a significant and unnecessary administrative burden on licensees. If we didn't do this change, government would frequently be required to amend their five-year plans when new silvicultural activities are proposed. As I said, this would have done nothing to improve silvicultural activity; it would have simply created an unnecessary administrative burden.
So the answer is no, there's no lessening of standards here at all; it's simply a matter, again, of addressing an unintended administrative burden and removing that burden in a way that makes some sense.
[F. Garden in the chair.]
Sections 4 and 5 approved.
On section 6.
W. Hurd: With respect to section 6, the ministry staff did provide me with a briefing on this change. It sounded logical at the time, but I must confess that I've since forgotten exactly what was offered. I assume that the grazing schedule required for unfenced grazing land is a recognition that as long as the appropriate head of cattle, for example, are on Crown rangeland.... I wonder if the minister could just explain exactly what additional imposition this might impose on the holders of range licences in the province.
Hon. A. Petter: I hate to shock the member, but in fact its intention is to remove what would otherwise be an administrative imposition. The concern that's being addressed here is that private land that is associated with Crown grazing land has, in the past, been subject to a grazing schedule but not to other regulatory or administrative requirements. The way the act was phrased, it raised a concern on the part of range holders that their private land might be subject to additional administrative requirements. That was not the intention, and this simply clarifies that that is not the intention, by limiting the Crown's capacity -- to only apply the range schedule as is the current practice and not to apply additional requirements to private land.
Section 6 approved.
On Section 7.
W. Hurd: This is an interesting section which requires the holder of a pulpwood agreement, which is a volume-based licence, to prepare a forest development plan. I wonder if the minister could tell us exactly what incremental requirements are envisaged here. Are we talking about the same kind of plan that would be submitted by the licensee for any other type of licence? Is this an additional requirement for this type of licence -- which, as the minister knows, is put out for competitive bidding, I understand? I'd just welcome a clarification of whether he feels this was a gap in the Forest Act that didn't require the holder of a pulpwood agreement to file this particular plan with the ministry.
[ Page 15123 ]
Hon. A. Petter: Yes. The nature of forest development plans that would be required here would be similar to that of forest development plans required on other tenures and, indeed, required as a matter of contract by some, but not all, pulpwood agreements that are current -- I think all of the ones that are currently active, but not all that are in existence. This simply clarifies that those same forest development plan requirements would apply to all pulpwood agreement holders, whether they are provided for as a matter of contract or not.
Sections 7 and 8 approved.
On section 9.
W. Hurd: I just want a brief clarification on section 9, which refers to woodlot licence holders. I understand that with respect to the private land portion of a woodlot licence, there is a lessening again of a requirement by the holder with respect to silviculture treatment. I wonder if the minister could tell us whether this section was the result of consultation with or input from the holders of woodlot licences in the province, and what impact this might have on the holders of those licences and their activities on their own land.
Hon. A. Petter: I think this helps to clarify a situation with respect to woodlot licences which may embrace both Crown and private land within their boundaries. The intention is not to require those licence holders to prepare stand management prescriptions; that is a matter for them to determine. Those prescriptions relate to incremental activities. If they choose to undertake those activities on their private land, that's not a matter we intend to regulate through the code.
Sections 9 through 11 inclusive approved.
On section 12.
W. Hurd: I did receive a briefing from ministry staff on this which I found helpful. The way the issue was explained to me was that this provided a method of not having a person who is in any way affected by an adjustment of the area under their licence having to file a silviculture prescription if the district manager is satisfied that the person will carry out only planting to supplement previous planting or natural regeneration. I wonder if the minister could tell us exactly the circumstances under which the district manager might be asked or required -- or his sign-off would be required.... Under what circumstances would the licensee approach the district manager for this kind of relief?
Hon. A. Petter: I don't know quite how to answer the question, because the member's preamble sort of answered it. In cases in backlog areas where there's a need to go back and do some fill planting, which is a low-impact activity -- and obviously we are concerned to cover off that backlog planting as quickly as possible -- it simply doesn't make sense in most cases to require that there be a silvicultural prescription to authorize that activity. Rather than putting unnecessary paperwork in the way of those who want to take on that activity, it is more desirable to allow the district manager to grant an exemption where in fact a prescription would not be necessary because the activity is low-impact and we should get on with it as quickly as possible.
Sections 12 and 13 approved.
On section 14.
G. Wilson: When you kept asking about section 13, hon. Chair, I was beginning to wonder whether you knew something we didn't -- I don't know. Having received such a thorough briefing from ministry staff, I was certain there wasn't much to that.
With respect to section 14, the Chair will be aware that I have served notice of proposed amendments to section 14.8(a) and section 14.10(b). What is being proposed here is really just a question of language, and what it does is to put into written form what most people would concede is in fact in place now.
The reason I'm doing it is that I have sat in on enough local resource use planning sessions and watershed management area committee plans at the community level over the past ten years to know that there are still people out there who will dispute what a drainage area is or that the drainage area should go to the point of drainage divide. As a professional geographer and somebody who has been involved in resource economics, I would concur with the members from the minister's staff who I met with earlier this morning to discuss this matter. Everybody who is involved in the drafting of this material thinks that a drainage area in fact goes to the point of drainage divide, but that isn't specified anywhere.
I was advised that the forest practices and community watershed guidebook makes this somewhat clear. In trying to get a copy of that, I was advised this morning that it's not available. It isn't printed yet, so we won't be able to get it until sometime in July.
I don't want to miss this opportunity to move this amendment, which I think is a sensible amendment that just clarifies what is intended by the term "drainage area." It would insert ", to the point of drainage divide" following the words "the drainage area" and prior to the words "above the most downstream point." I have already tabled the amendment -- if the minister can see his way to putting in that minor amendment. I'm sure that if the problem with amending it is moving it directly to third reading, we could try and get some unanimity in the House to be able to do that.
The Chair: Are you moving this as one amendment, member? There are two amendments, but you are moving them as one, I presume.
G. Wilson: I'm moving it as one because it's the same thing, and it affects the one section. There's no point in saying the same....
The Chair: Okay, as long as we're aware of that. The minister can respond.
On the amendment.
Hon. A. Petter: I accept that the amendment is offered in a helpful way, and I agree that the intent of the amendment is to clarify. Unfortunately, as is so often the case, amendments intended to clarify can have the opposite effect. Staff did review, following the briefing this morning, the member's point and did confirm to my satisfaction that the definition we now have -- with the help that will be provided in its application through guidebooks -- does meet the member's point.
[ Page 15124 ]
I simply point out that the member defeats his own purpose with the amendment in an unfortunate way, because if you add the words "to the point of drainage divide" after the words "the drainage area," the implication is that the drainage area might be beyond the point of drainage divide, which is the very point the member is saying ought not to be the case. Trying to clarify the drainage area to the point of drainage divide suggests that, without that wording, the drainage area might embrace more than that.
We, of course, are saying that is not the case. The drainage area as currently defined means the same thing and fully satisfies the member's concerns. Based on staff's advice and our review, I'm afraid I'm going to adhere to that advice and speak in opposition to what I accept is a constructively offered amendment but one that I cannot accept.
G. Wilson: The minister knows that the drainage area can't go beyond the point of drainage divide. That is its maximum. What it says, essentially, is that it's the drainage area to the maximum point. You can't possibly go beyond it, but it can certainly be less than that. The way it's worded now, I can tell the minister, has been a point of dispute in LRUP and community watershed planning and in.... I've sat on committees where professional foresters have vigorously argued that the drainage area does not include area within the drainage divide. So, with all due respect, you can't possibly assume it goes beyond it, because it can't physically do that. Water doesn't flow uphill.
[4:15]
Hon. A. Petter: Either way, the point stands, whether it's less or more. The point the staff are making is that the term "drainage area" applies to the entire drainage area above the intake. That's staff's interpretation: up to point of divide. That will be reflected in the guidebooks. To add these words suggests, therefore, if I take the member's point about not going beyond, that but for these words, "drainage area" might encompass less. That could have all....
The trouble is that by confirming that notion, one can in fact reinforce the very argument the member is trying to oppose elsewhere. So I think the more constructive answer is the one staff has said, and that is: let us proceed on the assumption the drainage area will in fact apply to the entire drainage area. That's the way it will be applied; resolve it in that way.
If the member is not satisfied a year hence that his concerns have been addressed, I'm certainly prepared to entertain it at that time. But to suggest that drainage area might mean less than -- or more than, but I'll settle with less than -- the point of divide is to yield to the very argument the member is trying to not yield to. So I think we're better to go with the staff's advice here, rely upon the staff to interpret and apply drainage area as meaning the entire drainage area -- i.e., to the point of divide -- and proceed on that basis.
G. Wilson: This is my last shot at trying to change the minister's mind, where it seems that he's going to take staff advice. The problem with the community watershed guidebook is that it isn't printed yet; we haven't seen it. I was advised in the briefing this morning that by getting in touch with Bob Harding, whose job it is to provide this, I could have this to study prior to this debate. He didn't have a copy of it. And -- going through the minister's office to talk to the ministerial assistants -- they didn't have a copy of it. I was finally advised that nobody had a copy of it because it isn't written and printed yet. So I hardly take comfort in the fact that the guidelines are going to deal with this issue if they're not even there.
As a result, this amendment simply makes clear what I think all of us in this House would agree should be a drainage area. I really think that the minister, by not accepting this amendment, is suggesting that in fact it may be less -- and in some cases it probably will be less, if the local plans put in place prescribe it that way on the maps that are drawn. I think that is unfortunate, because it should not be discretionary in that sense; it has to be to the point of divide. And that's what this language in the amendment would say. Leaving it out implies there is a discretionary basis by which that can be negotiated.
Hon. A. Petter: My final shot, because there's no substantive disagreement. Staff agree that the drainage area above the most downstream point means the entire drainage area -- that is, to the point of divide. There is no disagreement about that. That will be reflected, in this case, under the code. This decision will be made as a matter of application of the code by government, and that will reflect the member's intention; he has my assurance. If it doesn't, come back and see me, and we can work it through.
Incidentally, Bob Harding was not the contact person on this issue, but I nevertheless take the member's point that the guidebook isn't yet available. But semantically, the member has to acknowledge that once you acknowledge here the drainage area to the point of drainage divide, that implies that without those words the term "drainage area" might mean less than that. And that's the very suggestion we do not want to feed or confirm, because it is our position that the term "drainage area" does apply to the entire drainage area including the point up to the point of drainage divide.
So we have no disagreement. It's just a question of how we reach that point, and I, with due respect to the member, will continue to rely upon staff's advice on this particular semantical point to achieve the substantive result we all collectively desire.
R. Chisholm: I ask leave to make an introduction.
Leave granted.
R. Chisholm: I'd like to introduce to the House today Ms. Wood, a teacher from Greendale Elementary, and 27 of her students, along with, I believe it is, ten adults accompanying them, who are visiting the precincts today to watch parliament in action. Hopefully we will show them a little bit of style and class. Would you make them most welcome.
W. Hurd: It's an interesting amendment from the hon. member, but I want to ask an additional question with respect to the amendment, or an additional point that needs to be addressed. It is one the member referred to briefly in his remarks. It stems from the concern that the public has about the boundaries of a watershed. I know the minister will agree that there is a great deal of concern out there about the impact of harvesting methods on watersheds that have been designated. There are, I'm sure, examples of streams and tributaries
[ Page 15125 ]
that clearly are not designed to be part of a drainage, and I'm not clear in my own mind whether they would be captured by this amendment. But if there was a provision to adjust the size of the drainage to capture them, then I think the amendment has some merit.
That is the only point that I would offer with respect to the amendment, which I agree with the minister was offered in a reasonable way to enssure that the public concern is addressed.
Hon. A. Petter: A stream that flows into the stream within the drainage area is, by definition, within the drainage area.
Amendment negatived.
Interjections.
The Chair: I certainly heard enough nays to convince me that it was defeated.
On section 14.
G. Wilson: That is so tempting to go to division on, because, I'll tell you, I didn't hear a nay, and the minister was engaged.
Nevertheless, we're on the main section now. I would ask the minister, because this is such an important section.... There are two classifications in here that I think are important with respect to the Water Act and how it has been amended. One is the matter of domestic purpose and the second one is with respect to waterworks purpose, as the definitions that are in place. Now one of the things we run into when we get into community watershed protection and the problems with selective logging or designated logging in these areas is that often there will be an attempt made by Ministry of Environment officials, or possibly even Ministry of Health officials, to put in place very restrictive access into those areas that are deemed a community watershed. The problem with the regional manager having designation.... Under section 10, it says: "...in the opinion of the regional manager and a designated environment official should be designated as a community watershed." The problem with that definition is that it may in fact impinge upon community planning, and in some senses regional district planning, in that it demands or puts in place waterworks that are going to require expansion in the future.
I think that one of the concerns we have.... Let me use an area that the minister is well conversant with, and that's the Tetrahedron question. Where the primary concern is for water, the principal demand is to make sure that watersheds are protected, and not just for the intrinsic value that an unspoiled watershed has, which is one concern -- and that's one of the things that I think we can certainly see within the Ministry of Forests, and the Clayoquot is an example of that. The second concern, which is equally important, is that waterworks are going to have to be constructed in the future that may very well change the nature of the designations by turning lakes as they are naturally occurring within a drainage basin into reservoirs, which will then be used for long-term water supply. My concern is that within the provisions of this bill there does not seem to be coordination at this level anymore and, based on what we've got in here, between what local government is advocating, what the Ministry of Environment has to regulate through provisions of the Water Act and what we are looking at in terms of the regional manager's discretionary powers -- it would seem almost -- with respect to designation provisions.
So I have some very serious concerns about the way this is going to proceed, particularly in light of the defeat of that amendment, I would point out, because it now.... And believe me, the minister must be aware that somewhat arbitrary lines are often drawn around what constitutes a drainage area, eliminating logging from areas that in fact could well be logged and sometimes excluding areas from a watershed and permitting logging activities in areas where they should not be occurring. I'm concerned about this, because we lack the coordination now that I think we desperately want with the practices code. I say that in light of the protected-areas strategy, with this movement toward park classification and park status, all of which speak to the protection of the natural watershed basin but none of which speaks to the need for enhancement of waterworks construction, which may in fact put in long-term reservoirs. I ask the minister to make that clarification here.
Hon. A. Petter: Just a couple of points. First of all, subsection (11) provides for a variation by the regional manager with the agreement of a designated environment official. With respect to the question of the involvement of local communities, I think that is provided for. Remember that what we're dealing with here is a forest management designation -- that is, a designation that influences the way in which the forest is managed through the code, not a designation for all purposes. What you'll find under subsection (12) is: "Before designating an area as a community watershed under subsection (10) or varying or cancelling the status of a community watershed under subsection (11), the regional manager must provide for review and comment in accordance with the regulations." That provision is inserted because previously the designation was automatic. Now we're talking about variations. We're talking about potential addition to community watersheds, and with respect to that, there is a need to connect with local government and local communities in terms of their aspirations -- changes they may make on intake, etc. That's why, through regulation, there will be provision to enable local officials and locally interested citizens to have opportunity for review and comment, and to influence the designation process, taking account of many of the concerns that the member has articulated.
G. Wilson: With all due respect to the minister, the local government, which is often the case, or the community -- which is almost always the case -- don't want to influence the Ministry of Forests. They want to control their watershed. They want to have control over the water they are dependent upon. They don't want to suffer the vagaries of a regional manager, who has significant discretion in the powers as provided in this act with respect to powers of designation. The matter of cancellation is one thing, but the actual designation of a community watershed is something that should be provided for, with accompanying powers for administration and control at the community level. That's what the public wants. That's what I'm hearing at all the public meetings I go to. And believe me, when you get into a community there is no hotter issue than the protection of a community water
[ Page 15126 ]
system. Everybody is dependent upon it, and they don't feel comfortable, quite frankly, having that under the control of a regional forest manager. They want it under the control of either their locally elected government, or they want it under some other locally constituted body -- community authority -- which is going to have an authority over that watershed. So I don't think that this meets the guidelines, and if the minister could acknowledge that.... I'll let the minister answer.
[4:30]
Hon. A. Petter: First of all, the automatic designation for communities that are already licensed under the Water Act for waterworks purpose covers about 70 percent of the watersheds in the communities already. That's automatic.
With respect to changes that may take place -- the addition of new areas -- there will have to be an interplay between those communities and the ministry. This is obviously an area in which there are different responsibilities that must be coordinated. The Ministry of Forests does hold a responsibility to ensure that there is good forest management that is consistent with the aspirations of the community and its watershed management plans, but is also consistent with the objectives of the Forest Practices Code and the provision of opportunities for forest harvesting that do not impede that. There may be communities that would prefer to say: "Give us the control and we will do it, unilaterally." I'm sure there are; I know of some. I think that what we have provided for here is a much better system than previously existed, but one that does not completely yield authority over forest management to local communities. It provides for a reasonable balance.
As I say, in the case of 70 percent of community watersheds, they are already automatically covered. In respect of additional watersheds, there is provision for local input, and certainly the input I've received from communities is that they are quite impressed at the steps we have taken to protect watersheds and water quality values through the code. At the end of the day.... The member is right; there are some communities that prefer to assume full authority over all aspects of community watersheds, notwithstanding that it's Crown land and notwithstanding that there are other resource users who have to be accommodated, and I guess they will not be fully satisfied. But I think they should be more satisfied than they would have been had we not proceeded with these aspects of the code.
G. Wilson: The last point on this, so as not to belabour it, has to do with the 500-square-kilometre designation on the issuance of June 15, 1995. The minister might just tell us why that area designation particularly is under review. One would have assumed that that might have been something that would have been looked at in a broader context. Why was the issuance date of June 15 put into this section?
Hon. A. Petter: I understand that about 80 percent of watersheds are much smaller than 500 square kilometres; they're less than 100 square kilometres. When you get larger than that size, then there is more ability to accommodate forest practices without compromising water quality. There are some watersheds beyond that size that communities are desirous of seeing designated, and part of the changes in this act is to accommodate those communities' desires and proceed with designation on a selective basis. Obviously, it's a balance between the overriding need to protect the quality of drinking water and the need to provide forest harvesting and other activities. The 500-square-kilometre threshold is useful, although as a result of these changes, there is the discretion to designate watersheds that are larger than that.
W. Hurd: Just a brief question with respect to section 14 and the impact on harvesting methods that might be called for under the Forest Practices Code. The ministry has not come up with a master harvesting arrangement for areas that have been designated as sensitive or low intensity in the province -- at least, not that I'm aware of. They're subject to the vagaries of the area they happen to be in. I wonder if the minister could just clarify whether the designation as a community watershed.... Have the standards of logging practice been spelled out in any way under the code, or is this a definition that just requires more local input, more public review, of the logging plans than would otherwise be the case? Are we dealing with a substantive impact on harvesting methods, or is that something that we can quantify at this point?
Hon. A. Petter: There are additional constraints that apply in community watersheds in order to protect water quality and water values, and they are specified in the operational planning regulations. I assume that the member has access to those. Having said that, as is the case throughout the land base, the application of those constraints has to be sensitive to the specific site conditions that pertain in a given watershed. They are not uniform in their application across the province.
W. Hurd: Reference is made in this section to a joint opinion of the regional manager -- one would assume it's of forests -- and a designated environment official. One assumes that there's a sign-off provision for both the MOF and the MOE with respect to this designation. Does the regional manager invite an opinion by the Ministry of Environment with respect to this designation? I'm just wondering, with respect to the logging plans that might be forwarded for the community watershed, to what extent the Ministry of Environment would be involved in scrutinizing those plans. Would there would be a joint sign-off on that, or is the Minister of Forests just inviting opinions from the Ministry of Environment on this important issue?
Hon. A. Petter: As the legislation suggests, it is the regional manager who actually makes the designation or variation. There is a formal requirement for agreement by a designated environment official, and that would imply a formal sign-off of some kind by that official.
W. Hurd: One brief point with respect to section 14. I'm just following the progress of this section. It refers specifically to a decision the manager may make to deactivate or rescind the designation of a community watershed. There is a provision made here for some sort of public review process. I wonder if the minister could clarify the circumstances under which such a decision might he made by the regional manager. What formal mechanisms would there be for the public to be involved in that decision?
Hon. A. Petter: I can certainly provide an example. When what was a watershed shifts from human use to irrigation, the water is no longer provided for human consumption but for
[ Page 15127 ]
irrigation purposes. That might well invite reconsideration of the designation of a watershed.
Section 14 approved.
On section 15.
R. Neufeld: A brief question. The removal of "to comply with the prescription." Can the minister explain briefly why we would change it to be "in accordance with the regulations and standards"? I would assume that the prescription.... Even if you exceeded the area you were supposed to be in, it's obviously in the immediate area, so the prescription would apply. I'm wondering about the need for the change.
Hon. A. Petter: It's because the content requirement is provided for in the regulations. It was an oversight not to make reference to the regulations. It simply links up this section with regulations that are already contemplated, as set out in that content requirement.
Sections 15 to 23 inclusive approved.
On section 24.
W. Hurd: It's my understanding that the minister will be moving an amendment. Is that accurate?
Hon. A. Petter: Yes. I appreciate the member reminding me at the same time that my staff were. It's nice to get consistency on these things and help all around.
I move the amendment to section 24 standing in my name on the order paper.
[SECTION 24,
(a) in the proposed section 70(4)(b) by deleting "the regulations and", and
(b) by deleting the proposed section 70(4)(d) and (e) and substituting the following:
(d) by the regeneration date specified in the prescription meet, and after that date maintain, the stocking requirements as defined in the regulations and specified in the prescription for that date;
(e) within the free growing assessment period specified in the prescription, establish a free growing stand that meets the stocking requirements as defined in the regulations and specified in the prescription; .]
On the amendment.
W. Hurd: I did receive a brief message by phone today from ministry staff with respect to this particular amendment. I wonder if the minister could clarify the intent or the need for this particular change. I understand that it's almost like a grandfather clause. Is that correct? It's to ensure that there's no penalty or no additional regulatory burden on those who would otherwise be affected under this section. I wonder if the minister could clarify for the committee the rationale for this amendment.
Hon. A. Petter: This amendment is designed to remove a requirement that might otherwise exist for a person to come back a second time on a silvicultural prescription. That is as a direct result of consultation on the originally proposed wording with those in the forest industry. I know it was suggested during second reading debate that the government isn't listening. In fact, the government is listening to all those with an interest in these issues, and this is as a result of direct input from the forest industry.
Section 24, in particular, deals with two of the content requirements for silviculture prescriptions. As currently drafted, it can be interpreted as allowing changes in the forest floor displacement and stocking requirements of silviculture prescriptions after they have been approved -- that is, requiring different types of trees to be planted after the planting has taken place. That was not what the section intended to do. So this proposed amendment simply clarifies that the forest floor displacement and stocking requirements in the regulations at the time the prescription is approved are the only ones that apply to the prescription, and takes away the concern that industry had that we were inadvertently placing an additional requirement upon them.
Amendment approved.
Section 24 as amended approved.
On section 25.
W. Hurd: Again, the ministry staff did provide a briefing on this section which seemed to make sense to me, but I just want to briefly clarify. This section, I assume, just provides more flexibility with respect to the licence holder, who may now designate the ministry to be responsible for reforestation.
I wonder if the minister could clarify for the committee the type of licence we are dealing with here, and how the costs of the silviculture requirements would be recaptured in the event the responsibility shifts to the Crown. Is it built some way into the timber cutting fees? Is the licensee required to pay an additional amount that's agreed upon by the ministry? I wonder if we could get a clarification on that point.
Hon. A. Petter: The member is quite correct. This is to provide additional flexibility. It is intended to apply only in certain circumstances where an individual or company holds a non-replaceable licence and holds no other replaceable licences. The amendment is intended to then provide the opportunity for the responsibility to be shifted to the Crown in exchange for an agreement to compensate the Crown for assuming that obligation. It will be accompanied by amendments to the security for forest practices liabilities regulation, which will increase security requirements on all licensees. So for certain small licensees who may feel that they do not wish to assume this responsibility, where it's deemed appropriate by a district manager, that responsibility can be shifted. But that will only be done where the holder has paid the government an amount sufficient to cover the reforestation costs, and there will have to be sufficient security to accompany that commitment.
R. Neufeld: I too had a briefing on this section. I wonder if the minister has any idea about how many small licensees we're talking about that this would affect. You stated that it was just a few.
[4:45]
Hon. A. Petter: I can't provide a specific number. What I can say in general terms is that there is a growing number of
[ Page 15128 ]
non-replaceable licences. There has been a tendency to provide non-replaceable licences. I think this is a discretion that district managers may choose to use more frequently, but I can't give a precise number. Obviously it's a matter of discretion, and therefore it has to be accommodated within the capacity of the district to take on that responsibility -- and as I have said, only where there is adequate compensation. But I don't have a specified number that I can offer to the member that I feel comfortable with at this time.
Sections 25 to 27 inclusive approved.
On section 28.
W. Hurd: I have just a brief point for clarification under section 28. I wonder if the minister could describe what is meant here by fire preparedness responsibilities. One assumes that it applies to any business activity within 300 metres of a forest that has been designated under the act. I wonder if the minister could describe the nature of the responsibilities that may now accrue under section 28 to a business carrying on activities within 300 metres of an area designated as management or working forest in the province.
Hon. A. Petter: The kinds of activities are, as the section suggests, industrial activities. If the member goes back to definitions in the Forest Practices Code, section 75 says: " 'industrial activity' includes land clearing, timber harvesting, timber processing, mechanical site preparations and other silviculture treatments, mining, road construction and any prescribed activity...."
W. Hurd: What we're dealing with here, then, is the type of business that would normally be governed by the Forest Act, the statutes related to Energy, Mines and Petroleum Resources, or some other sort of resource-related activity. It wouldn't apply, necessarily, to other types of enterprises -- recreational businesses, for example. I'm just seeking, I guess, an assurance that the industrial definition under this particular section wouldn't necessarily apply to anything other than those enterprises directly related to forest harvesting or any other type of activity along those lines.
Hon. A. Petter: It implies that the kind of activity is not restricted just to forest use activity; it may embrace other types of industrial activity. But I'm also advised that that is the situation now. This is simply a carryover into the code of the same kind of requirements that previously existed under the Forest Act with respect to fire preparedness.
Sections 28 and 29 approved.
On section 30.
W. Hurd: Section 30 invites a few questions for the minister with respect to the requirement that industrial operators who incur costs for carrying out initial fire suppression be compensated in accordance with the regulations.
Obviously, the ministry sees a need here to add this section to the Forest Practices Code, and I'm just a little confused as to why this type of section, dealing as it does with compensation issues and costs, should find its way into a code dealing with forest standards and practices for harvesting, silviculture and that whole range of activities. I would just welcome a brief explanation from the minister as to the relevance and intent of this particular section of the bill.
Hon. A. Petter: I'll respond to the general question of why this provision is here. The answer is that when the code was enacted last year, we carried over into the code all of the provisions concerning fire protection, including compensation provisions. This provision simply clarifies that provision that was carried over. There was a conscious decision made -- that was debated -- to incorporate protection measures within the ambit of the code, and compensation for protection is obviously a component of that subcode of the code.
W. Hurd: Is the minister saying that the formula for compensation or the rights and abilities of an industrial operator to seek compensation are dealt with or governed in other acts? Or are the rights and responsibilities now spelled out only in the Forest Practices Code? It just seems like a.... I understand the fact that the code was designed to capture a whole range of issues related to forest enhancement, forest protection, firefighting, etc. I just wonder about the rationale for including such a mundane -- if I can use the term -- or such a business description within the parameters of a code that is designed to seek a level of protection or competency in forest management in the province.
Hon. A. Petter: This is not a general provision concerning compensation for damage caused by forest fires or anything. This targets in very specifically on compensation for those who are involved -- industrial operators and others -- in forest fire fighting. It's targeted at that activity, not at the general issue of compensation, which is covered in common law and elsewhere.
W. Hurd: Just to clarify it with one specific example, what we're talking about here is if there was a broadcast burn, for example, and the fire was to get away from the operator, this section would apply. The licensee could not apply for any sort of compensation for the costs of fighting the fire, or would then be liable for the costs, in the event that some activity they undertake on the land base results in a fire and is entirely attributable to them. I just wanted to get that clarification.
Hon. A. Petter: Well, the intention is not to compensate those who cause fires but to compensate those who, because of obligations placed upon them under the code last year, are required to undertake activities to suppress fires. Some of the triggering events are found in sections 92 and 94 of the code. So, for example, if a person is carrying out an industrial activity, and a fire occurs in or within one kilometre of the person's area of operation, that person must carry out initial fire suppression.
This provides for compensation to that individual, except under circumstances where that person was responsible for the causing of the fire. That's an exception in which compensation is not provided. But where the individual does carry out the obligations placed upon him or her -- or it, if it's a corporation -- or the user, then there is provision for compensation. That's what this provision deals with.
W. Hurd: Just one other brief question with respect to the code, then. Are we dealing with additional incremental
[ Page 15129 ]
administrative penalties under the code for a fire that is deemed to be the fault of the operator? How are the costs assumed here with respect to fighting the fire? I mean, if the ministry incurs costs, are they recoverable under this section? And are there additional administrative penalties where it can be demonstrated that the fire results from a flagrant non-compliance with regulations or is the result of some activity that clearly is a violation of the Forest Act? I wonder if the minister could clarify what kind of penalties and costs we're dealing with under this section.
Hon. A. Petter: I'm at a bit of a loss to know how to answer the member's question, but let me try this. Under the code, if there are provisions related to forest management that are violated, and that happens to result in a fire, or if one fails to act in accordance with certain obligations relating to the presence of fire, then yes, there are administrative penalties. But if the member is talking generally about penalties for those who carelessly cause fires in no way related to a failure to adhere to the standards of the code, then those would be provided for through general notions of civil liability and other legislation, not through the Forest Practices Code.
W. Hurd: I have just one other question with respect to section 30, and again it gets to the heart of the definition of industrial operator. Would an individual or company that holds a recreation tender be in any way captured by the term "industrial activity," or is that a definition that exists elsewhere in the code?
Hon. A. Petter: I think the answer is that if they are engaged in the kinds of activities I referred to earlier, as defined in part 5 of the code as industrial activity -- land clearing, for example -- then yes, they would be caught. If they are not engaging in those kinds of activities, then the answer is no, they would not be caught by the requirements. It depends on whether they are engaged in industrial activity, which is a defined term under part 5.
Section 30 approved.
On section 31.
R. Neufeld: I have a brief comment to the minister. I recall sitting at some wee hour of the morning with the member of the official opposition, discussing many of these points that we are going over now, and the minister was just glossing by and saying that most of them were no problem. I just want to bring to the minister's attention that this was one that would not even allow a person to ride a horse over a range, and it is obviously a good change. I thought I would take the time to remind the minister that we had discussed this at one time, and it could have been done quite easily a year ago, probably about 3 o'clock in the morning.
[5:00]
Sections 31 to 37 inclusive approved.
Hon. A. Petter: I move the amendment which provides for an additional section 37.1, standing under my name in Orders of the Day.
[SECTION 37.1, by adding the following section:
37.1 Section 142 (1) is amended by adding "or the regulations" after "under this Act."]
On the amendment.
W. Hurd: If I understand this amendment correctly, what we're dealing with here is an extension or change to the limitation period for liability. Is that the intent of this amendment? I wonder if the minister could clarify for the committee the intent of the amendment and whether it does apply to a three-year limitation period for any violations of the code.
Hon. A. Petter: All this amendment really does is clarify that the limitation period that already exists applies not only to the act but to the act and regulations. That wasn't clear before, and we just want to make clear that we're talking not just about the act but about the regulations that flow from it.
Amendment approved.
On section 38.
W. Hurd: This is a penalty section in the bill and invites a couple of questions for the minister. Clearly, when we reviewed the regulations and standards for the Forest Practices Code, there was a considerably higher penalty for offences related to unauthorized trail-building. There has been a reduction, a considerable reduction. I wonder, since the opposition -- and, I'm sure, the third party -- has received numerous representations from outdoor groups and recreation users about this section.... I suppose it invites a question as to why the ministry thought originally that a fine of $100,000 would be necessary. Perhaps he could offer the committee the rationale as to why there has been such a substantive reduction.
With respect to unauthorized trail-building, I think there is some concern that such trails can be used for other purposes and can have other impacts than just disturbing terrain or causing soil erosion. There is a suspicion that some of them might allow demonstrators, for example, to access certain areas of the forest, enabling them to block a logging road or some other method. So I wonder if the minister could just offer the committee a rationale for this rather dramatic reduction in the fines for illegal trail-building.
Hon. A. Petter: I'd be happy to do so. This is a case, as I said earlier, where we listened and consulted on a range of issues. This particular concern, as the member has indicated, was one that was voiced to a large extent by outdoor recreation groups -- hikers and others -- who were concerned that we had placed too great an impediment on trail-building and wanted, in fact, to see reference to trail-building removed altogether. After considerable consultation with those groups and with others -- because there is a legitimate concern that even trail-building, which might not sound like an intrusive activity or one that could cause damage, if improperly done could in fact cause serious damage -- we arrived at what I think is a bit of a compromise between the concerns of those groups and the concerns of others who want to maintain control of this activity in order to maintain good forest management.
The compromise was that, indeed, unauthorized trail-building would continue to be an offence under the act but that the fine would be less, recognizing that this is of concern to the general public and that the damage which could result is more likely to be less, and also recognizing that it's not the
[ Page 15130 ]
government's intention -- which I think some took as the intention -- to prohibit trail-building altogether. So it was part of the ongoing consultation process.
The Outdoor Recreation Council and others expressed very serious concerns; on the other hand, the government shared the concern that trail-building not be used in a way that could damage the forest floor and impede good forest practices. This was, in a sense, an attempt to navigate between those two points of view.
R. Neufeld: This is another example of -- between two and four in the morning a year ago -- the minister not accepting any suggestions from the opposition when there was lengthy discussion around fines. I am pleased to see that the fines for trail-building were lowered to the amount of $5,000. Specifically in my constituency that will make a difference with some of the guide-outfitters and the outdoors group.
The one question I have, and I understand or interpret it to mean that fines and imprisonment can be set by regulation.... Maybe the minister could confirm that for me before I comment further.
Hon. A. Petter: I might just add for the member's further information that there has also been in the regulations some clarification on trail-building that basically says that district managers are expected to approve trail-building where it does not cause damage, which places the onus in favour of trail-building that is not going to be damaging. That also addresses concerns of outdoor recreationalists and others.
I think the provision the member is referring to simply provides that if there is a discrepancy between the regulation.... The regulation sets a maximum for a particular activity -- a fine for a breach of a particular activity -- and if that maximum is less than the act might otherwise seem to provide for, the lower of the two would prevail. That, I think, is consistent with the practice that if there is, within regulation, provision for a lower penalty within the maximum range, that should be the one that prevails, not the higher potential maximum that's provided for in the act.
W. Hurd: Referring back to the same debate which occurred in the small hours of the morning in this assembly last year, I think there was a point made by a number of members present about the nature of the fines and imprisonment called for under this section of the Forest Practices Code.
I wanted to clarify the fine for a person who uses a road for industrial purposes in violation of section 54(6) of the code. I think the concern that was expressed at that time during the debate was that a logging truck operator with improper documentation with respect to the load on the logging truck might, in some way, be captured by this provision as being someone who is using a road illegally for industrial purposes. I wonder if I could just clarify under section 38.... What is a specific example of where the Crown might seek this kind of draconian penalty of two years of imprisonment and a $100,000 fine? Would it be, necessarily, for something as simple as a logging truck operator having an improper load or improper documentation in the cab of the truck? Or would it be something quite flagrant that results in serious erosion or collapse of the roadbed, or some other provision? I wonder if I could just get that clarification from the minister.
Hon. A. Petter: My recollection from those wee hours of the morning is that we did discuss this previously, but I'd be happy to give the member some comfort that clearly, Crown counsel will have to exercise discretion in this area. I can only tell you my expectation; my expectation is that the reason we have the upper range here is not to deal with the kind of technical violations he's talking about, hon. Chair. There are circumstances where you may have a very unstable road that is designated as such, and trucks are prohibited from using that road for a period of time, and a truck driver decides to ignore that prohibition, and as a result, there is some major failure in that road and damage that results from it. I think that's the kind of circumstance that would attract the upper range of fine within this maximum, not some technical violation around not having one's papers fully in order.
W. Hurd: Would that be a persistent or consistent use of the road illegally? Is that what's anticipated here? Or would it be just an incident that might trigger erosion or collapse of the road? I'm just trying to anticipate that there might be an acknowledgement of human error in some cases. This is obviously a case where Crown counsel is satisfied that the individual or company is aware that its industrial activities might have this significant impact on the road, and yet has continued to make a decision to use the road in violation of section 54(6).
I just wonder, with respect to this section, if the minister could give us specific examples of how the investigation might be triggered in this particular case. Would it be an initial investigation -- one assumes -- by the regional manager and his staff, and then subject to a recommendation or a review by Crown counsel? I wonder if we could just get a description or an explanation from the minister of how Crown counsel would become involved in a decision of this nature. Would it be, again, up to the discretion of the regional manager? Would it come from a public complaint? Or could it come from both?
[M. Farnworth in the chair.]
Hon. A. Petter: We announced recently, in conjunction with the Forest Practices Code regulations, that an enforcement team would be established -- a cross-ministry team -- to try to provide some consistency and continuity on enforcement matters. The matter could result initially as a result of a public complaint or of an official in the Ministry of Forests or some other ministry coming across a violation. It would then be a matter that would find its way through to Crown counsel, presumably through the guidelines set down by this enforcement team in the ministry. I anticipate that this would only be the case where there was some sense of seriousness and deliberateness around a matter of this kind.
Then it will be up to Crown counsel to weigh and balance these matters, as Crown counsel so often does, looking at issues such as the ones the member alludes to. What were the circumstances? Was the individual well apprised that damage could result, or was it merely an oversight? Were the conditions such that one would expect this kind of damage to result? Those are the kinds of considerations that Crown counsel normally considers, weighs and balances in determining whether to proceed with the prosecution at all and indeed what fine might be sought, should a prosecution by pursued. So I think the very factors the member talks about are the ones that would be weighed.
[ Page 15131 ]
As I said earlier, I anticipate that in cases of serious damage -- where a road was clearly marked to not be used, or someone's permit clearly prohibited the use of that road for that purpose, and serious damage resulted -- one would anticipate Crown counsel seeking the maximum fines that are provided for here.
K. Jones: I ask leave to make an introduction.
Leave granted.
K. Jones: Seated in the gallery this afternoon are 30 grade 7 students from Surrey Christian School in my riding of Surrey-Cloverdale. They're accompanied by their teacher, Ms. Margaret Venema, and two parents. Also touring the premises this afternoon are 20 grade 7 students from William of Orange Christian School in my riding of Surrey-Cloverdale. They were accompanied by their teacher Mr. Mel Deglint and several parents. Would the House please join me in making them welcome.
[5:15]
W. Hurd: Just one final question with respect to this section. I'm going to take advantage of the fact that the minister is also a practising member of the bar in British Columbia.
Interjection.
W. Hurd: Not any more; okay.
Hon. A. Petter: Never was.
W. Hurd: Never was; okay. It's amazing how many people are disavowing their involvement in the Law Society these days in British Columbia.
I just want to ask the minister a question with respect to private prosecutions that might be brought utilizing this section of the act and what discretion Crown counsel might be able to use with respect to taking over those prosecutions. Are we dealing again with an activity that's outside the parameters of the code? Would there be provision under this particular section or under the code generally for anyone to initiate a private prosecution -- if they disagreed with the regional manager, for example, on the extent of the damage or the transgression involved? I just would welcome an opinion from the minister on whether, generally, private prosecution would necessarily succeed or would have to be dealt with by Crown counsel through the rather significant penalties of this particular section of the bill.
Hon. A. Petter: I'm happy to report that not only am I not a practising member of the bar, I'm particularly not a practising member of the criminal bar. So my answer will have to be in my capacity as minister.
What I would say is that my understanding of the way in which private prosecutions work.... First of all, they're not governed by the code; they're governed, I understand, by the Offence Act. But my understanding of how they work is that as a matter of practice -- not of policy but of practice -- private prosecutions are normally taken over by the Crown, as can occur under the Offence Act, and then Crown, once having charge of those prosecutions, can make the decision whether or not they merit continuing, staying or whatever. The policy that is applied is normally the same policy that would be applied with respect to a request to proceed to prosecution that was generated within, say, the ministry. I don't think there is any additional concern here; that practice, I assume, would be followed by Crown counsel as it is with respect to other regulatory offences.
Section 38 approved.
Hon. A. Petter: I move the amendment standing in my name in the order paper that entails the addition of section 38.1.
[SECTION 38.1, by adding the following section:
38.1 Section 157 is repealed and the following substituted:
Employer liability
157. (1) In a prosecution for an offence under this Act or the regulations it is sufficient proof of the offence to establish that it was committed by the defendant's employee, agent or contractor, as that term is defined in section 158.1 of the Forest Act.
(2) It is a defence to a prosecution under subsection (1) if the defendant establishes that they exercised due diligence to prevent the commission of the offence.
(3) This section applies even if the employee, agent or contractor has not been identified or prosecuted for the offence.]
On the amendment.
W. Hurd: Again, the ministry staff was helpful in providing a useful briefing on this matter, which I understand just brings the code into sort of compliance or phase-in with what exists under environmental statutes, notably the waste management plan in the province, in which there is a requirement that.... Previously under the code, the Crown had to prove that the employee was operating with the full knowledge of the employer's industrial activity.
In other words, it is my understanding, as explained to me by ministry staff, that before this amendment was proposed, the Crown would have to prove that the employee was operating with the full knowledge and acquiescence of the employer. This is basically the same requirement that exists under the Waste Management Act, where the defence can't be used that the employee was operating beyond the knowledge or terms of reference laid down by the employer.
I just want to seek assurance from the minister himself that this indeed is the intent of this amendment: that in fact the defence cannot now be used under the Forest Practices Code by a defendant charged that the employee was doing something without his knowledge or in non-compliance with regulations.
Hon. A. Petter: This amendment does a number of things. First of all, in direct response to the member's comments, it makes it clear that an employer, for example, who has obligations to ensure that the code is complied with, cannot escape those obligations by simply saying: "Oh, I didn't know about it," or, "Gee, I didn't take any action."
It presupposes that the obligations must be undertaken and places an obligation upon those individuals to undertake sufficient activity to comply with the code, and doesn't allow them to escape liability by simply denying knowledge. It enables them to escape liability only by establishing that they
[ Page 15132 ]
exercised due diligence. That, I think, is consistent with regulatory regimes and expectations: that those who are required by regulation to carry out certain obligations should not be able to escape them by simply disclaiming knowledge or intent; they have an obligation to demonstrate that they did exercise due diligence.
I think it also helps this section to make clear that the liability of the employer or licence holder is not contingent upon the liability of the employee. In other words, the Crown doesn't have to prosecute an employee or a worker in order to hold the employer or the licence holder accountable. I think that is very important, because the whole purpose and nature of the Forest Practices Code is to place the primary obligation upon licence holders. Those who hold tenures and licences are those who are in the best position to ensure that these obligations are carried out, and they're certainly in a better position to do so than their employees may be. We don't want a situation in which one has to prosecute a forest worker in order to hold the forest worker's employer accountable. So this regulation helps to clarify that one can proceed to hold accountable the licence holder without having to proceed against the forest worker.
I might add that in discussions with Crown counsel, Crown counsel is in the process of generating certain policy in respect of prosecutions under the Forest Practices Code, and the information I've received from Crown counsel suggests that their policy will also reflect that basic principle -- that is, the principle that the primary obligation is that of forest licence holders and that Crown counsel will look initially to forest licence holders rather than to the employees of forest companies in terms of liability. It doesn't mean that if an employee were to act wilfully and irresponsibly and contrary to the direction of an employer, that employee might not be found liable. That may indeed be the case, but in the normal course of events, the intention of the code is to place the obligation upon licence holders. That's been the practice in the past under the Forest Act, it was the intention here, and this amendment helps to facilitate that intention, in conjunction with the guidelines or policies that are being generated by Crown counsel to undertake their responsibilities under the code.
W. Hurd: Just a brief clarification with respect to the minister's amendment under section 157(3), where it says that the section applies even if the employee, agent or contractor has not been identified or prosecuted. Referring back to the minister's remarks, I assume that would require that the licensee sort of.... The onus is somehow on him, rather than the Crown, to prove that the offence was not in any way related to his operations. It is assumed that it is, unless the case can be proven otherwise.
One was trying to imagine a scenario where this might occur. It could be that the audit done by the regional manager would uncover the offence, and even though the employee or contractor who may have been guilty of the transgression can't necessarily be found or identified, the licensee continues to bear the responsibility. That would invite one more question relating to the grandfather clause or the limits on liability. In this case of employer liability, are we dealing with any sort of time frame of liability, or does it continue for an indefinite period? I would just invite a clarification on that.
Hon. A. Petter: On the last point, we're talking about liability for an offence, so any limitations that apply to the offence -- three-year limitations and things -- would apply here, because this attaches to the prosecution for an offence. So if the offence has a limitation clause on it, then by virtue of that limitation, this would necessarily apply here as well.
With respect to the other general questions around how this works with respect to the employer's or licensee's liability, clearly the Crown would have to establish that there was conduct contrary to the code, and it would have to attach that conduct to the employer or licensee by showing that it was, for example, an area within that employer's responsibility or whatever. Once that was done, and once it had been demonstrated that there had been some breach of standards -- by an employee of that company, say -- then the onus would shift to the company to show that it had exercised due diligence to avoid that taking place. If a company could demonstrate that, then they would have a successful defence; if they could not, then the presumption would be that they are responsible for the damage that resulted from violation of the code, and the prosecution would be successful.
W. Hurd: I have just one final point, then. Where the agent and/or contractor is a limited company, an incorporated business, one would assume that the definitions of agent and contractor would still capture.... I'm just trying to anticipate whether, if a major licensee employed a contract logging outfit, for example, and they were a limited company, the terms of section 157(3) would apply to a limited company as they would to an individual employee or someone they had hired as an agent, and whether the liability would accrue to the holder of the licence, even if the agent and/or contractor were in fact a limited company under the Company Act in British Columbia.
Hon. A. Petter: A contractor is defined as meaning a person, and the term "person" contemplates corporations, limited companies, etc. Again, the basic principle here is that the primary responsibility rests with licensees. If contractors or employees are not carrying out their responsibilities in a way that is consistent with the act, the licensee or employer or person with whom that contract is held is in a good position, either through the contract or through the employment relationship, to take corrective action. The short answer is yes: it applies whether the contractor is an individual or a limited company, because the definition is sufficiently broad to encompass both.
K. Jones: I'd like to follow up on the amendment with regard to when an employee, agent or contractor has not been identified. If this were a case in regard to trailbuilding -- which I understand the preceding sections relate to -- somebody could go in and build a trail and not be identified, and the licence holder would then be liable without any proof that anybody connected with their operation had actually built that trail. Could you clarify that, please?
Hon. A. Petter: I guess I'd direct the member's attention to the first subsection, which says: "...it is sufficient proof of the offence to establish that it was committed by the defendant's employee, agent or contractor...." So that's still a requirement in order to invoke this section. You don't have to be able to identify who the employee or the agent of the contractor was, but you have to be able to say that the activity was connected to the company through someone who had a relationship with that company of a nature that's specified in
[ Page 15133 ]
the section. If it were some third party that came in and did the activity, then the Crown would not succeed, because they could not demonstrate that it was done by someone who had that relationship of employment, agency or contract.
Amendment approved.
On section 39 as amended.
[5:30]
W. Hurd: Section 39 relates to the powers delegated to the chair of the Forest Practices Board. I wonder if the minister could tell us whether the amendment here would in any way encumber the Crown or the Ministry of Forests from providing information when a complaint comes forward from the public with respect to a logging operation under the jurisdiction of the Ministry of Forests. As I understand section 39, it authorizes the chair of the Forest Practices Board to delegate power to require production of a record or disclosure of information. With respect to the amendment to section 39, are there any additional burdens on the Crown or on the ministry as an active participant in logging operations in the province? Even though we know the administrative and Criminal Code offences don't necessarily apply, one would assume that a member of the public could come forward with a complaint with respect to a logging operation under the small business forest enterprise program, for example. If that complaint came forward to the Forest Practices Board and they required further information, they would now be able to get it, I assume, under this proposed amendment.
Hon. A. Petter: No, this amendment is very narrow and technical, and what it really does is correct.... The way the section was previously drafted, the chair was not able to delegate the power to provide production of a record or disclosure of information. Under the Ombudsman Act, for example, the ombudsman does have that power, and I think the chair would find it desirable to be able to delegate powers to require production of a record or disclosure of information as a matter of administrative convenience. That's all this does.
W. Hurd: I have just one brief additional point of clarification. I wonder if the minister could just clarify the relationship between the chair of the Forest Practices Board and the ministry and/or the Legislative Assembly. Is it considered to be an office along the lines of the ombudsman, or is it a strictly consultative body? How does the chair function with respect to the Legislative Assembly?
Hon. A. Petter: The role is not identical to that of an ombudsman, but it obviously has some parallels, as we discussed last year during the debates. The chair does not report directly to the Legislative Assembly, but to the three ministers who are charged with responsibilities under the code, and who in turn communicate to the Legislative Assembly. The board clearly has a degree of independence and an ability to review the operations of not only licence holders but also of the ministries concerned, and therefore that degree of independence is one that has parallels with the function of the ombudsman's office. One of the reasons I referenced the ombudsman's office is those parallels.
W. Hurd: With respect, then, to the board chairperson, I'm just wondering whether he or she -- in this case, he -- would be considered an employee of the government. How would they be compensated -- under which vote and which ministry? And would they be recognized as an employee of the government, eligible for all the benefits and/or perks of a government employee?
Hon. A. Petter: The chair of the board -- indeed, the board -- is appointed by government and therefore is, in that sense, a public employee. The provisions for funding of the board are, I believe, incorporated within the estimates of the Ministry of Forests at the present time, although the board is an independent entity. I think it has its own provision of funds as an independent entity and a degree of independence that's recognized within that estimates process.
W. Hurd: One final question, then. Would the chairman of the board be eligible for a public service pension?
Hon. A. Petter: My recollection is, and I can certainly.... We're a bit far afield from the amending section, but I'd be happy to pursue this further in estimates, if the member wants. My recollection is that the chair of the Forest Practices Board was appointed at an equivalent-to-deputy level, and therefore would be eligible for the same kinds of benefits as a deputy minister.
Sections 39 to 45 inclusive approved.
On section 46.
W. Hurd: I'd welcome a clarification from the minister. Under section 46, which refers to the grandparenting of logging plans approved by "authorized" persons, are we again dealing here with a relaxation or a change to the code that would recognize harvesting and silvicultural plans that are already on the books? Is it the intent of this amendment to reduce the amount of paperwork that would be required in updating or changing logging, or at least harvesting, in silvicultural plans that are already on file with the Ministry of Forests?
Hon. A. Petter: I'm informed that the purpose of this change is simply to provide for the recognition that plans being grandparented in may not have been approved by the district manager but rather by some other official. Therefore the inclusion of the reference to "authorized person" clarifies that some logging plans prepared before the code were approved by forest officers. That facilitates the grandparenting in, because of the nature of the approval process prior to the code coming into effect.
Sections 46 and 47 approved.
On section 48.
W. Hurd: A discussion on section 48 really invites a review by the minister of exactly what we're dealing with in terms of the time frame for the full application of every aspect of the regulations and standards under the code. I understand that we're now in a position where the act has come into force, has the full force of the law, and has been proclaimed. In light of that, I just wonder if the minister could explain what exactly is intended with respect to section 48, particularly
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where it talks about the period in which the act comes into force. Are we not dealing here with the standards and regulations coming into force? Or are we just dealing here with a six-month period for the amendments? I wonder if the minister could clarify where we are -- it's as relevant a section, I guess, as any to ask the question -- in terms of the full application of the code to forest licences and forested areas of the province.
Hon. A. Petter: This is an attempt, again, to deal with the transitional problem and ensure that there is continuity and consistency. It provides that operational plans and amendments to operational plans prepared during that first six-month period after the code comes into force prevail over the act. There has to be provision as to which will prevail, and this clarifies that. So those plans will prevail over the act, regulations and standards during the two-year transitional period. The concern was that without this amendment, some operators might be forced to stop operations when the code comes into force until their operational plans could be amended to make them consistent with the code, and clearly that was not what was intended. What was intended was a transition that recognized that it would take some time to bring those plans into conformity, and that's what this amendment succeeds in clarifying.
W. Hurd: That certainly invites a couple of follow-up questions, because one assumes from the minister's response that there may be a period of time when the operational plans on file in the ministry may in some way be at odds with, or deficient with respect to, what is required on the land base under the new code. I wonder if the minister is at all concerned that field staff or ministry staff may be hobbled in any way in their ability to review the plans on file in an office and reconcile that with what the licensee is actually undertaking on the land base. Would this provision invite the need for more field inspections, given the fact that some of the information in the plans might be dated and of little use to the ministry in determining whether the code is being met in spirit, if not in law?
Hon. A. Petter: The intention here is to be realistic as we move from a pre-code period to a post-code period. So in the first six months there is an expectation under the code that people will strive to meet certain code requirements. But there is some leniency in that first six months, or some attempt to accommodate the fact that we are undertaking a major shift here. Plans approved in that first six-month period may not fully comply with what will be expected beyond that period. This provides that once they have been approved in that first six-month period, they can continue and be effective until their natural termination date as much as two years hence. In many cases that won't happen. Many plans are renewed annually anyway, and the next year's plan will have to then be in full conformity.
It simply says that if you're in that first six-month window where there is some degree of latitude allowed because of the transition from pre-code to code standards, and you have a plan that's approved in that window, you don't have to go back and redo that plan. You can allow that plan to continue through its natural time period, up to the two-year period.
Sections 48 to 51 inclusive approved.
On section 52.
Hon. A. Petter: I move the amendment to section 52 standing in my name on the order paper.
[SECTION 52(c), in the proposed section 240(4) by adding "Despite section 9 of the Forest Act" at the beginning of the subsection.]
On the amendment.
W. Hurd: Following up on the briefing provided by telephone from ministry staff, it's my understanding that this amendment provides the Ministry of Forests with a little more flexibility in compensating the successful holder of a timber sale licence where there's been a reduction under the code or by the provisions of the code. Is that a correct interpretation of this particular amendment, or is something slightly different intended here?
Hon. A. Petter: I think the member's comments refer to the section being amended. The amendment itself is fairly narrow in its focus. It's needed to avoid a conflict with the Forest Act, and to make it clear that notwithstanding the Forest Act, the Ministry of Forests can grant harvesting rights. The amendment is there to deal with that conflict.
The other comments the member made pertain to the larger purpose of the section being amended.
[5:45]
Amendment approved.
On section 52 as amended.
W. Hurd: I think part of my original question still applies, and I want to get some clarification with respect to section 52, which in the first case "authorizes the district manager to amend a timber sale licence that does not provide for cutting permits to ensure consistency with..." the act and the regulations. I wonder if the minister could clarify for the committee the intent of this amendment. It appears to us to be a significant amendment to the code, which provides a greater authorization for the district manager to undertake these kinds of arrangements. It invites a question as to why the ministry would feel it necessary to include a section like this under the Forest Practices Code. I'm just not sure how this particular amendment would in any way enhance stewardship goals. It would seem to be better dealt with under the Forest Act itself.
Hon. A. Petter: I'm advised by my staff that this is not a major departure from what currently exists. It's simply an attempt to improve the current provision by providing greater opportunities for compensation and to facilitate these licences without having to go through amendment procedures. It's largely technical.
Section 52 as amended approved.
On section 53.
W. Hurd: I assume that this is just an inconsequential amendment. We're dealing with the substitution of "professional forester" for an RPF. I assume that this amendment to the act was the result of consultation in some way with the association.
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I'm curious with respect to section 53. It's one of these bills where we find that the explanatory notes are more useful than actually looking at section 53, which says: "Section 259(b) is amended in the amendment to section 28(1)(d)(i) of the Forest Act by striking out 'registered'." That's the legal description; the explanatory notes indicate that we're substituting a professional forester for an RPF. I wonder if the minister could just clarify that.
Hon. A. Petter: I know that RPF may be the common term of parlance, and maybe that's why the word "registered" slipped in here, but the Foresters Act uses the term "professional forester." It is simply to bring this act into conformity with the Foresters Act that the word "registered" is being dropped, not because of a desire to see anyone being deregistered.
Sections 53 and 54 approved.
On section 55.
W. Hurd: Just a brief question on section 55. The section talks about the holder of an agreement or road use permit making application to the regional manager to reinstate rights. Is this an addition to the appeal process that's available, or is this just a housekeeping amendment that confers upon the district manager more flexibility to mitigate or mediate a disagreement or an interpretation of the code that may or may not be well understood by both parties? Are we talking about a legal process here with respect to section 55, or are we just conferring upon the district manager more flexibility to mediate a dispute of this nature?
Hon. A. Petter: It's really just adding flexibility. In one section we gave the district manager the ability to withdraw rights, and this provides him with the flexibility to then reinstate them, so it's really providing additional flexibility.
Sections 55 to 60 inclusive approved.
On section 61.
W. Hurd: I'm just rather curious about section 61, which seeks to create a subaccount under the forest stand management fund "to hold money collected by government under section 70.1 of the Forest Practices Code...." When we talk about the money collected under section 70.1, are we talking about administrative penalties? Are we talking about fees? I wonder if the minister could just clarify, first of all, what revenue we're talking about under section 61. A second question would be: why the need to set up a subaccount under the forest stand management fund?
Hon. A. Petter: I'm informed that this provision is being amended pursuant to the change we discussed earlier that enables the ministry to assume responsibility for silvicultural obligations. With respect to non-replaceable forest licences, in those circumstances the licence holder would undertake to pay the ministry for assuming those obligations. This provides the fund and the mechanism for those payments to be made, from which the government can then carry out the silvicultural obligations that have been assumed.
W. Hurd: So this is a non-replaceable forest licence we are talking about under section 61; it's not any other type of forest licence -- because, of course, there's also a requirement under section 61 that waives approval by the Lieutenant-Governor-in-Council before money may be expended. Again, I'm just confused as to why a section like section 61 would even be in the Forest Practices Code. It clearly relates to the expenditure of revenue by the Crown and the waiving of approval by the Lieutenant-Governor-in-Council. I wonder if the minister could just take a brief period to indicate the rationale for this particular section being included in the Forest Practices Code of British Columbia.
Hon. A. Petter: This amends an existing special account, not the code. It amends the Special Accounts Appropriation and Control Act to provide for a special account that will enable what we discussed earlier to occur. In other words, where there is a non-replaceable forest licence, and the holder of that licence does not hold a replaceable forest licence, there is now the discretion in the district manager's hands to assume the obligation of silviculture if the district manager feels that is appropriate.
In exchange for that, the licence holder must then pay to the Crown an amount to cover the discharge of that silviculture obligation. That payment would then come into the special account, and then the money would be drawn out of the special account for that specific purpose. That's why it wouldn't be appropriate for it to come in through general revenue or through the normal processes of budgeting; it is a specific payment made by the holder of that licence, to pay the ministry or the government to carry out the obligations of that licence holder on its behalf, pursuant to the provision we discussed and voted on earlier.
Section 61 approved.
On section 62.
W. Hurd: I realize this is a boilerplate provision that is contained in every bill the government brings forward, but it specifies no compensation for any losses incurred by the sections that we're passing -- sections 160(4) to 160(7). I assume that refers to the general impact of the code. I wonder: since there's been considerable debate in the province about the effects of the entire code on the riparian zones in particular, and with respect to losses of annual allowable harvest, whether this particular no-compensation clause would apply to a licensee who, by virtue of the type of terrain they're involved in -- whether there be a number of watersheds or riparian zones there, and they have suffered a significant reduction in harvest.... Does the no-compensation provision under section 62 absolve the Crown of any legal obligation with respect to loss of harvest that might occur as a result of the application of the code?
Hon. A. Petter: I think we had a good discussion around the analogous provision that applied within the code during the last session of the Legislature. The short answer is that this provision does not apply generally to the code as it was enacted last year; it simply extends that provision that we enacted last year to cover any of the incremental changes that are taking place here. It takes the general principle that good forest management is not something for which licence holders should be compensated -- indeed, it's something that is expected of them as a condition of their holding those licences -- and applies it to any of the additional obligations that may
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flow from this bill today. It isn't an attempt to try to reinsert or add to the compensation provision that currently exists in the code; it only applies to the provisions that are being added through the bill that's being enacted and that is before the House today.
Sections 62 to 64 inclusive approved.
Title approved.
Hon. A. Petter: Hon. Chair, I move the committee rise and report the bill complete with amendments.
Motion approved.
The House resumed; D. Lovick in the chair.
Bill 18, Forest Practices Code of British Columbia Amendment Act, 1995, reported complete with amendments.
Deputy Speaker: When shall the bill be considered as reported?
Hon. G. Clark: By leave, now, hon. Speaker.
Leave granted.
Bill 18, Forest Practices Code of British Columbia Amendment Act, 1995, read a third time and passed.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. G. Clark: I move the House at its rising stand recessed until 6:30 p.m.
Motion approved.
The House recessed at 5:58 p.m.
The House in Committee of Supply A; G. Brewin in the chair.
The committee met at 2:43 p.m.
ESTIMATES: MINISTRY OF FINANCE AND CORPORATE RELATIONS
On vote 32: minister's office, $348,000.
The Chair: Madam Minister, with her report -- and at this time I'm sure you know that you have 30 minutes if you want to use it.
Hon. E. Cull: I hope I won't take the full time, but there are a few remarks I'd like to make as we start the estimates debate for the Ministry of Finance.
Before I get started, I do want to introduce some of the staff that are here with me this afternoon: my deputy Mike Costello, who I think everyone knows; Brian Mann, our senior financial officer; Carol Anne Rolf -- I don't know how I can forget names like that when I see them dozens of times on notes and meeting schedules -- who is with our policy and legislation branch: and also Doug Hyndman, with the B.C. Securities Commission. We are going to start talking about the Securities Commission this afternoon, I think.
Before we get into the details, I just want to make a few comments about the role of the ministry. One of the major priorities of our government, if not the main priority, has been to encourage job creation and investment in the province of British Columbia. We have been very successful over the last three and a half years. British Columbia has had the strongest economy in Canada. Last year we saw a 4.3 percent growth rate, and while this year we see it moderating somewhat, at 3 percent it's still a very healthy rate of growth. In the last three and a half years, 40 percent of all the new jobs in Canada have been created in British Columbia. Again, as a result of strong in-migration to the province, both from other parts of Canada and from international sources, and because of the very strong economy, people have been attracted here, and it has assisted our economy to grow even further.
With respect to business investment, I'm particulary pleased with the results that we've achieved with non-residential business investment. The increase, year over year, for 1994-95 was 23.5 percent in non-residential business investment. That was double the rate of neighbouring Alberta and, again, shows very well that despite what we sometimes hear to the contrary, businesses are continuing to set up in B.C. and investment is flowing into our province. It's paying off not only in the healthy growth rate but in terms of jobs and our ability to manage our budget.
[2:45]
The Ministry of Finance clearly has a major role to play in supporting B.C.'s strong economy. We're not the only player, but we have a very important role to play. One of our major roles is to ensure that the finances of the province are well managed and that we have a strong, sound fiscal plan.
I'd like to talk very briefly about our fiscal achievements. In the last four budget years, we have moved from a $2.4 billion deficit to eliminating it one year ahead of the schedule we had set for ourselves. We expect a surplus budget this year of $114 million. It doesn't really matter whether you use the consolidated revenue fund or the more broad summary financial statements approach to financial accounting; in either case, we have a surplus budget. I think that's very good news for the people of British Columbia, who have said that eliminating the deficit is one of their most important objectives and one of the things they want to see this government do as quickly as possible.
Not only did we get rid of the deficit a year ahead of schedule, but we cut the rate of government spending. In the three budget years prior to the election of our government, spending was increasing at about 12 percent per year. This last year, the current budget year, we cut it to 2.9 percent. That's the lowest rate of increase in spending in this province in 25 years. You have to go all the way back to the last couple of W.A.C. Bennett budgets before you find a budget with a lower increase in spending.
If you factor population growth and inflation into all of this, again, the budget this year makes real cuts in per capita
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spending, showing that we are getting more efficient. We're dealing with 80,000 to 100,000 new British Columbians each and every year, but we're reducing the amount that it costs to provide services to those individuals each and every year. This is the third year in a row that we have been able to cut per capita spending on a real basis.
In addition to cutting the rate of spending, we are in the second year of a three-year tax freeze. All income, sales, corporate, property and other taxes have been frozen. They were frozen in the 1994 budget, remain frozen this year and will be frozen again next year. As a result, British Columbia has the second-lowest taxes overall for the average family of all the provinces. In fact, if members care to take a look at the budget document itself, we take a number of different scenarios -- individuals earning different amounts of money, families, couples and other scenarios. In all cases, B.C. has the second-lowest taxes. Only Alberta beats us, and that's because they don't have a sales tax.
The third area that I wanted to comment on under fiscal achievements is our debt management plan. I have to say, hon. members, that this is one of the areas that I am particularly proud of in terms of what we have been able to accomplish this year.
To begin with, we have the lowest debt per person in Canada, we have the lowest debt-servicing charges in Canada, and we have been experiencing the fastest growth. Our government has attempted to strike a balance between what we need in terms of capital investment and capital spending and what the taxpayers can afford. Again, the public is not only concerned about deficits, they have been concerned about debt as well.
This year the government challenged the business community to work with us and give us some sound fiscal advice with respect to what a good debt management plan would look like. We said: "You tell us how we should go about ensuring that our debt remains the lowest in Canada." We had people like David Bond of the Hongkong Bank; we had representation from the Investment Dealers' Association of Canada. We had Bob Fairweather from RBC Dominion Securities, David Levi from the Working Opportunity Fund, Ken Georgetti of the B.C. Federation of Labour and quite a number of other individuals whose names escape me right now. We challenged business leaders and people from the labour community....
F. Gingell: Darcy Rezac.
Hon. E. Cull: The opposition critic mentions Darcy Rezac, whom I should not forget, since he is the one who conveyed the report to me in the end. We asked them: "How do you go about doing this?" They took the task very seriously and worked with my staff. I think they gave us some very sound advice on how to ensure that we continue to have the lowest debt in Canada.
The plan they submitted to us, which involved tagging debt to the provincial GDP and putting a cap on the interest bite -- the amount of revenue dollars that goes to pay for interest -- was accepted by government. In fact, we toughened it up in a couple of places. After we looked at their recommendations, it became clear to us that we could, in fact, not only meet their goals but beat them by making the right decisions. We were prepared to do that.
Finally, just before I move on, I want to say that the combination of the elimination of the deficit, the putting in place of a sound debt management plan, the three-year tax freeze and the continued per capita reductions in real spending have given the province the sound financial and fiscal underpinnings it needs to continue with a strong economy. It has been one of the primary goals of our government to ensure that that has been brought about.
As I said, the ministry has a major role to play. Clearly we have a role in preparing the annual budget. We are also the tax collector, and we establish tax policy. We manage a very large investment portfolio on behalf of the people of British Columbia. We are also involved in debt management, and through the office of the comptroller general we ensure that the accounting practices of the province are carried out according to the rules established by Treasury Board and other accounting principles.
In addition, the Ministry of Finance has a regulatory role. Through FICOM we are responsible for B.C. trust companies, credit unions and insurance companies. We oversee the real estate industry through the superintendent of real estate. We are the registrar and regulator of our mortgage brokers. We are also the regulator of the securities industry through the B.C. Securities Commission. We administer public sector pension plans, and we operate the corporate and personal property registries.
In addition, we have responsibility under the Public Service Employee Relations Commission for the human and labour relations of the public service. This is not part of the ministry, but part of my responsibilities as the Minister of Finance. I also chair the Public Sector Employers' Council, which is a body that coordinates human and labour relations in the broader public sector.
I'd just like to highlight some of the achievements of our ministry in the last year. In the revenue division, we implemented the first-time homebuyers' program, which exempts first-time homebuyers from the property transfer tax. This meant a tax cut of up to $3,000 for the almost 19,000 British Columbian families who participated in the program.
We also implemented a successful tax amnesty program resulting in over $2.5 million of consumption taxes being recovered for the province from businesses that voluntarily paid tax liabilities with interest and without penalty. By hiring additional auditors and collectors, revenues increased by $14.5 million this year.
With respect to the provincial treasury, we raised $558 million in the province's third issue of the B.C. savings bond program in October 1994. It was a very successful campaign. B.C. savings bonds are a unique opportunity for British Columbians to get involved in investing in their province. They've been very well received. They have been quite successful in bringing smaller investors into the picture of investing in schools, hospitals, roads and other essential services.
We also implemented a purchasing card program this year, which means less paperwork, and has allowed us to save approximately $1.4 million as a result of bringing in the program.
As a result of diversifying our borrowing sources, provincial treasury has saved the province $7.8 million over the cost of borrowing by using more traditional methods. As the opposition critic, I know, is aware, the auditor general recently
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released a value-for-money audit on the provincial treasury, which was very positive. I was very pleased to receive that report, because it indicated that provincial treasury is properly managing government cash balances and borrowing transactions to lower borrowing requirements and to save money for the province. It was a very positive report, and one we were pleased to receive.
We also recovered $8.7 million in non-performing commercial loans and other long-term debts owing to various government ministries as part of our operations issue.
Our corporate registry implemented a remote access function, allowing clients to submit and obtain approval for business and corporate names through B.C. OnLine, which reduced the turnaround time by about 50 percent and won our corporate registry a prestigious international award from the International Association of Corporate Administrators. I believe that this particular program was discussed in estimates last year. There were some concerns about how it was going to work, and I'm pleased to report that it has reduced time and has been recognized as a significant improvement in our operating procedures.
Our policy and legislation branch released a draft condominium act for feedback this year. The act's intent is to allow the condos to operate more flexibly while balancing the interests of developers and owners and strata corporations. It's out there for discussion.
But I think the major work that we did this year with respect to policy was responding to the Matkin commission's report on the B.C. securities industry. I know we've been discussing those matters in the House, so I won't say anything more on that right now.
The Public Service Employee Relations Commission has concluded negotiations this year with a number of public service unions: The B.C. Government Employees' Union, the Nurses Union, the Professional Employees' Association, the Ambulance Service, Crown Counsel, Victoria Line ferry employees, and the orthodontic and dental fee for service physicians. All of those were successfully concluded within the guidelines established by the Public Sector Employers' Council.
We also completed the final stages of the pay equity program. We can now say, with respect to the public service in British Columbia, that we have achieved pay equity. That is a significant achievement, one that was long overdue, and it has allowed many, many women working in the public service to be paid the amount that their jobs are worth, based on the work that they're performing, as opposed to an old system which would have seen them making far less because of some traditional discrimination that was inherent in the system.
We've also launched the partnership program this year, where we have changed the nature of how we deal with our public employees -- not only our union employees, but our management, exclusion and professional employees. The old system would see joint management committees, where unions sat on one side and management sat on the other side, and the agenda was always about grievances or problems or conflict within the workplace. We worked through the bargaining system this year to reach agreement with our employees that there was a better way to conduct human relations within the public service. They agreed, they rose to the challenge and they were very pleased to see a new way of doing business in the government.
We have created partnership councils in all the ministries. Instead of coming together as two sides across a table, we now have all employees represented around a table, and instead of dealing with conflict, their objective is to try to find ways to improve the operations of government: to save money, to save time, to make it a more positive and productive place for people to work. It's starting to pay off with results.
This year, with the Public Sector Employers' Council, we have been doing most of our work on establishing the guidelines for public sector compensation. We have also been actively working with the employers' association to establish guidelines for compensation for management and excluded employees, and that is proceeding.
I just want to touch on a few current initiatives. With respect to our revenue division, we're implementing the international fuel tax agreement to lessen the red tape for the trucking industry in collecting fuel tax and to improve compliance. We're also continuing to consult with first nations to find better ways to deal with tobacco products, particularly the exempt products and the abuse that has been occurring around the province with smuggled tobacco and exempt tobacco being sold to those who are not eligible for it.
[3:00]
We're also working on ways for larger vendors to submit social service tax electronically -- again, to streamline the system and make it easier for the vendors to be able to comply with the law....
Hon. E. Cull: With the office of the comptroller general, we are continuing to implement the governmentwide corporate accounting system. When this system is up and running across government in September 1997, it will save about $4.4 million each year.
We're also implementing a new integrated corporate human resource information and payroll system, called CHIPS for short, to replace the 65 separate human resource and leave systems that are currently in government, plus the one payroll system. It will simplify all these additional systems, and we'll only have one. We will save more than $3 million each year once this system is fully implemented.
We are investigating the method of accounting for physical assets. Our comptroller general has been discussing a paper with members of the opposition, members of the media and other interested parties with respect to the whole question of how we account for physical assets.
Within provincial treasury, we're examining options to centralize the administration of unclaimed money within the province so that the rightful owners are reunited with their unclaimed dollars. We're also working with financial institutions and the Ministry of Skills, Training and Labour to change the way B.C. student loans are financed, which will save the province up to $200 million over the next ten years while still providing equal services to students.
In our policy and legislation branch, we've just introduced amendments to the Real Estate Act to ensure that the development and sale of shared interests in land are subject to the same disclosure and local government approval requirements as subdivided land, condominiums and co-ops. We will be publishing a draft of the new company act for public comment and feedback.
With respect to the B.C. Securities Commission, I'm not going to say an awful lot now, as we have been discussing two
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bills in the House over the last couple of days. I think we have canvassed the issues there, and we will continue to do so as we move into Bill 44, the amendment to the B.C. Securities Commission. But beyond the legislation, we have been actively working on the comprehensive package of responding to Matkin. It's not appropriate for people to focus on any one element of the response, whether it's financial autonomy, new legislation, administrative changes or the securities and fraud office that's being established with the RCMP. They come together as a package, and none of those items can stand singly to address the problems. We think we have the right package, but as I have said on a number of occasions, if we don't, we will continue to improve the system.
I have asked Mr. Hyndman to prepare a six-month report on the progress of implementing the Matkin commission recommendations with my ministry staff. We have released our first six-month report, and I will be doing this on a regular basis until we come to the point where we no longer feel we need to monitor it as closely as that.
The Superannuation Commission has been diversifying the municipal and public service pension plan investments, as recommended by the pension advisory boards that were established last year.
To conclude, as I announced in the recent B.C. budget, we are capping our debt cost and reducing the debt in relation to the size of our economy. Our goal is to keep B.C. as the number one credit rating in the country, with the lowest debt cost. We have received confirmation from two of the bond-rating agencies with respect to our credit rating. I expect to receive the final two confirmations within the next couple of weeks. My understanding is that we will be confirmed by all agencies. Perhaps above all, I think that is the letter grade I'm looking for when we are looking at the finances of the province.
Whenever we discuss the status of the province's finances -- whether the budget is balanced, what we're doing with debt, where the spending is -- there are a lot of politics in the discussions that take place. I look to the bond-rating agencies, because they don't really care whether a Liberal, Conservative, New Democratic or Reform government is in power. They care about how the books are being managed, whether the finances are being handled in an appropriate way and whether the government can afford the plans that it has put in place. Having the highest credit rating in the country, continuing to maintain that credit rating through some very difficult financial times and having the negative outlook removed from us last year shows that the folks who don't care about our political stripe, but do care very much about how we manage our finances, think that we're doing a very good job. I would like to conclude with that.
I would like to say one final word before sitting down and getting into the details of the debate. One of the things that a minister learns is that you can only be as good as the people who are working in the ministry behind you. I think the Ministry of Finance officials and those in the agencies that report to me have done an excellent job over the last year. This is a very professional public service that I have been privileged to work with. I would like to take this opportunity to thank the employees of the Ministry of Finance and the other agencies reporting to the Minister of Finance for the fine public service they have provided in the last year.
F. Gingell: I would first of all like to acknowledge, underline and underscore the comments that the minister finished with in her remarks dealing with the quality of the staff within the Ministry of Finance. I'm sure when the minister was in opposition she understood the concerns that one has as one sees the bureaucracy becoming what we truly believe to be politicized. To my knowledge, that has not happened in any way, shape or form in the Ministry of Finance. I'm really pleased. I think it's critically important, particularly in this ministry, to maintain the continuation of the high quality of staff. I echo your words.
Having said that, the person who gave the minister advice about the lowest tax rates in Canada carefully couched the words so that we talk about the average family. The minister refers to the Investment Dealers' Association, an organization I think we all accept to be relatively non-partisan. This is their 1995 little pamphlet. It talks about current economic and financial indicators, economic outlook, net financing through Canadian securities, and federal and provincial financing. It also has a fiscal report card of Canadian governments. I agree that yours is very, very good, and I wouldn't argue with that. Then it talks about comparative tax rates. In personal income, the top combined federal and provincial marginal tax rate is British Columbia. It is 54.16 percent; it is almost a full percentage point over Ontario. It is more than 8 percentage points -- or more than about 18 percent -- greater than the province of Alberta.
I think we lose credibility as politicians when we mention only one side of the coin. If only you would admit.... When you say we have the lowest tax rates for the average family and give a good example and tell us what that means -- whether they're married and whether they make any charitable donations and what they are putting into their RSPs -- if only you would admit at the same time that we have the highest marginal tax rate. I think we lose our credibility in dealing with knowledgable people when they hear you saying something that's only telling a little part of the story. That really bothers me.
Corporate income taxes. British Columbia has the highest rate of corporate income taxes for small businesses in Canada. This government talks about how important small business is as a creator of jobs and how important small business is in our communities. British Columbia communities outside the lower mainland are becoming bigger and bigger and more economically sound, and they are getting more and more diverse. And the greatest push in that economic growth is the growth of small businesses. We have the highest tax.
It bothers me that when you talk about all these other things -- you talk about how low our taxes are, etc., -- you don't tell the whole story. That really takes away from the message. Yes, we do have the lowest per capita debt of any province in Canada; yes, we do have the lowest debt compared to GDP in Canada. But you should also mention, at the same time, that in the past three years we've had perhaps the highest rate of growth in that debt -- per capita and to GDP -- in Canada, perhaps other than the province of Ontario. I don't have the numbers, but I know that we're not at the bottom of the growth-rate list. We're pretty high up on it.
As the minister said, we have spent some time in the last few days dealing with the issues of the amendments to the Securities Act and the VSE Act. I appreciate that this isn't the forum to discuss those changes. We've dealt with the two easiest parts; the more complex part is yet to come. I must admit that I hadn't planned on asking any questions in rela-
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tion to the B.C. Securities Commission, because we will be dealing with that. But as the chairman is here, perhaps it would be an opportunity to find out how the commission is managing to deal with change. They have busy day-to-day responsibilities. I'm not sure whether his office, in comparison to other booms and busts, would be comparatively busy or slow or sort of medium. But at the same time that they deal with change, they also have the responsibilities of dealing with the work that comes in through the door every day. I wonder if this would be a good opportunity to get a report on the account status.
Hon. E. Cull: The member is right, of course -- with implementing the changes that are required, there is additional work to be done. One of the first things that we established as needed to be done was to give the Securities Commission sufficient resources to be able to make those changes. That's why Bill 5 was such an important piece of legislation. It removed from the Securities Commission some of the restrictions put on it in the past that would limit its ability to hire additional staff -- as they have done recently -- to accommodate not only the workload at the commission but also to be able to deal with the changes.
That has been important and is the major response we have been able to provide to the Securities Commission to give them the ability to access the revenues that are collected from the securities industry and then to use those according to some restrictions in the Act with respect to business plan and the like -- that I know the member is familiar with -- so that they can cope with their workload.
F. Gingell: We don't have the budget of the Securities Commission in the estimates this year. Last year, from memory, I think they budgeted to get revenues from various sources -- a little more than $10 million -- and to have expenses of around $9 million. They were probably budgeted to have an excess of revenue over expenditure of about $2 million. I wonder if the minster could advise what the actual results for the year ending March 31, 1995, were.
Hon. E. Cull: The member is correct: the budget isn't in this year's estimates because of the changes in Bill 5. We expect the budget to be about $13.6 million this year -- that's the expenditure -- compared to roughly $10.5 million last year. Preliminary revenue -- and I have to state that these figures are preliminary because we have not yet finished with all the information from last year; we haven't got it all in and reconciled -- is $14.55 million, for a surplus of about $4 million.
[3:15]
F. Gingell: Just to make sure that I've got this right, you anticipate that last year's revenues were $14.5 million and expenses were $10.5 million, showing a net income of $4 million. In this coming year, the Securities Commission has set a budget of expenditures of around $13.6 million. They are planning on a 31 percent increase in expenditures. This is going to be a fairly substantial change in operations. I wonder if the minister could advise in very general terms -- I'm not looking for detail -- where the main focus of this increase in expenditures of $3 million is going to be. What portion of it will be salary costs, and into what divisions of the operation will those extra resources be focused?
Hon. E. Cull: The increase does look large in a percentage term, but I should point out that a securities fraud office is being established -- something that didn't exist before. A million dollars of that increase is going to the securities fraud office, so one-third of it is actually going there. The remainder of the money will be spent on enforcement. I don't have a breakdown of the salaries, but the major components of the enforcement cost would be salaries for staff and legal costs. The legal costs, as you might guess, may be quite significant.
F. Gingell: I know that the Securities Commission presently does have lawyers, and I presume that that is lawyers plural. I think I met at least two staff lawyers from the commission, but both are in policy-type positions. I wonder if the commission could advise us if they are planning on this increase in the need for legal services to be delivered to the commission through outside contacts with law firms or whether they intend to hire staff to perform these roles.
Hon. E. Cull: Two additional lawyers have been hired in the past few months. There is a mix of in-house and contracted lawyers. We are trying to shift to in-house lawyers, which is why we hired two additional staff.
F. Gingell: I would like to close this year's very short discussion on the B.C. Securities Commission by giving my continued commitment to the program that the minister brought forward. It's a strange situation when one gets accused in the House of being in the pockets of the Howe Street boys, who are evidently pouring money all over us, yet I'm holding hands with a member of the socialist horde who has been determined for many years to bring common sense and better practices to the commission's particularly important role in British Columbia's economy.
T. Perry: Come on across. There's lots of room on these benches.
F. Gingell: I don't think so.
Hon. E. Cull: Since the member has finished with the Securities Commission, I want to come back to the first comment he made in respect to taxes. I have no problem talking about the marginal tax rate and acknowledging, as the member has pointed out, that we do have the highest marginal tax rate for those earning the largest incomes in this province. I will refer the member, though, to pages 84 and 85 of the budget reports document, which calculate overall taxes. It includes provincial and federal taxes, property tax, retail sales tax, fuel tax, etc. Examples given include: single individuals earning $80,000, which is a relatively healthy income for an unattached individual; a two-income family of four earning $55,000; a two-income family of four earning $90,000; and a senior couple, with equal pension incomes, earning $30,000. In each case, British Columbia has the second-lowest taxes.
The question I would ask -- and I realize that the questions don't flow across the floor toward the opposition and that they're only one-way.... But he does represent a party that has said it will eliminate the corporation capital tax, that $330 million. His leader has committed to eliminating school property taxes, although I've heard this member qualify that by saying: "Well, he didn't mean to do it all at the same time; it's to be done over time." If we now hear that he's also going
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to deal with the highest marginal tax rate, I would like to know how he's going to balance the budget, maintain the lowest debt in the country and keep service levels where they are.
F. Gingell: This is a change, and I'd like to make some comments on that subject.
Hon. E. Cull: We're mailing this one out, Fred.
F. Gingell: That's okay.
Number one: you should listen carefully. Your party has a habit of not listening to everything that is said and then going out and shouting it from the rooftops, full of its inaccuracies. We said that we will bring the corporate capital tax back to what it was before you made changes in 1992. If you don't leave the financial institutions, then you have to go back and make a whole series of other changes. The financial institutions, the banks that were already paying this tax -- which was creditable, you will remember, from the income taxes to the province.... This was done originally to deal with the difficulty of trying to allocate income between provinces with large multi-jurisdictional institutions.
I'd like to refer the minister to an article I wrote in the May 1995 issue of the Canadian Chartered Accountant; I have been published for the first time. It talks about the process of good governance. Nobody is suggesting to you or to the people of British Columbia that there is some magic wand that you suddenly wave. But you have to give careful thought to those taxes that do damage to the economy and those taxes that are more neutral. I don't think there are any taxes that encourage economic development, but you can certainly recognize that a corporate capital tax that taxes a business creating an investment and a business in British Columbia, perhaps for the first time, is a very, very negative tax. I don't think anyone argues if one has to deal with the issue of revenue loss by raising consumer tax a fraction or raising corporate income taxes, but don't tax businesses on the investments and the job opportunities that they create. That is unbelievably negative and doesn't happen in the jurisdictions with whom we compete.
I know you keep saying: "How are we going to replace $375 million?" I hope that one doesn't have to. I hope that if you read my article and think about the ways in which government expenditures can be more clearly focused and evaluated, and if we all stop doing the wrong things, start thinking about those things that we do that we shouldn't do and focus more on those things that we should do, you will be able to get the level of expenditures in total down.
In this province in the early 1980s we spent roughly 14 percent of gross provincial product on the package of services that the provincial government delivers, including health and education.
One has to carefully go back and see what happened to school taxes. Back then, school taxes were paid through the municipalities and then directly to the school boards, whereas now they come to the province first. You have to check them to make sure whether that number is in or out. I have a feeling that your provincial economic review has, in fact, made the changes that are necessary so that the comparisons are fair.
When you came into government, that same package of services cost in excess of 21 percent and had increased by 50 percent over a matter of ten or 11 years -- 50 percent in the true and proper way of measuring it, which is to calculate it as a percentage of GDP.
Do taxpayers and citizens feel that they're getting 50 percent more value in 1995 than they were in 1983? I think the answer is clearly no, so one has to focus in on how to do things better. It's all very well for the government to continue shouting at us about what school you wouldn't build or what hospital you would close, but it was you, minister, when you were Minister of Health, who closed the first hospital. You were probably right; I'm not sure; I'm not able to judge these things. But if you were doing it for the right reasons, because you wanted to deliver health care in a more effective manner and in a way that's going to help British Columbians and put patients first, then that's what we should all be doing. Actions like the movement of Chris Chilton from the Premier's Office to the Ministry of Health don't help your government's argument in these issues. I appreciate the amount of money is small, but it creates the wrong environment.
When we talk about property taxes, we are talking about school taxes. I was, as I think you were, a school trustee. In the late 1960s, I was asked by the B.C. School Trustees' Association to sit on a committee -- or a commission or a working group -- to look into the issue of the proper way of financing education. I have that report somewhere. It was done for the B.C. School Trustees Association because the question of the right way to fund education was a continuing subject at every annual meeting.
[3:30]
We came to the conclusion that we should stay with property taxes for one reason only: the question of local autonomy. Property taxes were the only tax that a school district could determine sensibly. You could have a different tax on property from Delta to Surrey, but you couldn't have income tax in School District 37 different from that in School District 39, or whatever. You couldn't have a different consumer tax in different school districts, whether it be a sales tax on everything or a special consumer tax on gasoline, for example.
In those days, school boards made the decision about how much money they spent; they don't make those decisions anymore. There is no process now by which school districts make decisions about how much money they are going to spend. So the only reason for staying with the property tax to fund a portion of education -- and we all recognize that all of it isn't by any manner of means, after the homeowner grant.... I guess for K to 12 it would be about 30 percent or something.
The reasons for keeping it have gone. Property taxes are a logical way to fund education. The more you can swing the taxation system around so that citizens can see a relationship between the taxes they pay and the services they receive, the more efficient that would make us as politicians and the easier it will be to make decisions about the level of expenditures.
There is in Canada right now a waterfalling process. Citizens pour money into the top, to the federal government, and a portion of it waterfalls down to the provincial government. Then the provincial government takes in more taxes and it waterfalls money down to regional governments and municipal governments. There's a whole series of these financial transfers. They all cost money to administer, and they're inefficient. We spend money going into joint-funded pro-
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grams that we shouldn't do. We can get a dollar's worth, we think, for only 50 cents. I really feel strongly that we have to think about all these issues and come to a much more logical tax regime.
The government also accuses us of saying that they should have reduced transfer payments more. That's not what we said. What we said was that the federal government has a serious debt issue, and the minister has watched how they've struggled to get our situation in British Columbia improved quite dramatically from what it was under the Socreds. What we're saying is that the federal government has to face reality, and the reality has to be dealt with with the provinces in a fair and equitable manner. You know, there isn't any secret supply of funds.
I'm going to stop there, but I was, for the first time ever, asked to explain some of these issues and the way we feel about them. It's a new experience for me to have that opportunity. Maybe in a year or so we'll have the opportunity to do a lot more than that. If the minister has any other questions about how we can run government better, I'd be pleased to help again in the future.
Hon. E. Cull: I thought that was actually very enlightening. There's some very interesting information there. I think I'll ask more questions in the future, not so much to find out how we should do things, but to clearly get the opposition on record.
Just quickly in response, spending as a percentage of GDP has come down as a result of the actions of our government, and our debt management plan takes it even lower again. The $330 million -- give or take $10 million -- is the corporation capital tax without the financial institutions in it. It's still a very large chunk; it's $397....
F. Gingell: I think you said $375 million.
Hon. E. Cull: No, I didn't say that; I said $330 million. But $397 million is the total amount, including the financial institutions. The interesting thing is that the $330 million of non-financial institution corporation capital tax is roughly equal to 1 percent on the sales tax. I'm going to check the Blues for this, but I did hear the member say that an alternative might be a small increase in the consumer tax. I take that to be a 1 percent increase in the PST as an alternative.
With respect to the federal government issue -- and I'll just very quickly.... No, maybe I'll just go back on the property tax for a minute. Your party has said that they would eliminate the school tax from property. I understand, as an ex-school trustee, the comments you make about financial autonomy and the rest. The real issue here that the taxpayers have to understand is that it's not just switching it from property tax to income tax or consumption tax or some other form of tax, because clearly the money is going to have to be made up one way or another. I'm sure the member is not suggesting that it would simply be taken out of the school budget or other parts of the provincial budget, since it is quite significant. It is also a shift from business to consumers, unless the proposal is that the taxes would increase for businesses in terms of corporate income tax or capital tax or some other tax that is paid by business.
Finally, on the federal transfers, the thing that has disappointed me most about the opposition has not been that they have called for deeper cuts, but the fact that they have not pointed out what the federal government has done with respect to the cuts that they have chosen. Far be it from me as a Finance minister to not support the federal government in eliminating or reducing its deficit. I want them to get their finances under control. It's the federal government that has caused our foreign denominated debt to be moved down in its credit rating. It's nothing that we have done, but we have been held down because of the Canada downgrade.
The irony of what the federal government has done is that when it comes to the social programs of medicare, post-secondary education and social assistance, they have cut those programs through transfers to provinces by 20 percent. All other federal government programs have been cut by 3 percent. I think those priorities are wrong.
We gave the federal government over $9 billion worth of suggestions for where they could cut from business subsidies, from regional slush funds, from programs that, while they may have had some value in the past or may even continue to have some value today, are nowhere near as important to Canadians as health care and post-secondary education. I would urge all members of this Legislature to speak out against the priorities. Argue with whether you think they should have cut less or more; that's not the issue. The issue is that they have chosen a way which, I think, is political expedient -- it's not going to be felt until next year, and it's going to be delivered by provinces, not the federal government, because people see health care and education being delivered by the provinces.
But it's just wrong in terms of their priorities. The things they have left funded in areas of business subsidy or regional economic development funds clearly show that the federal government did have some other choices. They have chosen to go after the two programs that I think are going to hurt British Columbians most -- the ones that, from my discussions with people around this province, would have been the last areas that people would have asked to have seen cut.
F. Gingell: I'm also going to check the Blues tomorrow.
When I discussed the issue of where you replace taxes if you do so, I pushed you first toward the POMAR article, the program outcome measurement and reporting -- the means by which we start to find out about things we do that we shouldn't do and about how we do the things we should be doing in a more effective and efficient manner. I appreciate that we've come down fractionally from in excess of 21 percent of GDP to cover the provincial expenditures -- not a great deal, but we're going in the right direction. But you still have to recognize that the last administration of the Social Credit government pushed us up from 14 percent of GDP to around 21 percent, which was an increase of 50 percent. There have to be some better solutions. There simply must be.
With that, the member for Fort Langley-Aldergrove is going to step in on the PSERC issues.
G. Farrell-Collins: I will stick to the PSERC stuff; however, the other one sounds interesting, too, and I wouldn't mind getting into that debate sometime. I may come back later on today.
I wanted to follow up on some issues that were discussed last year with regard to PSERC and find out what the status has been on those, and then perhaps delve into a couple of
[ Page 15143 ]
other areas briefly. I don't intend to take a great deal of time, but I just wanted to see where we're at.
Last year there was some discussion about a problem that was highlighted with regard to an overutilization of sick leave in the public sector. At that time, the minister informed us that there was a joint study being done. She had invited in the public sector unions and the ministry, and they were going through the utilization of sick leave rates and trying to find some solutions and ways of improving that. My understanding was that last year the utilization rate was 245 percent above what it is in the private sector in comparable organizations. She felt that that was an issue which required urgent attention, and there was a group coming together to deal with that. I would like to know if the minister can tell us what progress has been made on that issue in the last twelve months.
Hon. E. Cull: I'd just like to take the opportunity to introduce Jo Surich, commissioner of the Public Service Employee Relations Commission. It's always a mouthful to say that; PSERC is easier.
[3:45]
The member is right. We did, through our negotiations with the B.C. Government Employees' Union last year, address this issue. We have a process in place. Our use of these plans has come down about 5 percent in the last year, which is a significant turnaround for one year. Work is continuing with the B.C. Government Employees' Union to develop ways to prevent absence, but more importantly to help people come back from sick leave more quickly. When we have people off on some form of leave or disability, we actively look at ways to bring them back -- perhaps not directly to their former jobs, particularly if that may cause them to be reinjured or go back onto the program because the conditions would exacerbate the condition. We are finding ways of doing that very actively through the Public Service Employee Relations Commission.
G. Farrell-Collins: I'm glad to see that work has been done. However, if I heard correctly, the minister said there was a 5 percent drop in utilization. Given that we were 245 percent above average a year ago, that would put us at about 232 percent above average now. It seems to me that there is a long way to go. Can the minister tell us if we are going to get there? Are there some really significant problems in certain areas? Are these problems right across the public sector, or do we have some problem areas that need to be dealt with more aggressively?
Hon. E. Cull: I just realized that in this committee we can have deputies answer directly, which might save a bit of time here.
Interjection.
Hon. E. Cull: The member said that is fine with him. I think what I will do is ask Mr. Surich, who is the deputy and therefore able to do this, to respond directly to the question.
J. Surich: The LTD plan in particular, which has a higher rate of participation than is the case for private sector plans, also has a much higher rate of return to work than private sector plans usually do. Those two numbers are kind of complementary. At this stage, it is easier to get on our plan. On the other hand, as a result we have much greater success in getting them back to work.
The distribution of causes for participation in our LTD plan are very similar to those of all large organizations in Canada, private or public sector. That is an artifact, I think, of the modern workplace. It's about 40 to 50 percent stress-and mental illness-related issues, and that's quite normal -- it's not normal -- but typical of those kinds of plans.
G. Farrell-Collins: I'm always glad when we do this, because it does speed things up. The answers tend to be better, and it allows us to get more information. I wish we could do it in the other House too. It certainly benefits everybody.
The comment was that your long-term disability also had a higher rate of return, as opposed to just a higher rate of usage. The 245 percent figure, which is now about 230 or so percent above the private sector figure, could be clarified for me. Is that strictly in numbers of people using it or per capita employees using it? Does that represent dollar figures of benefits paid out?
J. Surich: It's in terms of the numbers of people involved. The number of persons who join our LTD plan -- which, of course, is public service plus a bunch of Crown corporations that are also in the same plan -- is larger than the norm. The return back to the workplace is also larger than the norm. I think those two are related in some fashion.
G. Farrell-Collins: I'm looking for some idea of why that would be the case. It seems to be a large difference, not just a 10 percent or a 20 percent or even a 50 percent difference. I'm curious why that anomaly would be there. Are we accounting for it in a different way? Is there something about the work that would be different? If the breakout is similar to the private sector, I'm wondering why there would be that higher utilization rate in the public sector, twinned with the higher return rate. Is it because we're classifying something -- say, a long-term disability -- in a different way than the private sector does it? Or does Great-West Life Assurance account for it in the same way in both the public and private sectors? Is there any explanation for why that anomaly is there?
J. Surich: When you compare our plan with private sector plans, I think part of the difficulty relates to the complexity of the workplace. The private sector plan for a firm in the oil business, for example, is a very straightforward plan with a relatively small number of occupations. Ours has a huge range of occupations in it. So to make more effective and useful comparisons, one probably would want to look at other complex, large public sector plans. Our rate of people going on LTD is higher than the norm -- without question. Presumably that's a function of the process of decision-making as it's defined by collective agreements. It's part of the way Great-West Life interprets the data. Our capacity to get people back to work is also greater, but that's related, I suspect, to the fact that it's easier to get on in the first place.
G. Farrell-Collins: Sorry to keep getting you up and down. It's a silly process, but it's the way it works here.
I still don't know what's causing that anomaly. I'd be interested to know if it's the way it's being accounted for, or if
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the measures of the rates of usage of LTD in the public sector would be better compared to a different organization. Do we know what our utilization rates are compared to one of the other provinces or to the federal government for that matter? Are we comparable? Or is there a divergence between our province and other jurisdictions?
Hon. E. Cull: Well, compared to other provinces or other public sectors, we're relatively comparable. We may be a little on the high side in terms of the numbers.
But the question the member is asking is: why do we seem to have more people go onto LTD -- even if we do get them back to work at a higher rate than the private sector? If we knew the answer to that, we would be much closer to the private sector numbers, or we would be able to say that there is a good reason why you can't compare the two, because they're not comparable.
What we did last year as part of negotiations was to give this information to the union, who freely acknowledged that it was shocking to them as well, and they didn't know the reasons why. So what we're doing right now is working on a system that will get people back to work earlier, and we're trying to understand some of the dynamics that cause people to go on to LTD in the first place.
This is still work in progress, and it started fairly recently. Last year when we discussed this in estimates, we had just started the whole effort of taking action on this. But I think the commitment is there on both the employee side and the management side, and the work that's being done through our partnership councils and the approach to moving people back to work, even if it's not back exactly to the same job but to some form of work so that they're back in the work force and off LTD, is going to start to have impact. I don't expect to take this 5 percent a year for years before we have the impact that we expect to have.
I think by next year we'll have a much better understanding with respect to the real reasons that lie behind it all. At this point, if we had the answers to that question, we'd have the answers to the rest.
G. Farrell-Collins: I know Great-West Life is the group that we're working with to manage this program. Have they made any recommendations or been involved in the review that's taking place between BCGEU and PSERC? Are they involved in that, or do we have any outside people who've dealt with this sort of thing in other jurisdictions who may be offering some advice?
J. Surich: We're doing a number of things on this plan and all the other benefit plans. We are engaging one of the large consulting firms -- that RFP process has just been completed -- to first of all conduct a study of our practices in comparison to practices elsewhere. We are then going to tender out the management of all the plans -- dental and so on, because that hasn't been done in a very long period of time -- in order to get a more direct handle on what's causing these pressures.
G. Farrell-Collins: I'm glad to hear that. It sounds as if the issue is being grappled with. Perhaps we can get some indication of the goals and time lines as to where we are headed and the time frame in which we hope to get there. Are the targets set, or are we just working away at it and seeing how it progresses?
J. Surich: The targets have been set. We will go to tender on all the plans by September and plan to have, if necessary, new carriers in place by January 1. That's the time line we are working to. In turn, we plan to have completed the joint process with the union by next March.
G. Farrell-Collins: I'm glad to hear that. I didn't hear if there were any target numbers as far as getting that under control. We have the process in place and are going to wait and see what those targets are once the consultants have been brought in. Is that the intent?
I'm getting a nod from the minister. I guess you're not going to touch that one.
The last thing I want to ask is: what sorts of things are we doing or have we put in place to get people back to work sooner? Is there better rehab? Is there better counselling to get people back? Are there some specific things we're doing to get people back into the workforce quicker? Have we taken a more liberal view of getting people back into other jobs and freeing that up? Has the union been responsive in that as far as bumping and seniority goes? What specifically are we doing to try and improve that?
J. Surich: We are doing a number of things. In the last round of bargaining, we in fact changed the portions of the collective agreement that deal with this to provide for a much more effective and easier way to return people to an occupation not like their own. As you know, the return process is a problem of returning people to an occupation. We have arrived at an agreement in which we fix the lowest level of pay at 70 percent of the original occupation, thereby allowing ourselves the capacity to place people almost anywhere. There's a loss, but the loss is mitigated to some extent. That helps enormously in placing people.
The rehab process itself is now much more active. It has been expanded to include representatives of the ministries themselves, because the ministries are really the places of employment. They are now actively involved in the placement process, which has been very helpful in encouraging placements and getting them done.
G. Farrell-Collins: Perhaps, briefly, we can find out a little bit about the status of the move toward pay equity. How far along the road are we?
Interjection.
G. Farrell-Collins: We're complete?
Hon. E. Cull: The member wasn't here when I made my opening remarks; he wouldn't have asked this question if he had been, because we did discuss it.
Interjection.
Hon. E. Cull: The member says they're going to ask anyway, so I guess I'll answer it again.
The pay equity plan within the public service is complete now. There was an initial payment made early last year. We
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finished the work on the gender neutral plan to compare the jobs, and we made the final payment in October of last year and announced that the job was complete. Pay equity had been achieved, and we had a success story to report on.
G. Farrell-Collins: I'm glad to hear that. Can the minister tell me if it's completed not just in the mind of the government but in the mind of the unions also? Is everybody in agreement on that? If that's the case, that's wonderful.
Hon. E. Cull: That's correct, because the gender neutral job evaluation plan was worked out with the B.C. Government Employees' Union. I recall at the time, when we made the final payments, we included in the paycheque envelopes a letter indicating to people what this is all about and that we arrived at pay equity. The subsequent issue of The Provincial, which is the B.C. government employees' newsletter, made quite a story out of the fact and took a fair amount of credit for the work they had done to push that issue on behalf of their members.
[4:00]
F. Gingell: When we look at the number of FTEs, the number proposed for 1995-96 compared to 1994-95 is going to come down by some 30, if my memory serves me correctly. We heard about the fact that you had hired additional people for various responsibilities, particularly in the revenue collection area. I was wondering where this reduction in FTEs -- maybe we'll just confirm the number, but in my mind it's 30 -- is coming from.
Hon. E. Cull: I just want a clarification; I missed the very beginning of that. Was the member asking about the ministry in this case?
F. Gingell: Yes.
Hon. E. Cull: Okay, that's fine. I see the member for Fort Langley-Aldergrove is indicating that we're finished with PSERC, so I will allow my deputy to return to his other duties.
While I'm on my feet, if there are no questions on superannuation or pensions, I can let Mr. Cook go, too, if that's the case. Are there questions? If there are, then I will keep him here.
F. Gingell: I'd just like to read something into the record on the pensions issue, if I may.
Hon. E. Cull: Hon. Chair, we're talking across the chamber here, and it's highly outside of the rules.
The Chair: Yes, this is a little difficult. You're supposed talk through the Chair.
Hon. E. Cull: The member has indicated that there's something he'd like to do, and if that's to occur soon, I would appreciate it so my staff can return to their offices and carry out the work that they do.
It is the Ministry of Finance that the member was asking about with respect to the FTEs. Last year.... I'm just going to check the figures here. There's a little confusion on our side as to what question was actually asked. Let me answer one, and we'll see if it matches the question.
An Hon. Member: Jeopardy.
Hon. E. Cull: That's right. Jeopardy.
This year we have reduced FTEs in the office of the comptroller general as the result of eliminating a function that was essentially checking the checkers, if you like, which we had determined was no longer needed. The financial officers in the ministries and the staff that work for them are able to do this without the double-checking at the OCG level. So we reduced staff there.
I think the member was referring to my opening remarks when I commented on having hired additional auditors, which was actually in last year's budget. I think there were some minor FTE reductions throughout the ministry that allowed us to hire additional auditors, because revenue division got additional funding. But there were no significant program reductions or changes. It was just one or two here to make sure that the numbers stayed within the total FTE allotment.
We have tried wherever possible.... Obviously in a ministry like Finance, when you add auditors or staff to the revenue division, you generally increase revenue many times the salary and the cost of hiring a particular individual. When we can successfully put those arguments together, we have been able to increase our budget in the revenue area, sometimes having to make adjustments elsewhere to stay within the overall fiscal goals.
F. Gingell: You've basically answered the question.
The budget for this year indicates that there's a reduction in total in the ministry, having adjusted for the fact that the B.C. Securities Commission is no longer within your complement of 30. I heard you saying that the office of the comptroller general has had a reduction. What were the other major reductions in FTEs?
Hon. E. Cull: The other major reduction was about 17 individuals in the registries area, because of automation. There were a few reductions in Treasury Board staff and a few reductions in the provincial treasury operations. More significant reductions -- if you move outside the ministry itself -- occurred in pension administration, where there were almost 20. I guess that's the major one. I'm sorry; I've got them backwards. I said there was a reduction in pension administration. It was actually an addition.
F. Gingell: This brings up the subject of the pension committee. I just thought that rather than someone reading Hansard at a later date and thinking that we had not dealt with the issues of pensions in any manner, I would read into the record that the Public Accounts Committee dealt with this matter in some depth with both the commission and Mr. Cook, and with the assistance of Mr. Levi of Eckler Partners Ltd., the province's actuaries on the majority of their plans. Many of the questions that we normally would have asked within this forum were a matter of debate. If any citizen wants to know what has happened, the Public Accounts is a public document; and this debate took place at the last meeting in May of the Public Accounts Committee -- or was it last Thursday? Anyway, it can be found there. The official opposition doesn't have any further issues to raise on the matter of the pension commission at this time.
[ Page 15146 ]
There is a minor point that I'd like to make in passing. Last year I made a suggestion during estimates and had hoped it would not fall upon deaf ears. In the Public Accounts, every page has the name of the organization that it is for. It is not good practice to have a single sheet, which may be an income statement or notes to the balance sheet, etc., without the name of the organization on the top. I brought this subject up last year. ICBC needs to be told about it, and I'd just like to put it on the record and hope that next year this rather minor issue -- it is a matter of convenience -- will be properly dealt with.
The other issue that I'd like to bring up as far as the public accounts, financial statements and presentation of the budgets are concerned is that when there's a change in the way things are done, if there could just be a single line explaining what has changed. It is possible to find out by going through the exercise, but.... For instance, the revenue that provincial treasury has received from other ministries and agencies was always shown gross. This year they have shown only the revenue from Crown corporations. The moneys that they have recovered from other ministries for their work have been deducted from the expenses. So all of a sudden the numbers have changed rather dramatically, and one wastes a little time in trying to chase those items down. I would like to make that suggestion, too, if I may.
During the minister's opening remarks, there was a mention of the successful -- $538 million was the number mentioned -- sale of B.C. savings bonds. I'm sure the deputy minister will remember -- the minister may or may not -- a discussion I had with him at issue time over some concerns that bond swaps were being done. People were cashing in the old ones when it was unnecessary to, and renewing them. There was no cost to the holder of the bonds, but there was a suggestion that a commission was being earned by salespeople. Such practices, as I understand it, are against the rules of the IDA and other bodies, and I wonder if the minister might bring me up to date on that particular issue.
Hon. E. Cull: With respect to the last issue and the earlier small items you've asked, I noticed the comptroller general sitting in the room here making notes. He has committed, particularly with the ICBC issue that you mentioned, to make sure the name of the organization is on the reports; and we'll make note of the other ones.
With respect to the savings bonds, I know the member raised this at the time of the sale. We went back to the managers; we investigated. We could find no evidence of commissions being earned in such a fashion. So having looked into it, my staff have told me they could find no evidence that anything like that was occurring.
F. Gingell: If I may, I want to very briefly deal with CAS, the corporate accounting system -- now, happily, not known as GASSP. I understand from your description that everything is moving along -- that it's on budget. The minister will perhaps remember that last year it was anticipated that it would cost another $13 million to $14 million to complete it. You anticipated it being completed in the fiscal period 1996-97. I heard the minister in her opening remarks confirm that, yes, it is on time. I wasn't sure, though, that the budget of $13 million to $14 million, which would now be $7 million to $8 million or $6 million to $7 million to complete, was still on course.
Hon. E. Cull: The original budget for implementing this somewhat ambitious accounting system, which is going to save us a considerable amount of money once it is in place, was $32.5 million. We have now, as we're into implementation, revised that figure to $24.5 million, and we have $10.25 million left to go. So we're about $14 million into it, and we have $10.25 million left to go.
F. Gingell: The amount that you anticipate to spend, $10.25 million, is that before the almost $6 million that is anticipated to be spent in 1995? Or is that after the almost $6 million is spent in 1995-96?
[4:15]
M. Costello: The implementation of CAS, as the minister indicated, will be about an additional $10.25 million, and that includes funds that will be spent this year for implementation. As of April 1, 1995, we need to spend another $10.25 million.
F. Gingell: That would indicate that it's going to leave you $4 million to spend in 1996-97, the year that one hopes it's all going to come together. I presume that will be an occasion for a special celebration. Are you going to press a button and turn on the lights and let it go? If I'm not in this House, I hope the minister invites me. I offer at this moment that if I'm in the House and the minister isn't, I will definitely invite her to this.
The process has moved along by gradually bringing various ministries on line. I wonder if the minister could advise the House from a subjective viewpoint, as you are bringing more ministries on now, whether it is getting easier. Are the lessons that have been learned in the past really beginning to show some results?
[N. Lortie in the chair.]
Hon. E. Cull: The process has improved as we've brought each ministry on. The latest ministry that we brought on was the Attorney General -- a very large decentralized ministry. The comptroller general advises me that it went very smoothly. As we have been implementing it, we have gained knowledge and learned from our experience each time and then been able to do a better job as we bring the new ministry on.
F. Gingell: I think the minister, or the minister's staff, and opposition members last week, or the week before, talked to a group representing FCA -- Financial Collection Agencies Ltd. -- a large Canadian organization from eastern Canada that has gone into Britain and the U.S. but works with government on the collection of overdue accounts and non-performing loans. I know that they met someone within government from the Ministry of Attorney General or from the Ministry of Finance.
It occurred to me that the corporate accounting system is a real tool that perhaps government can use to deal with the issue of collecting overdue motor vehicle fines and any other form of money owed to the government -- even delinquent student loans that the government had to pay out their guarantees on. Can the minister advise whether any thought has been given to the interlinks that will be necessary to ensure the motor vehicles branch -- or ICBC or whoever -- that when people renew their car insurance or drivers' licences,
[ Page 15147 ]
there will be an automatic means by which any funds that are owed to government will become apparent to the issuing body?
Hon. E. Cull: The member is correct; the corporate accounting system does give us a much better handle on accounts receivable, so that we're able to develop those linkages and keep better track of them. But the fines are a separate system, and the company the member mentioned, FCA, is currently working with the Attorney General ministry, I believe, on that matter.
F. Gingell: Is there an intention, before the program is complete, that the fines will be brought into the accounting system?
Hon. E. Cull: The comptroller general advises me that there aren't any plans to do that right now.
F. Gingell: I appreciate that it would be a fairly mammoth task, but seeing that there are proposals in the Election Act that will tie in a driver's licence address to the voters list so that changes get recorded faster.... If that data bank is available, this may be a way of collecting these very large outstanding amounts -- not going to your ministry so much as to the Ministry of Attorney General -- and paying the $25 million investment back in a very quick manner. I'd like to suggest it for consideration.
Hon. E. Cull: I guess there are some linkages, but I'm not sure whether this is as comprehensive as what the member's asking for. We do have a linkage so we can do setoffs against payables or against the payroll system, so there is some ability to use the greater capacity of the system to deal with fines in that manner.
F. Gingell: I will move on to the next subject, which is employee suggestion awards. If you can collect those fines through this process, I will happily accept the award for it.
The minister will remember that we had a brief discussion about this last year. As I understand it, your ministry is responsible for payment of all suggestion awards across the various ministries. Perhaps if you do have a briefing paper in your briefing book, you could give us a brush stroke of some of the more notable items in the past year.
The Chair: You should have read it and memorized it.
Hon. E. Cull: It's a struggle finding your way through all the tabs in this binder. I knew I had some data on the employee suggestion program, which has been a very successful program since its implementation. Since 1992 it has produced benefits of over $12 million. We estimate that it saves $10 for every $1 it costs to operate.
I should tell members that we have been reviewing the program recently. It's now under PSERC, the area we were discussing a bit earlier. We have been reviewing the program and have identified some shortcomings in the way that it operates. So while it's successful, we think there are ways to make it even more successful, to more tightly link it to the kinds of operational efficiencies that we're trying to accomplish throughout government with the partnership committees and the kind of direct work that we're doing with our employees.
We have been evaluating some proposals to adjust the program to broaden its aspect in the public service. It has been described to me as operating on the margins of the public service, which is unfortunate. By that, staff means that it's not a household word in every office in the provincial government; it should be. We're going to bring about some changes, but they're in the works.
I have here the 1994 top 15 suggestion award winners. Maybe I could just graze through this for the members. We have the Ministry of Health, who saved over $500,000 in saved time by simplifying the discharge form used by the community care nursing services. We have a social worker who saved the government $161,000 in saved time by allowing social workers to consent to medical treatment of children in care by telephone or fax. Some of these things may seem very straightforward and simple, but they have saved significant money.
In the Ministry of Government Services a $75,000 savings was achieved in reduced costs by decreasing minimum recall requirements for government vehicles. Interoffice mail costs were reduced by an idea that came forward from a group of employees in Social Services and the Ministry of Government Services.
The Ministry of Finance saved $33,000 through an idea that we reduce cost by using an optical disk to maintain data in-house rather than at B.C. Systems Corporation. In the liquor distribution branch in Kamloops, $50,000 was saved by the use of cellular alarm technology rather than the old police line that was used to monitor all the locations.
Let's see if I can pick out another one or two. Another significant savings of $40,000 in the Ministry of Energy, Mines and Petroleum Resources was achieved by streamlining the revenue deposit in the ministry by using the government agent revenue management system. I could go on with the rest of the 15, but I think you can see that they're mostly practical and, in some cases, quite innovative changes to government operating programs. The top 15 saved over $1 million, and we provided awards to employees of $60,000.
F. Gingell: Did the minister say $50,000 or $60,000?
Hon. E. Cull: I said $60,000.
F. Gingell: Thank you.
There was just one other subject that I missed on the B.C. Securities Commission, although that wasn't an issue the chairman would deal with. I spoke to the minister about it briefly the other day and so I am aware of the current status, but I think it would be a good idea to have it in the record. When might we expect the report from Justice MacIntyre on the Adrian Du Plessis issue?
[4:30]
Hon. E. Cull: I believe the member's referring to Justice McKenzie, not Justice MacIntyre, who is investigating on my behalf some allegations made by Adrian Du Plessis with respect to two particular investigations of the B.C. Securities Commission. This investigation has taken far longer than I had initially expected. All the evidence has been heard from all parties, with the exception of Mr. Du Plessis, who is, I believe, continuing to testify. He will be doing so again next
[ Page 15148 ]
week, but there are many reasons why Mr. Du Plessis has found it difficult to give his testimony in a timely manner.
F. Gingell: We discussed briefly last year one other issue that sits by itself: your opening experiences with the cost and constipation of freedom of information. We discussed the staffing then, but in reviewing Hansard it was hard to tell whether you actually had 1.5 or 2.5 people responsible for it. We were discussing at that time that we expected the number of applications to reduce after the initial rush, and it wouldn't be quite the additional cost and bureaucratic nightmare that perhaps it was in the early days.
I was wondering if the minister could just bring the committee up to date on the issue of how she feels her ministry is dealing with freedom-of-information requests. How quickly are they being responded to? Does the ministry feel they are responding to them in a meaningful manner and following the intention of the legislation? Could you us give a rough idea of the costs?
Hon. E. Cull: Last year I hoped that as the freedom-of-information legislation kicked into place and we became more familiar with it, the costs would go down. Unfortunately, we are actually receiving more requests this year than we were last year: about ten a month on average last year, 18 per month this year. I might note that some of the most costly and complex ones come from the official opposition party.
Our budget for FOI this year is $147,217, and there are 2.5 FTEs.
D. Mitchell: I am pleased to enter into this debate. On the response the minister made to the last question by the member for Delta South, I have difficulty with the fact that the identity of the requester for information under the Freedom of Information and Protection of Privacy Act is an issue, or is even made known at the political level; I think that's probably inappropriate. In fact, the regulations put forward by the information and privacy branch of the Ministry of Government Services say that the identity of the requester and confidentiality requests through the FOI process can be made known to the head of the ministry. The fact that ministers are aware of the identity of requesters causes problems. Not with this ministry, but I think in government generally, we've seen some of the unintended consequences of that act, an act that I think all members of this House support.
One of the unintended consequences is the leaking of information before it's released to the requester, especially if it's politically sensitive. I think that's unfortunate. That's a debate for elsewhere.
I would like to ask a question of the Minister of Finance with respect to her budget that she's introduced this year, which apparently has a shortfall. The minister has commented publicly with respect to the $250 million shortfall as a result of the Columbia downstream benefits. In a $20 billion budget, perhaps that's not overly significant. It's over 1 percent of the budget, I suppose, but if you have too many disappointments and too many $250 million shortfalls, that does become significant.
The minister has indicated publicly that the budget will be balanced and that she will make up the difference, if necessary, by cost savings within government. We don't know what the total result of the negotiations with Bonneville Power Administration are going to be. There's sabre-rattling going on right now. We have no idea what's going to happen. But assuming that the down payment for the next 30 years of downstream benefits is not going to be received and was apparently counted by the minister when she tabled her budget in the Legislature, could she indicate in the committee specifically what measures she plans to take to deal with the $250 million shortfall?
Hon. E. Cull: First of all, I will start by pointing out to the member that last year the revenue actually received by the province exceeded the budget forecast by over $500 million. Let me assure the member that that was not an understatement that had been made deliberately in the budget. It was as a result of events that occurred throughout the year and had not been forecast at the time my forecast was done for the budget in 1994.
While $500 million is a significant sum of money -- I would never downplay that amount of money -- it is, with respect to the forecast of a $20 billion revenue, within a couple of percent points of the actual amount. We have been looking at our revenue forecasts. In fact, I have pushed the ministry staff very hard. I have looked over revenue forecasts going back over a decade, and we have been getting more and more accurate each and every year with forecasting revenue. But I don't think anybody expects, even our economic forecasters, that the amount of money in this year's budget projected revenue of $20.3 billion will be bang-on the $20.3 billion that was forecast. So there are, as the member is fully aware, all kinds of economic pressures that may increase or decrease revenue throughout the year.
The forecast that is put in for sales tax is in fact an educated professional guesstimate of how much retail sales will increase over the year and what they will generate in terms of retail sales tax. The other revenues, of course, are all based on estimates of either commodity prices or consumer or business behaviour throughout the year.
While I am concerned at the $250 million, it is just a little bit more than 1 percent. I am at this point not acting with haste to make changes immediately. We will be monitoring the revenue. We get monthly reports on revenue, but there is a lag time in terms of having sufficient information to be able to determine exactly where we are with respect to this year's forecast. I have already alerted Treasury Board to the fact that we will probably be doing what is called a clawback, or a savings exercise. We will ask ministries to indicate areas of expenditure that they can defer, delay or cancel, if it becomes necessary to make those savings to stay on track with our budget.
In 1992, my deputy advises me, partway through the year, because of the federal government and the information they gave us with respect to income tax, we were short somewhere between $300 million and $400 million of expected revenue from income tax. We found this out in the fall, half-way through the year -- not at the beginning of the year, as we did with the Columbia downstream benefits. At that point, we took the necessary steps to stay on track in respect to the deficit. As the member will recall, not only did we achieve our deficit target, but we came in even better than we had expected. But we are quite prepared to monitor as we go along and make the necessary adjustments to ensure that we stay on track in respect to our deficit target. We have a good track record of being able to do that.
[ Page 15149 ]
As a result of that -- of having a look at where we are right now, what the spending plans are of the ministries and very, very preliminary information on revenue -- I fully expect that we will be on target in respect to our surplus.
D. Mitchell: The minister seems to be indicating that budgeting is more an art than a science, and that there is some flexibility. I don't doubt for a minute the expertise in the provincial Ministry of Finance. There's no doubt that we have the professional ability to do an excellent job on behalf of the taxpayers of British Columbia. But in her opening statement today, the minister reiterated the pledge that she made in her budget, which was that we're going to have a budgetary surplus this year. In fact, she said that we expect a surplus budget this year of $114 million. That's the number she gave in her opening statement. I wonder how she can be so accurate and confident in that very specific projection of $114 million. Does that take into account the $250 million which may or may not be included in her budget -- namely, the Columbia downstream benefits down payment that we're talking about?
In all of this, I would like to ask the minister whether she would be willing at this point to admit the error that was made in calculating revenue before it was received -- a practice that can never be considered to be prudent by any government in our land.
Hon. E. Cull: First, I don't expect the budgetary surplus to be $114 million and zero cents, but I do expect it to be extremely close to $114 million. In fact, based on past records, my expectation would be that we will achieve that target or be a bit beyond it. But you're right: budget-making is an art; forecasting is an art. You bring all the knowledge and the science that you have to it, but at the end of the day, there are always going to be unknowns within the budget.
That leads directly to my response to the next question. I don't have the sales tax revenue that is in the budget right now. That revenue has not been received, and there is no guarantee that it will be received. There is no guarantee that the natural gas drilling rights revenue, which we expect to receive, will be received either. There are other circumstances.... I hear the member saying: "Gee, that's not quite comparable." There are cases where we might have discrete amounts of money, whether it is the recovery of a loan or payment, that we have no guarantee will actually be received.
In revenue projection, we base our decisions on the best information we have at the time and on the advice of the comptroller general. As I said in the House when we were dealing with this during question period, one of the suggestions made about treating this revenue differently would have required me to go to Treasury Board and pass a motion which would have overruled the comptroller general. I am very reluctant to do that. I am very reluctant to have a political board overrule the office of the comptroller general without great evidence that the comptroller general has given poor advice. In this case, I think he gave good advice, and we followed it.
J. Weisgerber: I'd like to follow along on this. What I'd like to do is focus a bit more on the decision to treat as current revenue the anticipated revenue from the $250 million Columbia sale. The comptroller general was kind enough to provide me and other members of the House with a briefing around the debates and the various opinions that were in place with the way in which that should be handled. Indeed, in seemed to me -- to pick up on the minister's comments -- that the letter from Mr. Barnard to the minister suggests that it was the comptroller general's advice to not take the $250 million into revenue at all but instead to apply it to the accumulated debt as money that had been earned in the first 30 years of the agreement. I would question if that would have required any action on behalf of Treasury Board, had the minister chosen to accept the recommendations of the comptroller general.
[4:45]
There was also advice from the auditor general which suggested that there were some serious questions around the handling of the $250 million as revenue. Further, Peat Marwick Thorne suggested that there were two ways in which the matter might be dealt with, one of which was to take it into revenue under certain conditions. I wonder if the minister could rationalize for us the decision to accept the one piece of advice that she wanted to hear rather than the other overwhelming bit of evidence, which suggested that this money -- regardless of whether or not it ever came to British Columbia -- should have been handled in a different way.
Hon. E. Cull: I'm actually very glad to be able to provide more detail on this, because this was not a decision that was taken in an afternoon at one meeting; it wasn't a decision that was made lightly. It was a decision that actually took almost three months to make -- four months, as I look across the letters that we have here. The first advice that I received from the comptroller general was different from the final decision and the final advice that was received. There's a letter, and I'm sure you have all this material, because I released it to you and to the opposition critic, and I know that the comptroller general has briefed you.
The first advice set out three ways that we could deal with the benefits: one, do it on a cash basis; second, discount the present value of the benefits and take them into revenue in this fiscal year; third, a more complicated way of dealing with it, which was the one recommended at that time by the comptroller general, and I won't read it all. Three methods were suggested. This was sent to the auditor general in a letter dated October 1994. In March 1995 we received a response. A lot of discussion went on from October and March between my staff and the auditor general's staff. The auditor general recommended another way of dealing with the downstream benefits, which created a bit of a quandary, because we had the comptroller general's recommendation, the auditor general's recommendation and three or four other options all sitting on the table that had not been selected by either of these two individuals but were equally valid.
We thought we might resolve things by going to a third party. We asked Peat Marwick Thorne to have a look at it. They, in fact, came up with yet another method of doing it; we got a response from them in February. After looking at all of this information -- all of these options -- and trying to sort out some of the problems.... And I find it ironic, because I know that some of the methods that we could have chosen, which would have been equally valid from an accounting point of view, would have actually had us in some years recording revenue received in our books when no cash was actually coming in. As you know, the agreement had cash payments in some years but not next year or the year after, and I believe in the third year there was either none or a very small amount.
[ Page 15150 ]
Many of the accountants' suggestions, which I'm sure make great sense from an accounting point of view, would have made no sense from the public's point of view: "How can you count revenue in your revenue stream when you actually haven't got any cash coming in that year and you know you don't have the cash?" It's not a situation where we thought it was going to come and it didn't appear, or a situation where you forecast sales tax revenue at being a 5 percent increase and only a 2 percent increase shows up. This is a case where we knew there was no cash coming.
At the end, looking at all these opinions, I again asked Mr. Barnard for his advice, and he gave me the advice verbally at that time. We acted on that at that point. We were very close to the cutoff point, I believe -- I'm checking with my deputy here -- for printing the estimates book. We had left it to the very end, hoping we would find a consensus. We didn't, so we went back to Mr. Barnard, the comptroller general, and he provided us with the advice that we subsequently took.
J. Weisgerber: Looking at the letter of April 13 from the comptroller general addressed to you, it says in the third paragraph: "After a lengthy internal discussion and review of the documentation, I took the position that the downstream benefits should be accounted for as a prior period adjustment -- reducing the accumulated deficit in the 1994-95 fiscal year, but not showing a revenue."
The letter goes on for most of two pages and then comes to this conclusion. "This leaves two options. Firstly, recognizing the revenues as and when sales of the benefit occur -- subject to there being no conditions for the province to fulfil as a result of the sales agreement." I'm reading on page 2, the third paragraph from the bottom. It seems to me to be the summary section.
[G. Brewin in the chair.]
It seemed to me that in the first option, the key factor was "subject to there being no conditions for the province to fulfil as a result of the sales agreement" -- and the second option being "recognizing the revenues as the sales occur, but amortizing the amounts over the remaining years of the agreement."
It appears to me that the minister chose to take the first option. But I believe the failure was in the subject to. Clearly there were conditions for the province to fulfil in order to conclude this agreement. The agreement was not concluded. The agreement hadn't been concluded, and it seems to me that the comptroller general had put in a caveat, which the minister chose to ignore when tabling the budget. I would again look for some explanation.
Hon. E. Cull: As the member was asking this question and reading this letter, I have been sitting here reviewing it with the comptroller general, who again assures me that when he gave me that advice, he went on -- just to complete the record here. It's not a question that I chose the first option.
It says: "Based on my understanding of the agreement" -- this is Mr. Barnard speaking -- "supported by KPMG, I feel that it is technically more correct to recognize the $250 million to be received in 1995 as revenue in the 1995-96 fiscal year than to amortize it over the 30 years."
So the comptroller general recommended taking the first option. I have just discussed this again with him. It was his understanding at the time, when he gave the advice to me, that there were no conditions to be fulfilled. We did not have to sell something; there was not something to be done. If the member is talking about the completion of the legal agreement as being the condition, that's the only thing I can think of that he can talk about. There was no requirement for us to deliver any power or do anything.
I do want to point out, though, that we did seriously consider the second option. And I have to say that I found that problematic, because that would have required us to report a $140 million revenue each and every year over the 30 years. That would be the discounted value of the stream of revenue that was coming to us. This year, had the agreement proceeded as originally negotiated, we would have reported $140 million but received $250 million. The next year we would have reported $140 million but received zero. And I found that to be very difficult. I believe very strongly that had we selected that option, which is acceptable to the accountants and can be defended from accounting practices, the opposition would have been howling about us doing the kind of BS stuff where we reported revenue that we didn't have or, worse yet, we hid revenue that we did have. In this fashion, based on the knowledge we had at the time the budget was prepared, I think my staff gave good advice. At the end of the day they said: "If you're getting cash, report it as cash." As a non-accountant, I felt that was something that the public would understand as well, and it lent extra credit to the good advice that I got from the office of the comptroller general.
J. Weisgerber: It seems to me that the comptroller general gave three options, and the government chose to take the one which best suited its purposes. The auditor general also seems to disagree with how the Minister of Finance handled it. He quotes in a letter to Mr. Barnard that the auditor general recommends "that the approximately $240 million Cdn receivable in 1995 be accounted for as deferred revenue in the province's financial statements, and then amortized over the number of years remaining in the treaty commencing with the year 1998-99."
While the minister may indeed have trouble with the options outlined by the comptroller general, it seems to be reinforced by the auditor general. The auditor general goes on to say: "Accordingly we recommend only revenue from contracted sales of future entitlements be recognized in the financial statements of the province, and that such revenue be recognized annually over the term of each sales contract."
So the auditor general, both in the sale of capacity up front and in the treatment of future sales, seems to be saying quite clearly that you amortize the revenue over the period of the contract. I wonder if the minister, in rationalizing the decision to accept one of the comptroller general's options, can also explain why she chose one that was not recommended by the auditor general.
Hon. E. Cull: To choose an option that was not recommended by the comptroller general would have required me to overrule that advice. I see the member is suggesting that that is what he would have done in this case. He would have selected the advice coming from the auditor general.
It's very difficult when you have two people of this standing disagreeing with one another. John Holdstock of Peat Marwick sits on the national board of the Institute of Chartered Accountants public sector standards group, as does
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George Morfitt. They both disagree on this issue. We have to hear two people who are pre-eminent in their field and have a national role in dealing with public sector accounting disagree on how to handle this.
I guess there's a number of ways you can deal with differences of opinion between experts: you can flip coins, you can draw straws, you can assign numbers or you can go to your comptroller general, lay it all out in front of him and ask for his advice. I have to emphasize this again because the member is suggesting that the comptroller general said: "Here are a bunch of options, you choose." The comptroller general did not do that; the comptroller general reviewed options and considered them. His opinion shifted over the time that he was considering this with Peat Marwick and the auditor general, but at the end of the process, he said to me and subsequently confirmed in writing that he recommended the approach we took, which was to record the revenue as received as revenue in 1995. I accepted the advice of the comptroller general.
J. Weisgerber: Before getting to the recommendations from Peat Marwick, it seems to me that the recommendations and the advice coming from the comptroller general said to not treat it as revenue but to apply it against the accumulated debt and not take it into revenue. The auditor general said not to take it into revenue in a lump sum but to amortize it over the remaining period of the contract, the 30 years starting in 1998. The minister -- not the officers or the experts giving advice, but the minister -- chose a third option, one that wasn't the recommended option of either of those esteemed gentlemen.
[5:00]
To move on to the Peat Marwick Thorne recommendation, I'm sure the minister has in front of her a letter addressed to Mr. Barnard dated February 10, 1995, and I would like to draw the minister's attention to the second paragraph in that letter, which says that in preparing these comments they have reviewed.... And they list a number of documents, including the unsigned 1994 memorandum of negotiators' agreement. It seems to me that they saw the significance of the fact that they didn't have a signed agreement from which to base a recommendation. I wonder if the minister could comment on that.
Hon. E. Cull: I wouldn't read anything into that. I don't recall the date the agreement was signed, but I assume from this that what we did was give them one of the copies of the agreement that had not been signed, which may have been prior to the signing. That would have been all we had at the time to work from.
But again, I can't stress enough that because of the way this committee works, I am allowed to have a deputy answer. The comptroller general is not a deputy, so he cannot stand and answer these questions, but the comptroller general has given a full briefing to members of the opposition on this matter and has made himself available to them for questions. I have checked again with him right now and asked him if I have accurately described the series of events that took place around this decision. He has once again assured me.
Just before I rose to speak, the member was reading from the April 13 letter or from the October letter, I believe, in giving his early position -- maybe it was the April 13 letter. The comptroller general did have an opening position, and he went through a process with the auditor general and with Peat Marwick. He had further discussions, and at the end of the entire process, he recommended the action which I took in accounting for this information in the budget.
J. Weisgerber: I will comment briefly on the Peat Marwick advice. It seems to me and to many who have looked at this that the minister simply cast around for advice until she found someone who would give her some advice, including at least an option, that was compatible with what the government's political agenda was on this issue. The Peat Marwick thing suggests again that there are options available. It says: "Once obtained, and notes of sale are exchanged, it would be appropriate to record the amount as revenue."
I would argue that notes of sale were never exchanged, that indeed the minister jumped the gun and accepted a memorandum of understanding, a memorandum of intent, and substituted that for the words here that are quite clear in Peat Marwick's recommendations, "...and notes of sale are exchanged...." Would the minister agree? Would the minister confirm that notes of sale have never in fact been exchanged?
Hon. E. Cull: With respect to the comment on shopping around, I again point out to the member that the advice received from Peat Marwick was not sought by me and not given to me. It was sought by Mr. Barnard. The letter is addressed to him, and that's where the discussions took place. My discussions took place not with the auditor general, not with the consultant, but with the comptroller general.
I think the member is confusing estimates and public accounts. We don't record in the estimates; these are estimates. We have to make decisions based on the best knowledge we have at the time, what we believe will be coming in in terms of revenue. But the whole question of how these are recorded, if notes were not exchanged or are not exchanged, is a matter for how it's treated in public accounts.
J. Weisgerber: So that I am clear, the minister has acknowledged that notes of sale have never been exchanged on the Columbia River Treaty downstream benefits.
Hon. E. Cull: No, I did not say that. That's a question the member can put to the minister responsible for the Columbia River Treaty. I'm not fully up to date with respect to that. What I did say was that the advice we had was that there was a sufficient expectation that this money would be forthcoming. When there is a sufficient expectation, the comptroller general's advice is that it be recorded in some fashion in the estimates.
If it turns out that notes are not exchanged, then that is a matter that will be dealt with from the revenues recorded, or not recorded, in the public accounts. But at this point, in terms of dealing with estimated revenue, after having received several conflicting opinions as to how to treat this particular revenue, the comptroller general made a decision, gave me a recommendation, and we accepted it.
J. Weisgerber: I believe, although the minister says that she won't confirm or deny whether a note of sale was exchanged, the verbiage that followed suggests that the minister is well aware that notes of sale were not exchanged.
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Indeed, if the minister goes back and reads her own words, she will understand that she knows and I believe should come.... If these estimates debates are going to be meaningful, then I think the minister has an obligation to be candid. I can't believe for a minute, given the notoriety and the amount of debate around this issue, that the minister doesn't know whether or not notesof sale specifically referred to in the advice she chose to take from Peat Marwick Thorne had been exchanged. I'm sorry to say, I just can't accept that.
The final thing I want to note in this regard is that I think British Columbians must understand that Peat Marwick also suggested that an argument could be made for deferring the revenue from the sale and amortizing it over the life of the agreement, which seems to me to be entirely consistent with the position taken by the auditor general. If they were looking for some consensus among these positions, it seems to me that the best consensus is one with an option from the auditor general, which seems to dovetail exactly with the position taken by Peat Marwick and is not at all inconsistent with the position taken by the comptroller general.
D. Mitchell: Obviously a mistake or an error of some kind appears to have been made, a $250 million mistake. Earlier on the minister was talking about the actions she might take.
Interjection.
D. Mitchell: That's right. And the great benefit, hon. Chair, as the member for North Vancouver-Lonsdale points out, is that the downstream benefits are still owned. They are still an asset of the province of British Columbia. That's the great fact about the negotiating achievement of the Columbia River Treaty, I suppose. But the truth is, the minister commented earlier in this debate -- maybe the member for North Vancouver-Lonsdale wasn't here at the time -- about the actions that may have to be taken if in fact the budget has a shortfall of up to a quarter of a billion dollars.
Can the minister tell the committee this afternoon whether or not the actions that might be considered in order to make up the shortfall would include the privatization of any government-owned asset?
Hon. E. Cull: It's equally likely that the $250 million will be received, that we will receive additional revenue beyond the forecasts and that we will not be taking any action whatsoever to make up savings for this money, because it won't be necessary. I am not prepared to speculate as to what actions the government may or may not take with respect to staying on budget until I can see that we're off budget. At this point we're not off budget.
D. Mitchell: The reason I asked the minister specifically about whether privatization options are being considered is that just prior to the commencement of this legislative session and the minister bringing forward her budget, there was some speculation -- and in fact she contributed to it -- about the privatization of one specific Crown corporation: B.C. Rail.
I wonder if I could ask the minister about this. I would note for the benefit of other members of the committee that the minister was kind enough to correspond with me on this matter. I quote from a letter that she wrote to me on April 4, 1995: "Should the government ultimately decide to privatize B.C. Rail as a result of this review" -- she's referring to an ongoing review within government of this question and the larger question of privatization of government assets -- "funds realized from the sale would be used to pay down the debt."
There was a leak at that time, the minister will recall, of a Treasury Board document on the specific proposed privatization of B.C. Rail. Since that time, I've been able to determine, through the Freedom of Information and Protection of Privacy Act, that the Ministry of Finance and Corporate Relations has commissioned at least two major studies on the privatization of B.C. Rail.
One study, which the minister may be familiar with, was commissioned by her ministry from RBC Dominion Securities Inc. It's referred to as Project West. It is a major review by a major investment firm here in Canada. It deals with the possible sale of part or the whole of the B.C. Railway Group of Companies through a share offering.
Another major study that was apparently commissioned by the Ministry of Finance -- again, I can't talk about the details because there was major severing of the documents obtained through the freedom-of-information process -- was a study by Gordon Capital Corp., another major investment firm in Canada. The title of this project is Project Roundhouse. It too deals with the privatization of the B.C. Railway Group of Companies, or at least the transfer of portions of that company to the public through a share offering. It looks like a fairly detailed presentation.
I would just note that at least one other major proposal has come forward to government, through the minister's colleague the hon. Minister of Employment and Investment. This one was apparently done by Goldman Sachs, a major American investment bank. Its name is Project Whistler. It deals with the same issue: the potential privatization of all or part of the B.C. Railway Group of Companies.
I would ask why these reports are circulating within government, why the government -- and the Ministry of Finance in particular -- has apparently expressed an interest in or has commissioned these studies and whether this matter is still under review.
Earlier in the session, when I put a question on this subject to the minister during question period, she indicated that all matters are under review all the time. That's a fairly general answer. In respect to these particular studies from investment firms or investment banks, can the minister tell us whether those privatization options are likely to proceed?
Hon. E. Cull: Every investment firm or investment bank that I've met with in the two years that I've been the Finance minister has wanted to make a presentation to me on some aspect of privatization of government services. We did not commission these reports; we did not pay for these reports. These reports have been prepared by entrepreneurial firms that are interested in providing services and advice to the government. As I said, every time I have been in New York or Toronto meeting with our investment bankers or any members of our syndicate, there is almost inevitably, with each and every one of them, a presentation on some aspect of how they could help us with private-public sector partnerships and with privatization of various government agencies. They are full of good ideas -- or full of ideas, let's put it that way -- which they want to present to the government.
[ Page 15153 ]
So I would caution the member on ascribing particular ownership of any of these reports. They have been prepared on the initiative of the particular firms involved. I have to say quite honestly that we are always interested in receiving these types of reports. If someone has a proposal or a good idea, far be it from me to say, "No, I don't want even to look at it; I don't want to see it; don't send it to me." We probably have a number of other reports similar to this from other firms, which the member would be equally interested in, I'm sure.
I'm not going to debate B.C. Rail. It's not the responsibility of my ministry, and I know it was extensively canvassed in the Ministry of Transportation's estimates, which is the appropriate place for it. What I can say, though, with respect to the sale of government assets is that we have indicated, as part of our debt management plan, that we don't rule that out and that government assets may be sold as part of the overall debt management plan. We do not currently have any plans to do that, but we have, as I indicated to the member in question period, reviewed a number of different possibilities, some of them as a result of this type of speculative report and some of them as a result of more directed action on the part of our government.
[5:15]
Certainly I think it is prudent for us to look at government operations, whether they are Crowns or indirectly in government service, and determine that the government needs to continue to provide them and that the appropriate provider of those services remains the government. If that is not the case, then I think we are quite open to having a look at it.
What we're not doing and what is not a policy of this government is simply looking around for the family silver to sell off in order to pay down the mortgage. We are going to make prudent decisions based on government operations that are no longer in the public interest to be operated by the government. We took that action last year with respect to the Government Air service. That has saved money and has not in any way harmed the public service. It may have inconvenienced a cabinet minister or two, but in the end it saved us money in our travel budgets, which I think has been worthwhile. There is a clear indication that that was an example of government operations that we were willing to take a look at and make a change to.
We have seen, though, in the past that some government operations have been sold off for reasons I can only guess at -- I'm not sure that money was the primary motivation -- but that turned out to be wrong. It turned out to be not in the public interest, turned out to cost us more money and turned out to provide poorer service. We want to avoid the type of decision that's driven either by ideology or by a shortsighted approach to getting some cash to pay down the mortgage.
D. Mitchell: I'm pleased to hear the minister's philosophy when it comes to privatization. Although I didn't specifically request that, it's useful to have that on the record. Presumably that represents the government's approach and philosophy as well.
She indicates that the reports within the control of her ministry, or the ministry of her colleague the Minister of Employment and Investment, don't necessarily indicate that the government has either expressed an interest in the recent reports -- has commissioned them -- or not. Yet it seems to be more than just a passing coincidence that three major investment firms -- international investment banks or merchant banks -- within months of each other, would be making representation directly to the most senior levels of government on one matter -- not a general matter, not a philosophical matter of privatization, but on the potential sale to the public, through a share offering, of one particular Crown corporation, B.C. Rail.
The minister is right, she's not responsible for this Crown corporation. But since two of these reports are in the possession of her ministry, and because her colleague the hon. Minister of Transportation and Highways could not answer these questions and suggested that I pose them to her, I do so once again. I won't belabour the point, but I would ask her about this question.
There is a concern. There's some uncertainty, not only given the existence of these reports, but given the minister's public comments on the record and given the leaked document for Treasury Board that occurred just prior to the tabling of her budget in the Legislature. That resulted in a headline in the Vancouver Sun that the minister herself commented on, in which she indicated that yes, the government was considering the privatization of B.C. Rail and yes, the proceeds of any such sale or divestiture would go toward the reduction of public debt. Those were her comments as recorded in the Vancouver Sun at the time of the leaked Treasury Board document earlier this spring.
Because of the uncertainty that's affecting and impacting on members of this Legislative Assembly who have operations of this major Crown corporation, B.C. Rail, in their constituencies -- and I would include in that group the member for North Vancouver-Lonsdale, whose constituency contains the headquarters of B.C. Rail and who has expressed some interests and concerns that have been passed along to him by his constituents, and certainly myself, representing a riding that is affected by the operations of B.C. Rail -- there is some uncertainty as to what the government's plans really are. Is there going to be a major divestiture here? Why is the government studying it? Why are these major reports being received by the government all within the same period of time -- within the same matter of months?
So I wonder if the minister, just to set the record straight in the committee this afternoon, could make a definitive statement. Could she, for instance, say that the government is not considering and will not be pursuing the privatization of B.C. Rail? I think that would end the uncertainty.
Hon. E. Cull: I'm not particularly surprised that investment firms or other consultants are producing reports on this subject. Anybody who's been watching what's happening in the rail industry in western Canada knows that there are some significant pressures on the viability of the industry. There have been a number of proposals floated by CN, CP and others for restructuring or changing the existing arrangements with respect to rail in western Canada. I would suspect that these businesses have done their homework, see an opportunity and are trying to make sure that they are first in line in providing advice to government. I'm sure we're not the only people who are receiving these reports.
As I said, I am not the minister responsible for B.C. Rail. It is not within my responsibility or authority to make a statement with respect to B.C. Rail. The government has made no
[ Page 15154 ]
decisions with respect to privatization of any of the Crown corporations. We have in a general way agreed to review government operations, and we will continue to do so. No decisions have been made with any that are within my responsibility. If there are decisions made, they will be announced and handled by the appropriate ministers.
D. Schreck: My friend the hon. member for West Vancouver-Garibaldi mentioned the concern that some of my constituents are expressing over the privatization of B.C. Rail or the consideration thereof. Just to make sure that the record is clear, my friend is relating the comments put on the record during the estimates of the Minister of Transportation and Highways in which I expressed that some of my constituents who work for B.C. Rail -- since B.C. Rail's head office is in my riding -- are expressing enormous anxiety over the definite promise made by the Leader of the Official Opposition that he would, for ideological purposes, privatize B.C. Rail.
I am extremely comforted by the remarks made by the minister today that an objective approach would be taken in looking at the assets of the Crown and that we would not engage in the fire-sale techniques of past governments. I want to thank the minister very much for putting those remarks in Hansard and on the record.
D. Mitchell: I wish I could be as effusive in my praise as my friend from North Vancouver-Lonsdale, but I don't think the uncertainly has been ended at all. Hon. Chair, just for your information, when I pursued this line of questioning with the Minister of Transportation and Highways, I could not get a definitive answer. She suggested that I should talk to the Minister of Finance. I've now pursued the line of questioning with the Minister of Finance, and I haven't gotten very far. I guess I'll pursue it with the Minister of Employment and Investment, because some of the studies are conducted under his ministry, and perhaps with the Premier during his estimates as well. But so far, it's very, very difficult to get a definitive statement on this issue. I don't think it ends the uncertainty at all among the constituents of the member for North Vancouver-Lonsdale or any other member who has communities in their constituencies affected by any potential changes with that particular Crown corporation.
I have one other area I'd like to pursue with the Minister of Finance today, and it's not one that will take a lot of time. I would just note that the Financial Post, which I'm sure the minister is familiar with and reads regularly, last weekend published an interesting series of articles about tax policies and their impact on Canadians generally. The minister has commented on this in the past. She knows that I've expressed concern about what the size of the underground economy might be in British Columbia and about what kind of economic modelling is done within the Ministry of Finance and Corporate Relations to detect how far we can go in British Columbia with the level of taxation and the burden of taxation. Given the fact that British Columbia has the highest marginal tax rate in the land, I think the series of articles in the Financial Post about resistance to taxes stiffening has some relevance.
There was a significant poll done, and I think this is a useful public opinion survey because it included British Columbians. It asked how many Canadians had admitted to tax cheating. It's astonishing to me to note the percentage, because more than 40 percent of Canadians admitted to having paid cash to avoid tax, for instance.
Another question was: "How many Canadians say they would or might cheat if given the opportunity?" More than 70 percent said they would. This is shocking to me that Canadians, including British Columbians, would admit to breaking the law and cheating. This does not compliment us or reflect well on any of us as citizens or as taxpayers. Yet more than 70 percent said that they would pay cash in order to avoid paying tax.
The final question on this poll that I think is relevant was: "How many Canadians declare they will definitely" -- not just probably or possibly -- "cheat on their taxes in the future?" That's a pretty definitive statement; again, it's a significant proportion: close to 20 percent. There are other interesting statistics in a major poll done by Compas in last weekend's Financial Post.
Just to deal with this question very briefly, I know that the staff within your ministry study this issue and have probably tried to estimate the size of underground economic activity in the province, which deprives all of us in British Columbia and the government that tries to service all taxpayers. Do we have any estimate in terms of dollars on the size of the underground economy in British Columbia? What kind of economic modelling does the ministry do on this that she is able to share with the members of the committee?
Hon. E. Cull: I read the figures that the member is referring to. Indeed, they are alarming in terms of what they say about Canadians and their respect for the law when it comes to tax law. Unfortunately, I think we can date a lot of this attitude back to the introduction of the GST. That was the proverbial last straw for people. I think that a mistake was made in introducing that tax at that time, and there was a significant shift in public attitude with respect to taxes and the public's willingness to pay taxes. That's something that the federal government has to take a considerable amount of responsibility for.
Having said that, my staff have done some work on the underground economy. I don't have a dollar figure here. If the staff member was here, she could assist me. I do know that some months ago this particular member of my staff participated in a panel with members of the Fraser Institute to discuss the underground economy. Her analysis was that the underground economy was considerably smaller than the Fraser Institute figures. I guess there is a professional difference of opinion, once again -- this time between economists instead of accountants on this issue.
Nonetheless, regardless of whether it is as large as the Fraser Institute suspects or smaller, we have undertaken a number of initiatives to address the underground economy. First of all, I think implied in what the member has said and certainly in the article is the feeling that people have come to the limit of taxation. As a result, they are unwilling to pay any more taxes. They are even unwilling to pay the taxes that have been assessed. We understand this and we have a three-year tax freeze as a result. Last year we reduced taxes in our budget in a number of strategic areas. We would have liked to have done it this year, but the public indicated to us that they wanted to see debt and deficit reduction before specific tax reduction at this point. So we decided not to cut taxes, but we will maintain the tax freeze. If the economy and the government efficiencies that are coming into play this year allow us to do so, we will reduce taxes again next year. We are trying to balance between the needs of having a balanced budget, really
[ Page 15155 ]
keeping debt down and staying on target with our debt management plan, and it does require a surplus to do that.
More specifically, we have addressed the underground economy in two ways. We had a tax amnesty program last year, and in my opening remarks I had the number. I suggest that the member have a look at the Blues for the amount that was saved, because I read it into the record at that point. We allowed people who were delinquent on their taxes to come forward and 'fess up with no penalty and to come clean. It was quite successful for a large number of small tax filers who came forward and cleaned up their records with respect to taxes.
We have also had an agreement that was signed with the Minister of National Revenue on the underground economy. I had an opportunity to speak with him informally over the weekend at a local fair, but he has made some public comments lately about the success of the initiative and the sharing of information between the two levels of government. I have asked my staff for a report, which is not complete yet, but we have been making some progress.
[5:30]
One of the indications I have had with respect to our success with the underground economy has been in the area of tobacco tax. Until very recently, our tobacco taxes have held strong despite the fact that the federal government created a problem for us by cutting the taxes and creating some very significant pressures for interprovincial smuggling. There have been a number of seizures. We have seen the publicity recently around the notices that have been sent out to those who use mail-order cigarettes. There is quite a variety of means that we have used to address that one area of the underground economy, and there are others we've used in other areas.
Through to our auditors' issue, we have increased our auditors, and we have focused on those areas that have the greatest potential for abuse. Home repairs is one of the areas where there is a lot of abuse, and I forget what the other category is. We have directed our revenue people to look at those areas of greatest abuse and try to correct the problems there.
D. Mitchell: I have one final question that I'd like to ask on this issue of the underground economy. I appreciate the minister's comments on that. If it's possible for the minister to have a briefing provided by the staff member that she referred to, who has done some work on this, that would be most useful indeed. I don't know if that's possible or not, but I'm familiar with the Fraser Institute numbers. They are large numbers in terms of an estimate of the size of the underground economy. I would be interested in the minister's estimate of the size of the underground economy in British Columbia, either measured in dollars or as a percentage of gross domestic product. It would be interesting to know how much forgone revenue there is in British Columbia. We've been talking today about the budget and the estimates that go into the calculation of the budget. Wouldn't it be interesting to know even what the broad range is for the dollars that are forgone in British Columbia because of tax policies?
There will be an election tomorrow in the province of Ontario, and all of us here in British Columbia are interested in the results. It's interesting to note that the party that appears to be leading in the polls, and which might form government, is promising -- some say recklessly; I don't know -- a 30 percent tax cut in that province. I would hazard to guess that one of the reasons that party and that leader are leading in the polls and have the prospect, at least, of forming a government tomorrow is simply because of that. In Ontario, they too are fed up with the burden of taxes.
One can only imagine that in British Columbia, even though there have been some good initiatives by this government.... I compliment the minister, actually, on the tax amnesty program, which apparently has recovered $2.5 million in consumption taxes that would not otherwise have been recovered. I think that's excellent. But if you take a look on the other side.... She mentioned the GST, but the minister might also note that we have the PST, the corporate capital tax, the WCB regulations and the new Employment Standards Act. Some of these are good initiatives, but they don't exactly discourage activity from going under the table or into the underground economy. It would be useful to know where British Columbia stands compared to the rest of the country on this and what measures in particular we can adopt to capture some of these forgone revenues that we are missing in British Columbia. This is hurting our economy and preventing the government from doing the job that I think it wants to do.
There's one other request that I'd like to make to the minister: could she provide some information on recent sales tax numbers in the province of British Columbia? I don't know how regularly the Ministry of Finance and Corporate Relations measures sales tax revenues. I don't know whether it's done on a monthly basis or a quarterly basis, but if the minister could make a commitment to provide figures to me for the sales tax numbers -- the revenue numbers, the actual receipts -- for the province of British Columbia for the last few months or the most recent quarter, I would really appreciate it. I wonder if I could give the minister a chance to respond to that request.
Hon. E. Cull: I will have the ministry staff person, Lois McNabb, contact you and arrange to give you a briefing on the underground economy. With respect to the latest figures, the latest I have is the last quarterly report, which is available to you. Each quarter, we do release a quarterly report on the figures. We're still in the first quarter, of course, so we haven't got the first quarterly report for this year. There is the final quarterly report from last year that is available to you. I thought it had been circulated to MLAs, but if it hasn't been, you can obtain a copy by simply contacting my office. I move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:35 p.m.
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