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 2)
Volume 20, Number 23
[ Page 15157 ]
The House resumed at 6:36 p.m.
D. Lovick in the chair.
Hon. A. Charbonneau: I call estimates of the Ministry of Finance in Section A, and I call committee stage on Bill 23 in Section B.
EDUCATION STATUTES AMENDMENT ACT, 1995
(continued)
The House in committee on Bill 23; H. Giesbrecht in the chair.
On the amendment to section 6 (continued).
Hon. A. Charbonneau: Perhaps I should re-read the amendment. It is an amendment to section 125(6)(c) of the School Act -- that is to say, section 6 of this act. I move the amendment to section 6 standing in my name on the order paper.
[SECTION 6, by deleting the proposed section 125(6)(c) and substituting the following:
(c) an amount of that component that must be budgeted, spent and moved for the board for educational resource materials specified by the minister.]
By way of explanation, this amendment would replace the general targeting authorities set out in section 125(6)(c) of the School Act with a specific targeting authority exclusive to education resource materials. Funds for the purchase of education resources materials, such as textbooks, videotapes and software, have always been targeted, and such a limited targeting power is consistent with the new funding formula and the historical allocation of funds to school boards for learning resources.
J. Dalton: As we all know, in second reading the minister advised us that he would be bringing this amendment forward, I presume in reaction to the warranted criticism of the targeting aspect of this bill. It didn't take a genius to figure out that the trustees, superintendents and other people were not going to be pleased with this undue interference in local autonomy, which is clearly what this part of the bill is all about. Can the minister satisfy...? Well, he won't necessarily satisfy us, but can the minister explain, having originally put this bill together with this obvious glitch in it, how he consulted, or with whom he consulted, to reach the amendment? Did he consult with anyone on either the bill or the amendment? It's not the happiest thing for a minister, I presume, to come into the House in second reading and tell us all: "Oh, by the way, I made a mistake." Why didn't he recognize that there was a mistake in the thing before we got to that position? I'd be interested to hear his views on the consultation process that resulted in both the original draft and the amendment that we're dealing with.
Hon. A. Charbonneau: The B.C. School Trustees' Association has indicated approval of the new funding distribution formula. In drafting the bill, as it was, one section could be misread by the trustees. They misunderstood, and I see how they could read it that way. A few who contacted me became concerned that I was intending to introduce a number of additional targeted areas. That was not my intent, so I have simply moved the amendment to clarify that.
J. Dalton: Did the minister receive a contact, official or otherwise, from the B.C. School Trustees' Association -- and not just maybe a few collected friends from Kamloops or somewhere that might have expressed some concern?
Hon. A. Charbonneau: I heard from the chair of the BCSTA. In fact, no trustees in Kamloops raised the issue with me.
J. Dalton: And what about the renegade school districts, as we might call them, that have left the BCSTA? Did the minister hear from any of those school districts about this targeting aspect?
Hon. A. Charbonneau: I cannot recall specifically whether any communication that I received, either directly or through the office, came from a district that is not a member of the BCSTA. But it seems to me that that is somewhat beside the point. As soon as a single trustee pointed out that a wrong reading of the section was occurring, I immediately realized that I should clarify it, and I did so.
J. Dalton: As we all know, the minister backed off from looking at the rationale of numbered school districts. I think we've already gone on record as to why -- at least from our point of view -- he did that. Will the minister give us any implications of this targeting and other things that have gone on in his ministry? Does the minister advocate local autonomy? If so, to what degree? Or is he perhaps heading down the road of other jurisdictions in Canada whereby the ministry will take over total control of school districts, and local say in community involvement will be basically a hollow exercise, at best?
Hon. A. Charbonneau: No. I have said in many forums, and I have said while meeting with many boards, that I respect the role of school boards and that you could never have proper governance of a system this size out of Victoria -- that school boards and quality people on those school boards were essential to the system.
J. Dalton: Given that response, and given the implications built into this part of the bill and perhaps other parts of it as well, Victoria is clearly keeping its tentacles out there. By the way, I don't quarrel with the need for some centralization of budgets; obviously the money has to be managed properly. In fairness to school districts, whether they be 75 or reduced or, heaven forbid, increased -- and certainly no one on this side would advocate that -- I would say that we have to give some due consideration and not just a sort of token: well, we bring in an act, we're going to target it because that will show that the minister is allegedly in charge, and then we're going to back off because, as everyone could have predicted, this is going to cause some controversy. I might draw to the attention of the minister, for example, that we have dealt in previous sessions with administrative capping and targeting of special education and targeting of aboriginal funds. And that was all done through this House. We didn't have regulations that might have snuck it in the back door. Those were all aboveboard, we debated them in the House, and if we passed them or not, then so be it.
[ Page 15158 ]
[6:45]
Under this new bill, I would submit, the new targeting and capping will be introduced by the minister without any further authority being needed. Is that a fair interpretation of what the minister is up to, whether it is the previous subsection (6) without the amendment, or with the amendment that he has brought in tonight?
Hon. A. Charbonneau: I think if the member opposite pauses to think for just a second, he will realize that there have always been some sections of the general allocation to school boards that are either in the form of a trust fund or in the form of a targeted amount. Learning resources are an example; elements within capital are an example. They cannot use capital to do something else. There are certain restrictions on that. There have been restrictions on aspects with respect to professional development and training. There are restrictions with respect to the use of special development funds for a variety of reasons. There is nothing unusual about any of that.
What I have done is introduce, in the past and now in bringing forward this legislation, three specific target areas. I would like to hear from the member exactly which of the three he might disagree with. First, I put a floor under special needs. That is to say that I have ordered every school district, once they have counted their special needs children and have received funds from me specifically for that purpose, to spend no less than that amount on special needs children. They have every freedom in the world to go well above.
I wonder if the member opposite is proposing that they should be able to take funds away from special needs children. I have targeted to aboriginal children, but again it is a floor. The district can spend above that amount. Perhaps the member is suggesting that they ought to be able to count aboriginal children, receive the additional funding for the education of those aboriginal children, and then deflect it to some other purpose. The third area that I've targeted is a cap, a ceiling, on the cost of administration. Perhaps what the member is saying is: "No, no, you shouldn't have any cap on administrative costs."
In fact, I think what the member is saying is that you should be able to divert money from special needs to pay higher salaries or to have more administrators, or perhaps the member is saying that you should be able to divert money from aboriginal students and spend that on additional administrative costs. Just what exactly is the problem that the member opposite is having? Is it that he thinks we spend too much money on special needs children, that we spend too much money on aboriginal children or that we don't spend enough money on administrators? Just precisely what is the problem?
J. Dalton: None of the above, hon. Chair; none of the above.
Let me just make this point. I'm not phrasing this in the form of a question, so the minister can tune out. I might point out, by the way, that this is not question period. After the next election, if the minister is lucky enough, he may be over here asking questions, but he certainly won't be over there asking them of us. I'm not going to rise to the bait, as he would like me to do, on what he just said.
The only point I'm going to make is that dealing with local school districts and local autonomy.... This is an erosion of local autonomy. We over here advocate the local accountability that goes with it, but I don't think this minister, quite frankly, is a believer in that. I don't think he really has any trust in local school districts, whether there be 75 or some reduced or increased number. That's a shameful thing to hear from a government and from a minister that say that they're advocates of education. What's wrong with allowing the local districts, given that they will have a properly based sum of money through a formula...?
I agree with the minister, by the way, that the old formula was a disaster. At least we've got more understandability in the funding process. The minister says: "Here's your money, but by the way, there are a whole bunch of strings attached, so be careful how you spend it." That doesn't deal with local accountability; that erodes it. It certainly erodes the confidence of local trustees, who give their time and effort and run in their communities and do the best they can to run school districts and schools.
As the minister knows, we over here advocate -- in some respects, at least, for the communities that wish it -- school-based management. That's certainly going to go out the window with all of this targeting stuff. There has to be a better compromise between the centralization that Victoria is exercising and the local accountability and autonomy that we all desire. At least, my colleagues and I do; I don't know that the minister does. He said to this committee already this evening that he didn't hear from anyone in Kamloops. Perhaps he doesn't deal with the people in Kamloops, or perhaps they don't care to deal with him; I don't know. However, those are the remarks I'm going to make.
L. Fox: I'm pleased to once again take part in this debate. It would have been nice if we'd known that this was going to be the first bill up after dinner, because I would have been able to finish my dinner -- or at least order it, or have some time to digest it.
I'm sure we all received the letter from the BCSTA about their concerns. If I recall the discussion last night correctly -- although it was kind of late -- some of the rationale behind the amendment was to deal with the concerns about this legislation that were identified by the BCSTA. I recognize that we have to target some funding, and that we have to put some caveats around how some funding is controlled, based on the needs as we perceive them from a provincial perspective. I guess my only question is: after the amendment is in place, will the minister have any authority that he didn't have prior to this legislation being brought forward in terms of targeting funding?
Hon. A. Charbonneau: No.
L. Reid: I want to return to the discussion the minister was engaged in earlier with my colleague from West Vancouver in terms of funding for special needs students. It certainly seems to me.... I'm not taking any issue with the minister's comments around having a floor in terms of a funding discussion, but I would be interested to know if there have been any changes made to the actual funding formula for special needs students. Certainly this legislation looks at the broad framework, but it doesn't suggest a specific formula for special needs students. If the minister would kindly comment.
Hon. A. Charbonneau: No, there have been no changes generally with respect to the funding for various categories of
[ Page 15159 ]
special needs children, but we're just in the process of getting to the printer new guidelines for special needs; they will be out into the field shortly. Part of the discussion in that whole process is about the funding aspects of special needs. I will be taking into consideration in the next budget whether or not we should adjust some of the special needs funding levels.
L. Reid: I appreciate the minister's comments around guidelines, but I would ask him to comment on enforceability. Certainly, having previously been a school administrator in this province, there are a number of districts that indeed do not spend those dollars as allocated. Is there some enforceability around guidelines for special needs students?
Hon. A. Charbonneau: Other than the targeting of the total sum with respect to special needs children within a district, no. They must spend at least that amount on special needs; that is the floor. They can spend more, or they can shift between special needs categories. To make certain that no board would draw down special needs money in order to meet some other need in the district, I felt it was necessary to do that. But to reach in further to specify that they could not move funds between special needs categories, no. I decided that would be inappropriate.
L. Reid: I'm only asking for some specificity in terms of the minister's comments about shifting between categories. Oftentimes, as the minister well knows, there are different categories of students that are far more difficult to educate and far more expensive to have in the school system. I would not wish to see this shift allow schools to say: "Sorry, we're spending our dollars on the learning-disabled population this year. We've allocated that. We've shifted the resources from severely impaired to learning-disabled, so we don't have dollars for that particular category." Does the minister envision that scenario being a possibility?
Hon. A. Charbonneau: Any given district receives, in effect, a lump sum for special needs, and then the target says: "You must spend no less than that lump sum." Districts are then faced with demands from advocates, parents and students for a variety of services. There may be demands for services that some would deem special needs but are not explicitly covered within the funding formula. I leave it up to the local board to listen to all of the concerns and to make the final decisions on how to allocate within the special needs amount.
L. Reid: I appreciate the minister's response, but it's not the answer to my question. I am looking for some ability for parents and teachers in the system to know that there is some obligation on behalf of a particular school to offer services and not to use this shift in funding category as an opportunity to not provide that particular level of service. That is the salient point that I'm interested in. I appreciate that it is each district's responsibility to make these determinations -- and possibly the neighbourhood school's -- concerning whether it has the resources in-house to offer an appropriate program. But if both of those have failed, is there an appeal process in place on behalf of this government that allows individual parents or teachers or principals to come back to the table and say: "We wish X dollars to educate this child in this child's neighbourhood school." Does that scenario exist?
Hon. A. Charbonneau: I may be missing the gist of the question, but I'll give another answer in another way. The member knows, from her own experience, that there are many categories and subcategories: low-incidence, high-cost and high-incidence, low-cost special needs children. There is an amount attached to each child, with the appropriate identification having been done. The system knows what those amounts are. The district receives an allocation that pays for a personal attendant for a fully dependent child. The allocations vary from the low-$40,000 range down to the $400-$500 range per student. The system knows that; teachers know that; I think any parent who goes in and inquires at the school or at the board knows that. The district also receives a certain amount for the program itself. There's an amount for the program plus so much per child in the category. So all of those factors are known.
I add up the total amount and say: "That's your floor. You" -- the board -- "make the decisions. Listen to the parents, assess your needs and make decisions on a school-by-school basis for what support is offered. Whether you have a gifted program or not, or whether you recognize some moderate learning disability or not, you allocate for that within the amount. If you choose to spend well above the floor I have established in order that you can meet the needs of more special needs children in more schools, you are free to do so." I leave my instruction at that.
[7:00]
L. Reid: I thank the minister for his comments. Perhaps we can wrap up this section with a simple clarification. Is it still this minister and this ministry's intention to educate special needs children in their own home schools, in their own neighbourhood schools?
Hon. A. Charbonneau: Yes, the policy of inclusion, of having a child in, if at all possible, their own school.... I think always a combination of the best interests of the child and the best interests of the other students in the school.... That determination should be made. But in the general sense, I am fully in favour of and will continue to support inclusion to the maximum degree. In those instances where a board might decide that it is best to have a pullout arrangement, that's fine. If they decide that it might be best to have a special class, with the intention of reintegrating back into the classroom as soon as possible, as soon as practicable, that is the policy of this government.
L. Reid: I appreciate the minister's clarification. From that, I would suggest that it's safe to say that there won't be children turned away from neighbourhood schools for the sole reason of financing; that there is not an opportunity for the administration or the district to say: "We cannot accommodate you here, because we don't have the dollars." They may be able to take a decision that they're not able to accommodate a child there based on different learning needs -- priority learning needs, the fact that a special system or class may exist in the district -- but they simply will not have the opportunity to turn them away because of finances. What you're saying is that the dollars will be there, and the district will have some opportunity to decide how best to utilize those dollars.
Hon. A. Charbonneau: A child should never be turned away, and I would not permit that to happen for financial reasons. It may well be that a child with special needs turns up on the doorstep of the school in May. The district does not get
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additional funding for that child, because the allocation still belongs to the district whence the child moved; we do not tie the funding to the child. So even if the child turns up in May, the district having received the child must support that child in the special needs way that the child requires.
Amendment approved on division.
On section 6 as amended.
J. Dalton: I would move the amendment on the order paper in the name of the member for Langley, which would delete section 125(6)(c), the very subsection that we've been debating.
[SECTION 6, by deleting section 125 (6) (c).]
The rationale, I guess, is obvious. We're not advocates of targeting, not the way the minister has put it together and presented it, and his amendment doesn't cure the exercise.
Interjection.
J. Dalton: Well, nobody said that it's out of order. Therefore we put this amendment forward, hon. Chair: that the subsection that we've just debated and amended be deleted.
The Chair: Hon. member, I'm advised that that would be out of order. The minister's amendment has already replaced the subsection.
J. Dalton: I guess I will accept that ruling.
I will now submit another amendment in the name of the member for Langley, which is on the order paper.
[SECTION 6, by deleting section 125 (7).]
On the amendment.
J. Dalton: Perhaps I could make a point of clarification. We are dealing now with section 125 in the bill, amended as we have just done, and now I am on my feet presenting a further amendment to section 125. We have not dealt with the subsections leading up to subsection (6). We haven't had the opportunity to debate any of the subsections, other than the amendment to section 125(6)(c). Hon. Chair, my interpretation of your ruling, if I read you correctly, is that we would be prohibited from dealing with any of the subsections leading up to subsection (6). We haven't talked about any of them yet.
The Chair: No, hon. member. We haven't adopted section 6 as amended yet, and your amendment, "by deleting section 125 (7)," is still in order, and that's what we're debating.
J. Dalton: May I speak to that?
The Chair: Yes, please, hon. member.
J. Dalton: Obviously the rationale for this will be basically the same as the rationale for wanting this whole targeting to be scrapped. But I would ask the minister specifically, under subsection (7), which we would ask to be deleted through our amendment: how can a board make any meaningful, or otherwise, planning when the minister will have his tentacles out there, as I described earlier? At any time he could "vary a direction provided to a board." That is no way to plan. This minister tells us that he's a great advocate of funding and future planning, and this subsection (7) belies the entire exercise. That's all I'll have to say about that.
Hon. A. Charbonneau: I must reject the amendment. Of course, it is necessary to allow that from time to time, direction from the minister may vary. That is not unusual. What it would say is that a ministerial order may be given or that, as is required under circumstances, it may vary, as the section as written states. There is nothing untoward about that, and it is necessary, for the act to function. For example, there may be a requirement to vary a direction because enrolment changes or the mix of students enrolled changes. So for a variety of reasons it's absolutely sensible to permit the minister the ability to vary as this section calls for.
J. Dalton: Let me present this scenario. Let's say that the ministry and the government of the day make a policy decision that's going to impact on targeted funding -- perhaps it's special education. So the government, through its wisdom or lack of it, has made a provincial decision that school districts must expand their mandate in special education. Then the minister, of course, will use this subsection to say, "All right, now I'm going to vary a direction to the board," which of course will be targeting. He's going to tell the board, if I interpret that correctly, "By the way, you have to provide more money for our provincial policy change on increased special education," and they've got no money and they've got no authority. Is that a possible scenario, and would that fit within what this minister perceives is the way to manage local school districts?
Hon. A. Charbonneau: Any direction that might be provided from time to time would recognize the ability of the province to fund some change and the ability of a district to be able to absorb any such change.
V. Anderson: I think there's a concern here which comes through sections 5 and 6 and right through. But it's highlighted in the amendment that's before you that the minister has, on one hand, attempted to say to boards that they should be responsible and they should do their planning; and then in each of these sections, the minister says that irrespective of what you plan, what formula we establish and what guidelines we establish at the beginning of the year, there is no guarantee to the board, to the teachers or to the parents that these items will not be varied every month, every week and every minute.
We must recognize that whereas the present minister may be very confident that he will be rational in what he is doing, over the last ten or 15 years changes have come so rapidly in the school system. They have come daily; decisions that were made at 9 o'clock in the morning were altered before noon the same day. That kind of instability that has been part of the school system over this period of time is written in here, in spades; it could be more a part of the school system. So it takes away from the confidence in planning of teachers, school boards or parents, who could say: "Why would we spend a lot of time planning? The minister is going to come and vary it anyway."
And that's been the practice in so many things during the last number of years, that there needs to be some sense of
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security. And I'm not sure why.... Subsection (5), which says the same thing -- we'll set out the budget and how you may spend it in the beginning of the year.... Then it sets out in subsections (6), (7) and (8), again and again, exactly the same thing: it will continue to vary. So if it was set out in only one place, you might accept the validity of what the minister is saying. But when it's set out in four separate ways -- in subsections (5), (6), (7) and (8), again and again -- then you have reason to lose confidence.
I would ask the minister what more is in subsection (7) -- and again, when we come to (8) -- that is not already covered in subsection (5)? Why is it repetitious? Subsection (5) deals with subsection (3)(b), (c) and (d), three areas of the budget. Having said it once, why does it need to be repeated again and again?
With all those repetitions, it seems that the minister is covering all the bases just to make sure that no matter what the situation, the minister can step in any day of the week, month and year -- regardless of formulas, arrangements and prearranged planning -- and change the whole system. It's that uncertainty that is built in here by the very nature in which this bill is written.
The Chair: On a point of order, the member for Mission-Kent.
[7:15]
D. Streifel: Humbly, hon. Chair, on a point of order, the simple member for Mission-Kent is confused as to which section we're on. We've talked (5), (6), (7) and (8). Have we yet passed section 6 as amended? If we haven't, I may request the members to respect the standing orders and speak specifically to the clauses before us in committee.
The Chair: Hon. member, we are on section 6 of the bill. It has been amended once. We are now on another amendment proposed by the member for West Vancouver-Capilano that deals with the deleting of subsection 125(7) of the act.
Hon. A. Charbonneau: Subsection (5) deals with allocations and the budgeting with respect to the preliminary allocation, which allows the board then to do such-and-such and the minister to provide certain direction. Subsection (7) has to do with the possibility of having to subsequently vary that. It may apply, for example -- it quite often would -- to the final allocation. Or if partway through the year, as an example, there were to be a change in policy with respect to, let us say, special needs children and an additional allocation, this allows the minister to direct how that additional allocation might be spent. Or if I've just announced a technology budget, this section allows me to give direction as to how that technology budget must be spent.
Furthermore, I point out to the members opposite that if they want to really debate the statement of varying from time to time, they're about a year late, because the section was introduced a year ago when targeting was introduced. The members opposite at that time had the opportunity to debate very, very similar language -- that the minister may vary a direction provided to a board under this section if there is a change in circumstance under which the direction was made. So, with respect, you're about a year....
Interjection.
Hon. A. Charbonneau: No. There is a difference in the overall section, but the wording of being able to vary has been in the act before.
V. Anderson: The minister, in part, has demonstrated the validity.... We had the same concerns a year ago. The minister has demonstrated that we have greater concerns because of what has happened and the way it's been used this last year. He's proved the validity of our concerns about the boards trying to find out where they're going and being able to make plans. I don't think the minister is going to listen or change, unfortunately, but I think he needs to be very clear that it's a question of confidence in the minister and in the process, and there has not been confidence in the general school system from the Ministry of Education for a number of years now. It's time we did things to restore that confidence rather than take these kinds of actions, which will continue to rob the reliability that should be there.
Hon. A. Charbonneau: I think that if the member opposite were to check around -- with the BCSTA, for example, or the BCTF -- he would find that there is a rising confidence in and a high level of respect for what has been accomplished in the system over the past couple of years.
L. Fox: Firstly, I'm a bit perplexed, I guess. A little earlier in this discussion, I heard one of the official opposition members suggest that a year from now they'd be over there and you'd be asking questions of them, so I guess I don't understand why they would be so concerned about this minister having control. However, notwithstanding that, this kind of clause is, I think, fairly.... In fact, I don't think I've seen a piece of legislation come through the House since I was elected four years ago that doesn't have a clause in it that ultimately gives the minister full authority at the end of the day to make some decisions.
But I think there really is some genuine concern around this kind of authority and how it might be used, so I'm trying to understand from the debate at what point, given that this clause covers a very small portion of the overall school board budget -- in fact, as I understand it, it will only cover the targeting funding, which is primarily special education.... Would this be a situation where, if funds were allotted in a school board allocation, for instance -- maybe a substantial sum -- for a special needs child who is a part of a family that has two or three children, in a smaller school district, and the family moves very shortly after school has started, the minister would then have the discretion under this clause to take back the funding for that child? Is that some of the authority this gives the minister?
Hon. A. Charbonneau: The districts make their formal counts on September 30, and they are funded in accordance with that. There's a second count made in January, I believe, and there are some circumstances where, if the growth has been more than such-and-such, an additional allocation of money is made for them. But the intent here is not to accomplish something like you have suggested; rather, it allows the general authority. A further example: I have indicated to boards that if there was no need for targeting, I would look at taking away targeting. We had a circumstance where in some districts, large amounts were received for aboriginal education, and next to nothing was spent on aboriginal education. If we have this targeting in place for a period of time, that
[ Page 15162 ]
situation will correct. It is virtually corrected now. We have negotiations going on between boards and bands that have never occurred before. We have local education agreements being negotiated in some locations.
We have a general rule that says that the amount allocated for aboriginal education can only be spent with the informed consent of the band or an aboriginal education council. Those kinds of discussions are now occurring in every district of the province, to the betterment of the system. Aboriginal people have said to me again and again: "Thank you for having done that. Something really good has come from it." But it may well be that when we look at the new budgets that come in, and check with the aboriginal people, we might want to say: "Okay, we don't want a target. The problem is corrected; we want to remove that specific target." Section 7 would allow me to do that. That is why it is there, for the kind of authority that the minister, from time to time, needs in order to carry out responsibilities. There is nothing nefarious about it.
L. Fox: Just one follow-up, and it's kind of for the record, because I'm very familiar with the agreements that have been signed between school districts and bands. For the record, I want to note that, indeed, such an agreement was signed between Tache and School District 56 well prior to this minister taking this target initiative. It's just for the record that I want to put that on there.
L. Reid: I want to continue the discussion that was begun by my colleague for Vancouver-Langara in terms of targeting funds and whether or not having the ability to vary that is useful. I would submit that there are some aspects of that that I trust will be based on some type of measurement; that when the minister comes back to the table and suggests that he's varying the dollars -- let's say, targeted for a special needs population -- it is based on some kind of measurement, not just the sum of dollars that flow to the school district; that they actually have some ability to report out on the calibre of the program, the quality of the program, rather than just on the number of students that were served.
I think that tends to be a very simplistic measure. I think it gets us started down the right road in terms of X district had 47 special needs students in this particular year, but I'm looking for something that allows us to make some determinations on how best those dollars are spent. I appreciate the discussions we've had in the past regarding value-for-money audits, but what I'm particularly interested in is: does the ministry have any expectation around districts reporting out on calibre of programs around targeted dollars?
Hon. A. Charbonneau: I'm wondering, first of all, if the member is still speaking to the amendment.
L. Reid: I am.
Hon. A. Charbonneau: I will go back, then, to stating why the amendment is there. It is not to solve the specific problems that the member makes reference to, but rather -- keeping in mind that in the preliminary allocation, budgets have been drawn up and approvals have been given for those budgets -- when they do the actual counts and those counts come into the ministry in December, I may have to vary the instruction back to the districts. For example, all of the targets in special needs and aboriginal will have changed, probably, because the actual counts will be different from the estimated counts that were made the previous February. So I have to issue a directive to say: "No, your target is now such." And that section 7 allows me to do that. It gives me that flexibility. If the issue that you or others opposite are coming back to is the need for targeting at all, then you will have to explain to me why you think that a board should be able to spend less than the floor on special needs or aboriginal, or more than the ceiling on administration.
L. Reid: I understand the minister to have said that he has the ability to vary the dollars, and I take no issue with that. The question was specifically whether the minister will make a decision to vary the dollars based on any type of measurement of the program that was delivered. That was the question. Move beyond a simple head count, I said, and tell me if you're looking at something that's a more complex measure -- and I trust that you are. If the minister could comment.
Hon. A. Charbonneau: No, the numbers would be varied in accordance with a formula. If the numbers that are reported to me in December from the September 30 count indicate that there are two fewer total-dependent children, then the targeted amount of special needs would be diminished by the cost of dependent-handicapped for two children. It would not be related to what the program is that is being delivered in the school, or anything else within the charge of the board. I am responding only in accordance with the formula to recognize that the numbers of students that we used as estimates on February 1 turned out to be different from the actual counts made on September 30.
The changes and the direction that would be varied under this act have to do with the numbers that are plugged into a formula to change the floor for special needs, in that instance. It has nothing to do with what is actually occurring in the schools. As long as it is within the School Act and following the guidelines published, what is occurring in the schools and classrooms is the business of the local board. That is their responsibility. My responsibility, in what we are speaking of here, is funding the board.
[7:30]
L. Reid: Let me attempt this with this minister one more time. What I am attempting to get at is whether there is any measurement of success in the program. I appreciate that the minister on two occasions now has said that it's a simple numbers formula -- the number of students on the ground in September and the number of students on the ground in January.
What I am suggesting to you -- if both you and I were principals of two schools in, say, Richmond, as an example -- is that there is no difference. If I'm offering an absolutely excellent program to a group of learning-disabled students, and this minister is offering a less than adequate program to a group of learning-disabled students, there is absolutely no difference in funding. If I were a parent in that situation, I would have to take my concerns to the board, and this minister would continue to dish out the dollars regardless of the calibre of the program. That's my concern.
I'm asking this minister -- if that is a scenario, and I know it exists in this province -- if that particular parent,
[ Page 15163 ]
principal or school district is able to come back to the minister and ask for some guidance. Right now, parents do not believe they are well served, and that is why they tend to shop for special needs programs. The consistency across a district or across the province is simply not there. I would ask the minister to respond. If he is not prepared to take that on as a mandate of the Ministry of Education, it causes me some concern. I believe that excellence and quality should be the mandate and that the districts and the parents should have some recourse. If the minister could comment.
[D. Streifel in the chair.]
Hon. A. Charbonneau: It seems to me that the member wants to debate a completely separate issue here. There are all sorts of mechanisms with respect to auditing to determine if the numbers are there that they claim are there. There is a whole program of curriculum. There are guidelines for special needs children, and there are programs for severe behaviour. All those questions I am hearing have to do with the quality of what a board or school is delivering. That is no different from how well mathematics is taught in this class in this district versus how well mathematics is taught in this other school in this other district. Do I measure how well they teach mathematics and then somehow vary the amount of money that goes to them, depending on something? No, we do not do that. We have one set of guidelines and policies with respect to quality -- whether the curriculum is being taught or not. We have other policies with respect to auditing the schools on whether the numbers they are reporting are appropriate.
This specific item we are talking about has to do with the funding formula. The funding formula states -- if you look deeply into the bowels of it -- that they count the number of students who are dependent-handicapped, and that for each student who is dependent-handicapped they receive around $42,200. If the actual number of dependent-handicapped turns out to be different than the estimate, I vary the amount of money that goes to that district. This is strictly a dollars-and-cents issue. The quality issues are dealt with elsewhere, not in this section.
L. Reid: Again, I appreciate the minister's comments that this is a dollars-and-cents discussion. I'm asking this minister to extend his thinking around the quality of the service which is provided, because this ministry is footing the bill. Frankly, there are incentives and disincentives around who pays. Certainly this minister will know, because the same correspondence has probably crossed his desk about parents in the system today who have a child in a program in a particular district. They know the amount of dollars that have been allocated to that program, and they know that they are not receiving a quality program. They know that the dollars are not being spent in the best interests of their child.
What you're suggesting is that they have no recourse other than to go back to the school district. What I'm suggesting to this minister is that if you take $42,000 for a dependent handicapped student, you have some responsibility to demonstrate that you have used those dollars in a prudent way. Right now, it's simply: student X gets X amount of dollars. I think there's some obligation on behalf of the recipient of those dollars to demonstrate that they have used those dollars appropriately. That is all I am asking.
Hon. A. Charbonneau: The member opposite is asking for massive intervention by the minister in the doings of the district. Perhaps the member doesn't understand that in special needs alone, we have approximately 60,000 students. The member seems to be asking that the minister should determine from Victoria what the quality of education is for each of those 60,000 students, that there should be a measurement of that somehow and that, depending on those 60,000 evaluations, I should vary -- 60,000 different times to all 75 districts -- the amount of money they obtain, depending on how well they deliver with respect to the educational needs of those special needs children. You are asking for a stupendous intervention and meddling from Victoria, taking away completely from all the boards their responsibility to deliver the education program of the ministry. We do not do that, nor would I ever contemplate doing that.
The question was asked earlier about whether we need school boards. I said yes, that we need school boards. It is the responsibility of school boards to determine how the education program is delivered in the field. Once again, what we are dealing with here is the distribution of money or funds to the system. Again, I would never contemplate intervening in the system and meddling to the degree that the member appears to be requesting.
L. Reid: What this member is asking for is accountability in the system. I'm not asking for any direction from the ministry in terms of delivering on the program. I am asking for some assurance that this minister is concerned about how those programs are evaluated. Right now, the dollars leave Victoria and go to the districts, and what is troubling to me -- what I'm hearing this minister say -- is that it doesn't really matter how the money is spent, because he doesn't know how the money is spent. That's a concern. It's much more straightforward to know which dollars went and to whom, but it's not particularly useful. What we are looking for in terms of offering a quality program is to know how those dollars were spent, and if anybody evaluated it from a ministry perspective. That is a very straightforward question.
We are not taking responsibility for delivery, and I am not asking this minister to look at 60,000 individual special needs students in this province. But I am asking that this minister at least have something on paper in terms of where he would go with evaluation. I believe that's more than relevant, because this clause is about funding. If you are only basing funding on numbers, it's interesting, but I think you're missing the mark.
V. Anderson: I am interested in the fact that the minister said he would not interfere with the decisions of school boards. It's my understanding that in the Vancouver area a priority for high school remodelling capital expansion was the Magee high school. The minister did not accept that, and instead put the priority to University Hill school, which was number two on the list. So that was the first meddling, if you like, or non-meddling of the minister in a decision of the school board. By finally agreeing with the Magee school board that something should be done, it's quite clear that the Magee school board was given permission by the minister to go ahead and make a plan for the new school. When that plan, model and architect drawings were ready, the decision was changed to say that they must be revised; that the kinds of quality building materials, gutters, paint and other items were too valuable, and so they....
The Chair: The hon. member for Prince George-Omineca on a point of order.
[ Page 15164 ]
L. Fox: As interesting as this story is -- and I know it's around the issue of the minister exercising his authority -- we're speaking about funding targeted in this legislation to a very small part of the overall operating budget. We're not in estimates talking about capital expenditures.
The Chair: Thank you for your kind direction, hon. member. I would remind the members of committee that we are on an amendment to this piece of legislation. We must consider standing order 61. We should remain in debate strictly relevant to the item before us, if I could bring the member's attention to that.
V. Anderson: Within this section, subsection (3) talks about capital components. We are talking about the capital components, which are part of this section and which are varied. I'm simply pointing out that this is talking about targeted components, capital components and developmental components. This can vary anything within this section. I'm saying that the capital components of the Magee high school have been varied, though they redesigned it again at great additional expense for the second or third time, and then they come along when all of that is done, and the minister says again: "Well, no, we can't do it."
What we have here is a concern that the experience has been that the minister has varied -- and I will agree that this regulation may have been there, so the minister was acting within the bill last year.... What we want to do, since the opportunity is here, is change it so there can be some consistency and some confidence.
I might also comment that the very authority that the minister was just talking about -- being able to vary because of the change of registration -- is again contained in subsection (8) of this section. Once more, it's overkill, and there's no reason for it to be there -- except that the minister is planning to use it consistently, as he has in the past.
Hon. A. Charbonneau: The member opposite is not just fishing in the wrong pond; I think he's in the wrong ocean.
The reference in subsection 125(3)(c) has nothing whatsoever to do with the capital construction, the capital envelope -- minor or major -- of school districts. Within the block there is an unfettered amount given to the board with respect to minor capital improvements, minor maintenance: painting the walls, changing the tires on the school bus, and what not. That is the capital component of the block. Everything that you were talking about has to do with the capital budget of the school board and nothing whatsoever to do with the section that you've referenced -- and certainly nothing whatsoever to do with the amendment that we are supposed to be debating.
Amendment negatived on division.
[7:45]
J. Dalton: We'll just take one more stab at amendments, and then we can get back to the entire section itself, which could open up some other discussion. I move the amendment that's on the order paper in the name of the member for Langley:
[SECTION 6, by deleting section 125 (8).]
On the amendment.
J. Dalton: I'll just give a brief rationale. This subsection demonstrates a lack of confidence that this minister and this government have in local school boards. We can recognize that targeting, even though we don't like the implications of it.... What this subsection is saying is that a board is directed to do what it will do anyway. It's directed to do the obvious, which is to "budget, spend and account for the targeted, capital and developmental components...under subsections (1) and (2)...." I don't understand why that's in there; that's obvious. The minister's got enough authority to target already in this section, and now he's telling the boards: "By the way, we have absolutely no confidence in you as a local elected authority. You are directed to do what is in your mandate, which is to budget, spend and account." Well, that's what a board does.
I would hate to think that this minister's going to be providing direction, as this subsection provides, for boards to do the thing that they should be allowed to do within their own jurisdiction. They are accountable to the local electorate. They should have confidence in the local electorate, but this government clearly has no confidence in them.
Hon. A. Charbonneau: I must speak against the amendment. The section referred to has to do with establishing the duty of the board. The other sections have to do with defining the authority of the minister; this section defines the duty of the board.
Amendment negatived.
Section 6 as amended approved on division.
Sections 7 to 11 inclusive approved.
Hon. A. Charbonneau: I move the amendment, which is on the order paper, adding a new section, section 11.1.
[SECTION 11.1, by adding the following section:
11.1. Section 152 (3) is amended by deleting "the amount of the Provincial block that is" and substituting "the amounts of the preliminary Provincial funds and final Provincial funds that are".]
This amendment is of a technical nature in that it amends section 152(3) of the School Act where that section references the term "provincial block." Bill 23 replaces the term "provincial block" with the terms "preliminary provincial funds" and "final provincial funds." During the drafting of the bill, the reference to these terms in section 152(3) was inadvertently missed. This amendment will bring this section in line with the other sections of the School Act amended by this bill.
Section 11.1 approved.
On section 12.
L. Fox: I would like to ask the minister to give us a little more background as to why we would want a school board to set up a trust fund.
Hon. A. Charbonneau: For example, with respect to the technology program initiative just announced, I will take the approximately $20.7 million per year, and it's not going to be just simply dumped into the system for boards to decide how
[ Page 15165 ]
to spend. Rather, there is a provincial plan for updating our technology and getting up to a ratio of one computer per six elementary and one computer per three secondary, and having local area networks and wide area networks, and teacher training and professional development with respect to that. As an example, I need each district to establish a trust fund. The funds that I will make available from the technology money will go into that trust fund, and then the board must spend it in order to meet the objectives of the overall initiative.
That is a typical kind of trust fund. We have established other ones, for example, in developmental areas such as the school meals program, inner-city schools and education change. Skills Now is another area where trust funds are involved. Each of those instances are additional money going to a board, above and beyond the allocation, but the additional money is for a specific purpose, and the trust approach ensures that that will happen.
L. Fox: Then I'm to understand that these are a form of a targeted reserve that indeed have some definite parameters, both in terms of the sums of money they collect and how those moneys are expended. I know the minister was talking to a colleague just there for a moment, but I wasn't sure when I originally read this whether this was going to be a targeted reserve for specific uses. If I understand the minister correctly, this would allow him as minister to have trust funds for specific initiatives, and that's all those funds would be used for. It would be one trust fund per initiative, not an overall pot that we could throw money into and then take it out from time to time. It's more of a targeted reserve rather than an overall trust fund.
Hon. A. Charbonneau: Yes, each would be a separate trust account. The moneys would be paid into that account, and then the school board can draw it down; but they can draw it down only for the purposes involved in the initiative.
Sections 12 and 13 approved.
On section 14.
J. Dalton: On section 14, the first thing I would ask the minister, looking at subsection (b) -- which is on page 7, so we know where we're at in this bill -- which adds subsection 189(1.2), is: could the phrase "to direct the manner in which and the time within which teachers and administrative officers...must assist in securing that accreditation..." be interpreted so that such provision would supersede a local collective agreement dealing with hours and conditions of work, and when teachers must appear for work and not appear for work, as the case may be? Is that a possible implication coming from this?
Hon. A. Charbonneau: No, it would not involve any violation of a collective agreement.
J. Dalton: Given that more authority is being given to the minister through such provisions, is the minister then going to be completely aware of all 75 collective agreements in the province? I can just see rulings coming out of Victoria that are going to have an impact on a lot of collective agreements. I can tell you that unfortunately I've seen too much resistance from people within the local unions to know that they're not going to necessarily be very happy to see the minister riding in and saying, "By the way, you must do this, that and such," when they've already bargained a collective agreement that might conflict with it.
So that's the concern I am raising. I can appreciate that this minister, given the makeup of his government and his colleagues, doesn't want to be perceived as interfering with local bargaining and collective agreements, but I'm suggesting to the minister that that may be the very thing that's going to happen here. The minute we have a local gunfight versus a provincial gunfight, who's going to win that one?
Hon. A. Charbonneau: That would simply not occur. At various schools that I have visited where they have gone through an accreditation process, the staff is virtually unanimous that it's a very positive occurrence. There is substantial growth that occurs through it and a redefinition of what they are about and what their school is about. All this section establishes is, ultimately, the authority to make sure that when an accreditation is to be carried out, the staff facilitate carrying it out.
J. Dalton: What I understand that to mean is that the power to direct the manner in which this accreditation will take place would have to be within the normal school hours of the school day.
Hon. A. Charbonneau: It would be carried out in such a way as to not violate any collective agreement.
J. Dalton: Typically, hon. Chair, we're not getting an answer. I don't think this is a terribly complicated thing.
Let me give this scenario. In second reading I made reference to my children's former elementary school and some of the experiences we have had with accreditation. I would suggest that part of the problem that we encountered when this rather fuzzy questionnaire came home -- the one that I told the minister in second reading came out of his ministry, because the questions were submitted to the ministry.... They said, "They look great; send them home," and some of them were ridiculous, to put it bluntly. So that's a very hollow exercise.
Given that that is a possible scenario.... In fact it's not just a possible one, because my wife and I have experienced it, and I can tell you that many of the parents in that school had the same unhappy experience. If that's the case, how are we going to have a meaningful accreditation process when: (1) Victoria really doesn't have much of a clue as to what's going on locally; (2) they give very bad advice to local people; and (3) you don't necessarily get a lot of cooperation from teachers and administrators? That may very well be because they have many other obligations, including the collective agreement, which I'm trying to point out to this minister is an important aspect.
For example, maybe I'll toss this one out. In some districts we still have these unfortunate community interaction days, which should have been scrapped before they even started. Would that be a possible scenario? We'll have an accreditation during the community interaction day, in which case we might then get some meaningful accreditation with parents, taxpayers and teachers -- and students too, if they care to be involved in the process. Is that a possibility? I think that might
[ Page 15166 ]
be a productive use for something that, certainly from my experience, has been very unproductive for the most part.
Hon. A. Charbonneau: The accreditation process is something that goes on much longer than a single day. It is my understanding, however, that some boards and some schools have decided to take advantage of community interaction day in order to accomplish at least some portion of an accreditation. That would be fine. I would point out that I think the member is debating more with respect to the nature of an accreditation, as opposed to whether or not this section is dealing with...which says that if an accreditation is occurring, we will, at the end, have the authority to order administrative, teaching and other staff to participate.
J. Dalton: Just one more point. Given that, hopefully, everyone will cooperate within the context of which this subsection is directing.... I'm not suggesting that they will or will not, but I think there are some problems built into this. Is there a possibility that coming out of this scenario, or accreditation in any other sense, we could have some meaningful comparative accreditation of schools within districts and of districts within the province? That's what a lot of parents and taxpayers in general want to see.
How are we evaluating schools? Not within themselves -- every school will have an accreditation process. But quite frankly, as I've said before about the questionnaire that came home from my elementary school, it was, for the most part, a rather useless exercise. I said so at the time and I'm saying so again now. That doesn't help anybody. What that does is drive parents and students out of the school. It has certainly happened in some of the examples I'm aware of.
Is there a possibility that we could turn this to our advantage and have some meaningful accreditation, comparative accreditation, so that parents, taxpayers, students and teachers -- everyone in the system -- will have some confidence that they're getting some value for the money they're spending?
[8:00]
Hon. A. Charbonneau: The accreditation process is virtually, as I've said earlier.... Our staff virtually unanimously agreed, after having gone through an accreditation, that it was a very worthwhile program. In addition to that, we've established that, on the external teams, there will be representatives of the community -- of business, of labour, of parents -- to make sure that we open the system up to the view of the community, not just of insiders. Because there could easily be a view that the education insiders might not perceive some of the problems that could exist.
The accreditation process is a good process. There is an extensive manual that is provided to districts in order to carry out their accreditation. With respect to making the information available, they are, at the end of the day, public documents. We are working, further, through the school reports, through district reports, to make sure, as part of the overall accountability agenda, that all of the parents in the district and the public at large obtain the district report if they so choose. The district report will speak to the quality of education that is occurring within that district, and it could well include the outcome of some accreditation.
J. Dalton: I did mislead the committee. I said that would be the last point; I've got one more that I want to make. It goes back to another comment I made in second reading about the questionnaire that was sent home. The last question on that questionnaire, which the members who were here may recall, was: "X is a good school." What in heaven is the purpose of that question? How is that going to tell anyone in the school district or in this province about...? If every questionnaire and every accreditation in every school in this province had that as the last question on the questionnaire, we would be in heaven -- and by God, it would be a very fine heaven that we would be living in, because it would be terribly artificial and phoney. And that's the result coming out of the accreditation process that's going on now, and there's no comparison.
The point I'm making is: if every school in an unnamed school district -- or in North Vancouver School District, if you wish -- were to ask that question as the final statement, every parent would be so happy. They'd say: "Well, all the schools are good, so I'll just send my kids wherever I happen to live or can place them." That's the sort of thing that's going on now, and we've got to do something about it. There has to be some accountability at the local level. I'm just hoping that perhaps there might be some positive aspect coming out of this, other than the negative aspect that probably will be created out of this ministry.
L. Fox: Just one very quick question. When I read this section of the act, I tried to envision why it would be required, having been around the school system for a long time and recognizing that in all instances I was involved with, there was a total willingness of the school to enter into this process. In fact, I never once had a teacher in my five years on the school board -- and in my participation in the accreditations of schools within the community that I was mayor of -- who wasn't prepared to enter into the process or an administrator who didn't want to accommodate an accreditation team.
I guess my first question to the minister is: given we've had accreditations for as far back as I can recall, why was there a need for this particular amendment at this point in time?
Hon. A. Charbonneau: First, hon. member, we've extended the accreditation to become mandatory for elementary schools as well as secondary. I understand your point, but all this does is simply formalize the process. There are many instances in which, by and large, we know that such and such is going to happen, but somewhere on a piece of paper it's still written that this must happen. That's all that this does in this instance. It provides express authority for the enactment of regulations.
L. Fox: Just one very short follow-up, then. Has there been any action or lack thereof that has forced this to come forward?
Hon. A. Charbonneau: No, there has not been any incident in the field of which I am aware that has triggered this; rather, it is a formality.
Sections 14 and 15 approved.
On section 16.
L. Fox: I just wanted to ask a couple of questions around this section, because this is dealing with the termination of the.... I made reference to this earlier in second reading. One question I had around this concern was the filing of.... I'm
[ Page 15167 ]
trying to express this without embarrassing myself. This allows you to access or request your records, as I understand it, and there was concern expressed to me that if students reported an incident....
Have I got the wrong section? The minister is looking at me.
Interjection.
L. Fox: Okay, sorry.
Sections 16 to 21 inclusive approved.
Title approved.
Hon. A. Charbonneau: I move the committee rise and report the bill complete with amendments.
Motion approved.
The House resumed; D. Lovick in the chair.
Bill 23, Education Statutes Amendment Act, 1995, reported complete with amendments.
Deputy Speaker: When shall the bill be read a third time?
Hon. G. Clark: By leave, now.
Leave granted.
Bill 23, Education Statutes Amendment Act, 1995, read a third time and passed on division.
Hon. G. Clark: I call committee stage of Bill 43.
SCHOOL SITES ACQUISITION STATUTES AMENDMENT ACT, 1995
The House in committee on Bill 43; D. Streifel in the chair.
Section 1 approved.
On section 2.
L. Reid: Certainly I raised in second reading debate whether the minister would consider putting in a dispute resolution mechanism. There are a number of sections where that may indeed be appropriate. I will simply say it once and will then ask the minister for his comments as we move through.
The area that has been brought to my attention that causes some concern, particularly in my school district.... It allows for situations where agreement cannot be reached between the city and the school district. Again, this agreement is needed to determine if it should be land or cash or a combination of the two. Now, there are a number of instances where that argument plays through this bill. I'm wondering if there's any opportunity for this minister to consider a dispute resolution mechanism as it pertains to the acquisition of school sites.
Hon. A. Charbonneau: No, the nature of the bill is that it will be voluntary. It is enabling legislation.
L. Fox: As section 2 is quite large and, indeed, is the meat of the legislation, I'll just ask a few general questions around it. As the minister will be aware, I spoke in favour of this piece of legislation, but I have a couple of specific concerns. I note in today's UBCM News that the UBCM appears to have had some concerns around this issue, at the time of this publication. I don't want to read it all out. I think the minister's probably well aware of it. But could the minister tell me whether or not he has been able to meet the concerns around this piece of legislation identified by the UBCM?
[R. Kasper in the chair.]
Hon. A. Charbonneau: I apologize to the member opposite. I was just getting a bit of information, and I missed the gist of your question.
C. Serwa: While the assistants to the minister are scrutinizing that particular article, I have a few questions. I'm really concerned about the whole aspect of this act. I demonstrated my particular concern, and so I have a series of questions that I would like to ask the minister.
[8:15]
It's apparent that the minister believes that land prices are escalating very rapidly and that it is becoming difficult to acquire school sites at realistic prices. Perhaps the minister could indicate site acquisition costs in 1993 or 1994, and the percentage of the land costs compared to the development costs of the schools built on the sites. What percentage would the land cost be out of the total cost of land and buildings throughout British Columbia?
Hon. A. Charbonneau: Generally speaking, in some of the more rapid-growth areas in the lower mainland, prices are approaching $1 million an acre. A large senior secondary school requires something in the order of 15 acres -- so about $15 million. The cost of constructing a secondary school for an enrolment of perhaps 1,200 to 1,500 might be in the order of $25 million. So it's $15 million out of a total of $40 million with respect to, say, a major secondary school. For elementary schools, where the sites are closer to five acres, the cost is proportionately lower.
In other districts around the province or in areas of the province where there's very little growth occurring, we're not acquiring sites. I'm not sure what the land values might be.
C. Serwa: It's a rather interesting response to a question that was really designed to find out the reason for this particular legislation. First of all, anyone from a school district paying $1 million per acre of land for a school site -- undeveloped land -- anywhere in the province has got to be out of their mind. You can buy residential housing built on lots at less than $1 million an acre. There is nowhere.... A rough rule of thumb is that the cost you pay per acre of land is the cost of a residential lot. Perhaps the minister can enlighten me. Where in the province are you paying $1 million for a residential lot? Because that's the formula: one-third land cost, one-third development costs, and one-third for profit and overhead. Fundamentally, the rough rule of thumb is: the cost per acre
[ Page 15168 ]
for land turns out to be the cost per lot. There is no place in British Columbia where anyone has paid $1 million per acre for land. I defy the minister to indicate one purchase of $1 million per acre for a 15- or 16-acre site. I'm going to await the minister's answer.
Hon. A. Charbonneau: The question was asked with respect to the acquisition of land. I know there was land acquired in Richmond -- I presume it was developed land -- and the assembly of land there came in at not very much under $1 million. I've just been looking at the acquisition of a site in Burnaby, where the value of land was reported to me as about $800,000. I'm not certain of the status of developed or not developed. I'm advised that in the Westwood Plateau, prices of $800,000 to $850,000 an acre have been mentioned. If you're saying that there is -- perhaps in Surrey or Langley or wherever -- some totally undeveloped land and that the price of that land would be less than a $1 million an acre, of course I agree with you.
C. Serwa: This is going to be a very interesting debate. The minister has no basis for bringing this legislation forward. The minister doesn't even know the difference between land costs compared to building costs in 1994, say, as opposed to 1984. Land-to-building costs: does the minister have those figures in front of him? Has land gone out of reason in relation to building costs in that ten-year interval? Does the minister have those figures to justify this bill?
Hon. A. Charbonneau: I believe I could quote the member himself from his comments on second reading debate. There's a reference, I believe, to the fact that there's no more of it being made.
The price of land is rising. If you look at our building costs, they have been approximately constant over the past five years; the price of land has not. The detail of exactly what the ratio is of the price of the land to that of the building seems to me to be rather beside the point. What we know is that in growing districts, we have to acquire sites, and the cost of acquiring those sites is a significant proportion of the total cost of delivering a school. This provides boards with a mechanism to do that. Trustees have wanted this legislation; we're accommodating them. It will assist in solving the overall problem of sites and schools.
C. Serwa: Still on section 2, it appears to me that what the minister is trying to do is justify provincewide legislation for a few unique situations. Truthfully, what the minister is alluding to and talking about does not occur throughout British Columbia. There is a great deal of land where there is new development; there is undeveloped land available for school sites. We're not talking about downtown Vancouver or downtown Burnaby. The reality is that any of the new growth areas, any school district....
My school district is a good example of being really forward-thinking and forward-looking. They purchased school sites some ten and 15 years ago that are being utilized by the community as residential parks at the present time. When the population buildup is there, they will have the school sites in place. Any community in the province can do that if the school district is willing to use a little bit of anticipation and foresight. If they do not require it, if the subdivision has not gone in that particular direction, they have a valuable piece of property that they got out of the free market at relatively low prices. They can sell it at high prices, and the capital gain can be utilized in the current market situation to obtain school sites.
Here you have a bill, especially in section 2, designed for what you believe is relevant and true in the Vancouver area, but your ministry doesn't even have any statistics to justify this bill. There is no property, unless it's high-density residential housing, condominiums, apartment blocks or downtown cores, that justifies $1 million per acre.
I suppose you can go out, as you've done with the Nanaimo Commonwealth Holding Society, and pay four or five times the valuation costs; you have the chairman of the school board, who is also an ex-NDP candidate, buying it from Nanaimo Commonwealth Holding Society, and the school district and the taxpayers have to pay the shot. I suppose you can pay any amount necessary, but you don't have this particular situation existing throughout the province.
What I would like from the minister and his staff is a figure, for throughout the province, to justify this. What is the percentage of land cost compared to building cost throughout British Columbia?
Hon. A. Charbonneau: Perhaps the member opposite, after taking his medication, will realize that this is enabling legislation, and that there must be voluntary agreement between a local government and a local school board. The local government is made up of local citizens, who are well aware of the circumstances of their community; they are responsible to and accountable to that community. The school board is made up of local people elected by the citizenry -- again, people who are sensitive to, aware of and accountable to that citizenry. So in areas of the province where they do not need to do this, they won't; but in areas where a local decision has been made that they ought to do this, they will.
L. Reid: I want to address my comments to section 2, which I believe we are still on, in terms of the flexibility that I believe is contained within that section. The districts have some ability to accept cash in lieu of land and, hopefully, to stockpile those resources so they have some dollars in the bank if they do not have an immediate need, but they know absolutely, based on growth patterns, that 18 months from today, for example, they will have a need for a new elementary or secondary school.
This particular section is very useful, I think -- certainly for lower mainland ridings, but particularly in Richmond, which I believe has done some very innovative things around school site acquisition combined with park site acquisition. I think this provides some flexibility, and I would commend the minister on this section.
Dropping down to section 2, section 992.1(2)(c), which says "in respect of the land provided to the local government under subsection (1) and section 992..." I'm seeking clarification. My contention is that it's probably not provided to local government but to the school district, and I think perhaps that's just a wording change. Could the minister kindly comment?
Hon. A. Charbonneau: This is an amendment to the Municipal Act. The land initially goes to the local government,
[ Page 15169 ]
then they subsequently deed over a mutually-agreed-upon portion of it to the school board.
L. Reid: Then, perhaps for my clarification, does the other scenario ever exist? Is it possible that the land could go directly to the school district, and that indeed when the decision is taken about fragmenting off a portion of a possible park site, that deed could then be moved over to the local government?
Hon. A. Charbonneau: In this subsection, the transfer is, and must remain, to the local government. But further into the bill, you will find the requirement for the local government to transfer to the board either the land or cash in lieu.
L. Fox: I have just a couple of general questions. First, along the lines that the previous member was asking, I would hope that this cooperation between municipalities and school boards might lead us to a development where you have the park and recreational use of a community being considered in with the school site, so that you wouldn't have an us-and-them scenario, but you'd have an overall community facility being developed that would meet all needs of that community. To that end, one would have to ask whether or not there would be an opportunity under this legislation in that kind of initiative whereby funding could take place for recreation and education, and somehow all be put together within that piece of property that's been either aggregately acquired or acquired in one lump through a major development. One would hope that this legislation would allow for -- which currently under the existing School Act is very difficult -- municipal investment with the Ministry of Education in terms of capital. Is that foreseen within this legislation, and would that be a possibility?
Hon. A. Charbonneau: The direction that the member is indicating would be, in my view, very good. There's nothing to prevent a district from combining even an elementary site with a secondary site and a park site. In the negotiations between the local government and the board, there's nothing to prevent coming to an agreement that the municipality will put a baseball diamond here, and the school will provide a soccer pitch here and something else there -- all together, for the use of the community. There's nothing in it that says that the community couldn't ask for and include in a capital project a civic theatre, for example, and provide some parking for that theatre. The board and the local government could then make a technical division as to who has what land. And they may well be able to fit it all in, in less than the amount of space that this enables them to. They might be able to pull it off with an 8 percent or a 7.5 percent allocation and deliver excellent services to the community at optimal locations at the best possible price.
[8:30]
L. Fox: Just one further question. It comes out of the article from the UBCM around the concerns about downloading the responsibilities of acquiring land from a ministry or global base to an individual base, placing that responsibility on the community. That's one of the concerns that they had. That leads me to the question that currently, many times -- particularly in rural British Columbia -- land becomes available for school sites out of Crown land grants. The direct question I would ask the minister at this time is: has there been any dialogue between his ministry and the Ministry of Lands around that issue and whether this would be an opportunity to download some of that responsibility onto municipalities?
Hon. A. Charbonneau: There is no intention, as the member opposite indicates.... In many parts of the province, if there is an opportunity within the settlement lands to provide some Crown land in order to facilitate a school site, for example, that can be done. And it can continue to be done outside of, and not requiring any agreement under, this enabling legislation.
Interjections.
The Chair: The hon. member for Okanagan West.
C. Serwa: In order to proceed with my line of questioning, however, I'd like the other members perhaps to conclude their questions. Then -- rather than losing the train of thought and the focus -- so the public can follow this debate as well, that would allow me a free hand to continue and ask the questions I have. I'd really appreciate it if perhaps the member for Richmond East would....
Interjections.
C. Serwa: Okay, thank you very much, hon. Chair. I'll take that as an opportunity to continue. We'll just pick up the discussion from where we left off.
If the minister believes for one moment that this so-called enabling legislation will not be used by every school district in the province on every subdivision, I've got a bridge that I'd like to sell him. If you can stand here in this Legislature and believe that is so, then I think there's something lacking in the minister.
The reality is that there is already 5 percent of land taken on every subdivision, in every municipality, on all land throughout the province -- either in land or in cash. That opportunity is availed every time. Do you know what's happening? The cash is being taken. Originally that land was designated for park sites, but then it was found very rapidly that those small community or subdivision parks were too costly to continue to maintain. So rather than taking the land, they take money in lieu of the land. Every municipality does that; I don't think there's an exception in the province. Every subdivision contributes 5 percent already.
If we really wanted land for school sites, we already have a mechanism so that we can have that land. But we've created, through this piece of legislation, the opportunity for another 5 percent. It really is a tax on the person who ultimately buys the lot from the subdivision -- just an additional burden and tax -- and makes affordable housing even less affordable. So if the minister can believe for one instant that the provincial government, along with the municipal governments and the school districts, will not utilize this each and every time, then I would like to be advised of why the minister thinks so.
I pointed out how the original 5 percent is being utilized. I might point out as well that the additional 2 percent tax that was enabled for the basis of promoting tourism in the community is also widely used through the UBCM in every community in the province. Do you know what it does? It doesn't
[ Page 15170 ]
promote tourism. The Attorney General indicates he knows one or two communities perhaps that haven't, but it won't last very long, I assure you. It's an opportunity. Do you know what that money is doing? It's not providing bases for tourism; it's providing facilities for communities. It's another type of enabling legislation that is being abused, and this one will be used and abused for so-called justifiable purposes. The reality is that I would like the minister to really seriously consider and respond to me if he feels that this discriminatory charge, levied in some areas and not in other areas, won't be used and abused in all areas of the province.
Hon. A. Charbonneau: In some areas of the province there are Crown grants available, and in some there are not. But I have confidence in our local governments and our school boards. They represent their communities, and they will make decisions that are in the best interests of their communities. I have no problem with that whatsoever. It is not a case of a school board that can go off and do something. A school board has got to have an agreement with the local government. They've got to have a plan -- a community plan -- and school sites. If the local community has done such a good job as to accomplish all of that, and if there's agreement between local government and the school board, then I will go along with their judgment.
C. Serwa: We can all have a great deal of faith in municipalities and school boards as well. The problem is not the faith. The fact is that you've got this great big carrot hanging out there, and if it's there, it's going to be taken advantage of. The minister knows it, I know it, and everyone in this Legislature and everyone in the province knows it. It has nothing to do with faith; it's an opportunity. What will happen subsequent to this particular legislation going through -- you can mark my words on it -- is that there will be another set of enabling bills so that the 5 percent doesn't have to be used for the acquisition of school sites, like the 5 percent for parks doesn't have to be used for the acquisition or the improvement of larger parks. It can be and will be used for other capital projects and other operating projects of the school district, whether this piece of legislation contains it or not. But this is the threshold piece of legislation to that.
I spoke to the minister about this tax being discriminatory. It is discriminatory. Perhaps the minister.... He hasn't been able to provide a great deal of information for justification, or any information for justification. Why is he discriminating against those people who purchase newly created lots? Why did the minister select that one group to fund the school site acquisition costs?
Hon. A. Charbonneau: Demand for schools is essentially created by the development of new residential areas. The people who occupy those new residential areas want to know that there will be services available for their children. They want to know that they'll be in good locations. The school board and the local government may want to ensure that they can accomplish that and that they can do so at the least possible cost. If so, they will be wise enough to come to a joint agreement and utilize this act.
C. Serwa: It doesn't take a rocket scientist to figure out that growth in the community -- whether it's internal growth, migration from other areas in the province or immigration that we actively seek here in Canada, and certainly in British Columbia -- will cause growth and pressure. You don't have to be a rocket scientist to figure that one out. I can handle that. But the question I asked the minister was: if you have justification for a principle...? Why did you only select the creation of new lots, and charge those people? Why not condominiums, where someone buys five or six residential lots and builds a condominium on that property? Let's say that on an acre you might get a yield of three and a half lots per acre; in a condominium you might get 30 or 40 units of accommodation. Why select the creation of new lots and allow someone who builds a condominium to go scot-free. They're also accommodating growth.
Hon. A. Charbonneau: Fascinating idea. I wonder if the member opposite is going to move an amendment that we include condominiums and all other developments -- perhaps new commercial development and many, many other things. If the member opposite is of the mind to introduce such an amendment, we'll have to consider it on its merits.
C. Serwa: I don't find this funny at all. It's a very, very serious matter. The minister thinks it's a big joke and finds it very humorous. It's discriminatory. It's attacking one select group of people who are moving into an area and who happen to buy a lot. It may not be people moving into the area; it may be the children of families in the area.
What I'm pointing out is that you're hitting only one group. If there was the slightest bit of justification for this legislation.... You're not looking at condominium development; you're not looking at the consolidation of land for that particular purpose; you're not looking at townhouse apartment blocks, for example, that accommodate growth in population. Those are excluded. You're not even talking about the type of development that goes on on band land. For example, in my constituency there are some 6,000 to 10,000 non-native residents living on band land. What are you doing about that? Are there any ideas to do anything about that? Why do you find it justifiable?
You socialists always do it. You want to attack a small group of people -- the people who are buying new lots -- because they are a small percentage of the population, I suppose, and you curry favour with the voters. There's not the slightest sense of fairness or justice or balance in what you're striving to do. If there was any point to this principle, you would apply it evenhandedly for all people in all areas of the province. But you're not doing that. You're saying that they may or may not decide; it's enabling legislation. Only someone that was very foolish would be susceptible to believing that as a statement of actual fact. It will not happen. It will be utilized by the school districts in any way possible, and your government will facilitate that.
Perhaps the minister can tell me what the rationale is for somebody that builds on a new lot being discriminated against by having to pay a higher price, while somebody -- maybe another branch of the same family -- that moves into a newly created condominium doesn't pay anything; someone who moves into an apartment block doesn't pay anything; somebody who moves onto band land doesn't pay anything. As a matter of fact, they don't even pay taxes to the provincial government; they don't pay education taxes or property taxes to the provincial government. What has the minister got to say about that?
Hon. A. Charbonneau: I wonder if a similar debate occurred when the 5 percent reservation for parks, or cash in
[ Page 15171 ]
lieu, occurred, because of course the very same points that the member is making would apply to that. We took a decision to bring in an act that paralleled the reservation of land for parks. The reservation of land for schools is a sound idea. According to the member opposite, I guess the only time that anybody will act under this act will be if it happens to be a socialist local government combining with a socialist school board in order to take advantage of what is a good piece of legislation.
C. Serwa: No, that wasn't the situation at all. The situation is that you have enabling legislation and a carrot there. As I've demonstrated, in every other instance where there is enabling legislation, that becomes something to be acquired. The trend starts in one area, and everyone else sees that it's the right thing to do, because they can get some more money.
[8:45]
Your government has stood tall in saying that you've created no new taxes, and here you've created very, very heavy and substantial taxes for people who are going to build a new home on a new lot. As far as I'm concerned, that's discriminatory. Rather than being evenhanded about this -- even if there was any justification for your goal or principle -- you're not even trying to be evenhanded. That's the thing. It's a very serious matter. I think that if the public out there at large is aware of it, they'll be very unhappy and dissatisfied with that.
But the fact remains that it doesn't matter what school board it is, they're hard pressed for funds. The smallest growth in education funding has come out of your government, both for capital funding and for increases in the Ministry of Education budget. The school districts are strapped for funds. They are there to provide a job to educate learners. They are committed to do the best job they can, and they will utilize any opportunity they have. They would love to have direct taxation opportunities or powers within the constituency, and then you would back away even further from funding that.
But it does not seem right. The basis of taxation is wrong when you hit only one group. In this short bit of debate on section 2, you haven't provided any justification other than your belief that you're attacking the landowner, or perhaps the developer, and that's a good, healthy thing. But the end result is that the consumer of that lot has to pay. You haven't provided any statistics, any information that justifies this action. You haven't been able to provide any relative costs.
I'll ask the minister another question: what percentage of your budget is directed, on an annual basis, to servicing the cost of school sites and the construction of schools?
Hon. A. Charbonneau: I found it interesting, the comment that the amount of funds provided for school construction has -- I believe the member said -- dipped under this government. He was a member of a government that, through the mid-eighties, averaged on capital expenditures about $55 million a year for five years -- $270 million total allocations in the mid-eighties. In four years we will have expended $1.7 billion on school capital -- far, far in excess. Far from dipping, we have put tax money into the future of our province, and particularly, of course, into the future of our children. We have not only had an aggressive program of school construction, but we have also funded many, many school site acquisitions. I cannot tell you the number offhand; I can provide that to you if you are interested.
This legislation -- sound legislation -- is supported by school districts; it is supported by the loyal opposition; it is even supported by the critic of the Reform Party. It is something that the large majority of parties within the House support, because they see that it is good legislation. In the long run, it goes to being able to provide schools with optimum sites, which districts and local governments decide, and it does so at the least possible cost for that particular component of the schools.
C. Serwa: Well, if I want to get into an active business, I think there's a splendid opportunity to set up a little kiosk in this building at this particular point in time and sell red underwear. There are lots of buyers for it.
I asked a question that the minister should be able to answer -- an objective question -- and I expect a realistic answer. The question was: what percentage of the annual budget of the Ministry of Education is directed to service the costs of land and building acquisitions?
Hon. A. Charbonneau: Neither I nor my officials can provide you with that number this evening. I would be pleased to have the number developed and delivered to you.
C. Serwa: The point I can't get through when I read section 2 is what the justification is for this particular bill. I've asked a whole series of questions, and I haven't had one direct answer from the minister that justifies it. Convince me if you can, but you haven't been able to. There are no figures that you have, other than saying that there are some that are in favour of it. School trustees are in favour of it, and as you pointed out, most of the members in this Legislature are in favour of it, but that doesn't make it fair and just; it doesn't make it right. It's not fair, it's not balanced and it doesn't incorporate all of the new people that come in or all of the buildings that are built in the community on different sites. That's a problem, minister. It shouldn't be acceptable to attack that one narrow element and be able to get away with it. I don't really know what's happening to this province.
Interjection.
C. Serwa: I see that the Minister of Skills, Training and Labour is excited. He understands that there's an NBA basketball game on, and it's into overtime.
In looking at this legislation, I really lack the ability to understand what your justification was for bringing this bill forward, other than that it has the blessing of some special interest groups -- and the school trustees are a special interest group.
The concept of taxation in this province has always been one of fairness and balance. We all share the costs of health care, for example. We're not loading seniors, and they demand the highest costs in health care. We're not hitting them when they buy property with a 5 percent tax for the cost of hospitals and hospital sites. We're not hitting them for additional health care costs simply because they need it more. You're distorting the whole picture of this.
I don't think I can say very much more, except that I'm very, very distressed that the Legislature in British Columbia can support legislation like this with no substantive evidence
[ Page 15172 ]
that it is even the least bit necessary. There has been no recognition of land costs escalating out of proportion to building costs in the province. The minister is unknowing of the percentage of his budget that is directed to site and buildings costs at the present time. He doesn't know what happened in '84; he doesn't know what happened in '94. This is simply a political bill driven by the attitude of the government that it's all right to hit a small section of the population unfairly because the majority of the population will say: "Well, I'm okay, they didn't hit me this time." That's the only justification for this bill.
The minister and the government -- and perhaps all members of the House who support this legislation -- should be dreadfully ashamed of abandoning equal and fair treatment and their responsibility to all citizens of British Columbia. The minister knows full well that as residential, commercial and industrial land and building costs appreciate, the tax base is higher, and a significant part of the tax base is school tax coming out of land costs. This is climbing in an escalated, inflated market; it's not further behind. Taxation has increased far more dramatically than land and building costs put together. We have the opportunity there.
All this is what I called it in second reading, and I regret that I have to say it. It's pure, unmitigated theft enforced on a small percentage of property owners -- those people who buy lots that are recently subdivided -- to the exclusion of all of the others who are causing growth in communities. Unless you want zero population.... You're going to have it internally, you're going to have it from migration, and you're going to have it from immigration. I think that the legislation should be scrapped.
Section 2 approved.
On section 3.
L. Reid: Just a couple of points of clarification. When we talk about creating a reserve capital account, I would be interested to learn if there is some regulation that will come down in terms of how school districts report on the funds in those accounts. Will they ever be asked to include that in operating dollars, or is that a separate and distinct line item that they can continue to carry separate and apart from their operating budget?
Hon. A. Charbonneau: I wonder if the member is not on a subsequent section. Section 3 of the bill is a transition section says that the act does not apply to land that is in process. I wonder if I could get a clarification.
L. Reid: I appreciate the minister's call for clarification. If he could generally respond to that question, I have specific questions pertaining to this section...in terms of the necessity to understand.... How these dollars are treated does have a greater bearing on the larger sections of the bill. So if the minister could clarify, I would be most appreciative.
Section 3 approved on division.
On section 4.
L. Reid: Again, just asking for clarification from the minister, subsection (4) says: "Subject to subsection (5), none of the following may exceed 5% of the land being proposed for subdivision...." I'm asking the minister's indulgence. When you turn the page, it says not to exceed 10 percent. If indeed that is the larger parameter, we could look at school districts in conjunction with local government acquiring land to a maximum of 10 percent. Is that the clarification?
Hon. A. Charbonneau: I would point out that.... I think I know the misunderstanding here now. The member is referring to a subsection of section 2 that has already been passed. We have now passed section 3, in fact.
But I will answer your question. Under subsection (5) of section 2, it simply states that either the amount acquired for a park or the amount acquired for a school site may exceed 5 percent, but the total of the two cannot exceed 10 percent.
Sections 4 and 5 approved.
Title approved.
Hon. A. Charbonneau: Hon. Chair, I move the committee rise and report the bill complete without amendment.
Motion approved.
The House resumed; D. Lovick in the chair.
Bill 43, School Sites Acquisition Statutes Amendment Act, 1995, reported complete without amendment, read a third time and passed on the following division:
[9:00]
|
YEAS -- 50 | ||
|
Marzari |
Priddy |
Edwards |
|
Charbonneau |
O'Neill |
Garden |
|
Perry |
Hagen |
Kasper |
|
Hammell |
Lortie |
Giesbrecht |
|
Miller |
Smallwood |
Cull |
|
Harcourt |
Gabelmann |
Clark |
|
Ramsey |
Pullinger |
Sihota |
|
Evans |
Randall |
Conroy |
|
Lord |
Streifel |
Sawicki |
|
Jackson |
Gingell |
Hurd |
|
Farrell-Collins |
Reid |
Warnke |
|
Dalton |
Tanner |
Jarvis |
|
Anderson |
Symons |
K. Jones |
|
van Dongen |
de Jong |
Fox |
|
Neufeld |
Chisholm |
Boone |
|
Hartley |
Lali |
Schreck |
| Brewin | Krog | |
|
NAYS -- 4 | ||
|
Tyabji |
Wilson |
Serwa |
| Hanson | ||
Hon. G. Clark: I call committee stage on Bill 17.
[ Page 15173 ]
MISCELLANEOUS STATUTES AMENDMENT ACT, 1995
The House in committee on Bill 17; H. Giesbrecht in the chair.
J. Tyabji: I seek leave to make an introduction.
Leave granted.
J. Tyabji: I'd like to recognize two people who are drawn to the fascination of watching the vagaries of politics. They are also people closely connected to our researcher, who has provided some outstanding service to us in this session. The two people who join us in the gallery are Leigh Walters and Ana Torres. Would the House please make them welcome.
Section 1 approved.
On section 2.
D. Jarvis: With respect to section 32, subsections (2) and (3), of the Coal Act, I appreciate that subsection (3) is an obsolete provision, but I would like to know if the minister would give us some clarification in regard to why the transfer of powers was necessary in subsection (2).
Hon. A. Edwards: This an administrative issue, and it really doesn't change the way things are done much, except to eliminate a considerable amount of administrative process at the top. Basically, it will make it easier to deal with these issues. Most of the work that is done in investigation and so on will be done by the same people and in the same way. This allows it to still be done with accountability, but without requiring that the Lieutenant-Governor-in-Council approve.
D. Jarvis: I was remiss in not having the House wish the minister a happy thirty-ninth birthday.
J. Tyabji: I note that the Coal Act is obviously tied to the Mineral Tenure Act, and we'll get to some amendments proposed to that later on today. But in this section I think an important question that has to be asked is: could coal be designated a mineral by regulation by this minister? I think that impacts the fact that this minister will now have full jurisdiction over coal.
Hon. A. Edwards: Coal is a mineral.
J. Tyabji: If the minister is saying that coal is a mineral, then we would note that when we get to the other act, the miscellaneous statutes act, there are going to be a number of changes that will affect the Coal Act.
I note that the definition of free miner that's used in section 2 is also tied to a new definition of free miner, which we'll get to later today. How does the minister see the fact that the definition of free miner is no longer tied to Canadian citizenship, affecting the future of the coal industry in B.C.?
Hon. A. Edwards: I'm not sure that this is the appropriate time to debate that, because this is not a clause that makes any requirement or any definition of free miner. But free miner is.... I really think I should defer debate on that to the clause that actually deals with the issue.
[9:15]
J. Tyabji: The minister has just stated that coal is a mineral, and I know that by regulation the minister can designate coal as a mineral. But I also note that in the definition of mineral that is before the House right now, coal is specifically by legislation not a mineral. That's why my question was: could the minister change that by regulation?
Hon. A. Edwards: I really don't want to have to account for the English language, but coal is a mineral. You're absolutely correct that in our legislation we have a separate act for coal, and the Mineral Tenure Act deals with metals, so that's how the legislation has been set up. Therefore this is separate, and coal is dealt with separately, although it is a mineral.
J. Tyabji: It's helpful to have that. Obviously that's something we can see in the legislation. So I go back to my original question: is this minister intending by regulation to put coal into the category of mineral? We believe that will affect how section 2, the amendment to the Coal Act, will play out in the future.
Hon. A. Edwards: We have no intention of changing the legislation that applies to the administration of coal into the Mineral Tenure Act. It will be administered under the Coal Act.
Sections 2 to 13 inclusive approved.
On section 14.
J. Dalton: I did make some comments in support of this in second reading. Of course, the intent of this is to bring some reality to the expenses that prospective jurors or people serving on a jury are entitled to. Given that these will be set out in regulations, I would like to know if the Attorney General could give us some ballpark figures as to what kinds of increases we might be looking at. For the edification of the committee, perhaps the Attorney General could advise us what the fees are now, and what anticipated increase might be placed....
[R. Kasper in the chair.]
Hon. C. Gabelmann: I understand that at the present time the payments are $20 a day for the first ten days and $30 a day for each day after the first ten in a longer trial. I think the member's comments in second reading were well taken, and I don't have any disagreement at all with his comments. We haven't made any decisions about the fees. There has been no decision about when and if these fees should change.
J. Tyabji: I just want to know to what extent this section is going to be cross-referenced to the Employment Standards Act. Not that I want to debate that act; I just want to know if that was a consideration in drawing up this section.
Hon. C. Gabelmann: Jurors are not employees under the definition of the Employment Standards Act, and there is no connection.
[ Page 15174 ]
J. Tyabji: The reason I ask that is that the Employment Standards Act for the first time actually has a provision for jury leave. That's why there is actually a connection, although they aren't employees.... Employees who may have to sit and do jury duty obviously will now have that legislative protection. I just wondered if there had been any connection in the drafting of this.
Hon. C. Gabelmann: It's not related to this section.
K. Jones: Could the minister tell us whether, under allowance for necessary and reasonable expenses, child care or babysitting would be included as an allowable expense?
Hon. C. Gabelmann: Yes.
K. Jones: Could the minister tell us what other business expenses could be included in that regard?
Hon. C. Gabelmann: Travel, accommodation, parking, child care and the like.
K. Jones: What about business loss?
Hon. C. Gabelmann: No.
K. Jones: Could the minister tell us what the defining factor would be of necessary and reasonable expenses with regard to the operation of a small business?
Hon. C. Gabelmann: An owner or operator of a small business would not be reimbursed for any of the costs that could be attributed to being absent from the business, in the same way that wages are not paid for a worker who is away from their workplace, although there may be other arrangements in respect of collective agreements or whatever. The small business operator does not get any special arrangements here. The expenses are, as I said before, for travel, accommodation -- out-of-pocket costs like child care or parking.
K. Jones: A small business of which the single operator is required to do jury duty for several months would be in a position where they would literally be put out of business. They would have to hire someone to stand in for them and operate that business as a manager. Would that be covered?
Hon. C. Gabelmann: In another way, and the other way is the person could get exemption from jury duty, arguing financial hardship. That happens all the time, and it will continue to happen under these changes.
K. Jones: Just a final clarification, then. A person will either get exempted.... Would the minister put that into the legislation so that they could be exempted? Or is he saying that they should, then, get some direct expenses that would allow them to continue their business?
Hon. C. Gabelmann: The individual who can argue financial hardship can make that argument, first of all, to the sheriff, and if that fails, to the court. In three and a half years in this job, I don't remember a single letter on the subject from someone who was denied exemption from jury duty on the basis of financial hardship.
Section 14 approved.
On section 15.
J. Dalton: Just one point I've spotted in sub (3) of section 32 -- which this section 15 is going to add -- and that's dealing with fees for different classes of persons. Could the Attorney General advise us what they have in mind by the possibility of providing fees for different classes of persons?
Hon. C. Gabelmann: At the moment there is no intention of taking advantage of this provision, but the provision would allow us in the future to provide different financial compensation to jurors who have different financial needs -- which speaks a little bit to the questions from the member for Surrey-Cloverdale. But the question of what the fees should be, as set by regulation, has not been addressed in any way. I have not put my mind to this. What this will simply enable us to do is recognize that some people have different financial requirements, and we could therefore, if we chose to, set different remuneration levels.
K. Jones: Could the minister tell us what the definition of classes is in this terminology?
Hon. C. Gabelmann: There's no definition per se, but it's something that would be developed by way of the regulations to describe people in different financial situations. As I said earlier, we haven't put our mind to this. But thinking off the top of my head, you might decide to make a different classification for a small business person as compared to somebody who has a collective agreement that pays them full wage loss while they're on jury duty, as compared to a single mother, as compared to someone who's on social assistance, and those kinds of different categories. It's enabling, it's going to allow us to be more responsive to the real needs of people who serve on juries, given that we want to make it possible for every citizen who is called to be able to sit, and not be restricted as a result of financial impediments.
K. Jones: I'm still troubled by the generality of the term "classes," hon. minister. In addition to the ones you've given, could they also be aboriginal or female or Catholic or Protestant or atheist? There could be all kinds of different categories of people -- whether they be fat people or small people. This leaves it very open for whoever is administering this to make those classes. Could the minister make some amendment to further define this so that it is more explicit to what the minister is intending?
Hon. C. Gabelmann: There's no intention whatsoever of using this provision to discriminate against people. Discrimination would be clearly against the Human Rights Act, at least. There's no need to make the kind of protection the member talks about, because that just wouldn't be possible to do in any event under the law in this country.
K. Jones: I'm still disturbed about the fact that we would have anything referring to classes in legislation. We do not have a class society, and we do not have a right to bring in legislation that's going to differentiate people on the basis of class. I think this is an error in the presentation of a fundamental piece of legislation, and it should be corrected.
Sections 15 and 16 approved.
[ Page 15175 ]
On section 17.
D. Jarvis: All these catch-all housekeeping forms that are statutes that are put forward.... In section 17 you bring up the aspect that it is just repealing a redundant act. Accordingly, I assumed that there wasn't anything -- as my friend from Powell River-Sunshine Coast would say -- untoward. I contacted the eastern British Columbia chamber of mines, and they seemed to disagree with the fact that it's just a redundant aspect. I would like to know two things. First of all, did you consult with the industry on this change, and secondly, what does this change actually do? You say it now falls under the minister's vote description.
[9:30]
Hon. A. Edwards: We consulted the British Columbia and Yukon Chamber of Mines. I might mention to the member that this is a redundant piece of legislation, because we can do this activity under the normal budget appropriation. That is how we've been doing it; we've been doing it for some time. As a matter of fact, just yesterday we sent out the notices on the prospectors' grants. We do not need this to do the kinds of activities that are described in this act, so it's a housekeeping clause in the best sense of the word.
D. Jarvis: Is there no section under the act that pertains specifically to prospectors in the way of grants?
Hon. A. Edwards: No, there isn't any legislation. It is not necessary. I mean, legislation won't save you anything. In 1991, before this government came to office, prospectors' grants were cancelled, so the legislation doesn't save you anything. The activity can be done under normal budget processes, so there's no sense having the legislation on the books.
D. Jarvis: I would like to say to the minister that we're all aware how much prospecting.... That's the meat of the whole mining situation in this province. If there's nothing to indicate that there is some type of encouragement or assistance laid out somewhere in the act, then do you not feel that it sends out bad signals throughout that community? We then leave it up to the whim of the minister or a bureaucrat to decide that they might want to give some assistance. As a matter of fact, I think what you call a grant is really not even a grant system; it's more of a contract system in which you require the prospector, when he makes application, to put 10 percent of it into the assaying end of it. Then he has to spend up to 75 percent of the amount that he's contracted for. So it's really not a grant; it is a contract between the money department and the prospector. Any comment on that?
Hon. A. Edwards: The Mineral Prospectors Act of 1979 is definitely out of date. It even puts a cap of $4,000 on the amount that you can give under a prospector's grant. We are giving grants of up to $10,000 under our program, which can very appropriately be done under the budgeting process.
D. Jarvis: Further to that aspect, there are cases out there now where your ministry is actually suing prospectors for work that's not done. So it's not a grant; it's a contract.
Hon. A. Edwards: I had to be informed about this, because anything like that happened before this government was in office. But evidently in the late eighties there was a mistake made, and the prospectors' grants that were promised were supposed to be allocated half at a time -- half at the beginning and half when the work had been done -- and somebody made a mistake. The full grant was given out at the beginning, and presumably the ministry, in attempting to save the appropriate money for the people of British Columbia, tried to recover it. That's the best I can do to respond to that suggestion.
But I was remiss in not mentioning that I'm pleased the member went to talk to the Chamber of Mines of Eastern British Columbia. We certainly have featured our prospectors' assistance program, which will figure prominently in the transition plan of the West Kootenay-Boundary core land use plan. So that is very active; it's there. We are using our ability to do these grants under a prospectors' assistance program that does not need legislation in order to do it. So there's no sense having an act on the record which is not necessary in order to do the appropriate work.
D. Jarvis: That is very encouraging. However, why would the chamber be so concerned about the fact that you are deleting this section, that there's no mention anymore in the act with regard to a grant or a contract system for prospectors? As I say, it leaves it out in the open and at the whim of the minister.
On the other aspect I was talking about earlier.... I don't know, but maybe your deputy would be able to tell us when this occurred. I have just been informed that a gentlemen by the name of Peter Leontowicz from the New Denver area was sued by your department for $1,800 for not fulfilling his contract. He took his case to a judge, who decided from his diary that he had fulfilled this time and all the rest of it, and yet he still has to go before the small debt court because the department is suing him now. You tell me: who's right and who's wrong? I don't know. Was that prior to your...?
Hon. A. Edwards: This might have been the case that came out of the previous event that I described. We turn these things over to the Attorney General's department, and I'm sure no one from government will comment on it as long as it is before the courts.
I also can't imagine why the chamber was upset. If they had been significantly upset, I suppose they would have contacted me.
D. Jarvis: Could the minister therefore relate to us what the system is now for grants, and if any consideration is being given to changing the granting system with regard to prospectors?
Hon. A. Edwards: I sort of sought out any differences that might be in our current program, and basically we do it very similarly to the way we used to do it. That hasn't changed. People apply for a grant and put forward a proposal for what they plan to do; then all the proposals are put together and the ministry reviews the proposals. We take the amount of money that's in the budget, distribute the money as equitably as we possibly can and the prospectors then go forth and explore. I don't think there is anything very changed or very complex about it. It is made to be simple for all of us to work well with it and to make the activity go ahead as efficiently as possible.
[ Page 15176 ]
Interjection.
D. Jarvis: No. I'd like to ask another question of the minister with regard to the granting system. I have been told that the prospectors feel that there should be a change to it -- that it should be a granting system rather than....Really, what do you call it? You call it a granting system, but it is actually a contract system, and there are penalties on it. They are legally bound to spend so many dollars, and they have to spend it. On that basis, it is almost prejudiced against a prospector who has no money versus one who has lots of money. Finally, the prospector's project becomes public after one year, regardless of whether he's finished with the project, and they feel that that is somewhat unfair. Can you comment on this, please?
Hon. A. Edwards: I think there would be some objection.... I would certainly have very great difficulty with my colleagues if I were suggesting to do a prospectors' grant program without having a contract and approval of a program. So any prospector who wants to have a grant has to have a program, and they have to go through the normal process. Now, part of that normal process is that they're guaranteed confidentiality of the information for a year, and after a year it becomes part of the pool of information that is available to anyone in the province.
Section 17 approved.
On section 18.
Hon. A. Edwards: Hon. Chair, I believe the Attorney General has filed two amendments with the Clerk. So I would like to make these amendments to section 18. I don't believe they are in Orders of the Day, so perhaps I should read them.
The first amendment to section 18 is to the proposed subsection (4) by deleting "Where an operator of a mine has become bankrupt or is discharged from bankruptcy, the following rules apply for the purposes of this Act despite the definition of fiscal year:" and substituting: "Despite the definition of fiscal year, where an operator of a mine has become bankrupt or is discharged from bankruptcy, the following rules apply for the purposes of this Act:".
The second amendment to section 18 is in the proposed subsection (5) by deleting "Where an interest in a mine is acquired or disposed of, the following rules apply for the purposes of this Act despite the definition of fiscal year:" and substituting: "Despite the definition of fiscal year, where an interest in a mine is acquired or disposed of, the following rules apply for the purposes of this Act to the operator who acquired or disposed of the interest:".
Perhaps it would be useful if I explain that the first amendment is made simply to make the wording parallel with the wording of the second amendment. So if you examine it, you'll find nothing changes. It moves modifying clauses around, but nothing changes. It has been done so it will be made parallel in construction to the amendment of section 18(5).
[9:45]
Now, this second amendment responds to a concern that was raised at the eleventh hour by the B.C. Mining Association's tax committee. When we first brought forward these amendments to the association, there were no comments on this. But more recently, we heard comments from the tax committee. We have responded in order to respond more specifically. In other words, when someone ends, we want the tax year to end in order to facilitate what happens with the books and the assessment of the tax and that kind of thing so that it will apply to the person who became bankrupt and not to everyone else involved. Obviously we thought.... Normally this doesn't happen, but the mining tax committee suggested that if it did happen, this would be better wording. There's no problem; we agree with that. So I would move that amendment.
The Chair: Copies of the amendments have been circulated, and there are additional copies available.
On the amendments.
D. Jarvis: I have talked to the Mining Association, and they feel there's nothing unexpected in sections 18 and 19, so I would approve it. I guess it's congratulations to her assistant, because every time she gets up to get ready to answer questions, she never has to speak -- in the estimates or here. She must do her job very well.
G. Wilson: I congratulate the minister for bringing in the amendments. As the Attorney General will recall, it was an area that was flagged in second reading debate. It's certainly one that I was concerned about at that time, and I'm pleased that something was done with it.
There is one other issue, though, that I have a concern about, and it is with respect to the date on which the operator became bankrupt. Is the amendment of that act, then, going to delete (a) and (b) under this section? I don't believe so.
Hon. A. Edwards: The amendments do not address any changes to (a) and (b). That would be dealt with after the amendments are dealt with.
G. Wilson: I'll wait for the passage of these amendments before we deal with that issue.
Amendments approved.
On section 18 as amended.
G. Wilson: Now I come back to this question of the specific date on which the operator became bankrupt. This is an issue of signficance. I wonder, in terms of the determination of that date.... It says the date the operator became bankrupt or was discharged shall be deemed to have ended on the day immediately before the date of the bankruptcy or discharge. Is that with respect to the filing date, or is that because...? There are several procedures in bankruptcies, as you are aware, and it's important to know which date we're specifically talking about in terms of effectiveness of the bankruptcy.
Hon. A. Edwards: I am advised that this refers to the filing date.
Section 18 as amended approved.
[ Page 15177 ]
Sections 19 to 21 inclusive approved.
On section 22.
R. Neufeld: Section 22 repeals sections 43, and in effect repeals section 7 of the PNE act. It goes on and on. Maybe the minister could explain fairly quickly why some of this is repealing some and then putting it back in place and repealing it again.
Hon. C. Gabelmann: I'll try. In 1988 the House passed amendments to the PNE act which dealt with the board of directors. Those amendments were never proclaimed. Subsequent changes to the PNE act have been in place, and this was never proclaimed, so it's now being eliminated.
Sections 22 to 26 inclusive approved.
On section 27.
M. de Jong: The portion of this section that I would like to question the Attorney General about is section 27(3). I wonder if he can advise whether he is aware of similar provisions where, in considering sentence in other statutes, there is a practice being established for the judiciary to be consulted insofar as establishing sentences is concerned. The hallmark of our system to date, I think, has been that very strict separation between the judiciary and the legislative branch. Though it may not seem on the face of it to be a major step, I think it is, because we're now going to the judiciary.
I wonder if the Attorney General can indicate whether they have been consulted, and whether they're in favour of being involved to this extent, on the basis that at some point they are going to be entertaining submissions. The Chief Judge of the Provincial Court will be entertaining submissions from defendants who have been found guilty of offences. He will be asked to rule on submissions about what the sentence should be. The point can now be made, or will be observed by defendants, that the very person whom they are making submissions to about sentence has been involved in establishing that sentence. So we're taking a rather dramatic shift. But the Attorney General will....
Hon. C. Gabelmann: No, in fact this doesn't change anything, believe it or not. The Offence Act has had for some years a provision in which the Attorney General is required to consult with the Chief Judge prior to making an order-in-council establishing fine levels for particular offences. So that provision has been in there. Because of some other changes that are being made to the act, we are retaining this consultation provision, but in another part of the Offence Act.
M. de Jong: Then, just to be clear, the Attorney General is saying that those provisions and that consultation have existed legislatively, as opposed to procedurally, in the past.
Hon. C. Gabelmann: The answer is yes.
Section 27 approved.
On section 28.
K. Jones: Could the minister tell us the reason for this enactment of legislation, at a time when the PNE is actually being determined to be dissolved?
Hon. C. Gabelmann: Just while I'm awaiting some staff on this section, I might say that the Pacific National Exhibition Incorporation Act is not being repealed. It continues in place, so these amendments are simply establishing clearly that the PNE -- the corporation -- has the same powers as others do under the Company Act. I'm not quite sure I understand the drift of the question.
K. Jones: The PNE has indicated to interests that they would make proposals to take sections of the PNE and disperse them over various parts of the province. They have one more year left, I believe, until the actual termination of the PNE. I can't understand why the minister would be bringing forward new legislation to continue or reincorporate the PNE at a time when it's being dissolved.
The Chair: The Chair recognizes the hon. member for Surrey-Cloverdale again.
K. Jones: I'd like to clarify that this is just bringing in legislation that will complicate the process of bringing about a division of the PNE facilities. It will make it much more complicated for the people who are trying to pick up the parts of the PNE and deal with them. By leaving it where it was with the present legislation, there was a structure there that could do the transfer. This, I think, would have a tendency to make that transfer very much more difficult.
Hon. C. Gabelmann: I'm going to try. The change is to make reference in the PNE act to the Company Act, which was previously the Companies Act. It's a very technical housekeeping change. But beyond that, why do they need the powers? They need the powers if they're going to involve themselves in any of these activities, as they, perhaps, move to the member's constituency to set up shop out there. That's what it's about. But the reference is a technical one.
K. Jones: I think the real thing is that we're creating a structure.... We're changing the structure of what it is currently, which you previously dissolved in section 22. Now this additional restructuring is being brought in to add to what was deleted there. This is defining the number of people who would be on the board, and it removes an aspect of where the headquarters would be.
It leaves the headquarters up in a sort of never-never land. It doesn't have a description of where it should be; it just says where it shouldn't be, which means that it has to be moved from Vancouver, where it is currently. It says that it cannot be in Vancouver, or it eliminates the requirement for it to be in Vancouver. But the PNE per se is not likely to be moved in total. The PNE is being broken up; it's not being moved in total to any one community, unless the minister has some other plans or is aware of some other plans than what has been given out to all the community organizations.
[10:00]
Hon. C. Gabelmann: I have no knowledge of what plans might exist. Those questions should go at the appropriate time to the minister responsible. This section simply repeals a cou-
[ Page 15178 ]
ple of sections which make reference to the city of Vancouver. It takes out those references to Vancouver and clarifies the change in respect of the change of name in the Company Act. The Pacific National Exhibition is clearly a provincial entity, and it doesn't make sense to have references to the city of Vancouver in it, given the prospect of the changes that are coming that the member knows about.
K. Jones: I would ask the minister to step down this section and to give it some more thought before it is enacted, because it seems to be very inappropriate to be bringing it in at this point.
Hon. C. Gabelmann: Let me try this. Does the member want the PNE or some part of it, whichever part of it goes to Cloverdale, to have the board of directors appointed by the city council in Vancouver? I don't think so, but the references to the city of Vancouver are in there, and so they have to come out, so that the city of Vancouver doesn't continue to have the power to appoint directors to the PNE board, which it now has but by agreement with the province. There's a signed agreement on this to change how and where the PNE operates and to change what happens in that area around Hastings and Renfrew. I'm sure the member doesn't want the city council of Vancouver determining who is in the partial number on the board of directors for an operation that may well take place in his own riding.
K. Jones: I concur with the minister's statement that we aren't defining where the people should be coming from, but we are also defining where the headquarters is not required to be. The real question is: should there be a PNE continuing after the two-year term? Surely it is really that other forms of already existing organizations will be taking over the various assets and putting expanded facilities in their location. They would not want to have a PNE board continuing to operate when you move that facility to another location. We would have the situation, like in a case of the facilities moving to the Fraser Valley exhibition grounds, for instance, that the PNE board would come in there and continue to operate some of the facilities and would be trying to operate in the same grounds as the Fraser Valley exhibition board that is already structured there.
Hon. C. Gabelmann: As the member indicated, what we're doing is taking out of the act the reference that the PNE land has to be in the name of the city of Vancouver; that the registered office must be in the city of Vancouver; that the city of Vancouver must appoint five of its council members to the board, etc.; that the PNE can't borrow money without the consent of Vancouver; and that all the moneys obtained upon the dissolution of the PNE must be paid to the city of Vancouver. All of that comes out, and that's done by agreement.
What will happen as a result of these amendments is that the PNE corporation will be controlled by the province, as opposed to having these restrictions and being controlled by the city of Vancouver. That will then enable the PNE corporation to search for a new location for the annual fair and Playland, and it will enable the official severance from the city of Vancouver to take place. Otherwise, the board would be a Vancouver board looking for a Playland and PNE site outside the city of Vancouver, and that makes no sense at all.
K. Jones: I appreciate that what the minister's stating is what is in this legislation, and I agree that it should be done, provided that there is a termination date for the Pacific National Exhibition Incorporation Act so there won't be two organizations operating in conflict with each other.
Hon. C. Gabelmann: That issue isn't in these amendments, and that's an issue for the member to talk to the minister responsible about as the changes continue to take place over the next few years.
Sections 28 to 38 inclusive approved.
On section 39.
R. Neufeld: I have just a quick question. This section allows the Chief Justice an option to step into another role if he wishes to give up the Chief Justice position. What was required before was reappointment; you could step down, but there was a process where the judge had to be reappointed to the bench. Can the minister maybe just explain about the rationale? Is this coming forward from government or was the justice system having some difficulties?
Hon. C. Gabelmann: The issue was raised with government by the judiciary that if someone was appointed as Chief Justice of the Supreme Court and after a period of time chose to not do that anymore and go back to being just a regular member of the Supreme Court, they couldn't do it without resigning altogether and getting reappointed by the federal government. The request to allow for this stepping back into the previous position made sense to us. So we agreed, and that's why we have the change.
Section 39 approved.
On section 40.
K. Jones: Could the minister tell us what the termination date is? It says: "...the termination date, if any, stated in the order of appointment." Are those the termination dates of the appointed directors? Is the termination date referred to here the termination date of the directors of the board?
Hon. C. Gabelmann: Yes. This is the termination date of the current 16 members of the board of the PNE. Otherwise, it's straightforward.
K. Jones: So we have to assume that all of the termination dates are before September 30, 1995.
Hon. C. Gabelmann: I had staff here a moment ago and I didn't realize that we hadn't completed all of the PNE-related sections. I don't know the answer to the question about the termination dates. If you read the bill, I think we'll be able to figure this out between us. If their termination date is later than September 30, 1995, that termination date would apply. If the termination date is prior to September 30, their appointment would continue until September 30. I'm looking for a nod of.... Give us a moment, Mr. Chair.
[ Page 15179 ]
K. Jones: I see a clarification here. Just looking in the interpretations, it says that the transitional board contains the current members until September 30, '95. So I presume from this that the board of the PNE will then terminate as of September 30, '95, and will no longer be an entity after that date.
Hon. C. Gabelmann: All 16 members would continue until September 30, '95. Those members who have a termination date subsequent to that would continue until their termination date.
K. Jones: That, then, means a few selected people will then continue to be directors and will be controlling the PNE, not the broad representation of the 15 or 16 current members -- whoever's still left with a term to expire. When their term expires, does that mean there is no entity to deal with after that point?
Hon. C. Gabelmann: I was going to suggest to the member that at caucus tomorrow he ask his leader, who helped to negotiate this agreement, just what they had in mind when they negotiated this agreement. I won't say where the idea for that comment came from, but it was not original with me. I think the member....
The section is straightforward.
Sections 40 and 41 approved.
Title approved.
Hon. C. Gabelmann: I move the committee rise and report the bill complete with amendments.
Motion approved.
The House resumed; D. Lovick in the chair.
Bill 17, Miscellaneous Statutes Amendment Act, 1995, reported complete with amendments.
Deputy Speaker: When shall the bill be considered as reported?
Hon. C. Gabelmann: With leave, hon. Speaker, now.
Leave granted.
Bill 17, Miscellaneous Statutes Amendment Act, 1995, read a third time and passed.
Hon. C. Gabelmann: I thank members for their patience and for agreeing to go ten minutes past the agreed time.
Committee of Supply A, having reported resolutions, was granted leave to sit again.
Hon. C. Gabelmann moved adjournment of the House.
Motion approved.
The House adjourned at 10:11 p.m.
The House in Committee of Supply A; D. Schreck in the chair.
The committee met at 6:45 p.m.
ESTIMATES: MINISTRY OF FINANCE AND CORPORATE RELATIONS
(continued)
On vote 32: minister's office, $348,000 (continued).
F. Gingell: I understand there's a simple answer to the issue of the difference between the 1994-95 budget and the 1995-96 budget on the amount that is shown as the estimated expenditures for the Public Service Commission appeals -- now called the Public Service Appeal Board -- where the amount changed from $276,403 to this year's $326,000.
Hon. E. Cull: The difference occurred because in last year's blue book, when we put the numbers in, we had assumed that the Public Service Appeal Board would only be in operation for half a year. That turned out to be incorrect, so we had to restate it to reflect its actual operation.
F. Gingell: The $276,000 last year was for only six months?
Hon. E. Cull: The funding amount that is in last year's blue book is the funding for the old Public Service Commission, so it doesn't reflect the new Public Service Appeal Board. That's where the error occurs.
F. Gingell: I take it, then, that the difference between $276,000 and $326,000, which is $50,000, is the additional cost incurred because you hired Joy Leach as the commissioner and moved the offices from Victoria to Nanaimo.
Hon. E. Cull: No, that's not correct. The $276,000 that is in there for last year assumes only a partial year operation of the Public Service Commission, so it doesn't reflect its full annual cost. We had assumed that it would not be operating for the full 12 months.
F. Gingell: Well, that was the answer that you gave me first, so I then questioned, because you'd indicated six months rather than the whole year. I was a little taken aback that the amount would have been as high as $276,000, because in the previous year the total expenditures were $318,000.
The question is: knowing that you were not going to do away with a process whereby there was an appeal process, because you have a contractual obligation with unions to have an appeal process, where were the additional costs in last year's budget that were intended to take over where this finished off?
Hon. E. Cull: I will try to clarify this. It is a little confusing.
Last year, when we put the $276,000 amount in the budget, we assumed that the Public Service Commission would
[ Page 15180 ]
not be operating for the full year. We knew that the Public Service Appeal Board would be taking over for whatever the rest of the year was. I don't recall, so I'll have to look at the Blues myself. I don't think I said six months; I think you did. It was for some portion of the year. Again, we made an estimate. I think the full-year funding the year before was $318,000, so that would have been more than half an year.
We anticipated that some time during the year the commission would end and the appeal board would start, but we did not know where the appeal board was going to reside in terms of where it would appear in the budget. We showed what we estimated to be the operating expenses of the commission for that fiscal year. When we got to stating it this year, we then had to restate on a full-year basis. The amount is $330,000, which is fairly close to what the old commission would have cost, had we put the annualized amount in.
F. Gingell: As I understand it, then, you just want to ensure that there are good comparative figures.
Hon. E. Cull: Yes.
F. Gingell: When we are dealing with such important issues as the Transportation Financing Authority, why hasn't the government taken the same position of restating the prior years and clearly explaining what has happened so that the public, like us, can look at numbers that are on a comparable basis?
I agree with what you have done, but it applies just as much to any major change in accounting practices that the ministry has. I would suggest to you that the Transportation Financing Authority is the best example of where you've done it in one case and not in the other.
Hon. E. Cull: There is a little consultation going on here with the comptroller general in respect to accounting policies.
It's simply not the same, as the comptroller has just said. What would you restate it to...? When you change the way a body is reported, then there is a footnote in Estimates to indicate that. When you change accounting policies, that's reported in Public Accounts. According to the comptroller, it would not be normal, typical or even advisable to restate it in the fashion that you're suggesting.
F. Gingell: I must admit that I have a difference of opinion. I think that what you would do in making comparisons to prior years is pull those expenditures out of the expenditure statement. You'd bring them down to the bottom of the statement, you would prepare a deficit or surplus with exactly the same accounting principles and then you would show this single line item: amount previously included in the expenditures for the year 1991-92, or whatever the year was. You would add that, then show deficits or surpluses previously reported. I'd like to ask if you think that's an acceptable practice.
Hon. E. Cull: This particular question is causing a lot of discussion with my staff around accounting. It has to do with the consolidated revenue fund and the move to summary financial statements. I know that the member is an accountant and is very interested in these matters. What I would suggest, because it looks like this may take a bit of explanation, is that I offer him a briefing with my staff to explain that issue.
F. Gingell: There isn't any need; it's a partisan issue. I think the point I am making is very, very valid. I have concerns that the government is more interested in showing the financial results that they want rather than ensuring that the financial statements are clearly understood and clearly comparable so that everything is there and readers can draw their own conclusions. There isn't any need to carry on about this. I'm going to claim a technical win.
The next issue I'd like to talk about is investment returns. Last year we had quite a discussion about the move away from a highly regulated framework, in which we could invest the many, many trust funds that are within the province's responsibility and for which you act as trustee. These were described and discussed as the types of investments that would be made by a prudent person. I was wondering if the minister could advise us how far along that has moved from the rigid framework that we used to have to the investment of a prudent person. Of course, we only have the 1994 financial statements. We can go into the trust funds when this year's have come up and see how much money has been moved in its investments. Perhaps you could let me know how the program is coming along and how the returns for last year compare to a previous year's returns.
Hon. E. Cull: For the record, the public service pension plan fund and the municipal fund have started to move into diversification. All the others were already able to do that. I can't give you any indication of how far they've moved, but they have started to diversify.
With respect to returns, I have consolidated the total returns versus our private sector benchmarks for all funds for the period ending March 31, 1995. Our one-year return was 5.6 percent compared to 4.4 percent for the private sector benchmark. I can give the member five-and eight-year numbers if he wants: five years, 11.3 percent versus 11.2 percent; eight years, 9.8 percent versus 8.8 percent. The first number in each case is the provincial treasury result, and the second number is the private sector.
F. Gingell: Thank you for those numbers. It wasn't a particularly good year, and I appreciate that, but you still beat the private sector benchmarks. It reminds me of discussions in estimates with your predecessor. We got to the point where he was boasting about the rates of return, and I was suggesting that if he felt as strongly as he did, he could solve the province's financial position by going out and borrowing $3 billion or $4 billion at interest rates that were then 7 percent or 8 percent and make the 12 percent and 13 percent that he was bragging about.
I recognize that your investment branch has taken a responsible position towards their responsibilities. I also appreciate that 1995 was not a good year for rates of return.
[7:00]
I now move to two items that are in the auditor general's report of earlier years which we discussed briefly last year. I'm interested in an update. There was an update by the auditor general in report No. 5, which has just been tabled. It deals with two items that haven't moved along in the same way that the auditor general had hoped. The response from the Ministry of Finance and Corporate Relations states: "The office of the comptroller general will be reviewing financial management policy on asset management when resources per-
[ Page 15181 ]
mit." You may remember that we had a discussion about this last year. I was wondering if perhaps the ministry has any estimate of what would be required in the way of resources and how high it sits on your priority list.
Hon. E. Cull: We have reviewed the policies as a result of the auditor general's report, and the conclusion we've come to is that the policies themselves are pretty good. It is the application of the policies that needs improvement, which is a matter of training. We are in the process of ensuring that that training takes place so that all individuals who are responsible for managing physical assets are aware of the proper procedures to follow and are able to do so and record them.
F. Gingell: So I take it that the response is, "Yes, we recognize that it needs to happen, and yes, we've started a program, and we're moving along," which is different from last year's response which was: "Well, we're not sure how much it's going to cost and whether there is a sensible return." We all agreed that you don't want to spend a lot of money in ensuring that you know exactly where and what the serial number is of a lot of not very expensive equipment, but I was wondering if the minister could respond to the other part of my question, which was: how much money do you think this new program might cost?
Hon. E. Cull: Last year when we were looking at this, we hadn't had the opportunity to do the review that we've done now. We've concluded that this is not problem of money, it is a problem of ensuring that the policy that's in place has been accurately and consistently applied. Our concerns with respect to the cost are no longer there. We're now just focusing on making sure that people do follow the policy consistently.
F. Gingell: From my memory of last year's Hansard, when we discussed this you were concerned about a dictaphone you thought you had taken with you from the Ministry of Health and Ministry Responsible for Seniors to the Ministry of Finance. Can the minister show this committee that in fact she has looked into that and has had it properly recorded?
Hon. E. Cull: I can assure the member that the dictaphone is now in the hands of the Minister of Environment.
F. Gingell: I guess we'll just have to accept the $20 it will cost to put it through the accounts to make that transfer.
The other issue that we dealt with last year in regard to these reports was the issue of unclaimed money. You will remember, perhaps, that there was no problem whatsoever with the way in which unclaimed money was dealt with by the province. It was the application of the legislation to non-government businesses. There was a little bit of discussion, as there had been in the Public Accounts Committee, about the responsibility of the provincial government in ensuring that legislation and the regulations thereto are clearly understood by the corporate sector.
Hon. E. Cull: We have continued to work on this issue, and I've just approved a project that will have the ministry track down the sources of the unclaimed money, look at possible changes to legislation and put together a group on a cost-recovery basis to try to match unclaimed money with individuals. We are pursuing this. We have just started a project to actually implement it, which may result in some future legislative changes.
F. Gingell: I'm sure the minister knows from previous discussions that I'm most interested in the issue of program evaluation. The efforts of the auditor general and the comptroller general have caused more understanding and more effort to be put into this subject. As I said earlier, I think that instead of raising taxes in this province, this is a very, very useful tool to find ways to reduce the expenditure levels that we are presently at. Could the minister respond in a fairly generic way about what is happening within her ministry in this area and perhaps give me an example of one program?
Hon. E. Cull: There are two areas of program evaluation or program review and two bodies in the ministry that look at it. Obviously the one that the member would be most familiar with is the office of the comptroller general, which has about 50 individuals working on value-for-money audits and doing reviews of various government programs.
Within the Treasury Board group of the ministry, we also have a program evaluation branch, which looks more generally at programs and tries to determine if we're getting our money's worth or if there are more cost-effective ways of operating. Let me give you an example of what this particular group was doing. The changes we've announced this year in respect to the student loan program came as a result of work done by this particular group. They made recommendations that are going to save the government significant amounts of money over the next number of years and still provide the same level of service to students. That's an illustration of the type of work that branch does.
[N. Lortie in the chair.]
F. Gingell: In the particular case that the minister describes, were there a series of targets, goals and benchmarks that were clearly understood by everybody before the program changed? Did the ministry believe they could meet these by the changes in the program that were envisaged? Perhaps I can add to that. Is that going to be reported in some public manner so that we can all see it?
Hon. E. Cull: In that particular illustration, we established goals with respect to the services that had to be provided to students. We looked at the existing student loan program and the objectives that were achieved there, and determined which ones had to be safeguarded in any new system. We did that in a number of different ways, looking at different bundlings of packages that could be put together. Our staff then did an analysis that indicated there would be a financial saving by moving to a different method of providing for student loans. We are now using the standards or the objectives that we had originally set out as the basis for a proposal call to the banks to determine whether they will be able to achieve those savings for us.
F. Gingell: If I may, I'll come back to student loans in a little while. I had a question to deal with the issue of the provincial treasury revenue. You anticipated last year that you would have a profit of $1 million; I see in this year's statements that that turned out to be somewhat overestimated.
[ Page 15182 ]
Perhaps you could deal with what went on last year and also comment on the reasons you think that this year's estimate of going up to $1 million is a reasonable estimate of what will happen.
[D. Schreck in the chair.]
Hon. E. Cull: I wonder if the member could clarify the page and the numbers that he's looking at. We're having a hard time reconciling the numbers to his question. Perhaps he could just refer directly to the page in the estimates, so we can answer it from there.
F. Gingell: Page 140.
Hon. E. Cull: I was hoping the member would actually, with the page in front of him, ask the question again, because I can't match the numbers that he's talking about.
F. Gingell: In the year 1993-94, the estimates show -- and I presume the number is reasonably accurate -- that the provincial treasury revenue earned a profit of around $270,000. In 1994-95 you increased that estimate. Your budget showed that you had expected to make an income of $1 million. I haven't checked in Hansard, but my notes from last year's budget say: "Why the increase?" I didn't write down what the answer was, so I didn't check it.
When we look at the 1995-96 estimates, you will see that $1 million on the left-hand side of page 140 and an adjustment of $807,700, which means that what you actually earned in the provincial treasury revenue was $193,000, rather than the $1 million you estimated.
M. Costello: The numbers for the provincial treasury revenue account -- the member stated that it was for 1993-94.... We don't have the numbers in front of us, but it is approximately $200,000. We expect the revised number for 1994-95 to be approximately $250,000, and we are estimating $1.029 million for 1995-96. That number is a fairly firm number. It's the result of transactions that have been done to date, both in 1994-95 and in 1995-96, which have locked in an investment earning of an amount that totals $1.029 million. Approximately six transactions are in the account. The account works such that we do a debt transaction. We then invest the proceeds -- so-called warehousing the funds -- and achieve an investment return in excess of our cost of funds. That net amount shows up as revenue in this account, and that's $1 million.
F. Gingell: The adjustment of $807,000 that you put in as the estimated difference between the 1994-95 estimates and the projected actual net should have been roughly $730,000, which would bring it down. These estimates were produced in January, February and March. They were tabled in the House on March 22 -- a little earlier than we planned, I seem to remember. I wonder how you knew at that point that subsequent to March 31, after April 1, you would have this $1.029 million income to include.
M. Costello: The estimate that is now in the 1995-96 blue book shows a net revenue to the account that is a result of transactions that had already been booked and locked in. That is why that number is so precise. Those transactions are in fact in place and will generate that revenue.
[7:15]
F. Gingell: I'm not going to spend any time on this because it's very small. I would presume that you can have losers as well as winners in the provincial treasury revenue account. If you have warehoused some debt and subsequently move it to a Crown corporation or a fiscal agency, and interest rates have dropped, you will have to discount the amount for it to accept it.
M. Costello: There are actually no losers in this account. The way it works is that the debt transactions are done on an opportunistic basis where we see there is an opportunity to earn and lock in a spread. We might do a debt transaction at a floating rate of BAs minus 10 percent and invest at the same moment at BAs even and have a spread, for example, of ten basis points for six months. When the six months are over, the assets are sold; it's all unwound and the cash is then available. Those funds could then be provided. We don't do a transaction that has any built-in loss; it wouldn't be done. There has to be a net revenue.
F. Gingell: Then I'm mistaken. I thought that this was where you warehoused debt, that you were borrowing early when you thought it was appropriate for Crown corporations and other fiscal agencies. I know that the ministry performs that function. Where does that get recorded?
M. Costello: With respect to the matched book account, there is an offsetting transaction, and there is a net revenue. When the transaction is unwound, the debt then moves to the client, whether that be B.C. Hydro or some other agency. At that point in time, the transaction concludes, and there is no built-in loss in the provincial treasury revenue account.
F. Gingell: So when you move the debt out of the warehouse to the Crown corporation or the fiscal agency, if interest rates have changed at that point, do you move the debt out at its fair market value or at the rate that the debt carries?
M. Costello: In the warehousing account, the day that the client requests the funds or they are made available to the client, the interest rate is set on that day, so it's market to market on that day.
F. Gingell: One last question. Where do the wins and losses from that transaction appear?
M. Costello: Hon. Chair, I guess we don't at this point see how there could be a win or a loss. We would be happy to have a briefing and walk through some transactions with the member.
F. Gingell: I think I can put a very simple example. On day one you are advised by the B.C. Ferry Corporation that they need $100 million in six months. You see the opportunity to get $100 million, and let's say the bank's acceptance rate on that day is 8 percent and you can borrow it at 7.9. You can loan it out at 8 percent with a maturity date coinciding. So what happens is that you hold the money for the six months, and at the end of the six months the deal is unwound, and the treasury has made ten basis points on the $100 million.
Is it true that you have never, ever put into that account any long-term debt? You would only borrow short-term, six
[ Page 15183 ]
months, and you would then have to go out.... There's the debt that sits behind the money that you originally put up. You are going to transfer that to B.C. Ferries, and you say that's at market value. If the market value on that day, six months later, is different from the rates at which you borrowed it six months earlier, there's a difference.
M. Costello: In the example that was presented, we do have long-term debt in the warehousing program. For example, if it was a ten-year bond issue, for the first six months we would swap.... In your example we would have swapped that fixed rate to floating rate and locked in a savings or a revenue for six months. At the end of six months, if the client wanted the money, we would then have gone to the market and swapped it back into a fixed rate, which the client would then pay, whether it is 6 percent or 10 percent. Whatever the fixed rate of that day is, it would be transferred at the market rate of that day.
G. Wilson: I now know why I'm not an accountant -- my goodness! My questions actually.... I'm going to try to deal with them in three principal categories. I appreciate the opportunity to come in in the middle of the member for Delta South.
The first has to do with property taxation and assessment, and I have some specific issues with respect to that. The second is perhaps a broader question -- if the minister has already been canvassed on this, I'll yield to the Blues -- and has to do with uncollected debt, excluding the student loan portion, and the provisions for debt collection. That may have already been done today. The third is with respect to this minister's responsibility over societies, the Society Act and regulations relating to that. So those are the three broad areas that I'd like to canvass, and I will try to be as specific as possible.
On property taxation, I note with interest that the minister actually put out a press release on June 5, 1995, in which the minister indicates that this year the full homeowner grant has been extended to homes valued at up to $475,000, up from $450,000 last year, and then says that: "In addition, the three-year tax freeze to promote jobs and economic growth, introduced last year, will continue. That means no increased property tax rates, no increase to personal income tax rates and no new taxes."
If we look at the data that's provided with respect to the rural area property taxes, we note that in terms of total revenue accrued, there is roughly a 10 percent increase. If we look at the assessment notices that are coming in to people in rural areas, some of those assessments are extremely high. One has to ask a fairly obvious question then: is all of that due to the increase in the local mill rate? Is that something that is to be passed on down to local government? Or is what the minister has outlined here not technically quite so? Rural British Columbians are certainly not acknowledging that they have no increase in their taxation demand.
Hon. E. Cull: There are two aspects to this. If the number of properties from year to year remains constant -- let's assume that there were no new properties out there.... From year to year, relative assessments are changing, so to keep the property tax equal or frozen, we can't just simply freeze everybody's property taxes. So what we do is adjust the rate so that the overall amount of revenue for the existing stock stays constant. That means that properties that go up in value would pay higher taxes; those that drop in value, relative to others, would pay lower taxes. So that aspect continues to operate in terms of the market value of properties.
The increase in overall revenue from property taxes, as a result of more properties being assessed -- developed property, subdivided land, etc. -- gets added into the tax base. So it's somewhat like income tax. It goes up even though the rate is frozen, because you have more taxpayers, if you like, paying the amounts.
G. Wilson: Clearly there are people who are finding that their assessed values have declined -- albeit, they are perhaps a minority. But notwithstanding either a slight decline or even an assessed value that's constant, the tax demand against that property has increased....
Interjection.
G. Wilson: The minister says: "Not very much." In some instances....
Hon. E. Cull: No, I said not from the province.
G. Wilson: Well, that's my question. If the minister is saying that that is not driven by the province but by local government, then I think what I'd like to know is: what percentage of the overall increase that's coming off rural property is in fact driven by local government demand or increase in the mill rate? Is that broken down? Do we have an opportunity to look at that? Quite clearly, local government is saying to people in British Columbia that that is a result of the province's demand, and the province is saying: "That's not us; it's the local government." Somebody is pushing that rate, because the property tax payer still has to come up with the money.
Hon. E. Cull: With respect to rural property taxes, there would be other tax bodies that would appear on the assessment, the tax notice. The member, having been a member of the regional district, would be fully aware of that. So anything that is levied by the regional district or regional hospital district, for example, is not subject to the province's commitment to freeze taxes. We haven't frozen regional district taxes, nor have we frozen municipal taxes.
You're speaking here about rural taxes, so I assume you're not talking about anything inside a municipality. In the rural area, the tax rate that is levied by the province for local services that are provided by the province -- road, police and other services -- has been frozen in a manner to ensure that across the tax base, we do not receive any more revenue from those properties.
[7:30]
I think the member understands the concept. It's not as simple as just simply freezing a tax and saying it will be 5 percent, because if the tax base is based on values and values all change..... In fact, if we had frozen the rate at the rate it was in 1994, when we introduced the three-year tax freeze, we would see greatly increased revenue each year as the market value of the properties went up. We've actually been dropping the rate to offset the increase in values so that we continue to collect approximately the same amount of revenue.
G. Wilson: Does the minister have some sort of aggregate figures with respect to what the differences are in terms
[ Page 15184 ]
of the assessed value and the rate, and how that proportional difference has occurred? Is that available somewhere for some review?
Hon. E. Cull: I don't have that here with me tonight, but I'd be happy to obtain the information and give it to the member.
G. Wilson: I wonder also, if it's available -- and it's something that we're attempting to get hold of -- about the variable rate that is happening with respect to school tax as a proportional amount of overall property tax -- that is, tax in the rural area, again, that is specified for schools. If the minister has that available, that would also be useful as a percentage or proportion of tax.
Hon. E. Cull: I'll try to provide complete information to the member on this matter.
G. Wilson: If we could move to another issue around the Assessment Authority, it has to do with the Assessment Authority acting as agent on behalf of self-taxing aboriginal authorities. This is a matter that has become somewhat contentious as a result of the somewhat complex jurisdictional questions that may exist between the federal and provincial governments.
As I understand it -- and the minister might correct me if I'm wrong -- a self-taxing first nation does contract as agent the Assessment Authority, which will assess leased properties where those leased properties have capital improvements that people have put on -- houses on their leased land. They will assess them as though they are fee simple in terms of the assessment that will be levied against that land. The comparative example they take is one of fee simple property, even though it's leased. If that's correct -- and I believe it is -- then can the minister tell me what provision there is, given that they're assessed on exactly the same basis as fee simple property, for people who seek to defer taxes in a manner that anybody else could seek to defer taxes, if they are indeed taxed on leased land which the provincial authority has no right...?
Hon. E. Cull: My staff don't believe that they are eligible, but we're not certain on that. Again, I will get back to the member with an answer to that question.
G. Wilson: I don't think they're eligible, either, actually, and that brings me to my next point. It seems inherently unfair that people who are being assessed as having fee simple property, in a manner equal to that of somebody who may live off reserve with a very comparable piece of property, have a right to defer. We're trying to get some legal interpretation on this, because it is an issue of some concern in my riding, which has a lot of leased properties. It's a riding that has a lot of aboriginal land.
Because the provincial Crown has no authority to take property for sale if there's a default, my understanding is that they can't provide that. It would seem to me that there should be some kind of provision within the act that would provide some protection for those people in a manner that's similar to anybody else. Otherwise, it becomes an inherently unfair situation.
[J. Pullinger in the chair.]
Hon. E. Cull: I will clarify this for the member afterwards, but it seems to me that the simple answer is that we cannot defer taxes that are not paid to us. In other words, where we do the tax deferment program, the taxes are supposed to be paid to us. Therefore we can operate a program -- for taxes that we would collect -- and defer the taxes. In the case of land that is leased from first nations, the taxes are not paid to the province. It would have to be up to the tax collector in that situation....
Interjection.
Hon. E. Cull: No, we're not the tax collector. The Assessment Authority of B.C. is not the tax collector. The Assessment Authority is contracted by the first nations to provide a service, which is to assess properties. But the tax collector, in the case of non-aboriginal, self-governing land where there is a self-taxing authority, is the province of British Columbia. In the case that you're talking about, I assume that the taxing authority is the native band. I think the simple answer to this is that no matter who does the evaluation, the tax collectors are different, and it is us, as tax collectors, who have established a deferment policy. To make sure that I'm accurate on this -- because we can't confirm this with the staff I have here -- I will commit to providing that information to the member.
G. Wilson: I don't know if that interpretation is or is not correct, because we've been trying to get clarification for several months on this question. If in fact the government isn't the taxing authority, then why is it that the normal board of variance is carried through precisely as the Assessment Act would require, that any appeal is done through the Assessment Authority appeal process and that all the measures in respect to contesting the actual assessment are done in a manner that is absolutely consistent with any other appeal process that would be done in the province of British Columbia?
Hon. E. Cull: I think, again, that the answer is probably straightforward in this case. I'm not the minister responsible for the Assessment Authority, so I'm answering an area that's not in my jurisdiction. But I have to assume that if the band is under the Indian self-taxation act, all they're doing is contracting with the Assessment Authority to provide the assessment. Presumably they would be free to contract with anyone else who was out there, although the Assessment Authority is the body that does this. Or maybe in obtaining their self-taxation powers, there was an agreement to use the Assessment Authority.
The Assessment Authority is not the tax collector, so the Assessment Authority is not involved in the tax deferment program. They don't have anything to do with it: they couldn't decide to extend it, cancel it, change it or anything. It is the Ministry of Finance that operates the tax deferment policy. We are not the tax collector on the band lands in cases where there is self-taxation or Indian taxation.
G. Wilson: I am well aware that this minister isn't responsible for the Assessment Authority. I will be bringing it up once we get into Municipal Affairs estimates to try to get that side of it clarified. But the reason I raise it here, and the reason I'm pleased that we will get something definitive from the Minister of Finance on it, is that it is quickly going to become a legal matter. I don't know; possibly now that we
[ Page 15185 ]
have class-action legislation pending, maybe that's what is going to take place. There really are some very difficult legal problems with the way it's working at the moment in terms of the Assessment Authority's position vis-a-vis the Ministry of Finance -- its association with that body. I flag that because when I put these questions to people who are far more knowledgable than I, they have bogged down in a whole bunch of legalese that I think needs to be worked through.
There is another matter I will flag. Perhaps, again, you don't have the personnel with material available to make anything on it. It has to do with the proportional amount of tax collected -- education or school tax -- from that assessment, and the degree to which, in any deferral process, first nations bands may somehow regulate the rate at which that collection can occur. I think there has to be some clarification provincially within the provisions of the statutes to protect the Crown against a potential suit. It's one where there's a lot of grey area, and it's a big problem. I flag that for the member, and I appreciate that. I won't take up more time tonight to go into it in any more detail.
If the minister would also like -- and I realize this is perhaps stretching the point a bit -- to find out why, even on leased properties where there is land that is clearly not a part of that leased property, but is in fact a leave strip in front of it.... This deals primarily with waterfront properties. There is a strip of land that first nations have withheld from the block that is leased where the property runs to the high-water mark. The Assessment Authority is leasing that property as waterfront. They are collecting revenue on the basis of that as waterfront property, even though clearly it is not. I think you can see that it is not.
The reason I raise this in these estimates is that the comparative measures that they're using in terms of rates are being determined at the local level. This becomes a serious issue for somebody who's trying to seek restitution for that problem. It may be that they have not improved or built anything on that leave strip, but they clearly can't use it. It's not part of their lease property, and therefore it clearly is not waterfront, even though they obviously have something very close to it.
I throw that out in the hopes that the minister might also take a look at it, because we'd like to get some clarification on it. I don't know if the minister wants to respond to that or not.
Hon. E. Cull: I think I will take all the information from the Blues, give it to staff who are responsible for this area and have them prepare a complete answer for you.
G. Wilson: Let me move on to the second, broader area that I wanted to talk about: the question of uncollected debt. I read with interest that the government is either considering or has contracted private agencies to engage in the provision of uncollected debt. I wonder if the minister might talk a bit about that, about what the government has in mind and how the government intends to pursue this. What is the current aggregate figure of uncollected debt owing? What is the total amount of uncollected debt that the province of British Columbia would seek to recover?
Hon. E. Cull: I think the member asked for the total of all uncollected debt, so you'd be including traffic fines, student loans and.... I'm not quite sure that we have that all aggregated and readily available here. But while my staff are looking for that, let me just answer the first part.
In late 1994, following a successful pilot project, we made a decision to give our loan administration branch approval to expand the use of collection agencies to collect overdue accounts and debt. The pilot was restricted to B.C. student loans from students living outside of B.C. In January 1995 we issued a request for proposals to collection agencies operating in B.C. to collect student loans in B.C. where the potential for collection was low or where the student resides outside of B.C. Ten agencies submitted proposals, contracts have been signed with two of them and the work is ongoing in collecting this debt.
Hon. G. Clark: I am delighted to rise in the discussion of these estimates. I won't make a long speech about the second-best Minister of Finance in the history of the province, but I thought I would just ask a very simple question. The committee might be interested in knowing that when we took office, the spread between the borrowing cost of British Columbia versus the borrowing cost of Ontario and what the spread is today -- or roughly the spread today in basis points....
Interjections.
Hon. E. Cull: I was afraid that the member was coming in to get back at me for showing up in his estimates every time for the first two years nagging him about grants in lieu of taxes for colleges and universities, but I subsequently fixed that problem. It fell on deaf ears for the alleged best Minister of Finance -- but the second best at fixing problems.
[7:45]
Anyway, in answer to the question, at the beginning of our term of office, Ontario was ten basis points better than us. We are now 17 better than Ontario.
G. Wilson: I'm almost through the three sections that I've identified. I wonder if the minister might tell us, or perhaps provide by separate copy if it's not available, the total amount that will be written off in uncollected debt in this fiscal year and what the comparison is to that debt write-off for the last two years.
Hon. E. Cull: That amount is not readily available. It's across all ministries in their votes, but I'd be happy to have staff put it together and give it to you.
G. Wilson: The third general section deals again with this minister's responsibility in terms of the administration of the Society Act and has to do with reporting and with the registry of the Society Act in terms of tax status -- some of which, of course, is a threat to Canada, I understand. Revenue Canada may have it as a federal number, but I wonder if the minister might tell us to what extent the Society Act is being regulated for societies that are inactive under their registered name but active under a second name, and the degree to which the tax status within that society is being used in the unregistered portion, as opposed to the registered portion.
Hon. E. Cull: Again, we're having trouble understanding this question. The Society Act isn't a regulatory act in this fashion. Perhaps the member could be more precise in his question, and then we might be able to give him an answer.
[ Page 15186 ]
G. Wilson: Within the Society Act there are requirements in terms of the bylaws of the society. Therefore there are also terms and conditions put in place upon that society in terms of the filing of annual reports. Where that society shares or has, in addition to it, a tax status number or a registered tax number, there is a reporting requirement with respect to how the revenues that are generated by that tax number are accounted. What is taking place in the province -- and it's something I have raised -- is that there are societies registered as societies that have, in addition, a virtually identical authority -- in terms of their officers, their practice, their numbers and their name -- operating as an unregistered entity that is raising and paying money on the basis of its tax base as a society, although it is using the money in an unregistered form because the society is effectively a shell. I'm asking the minister to what extent that is monitored. To what extent does that find itself positioned within the Society Act in terms of the statute, and to what extent would that be subject through this ministry, for example, to audit?
Hon. E. Cull: Let me clarify this. Is the member suggesting that there is a society that is registered that is raising money, and it may be giving that money to another entity which is not a registered society? Is that the question you are asking? The member is nodding.
There is no audit. We do not regularly or routinely audit societies to make sure they are living up to their constitution bylaws. If there is a complaint brought or if the society's board of directors believes for some reason that funds are not being used according to the purposes that they have been registered for under the Society Act, then an action could obviously be brought, and it would depend of the nature of the action.
G. Wilson: I have only two other questions on it. Again, this is something that I flag for the minister, and I will be following up with separate copy and some documentation that I think the minister might find interesting.
The difficulty we have is where there is a tax deferral or a tax credit that is provided to a society, because that then impacts directly on the taxation authority that both provincial and federal may have against this particular entity. Where the entities are different, in the sense that one is registered and one is not, though they are both basically identical in every other feature, it would seem that there is recourse for members through the shell because they have a constitution that provides for it, and they also have the number registered in terms of tax collection, but there is absolutely no recourse for the moneys being raised through that society and funnelled into an entirely separate operation.
I would argue that this constitutes tax fraud. I raise it for the minister's consideration, and I don't want to name the societies, though I'm aware of not one but two in the province. One does a lot of charitable work and deals with several millions of dollars annually, and the other is chartered to do quite different work. I raise that for the minister, and I really would appreciate an opportunity to look at this. I think it's an important consideration, and these are only two I'm aware of. The Society Act, as I'm sure you are aware, is in bad need of a major overhaul, and I think this is one of the areas where there can be abuses.
The last question I have with respect to this again has to do with the question of receipting. It concerns the extent to which, in the provision of tax numbers, the province is actually involved in the assignment of those numbers. Or is that left exclusively to the federal government? I'm talking about charitable status numbers.
Hon. E. Cull: It's entirely a matter of federal jurisdiction. We have no involvement.
K. Jones: Could I ask the minister to tell us what the disposition is of the VLT demonstration models at the B.C. Lottery Corporation?
Hon. E. Cull: Sorry, I'm not the minister responsible for the Lottery Corporation, so I can't answer that question.
K. Jones: Could the minister tell us exactly who is now responsible for all of the budget that was originally allocated under your budget?
Hon. E. Cull: The Lottery Corporation has been transferred to the Minister of Government Services.
K. Jones: I believe the minister is responsible for the Public Service Employee Relations Commission.
Hon. E. Cull: Yes, I am, and we actually canvassed that matter earlier when I had staff from PSERC here.
K. Jones: I'm sorry that I wasn't able to be here then, but it's with regard to a reply that I got from PSERC with regard to the disposition of government air services placements. What we had originally asked for was the allocation of the positions with the government air services versus the positions they now hold, one on one, so that we could have an idea of how the people were given comparable employment. All I received was a listing of some of the positions that people were assigned to.
Hon. E. Cull: It's unfortunate that the member wasn't here while the commissioner was here, because I'm sure he might have been able to give more information. All I have is the general disposition of the employees. There were 66 affected regular employees: 24 have been permanently placed; 12 have permanent placement identified but pending final clarification; seven are temporarily assigned, and dedication of permanent placement is ongoing; and 14 have voluntarily resigned or retired. That's as of May 3.
K. Jones: Could I ask the minister to arrange to give me the actual disposition, position by position, of government air services to their newly assigned positions?
Hon. E. Cull: I'll refer that question to the commissioner and have him contact the member.
F. Gingell: Further to the discussion we had with the Minister of Employment and Investment, I'd just like to make the point that the NDP government has been in office in Ontario for five years, and I hope that the government treasury staff will recognize what could well happen to their interest costs in the next 18 months, seeing that we're now at the three-and-a-half year mark.
Interjection.
[ Page 15187 ]
F. Gingell: No, but I also don't believe the stuff that....
I'd like to deal with the financing transaction for the land tax deferment account. The minister will perhaps remember that in 1993-94, when we expected there to be a substantial pay-out, in fact the numbers almost balanced. There was $12.6 million paid out and receipts of $12.6 million, which was considerably different from the amount in the estimates. I'm wondering if, to start, the minister could tell us what the results were for 1994-95.
Hon. E. Cull: The actual results for 1994-95 in tax deferment receipts were $5.4 million, disbursements were $14.8 million and total net disbursements were negative $9.4 million. Rural area property tax receipts were $91 million, and disbursements were $91 million -- those numbers balance obviously.
F. Gingell: The rural area property taxes are just taxes that the ministry collects and remits to other local and regional governments.
I was wondering if the minister could advise us of the average amount paid out under the Land Tax Deferment Act is. The amounts are going up. Are the numbers going up, or is the amount of each particular transaction going up?
Hon. E. Cull: There are 7,000 accounts, and the amount of deferred principal tax and accumulated interest as of March 31, 1995, is $60,370,953. So without having done the calculation, I would assume that we're seeing a little of both: an increase in the amounts going up, but also an increase in the number of people who are taking advantage of the program.
F. Gingell: So the history is that once somebody goes onto the program, they tend to stay on it and defer their taxes year after year rather than doing it one year and not doing it the following year, coming back on and going off.
Interjection.
Hon. E. Cull: It's a little disconcerting when the Chair is laughing. I'm not quite sure whether we're missing a good joke.
Just looking at the figures, we had about 2,000 new applicants a year in the last couple of years.
[8:00]
R. Chisholm: I'd like to get the minister's opinion on what I'm about to read. It is from a CGA company, and they have a problem with the B.C. corporation capital tax and have some suggestions. I'll read through what they have to say, and maybe the minister can give us comments on what they're stating:
"Individuals are saying that the notices of assessment are not received for up to two years from the date of filing returns. In telephone calls, ministry staff confirmed they are about two years behind in assessing returns. The ministry does not issue confirmations upon receipt of returns. Taxpayers are required to make regular quarterly instalments based upon the previous year's total tax assessed. They are subject to penalties and interest on late or deficient instalments, even though instalments are based on the prior year's total tax payable, which may be confirmed two years later. When taxes are remitted, the cheques are naturally cashed immediately. When refunds are owed to taxpayers due to overpayment of tax or amendment of returns, refunds are not paid until after the assessment or reassessment."
Their suggestions are that the tax is removed at least until assessments are current:
"The minister should send confirmations of receipt for returns filed and an indication of when assessments can be expected. The situation would be eased slightly if assessors would sort refund applications from other returns and give them priority in processing, which is now standard procedure for Revenue Canada for personal tax returns. Interest is paid on overdue refunds, but this is inadequate compensation for the loss of use of working capital for two years, and the needless cost to the rest of the taxpayers in the province. The taxpayers are expected to comply with the onerous array of tax laws for the most part.... Most of them consider this tax on debt to be particularly noxious and unpalatable.
I just wonder what the minister's opinions are of some of the suggestions that the CGAs have come up with and whether she sees this as assistance to the industry and to helping people accept the taxes that are assessed in the B.C. corporation tax -- especially if it is two years behind, the way they're stating.
Hon. E. Cull: I am aware of the problems the member has brought up. In fact, I've received some correspondence on the matter in the last number of months. We are behind in dealing with this matter, but we have determined that it is a problem and have added additional resources. We hope to be able to clear up the backlog.
R. Chisholm: Does the minister have any sort of time assessment on this backlog? It's two years now and climbing. Does she have any thoughts that we'd be on track within a year or half a year? What would the situation be?
Hon. E. Cull: We're working on this one as hard as we can. We do have plans to decrease the backlog by implementing an automatic assessment system. We are adding additional resources. I would hope that by the end of the year we will have this matter well in hand.
R. Chisholm: The next area I'd like to talk about is agriculture and its competitiveness. We have horticultural industries; we have the agricultural industry competing on the world market. In the world market they are not paying PST.
If you take a look at heat, light and fertilizer, essentials for growing of plants.... I know you've been confronted with this issue before by different organizations. We are subject to PST on these various commodities, which are essential to these industries. The PST, of course, raises our input by 7 percent, which takes us out of the market with our competitors south of the border -- or even east. I'm just wondering if the minister foresees looking into this situation. It's not just the horticultural industry that is at stake here; the whole agricultural industry requires the reduction of taxes on their inputs.
Hon. E. Cull: We have reviewed the effect of PST on various agricultural inputs over the last couple of budget years, at least the two that I've been involved in, and perhaps earlier. We made some changes this year. We did eliminate some items from PST coverage that will reduce costs to the agricultural sector by $3 million annually just from this year.
[ Page 15188 ]
As you know, we elected not to make major tax cuts in this budget because, in the work that we had done in talking to people prior to the budget, people said, "Balance the budget; pay down debt" as their first two concerns. We made very few tax cuts. The exceptions that we did make in this case benefited farmers.
We'll continue to look at the application of PST to agricultural inputs. I'm very, very interested in being able to provide relief where we can demonstrate that it will actually have immediate benefits. One of the concerns we've had -- and I say this generally as opposed to dealing with the specifics of the examples you brought up -- is that in some cases it's very difficult to ascertain that an input is an agricultural input because it may have general use elsewhere in the economy. We want to make sure that if we're going to do something that's targeted for agriculture, it is in fact targeted for agriculture, or else we make a decision to make an across-the-board change. We are fully aware of the revenue impact of making a larger change.
R. Chisholm: I appreciate the cuts that you already have made. When you talk about hydro and that type of thing, there's no doubt about what is an input with the horticultural industry. Again, I appreciate the PST cuts you took off natural gas and fuel. If you would look kindly at gas, too, and diesel -- because those are inputs into the agriculture industry which put us at an added disadvantage when we're trying to compete on the open market -- it would be most appreciated.
The next area I'd like to talk about is in the area of credit unions. We insure the holdings of the credit unions at the provincial level. I'm just wondering why we are still doing this at a time when credit unions are turning over such a vast profit and when we are in an economic climate where we can ill afford some of these luxuries. Maybe the minister could elaborate or straighten this one out for me.
Hon. E. Cull: The credit unions are self-insuring through the Credit Union Deposit Insurance Corporation. We do not insure; they insure.
R. Chisholm: That's exactly what I wanted to clarify with you. I wasn't sure whether they were self-insuring or not.
The next question to the minister is that with the federal government cutting back on transfer payments, I haven't seen where we are budgeting for it. I'm just wondering if you are taking actions to ensure that we go through this transition smoothly. Exactly how do you plan on reacting to this situation.
Hon. E. Cull: We did speak a little bit about this earlier, in very general terms, in the estimates today. I want to take the opportunity again to comment on the fact that the federal government, through the decisions on cutting transfer payments, have opted to cut medicare, post-secondary and social assistance budgets by 20 percent while cutting their overall program expenditures by only 3 percent. I again repeat that they have their priorities wrong.
This year, 1995-96, significant cuts to transfer payments are not occurring. The move to the Canada social transfer -- the one large transfer payment which will be reduced to the province of British Columbia next year by about $450 million -- doesn't kick in until the 1996-97 fiscal year. There is some reduction; we're still absorbing a continuation of the Tory program of cutting back on transfers, but this year it's small relative to next year.
The only place that this has been factored into the budget is within the debt management plan. If you refer to your budget documents, the table on page 44 of the "Budget '95 Reports" document does show revenues. You'll see that the revenue growth next year, despite growth in the economy, is relatively flat. That reflects the fact that we will be losing about $450 million from federal government transfers. As a result, the spending level next year is also relatively flat. There's not a large increase in spending.
The details with respect to how that will be accommodated are going to prove to be very difficult. It is difficult, in a province that is growing by probably another 80,000 people next year, to accommodate all that increased growth without having some increase in expenditure. But the federal government has given us this problem without giving us any solutions. We have put forward other ideas; we have said they have their priorities wrong, but we haven't just said: "Don't do it." We have given them alternatives with respect to business subsidies, economic development funds and other subsidies or payments or programs which we feel are of lower priority than health care and post-secondary education. Unfortunately, they have not elected to cut those particular programs.
Nonetheless, we'll continue to press them to change their minds and make the cuts in the right places. In the meantime, we are going to have to look very carefully at our resources and our priorities and determine what can be done with respect to some very significant program areas in next year's budget.
I'm saying this because I don't want to leave the impression that dealing with this is going to be easy or that we have all the solutions at this point. I think there are some difficult matters that are going to have to be addressed as we put together the 1996-97 budget, and we have actually already started on that process.
K. Jones: I'd like to go back to the question of the corporation capital tax refund. I'm in receipt of a letter that your ministry replied to one of my constituents on, and they expressed concern that the reply didn't seem to be adequate, particularly the fact that they were several thousand dollars out for an overpayment of taxes. The letter, first of all, was delivered to your ministry on March 1, and the reply didn't come until June 1. Secondly, the reply did not indicate when they would receive their money. Can the minister tell us what is being done? These are people who are trying to run a small business, and they're out of pocket by that amount.
Hon. E. Cull: As I said a few minutes ago, we are aware of the problem. We have taken some steps, which we believe will address the problem, by providing additional resources and moving to an automated system. But if the member wants to bring the details of that particular case to my attention, I would be happy to follow up. I agree that three months is a long wait for a reply, although I would point out that March is a particularly busy time of year for the Ministry of Finance. Everybody is almost flat out, 12 and 14 hours a day, doing budget work at that time. So I'm not surprised that letters received in early March take some time to be replied to.
[ Page 15189 ]
[8:15]
F. Gingell: Perhaps we could just turn briefly to the issue of property taxes, primarily school taxes on Indian reserve land. Recognizing that the actions of the federal government have caused this anomaly, it is still the case that the provincial government is providing education and paying the costs of education, particularly in the case of non-Indian children who happen to be resident on reserve land, such as we have in Tsawwassen -- in Stahaken -- and in Vancouver in the Musqueam development by Shaughnessy.
I was wondering if the minister could advise the committee how much money was involved in these school taxes that we did not receive and whether the government has made any applications or had any discussions with the federal government about correcting this situation.
Hon. E. Cull: There have been discussions with the federal government with respect to taxes that are being collected by the bands and money that is going directly to the bands and education. However, those questions have to be put to the Minister of Education. I'm not familiar with the details of the negotiations around the master tuition agreement and other funding matters related to ensuring that federal funds do cover the natives living on reserves who receive education through the provincial public system. I know it's a complex area. I know there have been some unilateral changes by the federal government in recent months, but I am not as conversant as the Minister of Education would be on the details.
F. Gingell: I guess one of the solutions that pops to mind is that you could take education taxes off real property and do it in some other fashion. I guess that's one of the alternatives that we discussed earlier.
Student loans. I wonder if we could quickly go through them. I was wondering if we could know, as of some reasonable date that you have within your briefing notes, the number of student loans that presently exist and the gross dollar value.
Hon. E. Cull: As of March 31, 1995, there were $77.8 million in outstanding student loans in 15,600 accounts.
F. Gingell: Could the minister advise us of the criteria they use for determining when an account is in default? Is it when the first payment has been missed or at some subsequent point?
Hon. E. Cull: A loan goes into default when 90 days have elapsed without a payment and the bank has sent a letter to the student advising him or her of that situation.
F. Gingell: Could the minister please advise the committee of the number and the portion of that $77.8 million that meet these criteria at the point that that was a relevant number?
Hon. E. Cull: I'm sorry. I heard the question that the member asked the first time, but I think we leapt to the conclusion that he was going to ask about defaults, and so we answered the question on defaults, not on the total portfolio. Had I not been trying to second-guess where the member was going, I would have realized that the total amount of student loans would be in excess of that. It is $77 million that is in default right now, and that amount has been increasing over recent years.
We would not know the full amount of student loans that are outstanding, because we don't take ownership of the loan until it goes into default. The arrangement is between the student and the financial institution, and if it never goes into default, it is not a matter for the province.
F. Gingell: Clearly there is a contingent liability of the province if you are required to pay it out. Therefore, for the preparation of the annual accounts every year, all the banks would report to you the total value of the loans outstanding in order to put some number into the public accounts under the contingent liability.
Hon. E. Cull: I'm not trying to push this question off to another ministry, but this one also belongs with Skills, Training and Labour. They are the ones who set this up, determine the contingent liability and report it in their budget. In terms of the Ministry of Finance, as is usual we have the bad news end of the deal.
F. Gingell: I'm going to assume that everybody else has finished. I have one more subject that I wish to deal with, and I decided that I would deal with it last. It is the issue of the $250 million. Perhaps I should tell the minister that I make such an issue about this because I'm truly offended in my professional heart and my professional mind on the issue of this matter. I hope you have the right person here.
I would like to just review what happened as far as our discussions were concerned. Either on budget night or the night after the budget, you and I were on "Voice of the Province." At that point, I didn't know anything about the $250 million, except that we had noted in the the speech that it was talked about as a one-time-only payment. That immediately rang a little bell, and I wanted to find out about it. On that evening, you said to me that you had two or three opinions, and you would make sure that I got them right away.
Well, I went into the minister's office every day for about 20 days, and I couldn't get them, and I couldn't get them, and "they're going to be here tomorrow...." And so it went, on and on and on. When I finally received them, the top sheet was a memorandum from the comptroller general dated April 13, and I think I got them on something like the 15th. So the fact of the matter is that the letter had not been written at the time that you and I had the discussion on "Voice of the Province."
I have to draw the conclusion that the position that the comptroller general took in that memorandum was different from the memorandum that he had written to the auditor general back on October 26. There was no evidence in the information that you gave me that said that the comptroller general had an opinion at the time it was put in the budget that was different from his letter of October 26.
His October 26 letter, if I can paraphrase it, suggested that what we should do was current-value the future value of these payments as they would be earned, and the money would be.... Although the receipt was going to take place in 1995-96, we would record it in revenue in a stream of payments over the number of years.
[ Page 15190 ]
At that point you also had the opinion of the auditor general, which is the opinion that I personally favour, that suggests that the money should just be recorded as income in the years that it applies to. During our discussions in the House, the minister said to me things like: "Well, if we're going to get it, it's income and we should record it. That is what everybody understands."
But that isn't how we keep our accounts. We have accrual accounting in this province. This government has carefully set up the Transportation Finance Authority so you do not show as an expense an amount that you will be getting the value from over a number of years. I know this is the other side of that transaction -- i.e., it is an expense item. But you have carefully gone through the process of saying: "Even though we've paid the money out in this year, we're not going to charge it up as an expense in this year because we haven't used it up yet."
Well, the issue with the downstream benefits is that this sum of money was purely and simply a discounted sum that was given for early receipt. You record deferred revenues in the public accounts. You record deferred drivers' licences, deferred this, deferred that. There is a whole series of revenues that you have received but you have not yet earned, and you defer them. I'd like to suggest to you that this is exactly the same circumstance as someone taking a 20-year lease on a building. They pay an amount up front, and they get a discount for making the payment early. The building hasn't been built yet or is under construction. They're going to take possession of it in 1998, which I think is the year that's involved here, and they are going to have the use of it until the year 2024. Well, no accountant, under any circumstances, would ever consider that to be income of the year it was received -- never, ever, ever.
It seems to me that when you think about this, the government knew that this issue with the auditor general, who did not agree with what was going to happen, would not come up until after an election had been held. This government has to go to the people before November 6, 1996, and this issue would not have come up in the auditor general's report until after that date -- late November or early December is basically when the public accounts have been coming out. You would have purposely taken this action, which you knew the auditor general did not agree with, and his report on that matter would not come out until after the election had been held.
Now, the fact that the deal didn't go through -- it's still pending -- is not relevant to me. If this had been truly 1995-96 income, and if you had the agreement -- you know, you hadn't dotted all the i's and you hadn't crossed all the t's -- I'd have recorded it, too. I have no argument with the issue of whether it was a memorandum of agreement from the accounting function. It is just in my bones that there are no circumstances in which this can be considered to be 1995-96 income. The province has to deliver services in the form of storing water and dealing with water flows over the period between 1998 and the year 2024 to earn this. They didn't pay you and then say that if the dams fall down or you don't operate them properly, they don't have some course of action against you.
[8:30]
Having given this piece -- and you can see why I left it to the end -- I'd like to know if the comptroller general had, in fact, given the Minister of Finance an opinion that was different from his October 26 opinion before these budget documents were prepared. I have to assume that the decision on putting the money in was made in January or February.
[G. Brewin in the chair.]
Hon. E. Cull: Well, hon. Chair, it's good to see you back in the chair, because I think you were here earlier when the member was not here, when we spent about half an hour on this issue then. So I don't want to go all the way back through it. But I'm going to give a very brief summary of the debate, because we did go through a considerable amount of that then.
First of all, I will go back through the history of what occurred with respect to the accounting. I want to assure the members again -- as I assured the members when we discussed this earlier -- that I have been checking with Mr. Barnard, who is here. While he is not a deputy and not able to speak, I have been checking with him consistently throughout this debate to ensure that I am accurately conveying the history around this issue.
I take some offence at the member suggesting that we did this in the hope that it wouldn't come out until November 1996. If that had been the case, I wouldn't have indicated to you that I had these opinions and offered to share them with you. It took some time, because I was out of Victoria for at least two weeks of that 21 days. If my staff were not able to pull this information together as promptly as you would like, I would apologize. But that time in our office is an extremely busy time with pre-budget and post-budget work going on, and I wasn't around very much -- I was out around the province.
With respect to the matter of how to deal with the $250 million, when we became aware of it, we started to discuss how we would treat that in the accounts. We began in October with the comptroller general sending a letter on October 26 to George Morfitt suggesting three ways the $250 million could be accounted for and suggesting his preferred method.
That then began a period of considerable debate and discussion between the auditor general and comptroller general, who did not agree on how the matter should be handled. George Morfitt finally wrote back in March, but considerable discussion went on between October and March between the auditor general's office and the comptroller general's office about how to handle this. During that period of time, the comptroller general determined that he would like to seek some outside advice, since there was not any agreement between the auditor general's and the comptroller general's staffs on how to deal with this.
Peat Marwick was brought into the discussion. I'm sure the member is familiar with John Holdstock, who, like George Morfitt, is a member of the Chartered Accountants Institute's public sector accounting body that is providing advice on how to do this. Mr. Morfitt and Mr. Holdstock did not agree with respect to how to treat this.
We debated this until virtually the last minute. We were debating this at the point where staff were saying to me: "We have to make final decisions because the estimates book has to be printed, Minister, if you want to deliver the budget on March 22." We had one final discussion on it, and, based on
[ Page 15191 ]
that discussion, Mr. Barnard advised me as is stated in his April 13 letter. I will read it again into the record: "Based on my understanding of the agreement, 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." Based on Mr. Barnard's advice in a meeting prior to finalizing the budget, we then took that advice.
I have listened to the member, and I know he disagrees. I respect the fact that he disagrees; he is an accountant and is fully entitled to his professional opinion on it. I respect the opinions of all the individuals who gave me advice on this matter, and I expect that there will continue to be debate until the public accounts are closed off on the whole issue.
At the end of the process, when a decision had to be made to put something into this year's budget, I turned to the adviser that I have to turn to in this case, the comptroller general, and did what he recommended. To do otherwise would have required Treasury Board to overrule him. I did not feel that was advisable and so, knowing that there would be a difference of opinion from several quarters on how to handle this, I took the advice of the comptroller general.
If the member's position is that I should have taken the advice of the auditor general, he is free to believe that, and we will have to agree to disagree on that one.
F. Gingell: I have had quite a lengthy discussion with Mr. Holdstock on this issue. I would be happy to have that debate with Mr. Holdstock in a public forum, and perhaps I can find one.
I would like to point out to the minister Mr. Barnard's letter, addressed to the auditor general and dated October 26, which was the opinion. He said, and I have to read this into the record: "To account for the revenue as the cash is received, this has the advantage of probably being the most understandable by the man in the street" -- and this is the argument the minister has used -- "...but is contrary to our accrual accounting policy."
How can we get past that? How can we get past the statement of the comptroller general that this action was contrary to the stated accounting policy of this government?
Hon. E. Cull: The comptroller general advises me that the downstream benefits met all the conditions for revenue recognition in generally accepted accounting principles. We can have a public debate among accountants, if that's what the member would like to have, and I'm sure he would enjoy having such a professional debate. I am not going to enter into that debate. I'm not an accountant, and in that respect, when we are faced with a number of different choices, I am going to take the advice of the comptroller general in this matter. That is the decision I made: not to pick one option over another, but finally say: "Mr. Barnard, you have spent six months looking into this matter; you have talked to all parties; you have looked at a number of options yourself; in fact, your opening position on this has changed as a result of the debate. We have to make a decision; give me the advice as to what to do." Mr. Barnard gave me that advice, and we took it. As I said, we will have to agree to disagree among accountants.
F. Gingell: We talked earlier about the importance of financial statements being consistent. In the private sector, the key to good accounting is to match revenues with costs, or costs with revenues. In the public sector, the key to good accounting is to match your costs and your revenues with periods of time. The public accounts and the accounting system of government is involved in the exercise of measuring the revenues earned in a period of time -- not how much cash, how much income, the province receives -- and what program costs, etc., it has paid. The key to good accounting is to match those two things so that our revenues and costs in one fiscal period match.
That's why we have an accrual accounting system. That's why the policy of this government is to have an accrual accounting policy. Recently we went through, in the Public Accounts Committee, a discussion about some $22 million worth of grants that were paid in one year, strangely in the last weeks of March, that applied to the following year. We spent some time dealing with that issue.
But this is a different issue. This budget is full of what we call financing transactions, page after page. We were just now discussing the issue of land tax deferment. The amount of money that you pay out, or the amount of money that you receive, is treated as financing transactions. They are just loans. They don't enter into the budget as receipts, and they don't enter the budget as payments. You spend money on roads -- which I think is the best example -- and you spend it in this year, and you've set up a process by which you will amortize those costs over a period of time.
There clearly were responsibilities that the province had in managing those dams and the water and the flow of water, etc., that they've got to deliver over the years 1998 to 2024. The responsibilities of the government haven't gone away. I understand that what we've sold is this outside piece, the capacity over 950 and the volume in excess of 550. So what we've done is create certainty about what our downstream benefits will be in the future.
But you know, if you were to sell them tomorrow short for $5 billion -- or whatever the current value is -- surely you wouldn't consider including that in the current year's budget. You wouldn't dream of doing it. If we were to sell an interest in B.C. Hydro or whatever, you don't take that item into income. The item, I think, becomes key and has partisan issues because you knew that the auditor general was not going to agree with you, and although you took offence at my statement, it is a fact that the auditor general's qualification -- which now won't happen because you're not going to get the money anyway, at least not at this moment in time.... He would have qualified his report if you'd included it in the public accounts. It would have created a media event at that time, and it would have been after the election was held.
I guess we aren't going to get anywhere, but I'm really saddened by this. As I said earlier, I hold your staff in high regard. I believe that the good credit rating that we have for this province is due in part to the quality of your staff. I believe that this particular incident will put the question into the mind of credit-rating agencies that you are willing to play around with the books. I won't speak to this matter again, other than to repeat that I believe that you played around with the books.
Interjections.
The Chair: Order, please.
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Hon. E. Cull: I'm not going to engage in an accounting debate with the member. What the member has said is that....
Interjections.
Hon. E. Cull: I hear two questions coming across the floor. I see that people are very agitated about this. One has asked: "What about a Finance debate? What about an ethical debate?" What I take from what this member has said is that if he were the Minister of Finance, regardless of what the comptroller general told him, he would use his own personal knowledge as an accountant to decide what was right and what was wrong. He may feel comfortable in doing that as an accountant. I feel very fortunate that, as a Minister of Finance and as a politician in this regard, I don't have a personal, professional knowledge that allows me to engage in arguments or debates with my staff. I bring a political decision to all of this, and I try to manage in the best interests of the public when I make decisions as a minister. But what I have decided to do, and what I think is appropriate and ethical, is that when there is a difference of opinion on a matter like this, I will take the advice of the comptroller general. That is what I've decided to do. If this member is suggesting that he would take someone else's advice, I'm not going to argue with the member on that. That would be a choice that would be made.
[8:45]
F. Gingell: That's not what the comptroller general said in October.
Hon. E. Cull: The member just said that that's not what the comptroller general said in October. He is correct. In October he had an opinion that is outlined in his letter. When we finally made the decision in April, he gave me different advice. I have followed his advice.
The member wrapped up with a comment on the credit rating. The credit rating, as I said earlier in my remarks, is, as far as I'm concerned, the only grader out there. The credit rating agencies are the only people giving out letter marks that I'm going to pay attention to, because they are not wrapped up in partisan purposes at all. The credit-rating agencies, who rated us subsequent to the matter of the downstream benefits, said that with the way we have handled this, the way that this has come about and with the deal unravelling in the last little while.... This has still seen us getting the highest credit rating of all provinces in the country. Not one of them has raised the issue of whether this was inappropriate or counted before its time. In fact, in confirming our credit rating, they have confirmed the way we've handled this.
F. Gingell: I know that we are not going to resolve this. I'd like to suggest to you, as a final word, that the credit agencies have not passed judgment on the issue of whether this was proper accounting practice or properly included in this year's budget. The credit agencies believe that the province can meet its financial responsibilities as they fall due. I believe that, too, and I am pleased that our credit rating is high. I hope it stays high. With that, I am prepared to allow this vote to pass.
A. Warnke: Since we're on this subject, I want to follow through with just one question. It was a puzzle to me at the time, and it still puzzles me, especially given the answers by the Minister of Finance. I just have one point to try and clarify something that has been puzzling me, and perhaps it can be explained. The budget is presented in the middle of March, and yet there is the reference that has been made -- and it's been made again here today -- to advice given to her April 13. As I see it, the reference to the advice given to her April 13 is irrelevant if, in fact, the budget has been brought down, unless that same advice that appears in April 13 that appeared prior to the publication of the budget. I have never heard the Minister of Finance say that was the case. If it is the case, I would just like to have a simple clear answer that yes, that kind of advice was given. Otherwise I still feel that the advice given April 13 is totally irrelevant and that the Minister of Finance made that decision on her own.
Hon. E. Cull: In preparing the provincial budget, from probably the middle of January until budget day itself, I am spending anywhere in the order of probably ten to 14 hours daily with staff dealing with budget matters or dealing with Treasury Board issues. In the weeks prior to the budget, those hours increase -- and staff, I want to assure you, are usually there starting before I do and finishing after I do. I know the hours that they put in are very long. If I was to obtain all of the advice in writing and give all of the decisions that have to be made in building the budget in writing, this binder that I have in front of me tonight, which is three inches thick.... We would have dozens and dozens and dozens of them. The advice -- and I guess you were not here earlier when we canvassed this at length -- that I received from the comptroller general when we made the final decision was verbal. My deputy and I, and others from Treasury Board staff, were in the room with me when we sat down and discussed how to handle this, and a decision was made at that point. The April 13 letter was simply to document what had been said verbally to me prior to making the final decisions.
Vote 32 approved.
Vote 33: ministry operations, $72,211,470 -- approved.
Vote 34: pensions administration, $10 -- approved.
Vote 59: management of public funds and debt, $979,000,000 -- approved.
On vote 60: contingencies (all ministries) and new programs, $57,000,000.
F. Gingell: Just as we did last year, it reminded me that.... I wonder if, in your briefing book, you have a short summary of what items were paid out of last year's contingency account.
Hon. E. Cull: The largest item was the final pay equity payment made to public service employees to conclude our pay equity plan, as I indicated. That was about a third of the total amount. The rest were a number of small amounts related to land acquisitions. There was a transfer to the government of Manitoba to deal with our western Canada tobacco tax smuggling initiative. There was additional funding for the land use coordination office and the multiculturalism initiative, which was launched partway through the year and not contemplated at budget time.
[ Page 15193 ]
Vote 60 approved.
Vote 61: corporate accounting system, $5,950,000 -- approved.
Vote 62: Public Sector Employers' Council, $2,170,000 -- approved.
Vote 63: Public Service Employee Relations Commission, $9,990,000 -- approved.
Hon. E. Cull: I'd just like to thank the opposition critic for a very civilized debate, as usual, and also for cooperating with respect to giving me information on the order of questions so that I could have appropriate staff here, at least for most of what we covered. On behalf of my staff, I will also thank him for his comments about the staff in the Ministry of Finance. I'm glad to hear that you agree that we have a very good crew here.
I move that the committee rise, report resolutions and ask leave to sit again -- for some other minister.
Motion approved.
The committee rose at 8:56 p.m.
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