(Hansard)
TUESDAY, JULY 30, 1996
Afternoon
Volume 2, Number 9, Part 2
[ Page 1181 ]
The House resumed at 6:39 p.m.
[The Speaker in the chair.]
Hon. J. MacPhail: First of all, I'd like to advise the House that we will be sitting tomorrow.
In Committee A, I call Committee of Supply. For the information of the House, we'll be debating the estimates of the Ministries of Employment and Investment; Municipal Affairs; and Small Business, Tourism and Culture. If we get through
In the House, I call Committee of Supply. For the information of the House, we will be debating the estimates of the Ministry of Finance and Corporate Relations and the Minister Responsible for Intergovernmental Relations.
The House in Committee of Supply B; M. Farnworth in the chair.
On vote 29: minister's office, $348,000 (continued).
Hon. A. Petter: I thought I'd begin this evening's session by introducing two officials who are with me today in anticipation of questions concerning the Securities Commission. They are Doug Hyndman, chair of the B.C. Securities Commission, and Carol Anne Rolf, director of policy and legislation with the ministry.
B. Penner: Hon. Chair, I'm going to begin tonight by indicating to the minister that I'll be asking questions primarily having to do with the Matkin report, which I believe was released in 1994, and the government's steps in trying to implement that report. Secondly, I'll be asking questions having to do with proposals to establish a coordinated federal system of securities regulation across Canada.
To begin with, I'd like to just open my remarks by commenting on the Matkin report itself, which was released, as indicated, in 1994. That report received plenty of attention, certainly in the media around the province and in the sectors affected at the time of its release. Most of the reports and commentators indicated that the report was quite far-reaching and had many worthwhile proposals. Since that time, many people in the industry and interested observers throughout the province have watched to see what this government was going to do in terms of implementing that report. Needless to say, some hesitation was initially expressed by certain sectors, particularly in the brokerage area, about certain elements of that report. Nevertheless, I feel that it's important tonight to go at some length through recommendations contained in that report and to find out just what the government intends to do, or has done, in terms of implementing that report.
Perhaps the minister can begin with a fairly general response in terms of his view of Securities Commission regulations in the province and the steps he is undertaking in implementing the general recommendations of the Matkin report.
Hon. A. Petter: I'll give a fairly general response, in part because these issues were extensively canvassed and covered in the past, and in part because I am fairly new to these issues myself. The member will have to forgive me as we find our way to answers together.
[6:45]
The member is no doubt aware that some major changes were undertaken in response to the Matkin report. I believe that response was issued in October of '94 and followed up with legislation in the spring session of '95. That legislation, I can report, was proclaimed and brought into force in January of '96. While the action did not correspond exactly to the recommendations, it was an attempt to try to respond to the basic concerns and recommendations that were brought forward by Mr. Matkin in a way that the government laid out and described at that time.
Some outstanding issues, as I understand it, remain to be addressed, some of which are underway. For example, the securities fraud office pilot project is one issue that remains outstanding, although I think work has been undertaken in that regard. There are issues around the Law Society report on conflict of interest, monitoring the IDA-member regulatory commission proposal, issues around promoters, civil remedies and overall evaluation. I'd be happy to go into some of those if the member has further questions.
B. Penner: We all know that from time to time the Vancouver Stock Exchange is subject to harsh criticism because of certain dealings at the exchange and people associated with it. However, I feel that the Vancouver Stock Exchange does fulfil a very important economic role for the province, in that it helps supply smaller, developmental-stage companies with high-risk capital. Of course, the very term "high risk" leads us to know that there will be some examples where investors are disappointed. That's not to say that regulation doesn't have a strong role to play in all of this.
One of the key recommendations of the Matkin report was to separate some of the functions of the B.C. Securities Commission. One of the critical comments in the Matkin report was that the B.C. Securities Commission held itself out, essentially, as judge, juror and executioner in terms of meting out the penalties and being the enforcer. Therefore, in the report that was released in 1994, one of the recommendations was that a separate body be created to be the enforcer and to free up the board so it could perform more of an administrative and policy-setting role. I was just wondering if the minister could tell us what steps his ministry has taken in that regard.
Hon. A. Petter: Again, I don't want to revisit the issues that were fairly well canvassed at the time, but my understanding is that that was one of the recommendations of the Matkin report that was not embraced by government. The notion of separating adjudication and policy was not embraced by government. The government rejected the recommendation on the basis that an industry-run structure would compromise the underlying principles of independence of regulators from the regulated industry, was contrary to international trends towards increased regulatory independence and could have had a detrimental effect on regulatory effectiveness and harmonization of securities regulation. I guess the answer is that while Mr. Matkin's report contained many recommendations that were acted upon, this one was not.
However, the government accepted the key finding of the Matkin commission that BCSC required increased resources
[ Page 1182 ]
and financial autonomy, and have brought a range of input into policy formulation, in order to more effectively regulate the junior market. There were a number of announcements that flowed from that. So the notion of separating the adjudicative and policy functions that was part of the report was not accepted by the government and did not form part of the government's commitment in response to Matkin.
B. Penner: The minister just commented about giving the B.C. Securities Commission some increased independence and regulatory authority over its own functioning. There has been some talk, as I understand it, of a proposal to make the B.C. Securities Commission essentially a special operating agency. I wonder if the minister could confirm that and advise us what stage that proposal is at.
Hon. A. Petter: Essentially, that is the current status of the Securities Commission today. The commission operates as a separate corporate entity that is self-financing and, therefore, with a degree of autonomy from the rest of government.
B. Penner: I've had the privilege of sitting on the Public Accounts Committee for the last little while. It's often talked about by this government how it has had some successes in establishing SOAs, or special operating agencies, which, as I understand it, operate quite differently than other levels of government. I appreciate that the B.C. Securities Commission has presently, and for some time now, been operating more independently than other arms of the government. My question to the minister is whether the government is considering taking this one step further and officially making the B.C. Securities Commission a special operating agency. There are now, as I understand it, four such entities.
Hon. A. Petter: The answer is no, because the commission currently has a higher degree of autonomy than an operating agency. It operates essentially as a corporate entity which has all of the independence and autonomy that an SOA would have, and then some. It's not necessary to use the creation of a special operating agency to achieve the goals of independence and autonomy that the member refers to. They are already incorporated and recognized by the existing operating structure.
B. Penner: I thank the minister for his comments. As I understand it, the B.C. Securities Commission is self-financing, in that it pays for itself and its staff through fees levied on people seeking to file prospectuses and other documents with the commission. I'm wondering if the minister can advise the House what happens with any surplus that the B.C. Securities Commission may encounter on a yearly basis and what happens to that surplus if it starts to accrue year after year.
Hon. A. Petter: To the extent that there are surpluses, they stay with the agency. As I understand it, the agency is trying to build up a small operating reserve at this time in order to assist in its functions. But if it were happily to be the case in years to come that there were ongoing surpluses that exceeded the requirements of the agency, then the agency would have the happy choice of either expanding its services or reducing the fees that it charges.
B. Penner: I suppose there might be one other alternative: a future Finance minister may be tempted to receive a cash donation from the B.C. Securities Commission. Since I'm new to this area, I wonder if the minister could explain the legislative framework or regulations that prevent the government from accessing those funds at the present time. Is it simply an in-house policy or informal agreement, or is something enshrined in legislation which prevents the government from accessing any annual surplus that the B.C. Securities Commission may enjoy?
Hon. A. Petter: It's within the legislation that the agency is to be self-financing and that the funds raised are for the purposes of operating the agency. This was part of the legislative reform which was brought in in response to Mr. Matkin's recommendations. So that is legislatively provided for -- unlike, I might add, in some other provinces, which do use their securities regulation framework as a source of revenue, which is raising some interesting issues around the federal proposal for a national security agency and around issues of compensation. But in B.C., we moved, through legislation, to this mechanism of the agency being self-financing, having control over its own revenues, and that is provided for in legislation.
B. Penner: Given that the B.C. Securities Commission has some autonomy and independence, particularly with respect to its own finances, I'm wondering if this government has ever considered conducting an efficiency audit to make sure that there is an incentive in place for the commission to run as efficiently as possibly. Presumably, if it were to find itself in a financial crunch, it could always increase the fees that it charges for its services. I'm just wondering what mechanism is in place in terms of making sure the commission operates in the most efficient way possible and doesn't simply -- not that I'm making this accusation, but if this were to happen in the future -- increase its fees rather than find efficiencies within its own organization. What mechanism is there which would prevent the commission from doing that?
Hon. A. Petter: There are some control mechanisms that enable government and the public to ensure that the commission operates in a frugal and responsible way. As I understand it, the fees that are charged do have to be vetted and approved by government; the agency prepares a business plan. Obviously, those who pay the fees would have something to say if the fees were raised, so there are mechanisms -- audits as well -- that provide, through government and perhaps directly from consumers, some mechanisms and pressures that ensure that the agency operates efficiently in establishing its fees and in ensuring that it maintains those fees at an acceptable level.
B. Penner: An additional question with respect to the B.C. Securities Commission. I wonder if the minister could indicate to us the number of FTEs that the commission presently has, and if he could provide this House with some historical perspective, perhaps going back over the last five years, just generally, so we have some idea whether the commission is growing and, if so, by how much.
Hon. A. Petter: The commission doesn't operate on a traditional FTE system. As I understand it, there are currently about 150 staff. That would be an increase over the past five years from around 110. That increase has taken place in a number of areas, but the major area has been enforcement.
B. Penner: You made some reference just now to the number of staff hired, primarily for enforcement. I wonder if you could bring us up to date with respect to the number of enforcement actions the B.C. Securities Commission has seen
[ Page 1183 ]
fit to pursue in the past year and, again, provide some historical perspective as to whether that's increasing or decreasing over time.
[7:00]
Hon. A. Petter: If the member wants some detailed information, I can certainly undertake to have the commission provide it to him. Just looking at the annual report for the year ended March 31, 1995, in 1995 there were 36 notices-of-hearing issued; in 1994 it was 33; in 1993 it was 39; and in 1992 it was 37. I'm informed as well that the commission had about 30 decisions following hearings in the past year, which is up considerably from previous years. I don't have the 1996 number for notices-of-hearing issued, but we could certainly get that, to date, if you want it.
B. Penner: One of the conclusions of the Matkin report was that the regulatory body -- whatever form it took -- should spend more time on and place greater emphasis on prevention of problems rather than going after the problems after the fact and taking disciplinary action. I'm interested in what actions or initiatives this government has taken to implement the recommendation that a greater emphasis be placed on the prevention of problems, for the benefit of investors.
Hon. A. Petter: Through the changes that were undertaken last year, there has been some tightening up with respect to promotional activities and unregistered advising. I understand that the commission is also planning to undertake initiatives in terms of educating investors and in terms of ways to try to be preventive. Of course, it is difficult to prevent, particularly in an area where people are about to commit fraud, but these kinds of initiatives which are responsive to the Matkin report and its recommendations have been undertaken and are going to continue to be pursued by the commission.
B. Penner: Another comment I came across in the Matkin report was a suggestion that brokerage firms be required to undergo some form of fitness test prior to being permitted to continue underwriting new listings. Presumably this is another proposal that would benefit investors and would-be investors, and offer them some assurance that the Vancouver Stock Exchange is indeed a safe place for them to place their investment. I'm wondering whether this particular recommendation has been pursued by this government.
Hon. A. Petter: I understand that if brokerage firms wish to be registered as underwriters, they now have to go through a form of fitness test on a range of different criteria -- due diligence, etc. -- in order to qualify.
B. Penner: Could the minister advise us on whether that has always been the case or whether new initiatives have been taken to ensure the fitness of brokerage firms, for the protection of the investing public?
Hon. A. Petter: The reference I just made is new this year. Registration and the breaking-out of a separate registry for underwriters is a new requirement and was made in response to the recommendations of the Matkin report.
B. Penner: Has the government given any consideration to the recommendation that legislative changes be made to permit class action suits as one form of remedy when parties are aggrieved by misleading or deceptive practices on the part of brokerage firms or promoters?
Hon. A. Petter: Yes, class action legislation has been introduced in this House, and it certainly can be utilized in this context. Perhaps I should make reference to a related issue, and that is that Mr. Matkin recommended the expansion of statutory civil liabilities -- from misrepresentations made in the prospectus to secondary market documents, such as press releases. This is one of the outstanding issues that I referenced earlier. As I understand, a review of a similar proposal is being undertaken by the Toronto Stock Exchange -- by a committee of the exchange on corporate disclosure. The report has attracted commentary and a final report is expected in September and October. In order to ensure that we benefit from that consultation and also look at a regime that can operate nationally, we are watching and awaiting the outcome of that initiative from Toronto, and gauging it before we respond to the recommendations Mr. Matkin made in British Columbia.
B. Penner: I commend the minister for closely watching the procedures and developments in Ontario with respect to their securities regulations. Hopefully, we won't simply wait for them to take the lead but will take some action of our own.
I'm going to go back to a topic I raised a little earlier that, again, has to do with the separation of powers between regulating, enforcing and administering. To go back to the Matkin report, one of the specific proposals was that the government help create a new office known as the securities fraud office which would investigate any complaints coming from the investing public. What are the minister's thoughts in respect to that proposal? I note that the suggestion was that the securities fraud office could fund itself through fines collected in the course of its enforcement procedures.
Hon. A. Petter: I think the member may be, in a sense, confusing two issues. One thing Matkin recommended that the government did not act upon, to reiterate what I said earlier, was a breaking-out of the ordinary enforcing, regulatory and administrative functions of the commission. That was explained at the time; I've tried in capsule form to explain it again.
What the security fraud office proposal does is speak to another issue, and that is around prosecutions, which were never the purview of the commission, to try to build into government the capacity to undertake prosecutions in the area of securities in a way that reflects a greater expertise and consistency and that meets the expectations of the public by providing a prosecutorial role with respect to securities regulation. In respect of that recommendation, which is somewhat different than the other issue, there has been a three-year pilot project, funded up to $3 million by the B.C. Securities Commission, to establish a securities fraud office in the commercial crime section of Crown counsel in Vancouver, plus additional officers to the market manipulation group of the RCMP, Vancouver commercial crime section. That pilot is now underway. The first interim evaluation report to the Minister of Finance and Corporate Relations has reported progress. However, I want to inform the member that there have been some problems in RCMP staffing-up. Another evaluation report is due in September, so we'll be monitoring this closely. But certainly the goal here is to utilize this pilot to try to develop the kind of securities fraud prosecutorial capacity that will be effective in pursuing prosecutions in this area.
B. Penner: I thank the minister for his answer to that question.
I'll just move to a different topic now, still related to securities regulation. It's becoming a favourite topic, I believe,
[ Page 1184 ]
across the country to talk about the harmonization of securities regulation, taking it from the distinct and separate purview of ten different provinces and having a uniform approach across the country. As the minister will probably be aware from his constitutional law classes, the Canadian constitution gives the provinces the right and the responsibility to regulate matters relating to securities. Obviously, a move to harmonize securities regulation across Canada would require some form of intergovernmental negotiation and cooperation and, finally, agreement to voluntarily transfer or give up, at least temporarily, some of the provinces' constitutional powers with respect to securities regulation. At least, that is my understanding. I'm wondering if the minister could bring us up to date with respect to the province's role or initiatives taken in terms of pursuing the potential harmonization of securities regulation and enforcement in Canada.
[7:15]
Hon. A. Petter: It's something to do with property and civil rights, as I recall.
I think the member is right in saying that the primary constitutional authority over securities regulations falls within the provinces' purview. But obviously there has been, for some time, some interest in pursuing the possibility of a national regulatory regime around securities regulation. I don't think it would require the relinquishment of constitutional authority by the province to achieve that. In fact, I think the proposals that are being looked at would involve some delegation of authority, which, in some ways, is an affirmation of authority but an affirmation that results in that authority being passed on -- in this case, for the purpose of a national regulatory structure.
This is an issue that was discussed at official levels prior to the first ministers' conference in Ottawa in June, and it was discussed there as well. The federal government indicated at that conference a desire to proceed with a national securities regulatory agency on a delegated model, with provinces joining on a voluntary basis. There was interest expressed in that by eight provinces. Quebec indicated that it was not interested at this time. B.C. indicated that it would not commit at this time, but I think that was done for some rather specific reasons.
There is obviously a concern, and the member referred to it earlier, about the unique nature of the Vancouver market and the need for venture capital. If there is to be a national securities regulatory agency, there is a concern that it not be one that -- I'm trying to put it gently; I suppose I won't put it gently -- acts as a suction pump for investment in central Canada or disregards the unique character of the capital markets in British Columbia.
The province, while not committing at this time, has continued to participate in discussions. In July, there was a meeting of officials in Winnipeg, I believe. British Columbia is participating in that process. We are trying to ensure that, if and when this national system gets up and running, it is one that will not be detrimental to B.C.'s interests. Then, in consultation with those in securities markets and others, we would have to make a decision as to whether or not we would join this national plan. For now, we're playing a role in ensuring that the national regime is one that leaves some doors open.
I think there are some reasons why B.C. would be rightly suspicious of a national scheme, particularly one that didn't allow for some recognition of the unique nature of B.C.'s securities market, as well as some autonomy and local presence. By the same token, those are issues that may be addressed. If they are addressed, there is the possibility of British Columbia becoming a participant in such a national securities regime, but not in a way that we would relinquish our constitutional authority.
B. Penner: I would like to clarify my earlier comments. I certainly wasn't suggesting that the province transfer or relinquish on a permanent basis any of its constitutional authority with respect to property and civil rights in the province.
One matter gives me some concern, though. With the position the province has taken by being one of only two provinces in Canada so far indicating a lack of interest in pursuing harmonization of securities regulation, we may be getting left out of the discussions and left in the dark. That may be to our future detriment. What particularly concerns me is that our neighbouring province of Alberta, which has never been a champion of centralization of powers, at least in my relatively short life, has been actively getting involved in the discussion and negotiation process and in trying to move forward with proposals to bring harmonization of securities regulation across the country, at least to those provinces willing to cooperate with and partake in the plan. I'm wondering what the minister's comments are with respect to that. I've heard a few rumours about the specifics and about some of the prominent individuals from Alberta who are involved in those negotiations. I'll sit down and listen to the minister's comments.
Hon. A. Petter: I would urge the member not to interpret a lack of prior commitment on the part of the province to join a national securities regulatory regime as a lack of interest. In fact, as I've already indicated to the member, we have an interest. Officials are attending meetings concerning this. We are expressing the concerns we would have about a national scheme if it were one that we were to contemplate joining at some time. I can certainly assure the member that a lack of prior commitment has not brought a lack of attention toward British Columbia's concerns on the part of the federal government. Again, I suspect the situation is rather the opposite.
Interjection.
Hon. A. Petter: No, I don't even think it's a lack of influence. I think the member for Delta South may find that provinces that stand up and speak their concerns publicly and don't just jump when the federal government says to jump get a little additional influence, if anything. Perhaps that's a contribution B.C. can make.
With respect to Alberta, I think there are some competing concerns in Alberta. The Alberta government has indicated an interest in participating in a national scheme, but I know there are some in Alberta who feel differently. I'll be frank with the member: I think that at the end of the day, everyone is looking at competing concerns. They're trying to maintain a regime that reflects the needs of the domestic economy of Alberta or of B.C., and there's the concern that they're competing against each other -- and they do not want to be isolated, either.
I think we're going to have to see how this works its way through. But certainly at this point, given the nature of the B.C. securities market, the nature of the B.C. economy and the historical pattern of national regulatory bodies having been not very favourable to B.C.'s economic interest, if I could put it that way, I feel far more comfortable, particularly in my capacity of Minister Responsible for Intergovernmental Relations, having not made some prior commitment to join some as yet
[ Page 1185 ]
ill-defined or undefined national security scheme, and having said, rather, that until we hear that each and every one of British Columbia's concerns have been addressed, the federal government should not expect to take us for granted or that we would be participants in such a scheme. I think that's a far stronger bargaining position. I also think it's far more reflective of the view of most British Columbians that we should bargain hard and make sure, particularly in the area of provincial constitutional authority, that our interests are not yielded in any way until we're certain that we get in return, in this case, a preferable regulatory regime.
B. Penner: Hon. Chair, I think you would agree with me that the Premier of Alberta has rarely been considered a pushover, particularly when it comes to sticking up for his province's interest. What attracts my attention to this issue is the fact that Alberta apparently has chosen to get in on the ground floor, to have some input and influence in the formative stages of this proposal and to help shape at the very early stages what this national regulatory body will look like.
My concern about the province's present position of sitting on the sidelines is that we may be missing out on the most influential stage of the entire proceedings. I certainly don't want us to miss opportunities to help shape whatever regulatory regime comes into place. If the province decides to go it alone, we would be in the unenviable position of being compared to Quebec, I think, in terms of trying to attract investment to British Columbia. I don't think that would be a positive move on our part. Businesses wishing to list with the various regulatory regimes would have some options. They could list in Alberta, perhaps, and have access right across the country, save and except for two provinces; or they could list in British Columbia, with all the fees and costs associated with that, and have access to one province in terms of conducting their share offerings here.
Those are my concerns, and I don't think they're frivolous. I think I understand the minister's point that sometimes you can get some extra attention by being the bad boy of Confederation, but I wouldn't recommend taking that position simply for the sake of being that. I think we need to take a case-by-case look at our role, in terms of how we cooperate with the rest of the provinces in Canada. Certainly my concern here is based on the fact that Alberta -- a province that has historically stood up very strongly for its provincial rights -- has gotten in very early on the ground floor and, according to reports we're hearing, is having tremendous influence in shaping what this commission is going to look like at a federal level.
I'd again call on the minister to perhaps take that message back to the rest of his cabinet colleagues, because I do feel it's important. I don't think British Columbia should miss out on an opportunity like this to have influence at the very earliest stages of the creation of what could be a very exciting and dynamic new regime in terms of securities regulation in Canada.
Hon. A. Petter: As the member may be aware, there are differing views in the industry in British Columbia concerning the relative merits of having a separate or integrated securities regime in Canada for British Columbia. I daresay they correspond, in general terms, to the conflicting concerns I outlined earlier. It's all well and good to be in a national securities regime, but not if that regime is systemically tilted against the interests of your province. I think we have to acknowledge that there are some differences of views.
Then the question comes: how do you best pursue the interest of British Columbia in that context? The view taken by the Premier, and certainly subscribed to by myself, is that one should not assume that influence is a function of prior agreement -- in fact, quite the contrary. I think the fact that British Columbia has indicated that it cannot be taken for granted enhances its influence, if anything.
Some of the proposals the member is referring to that have formed the basis for some of the work to date were put forward jointly by British Columbia and Alberta, working together through the two Securities Commissions. Mr. Hyndman was involved in formulating those positions. B.C. has attended the officials' meetings and attended, and had voice at, the meeting in Winnipeg recently.
I guess it's just a strategic difference between us, hon. member. Perhaps you'd like to go on the record right here and now, so British Columbians can be clear on your position and your party's position. If you're saying that you believe that British Columbia ought to commit now to joining a national securities regime at this stage, even before we know what that regime is and how well it will serve B.C.'s interests, then stand up and say so, and let the people measure you based upon that deposition. Otherwise, I suggest that the better course is to support this action by this government -- that is, saying: "No, we won't be taken for granted, but we're going to be players." We'll pursue our interests aggressively, we'll put the federal government to the test, and the federal government can demonstrate to us whether they're prepared to put forward a model that will meet B.C.'s interests. If they do, we'll consider it; and if they don't, we won't.
F. Gingell: Hon. Chair, I will certainly stand up on this issue.
Two months ago, this government was in and Alberta's was out. Two months ago, British Columbia was in, and Alberta was out. British Columbia was part of the negotiations that were going on. All of a sudden, over some fish issue, the Premier pulled us out of the negotiations, and we are going to lose our opportunity to make the right negotiations for the right deal. If British Columbia's securities industry isn't part of this national system, it will die. They can get along without us. Anyone who wants to register in British Columbia will be subject to double costs and double registration. We were going along fine, and all of a sudden we got off track.
Our understanding is that the federal government, who have been negotiating in private with Ontario -- and we appreciate that's not the way this should be done -- went to Alberta and said: "What is it that you want to come in on?" Alberta gave them a list, and they said: "Okay, that's done." British Columbia, at that point, who previously had been supportive of this
[7:30]
I'm really concerned that this isn't a terribly strong chip. They can get along without us, but we can't get along without them. It isn't a question of British Columbia standing up for its rights; it's a matter of British Columbia thinking through all of the issues about how the securities industry and its regulation will work after there's Canadian securities regulation in place. What would be the consequences to our own industry if British Columbia is not part of it? It isn't a question of stand-
[ Page 1186 ]
ing up for our rights; it's a question of ensuring that we are part of the group who carefully plans how this is going to happen, to ensure that British Columbia's needs are met. What are our needs? We want there to be a regional office in British Columbia that is independent. We want to ensure that the type of regulatory regime the B.C. Securities Commission has been bringing into play in British Columbia is not denigrated in any way by this nationalization.
My belief is that we don't have to take any position secondary to any other regulatory agency in Canada. We're doing a fine job here, and if you want to look at all the problems that have come about, they've been in Alberta and Toronto. I believe that we have pulled ourselves up by our bootstraps in the last four or five years. We're in a position to play an important role in how this regulatory regime will come about, and I'm scared that we're going to stand back from it and lose the opportunity to make sure that the things that British Columbians want in order to ensure the continued growth, vigour and vitality of the investment industry in British Columbia are going to be lost to us. In my opinion, they'll sure as heck be lost if we're not part of a national regulatory agency that works from the Rockies east, excluding Quebec.
Hon. A. Petter: Let me go back and start where I did last time. I appreciate the member's forthright statement of his position and his party's position. It's refreshing. But he should know -- and I'm sure he does know -- that within British Columbia, amongst the business community and elsewhere, there are some real questions and concerns around the possibility of being isolated from a national regime but also around the possibility of being compromised by a national regime. Officials have already been influential, through the paper that was produced which the member referred to, through ongoing
The member has to understand that B.C. has not pulled out of any process. But that does not mean that B.C. is prepared to roll over for any process, either. Perhaps the trouble with being a provincial Liberal with strong ties to the federal Liberal Party is that one assumes that in order to get anything, you have to roll over first and ask questions later. The fact is that this government is aggressively pursuing B.C.'s interests. That does not mean that we're pursuing an isolationist strategy here or anywhere else. We've been saying to the federal government that we're not prepared to precommit to a national securities regime until we know what that regime entails, what it means for British Columbia and that B.C.'s interests are protected. We're not going to give any prior assurances or commitments, and that strikes me as an eminently reasonable position for a province that has legitimate concerns, shared by many in the business community, in an area of provincial jurisdiction.
No one should assume that that means that we are disinterested. In fact, all of our activities -- from the papers that have been produced, to the participation in conferences, to the meetings with officials -- suggest that we are very interested. But we are going to bargain from a position of strength, not from a position of weakness. We are going to go into this with B.C.'s interests very clearly front and centre, not assuming ahead of time that we are going to be rolled up and assimilated into some national securities regime that's going to act as a suction pump for the interests of central Canada. I'm sorry, those days are over. We will participate in good faith on behalf of British Columbia. I regret the fact that the member opposite takes a different position, but I appreciate the fact that he's been so forthright in stating that position.
F. Gingell: There is a memorandum of understanding that provinces are signing onto -- everybody but Quebec and British Columbia. That memorandum of understanding, as I understand it, provides for a task force for transition implementation. Secondly, it provides for an advisory committee, sitting outside, to advise the transition task force on all of these issues. My understanding is that unless we are inside the tent, we will have no influence and no say whatsoever on either the transition implementation task force or the advisory committee to that task force. Is that true?
Hon. A. Petter: The member is getting ahead of himself and of the process. The MOU he's referring to is a draft MOU. Indeed, the very discussions and negotiations that are taking place are around the structure of that MOU, and no one has signed onto that MOU as yet. Indeed, I think the question will
Far from our being left out of this process, I think we are very much engaged in the discussions around what that MOU might contain and whether what it contains would be sufficiently attractive to British Columbia to make it possible for British Columbians and this government -- and, hopefully, the opposition -- to consider supporting the signing of that MOU. Until we reach that point, we are not prepared to make a prior commitment that would tie our hands or tilt the table.
F. Gingell: Very nice, in that you're a politician and a law professor. I'm a politician and a CA, and neither of us are in the securities industry. I always look for good advice. This government made a point of creating the Securities Policy Advisory Committee, a group of people from the industry, the legal professions and the brokerage industry. If you go through the list of the people on that committee, it's a pretty blue-ribbon group. Has the minister sought the advice of this Securities Policy Advisory Committee on this subject?
Hon. A. Petter: SPAC has been involved in trying to assist government in formulating a position. They've canvassed the business community and others, and have provided their advice. As I understand it, their advice has been: "Definitely no, stay out"; then "Perhaps yes, get in, because we don't want to be isolated"; and then "Gee, we're not quite sure, because other provinces seem to now be reconsidering, and if they are, maybe we don't have to come in"; and ultimately "Whatever you do, stay involved in the process." If I synthesize all of that advice, I think I'm following it.
F. Gingell: Obviously, I get different messages from SPAC than the minister does. My understanding is that under the circumstances that exist at this moment, they are concerned that we should be very careful not to be left out of this exercise. They're concerned that the way we're going at the moment is going to leave us outside this exercise, and we're
[ Page 1187 ]
going to lose our input. We obviously can't spend all evening on this and don't really want to, but perhaps the minister would make available to me any written advice he has received from the Securities Policy Advisory Committee on this subject.
Hon. A. Petter: I don't disagree with the characterization the member has given of the advice to not be left out of the exercise, as opposed to the product of the exercise. In fact, we are very much engaged, as I have been at great pains to say. We are involved, and will stay involved, in the exercise, using the maximum leverage we have at our disposal. I'd be happy to provide the member with any written advice that was provided to me or my predecessor on this matter by SPAC.
F. Gingell: It may, of course, as is so often the case, turn out that we're not that far apart on this issue.
I want to assure you, hon. Chair, that the actions of this government in the last few weeks over the fish issue, and what was said in Ottawa, have caused concern amongst people who are careful, thoughtful students of and experts in this industry and who are concerned about the ongoing role that the British Columbia securities industry will play. They're concerned about remarks that the Premier has made and the rather negative attitude that flowed from them. As long as that isn't the minister's attitude, and if he genuinely wants to ensure that we have influence, that we do play a role, then that is good, and we're all on the same side.
If I may, I will just go back briefly to some of the other issues that were dealt with. The securities fraud office, the $3 million: you mentioned the problems of the RCMP in being able to staff up for their commitment to this. Is a solution being found? Are we going to move forward?
Hon. A. Petter: I'll resist the temptation to respond to the first part of the member's statement before the question, because I don't want to prolong that debate. I will say this: I think most British Columbians feel a lot safer knowing that the Premier is there representing their interests in these and other matters on the national stage. I count myself proudly and enthusiastically among them.
Having said that, yes, I understand that there is work going on, that there have been some additional resources found within the RCMP to staff up and that the Securities Commission is continuing to pursue that. Solutions are being sought.
F. Gingell: One of the most interesting provisions we dealt with when the new Securities Act came in last summer was the issue of disgorgement. I wonder if anyone's coughed up yet?
The Chair: I don't know if the Chair should rule on that remark!
Hon. A. Petter: The term "disgorgement" has certain medieval implications to it.
I understand that this mechanism has not yet been utilized by the commission.
F. Gingell: Is the reason that it hasn't been used yet that no particular set of circumstances had arisen in the provisions of the B.C. Securities Commission? Or have you any concerns about its legality?
[7:45]
Hon. A. Petter: I guess the circumstances for it to be used have not yet presented themselves.
F. Gingell: As the minister probably knows, I was supportive of the decisions your predecessor made as to those portions of the Matkin commission that would be instituted and those that would be left to one side. One of the issues that we had unanimity on amongst politicians was the decision the government made that the chair of the Vancouver Stock Exchange should be a public governor rather than an industry member. It surprised me that I heard more criticism on that particular subject than on any other. A year and a half later, people that I speak to, who I respect, suggest that you made a mistake there. I was wondering whether the issue has come up sufficiently to the Securities Commission or to the minister, from the VSE and others -- perhaps through the public governors of the VSE, who the minister appoints -- to cause the minister to have a second look at that issue.
Hon. A. Petter: Certainly I have not been approached on this issue in my brief tenure as minister. But I'm informed by staff that while there were concerns expressed at the time and there is still some reiteration of those, there has not been, from staff's point of view, a strong and concerted campaign or effort or message that that decision should now be revisited.
F. Gingell: I think that if you look back, the VSE is now into its second non-industry chair. Perhaps it might be appropriate for the minister or a member of his staff to talk to the first chairman, who I haven't spoken to, to get his opinion.
Clearly, the chair of the VSE plays a dual role. There is the role that he plays as chair of the meetings of the stock exchange, and that, I must admit, is where my focus was in being supportive of the chairman of the Vancouver Stock Exchange not being a player in the market. Evidently, just as important is the role of the chairman in representing the VSE on the boards of Canadian and international organizations. A chairman who is not an industry member brings less experience, less understanding and less knowledge of the issues to those meetings. I myself would have thought that role could have been played by the president of the exchange, but I'm led to believe that that isn't the case and that this is a subject that's being revisited.
Hon. A. Petter: Being new to this issue and this portfolio, I guess what I'd simply say is this: based on the limited knowledge I have, it strikes me that there are some trade-offs being made here. On the one hand, having a public governor as the VSE chair does provide a certain aura of credibility and independence, which, I think, can stand such an individual in good stead. On the other hand, obviously it can impair the credibility, internally, of that individual and the efficacy of that individual acting as a working chair of the exchange. What I'd say is that I'd be happy to monitor that situation and hear various views, including the member's, over the course of the next year or two. If there's reason to review this matter, then I'd be happy to do so.
F. Gingell: The Securities Commission finished its first year as an independent body on March 31, 1996. The '96 report hasn't come down yet; at least if it has, I haven't seen it. Can you tell me what the revenues and expenditures are for this year?
Hon. A. Petter: The revenues are $15.6 million and the expenditures are $12.1 million, for a net surplus of $3.5 mil-
[ Page 1188 ]
lion. I'm informed, hon. member, that the report should be available within the next few days, so I'll undertake to table it as soon as I'm able.
F. Gingell: Just one last question, to correct my memory. When the member for Chilliwack was talking about the ability to withdraw excess earnings over and above a contingency fund or
Hon. A. Petter: I think the member may be mixing up two things. As I understand it, when the commission was created on the new model, there was, in the then account, about $13.5 million, $5.5 million of which was sort of earmarked as a fund or a contingency that could be provided to the commission should it require it, with the $8 million coming back to consolidated revenue, I assume.
Interjection.
Hon. A. Petter: All $13.5 million going back, but with the $8 million knowing it wasn't going to return. There is no mechanism in the legislation -- or so I'm informed, and I'm sure that the chair of the Securities Commission would have no motivation to misinform me about this -- to claw back reserves. The commission is expected to manage its affairs in such a way that the reserves do not become excessive, either by expanding its services or by reducing the fees that it charges.
F. Gingell: Shall we move on to another subject?
Hon. A. Petter: What do you want to do -- the B.C. Utilities Commission?
F. Gingell: Yes.
Hon. A. Petter: Assisting me in this part of the estimates is Mark Jaccard, chair of the B.C. Utilities Commission. I simply introduce him to the House as we proceed into this component of the estimates debate.
F. Gingell: It's nice to see the commissioner again. He briefed me some time ago with respect to one of the most difficult issues ever: whether to put up the rates for poor people in the West End to heat themselves in the winter and cut them in the summer when they don't need any heat. Anyway, we won't deal with that issue.
What I'd like to deal with is the relationship between the Utilities Commission and B.C. Hydro, specifically in relation to special directive No. 2, which is a directive sent to B.C. Hydro -- but the Utilities Commission are subject to its instructions. It requires B.C. Hydro, as I understand it, to pay out 85 percent of its earnings, as calculated. . .a rather complex and difficult calculation, I think, for those of us who are accountants. In this year's budget, the government have proposed that B.C. Hydro will pay a dividend to the government of $214 million. Is $214 million the amount that the B.C. Utilities Commission has approved as being the appropriate amount payable under special direction No. 2?
Hon. A. Petter: I'm informed that the two special directions that are relevant here are special direction No. 2, to B.C. Hydro, and special direction No. 8, to the Utilities Commission, and that the $214 million is within the amount that is allowed as a result of those directives. It may well be in excess of that, but certainly it is within whatever amount the formula allowed.
[G. Brewin in the chair.]
F. Gingell: I was going to deal with special direction No. 8 secondly. I am going to deal with special direction No. 2 first.
When you look at the results of B.C. Hydro for the nine months ending December 31, 1995 -- that's the most recent information we have, but it may well be that the Utilities Commission has more up-to-date information than we have -- earnings were down by quite an amount. They were down by $39 million on $118 million, fractionally more than one-third. When we look at what happened in prior years, in 1993-94 the government budgeted for a $290 million dividend, and $245 million was paid. In 1994-95, $235 million was budgeted and $98 million was paid. And in 1995-96, $146 million was budgeted and $125 million was paid. So at no time has B.C. Hydro been able to meet the estimates that were put into the budget.
[8:00]
Now, I appreciate that this statement for the nine months ending in 1995 is for this past year, in which $125 million has been paid. When you look at the trend of B.C. Hydro, I find it hard to understand that they would have earnings available for the purpose of making a dividend payment that's 70 percent greater than was paid last year. Income is going down, but you expect the dividend to go up.
Hon. A. Petter: If the member wants to get into detailed questions around Hydro's operations, the minister, who is in a committee room down the hall, may be better equipped to do that than I am.
In general terms, as I understand it, throughout the industry right now there are major savings being realized in terms of electricity. The expectation is that B.C. Hydro will be able to achieve similar savings, which will help in the contribution towards this dividend.
As with all forecasts and projections, we're going to have to monitor Hydro's activities in order to ensure that they can meet this dividend. If it were to turn out that they could not, we would make the necessary adjustments elsewhere -- hopefully, in increased revenue elsewhere or in cost savings, should there be the need to do so. These projections were made prior to my becoming minister and are now incorporated in the budget, based on the expectation regarding Hydro's ability to achieve savings and also on other expectations regarding Hydro's economic position in the coming year.
F. Gingell: Special direction No. 8 deals with the rate of return that B.C. Hydro can make and is related, as I understand it, to the industry -- and in British Columbia that turns out to be B.C. Gas, basically. The 1994 approved rate of return was 15.23 percent and it was 12.74 percent in 1995. What's the 1996 rate?
Hon. A. Petter: I understand it's adjusted by an automatic formula. We don't have that rate, but I could certainly try to get it and have it communicated to the member.
F. Gingell: The rate is, in fact, known to the B.C. Utilities Commission at this point?
[ Page 1189 ]
Hon. A. Petter: I'm informed that we can find out what it is; it's an automatic rate. It's set, as I think the member suggested, based upon B.C. Gas and long-term bond rates. We don't have it here, apparently, but it's formula-driven. I'd be happy to provide it to the member should he wish to have it.
F. Gingell: I would have thought, honestly, that a number of such consequence would have been burned into the minds of the people who are involved. Have you got a ballpark number? From the 1995 figure of 12-3/4 percent, did it go up or down? It came down by some 2-1/2 percentage points from '94 to '95. Did it continue down, or did it go up? B.C. Gas has just shown record earnings, I see in the newspaper. That may not be relevant, I appreciate.
Hon. A. Petter: I'm trying to find something in the ballpark for the member, but I can't. I guess the best information is that if gas goes down, it goes down; if it goes up, it goes up. I guess we'll have another rate established in November, along with the bond rates, as well. I guess it is not as fixed in the minds of the commission as it is in the mind of the member, but I'd be happy to try to facilitate the communication that needs to take place.
F. Gingell: Hon. Chair, I'm sure that that rate must have been in the mind -- from special direction No. 8, and the requirements of special direction No. 2 and the $214 million dividend -- of the commissioner when his advice was sought on the propriety of this government announcing a rate freeze for B.C. Hydro residential consumers. Can the minister advise us if the commissioner took all these items into account before he advised the Premier on the issue of the rate freeze?
Hon. A. Petter: I'm informed that the commission was in no way involved in the decision to freeze rates; indeed, it would be inappropriate for the commission, as a regulatory body, to do so. That was a commitment made through Hydro. Again, I would suggest that there's another room where people can fire questions regarding Hydro and its policies. This was not a policy of the commission; this was a policy of the government and of B.C. Hydro.
F. Gingell: But in the B.C. Utilities Commission, particularly when we have had a commissioner that has been in office for some
Hon. A. Petter: I think the member is trying to put words into my mouth and, through me, perhaps into the commissioner's. That's not the case. I'm sure if he asks the minister responsible for B.C. Hydro, the minister will be a fount of information as to what the implications of the rate freeze are for B.C. Hydro. The point is not that; the point is that the B.C. Utilities Commission is an independent agency. The government is at great pains not to compromise that independence either by providing direction, by soliciting advice of a political nature, a policy nature or any other nature that might compromise the independent functions of the Utilities Commission.
F. Gingell: Seeing that the minister is being advised by someone who knows more about these issues than 99.99 percent of the population, could the minister advise us what the consequences will be to the non-residential users if you pay a $214 million dividend, and if you live up to the requirements of special direction No. 8?
Hon. A. Petter: It would be inappropriate to have the commission declare itself ahead of time, through me, on a matter that may come before the commission. It's a great trick if you can do it, but lawyers who try to do it with judges usually get into trouble.
Having said that, if memory serves me correctly, I think it was this member who said during the election campaign that he was unimpressed by B.C. Hydro's rate freeze because there wouldn't have been an increase in any event. Perhaps he was aware, as I guess the commission is, of the huge reductions that are taking place in costs within utilities such as Hydro and of the previous decision of the commission not to allow a rate increase. He can reach his own conclusions, based upon that information, as to what consequences, if any, might be visited upon non-residential consumers.
F. Gingell: Thank you for those responses. Looking at the financial statements of B.C. Hydro for the nine months ended December 31, 1995 -- some six months ago -- compared to 1994, I don't see many of these savings taking place. The income, as we know, has been reduced by almost 40 percent -- 39 percent -- so none of those savings have begun to be reflected.
If the minister had really been listening to what I said during the election, what I said is what I said the other day -- that is, I am concerned that organizations like B.C. Hydro should be directed by their directors. If you appoint directors who have responsibility for directing the organization, it is they who should decide what the right thing to do is.
[8:15]
I just have concerns. Without any specific knowledge, it seems to me, from a commonsense point of view, that if your earnings are going down, which they are, and your dividend is going up, which you want it to do, and you have frozen residential rates, the only balloon, the only movement other than some reduction in cost -- which so far has not become apparent -- is that you are going to have to make substantial increases in the cost of electricity to non-residential users. We all know that our competitive position in British Columbia is what determines how many jobs we have. Electricity is an important cost component of family-supporting jobs and manufacturing and chemical businesses like ERCO Industries and Hooker Chemicals. I had hoped to get a response from the minister about the Utilities Commission, which would have considered what effect these various things would have on B.C. Hydro -- and on demand, too, because if you start pushing the prices up for commercial users, then they'll try to find some other means of acquiring their power or going somewhere else.
I guess, hon. Chair, I'm not going to get any further on that subject unless the minister provides a response. The B.C. Utilities Commission is a $10 vote -- i.e., you recover all of your costs by charges to the various people whose applications you hear. During the course of the election, an announcement was made that the Utilities Commission was being called upon to investigate the price of gasoline. I wonder if the minister could advise us what the cost of that study is, if it is complete and who the cost is going to be recovered from.
Hon. A. Petter: I caution the member not to confuse Mr. Jaccard's role as a member of the Utilities Commission with
[ Page 1190 ]
his role as a special inquiry commissioner looking into gasoline prices. The latter is a separate role done under the Inquiries Act; it is not part of this ministry and not part of his role in respect of the Utilities Commission.
F. Gingell: I didn't realize that, because when one hears the inquiry commissioner's name, one immediately ties it to the Utilities Commission. Seeing that the commissioner now has this big contract outside his regular employment, is it the case that his income from the commission is going to be reduced?
Hon. A. Petter: No. Mr. Jaccard's expenses and remuneration with respect to his role as an inquiry commissioner are paid out of general revenue; then there's a commensurate reduction made in what he is paid in respect of his activities as a member of the Utilities Commission. So there is no double compensation, and everything is done according to Hoyle.
F. Gingell: There has been quite an exercise this past year in dealing with certain applications by Westcoast Transmission in relation to new gas-gathering plants -- whether they're all to be rolled into one and all the various exercises. The National Energy Board dealt at some length with the issue of whether this was even in their jurisdiction or in the jurisdiction of the province, as I understand it. Can the minister advise the committee of the result and whether that result is going to change the role, function, work levels and workloads of the Utilities Commission in future years?
Hon. A. Petter: I'm given to understand that this issue is wending its way through the courts. The most recent decision of the Federal Court, as I understand it, is -- no doubt based on arguments of interprovincial undertakings and the like, which I think we'd best not get into -- that this matter is within the purview of the National Energy Board regulatory regime. However, that decision, as I understand it, is on appeal to the Supreme Court of Canada, and we are going to await the outcome of that appeal for a definitive ruling that will determine who has regulatory authority.
F. Gingell: Please correct me if I'm wrong, but I understand that the project itself has been cancelled now, hasn't it? They've sort of backed down from it. Is it the intent of the British Columbia government to ensure that this particular issue moves forward so that issue will be dealt with -- whether this is federal or provincial jurisdiction?
Hon. A. Petter: Let me see if I can answer the question this way. Notwithstanding that the project in question has been cancelled, there are other projects, as I understand it, that fit within the same category and for which this issue needs to be resolved, in any event. The appeal is being pursued by B.C. Gas. I am not 100 percent clear on the status of the appeal -- whether, for example, standing has yet been granted by the Supreme Court of Canada and if the cancellation of the project is relevant to whether the Supreme Court will hear the appeal. I just don't know the answer to that. But the appeal is being pursued not by the provincial government but by B.C. Gas.
F. Gingell: One last question. The world of utility regulation has been changing, particularly as privatization has taken place in Britain, primarily, and in other places. Has the Utilities Commission been watching what is going on there with the various forms of regulation with Ofgas and others? Does the commission believe that there are any lessons for us or reactions that we should have to what's happening there?
Hon. A. Petter: Yes, I'm informed that the commission has been very active in looking at the experience elsewhere and has been a leader in a number of critical areas that I think are relevant.
In two areas in particular, the commission has taken a major leadership role. One is in alternative dispute resolution and negotiated settlement process. In an effort to improve the quality and efficiency of the regulatory process in B.C., the commission has explored different methods of regulation that are alternative or complementary to methods currently used, to provide alternative ways of resolving disputes.
The other is incentive regulation. I don't fully understand this, but as I understand it, the commission institutes direct utility and shareholder incentives for cost-efficiencies that do not negatively affect the quality of service but do allow for the commission to not make regulatory decisions on an annual basis, but rather to allow for that incentive regulation to allow for longer periods between reviews and greater alignment of interests of shareholders and ratepayers. I'm informed that this is a cutting-edge activity of the commission.
F. Gingell: Unless anyone else has any questions for the Utilities Commission, can we thank the commissioner and move along? John is here, and the member for Oak Bay-Gordon Head has some questions.
Hon. A. Petter: I thank the member for the courtesy of allowing me an opportunity to introduce John Cook, who is superannuation commissioner, and who has kindly joined me today to assist me in providing answers to members' questions with respect to pension administration.
I. Chong: First of all, I want to say greetings to Mr. Cook. I never had the opportunity to personally meet him. I just had a picture to refer to, so I'm glad to have the opportunity to speak with him.
The questions I have relating to the municipal pension plan, as you perhaps are aware, are such that there was some concern at the municipal level. I may be rehashing some of these questions and I apologize for that, but it may be the only opportunity that some of these questions are answered. I have before me the municipal pension plan annual reports for 1993 and 1994. I'd like to find out whether the 1995 annual report is in progress and how soon that may be available.
Hon. A. Petter: I believe that I tabled the 1994 report recently, and I'm informed that the '95 report will be ready for tabling by the next spring session of the Legislature.
I. Chong: I want to ensure that the questions I ask are not too outdated, but that is the only information I have to work with.
First, in the '93 and '94 reports, the reference to the actuarial
[8:30]
Hon. A. Petter: Just to clarify, the report the member referred to is the 1994 annual report, which
[ Page 1191 ]
annuation fund, related to valuation as at December 31, 1994. That is now in hand and will appear and will be referred to in the annual report to be tabled next spring.
I. Chong: So I'm to assume that the actuarial has been completed, and if I had questions regarding that, they would be available this evening?
Hon. A. Petter: Yes, that's correct. If the member wants to spare herself the necessity of asking a lot of questions, I'd be happy to arrange, through the commissioner, to provide her with a copy of the report so that we won't have to communicate back and forth about something she can probably understand better than I ever will, by looking at it directly.
I. Chong: I will take advantage of that, but perhaps some of these questions can still be answered. I will take it upon myself to have a further, more detailed review.
The question I have is in regard to the unfunded liability. In 1988, there was reference to it being $1.08 billion; in 1991, it was $1.41 billion. I guess I was waiting for this actuarial evaluation to see whether this unfunded liability would have increased over these three years. I don't want to give you a loaded question. I do want to advise that the reason I'm asking is that I understand that changes recently in the PBSA, which is the Pension Benefits Standards Act, were to provide for unfunded liability to disappear over time. I was hoping to perhaps see some effects of that in the actuarial evaluation.
Hon. A. Petter: Well, it's heading in the right direction. The number for 1994 is $1.309 billion, which is down from 1991, which was $1.411 billion.
I. Chong: I thank you for that answer. It does reassure me somewhat, as I was concerned that it was going in an increasing direction.
Referring now to the municipal pension fund, I note that it is a trust fund where contributions accumulate and are invested to pay the current and the future pension benefits. I'd like some clarification as to what is meant by benefits -- by that I mean whether it's strictly benefits of a monthly amount as a pension amount or whether that includes a number of other entitlements.
Hon. A. Petter: In addition to monthly benefits, some of the additional benefits that are provided are extended health, MSP and some dental benefits.
I. Chong: That was what I was expecting. I just wanted to ensure that there were no further amounts included in that.
The next question I have is: who would determine what the benefits are should there be increases to that amount? If some other benefit plan were to be introduced to the pensioners, who makes that determination?
Hon. A. Petter: Government, through Treasury Board, would ultimately make that determination based on recommendations received from the Municipal Pension Board.
I. Chong: Just to confirm, then: would the criteria that form the basis for any changes to benefits or increases in benefits -- such as increases in the amounts provided for in extended health or dental benefits, etc. -- be under the purview of the Municipal Pension Board?
Hon. A. Petter: Yes.
I. Chong: On my question regarding the Municipal Pension Board, I note that the commissioner serves on this board and is also the chair of this board. I read in the notations to the annual report that this board, amongst its responsibilities, provides direction to the commissioner on the application of the various plan rules. I would like to know whether there is, I suppose, a conflict, in that the board members are providing direction to their own chair within that board.
Hon. A. Petter: Any potential conflict that might otherwise arise is resolved, as I understand it, by the chair of the board exempting himself from any decision-making which could affect decisions made by him in his capacity as plan administrator.
I. Chong: My concern, then, is: where is the independence in this? Ordinarily, on any board or agency where you have a board of directors, the members who serve on it work collectively with the chair and then pass direction to the administrator or CEO of that particular organization. I'm sure Mr. Cook is well qualified to serve as the chair of the board and the CEO of this particular plan, but my concern is: how can we feel assured that there is, in fact, independence in his role in this? Shouldn't there be a chair who is not related to the Municipal Pension Board?
Hon. A. Petter: I suppose the answer resides in the plan's members and, to some extent, in the government. If they do not feel that this current arrangement provides a regime that is reflective of their interests, then they are free, I suppose, to indicate that. But to this point, there has, to my knowledge, been no indication of that from plan members, and certainly not on behalf of the government.
I. Chong: I'll move further on, then, to the provincial treasury. I noticed there was an investment advisory committee in place in 1993, which met every quarter for the purpose of reviewing investment strategies and performance. I could not see this advisory committee having any involvement in 1994, so I would ask the minister to confirm whether this committee still exists and, if it was abolished, when it was abolished and who is now assuming those responsibilities.
Hon. A. Petter: As I understand it, the committee acted in an advisory capacity to the minister, and that capacity has now been folded into the pension board. So the pension board continues to act as an advisory committee on investments to the minister.
I. Chong: I'm not sure if I understand the ramifications of that. Is the minister saying that the investment advisory committee has been eliminated as a result of the Municipal Pension Board being established, whereas the Municipal Pension Board acts on issues not related to investments? I'm wondering where the investment planning and strategy reviews are being conducted.
Hon. A. Petter: I'm advised that the functions of the investment advisory committee, through statute, have now been conferred upon the board, but the functions have not altered. In other words, the same functions are being performed by the board through statute.
I. Chong: Can the minister advise whether those who are on this board have any expertise or background in investment strategy and review?
[ Page 1192 ]
Hon. A. Petter: Maybe it will help if I clarify it in this way. The membership of the pension board, as I understand it, is essentially the same as the membership of what was previously the investment advisory committee. Although the committee has been disbanded in name, the individuals are essentially the same. The expert advice, which was sought by the committee and will be sought by the board, comes in the form of expert advice that is obtainable through contracts with experts in the field. So really, there's been no change in the expertise or the relationship with those who have expertise as a result of this legislative shift.
I. Chong: I don't want to belabour the point, but I must request clarification again. In 1993, the annual report states that there was a municipal pension plan advisory council, and it lists a number of people on that committee: representatives from the municipal employees' pension committee, the Union of B.C. Municipalities, etc. There is also mention of an investment advisory committee, and I note in there that the members on that committee are different than those on the municipal pension advisory council. So there were two committees set up in 1993.
In the 1994 report, I see no reference to that investment advisory committee, yet I see a new committee being set up as the Municipal Pension Board. My concern is that a committee has been eliminated, which dealt with reviewing investment strategies and performance, and which met every quarter for the purpose of those reviews. I'm concerned that now that is not being handled by another independent committee.
[8:45]
Hon. A. Petter: If the member is suggesting that there was a different structure -- namely, that the investment advisory committee and the investment advisory council were different -- that doesn't seem to strike a responsive note over here. Unless the member has some new information we're not aware of, I think the assumption we're making is that the investment advisory committee and investment advisory council are one and the same.
What's happened to the pension board is that those same representatives have moved over to the pension board, and there has been the addition of some government representatives, including, as I understand it, a representative from the UBCM. They continue to essentially perform the same function in the same way as the committee did, seeking and enlisting the same expert advice that the committee previously would have.
I. Chong: I'm not suggesting anything other than what I've seen in the 1993 report. The municipal pension plan advisory council's membership is here in the 1993 annual report, and one of its functions, of course, is to review pension plan investment strategy and performance. I turn over the page and see an investment advisory committee, and it also lists members such as the commissioner, someone from the Municipal Finance Authority, someone from the municipal employees' pension committee, the deputy commissioner and the superannuation commissioner. So it does show that there are two separate entities, whether you want to call them a council or committee.
When I was going through the 1994 report, which was just tabled, I saw that there is, in fact, only one board or committee now, the Municipal Pension Board, and it seems to have taken over the functions of the municipal pension plan advisory council. So I'm concerned that the investment advisory committee no longer exists. Not knowing what has happened in 1995, I'm just looking for a bit more clarification as to what I could expect.
Hon. A. Petter: I appreciate that clarification; it seems to have triggered the necessary recollection. As I understand it, the two entities the member is referring to performed two complementary functions: one was with respect to investment advice and the other one with respect to pension advice. Both of those functions have now been rolled into the pension board.
If the member wants to get into this level of detail around these kinds of fine structural changes, I would be more than happy to arrange a briefing with the commissioner so that this information could be provided without having to use me as an intermediary. God knows, I'm not a very effective intermediary in these kinds of matters, given the expertise that exists in the two parties I'm trying to mediate between. So while I appreciate the member's interest, if the member felt that her interest could best be pursued, as I think it might, through a direct briefing from the superannuation commissioner, I'd be more than happy to facilitate that and spare her the agony of having to hear my secondhand accounts of answers to her excellent questions.
I. Chong: I thank the hon. minister for his comments, and certainly I will avail myself of that opportunity. I don't mean to get into that fine detail, except for the fact that you had confused me when I was trying to determine the structure of the plan. The reason I was asking these questions was more general in nature. It was to find out whether there was something in place that would ensure that there was a group meeting on a quarterly basis, as in the past, and reviewing the investment strategies and performance, because I am concerned regarding this plan and the potential for its sustainability. If the duties have in fact, been rolled together, which I will speak with the commissioner about, perhaps you can answer one last question on this area, and that is whether or not, or how often, the Municipal Pension Board does in fact meet.
Hon. A. Petter: I am informed that the pension board meets three times a year as a separate board, and then it meets together with the other pension boards, for the fourth time, once a year. One of the functions the board performs in each of those quarterly meetings is to review the pension and investment matters that the member refers to.
F. Gingell: I am actually pleased to hear that things have moved forward. I was the B.C. School Trustees' appointee to the teachers' pension board -- whatever it was in the mid-seventies -- and we weren't allowed to do anything. We were handed a little bit of wood with a piece of rubber on the bottom of it and one of those ink pads as we came into the meeting. That was the total extent of our ability to do anything.
There was one issue that I wanted to bring up. I believe 1996 is the year that British Columbia gets involved in discussions with the federal government with regard to the Canada Pension Plan. Is it your superannuation commissioner that advises the government on those issues, and have I got the right year?
Hon. A. Petter: No, it's not the superannuation commissioner who would be the official responsible for this. I think the member is correct: yes, Canada Pension Plan discussions
[ Page 1193 ]
with the federal government are taking place, as the member is probably aware from the news media. This year there has been a whole consultation procedure around the Canada Pension Plan. If the member wanted to raise those questions, I could have an appropriate official here to discuss it, or we could simply discuss it separately at some future time.
I. Chong: A lot of the questions I have are directed more in detail to the commissioner, so I won't use this opportunity to use the minister as intermediary.
Perhaps I can ask what has occurred at this time with the UBCM recommendations from 1995. There was an extensive review of the municipal superannuation plan, there was input requested, and there were some concerns by municipalities and school districts as well as regional districts regarding the sustainability of the plan. I understand that there was a promise that this would be reviewed, and I'd like to know the status of that.
Hon. A. Petter: I am informed that UBCM has a representative on the board. To date, the only issue that has been communicated to the board from the UBCM has to do with employer contribution rates. Other issues that may have been the subject of the concerns the member is referring to have not yet been formally communicated to the board, although they could obviously be communicated through the agency of this representative.
I. Chong: Am I to understand, then, that the only issue that has been raised at this time is the employer rates? If that is the case, would the minister advise what, in particular, the employer rates are that we're concerned about? Employer rates represent a downloading onto local governments and jurisdictions.
Hon. A. Petter: I understand that the employer contribution is currently governed by a formula that tracks age, sex and the maximum retirement age of employees. The issue being looked at here is the formula and whether it should be maintained or altered in some way. This is part and parcel of a review which is likely to take the better part of a year or more to resolve.
I. Chong: What I'm hearing is that there are a number of factors that will relate to the employer contribution rate. Can the minister then confirm that it does not entail unnecessary increases to the employer contribution rate? Is that an assurance I can get from this minister?
Hon. A. Petter: I understand that the goal is not to increase the overall employer contribution, but by revisiting the formula -- if there are changes in the formula -- the relative contribution of particular employers may go up or down. But the goal is not to change the overall contribution.
I. Chong: I take it that you're looking at the base, and I'm quite comfortable with that at this time. I would like to ask one more question regarding the plan. I know that I may have to refer to the commissioner at a future time, but I'll ask in case you have an answer. It concerns the inflation adjustment account. There was some concern regarding this. The purpose of this account was, as I understand, to ensure that those who are retired will continue to have their pensions appropriately indexed. I'm wondering whether the inflation adjustment account has been subjected to an actuarial review as well. I understand that it had been excluded at a previous actuarial review.
[T. Stevenson in the chair.]
Hon. A. Petter: I understand that it is, and continues to be, excluded. I understand that there are good reasons for that, relating to what is susceptible to review. The reasons are highly technical and, again, this is a matter the member could take up with the commissioner who could explain it more eloquently, fully and accurately than I am capable of.
[9:00]
I. Chong: I'm disappointed to hear that, because that was a major concern for review when I sat on a particular task force. The inflation adjustment account did bring some concerns as the number of retired pensioners continued to increase, and the members that I spoke to continue to be concerned about that. So I am hoping that I will get to speak on this matter at a future time and to ask this minister to reconsider that.
I will move on to one last question -- and I'll let you off easy this evening -- and that is to ask whether the minister is aware of any ongoing discussions or potential discussions about the re-establishment of a municipal sector distinct pension plan. That was one of the items that was being asked for at the UBCM level -- that a distinct municipal plan be set up strictly for municipal employees versus the combined municipal plan that is in place now. Has there been any further consideration of that?
Hon. A. Petter: I am not aware of any, and I don't think any proposal, to my knowledge or to the commissioner's knowledge, has come to the board in that regard.
I. Chong: As I stated, that was going to be my last question, and I will stick to my word. I just want to thank the minister and the commissioner for providing me with some answers and some direction for where I can get further answers. I will pay a visit to the commissioner's office in the very near future.
K. Krueger: The official opposition has asked me to ask some questions concerning the government's policies on gaming in general: the B.C. Racing Commission, the B.C. Gaming Commission and the B.C. Lottery Corporation in particular.
As I made my way through the estimates books, I began to feel as though I was involved in a lottery game or a game of chance of some kind myself. There were transfers in and transfers out of many different ministries -- Labour, Government Services, Sports, Multiculturalism, Human Rights and Immigration, Finance and Corporate Relations, and the Attorney General ministry. It was like Super Mario Brothers. It was really puzzling, because I knew that the destination was to be the Finance ministry, but the major book -- the 270-odd-page book -- shows these transfers to the Attorney General and away from Sports and into Labour and back and forth, and it didn't really end up with the Finance minister.
Then the supplement to the estimates shows the B.C. Racing Commission and B.C. Gaming Commission finding a final resting place for the year, apparently, in the Ministry of Labour. Of course, I knew they couldn't stay there, and in the end there is a page stapled into the back of the main estimates book, a two-sided page. On the back of it, we see this very latterly move of the Racing Commission and the Gaming Commission to where they are supposed to be. Apparently the buck stops here; the buck stops with the Finance minister.
So if I ask some questions that should seem obvious to people who have been through these routes before, pardon me. This is my first time through.
[ Page 1194 ]
The B.C. Lottery Corporation is reporting gross earnings in the amount of approximately $800 million per year. Various sources have indicated that the total gross economic activity of gambling in British Columbia is substantially higher than that. I wonder, to begin with, if the minister could tell me what the approximate figure is as to the gross intake from gambling activity in British Columbia per annum.
Hon. A. Petter: To explain to the member: first, he can be assured that his questions will be fresh and alive to me, because I'm as new to this as he is; second, I'm just waiting for some staff to arrive to assist me in answering his questions, so perhaps we can just take a minute or two while they do so.
Let me start by introducing the two officials who have joined me here. On my left is Dick Macintosh, who is chair of the B.C. Gaming Commission. Mark MacKinnon is a senior projects analyst with the Ministry of Finance. I will now endeavour to get the answer to the member's question.
K. Krueger: Hon. Chair, I apologize to the minister that we didn't warn him earlier. We weren't sure when this would come up.
My first question was that I wanted to get a handle on the approximate total of gaming activity in British Columbia. I mentioned that the B.C. Lottery Corporation reports gross income in the amount of somewhere around $800 million per year. Of course, there are a lot of other activities as well. Do we have a global figure for the amount of economic activity in gaming per year in British Columbia?
Hon. A. Petter: Yes. In addition to the $800 million or so through the Lottery Corporation that the member refers to, the figure I have for B.C. charitable gaming on top of that will be gross revenue of $668 million.
K. Krueger: On pages 4 and 5 of the main estimates book, some net income figures are shown: $262 million estimated for '96 and '97 from the B.C. Lottery Corporation; on the same page, $21 million in public gaming licences and permits; on the facing page, page 4, $6 million from horse racing. Are these the total net proceeds to government revenues from gaming in British Columbia?
Hon. A. Petter: I'm not exactly sure I picked up on all the different headings the member mentioned, but these are the figures that represent the contribution to the consolidated revenue fund from the respective activities: horse racing, the British Columbia Lottery Corporation, public gaming licences and permits, etc.
K. Krueger: I wanted to ensure that I hadn't missed any lines of income beyond the ones I mentioned, which were the public gaming licences and permits, proceeds from the British Columbia Lottery Corporation and horse-racing revenue. Are there any other areas of revenue from gaming shown elsewhere in the government's books?
Hon. A. Petter: To the best of my ability to determine, it appears that those are the major sources -- indeed, the only major sources -- of gaming, lottery and horse-racing receipts that come into the consolidated revenue fund.
K. Krueger: My thanks to the minister. We're fellow seekers on this road, and that's all I could find as well.
Looking at the percentages, if we're talking about $1.5 billion in economic activity and about $300 million net to the government each year, I would like to relate those numbers later to social issues I want to raise. I'll just leave that thought with you for the moment.
Given the struggles that the province has in balancing its budget and the deficit situation from last year, has any active consideration been given to expanding gaming in British Columbia and deriving greater income from these sources?
Hon. A. Petter: First let me introduce another official who has happily joined us: Gail White, who is branch manager with the British Columbia Lottery Corporation here in Victoria.
In the 1994 policy there was, I believe, provision for the expansion of bingo. That continues to stand as policy. In addition, as the member is aware, the government is undertaking a complete program review of all government activities, and certainly gaming activities will be subject to scrutiny along with others. There is, I suppose, the potential to look at gaming activity as a possible source of revenue, although that must also be balanced against some of the social concerns that always surround these kinds of questions.
[9:15]
K. Krueger: Turning for a moment to the question of advertising, could I get a global figure for the expenditures of these various corporations or commissions, arms of government, on advertising gaming in British Columbia in a year?
Hon. A. Petter: The Gaming Commission, while it does excellent work, finds no need to advertise. On the other hand, the Lottery Corporation, of course, does extensive advertising. I'm told that the figure for '95-96 is in the vicinity of $10.6 million. That includes all buys -- television, billboards, radio. Whatever is entailed in the promotional activity would fall within that $10.6 million.
K. Krueger: I'd like to know if the government lays down any guidelines for B.C. Lottery Corporation as to the nature and the cost of the advertising that it does.
Hon. A. Petter: I'm not aware of any guidelines per se. Obviously, government reviews the activities of the Lottery Corporation with a mind to ensuring that dollars are well spent. I'm told that in this particular instance, the ratio and recoveries that are done by the Lottery Corporation in respect of advertising are very favourable. In other words, the amount they spend on advertising in terms of the amount they get back in patronage is a very good ratio in comparison to other jurisdictions. It compares very favourably.
K. Krueger: I've had considerable input from the public about the "I'm sorry, so sorry" ads of the B.C. Lottery Corporation. People feel as though those ads cross the line between making people aware of the size of the jackpot, and so on, and actually making people feel badly about not having purchased tickets. Rather than being explanatory, they go into what people feel is almost a form of coercion. That's one of the reasons why I asked about guidelines. I wonder if the government is looking into that sort of guideline. Perhaps it's more a matter of taste than dollars and cents.
Hon. A. Petter: I'm informed that the corporation itself does market research in respect to its commercials. I'm not familiar with the commercial; at least, I don't recall it. I'm informed that that one apparently does very well in market
[ Page 1195 ]
research in terms of public approval -- it's the second-most popular. If the member wants at some point to explain to me his concern, I'd be happy to review it and consider what the concern is. I'm told that internal to the Lottery Corporation there is market research and review done of their commercials, and I've already indicated the outcome in this regard.
K. Krueger: I'll spare everyone the agony of hearing me try to sing the commercial for the minister.
Interjection.
K. Krueger: My colleague says he'd like to hear it, but it wouldn't even look good in Hansard. It actually says, "I'm sorry, so sorry, for being such a fool" -- that I didn't buy the bonus, is the point. So I appreciate the minister's commitment to have a look at that.
Looking at the Ministry of Government Services annual report for 1994-95, I want to ask about the gaming policy project outlined on page 16. The preamble says: "The gaming policy project has the responsibility of developing and recommending to government a comprehensive policy on the regulation and conduct of charitable gaming in B.C., including the role of the first nations. A part of this project is the evaluation of potential gaming expansions." I take it that's a different project than the one leading to the Report of the Gambling Policy Review dated October 1994, in that this report is dated March 31, 1995, and refers to a project that, apparently, wasn't complete at that time. Could I have that clarified? Is there an ongoing gaming policy project?
Hon. A. Petter: As I understand it, there were essentially two parts to the same enterprise: one was the policy component, and the other was an implementation plan that culminated in the announcement of the implementation through a news release in the spring of '95.
So the answer is no, that initiative does not constitute an ongoing policy review. However, I go back to the point I made earlier, that government is undertaking a comprehensive review of all programs. Gaming will fall within that review, and there may well be elements of that review that look at gaming policy. I don't want to mislead the member into thinking that gaming is not going to be subject to review -- not as part of the continuation of the projects he's referring to, but rather as part and parcel of the comprehensive review of government programs I've just referred to.
K. Krueger: The gaming policy project referred to in that report set out three specific goals. I wonder if we could learn the status of those initiatives. One is to "obtain input from affected parties and stakeholders on implementation issues." What is the status of that?
Hon. A. Petter: Following that recommendation, consultations were undertaken with representatives of bingos, casinos and charities -- some meetings together, some meetings apart -- to discuss issues of implementation with respect to policies affecting those particular interests.
K. Krueger: A second goal stated was to "reach a negotiated agreement with first nations on gaming issues." What is the status of that initiative?
Hon. A. Petter: The short answer is that the negotiations broke down, and there was a news release issued May 9, 1995, indicating that they had broken down and giving the reasons, quoting the Government Services minister of the time as saying that the First Nations Summit was looking for a significant increase in the number of facilities and wanted casinos which were more like Vegas-style operations -- large numbers of table games, high betting limits and slot machines -- and that this was incompatible with the government's policies. So that broke down, but I understand that subsequent to that some first nations were coming forward and expressing an interest in securing opportunities to share in the proceeds of gaming activities on the same basis as other groups, through the charitable opportunities that exist for bingos, etc.
K. Krueger: Are there ongoing negotiations, or have negotiations resumed with first nations pursuing that goal of an agreement on gaming issues?
Hon. A. Petter: No. The negotiations reached an impasse and were broken off, and they have not resumed.
K. Krueger: Were the negotiations that took place -- or whatever success did occur -- ever publicized, or were the matters all held in confidence, other than the news release that the minister referred to?
Hon. A. Petter: No, there was not a publication, if I can put it that way, of the positions taken in the negotiations or whatever. The negotiations broke off, and the news release I referred to outlines in fairly clear terms the reasons why, at least from the government's point of view, the negotiations failed, and the objectives of the province that could not be met in those negotiations. To the extent that there was information gleaned through the negotiations, that has been factored into policy decisions that have been announced, but the negotiations themselves have not been publicized in any way.
K. Krueger: The various documents that I've resourced in preparing for my questions have indicated that first nations people have about a 0.5 percent share in the gaming proceeds derived in the province through gaming activities, and I'd like to know if that is still approximately their share of the proceeds.
[9:30]
Hon. A. Petter: The figure that I have available to me is with respect to charitable gaming, and it's about 2 percent of charitable gaming, as I understand it, that is directed specifically to first nations. Then, of course, first nations citizens benefit, as do all citizens, from the benefits and proceeds of gaming activities. But as a specific beneficiary, it's 2 percent of charitable gaming.
K. Krueger: The third and final goal of the gaming policy project referred to in the 1994-95 Ministry of Government Services annual report was to "develop a legislative framework for charitable gaming issues." Close to the bottom of the left-hand side of page 17, the statement is made: "The next step will be the implementation of comprehensive gaming legislation and regulations that will provide the necessary foundation for future gaming decisions." Could we learn the status of that initiative?
Hon. A. Petter: Yes, there has been work done on draft legislation. However, it has been placed in abeyance pending the outcome of the Nemetz inquiry, in the expectation that that inquiry will have something to say and some recommendations to make that will be relevant to legislative changes.
[ Page 1196 ]
K. Krueger: That makes eminent good sense to me, again.
That same report, on page 17, gives a brief status report on the public gaming branch. I'd just like to have clarified the present status of the public gaming branch -- whether it has a budget and whether it has a staff.
Hon. A. Petter: My understanding is that the public gaming branch ceases to exist as a separate entity. Most of its functions were absorbed into the commission. I understand there were some smaller functions -- audit functions -- that essentially were transferred over to the Attorney General ministry and are now performed within the context of that ministry's activities.
K. Krueger: I kind of thought that, but there was nowhere that it says that sort of thing. FTEs and budgets come and go, and move between ministries.
I was also really puzzled by the 1993-94 annual report of the Ministry of Government Services, in that this document, on page 17, refers to the gaming policy implementation project, although it was written a year before the document about the gaming policy project. It would be an implementation prior to a project having been initiated, so it must be a different project.
It says: "This project, begun in February 1994, has the mandate to develop a comprehensive government policy on the regulation and conduct of gaming in B.C., including the role of first nations." I just want to clarify that there haven't been two different initiatives. Perhaps these are both the same initiative mentioned in that peculiar way in the two reports, and the status is the same -- nothing is presently ongoing with first nations. Is that correct?
Hon. A. Petter: It is correct that there is no consultation process or negotiation with first nations with respect to aboriginal gaming, other than the opportunities that are available to first nations to apply for and participate in the current framework of gaming activities that exist.
K. Krueger: There are a number of references in the material to a quote by then Premier Harcourt in the fall of 1994 to the effect that there were at that time 10,000 illegal video lottery terminals operating in British Columbia. I would like to know whether the government feels we now have a handle on those activities and whether those machines have been shut down.
Hon. A. Petter: Yes. The member may be aware, as he may have raised this matter already in the Attorney General's estimates, that the Attorney General, I believe, struck a committee with RCMP representation and other representation to look at the problems around grey machines and how to ensure that illegal machines were shut down. I do not know the progress to date on that, but the Attorney General would know through that committee.
K. Krueger: There has been a figure of 50 percent that I've repeatedly heard: 50 percent of the net proceeds of gaming in British Columbia that flow to the government are directed to the Ministry of Health. Is that correct?
Hon. A. Petter: Fifty percent of lottery proceeds flow into the Health special account.
K. Krueger: The reason I ask is that I've had a lot of input about problem gambling and gambling addictions that people develop in British Columbia, and I wonder if any portion of that money is designated to deal with that problem, in that it's so integral to the source of the income.
Hon. A. Petter: I'm not aware that the funds in Health from that 50 percent are specifically targeted for addiction problems. I can't confirm that for the member. There has been some work done, as I understand it, initially within the Ministry of Health -- and I think it may be well worth pursuing now -- on addiction problems and addiction programs, and looking at some of the work that has been done on alcohol and other kinds of addictions. But I think this is an issue that, if the member has suggestions, we could perhaps pursue and consider what might be undertaken. I'd be happy also to see what programs are currently provided within the Ministry of Health that deal with addiction. Maybe this is an area where we can work together in considering what kinds of programs should be offered.
[G. Brewin in the chair.]
K. Krueger: I really appreciate that gracious answer from the minister. It's an issue that affects families tremendously deeply and affects them in many ways. I've talked to people who were divorced because one of the partners developed a gambling addiction. People have lost all their assets; people have ended up on welfare. A young woman called my office just recently. She had learned that I was the opposition's gambling critic. She was in tears. She said that her father has developed a gambling addiction, that he buys tickets all the time and that it's driving her mother to distraction. The family is falling apart. She tried to speak with him about it, and he choked her until she couldn't breathe. She still couldn't swallow when she was talking to my office. It does terrible things to people.
The B.C. Lottery Corporation, as I understand it, commissioned the Angus Reid Group -- probably in 1993, since the report was written in January 1994. I don't want to take a lot of the House's time, so I'll just go to the conclusions. It says:
"Implications. Combining the present survey results with the most recent census data, we estimate there are between 12,700 and 42,100 current probable pathological gamblers in British Columbia; assuming that half of these eventually seek assistance, treatment will need to be provided for a minimum of 6,000 cases. Bingo, casino and horse-track bettors represent the most at-risk gaming segments for problem gambling behaviours."
In conclusion, it says:
"Gambling represents an extremely popular range of activities in British Columbia. The vast majority of the adult population has participated in one or more types of gambling in their lifetime. This gambling generates substantial revenues for the provincial government, charities and other organizations in the province on an annual basis. While the majority of British Columbians participate in legal gambling activities in a responsible way and experience few negative consequences, the results of this study indicate that there are substantial social, economic and health concerns associated with legal gambling in British Columbia."
Because of the order of estimates and the way that they've come up, I haven't yet been able to ask in the Ministry of Health estimates whether there are any programs and funds specifically directed at that problem, although the Minister of Health did stand in for the Minister of Social Services. I think she was answering from a Social Services point of view, but she said there were no designated funds. The Minister of Social Services didn't even want to answer the questions.
Of course, it wasn't really the Attorney General's area when I asked him about that, although he certainly has to deal
[ Page 1197 ]
with the costs of crime and crime-fighting through his ministry, and doubtless the sorts of desperate situations I've discussed lead to crime. Clearly they lead to people falling into the social safety net who wouldn't otherwise be there.
Just to wrap up those numbers, there are larger numbers contained in the report of the gaming policy review written by the Ministry of Government Services in October 1994. Those are that approximately 3.5 percent of British Columbians have a gaming problem. Provincial action on problem gambling should address this issue comprehensively from prevention to treatment. So 3.5 percent of the population would be something over 120,000 people. There are numerous assurances in this report and in others I have that the government is coming to grips with this issue, but the victims tell me that they just don't know where to go. As I said, I really appreciate that commitment. I will be following up on it. I think it would probably be relatively easy to direct some of that income stream to dealing with the social problems that flow from the issue.
One thing that puzzled me a bit in the estimates was a mention of debt on the part of the B.C. Lottery Corporation, but it isn't necessarily theirs. It's on page 2 of the main estimates book. A debt of $95.7 million is shown in parentheses and categorized as "other debt," to be reduced to $47.6 million in 1996-97. Then, in the fourth subnote, the explanation is that it includes all kinds of things: student assistance loans, the British Columbia mortgage assistance program and non-guaranteed debt of the British Columbia Lottery Corporation. I wonder if we could have a breakout of how much of that debt is the non-guaranteed debt of the British Columbia Lottery Corporation and an explanation of how it happened, when they generate such substantial income.
[9:45]
Hon. A. Petter: I'm just looking at the 1994-95 annual report of the B.C. Lottery Corporation, and it indicates the long-term debt at $4.7 million for 1995. I'm guessing that it relates to the capital program, but I don't know that for a fact. I'd be happy to get that information for the member; I don't have it at hand.
Interjection.
Hon. A. Petter: A usually reliable source informs me that it's a mortgage
K. Krueger: The knowledge of that source never ceases to astound me, and sometimes you just don't think to ask the right person.
The B.C. Lottery Corporation has two large operations, one larger than the other: one in Kamloops and one in Richmond. I'd like to know whether the minister, or the people with him, has given any consideration to consolidating the two operations into one and has studied what savings and efficiencies might be achieved through that business move.
Hon. A. Petter: In 1991, as I understand it, Ernst and Young Management Consultants conducted a review of the organizational structure of the B.C. Lottery Corporation, and the findings from that report indicated that the departments are located where they are for valid business reasons. The goal has been, from the inception of the corporation, that whatever can be in Kamloops will be and that whatever must be in other areas of the province will be kept to a minimum in order to do the job that's necessary. Various departments located in Kamloops are there, by design, to fulfil a mandate to locate in Kamloops any functions that can reasonably be located there. The rationale for locating certain functions in Richmond is based on the requirement to be in the lower mainland in order to accomplish the primary responsibilities of that particular function or department -- for example, marketing support and advertising.
There's a note here to suggest that one of the reasons for a substantial number of employees being located in Richmond is the sales and marketing activities that are concentrated in the lower mainland, where the most significant number of customers reside. That's a 1991 study.
Again, we're doing a program review that includes all aspects of government, but the most recent review that was done suggests that there are legitimate business reasons for the current configuration of operations in both Richmond and Kamloops.
K. Krueger: My thanks to the minister. Although I have a plethora of questions I'd like to explore with the minister, the hour is somewhat late. I'm not entirely sure if the schedule remains as it was, but the learned source that we referred to moments ago has asked if he could resume directing the debate. Although he's presently engaged in a little conversation, I think that's what he wants to do. So if I could call upon the Finance critic of the official opposition. . . .
Interjection.
K. Krueger: His advice is that I ask the hon. minister one last question and say thank you very much. He didn't hear me do that. So thank you very much, hon. minister.
M. Coell: Hon. Chair, I have a few questions on the Public Service Appeal Board and also on the Public Sector Employers' Council.
If I could digress for a
With regard to the Public Service Appeal Board, I wonder if the minister could tell me the number of staff it has at this point.
Hon. A. Petter: Well, I'll take advantage of the generosity of the member's comments to caution him that the depth of resource material we have on this topic is perhaps not as deep as he would like. I didn't expect this topic to come up, but that being the case, I understand there are four staff -- excluded staff -- who are committed to the appeal board.
M. Coell: I wonder if the minister could tell me the number of cases the board would see in an average year and whether there are any order-in-council appointments to the appeal board.
Hon. A. Petter: The member may have to repeat his question, because I was trying to get the information while following it. We're not quite clear on the status of the appointees. Obviously Ms. Leach is an order-in-council
[ Page 1198 ]
appointment. If the member was asking about the activities -- whether he was or wasn't, I'll give him the information -- the information I have is that the board received 132 appeals filed by employees. Of these, 57 were withdrawn, nine were untimely, 13 were no-jurisdiction, 14 are still in progress and a total of 39 appeals went to hearing. Of 30 percent of the appeals that were filed during the year, 25 were dismissed and 14 were allowed. That's in the period of 1995-96.
M. Coell: Hon. Chair, that was far more information than I requested, and for a change, that's delightful.
With regard to the Public Sector Employers' Council, I wonder if the minister could briefly describe how that council functions. Also, I'd be interested in knowing the number of staff and their caseload.
Hon. A. Petter: First, let me introduce Peter Cameron, who is vice-president of the secretariat of the council and who is helping me answer questions in this regard.
As I understand it, the council's activities take place formally through meetings that are held from time to time. But the day-to-day activities are performed by a secretariat, of which Mr. Cameron is vice-president, and that secretariat is comprised of 17 employees.
M. Coell: The 17 employees: are there any order-in-councils in there as well, or are they all provincial government employees? The other question is on the caseload. How many cases would they see a year?
Hon. A. Petter: First, in respect to the question of order-in-council appointments, the CEO would be the only order-in-council appointment. The others would be excluded employees. The acting CEO right now happens to be Doug McArthur, who also serves, of course, as deputy minister to the Premier.
In terms of caseload, there really isn't a caseload; the council is a coordination body. But perhaps the best way to answer that question is to say there are six employer associations with respect to whose activities the council operates, oversees and coordinates.
M. Coell: I wonder if the minister could just briefly describe the operation of the employers' council. He started to, and I'd be interested in hearing a bit more.
Hon. A. Petter: The creation of the council came out of the recommendations of the Korbin commission in an effort to better coordinate bargaining within the larger public sector. The council operates as a deliberative body that brings together representatives of the five employer associations, as well as representatives of the provincial cabinet, to try to better coordinate and carry out employee-employer relationships within that broader public sector.
M. Coell: I wonder if the minister could tell me whether the office is in Victoria or in another part of the province and what the tenure usually is for the CEO -- whether that's a two-year appointment or more.
Hon. A. Petter: First of all, the offices are in Victoria, on Belleville Street, as I understand it. The OIC appointment of the CEO is an at-pleasure appointment.
[10:00]
M. Coell: Thank you for your comments. I won't keep you any longer.
M. de Jong: It's our intention now to move on to the minister's responsibilities in the intergovernmental affairs area, unless, of course, the lead critic for the opposition. . . .
F. Gingell: I understand that there has been some discussion about finishing now and leaving intergovernmental affairs for tomorrow. But you have the official here, and perhaps we should take advantage of this and move it along. We understand our responsibilities to deal with estimates in an expeditious manner.
M. de Jong: Maybe we could begin with some fairly basic questions to the minister about the intergovernmental relations secretariat. I think that's the correct term for that portion of his office. What is it? What exactly gave rise to its creation? How is it constituted at the moment?
Hon. A. Petter: I'll give the short history instead of the long history. First, let me introduce Peter Heap, who is the acting ADM at IGR, and I'm very pleased that he's able to join us today. I appreciate the members' indulgence in accommodating not so much me as Mr. Heap, who has waited long enough to assist me for this portion of the estimates today.
Members will know that there was at one time a separate ministry of intergovernmental affairs in this province. Over time, under previous
An Hon. Member: The golden years.
Hon. A. Petter: The golden years? Well, not as I recall them, hon. member -- but there we go.
... that got brought into the Premier's Office as a secretariat. That secretariat function has now been shifted over and reports to me, as the minister responsible for intergovernmental affairs. The secretariat is a central agency of sorts that provides services to government -- advice, support services, facilitation services -- in respect of intergovernmental matters, both domestic -- that is to say, province to province, province to the federal government -- and international. It has a small, dedicated and talented staff that assists government ministries and ministers in carrying out their functions as they relate to other governments, both domestically and internationally.
M. de Jong: Well, the minister's response begs asking the next question: how small is it? Maybe we could get the nuts and bolts: the numbers, the dollar signs and the FTEs.
Hon. A. Petter: It's about 20 FTEs and has a budget of around $1.5 million.
M. de Jong: The minister has alluded to a mandate of sorts, as a clearinghouse for intergovernmental negotiations, discussions and involvements. I wonder, though, if there is a more specific mandate. In particular, I am thinking of the circumstances that gave rise to this assignment being placed with him some months prior to the last election and of whether he can expand upon what we might otherwise expect to be the usual function of that sort of office. I'll signal ahead what I'm going to ask him at some point: does he see a role for the secretariat insofar as internal negotiations -- the govern-
[ Page 1199 ]
ment calls them government-to-government negotiations -- with aboriginal peoples are concerned? Is there a function for that? Maybe he could touch on those things.
Hon. A. Petter: No, I don't think there is a more specific mandate as such. Obviously there are issues that are of concern, I think, to all British Columbians and all Canadians at this time concerning national unity, concerning British Columbia's role within the federation and concerning fair treatment by Ottawa of British Columbia, all of which may help explain why I, as Finance minister and as someone who has an interest in those other issues, may have been given the resources of the secretariat to report to me, for which I'm very grateful.
In response to the second part of the member's question, no, the secretariat does not perform functions in respect of negotiations with first nations. That's a function performed by the Ministry of Aboriginal Affairs in respect of government.
M. de Jong: Is the government-to-government function that I referred to something that the minister could contemplate changing in the future? That might be a speculative question, and he may or may not want to answer it.
The Chair: That's future policy.
Hon. A. Petter: I'm trying to think of at least three other reasons why I shouldn't speculate, not the least of which is that I think that would be a matter that the Premier would ultimately be responsible for. Let me just be clear: I don't think there's any intention or any contemplation that this secretariat would take on the responsibilities that currently reside with the Ministry of Aboriginal Affairs.
M. de Jong: The minister referred to the challenges that lie ahead with respect to the issues surrounding national unity and the question that has plagued this country for years and years now, seemingly since I can remember. I think that it is worthwhile at this point, in these early stages of the government's mandate, for the minister responsible to provide some notion, some idea, about where the secretariat and where he as the minister responsible intend to take British Columbia vis-à-vis those negotiations, which must necessarily occur.
My recollection is that on the national stage, at least, there's an obligation that the constitutional talks take place in one form or another by 1997 or in 1997. So those discussions are coming. I know there has been some debate about the value of engaging in full-fledged first ministers' constitutional conferences at this time. What is the government's position? To what extent are resources within the secretariat being devoted to developing a position for British Columbia to take to such a conference, if indeed there is a willingness on the part of the government to attend such a conference?
Hon. A. Petter: I think the position that the government has taken, I have taken and the Premier has taken in respect of this general issue is that it's a mistake to equate issues of national unity with issues of constitutional change, at least in the short term. Building a strong commitment to national unity in this country can best be achieved by working within the existing constitutional framework, by strengthening the bonds of national unity, by having the federal government exercise its responsibilities with certain key social programs in areas such as health care, by demonstrating leadership on economic issues such as job creation and then by working within the constitutional framework to deal with some of the concerns of various provinces, including British Columbia, in respect of fair treatment and in respect of more scope for authority in areas such as labour market training, etc.
As to the related issue the member raises concerning the constitutional obligation to hold a conference, the position of the federal government is that that obligation has now been discharged as a result of the first ministers' conference that was held in Ottawa. There was an item placed on the agenda by the Prime Minister to deal with that issue. The obligation is that of the Prime Minister, and the Prime Minister announced following that meeting that he felt he had discharged that obligation. So I don't envisage the federal government calling a constitutional conference, and I hope the federal government puts more of its energy and resources into matters other than constitutional change at this time. I would view that as a more constructive pursuit -- that is, working towards national unity outside the context of constitutional change. I would view that as a more positive contribution than reigniting some of the very divisive debates around constitutional change.
M. de Jong: I wonder if the minister could explain the processes that are at work within the secretariat, and within the ministry and the government generally, in terms of developing the position that he has provided to the House today in broad strokes. I think British Columbians want to know that their government won't be left in a position where it is responding to circumstances that occur in Quebec, that there is a plan and that some thought has been given to developing some solutions for the challenges that face this country.
I can't think of a more agonizing moment, as a British Columbian and as a Canadian, than on that night in October last year when those referendum numbers were coming in in Quebec. We felt -- or at least I did, as I watched them -- completely powerless, completely unable to affect the destiny of the country. The province -- my province -- really hadn't presented an option or an alternative and hadn't engaged in that debate in a meaningful way beyond responding in the way that we had traditionally: to say that we're all proud Canadians, and we all want to see a unified country.
Beyond some of the very specific objections we have to federalism as it's presently constituted, we have not in this province, in my view, exercised the kind of leadership that we would expect from a province as dynamic, as diverse and as economically powerful as ours is.
Maybe the minister could allay my fears that one day -- and this will happen, whether he likes it and whether I like it or not -- those forces of separatism in Quebec will come back calling for the umpteenth time. What is at work? What process within government, and what process involving British Columbians generally, is he prepared to put in motion to ensure that, at a minimum, there is a feeling of inclusiveness on the part of British Columbians and that they can take charge of their province's and their country's destiny, and not simply be left in the position of responding to a fait accompli from another part of the country?
Hon. A. Petter: I think I can amplify a little on the positions this government has been taking on behalf of British Columbians and on behalf of national unity, and the secretariat certainly has been supporting all of those activities.
The key position this government has been taking is that national unity should not be seen simply as a function of the Ottawa-Quebec relationship, nor should it be seen as a function of the constitution. In fact, the perception too often taken in Ottawa, that national unity is about using the constitution
[ Page 1200 ]
to deal with Quebec, is part of the problem. It's what inhibits inclusion of all parts of the country in the solution; it's what has created some very divisive politics around national unity.
We have been very aggressively pursuing an alternative view, a strategy which is not just self-interested in terms of B.C.'s narrow interests, but is self-interested in terms of British Columbians' desire to maintain a united Canada. Parts of that have been to respond where the federal government has taken action that we feel is counterproductive -- for example, last fall, when the federal government, in response to commitments made by the Prime Minister in Quebec, introduced without prior consultation legislation that would have relegated British Columbia to status as a sub-unit of a fourth region of the country. When the federal government, even after making alterations, continued to pursue a strategy to grant additional vetoes through legislation, which we felt was both fostering a view of inequality of provinces and potentially blocking constitutional change, we took a very strong and aggressive stand against that action. Indeed, I travelled at the time to Ottawa, spoke in front of the Senate and took strong action.
[10:15]
At the same time, we have communicated what we believe is a positive vision that the federal government could be pursuing in coordination with provinces to promote national unity, which doesn't get us into those kinds of divisive arguments. For example, we have argued that the federal government, if it wishes to speak to Quebeckers and to British Columbians and to maintain a strong sense of national identity, should not be relinquishing its commitment to health care and to social transfers, and that it has misplaced its priorities in this regard. There have been very detailed proposals made to the federal government around how savings could be made to meet the federal fiscal objectives without sacrificing some of those key national programs that have, in the past, bound Canadians together. Now we are in danger of losing those sinews of Confederation because of the weakening of the federal commitment.
We have spoken out very strongly in favour of programs like equalization, saying that we support the equalization system that exists in this country, but we believe the federal government is performing a tremendous disservice to Canadians by now trying to introduce notions of equalization outside of those equalization programs by discriminating in tax programs and in other social programs. So we have put forward both a positive vision and concerns regarding the agenda of the federal government.
We have also argued that certain issues to provide provinces with greater autonomy can be part of the solution for Quebec and for British Columbia. Labour market training is a good example of where I think Quebeckers and British Columbians would like to see there being more opportunity for provinces to craft their own labour market strategies that meet the needs of their own economies and populations. The federal government has made some movement in that direction, but it seems that with every hand that gives, there's a hand that takes.
The province has not hesitated to advance issues that are peculiar to British Columbia, because we firmly believe that fostering national unity must be a process in which all provinces and all people are engaged. It is productive of national unity to demonstrate that there are issues around which British Columbians are peculiarly concerned and that we are not happy with the status quo, so those right across the country can see that we as British Columbians can bring our issues forward, can express our discontent and can still remain strong, loyal Canadians. There's no better example than perhaps the issue of fish, which the Premier took to the first ministers' conference with the support of the secretariat and all the work that had been done. He made a very strong stand, and I think we reviewed that in this House in question period and elsewhere. As a result, I think we have seen some tentative steps by the federal government which indicate that perhaps we're finally being heard on that issue, and hopefully some progress will come.
So in all those ways, whether it's encouraging the federal government to strengthen its role in promoting national unity through a stronger presence in the areas of health care and economic leadership, whether it's providing advice to the federal government and arguing with other provinces for more autonomy in certain key areas or whether it's arguing for greater equity of treatment of all provinces and moving some of the discrimination that exists within both tax programs and transfer programs, I think this province has taken a leadership role that shows that a province can represent its own interests without sacrificing and with strongly advancing the commitment to national unity.
In all of that, the government has been extraordinarily well served by the secretariat, whether it's on the fish issues, whether it's on the fiscal issues or whether it's on the issues concerning labour market training or on some of the economic issues that we feel the federal government could be playing a greater leadership role in.
M. de Jong: The minister will find, I think, that much of what he says will be received relatively positively on this side of the House. He will find no dispute from the opposition when he says that vetoes are about maintaining the status quo and have very little to do with renewing one's sense of nation and one's sense of commitment to the Confederation. But I will leave the minister with this thought on this particular subject, and that is that when the people of the country begin to question the legitimacy of their existing political institutions to find, introduce and implement solutions to these challenges that are facing us -- when that legitimacy disappears -- it really doesn't matter how much sense the solution makes. It won't work.
In a deal brokered by provincial governments and the federal government, no matter how much sense it makes, if it is seen to be tainted by virtue of where it has come from, it's not going to work. It's not going to receive the support and the endorsement that it needs not just from all British Columbians but from all Canadians. And that, I think sadly -- and I do say sadly -- is where we find ourselves today. The ability of governments, from the provincial legislatures and from the federal parliament, to broker a deal that can be sold to Canadians in the way that I think the minister is talking
I am going to emphasize the need for him, as a minister, and the government of British Columbia to examine the options that exist in terms of finding another source, finding another way to involve British Columbians in the process of developing our provincial position on some of these questions, and developing a consensus right across the country. Again I say that whether he and I like it or not, we are headed towards the precipice, and it will be driven by those in other jurisdictions.
So I say to the minister in the strongest possible terms that this is an issue we do need to work together on. Be it a question of activating the appropriate all-party standing com-
[ Page 1201 ]
mittees or be it a question of finding or creating another forum, let us not shut the door on those options. Let us not be blinded by partisan politics on an issue that, really, we can't afford that luxury on any longer. To the minister I say that he has -- in his words -- a team that he believes he can count on, but it's time to add to the bench strength of that team. He has got to draw players from all sides of the ice, all sides of the playing field, or it's not going to have the legitimacy that is going to be required to pull this off.
Hon. A. Petter: Let me just say I very much appreciate the member's words. I agree with him that we are not going to be able to deal with these concerns in a way that is effective and meets the concerns of not only British Columbians but Canadians by simply replicating the old patterns of elite accommodation that haven't worked in the past. We do have to look at ways of reaching out; we have to look at ways of being inclusive, at multi-party solutions.
I also hope, though, that we aren't throwing out the baby with the bathwater, that legislators still do have a role, and that we can work through legislators to solutions. If the member's comments signal, as I think they do, a willingness to work in a non-partisan way, cooperatively, in terms of confronting some of these very important issues and ensuring not only that B.C.'s interests are represented but that the ultimate interest of maintaining a united Canada is fulfilled in a way that is satisfactory to Canadians and British Columbians, then I particularly appreciate that suggestion. I look forward to working with the member and members opposite on that common project.
M. de Jong: Hon. Chair, I move the committee rise, report progress and seek leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
The Speaker: Government House Leader, before I recognize you, can I just remind members that tomorrow at noon in this chamber we will be doing the official photograph. I apologize to all members for the absence of notice, but we weren't sure how long we would be here and therefore decided to seize the occasion: namely, tomorrow at noon. So please be here, and we will all get a picture.
Hon. J. MacPhail: I move that the House do now adjourn.
Hon. J. MacPhail moved adjournment of the House.
Motion approved.
The House adjourned at 10:29 p.m.
The committee met at 6:46 p.m.
On vote 22: minister's office, $374,615.
Hon. D. Miller: I actually have some opening notes, Mr. Chairman, but in the interests of time, I'll just dispense with them and get right into it.
C. Hansen: I should take a quick skim of those notes; it may be a good place to start from on this. I have passed a memo on to the minister's office explaining a general sequencing of issues that we see arising. We already see some unforeseen complexities to that in that the Ministry of Finance estimates are being debated in the other House. There may be issues that we may have to come back to, only because certain members of the opposition are not available at the times when these come up. To the extent possible, I will certainly endeavour to stick to this order, and I will try to keep the minister advised as we identify issues that might have to come up later.
Certainly the first one on that list is the issue of the Four Corners bank, and I know my colleague the member for Delta South has some questions that he would like to raise in that area. So with the indulgence of the minister, that may come up later in these proceedings. Generally, there's always the chance of issues coming up that aren't in the sequence, but to the extent possible, we'll try to stick with that list as I've outlined.
The issue that is probably foremost in my mind -- and, I know from speeches that have been made by members of the executive council, is foremost in the government's mind -- is job creation. I would like to start on that whole theme of job creation. I know the minister has some things that he would like to brag about, and I know we have some things that we disagree with. I think there are issues that come down to a disagreement of philosophy, but there are also things that I think come down to questions of administration and procedure, which we would like to inquire about during the course of these debates.
What I'd like to do is start by asking the minister if he could outline for us what he sees as his ministry's role in the area of job creation during this current fiscal year.
Hon. D. Miller: Well, generally our approach -- and I'll take a few moments to try outline it in broad terms; I can speak to a number of specifics, but I think the broad kind of statement is important -- is to look at our economy and recognize the kinds of problems that we face and the uniqueness that we have as a jurisdiction. As with many other industrialized economies, we're a province within a federal state; nonetheless, we have an economy that is essentially in fairly rapid transition. This is so for a couple of reasons. One is that we've moved from a fundamental reliance on primary resource extraction and development to a more sophisticated economy. Unlike most other provinces, we also face incredible pressures because we have an expanding population.
There are three general areas that we've focused on in order to set the stage for economic expansion. First, we've been dealing with fiscal issues -- budget issues. We have been trying to ensure that our budget is, in a broad sense, afford-
[ Page 1202 ]
able -- in other words, that the expenditures, the tax levels and the capital spending are all affordable and doable. Within that context, we have concentrated on infrastructure development. Despite any philosophical differences the members may have, I hope they would agree that fundamental infrastructure is absolutely critical to economic expansion. Transportation is generally used as the example there, but my own belief is that education is also critical. It is critical to have significant investment in our infrastructure in order to ensure that our transportation systems -- the highways, transit, you name it -- are there to accommodate growth. It is critical to have significant investment in the capacity of our education system to take in students and to offer the kinds of training that are relevant to today's economy. Moving right into that, it is critical to look at the education system itself and the significant changes that have been brought about through the skills training initiatives right across the piece -- again, not getting into detail.
Those are the three pillars, if you like, of what we think are the keys to being able to expand our economy. Perhaps the philosophical difference is that we looked at what was happening around the world in terms of modern economies -- those that do well and those that do poorly -- and realized that government is a significant player with the private sector in being able to plan for economic expansion. That's our broad approach to the economy in British Columbia. I think we've had some modest successes in that regard. I never make the claim that every job created is an example of the government creating a job, but I think what we've done has contributed, arguably, to one of the most successful records, with respect to job creation, in Canada. Certainly B.C. is the hot spot in Canada both in terms of its growth rate over the last number of years and, in the foreseeable future, in terms of jobs created. The latest statistics, notwithstanding any debates that might currently be going on with respect to the budget and forecasts, etc., again indicate, broadly stated, that this is an economy that continues to enjoy the kind of expansion that is probably the envy of other jurisdictions.
C. Hansen: I would like to invite the minister to expand on the job creation initiatives that he feels are central to his ministry's success in the job creation record that we've seen in British Columbia.
Hon. D. Miller: I thought I just
C. Hansen: When you start talking about it being the private sector that creates jobs and the government that creates the environment, you sound like a Liberal. I'm pleased to hear those words.
What I was getting at with my question was that there's a lot of focus on job creation throughout things like the two throne speeches we've had this year, the two budget speeches we've had this year and other speeches that have come out. What I would like to do at the opening of this debate is get a sense from the minister of the various job creation initiatives being sponsored by the provincial government, programs that are being put forward by this government -- which ones fall specifically under his ministry and that he thinks are part of the issues we can address in this debate, and which ones he sees falling into other ministries.
Hon. D. Miller: I'll just cite a few examples that might be relevant in terms of what I talked about in my opening remarks, the broad approach of government. On the infrastructure side, just going through a fairly short list, there's the Annacis Island wastewater treatment plant, the largest infrastructure project in Canada, which obviously dealt with a major pollution issue, but at the same time created 1,500 on-site jobs and 1,300 indirect jobs during construction. That's very modest in terms of full-time, but obviously that's a stimulus in terms of what's happening over the short term. There's the Vancouver Island Highway project, 3,300 direct jobs -- by the way, 90 percent went to local residents on the Island, which I know the Liberals were opposed to. There's the Century-class ferry construction, $35 million for two vessels -- 160 jobs. The Westview interchange -- I don't have a job number on that, but it's $32 million. Arguably, jobs have been created for that. You can go on and on. You can assign a number, really, for all the kinds of infrastructure projects and short-term jobs that those created.
On the private sector side, the partnership side, we're looking at projects like: the Huckleberry mine, essentially about 200 full-time jobs through a partnership with the government, a $15 million infrastructure loan; Royal Oak Mines, 550 direct jobs, 1,000 indirect; Newbridge Networks, another private sector one that we supported, 75 new high-tech jobs; Dynapro Systems, 100 new high-tech jobs; Quinsam Coal and Marubeni Corp., mine expansion, 100 new jobs, $11 million in investment. The list goes on and on, and I think I've illustrated the point that both on the infrastructure side and on the partnership side, there's been quite a number of jobs created.
C. Hansen: I may have phrased my question wrong, but this is actually an interesting list, and I do appreciate it. What I was looking for is the programs for job creation specifically, as opposed to the specific projects.
Hon. D. Miller: It might be helpful if the member asked about a particular program; it's such a wide-open general question that we could be here forever.
C. Hansen: I guess we'll be here as long as necessary.
For example, in the Student Summer Works '96 program, what is the ministry specifically involved in?
Hon. D. Miller: Student Summer Works '96 -- there have been student summer works jobs, actually, over the last number of years. It's a fairly modest program, really, in terms of the cost. Student Summer Works '96 is a partnership with employers who will create as many as 2,250 summer jobs for post-secondary students during the summer of '96. It's a 50 percent wage subsidy, up to $4 per hour, for employers hiring a post-secondary student for at least 150 hours during the summer. Our target was 2,550 jobs; the actual to-date is 2,458.
C. Hansen: Is this the program that's actually funded by Employment and Investment or by Education, Skills, Training and Labour? I understand there are six programs in all, and what I'm trying to do is get a feel for the scope of the debate
[ Page 1203 ]
that we can engage in under estimates -- whether the ministry plays a role in the entire student summer employment program or whether it's a very narrow focus with specific jobs. What latitude would the minister be prepared to engage in in the estimates debate?
Hon. D. Miller: The only one we have a budget for is First Job in Science and Technology, which has been a fairly unqualified success. Our target was 90 to 150 jobs; the actual to-date is 145. Opportunities '96, which is really not a subsidy program, is with us, but the money is in the Skills ministry.
C. Hansen: Do I understand, then, that the funding for Opportunities '96 comes out of this ministry and the administration is with Skills and Training?
[7:00]
Hon. D. Miller: The dollars are in Skills; the administration is with us.
C. Hansen: I do want to come back to visit Opportunities '96 at a later point in the discussion -- this evening, I assume.
First of all, I want to get a sense of the range of programs that the ministry is involved with. Is the ministry involved in the jobs and timber accord that's being proposed, or is that strictly in the Ministry of Forests?
Hon. D. Miller: We're part of the process, but it's not directly in the ministry.
C. Hansen: Just to alleviate any concerns, I don't plan to get into that debate in this forum. I just wanted to get a sense of the programs that your ministry is involved with.
I understand there's an initiative for job creation in the tourism industry; there is a major program that's being looked at in that regard. Could the minister comment on that in terms of the ministry's involvement?
Hon. D. Miller: Yes, we actually did a fair amount of work in the former Ministry of Skills, Training and Labour in developing new apprenticeable trades in that sector, which I think will pay dividends. But the special operating agency will pool government and industry resources in project programs to promote tourism.
The target is 23,000 additional jobs by the year 2000. I've mentioned the food trades apprenticeship program; on-the-job training; Choosing Careers for Youth, a federal-provincial workplace training program; and Destinations, a new tourism education pilot project.
C. Hansen: Is the Ministry of Employment and Investment responsible for this tourism job creation program or is it the Ministry of Tourism?
Hon. D. Miller: The latter.
C. Hansen: The reason I raise that is, I guess, as often
I've given these examples of the summer jobs program, the jobs and timber accord, and the tourism initiative, which are certainly the three areas that have been discussed in some of the publications and speeches which have come out in recent months. I am wondering if there are any other major job creation initiatives that the government is involved with, other than these three. Or is that, in essence, it?
Hon. D. Miller: I've tried to draw the difference between quite specific programs -- for example, student summer work programs -- that are clearly short-term and have a focused short-term
C. Hansen: There is a line from the first budget speech that came down at the end of April. Could the minister explain if we'd covered the bases on this? In this speech it said that in the next few weeks a new jobs plan with ambitious achievable targets for private sector job creation would be announced. That's what we've been discussing with these various programs and initiatives under the specific projects he mentioned. Does that in fact encompass what we've been talking about?
Hon. D. Miller: I don't know about commenting on a throne speech prior to the election. Clearly the government has announced, for example, the forest sector strategy in terms of trying to increase jobs in that sector. That's an illustration of what we were talking about.
C. Hansen: I'm quoting from an article in the Vancouver Sun on June 20, 1996, when the Premier was leaving for a federal-provincial conference. The opening sentence says: "Premier Glen Clark will demand the federal government change its priority from deficit-cutting to job creation." Then there's a quote later on that says Clark will push for a national jobs strategy that would include massive infrastructure. I appreciate that this is intergovernmental affairs, but my question to the minister is: are there certain elements to that national strategy coming from his ministry?
Hon. D. Miller: The member is aware of the benefits of the first federal infrastructure program. Significant capital dollars were used primarily in British Columbia on the Annacis project that I mentioned, for example, and on sewer and water, the basic infrastructure we think needed to be upgraded in communities. Obviously if we're going to expand the economy, one of the fundamentals is that communities themselves have to have decent water and sewer systems; and not only were those goals accomplished, but there was a great deal of employment created as a result of that.
Indeed, the member is correct, and I think the Premier was bang on in talking about challenging the federal government to change their priorities. When reading accounts of the federal cabinet retreat, I was quite pleased to see that it appears to have been a preoccupation. In fact, there seemed to be a sense among federal Liberals that they had failed to address that fundamental issue in Canada: creating more jobs
[ Page 1204 ]
and dealing with the economy. I suppose we'll have to wait and see, if they've expressed that concern, whether they're prepared to do something about it. We've indicated we want to work with them, and hopefully they will respond in the affirmative, because I think that is really the number one issue for Canadians.
C. Hansen: There's a document that refers back to last fiscal year, but I believe it may not have been actioned last year. I assume it's as relevant today. It's talking about a communications expenditure for the ministry, under something called a job strategy, of $40,000 for communications and publications under STOB 20. I wonder if the minister could explain how those funds have been or will be disbursed.
Hon. D. Miller: I'm advised that it was publishing and advertising for the Investing In Our Future program.
C. Hansen: Is this basically the publications aimed at potential investors in British Columbia?
Hon. D. Miller: No.
C. Hansen: I quoted earlier from the budget speech in the spring, and in the highlights there's a reference to this year's budget. There's a reference to a quote from the Minister of Finance, but I assume it is being implemented by this ministry, and it says: "We will also introduce a comprehensive jobs plan that brings together business, working people, communities and government to build on our success in protecting and creating jobs." I'm wondering if the minister can tell us how that will manifest itself. Or is this in fact what we've seen with these various programs and projects that are underway?
Hon. D. Miller: Sorry, could you just repeat the first part of that?
C. Hansen: It's a document that came out in conjunction with the budget, titled "Budget 96," June 26, 1996: "Budget Delivers on Tax Cut, Takes New Action on Debt." I always find that I can distinguish which budget '96 it is by whether or not the documents are talking about two consecutive balanced budgets or just one. This is from the most recent one: "We will also introduce a comprehensive jobs plan that brings together business, working people, communities and government to build on our success in protecting and creating jobs."
Hon. D. Miller: I've used the forest jobs targets as one example. Clearly we're working in many sectors, both with industry and with communities, in the fishing sector, trying to protect and create additional jobs. There's a myriad of examples that illustrate that, but the government has yet to complete any announcements about new developments with respect to job creation initiatives.
C. Hansen: I want to come back to the whole issue of student jobs, specifically the Opportunities '96 program. I know that the minister has looked broadly at the success of the summer employment programs. There have been some mea culpas when it comes to the Opportunities '96 program in terms of not achieving objectives, and I can certainly sympathize with that. It's nothing ventured, nothing gained on a lot of things. As a businessman myself, I know what it's like to take risks, and when you're developing programs, you also have to take risks; some are successful and some aren't.
My issue is not with the fact that the program has been initiated and perhaps not lived up to expectations, because I do recognize that some of the other programs have been successful. But I want to focus in on something that was specifically in the budget speech this year, and it says: "200 jobs have already been created through the Opportunities '96 program. I know that some private sector employers feel there was inadequate consultation on this initiative, so we were stepping up our efforts to work with business to connect young people with jobs."
The minister may recall that I raised this issue during a supply debate a month ago. It was interesting. I went back and watched the video of the electronic Hansard that night, when I asked the question about what the nature of these consultations with the private sector had been. If I can quote the minister's response to me, he said: "I have not undertaken any consultations myself since the formation of the new government." I'd gone back and read that in Hansard, and it was only when I watched the video transcript of it that I noticed the Premier, sitting beside you, visibly wince when you said there had been no consultations.
What I was trying to get to that night -- and I cut the discussion short because of the lateness of the hour -- was the nature of the consultations that are taking place involving that Opportunities '96 program with the private sector. I think we all recognize that these programs that rely on the private sector to create jobs, as opposed to jobs that are heavily subsidized by government, do require a considerable amount of consultation. I would like to get a sense of the kind of consultation that the ministry has been involved in with these programs.
Hon. D. Miller: Ministry staff are discussing the issue with, among others, the Business Council. I guess what I'm really struck by is that when we offer a wage subsidy program, the uptake is fabulous. But when we challenge the private sector to actually do something on their own, even though this is a modest $150 per individual, the results are pretty dismal. I'm not sure that I'd regard it as a failure of the government side or of the government program that there has not been a better uptake. Perhaps the member, who is in business, could explain his view on why, unless you offer a subsidy, the response doesn't seem to be what you would like.
[7:15]
C. Hansen: That in itself makes for a very long debate, which I am certainly prepared to engage in. This is one of the areas where I think we do come down to that fundamental difference between the approaches that the two parties are prepared to bring to government. First of all, I would say that there is a need for considerable consultation with the private sector. I think it's a case of going to the private sector, and instead of saying, "Create jobs," as we have seen in the case of the jobs and timber accord and the Opportunities '96 program, where basically the government has announced a program and then wondered why there hasn't been uptake on
Again, I would ask the minister if he feels that these
[ Page 1205 ]
tions, but I'm curious as to the kind of approach that the government would be willing to take with a private sector group when it talks about the need for the private sector to create jobs. What's the enticement for them to participate in these programs?
Hon. D. Miller: I tend to reflect some of the speeches I've seen given by, for example, Bill Clinton and Jean Chrétien, who have been musing publicly about why it is always the obligation of government to provide a subsidy to business and where the responsibility of business is in our economy to ensure some measure of employment. Quite frankly, if the member thinks that it's always government's fault or government's responsibility to address that concern, and there is no corresponding responsibility on the other side, then I don't know. I don't think life works that way, but perhaps the member does.
C. Hansen: Actually, I believe quite the contrary. In the examples that you've raised of those two individuals, unless you consider job creation in a law office, I'm not sure that either of them have been involved in job creation.
What I hear from the business community and companies -- small companies, medium-sized companies; I must confess I don't have too many discussions with human resources departments in major
There are companies that will willingly accept a subsidy from government. I can speak from my own experience in business. I've never once accepted a subsidy, direct or indirect, in any way, shape or form from government, and I know many individuals who have been involved in running small companies feel ideologically very strongly that they would not accept a government subsidy. They think it's a contradiction in terms when governments get involved with subsidizing job creation. They think that the private sector is more than willing to do it, providing that there are factors that allow them to create jobs and eliminate some of the disincentives for small and medium-sized companies to create jobs. My question is: when you have these consultations, is it a two-way street? Is the government looking for advice from the private sector as to what changes in government policy would have to happen for job creation to proceed without government subsidies?
Hon. D. Miller: We have tried to respond in a significant way to issues raised by the private sector. On the training side, the Premier's Summit on Skills Development and Training, for example, was a perfect opportunity. We listened and brought in new programs, and they were applauded by the private sector. I presume the reduction in the small business tax was a response to some of the concerns of that particular sector of our economy. I know I talked to the chamber of commerce. In fact, they wrote a glowing article in the Times Colonist a couple of years ago about how our skills training program was really giving them the people with the kinds of skills they required in this changing and dynamic economy.
But perhaps the member hasn't mentioned any of the changes or incentives he thinks are necessary. I presume there may be a cost attached, one way or the other -- there's a cost for everything -- to those changes we need to make for business to actually think it has a broader social responsibility in terms of employment questions.
C. Hansen: I can certainly speak from my own personal experience in terms of the kinds of things that would allow jobs to be created. The point I'm trying to make is that there is a wealth of knowledge out there that's available to the ministry, and to the minister in particular, through organizations such as the Business Council -- but that's only one organization. It happens to represent very large employers. My concern is that the government is not seeking the advice of those organizations as to what it would take for job creation without government subsidies.
I am also very concerned that the ministry
Hon. D. Miller: I recall -- and it doesn't seem that long ago, even though it probably was -- a delightful lunch I attended in Vancouver with the Retail Merchants Association. I don't know if the member opposite is a member of that organization. There was a glowing story in the Vancouver Province, a full-page spread on the business page. In fact, the government spent some money working with the retail merchants in putting on business training seminars for those merchants. Mark Startup was there -- and others, such as the fellow who owns the Plum Clothing outlets in Vancouver.
I presume from what I read that they were delighted with the programs they had worked on and put together in partnership with the government. They advised me that this was exactly what we needed to do in order to give them some opportunities to expand business. There are all kinds of programs. We're not single-focused here; we're not single-minded. We work with all the sectors -- and rather well, I think.
C. Hansen: I recognize that some of the training programs that have been initiated by the provincial government are well received by the business community and obviously play a very important part. As a general approach, my concern is that this government and ministry have looked at job creation as, first, infrastructure development -- which is a very heavy cost to the taxpayer, whether it's short-term or long-term debt -- and, second, programs such as some of the student summer works programs which involve a considerable subsidy from taxpayers. In essence, they are bribing the private sector to create jobs.
[ Page 1206 ]
sary to allow the private sector to create jobs. Is there a willingness to go out and seek that kind of advice from a broad base of the private sector, not just the B.C. Business Council?
Hon. D. Miller: If he cares to take the time and look at the work produced by the Premier's forums over the last five years, I think that the member will find that in this province there has been an unprecedented coming-together of business, labour, the community, government, academia and others that has produced startling results with respect to broader issues in the economy and the issues of skills training. The Forest Sector Strategy Advisory Committee, which I established as the Minister of Forests, has been the first opportunity for the players in that sector -- both the very smallest and the very largest -- and trade unions, communities, aboriginal groups, environmental groups and the government to come together in a way that is unprecedented in any jurisdiction in North America that I'm aware of; to actually plan their future; to have the ability to look at change they know is coming; to have money available with respect to the retraining issues, and to promote and stimulate value-added and more manufacturing in that industry. Right across the board, I think we've worked in a very open and good way with respect to all sectors of our economy.
Getting back to it, that's why we've done quite well with respect to the job creation record -- the envy of Canada, in many respects. When we look at those numbers -- 177,000 jobs over the last four year -- it is some 40 percent of all the jobs created in Canada, with about 12 or 13 percent of the population base. I would never, ever say that the job is complete. It's not; it never is. But it's not bad. It's never good enough, and we'll continue to try to match the record of the last five years, which arguably was good enough. I was very pleased that we received the confidence of the electorate to continue in that vein.
C. Hansen: The minister and his colleagues have often talked about the job creation record and the state of the economy in British Columbia, and I think we all recognize that British Columbia has a very strong economy. If you were the minister of employment in the province of Newfoundland, you might have a very dismal record to look at when it comes to the performance of the economy. Yet I'm sure that that minister would be very proud of himself if they were achieving the potential that the economy could bear. Our concern, and I know this will come down to a difference of opinion, is that the economy in British Columbia has much more potential which is not being achieved. In British Columbia the economy itself may have a good track record, but as a broadcaster that we both know likes to say: "When you're in a roomful of twos, it's not hard to be a three." We should be setting our sights much higher, and we think the potential is much higher.
I would like to come back to a document entitled -- and I'm sure the minister is aware of it -- "Ministry of Employment and Investment: 1995-96 Communications Plan," which came into the public domain earlier this spring. If I could read some of the quotes from this, I would like the minister to comment on them, specifically about the B.C. 21 program, which we'll deal with in more depth later. It also refers to the Transportation Financing Authority, which I appreciate is no longer in his ministry. The quote is that communications without program substance is "one of the hangovers that exists -- no meat in the sandwich." I just wonder if the minister could comment on this material, which was written by an employee in his ministry.
Hon. D. Miller: I haven't read that. I get lots of paper, and I can't read everything. With respect to the member's last comment, I also wanted to say candidly that I have not heard any ideas coming out of the Liberals -- not one new idea with respect to the challenges modern economies face which would produce even one single new job in this province; not one single idea. I hear a lot of tired old rhetoric, and perhaps that was the reason for their failure.
C. Hansen: Again, it comes down to a fundamental difference in approach when it comes to job creation. If you're looking for us to say, "Yes, we're going to take this amount of money and commit it to a program that's going to create this number of jobs," you will hear very little from the Liberal Party. Instead, you're looking at a broad strategy which is going to create the kind of environment in which the private sector is going to be able to create jobs. I know the minister has been through the economic plan that holds a lot of those ideas, and I recognize that they may be quite contradictory to the philosophical approach that he'd like to pursue. We'll probably have to agree to disagree on those things.
Again, coming back to this document, the communications plan -- the minister didn't comment on that. My concern is that these comments may be as relevant today as they were a year ago when they were written. The other quote is:
"The job creation ministry does not have an endorsed macro-job-creation strategy. This ministry and Crowns have made a number of major and significant commitments and announcements in the absence of a broad job strategy. It is akin to hanging many coats on an absent coat hanger -- i.e., there is nothing to hang the initiatives together."
Would the minister comment on that?
[7:30]
Hon. D. Miller: No, there's very little I can say about that.
Interjections.
C. Hansen: There is a lot more, but I gather nothing has changed, and that is my concern. I'll defer to my colleague from Surrey-White Rock.
W. Hurd: I have been intrigued by the discussion from the minister, and in particular the
Hon. D. Miller: I must say that you're easily intrigued.
W. Hurd: Well, just intrigued by the answers from the minister and also intrigued by the fact that he would waive his opening statement about a ministry of such magnitude in the province. Could I start by asking the minister if he could give us a breakdown of the 177,000 jobs created over the past four years? Where are they, who are they for, what kind of pay scales are we looking at? I'm sure he will have those numbers at his fingertips, and I'm quite shocked that he wouldn't have taken the opportunity to stand during the opening remarks and elaborate on those figures.
Hon. D. Miller: I seek your guidance, Mr. Chairman. I find the question rather foolish. Surely the member is not serious.
The Chair: Insofar as your questions pertain to the minister's estimates, I think you should proceed.
W. Hurd: Hon. Chair, the minister offered the statistic to the committee, and I'm sure that he intends to spend a certain
[ Page 1207 ]
amount of his resources in the coming fiscal year to track his wonderful record of job creation -- at least, he would want to know whether it slows down or not. I wonder if the minister could, then, briefly elaborate on the 177,000 jobs and on whether he expects the same pattern of employment creation to continue into the current fiscal year. Or does he expect any employment to continue into the current fiscal year?
Hon. D. Miller: Yes, I do.
W. Hurd: I'm to conclude, then, that the minister isn't prepared at this point to offer the committee a breakdown of the 177,000 jobs. I think it's important to get that on the record. If that's his answer, that's fine. But the answer is that he doesn't feel that the four-year record of job creation he extolled in his brief opening remarks is really worthy of our discussion in this set of estimates, and that he would prefer to see us not focus on that. That's not what I heard from him, but just for the
Hon. D. Miller: I talked in a rather modest way about our broad strategy, in terms of how we deal with an economy that is so important to everyone. I did say, in a very humble way, that the economy has performed very well and that I certainly wouldn't stand here and claim that every job created in the last four or five years was as a direct result of government action. I certainly wasn't trying to claim that everything that moved is because we were here.
Getting to the specifics of the question, the member asked me to stand up and talk about every one of those 177,000 jobs -- where they were. I just think, in the context of the estimates debate.... Mr. Chairman, I would certainly take your advice, as I always do, but that seemed to me to be rather foolish. There's no disrespect in saying that. Maybe others feel differently, but....
W. Hurd: I think the question is a legitimate one. The minister is certainly aware of the concern expressed in some quarters. Of the 177,000 jobs created, a number are in what one would term low-wage occupations -- service industry occupations, perhaps -- that don't provide the level of long-term security and pay scales that would allow those new job participants to participate in the so-called new economy. I just wonder, because I think it's important to get it on the record, how many of those 177,000 jobs are high-paying jobs and would allow the person, for example, to buy a house in the lower mainland or to buy a car -- to participate in the modern economy. I would think that those kinds of statistics would, at least, be the kind the ministry would be attempting to catalogue in some way.
The minister has attempted to talk about the need to upgrade the skills and training of British Columbians. Certainly that's a fair assessment, but clearly it's important to have a discussion about where the new jobs are being created, what's happened over the past four years and what may have to happen over the next four years, in terms of a different pattern of job creation in the province. I would commend to the minister that at some point during this discussion, he might want to provide the committee with a breakdown of those jobs and perhaps what he sees in the next four years as the needs for some change. I'm sure that with the modern economy changing as rapidly as it is, the jobs that were created even four years ago may require individuals to improve their skills. I hope that we can encourage the minister in that direction before this discussion is over.
The only other question I wanted to raise was an issue that certainly came up during the election campaign: the corporate capital tax. I know the government has had a very uneven record of, first of all, defending the tax, and then suggesting they'd get rid of it in the last budget, and then fighting an election on the tax. Now we're into the post-election period. I wonder if the Minister of Employment and Investment, whose responsibility it is to encourage people to bring investment capital to the province, could just take a moment to amplify for the committee his own personal views on the wisdom of the tax -- whether it will be a long-term part of the government's plan to attract investment capital. What does he believe is an appropriate level of taxation when it comes to taxing capital entering the province?
Hon. D. Miller: Just dealing with a couple of questions that were posed, I'm certainly aware of the kind of changes that have taken place in our economy, particularly in this province. As I indicated in my opening remarks and in some of the early questions, one that really achieved tremendous growth was based on the development of our resources. In fact, you might argue that our natural competitive advantage at that time was that the resources were here; they were relatively cheap. Quite frankly, we underpriced them and didn't manage them as well as we could have. We're paying a price for that now in terms of the changes, but they are changes for the better.
Many of the jobs that this so-called new economy is creating indeed are the low-wage jobs. In fact, statistically, if you want to look across not just British Columbia, but anywhere in Canada or North America, you will see that for the average working person -- the Premier talked about the middle class, the working class -- their standard of living has declined over time in real terms.
Yet I'm constantly struck that every time we try to bring in programs to create at least some benchmarks with respect to working people and their need to try to earn a decent income, we're opposed by members on the opposite side. Certainly I mentioned the Vancouver Island Highway accord, which provides a decent wage for people working on that project; which has one of the highest apprenticeship training ratios; which has provided for people here on Vancouver Island -- getting those jobs for equity positions, so that women are no longer sort of excluded when it comes to opportunities for working in those kinds of projects. Yet, much to my regret, the opposition had as its number one priority the cancellation of that agreement. That was obviously bitterly disappointing to those people who are employed and obviously trying to do what families do: pay the mortgage and the rent, etc.
I know, as the Minister of Labour, that again there was a sense of disappointment that the Liberal Party had perhaps lost touch with some of its roots. It wouldn't even defend a minimum wage, for example. I know that sometimes when you start to lead the good life you tend to forget about people who make the minimum wage and require legislation, like employment standards, as a kind of benchmark for some basic protection, some minimum protection. I was constantly puzzled by the fact that they spoke about people's standard of living declining. Yet their solution, their remedy, was to make it worse. I suppose that's something I'll just have to be continually puzzled about.
W. Hurd: It's almost like the 177,000 jobs -- puzzlement everywhere.
Hon. D. Miller: Yes, that's true. Sometimes life's a puzzle.
[ Page 1208 ]
The member talked about training and employment relevant to industry, and I would highly
W. Hurd: The minister really sidestepped the main question, which was the corporate capital tax. He always does that, but we know that. I just know he had no part in the ads that ran during the election campaign.
Interjection.
W. Hurd: The capital tax -- the one that is so popular with business. I know it comes up periodically when he has meetings with the business community. I just want to get an idea what he, as the Minister of Employment and Investment, thinks the tax's future is in the province and whether he thinks it's a fair method of raising revenue, given its impact on investment. Maybe what I'm looking for is a willingness on the part of the minister to stand up in this set of estimates and vigorously defend the tax, as the Premier did during the election campaign. Because I think it's important that his view of this tax become part of the record.
Hon. D. Miller: I don't know what burning desire guides the member, but I certainly don't want to offend the rules of the estimates. Last time I checked, taxation wasn't my field. But I want to say that I'm a great believer in fair taxation.
W. Hurd: The last time I looked, an industrial strategy and an investment strategy for the province were among the minister's responsibilities. How can the minister stand up in this set of estimates and suggest that while he's responsible for devising an investment strategy for the province, the tax regime isn't any of his business? Does he not see any correlation between the two? If he doesn't, maybe that's the reason we're embarking down the road of this two-headed monster that we have in the province, where revenues are a mystery to the Minister of Finance and where the Minister of Employment and Investment apparently is not willing to stand up in public and talk about fair taxation for the business sector, which he's supposed to be responsible for helping to foster. I just can't believe the minister would not avail himself of the opportunity to talk about the capital tax, which affects investment in a very real way. But if he's determined to duck it, that's his right.
Hon. D. Miller: I said I believe in fair taxation, and I'm always happy to debate it. I just don't want to offend the rules. It puzzles me -- and, again, it might be one of life's mysteries -- why a party that just got devastated after advocating that we radically reduce taxes for the very wealthy, for those who can afford to pay, and consequently increase taxes for those who can't, would continue post-election in the same vein. But perhaps that's a question that the member hasn't had time to reflect on in the post-election period.
Perhaps I could kind of shift the rather arcane discussion that's taking place now and read some information relative to the B.C. investment climate. It appears to be quite good. I just want to make these points: the overall tax burdens for manufacturing, high technology and small firms in British Columbia are often lower than those in competing North American jurisdictions such as Washington State, Oregon and California. Tax advantages in B.C. compared with the U.S. include lower payroll taxes, the exemption of machinery and equipment from property tax, lower tax rates for small business and manufacturers, and more generous research and development credits.
[7:45]
I could go on and on. The 1996-97 B.C. budget includes a two-year tax holiday for new small businesses, described as the job creation engine of the B.C. economy. Total personal taxation in B.C. is the second-lowest in Canada. Compared with the U.S., personal income tax rates are significantly higher for highly paid personnel -- that's $100,000-plus a year. I'm sure I read in the newspaper not long
Tax questions are really a question of balance. While we may have some differences -- we could probably talk about those differences for a long time -- we just went through an election, and we talked about those differences, and the judgment was rendered by the public. We received a mandate. Obviously there was some sense of confidence in the approach that we've taken.
The economy has performed, I think, reasonably well. I've never, ever claimed that it's perfect; I never will claim that it's perfect. We've got some challenges that we share with most industrial jurisdictions, in terms of the transition that's taking place in our economy. How do we meet that? What is our ongoing competitive advantage with respect to some of our existing industries? There are some challenges there. What sectors of our economy -- and we've identified many in our economic plan -- can we target -- indeed, what regions of the province? I think we've tried to address those in a very meaningful way and in a way where we've consulted widely both with business and labour.
I don't think there's any question that any successful economy in the future is going to be one where that partnership is forged. The recipe that I hear too often from the critics on the other side is that if we could only put certain people in their place, if we could only strip labour of its power, if we could only strip the Employment Standards Act of it's regulations, if we could only get rid of Island Highway agreements that provide for decent wages, local hire and equity
Well, tell me a jurisdiction where it's happened. It hasn't happened, and the very thoughtful economists today are advocating strongly that without that partnership we will never succeed economically. I realize that we have differences. We can probably go around the circle for as long as it takes -- and, quite frankly, I don't care. Over to you.
[ Page 1209 ]
C. Hansen: I was wondering if the minister thinks that the jobs and timber accord is an example of that future partnership that's needed.
Hon. D. Miller: Absolutely. Let's make no mistake about it: the resources of this province are owned by the people, and we have the responsibility -- anybody who's in government has the responsibility -- to manage those resources and get the maximum return for the people of this province. Nobody in this province who wants to be in public life should ever suggest that we should not exert the maximum influence in terms of those resources. They are ours; we should manage those to get the maximum benefit for the people of this province, whether that's in the resource rents, the economic rents, job creation -- whatever you want to talk about. That is a fundamental tenet in managing public resources. I caution the members: if they want to suggest that we take public resources and turn them over to capital in good faith and let capital determine what the maximum return to the people is, it's a recipe for unmitigated disaster.
C. Hansen: I agree with a lot of what the minister just said, but that begs the question. I'd like him to define the word "partnership."
Hon. D. Miller: There is no absolute definition.
C. Hansen: I guess this is one of my concerns. I know we're on somewhat of a philosophical bent at the start of this, and obviously we've got lots of specifics to come to in due course. But I want to get a clear understanding of the approach this minister is taking with regard to job creation generally. I think that when we talk about his concept of partnership and about the jobs and timber accord, it demonstrates the very real concern I have that the actions of this government are not maximizing and taking advantage of the potential in the economy. If you look at an example such as the jobs and timber accord, we're not talking about an accord. An accord means an agreement; it means the involvement of more than one party in coming to a negotiated agreement.
I'll tell you my definition of the word "partnership." It's when you've got more than one party working together. In the jobs and timber accord, we're not talking about an accord or a partnership. We're talking about a government that is imposing its will on a group of companies, under the threat of economic sanctions. I happen to think that's the wrong way for this government to create jobs.
I'm not here to pick a fight with the minister tonight, but to express my concern that we are not maximizing the economic potential of this province. We are not getting the return to the taxpayers of this province for the timber standing in our forests and the minerals in our ground. The reason we are not getting the maximum economic benefit is that the government is prepared to go in with a cowboy mentality, rather than to sit down in consultation and in partnership with the private sector to develop accords with that sector, so that real jobs can be created which don't involve massive subsidies of the taxpayers' money.
Hon. D. Miller: I have some experience in the forest sector; I don't know what experience the member has. I have recently had some very good, frank discussions with senior people in the forest sector about some of these questions. I want to go back to something I touched on earlier: the forest sector strategy. It's the very first time in the history of this province, which has relied so heavily on primary resources -- timber -- that any government ever got everybody into the same room. The big companies, the medium-sized companies, the small companies, the loggers, the value-added manufacturers, the trade unions, the communities, the aboriginal communities, the environmentalists and the government were all at the same table when we announced the Forest Sector Strategy Advisory Committee. It was cheered and applauded. When I made that announcement long ago -- in January 1992, I think it was -- at a truck loggers' convention, it was applauded by the forest sector as the most significant initiative in forestry to ever happen in this province. It has produced magnificent results.
There is no other sector in Canada, indeed in North America -- not one --
It ensures a future. It ensures a future for business, for communities and for working people. It ensures participation. That we've got that resource base in the
Let me use one example. I'm trying not to speak too much here, but here's one example, using the forest. I like this example because it combines a lot of the elements I spoke of at the outset: the capital side, the training side, challenging academia, business. It's the centre of excellence at UBC. Again, it's one small modest example, really, of where we can ensure, over time, not only stability but the opportunity for change -- in fact, encourage change in the forest sector.
UBC is now building, thanks to a public debt -- we're spending, I think, $46 million -- a new forest sciences building. Combined with that is a $7 million centre of excellence which, in effect, is a facility devoted to value-added issues. We have never, despite our
It's not limited to UBC; it's supported by industry, by the federal government, by the provincial government, by Forest
[ Page 1210 ]
Renewal. It's a true, amazing partnership. It's linked into our community colleges, but it's not an ivory tower. It's linked right into the community colleges, where indeed, right around this province, very practical research is being done in concert with industry. It's linked into our high schools, where we've now developed curricula in forest sciences so we can expose our high school students to opportunities in that field. It's a marvellous accomplishment that begs for some intelligent understanding.
I went to a dinner with the major people in Canada: Art DeFehr, the major furniture manufacturer based in Winnipeg; Clark Binkley, the dean of forestry at UBC; the industry -- they were all there. All of us together were applauding what we thought we had jointly accomplished and what will pay enormous dividends in this province in the years to come.
As members know, I introduced my grandson, and I took him home on the weekend. I was playing golf with some friends, including some executives in the forest sector, and they were both complaining to me that the biggest problem they had right now was not being able to hire technicians and RPFs. Now our schools are gearing up. We had the biggest hiring over the last couple of years of people with very good qualifications. They both were saying to me that in terms of future career opportunities, it was great.
We have developed, amongst other things, through the Forest Practices Code, through work that we've done in the past, the finest ecological classification system, I think, in the world. It's technology we've developed here in British Columbia. We're capable of exporting that. But we've been a little bit slow, and that's what the Training for What? paper, which I'm very disappointed the critic for universities hasn't read, identifies as one of the problems. It wasn't identified in isolation. The board that put that paper together is made up of business, labour and equity groups.
We're doing it here. So much of that very fine work is being overlooked, is being given short shrift, because of some lack of interest or care, I suppose. In my view, it's a shame.
C. Hansen: When the minister says that I may not have a great depth of knowledge when it comes to forestry, he may be right. I recognize that what he said tonight demonstrates that he, as a former Minister of Forests, knows more than I do when it comes to the forest industry. I also recognize that based on what he has just said over these last few minutes, he's also much more familiar with the issues of labour, skills and training. I think what we're talking about tonight is job creation, and that's an area where I do have some personal experience, albeit in a very small way.
[8:00]
I know that we could debate for hours the merits of a corporate capital tax or the lack of them. This is where it's directly relevant to your ministry. In the budget papers, if I can quote this from memory, it said that there had been criticism of the corporate capital tax because it's a disincentive for investment in new plant and equipment. Then it went on to say that this was partly offset by the fact that the corporate capital tax is a deductible expense for corporations. But the fact of the matter is that that deductibility is expected to be eliminated by the federal government. There goes the only reason against getting rid of a corporate capital tax that's expressed in the budget papers of this government.
If you come down to the people that I've talked to who have looked seriously at expanding plant and equipment or at investing in this province, which is directly within the minister's responsibility, the corporate capital tax is a major impediment to their willingness to invest and create jobs in this province. The previous leader of his party, the former Premier, certainly recognized that disincentive from the work he had done with offshore investors, and I'm sure that's the reason why Mr. Harcourt was advocating the elimination of the corporate capital tax.
As I see it today, the only reason that it's still in place is purely partisan political issues. I think there should be some leadership from this ministry and this minister to see that the corporate capital tax is eliminated, because this minister is the one who should be receiving the input from some of those potential offshore investors. I'd like to ask the minister if concerns have been expressed to him by offshore investors regarding our tax rates in this province.
The Chair: Before I recognize the minister, I did give one caution a while ago. We are now an hour and a half into the estimates, and the opening philosophical statements have been well expressed. I think it is time that we deal with the estimates, and that does not include legislation.
Hon. D. Miller: I've read some of the comments, but since I've been named minister, no, I have not talked to anybody personally.
C. Hansen: Earlier the minister was listing off the various tax incentives and other issues that make British Columbia an attractive place to invest. I'm wondering what kind of format that might be in to
Hon. D. Miller: Yes. I understand there are publications through the former B.C. Trade that talk about the investment climate in B.C.
C. Hansen: In this communications document there's actually reference to a document titled "Competitive and Tax Advantages of B.C.," which was under STOB 20, advertising. There's $12,000 for the layout and publication -- a foldout showing the competitive and tax advantages of B.C. compared to other selected provinces. I've tried to get a copy of that, and nobody seems to know of the existence of it. I was wondering if the minister could comment on that.
Hon. D. Miller: I don't have any with me, but we'll certainly see if we can get some.
C. Hansen: Do they exist?
Hon. D. Miller: I assume they do.
C. Hansen: Is there anybody in his ministry that could confirm that they exist, because I haven't been able to find them?
Hon. D. Miller: We'll check. I'm sure it exists. We'll get a copy. If we can get it tonight, so much the better. I was just
[ Page 1211 ]
passed a note that all these publications were sent to the member on July 25. But if there's an error there, we'll see if we can't locate something.
C. Hansen: I don't believe I received that particular one, and that's the one that was of interest in the context of our earlier discussion.
I want to come back to our debate on the Opportunities '96 program. Regarding the amount of $1.2 million allocated for the Opportunities '96 program, on June 27, the night of the debate of the supply bill, I asked the minister if it was anticipated that all of that money would be spent.
Hon. D. Miller: Perhaps the member might give me what my answer was.
C. Hansen: I'm glad you asked. Your answer was: "Well, certainly, I think the bulk of the budget -- not totally, but operational -- has some relation to the uptake, or the number of people who participate. I don't have precise numbers as to the balance that may be expended, but I will endeavour to get that to the member." That was five weeks ago.
Hon. D. Miller: I understand we're still endeavouring.
C. Hansen: My concern at the time -- and my concern is still the same -- was that this program did not involve a significant subsidy of jobs to the private sector. I'm assuming that the $1.2 million was primarily for administrative expenditures within the ministry. Could the minister confirm that?
Hon. D. Miller: Yes, I assume that that is correct. It's probably administration, and I'm sure there's some communication in there as well.
C. Hansen: Do I take it that regardless of how many jobs are created under that program, it's expected that all $1.2 million will be spent?
Hon. D. Miller: As with any program, we try to have realistic projections. We don't have any current numbers with respect to what the expenditure is. Obviously, that's something that we will have over time.
C. Hansen: The subsequent question I asked that night, and I'll repeat again, was: could the minister advise us as to what percentage of that $1.2 million would be for advertising?
Hon. D. Miller: I believe around $200,000 of the amount is for communications. Just to be clear, not all of it is for advertising.
C. Hansen: Is that money expended by the communications department of the ministry, or is it expended by the Premier's Office and charged back to the ministry?
Hon. D. Miller: The former, Mr. Chairman.
C. Hansen: If I can move on to another subject
I'd like to move on to the industrial incentive fund. I would like to ask the minister the status of the loan that was made to Newbridge Networks. I understand that under the industrial development fund there is a series of loans and loan guarantees, and there is direct investment. I understand this was a direct investment in Dynapro. I would appreciate it if the minister could explain the nature of that investment.
Hon. D. Miller: The member did refer to Newbridge and
C. Hansen: My apologies -- I meant Newbridge in this context, not Dynapro.
Hon. D. Miller: The government approved a $10 million investment in a $30 million research and development capital investment to be made by Newbridge over a four-year period, to establish an R and D division in B.C. That was approved in November of last year. That agreement provides for royalty payments to be made based on Newbridge's gross revenues, which will provide an estimated 50 percent return on the province's investment. The agreement was completed in January of this year. The facility is now established in Burnaby. The first advance of the approved funding is anticipated shortly. That's the current status, unless the member has some more specific questions.
C. Hansen: Could the minister explain the nature of the investment? Is it in the form of equity? Is it in the form of a promissory note? Is it in the form of preferred shares? Could he explain what it is that the taxpayers of this province have as an investment in Newbridge?
Hon. D. Miller: I thought I did -- a $10 million investment in the facility. Staff may advise with respect to how the disbursement is proceeding. The first advance has not been made yet; it is anticipated shortly.
C. Hansen: I guess I'm looking for something a bit more specific in terms of the nature of the investment.
Hon. D. Miller: The money has not been advanced yet, but it's an equity investment.
C. Hansen: Would this be in the form of preferred shares, common shares or some kind of promissory note? That's what I'm looking for.
Hon. D. Miller: Preferred shares.
C. Hansen: Is there a par value to those shares? Are these shares that will have a fluctuating value? Or will they have a fixed value until such time as they're repaid?
Hon. D. Miller: A fixed value.
C. Hansen: From here I would like to go to a more general question: what kinds of actions does the ministry take to monitor the ongoing stability of some of these shares? I don't want to cast any aspersions whatsoever on Newbridge. I understand they're an excellent corporation, although their share value has been going through some fluctuations in
[ Page 1212 ]
recent months. I just wonder if the ministry tracks these companies on an ongoing basis and how often they get reports back in terms of protecting the investment that the taxpayers have in these companies.
Hon. D. Miller: We do due diligence prior to making the decision; obviously, we have to satisfy a fairly rigorous standard. And yes, we do watch those investments and sometimes have to make decisions that people don't like. I think we made one the other day on Apex that seemed to be challenged by the other side. But yes, we do watch them.
C. Hansen: Actually, Apex is an issue that we would like to discuss during these estimate debates. I don't anticipate raising it tonight, but could the minister confirm the nature of the loan to Apex? Was it done under the industrial incentive fund, or was it through some other branch? As I said, we would like to come back to this, probably tomorrow.
Hon. D. Miller: It's a guarantee against the Financial Administration Act through the Ministry of Small Business, Tourism and Culture.
C. Hansen: Is that, again, a fund that's under the Small Business ministry but administered by your ministry? I just want to get your particular involvement with that issue.
Hon. D. Miller: It's done under the Ministry of Finance Act, but the reserve is with the Ministry of Small Business, Tourism and Culture.
C. Hansen: I know that this minister has played a lead role in the negotiations that have taken place, and I'm just wondering in what capacity.
Hon. D. Miller: I'm acting in the capacity of the Minister of Small Business, Tourism and Culture, pending the active return of the minister.
C. Hansen: This is obviously a very important issue, and it's something that we would like to raise in more detail. Can I seek the advice of the minister as to whether tomorrow may be an appropriate time to explore this in more detail?
Hon. D. Miller: Certainly -- I have no difficulty with that. I had a list here that indicated the sequence, and I can't recall whether Small Business, Tourism and Culture was singled out. No, it wasn't. But certainly I'd be happy to do that.
[8:15]
C. Hansen: There may have been some misunderstanding on our part, because we felt that this issue was on your desk and that it was with you wearing the Employment and Investment hat, as opposed to that of the acting Minister of Small Business.
In terms of the sequencing, I guess, included with that memo is a list of the issues that pertain particularly to Employment and Investment. As I mentioned earlier, we see going from here -- after we complete all of these issues, including the Crown corporations -- to Municipal Affairs. If it's the minister's wish, we can then proceed to Small Business and then come back and do those assembled votes at the conclusion.
I want to move on to some interprovincial trade issues that I want to raise. There's an issue that arose just very recently, which I guess came to light about ten days ago, involving a company in New Westminster that's involved in wine- and beer-making supplies. The concern is that they're being frozen out of the Quebec market because of legislation that has been introduced by the Quebec government. I would like to ask the minister if he's aware of this issue and if that is one of the interprovincial trade issues that his ministry is pursuing.
Hon. D. Miller: Beyond reading the same article, no, I'm not aware of it. I'm not aware that the people have made any presentation to government.
C. Hansen: I gather the issue here is that companies that are vending beer- and wine-making supplies are required to have a licence as a wholesaler in the province of Quebec. I'm wondering if that's an issue that his ministry would be prepared to pursue and what actions it would take. Does it require a formal presentation to the ministry in order for the ministry to take action?
Hon. D. Miller: Certainly we'd have no hesitation. If someone asked us to look at that question, we would.
C. Hansen: I know that the issues of barriers to interprovincial trade have been a major concern. I'm wondering if the minister could comment on the progress that's been made in addressing some of the outstanding issues and whether the agreement that's in place is going to lead to... I think working in British Columbia's interest is probably the best way for me to put it.
Hon. D. Miller: We are a signatory to the agreement, which tries to remove interprovincial trade barriers. We take that seriously, and we're working with the other provinces. I think that we have taken a very firm stand on some outstanding issues. In fact, we've led the nation with respect to the so-called MASH sector, the social services sector.
There's a very good reason for that. We're mindful that despite what appears to be a commitment to free trade, if you like, quite often our experience is that it's the opposite. We entered into -- although my party complained about it and objected to it -- a free trade agreement with the United States and then subsequently included Mexico. We fully understood that under that free trade agreement, if there were problems, they would be resolved in a fair and impartial manner through a free trade panel. Notwithstanding that, we went through that process, spent a lot of taxpayers' money to fight for the right of unfettered access for our softwood into the U.S. market, won that case and had a binational panel support our position. Notwithstanding that, very shortly after, the U.S. turned around and changed its law and launched another countervail. Now, somewhat paradoxically, between us and a country with which we are party to a free trade agreement, we have restricted trade. We have, in fact, a Canadian cartel, much to the detriment of consumers, I suspect.
I'm trying to convey the point that in dealing with issues of trade or so-called free trade, our first obligation -- while we are generally quite supportive of free trade and think we have been very good, in our businesses and industries, at being internationally competitive -- is that we are not about to give away any advantages, particularly if other sectors are doing what they can to be protectionist.
We are discussing that with the other provinces. We have taken an aggressive position where we see violations or think
[ Page 1213 ]
there are violations. On the United Parcel Service job-poaching issue that New Brunswick initiated, our Premier took a very strong stand, when he held this portfolio, in challenging that. It's an ongoing dispute that we will pursue with some vigour. Beyond that, I don't think there's much else to say with respect to that.
C. Hansen: In terms of the dispute involving New Brunswick, could you update us on the status of that? I'm interested in where you see it leading to, if I can be indulged.
Hon. D. Miller: We have just invoked the third stage of the process, which is the involvement of other trade ministries across the country.
C. Hansen: I understand that agreement on internal trade is fairly new and recent. If I can use this expression, are we still getting the bugs out of it? Is the process going to work in B.C.'s interest concerning New Brunswick and any other of these interprovincial disputes that might exist?
Hon. D. Miller: It remains to be seen.
C. Hansen: One of the concerns that has been expressed with regard to issues such as job-poaching is the fact that there may not be any real teeth in this thing in the end. I'm wondering if the minister sees this coming to a resolution that will be in British Columbia's interest.
Hon. D. Miller: The member may be right. My own view is that the real losers are those like New Brunswick. If you want to get into the
It's a bit of a mug's game, and I suspect the real loser is the economy. I don't want to be disrespectful, but you can build a bit of a false economy by poaching jobs, particularly jobs that are essentially low-skill. It's hardly an intelligent way to address economic fundamentals in a province. But be that as it may, we're pursuing it under the rules, and we'll see where it gets.
C. Hansen: Is this the test? Are there any other issues in B.C. that affect British Columbia and that are likely going to result in actions under the interprovincial trade agreement?
Hon. D. Miller: No, this is really the case at the present time.
C. Hansen: This is something that I gather is not now a part of the interprovincial trade agreement, but when it comes to job creation and job opportunities, a concern is the inability of provinces to recognize one another's trade certifications from province to province. This, I gather, is not now part of the Agreement on Internal Trade. Is it part of discussions that this province is pursuing?
Hon. D. Miller: Yes, there still are some elements of that. In fact, there has been historically in some
One of the concerns I had, again in my former portfolio, was that while there was a desire to harmonize the standards, the sheer cost and the timetable were things that might be very difficult to meet. That's always something you have to kind of look at as you're addressing these questions.
C. Hansen: I gather that this is not now a part of the interprovincial agreement, when it comes to trade certification.
Hon. D. Miller: As I indicated in my answer, some of it still is. But perhaps there's a growing recognition that some of it is sort of on a longer time horizon. The fundamental issue is one that's been addressed by ministers, and presumably there is a desire, to the degree that it's practically possible, to restrict or reduce and eliminate these kinds of barriers.
C. Hansen: I know there are ongoing discussions in terms of the expansion of the parameters of interprovincial trade. Is the recognition of trade certification something that this provincial government is prepared to take to the national stage, to advocate more open borders with regard to that interprovincial certification?
Hon. D. Miller: Just for clarification, perhaps the member might advise what
C. Hansen: I'm referring to the certification for construction trades, industrial trades -- the ability of somebody that is licensed in one province to have their ticket recognized by another province when it comes to those jobs. My question is whether this government is prepared to advocate in the national forums for an extension of the Agreement on Internal Trade to clearly include reducing those barriers, to the extent that they now exist.
Hon. D. Miller: Well, we want to resolve the issues that are there. Obviously there are other issues; we talked about the job-poaching question. You know, predating any broad discussions about trade barriers internal to Canada, ministers responsible for training, or ministers of labour generally, have worked and have developed
C. Hansen: I guess I have one last point on this whole issue. I just want to come back to the issue of the maker of the wine and beer supplies. I understand that there is somebody in the ministry who's been designated to be responsible for fielding these issues. As an issue like this arises and someone wants to take this to the national forum, is it something
Hon. D. Miller: They all share responsibility, and we all help each other out. But Mr. McRae is quite happy to receive any inquiries. Or you can send them directly to me; that's probably the best thing to do.
[ Page 1214 ]
C. Hansen: The reason for my question is that I understood, under the Agreement on Internal Trade, that every province was encouraged to designate one person to assist with the interprovincial dialogues that go on. I gather that's Mr. McRae. Thank you very much.
If I can move on to yet another file
I would like to ask the minister, when it comes to the various projects that exist, whether it's in education or whether it's a school construction or whether it's a hospital construction, or the various other projects that have been put on hold, or are in fact proceeding under the B.C. 21
Hon. D. Miller: I think it's timely now.
[8:30]
C. Hansen: Again I apologize if I caused the shuffling of seats and the moving of binders. If we want to get into that substantive discussion, it won't be tonight that we do that. But I would like to ask some general points. One thing that I probably had more correspondence on than any single issue over these last couple of
Hon. D. Miller: No, I don't expect so. In fact, I expect there would be savings.
C. Hansen: Actually, I think you'll find quite the contrary. If I can just give a specific example, there are companies that I think have gone to great expense to put together, in good faith, when the government asks for tender proposals to come
I think that there will, in fact, be a higher cost to the taxpayer. I certainly don't have the expertise to come up with the number as to what that's going to be, but my bet is that with some research the government would be able to determine the extra cost that's going to be there.
I want to ask the minister specifically about a reference to something I saw that was called "1995 Consolidated Capital Plan." Again this is a general question; I don't want to get into specifics tonight. Is there, in fact, a document entitled "1996 Consolidated Capital Plan," and is that something that could be made available to us?
Hon. D. Miller: Yes, there is, and perhaps I can
It goes really to the heart of what I said at the outset, that we think there's a need for a level of public investment in transportation, schools, post-secondary institutions, health care facilities and the like. It was our view that there needed to be a much more coordinated approach to how capital was spent, both in terms of efficiencies that might be realized -- standardization, for
It's kind of early in the game, there's no perfection there, but it's a much more intelligent way of ensuring that capital is spent -- because capital is scarce -- that it's focused, and that it's tied in with other initiatives. Now, of course, we're looking at that in an even more intensive way through the Minister of Finance, who is responsible for the review, to see if even further efficiencies, savings, etc., can be realized. I think there's some very good, creative work that's been done over the last number of years, and that will continue.
C. Hansen: I gather that this document, "1996 Consolidated Capital Plan," is something that is before Treasury Board and is not available for public circulation.
This one document, the "1996-97 Project List," was circulated to me on July 2, shortly after the freeze was imposed. Is there any other document in terms of capital projects that is a public document at this point?
Hon. D. Miller: No, hon. Chair.
C. Hansen: I would like to touch briefly on and ask the minister what progress has been made with regard to public-private partnerships. I think it's an initiative that has general support when it comes to the concept. Like anything else, we have great concerns with how something like this might be implemented. I'm wondering if the minister could comment on where the government is in implementing a program of private-public partnerships.
Hon. D. Miller: There was a task force put together of 13 people, chaired by Bob Kadlec of B.C. Gas. I'm advised that
[ Page 1215 ]
it's anticipated their report will be ready soon for presentation to the government. Again, it's an area that we have some strong interest in. We want to ensure that if there are advantages in terms of public expenditure, and we can do that through private sector partnerships, we do that in a way to maximize benefits to British Columbians. We want to ensure that we avoid mistakes made in other jurisdictions.
It's a fairly complex area, as I've come to understand in a fairly limited way at this point. I hope to understand it in a more comprehensive way, particularly with the report and an opportunity to sit down with Mr. Kadlec and discuss the work of the task force.
C. Hansen: It's an area that is certainly of interest to us. As I say, I know there is broad-based interest in the concept. In the absence of the report being ready, it's difficult to get any more of a detailed discussion than this, other than to ask the minister when he expects the report to be tabled. You said soon. Are you talking about a matter of weeks, or is it months? I know there are a lot of people looking forward to that.
Hon. D. Miller: Perhaps by the end of the summer, late August or September, somewhere in there. You know how reports are: you get them when they're ready.
C. Hansen: I'd like to shift gears again. I'm sure we'll be coming back to B.C. 21 projects at a later time in this debate. I would like to shift gears a bit and focus on the whole question of the settlement with Alcan in terms of the Kemano completion project. I know, as I'm sure the minister does, that there are some great concerns on the part of residents and community groups in the northwest sector about the implications of that negotiation or settlement or whatever the right word is at this point. I would like to start off, if I can, by asking the minister what the current status is of the settlement negotiations between the B.C. government and Alcan.
Hon. D. Miller: It's not under my ministry.
C. Hansen: Could the minister advise whose ministry would be handling this?
Hon. D. Miller: I'm advised that it's the Minister of Environment, but I might want to confirm that for the member.
C. Hansen: In that case, I'll put that one aside for now.
While we're on the subject of the northwest sector, there have been ongoing discussions with regard to the potential for an LNG plant located in that sector. I'm wondering if the minister could comment on where we may be with regard to that proposal.
Hon. D. Miller: First of all, with respect to the responsibility for Alcan, I want to be very clear there that it may not in fact be the Minister of Environment. He is and has been designated for some time as the spokesperson on that issue for government, but I'll attempt to get clarity tonight, if I can, on that question. If not, tomorrow I'll advise the member where he might seek to discuss the issue in the estimates process.
With respect to the LNG plant, my understanding is that they have not yet put together a commercial deal; if they do, then any proposal would be subject to an assessment process.
C. Hansen: I guess I'm concerned, if not about a conflict of interest, then about the potential for a perceived conflict of interest on the part of the minister, only because one of the possible sites is in his riding. I'm wondering if the minister could comment on the process an application of that nature would go through and how it would be dealt with in a way that is clearly seen as being a fair process that leads to the best possible site that's in the interests of the entire province.
Hon. D. Miller: I'll just clear this up right now. I must advise that if the member has any feelings, any allegations or anything else with respect to my involvement in trying to bring industrial enterprises to this province, regardless of where they might be located, then I would strongly suggest that he confer with the conflict-of-interest commissioner, and that he should do it posthaste and clear it up in his own mind. There's no confusion in mine, but I don't like issues of conflict to be treated lightly. I've had some experience with them. The member should make up his mind. If he thinks it's conflict, state it and we won't discuss it.
C. Hansen: I didn't mean it to be an accusatory question, and I can see that my choice of words was probably inappropriate. Let me rephrase it. There are two possible sites, as I understand it, for this proposed plant -- one being Kitimat and the other being Prince Rupert -- and I'm wondering what process the minister sees that application going through so that the site that's chosen is perceived to be in a very broad public interest, as opposed to a regional interest.
Hon. D. Miller: Mr. Chairman, I must
C. Hansen: There is no intention on my part, hon. Chair, to suggest that there is a conflict. If there is conflict in the direct sense, I'm certainly not aware of it, and I'm not making such an accusation. I'm raising a question with regard to the process that the minister sees this particular proposal going through. It's an innocent question. It wasn't meant to have any broader implications to it, other than an inquiry regarding process.
Hon. D. Miller: That's not good enough, Mr. Chairman.
The Chair: Perhaps the member would go on to another question.
[8:45]
C. Hansen: I will, and if I have somehow offended the minister, I certainly apologize for that. There was no intention on my part to do that. As a new member, I can appreciate the fact that issues of conflict must be taken seriously, and I'm glad to see that the minister is taking it seriously. I apologize if my line of questioning has led to any offence, but it certainly wasn't intended. I'll seek some guidance, and if appropriate, we can revisit it again tomorrow.
I would like to refer very specifically to some issues that are in the estimates directly. But before I do
B. Penner: I'll just start addressing the issues concerning trade and trade policy generally for the province. I know my
[ Page 1216 ]
esteemed colleague said I'd have a specific question, but I'll actually start with a broader question. I'd just like to explore this government's philosophy with respect to trade. I'm sure we all recall that shortly after the election in 1991, one of the first things the former Premier of British Columbia, Premier Harcourt, did was go on a well-publicized tour of eastern Asia in support of trade missions from British Columbia. I'm just wondering if the province is planning any additional trade missions in the future and what this minister's view is toward the support government can lend to B.C. industry in that essentially flag-waving capacity overseas.
Hon. D. Miller: Yes. There are some things that may almost be firmed up. There are no specific missions or trips, although I must say that the Premier may have some that are more firm than what I have looked at to date.
I think it is important that we have that kind of presence. I mean, I think you have to be quite strategic with respect to travel. I don't think you can travel forever, obviously. You want to do that. I think the former Premier, Mr. Harcourt, was one of the best advocates we ever had in this province in terms of looking, in particular, at the Asia-Pacific.
If we go back, we were talking about the issue of interprovincial trade. It's quite startling to look at the trade numbers internal to Canada and realize that British Columbia is the province that's least dependent on trade with other provinces or the rest of Canada. In fact, it has the two principal markets of the U.S. and the Asia-Pacific, which we have expanded significantly in.
I'm just looking at trade numbers. We do have some numbers. Perhaps my officials might see some statistics relative to export growth over a relatively short period of time. I would just cite some of those. Merchandise exports grew by 18 percent last year -- $26.9 billion, a record amount -- which does not include exports of services or, indeed, exports to other provinces. The fourth consecutive year of solid export growth was 1995. This is rather amazing: since 1991 exports have grown by 77 percent, from $15 billion to $27 billion. I could go on. There has been just this remarkable growth. British Columbia accounts for 40 percent of Canada's exports to the Pacific Rim, and here is that breakdown: Japan, 57 percent; Korea, 36 percent; the Philippines, 32 percent; Taiwan, 29 percent; and Australia, 26 percent.
I have started to meet with some of the Asian leaders, and I expect that I will be continuing that in a more focused way. Obviously, this summer session has somewhat restricted the ability of all of us to move out beyond Victoria.
We have, as well, probably one of the most significant events ever to happen in Vancouver coming in 1997, and that's the APEC conference -- Asia-Pacific leaders from around the Pacific Rim coming to Canada. We have, as well, the Japanese Ambassador to Canada coming on August 8. So we are going to continue to play a key lead role -- and I'm sure the Premier will, as well -- because we very much see that our future and the increased opportunities to expand our economy are linked with trade. I think we have to have a twin track in that regard.
Obviously, as a trading province within a country, we want to continue to try to get the kind of growth that I've cited, but we also need to concentrate on investment in British Columbia. I'm fairly new in this portfolio, but as I understand these issues a little better and get out and meet some of these people, I will be continuing that very strong focus.
B. Penner: I thank the minister for his general comments. They do raise a number of more detailed questions on my part, however, and I'll begin with the first one. There has been some talk again of a further Team Canada mission led by the Prime Minister. There was one last year, I believe, which was fairly high-profile. I just wonder if the minister can inform us as to the status of any discussions with respect to a possible follow-up Team Canada trade mission.
Hon. D. Miller: Was the question specifically dealing with issues that arose out of the first Team Canada trip and the follow-up on particular issues that were identified at that time?
B. Penner: No, actually I was just wondering if the minister is aware of any plans for a follow-up Team Canada visit -- a Team Canada 2 trade mission.
Hon. D. Miller: My understanding is that the Prime Minister has announced his intention to do that. I don't believe that specific invitations are here at this point, and certainly we've not made a decision. It's much too early.
B. Penner: The minister referred to the importance of trade to British Columbia's economy and the comparatively small role that interprovincial trade plays for British Columbia. I wonder if the minister could provide us with the statistics, if his officials have them handy, as to what percentage of B.C.'s economy is dependent upon interprovincial trade as opposed to outright exports from the country.
Hon. D. Miller: I did indicate in my remarks
B. Penner: Nevertheless, there has been talk for many years, and it's almost become a motherhood issue to work towards eliminating or at least reducing interprovincial trade barriers across Canada. It seems that every time there's a first ministers' conference, the perennial topic of interprovincial trade barriers rears its rather ugly head. I'm wondering if the minister is planning any initiatives with respect to interprovincial trade barriers, particularly in the areas of breweries
Hon. D. Miller: With respect, I've been through a few estimates in the past, and we thoroughly canvassed that issue. I believe your hon. colleague from Vancouver-Quilchena dealt with almost the exact same specific question. I don't know, Mr. Chairman, perhaps you might provide some guidance.
The Chair: We have canvassed that area, member. Perhaps the Blues will be available tomorrow. You could go over that and save some time.
B. Penner: For the sake of
Hon. D. Miller: Again, Mr. Chairman, with the greatest of respect, having conducted -- I don't know, it wasn't that long, I suppose -- a reasonably lengthy question-and-answer with respect to those very same issues, I think it
B. Penner: A matter came up yesterday, I believe, in the debate around Bill 17, Miscellaneous Statutes Amendment Act, 1996, having to do with the elimination of the B.C. Trade
[ Page 1217 ]
Development Corporation. I asked a number of questions at that time; that was yesterday. I'm just seeking some further clarification around that particular issue. First of all, I'm just seeking a formal clarification of the number of employees that the B.C. Trade Development Corporation had prior to the wind-down.
Hon. D. Miller: I think I used the number of 87. I'm just trying to recall my answer from yesterday. Perhaps we can look at it another way: we eliminated 62 positions in moving essentially from a Crown corporation to a special operating agency -- which is not complete, as I advised the member in committee stage.
B. Penner: In seeking clarification, as the wind-down continues can we expect the figure of 62 positions eliminated to be increased?
Hon. D. Miller: No.
B. Penner: Presumably, then, 62 will be the total number of employees taken off the public sector payroll. I believe the minister indicated yesterday that at present there remains approximately 87 persons on the payroll that have now been transferred to the ministry proper, presumably in the new B.C. Trade and Investment Office. I'm just wondering if the minister could confirm, either himself or through consultation with his officials, whether all those 87 positions are actually assigned to the B.C. Trade and Investment Office, the new entity which is replacing B.C. Trade Development Corporation?
Hon. D. Miller: Two points: the answer to that is yes, and we're talking about positions and we're talking about numbers.
B. Penner: Sorry, I'm not quite clear on that answer. Is the minister indicating, then, that all 87 positions will be with the B.C. Trade and Investment Office and assigned to that responsibility?
Hon. D. Miller: Yes.
B. Penner: At least, by jumping up and down like this, we get some exercise, which is often missing around here.
Hon. D. Miller: That's putting a positive spin on it.
B. Penner: I try to be positive.
Again, just carrying on, I wonder if the minister could describe to us -- those people such as myself who are new to this -- what, in his view, will be the difference in role between the B.C. Trade Development Corporation and its former mandate and the new entity, the B.C. Trade and Investment Office? Is there going to be any real, substantive change in direction or philosophy? If so, what is that?
Hon. D. Miller: Well, again, no disrespect to the Crown corporation that existed. Obviously, the numbers I talked about earlier are testament, to some degree, to the kind of work done by the Crown corporation, but there are a number of reasons for looking at changes. One, of course, is the cost saving. The Premier did indicate that he thought it was required, to reduce the size of government, and that's certainly one of the imperatives with respect to that.
But I do believe that having a special operating agency within the ministry will allow for better coordination. These are debatable questions, I suppose; I don't know what the member's position is, whether he agrees or disagrees. But it will allow a more coordinated, integrated and effective approach to not only industrial development but investment and export activities. I talked about that investment question -- obviously seeking investors to come to our province -- and that's going to be something that I'll be working on in this portfolio.
B. Penner: I'll just indicate to the minister that I did have an opportunity a number of years ago to spend a brief period of time -- all too brief, in fact -- in the trade policy division of the ministry. It used to be called the Ministry of International Business and Immigration, and since that time I think it's gone through several name changes. As I recall from my brief stint in that office in 1989, some of the staff were of the view that change was so constant that any one particular theory or philosophy never had time to become fully implemented. Part of my concern isn't necessarily that the B.C. Trade Development Corporation is being wound down. It may well be that's a suitable step to be taken. However, my concern is that if you look over the last ten years, the number of changes that have been made to the structure, and presumably to the philosophy behind the structure, leaves some confusion amongst the industry and certainly amongst the staff working for the government.
Just what direction is to be pursued in the mid- to long-term? I'm wondering if the minister has any thoughts around that about a long-term strategy -- whether it's changing, whether it's more of the same. Perhaps the minister may even wish to reference back to the former Social Credit government and how he sees this government's view being different in terms of its mid- to long-term planning or strategic goals for trade for British Columbia.
[9:00]
Hon. D. Miller: I think, actually, the member makes a point with respect to organization, and that is if you constantly tear apart your organizational structure and try to reshape it without having a particular focus, then sometimes that doesn't get you very far. On the other hand, despite many changes -- and I don't really want to go back too
I just think that over the last number of years, our policy with respect to pursuing not only export opportunities but investment opportunities has really paid off. Again, how often can you stand up and talk about trade growth, and talk about a growth since 1991 of 77 percent? Dramatic changes. I think that's testament to the kind of change that's taking place and the growth of some of those Asia-Pacific economies.
What we're hoping to do, and the challenge really is now with us, is establish the special operating agency with a specific mandate to foster industrial development, continue to enhance the export of B.C.'s goods and services, pursue those investment opportunities that I talked about, provide assistance -- we do a lot of that -- to business both on the export side and in other areas, and advise government in terms of strategic issues. I'm sure the opposition will be vigorous in ensuring that the structure we've got is one that makes sense and that we're producing results.
[C. McGregor in the chair.]
[ Page 1218 ]
B. Penner: Certainly we'll try to do our job on this side of the House. Please bear with us as we get up to speed on some of these issues. The minister raised an interesting point, and that had to do with government assistance to business. I know it can take a number of different forms, at least in my view. Perhaps the minister can clarify. There are two essential ways in which the government can assist business. One is directly through, perhaps, export loan guarantees or other forms of financial assistance. The other is primarily in terms of information and coordination of information, making that available to private businesses throughout British Columbia. With respect to the more direct form of assistance, and that has to do with export loan guarantees, I'm wondering if the minister could advise us as to the current status of the province's portfolio in terms of loan guarantees, and whether that has grown or shrunk over the last number of years.
Hon. D. Miller: That program started in 1989. To date, it has issued a total of 129 guarantees which have been directly linked to $424 million in new export business. I suppose that without the support of these guarantees, the lending agencies would not have put forward the money. I estimate the number of jobs created out of that is about 2,900. So it appears to be paying off. Since it started, the program has generated fee income in excess of $2.5 million, which has been sufficient to cover all staffing costs and overhead associated with the program. With the exception of three guarantees to the film sector, the program has experienced a loan loss rate of 2.5 percent, which is about half the 5 percent industry average for similar programs outside the province. So it does facilitate the area it's supposed to, I think, and it appears to be working.
B. Penner: Just to seek clarification, I believe the minister indicated that there is $2.5 million in revenue. Is that from the interest charged, or is there some fee that's levied? In any event, whatever that answer is, could he just confirm for us whether or not that $2.5 million in revenue was sufficient to offset any losses or other liabilities associated with this program?
Hon. D. Miller: It's processing and standby fees.
B. Penner: Again, I'll just seek clarification as to whether or not that $2.5 million was sufficient to offset any losses the province may have incurred.
Hon. D. Miller: Yes.
B. Penner: If I hear the minister correctly, this program has not actually cost British Columbia taxpayers any amount of money directly, and we haven't suffered any major loss. If we have, perhaps I'd just ask the minister to tell us about it.
Hon. D. Miller: That's correct. We are in the process of recoveries on some of the guarantees, but the member is correct.
B. Penner: Could the minister tell us how many of the 129 guarantees have fallen into default, and how many are delinquent?
Hon. D. Miller: I'll just run through the list: guarantees in place, 15; expired, 105; and in default, 9. That's a total of 129. Obviously, as I said, some of those are collectibles.
B. Penner: I wonder if the minister has the figures available as to the total value of those that are delinquent or in default.
Hon. D. Miller: It's in the $6 million range.
B. Penner: It's hard to keep up with my note-taking and ask questions at the same time.
I'd like to move on to the topic of foreign trade offices. I understand that the province operates a number of trade offices or what are called trade missions in different parts of the world. The figure I was provided with is 11 in total. Presumably this would include B.C. House in London. I'm wondering what the minister's views are, first with regard to B.C. House in London and what he sees as its role, and then, more generally, on what he sees as the role and the future role of the other trade offices in different parts of the world.
Hon. D. Miller: I must confess that I have not really formed any hard and fast opinions relative to B.C. House. If I'm not mistaken, I think the Opposition House Leader and the Premier have had some discussion, where I think they agreed. Beyond that, again, obviously we could give a list with respect to the offshore offices. I think the issue there is that you need to be in the field, and you always have to watch that you don't end up committing huge resources to those operations. You kind of watch what the return is, or what you think the return is, by having offices in offshore locations.
On the one trip that I took to Japan and Korea some years ago, I was impressed with the work being done not only by B.C. representatives, but by industry representatives, particularly the COFI representatives on the forest products side in Japan. As well, I was impressed by the trade reps in the Canadian consulate, whom I thought were doing a reasonably good job. It's something you always have to watch and, as trade patterns shift, be prepared to examine, see what it's costing you and what you think your returns are.
B. Penner: It's my understanding that the lease for the B.C. House location in London is coming up for renewal, or at least negotiation, in the near future. Presumably this government will have to consider whether it wishes to renew the lease and how big an operation it wishes to maintain in London.
Again, it's my understanding that the operation has been scaled back somewhat in London from what it used to be, and I think that's probably to be commended. Certainly in the past, it was the target of some criticism when members who are now forming the government used to be in opposition. I'm wondering if the minister could give us a listing of the different locations of the other trade offices.
Hon. D. Miller: News is arriving in huge volumes. I have a publication that I believe the member for Vancouver-Quilchena referred to earlier. I hope this is the right one: Competitive Advantage in Advanced Manufacturing: Comparing British Columbia to Washington, Oregon and California, published by the former Ministry of Economic Development, Small Business and Trade. I don't know if that's the publication. I'll pass it over, and perhaps there will be some information there.
I can confirm that the ministry responsible for Alcan is indeed the Ministry of Environment, so hopefully that is clarified at this point.
Offices in the following locations were closed, and management of trade initiatives was shifted to Vancouver. We closed our offices in Seoul, Korea, in Munich and in Irvine, California. Those were all in '94 and '95. The following offices were closed and agents have been engaged to provide more
[ Page 1219 ]
flexible, cost-effective representation: Hong Kong in '93, Taiwan in '94 and Singapore in '94. Operational changes: the Tokyo offices moved to less expensive premises in March of '95.
The member referred to B.C. House in London, which I haven't seen since 1965. It's time, perhaps, to pay another visit. We downsized the London operations in November '95 by appointing an existing, locally engaged employee as an unofficial agent general and transferring building maintenance responsibility to B.C. Buildings Corporation. We've established agents in Osaka, Kuala Lumpur and Bangkok. We've established student intern researchers in Guangzhou and Beijing, in cooperation with Capilano College and the federal government. We're refocusing the Seattle office to provide a sales office service to B.C. companies on a cost-recovery basis. Michael Carter of the international services and special projects branch has been given the task of finalizing this continuing rationalization of the international operations. We expect the study and recommendations to come forward within the next six to nine months.
Savings. As a result of this, operating costs have been reduced from $7 million for nine offices in '92 to $3.5 million for 11 different locations in '95, broken down as four offices and seven contract situations, as I outlined.
B. Penner: I thank the minister and his staff for their incredibly quick response to a detailed question like that. It's impressive to see the amount of information that they have at their fingertips. Certainly we could use that kind of support from time to time.
Still with the trade offices issue, from the description given by the minister, obviously it sounds like there are different levels of office service provided. It's my understanding from talking to some people in private industry that the really big players, the big corporations of British Columbia, don't need to use those offices. Rather, they're perhaps of more assistance to the more fledgling or medium-size entrepreneurs in British Columbia. I'm wondering if the minister would share that view.
Hon. D. Miller: There is probably a lot of merit to what that member says, and I think that's our focus.
B. Penner: I'm wondering if the ministry has any way of measuring, or any standards that it sets, for these offices and commissions, and if it has any way of measuring the return on its investment through the operating cost of these offices. The minister indicated that it's now costing about $3.5 million per year to operate these 11 locations. I'm just wondering how the ministry measures results.
Hon. D. Miller: Yes, we do have an evaluative process. On the broader question, I mean, you can look at any office and try
From an operating side, as I indicated in my response to the last question, we have been fairly critical in terms of looking at those options, shutting those that we didn't think we were getting the benefit from, and moving to different situations. That kind of evaluation is something that we will continue to do.
[9:15]
B. Penner: I'll be a little more specific in my question. I'm wondering if the ministry keeps track of the number of business contacts that these offices make on an annual basis, and what those numbers are.
Hon. D. Miller: Yes, we do.
B. Penner: I'm wondering if the minister's capable assistants have those kinds of figures available, to give us an idea of how many people are making use of these trade offices.
Hon. D. Miller: We don't have the numbers or the figures available here, but we'll certainly get them to the member.
B. Penner: I thank the minister for his comments. I'm not trying to be difficult, but I've always been genuinely curious about just how many people actually come through the doors and how many businesses and entrepreneurs are successful in even finding out that British Columbia has a presence in different locations.
I spent some time working in Southeast Asia myself a few years ago. I can tell the minister that my impression from working in Southeast Asia was that the natives and the people who call those countries home certainly view with disdain foreigners who come and go without putting in a substantial amount of time in the particular countries involved. On the other hand, a great deal of respect is accorded to those individuals, even from North America or Europe, who come to the country and show a genuine and ongoing interest in the nation's affairs by establishing some form of permanent or at least ongoing, regular contact with the country, the government and business in those countries. So I'm just expressing to the minister my own personal thoughts with respect to the benefit of, firstly, trade missions and showing the flag on a regular basis, and secondly, establishing some form of presence on the ground through the most economical means available -- provided, of course, that it's still effective.
Some alarm bells were ringing earlier in this legislative session, when it came to light that there were some what appeared to be pretty optimistic revenue projections contained in the Finance ministry's '96-97
Hon. D. Miller: Somebody may come up with something while I'm on my feet here, but if not we'll see if we have -- I'm not sure what kind of up-to-
[ Page 1220 ]
unprecedented, which may be kind of indirectly linked to the forecasting. I know many senior executives are capable people who have been in the business for years, and they were caught short. In other words, they did not anticipate in any way the kind of dramatic up and down that took place with respect to that commodity market. If I'm not mistaken, I think there are several large forest companies that got stuck with vast quantities of pulp logs that they paid well over 30 bucks for and are now worth maybe 17. It maybe just illustrates the vagaries of forecasting, even by people who have got lots of experience in the private sector.
B. Penner: I focus on the forestry component of B.C. exports because, of course, the lion's share of B.C. exports is still attributable to exports from the forest industry, either in lumber or pulp and paper. I'm wondering if the minister, just so we can pinpoint exactly how significant forestry is, could tell us what percentage of B.C. exports are dependent on the forest industry in a typical year. I believe the number I've sometimes heard is close to 70 percent. I'm not sure if that's accurate.
Hon. D. Miller: Not precise, but in that range, yes.
B. Penner: Given the importance, then, of forestry exports to British Columbia, the importance of the international market for forestry products generally, I'm wondering if the minister's mandate and his trade officials' mandate includes monitoring developments in the forestry sector globally. What I'm getting at is that there are other countries that are becoming increasingly competitive with British Columbia, particularly on the pulp side of things, including Indonesia, I believe. I'm wondering whether the ministry's
Hon. D. Miller: Yes. In fact, going back again to some of the remarks I made at the outset about the transition and changing nature of our primary industries, which at one time not so very long ago were price-takers in international markets and not marketers, they have had to adjust to that international competition and have done very well. There are some challenges, in my view; I think there are challenges on the pulp side. We will obviously want to increase the value of the products that we export; we'd rather sell a finished product than a 2-by-4. We're aware, though, that some of those commodity markets are big revenue generators. So moving that industry, particularly the high end, further down the manufacturing chain is where the jobs will come.
We've seen some, I think, fairly good changes on the solid wood side, particularly with respect to the Japanese market, where more and
We're also seeing now, I think, the emergence of some interesting new developments. Certainly the MDF technology, that is now being applied in Quesnel and will be shortly in Prince George, is a good move, in my view. It's utilization of waste products, essentially. It's fairly high-capital, but nonetheless, not as high as pulp. There's a fairly decent job generation -- about 105 to 110 jobs, I think, in that plant in Quesnel.
An Hon. Member: What is MDF?
Hon. D. Miller: MDF? It's medium-density fibreboard.
You have to continue to look and work with industry to see where those new opportunities exist with respect to the offshore markets and how that links back in and integrates with domestic industrial policy, regardless of which sector.
B. Penner: What I'm wondering is whether there's any formal arrangement where the minister or his staff, through utilizing information gathered in the 11 different trade offices, have a protocol, formal or not, to give that information to the forest industry here in British Columbia to help them respond to changing global conditions in terms of markets for forestry products.
Hon. D. Miller: The answer is yes.
B. Penner: There's an item, I believe, in the estimates comparing asset acquisitions for the B.C. Trade and Investment Office from 1995-96 to 1996-97. According to the figures I have, it shows 1995-96 asset acquisitions at $26,704. In 1996-97, it's projected at $542,000, a very major increase. I'm just wondering what the office is acquiring to drive that figure up. I'm trying to do the math here on my feet. It's more than a tenfold increase.
Hon. D. Miller: I must confess I don't know, but again, if we can find it here we'll try to get the answer.
B. Penner: I'm just quickly scanning my notes here, hon. Chair. Thank you for your indulgence.
I have a more general comment for the minister, while his officials are looking for some information. In the last little while, in talking to some members of the business community, including the mayor of Chilliwack, who is now actively trying to locate an investor to replace the loss of CFB Chilliwack -- that's the Canadian Forces Base C
Some of the comments that we've been getting are that the location is usable in that it's close to a port and rail lines and other infrastructure. But they have to attract middle-to-higher-level management. Particularly in computer software, you're often competing with other jurisdictions to attract the senior or middle levels of management for those companies. One of the factors they take into account, of course, is our beautiful setting, and I don't think there's any place more beautiful than Chilliwack in British Columbia -- at least, on a clear day. However, one of the difficulties we're running up against -- at least, what I'm hearing through the mayor -- is that some of these individuals are expressing concern about their ability to attract the requisite, I suppose, intellectual knowledge, because these are knowledge-based industries we're trying to attract. The difficulties they're having attracting this pool of talent are because of some of the other higher costs that we have in British Columbia. I'm speaking particularly about our marginal tax rates. I suppose it hits these individuals more than others because they tend to be at the higher level of income due to their particular positions.
I'm wondering how the ministry deals with that when they're attempting to attract investment. Is there an informa-
[ Page 1221 ]
tion package that they provide to would-be investors in British Columbia or managers of businesses? Generally, what is the ministry's response to those types of concerns?
Hon. D. Miller: In response to the first question with respect to the acquisitions, they were computer upgrades in B.C. Trade mostly. We'll get some absolute detail if the member's interested in pursuing that.
Yes, I did deal with this earlier -- at some length, I think. I don't want to repeat what I said then,
B. Penner: It's new ground, I think.
Hon. D. Miller: The member indicates it's new ground, but I distinctly recall the question being asked about high marginal tax rates as a disincentive to
I'll just cite one reference. I think the member can refer to Hansard for others. Internationally, British Columbia ranks as inexpensive for executive, managerial and professional personnel. For example, Vancouver ranked 123rd in a Swiss-based corporate resources group's cost-of-living survey of 130 world cities -- equal to Atlanta. I would say that with the added benefit or
I'm sure all of us instinctively think these things, but there's just one other note, I suppose. I think one of the most significant problems we face on the lower mainland is the cost of housing. You know, you have to look at the total context. If you've got the lower tax regime and you've got more income, yet you're paying a much higher proportion of that on housing, then that's also a factor. And that's not something that we control. Clearly, it is beyond our control, particularly in the growth areas of the lower mainland.
[9:30]
B. Penner: I'm winding down my questions having to do with trade. As I do so, I'll end by focusing more locally on my constituency.
Chilliwack has suffered a number of setbacks in the last couple of years in terms of the job base. Most notably, of course, is the closure of CFB Chilliwack, and that's not the responsibility of the provincial government. But just so the minister is aware, just to bring him up to date, it will be resulting in the loss of approximately 2,000 jobs in the Chilliwack area once the closure of CFB Chilliwack is complete. That includes military personnel as well as the civilian support staff. That's a major blow to any community, particularly one which is relatively small still, and that's my hometown of Chilliwack.
[W. Hartley in the chair.]
In addition, there have been other job losses. We've lost the FraserVale fruit-processing plant, which I believe has been around since the 1940s. It was purchased by a different business, was consolidated, and they left one remaining plant or a different plant in the Sardis area of Chilliwack. That plant used to be known as Berryland. It escapes me now what its most recent name was, but it just closed in April of 1996. I believe that ended 200 year-round jobs and about another 200 seasonal jobs.
This puts pressure not just on our job base in Chilliwack but also on farmers, because the farmers counted on a market for their produce by having these local processing plants to ship and to sell to. With the decrease in the number of fruit-processing plants, there's a decrease in the local demand for produce. More and more of the farmers are left in the unenviable position of dealing with only one or two brokers interested in buying their produce, and that gives those one or two remaining brokers tremendous power to negotiate very low prices for the produce produced by the farmers. So that's a concern.
Now, I'm not laying all the blame for the closure of those two processing plants at the foot of this government. I think there are maybe some things the government could do differently. Clearly those two plants were old, and the owners of those plants saw fit not to invest the capital necessary, in my view, to make them competitive. However, I'm just indicating on the record to the minister some of the concerns that Chilliwack has.
There are businesses in Chilliwack that manufacture and export successfully, and they are thriving and have done very well. I'm thinking of one in particular: Ty-Crop Manufacturing, which was started not that many years ago -- in 1979 -- by a fellow who was 17 years old. He started welding in his father's barn, fixing equipment for some other farmers that were friends of his father. He quickly found that he had a particular skill and a knack for this, and he bought an old farm building and started doing this full-time. He now employs about 120 people in Chilliwack, and the vast majority of the products -- because he's now gone from simply repairing machinery to actually inventing and manufacturing machinery -- are exported.
When I met with the owner fairly recently, he told me about one particular problem he has. Most of the product is manufactured in Chilliwack, but they have to import certain component parts -- I believe it's something similar to a ball bearing -- for this product that they export internationally, including to China, Taiwan, Japan and Australia. It's a product called the TD400 topdresser, and it's used for golf courses, believe it or not, to address the soil concerns, distribute fertilizer and add sand where necessary. These particular units sell for about $20,000 apiece, and they can't keep up with the demand. It's an amazing little innovation that they've come up with. There doesn't seem to be anything quite like it on the market. But he does need to import -- I believe it's from Oregon -- a particular section. It's a ball bearing or some small component part.
He tells me that he has to complete 15 different forms through nine different government agencies -- whether they are federal, provincial or municipal -- in order to get that part into his plant. Obviously he's not in business to fill out forms. He's aware that he has a certain amount of responsibility as an employer/manufacturer to do recordkeeping, but he cites this one example of some of the frustration he's feeling in trying to remain competitive and at the leading edge of this growing industry in treating golf course turf.
I will close my remarks with that example, because I think it highlights some of the difficulties we tend to inadvertently create for small and medium-sized businesses. Maybe the really big businesses don't worry about it that much. They have a separate department that can handle filling out all those forms, and it doesn't affect them quite as much. But he's still a pretty small-time operation. He has 120 employees, but he does a lot of it himself, in terms of administration, in order to keep his costs down and to keep competitive. He tells me he does not want to leave Chilliwack. Perhaps it would be cheaper for him to operate elsewhere, but this is where he started and where he wants to remain.
[ Page 1222 ]
So I encourage this government to continue to be sensitive to problems around red tape. I recognize that often it's inadvertent; it's for recordkeeping purposes. Or we decide we want to do a study, and there are more forms to fill out so that we know where things are going. But I think it's incumbent upon us to remember that it does place a burden, particularly on small and medium-sized businesses.
Hon. D. Miller: Well, just working backwards from the topics the member raised, I want to say I agree wholeheartedly. I agree fundamentally that we need to look at those areas, and I suspect it's primarily federal -- probably duty remission with respect to the duty on parts being imported and then a credit when they're exported. Maybe that's small comfort
The manufacturer you described is one that I'm very interested in, because I like entrepreneurs, and perhaps we could discuss this in some forum other than these estimates. I truly like those kinds of companies. They're entrepreneurial, and they're creating a product that's bringing wealth back into the country. So we'll have to talk about that.
I also want to say that the member and I share a common problem. I represent the community of Masset in the Queen Charlotte Islands, and that community is less well-equipped than yours to deal with the loss of the Department of National Defence base there -- DND Masset -- which is 50 percent, or more, of the local economy. It's a huge challenge for government to try to work with a community to offset the loss of that significant part of their local economy. And, obviously, it's more difficult in Chilliwack because it's quite remote. There are transportation issues, and the opportunities for diversification of the economy are much more challenging in a place like that. So we do share that.
Finally, maybe I can use this in not too pointed a way to illustrate the kind of
C. Hansen: I'd like to seek the guidance of the Chair. There are a couple of small topics that I could address in these remaining minutes of this evening's sitting, or I can launch into a more lengthy one, or I could move a motion of adjournment. But I'd like to seek some guidance on that -- if the minister might give me some advice.
Hon. D. Miller: I'm here to do my best, Mr. Chairman. The member should just continue, I think,
C. Hansen: I've got some very specific questions with regard to the estimates documents that have been put forward. Some of them are fairly detailed questions that I would like to seek some response from the minister on.
One of them is regarding the whole issue of salaries and benefits in the ministry. I've gone through and taken out the full-time-equivalents that have now been transferred to the Ministry of Finance, and my calculation shows that we've got salaries and benefits of $42.8 million in the ministry. If you divide that by the 655 FTEs in the department, you wind up with an average cost per salary and benefit of $65,371 per FTE. That strikes me as rather high, and I'm wondering if the minister could comment on that.
Hon. D. Miller: No, I can't.
C. Hansen: My question to the minister is: could he explain why the cost per employee would be so high in his ministry?
[9:45]
Hon. D. Miller: I'm advised, Mr. Chairman, that a lot of our staff, up to 30 percent, are excluded employees -- in fact, professionals -- and therefore that would account for the higher per capita.
C. Hansen: Thirty percent were excluded?
Interjection.
C. Hansen: Thank you very much.
I want to move now to the policy branch, specifically with regard to the grants and contributions that are being issued from that branch. I notice that there is an increase of 900 percent over last year, from $71,000 to $686,000. Could the minister please explain why the dramatic increase?
Hon. D. Miller: I am advised that the main difference is that the grant to the Asia Pacific Foundation was included in there, and it wasn't in previous years.
C. Hansen: Does that include the grant to the Asia Pacific Foundation?
Hon. D. Miller: I see heads nodding all over the place, Mr. Chairman. The answer is yes. As well, interprovincial trade costs are in there.
C. Hansen: The interprovincial trade costs wouldn't necessarily be under grants and contributions, though, I don't imagine. Actually, that intrigues me. Are we looking at an increase in funding to the Asia Pacific Foundation in excess of $600,000? That doesn't seem appropriate.
Hon. D. Miller: No. I'm advised it's relatively the same as last year.
C. Hansen: Does the minister have a specific number for what the grant to the Asia Pacific Foundation was last year and what it is this year, if in fact it is the same?
Hon. D. Miller: Asia Pacific is in the neighbourhood of $250,000 -- it could be plus or minus -- and the secretariat of
[ Page 1223 ]
interprovincial trade in Winnipeg is about $50,000. So there's
C. Hansen: Is the contribution to the secretariat in Winnipeg shared equally among provinces, or is there a formula for the funding of that office?
Hon. D. Miller: I'm advised there is a formula.
C. Hansen: I guess that begs the question: what is the formula? This is going down a line I didn't anticipate, obviously, but certainly I am intrigued in terms of how that office is funded.
Hon. D. Miller: Pro rata, I believe, is the term.
C. Hansen: In other words, based on population. Do I have
I want to ask the minister specifically about the annual report of the ministry, which has been, I guess, a subject that has come up from time to time in the House. I'm just wondering if the minister could advise us of the status of the annual report. The ministry was created in September of 1993, and I understand that there has yet to be an annual report.
Hon. D. Miller: Again, I see heads nodding, Mr. Chairman, so I will have to confirm that. I'm sure we've got a slug of them on the way.
C. Hansen: The confirmation is that the ministry was created in September 1993. I knew that ahead of time; we didn't need confirmation. But is the minister saying that there is an annual report for these past years soon to be tabled?
Hon. D. Miller: Yes, I'm sure that's correct.
C. Hansen: Annual reports are obviously a very good source of information not just for us but for the general public and for people that want to understand and have access to your ministry. I think the annual reports are a very important vehicle for that. The lateness of some of these annual reports is certainly a concern to us, because I think they're often the things that are put to the bottom of the priority list.
The other thing I see in looking back through estimates over past years is that there's always a budget allocation for an annual report, which sometimes slips into the next year and the next year. In fact, what you're doing is paying for a 1993-4 annual report out of this year's budget. I wonder if the minister can assure us that there's adequate funding in here to bring the annual reports up to date, including the 1995-96 annual report.
Hon. D. Miller: Yes. I guess there's a bit of levity here. I appreciate it; it's not out of disrespect. Certainly I think we've got an obligation to produce annual reports on a timely basis, and I think we're trying to play catch-up. I've introduced a couple, in some parts of the ministry, that are back to back.
C. Hansen: My questioning is serious. It is something that I am quite interested in.
I would like to make a suggestion to the minister. I've seen a lot of annual reports, and I've been trying to read and digest them as they've been coming across my desk in these last few weeks. It's an enormous amount of reading. My impression in looking at these is that some have a wealth of information. A lot of time, effort and energy has gone into creating a document that is very informative, and not as much time, energy and expense has gone into the design. Other reports come out where a lot of expense, time and energy has gone into the design, the pictures and the glossies, and they're very short on information; the information is pretty thin. Certainly it's something that I would like to see your ministries do -- collectively, all of them, and throughout government: pay far more attention to the content of annual reports in a timely fashion and not so much to the glossiness of them. My suspicion is that we're spending a lot more than is necessary on the design and production side of annual reports rather than on the content.
I would also like to ask the minister if his ministry would consider alternative vehicles for producing this kind of information, so that it can be more timely and more relevant, using systems such as the Internet. That should, in theory, be far more cost-effective over the long term.
Hon. D. Miller: I can assure members that if it was on the Internet, I'd never be able to read it. I think the auditor general did have something to comment on with respect to annual reports. I think they should be timely. Hopefully, the ministry will excel both in the content and in the style. Both, I think, have some importance. We do have a home page on the Internet.
C. Hansen: As I mentioned to the minister in supply debate, the web site was a very useful primer for me when I was first trying to get a sense of what the ministry is all about. I thought it was very well done by whoever is responsible for that in your ministry.
If I can move to the budget item under Build B.C., it shows an expenditure of $38 million last year. When I went back to the estimates from last year, the projection was for $40 million for Build B.C. Yet in reconciliations, there's no indication of $2 million heading off in any other direction. I wonder if the minister could explain that discrepancy.
Hon. D. Miller: I'm advised that it's a base transfer to Environment for the environmental youth teams -- $2 million.
C. Hansen: I'm curious as to why that would come out of the Build B.C. fund. Could the minister explain that?
Hon. D. Miller: It was a decision of government.
C. Hansen: Maybe I'm misinformed or under the wrong impression, but is the Build B.C. fund not to be used for capital expenditures and long-term expenditures as opposed to something that is more operational in nature, such as the environmental youth teams?
Hon. D. Miller: No, it's the two parts of Build B.C. There's B.C. 21 -- the capital -- and the Build B.C. special account, which was established in 1993 under the Build BC Act as one of the tools of government. I'm just looking at some of the specifics here. Special account allocations from consolidated revenue have been as follows in descending order: 1993-94, $100 million; 1994-95, $100 million; 1995-96, $40 million; 1996-97, $20 million. The objectives are: to create and/or maintain jobs; to increase participation by traditionally disadvantaged groups -- that is, income assistance recipients, youth, women, aboriginal peoples, persons with disabilities
[ Page 1224 ]
and other visible minorities; to promote regional development and diversification; and to provide training opportunities and investment in assets and/or people. So it appears to
C. Hansen: Is it anticipated that the Build B.C. fund will be exhausted during this fiscal year?
Hon. D. Miller: No.
C. Hansen: If I follow the balances that the minister was referring to, it's decreasing every year. At some point will it be phased out, or will it be replenished to some significant degree?
Hon. D. Miller: Its allocations out of the fund and expenditures under this special account have been reduced as part of the government's commitment to fiscal responsibility.
C. Hansen: I'll leave that one for now.
Specifically under Build B.C., I notice there's a change in the way that particular item has been set up. In past years, I believe, the entire lump sum always showed up under STOB 95, other expenditures. Now, this year, we see it divided into the specific operational STOBs. Could the minister explain why that change has taken place?
Hon. D. Miller: I'm not an accountant, so I don't really follow these things that closely. In previous years, it was subsequently allocated throughout the year, and this year it was allocated under various STOBs.
C. Hansen: As an integral part of the ministry, is there any change in the operational nature? Is it now more integrated into the ministry than it has been in past years?
Hon. D. Miller: No, it's the same.
C. Hansen: Have the employees of Build B.C.
Hon. D. Miller: Mr. Chairman, I'm a poor conduit for these kinds of questions. Perhaps one of my officials might help, if the member wants to kind of pursue that. Does anyone want to explain this? I have to leave the room for a few minutes.
[10:00]
B. Redlin: The FTEs have always been part of the ministry. There has never been a separate place called Build B.C. It's always been in the program and capital development branch of the Ministry of Employment and Investment.
C. Hansen: But if we look
For the benefit of Hansard, I should indicate that I think it's appropriate if our guest introduced himself first.
B. Redlin: My name is Blair Redlin, Deputy Minister of Employment and Investment.
STOB 95 is an "other expenditures" category. With some experience with the Build B.C. special account, the allocations have been more appropriately allocated to the various other STOBs, as opposed to a very general category like STOB 95.
C. Hansen: I appreciate that. I guess I'm trying to read more into it than is there. It seemed to be a fundamental change; I gather it's not.
My next two questions are also of a very detailed nature, and perhaps we can deal with them in the minister's absence as well. This is a very minor point, but it's something that intrigued me. I thought there might be an explanation for it. There is a transfer of one FTE to the Ministry of Environment, Lands and Parks to handle multicultural issues. I'm wondering if you could explain who that person is, what they do, and why they're more appropriately housed in the Ministry of Environment.
B. Redlin: Could you clarify whether it was a transfer to us or from us?
C. Hansen: I apologize. It is a transfer from the Ministry of Environment to your Ministry of Employment and Investment.
B. Redlin: About a year ago, responsibility for business immigration and multiculturalism was transferred to the Ministry of Employment and Investment from the Ministry of Environment, Lands and Parks, and an individual was transferred to the investment facilitation branch to work on film issues from a multicultural perspective.
C. Hansen: Sorry, but it didn't ring quite right to me that responsibility for business immigration was transferred from the Ministry of Environment, Lands and Parks.
C. Nelson: Business immigration was part of Multiculturalism a year and a half ago. They were doing some industry sector development within Multiculturalism -- and the business immigration side -- and one individual in there was doing film industry and India development work. It's now part of the B.C. Trade and Investment Office, so that employee came over with that investment promotion activity, and it's now part of the ministry.
C. Hansen: I would like to shift to the natural resource community fund. I notice that the fund has a maximum amount of $25 million. As revenues come in from petroleum and natural gas, mineral revenue and forest revenue, they are going into the natural resource community fund and basically flowing straight into consolidated revenue. I'm wondering if the minister could speak to that in terms of the very small allocations that have been made -- I believe $96,000 is anticipated. Does he anticipate more active use of this fund?
Hon. D. Miller: The modest expenditures have primarily been for studies. The notion behind it really was to look at resource communities and the problems they face, particularly problems of transition. By and large, I'm not suggesting that every small community is doing well. As well, there have been different funding sources to deal with some of those questions -- Forest Renewal is one example. When the economy is performing well, the need to expend out of the fund is diminished.
[ Page 1225 ]
C. Hansen: Could the minister explain the purpose of the $96,000 that is there as an expenditure?
Hon. D. Miller: I'm advised that it is primarily for the northern Vancouver Island communities around Port Hardy, and it involves some of the implications of the CORE process on that community. That was obviously prior to the establishment of Forest Renewal.
C. Hansen: Given the existence of the forest renewal fund now, will this fund become somewhat less relevant?
Hon. D. Miller: Not necessarily. The options are there, and it's one that I obviously want to keep as a different way of dealing with these questions. Forest Renewal is the most obvious example that's been brought into existence, and we obviously want to use those. The fund is there and it should be used according to need.
C. Hansen: As is explained in the estimates notes, these expenditures are for training and skill development, worker relocation, job creation, maintenance, local government operating costs and other costs which may be deemed necessary. That's a fairly broad range of activities that could be included in this fund. Could the minister explain to me what the application process is? If a community is going through transition in terms of its economic base, how can they make application to this fund to take advantage of it and to set up some of these programs that may be necessary?
Hon. D. Miller: I'm just trying to get some examples. I understand Babine is one community. The applications are made directly through us. The member might recall -- and this is prior to the establishment of the fund -- a major adjustment in Cassiar when we had to essentially close that town down. Again, all the issues identified there -- worker training and adjustment -- can be dealt with out of the fund. It's up to communities to make application.
C. Hansen: My understanding is that this community fund is not well known among resource communities in British Columbia. There doesn't seem to be an effort to communicate and make it known to resource communities that there is this fund available. I guess that leads to my suspicion -- not a suspicion; let's just say I have a
Hon. D. Miller: Again, you look at the relative health of the economy. I suppose for any fund that's there, if its existence is
While communities are doing relatively well, other devices
C. Hansen: Could the minister advise us how many applications have been received from around the province in the past year for disbursements from this fund?
Hon. D. Miller: I'm advised a couple a year, and since 1992 we've really dealt with four areas: Cassiar, which I've mentioned; the Elk Valley; Granisle; and northern Vancouver Island, which I talked about.
C. Hansen: In terms of northern Vancouver Island, I know that Gold River, for example, is going through some very dramatic challenges. I'm wondering if that might be an example of a community that might be eligible. It's one of these subjective things, when they talk about -- what's the wording in here? -- "severe economic dislocation arising from industry closures." It's a subjective thing and obviously comes down to the opinion of the ministry. I'm just wondering what would constitute a severe economic dislocation.
Hon. D. Miller: The forest sector is not disappearing in Gold River or in that area. They're certainly going through adjustments, as some others have, but in that respect it probably wouldn't qualify.
C. Hansen: I guess the final point that I'd like to get at on this is that you mentioned that now the forest renewal fund is in place, a lot of the applications that may have come through this fund are in fact going through Forest Renewal instead. You're shaking your head. That may be a misstatement on my part, so I would ask the minister to clarify that. The other point I'd like to make is: are the demands on this fund in recent years, the number of applications coming in, down from what we've seen in years gone by?
Hon. D. Miller: No. Let me try to clarify that. There may be instances where, in fact, a
[10:15]
C. Hansen: The 0.5 percent of forest revenues that flow into this fund and then subsequently flow through into general
Hon. D. Miller: No.
C. Hansen: Is it in no way tied? If we're talking about the total revenues to government, is this just the 0.5 percent that's coming in in terms of pure stumpage coming into the consolidated revenue fund? Does 0.5 percent of that flow into this fund?
[ Page 1226 ]
Hon. D. Miller: Yes. I think the description in the book is dead accurate: 0.5 percent of annual petroleum, natural gas, mineral and forest revenues and the interest earned on fund investments flow in. Forest Renewal is a quite separate fund.
C. Hansen: I know that earlier today we canvassed some of the issues involving interprovincial trade. I certainly didn't mean to imply that we were going to wrap that up. I hadn't realized that my colleague was going to raise some issues regarding interprovincial trade on beer. You had indicated at the time that this was an area that had been canvassed. There may have been a misunderstanding, because I don't think this specific issue had been canvassed during that debate. So I'll defer to my colleague.
B. Penner: Thank you, hon. member. In fact, I think that now would be a perfect time to have a beer. I state that in response to the minister's comments that he's always happy to speak about beer. Sometimes I think actions speak louder than words, and perhaps it's just about that time: Miller time.
The issue of interprovincial trade barriers keeps getting discussed at every first ministers' conference and at every economic conference held between the various provinces. I'm wondering what this government's view is with respect to interprovincial trade barriers.
To make it more specific, I'd ask the minister to perhaps share his thoughts on the perennial issue of the brewing industry -- the beer-makers. We're told over and over again that we have more capacity in Canada than we really need in terms of doing it efficiently. For instance, one or two large plants could probably supply almost all of Canada and do it on a more cost-effective basis. I know certain brewers in the United States, for example, are able to service their market through either one or two plants.
I'm just wondering what the minister's thoughts are with respect to interprovincial trade barriers. I know they were put in place for a reason and that taking them down obviously incurs some risk -- and probably some political strife from certain interest groups who may be affected. I'm just asking the minister for his general thoughts on that subject matter.
Hon. D. Miller: Again, with due respect, I did think I expressed some general thoughts. As for any particular issues around beer, I'm certainly not aware
I did generally characterize British Columbia's position as one that I think has certainly worked in favour of removing those kinds of barriers. I think the very wise kind of approach is that we want to make sure that the agenda is open and clean and that we're not taken by surprise. We don't want to be naïve in terms of trading issues.
I cited, I think, the issue of the free trade agreement. I'm sure many in this room from that side of the House would have argued quite strongly in favour of the free trade agreement and the benefits that that brought to Canada and British Columbia. I thought, when they did advocate that
I used lumber to illustrate the point where we did up a free trade agreement. Then, lo and behold, the Americans came along for the third time and launched another countervail action. I was minister at the time, and I tell you we fought hard -- and we won. A binational panels says there was no subsidy on Canadian or British Columbia timber-harvesting fees, stumpage or royalties.
What happened when we won? The Americans turned around and changed the law and launched another countervail. And what have we got now? We've got a Canadian cartel -- a cartel, as I understand it -- approved of by the United States government that limits the supply of Canadian manufactured lumber into the United States market. That's exactly what we have. It's a bit of a puzzle to me for those who advocate free trade, but I guess that's the way the world works, and you just have to know how it works and never get played for a sucker.
B. Penner: The minister raises an interesting point -- something that has been on my mind -- and that is the voluntary quota on softwood lumber exports. I believe Canada has agreed to limit its exports from across Canada to 14.7 -- is it billion? -- cubic feet of lumber in this particular year. It is also my understanding from speaking to various people involved in the forest industry that negotiations are ongoing and discussions are ongoing between the federal and provincial governments as to just how to apply this quota to particular companies in B.C. It's one thing to say that across the country we're only going to export a certain amount, but the question then becomes how we allocate that to particular companies here in B.C.
It appears, at least based on my discussions with some people in the industry, that what will happen is that individual companies will be limited to exporting 7 percent -- I believe it's 7 percent -- less than they exported last year. Some companies might have had an exceptionally good year -- for whatever reason their sales were extraordinarily high -- and they're going to be capped at a rate just 7 percent less than a very good year. However, there may have been other companies who were closed for a period of time -- perhaps due to maintenance matters or labour disputes or who knows what -- that will now be capped, it seems, at 7 percent less than what was a very poor year for them, an exceptionally low year in terms of production. This way of implementing the quota would punish those particular companies who for some reason had a low-productivity year last year.
I'm just wondering what the minister's thoughts are on that. More specifically, can he bring us up to speed as to what is transpiring in discussions between the federal government and the province in terms of how that quota is going to be implemented on a company-by-company basis in B.C.?
Hon. D. Miller: I'm not involved in any direct way in those discussions. It has been raised in discussions I've had, but it's a peripheral issue with me. Just to advise the member, it is a very complicated issue in terms of that allocation. I think our position is that the quota should be allocated to producers, not wholesalers. I think that's the position of the forest sector as well.
Further to that, details will be worked out with the federal government, but the partnership here is with the producers and the government. It's not the government sort of being the arbitrator and saying that it should go here or to this company or that company, but rather, it's on an industry or sectoral basis for the industry to work out what appears to be a fair allocation. As I said, a complication that
[ Page 1227 ]
The result creates these kinds of complications, which I'm sure we'll resolve.
British Columbia, by the way, was the leader in advocating a system that at least provided the protection and did not see a revenue drain out of this country into the United States. Faced with the intransigence of the U.S. and, really, their failure to want to be free-traders, we, I think, led the nation and forced the federal government to accept the proposal that we'd put together. I really want to give credit to the former Minister of Forests, the current Minister of Finance, who was a leader in that regard, and the deputy to the Premier, Mr. McArthur, who, I think, did outstanding work along with the industry in advancing the position that was eventually established in this country. And I'm sure the details will be worked out.
B. Penner: I'll have a more specific question in a moment.
I'll just begin with a comment that it was my understanding that prior to the free trade agreement there would have been nothing to restrict the United States from limiting our exports of forestry products. Certainly now, under the free trade agreement, at least they have the hurdle of this tribunal to go through. It's my understanding that the way the free trade agreement is worded is that the tribunal is forced to interpret the laws that are placed before it, of the country in question -- in this case the United States.
Interjection.
B. Penner: The minister raises a good question: perhaps the free trade agreement didn't go far enough in terms of limiting the sovereignty of the nations that are a part of the free trade agreement. Sovereignty is always a touchy issue, and I know that it became very much a part of the 1988 federal election campaign.
However, it's my understanding that we now have a tribunal that does have powers to make binding decisions. But because of the wording of the free trade agreement, it makes those decisions based upon the legislation and interpretations of the legislation of the country involved -- in this case the United States. Perhaps that's an issue that can be visited in discussions with the federal government -- whether there's any support for trying to push things further along in terms of tying the hands of different countries in bringing restrictive legislation to the tribunal.
I'll sit down here in a moment after I ask this question: what percentage does B.C. get of that 14.7 billion cubic feet of lumber on an annual basis?
Hon. D. Miller: Very, very briefly, about 60 percent.
And the lesson to be learned is to keep your eyes open and your head up when someone asks: "Do you want to break down interprovincial barriers? Do you want free trade?" Make sure that that's the only thing on the agenda. I mean, we won three countervails in a row, and they keep changing the law. If you think there's any value in
Mr. Chairman, I move the committee rise, report progress and seek leave to sit again.
Motion approved.
The committee rose at 10:28 p.m.