(Hansard)
TUESDAY, AUGUST 6, 1996 -- 2 p.m
Afternoon
Volume 2, Number 13, Part 1
[ Page 1427 ]
The House met at 2:06 p.m.
Prayers.
Hon. P. Priddy: Today I rise to ask the Speaker's office to convey congratulations from the Legislature to B.C.'s Olympic medallists at the Atlanta Olympic Games. Seventy-seven B.C. athletes competed at the Summer Olympics in Atlanta, and of Canada's 22 medals, 41 percent were from B.C. athletes. Hundreds of thousands of British Columbians followed their progress. B.C. has a longstanding tradition of producing exceptional athletes. B.C. also sent the second-largest contingent in the country to the games. They performed exceptionally well.
The medal winners from British Columbia are Kathleen Heddle from Vancouver, who won a gold in rowing and now has three gold medals -- something no other Canadian has done -- and a bronze as a member of the women's quad scull. Silken Laumann of Victoria, after an extraordinary comeback in Barcelona, won a silver medal in the women's single sculls. Victoria's Derek Porter won silver in the men's single sculls. Laryssa Biesenthal of Victoria won a bronze as a member of the women's quad scull. Clearly, rowing in Victoria is easier. Gavin Hassett of Victoria won a silver medal as a member of the men's lightweight four. Anna van der Kamp from Port Hardy, Jessica Monroe from North Vancouver and Theresa Luke of Forest Grove won silver as members of the women's eight.
Cyclist Brian Walton of North Delta won silver in the men's points race, and synchronized swimmers Janice Bremner of North Vancouver and Christine Larsen of Coquitlam won silver medals. Alison Sydor, world champion cyclist, won a silver medal in women's mountain biking.
I think we need to mention a special word of praise for Victoria's Angela Chalmers. She was expected to be a favourite for a medal in Atlanta and had to pull out, tragically, because of a games injury.
As the opposition did last week, we should also congratulate all of the athletes who participated in the games. I, quite frankly, have to also congratulate their moms, dads and coaches, who, from the time they were six or seven, spent very early hours, at four in the morning, at swimming pools, beside lakes and in gymnasiums. They deserve our congratulations, as well.
Again, I ask the Speaker's office to convey congratulations from the Legislature to B.C.'s Olympic medallists at the Atlanta Olympic Games.
The Speaker: Thank you, minister. I shall be happy to undertake that pleasant task.
G. Brewin: It gives me great pleasure that visiting us today in the gallery are two people: Mr. Peter Bennison, who is Clerk Assistant and Sergeant-at-Arms in Hobart, Tasmania; and Mr. John Mandy, who is Clerk Assistant and Sergeant-at-Arms in Perth, Western Australia. Both Mr. Bennison and Mr. Mandy are here to attend the Sergeant-at-Arms' Conference. I would ask the House to join me in welcoming them to our assembly.
J. Dalton: I am pleased to introduce four visitors today, sitting up there across from the opposition benches. Caprice Barbour and her daughter Laura are here. Caprice is the riding president of the Vancouver-Fraserview Liberal Riding Association and, I understand, is preparing to turn the torch over to our other visitor, Mike McDevitt, who is also with us, with his son Sean. So welcome to all four of you.
G. Robertson: With us today is my daughter Kimberly. Kimberly is down in Victoria this week, enjoying it, obviously, and looking forward to question period. I ask the House to join me in welcoming Kimberly here this afternoon.
K. Krueger: It's my pleasure today to introduce to the House Ron and Susan Olynyk from Kamloops. These people are very active in the business and professional community in Kamloops. Ron has twice been the president of the chamber of commerce there. They were here this weekend to celebrate the engagement to be married of their daughter Kelly, who has been a UVic student. I ask my colleagues to make Ron and Susan Olynyk welcome.
I. Waddell: I'd like to introduce to the House a woman who is young at heart, who wowed Pierre Trudeau, who stopped Brian Mulroney in his tracks and who caused Mayor Jean Drapeau to splutter, but who has many friends on both sides of the House. She has charmed all of them with her good sense of humour and her innate charm -- my mother, Isobel Waddell, who is here.
Hon. M. Sihota: In the gallery today is the former editor of the Ubyssey newspaper. The other day I got a phone call from the Ubyssey; they couldn't believe some of the things I said when I was at university. I told them I was regularly misquoted by Chris Gaynor, who is here with his friend Steve Pacholuk from Manitoba. Would the members please give them a warm welcome.
A. Sanders: Today in the gallery we have three very important people: Mr. Hoong Neoh and Deborah Tucker, and from Vernon, Mrs. Cindy Bourne. Would the House please make them welcome.
P. Nettleton: Seated in the gallery today are two guests of mine visiting Victoria from Abbotsford. Nine-year old Jeremy Maddocks, who follows the activities of this assembly with keen interest, is accompanied by his father, Chris Maddocks, supervising lawyer with Legal Services in Abbotsford. Would the House please join me in providing them with a warm welcome.
F. Gingell: I saw earlier in the gallery the long, long time teacher/chef at South Delta Senior Secondary, Julius Pokomandy. He has created a reputation second to none for the quality of food at public occasions that are catered at South Delta Senior Secondary. I ask you all to make him welcome and accept the invitation to attend some special occasion next time you see one at South Delta Senior Secondary.
G. Wilson: Observing our deliberations today are two people who are very special to me and who share a special day -- it's their birthday -- my mother, Evelyne, and my son, Mathew. Would the House please help them to welcome their special day and to celebrate.
B. Goodacre: With us in the House today we have the Deputy Speaker of the Ontario Legislature, Mr. Bert Johnson, MPP for Perth. Mr. Johnson was first elected to the Ontario Legislature in June of 1995 and was put into the Deputy Speaker's chair in September of 1995.
[ Page 1428 ]
For those of you who are wondering why an NDP member for Bulkley Valley-Stikine would be introducing a Conservative from Ontario, it just so happens that we were in Stewart two weekends ago -- on government business no less, in the King Edward Hotel -- when Mr. Johnson popped over and introduced himself. A couple of constituents of mine from Smithers who are related to Mr. Johnson pointed us out. I should mention that it was in the dining room of the King Edward Hotel. Harry was in the other part of the hotel. So could the House please make Mr. Johnson welcome.
[2:15]
Hon. C. Evans: Hon. Speaker, I rise today to disprove a popular myth that there is no such thing as a social democrat in Kelowna, quiet as it's kept there.
Interjections.
The Speaker: We are making history. We now have heckling during introductions.
Hon. C. Evans: And your mothers are here watching our deliberations. Aren't you embarrassed?
Quiet as it's kept, there is a whole bunch of social democrats in Kelowna, and every
Interjections.
Hon. C. Evans: Give me a minute. I'll give you some names. Every year they host a picnic and invite me to their picnic. I'm here to return the favour. Sitting right up above the Leader of the Opposition, looking down and seeing how he's doing, are Burt Mitchell and Faye Saxon from Kelowna. I welcome you and ask everybody else to make you welcome.
The Speaker: Members, I also have a brief introduction to make. Sitting on the floor of the chamber is another visitor from Australia, Mr. Terry McCarthy. He was first elected 13 years ago to the Legislative Assembly of the Northern Territory in Australia. He served five years as a cabinet minister, and for the past two years he has been Speaker of that assembly. I have told him that our Legislature is the exemplar of civility and that there is never an acrimonious moment here -- and I hope, of course, you'll all prove me right. Will you please join me in welcoming Mr. Terry McCarthy.
Hon. U. Dosanjh presented a message from His Honour the Lieutenant-Governor: a bill intituled Electoral Boundaries Commission Amendment Act, 1996.
Hon. U. Dosanjh: Hon. Speaker, I am pleased to introduce Bill 19, the Electoral Boundaries Commission Amendment Act, 1996. The function of the Electoral Boundaries Commission is to make proposals to the Legislative Assembly as to the areas, boundaries and names of the electoral districts of British Columbia. This bill authorizes the commission to make proposals regarding whether the number of electoral districts should be increased up to a maximum of 81. This bill also provides that the commission, in making such proposals, shall take into account considerations of geography, population, communication and transportation. These considerations will provide for a formula that permits the commission to maintain electoral districts in the more remote and rural areas of the province, while balancing the need for change in the densely populated cities. This bill allows for a fair electoral representation for all British Columbians, particularly those in the north and in the interior.
Hon. Speaker, I move the bill be read a first time now.
Bill 19 introduced, read a first time and ordered to be placed on the orders of the day for second reading at the next sitting of the House after today.
ROLE OF JOHN LAXTON
IN B.C. HYDRO OFFSHORE PROJECTS
G. Campbell: On Friday we learned once again that the World Bank had grave concerns about John Laxton being involved in anything to do with the Raiwind power project in Pakistan. In fact, there is evidence that the World Bank was unwilling to forward or release funds for funding that project until the RCMP investigation into Mr. Laxton's activities at B.C. Hydro had been completed.
Can the Premier tell this House why, with the World Bank complaining about Mr. Laxton's involvement, and with the Premier's own admission or claim that he had fired Mr. Laxton, it did not jeopardize, in his mind, the state of the project by keeping Mr. Laxton involved on behalf of B.C. Hydro and the people of British Columbia, in spite of the fact that he was involved in an RCMP investigation?
Hon. G. Clark: First of all, I want to reiterate what I said last week, which is really this: when activities around the Raiwind project came to my attention on the day of my swearing-in, I believe it was -- the first time; just before that -- I took immediate action by removing the chair of the board and the CEO of the board, and I installed in their place the former Attorney General of British Columbia, Brian Smith, to conduct a full review of the events leading up to that, and also with a view to extricating ourselves from this project in a staged withdrawal, in a staged, managed way.
Mr. Smith has been charged with that responsibility, along with the Minister of Employment and Investment; they are in the process of doing that. The unwinding of this project must be done in a manner which ensures that tens of millions of dollars, potentially, at B.C. Hydro are not at risk. As they withdraw and change the process to withdraw from this, they also try to protect the financial interests of B.C. Hydro and therefore the project. I have confidence that that is the case.
I want to take an opportunity here, Mr. Speaker, because I saw some comments on the weekend from the Leader of the Opposition, and I've talked to the minister, who should be here shortly. I talked to the minister today and instructed him to ensure that Mr. Smith is available to members of the opposition in estimates to answer any and all questions with respect to the handling of this question. I'm sure that should give the opposition ample opportunity to canvass this matter fully. From my perspective, we have nothing to hide and nothing to fear from a full investigation of this.
G. Campbell: It's interesting that when we're trying to protect the financial health of B.C. Hydro and the people of British Columbia, we have decided to ignore one of the chief
[ Page 1429 ]
financial backers of the project -- the World Bank. Mr. Smith said on Friday that he "agreed to Mr. Laxton's involvement in SEPCOL's board" with "not much enthusiasm." Evidently, it was without the support of the World Bank, a crucial partner. Mr. Smith must have taken someone's word that Mr. Laxton was crucial and critical to this project. My question to the Premier is: who, from Pakistan, called Mr. Smith, told him it was critical to have Mr. Laxton involved and told him that it was important with such weight that we could ignore the concerns of the World Bank and indeed jeopardize the financial position of B.C. Hydro and the taxpayers of British Columbia?
Hon. G. Clark: That, of course, is an excellent question to ask Mr. Smith when he appears before estimates, which is the appropriate place for the question to be asked. I want to reiterate briefly that, in unwinding and untangling this very complex transaction, the instructions to Mr. Smith are to extricate B.C. Hydro from that transaction in such a manner that does not cause lawsuits and potential exposure of B.C. Hydro to hundreds of millions of
Interjections.
Hon. G. Clark: Those are the instructions. I have confidence in Mr. Smith's handling of the question. He will be available in estimates for members to ask all the detailed questions they may have.
G. Campbell: Mr. Smith's interim report points out that this government was inept, incompetent and amateurish in the way they put together the
Interjections.
G. Campbell: I would suggest to you, hon. Speaker, that the Premier's response shows that the ineptitude remains. When you fire someone, it is very simple. You say: "You are fired. You are gone. You are not having anything to do with the province of British Columbia or B.C. Hydro or the public interest in this province."
Throughout this interim report that was prepared by Mr. Smith, it is clear that no one at B.C. Hydro and no one in cabinet put the public interest ahead of Mr. Laxton's interests. It is clear from hearing the comments of both the minister responsible -- the Premier -- and the chair of B.C. Hydro in the last week that, again, no one is standing up for the public interest. My question is to the Premier, who is ultimately accountable for this. Who is responsible for the public interest with regard to B.C. Hydro? Who is making sure that someone that lied to the public, breached the Premier's trust, and ignored the B.C. Hydro act is removed once and for all from any connection with public life in the province of British Columbia?
Hon. G. Clark: We know, hon. Speaker, that members of the opposition have been trying to play politics with this for months. We know they held information for months to try to inflict maximum damage on the government. It didn't work then, because the public knows that playing politics with this issue is not acceptable. They want to see action; I took action.
Interjections.
Hon. G. Clark: Yes, we did. We removed Mr. Laxton from the board. Yes, there is a company of which B.C. Hydro owns 14 percent and of which Mr. Laxton has been the chair. The decision to unwind this is left with the minister and the board. All members of the opposition can question Mr. Smith; all members of the opposition can question the minister responsible in estimates. But they want to play politics with this issue, hon. Speaker. The public see through that. They know that we're trying to unwind this affair. They know that I don't share the kind of way in which this has been managed up to this date, and they know I accept the responsibility that that report pointed out with respect to how it was managed. They know all that old history, and they know we're moving forward from here in a way which gets us out of this kind of sordid transaction but protects the taxpayers at the same time.
G. Farrell-Collins: The people of British Columbia believed the Premier when he said he had taken action, when he said he had been decisive. The truth is something quite different. Mr. Laxton continues -- who knows? -- even to this day to represent British Columbia in Pakistan with SEPCOL. Hon. Speaker, the question is a simple one to the Premier: how could he, as the minister responsible and then as the Premier, allow Mr. Smith to allow John Laxton to continue to represent British Columbia on this deal, when the World Bank, one of the chief lenders in this deal, said they wanted him off the board? Who in Pakistan, more than the World Bank, was pulling the strings of Mr. Smith?
Hon. G. Clark: It's interesting, hon. Speaker. First they say we didn't do anything. Then they quote an interim report by Mr. Smith which acknowledges blame on my part, which I have acknowledged. Which is it? Is it a whitewash or is it a full report? If it's a whitewash, why are they standing up there quoting from a report which criticizes the government? I removed the chair; I removed the CEO; there's a full investigation; the interim report came out, in which I acknowledge blame; and there's a full and final report coming out shortly. Mr. Smith will be appearing before estimates to answer any and all questions. We have nothing to fear and nothing to hide. This is a sordid affair. We want it all out in the open, and we want to deal with it in a way which protects the taxpayers as well.
G. Farrell-Collins: The people of British Columbia thought that when this minister said he fired the chair and got rid of the CEO that he meant it -- that they were gone -- only to find out some five months later that once again the Premier and the minister responsible for B.C. Hydro don't have a continental clue what's going on at B.C. Hydro.
Mr. Smith's own report says that the management -- the senior people at B.C. Hydro and the senior officials; i.e., the minister responsible -- were incompetent and amateurish, and that they did not exchange information. Mr. Smith, the Premier and the minister now responsible are just as incompetent and just as amateurish for not exchanging information. Does the Premier have any explanation at all for how Mr. Smith could allow John Laxton to continue, and never in five months tell the Premier or the minister responsible that John Laxton continued to represent B.C. in Pakistan?
Hon. G. Clark: Not only did Mr. Smith engage in a full review, he hired former superintendent of brokers Neil de Gelder, and one of the top criminal lawyers in British Columbia, Chris Considine, among others, to do a full and detailed review. They are managing this issue; they are staging B.C. Hydro's exit as per these inquiries. They are managing it in a way which tries to prevent lawsuits and tens of millions of dollars in cost to the taxpayers.
[2:30]
[ Page 1430 ]
We've been upfront about this. When they ask questions, they get answers to them. We're making every source available to them to provide full and complete instructions. Instead of playing politics with it, why don't they work with us to try to unwind this kind of activity, ensure it doesn't happen again and further ensure that the kinds of costs -- potential liabilities -- for B.C. Hydro don't take place? Instead of playing politics, hon. members, why don't you join with the government and Mr. Smith and the expertise hired to unwind this in a fashion that protects the taxpayers at the same time?
R. Coleman: Last week, in estimates, the minister responsible told British Columbians that John Laxton remained on the SEPCOL board to provide stability. Mr. Laxton deliberately concealed his and his family's investment in the project and then lied to the public about it. Why would the Premier or any of his people allow John Laxton to stay in any position associated with B.C. Hydro after John Laxton played so fast and loose with the truth?
The Speaker: The member for Fort Langley-Aldergrove on a new question.
R. Coleman: It's amazing to me that a direct question can't get answered in this House either.
It's absolutely astounding to me that anyone would think that John Laxton's presence in this project would provide stability. Let's face the facts. John Laxton lied about whether or not he held shares in IPC. From there, an RCMP investigation was conducted. Is the Premier expecting us to believe that Mr. Laxton is an appropriate ambassador for B.C. Hydro and the people of British Columbia? If he didn't know why he was still on the board, why not? Who was responsible, and what's he going to do about it?
Interjections.
The Speaker: Order, members.
Hon. G. Clark: I thought it was the member for Kamloops-North Thompson that was loud, but hon.
The appropriate place to ask that question is in estimates -- to the minister responsible and to the chair of the board, who I have already instructed to be at estimates for a full accountability. As I said, I have confidence that Mr. Smith and the minister are handling this in a way which extricates us from this sordid mess and, at the same time, does not make B.C. Hydro liable for tens of millions of dollars in possible lawsuits.
Interjections.
M. de Jong: I hope members will be quiet so they can hear my question as clearly as I heard the last one, hon. Speaker.
People are genuinely shocked by the contempt that Mr. Laxton has shown for some pretty basic moral and ethical standards. His actions certainly represent conduct unbecoming an ethical and honest businessman. But as a lawyer...
Interjections.
The Speaker: Order, members.
M. de Jong: ...Mr. Laxton's actions may well represent conduct unbecoming a solicitor, as that term is known by the Law Society of British Columbia.
My question to the Attorney General is: at a minimum, has his government referred this matter to the Law Society of B.C. on behalf of B.C. Hydro and the millions of British Columbians who have been betrayed by Mr. Laxton's actions? Has that reference to the Law Society been made?
Hon. U. Dosanjh: The Law Society is a creation of statute, and the hon. member who posed the question has the ability and the capacity to make the complaint if he so wishes.
The Speaker: The bell signals the end of question period.
R. Thorpe: I have the honour to present a petition on behalf of some of the constituents of Okanagan-Penticton -- in fact, 3,819 to date and, I understand, more to come. The petition reads:
"I support the survival of the South Okanagan's economic community and the role that Apex Mountain Resort plays. I feel that it is vital to the survival of the South Okanagan that Apex Mountain Resort is given the chance to operate successfully into its thirty-sixth year."
Hon. Speaker, I table this petition on behalf of 3,819 concerned citizens and I urge the government to listen. Thank you.
Hon. J. MacPhail: I'd like to advise that the House will be sitting tomorrow. In Committee A, I call Committee of Supply, and for the information of the House, we'll be debating the estimates of Employment and Investment; Small Business, Tourism and Culture; and Municipal Affairs and Housing. In this House, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Labour and the Ministry of Education, Skills and Training.
The House in Committee of Supply B; G. Brewin in the chair.
On vote 20: minister's office, $460,000.
Hon. M. Sihota: This is the first time I've had occasion to present before this House the estimates of the Ministry of Education, Skills and Training, and of the Ministry of Labour. I want to take a few minutes to make some introductory comments.
This government was elected to represent the concerns of ordinary, working people; blue-collar people; people trying to make it from paycheque to paycheque. Most people in society know that the best chance their children have of making it in life -- whatever way you want to define that -- is through a good education. This government is committed to ensuring that young people in British Columbia -- be they in the K-to-12 system, in the post-secondary education system, or out of the system and wanting to access it at some point in their life -- have access to the highest possible education and training opportunities.
In the course of the design of our work to speak to those families who move from paycheque to paycheque, our gov-
[ Page 1431 ]
ernment is committed to increasing accessibility, particularly to post-secondary education for young people in British Columbia. By that, I mean that our government is committed to doing more work around accessibility, going beyond the two-year commitment we have made with regard to a freeze on tuition fees. It is my personal view that tuition represents a psychological barrier -- if not a financial barrier -- for many students considering post-secondary education. In the short time that I've had the privilege to represent this portfolio, I have been struck by the number of young students I've talked to, who at the grade 8 level -- even at that level -- have ruled out a post-secondary education or training because of their perceptions about tuition fees and other financial impediments to accessibility for post-secondary education. We're going to deal with that issue. We're going to deal with accessibility-related issues as related to post-secondary education, because, as I said earlier on, families going from paycheque to paycheque hold out that the best hope for their children is a quality education. That is going to be the fundamental objective of this government during the course of my tenure in this portfolio, for however long that may be.
I should also say that this ministry is, of course, divided into three components: the K-to-12 system; the post-secondary universities and colleges system; and skills training, which includes Youth Works and some of the initiatives that we as a government are bringing forward to help people make the transition from welfare to work. We are doing this by implementing the Youth Works program -- one of the most ambitious and thoughtful programs introduced by a government in this province, and one which will change the welfare system as we've known it. I look forward to any questions that the opposition may have with regard to all of those different pillars of this ministry.
I should also say, in wrapping up, that I look forward to what hon. members have to say on the other side of the House during the course of debate, and to their comments, which I'm sure will be constructive. I'll reflect on what they have to say, as this is an opportunity for them to have some impact on my thinking as the budget is passed and then as I begin to roll out the initiatives of this government.
So it's a good time to have a blue-sky kind of discussion. I will refer any technical issues or financial matters to staff who are with me: my deputy, Don Wright; assistant deputy of the K-to-12 system, Paul Pallan; and Joan Axford. I should say, however, that with regard to matters that are purely technical, it will be my intention to simply note those and to correspond back in written form to hon. members with regard to any technical or financial issues. I hope that we can have a broad discussion on policy for the time that we debate those estimates.
With that said, I look forward to a speedy passage of the vote I have just introduced.
A. Sanders: In September, Canada's future will walk through the school doors. Like a fistful of bright pennies, our future's collective shine comes from the individual potential of our children. In September, every parent in every town across Canada heaves a collective sigh as they hand over their most precious belongings, their children, for yet another school year. Those who teach touch the future. In doing so, every teacher assumes a mantle of responsibility given by the parent.
[2:45]
Parents may realize for the first time that their children are of them but do not belong to them. They may find it difficult to acknowledge that through the education process, a teacher can lead their child to tomorrow regardless of whether the parents consent. By its very nature, the parent-teacher relationship can be tenuous and guarded. Trust is everything. It's a relationship that must be cultivated and nurtured. There must be mutual respect.
Those of us who are parents and those of us who are teachers must never forget the basic premise of this issue. Above all, we must respect education. It is the mortar that collectively cements the society of individuals. Society's strength, therefore, results from the quality of knowledge and the skills it imparts to individuals. It does this through our education process.
As the year 2000 approaches, we educate our children for a global culture. Industry, media, family, work, community and government all play an educative role. Gone is the simplicity of the tribal or ecclesiastical culture, where education was tended to by families, tribal teachers and the church. Multifaceted now, education moves so much more quickly. We are caught in a time when education must be plastic to adapt over and over to changing societal demands. The ephemeral nature of what is good education has become more troublesome for many parents and educators. Collectively they ask if we're giving our children the skills they need in the education they receive.
What do we want our schools to provide? What is a good education? One has only to go to the literature for a plethora of different definitions. In 1917, Henry Bennett stated: "An effective education is one that develops an increasing ability to read appreciatively, to calculate accurately, to converse intelligently, to take an interest in the best things of life, and to do well the things that most need doing." In 1957, Paul Woodring said: "In a free society, the proper aim of education is to prepare the individual to make wise decisions. All else is but contributory."
My own definition of education -- and I have a child going into school for the very first time this September -- is the eradication of ignorance. My children will be well educated in this system if they have an atmosphere where their personal skills and adaptive learning skills can coalesce to produce in them productive members of society.
In the Education estimates, the government and the official opposition will debate the issues of education; the broad categories of governance, curriculum and finance will be explored. Despite the fact that these issues will be discussed, the most important questions for government to address remain the same. My top-ten list as Education critic reads as follows. Are we doing the best job we can to educate our youth? Are we providing leadership in education to meet the goals of intellectual development, human and social development, and career development? Are we funding education wisely? Is education a priority for the government of B.C.? Is our education student-centred? Do we make the well-being of students the fundamental value in all decision-making and action? Are we keeping up with technology? Are we funding technology in our schools? Are we effectively measuring outcomes in education, and if not, why not? Does our education system demonstrate social equity? What can we, as government, do better? Are we providing the education tools that will be necessary for participation in the society of tomorrow? And finally, are parents, educators and government working together for the well-being of students? Do they have their own agenda? Do those agendas agree?
All of these issues will be addressed in the education estimates. I look forward to the process, and I look forward to
[ Page 1432 ]
the analysis of this minister's vision for education in British Columbia in 1996. I am specifically responsible for the area of K to 12, and what I would hope we could do today would be to start with K to 12, and then bring in Skills and Training -- universities and colleges -- and Labour. We will most certainly give you the order in which we'll do that so that ministry staff do not have to be here for no reason.
I think what I'd like to start with, because the bean counters are here, is the funding aspect. What I'd like to ask the hon. minister first of all is: what is the per pupil funding in the K-to-12 years in our schools in B.C.?
Hon. M. Sihota: It is $5,827.
A. Sanders: Could you please compare that to '94-95, and then to '95-96? It doesn't matter if it's in a percentile or in actual figures. What kind of accrual are we looking at here?
Hon. M. Sihota: Last year it was the same, and the year prior to that it was slightly less.
A. Sanders: Looking from '95-96, what percentile increase are we looking at in funding from last year to this year -- in the global budget?
Hon. M. Sihota: The increase year to year was 1.8 percent for enrolment, and that amounts to $64 million.
A. Sanders: In looking through the annual reports of Education, we don't have the '95-96 report. In fact, all I have done up to date is the '93-94 report; but using the information that I do have available, albeit several years old, what I am interested in is: is the per pupil cost strictly for the initiatives of basic education, K to 12, or has there been a shift in the funding to include skills initiatives that previously were not included in Education? In other words, is there a change in the funding to those children sitting in a kindergarten class in B.C.?
Hon. M. Sihota: No.
A. Sanders: I'm pleased to hear that. As a parent, I would be very happy to see that that was the case.
In terms of going through the Ministry of Education's annual report, there is some terminology that I would appreciate the minister or his staff delineating for me in terms of what it consists of. The first is block funding. Could the minister please explain to me what block funding is? I realize it's made up of a core and a district-specific amount, but would the minister outline for all of us who don't know what that means exactly what is entailed there?
Hon. M. Sihota: The block funding is the $5,827 multiplied by the number of students in the system. It includes issues such as English as a second language, career planning, operations and maintenance.
A. Sanders: Could the minister please explain to me the difference between targeted funding and block funding?
Hon. M. Sihota: Targeted funding is within the block, and it will include specific funding for, let's say, aboriginal or special needs children
A. Sanders: Could you please explain to me how the aboriginal children's funding works in B.C.?
Hon. M. Sihota: It's allocated on the basis of $1,000 per student, totalling about $34 million annually, and it is provided for cultural and language instruction for aboriginal peoples.
A. Sanders: With the aboriginal funding, does it make a difference in terms of the number of students in the district? Or is it just base funding?
Hon. M. Sihota: It's based on the number of students eligible times the amount.
A. Sanders: That leaves me a little confused. Many of the school districts, which have contacted me with respect to amalgamation, have stated that they will lose incrementally a certain amount of funding because of the increase in the size of their student population by the amalgamation of several districts having the same base funding and aboriginal children. I was hoping the minister would explain to me why they would lose funding.
Hon. M. Sihota: It averages about $1,000 per student, but it is staggered. For the first 15 aboriginal education FTEs, it's $1,300; for the next 200, it's $933; and for each of the remaining elementary aboriginal educational FTEs, it's $755. So it may be caught up in that. Alternatively, it may be caught up in the fact that the federal participation numbers will change. But our numbers are constant.
A. Sanders: If the minister would be willing to provide me with a schedule of that, I would appreciate it very much.
In addition, with the amalgamation of districts, will there be any change in the percentile from the federal aspect or will it stay within the same formula?
Hon. M. Sihota: We don't anticipate any major changes, and I will give you that information through staff. I've made a note of it.
A. Sanders: In terms of targeted funding, hon. minister, my understanding is that this funding is directed specifically toward one activity -- for example, special education. With targeted funding that is given as part of the block funding to districts, do those districts have any leeway whatsoever in terms of the application of those funds? If so, what?
[3:00]
Hon. M. Sihota: We give them some guidelines in terms of programming that is acceptable, and they can work within those guidelines. The money is allocated for aboriginal students and aboriginal purposes or special needs purposes.
A. Sanders: I would like to go back to targeted funding in the future, but I will discuss that under amalgamation of districts, with other people who wish to ask questions then. Another term in the report that I have interest in is "district-specific funding." Could the minister please explain this terminology?
Hon. M. Sihota: Those are grants that cover varying costs across districts, due to enrolment, size, geographic characteristics and educator salaries.
A. Sanders: So these moneys are in addition to the block funding, and not contained within that amount?
[ Page 1433 ]
Hon. M. Sihota: No, it's part of the block.
A. Sanders: Would all districts obtain district-specific funding, or would that be something for only certain districts?
Hon. M. Sihota: All districts.
A. Sanders: Could the minister please tell me what audited funding is, specifically, and give some examples of it?
Hon. M. Sihota: This would include geographical adjustments, educator salary adjustments, small secondary school allocations, growth facility planning in community schools, and student density or transportation allocations.
A. Sanders: Are the audited fundings supplied in the block funding, as well?
Hon. M. Sihota: There is funding in there to pay for school district auditors, if that's what you're asking.
A. Sanders: Specifically what I meant was: are they part of the base budget? In other words, if a certain amount of the fund is targeted, and there's an audit on that and you actually haven't spent it, is it then taken away from your base budget the next year?
Hon. M. Sihota: I understand what you're saying. We will, from time to time on a random basis, send auditors into school districts to ascertain whether or not they are applying the funds to the targeted purposes.
A. Sanders: Is there an incentive within school districts to be under budget? For example, if districts come in under budget for the amount of block funding they have in the audits you do, is that then subtracted from their next year's base? Or do they actually get to use that toward improvement of education in their districts?
Hon. M. Sihota: They're entitled to carry forward surpluses.
A. Sanders: My understanding is that with the funding formula, the funding the district gets is based on the projected enrolment of the district in question. For example, if you have a district that projects 1,000 pupils for September, and in fact 1,200 show up, when does the school receive the funding for the additional 200 students? Having those students arrive in September, do they get the funds in September as well?
Hon. M. Sihota: They actually get it around December, but they can estimate it and we'll work with them. It is around December that they'll get it.
A. Sanders: Many of the districts I canvassed said that they often didn't actually receive the funds for sometimes up to six months and that having a school planning its programs for 1,200 students when they had projected 1,000 created extreme hardship for them. Is this just random canvassing on my part or is this a concern?
Hon. M. Sihota: I think it's somewhat random. There are refinements that people ask for. We'll look at it, but I acknowledge that they have the ability to plan. They know what their block amount is, and if they get a higher enrolment, they know they're going to get that money and can budget accordingly.
A. Sanders: I don't disagree with that; I think that's a great idea. However, in areas with secondary suites within homes, for example, you can do a survey, and based on your school property tax levies, you would think that there are going to be 1,000 students and in fact you find 1,500. If you don't have the finances early on to provide the services for that extra 500 children, then you have a severe problem. I hope the ministry will look into that, so that people who require funding as close to September as possible do in fact get it and don't have to spend half the year with no moneys to finance their students.
One of the districts -- I think it was Surrey -- mentioned to me that there had been some incentive or will in the provincial government -- meaning the last government, which is the same as this one -- to subsidize districts that had large population numbers and insufficient school taxes to cover increased enrolment. Is the minister aware of this previous will of the Ministry of Education?
Hon. M. Sihota: I'm sorry. I don't quite understand the question, because school boards don't tax.
A. Sanders: My understanding -- and I believe it was from the Surrey school district -- is that when they did their projections, they could not ascertain the correct projections and were ending up with a quite significant 20 percent more students. I believe it was the last Minister of Education who had said that somehow the provincial government would subsidize these districts for large numbers of uncounted students, which resulted in increased enrolments in the school. I'm just passing this on as hearsay. Has this minister heard of this particular promise?
Hon. M. Sihota: We will fund. Unlike any other government in the country, we have increased funding every year for education. So when they actually do their head count and when they know exactly how many students they have -- some will drift in even by October -- we'll fund the increased enrolment. There may be a lag between the time the kids show up and the time they get their money, but they also have their global budget, so they can shift funds around.
This has not come to my attention as a particularly acute problem. It may be specific to a particular area, but I'm reluctant to do it in one area so as to create a problem or demand in other areas, fiscally forcing government to release funds quicker than I would prefer and therefore incur the cost of releasing those funds. We'll do it, and in terms of your point, I hear you. If it is our assessment over time that it is an acute problem, we'll deal with it.
A. Sanders: I have one last question in that area. What would the minister feel is an inappropriate amount of time for government to release funds under the funding formula for districts that are overpopulated? How many months do you feel are okay before it gets critical?
Hon. M. Sihota: I don't have a problem with the current formula. I have a constituency which is one of the fastest-growing in British Columbia, and my observation over ten years has been that they seem to be quite happy with what they get in December, as long as they get it. That's often an issue. We'll monitor it, and indeed, if the trustees point to this as a problem worthy of further review, we'll take a look at it. I
[ Page 1434 ]
hear what the hon. member is saying, but at this point my assessment is that by December is an appropriate time, because there are adjustments throughout districts.
A. Sanders: I appreciate the hon. minister's patience with me, in trying to grasp this very large and very important area. One of the things that I have certainly come across in my reading and in my attempt to analyze the Ministry of Education in six weeks is that the funding formula doesn't work as well for some districts as it does for others -- specifically, those that are quickly expanding in numbers. Again, Surrey and Coquitlam -- these areas which are often in the press -- come to mind. I would appreciate knowing if there is any other way of specifically looking at their problem. I do understand the argument that if you give something to one district, then other districts want it as well. But looking beyond that and recognizing that -- for example, in Surrey -- the funding formula puts them at 75 out of 75, they are in what appears from the media to be a tremendous crunch with the capital freezes. Is there a way to look at this funding formula for areas such as Surrey, or does the minister feel that those areas should be as well serviced by the formula as other areas?
Hon. M. Sihota: This is an annual, almost chronic, debate. However, it is my view that we need to, and indeed we do, review the funding formula every year. We will continue to do that to try to make refinements, so that it is as attentive as it possibly can be to demographic and other shifts in demand. I want the hon. member to know that that will happen again. The finance and facilities advisory committee also advises the ministry; all the stakeholders on that are in a constant assessment of the funding formula. It is happening again because I want it to happen again. I understand what the hon. member is saying; I read those same press reports. Certainly in the decade that I've been in this House, I've noticed, as well, that there has been constant comment by MLAs with regard to the mysteries of the funding formula -- including, if you go back to debate, in this House, by myself.
A. Sanders: I remember dealing with this funding formula as a teacher and having difficulty recognizing how it would apply to my own district. What I'm interested in is -- and this a good example of how one size doesn't fit all: for areas like Surrey, are there any other ways to approach their circumstance in order to try and prevent the significant impact of the funding formula and the growth in population?
Hon. M. Sihota: There are. They can always contact me. They can always ask you to raise a question in the House. They can always have their MLA approach me. There is no limit to the number of logical doors here. Should they do that, we'll review it.
We have a common objective here, and that is to ensure that the students, whether they live in Surrey or in Stewart, receive the best possible education that we can provide -- in a sufficient manner in terms of the allocation of dollars. Anytime someone makes an argument about inefficiencies, they'll have my ear. If they make an argument with regard to inequities, they'll also have my ear. As the world evolves, so will the funding formula. This is not an issue that I will dismiss. It will be an issue that I will put -- and have already in the six weeks I've done this job -- a fair bit of time into. The funding formula is, I know, a constant and chronic debate. I have no difficulty with that and no difficulty with trying to work on the work of my predecessors, both from Social Credit and our government, to improve the quality of the educational experience through a meaningful funding formula.
[3:15]
A. Sanders: Seeing that the hon. minister and I are getting along so well here, I just want
Hon. M. Sihota: First of all, they will get responses. Second, I'm well aware of the situations in both those areas. Third, I'm very mindful of the fact that during the course of the election, there was much debate around debt. I do believe that government has to be attentive to the concerns about debt that were expressed during the election campaign and hence review these projects in some meaningful way. I believe that deeply, because I think that message was powerfully conveyed during the election campaign. So we're going to do that, and that may cause some short-term aggravation. I understand that, and we'll try to cope with it the best that we can. But we got a message during the election campaign, and we're going to respond to it.
J. Smallwood: I had the opportunity of hearing the debate in the House. I know that the critic particularly is new to this topic, so I want to speak on a couple of the points the member made with respect to the funding formula in my municipality. I will also take an opportunity later on during the debate to talk about the freeze on capital and the question of the university -- the polytechnical.
Specifically on the question of the funding formula, I'd like to commend this minister for his openness in discussing the issue and also put on the record for this session the work of our government in the previous session with respect to the funding formula in particular. We inherited a funding formula that was very complicated. That made it very difficult for school districts like Surrey and other growth districts to be able to impact their standing. The critic references the question of Surrey being 74 out of 75. In its work, this government ensured that each and every student, regardless of where they were in this province, had exactly the same amount contributed to them through the funding formula. The funding formula was simplified to ensure, for the first time, that a school district that was lower down on the list of school districts didn't have to convince 74 other school districts to agree to an equity-sharing.
For the first time, it's now up to school boards to ensure that they are getting the full funding that has been allocated for them; that each and every student is equal, regardless of where they live; and that the school districts can understand clearly how the formula works and argue for different aspects of the funding formula if they feel they are not getting their fair share. So this government has made considerable progress, and if the hon. critic is communicating with the school board in Surrey, she might suggest to the school board that if they feel they are not getting their appropriate funding, they do their homework, because we've held up our side.
Hon. M. Sihota: I thank the hon. member for her comments. As always, I will avoid the intricacies of Surrey politics but try to deal with the realities faced by students as they go to school.
[ Page 1435 ]
A. Sanders: Never having to say you're Surrey -- is that how it goes?
Thank you, hon. member, for your comments. As time goes by and I know and understand more of the intricacies of things, I will be able to phrase my questions much more concisely with respect to different districts.
One of the important questions to me in terms of funding has to do with the switchover from what used to be local bargaining towards provincial bargaining for teachers. We find that we are, as I understand it, in neither camp. My understanding is that we are not in a local bargaining situation anymore; but we haven't moved to provincial bargaining, because the talks broke down. My teacher colleagues tell me that at present they are in a two-year interim agreement which offers a 2 percent wage increase over three years. Is my interpretation of the situation correct?
Hon. M. Sihota: I don't think so. I wouldn't call it an interim agreement; there was an agreement.
First of all, let me go back and say that the regime is now one of provincewide collective bargaining as opposed to local bargaining. Secondly, there was an agreement that took existing contracts and rolled them into a two-year agreement, so there are now variations by district, if that what's the hon. member is trying to get at. I believe that the collective bargaining process will deal with those variations, as well as some outstanding issues. Commitments were made by both parties -- both trustees and teachers -- to work on these under the auspices of the Deputy Minister of Education.
A. Sanders: Is the minister saying that presently we are in a provincial bargaining stance? Is that correct?
Hon. M. Sihota: Yes, for all monetary issues.
A. Sanders: Who is bargaining with the teachers at this point?
Hon. M. Sihota: The B.C. Public Schools Employers' Association.
A. Sanders: Do the individual school trustees and the school boards bargain with the teachers at all, or is it done totally through BCPSEA?
Hon. M. Sihota: All of the monetary issues are done through this central agency, which includes nine trustees and four other representatives from government.
A. Sanders: Would the hon. minister please give me some indication of who is on the BCPSEA board?
Hon. M. Sihota: We'll get you those names. They are trustees from across the province. They're not chosen on the basis of political sampling. They're trustees; the legislative provision makes a place for them.
I want the hon. member to understand clearly what I have said here. All monetary issues are dealt with that way, and this is perhaps where some of the confusion exists, because I sense there is some confusion here. Non-monetary issues are dealt with at the local level, so that may be where there is some confusion.
A. Sanders: Could the minister give some examples of the kinds of decisions that would be dealt with at the local level at this time?
Hon. M. Sihota: Working conditions, but more specific than that -- things like how you may want to organize your prep time. The collective agreement may make a provision for X amount of time for prep time, and how they may want to allocate that prep time would be an example. Another example would be allocating when professional development days would be. The monetary component -- the broad funding decision -- on professional development days is made at the provincial level. But where they sit on the calendar -- where you and I see them when our kids come home -- would be worked out at the local level.
A. Sanders: If provincial bargaining is meant to make things more straightforward, but we have teachers involved in provincial bargaining from the monetary aspect and from a local aspect with the school trustees to whom they are responsible, how has this facilitated things?
Hon. M. Sihota: In a number of ways. First of all, let's remember that very little bargaining happens at the local level. We're talking about very, very little irritation -- to use your example -- in the system.
I had the privilege of being the Minister of Labour in 1991, and I could see with my own eyes that the system that had evolved up until then wasn't working. There was just too much disruption in the system. Different districts would have contracts come up at different times. There would be work stoppages initiated by either the employer or the employee, which would aggravate the public and the parents. There wasn't enough, I would say, cohesion or uniformity in the contracts. Occasionally there was an effort to negotiate -- in a more agreeable district rather than a less agreeable district -- to increase the standard of the contract and then have that as the gauge for the rest of the province. The province, as the central funder for education, felt that it had little say in terms of the fiscal pressures that were on it in dealing with education dollars and the allocation of those.
It was a system that the Vander Zalm government brought in around 1987-88 -- somewhere in there -- and it warranted a review. We looked at it, and I think there was broad acceptance, including by your party, that we should move to the system that we did.
A. Sanders: I'd appreciate a little historical aspect from the minister. Many of the teachers I have discussed this circumstance with say they are on a two-year interim agreement with an overall 2 percent increase. Trustees have referred to it in the same way, saying it's an interim agreement. The minister obviously has told me that this, from a monetary point of view, is now provincial bargaining. Could I have some historical background to synthesize those points of view?
Hon. M. Sihota: Personally, I take the view that interim is an inappropriate description of the agreements; I don't think they're interim at all. There was an agreement, and it was conclusive. But with many collective agreements, including this agreement, there are provisions to work issues out, so that with some issues that were not concluded, people agreed to a process to conclude them. That's often contained in collective agreements, so it's not surprising to see those. That's what's found in this agreement. There are some issues people still have to work out, but that happens in agreements regularly and here as well. More, I think it's still a reflection of some tentativeness in the system. You know, we have a new system in place: provincewide bargaining. There are some who would like to see it go back to the old system, some who
[ Page 1436 ]
would like to have more say than they do through the structure that's established and some who don't like the fact that there are processes to resolve issues.
Quite frankly, I think the hon. member is getting pulled into the different political agendas that may be in play. I do believe that going to this provincial system has very clearly, in my mind, brought about a level of stability that was lacking. I need to remind the hon. member that her political party in this House took the view that education is an essential service -- I think that was the way they described it during the campaign and, indeed, in this House -- because they too had a concern about this instability in the system, and they too recognized that there needed to be a better way to do things.
I think we both recognized the instability caused by the previous regime. We took different approaches: your party taking the view that it ought to be an essential service and should therefore have no ability to have any disruption in the system, and our party taking what they call the big-bang theory of labour relations, by putting everything into one unit. The pressures on the parties are such that they themselves generate an atmosphere of stability by not going into a provincewide strike. That theory of labour relations has worked well since the sixties in the United States and here in Canada. So that's the thinking behind the two different regimes, but the common base was this concern about stability.
[3:30]
A. Sanders: I'd like to reassure the minister that I won't be swayed by different political persuasions. In fact, my mandate is specifically as a parent and as a representative of my constituency.
I do, however, feel that there is some difference in what we are talking about here. The minister has said that there is an agreement and to call it anything else is not technically correct. However, it is a choice to make no choice at all, I suppose. When the minister said that there are some parts of the bargaining that have not been worked out, what specifically are those issues that have not been worked out?
Hon. M. Sihota: I think the best example, because in many ways it is the nub of the matter, is class size.
A. Sanders: This is a very important point that the minister has raised, and I will most definitely want to discuss that. Specifically, my understanding is that although the monetary aspect was finalized, there was no provincial contract for teachers; each teachers' group had their own local contract with class-size language. What is the total increase? In the 2 percent over three years, what is the total monetary figure in dollars, please?
Hon. M. Sihota: For this year it is $22 million.
A. Sanders: Could the minister please direct me to the page in the estimates where that $22 million is delineated?
Hon. M. Sihota: It's not in there, because it was negotiated after the estimates were tabled.
A. Sanders: Could the minister tell me where we will find that $22 million?
Hon. M. Sihota: Within the $3.7 billion allocated for K to 12 -- which is more than enough, in my view.
A. Sanders: It's somewhat concerning, Madam Chair, that we can find $22 million, but we had to have a capital freeze of considerably less. Within the $22 million, what would be the most likely area for that money to come from? I'm looking at votes 20 and 21.
Hon. M. Sihota: I would hope from administrative costs.
A. Sanders: I would look forward to having more information on where this $22 million will come from in streamlining the minister's administration.
What was the contributory amount of money that the school boards had to come up with for this settlement?
Hon. M. Sihota: Nothing.
A. Sanders: Is that the usual process? If there is a settlement, does the government usually take the hit -- the $22 million, in this case?
Hon. M. Sihota: This is the first time we did this, because this is the first time we went to provincial bargaining. Normally it would come from the budget of the Ministry of Education, which is passed down to school districts for allocation. They recognize that there is a wage increase -- which they have negotiated in the past and which we have negotiated now -- which has to be found from the budget.
A. Sanders: Will the Ministry of Education continue to fund that $22 million over the next three years?
Hon. M. Sihota: It will be funded from whatever budget allocations the Ministry of Education gets, and within that global budget of around $3.7 billion, the money will be there. We'll have to find it, and we look forward to any suggestions you may have with regard to where it would come from.
A. Sanders: Now that there's $22 million I need to
Hon. M. Sihota: They're separate and distinct.
A. Sanders: Would it have been advisable for the amalgamation to occur first? I realize that they're distinct processes, but they do seem to have complicated each other. Does the minister have any feelings about that?
Hon. M. Sihota: I don't think they cause problems for one another. Quite frankly, they're quite complementary to your districts. Provincewide bargaining means that there are fewer districts you have to go back to. But they aren't related in any way. They're two separate and distinct public policy initiatives, which started at two different times. I was there when both of those debates happened, and I can tell the hon. member, without breaching any cabinet confidences, that they were at two different times and that we were looking at two different sets of issues and two different sets of pressure points. Hence the determination.
A. Sanders: Just one more question on this area, and then I'm going to ask my colleague to carry forward here.
In the provincial bargaining model, how will seniority work for teachers?
Hon. M. Sihota: It stays as is.
[ Page 1437 ]
A. Sanders: My understanding of how the process is at this point is that if I have a vacancy in a grade 11 biology class, the most senior member in my school district who could fill that would be able to fill that job. Will that be the same? Or will it be across British Columbia that any British Columbia teacher could vie, based on seniority, to fill that particular position?
Hon. M. Sihota: It could be part of future negotiations, but right now seniority is tied to the district that you're in.
[P. Calendino in the chair.]
R. Masi: Just to get back to the provincial bargaining, my feeling about this is that the financial aspect of the bargaining is fairly straightforward, which it has always been with teachers. Generally, they're good bargainers. They know when to pull back and when to go forward, and they've done very well over the years.
I think, though, the essence of the problem lies in the learning and working conditions aspect of it. My understanding is that the blockage in negotiations, which has taken place in the last year or so, has been largely because the teachers' union seeks out probably the prime contract in British Columbia, whatever district it may be -- Surrey, Coquitlam or anywhere else. What I'm concerned about here is not so much class size, because I think that can be dealt with. I know it's an essential issue, and it does have a heavy financial implication -- no question about that. What I'm looking at here, though, is a question of governance: who, in fact, governs education? Is it the union or the employers? I think this is the nub of the problem; this is the blockage that could take place regarding any major changes in our approach to education.
My colleague brought forward the question of seniority, but I'm looking at the reason why progress has not been made, because there are two diverse positions on this. My question to the minister after all this is: from a provincial perspective, is the ministry prepared to legislate a change in the approach to working and learning conditions in order to motivate change in the system?
Hon. M. Sihota: We're not planning any legislative changes. Obviously, if you've got views, put them in writing and send them to me, and we'll look it. But I should say that this issue of management rights, if I can put it that way,
B. Barisoff: The minister indicated to my colleague that BCPSEA is the provincial bargaining agent for the province and for the school districts. How long have they been in existence? How long as BCPSEA been here?
Hon. M. Sihota: They've been in existence slightly under two years.
B. Barisoff: Could you tell me how many clauses have actually been settled between the teachers' association and BCPSEA in the last two years?
Hon. M. Sihota: In my view, an insufficient amount.
B. Barisoff: You said "an insufficient amount." Do you know how many have been settled? What would you consider an insufficient amount. How many have been settled?
Hon. M. Sihota: Let's just say, for the sake of debate, under a dozen. Let's remember that we are going through a new process, and let's also remember that the collective bargaining tensions with regard to the resolution of these issues peaked before the provincial election campaign, and I think people were hesitant, wanting to see what the outcome of the election would be, before they took the next necessary steps.
Also, given that this is a new process and uncharted waters for
B. Barisoff: I think there happens to be probably -- you say less than a
My concern is that the government of the day has to take action and make sure that some of these things are settled. This isn't really a new phenomenon with teachers bargaining. They've been bargaining with local school districts for the last number of years. My question to the minister is: will he interact to make sure that something happens? I think my colleague from Okanagan-Vernon is 100 percent right in that we are in with an interim agreement. We don't really have an agreement, because we're using agreements that have been in place for a number of years. Is the minister prepared to step in and speed up this process?
[3:45]
Hon. M. Sihota: Let me put it this way. The answer is yes, in the sense that under the agreement, as I understand it, the Deputy Minister of Education is to work through the parties for the resolution of these issues. Look, it concerns me like it concerns you. Take your number, then: have three. There's no way that two years from now we should be making that kind of glacial progress. Clearly, we have to move towards resolution. I'm not an advocate of legislating agreements; I've done it in this House. The Hansard will point out that as Labour minister I introduced a bill here that ordered teachers back to work and established a process, but I'm not an advocate of that kind of approach. I'm more of an advocate of parties working
Clearly we have to play a role in getting the parties to move along. Already, in the meetings that I've had with different stakeholders, I've referred to this issue as a matter of concern. I'm appreciative of the fact that it's a view that is shared by both sides of this House, which I will convey to the parties.
B. Barisoff: I appreciate the fact that you will intervene, because if we look at it from the perspective of what has taken
[ Page 1438 ]
place over the last couple of years, we really haven't moved anywhere.
Going back to some of the comments that were made by my colleague from Okanagan-Vernon, you were indicating that all the decisions that would be made at BCPSEA will be monetary decisions. I'd like you to indicate to us which decisions don't have monetary implications. I think even the one that you mentioned has monetary implications to school districts. It seems to me that this is total provincial bargaining. Maybe there are some others that I haven't thought of, which you could mention. I think the one that you did mention does have some monetary implications.
Hon. M. Sihota: In many ways, you're right. It is essentially provincial bargaining.
B. Barisoff: I just want to move into some of the funding formulas that my colleague was speaking about. It was indicated by the previous Minister of Education -- in fact, I think a directive came out -- that there would be no funding cuts for special education, that it would not be cut in any way, shape or form through the amalgamation process. Is this still what's taking place?
Hon. M. Sihota: Yes. In fact, we've gone from $381 million in funding for special needs up to $385 million this year.
B. Barisoff: I should probably rephrase my question: will there be any funding drop or any funding loss for special education students in particular school districts? Is the funding formula going to stay the same in each school district? You're giving me the lump sum of money for the entire province. My concern is with the indication that through amalgamation, individual school districts would not lose any money towards special education. Will individual school districts be penalized in any way, shape or form?
Hon. M. Sihota: No, they're protected with regard to special needs and aboriginal ed.
B. Barisoff: Then maybe the minister could indicate to me whether, in this past year, there has been a formula change in the way special education funding is actually being implemented in school districts. Has there been a formula change that will actually change the funding formula to individual school districts?
Hon. M. Sihota: There was a change, but the change will not have the effect that I think you're concerned about -- which is that the base amount that is allocated to special needs somehow drops. If you're trying to ask whether we're indirectly trying to do something that we directly said that we wouldn't do, the answer is: it is our intention to do directly that which we said we'd do and not to indirectly try to have a different result through an adjustment in the funding formula.
B. Barisoff: Maybe we could re-evaluate the stepping formula that has taken place in school districts in this past year. I think that if you look at some of the school districts, with the way the funding formula has been changed in the stepping
Hon. M. Sihota: We gave people special purpose grants so as to deal with this stepping issue. I, obviously, am well aware of the hon. member's background. If you or your district believe that your district was affected negatively, you should let me know, and we'll look into it.
B. Barisoff: It has been affected in a negative fashion. The stepping formula has actually created less money in the special education budget.
There is a set amount in the funding formula, which amounts to roughly $320,000 per school district. With the amalgamation of school districts -- and I'll use the district that I come from and the district of Keremeos, 14 and 16, which each get $320,000 in base funding -- will that base funding for each district stay, and we'll be getting, in essence, $640,000? Or will we be getting cut back and be put on a new funding formula that will put us at $320,000?
Hon. M. Sihota: The amount will stay. Provision has been made for that in this year's budget.
B. Barisoff: I hope I'm hearing this right. The funding with the amalgamated districts will leave districts 14 and 16 -- the new district, I think, is going to be 54, or whatever -- with the base
Hon. M. Sihota: I have too much respect for the rules of this House to violate them. I can only speak to the estimates that are before this House. That provision was made for this year. I understand the hon. member's concern; I have that concern as well. In due course, I'll make an announcement with regard to next year.
I should also let you know, just to make sure that there is no confusion -- we can work this out in some other venue -- that the number we have for the districts you alluded to is $280,000, not $320,000. If there's a difference of opinion there, we should clearly resolve that, with regard to that $40,000.
B. Barisoff: I think what I was referring to was the base amount that starts off every school district in special education. That amount, I think, is exactly the same for every school district in the province. My concern, leading back to the stepping, was that in this last year, we've actually changed the stepping formula to make sure that the effect will be negative on small school districts and probably positive on larger districts.
My concern still leads back to the point that after this year, when the districts are amalgamated, we're going to lose this $320,000 for each one; we won't be getting the $640,000. In essence, two small districts amalgamating will get shortchanged $320,000. I think what the minister is saying is that for this year, it's all right; but my concern is not only for this year. I think you plan to be in government for more than one year. My concern is for further years. If it happens for one year, what are school districts going to do in the future, for the upcoming years?
Hon. M. Sihota: This government intends to be in power, you're right, for more than one year -- probably for the next couple of decades. We'll be as attentive to these concerns in the future as we have been this year.
B. Barisoff: I beg to differ with the hon. minister about how long that might be, but the fact is that he will be there for this year, anyhow.
[ Page 1439 ]
I just want to go back to another comment he made to my colleague from Okanagan-Vernon. He said that if school districts don't spend the money on special needs, they are able to carry that money forward to the following year. Could he clarify that again? I'm not quite sure if that's exactly what takes place.
Hon. M. Sihota: I just want to make sure that I recollect the question from the member for Okanagan-Vernon. Her question regarded general funding, not special needs funding, as I recall. I answered the question with regard to general funding, not special needs funding.
With regard to special needs funding, if they underspend in the first year, they can ask our permission to have that additional amount carried into next year, and we'll consider that. But I'm confident that the question was with regard to general funding. It was a general question, not about special needs.
B. Barisoff: I thank the hon. minister for clarifying that. The way I was reading it here, and the way I wrote it down, was that it could continue on for special education funding in general. I know that's what takes place.
I have a couple of other questions before I turn it back over to the hon. member for Okanagan-Vernon. When the student FTE comes in, when is the cutoff date for actually creating the funding for that year's budget?
Hon. M. Sihota: It's September 28.
B. Barisoff: I do know that it's September 28, and I hated to ask the question, but I was leading into the fact that two systems exist and that right now we have another system that seems to be growing in popularity out there. It's called the Copernican system. Funding on September 28 isn't as fair for school districts or schools that happen to be on that system. Has the minister considered any change in that? Has he looked at possibly changing when that funding date is set?
Hon. M. Sihota: In the short time I have been in this portfolio, I haven't had the opportunity to put my mind to that issue. Now that you've raised it, we'll certainly look at it.
B. Barisoff: I think it's an important issue for districts that are on that system and that it would be important that the minister look at it sooner rather than later. It does make some difference as to what takes place.
The minister also indicated to the member for Okanagan-Vernon that there was full funding for increased enrolment. Does he mean to say that there would be full funding if the increase in student enrolment exceeded the 1.8 percent in a particular district?
Hon. M. Sihota: If a district is at 2.5 percent, we will fund to that level. If it's at 0.5 percent, we'll do that. At 1.8 percent, which is the general provincial
Regarding your previous question, I'm sure you know that we are doing some pilots that will help to guide us in dealing with the issues. You left me with the impression that you thought I was somewhat dismissive of it. I just want you to know that we are monitoring those pilots with regard to year-round, to see what the savings to the public are.
[4:00]
B. Barisoff: I just want to make sure I'm correct here. I wonder why there are concerns with larger districts, then, if with increased enrolment they're getting full funding. I can't understand why they would be complaining so much about the fact that they aren't getting the money. I was led to believe that they weren't getting the full funding for the increased enrolment. But you're saying that whatever increased enrolment exists in the province or in a particular school district, they are funded fully at the $5,700, or whatever it is, per student.
Hon. M. Sihota: They are funded fully. The two of you should get your act together and decide which side of the fence you want to be on on that one.
You're both right. People do complain about the lag, and people elsewhere in the province wonder, if the commitment of government is what it is, why it is that they complain. It's all factored in.
B. Barisoff: I just refer back to the comment that was made by the hon. member for Surrey-Whalley, which was that the funding formula was created to create an equality throughout the province. Sometimes, if you're coming from a larger district, you think there are inequalities -- or if you come from a smaller district or whatever. I think that the funding formula was created to create equality throughout British Columbia, and I would hope that would stay. My concern is, though, that in some respects right now, what's taking place is that some money is being shifted from the rural areas into the larger areas. If the hon. member for Surrey-Whalley is correct, that's probably not going to take place. I would like the assurance of the minister that there won't be drastic changes in the funding formula that would affect rural British Columbia.
Hon. M. Sihota: You have the assurance of no drastic changes.
A. Sanders: Just to go back to the definition of whether we were in an interim agreement or into provincial bargaining, I draw the minister's attention to an article in the Vancouver Sun. It says:
"The tentative contract for B.C. teachers could end up costing taxpayers far more than the estimated $50 million in salaryincreases.... Last April 28, after more than a year of snail-paced talks between negotiators for the B.C. Teachers Federation and the employers' association, the provincial government passed Bill 21...giving cabinet the power to impose a settlement for teachers and avert a strike during the election campaign. The tentative settlement for teachers was announced less than two weeks later...only about 13,500 of B.C.'s 42,000 teachers cast ballots...."
Is this in fact misinformation in the press, or has something changed between June 13 and August?
Hon. M. Sihota: I think that article would have been written when they used the word "tentative." I think that's the point you were trying to make, if I understood your point. It was probably written before the ratification that occurred from the trustees' side.
A. Sanders: Does the minister know when the contract was ratified? This article is of June 13, which is just before we came to sit in Victoria.
Hon. M. Sihota: On June 18 or 19, the Vancouver Sun reported that it was.
A. Sanders: I would appreciate the minister explaining to me in terms of provincial bargaining for
[ Page 1440 ]
understanding would be that this should save money within the system; that from a stability point of view, it should prevent problems that would result from local bargaining and threatened job action; and that there may be some ability to have an effective management of contracts throughout the province. Do the other unions working within this school itself -- CUPE, BCGEU -- bargain locally within each of the school districts while the teachers are moving toward provincial bargaining?
Hon. M. Sihota: Yes, they do. To explain the difference, it was the assessment of government at the time that the area which needed the change was the one that dealt with teachers, but not, let's say, the CUPE or the BCGEU situation, because there was a fairly high level of stability in those areas. So for those reasons, we went into this two-tracked system, if you want to call it that.
A. Sanders: If the other unions within this school are bargaining locally, would their job action not close the school down in the same way as if teachers had been bargaining locally?
Hon. M. Sihota: Theoretically, it could; practically, that hasn't been the case.
A. Sanders: I would very much appreciate the minister explaining to me why that would not be the case. It would seem to be a very powerful tool -- to impose negotiations -- if any of your local unions could in fact close the school down. What kinds of things will be in place so that would not happen in the future?
Hon. M. Sihota: Under the provisions of the Labour Code, we've put a lot of emphasis on preventive mediation in trying to resolve disputes before they become disputes. That approach has worked very well in some areas and in some sectors. So where it isn't broke, we won't try to fix it. So far, that system has served the province, educators and districts well, in my view, and so it remains intact.
A. Sanders: I'd like to explore this particular topic a little bit further, having spent a number of years in a district that was very much, from '91 to '93, affected by job action. The schools were closed for many days, if not months.
Specifically, what kinds of preventive measures would the minister be describing that would prevent that kind of action? I do recall very clearly that many of the students in my district were out of school for the last several months before they wrote provincial exams. These northern area students wanted to apply for scholarships and do final exams, but because school is not an essential service under the NDP government, we had these students out of commission during a very important part of their career.
Hon. M. Sihota: I was just asking staff whether -- and I don't know if you
A. Sanders: Teachers.
Hon. M. Sihota: Okay, so it was a teachers' dispute.
Interjection.
Hon. M. Sihota: Well, it does, because it wasn't a CUPE dispute; it was a teachers' dispute. So we tried to look at ways in which we could deal with disruptions from that sector, and we crafted a system that I believe will inject a higher level of stability.
Be that as it may, let's just recognize that in your case, it was teachers and not CUPE, which I think underscores my point. But you're right in asking the question that you asked, so let me answer it.
There are a number of
A. Sanders: In the last term, from '91 to '96 prior to the election, how many days were lost to strikes by union members in the school system in British Columbia?
Hon. M. Sihota: I'm sorry, I don't have that number. But I think it's fair to say that the comment here in the Legislature and the comment from districts and from parents, certainly during my term as Labour minister, led me to believe that there was sufficient disruption to warrant a change, and we did that.
A. Sanders: The minister has a very difficult job in that he has a two-hat role -- two heads, two hats, whatever the term could be; Minister of Labour and, in addition -- and hopefully not ancillary -- Minister of Education. How will he resolve issues of labour that affect education in this term?
Hon. M. Sihota: Well, it's not the first time in B.C. history that a minister has had responsibilities both for labour and for
[ Page 1441 ]
other sectors. For example, my predecessor on the post-secondary education side of it had post-secondary education and labour, and the same situation would arise there with regard to, let's say, college instructors, university professors, CUPE, BCGEU and other trade unions at that level.
My view is that the first responsibility in Education is to try to point out to the parties wearing the education hat that these collective bargaining issues must move along -- much as your colleague from Okanagan-Boundary pointed out a few minutes ago -- and I do that.
[G. Brewin in the chair.]
If it gets to the point where we're looking at, let's say, legislative provisions -- and I think it's quite easy to deal with both hats on in terms of the Labour Relations Board and day-to-day administration of
[4:15]
You should also know that we have a system where there are backup ministers. If one minister cannot do their job, then by order-in-council there is a list of backup ministers, if I can put it that way. I myself on at least one occasion asked my backup minister to make a determination, because I didn't think it appropriate to make that. So that may happen as well, and often we seek advice on those matters from people like the conflict-of-interest commissioner, legislative counsel and the Attorney General ministry. Staff flag those issues as well as the opposition.
A. Sanders: Along that line of questioning, with the minister being involved in both the Labour ministry and the Education ministry, I would like to ask for his opinion on education as an essential service.
Hon. M. Sihota: If I recollect rightly, the Labour Code allows any party to make an application to the Labour Relations Board for it to decide whether or not a matter is an essential matter. For example, in June of 1993, I think it was, the issue of whether or not a labour disruption in education and the inability of students to write grade 12 examinations would therefore deem education to be an essential service went before the Labour Relations Board by way of application -- I believe, if my memory serves me right -- from the school district. I hate to say this, but I can't remember what the outcome of the decision was. I know that the chair of the Labour Relations Board actually rendered a decision. I'm really functioning from memory here, but I believe in
I advise the hon. member to read that decision by Mr. Lanyon. I believe that in his decision he laid out the parameters within which he would consider a matter within the education field to be essential. There are enactments that allow for that to be considered. Government, very consciously, in the drafting of the code -- you're right, we're way into Labour instead of Education here -- left the word "essentially" undefined, so those kinds of applications could come forward.
A. Sanders: I appreciate the background. I'm interested in what the minister's view is personally about education as an essential service.
The Chair: That's not necessarily generally part of the estimates. We're talking about administrative issues, policy matters and that kind of thing.
A. Sanders: I'll rephrase the question. Being in a circumstance where we are looking at the estimates -- and I will reserve that question for later in a different forum -- I'd like to turn to the estimates blue book. On page 87 there is a list of the Ministry of Education's offices and staffing. Under budgetary expenditure, there is an increase of 63 full-time-equivalent staff in the office of that ministry. Could the minister please outline for me what those staff specifically are doing?
Hon. M. Sihota: That is essentially for B.C. Benefits. In fact, they have taken on the Youth Works program and B.C. Benefits provisions.
A. Sanders: Are all 63 of these staff involved in B.C. Benefits?
Hon. M. Sihota: There are actually 163 new FTEs, offset by 99 eliminations, so we actually have 64 as opposed to 63; there might be some discrepancy there. And 79 new FTEs are to implement the new B.C. Benefits training and employment program throughout the province. Of those, 43 have been transferred from the B.C. Systems Corporation, and we're dealing with some skills development issues, as well, within the ministry.
A. Sanders: Of the new staff -- and again, it may be 64 as I calculate the number here in the book, or 63 -- are these individuals full-time-equivalents who are now permanently ensconced in the Ministry of Education?
Hon. M. Sihota: Some will be. As the program gets wrapped up and into place, some will be eliminated. Regrettably, I don't have the numbers as to how many that would be, but there will be some who will be eliminated.
A. Sanders: Would the minister provide for the critic the number of staff involved in full-time service in the Ministry of Skills and their term of office?
Another concern I have has to do with ministry office operations and why this increased by approximately $212 million. The largest increase was in grants and contributions. I would like the minister to outline what is contained in that category.
Hon. M. Sihota: The $212 million is made up of an increase in school funding from $3.9 billion to $4.07 billion, and that, I suspect, is due predominantly to our contributions to increased enrolment. In fact, that is the case, from what I can see here.
With regard to post-secondary education, the other component increases from $1.45 billion to $1.48 billion. These are grants that are given to post-secondary institutes, made up of an increase in capital debt servicing and an increase in educational institution funding.
A. Sanders: Of the full-time-equivalents who are now allocated to education -- 1,083 -- what was the number in the
[ Page 1442 ]
year previous to the '95-96 estimates? Or what percentile increase have we had over the last three years?
Hon. M. Sihota: We don't have the information over the last three years. I can tell you that in '95-96, the number was 1,019, and it has gone up to 1,083. But you have to understand that it would be misleading for me to give you that number, because this ministry didn't exist at that time. You'd have to go through the component of Social Services that has come over to the corner of Education and the way in which we've rearranged post-secondary ed. I don't think it's a comparison of apples to apples.
A. Sanders: It is confusing, because Education is taking on more of a Social Services role. I think what most people will want to know is that we are funding the block of education -- K to 12 -- in the same way, despite the fact that we are now doing school programs, meals and programs that have to do with adults getting back to work. I think parents in B.C. want to know that we are actually funding their kids in K to 12, to give them that basic education.
On page 90, under vote 21, the operating contribution to public schools has increased by approximately $60 million. Is this money the target or an area that would be affected by the freeze in capital projects?
Hon. M. Sihota: No.
A. Sanders: Where would I locate the money that will be saved through the freeze in capital projects?
Hon. M. Sihota: If you take a look at the column on the left-hand side versus the column on the right-hand side, you will see that the amount for debt servicing increased from $326.1 million to $395 million. So we've actually increased the amount for debt. Now, a percentage of that -- and we can get you that number; we don't have it here -- will be caught up in the freeze. As you know, projects which are legally committed to are not captured by the freeze. If this helps the hon. member in ascertaining the amounts, I can tell her that on the Education side, 71 percent of the funding that is minor capital is legally committed, and roughly 60 percent on
A. Sanders: What are the total savings that will accrue from the capital freeze?
Hon. M. Sihota: Government has ascertained that $272 million would be saved throughout the system of government -- not, obviously, through this ministry. As you make the determinations in Health, Education and other capital allotments, that will be the amount that will be saved corporately. How much of that is going to come from the Ministry of Education, of course, is subject to the review. When that review is completed, we'll know what the cost pressure on the capital for this ministry will be.
A. Sanders: Would the minister be able to provide me with a ballpark figure, not to the dollar, of what that is?
Hon. M. Sihota: No, I don't have a ballpark figure. Actually, funnily enough, because of this process, I haven't sat down with the Minister of Finance to talk to him about the decisions we're going to have to make; nor have I really sat down with staff. As I said earlier on, we got the message fairly clearly during the election campaign that we've got to deal with debt, so we're going to deal with debt. That means that some projects that people had some sense of anticipation about won't occur. We'll go through that review. That is the purpose of the review. I can't give you a ballpark, but there will be some impact, obviously, in terms of Education.
[4:30]
I understand what my job is. My job is to minimize the impact of that debt on education, and we'll see what we can achieve. I myself have told staff that I have no intention whatsoever of going to Treasury Board and asking for 100 percent of the debt requests that the ministry brought forward earlier, until and unless they can convince me that these are projects that are worthy of proceeding. I'm going to go through an internal exercise, and I honestly believe that if I go through that, the ministers on Treasury Board will look at it differently than if I don't. I know the hon. member is not familiar with the process of Treasury Board, but much -- or some -- swings on the homework the minister has done before he goes in there. People have to sell me on every item. Then, when I'm persuaded that I'm confident, I can persuade Treasury Board.
A. Sanders: Again, in vote 21, debt servicing contributions have increased with these estimates by approximately $70 million. Would the minister please explain to me specifically what that $70 million increase is due to?
Hon. M. Sihota: Because this government made a commitment not to do what the previous government had done -- which was to put an end to capital projects -- there was an enormous backlog of capital work that needed to be done when we inherited office in 1991. We've been doing it, and we've been taking criticism -- in my mind, unfoundedly -- but that was the reason we did it, and that's why we have increased it.
A. Sanders: Very briefly, again on page 90 -- although I do not wish to go into the skills development programs at any great depth; my colleague from Delta North will do that -- I would be interested in an analysis of the figures. The skills programs are up approximately $50 million, from $121,143,680 in the estimates for '95-96 to $171 million in the '96-97 estimates. This is approximately a $50 million increase. When the Premier -- and this minister -- announced the Youth Works program, he stated that that program initiative, separate from the Social Services-Housing part, would be $80 million. I'm just trying to make sense of those figures. If Skills has gone up $50 million and the program costs $80 million, where is the other $30 million coming from?
Hon. M. Sihota: I think the reason for some hesitation on my part is that I'm not sure where you get $80 million from. I'll take a look at that. It should be $60 million, and $50 million of that ... and another $10 million we'll find internally in the ministry. If the press release said $80 million, I'd have to go back and find out how they arrived at that. They may have calculated something else in there that we haven't, in the design of our budget, calculated into B.C. Benefits. That's a good question, and I'll get an answer for you if I can before the estimates are complete -- and certainly, if not, in writing. When press releases are generated, they take into account a number of things and put them into a lump sum. So we'll find out how that $80 million was arrived at, and I'll give you an answer, hopefully before the conclusion of estimates.
[ Page 1443 ]
A. Sanders: I would appreciate that from the minister, as the press releases did say
On page 91, in vote 21, there is $13,432,280 set aside for operating costs. My understanding from the vote description is that this provides provincial block contributions, technology and skills contributions, special needs integration, English as a second language, Kids at Risk and support for collective bargaining. Could the minister provide this critic with the breakdown of these categories in terms of the cost per unit for ESL, Kids at Risk, etc.?
Hon. M. Sihota: We have the answer to the question; I just want to make sure we are talking about the same page and the same program. Are you talking about page 90, vote 21?
A. Sanders: Page 91 -- operating costs, $13,432,280; estimates for '96-97.
Hon. M. Sihota: We'll get you a breakdown in writing.
As I said before, at the outset of estimates, my previous experience in this
A. Sanders: There will obviously be some questions forthcoming from the breakdown of those categories, if they are broken down in terms of numbers of students.
My next question, again relating to the estimates: has federal off-loading been considered and taken into account in the estimates for '96-97?
Hon. M. Sihota: What sort of federal off-loading?
A. Sanders: Has federal off-loading to the provincial government been taken into account in the '96-97 estimates?
Hon. M. Sihota: Those darn Liberals, causing us lots of problems from Ottawa. We have to deal with the federal off-load. I do think -- if I may just for a moment comment on this -- that the way the federal government is dismantling what this country is known for is tragic. I think the federal government has quietly ripped out the conscience of this country, be it in the off-load on health -- which I won't talk about, because it is outside the purview of this debate -- or in the area of education or in other areas.
I think that for all the debate we have and the difference of opinion we may have, the reason this country has evolved in the fashion that it has, the reason it serves as a beacon of hope to the rest of the world about how things ought to be, is the premium we as a group of people have placed on things like being the world's peacekeepers, having a universal medicare system that's available equally to all and our commitment to environmental protection. I think that defines Canada around the world. I think one of the reasons we have been successful economically to the degree we have been, and have been able to adjust as we go from the world that I grew up in to the world that I'm living in -- a world where we were very dependent on our natural resources, to a more competitive global economy -- is that we've been able to adjust our educational system such that it is more attentive to what's happening in the global economy. I think there's a conscious effort on the part of this country to train young people, future generations, to be able to be functional, competitive and productive in the emerging economy, so as to maintain the standard of living that we have in this country.
I think it's fair to say that a government that invests in its people at the front end, particularly through the education system, reaps the benefits subsequently in terms of the quality of life and the quality of the economy that future generations inherit. I think that the federal Liberal Party, given the image it had created for itself by virtue of some of the policies it brought forward since the Second World War, has regrettably made a tragic turn to the right. It's now up to other governments to begin to deal with it.
I notice today that the Premier of Prince Edward Island quit, in part because she had to take the impact of federal off-loading of health care and administer that in her province. Other governments have not taken the view that our government has, which is that we have, as a matter of policy, made a conscious effort to keep education whole. That's why we brought forward this budget for this House. We're doing it, whereas other provinces aren't.
I think it regrettable that in the overall scheme of things there isn't the kind of commentary there should be with regard to the damage being caused by the federal government. Yes, hon. member, we have taken into account the decisions of the federal government. We've made policy decisions to protect the integrity of our education and our health programs. There are enormous pressures on government, therefore, because we have to deal with our corporate budget in a trying fashion in other ministries. It disturbs me, the degree to which there is an absence of critical comment on the federal government, in terms of the way in which it has silently dismantled much of what this country is known for.
A. Sanders: I don't want to make the hon. minister cry here, so I will continue forward. His comments are certainly appreciated, but I think it's also important for us to recognize that any government that year after year spends more money than it has in the bank eventually runs into a deficit situation. We as a country have done that. We will always have cutting of the social safety net when we are in a situation of debt. I think this is a good lesson for all of us in British Columbia, as we are now in our second deficit budget. This government needs to specifically address that issue while at the same time lambasting the federal government for being in the same circumstance itself.
On the federal off-loading, which the minister and I both recognize is in fact going to occur, what is the dollar value that that will amount to in the estimates for 1996-97?
[4:45]
Hon. M. Sihota: That number does get reflected in the estimates, which is why I'm searching for the number. I think it's $454 million over two years, but I'm functioning from memory there. We can send you the number in terms of the federal off-loading and its implications in British Columbia, but I think that's it.
A. Sanders: So does the minister mean that this has been taken into account in estimates, in the budget, and we're not going to have to go looking to take $454 million out of our
[ Page 1444 ]
Education estimates over two years, in order to offset what we've lost from the federal government?
Hon. M. Sihota: Let's try to keep this debate within the four corners of what's before this House. Before this House are the estimates of the Ministry of Education, not the revenue which accrues to British Columbia. Revenue from the federal government accrues to British Columbia. It shows up on our ledgers, and that is being reduced by the federal government as a result of its off-loads. That's not before the House now; it's a reduction in revenue for the province. This budget here is the estimate of expenditures for the Ministry of Education.
Corporately, government has to make adjustments as a result of this tragic off-loading by the federal government. But what we've done is make a conscious effort to try to keep education whole. So rather than take that reduction in revenue and pass it on to the system -- let's say through a 25 or 50 percent increase in tuition fees; I think those are the numbers that were being bandied about -- we've made a conscious decision not to allow that to happen, but to maintain the same level of tuition fees this year as last year, just to use that example. So we try to keep it whole.
A. Sanders: I do appreciate that the revenues of the federal government to the province are not up for debate at this point. However, it is important to understand that our minister has taken into account that there will be some shortfall for education from the lack of transfer payments to education and that the system will somehow be buffered. My question to the minister -- and if it is beyond his realm of expertise, that would be
Hon. M. Sihota: Yes, I do have that feeling.
A. Sanders: And what does it tell you?
Hon. M. Sihota: It tells me that cabinet is going to have to make some tough choices, and we will. That's reflected in the overall budget allocations ministrywide.
Just to give you the number, the federal government, in the year '95-96, provided British Columbia with $2.3 billion in contributions. This year it goes down to $1.9, or roughly $400 million less.
A. Sanders: With off-loading from the federal government, will there be a change in the aboriginal allocations, as well?
Hon. M. Sihota: There hasn't been, so far, to the funding of districts.
A. Sanders: Where in the budget breakdown of vote 21 on page 93, the "Group Account Classification," do I specifically find the moneys set aside for the welfare-to-work program through the Ministry of Education?
Hon. M. Sihota: Grants and contributions, under the skills development programs component.
A. Sanders: Could the minister please outline, from "Grants and contributions," how much of that total goes specifically to Welfare to Work?
Hon. M. Sihota: There is $21 million provided for work-based training; $6.5 million is for full- and part-time summer employment students; and $66.7 million is provided under B.C. Benefits.
A. Sanders: My next question was about the B.C. Benefits program, and the minister has provided that. Along with that, of course, will go Youth Works -- the $30 million that has gone missing from the $80 million in the press release.
There are two other questions I would appreciate the minister explaining for me with respect to understanding the estimates. On page 92, what is a sinking fund payment?
Hon. M. Sihota: It's a principal payment on debt.
A. Sanders: And secondly, the sinking fund provisions?
Hon. M. Sihota: As we understand it, it's the same thing.
A. Sanders: In the Supplements to the Estimates, the smaller blue book, on page 46 is an outline of the Ministry of Education. Under the breakdown in the supplement, $3 million was spent on advertising within the Ministry of Education. How much of that $3 million was spent for partisan advertising?
Hon. M. Sihota: Well, arguably, none. You're going to say "all," and we're going to have a debate. I just want to make sure: are you talking about '94-95 or the '95-96 supplementary estimates? Perhaps you could be clear on that point.
A. Sanders: Item 40 -- this was '95-96.
Hon. M. Sihota: I'm trying to answer your question, actually. Look, from your point of view, I think you'd probably say the Opportunities '96 program, which is a student employment
We do have to have information that is made available to the public with regard to programs that we run. I put a premium on communicating what it is that the ministry is doing and what it is that people are getting for their tax dollars. I did that in my previous portfolio of Environment, quite aggressively, because I think the public had to know whether we saved Fintry Estates or not. We're going to do that again this year, and I'll let you know right now that I'm going to be fairly proactive in terms of communicating what this ministry is doing. I make no apologies for that. I think that the taxpayers must know very clearly what it is that the ministry is doing, and they must know what they're getting for the dollars they're spending.
I take the hon. member's point, which is that she's concerned that some of the material that goes out may have too much of an NDP flavour for her liking. I'm sure she'll comment on that when that happens.
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A. Sanders: I think it may be helpful for us all, as independent taxpayers, to look at the information that comes from government and consider whether or not we as parents feel that is the best way the money within Education could be spent.
In STOB 95 of the Supplement to the Estimates.... There is a category which is called "Other," and it contains a sum of $10 million. Could the minister explain to me what "Other" signifies?
Hon. M. Sihota: It is predominantly student financial assistance.
A. Sanders: In STOB 99, on the total recoveries of $8,472,521, could the minister give me an outline of what this actually represents?
Hon. M. Sihota: That would include things like education for French students and recoveries from that, recoveries from royalties from the printing and sale of the distance education learning materials, recoveries from distance education, marketing recoveries from the Yukon Territory, recoveries under FOI and some print recoveries.
A. Sanders: The last question in this area that I wish to ask is item 65 in the Supplement to the Estimates. Skills and Training will spend $10 million on building occupancy charges. Does this represent a new facility that will be provided? What is this $10 million expenditure?
[5:00]
Hon. M. Sihota: There are about 60 offices across the province.
J. Dalton: There were just two or three questions that I noted as the opposition critic was dealing with financial issues -- in particular, provincewide bargaining versus local issues. At this point, I'm not going to take issue, necessarily, with the minister's interpretation of this agreement that was put into place for political purposes as much as for stability. I do feel that the provincewide agreement, even though it is, of course, monetarily based, is certainly one that is not going to necessarily have a permanent flavour, and I think my questions will deal with some aspects of that.
Firstly, I would like to know whether the community interaction days that were brought in, I believe, in 1993 are still with us. Is it still possible for local districts to cancel or rearrange those days for local purposes?
Hon. M. Sihota: Those days are gone. One day is instructional and one day is for professional development.
J. Dalton: That's what I understood to be the case, but there was certainly some uncertainty over the last year, in particular about the use of those days. I can tell this committee that I'm quite happy to see that they are gone, although it may still beg the question, for future reference for the minister, as to whether we have too many non-instructional days. Certainly parents comment to me -- and I know I'm not the only MLA that would get such comments -- that the more instructional time we can devote to the K-to-12 system, the better off we would all be.
On the question of outstanding local issues that the minister commented upon in response to some of the questions from the member for Okanagan-Vernon, is there a time line to settle these outstanding local issues? What incentive is there, if any, to resolve local issues, class size being the main one that I have a concern with?
Hon. M. Sihota: You're using class size as an example. Let's remember that this is a provincial, not a local, issue.
Generally, a lot of these agreements aren't predicated on time lines. They're predicated more on the will of the parties and the goodwill of the parties.
I want the hon. member to understand that as we went through this process, both parties communicated to me that the fact that the ministry involved itself through the deputy minister -- and he would chair a number of meetings -- was a critical variable in their minds. That, more than time lines, played an instrumental role. No, there are no time lines. I also want you to understand -- I'll put this on the record, so I'm very clear, because I've communicated this to the parties -- that I don't have much of an appetite for this issue to just go on and on. In my own way, I will be exerting the requisite pressure to try to conclude these issues. I'm determined to do that. I've made that very clear to the parties in my initial meetings with them, so they know exactly where I'm coming from. I think they know enough of my background to know that I have never ruled out any option, and I've come before this House armed with some options in the past. I hope I don't have to do that again.
J. Dalton: Probably the reputation of the
Did I hear the minister state in his last response that class size was a provincial issue? Previously, in commenting on that, he gave that as a particular example of a local issue that has a monetary impact, even though it is, strictly speaking, perhaps not monetarily based. I'd like to have that question cleared up, if I could.
Hon. M. Sihota: I was talking about monetary versus non-monetary issues. I was trying to give you an example of unresolved issues under the agreement that had a monetary impact. Class size is one of them. Hopefully, that clarifies it.
J. Dalton: Later in these estimates, I'll be making some comments and asking some questions about the North Vancouver school district in particular. But I just want to put on the record right now that I think that in a district like North Vancouver, class size is going to be an issue that will be difficult to resolve, particularly when you compare it to the neighbouring school district of West Vancouver, which is also part of my riding, where we have differences in class-size issues. So we'll have to see how that plays out.
Just before I finish up this line of questioning, my colleague would like me to ask about the community interaction days I asked about earlier. If those are indeed cancelled -- and the minister has stated so -- are they to be put back as strictly instructional days, or can they become one of the...? Now there are five professional development days. Can we have the possibility of two extra professional development days on top of the five, or will these -- either both or one of them -- be put back as an instructional day?
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Hon. M. Sihota: It's one instructional day and one professional development day. So you could add one on.
R. Masi: I'd just like to ask the minister a question on funding relative to independent schools: will there be an equal percentage increase in funding to independent schools, as there is in the major budget of Education?
Hon. M. Sihota: The per student amount will remain the same.
R. Masi: Is there any suggestion at all that independent schools may come under the Labour Code, that the staff, the employees, at independent schools might come under the Labour Code in the near future?
Hon. M. Sihota: They have the ability, as does any other employee in this province, to be covered by the provisions of the Labour Code and hence, if they wish, to form a trade union, to enter into negotiations.
B. Barisoff: I'll just get back to those community interaction days. The two community interaction days that were instituted by the Ministry of Education a number of years back -- I think it was two or three years back -- proved to be ineffective. I can't understand why the minister would use one of those as a pro-D day and take one back as an instructional day. Would it not be beneficial to the students of British Columbia to make both of those instructional days?
Hon. M. Sihota: This is an ongoing debate. I think it's fair to say that this administration brought forward a fair bit of change to the curriculum, and I think that the system needs the opportunity to digest those changes and react to them. On that basis, I can see some value in doing the one-and-one split.
B. Barisoff: I don't begrudge the professional development days; I think that they are important. What I'm saying is that the instructional days are also important, probably more so than the professional development days. How many of these new programs that have been instituted are actually followed through to fruition? How many have actually come into place, if we are looking for another professional development day rather than at the needs of the student for another instructional day?
Hon. M. Sihota: For the time that I've had the privilege to sit in this Legislature, I have taken a view that, in the development of government policy, if you think about your children, everything else falls into place. If you think about the kind of health care system you want them to inherit, it helps you make the public policy decisions. If you think about the kind of environment you want them to inherit, that helps you make the public policy decisions. If you think about the kind of economy you want them to inherit, it helps you make public policy decisions. And if you think about the kind of education system you want them to have access to, again, that helps you make, I think, the right public policy decisions. So as long as you think about your children, if I can take it in a generic sense, then I think you make the right public policy decisions. I've used that as my rule of thumb for as long as I've had the privilege to be in office -- and I find it passing strange that myself and a few other members are now the oldest members in this chamber; it's weird. In making these kinds of determinations, it will not be organizations that have lobbyists that can make their way through these halls that will drive the agendas. Since I arrived in public office, in whatever portfolio I've served, I have always used that basic rule of thumb. I'll use that in this portfolio. If I feel that there have to be changes because it doesn't quite cross the grain the way that it should, then I'll make those changes. I just want the hon. member to know that will be the operative variable.
B. Barisoff: It's not that I want to debate the issue of whether it's the non-instructional day versus the instructional day. I think the point I'm trying to make to the hon. minister is that what took place was that the government imposed two community interaction days -- that were unsuccessful -- to bring the community into the schools, and took these two days from instructional days. My point is that they should have been returned to instructional days. It's something that I would ask the hon. minister to consider -- to take that other day and put it back as an instructional day -- because it is that important.
Hon. M. Sihota: I got your point. I've tried to give you a hint of what's kicking around in my head.
The Chair: I remind the members: through the Chair.
A. Sanders: Hon. Chair, I'd like to go back to the financial aspect and touch upon school boards and deficits in funding. This past year, the government fired the school board in North Vancouver because it was running a $2.6 million deficit. There are seven other districts around the province that are also operating in deficit situations. My understanding of that list is that it is: Nelson, South Cariboo, Coquitlam, Powell River, Sooke, Gulf Islands, Cowichan, Lake Cowichan, Qualicum and Mission -- totalling another $2.8 million. Why is the minister allowing these districts to be in a deficit situation?
Hon. M. Sihota: I haven't signed off any approvals. I'll hear their cases, I'll reflect on the case that they make, and then I'll make a decision.
[5:15]
A. Sanders: What kind of instructions will you be giving these seven districts in terms of how to go about eliminating their deficits?
Hon. M. Sihota: They will have to put forward a plan to retire that deficit, and that plan will have to be well thought out, coherent and persuasive; otherwise, they will not have approval.
A. Sanders: What would happen in the theoretical situation -- I don't know the particulars -- of a district amalgamating and one district having a deficit budget? How would that be handled by the amalgamated district?
Hon. M. Sihota: Actually, it's not theoretical. It will have to be attended to through the revenue that they get through amalgamation.
A. Sanders: Again, looking at the North Vancouver school board, because of its somewhat unique position, what is the current status of the deficit that is being carried now by the board?
Hon. M. Sihota: I'm advised that it is an accumulated amount of $5 million. They have put forward the suggestion that it be retired over ten years.
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Let me also say that, as the hon. member pointed out, she's new to these critic responsibilities, I'm new to this portfolio, and I inherit situations. When they are inherited, one has the ability to review them. I have not put my mind to the North Vancouver issue perhaps to the degree that I should have. The other day the member for North Vancouver-Lonsdale, to her credit, stopped me in the hall and reminded me that it was an issue I had to deal with.
I just want to say that my intention with regard to the North Vancouver issue is to talk to the MLAs that are affected and get their opinion before I get any briefings on the issue. So I want their views before I get staff views or district views or anybody else's views on this matter. I will listen to what they have to say, and there will be weight attached to their opinions as I go about the process of making any determinations that I have to with regard to North Vancouver. Once these estimates are complete, I will ask them to meet with me, and we'll make some decisions around North Vancouver.
A. Sanders: In the situation of the North Vancouver district, it does bring not a theoretical problem but a real problem, in that we will have the school board trustees' election in September, which is almost upon us. What assurance does the minister have that a newly elected board will be able to manage a deficit of that magnitude?
Hon. M. Sihota: The elections are actually in November; you said September. I'm sure that was just an oversight on your part, just as I think I said "Minister of Finance," or something, once.
I'm going to talk to the MLAs in the area and take their views on this matter.
A. Sanders: From that, my understanding is that the ministry will maintain a role in North Vancouver after the election of new trustees.
Hon. M. Sihota: Again, I'm going to talk to your colleagues as MLAs and hear what they have to say in a meeting that I've now undertaken, on the record, to have with them before I make any decisions.
A. Sanders: I'd like to switch topics slightly to discuss a bit about capital freezes. This is a topic that has been very much in the press. Most certainly, as I am Education critic for K to 12, the public has tried to make me aware
Basically, what the synopsis tells me in the overview is that it takes about five years to get from thinking about building something to actually doing so. The minister has brought up fiscal responsibility as an issue, and I do not disagree with that. However, how he and I -- or any other individual in that case -- may have looked at what needs to be frozen and what needs to be
According to the Independent Contractors and Businesses Association of B.C., between April 1, 1992, and March 20, 1995, over $72.6 million was spent just on the fair-wage premiums on education projects. If we look at that in terms of other ways to spend $72.6 million, this could have built the $16 million Clayton school in Surrey, which is now on hold. It could have increased the capacity of Hugh McRoberts Senior Secondary in Richmond, but the $9 million for that project is now on hold. If the NDP had not implemented the fixed wages policy, these schools and many others across the province would be under construction today, based on the same budget we were operating from. In light of the $72 million-plus spent on fixed-wage just for education, would the minister consider exempting education capital projects from the fixed-wage policy?
Hon. M. Sihota: No.
A. Sanders: That's a pretty straightforward answer. Unfortunately, it's not the kind of answer I was hoping for. To me, the building of education facilities for young people holds a higher priority than the fair-wage policy. If we look specifically at Surrey -- and this has come up before, with an hon. member from one of the Surrey ridings making comments -- in 1995 that district had 7,625 more students than spaces. In Surrey the total cumulative number of portable classrooms is 305. There will be 1,800 additional spaces in 1996, as previously approved projects are finished, but the only school that will have additional space is Envercreek Secondary School, which is to open in 1997. Unless further projects are approved that will bring in additional student spaces in the next five years, there will be an accommodation deficit of 16,092 by September 2001, with an increase in the number of portables to 640. What kinds of problems can we look at for this school district -- or something that would ameliorate the situation, which does seem to be quite significant in this area?
Hon. M. Sihota: The hon. member takes information from the Independent Contractors and Businesses Association of British Columbia, which is one element within the construction industry, and puts forward the general proposition that if we were to eliminate the fair-wage policy, we could do all of these wonderful things and build all of these schools. Let me suggest, with respect, to the hon. member that Mr. Hochstein's proposal is somewhat simplistic and self-serving in terms of the component of the industry that he represents. None of that will surprise Mr. Hochstein, because I've met with him lots of times, talking about these issues.
One of the things that happens in this ministry is that we put a lot of money into the operating and maintenance of facilities, and into having to upgrade them earlier than we had originally anticipated because they weren't built properly in the first place. Under the fair-wage policy, we've brought forward changes that ensure that the people who have the highest-possible credentials are the ones hired to work on these projects. So they have to go through a process of certification. Studies on this issue have indicated that by doing quality work on the front end, you will defer operating, maintenance and capital replacement costs by several years. That also has to be factored into dealing with Mr. Hochstein's argument. It's a very, very important argument, in my view, in that when we're looking at the economics, we have to take a look at the broad economics of these projects. I would ask the hon. member to reflect on that.
Secondly, these aren't union wages that are being paid. The fair-wage policy is lower than the trade union rate. I can't
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remember by how much, but let's say it's roughly 10 percent lower. We were getting into a situation where people would hire anybody who'd work at $12 an hour, $8 an hour or $7 an hour -- whatever the market could fetch -- without due consideration to their experience and their credentials. That was a public policy problem that we had to deal with. I'd rather pay someone $18 an hour if I know that they're properly skilled, than hire someone at $7 an hour who is deficient in their skills.
Thirdly, I think we have to, as a matter of public policy, look at the issue of people from foreign jurisdictions or from other provinces coming into British Columbia and doing work that British Columbians would argue they should do first. I know that in some of the projects in my
I also think it's important that when we do this kind of building, we make sure that small businesses and local communities benefit. Rather than buying your materials and your equipment from Edmonton and shipping them into B.C., it's far more preferable that you buy them at your local hardware store, lumber contractor, or whatever, for this kind of work. That circulates the money within our own economy, and the fair-wage policy does that.
It is particularly important, in my view, that apprenticeship opportunities be provided to young people. One of the great tragedies in the things that have to do with my portfolio is that we have an unacceptable number of young people on social assistance -- or now in the Youth Works program -- who could be employed in some of these projects. I want to see that happen. I can't remember the ratios off the top of my head, but I can tell the hon. member that the ratios have increased significantly, so that we're hiring more young people as apprentices on these projects. In particular, in that context, we are hiring more women and aboriginals on these projects to give them skills to break barriers. I think that's an important public policy initiative which is part of the fair-wage policy and, in my mind, a critical element of that policy.
All of these things -- and I can go on -- have to be factored in when you're looking at the fair-wage policy. There are many
[5:30]
On my first argument, if you hire quality people who are appropriately certified to do the work, you get a quality building on the front end. That means on the back end you're going to save on operating and maintenance and capital replacement. In that alone, we're going to save well in excess of the money that Mr. Hochstein says could be deferred for the project.
I respect the hon. member's comments. Obviously, as a minister I have to make sure that we're getting value for money, but I would encourage her to look at the totality of these issues and then arrive at a determination.
There are problems in Surrey. I know that; the hon. member has raised that point here. Members on both sides of the House from that part of the province have made references to capital deficiencies in Surrey as they relate to increased enrolment and so on in that district. I understand that. In the process of capital, I'll look at that, and I'll take that into account in the decisions that I make. But I'm not going to short-shrift Surrey, because I know there is a sense of historical inequity in that area. I'm going to deal with that; how I don't know yet. I haven't got my budget approved, and I don't know what the capital allocations are going to be. But I'll deal with it, because I'm sensitive to those concerns.
Finally, let me also say that both the opposition and ourselves have to look at a broad range of policy options which may perhaps realize better savings than these more ideological arguments around the fair-wage policy. For example, one of the things that concerns me is that we are building these elementary school facilities, secondary school facilities, new universities and colleges -- a very large capital envelope. But I don't think we put enough time into the way in which we make them adaptable and flexible.
We know that there was a baby boom, and there is an echo now from that baby boom, and kids are moving through the system. Are we better off as a province to reconfigure and redesign, say, our elementary schools that are middle schools, so as that echo moves through the system, that school can be readjusted internally, without, as we've always done, building another facility -- to make our facilities more adaptable as children go up on an intergenerational basis? It seems to me that we don't do enough of that, and I think there are some real savings to society on that basis. I think the hon. member for Okanagan-Boundary made reference to a year-round system, and I think there's some value, intuitively, in looking at that, because it's a better use of facilities.
Thirdly, I'm a big advocate of community schools. To be candid, it drives me up the wall as a minister and an MLA to drive by all of these schools right now and to see those capital facilities vacant and underutilized or unutilized, when -- and the hon. member made the point earlier on -- we have occupancy costs for Skills Now. One of the things I'm going to do is to engage in a discussion here in the ministry -- not just a discussion; we're going to look at this issue -- of making better use of existing capital facilities like schools when they're dormant 12 hours of the day. We have to look at that, because I think that's a more creative way of dealing with these debt issues, which go beyond the more ideological debate that Mr. Hochstein and others would like to trigger in society.
When we're doing some of these
I have therefore tried to give the hon. member four or five other examples which I think are far more creative in the way that we can apply capital dollars, to make better use of our capital facilities, than this debate on the fair wage, which is, in my mind, somewhat self-serving and simplistic. I look forward, over time, to comments from members of the opposition with regard to these capital matters in that more creative and less ideological context.
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A. Sanders: In looking again at the capital freeze in British Columbia at this time -- and I will take into account the minister's comments with respect to these -- I would like to discuss several schools that I feel are very important in terms of their present situation. One is the Queen Elizabeth Secondary School, again, for whatever
With the freeze in capital expenditure within education, not only is there a freeze on the construction of the Queen Elizabeth school, there is a freeze on the purchase of the portables that this school would move into. With the portables frozen and the school frozen, as of Friday last week no one had heard a word from the ministry about what they were supposed to do. These teachers have been given the job of deciding what kind of circumstance will exist in what will now turn out to be a month from now. What answer can we give to this particular school when it reconvenes in less than a month? I guess that would be a good place to start.
Hon. M. Sihota: This House has not approved my budget. I am hesitant to make determinations until this House approves my budget, and then I'll make some decisions. If I may, I'll ask the hon. member to give me the list. I know that for each one you can make your individual case. If the hon. member would be kind enough to give me the list -- just read out the schools that she's concerned about -- I will try to respond to each of them. Just give me the list, instead of the case, because I am sure everyone can make the case. Then I would at least know the opposition's priorities, and that will influence some of my thinking.
A. Sanders: I appreciate the minister taking an interest in the individual cases, although it does take a lot of the fun out of this for me, because then I don't get to talk about the individual schools and what kind of circumstances they are in. In all of the cases I think what is really important for these people is communication of some kind, and in most cases it is a circumstance where they haven't heard anything. The budget is not approved, but we do have some idea of what we are going to do. If we don't have an idea now, that's pretty scary, because we are talking about the children going back to school in a period of 30 working days.
The schools I am specifically interested in and have had tremendous input on from teachers' associations, trustees, parents and students, as well as from the media in the areas, are the Queen Elizabeth school, Clayton senior secondary
Other areas individual members will bring up themselves. My understanding from their brief comments to me
With respect to capital projects, another thing I would like to ask the minister has to do with the use of portable classrooms. Again, this is an issue for many parents in large, rapidly growing school districts, where their children have gone to elementary school in portables and now attend secondary school in portables. What solutions does the minister have for ameliorating the portable classroom situation? When this government ran in the election of '91, one of their platform items was the elimination of the portable classroom. How does this minister feel about that particular statement now in 1996?
Hon. M. Sihota: I feel today about that issue like I felt in 1991. Let me answer the hon. member's points in the order that she made them. The schools that the hon. member initially raised are, generally speaking, major capital issues. Put that in some context: 109 major projects were approved by government, and 19 have been frozen. The bulk of the projects that we are committed to will proceed, okay? That will be communicated to school districts.
Some of the 19 are under review. I'll go through those 19 and try to make some decisions, but now I know which ones the opposition is concerned about.
Let me also say that as a matter of practice, I'm going to ask every MLA -- I'll put this on the record now so you'll know it's coming -- to actually write to me and make a commitment that they want to see the debt of the province increased so as to allow for this project to proceed. I will make that very clear to you. Quite frankly, that shields me from criticism, and I'm going to do that. Every MLA who wants a project approved will have to correspond with me explicitly stating that they want the debt increased for that purpose.
[5:45]
The other point I want to make is on the portables. Those are, generally speaking, minor capital. I will make this commitment, because I think the hon. member is right that there are some pressure points there, whether it's the Queen Elizabeth school in Surrey or other portables in the system. People need to know whether or not they can get theirs, or what's going to happen. With regard to those minor capital provisions, within a week of the passage of these estimates, I will release the list of minor capital projects that the government will improve. So within seven days, I will get that done, because I accept the member's point on that issue. That will be the time frame within which I will operate, whether I'm on holiday or not. We'll make sure that gets done. So that deals with that issue.
Then on the broad issue, of course, one wants to deal with these facilities so that students have the best learning environment. We'll deal with it with the kind of creativity that I alluded to in the answer to my previous question.
A. Sanders: It is somewhat simplistic to ask individual MLAs to accept responsibility for debt for funding capital projects when you don't get to make any of the other decisions. Although that might be an interesting exercise for some-
[ Page 1450 ]
one, I think you're taking a very small part of the very big picture.
I'd like to talk a bit about a slightly different subject that I've had quite a bit of correspondence on: school accreditation. If we look at secondary school accreditation, firstly, are secondary schools being accredited? If so, how often does this occur?
Hon. M. Sihota: Once every six years.
A. Sanders: Could you please outline the accreditation panel and how that is carried out?
Hon. M. Sihota: Normally I would answer that question. I'm not going to answer it, because I want to give the hon. member something to think about, and I would be interested in her views on this issue.
I am looking at the accreditation process in the province. It's an issue that has been flagged in my mind as one where we have to ascertain whether or not we really are achieving much with regard to the process -- whether we should do it over a longer time frame rather than a shorter time frame. Trustees and teachers I have talked to since I've had the privilege to be in this portfolio have commented on the frequency of it and have questioned the need to do it to the degree and in the fashion that we do. In my mind, that issue will be revisited. Over the next two or three months, if hon. members opposite have any views with regard to the accreditation, they should feel free to correspond with me. I would encourage the hon. member to look at that issue in her capacity as critic and let me know what policy changes she believes we should make. It would be interesting information for me to review as I revisit this issue.
A. Sanders: The six years that secondary schools are accredited -- is this the recommended period between accreditations as it stands now, or is this the actual period of time between?
Hon. M. Sihota: That is the actual policy right now.
A. Sanders: Are we accrediting elementary schools in British Columbia?
Hon. M. Sihota: Once every six years, and my predecessor announced that it will no longer be mandatory.
A. Sanders: Is this the circumstance for all elementary schools in British Columbia?
Hon. M. Sihota: Subject to the response I gave about the review, yes.
A. Sanders: Could I ask the minister the basis for now making that an optional exercise for elementary schools?
Hon. M. Sihota: The concern was that it was taking up too much time and energy and taking too much time away from students.
A. Sanders: Would the minister please delineate for me the cost of accreditation for a school, first at the secondary level and then at the elementary level?
Hon. M. Sihota: We don't have the breakdown, but I can tell you that we spend $4 million a year.
A. Sanders: Has that accreditation process been one where outcomes have been evaluated and changes have been made within the system?
Hon. M. Sihota: Definitely.
A. Sanders: Does the minister feel that was $4 million well spent? If so, why? And if not, why not?
Hon. M. Sihota: I'm not sold on the fact that it is, and that's why it's under review.
A. Sanders: I have some concern about the optionality of the elementary schools being accredited. This is an area where most of our very basic education occurs, with the follow-up in intermediate. Was this making elementary accreditation optional a funding decision, or was it based on other parameters?
Hon. M. Sihota: As I pointed out, my predecessor made that decision, not me. You'd have to ask my predecessor as to why he made it -- not to be evasive about the issue. I have to tell you that in my own mind, regardless of the decisions that were made, I want to take a look at the effectiveness of it, the time lines, the amount of time it takes and the impact it has on the classrooms versus the benefit it provides in terms of the changes that occur. Should we expand the time frame, shorten it? Should we expand the scope or not? I think it is first and foremost in my mind a policy question, and then I'd look at it from a fiscal point of view.
A. Sanders: I received some concerns from a parents' group at the Pender Islands School. This is a school from K to 8, with 110 students, five teachers and one principal. Has the minister been made aware of the Pender Islands accreditation?
Hon. M. Sihota: Not yet.
A. Sanders: Will the minister be made aware of the Pender Islands accreditation?
Hon. M. Sihota: The hon. member, in the course of her duties as an opposition member, just did that.
A. Sanders: Does the minister wish to know more about the Pender Islands School, or would this be something that he would prefer to have a briefing on and not take the time in estimates?
Hon. M. Sihota: I don't know -- maybe we should pay a site visit and enjoy Pender Island a bit. I'm going to get a briefing by staff because of it, and then I will correspond with the member with regard to determinations that I've made. I'd be most interested in any comments she may have with regard to determinations we could make about Pender Island.
A. Sanders: I would just like to let the minister know that I think this is something he should address -- that the process appeared to be flawed and the accreditation invalid. Parents were not involved in the team. Therefore the accreditation does contravene the School Act and needs to be addressed.
In terms of some miscellaneous issues that I haven't got a good place to put, I'd like to ask the minister about stock plans for schools. My understanding was that the ministry was g
[ Page 1451 ]
oing to create a stock plan for schools to defray the expenses of each school designing schools independently. What is the present status of that plan now?
Hon. M. Sihota: We have made it optional for districts to use stock plans; however, we have said to them that if they use them, they can keep 50 percent of the savings. They have to look at it in that context.
A. Sanders: What would be the estimated saving from the enforcement of a stock plan?
Hon. M. Sihota: It would be about $100,000 per school.
A. Sanders: Since the stock plans are optional and result in savings if the school chooses them, is there any reason to enforce the stock plans, based on that figure of $100,000 per school?
Hon. M. Sihota: Anywhere we can realize savings, I like to realize them.
A. Sanders: The second area I'd like to touch on involves the report cards we presently use. As a parent, this is an issue I have taken quite a dislike to; in addition, many of my teacher colleagues are very unhappy with the format. Is there any will in the ministry to review the reporting format at this time?
Hon. M. Sihota: I know I have received some comments, particularly in regard to in-progress cards, and because of that I am canvassing this issue with staff.
A. Sanders: I'd like to refer to a letter that was written to the hon. minister in June; a copy was sent to me, as well. It was written by Joan Peggs. In the letter, she says that after hearing about the high cost of attending school, the hon. minister floated the idea of books being tax-deductible. Was this something that the minister actually meant to follow up on? Did the Times Colonist article of June 19, 1996, contain a correct quotation?
Hon. M. Sihota: It was correct in the context of the cost of post-secondary education.
A. Sanders: My understanding is that this was in the context only of post-secondary and not, as this woman has alluded to, of schooling in general.
Hon. M. Sihota: It was in that context. But it's an interesting point, let's say, for adult basic education or education of adults. I won't rule that out in terms of my considerations.
A. Sanders: The next point I'd like to touch on is technology. At this time, this will certainly be one of the most expensive changes in our school system. It may also result in inequity within districts -- those with more money in their base than other districts or with more will among the community to provide that technology. What commitment will the ministry be making to funding technology in the schools?
Hon. M. Sihota: It's over $10 million this year.
A. Sanders: What are we looking at in that $10 million? What is the ratio? For example, if we're looking at computers, what is the ratio per computer for elementary students and for secondary students?
[6:00]
Hon. M. Sihota: We'll see if we can get you that information.
Hon. Chair, given the hour, I'd like to move that the committee rise, report good progress and ask 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.
Hon. M. Sihota: I move, by leave, that the sessional order of July 10, 1996, authorizing the Committee of Supply to sit in two sections designated A and B be varied to permit the Minister of Employment and Investment and Minister of Municipal Affairs and Housing to defer to the chairman of B.C. Hydro for the purpose of replying to questions put to the minister. For the information of members, I think that this allows Mr. Smith to answer questions directly instead of indirectly, which I am sure serves in expediting the process.
Motion approved.
Hon. M. Sihota: Hon. Speaker, I move that the House stand recessed until 6:40 p.m.
Motion approved.
The House recessed at 6:02 p.m.
The committee met at 2:47 p.m.
On vote 22: minister's office, $374,615 (continued).
G. Farrell-Collins: We understand from a statement by the Premier in question period today and again in the halls that Mr. Smith is to be available for response to questions. Is that correct? If so, do we know when he'll be here?
Hon. D. Miller: That is correct. I don't have an exact time, but I think probably an hour would be fairly safe.
G. Farrell-Collins: In that case, if we have a few moments, the member for Vancouver-Quilchena, the critic for Employment and Investment, has some general questions on the ministry, which he will be glad to put to the minister in the intervening period. We can resume the Hydro portion of these estimates when Mr. Smith arrives.
[ Page 1452 ]
Interjection.
G. Farrell-Collins: These are Hydro questions also, but more general questions perhaps.
Hon. D. Miller: Just in terms of trying to get some staff deployment here, Mr. Chairman, we'll take a few minutes to get some people from E&I.
C. Hansen: Hon. Chair, I'll seek some direction from the minister. We certainly have some other areas involving B.C. Hydro financial matters that we would like to address during the course of the estimates. The other subject area that I know we would be prepared to deal with at this time is the issue of the Four Corners bank. I seek some direction from the minister as to what might be most appropriate from his point of view.
Hon. D. Miller: I understand Mr. Green from Four Corners is downstairs and should be up as soon as we can get someone to go down and tell him to come up here.
C. Hansen: I have a few general questions, and then I will turn the floor over to my colleague for Delta South.
I want to start by asking about the board of directors of the Four Corners bank, specifically whether any of the directors have had previous experience as a member of a board of directors of a bank.
Hon. D. Miller: I'll read the list: Jim Green is the chair; Lucille Johnstone, vice-chair; Barbara Charlie; Ron Yuen is an architect; and Gordon Westrand is a longshoreman -- a job I've had myself in the past. The rest are Ken Lyotier, Amalia Dorigoni, Lore Krill, Elain Duvall, Glenn Haddrell and Bob Fairweather. I believe the two with banking experience are Lucille Johnstone and Bob Fairweather.
C. Hansen: Could the minister advise us what the nature of their previous experience was, in terms of which banks?
Hon. D. Miller: It's not in the information, but I believe Lucille Johnstone was with Northland Bank. Bob Fairweather is director of investment banking with Richardson Greenshields of Canada, and was vice-president and resident manager of Richardson Greenshields, Tokyo, 1984-91 -- plus other obviously important business positions.
C. Hansen: The minister said that Lucille Johnstone was with the Northland Bank? Is that a current capacity?
[3:00]
Hon. D. Miller: I don't believe there is a Northland Bank these days.
C. Hansen: Is the minister confident that the affairs of the Northland Bank are resolved, and whether or not Mrs. Johnstone has any residual responsibilities as a current or past director?
Hon. D. Miller: I'm advised that I can't answer the question about residual; but nothing current. The approval for her to sit as a board member came from the Financial Institutions Commission.
C. Hansen: Could the minister advise us what interest rates are currently being paid to depositors who have significant amounts of money on deposit with the bank?
Hon. D. Miller: Market rates.
C. Hansen: I was looking for a more precise answer in terms of what may be paid currently, if the minister has more detailed information.
Hon. D. Miller: Mr. Chairman, I'm sure we could have someone phone the bank and get whatever today's posted rates are. But it's market rates; it fluctuates -- presumably in the range of 3 percent to 4 percent.
C. Hansen: My understanding is that the seed money for the bank was $10 million from the provincial treasury. Could the minister confirm that and that the money has in fact been transferred to the bank? Could he advise us if there are any other significant deposits from the provincial government or any of its agencies or Crown corporations?
Hon. D. Miller: I'm not aware, in consulting with officials, of other significant depositors. But of the $7 million approved by the province, $6 million has been advanced.
C. Hansen: I had heard a report that there may be some funds deposited with the bank with regard to a housing project. Do I gather from your response that that is no longer a current deposit?
Hon. D. Miller: I'm advised that there may be a question, Mr. Chairman. Again, I'm not that familiar with this banking business, but with respect to the confidentiality of investors in the bank, it's a bit awkward. I obviously want to be certain of my ground before I give out information that I may not or should not. I'm certain we can have that checked. I don't see the staff in the room, but we'll see if we can get that issue cleared.
C. Hansen: I guess I would be careful not to dig too deep into the non-government depositors of the bank, but I think that to the extent the province of British Columbia is a depositor, that's something that should be on the public record, and I feel that the bank should be accountable for it. We would certainly be interested in that information, if that could be pursued.
I understand that for the initial base, the target was $100 million in deposits. Could the minister advise us to what extent that target has been reached?
Hon. D. Miller: Yes, the target is $100 million. The campaign to try to attract that kind of investment hasn't essentially started yet, but the target is $100 million. The bank hopes to realize that over a five-year period.
C. Hansen: Could the minister give some indication as to what progress has been made to date towards reaching that target?
Hon. D. Miller: I did indicate in my answer, I think, that the campaign to try to attract that has not essentially started.
C. Hansen: I'll rephrase that, then. Can the minister advise us of the total amount on deposit with the bank as of this week or this month?
Hon. D. Miller: Approximately $4 million.
C. Hansen: I understand that earlier the minister said that $6 million had been advanced from treasury. Do I gather
[ Page 1453 ]
that that is not on deposit? Is that an outright advance? What is the status of the $6 million?
Hon. D. Miller: It's equity.
C. Hansen: I understand that the number of individuals registered with the bank has been relatively successful. The number I've heard is 1,200. Could the minister confirm that? Also, could he give us an indication as to the number of depositors who have registered with the bank?
Hon. D. Miller: It's 1,200 to 1,300.
C. Hansen: I gather they have signed up for banking services, including cheque-cashing services. Could the minister advise us how many of those -- or what percentage, approximately -- would be actual depositors with the bank?
Hon. D. Miller: All of them.
C. Hansen: Could the minister advise us if any loans have been issued by the bank to date?
Hon. D. Miller: No.
C. Hansen: Of the $4 million on deposit, am I correct in my information that this money is on deposit with the provincial treasury, and if that's where the funds are on deposit, that the bank is receiving interest from the provincial treasury?
Hon. D. Miller: I'm advised that those funds are deposited with what used to be B.C. Central Credit Union; it's now Central Credit Union.
C. Hansen: Could the minister advise us if the interest earned on those deposits is also at market rate, and if so, approximately what that might be?
Hon. D. Miller: I'm advised that they are market rates.
C. Hansen: Could the minister advise us as to what spread the bank would be working on?
Hon. D. Miller: The target margin is 0.2, and they've been running about 0.6.
C. Hansen: I had the understanding that the target margin was 0.8, but I'll take the minister's word on that one.
I understand that there was about $750,000 to renovate the building. Could the minister confirm that and also advise me of the status of the terms of the lease with, I understand, BCBC?
Hon. D. Miller: Three-quarters of a million dollars were budgeted for the renovation. It came in about $100,000 lower, about $650,000. There's a five-year lease with B.C. Buildings Corporation, plus an option to renew for a further five at commercial rates.
C. Hansen: With that, I will turn the questions to my colleague.
F. Gingell: Maybe we'll just stay with that subject. The budget for the renovation of the building, for all capital expenditures, was $470,000. You've spent $1.7 million. How can you say that the budget was $750,000?
Hon. D. Miller: I have sought advice from the staff people associated with the enterprise. Those are the numbers they have given me. If they're not correct and the member is correct, then surely that's not something we want to
Reading from the business plan, we have as follows -- and I'll read this into the record: construction, $600,000; startup, $126,000; BCBC project management fee, $24,000; consultants' fees, $60,000; contingency, at 17 percent, $140,000; for a total of $950,000. That was approved, and the project, as I indicated, appeared to come in under budget.
F. Gingell: This project went ahead on the basis of this business plan that you were good enough to give me at the time that the bank was set up, so maybe I should read into the record the estimates for fixed assets: 600,000 square feet, $195,000. Under leasehold improvements and furniture are: cash dispenser, $30,000; night deposits, $10,000; vault and strongbox, $15,000; alarm system, $7,000; cameras, five -- $5,000; computer stations, five -- $75,000; communications, $15,000; telephones, $25,000; others -- fax, copying, etc., $14,000; signage, $16,000; for a total for leasehold improvements and fixed assets of $407,500.
[3:15]
Hon. D. Miller: Just while Miss Hay is searching for that other sheet that I just read, there also
The list is: computer equipment, $63,000; computers for dispensers, $6,000; telephone, $5,000; fax copier, $7,000; security, $24,000; ID system, $25,000; cash dispenser, $10,000; note counters, $5,000; encoder, $3,500; microfilmer, $5,000; teller wickets, $11,000; furniture, $10,000; night deposits, $6,000; safety deposit boxes, $3,000; cheque-clearing system, $2,500; signage, $11,000; locker systems, $3,000; for a total of $200,000. That's correct. Adding in the tenant improvements on the earlier sheet that I read, the total is $1,150,000.
F. Gingell: What has happened is that there was an original projection made, on which this project was approved by the Legislature, and it's all in this blue book. Now, the total was $407,500. There are balance sheets, projected profit-and-loss statements, projected balance sheets -- the whole thing -- all based on capital costs for the building, getting it going and all the equipment, furnishings, etc., of $407,500. Now we're told it's $1,150,000. You know, you can make up this year's business plan having discovered that you're more than two and a half times over budget, and next year you can bring in a 1997-98 business plan. But the fact of the matter is that the people who are responsible for this operation produced a budget that said our total capital costs were going to be $407,500. What else has changed? Who has been held responsible for the fact that they were almost three times over budget?
Hon. D. Miller: I wasn't the minister at the time, but I understand that the purpose of these estimates is to debate the budget currently before the Legislature.
[ Page 1454 ]
F. Gingell: The amount that is in this budget for depreciation for this coming year is $141,000. The amount that was in the budget in this original provision was $71,000. That's because they've now spent over a million dollars, when they had originally projected to spend $407,500. So it is clearly within the purview of this committee. Mr. Chairman, perhaps we could have an explanation of why the capital costs were almost three times the original budget.
Hon. D. Miller: Again, as I indicated, I was not the minister at the time, and I'm not familiar with the process that led to the original budget. All I can do is debate what is here before us, and I read those numbers out.
F. Gingell: The practice in these estimates is to allow officials to respond to questions, if that is the minister's wish. It was done at great length with your predecessor, who is now the Premier. Seeing that the officials who have been responsible for this project from the very start are here and given that this is an important subject, surely the capital cost budget being almost three times the original budget is a subject that should be discussed.
The Chair: Perhaps I might enter into the debate. The rules of this committee are that deputy ministers are able to respond directly, but not others.
F. Gingell: Do I take it from the minister, then, that this overrun is a subject which is not going to be dealt with?
Hon. D. Miller: With all due respect, Mr. Chairman, were I more familiar with the
F. Gingell: I'd like to point out to the minister that this is our only opportunity, once a year. One year has gone by. It is during this year that they spent over a million dollars, when they had originally estimated spending $407,500. I see looks of surprise over there, but here are the original documents that I was handed for the purposes of evaluating whether or not this bank was a sensible investment and a worthwhile project for this provincial government. On the first item we deal with, I get reticence from the minister to deal with the issue or to hold someone accountable for this difference.
Hon. D. Miller: Again, I don't have the numbers from previous years, but I don't accept -- and I want that on the record, and it will obviously be in Hansard -- that the costs exceeded original projections by the million dollars that the member is referring to. But I guess there is a fundamental point, and that is: is this a project that people generally support? Clearly the government has gone out and done it. Therefore the government does support it and thinks it's worthwhile, for a host of reasons. I don't know what the position of the opposition is. I've never really talked to anybody in the opposition about this to see whether or not they endorsed this project. I've heard a lot of questions here today, but I really don't know what their position is. They're quite free to oppose it; that's something that political parties do all the time. They can oppose it on any basis they wish, I guess. If they think that it costs too much, they should say that. If they don't think it should be there, they should say that and not belabour the point.
F. Gingell: I think that we made our position on this issue very clear at the time of the original debate. We recognize that there's a desperate need for the service that this bank is offering to provide. We believe there were better alternatives that would not be as expensive for the British Columbia taxpayer and that would not put British Columbia taxpayers' money at risk with $2 million guarantees. This bank has been subsidized to a tremendous sum -- already the interest on some
Hon. D. Miller: Regardless of what the initial projections were or what the actual costs were to renovate the structure and to buy the equipment necessary to start up a bank, I don't think the story of this bank is going to told in one or two years. Pretty clearly, there was a strong social need to address some issues on the downtown east side, and we have chosen this vehicle to try to do that. The long-term success is going to have to be determined over time.
The projection is to break even, then to become profitable after five years of operation and pay a dividend to government. In the meantime, regardless of what the member might say about what the capital costs or asset acquisition costs were, I think the bank is a very useful addition to that part of Vancouver. The bank will pay -- I don't know if they've paid it yet -- corporation capital tax. They are providing employment for people in the downtown east side who were previously unemployed. They do provide a facility so that people who live in that neighbourhood can get their cheques cashed without going to a money mart, to people who take a chunk of it.
So I can't quite understand the fixation that appears to be here with respect to this operation, but it seems to be serving a very worthwhile purpose. If the members opposite don't like it, they should simply say that they disagree with the bank being there, and everybody will know that there are two political views on this subject. I suppose it will be out there with lots of other issues where there are two political views.
F. Gingell: The minister, in his typical fashion, wants to identify this as a partisan issue. But this is a good-government, good-business-practices issue. The minister knows perfectly well, if he had bothered to read Hansard before this, that we are concerned about this issue. We do think that people should have a petty cash -- as it were -- bank account. We do think that people should be able to cash their cheques without going through the cheque-cashing places or the pubs. But there were other solutions, and, Mr. Chairman, it was his government that produced certain financial projections. We've dealt with one about capital costs. There is another one.
The original financial projections on which this deal was approved budgeted for the total maximum loss over a period of three years to be $661,000. That would be the accumulated losses before you started to be profitable. There is now a new business plan, and it is very easy to change business plans: you just type them up. The new business plan suggests that the accumulated losses, before the bank becomes profitable, will amount to $1,356,000. Can the minister explain why, all of a sudden, the anticipated losses before the bank becomes profitable have more than doubled?
An Hon. Member: It was the weather.
[ Page 1455 ]
Hon. D. Miller: I'm just trying to find the number. My advisers tell me that part of the mixup might be that the document the member is quoting from is a three-year-old document. It is not the business plan. I don't know,
F. Gingell: It's the Ross Montgomery plan.
Hon. D. Miller: It's the Ross Montgomery plan. That was not the business plan that was accepted, I'm advised. I have no other interest in this matter except to try to bring some clarity to it. I want to provide clear answers to the questions that are provided. If there's a mixup and if the member is using a document that's three years old, then clearly that presents some difficulties in terms of trying to get the answers to his questions. Thumbing through the business plan, we've had some difficulty in responding because the numbers don't jibe. It makes it very difficult to try to respond to the questions that are being asked.
[3:30]
F. Gingell: But it was this business plan that was presented by your predecessor as the basis for all the legislation and for the discussion we had through the committee stage as the Four Corners bank was being incorporated. We didn't receive any updates before the bank commenced business. The first thing we got was a 1996 proposed business plan, which has just been finalized, that is substantially different in important matters, and these, of course, have been the subject of these discussions. I don't think you can just type up a new business plan and say: "This one is three years old, therefore you should ignore it." The three-year-old business plan had a five-year plan in it, and we should in fact be into year two of it. We should just be starting year two of that plan now.
Earlier I asked the minister a question on the capital that the government is going to invest. As I understand it, the original plan was $5 million. The balance sheets show $6 million having been advanced, and the business plan shows $7 million. Can the minister answer the question: is the additional $1 million going to be paid in this year, or has it already been paid in?
Hon. D. Miller: First, $10 million was approved, and I did indicate in an earlier answer that $6 million has been advanced. Seven million dollars has been approved by Treasury Board, $6 million of which has been advanced, and there is potentially another million.
But I want to go back to the fundamentals here. As I understand it, the report that the member is using for questioning was a feasibility study done by Mr. Montgomery which, in general terms, looked at issues of cost and profitability and those kinds of questions, to determine whether or not the government should proceed with this project. Based on that, the decision was made to proceed. Indeed, it appears there is a difference. I'm not familiar with that document, but just looking at the numbers
You can go over every expenditure, I suppose, but I am just wondering what the purpose is here. Is it to lay down some markers because the members want this bank to fail? Is it that they don't like the idea of a bank with that kind of ownership and board representation? Why else ask why we have ordinary people on this board, such as we do in my hometown in the credit unions -- ordinary working people who take direct charge of their financial affairs and run a very successful credit union -- as though somehow they couldn't be capable of being board members? I find the whole thing a bit curious. I'm not familiar with the history of this bank. It seems to be an entirely laudable goal, and it seems to me that the people employed in getting it up and running are doing what they ought to do. So I don't know where we are going. We are running in circles, I guess.
F. Gingell: I'm sure there are as many strong, vigorous supporters of credit unions on our side of the House -- and certainly me -- as there are within your caucus. I'm as dedicated a member of the Delta Credit Union as I'm sure you are of the one in Prince Rupert.
So we come to the issue of the business plan on which
Hon. D. Miller: Feasibility plan.
F. Gingell: This was the business plan or feasibility study on which this bank was based, sure. But a feasibility plan is a business plan of a sort, and the first thing I would have expected to have seen this year is an explanation of why there have been such dramatic changes from here to here. They are not little changes; they are big changes -- huge changes -- and that at least deserves explanation. Maybe there is some interim business plan for the year '95-96, which we didn't see, that explains what those changes were. Anyway, let's move on or we are not going to get anything done.
As I understand it, at the moment the bank has roughly $9 million on deposit. Is that correct?
Hon. D. Miller: The answer was four, given to an earlier question.
F. Gingell: I'm sorry, I didn't mean the amount of deposits in the bank but the amount of cash the Four Corners bank has deposited in someone else's bank. I understand it would be the B.C. Central Credit Union. That's about $9 million?
Hon. D. Miller: Yes, roughly $9 million.
F. Gingell: The bank now has roughly 1,400 active accounts.
Hon. D. Miller: I said 1,200 to 1,300 earlier. The requirement is that if people want to use the bank for cheque-cashing purposes, they must open an account. Obviously some of those accounts are probably very modest. But yes, that is the total number of accounts.
F. Gingell: In its business plan, the bank talks about the investment criterion the bank will use. It's defined in the business plan as socially responsible investments. Can the minister expand on that a little more? What is a socially responsible investment and what is not a socially responsible investment?
Hon. D. Miller: It will take time. I should note, by the way, that the bank has been open in terms of taking cash
[ Page 1456 ]
deposits for two months. That's not really a long period of time in which to gauge its success.
The model is perhaps pioneered by the Vancouver City Savings Credit Union, although probably on a broader scale. The bank will obviously be looking at the application of that, particularly the issue around job creation potential in the downtown east side. I think the simplest way to describe the model is the Vancouver City Savings Credit Union one.
F. Gingell: The business plan talks about the conditions under which loans will be made. It states the terms: "Loans will be secured only by deposits." Now, this bank is beginning to sound like the "Humungous Bank" that the Richmond Savings Credit Union advertises about. Is it truly the intention that loans will be made only when secured by deposits with the Four Corners bank?
Hon. D. Miller: Yes, but I just want to again point out that the bank is some ways off from starting to lend money in terms of building up a clientele, going back to what I talked about earlier. People who may not be used to dealing with a bank, quite frankly, are used to getting their cheque cashed at a money mart or in a bar or some other place, some of them never surviving until the next one comes along. I think, again, that the bank will be striving to get people acquainted with the use of the bank, to get them comfortable.
Some people will not leave their money, even though it's far safer and they can have access to it on a timely basis. They will simply not do that. I guess you get down to some of the horror stories on the downtown east side. If you want to lay your hands on $10 or $20 and you need it right now, that's the most important thing in the world.
It is a pretty difficult area to deal in, but the bank obviously wants to take some time and try to establish the bank as a presence and as an institution that is user-friendly to people in that area. When you get to it later on, I suppose, in terms of lending money, sometimes their needs may be rather modest. It may be people actually going in to borrow a hundred bucks. The bank obviously has an obligation, in terms of lending money, to manage the risk associated with lending money. I'm sure they're up to the job.
F. Gingell: If the bank requires you to have deposits on hand to cover your loans, there isn't any risk to the manager, I would suggest to you.
Has the bank got into the business of the use of cash dispensers, allowing customers to draw cash from remote locations?
Hon. D. Miller: No. It's being looked at.
F. Gingell: Was all the work on the renovations to the building at the corner of Main and Hastings done by union contractors?
Hon. D. Miller: No.
F. Gingell: That's not in accordance with the original business plan, as a matter of fact.
The second question I have on unionization
Interjection.
F. Gingell: I'm interested in the answer. Are your staff unionized?
[3:45]
Hon. D. Miller: Staff are organized under the Canadian Automobile Workers.
F. Gingell: I presume you now have your FICOM approval.
Hon. D. Miller: Yes.
F. Gingell: One last question I have is: would the minister make a commitment through his staff that next year's business plan will show any differences from this year's business plan? We need a starting point. The Ross Montgomery study was the starting point, and I think most members of the Legislature who were in the committee stage discussion will agree. No doubt a new business plan will be prepared next year. In fact, it is required under the legislation. I do think it will be lacking if it doesn't have a description of how we got from this year's business plan to next year's business plan -- so there won't be any disagreement by us on what our base point is.
Hon. D. Miller: Again, in keeping with my earlier remarks about wanting to give the answers to the questions proposed, I'll just point out that the feasibility study the member is using is three years old. I assume that all business plans are subject to change. Again, in the interest of wanting to provide
Interjection.
Hon. D. Miller: It has to be filed with FICOM, and it needs to be approved, but beyond
Interjection.
Hon. D. Miller: And Treasury Board, yes. But I don't know if there's a requirement beyond that, Mr. Chair. I do agree that everybody's interests are best served if we're operating on the same information base. Hopefully, by next year we can find some way to achieve that purpose.
G. Wilson: I only have a few questions with respect to this issue, and I'm not going to go back over ground the minister has already covered. I am interested, though, because in the debate on the establishment of the bank, one of the more controversial sides of the issue was the question of the $2 million guarantee that was to be established with respect to the bank, and also the question of bank liability and the degree to which the government was going to effectively hold that liability. To begin with, I wonder if the minister might tell us what the current liability of the bank is. Maybe we'll start there, and then we'll move on.
Hon. D. Miller: I think the best answer, really, is that the bank is meeting its statutory requirements under its approval.
G. Wilson: That's not very helpful. In order for the bank to fulfil its statutory obligations, as I understand the minister to
[ Page 1457 ]
are in place. I think a question that's in order for these estimates is: what is the financial guarantee, and what is the degree of liability?
Hon. D. Miller: I don't know that there is any particular risk at this early stage in the bank's development. Certain funds are on deposit, as has been discussed. The bank is not up and running in terms of lending money. It's all rather modest in terms of the number of clients. I don't quite follow the question, in terms of its liability.
G. Wilson: I'm rereading a section of Hansard from last year from the then minister, now Premier, with respect to
Let me ask this question. One of the issues we raised was the degree to which the bank would seek to try to get those securities by attracting the deposit of union pension funds. I wonder if, in this year, there is an active campaign underway to try and secure union pension moneys deposited in order to give the bank the $6 million that it's after.
Hon. D. Miller: I did indicate in an earlier answer that the campaign is yet to proceed. The bank will be looking for a wide range of investors and union pension funds, certainly, but not exclusively union pension funds -- other pension funds too, for example.
G. Wilson: I wonder if the minister -- and it might expedite these questions
Hon. D. Miller: It's not clear, Mr. Chairman, whether the member is looking for a place to deposit a significant amount of money or not.
As those initiatives are unfolded, with respect to the communications plan and anything of a public nature, they will be made available to the public. It may be that the bank may be having discussions with pension funds that are mutually confidential; I don't know. Obviously you're not going to talk about that.
G. Wilson: No, what I was asking for is essentially, in a more refined way, what the member for Delta South was asking for. There has to be a business plan that the bank is operating by. In order to know that the securities will come on deposit, there has to be some campaign either underway, planned to be underway or soon to be underway to go out and attract some revenue. We would be curious to know who the bank is targeting and if there's any documentation on that campaign. We might be provided with at least an outline of what that campaign may include so we have an understanding of the clientele that this bank is attempting to attract.
It's
Hon. D. Miller: The bank obviously has a job to do in securing the deposits that are forecast in the plan. Not all of that work is done in a very public way; some of it is done in a private way, as is the way with any business.
As I said, if there are public aspects to the campaign that are important, then I'm sure all
G. Wilson: The difficulty is that when we have public money securing what should essentially be a private sector enterprise, we always run into the grey area: the extent to which that public money ought to also provide public disclosure on how those assets are invested, are tied up or have liability against them.
While I'm well aware that protection of investors in particular is something that the principals of this bank are going to be concerned with, there was a lot of concern around the establishment of this bank. Maybe we could clarify it now without walking the minister into the realm of future policy. One of the reasons, I think, for active concern by those who are observing not the day-to-day cheque-cashing operations of the bank -- I think most people would support that -- but the larger financial role the bank may play is the degree to which the bank may in fact act as one of the vehicles for financing government housing projects in concert with private investors. The concern was that this would be a vehicle for the government to essentially use public money in concert with either pension dollars or private investment dollars to get involved in capital projects -- housing projects in particular. Of course, the casino issue was very actively being discussed at that time, which I see Mr. Green chuckling about now, as it has found its way into never-never land, as history will show.
What we need to know is the degree to which this bank will be used as a vehicle for such financing by government. There may be an up side to that, quite frankly; there may be a positive way for that to be done, which would benefit the people of the east side. But by the same token, because of the lack of reporting opportunity, it may provide some concern for taxpayers, who may want to know where and how their dollars are being invested.
Hon. D. Miller: Okay, we will note the question. I think the member touched on probably the most important issue here, and that is the private sector. I think the conclusion you
[ Page 1458 ]
draw from this experience and perhaps others is that the private sector doesn't always serve the needs of the public. All too often, of course, the breakdown is that the private sector is out there where anything is profitable; but where it's not, then it's government's responsibility. We make arrangements even with our government agents, for gosh sake.
In some of the northern communities, the banks have essentially said, "There's not enough business here for us; we're going to pull out," notwithstanding that all of them might have had a fairly decent year -- like a billion-plus; fairly decent. Quite often they will make those decisions. I recall them doing it in my constituency years ago and my talking to the then Finance minister, Mr. Couvelier, about that.
For a host of reasons, the private sector does not always meet the general needs of society. I guess that's an appropriate goal for government: to come in and try to work with communities -- and I really think the downtown east side is a community -- and to try to address in a broad way not
I've noted the member's comments, and as we learn
[4:00]
C. Hansen: I think that probably wraps up all the questions we have on the Four Corners bank. Thank you to your officials for being here.
G. Farrell-Collins: I assume the chair of Hydro would like to get himself settled, but if he's ready to go, we can start immediately.
I don't know what process the minister wants to use here today. It is at his discretion whether or not the questions are answered by himself, or either indirectly or directly by the chair of B.C. Hydro. I guess that's at the minister's discretion. How does he intend to do it?
Hon. D. Miller: My understanding is that I have absolutely no discretion in this matter whatsoever. The rules are made by others.
The Chair: I provided the information earlier that only deputy ministers can respond directly in this committee.
[4:15]
G. Farrell-Collins: Then my first question to the minister is: can he tell me if we managed to determine yet, since the April 23 report, who the partners of our investment are in Pakistan?
Hon. D. Miller: I don't have a complete list. In fact, I'm not certain that we do have a complete list. The principal contact in Pakistan is a Mr. Ali Mahmood, who is also, I believe, president and CEO of SEPCOL.
G. Farrell-Collins: Is he the only individual in our Pakistan partnerships that we have been dealing with, or are there others?
Hon. D. Miller: He's the principal spokesman.
G. Farrell-Collins: I'll ask my question again. Are there other individuals we have been dealing with in Pakistan aside from Ali Mahmood?
Hon. D. Miller: From my conversations and early discussions, Mr. Mahmood is the central person we have all our contact with and moving into the issue of Mr. Laxton and with respect to Mr. Laxton remaining on the board of SEPCOL.
G. Farrell-Collins: I didn't ask that question yet, but thank you for answering it for me, anyway. Am I to understand, then, that the only person we have heard from in Pakistan with regard to saying it was urgent that Mr. Laxton continue on in his capacity as the chair of the board of SEPCOL is Mr. Ali Mahmood?
Hon. D. Miller: That's correct. I'm advised that Mr. Mahmood, essentially, is the spokesman for the project in Pakistan and appears to have a close relationship with the Prime Minister, Ms. Bhutto.
G. Farrell-Collins: The only person involved in this deal in Pakistan -- the individual who called the chair of B.C. Hydro and insisted that Mr. Laxton remain on as a board member of SEPCOL -- is Mr. Mahmood. If that's correct, we can leave that on the record.
The second question is: when did the World Bank communicate with B.C. Hydro with regard to their concerns about Mr. Laxton continuing on in his capacity at SEPCOL? To whom did they communicate, and in what form?
Hon. D. Miller: As a result of some newspaper articles in the Vancouver Sun -- I think by Daphne Bramham -- in late June, Mr. Smith spoke with the division chief and vice-president in charge of the project in Washington.
G. Farrell-Collins: Did this discussion take place on the phone? The minister says yes.
Can the minister tell us the concerns that were raised by the division chief in Washington, D.C., with regard to this project in late June?
Hon. D. Miller: The concerns generally were, as I said, around newspaper articles that appeared in the British Columbia media about the B.C. Hydro affair -- the termination of Mr. Laxton, Mr. Sheehan, the announcement of a criminal investigation by the RCMP -- and whether that, in fact, would cause us to do anything other than what we are committed to with respect to the project. We gave the assurance that that would not happen.
Additionally, it's of interest to note that on the board of SEPCOL there is a banker from the NDFC, the Pakistani development bank which is the recipient of World Bank funds. My understanding is that that board member did not raise any concerns with respect to the continuation of Mr. Laxton on the board.
G. Farrell-Collins: I guess that raises a question: was he asked? Was he informed? And who cares? Just because they are the recipient, or would be the recipient, of the funds for the World Bank doesn't necessarily mean that if they don't raise an objection, the World Bank hasn't raised an objection. I would think that regardless of what that relationship is, the World Bank can make their determinations on their own.
[ Page 1459 ]
So the minister said: "around newspaper articles." I'm surprised this communication took place in June, since this issue broke in February. Did the World Bank just become aware in June of all that took place in February, and was this the first or was there some other article in June that raised the concern of the World Bank at that time?
Hon. D. Miller: The involvement of the World Bank, at least in a public way, predated June. In fact, I was particularly troubled, as the minister who was appointed to head up Hydro, by the kind of contradictory statements made in the newspaper by various spokespeople for the World Bank. There appeared to be -- in fact, there was -- outright contradiction between what someone in London was saying versus someone in Washington. I concluded all of that exercise with a letter from the Royal Bank that gave me a great deal of comfort. It simply said that the project was sound and we should proceed, and they obviously were going to be investors in the project.
In fact, the project is one of a series that arose because of activities of the IMF, the International Monetary Fund, in assisting Pakistan, which has had a very turbulent political history, to modernize their economy. Part of that process is the development of various electrical generation projects in Pakistan, so that, in terms of their primary export being cotton, they can essentially look at adding value prior to export.
It really is a long history: the whole issue of Pakistan, its condition, its turbulent political history and attempts by these world institutions, the IMF and the World Bank, to assist this country in modernizing and improving their conditions. Obviously this project was one of those. The project, as I have said repeatedly, is a very sound one, or appears to be a very sound one. It has many investors. Let us hope that, in fact, it is a success and will lead to the kind of improvements in that country that I think are highly desirable.
G. Farrell-Collins: I too hope that improvements take place in Pakistan and that they're able to increase their economic activity in a sustainable way that improves the standard of living of the people who live there. I'm sure that anything that B.C. Hydro can do in the form of technology is a role that we would like to play.
But all that aside, the minister stated that the World Bank is very familiar with Pakistan and is aware of projects through the IMF that take place there. As a result, you would think the World Bank would be familiar with the way business was done in Pakistan -- with this deal, with its operations. Therefore I would think that a call from the World Bank raising concerns about individuals who continue on the board of SEPCOL, the company managing this project, would be of concern. Can the minister tell us what the nature of those conversations were, what specific concerns were raised and if they asked whether Mr. Laxton could be removed from his position on SEPCOL?
Hon. D. Miller: Again, Mr. Chairman, I did attempt to give an answer to that question. It was generally around the kind of publicity that was being generated here in British Columbia, particularly -- I can't remember the exact date -- when the RCMP announced that they were pursuing a criminal investigation. But subsequent to that, the concern of the World Bank was: was that going to have an impact on our involvement in the project? The answer to that was no.
G. Farrell-Collins: So if I can get this straight, the World Bank phoned us to say: "Gee, we've heard about this stuff in the newspaper and about the RCMP investigation now. Is that going to affect B.C. Hydro's involvement in this deal?" Was that the nature of the conversation?
Hon. D. Miller: Again, going back to my previous answers, there were concerns raised about the kind of publicity that was being generated here in British Columbia about the Hydro affair. The World Bank had expressed their concern about that. We also -- I'm going back to the original discussion -- only acceded, in a passive way, to make no attempt to actually remove Mr. Laxton from the board of SEPCOL, pending the share offering in Pakistan -- which proved to be successful, I gather.
[4:30]
G. Farrell-Collins: I'm sorry, that wasn't my question. My question was: what was the nature of the conversation or the discussion that took place? The World Bank, my understanding is, picked up the phone, phoned B.C. Hydro and said: "We've heard about this RCMP investigation. What's going on?" Or, as the minister stated earlier, did they say: "Are you intending to continue with the project? That is, it doesn't bother us. But what's Hydro thinking?" Or was it: "We're not that concerned with what Hydro's thinking, but we've got to let you know we're not happy about this. We've got a problem with this RCMP investigation going on. We don't want Mr. Laxton sitting on the board"? Which of those was it? Or was it something in between?
Hon. D. Miller: I am advised that Mr. Smith phoned the World Bank, and I should have said that in the beginning. They discussed the issue of Mr. Laxton's involvement. I think it's fair to say, in summing that up, that there were obvious concerns registered by the World Bank, which we had as well. Notwithstanding that, the issue proceeded. Mr. Laxton remained on the board of SEPCOL, and the share offering went forward and was successful.
G. Farrell-Collins: I apologize if I didn't catch all the answer. There was a note sent to me by one of the minister's colleagues.
Was there an objection raised by the World Bank to Mr. Laxton continuing in his role as a director, board member and chair of SEPCOL?
Hon. D. Miller: I think I've characterized that objection, Mr. Chairman.
G. Farrell-Collins: I didn't hear it if the minister did. This has changed; my understanding now is that Mr. Smith, the chair of B.C. Hydro, picked up the phone and talked to the World Bank first. Is that correct, or did the World Bank contact B.C. Hydro first?
Hon. D. Miller: Mr. Smith phoned the World Bank.
G. Farrell-Collins: Can the minister tell us what caused Mr. Smith to pick up the phone and talk to the World Bank?
Hon. D. Miller: There had been a history, as I indicated in one of my previous answers, of conflicting statements made by the World Bank. There had been ongoing communication, obviously, with the World Bank on this question. Mr. Smith was concerned about the latest issue of the RCMP investigation, and therefore, in keeping with the mandate of B.C.
[ Page 1460 ]
Hydro to move forward to ensure that this project was successful, he communicated with the World Bank.
G. Farrell-Collins: Correct me if I'm wrong, but I thought I heard the chair of B.C. Hydro say in a media scrum in the corridor earlier that the World Bank had approached the staff of B.C. Hydro. Is that correct?
Hon. D. Miller: Yes.
G. Farrell-Collins: Perhaps the minister can clarify for me which it was. Did the World Bank approach the staff of B.C. Hydro first, or did the chair of B.C. Hydro pick up the phone and call the World Bank first?
Hon. D. Miller: I can't really follow the line of questioning. There were communications with the World Bank. We have said that; Mr. Smith has said that. There were concerns expressed; we had concerns, obviously, about this project and the kind of adverse publicity being generated here in British Columbia. The board's responsibility, and Hydro's responsibility, was to try to ensure that this project succeeded. We took what steps we thought were prudent in order for that to happen, notwithstanding any discussion or communication with the World Bank or anybody else. That's what took place, culminating in the public offering in Pakistan, which, as I've said repeatedly, appears to be successful.
G. Farrell-Collins: I don't know why the line of questioning is that difficult to follow. The question is simple. I've heard two different answers from the minister to the question. The minister said first of all that it was the chair of B.C. Hydro who approached the World Bank first. The minister has also told me that staff at B.C. Hydro was approached by the World Bank first. Can the minister tell me if both of those events occurred and which one occurred first? I'd be glad to repeat the question if the minister didn't hear it.
Hon. D. Miller: There was a story in the June 22 issue of the Vancouver Sun with the headline: "World Bank Puts Hold on Hydro Pending Probe." The story opens by saying: "The World Bank says it won't release any money to B.C. Hydro International Ltd. for its controversial Pakistani power project until the RCMP investigation into the project's financing is completed."
Mr. Smith, based on that -- and I didn't indicate which particular article -- contacted the World Bank. There was a discussion about Mr. Laxton remaining, but at that time, I would suggest, it was rather a moot point in terms of the sequence of the timing, because the offering was on the market. There's nothing to indicate at all that the World Bank will not be moving forward to flow the funds they've agreed to as part of this larger strategy in trying to assist this country in terms of modernization.
G. Farrell-Collins: I'll ask my question for the third time, hoping that I'll get an answer to it. Did Mr. Smith contact the World Bank of his own initiative first, or did the staff of the World Bank, or somebody at the World Bank, phone the staff of B.C. Hydro first?
Hon. D. Miller: Mr. Smith phoned them.
G. Farrell-Collins: So Mr. Smith read the article in the newspaper and said: "This is something that I should get on to and talk to the World Bank about." At the time he spoke to the people at the World Bank, the minister says there was some discussion about the role of Mr. Laxton in his capacity with regard to SEPCOL. Can the minister tell us what the nature of that communication was?
Hon. D. Miller: Mr. Chairman, I've tried to characterize the discussions that took place, and I've answered that.
G. Farrell-Collins: The minister hasn't answered that question, because it's the first time I've asked it. Can the minister tell me what the nature of the communication was, and what were the concerns by the World Bank about Mr. Laxton continuing in his capacity at SEPCOL?
Hon. D. Miller: I've indicated that the chairman of B.C. Hydro phoned as a result of the newspaper article I cited, which said that they would not advance funds. That was the thing that really sparked the conversation. Obviously, as I've said, their concern -- everyone's concern -- was whether the RCMP investigation would have any impact on the ability of Hydro to fulfil its obligation on the project.
G. Farrell-Collins: I'll raise my question again, and I'll wait until the minister is paying attention before I ask it. Can the minister tell me what the nature of the conversation was that took place when the chair of B.C. Hydro, Mr. Smith, phoned the World Bank to talk about the June 22 article? It's been stated by the minister today that there were some conversations and some concern was raised at that time by the World Bank about Mr. Laxton's continuing role with SEPCOL. Can the minister tell me what the nature of that concern was, with regard to Mr. Laxton specifically?
Hon. D. Miller: I've done that; I think I've touched on the salient issues. The newspaper article in B.C. said that Mr. Laxton was being investigated -- and others, presumably; I don't know what they're doing -- by the RCMP. There was an article here that said the World Bank would not advance funds. Mr. Smith contacted the World Bank about that. They had registered their concern, I presume -- I don't know the exact language -- about Mr. Laxton and the RCMP investigation and whether that would have a negative impact on the ability of the project, the various stages of the project, to move forward.
G. Farrell-Collins: Can the minister tell me whether or not the concerns raised with regard to Mr. Laxton were just that there was a criminal investigation going on with regard to the project? Or did they raise concerns about Mr. Laxton continuing in his role at SEPCOL? Those are two different things. The first one is -- and this is the World Bank talking now: "There is a criminal investigation going on here; we're concerned about that. Is that going to affect your ability" -- i.e., B.C. Hydro's -- "to proceed with the project?"
Or was the nature of the conversation that: "We hear there's an RCMP investigation going on there. We have concerns at the World Bank that this project be ongoing and that we'd be advancing you funds while there's a criminal investigation taking place"? Or was it of the nature that: "We hear there's an RCMP investigation going on into Mr. Laxton, and we don't want Mr. Laxton to continue to be involved in this project"? There are three options. Can the minister tell me which of those it was, or was there something other than those three?
Hon. D. Miller: There was a telephone conversation. There was a general conversation, as I indicated, about this
[ Page 1461 ]
article, about Mr. Laxton, and I believe there were subsequent communications about Mr. Laxton remaining on SEPCOL. But I don't have any firm dates on those communications.
G. Farrell-Collins: That makes it a little easier; that's where I'm headed. There were subsequent communications to the one where Mr. Smith phoned the World Bank directly, and in those discussions the issue was raised about Mr. Laxton, in particular, remaining active in SEPCOL. Was that discussion initiated by Mr. Smith also or by the World Bank?
Hon. D. Miller: Mr. Chair, I just passed you a note which indicated that others outside this chamber have been talking about what is going on here, and I'm advised that there is an all-party agreement. I don't know if we require a motion or not in order for Mr. Smith to respond directly to questions, but I'll take your advice with respect to any motions that may be required. Or can we simply...?
The Chair: Thank you, minister. There is no motion required. The Chair is in the hands of the committee. It appears that members of this committee and, more importantly, members of the House who conferred the present terms of reference upon this committee have agreed to permit the minister to delegate responses to the chair of B.C. Hydro. Just a reminder to the members that questions are addressed to the minister, and he can defer them if he chooses.
G. Farrell-Collins: I guess that's by leave; that's really, I guess, the way we can do it. That's fine. Perhaps this will move along a little more quickly.
I guess we've set aside the first conversation that took place between the chair of B.C. Hydro and the World Bank at the initiative of the chair of B.C. Hydro. That was with regard to seeking assurance from the World Bank that they were not about to pull out their funding due to the ongoing criminal investigation. Can the chair advise us whether or not that assurance was received from the World Bank -- that, in fact, they were not intending to pull their funding from the deal as a result of the criminal investigation?
B. Smith: Yes, that's right. They indicated that they weren't going to pull their funding. They did have concerns about the story of the criminal investigation, as I did. I thought it might jeopardize the advancing of the funds. I explained to them what was involved in the criminal investigation -- that it could go on a month, a year, two years. It could result in charges; it could result in no charges; or nobody could be told that it was over. I said that we were staying with the project in the face of that, and they said that they would. They were going to advance their funding, and we had that assurance from them. We had that at the staff level, but the division head told me that there was no question of the funding; they were going to advance it. That was my concern; that's why I made the call. I didn't make the call because of Mr. Laxton; I made the call for that reason.
G. Farrell-Collins: Subsequently, there was a series of -- or at least some -- communications between the World Bank and B.C. Hydro in some capacity, with regard to Mr. Laxton remaining on the board. Can the minister or the chair advise us of the nature of that communication? What was discussed, and who was discussing that issue?
Hon. D. Miller: I'd ask Mr. Smith to respond.
[4:45]
B. Smith: After that phone call, the World Bank did contact me, and after the discussion, they raised the question of the continuation of Mr. Laxton and the necessity for that. That presumably came from reviewing a due diligence report that showed that Laxton was still a director of SEPCOL. They wanted to know why the continuation of that was necessary and also what B.C. Hydro was doing with respect to the purchase of the balance of the IPC shares, because we did not have control of IPC.
Following that concern being raised with me, after my initial phone call, I told the World Bank where we sat with the IPC shareholding and also that Laxton had already indicated to me that he was going to step down as a director of SEPCOL. Following that, I responded to Laxton's letter formally. I probably wouldn't have responded to it at all, but I responded to it to make sure that I had asked him in writing to carry out the intention he had expressed, and that was to resign his positions in SEPCOL.
G. Farrell-Collins: Have we received Mr. Laxton's resignation from the board of SEPCOL at this date?
Hon. D. Miller: I understand we have, Mr. Chairman.
G. Farrell-Collins: Can the minister tell us when?
Hon. D. Miller: Within the last number of days; it might have been Friday of last week.
G. Farrell-Collins: So we have Mr. Laxton's resignation as of Friday, August 2. Can the minister tell us who is intended to replace Mr. Laxton on the board of SEPCOL?
Hon. D. Miller: No, Mr. Chairman.
G. Farrell-Collins: Is Mr. Laxton's seat considered a seat that's controlled -- through a circuitous manner -- by B.C. Hydro, IPC or both together? To whom does that seat on the board nominally belong?
Hon. D. Miller: BCHI Power is the company; it's not Hydro. I think I've gone through that at some length previously, in terms of the 60-40 split on IPC and BCHI Power.
G. Farrell-Collins: Is there some name coming forward? Is there some agreement? Are we even talking to our partners in BCHI Power, or is this seat going to remain vacant for the foreseeable future?
Hon. D. Miller: There have been preliminary discussions, and there will be more.
G. Farrell-Collins: Thank you. I'll come back to that in a few moments.
I want to ask a few questions in a slightly different vein. I've heard different answers with regard to how much, if any, of the IPC shares have been sold to B.C. Hydro. The minister informed us that a beneficial ownership agreement -- or something to that effect; I don't remember the legal term -- was in existence for about 45 percent of the shares of IPC. I heard in the corridor earlier the chair of the Crown say that, in fact, 45 percent of them -- and he used these words -- had been sold to B.C. Hydro. Can the minister advise us whether or not any shares have actually transferred ownership between IPC and B.C. Hydro International?
[ Page 1462 ]
Hon. D. Miller: I think I indicated in answers last week that none had, and I think I used the percentage of around 43. Perhaps Mr. Smith can also elaborate on this.
B. Smith: There are some different figures, hon. member, but actual ownership and beneficial ownership are a little different in percentages. That's because, since this lawsuit was started, we weren't able to conclude some of it. Actual ownership is at 33.05 percent and beneficial ownership is at 43.8 percent, and that included the Nico shares, which are to be transferred when the legal dispute is concluded. Those 500 would bring us up to 43.38 percent. We have an agreement to transfer, as well, 115,000 shares in Finrose, which would bring us up to 45.76 percent, but that's been held up because of the court case. With Finrose and Nico, we'd be up at 45.76 percent, so we still have to get to 50 percent plus one for control.
G. Farrell-Collins: I just want to be clear, then. Can the chair confirm that 33.05 percent has actually been transferred to B.C. Hydro? The 33.05 percent is the actual ownership that B.C. Hydro has over those IPC shares. Is that correct?
Hon. D. Miller: Mr. Smith will clarify that last point.
B. Smith: They can't be transferred until the lawsuit is settled, but the agreements have all been made. As I understand it, we have paid money to their shareholders. That is not the case with the Nico shares; that transfer hasn't taken place. But the other shares, the 33.05 percent subject to the lawsuit, have actually been sold and the money has been paid.
G. Farrell-Collins: Has that money been paid to those individuals or has it been paid in trust? Can the minister or someone tell us how much was paid for those shares in relation to the $1 (U.S.) value they paid originally?
Hon. D. Miller: It was $1 (U.S.) per share to the individuals, and they in turn have given their commitment to make their efforts to have the shares transferred.
G. Farrell-Collins: So if I understand that correctly then, there are actually 33.05 percent of the shares for which we have an agreement. Essentially, they've been sold pending the court case, which I suppose could overturn that, and the money has been paid directly to the individuals, not paid in trust. There are obviously going to be some legal costs surrounding all that with regard to the transfer. Those legal costs, I assume, are being borne by B.C. Hydro. Is that correct?
Hon. D. Miller: Staff advise me that there are no outstanding legal costs with respect to the transfers. I should also register a caution that there is potential for a court case with respect to this whole business.
G. Farrell-Collins: I'm being very careful, as I have throughout these debates, with regard to any court cases that are or may be pending, and I intend to continue to do so.
Can the minister tell us who structured that buyback? Was the legal advice for structuring that buyback done in-house at B.C. Hydro? Or was that done with outside counsel?
Hon. D. Miller: There was both internal and external advice to Hydro.
G. Farrell-Collins: Can the minister tell us who the external counsel was?
Hon. D. Miller: Both Blake Cassels and Farris Vaughn, I'm advised.
G. Farrell-Collins: For Blake Cassels, would that have been Ms. Stewart again, who has done work for B.C. Hydro in the past?
Hon. D. Miller: I'll take your advice, Mr. Chairman. Again, I'm not sure that the line of questioning is relevant here. There's a variety of advice obtained by legal counsel from those firms. I assume that someone from the firm offering advice operates from the firm.
G. Farrell-Collins: I make the same assumption, and I would expect the minister to do so, also. The reason I'm asking is that there are individuals referred to in Mr. Smith's report who have been used on several occasions by the government for legal advice on this deal, and I just want to determine whether or not we were using these same people. I think it's a degree of detail and relevancy that was included in the report, and that's why I was seeking that information. It was not for any nefarious reason but just to determine who the players are that we're dealing with.
Hon. D. Miller: Again, a variety of lawyers from these firms provided advice on the questions that were germane at the time. We're talking now about the mandate of Hydro to try to buy back the shares. That obviously was one of the issues that sparked this business in the first place. There was an allegation that the shares were somehow offered, as I believe the quote in the Liberal release stated, only to NDP friends and insiders. That
An Hon. Member: Hydro insiders.
Hon. D. Miller: Or Hydro friends and insiders -- regardless. That and subsequent
G. Farrell-Collins: I know that's been a spin that the NDP put on this. The actual quote was "NDP friends, B.C. Hydro insiders and others" -- just for the benefit of the minister. No one ever insinuated that the only people this deal was offered to were NDP friends and B.C. Hydro insiders, but certainly they were representative of the shareholders in a far larger proportion than they exist as a population of British Columbia. I think the minister would probably agree with me on that one.
Interjection.
G. Farrell-Collins: My question to
Hon. D. Miller: People with money?
The Chair: Through the Chair, please.
G. Farrell-Collins: Maybe you could look at the minister when you say that.
[ Page 1463 ]
My question to the minister is: have we determined yet -- the minister hadn't earlier in this debate...? Has the minister or the government or Hydro determined yet who owns the Pathfinder shares?
Hon. D. Miller: I'll ask Mr. Smith to respond to that.
B. Smith: Ali Mahmood of Pakistan.
G. Farrell-Collins: Can the minister or the chair advise us whether or not those 300,000 Pathfinder shares, owned by Mr. Ali Mahmood, are contained in either the 33.05 percent of the 43.8 percent or the 45.76 percent?
Hon. D. Miller: I'll ask Mr. Smith to respond.
B. Smith: No, they're contained in none of those percentages. They have not been sold. We have not bought those.
[5:00]
G. Farrell-Collins: Can the minister or the chair advise us whether or not the same offer was made to Mr. Ali Mahmood, the sole shareholder of the 300,000 Pathfinder shares, as was made to the other individuals in this deal?
Hon. D. Miller: Mr. Smith will respond. But Mr. Chairman, just for the record, the Liberal press release of February 21 reads specifically: "Special Deal for NDP Friends and B.C. Hydro Insiders." I guess they forgot "the others" in the bold type.
B. Smith: The offer was made to everybody following the purchase of Mr. Laxton's and his family's shares. Exactly the same offer was made to all; that is, that we would buy the shares back at the price paid. So that, of course, included Pathfinder and every other shareholder.
G. Farrell-Collins: Can the minister or the chair advise us whether or not there has been written or verbal correspondence with Mr. Ali Mahmood regarding the potential transfer of those shares, other than the one offer that was made to all shareholders of IPC? Is this something that's been going on back and forth? Are there negotiations, or have we just been told in an outright manner that no, he's not interested, thank you very much?
Hon. D. Miller: I'll ask Mr. Smith to respond.
B. Smith: Apparently Mr. Mahmood decided not to sell his shares; he had discussions with our staff about that and decided not to, at that particular stage. So we never had an agreement from him to buy his shares.
G. Farrell-Collins: So Mr. Mahmood has -- as far as we know, anyway -- 300,000 shares of IPC, held by him through Pathfinder Enterprises. Mr. Mahmood has a good chunk of shares in this deal, in Pakistan itself -- through SEPCOL, through his various companies there. Have we been able to determine why Mr. Mahmood determined that he would spend $300,000 and buy shares in IPC when he already held shares in a whole bunch of other companies which were involved directly in Pakistan with SEPCOL?
Hon. D. Miller: I'll ask Mr. Smith to respond.
B. Smith: I must apologize. I didn't hear all your question, but these shares were received as a fee, apparently. The IPC shares were given to him in lieu of a fee. He did not pay money for them, as far as the review team was able to ascertain. But they were allegedly part of a service rendered, so there was no money within the books of IPC for those shares.
G. Farrell-Collins: So the 300,000 shares of Pathfinder, which in turn were invested in IPC at a value of $1 (U.S.) each, were in fact a payment to Mr. Mahmood for some services rendered. In the offering memorandum, there are comments with regard to $300,000 being paid to an account in the Cayman Islands, if I'm correct, for past services and risks rendered, or something to that effect. Can the minister or the chair advise us if that's the $300,000 we're talking about?
Hon. D. Miller: The issue under discussion has been summarized on page 99 of the B.C. Hydro-IPC Review: Interim Report, and I understand we don't have a copy of the offering memorandum. We're just looking for it.
Just in the interests of time, I don't know if the member has a page reference for the offering memorandum that he
G. Farrell-Collins: That's fine. It's in there, I'm sure. You can keep looking. I can't remember the exact page number myself. I'd have to go through it just as you are to find it, and I'm glad to do that, but this meeting comes to an abrupt halt if we stop asking questions. I'll keep moving in that area, and I suppose you'll be able to find it. Otherwise, I'd be glad to take the time to find it myself if that's more convenient.
The $300,000 was an expense listed by BCHI Power in the Raiwind project. It was listed as an expense, and the $300,000 was paid, to my understanding, into a Cayman Islands bank account. At the time, we didn't know who that was. I suppose the chair has determined, in the time between when he was appointed and April 23, who that was paid to. There seems to have been a subsequent agreement, some time between when that money was paid and when this report came out, that essentially kicked that $300,000 over into a share holding of 300,000 shares.
I guess my question would be, then, looking at that and looking at Mr. Mahmood's position
I'm finding it difficult to determine which this is. My understanding from the offering memorandum was that it was $300,000 (U.S.) that was paid in, and then there was an agreement to flip those over into $300,000 worth of shares, or 300,000 shares at a dollar each. I was informed earlier that in fact there was no money paid, that it was really just in the form of shares. It is important to determine which of those is the case, because if it were the first, then obviously, if we were to buy back these shares, they do have a value of $1 (U.S.) each. There was in fact some transaction that took place. Otherwise, we are speculating that they're worth a dollar each, because Mr. Mahmood actually put in no actual money of his own; rather, he put in services. Can the minister or the chair tell us which of those it is?
Hon. D. Miller: I'd ask Mr. Smith to respond.
B. Smith: Well, it was the then chair of Hydro who made this arrangement with Mr. Mahmood, which we reviewed and
[ Page 1464 ]
which is in the review report, so I can't tell you any more about it. Your conclusion that if he had taken up the offer to sell his shares, he would have been enriched by that amount of money, is correct. But he didn't take up the offer, and we didn't have to pay him that money.
G. Farrell-Collins: Can the minister tell us, or can the chair tell us, if anyone other than Mr. Mahmood raised the issue of Mr. Laxton having to stay on as the chair of SEPCOL in the intervening period? Were there others, other than Mr. Mahmood, who raised that, and if so who were they?
Hon. D. Miller: I'd ask Mr. Smith to respond.
B. Smith: It was raised, hon. member, by the IPC officers that controlled IPC. They wanted him to stay on as well -- that is, the ones that have control of IPC now, the majority of IPC.
G. Farrell-Collins: We have been told over the last little while that there's a law that exists in Pakistan that disallows any change of directors of a corporation whilst an offering is in process. Can the minister or the chair tell us whether that is in fact the case or whether that was misinformation?
Hon. D. Miller: I don't know what the source of the information was, so I can't comment on that. I prefer to wait till legal counsel comes back to give an answer to that. That was my understanding, but let's wait till legal counsel gets back.
G. Farrell-Collins: Can the minister or the chair tell us if either the people in Pakistan or the IPC comptrollers requested or made clear that there was any other individual who was essential for the success of this project? Or was it strictly Mr. Laxton?
Hon. D. Miller: I don't quite follow the question, Mr. Chairman.
G. Farrell-Collins: Controlling members, controlling individuals of IPC, and Mr. Ali Mahmood, both or collectively, stated that it was essential that Mr. Laxton continue on in his capacity with SEPCOL in order for this project to be successful. Can the minister tell us if there was any other person whom they felt was also essential and was therefore requested to stay on in their position at SEPCOL?
Hon. D. Miller: Really, the only reason Mr. Laxton came up in the context that we have been discussing over the last number of days is because of activities that happened here in British Columbia. There was simply no occasion for others to be discussed. No one else was being investigated, etc. I assume that Mr. Ridley is a key person on this project, but I don't know -- nobody has advised me to the contrary -- that there were any
G. Farrell-Collins: Logic would also dictate that Mr. Sheehan fell within that category, in that Mr. Sheehan was a member of the SEPCOL board. He did sit
Interjection.
G. Farrell-Collins: Well, the report is there. I suggest the minister look at it.
Mr. Sheehan was a member of the SEPCOL board, a member of a number of boards. Was there any representation made to B.C. Hydro by the IPC comptrollers or by Mr. Ali Mahmood that Mr. Sheehan continue in his capacity on those boards?
Hon. D. Miller: No.
G. Farrell-Collins: I guess my question becomes,
Hon. D. Miller: We have been advised that that is the case, but we are taking further steps to confirm that with Pakistan itself, and have not at this point.
[5:15]
G. Farrell-Collins: Can the minister tell us who advised him of that law?
Hon. D. Miller: I'll ask Mr. Smith to respond. But I don't know, again with respect to the line of questioning, that I have used that argument
Interjection.
Hon. D. Miller: No, I didn't. I have said that the request was that Mr. Laxton remain because of -- and I got great gales of laughter from the other side -- the stability that he represented in Pakistan, and it was felt by the Pakistani partners that that was important to the success of the share offering. That was, I think, confirmed by various lines of communication, or a letter from Mr. Laxton to Mr. Smith. The rationale that we've used consistently in this discussion has been that this project, which I described earlier as being important in terms of the modernization that is going on in Pakistan, is important. With all the turmoil that existed here in British Columbia around this project, the mandate given to Hydro was to do what was necessary in a businesslike way to ensure that it did succeed. We agreed to accede it in a passive way, not to try to actively remove Mr. Laxton from the board of SEPCOL. We can get into whether that was our legal requirement once the share offering was put forward in a public way. My answer is that at this point, we haven't confirmed that.
G. Farrell-Collins: I am pretty sure the minister
Hon. D. Miller: I guess I forgot to read the paper on the weekend. In the Vancouver Sun on Friday -- I assume this is
[ Page 1465 ]
the weekend paper -- there is a quote that says: "The World Bank official confirmed that Pakistani law does not allow for changes to the board of directors once a public share offering has been made."
Mr. Chairman, I should retain my place, given that I'd talked about some conflicting statements that were made previously by the World Bank with respect to this. I still want to have legal counsel satisfy me as to whether or not this is the case.
G. Farrell-Collins: That's a good idea. But I don't believe that the story originated with the World Bank, and I think that if the minister reads the article -- although I'm always cautious, too, of taking facts from print, from the
If that law exists and that was the rationale, then why would Mr. Laxton not have been removed from the chair or from his position at SEPCOL, yet Mr. Sheehan was? Indeed, I believe that the minister told us that there had been people appointed to the board -- Mr.
Hon. D. Miller: Again, my advice is that Mr. Sheehan departed prior to the share offer being issued, and assuming the law is there that says there can't be any change, he was gone before the offering. Mr. Laxton didn't leave. I gather that nobody asked for Mr. Sheehan to be retained. This has never come up in any conversations I've had.
G. Farrell-Collins: Can the minister tell us when B.C. Hydro was approached by Mr. Mahmood and the controlling interests of IPC to request that Mr. Laxton continue in his capacity, for stability reasons?
Hon. D. Miller: Shortly following the issue becoming a public issue here in British Columbia -- late February, early March.
G. Farrell-Collins: So in late February or early March, Mr. Mahmood and the controlling interest at IPC approached the government and made their plea that it was important that Mr. Laxton continue in his capacity on the SEPCOL board for reasons of stability. They did not raise the issue of whether or not Mr. Sheehan should continue in his capacity on the SEPCOL board at any time. Is that correct?
Hon. D. Miller: Generally speaking, there does not appear to have been any discussion with respect to Mr. Sheehan staying.
G. Farrell-Collins: I understand that the first opportunity for the government to interview or discuss this with Mr. Mahmood for the purposes of the Smith report was probably June 3 and 4 of this year, when he came to Vancouver. I find it interesting that there was no opportunity for Mr. Smith to interview Mr. Mahmood for his report, which came out on April 23, but in that period of time there was opportunity for Mr. Mahmood to talk to us about keeping Mr. Laxton on the board. It would seem to me that if we were being sympathetic to Mr. Mahmood and offering to accede to his wishes, "without enthusiasm" -- if I can quote -- to keep Mr. Laxton on the board, Mr. Mahmood would have then been available in some capacity, even over the phone, for an interview to help us along with the interim report.
Can the minister -- or perhaps the chair -- tell us more precisely when Mr. Mahmood requested that B.C. Hydro continue to have Mr. Laxton, in the long term, remain on the board? Was it within a few days after this issue became public? Was it within two months, two weeks? It is important to know the time frame for that.
Hon. D. Miller: Mr. Chairman, I'm going to ask Mr. Smith to answer that question, but I also want to raise the issue of just what it is we're engaged in and where people think we might be going. We've sat here now for a number of hours and listened to a series of questions which appear to not lead anywhere in particular; rather, they are about who spoke to whom and all the rest of it. With all due respect, there has to be some indication of where people want to go or some indication of conclusion. We are not here to simply answer any question that might pop into any member's head without it having some broader connection with respect to these estimates. We have tried to respond to questions. We have said right from the very beginning that he was left there for a particular purpose. It was a business reason; it was important for Hydro's reputation; it was important for the shareholders that this project be successful. That is one of the mandates of B.C. Hydro. In order achieve it, B.C. Hydro is pursuing exactly the right course.
B. Smith: The review team has sought repeatedly to interview Mr. Mahmood, and he has not presented himself for an interview. But we sent him some concerns in question form, and we understood that he was going to respond to them. He has not responded to them yet. We will still be seeking responses to those concerns. I'm not holding on to my hat that we're going to get them. He has not been interviewed, either here or in Pakistan, and has declined to be interviewed.
G. Farrell-Collins: That's exactly my point. Mr. Mahmood has been uncooperative and evasive from day one. He has engaged in some sort of deal -- a share swap for past services rendered -- for $300,000 and now owns shares in IPC. He has not been cooperative in transferring those shares to the government. He has not been helpful in trying to bring this thing to a resolution. He has not made himself available for discussion, consultation or an interview. As we've just heard from the chair of B.C. Hydro, he has not responded to written questions. Why the heck would we allow Mr. Mahmood to casually pick up the phone, talk to us and say: "Oh, by the way, I would like my lying friend, Mr. Laxton, to continue to represent B.C. Hydro and SEPCOL"? And we said: "Okay." What rationale could we possibly have for acceding to Mr. Mahmood's wish that Mr. Laxton remain as B.C. Hydro's representative on SEPCOL?
Hon. D. Miller: That's political rhetoric.
G. Farrell-Collins: It's not political rhetoric, Mr. Minister. This is the nub of the issue. We have
[ Page 1466 ]
and the very fact that the chair of B.C. Hydro at the time was playing his own game, wasn't talking to or telling people, was ignoring advice, went about his way and didn't inform the minister responsible at the time about this whole deal, and despite the chastisement that's contained in the Smith report, we now have the current chair of B.C. Hydro engaging in negotiations and discussions with a man, Mr. Ali Mahmood, who has been far less than cooperative at any stage of the debate in this whole process. He hasn't made himself available. He hasn't shed himself of his 300,000 shares. He hasn't been cooperative at any stage of the deal. Yet the current chair of B.C. Hydro thinks it's fine to say: "Sure, Ali, if you'd like Mr. Laxton to stay on, we're
Why do we take the word of Mr. Mahmood that Mr. Laxton is essential to this deal? We certainly can't take the word of Mr. Laxton. He has proven himself to be less than truthful on occasion after occasion. Now we've got Mr. Mahmood, who has not been cooperative at any stage of the process, telling us who it is we need to keep on the SEPCOL board. Why on earth would we allow that to happen? That's the point I'm getting to. Why is it that we would let that happen and not follow the very advice that's contained in the Smith report to keep the minister informed? More importantly, why would the new minister responsible, after having read the Smith report, not be asking the types of questions that the former minister should have been asking about this deal as it went on? Through this debate over the last few weeks, it appears to me that the current minister doesn't have a clue what's going on at B.C. Hydro right now with regard to the Raiwind project.
[5:30]
Isn't he involved in keeping on top of things? We've already heard in these estimates that absolutely nobody at B.C. Hydro was supervising Mr. Laxton in any capacity whatsoever. He was allowed to continue on in his position at SEPCOL. We have also been told that somehow -- we're still checking, and we'll pull it out of here -- there was a law in place in Pakistan that required Mr. Laxton to stay on, but there was no law that required Mr. Sheehan to stay on. The facts that are coming out -- facts that are coming forward like drawing out teeth in the painful fashion it is -- don't seem to jibe with the actions of the current chair and the current minister. It appears to me that we are engaged in exactly the same kind of lack of communication, breakdown in control and breakdown in leadership at B.C. Hydro as we were prior to February 22. Why on earth would we be allowing Mr. Mahmood to tell us who our representative should be on SEPCOL?
Hon. D. Miller: This is the third day now that we've heard the same questions repeated ad nauseam. We have heard, Mr. Chairman, the Liberals get away with, if you like, simply mentioning John Laxton with some indignation and assuming that everything else is wrong without once having put their finger on just what it is they don't like.
The fact is that I have said very clearly that Hydro had two responsibilities once this issue became public. Once it was revealed, in a press release which the Liberals are being coy
There were two issues that Hydro was faced with: (1) continuing the investigation into what went wrong with respect to that share offering and all of that -- and there's an interim report on that -- and (2)....
Interjections.
Hon. D. Miller: I don't know; I think the Liberals opposite take this rather lightly. It seems to me that they take it rather lightly -- as they take people's reputations lightly. I've heard them talk about people being liars in this room, but I don't know if any one of them has gone out in the corridor and said it.
G. Farrell-Collins: I'll do it right now, if you like.
Hon. D. Miller: Be my guest.
The other obligation, a serious one, that B.C. Hydro had -- both for the ratepayers, the owners of Hydro, and the shareholders of IPC -- was to take what steps were prudent to ensure that this $120 million development project in Pakistan was successful. There were various obligations of various partners in making sure that this project moved forward. One of those was a public share offering on the Karachi exchange.
We were simply asked and advised by our Pakistani partners not to take steps to remove Mr. Laxton -- use the language you want -- because Mr. Laxton was seen to be the person who had done a lot of work in terms of scouting the project and had formed the contacts. He was important for that share offering. We acquiesced in that fashion. Really, it's passive, because when it comes right down to it -- and that has been brought out as well -- we have about a 13.5 percent interest in SEPCOL directly and couldn't arbitrarily say that this person should be off.
That was a business decision. Like it or not like it, apply some moral standard or not apply some moral standard, it was a business decision that I think will result in the project moving forward to success and will allow B.C. Hydro, through BCHI Power, to play their role in terms of using the technical expertise of B.C. Hydro to manage this project and to see the kind of return that may be anticipated to a variety of people in British Columbia. I guess in some sense, most of all, looking at a country that has had a turbulent history and is trying to get back on its feet with the assistance of the World Bank, I see that project as contributing to that development possibly happening.
It was a business decision: nothing more, nothing less and nothing nefarious. In that respect, Mr. Chairman, I think it might be important to note that Mr. Smith is now in receipt of a letter from RBC Dominion Securities, dated August 6, from a Mr. Mark Cullen, vice-chairman and director.
Interjections.
Hon. D. Miller: The members seem to be mocking that -- I see the mocking looks and the chuckles on the faces of the Liberal members opposite. I don't know if they place any faith in advice received from Mr. Cullen and RBC Dominion Securities Inc. But we do, and I want to read this letter into the record:
[ Page 1467 ]
"As you know, RBC Dominion Securities Inc. was asked in March 1996 to provide financial advice to counsel for the B.C. Hydro and Power Authority, relating to the involvement of B.C. Hydro and B.C. Hydro International Ltd. in international power projects, including the Raiwind project, and the involvement of B.C. Hydro and BCHIL in BCHI Power Ltd., the joint venture with the International Power Corp.Mr. Chairman, I read that simply to reinforce what I have been saying from the very beginning about this issue. We have been exceedingly patient, listening to members opposite ask question after question after question, only to see the summation offered by my Liberal friend who got up and finally said: "This is the point: we don't like it." We knew that on Thursday, we knew it on Friday, and we knew it on Wednesday. All through the weekend they probably didn't like it. They don't like it today.
"Our advice was that B.C. Hydro and BCHIL protect their investment in the Raiwind project by maintaining at the local Pakistan level a businesslike approach with respect to the construction and financing of the project. We emphasized that BCHIL should continue to cooperate with BCHI Power Ltd. and local partners in Pakistan as represented on the board of directors of SEPCOL, the local project development company.
"At the time SEPCOL was commencing construction and was preparing to raise equity financing in the Pakistan public capital market. This financing was critical to the overall financial plans as a source of risk capital, and to fulfil a requirement for obtaining government approvals in Pakistan for a project of this type. Failure to complete the public issue was also an event of default under several of the loan agreements with lenders.
"BCHIL was advised by its partners in Pakistan that the success of the financing required stability in the corporate structure of SEPCOL, including the composition of its board of directors. We felt it particularly important that John Laxton remain as non-executive chair of SEPCOL during the period of the public offering, as an indication of stability to both the local partners and to the local capital market.
"We understand that the share issue has now been successfully completed and that the shares were listed for trading on July 23, 1996.
"Yours very truly,"Mark. L. Cullen, "Vice-Chairman and Director."
Mr. Chairman, it is a
G. Farrell-Collins: I found that letter very interesting, given the speed with which it arrived here today, having been written and faxed over here. I don't know if there's a time on the top of it, but it is dated today.
That's the
Hon. D. Miller: Do you want this to contribute to the debate?
G. Farrell-Collins: Hey, I'm glad to see it; I'm thrilled. I wish all information came as fast and furious as that did. We've been waiting for five months for documents from B.C. Hydro. We've been told that none of it is available to us, because the special prosecutor said that he doesn't want any information released. Yet it
Hon. D. Miller: On a point of order, Mr. Chairman, the member seems to be suggesting that in fact there is some question about whether or not we have been asked by the special prosecutor not to release documents. That is a fact. If the member thinks that's not a fact, then he should stand up and say it. Perhaps we can get
G. Farrell-Collins: Seeing as that wasn't a point of order, hon. C
Last week a letter from Mr. Laxton to the chair of B.C. Hydro was released, and then a letter from the chair of B.C. Hydro back to Mr. Laxton was released. It seems that whenever there's a piece of information that helps the government, away it comes -- you know, it arrives. If the minister thinks it helps the government, it arrives. But whenever there's information requested by the media or by the opposition or by third parties, it's: "Well, we can't. Sorry." I'm sure that that directive has been given; I just don't understand where this other stuff comes from.
Hon. D. Miller: You're not sure where?
G. Farrell-Collins: I don't understand
Hon. D. Miller: You don't know?
The Chair: Continue, member.
G. Farrell-Collins: I don't know where the other information comes from and why certain information is allowed to be made public but other information isn't; it seems to be at the whim of the minister. I guess I'm terribly confused as to the direction the special prosecutor gave the minister or B.C. Hydro. Maybe he can inform us why some information is excluded and other information isn't excluded from that direction. I'd be interested to know that.
Coming back to the document which arrived here just moments ago, hot off the fax machine, it talks
Can the minister tell us if there's anybody else in the whole world, anybody I haven't mentioned yet,
[ Page 1468 ]
who also advised the chair of B.C. Hydro that Mr. Laxton should continue? I know that with this government, we're often told: "Well, I was waiting for somebody to ask me the question." I have now asked the question: of all the six-billion-and-some people existing on planet Earth, is there anyone else the minister would like to inform us of now who has advised the chair of B.C. Hydro that Mr. Laxton should stay with the deal? Anybody at all; I don't care -- no boundaries, no borders, no continents, nothing. I'd like to know of anybody in the whole world we might know, between now and 6 o'clock, in case another fax comes through, and then we'll know that somebody else did. Can you tell us if anybody else advised him?
Hon. D. Miller: Part of the difficulty of trying to deal with this issue in a straightforward way is that you get the kind of crooked
To have this member distort that, in a mocking way, simply indicates that he's not listening and is set to do whatever he wants to do. He'll get up and make a speech on anything and twist it any way he thinks will serve his advantage. I think he's less interested in the truth than he is in politics.
G. Farrell-Collins: I'm trying to get the truth. I wasn't trained as a lawyer, so maybe I'm just really dumb at asking questions -- I don't know. Maybe what I should do is just keep asking questions for the next eight months, and eventually, maybe, I'll be smart enough to ask the question in just a slightly different way, and then I'll hit upon another fact. The minister is indignant now that, according to him -- we'll have to go back and check the facts; we'll have to go back and check the actual wording of the question in
Let me put it this way. Is there anybody else in the world who has advised, insisted, suggested, commented upon, the requirement of Mr. Laxton to stay, or the possibility of Mr. Laxton's staying, on the board of SEPCOL as our representative? Can the minister maybe tell me the exact wording of the question so that we can know what other letters he's got waiting to be faxed over here? Is there any other sort of question we should...? Does the minister understand what I'm trying to get at? Can he tell me: is there anybody else in the world -- anybody else -- who advised, or offered a suggestion to the current chair of B.C. Hydro on the advisability of Mr. Laxton staying as our representative on SEPCOL in Pakistan?
[5:45]
Hon. D. Miller: I did try to put the issue in some perspective. Obviously the member is unable to grasp it. I've answered the question.
G. Farrell-Collins: I'll take that as a no; that there's no one else, that there won't be any surprises coming flying through the door tomorrow when we ask questions. But I must say that the answers to our questions have been changing each and every day, and that's what encourages me that maybe at the end of this we're going to finally get to the truth. Maybe another week of this -- I don't
I have a fresh, brand-new question for the minister. Given that we were so well represented in Pakistan on the board of SEPCOL up until recently by the ever-competent and diligent public servant Mr. Laxton, and his vital support on our behalf there to ensure that the public interest was represented, can the minister tell us if anybody in B.C. Hydro has had the chance -- this is anybody at all who works for B.C. Hydro, is a chair of B.C. Hydro, is on the board of B.C. Hydro, works with B.C. Hydro, is a legal adviser to B.C. Hydro or is a consultant to B.C. Hydro...
F. Gingell: Or a subsidiary.
G. Farrell-Collins: ...or a subsidiary of B.C. Hydro...?
Thank you to the member for Delta South. Has anybody else got any tips on how we can make this question ironclad? I'd be glad to hear it.
Is there anybody else out there who is involved with B.C. Hydro in any way and who has actually seen the prospectus put forward in Pakistan with regard to the share offering that has taken place there?
Hon. D. Miller: BCHIL has a copy, and Mr. Ridley is on the board of SEPCOL and would be in the prospectus.
G. Farrell-Collins: Can that prospectus be made available to the public and the opposition?
[ Page 1469 ]
Hon. D. Miller: It's a public document. I see no reason why not.
G. Farrell-Collins: I am formally asking for a copy of that prospectus. Does the minister have any idea when it could be made available to the opposition and the public?
Hon. D. Miller: Not at this point.
G. Farrell-Collins: Could the minister turn around and ask his staff when they might be able to make it available to the public and the opposition?
Hon. D. Miller: I'll indeed do that, Mr. Chair, but right now I move the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:48 p.m.