[ Page 2957 ]

The House met at 2:07 p.m.

Prayers.

S. Hawkins: In the House today is a constituent of mine, Dr. Duane Zilm from Kelowna. He is recognized in North America as an expert on computerization in health care, and I ask the House to please make him welcome.

I. Waddell: This morning the members from Trail, Quilchena, Chilliwack and I met as part of the delegation of this assembly to the Pacific NorthWest Economic Region, which is an organization of two provinces and five states. We met with the executive director of PNWER. He's a Canadian, a former consul general to Seattle and a former Canadian ambassador. I'd like the House to welcome the executive director of PNWER, Roger Bull.

B. McKinnon: I would like the House to help me make welcome friends of mine from Coquitlam: Alice and Bill Selby.

G. Brewin: I have two groups that I'd like to introduce to the House today. First, Glenlyon-Norfolk, a school in my riding, is hosting some folks from Albertville, France, which, as everyone will remember, was the location of the '92 Winter Olympics. They are 21 grade 11 students. But here with us today are their host, Ms. Girard, and Ms. Rosset and M. Bouquallaba from Albertville, France.

C. Clark: Today we are joined again by another young British Columbian who is interested in ensuring that we protect education in this province. So he has joined the Young Liberals of British Columbia executive. His name is Tom Madden, and he is a student at the University of Victoria. I hope the House will make him welcome.

J. Doyle: I'm very pleased to have two constituents down from the Golden area. They actually live by Doyle Creek, just west of Golden. I'm speaking of Ann Sutton and Paul Leeson. They also run one of the very finest lodges in all of Canada and British Columbia. That's the Purcell Lodge in the mountains near Golden. Make them welcome.

G. Janssen: With us today is Mr. Wolfgang Vogt, a senior member of the German Bundestag, a former associated Minister of Labour and Social Affairs, chair of the government caucus on labour issues and a member of the all-party Committee on Labour and Social Affairs. Joining him is Wolfgang Zimmermann, executive director of the National Institute of Disability Management and a member of the Order of British Columbia. I ask the House to make them welcome.

Hon. C. Evans: I'm very pleased that we've been joined today by some folks, at my invitation, to witness what's going to happen next here. I'd like to introduce Dan Edwards of the West Coast Sustainability Association, Errol Sam of the village of Ahousat, Rose Davison from the Coastal Community Network, Ardyth Cooper from the Sooke nation, Lynn Hunter of the Pacific Salmon Alliance, and Don Mallard of the UFAWU. Would the House please make them welcome.

G. Brewin: The second group I want to introduce is a group of young people: 66 grade 6 students from the United States. In fact, they are from Canyon Creek School in Bothell, Washington, and are led by their teacher Ms. Zettner. Would the House please make them welcome.

Hon. C. Evans presented a message from His Honour the Administrator: a bill intituled Fisheries Renewal Act.

Hon. C. Evans: I move that the bill be introduced and read a first time now.

Hon. Speaker, this bill, the Fisheries Renewal Act, establishes an agency to undertake strategic initiatives for sustainable commercial and recreational fisheries in British Columbia.

This bill establishes an agency that will promote the conservation, protection and enhancement of the fisheries resource. It will make key investments in fisheries diversification and development. In addition, it will deliver skills training and opportunities to fishers, and aboriginal and non-aboriginal fishing communities will have assistance in planning long-term economic development strategies. Directors will represent all interests in the fishery and the diversity of the population, including regional fishery interests, first nations and various stakeholders, as well as federal and provincial government representatives.

The bill also complements the Canada-B.C. Agreement on the Management of Pacific Salmon Fishery Issues. The Fisheries Renewal Act demonstrates the province's commitment to fisheries renewal by going beyond commitments already made in the salmon agreement with the federal government.

Mr. Speaker, I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 19 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

G. Campbell: Hon. Speaker, all members of the House are concerned about children that are in the government's care. This week, again we have faced a tragic situation with regard to a newborn baby in the government's care. We know that from day one, the baby's aunt had requested custody of the child so that she could join her sister. Two days after the baby's birth, the government evidently apprehended the child. About two months after the birth, on April 23, a court order was issued that gave custody to the aunt.

My question to the Minister for Children and Families is simply this: why wasn't home study commenced as soon as the aunt requested custody of the child, so that the child could go to the family directly from hospital as soon as she was ready to be released from the hospital?

[2:15]

[ Page 2958 ]

Hon. P. Priddy: I am pleased, as always, to hear the Leader of the Opposition, or anyone in this House, confirm what we all know: that we are all concerned about children.

Let me put this home study into context for the Legislature, if I might, hon. Speaker, by giving you the history of the ministry's involvement as I know it at this time. The ministry was granted an interim custody order on March 13, 1997. At that time, I am told, we were aware that several members of the family were interested in caring for the child. We requested that a restricted home study -- which means a family member -- for one of the family members begin on March 26, in the event that there would be or might be a Family Relations Act application or that the child would be placed in our care on a temporary basis.

At the request of the family member, there was a short delay in beginning the home study, and before the process was completed, there was a Supreme Court decision which awarded custody to that family member.

It is important to understand that there's a difference between hearings around custody and hearings around the need for child protection. So on April 23, 1997, the ministry and the family returned to family court. At that time, as I understand it, there was an understanding that the child would continue to remain in the temporary custody of the ministry while the home study was completed. Our intention was to have the home study completed by the time there was a family court conference to settle both custody and protection decisions, which was scheduled for June 12.

I think it's also important to understand, hon. Speaker, that the circumstances around child protection cases and custody orders are as complex and unique as the individuals involved. I also understand that there's. . . .

The Speaker: Minister, I'm going to have to ask you to wrap it up. I think it was well. . . .

Hon. P. Priddy: Okay, I will wrap it up by saying that I know there's a lot of emotion around these issues -- as there should be. Within the bounds of confidentiality laws and the ability to pull information together as quickly as possible, I've tried to provide a comprehensive and accurate accounting.

G. Campbell: I appreciate the answer from the minister. I think it is important to note that I do think that she's trying to do this. There are a number of, I think, vexing questions that raise themselves every time something like this takes place.

Again, I would like to go back to this particular issue. The family has released to the opposition -- released to us -- a document that was prepared by the ministry. The document makes it very clear that the mother of this child has four children. All four of the mother's children are currently in the care of relatives. We understand that.

My question to the minister, though, remains: in view of the many problems that the ministry is facing and in view of the problems that the minister herself has identified with regard to foster care funding, with regard to foster care support, with regard to people who are willing to come forward and provide foster care to our children, why wouldn't the ministry immediately start, with regard to the family, to make sure that the home studies were done so that the child could be released to the aunt who was caring for the child's sister and was willing to care for the child -- so that the child could be released directly from hospital into the aunt's care?

Hon. P. Priddy: I want to repeat something that I said earlier -- not to sort of be repetitive. But our understanding when we began the home study was that there was not one but several family members who might be interested in having the child placed with them. So the information I have is not that there was one, but that there might be several family members who had made that indication. There had, at that stage, been no application under the Family Relations Act to have this child placed in their care.

M. Coell: Mr. Speaker, there was another child placed in the same foster home last July. The mother of this child says that she lodged a series of complaints with the ministry regarding the care of her son. Today the minister has said that there was a police investigation into this complaint. However, it appears that the police investigation consisted of a phone call to the social worker on this case.

To the minister: what did her ministry do to investigate these complaints?

Hon. P. Priddy: The information that I gave out this morning, I think, is perhaps a bit more extensive than that, so I want to add to that just a little bit. Yes, there is a family that has raised repeated allegations. There were actually two investigations: one by the RCMP and one by the local Victoria police. My understanding from the information I have is that the RCMP visited the hospital, interviewed pediatricians, interviewed physicians, interviewed nurses, talked to care providers, etc., before they made the decision that there was not substantiation either for criminal allegations or for a charge of abuse and neglect. So the information I have does not say that the police made one call to a social worker, but that they carried out an extensive investigation.

M. Coell: As the minister said, there wasn't just one complaint. There was a series of complaints. The mother of the boy apparently complained several times to social workers. Then her lawyer sent the ministry a series of letters. Can the minister tell us what happened in response to each of these complaints, by her ministry?

Hon. P. Priddy: I cannot provide that particular information to the House today. I'm certainly prepared to go back and look at that. But I do know that I have read in the press and heard others say that there was no response to that -- that there was no response either to the mother or to the lawyer. When I asked our staff to review the files just fairly quickly, we found at least a dozen responses from our ministry to the lawyer of the mother. We do know that the mother continues to have supervised -- because it's court-ordered by the judge -- access to her child.

G. Plant: When the tragedy surrounding Chabasco Flanders occurred some weeks ago, a memo from the Vancouver East social services manager advised: "We're in a very critical situation presently with our resource network."

It's clear that the foster care system is under pressure and that its resources are stretched. British Columbians know that there are no quick fixes here. But the question is: are we making progress? My question for the Minister for Children and Families is this: what can she tell us about the specific, concrete actions that she's taken in the last few months to deal with problems in foster care?

Hon. P. Priddy: I think the question is an important one. Let me list three or four of those. And let me also say that I asked the same questions. I also wanted to know: what is the state of foster parenting, and are we gaining or losing foster parents?

[ Page 2959 ]

That's a very hard job. I don't know how many people in this House have done it; I have not. But it is very hard to do.

In the last two years there has been a 30 percent increase in the number of people fostering in British Columbia -- the number of foster parents. That has come about by actually reaching out and recruiting foster parents. There is a new guidebook that we have done with the British Columbia Federation of Foster Parent Associations. It's an orientation handbook. As well, there are new guidelines for standards in foster homes. Those are all new initiatives. They will continue and we will find more.

G. Plant: I think all members are engaged with the minister in the effort of attempting to solve this problem. The question is always to move beyond general assurances to specific initiatives, and it's good to hear that there are some.

The question is: what more can be done? What more can we in this House do, what more can the minister do, and what more can British Columbians do to address this critical problem with foster care?

Hon. P. Priddy: Well, not wishing to assume I have a quick answer for that. . . . I'm actually very grateful for the sort of collectiveness of "what can we all do?" because I think we should look at that.

I think one of the things I would do as I stand here -- because these are very difficult situations for foster parents in British Columbia when this particular kind of story or circumstance is in the media -- is say to foster parents: "We are so grateful for the skill and the compassion that you bring to the jobs that you do." As I say, it is not an easy job, and I think to even recognize that is extremely important.

One of the things. . . . And I appreciate, again, the question, because the member referred to the memo at the time of the Mavis Flanders case. That was very much about the need for aboriginal foster homes, particularly in the downtown east side. We have made very specific initiatives with aboriginal organizations and with social work organizations, and we are actually calling on individual people and individual families to encourage aboriginal people to also be foster families. That is the memo you referred to in the first place.

But I think we could have a collective discussion, and I hope we do.

G. Farrell-Collins: I'd like to return for a moment, if I may, to a question that was raised by the member for Saanich North and the Islands. The minister stated that there were a number of complaints, two of which I believe she said were investigated: one by the RCMP and one by the Victoria police. The minister stated that there was not sufficient evidence to put forward a laying of charges, but obviously something wasn't right in this home. We know that now.

Can the minister tell us how many complaints there were, and what sorts of investigations were done within the ministry itself, over and above what the police did?

Hon. P. Priddy: I cannot tell you about the numbers, and I'm happy to find that out for you.

I would say, though, that a number of the complaints that were made were about. . . . As a matter of fact, a significant number of the complaints that were made were about access to the child and not about abuse. I'm not saying there were not those allegations and there were not investigations around that, but a significant number of the complaints or concerns that the mother raised were about access to her child. She has court-ordered access. The judge said she can only see her child under supervision. A number of her complaints were around wanting more access and so on, so they were not necessarily about the issues of abuse and neglect.

I don't have the particular numbers. I'm happy to get that for the member.

G. Farrell-Collins: The minister said that there was a fairly thorough investigation -- at least, it sounded like a thorough investigation -- done by the RCMP and perhaps the Victoria police with regard to the complaints that were laid, and there were insufficient bases to lay a charge. Can the minister tell me whether or not there was sufficient concern raised at that time? Certainly, the media reports indicate photographs being taken of bruises and perhaps of other potential forms of abuse. Can the minister tell us whether or not the staff of the Child and Family Review Board or any other part of her ministry were made aware of those complaints, over and above what the RCMP and/or the Victoria police did? Was the ministry made sure. . .? Was the ministry comfortable that that continued to be a safe house, despite the fact that no charges were laid?

Hon. P. Priddy: I think at this stage. . . . I mean, what I do want to say about foster placement is that this is a foster mom who went through all of the same foster parent application and reference checks and letters from physicians about physical and mental health and so on that every other foster parent has.

But I would remind people that there is a criminal investigation ongoing. I have tried to be as forthcoming as I can with information, hon. Speaker, but there is a place at which I simply have to say there is a criminal investigation, and I can go no further.

G. Farrell-Collins: I certainly don't want to prejudice any criminal investigation that is ongoing. But I would think, given the focus around this case and given the time that has elapsed since it became public, that the minister would have made herself aware of how comfortable her ministry was with this foster home. I do not believe that disclosing that information and whatever reviews were done within her own ministry is going to affect the criminal investigation. That is information that should be made available to the minister and certainly should be made available to this House, so we know whether or not the government is doing everything within its power to protect children that are in foster care.

Hon. P. Priddy: As carefully as I can, because I know none of us would ever want to be someone who put an investigation at risk because of something we said, what I do know is that this particular foster mom, because there was another child in the home, had a variety of people in and out of her home on a regular basis. One of the children was being seen four times by a child care worker, infant development workers, a physio. . . . So this is a home where. . . . And the foster mom was having ongoing, almost daily, contact with people from various parts of the ministry and the Ministry of Health.

[2:30]

The Speaker: The bell terminates question period.

[ Page 2960 ]

Hon. J. MacPhail: In Committee A, I call Committee of Supply, and for the information of the members, we'll be debating the estimates of the Ministry of Attorney General. In this House, I call Committee of the Whole to debate Bill 2.

The House in committee on Bill 2; G. Brewin in the chair.

On section 12 (continued).

C. Clark: As I recall, we left yesterday on some interesting topics of debate that generated a fair amount of discussion in the House -- some of it useful; some of it, I guess, a little bit more marginal. Now that the minister has had about 20 hours to consider the question that I asked yesterday, I wonder if he has come up yet with definitions for the words "certainty" and "stability," to which he likes to refer when he talks about his relationship with municipalities.

Hon. M. Farnworth: I answered that question for the hon. member at considerable length yesterday. I guess, hon. Chair, I'll repeat the answer again.

In terms of certainty, what the municipalities can expect is that over the course of this year, this government is going to be living up to the terms of the protocol agreement that was signed last September. There's going to be an extensive process of consultation on issues relating to legislation, financial matters and other areas of interest to municipalities. That's certainty; that's going to lead to stability.

C. Clark: What we understood the word "certainty" to mean the last time the government entered into this process was that there would be consultations, that they would be extensive and that municipalities would have an understanding of the kinds of cuts that were going to be levied against them by the provincial government well before they happened. None of that occurred.

Now, I think what the minister is arguing is that some of that did occur, that there were some consultations, or that there was some expectation of cuts on the parts of the municipalities. I wonder if the minister can tell us: did his consultations with the municipalities include any discussion of the level of cuts -- the huge, deep cuts -- that the ministry exacted against municipalities? Did the consultations give them any expectation of exactly how deep and how extensive these cuts would be?

Hon. M. Farnworth: I was not the minister at that time.

C. Clark: The minister, I think, will recognize what I'm trying to get at here. There is an understanding that the government -- no matter who the ministers are -- continues to exist even between different ministers. But what I'm trying to figure out here is: when the ministry said something before, even though it was a different minister, and the ministry says something now, will the outcome of the promises they made before, which are exactly the same promises they've made now. . .? The minister appears to be indicating that even though the promises are exactly the same, the outcome of these promises will be different. Last time they made the promises -- they made the promise of consultations; they made the promise of certainty; they made the promise of stability -- what it resulted in was no consultation, no discussion. It resulted in deep cuts, completely unexpectedly; it resulted in a lack of stability and a lack of predictability. So there's the promise, and there's the outcome.

The minister seems to be indicating now that when he says certainty, stability and consultation it means that there is actually going to be discussion, there is actually going to be some certainty and there is actually going to be some predictability that comes out of it. There's clearly some difference in the way these two different ministers have defined where they want to go with this.

I think the minister will appreciate my interest in this, given the fact that this bill attempts to or does give the minister total flexibility to make cuts any time he wants without any consultation. No matter what promises he makes, no matter what memorandums of understanding he enters into, he will always have -- until the government changes -- the flexibility to be able to do whatever he wants.

What I'm trying to get to here is the difference in definitions between the way the government defined this before and the way the government defines this today. I think the minister can. . . . What I'm looking for from the minister is some further assurance, or a little more substantial assurance, that their method of operation has indeed changed from the way the previous minister operated in his relationship with municipalities.

Hon. M. Farnworth: I will go back to the answer I gave yesterday because it will suffice for the same question today that was asked yesterday.

Look, when the minister signed the protocol, he did so after advising the UBCM that there were cuts coming, that in terms of consultation they would probably say that it wasn't long enough, that it was not able to take place and that he was reluctant to sign it. So that's what was said, hon. member.

Since that time. . . . And the members opposite claim that the period of consultation wasn't long enough. As I said yesterday, we can debate that until the cows come home, but what's important is how we take the protocol that was signed in September to deal with issues coming in the future. I've told the hon. member and I've told this House. . . . I'll give them the same message I have given to the UBCM, the same message that's been put into practice -- that is, it is my intention and it is the government's intention to consult with the municipalities on all matters concerning them, legislative and financial.

That process is in place. We've had three meetings so far this year that have dealt with a host of issues. We've agreed to have a special meeting of the joint council on budgetary matters later on this summer. That's what they want; that's what is taking place. I want to ensure that the municipalities know well ahead of time what the financial implications on our budget deliberations are for next year so that they are in a position where they can plan ahead accordingly -- where we can sit down as a government at that joint council process with the executive of the UBCM to look at how we allocate available resources -- and so that there is input and consultation.

That, hon. member, is going to lead to the three favourite phrases that you like to use, which are certainty, predictability and stability. As I said yesterday, another definition, as far as I'm concerned, is: certainly you are opposed to everything I've 

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been saying; you are predictable in that. And in terms of stability, I won't question the stability of you guys on the other side.

But if you're looking for that commitment, I'm telling you that it is taking place, and the UBCM is quite happy right now with the consultation process that is evolving and is taking place.

C. Clark: The fact remains that the consultation that occurred which the minister is referring to, which occurred in the last round of cuts, consisted of the minister summoning the municipal leaders into his office, informing them of the cuts and then trotting out and telling the TV cameras. That was the extent of the consultation in this last round, and it is very disturbing to recognize that the minister is not prepared to tell us that he is going to give a different definition to the word consultation than the previous minister gave, because the previous minister's understanding and interpretation of the word consultation was weak indeed. It's not a definition that is in any way shared by most other British Columbians.

Having made that point, I will happily cede to my colleague from Shuswap, who is prepared, I know, to carry on this debate very vigorously.

G. Abbott: There may be others on this side who have further comments to make with respect to section 12. I just want to pass along to the minister, if I may, a couple of quotes from UBCM executive members. I think it gives some indication of the state of happiness, the state of satisfaction, that they have with respect to how they were treated with respect to the Local Government Grants Act amendments proposed here. I do invite the minister to comment, and I will give him equal time to comment on what's stated here.

The first quote is from the Cariboo Observer of April 2, 1997, by the UBCM president, Gillian Trumper, and it reads:

"While the provincial government protests a 28 percent reduction in transfer payments to the province over two years, the same provincial government cut unconditional grants to municipalities by 40 percent in one year. The provincial government holds the federal government to a higher standard of performance than it is willing to meet for itself."

I'd invite the minister to provide his comments with respect to that. I presume he would wish to do so.

Hon. M. Farnworth: The hon. member may wish to refer to quotes in newspapers or editorial comments in certain newspapers. What I prefer to do is to sit down face to face with the members of the UBCM executive who make up the joint council and talk over issues in a rational, reasonable way in order to find solutions and a way that we can work together. That's what I'm committed to doing, and that's what has been taking place since I became minister.

I intend to continue that dialogue. As I've already outlined to the hon. members across the way, we've held three meetings so far and we will be holding more meetings this coming year. We've addressed a number of substantive issues raised by both the municipalities and the province, and we've agreed to have a special budgetary meeting in the summer to address strictly financial issues. Those are the things that are taking place. To me, what's important is that the people I'm to deal with are at the table and getting the process that they want. That's taking place, hon. member.

G. Abbott: There's an old expression in the Shuswap -- and I expect it applies all over the province -- that talk is cheap. It's not necessarily cheap from this government, but I guess there's often a. . . .

Interjections.

G. Abbott: Yes, they spend a lot of money on it.

There is often a big gap between what is promised and what is realized. We find, particularly with this government, that there's very frequently a huge discrepancy between what's promised and what's realized in the end. Again, to remind ourselves of why we're here, we're debating whether it is appropriate, as is proposed in Bill 2, to repeal section 2 of the Local Government Grants Act. Again, we've made this point as well as we can. The minister unfortunately hasn't chosen to embrace our views, but I think what we've tried to say here is that it's most unfortunate, particularly given the record of this government with respect to consultation, to eliminate the one element in the Local Government Grants Act which provides the -- to use that well-used phrase -- predictability, certainty and stability that we'd like to see from a local government grants act.

[2:45]

Again, I'd just like to pass along to the minister the second quote, and this was from Mayor Steve Wallace:

"Interviewed Tuesday, Quesnel mayor Steve Wallace said the province is telling municipalities to 'do as I say, not as I do. The province is whining about cuts of 28 percent, but they got two years' notice and two years to implement. Then they turned around and gave municipalities 30 days' notice for 40 percent cuts. It's a double standard on their part, something we've come to expect from this government.'"

I'd have to say that on this side of the House we certainly agree with these sentiments that have been expressed by the UBCM with respect to this issue, because this government is entirely unpredictable, entirely unstable, entirely uncertain about its direction, except for obviously wanting to rip off local governments with respect to this particular issue. On that point they are remarkably certain. At any rate, I'll invite the minister to provide any comments which he may have in response to Mayor Steve Wallace.

F. Gingell: There was a press release put out by the government on the issue of certainty, dated November 26, where they included a whole bunch of non-municipal grants in this amount. At that same time, there was notification given that certain provincial highways were going to be turned over to the municipalities. The cost of that happening has not been included in this calculation, so obviously this particular backgrounder was typical of the PR nonsense that we get. It doesn't tell the truth. Now, that had to change because the government discovered that they couldn't legally do this, as I understand it. They can't transfer provincial highways to the jurisdiction of municipalities without agreements with the municipalities, which they did not have. But there had been included in the original cuts an amount of some $8 million which were grants that were paid by the provincial government to municipalities for the maintenance of what are called arterial roads.

In the meantime, the Ministry of Municipal Affairs scheme to increase the amount of the cuts and the downloading onto municipalities by moving some provincial highways over to municipalities and, in my particular municipality's case, a couple of bridges. . . . The Westham Island bridge and the Annacis bridge couldn't happen. There were further cuts. I know Delta's grants have been cut, in addition to the amount shown in the document which they were given, by $341,000.

At the original briefing on Bill 2, I was given a commitment by your ministry's staff that I would receive the total of 

[ Page 2962 ]

the further reductions that have taken place since the November 26 backgrounder. Then again I was given that commitment on Monday, I think, when we had a further briefing on Municipal Affairs estimates, and I still don't have those numbers. So can the minister tell us the amount of the further cuts of grants to municipalities to compensate for the provincial highway costs that they were not able to off-load onto municipalities?

Hon. M. Farnworth: I don't have that particular table with me, but I can tell the member that the table has been prepared and that the numbers are being forwarded to him as he requested in the briefing. You will be getting them shortly, hon. member.

F. Gingell: I really would have liked them for this section. I guess we'll just have to keep section 12 going until we receive them. I can assure both the Chair and the minister that we're perfectly capable of doing that.

What I wanted to do was to get a feel for what the total percentage of cuts were, because I heard the Minister of Finance talk about federal cuts in the early portions of discussion of section 12. No one in this House, whichever side they sit on or whether they sit with an independent party, is going to support this or believe that the right thing is to increase federal cuts. I know that the minister agrees with me that what this country really needs to do is to sit down and think about the way revenues and responsibilities are shared through the three levels of government. Perhaps there will be some changes to these issues.

The minister always conveniently forgets to include the value of tax points when he talks about transfers. How much they are worth, I know not, but I do know that the value of the tax points is growing dramatically. I just ask that the minister please include those when he deals with the statements he makes. We all want to go and put pressure on the federal government not to disadvantage British Columbia, but we really do need to know the truth. We need to know the facts. The Minister of Finance, in that rather different role -- what I believe should be more of a non-partisan role -- should really make an effort. Sometimes I'm critical that he doesn't deal with all those issues.

Having said that about tax points and leaving that on one side, I would like to ask the Minister of Municipal Affairs, or perhaps the Minister of Finance, the following. Federal transfer payments in cash to British Columbia in the year 1991-92, which was the first year of this government's administration, amounted to $2.095 billion. In 1997-98, in the estimates we're dealing with this year, they amount to $1.78 billion. Would the minister agree with me that that is approximately a 15 percent cut?

Hon. A. Petter: It's hard to follow the member's figures orally. If he provides them to me in writing, I would be happy to look at them. I'm just checking my own charts, because I don't have the figures in my memory.

I do want to correct one thing he said earlier. He suggested that no one in this Legislature could possibly support the cuts on the part of the federal government that have taken place -- or could want to see those cuts increased, as I understood him. In fact, that's simply not correct, and I have in front of me some records that show it's not correct.

I'm quoting from the Leader of the Oppositon at various times in the past. From February 28, 1995, the Vancouver Sun quotes the Leader of the Opposition as saying: "The federal Finance minister Paul Martin did not go far enough in his cuts." From February 18 in the Province, I'm again quoting the Leader of the Oppositon saying that Martin hasn't gone far enough. He says that the expected deficit of between $20 billion and $17 billion is still too much, and then he goes on to suggest that the cuts should be greater.

It's simply not correct to suggest, as the member opposite does, that no one in this House has applauded the federal cuts or urged that the cuts be deeper, because the very party that this member represents, and its leader, have taken exactly that position in the past. There are a number of stories. Let me quote from Hansard. I think I quoted earlier from Hansard. On April 12, 1995, there was a quote from the Leader of the Opposition. He said: "When the federal government tabled its budget in February, the B.C. Liberals said they should have cut more."

I encourage the member to revise his memory and his history of his own position, because the position of the Leader of the Opposition has indeed been categorical and clear -- until recently, at least -- that the federal cuts that have taken place and that have produced much of the fiscal difficulty we face as a province are resulting in some of the reductions we're now making. The Leader of the Opposition has taken the position that those cuts should have been even deeper than they were, and I don't want to allow the member to escape that very important part of the public record.

F. Gingell: I have a feeling that I've heard that speech before. I wish the Minister of Finance would spend more time worrying about the finances of this province and getting them in good shape -- learning his job and beginning to understand the issues that this province faces because of their incompetence -- instead of spending his time reading out all this stuff.

I believe that all governments, whether federal or provincial, need to make those cuts that are necessary to get accounts in balance. I'm sorry that you don't, but those things need to be done. Madam Chair, perhaps the Minister of Finance would please take his pencil -- there, he's got a pen in his hand -- and write down $2.095 billion and mark it '91-92, then write down $1.78 billion and '97-98 and then tell me whether he agrees with me that that is a 15 percent reduction in the expenditures.

Hon. A. Petter: I'm searching in vain for some of the papers I had here earlier, which I quoted from, but I'll be happy to get them sent in so I can refer to them, hon. Speaker. They show that the cuts from the federal government to the province, in terms of the share of funding the federal government provides for the established social programs that the funding was targeted to, have been much greater in recent years than the proportion of cuts in terms of the share that the province provides to municipalities. That's the point the member is taking. Rather than getting into a debate around the numbers, I would be happy to simply get the numbers I referred to earlier and re-recite them for the member's benefit.

I'm certainly not going to get onto the slippery slope with the member of agreeing to some numbers that he has produced out of thin air and then have him recite them back. What I've noted is that whenever the Liberal Party draws numbers in these matters, they make very selective use of the numbers and very selective use of the comparatives.

Interjection.

Hon. A. Petter: And yet British Columbians know what seems to so irritate the member opposite. British Columbians 

[ Page 2963 ]

know that federal cuts that have been targeted at health care, education and social services have been a major source of problems not just for this province but for other provinces. The difference is that in other provinces where governments of a similar ideological stripe as the opposition party have been in power, those cuts have been passed through in areas of health care and education.

I apologize to the member if it irritates him that I quote from his own leader's previous remarks. Believe me, it usually irritates me. If we've reached the point in this province where a statement of the Leader of the Opposition being quoted back at members of his own party is irritating, then perhaps that's indicative of why people in the last provincial election felt that those kinds of positions were untenable.

The Chair: And now for a different face. I recognize the hon. member for Comox Valley -- rising on what matter?

E. Gillespie: I ask leave to make an introduction.

Leave granted.

E. Gillespie: Visiting us in the House today is Mrs. Amy Bryden and her class from Tsolum Elementary in the riding of Comox Valley. I'm very pleased to welcome these students here today, along with their teacher and their parent volunteers. This is the first class to visit while I've been a sitting member of this Legislature. Would the House join me in making them welcome.

[3:00]

F. Gingell: I didn't intend to get into a great discussion about these issues, but perhaps we should. The only transfers that the federal government makes to the provincial government are these ones that the Minister of Finance calls health and education -- and of course there is CAP, too -- but this government and the Socred government before them just treated them as money. They're not allocated within the estimates for specific purposes. They are just funds.

The point that this minister has made time and time again is that the cuts in total dollars. . . . I agree that as a percentage of expenditures in those areas, the way this government has been behaving, those expenditures have been going up. There are jobs that have fled the province, and it has had its consequences on health care costs, costs within the education system and other costs. But when you properly and carefully evaluate and deal with apples and apples and oranges and oranges, the cuts that this government is making to the municipalities at this time -- with no notice -- I believe are 29 percent plus the amount of these additional cuts that you will be giving relative to further reductions related to the transfer of provincial highways. I believe that to be the correct comparison.

It surprises me that the Minister of Finance thinks that the proper defence of what this government is doing to municipalities, a short two years after they made a definitive promise about certainty and stability and consultation, is to talk about the way the federal government -- 50,000 miles or so away from British Columbia, it seems -- treats British Columbia. The important thing for this Minister of Finance to do, I would suggest, is to ensure that British Columbia is treated fairly in relation to the other provinces, recognizing the commitments that we as British Columbians, and all Canadians, have made to the issues of equalization.

The point that I want to make -- and the point that I really feel is critical in the discussion of this section of the bill -- is the depth and the extent of these cuts. I believe that the only way you can properly measure that is in dollars -- that's what we are speaking of -- and in fact this year's conditional and unconditional grants to municipalities will be 50 percent of what they were in 1991-92. In 1991-92 they were $376 million; this year in the estimates book they're in there at $188 million, and that doesn't deal with this issue about the highways. So I believe they have been cut in half in that period of time. They've been reduced from some $252 million in 1997-97 to $188 million in 1997-98, which is a difference of some $64 million, or roughly 26 percent of the amount. And that really is the issue on which I haven't heard any satisfactory responses from the Minister of Municipal Affairs.

I wonder how the member for New Westminster can go home and face the people within his community who must surely be facing the same kinds of tax increases that are going to take place all over this province. In the election, this government promised no tax increases. Well, you fudged a bit about some user fees that you're going to push up and you fudged a bit about this. When they were in opposition. . . . I mean, I don't go around with everyone's quotes in my pocket; I have more important things to do. But when the NDP were the official opposition to the Social Credit government, you can find quote after quote after quote of them saying: "User fees are taxes."

The promises that you made are being broken, but you're trying to push the responsibility for doing that onto somebody else -- onto municipal government. It was the same yesterday with the issue of. . . . You know, the long discussion where we went on about who's financing the Assessment Appeal Board and the courts of revision. The minister knows that the B.C. Assessment Authority doesn't have any income of its own. Its only income of any substantive nature is the assessment that it charges every single property owner in this province -- a certain mill rate. If there are some reserves from previous years, it's because you charged them too much and you should be reducing taxes. We can't even get the minister to admit that this $2.6 million -- small as it is -- is going to be paid by provincial property taxpayers. It is a fact; there is no getting away from it. There's no tooth fairy that can come and put $2.6 million under your pillow at night to pay for this.

Thank you, hon. Chair, for the opportunity to say some things that have been burning a hole in my mind about this section. I'm sure there are other members of the opposition that wish to take up further issues, and I look forward to receiving the amount of these further cuts that I need to know about.

Hon. M. Farnworth: Just a comment to the member for Delta South on the last question in terms of getting the specifics for each community. The total is $5 million to the fiscal year January 1, and $8 million to the fiscal year March 31. That's the total cost; that's the total dollars we're talking about.

F. Gingell: You will note, hon. Chair, that the amount of $8 million is the amount of the reduction in the grants that were identified from the Ministry of Transportation and Highways to municipalities for looking after some arterial roads for them. So it just happens, by coincidence, that this is the same amount, because this is not the item to which I'm referring. What I'm referring to are additional reductions in municipal grants that took place after November 26, 1996, when you discovered that the provincial highways you had planned on turning over, and the Westham Island bridge and the Annacis 

[ Page 2964 ]

bridge, could not in fact be turned over. Delta municipality has advised me that the grants have been cut by an additional $341,000 over and above the cuts they were originally advised of in November.

Hon. M. Farnworth: That $8 million was included in the calculation of the grant to cover those costs in terms of the arterial roads. When we took back the decision on the arterial roads, which occurred through discussions of the joint council. . . . Because the municipalities would not be doing the work for which that money was allocated, the province took that money back.

F. Gingell: So I take it that this $8 million that's included as arterial roads, Transportation and Highways, in the backgrounder, "Transfers and Services Affecting Local Governments," dated November 26, 1996, had never been paid in any prior year when the Ministry of Transportation and Highways were administering and paying for the maintenance of these highways. These amounts have never been paid before; you just put it in there to reflect the cost of these transfers.

Hon. L. Boone: This is a very complicated issue. As you know, money was allocated to municipalities to carry them over. This money was taken out of my budget and was, in fact, put in to offset the reductions, to cover the costs of the highways. There was considerable concern expressed by municipalities at that time. They were arguing and saying that it wasn't enough money, that in fact it was going to cost more to do the maintenance and that there were some long-term costs around upgrading, etc. So we agreed as a ministry that we would take this back and review it, but in doing so we needed the dollars to continue to maintain those roads. That's why there was the takeback of that $8 million into our budget -- so that we could continue for this period of time and do the jobs. But that money was put in there to offset the costs that were going to be incurred by municipalities.

F. Gingell: Then I'm really confused, because on this sheet -- and I'd be happy to pass it over -- it shows that under the restructured system there was zero being paid. So you're now taking back money you hadn't given them.

The Chair: The member continues.

F. Gingell: If I may, you'll allow this as a subject for debate in estimates, then? Okay.

G. Abbott: I find this discussion interesting, too, because I think I may have learned something new here today about the events surrounding November 26. Just to follow up on the question by my colleague for Delta South, what we got, then, on November 26. . . . We understood on November 26 that the net reduction in transfers to municipalities was $113 million. But in fact -- if I'm understanding the ministers correctly here -- the net reduction was $113 million plus X deduction from equalization grants, the exact figure of which we are not yet privy to, I gather. So the net reduction as of November 26 was $113 million plus the deductions from the equalization grants, because they were not going to be doing that. Am I correct?

Hon. M. Farnworth: No, it is included in that figure of $113 million.

G. Abbott: Okay. Just to make sure I've got it right -- I know the minister would want to get it right, as well -- the minister is saying that in fact that $113 million was inclusive of the deductions from the equalization grant. This is a curious way to put it, but it's a curious situation we have. It is inclusive of moneys that the province thought municipalities were going to be spending on arterials but in fact did not. But it was my understanding that the decision to deduct from the equalization grants came well after November 26.

Hon. L. Boone: I'm not quite sure what the member is getting at. But yes, the decision to reduce that amount by the $8 million. . . . We're still going at the $8 million reduction that came back into my ministry. That was made well after the 26th. That was made after our meeting with the joint council, where we agreed that we would take back the arterial highways, that we would review that whole issue and that we would come back to the joint council after a review had taken place -- which is taking place right now. At that time, we said: "Well, if we're going to take back the highways, then we need to take the $8 million back into our budget so that we can do the work that was going to be expected to be done by the municipalities."

G. Abbott: Good. I think I understand this in the same way that the minister does. In fact, then, the net cut -- not effective November 26 but effective, I guess, after the decision to pull back money from equalization -- to municipalities was $113 million, plus $8 million that was pulled additionally back from equalization grants. So in fact the net cut was $121 million.

[3:15]

Hon. M. Farnworth: No, it's not, because the municipalities aren't doing the highways work, so they don't have those costs. So you're taking from both sides of the ledger.

G. Abbott: Before I defer to my very patient colleague from West Vancouver-Garibaldi, could the minister answer the very important point that my colleague from Delta South raised? He then went into a kind of rhetorical flourish that allowed the minister not to answer the question, and fair enough. I'll pose it directly now. The suggestion made was that municipal transfers are about 50 percent in 1997-98 of what they were in 1991-92. Back in the early part of this government's tenure, the annual transfers to municipalities were about $360 million-plus, and now they are about $180 million. So they are about 50 percent of what they were. Is that a correct summary of the situation?

Hon. M. Farnworth: Unfortunately, I don't have the same figures the hon. member is working from, but what I can tell him is that however he wants to look at it, the effect on municipalities is 3 percent of revenues. That's what the reduction works out to: 3 percent of revenues for half the communities in the province. So any community under 5,000, for example, did not get a reduction -- and for effective purposes, any community under 7,000. So it's a maximum 3 percent of revenues. That's what it amounts to.

G. Abbott: It's unfortunate that the minister doesn't have the figures of my learned colleague. He's extremely generous about providing that kind of information, and I'm sure he will make sure that the minister has that information in his possession as soon as possible. I hadn't intended to actually go into this issue of the 3 percent of revenues at this point, but given the minister has raised it, I think it might be a good time to canvass it briefly.

[ Page 2965 ]

The point here is. . . . And this is not something that has been generated from my mind. This is an issue that's been brought to my attention very forcefully by a number of municipalities which say that when the province says that the cuts will not amount to more than 3 percent of total revenues, they are being misleading. For example, we could have a situation where a municipality's total revenues are $10 million, but $5 million of those dollars are in-and-out funds going to regional districts, school districts, various authorities and so on. Could the minister confirm that when they talk about 3 percent, they are not talking about 3 percent of real municipal revenues but about any revenues that may in fact have absolutely no benefit to the municipality?

Hon. M. Farnworth: In the calculations, all municipalities have been treated the same way. For example, all the money that flows through a municipality has been included in the calculation, including regional districts and school boards. It comes down to where the municipality buys its service -- whether they provide the service in-house or whether they provide the service through the regional district. They're still getting the service, and so the revenue is still there. It's based on that calculation.

What was taken out were specific revenue flow-throughs that are unique to a particular municipality. I'm thinking in particular of health boards, because that varies considerably: some participate, some don't. That's not a general program that. . . .

Interjection.

Hon. M. Farnworth: Some have community health programs. For example, Burnaby has a special enriched health budget. So however you want to slice it, having that taken out, all the services that the municipality is providing are all in the calculations, and no community is impacted more than 3 percent.

G. Abbott: Again, I don't want to sort of fly off in some tangential direction on this point, but the very fundamental point that I think needs to be made here is that when the problem -- when the province. . . . It's a Freudian slip for me to refer to them as the problem. When the province refers to the impact of these cuts as being a maximum of 3 percent of revenues, it is somewhat misleading, because there may be a whole range of revenues which are in and out and which have no benefit to the municipality. Let me give you an example of that, because I'm. . . .

Interjection.

G. Abbott: The Minister of Finance is becoming particularly interested in the subject, and I'm sure he will be delighted to hear this particular case in point.

This is from the mayor of the city of Revelstoke. The letter reads:

"It would seem that UBCM also had the understanding that the impacts of Bill 55 were to have been worked into the cut in transfers so that we experienced a maximum cut of 3 percent of that total revenue." We won't get into Bill 55 right now. "Revelstoke's gross general revenue for 1995 was $11.4 million, but approximately $5 million of that is represented by in-and-out revenue collected on behalf of the school district, regional hospitals, the regional district and several other agencies and special projects. Surely our 3 percent maximum cut should be applied to our net revenues of $6.4 million -- which would mean a maximum reduction in transfers of $192,000.

"Revelstoke's transfer cuts of $146,000, augmented by [the] $179,000 impacts of Bill 55. . .add up to $325,000 -- well in excess of the $192,000. The $325,000 would represent a 13 percent tax increase unless cuts to services are made."

I don't buy -- at least without some corroborating argument, here -- the point that somehow the moneys raised for the regional district as a matter of convenience, or the school district as a matter of convenience or regional hospitals as a matter of convenience, are revenues that in any way represent. . . . They may in some instances represent a purchase of services, but they don't always. In many cases they don't. So again, I think the point we're making is that a claim that it amounts to a 3 percent impact can be quite misleading.

Hon. M. Farnworth: Could the hon. member for Shuswap just repeat the number that he said was the cut to Revelstoke?

G. Abbott: Their gross revenue for 1995 was $11.4 million. Approximately $5 million represented in-and-out revenue on behalf of the school district, regional hospitals, the regional district and other agencies and special projects.

Hon. M. Farnworth: We calculated our cut to the city of Revelstoke on a total revenue of $7,009,198, so that's a substantial difference.

F. Gingell: The number that the UBCM came up with in the document dated February 19, "Provincial Government Budget Analysis Challenged by Union of British Columbia Municipalities," which deals with this issue. . . . It has a complete listing of all of the grants and their property tax revenues. I appreciate that the property tax revenues. . . . There will be some other revenues. But that number shows that the grant reduction as a percentage of property tax revenues is 4.46 percent. So the number is going to be fractionally lower, but it's not going to be much lower.

In 1996-97 the transfers from the federal government to the provincial government were $1.775 billion, and in 1997-98 they are anticipated to be $1.58 billion. That's for Canada Health and Social Transfer only, and it's the most advantageous calculation to make -- to your position. That is a reduction of some $190 million to $195 million in a total budget of in excess of $20 billion, which is a fraction under 1 percent. So the federal government's cut, in this current year, to the provincial government is a fraction under 1 percent; your cut to the municipalities -- to their property tax revenue -- is 4.46 percent. If you take total revenue, it probably comes down to 4-1/4 percent.

Interjection.

F. Gingell: Yes, well you can add on that, and that adds on another 8 percent to the calculation, which could drop it down to four-point-something. . . .

Interjection.

F. Gingell: No, no. No way. Because it's less than 10 percent, you can only reduce this by less than 10 percent. Go back and take Math 101.

But the issue is that this government keeps telling us: "All we're doing to you guys is what them guys have done to us guys." But the truth of the matter is that you're doing far, far more to them guys than those guys did to youse guys.

Interjections.

[ Page 2966 ]

F. Gingell: Come on.

The Minister of Transportation and Highways says that this has been happening for years and years and years. If you go back to 1991-92, when this government came into office, it's only gone down by 15 percent in dollars. But your "in dollars" has gone down by 50 percent. So don't you think you should really think this thing through and consider withdrawing the budget?

An Hon. Member: Pull this bill.

F. Gingell: Well, pull this bill and that will solve the problem. Actually, pulling this bill would be a good idea and would put them in a very interesting position.

Hon. L. Boone: And increase the debt. You want to increase the debt.

F. Gingell: No, take it out of some of these: your contingency fund, the ministry of this or the ministry of that -- whatever you think is the most effective and efficient place to take it from.

Interjections.

F. Gingell: We said the province should get out of the property tax business, first of all, and that's very different.

At any rate, with that thought, I'll leave the Minister of Municipal Affairs to think about it and to consider my suggestion. I'll pass the questioning over to some other member.

T. Nebbeling: I've been watching the procedures of the last two days with much interest, knowing that it is the minister's first time actually on the mat, having to defend something that is actually indefensible. I've been watching his body language in particular. I know we're not supposed to do this, but I had to. Especially the body language of the minister. . . .

[3:30]

Interjection.

T. Nebbeling: As the member for North Vancouver-Seymour said: "He's red as a beet." I was talking body language. Shades of colour will come into the fray a little bit later.

I should just say that when the member for Delta South was speaking, I saw a sign of relief on the face of the minister. It was clear that the interjection of a little bit of humour made him feel very comfortable. At other times, when we were actually asking questions that are very pertinent. . . . We ask them on behalf of the municipalities throughout the province. They are questions that the municipalities would dearly love to ask the minister. Although the minister claims he is very much involved in consultation, a little bit later I want to talk about that, because I don't think the consultative process that the minister so brazenly heralds in this room as being of a constructive, joint effort-type of approach is necessarily agreed upon by the other side of that joint effort, and that is the municipalities.

One of the things that I think I learned through watching the minister over the last two days on this section 12 -- and I understand he is new at the job -- is that I am not so sure that the minister is totally familiar with the whole grant system, in particular the general grant and what really is the base for this government giving this unconditional grant to municipalities on an annual basis. I would like the minister to, if he could do it in a succinct manner, give us a bit of a rundown of not only how he thinks this grant was actually created and when it was created, but what it was supposed to be doing for municipalities throughout the province.

If he can help me by giving me a feeling of his knowledge, then some of the questions that I would like to ask might not be necessary. Otherwise, some of the reactions that we have seen from him so far may be explained. So if the minister can give us a rundown of the grant and its purpose and incorporation, that would be helpful for me.

[J. Doyle in the chair.]

Hon. M. Farnworth: For the hon. member's edification -- and I get the feeling that no matter what I say, it won't preclude any questions that he may or may not want to ask -- I'll just tell him that the grant was initiated in 1978, at a time when revenues were flowing from all over the place. It was designed to assist municipalities in the day-to-day running of their operations.

T. Nebbeling: That's a very small part of the answer, I believe. What I would really like to hear is the criterion that made the government decide in 1978 that a formula had to be created to assist municipalities in the trials and tribulations of trying to serve the demands of the provincial government. So if I could get that criteria as well, that would give me an impression of what was indeed intended to be done with this money coming to municipalities and regional districts.

Hon. M. Farnworth: I find it interesting that the hon. member wants to know if I can go back to 1978 and what the original criteria were. I was -- what? -- 19 in 1978 and really didn't pay much attention to what the criteria for municipal grants were. But my understanding. . . .

Interjection.

Hon. M. Farnworth: Yes, exactly. Shame, hon. member.

But I guess my understanding is that they were based on the same three things then that they were based on until recently, which was population, assessment and spending.

T. Nebbeling: I forgive the minister, of course. At the age of 19, I don't think he even lived in Canada -- like myself, as well. So I think. . . . Or maybe you did.

Hon. M. Farnworth: I think he may want to withdraw that remark. I've lived here nearly all of my life.

T. Nebbeling: Well, I didn't think that member would take offence. It's just that I. . . . I take back that remark if it offended the minister. It was in no way, shape or form intended to offend him. I was only arriving that year in this country. I thought that in a discussion I had with the minister, he reflected that he also was an immigrant coming late to this country. However, I have no problem taking that back.

But what I do want to know is, you know. . . . I know the criteria as well. What I don't know is what led the government at the time to say: "Hey, listen, there's a need for municipalities and districts to get additional funding." If we look at the population, yes. If we look at the revenue and if we look at 

[ Page 2967 ]

the assessment, then we have. . . . But there must be a real reason it happened and, whatever that reason, why it doesn't exist today.

Hon. M. Farnworth: I find the question somewhat puzzling. I have an idea of where the hon. member is going. But as to why it was brought in in 1978 -- you know, for what reasons -- it's probably best to go back and talk to Hugh Curtis, who was probably the Minister of Municipal Affairs at the time.

T. Nebbeling: I'm asking this. . . . I was expecting that the minister does not have much knowledge of the background, and for that reason he is uncomfortable dealing with the questions from time to time. I think it is very important that he, as the minister, is aware of exactly the reasons communities need that extra financial assistance based on population -- yes, I understand that -- and the other criteria to assist these communities. Obviously the minister is not aware of the reasons, and I will go away from this whole line of questioning.

What I will ask the minister now is. . . . The other source of revenue for a municipality or for a regional district is property tax. Property tax is collected by municipalities for the purpose of the administration of a municipality or a city. Property tax is collected for the purpose of public safety. And property tax is collected for the purpose of maintenance of road networks and municipal infrastructure. That's the only source municipalities have.

Having said that, is the minister aware -- now that he's reducing the funding for municipalities, and it's $113 million for the municipalities in total -- of what other ways municipalities have of recuperating that money? Or is the minister expecting to see property tax payers just absorb that additional money -- which means, in a sense, a broken promise for this government? One of the promises was no new taxes and no tax increases. So if the minister knows of any other source of taxation that the municipality can use that is not a violation of that minister's government's principle, then I would like to hear it.

Hon. M. Farnworth: I find the line of questioning of the hon. member interesting, because we all know that the source of revenue for municipalities is property tax. Municipalities know, as all of us know, that financial conditions have changed since 1978, when money flowed from the federal government in great largesse. It flowed from the provincial government in great largesse. It was at that time that we actually started on a long road to massive deficits, which the federal government incurred at that time. As a consequence of that, we've had to make some significant and substantial financial decisions in this decade to put the fiscal realities of the country and the province in order.

The simple fact -- and the hon. member doesn't seem to want to acknowledge it -- is that we've asked municipalities to play a part in controlling those expenditures, in reducing the deficit. We've asked municipalities to go through the same exercise that we've had to go through. We've said: "Look, we can't afford the same level of grants that we did in previous years, and there's going to be a reduction." That occurred.

We asked municipalities to look inward for efficiencies and savings and to try and absorb the impact of the cuts, which are no more than 3 percent of general revenues for half the municipalities in the province. We protected the smallest 50 percent of the municipalities in this province, recognizing that they don't have the same opportunities as many of the larger communities do. We asked the municipalities to absorb the savings internally. You know what? Right here, the city of Victoria has done just that.

So the property tax is the source of revenue for the municipalities. It will continue to be the major source of revenue for the municipalities. And we've asked them to do what we've had to do, which is to make internal choices, to make internal efficiencies and to recognize that they're part of the solution to the fiscal problem of the nation as a whole.

T. Nebbeling: It's interesting -- maybe not interesting, but. . . . The point I notice is that every time the minister has stood up to answer my questions, he has given a pretence of disinterest in the way the member asked. I don't know how the other members are asking, because their questions were obviously not interesting.

The minister started off making a point by saying: "We have asked the municipalities to absorb some of that financial pressure that we are under." I really have to take exception to the minister using the word "asked." The word "asked" has never been part of the debate, has never been part of the dispute, was never a part of the vocabulary used during these meetings.

Every meeting -- and I have this from people who were in these meetings -- was one where the minister informed people what was going to happen, where the minister used force in his voice to tell people: "There is no other way but my way." It wasn't this minister, so I'm not going to blame him for the bombastic, dictatorial way that the previous Minister of Municipal Affairs indeed spoke to municipal leaders through the executive board of the UBCM. Never let it be stated or known or thought that municipalities asked at any time to become partners in dealing with the financial mismanagement of this government -- because that's what we're talking about.

If this government was looking at a lack of funding for certain programs and if they had the nerve to dare to look at their own programs that have added hundreds of millions of dollars to the cost of running this government, they could have found this money without going back to the property tax payers and saying: "Okay, we have hit you once; we're going to hit you again."

I'll give one example, because when I make that statement, I have to back it up. The fair-wage policy. Every piece of infrastructure that this government puts in the ground in this province, every piece of infrastructure that is built under the rule of this government, has a premium that adds up to $170 million a year in additional costs only because of the policy incorporated by this government. I'm saying that if this government was truly looking for a way of recouping dollars, that would maybe have been a very wise one to go after.

This fair-wage policy is not creating fair wages for workers. It is paying excessive wages when it is compared to the private sector -- and even often to the union sector. There would have been a source of money that this minister could really have looked at and talked about to ideology-driven members, like the member for Bulkley Valley-Stikine, and taken it that way.

[3:45]

No, the minister took the easy way out, and said: "Listen, we are the government. We can do whatever we want to do, and we're going to tell municipalities they are going to give up that money." The minister said today: "But what we didn't 

[ Page 2968 ]

do is. . . . We took the small communities and gave the small communities a break. We didn't go to them; we actually gave them a little bit more money." Well, that is the first year. This bill allows the government next year to do to the small communities what they've done to the bigger communities. I have no confidence whatsoever that this minister is going to be showing compassion for smaller municipalities in the future.

I think I'm going to leave it for now. When we debate section 13, I've got a number of questions that I'd like to see asked. At the same time, I think this bill is an affront to what's happening in British Columbia and reflects ideology rather than common sense.

Hon. M. Farnworth: I just want to respond to the tail-end remarks of the hon. member, when he talks about the smaller communities. I've given a commitment that there will be no arbitrary decision from this ministry on funds available for small communities. That's going to be something that will be discussed at the joint council between the province and the UBCM -- how the allocation takes place over the coming year. It's a decision that's going to be arrived at jointly, not arbitrarily. It's going to take place in the context of the joint council, at which we signed a protocol last September and which, since I've been minister, has met three times to discuss -- as I remind the member again -- substantive issues that they raised and that we raised. It's evolving into a forum to resolve problems and concerns.

As I've told the hon. members and as I will tell this hon. member, there will be a special meeting later on this summer that will deal strictly with finances. At that meeting I expect we will discuss how moneys are going to be allocated in the coming year. I want input from all the municipalities as to how the allocation should. . . . Should it take place in the same way that it did this year, or should it be changed in any one of any number of combinations? That's what's going to take place, and it's going to be done through that joint council process -- the process that's currently in place and the process that's currently working.

T. Nebbeling: I'm really happy to hear that the minister has so much faith in the process of the joint council.

I wasn't going to bring it up, but here again we are dealing with a one-way street. Government believes that everything is going well, and the minister believes that he is doing a good job consulting with the communities.

Let me read you a little quote from a mayor. Mr. Chair, I'm not going to reveal the mayor's municipality, because it could mean some retribution down the road.

Interjection.

T. Nebbeling: Oh, this would not be the first time this happened, member for Bulkley Valley-Stikine.

This is after a request made by the UBCM to meet with the Premier of this province. This request was made by the UBCM on January 23 this year. One of the reasons that the mayors of the communities in British Columbia want to meet with the Premier has to do with the fact that I don't think they feel very comfortable with the joint council's way of dealing with business. One union member said:

"Union members want to meet directly with [the Premier] and not with any one of his ministers. If the province really listened to local government and they recognized the depth of the problems that we have, then I believe they would take some action."

What this says to me is that in spite of these meetings, the municipalities' representatives are certainly not getting any level of satisfaction in dealing with the minister and are saying: "The only one who can help us out, because we expect him to listen, is the Premier."

At this point, obviously, there is very little comfort in the joint council meetings. I don't want to go into hypothetical situations, but what I have heard so far of the meetings that have taken place is that they have been more focused on persuading municipalities not to go to court rather than on trying to find solutions to this unbearable financial pressure that has been put on many communities in this province. I think that's the real issue.

Hon. M. Farnworth: I am surprised that the hon. member would read a statement which is clearly in the public record and decline, for some spurious reason, to name the person that gave the quote. The comment lacks a certain degree of credibility when that happens.

I want to tell the member that one of the requests of the joint council was to be able to meet with the Premier. If the member was aware. . . . At the last meeting of the joint council, the Premier was in attendance. We had a very good meeting, a very frank and open discussion on issues of concern to UBCM and issues of concern to the province.

I find it somewhat puzzling that the hon. member would want to say the process is not working when in fact it is, when in fact that issues that have been raised by the joint council have been dealt with because the municipalities brought them up. The issue of arterial roads was raised by the municipalities of the joint council. The government is taking action on that particular issue. The issue of downtown revitalization was raised by the joint council. That issue is being addressed by the government.

A whole host of issues, hon. member, have been raised by the municipalities through the joint council process, and we've had good, constructive meetings. The municipalities raised the need for consultation over budget matters in the coming year. That's being addressed, as I told the hon. member a few minutes ago, by a special meeting in the summer to deal with allocations, to deal with what they might have to face. I have yet to hear one criticism by a member of the joint council of how the meetings have been run or of what issues have been discussed. There's not been one, hon. member.

We are embarking on a legislative package that's taking place with complete consultation with the municipalities. Legislation is not going forward unless it goes through that joint council process. You know, I've talked to municipalities throughout this province about a change -- it's time to renew the Municipal Act, because it's out of date and it puts them in a straitjacket. We've been meeting -- consultations with the joint council -- on how to do this. So there's buy-in from the municipalities to changes that are made down the road. I haven't heard any complaints whatsoever about any of those issues which are of primary importance to municipalities. So for the hon. member to stand up and say that the joint council process isn't working reflects greatly on his lack of knowledge of just what has been taking place at the joint council table.

T. Nebbeling: I don't know if anybody noticed, but the minister is not really talking about what the issue really is today for municipalities: the money grab, the money raid of $113 million from these communities. That's a fact. The minister now talks about all the great things that he is going to do, 

[ Page 2969 ]

together with the municipalities over at the UBCM, in the future. Well, that is great. But what has that to do with the $113 million that we are working on here? This is the issue.

It's great to hear the minister say: "Well, you know, we heard the problem with the highway arterial road program -- $8 million. So we dealt with it." Well, how did you deal with it? It's going to be there next year. So there is no long-term saving.

But what about the police services? What about communities that are over the population of 5,000? These communities were promised at the time: "If you go over the 5,000 population number, you will have to absorb the cost of policing, but for three years we will be partners with you. The first year we as a government will take on the responsibility of 100 percent. The second year we will take on 65 percent of the cost, and the third year we will take on 35 percent of the cost."

How do communities deal with that? Let's talk about the community I live in: Whistler. They had grants from the government in the order of $380,000. The government reduced that by 80 percent, so now they get $80,000. At the same time, as a community they've grown and gone over the 5,000 number, and suddenly they're responsible for the policing. Are they getting over $1 million the first year, as the plan always had in place? No, they aren't. They get $200,000. So there is another $800,000 that the taxpayers of Whistler will have to absorb.

Take the community of Squamish: the same thing. They're depending on grant-in-lieu money. Is this government offering their commitment that was made in the past that grant-in-lieu money would represent the value of properties in these communities? No. They get a fraction of it. Consequently, because of the grant reduction and the reduction in grant-in-lieu. . . . This community needs three more policemen. They can only afford one. Will that not have an impact on the community? Of course, it will have an impact on the community. As long as the minister is not willing to recognize that this is part of the equation that creates the impact on the communities, and as long as he pretends that everything is glorious and well and that everybody thinks he is a great minister when he meets with the joint council, we're never going to deal with these issues. But it is these issues that really are at the forefront of the moods in the communities that are affected by these cuts. The minister has to acknowledge it. If he does, then maybe he will become what the mayor of one of these communities is asking for: a partner in solving the financial consequences they have to face as communities.

The minister is not willing to do it at this time. I don't know if it is because he's a new minister, but I think he's ignorant when he talks about the consequences of the action of this government. When he as a minister believes that everything is just glorious and rosy in the communities of British Columbia, I'm sorry -- he is not seeing it through the right glasses.

[4:00]

G. Abbott: Undoubtedly, the most contentious portion of Bill 2, which we are debating here, is this section. I think that all of my colleagues on this side of the House have exhausted their questions and their observations with respect to section 12. I do want to say, though, as we move along here, that the repeal of section 2 of the Local Government Grants Act -- section 12 in Bill 2 -- is indeed a very sad moment in the history of relations between the province and its municipalities. Unless we've been more persuasive than I think and members opposite do not want section 2 to be repealed, not only will we be losing section 2 of the Local Government Grants Act with the passage of this section but also we will be losing that very brief interval between 1994 and the present, when there was some stability, predictability and certainty in local government transfers in this province. I don't think that this is a moment that is going to be soon forgotten. I expect as well that this is a moment that this government will come to regret for some time into the future.

Section 12 approved on the following division:

             YEAS -- 36

Evans Zirnhelt McGregor Boone Hammell Streifel Pullinger Farnworth Kwan Waddell Calendino Stevenson Bowbrick Goodacre Giesbrecht Walsh Kasper Orcherton Hartley Priddy Petter G. Clark Dosanjh MacPhail Cashore Ramsey Brewin Sihota Randall Sawicki Lali Gillespie Robertson Smallwood Conroy Janssen

NAYS -- 33

Dalton Gingell Reid Campbell Farrell-Collins Plant Sanders Stephens de Jong Coell Nebbeling Whittred Thorpe Penner Weisgerber G. Wilson Neufeld Barisoff Krueger McKinnon Masi Nettleton Coleman Chong Weisbeck Jarvis Abbott Hawkins Symons C. Clark Hansen Reitsma J. Wilson

Hon. G. Clark: I'd like to ask leave to make an introduction.

Leave granted.

Hon. G. Clark: We have in the gallery today an old friend of mine -- a current friend of mine -- Ren� Wattell. Ren� is the business manager for the Iron Workers Union, Local 712, my old employer. Ren� is someone I signed up into the Iron Workers Union, and he's now the business manager. I'd like all members to make him welcome.

Hon. J. Cashore: I ask leave to make an introduction.

Leave granted.

Hon. J. Cashore: I'd like the House to recognize in the gallery two residents from Coquitlam, both very strong advocates for social justice: George and Mary Porges. Would the House please make them welcome.

I. Waddell: I am rising not as a former employer of the Premier but to ask leave to make an introduction.

Leave granted.

I. Waddell: Actually, the introduction has been given, but I would like to reintroduce and further introduce my old 

[ Page 2970 ]

friends -- well, he is an old friend -- Mr. and Mrs. George Porges up there. I want to give my best to them and welcome them to the House.

On section 13.

G. Abbott: I'd like to begin our discussion of section 13 by inviting the Minister of Municipal Affairs to advise us, based on section 13, of his view of how municipal grants will be determined in the years ahead.

Hon. M. Farnworth: The grants will be administered in terms of replacing the old structure with the new structure, which is the small communities protection grant and the municipal equalization grant.

G. Abbott: I appreciate that response. I was aware that those are the two components that now replace unconditional grants. The question I'm asking is a slightly more specific version of that. How will those grants be determined from year to year? How does the minister anticipate -- for example, in 1998 or 1999 -- that those will be determined?

Hon. M. Farnworth: I'll answer the question in two parts. There's a formula in place which is used to determine the grants for this year. In subsequent years that formula will be up for negotiation with the municipalities themselves through that joint council process.

When I talked to the hon. member earlier on in section 12 about how it's my intention to consult with the municipalities on what moneys will be available. . . . I also want at that time to consult in terms of how we apportion those revenues. There's going to be some input from the municipalities. It may not stay exactly as it is this current year.

[4:15]

G. Abbott: Again, I don't want to put words in the minister's mouth. I'm trying to come to grips with where we're going in the municipal grants area. The minister can correct me if this is not a correct summary of what he said there. I think I heard him saying that grants may be based on any number of factors, that the formula is very open-ended at this point in time and that the province doesn't have any preconceived notions of how the formula will be determined. Rather, that will be left to a consultative process involving the joint council. Is that a correct summary of what he intended to say?

Hon. M. Farnworth: Could you repeat the tail end of what you just said?

G. Abbott: I'm not sure I can do it quite as eloquently as I did previously. The question I pose is: is the following a correct summary of what the minister said? That the government, at this point does not have any preconceived notions of how the grants will be determined; that the formula is quite open-ended at this point in time; that there may be a number of elements that come into play -- presumably the ones listed here in section 13; but that the determination of what that formula will be, ultimately, is something that will be determined through the consultative process in the joint council.

Hon. M. Farnworth: The components of the formula, as outlined in section 13, will be there. But in terms of the relative value of each of them, in terms of do I have a preconceived outcome -- how it will be at the end -- no. What I want to get to is. . . . I'll go in there and say: "Okay, here's how we did it last year. What do you see as being the most equitable way of apportioning the revenues that are available? Where do you think the emphasis should be?"

There has been some debate within the UBCM already. There are municipalities saying: "Look, the small communities protection program should be maintained." Some say: "There should in fact be more emphasis on that." Others say: "Well, no, we think that there needs to be a more equitable treatment of every community across the province." So those are the types of things that I think we need to hash out at the joint council process.

In answer to your question: do I have a preconceived idea of where it will end up? no, I don't.

G. Abbott: I appreciate the frankness of the minister's comment. I think that's good, and in some ways I think the approach is a commendable one. Again, I want to lament what we've just lost in the last section. I'm not going to revisit that at this point, but I do lament it. Given the direction of the government, it's good that you have adopted the joint council approach and that there will be some consultation in the determination of grants.

One of the advantages to the Union of B.C. Municipalities and its executive is that it tends to reflect the varied interests among municipalities: the small municipalities, the villages, the regional districts, the large municipalities and so on. Again, that's very good. Frequently -- generally always -- the UBCM executive reflects that diversity. In some respects the joint council representatives from UBCM may also reflect that diversity, but not necessarily so. You're getting into a smaller group of representatives when you get to the joint council level.

My next question really flows from that point. Does the minister anticipate some broader consultative process in addition to the discussions that go on with those members of the UBCM who are fortunate enough to be represented on the joint council?

Hon. M. Farnworth: The member actually raises a very interesting and a very thoughtful point. It's something that I have given some thought to. It's a topic that I have discussed with the joint council, because some municipalities have raised it with me.

The approach I am taking right now is to recognize that how the. . . . This is one of the challenges in terms of getting this joint council process to work. Let me back up a second and deal with that. We are still at the early stages. It's not just something that is cast in stone right now. It is going to evolve over time, and one of the things I see happening is that as municipalities come to realize the importance that it's going to play, both in legislative issues and in financial issues, there will be greater awareness and probably a greater degree of wanting to participate. In fact, I expect you will see an evolution over time in who participates and perhaps even in the structure of the UBCM or the joint council itself. But that's an internal matter for the UBCM; that's their decision to make.

One of the things I think will happen -- and it's a challenge that I face and that the cabinet ministers at the joint council process representing the provinces face -- is to make my colleagues aware of how it works and the importance that it plays, in terms of ensuring that we're aware of legislation that's affecting municipalities. The UBCM members have the same challenge, which is to make their members aware of the issues that are being discussed.

[ Page 2971 ]

The executive of the UBCM is substantially larger than the membership of the joint council itself. You are correct that the table officers, so to speak -- the top four positions -- don't always reflect the geographic diversity of the province. The executive does represent all the regions there are, with representatives from villages, regional districts, large interior urban centres and Vancouver. You do get the whole range. My impression of how it's working so far is that there is a fair degree of consultation with the executive by the UBCM members on that joint council process before going to a meeting.

You do raise a good point, and I share that concern. At the same time, the evidence so far, as I see it, is that the issue is being addressed internally by the UBCM. Certainly the table officers -- the UBCM members on the joint council -- are aware of it, and they're taking steps to ensure that there is a range of consultation.

Having said that, in terms of my taking it on to ensure a broad range of consultation, I think that would be a bit presumptuous of me, having committed that the joint council will be the primary focus of discussions. That's how I see the issues being introduced being dealt with there. If out of that, we agree to say that maybe we need to expand it, then we should. But that's the approach I want to take.

G. Abbott: I appreciate the minister's response, and I think that's a responsible way to proceed. Again, I don't disagree at all with the minister's assessment about the way in which the UBCM attempts to communicate with their members. I think they do a very good job of it, and I'm sure the minister concurs. The joint council, hopefully, reflects quite well the structure of the UBCM table officers, etc.

Again, the only point I would make is that I think -- and the minister is probably not going to agree with this assessment -- that there have been grave and very considerable failings in terms of consultation in recent months. I believe the minister has a big job ahead of him in terms of re-establishing some trust and respect between the province and local government. I don't expect him to leap to his feet and agree or disagree with me here. I think I'm stating a fact here, and it's not going to be politically expedient for the minister to agree.

I believe it to be the reality of the situation in British Columbia today. I do encourage the minister -- in the process of developing the new formula or determining the weighting of the different elements in the formula -- to perhaps go that extra mile in the year ahead and try to give municipalities and regional districts in this province a sense that they have been asked what their view is with respect to these issues. I know the minister is a seasoned politician and appreciates that even if it's just being given an opportunity to state a position, the opportunity is appreciated. I do hope that the consultation is widely held.

With that, I would like the minister just to confirm what I think is a fairly straightforward question, and that is that the formula -- if we can call it that -- for determining grants in the future under the terms of this Bill 2 may be any one of, or a combination of, those items listed between subsections (a) and (e) of new section 3.

Hon. M. Farnworth: That is correct, hon. member.

G. Abbott: So, for example, the minister may choose to determine that in 1998, municipal grants will be based exclusively on subsection (a) or subsection (e), if he should so wish it.

Hon. M. Farnworth: Technically, the answer is yes, but the decision is not one that I would make solely as a minister. It is a cabinet decision that would be done by order-in-council.

G. Abbott: I do appreciate that in some respects the minister may choose to use all five; he can use one -- whatever. There may be a range of circumstances that come into play in his determination. What I'm obviously concerned with here, as the critic for Municipal Affairs, is the bill itself as it is laid out in front of me. As the minister has acknowledged, any one of these elements or any combination of them could technically be used in determining grants from year to year. The minister can correct me if I'm wrong in that little summary.

There is one question -- if I can kind of interrupt the flow here for a moment -- that I should have asked a couple of questions ago. The minister suggested that the small communities protection grant and the equalization grant would take the place of what I think were referred to as municipal general grants. I guess that's different than unconditional grants. The old section 2, which we just repealed -- or are in the process of repealing -- referred to municipal general grants. Where in the statute is there reference to the small communities protection grants or equalization grants?

[H. Giesbrecht in the chair.]

Hon. M. Farnworth: They are established by regulation under or through section 3.

[4:30]

The Chair: Member.

G. Abbott: Thank you, hon. Chair, and welcome. Knowing your own background and interest in these matters, I'm sure you will enjoy with some rapt fascination the discussion occurring here.

If I may. . . . In my rhetorical flourish, I almost forgot my question. Just to confirm, then: we will never see the expressions "small communities protection grant" and "equalization grant" in statute. Those will only appear in regulations -- what's the term? -- subsequent to this bill.

Hon. M. Farnworth: That is correct, hon. member.

G. Abbott: Could the minister advise whether any of the five elements listed in subsections (a) to (e) in any way, in a technical or legal sense, fetter the ability of the government to determine municipal transfers at any level which they deem to be appropriate?

Hon. M. Farnworth: No. We set the grants; it deals with the allocations. So it doesn't deal with the level of the grant.

G. Abbott: So, for example. . . . Hon. Chair, excuse me. Almost a lapse there, but I caught myself at the last moment and prevented another unfortunate breach of parliamentary conduct here.

To the minister: is there anything, then, in subsections (a) to (e) which would, for example, prevent the minister and this government from determining municipal grants in 1998 to be zero dollars and zero cents?

Hon. M. Farnworth: Before I comment, hon. member, I just want to say that I could give you a detailed explanation. But in a short lapse, knowing that by giving this answer I'm going to make the member for Okanagan West's day, I'm only going to say a one-word answer: no.

[ Page 2972 ]

G. Abbott: Thank you for the brevity of that answer; not necessarily thank you for the content of it. But we do salute the minister for the brevity of it, and for the honesty.

Again, I think the problem here is that with the repeal of section 2 and the complete emphasis in section 3 on determining grants, we are literally stripping away all of that predictability, certainty and stability from year to year.

The minister can certainly respond to this by saying: "Well, I am a wonderful, responsible, forward-thinking minister." I'm sure he would be right on all counts in saying that. But we are passing a statute here which may live for some time in the province, and other future Ministers of Municipal Affairs may not be as benevolent as the current occupant of that chair. So should we not be concerned with the direction that we're going here? I would never want to introduce a rumour into the House, but one of the rumours that I've been privy to recently is that municipal transfers will in fact be zero dollars and zero cents by 1999. I guess I'm asking the minister what kind of assurances he can give through this bill that that ain't going to be so.

Hon. M. Farnworth: I guess this relates back to a question that took place in an earlier section. The short answer is that if our economy is doing fine, and provincial revenues are in, and we're not getting the transfer download from the federal government, and there are revenues, and we have money for programs and our key areas that we want to protect in terms of health care and education -- that there's funding there -- then I fully expect that we would see the same level of funding, if not an increase, in future years.

We can't tie the hands of the government in terms of where the allocation of resources takes place. If, for example, pulp prices and lumber prices drop at the same time, and you're seeing a reduction in provincial revenues, and the public is saying, "Look, our key areas of priority are health care and education," and -- to quote the member for Delta South, who earlier on in debate this afternoon said, "We need to make the cuts we need to make to balance the budget. . . ." Then we may have to go through an exercise again of identifying areas of expenditure reduction. At that time we may have to revisit the issue of transfers to municipalities.

Interjection.

Hon. M. Farnworth: What I've said, hon. member, is that I want to get to the point where we're able to say to municipalities well ahead of time, well ahead of their budgeting process, "Look, here's what our financial targets are for the coming year; here's where we need to go; here's what it looks like for the money available for municipal transfers this year," and then sit down and discuss how we allocate them.

I can't predict the future, hon. member, and neither can municipalities. But what I want is to try and get us to some sort of point where we're able to notify them ahead of time and we're able to have some discussion around what's available.

G. Abbott: Again, I appreciate the frank acknowledgment by the minister that all of those elements in the Local Government Grants Act that ensured stability, predictability and certainty have been stripped away. Effectively, that's what has been said here. The minister says: "We're doing that to protect health care and education." Were it not for the fact that this government wastes millions and millions of dollars in a whole range of areas apart from health and education, I'd say: "Great. " But there are far more than two areas of expenditure by this government in British Columbia. I think that before they reduce municipal transfers to zero, they ought to look at a number of those areas.

As well, there's a very important point here that I think has been lost on this government, perhaps deliberately. Maybe it has not been lost at all; maybe it's just something that is strategically overlooked or ignored so that it doesn't become an embarrassment. That very important point is this: municipal transfers, in some very considerable measure -- in fact, in large measure -- are a reflection that municipalities and regional districts undertake important work which would otherwise be the responsibility of the provincial government. Grants have been around long enough now -- and, I guess, municipalities have been around long enough now -- that this very important fact has tended to be forgotten.

The reason why it rings important to me is that prior to me having the honour of being elevated to this chamber, I spent quite a number of years on the council of the district of Sicamous. Before that community incorporated in 1989, roads and a whole range of services in the community of Sicamous were the responsibility of the provincial government. For example, all of the streets in the community were maintained by the provincial government or its contractor. When the municipality incorporated, it essentially made a kind of business deal, I guess, with the province, that said: "In exchange for municipal grants, we will undertake to maintain roads, to do a whole range of things which otherwise fall into the area of responsibility of the province."

So I think it's important for this minister and for this government to recognize that municipal transfers are not subsidies, as the Premier referred to them in his rather unfortunate infomercial of last fall. They're not subsidies at all. At the heart of them is a recognition that municipalities and regional districts do things for the province which, if they didn't do them, would be to the financial detriment of the province. Regional districts and solid waste management is a good example of this.

So I think that when the province are looking at this whole issue of municipal regional district transfers, they need to bear this in mind -- that they're not just doing this out of some kind of largesse or a kind of subsidization of the local level of government but that in fact the local level of government is doing things for the province which otherwise would be their responsibility. I'd be fascinated to hear the minister's response to that suggestion.

Hon. M. Farnworth: My initial response would be that local government works best when residents get the services they want to pay for. I understand what the member is saying, but I also think there's a reality that has to be addressed. He made some comments in terms of where expenditure reductions should take place, and he said there's a whole host of areas besides health care and education which should be looked at. Those areas include environmental protection; they include social services; they include a host of areas that are priorities for the people of the province. There's an importance attached to each and every one of them.

Municipalities are important, the environment is important, and health care and education are important. What you have to do is look and say: what are the core responsibilities in terms of the province, and where are our first priorities? When you ask most people in this province, it's fund health care and education.

What we have to do next is what we did, which was to say: "Look, municipalities have a role to play in expenditure 

[ Page 2973 ]

control." One of the problems that municipalities face is that they're fettered by a Municipal Act which restrains their ability to deliver services. Funding is one component. It's an important component -- I don't deny that. And I don't deny that municipalities are upset at the grant reductions. Had I still been on the council in Port Coquitlam, I probably would have been upset, as well. But that's just the here and now.

What municipalities are doing is making choices, and they're doing that on an ongoing basis. It wouldn't matter. . . . I shouldn't say it wouldn't matter. Regardless of where we are in terms of transfers, those choices of where they want to expend their funds would continue to take place.

One of the key things that's important, and one of the key areas that we need to address, is some of those legislative changes that allow municipalities greater flexibility in how they manage the resources that they have and in how they deliver the programs that they have. By changing some of those regulations under which they operate, they would be able to achieve either greater efficiency, new sources of revenue -- or potential new sources of revenue -- or more creative ways of administering the authority that they have.

One of the complaints. . . . What's been asked for -- and comes up at the joint council discussions on a frequent basis -- is: "We understand the government's financial decision. We don't like it, but we understand why you've done it. And we know that it's not going to change, so we have to live with that. But what we want you to do now is allow us, by making changes in the Municipal Act, to better manage the resources that we do have and better manage the opportunities that are available to us by removing some of the constraints, by allowing us to do things a little differently than we've been doing them in the past."

[4:45]

Interjection.

Hon. M. Farnworth: I call it common sense. It's something that I've been advocating for a long time, and it's been advocated by the UBCM. There are a lot of outstanding issues that need to be addressed, and I know that this is getting a bit into estimates debate, hon. member. But the point in the question you raised is one worthy of some discussion, because it's a natural consequence of the grant reductions. If we're doing that, then I think we have to be prepared to make changes to give municipalities more authority and more power. That's the direction that I see us moving in.

G. Abbott: I appreciate the full comments of the minister. But again, the way we have to look at this thing is all based on what appears before us in this bill. Talk is cheap. I think if we had in the past six months seen any kind of shred -- any kind of shadow -- of similarity between the approach that the minister has just outlined and the approach we actually saw from this government as a product of the way they've treated local government, then we'd say: "Great!" But there is no shred of similarity between the approach outlined by the minister and the way that municipalities have been treated through this whole very sorry exercise of gutting the Local Government Grants Act.

Again, this is not meant to disparage the current minister. I know from many of my friends in local government that the present minister is making an attempt to call them and to try to make them feel that they're part of the loop. And all that is very good. I salute the minister for that. Again, though, what we are dealing with is a bill that is going to confer on the provincial government absolutely dictatorial powers in terms of the way in which municipalities can be treated by the province, if the minister chooses to. It makes it very, very difficult to say a kind word about this bill, when it confers that kind of authority on the provincial government in relation to local governments.

For example, we could find the sort of unfortunate and kind of ironic situation where in 1998 -- or 1999 or the year 2000 or whenever it may happen to be -- a small community opens up an envelope from the province that announces that their small communities protection grant allocation for 1999 is zero dollars and zero cents. I'm sure the minister would say: "Well, no, that won't happen." But, in fact, it most distinctly can happen under the provisions of this bill. The minister, I think, has admitted that.

I want to also comment -- and I guess this gets us to a more general level -- about the minister's comments concerning the way in which relations should be conducted between the province and its municipalities. I saluted the minister. . . . I'm saluting the minister a lot today. I don't know why I'm doing this -- probably because this is all getting ready to slam him in a little while.

I mentioned the other day that I welcomed his conversion, his borrowing, his lifting of the joint council concept from our community charter. I think that's a great step ahead. It's too bad that that hadn't been lifted a little while ago by this government. Perhaps the whole sorry scene of the last few months might have been avoided -- probably not. Obviously there are some fiscal realities being pursued by this government which made inevitable their $113 million ripoff of local government in recent months. But nevertheless, maybe the joint council might have helped in some way. So it's great that the minister is moving in that direction.

He now advises us that in a range of other areas -- the elimination of regulation, the streamlining of the Municipal Act. . . . This is excellent, as well, and I really welcome the conversion of the Minister of Municipal Affairs to the concepts of the community charter in that regard as well. In terms of local empowerment, the minister has indicated that what this government wants to do is empower local governments to make them more responsible for their own destinies and free them from a range of unnecessary regulations from Victoria.

Interjection.

G. Abbott: Absolutely. I couldn't have put it better.

S. Hawkins: What did he say?

G. Abbott: I believe he said: "Eliminating the shackles of. . .?

Hon. M. Farnworth: The yoke and shackles of running-dog imperialism.

G. Abbott: The yoke and shackles of running-dog imperialism. Well, I don't know if I could quite put it in those terms, not being able to embrace some of the socialist dogma that perhaps the minister enjoys.

But it is good. . . . I think it's excellent that he is proposing to do that. I think, however -- and maybe the minister will want to go on and agree with me here as well -- that there is an important difference between what we proposed to do in our community charter and what this government has in fact done in recent weeks and months.

[ Page 2974 ]

That is that the whole of our community charter is based on the notion of consultation and concurrence between provincial and municipal levels. Further, it is very much based on the proposition that in the devolution of responsibility to the local level of government, there are resources that should accompany that devolution, as well. That's one of the reasons, for example -- and the minister may want to comment on this -- that we have in our community charter a commitment to returning 75 percent of traffic fine revenue to local government for the purpose of youth crime programs, anti-vandalism programs, more policing and those kinds of things.

So what we have -- and I think this is where the current government hasn't quite yet captured the essence and spirit of the community charter -- is that if you are going to devolve authority to the local level of government, you must also devolve resources to go along with it. I invite the minister's comments on my comments.

Hon. M. Farnworth: I'm impressed. I'm really impressed with the hon. member, because here I thought that in all those municipal conferences we have been to together over the last few months, he wasn't paying attention to my speeches. I see that he was, and I am touched.

I think it's wonderful, because I can tell you, hon. Chair, that one of the things I have constantly said since becoming minister is that not only do we have to empower communities, and not only do we have to reduce the Municipal Act -- which at over 1,000 sections is the largest provincial statute on the books -- and make it more suited to the needs and the aspirations of municipalities, but we have to do it through a consultative process. We also have to address and recognize that they do need some resources. It is time to put to rest some of the outstanding issues that have been bugging municipalities for a long time.

One of the key ones that I am so glad my hon. colleague across the way mentioned was the issue of traffic fines. Since taking on this position and in instances before that, I've said that it's inconceivable that since 1984, when I attended my first UBCM convention. . . . The issue of traffic fines and traffic fine revenue was a resolution at that convention. It has been a resolution at just about every convention since then, and I think it's time we addressed the issue.

I can tell the hon. member that at the last meeting of the joint council, we raised that issue, and we're dealing with that issue because I think it's time we put it to bed. It will give municipalities some more financial resources, and at the same time I think it's also an important way of addressing problems around public safety.

So yes, hon. member, it's something that is at the joint council table. It's something that I think needs to be done, and I can tell you that it's an issue that I, the Attorney General and the rest of the representatives of the government at the joint council table are pursuing and working on.

G. Abbott: Delight is absolutely bouncing back and forth across the chamber here today. This is some kind of love-in, I have to say. It's a disturbing new trend here in the Legislature of British Columbia that this is occurring.

While the minister is primed and warm -- a finely tuned machine -- I just want him to confirm that what he has just said, and I'm sure he will want to state it unequivocally now, is that there will be no devolution of responsibility to municipalities and regional districts without a corresponding devolution of resources.

Hon. M. Farnworth: I think we need to separate two issues. The issue of traffic fines and revenue is a longstanding issue, and it is not tied to the devolution of authority.

In some areas, devolution of authority doesn't anticipate resources being transferred. What it may anticipate is the elimination of regulation. It may anticipate or may require the elimination of approval processes. It may be a recognition that the province. . . . For example, we're currently engaged in negotiations with the GVRD around the areas of transit and transportation, and the funding and how you pay for it is part of those negotiations. That's something that's being negotiated.

I think it's slightly erroneous to suggest that a devolution of authority automatically requires a devolution of resources; the other side of that is that some devolution of authority may well require the devolution of resources. But I want to tell the hon. member that the approach we're taking is that discussion takes place at the joint council level. That's the process in place, and I think that's how we're going to come to some sort of agreement. It's not my desire to see it work any other way.

G. Abbott: That wasn't quite the ringing endorsement of the proposition I had hoped for. I appreciate that the minister is trying to signal to me here that these are issues that the joint council level will occupy itself with in the future and that he wouldn't want to boldly enunciate a principle when there are all kinds of details to be sorted out at the joint council.

But, again, I think it's important to recognize that we're dealing with Bill 2 here. We are trying to anticipate what the new world of provincial-municipal relations is going to be like in the post-Bill 2 era. It may not be pretty. I want as much as possible here to learn from the Minister of Municipal Affairs the manner in which, broadly speaking, local government will be treated by the province in the years ahead. I think the point I was making about responsibilities on the one hand and resources on the other is in fact a very important one to be considered in the context of this bill.

Now, the minister rightly points out that in some instances, a shift in responsibilities doesn't necessarily require a shift in resources. However, I would suggest to him that in virtually all the cases I can think of -- at least where, realistically, over the next five years, ten years or 20 years, responsibilities will be shifted to the local level of government from the provincial and perhaps even from the federal government. . . . In virtually every case, these are in fact the areas where there are going to be very significant costs to local government.

[5:00]

Just off the top of my head, the ones I can think of that are probable areas of devolution to local responsibility. . . . Health is certainly one area where, for example, provincial health inspectors may at some future point become regional district or municipal health inspectors. A number of the positions in the provincial health bureaucracy may become the responsibility of local government. That will, in a very direct way, become costs to the local government.

Similarly, I know that at this point in time, the Ministry of Transportation and Highways is working as vigorously as it can to try to get regional districts to undertake some of the planning and technical responsibilities that they currently have in terms of, essentially, local approvals. They would like to see those shifted to regional districts or, in some cases, to municipalities. Again, it involves personnel, and it involves costs to the local level of government in a very direct way.

[ Page 2975 ]

Similarly, transit: that's going to be, potentially, a very huge shift. I know the minister is working on ways. . . . In that case, you will have to very clearly identify the resources that will be shifted along with the responsibility.

In environment, we've already seen the provincial government -- not this one, but the previous Social Credit government -- mandating regional districts with the responsibility for solid waste management across the province. Again, particularly given the rules that have been put in place for regional districts on solid waste management, that has incurred absolutely huge costs to that level of government.

The question that I'm posing is not a hypothetical one. It is a very real concern on the part of local government that responsibilities will be shifted to them but that there is not necessarily any commitment -- certainly not a long-term commitment -- by this government to provide them with resources as well. So I'd like the minister to respond to that rather long dissertation on devolution.

Hon. M. Farnworth: I understand what the hon. member is saying, and I'm sure we'll debate this further in estimates.

Interjection.

Hon. M. Farnworth: Pardon?

An Hon. Member: We want to.

Hon. M. Farnworth: Undoubtedly.

The point that I'm making is that I don't anticipate devolution taking place without a consultation through the joint council process with the municipalities. As far as I'm concerned, the key principle in how the joint council process has to work is that change has to go through that joint council process. That's my number one priority as minister.

I also recognize that in some cases there will be resources that have to go with a transfer of responsibility and that it should be mutually agreed to. As we've already pointed out, sometimes you don't have to have that. You don't have to have a transfer of resources, because you are getting rid of regulation approval processes that add to costs for municipalities. Basically, you've got a duplication of red tape here in Victoria with red tape at the local level. And by eliminating that, you free up resources.

There's a realization, certainly on the part of the government, that there may well have to be a reallocation of some resources. One of the things that's taking place is that the change I want to introduce. . . . And it reflects back to an earlier comment the member made that the government isn't doing anything, but it's imposing. . . . It is a legislative program I'm advancing that has been discussed at the joint council in terms of legislation that we could introduce this session and in terms of legislation that we could do next session that addresses some of those key areas that municipalities feel straitjacketed by -- some of the sort of key areas that either impose costs on them that they could get rid of or address issues that they could generate revenue out of. Those are issues that are raised by the municipalities.

What I want to do is to. . . . I've told the joint council -- and I've told Gillian Trumper, the head of the UBCM -- that in terms of legislative change and addressing changes to the act and the very issues that you've been raising, I want to know what their priorities are. I want to know them early, so we can start to work on them. That's how I want the changes to take place. It is to be very much the municipal priorities that we deal with at the joint council process, so that I can get my ministry and affected ministries working on it and we can introduce legislation sooner rather than later. That, in a sense, is a sign of the government's commitment that a process of change has got to take place and that you're eliminating duplication, you're eliminating approval processes, you're eliminating some of the obstacles that stand in the way of municipalities delivering the services that local government provides, because that's what local people want.

At the same time, we're also ensuring that there's a longer-term process put in place to manage change in a logical, constructive fashion so that it's not done randomly. People can look at it and see that we're going to address this area this year, that area next year and another area the following year. Here's what the results are going to be, and here's the time line it's going to have. We can look and see what types of resources need to be allocated. We can agree on what it is that we're going to look at and on some things that we may decide not to look at.

I accept the member's points. I think we are addressing the concerns he is raising, and I've made that commitment to the joint council. It's been very much -- in the meetings we've had to date -- how I intend to move the process forward.

G. Abbott: Again, I appreciate the minister's acknowledgment of the validity of the proposition I put forward. That's excellent -- a step in the right direction.

What I'm concerned with here is that there is still -- notwithstanding the minister's comments -- the real problem of the discrepancy between what this government is prepared to commit to in terms of process and their willingness to make a commitment regarding principle. Again, I put forward the proposition to the minister that this government should commit, if they want to be true to the spirit of the community charter, which they want to adopt, in some respects. . . . If they wanted to be true to that, they would commit very readily -- hopefully -- that there would be no devolution of responsibility without a corresponding devolution of resources. The minister has been reluctant to embrace that.

The reason I'm very much concerned with that discrepancy and with the minister's reluctance to embrace the proposition, particularly in the context of this bill, is that again what we had in section 2 of the Local Government Grants Act, which we have -- at least the government has -- just voted to repeal, is a commitment to continuity, a commitment to principle. It is essentially the repeal of the underlying principle of the bill. This government is prepared to say that in some. . . . Superficial is unfair; it's more than that. But only in some respects are we prepared to adopt the spirit of the community charter. We are not prepared to commit on our part that if we want to give local government more responsibilities, we are also prepared to give them more resources. I think that is certainly something that local government seeks and something that the provincial government ought to readily acknowledge and give their blessing to.

The province has, as we have noted on a few occasions, adopted some aspects of our B.C. Liberal community charter. They've adopted the joint council. The minister has now indicated that that new joint council is committed to looking at a range of streamlining measures for the Municipal Act. It's looking at a variety of issues which, again, are very good.

What the minister needs to give his serious consideration to is a need to adopt or commit himself to the fundamental underlying principle of the community charter; that is, no 

[ Page 2976 ]

transfer of responsibility without a transfer of corresponding resources. I don't think the adoption of some elements of process -- the adoption of a joint council and so on -- really means a whole lot unless the government is prepared to do that. So, with that. . . .

Again, we're very much concerned with this bill, because section 2 of the Local Government Grants Act was founded on the principle that there should be continuity from year to year in transfers to local government. Unless I'm sorely mistaken -- and I hope that the minister can point out something here that I'm missing -- the only underlying principle that I see in the amendments in Bill 2 is that the government should not be fettered in any way in its discretion in determining local government grants or transfers from year to year. I'd like the minister's comments on that.

Hon. M. Farnworth: I guess what we come back to is the ultimate. . . . I guess the point in this discussion and the point that I'm hearing from the hon. member is that we should automatically commit resources when there's a devolution of authority. That seems to me along the line of: "Well, we want you to do something; we're going to give you more money to do it." That's not necessarily the solution.

What we've said we want to do, and what I take as the guiding sort of principles, are (1) the protocol itself that was signed, and (2) the position: "Look, we want to make changes. We want to devolve authority, but it's not a one-way devolution. It's done on the basis of a request from the municipalities on what the municipal priorities are."

As I've pointed out to the hon. member, that does not necessarily involve resources. It may in fact involve changes that allow municipalities to more effectively use the resources they've got. They may also come and say: "Look, we want you to give us this authority, but it will require resources to either administer that authority or to administer a particular program." In which case, we're willing to sit down and say: "Yes, that's a good idea. For this reason we'll devolve the authority, and we'll devolve the resources." Or we may say when we come to the joint council table: "Look, we would like to do it. Make changes in this area." And the municipalities may say, "Fine, but we need resources to do that," and we can have a discussion about that, a negotiation over that. We may in fact do that.

As the hon. member himself pointed out earlier on, we need to address the issue of traffic fines and traffic revenue. He stated that his position at that time was that it was something he thought was a good thing, and that the money should go to traffic programs and to preventive programs. That may be the right and good thing to do. On that point, I may say: "Look, yes, we have to address that problem and resolve that issue." But where you allocate the resources that come to the municipality when we do that. . . . Let's say we reach an agreement on traffic fines. That allocation of resources is up to you. You may choose to put it into general revenue, into parks and recreation, in traffic safety, in whatever program you want. That's something that can take place.

[5:15]

The point I'm making is that I see the underlying principle for change in the relationship between the province and municipalities and how it needs to go as one of negotiation, and that I'm willing to look at all the options. I don't take it as cut-and-dried, as is the impression I'm getting from the hon. member -- that just because you devolve authority means an automatic devolution of resources -- because it doesn't. It varies. I'm willing to look at requests through the joint council process that cover the whole range.

G. Abbott: There's a few things that I think deserve comment from the minister's statement. The first thing that I want to. . . . I think the minister already knows this, but for the record, we are committed to a sharing of traffic fine revenue. It is not our view that we are going to determine where that revenue is going to be used in the municipalities or. . . . I guess it would only be municipalities; it wouldn't be regional districts in this case. It would be up to them to determine where they felt it was most appropriate to see that used -- just for the record.

Getting back to the more important or broader point that we're dealing with here, the issue of whether the province should commit to the principle that along with responsibilities should go resources, there's a lot of reasons why I'm harping on this particular point with you. I spent 17 years in local government prior to coming here. I don't know on how many occasions over those 17 years I saw examples of where. . . . This is not all referring to your own government. Most of my years in local government, actually, were with Social Credit governments in power in British Columbia.

I've seen on too many occasions, over the years, examples of where the province decided they no longer wanted to do something, and surprise -- one day the municipality or the regional district opens up a letter to find that it has inherited a new responsibility. Sometimes, along with the advice that they have now inherited the new responsibility went some measure of compensation -- a temporary grant or whatever -- to get them to do something. For example, when the Social Credit government decided in the late 1980s that regional districts should be mandated the responsibility for solid waste management across British Columbia, there was a series of grants that were put in place, designed to encourage regional districts to undertake solid waste management plans, to set up recycling programs and so on. There was a range, in short, of provincial government resources or supports which were aimed at inducing regional districts to undertake that responsibility in a relatively cooperative fashion, and indeed many did.

What we've found since then, and even when I was still in local government, was that once the regional districts were committed to that new regime of solid waste management in British Columbia, the grants moved from 50-50 or 75-25 to 25-75, and then the following year they were gone completely. The province had achieved its objective of getting the local government to undertake a new responsibility. But in the long term there was no commitment of resources.

I'll also offer to the minister one more of my particular pet peeves in this area of what I think might be termed provincial government downloading -- that is, the aquatic plant management issue, or Eurasian milfoil control, in British Columbia. When that first became a problem in the early 1970s in British Columbia, the province stepped in and set up their program. They were carrying 100 percent of the cost.

A year or two after carrying the program on their own, they induced local governments, regional districts, the Okanagan Basin water board and so on to get in it by offering a 75 percent provincial, 25 percent local funding formula, which the province argued would allow a comprehensive ongoing program with a strong local component that would guide the program. Over time, in 1994, the provinces were induced by a five-year written agreement with the province -- $450,000 per 

[ Page 2977 ]

year from the province to local government -- to go to a 50-50 funding formula. In 1998 we find that the province is going to budget precisely zero dollars and zero cents in its budget for this function, even though it is committed by contract to continuing that through, I believe, 1999 or 2000.

I think that's a rather stark and disturbing example of the province inducing local government to undertake a function and then, once they have induced them to do so, turning around and tearing away all of the resources which brought the local government into that function in the first place. That is the reason why I am here trying, rather persistently, to get the province to commit to a principle. A principle is a principle. Perhaps in some instances there may be extenuating circumstances why this is not possible, or maybe it doesn't come into play in some situations. But again, as I've explained -- from long experience in local government -- in most situations, if you're going to transfer new responsibilities, it's important that you are prepared to commit to transferring resources as well. I think that's the whole spirit and intent of the community charter. If the province is moving in that direction, I think it has to capture that, as well as capture some of the framework of the charter itself.

Hon. M. Farnworth: I understand what the member is saying. I guess I can refer back to my previous answer, in that some transfer of authority will involve a transfer of resources and some won't. But I'd like to look at another avenue and another aspect of this whole issue. I know the member had extensive experience in local government, as I did during the eighties.

I think that one of the problems that's happened in the past -- and here's where I have a concern with what he's talking about -- is that governments of the day, regardless of stripe, had a habit of introducing programs or dealing with shifted responsibilities, and putting in place grants or financing, with the unwritten expectation that they were there in perpetuity. What happens is that you institutionalize certain types of funding that deal with either a particular problem or a particular issue. There's no recognition, over time, that circumstances -- be they political or financial -- change or, in the case of the problem itself, circumstances change.

We can go back. For example, let's look at the issue of pollution. There was a time when there were all kinds of pollution abatements. At the time, it was the right thing to do, and it was a way of getting the municipality or industry or whoever the polluter was to clean up. Over time, technological change comes along and the original problem isn't there. But the money that's going to that problem is still there, when instead it shouldn't be there; it should be allocated somewhere else.

I think we have to get away from this idea that we transfer authority with resources allocated to it and that there's a sense of perpetuity there. I think what we have to get to is a sort of. . . . We have to recognize, if there's a specific problem, that we try jointly on how we're going to agree on it, how we're going to address the issue, or how we're going to address the particular problem. For example, if the province or a municipality or a regional district is taking on a responsibility, then maybe what's required is to say: "We'll transfer X number of resources for X number of years." We need to look at defined problem arrangements. There may be a long-term solution, and once that's achieved, you end funding. Maybe it's a short-term problem for which you can provide funding until something else is in place. But what I'm concerned about is getting into sort of long-term funding agreements.

The other point I want to make -- and I want to come back to it because I feel very strongly about it -- is that a lot of the changes that are required are changes that allow municipalities to more efficiently manage the resource they've got. They don't necessarily require that devolution of resources. One of the key ones that takes place, or that's asked for by the municipalities, is the ability to lease land over the long term, particularly in the provision of new facilities or other public buildings.

If we make the change the municipalities want -- and it's something that I think we need to do -- you're allowing them a more effective use of their resources and to bring in resources from the outside. To me, that is a case of devolution of authority which generates more resources for the municipality and doesn't require a transfer of resources to the municipality from the province. The way I see it, it's a question of negotiation, which comes back to the principles enshrined in that protocol and that joint council process: we sit down and discuss, we come to an agreement there, and then we act on it.

I understand what the member is saying; it's just that I don't necessarily agree that that's the fundamental principle, because the situations are different. It's got to be based on what municipal priorities are, and there's a wide divergence in the requirements for delivering on what those priorities are. Some require resources; some don't. I've said that if there's a move of authority that doesn't, we're more than willing to look at it, and we're more than willing to negotiate.

G. Abbott: First of all, with respect to the issue of amending the Municipal Act to permit municipalities the ability to enter into longer-term leases for the purpose of public-private partnerships and so on, I think that's good. I understand that the minister will be introducing amendments to the Municipal Act in this session to do that, hopefully, and I think that's good. I think your example of devolution without associated or corresponding costs is a good one, and I acknowledge that. I hope that the minister can acknowledge that I could probably pull 57 examples out of my case of where in fact it will require costs or resources.

I think we probably flogged this particular horse long enough. I'm sure we'll. . . .

An Hon. Member: The horse is dead; get off of it.

G. Abbott: The horse is dead. They say we've flogged it so badly that we have taken it into a state of demise.

I don't know that there's great value in pursuing that any further, in terms of the context of this bill. Undoubtedly we will be pursuing this, and undoubtedly there will be a legion of interested observers when we do it in estimates. I'm sure we can both look forward to that.

[5:30]

Moving along here, the important point that I want to stress is that there is an absence of principle in the way in which municipal transfers are dealt with in Bill 2, as opposed to the very real principle of continuity, which underlies the Local Government Grants Act -- at least prior to its amendment here. So that is, I think, the very important point that I've been attempting to make in our long discussion here on this area. It's been valuable and scintillating, and I appreciate the minister giving some idea of where he's headed in this area. But perhaps we should be moving along here -- to the delight of many who are observing today, I'm sure.

[ Page 2978 ]

In subsection 3(a), "a fixed amount for each municipality or regional district. . . ." Could the minister advise how this would ensure stability, predictability or certainty in local government transfers from year to year?

Hon. M. Farnworth: That section is basically a starting point which the rest of the formula operates on, and it wouldn't be used by itself.

[R. Kasper in the chair.]

G. Abbott: I guess the question really is: what does this section mean? I'd like to know in more precise terms what it will mean to a municipality or regional district that subsection 3(a) prescribes a fixed amount for each municipality or regional district.

Hon. M. Farnworth: One example would be that we could say that every municipality or regional district will get a particular fixed sum of money.

G. Abbott: I'm not sure if I can embrace the rather astonishing lack of specificity in that answer or not.

For example, to go back to a point I made earlier, is there anything in Bill 2 which would in any way fetter the minister should he or she decide that the fixed amount for each municipality or regional district should be, in any given year, zero dollars and zero cents?

Hon. M. Farnworth: No. There's nothing that fetters the ministry, other than debate in terms of estimates and in terms of what resources are available.

G. Abbott: I again want to thank the minister for his candour. In fact, there is absolutely nothing in subsection 3(a) which would ensure that the grant from year to year is going to be anything above zero. Hopefully, it can't be below zero; perhaps there is that degree of certainty, anyway. But there's nothing that would require it to be above.

Is there anything in subsection 3(a) or, indeed, in Bill 2 which would require the Minister of Municipal Affairs to consult with municipalities and regional districts prior to the determination of this fixed amount?

Hon. M. Farnworth: New section 6 in section 14 would require us to do that, hon. member.

G. Abbott: I would like the minister, then, to confirm that when the reference is made in section 6 -- "At least annually, the minister must consult with representatives of the Union of British Columbia Municipalities regarding the administration of grants under this Act" -- it is implicit that not only are they discussing the administration of these grants but also the amount.

Hon. M. Farnworth: I don't mean to be procedural here, but we are sort of debating an issue that occurs in section 14, and we're still on section 13.

G. Abbott: I only leapt ahead to reference new section 6 in section 14 because the minister had already done that. I was trying to determine whether there is a fixed commitment to consultation with respect to the amount to be arrived at in subsection 3(a). As I read the bill there is not at this point in time, but I'm hearing from the minister an indication that in fact there is.

Hon. M. Farnworth: There is a requirement in a section after this that requires us to consult with the Union of B.C. Municipalities.

G. Abbott: Again, I don't want to leap ahead in time here and be chastised by the minister once again; it's an interesting little chase that we're doing around the mulberry bush here. Perhaps there are ways in which the certainty of consultation can be arrived at.

Let's move on, if I may, to subsection 3(b): ". . . the population of a municipality or regional district." I presume that this is just a very straightforward element that may be used to shift the grant up or down, based on population -- that there's nothing else to this section. It's very straightforward.

Hon. M. Farnworth: That is correct, hon. member.

G. Abbott: Subsection 3(c): ". . . the total annual expenditures or revenues of a municipality or regional district." It's interesting -- and I'm sure the minister will give us the definitive explanation of this shortly -- that this is a minor change from the Local Government Grants Act as it existed prior to Bill 2, because there is included a reference to "or revenues" as well as annual expenditures. Can the minister advise the reason for and the significance of the addition of the words "or revenues" in this context?

Hon. M. Farnworth: Basically, subsection 3(c) reflects the change that took place from the previous year to this year. It is identical except for the addition of the word "revenues." So whereas last year the formula was a determination based solely on expenditure, this year it was based on revenues.

G. Abbott: I actually understand that, because that's what it says here. What I'm attempting to get at is why, and what the significance of it is.

Hon. M. Farnworth: It's now part of the formula. The formula is changed. We didn't use it last year, but we're using it this year. And it's now a part of the mix that could be used in future years, so that's why it's in there.

G. Abbott: I appreciate that the formula is being changed, because there are the words "or revenues" that weren't there previously. So yes, it is part of the formula now. Why have those words been inserted, and what is the significance of that?

Hon. M. Farnworth: To make sure the impact of the changes that take place can be fairly and equitably distributed to the municipalities.

G. Abbott: I'm still not sure that my question has been answered, but at least he got a little bit closer there. Let me pose the question to you in this way. One of the suggestions I have heard in recent weeks is that this reference to "or revenues" is a way for the province to indirectly penalize those municipalities that have efficiently or effectively handled their revenues and/or their reserves. No truth to that? Truth to that?

Hon. M. Farnworth: No, there is no truth to that whatsoever.

G. Abbott: There is a collective sigh of relief across the province at that definitive response to the question. I appreciate that.

[ Page 2979 ]

Subsection (3)(d): ". . . the converted value of land and improvements within a municipality or regional district, within the meaning of section 820 of the Municipal Act." As I read it, this is a pretty straightforward element in determining the formula. Can the minister advise of its purpose and whether it's as straightforward as I anticipate?

Hon. M. Farnworth: It's a per capita assessment. It's weighted to ensure that all municipalities are treated equally, and it's also part of the formula.

G. Abbott: I deduce from that response that this is a fairly straightforward quantitative element in the formula and not something which could be influenced by any external factor like politics or that sort of thing.

Hon. M. Farnworth: We would never do that.

G. Abbott: Really? Now there's a news flash!

Subsection (3)(e) -- this is one that fascinates me. I guess it wouldn't have fascinated me had not the government just voted to repeal the former section 2 of the Local Government Grants Act. In the context of Bill 2 and the Local Government Grants Act as it will be amended subsequently, subsection (3)(e) again appears to me to be. . . . As it says: ". . . any other prescribed basis." It would appear to me that this gives the Minister of Municipal Affairs and the government pretty much the unfettered discretion to determine municipal grants at any level they choose. Is that correct?

Hon. M. Farnworth: This particular section is not used in the formula itself -- it's not a change from the old act, and basically you could say it's for contingencies. There could be emergencies that arise that you could use that section for. But in terms of how the grant was operated previously or how it would be operated in the future, it will not have a direct impact.

[5:45]

G. Abbott: Would the minister nevertheless acknowledge the point that I am making here -- that this "any other prescribed basis" did not have any particular effect when section 2 of the Local Government Grants Act existed because, of course, that gave some stability, certainty and predictability from year to year about local government transfers. But having repealed section 2, this "any other prescribed basis" takes on a whole new meaning and potentially a whole new importance in terms of how grants are to be determined from year to year.

Hon. M. Farnworth: To the hon. member, my previous answer still stands: it's not part of the formula. And it won't be used in the determination of future grant allocations. It exists there as a contingency measure, and that's all. It allows us some flexibility. But it's not some sort of nefarious scheme where we can reward some municipalities and not reward other municipalities. It exists to put a degree of flexibility in the act and to give the government a degree of flexibility, that's all. It's not -- and never has been -- part of the formula, nor will it be.

G. Abbott: One of the last things I'd want to do is accuse the Minister of Municipal Affairs of being nefarious. I do, however. . . . Again, in the context of this bill and in the context of the Local Government Grants Act as amended, this could have enormous consequence. If the government decides in 1998 that, as I think the Premier once said, "subsidies to municipalities are something we can no longer afford" -- period -- then it may very well be that this "any other prescribed basis" will become an enormously important element in the determination of grants.

Let me just put this into an overall question on section 13 here. Perhaps the minister can in a way summarize for me: tell me what there is in subsections (3)(a) to (3)(e) that provides, from year to year, stability, certainty and predictability in local government grant transfers?

Hon. M. Farnworth: I'll come back to an answer to the previous question -- okay? The key is the government determining the allocation. These are guidelines as to how the moneys are allocated. If we're not continuously being bombarded by federal cuts, if we're not facing huge reductions in federal transfer payments, if the price of pulp isn't rock bottom, if the price of lumber isn't rock bottom. . . . If our revenues are coming in and the economy's performing fine, then I don't see any reason why we need to look at making decisions that reduce transfers to municipalities. But if those things do occur and, to quote the member for Delta South from earlier on today, "we need to make the cuts we need to make to balance the budget," and at the same time our priorities are health care and education. . . .

I notice the other member is yawning. You know, it's the same answer to the same question he asked before.

If we're not forced to make choices to protect health care and education, then I don't anticipate cuts being made on Municipal Affairs.

G. Abbott: I think the sum of the minister's answer to this -- and indeed all the previous questions with respect to section 3 -- is that there is absolutely nothing in Bill 2 which will provide stability, certainty and predictability from year to year. There is absolutely nothing in this bill that would do that.

I found it interesting, given our discussion here today. . . . I have a copy of a letter to the South Cowichan Restructure Study Committee, a group up-Island that's looking at the possibility of incorporation. They wrote to the Ministry of Municipal Affairs to inquire as to what amounts they should include in their restructure study for provincial transfers to the potential new municipality. The letter reads. . . . I won't put the whole thing on the record, but I'll put the important, applicable sections on the record:

". . . with respect to the recent changes in the annual provincial grants to municipalities, I am not in a position to anticipate what the ministry will provide to any municipality in 1998. In this sense, South Cowichan is in the same situation as all of the existing municipalities. . . . Ultimately, it is the committee which must decide what information to present to the public, as there is no certainty with respect to ongoing grants. In cases where there is some uncertainty, the ministry generally advises a more conservative approach rather than an optimistic one."

So there I think we have, in rather precise terms, the Ministry of Municipal Affairs outright admitting that they do not have any idea what municipal grants will be in 1998. That much is very clear.

While this entire bill is flawed, what I would like to do at this point, in hopes of at least marginally improving it, is move an amendment, hon. Chair, as it appears on the order paper. I would like to move that section 13 be amended as follows:

[ Page 2980 ]

[SECTION 13, to read: Without limiting section 1, the amount of a class of unconditional grants must be determined on the basis of one or more of the following, as prescribed by regulation, but subject to any minimum or maximum prescribed by regulation:

(a) a fixed amount for each municipality or regional district to be determined after the Minister consults with the City of Armstrong, the Township of Spallumcheen, the Village of Chase, the City of Enderby, the District of Salmon Arm, the District of Sicamous, the Columbia Shuswap Regional District, the City of Revelstoke, the City of Kimberley, the Village of Radium Hot Springs, the District of Invermere, the Town of Golden, and the Regional District of East Kootenay by July 31st of each year;

(b) the population of a municipality or regional district;

(c) the total annual expenditures or revenue of a municipality or regional district;

(d) the converted value of land and improvements within a municipality or regional district, within the meaning of section 820 of the Municipal Act;

(e) any other prescribed basis to be determined after the Minister consults with the City of Armstrong, the Township of Spallumcheen, the Village of Chase, the City of Enderby, the District of Salmon Arm, the District of Sicamous, the Columbia Shuswap Regional District, the City of Revelstoke, the City of Kimberley, the Village of Radium Hot Springs, the District of Invermere, the Town of Golden, and the Regional District of East Kootenay by July 31st of each year.]

Hon. M. Farnworth: Hon. Chair, the proposed amendment is out of order because it requires an expenditure by the Crown. And I would ask that you so rule.

G. Farrell-Collins: I understand the minister's comments -- his point of order. However, I think if the minister looks further ahead in the bill. . . . In fact, he doesn't have to look very far. All he needs to do is look at section 14 on the next page of the bill, which is an amendment or a change to section 6 of the act. It says that "at least annually, the minister must consult with representatives of the Union of British Columbia Municipalities regarding the administration of grants under this Act."

In effect, what's being added in section 13 is a clarification -- in this one amendment, anyway -- of who comprises the Union of British Columbia Municipalities. For the minister to have to consult with representatives of this community, he also has to consult with representatives of the Union of British Columbia Municipalities. Therefore the amendment, rather than impose an additional charge on the government, merely clarifies the requirements that exist further on into the bill.

The Chair: Hon. members, it is clear that the amendment as proposed is out of order on the following grounds:

1. It imposes an obligation on the Crown. In this regard, I refer hon. members to the British Columbia Journals of March 27, 1963, at page 197; August 25, 1983, at page 116; February 14, 1985, at page 140; and March 22, 1991, at page 156.

2. The amendment as proposed dictates government policy. In this regard, I refer hon. members to the British Columbia Journals of March 20, 1964, at page 179, and March 26, 1965, at page 198.

3. The amendment involves the expenditure of public funds, contrary to standing orders 66 and 67 of this House. I refer hon. members to the British Columbia Journals of January 23, 1969, at page 13; March 28, 1966, at page 183; January 25, 1968, at page 12; and April 3, 1970, at page 238.

For further guidance of the members, I refer them to Parliamentary Practice in British Columbia, third edition, at pages 144 through 147, and to Erskine May, the seventeenth edition of Parliamentary Practice, at pages 781 and 782.

I have examined additional proposed amendments to section 13 which appear on the order paper, and for the reasons stated above, they too are out of order.

G. Farrell-Collins: Actually, I noticed the critic rising, and I'll yield to him at this point.

G. Abbott: I guess I'm mildly disturbed that when I asked. . . . No, I'm not mildly disturbed. Actually, I'm disturbed that when I asked earlier on, in response to a question about section 3(a), whether there would be consultation with local government with respect to that, the minister assured me that under section 6, municipalities would in fact be consulted on this issue. Now, consultation obliges an additional commitment by the Crown. I'm puzzled, hon. Chair, at what the distinction is here.

Hon. M. Farnworth: I would draw the member's attention to what section 14 says. It says: ". . .annually, the minister must consult with representatives of the Union of British Columbia Municipalities regarding the administration of grants under this Act." And that is what we intend to do through this particular section, not in the way in which you wanted to do it, through section 13.

Hon. P. Ramsey: Hon. Chair, noting the hour, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Committee of Supply A, having reported progress, was granted leave to sit again.

Hon. P. Ramsey moved adjournment of the House.

Motion approved.

The House adjourned at 6 p.m.

The House in Committee of Supply A; W. Hartley in the chair.

The committee met at 2:39 p.m.

On vote 16: minister's office, $429,000 (continued).

[ Page 2981 ]

A. Sanders: Are the staff present, so that we can talk about liquor distribution and all that stuff?

Hon. U. Dosanjh: Yes, all that stuff.

A. Sanders: Okay. All the good stuff, eh?

I'd like to ask the Ministry of Attorney General to turn their minds to the government revenue and expenditure programs relating to alcohol, tobacco and gambling. There is the recognition that in British Columbia $5 billion is spent every year on alcohol, tobacco and gaming. As a direct result of that expenditure, the provincial government collects revenues of $1.4 billion, which is a considerable amount and represents 7 percent of the total government revenue.

Because this is such a significant amount of money, it is necessary to say that it doesn't come without the concomitant risks of the downside of these activities. One thing in government that we must do is balance the social responsibilities with the opportunities to maximize revenues. Government programs to establish clear direction for managing alcohol and tobacco sales and gaming revenues are a responsibility that maintains that programs must be set -- goals for programs, access control. The area I would like to focus on specifically is minimizing the health and social costs of these activities.

What was found by the auditor general and done in a report was that public interest in government's role in the regulation of these activities -- specifically alcohol, tobacco and gaming -- is increasing. The control of liquor and gaming as well as the federal initiatives in tobacco legislation are of more interest to the average British Columbian than they have been in the past. Most people in British Columbia realize that there needs to be a balance between programs that are needed and the goals in terms of remuneration for government. Each of these substances sold to British Columbians by government comes with a downside, and there is a need to evaluate whether programs are adequate for the revenue that occurs.

When it comes to alcohol consumption, cigarette smoking and gambling, there are negative impacts from the activities. It is also argued that in moderate participation these activities can remove the stress of modern-day life. I suppose that's equivalent to Prozac in the watercooler; nevertheless, I guess it is one possibility. There are strongly held public opinions on both sides of the question concerning whether to support continued or increased alcohol and tobacco sales, as well as increased gaming. With all the factors that I have delineated, balancing social responsibility with the opportunity to maximize revenues for government is important.

I'd like the minister to tell me what program goals and what factors controlling access and minimizing health and social risks have been delineated by government in order to look at alcohol, smoking and, finally, gambling.

Hon. U. Dosanjh: I don't believe that either gambling or tobacco has very much to do with this ministry, other than the fact that we have a gaming audit and investigations office -- that we actually talked about yesterday -- with respect to enforcement of gaming. With respect to the alcohol issue as well as the others, I believe the most appropriate ministries to talk about the remedial programs with respect to problem users of these substances would be the Ministry of Health and the Ministry for Children and Families. I would encourage the hon. member to raise these issues there. As the hon. member may be aware, there is a problem-gamblers program anticipated in the Ministry for Children and Families, as part of the announcement on modest expansion of gaming.

A. Sanders: As the minister has correctly directed, I will only discuss alcohol. What I am interested in, in terms of the alcohol situation, is to ask the minister: what is the status of the liquor policy review at this time?

[2:45]

Hon. U. Dosanjh: The review has been made public. We are receiving input from those that have obviously read the review and are concerned. We have an individual in the ministry who is receiving all these responses from the public. We will be considering those in due course.

A. Sanders: Can you tell me who is carrying out the review?

Hon. U. Dosanjh: The review was done by Tex Enemark. The individual who is in charge of receiving the responses from the public with respect to the review recommendations is Ruth Rogers, in my ministry.

A. Sanders: And when will the reported recommendations be available for the public?

Hon. U. Dosanjh: I think the hon. member may be confusing the issue. The recommendations of the review are out now. We are simply receiving public response with respect to those recommendations. We would be dealing with them at some point in the future.

[H. Giesbrecht in the chair.]

R. Thorpe: Attorney, Rich Coleman is here now. Did you want to do the Residential Tenancy Act now? If you do, it's not a problem for us.

Hon. U. Dosanjh: Yes, that would be preferred.

R. Coleman: First of all, I want to go back to yesterday, because that seems to be the main issue, obviously. It's one of the main issues as far as. . . . With regards to residential tenancy, first of all, we discussed, you will recall, the rewriting of the act in plain language, which is something that the Attorney has agreed is ongoing now.

Then I canvassed some areas or issues with regards to the manufactured home parks, which are mobile homes. That is the biggest concern because of the affordability loss in housing, which will be lost if those parks get in too much trouble. We dealt with, first of all, the retroactive rent increases back to 1992, which are affecting the operation of the manufactured homes. Rather than read the hundred or so letters that I have on this particular issue, I'm going to deal with those.

The Attorney said yesterday that if we can make a case for that amendment to be fixed, we can deal with it possibly in this session, as long as his colleagues are in favour of it. I want to take that explanation one step further, so we can look at the other side of the problem with regards to manufactured home parks.

First of all, I want to know if the ministry is aware of the fact that there are two sides to the issue. Obviously, the retroactivity in 1992 was there for protection against gouging within the industry, to put some stability in the rent increases. I think a five-year period probably established that. Is the Attorney General aware of the tenants' issues with regards to why that control was put in place?

[ Page 2982 ]

Hon. U. Dosanjh: The ministry is quite aware of the issues. I may not be as extensively aware, but I'm somewhat aware of the issues, as well.

R. Coleman: The main issue, then, if I could just. . . . I want to clarify it so that we understand it. I think there has to be some give-and-take on both sides of the issue as far as settling the problem with the 1992 retroactivity. If you only deal with the 1992 retroactivity in isolation, what will happen is the tenants will feel that they have had some poor dealings in the fixing of the legislation.

The issue with the tenants seems to be -- or is, as a matter of fact -- the stability of tenure, and in two ways. One is the stability of tenure and their performance as tenants under the Residential Tenancy Act, whereby certain notices can be given for eviction because they are not following certain guidelines within the park. This is similar to what you would have in an apartment building if you weren't following the rules.

I don't think that's the argument with the tenant. The tenant concern in this particular issue is a section of the act that says that the sale of their home and the continuation of the residential tenancy agreement cannot be unreasonably withheld by the owner of the park. One of the issues there, of course, is that somebody has an asset that has nowhere to go.

We have parks that are not being built because of the problem with the retroactivity from 1992 within the industry. We aren't getting reinvestment in parks. At the same time, we have nowhere to move people if they happen to actually get evicted from a park. The other difficulty is the upgrading of parks on resale.

I've looked at this issue extensively, and I have a suggestion for the ministry that may assist us in bringing forward quickly this particular adjustment to the industry. I know -- from talking last night on the telephone to the stakeholder groups that I've been dealing with -- that there is some palatability in this type of situation.

One suggestion is to remove the retroactivity, but in exchange for that. . . . At some point in time, the tenant has to be protected. There has to be some form of. . .that when the tenant wishes to sell their asset, they're allowed to continue with the residential tenancy agreement that they have in place without being held to ransom. The easiest formula that I see for that would be to have an addition made to the act that whenever a tenant sells a unit, it could not be unreasonably withheld, provided that there was an occupancy permit provided by the local jurisdiction on the particular unit. I'm just wondering what you think about that.

Hon. U. Dosanjh: We are always skating on thin ice in terms of future legislative changes, but I can certainly say to the member that security of tenure for tenants is very important. In discussions that I intend to have with the hon. member, we can certainly explore that with the ministry.

R. Coleman: I think we have the understanding, then, that we will posthaste try and get something done to deal with this portion of the act, so that the people who are canvassing the ridings throughout the province. . . . In checking with my letters this morning, there's actually not a riding on your side of the House or on our side -- except there may be two or three -- that I haven't been contacted by with some problem with regards to this retroactivity and this tenure of tenancy. It's an issue that affects a large number of British Columbians.

I want to deal with residential tenancy by itself for a few minutes -- only because I think we should be aware of the difficulties that we're creating for ourselves. First of all, our arbitration costs -- with the mobile home manufacturing ones, with the way people can have so many cases all at once with regards to this retroactivity -- must be causing us some rather interesting expenses.

One of the issues that was brought to my attention is the closing of the residential tenancy branch office in Kamloops, which is a city of about 70,000 people. It's going to be facilitated out of the city of Kelowna. I wonder if you could give me the background as to the reasons for that closure and the justification for it on a cost basis.

Hon. U. Dosanjh: The savings from these two offices, in fact -- Prince George and Kamloops -- would be $973,000 over three years. Obviously we continue to provide service. There is a telephone access, and there's also service through the government agent's office. Arbitrations are available in those local areas at scheduled times. So you have, in essence, the integrity of the service intact. However, there is telephone access to somewhere else, and arbitrations happen in the local area.

R. Coleman: Would I take that to mean that you are now taking the show on the road, as far as arbitrations are concerned, for other communities? For instance, somebody in Chase or Ashcroft or those communities would be able to deal with their arbitrations on a local basis. Are you taking your arbitrators into these communities to hear cases, or are they having to go into Kelowna, as well?

Hon. U. Dosanjh: In areas where physical access means long-distance travel for individuals, there are telephone hearings available to people, if not in-person hearings, with arbitration being physically available.

R. Coleman: That being the case, basically, what is the argument, then, for keeping any residential tenancy branch office open and not running the entire operation that way?

Hon. U. Dosanjh: Theoretically the hon. member's position would be correct, but there might be arbitrations that might be extremely complex and difficult to conclude telephonically. There has to be a right mix, a balance, in terms of accessibility through electronic linkages as well as physical accessibility in various centres across the province.

R. Coleman: I would now like to move on to the residential tenancy notice to end a residential tenancy situation. The reason I want to canvass this briefly is because it is obviously not being applied the way it is meant to be applied with regards to the form that is provided by the residential tenancy headquarters. In order to deal with that, I want to cite you a couple of quick examples in a couple of areas, and then perhaps you could comment on how this could happen with regards to your arbitration system.

The first example, which is the most simplistic one of all, is that a notice that is given for rent arrears can be served any day after the day the rent is due, to be effective ten complete days after the date of service. For example, notice that is served on the second day of the month could be effective on the twelfth day of the month. This deals with the most important aspect, obviously, in a relationship between anybody in an economic situation where somebody provides a service and expects to be paid for it on time, and there's an agreement that it be paid for on time.

I want to give you a quick example of residential tenancy with regards to a residence that I reviewed, and I want to 

[ Page 2983 ]

know what the justification is for this type of operation. A tenant failed to pay rent in a given month, and the landlord filed the notice because they weren't paid. It went before the residential tenancy branch, and the branch held a hearing. It's now about the 25th of the month; the landlord still hasn't been paid, obviously. They allowed the tenant to pay an apportionment of their rent in order to maintain their tenancy, with the difference being carried back by the landlord. That was the decision of the arbitrator for month one.

In month two -- the same tenancy -- the tenant doesn't pay rent again and is now in arrears for close to a month and a half of rent. The same notices are filed with the residential tenancy branch; the same hearings are taken. Then an order of possession is requested, and at that point in time the arbitrator holds another hearing. The tenant does not appear at the hearing but phones in to the hearing as it is going on.

At that time the arbitrator says: "If you will have X number of dollars at a certain McDonald's restaurant in a certain community" -- where this person happened to be working at the time -- "and the landlord meets you there, I will extend your tenancy." So the people had to drive 35 miles up the Fraser Valley to a McDonald's restaurant to meet a tenant who was supposedly going to pay a portion of their rent in order to avoid the order of possession. The landlords did this, the individual didn't show up, and as a result of that they finally got the order of possession.

I'd like to know what the thinking is in the arbitration system with regards to the Residential Tenancy Act -- that we would put people through this type of a harangue in order to get an order of possession because their bills aren't being paid.

[3:00]

Hon. U. Dosanjh: Obviously the example that the hon. member gives is a particular example, and I can't comment on it. Arbitration decisions are quasi-judicial, independent decisions. There are obviously judicial review procedures available. They are expensive, and I agree. . . . These are the kinds of issues which I'm glad that the hon. member is bringing to my attention. I'll get my ministry to look at that particular case to see if any changes can be made to streamline it so that the arbitration process isn't used to thwart the intent of the legislation.

R. Coleman: Just so I can be clear -- seeing as the Attorney General is the lawyer here, and I'm not -- could you tell me what you think the intent of the legislation is?

Hon. U. Dosanjh: The intent of residential tenancy legislation in British Columbia has been for many years -- ever since I was at law school, at least -- to make sure that landlord-tenant disputes in residential areas do not have to end up in court with huge, long, expensive legal battles and with both landlords and tenants suffering inordinately long delays and, of course, large legal fees. That's the intent -- so that you can have arbitration in a somewhat informal situation where it's not as threatening, it's accessible, it's not confrontational and it may not, hopefully, need to go to court at the end of the day. That's essentially the intent.

There has to be, of course, a balance between the interests of the tenants and those of the landlords. If at the end of the day there are particular provisions that cause us concern as British Columbians, we should look at them.

R. Coleman: Could the minister please advise me of what the qualifications to be an arbitrator under the Residential Tenancy Act are?

Hon. U. Dosanjh: Most of these arbitrators are trained lawyers, and they do arbitrations on contract. Some of the arbitrators are from the old rentalsman's days, and they have a lot of administrative experience. So there is a mix, but a vast majority of them are trained lawyers, who would know the procedures and the requirements of natural justice.

R. Coleman: Then could the minister tell me if there is a training process with regards to this particular act for the lawyers and the former rentalsman employees that are involved regarding the collection of the evidence, the identification of the exhibits presented by the parties and how those exhibits are kept so that the evidence can be controlled and safeguarded? Is there a cross-reference review of how that is being done, so it's handled consistently across the board?

Hon. U. Dosanjh: The answer is yes. The training is conducted by the branch with senior arbitrators, and of course there is ongoing monitoring to make sure that things happen appropriately.

R. Coleman: I would like to know, then, if there's a standard of practice that all written material brought to arbitration is labelled and kept on file with regards to the decision of the arbitration by both parties.

Hon. U. Dosanjh: Under the legislation, of course, the arbitrator has the discretion to admit evidence with respect to a particular arbitration. Once the evidence is admitted -- whether it's documentary evidence . . . well, it's documentary evidence mostly -- it would be then retained. It is not destroyed.

R. Coleman: So basically we're saying that we're dealing with issues of admissibility, as far as the arbitrator having that basic ability to say yea or no when a letter or a complaint from a tenant within a building, or whatever, about the behaviour of another tenant is brought to an arbitration. Does the arbitrator have that carte blanche ability to say whether this is admissible in this hearing or not?

Hon. U. Dosanjh: Yes, there is wide latitude and discretion. And I think that's required, because in the vast majority of the cases these are laypersons who appear before the arbitrators. It is like what I used to experience when I appeared before the immigration appeal board, which is a statutory body much higher in stature, an almost court-like setting, where they would admit evidence that they believed was credible and reliable. They disregarded rules of hearsay because ordinary laypersons don't know those rules and can't follow them. Similar procedures apply here. Of course, if there are issues where a particular party before the arbitrator believes that an injustice has been done to him or her, then they can ask for a review by the arbitration panel -- which, again, is not a court, so it's not necessarily expensive to deal with.

R. Coleman: When you're saying that the rules of hearsay do not apply, it sort of leads me to some concern. Then we're just dealing with my story against your story in some kind of quasi-judicial situation. That makes it very difficult for anybody to make a very reasonable decision -- a decision to come up with something. Does it not concern the Attorney General that if the rules of hearsay are not being applied here, then we have some difficulty in the actual collection and the assimilation of the information?

Hon. U. Dosanjh: If I might just advise the hon. member, these rules are followed in administrative tribunals all over 

[ Page 2984 ]

the country. They are followed for the convenience of the parties, who aren't necessarily educated in law, and for the probative value of the evidence that's adduced, as well as the reliability of the evidence and whether, at the end of the day, the arbitrator believes what's submitted. Those are all issues in the discretion of the arbitrator, and they are like judges -- subject to review by the arbitration panel and then eventually subject to review by the courts.

R. Coleman: Could the minister advise me how you go about assessing the quality of decisions by your arbitrators on a consistent basis? Is there some method of measuring the performance of the people that are actually hearing the arbitration as it applies to the act? I mean, the provisions of the act are fairly clear, whether it be on eviction or rent increases or whatever the case may be. Is there some measurement for us as government, I guess you could say, or the province to be able to actually be apprised of whether these people are making decisions that seem to stay within the act, or whether they're taking so much latitude in and outside of different sections that it's creating a difficulty in the industry?

Hon. U. Dosanjh: I understand that the branch management follows the decisions quite rigorously. They don't, obviously, have a supervisory function over what are quasi-judicial officers: the arbitrators. However, there is the opportunity for a review by the arbitration panel. I understand that in 6 percent of the cases, applications are made for leave to review, and in 2 percent of those cases the leave is granted. Out of the 2 percent where leave is granted and a review is held, I understand 0.6 percent of the decisions are set aside. I also understand that it's rare that a decision, or a judicial review, is ever sought in these cases. There has been an occasional review, maybe one or two reviews, in the last year and a half.

I was misinformed, sorry. Forty-one cases in the last year and a half have been taken for judicial review. Of those, only one has been successful. So it seems to me that the process is functioning fairly appropriately. Even the courts. . . . Out of the 41 cases that went for judicial review, only one was successful, and that indicates that the decisions made by the lower tribunal were appropriately made -- at least that's the implication.

R. Coleman: Don't you just love statistics? Then there's life on the street, and life on the street is that the process usually doesn't go past the arbitrator. What happens is they go and come back and fight another day over another issue with another application, either for eviction or rent increase or whatever the case may be. It seems to be that that's where the flaws are, and that's why my question was: is there a review of the decisions? I realize they're quasi-judicial, but somebody should be reviewing those decisions as to whether or not they apply to the act on a consistent basis. I'm just wondering if there is a process in place to do that.

[3:15]

Hon. U. Dosanjh: Yes. The branch, as I indicated, follows those decisions very carefully, but the branch can't direct the arbitrators. But if there are any systemic issues that come to light, we deal with them. I have not been made aware of any specific problems in that process. The hon. member has talked about one particular case. There might be stories about other cases as well, where sometimes landlords and tenants -- in rare cases, but it does happen -- go at each other time after time. I don't know whether those cases are good examples to judge the whole process by.

I understand there have been 20,000 arbitrations in British Columbia in the last year, and 6 percent of those have made applications for leave. Leave has been granted in 2 percent of cases, 41 have made it to judicial review, and one has succeeded. I think those results speak well of the process. But I'm always open to suggestions made by the hon. member, to maybe more thoroughly look at the process and see if we can iron out any wrinkles if they exist.

R. Coleman: There are a number of wrinkles. I guess the first thing we should be aware of is that statistically we're seeing that those are the complaints actually getting to us. The difficulty in the marketplace, in actual fact, both from the tenant's and from the landlord's perspective, is just the ability to get there to begin with -- because of the delays in time to do it, and what have you. So you start to find that the system really is only serving a certain core need of people, and it is causing some difficulty.

The next question I have is with regard to the review panel itself. Does the review panel ever conduct any of its appeals by telephone, or are they actually done in person?

Hon. U. Dosanjh: Firstly, I don't believe there are any backlogs at either level in this machinery. I understand that applications for leave are accepted and routinely done telephonically. For the actual arbitration review panel hearings that take place, I understand that there has to be personal attendance.

R. Coleman: I want to then go to another problem within the act that the minister should be aware of. As we get into this review, we should all be aware of the case of either an eviction or abandonment of a unit. Presently there is great deal of difficulty within the system.

I came across this and started to look into it in more depth -- as to just how often this was happening and the difficulty that it was providing to both parties -- when I was driving down Fraser Highway in Aldergrove one day and saw the entire contents of a house sitting on the side of the highway and people picking through them.

The reason was that the house had been filled up over a number of years to the point where the bailiff had come in and basically moved the people out of the residence. And then the landlord was advised that he had 60 days to. . . . For 60 days he had to actually take care of the possessions of the person who hadn't paid him, and then he could dispose of them for funds. There are a tremendous amount of things that go on with that. But the first question that came to mind was. . . . Well, the disposal in this case was to put them out on the street, which then created a very big garbage problem all over the community. That's an extreme example.

The other example is the question of fairness. The fairness is on both sides; there has to be responsibility within any legislation to both parties that are affected, I believe. When a tenant in an abandonment situation leaves furniture and goods behind, at this point in time we say that somebody else has to protect their possessions. I'm wondering what your comment would be on that.

Hon. U. Dosanjh: That duty to safely store the possessions of the tenant has been there for decades, I believe. It's as old as my law career, at least -- which is a couple of decades. It's important that that duty remain. I will say this: there may be reasons. People disappear. Sometimes you don't know where they go. Sometimes they simply disappear because 

[ Page 2985 ]

they don't want to pay, and their valuables aren't worth very much. They simply desert those items and leave them there -- abandon them.

Sometimes there could be legitimate reasons for a person's disappearance beyond the person's own control. If the person then comes within a reasonable time lag, a 30- to 60-day period, and finds that those goods or items have not been stored appropriately -- and they may be valuable -- there obviously would be a concern. But at the same time, I think I understand that the landlords have to store those items at their expense in the interim. They may or may not be able to recover that expense from the sale of those goods and items at the end of the day. I appreciate the concern, but I think there is a balancing of interests here that has to happen. I'm sure the hon. member recognizes that.

R. Coleman: I believe there's some recognition of the balance. Unfortunately, in the case where you know the abandonment has taken place, and you can prove the abandonment has taken place, and the payment hasn't been made, and there is no way. . . . You know that the people are in a community where there's still no process for the individual to say. . . . I know this. There should be some balance.

Just because something has been around for generations doesn't mean that it can't be improved sometime. Otherwise, we'd all still be driving 1952 Chevys or something like that.

Hon. U. Dosanjh: Since the hon. member has raised the issue, perhaps. . . . I've just talked to my officials. Perhaps we can look at a mechanism -- if it was doable -- for the landlord in particular to go to the residential tenancy branch and see if discretion could kick in to make a decision to let those items be disposed of earlier, based on some evidence, if it could be provided. It would be a very cumbersome mechanism, but certainly my machine begins to churn when there is an inconvenience to either landlords or tenants. I would be happy to have my ministry take a look at it.

R. Coleman: At this point, I know the member for Peace River South has a few questions that he wishes to bring forward with regards to some accounting issues. Since I'm not going to get into the accounting issues of residential tenancy, because I've already dealt with the minister with regards to taking a look at some very specific and important issues with regards to manufactured homes, how they apply and the fixing of that situation within the act at his earliest convenience. . . . Before I pass it on, I would like to just confirm that commitment from the minister -- that that's what we're going to do.

Hon. U. Dosanjh: Yes, I have provided an undertaking to the hon. member that he and I, with representatives from the ministry, would sit down and take all of his concerns in, get the ministry to explore all of them and then come back with some material -- based on which we can have a discussion.

J. Weisgerber: I did indeed want to talk about some bookkeeping and requirements -- new obligations that I think the Residential Tenancy Act has imposed upon landlords.

Before I do that, I'd like to seek some clarification on a point the minister made with respect to arbitrations being done in person. It's been an extremely sore point with people in the Peace. Landlords especially have been subject to telephone arbitration cases, whereas the arbitrator appeared to have all the documentation from the tenant but was not inclined to receive written submissions from the landlord. In fact, many cases recounted to me were very abrupt with the landlord with respect to putting forward an argument as part of the arbitration.

Can the minister tell me if this situation has changed? I hear the minister say that arbitrations are done in person. That would reflect quite a significant change over the last couple of years.

Hon. U. Dosanjh: I was referring to the review panel, not to the arbitrations. I've just been speaking to my officials. In fact, it should be possible for the arbitration review panel to even hold reviews telephonically if that's possible, with appropriate submissions in writing being faxed to the panel; then oral arguments could be made telephonically. I have no difficulty with asking the ministry to pursue that to make it easier for everyone involved.

J. Weisgerber: Well, my sense -- it's entirely from a landlord's perspective, because I was approached by a group of landlords in my constituency -- is that that circumstance. . . . Telephone arbitration, in their view, has been most unsatisfactory. I would argue that if indeed you were going to take the position that each party put their case in writing and fax it to the arbitrator, and the arbitrator simply comes up with a decision, that might be one thing.

But the experience of landlords. . . . And when I talk about landlords, as they relate to the people who came to see me. . . . For the most part the people that I'm referring to are family landlords -- a husband and wife who might own a small apartment building, six or seven houses, perhaps a duplex or two. These are not big landlords, nor are they slum landlords. Nor are they bad landlords, I believe. As a matter of fact, I would make the argument that some of our best landlords are those who run rentals as a small business. They feel extremely poorly served by the branch, quite candidly, and particularly by the arbitration mechanism.

I think that by far the first choice would be to have an arbitrator go to Dawson Creek. It's 250 miles, but that's not a huge distance. I think the most desirable situation is to sit down with the two parties, hear their concerns and give both parties an opportunity to make their case. I make a pitch for that, but then I've done that before, and I will continue to do that. If the minister wants to respond, fine; if not, I'll simply carry on.

[3:30]

These same landlords find themselves incredibly burdened by the need to maintain records, as I understand it, on a basis that allows to them to calculate an annual financial statement on any given month of the year. The effect of that, in essence, is to run off 12 complete financial statements, one for each month, so that when asked to justify expenditures, costs, etc. in order to rationalize a rent increase, you can justify it at any given point in the business year. It is incredibly demanding on someone who. . . . Whether you have 1,000 suites or ten suites, this legislation puts a very heavy burden on the landlord, and I wonder whether or not the branch and the minister are looking at somehow simplifying those requirements.

Hon. U. Dosanjh: Going back to the earlier question that the hon. member was asking about an individual being present in Dawson Creek in terms of the arbitration, I believe that we could probably achieve the same result if the registrar 

[ Page 2986 ]

made some stringent rules for the arbitrators to follow, for fairness to all parties. I understand that those rules are being drafted or have been drafted; at this time they have not been finally approved.

In addition to the ability to fax your submissions, you should have the opportunity to provide oral submissions through the telephone. I think that if you put all of those facilities together, you may be able to come up with a fair result at the end of it, even without the arbitrator being present in person, which is obviously the best solution if it can be fiscally done.

The issue around the rent protection provisions, which is what the hon. member is talking about, is somewhat more intractable, somewhat more difficult. I understand the hon. member's concern; I don't have a solution. I wasn't aware. . . . I didn't put my mind to this particular section.

I've just asked the officials if there is a solution, because yes, for someone with five or ten suites. . . . If your tenancies originated at particular intervals and you want to increase those rents. . . . Let's say it's ten tenancies in ten different months. For a landlord that owns just those ten suites, the process could be very cumbersome -- is very cumbersome, then. I certainly believe that a way should be found to mitigate that problem, and we will try and do that if it can be done.

J. Weisgerber: Yes, indeed. Let me just go back. We're kind of talking about two issues at the same time, and for me that's rather confusing -- but I'm sure it's not for the minister.

With respect to the arbitration, let me just offer up one other suggestion, and that is: if indeed we are going to do fax submissions from each party and then follow it up with some verbal clarifications, I think it's absolutely essential that each party have a copy of the other party's submissions, so that people aren't simply stabbing around in the dark trying to respond to issues that they're unclear about.

I appreciate the minister's undertaking with respect to this accounting problem, because the combination of what are seen as biased arbitrations -- I don't think there's a clearer way for me to put it -- along with these accounting burdens is seeing a lot of people simply opt out. I believe that over the last three or four years, in Peace River South in particular, there has been a significant concentration in the ownership of rental properties. I know from personal experience people who have simply decided: "Look, I don't need this aggravation; I don't need this headache. I used to enjoy having a side income, a little thing that the family looked after at the kitchen table, but it has now become more trouble than it's worth."

I think that if the minister were to look, he would see that the effect of this Residential Tenancy Act is to put more and more rental units into the ownership of fewer and fewer landlords. I would argue that it will cause a deterioration in the overall quality of the home rental market and the experience that comes with that.

I'm just trying to read a note here, but talking while reading is beyond me, I guess.

The other point I want to clarify. . . . I know that the minister has had some conversations with the member for Fort Langley-Aldergrove, but this Residential Tenancy Act and the multi-year reviews at mobile home parks are a huge problem. I also understand that there's an undertaking from the minister to work with that member and others who want to have input -- the association and others.

I think that as government becomes overzealous in attempting to protect tenants, the effect can well be to damage or harm them by way of simply drying up the market. If the legislation and the requirements are too stringent, people just don't get into the business. I genuinely believe that we have reached that situation with respect to mobile home parks, and I suspect that with the construction of new rental properties, the legislation has not served tenants very well in that respect. If the minister can just confirm to me that indeed that undertaking has been given to my colleague, then I'll be content to let it move forward.

Hon. U. Dosanjh: Yes, it has been.

R. Coleman: I had just a couple of quick questions in closing. I got a number of studies recently -- in the past year. Sometimes I look at my bookcase and think I have a sick mind, with all the things I've read on housing. But the one question I have is: is the residential tenancy branch having any involvement in the issue regarding illegal suites in residences? Are you making any recommendations for municipalities to follow to deal with those?

Hon. U. Dosanjh: I understand that no municipalities have attempted to consult with the branch. However, it's my understanding that if any advice is sought, it would be forthcoming.

R. Coleman: In closing, then, I would like to first of all thank the minister. Last year, when I went through Housing estimates, the minister sort of threw up his hands at that point and said: "I think you know more about this issue than I do. My office will consult and work with you, and we can solve some problems." That has been successful in the last year with regard to a number of issues dealing with housing. I would like to look forward to maybe solving this mobile home issue posthaste for the people of B.C. with regard to that, and not taking the minister -- as I could have, probably -- for a substantial . . . lengthy period of time with regard to this act and some of its difficulties.

I did pass one other comment last year during estimates to the Minister of Municipal Affairs and Housing, and I would do the same to the Attorney General. It seems to me that there's a great difficulty in the ability to manage housing stock in British Columbia with regard to occupancy, residential tenancy, social housing, the Condominium Act and those sorts of things, because they're spread all over different departments of government. I suggest consolidation, as I suggested last year at some point in time, so that all these different uses relative to housing be consolidated in one location, and you don't have to bounce all over the place.

R. Thorpe: Perhaps we want to take a moment here to shift staff.

Hon. U. Dosanjh: We won't have tea break today, since we're doing liquor today -- right? [Laughter.]

R. Thorpe: So Plant gets tea; I get nothing.

Hon. U. Dosanjh: Well, you're doing liquor today.

R. Thorpe: I could be here for two or three days -- whatever you want.

Hon. U. Dosanjh: So that we may be able to finish if we can, I'd rather stay here than have tea.

[ Page 2987 ]

R. Thorpe: We will finish.

Hon. U. Dosanjh: Good.

R. Thorpe: We just don't know when.

Hon. U. Dosanjh: Well, I'm talking about today, but if that's not your wish, that's fine.

R. Thorpe: It depends how fast you answer the questions.

Hon. U. Dosanjh: Very quickly and succinctly.

[W. Hartley in the chair.]

R. Thorpe: Always.

First of all, I'd like to apologize to everyone. I'm sick; I've got a cold. It's a bad throat, so if I break out sneezing, please understand.

I have a couple of questions on last year's estimates, just so it sets me up to go forward here. You stated last year, when I asked about the tremendous growth in profitability of the branch, that the branch was anticipating a lot of efficiency measures to make sure that projected revenue aims were met. Could the Attorney please explain to me the efficiency gains that they achieved in increasing their profitability by some $20 million?

Hon. U. Dosanjh: I understand that the hon. member has obviously had a thorough briefing from my ministry and knows how the revenue was achieved. There was obviously a markup increase that resulted in some gains, and there was gross margin impact that resulted in some gains. I understand we are actually $87,000 over the budget target.

[3:45]

R. Thorpe: I'm sure that the people who absorbed the tax increase are very pleased that the government has overachieved its revenue.

One of the statements the Attorney did make last year when we were pursuing a line of questioning about the possibility of a tax increase, which he could not comment on at that time because it was before Treasury Board, was: "The government, in its endeavours from day to day, has to make very difficult decisions, but I want to assure the members that all those very difficult decisions are made with the complete knowledge of the wishes of the people of British Columbia." Could the Attorney please advise how the people of British Columbia were consulted on this tax increase?

Hon. U. Dosanjh: If the member remembered my remarks, I said a markup is not a tax.

R. Thorpe: Could the Attorney please advise. . .? I do recall that we did have some differences of opinion as to whether a markup is a tax or a tax is a markup, so I'll say markup/tax. The Attorney can say whatever he so wishes. Could the Attorney, then, advise how the people of British Columbia were consulted on the markup increase, because he did give an indication that such a decision would be made with the complete knowledge and wishes of the people of British Columbia?

Hon. U. Dosanjh: This is obviously a business decision by the LDB. Historically, these decisions have been made with very little public debate, and it was no different this time.

R. Thorpe: In the three or four pages of briefing documents that we got last year, there was a comment that there would be $6 million in miscellaneous income. That was the document I received last year. In the business plan documents I received this year, I notice that that number is now $4.5 million. Could the Attorney General please advise what the $1.5 million difference was?

Hon. U. Dosanjh: I understand that that was projected revenue from possible audit of suppliers, and that $1.5 million was obviously not realized.

R. Thorpe: The interesting thing to me, though, is that the original budget figure was changed from $6 million to $4.5 million in the documents I later received. So to my way of thinking, it wouldn't be for something that may or may not materialize through the year; there was some kind of management decision between the $6 million and the $4.5 million when the budget documents were finalized. I'm not talking about actual versus budget; I'm talking about two budget figures being changed.

Hon. U. Dosanjh: I understand that some matters transpired between those two dates, and the adjustment was made.

R. Thorpe: Could we be a little bit more specific as to what kinds of $1.5 million changes or adjustments took place? Do we know what they were?

Hon. U. Dosanjh: As I indicated -- let me use the term "hinted" -- with respect to the projected $6 million, this was to be revenue as a result of audits of suppliers. I don't believe it's appropriate. . . . I believe that should be accepted as enough information, because those matters may impact on businesses and suppliers if all that information is discussed -- here, at least. It may be available to the member through an FOI request; I don't know.

R. Thorpe: In reading the annual report for the 1995-96 period, your contingent item (b). . . . Could the Attorney General please advise as to the current status of the airline claims by Canadian Airlines and Air Canada against the LDB?

Hon. U. Dosanjh: I understand that that issue is being tested in Ontario. No decision has been made in British Columbia, and we've simply established a contingency, just in case things develop.

R. Thorpe: Moving forward, in the area of policy, could the Attorney General please advise what the LDB is or is not doing with respect to what may or may not be taking place in the grey market of beverage alcohol?

Hon. U. Dosanjh: I don't, of course, have the details of all the different operations. There is a joint effort by the RCMP and Customs, as well as the inspectors of the branch, to work on that issue. As well, all of the efforts include the potential proclamation of legislation that we passed last year.

R. Thorpe: Could the Attorney General advise -- just in the grey market: beer, wine and spirits -- what an estimation of lost markup revenue to the province may be on an annualized basis?

Interjection.

R. Thorpe: Well, net markup revenue to you folks.

[ Page 2988 ]

Hon. U. Dosanjh: When the legislation was debated in the House last year, I think a speculative figure was provided. What I might say today would be speculative again, and it would be totally unreliable, so I think it's better left unsaid. If the hon. member is interested in that particular issue, he is at liberty to have discussions with the officials and be as informed as he can be.

R. Thorpe: I appreciate the Attorney's answer. I take it from the Attorney's answer that he has some concerns about some sensitive or confidential information. Therefore I do take his invitation -- because I am interested in this -- and will meet with his officials and investigate that subject that way. So I appreciate that.

Moving forward, in the broadest general terms, the LDB and its staff prides itself in being a very successful retailer of beverage alcohol in British Columbia. Many people support that view. Could the Attorney advise how the LDB is looking at the changing environment of the retail market and how that may be impacting on their longer-range plans?

Hon. U. Dosanjh: Could the hon. member be a little more specific?

R. Thorpe: I'm not suggesting when I give this example. . . . This is just to try to be a little bit more specific. Many of the non-alcoholic market retail stores have changed from small stores. One may have read that Eaton's is having some difficulties. There are big-box stores, as they're called. I'm just wondering if the LDB has sort of, in 220 stores scattered around British Columbia. . . . Are you looking at and investigating other methods of retailing to keep abreast with what I believe is an ever-changing retail market?

[4:00]

Hon. U. Dosanjh: Yes. The LDB, of course, is trying new things. I understand that they are experimenting with different types of stores. The hon. member can be briefed on the kinds of different permutations and combinations that they are trying, rather than me explaining in my uneducated fashion something to do with marketing. It would be somewhat difficult. They are experimenting, for example, with 2,000-square-foot convenience stores.

R. Thorpe: One of the things that was announced in this recent budget was the sale of assets -- I believe in the $170 million. . . . Does any of this impact on the LDB?

Hon. U. Dosanjh: No.

R. Thorpe: In looking at a document I received -- in January, I think it was -- the LDB was very clear in establishing its vision and its mission -- also its values. Since we're not at liberty to have a. . . .

They're ringing the bells for your teatime now. Now I've got to try to remember the question.

The Chair: Just a minute. There were only two bells, so let's clarify that one. Okay. There is a division in section B, so we will reconvene immediately following that division.

The committee recessed from 4:02 p.m. to 4:14 p.m.

[W. Hartley in the chair.]

R. Thorpe: I believe I was asking a question about the vision, the mission and the values. In some years, no doubt, we'd go through every one of them and ask detailed questions. That's not my intent. What I would like to know, though -- because this is from January 1997 -- is the business plan that I assume is before Treasury Board. . . . Have any things changed in either your vision, your mission statement or your values for the LDB?

[4:15]

Hon. U. Dosanjh: No.

R. Thorpe: I guess one thing I should clarify is: is the business plan currently before Treasury Board?

Hon. U. Dosanjh: No. It may go by the end of next month.

R. Thorpe: In developing your business plan. . . . As you've gone forward this year to achieve, I think, $592 million in net contribution to the province, have you strategically reviewed your government's ban on the LRSs -- the licensee retail stores? Are you lifting that ban, or are you keeping that ban imposed?

Hon. U. Dosanjh: There are no plans to change the status quo.

R. Thorpe: Then I assume that the ban on the expansion of the private sector LRS stores remains in place. Is that correct?

Hon. U. Dosanjh: Yes.

R. Thorpe: From an employee perspective, could the minister give me a brief summary of how the layoffs are going, and how many staff have taken early retirement or have been laid off from the LDB as part of your downsizing program there?

Hon. U. Dosanjh: Hon. Chair, 155 people have taken advantage of the voluntary exit program -- that's what it's called.

R. Thorpe: So I understand that 155 individuals elected to leave the branch, whatever the severance package was. Have any other employees been laid off? Or did you achieve your internal goal of reduction in FTEs through acceptance of that program?

Hon. U. Dosanjh: Yes, one person was laid off.

R. Thorpe: Switching here and moving along at the pace I hope the Attorney appreciates, it's just been confirmed that the annual business plan has not been submitted to Treasury Board. If I understood correctly, perhaps at the end of. . . . Was it the end of April or the end of May? End of May. Could the Attorney then advise when the plan will be completed within the LDB?

Hon. U. Dosanjh: That would be towards the end of May. It would come to me and then to Treasury Board; I haven't seen it yet.

[ Page 2989 ]

R. Thorpe: We're going to move along here really quickly, because the Attorney is now anticipating my questions. Do you actually review the plan prior to submission to Treasury Board?

Hon. U. Dosanjh: Yes.

R. Thorpe: Historically speaking, when is the business plan approved by Treasury Board?

Hon. U. Dosanjh: I don't have the historical data, but that can be available to the hon. member at some future date -- the earliest possible date.

R. Thorpe: Just on the point of trying to run a business in an efficient manner -- I'm sure the Attorney supports the concept -- last year the business plan for the LDB was approved very, very late in the year. Can the Attorney shed any light on why that practice. . .? Should we accept that practice? How can senior management of an organization run it effectively when the plan that they presented is not approved until some eight or nine months into a fiscal year?

Hon. U. Dosanjh: The usual business, of course, with respect to LDB continues, with the exception of any commitment for capital expenditure which is usually then reserved for Treasury Board to deal with -- under circumstances where there might be a delay of approval.

R. Thorpe: I want to make sure I understood the Attorney correctly there. So the only facet of the business plan before Treasury Board that is ever held up for management discharging its day-to-day responsibilities to achieve the annual revenue target -- in this case, $592 million. . . . The only item that is held back is approval of capital expenditures.

Hon. U. Dosanjh: The revenue projection is already established by the budget, whenever the budget is introduced in the House. The LDB will then deal with those issues, even if Treasury Board hasn't seen the business plan or approved it. They have to then start crafting their business plan around the budget requirements.

R. Thorpe: I didn't think I was going to get hung up on this point. But I want to make sure I understand, because I believe the Attorney indicated in his first answer that it was only capital that was held up by Treasury Board. I stand to be corrected. In your second answer, I'm starting to feel that you're shifting a little bit on me, and I know that would never be the hon. minister's intention.

Did I hear the Attorney state that the LDB, the senior management group, knows the revenue projection from the budget -- $592 million, $587 million last year, $567 million the year before -- so that the LDB has the full discretion to go out and achieve those items to achieve that profit? Is that what I'm understanding?

Hon. U. Dosanjh: If there are any major changes -- for instance, markup increases and the like -- those would have to be approved by Treasury Board before they're implemented. Day-to-day operations of the store continue, and the LDB can take measures within the context of those day-to-day activities to deal with the budgetary projection.

R. Thorpe: I understand that one of the efficiency opportunities, whether it was last year or this coming year, was a change in how the branch counts its cash. I understand that 42 to 45 people are affected by that change. Is that a change that the management in the day-to-day operations of the LDB branch. . .? I mean, counting cash is sort of a day-to-day operation, I would think. Is that one that the LDB management would make? Or is that one that Treasury Board would make?

Hon. U. Dosanjh: That was one of the initiatives that Treasury Board actually granted approval for as part of a package of initiatives that were dealt with.

R. Thorpe: So I guess we can conclude that Treasury Board is extremely active in the day-to-day operations, then, of the LDB. Perhaps you could share with us some of the other things or initiatives that were in that package -- you had mentioned the word "package" -- that Treasury Board approved, of the day-to-day operations of the LDB.

Hon. U. Dosanjh: Just as an example, the head office restructuring was another initiative that Treasury Board dealt with. To deal with the issue around counting change, that would impact at least 40 jobs. That's a major initiative. I believe that Treasury Board appropriately dealt with that issue.

R. Thorpe: I'm going to conclude that Treasury Board is fairly involved, then, in the day-to-day operations of the LDB.

But moving forward, in a briefing I received in late January from the LDB staff with respect to our caucus, quite frankly, I want to share with you, Attorney, that our caucus said it was the best briefing they have ever received from any ministry. I want to pass that to you and also to the staff, so that they can pass that back to their staff.

One of the things that was most interesting to me and my colleagues was that the LDB sees itself moving forward on four pillars of its business: business effectiveness, customer service, workplace cooperation and social responsibility. As we move forward into this fiscal year -- because I assume that pertained to last fiscal year -- could you confirm, then: are those the pillars that the LDB is moving forward on this year?

Hon. U. Dosanjh: Yes.

R. Thorpe: The one I'm particularly interested in, if I could just ask a couple of questions, is customer service. Could the Attorney advise: how do we. . .? Does the LDB have benchmark measurements in place to in fact monitor that they do have the right product in the right place and at the right time? Could he just give me a very brief summary of what benchmarks they set for themselves and how they monitor their progress?

Hon. U. Dosanjh: I understand that each store engages in a customer survey every year and then makes whatever changes may be necessitated or required as a result of that survey in each of the stores.

R. Thorpe: Then, just so I understand it in moving forward, this is done at a store level. Is it also done at a consolidated corporate level? Does the process work from the top down or the bottom up?

Hon. U. Dosanjh: The process is bottom up. But obviously, at the end of the day, then the recommendations come down based on what's gone up.

[ Page 2990 ]

[4:30]

R. Thorpe: Workplace cooperation. I know I could probably get this briefing from staff, but I think it's important just to get it on record here. I realize that this is the union employees working together with the management of the LDB in workplace cooperation. Could you, in a few words, give us the current status of the contract with the employees? How in your own estimation would you judge the relationship, as we move forward with the challenges of the business world in front of us?

Hon. U. Dosanjh: I understand that in terms of labour relations, there is an extremely good relationship between management and labour, and there are no ongoing difficulties.

R. Thorpe: Just as a quick point of information and a little bit of detail, could the Attorney advise on when the current collective agreement with the employees expires?

Hon. U. Dosanjh: Next spring.

R. Thorpe: I assume, then, that next spring. . . . So a year from now -- is that what we say when we say next spring?

Okay. Thank you.

I've just got a quick note here on the mission statement, which we had confirmed earlier there would be no changes to. My note to myself says -- now, I write funny notes to myself -- that it could possibly change in the new plan, June '97. We had confirmed earlier that it wouldn't change the mission, I believe. I just want to. . . . Is my note to myself correct or incorrect?

Hon. U. Dosanjh: Correct.

R. Thorpe: You're doing a very. . . . Hon. Chair, through to the Attorney -- I never want to forget the Chair, of course -- I thought that earlier we said there was no change to the mission. My note said there will probably be change. So my question is: is my note correct, or is my note incorrect?

Hon. U. Dosanjh: The note is incorrect.

R. Thorpe: As I'm sure happens with you from time to time, people involved in this industry do approach us from time to time to talk about things that are near and dear to their hearts. Having been in this business myself for many years, one of the concerns that people have is the ongoing ability or difficulty, depending which perspective you take, of getting their products listed. In your retail services branch, you initiated a re-engineering of the listing process to be completed by December of '96. I assume that re-engineering of the listing process would be to satisfy your own internal needs and probably some observations from various suppliers.

So can you confirm that this re-engineering has taken place? Have you had any feedback? Do you continue. . .? Are you receiving positive feedback from your suppliers who would generally give you negative feedback?

Hon. U. Dosanjh: The re-engineering project has not concluded as a result of receiving very diverse input from all of the sources. It will continue and may conclude in a year's time.

R. Thorpe: So I guess our original target date of December '96 was extremely optimistic -- or you've had some unbelievable feedback as a result of your proposal.

Hon. U. Dosanjh: Yes.

R. Thorpe: Another very quick housekeeping item. One of the items that many suppliers would also be concerned about, I'm sure, is listings management at the store level. You appear to have had the objective to reduce that store level some 5 percent of your listings by September '96. Has that been achieved, and have you had feedback from suppliers on that issue?

Hon. U. Dosanjh: It varies from store to store. Some stores didn't change; others changed more than 5 percent. We haven't had many complaints, as the products that were not selling were, of course, dealt with as part of this.

R. Thorpe: Quickly, on the retail development of liquor distribution in British Columbia, you have confirmed to me that the licensee retail store licences on those are frozen and this government will not lift that ban -- notwithstanding, no doubt, that some that are in the system may or may not proceed through. I'd like to know. . . . Are rural agency stores going to increase in the coming year? Also, do you see other agency stores increasing as we go forward?

Hon. U. Dosanjh: There has actually been very little change over the last year. Rural agency stores went up from 140 to 142, and the other agency stores went up from 26 to 29. That may change by a little bit, but we don't anticipate any significant change.

R. Thorpe: In the area of private wine stores, other than the new one that's being opened, I think, sometime next month in Penticton, the VQA store. . . . Again, I must compliment both branches for working very closely with the industry, because the industry has kept me advised of that. Are there any anticipated new wine stores on the horizon that would sell premium VQA B.C. wines?

Hon. U. Dosanjh: No new stores have been proposed at this time.

R. Thorpe: Moving into what I would call the areas of operation. . . . I will try to move through this very quickly for you. Has the Attorney personally spent any time visiting the retail operations of the LDB?

Hon. U. Dosanjh: Actually not, and that's a confession that is easy to make. With my duties, I haven't been able to do that. In fact, I haven't even been to a liquor store to purchase anything in about seven months. But I do intend to do that once we get out of here. I've been extremely busy.

R. Thorpe: In the spirit of the way the Legislature works, perhaps we should both talk with our Whips and see if we can pair up on that trip, because I too would probably enjoy it.

Then I guess it's fair for me to conclude that except for the slight involvement of Treasury Board, the senior management of the LDB operates its stores pretty much by itself.

I'm just running down my list of questions here. Let me just ask: has the senior staff group in your ministry had the opportunity to spend any significant amount of time relative to this $1.5 billion corporation?

Hon. U. Dosanjh: I don't believe that my senior staff would be visiting these establishments any more than I, but 

[ Page 2991 ]

obviously there is constant communication between my deputy minister and the branch, as there is ongoing accountability. But the branch essentially functions on its own.

It's a very sensitive area -- it is. And that's not to say that one shouldn't be involved in one of the major undertakings in the province. I can tell the hon. member that as I travel across the province, occasionally individuals do come up to me and talk about listing or delisting various products. I certainly don't want to be party to those discussions, so I try and stay away as much as I can.

R. Thorpe: I thought you had opened up a line of questioning for me. I hadn't anticipated the sensitivity of it. So it just has to do with listings and other things like that.

The other area of concern. . . . We have the LDB over here. We have significant supplier groups and stakeholder groups that deal with them. With the immense responsibilities you have in your ministry, do you have the opportunity to meet the various stakeholders of the industry on a regular basis? Or is it pretty much just on an ad hoc basis?

[4:45]

Hon. U. Dosanjh: I have met with a significant portion of the industry. I don't remember whether I have met with the distillers, but I have met with others over the last year and a half that I've had the responsibility for. In the last six months or so, in fact, I have stayed away from meeting any of these stakeholders because of the review that was in the air and that was being conducted.

R. Thorpe: I'll wait and ask staff that one.

With respect to advertising within the LDB this year, could the Attorney General advise how much will be spent in total advertising at the branch this year?

Hon. U. Dosanjh: There is $973,000, I believe, for organizational development, policy and communications.

R. Thorpe: Since you've got the figures out, is that comparable to a number last year of $447,220?

Hon. U. Dosanjh: The total figure last year was $852,000. So it's. . . .

R. Thorpe: So there's something else in there. That's fine.

Can you advise us if in fact there are any moneys within the management of the LDB to examine the impacts of alcohol on our communities throughout British Columbia?

Hon. U. Dosanjh: No.

R. Thorpe: Based on the Attorney's comments earlier, the Attorney indicated that he would be more than willing to have his staff meet with me and go through details. One of my questions is an extremely detailed question on what various external studies have been done in British Columbia with respect to the operation of the LDB. I won't proceed on that line of questioning if I have the undertaking of the Attorney that after this session, I could meet with the management group of the LDB to review such a listing of external studies, etc.

Hon. U. Dosanjh: Hon. Chair, the hon. member will have access to any information that the LDB can provide him.

R. Thorpe: Thank you very much. I appreciate that.

When we get into the actual store operations, I know that within the LDB they are trying to buy in at the store management level. At the store management level, has the LDB clearly established performance measurements and benchmarks for the individual store managers to focus in on how they are performing against the desired performance?

Hon. U. Dosanjh: Yes, there are budgets that are developed by the stores, and monthly performance is measured against that. So you have a report back on a monthly basis.

R. Thorpe: I thought that's what was going on, and I'm pleased to have that confirmed. Obviously performance measurements and benchmarks are very important. Given the structure of the LDB and the very strong union organization, when performance benchmarks are not being met, is the management of the LDB able to work with those stores in a way to ensure that these predetermined benchmarks and performance measures programs can be put in place to achieve them?

Hon. U. Dosanjh: The answer is yes, subject to the usual challenges in these issues.

R. Thorpe: With respect to agency stores, does the LDB have any performance measurements or benchmarks that they overlay on agency stores to judge or assess performance?

Hon. U. Dosanjh: Yes, there are measurements in terms of operational standards, but not in terms of the financial aspect.

R. Thorpe: I assume that answer applies to both the agency stores and the LRS operations.

Hon. U. Dosanjh: In that case, usually it's simply the compliance aspect of the act that's more important than anything else.

R. Thorpe: For the LRS?

Hon. U. Dosanjh: Yes.

R. Thorpe: It's my understanding that the normal commission for these agency and LRS stores is 10 percent. Is that the current figure?

Hon. U. Dosanjh: Yes.

R. Thorpe: When the LDB is measuring and looking at its own stores' operating costs and contributions, is that the norm that the LDB would use to measure success of its own stores versus the private sector?

Hon. U. Dosanjh: I understand that the standard the LDB would like to achieve is 10 percent, less 2.5 percent for administration.

R. Thorpe: So what we're saying, then, is that the LDB norm for looking at its stores is achieving a ratio of expenses to sales of 12.5 percent -- and 2.5 percent must be corporate overheads or something like that. Does the LDB keep a running total of how the stores are doing against this acceptable standard of 12.5 percent?

[ Page 2992 ]

Hon. U. Dosanjh: Yes.

R. Thorpe: Do we have stores that are costing us more than 12.5 percent to operate in the province?

Hon. U. Dosanjh: Yes.

R. Thorpe: How many of those stores are operating at a cost of more than 12.5 percent to the taxpayers of British Columbia? Incidentally, they do pay the highest alcohol taxes in North America -- or markup, I guess the Attorney General would say. How many stores would we have in British Columbia that are not achieving that benchmark of 12.5 percent?

Hon. U. Dosanjh: That number isn't available here, but we would provide that information. And any information, like the information the hon. member is seeking, is routinely available from the LDB, just for the asking by this hon. member.

R. Thorpe: Well, I'm certainly going to clip that statement out of Hansard and keep it right near my phone and attach it to my letters. But I do appreciate that vote of confidence from the Attorney.

Could the Attorney, through his LDB staff, advise: has the LDB closed any inefficient stores in British Columbia in the past three years in British Columbia?

Hon. U. Dosanjh: Yes, Dease Lake.

R. Thorpe: So we've only closed one in the last three years?

Hon. U. Dosanjh: Yes.

R. Thorpe: Since we don't have the list here, but since we are going to get the list of stores that may have operational problems. . . . I know there's a possibility that the Attorney will say that he doesn't want to answer a hypothetical question, but let's assume we do get the list and the list does indicate that there are some inefficient stores. Based on this benchmark which, it has been acknowledged, should be agreed to, do we think we would be seriously considering action to perhaps close some of those inefficient stores and/or look at alternative methods of product availability for British Columbians in those areas, if they exist?

Hon. U. Dosanjh: The branch, obviously, looks at those stores and tries to assist the stores in becoming efficient. No, there are no plans to close any other stores at this time.

R. Thorpe: The brewing industry has itself gone through, and continues to go through, many changes over the past several years, with beer being crafted at licensed, very small breweries: microbreweries, brewpubs, etc. Could the Attorney advise this House if in fact the LDB is looking at being much more supportive of British Columbia small businesses by listing brewpub-packaged beer in their stores?

[5:00]

Hon. U. Dosanjh: I believe the LDB is doing a good job of reflecting the microbrewery industry's products in its stores and will continue to do that.

R. Thorpe: Thank you for that answer. I believe my question, though, focused in on brewpubs as opposed to microbreweries, and I think there is a difference. As I'm sure the Attorney knows, brewpubs are a small but growing segment of the business in British Columbia -- small business operators employing British Columbians. So is the LDB looking at offering their packaged beers for sale in LDB stores so other British Columbians can in fact get their products?

Hon. U. Dosanjh: Yes, the LDB is reviewing that policy at this time.

R. Thorpe: Well, I'm encouraged that they're looking at it, and I'm sure that the brewpubs of British Columbia, as the consumers of British Columbia, are pleased to hear that. Could the Attorney advise when that review will be completed? As I'm sure the Attorney appreciates, people in small business -- versus big business -- need certainty and stability to ensure that their businesses can be successful and that they can continue to create employment in British Columbia.

Hon. U. Dosanjh: By the end of June.

R. Thorpe: On that issue, I would ask that the minister's staff keep me advised on the developments in that area, because it is one that we do hear about from constituents on a regular basis.

Just a couple of questions with respect to the communications branch of the LDB, which had five FTEs last year, I understand. I would assume that they're probably around the same level this year.

In looking at the February 21 "Newsline," I read that an extensive customer survey was done between October 21 and 26, with over 101,000 surveys issued and approximately 12 percent returned. Is that an ongoing process? The rate of return: is that normally what you get?

Hon. U. Dosanjh: The answer to both parts of the question is yes.

R. Thorpe: Could the Attorney advise if this is the last survey that was conducted?

Hon. U. Dosanjh: Yes.

R. Thorpe: I saw some very interesting figures. I note that with respect to the return of empties, 44 percent of the people who return their empty bottles to the LDB make another purchase. Has the LDB ever thought of expanding the types of containers that are returned to their stores?

Hon. U. Dosanjh: Yes, but it's not cost-effective.

R. Thorpe: If I could follow up just with a quick one. When we say it's not cost-effective, is that just looking at the traditional ways of handling returns? Or have we looked at the new ways of handling returns to retail? As we know, some packages are not refillable.

Hon. U. Dosanjh: Maybe it's late in the day, but I don't understand the question fully.

R. Thorpe: Well, you missed your tea. That could do it.

Hon. U. Dosanjh: The sugar. . . .

R. Thorpe: Sugar -- that could be it.

[ Page 2993 ]

The LDB's own customers and their customer survey say that 44 percent always make a purchase when they return their empties. Well, as we all know, the empties that they return right now are basically brewery products -- both bottles and cans -- cider products and, I believe, cooler products. For the most part those are returnable, with the exception of some imported beer products and some canned products which are handled in different ways. obviously. Where I was originally going with this. . . . You said you weren't looking at taking back because of cost restraints. . . . We do have wine bottles and we do have spirit bottles. And I tend to agree, without knowing the details of the number, that to have those returned in the traditional mode could be cost-prohibitive. However, there are crushers, reverse-vending, etc., that are available out there, and I'm just wondering if, in the LDB's quest -- and one of its pillars, customer service -- it has looked at some of these new ways to handle non-traditional products that may be returned in the near future in British Columbia.

Hon. U. Dosanjh: The answer is yes, they have looked at it, and it has been rejected for essentially the same reasons.

R. Thorpe: I guess I would conclude, then, that if they've looked at it, they have an internal study that they did on it. Based on our previous comments, I would then assume that I would have access to such a document.

Hon. U. Dosanjh: Yes.

R. Thorpe: That's two yeses, I would assume. The first is that a study has been done, and the second is that I would have access to the documents.

Hon. U. Dosanjh: "Study" is a very specific word. There might have been an assessment done; one could say that's a study, but whatever has been done would be available to the hon. member.

R. Thorpe: I know it's getting late, and I don't want to upset anybody, and, you know, you and I have always gotten along, Attorney.

The other interesting thing here in this survey, which I read, pertains to hours of operation. It says that 71 percent of the customers are satisfied or pleased with our hours of opening. That means that 29 percent, I guess, aren't. I'm just wondering why that seemed to be one of the items we had to study in a limited review of liquor policy in British Columbia, when 71 percent of our customers are very satisfied.

Hon. U. Dosanjh: I honestly don't know where the member is going with this, but that was a question on the survey. There is an answer; it may have several explanations. The review wasn't specifically aimed at the hours per se; it was aimed. . . . If the hon. member is talking about the Enemark review as opposed to this review, that was aimed at the specific question of Sunday and statutory holiday opening, which may or may not have anything to do with more hours. One could theoretically open on Sundays and have the same number of hours. I'm not suggesting that that would be done, but that's a question that has been raised many times in British Columbia, and we were trying to seek an answer to that.

R. Thorpe: At this point in time I'm not trying to go anywhere with this line of questioning, other than that this was in part of my communications. If you recall, I asked some questions on communications last year, and since the LDB puts out this document, and I take the time to read it and note things of interest. . . . I just kind of keep those things. That's where I was going with it.

But I would be very interested in getting. . . . The Attorney could be correct in his assessment of the interpretation of this answer, but the only way we will be able to confirm that is once I see the questions. So I'd be very, very pleased to look at that study and understand the question.

Hon. U. Dosanjh: I've given this undertaking to the hon. member. In fact, we could dispense with many of these questions if the hon. member would simply accept the invitation to seek whatever information he is seeking directly from them, and we could carry on.

R. Thorpe: I think this must be what the Premier said two throne speeches ago about working in partnership; it's just taken us a long time to get there. I guess there has to be one ministry that leads, and I'm glad to see it's the Attorney General.

But I was also given that assurance last year -- that I would be able to get stuff and review business plans, etc. -- and we met in January. We were kindly given the assurance in July, so I'm taking the Attorney at his word because I've always found him to be a gentleman, and I'm going to pursue that line.

In the communications. . . . Just a couple of things, because I do read these things, and I do make notes. I want to compliment the Attorney and the staff at the LDB, because in their April 25 "Newsline". . . . They are doing two things in the community for British Columbians which I think are very, very important, and I think that we should take time to recognize them. One of them is RADD, Recording Artists Against Drunk Drivers, a program running in their stores in the month of May.

You know, we're not here just to throw darts and take shots; we're also here to recognize people's contributions. So I want to recognize the LDB and its staff for that, and I also want to take the time to compliment them on another program, which I note in this particular issue, called Kids in the Hall. The Attorney may not be aware of what that is. It's the LDB having a program where they bring 14 high school students in to work and see how work is done, and I think those are very, very important programs. So we're going to ask some questions, but we're also going to give some compliments where compliments have been earned.

Just moving along into another area: volumes. I know the Attorney's going to tell me that I can get all of the information I want on volumes, so I guess the only thing I can ask at this point in time -- because the last documentation I have on this is, I think, December '96. . . . I would just ask the Attorney, then: are volumes in the major beverage alcohol categories running pretty much on target, or ahead of target? Is there anything going on in any of the particular categories? And the categories would be broad categories of spirits, wine and beer. So just a rough view of where we're going in volume terms.

Hon. U. Dosanjh: I understand that in terms of the expectations in dollars, the expectations are in fact being exceeded. People are buying more expensive items, if I can use simple language. There is a term for it that the hon. member would know.

Interjection.

[ Page 2994 ]

Hon. U. Dosanjh: Yes.

R. Thorpe: So we're saying that we're ahead in dollars and in volumes. Do we see any significant shifts on a year-over-year basis on an actual basis, and do we see any problems looking forward to the next year? In volume, not dollars.

Hon. U. Dosanjh: The answer is no.

[5:15]

R. Thorpe: Again, in the April 25 "Newsline" -- I'm moving into expanded deposits now -- I note a paragraph or section in here that basically is telling us that we're going to expanded deposits in April 1998. I'm just wondering if the Attorney could advise us what kind of detailed information they have received on the implementation with respect to the return from the Ministry of Environment on this particular subject.

Hon. U. Dosanjh: I know from my own knowledge that the branch has worked very closely with the Ministry of Environment, and I understand that the committee on implementation of the proposals has just begun meeting.

R. Thorpe: Through to the Attorney, who no doubt will have to confer with his staff: do the Attorney and the staff believe that there is going to be any change to the return of the current products -- beer, cider and coolers -- to their stores, or do they have the assurances from the Ministry of Environment that those will stay in place?

Hon. U. Dosanjh: I understand that the proposal is for the LDB to be able to continue to accept the returns, and I understand that the LDB shall continue to accept the returns.

R. Thorpe: Those are the understandings, but does the LDB know that for a fact? Have they received assurances? I'll tell you quite frankly where I'm going with this. My next question is this: if you haven't received the assurances, are you aggressively pursuing those assurances? Secondly, if you don't have those assurances, what is going to be the impact on your own staff? If you are not taking beer, cider and coolers back, how many staff will you have to lay off?

Hon. U. Dosanjh: It's my understanding, and I believe it has been announced by the Ministry of Environment, that the public would have the choice of continuing to return to the stores as well as to the depots.

R. Thorpe: If that in fact has been officially announced, I have not seen the official announcement that confirms it. If the LDB does in fact have those official documents, I would be pleased. Quite frankly, many stakeholders are making representations to me and to our caucus that they have grave concerns over this. So if the LDB has that, I'd really appreciate it.

The success of the LDB and the multi-retail facet of selling products in British Columbia has no doubt been a partnership between stakeholders and the LDB. Many stakeholders fear the uncertainty of the expanded deposit system going forward, and I believe that there is great uncertainty. I would like to know if the LDB management and the Attorney, who is responsible, are going to ensure that the voices of these stakeholders and suppliers are going to be heard by what is feared to be a very bureaucratic organization that is developing expanded deposits. I would like to know if the voice is going to be carried on behalf of those various stakeholders to the Ministry of Environment by the LDB and by the Attorney.

Hon. U. Dosanjh: I have not heard directly of this concern. This is the first time I'm hearing about it. I'm simply going on my recollection of the press release from the Ministry of Environment. I could be wrong, but obviously, if there are concerns, they would be looked at.

R. Thorpe: My intention is certainly not to put anybody on the dime. No doubt the Attorney. . . . It could be the first time. If he says it is, no doubt it is the first time the Attorney has heard this. Could the Attorney confer with staff? Has staff been made aware of the concerns of various stakeholder groups with this government initiative?

Hon. U. Dosanjh: I understand, in terms of the general manager, that the concern has been conveyed to him secondhand, essentially. He advises me that he has spoken to my deputy on a couple of occasions, based on that secondhand information.

R. Thorpe: Just so I clearly understand it and so the record is correct, what I'm hearing is that neither the Attorney nor the general manager of the LDB has had direct representation to them by any sectors of the beverage alcohol industry that have concerns about the impact on their businesses with respect to expanded deposits in British Columbia. Is that correct?

Hon. U. Dosanjh: Since the report has been issued, I'm not aware of any letters that may have come to my office and may have been directed to the ministry for response. I have not spoken to anyone about this issue, and nobody has spoken to me about this issue.

R. Thorpe: On behalf of a variety of sectors of the industry, let me then express to you and to your senior staff that they have grave concerns about expanded deposits. It's not because they don't care about the environment, because all British Columbians care about the environment. These suppliers are concerned about the environment. What they're concerned about and what they've shared with me, I will make every effort to make sure that they either share directly with you or share with senior LDB staff as quickly as possible.

What they're concerned about is another government-dictated bureaucracy that is going to drive their costs up immensely. When that happens, there's only one person who always pays, just as there is only one taxpayer. It's the customer. I just want to make sure it's on the record that all sectors have expressed grave concerns to me, and I will do my utmost to make sure that they convey their concerns directly to LDB. It would be my hope, since they are a very important stakeholder to the success of your industry and your revenue of $592 million this year, that you would want to be their strong voice and strong advocate at the table.

The next area I want to talk about, if I could, is the limited liquor review. Before I get into some questions in that area, could the Attorney advise me if his ministry and/or the LDB conducted any studies or opinion polls relating to liquor regulation prior to the appointment and the announcement of the Enemark review?

Hon. U. Dosanjh: Based on my recollection and the recollection of the officials, the answer is no. But that's a 

[ Page 2995 ]

question that could be investigated. If it turns out that the answer is not correct, we would provide that information to the hon. member.

R. Thorpe: I would ask, then, on your undertaking, that you check with your ministry and LDB staff on that. I would look forward to such a document as quickly as possible -- if in fact it does exist.

Could the Attorney advise what the cost of the Enemark study was to the taxpayers of British Columbia?

Hon. U. Dosanjh: Thirty thousand dollars in total.

R. Thorpe: Various industry sectors and the public of British Columbia have not heard any official comment from the government on this $30,000 limited review. When can the people that are directly affected -- the hobby brewers and vintners, the neighbourhood pubs, the hotel association, the LRSs. . .? When can the people of British Columbia have an answer as to what the process is going to be, and when we are going to have either some announcements or decisions or further study? When can we expect to hear on this?

Hon. U. Dosanjh: It's tempting to say "in due course," but I wouldn't say that, because that doesn't enlighten anyone. I can tell you that it is my view that adequate time should be given for people to respond to the recommendations. People are now aware of the recommendations; they have been made public. There is an individual within my ministry by the name of Ruth Rogers who is receiving all of the public responses on these recommendations.

Once adequate time has passed after the publication of these recommendations, we will assess the public response. The ministry is, of course, continuing to work on this issue and will continue to work on the issue, taking into account the responses from the public. There are no current plans to implement any particular recommendations very quickly, because I want to make sure that people have had an opportunity to review them and provide us with their input. It may change.

[5:30]

R. Thorpe: I thought I heard the minister say: "It may change." Yes, things do change. Sometimes they change for the better, and sometimes they change for the worse. I guess it depends which side of the fence you happen to be on and what the issue is.

But people make investments. People employ other people in their small businesses. It's all right for us in government, because the government seems to have an endless supply of money, but people in small business need stability.

Hon. U. Dosanjh: What do you want me to do?

R. Thorpe: I'd just like you to let me finish the question first, for starters. Thank you.

Some of them are very, very small; they have been referred to as mom-and-pop operations. They have bank loans. There is uncertainty taking place out there. I guess what I would like to suggest to the Attorney. . . . And what I'd like to have, is a bit more of a definitive time frame so that people know. . . . Some people obviously lobby for this or that, but I think people want certainty so that they can live the rest of their life. I would appreciate. . . . I think many of the people who are affected by it and operate small businesses and employ people would like some kind of a time frame. Is it by the end of July? Is it by the end of August? When can we expect a decision?

Hon. U. Dosanjh: We're getting into future policy. I don't want to say that I won't talk about it, except that it's important that some of these changes recommended by Tex Enemark may require legislative change. I alone certainly don't control the agenda of the House, and I think it would be premature and irresponsible on my part to make any undertakings as to any time lines.

It is important that there be certainty in the market. There has been. That's why this review had very limited scope. In fact, that's one reason we want to make sure that we proceed very slowly upon receipt of people's responses to these recommendations.

R. Thorpe: The liquor distribution branch indicates that it could have a net contribution of $5 million by Sunday openings, and I believe $1 million if they were open on statutory holidays. Are those numbers included in the business plan going forward?

Hon. U. Dosanjh: No.

R. Thorpe: With respect to these numbers, are these numbers. . .? It says "net contribution," but I want to make sure that I understand. Are these net of the potential negative impact that it would have on other retailers -- the losses that they would have? Or are these just net dollars into the government's general revenue fund?

Hon. U. Dosanjh: The latter.

R. Thorpe: With respect to Enemark -- for lack of a better terminology; I'm sure Mr. Enemark doesn't mind having his name recognized -- are the Attorney and the LDB. . .? I guess in this case it's the Attorney's office. Are you really heeding the inputs from the UBCM who, in March 1997, published extensive views on this Enemark report? Is your office taking into account the UBCM's published views on all of these items?

Hon. U. Dosanjh: All of those issues would be taken into account when we make decisions.

R. Thorpe: With respect to U-brews and U-vins, can the Attorney confirm that the government will be standing by the words of the Premier of the province, and that they will not be introducing taxes on these folks? We don't want to whack these people who brew their own beer and their own wine. Would the Attorney confirm that today?

Hon. U. Dosanjh: The Premier speaks for the government. He is the government.

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R. Thorpe: I'm going to assume that that is a yes -- that from the Attorney's point of view, these people will not be taxed. Did I misunderstand that?

Hon. U. Dosanjh: The Premier has indicated very clearly the intent of this government, and that is to not impose any taxes on U-brews and U-vins. I have said that in the past, and there is no change.

R. Thorpe: The next two areas I have to go through are fairly detailed. In looking at the time, I wonder if it would not be appropriate to move that committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:37 p.m.

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