(Hansard)
WEDNESDAY, JUNE 4, 1997
Afternoon
Volume 5, Number 13
(Part 2)
[ Page 3895 ]
The House resumed at 6:36 p.m.
[The Speaker in the chair.]
Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members of the Legislature, we'll be debating the estimates of the Ministry of Municipal Affairs and Housing and the Ministry of Agriculture, Fisheries and Food. In this House, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Health.
The House in Committee of Supply B; G. Brewin in the chair.
ESTIMATES: MINISTRY OF HEALTH AND
MINISTRY RESPONSIBLE FOR SENIORS
(continued)
S. Hawkins: I just want to wrap up the ambulance issue, then, by asking the minister if there is any thought to putting alternative practices into place to improve response times for paramedics. I know I alluded to that earlier. Other jurisdictions, I understand
Hon. J. MacPhail: Yes. The suggestions are valuable. We actually are using bike crews at special events and determining the success of those. But yes, we are looking for ways other than the regular crewed ambulance for actually meeting the needs where populations are much more concentrated. We'll continue to examine all possibilities in that area.
S. Hawkins: One last issue with regard to this is the 911. I know that was something that was quite highly publicized in the recent past. I wonder if the Ministry of Health is working with the AG with respect to getting provincewide 911, and what their role has been in that issue to date.
Hon. J. MacPhail: Yes, there will be future policy on that, but whatever future policy is being planned, we're part of it -- the B.C. Ambulance Service.
L. Reid: I'm pleased to enter into the conclusion of this debate on Health estimates this evening. I want to spend just a few moments on accountability questions. I've certainly raised this issue with the minister many times in the past, in terms of how best to provide some kind of cost-benefit analysis to the taxpayer. How are we going to return some kind of reasonable product and then indicate the value of that product?
The question I raised in this Legislature in a private member's statement on April 4 -- two months ago today -- was around the reference-based-pricing question, because the request at the time was for evidence-based research. The responder of the day rose to his feet -- as did the minister -- and said every decision this government reaches is based on evidence. I requested, exactly eight weeks ago today, a copy of that study that indicated that this was a good direction for the province of British Columbia -- that this was a good direction for seniors and users of the Pharmacare system. I do not have that report today, and I would ask the minister to kindly comment.
Hon. J. MacPhail: There is a UVic study that has not been released yet; they've issued a news release about it, but they haven't issued the study yet. As soon as they release that, we would be more than happy to make that study available. They have released the details of the study, which they've done through public commentary, about the satisfaction of the reference drug plan. As soon as they give it to us, I'll make it available completely. In the meantime, we keep track of our own statistics internally.
L. Reid: I appreciate the minister's offer. What I believe she is referring to is the post-study. What was promised to me was the study that led up to the initial decision that, indeed, reference-based pricing was a good thing -- based on that study. That has been promised upwards of a year. So it would seem to me that probably we're having a discussion about two separate studies. The original study that allowed the decision to be taken -- that said this was a good direction -- is the one I'm after.
The post-survey, if you will -- in that the program has now been operational and people are responding to it, based on the quality of service they might or might not have received -- is interesting, and as one aspect of the discussion, I will certainly await that study. But what I was told eight weeks ago, and what I was told almost a year ago, is that the ministry itself had a study -- was conducting a study and was completing its own evidence-based research -- that would indeed indicate that this was a reasonable direction. Many dollars were spent around this province citing this study: "No, no, no, you opposition people don't need to be agitated by this. We have a study that says we've done our homework." We're now probably in the fourteenth month. I simply want access to the study. If the minister could kindly comment.
Hon. J. MacPhail: Let me offer this to the member. The evaluation committee meets regularly; it's ongoing, and it's determining the evaluation. I would be more than happy to have the hon. member meet with that committee. A final report is not anticipated; they're doing ongoing evaluation. I would be more than happy to have that member meet with the committee and ask any questions and have any information that we have available, as well.
In the meantime, we're doing our own assessment around the issues of hospital utilization. There is ongoing determination about the effects of the reference drug program -- all of which we keep records on.
[6:45]
L. Reid: I do appreciate the minister's offer; I'd be pleased to attend the meeting. However, again, what the minister is referring to is a post-assessment tool. When the member for Esquimalt-Metchosin rose in this House and responded to me on April 4, he said: "I can assure the hon. member that this government doesn't move without doing its research in all areas of public policy, and that includes reference-based pricing."[ Page 3896 ]
Evidence-based research in the area of reference-based pricing has now been promised to me for more than fourteen months -- not the post-evaluative framework that this minister has now referenced twice but the evidence-based, principled, decent research that led up to this government taking that decision to implement, to impact all British Columbians with, a reference-based pricing program. I think the minister is more than aware that this is a dramatically different program than generic substitution. This is a program that links chemically different products by category. That's the issue for British Columbians who are being impacted -- in numerous cases, negatively -- by this program. I want to know where the research is that established this direction initially.
Hon. J. MacPhail: I'm sure the member has been asking this question since we introduced it, which would be two estimates ago.
We consulted with New Zealand, we consulted with European jurisdictions; our staff met on that basis, and we reviewed all of the studies about referenced drug plans and reference-based pricing in the field and designed our program on that basis. I'm more than willing to offer every single staff resource available about the genesis of this program. There's no hesitation to do that, but if the member is looking for a document that compiles all of this
Also, the court case that the pharmaceutical companies brought against the referenced drug plan has all of the public documentation. If we've got that assembled in one place, I'll give that to the hon. member.
L. Reid: I appreciate the offer, and if indeed that information is assembled, I would appreciate that. That would be a very good place to start.
It troubles me that it has taken 14 months to get to that offer. It seems to me if that information had been readily available, I would have had it long before now, because it seems to me that this minister has been very forthright with information that has been requested. That causes me great concern; I'm not convinced it exists. I think this government travelled the province citing a study that probably doesn't exist. That's a huge concern for me, and I can tell this minister that I sat in numerous public meetings where "the study" -- never available -- was referred to endlessly: "This is a good policy direction for this province, because we have done a study." Fourteen months later the minister maybe says that there is a compilation of material somewhere. That doesn't provide any comfort to me.
Certainly to someone who has watched this issue in all its manifestations for many, many months, it's not what this minister stands for in terms of decent principled research when she talks about evidence-based research guiding the actions of this government. We don't have that before us today. I'm truly troubled, minister, when it comes to whether or not that information was the benchmark from which the new program was created. It seems to me that it probably was not. I have serious concerns about that.
This minister has heard me rise and talk many times in this Legislature about reasonable measurement tools, about accountability and about reporting out appropriately to the public. Well, I'm asking these questions on behalf of my constituents, who are faced with this program that's not working for them. They too are being told: "We studied it; we have a study; we completed a study and that's why we went down this road." I'm not hearing that that is in fact a valid comment -- and I'm not hearing it from the minister, which troubles me further.
Hon. J. MacPhail: There are two aspects to alleviating the concerns of the member's constituents. One is that we will make available the public documents that were tabled in the court case. I've just asked staff whether a study has ever been cited, and there has never been one study ever cited in our presentation of referenced drug plans.
The hon. member is shaking her head. Is it a particular official that's been doing that, or whatever? Well, the assistant deputy minister has never done that. What we need to do is get the hon. member together with our staff at the ministry and work out the lack of communication. The staff is more than willing to do that. I'm more than willing to have the member meet with the evaluation committee.
We didn't just put the policy in place and then say: "Oh well, here's a policy and we're not going to evaluate it and make sure that it's the best for health care." There is ongoing evaluation. I mean, each and every time a physician prescribes a medication, there's ongoing evaluation. The evaluation committee looks at all that evidence. We also have the therapeutics initiative, upon which we rely, and the pharmaco-economics initiative. We monitor utilization of other health care resources. The BCMA is involved in the evaluation, etc.
The fears expressed
When we get those complaints, we investigate them. On the basis of the stories, there's always a solution. There is always a solution to the problem: proper procedure isn't being followed; there's a misunderstanding between the patient and the doctor; there's a concerted action to refuse to cooperate that has nothing to do with medical care. We can resolve those concerns, and we can resolve them very quickly. So we're monitoring the health outcomes of the reference drug plan. And frankly, we've also said that where there is major concern that's broadly based concern, we'll review and, if necessary, change.
L. Reid: I appreciate the offers to be involved and to be apprised of the post-evaluative framework. I truly appreciate that offer on behalf of the minister, and I look forward to those meetings. In terms of what led up to that policy direction, if that compilation is indeed available, I would welcome that as well. What continues to concern me is the impact that this is having on upwards of 400,000 British Columbians. That number is growing by the day. If there is indeed a plan for that kind of volume evaluation, that would be a good thing to share with us, as well, because many folks will never be asked the question as to whether or not this is a useful program for them. And many more folks today, I think, are experiencing difficulty with the program. So if there are ways for us to find out more about the evaluation plan that's in place, I'd be happy to share that directly with my constituents and to indicate that perhaps this is an area that they may wish to address in more detail. I could direct them to somewhere a little more specific to their needs.
If I can just change topics for a moment, and I know you've covered MSP in some detail
[ Page 3897 ]
are claimants around this province whose bills remain unpaid for, on average, six months. It seems to be a particular backlog for the Medical Services Plan in their dealings with the Workers Compensation system. I think, in that the minister has been very generous in her offers this evening, if there's an opportunity for improved communication around who is indeed responsible for that backlog
There are a number of care providers
Hon. J. MacPhail: I thank the member for bringing this to my attention. I've just discussed it with the Deputy Minister of Health, and we're well aware of the problem. Believe you me, it is a bureaucratic problem. It does require a solution. There is a difference in the way that WCB claims are paid, in terms of whether they're paid on a contractual basis rather than a fee-for-service basis. So there has to be
We're well aware of other problems in the way we pay drug claims to WCB, through WCB, etc. We're making good progress in the area of getting drug claims paid on time. I confess: this is an outstanding problem that needs to be resolved.
L. Reid: I appreciate the minister's sense that perhaps we can find a solution to this. What troubles me is that I know a number of people are being turned away from reasonable care providers in communities, because the care provider has put up a sign, "We do not handle WCB claims," because they simply cannot take the frustration any longer of being embroiled in enormous paperwork and enormous backlog.
I wasn't clear on the minister's comment when she said contractual. That's an arrangement between the Medical Services Plan directly with, I assume, the Workers Compensation system in British Columbia, because individual care providers are paid on a fee-for-service basis. I mean, the physiotherapists in question have not contracted to the WCB. They are private care providers who happen to receive patients who happen to be WCB claimants. Could the minister comment?
Hon. J. MacPhail: I'd like the member to stop asking questions, because it gets worse as
Okay, health care practitioners make claims to the MSP for WCB claims. We actually act as the agent to pay those claims. But we need approval from the WCB; we pay on behalf of the WCB. So the contractual arrangement is that we make the payments, but they adjudicate the claim because eventually it will be charged against the WCB. It's the adjudication that is taking a substantial amount of time.
So let me offer -- now that I actually understand the problem in detail -- that I'll see what I can do in terms of alleviating the concern. The last thing that makes sense is for the health care practitioner to be the one that absorbs the responsibility of the delay in the payment. But I now understand. I hold out hope that we may be able to resolve this.
L. Reid: If the minister is taking it on, it would warm my heart.
I'd like to perhaps offer a solution, that at some point some Minister of Health -- hopefully this one -- will come to the table and take responsibility for the medical programming that goes on in the Workers Compensation system. There's no reason in the world why that cannot be aligned with a major teaching hospital in this province, which would finally give it some credibility and, frankly, put in place some levels of accountability that are notoriously absent today.
I'm putting this on the table because I want the minister -- knowing full well that this job is as enormous as it is -- to look at the fact that a two-tier level of health care does exist in this province. It exists for people who are WCB claimants. The level of care they receive is dramatically different than the level of care for any other patient in this province. It is a two-tier system. If this government is truly committed to ensuring that health care is universal and accessible to all British Columbians, regardless
Any member of this House will stand up and say we support a single level of health care. It is time to operationalize that belief, because, truly, if you are an injured worker in this province your access to health care is dramatically different. Any member of this House will tell you that, because I'm sure every single MLA has had Workers Compensation claimants come to them for service. They're the ones who don't get to see a physiotherapist when their injury happens. They see one three months later, when the WCB has somehow adjudicated it through their paper maze. They don't get diagnostic tools in place; they don't get X-rays; they don't get surgeries. Oftentimes, a year or a year and a half has gone by -- not appropriate.
[7:00]
It's the filter -- the screen, if you will -- that is creating a very significant second layer of health care, because the number of work-related injuries in this province goes up every year. We simply say: "Here is the access to health care. But you won't be able to get through the maze for probably 18 months. Good luck. It's too bad you were injured at work."I appreciate that this is currently under the Ministry of Labour, but it's a health issue. Where the rubber hits the road in the Workers Compensation system is around health care delivery and access to reasonable service. I truly understood the minister's problem when she said it's a bureaucratic problem; it absolutely is. But because they have refused to resolve that bureaucratic problem for upwards of 15 years, health care is being compromised in this province. You're not a different calibre of patient because you happen to have received a work-related injury. It seems to me it will take someone of this minister's strength to get the ball rolling, but it's time the discussion was held.
There's no reason for workers in this province to be shuffled off to little rooms at the Workers Compensation Board to be seen by individuals who call themselves medical advisers but who sometimes have zero medical training. It's misleading in the extreme. Those individuals are not aware that they are not physicians, for the most part. That will
[ Page 3898 ]
change this year. The fight has been long and arduous on that. Now we will look at people who are on the active list at the College of Physicians and Surgeons of B.C. But this organization has been in place since 1917, so you can only appreciate how many people have had their health care compromised up to this point. It's truly an issue that needs attention. I would welcome the minister taking it on.
Hon. J. MacPhail: Thank you very much for those comments. Two things: in the meantime, we'll investigate a solution to claims payment; the broader issue of responsibility for health care costs is one that I'm extremely interested in -- in all areas of who's responsible for our health care costs. I'm actually going to discuss with my staff how we can approach this in terms of the royal commission presentation and see what our role is there. So I do very much appreciate the member raising the matter.
L. Reid: I want to thank the minister for those comments. But I certainly was here in terms of giving the minister a heads-up. That will be the basis of my presentation to the royal commission; I certainly believed it was important that you hear it from me first. I think you indeed should take on the Workers Compensation system. I thank you most sincerely.
S. Hawkins: I'd like to go back to the drug plan. I understand that I did have the opportunity to meet with ministry officials and get an overview of the drug plan. I understand there are several different parts to the plan. I understand that through PharmaNet -- I believe it was the family plan -- the costs associated increased quite substantially. I wonder if the minister or the ministry officials would again just reiterate why those costs went up. Do they perceive that they will continue to go up?
Hon. J. MacPhail: What's good news for the taxpayer turns out to be, because of the introduction of technology, a cost on the system. Prior to the introduction of PharmaNet, any person who wished to make a claim for a prescription had to save the receipt, put it in a drawer and then make a paper claim. What happened, I can only assume, was that lots of families put the receipt in the drawer and then never made the claim. So they were actually at a loss for the entitlement to benefits.
On PharmaNet, the computer keeps track of the claim and pays out automatically. So about double the number of families now are receiving a cheque from Pharmacare. I think it was about 52,000 who were making claims before, and there are now about 116,000, so it's more than double the number of families. As a result of that, the pressure on the system, the extra cost has risen from $46 million per year for that plan to almost $78 million. Over $30 million of extra claims are being paid out as a result of PharmaNet, which is good news, I guess, for working families.
S. Hawkins: I suppose that was kind of a surprise for the budgeting in the drug plan. Now, is that something that will increase? Is that something that the ministry perceives will increase?
Hon. J. MacPhail: Actually, it didn't come as a surprise; we predicted that and budgeted for it. It's a one-time cost, because now everyone is captured by PharmaNet. We know the exact amount of claims that can be made.
S. Hawkins: I also want to talk about reference-based pricing. I know we've had this discussion with respect to a motion in the House, but I just want to address it again in estimates.
This is a policy that replaces a drug that is ordered by a physician with another group of drugs that Pharmacare says works just as effectively. Certainly the minister knows our concerns with this policy, because groups -- seniors groups, other groups
I have the same concern as the member that was speaking prior to me has, and that is: if the patient goes on a drug that the doctor didn't order -- it's replaced by Pharmacare
Hon. J. MacPhail: Yes, we do, and I'll just provide that information now. There is monitoring specifically to seniors, and I actually have the diagrams here. We'll make a copy of this available now, if you wish.
The first figure shows that there's been no change of rate of hospitalization. So let me go into more detail around that. Among seniors who switched gastric drugs after October 1, 1995, the rate of hospitalization for gastro-intestinal bleeding was unchanged. The average rate was 60.0 hospitalizations per week in the two years before reference-based pricing versus 60.6 hospitalizations per week during the six months after reference-based pricing.
Among seniors who switched nitrates for heart pain after November 1, 1995, the rates of hospitalization for fainting and heart attack were unchanged. The average rate for fainting was 73.5 hospitalizations per week in the two years before the reference drug plan versus 72.2 hospitalizations per week during the five months after reference-based pricing. For heart attack, the average rate was 73.1 hospitalizations per week in the two years before reference-based pricing versus 68.8 after reference-based pricing.
Among seniors who switched non-steroidal anti-inflammatory drugs, NSAIDs, after November 22, 1995, the rate of hospitalization for gastro-intestinal bleeding was unchanged. The average rate was 49.9 hospitalizations per week during the two years before the reference drug plan versus 49.8 hospitalizations after.
We introduced the drugs that lower blood pressure just in January of this year. we're keeping the stats for that, but the initial months -- it is only initial -- show no change in the weekly incidents of patients who, for the first time in at least one year, received medical services with diagnostic codes for heart attack or stroke and who switched their blood pressure drugs. The average incidence of first services for heart attack was 9.4 patients per week in the first two months, compared with 12.2 patients per week during the nine months before.
We are very concerned about making sure that this is good for patients as well. We are monitoring it all very carefully and will continue to do so.
[ Page 3899 ]
S. Hawkins: I'm wondering if the minister can tell me who's doing these studies, or this tracking, and where it is being conducted.
Hon. J. MacPhail: The data that I quoted is the internal monitoring of the utilization rates and the Medical Services Plan billings. We will give this to the evaluation committee for a reference drug plan, but they, too -- the evaluation committee -- are using their own evaluation methods on the reference drug plan.
S. Hawkins: Are there any studies being done between a control group, if you will, of patients who are taking the drugs the doctor ordered and the patients that are being reference-based? I honestly feel that when policies like these are put into place, there should be hard scientific evidence that this is indeed working.
We know that other jurisdictions have tried reference-based pricing. We know that it was tried in Germany and that they abandoned it. We know that it has been tried in HMOs, which are organizations in the States, and it's been abandoned. Where they restrict formularies, they find that their health care costs increase. We know that in the past few years health care costs in this province kept increasing. Is there any scientific basis to reference-based pricing working?
Hon. J. MacPhail: Yes, we are tracking it. According to their own personal medical data of patients that have switched medications, there's been no statistically significant increase in either hospital utilization or in the patient visits. We'll continue to track that.
S. Hawkins: This is a policy that this opposition will follow very carefully. I think there are very few areas that I get a lot of letters on, and this is certainly one that I do get a lot of letters, phone calls and concerns on.
I would also just like to ask the minister who advises what group. Is it still the therapeutic initiatives group that advises on this policy?
[7:15]
Hon. J. MacPhail: Now, there were two parts to that question: the therapeutics initiative and then who advises us. The therapeutics initiative does the clinical advice on use of drugs. They're not part of our advisory committee. We use the information that they release to the broad public and to the medical community. We use that in our evaluation of moving forward on a reference drug plan, but there's a reference-based pricing expert committee which the ministry has struck that assists our Pharmacare division on reference drug pricing. They advise on the addition of new categories, the consultation process regarding protocols and the implementation of therapeutic guidelines. The people who sit on that are ministry officials, the office of health technology assessment, the hospital representatives, experts from the hospital sector, from the University of British Columbia, from the drug and poison centre -- clinical pharmacologists. Just to name some of the past members, Dr. Janet Martini, Dr. David Blair, Mr. Derek Daws and Dr. Malcolm McClure are some of the people who have sat on that committee.S. Hawkins: I assume, then, that this is the core committee that makes the decision of whether a drug group will be reference-based or not. They obviously, from what the minister says, use the advice of a group that is called the therapeutics initiative. I understand that in this budget year the therapeutics initiative group will get $575,000. I wonder what service they provide for that money and what accountability they have to the ministry for that service.
Hon. J. MacPhail: Yes, the member is correct, in that the government provides $575,000 to the therapeutics initiative. They then are required to do the evaluation of new drugs. They also do conferences and education sessions with health care practitioners, and then they also issue communications. I know I'm not allowed to use props, but here are the
L. Reid: In terms of the minister's final comment that their role is to evaluate the scientific literature available on different drug products and then render a decision -- again coming back to the accountability question -- I have some concerns on whether or not that is an exhaustive look at each of those drug products. It seems to me there is a great variation in the level of material and the amount of material they would look at, product to product. There have been references made that one or two articles have sometimes sufficed in the selection of a particular product to be reference-based, and in other cases there's been a great deal more work done. If this is, you know, the ERIC clearinghouse for drug research and they look at articles that are readily available, how does that figure into the ministry's overall plan for accountability?
Again, for the record, these are not the people who actually conduct the research; these are the individuals, from my understanding from what the minister has said, who read the articles from scientific journals about particular drug products that are new to the market. To me there are huge gaps in how accountable that process really is. If the minister can assure us, I would delight in that. But how can she assure us that indeed the work has been done? Is it possible that this committee would reach a decision based on the reading of a single article? Or is there a criterion in place that says they have to look at seven different articles or nine different articles? Is there a way for us to be sure that that is indeed a credible, exhaustive process?
Hon. J. MacPhail: I'm glad you asked this question, because I don't want to influence the reputation of the therapeutics initiative by suggesting that they support or don't support a reference drug plan. They have clearly said that they have absolutely no opinion on the reference drug plan. They don't support it, and they don't not support it -- fix that in Hansard, if you can. They're tied in with the Cochrane Institute, which is an evidence-based scientific research institute. Their evaluation procedures are well accepted in the world of university research.
Original research, of course, is a very complex and costly procedure. Billions of dollars are spent worldwide. The therapeutics initiative researches every single peer review on a drug -- all the journals. They do the full range of research. I wouldn't, for a moment, challenge their legitimacy or their credentials on this area. They do the full review, and they issue their letter.
I actually had a meeting with them. They're very serious and very committed to what they consider an extremely valuable
[ Page 3900 ]
research initiative at the university. They are tied in with the university -- not with any other institution -- and they stand behind all of their initiatives. They also made it quite clear to me that I am never to invoke their name in any way that besmirches their reputation, and I have clearly made that commitment.
L. Reid: The minister referenced the Cochrane Institute. Could the minister provide some information on where they exist and who they report to?
Hon. J. MacPhail: That's an interesting question. The Cochrane Institute was originally out of Oxford, but it's a virtual organization -- an international organization. They provide the gold standard in terms of what is evidence-based research. They have a very high standard of criteria that has to be met. The therapeutics initiative is attached to the Cochrane Institute. I'll make available to the member whatever written material we have in terms of the organization.
L. Reid: If their goal is indeed evidence-based research, perhaps the ministry could have looked at that when it came to creating evidence-based research for reference-based pricing. If they truly are the gold standard, I would have appreciated this ministry building that into the original plan so that we would not have had to spend 14 months requesting the study.
S. Hawkins: My questions still relate to the therapeutics initiative. Is this a group set up by the ministry and totally funded by the ministry for the information they receive on review of drugs?
Hon. J. MacPhail: It's a three-year grant. This is the third year of the grant. They are fully funded by the Ministry of Health, but they operate at arm's length and take no direction from us.
S. Hawkins: I understand that. I'm just passing these concerns on to the minister, because the minister showed a binder of information that's supposed to be published
Hon. J. MacPhail: They are to do ten newsletters a year, and from the most recent information we have, they are meeting that goal. I accept that as a question for me to investigate -- that they're meeting the terms of the contract -- and we will do that.
L. Reid: The minister referenced that this is indeed a grant program to operate the therapeutics initiative, and it's in year three. Could the minister comment on what happens next year, as it will be another three-year contract that comes into force, and if these appointments are still order-in-council appointments, are they staggered in any way? Will people be leaving the board this year and new entities coming on side?
Hon. J. MacPhail: In terms of what happens, we'll have to leave that for future estimates. Actually, the committee membership is not by OIC. The doctors request committee membership and gather up the committee membership. It does change from time to time, but it's not through government appointment. A government representative sits on it, but we don't make the appointment.
[7:30]
L. Reid: From the minister's comments, am I to understand that she is not aware of the individuals whose names are being put forward for consideration on the therapeutics initiative? I think the response was that in terms of future funding, that would be decided at a later point. Are we to understand that the possibility exists that the therapeutics initiative will not exist after this year? Or is this a long-term initiative on behalf of this government? It's got to be one or the other.Hon. J. MacPhail: I can't commit myself to future estimates. It's just not appropriate for me to do that. I get asked all the time to make commitments for future funding, and I just can't do it. Am I committed to the therapeutics initiative? Yes. The scientific directors are responsible for assembling the committee of scientists from across the community to be the directors for the therapeutics initiative.
L. Reid: The second part of that question was: are those names known to the minister prior to the selection process?
Hon. J. MacPhail: No.
S. Hawkins: Back to who gives advice to the ministry when they are reference-basing a group of drugs. I understand that last October, when the heart drugs came on board, the Canadian Cardiovascular Society, in an unprecedented move, released a press release saying that they were opposed to reference-based pricing of the heart drugs, and they felt that it was risky and dangerous. Were they consulted before those groups of drugs were put on this pricing initiative?
Hon. J. MacPhail: We've had a good debate around Bill C-91 on these issues, and I don't want to besmirch anybody's reputation in the process of this.
The Canadian Cardiovascular Society issued the press release, and immediately thereafter, the Centre for Evaluation of Medicines wrote a letter to the Canadian Journal of Cardiology refuting the position taken by the members in the Canadian Journal of Cardiology. I made that letter available to the public. It puts in question the position taken by the Canadian Cardiovascular Society, but let me just very
So there we are. I have listened to both sides. Our ministry is well aware of the positions taken around this matter, and we will continue to seek information from the experts on what are the best evidence-based decisions.
S. Hawkins: I would hate to think that a doctor or a cardiovascular or cardiology expert would be basing their decision about what drug is good for their patient on who might fund their organization. I think that's a big leap to be
[ Page 3901 ]
taking, and we could certainly get into that discussion. We know that different groups back different organizations. We know where governments get their backing and we know where other groups get their backing. This is patient-centred; these are patient-focused kinds of issues here. I don't think I hear the minister -- I hope I don't hear the minister -- saying that that press release was a result of influence from a drug company. I hope that's not what I'm hearing.
I have talked to cardiologists; I have talked to cardiovascular surgeons. I think I brought this up in the House the other day. They are questioning the longer waiting lists for cardiac surgery, and there's no evidence
Now, that's anecdotal stuff I'm hearing, and I don't know if the minister is hearing stuff like that. I hope the ministry looks into that, because several heart surgeons have brought those concerns forward. And I would hate to think that we are looking behind the concerns that front-line providers have for their patients and looking at where their organization might get funding. I would hate to think that the ministry would in any way even
I want to move on to the special authority forms, and I understand that there was quite a bit of work involved around the special authority forms. I understand that there was money added to the physician MSP budget, and I understand that part of the $10 million that was added to the physician budget was in response to work around special authority forms. Is that correct?
Hon. J. MacPhail: The negotiations with the BCMA are always interesting. The negotiations for increased funding in the last fiscal year had the BCMA putting a whole range of issues on the table that required -- in their view -- extra compensation. The Ministry of Health negotiators had a view on a range of issues that should affect Medical Services Plan utilization as well. The BCMA put forward what they thought should be the compensation package. The Ministry of Health put forward a substantially lower number. A total compensation package of $10 million was agreed upon without attachment to any specific
S. Hawkins: I guess it's all a matter of perception.
I also want to canvass briefly the area of special authority forms. How many are being received daily by the ministry?
Hon. J. MacPhail: Special authority approvals cover three categories: reference drug plan, low-cost alternative and restricted drugs. I can deal with them in total. For reference drug plan, the requests per year were 50,000. It varies daily, so I would appreciate it if I could give an annual figure; it varies substantially daily. The number of prescriptions under special authority for reference drug plan is about 5 percent of overall prescriptions annually. So that was 50,000 prescriptions for reference-based pricing. Low-cost alternative are 3,000; special authorities and restricted drugs, 15,000.
S. Hawkins: What's the turnover time for a special authority form?
Hon. J. MacPhail: The turnover time for reference drug plan special authorities is within 48 hours -- a maximum of 48 hours. But on the restricted drugs, it's a much more complicated process for special authority, and admittedly that could take up to four weeks. It's usually much shorter than that, but there are times when it does take up to four weeks. But not for the reference drug plan.
S. Hawkins: For the time period where it's extended more than 48 hours, what provision is made for the patient to get the drugs they need?
Hon. J. MacPhail: Well, the reference drug plan approval is within 48 hours, but on the restricted drug approval, the examples are usually of ones that are experimental drugs or still clinical-trial drugs. So the Pharmacare program works with the physician to get it as quickly as possible. But I offer this: a life is not threatened by the longer approval program for restricted drugs.
S. Hawkins: Also, there were concerns about malpractice suits over this Pharmacare policy by practitioners that prescribe, and I'm wondering: if the patient can't afford to buy the drug that the doctor orders and they must go on the reference-priced drug because that's all they're going to get, because that's all they can afford, who assumes the liability if there is injury to the patient?
Hon. J. MacPhail: At the last meeting I had with the B.C. Medical Association, they raised this concern. There is certainly recognition that there is no evidence yet of this situation occurring. It is a future concern that the BCMA is raising with us. I'm listening very carefully. We're in discussions around the whole issue of the reference drug plan. The fear, to date, is unfounded, but it doesn't mean that it isn't an issue that we have to deal with.
Certainly there's a recognition on our part -- and the physicians freely recognize, as well -- that there are a whole host of adverse drug reactions unrelated to any reference drug plan or any Pharmacare program. It is in the context of the whole wealth of information and court decisions around adverse drug reactions that we need to consider this issue. We are talking to the B.C. Medical Association about it.
[7:45]
S. Hawkins: I think the minister can appreciate that if the practitioner wrote the prescription and the patient filled it and that was the drug that he or she ordered then he or she would be responsible. But when it's a prescription that the practitioner is writing but the patient can't afford the drug that the doctor ordered, and it's being replaced, there is a grey area there, and the ministry should look at that very seriously, because I think they're going to have a fight on their hands. The practitioners, from my dealings with them, are absolutely not willing to assume that liability, because that's not the drug they ordered for that patient.I'm going to move ahead to a couple questions that I've been asked by pharmacists. One is that they feel that they're assuming more and more responsibility -- or they would like to assume more responsibility -- for patient teaching in the way of compliance and drug education. They have a disease management plan -- and I believe the ministry is aware of it -- where pharmacists would assume an expanded role. Where are the discussions to date, and is the ministry considering this in their Pharmacare program?
[ Page 3902 ]
Hon. J. MacPhail: Yes, there are discussions going on about disease management, which is where the pharmacists would counsel a client-patient on the use of their medication. As always, it's a matter of: what are the fiscal implications for this? I know, just personally, that my pharmacist
S. Hawkins: This has to do with compensation as well, and I understand there was an issue -- and it may be resolved; the minister can advise me -- with respect to the added duties that the pharmacists took over when PharmaNet was implemented. I know they presented a case to Pharmacare to get some compensation for that. Has that been resolved?
Hon. J. MacPhail: Yes, we actually just very recently reached an agreement with the pharmacists' association on compensation -- an overall compensation package that compensates pharmacists for the workload associated with PharmaNet. The final agreement was signed very recently.
S. Hawkins: I appreciate that response. I'm glad it's resolved. A final issue
One particular program that I've been getting letters about is the British Columbia Centre for Disease Control. There is a concern that these programs will go to one board and that that board may not consider, I guess, the effects of the rest of the province in their responsibility. I understand that the B.C. Centre for Excellence in HIV/AIDS is under that board. I understand
Hon. J. MacPhail: Clearly, the ministry officials are well aware of this issue, because they're all involved in it. It is an important issue; there's no question. I'll give two parts to the answer: one is the whole issue of provincial programs going to a particular regional health board. We have a very clear mandate: the main one is the Vancouver-Richmond health board about funding allocation. The cluster-board model is also set up in a way that gives particular attention to provincial programs. That's the reason why the Vancouver-Richmond health board actually has the ability to appoint three members more than any other board -- to allow for representation outside the geographic region represented by the Vancouver-Richmond health board.
And yes, the point is well taken on the B.C. Centre for Disease Control. That's why it has not been transferred yet. We're setting up an advisory committee, of which our provincial health officer will stick-handle the consultation about the best method of ensuring the integrity of the B.C. Centre for Disease Control, given the new regionalized health model. They are looking at similar health models with similar centres in other jurisdictions, including the United States. All of that will be done before the transfer actually takes place.
S. Hawkins: I appreciate the answer. That is something that we will be watching, as well. There are certainly funding concerns around that, too. And that's something we'll be keeping our eye on.
At this time, I guess I'd like to say -- thankfully, some would say -- that I would like to conclude the debates for the Ministry of Health estimates. I must say that I've thoroughly enjoyed them. I think we've had good debate. I don't think there's one issue that was raised that wasn't important to British Columbians and to patients in this province. And I must say that I am still concerned about health care in this province. And this side of the House will be vigilant: we will be speaking for patients.
I want to thank the ministry staff for their patience and for the information. It's very, very helpful. And I hope to get some briefings this year and to work with some of the ministry officials. So at this time, I'd like to say thank you. And that concludes debate.
Hon. J. MacPhail: Thank you. And just before we call the votes, I, too, thank the hon. members throughout the House very much for the debate. I would just like to personally reassure the members that I always knew the job was a big one before and now, after the debate, I know that it's a giant job. I certainly do appreciate, even in moments of frustration, the valuable advice I receive from everybody in this House.
But I'd also like to take the opportunity in the whole chamber, the whole building -- as people are listening to me -- to really, truly thank the ministry staff. I am constantly impressed by the expertise contained in the ministry and by the way in which they patiently advise me. The leadership of this ministry is quite exceptional, and to each and every one of them standing throughout the building, I say thank you very much. And I wish I could join you for a celebration, but I can't leave this chamber. Anyway, go and have one, but thank you very much to the staff.
Vote 40 approved.
Vote 41: ministry operations, $6,869,553,000 -- approved.
Vote 42: vital statistics, $7,862,000 -- approved.
Hon. J. MacPhail: I move that the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The House resumed; G. Brewin in the chair.
Committee of Supply B, having reported resolutions, was granted leave to sit again.
Hon. J. Pullinger: I call Committee of the Whole to debate Bill 9.
[ Page 3903 ]
TOURISM BRITISH COLUMBIA ACT
(continued)
Hon. J. Pullinger: Before we commence, I would like to introduce my staff that are here with me again today. Beside me is Lyn Tait, who is the deputy minister; Rod Harris, sitting behind me, is CEO of Tourism British Columbia; Dennis Carson, who is legal counsel for the Ministry of Attorney General, who knows all those intricate details about the legislation that I don't.
On section 11.
[8:00]
I. Chong: At last count, we were on section 11. I was just having to check Hansard to see where we were, so I didn't have to repeat my questions. I ask the hon. Chair to just bear with me for a moment, so I can find my place. At the time we adjourned, I believe there was a vote.In section 11, when we were discussing the business plan, there were some concerns -- and those concerns still exist -- as to carrying out certain functions, the mandate, of the new special operating agency. I'm wondering
[F. Randall in the chair.]
Hon. J. Pullinger: Tourism British Columbia has been an SOA, as the member knows, and we are now in a period of transition. In the act, as the member knows, the legislation is retroactive to April 1 for functional purposes. We are in a period of transition right now where the special operating agency is continuing to do its work and review programs and provide the marketing service for British Columbia and the tourism industry in the province. As they review the programs, they are also developing the business plan. So very soon after -- within a reasonably short time -- the first board of the new agency is in place, there will in fact be a somewhat late business plan for this fiscal. And there will also be one in place for next year prior to the next fiscal. It's just simply late because we're in a period of transition.
I. Chong: I appreciate that clarification from the minister, because that was not what I was led to understand last week when we were canvassing this particular section. We thought we would be looking at this current fiscal, '97-98, to be carrying on, and that the first business plan we would be seeing would be for the '98-99 year, and that it would be prepared and provided prior to the next fiscal. But what I'm hearing from the minister now is that we will get a somewhat truncated version for the balance and remainder of the year, so that we can see what the business plan and objectives will be for the remainder of the fiscal.
One thing that the minister mentioned, which caused my eyebrows to be raised was that the business plan
Hon. J. Pullinger: The current SOA board is in transition -- it is the SOA board -- and in this period of transition is reviewing current programs, etc., so that when the new board is in place soon, it will be prepared to move forward rapidly. So that work is being done now. As the member knows, it's is not really part of this legislation.
Just to clarify -- we discussed this earlier -- the Tourism British Columbia agency that we're creating here will take all of the programs that are currently in my ministry, with the exception of land use policy, overall policy and some of the development that will be a shared function. I think that's all of them.
I. Chong: The question that I have for the minister, as a supplemental to her response
Hon. J. Pullinger: The current board is an industry board, and they're very much in touch with the tourism industry. I have also made a commitment, which I think is an appropriate one -- and I'm sure the member would agree -- that there will be some rollover from the existing board to the new board, so they will carry that information with them. Technically, the new board will be fully empowered when it comes on, when it's appointed and Tourism British Columbia is up and running. It will be fully empowered to make changes if it so wishes, but in all fairness, I think it's really a bit of a moot point. The industry collectively is very much behind the existing board and will be very much behind the new board. What's happening is a result of consultation with a knowledge of the industry.
I. Chong: I didn't want to belabour the point that the minister made earlier, except for the fact that I think the minister was aware that we were concerned about the board composition. Of course, I know the industry is in fact behind it, provided they felt there was the ability to have some independence and to move forward with what they view as their marketing objectives, which may be different from those of some of the board members who may currently be dealing more with the policy and program issues that are before them now.
Looking at section 11 of the Tourism British Columbia Act, on the business plan that is to be prepared, it says that it's required to prepare revenue and expenditure proposals. I guess that would ordinarily be fairly easy, because the expenditure
[ Page 3904 ]
proposals would establish the revenue that the ministry would provide to it, because it was a part of the ministry. Given that this will now be based on a funding formula, can the minister advise how the board would be able to set their expenditure proposals, which are based on their revenue -- which they're not necessarily virtually assured, unless they are, and that's what I'd like the minister to be able to answer. If they are virtually assured in terms of dollars, is there a plus or minus percentage, shall we say, a range that those who are preparing the business plan are permitted to work with?
Hon. J. Pullinger: There are funding formulas in place, but with the permission of the member, I would like to suggest that we discuss that under the funding formula part of the legislation, if she concurs. I would be pleased to answer any more business plan questions.
I. Chong: I wasn't trying to engage in the discussion of the funding formula, because I know that's coming later on. When I referred to it, I was alluding to the fact that in the past, the ministry said we would have a $20 million budget for tourism, and then the board, with those numbers, would determine their expenditure proposals. With no assurance as to what that dollar figure may necessarily be, I was wondering whether the minister would allow the business plan to have flexibility, plus or minus 1 percent, plus or minus a half a percent, of a $20 million target, a $19 million target or a $30 million target, whichever it may be. That would then allow the business plan to be developed and to deal with those expenditures, based on knowing that they could develop it with a revenue amount with some flexibility. If there is that, I'm wondering whether the minister can provide us with that plus or minus range.
Hon. J. Pullinger: The board of this new Tourism British Columbia will be made up primarily of business people. As they develop the business plan, I'm absolutely confident that they will use standard projections, economic projections, revenue trends and so on. They would plan for any increases or shortfalls in revenue and make provision for that in the business plan.
I. Chong: I'll accept the response from the minister at this point. I know the difficulty in preparing business plans, given the volatility of the tourism market. I know it has been a steady increase, but anything can happen. Our exchange rate here can suddenly go on par with the American dollar, and we could suddenly lose a lot of tourism revenues, and the hotel tax ones, from which revenues are going to be provided to this new Crown corporation, are certainly going to be dependent on that. With that, I will leave my questions on section 11 and defer to the hon. member for Parksville-Qualicum.
P. Reitsma: I've got just one question on section 11. All the questions have been asked, but I seek clarification from the minister on a statement she just made. The current board is carrying out and implementing the current programs. If that is the case, are the costs of those current programs, which have already started last year, based on funding that was supposed to take place last year? Is that being carried forward, or is that part of that $18 million or $20 million as of April 1? It's one thing to carry out current programs that were implemented based on last year. It's another thing, of course, having the funding. Is that predicated
Hon. J. Pullinger: The business plan is being prepared based on a fairly solid estimate of the funding that the new agency will have this year. I would be really happy to provide to the member the details of how that funding is going to work. But with the member's agreement, I would recommend that we defer that conversation about the details of how the funding formula will work until section 22, where we talk about the details of that. That would be a more appropriate place, but I'd be delighted to answer the question.
R. Neufeld: There were earlier questions about plus or minus in total budget amounts. Is it not possible for the Crown corporation to carry forward surpluses of that nature -- or deficits, I guess you could say -- from one year to the next? Is that not possible under Crown corporations?
Hon. J. Pullinger: In fact, they can carry forward surpluses. Again, with the indulgence of the member, I would like to move on to the financial part of the act, because then we can discuss all the financing arrangements in detail. They are absolutely valid and appropriate questions, but I think it would be better to deal with them at a later part of the legislation.
[8:15]
Section 11 approved.The Chair: Shall section 12 pass? So ordered.
Interjection.
The Chair: Oh, is somebody up over there?
The member for Parksville-Qualicum.
P. Reitsma: Thank you, hon. Chair. It's hard to be in the corner, particularly when you're only 5 foot 18 inches. You know you're being overlooked at times.
On section 12.
P. Reitsma: Section 12 states: "The board must prepare and deliver to the minister, within 3 months after the end of the fiscal year of the corporation or at a later date that the minister may designate
Hon. J. Pullinger: The purpose of this section is to provide for the standard reporting within three months. That's standard within the Crowns, and the format is standard. The additional part that the member alludes to -- the provision that enables me as the minister to extend that time -- is simply there in the event that there are some special circumstances, particularly in the first year when the business plan is late. So all that does is provide a little bit of flexibility. The board could come to me and simply say that it's unable to report within the three-month standard reporting period, and we could simply agree on a reasonable later date.
I expect that this year will be difficult. Rather than doing the business plan in advance of the fiscal year, it's being done
[ Page 3905 ]
during the fiscal year, because of the transition process. So I expect there may in fact be some difficulty in having that reported on time this year. It's primarily for that reason that this section is in here.
P. Reitsma: I appreciate that, and I accept that perhaps that might be an example of being beyond the three months. But I would assume and I would take it that the absolute maximum, of course, will be March 31, 1998, before the end of the next fiscal year -- that the maximum will be a year after the date of the fiscal year.
Hon. J. Pullinger: Absolutely. It's a very hard-working board that we have now; I expect the next one will be just as good. And I would expect that if they're outside the three-month period, they won't be long outside it. The next business plan will be due to come to me 30 days before the end of this fiscal. So I'm sure that they'll want to have the other one complete as quickly as they can.
R. Thorpe: The annual report, as I understand it, is based on a fiscal year-end. So I don't understand, if the planning starts late this year, why that should have any impact on the delivery of the annual report -- when the thrust of the annual report is the financial year-end. Perhaps the minister could clarify that.
Hon. J. Pullinger: Good question. This year we will have a new auditor; we'll have a new system; we'll have a new board. And they will in fact be overlapping in their functions for this year and next. Whereas from next fiscal on, it will roll out in a more orderly fashion. People will be more familiar with the new structure. So this year, I expect, will be a little more difficult than ensuing years.
R. Thorpe: When the minister receives this annual report
Hon. J. Pullinger: I don't expect to deliver it to the House, but it will certainly be a public document and available to all members.
R. Thorpe: If the document for clarification is not going to be delivered to the Speaker, to the House, could the minister clarify where we will get that document, how we will get it and when we may expect to get it after she receives it?
Hon. J. Pullinger: In this rather lumpy year, I would certainly have no problem making a commitment to deliver it as soon as I get it and reasonably can, once everything is finalized. In future years I would expect that the report will be in within the three months, and so a reasonable time to request it would be towards the end of that three-month period.
I. Chong: Just a final question, I suppose, to follow up regarding the annual report. Again, to reiterate what my colleague the member for Parksville-Qualicum started regarding the three-month requirement at the end of the fiscal year and the later date that the minister may designate
Hon. J. Pullinger: The special operating agency has only been in place for one year, and a special operating agency really is a contract, if you like, or an agreement between any given ministry and the Ministry of Finance. It has an advisory board, so the reporting is done through the usual ministry reporting. So, in fact, this year the special operating agency's activities would be part of my ministry's annual report.
I. Chong: The other question I have, very quickly, is on section 12(b), regarding the "financial statement in the form required by the Minister of Finance
Hon. J. Pullinger: With the agreement of the member, I would recommend we defer that to section 15, which deals expressly with the transfer of property.
T. Nebbeling: Just a quick question. My main concern up to now has been how the transition period will take place between the minister being in control of tourism right up to today, and when the act is passed and has had assent. How do you foresee the transition, especially in regards to the board? And how can that board, which is going to go through a period of intense organization, operate without your control, in a sense, that you can exercise right now on the industry?
Hon. J. Pullinger: I'd be delighted to chat with the member outside the House. We've passed that section on the annual report, so I have no problem dealing with those questions. I'd be happy to chat with you or provide you that information another way.
T. Nebbeling: The reason I'm asking this is that this board will not be able, in the short period of time that it will be in operation -- and that it can be factually in operation because of the organization having to be developed first -- to come up with an annual report next year that will reflect the activities of this year, be it through financial management
Hon. J. Pullinger: I understand the question. There will be a great deal of continuity between what's happening now in my ministry and what happens with the new board. I fully expect that the normal accounting will take place. As it details later in the legislation, it is retroactive to April 1 for that very reason -- for clarity and transparencies. So I fully expect that we will have the first annual report as quickly after the end of this fiscal as is possible to do in this transition year.
[ Page 3906 ]
I. Chong: I hadn't quite concluded my comments regarding section 12(b) and the response that the minister gave me. The reason why I asked that particular question was not so much to talk about the assets being transferred, which is
As I understand it, certain Crown corporations and certain boards and agencies, I suppose, don't all report their assets and account for them perhaps in the same manner. When I say that, I mean full disclosure of assets, full disclosure of liabilities, market value, book values, amortization -- those kinds of things. Having served on Public Accounts for a year now, I've come to see that there are sometimes these kinds of discrepancies.
So when I see section 12(b) stating that the financial statement will be in the form required by the Minister of Finance, I'm not sure what form that will take. If you're referring to the format, I can understand that -- assets go here; liabilities go there. But if we're talking about the revenues, expenditures, assets and liabilities -- the values that are going to be used -- the values of the assets in particular may play a significant role, because those valuations of those assets may be what will be levered for a financial operating line of credit and those kinds of things. I would like to know from the minister, if I can, what kinds of values may be used, so that when they are given as security the board hasn't perhaps overextended itself -- things such as that.
Hon. J. Pullinger: I would expect, in this first year especially, that there will be very full disclosure. I am sure that the new board would agree fully with that. I expect that transferred assets, acquired assets and other relevant information of that kind would be fully reported, in fact, in the annual report.
The format that the member asked about would be a format that is developed in consultation with the new agency that's appropriate to it and to its function. That would be done in consultation with the comptroller general to ensure that the standard public accounting practices are met.
[8:30]
I. Chong: I am satisfied knowing that the comptroller general will be involved because, having served on Public Accounts, as I say, I have seen that he very much recognizes the values of assets to be transferred.So with that, I thank the minister. I believe I have no further questions on section 12 -- unless other members on this side of the House do.
Section 12 approved.
On section 13.
P. Reitsma: If I might ask four points on section 13
Hon. J. Pullinger: I'm glad the member asked that question. This is one of the absolutely key parts of the legislation and one of the parts that the tourism industry is very keen on -- to understate it. This section provides for the percentage of the tax to go the Crown. It allows for the Crown to accrue that from year to year, which is very important. This is the section that makes this Crown corporation very unique. We haven't been able to find any other jurisdiction that provides for a legislated percentage of the hotel tax, or of a tax, to fund a corporation to advertise and market tourism in this way. This is the innovation, to a large degree, in this legislation. It's the guts of it, if you like, and the part that really makes it go.
There is no cap in the legislation. The intention here is that they have a percentage of the tax, and as the industry grows, the tax dollars will grow and their portion of the tax dollars to fund their agency will grow. In effect, it's very much a linked system. The better the job they do of marketing British Columbia, the more the revenues will come in, because it's a percentage that they have.
And a clarification for the member: the 6.35 percent doesn't come to the ministry. It goes to consolidated revenue, just for clarification for the record. The other 1.65 percent will go to Tourism British Columbia. I hope that answers the question.
P. Reitsma: It answers one of the two questions. The second question
Hon. J. Pullinger: This section is the part that provides surety to the marketing corporation and the board, and it does so in the fact that if there's any change to the percentage, which I believe is what the member is asking, we would have to come back to this House and amend the legislation. The percentage is enshrined in the legislation.
P. Reitsma: The way I see it is that if the hotel tax were to go up to, say, 9 percent, then 20.64 percent of the 9 percent will go to Tourism British Columbia. If it were to go down to 7 percent, which is quite unlikely, in my mind, I would foresee a decrease in terms of the percentage related to the actual tax.
On 13(2): "Money received by the corporation from any source may be retained by it to be used and dealt with for its purposes." Being in small business myself, I would prefer to be using the word "shall" rather than "may," because it's ambiguous. It could be changed at the minister's discretion, depending on the crunch of revenues or expenditures. I'd like to see that clarified. Secondly, will any additional moneys received somehow be deducted from a base source, or is that simply in addition to what is being promised? So there are two questions.
Hon. J. Pullinger: To answer the last one first, the corporation has the power in other sections of the act to engage in
[ Page 3907 ]
entrepreneurial activities, if you like. In other words, it can take the Super, Natural B.C. logo and, in the example I've used, it can put that on a hat and sell it. If that were to happen now, in the arrangement we have now, by the rules of public accountability that money must go into the consolidated revenue fund. In other words, it can go sell a gazillion hats and make a whole bunch of money, and it doesn't benefit the special operating agency one whit.
Under this legislation, they not only have a dedicated portion of the hotel tax, as the member correctly describes, but they also have the ability as a separate entity to engage in activities that will raise other funds -- such as marketing their trademarks and logos, and whatever else they do -- and that money is then fully accounted for within the organization and can be carried forward from year to year. Again, that's one of the real selling items of this legislation. Under the existing rules, by the rules of accountability, additional funds that they may generate must go into consolidated revenue. Now they will go back into the new agency.
P. Reitsma: Maybe it's a bit of a throwaway question, but does the minister anticipate any increase or decrease in the 8 percent hotel tax at the moment? Is there anything the minister might know which she's not supposed to tell but might wish to share with us anyway?
Hon. J. Pullinger: Let me just give a report! No, seriously, the member is alluding to future policy, future issues, hypothetical things that may happen and also things that are outside the scope of the legislation and my ministry. It would be the Ministry of Finance that would determine those things. So for all of those reasons, I don't have an answer for the member.
P. Reitsma: I will take that as a definite undecided, I suppose. Being in the business myself, and particularly with the high season coming up, I do not actually anticipate it this year.
On section 13(3):
"Tourism British Columbia must pay to the Minister of Finance and Corporate Relations, in the 1997-1998 fiscal year of the government, as a recovery to the Ministry Operations Vote of the Ministry of Small Business, Tourism and Culture, the costs reported by the minister as having been incurred by that ministry during that fiscal year in carrying out functions consistent with the purposes of this Act and with the mandate of Tourism British Columbia."We're in a new fiscal year as of April 1. We've got April, May and June before this is passed. We're probably looking toward the end of June or beginning of July. So this new function has been operating for three months, which is one-quarter of the next year. Is it anticipated that a full one-quarter of the anticipated funding will be appropriated to the ministry, or is it a percentage? Keeping in mind, of course, that April and May, although very important in terms of marketing
The question to the hon. minister is: can we expect, since three months have passed, that one-quarter of the anticipated appropriation of funding will be recouped by the ministry in total?
Hon. J. Pullinger: If the member will bear with us, I will try to explain why this rather complicated-looking section is in here. The fiscal year of the new corporation will be the same as government, so in order to have a clean audit and transparent accountability for the entire year, we've put in place an arrangement whereby the hotel tax portion begins April 1, by a triggering mechanism we can talk about later on. So in order to continue to fund operations until such time as a new agency and the board is up and running, we have provided $6.5 million in my budget to fund the activities that are currently provided through my ministry. When the new board comes on, there will be a back payment of the allocated tax dollars to April 1. The corporation will begin retroactively to April 1, so they will in fact have a payment from the Ministry of Finance back to April 1, at which time we will have our handout from our ministry to repay the moneys that we have expended to go through the transition period. I hope that's clear to the member.
P. Reitsma: One or two more questions on my part. The proposed convention centre in Vancouver, and all the ancillary buildings, hotels and business flowing from that, are, for all intents and purposes, extremely exciting. It's important. There is some talk that in order to facilitate such an expenditure and to make it attractive, perhaps concessions or a sliding scale of taxation in terms of room tax might take place or might happen. If that were the case, how would that affect the funding? Would they be exempt, as well, or would provisions be made that a certain percentage would be accrued to the new Tourism B.C. agency?
Hon. J. Pullinger: I regret that I can't answer the question, because it's based on a hypothetical future situation and, when it comes to taxation, issues that are outside this legislation and the control of my ministry. So I can't answer that, because it's hypothetical -- future.
P. Reitsma: My last question might have been asked before: is there guaranteed minimum funding for this coming year in terms of the SOA? We're talking about $18 million or $20 million. It could be less, depending on the sales of accommodation during this year. But is there minimum guaranteed funding -- an absolute baseline?
Hon. J. Pullinger: There's a funding formula in section 22. I think that would be the appropriate place. I'd be happy to answer that.
[8:45]
R. Thorpe: I was trying to listen carefully. I thought I heard the minister say there was no cap on the legislation. I would just like it clarified that there's no cap on the funding.Hon. J. Pullinger: Absolutely. If that's what I said, I was wrong. It is a percentage and there is no cap in the legislation on the dollars that are accrued through that percentage.
[J. Doyle in the chair.]
R. Thorpe: As the tourism industry concluded its last fiscal year at March 31 and is now in a transition
Hon. J. Pullinger: My estimates contain a $1.3 million, one-time startup grant and the $6.5 million that I alluded to earlier for transition funding until such time as the hotel tax is paid retroactively and refunded.
[ Page 3908 ]
R. Thorpe: So if the surplus was there or is there, it's that $1.3 million that's flowing through for it this year. That's my understanding, then. Thank you.
How is the revenue tracking compared to the expenditures for the first two months of this fiscal year? That question obviously relates to section 3. I just want to know how you're tracking on your revenue versus your expenditures.
Hon. J. Pullinger: We don't have that information here. I would propose that my estimates are still to come; we could canvass that detail more fully in estimates, because that's really the ministry funding.
[G. Brewin in the chair.]
R. Thorpe: That's fine; we'll canvass that in estimates. I'd appreciate that, and I'm sure the industry would appreciate it.
I know that it's difficult to speculate and to talk about hypothetical situations. But I'm sure that in developing the strategy in this bill and working with the industry, there has been some thought given in a global sense to projected revenues for the five-year business plan, which would be a normal business plan cycle. Could the minister share those figures for four fiscal years, to the nearest million dollars? Is that possible right now?
Hon. J. Pullinger: I don't have that kind of detail here. This is just simply the formula I have in the legislation. But again, we can certainly provide the best that we have in estimates, if the member's willing.
R. Thorpe: Yes. If that's an undertaking from the minister and staff that in estimates we'll have the annual funding for the next five years by year, that would be satisfactory.
We talk about the commitment to not capping the flow of revenue to the tourism industry. We talk about creating certainty for the tourism industry. I would just like to know, in the minister's words, how we as opposition
Hon. J. Pullinger: First, I want to clarify that what we will provide in estimates is how we do the projection. I can't give hard numbers for future years; they are guesstimates. But we can certainly discuss how we do those projections. That's what my commitment is for estimates. I just want to be very clear about that.
Secondly, section 13(4) is the ironclad assurance that the funds will flow to the Crown. It in fact exempts the Crown from section 27(1)(a) of the Financial Administration Act, which states that Treasury Board may, "by directive, control or limit expenditure under any appropriation." This section 13(4) provides that exemption for this Crown corporation.
I would simply like to end my comment on this part by saying that I reject the editorial comments made by the member.
R. Thorpe: I'm not so sure which editorial comments you reject, but I guess that is your privilege -- to accept or reject whatever you want.
The Chair: Hon. member, through the Chair. We don't use the pronoun "you," as you recall. We refer to everybody in the third person.
R. Thorpe: Sorry, hon. Chair. I'm not so sure what editorial the minister is referring to.
R. Neufeld: There are so many clawbacks.
R. Thorpe: There have been so many clawbacks. Thank you very much for pointing that out and bringing it to my attention once again. This industry has suffered many of them. They have been led down the garden path on these issues before. If that's editorializing, caring about the tourism industry of British Columbia and all the people that work in that industry, so be it. I do care about the industry, and I do care about the employees.
The only way that this government or any government, as a matter of fact, can change the funding formula to ensure certainty of funding to the tourism industry, would be by introducing new legislation. Is that correct?
Hon. J. Pullinger: That's correct. It would take an amendment to the legislation.
I simply want to say that what we've done here is something that the tourism industry has wanted for years and years and years. As long as the marketing function was a function of government, then it was obviously subject to the vicissitudes of income to government, which depends on a whole lot of other things. What this really does is take this little chunk of revenue and put it aside into a place where they can count from year to year on a stable funding source. This whole funding formula that we're talking about here is innovative and, as far as we can find, not replicated anywhere -- which is great stuff.
I. Chong: I know this section is being fairly heavily canvassed. I hope the minister appreciates that we're doing so because, at various times throughout the earlier sections, we were referred to section 13: "Wait until we get there; we'll talk about it." I trust the minister will give us some latitude here when we ask these questions, which may appear repetitious to her. But for us and for the record we want very certain clarification.
I'd like to again ask the minister
Hon. J. Pullinger: Actually, that's under the new section 24. But with the understanding that we'll just whiz on by section 24, I'll answer it now.
[ Page 3909 ]
I've just received clarification that in fact it is 1.65 tax points that this will
I. Chong: I just want the minister to be aware that I had looked at section 24. I was very certain of what I was saying here, and that's why I posed the question as I did -- 1.65 percent of the purchase price of accommodation, with the purchase price of accommodation attracting an 8 percent tax. The 1.65 percent of the 8 percent represents a 20.64 percentage of the pot, shall we say -- so that if $8 is collected, roughly $1.65 would go to that. But, you see, if the hotel tax -- and again, I realize this is hypothetical -- were to drop to 5 percent for some reason
Hon. J. Pullinger: I believe section 24 enshrines the 1.65 tax points. Is that clear?
I. Chong: If that is where the act enshrines this and essentially guarantees it -- until legislation changes again -- then I will accept that from the minister. As I say, in a previous or earlier press release, the wording within that press release factored that amount out to be 26.4 percent. So I was trying to ensure that I knew what the intent was.
Given that 1.65 percent has been the guaranteed and secured amount, I want to just go back to a comment that the minister made earlier that this is what the tourism industry wants. I certainly agree that that is what the tourism industry wants. But I would advise the minister that based on previous collections of hotel tax revenues, the 1.65 percent of the purchase price of accommodation basically allows for approximately an $18 million pot. What the tourism industry in fact actually wanted was a $25 million budget to deal with. The 1.65 percentage that was calculated, I think, was to work backwards to get to the level that the ministry was prepared to provide. I just want to make that clear for the minister.
The other item I want to speak to is that the minister advised earlier that the $1.3 million would be a startup cost, which I understand is a one-time amount that is not to be affected, clawed back or adjusted for. Also, a $6.5 million advance would be given, which is probably roughly one-third of the budget they expect for this current '97-98 fiscal year. Can the minister advise whether there would be any accounting done for interest to be charged on the advance of these moneys? Can I assume, or can the industry assume, that this $6.5 million advance that is given will not have to be paid back with interest to the ministry's budget?
[9:00]
Hon. J. Pullinger: I just want to clarify for the member that the 1.65 tax points was negotiated with industry. Industry has had a longstanding concern about the stability of funding and the ability to carry forward, which we address here. As I say, that has been the outstanding issue for a couple of decades that I know of. And the amount, the starting pointThe second point. The formula we have is that right now the marketing function is in my ministry, so we're simply spending the dollars in the normal way. But in order to have the maximum clarity and transparency of what this new Crown corporation is doing, the decisions that are being taken as of April 1 this year and the funds expended as of April 1 this year will in fact be included in the accounting for the new Tourism British Columbia. The act is retroactive to April 1. So, in essence, we're funding the activities through the ministry in the normal way right now. When the act is proclaimed, the new board takes over, and they trigger the funding clause and have their funds. Then they will simply return to the ministry the funds that they have expended thus far. It's a little bit complicated, but it's designed to make an entire fiscal year report so that we have a benchmark to move from.
I. Chong: It's actually not that confusing. As I say, I just wanted to know. I recognize that it's merely an advance, and once everything is done, the advance will be paid back. I just want to ensure that that advance is considered an interest-free amount so that the new board would not have to be budgeting for that kind of unknown, shall we say.
The other question I have is in regard to section 13(2): "Money received by the corporation from any source may be retained by it to be used and dealt with for its purposes." That section, I understand, can refer, as the minister alluded to earlier, to sales of the Super, Natural logo on T-shirts, hats, bags and things; that's understandable. Hopefully, that will be a source of additional revenue for the tourism industry, for their marketing.
The other thing I was curious about here is, if there was a surplus of money that was building up in this Crown corporation and it earned interest revenues in a short-term deposit, whether that money may be retained by it. The member for Parksville-Qualicum had wanted to ask about "may" versus "shall." If it was "shall," there's no question. "May be retained" refers to the fact that perhaps the ministry may request that the interest earned is not interest that it may keep. I want to ask the minister whether there will be any problem if in fact there is a surplus of cash that is on deposit and interest is earned -- whether it may, can and will stay with the Tourism B.C. board.
Hon. J. Pullinger: This section provides for any funds accrued to the new agency to remain with the agency.
R. Neufeld: One brief question. I know that through the first year, it's a little difficult, but how will the revenue be paid from the Ministry of Finance to this corporation? Is it going to be paid monthly in future years? Is it paid quarterly, or something to that effect? I guess that leads into the question that the member for Oak Bay-Gordon Head, who just spoke, asked: will the corporation have to go out and borrow funds for maybe a three-month period to be able to continue to operate until they get paid by the Ministry of Finance? Just how will that work?
Hon. J. Pullinger: I've just confirmed that it will be paid monthly. Therefore there won't be any need to go out and do that kind of borrowing.
[ Page 3910 ]
P. Reitsma: My colleague from Okanagan-Penticton kind of made me push the button for clarification on one or two items. Just for my benefit: this funding formula -- is that good for one year, two years, three years, or in perpetuity? Is it to be reconfirmed every year?
Hon. J. Pullinger: Is the member alluding to the amount of funding or to the way the funding is paid out, like the monthly allotment?
Interjection.
Hon. J. Pullinger: The funding level, of course, or the percentage tax point, is in the legislation. The way that is paid is an arrangement that's been made or will be signed between the board and the Ministry of Finance. It's just simply an arrangement between the corporation and the Ministry of Finance. I would imagine that would just be a mutual convenience. I don't expect that there would be any major changes to that if it meets the needs of both parties, which it clearly does.
P. Reitsma: Perhaps I'm less clear than I thought I was. This is not a trick question at all. As the minister knows, when I was mayor in Parksville, we, of course, could not commit funding beyond one year in the budget. Maybe I should rephrase it. This funding is good for one year to X amount of dollars; I accept that. What about next year? Does it have to be reconfirmed? Does it have to be passed again? Or could it be withdrawn the second year, for that matter?
Hon. J. Pullinger: No. The reason for having this legislation is to provide stable, ongoing funding. I think perhaps -- I'm guessing here -- what we may be confusing here is that the new board needs to pass a bylaw to trigger the funding for the first time, just for all the technical reasons to make it flow. Something has to happen so that there is an agency for it to flow to. But from that point on it will just simply flow, and the only way we could change that funding formula is by changing the legislation. I hope that clarifies it.
P. Reitsma: That does. I would just like some indication
I just would like to know, for the sake of the industry -- which is my industry; I've been in that industry for 30, 31 years -- that they could look forward to maybe two or three years of security, and that it will not be somehow changed under this government in a rage of some sort, and that no legislation will be forthcoming that cancels what we've so frugally tried to attend to.
I agree with a number of editorials of my colleague from Okanagan-Penticton. That is, I
All I'm after is some indication from the minister of some stability and security for the next two or three years. Whatever happens afterward, so be it; but at least our industry could look forward to some stability and security for the next two or three years, and some promise -- a definite promise -- by this minister that not next year, not two or three years from now, will legislation be introduced to reduce or annihilate this funding, as was done last year after the promise.
Hon. J. Pullinger: Just to clarify for the member, a special operating agreement is an arrangement between any given ministry and the Ministry of Finance -- those are the signatories. It's subject to all of the normal rules of money coming and going, and if money goes when the pulp prices go in the tank and cost the government $800 million and we made a commitment to fund health and education, that means things have to be cut.
In the interest of not being here forever, I will avoid the obvious temptation to talk about larger commitments to cuts from the other side of the House, but we have done something here that no other government in Canada, or anywhere else that we can find, has done. We have provided a legislated funding mechanism that will provide stable, ongoing funding for tourism marketing in this province.
That's a commitment that has never before been made by any government in this province or in this country, or by any government that we can find anywhere else with this kind of arrangement. So we have made a commitment here that is unprecedented. I think that speaks for itself. And if a future government wants to change it, they will have to bring it back to this Legislature and do so.
P. Reitsma: My final comment is that when I, in the estimates last year, to whoever then was the minister -- we've had so many, and as I indicated, I hope this revolving door is shut now so that we have some stability from that point of view as well
Let me assure you that I'm absolutely pleased and delighted that this now
R. Neufeld: I can hardly resist some of the comments from the minister, talking about "unprecedented, never before happened in the Dominion of Canada, never before happened in the province of British Columbia." I suggest that the minister think back just a short time ago to one of her colleagues -- not in cabinet, but one of her colleagues in her caucus -- the Hon. Darlene Marzari, making an unprecedented commitment to a revenue-sharing plan for communities in British Columbia -- never before seen in the history of British Columbia. It lasted about two years. So, I mean, it's fine for you to stand up here and talk about something that this is
I guess what really prompted me was the minister talking about how great everything is that her government does, and that some future government may break this commitment. Well, my goodness, if any one of us have had a lesson about breaking commitments, we've certainly experienced it under the term of the NDP -- about breaking commitments. So I think the member from Parksville has a valid concern. I think they're trying to get across to the minister that they want some commitment from the minister -- as good as it is on paper, I guess, as good as it can be in writing -- that this money for
[ Page 3911 ]
Tourism British Columbia is going to be here at least as long as she's the minister and that the 1.65 percent will not change at all. I think that's the commitment that the member from Parksville is asking for.
It's a little hard to take when I hear the minister talk about how great this bill is. I think, actually, that the idea of it is great. The problem that British Columbians have and the tourism industry has is the government's commitment to promises that they've made to many different organizations, this being one of them. So I could hardly resist putting that on the record, about broken promises by the present government -- in fact breaking their own promises that they made hard and fast.
[9:15]
Hon. J. Pullinger: I just want to say I appreciate the absolutely non-partisan comments of the member from the corner. In the interestsR. Thorpe: I just want to follow up on the comments of my friend from the Peace, too. The reason all of us on this side have talked about the commitment and the need to hear from the minister -- the commitment we need to hear from this government -- is because this government committed and promised funding to this industry on February 24, 1996. That didn't happen. They promised on April 22, 1996 -- by the Premier. That didn't happen. Then we hear that this is the greatest thing since sliced bread.
Well, please let us receive your personal assurance that this promise is going to be kept. That's what the tourism industry wants; they don't want another broken promise.
Hon. J. Pullinger: It's really interesting to note that it's the members opposite who are complaining and not the tourism industry. We took an unprecedented step in putting together a special operating agency, a special operating agreement with the first tourist industry board, something that the members opposite when they were here under the name of Socred would never do. For 20 years they had the opportunity to do that, and they wouldn't do it. We did that.
When it became apparent that federal Liberal funding clawbacks were going to affect health and education -- and our absolute top commitment, which we have kept, was to fund health and education, and we're doing that -- that meant that there wasn't the same amount of money for other things. You've got to cut something somewhere. The members opposite were prepared to cut about five times as much as what we've had to cut.
So rather than just cut it, we went back to the industry. I was once Tourism critic, and I know full well that this has been one of the outstanding requests of the ministry for well over two decades that I know of. We said: "Look, this is a reality of life. Funds to government are shrinking. So let's deal with that and move forward rather than backward." We have done that, and I'm proud that we've done that. It is a historic step.
The funding is secured by legislation. It's in the legislation. The funding formula is in the legislation. It's there. It's 1.65 tax points, and you have to change the legislation if you want to change the funding. That's about as secure as it can get, and it's more secure than we have ever had in British Columbia, or for that matter, anywhere else in this country. That's sure. That's about as secure as you can get.
If at some future time the legislation comes back to be amended, then we can argue about it at that time. But we have provided for surety of funding on an ongoing basis in a way that it hasn't been provided for before and in a way that the industries have wanted for 20 years. It is all provided for in this legislation. I'm not really sure what could be more secure.
Section 13 approved.
On section 14.
R. Thorpe: With respect to this section 14, I would like some clarification that it is not a mandatory requirement for this Crown to place its funds with the government, that it is solely a discretionary decision of the board of directors. I would like that clarified.
Hon. J. Pullinger: That's totally the decision of the corporation.
I. Chong: I know we're stepping up to speak on this, and we're from all corners of the room here. I know there are a lot of empty seats. In any event, I'd like to ask the minister about the investment powers in section 14. In subsection (2), the money that is placed with the Minister of Finance and Corporate Relations is to be treated for all purposes as money placed with that minister under section 40(5) of the Financial Administration Act. Can the minister advise us more clearly what that is? I do not have the Financial Administration Act with me.
Hon. J. Pullinger: This section is an enabling clause that essentially allows the corporation to take advantage of higher returns by pooling investments with others through the Minister of Finance.
I. Chong: What I understand this minister to be saying is that the moneys placed with the Minister of Finance and Corporate Relations will be kept distinctly separate from the pooled money account. Somehow it's segregated and earmarked that it is money belonging to the Tourism British Columbia board.
Hon. J. Pullinger: It is sort of like if I were to put my own money in a mutual fund. The money would be pooled and invested collectively, but I would know how much I had through the accounting processes of the credit union.
P. Reitsma: I have just one or two questions on subsection (1). As pointed out, "The corporation may place with the minister
Interjection.
P. Reitsma: The second portion? Their excess moneys
[ Page 3912 ]
Hon. J. Pullinger: If the board chose to invest directly, they could do that. I can't answer the questions about what the returns might be -- that fluctuates. If I can just clarify, it's like when you put your personal money into a mutual fund and it goes up and down with the various items in the portfolio. There would be the same thing in the Ministry of Finance, and there are managers who work very hard to make sure that the return is the best possible with the appropriate risk rates, etc. I can't put a number on that, but there are managers who do that in the Ministry of Finance.
P. Reitsma: I appreciate that. I just want some flexibility for the corporation if they deem it appropriate to invest temporarily outside the Ministry of Finance. That's fine, although there may be certain risks involved. I take it, then, that there are no restrictions put on the corporation in terms of investment -- although they would be wise not to take risks like Bre-X, of course.
Hon. J. Pullinger: Yes, we canvassed this fairly thoroughly under section 6, but this section here is an enabling clause. It allows the corporation if it so chooses to invest funds through the Ministry of Finance. The reason that I think the corporation would probably want to do that would be because it has the option there of being part of a greater pool of funds, which then gets a greater return. If they choose to take their funds and do it elsewhere
Section 14 approved.
On section 15.
R. Neufeld: Section 15(1): "For the purposes of this Act, the minister may designate property of the government, now in use by the Tourism Division of the ministry, that is to be disposed of to the corporation." Could the minister explain the term "property"? What would that encompass? I would assume that it would mean equipment and those kinds of things, but maybe she could be a little more definitive about what that property actually is. Is it office property or such?
Secondly, on subsection (2) of section 15: "The government may dispose of to the corporation any property that, under subsection (1), the minister designates for disposal." How will that be costed out? How will the value be determined? How will the corporation have to, I would assume, pay government back for those assets? Will it be over a period of time or will it be immediately? How will that take place?
Hon. J. Pullinger: I would refer the member for the first part -- I will answer the question, but for more detail -- to the discussion of section 6 around the property. It's desks and pencils, but it's also primarily intellectual property such as the Super, Natural British Columbia, Tourism British Columbia and SuperHost trademarks and things like that. It's the intellectual property, but it's also the desks and pencils.
The second part of the question is: how is that to be transferred? The answer is that an inventory and valuation of the assets is being undertaken now, and there will be an agreement signed between the province and the corporation regarding the transfer of those assets. There will be a full evaluation -- that's happening now -- but we expect that there will be a relatively nominal charge for the assets, just some sort of fair transfer.
R. Neufeld: Will trademarks and logos be costed out as a value, somehow, to the corporation? Or is this just a straight transfer?
I see the minister shake her head, so I gather from that that the trademarks and logos will just automatically transfer with absolutely no cost attached to them at all. No value. So it's really the pencils and the desks.
I guess the other part of my question is: how will the corporation be required to pay for that? I know the minister said that it's nominal dollars, but if you receive your money every month, and if it's actually
[9:30]
Hon. J. Pullinger: The amount, I expect, will be more or less a token amount. You know, that hasn't been negotiated yet; that hasn't been discussed yet. It's in process. But I expect it will be a relatively token amount; we're not going to charge full market value or anything like that. It would simply be paid out of the funds that the corporation has, but, as I say, I expect it would be a very nominal, token kind of amount.The other question the member asked was about the intellectual property. There is no charge to transfer. They're not going to sell that in any way; we're just going to transfer it over to the new corporation. But there will be conditions attached for appropriate usage, and certainly the industry is absolutely agreeable that that should happen. As the member understands fully, we need to protect that trademark in order for it to have value. So the appropriate conditions will be attached to that transfer.
R. Neufeld: Again, I ask: will they
Hon. J. Pullinger: The terms that will be attached to the trademarks are terms that will be appropriate, simply for the purpose of protecting the integrity of that trademark. There's no disagreement between industry and government about the fact that that should be done, so I expect it will be relatively easy.
I expect that the cost of the actual property -- pencils and desks -- that will be transferred will be quite nominal, and certainly any conditions
P. Reitsma: On the same subject, I have some minor questions, I suppose, but I would just like to get it on the record. You know, I'm in business myself. When you transfer a property, often there's a dispute. I just wonder if there is some kind of arbitration or appeal mechanism. I haven't seen the list
[ Page 3913 ]
of what is designated as property. It could be desks, pencils or all kinds of things. But if the two parties do not agree, is there some kind of arbitration or appeal mechanism which they might consider to be artificial
Hon. J. Pullinger: What we're looking at here is simply taking assets that are currently part of my ministry
I absolutely don't anticipate that there will be any problems. If the staff move over, they need desks. There's not much point in having the desks if we don't have the staff. So I expect it to be a very straightforward kind of process. We simply take that chunk of my ministry and essentially move it out into the Crown corporation to do its function in a new way -- that's all.
Just to deal with the absolutely hypothetical, if in fact there was a problem, I guess we could create a process to deal with it. But I really don't anticipate one. This is very straightforward.
P. Reitsma: Neither do I anticipate one, but in the past, in my own small business, I did not anticipate a lot of things that happened. I'm comforted by the fact that there might be some appeal mechanism to have that looked after. There is a value, maybe depreciated, and when people are in a cash crunch they try to get the absolute maximum, even if it is inflated and artificial.
May I ask the minister: when there's talk of designated property we are not referring to real estate, are we? If we are, does the Tourism ministry have any real property at the moment?
Hon. J. Pullinger: The member is alluding to real estate, I believe -- like dirt?
P. Reitsma: Like real estate.
Hon. J. Pullinger: No, the ministry doesn't have any real estate, per se, that would be transferred over to the new corporation.
R. Thorpe: We seem to be talking quite a bit about this transfer of property as we all seem to search for the answer. I wonder if the real question isn't: will the assets that are being transferred from the ministry to this Crown be transferred at net book value? Therefore the taxpayers of British Columbia will not incur any losses, and the tourism Crown would apparently be getting assets at a net book value.
Hon. J. Pullinger: For accounting purposes, there will be full evaluation of the assets that are transferred over. So that will be done in a way that is transparent and clear, and evaluated fully. However, the actual charge or cost of transferring those assets will be nominal. Does that answer the question?
R. Thorpe: I'm going to leave that. I'll move on. We talked about property. Does this envisage that leases on offices are considered property?
Hon. J. Pullinger: The corporation will have the ability to enter into leases and so on, but a lease isn't property per se.
R. Thorpe: The minister was answering an earlier question. She made reference to actually moving -- moving desks from here to there. I guess my question is: is the current ministry in an office building with a lease that's in place? Has that lease expired? Are these people physically moving? Do we have a lease that is either expired or not expired, or are we entering into two new leases?
Hon. J. Pullinger: There are currently 61 FTEs. There's a small office in Vancouver and another here. The current leases will be assumed by the new corporation. Does that answer the question?
R. Thorpe: Yes, thank you, it partially answers the question. Just my final question on that. I would just like assurances that those leases that are in place are at fair market value and that that has also been discussed with the new board or the new Crown -- that those are going to be at fair market value and competitive for this new Crown.
Hon. J. Pullinger: We're getting into estimates kinds of questions here. There's no provision here
I. Chong: I wasn't anticipating asking any more questions on this, because I thought I had fully canvassed it in the previous section. But some of the responses raised a few other concerns I have. The minister advised us moments ago that there would be a full evaluation of all properties to be transferred. And just now she spoke of properties to be transferred as primarily a few items that the Tourism ministry is currently using and intellectual properties. Can the minister advise
Hon. J. Pullinger: It would be the same answer I gave earlier: a full evaluation is underway now.
I. Chong: I'll be curious to see how that happens. Perhaps in the estimates process
The other issue I would like to quickly ask the minister about is whether the ministry currently views highway signs as part of the assets of the Ministry of Tourism. I ask that because I understand that in 1995-96 there was a surplus of some $700,000 in the Ministry of Tourism budget, and that money was quickly used to update, fix, purchase, install a number of new highway signs. I haven't yet been able to get information on that, but it did come out of the 1995-96 Tourism budget. It was some $700,000, so it is a substantial amount. I'm wondering how that has been accounted for -- whether that was considered written off as maintenance, or whether or not it's an inventory of items that can be transferred as properties to the new agency.
Hon. J. Pullinger: Just to repeat, what we're talking about under transfer of property is essentially office equipment, desks, pencils and the intellectual property. Highway
[ Page 3914 ]
signs have nothing to do with my ministry, other than that we set some policy and facilitate what the Ministry of Transportation and Highways does. But let me be very clear: property is intellectual property -- primarily the Super, Natural B.C. trademark and the SuperHost trademark -- and desks and pencils, the working equipment. That's the nature of the property to be transferred.
I. Chong: I can appreciate what the minister is saying, but when she says desks and paper and pencils
Hon. J. Pullinger: I think the member is confusing highway signs that are provided under the Ministry of Highways with the infocentre signs -- which are local chambers of commerce -- that this ministry provided funding to make changes to earlier. But that has nothing to do with this legislation, and there are no assets there that will be transferred.
Section 15 approved.
On section 16.
R. Thorpe: This has to do with directors and disclosing their interests. I'm just wondering: what safeguards will be put in place that will apply to government appointee board members?
[9:45]
Hon. J. Pullinger: For the interest of members, I should tell you that the entire conflict-of-interest section of this legislation is lifted more or less verbatim from the Company Act. It's in this act to be very clear what the responsibilities are for the directors. So they're very much modelled on the existing Company Act. Were they not in here, then the Company Act would prevail.R. Thorpe: I appreciate that answer, but my question was: what safeguards are there, and how will they apply to government appointees? If I can remember back, I think there are up to five appointees from government. What safeguards will be applied for these individuals?
Hon. J. Pullinger: All of the directors will be appointed by order-in-council. There's a process for recommendation, and all of the directors will be subject to the legislation.
P. Reitsma: I must say I missed the first question by my colleague, but 16(1) says every director of the corporation has to "disclose the nature and extent of his or her interest at a meeting of the directors." I take it, of course, that's to avoid any conflict of interest. I wonder if the current conflict-of-interest guidelines would apply to them?
However, I would anticipate that some of the directors of the corporation -- and this is why "indirectly" is quite ambiguous -- because of the nature of the decisions they have to make in terms of marketing, whether it's advertising and marketing tools or marketing particular destinations
So are the general conflict-of-interest guidelines applicable to them, and would the minister see a problem indirectly with some of the directors if decisions have to be made in terms of the type of marketing and the type of destination push?
Hon. J. Pullinger: It's my understanding that the corporation will develop its own policies and procedures to meet the very high test of the Company Act. The disclosure, direct or indirect, is laid out. That provision is laid out in the legislation. So it is in fact very stringent. The actual policies and procedures for doing that will be created by the corporation, but they must meet the test of the legislation.
P. Reitsma: The corporation consists of those directors who are going to establish guidelines as to whether or not some of those directors might be in a conflict of interest. It's almost like a couple of colonels trying to set some guidelines when raising chickens -- how big should they be? Whether or not they should be on the board
Hon. J. Pullinger: The conflict sections of this legislation are designed to protect the public interest, but also to protect the directors. It's therefore in their interest to create very clear policies and procedures. But I'd like to also point out that the test of those guidelines, policies and procedures they do develop is very clearly laid out in the legislation. Section 16(1) says very clearly: "Every director of the corporation who, in any way, directly or indirectly, is interested in a proposed contract or transaction with the corporation must disclose the nature and extent of his or her interest at a meeting of the directors." So it's very clear; the disclosure provisions are very clear in the legislation. The other policies and procedures are there as much to protect the directors as to protect the public interest, and I'm sure that they will be developed with great care and that they will meet the test of the legislation.
P. Reitsma: On 16(3)
Hon. J. Pullinger: Section 16(1) says any interest in any way, so we expect that disclosure will be a full disclosure.
P. Reitsma: So I take it that any percentage of one or more
[ Page 3915 ]
My last question is on 16(4)(d): "
Hon. J. Pullinger: Section 16(4)(d) is so that the directors can be paid their per diems and not be in violation of the conflict legislation.
I. Chong: Just some very quick questions so that we can conclude on this, and also perhaps take advantage of the staff who have so patiently waited to provide information and direction to the minister.
Section 16(4)(c) refers to the type described in section 128 of the Company Act -- that's what it says here. Can the minister advise with information from her staff what that means? I'm not clear on what that would be.
Hon. J. Pullinger: Section 16(4)(c) refers to a director's own indemnification contract, which allows indemnification to a director, former director and heirs against cost and charges if made a party by reason of being a director, provided that she acted honestly and in good faith or had reasonable grounds for believing her conduct was lawful.
I. Chong: That provides a bit more clarification.
One question regarding this section 16 generally, regarding the director's requirement to disclose interest: will the directors be guided by the conflict-of-interest commissioner? Or when we have a conflict-of-interest-commissioner, will that be the source that the directors have to receive information and clarification from?
Hon. J. Pullinger: The conflict commissioner deals with members' issues. It has no jurisdiction for these.
I. Chong: So what I'm wondering is that although the act is explicit here as to a director's requirement to disclose their interest, we've seen in the past where a director didn't realize he had to disclose, as evidenced in B.C. Hydro problems, etc. I'm curious as to how a director would know, if there's no place for that director to go -- unless they seek personal legal advice, I guess -- whether they are directly or indirectly required to report a transaction. These directors, who may in fact be industry representatives, may feel that they have not breached their duties, and no one else on the board may know that they have until it's too late. We certainly want to avoid another occurrence like we had in the past. I wonder whether the minister could advise where these directors could go for information, for direction.
Hon. J. Pullinger: One of the things that the board would do would be to set up that kind of a process and procedure.
Section 16 approved.
On section 17.
P. Reitsma: Just a couple of questions; I won't be too long.
Subsection (1): "Every director referred to in section 16(1) must account to the corporation for any profit made as a consequence of the corporation entering into or performing the proposed contract or transaction." Could I have some analysis and interpretation of who is going to decide and interpret what a profit is, and whatever transaction
Hon. J. Pullinger: That would be financial gain.
P. Reitsma: Well, I'm in business. I can go on probably for a couple of hours to try to explain financial gain once you've had your cost, your analysis and what have you. I really would like an answer. What is defined by profit? Financial gain is based on what?
Hon. J. Pullinger: We're getting into linguistics. The intent of this is to ensure that there is full disclosure of any financial dealings. If there is any profit made, or any funds made, by any activity that a member is involved in, then they must disclose that. So if they're engaged in activities as a board member which result in them getting money for their own personal benefit, they have to disclose that.
P. Reitsma: I really would love to get into a debate about profits. To me, by the way, profit is the reward for risk taken.
This will be the last question; that's a promise. Section 17(1)(b)(i) says: "
Hon. J. Pullinger: That would be the determination of the directors. If there was any difficulty with that, it would be interpreted by the courts.
Section 17 approved.
[10:00]
G. Farrell-Collins: I move 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 and resolutions, was granted leave to sit again.
Hon. J. MacPhail moved adjournment of the House.
Motion approved.
The House adjourned at 10:02 p.m.
The committee met at 6:40 p.m.
ESTIMATES: MINISTRY OF
MUNICIPAL AFFAIRS AND HOUSING
(continued)
[ Page 3916 ]
G. Abbott: To begin, we're now, I guess, on to the Assessment Appeal Board. Does the Assessment Authority fall under your realm as well?
Hon. M. Farnworth: Yup.
G. Abbott: Good. And I'm sure my colleagues, when they return, will have a couple of questions, as well.
To begin, could the minister bring me up to date on the situation regarding the major industrial assessment manuals? This was an issue which we had an opportunity to discuss previously in the House in the context of question period. I'm curious as to what has happened recently with respect to those.
Hon. M. Farnworth: If this answer sounds familiar -- well, that's the way it goes. No decisions have been made. No decisions have to be made until the end of the year, and so nothing is going to happen in the near future.
G. Abbott: I deduce from the minister's response that for the issues of sawmill assessment -- and I guess the minister can tell me what other assessment manuals are involved -- there will be no change for 1997. And am I to assume that there will be no change in 1998? That's not necessarily with respect to the assessment manuals; a decision hasn't been made on that. But it's with respect to the assessments of the industrial enterprises involved in those manuals.
Hon. M. Farnworth: For 1997 that certainly is correct. For 1998 let's put it this way: if we don't adopt the new manuals, then the same rules would apply. If we do, then there could potentially be changes. But as I said, that comes back to the fact that no decision has been made, and I'm not sort of anticipating making a decision in the short fullness of time.
G. Abbott: The phrase I often use in relation to these things is "in the foreseeable future." It's probably no more or no less precise than "in the short fullness of time." I don't know.
First of all, could the minister clarify for me
Hon. M. Farnworth: All major industries are covered, but basically there's a mines manual, a sawmill manual, a pulp and paper manual and an oil and gas manual.
G. Abbott: And is the potential direction that is contemplated in the sawmill assessment manual -- that is, the inclusion of machinery and equipment in determining assessment -- the same potential that is being considered for other areas apart from sawmills?
Hon. M. Farnworth: The way the manuals have been developed is through, I guess, a process of negotiation with each industry. So they're developed separately. The oil and gas manual is developed in consultation with the oil and gas industry. The same with pulp mills, the same with mines and the same with sawmills. So any particular change that may apply to the sawmill manual does not apply to the other manuals; each is independent. And the issue around the sawmill manual, or the primary issue -- one of the ones that we discussed in question period -- was around conveyors. So whatever decision is reached on that particular issue would apply only to the sawmill manual; it would not apply to the other manuals.
[6:45]
G. Abbott: Am I correct in assuming that the changes to those manuals, should the minister and/or cabinet decide to pursue them, would be made via changes through orders-in-council rather than through legislative changes in the Legislature?Hon. M. Farnworth: That is correct. Yes, it would be done through an OIC.
G. Abbott: Is the ultimate decision, with respect to the changes envisaged in the new assessment manuals, a decision of the Minister of Municipal Affairs, a decision of a committee of cabinet or a decision of cabinet?
Hon. M. Farnworth: It's a decision of cabinet.
G. Abbott: And the decision of cabinet would be based on a recommendation which would be forthcoming from the Minister of Municipal Affairs?
Hon. M. Farnworth: That would be correct.
G. Abbott: In terms of the Assessment Authority, just a small question with respect to the broad Assessment Authority and the Assessment Authority Act. I understand that there is a requirement that:
"I don't believe we've seen a report from the Assessment Authority in recent years. Is that correct, or is it something that we have missed?. . . the board must make a report to the Lieutenant Governor in Council on or before January 31 in each year, summarizing its activities under this act during the preceding calendar year."(2) If the Legislature is then in session, the report shall be presented to it. Otherwise, the report shall be presented to the Legislature within 15 days after the opening of the next session."
Hon. M. Farnworth: I wish to assure the member that last year's report was in fact filed.
Interjection.
Hon. M. Farnworth: Yes, I'm assured that it was. And I can tell you that this year's report will be filed within a matter of days.
G. Abbott: Actually, I'll yield to my colleague from Delta South, who has infinitely more knowledge in this area than I.
F. Gingell: I have the last two reports that are available: 1993 and 1994. The 1995 report, which was due by February 15, 1996 -- a year ago -- has not, according to the Clerks' office, been filed with the Clerk, and I could not get a copy in the Legislative Library. The Legislative Library does not have it. The 1996 report is also late. So we're not talking about one year; we're talking about two years late.
Hon. M. Farnworth: And from time to time, I'm not above admitting that answers need to be corrected. This is one
[ Page 3917 ]
of them. I have to agree with the hon. member that the '95 report has not been tabled. I'd like to thank him for bringing that to my attention, because I wish to assure him that we're going to change that. We're going to get the reports tabled on time.
F. Gingell: And could I get from the minister an assurance that you'll file the 1996 report at the same time?
Hon. M. Farnworth: The hon. member has my assurance that the report that has not been filed, which, I gather, is '95, is going to be filed. I will endeavour to find out the status of the '96 report, and we will get it tabled as quickly as we can.
G. Abbott: On page 2 of the 1996 annual report of the Assessment Appeal Board, the first sentence says: "During the past year the board completed an office reorganization. As a result of the new structure, the board has been able to initiate more prehearing procedures and has been successful in reducing the accumulated backlog of appeals." Could the minister just expand on that and explain how the new structure has been able to reduce this accumulated backlog of appeals?
Hon. M. Farnworth: The biggest change was the appointment of a registrar to facilitate the scheduling of appeals and the scheduling of people to hear appeals. Through doing that, we've been able to reduce the backlog considerably.
F. Gingell: I would like, first of all, to pass on my congratulations to the Assessment Appeal Board, which has filed its 1996 report on time.
In the report, the Assessment Appeal Board talks about its aims and objectives. It says: (1) "To provide parties with impartial, fair and professional adjudications." How would you measure that?
Hon. M. Farnworth: The main measure is by the number of decisions made by the Assessment Appeal Board that are appealed to the Supreme Court, and the numbers, in fact, are extremely low.
F. Gingell: In 1996 a total of 51 were appealed to the courts. Well, there were 51 decisions given by the Supreme Court. Of those 51, you won 60 percent and you lost 40 percent.
Interjection.
F. Gingell: You won 32 and you lost 19. Do you think losing 40 percent of the appeals that were heard in the Supreme Court is an acceptable measure that the Assessment Appeal Board is being fair and impartial in its results?
Hon. M. Farnworth: Yes, we do. I would give this rationale for the type of cases that get there. When you consider the number of assessments that are done and, consequently, the number of appeals -- the way it works itself up the food chain, if you like -- by the time they get to the Supreme Court, you're usually dealing with extremely complex, controversial cases, where there's a long history and all kinds of extenuating circumstances, complicated tax issues, and a whole host of issues that come together. In that case, quite often you're down to arguing particular points of law. So at that level, you're going to win some and you're going to lose some.
F. Gingell: In 1996 one of the cases, I believe, was the Celtic Shipyards case -- the Musqueam Indian band and the city of Vancouver. I can't see from here and I don't know from my common knowledge what the final result of that case was, but I appreciate that it's going to have dramatic implications on assessment law throughout the province. Could the minister just bring the committee up to date on the issue?
Hon. M. Farnworth: The case has not been heard yet. The main issue is: is the land that the shipyard is located on owned by the reserve? The Musqueam own the land, and that's the key issue that's at stake here. There has not been a decision made, but the case has not been adjudicated yet. The federal government has asked to be an intervener, as has the city of Vancouver. So I expect that it will be a landmark case. There is a considerable number of issues at stake here.
F. Gingell: Perhaps the minister would just clarify it for me. He spoke of the issue of the Musqueam Indian band owning the land. That is surely not the issue. At issue is the title: whether they own it in fee simple -- they acquired it, and there is a fee simple title that underlies the Musqueam's title -- or whether it is part of Indian reserve land that was
Hon. M. Farnworth: That is the issue: whether it is part of reserve land or whether it is outside.
F. Gingell: On "Aims and Objectives," No. 3 is "to maintain a high level of quality services." I wonder what measures the appeal board was using to measure the quality of their service and which services they were identifying as those that are important in fulfilling their mandate.
Hon. M. Farnworth: There are a number of measures and points I'd like to make: the number of decisions heard, the timeliness of decisions, resolving prehearings before they get to an adjudication stage and doing things in a cost-effective manner.
F. Gingell: When one looks at the body of the report and goes to the table at the back that shows the number of outstanding cases -- the number of appeals that have not been determined -- one appreciates that the numbers are coming down. They are getting better, but they are still horrendously large.
[7:00]
I appreciate that some of those appeals will be outstanding because of issues that are not within the control of the appeal board, such as waiting for decisions on other cases on whichHon. M. Farnworth: I guess our time serving together on the Public Accounts Committee has accomplished a number of things. One is that on my first meeting with the chair of the Assessment Appeal Board, I said that in future annual reports I want to see a greater breakdown in terms of types of appeals, delays, jurisdiction, all kinds of things. There needs to be a lot more information. So that is in fact going to be taking place.
On the other issue, in terms of appeals, yes, they are coming down, but I want to see them come down even more.
[ Page 3918 ]
F. Gingell: Mr. Chairman, perhaps it is the minister that has caused the delay of the 1996 report by requiring it to have these changes, which we will all support.
At the moment, the board's target is to render an opinion within 90 days. Having sat on a similar administrative law type of thing -- the board of reference for teachers for many years -- I would have found it terribly difficult to have arrived at decisions if we had left the writing of the decision for 90 days. We made a point of always doing it immediately. I'm surprised that your target is such a long period of time. I would have thought that the appeal board would have set themselves a target of more like 14 days or 21 days. I'm wondering if you'd like to comment on that.
Hon. M. Farnworth: The 90 days is a maximum, but most decisions take less than that. But the point is well taken, and it's a point I intend to be taking up with the chair. There have been a number of issues identified that I think need to be improved.
F. Gingell: My understanding is that at the moment there are 19 appeal board members: three groups of six and one chair. Is the number of commissioners limited by the legislation, or do you have freedom to appoint more if they're necessary?
Hon. M. Farnworth: No, it's not limited. In fact, I added three members shortly after becoming minister, because one of the questions I asked was: "We have 19 and we're not limited to that number of commissioners, so if we do have a backlog, why don't we have a few more?"
F. Gingell: The commissioners require quite a background knowledge. Looking through the CVs of the people that have been appointed, one appreciates that they have the right kinds of backgrounds -- for a change in some of your appointments. But anyway, has the issue of being able to find people with the right kind of background who are willing to sit on the board been a limiting factor for you in getting commissioners?
Hon. M. Farnworth: No. Let me put it this way. I have a slightly different philosophy, I think, than was in the past. I think previously it was very much a legal background, a real estate background or an appraisal background. In that respect, I think that might be limiting. I don't think that to be a good adjudicator or to hear an appeal one necessarily has to be a lawyer or have a real estate or appraisal background. I think there are people with a great deal of common sense out there.
Quite frankly, the three people I appointed did not have a legal background or an assessment background. In fact, one was the former city clerk of the city of Port Coquitlam, who has spent over 35 years dealing with municipal issues and local government issues and has a full understanding of the assessment process and how it works -- you know, hearing first-hand from people who phone city hall before they even get to the Assessment Appeal Board. I think there is a much broader segment of the population that is capable of doing this function, and I don't think we should be limiting.
F. Gingell: I appreciate that answer. I notice that in their concern for dealing with costs, the report indicates that the board will, on occasion, allow a single commissioner to sit with a consultant. The commissioners are paid a total of $250 per day. Does that indicate that it is more cost-effective to have one consultant than one commissioner? Or is it an issue that one consultant is more cost-efficient than two commissioners, because you have to have an odd number of commissioners?
Hon. M. Farnworth: In practice, the consultant is a board member, so the panels are currently one or three. That's what is taking place.
F. Gingell: Does the minister think he's meeting the intention of the legislation by having a commissioner not sit as a commissioner but sit as a consultant? If I may just add to that question, does he get paid the same amount as a consultant as he would have been paid as a commissioner?
Hon. M. Farnworth: The consultant gets paid exactly the same as a board member.
F. Gingell: I notice that one of the decisions the board made to be more cost-effective was to hold as many of the hearings as they could in offices in Richmond. Does that cause any additional cost to the appellants in these cases?
Hon. M. Farnworth: No, there is not much additional cost. The practice is that when they are in the lower mainland, it's held in Richmond. If the property is out of town, then we go out of town to hold the hearing.
F. Gingell: Page 21 of the report refers to the disruptions of the office reorganization and the shortage of staff. You have dealt with the staffing issue within this report. It seems as though you are fully staffed now or were fully staffed as of December 31. Is that the case, or are you still suffering from staff shortages?
Hon. M. Farnworth: It's my understanding that we are fully staffed at present.
F. Gingell: Going back to the issue of the Celtic Shipyards
Hon. M. Farnworth: The Assessment Authority believes that they should be part of -- in this case, Celtic Shipyards -- the city of Vancouver's assessment roll.
F. Gingell: At the bottom of page 15 of the report, there's this: "The board has continued to receive comments and recommendations from members of the assessment community and has continued to engage these participants in discussions." This is all to do with how we can do this in a more effective, efficient and economic way and meet everybody's needs. It seems as though the Assessment Appeal Board has gone through some changes in this past year. I know one never really gets to the end of change; it is with us always. But do you see any more changes of the significance that you've had in the last two or three years, continuing into the future? Or is it polishing up at this point?
[ Page 3919 ]
Hon. M. Farnworth: There is currently an internal study underway of a way to make things more efficient, looking at the structure and seeing what we can do better. Let me put it this way. While there is nothing anticipated this session, I certainly wouldn't rule out anything in the future. There are a number of issues that you have raised or that I have raised, and I think they need to be addressed. Probably the best thing to say is to stay tuned.
F. Gingell: Two last things. The report, which I'm pleased to see is
Hon. M. Farnworth: It's probably that it takes too long to get a decision. Having said that, in answer to the first part of your question, I will -- if you want -- send you a copy of a letter that I sent to the chair.
F. Gingell: That would be very nice.
M. Coell: I want to add a couple of questions for the minister on the Assessment Authority and the Assessment Appeal Board. I wonder if he could confirm for me that the Assessment Appeal Board this year is being transferred to the Assessment Authority and comes under their budget.
Hon. M. Farnworth: That is not correct. It is not being transferred to the Assessment Authority.
M. Coell: My understanding was the budget for the Assessment Appeal Board was funded a different way last year than it is being funded this year. I'm trying to assess how that funding change has taken place.
[7:15]
Hon. M. Farnworth: It was in Bill 2. The way it works is the province will requisition the Assessment Authority for the costs of running the appeal board. The money doesn't go from the authority to the appeal board. We requisition the authority, and then we pay the costs of the appeal board. They're still completely independent and function totally independent of each other.M. Coell: Where will the moneys for the running of the Assessment Authority come from?
Hon. M. Farnworth: They will continue to come primarily from the levy on the property tax assessment.
M. Coell: So we have municipalities, or the residential and business taxpayer, paying for the Assessment Authority. The authority is requisitioned a sum to run the Assessment Appeal Board. Is that correct?
Hon. M. Farnworth: The Assessment Authority does not run the Assessment Appeal Board. We requisition the authority, and then the province pays the money that's required to the Assessment Appeal Board.
M. Coell: I apologize. I'm trying to ascertain if the funds that you take from the Assessment Authority to run the Assessment Appeal Board are still coming from the residential and business taxpayer.
Hon. M. Farnworth: Yes, that is correct.
M. Coell: The Assessment Appeal Board is run by people who are appointed from the provincial government, cabinet appointments. I wonder if you can tell me how those people are chosen to sit on the board.
Hon. M. Farnworth: They're a ministerial appointment; as minister I make the appointment. We get résumés in all the time from all kinds of people. In fact, it is a fairly desirable board to sit on. They get reviewed for suitability in terms of experience and ability, and then I make the decision accordingly.
In fact, at a recent reception that you and I were both at, an individual came up to me and said: "How can I get on the Assessment Appeal Board?" And I said: "Well, send in a résumé." They come to me solicited, and they come to me unsolicited.
M. Coell: The point I want to make -- and the minister may wish to comment on it -- is that you now have a situation where the province, out of general revenue, is not funding the Assessment Appeal Board. The funding is coming from the Assessment Authority, which is a different level of taxpayer. But that level of taxpayer does not have the ability to appoint people to that board. I just wonder whether the province has considered now allowing a body like the UBCM to have input into the people who sit on the board.
Hon. M. Farnworth: Let's look at it this way: the province represents all taxpayers, so in that sense the appointments are representative of taxpayers at large. If the UBCM has names they would like to put forward or people they think have a suitable background, I'm more than willing to consider them.
I. Chong: Originally I wasn't going to participate in this, but I heard such interesting dialogue that I just had to rush up and ask the minister some more questions regarding the Assessment Authority. Following along on the heels of my colleague from Saanich North and the Islands regarding the B.C. Assessment Authority board, can the minister advise how often it is that the board sits and has a meeting? Is it once a week, once a month?
Hon. M. Farnworth: Could the hon. member clarify? Does she wish to know how often the board of directors sits? Or is it how often the people who are hearing the appeals sit?
I. Chong: I was referring to the B.C. Assessment Authority board of directors.
Hon. M. Farnworth: About once every two months.
I. Chong: So that would probably represent six meetings a year when the board of directors actually sits to conduct the business that they're mandated for. Can the minister advise what the honorarium is to the board of directors members? I have a fairly clear estimate of that, but I would just like the minister to confirm the current rate.
[ Page 3920 ]
Hon. M. Farnworth: The director's fee, which you call the honorarium for a director, is $2,400 per year.
I. Chong: I had heard it was substantially higher, but I will check my sources on that. The other thing I would like to ask the
Interjection.
I. Chong: Well, I have seen the T-4 slip, and I was just curious. Perhaps there were other duties that were involved.
Perhaps the minister can, then, advise: is there also a per diem for other committee work that the board of directors are put on -- subcommittees, etc.? If so, can he advise as to the per diem for those?
Hon. M. Farnworth: The per diem is $300.
I. Chong: So for clarification, $300 per diem is for the board members when they serve on committees as well as when they sit at their regular board meeting? Is that correct? Or is the annual board honorarium a flat $2,400?
Hon. M. Farnworth: No. The honorarium is one thing, and then the per diem
I. Chong: This has been rather enlightening. Would the minister be able to advise, on average, the number of committees the average board member would serve on and the average per diems that would accrue for the year?
Hon. M. Farnworth: There are 11 directors, so it would work out to about $10,000 per year.
I. Chong: Can the minister advise if, for the executive positions -- the board chair, for example -- there is an additional increment provided?
Hon. M. Farnworth: The chair receives a $3,600-per-year honorarium, or director's fee. Their per diem is $50 more; it's $350 per day.
That figure that I gave you of averaging $10,000 per year includes expenses, as well.
I. Chong: Can the minister advise, if that is the average and the amount was in excess of that -- for example, double that amount -- whether that would cause any alarm? Would there be someone who would be looking at the reasons why and trying to determine a justification for those increases occurring?
Hon. M. Farnworth: There is a director of financial services, who would review all expense claims put in and review things like attendance at meetings, and who would be monitoring what is paid out and when it is paid out.
I. Chong: I appreciate that information from the minister. For my information and clarification, can the minister advise whether the director
Hon. M. Farnworth: This is an organization that's run in a very businesslike way. If the member has a particular point or a particular concern, then I would say to let me know, and I'll get the information for you. But just for the member's information, in 1995 there was $145,000 in directors' fees and expenses, and in 1996 there was $118,000 in directors' fees and expenses.
I. Chong: I appreciate that information. We didn't have the updated information for 1996, as the minister is aware. So we had no idea where we were headed. I had heard some concerns, and I appreciate that information, because then those concerns are perhaps unwarranted. But I was looking at it from the accountability point of view, as the minister is probably aware, having been involved in Public Accounts as well. I'll leave that for a moment.
I want to quickly ask the minister a question regarding the court of revision, which I believe was discussed earlier. I heard the answer the minister gave to the member for Saanich North and the Islands -- that this was still going to be an independent board and that it would just be that the ministry would be requisitioning an amount from the Assessment Authority.
From the newsletter I received from the Assessment Authority, I understand that appeals to the courts of revision have declined substantially over a number of years, from 1993 to 1997. Can the minister advise whether there is a reduction in, I guess, the staffing or whatever the requirements are -- the contractors, or however it is set up -- to deal with the appeals?
[7:30]
Hon. M. Farnworth: There are two staff that deal with courts of revision in the ministry. So I do not anticipate that being reduced, even though there's been a reduction in caseload. In terms of the courts of revision themselves, they're distributed geographically throughout the province, and they only work when they're hearing. So if the number is going down, they actually just sit fewer days.I. Chong: So my summation of what the minister said is that if there are fewer appeals, then there would also be a decline in the cost, as well, because they would not be required to sit and do their work.
Hon. M. Farnworth: That is correct.
I. Chong: Just one more quick question. I see a question I had written down here that I had forgotten to ask the minister regarding the B.C. Assessment Authority board. I understand that the board members are by ministry appointment, as he earlier stated. Can the minister advise whether regional representation, diversity in backgrounds, etc., is taken into account? A number of issues have evolved around regional boards and multicultural and that sort of diversity.
Hon. M. Farnworth: Yes, yes, yes and yes. In fact, in terms of gender, there are more women than men.
I. Chong: I wasn't looking for that answer, but that's nice to hear. I thank the minister for his assistance.
[ Page 3921 ]
G. Abbott: I have a couple of final issues here before our parting comments. One revolves around the inclusion of the GST in the price of new property when determining actual value for assessments. The minister may be familiar with this one.
Mr. William Wedley of West Vancouver has, I gather, been fighting a running battle over this issue for some time. It's his view that this policy of the B.C. Assessment Authority of including the GST in the price of new property when determining actual value for assessments is wrong. Could the minister confirm, first of all, whether this is in fact the policy of the B.C. Assessment Authority? And if so, why?
Hon. M. Farnworth: Our policy is "defined market value." That individual appealed that decision to the Supreme Court of British Columbia and lost.
An Hon. Member: You said that with real venom. [Laughter.]
G. Abbott: Occasionally we inspire passion in this minister at the oddest times. This is one of the occasions when I find the passion curious. But that's fine. I understand the point that in fact the whole drive, purpose, scope and goal of the Assessment Authority is to do that -- to determine fair market value.
My understanding -- and maybe it's flawed -- is that in this case, by including the GST on top of what's fair market value, there may in fact be a minor distortion.
Hon. M. Farnworth: We can get into this and play this whole
I just find it interesting, because in terms of complaints that come in to you when you're a city councillor, this is one of those things that you deal with, and it's like
F. Gingell: It's in your power now.
Hon. M. Farnworth: No, it's not. It's been ruled on by the Supreme Court, which made the decision.
But the way it works is that
G. Abbott: I think I understand what the minister is saying. It's the argument that the GST will be recaptured in the subsequent sale. Does the same argument hold true in a declining market? It frequently happens in the rises and declines in real estate that one may not recapture the value of the GST in the subsequent sale. Does that not call the original proposition into question?
Hon. M. Farnworth: Market values go up and down, and that's what the assessment system is based on. It's based on a comparison of market values of comparable properties within same areas. So if they're all going up, and as a rule, there tends to be
I can fully understand why some people think they are not being treated fairly, but the fact is that they intend to recoup their money through the sale. If they sell when it decreases, whoever is buying it is still going to be assessed on the value at that time, just as the person would be assessed on a decreased value and would probably see a decrease, potentially, in the tax paid.
G. Abbott: However, in the interval between the original purchase of the new home or whatever it happens to be, and the time of the subsequent sale and recapture -- whether it's all or more or less, or whatever it happens to be -- the individual will be paying property tax, will he not, on the value of the GST?
Hon. M. Farnworth: You're paying property tax on the fair market value of the property. You're not paying it on the original price that you paid on the home; you're paying it on the fair market value of the property. That's what the assessment is. It's not property plus GST. It's what this particular property is worth on the open market, and the assessment is based on that. Everybody is treated the same. We have one of the fairest systems in the country, in fact, if not in North America. Other provinces come here to see our system; states come and see how our system is done, because it is a very good system. There's a high level of confidence in the system, and it's fair.
G. Abbott: On a rather different issue, and I probably should have brought this up earlier
This involves the homeowner's grant and its application to a particular kind of strata development, and I have some questions revolving around that. The development in question is called Lakemount Estates, near Sicamous, in an area called Annis Bay, a lakeshore development. I'm not even sure how this kind of ownership would be categorized. In each case, the owners hold five of 229 shares of the development. They own their home; they own a piece of the ground. Overall, it is not a subdivision but one large strata development. I think there's a term for that; it escapes me at the moment.
F. Gingell: Undivided interest.
G. Abbott: Undivided interest. Yeah, perhaps something like that. At any rate, for about ten years the owners of Lakemount Estates -- at least those who have owned for that long -- have received the homeowner's grant for their properties at Lakemount Estates. Of course, that would only be in those cases where it was their principal residence. Obviously they couldn't claim the homeowner's grant for a place at Lakemount Estates if they had a principal residence elsewhere. But if it was their one principal residence, they were able to claim the homeowner's grant. For reasons which I don't know, but which perhaps the minister can advise on, the owners of property at Lakemount Estates were advised
[ Page 3922 ]
last year that they would no longer be able to receive the homeowner's grant for that property. Could the minister advise why that change occurred?
Hon. M. Farnworth: It is a single taxable parcel and is therefore only entitled to one homeowner grant. So the entire parcel would be entitled to one. If the homeowner grant is $475 -- I think it's somewhere around there -- or $450, that's what they would be entitled to.
G. Abbott: The argument the folks at Lakemount Estates make is that they own a home like others do; that irrespective of the legal title of the property, if they have one principal residence on it, they should be entitled to the homeowner's grant, as others might be. If there are certain arguments for the homeowner's grant which can be made generally -- that it's to assist people in meeting their obligations for property tax, school tax and so on -- why would it not apply in this case as compared to a single-family residence?
Hon. M. Farnworth: While I understand the legal argument in terms of it being one single parcel, I am more than willing to look at the details of the case if the member will provide me the details. I will get some thorough examination of the issue and take a thorough look at it myself.
G. Abbott: At the same time, would the minister also consider the issue of tax deferment for seniors on such properties?
Hon. M. Farnworth: Yes, I will look at that issue, as well.
[7:45]
G. Abbott: I think that covers the issues which I wanted to raise in these estimates for Municipal Affairs. If it's appropriate now, I'll make a few closing comments, and then I'm sure the minister will want to do the same.Over the past days, we have canvassed what I think are many of the most important issues in the Municipal Affairs area. By and large, I've been satisfied with the responses to the many questions that have been posed to the minister, and I think my colleagues and I appreciate the generally open and thorough nature of the minister's responses.
There are a few things that I would like to note at this point for the record. On the one hand, I am very pleased that the province has moved to the joint council approach to resolving issues of mutual concern to the local and provincial government. I think this is a great step ahead. As I noted at the time, we are pleased that the model that was laid down in the community charter has, by and large, been adopted here. If all parties stay faithful to the principles behind the joint council, it will be a very productive mechanism. Further, I think it will go a long way to obviously improving what have been very difficult relations between municipal and provincial governments in the past several months. The one event which does cause me concern with respect to the operation of the joint council -- and indeed, with respect to the applicability of the protocol -- is the recent decision by the province to place photo radar on a mandatory rather than a voluntary opt-in basis. The minister and I had a fairly extensive discussion of this the other day; we agreed to disagree. I certainly still maintain the point that I made then: that in consulting with UBCM and the joint council on an issue like that, there would be nothing that would in any way impair or derogate the authority of the province of British Columbia to undertake that. In fact, it would have been an indication of good faith to advise the council that such a change was being contemplated. That's the one sour note that I see in terms of the operation of the joint council and the protocol.
The minister needs to bear in mind -- and indeed, his colleagues in cabinet need to bear in mind -- that the joint council has to be a mechanism that is used when bad news is pending as well as when good news is pending. In fact, it may be far more important to consult with respect to the unpleasant issues of life, even more so than the relatively pleasant ones.
In terms of other issues, I think we had a good discussion of infrastructure, too. I was pleased -- as I recall, at least -- that the minister recognized that it would be useful in the future to try to find a greater involvement for local government in determining the parameters of any future infrastructure program between the federal, provincial and the municipal levels of government. The point I made then -- the point that I hope the minister agrees with -- is that as an equal partner in the infrastructure program, local government should also be a partner in determining the parameters, the components of that future program. Again, I agree that in terms of where the funds are awarded, that can certainly remain with the federal and provincial governments, given that there would be some competition between local governments for those funds; that's fair enough.
The concern that I've been hearing and I'm sure the minister has been hearing is that sewer and water projects are backlogged in the province of British Columbia, and that there should have been some funds dedicated that way. There are good arguments both ways, as the minister has said, as to whether you go this way or that with the program. But the important point is that local government should have an opportunity to be a part of making that determination as an equal partner in the program. Whether it should be roads and transit or sewer and water is important but not central to the issue here. Central to the issue is local government's opportunity to have a role in the determination of the components of the program.
I'm pleased with the progress that the Ministry of Municipal Affairs has made in its safety review. As I noted at the time, I was very impressed with the work that has been done on the safety review by the committee involved. I think it's a very thoughtful and thorough appraisal of what's been in place and a very good base to work from in making some very important decisions about the provision of safety services in the province in the future. Again, I compliment the minister on the job that he and particularly his staff and the committee have done in taking a very big step forward in terms of a safety systems review in the province.
In concluding estimates, the one area in the safety systems review that I would like to highlight at this point is the issue of the different ways in which the liability issue has been dealt with in the past. We have talked at some length here about the very different ways in which the building inspection liability issue is treated in the Vancouver Charter as opposed to in the Municipal Act. I'm pleased that the minister has agreed with me that it's not tenable in the long term to have two very different and in fact quite conflicting approaches to the liability issue, and those two fundamental bodies of law for municipalities in the province. I'm pleased that as part of the safety systems review, the province is going to be taking a good, long look at this issue. I think I sense that there is a disposition on the part of this minister to try to resolve the two
[ Page 3923 ]
approaches in those two bodies of law. I look forward to seeing the product of discussions at the joint council and presumably at the UBCM with all of the stakeholders that are involved in that particular issue.
In other issues we talked about, I raised concerns through the debates about the termination of the downtown revitalization program. I suspect that the minister agrees that that has been a very successful program for communities in British Columbia. The minister advised that at some point -- what is the phrase you used? -- in "the short fullness of time" we would be seeing the successor program to the downtown revitalization program. I know that I will welcome that and I know that municipalities in British Columbia will welcome that, because it has been a very successful program. We look forward to seeing whatever refinements are offered in relation to the former downtown revitalization program; we hope it can be improved. I hope that many of the very effective personnel like Martin Thomas will be a part of the new program and that we will continue to see this program used in the very positive way it has been used in the past to enhance communities throughout British Columbia.
An additional issue that I think is very important that clearly the ministry is moving on -- whether quickly enough or not -- is the P3-enabling legislation, ensuring that public-private partnerships are possible under the terms of the Municipal Act. As we discussed, the MEVA has been used in the instance of the arena for the city of Victoria. The minister has indicated that that really is not a useful approach to resolving these things in the long term and that more substantive changes need to be made to the Municipal Act in order to ensure that there are no outstanding impediments to public-private partnerships in the future. Again, certainly we on this side of the House will be welcoming that. I hope those changes come sooner or later.
The minister has pointed out that there are numerous projects at various stages of development that may be awaiting these important changes to the Municipal Act. I hope that we see good speed on the part of the ministry in developing that package of P3-enabling measures. We certainly will welcome that -- hopefully, in this session, but if not, obviously as soon as possible after that. Given that, this is obviously an economic development issue as well as a regulatory issue. Hopefully, we can give some priority to that so that important projects to communities in British Columbia are not held up unnecessarily.
Some of the other issues we discussed
So this is obviously a much larger issue that the Minister of Municipal Affairs needs to work on with his colleagues in cabinet. But I hope that, based on the experience, cabinet will one day soon again see the merits of the approach that was taken in the Local Government Grants Act in section 2. Whether it's like that or in a new form along that line, I think it needs to be done, and I look forward to hopefully seeing something from the ministry on that in the future.
We talked at some length about Bill 55. Again, I think it's going to be a significant challenge to this ministry putting that into effect. It has been done in year one. It seems a remarkably complex operation, but I'm just glad I don't have to deal with it. I guess if the ministry staff is satisfied that that is a reasonable way to proceed to achieve the rather modest goals of Bill 55, then fair enough. But I think there may be better ways to do it, and the minister may want to think about those in the future, as well.
The issue of declassification of provincial secondary roads
I see I've got the green light. So I keep going, right?
Interjection.
G. Abbott: Okay, thanks. In fact, I'll be able to finish in a minute. I'm down to my last point here -- remarkably.
I hope the minister bears that in mind and keeps the interests of small communities very much at heart in those discussions.
Finally, I wish the minister the best of luck on the local governance issue surrounding the 286 -- I think it was -- local improvement districts, waterworks districts and irrigation districts that exist in the province. Again, we discussed this in terms of the situation at Naramata, and I think that highlights some of the concerns that the ministry is going to need to address. I am satisfied that the track that the minister is taking with respect to resolving that is a good one, and I wish him all the best in that. Thank you very much.
Hon. M. Farnworth: Just in my concluding remarks, I'd like to say I have enjoyed these, my first estimates, and we have had
Interjection.
Hon. M. Farnworth: One always enjoys the first time -- right? [Laughter.]
D. Jarvis: How about the last time? Don't you enjoy that?
Hon. M. Farnworth: I hope I never have to worry about the last time.
Anyway, we've had an interesting discussion. We've touched on a great number of issues. I'd like to thank the member, because I think we've managed to do it with a good tone of civility and a good exchange of humour, and we've had a frank and open discussion on a lot of issues. I have quite enjoyed it.
[ Page 3924 ]
[8:00]
I think that the member has brought a good approach. I think he's demonstrated that he cares about local government and the issues of Municipal Affairs. I think he has a keen interest in that, and I've appreciated his questions and a number of the issues he's raised, because they've given me some ideas and some points that I think we need to look at within the ministry. We've committed to supplying the member with information on a number of issues, as well as looking at particular issues, and we will follow through on those commitments.From time to time we have agreed to disagree, particularly around the issue of photo radar. But we've also found agreement in a number of other areas, particularly when it comes to directions that we need to move in on such things as public-private partnerships. I'm glad to hear the hon. members' commitment that they support the direction that the government is moving in.
I also think that we've explored thoroughly the directions the ministry needs to go and is going in a number of areas, particularly around such things as local governance. The member mentioned the irrigation districts. We've looked at things such as restructuring and how that takes place. We've looked at a number of issues around growth strategies, which are of keen interest and keen importance to the future of the province. We've looked at issues around roads classification and devolution. I think all of those are key and important issues.
The one that I want to come back to for a moment is the issue of the joint council and the protocol, because we have had extensive discussions on that. From my point of view and the ministry's point of view, that really is a fundamental shift in terms of the government's approach to dealing with municipalities. We're committed to making it work. We've talked about the structure, the way it was formed, how it came into being, who is involved, how it's evolving and the fact that it is a new concept, a new idea and that it does have growing pains. And it is going to take time -- you know, 12 to 18 months -- to get it up and running in the way that both parties, the province and the municipalities, envision that it can work. But I think there is a great deal of commitment on behalf of the government, and certainly on behalf of my counterparts in the UBCM, to make that process work. So I expect and I know that that will remain a focus of the ministry over the coming year.
I think it's fair to acknowledge that there is a fairly ambitious program within the ministry in a number of different areas. I think we will see that program bear fruit, some of it in this legislative session and certainly more in the next legislative session. A lot of that work and a lot of the produce that will come forward are going to be because of a joint approach between municipalities and the province in terms of bringing forward changes that need to be made on the basis of their priority with the municipalities -- that it's not just an issue of priority to the province, but that changes are taking place because they are a priority of the UBCM. We'll have discussed them, solved a lot of the issues and done a lot of the groundwork ahead of time, so that when things go to cabinet and when they're introduced to the House, members will know that they've gone through a process, know that there's been a lot of work done and know that there is support. So that is something that I'm extremely keen on and very enthusiastic about. Part and parcel of that is a revamping of the Municipal Act.
We've had a thorough discussion on the issues of Housing, and I also really enjoyed that. I think we've discussed where the province is in terms of housing -- some of the issues around that and the directions that we need to go.
So having said that, I want to again congratulate the member and say I appreciated his comments. I've quite enjoyed it, and I look forward to next year. As they say: same time, same place, same station.
G. Abbott: Just begging your indulgence for a moment, hon. Chair, I want to thank the minister for his thoughtful answers, and I want to thank Municipal Affairs staff. I've always been very impressed with the competence and dedication of the Municipal Affairs staff, and I appreciate their assistance in this process as well.
Vote 48 approved.
Vote 49: ministry operations, $131,233,000 -- approved.
Vote 50: local government grants, $224,660,000 -- approved.
The committee recessed from 8:08 p.m. to 8:12 p.m.
[W. Hartley in the chair.]
ESTIMATES: MINISTRY OF
AGRICULTURE, FISHERIES AND FOOD
Hon. C. Evans: Hon. Chair, I am pleased to present the estimates of the Ministry of Agriculture, Fisheries and Food for 1997-98.
Joining me today, to make sure that I don't get it too wrong, are Lorne Seitz, deputy minister; Gordon Macatee, ADM, Agriculture; Robert Menes, manager, resource planning; David Matviw, the executive director of policy and legislation; and Dave Davies, the person who actually knows where the money is.
I got this job a year ago, and we had last year's estimates in the fairly unenviable position of having to answer questions about which I knew almost nothing. I'm much happier coming back this year, understanding that this is actually the most exciting ministry in government where all the best people work -- and we do the most fun things.
We are also quite good at what we do. Members will know that producers of food in British Columbia are in the business of producing more than 200 different commodities. I have had the opportunity to learn this year that some of those commodities, like neon flying squid and emu-ranching, are worth millions of dollars, and lots of us don't even know about them.
The context in which people produce food in British Columbia is changing faster than anything else I know about. The global marketplace and world trade law drive lots of that. I had the opportunity to go with Gord to Japan and observe some of that first hand.
[8:15]
There are challenges and opportunities that we meet and deal with every day. Some that we know well are: urban[ Page 3925 ]
encroachment on farmland; waste management; the issue of food security; the questions of new technologies and their impact on the industry; environmentally sustainable practices; and the changes in marketing, including direct farm marketing. Basically, all those subjects are going through an intense transition period. I hope and believe that we are moving in agriculture, food and fisheries from maintenance and survival mode to growth and sustainability mode.
As minister I have learned, in the last year, that the choice for the producers in British Columbia is to change or be changed. That includes changing from the federal government's old-fashioned sort of central command, "We tell you all what to do, and you all go do exactly what we tell you, or else," attitude in managing fisheries to one that I'm sure we'll discuss in these estimates, which is way more consultative and friendly and where the British Columbia government actually has a role to play. It's changing from an environment in which all industries, all commodity-producing groups, recognize that there are fewer and fewer resources available in terms of state resources and there are increasing demands on those resources; changing from an environment where the industry traditionally sold to a few traditional markets, and they were predictable markets, to one in which diversification and niche markets and direct marketing are the orders of the day, and the people who are winning are people who are learning to exploit those opportunities and are engaged in wonderful activities like shifting pesticide-free greenhouse vegetables into California, reversing the historical trend from south to north; changing in that we are experiencing this period of time in which jobs are lost and jobs are gained.
Some of the jobs that are lost are traditional jobs, jobs that we're used to having, and some of the jobs that we gain are jobs that we didn't know existed before. The food-processing industry, for example, has lost 1,200 traditional jobs in the last four years, as companies have consolidated to find cheaper means of doing business. But no parties in this House are interested in engaging in the race to the bottom. Our challenge is to realize those changes without engaging in that never-ending race downhill. Statistics Canada also shows that over the same four years we lost those 1,200 jobs, B.C.'s primary and food-processing industries actually had a net increase of 3,600 jobs -- three times as many people hired as were lost.
We don't notice, because we don't read it in the newspaper. We don't read it in the newspaper because it isn't news. News is when you lose something. You also don't read in the newspaper that annual investment in the food-producing industries has risen over 50 percent since I got elected in 1991, from $209 million a year to $316 million in 1996. I think that's indicative of the confidence that individuals and business are placing in British Columbia industry.
You also don't usually read in the newspaper that the number of farms and employment on the farms have increased dramatically. Census Canada's 1996 figure suggests that there's been a 13 percent increase in the number of farms in British Columbia since I was elected in '91, from 19,225 to 21,835 last year, and also that it's the greatest increase in the land. Ninety-seven percent of those farms are family-owned. Employment on B.C. farms has increased 23 percent in the same time period.
But the changes also mean that this ministry and minister and government have to change too, as much as the industry. During the past year the ministry has been restructured to meet a changing environment, including the fiscal environment in which we operate. The provincial government needed to put our fiscal house in order. This ministry has met that challenge. The people behind me have met that challenge in the most creative ways that we could bring to bear on the situation.
The ministry examined our own role to see where we could focus our resources, where it was in the best interest for respective industries and associations to assume greater responsibilities, and how to move the industry from the traditional maintenance-and-survival mode to one of growth and sustainability. We have seen this year, and we'll see next year, the implementation of restructuring mostly on the agriculture front, which we hope is in the interest of producers and also taxpayers.
Fundamental change within our ministry is taking place. We are moving from a historical situation where we tend to serve individuals to a situation which I think is more healthy, where we tend to serve organizations of producers, self-organized into industry associations and sectors, which in turn are able to serve the needs of their individual members. The shifts mainly involve the agriculture industry. We'll discuss fisheries and the kinds of shifts going on there later. Changes have also resulted in many industry sectors helping to share the responsibility of providing information to their own members, who are, of course, individual farmers.
The ministry operations now are consolidated into three regional branches, including north central, southern interior and south coast, and also provincial branches, which have moved from eight to five and deliver commodity-specific programs on a provincewide basis. The five provincial branches now include the resource management and planning branch, which is a new branch addressing both land and water management issues, such as the right-to-farm legislation, land use plans and environmental and other resource issues; the animal industry branch, a new branch managing animal health activities and five commodity teams focused on beef, hogs, dairy, poultry and specialty animals; the plant industry branch, which is a new branch managing the plant diagnostic lab, weed control, apiary and eight commodity teams focused on berries, nuts and forage, floral culture, tree fruits and grapes, grains and oil-seeds, nursery vegetables, mushrooms and specialty crops; the industry organizations development branch, providing management expertise and financial resources directly to industry organizations in order to enhance their ability to lead, manage and finance industry development; and an agriculture risk management branch, providing the new crop insurance program and NISA.
The commodity teams mentioned will relate to particular industry commodities but with, I hope, a comprehensive focus. There will be three members per team: a production specialist, a farm business specialist and a processing and marketing specialist. The commodity team system shows great promise. I hope the team of experts will be seen by the producers to be intimately familiar with their issues and delivering their services in the most efficient manner possible.
On to fisheries a little bit, the sky is the limit on the level of change. Last year we've seen the industry basically go from a sunset industry -- in which everyone was holding their head and going, "Woe is us; let's have a scrap over the last fish," and the federal government was forcing the fleet to cannibalize itself, turning fishers against fishers, communities against communities, natives against non-natives, sport against commercial -- to one in which the provincial government for the first time ever is part of the management of the fishery. I think we all celebrate that -- organizing, for example, the ground fishery into a situation where the provincial government is not only at the table to create the organizational
[ Page 3926 ]
model but also gave $50,000 to a working group to help assign fish in such a way as to guarantee the sustainability of communities -- and the more recent initiatives like Nanoose, attempting to wake up our federal government and indeed another nation to the need for conservation, sustainability, cooperation and good neighbourliness in order to have a salmon industry at all.
We should talk about some of the ministry's key strategic priorities being carried out this year. One is completion of commodity team business plans, targeting the industry's diversification, market development and job creation opportunities. Second is implementation of the Farm Practices Protection Act at the municipal level -- the folks I met with this morning, wonderful people doing wonderful work and ensuring that British Columbia doesn't go the way of lots of eastern and southern provinces and states, where the scrap between rural and urban increasingly forces people off the land -- proceeding with the legislative amendments that are necessary to make these plans work and working with industry to ensure smooth transitions for both the dairy and the brands issues.
We're looking at other issues, such as the Canadian food inspection system and the B.C. marketing board system, to make sure that our activities are in keeping with the needs of the producers and the consumers.
We're encouraging farm practices that reduce soil erosion, compaction and protect water quality. In that respect, we're attempting to ensure that the Fish Protection Act rolls out in such a way that farming is not only allowed but there's an encouraged use of repairing land in such a way that we can enhance the fishery.
We're encouraging the use of integrated pest management systems to reduce the reliance on pesticides. In that case, I hope people ask us about the SIR program, because I think everybody should learn about it and talk about it. And we're working on a plan for the Roberts Bank provincial farmland to see if we can't resolve that issue.
In summary -- and I'm sure glad for this part, because we're winding this up -- the environment in which we operate is changing rapidly, and so are we. I think it's exciting that we're doing a good job. I actually think it's probably the best place there is to work. You guys are lucky to get to ask questions about this particular ministry, and I'm lucky to get to answer them. Let's fly at it, and I have to tell you that I've got five bucks on how many hours this takes. So I'll share with you later what my bet is, and maybe we can make a deal.
J. van Dongen: I'm pleased to be here today to participate in this estimates debate. I should say, first of all on the minister's closing comment, that I heard the other day that a previous minister felt that the Premier's view of this ministry was conditional on the length of the estimates. So if the estimates for Agriculture, Fisheries and Food took a long time, it was his view that this would impress the Premier of the day. Taking that as a lead, I want to assure the minister that I'll do my best to help him out in this regard, and we'll talk later about the $5.
I want to simply start out by saying that this is the third time I've been involved in this process, and contrary to what people think, it doesn't get any simpler or any easier. It is a very interesting and very diverse ministry. I'm always struck by the fact that it's one of the smallest ministries, but one of the most diverse and one of the most important. If you look at the whole spectrum of agriculture and fish -- all of the commodities, all of the people involved, all of the issues -- there's not a lot of British Columbia that you don't touch, and I think that's significant.
[8:30]
I have my roots in farming and in agriculture, and I still live on the farm. Sometimes that's a good thing; sometimes it's a bad thing. I think you tend to see some of the problems more so than others. There are days, as I drive by the farms to and from my work, when I sometimes feel that I've chosen the easy way out, compared to some of the struggles that farmers face. As I drive from home even to my office in Abbotsford, I pass by a lot of agriculture, a lot of dairy farms and hog farms, blueberries. If I go to the ferry to Victoria, then it's raspberries and a whole lot of other enterprises. I also invariably find that it doesn't matter what time of day or night it is -- and sometimes it's pretty odd hours -- I always see feed trucks and milk trucks on the road. To me it's another indication of the importance of agriculture, particularly in my area.Having said that, I see the effects of the weather, and you know what that does to farm operations. Right now there's a great deal of concern about flooding. That does keep me connected, and it reminds me constantly about who we're working for and why we're here as public servants. I agree with the minister that there is a great deal of change taking place in the industry and in the ministry obviously, and that has casualties. Some people are not able to cope with change, and in many cases it's a logical decision for them to leave the industry. We've seen a lot of people leave the industry -- leaving various commodities -- and we've seen major changes. Then there are others -- sometimes younger people, sometimes university-trained people -- who see agriculture and fish as a completely different kind of enterprise than, say, their parents did. They have different sorts of risk levels, different views on how you do things, and some of them are taking up the charge, if you will.
In learning about the fish side of the ministry, and particularly looking at some of the change issues, there are some very major parallels between, say, what's happening in the commercial fishing sector and what we've seen happen in the tree fruit industry. Some of the same people issues apply -- the same stresses and strains -- and sometimes the same solutions in terms of transition programs are applicable. I think we have to be conscious of the people aspects of the issues. It isn't strictly a dollars-and-cents game that we're in. I think that even some of the changes we'll talk about in the ministry are hard on people -- those that leave and those that stay.
There are also major changes in the agribusiness service sector -- whether it's on the food-processing side, as the minister mentioned, or even on the supply side. There are equipment dealers, seed suppliers, feed mills, whatever. But it's really absolutely major change again for people and for businesses, and we see a lot of people going out of business. At the same time, we see people who are very aggressive and who have a lot of guts, I think, investing. In my riding, we have one feed company putting in a $10 million feed mill, which is absolutely incredible. They're the exception rather than the rule, but I think it needs to be acknowledged that it's happening. So there are opportunities in agriculture, as the minister has mentioned.
There are also major opportunities on the fish side, in particular in salmon farming, aquaculture generally, the sport
[ Page 3927 ]
fishing sector and a renewed commercial sector. There are lots of opportunities, and hopefully, we can get through some of the machinations of change to make that happen.
Having said all that -- and I try to take a balanced view of these things -- I think the ministry itself, and government generally, has gone through some pretty horrendous change in the past year, which really started in a public way in November '96 when the minister came to Abbotsford with this speech. I think that's really been the business of the ministry in the past year, and we're just getting closer to the end of that. But that has impacted both internally and externally -- with a reduction of 90 people, a lot of technical staff. A lot of very competent, very dedicated people suddenly found themselves facing the prospect of doing something else. Even for the people that have stayed in the ministry, I think there's been a lot of reshuffling, and it's an adjustment process for them, also.
We've seen the major reduction in dairy inspection, and certainly in principle, as I said when we discussed the bill, I think it's all doable in theory. But I want to underscore the concern, and hopefully, with careful monitoring, it will work. I think there's a very significant third-party public responsibility for government in making sure that not only the food quality of our dairy products but also the public perception remain intact for what has been one of the strongest dairy programs in North America.
We've seen the elimination of brands inspection by the government and the legal infrastructure being put in place for the industry to run their own system. It's a necessary system for them to have, and probably out of that there will be some opportunity -- but again, not without short-term pain.
We've seen closures of a number of offices -- six ministry offices. Generally speaking, they are very small offices, but very critical to those communities -- one of the few connections that that local community had with the Ministry of Agriculture and with government. We've seen some major changes in risk management programs such as crop insurance, NISA and that sort of thing. We've seen major changes in the replant program, and we'll talk about that a bit more, hopefully tomorrow.
I think that with some of these programs, one of the most significant aspects was the feeling that commitments had been made. In fact, I think commitments had been made which were broken, particularly in the Tree Fruit Authority case, the replant programs and the grazing enhancement programs. But there had been clear commitments made which people were relying on, that suddenly disappeared or changed. There was virtually no part of the ministry which was untouched -- grape and wine enhancement, the Peace River Agricultural Strategic Planning Society and a number of those programs which weren't huge programs in themselves, but were important to the people involved.
I happened to find a statement for the ministry which goes back to 1994-95, and the actual expenditure that year was $82 million. Here we are, three years later, looking at $56 million -- a very, very significant reduction -- and I just want to put that into context. When we look at government spending overall, we're looking at a budget of about $20.5 billion. Of that, $7 billion is going into the Ministry of Health, about $5.7 billion is going into Education, and from there on down. I guess what's really disturbing to me, and what always bothers me, is that at $56 million, the Ministry of Agriculture is significantly less than 1 percent of the Ministry of Health. I've seen how the ministry has struggled with making the adjustment of taking roughly $17 million out of its budget in an 18-month period of time. I see all the management time and effort that went into that to save $17 million out of a total budget of $20.5 billion, and I really question whether that has been a cost-effective exercise in the total scheme of things.
I recognize that there always needs to be review and adjustment to get value for taxpayers' money. But again, I find that the best way to try and measure that -- certainly as a layman and as a politician, which is our job -- is to compare it to what's happening in other parts of government.
I note that the resource industries took major hits in this budget-cutting exercise. The Ministries of Forests, Agriculture, and Small Business and Tourism -- and mining -- for example, all took major hits, and I'm not convinced that the same level of effort was put into getting value for money in other ministries. I'll just mention one example that bothers me, and that is the recent numbers on the health labour accord, where it was indicated by government that there would be savings. There aren't savings; there are actually increased costs of $188 million. And $188 million is a terrific amount of money, particularly when you compare it to this ministry's budget of $56 million.
I want to put on the record some of the comments that have been made by farmers in terms of their reaction to this change that we've talked about. I think it's important to do that, first of all, to recognize where they're at in the field and to acknowledge the difficulty of facing change.
I have three letters here, but the first one comes from an individual that I know the minister has met: Bob Collins in Port Alberni. I'm guessing that he started farming as a young farmer a dozen years ago. He started from scratch, but he is really struggling, and I just want to read one quote out of his comment in the Province newspaper: "
There is another letter that I want to table some significant quotes from, for two reasons. One is because the letter speaks to the quality of the ministry staff who have been and who are on the job, and it also speaks to a lot of the issues that I know the minister and the ministry are continuing to work on to address in terms of their strategic plan -- that is, a lot of the land use and regulatory issues; all of the issues that face farmers as they go about their business. This letter cites one individual, and given that individual's record I'm going to use his name -- not to single him out, but I think it's reflective of what I believe is the quality of a lot of the staff in the ministry.
[8:45]
"For over 30 years, John Murray was dairy inspector. Now his position has been terminated. I believe that the superior quality of Vancouver Island milk is a direct result of his skill, effort and teaching ability. I also believe that all of the dairy farmers and their staffs are better trained because of him and other extension staff. No matter what is done to milk after it leaves the farm, nobody can raise the quality of the product if it was not of high quality to begin with.Then he gets into another train of thought. He says:"John Murray was aware, and he was there when you needed him. He was there when Dave Grieve's barn burned down, and he helped to get Chris Sorensen's dairy -- some eight years dormant -- up and running so those cows could be milked. It was almost midnight when he considered his job done. Not your typical civil servant."
[ Page 3928 ]
"We bought the story that an efficient farmer will make a reasonable return on his investment and also earn a comparable wage. Not anymore. In 1963 when we started farming, district 69 had over 30 dairy farms. Six are left. Even if those six produce four times as much milk, nobody gives a damn about the food produced, as long as the teamsters in Victoria meet their payroll demands. And here the role of the staff of the department of agriculture, foods and fisheries -- people that have degrees in agricultural sciences -- are being replaced by those trained to be health inspectors, environment technicians or are governed by municipal bylaws.That comment, for example, speaks to domestic internal competition, very aggressive internal competition -- internal to Canada -- in the food industry. A lot of people don't realize that. They think that the pressure on our agricultural industry comes from GATT and that it comes from export issues. That is really not the case in a lot of our food industry at the present time."Ask me about 'building' inspection for barns, burning bylaws. Ask me about restrictive legislation by almost anybody empowered to pass rules
. . . . The new buzzword is global marketing. I can't compete with the mainland, let alone with a U.S., New Zealand or other producer."
The third letter is from a young guy, 20 years old, who graduated from high school with honours in May 1996 and received a horticultural technician certificate from the College of the Rockies. Speaking to some of the political decisions with respect to the budget cuts, he says:
"As a young person, to enter the orchard industry by choice, I am very confused. There is so much uncertainty about trusting government. The government put the ALR in place and has since reduced or eliminated its participation in agriculture in drastic fashion.There's been another interesting event in the past year. It's part of the context that we're operating in and speaks to some of the issues -- that is, the passing of the B.C. Federation of Agriculture as a central farm organization in British Columbia. It's another example of change where an organization probably failed to keep up with the change that was happening."How can you change the rules once you make a commitment? We had already cut down two acres of trees as soon as the crop was picked last fall, and then you changed the replant grant. In order for orchardists to become self-reliant, we must continue to replant. Many growers have been apprehensive because of the costs and are just starting to see the light. Due to this fact you should continue with the original contract until the year 2000. All the paperwork has said that assistance for replant is available until then. How do you expect young people to enter agriculture, when politicians keep backing out of their commitments?"
I was an active participant in that organization for 20 years. I think that the change it failed to recognize is the divergence between aggressive, modern, leading-edge commercial farmers and part-time hobby farm, part-time small-scale agriculture. I feel strongly about that. It also speaks to the way we design policies as we go down the road. There's a very clear line in my mind between those two segments of agriculture, and one is not more important or less important than the other. They're both important. But you have to design different policies for those different groups. There's a certain amount of common ground, but there's a lot of difference, also.
Hopefully, the farm organizations will make a new central farm organization work. That's very important not only for farmers but also for government and the ability to have a good working relationship between government and industry: one that is effective, one that is efficient, one that we can make work.
I also ran into an interesting article in the Western Producer from January, which I think is part of the context that we're operating within in British Columbia. It shows the degree of progress that this industry in this province has made at being self-reliant. This is an article that talks about subsidization of agriculture and talks about farmers in Quebec being the most subsidized in Canada. It quotes some numbers here. I don't actually have a percentage for Quebec, but 24 percent of the net operating farm income in Manitoba comes from government subsidies, 20 percent in Saskatchewan, 10 percent in Alberta and 6 percent in British Columbia.
Again, it reflects the progress, if you will, that has been made in trying to come to self-reliance. It reflects the fact that in terms of the cuts that are being made in the ministry, a lot of those cuts are in dollars that actually go to farmers. If you look at the total budget now in the Ministry of Agriculture, there's less and less -- really a very small amount -- money actually going to farmers in terms of risk management.
I want to simply wrap up my opening comments by saying that a lot of our discussion in these estimates will revolve around the changes that have been made and are being made in the ministry and how they will impact agriculture. A lot of it will also, in my mind, revolve around the future and how we make the agricultural industry and the fishing sector work in a progressive way such that we create jobs and maintain existing jobs.
It's very important that we don't lose sight of the fact that a lot of economic activity is generated by the existing industry and some of the old, reliable commodities, if you will, that are there. I always say that agriculture is there every day, seven days a week, generating economic activity in a lot of communities. We don't want to lose sight of the existing industry we have. At the same time we want to position ourselves for new opportunities.
I think there are some really exciting things that can be done. We met today with the salmon farming industry, for example, and there are some great opportunities in aquaculture -- as I said, in the sport fishing sector -- provided that we can deal with all of the other issues that impact on that, such as the environmental issues.
I want to look a little bit at some of the numbers now. I'm not going to go intensively over all of the numbers, but one of the things that I noticed in terms of the total budget
I want to take a look at the corporate services section because I note that there's only been a 2 percent cut in that part of the budget. There's been a 20 percent cut in the fisheries and food part of the budget. In agriculture and risk management there's been something close to 25 percent. I'm wondering if we could just start out by having the minister comment on what the composition of corporate services is and why it wasn't possible to generate some more of the savings -- presumably the minister had to find $17 million in savings over 18 months -- in the corporate services sector.
Hon. C. Evans: The answer to the member's question is that we should have written the books differently so that it reflected his question before he asked it. We could have guessed that that would bother the hon. member, but in reality, corporate services took its share of the cuts. In fact, a greater percentage of people were laid off in Victoria and Vancouver than up-country -- just in case you're wondering
[ Page 3929 ]
whether folks here protected themselves and laid off everybody else. If that's the subtext of the question, the answer would be no.
When we reorganized the ministry, we took big chunks of the budget that had been in other parts, like information services for more than $300,000, and moved them into this line item. So in fact, corporate services took as much of the cuts as anybody else did, but in the creation of this year's budget, the numbers are added up differently so it appears as though it only has a 2 percent cut. Please don't let anybody tell the story in such a way that it looks like the really highly paid people protected themselves at the cost of everybody else, because that isn't true. And if it was true, somebody would have fired me by now.
[9:00]
J. van Dongen: I wonder if the minister, then, could be a little more specific about what was moved in. Were regional office operations moved in? And I just want to assure the minister that I don't believe all the stories I hear.Hon. C. Evans: Information services at $585,047 and the information part of asset acquisitions at $327,041 are both line items which were previously elsewhere.
J. van Dongen: What all is included in information services?
Hon. C. Evans: Computer equipment, computer line charges and computer support -- teaching people how to do it and putting people on the same system -- is essentially what it's about.
J. van Dongen: Is this part of the computer program, for example, that would look after all of the accounting for the ministry, that sort of thing? Or is it a database?
Hon. C. Evans: Both of those.
J. van Dongen: If I looked at last year's budget, then, where would I find it?
Hon. C. Evans: About $600,000 of it you wouldn't have found, because it used to be handled centrally by government and not by the ministry. The rest of it was previously in the Agriculture and Fisheries divisions as a much smaller item.
J. van Dongen: If it's being moved into the ministry from other parts of government, is that more of a common theme now -- that every cost is going to be allocated to the ministry on something like accounting?
Hon. C. Evans: No.
J. van Dongen: Just so I'm clear, that's not part of a more rigorous cost-accounting process to allocate costs to where the actual costs are incurred. It's not part of that kind of policy?
Hon. C. Evans: It has to do with the expected efficiencies that government thought it would find when it got rid of BCSC. Last year what government did was bring the whole thing into government and say: "We can do it better." It turned out that they couldn't. We actually could do it better, so they gave it back to us.
J. van Dongen: So is the minister saying that we can save government money by expanding the ministry, making it bigger?
Hon. C. Evans: I'm saying we can save government money by taking any function of government and putting it into this ministry, where we can deliver it better than it presently is from wherever they do it.
J. van Dongen: I note from one of the briefing documents that part of the corporate service program -- and there's probably three there that I want to question the minister about a little bit -- is central support. Maybe the minister could clarify what central support is.
Hon. C. Evans: It's a group that looks after rent, office supplies, vehicles and basically all the stuff that you need to do your job.
J. van Dongen: Just so I'm clear, that's purchases of supplies and services for the ministry itself. That has nothing to do with services being provided by government to the ministry?
Hon. C. Evans: I think the answer is yes, your understanding is correct. We lease vehicles from a central government agency, but the lease cost is attributed to this ministry.
J. van Dongen: How many vehicles is the ministry leasing in the coming year at the present time?
Hon. C. Evans: One hundred and twenty-one at the present time.
J. van Dongen: So there are 121 vehicles leased. There are no purchased vehicles being used by the ministry.
Interjection.
J. van Dongen: I guess that was a yes. We're getting really efficient here. Are there any employees, then, in addition to the people driving the 121 leased vehicles, that are collecting a certain amount of mileage? Secondly, how do you determine who gets a leased vehicle? What's the policy on that?
Hon. C. Evans: The answer would be yes to the first question; there are people who are paid mileage on their own. The answer to the second question is: it's generally assumed to be more efficient to supply a vehicle if you drive more than 15,000 kilometres in your own vehicle in a given year.
J. van Dongen: It seems to me that from a tax perspective, the latest thinking is that there's not much benefit anymore to someone having a leased vehicle. I'm wondering: is there any consideration in this ministry -- or within the government generally -- to revisit the policy, or any other policy, for tax reasons? Is this considered the ideal way to operate in the future -- leasing vehicles?
Hon. C. Evans: That would be a government decision, not a ministry decision. We're going to operate within the context of the way government operates. We'll review how many vehicles we lease inside this ministry. But a good question for the Minister of Finance would be whether or not government decides to lease vehicles.
J. van Dongen: On the issue of leased vehicles, then, this ministry is governed by general government policy to a significant
[ Page 3930 ]
degree. You don't have an option of, say, deciding that you're not going to lease any vehicles, but to deal with transportation in some other manner?
Hon. C. Evans: Yes.
J. van Dongen: I guess I'm not clear on what the minister's answer means. Is he confirming that the ministry has no option but to lease vehicles, because that's government policy?
Hon. C. Evans: Yes, the minister is confirming that that's what he meant -- except for the option of paying mileage.
J. van Dongen: One of the other categories of corporate services is personnel. I'm wondering if the minister could tell us how many staff members, or FTEs, are engaged in delivering human resource programs in the ministry.
Hon. C. Evans: Six.
J. van Dongen: Is there any consideration for review in that area? It seems to me that at some point, at some size of the ministry, it probably isn't economical for it to have its own personnel unit. Is there any discussion in that area?
Hon. C. Evans: We did reduce it by one. I want to ensure that if the ministry continued to get smaller, then we'd reduce it some more. But I want to give a little bit of credit where credit's due. One of the things that those folks do is help sort out the staffing issues generally. I think the hon. member mentioned that something like 90 FTEs are gone. Of all those people, I don't know of any individuals who are actually unemployed today, who didn't take early retirement, transfer somewhere or find a job. Having people in human resources assist in that process is, I think, hugely important to get through this period of time with as little personal travail as possible visited on people.
J. van Dongen: I certainly agree with the minister's comment. In terms of the six FTEs involved in delivering personnel programs, could the minister give us a little bit of a breakdown on how many are involved in delivering routine personnel services, such as accounting and dealing with pensions, etc.? And how many of those FTEs would be engaged in human resource - type programs for the ministry staff?
Hon. C. Evans: The breakdown of the six FTEs is: four officers engaged in hiring people, changing or assigning classifications and training people for their work; and two support staff. They don't deal with pensions; that's done elsewhere.
J. van Dongen: I noted from the annual report on page 31 that the ministry has been involved in effectiveness reporting and performance management workshops in the past year. Was this a one-time program, or is there going to be ongoing activity in this area? Maybe the minister could just tell us what is being done in terms of those types of programs.
[9:15]
Hon. C. Evans: The program is intended to be ongoing. It's intended to be able to prove that we're doing a good job at what we say we're going to do, so that when you ask questions in estimates, I can actually justify my statements that we are operating a good ship and delivering what we say we'll deliver.J. van Dongen: Is there any sort of annual report that attempts to measure the results of these training programs? Is anything being done to sort of give an overall report on the impact of that?
Hon. C. Evans: The intent is to operate more efficiently ourselves. An example of that is the changes we've made in crop insurance, brought forward by the people who deliver the service, debate it, try to figure out how to do it better and go out and do it better. I hope that the proof for the member is in the delivery of programs as opposed to the production of a report justifying ourselves.
J. van Dongen: Is the delivery of employment equity programs part of the personnel branch, or is that a separate staff?
Hon. C. Evans: Yes, it's part of the personnel branch.
J. van Dongen: I notice that on the ministry organizational chart in the annual report there is a position entitled "Executive Coordinator, Women's Programs -- Employment Equity, Victoria," which reported to the deputy minister. Is that position still in place in the new chart?
Hon. C. Evans: The position doesn't exist in the same way. It's been transferred into the personnel branch, and the individual that's delivering that job also has other jobs to do.
J. van Dongen: Could the minister confirm the amount of the budget that's allocated to the employment equity programs? Is that a separate line item? Could the minister confirm the figure?
Hon. C. Evans: It's $67,000.
J. van Dongen: What is the change from the previous year? The reason I'm asking the question is: is this an ongoing program within the ministry and within government, and is there any level of reduction that could take place over time?
Hon. C. Evans: It's an ongoing program of government which will be eliminated as soon as you see racial, gender and class parity on this side of the table delivering the answers to your questions. We're working there as fast we can; then we'll lay this person off for good and retrain him to do something else.
J. van Dongen: In the administrative review section of the annual report it also makes reference to freedom-of-information requests, and I'm just curious
Hon. C. Evans: Well, hon. member, you could really help us with this one. We used to have two people, and we had to reduce it to one. This person is really overworked. You haven't put in any fewer requests, yet we have fewer people. So I'm going to ask you to help us. We have a 50 percent reduction here; we're really proud of it. We need your help. We're still getting about 80 requests a year, and we assume it's mostly generated by yourselves. So if you could just cut that to 40 over the next year, we'd have a heck of a lot easier time delivering the service.
[ Page 3931 ]
J. van Dongen: I've got an easier answer for the minister: just produce the documents when we ask for them, and you don't need an FOI section.
Also included in the corporate services programs is the Columbia Basin Trust. I realize that's something completely separate and apart from agriculture, and I guess it's in this ministry because of the minister's involvement in that trust. It talks about a $2 million operating grant. I wonder if the minister could describe for me what the purpose of the trust is. Is that money going to be spent in this fiscal year? If so, what is it going to be spent on? Could you just describe a little bit what that money goes for?
Hon. C. Evans: I'll do my best, but I'm going to put on the record that this is extemporaneous, because none of the folks able to answer the specifics of the member's questions are here right now. Firstly, what is the trust for? The trust is created by a statute to create an institution that we share provincially with municipal levels of government. The function is to invest moneys in such a way as to mitigate the job creation -- economic development opportunities that were bypassed by the storage capacity, basically, dictated by the Columbia River Treaty approximately 30 years ago.
The trust receives an administrative allotment of $2 million a year for a limited period of time. I'm not sure, but 12 years sticks in my mind, but I can correct that tomorrow if it's not correct. The reason for that is that the trust was charged with investing moneys which would then produce a dividend, and they would be self-sustaining. We negotiated that in the years it took them to invest the funds and receive a dividend, the province would assist them with administrative costs. As to where it goes, I believe 18 members of the trust live all over southeastern British Columbia. A huge amount of the administrative cost is the cost of bringing them together, plus they have a very strict and mandatory consultative obligation. They are required to hold many community meetings and consultation processes, and one annual general symposium in which they actually have to subsidize bringing the people of a region together. Some people pay, and other people are assisted with travel expenses. Plus they maintain a small staff of about six people in an office in Nakusp.
J. van Dongen: Is my understanding correct that there's no direct linkage to Agriculture -- that this trust is engaged in a range of projects in the community?
Hon. C. Evans: That's correct. When I was the Minister of Transportation, it was a Transportation function.
J. van Dongen: So part of this $2 million obviously goes to the functioning of the trust, but will a certain percentage of this money end up in projects in the community? If so, how much?
Hon. C. Evans: The difference between the actual cost of administrating the trust and the $2 million is likely to vary over the years that it is delivered. The ability of the trust to use that money for community projects will unroll over time, and I can't give you a specific. The projects are actually intended to be delivered with investment funds that are delivered to the trust and through other means. And the $2 million
J. van Dongen: Somewhere in these statements I saw a figure of $50 million connected with this trust. Am I correct in understanding that those are capital funds that are put into an account, the interest from which is used to fund these projects?
Hon. C. Evans: No. The $50 million which I think you're referring to is an annual transfer. It happens one year between the province and the Columbia Power Corporation, and the next year between the province and the Columbia Basin Trust. The two institutions are required to invest that money in power generation activities as a 50-50 business arrangement. The interest on whatever profit there is from power generation activities constitutes the annual dividend of the trust that we'll have to operate.
J. van Dongen: The final area under corporate services that I want to talk about a little bit is public affairs. I'm wondering if the minister could confirm how much of this budget of $11.8 million is planned for public affairs.
Hon. C. Evans: It is $980,000.
J. van Dongen: What was the actual expenditure in the past year for public affairs?
Hon. C. Evans: It was $690,000.
[9:30]
J. van Dongen: Could the minister detail the increase from last year?Hon. C. Evans: Hon. member, last year we didn't actually have to fight the federal government on the subject of the Mifflin plan; we didn't have to fight the United States on the subject of the treaty. We were not engaged anywhere near as much in the dissemination of public information on the Fisheries side. So I guess you could say the difference is that the ministry is actually doing its job, in a larger sense, on the Fisheries side.
J. van Dongen: In terms of the $690,000 in actual expenditures last year, could the minister provide a breakdown between Agriculture and Fisheries?
Hon. C. Evans: I can't really do that because it's the same group of people that do it. That's a
J. van Dongen: I take it that would be the same answer, then, for the figures for the current year, the budget. Could the minister give us an indication whether there's a breakdown in the budget between Agriculture and Fisheries?
Hon. C. Evans: No, it's not broken down.
J. van Dongen: Could the minister break it down, then, between Agriculture and the Food and Fisheries part of his ministry? I do have a document here that does break down the figures, certainly historically, between the Agriculture division and the Fisheries and Food division.
Hon. C. Evans: Okay. Share the document, and we'll try and respond to it.
J. van Dongen: Well, the document I have is the '96-97 budget overview.
[ Page 3932 ]
Hon. C. Evans: While staff study it, how about if the member just rephrases his question one more time to see if we're not quite getting what it is that he wants to know?
J. van Dongen: Well, I'm interested in a breakdown between the public affairs budget with respect to Agriculture and Fisheries and Food -- those three items, if I could get them. Now, possibly we need to look at a further breakdown. But that's what I'm interested in, and if we can't do it tonight, then maybe we can do it tomorrow or whenever.
Hon. C. Evans: This document is part of the internal planning mechanism of this division, and the director of this division provided this as of August 1996 to the executive of the ministry, saying: "Here's what I guessed I would spend, and here's what I've actually spent up to this time." I don't have a plan for this fiscal year from this director that looks like this to compare it to. Nor do I know, actually, at this point in the fiscal year, if one exists. But if you want to ask me, I'll go ask her and try and bring it back to you.
J. van Dongen: Yeah, as I said earlier, if it's possible -- maybe it isn't possible, as the minister said -- I think I would be interested in the breakdown on this vote in this budget year that we're looking at and in the previous year's breakdown based on the Agriculture division, and then the Food and Fisheries division if we could break it up between Food and Fisheries. I imagine that Food is Buy B.C., for example. If that's possible, I'd be interested in that for those two years.
Then I have another question in this area that maybe comes at it in a little different way. What are the various types of expenditures included in public affairs? I assume there's some staff time, staff that's internal to the ministry. Are there purchased print materials, for example? Is there advertising of various sorts?
Hon. C. Evans: The columns appear to be staff budget: benefits for staff -- basically wages; and a line item for contracts -- that would be with an advertising agency. There are two separate kinds of advertising: one is statutory advertising, when we're required to do so; and the other is advertising by choice, when we have a story to tell. There's another item of about $100,000 to assist industry to produce production guides, basically, for assisting in communicating with their own industry.
J. van Dongen: In terms of the staff wage and benefit component, I'm interested in the number of public affairs staff in this budget or at the present time, compared to last year.
Hon. C. Evans: It was nine before; it's now eight. The budget this year is for about $460,000. I don't have the specific personnel budget for last year, but this year's is presumed to be one-eighth larger than that.
J. van Dongen: In terms of contracts for advertising, is all of the advertising placed through some kind of firm? For example, is newspaper advertising done through an outside firm by contract, or is some of that done directly by ministry staff?
Hon. C. Evans: It's done through an agency.
J. van Dongen: So all of the advertising -- print and television -- is done through an agency? I just want to confirm that with the minister.
Hon. C. Evans: Yes.
J. van Dongen: I'm going to assume that the statutory advertising that needs to be done is fairly consistent from year to year. Perhaps the minister would confirm that or otherwise.
Hon. C. Evans: Yes, I can confirm that the amount of money spent is about the same, and the best example of that is the production of the annual report.
J. van Dongen: Does that category include
Hon. C. Evans: Yes, it's part of the overall budget, but it's not part of the statutory budget.
J. van Dongen: I guess I'm interested in the amount of dollars going into the production of pamphlets, brochures, that sort of thing. What percentage of this budget of $980,000 is going into the routine production of brochures and extension documents, which are used by the ministry in terms of dealing with the public, farmers and fishermen?
Hon. C. Evans: It's about $50,000 internally, and we do about another $100,000 externally.
On that note, I move that the committee rise, report resolution on the estimates of the Ministry of Municipal Affairs and Housing and report progress and goodwill on the estimates of the Ministry of Agriculture, Fisheries and Food, and ask leave to sit again.
Motion approved.
The committee rose at 9:45 p.m.