[ Page 4711 ]

The House met at 10:06 a.m.

Prayers.

G. Abbott: Delta South beat me to the punch yesterday in introducing my son, so I am going to take the opportunity today to introduce my son Brant Abbott, who is here in Victoria with me this week, seeing what the heck it is that dad does when he is away from home all the time. I'd like the House to make him welcome.

The Speaker: I think we'll ask Brant for a full report.

Orders of the Day

The House in Committee of Supply B; G. Brewin in the chair.

ESTIMATES: MINISTRY OF FINANCE AND
CORPORATE RELATIONS AND
MINISTRY RESPONSIBLE FOR
INTERGOVERNMENTAL RELATIONS
(continued)

On vote 31: minister's office, $348,000 (continued).

F. Gingell: I appreciate that the minister may well feel that this is going back over some ancient history, but it really is the first opportunity that we've had to have a debate between the two of us the issues that surround the documents that were tabled a year ago relative to the budget. The minister will appreciate that the information about what had happened prior to that and the information that the ministry had been receiving from their own officials didn't become public knowledge until September. At that point, of course, the House had already risen.

In dealing with the issues of the revised budget that was tabled both by this minister and by his predecessor for the year ended March 31, 1996, there were, in my opinion, three major items.

The first was the issue of forest revenues. The minister and I had some discussion about that at this time last year, but it is only subsequently that it has come to light that the minister, as Minister of Forests, had written a note to the Minister of Finance in December of 1995 -- the week before Christmas -- indicating that revenues from forests were running fairly substantially behind the original projections. So perhaps as a first question, could he advise the committee if his concerns dealt only with the small business program or with all forestry revenues?

Hon. A. Petter: This has, of course, been well canvassed, and two reports were prepared by my previous deputy outlining the chronology. I take it that the member is aware of those reports.

The communication the member is referring to was, I think, a covering note that I attached to a report on the small business program and signed off to transmit the small business numbers in December of 1995, I think it was, to the Minister of Finance. That covering note indicated that the small business revenues were not performing as well as was hoped and that the Minister of Finance should take account of that.

I don't have the numbers in front of me, but my recollection is that it led to the Ministry of Finance then adjusting their forecast for small business revenues downward substantially in January and February -- in excess of $100 million, I think. It did not pertain to other forest revenues, which the Ministry of Finance continued to forecast as being ahead of what was previously forecast.

So the note the member is referring to contained a letter of transmittal, which I signed to communicate the concern around small business. That concern was then followed up by the Ministry of Finance, and downward adjustments were made in the forecast with respect to the element of forest revenues that the note referred to; namely, small business revenues.

The ultimate problem that arose in forest revenues at the end of the day was not in the small business sector, because the forecast, to my recollection, came in pretty close at the end of the day once these downward adjustments had been taken into account. It had to do with other components of overall forest revenues, which were not the subject of the note that the member is referring to.

F. Gingell: I appreciate that a great deal of information has come out, but this really has been the very first occasion when we have had the opportunity to sit down and have a two-way exchange.

The issues that you raised in your note -- without a media filter in the middle -- dealt with market prices and the size of the harvest. When we look at the final causes of the reduction of income from other classifications of forest revenues -- the timber licences and the tree farm licences -- they are the same issues that caused the reduction in those revenues. Or is that not so?

Hon. A. Petter: I guess I want to be careful, in answering this, to be responsive to the member's concern. The small business program always has concerns that are peculiar to it, because, as the member will appreciate, the revenue to the small business program is a function of bids. Therefore it's much more sensitive to market fluctuations in terms of the bids received and the volumes harvested. If people have bid high and the market goes down, they're going to be less inclined to harvest the timber in the short term. There's also been a problem of undercut within the small business program. So revenue streams to the small business program have not necessarily tracked revenues overall.

[10:15]

[ Page 4712 ]

based on a bid structure. Therefore they are subject to very different forecasting variables and factors, which we did discuss to some extent last year and that I'm not fully conversant with.

I should also say that while I've become more conversant over the course of the last year with how forest forecasting is done, as Forests minister this is not an area which I was immersed in. My major role was to ensure good forest management. There is a branch within the Ministry of Forests, as the member knows, that does these kinds of forecasts and calculations. My basic role as minister was to occasionally act as the conduit to transmit that information from myself to the Minister of Finance, which is what indeed happened in this case. But it would not have been information in which I was immersed. The Ministry of Finance has a direct relationship with the Ministry of Forests in gathering this information. For that reason, in the information that was released in the material last year, there was not much in the way of communication. This may have been the only. . . . There may have been one other memo from myself as Minister of Forests, because, frankly, forecasting was not an area that I as Minister of Forests took a major role in. That was an area for the Minister of Finance, and my role was to transmit.

The short answer is no. The small business program often has its own peculiarities and sensitivities that affect its revenue stream. As Minister of Forests, I simply communicated the information that officials had asked me to communicate through the Minister of Finance. As I now have discovered, the Minister of Finance and her officials responded to that by making adjustments in the relevant forecasts.

I. Chong: I ask leave to make an introduction.

Leave granted.

I. Chong: Visiting us today from Campus View Elementary School, which is a school in my riding and where I attended when I was in elementary school, are 26 grades 5 and 6 students who are here to learn about government and history -- with some delivered in French, as I understand it. They are accompanied by several adults and their teacher Ms. Gifford. Would the House please make them welcome.

F. Gingell: Minister of Finance and ex-Minister of Forests, there is within the Ministry of Forests a division that is responsible for the whole process of administering forest revenues from the major sector. Is the minister aware of any notification forwarded by them that their estimates were going to be so far out -- that the revenues coming in were going to be so far under the original budget?

Hon. A. Petter: The Ministry of Forests does do revised forecasts throughout the year, but my recollection. . . . As I say, this material would have been of more immediate interest, while produced in the Ministry of Forests, to the Ministry of Finance at the time. I'm sure I reviewed it over the course of the last year, some time ago, but really it's in the material that was released over the course of the last year concerning forecasting. It was material concerning Ministry of Forests estimates and the like. Frankly, I don't have either the recollection or the resources here to go through that material in detail and refresh my memory as to what was communicated and when.

I am aware of the issue of the memo that I sent, because obviously I went back and reviewed the circumstances regarding that and also acquainted myself with what the response from the Ministry of Finance was to that memo. Once received, then I responded to that. But additional communication concerning Forests estimates was released along with the FOI information that was released last fall. Maybe the member wants to take that up with the Minister of Forests during Forests estimates, although it does pertain to a previous year. But I'm really not sufficiently conversant with the material to be able to provide detailed answers, which I think are already known to the member, if he went through -- as I think he did -- the material released last fall.

F. Gingell: Moving on from forest revenues to the $43 million item for the funds that were withheld by the federal government from transfer payments because of the three-month residency requirement that the government put onto new residents of this province before they could claim welfare. . . . That happened in the fall, at the end of 1995. The federal government stated very clearly at that time that there was no intention to refund those funds. I haven't got the press releases, the press clippings, but I remember them reasonably well. They said, "We'll go to the Supreme Court of Canada," and that was where it was anticipated that this would end up.

For an accounting practice, I'm sure we would all be on the same side, in that under these circumstances it would be inappropriate to record such an amount withheld as revenue. But as the minister is aware, the province went ahead and did that. When the auditor general came to deal with the issue later, the amount was reversed.

Did the government seek any opinion on the propriety of including that penalty or that withheld amount in revenue?

Hon. A. Petter: I'm at somewhat of a disadvantage here, because these are really matters that fall within the purview of Treasury Board rather than treasury. So while the staff here have some knowledge of the general matters that are being inquired of, they are not the ones who are directly knowledgable. Also, of course, the period of time being talked about is one that was more than a year ago.

So in a general way, I think the recollection that staff have provided to me is that there would have been, and likely were, some discussions with the comptroller general in producing the budget documents concerning the accrual of that revenue initially. Obviously, when the public accounts finally came about, that amount was not included.

Again, if there is more specific information that's wanted, I would have to refer back to Treasury Board staff and have them inform me of the events that occurred in the preparation of the budget for the previous year, and the staff here are not really the appropriate staff to do that.

F. Gingell: The question is relatively simple. So perhaps the minister could advise me later on whether or not an opinion was sought from any accounting authority on the propriety of including the amount that had been withheld by the federal government in revenues.

The third item that was so far out was, of course, the issue of the corporation capital tax. There has been some. . . . I appreciated the minister arranging the discussion between myself and the official from the budget group, Mr. Foster, to discuss this, but Mr. Foster and I did not arrive at any agreed conclusions. It is my supposition that a cash basis means a cash basis -- the amount of funds received. It is Mr. Foster's supposition or position that the federal government is the agent of the provincial government. Therefore any money that is collected by the federal government on behalf of the provincial government would be included on a cash basis.

[ Page 4713 ]

Early on in my career as an MLA I received a briefing on the methodology of the collection of all taxes and what was included in what year and how it was recorded. Some of them, of course, were pretty straightforward, but some of them were more complex. At that time, I didn't finish up with the opinion that at any point you would include in revenues from corporate income taxes some amount that wasn't readily received. There are always settlements to be made. You always get to the end of some period -- the federal government do it on an ongoing basis because there isn't a definitive tax year the same way as there is with personal income taxes -- and all the calculations and all the returns are added up and assessed, and adjustments are made.

[I. Waddell in the chair.]

So to me it is a surprise that the thought that there might be some additional funds floating around somewhere in Ottawa that would be included is contrary to my understanding of the way these things have been recorded in the past. Is my opinion shared by the minister?

Hon. A. Petter: It is my opinion that hindsight is 20-20. If that's the opinion of the member, then I share it.

In a federal system in which we have one level of government collecting taxes or duties or behalf of another level of government, and you try to marry that fact with a cash system of accounting -- which is the case in the situation the member indicates -- there may be difficulties where the federal government acting as agent for the province is thought to have collected moneys, and that -- due to some miscommunication or misunderstanding, or miscalculation by the federal government or by the province, for that matter -- turns out not to be the case. I think there are perhaps some important lessons that we can learn from this example in terms of trying to make sure that we and the federal government are more in tune with what exactly has been received and is due us.

But I don't think that in principle there is a problem with the approach that is taken by the ministry, and that was taken in the previous year, which is to treat as cash received moneys that the federal government was believed to have in hand and that were due to the province. There's been discussion, as the member indicates, with my officials concerning how this came about, and a subsequent memo was received from the federal government that supports the account that was given. In this case, there was an expectation of money to be received from the federal government -- that it was believed the federal government had in hand and was holding on behalf of the province -- that, as it turned out, was not forthcoming.

I don't think that's an abrogation of the principles of this kind of accounting. It is a problem that resulted from bad communication and the fact that the collector of the taxes happens to have been so far removed and administratively distant from the ultimate recipient -- namely, the province.

Are there lessons we can learn from that? Can we improve? I'm sure there are, and I'm sure officials are doing so, to ensure that there is better communication with the federal government in the future and that we come to as firm conclusions as are possible concerning the money that the federal government has collected on our behalf. On the other hand, we don't want to err on the other side by pretending that money that the federal government has collected on our behalf and that is going to be forwarded through to us by the federal government, as our agent, is not money received. To try to somehow pretend that that money is not the money of the province would be equally wrong. So I think there are lessons to be learned here, and I think hindsight is 20-20. I think the positive thing is that we can learn from that 20-20 hindsight and improve communications. I'm sure officials are acting on that -- and in that spirit -- in this regard.

[10:30]

Hon. A. Petter: I can't confirm that, because I don't have information concerning the precise time frames. I think the short answer here is that the officials in this regard did nothing different in respect of their approach here than they have done in previous years. What may have been different here were the particular issues around this countervailing duty and how it impacted. But the approach taken by the officials in respect of the federal government and its role as a tax collector on behalf of the province was no different in respect of this calculation than it has been in previous years.

F. Gingell: That answer surprises me. It is my understanding from discussions that I've had that this was an exception, that this was the first time there had ever been a set of circumstances where the provincial government believed there was going to be a bubble of corporate income taxes arising from an unusual circumstance, which was the refund of the softwood countervail. My understanding was that this was different and hadn't happened before and was an exception.

Hon. A. Petter: As I say, the process that was followed by the officials was no different. What may have been different in this case were the facts that fed into that process -- in particular, the expectation of a substantial amount of money due as a result of the refunds occurring through the discussions and resolution of the countervail. That factual pattern was no doubt different. It meant that the dollars involved and the uncertainties involved, in retrospect, it turns out, were different. But the process applied to those facts was no different. I want to clarify that, because I don't think the two points are inconsistent. There may have been an unusual consequence in this regard because of the particular facts around the countervailing duty, but the process followed in ascertaining the amount of revenue due was no different from the officials' point of view.

F. Gingell: The minister has sent me certain copies of documents recently. I presume that I got them all, but in there I did not see a confirmation from the federal government that they had advised the province that there was a likelihood of a bubble of corporate income tax. What I did see was a letter from the federal government that says: "Yes, we have gone and done what you asked us to do, which was to review the corporate income taxes of the forest sector. We have done that, and the result is that, sorry, there aren't any further funds." Maybe my interpretation is different. I don't have the letter here, but my recollection is that it was a process which they followed through on but not one where the federal government indicated they agreed with the province that there were additional revenues coming.

Hon. A. Petter: The memo that I was referring to is the memo that was obtained from the federal government on May 

[ Page 4714 ]

8 in an effort to provide some confirmation of the process. Other specifics, as I understand it, are protected as income tax information and the like. The member has heard from officials in respect of why they made the calculations that they did. I think the member does have the memo that I'm referring to, which is the memo of May 8 to the province from the director general of the audit directorate of the respective branch of the federal government.

F. Gingell: My recollection of that memo is that it says, in effect: "We were expecting to have received more, and it hasn't arisen. Could we please prevail upon you to do some further review and advise us accordingly?" I note that May 11 was before voting, and I'm surprised the government didn't make an announcement: "Corporate income taxes may be substantially lower than originally anticipated."

Hon. A. Petter: I'm a little confused. The memo or letter that I was referring to was May 8, 1997.

Interjections.

The Chair: Could we get our memos right?

F. Gingell: I thought you were referring to May 8, 1996. The letter I remember is dated September. I think there's a document. . . .

Interjection.

F. Gingell: I probably don't.

Hon. A. Petter: Well, if the member does not have the letter of May 8, 1997, which I thought he did, perhaps he doesn't have all the information I'm referring to. I'll be happy to make sure that he receives a copy of this memo.

F. Gingell: On March 12, 1996, when the work was proceeding to complete the estimates, there was the famous lunch held in Vancouver. The minister shakes his head, but I sincerely believe that there was a conspiracy to hide the truth.

I see a voucher that is for a lunch between Brenda Eaton, the Deputy Minister of Finance; Lois McNabb, from the Ministry of Finance, in charge of the projection and administration of revenues; Tom Workman, who I believe was in the public relations side and was the official that dealt with public relations; and Tom Gunton, who was the Deputy Minister of Environment, Lands and Parks. One can understand a meeting of those three, perhaps to talk about some financial issues in the Ministry of Environment, Lands and Parks, but that clearly was not the issue.

That same day, a memo went from Brenda Eaton to Chris Lawless and Doug Foster, the two people who are responsible for preparing this stuff: "General: Cautions, I believe, are well understood and documented." What does that mean? Well, the cautions can only refer to the substantial volume of information that we have seen flowing from people who were responsible for forecasting and tracking revenues to the more senior people, that revenues were not being realized and that the situation could be well described, as it was, as a surplus of optimism.

"In particular, government needs to be aware that very significant measures will be required on the expenditure side if the revenue doesn't materialize, but we have repeatedly made that point." So they're saying: "We, the professionals within Treasury Board, within the Ministry of Finance, have repeatedly said what we believe. End of story; forget it. I'm now moving into budget production mode. So we've said our piece, we have lost this battle, and now we have to move forward into budget production."

It is, as we see, the final stages, because the date of this memorandum is March 12 -- the memorandum from Brenda Eaton, who is no longer in government, to Lois McNabb, no longer in Finance, to. . . . The other person at the meeting, at the lunch was Tom Workman. Is he still with the Ministry of Finance?

Interjection.

F. Gingell: Well, one out of four.

If the minister were sitting on this side of the House, would he not believe there had been a conspiracy?

Hon. A. Petter: I can't project what being in opposition does to one's mind in terms of forcing one to tortured conclusions. But I would say this: first of all, the specific events and meetings the member is referring to occurred prior to my becoming Minister of Finance, and I'm just not in a position to speculate on what the meetings were about and why people were there, other than to say that meetings between Finance officials and Treasury Board, which is a central agency of government -- any number of meetings -- occur all the time.

Apart from that, I do want to address and put into context this general picture the member paints as though there were some kind of attempt to make decisions that did not reflect a true picture as was seen at the time of forecast. Ultimately, as I think the member acknowledges and knows, while the forecast numbers -- the expectations regarding the budget -- are based on a range of information, they are the responsibility of the Minister of Finance. In this budget that I introduced, I made it clear that I was bringing forward forecast assumptions that were inconsistent with my own ministry officials' advice, and I said, very transparently, why I was doing that.

I want to put this into context. Let's go back to 1993-94. In 1993-94 the advice of Finance officials was to forecast certain revenues. That advice, as I understand it, was followed, and the revenues came in $500 million in excess of that forecast. In '94-95 the Minister of Finance made the decision that she made in respect of that budget, based, I assume, upon advice. I don't know how closely it corresponded to the advice of Finance officials, but I assume it followed it fairly closely. The forecast in that year was $800 million beneath the actual revenues that materialized.

So there was a previous history of two years in which the advice received from officials, perhaps not surprisingly, was on the conservative side, to a greater extent than this past year's forecast proved to be on the optimistic side. There was a greater error on the other side in forecasting in those previous two years.

In crafting a budget, it's not surprising that those who are responsible -- and ultimately the Minister of Finance -- will not just look at one source of information but will look at a range of information. As the member is aware, the range of information that was available to that minister when she put her budget together included private sector forecasts which saw continued growth in the economy and were considerably at variance with the more conservative picture that was being painted by some in Finance. Indeed, in the election that fol-

[ Page 4715 ]

lowed, the member's party chose to go with some of those more optimistic scenarios and, I think, forecast revenue growth based on a GDP growth of 2.5 percent. The budget was based on 2.7 percent.

Having been overly conservative for two years, it turns out that the slowdown in economic growth that was projected in the previous two years and didn't materialize did materialize in the third. That strikes me as an unfortunate happenstance and one that the opposition has tried to exploit to political advantage, but it doesn't strike me as being particularly supportive of any sinister ex post facto scenarios that the member has suggested.

I'd also recommend that the member take a look at the table that was published in budget documents that sets out a comparison of provincial revenue forecast errors amongst provinces in the period from 1981 to 1995. It shows that the average variance, looking both high and low within B.C. over that period of time, has been in the range of 4 percent. The error in the budget that the member seems to think was so problematic was 2.2 percent -- well within the historical range of variance.

So based upon all of that, and without reading it through the less-than-rose-coloured glasses that members of opposition parties are forced to don in order to approach these issues, I find that there's a very different and much more understandable story, which unfortunately has not been much told.

In fact, judgments were made that proved to be wrong. But that's a very different thing than what the member is suggesting, which is that judgments were made knowing they were wrong. I don't believe that's the case. I don't think the evidence supports that. Just as I wouldn't suggest that the Finance officials and the Minister of Finance in the previous two years, when they were wrong on the other side of the equation, knew they were wrong, I don't believe that that was the case in the year's budget that they member was referring to, either.

[10:45]

I am in no way arguing about the differences between original budget numbers and final results. A year goes by: who can foretell the future? If we could all foretell the future and know what was going to happen in tomorrow's stock market, we'd all be doing very, very well.

What we're talking about here are the differences between numbers that were put down as revised forecasts in late March 1996 in relation to the year ended March 31, 1996. I'm not arguing and would never dream of arguing about the final differences, unless I thought they were wrong. I'm purely and simply talking about an interim set of financial statements.

In business and in organizations that we have been involved with, we all get interim financial statements. The board of directors of community associations or of corporations get statements every month, as you do, that tell us how we're doing, how we're going along and how we're doing as to budget. By the time we get to the year-end, those numbers should be getting pretty definitive.

What happened here was that on April 30, one month after the fiscal year was over, Mr. Minister, a revised forecast was tabled that was out dramatically in three areas: the issue of the corporate income taxes -- we're talking about one month later; the issue of the withholding of the federal transfer payments; and the issue of forest revenues. This isn't differences in economic growth; this isn't whether you forecast 2.6 or 2.1. The year is over; it has all happened. You have your sales tax revenues in, and they will not be subject to adjustment. On April 15, the returns for consumer tax for the month of March were all filed, they were in your computers, and the numbers were all there or were in the process.

My argument is not about forecasts. My argument is that at the moment of time on April 30 when this government or its predecessor tabled this year's budget, it included a revised forecast. On April 30 you knew, I believe. . . . I'm not saying that this minister knew, but there clearly were indications in these three areas that you were substantially out. Of course, what it did was. . . . Any one of those items, treated differently, would have turned the word "surplus" into the word "deficit." The word "surplus" was a major plank in the election campaign of the NDP party. It's just a fact that any one of those three items could turn surplus into deficit.

Hon. A. Petter: Well, this was an issue that we did debate in detail last year. Of course, one of my first acts as Finance minister -- and one I paid quite a price for -- was to come forward at the moment when I felt confident in the numbers, although they too were subject to change, and indicate that in fact what was still a forecast for the previous year's numbers was subject to change and that, as a result, the budget for the previous year would be in a deficit.

I can just tell the member -- and this is anecdotal; I think I said this last year -- that I know what he is saying. The conspiracy theory he is creating is not the case, because I know that when I became Minister of Finance, which was towards the end of June, I met with the outgoing deputy. I was informed of risks -- I think I said this before -- to the forecasts for the close of the previous year that indicated that we could well face a possibility of that number going into a deficit as opposed to a surplus. But it was still uncertain at that time.

Over the course of the ensuing ten days, which is the ten days I had as Finance minister before I got to table the budget, there started to be the view that it was likely we would be into a situation of deficit. Then that crystallized, I think, a few days after the budget -- and all of that documentation has been released. Once it crystallized, I made it known in a way that I have said I wished I hadn't made it known. I wish I had done it in a more open way than venting on a Friday afternoon to a single reporter.

Be that as it may, from my personal experience, the information I was given and that I processed in my effort to make that information known as soon as I felt it was in a form that had certainty attached to it just contradicts the member's view of the world. All I can say is that in this world of accrual accounting, in the world in which adjustments are made. . . . And the federal government, the member will remember better than I, within the space of a month said that deficit projections went from -- what was it? -- $19 million to $9 million, or something, with respect to the previous year.

Accrual accounting does create levels of uncertainty that do not make it possible to close the books with certainty until the following fall and December.

Interjection.

Hon. A. Petter: Well, hopefully sooner.

[ Page 4716 ]

Perhaps the member's initiative to encourage the government in its efforts to get its accounting system revised will assist in closing the books more quickly and more accurately. I think the answer here, frankly. . . . I think there's a problem. I do acknowledge that there's been a problem that's been created here in terms of credibility. I think the answer is to be more transparent. In terms of forecasting -- and again, I'm talking more about forecasting prospectively -- in this budget I have tried to be extremely transparent in terms of setting down my assumptions and the ministry and private sector forecasts for the future. I'm prepared, as I have been in estimates debate, to be as transparent as I can on other issues. But I just cannot accept the member's account, because it does not correspond with the realities I faced in becoming Finance minister towards the end of June.

The Chair: Hon. members, I would like to express a little concern that we are redoing some history. The purpose of the estimates is to deal with the issue of this year's estimates, not the previous years' estimates, forecasts or whatever. I would encourage members to move to today's estimates.

F. Gingell: That gives me an opportunity to just wrap up this particular little bit.

I am not a conspiracy theorist. I do not believe it was part of a grand conspiracy for the previous Minister of Finance to lose the election and not be sitting in this House. But I must admit that even though some other persons stitched the jacket, this minister has been required, and will continue to be required, to wear it.

If we may, without moving off treasury completely. . . . I rushed up here from Public Accounts this morning, and I'm missing some papers, so maybe this is an opportune moment for the member for Fort Langley-Aldergrove to ask the minister some questions related to the Condominium Act. I will come back to the debt management issues.

R. Coleman: I just want to spend a few minutes this morning with regard to the Condominium Act, which falls under this minister's portfolio.

I guess my opening question to the minister would quite simply be: could he tell me the rationale for the Condominium Act being a Ministry of Finance portfolio?

W. Hartley: I ask the House for leave to make an introduction.

Leave granted.

W. Hartley: I've just received word that we have a group of students from Albion Elementary School -- some 51 grade 4 or 5 students accompanied by their teachers Shelagh Maguire and Loraine Cleave. I'd like the House to make them welcome.

Hon. A. Petter: The answer to the question on why this act falls within the responsibility of the Ministry of Finance is a very good question, the kind of question I can answer. The answer is that within the responsibilities of the Ministry of Finance and Corporate Relations, this ministry carries responsibility for statutes that govern entities such as corporations, cooperatives, partnerships and the like. Included within that are legal entities such as condominiums, which have a particular set of legal rights that attach to their particular corporate form.

R. Coleman: This is what I want to canvass with the minister. I've canvassed it similarly with the Minister of Municipal Affairs and Housing. Basically, what we have in this province is the Residential Tenancy Act sitting with the Attorney General's office and the Condominium Act sitting with the Ministry of Finance's office. We have responsibility for social housing sitting with the Ministry of Municipal Affairs. We have some development issues with the Ministry of Municipal Affairs. At the same time, we have transition houses sitting with the Ministry of Women's Equality and other group homes sitting with the Ministry of Health. For all the issues dealing with housing it's actually very difficult for the consumer in British Columbia to access information and deal with it. Although the Condominium Act deals with the condominium corporations, as far as management is concerned it has some practical application with regard to issues, and that is where the difficulty comes into it.

The last major revision of the Condominium Act was in 1977. We went through a process beginning in 1990 with regard to some public input and with regard to a new act. I'm wondering if the minister could tell me the status of the discussion draft and the draft act that was put out in 1994.

Hon. A. Petter: First, allow me to briefly introduce Carol Anne Rolf, the director of financial and corporate sector policy within the ministry, who is here to assist me in answering some of these questions.

I can't answer as to why various acts reside with certain ministries other than my own. But I can say that in terms of housing policy, the Ministry of Municipal Affairs and Housing is the lead ministry and therefore can and does act to coordinate responses from other ministries in respect of housing policy issues.

In respect of the particular discussions and the interest that have obviously been shown in terms of the Condominium Act and potential improvements to that act, the member alluded to the discussion draft. Some 4,000 copies have been circulated over the course of recent years, and there's been considerable interest -- about 500 responses and submissions. There are still some outstanding issues that are being reviewed. Ultimately, this is a matter of future policy for government.

Clearly there is interest on the part of the public in making some revisions and improvements to the act. I'm aware of that and will be working with the ministry to review progress over the coming months. It will be a matter of future policy for government as to when and whether that results in future legislative change.

[11:00]

Hon. A. Petter: I was referring to my role as minister in working with my own ministry officials in evaluating where we are. That doesn't mean that other ministries are not concerned; they obviously are.

Some of the outstanding concerns are things like the common expense allocation issue, age restriction bylaws and rental restriction bylaws. Those would be the three major issues on which there is still contention and consideration around particular responses.

[ Page 4717 ]

R. Coleman: I just want to deal with some of those particular concerns. When you file a disclosure statement on a condominium, whether it be new construction or a conversion, there is the opportunity in the Condominium Act to deal with the rental restriction by disclosing it in the disclosure statement, which then allows for the rental restriction. That is often done by people that do this. I think we could probably spend the next two or three days on disclosure with regard to the Condominium Act, because there are a number of concerns with regard to how disclosure is handled, particularly since it jumps from prospectus to disclosure to nothing, depending on sizes of lots and what have you. That's a bit of a concern.

I think the stronger issues for the future with regard to the Condominium Act are related to air space parcels, specifically when we start getting into some very complicated strata leases as we enter into private-public partnerships, which I canvassed with the Minister of Municipal Affairs and Housing. Strata leases and how they're going to apply under the Condominium Act is still an area where there is some difficulty within the marketplace in understanding their enforcement and their application with regard to the act. As we move into some of the things we're going to do with Crown lands as we move down the road, we should be aware of the fact that the act is going to have to either provide for those provisions or we're going to have to have some other act that deals with that, because when we get into strata lot leases it becomes a bit of a difficulty.

The other difficulty, of course, is that there's a balance within this act. One is the incorporation side of the act, which is the side that the Ministry of Finance deals with, and the other side is the files that I deal with as the Housing critic for the opposition, which numbered somewhere in the 150s in the past year. They have very little to do with the act itself as far as the disclosure side and what have you; it has more to do with dispute resolution and problems within the operation of the condominiums themselves. The biggest concern, obviously, on the construction side is the leaky condominium, which I've dealt with with the Minister of Municipal Affairs. And the Canadian Home Builders Association has been very active in coming up with solutions in that regard.

The other side is with regard to what the owner of the condominium is entitled to under the bylaws, as far as reporting information, and this seems to be the biggest complaint. One is that they are basically being allowed to be a participant in the process; secondly, their owner input into the operation; and also financial accountability on a monthly or a more prudent basis than there has been in the past. I'm just wondering whether the minister is aware of that, and what his situation is with that.

Hon. A. Petter: The issues that I refer to are the ones about which we receive the most communication from the public. But I certainly want to acknowledge that there are concerns in areas that the member identifies, such as strata governance and air space, that do merit consideration and are, as I understand it, already addressed to some extent in the discussion draft.

I might just say generally that part of any revision that might be made to the legislation would be aimed at simply converting the legislation into a more accessible, plain-language format that would assist in resolving issues that fall under the legislation and might help in enabling those who are within strata corporations to deal with some of the issues that arise under the act.

R. Coleman: I think we already have that plain language in this discussion draft that's been sitting around since April 1994. The difficulty is that we haven't brought it forward and dealt with it, and what we're doing is just creating more uncertainty in the marketplace with regard to people who have strata ownership. For a person that has strata ownership in this province. . . . The people that buy most of the stratas are people in their fifties-plus. They're the people that have some confusion as to what their rights and privileges are under the act, and also with what their privileges are under their own bylaws. I find the bylaw portion of the plain language a little weak on the reporting side for people that own condominiums.

The other difficulty is that until we address this act and some other issues within the housing market that we can't address ourselves, we have a very serious issue in manufactured home parks in the province, some of which could be addressed through a bare-land, strata-type formula -- back into the ownership of the land . . . over the manufactured park owners. It's affected by this act and it's affected by the Residential Tenancy Act, which is still waiting for some new provisions and some active participation from about three ministries. What we have is a situation where we are creating a problem for ourselves.

I'm just wondering what the time frame is to bring this act forward. Whether it be complete or perfect or not, it's better than what we have. It's certainly easier to read. Having gone through the Condominium Act again yesterday and having dealt with it, I can tell you that this draft is a much more applicable draft than the act we have at present. I'm just wondering what the time frame is for this act to come forward.

Hon. A. Petter: I assume that one of the reasons that rules concerning future policy were adopted in this House is to prevent ministers from speculating about time frames.

Let me say this. I have become aware of this concern over the course of the last year, and I'm heartened by the support that the member offers to legislative change in this area. Obviously the question of timing in terms of government legislation is one that has to be determined by government, through the processes that set priorities according to what other claims are made on the legislative calendar.

If the opposition member is supportive of this initiative, that gives me some further reason to view this as an initiative that might be pursued sooner rather than later. It gives me an additional reason to try to move it up in the calendar if I'm able to persuade my colleagues and others that this should indeed be regarded as a priority relative to the other pressing demands that are on the legislative calender of governance.

R. Coleman: I would like to assure the minister that to bring forward a plain-language act with regards to the Condominium Act would be something that would be supported simply because it's something that would improve a lot of people's difficulty with their operations and the act, right from the real estate industry through to the actual homeowners themselves and the understanding about rental restrictions and what have you within the act. I think it would be very important to move on this in a prudent manner.

Having said that, I would also like to reiterate what I did reiterate to the Minister of Municipal Affairs and Housing: that at some point in time I think government should take a look at the fact that issues to do with housing should be in one place so they can be dealt with by one group of people. Issues 

[ Page 4718 ]

that deal with residential tenancy that are affected by rental restrictions in the Condominium Act, that are affected by the marketplace and that are affected by social housing would all be dealt with in one ministry, rather than have people bouncing all over the place to try to get their answers. I think that's one of the difficulties we're creating within the marketplace, and I think that's something that should be addressed.

F. Gingell: The member for Oak Bay-Gordon Head has some other pressures which require us, if we may, to deal with the Provincial Capital Commission at this time.

I. Chong: I have a number of questions to the minister regarding the Provincial Capital Commission. Perhaps they shouldn't take too long, as I know the minister has been the minister responsible for a number of years, and I know his history of it and his recollection are fairly good on this.

First of all, I'd like to ask the minister for clarification on the Provincial Capital Commission. What regions of the provincial capital does that entail? Generally, we think of the provincial capital as perhaps being greater Victoria. I would just like clarification on whether that extends to the capital region. Years ago, I know, they called it the capital improvement district, and now I'm just wondering: with all the changes and the new municipalities, has that been expanded? Could the minister provide that clarification?

Hon. A. Petter: I'll refresh my memory. I may get some assistance as to just how far it goes, but clearly it is not just the precincts. It extends to cover the municipalities within the capital regional district, right up the peninsula, and I believe it would include as far as Sooke. So I think it's generally coterminous with the CRD, but I will confirm that. I haven't had occasion to question that recently, but I'll find out in just one second for the member.

Let me introduce Larry Beres, who is the executive director of the Provincial Capital Commission and who has joined me to help with that.

It turns out that it's a good thing I asked. It does not include the Sooke area. It includes the municipalities extending up the Saanich Peninsula and the Western Communities. That is the defined area that is of immediate concern to the Provincial Capital Commission.

I. Chong: I understand that there is a board composition representative of municipal elected officials, as well as government. Can the minister advise at this time whether there have been any changes in terms of additions to the size of the board since its inception or change, given that there is now a larger region that is being represented? If so, can he provide the approximate mix or how the determination is made? Is it by size of municipality? Are there two representatives because of size, etc., and those kinds of things? Can the minister please provide that clarification?

Hon. A. Petter: The short answer is that there has not been a change in recent years. The member said "since the inception." The Provincial Capital Commission dates back to the days of W.A.C. Bennett. It was very, very different in its early days, but in recent years no, the representation has not been altered. It involves a mix of representatives from the core municipalities appointed by municipal councils, and appointments made by the Lieutenant-Governor-in-Council. That mix remains the same today as it was, I think, when I became minister.

I. Chong: In terms of some of the financial aspects of this, I understand that at this time the board is a volunteer board -- that there is no remuneration. Has that changed, just for confirmation? I understand that out-of-pocket expenses for board members are the only things that are charged at this moment. In terms of financing the Provincial Capital Commission, there must be a number of staff, FTEs. Can the minister advise what this year's FTEs are compared to last year -- this year being '97-98?

[11:15]

I appreciate the member's initial question, because I think that so often people who serve on commissions and boards take the brunt of criticism -- sometimes for the decisions they make but also because there's a misapprehension amongst the general public that somehow people are doing so for profit. I can say that in the case of the Provincial Capital Commission, that is not only not the case but many people give up hours that they no doubt could devote to profitable enterprises in order to put in community service on the Provincial Capital Commission.

I'm amazed at the extent of commitment and energy that people devote to the Provincial Capital Commission. It's one of the reasons that the commission has been as successful as I think it has been in the initiatives it has pursued. Indeed, the member is correct: the only compensation they receive is for out-of-pocket expenses.

I. Chong: I appreciate the comments by the minister. I do appreciate the work that is done by the board members, and I do know that sometimes those things are forgotten. However, it's also an important commission to serve on. Although no remuneration is granted, it's certainly a board which is one of public influence, with the influence, of course, being on the provincial capital as to what we will see develop in this area. Certainly I think that those who serve on it have that vested interest, as do many of us who live in the capital region.

The question I have for the minister. . . . I'll back up to when I asked him originally as to the FTEs. I appreciate that there are 24 this year. My understanding is that there were 18 last year. Can he confirm that or advise me as to whether there has been a change?

Hon. A. Petter: As I indicated in response to the previous question, the advice I receive is that the number of 24 is unaltered from the previous year.

I. Chong: Also on the financial aspect of the Provincial Capital Commission, can the minister advise. . . ? I haven't been able to -- and I have looked back on the last three or four years of Hansards and at other questions and also at the information that's available on the Internet. . . . I'm trying to determine the mandate, the scope. I wouldn't say the reason for being -- I know the reason for being -- but I suppose: what justifies the existence, on an annual basis, of the Provincial Capital Commission, in terms of an allocation from the budget? How does that specifically work? How does the minister set up that kind of budget on an annual basis?

Hon. A. Petter: The Provincial Capital Commission performs, I think, a very important function in protecting and enhancing the amenities of the greater Victoria area in respect of its stature as 

[ Page 4719 ]

a capital city and its ability to represent itself as a capital city to the province, to the country, to the world. Of course, there is a counterpart in the National Capital Commission in Ottawa, which has a similar kind of role.

The financial arrangements with respect to the commission have, in the past, involved government providing funding to the commission that the commission has then, in turn, made available through beautification grants throughout the capital region. However, the commission has been very successful in recent years in generating internal sources of revenues from some of the properties it holds.

Given budget constraints within the provincial budget and the commission's stewardship of its properties, it has been the case that in last year's and in this year's budgets, there are no grants being provided any longer for the commission -- at this time at least -- out of the consolidated revenue fund. The commission is continuing its grant program, particularly targeted at greenways -- the enhancement of green space and greenways -- and assistance to municipalities and groups. But that is being generated out of the revenues that it itself creates through parking revenues and rental revenues in respect of the properties that it controls and manages.

I. Chong: Again for clarification, am I to understand from the minister that for the last two years there have been no grants from the consolidated revenue funds to the Provincial Capital Commission and that the Provincial Capital Commission's budget has been solely based on its revenue-earning capacity? If so, does the minister receive a copy of that financial information, a disclosure statement of some sort, to see the amounts that are being generated and how it's being expended?

Hon. A. Petter: I believe that in last year's budget there was a provision in the estimates, but during the course of the savings that the government achieved over the course of the year, there was a decision made to not provide a grant to the Capital Commission -- happily, because the Capital Commission had, as I say, managed its properties in a way that generated a sufficient income stream so that it could continue the grant programs without the necessity of that provincial funding. That continues to be the case in this year's budget, which is why there is no allocation within this year's budget for beautification grants.

There is an audited financial statement that's produced by the commission on an annual basis. I believe one is due momentarily and will be available in the next week or so, and I'd be happy to provide a copy of that statement to the member, which sets out the incomes and expenditures that the commission undertakes.

I. Chong: If the province, in that respect, is no longer providing grants for beautification projects and it's, I suppose, the board that makes those decisions based on the revenues that it generates, would it be fair to say that there's -- I wouldn't say little -- minimal involvement by the minister in terms of the decision on which beautification projects proceed and which do not?

Hon. A. Petter: It would not be fair to say that there is not much involvement, but it would be fair to say -- and this was the case previously -- that the minister has traditionally, at least while I've been the minister, taken the recommendations of the commission. But it remains the case that under legislation -- the Provincial Capital Commission Act -- expenditures by the commission, be they generated from own-source revenues or from beautification grants, do require the approval of cabinet, and therefore government does have a direct role in vetting and approving those expenditures. But obviously the commission is a volunteer body that exists to make these kinds of recommendations.

I as minister have an interest, and I meet on a regular basis with representatives of the executive and have occasionally met with the commission. I think that I have benefited and, hopefully, that they have benefited from that interchange. Ultimately, government does make the decision on the allocation, but it's been my practice, I think invariably, to approve the recommendations that have come forward from the commission.

I should credit here not just the commission but the fact that the commission has in recent years made a practice -- something I've encouraged them to do as part of my involvement -- of setting up particular groups to assist and advise them on particular issues. So there's a greenways advisory committee now that vets greenway grant applications and looks at how the greenways program of the commission might be enhanced. There's a group advising on the enhancement of the St. Ann's gardens.

I as minister am very sensitive to the fact that we have volunteer power out there in the community. I have tried to perform my role in a way that facilitates that, but it certainly involves interaction and interest on my part as minister, and I certainly sometimes voice my opinions on some of the key strategic directions of the commission. It's been a very productive relationship, I might say.

I. Chong: I appreciate what the minister is saying. My concern, I suppose, is with the involvement of the minister -- how much or how little there may be. I appreciate the fact that the minister and cabinet still have a vital role to play.

I wonder whether there is a process for appeal, in that if the commission. . . . Again, being volunteers and being that their agenda, I'm sure, is quite full and that they can at times divert their attention to a different form of project -- whether it be greenways, whether it can be enhancement of other waterways, or whatever. . . . Given that, if the commission makes a concerted effort and creates a level of grant for beautification projects geared to a certain type of project for a certain year, and others feel that they've been left out in the process, would the minister and cabinet ultimately offer advice and suggest that there be more diversity in the kind of beautification grants that are available to the capital region?

Hon. A. Petter: I'm happy to say that the situation hasn't arisen since I've been minister. I certainly have people appeal to me on issues, such as penguins. I really hesitate to mention that, because I don't want to get into the penguin issue.

Interjection.

Hon. A. Petter: Don't ask, hon. member.

On the beautification grants and the allocation of the grants, I think the commission has done an outstanding job. Of course, I as minister have tried to make appointments that are reflective geographically as well as in terms of background of varying groups, and it just hasn't arisen. I don't want to speculate about and encourage the thought that the commission would not be seen as performing its function well. Frankly, the commission has done an outstanding job and is, I think, viewed very, very positively by the public. The situation hasn't presented itself.

I. Chong: I'm not suggesting that the commission is not doing a good job. My concern is whether or not there is an 

[ Page 4720 ]

appeal process. As I say, sometimes we concentrate our efforts on one area and can tend to forget other areas. For a time, as we all know, the environment was very important to all of us. At another time, we could be looking at education issues that are very important to us, like the government officials. Again, in the Provincial Capital Commission I know the greenways projects have been extremely important, especially in the last two or three years.

I'm just wondering if there's been a lot of attention focused on that area and whether some other areas haven't had enough attention paid to them. If that were the case, would groups have an opportunity to appeal either to the commission or to the minister and ask whether or not these other areas have been neglected or whether they're just on hold for a while?

Hon. A. Petter: No. There is no formal appeal mechanism, nor do I think one would be appropriate. There is certainly the opportunity for those in the community who believe that the commission could refocus its efforts or broaden its focus to make those views known to the commission and, ultimately, to me as minister responsible. At a policy level I wouldn't hesitate, if I felt that the commission should consider a different focus, to suggest that and put that before them as a possibility. In fact, the greenways focus came out of interaction between myself as minister and the commission. Happily, we came to the same conclusion around the same time that this was a very worthwhile focus for the commission.

But to suggest a formal appeal mechanism is, I think, to contemplate a Rube Goldberg solution to a problem that doesn't exist. The interaction of the policy perspective that I can lend as minister and that I gain from my interaction with the public, and what the commission itself generates through its own input and that it receives from the public, has worked very well and will continue to work to enable the commission to respond to the changing challenges and demands it may face in the years ahead.

I. Chong: I asked the minister whether there was an appeal process -- not so much a formal one but just so that people know that there is an opportunity to talk to them. The reason why I ask this is because there have been some issues that have been raised with me -- in particular, a lack of attention perhaps being paid to other things, which was the area of beautification grants that were previously provided by the Provincial Capital Commission in the areas of heritage and things of a historic nature. In particular, there have been some concerns raised that those are things being put on the side or on the back burner while these other projects take precedence, because they had been neglected for so long.

My attempts to ask the minister are to find out whether or not these things do get sidetracked for a while until those are completed, and then these other groups who are concerned about things of heritage or historical importance are brought back in a subsequent year or two years from now. There are some issues, and I will canvass this after I hear the minister's response.

Hon. A. Petter: I think the member's concern is addressed. I wouldn't call it an appeal as such, but, for example, the greenways initiative has become the focus of an advisory committee, and the commission then sits as a body whose focus goes beyond that and includes heritage concerns. The focus on the restoration of St. Ann's, for example, which I am happy to say will soon reach a conclusion in July -- I hope members will attend the official opening of the St. Ann's structure on July 12 -- has very much had a heritage focus.

If people are dissatisfied with decisions or recommendations made by the greenways advisory committee, they can certainly make those views known to the Capital Commission. The Capital Commission, as a body, certainly has the capacity to make decisions and does make decisions in a number of areas. For example, another interest of the Capital Commission has been to protect beautification on approaches into and out of the city. It has taken the initiative in working with the Ministry of Highways in acquiring key parcels of property that are strategically important in terms of protecting the visual values of approaches to the city. Those concerns are brought to the commission directly.

[11:30]

It's not that the commission will satisfy every person or every group out there with respect to every aspiration they might have, but the commission does a pretty good job in considering what it does with its limited resources and has been generally recognized as having made a major contribution through the initiatives that it has pursued. If people aren't satisfied, they can go from the particular committees that focus on particular initiatives to the commission, and from the commission to me. I wouldn't call it an appeal, but certainly there are avenues for people to express those concerns.

I. Chong: Can the minister advise whether the commission provides or prepares a schedule, a five-year plan of projects it wishes to undertake or where it wishes to focus its attention? Is there any -- I wouldn't call it a business plan -- projection of what its role will be in the next five years, given that there will be some changes along the way? Is there something like that available?

Hon. A. Petter: The commission does do planning in respect of the properties that it manages and the future plans with respect to those properties -- in fact, future lease arrangements with leaseholders and property use. In respect of funding allocations, those are made in response to requests that are generated within the community. The commission's role then is to respond to those requests, prioritize them and fund them according to the commission's capability to do so and the relative merits of the projects as the commission evaluates them.

I. Chong: I will move on to one area of specific concern, which I did say to the minister I would bring up at this time so that he knows where I was leading to -- I was hoping that he perhaps would have picked that up.

It has to do with a particular site in my riding, a site which in February 1996 was given national historic site status, and that is the Harling Point Chinese cemetery in Oak Bay. At the time, it was well received by the community. My predecessor from Oak Bay-Gordon Head also applauded that as an historic and significant move by the federal government to give this national historic site status. Of course, being part of 

[ Page 4721 ]

the provincial capital and being part of its mandate that those coming to our provincial capital would be able to avail themselves of the beauty of this site, it was very important in that respect. So my question, then, to the hon. minister is: would this site, in his view, qualify -- I believe it should -- and has this been brought to his attention? I'll just give him a little preface to that.

The community, in particular the Chinese community in Victoria, were told and promised -- again verbally -- that there would be, and there were, funds allocated to ensure that this beautification occurred, because it had been granted this status. Although I understand that the minister may not be able to commit to somebody else's promise, that was a promise made, and those who were there and involved in that conversation recall it vividly and were wondering what has happened to those funds. If in fact they were allocated, can the minister provide or shed some light on that?

Hon. A. Petter: My recollection is that there were discussions a couple of years ago concerning the possibility of some acquisition of the site that I think the member is referring to. I'm not sure that any formal application was ever. . . . In fact, I'm reasonably sure a formal application was not brought forward to the commission. I think there were discussions between the owners of the property, the commission and local government. Ultimately, as I understand, the decision by the owners of the property was not supportive of moving forward with the proposal. But it strikes me that if there is some proposal that could result in, for example, the acquisition of some of that site as a public amenity, then within the limited resources of the commission, it's a proposal that would receive serious consideration.

It does relate to a green space of some significance, and it would be up to the commission and the greenways advisory committee to assess its merits and for the commission to consider the financial contribution that it was being requested of it, whether there were matching funds in the community, all the things it normally looks at. I don't that's been ruled out. I think the discussions that took place on a sort of provisional basis, some sort of what-if basis, sort of fell apart when the owners of the property indicated at the time that they did not wish to proceed with what others had proposed as a possible resolution of the issue.

I. Chong: Just for clarification for the minister, I will provide him with a bit of background. It was in June of 1995 that there was discussion, that there was perhaps an application in process for acquisition of the site. Because that did fall through because of local government difficulties, that avenue was no longer pursued. What then took place -- again by another group of very concerned individuals -- was to ensure that that site would always remain a heritage and historic site, because in this city it does represent a landmark. A group of concerned individuals from the Chinese community approached the federal Minister of Transport -- I think he was still Transport minister at the time -- and through his office they were able to secure this, in 1996, as a national historic site. It was at that time that the situation had changed, and it was no longer required to acquire it. The community was happy to leave it as it was, but being a national historic site required it to be beautified. That's where the discussions then took place.

As I say, I appreciate the fact that the minister was not privy to some of those conversations. In the conversations that took place -- and perhaps in a speech by my predecessor, as well, at the time that this was dedicated. . . . The Provincial Capital Commission would be involved and would like to play a part in the beautification of a public amenity. I hesitate to go so far as to say that a promise was made. Again, while it certainly goes on hearsay, there was that allusion to the community that a promise would be made, that funds would be coming, because for some reason, there had been funds committed by the Provincial Capital Commission.

That's one of the reasons why I am probing this issue -- to find out whether or not in fact there had been funds set aside. If they were set aside and have now disappeared as a result of the program spending review, I can accept that, too. But I'd like to know whether in fact there were funds, as was told to them.

Hon. A. Petter: No, there were no funds set aside for this particular purpose. There are funds set aside within the Capital Commission's budget -- and which continue to be set aside -- within the funds that it generates from its own revenues for beautification, particularly of open space and green space. I'm informed that no application has been forthcoming to the Capital Commission with respect to the site in question. Were an application forthcoming, there are funds set aside by the Capital Commission for greenways and beautification that might well apply to this site.

I don't want to, in the Legislature, prejudge or foreclose a decision that is being made by the commission. As I said earlier, I prefer to leave those decisions to the Capital Commission, although I'm not afraid to direct their attention when there's an issue. I'd be happy to point the commission in this direction and make them aware. But there has to be an application; there has to be someone who comes forward and requests the funds. I'm informed that that has not happened to date.

I. Chong: I will, then, so advise to that concerned group of individuals that there appears not to be an application. Perhaps the misunderstanding was that, as I say, my predecessor indicated to this group that this would all be taken care of, and perhaps they failed to provide their application. I'm not faulting the minister for that, but again, some communication clearly has been miscommunicated.

My question to the minister was in the sense of whether he is involved in looking at the various types of applications that do come in for beautification and whether, if we do see a focus in one area -- and again, this is one clearly in another, which I alluded to earlier, that has to do with heritage preservation or historic site preservation. . . . If there seems to be a lack of that in one particular year or another, can the minister, then, in his capacity as an adviser to the commission, speak to the members and say: "Are we neglecting a particular kind of preservation, or are we neglecting an area that we. . . ?" Is that occurring?

If that's the case, I just want to get some clarification from the minister that there is an opportunity for citizens to come forward and say: "We appreciate all that the Capital Commission is doing, but clearly we see that we're a small group, and we're being forgotten. How can our voices be heard?" That was the reason for my original question as to the appeal process, because it seemed to be that smaller groups were being forgotten here.

Hon. A. Petter: I really must say that the member is approaching this from the wrong end. The Capital Commission -- and I, as minister -- have been incredibly open to those who have legitimate concerns. Rather than bringing this up in estimates debate, it might be better if the member, as 

[ Page 4722 ]

MLA. . . . I must say that MLAs have not hesitated, in the past, to voice their support for initiatives to the commission directly or to myself as minister, and I do the same. If you ask for my interaction with the commission, it's partly as minister and then partly as MLA. I make sure, when proposals come forward from councils in my area, that I, as MLA, indicate support for those. The member, as MLA, can act as an intermediary here.

Perhaps the best thing I can offer is that rather than take up the time of the House to figure this all out, if the member wants to receive a briefing and some information from staff, from the commission, I'd be happy to arrange that -- and again, information as to how she can communicate to her constituents how to bring an application forward, the time frames for doing so, how it can be done. So instead of talking about appeal processes when we haven't even had an application, we can actually put an application in front of the commission. The member can play her role as MLA in supporting that application, if she does. We won't have to debate appeals, because the commission will have a chance to make an initial decision concerning the matter that she's raising.

I. Chong: I do appreciate the fact that I can act as intermediary. I tell the minister now that I likely will convey these messages and see what these constituents would like in terms of my involvement. I raise them in estimates simply as a matter to canvass this area, to see whether or not he can provide me with an assurance that there were no committed funds, which is what the misunderstanding out in the community was. I will be happy to convey to the community that there was no commitment.

In terms of the appeal process, I raise that, as well, during this process, just to determine the workings and the relationship that the ministry has, given that it funds it to the tune of 24 FTEs -- not to suggest that I'm premature in suggesting that the application will be denied. You have 24 FTEs involved in the Provincial Capital Commission. You know there's an involvement with the minister. Again, wanting to find out how that accountability is to the people -- that was the purpose of my questioning on the appeal process, or the lack of appeal process, if you will.

I want to say to the minister that I do appreciate what he shared with me, and I will convey some of his response to the community that raised it with me.

Hon. A. Petter: Just for the sake of the record, because I don't want to have. . . . I don't know what the previous MLA said, but there are committed funds. There are funds committed in the Provincial Capital Commission's program for greenways initiatives, which may well be relevant and accessible. I don't know the particular application that might be brought in, so I can't speculate. It seems to me that to say that there are committed funds within the Provincial Capital Commission that could be applied to this purpose is not incorrect. Indeed, we would know that by now, had some initiative been taken. I don't want to needle the member, but I'm a little perplexed as to why she wouldn't have brought this concern to me as minister, or to the commission, some time ago. Perhaps that's what the previous member had in mind when she said what she did, and she anticipated she would then assist, if re-elected, in doing so.

But let's put that aside, and we'll now work to try achieve a solution rather than imagining problems that don't exist.

[11:45]

Hon. A. Petter: I'd be very happy to advise the committee. The financial management plan, which is set out, as the member knows, in the budget reports, covers a broader range of issues than simply debt. It looks at the operating budget and establishes targets with respect to the operating surpluses of government. It looks at a capital spending plan coming out of the capital spending review and establishes certain expectations concerning the management of capital spending and sets benchmarks in that regard. Then it also looks at the issue of debt, in particular the debt-to-GDP ratio, and has plans with respect to that.

The financial management plan embraces all of those elements -- and some others, which I won't go into -- and therefore has a broader compass than simply debt management.

F. Gingell: It may have a broader compass, but it sure has a lot less detail. In the earlier debt management plan, there were some specific commitments or plans, to do with, for instance, the reduction of debt. I don't find any reference to the reduction of debt in the current financial management plan. Is that because the province doesn't intend to reduce its debt?

Hon. A. Petter: First of all, the plan has to do with reducing the ratio of debt to GDP, as opposed to reduction in the nominal amount of debt. That's because the considerable growth this province has experienced is likely to continue. I know the member is familiar with that.

I'm not sure I'd agree with the member's characterization. What we have done -- and this is based on the advice of this business and labour panel that was reconstituted -- is to establish a short-term target over the next three years, and then a longer-term target in the ensuing 15 years. As we move forward, we are then able to set various benchmarks along the way, but I don't think that shows any less commitment. In fact, I think the approach is one that corresponds directly with the advice received in this regard. The previous plan, as I understand it, modified some of the advice received, and I think this is wholly consistent with the advice received from the business and labour panel.

F. Gingell: It's very easy to go and get advice from people who are in the business of building schools and doing all of those things. But there are two issues, I would suggest. The debt management plan originally committed to pay off the provincial direct debt in 20 years. That promise seems to have vanished now. If it hasn't, is it still the intention of the province to repay all of the direct debt -- the debt that is created from operating deficits, however one may measure them -- amounting at the moment in excess of $11 billion? Is it still the intention of the provincial government to repay that debt in a period of less than 20 years?

Hon. A. Petter: The current plan contains a commitment to reduce the direct debt over 20 years, to pay down direct debt. But it's true that it does not include a categorical commitment to eliminate the direct debt, because we have to envisage the cycles in the economy. We're trying to set directions that we can be assured are achievable and can be achievable throughout the cycles in the economy and the business of the province.

[ Page 4723 ]

F. Gingell: Am I hearing the minister say that before the election was called -- sorry to bring that up again. . . ? In 1995 you made a commitment that the provincial direct debt would be repaid within 20 years. Now I hear you saying that you recognize that that is not achievable, which is the term that you used. Is it clearly a matter of record that the promises made in 1995 with respect to reduction of direct debt. . . ? I bring the minister's attention to the statement in 1995: "Debt Management Principles. . .Equity -- Debt financing policies should treat all British Columbians fairly" -- whatever that means. "Future taxpayers should not pay for current services." So if we're talking about future taxpayers not paying for current services, as an integral part of that -- a foundation stone -- there is a definitive plan to repay the direct debt over as reasonably short a period as we can afford.

Hon. A. Petter: The direct debt has become part of the tax burden. Our commitment is to not further add to that tax burden by adding to the direct debt -- hence the commitment on the operating side to move into a balance next year and a surplus thereafter. The associated commitment is to reduce that accumulated debt burden, including that represented by the direct debt, in accordance with the debt-to-GDP ratio as set out -- and in particular, with the direct debt, to reduce it over a period of 20 years.

There are some modifications inherent in this approach to the one set out previously, and that's a reflection of my judgment as Minister of Finance and my view as to how we should proceed to set targets in a way that achieve the goals of paying down the debt burden and not adding to the direct debt in a way that I believe can be achieved without doing damage to the ability of government to meet the needs of a growing economy and the social needs associated with that economy.

F. Gingell: Seeing the time -- just before 12 noon; I understand Committee A has risen -- I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. A. Petter moved adjournment of the House.

Motion approved.

The House adjourned at 11:55 a.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 10:12 a.m.

ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)

K. Krueger: I note that the minister has some new advisers with him today, one of whom I hope didn't have to come all the way back from Europe to be with us this morning. Perhaps the minister would take this opportunity to introduce them to the members present.

Hon. D. Miller: Mr. Simonis is to my left and Mr. Poleschuk is to my right.

K. Krueger: Yesterday, when the minister didn't have these people with him, there were a few questions that he didn't feel prepared to answer. I wonder if we could just touch on some of them this morning.

I want to ask the minister again: what specific goals has the Lottery Corporation set for itself for the present and future fiscal years? How does the Lottery Corporation measure those goals and report on its progress?

Hon. D. Miller: I did read the goals into the record yesterday. I mean, to put it not too crassly, I would hope it's to make money but to do it, as I read yesterday, in terms of ethical business practices and those kinds of things.

K. Krueger: That's not much more of an answer than we had yesterday. Specifically how the corporation makes money and whether it turns over as much of it as it should to the general revenue fund is obviously a question.

One of the questions that we began to explore yesterday was what the management salary scale of the B.C. Lottery Corporation is and how it compares to other Crown corporations, including such issues as leased cars and benefits to senior managers.

Hon. D. Miller: I believe I did answer that question yesterday. It compares very favourably.

K. Krueger: In dealing with that question yesterday, the minister referred us to public accounts. It's not an issue for public accounts, so I'd like the minister to consult with the people who are with him and tell us specifically how many B.C. Lottery Corporation employees enjoy vehicles for personal use at B.C. Lottery Corporation expense.

Hon. D. Miller: Eight.

K. Krueger: Obviously the make and model of these vehicles has become an issue at B.C. Transit and other corporations. I wonder if the minister would identify that for us for those eight.

Hon. D. Miller: North American four-door sedans.

K. Krueger: We touched on the question yesterday of the legal expenses of the B.C. Lottery Corporation. I'd like to know what the expenditure was in the last year for the legal expenses of the B.C. Lottery Corporation. What is the budget in that area this year?

[ Page 4724 ]

[10:15]

K. Krueger: Yesterday we asked, and the minister wasn't in a position to respond, whether the B.C. Lottery Corporation has incurred any expenditures to pay employees who have brought forward allegations of sexual harassment at the Lottery Corporation. Could the minister learn that answer from his advisers?

Hon. D. Miller: The answer is no.

K. Krueger: Has the B.C. Lottery Corporation incurred any legal expenses defending such allegations?

Hon. D. Miller: Same answer.

K. Krueger: What percentage of the gross revenues of the B.C. Lottery Corporation are consumed by its administrative costs?

Hon. D. Miller: It's 6 percent. I gave the total figure yesterday.

K. Krueger: Now that these people are with us, perhaps we could have an answer to yesterday's question about the travel expenses of the B.C. Lottery Corporation -- the costs of travel within B.C., within Canada and internationally.

Hon. D. Miller: Interoffice travel?

K. Krueger: Any kind of travel.

Hon. D. Miller: Do you want to write it down? Interoffice, $250,000; in province, $80,000; out of province, $55,000; total, $385,000.

K. Krueger: I asked the minister yesterday about studies to do with the potential savings by consolidating the operation of the B.C. Lottery Corporation to Kamloops. The minister was not familiar with hard numbers, nor necessarily, I believe, with the most current evaluations. With these resources present, I'd like to know what the projected savings would be if the corporation were consolidated to Kamloops.

Hon. D. Miller: Yes, it has been examined, and the result of that is that there would be no savings.

K. Krueger: In a briefing last year with one of the gentlemen who is present with the minister, I was told that a projection had been made that if such a move were made, it would take three years before the cost of severance packages potentially incurred in Richmond and the cost of relocation expenses were recouped by the savings. After that, presumably those savings would accrue to the corporation's bottom line. Perhaps the minister could just touch base with his advisers.

Hon. D. Miller: I'm a bit curious. If the member is arguing efficiency -- in other words, that consolidation makes sense, which appears to be woven through the questions; that it makes sense for efficiency and cost saving -- is the member advocating that that consolidation take place in Kamloops because he happens to represent it, or would he also advocate that we ought to consider consolidation if we should do it in the lower mainland?

K. Krueger: Presently the head office of the B.C. Lottery Corporation is situated in Kamloops. If studies have been done in either direction, I'd like to know the numbers. That was my question.

Hon. D. Miller: So if we were to do a study to indicate that consolidation in Richmond produced a cost saving, would the member support that?

K. Krueger: Perhaps I could just remind the minister that I'm hoping he'll have some answers. He's the man with the advisers and the books, and I have lots of questions. The question is: has a study been done, and are there numbers as to the savings for consolidating the operations of the B.C. Lottery Corporation?

Hon. D. Miller: That's an interesting response. I'm sure the member would not want his constituents to know that he is advocating potentially moving the lottery headquarters out of the city of Kamloops.

K. Krueger: Could we have an answer to the question?

Hon. D. Miller: I believe I've answered the question.

K. Krueger: The minister gave an uninformed answer. I've advised the minister that the gentleman sitting to his right had some hard numbers last year. I'd like to know what the corporation's current numbers are.

Hon. D. Miller: We have no plans to consolidate offices.

K. Krueger: I appreciate that the minister said he has no plans. Does he have any numbers as to the savings if the offices were consolidated?

Hon. D. Miller: I did answer the question moments ago.

K. Krueger: The minister answered the question and didn't have information that I had last fall as to at least a rough approximation of how long it would take to recover those initial costs. So I'm asking the minister to please consult with the gentleman on his right and give us the current numbers, the current facts.

Hon. D. Miller: I've answered the question, Mr. Chairman.

K. Krueger: The record will obviously show that the minister doesn't want to answer that question with hard numbers.

We'd like to pursue the issue of Club Keno a little further now. What is the target market for Club Keno?

Hon. D. Miller: They are very broadly applied, so the market is very broad in our society. I did deal yesterday with the issue of those under 16.

K. Krueger: But isn't it true that the B.C. Lottery Corporation does studies and identifies specific markets on which it 

[ Page 4725 ]

hopes to focus certain products, including the Sports Action lotteries, the various pull-tabs, the various scratch-and-wins and Club Keno? Were such studies done with regard to launching Club Keno in pubs and bars?

Hon. D. Miller: I did talk yesterday, again, about the kind of market survey work that is done on a continuous basis by the corporation to see how customers like the products that are being offered. That's only as it should be. Anybody in the business of marketing a product should be aware of customer viewpoints with respect to a variety of those products and be prepared to offer the kinds of products that people would like.

K. Krueger: That's some progress. Does the B.C. Lottery Corporation evaluate the potential market, looking for groups of people who aren't necessarily purchasing as much product as the B.C. Lottery Corporation thinks they might?

Hon. D. Miller: Again, I think they survey the market to see what kinds of responses there are to a variety of opportunities to purchase tickets in a variety of ways. The member is probably more familiar than I am with all of the types of games or tickets that are available. I'm sure we have a list here somewhere, but I couldn't tell you what they are off the top of my head. They're all a bunch of colourful tickets that we see at the 7-Eleven. You know, you see how people respond to one or the other; they might like one better than the other. You develop your marketing plans based on how the customers view the product.

If the member is trying to hint around that we are trying to hook people on gaming who currently don't participate, the answer is no.

K. Krueger: Perhaps the minister would take a moment and speak with the gentlemen on his left and on his right and advise us specifically why the decision was made to move Club Keno into pubs and bars last fall in British Columbia and what the target market was.

Hon. D. Miller: A decision was made last year under a different ministry than this one. Notwithstanding that, it seems pretty obvious that there are and have been historically the breakopen tickets in pubs and bars. To the extent that technology has changed the nature of the machines, Club Keno represents that change. Therefore it seems like a very plausible position to take that those machines can be installed in bars.

K. Krueger: People have a theory that Club Keno was conceived to capture the market of low-income people who frequent pubs and bars. Is there any substantiation to that?

Hon. D. Miller: I don't know where the member hangs out, Mr. Chairman. I don't know where he draws those broad societal conclusions.

K. Krueger: Is there any foundation to a hypothesis that Club Keno targets low-income people?

Hon. D. Miller: No.

K. Krueger: Would the minister please explain the Club Keno marketing approach that's currently in use?

Hon. D. Miller: There's no advertising; they just happen to be there. They're everywhere, I guess. I'm not even sure what the machine looks like. They're in 7-Elevens and corner stores and gas stations. They're all over the place. Are they not?

Interjection.

Hon. D. Miller: Well, I thought they were.

K. Krueger: I think it would be great if the minister would pause and consult with the people who are with him before he answers, because they obviously have the answers to the questions. It would be good if the people of British Columbia could be shown the respect to have answers, especially when the expense has been incurred of bringing these people in. So yes, I'd appreciate it if the minister -- although he hasn't yet consulted with the gentleman -- would give us a fuller explanation of the marketing plan for Club Keno.

Hon. D. Miller: My previous answer is correct.

K. Krueger: The minister's previous answer is incomplete.

What can he tell us about the staff who are presently employed in pubs and bars promoting Club Keno to the patrons of pubs and bars?

Hon. D. Miller: Nothing.

K. Krueger: Would the minister then please consult with the advisers to his left and right about the fact that people in B.C. Lottery Corporation uniform are pushing Club Keno on patrons in pubs and bars and tell us what that's all about.

Hon. D. Miller: On a new installation, we do provide personnel to explain the operation of the game to customers.

K. Krueger: How many such personnel are there?

Hon. D. Miller: It's on an as-needed basis.

K. Krueger: Would the minister please break down or define an as-needed basis? Is it the first few days of a new installation? Is it the first few weeks? Is it the first couple of years?

Hon. D. Miller: My understanding is that there are as many as 15 people -- who are part-time -- available, on call, for these kinds of tasks.

K. Krueger: If they're on call, there presumably is a record of how much they've been used since Club Keno was installed in pubs and bars last fall. How many worker-days have gone into this type of promotion in British Columbia since last fall?

Hon. D. Miller: Look, we'll make a serious effort to try to find the minutiae that the member is seeking. I'm also making a serious effort to try to understand where the member is going, but so far I've failed.

K. Krueger: I'll make it easier for the minister. It's somewhat similar, I think, to a pusher offering a free product to individuals that he'd like to see begin to use the product on a 

[ Page 4726 ]

regular basis -- having uniformed employees of B.C. Lottery Corporation offering free Club Keno services to people in pubs and bars, trying to get them accustomed to using the product. I think that the people of British Columbia find that approach offensive. Now that the minister is more aware of it, what does he think of that approach?

[10:30]

K. Krueger: It's illegal in this province, as I understand it, for owners of pubs and bars to offer free drinks to people and seduce them into buying more of the product in that way. I don't know why the minister would find it bizarre that I find it bizarre that the B.C. Lottery Corporation would have people pushing free Club Keno tickets on the clientele of pubs and bars in order to encourage them to get into the habit. Perhaps he would like to respond a little further.

Hon. D. Miller: They're not pushers, Mr. Chairman. That's rather odious. They are there to explain, when a new installation takes place, how it operates.

K. Krueger: How long do they stay, then, after a new operation opens up or a new machine goes into a pub or bar?

Hon. D. Miller: It could be one or two or three nights.

Not that much? A couple of hours, I'm told.

K. Krueger: Approximately how many free tickets would these employees give out at the average installation and to approximately how many customers?

Hon. D. Miller: In terms of introducing customers to the machine, I guess they do give them the opportunity. They use a coupon to demonstrate the use of the machine.

K. Krueger: Before the B.C. Lottery Corporation made this move to install these machines in pubs and bars and began mixing the potential cumulative effects of gambling addiction and alcohol addiction, did the B.C. Lottery Corporation procure any professional studies of the likely outcome of that, both with regard to the lowering of the resistance of clientele to purchasing the product and with regard to the potential for increased addictions in British Columbia?

Hon. D. Miller: I did respond earlier that technology is having its impact across a wide variety of fronts in our society. The breakopen ticket machines have been in bars since 1988. Society may have gotten a little worse since then, but I don't think it's because of that. So this was sort of a natural evolution of technology.

K. Krueger: Were any such studies done?

Hon. D. Miller: No.

K. Krueger: Can the minister, on the advice of the people next to him, tell us: does a Club Keno machine in a pub or a bar presently generate more sales than a Club Keno machine elsewhere?

Hon. D. Miller: It would depend on the location.

K. Krueger: Then if you average the number of tickets sold through a machine in a non-alcohol-serving establishment and the ones sold in alcohol-serving establishments, is there a relation? What's the difference?

Hon. D. Miller: I don't think there are any numbers. It's probably too early. It hasn't been that long since the machines were installed in bars.

K. Krueger: It's been almost a year. Would the minister undertake to have the B.C. Lottery Corporation give me those numbers, comparing the average sales of machines in pubs and bars per day to the average sales of machines that are operated where alcohol is not sold?

Hon. D. Miller: As I indicated yesterday. . . . Mr. Simonis was not here, but on his behalf, I did offer a direct meeting with the member to pursue any questions that the member might have when we detailed the minutiae-type questions, and I repeat that offer. Any time the member wants to meet directly with Mr. Simonis or any other staff members of the corporation to explore these issues, they will be available for him.

K. Krueger: I appreciate that. Will Mr. Simonis have instructions to answer all of my questions fully?

Hon. D. Miller: That shows a level of disrespect that's unnecessary, Mr. Chairman.

K. Krueger: Not at all. I believe that this government frequently suppresses information from employees of government and Crown corporations. I'd like to know that Mr. Simonis is not under any such restriction from the minister. So I ask again if Mr. Simonis will be empowered and instructed to answer my questions fully.

Hearing no answer, we'll see what the result is and pursue the matter subsequently.

Now that Mr. Simonis is with the minister, I'd like an answer to a question I put yesterday, which was: I understand that Mr. Simonis has a list of 5,000 grey machines in British Columbia and their location -- could we please have that list?

Hon. D. Miller: I answered the question yesterday.

K. Krueger: Actually, yesterday the minister didn't appear to know whether that was the case or not. Would he please look to his left and ask Mr. Simonis if that's true, and if so, advise me whether he could produce the list to us.

Plainly, the minister has no intention of answering that question.

Again, yesterday the minister was unable to confirm complaints that have been made to us about owners of pubs and bars feeling that they were coerced into installing Club 

[ Page 4727 ]

Keno equipment into their establishments and, from their point of view, at least, given a none-too-subtle threat that if they declined Club Keno, they would also be out of the running for future developments. Could the minister please speak with the gentlemen with him and tell us if that is true?

Hon. D. Miller: I answered the question yesterday.

K. Krueger: Yesterday the minister was unable to answer questions because these gentlemen were not with him. He said that one of them was in Europe, I believe. Today they're with him, and he still doesn't want to answer the questions, so I'm not sure what the point was of putting the gentlemen to the trouble of coming here.

I'll ask him once more: what were the instructions to the people who market Club Keno machines and the like to pubs and bars, and is there any likelihood that those sorts of communications went to these entrepreneurs?

Hon. D. Miller: We've been dealing since last night, and now the theme reoccurs here this morning, with vague allegations that the member somehow has received from somewhere. These cannot be answered, because they are so vague. I really do object to the kind of tone that's running through the questions in terms of the sense of allegations. Perhaps the member might want to contemplate or think a little more about that line.

If he has specific questions relative to the operation of the corporation as opposed to these sort of vague notions that he's come up with, we'd be happy to try to answer. If they're detailed questions or if they're statistical types of questions and we don't have the information, I've already given him a commitment that we will try to obtain that information and forward it to the member.

I don't know that it's particularly productive to continue to make these kinds of allegations that are completely unsubstantiated. I know how to fish, and this isn't even a very good fishing expedition.

K. Krueger: Here's a question on the same subject, and it is not at all vague. It's a true-or-false question; it's a yes-or-no question. It doesn't require a lot of detail. Were the people who own and operate pubs and bars in British Columbia in any way given to understand that if they didn't take Club Keno in their establishments, they'd be cut off from future marketing decisions that the B.C. Lottery Corporation made and future opportunities, such as, at the time, slot machines or video lottery terminals? We certainly know what the announcement has been this spring. This is not a vague allegation; this is a specific allegation that people have made, and the gentlemen who can answer the question are with the minister. I haven't seen him ask them. He didn't know the answer last night. He doesn't think that would have happened. I'd like him to look to his left or to his right, ask the question and give us the answer.

Hon. D. Miller: The answer is no. The member need not continue to refer to officials. The questions, if they're directed to me, I'll try to answer. If it's a question that I don't have an answer for, then I'll try to get that kind of detail from the officials who are available. So the member can, I think, properly dispense with this looking-left-or-right business.

K. Krueger: Would the minister, then, with the benefit of the advice he has available to him, explain to the House why the B.C. Lottery Corporation has never contributed to either the assessment or treatment of gambling addicts in British Columbia?

Hon. D. Miller: Those are policy questions that are not germane to the corporation.

K. Krueger: The B.C. Lottery Corporation has been the principal source of gaming revenues to this province for some years now. Gaming revenues to this province have totalled almost $300 million a year. There is an addiction level of 4 percent, according to the 1993 and 1996 Angus Reid surveys commissioned by and paid for by this government through, I believe, the B.C. Lottery Corporation. So it certainly is germane to the B.C. Lottery Corporation in that they've been the largest gaming operator in B.C. to date. They've paid for the studies, as I understand it, but they've never paid a nickel, as I understand it, toward the problems experienced by addicts and their families and their victims throughout British Columbia. I'd like to know the Lottery Corporation's rationale.

Hon. D. Miller: I would again remind the committee that we spent almost two entire, long days on the issues surrounding addiction treatment -- those kinds of questions. It was clearly understood that we had canvassed those issues and that we then were going to move directly to the corporation with respect to the operation of the entity. We have done that extensively, repetitiously, and we're not going to duplicate that again.

K. Krueger: B.C. Lottery Corporation estimates were clearly and definitively separated from gaming. This is a really puzzling question to a lot of people. I read into the record yesterday -- and I will again today, if the minister needs me to -- a letter from one of the B.C. Lottery Corporation's vendors who had become more and more uncomfortable with the marketing techniques. I hear from people such as the woman I think of at the moment whose husband spends $500 per night on breakopen tickets in a bar. When I heard from her, he had attempted suicide the night before because they had had a domestic dispute over these expenditures. Therefore I'd like to know what the president and the vice-president of the B.C. Lottery Corporation have told the minister as to their reasons for not having been involved in dealing with and resolving the gambling addiction problem in British Columbia up until now.

C. Hansen: I want to get back to a couple of the issues that we raised last night, where the minister indicated that he didn't have adequate information at his disposal. I raised the subject of the World Cup of soccer lottery program and asked whether or not that particular involvement had been a financial success for the B.C. Lottery Corporation. The minister didn't have that information at the time. So now that he has officials with him, perhaps he could give us that information.

Hon. D. Miller: It was a two-week lottery. We sold $100,000 worth of product, and the profit was $20,000.

[10:45]

[ Page 4728 ]

Hon. D. Miller: No, there was one other: the European soccer cup.

C. Hansen: Again, could the minister advise us as to whether or not that produced a net profit for the corporation?

Hon. D. Miller: It was about break-even.

K. Krueger: The B.C. Lottery Corporation prepared a briefing paper for the minister. Last night he told us he hadn't found the time to read his briefing papers. The heading of it was: "Problem gambling on the rise in B.C. -- problem gambling replication study." The minister had two pages of recommended responses that were blacked out on the freedom-of-information request response that we received. I wonder if the minister would now do this House the courtesy of at least telling us what the B.C. Lottery Corporation's recommended response on that issue was.

Obviously not. The B.C. Lottery Corporation also prepared a briefing paper for the minister: "What is the public's opinion on Club Keno being sold in licensed premises?" In its background statement, it says: "Recent statements have included misinformation regarding Club Keno. To determine awareness and measure overall opinion and acceptance of Club Keno, BCLC commissioned the Angus Reid Group to identify the public's true opinions." Is this the study that the minister referred to yesterday and the one that he referred to again this morning?

The Chair: The Chair would like to remind members that we do have rules in regard to repetition and relevancy in debate. I would like to see members move toward a process that contributes to reaching a decision on these estimates.

K. Krueger: Obviously we seek to know, and we don't get a whole lot of cooperation in finding out, what efforts the B.C. Lottery Corporation has gone to, if any. When we find some indication that they have made some efforts, the results are blacked out, even on freedom-of-information requests. It's odd that there is such a veil of secrecy around this subject, although I certainly think the B.C. Lottery Corporation has reason to have sensitivities about its lack of participation in the resolution of the problem to date.

The briefing paper goes on to say: "The details of this report have not been released to media or special interest groups." Perhaps the official opposition is included as a special interest group. Why would it be that the details of this report have not been released to the media or special interest groups?

Hon. D. Miller: I find it somewhat astounding that the member who, in terms of quite rightly representing the needs of his constituents, would lobby so hard for a contract to print the tickets -- the very things that he appears throughout these estimates to oppose. That he would lobby so intensely and would even go to the extent of saying that the contract should be awarded to a firm in his riding untendered, and then to have a complete dichotomy with respect to the kind of tone he's taking here, I find very, very puzzling.

The Chair: The Chair would like to remind members that we are dealing with the administrative action of the minister's department in regard to the Lottery Corporation.

K. Krueger: Surely, what's sauce for the minister is sauce for the opposition. Once again the minister has been repetitious, and once again I will correct the record to make it clear that the conversation which passed between his executive assistant and me was with regard to the renewal of the Pollard Banknote contract in Kamloops. It had been negotiated in 1991, when an NDP MLA was the sitting member, and questions on it were prominent in late 1996. The alleged "lobbying so hard" amounted to a conversation between the minister's assistant and me, where I assured him that we understood the situation in that there were no suppliers in Canada west of Montreal, and that if the government chose to negotiate again, we did not intend to be critical of them for that.

In any event, what we are talking about here is the responsibility that comes along with government entering into activities that may have a downside for the public, and clearly gambling has a downside for the public in any jurisdiction. This government has enjoyed substantial revenue from gambling, largely through the B.C. Lottery Corporation, to the tune of nearly $300 million per year. But until this year it has never made a decision to participate in dealing with the problems that people experience as a result, and even this year it has announced something but not delivered anything for those people, despite launching a massive gambling expansion.

The B.C. Lottery Corporation has clearly spent some money on surveying the public and dealing with some of these issues, and they're very secretive about the results. Might we know why the details of this report on the public's opinion of Club Keno have not been released to the media at the date of this briefing paper, and when they likely will be?

Hon. D. Miller: Revisionist history is interesting. I did give some numbers last night.

K. Krueger: This question wasn't about numbers; this question was about when the results of this survey will be released to the media and to the public and to the so-called special interest groups.

Observing that the minister has no intention of answering, and again, now that he has the benefit of some resources, we'd like to know if the B.C. Lottery Corporation has made any changes in its advertising policy for this or next fiscal year.

Hon. D. Miller: We dealt extensively with advertising last night.

K. Krueger: Yes, and we dealt in a vacuum with contemptuous, brief and totally unsatisfactory answers in most cases.

Hon. D. Miller: Point of order, Mr. Chairman. I don't think that at any time, in the judgment of the Chair, I've been contemptuous. Certainly the member has no basis on which to make those kinds of statements. They may not be unparliamentary, but they don't make a lot of sense.

The Chair: The Chair would ask the member if he meant to impute improper motives to a member of the House.

K. Krueger: All the hon. member meant to do was state a sense of how the answers ran last evening.

The Chair: Just a yes or no, member, would do.

K. Krueger: To impute improper motives?

[ Page 4729 ]

Hon. D. Miller: Just say no.

K. Krueger: I'll say no.

We asked last night -- and the minister wasn't sure of the answer at all -- who it is that licenses the sale of slot machines in Canada. He referred to the three licensed firms that were on the shortlist for providing the slot machines. Could we know who that is?

[H. Giesbrecht in the chair.]

Hon. D. Miller: It's provincial jurisdiction, through the Attorney General's ministry.

K. Krueger: We asked, when the RFP went out, whether it was Canada-wide, North America-wide or worldwide and what sort of RFP it was. Could we have that answer today?

Hon. D. Miller: North America.

K. Krueger: The minister wasn't entirely sure about the question of whether the Lottery Corporation has a written policy with regard to potential conflict of interest for its managers and employees. We're thinking very broadly here but also specifically with regard to employment of relatives of B.C. Lottery Corporation employees in suppliers, companies, advertising companies or any sort of operation that the B.C. Lottery Corporation does business with.

Hon. D. Miller: Yes, there is a policy.

K. Krueger: Could we please have a copy of that policy?

Hon. D. Miller: Certainly.

K. Krueger: Have there, to the knowledge of the B.C. Lottery Corporation, been any violations of that policy in the last several years?

Hon. D. Miller: No.

K. Krueger: Another question the minister didn't have an answer to last night was the cost of the legal action which the B.C. Lottery Corporation launched against the city of Vancouver last fall. Could we have that number, please?

Hon. D. Miller: It was $75,000.

K. Krueger: Is there a budget this year for dealing with municipalities that will resist the installation of slot machines within their jurisdictions?

Hon. D. Miller: No.

K. Krueger: Does the B.C. Lottery Corporation have written guidelines as to when its employees can travel outside British Columbia or outside Canada? If so, could we have a copy of that policy?

Hon. D. Miller: Certainly.

C. Hansen: I think that pretty well wraps up the questions we had for the Lottery Corporation. We're prepared to move on. Certainly on behalf of this side of the House, we'd like to thank the officials for being available. We've managed to plow through some specific questions fairly quickly this morning as a result. Thank you.

Hon. D. Miller: It will just take a few minutes to get the other people in for the next set. Thanks very much. Maybe we could have a short recess to allow for the change of officials.

The committee recessed from 10:58 a.m. to 11:07 a.m.

[W. Hartley in the chair.]

Hon. D. Miller: First of all, just to introduce officials to the members opposite, they are: Mr. Rhodes and Mr. Brown in the front row; behind me, Mr. Tom Ward, senior vice-president of engineering and construction; Mike Carter, senior VP of operations and customer services; and Harry Martin, vice-president of corporate safety and standards.

Just a few opening comments about the operations of the corporation for fiscal '97-98. Members may be aware that there have been some challenges that the corporation has had to deal with. Notwithstanding that, I think there has been some substantive measurable progress, such as completion of the first Century-class vessel, which is a story unto itself. It probably won't get the kind of publicity that I think would be interesting, in that this ferry, built in a B.C. yard, has outperformed its design specifications. I said at the opening, and repeat here, that on sort of the technical side of things I think you'll see that that vessel will be written about: its lack of weight, its manoeuvrability -- those kinds of things. It's an outstanding vessel, produced here in British Columbia in a B.C. shipyard by British Columbia workers.

The Duke Point terminal was opened just in the past couple of weeks. I actually had the occasion to use the Island Highway this weekend. That and the connection with the Duke Point terminal will certainly do a heck of a lot, particularly for the Nanaimo region, in terms of traffic congestion and the ease of passengers utilizing B.C. Ferries now, with the option of both Duke Point and Nanaimo.

As well, although last week I had to cancel a trip over to the assembly yard to view progress on the cat, I understand things are going very, very well on that. It's a tricky piece of engineering and construction. I was delighted to learn that when they came to fit the two major pieces of the hull together -- as one person described it to me -- they couldn't slip a business card in the space between them once it was fully fitted. So that means that the specifications and the quality control are being watched very, very carefully. I think all British Columbians look forward to the launch of that vessel, that first fast ferry, hopefully some time later this year.

The midcoast and northern runs. We saw an expansion of the sailing days on the northern run this year, providing more opportunities, particularly on the tourism side, for northern British Columbia and Vancouver Island. The new midcoast service is proving to be. . . . It is in an area of my constituency, a very significant area of British Columbia, the midcoast, and I have now seen write-ups in the Globe and Mail, the Los Angeles Times, the Fargo News. . . . Did anybody see that movie Fargo? It was a delightful little movie. I have spoken to people, far and wide. We've had the opportunity to take that trip, most recently last Thursday night. At a dinner with some business people, Darcy Rezak mentioned that he had been on the vessel. He was just glowing in his compliments about that new service. We're very, very excited about it, as are the people on the midcoast, who, in some communities for the 

[ Page 4730 ]

first time, now have some opportunity to develop local economies built around tourism and freight services. That, of course, branches right up into the Cariboo -- the opportunity for the triangle run. So we think we've made some significant progress in terms of the service side.

We're also working on a relatively new initiative on the stakeholder committee process that was really pioneered on the mid- and north coast in terms of the new service options and the planning there. We are looking at that and undertaking that in other parts of the service regions, principally the Gulf Islands, where there are indeed significant challenges in terms of the cost of service. But we do feel that if people in those communities are part of the planning, they'll have a better understanding of the challenges of the corporation and we can move forward to deal with some of those issues.

Financially it has been, again, a challenge. We anticipate that when their final report comes out for the last fiscal, we will be posting an operating loss of about $28 million, which is a substantial increase from the previous year's of $3.4 million. There were reductions in the traffic throughout the system, and the government did not proceed with tariff adjustments -- we skipped a year -- and those are contributing factors. Fuel costs and those kinds of things also contributed. Notwithstanding that, we have been in a cost-cutting mode and we anticipate that we will be successful in developing cost reductions of about $10 million over two fiscal years.

The 1997 outlook is for an improvement. We anticipate a reduction in the operating loss, and we anticipate that in the year following that, we will be in a break-even position on the operating side.

So, just a few opening comments. We'll be pleased to try to answer questions the members may have.

D. Symons: I appreciate those introductory remarks. I happen to know the gentleman sitting opposite here, having run through this exercise a number of years. The minister has changed, but indeed, the players behind the minister remain the same. So I'm wondering if for the benefit of the others the minister might introduce the staff and the position they hold just so that everybody here will know.

An Hon. Member: He did.

D. Symons: Oh, you did. I'm sorry, I was on the way here.

Yes, I like your opening remarks because there are other things I'd like to just add to that and then we can get into the actual meat of the estimates debate. You know, the perception for many people -- and particularly people who live here on the Island, and on the coast -- is that the ferries are an extension of the highways. I know this is quite an issue and has been for a long time with many of these people. Historically, that does not seem to be the case, because the ferries -- on the salt water, anyway -- were run by the private sector. They provided the service basically at cost, or at a profit, really. It was through the late fifties and sixties that the government gradually took over the major routes, and because of taking over the money-making routes, they basically drove the other providers of service out of business.

Through the economic boom years, the service improved and so did expectations of the ferry service. We are now faced with the problem of providing a service that balances the expectations of the people who use the ferry service with the cost of providing that service. Indeed, the minister made three or four remarks -- which we'll be following up -- about the sort of financial difficulties that the Ferry Corporation finds itself in. So the problem really is: how much should the public purse pay towards subsidizing the ferry service? It would seem from remarks made in the past couple of years by the now Premier and the minister last year, that eventually the theme of the government is to make the Ferry Corporation self-sufficient, that there would be no government subsidy. This government has been steadily reducing that subsidy, and I suspect that the object is to remove it entirely.

The federal government has made a commitment -- and this year that commitment is, I think, close to $21 million -- to supporting coastal ferry service. I'm wondering, as the provincial government seems to be cutting back its subsidy support, exactly what financial support the B.C. government is giving this year and whether it is intended that the federal government be the only one giving a subsidy to B.C. Ferries.

[11:15]

Interjection.

Hon. D. Miller: In 1970, yes. That's right. So that's $21 million, almost $22 million. But I go back to my opening remarks in terms of the kind of service extensions and expansions that we've brought into the mid-coast and expansion of service to the north coast. So, you're right, there is a debate relative to the subsidy of the Crown to the B.C. Ferry Corporation and what that ought to be. We, this government and the previous government, have over time reduced that from about $50 million to about $4.5 million or $4.7 million currently.

My own view is that there are more efficiencies available in the corporation. We do have to examine, I think, the internal operating subsidy to a variety of different routes. I did indicate that in the southern Gulf Islands, to use one of those, our costs are about $50 million to service 25,000 people. Through the stakeholder process we hope to examine those individual routes to see how greater efficiencies can be obtained. Clearly, there are issues around service, fares, those kinds of things, but it is an issue that we do have to tackle. At the same time, we have to continue to move forward with respect to the capital plan for new vessels and vessel replacement.

Things are proceeding in the kind of direction that I think is the right one. As I indicated, I think we'll be in balance on the operating side, and we'll continue to try to deal with those questions of service quality, fares, etc., on all of our routes.

D. Symons: A Mr. Bill Waters from the university did a study of subsidy policy on low-volume ferry routes and made a comment toward the end of his brief:

"In brief, the amount of subsidy available is inadequate for the long-run viability of services being provided, the future of this subsidy level is uncertain, and there are no directives for the purpose and the distribution of the subsidies."

"The underlying dilemma is familiar in government. It's the age-old conflict between politicians' desire to be prominent when capital expenditures are made and reluctance to be identi-

[ Page 4731 ]

fied with less politically palatable decisions, such as raising prices to pay for the capital expenditures. One way to break this policy deadlock is an institutional change which distances the minister and cabinet from the pricing, operating and service decisions of the company. . . ."

Hon. D. Miller: Well, they are interesting, and I don't completely discount them, but I must say that as a government we've not adopted that approach. I actually think that's fairly accurate. In politics -- and I don't think it's just here; it's everywhere, in my observation -- everybody likes to be in on the good news and everybody hates to be around when there's bad news. But that's not a reason for not dealing with tough issues. So I find it interesting.

I mean, we did raise fares, and as one might expect -- again, I'm not trying to be overly critical -- the critics immediately arose, as one would anticipate they would, and I believe some of them were on the opposition benches. But that's fine; I understand that.

So while the proposal is indeed interesting -- in other words, let's not have fares subject to some political process but rather use some other vehicle -- there are other vehicles available in other sectors. Typically, utility companies -- those that have monopolies -- are subject to regulation. The BCUC is one such vehicle that rules on issues of whether it's fares or the price that Westcoast might want to charge its customers for utilization of the pipelines. But I certainly have not come down on that question.

At the present time, the policy of government dealing with that will continue. Now, if the opposition wants to advance that, it would be interesting in terms of a more substantive debate. But I don't know that the member is really proposing we do that.

D. Symons: No, I think another time and place might be better for that debate, where we're sitting around the table with coffee cups in front of us rather than the formality of the system here. It would be more humane to do these particular estimates in that circumstance, as well. Maybe I'll look forward to the day when that will take place.

Considering that the corporation is running a substantial operating debt and is now into a large capital debt, how does the minister envision that the corporation will turn this growing debt around? He made a comment before that he hopes to be on the plus side on the operating one within a year or so, but I'm wondering. . . . That predication was made a few years ago. The ridership was going to go up, and it's gone down. Revenues were going to be increasing; I don't know if they've increased at the rate that operating expenses have increased. So although the optimism is there each year, it seems that the reality is that it hasn't happened. Without substantial fare increases, which is one option, I don't know what other options the minister is looking at to turn the situation around.

Hon. D. Miller: I did outline in broad terms our anticipation for the future, or at least for the next couple of years, on the operating side. Our willingness to meet the challenge of looking at the issues of service and fares in some of the very high-cost areas, or some of the areas where the losses are significant. . . . But we do anticipate, I think with some degree of accuracy, continued growth of the system. It's clear that, at least here on Vancouver Island, growth continues. While there may be changes in any year over year, in terms of traffic volumes and those kinds of things, over the long term that growth will continue. We're also concentrating on non-tariff revenue. We anticipate that we can grow that in a significant way from its current $60-odd million up to about the $100 million range.

We are also interested -- and I did say this at the launch of the Century-class vessel Skeena Queen. . . . Where there are innovative proposals put forward by the private sector, we're prepared to consider them. In this case, the member may be aware that Allied and its workforce have made a proposal that they in fact could construct two more Century-class vessel, but the capital cost would be theirs. Now, I'm not saying that's a done deal or anything, but those are the kinds of things that we are prepared to entertain that may create some improvement in our position on the capital side. We haven't done any of that, but those are the kinds of things that we are looking at.

D. Symons: On some of the capital expenditures, I think we'll get into that later when I want to discuss the programs and that. But I would caution the minister: I think the leaseback arrangement that you are suggesting -- and I think it has also been suggested for catamarans 2 and 3 as a possibility for getting those into the water -- would be, in a sense, postponing some of the problems we have; you're just making payments over a period of time, hoping that things will improve. In the meantime, that may not be the case. It may not be the solution that's going to be needed to deal with the problems that are taking place with B.C. Ferries.

Looking back over the past few years, I find that the fare increase has been roughly 40 percent in the last six years, yet that has not kept up with the growth of the debt. It hasn't managed to stifle. . . . The growth of debt continues, so there are going to be some real problems. The minister responsible a few years ago, who is now the Premier, when introducing the fast ferry program, kept insisting that the growth in ridership, and by increasing fares only at the rate of the consumer price index, would be enough to take care of all of the added expenses for the capital program. We're finding, as time goes on, that it's not even keeping up with the expenses on the operating side, let alone the capital side. It seems that those projections of only a few years ago are way off, and we're going to have a great deal of trouble in dealing with it.

I hadn't quite planned on getting into this, but can you tell me. . . ? I gather there's a limit on the debt the B.C. Ferry Corporation is allowed to hold at this time. As a matter of fact, I have what I believe is a briefing paper from the British Columbia Ferry Corporation. It's an issue summary, referred to as "tab 22," handwritten in the corner -- if that would help in finding the location of this. It's called: "B.C. Ferries and Provincial Debt Management Plan." One of the items down here is the legislated debt limit. The only trouble is, that legislated debt limit was severed when it was given the information. I can't imagine, if it's a legislated one, why section 13 of freedom-of-information should apply there, because it seems that when I looked up section 13 it doesn't apply at all. Section 13(2)(a) would seem to indicate that that information should be available. So I'm wondering if you might be able to fill in what the legislated debt limit is for B.C. Ferry Corporation.

Hon. D. Miller: It's $730 million. But I want to deal with the main body of the member's question, and that's the issue of the capital -- the need to replace vessels, those kinds of things -- and the impact on the operating side. Again, I think 

[ Page 4732 ]

that you ought to consider the longer term. Indeed, there's a program now, a fairly ambitious program on the capital side, that's required. It's open to some debate, I suppose, for those who feel that the fast ferry was not the right ferry; but it's not open to debate on whether or not vessel replacement was required. I think that in that sense the debate is between the conventional approach and the one that we've chosen.

Notwithstanding that, given the long-term projection on the volume side, the utilization, you have to look at those two in conjunction with each other. There may be a period in your time where you have to increase capital spending because of the reasons I cited, but that's not something that goes on forever. You don't always have a very large, ambitious capital program underway. I think you've got to take a long view, and we fully anticipate that those are manageable issues and will result in the corporation being on at least a break-even basis.

There may be those who advocate that there ought to be a larger explicit subsidy from the Crown. But surely, if one can achieve operating efficiencies, achieve the capital requirements and reduce the dependency on taxpayer-supported subsidy, then that ought to be, or I would think it would be, the appropriate way to go.

D. Symons: I'm going to find one thing here. It's a comment from a fellow named Curtis Eaton, who I think the minister is probably familiar with.

[11:30]

D. Symons: Yes. He comments here -- it was in a newspaper article just a short while back -- that "it's becoming painfully clear that the ability to cross-subsidize is vanishing. Routes 1, 2 and 3 are not the cash cows we thought they were." I think things have changed with those major routes, where they were helping to subsidize a lot of the other routes that were not making money. But I think that the amount of profit that they've made relative to the costs of operating the whole system has gone down as we've brought in the superferries, and I think the same will be true when we bring in the fast ferries on route 2. So I'm wondering. . . . When you talk about bringing in efficiencies, it would seem that what was talked about as an efficiency -- bringing in the superferries -- seems to have reduced the profit that the corporation is making rather than increasing it.

Hon. D. Miller: I did mention, in my opening remarks, some of the capital construction that's taken place -- the Duke Point terminal, superferries, those kinds of things. What's reduced the profitability -- I'll use that term -- of the major routes is the fact that they're now carrying the debt for those facilities. But you're essentially right in terms of the ability to cross-subsidize, which is why I did say that we have to deal with, and are dealing with, the issues of service, fares, etc. -- and I singled out the southern Gulf Islands in that discussion.

I don't have a complete list. I've reviewed a list of the individual operations, and I find -- and I think this is generally true -- that there is a lack of consistency in terms of the balance in terms of both service and fares throughout the smaller routes. I suppose those are historic anomalies, if you like. Again, in terms of coherent policy we're attempting to deal with that, to bring some rationality to the structure. So while we don't anticipate that we're looking at a dramatic fare increase to solve the problem. I really don't think that is the way to go, because it would simply mask some of the issues that I have talked about -- those historical inequities that have been allowed to be left alone. They have to be dealt with, even with some risk of some criticism flowing.

When we did do the most recent fare increase, I noticed that quite an interesting debate ensued, which government didn't take part in. For example, opinions were expressed by people here in Victoria through the chamber of commerce and others that the corporation should deal with those money-losing operations. They are essentially saying: "Why increase the fares on our major routes? They do make money. You should go after those areas where there are operating losses."

One has to be very careful in approaching that question, because British Columbians live all over the place. We have to understand that in some parts of the province, marine transportation links are in fact the only ones -- the critical links. I mention the midcoast as one example where the people up there have historically paid. . . . The number that I recollect is for every consumer good that's purchased in those communities, 27 cents a pound is added onto the price. That's the cost of delivery through what used to be a pretty inefficient system.

In considering ability to pay -- and those are the kinds of things you have to look at -- you have to consider if there are alternative transportation links. If there are multiple transportation links to one point, are they all required to be maintained? Those are the kinds of tough questions. We're trying to deal with it not by developing that internally in the corporation or in government but rather through the stakeholder process, involving the people who live in those regions in the kind of planning that's required.

D. Symons: On many of these points the minister is making, we agree on what the problem is. I guess we're looking for the solutions. You talked about the cost of the infrastructure on the major routes as being one of the reasons that I said earlier that the major routes aren't making the money that they should. Compared to a few years back, prior to the superferries being in operation, can you tell me whether the revenue-to-operating ratio -- just the operating only without the capital costs brought in as debt service -- has been reduced so that routes that were making maybe $1.06 for $1 of revenue operating costs are now making $1.02 or something?

Hon. D. Miller: The consensus from officials seems to be that on a comparative basis it's difficult, because you have to consider capital and those questions of the declining subsidy -- but on a comparative basis, it's either as well or marginally better.

D. Symons: That seems to be at odds with what I had been informed by somebody, so I guess we'll eventually have to see. I'm surprised that these are not worked out by the corporation, where they work out, on the operating side, a cost per passenger for moving them back and forth. Would this not be a normal procedure, where the Ferry Corporation would have benchmarks on how it could measure its success on the different routes and be able to determine whether indeed one particular type of service or ship used is more profitable than another? Is not all that stuff sort of kept track of in a way that. . . ? You may not have the information here, but would that information be available? I'm wondering about the way in which the corporation is benchmarking its various routes and the profits and losses, etc., tied in with that.

Hon. D. Miller: It is done. The member appreciates that there are a variety of factors in that process. You're also 

[ Page 4733 ]

dealing with. . . . In addition to the straight decisions -- say the more technical decisions around the utilization of certain vessels and certain routes, in terms of their ability to meet the job -- that is done. But you are also dealing with the people factor. Decisions of the corporation are not made, if you like, in a vacuum or in a bubble. They're made on the basis of those technical decisions in terms of allocations of ships, etc., but they're also made in terms of the service requirements.

D. Symons: We're moving into dangerous ground here, because I asked the minister last year about the possibility of fare increases, and he responded: "I'm not prepared to move forward on that at present time." It was just about a year ago today that we asked that question. You've recently increased fares in the high season. For foot passengers it's about a 20 percent increase; overall, I think the increases were around the 10 percent range. So they were somewhat larger than the consumer price index change since the last fare increase.

Considering the fact that the corporation is still in a deficit on the operating side, what does the minister see in his crystal ball for fare increases in the next while?

Hon. D. Miller: At the risk of being repetitive, I think my answer would be the same one I gave last year.

D. Symons: Then we'll have to see whether I'm going to come back next year and ask the same question in the same way. We're looking forward to another 10 percent increase, I would assume, then. But I thank the minister for that answer. I think we've dealt with that.

I wonder if the minister might give the following. . . . I'll rattle them off, because they may indeed be there somewhere. You haven't got your annual report out yet, so I haven't got these figures: total revenues for '96-97; total operating costs, and that is just operating costs minus any debt costs; debt-servicing costs for the accumulated operating deficit, so your servicing charges on the operating deficit; and the debt-service charge on the accumulated capital debt. I'm basically trying to find out what yearly amount you're paying in service charges on your operating deficit and on your capital programs.

Hon. D. Miller: We don't have it actually broken down that way, but I will give the member some numbers relative to the categories. On the revenue side, $360 million -- and that's all the tolls, catering, etc. On the operating side, it's $388 million. I did indicate the forecast of a loss of about $28 million on the operating side.

D. Symons: I wonder if I might pass the other questions on, and maybe the minister could get back to them later in the day once he has a chance to find the figures. I was looking for the operating cost minus the debt costs, the debt-servicing costs alone for the operating deficit and the debt-servicing costs for the accumulated capital debt, as well.

Then I'm after the total operating debt, and I think you gave that figure to me. That would be the $28 million you referred to, I believe -- and if we could, the total capital debt to date. So I'm looking basically at adding those two together; the total B.C. Ferry Corporation debt would, I hope, be adding up the operating debt and the capital debt. Maybe the finance VP could correct me if I'm wrong in my assumption that that would be the case.

Hon. D. Miller: My officials have taken down the questions. I'll try to come back. . . . But just to illustrate again, going back to a previous question in terms of where we sit on the operating side relative to some years ago, prior to the corporation having the requirement to meet their own debt-servicing costs and those kinds of things. . . . Excluding debt-servicing, the corporation would have had a profit. Debt-servicing in the $32-33 million range, possibly as high as $38. . . . If I use the forecast figures, it's $38 million. So you can appreciate that excluding that on the operating side, the corporation would have reported a profit.

D. Symons: Does the B.C. Ferry Corporation have a business plan as such, and is there a business plan for each of the separate routes? Along with these business plans, if there are plans, I would assume that there would be a cost-benefit analysis of that particular route. That's something I was referring to before and asking about -- the route costs and so forth.

Does the B.C. Ferry Corporation do a value-for-money audit? And -- I'll just throw in a last one -- are the business plans basically updated year by year?

Hon. D. Miller: Yes, there is a broad strategic plan. There's a business plan, and there are route business plans -- to again go back to my previous answer -- that will be developed. Some have been developed, for example, in the northern service -- and will be developed through the stakeholder process.

D. Symons: I thank the minister for that. I'm a little disappointed in just the few words he added at the end -- talking about how these plans will be developed -- because it would seem that before you put service in, there would first be a business plan. You seem to be indicating we're doing a catch-up on it, but you're going to correct me on that in a moment. All right, that's fine.

I'm wondering if the annual report is available for the '96-97 year. It's three months past the end of the year, and I know that within six months there must be one put in by legislation. Is it ready now, by chance?

Hon. D. Miller: I don't anticipate it would be too much longer. We just received our material back from the auditors this week or last week.

I just want to say that with respect to the route business plans, the only point I was trying to make is that as we try to grapple with some of the service and fare issues, those plans will be developed in conjunction with or through the stakeholder process. That's not to imply or suggest that there's a lack of a plan now. But where we know we have to deal with change, we will consult with the stakeholders in developing those new business plans.

D. Symons: I'm wondering what changes in the traffic mix -- and it may be just a flavour for this rather than specific figures -- have occurred in the last few years on the major routes. I'm meaning the buses, commercial, overheight and underheight vehicles. What have been the changes in that? That indeed is going to affect the revenue side for the corporation.

[11:45]

[ Page 4734 ]

Hon. D. Miller: There has been, again in broad terms. . . . Going through some categories: on passenger-only, some increase; on passenger-and-car, a decrease; buses are up; and there was a decline on the commercial side -- trucks -- but that's coming back. Those are generally the major categories.

D. Symons: I would move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:46 a.m.

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