[ Page 8421 ]

The House met at 2:04 p.m.

Prayers.

R. Thorpe: On behalf of the official opposition, it gives me great pleasure today to introduce His Excellency George Bullen, the high commissioner for the Organization of Eastern Caribbean States, and his delightful wife Margret. Will all the House please make them welcome.

S. Hawkins: In the gallery today are two very good friends of mine from Okanagan West, who are also constituents of mine: Eva Jennings and Michael Jennings. Accompanying them are Phyllis Rivers and Guri Stange. Would the House please help me make them welcome.

W. Hartley: Hon. Speaker, on your behalf I'd like the members to welcome 27 grade 11 students, with some adults and their teacher, Mrs. Albers, from Victoria High School in Victoria.

Hon. J. MacPhail: I'm pleased today to welcome Doug McClelland from the Institute of Chartered Accountants. It is with pleasure that he joins us to watch the proceedings. May we please welcome him.

Hon. D. Miller: It is my pleasure today to introduce a number of guests to the House from South Africa. They are here in British Columbia looking at policy issues related to our mining sector. The South African project, the Kwagga project, is loosely modelled on the Whitehorse Mining Initiative completed here about four years ago. Joining us are Ms. Hesphina Rukato, Mr. Grant Mitchell, Ms. Esther Englebrecht, Ms. Lorraine Mudunungu and Ms. Naseema Ebrahim. With them as well is Ms. Lois Houge, a Canadian adviser attached to the project. I would ask the House to make them most welcome.

Hon. M. Farnworth: I'd also like to take the opportunity from this side of the House to welcome His Excellency George Bullen, the newly appointed high commissioner for the Organization of Eastern Caribbean States. We will be meeting later on this afternoon to discuss issues of mutual interest, and I would ask the House to make him welcome.

G. Campbell: I'd like to introduce today a number of representatives of the Chinese media: from AM-1320, Amy Ko; from AM-1470, Agnes Wu; from Fairchild TV, Endora Fan and senior producer Kevin Ng; from TalentVision TV, Joyce Lee and cameraman Kong Kwai Man; from Ming Pao, Albert Tsui; and from Sing Tao, Carol Tong. I hope the Legislature will make them welcome.

Hon. D. Streifel: I'd like to introduce to the House two people who are extremely important to me: my best friend, my wife Linda; and my best friend's mother-in-law, my mother Edith. I bid the House make them welcome.

B. Penner: It is my pleasure today to make two introductions. First of all, a long-time friend of mine -- in fact, we've been friends since I was a teenager -- is here visiting from Chilliwack: Lisa Steinebach. Would the House please make her welcome.

In addition, a woman by the name of Anna Wong is visiting here today. She works for the Leader of the Official Opposition's office in Vancouver. Would the House please make her welcome.

Hon. C. Evans: Sharoo Modha and her younger sister Puru Dave are visiting us here today. Would the House please make them welcome.

C. Clark: Visiting us today is an employee of the Leader of the Official Opposition's office, who is also a constituent and neighbour of mine: Nancy Holman. I hope the House will make her welcome.

M. Sihota: Visiting us from India today is Mr. Bhandari, together with his wife and two children. Mr. Bhandari was here the other day as a part of the trade delegation from Punjab, and he was so captivated by the beauty of this city and this island that they decided to extend their stay and come back to Victoria for another day. Would all members please make them welcome.

Oral Questions

LOTTERY CORPORATION DOCUMENTS
AND COSTS OF FOI RELEASE

Hon. M. Farnworth: I would suggest that the hon. member read the reports when they are released by the freedom-of-information commissioner, and she will find the information she wants to find out.

The Speaker: First supplementary, the member for Oak Bay-Gordon Head.

I. Chong: From the response of the minister, it's obvious that he hasn't read the reports; otherwise, he would be able to give us that information. A very simple question to the minister: can the minister responsible for the B.C. Lottery Corporation tell us why, when we ask for marketing documents geared to a specific ethnic group, we find that there are over 6,500 pages of documents in the ministry's possession related specifically to the Asian community?

Hon. M. Farnworth: I would repeat to the hon. member: read the information. If it has been released under the Freedom of Information Act, it will be released, and the hon. member can see what the Lottery Corporation is doing. She can find out whatever information she wants and can put her own spin on it -- whatever she wants to do. It's public information. She'll read it.

G. Plant: It would be nice if the public could ask for the public's information and get it. Unfortunately, it's not that simple. We made a request for that information on November 7, 1997, and we were told two months later -- January 6 --

[ Page 8422 ]

Hon. M. Farnworth: You know, if there weren't a charge. . . . Nothing in this world is for nothing. There are costs for labour, costs for paper, costs for research, costs for production. There are costs for everything. This is an opposition that time after time criticizes the government for "spending, spending, spending." Well, what we have here is an opposition saying that it should all be for free.

If they want the information, they can get the information. It's been released under freedom of information. They can take the time themselves and read the information for themselves.

The Speaker: First supplementary, the member for Richmond-Steveston.

G. Plant: Here's the situation, and I'll help the minister with some statistics. The freedom-of-information commissioner today referred us to a report that makes it clear that only 32 percent of B.C.'s responses to freedom-of-information requests are actually completed within the 30-day requirement. That's the worst rate in Canada, and the rate for over 60 days is worse -- also the worst province in Canada. Faced with those statistics, this government, including this minister, is introducing fee hikes, charging fees and cutting the expenditures it's prepared to invest in freedom-of-information requests. My question, again to the minister, is: why is he actively taking steps to deny the public access to the documents they have paid for in the first place?

Hon. M. Farnworth: If there's a problem in getting documents out from the FOI commission, it probably has more to do with the blanket requests that come from the opposition on every topic under the sun so that they can engage in fishing expeditions at the taxpayers' expense.

[2:15]

The Speaker: Hon. members. . . . I recognize the member for Shuswap.

NFO, FRBC AND FOREST SECTOR JOBS

Hon. D. Zirnhelt: The member said it was from Golden. The New Forest agreement does not. . . .

Interjections.

Hon. D. Zirnhelt: Sorry, Gold River. First nations, if they're unemployed forest workers, have an opportunity equal to other unemployed forest workers from the IWA, or wherever, to be enrolled in these programs. Further, I would say that we are working with first nations in many cases to have exemptions for first nations projects. Where they have a track record and they are proven performers, we have taken steps to exempt them.

The Speaker: I recognize, for a supplementary, the member for Shuswap.

G. Abbott: That's the entire point here. These people were not unemployed until this meddling government came along and put them there. As a consequence of this government's bureaucratic, centralized meddling, this company now faces bankruptcy. Prior to NFO coming along, the company had pre-signed contracts. Now all the contracts have been shut down. This is a government that tells us that New Forest Opportunities is going to create jobs. To the Minister of Forests: why is it having exactly the opposite effect?

Hon. D. Zirnhelt: They may be talking about the redistribution of the jobs. . . . But if they are local unemployed forest workers, they will have equal opportunity to be employed on New Forest-funded agreements.

Interjections.

The Speaker: Minister, one moment, please. Take your seat.

Hon. members, come to order, please. Members may know the answer, but others of us don't. So I'd like to have an opportunity to hear the answer.

Hon. D. Zirnhelt: The opposition could speak to any displaced forest worker and say it's because of New Forest. New Forest has been established to employ people who have been displaced from all sectors in the forest industry. The opposition was calling for New Forest -- Forest Renewal -- funding to employ all displaced forest workers. We've brought in a system that's fair to all sectors in the forest industry.

C. Clark: Among the people that have been "redistributed" out of jobs are the people in this native community. They point out in their letter that it is young people in particular that are paying the heavy price for this minister's insistence on using NFO. They say: "Speaking of our children, how will our youth ever receive training in the forest? They don't qualify for this program, because they're not displaced forest workers." How can the minister defend this program when youth unemployment is at record highs, when native youth are particularly hard-hit and when he tried to create a program that's supposed to be creating jobs but instead is cutting out the people who need the work the most?

Hon. D. Zirnhelt: Forest Renewal funding is not selecting out youth over anyone else; in fact, the partners of Forest Renewal have suggested that we deal with people who are displaced for whatever reason. It is not designed to bring young people into the forest industry. We have youth employment programs that they may qualify for. This morning the Premier, the Minister Responsible for Youth, announced another youth employment program that some of the first nations people will equally qualify for.

[ Page 8423 ]

C. Clark: Hon. Speaker, what this government should be doing is trying to get young people back to work, trying to break the welfare cycle on native reserves. That's what this government should be doing. They should not be redistributing young people -- young native people -- out of work in B.C.'s forests. That's what they should not be doing. The only way to break the welfare cycle on reserves is to get young people into the workforce. Will the minister shut down NFO and start trying to find programs that will get young people on reserves back to work, so that he can keep the promises he made to the native communities of British Columbia?

Hon. D. Zirnhelt: This opposition is making up some promises. I don't know what they're talking about. We have said that we would maintain. . . .

Interjections.

Hon. D. Zirnhelt: I don't know; they're getting to pointing again and thinking that they can make up promises, hon. Speaker. This opposition. . . . The Leader of the Opposition, at a conference of silviculture workers, said that he would reduce stumpage so there would be no income to Forest Renewal, and there would be no jobs funded by Forest Renewal for anyone, native or not.

We have said to the aboriginal community that the percentage of employment that they had under Forest Renewal. . . . We will have agreements whereby they will have the same proportion of jobs under New Forest and all Forest Renewal programs as they had before.

G. Farrell-Collins: Well, it appears that the IWA members in the minister's own community are so happy with Forest Renewal that at their last meeting they voted overwhelmingly to call for a full audit of the practices and procedures undertaken by Forest Renewal. Things are so bad with Forest Renewal that the minister's own friends in his own riding are calling for a full audit of the Forest Renewal B.C. program. Can the minister tell me if he intends to honour that request from friends and supporters in his own riding?

Hon. D. Zirnhelt: We have every intention of meeting with them to discuss their concerns. There have been meetings taking place already -- at least, phone calls. I was at the meeting where this resolution was discussed. So I have full knowledge of their concerns, and I addressed them in the meeting.

The Speaker: The Opposition House Leader for his supplementary.

G. Farrell-Collins: Thank you, hon. Speaker, but he didn't answer the question, did he? His own members, his own supporters in his own riding, said, "FRBC has developed into one of the most complex bureaucracies in the province of British Columbia," exactly as the opposition said it would four years ago. Forest Renewal B.C. is the most bureaucratic operation this government has yet set up, and the minister's own supporters in his own riding say so. Will the minister not just discuss, not just meet with, not just talk about, but will he stand up today and call for the audit of Forest Renewal B.C. so his own supporters in his own riding can get to the bottom of Forest Renewal B.C.?

Interjections.

The Speaker: Minister, before you begin, I think we need a little quiet on your side of the House. I recognize the Minister of Forests.

Hon. D. Zirnhelt: I'm not convinced that there's a need for an audit, for wasting money on an audit, when what we really need is the expeditious spending and delivery of. . . .

Interjections.

Hon. D. Zirnhelt: A year ago this opposition and others were criticizing Forest Renewal for the amount of money they spent on administration. That has been reduced dramatically through the creation of long-term agreements for land-based programs. So we are reducing the amount spent on administration. With respect to this particular program, it was an issue around a funding agreement for some $600,000. The vast majority of the money being spent in that region is going to the IWA workers there to train and retrain people in the forest industry. I think those people in that area understand that there's an agreement there, it's been signed, they have funds, and an audit isn't necessary.

M. de Jong: Well, using the new terminology, I think it's time the Premier redistributed this minister out of his present portfolio.

An Hon. Member: Expeditiously too.

M. de Jong: Expeditiously, as my colleague says.

Look, the IWA has got no confidence in this minister; it's got no confidence in Forest Renewal B.C. The president of Local 1-425, Brian Symms, says: "It's very easy to make an announcement on a project, but it's quite another thing to deliver funding for these projects. That's where the problem lies with FRBC -- announcements and delivery." It sounds like a job review -- a performance review -- of this Premier, hon. Speaker. My question to the minister is: after four years, why are we still hearing about the inability of Forest Renewal B.C. to deliver on-the-ground programs?

The Speaker: Mr. Premier, briefly, please.

Hon. G. Clark: Thank you, hon. Speaker.

Isn't it embarrassing. . . ?

Interjections.

The Speaker: Hon. members, no answer has yet come forth. So please, silence is required. Some order is required, please.

Interjections.

The Speaker: Order!

Hon. G. Clark: Hon. Speaker, aren't the members opposite embarrassed to be asking a question of the Minister of Forests about a meeting that he attended and for which they rely for their information on newspaper reports? The members opposite in this House consistently ask questions of which they know not what they're talking about. The mem-

[ Page 8424 ]

This program is putting thousands of people to work in the member's constituency -- thousands, hon. Speaker. I look forward to the debate in this House and in the next election, when we examine the hypocrisy of the members opposite on Forest Renewal.

Orders of the Day

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

[2:30]

ESTIMATES: MINISTRY OF FORESTS

Hon. D. Zirnhelt: I'm pleased to introduce the 1998-99 budget for the Ministry of Forests. Despite continued diversification in the provincial economy, the forest products industry still plays a central role in the economic well-being of British Columbia. Direct employment in the forest industry accounts for approximately 6 percent of total provincial employment. The gross domestic product directly from the forest sector accounts for approximately 7 percent of provincial GDP.

British Columbians want and expect our forests to be managed with a view to the future. They expect us to meet today's challenges without compromising the needs of future generations, and that is no small task. Declining markets abroad are testing the strength and resilience of our forest sector. At the same time, industry continues to restructure in preparation for future growth. These are critical short-term impacts. While experience indicates that our industry will recover in the long term, ministry policy and programs must recognize and deal with short-term needs as well as plan for the future.

The ministry's mandate, as outlined in the Ministry of Forests Act, is to encourage maximum productivity with the forests and range resources; to manage, protect and conserve the forest and range resources; to plan the use of the Crown's forest and range resources in consultation and cooperation with other ministries, including agencies of the Crown and the private sector; to encourage a vigorous, efficient and world-competitive timber processing industry and to assert the financial interests of the Crown in its forests and range resources systematically and equitably in the interests of all British Columbians now and in the future.

The ministry's mandate hasn't changed in recent years, but the strategies we use to carry it out have changed significantly. Not long ago, the Ministry of Forests focused mostly on what we would describe as economics: getting the timber harvested, collecting revenues, managing our ownership interest in the resource. Over the past decade, however, management of our forests has become far more complex. A wider range of interests is being expressed, and the ministry must consider these broader expectations in all our resource use decisions.

Social factors that influence land and resource use decisions include: urban expansion, which introduces new and sometimes conflicting land use options and increases pressures to preserve accessible forests for recreational, aesthetic and water supply uses; government priorities for health and education; the desire of many first nations communities for greater participation in the forest industry; increased interest in recreational activities in forests; and environmental stewardship, which includes increased emphasis on biodiversity, fish habitats and aesthetics.

Dealing with international and domestic market forces is a critical part of the sector's economics. While social factors continue to be central to all our work, we must respond to a clear need for economic restoration of our forest industry and communities. Our response to these challenges includes action in three areas: strengthening and diversifying the forest sector through the jobs and timber accord; cutting red tape and cost to industry in the Forest Practices Code, without reducing environmental standards; and lowering stumpage fees, the week before last, to account for unforeseen -- largely Forest Practices Code-related -- logging costs since 1994. During the past year we have taken significant actions on all three fronts, and we will continue to focus on all three areas this year and into the future.

Hon. Speaker, I'd like to talk a bit about the first part of our response. The jobs and timber accord was introduced just under a year ago, and despite a major downturn in our international markets, several of the key components have already been implemented. The accord recognizes important linkages among a healthy forest economy, sustainable forestry management, stable communities and jobs. It sets priorities, actions and programs to strengthen those linkages. Those priorities are: working with industry in order to increase cost-competitiveness; maximizing investment and employment benefits through diversification; creating new, economically viable and family-supporting jobs in the forest sector; sustaining and enhancing existing jobs; generating more value from every tree harvested; and making investments that increase the growth, yield, value and availability of timber.

The jobs and timber accord is a four-year strategy to support an industry in transition. It will take time for industry to adapt to new markets and market conditions. It will take time for the goals of the accord to be realized. We are in year one of a program which extends until December 31, 2001. The accord identifies specific initiatives that achieve its goals: increasing the timber supply to secondary wood industries; encouraging the value-added sector by increasing the transfer of sawn fibre from major licensees; increased industry investment in improved technology and higher value-added products; investments through Forest Renewal B.C. to renew our forests; improved delivery of forest renewal programs and programs through multi-year investment agreements with forest companies; improvement of industries' access to their full allowable annual cut allocation; and the appointment of a jobs accord advocate to work closely with forest sector partners and oversee progress towards the job creation targets.

I'm pleased to report our progress on these initiatives to date. On May 25 I announced the Small Business 2000 project, which will benefit remanufacturers who often have trouble getting fibre. Through this project the ministry will sell 100 percent of the small business portion of the allowable annual cut. We will sell the undersold small business volume of

[ Page 8425 ]

The government is also making progress through Forest Renewal, which is renewing our forests and supporting workers in communities. Forest Renewal B.C.'s 1998-99 business investment plan set investments at over $500 million, clearly on target to invest the $2 billion that we said over the first five years. That includes $356 million dedicated to land-based programs, creating 5,600 jobs and, for the second year in a row, exceeding Forest Renewal's jobs and timber target of 5,000 jobs.

With respect to improving industry's access to full allowable annual cut allocations, we continue to make progress on key performance agreements with forest companies. On average, licensees have increased their on-hand permitted harvesting work from under six months to over one year. We are well on the way to meeting the jobs and timber accord target of two years for all companies that want it. The jobs accord advocate, Garry Wouters, assumed his position on April 1. His work began, and he will be releasing an annual report in the coming weeks detailing accord implementation.

Other achievements and initiatives are as follows. First, three innovative forest practices agreements have been signed with seven forest companies -- five of them in one joint project in the Kamloops region. More than 80 communities have filed expressions of interest in community forest pilot projects. Legislation regarding these pilot projects will be introduced during the session. Value-added facilitators funded by Forest Renewal B.C. are about to begin the work of boosting the wood supply to the value-added sector by 70 percent. New Forest Opportunities Ltd. is now operating on the coast, and it will provide increased job certainty to workers on Forest Renewal B.C. projects and more economic certainty to forest-dependent communities.

I want to talk about the second major action of the government to assist the forest sector: the changes to the Forest Practices Code regulations which were introduced in April this year. The streamlined regulations make operations simpler and less costly for industry without compromising environmental standards. Legislation to amend the Forest Practices Code of British Columbia Act was introduced during the last legislative session. New regulations developed from the recommendations of industry and other stakeholders come into effect on June 15.

Changes in the regulations for operational planning, forest roads, silviculture practices and timber harvesting practices include moving towards a more results-based code that focuses on results on the ground, not on paperwork; reducing the number of plans from six to three, eliminating unnecessary reviews and uncertainty around plan approvals; ensuring that strict environmental standards are maintained for timber harvesting; and improving the enforcement of the code. These changes will lead to more professional accountability. The shift towards monitoring for end results will place greater reliance on the professional forester's judgment and quality of work. Code-related changes will reduce industry's costs by approximately $5 a cubic metre and contribute to the government's strategy to encourage investment and stimulate the forest economy.

The week before last we implemented our third strategic response to the economic factors affecting the market. On May 28, at the Premier's economic summit in Kamloops, the Premier and I announced a significant reduction in the basic stumpage rate. Stumpage charged to the B.C. forest industry is being lowered by an average of $8.10 per cubic metre on the coast and $3.50 in the interior. The reduction took effect on June 1 and will reduce industry costs by about $600 million over the next three years. This latest stumpage reduction accounts for largely unforeseen code-related cost increases since 1994. It follows significant price-driven reductions that have occurred since October 1997 through our regular quarterly adjustments.

In addition to reducing stumpage rates, we're modifying the way stumpage is calculated. In addition to lumber prices, pulp chip prices will now be added to the formula to make the stumpage system more market-sensitive. Senior government officials have held discussions with their Canada-U.S. softwood lumber agreement partners to ensure that the reasons for the reduction are well understood. We are confident that the reduction falls within the parameters of the Canada-U.S. softwood lumber agreement.

Combining quarterly adjustments with the reduction to the target rate we have just introduced, stumpage rates will have been cut by $9.67, or 28 percent, on the coast and $9.19, or 30 percent, in the interior. Government and industry have worked together to address this serious issue of competitiveness. Tom Stephens, who is the president and CEO of MacMillan Bloedel, said that government's aggressive action puts companies in a better competitive position and that it influenced decisions to restart operations at some of its mills. Through this stumpage reduction, government has made a significant contribution to help the forest sector return to profitability.

As a result of changes to the Forest Practices Code and stumpage reductions, we have cut industry's cost by some $14 a cubic metre. In addition, achievements under the jobs and timber accord will help stabilize B.C.'s forest economy in the short term and help it expand and diversify in the long term. They are clear, purposeful actions that address issues related to cost competitiveness and investment in B.C.'s forest economy.

All of the actions we have taken in our three priority areas -- the jobs and timber accord, changes to the Forest Practices Code and stumpage reductions -- underscore our government's commitment to improve B.C.'s forest economy. And they are the context for the budget that I'm presenting today. In the 1998-99 year, as in '97-98, the ministry will focus on resource stewardship, maintaining a healthy commercial forest industry and protecting the forest resource.

This budget is about $16.5 million, or 3 percent smaller than last year. As you will recall, the ministry's budget was reduced by 23 percent in 1997-98. In order to protect the staff and financial resources needed in our districts, a greater portion of this reduction is applied to headquarters branches. The headquarters budgets are reduced by 15 percent, in addition to a 14 percent reduction in 1997-98. The regional and district offices will absorb a 5 percent reduction.

[ Page 8426 ]

We've also added $5 million for funding initiatives in another high-priority area: the small business forest enterprise program. Operations within the ministry are under constant scrutiny to make sure that we are as cost-effective as we can be in making land and resource decisions, in reviewing and approving operational plans, in issuing cutting authorities, in monitoring licensee performance and in protecting our forests.

In conclusion, hon. Chair, the Ministry of Forests has accomplished a great deal in the past year and will continue to work hard to support a healthy business and investment climate in the forest sector. Producers, workers and forest communities will all benefit from lower stumpage rates, reduced operating costs and initiatives under the jobs and timber accord. The budget I'm presenting today supports these three strategic initiatives, and it will help us support our forest economy and create jobs in the same way that the government already protects the environment and creates parks and protected areas.

[2:45]

One of the things I want to do this year, to hopefully make our estimates an efficient and productive process, is to outline early on for the minister where we propose to go with respect to the issues we'll be canvassing in his ministry. Hopefully, we are all working towards the goal of a stronger, more viable forest industry in the province of British Columbia. I don't think there's any great mystery about the things we'll be wanting to talk about. I want to be very straightforward with the minister about where we're going on this.

Before I do that, and before the deputy critic of Forests offers his introductory comments as well, I want to say a few things about what I have learned to date -- after several months of being the Forests critic -- about the forest industry in British Columbia. Over the past several months, it certainly has been a pleasure for me to visit many parts of this province, to have a firsthand look at the forest industry and to have firsthand discussions with many people who work in the forest industry. I've learned a ton from the many people I've spoken to. It's helped me enormously in terms of understanding the complex issues that frequently face this industry and this resource.

The people I've talked to, and the places I've visited in the province, certainly speak to both the current strengths and the weaknesses in our forests. I think it's important to say at the outset that, in my view and certainly in the view of the official opposition, forests can be and should be our key industry for decades and centuries into the future. This is an industry, a resource, that has served this province well for 150 years. There's no reason, with reasonable management, why it can't continue to be the centre, the backbone, of our economy for many more years to come.

What we have here is an industry that produces at least three critical things. One is jobs. My father and my grandfather worked in the forest industry for most of their lives, and I'm certainly not an exception in that regard. I suspect that many members of this House have had parents who worked in the forest industry. If you live in the interior or on the coast of British Columbia, chances are that if you don't work in the industry, several of your friends do. It's the heart, the backbone, of our economy. It produces jobs; it produces revenues. We only have to look at the Ministry of Finance budget for this province to see how critical our forests are to the present and future of British Columbia. Without a healthy forest industry that produces the revenues we desperately need to maintain quality health and education systems, we would be in great difficulty in this province. So revenues to government are something important that this industry and this resource produce.

New investment in this province. Regrettably, because of some onerous and regressive policies, we have not seen the level of investment in this industry in recent years that we need to see. But I think that can be turned around as well. We need that new investment, because without the new investment, of course, we won't be seeing any new jobs in British Columbia. That's a key linkage here and one that we will certainly be exploring in detail in the coming estimates.

There are lots of other positive things that can be said about out forest industry. We have a tremendous land base, and a large proportion of that land base grows trees very well. In fact, we've been learning just in recent months that our second-growth forests are growing better than had been anticipated. We've got the climate, the soils and so on that allow us to produce forests in perpetuity. That should be a tremendous advantage to this province and should provide those things -- the jobs, the investment and the revenues -- which are such a critical part of our future.

As well, we have an energetic, well-educated and well-trained workforce that is well equipped to take trees from our forests and manufacture from them products which will, hopefully, be competitive on world markets. We have a forest industry which is highly efficient and which maximizes the fibre that our forests produce, for value as well as for uses.

Regrettably, however, despite the advantages that we have in British Columbia with our forests, government has too frequently been an impediment rather than an assistant to progress in our forests. In fact, I think that when the historians a few years hence take a look at the record of this government in the 1990s, they will put into perspective the performance of this ministry and this government not just in 1998 but in a period which might well span from 1991 through to early in the next century. Perhaps not; I guess the members on the other side would know better than that.

But clearly, over the period from 1991 to the present, we have seen government policies that in my estimation have done terrible damage not only to the industry and the jobs it supports but to the economy as a whole in British Columbia. Too frequently we have seen this government view the forest industry as a fat goose that would continuously lay golden eggs in this province regardless of what abuse was levelled at it.

Further, I think -- and I don't think the hon. minister shares this view -- we have seen too frequently from the other

[ Page 8427 ]

As well, what we have seen in the policies of this government from '91 through to the present has been a view that while forest revenues were always welcome, there should be no particular concern paid to the cost side of the ledger -- that the industry would continue to provide those revenues regardless of whether the cost structure that was thrown onto the industry was having negative consequences or not. Of course, what we're seeing in the current weeks and months is the reality that if you load down the forest industry in British Columbia with too many regressive taxes, too much regulatory burden and so on, the industry in fact can't compete internationally. If they can't compete internationally, they're not employing people in British Columbia. They're not cutting trees in the province to the extent that the revenue projectors anticipated. As a consequence, we see those revenues to government shrinking as well. I suspect that is in part one of the reasons why this government has in recent weeks moved, at least to some extent, to try to address the deplorable cost side faced by the industry in British Columbia.

What we have seen since '91 -- and we're certainly going to be talking about this a good deal during these estimates -- is a virtual doubling of fibre costs in British Columbia. This doubling of fibre costs is in considerable measure a product of the very process-oriented Forest Practices Code, which this government introduced in '94, I believe it was, and it came into effect in '95. As well, we have seen a skyrocketing of stumpage rates in British Columbia since the mid-1990s. The combination of these two things has thrown the industry into a tailspin. It's put them over the edge in many cases in terms of ability to bear the cost and still produce a product.

One of the distressing things I learned at the Price Waterhouse press conference on Friday morning was that despite Bill 47 -- which we spent a good deal of time on last year -- and other purported cost-saving initiatives on the part of government, we continue to see the costs of fibre increase in the province of British Columbia in 1997. It was up substantially; I believe it was up 5 or 6 percent over 1996, as I recall from Price Waterhouse. We are still seeing an upward curve in terms of those fibre costs. That's something we have to get a handle on, or we're going to be in big trouble.

The minister and I are probably going to have somewhat different views about whether the most recent initiatives of this government are going to be sufficient to turn that around. I guess we all hope that it will. This estimates process is an important part of, hopefully, finding reality. Are we going to be able to turn around that upward-sloping cost curve we've seen as a constant feature of the forest industry in British Columbia under this government's leadership?

In addition to the problems of a very expensive code and the very expensive stumpage in British Columbia, we have the problem of excessive taxation. There were great hopes not only among the forest industry but among virtually everyone in business in British Columbia that this government would do away with the very regressive corporation capital tax on investment in the last budget. Regrettably, they have not done that, and excessive taxation in this province continues to be a problem which besets this industry, along with the other problems we've noted.

Finally, in terms of attitude problems, I think the rhetoric that has periodically emerged from the government benches -- and, in particular, from the mouth of the Premier -- is something which has gone a long way to undermining the business and investment climate in the province of British Columbia. Certainly the Premier may have attempted in recent months to try to put a new cast on some of that. But I think we all remember far too clearly the election campaign of 1996 and the very prominent business-as-enemy theme which was such a big part of that campaign.

I think that there is at this point no single magic bullet which is going to turn the forest industry around in British Columbia. There's no stroke of the pen that's going to cure all of the ills. But even I would acknowledge that some of the steps are in the right direction. We do need a made-in-B.C. stumpage policy. The changes that were announced very recently around stumpage are in the right direction. Are they enough? Well, I think that's a hugely important question that we'll want to explore in depth in our discussions here in estimates.

[3:00]

None of those things. . . . I don't think, as I said, any single magic bullet is going to turn things around. The problem we have today in British Columbia, if I could put it into simple terms and think of it as a ceiling and a floor, is that we have a forest industry which is being crushed between a descending ceiling -- a world product crisis. . . . Regrettably, this is now true, I guess, of the United States as well as of Japan. Our producers are being caught between that descending ceiling of world forest product prices and a rising floor of delivered wood costs. As everyone knows, if the floor rises too high and the ceiling sinks too low, things stop. That's regrettably what we're seeing in British Columbia today with the widespread layoffs in the forest industry. It's not only a case of not being able to get any kind of return on sales of forest products in international markets; it's that the losses from those sales are too large to bear and producers are being forced to shut down.

Some of the cost issues, hon. Chair, could be overlooked in more buoyant times, when world forest product prices were very high in Japan and high in the United States. The cost side of the equation -- which this NDP government had loaded on -- could be overlooked. With the collapse of the Japanese market, the high-cost structure quickly came home to roost. We found ourselves at that point discovering that we had gone from being one of the leanest and most efficient producers of forest products in the world in the early 1990s to one of the most vulnerable and non-competitive producers of forest products in the late 1990s. It's a bad time to be non-competitive. What we have in the world today is a host of new players putting a lot of wood products on international markets, and it's a critical time for our industry to be competitive.

[ Page 8428 ]

To conclude that point, a turnaround in our markets is not necessarily going to mean a turnaround for B.C. forest products. We have to be more competitive if we want to recover our markets in the highly competitive world we live in.

One of the problems that I should mention, as well -- and that I think we'll need to discuss today. . . . And I guess the government has implicitly acknowledged this in the recent stumpage reduction which was announced in Kamloops. What we have seen since the introduction of the so-called superstumpage to fund Forest Renewal B.C. is that too frequently that superstumpage has meant -- as the dean of forestry at UBC puts it -- the decapitalization of the forest industry in British Columbia. Superstumpage has come to represent the difference not only between profit and loss but also between the ability and the inability to recapitalize, to reinvest in sustaining the efficiency and productivity of our forest industry.

This is a key point. If we want to remain even as competitive as we are today, we have to make those substantial investments as reinvestments in industry. We are caught at this point -- and this is most unfortunate -- in a highly destructive spiral, because in recent years there has been no prospect of a return on capital employed. We just have to look at the summaries for 1997 and 1996 by Price Waterhouse. Admittedly, '95 looks better. I suspect we're certainly looking at tough times in '98 -- probably the worst of times, actually. Because there's no prospect of return on capital employed, we have no investment confidence. As a consequence, we have no reinvestment. As a consequence of that, we have reduced competitiveness and, again, as a consequence of that, we have no prospect of profit. All of these become a destructive swirl, which is pulling our forest industry down. Again, the government may be very proud of its record in recent weeks, but we have to look to the record from 1991 through 1998. Given that record, we can see very clearly a large part of the reason for this highly destructive spiral that we are in today.

Obviously we need to turn this around. How are we going to do this? There are some fundamental reforms that are required to restore competitiveness. I know that this is a government that likes to talk about restoring competitiveness and, indeed, to claim that they have taken all the steps necessary to do that. The issue that was raised in question period today is a prime example of the continuation by a government that is doing things which impede the recovery of the forest industry in British Columbia, which impede the restoration of competitiveness of the forest industry rather than providing an assist to restoring competitiveness. Virtually everything this government has done has reduced the viability and competitiveness of the forest industry in British Columbia, and they haven't stopped yet.

Had this government not done what they did around New Forest Opportunities. . . . It won't be any surprise that we're going to be spending a good deal of time on this in estimates. New Forest Opportunities is a classic example, again, of where a government -- I think for ideological reasons -- is undertaking a program which, in a very direct way, is going to diminish rather than enhance the competitiveness of our forest industry in British Columbia. There are some things we need to do. We need to reduce fibre costs. We clearly need a results-based Forest Practices Code in British Columbia.

When the Minister of Forests and the Minister of Environment made their announcement about the reforms, the changes to the Forest Practices Code, they suggested -- and I hope I've got my figures right -- that they could reduce the annual cost of the Forest Practices Code from about $750 million to $400 million. The minister can correct me if I'm wrong, but I believe that was about the magnitude of the savings that they projected as a consequence of the reforms to the code. I hope that's true. I hope we do make those kinds of savings. But the thing we have to remember is: who put a code in place in the first place that cost British Columbia and its forest companies that much money? If we're looking at $350 million a year for two or three years, that is a substantial amount that has been drained -- for apparently no good reason -- out of British Columbia's coffers. We have to be very mindful of that.

Again, the claim of the government is that they are going to be able to deliver the environmental objectives of the code for considerably less without diminishing those goals in any way. Actually, I believe that could be the case. In fact, we believe that with a results-based code, we can do even more; we can go further. We are certainly going to look forward to discussing this with the minister today, and I hope, in fact, that the minister will view our suggestions around the code as constructive. I expect that the minister, being a tractor logger from the interior -- like I am -- might even have a practical view of this and may have to argue very forcefully with his cabinet colleagues at times about some of the issues associated with a more results-based code. I hope that some of the suggestions we can offer him in these estimates will help in that process.

The second thing we need to do to restore the forest industry -- and I'm afraid this is going to be a tough one for the government -- is to enhance the business climate here in British Columbia. We need to have an environment where there is some prospect of a return on capital employed. Until we have that, we're not going to get the new investment. We have to eliminate the regressive taxes in British Columbia. Those have become an unnecessary and foolish barrier to new investment in this province. We need to see the elimination of unnecessary regulation. Regrettably, this government is not well suited to eliminating unnecessary regulation, and they're not well suited to getting rid of regressive taxes. Those two things have tended to be the hallmark of the government: actually adding taxes and adding regulation. They haven't been successful to date in removing them or reforming those things.

There is a profound distrust of this government not just in the business community but, I think, in every forest community. I'm afraid that it may even take the eventual resignation and defeat of this government to turn around the economy of the province and the forest industry in this province. Too often we have seen this government responding to real and substantial problems with rather smoke-and-mirrors, phony-baloney responses.

[ Page 8429 ]

Think again. New Forest Opportunities and some of the nonsense around forcing silviculture workers in this province to. . . . Even if they have a great and ongoing silviculture job, in order to work on an FRBC-funded enhanced silviculture project, they have to join the IWA, get hired out of the hiring hall, and all that nonsense. All that does, hon. Chair, is add to the uncompetitive burden which the forest industry has to bear in trying to recover in this province.

[3:15]

I see that I'm just beginning to test your patience from a time perspective, hon. Chair. So with that, perhaps the deputy critic would like to make his opening comments, and then I'd like to advise the minister of the flow of the estimates debate from our perspective.

J. Doyle: I seek leave to make an introduction.

Leave granted.

J. Doyle: Hon. Chairman, at your request, I'd like to introduce visitors from Washington State. In the galleries today we have Mr. D. Sander, a teacher from Wellington Elementary in Woodinville, Washington. A total of 104 grade 6 students are visiting with us today, accompanied by several adults. I'd like you to make them welcome to British Columbia.

R. Coleman: I'm pleased to enter into the estimates debate this afternoon. Of course, we will be canvassing the ministry from top to bottom in the next days and weeks to come.

The first thing I must do, though, hon. Chair, is tell you that in the past six or seven months I've been in 43 different mill operations in communities across this province. I've met with workers, owners and investors, and I've met with the people that make this industry tick. There's a couple of things we should remember about this industry. First, it is absolutely incredible how it has adjusted, through the many years that this industry has evolved, on the backs of people with initiative and brilliance in the forest industry. Their ability to make this industry tick is what has made it such a strong economic engine for this province. The other side of it is to talk to the people that are hurting out there. Let's make no bones about the fact that there are literally thousands of people in this province who are out of work in the forest sector today. The people that support the forest sector are being affected by that as well.

What does that mean? That means that people whose lives are important to them, whose self-confidence and self-respect are being destroyed by the fact that they can't pay their bills and by the fact that many people are losing their homes and by the fact that the social fabric is affected by a downturn in the economy or in the industry to the extreme that this one is. . . . Make no mistake about it: this is an industry in crisis for a number of reasons. I think we should talk about those as we go through estimates debate to see if we can come to the solutions that are necessary to fix this problem.

The first thing people told me when I went out in the province and talked to them about the forest industry was: "No more announcements. Don't give us any more flashy ads telling us that you're going to create jobs. Don't give us any announcements that you're doing something to create profit, when it won't. Don't do anything except adjust the way you do business by reducing the size of your bureaucracy and reducing the way you apply a process-driven Forest Practices Code to the industry. Wake up and smell the roses and understand that we're an industry in crisis. What we want is medicine for the industry; we don't want glitz for the politicians."

I think it's important that we realize that. They want action; they want results. They're dealing with gruelling regulations in the Forest Practices Code -- a code that is not results-oriented, a code that is affecting the way they do business simply because they've been downloaded with process upon process upon process. They tell me that that cost is shutting down the industry and that cost is affecting jobs.

We have to look at this industry for the fact that it is an engine for this province. It has been for a hundred years, and it will continue to be into the next century because we are a resource-driven province. Without an industry that's strong and vibrant in the forest sector, we are going to be affected in health care, education, social programs and all the other fabrics of our society that we hold dear to us. Without industry, without private sector investment and without jobs, we don't have the rest of that. We don't have it.

Now let's take a look at the industry. Just take a quick look at last fall: 6,000 workers were laid off in shutdowns in 21 northern interior mills. Can you imagine shutting down 21 mills in communities where these are their primary employers? How does that affect the shoe store? How does that affect the grocery store? How does that affect the community as a whole? That's where the hurt is. It's not in this Legislature, and they don't want us to create a bunch of bumf in this building that they have to deal with. They want results because they want to go back to work. Five thousand forest workers and their families in the coastal region were laid off last fall -- and 3,000 more southern interior millworkers and loggers. That's 14,000 people out of work, and it grew over the winter. That's thousands of people being affected by us in this province because we don't know how to make this thing work.

The government keeps pointing the finger at world lumber prices, but the truth is that a lot of these layoffs are a made-in-B.C. problem. NDP stumpage problems, NDP taxes and the NDP's massive buildup of bureaucratic red tape are all contributing to a made-in-B.C. recession in our forest industry. We have to do something about it. The government in Victoria has taken B.C.'s forest industry from being one of

[ Page 8430 ]

What does that mean? Let's take a look at our stumpage costs in 1997. In B.C. we were paying $22.70 per thousand cubic metres in 1996; Alberta was $4.50; Saskatchewan, $2.37; Manitoba, $1.20; jumping over to Ontario, it was $10; Quebec was $8.52, and it was lower throughout the rest of the country.

I came across a reman operation in my own riding the other day that brings in lumber from Quebec, shipping it across the country for the same price that you can get the same kind of lumber out of Williams Lake, in the minister's home riding, with the shipping included. That tells me that we have an endemic problem in our industry: we are not even competitive within our own province with the fibre that we get to our own mills.

According to the Northern Forest Products Association, stumpage royalties, taxes and other costs in Alberta, Ontario and Quebec are much lower than in B.C. We know that. Our stumpage rate is the highest in Canada, and we're more than twice the rate of the next-highest province. How are we supposed to compete, and how are we supposed to attract investment when we have those kinds of costs loaded down on our industry?

From 1990 to 1996 -- this is a statistic that bothers me -- government revenue from stumpage royalties and rent from forest companies grew by 187 percent. The NDP tax policies have scared off capital investment with things like the corporate capital tax during the same cycle. An increase of 187 percent. . . . Those are costs that go right to the bottom line of the industry, and those are costs that create a climate where we do not make money in the companies, we do not reinvest in the industry, and we do not -- we do not -- create jobs. We lose jobs.

Since 1990, capital investment from the very same forest companies in our province has declined by almost 50 percent. So 50 percent less money has been reinvested by the companies in this province in the last five years. As a result, this is what happens: our mills are the first to shut down, and our mills are the last to reopen. That means that our workers suffer, their families suffer, and the industry which fuels taxes to our public service shrinks. What is the government's response? It's a great big campaign scam. The big campaign scam was to tell us that we had a jobs and timber accord to create 21,000 jobs.

This industry lost $132 million last year, and it lost $290 million in 1996. But between 1994 and 1996, we took between $1.5 billion and $2 billion from this industry, in addition to the royalties in stumpage to government, and we said: "Survive." We said: "Create jobs." We said: "Do your job, create jobs for the communities and stabilize your industry while we pick your back pocket for almost $2 billion." If there were a billion dollars left in the industry in that three- or four-year period, can you imagine what the health of our companies would be today and how stable the jobs of our workers would be, because of the ability to be competitive in a world market? Nobody has quite figured that out, except for the fact of throwing rhetoric through a jobs and timber accord.

The effect of the NDP's policies is spilling into the overall economic performance of the province. You know, we remember when B.C. was number one in the Canadian economy, but after six years of this government, we have a province that is number ten in economic growth per capita, with record levels of youth unemployment and now widespread layoffs of forest workers. It's all the result of a lot of things that we've done to ourselves. The sad part about the $1.5 billion to $2 billion that we took out of the industry into Forest Renewal B.C. . . .

I was reading the transcripts of the minister when the bill creating Forest Renewal was introduced to this House. I also read a number of the debates of other members of the government. At the same time I read the initial goals of what was going to become FRBC. You know what? We didn't meet those goals. What we did was. . . . We did not put the money where we said we were going to put it; we moved it around to a bunch of special projects in addition to it, and we created a huge bureaucracy. This, to me, is a fraud to the taxpayers of British Columbia: money is taken out of our companies' and our workers' pockets -- money that should be theirs if we're not going to use it for what we said we would.

There are some things that have happened around here that pale by comparison, but this one is the big one. It's not a call to a judge; it's not a $200 million bailout of Skeena Cellulose; it's not taking from innocent contractors and cutting them back to 10 cents on the dollar when we, as the Crown, take over a company; it's not calls to the Motor Carrier Commission or the Agricultural Land Commission; it's not weighting boards; and it certainly isn't a Nanaimo Commonwealth Holding Society -- all of those things that we find distasteful. The most distasteful thing is when we set out to do something, and we take millions and millions of dollars out of the pockets of British Columbians, and we don't put them where we said we would in the beginning.

We also have a business plan, actually, that we'll get into in this session of the debates, and we'll find that that business plan has changed. Things have moved and disappeared from it in the last three years -- things that were there in the beginning that are no longer there today.

It's vital that we revitalize our forest industry. So what do we have to do? Let's give you five steps that might set you in the direction to revitalize our forest industry. The first would be to replace the bureaucracy-driven Forest Practices Code regulations with results-based regulations. We've started towards that, but sit down with a professional forester and you'll know that we can go a lot further, that we can get it done and that it's going to take the will of the ministry and the will of the bureaucracy to make it happen. There's no sense in just making the announcement; we have to get it done.

Secondly, we have to shrink Forest Renewal's bureaucracy and remove the political people from the board and get industry people on the board -- people that know business -- so we can get Forest Renewal working in the direction it should be.

Third, we should return Forest Renewal dollars to the regions that generate them. These dollars can become a potent force in increasing the productivity of the land base, restoring the environment and providing for the long-term economic stability of forest communities. Put it where it belongs: put it in the forest; put it in the resource; put it where forestry and the resource can grow and build for the next generation.

We should implement an effective forest enhancement program so we can get more timber on less land. Many studies have been done on this, and a lot of work has been done. Some companies are doing that today. If nothing else, we should be pushing that harder and getting away from short-term political ad campaigns.

Fifth, the NDP has to stop, take a deep breath and admit that the jobs and timber accord is nothing but a sham. We didn't create 21,000 jobs in the forest sector as a result of that,

[ Page 8431 ]

[3:30]

You know, the minister said a while back that the days of big profits in the forest industry are gone. Well, I say to the minister: you'd best create a climate where there's profit in the industry, so there's money to be reinvested in the industry -- so that when we reinvest money in the industry, we can create the jobs that we need for the next generation of British Columbians. We can only do that when government gets out of the way and gets moving.

My first question to the minister to start out estimates today. . . . I'd like to know what your goals are for the forest-bred industries of the province.

Hon. D. Zirnhelt: The goals for what? I'm sorry, I didn't hear what you said -- forest something.

R. Coleman: Let's just try simplifying the statement. Forest and forest-bred industries are everything that's affected by the forests of the province of British Columbia, whether it be equipment, suppliers, highway. . . . Whatever it is, if it's affected by the forest industry. What are your goals for this industry? What are your goals from here, and how are you developing those?

Hon. D. Zirnhelt: The goals we've set for the forest industry are to put more fibre in the hands of the remanners -- that wasn't happening on a volunteer basis, but we got agreement under the forest accord to do that -- and more wood from the small business program into the remanners, because we expect a lot of the jobs to be created in that sector. We expect Forest Renewal to continue to fund the forest transition -- although probably on a declining basis -- to take investment in training and in the forest into the land base, which ultimately will create more jobs on a long-term basis.

R. Coleman: My question to the minister was: what are the goals? How are you developing those goals? How are they developed within your ministry, and how do you come to the process to decide what your goals are?

Hon. D. Zirnhelt: I tried to summarize in my opening comments. If you were listening carefully, I went through everything we were doing. When we came to developing directions with respect to changes to the code, we consulted with industry. When it came to changes to the stumpage system, we consulted with industry and other stakeholders on virtually everything we did. It's fairly clear that we have to continue to steward our resources, and rhetoric from your side doesn't help. You say "results-based code," and all you do is say: "Sit down and talk to people." The people we've been sitting down with don't have concrete ideas of what a results-based forest code would look like. You certainly have no ideas on that side of the House. You just say a more results-based code. Yes, we agree. We're moving towards that.

We have sat down with the secondary industry, the reman sector, and come up with some goals there. We have worked with Forest Renewal to come up with a value-added strategy. The point is that we have a lot of pieces in place to restore the competitiveness of the industry and to help it in the transition towards more employment. We freely admit that that will happen when we've got a restoration of the marketplace. You could reduce costs -- you could get rid of the Forest Practices Code tomorrow -- and you'd just hurt our markets. What we don't hear from that side of the House is the benefits of the Forest Practices Code: what it's done so that we can stand up and say, particularly to the European market but increasingly to Japan and the United States, that we have a code of practice in place, and therefore the products are good ones to buy.

There's a long list of things that we can come up with, from specific items that go back to a lot of the items in the jobs and timber accord. . . . We've followed through, and I've itemized a number of things we've done. We did that in consultation with industry. Where we need agreement from industry. . . . We have said it isn't government alone that's going to create the jobs. The part government has to create has to do with FRBC, and we're on our way to doing that. We have lived up to that commitment. I can say to that member that where there is a goal needing to be established, we do it, usually in collaboration with the industry itself.

G. Abbott: First of all, I want to give the minister an idea of where we're going in estimates in this session. As I said at the outset, there are no great mysteries about the kinds of things that we're interested in here. We're interested in all of the elements that can go into making our forest industry in British Columbia more competitive again in world markets. We'll be pursuing those. We wanted to give the minister an idea, so that, in terms of deployment of staff, we don't have 40 Ministry of Forests and FRBC personnel sitting in a room adjacent so they can don their blue tights with the "S" on them to come in and assist.

What we want to start with is a range of regional, topical and current issues, and we will be canvassing the waterfront here. As part of that we will be discussing the current state of the industry, in terms of expectations around revenues and that sort of thing. We may spend a fair amount of time getting through them because there are quite a number of them, and a number of members have issues from their constituencies or regions that they want to discuss with the minister. After we have completed those regional and topical issues, we'll move to Forest Renewal B.C. I'll let the minister know, as we near the conclusion of the issues section, that we're getting near there so that we can tee up the FRBC guys and have them in.

After discussion of FRBC, I guess we will evolve into a discussion of the jobs and timber accord and where we are in relation to the objectives that are set out in the accord. We will then want to discuss the delivered-wood costs in this

[ Page 8432 ]

Skeena Cellulose. We have some issues around that, appreciating that it's the responsibility of the Minister of Employment and Investment. There are some issues that are specific to that operation, now that a majority of the company is owned by the province.

Details around areas set aside for parks and protected areas, including issues involving compensation and, finally, annual allowable cut and issues associated with that. . . . We will, as I said, be beginning with a number of specific issues, and I'll give the minister an example of how this is going to work -- from my perspective, anyway. The first issue I want to canvass with the minister is the jobs accord advocate. The general discussion of the jobs and timber accord we'll leave to itself, later in the estimates, but that is an example of the issue-specific way we will be dealing with the first portion of the estimates. Hopefully, that provides some guidance as to how we will be proceeding. If the minister has more questions, I'd be glad to answer them.

I want to begin with my first question to the minister, and that is on the jobs accord advocate. My understanding is that there is no statutory basis for the jobs accord advocate other than the jobs and timber accord itself. The advocate exists not in statute but is given life, so to speak, by the accord alone. Could the minister first confirm -- and I think it will be readily confirmed -- that this is in fact the case? Second, does the government plan to add any statutory basis to this office?

Hon. D. Zirnhelt: I'd like to thank the member for his outline of how we will proceed here. It will be helpful in making the best use of the officials' time.

With respect to the first question, there is no intent at this time to bring in a legislative mandate for the timber jobs accord advocate. The agreement between industry and government was of a voluntary nature, and we agreed that we would review progress under the accord. But it was at industry's urging that we came up with the advocate position, because they felt that somebody should advocate for the sector and for the agreement that was reached between government and industry.

G. Abbott: That is a satisfactory answer to the question and explains to me further why, for example, the model of the job protection commissioner would not have been used here. As the minister explained, the accord is of a voluntary nature; therefore to place it in statute would not be in line with that. Based on that answer, would I be correct in assuming that the appointment of Mr. Wouters as the jobs accord advocate will run with the duration of the accord? Is that correct?

Hon. D. Zirnhelt: Yes, that's the general intent, although you will remember that we agreed to review progress under the accord, particularly some provisions, after two years. The wood fibre transfer program is something he will be watching very closely. But the intent is: during the life of the accord.

G. Abbott: Has Mr. Wouters signed a contract with the Ministry of Forests, the representatives of the industry group or Forest Renewal B.C.? Or has he signed a contract with all of those? Where this is leading to is that the answer to the first question was -- it appeared, at least, from the minister's response -- that it wasn't a fixed contract and that the length of Mr. Wouters's appointment may vary upon review. Perhaps the minister could clarify that point. Is there a specific contract for a specific period which may be renewed, or is it a contract which will run for the life of the accord?

Hon. D. Zirnhelt: I will get back to the member on some of the details, but I want to point out that on each step of the way we're working out the method of operation with industry and that it is really considered a joint appointment between industry and government.

I will get back to you and bring the details on the advocate. You said you wanted to talk about the accord in some detail. We could do it then, or I could undertake to get back to you when I have the officials here who are administering that part of the accord.

[3:45]

Hon. D. Zirnhelt: I haven't actually seen the contract. I will have to make that kind of a judgment when I see it. There are, as you know, protection-of-privacy aspects in the same legislation. We'll undertake to give as full a disclosure as we can to the member.

G. Abbott: The media have recently been reporting that the jobs accord advocate would be paid $168,000 per year, and I haven't seen anything which would suggest that that's not the case for the advocate himself. Could the minister, first of all, confirm that $168,000 is accurate and, secondly, whether there are any performance or other bonuses contained in the agreement that has been made with the advocate?

Hon. D. Zirnhelt: I don't know the latter; I will undertake to look into that. Certainly with respect to the amount, that's the amount I understand the salary to be. It is jointly funded by industry and government.

G. Abbott: Could the minister advise what budget is in place for the operation of the jobs accord advocate, exclusive of the cost of the advocate himself?

Hon. D. Zirnhelt: The budget as proposed, total and inclusive of the advocate himself, is less than $1 million. It is under review right now by the advocate, government and industry. We undertook to jointly develop the work plan, and this is something that, in my view, hasn't proceeded as quickly as I would have liked it to. On the other hand, finding someone who could do this job did take more time, and there are a lot of elements in the accord. We expect to tie up a lot of loose ends around this in the near future.

[ Page 8433 ]

Further to that, the minister has advised that the advocate is funded jointly by industry and government. Is the office of the advocate going to be funded jointly by industry and government as well?

Hon. D. Zirnhelt: There has been agreement to share the cost of the advocate himself, but it is my information that we don't have agreement between industry and government on cost-sharing for the rest of it. We'll say that this is very much a live issue being discussed between government and industry.

G. Abbott: Could the minister advise what the division of the $168,000 salary of the advocate is between government and industry? Is it 40-60 or 50-50, or what?

Hon. D. Zirnhelt: What I can tell the member at this point is that government was proposing to pay the equivalent of a deputy minister's salary. That's as far as it's got right now. We said we wouldn't pay any more than that. I don't have that actual figure with me here.

G. Abbott: Again, I believe that a deputy minister's salary is in the range of $120,000 per year. I understand that in this case, in order to engage Mr. Wouters, they had to match the rather higher salary of a federal deputy minister to induce Mr. Wouters to take on this task. I think that's probably beside the point. . . . Just so I have it clear, the government of British Columbia is proposing to pay that portion of Mr. Wouters's salary equivalent to the salary of a deputy minister in British Columbia, which, as I say, is somewhere around $120,000, as I recall, with industry picking up the balance of, I presume, somewhere around $50,000. Is that correct?

Hon. D. Zirnhelt: We were working with a general notion of two-thirds and one-third, and it's still very much under discussion with industry. But we may have to balance a proportion over the whole budget. As I say, it is very early in setting up this office and knowing what the business plan of the office will be. But we wanted to respond to industry's desire to have an accord in place that they had confidence in, so it was very much at their urging that we picked the type of person that we did pick. For this specific part of the expenses under the advocate office, we did agree to pay approximately the equivalent of a deputy's salary. We have taken steps to do that. Our part is on the table, if you will, and we've got a start. The advocate is in place as we work out the details of the rest of the office.

G. Abbott: Presumably the government is going to attempt to persuade the industry to pick up some share of the $700,000 to $800,000 that it will cost to operate the office, exclusive of the advocate.

Could the minister advise through what mechanism the industry's portion of the jobs accord advocate's salary will be provided? Is it through the Council of Forest Industries or some other mechanism -- to provide that funding?

Hon. D. Zirnhelt: We would expect it to be the partners to the accord, which are the major licensees, in some way, in some form of their choosing. To my knowledge, it has not been decided from which industry format, which industry organization, the dollars would flow. That is something that they are trying to work out. As you know, COFI is going through changes, and we have a council of major licensees for the purposes of negotiating and consulting on a number of things. But it is industry's choice as to what form they take to give effect to the various aspects of the accord, and this is no different.

G. Abbott: So obviously, from government's perspective at least, the industry will work out itself, internally, an appropriate mechanism for taxing its members, or whatever, to come up with the portion that it will cost them to fund the advocate and perhaps -- depending on what's concluded from the negotiations between the province and the industry -- some portion of the office of the advocate as well. Could the minister advise next who or what will be paying -- whether it's FRBC or general revenue or what -- the provincial deputy minister's portion of the jobs accord advocate's salary?

Hon. D. Zirnhelt: It will be Forest Renewal B.C.

G. Abbott: Could the minister advise whether the cost of the office of the jobs accord advocate will also be borne by Forest Renewal B.C.? Or is that from general revenue?

Hon. D. Zirnhelt: The cost would come from Forest Renewal B.C. When we went into the jobs and timber accord, we said that FRBC would be wrapped in; it would be part of what we use, part of the capacity to ensure that we achieve the objectives of the accord. FRBC has budgeted between $400,000 and $500,000. . . . Let's say it's approximately $500,000, plus or minus, for the purposes of this office. They've provided for that. Whether that's all necessary or not, we don't know at this point. Obviously we'll try to have as lean a budget as possible to achieve the objectives.

G. Abbott: I guess that in a way, the negotiations will be interesting around the funding of the office, given that the industry is likely to argue that they are already funding Forest Renewal B.C. through stumpage. They'll probably take some exception to being hit up again for a portion of it, although I guess it just depends which pocket we're going to be pulling the money out of.

More interesting. . . . This is from the jobs and timber accord itself. It doesn't have a page number, but this is under the jobs accord advocate section. It states that the jobs accord advocate will, first, "be responsible to government and industry." Could the minister advise, firstly, how the advocate will be accountable or responsible to industry? What would be the mechanism for that?

Hon. D. Zirnhelt: There is a joint board that will govern the affairs of the advocate office. There will be two government and two industry representatives. The government representatives will be the chair of Forest Renewal and the Deputy Minister of Forests. Industry has sought to appoint someone. They already have one person in place, appointed by the FIEAC, the licensees' group that was negotiating on the accord. It will be up to industry as to how they select the other member, or whether they appoint two different ones, or whatever. Industry appoints its members to this management board.

[4:00]

[ Page 8434 ]

Hon. D. Zirnhelt: The plan comes very much from the work the advocate has been doing with industry and government. What has been proposed is that there be a management board with a number of directors sitting on it. Industry would appoint two members and government would appoint two members. I've said whom government intends to appoint. Industry itself will find some way to do that, and it may be that COFI steps forward or it may be the council of licensees, the FIEAC group -- the Forest Industry Economic Advisory Committee.

G. Abbott: In any event, it appears that it's going to be a four-person board with equal representation from each side, presumably providing guidance to the advocate as needed.

Could the minister explain -- again, this is further to the statement in the jobs and timber accord -- through what mechanism or mechanisms the advocate will be responsible to government?

Hon. D. Zirnhelt: It will be a joint responsibility. The management board which I have to add. . . . The proposal is that the advocate would actually chair the board, and there would be the other four members on it, so it would be a five-member board. They would report out both to government and to industry. They would report out to government through the deputy, the Minister of Forests and through FRBC, which reports to me as government and to the Legislature through me. So I will get the reports from the advocate, the deputy and the chair of FRBC. Industry will report out through whatever mechanisms they choose. In fact, we hope that the advocate will be reporting to the public very soon through his first annual report. Work has been going on by industry and government while we were waiting to select an advocate.

G. Abbott: Just so we can get a little bit more specific about this, will the advocate be responsible and accountable as an advocate who is, in large measure at least, paid by Forest Renewal B.C.? Will the advocate be accountable and responsible, along with Forest Renewal as a whole, to this Legislature's Select Standing Committee on Forests?

Hon. D. Zirnhelt: Perhaps indirectly in that the legislative standing committee reviews the business plan. Otherwise, the reporting mechanism for achievement under the goal. . . . Many of the efforts, tools and aspects of the accord come directly under the Ministry of Forests, for example. The accountability will be to the appropriate authority that can expend funds or give regulatory relief or invoke policy changes that will be beneficial to the creation of jobs. So the advocate is there to go to whatever agency and to respond to it. The financial accountability for the dollars expended by FRBC will ultimately be where the FRBC board accounts are -- that is, the Public Accounts Committee will examine them, and they'll go to the legislative committee when they discuss the business plan.

G. Abbott: I think it is an important point and something we should be clear on right from the start, because this is a new office. There is not a plethora of detail around how and through what mechanisms the advocate will be responsible to government. I think it's important to have on the record, at this point, how that will happen.

Let's go to the Select Standing Committee on Forests, first of all. I will make the argument -- I think the minister has already agreed with it, and hopefully, that's the case. . . . I think it's important that as Forest Renewal B.C., for better or for worse, spins off companies like New Forest Opportunities or the forest worker employment agency or the jobs accord advocate, there be mechanisms whereby those spinoff boards and agencies are accountable to the Legislature through that select standing committee. So I would like the minister to confirm that when we review the business plan for Forest Renewal B.C. in the months ahead for the coming fiscal year, the representatives from FRBC will be able to speak with authority about what the advocate is doing. Indeed, if it's wise and appropriate, the advocate himself should appear before the committee to defend his programs and expenditures through FRBC. Could the minister confirm that this is the case?

Hon. D. Zirnhelt: The form of the office has yet to be set up on a legal basis. In other words, we are moving collaboratively with industry to establish it so there is a sense of joint accountability.

With respect to the government side of it, I understand where the member is heading. I would say that the responsibility for the expenditure of Forest Renewal dollars, to the extent that they fund any subsidiary, will be accounted for in the same way as Forest Renewal dollars are accounted for. So I would expect that when the chair of Forest Renewal, or whichever officials they bring in to speak to that budget item in the select standing committee, discusses the business plan, it would be done in the same way. It will be seen as a program of FRBC.

As to accounting for industry's expenditures on that side, we haven't worked that out. So that the member knows, we have proposed, in order to have the accountability, that the Lieutenant-Governor-in-Council actually appoint all the members, although it's the intent of the management board that industry makes the nominations and in fact selects it. But the board of directors will be given its legal effect through order-in-council appointments.

G. Abbott: I'm satisfied with that response. Again, I think that if Forest Renewal is to spawn subsidiaries, it's critical that those be just as responsible to the Legislature through the select standing committee as the FRBC chair and chief executive officer are as well. I think it's a very important point.

I also want to ask. . . . Again, this is from the language of the accord itself. The jobs accord advocate will "establish accounting mechanisms to monitor job creation and assess progress towards achieving job targets." The next bullet simply repeats that in slightly different words and says: ". . .monitor ongoing employment and job creation in the forest sector." Could the minister advise, first of all. . . ? We've had some discussions in the Legislature about job creation and job loss and so on, and we've actually had those discussions at the FRBC business plan meetings as well. Who at this point in time in the ministry, in FRBC and in the advocate's office. . . ? I guess they haven't started in the advocate's office yet. Is there anyone in government at this point in time who is doing the two things outlined in those two bullets?

Hon. D. Zirnhelt: On those items in the accord, some preparatory work was done by government. We didn't wait

[ Page 8435 ]

G. Abbott: Could the minister advise whether bullets 3 and 4 are stated in a way that positive job creation will be accounted for? Is it implicit in this? Or does it need to be stated additionally that unemployment, job losses and the monitoring of those are also a part of the role of the jobs accord advocate? Further, if indeed he is taking that on, in addition to measuring job creation, is he going to be assuming the role from the ministry around monitoring job curtailment? Is there a responsibility that's moving from the ministry to the jobs advocate here, and he'll be reporting back to the ministry? Or what will the relationship be on that end?

Hon. D. Zirnhelt: The accord deals with a layoff procedure. You know, the next section in the accord deals with the notice that has to be given to the advocate if there's going to be a permanent layoff of more than 25 workers. So he will have the same information on the survey of job loss. We are hoping that we'll have a better handle on employment creation and employment loss through the efforts of the timber jobs advocate. So he actually will have a handle on both aspects, because we expect that the job plans that industries might create, in order to have some of the benefits under the accord, will specify where they will take out jobs and where they'll add jobs. So we'll always we looking at the net.

We are looking, as we said, to increase the number of jobs per cubic metre. That's the objective of the accord. We want to get the ratio of jobs to timber up; that's the underlying assumption. The advocate has to be able to measure progress towards that.

So to answer your question about it, no, we're not going to transfer any units of government -- or there's nothing like that implicit. Government for its own purposes needs to administer parts of the Forest Act. There are jobs implied in aspects of the Forest Act and aspects of forest licences. We have no intention to transfer the statutory obligations that we have. So it's a question of. . . . There will be a team in industry, in industry organizations and in government that will work with the accord to track progress under the accord.

G. Abbott: I don't want to dwell on this. I'm just trying to make a fairly straightforward point here. I think what everyone in this chamber needs, whether we're government or opposition -- or whether we're FRBC or the forest industry or a forest worker -- is somebody to be providing us with ongoing, reliable, accurate information around how we are doing employment-wise in the province in the forest industry.

[4:15]

My point here is not a tricky one; it's a very straightforward one. Would we be better off to have one agency -- whether it's FRBC or the advocate or the ministry -- doing a very solid, thorough, reliable job of compiling and analyzing those numbers? I hope I'm making a point here -- that we seem to have some overlap in terms of people doing work around the compilation and analysis of job creation and job loss numbers.

Hon. D. Zirnhelt: I don't think the member can sustain an argument of overlap. I think that there is an appearance of a number of people working on this issue. We have no intention of having the jobs advocate take over what Statistics Canada is doing in terms of collecting the survey of employment, payroll and hours. We argued this through -- how it would best be done -- when we were talking to industry about the accord. We had a working group on that subject. We agreed that the most statistically reliable measure is the survey of employment, payroll and hours. So unless and until something better comes up, that's what we'll be using.

What the Ministry of Forests does. . . . Because we've got, you know, 3,000 people out in the field, they have a pretty good idea of whether a layoff is permanent or whatever, and they report in. The Ministry of Forests has management information. We will share that information with the advocate, so he will have a couple of sources of information upon which to base his overall reporting and accounting. But in terms of publishing an annual report, that's why it was very. . . . You know, industry drove this as much as government did. They wanted to make sure that it was a joint effort and was duly accountable to government and industry.

That function of reporting out on layoffs and job creation will be the advocate's responsibility. He will be tagged with the responsibility of dealing with the permanent layoffs. Temporary curtailments, which are cyclical, which might be seasonal and so on. . . . We don't expect him to be tracking on a day-by-day basis exactly what happens there. Through his annual report, he will examine the SEPH data and compare it and see if there's anything wrong with it. As you and I know, it doesn't have contractors in there; it's a survey of employment, payroll and hours. But there is no easy way. The contractors don't have to report out on their employment.

I think we can argue this thing to death, but because he's reporting to industry and government, there are checks and balances associated with his office.

G. Abbott: To move on, the next bullet is: "The JAA will. . .in cases where outcomes are in jeopardy, undertake reviews and propose remedial measures." This is written in the language of the 1990s -- "where outcomes are in jeopardy." In the expression "where outcomes are in jeopardy," I presume the reference is to a forest company that may be experiencing severe financial difficulties and for those reasons, may be considering a shutdown. Is that a correct reading of that section?

Hon. D. Zirnhelt: I think that's generally correct. I mean, the idea is that he examine cases and give advice to government. I have responsibilities under the act to enforce the terms and conditions of employment. Now there is a new advocate who will be making his opinions known on the adequacy of job plans. As I say, any given job plan may be to take down a plant here for whatever reason -- shortage of fibre, outdated machinery -- and reinvest it here or create jobs over there. We expect the jobs advocate to get involved in discussions around the appropriateness of arriving at the outcomes that we have targeted in the accord.

G. Abbott: The reason I raise the point is that the description of that portion of the responsibilities of the jobs accord

[ Page 8436 ]

Hon. D. Zirnhelt: If you look at outcomes here, it has to do with whether a company might fail. If a company's going to fail in its performance, it can go to the job protection commissioner and ask for an economic plan. The advocate won't be doing economic plans, although he might see a problem -- for example, where a company has filed a jobs plan. They say that they intend to do this, and sometime into the plan economic conditions change, and they find they have a problem in achieving the job plan. It may not put the company in jeopardy, so there would be no need to go to the job protection commissioner. The job protection commissioner is there to help restructure or to do some economic mediation, perhaps, between parties. The job protection commissioner is still there to assist in his traditional role, where the advocate here would be looking at the job plans per se. The job protection commissioner won't be examining the job plans, although there might be information in a job plan that he needs, to come up with an economic plan. We don't see any overlap at all here.

G. Abbott: I hope that's the case, as well -- given that we're working with a new position here and, presumably, that the dynamics of that position will evolve over time. We should always be cognizant of the possibility of the offices growing in a way where they could be competing forces, as opposed to complementary forces. Certainly we would want those two roles to be very much complementary forces. Hopefully, at some point in the future we will have a buoyant forest industry again, and we will not be preoccupied with the doom and gloom of threatened job loss. It appears, at least on the surface, that there is theoretically a possibility that those two positions could compete against, rather than complement, one another. I want the minister to be cognizant of that as the role of the advocate evolves over time.

The next statement after that says: "In order to carry out his or her responsibility, the JAA will have reasonable access to the information needed." It's not clear to me what that means. Could the minister advise?

Hon. D. Zirnhelt: This means a company's specific information. He needs to have information that might not necessarily be disclosed to government, but in order to do his job, he may need a company's specific information about the status of employment and the number of employees that a company might have.

G. Abbott: Again, so I fully understand where we're going with this section. . . . The key word in here may turn out to be "reasonable." If we -- we being the opposition, the media or private citizens -- want to find out information about some aspects of government, for example, at times that information may be made freely available to us. At other times it may require an action under the Freedom of Information Act to access portions of it, and then we might see it in a severed form. Here we're saying: "The jobs accord advocate will have reasonable access to the information in the files of private companies." Will that be achieved through a voluntary agreement between the parties, or will it require something additional to that in order to succeed? I presume that many companies might be reluctant to share some of their business information with anyone, jobs accord advocate included. So the question is: will this particular section be achieved through these voluntary agreements, or is some other mechanism anticipated to achieve that?

Hon. D. Zirnhelt: The advocate will have to work that out with individual firms. There is going to be information that they might want to provide which has to be kept confidential, and I expect there will be confidentiality agreements associated with that. Some firms are public; some are private. So it varies with how much is reported out publicly. We have to be cognizant and respect privacy of information with respect to firm-specific financial information.

G. Abbott: The last section I propose to raise around the jobs accord advocate, at least at this point in time, is the final sentence: "The JAA will report annually on progress made towards the implementation of this accord." To whom would the JAA be expected to report annually? Again, will it be the Legislature via the minister or to the Select Standing Committee on Forests or both? That's assuming that there will be a good deal of interest in not only seeing the report but also having an opportunity question or analyze the report through the mechanism of Forests estimates or the review of the FRBC business plan.

Hon. D. Zirnhelt: It could be one or the other -- in all likelihood, these Ministry of Forests estimates. The reporting-out will be in a public report. I've said that. It'll be a report to the public of British Columbia. Essentially, the advocate works for the partners to the accord, which are government and industry. But the intent is that it be a public report and available. If there is a requirement to file it in the Legislature, I'll do so. At this point, I don't know if there is a requirement, but it'll be a public report -- so available.

G. Abbott: The only items we have left over from our earlier discussion are the details around the contract. The minister has undertaken to get what detail he can on that -- the duration of the contract and that kind of thing. So we'll revisit that. Hopefully, the minister will have the information when, at some point later in these estimates, we come back to the jobs and timber accord as a broader work.

I want to turn now to a different issue. Actually, I should check and make sure that none of my colleagues has questions on the advocate before I move along. It appears that they do not.

[4:30]

[ Page 8437 ]

I want to discuss a few things with the minister. One is the possibility of a product-specific stumpage system that would take into account the particular difficulties of plywood. I'll give the minister a little opportunity to think about that. And let's talk about ways in which we can restore the health and viability of the plywood sector in British Columbia. Perhaps I'll let the minister begin. As I say, I know that plywood is just as important a factor in his riding as it is in mine. We know that the plywood sector is facing difficulties in 1998. Those difficulties are not going to be easily reconciled. How does the ministry account for those difficulties, and what initiatives is it proposing to undertake to assist in the revitalization of the plywood sector in B.C.?

Hon. D. Zirnhelt: I'd be happy to try to respond to any of the specifics the member has questions about. The plywood industry suggested that they were experiencing structural problems, not the least of which was the inability to change product and ship materials from the same logs that they manufacture into the United States, and because they are restricted by quota, they have a reduced flexibility in what they can do with the logs that they have. So the plywood industry asked that we examine this problem and try to come up with some solutions.

Government has not decided to get into product-specific stumpage at this point. We undertook to do a survey with industry, through a task force on examining the structural problems facing the industry, and I am waiting for a report. I don't have the report yet; it isn't ready. It is in draft form, I understand, and we'll examine possible solutions and assist if we can.

G. Abbott: If I can -- fairly, I hope -- summarize the minister's comments around that, a committee has been struck to look at these issues. They have been looking at the possibilities for assisting the plywood sector, and they have reported back with a draft report, which I guess is currently being examined by the ministry and which will appear at some point, presumably in a final form, in the weeks ahead. Could the minister advise whether that final report on those considerations is pending; in other words, is it something that we might reasonably expect to hear about before the conclusion of these estimates? Or are we talking about months before we see a final report on that issue?

Hon. D. Zirnhelt: We're hoping to have the recommendations and the analysis completed by the end of the month, so I wouldn't expect that we would have them in time for these estimates. It is a work in progress. I think you summarized it. I said that we're looking at the structural problems of the industry; there may or may not be things that the government can do. But the process will be, as it normally is. . . . The technical work will report out to the deputy minister, and when he is satisfied that there is an adequate report, it will be brought to my attention. I am anticipating it by the end of this month or early in July.

G. Abbott: I will look forward to seeing that. I'm not planning, actually, on taking these estimates through to the end of the month, so they may well be concluded in advance of the minister providing a report. All kidding aside, it is obviously critical to the many people who work in the plywood sector in British Columbia to move ahead on some of these issues.

Again, I hope I'm not putting words in the minister's mouth, but as I understand it, no conclusions have been formed yet around the issue of product-specific stumpage.

To give some context to my question, I was actually pleased to see the addition of pulp chips to the formulation of stumpage in British Columbia. I understand from the minister's staff that it constitutes only something like 10 percent of the determination of the formula. Nevertheless, I think it is a step in the right direction -- broadening the formula so that it takes into account more than random-length dimensional lumber. It raised the question in my mind of whether, in fairness to the plywood producers, the OSB producers and so on, the formula ought to take into account those additional products as well. Again, I gather that they are of even less measurable size than chips. But I'm wondering whether the stumpage formula ought to better reflect the diversity of forest products that are produced in British Columbia.

Hon. D. Zirnhelt: The matter has been considered in the review. But where you begin and where you end is already a complex system. It would be very difficult to administer, but one of the problems with plywood is competition from OSB in other areas of the world. There are some major structural problems that maybe product-specific stumpages won't deal with. That's all being considered.

G. Abbott: Good. I'm pleased that it is being considered. It is interesting, when looking at the way dimensional lumber prices track over time and the way plywood tracks over time, from the perspective of whether plywood really should be tied to a stumpage system based on dimensional lumber. From the time of the graph that I have here, January 1991 through to the present, there have certainly been times when the prices of plywood and dimensional lumber were comparable. There are also -- and I think these are more numerous -- times when dimensional lumber was higher valued than plywood.

Indeed, we have come through such a period recently, from January 1996 through to the present, where -- at least until the most recent drop in the price of dimensional lumber -- there had been a big gap between the value of dimensional lumber on the American market and the value of Canadian plywood on the same market. So the argument here runs that the plywood producers are paying stumpage which reflects a higher-priced commodity, generally speaking, than what they have.

Plywood tends to track fairly steady over time. Dimensional lumber, for the most part, tracks higher, yet the stumpage system that the plywood producers are paying on is based on random-length dimensional lumber. They argue that it puts them at a structural disadvantage in relation to plywood producers in the U.S. or eastern Canada. It seems to me a reasonable argument, and I'd be interested in the minister's response to that.

Hon. D. Zirnhelt: If you take today, the analysis isn't borne out. Plywood is higher than dimensional lumber. So it's a very short period of time in which to get a trend out of it. Does this trend over the last year indicate a structural change? All of that is being looked at, and we'll have to await the report. There are huge implications for our product-specific stumpage where it would involve plywood, because it would affect competition with OSB and a number of other things. It would probably include vast implications for the softwood lumber agreement as well.

G. Abbott: Again, I don't want this point to go unnoted. It may well be that plywood, as of the last week or two or

[ Page 8438 ]

Hon. D. Zirnhelt: Well, by your own calculations, 60 percent of the time, yes. And the facts are there. Whether it constitutes a structural disadvantage or not, that is precisely what the report is acknowledging. As I said, there are huge implications from interfering in the market to get product-specific stumpage.

I trust that the member will be telling us where he's coming from with respect to that. But I can say that we're examining the structural changes. To suggest that we would further complicate the stumpage system, I think, is a big step. I'm sure that the member opposite, seeing it as intervention, would find ways to be critical of that.

The final solution that we have proposed to industry is some market-based or transaction-based system, and that may be a way to get back to a pricing system on stumpage. But we have to examine every aspect of the plywood industry.

G. Abbott: I want to assure the minister that I'm asking questions here and trying to understand the problem that's facing this industry and threatening to potentially put a couple of thousand people in British Columbia out of their jobs. It's an important issue and one that I want to understand. I do want to ensure that, to use the old cliché, people are on a level playing field. There are always winners and losers in marketplaces, but we don't want to set up the marketplace in such a way that it is theoretically impossible for someone to survive and thrive in that marketplace. I think it's important to be clear on that -- that if, indeed, we are putting our companies at a competitive disadvantage here, we acknowledge that and come to grips with it.

[4:45]

Again, the important point here is that stumpage is, by its nature, an intervention into the marketplace -- and a necessary one. Obviously we as a society have deemed it appropriate to extract rent from our resources. We do that in large measure via a stumpage system, so of course, we're going to be intervening in the marketplace. My concern here, both for the plywood producers and for others that we may be discussing at points in the estimates, is that when we intervene through the stumpage system -- when we extract rent -- we do it in a way that is reasonable and fair and does not set any sector at a competitive disadvantage. Obviously the industry and every plywood worker in the province will be looking forward to that report, and I certainly will as well.

Could the minister advise further if product-specific stumpage was, in the informed opinion of the authors of the pending report. . . ? If, in their view, product-specific stumpage did not represent an appropriate or reasonable alternative for the plywood producers, what other suggestions, what other possibilities, exist to assist the plywood sector through the difficult times they have? I mean, presumably in composing their recommendations, the committee looked at a number of possibilities. Could the minister advise what some of the other theoretical possibilities are to assist the plywood sector at this point in time?

Hon. D. Zirnhelt: I want to go back to the member's previous commentary about the stumpage system. Yeah, we will get into it, but the member knows that while there's a lag when prices go down, there's a lag when prices go up as well. B.C.'s stumpage system is fundamentally the one that we refer to and is sort of an underpinning regime for the softwood lumber agreement. So we are under a scrutiny that other provinces aren't. They can arbitrarily take their stumpage up and down in a way that we can't. We have to defend our changes based on the system that's there.

With respect to the plywood industry, I have not received the report. I don't want to see the report until it's been worked through and there's good analysis and some good options. So I can't get into a hypothetical discussion about what else might be done. I have to remind the member that one of the concepts under the softwood lumber agreement and the approach to trade policy that is taken by the Americans, who have us under scrutiny, is fungibility. We can't do something that assists plywood which indirectly will assist 2-by-4s coming out of that same company and thereby make it possible for that company to ship 2-by-4s at a competitive advantage -- in effect, get around the softwood lumber agreement. So we can't make a simple analysis out of a very complex problem, and it is complex.

I hope that the task force looking at it has come up with some solutions that are doable. I too am concerned about the employees there, and we should be doing what we can to maintain employment in the plywood industry. Having said that, if it requires fundamental change, structural change, that we can't achieve by government policy, then our hands will be tied from doing something. The will to do it is there, provided we have something concrete that is within our capacity to implement.

G. Abbott: Again, to emphasize the point, I do hope there is a specific response from government to the difficulties.

I'm going to ask the minister if he can advise. . . . The one piece of information I don't have -- hopefully, he can provide it to me -- is the destination, by market, of British Columbia plywood. Hopefully, he can find that for me. In the meantime, I want to make a couple more points about the difficulties facing the plywood sector.

One of the startling features mentioned in the paper I have on this is the growth of imported plywood into Canada over time. For example, we see that in 1988 imports comprised something less than 4 percent of Canadian plywood con

[ Page 8439 ]

The other chart that caught my eye was the one showing North American plywood shipments to Europe. While American production has grown from about 35 percent to just over 80 percent by the look of it, B.C.'s share has fallen from nearly 70 percent in 1985 to something less than 20 percent through much of the nineties and to less than 20 percent in 1996. It's going in the wrong direction in terms of Canadian and American shares of the European market. Again, the argument that is being made is that our producers are at a competitive disadvantage. Maybe the minister has some comments on that, and perhaps he has some details about the destination of Canadian production. Does it primarily go to the Canadian market? What percentage goes to the American market?

Hon. D. Zirnhelt: I don't have that information with me. I can get the reports and so on with the detailed discussion.

I won't dispute the facts as you've rolled them out. Yes, if we lose product share anywhere, it's too bad. But product share ebbs and flows with the relative advantages that people have and the relative competitions that come in.

Virtually none of the plywood is exported to the United States. So you could easily conclude: "Well, therefore what's the problem with the stumpage system?" But the point is that companies can divert products within different parts of their operations. So product-specific stumpage is quite different from putting plywood into the index that creates the basket of products that creates the stumpage system. This is very complex, as I said. There is an issue around how you might assist one aspect of the industry that is shipping offshore -- not to the United States -- but you might indirectly affect their ability to pay the tickets to ship another product they produce into the United States. That's still the problem.

G. Abbott: I appreciate the minister's response that rolling plywood into the overall formula is different from product-specific stumpage. I'm sure that the committee the minister has formed will be able to arrive at a more informed judgment than the one I can throw across the floor at him. Again, I'm not proposing that I have all the answers, but I am proposing that we have to be ever mindful of creating a set of rules that don't set any particular player at a disadvantage in the game -- to continue the sports metaphor. So I do look forward to seeing the report, and I do hope that there is a definitive and positive response from the government to the problems that are facing this sector.

I'm just going to consult briefly with my deputy critic as to whether he would like to do shakes and shingles now. Would you like to speak on leaky condos and have me speak on pulp?

Interjection.

G. Abbott: Okay, I'll do pulp and you do leaky condos. He is our official critic for leaky condos, and his activities there take him to Municipal Affairs at this point.

If I could just take a moment, I'll turn my attention to the pulp sector. First of all, could the minister take a few moments to outline for me what challenges are facing the pulp and paper sector? Again, as we did with plywood, could he outline to me what responses the government might envision to deal with those challenges?

Hon. D. Zirnhelt: The fundamental challenge is a weakness on the market side. There is just a shortage of demand, and as a result, we have to wait for that to pick up. Most of the pulpwood that goes in is at minimum stumpage. The availability of fibre is not a problem now, but when it picks up again, everybody will be looking for more fibre. So the fundamental challenge is a market challenge, where there is a lack of demand.

G. Abbott: The weakness on the market side. . . . It's my understanding that the break-even point for pulp producers is $580 or $600 a tonne or whatever and that the world price has been tracking below that for a while. Can the minister provide me with a little bit more information in terms of what exactly he means by weakness on the market side? For example, can he tell me how it's been tracking in the past year in terms of where market levels are and where they need to be for our producers to be competitive in the marketplace again?

Hon. D. Zirnhelt: The price is approximately $550 (U.S.) a tonne now. Industry will see profit as a whole when it gets to $650 and pushing $700. But some mills make money because they have a lower cost structure, so it really depends on the mill. We have the problem here of dealing with industry averages. But it does have to improve before we'll see a return to profitability.

G. Abbott: From the information he has available, could the minister advise on the range of production levels in pulp mills in British Columbia? I presume that there are some in full shutdown, others with shift curtailment and so on. Could the minister advise what the production level is in relation to optimal levels?

[5:00]

G. Abbott: I would appreciate that. It would be useful information.

The minister talked about the availability of fibre as a factor. I want to explore that a little bit more. I'm sure that it's not surprising that the availability of fibre is not a problem at this point in time, given that it appears, at least, that there are considerable curtailments of employment in the industry around the province. As a consequence, the demand for fibre would certainly be less than optimal production.

One of the concerns that one frequently hears -- and I guess this was most frequently expressed around the acquisition of Skeena Cellulose and, in particular, the pulp mill -- is that when the price rises again, with more mills in production and so on there may not be sufficient fibre to keep the industry at capacity. Is that or is that not the case? Will there be, under optimal conditions, a shortage of fibre?

Hon. D. Zirnhelt: I don't know what you'd define as a shortage of fibre. I said that last time pulp was high, people were arguing that they could use more fibre. We have a huge production capacity. They're trying to get productivity up. That's the way they get their costs down. We expect that yes, there will be a higher demand for pulp when the price goes up. So I'm not sure where you're going with this. We don't have any crystal ball into the future of the pulp market. Most of the projections -- virtually all of them -- said that by now we would have a recovery. It hasn't happened yet, but all we can do is go with the information we have.

[ Page 8440 ]

But as we log the valley bottoms and go up the hills, it's going to be expensive. Wood cost is going to be high compared to flat land, where trees have been farmed for the last 30 to 40 years or to where they grow in a rotation of 15 to 20 years. B.C. has a structural problem in that its fibre cost will likely always be high. That is a disadvantage to us. We have to offset that with productivity and quality.

G. Abbott: The minister asked where I was going on this. I guess where I'm going is to discuss, from a public policy perspective, the contention of some forestry industry analysts in British Columbia that on both the production side and on the available-fibre side, there are more pulp mills in British Columbia than we can sustain in the long term. That's where I'm going, and I'd be interested to hear the response.

Hon. D. Zirnhelt: As far as I can tell, it will be a matter of whether or not pulp prices go up, what happens in capital investments and what happens in the market as to who can buy the chips. There's a tremendous capacity to vary -- that is, to increase -- the production. We will increase production if there is a recovery in the international market. I don't think we can answer that question definitively. It will depend a lot on the market.

G. Abbott: On the cost side of the equation, the minister has talked about weakness on the market side. We need to move from the current price of $550 (U.S.) a tonne to roughly $650 - $700 (U.S.), generally speaking, to be making money again on pulp.

I want to ask the minister some questions about what, if anything, we can do to deal with the cost side of the equation. The minister's right: most of the pulpwood is at minimum stumpage. But I recall from the experiences of Evans Forest Products in Golden that part of the reason they were experiencing such difficulties in 1996 was the high pulpwood component in a lot of their stands up there and the very high cost to take pulpwood out.

One of the problems here is that the Forest Practices Code doesn't distinguish between a stand with a high percentage of pulpwood and a low percentage of cedar any more than one with a high percentage of cedar and a low pulpwood content. Is there anything that the government can do, in particular in relation to the extraction of pulpwood, to change the cost structure that's faced there? Perhaps there is something in the recent changes to the code that the minister has announced which is going to assist here. Is this a part of the cost structure that we can or should be addressing?

Hon. D. Zirnhelt: In theory, we could vary utilization standards. We could say, as a matter of public policy, that we'll reduce the costs by letting them only take out the pulpwood that they can afford to take out. There has to be a very delicate balance between wasting wood because it's not economic to take it out right now, and leaving it to rot and be of no use to anyone. I think in the appraisal system we examine the costs of getting wood out.

But we're not in a position to pay people to take wood out; that's the problem. That's the point of minimum stumpage. There is a minimum, and it's not very much -- it's 25 cents. The balance of pulpwood at minimum and the sawlog components is judged. What's charged for the overall stand will be lower if there's a high amount of pulpwood, and pulpwood has to be low. We're saying that the changes we brought in recognize, on the price side, the value of the pulp. So that has a depressing effect on the value of that wood.

There is not much we can do on the environmental side, because forest management has to be good stewardship regardless of whether it's pulp or wood destined for solid wood or other products. From a public policy point of view, I don't know what we can do to further reduce the costs below 25 cents.

Now, there's all the road-building and all the other logging costs, which we can always examine. We've said we have done what we think we can do right now to reduce the planning costs and to go towards more results-based silviculture prescriptions. So we're not telling industry how to do things; they're able to figure it out themselves. But they do accept reforestation as a responsibility. We're very interested. If there's something that we can do to help reduce pulpwood-logging costs in addition to what we've already done, I'm very interested.

G. Abbott: One of the suggestions I've heard recently is that the value of pulp logs appears to be on the rise again -- that it has gone from very low to a more intermediate level at this point. Is that the case in reality? If so, I expect that it would obviously have a positive effect on those companies selling pulp logs and would perhaps add to the difficulties of pulp producers on that side. Is it in fact the case that the value of pulp logs is rising? If so, what does the minister anticipate the economic consequence of that will be on the pulp producers and, I guess, the pulp log suppliers?

Hon. D. Zirnhelt: The effect on pulp producers will be positive. The price of pulp logs will follow the increase in the value of pulp. But it won't be a significant turnaround until it gets up towards $700 for pulp. That would really stimulate the harvesting of pulpwood, and it would help in converting other fibre that might be out there beyond the utilization requirements -- bring in the small tops, that sort of thing, as happened during the last time the price of pulp was high.

G. Abbott: In terms of other issues dealing with pulp logs generally, one of the questions I have had on my mind for some time -- I'm sure the minister will be able to disabuse me of this notion, but I'd be very interested in his response to it -- is in relation to pulp logs specifically, as compared to cut overall. Built into our five-year cut plans is a certain amount of flexibility or elasticity around what year the cut is made. It can vary in any given year between 50 and 150 percent of the average for five years. For pulp logs specifically, I wonder whether it makes sense for there to be even more elasticity. If we're going to be liquidating portions of our forest with a heavy pulp component, a lot of pulp logs in the profile, would it make sense to have even more elasticity in the system for those kind of cutblocks than others?

Hon. D. Zirnhelt: Most of pulp that comes from sawlog stands is in residuals -- chips that come from the sides of squared timbers and other products that are there that are economical to harvest when they're harvesting the sawlogs. We do have elasticity in the pulpwood agreements; they're very elastic. Those agreements are set up to backstop pulp productions. With the pulpwood agreements, you don't have

[ Page 8441 ]

We're really trying to make it simpler, make it more market-responsive. I don't see an easy way to do that. There may be a way to do it, but so far our public policy response has been to create the pulpwood agreements, and that has been the backstop of most of the mills.

G. Abbott: I think the minister's response is a good one. Fair enough. I appreciate, particularly if we were going to extend that kind of flexibility to others, that it would make it more complex. I'm still not convinced that it's not worth looking at or trying, though, because again. . . . I'm think of the Evans situation, but I'm sure it applies in every other situation. At times when the value of pulp logs is so depressed, companies are responding by either not logging the blocks or by logging them at tremendous losses to get them out there to fulfil some obligation.

My thought is that perhaps the added complexity might be worth it, particularly given the experience of the last few months. Companies are running here and there to try and go after specific stands because they are high in cedar and low in pulp. Maybe a realistically greater elasticity on those other cuts might be a thing to look at. I'd be interested in the minister's comments.

[5:15]

I think there is some elasticity there, and I would argue that that's where most of the elasticity is going to be. We've seen, in the past, very high cutting in pulp stands when pulp was up. That happened in the phase which we just came through. We expect now that people will be targeting the higher - sawlog-value stands. We're seeing that on the coast. They're targeting cedar stands.

G. Abbott: Again, I don't think I have any substantial disagreement with that. Clearly the two-year standing timber inventory is a commendable goal. That, I think, is of enormous advantage where it's been achieved. I gather there's been some variation in success in achieving that two-year standing timber inventory around the province, but the minister is right that achieving that -- where it has been achieved -- provides the very important flexibility the industry needs in order to access stands on a sort of market-driven rationale. So I agree with that.

The point I'm making. . . . I guess this might apply even where we achieve a two-year standing inventory across the province and industry has flexibility to move here or there. It still seems to me. . . . I'm thinking of the decadent hemlock forests in some areas near where I live, and I'm sure that's the case in many other parts of the province too. You have these decadent hemlock forests. If they're in somebody's tree farm licence or if they're in a timber licence or whatever, they tend to be a liability in times when pulp prices are low and the value of pulp logs is low. They're a liability, and when they're liquidated, they're typically liquidated at a loss. So I guess my point is that if we have something that can be an asset at one point in time versus a liability at another point in time, we should do everything we possibly can to allow the maximum liquidation of those at the time when they're an asset rather than a liability. So that's the point I'm attempting to make in my crude way.

Hon. D. Zirnhelt: Well, I think you're making the point succinctly. I was saying that we have a little bit of a disappointment in the sense that some in industry are not looking to the full two years ahead. At some points in history, some companies, by a very aggressive development plan, have had up to four years ahead. But as we introduce the code, as we move from the most easily harvested into the more difficult stands, and as the structural nature of the industry in world markets changes. . . .

You speak about hemlock. If hemlock doesn't respond -- particularly hemlock pulp or, on the coast, hemlock sawlogs -- we'll have a big problem with hemlock stands in B.C. There will be a huge surplus of hemlock, and if you get a disease problem added to that -- hemlock looper -- you'll have an even bigger problem. So there is a bit of a problem in trying to harvest the profile in an orderly fashion, instead of just leapfrogging whole valleys or whole subsections of the ecosystem. It's very difficult to do that. You might be hitting other watersheds too hard. So the balance between what's biologically appropriate and what's economically appropriate is a difficult challenge.

I would say that the answer lies in working very aggressively on getting that wood ahead and making sure that the planning is being done. So that's the challenge: to invest in sufficient planning so the permitting can take place.

G. Abbott: The challenges of the markets are certainly clear enough. I think there are some cost issues facing our industry, as well, which we've touched on to some extent. The third broad challenge facing the industry is around environmental initiatives. Could the minister advise what environmental regulations are pending -- including, I guess, AOX -- which may change the nature of the pulp industry and pose a significant challenge to the continued viability of pulp production in British Columbia?

[ Page 8442 ]

The fact remains that there's a benefit on the market side to an environmentally regulated industry. The market is looking for products produced in an environmental fashion. We have to be aware of that, and sometimes our regulatory regime is a definite benefit there. I'd say about the Forest Practices Code that it has a huge benefit side, and we just have to keep the costs and benefits in balance.

G. Abbott: I appreciate that environmental regulation falls within the purview of the Minister of Environment. Has the ministry considered, through consultants' reports or any other measures, the social and economic impact on the industry of zero AOX discharge? In other words, has the Ministry of Forests looked at what the impact of the pending 2002 regulation will have on the industry?

Hon. D. Zirnhelt: No, we're not aware of anything that has been done by the Ministry of Forests to look at that.

G. Abbott: I certainly will be raising this issue with the Minister of Environment. I would think that if the regulation involving zero AOX discharge by December 31, 2002, remains in place, it would have a considerable impact on the pulp industry in British Columbia. I don't know whether we'll discuss this matter when we're talking about Skeena Cellulose or not. I suspect that the plant at Skeena Cellulose is probably one of the plants that is rather further from zero AOX discharge than most in the province. But perhaps, again, that's something more appropriately directed to the Minister of Environment.

One issue, though, that I think the minister should be able to comment on in addition to the question of the social and economic impact of the change. . . . I understand that the major Swedish pulp producer made a substantial investment a few years ago to go to a zero AOX discharge and a totally chlorine-free pulp. After some initial interest in the product, I understand that the product was found to be inferior to elemental-chlorine-free northern bleached kraft pulp and that the marketplace since that time has been quite unreceptive to it.

Does the minister have any further information with respect to this? Again, given the importance of the pulp and paper industry in British Columbia, what should we be doing to assess the social, economic and employment impact of the zero AOX regulation on our pulp and paper industry?

Hon. D. Zirnhelt: I can check to see if there's something there that I haven't been made aware of in terms of studying this problem, but the Forests ministry's concerns. . . . When the industry comes to us for assistance, they talk about the concern around the environmental lobby in the market, the concern around pulp coming from old-growth forests. That's the issue we're grappling with. In our view, that's a big challenge, and we have to meet that head-on because we're still harvesting in old-growth forests and will for some time. We have to have the product, the pulp, coming from that, because there is a large amount of pulp, particularly in the decadent stands. We come at it that way. That's the concern we have to deal with, and the economics around that are important for us to be aware of.

G. Abbott: We certainly have to be cognizant of the environmental considerations around this issue. I think we also have to be cognizant of what the playing field is with respect to our competitors in other parts of the world. It's my understanding that the U.S. Environmental Protection Agency has established a limit of 0.623 kilograms per tonne of AOX and that Ontario has gone with 0.8 kilograms per tonne of AOX. These are two of the competitors that our forest industry will have to meet in world markets.

Again, is there evidence that what is being proposed for December 31, 2002, is something that is going to allow the continued operation of our pulp and paper industry? Or are we pushing something which will be out of step with the rest of the world and which would have a very pronounced and detrimental socioeconomic impact? I'd be interested in the minister's comments on that.

Perhaps I can ask the Chair's guidance. Someone whispered in my ear some time ago that we were looking at knocking off at 5:30. Perhaps I will yield the floor.

Hon. D. Zirnhelt: I thank the member for raising that.

On the issues of the economics and the costs of specific targets, I really will have to defer to my colleague, and she's here. We can have conversations about that, and they can be addressed there.

By agreement, hon. Chair, I understand that it's now the time to move the committee rise, report progress and ask leave to sit again.

[5:30]

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. D. Zirnhelt moved adjournment of the House.

Motion approved.

The House adjourned at 5:31 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

The House in Committee of Supply A; E. Walsh in the chair.

The committee met at 2:36 p.m.

ESTIMATES: MINISTRY OF
MUNICIPAL AFFAIRS
(continued)

[ Page 8443 ]

Hon. J. Kwan: Just to clarify, first of all, there is no relationship between the building standards branch and the safety authority. What we have done is to update and relocate the building standards branch into the corporate policy branch, and the work they've been doing is to look at updating the Building Code. So really, the building standards branch has been relocated, if you will, within the ministry.

On the issue around the safety authority, prior to changing the structure of the safety division within the ministry, we want to make sure that there is a strong mechanism as the basis on which those changes are made. Part of the report, which I know the hon. member mentioned last time, cites and advises that we make those changes slowly and carefully. Part of recommendation 31 which was adopted by our ministry, is to implement an advisory committee for implementation. In fact, I met with the committee for the first time very briefly last Friday, and I anticipate that they will be bringing forward some recommendations for my consideration later on.

L. Reid: If I'm hearing this correctly, the minister is saying that in fact the building standards branch has not been eliminated. Certainly that was the major portion of the discussion in last year's estimates.

Hon. J. Kwan: The building standards branch structure had been changed, in that the structure has moved to the corporate policy branch. So I suppose one could say that it has been restructured from the building standards branch to a component where, within the corporate policy branch of the ministry, we have building safety issues being dealt with.

L. Reid: Then perhaps the minister could advise in terms of how much on-the-ground work this new corporate policy group is responsible for, because it was my understanding that the building standards branch actually was directly involved with ascertaining whether or not particular buildings reached a particular building standard. If the minister is saying that this process is no longer found within the Ministry of Municipal Affairs, I'd be intrigued by that.

Hon. J. Kwan: Just for the member's information, the building standards branch, even in its original incarnation, actually never did do site inspections, by and large. From time to time, they may provide interpretations of the Building Code to a particular person. But they actually never went to the site, as the member has suggested. The building standards branch now, in its reincarnation in the corporate policy division, is by and large to work on changes to the Building Code and to look for and do the necessary work that needs to be done within the ministry on that front.

[2:45]

L. Reid: My understanding -- and I believe this is a correct assumption -- is that the building standards branch was originally involved in training. There was a vast resource, if you will -- some expertise found within that entity or agency that indeed could advise individuals who came forward with questions and that could work indirectly with the people who were on the ground. My sense of what this minister is saying now is that this resource has not been replaced; it is not found within the corporate policy branch. Indeed, that work has now been shuffled off, if you will, to the Building Officials Association of British Columbia. The ministry, I think, has in the past performed that role and is no longer doing that. That seems to be the information I'm receiving from the field.

That again is another de-skilling within the ministry, because they are no longer able to provide that level of expertise. That's certainly the commentary I am receiving, and the minister has not alleviated my concern. It seems to me that that service probably was available. If those individuals were not on the ground, my comment was that they were responsible for ensuring that those services were performed in a well-above-standard manner, if you will. They were there about mastery and expertise and about ensuring that the questions were answered to the best of their ability. Now it would appear that there isn't anyone in place to answer that level of inquiry, and that's a concern to me. I believe I'm right in that assertion.

Hon. J. Kwan: For the member's information, the restructuring within the ministry. . . . Back when we did have the building standards branch in its original form, there were about seven or eight FTEs at its height. Since the restructuring, the FTEs have been reduced to four.

However, what the ministry has also done is provide a grant for the purpose of training to the Building Officials Association, which actually did a lot of the training work at that level. As well, we have regional workshops for the 1998 code throughout the different regions. So really, it's a process of restructuring and finding within government how to do things differently. In many ways, by providing the training to the Building Officials Association, it is a means by which the ministry works toward professionalizing the work that was originally done in the building standards branch.

L. Reid: I would, frankly, take issue with that comment. I think the work that was done by the building standards branch was exceedingly professional. It's the current scenario that the public has in fact raised questions about. They see what used to be a doing activity becoming a talking activity, and they believe that those kinds of issues, in terms of bringing forward their concerns, are not being addressed. The levels of accountability -- knowing those names and those faces so that they can actually call up and establish a rapport with someone -- are gone, frankly. That's a concern.

Indeed, if this is the ministry that's talking about responsible, accountable government and empowering people to do that, then the ministry has a responsibility to ensure that accountability is the number one objective. When individuals make phone calls to this new policy conglomeration, there's no consistency, no constancy.

[ Page 8444 ]

Hon. J. Kwan: For the member's information, I'm advised by staff that when the building standards branch did do some work in the area of providing advice to folks with respect to interpretation of the Building Code, only about 20 percent of their workload was consumed in that area. By and large, the workload is elsewhere within that branch -- much of it to do with the policy component.

With respect to evaluation of the new restructured system and whether or not the corporate policy branch, which is now dealing with the Building Code issue, is effective or have done a good job, the member will actually have the opportunity to make those evaluations when the 1998 Building Code is adopted. When the work and recommendations that they have been working on are brought forward to me later on this year, the member will have the opportunity to evaluate their work at that time as well.

L. Reid: I appreciate the minister's comment. The question was: how is this minister evaluating their work?

Hon. J. Kwan: The fact is that they are working, with a big emphasis, on the 1998 Building Code, and they've been working on this for quite some time now. They are poised to bring forward their recommendations to me this year, in the very near future. I will also have the opportunity to look at their work performance with respect to what they have done in their analysis around the 1998 Building Code. I also know that they have been working very closely with the advisory committee on that front as well. I met with the advisory committee on Friday, and it appears to me -- at least from that committee -- that things are progressing well, and they do have a set of recommendations that they will bring forward to me, for my information and consideration.

L. Reid: Do they have a particular deadline by which these recommendations are to be received?

Hon. J. Kwan: The time line is such that I am looking to receive the recommendations from the committee sometime in the fall of this year and possibly looking at implementation shortly after that.

L. Reid: I will just hark back to the minister's earlier comment, where they were poised to deliver it. Now it's the fall. What was the actual parameter that they were given? When was the task assigned, and when did they indicate that they would have it ready for your perusal?

Hon. J. Kwan: The B.C. Building Code is such that the various people who've been working on it have always been looking at making changes. The code they're working from is the 1992 Building Code. The practice is such that every five years or so a new code is adopted, so 1998 is being targeted for the new code to be adopted. It's an ongoing process of reviewing, analyzing and making suggestions and recommendations for changes. Again, I anticipate that they are poised to bring forward their recommendations sometime this fall. As I said, I spoke with the advisory committee on Friday, and they also advised me that they are close to being ready to bring forward their recommendations. I look forward to receiving them sometime this fall, possibly in September.

L. Reid: I appreciate the minister's clarification. So we are to understand that the building standards branch in its original form began this inquiry sometime over the last five years and that this new corporate policy structure is completing their inquiry around the Building Code, which is due to be in place in the fall. Is that correct?

[3:00]

The other committee that I was talking about, which I met with on Friday, is the implementation advisory group. The member was talking about the safety systems review, "The Next Horizon." That's the committee that I've been meeting with. Within that "Next Horizon" report, there are 31 recommendations. Recommendation No. 31 suggests there be an implementation advisory committee to look at these recommendations. So I just want to be clear, because I wasn't sure if we were confusing the role of the different committees and what they were doing.

L. Reid: My question was in relation to the building standards branch. The minister indicated earlier on in the discussion that it has in fact been replaced by a corporate policy entity. So the question specifically was about the work of the corporate policy structure. The minister alluded to the fact that they are indeed looking at the Building Code, which I assume is a separate investigation from this implementation advisory committee. The minister is nodding that that is the case. So the Building Safety Advisory Council and the corporate policy branch are, I believe, independent today. So my question would be: where indeed is there some linkage, some crossover, in terms of them advancing similar issues? Or, in fact, do they?

Hon. J. Kwan: The building policy section of the corporate policy branch of the ministry attends all of the meetings of the Building Safety Advisory Council. The work that this building policy section of the corporate policy branch does is not so much an investigation, as the member suggests, but rather an ongoing review of Building Code issues.

L. Reid: For my clarification, the task of the building policy section of the corporate policy branch is to continually

[ Page 8445 ]

Hon. J. Kwan: As the Minister of Municipal Affairs, I actually get advice from all kinds of different sources. Ministry staff is one source. There is the building policy section of the corporate policy branch within the staff arena. Within that, I also get advice, information and suggestions from the Building Safety Advisory Council, known as BSAC. As well, I also get advice from the implementation advisory group that arose out of the "Next Horizons" report.

For the member's information, as well, in the safety systems implementation advisory group there are a number of organization representatives, some of whom also sit on the Building Safety Advisory Council. As an example, the UDI is a member of the implementation advisory group, as are the B.C. Construction Association, the Canadian Home Builders Association, etc.

To really clarify the different roles of these different committees, perhaps -- what it is that they do -- the safety systems implementation advisory group has a mandate that deals with the largest safety systems within British Columbia and not just with the Building Code component. The Building Safety Advisory Council's role is more specific, as it relates to the Building Code and not necessarily on all of the safety issues. In the ministry, as an example, we have elevating devices and other things like that; the safety systems implementation advisory group deals with all of those safety matters. The Building Safety Advisory Council deals only with issues relating to the building components. If we're totally clear now. . . .

L. Reid: Where we began this was with the building standards branch. Now the discussion is around whether or not the building policy section, the corporate policy branch. . . . That is the entity that replaces the building standards branch, if I'm hearing the minister correctly. The implementation advisory committee, the Building Safety Advisory Council and the safety systems advisory group are in that same milieu. But they're not working in terms of having replaced the original building standards branch. Is that correct?

Hon. J. Kwan: The hon. member is correct to say that these groups don't replace the building safety branch. The building safety branch has been restructured. The restructuring is such that we now have a building policy section of the corporate policy branch doing the policy work of the former building safety branch.

L. Reid: So originally, I understand from the minister's earlier comment, there were eight full-time-equivalents. . .down to four. What is the number of full-time-equivalents for these five separate entities or groups? I'll put them on the record. The building policy section, is that the group that has the four individuals? From that, how many are actually involved in the corporate policy branch? How many are on the implementation advisory committee? How many are on the Building Safety Advisory Council or committee? How many are on the safety systems advisory group?

Hon. J. Kwan: Those advisory groups have no FTEs. They are all community members, if you will, who have agreed to and have committed themselves to sitting on these various committees.

L. Reid: Two of those do have FTEs, though -- correct? The building policy section and corporate policy branch combined have four individuals. Let's just talk about bodies. In terms of the level of input from these other three entities, how many members of the community, then, would be involved?

Hon. J. Kwan: For the member's information, the safety systems implementation advisory group has the following members: from the UDI or Urban Development Institute, Maureen Enser; from the Amalgamated Construction Association. . . . Should I list the names, or should I just list the organizations?

Interjection.

The Chair: Through the Chair, please.

Hon. J. Kwan: Pardon me. Through the Chair.

I would just list the organization names and not the individual names: the Amalgamated Construction Association; the B.C. Construction Association; an individual by the name of Bonnie Maples; another individual who is a professional engineer, Barry Thorson; the Canadian Home Builders Association of B.C.; another professional engineer, Bruce Campbell; another organization, the Mechanical Contractors Association; another individual, Hugh Richards; another organization, the Municipal Insurance Association; the permits and licences department, city of North Vancouver; a representative from the BCGEU; a construction group called Grade Back Construction Ltd.; the dean of the school of trades and technology at Camosun College; and finally -- two more groups -- the superintendent of energy and protective services, Cominco metals; and the Consumers Association of Canada. These are all the representatives for the safety systems implementation advisory group.

The members of BSAC, the Building Safety Advisory Council, are: the chair, a professional engineer from the city of Surrey, Dave Magnusson; the vice-chair, Cliff Pilkey; a representative from Lynn Rines Interior Design Inc.; from the city of Burnaby, the chief building inspector; from the city of Vancouver permits and licences department, Bob Maki; the executive vice-president of Read Jones Christofferson Ltd.; Dana Taylor; a representative from the city of New Westminster; Keith Sashaw, who is the Canadian Home Builders Association representative; a representative from the city of Langley fire department; Greg Clark; a representative from BCIT's building technology department; a representative from the UDI, Peter Hrdlitschka; Betty Cuff; and Casey van den Broek. These are the members of BSAC.

[3:15]

Hon. J. Kwan: The members who sit on the implementation advisory group are the first list of members that I read out, who form the safety systems implementation advisory group. I began by listing a representative from the UDI and

[ Page 8446 ]

L. Reid: There was a significant amount of overlap, so those individuals from the Canadian Home Builders Association, etc., would have some input into a variety of different avenues. Fair comment? The minister is nodding yes.

I appreciate the information. A number of pieces of correspondence I received talk about the elimination of the building safety standards branch as being somehow related to the leaky-condo question -- that there hasn't been an overview. There hasn't been anyone taking responsibility for ensuring that all the information was in the right hands. Certainly the leaky-condo question was brought up fairly extensively in last year's estimates. When I reviewed the debate, the information was there in terms of the need for recommendations and the fact the report had been written.

I will refer specifically to the January 9, 1996, report, which makes a number of recommendations. As I work through these, I'd be interested to know how the ministry responded to the receipt of this report and indeed whether or not any of these recommendation have been acted on. The report I'm referring to is that of the task group on condominium construction to the Minister of Housing, Recreation and Consumer Services. At that juncture, that would have been contained within this ministry -- and it certainly has come back to rest within this ministry around the leaky-condo question.

Recommendation No. 1 was to establish a hotline to inform homeowners and strata councils of the proper steps to take to address water leakage problems. It indicates that the participants -- and I would assume that some of these bodies would be the same -- were supportive of establishing this hotline service. I need to know what happened with that recommendation.

Hon. J. Kwan: With respect to those recommendations, the one recommendation that the hon. member cites is the establishment of a hotline to inform homeowners and strata councils of the steps to take to address water-leakage problems. Rather than establish a hotline, which has ongoing staffing and other costs associated with it, the ministry has chosen to work with industry and consumer groups to develop a how-to guide for homeowners and strata councils dealing with water-leakage problems. Government's role is to provide assistance in developing the guide and provide some financial assistance to print and distribute the guide. The UDI is the project manager for developing this guide, which is being done with the technical and financial assistance of a large number of other industry and government representatives.

Other recommendations. I assume that you will want to know all of the recommendations and what's happening. . . ?

Interjection.

Hon. J. Kwan: I will, then, go on and address the other recommendations. The second recommendation is to develop a consumer education program and consumer education materials. The ministry indeed produced in 1997 a guide called "Buying a New Home: A Consumer Protection Guide," which has been widely distributed and is also available on the ministry's website. The Building Envelope Research Consortium, which has a provincial staff representation, is also producing a best practices guide to building envelope construction. The ministry has also provided funding for a private initiative, as you know, to produce two videos to assist potential homeowners in purchasing a new home.

The third recommendation is to enhance disclosure requirements for relevant documentation in real estate transactions for purchasers of both new and existing housing. A number of the proposed amendments to the Condominium Act are under consideration and are intended to assist owners to discover and deal with building defects in a timely, efficient and fair manner. The fourth recommendation is to request the relevant ministries to examine legislation for possible action to enhance consumer protection in the real estate legislation and/or to include real estate in existing consumer protection legislation. And of course we're working on legislative changes this session. I'm hopeful that upon receipt of the commissioner's report, we would be able to move forward on some of the legislation in that regard.

For the member's information, as well, the other ministry which has been dealing with some related matters with respect to this issue is, of course, the Ministry of Attorney General. It has introduced legislation to extend the provisions of the Trade Practice Act to real estate property transactions, which was announced not long ago. The Ministry of Finance and Corporate Relations has a legislative proposal for the 1998 calendar year to amend the Real Estate Act to create an industry-funded compensation fund for persons who lose money held in trust for real estate transactions. The Ministry of Finance has a legislative proposal for the 1998 session with respect to the Condominium Act as well.

On the fifth recommendation, improving warranty protection for consumers, that's also something that my ministry is looking at and I'm looking at, and upon receipt of the Barrett commission reports, we will be in a position to move forward and bring legislation this year on warranty protection.

The sixth recommendation is to ensure that problematic zoning provisions -- i.e., overhangs and square-footage calculations -- are identified and revisions recommended where necessary. I'm sure, in working with local governments and, again, through the Barrett commission, that if this is a matter that's identified as something we should move forward on, we will be engaging with local governments on that matter.

Finally, the mandatory licensing of property managers. As the member knows, that's also something we're considering at this time, and I await the Barrett report with respect to this item also.

L. Reid: I have a number of questions regarding some of these recommendations. So we'll return to recommendation No. 1, which is to establish a hotline to inform homeowners and strata councils of the proper steps to take to address water leakage. It says: "Participants were supportive of establishing this hotline service, but no one organization had the capability to operate it independently." I appreciate the minister's comments about, you know, the UDI working on the how-to guide. The fact is that it's not ready yet. This was a two-year-old request and will probably be closer to three years by the time this is done and in the hands of consumers -- a missed opportunity to put that information into the hands of individuals when they ask for it.

Why would the ministry not have stepped up and said: "If you're not able to operate this service independently, we'll provide some assistance." I mean, this was a pretty reasonable request that would have put that information at the end of a telephone line -- as opposed to saying: "Well, we're going to

[ Page 8447 ]

Hon. J. Kwan: Leaky condos have been highlighted as an issue for a couple of years, at least, if not longer. I know that my predecessor, the Minister of Employment and Investment, tried to work hard with industry and with the various experts in the field to come up with solutions to deal with this problem -- part of which were the recommendations that I had cited early in the process, some of which are legislative in nature, some of which are not. All along, what industry has said to government is: "Let us deal with this issue. We want to work with you on these matters. Work with us on these matters." They implied that government should not simply just move forward and come in with solutions on our own in that respect. Government has listened. The Minister of Employment and Investment had tried to work hard in engaging with industry, in trying to come up with solutions. That was a couple of years ago.

When I was appointed Minister of Municipal Affairs, one of the top issues that landed on my desk was, of course, the leaky-condo issue. A point of view of the many reports, the many recommendations and the progress to date. . . . It became very clear to me that not enough has been done and that, yes, more needs to be done, perhaps in a very more aggressive approach.

So to that end I have appointed a commissioner to head up this task and to move forward on these matters. I'm expecting a report very shortly from the commissioner with respect to action that government should take -- and perhaps not just government but in the range of different places or different groups as well. I'm looking forward to receiving that report and to moving forward from two perspectives in dealing with the leaky-condo issue. One is, of course, future legislation for future protection for future homeowners. The other is to deal with the issue from the perspective of current homeowners who own a leaky condo.

As well, I finally just want to add that this issue, though. . . . While government is right in taking a lead on this matter, government alone is not the only group that needs to come forward to deal with the issue. Clearly everybody has a role to play. It is important that every group come forward to address this issue in a responsible and, I hope, timely fashion.

L. Reid: Minister, I would agree that this is the goal. But I think the minister has not stepped up to the plate. I mean, the recommendation is clear. It says the task group believes that the ministry should avoid overlap with technical work already underway -- we agree with that -- and instead should focus on consumer protection and education. To this end, "the task group makes the following recommendations to the Minister of Housing, Recreation and Consumer Services. . . ."

[3:30]

Certainly I take nothing away from the Urban Development Institute in terms of the creation of this pamphlet. But by the time this finally reaches the press it is going to address a problem that was raised to this government two and a half years ago. That's not a response that I. . . . I mean, I don't believe this ministry can be particularly proud of not stepping up to the plate and of saying: "We're not prepared to do it necessarily by ourselves." You weren't asked to do it by yourselves. You were asked to work in conjunction with the existing entities, the organizations, and put this together as a package. That was a reasonable request.

If that kind of easy request cannot be acted on in a timely way -- and I don't consider 30 months a timely response -- how are we to believe that the recommendations that flow from this current commission are going to receive any more attention than these recommendations? Frankly, they won't be vitally different, if I might be so bold. I mean, the same response for the consumer is probably found here. But these ones weren't acted on.

I can make a number of comments about a number of these. I'll ask a specific question regarding No. 2. The minister's response was that two videos are going to be produced. Would the minister be so kind as to give us the time line and the cost?

Hon. J. Kwan: While I agree with some of the comments the hon. member has shared with us, there are some I don't. The ministry, prior to my arrival, had been working hard on this issue. Under the leadership of the now Minister of Employment and Investment, educational material was produced in 1997: the guidebook "Buying a New Home: A Consumer Protection Guide." It was very well received. We have not been able to move forward on some of the initiatives that were meant to be joint initiatives, where industry said they would share with us, like the 1-800 number that the member suggests. But an alternative is being looked at, in that the lead coordinator, if you will, on this project is the UDI.

The fact is that she's right. The question becomes: how come it takes so long to move forward on some of these things? I have been Minister of Municipal Affairs for about two and a half months now, I guess, and one of the top priorities for me is the leaky-condo issue. I am waiting for the report of the Barrett commission. I have made commitments, as have my predecessor and the Premier, that we will bring in legislation this session to deal with consumer protection. We're committed to that. With all of this discussion, as well, what was missing all the time was: how do we deal with the problems of the homeowners who are now faced with the problems today? Industry, in their best efforts in trying to look at this issue, never came up with any suggestions for the province to consider. That's something that I want to move forward on as well, and I'm looking forward to Mr. Barrett's report in terms of his recommendations on these matters.

With respect to the notion of how we would know that action would actually be taken on the Barrett commission or that those recommendations would be substantively different -- or not -- from these other ones, all I can suggest is to just wait and hang tight for the report that will be coming forward on June 19. Look at those recommendations and look for government to take action on that front.

With respect to the video question, the ministry is a member of the consortium of individuals -- or groups, if you will -- who supported the production of this video by Double M Productions. The Ministry of Municipal Affairs provided a grant of $10,000 to that end, and the distribution of that video is headed under CMHC. My understanding is that the video is out. I actually received final copies of it, and I assume that CMHC is managing the distribution of these videos.

[ Page 8448 ]

Interjection.

L. Reid: I'm sure I could return it to you safely, minister.

In terms of the other partners in this, if the ministry's contribution was only $10,000, what was the total cost of the two videos in terms of production, and who else shared in those costs?

Hon. J. Kwan: We will be happy to provide that information to you. My understanding is that outside of our ministry, the B.C. Federation of Labour has also contributed, along with CMHC, but we'll be happy to get you that list and the respective contributions.

L. Reid: I would appreciate receiving that information.

Under recommendation No. 3, "Enhance the disclosure requirements for relevant documentation in real estate transactions for purchasers of both new and existing housing," the minister's response was that the new Condominium Act will contain some of that information. It's my understanding that the new Condominium Act has been in the works since 1994. So again, my question would be around time lines. If there were remedies that could have assisted condominium homeowners earlier on in the process, why were they not brought in line much earlier?

Hon. J. Kwan: Just for the member's information, the Condominium Act is technically under the Ministry of Finance. I'm not able to engage in a discussion with respect to future legislation, but it would be fair to say that our ministry has been working closely with the Ministry of Finance on issues relating to the Condominium Act.

L. Reid: The minister will recall that she was the one who indicated that these revisions would be contained in a new Condominium Act and that in fact it was she who brought that item to the table. My comment was only that the information around a new act has been circulating since 1994. Can the minister confirm that the act has indeed been in the works since 1994?

Hon. J. Kwan: The information that I've provided for the member under recommendation No. 4 is to advise that the Ministry of Finance is indeed working on a legislative proposal for the 1998 session with respect to the Condominium Act. By offering that information, by no means do I want to begin debate or engage in discussion around what the proposals might be or anything like that. I simply want to let the member know that a number of items are being looked at at this time. I don't want us to engage in discussions in the House around potential future legislation on this matter.

In terms of the question of whether or not the Condominium Act is something that people have been working on since 1994, I'm advised by my staff that yes, this is something that people have been looking at since 1994. As the hon. member knows, I was elected and came to the table as an MLA in 1996.

L. Reid: I would make the same comment that I made regarding recommendation No. 1: timeliness, regardless of the ministry, is a concern. I'm not troubled by the fact that it's Finance or Transit or Municipal Affairs. The issue is that I believe the problem could probably have been remedied if this government had acted on a legislative mandate four years earlier. The minister chooses not to have any responsibility for that, and I accept that; it truly is not something that falls within this ministry. But I will make the same pervading comment for most of these recommendations: the issue of timeliness was not addressed effectively by this ministry. Whether this ministry was advocating that another ministry move ahead, so that the anguish of current condominium owners could have been lessened. . . . If they had some of this information four years earlier or two years earlier, in terms of the hot line, some of these individuals would not be in the dire straits they are in today. I will commit that to the record. I firmly believe that. The shuffling-off of responsibility around putting the right information in the right hands in a timely way, ensuring that. . . .

Thousands of British Columbians have bought condominiums in the last four years; you only have to check the real estate records. Disclosure is still an issue. Indeed, the ministry has not protected those consumers. So for those individuals to get to their feet today and talk about consumer protection being the number one issue. . . . It hasn't been for the last four years. The work has been there and simply has not seen the light of day. We're aware of that on the opposition side of the House. Taxpayers are aware of that, and condominium homeowners are aware of that, because strata councils, to use the minister's words earlier, were always poised to receive information regarding a new condominium act.

So the comment. . . . If the minister isn't believing it's falling on fertile ground, I accept that in terms of this particular ministry. But the issue for this government is lack of timeliness -- around ensuring that the issues of condominium homeowners today have not been aggravated by a lack of timeliness. I will submit for the record that I believe they have been. I believe this government has gone out of its way to aggravate homeowners in terms of not providing information in a timely way.

A number of other recommendations are intriguing because, again, they weren't acted on. I certainly concur with the minister when she talks about the overhang-and-eaves question in terms of square footage and how that is measured from municipality to municipality. There is tremendous variation in how that's done. If the ministry is the overseeing body, it has some responsibility to put into the hands of consumers what they should be looking for. It shouldn't be dramatically different from Burnaby to Vancouver to Richmond. The fact that it is. . . . People need to be aware of that kind of information. Again I will the case that the information was simply not put into the correct hands in a timely way.

I appreciate the minister's inability to comment on future legislation. This is a discussion around timeliness, because all of these issues have been before this ministry specifically for two years and before this government for four years. Regardless of who sits in the seat as Minister of Municipal Affairs, there should be some continuity within the government as to how to best address the needs of taxpayers and consumers. I mean, the problems of these individuals are not more complex today than they were two years ago. They still have leaking condominiums. It may require more dollars to repair them, but whatever caused that problem isn't more complex today than when the leaks first began on their individual properties.

[3:45]

[ Page 8449 ]

I sat through many days of those presentations, and I would submit for the record that I believe this minister has created an impossible task for this commission, unless he hires people with some technical ability to craft a report. It's an absurd expenditure to pay someone in excess of $700 a day to listen if they cannot do anything with the information. I would submit that this individual does not have the expertise to draft a reasonable, technical report.

Hon. J. Kwan: On the issue of quality of residential construction, I recall when I was on city council and the matter was brought up within the city of Vancouver. I sat on council between 1993 and 1996. At the time, even when city council was poised to take action on the issue, what industry representatives around the table said to council was: "Let us deal with these issues. We are the experts in the field. Let us fix the problems." That was from 1993 to 1996.

I know that when the Minister of Employment and Investment was given this portfolio he also took the position that he wanted to work with industry, to come to resolution in dealing with these matters. Unfortunately, while yes, much work has been done, and progress in terms of suggested recommendations has been made. . . . Even then, action that was needed in terms of getting agreement on how to move on a couple of critical components for consumer protection, such as the new warranty program and the regulation of the industry. . . . There was no agreement amongst the experts in the field on this matter.

Take, as an example, when we talk about the warranty program. I know that the minister, prior to my arrival, had worked desperately to try to bring people together to come to agreement. When I was appointed as minister, industry said to me when I contacted them on the new-home warranty program issue: "Unless you do what we want, we'd rather that you do nothing at all." What they were asking me to do was to commit to a three-year warranty for water penetration only -- not five years, not ten years or anything else.

What they also said to me was: "Unless you agree with us on how to proceed on the regulation of industry, we'd rather that you did nothing at all." What they wanted me to do was to have the industry regulation regulated by the industry. Well, other people said to me: "Wait a minute. We feel that the problems that have been caused, the problems they feel are identified in the leaky-condo issue, are problems caused by the industry." Therefore they didn't agree with the notion of industry regulation.

So while yes, there were general suggestions as to how to move forward, even despite the best efforts of my predecessor there was no agreement to be had. Since I've been appointed Minister of Municipal Affairs, I've reviewed all the work that has been done -- the ongoing work from before -- and have made a determination that we perhaps needed to move forward in a more aggressive way. One way of doing that is to appoint a commissioner to compile, consolidate, hear from the public -- particularly the people who have not been at the table around this issue, people who are not experts on this issue. I stand firm that Dave Barrett is someone who will do a good job for the government. I again ask the member opposite not to judge Mr. Barrett because he is a former Premier, a former NDP Premier, but rather to judge the work that he's going to produce and table to me on June 19.

Finally, on another issue with respect to local government -- the overhang issue, etc. -- this is very much a design issue as well. I actually had a conversation with the AIBC around that, because overhang per se is not prohibited within our municipalities. People do away with the overhangs because of the way in which municipal government calculates the floor space ratio. In their attempt to save the floor space, the design team, in their own wisdom, decided not to put the overhangs in place and consequently may well have contributed to some of the problems faced by the leaky-condo homeowners.

But it's a local government issue as well. We have consistently heard local government representatives tell us: "Look, we are an independent, accountable and responsible level of government within our jurisdiction. Treat us as such." So what I think we need to do on this issue is to bring all the parties together, sit down and say who has to do what and who has what responsibility. Perhaps the commissioner's report and the recommendations that he's going to table will assist us in moving forward in that fashion.

L. Reid: I will simply ask the minister: how many people were considered for the post of commissioner? And did any one of them have a technical background?

Hon. J. Kwan: Those are cabinet discussions and decisions. I'm not prepared to discuss cabinet decisions at this time.

L. Reid: The minister referenced her comment regarding a three- or five-year warranty. The recommendation in the report that went to the ministry two years ago recommends that warranty programs offer a minimum five-year water penetration guarantee. The discussion has been on the table for more than two years.

Frankly, I think what consumers are looking for is some leadership on the question. I don't think anyone would have been agitated about whether it was five years or ten years. I think they simply wanted the ministry to take a decision on the issue rather than continually flinging it back, saying: "Well, we can't move ahead." It doesn't make for a decision that's in the best interests of the taxpayer when the constant commentary is: "It's not something we're taking responsibility for. We're not moving ahead."

The minister, when she originally read these recommendations into the record at my request, didn't mention that one. That is something that this government could have done more than two years back. There was nothing that prevented some action being taken. Frankly, we're both aware of that. Will the new commissioner's report, costing probably in excess of $300,000 -- I think that was the first amount cited in the press -- say something dramatically different? Again, I will put on the record my comment that it will probably say: "There shall be a minimum five-year water penetration guarantee." What is the taxpayer paying for, hon. minister?

The minister's comment was that indeed Dave Barrett will do a good job for the government. I have no doubt about that. What I'm looking for is a good job for the taxpayer, a good job for the condominium homeowner. I'm not convinced of the skill set, of the commitment to make good decisions on behalf of condominium homeowners today. The decisions

[ Page 8450 ]

Hon. J. Kwan: There are two areas of concern for me, as Minister of Municipal Affairs, with respect to the leaky-condo issue. One is the concern about protection for future homeowners in the areas of home warranty and mandatory industry regulation, etc. The other concern for me, of course, is the issue of those who are faced with the problems today and the options available to them in dealing with this issue.

When I was appointed Minister of Municipal Affairs, I made a point of reviewing all of the different reports and all of the different recommendations that had been put forward -- and the suggestions and even the discussions that were ongoing with various people. It became clear to me that we needed to take a more aggressive approach in finding those answers, which is what I did by appointing Dave Barrett to head the commission.

[4:00]

This is a very complex issue, as I know that the member opposite knows. It is a complex issue because there are issues with respect to consumer protection, there are issues around industry standards, there are perhaps issues around the Building Code, and there may be issues around professional organizations such as the architects, the insurance companies and different levels of government -- municipal government, in terms of their bylaws and the zoning, design guidelines, etc., that they have in place. The task I'm grappling with is to try and see how we can pull all these pieces together for the purpose of protecting consumers in the future and for the purpose of dealing with this crisis that we are faced with today.

With respect to the issue around the cost of the commissioner, I have not yet received the billings, if you will, from the commissioner's group. They will be, I assume, submitting those to the Attorney General's office, as the commissioner was appointed under the Inquiry Act.

L. Reid: What was the budget. . . ? If the minister is unwilling or unable to give me the number, what was allowed for this commission? What was the budgeted item?

Hon. J. Kwan: As I stated publicly at the appointment of the commissioner -- at the news conference -- the budget for the commissioner's work is $300,000. Given that there is now an extension, the budget may well exceed $300,000. But the final figures will come in when the work is completed and the various documents are received by the ministry.

L. Reid: So there is a budget -- signed off by someone, I would assume -- that allows for the work of the commission not to exceed $300,000 up to and including May 29. Who would have signed off on that budget item?

Hon. J. Kwan: Under the Inquiry Act, the statutory appropriation has no authority to require a budget in that way. What it does have is the authority to allow for spending to take place under a particular task -- in this case, the commissioner. Our estimation at this time is a projection of $300,000 for the work of the commissioner. As I said earlier, given that the commissioner's work has been extended, I anticipate that the estimate will increase. We will receive the final figures upon the completion of the work of the commissioner.

I want to say, though, that the leaky-condo issue is not just around leaky condos but is really around protection for residential construction throughout British Columbia. It is a multibillion-dollar industry.

When I earlier said "government," I really meant the government in representation of the people of British Columbia. So the spending on working on these matters is not for government in and of itself but really government in representation of the people of B.C. Given that this a multibillion-dollar industry and that the changes we may bring in will affect us for many years to come, it is important that we recognize the importance of the work and the investment that we put in place at this level.

L. Reid: The sentiment expressed by the minister is not evidenced in her actions. Every time the minister gets to her feet, she talks about the complexity of this issue. If she were truly committed to the belief that this is a complex issue, the minister would have appointed someone with some technical background -- bottom line. I do agree this is an issue that's in the best interests of government and not necessarily in the best interests of the taxpayer. But my question specifically was to look at the formula that has driven the $300,000 estimate -- in the minister's words. . . . The original estimate of $300,000 was for six weeks' work, for 30 working days. I believe this commission came into being around the middle of April and was to conclude on May 29. For 30 days of work we understand that the commissioner has been paid $725 per day. I would ask some questions around expenses that would go along with that, and I would ask for the daily fee paid to both Robyn Allan and Peter Leask.

Hon. J. Kwan: With all due respect to the member opposite, the fact is that these technical experts who have been working with my predecessor for the last couple of years have not been able to come to a resolution or agreement on these issues. The fact is that even with the technical experts out there, there are some technical experts who say that this is the architects' fault, there are other technical experts who say that it is the inspectors' fault, and there are still other technical experts who say that it is the industry's -- the developers' -- fault. As you see, there are many people who want to pass the buck, if you will, in terms of blame. It has been very difficult to try to get people to own up to accountability and responsibility.

[ Page 8451 ]

With respect to the costs and the contract documents for the commissioner's staff team, I was under the impression that those documents were already made public to the member opposite. If the member opposite has not received a copy of that, I know that the Attorney General's office would be happy to provide a copy to the member opposite. If not, our ministry would be able to get a copy from the AG's office and make that available to her.

L. Reid: If that information could be forthcoming as soon as possible, that would be helpful. I believe it is an enormous expense. What the minister has said is that the estimate will not be met and that a three-week extension has been granted, which will result in increased costs. If I can put the question on the record for a future response, I need to know what the additional costs will be for that additional 15 days' worth of work, if you will. I have tremendous concern that when taxpayers look at this expenditure. . . . If we're going to speculate, it'll come in somewhere in the neighbourhood of $400,000. If we're parcelling it out over six weeks, and it's $300,000, and you're going to add another $150,000 for the additional three weeks, you're heading towards an enormous sum of money that, frankly, could have repaired a number of these condominiums. I would trust that the sum will not be that high, but I have no confidence that this is a fiscally well run operation at all.

In terms of a future solution, the minister will continue to say that it's not easy to apportion blame. I think that the discussion is a whole lot bigger than that. This is about acknowledging that there's some shared responsibility for this and about moving forward. If this is only about finding someone to carry the entire responsibility, you're dancing in the wind. I believe, if this is truly a commitment to a remedy and a solution, that it's more important to have the discussions.

All the way back to 1986, when we talked about changes to the Building Code, which looked at changes to the polyethylene barrier within the building envelope construction. . . . Again, the research was not done -- whether it was this government or the previous government -- as to the viability of situating that type of envelope in the temperate rain forest. That's a fact.

This isn't new information; this is information that's been available for a number of years. Certainly in the research I have done in terms of Washington State, they have not experienced anywhere near the calamity we have in condominium construction, and they have an almost identical climate. So from 1986 onward, in this province we did some things very, very differently around the polyethylene barrier. That's a fact. That's not about apportioning blame, minister; that's acknowledging that it did happen. It's about acknowledging that there needs to be some remedy and some shared responsibility about what happens next.

I will put on the record two discussions: one surrounding urea formaldehyde foam insulation, where Canada Mortgage and Housing did come forward with a formula that looked at how best to correct a problem that they in fact instigated. They said to taxpayers across this land that this was appropriate material to put into your homes for saving on heating expenses. I'd make the same claim regarding radiant heating panels. The news coverage in 1995, only three years ago, looked at Canada Mortgage and Housing coming to the table and saying: "We indicated to you that this was a reasonable way to proceed; we have since learned that it is not." And they put in place a formula that offered homeowners some remedies, in terms of dollars, to remove that product from their homes.

The same principle is in place regarding the 1986 Building Code. The polyethylene barrier is not suited to British Columbia. No further research is needed on the fact that that was not a good decision. What is the best type of product to use in the future? Absolutely, let's do the research on that question. But we know mistakes were made, all the way back to the Canada Mortgage and Housing Corporation. So let's craft some kind of formula that acknowledges that individuals today have an enormous outlay of cash requested of them by their strata councils -- to the tune of $30,000, $40,000 and $50,000 -- for home repair, and we're going to wait another three weeks for another set of recommendations. All that does is delay the repair.

The weather today is lovely, but you know that it will be raining in this province in a matter of months, and it will be raining for a number of months. The strata folks who made contact with me have said: "If we don't begin these repairs before the rains, we will have a more dire situation upon us." So the delay may indeed suit the government, but it doesn't suit the homeowners who are living in leaky condominiums.

[4:15]

Hon. J. Kwan: Just to touch on a couple of issues that the member opposite raised, as I said earlier, I'm committed to bringing in legislation this session, dealing with the future new-home warranty programs on the leaky-condo issue. I remain committed to that; my predecessor had committed that he would bring in consumer protection legislation to that effect. In the throne speech, it was stated that we would be committed to bringing in legislation dealing with the consumer protection component, and I remain committed to doing that.

I also want to say, in terms of the cost of the commissioner, that I actually spoke with some folks just prior to the appointment. One person I spoke with, who knows intimately the problems that various homeowners are faced with with respect to the leaky-condo problem, is a woman by the name of Nona Saunders. She's the president of the Condominium Home Owners Association of B.C. When I spoke with her about this issue, she actually said to me that for government to spend $300,000 or even $500,000 on dealing with this very critical problem in a multibillion-dollar industry is, in her words "a drop in the bucket" -- no pun intended.

[ Page 8452 ]

L. Reid: My question to the minister was: when might that report be made public? Are we talking about two weeks after June 19? Are we talking about one week, a matter of days?

Hon. J. Kwan: I'll let the hon. member know upon receipt of the report when I would actually make that report public.

L. Reid: From the minister's remarks, if it's indeed going to cabinet and then going to caucus, that's probably two additional weeks, so the public may indeed. . . . The cabinet regularly meets weekly. If that changes, that would be intriguing, again. But in terms of the response, I would urge the minister to make it immediate. There are enough individuals out there who are hanging in the balance, who indeed have not made their mortgage payments. Their dollars have gone into repairs, and they are in absolutely dire straits. So the extension didn't warm their hearts. If there's an additional delay. . . . Again, I would put the question to the minister: does she today have plans to further extend the receipt of that report?

Hon. J. Kwan: The answer to the last question is no. I have no plans to further extend reporting out on this issue from the commissioner, Dave Barrett.

On the issues around action and when I will make the report public, again, I will make that determination on June 19.

L. Reid: If it would please the committee, may I request a five-minute recess?

The Chair: If it pleases the committee, we'll take a five-minute recess.

Interjections.

The Chair: We'll recess until 4:30.

The committee recessed from 4:22 p.m. to 4:32 p.m.

[B. Goodacre in the chair.]

V. Anderson: At the UBCM conventions over the last number of years, there has been a great deal of discussion about the working relationships between the UBCM and the ministry. Could the minister comment on how that has developed and how it is working at this particular moment?

Hon. J. Kwan: The last time I spoke with the president of the UBCM, Steve Wallace, was last week, in fact, when we introduced the Municipal Act reforms. It was actually in the public record, although you can never trust what the newspapers say. I was actually there and heard him say it, so therefore they reported it accurately -- I can only assume. Over the last while, the relationship with the Ministry of Municipal Affairs and the UBCM has been one of cooperation. We've been working together through the joint council in dealing with different issues. Where matters fall outside of the Ministry of Municipal Affairs, we have endeavoured to bring the relevant ministries in and be that liaison in bringing forward their comments or feedback to the respective ministers and ministries for their information.

V. Anderson: Could you explain to us the nature of the joint council, the membership of it and who sits on it on behalf of the government?

Hon. J. Kwan: From the provincial government side there are four ministers who sit on the joint council: the Minister of Transportation and Highways, the Minister of Environment, Lands and Parks, the Minister of Municipal Affairs and the Attorney General. From the UBCM side there are the president of UBCM, Steve Wallace; Mayor Steve Thorlakson; and Jim Abram and John Ranta, who are also table officers from the UBCM. The structure is such that the meetings are chaired by either myself or Steve Wallace on an alternating basis.

V. Anderson: Does the council meet on a regular basis, or is it ad hoc? How does it work in the committee process for the issues that are being jointly worked on?

Hon. J. Kwan: Generally speaking, we meet quarterly. We have discussed a whole number of different issues in the last while. We've been working very hard on the municipal financing issue and on the Municipal Act changes to traffic fine issues. Oftentimes there are committees that break out and work with UBCM staff on these matters, and then they report back to the joint council with recommendations or suggestions. Then we have discussions there as well. Generally speaking, the agenda is set prior to the meeting, and we table the different issues that we've been working on for discussion.

V. Anderson: To understand the process -- and I'm thinking of the community people who have been asking about this process -- let me use an illustration. We'll take the Municipal Act, not discussing its content at the moment. Does this mean that when that is brought forward, it has come with a joint consensus in the council of both the government and the council on behalf of the municipality? Does that come through, then, and is it brought forth by the government after they have reached a consensus on it in the council itself?

Hon. J. Kwan: Generally speaking, we identify through the joint council the issues that need to be discussed. Each individual community group or municipality does not bring a matter per se to the joint council. The joint council executive, through the UBCM executive, makes the decision on what is a priority for the UBCM on matters to be brought up at the joint council level, oftentimes through the resolutions of individual municipalities. Unless it is an issue that the larger UBCM executive wishes to deal with, those individual items don't normally make it to the joint council meetings. That determination, of course, rests with the table officers of the UBCM, who also sit on the joint council with the province.

[ Page 8453 ]

Hon. J. Kwan: Generally not. In that instance, with respect to the transit items, the mechanism that can be brought forward is either through the GVRD or through the GVTA. Perhaps that would be a more appropriate mechanism. Generally speaking, the UBCM does not deal with issues that are so specific. They deal, rather, with broader issues that have ramifications for many of their members, if not all.

V. Anderson: Another area, when I have the opportunity to raise it, has to do with the question of infrastructure. As the minister knows, the Taiwanese Cultural Society is looking for an opportunity to develop the centre, and there is some land available if they have the finances. They've raised over $2 million, as the minister is probably aware. Is that the kind of project that comes through the ministry because of the infrastructure program, if they're applying in that direction?

Hon. J. Kwan: In fact, the infrastructure program is under the Minister of Employment and Investment. I know of the project the hon. member is talking about, and the site as well. The site is owned by BCBC, so the appropriate authority to go to on that is really BCBC. For the member's information, the last I heard, the site the member references has been valued at between $3 million and $4 million.

V. Anderson: As always on sites, there's a disagreement about the valuation, so that will come up for discussion.

Another area, with the permission of my colleague here who is the critic for multiculturalism. . . . I've been in the habit of asking this over a number of years: could the minister comment briefly on the current multicultural plan of her ministry, which is part of the requirement that's to be undertaken each year? I know that in the past it's been done very well.

[4:45]

Very recently I attended, and was very excited to attend, a meeting with our staff of the employment equity and multiculturalism committee, with a view to looking at how we enhance government representation in terms of our employee base to better reflect the multicultural faces of British Columbia. So I'm very excited about the work being done there. The meeting was well attended by staff on a volunteer basis, and there were representatives from throughout the different regions in British Columbia. As I said, I'm very excited about that work, and I'm looking forward to the findings of the committee.

Some of the other things that I know the hon. member is aware of and knows that work has been done in the past, which we will continue to look at. . . . Of course, the distribution of the Multiculturalism B.C. calendar to all the ministry branches is one thing. That was in fact suggested by the member opposite, and our ministry has actively taken that suggestion and is distributing the Multiculturalism B.C. calendar to all ministry branches.

We have also made contributions towards the publication of an atlas tracking the immigrant settlement over time in various parts of the lower mainland, as an example. We've also focused on hiring practices in terms of co-op students, and we are looking at equity issues from that point of view, as well. This year we're looking at the publication of ministry information in languages that represent the diverse community throughout British Columbia. As well, we're looking at developing and implementing a training plan to offer workshops in the areas of employment equity and multiculturalism training.

These are just some of the ideas that the ministry is considering or has embarked on. I'm very excited to work in this area and look forward to working with the member opposite, as I know he's also interested in the area of multiculturalism.

V. Anderson: I appreciate the minister's response. Can the minister indicate approximately what the multicultural mix is in ministry staffing at the moment? How has that changed over the last few years? Has there been any major change that is recognizable, and if so, in what direction has that come about?

Hon. J. Kwan: The statistics that we collect within our ministry are employment equity statistics. They don't necessarily break out the multicultural makeup of the ministry in that sense, as I know the member can appreciate the challenges in doing that. How do you break out multiculturalism and its representation from that point of view?

Having said that, though, we're actively working within the ministry toward bringing diversity to the workforce in the Ministry of Municipal Affairs. To that end, when I talk about diversity, I'm referencing not only diversity from an ethnic-origin point of view but also diversity from an accessibility point of view. We actually have a coordinator within the ministry who focuses in on that arena. Other areas, of course, focus in on the aboriginal component of the ministry. We are looking at a number of different ways to enhance representation in the workforce within the Ministry of Municipal Affairs to better reflect the diversity of the province.

G. Plant: What would constitute success, from the minister's perspective, in terms of enhancing the representation of aboriginal people within the staff of her ministry, given that she apparently doesn't actually keep track of actual numbers?

Hon. J. Kwan: Within the employment equity groups, there are four basic categories in which we do track numbers. That gives us at least a sense of where things are going. The four groups are: women, aboriginals, people with disabilities

[ Page 8454 ]

I should also say, given the ministry and some of the work that falls within the ministry like the traditional work around safety standards, the Building Code, etc., -- that traditional workforce -- that there's a high representation from the male sector and not so high a representation from the female sector. What that means is that we need to do some work around getting women into these non-traditional work areas. As in many other industries out there, the task is to challenge the status quo and to work towards bringing into these fields the non-traditional workers in these fields.

G. Plant: Well, I recognize that statistics are almost a heartless way of examining a question that is fundamentally about real human beings and dignity in the workplace. But since we're on the subject, how does the Ministry of Municipal Affairs compare with the general public in terms of the four categories that the minister referred to? Could I get the actual numbers from the minister?

Hon. J. Kwan: My staff will endeavour to give you the precise breakdown for these various categories, but on the whole, with respect to the women's target, we do a not bad job. Generally speaking, in the larger population the workforce representation is about 52 percent; our ministry has achieved a target of approximately 46 percent. We know that in the aboriginal communities it's exceedingly difficult for our ministry to target aboriginals to come into the ministry. We're working hard on that, and I can get you the figure from that point of view. The visible minorities component, as well, is something that we need to improve upon and that we're focusing on. Once again, we can bring you that concrete figure.

Finally, the disability component is something where. . . . We actually have a dedicated coordinator on this front, working towards achieving better targets. Again, we can bring that number to you at a later date.

G. Plant: I look forward to receiving that information, and I appreciate the offer.

On another, quite different subject. . . . Each of the ministries of the Crown has been required to reduce its expenditures on the services it provides to members of the public and others in respect to freedom of information and protection of privacy. As I understand it, there are two components to the funding issue around FOI. One is an actual reduction of expenditures, which I assume has happened in this ministry, in terms of the comparison of last year's numbers with this year's -- although the minister may be able to correct me. The second is that my understanding is that generally across government, there has been a direction that ministries improve fee recovery from the FOI business, as it were. I think that until relatively recently the precise parameters of the fee-recovery side of the equation were still a matter of discussion. I don't know if there's been a decision or not.

[5:00]

Hon. J. Kwan: Our ministry is a small ministry in comparison to other ministries within government. To that end, we did not reduce the dollars allocated to freedom of information; in fact, we actually increased the budget by $3,845, for the member's information.

G. Plant: So there is no direction affecting this ministry with respect to increased fees at all?

Hon. J. Kwan: The targeted recovery is $27,000 within the ministry under this area. The actual expenditure within the ministry, as I said earlier, increased by $3,845.

G. Plant: If I may ask, then: what is the $3,845 in addition to? That is, what is the total budget figure allocated to FOI? Secondly, the recovery of $27,000. . . . Does that figure represent a change from last year in terms of the targeted recoveries?

Hon. J. Kwan: The total expenditure is $225,994, minus anticipated recoveries of $27,000, which brings us to the total figure of $198,994. The only difference between this year's and last year's figures is the $27,000 recovery target.

G. Plant: It's the expectation, then, that in responding to FOI requests in the current fiscal year, the ministry is going to have to essentially levy fees or charges that will amount to a total of $27,000. Is that correct?

Hon. J. Kwan: Yes.

G. Plant: Just to wrap up the subject, then, apart from whatever one might argue about on the impact of the additional fees -- $27,000 -- am I right that the ministry does not expect service delivery in respect of compliance with FOI requests, and so on, to change this year over last year? That is, the ministry expects to do as good a job this year as it did last year in relation to FOI.

Hon. J. Kwan: Yes. Our ministry expects to continue the high performance rate at which it has been operating. But for the member's information, not only do we do the freedom-of-information work within our ministry, but we also provide information and guidance to local government. As the Minister of Municipal Affairs, I anticipate that the ministry staff will continue to do the excellent work that they are doing right now.

G. Plant: I can appreciate that that could well be a significant task -- helping municipal governments sort out how they're going to comply with their obligations.

[ Page 8455 ]

Hon. J. Kwan: Yes, it is included.

L. Reid: I have a further number of items I wish to canvass the minister on in terms of the leaky-condo question. Certainly, prior to my departure, I put on the record the issue of possible remedies similar to the radiant-heat- homes article. I just want to spend a few moments referencing the discussion. The article is from November 3, 1995: "The B.C. Assessment Authority is offering to reduce the assessed value of homes with two types of radiant ceiling heating panels. The move would lower property taxes for those affected."

The sentiment in the article is that the offer was made by the B.C. Assessment Authority. My question to the minister is regarding whether or not a similar offer has been made to individuals today who are residing in leaky condominiums. In that their properties have been devalued -- in some cases to the extent of $40,000 and $50,000 -- will that devaluation be reflected in a reduced property assessment?

Hon. J. Kwan: If indeed somebody's home has been devalued because of leaky-condo problems and that information is made known to the assessor, I'm sure that it will be reflected in their next year's assessment.

L. Reid: The question pertains more to whether or not the offer is there. The minister will know that the majority of individuals have missed the time line for this year -- that the window has closed on their ability to appeal the assessment. The question is pertaining more to the flexibility of the Assessment Authority, in terms of whether or not people will still be invited to come forward and whether someone will take responsibility for ensuring that they realize that the window is perhaps going to be ajar -- and, indeed, that they can participate in a process.

Most folks today have been told that there is no opportunity. My concern is that these individuals don't need the last nail in the coffin. They are truly at their wits' end in terms of living in these homes. Their repair bills are mounting, and now they've been told that the avenue is not open to them. I will simply put it on the record, and I trust that the minister will respond around some greater flexibility of opportunity for these particular homeowners.

Hon. J. Kwan: The matter that I think the hon. member is really referencing is compensation, if you will, relating to the leaky-condo issue. Subject to receipt of the Barrett report, I will take these issues into consideration. I note that the B.C. Assessment Authority is, of course, bound by a schedule, because they have to get their rolls out for local government -- for them to build into their budget, etc. As well, the mandate that has been given to the B.C. Assessment Authority is to assess a particular property based on its market value. In a scenario where a homeowner has, let's say, discovered today that their home in fact leaks, that assessment will be reflected in next year's assessment as well. They will have the opportunity to make sure that that information is shared with the assessor and to go through the appeal process accordingly.

L. Reid: My concern is for those homeowners, hon. minister, who discovered earlier in this calendar year -- let's say March, April, May -- that these leaks are devaluing their property. They are indeed still required to pay on the full market value of that property this July 2, when those taxes come due and payable. For your response to be that they should wait an additional 15 or 16 months until next July 2 rolls around is, frankly, not in their best interests. What I'm asking for is flexibility on behalf of the Assessment Authority -- to allow them to come forward.

Again I will make the comparison to the radiant-heathomes issue, because a quote here is: "The Authority wrote to owners, offering to revise assessed values by the estimated cost of replacing the faulty system." The Assessment Authority, in this instance, took the initiative and indicated to individuals that the option of having their assessments lowered was available to them. My concern around this issue is that individuals have no way of learning whether or not the minister's sentiment is indeed going to be implemented -- whether or not they're going to be able to come forward without waiting until next July 2 to have a decreased assessment of their property. The fact of the matter is that their property is worth less today -- in some cases, as much as $50,000 or $60,000 less. So for them to pay full value this July 2 is not fair, frankly. It's not in their best interests.

[5:15]

But if the member is suggesting that given that the assessment is based on the time in which the property was assessed and that it was accurate in that there were no leaks during that year, and in the subsequent year they found that there was in fact a leak and that therefore for all the years they had previously been assessed, they should somehow be granted the authority to get a discount, if you will, from government, that really adds up to an issue of compensation. That's really what the member is suggesting. Again, I await the Barrett report in terms of what options are available to the current homeowners who are now faced with the problem.

But I also want to point out for the member's information that while it is true that the B.C. Assessment Authority makes the assessments, it's the municipalities that actually collect the taxes. So to go retroactively, to years past or years previous, would actually impact the tax rolls for the local government as well. I wonder if the member opposite has any information to offer me as to what municipalities might think of that. Their budgets are based on what that assessment is, and if we do anything drastic in terms of changes that would affect that whole budgeting process and the estimates of what property taxation dollars they might receive because of the leaky-condo issue, then I'd imagine that local governments would have something to say about that as well.

[ Page 8456 ]

However, on advice from the previous Chair, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:20 p.m.

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