[ Page 8611 ]

The House met at 10:05 a.m.

Prayers.

Introduction of Bills

TOBACCO FEE ACT

Hon. P. Priddy: I move that Bill 29, entitled Tobacco Fee Act, be introduced and read a first time now.

Motion approved.

Hon. P. Priddy: Hon. Speaker, this historic legislation marks another important step in this government's efforts to fight the damage that tobacco use causes to the health of British Columbians. It establishes a requirement that tobacco companies must register and pay a licence fee for the right to sell their tobacco products in British Columbia. The total revenue from licence fees in this fiscal year is set at $20 million. This will be apportioned among the tobacco companies according to the size of their market share in British Columbia. Tobacco companies having less than a 5 percent share of the market will be exempt from the requirement to pay a fee but will still be required to register and obtain a licence.

The bill specifies that the licence fee revenue will be used to fund the cost to the government of developing and implementing our comprehensive strategy for reducing tobacco consumption in British Columbia. Tobacco companies will not be allowed to pass the cost of this fee onto the consumer in the form of higher prices. This legislation will provide the government with the legal authority, if necessary, to impose limits on the prices at which tobacco products are sold in British Columbia and to recover from the tobacco companies any increased revenue they receive as a result of attempting to pass the fee onto consumers.

Furthermore, wholesalers and retailers will be prohibited from selling a tobacco company's products unless the tobacco company has a valid licence.

The tobacco industry spends about $18 million a year in British Columbia on promotion of its poisonous products which affect our children. We think it's about time they spent a similar amount on telling the public the truth about what they're really up to.

The Speaker: Minister, your time is up.

Hon. P. Priddy: Hon. Speaker, I'm pleased to be able to table this legislation today. I move this bill be placed on the orders of the day for second reading at the next sitting of the House following today.

Bill 29 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

TOBACCO DAMAGES RECOVERY
AMENDMENT ACT, 1998

Hon. P. Priddy: I move that Bill 30, entitled Tobacco Damages Recovery Amendment Act, 1998, be introduced and read a first time now.

Motion approved.

Hon. P. Priddy: The Tobacco Damages Recovery Act provides the foundation for a legal claim by the province against the tobacco industry to recover the health care costs of tobacco-related illnesses. During the time since this legislation was approved by the Legislature last year, a number of developments have occurred which make it essential to amend this act at this time.

The most significant development in the past year has been the growing evidence that the entire tobacco industry has concealed the non-health risks of smoking, concealed the addictive properties of nicotine and manipulated nicotine levels in its products, and targeted children and teenagers to be consumers of these products.

On the basis of this information, this legislation shifts the burden of proof in relation to certain aspects of causation. This would require the tobacco companies to prove that any breach of duty on their part did not contribute to exposure to tobacco products and resulting tobacco-related disease. Shifting the burden of proof in this way is appropriate here, because the industry undoubtedly has the best evidence available respecting why people start and continue to consume tobacco products, and because the industry continues to maintain that nicotine is not addictive, that smoking is a matter of free choice and that they have not used deceptive practices to encourage youth and teenagers to smoke.

There are other important changes contained in this bill, which I will describe more fully at second reading. These changes are essential for the purposes of ensuring that the claim against the tobacco industry will be based on a full and fair examination of all the relevant facts. When this legislation was brought in last year, we made it clear that this litigation was to be fought on a level playing field. We remain committed to this principle, and we're satisfied that these changes will ensure that a hearing of the merits of this case will fully disclose the extent of responsibility of the tobacco industry for the suffering of so many smokers in this province.

Hon. Speaker, I'm pleased to be able to introduce these amendments today.

Bill 30 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Orders of the Day

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

S. Hawkins: I seek leave to make an introduction.

Leave granted.

[ Page 8612 ]

ESTIMATES: MINISTRY OF FORESTS
(continued)

G. Abbott: I'd like to begin this morning by quickly reviewing with the minister what my colleagues and I propose to do today in terms of Forests estimates, so that we can have a useful and effective deployment of staff throughout the day. What I would like to do this morning is complete our discussion around aboriginal issues associated with Forests and then move to compensation-related issues -- some of which are related to the aboriginal side, but generally not. Perhaps the minister can advise me on this. My thought was that in the interests of having FRBC staff here at a convenient time for them and an appropriate time for us, regardless of where we happened to be in the order of things, we could commence our discussion around Forest Renewal B.C. issues after 2 o'clock, whenever question period and so on is completed -- if indeed the FRBC folks are available at that time. Perhaps the minister could let me know whether that's appropriate.

[10:15]

G. Abbott: That's good. So I will build the day around starting the Forest Renewal B.C. section immediately after question period, moving through it at whatever pace we can.

Following that, the next thing up would be the jobs and timber accord. I would ask the minister if he could bring along whatever job figures and analyses he has. I know we had a rather animated discussion on this point last night in the chamber. It's my view that there is much we can discuss with respect to job creation and job loss numbers without going through the unfortunate route of freedom of information. So the minister can expect that in my usual low-key yet subtly effective manner, I will be attempting to elicit from him information around job creation and job loss through that section. The minister can reflect, obviously, on what portions of that need to be withheld from the public for reasons of commercial or other interests. That's just to let you know where we'll be going in the foreseeable future here. As far as I'm concerned, after that point we will continue to follow the pattern which I laid out for the minister at the start of these estimates.

Moving again, then, into the aboriginal issues, we had, I think, a good and thorough discussion last night on the response of the province and particularly the Ministry of Forests to the Delgamuukw decision and the processes that are underway to try to come to grips, from a policy perspective, with what the appropriate response of the ministry should be to the Delgamuukw decision.

There is one other case which I think is of importance and significance to the Ministry of Forests around the issuance of tree farm licences and so on. That was a case in the Court of Appeal of B.C. last November -- at least, the decision was rendered last November 7. It was the case of the Council of Haida Nation et al. v. the Minister of Forests et al. In that decision. . . . I'm mercifully not a lawyer, so I will probably not do a good job of summarizing this. But I know that the minister is not a lawyer either; he's not encumbered by that unfortunate body of knowledge associated with a legal education. So perhaps we can actually communicate here on a reasonable level.

The decision was one that appears to have -- and I want to emphasize "appears to have" -- broad implications for the Ministry of Forests. The court held that aboriginal rights are "capable of encumbering" timber, meaning that aboriginal groups can challenge the issuance of tree farm licences based on the notion of aboriginal rights in an area. The decision appeared to have very important implications for the ministry in terms of the encumbrance of timber, under section 28 of the Forest Act. I'd like the minister, in consultation with his staff, to outline the position of the ministry now that the ministry has had an opportunity to digest that decision and assess its policy implications.

Hon. D. Zirnhelt: I am a bit fettered in a sense. I know that's a legal term. I don't think the Haida have decided whether or not they're going to go back to court on the issue, so I can talk in general terms about it. I think we can have a productive discussion.

Our approach to this issue is that the courts have made a ruling; it was on a preliminary point of law. So the issue of area-based tenures being potentially encumbered by aboriginal rights and/or title is an issue we have to deal with. Our approach to dealing with it is that we have approached the Haida nation -- and we have for some time -- with a view, because they're in the treaty process, to having interim measures for this period of time while we're negotiating treaties. So our policy and operational response is to encourage negotiations. That offer to negotiate is open; it hasn't been taken up yet, but it's open.

G. Abbott: In short, I understand from the minister's response that they would rather like to open up a process of discussion and negotiation with the Haida, as they have with the Union of B.C. Indian Chiefs and the First Nations Summit and so on, on the other issue of Delgamuukw. But to this point, the Haida have chosen not to engage the ministry in such a process. As a consequence, the implications of this remain, I guess, much as they were at the time the decision was rendered. Is that a fair assessment?

Hon. D. Zirnhelt: The facts of the matter are the same, with the possible exception that we have continued to be ready to negotiate and will be talking to the Haida, I believe, tomorrow morning. That's the only thing that's new.

G. Abbott: It's good that this process is getting underway; that's excellent.

The Nisga'a AIP holds, as well, considerable implications for the Ministry of Forests in British Columbia. There are numerous aspects to the agreement, key forest issues that have to be resolved prior to the execution of any final agreement around the Nisga'a nation. I want to review with the minister some of those key forest issues and where the ministry sits currently in terms of the finalization of those key issues.

[ Page 8613 ]

Hon. D. Zirnhelt: As you know, no deal is done until the whole deal is done. We are continuing to finalize negotiations with the Nisga'a. That issue, I'm advised, is progressing, so progress is being made on that.

G. Abbott: Another key issue with respect to the Nisga'a AIP and the finalization of that is the development of a method to evaluate a Nisga'a forest practices code. I gather that the Nisga'a are reluctant to embrace the broad code that we have in British Columbia. As a consequence, there was -- notionally, at least -- the idea of a Nisga'a forest practices code that would be developed within five years of a final agreement, or else the provincial Forest Practices Code would come into play. Could the minister advise of the nature of discussions around a Nisga'a-only forest practices code? Is discussion on that continuing?

Hon. D. Zirnhelt: That is still under discussion. The position is, as I articulated last night, that we want a system in place that meets or exceeds the code that we have.

G. Abbott: If I could go back to the first question about the joint determination of an AAC. . . . I apologize to the minister; I missed the latter part of his answer. I appreciate that no deal's done till it's done. Would the minister mind repeating the latter portion of his. . . ?

Hon. D. Zirnhelt: I said that discussions on that matter were progressing -- that they weren't stalled; they were progressing.

G. Abbott: On the issue of the economic position for the Nisga'a at the end of the transition period, again the language is kind of fuzzy here. I'm not entirely sure what it means, and I hope the minister can help me. I gather there are transitional provisions that the ministry needs to work out in relation to the economic position of the Nisga'a at the end of the transition period. Can the minister advise more precisely what is meant by transitional provisions and what's being done in that regard?

Hon. D. Zirnhelt: The scope of the same economic position as in article 90(b) on page 21 of the AIP is still under discussion with the Nisga'a.

G. Abbott: The Ministry of Forests is also required, prior to completion of the final agreement, to resolve issues around administrative processes for Nisga'a timber scaling, stumpage collection, insect and disease control, fire suppression and so on. I presume again, as with some of the other things we had discussed previously, that there were possibilities here of the Nisga'a accessing, by contract or other means, the use of provincial resources around those items -- scaling, stumpage, fire suppression, etc. They could use provincial resources through contract or other means, or presumably they could develop their own alternative ways of dealing with those matters. Could the minister advise where discussions currently sit with respect to those issues?

Hon. D. Zirnhelt: Most of that is still under discussion, to get all the details worked out. With things like scaling and marking, we have to have a compatible system. We require this of other landowners in the province so there is some consistency of administration.

With respect to the use of provincial resources and systems, all of that is subject to negotiation, and we will be dealing with the financial implications of that as part of the negotiations as well.

G. Abbott: The final issue that I'd like a comment from the minister on is with respect to joint approval of forest development plans for the five years after the final agreement is executed. Is the province now in a position to sign off on that particular issue with the Nisga'a people?

[10:30]

G. Abbott: If progress is being made, that's good. Hopefully, the progress is being made in line with the approach adopted in the minority report on the Nisga'a AIP. It sounds in some ways as if that's actually a little bit more of the direction that is being sought here, but I don't propose to get into a long debate on that.

I think this is probably my final question with respect to this particular issue. As I recall, the Premier stated a few weeks ago that one of his priorities is to get a final sign-off on the Nisga'a treaty in the year ahead. In the opinion of the minister, are there sufficient resources and is sufficient progress being made that the key forest issues will be resolved to permit final sign-off within the next several months?

Hon. D. Zirnhelt: Of course, we're unsure of the timing; the sooner the better. We are devoting the resources to it. The final negotiations are not failing for want of resources coming from the Ministry of Forests to help the process along.

G. Abbott: Some of the issues around the Nisga'a agreement have implications on the compensation side. I think I'll leave those questions. Maybe we'll move into the compensation issues in kind of a seamless way.

I know that at least one of my colleagues has a specific question on aboriginal issues, so perhaps he can carry it for a bit here.

J. Dalton: I have some questions for the minister, both within his ministerial capacity and also within his riding, so he might like to hear some of these. Last Sunday there was a blockade on the Raven Lake Road, which the minister knows hooks into Highway 20. I called the Williams Lake RCMP this morning just to get an update. The blockade continues. The officer told me that there are approximately half a dozen natives who are on the blockade. They've removed the cattle guard on the road. That means, of course, that there's no logging activity along that particular road. Also, there's a

[ Page 8614 ]

Hon. D. Zirnhelt: Well, I won't get into what my office is doing, because that's not appropriate for the Ministry of Forests estimates. What the ministry is doing is monitoring the situation. We are looking at the impact and at what plans can be made. In this case, attempts are being made -- and quite successfully -- to find alternate operating areas until the dispute is resolved. The Ministry of Forests is monitoring the situation.

J. Dalton: Does part of the monitoring include any involvement by the Attorney General's ministry? As I'm sure the minister is aware, or should be aware, blocking a public highway is a criminal offence. Is either his ministry or the Attorney General's ministry making any effort to make sure that this blockade does not continue?

Hon. D. Zirnhelt: The first prerequisite is the safety of the people working and operating in the area. The circumstances vary, depending on which road you're talking about. The Ministry of Transportation and Highways and the Attorney General are looking at getting those roads open or making sure that people are able to pass through the public highways. We have to ensure that if there is some need to open the road, steps will be taken to open the road. There's active work going on to keep all options open to progress on re-establishing access as needed by local residents, by the general public and by third parties working in the area.

J. Dalton: Certainly I think the minister would agree that there is every need to have that road reopened. There's forestry activity, which is within his portfolio, that is being impacted. People cannot access the forestry campsite, which is also within his portfolio. I needn't tell the minister that obviously others, such as loggers and even natives themselves, may be impacted by the ongoing blockade of this road. So I'm hoping that some action is being taken, other than, as he described, monitoring the situation. Monitoring the situation doesn't help the local residents at all in this circumstance. I and many others in this province are concerned about some of the implications that such a blockade may have.

The minister will be familiar with the letter of February 10 that Ray Hance and Ervin Charleyboy wrote to Gerry Grant, who is the district manager of the Chilcotin forest district in Alexis Creek. There are some comments in that letter which have a threatening nature to them. I don't want to go over that old ground, and I believe our critic has perhaps already raised the issue. But when you tie in some of the comments that Ray Hance and Ervin Charleyboy made in this letter to Gerry Grant, and the current blockade not too far down the road -- in fact in the same area. . . . For example, this comment: "The Tsilhqot'in nation hereby informs you that all forest development plans underway are ultra vires." Is this now the natives' approach, to draw some further attention to this issue by blockading a forest road? Is the ministry doing anything to ensure that this activity does not continue?

Another comment in this letter: "The Nemaiah Valley-Tsilhquot'in community [has]. . .authorized community members to harvest logs on what you consider to be Crown land." Can the minister advise this committee as to whether the Nemaiah Valley community has in fact gone ahead and harvested logs on Crown land? Has that sort of activity taken place?

Hon. D. Zirnhelt: I'll tell the member that I answered those questions last night. I'm not sure what he means when he wraps all natives into one bundle; I think it's unwise. In this case, the road blockades are by the Anaham band, not the TNG, so you've got a few things confused here.

The threatening letters that they have written have been responded to. They have clarified that they didn't mean any threat in the sense of anything illegal. All of this posturing around land claims has to do with the assertion of title. There are disputes about how the land is to be managed in the meantime, before we have treaties. Our position is clear: we don't negotiate over blockades. I've made that abundantly clear. The people in the Cariboo know that.

We are in daily contact with the local residents. The local residents are not stopped from using their property. The disruptions to the economic activities in the area are being handled in a wise way, so as not to inflame the situation. If there is something that needs to be talked about -- the way in which consultations have taken place with respect to the resource use or how it's been managed -- the door is open. We have officials that will meet with them should they choose to meet.

In the meantime, we take appropriate actions to gather evidence and so on, so that we can move when it's deemed appropriate. Any matters of law enforcement are issues that are dealt with by the Ministry of the Attorney General. The Ministry of Forests monitors and is in daily contact with the companies and the people involved, as am I -- particularly because it's my constituency.

J. Dalton: I heard the minister say that local residents may not be impacted or inconvenienced by this blockade, but since the RCMP told me on the telephone just an hour ago that the cattle guard has been removed from the roadway, I would think that there would be a great deal of inconvenience. How are people going to be able to navigate that road if in fact there is a huge ditch across it now where there used to be a cattle guard? That's just an example of the sort of activity that is going on up there. I needn't tell the minister, in both his role as minister and as the MLA for the Chilcotin area, that there is a lot of concern in the aftermath of Delgamuukw. When I see this letter of February 10, which the minister of course was copied. . . . He's quite correct; it was addressed last night, so we don't need to go over old ground. But letters like that, current blockades, activity of that nature is not helpful to the economic activity in the Chilcotin any more than it is anywhere else. So I hope that the minister will closely monitor that situation, and I hope that we will have a resolution of that blockade very soon.

I have a couple of other items that I would like to deal with as well. I believe that today is the last day of what is described as a three-day workshop at Alkali Lake. I don't know all the details about it, but I know some local ranchers and forestry people up there have been attending this workshop. Can the minister tell us whether any Forests officials were invited to participate in the workshop and what sort of items were on the agenda?

Hon. D. Zirnhelt: I don't have the details. What is happening is treaty information sessions; this is what they are.

[ Page 8615 ]

I'll just end by saying that the member should know that beside every cattle guard in the Cariboo is a gate. So cattle trucks, cattle and people can move through gates. Yes, the cattle guard was removed, tipped up, but we're ensuring that where there needs to be access, there is access.

J. Dalton: It may be true that with that particular cattle guard there is a road that runs around it, but I am certainly familiar with some in the Chilcotin that do not, in fact, have an opportunity to drive around the cattle guard. However, we're not going beat that issue.

It would be interesting. . . . Maybe the minister could advise us: will there be any report or follow-up from the Alkali Lake workshop that he might be prepared to share with members of this assembly?

Hon. D. Zirnhelt: I don't know the answer to that question. The Ministry of Aboriginal Affairs may. The treaty negotiations are their process; they may have reports. You could direct your inquiry to the office of the Minister of Aboriginal Affairs, and he'll respond if there is going to be a report.

J. Dalton: One other item, which may be of even longer standing concern, certainly to the people on the plateau, deals with the Chilcotin military reserve. The minister will know that the military is no longer using that for exercises. Their last exercises there were last summer. There's a 90,000-acre, if not 100,000-acre, tract of land there that would be very useful for forestry, cattle and recreation operations. Has the ministry been involved in any way in tracking the questionnaire that's been conducted in the area about what residents feel should happen with the reserve? Is the ministry aware of what the federal government's plans may be with regard to the military reserve?

[10:45]

As you rightly point out, it is federal land, and our interest in federal land is any beetle infestation or fire that might take place that might spread beyond the boundaries to Crown land. . . . We have to have a method of controlling that. In the meantime, we've taken the position that if we can assist local, traditional users of that area in the ease of management, we're prepared to do that. We do have an arrangement with respect to the management of grazing on the lot.

J. Dalton: The questionnaire was actually a telephone survey. My sister-in-law got a call from a lady in Richmond who was hired by the Department of National Defence to conduct a phone survey of the residents in the area. Actually, she has obtained a copy of that questionnaire on behalf of the Riske Creek Stockbreeders Association, so I'll probably be able to get a copy of that just for our interest. I did call the DND office in Edmonton, which now oversees the reserve area. I understand that when they get the results of the survey, they are then going to announce the federal government's intention with regard to the reserve. It will certainly be important to all of us -- particularly to the minister in his dual capacity as Minister of Forests and MLA for the area affected -- to see what the federal government may have in mind.

Could I also ask the minister. . . ? In regard to the military reserve land, he mentioned beetle-kill and other things. Has any forestry activity been permitted on the reserve to take care of beetle-kill and other things that may spread beyond the boundaries of the area itself?

Hon. D. Zirnhelt: I haven't checked recently, but I do trust that if there is a current problem that isn't under control, the officials will bring it to my attention. They do have instructions to push back on the federal landowner, in this case the DND, to make sure that it isn't a continuing source of pest infestation for the surrounding areas. What we have been doing. . . . If you want the particulars on things that you might not be familiar with, I can get them. My understanding is that they are managing the periphery of the lot so that we are managing the beetles that might come from inside of the lot. I'm not aware of a problem that is not under control, save and except that generally there are problems and periodic outbreaks. But I don't know if it's any worse than ever.

I think the bigger problem is utilizing the standing dead -- whether that is an unutilized economic opportunity. Over the years I've been pushing DND to resolve the impasse over logging permitting on the area, so that local people, including aboriginal people, can get some economic benefit from it.

J. Dalton: I would certainly endorse that approach. Probably the last thing I'll have to put on the record is that there is no question that there is a lot of economic opportunity for natives, loggers, ranchers and recreational users with that track of land. It will be interesting to see the results of the questionnaire that has been conducted on the local residents. We certainly want to monitor what DND may have in mind coming out of that questionnaire. We want to make sure that the federal government doesn't just walk away from its responsibilities as the owner of that huge tract of land, particularly with its economic opportunities for all of the people on the plateau, as the minister referred to in his response. So what I will endeavor to do, if the minister is so interested, is undertake to get a copy of the questionnaire, and we'll continue to monitor what DND has in mind for the military reserve. That concludes the questions and remarks that I have.

G. Abbott: We're now moving into compensation issues, some of which have aboriginal aspects to them. We're moving into that area now, so perhaps if there are any adjustments to staffing that need to be made. . . . While we're doing that, just to make use of a minute here while any adjustments are made, my colleague from Prince George-Omineca has a constituency-related issue which he'd like to raise with the minister.

P. Nettleton: As my colleague has indicated, I do have a constituency issue which I will raise very briefly with the minister, if I may. I think that for the purposes of doing this in a very timely fashion, I would like to pass along to the minister a copy of the correspondence from Nass Forest Products Ltd., which is the subject company, dealing with a number of questions around the company's submission of a proposal for a licence to salvage single-tree blowdowns along

[ Page 8616 ]

All I would ask for at this point is some commitment from the minister to provide me with some form of response -- perhaps even an opportunity to meet with him and/or his staff to discuss this in some detail. Page 4 of the correspondence to which I've referred, and of which I have provided the minister a copy, raises a number of questions which we could perhaps explore in some detail at a later date. They refer to wood rotting in the forests, the whole question of accountability for the alleged waste of Crown timber flowing from blowdowns, difficulties from the point of view of this company in getting straight answers from the ministry staff, and the impact, of course, on the company in question.

Perhaps I will take my seat at this point and ask the minister for some commitment to pursue this in some detail beyond estimates.

Hon. D. Zirnhelt:. I'm not familiar with the letter. It may be a letter to you, but certainly the allegations must have been made. Yes, I have signed letters to that company. I will give you an undertaking to address those issues, and in fact we can provide you with a briefing. I will ask for the responses to those specific questions.

P. Nettleton: Thank you very much. I'm delighted by that assurance.

G. Abbott: I presume that the minister is ready to roll with respect to compensation issues now. I want to set the issue in context. I think it's a very important issue, and that's one of the reasons that we want to take some time with it today. I think there are some critical public policy issues with respect to compensation that need to be discussed. I hope that I'm going to hear today that this ministry and this government are moving closer to some resolution of the many outstanding compensation claims and broader compensation issues in the province.

While the compensation issue remains unresolved, it does some unfortunate things to the investment climate in British Columbia. I think it contributes in a very significant way to what has been recently referred to as "the B.C. discount." It's where the value of B.C. companies, the ability of B.C. companies to borrow on financial markets and so on, has been undermined by uncertainty surrounding what occurs in relation to compensation when land, resources or other assets are taken. This is a very important issue, and we have numerous questions that need to be raised with the minister. I do hope we are going to hear that this very important issue is coming some degree closer to resolution.

The issue is not a new one. I suppose that since governments took office in British Columbia, there have been issues around compensation. But particularly since this government took office in the early 1990s, there has been a growing list of very important and very substantial claims against this government for the taking of resources. The government in fact responded in the early 1990s -- I believe it was early in 1992 -- by appointing the Schwindt commission to inquire into what they termed "compensation for the taking of resource interests."

The commission released its report in November 1992. The report took what, I guess, could be termed a minimalist approach to the issue of compensation for the taking of resources, and the commission's recommendations were viewed with some skepticism. Notwithstanding that, even though there was what might be termed a minimalist approach adopted by the Schwindt commission, the government nevertheless did not act even on the recommendations contained in the Schwindt commission report.

The government, in the late stages of 1992 or early 1993, did make a commitment that they would introduce legislation in the 1993 spring session to deal with this matter. The quote from a government official at the time was that they would introduce legislation to "provide fair compensation to the forest and mining industries when resource interests are taken by government for public use." So there was a commitment, but regrettably, we did not see legislation in the spring session of 1993 to deal with this issue. I think that even today we await some firm direction from the government with respect to how they're going to deal with these very substantial and very expensive claims that have been levelled against the government of British Columbia for the removal of resources, lands, or other assets or rights. It's a critical issue, and one that, to my knowledge, remains unresolved today. One of the wonderful things about estimates is that we can find out whether in fact that's the case, and that's what I'll set out to do now.

The first question I have for the minister is whether any relevant compensation policy has, to this date, been put in place by the province of British Columbia in relation to compensation claims.

Hon. D. Zirnhelt: The promise was to settle fairly. We believe the way to achieve maximum fairness is through voluntary negotiations and voluntary settlements rather than legislated settlements.

G. Abbott: The minister is saying, then, that the policy -- and I'll ask him here whether it's a written policy or a sort of anecdotal or unstated policy -- is to attempt to secure voluntary settlements where that is possible, but that there is no. . . . Well, I'll ask him. Is there any formal, stated policy around how to deal with compensation issues in the province of British Columbia?

[11:00]

G. Abbott: When the government stated back in 1993 that its intention was to provide fair compensation to forest companies and mining companies when their resource interests were taken by government for public use. When the government made that commitment, did they anticipate that this commitment would also embody losses of resources, land, revenues or rights associated with aboriginal settlements?

Hon. D. Zirnhelt: Yes. I believe that, in or around the same time as we dealt with the issues around treaties, the Premier of the time stated that there would be fair compensation. I know that Ministers of Aboriginal Affairs have stated the same to third-party interests. So in order to determine what that is, we expect negotiations around mitigation strat-

[ Page 8617 ]

G. Abbott: The voluntary settlement approach that the government has pursued since 1992 has, I think, produced a few cases where settlements have been reached. I guess the most prominent of these would be the settlement of issues surrounding the South Moresby Park with MacMillan Bloedel, Western Forest Products and so on. Beyond the settlements associated with that. . . . I'm talking here on the timber side; I know there have been additional settlements on the mineral side, but I don't propose to pursue those today. On the timber side, beyond the settlements around South Moresby, have there been additional settlements reached regarding the confiscation or removal of timber rights in other areas?

Hon. D. Zirnhelt: As the member knows, Moresby was an agreement for compensation that was reached before we were government. We inherited the task of giving effect to that agreement. There are a number of negotiations underway, but no settlements.

G. Abbott: The number of cases surrounding timber issues is growing, and there are some absolutely staggering figures associated with the potential settlement of some of those. But let's begin by going back to the implications of some of the aboriginal settlements in the province. The first of these, of course, is the Nisga'a AIP and what that means in terms of losses to companies, in their tree farm licences or other cutting areas, of assets which they have been using in the past.

Could the minister advise what the consequences are, from a timber asset perspective, of the Nisga'a AIP, assuming it becomes a treaty at some point? What are the implications of that AIP and treaty for timber-cutting in the northwest? Who stands to lose? What is the value of what they are apt to lose? How does the province propose to set about remedying those losses?

Hon. D. Zirnhelt: Until there is a treaty, we don't know what the impact might be on third parties and timber companies. But we do know that there will be a transition strategy which will minimize the impact. So until we have a treaty, we don't have the details of the impact.

G. Abbott: I appreciate that until a treaty is finalized, the government does not know with precision what the consequences of the treaty would be on timber in the area. But we do have the agreement-in-principle in place. Has the government assessed what the consequences of the terms of the AIP would be with respect to timber-cutting in the area?

Hon. D. Zirnhelt: What we have in the AIP is an agreement that the development plans carry on for five years. Then what we're working on are transition programs for what happens after that period, fully knowing that the transition period probably needs to be longer than five years. So we've got development plans for five years. That's a long way into the future. A lot of the transition planning can be fine-tuned, and we can deal with mitigation strategies. We have taken the position that there would be fair and timely compensation.

G. Abbott: Obviously the issue is fair and timely compensation. Frankly, the record of this government has not been good with respect to fair and timely compensation. There are a host of claims out there where the government has, for example -- again in the interests of the greater social good, presumably -- confiscated or expropriated for parks or other notable purposes without fair and timely compensation.

I know there's a good deal of skepticism around whether fair and timely compensation will be delivered in cases surrounding aboriginal settlements as well. One of the problems with the approach that the government has taken -- rather than setting up, for example, any kind of mediation or arbitration process around these things, doing them as one-off projects where over a course of time some voluntary agreement is reached -- is that the list of very substantial and, in some cases, huge claims that sit out there as liabilities to the government constantly grows. So that's my comment on fair and timely compensation.

I hope the minister can say something that would diminish my fears around whether compensation is going to be any more fair and timely with respect to pending issues than it has been with past issues. I hope something can be said that's of a persuasive nature.

As I await those comments, I'd like the minister to outline for me. . . . He's used the term "transition strategy." I think that probably in a general way I have an idea of what that's going to be about. But could the minister enumerate for me what the elements in the post-treaty transition strategy would be?

Hon. D. Zirnhelt: The elements are things like: what do we do about management, and what do we do about development? For example, the elements would be an agreement on the AAC which generates potential wood flow and an agreement on the forest development plan for a number of years -- as I said, five years. There is agreement around no primary processing facilities being built by the Nisga'a on their land with their resources. That's there to ensure that there's a continuation of flow for ten years, with interim application of the Forest Practices Code until something else is in its place. Those are some of the elements. What we want is mitigation of the economic impacts; we don't want just an abrupt halt to economic activity and then, say, a pay-out or something like that. We're trying to have an ease of compensation here.

I'd suggest to the member that when people come forward with a compensation claim, our policy is to engage them; and yes, there may be debates around what's timely. But to take on face value the huge claims that are made and often overstated by some people. . . . For government to buckle because somebody generates public opinion that says the government should pay. . . . I think is not fair to the taxpayers. We are, after all, talking about resources that belong to the people of British Columbia, over which there are some kinds of arrangements. We aren't, in most cases, talking about private property or private property rights. If there is some suggestion that there is a B.C. discount and that part of that has to do with compensation, I haven't seen that. It may be there; I'd certainly like to see some evidence of that.

When I meet with investment communities, more of the questions are: "Are you dealing with treaties? Are you dealing with forest practices? Are you getting to sustainable cuts? Are you dealing with the economics of the industry?" Those are the issues that I hear -- not ones around compensation, around our parks program. But I'm always open to hearing if that is a factor in some kind of discounting.

G. Abbott: There simply isn't any doubt that that is a factor in the so-called B.C. discount. When we are talking

[ Page 8618 ]

The minister mentioned that as compensation claims come forward, as aggrieved parties lay their claims and bring forward their issues, the government's process is to engage them in face-to-face discussion around their issues and hopefully begin a negotiating process leading toward some conclusion or settlement -- compensation, in whatever form it takes.

One of the consequences of the signing of the Nisga'a AIP in early 1996 was that Skeena Cellulose Inc. filed an action against the province of British Columbia for $80 million in compensation for lost cutting rights stemming from the Nisga'a AIP. The claim related specifically to a loss in cut from the company's tree farm licence No. 1. Could the minister advise how the government has dealt with this claim -- $80 million by Skeena Cellulose -- since it was filed? Have there been, in the case of Skeena Cellulose, face-to-face negotiations? I would be appreciative of a chronology of how that issue has been dealt with, particularly given the recent change in ownership status of that corporation, involving the acquisition of majority ownership by the province of British Columbia.

[11:15]

G. Abbott: Does the government, now that. . . . Skeena is not a Crown corporation but there is, at minimum, this awkward complication of the government's majority ownership of that firm. Does that give pause to the ministry to look at the compensation issue in a different way now? In effect, could it be argued -- or perceived at least -- that it could be something of a conflict for the government to be negotiating with itself, in terms of its majority ownership of Skeena Cellulose, around the issue of lost cutting rights from TFL No. 1 resulting from the Nisga'a AIP?

Hon. D. Zirnhelt: On these matters, the Ministry of Forests would treat Skeena Cellulose, whoever owned it, at arm's length. We'd protect against the problem or perception of conflict of interest that might arise. So our treatment of the issue is at arm's length.

G. Abbott: I have a particular non-legal understanding of what's implied by arm's-length discussions and negotiations. Could the minister advise how arm's-length status is achieved in this particular case, given the current nature of the ownership of Skeena Cellulose? How is that arm's-length relationship achieved?

Hon. D. Zirnhelt: As I understand it, we have technical discussions that go on about resource management issues, licensing issues, licence performance issues and so on. The officials that are there to deal with this company deal with the officials of the company. It's not something that's directly handled by ministers or whatever. They go by the policy of government, they go by the regulations, and they treat it with equanimity.

G. Abbott: I was not for a moment suggesting that ministers or politicos in the government were involved in it; I'm sure the discussions would be ministerial. . . . The question I am asking is: because, broadly speaking, the government has such a prominent role with respect to that company right now, is there more that needs to be done to ensure that an arm's-length relationship around those negotiations is achieved? Is it satisfactory to merely say that is achieved by having staff rather than the minister or direct OIC appointments dealing with it?

Hon. D. Zirnhelt: There is no need to further separate activities. What governs the relationship is the economic plan and then the legislation regulations. So they're administered as officials would be expected to administer them. As I said, there is the public policy implied in the legislation that has given effect to the economic plan. So there is no need to do anything further. The relationships are arm's-length and remain arm's-length.

G. Abbott: Could the minister advise: if the cutting rights that would be impaired as a consequence of the Nisga'a AIP are translated in similar fashion into the final treaty settlement terms, what would be the impact in terms of cutting loss to Skeena Cellulose's TFL No. 1?

Hon. D. Zirnhelt: The question is specific to Skeena Cellulose, since they're the big operator up there, but anybody operating in the area must have a relationship with the Nisga'a afterwards. We're try to facilitate a working relationship as part of the transition planning. What we have is a five-year development plan, and any AAC implications -- because of severed land or whatever -- are something that would be considered by the chief forester in the reviews. As you may know, the area was severely cut over -- dare I say abused? -- in the past? and has some consequential problems with its ability to sustain cuts.

There are a lot of issues around forest development planning. But what we have is a forest development plan grandparented for five years, which is a long time horizon in planning, and so we have some security there.

G. Abbott: Just so I understand clearly, the suggestion being made here is that until the final terms of the Nisga'a treaty are arrived at, and the terms of the transitional arrangements, the five-year plan and so on are sorted out, in some measure the magnitude of the value of any loss in cutting rights that might be incurred by Skeena Cellulose in their TFL No. 1 is an academic question. I gather that what is being said here is that until the treaty is finalized, we don't know the actual impact; therefore it would be difficult to quantify and measure the actual value of the losses there. Is that a fair summary of what has been said here?

Hon. D. Zirnhelt: Yes, that is correct.

G. Abbott: Then is it also fair to say -- in terms of how this statement of claim by Skeena might proceed -- that as a private company, perhaps for defensive or protective purposes, it made the statement of claim in 1996 and at this point discussions continue, but it's unlikely, pending the finalization of the treaty, that there will be a resolution of that particular claim?

[ Page 8619 ]

The member would know that in going into negotiations on everything from the AAC to transition strategies, there would be backup papers, estimates. . . . A person could do a lot of work, and there is work done. Those documents backing up the negotiations aren't made public during the negotiations. They share only what information is needed. Suffice it to say that we're trying to get the best deal for the taxpayer and the best deal for everybody -- and, at the end of the day, a sense that it's fair for impacted third parties and the primary parties to the arrangement.

G. Abbott: When we discussed the key forest issues which remain to be resolved around the Nisga'a AIP, I laid out a number of those. The minister's response was that they all remained under discussion, that progress was being made on them, and so on. Skeena Cellulose is, by far, the dominant forest company in that area that would be impacted by the Nisga'a AIP. Have they been permitted to be a part of those discussions and negotiations around the resolution of the key forest issues associated with the finalization of the Nisga'a treaty?

Hon. D. Zirnhelt: We have frequent and frank discussions with them. Every three weeks there is a meeting of the Nisga'a regional forestry advisory committee. They're on that committee, and they air their views there. I would say that they are intimately involved. Our approach, really, is to focus on some kind of certainty and confidence around fibre flow, rather than compensation as such. In the end we want the smoothest transition and the most economic activity that we can get.

G. Abbott: I'm asking, out of ignorance, a question about the nature of the forest there. We know we're going to have a huge problem, in terms of fibre flow, in the southern coastal area in the decade or two ahead. If the Nisga'a agreement is concluded along the lines set out in the Nisga'a AIP, would fibre flow be such an element, or is it more a distribution question? Are there pending or possible fibre shortages in that part of the province?

Hon. D. Zirnhelt: As the member can appreciate, I watch these very carefully. None of the information packages and the processes to review the timber supply in that area -- and there are a number of them -- have pointed to major gaps. The information reports don't identify major fibre shortage problems coming up in that area. When we go into these discussions, we do look at the big picture, and we look at fibre availability. At this point, I would have to say that it is an issue around distribution, not a matter of overall quantity of fibre.

G. Abbott: The settlement with the Nisga'a will be the first one, presumably, to impact SCI operations in the northwest in a substantial way. I gather, however, that negotiations need to be concluded with at least four other bands or nations in that area -- the Gitxsan and so on. What is the potential impact of those settlements, additionally, presuming they follow the model of the Nisga'a AIP? Are they, in turn, going to impinge in a substantial way on the cutting rights of SCI as well? Or have we thought that through to this point?

Hon. D. Zirnhelt: At this point we have no idea. You could look at a number of scenarios, but it would be totally theoretical at this point. In the other treaty processes, we're nowhere near where we are with the Nisga'a. It's very difficult to answer that. We expect that the propositions put forward at the table will vary greatly, and we'll have to assess the impact and factor that into the negotiations. But we just don't know at this point.

G. Abbott: I appreciate the minister's frank and honest response. In reality that is the case, and I'm pleased that he didn't attempt to dress it up. This is something that is evolving.

This is the follow-up to the initial question. Is the government mindful, as it's finalizing the issues around the Nisga'a treaty, that the model, in terms of cash versus land and those other considerations, is going to have a heavy bearing on at least four other settlements that have to be made within the SCI cutting area?

[11:30]

G. Abbott: That is certainly a commendable goal -- rather easier said than done, I suspect, as well, but commendable.

The other very prominent claim for compensation that is out there and that heavily involved an aboriginal element -- and I'm not even sure of the current legal status of it -- was the claim for damages by Carrier Lumber of Prince George against the province resulting from the loss of their two forest licences in the Anahim Lake area. I read with fascination the court transcripts around the Carrier Lumber action and was struck by some of the things which occurred in that particular case. Could the minister advise of the current status with respect to Carrier Lumber? Is the action by Carrier Lumber something which is exclusively confined to the courts of British Columbia at this point in time? What is the status of it from a legal perspective? Are there any attempts by the government of British Columbia to resolve some or all of those claims against the province by means other than the legal process?

Hon. D. Zirnhelt: This is still in front of the judge. The decision is pending, as you know, so I can't comment on the detail. You're asking whether there are any other processes dealing with compensation, and I will say that there are no active negotiations. This is at play right now in the courts of British Columbia.

G. Abbott: I appreciate that the minister is very much limited in his response, given that the matter remains before the courts. For my information, could the minister advise of the status of the court actions? What are we awaiting in terms of the resolution of this issue in the courts, and what is likely to follow after that?

Hon. D. Zirnhelt: All the court proceedings have ended, all the presentation of evidence and the argumentation, and it

[ Page 8620 ]

G. Abbott: I won't pursue that one further, given the nature of it.

Husby Forest Products is an independent logging company that operates out of the Queen Charlottes. They launched a kind of unprecedented action around what, in their view, were the forced losses of revenues as a product of excessive stumpage charges, excessive costs associated with the Forest Practices Code and so on. I think their argument has been that that amounted to de facto expropriation of their assets and resources. Could the minister advise where the issues with Husby Forest Products currently lie? Is this a matter, as with Carrier Lumber, that is being played out entirely in the courts? Or are there discussions and negotiations going on elsewhere that might have some impact on the resolution of this case?

Hon. D. Zirnhelt: It is my information that the court action has been set aside and that there were discussions with Mr. Husby outside the court process. We are working on and have made some kind of arrangements with Mr. Husby to satisfy his concerns.

G. Abbott: That is certainly good news, if that's the case. The court action has been set aside; it's been removed from that arena. Arrangements have been made between Husby Forest Products and the Ministry of Forests to accommodate the concerns that had been raised by Mr. Husby in his court action. Can the minister advise, given that the arrangements are presumably extralegal or outside the court realm, what arrangements have been put in place to satisfy the concerns of Mr. Husby and Husby Forest Products?

Hon. D. Zirnhelt: Mr. Husby's concerns were technical ones. They've been addressed technically; we have made some technical fixes. One of the issues, for example, was how the merchandising of the logs to create higher value generated certain actions with respect to appraisals. So where appropriate, we've looked at the log profile, the way in which it was processed and the way in which scaling and appraisals were done. That's the nature of the kind of arrangements that were made with him. We understand that Mr. Husby is satisfied with that. From the information we have, he is dropping the court case.

G. Abbott: That was actually going to be my next question: what exactly was meant by "set aside"? I presume that he withdrew from the action on a temporary basis and that the expectation of the government is that he will be withdrawing that action, given that it appears that there has been some negotiated settlement reached around -- as the minister puts it -- technical issues associated with the application of stumpage to Mr. Husby's operations. Is that a fair assessment of that?

Hon. D. Zirnhelt: I could characterize the arrangements on the legal aspects as there being an agreement-in-principle with Mr. Husby. The lawyers are working on what it takes to drop the lawsuit.

G. Abbott: Then the action has not at this point been formally withdrawn, and it will not likely be withdrawn until the finalization of some legal agreement between Husby Forest Products, the Ministry of Forests and the province of British Columbia around those issues contained in the legal agreement. Is that correct?

Hon. D. Zirnhelt: The principals, Husby and the government, have an agreement. We are just working on the legal details as to how you would formalize getting it out of court, whatever the term is.

G. Abbott: Is it the government's expectation that the claim for compensation would be dropped effective with the signing of the legal agreement between Husby Forest Products and the government of British Columbia?

Hon. D. Zirnhelt: The case was not a claim for compensation. The nature of the case was really about a challenge to the stumpage regimes and the system and his particular rate calculation. It wasn't a claim for compensation. I just want to make that clear. What we do have is an out-of-court settlement around the technical issues that he raised via the court case.

G. Abbott: The minister notes that the matter was addressed technically. Because technical details fascinate me with respect to the application of the stumpage system and so on, could the minister advise: will the technical arrangements that are made as a part of this agreement have some implications of a broader nature for the application of the stumpage system in the province?

Hon. D. Zirnhelt: The fixes that are available would be available to anyone who wanted to go through the process, but Mr. Husby was doing something that no one else was doing. He had decked 70,000 cubic metres of pulp logs, and he was paying stumpage on what he shipped, which was sawlogs. That's a gross charaterization, but we think this is a fairly unique situation, and it had to be treated as a one-off situation. We're always looking at how the system works against somebody and trying to find a way to mitigate.

G. Abbott: Interesting response. As I suggested to you yesterday, I think you are probably going to have to do that for the fixed-rate stumpage small business salespeople some time in the future too. We'll see. We did enough on that yesterday; we don't need to do it again today.

Next, if we can leave Husby, I want to ask the minister about what I think is a really interesting case around the actions of MacMillan Bloedel and TimberWest, and their claim for compensation based on the government adjusting their royalty payments on their tree farm licences up to the regular rates of stumpage in British Columbia. Is the issue around the adjustment in stumpage on TFLs a matter that remains exclusively before the courts, or is this an issue which has been the subject of negotiation and discussion in an arena outside the courts?

[11:45]

G. Abbott: The issue is of significant interest to me, and I don't know the province's position on this well enough to say whether I'm persuaded by it or not. I'm hoping that the minister can persuade me. Certainly the arguments of the companies in this case, MacMillan Bloedel and TimberWest,

[ Page 8621 ]

Hon. D. Zirnhelt: It is before the courts. Perhaps I should send the member our statement of defence. Really, beyond that, I can't make any statements except what we have in the statement of defence. I'll send that to you.

G. Abbott: The other very prominent case that is before the courts -- and perhaps there are discussions going on here, as well, and I'll ask the minister about that -- is the claim by MacMillan Bloedel, launched in September of 1997, relating to timber leases in the Carmanah Valley, Clayoquot and Strathcona Park. The total claim is somewhere between $200 million and $500 million. But the issue again seems to be a fairly clear-cut one -- that the government, for park purposes, expropriated assets of MacMillan Bloedel. In the absence of what would appear to them to be reasonable and fair compensation, MacMillan Bloedel has launched a legal action against the province. Could the minister provide me with an update on this claim of MacMillan Bloedel's around the expropriation for parks?

Hon. D. Zirnhelt: This is what happens, I think, when journalists report on cases. They try to have some figures. In the court case, I'm advised that there have been no figures stated. Where it now stands is that because we are in negotiations, there are confidentiality arrangements; and as the government party has signed a confidentiality arrangement, I'm not at liberty to say anything more about that claim except that it is being negotiated.

G. Abbott: I'm not going to push real hard here, but I do want to have a grasp of the essence of what's going on here. It would appear from the minister's comments that the action by MacMillan Bloedel remains before the courts. But I presume from the minister's comment that the ongoing progress of that action has been suspended pending negotiations with the province of British Columbia around fair and reasonable compensation for the lands expropriated for park purposes on Vancouver Island. Is that a fair summary of where things sit?

Hon. D. Zirnhelt: The answer is yes. I want to remind the member that I'm watching the time. We haven't run out of time, but I'm watching the time.

G. Abbott: In fact, the good news is that we're actually getting pretty close to the end of all the discomforting issues that I'm raising around compensation. I think I've pretty much covered those issues that I want to deal with. We may have to come back to this again briefly, but I think we pretty much covered it off.

My colleague from Okanagan-Penticton has a specific issue that he would like to raise with the minister. We probably have about the right amount of time to do it before lunch, and then we can come back and do FRBC after lunch, if that is fine.

R. Thorpe: Could the minister advise us of the status of the noxious weeds program within the ministry?

Hon. D. Zirnhelt: Issues around fine-tuning our budget and dealing with the noxious weeds problem are still under discussion with the executive of the ministry.

R. Thorpe: Could the minister advise us of the total amount that was anticipated in the '98-99 budget for this operation within the ministry, on a provincial basis?

Hon. D. Zirnhelt: I'd have to get back to you on what the actual figure is in the budget for that. I don't have that figure here with me.

R. Thorpe: Could the minister advise if there's a window of time in which these programs should be undertaken? Is it in the spring, or can this take place throughout the whole year?

Hon. D. Zirnhelt: There may be a window; there probably is a window. I don't know the answer to the question.

R. Thorpe: There may be a window; there may not be a window. Perhaps the minister should consult with staff, because I believe there could possibly be a defined window.

Could the minister advise how many contracts are pending executive decision within the ministry on this issue?

Hon. D. Zirnhelt: I'm advised that there aren't any contracts pending at this moment, and there is indeed a window -- and I'm told that the window is still open.

R. Thorpe: I just want to make sure. The window is open; there are no contracts pending. In other words, as the minister obviously knows -- because it's his ministry -- his ministry enters into three-season agreements subject to annual funding. I'm sure the minister is well aware of that. What the minister is saying is that all the programs that were subject to funding this year have been dealt with as either a yes or a no. There is nothing in between. Is that correct?

Hon. D. Zirnhelt: Instead of sort of leading, why don't you ask the direct question? You obviously have some information. You lead me and try to get me into a position where you want to make a liar out of me, and I refuse to let you do that. I won't answer until I've actually investigated. If you've got a specific question around the contract, I will answer the question. I told you that I'm advised, with the staff I have available here, that there are no contracts pending.

Noting the time, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

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

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

Hon. D. Zirnhelt moved adjournment of the House.

Motion approved.

The House adjourned at 11:56 a.m.

[ Page 8622 ]

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 10:16 a.m.

ESTIMATES: MINISTRY OF LABOUR
(continued)

Hon. D. Lovick: I understand that by agreement we are going to begin today with the Workers Compensation Board. I hope that agreement is still in place, and I see from my colleague opposite that it is.

Let me offer a few comments to set a context for our discussion on the WCB. First of all, some statistical evidence. All of us know intuitively the staggering human cost of workplace injury and disease, and there's also the dollar cost. In the last ten years, the number of times a new injury was reported to the WCB was 1,980,797; the number of days of short-term disability benefits payments paid in 1997 was 2,981,280; and the number of workers who died in the past decade as a result of workplace injury and disease is 1,518. The role of the WCB is to address that problem in the workplace, to address that perceived need through prevention, compensation and rehabilitation.

To begin, let me say something about the people in the organization. I think that we too often lose sight of the fact that this is not just bricks and mortar; this isn't just regulation. These are actually people -- living, breathing human beings attempting to do good work. Their role is difficult. I've been an MLA for 12 years, and I've heard my colleagues opposite speak eloquently on occasion, very effectively on occasion, about the problems with the WCB that they perceive in their constituencies. I certainly know that that's the case in mine, and indeed, I suspect that's true everywhere. Unfortunately, we too often get into a space where we believe that somehow solutions are simple and that therefore the individuals working at the WCB don't care, are lazy or indifferent or some other such thing. I want to make very clear that in doing so, I think we do a terrible disservice.

We ask these people to play an extremely difficult role, and we ask them to work with never-sufficient resources. Frequently we ask them to be the gatekeepers, the ones who say: "No, we can't help you." We ask them to be professional, but we also demand that they are compassionate. We ask them to be cost-effective in their decisions. We ask them to be efficient and yet sensitive and understanding of the concerns presented to them. We ask them to be thorough in every case, to make sure that they live up the letter of the statute, regulations and rules, and yet to be timely. It seems to me, in all fairness and all candour, that we must acknowledge that the work they do is challenging. The work they do is often performed in incredibly difficult circumstances, and I think we owe them at least our gratitude.

Let me turn now briefly to the successes. The failures are legendary and legion. The successes are perhaps not so well known, and I think we ought to acknowledge that there are some considerable ones. First of all, independent external assessment shows that the WCB is making real, definable progress and has been for some time. I'll give you a couple of examples, if I might. The W.E. Upjohn report states that British Columbia has among the very best systems in North America for both injured workers and their employers. Another one, by Ashford and Rest, says that the prevention division of the WCB has a deserved reputation as one of the more exemplary OHS systems in North America. The prevention division can be classified as one of government's successes, and the regulation review process has overcome decades of gridlock.

Terry Thomason and John F. Burton Jr., on the cost of the workers compensation system, write that even though it was not a result they expected, and even after controlling for a wide range of factors that influence cost, they found that workers compensation costs under the B.C. system are not higher and indeed may be lower than they are in the more private, competitive system that exists in the United States.

Let me say a little bit now about accountability. The WCB must, of course -- and nobody here, I'm sure, would dispute this for a moment -- be accountable for its actions and its performance. Indeed, that's why we're in this chamber having these discussions -- to ensure that that is the case. This past year, however, WCB accepted a challenge and invited, on its own hook, the office of the auditor general to conduct an independent assessment of the WCB's accountability reporting.

In January 1998, the auditor general reported as follows: "We acknowledge the innovative thinking of WCB management in inviting our office to provide an independent assessment of its performance measures. In our view, management of the WCB has made considerable advances compared to many other organizations in British Columbia in identifying key performance measures." The auditor general's report made 39 recommendations, all of which have been accepted by the WCB. Many of these, I'm pleased to report, are already being implemented, and action plans for implementing the others are now being developed.

I think I would be remiss if I didn't acknowledge the complexity of issues in trying to solve problems at the WCB, so let me take just a moment to do that. Whatever the WCB does tends to involve them in an on-the-one-hand, on-the-other-hand kind of circumstance -- getting cross-pressured, as some would have it. Measuring the service performance, for example, means asking injured workers to comment, but that process clearly will be perceived to be intrusive and indeed offensive by some. On the one hand, then, they are asked to measure the performance; on the other hand, they will be criticized if, in their efforts to find that information, they appear to be too intrusive.

Similarly, there is balancing the need for a thorough inquiry against timeliness. They will be accused on the one hand of whitewashing the circumstance if they don't do a thorough analysis, but in doing a thorough analysis, they are going to have to take some time and then will accused of dragging their heels. They are clearly caught in a rather difficult circumstance.

Similarly, there is providing flexibility to decision-makers. On the face of it we all agree that that's a good idea, but that increases the need for monitoring, training and development. That, of course, means more money. Similarly, providing more timely health care closer to home, which we all accept ought to be the conclusion of a WCB judgment, will increase administration and medical aid costs. The use of technology to speed up services -- again, a worthy idea -- will also inevitably increase costs. I think I've said sufficient to make the point.

I want to touch very briefly on the royal commission, just to make one short point. The easy answer to any questions

[ Page 8623 ]

At this juncture, let me just acknowledge that I am well supported today in the chamber with expertise. On my left -- you will recall that last night I introduced Marg Arthur, the deputy minister. On my right is Don Cott, assistant deputy minister. Don Cott is also the chair of the panel of administrators at WCB. The person directly behind us is Terry Bogyo. Terry is the director of corporate planning and development at the Workers Compensation Board. I am confident that between all of those people, with their considerable experience and expertise, we ought to be able to deal with any questions that arise.

Notwithstanding the royal commission and the fact that the WCB certainly said that it wanted to cooperate absolutely with it, life has gone on. Indeed, the WCB has developed a strategic plan that I think we can all take some satisfaction in. The plan has been in operation for at least a couple of years, and the results are already apparent. In the last two years we have discovered, for instance, that fewer workers have been injured and that there has been a lower injury rate than was the case even five years ago. So obviously something is working. Injured worker service satisfaction, I am advised, has increased significantly and measurably.

I understand that the system has now returned to more than full funding ahead of schedule. We're now at 102 percent. There is a $30 million reserve now which is used to continuously fund research. I understand, finally, that there is an average 2.1 percent decline in assessment rates, with 79 percent of employers paying the same or less today than they did in 1996. Obviously there's more to be done, but I think those are good signs.

I want to end my brief opening comments here just with a reminder, though, that when we talk about WCB, it is absolutely crucial to recognize that prevention is and must be the focus. I'll just share with members an analogy, a story. I'm sure many of them are familiar with this, because we've all encountered it at some time or other, I suspect. It's the kind of parable of the individual standing at the riverside with a long rake or a hook, fishing out the bodies in the river. And somebody comes along and says: "Why are you fishing out these bodies?" The person says: "Well, the bodies are there; we obviously have to deal with this problem, with this damage." And the other person asks: "How long have you been doing this?" The guy answers: "Well, my entire life's work has been fishing out these bodies. I've been here dutifully with my rake pulling these bodies out of the river, because it's a problem." The other guy says: "Well, good luck. See you." And the guy replies: "Well, why don't you help me fish out these bodies?" And the other guy says: "Well, I'll tell you why not: I'm going to go upstream a bit, and I'm going to find out who's putting the bodies in the river in the first place."

That's the analogy I would like to suggest ought to govern our looking at the WCB. The WCB is not so much about fishing the bodies out of the river; it's about making sure that they don't get into the river in the first place. That's the prevention culture we discussed when we looked at the occupational health and safety legislation; that's the prevention culture I think everybody at WCB is committed to achieving and making happen. We know the evidence is overwhelming and absolute that 50 percent of workers off for six months or more will never return to work. If they're off for more than year, only 20 percent are likely to ever work again. Consider that cost in human terms, let along economic terms. That's why the efforts of the board in case management, disability management and rehabilitation, using a continuum-of-care approach, are so important to protecting the futures of injured workers and families after the injury has occurred. Ideally, it should be doing a great deal in advance, using our legislation and our efforts to educate and create that prevention culture.

[10:30]

C. Hansen: Certainly I do share the sentiments of the minister in the comments he's made. I think that we can often disagree on how we achieve end results, but there is no dispute that we all share the results that we are trying to achieve -- that is, the reduction of workplace accidents and injuries.

I would like to comment briefly on the minister's comment about workers at the WCB. Certainly in the interaction I have had personally with staff at the WCB, I've found them to be very professional; in some cases, I've found them to be frustrated, which the minister alluded to. We certainly hear anecdotal stories from our constituents regarding some frustrating encounters that individuals have had with WCB officials, which is a matter of concern. But generally speaking, I think the staff at the WCB have an incredible task to deal with. I can appreciate the frustrations that staff must have in dealing with the multiple problems that come across their desks on a daily basis, and the emotions and tragedies they are faced with.

The minister made reference to this discussion in estimates going on for hours or days. Certainly it's my hope that it will be hours and not days. I think if we look at the issues that are before us in terms of WCB, many of them were canvassed in the discussion on Bill 14. I think there are also many, many other issues which would normally be discussed in estimates that are before the royal commission. In many cases we would be wise to wait for the report of the royal commission and not try to get into lengthy discussions here on the issues the commission is going to be reporting on.

I do want to start by discussing the structure of the Workers Compensation Board a bit, particularly the panel of administrators and its relationship with the Ministry of Labour. It is my understanding that the panel of administrators is a body that is to reflect both employer and worker

[ Page 8624 ]

Hon. D. Lovick: Hon. Chair, I've put on my cheater glasses here because this flow chart I've been given is hard to read.

I don't know whether the members opposite happen to have a copy of this, the Workers Compensation Board organization chart. My apologies if you don't. I will make sure I get that sent across to you. If one looks at the top tier, that is the panel of administrators. Let me simply refer to them: one of the vice-presidents is a trade union member; there's a deputy minister representing the Ministry of Women's Equality; the chair of the panel at the moment is the acting assistant deputy minister in my ministry, as I referred to; another member is an employer, the Pulp and Paper Employee Relations Forum designate; and the other member of the panel of administrators is an injured worker. That's the constituency he is to represent.

There is one vacancy on the board at the moment. That would normally be filled by. . . . The person who formerly served on the board was the late Doug Kerley, known to a number of us as the job protection commissioner. Obviously he was one of those persons with a foot in both camps, in terms of workers and employers. I would assume that our endeavour would be to try and replace him with someone of equal stature, ability and background.

C. Hansen: In terms of the replacement of Mr. Kerley on the panel, certainly Doug Kerley was an individual who I think all of us had enormous respect for. I'm sure there is a big gap on the panel as a result of his passing. I'm wondering: is it anticipated that this position would be filled soon? There is a second side to that question: is it seen that this position may be filled by the new person who replaces Mr. Kerley in his capacity as job protection commissioner?

Hon. D. Lovick: I understand that there is no plan or thought at all about any kind of automatic rollover. In other words, the job protection commissioner isn't an instant step into the next one or anything like that. I gather that the reason why the vacancy has not been filled thus far -- and won't be, at least for the next short while -- is because we're waiting on the report of the royal commission, just in case they have something to say about. . . . As you know, we are mandated to talk about governance, and they may have something to say about that which might affect the makeup of the board.

C. Hansen: I'm wondering if this position is earmarked for a certain type of appointee. Certainly, as the minister outlined, there is somebody who has a trade union background; there's an injured worker background; we have two individuals with government involvement, as government officials; and we have an employer background. Is there an expectation that this vacancy, when it is filled, would be filled from any particular community?

Hon. D. Lovick: I understand that the tradition, the norm, is a financial background.

C. Hansen: I'm wondering if there are any guidelines for members of the panel of administrators in terms of the conflicts of interest that may apply.

Hon. D. Lovick: I'm advised that there are some requirements vis-à-vis conflict of interest in the bylaws that the board functions by, a copy of which we apparently don't have here today but which we can certainly get. I'm also advised that the sort of standard notion of conflict is enunciated in those bylaws -- namely, that what the conflict legislation or rules protect against pre-eminently and primarily is the notion of some individual profiting personally by his or her involvement on the board. That, I gather, is the burden of the conflict rules.

C. Hansen: I want to ask the minister about the relationship between a particular member of the panel and the workings of the board. In doing so, I don't in any way want to discredit any of the work that this individual or his organization is doing. I only want to raise the issue in terms of how the board deals with decision-making that may involve the possibility of conflict. The person I'm referring to is Mr. Zimmermann and his involvement with the injured workers association -- I have forgotten the exact title now -- centred in Port Alberni. My understanding is that that association is a regular recipient of grants from the WCB and, at the same time, he is serving on the panel of administrators. I'm wondering how the board deals with that, and whether or not he exempts himself from meetings that may discuss issues such as budgets for grants and things like that.

Hon. D. Lovick: I thank the member for the question. I understand there was a one-time grant to that organization, at which point the individual in question, Mr. Zimmermann, absented himself from the board, apparently declaring a conflict.

C. Hansen: As I say, I'm not trying to say that there's anything inappropriate with the grants that go to that organization, but I am concerned, from an administration point view, about it dealing with conflicts.

Just to confirm that, I gather from what the minister has just said that there are no revenues from the WCB to the institutes that Mr. Zimmermann is involved in, in Port Alberni.

Hon. D. Lovick: I am advised that the WCB, as a matter of course, assists the National Institute of Disability Management for injured workers. It does indeed assist them with putting on conferences and so forth and also, apparently, has been known to send WCB staff to attend programs put on for training purposes by the disability management institute. In that sense, yes, there is that connection.

C. Hansen: My question is whether or not the conflict rules would affect that relationship between the WCB and Mr. Zimmerman's organization. Are the conflict rules specific enough to give us reassurance that there are some specific guidelines that govern what is and is not appropriate within the organization?

Hon. D. Lovick: I obviously can't categorically say yes. But certainly I am comforted, based on what I've been told, that that is the case. I would also point out that the decision regarding whether to send people -- staff members and so forth -- to conferences is not made by the panel of administrators. That's purely a management decision. It's the next tier down.

By the way, I'm going to pass this chart over right now, if I may.

[ Page 8625 ]

I would like to talk about the way the panel functions. My understanding is that it functions much like the board of directors -- that these are outside individuals who have other professional responsibilities. They come together for meetings of the panel, which are much like the meetings of a board of directors of a not-for-profit organization or a corporation. I'm wondering if the minister could give us some background in terms of how often the panel meets and the substance of their meetings.

[10:45]

The structure of the panel is as follows: a chair and five public administrator positions are responsible for the overall direction of the board. The president and chief executive officer oversees the operation of the board and is responsible to the panel of public administrators. We're still searching for a replacement for the former president, Dale Parker, who retired at the end of. . . .

Interjection.

Hon. D. Lovick: I'm sorry; we did. . . . I even made that announcement. I'm embarrassed that I didn't know. We do have a new permanent CEO: Ralph McGinn. He will never forgive me for that.

An independent appeals division headed by Maureen Nicholls reports to the panel. Ms. Nicholls was appointed August 1, 1996. She is the former Deputy Minister of Government Services, and has been seconded from the provincial government to take on this position. Her secondment is intended to cover the period of the Royal Commission on Workers Compensation in British Columbia and the implementation of any legislation which may flow from its recommendations. That's the basic governance model.

C. Hansen: My question was more along the lines of the kinds of issues that come before the panel. My understanding is that the panel would review things like the annual budgets and business plans of the Workers Compensation Board generally, that they would in that respect function like a board of directors, and that they would not be involved in the day-to-day operations of the board but more in terms of the general direction of the board. Is that not correct? I see the minister nodding his head. I'll accept that.

I guess my concern is regarding groups that may be making special presentations to the panel of administrators. My understanding is that this is something that is done on rare occasions. I wonder if the minister could comment on that.

Hon. D. Lovick: I understand that this has happened. I think it was a one-time thing, a very rare circumstance. I understand that the panel heard a representation from workers training centres, and made the same offer to employers, owners and managers, saying that if they had some kind of proposal, the panel would also be interested in listening to that proposal.

C. Hansen: Certainly the information I received was the same as what the minister has, and that is that this was a one-time thing and had never happened before. My question is: why did it happen in this case? Why did the panel of administrators agree to hear a presentation from this particular body?

Hon. D. Lovick: The information I'm given in response to the question is that it was the chair's call. Mr. Cott made that decision. The proposal, in his judgment, was a significant proposal and ought to have been considered because it promised to reduce injuries in a significant way -- part of that new culture we were talking about.

Also, our understanding is that indeed that decision, that discretionary judgment, falls entirely within the legal authority spelled out for the chair of the panel of administrators. I could refer you to section 82 of the act, "Powers of the governors." I think that 82(a)(vi), "Plan for the future of the board," is one of its obligations. It was perceived, I guess, by the chair that this would indeed fit comfortably into that, given that the injured workers group -- and that's who we're talking about, I take it -- is, as we all know. . . . I think all of us in this room are familiar with the work they have done, and what they promised to do is revolutionary and could quite conceivably make a huge, gigantic difference in the costs of compensation, both in terms of dollars and in terms of human tragedies. From what I know about that organization, I'm inclined to say that the chair of the panel and his colleagues made the right decision in what they did.

C. Hansen: Given the fact that the royal commission is underway and they have had public hearings around the province on dozens of different issues, I don't understand why this particular group would not have been directed to the royal commission. Why was the work of the royal commission short-circuited, in this case, by receiving privately a brief and a presentation to the panel of administrators rather than directing them to the royal commission?

Hon. D. Lovick: I think that one ought to clarify that the royal commission is being asked to give insights and advice and ideas in terms of future direction, but that doesn't mean for a moment that the work of the Workers Compensation Board stops. It is an ongoing operation, and clearly the board has its own obligation and its own mandate by legislation to be thinking about the future and planning.

The member will recall what I quoted into the record not too many minutes ago -- namely, the strategic planning work by the board that goes on, irrespective of what the royal commission might or might not do. I think we should all be thankful for the fact that the board continues to do that. Obviously it's had considerable success, and we as taxpayers and citizens in this province should, I think, be grateful for that.

C. Hansen: I think the concern is that there is a group with a very expensive proposal that has an inside track. There is a group with this expensive proposal that wasn't just going to the royal commission to present this to the public, but was obviously given an inside track to the panel of administrators -- something that's never been done before. It certainly has all of the appearance of a proposal that is being considered far more seriously than any other proposal that may be out there in terms of the delivery of safety and training services in this province.

I've got a copy of a letter from the president of the Canadian Automobile Workers, Buzz Hargrove, which he wrote on December 19. He's talking about the issues they have concern about in terms of the interim report of the royal

[ Page 8626 ]

He's listing five points. In the Bill 14 debate, I raised some of these points as requests that had come from the union movement. That had been granted. . . . I think the minister came back and made a point of trying to say that I was wrong on these points because they were also endorsed by the employer community. That wasn't my point. Two of them were endorsed by the employer community. The first four points that Mr. Hargrove raises in this letter are:

1. Health and safety should be in the Workers Compensation Act. He goes into the background at length, explaining what is meant by that. That was included in Bill 14; that change was made from the royal commission recommendations.

2. The WCB should continue to make recommendations. Again, that was included in Bill 14 -- granted, with the endorsement of the employer community as well.

3. Higher additional employer assessments are needed. They got that.

4. Administrative penalties should not be assessed against workers, or, as Mr. Hargrove put it in his letter: "Workers should not be ticketed." They got that.

Now we get to point No. 5. They've got four out of five so far. No. 5 is to set up a worker occupational safety and health centre to the tune of $125 million, which would be drawn from the compensation fund. You know, we're talking about the compensation fund. Just to remind the minister, it is built up by premiums charged on employers in British Columbia. Now you've got a group coming forward with this proposal for these worker occupational safety and health centres, and they're asking for $125 million to be drawn out of the compensation fund to fund this in perpetuity. Now we find that this proposal isn't being referred to the royal commission, but it's in fact being fast-tracked -- or at least tracked through the back door -- to the panel of administrators to give consideration to this proposal. I would like to have the minister's comments on this particular proposal and on why a proposal of this nature and magnitude would in fact be given preferential access to the panel of administrators.

Hon. D. Lovick: First of all, let me just respond to.. . . The member decided to read into the record a letter that didn't come to me. I gather it was addressed to the Premier from the CAW. Dated when? December something?

Interjection.

Hon. D. Lovick: Okay, fair enough. I have subsequently met with a delegation from the CAW, and they put on the table this matter of this training centre for workers and so forth. I regretfully had to give them the same answer I do to just about everybody: it sounds like a great idea, but where the heck are we going to get the money? So to my knowledge, no assurances -- nothing like that -- have ever been made.

The suggestion, though, that somehow this group has the inside track and that if they can't get what they want through the ministry, then they have an inside track to the panel of administrators. . . . I am sorry; I have to reject that rather peremptorily. There is no preferential treatment given. Indeed, the member's effort to say: "Hey, they got No. 1, they got No. 2, they got No. 3. . . ." Well, the reality is that most of the things that the member read into the record have indeed been the consensus for people looking at occupational health and safety for about 20 years. So I don't think we ought to say: "Holy cow, a separate section of legislation to deal with occupational health and safety -- what a win for the labour movement!" Far from it; it's been the consensus, as I say, for a very long time. I don't think there's much of an issue there in fact.

The other point to make is that the chair of the panel of administrators advises me that what came before the panel was for information; it was not a formal proposal or a formal request for money, or anything of the kind. He learned about the letter, I gather, at a meeting of the Council of Construction Associations -- COCA. He thereupon wrote to that body and said: "Look, you too have exactly the same rights as those people do to write to the panel and ask for a meeting with them or to make a presentation."

As I said before, the one that I'm more familiar with is the Zimmermann activity. It seems to me that that disability management is one of the most exciting and promising concepts I've heard about in a very long time. As I say, I'm very pleased that somebody listened to that and did what they could, within their absolute mandate and law, using their proper authority under regulation and law to encourage that activity. I for one am thrilled that that happened. I think that's good.

C. Hansen: I gathered from the minister's earlier comments that he was perhaps confusing two different proposals. This proposal that I'm aware of for the workers' occupational safety and health centre does not have anything to do with the National Institute of Disability Management and Research, as far as I know. I think they're totally separate. But certainly there is a considerable amount of work that has been done on what is called the WOSH B.C. proposal -- workers' occupational safety and health.

[11:00]

Hon. D. Lovick: Hon. Chair, my apologies to you and my colleagues across the way for the delay. I'm learning details here that I wasn't aware of, so I want to make sure I get them correct. You're patient, and I see the members are patient.

First of all, it should be noted that the body to which the member refers did indeed receive a $30,000 grant. The grant, I gather, was earmarked to help them prepare their proposal.

[ Page 8627 ]

Interjection.

Hon. D. Lovick: And approved by the stakeholders as well. It couldn't be simply one segment saying that this is a good idea and nobody else. . . . That's my up-to-date information on what apparently happened with that proposal.

C. Hansen: I wonder if the minister can tell us: when the $30,000 grant was given to this body, what was the grant given for?

Hon. D. Lovick: The answer -- I thought I'd said it -- is: to assist with the costs involved in preparing the proposal.

C. Hansen: I should have made my question more clear. My question is. . . . Obviously somebody had submitted a request to the board for funding for this particular project. They obviously had a purpose for getting the grant. I'm wondering if the $30,000 grant was to look at the development of training centres. Was it to look at the development of a foundation to support training centres? What was the board's understanding as to what that $30,000 was to be spent on?

Hon. D. Lovick: The decision was apparently made by the vice-president of the prevention division. They obviously adjudicated and analyzed what the specific proposal entailed and what they were looking for at the end of the day. We don't have that information. We can get it.

C. Hansen: I gather that the individual who was the head of that division at that time is now the president of the WCB, if I'm right.

Interjection.

C. Hansen: Thank you. I would appreciate it if the minister could provide me with the information in terms of the nature of the request that resulted in the $30,000 grant and also what specific understanding the board had in terms of what that $30,000 was to be used for.

I want to follow up on the minister's comments about the approval process that this may take. Basically what we have here is a proposal that, if accepted, would result in $125 million being drawn out of the compensation fund. The minister says that it would require the approval of stakeholders. That's kind of vague for my purposes. I wonder if the minister could elaborate. If this proposal were to come to fruition, who would have to approve it?

Hon. D. Lovick: First, the consultation. I understand that. . . . Again, we're making some assumptions that this is going to advance. If the proposal reaches the stage. . . . I guess that will happen; there is a proposal on the way -- or it's out there. The consultation will involve all the stakeholders. The ultimate decision-making authority will, of course, be the panel of administrators. That's its job.

Regarding the dollar amounts, there are, in effect, two proposals. But it's not the case of two proposals together; it's one or the other. One proposal, I gather, is for an endowment fund of -- what? -- $125 million. The other -- which would obviously be, you know, self-perpetuating, to create and operate the centre -- is for $30 million to $35 million over five years. Either of those, of course, is obviously going to be asked from WCB, ultimately. Whether or not that will go anywhere, who's to say? But at the moment, that's where it's at.

C. Hansen: The minister mentioned that this would be done with the approval of stakeholders in terms of. . . . There are no specific names that you can put to a list of stakeholders -- at least, I stand to be corrected. But when the minister says "approval of stakeholders," is he saying that if the employer community rejected the concept, it would die? Does the employer community have the ability to veto a proposal such as this?

Hon. D. Lovick: The frivolous answer to "Who would serve on the committee," is, of course: the usual suspects -- obviously representatives of labour and of business. That's a thinly veiled allusion to a Humphrey Bogart movie, in case the member is wondering -- just to make sure that's clear. Obviously what would happen is that a committee would be struck, composed of representation from both of those entities -- those constituencies, as it were. They in turn may say: "What a dumb idea." "What a great idea." "Here's an idea that needs some modification, etc." All of that, of course, is in the realm of speculation and conjecture. We don't know.

What will happen is that in this process that committee gets formed. They look at this concept, and they say: "Is this a good idea? Should we do it? What form should it take? How much should be invested? Is that justifiable?" Ultimately that committee will make some recommendations to the panel of administrators, whereupon the panel will make a decision. Beyond that, I can't be much more specific. That's the construct, if you like, of the decision-making apparatus.

C. Hansen: My concern is with regard to the makeup of the panel of administrators -- to sort of do full circle on where we started on this -- in that we have today one employer rep on a panel of administrators. If we had this coming down to an ultimate decision by the panel of administrators, would it require a unanimous vote of the panel, or would it require a majority vote?

Hon. D. Lovick: I'm advised by the current chair of the panel that since he has been chair, every decision -- every vote, if you like -- has been undertaken by consensus. That's the model they try to function on. If at some point it didn't work, then you could have a vote. But Mr. Cott advises me that he doesn't think that is likely. That is indeed the working relationship that the panel uses, and he would hope that would continue.

C. Hansen: Does the minister see a decision of this nature as being a matter that should be solely decided within the WCB, or would it become a matter of government policy and direction?

Hon. D. Lovick: This falls directly within the WCB purview and mandate.

[ Page 8628 ]

Hon. D. Lovick: I'm happy to give the member my personal assurance that the consultation committee that is going to make recommendations will have absolutely equal representation on both sides.

C. Hansen: That doesn't give me much consolation. If we're talking about a consultative committee, first of all, we're talking about a committee that. . . . You can talk about equal numbers of employers' reps and employees' reps, but as we have seen in other circumstances, that doesn't necessarily constitute balance when it comes to the dynamics of any particular committee and working group. My concern also is that this is a committee that may make recommendations, but we're talking about the ultimate decisions that will go to the panel of administrators. My question is whether or not the minister is prepared to give direction to the panel on the parameters of funds that could be drawn from the compensation fund for a proposal of this nature.

[11:15]

The other point to make is simply that I am very, very doubtful as to whether any decision will be made before the royal commission's final report comes down. Indeed, I would imagine it's just about impossible that that would happen. As we know, the royal commission is mandated, among other things, to look at governance, and it may well have something to say about just this matter.

C. Hansen: I appreciate that the royal commission is certainly going to be looking at the governance and accountability of the Workers Compensation Board. But the Workers Compensation Board is accountable to the people of British Columbia through the authority of this Legislature. Especially when you start looking at the current makeup of the panel of administrators -- where two of the five individuals that serve on it are senior officials with the provincial government at the assistant deputy minister and deputy minister levels -- the provincial government clearly is playing a very direct role in the operations of the panel of administrators. So for the minister to say that it's arm's length from government. . . . I would be interested in knowing how that happens, given the fact that he has one member of the panel, the chair, who reports to him, and another panel member has a reporting responsibility to the executive council in her capacity as a deputy minister. To say that the board operates independently. . . . It may on paper, but it certainly doesn't hold water in terms of the reality of the current makeup of the panel. I don't know if the minister wants to respond to that, but I'll invite him to respond.

Hon. D. Lovick: The board operates under the authority of the legislation, the Workers Compensation Act. Obviously government is not going to be totally oblivious to what the board is doing, and people in their legal responsibilities as deputy ministers, as public servants, take an oath. Their job is, of course, to protect the public interest -- the Crown's interest. That's their primary responsibility.

Now, if the member's asking me if I will ever have a discussion with the deputy minister and ask: "How's life at the board?" -- to say that would never happen. . . . Of course I wouldn't give that assurance. But I can tell him that cabinet does not say to this other individual: "These are your marching orders; go in and do this at the next meeting of the panel of administrators." You don't function that way. To do so, quite frankly, would be tampering with their legitimate authority.

Obviously we will all look at what the legislation allows and does not allow, and function within that basis. Clearly government isn't going to be unaware of, oblivious to or unconcerned with what happens at the Workers Compensation Board; far from it. But you give people a legislated mandate to do a job, and then you let them do it. I think we have been pretty well served in the last fair while by those bodies.

C. Hansen: I would like some small reassurance from the minister that if the panel of administrators actively considered whether or not to draw $125 million out of the compensation fund to fund the foundation that would be behind this new proposed centre, and if a proposal of that extent is considered by the panel of administrators, he would use his authority to intervene and to give direction to the panel that that kind of allocation would be inappropriate.

Hon. D. Lovick: There is no authority in the act for the minister to interfere. If the member is asking whether, if I suddenly saw a splashy headline, "Panel Contemplating Spending $125 Million," I might venture an opinion, yeah. . . . I'm not going to deny I would. But I don't have a right to say to the chair or to the panel: "Don't do that." That's not my authority; it's a legal authority. Quite frankly, I would be usurping the authority of others if I were to take that position.

None of us here is naïve; we all know that governments function on the basis of information, and people do have conversations. But my point is that as long as I ever have anything to do with it, those conversations will function only within very definite rules and parameters in terms of what is legally allowed and what isn't. I will not venture outside of what my legal responsibility is.

C. Hansen: But in the opening comments earlier today, the minister talked about the accountability of the board. He talked about the review that was being done by the auditor general. And here we have. . . . Virtually every body, agency and commission of the provincial government is accountable to this Legislature -- and is accountable, ultimately, to the voters, the residents of British Columbia, through our elected officials. Those ministries, those agencies, those boards, are accountable to this Legislature through the minister. I would like to ask the minister: in terms of the WCB, where is the accountability? Where is the link from the accountability of the WCB back to the public of British Columbia?

Hon. D. Lovick: I don't want to sound condescending, but I would remind the member that any textbook on basic political science will tell him that he has just been showing the accountability process in action. That's what estimates are

[ Page 8629 ]

C. Hansen: And ultimately the authority to spend money comes back to this Legislature. Yet, here we are. . . . You're saying that a proposal to pull $125 million out of the compensation fund is a proposal that the public will have no say in. The only involvement might be a consultative committee, which the minister promises will have equal representation on it, to make some recommendations; but ultimately it comes back to a body appointed by the minister -- the panel of administrators. Yet if you start looking at the makeup of that body as it currently stands today, it certainly doesn't give me comfort that the public interest is going to be protected in a decision of that magnitude. What I would like to know from the minister is: how does the public have a say in a decision as to whether or not to withdraw $125 million out of that fund?

Hon. D. Lovick: Again, working on the assumption that something like this might happen -- and we have no clear indication that this will happen. . . . If suddenly the steering committee or whatever we call it -- maybe it's an advisory committee -- decides to accept the proposal and then takes it to the panel and they in turn accept it. . . . So we're in the realm of conjecture, very much so. But what the money comes from, in the event that money is spent. . . . Again, I would clarify for the record that we're not necessarily talking about $125 million; that's one proposal. There's another one of about $6 million or $7 million a year over five years that would come from what is called the accident fund. And the accident fund, by law, is under the purview of the WCB.

The larger question of accountability. . . . I think, members, that we all ought to bear in mind that accountability doesn't mean that we all sit here and talk about every single line item expenditure of every ministry. We can do that, theoretically, but what we do above all is provide a mechanism for all of us to raise questions and issues if we have concerns that the money is not being judiciously and wisely spent. That's what our obligations are as legislators. It seems to me that we are carrying them out very well. To say that that suddenly there is no accountability because the minister is not riding herd on the speculation that there may be a considerable expenditure made one year, two years or however many years from now on this particular proposal. . . . I'm sorry, with all due deference, I think that is a non sequitur; that just does not follow.

I think the process is working very well at the moment, and we've explained it in some detail. The business and the labour communities are going to have a good opportunity to look at this. The power or the prerogative to spend money for accident prevention purposes belongs properly to a division of the board. I'm glad they do it. I think the activities that have already been undertaken have borne fruit. I think the financial success of the board in recent years is something we should all be thrilled about. I think employers are certainly happy with the reduction in premiums of 6 percent, which is obviously a factor that resulted from reducing the incidence of injury.

I don't know, because I don't know the proposal well, but if the model that the CAW and others are talking about, which I understand has been tried out in Ontario. . . . I think there is a model in Ontario; I don't know that, but I think that's where. If it's a success and they can say to us, "Wow! Look at all these wonderful things that happened," and everybody here is thrilled with it and thinks it's a good idea, then obviously that would bear some scrutiny in this jurisdiction as well. It may be the case that we look at another jurisdiction and say: "It was a great idea, but it doesn't make a damn bit of difference." That too would have a considerable weight on our deliberations here.

I have faith that the committee that's going to be established is going to be as responsible and diligent regarding the wise expenditure of money as you and I, and therefore I don't hear any alarm bells going off at the moment.

C. Hansen: The minister was talking about this being a hypothetical proposal, and yet here we have a proposal that has been developed with the blessing of the board, with $30,000 of money from the board going to the development of the proposal. It's certainly moved forward with some deliberateness -- if that's a word -- having been received at least for information purposes by the panel. Now we find out that in fact the panel has the authority to accept this proposal tomorrow. So when you talk about it being hypothetical, this isn't something that we can sort of revisit a year from now and say: "Where is this thing in terms of tangibility?" The panel has the authority to accept it tomorrow, and if they were to accept it tomorrow, and the money was removed from the fund, it's gone. There's no accountability at that point; the minister can say: "It's not my responsibility. It's the panel of administrators that did it, and they are arm's length from me, and I didn't interfere with their decision." Meanwhile $125 million is gone. It cannot be recovered if it were allocated in the manner that this proposal suggests.

Hon. D. Lovick: Yes, but you're making it. . . .

The Chair: Order, members.

C. Hansen: For the minister to suggest that I'm somehow jumping to conclusions. . . . There are some big conclusions here, and there is every indication that this thing is moving forward.

I would like to ask the minister precisely where we are with this proposal today. It has gone to the panel of administrators for information, as the minister said earlier. The minister has talked about it not going forward until such time as a consultative committee is struck. Two questions. What happened to this information after it was received by the panel of administrators? Where did it go from there? And secondly, who will strike this consultative committee, and when do we expect this consultative committee to be underway?

Hon. D. Lovick: Let's see if I remember the two questions. The first is: who will strike the committee? That matter will be referred to the policy bureau -- the director general specifically -- to strike the committee.

The other question concerned the. . . .

C. Hansen: Where has the proposal gone, after. . . ?

Hon. D. Lovick: Yeah, where has the proposal gone? My apologies. The proposal went to the administration and the policy bureau. Their job is to analyze this and then create the committee to look at the proposal. Ultimately, the committee will be charged with making recommendations, which will then be reviewed. That's where it sits at the moment.

C. Hansen: Okay. Just to make sure I understand this, the striking of this committee would be done by the WCB itself. It wouldn't be a committee set up by the minister.

[ Page 8630 ]

[11:30]

If this proposal were to go forward with the objections of any one of the stakeholder groups, I think that we would be addressing a major political issue. We would certainly be holding the minister and the government accountable for that. It certainly would not be acceptable for the minister at that time to say, "Well, it wasn't our decision," because I think the minister has to assume a responsibility for that position.

I would like the minister to give us some assurance this morning that if a proposal were to come forward which did not have the unanimous consent of stakeholders, he would ensure that it was not allowed to go forward -- that the $125 million out of the fund would not be allowed to proceed if it did not have the unanimous support of the various stakeholder groups.

L. Reid: Just say yes. [Laughter.]

Hon. D. Lovick: Sotto voce, hon. Chair, I heard somebody say: "Just say yes." If I were to say yes in answer to that question, I would also say yes, I am prepared to break the law. I do not have the legal authority to do that.

If the member is really asking me if I would venture an opinion -- "Gosh, you know, given that 47 percent of the stakeholders said they think this is a dumb idea and is irresponsible. . ." -- and then stand up and say, "What a great idea; I think we should go ahead anyway," then we may have a discussion. In terms of saying would I interfere, would I say to the board, "You can't do this," no, of course I wouldn't, simply because I don't have the legal power to do that.

L. Reid: First let me extend my greetings to Margaret Arthur, Terry Bogyo and Don Cott. It's very nice to see all of you again.

In terms of a little bit of chronology here, perhaps a little bit of history, I was present when the original board of governors was dismissed because their activity was, frankly, a dismal failure for the organization. The discussion of the day was that this panel of administrators was an interim body. They would not be charged with new direction so much as they were charged with stewardship of the organization -- to get them through the term of the royal commission. That was certainly how it was relayed to me on many occasions.

Where we are in terms of this discussion is that I need to know whether or not that sentiment has changed, because indeed this is a new direction. This is an enormous expenditure. Would it be prudent to have a stewardship body make that decision? I would submit to the record that the answer to that is no, that indeed the royal commission hasn't been asked to report back on a new governance structure. It is the new body that indeed should take responsibility for an expenditure of that magnitude.

Perhaps we can start there, with the hon. minister. Is his understanding of the parameters of authority, if you will, of the panel of administrators similar to mine?

Hon. D. Lovick: I welcome the member for Richmond-Steveston -- or Richmond East. Sorry, I should know by now. It's only been -- how many years?

L. Reid: Seven.

Hon. D. Lovick: I should know by now. My apologies.

I know that the member has considerable experience and involvement with the board and its activities, and some expertise, and I welcome that to this table today. Her question -- two points, okay? Let me deal with the second one first, regarding the magnitude of this project and, my God, should they be doing it, etc. Let me emphatically point out again that there is no huge project at the moment going anywhere. This is a proposal, okay, that has been drafted and is now being worked on. The committee is going to be studying it, and they may be modifying it. As I said shortly before the member arrived, I frankly can't imagine something of this magnitude, whether it's the $35 million over five years or the $125 million endowment, being done prior to the royal commission's final report on governance. It just seems to me that that isn't in the cards. That's point one. Second, we are really in the realm of conjecture and speculation about whether it would ever happen in any event. I think it's wrong, then, to cast the debate in terms of: "This panel of administrators has this inflated notion of its own importance, and they're going to do all these awful things." I think that's just the wrong context -- okay?

Number two is the more specific question regarding whether there's been a shift in the role of the panel because, as the member suggested, their mandate, as she understood it, was stewardship to get us over the hurdle until we got the royal commission recommendations on governance and cemented a new structure in place, as opposed to what she refers to as new directions for the panel. I would just remind her that the legislation says very clearly in section 83.1(1), (2) and (3) that the panel of administrators in fact has the same powers as the previous board, and they are empowered to do all of those things in the act. I know that the member doesn't need me to read this to her, but suffice it to say it is very clear that they take on those responsibilities.

Again, as I said earlier -- and I hope I won't repeat myself too many times here -- because there is a royal commission out there doing good and important work, it doesn't mean that all the responsibilities and duties of the existing board are held in abeyance. Life goes on, and a part of the board's mandate is to do things to foster and encourage prevention and to improve the workplace. I for one am very glad that's happening. I think they have a pretty good track record to show that we should all be thankful that they have indeed continued to take their duty seriously, rather than to say: "We're simply a do-nothing board, and we'll stand pat until such time as the new governance structure is imposed."

L. Reid: I thank the minister for his comments, but let's perhaps work our way from the other end of this discussion.

The royal commission is due to report in September 1998, as I understand it. Has any extension been granted? Or is there any likelihood that an extension will be granted?

Hon. D. Lovick: We have a request for an extension to December 31. In all candour, we haven't made that decision yet. I suspect that we'll be doing so fairly shortly.

L. Reid: This is the month of June, and we may not see anything until January 1999, if that extension is granted. And by the time that information is made public, it will probably be months after that because the House will probably not sit until March of next year; that has typically been the way that it has unfolded over the last decade.

If that's the case, I would hate to believe that this would be accelerated in any way. The extension will probably be

[ Page 8631 ]

I think that if the royal commission was truly entrusted with coming back to the table with a governance structure that was about the future of the organization, the same claim can be made for this document. If this is going to figure prominently in how services are delivered by the workers compensation system to injured workers throughout the province, these items should not be considered separately. There should be come commitment on behalf of the individuals present today. If the minister can't give me that commitment, I'd happily hear from the deputy minister, which is permissible in this small committee, that the consideration of those two elements will be seen as a package.

We trust that the new governance structure will bring some consistency, some constancy to the organization. But for the new governance structure to be unveiled. . . . Let's again make the claim that it's perhaps January of 1999 now. Before that new structure is operational is probably another six months hence. So now we are talking late in the year 1999. The minister probably agrees that these things will not happen quickly. Indeed, if the governance structure that's proposed is a departure from past practice, there will be transition time and massaging time and all of those other aspects it takes to bring together a decision-making body.

In conclusion, it's vitally important to people who fund this system -- and this is about the people who will pay the bills, whether it's this proposal or any other -- that they have some understanding and some confidence that their contributions are not just valued in the process but that they are actually sought out about how those dollars will be spent. I know for a fact that there is concern today about the interim panel of administrators. I do support the comment the minister has made in terms of the act. Yes, I'm well aware of the intent, but I would hope that because the public profile of the organization today is not solid, in my view, they would not venture down this road until a new governance structure is operational. Indeed, if the extension is granted to December of 1998 -- six months from now -- there will be, if I might be so bold, probably a six-month startup period for a new decision-making body to come into being. I would suggest that this come back to us for discussion in estimates next year and that we have some ability to have this document evaluated. To end where I began, Mr. Minister, I don't believe this is hypothetical; I believe this is on the table and will follow some path. If the minister could kindly comment.

Hon. D. Lovick: I'd be delighted to, and I shall try to do so briefly. First, the matter of the royal commission report. In passing, the member said: "Well, how long will it take before we find out what's in it?" I'm happy to report that with this report of the royal commission, just as with the last one, I understand that it will become public within a matter of days. It isn't going to be the case that the report is made and nobody knows about it for six months or something. I share the view implicit in the member's comments that that's bad public policy. I think royal commission reports should be public instantly. That's the nature of a commission, in my opinion.

Second, I want to give the member the personal assurance of the chair of the panel of administrators that there will be no acceleration of this proposal. As well, I'm given the assurance that this will not come before the panel in the next six months; this simply will not happen.

Third, there's an offer from the chair of the panel to meet with the member, and any of her colleagues who wish to, to talk about this matter if she has some other concerns.

L. Reid: The minister may not be aware, but certainly the chair is, that I indeed have made many requests to attend a meeting of the panel of administrators and have been denied each and every time. If the policy is now more inclusive, I await my invitation to the next meeting.

Noting the hour, hon. Chair, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:43 a.m.

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