1998/99 Legislative Session: 3rd Session, 36th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, MAY 25, 1999
Afternoon
Volume 15, Number 10
[ Page 12715 ]
The House met at 2:07 p.m.
Prayers.
Hon. L. Boone: Today I rise to introduce some people here in the gallery who are no strangers to Victoria or to most people in the province of B.C. -- and in Canada, in fact: Bruce and Crystal Dunahee, and Bruce's mother Barbara Dunahee. Of course, they became known to all of us several years ago with the loss of their son Michael. They're here today to share with us in the proclamation of National Missing Children's Day. So would the House please make these individuals welcome.
Hon. A. Petter: In the gallery today we're joined by members of the board of governors of the British Columbia Institute of Technology, who have been meeting with members from both sides of the House. They are Arun Garg, the chair; Peter So, the vice-chair; Ken Spencer; Julia Blockberger; and Shannon Cooper. Also with them are Brian Gillespie, the president of BCIT, and David Bernard, the director of marketing and public affairs. Obviously BCIT performs a very valuable service for the people of British Columbia. I'd like to have the House join me in making these members of the board and present administration very welcome today.
W. Hartley: Hon. Speaker, on your behalf I'd like to introduce three guests who, I believe, you had lunch with today. They are constituents of yours: Kathy Quan-Yolden, Darrell Yolden and Fred Jock. Would members please make them welcome.
[1410]
Hon. I. Waddell: Today is the beginning of the B.C. Festival of the Arts here in Victoria. I'd like to introduce members of the board who are here: the president, Paul Winn; Eileen Hoeter, the secretary; Margaret Stacey; Andrea Spence; Armeda Spada McDougall; Barry Kelsey; Kathy Pick, the vice-president; Gary Semeniuk; John Lazarus; Sue Popesku; and Gabrielle Levin, the executive director. Would the House please welcome these hard-working directors for a successful B.C. Festival of the Arts.
The Speaker: Any further introductions? I recognize the Minister of Small Business, Tourism and Culture again.
Hon. I. Waddell: Hon. Speaker, sadly, I rise to bring to the attention of the Legislature the untimely death of a B.C. music producer, Bruce Fairbairn. He died last week at the age of 49. Bruce Fairbairn was a Vancouver producer responsible for building and rebuilding the careers of some of the world's major rock acts. The records he produced sold more than 60 million units. He produced for Bon Jovi, Aerosmith, INXS, the Cranberries, AC/DC, Kiss, Lover Boy and many other groups I could mention. Perhaps we have underrated this man. He was a very serious, worldwide-acclaimed British Columbia producer, and we're going to miss him in the arts community in B.C.
The Speaker: Thank you, Minister, for bringing that to our attention.
ATTORNEY GENERAL STATUTES AMENDMENT ACT, 1999
Hon. U. Dosanjh presented a message from His Honour the Administrator: a bill intituled Attorney General Statutes Amendment Act, 1999.
Hon. U. Dosanjh: I move that the bill be introduced and read a first time now.
Motion approved.
Hon. U. Dosanjh: I'm pleased to introduce Bill 66, the Attorney General Statutes Amendment Act, 1999. This bill makes amendments to a number of statutes to streamline rules, approve administrative efficiency, eliminate unnecessary provisions and correct errors arising from the 1996 statutes revision.
The acts amended by this bill include the Court of Appeal Act, Court Order Enforcement Act, Creditor Assistance Act, Estate Administration Act, Evidence Act, Interpretation Act, Land Title Act, Libel and Slander Act, Limitation Act, Motion Picture Act, Motor Vehicle Act, Multilevel Marketing Regulation Act, Municipal Act, Police Act, Refugee Settlement Act, Trustee Act, Wills Act and Young Offenders (British Columbia) Act. Of course, during second reading, we'll go over the details of that. I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.
Bill 66 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.
LABOUR STATUTES AMENDMENT ACT, 1999
Hon. D. Lovick presented a message from His Honour the Administrator: a bill intituled Labour Statutes Amendment Act, 1999.
Hon. D. Lovick: I move that Bill 65, be introduced and read a first time now.
Motion approved.
Hon. D. Lovick: This bill makes three amendments to the Workers Compensation Act to enhance the fairness of the compensation system, for both workers and employers, and to protect the health and safety of workers.
First, authority is provided for the Workers Compensation Board to increase the amount paid for funeral expenses when the tragedy of a workplace fatality occurs. Second, a new framework is established for the employer classification system, so that a system that is fairer and more equitable in calculating employer assessment rates can be implemented in early 2000. Third, the act is amended to codify the board's existing authority to develop workplace safety regulations by adopting other provincial standards and legislation. This parallels the authority provided last year with respect to national and international standards and the new occupational health and safety legislation.
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This bill also introduces, or includes, changes to the Employment Standards Act that allow the director of employment standards to recover wages from a talent agency if the talent agency does not pay those wages to the actor. This amendment will provide greater protection for performers working in B.C.
Finally, this bill also introduces minor streamlining amendments to three provincial
labour statutes. First, the Skills Development and Fair Wage Act is amended to remove the
requirement for contractors and subcontractors to provide statutory declarations to the
tendering agency on a fair-wage project. Second, a legislative oversight is corrected in
the Hairdressers Act to provide certainty that hairdressers may cut hair as a primary
function of their trade. The Hairdressers Act is also updated to clarify the current
practices of the cosmetology profession and to enhance the administration
The Speaker: The minister will recognize that his two minutes are up.
Hon. D. Lovick:
As well, finally, the obsolete Labour Education Centre of British Columbia Act is repealed.
The Speaker: I think you have a motion for us.
Hon. D. Lovick: I do. I move that the bill be referred to this House for second reading at the next sitting of the House after today.
Bill 65 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.
[1415]
AGRICULTURAL LAND COMMISSION AMENDMENT ACT, 1999
Hon. C. Evans presented a message from His Honour the Lieutenant-Governor: a bill intituled Agricultural Land Commission Amendment Act, 1999.
Hon. C. Evans: I move that the bill introduced and read a first time now.
Motion approved.
Hon. C. Evans: This bill amends the provincial interest sections of the Agricultural Land Commission Act. The provincial interest sections of the act established the process by which the Lieutenant-Governor-in-Council may remove a matter from the Agricultural Land Commission and decide the matter itself. That process is a recognition that there may be very rare cases where a matter involves interests that are important to the province as a whole and that those interests are broader than what the commission is capable of addressing within its specific mandate of protecting agricultural land.
These amendments clearly define the circumstances under which the Lieutenant-Governor-in-Council will consider referring a matter from the commission to the provincial interest inquiry; expand the requirements that must be followed throughout that inquiry process to ensure that it is open, accountable and fair; ensure that the public has access to good information in a timely manner so that people can meaningfully participate in the inquiry; and establish the values that must be applied by the Lieutenant-Governor-in-Council when deciding on a matter, with agricultural values always having the highest priority.
These amendments will improve the ability of the public to meaningfully participate in an inquiry and will improve the quality and quantity of information available to the Lieutenant-Governor-in-Council. Most importantly, these amendments will confirm that agricultural values are the first priority for any considerations under these sections of the act about the use of the province's scarce and valuable agricultural lands.
Madam Speaker, I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.
Bill 70 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.
B.C. FERRIES DEBT LOAD
G. Campbell: My question is to the Minister Responsible for B.C. Ferries. When the minister assumed responsibility for the ferry mess, he told us all that the corporation was a financial wreck. He told us that he was going to get the debt under control. Today I have a confidential B.C. Ferries document dated April 1999 -- that's after this year's budget, hon. Speaker -- which shows that B.C. Ferries will need another $600 million of debt to offset new capital and operating deficits between now and the year 2004. My question to the minister is: why didn't he tell B.C. taxpayers that they were going to need another $600 million in debt just to keep the fleet afloat?
[1420]
Hon. G. Wilson: I hate to pop the Leader of the Opposition's balloon, but that's not a confidential set of figures. Clearly what the B.C. Ferry Corporation has been saying all along is that there is a very high debt load that we need to manage now on both the capital side and the operating side.
There is a new financial strategy being put in place, with a new board. They are doing due diligence. In fact, they're meeting within a couple of weeks to formalize a new capital plan. When that's done, it will be made public for everybody to see. There's nothing to hide. This corporation will be brought into a sound fiscal management regime. If that's not good enough for the official opposition, I think it certainly will be good enough for the people of British Columbia.
The Speaker: First supplementary, Leader of the Official Opposition.
G. Campbell: I read today's news release from the minister with regard to the second fast Ferrari being launched. Nowhere in that news release is there any comment with regard to the costs of this. There's not one word, not one peep about the additional debt that is going to be required just to
[ Page 12717 ]
keep B.C. Ferries going as a corporation. The fact of the matter is that this is an additional $600 million in debt. My question to the hon. Minister Responsible for B.C. Ferries is: how does he believe that adding an additional $600 million in debt is going to make B.C. Ferries any less broke than it was when he assumed responsibility?
Hon. G. Wilson: The Leader of the Official Opposition ought to know that if
there has been a long period of time with no capital construction program, if we have a
situation where ships are aging, if we have a situation where we now need to invest in
putting in place sound capital construction programs to provide service for people in
coastal British Columbia
Interjections.
The Speaker: Order, members.
Hon. G. Wilson:
Interjections.
The Speaker: Members, come to order.
Hon. G. Wilson:
Interjections.
The Speaker: Members
Hon. G. Wilson:
The Speaker: Thank you, minister.
Hon. G. Wilson:
Interjections.
The Speaker: House, come to order.
D. Symons: It sounds something like a leadership race going on over there.
But anyway, you know, this Ferries document shows, on a page that's titled "Scorecard Today," the corporation's plans for increasing tariffs up to the year 2004. The tariff increase will total almost $42 million over the next five years, an increase of more than 14 percent. Can the minister explain to ferry users why they'll be forced to pay for this government's fiscal mismanagement of the Ferry Corporation?
Interjections.
The Speaker: Come to order, members.
Hon. G. Wilson: What I can explain to the people of British Columbia is how hopelessly incompetent those members opposite are. They're referring to a document that has no relevance to the current tariff structure. They're referring to a document that does not reflect the fact that this government has committed to no tariff increase until April of the year 2000, and then there will be a tariff rationalization that'll be fair to all people.
Interjections.
The Speaker: Members
Hon. G. Wilson: That member should get out of Richmond and the Leader of the Official Opposition should get out of Shaughnessy and travel the coastal communities and see how B.C. Ferries is now an integral part of the building of their economy.
The Speaker: First supplementary, the member for Richmond Centre.
[1425]
D. Symons: The reality is, I think, that it's the minister who's out of touch with
what's going on in the province of British Columbia. We found out that the minister is
indeed planning to increase the debt of the Ferry Corporation by over $600 million over
the next five years. With the fiscal mess that that corporation is in, how can the
minister possibly expect that ferry users will not be forced to shoulder this burden? How
is that going to happen? What happened prior to 1995 and
Hon. G. Wilson: I know that the Liberals want us to jack up ferry rates. I know they want us to increase ferry rates. I know that they want us to burden the people in the tourism sector.
Interjections.
The Speaker: Members, come to order.
Hon. G. Wilson: I know that they have no compassion whatsoever for people who live in ferry-dependent communities. That's their strategy. If this member opposite had been paying attention and keeping up to speed, he would know that the information he's using is two and a half to three months old. We are putting together a tariff rationalization that will be fair to British Columbians. It will not require them to shoulder the burden, because we are going to put the B.C. Ferry Corporation on a sound fiscal footing. The member should know that. I've invited him to work with me.
The Speaker: Thank you, minister.
Hon. G. Wilson: Instead, he has preferred
The Speaker: Minister
Hon. G. Wilson:
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G. Farrell-Collins: Well, this document says April '99. That was last month, hon. Speaker -- last month. When the new minister of ferries -- the newest New Democrat, the only one who's signed an NDP card in a year -- became the Minister Responsible for B.C. Ferries, he said he didn't want B.C. Ferries to go on "a major borrowing spree." Two weeks ago in this House we boosted the debt at the B.C. Ferry Corporation by $375 million. Why, two weeks ago, didn't the Minister Responsible for B.C. Ferries stand up in this House and tell us that within two short years he intends to blow the top off of that debt cap and add another $400 million to the debt load?
Interjections.
The Speaker: Order, please.
Hon. G. Wilson: The reason I won't stand up and say that is that we don't intend
to do that. And if the member
Interjections.
Hon. G. Wilson: Oh, the member waves a piece of paper that was written
internally in April, released
Interjections.
The Speaker: Order, members.
Hon. G. Wilson: Hon. Speaker, the reason that the Liberal opposition hang their
hat on such flimsy material is because they're not prepared to face up to the fact that
the B.C. Ferry Corporation has turned a major corner. We have a new board. That board is
working diligently to put in place a new capital plan. And if that member would
Interjections.
The Speaker: Members, order.
Hon. G. Wilson:
The Speaker: Thank you, minister.
Hon. G. Wilson:
The Speaker: First supplementary, member for Vancouver-Little Mountain.
Interjections.
The Speaker: Order, members.
G. Farrell-Collins: I admit guilt. I based my argument on the flimsy basis of one-month-old B.C. Ferries treasury group documents. How outrageous of me to do that. I mean, if you can't do that, what can you do? The Minister Responsible for B.C. Ferries says that he has a plan to put the B.C. Ferry Corporation on a firm financial footing. And now we realize from his documents -- those aged, one-month-old ferry documents -- that in fact he's planning a spending spree of his own of about $600 million. Can the Minister Responsible for B.C. Ferries tell us when he was going to tell British Columbians the truth and when B.C. Ferries is finally going to come clean with the people of British Columbia, who are paying hundreds and hundreds of millions of dollars for this mismanagement by him and his colleagues?
Hon. G. Wilson: Well, British Columbians have learned something about the Liberal opposition today. They want to increase ferry fares for coastal communities. They want to shut down capital construction. They don't want to build any new ships. They don't want to get involved in capital repair programs.
Interjections.
The Speaker: Order, order!
Hon. G. Wilson: And they are not prepared to work with this government in making sure that we put this corporation on a sound fiscal footing. That's what the Liberals would do: increase fares, do no further ferry construction and simply carry the weight of the ferries on the backs of ferry-dependent communities. And I say shame on those Liberals over there.
[1430]
Interjections.
The Speaker: Members, come to order.
G. Plant: After the budget was brought down in March, the then newly launched Minister Responsible for B.C. Ferries stated that the provincial government was going to commit secure funding to help put the Ferry Corporation back on its feet. However, this antique, yellowing, leaked document shows that even with an increased provincial subsidy, the net operating loss of B.C. Ferries will only get worse. So my question for the minister is this: will he tell us how much longer he intends to pretend that he is actually doing something to put the Ferry Corporation on a sound financial footing when in fact he is driving it deeper into debt?
Interjections.
The Speaker: Members will come to order.
Hon. G. Wilson: The amount of capital debt that the B.C. Ferry Corporation is carrying was public information months ago. The Liberals are now trying to allude to the fact that the B.C. Ferry Corporation carries a large debt and is going to have to go on a capital construction program. That is not new news; we knew that. And the fact that the Liberals are only now waking up to it tells us that they've been asleep at the switch. To have a sound program, to have a sound corporation, we need to construct some new ferries. Those ferries will be built in British Columbia with British Columbia workers, and they will supply British Columbia communities with sound transportation at an affordable price.
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That's the plan. If the Liberals oppose that, they would simply shut down the shipbuilding industry, increase the fares and kill the economy in coastal communities. I say shame on those members.
The Speaker: First supplementary, the member for Richmond-Steveston.
G. Plant: Actually, if the minister had been listening to my question, he would have heard that I was asking about operating costs, not capital construction. But that may be a distinction which is now lost on the minister, having taken his lessons in NDP economic management. The operating costs of the B.C. Ferry Corporation are today a financial disaster, and this document predicts that they will continue to be. In fact, before you add in the contributions from government and fare increases, the operating loss to the corporation will rise from $95 million last year to more than $235 million by the year 2004.
The Minister for B.C. Ferries was going to fix this program. Instead, he's become the star pupil in the NDP financial mismanagement school. Will he explain how a massive increase in operating expenditures and losses equates with sound financial management?
Hon. G. Wilson: I would think the very first thing you would do is be able to read a balance sheet in a ledger, which that member clearly doesn't understand.
Interjections.
The Speaker: Members, come to order, please. Members will come to order. The minister will reply. The question was heard in some silence, and I expect the answer to be heard also.
Hon. G. Wilson: I'm alerted by the members opposite that they intend to start Ferries estimates tomorrow. Perhaps they should have a briefing from the Ferries staff so they can at least read the information that's in front of them.
[1435]
The member wants to know how we're going to rationalize operating costs. We're going to do that by making sure that we have a rationalized service in the Gulf Islands; that's underway. Working with coastal communities -- that's underway. Working with the people who will depend upon the ferries to make sure that tariff rationalization is fair and equitable through the system -- that is underway. Making sure that the midcoast ferry that services Bella Bella, Bella Coola and Klemtu is protected so that those economies can be secure -- that is underway. Making sure that North Island and Prince Rupert are adequately and properly served -- that is underway.
If those members opposite had their way, they would shut it all down. They would jack up the fares. They would stop capital construction. And we would have crisis in coastal communities.
The Speaker: The bell ends question period.
NATIONAL MISSING CHILDREN'S DAY
Hon. L. Boone: I rise today to make a ministerial statement. It is with great hope and considerable sadness that I stand before you in recognition of National Missing Children's Day, May 25, 1999. Throughout this day across the province, families and their communities join together to raise awareness to prevent this kind of unfortunate situation and to impart hope in finding children who have gone missing.
It's important to understand that there are different scenarios that can result in missing children -- anything from unresolved custody issues and family abductions to the most tragic situation when a stranger kidnaps a child. On behalf of the government, I want to convey our heartfelt sympathies for the suffering and frustration that a family and their community endure when a child or a young person goes missing. No one, unless they have experienced this type of loss, can even begin to imagine the pain it causes, no matter what the final outcome.
In the midst of this sadness, it is also important that we stay hopeful as we remember these children for the wonderful memories they have given their friends and families. We must not forget the good times or the joy that they have imparted to many people's lives. We must maintain our hope for the safe return of missing children everywhere.
I ask all of the members here today and everyone in British Columbia to take responsibility for the safety and well-being of all children in your lives and in your communities. For example, the next time you see a photo of a missing child, don't assume that you can't help. Instead, take a long look at it and memorize the image as best you can. Your memory of this photo could help in the identification of a missing child one day. I urge everyone in B.C. to take this action and to do your part.
In addition, you can contact the Child Find office nearest you to learn more about what you can do to educate the children and families in your life. Over the month of May, Child Find has offered fingerprinting clinics throughout B.C. to help with the easy identification of children who have gone missing. This is an extremely valuable service and one that helps families everywhere in B.C.
Let's all pray for the safe return of our missing children, and please find it in your heart to share in the responsibility for preventing this in the future.
L. Reid: I wish to make some comments today on the Green Ribbon of Hope campaign.
"In 1986 the Solicitor General of Canada declared May 25 to be National Missing Children's Day in Canada. Each May, Child Find hosts the Green Ribbon of Hope campaign. During the month of May, community members are asked to show their support and concern for the issue of missing children by prominently wearing a green ribbon. Proceeds generated by the campaign enable Child Find B.C. to continue its mandate of assisting in the search process for missing children and the education process of children and adults about child safety.
"On May 25, the Green Ribbon of Hope is recognized as a symbol to help remember missing children and to seek their safe return. It is also used as an expression of our thoughts for missing children and their families and friends. Activities
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carried out during the month include fingerprinting clinics and various community fundraisers.
"The concept of the Green Ribbon of Hope was originated by the students and faculty of Holy Cross Secondary School in St. Catharines, Ontario, following the abduction and subsequent murder of 15-year-old Kristen French. Her classmates came to Child Find to ask to develop a legacy for Kristen and all missing children in Canada."
I'll conclude by paying tribute to Jon Taylor, president of Child Find British Columbia. There is no loss in this life greater than the loss of a child. Jon, you and your agency do important work, and for that we are grateful.
[1440]
Hon. A. Petter: I have a petition from 144 constituents concerning gypsy moth spraying and the opposition that they have to it.
W. Hartley: I ask leave to make an introduction.
Leave granted.
W. Hartley: Visiting us today are 21 grades 6 to 8 students, several adults and their teacher Miss Heney from the Foothills School of Arts and Sciences in Boise, Idaho. Would members please make them welcome.
Hon. I. Waddell: I ask leave to make an introduction.
Leave granted.
Hon. I. Waddell: I'd like to introduce to the House two friends of mine: Irene Wright from Saltspring Island and her son Hal Wright from Sandon, B.C.
Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Municipal Affairs. In this chamber, I also call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Labour.
The House in Committee of Supply B; W. Hartley in the chair.
ESTIMATES: MINISTRY OF LABOUR AND MINISTRY RESPONSIBLE
FOR THE INSURANCE CORPORATION OF BRITISH COLUMBIA
(continued)
On vote 39: ministry operations, $24,045,000 (continued).
[1445]
Hon. D. Lovick: We are to discuss the estimates of my ministry and also the estimates of the Insurance Corporation of British Columbia. Accordingly, I would move the following motion: "Be it resolved that a sum not exceeding $24,045,000 be granted to Her Majesty to defray the expenses of the Ministry of Labour, ministry operations."
The Chair: Thank you, minister.
Hon. D. Lovick: Mr. Chairman, for anybody who is watching this debate, what I just said is the equivalent of saying: "ICBC discussions, the sequel." We began on Thursday last, and we are now picking up where we left off.
I have only one thing I would say before we begin the process of questioning and comments from my colleagues on the opposite side: namely, that I believe we quoted a figure of 4 percent, in terms of the administrative cost relative to the total operations of the corporation. I am advised that I was apparently given a misprint; the figure should be 6 percent. My apologies to my colleagues and anybody else who might have been inadvertently misled by that comment. With that, I will simply defer to my colleagues.
K. Krueger: We thank the minister for that clarification.
Over the weekend, the people of this province had the opportunity to ponder the answers
and the questions that were put in the ICBC estimates last Thursday. There are two answers
that I want to give the minister the opportunity to say a little more on, if he'd like to,
in that I think the answers are just so unacceptable to the people of this province. Those
were with regard to the matter of ICBC spending $2 million to locate a group of
top-echelon managers across Burrard Inlet from their head office location, well away from
the employees they manage. One of the minister's answers
Essentially, the answers said two things. One was that the managers wanted to get away from the mundane day-to-day activities of the people they manage. The other was that the managers were, essentially, making this move as a matter of personal sacrifice, because nobody else wanted to move across the water. Surely those are not acceptable answers.
This afternoon there are community social services workers' pickets up in front of the Legislature. Many of these people work for minimum wage; many of them have no benefits in addition to that minimum wage, or the wages they get. Those people have to get to and from work, many of them in automobiles, and they pay ICBC premiums. Most of the community social services workers are women. They feel disregarded and not valued at all by government. They cannot understand the prioritization process by which decisions like this are made.
It's all the same money to the public; it comes out of the same taxpayers' and premium-payers' pockets. The people are one and the same. It's very hard for people to understand how HCL workers get a 5 percent increase on top of their $30 wages. Community social services workers work for minimum wage. ICBC spends $2 million to move to plush offices. These things are impossible for people to reconcile. It's just not acceptable to them to hear those reasons for the expenditure. So we want to give the minister an opportunity to add to those answers, if he'd like to.
Hon. D. Lovick: You bet; I'm happy to respond. First of all, let me say that I hope this isn't an indicator of the way the
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debate is going. I do not take kindly to somebody grossly overstating and misrepresenting what I said in the Legislature. Contrary to what the member suggests, I said that the move was made to enable that group of senior people within the corporation to deal with strategic planning matters. In the course of our discussion, I accepted the proposition that that indeed meant no longer doing the mundane activities.
[1450]
Perhaps the member would like to look up the meaning of "mundane." He'll discover that it isn't necessarily a derogatory or pejorative term. It means the day-to-day ongoing activities, which junior echelons of management normally do. You don't need your senior executive doing that. Rather, the decision of the corporation was that the senior executive would carry on with those more strategic, longer-term things.
Second, the matter of the sacrifice. I told the story in jest. I said that there was indeed a committee struck in the corporation to see who would be willing or what departments would be willing to move across the water. Apparently nobody was willing to do so. I did not say that the executive was in any way making a grand sacrifice by moving. They simply decided they would, in that nobody else apparently wished to do so.
I also must respond, albeit briefly, Mr. Chairman, to give the member notice that if he thinks he's going to use these estimates as a platform to set himself up as some kind of great defender of poor people and the underprivileged in this society, he ain't going to do so with silence from me. Those are the people across the way who have spoken against minimum-wage increases. Those are the people who have spoken against occupational health and safety improvements. Those are the people who are advocating downsizing government and reducing services to people, especially poor people. Those are the people who have also advocated tax breaks for the wealthiest and most powerful in this society. So spare me, please, members opposite wrapping themselves in the blanket of caring about the little folks and suggesting that nobody else does.
The Chair: The Chair would remind members about the standard rules in regard to relevancy. I hope we can carry on in a relevant tone.
K. Krueger: For the record, we don't regard them as "little folks." They also shouldn't be poor folks; they do valuable work. I refer the minister to pages 48 and 49 of the Blues, where he said exactly what I quoted. In any event, my colleague the member for North Vancouver-Seymour further personally checked out some of the minister's answers, and I will turn the debate over to him now.
D. Jarvis: I'd like to ask the minister -- and I wasn't quite sure if we did discuss it: are you carrying any catastrophe insurance? Is ICBC putting any moneys aside for catastrophe insurance?
Hon. D. Lovick: I wasn't sure exactly what catastrophe insurance meant, so I
wanted to get that before I answered the simple question. The short answer to the question
is yes, the corporation does that. I understand they are paying a premium at the moment of
$5 million per year for a five-year
D. Jarvis: I wonder if the minister could tell me where in the financial
statements that $5 million is put aside for
Hon. D. Lovick: The amount isn't specifically stated because it comes into effect, apparently, for 1999. But there is a statement talking about that particular obligation on the part of the corporation which appears on page 29, at the bottom.
D. Jarvis: In the financial statements under claims paid, that figure has
remained pretty static across the last few years. I am just wondering
[1455]
Hon. D. Lovick: The answer is no, it is not overstated.
D. Jarvis: What about the prior years' adjustments on it? It wasn't too long ago -- in fact, in '95 -- that it was at minus $30 million. Then it went up to $104 million in '96 and $163 million last year. Now it's up to $219 million. I'm wondering if he would explain that to me.
Hon. D. Lovick: The explanation, I am advised, is essentially what we talked about last time. Namely, it has to do with the six-point plan and the costs attendant on that and the various other safety initiatives.
D. Jarvis: With respect to the administration aspect, it appears that approximately $75 million of motor vehicle costs has been moved from the government to ICBC. And it says that in '98 it was down to about $41 million. Are there any moneys to be laid off in '99? ICBC, I assume, is going to absorb all the government's costs of $75 million and transfer them to the premium costs.
Hon. D. Lovick: The merger is, I think, something that has to be looked at in a
broader context, if I can put it that way. We're talking about the single window, the
single opportunity. Indeed, in my opening comments, I think I said something about what
the merger does. If the member's question is: will ICBC get back the shortfall of
approximately $10 million
D. Jarvis: I notice that the total number of claims is down at least around 10,000. I was wondering what the minister would attribute that to, on the premise that in most recession periods -- which we have been going through, and we're still probably in it -- people don't drive as fast; they drive more carefully and all the rest of it. Traditionally, right across North America, claims are down. There's no question of that.
In the United States, their claims are down. I think it's about four quarters in a row now that their premiums have been dropping. Ontario's down about 12 percent, from what I've read. I was just wondering to what he attributes the fact that ICBC claims are all down.
Hon. D. Lovick: I wouldn't make the huge leap in logic. I think it is probably asking too much to suggest absolute
[ Page 12722 ]
causality between the various safety initiatives and the reduction in claims. I would,
however, suggest that it certainly has a contribution to make. Indeed, based on the
numbers that I have seen and the analysis that's been done by the corporation, the
suggestion would be that yes, indeed, our safety initiatives have made a very significant
difference. I'm not for a moment, however, suggesting
[1500]
D. Jarvis: Bodily injury claims are down lower. It wasn't too long ago that we were
told it was necessary to bring in no-fault, because they were completely out of control. I
see they're now lower. I was wondering if the minister could tell me what he attributes
that to. I'm hearing of cases where, on the settlement end of it, ICBC is now becoming --
although they're trying to be friendlier -- a harder company to deal with. We're seeing
claims now referred to juries rather than judges, ostensibly because the settlements
theoretically have been getting lower. Now, we know those will change around, because
sooner or later jury trials will raise settlements up. If the minister could tell us how
he justifies the fact that they are lower
Hon. D. Lovick: I would like to remind the member that when the no-fault debate was going on, it was considered by many at the time that no-fault was indeed the remedy to prevent that apparently upward spiral in bodily injury claims. What happened was that the counterpoint, the alternative to a no-fault system, was indeed that high-profile set of safety initiatives -- among them, most importantly of course, the six-point plan. That is the essential answer to the question.
D. Jarvis: On the settlement of bodily injury claims, has there been any significant happening with regards to mediation of settlements?
Hon. D. Lovick: The corporation, I understand, has apparently established an alternate dispute resolution mechanism, which is of course in keeping with the change in our provincial statute.
As you know, every jurisdiction anywhere in the world has recognized for some time that courts are extremely expensive and that frequently, by using alternate mechanisms -- mediation of various kinds, shapes and sizes -- one can save a huge amount of money. And indeed, the participants seem to be as well, or perhaps even better, served.
D. Jarvis: Could the minister advise us if there's been any change in the philosophy of ICBC with respect to bodily injury claims? I am receiving letters and reading articles in the paper where it's basically: deny, deny, deny and force people into the courts rather than into mediation. I can quote some specifics, but I don't think this is the right place to do it. I wonder if he could give me some opinion as to what ICBC's intention is. They are driving the bodily injury claims down, as evidenced by the information that we have. Also, their attitude appears to have changed.
Hon. D. Lovick: I think the corporation's mandate is to be what it always has been, and that is fair. Certainly to suggest that there is some kind of plot whereby people say, "Let's see if we can screw the last dollar out of individuals who are already suffering some kind of psychological as well as physical injury," is absolutely not acceptable and would certainly not be embraced as a policy by the corporation.
D. Jarvis: Well, I can appreciate that's not what the minister would do if he
was in absolute control of ICBC. But it is
[1505]
In insurance companies, whether it's in the private world or the monopoly that we have here with ICBC, the trend is to get those dollars down and to make money. And that's what happens. I'll go into that aspect better, but if you could comment on that.
Hon. D. Lovick: The first point I want to make is that the member, on two or three occasions now, has referred to this big file. I've talked to the officials here with me, and they said they've had some conversations with the member but certainly not about a big file such as he has. If he has those kinds of concerns, I would certainly recommend that he take them to the corporation. He can give them to me if he wants, and use me as the intermediary to make sure the corporation gets to look at them.
I would just note, for the member's benefit, that the customer satisfaction surveys that have been done in recent years by the corporation show that the corporation is indeed perceived to be treating people more fairly and better. Therefore the rate of satisfaction is significantly higher than it was X years ago. That doesn't, of course, mean that everybody will be satisfied. As I said to the member before -- I believe it was on Thursday -- whether we like it or not, we live in a society that is becoming increasingly adversarial and increasingly litigious.
If you have legal firms advertising on television and radio on a regular basis, saying:
"Don't trust those guys. Come and see us before you sign anything, before you do
anything, because we'll get you more money
I would suggest that there are probably very few people in the history of the insurance
business who have suffered serious injury, whether physically or in dollar terms to
vehicles, who are absolutely and entirely thrilled with the experience -- contrary to the
mythology that the same kind of argument that goes on about people deliberately hurting
themselves to get a payoff from Workers Compensation
[ Page 12723 ]
vehicle wants to get the car pranged up or wants to get hurt. At the end of the day, in all likelihood the person will be a lot less well off after the accident experience than before.
The corporation's job is to treat people as fairly and compassionately as they can. To suggest that they aren't doing so causes me some concern. My meetings thus far with the corporation lead me to believe that we are talking about some pretty dedicated people who are indeed trying to do the best job they can. If they aren't, then clearly I share the member's concern, and we should do something about that.
D. Jarvis: I don't think we should stand up here and have a fight over incidents which are large and small, all over the place. I mean, I can quote you the Neville West case that we're going to bring up later on today. These things are ostensibly giving ICBC a bad name throughout this province.
Where is ICBC's friendly attitude when all of a sudden, if you're involved in an
accident and you're, say, 100 percent down to 1 percent responsible, you have
Interjection.
D. Jarvis: RoadStar, that's it. And touch wood -- very hard -- I haven't had a claim with ICBC for probably 30 years.
[1510]
An Hon. Member: He's going to have an accident tonight.
D. Jarvis: Well, maybe so. Someone said I might have an accident, but I doubt it. If I get into a small accident now, I'm going to be charged $250 for it. It's a bodily injury and property damage deductible that's been added on. Most of the people out there, regardless of all the advertising that ICBC does, aren't aware of it until they come into an accident, because they don't expect to have a bodily injury and property damage deductible on their policy. Now, that is not what you'd call a loving, friendly company.
Hon. D. Lovick: I guess one should avoid the temptation to compare mythologies
in terms of one's own driving record. Look, I had a pilot's licence before I had a
driver's licence, and in the first 25 years that I drove, I never had any trouble. And I'm
sorry to say it, but now that I've approached the ranks of what I call junior-senior --
age 55
That was the basis of the particular program that the member's referring to. It wasn't a surprise to anybody. It was advertised; it was talked about at great length. The essential argument was: here's what we propose to do, largely in response to the public demand. The public's saying: "Wait a minute; surely we could bring down our rates if we said to those people who have in fact caused problems, who have in fact been less than astute and not as careful as they should have been, that they will bear some costs." They will get some kind of punishment for what they have done -- an extra deterrent, if you will.
I think that the public certainly has seemed to be quite supportive of the program. As I say, it wasn't a surprise to anybody, as far as I can recall.
D. Jarvis: Well, I just can't understand how you can say that the public is
supporting you, because there is great distress out there in the public with regard to
ICBC. If you think that ICBC is the epitome of the great, friendly, responsible corporate
citizen of this province, call an election on that one item, and I'll tell you
Interjection.
D. Jarvis: Well, that's ostensibly the way -- what you're trying to infer, I think.
Between the claim adjusters and the philosophy of the company -- and maybe all
companies are like this; I'm not too sure
I want to talk about the aspect that the minister was mentioning -- that they could
bring the rates down. Well, I look at the cost of different things that have gone on over
the past
Perhaps a change may not be good for them on the
[1515]
Hon. D. Lovick: I don't think there was a question there, but I'd just advise the member that the premium tax has always been there -- it's just differently named, I guess. We're talking four years of a rate freeze. I think that's providing pretty good service. The member's quite right that there are some additional costs that can be identified, but there are some huge benefits that have also occurred as a result of ICBC's operation. I'm struggling a little bit, though. As I said on Thursday, when I listen to the member's line of questioning, it sounds to me as if he's suggesting that we should scrap the corporation and be done with it, whereas the principal critic on the other side seems, rather, to be saying no, ICBC is necessary and desirable, albeit it could use some improvement. So again, I don't mean to be contentious or provocative, but I would think it would be good if they could get their lines straight.
D. Jarvis: I'm afraid the minister has it wrong in the sense that I didn't say we should scrap the whole corporation. I said
[ Page 12724 ]
that we should look at reorganizing the whole organization and also maybe bring in some competition in order that this government monopoly that we have here, ICBC, could be run a little bit better.
That just brings me to a point
An Hon. Member: Thursday.
D. Jarvis:
So I got off the helijet on Friday morning, and I walked up to the offices, took the
elevator up there, walked in the door, signed my name in there, because they've got a
security guard, and I said: "Take me to the showers." They did; they took me to
where the showers are. So I just want the minister to know that when he said there are no
showers there
Hon. D. Lovick: In the bathroom there could be a shower. That's a little different from personalized ensuite plumbing.
D. Jarvis: Anyways, Mr. Chairman, back to the subject we're on.
I was just wondering if he could tell me the
KPMG -- are they doing any other studies for you at this point that would come up with some frivolous statements along that line, to suggest that we're in immediate trouble and that there's a possibility that this corporation may again be considering bringing in no-fault in the near future?
Hon. D. Lovick: First, to the specific question, there is no discussion going on at present. How can I be categorical as much as one can about no-fault? No-fault is not on anybody's horizon, to my knowledge.
The KPMG report, I understand, was based on the fact that in 1995 the rise in claims cost was about 14 percent. What KPMG did, appropriately enough, was to look forward and say: "My gosh, if this is indeed the trend line, then we will have a problem." That's what they did. The reality, of course, as we now know, is that it has fallen significantly in actual fact.
[1520]
D. Jarvis: I was wondering if the minister could possibly tell me about the great
potential of a Surrey mall. There was a question
The second one is that I heard that they originally signed a contract for around $53
million for
When I said that we had two questions
Hon. D. Lovick: I'm glad the member raised the question about the overall investment strategy of the corporation. He will perhaps recall that one of the debates about ICBC, when the corporation was first established in '74, had to do with the reality of people's insurance dollars in British Columbia going out of the province -- in many cases, out of the country. One of the most powerful arguments used to establish a public insurance corporation was that we could keep the money in the province, being used by the province. That argument is still alive and well today.
One of the arguments that has been used latterly, though, is that ICBC's investment portfolio -- as you know, it has to march to a very rigorous beat and standard -- was perhaps not focusing as many investment dollars in British Columbia as ought to be the case. Therefore, guided by some very particular and rigorous policies, the corporation has recently been looking at spending more of its total investment capital portfolio here in British Columbia. Like every other insurance corporation in the world, as I understand it, that means some investment in real estate.
Broadly, though, let me simply give you the breakdown on 1998 investment income,
starting with the total amount returned on that investment -- all right? -- which was some
$412 million. If I give you the breakdown, you'll see the various ways
I think the member's other question, he will
D. Jarvis: I wonder if you can tell me, with respect to the Surrey mall, what ICBC actually did spend on it? Is it being reconsidered? I've heard a rumour to that effect. Of the total cost to them, what were the Bing and Thom architecture costs?
[1525]
Hon. D. Lovick: The Surrey Place mall
Negotiations are ongoing. As the member, I think, knows full well, the plan by the
provincial government
[ Page 12725 ]
all been made very public, so I'm not telling tales out of school. The provincial government has been talking about creating Tech B.C. Tech B.C. is a new kind of university-technical school to be located, ideally, in the Surrey Centre or Surrey-Whalley area. It's one of those exciting places that has less in the way of physical facilities than being essentially a place where all kinds of people gather. They will gather for exchanging ideas, creative thoughts, etc., and they will be connected, ideally, to other industrial and high-tech companies and so forth. There aren't too many models like it, but there are things like the Silicon Valley. The University of California, I think, has something similar.
Anyway, the idea is that government is obviously going to invest a certain amount of money in creating this thing called Tech B.C., and the possibility for synergy and for creative cooperation and partnerships with some others is there. Therefore ICBC said that, as part of its investment portfolio, it could perhaps purchase the land on which Tech B.C. would be built, in partnership with some others -- I think B.C. Tel, a couple of private sector high-tech firms and so forth -- to create, in fact, a complex bigger and more exciting than one could ever have by simply building one small project, separate and distinctly, at a time.
The original option on the property, I understand, lapsed. The corporation was never in for quite as much money as some of the newspaper stories suggested, though it obviously cost them some money for the option. The member referred to a figure of $50-some-odd million as opposed to $35 million. All of the figures that I have seen have been the result of particular formal appraisals and, you know, the legitimate assessed value of the land. And what we're talking about, certainly, in terms of what the corporation was proposing to spend, is not in any way out of line with what its assessed value is.
Indeed, at the end of the day, there's a very high-profile, blue-ribbon team of people working on this thing -- mostly people who are distinguished in the private sector. For example, I believe the property manager for Concord Pacific is part of a team to ensure that if the corporation invests in this thing and tries to make Tech B.C. go, it's going to do so protecting its own stakeholders -- in this case ICBC and the people who pay premiums to ICBC.
It has the possibility, frankly, of rejuvenating and regrowing downtown Surrey. As some of you in this chamber may know, it is now projected that within the next 20 years it could become the largest city in British Columbia. That's the kind of pressure we're dealing with. The possibility, then, of making a good chunk of that growth a coordinated, exciting, creative thing like a new university in the downtown, surrounded by other high-tech developments, and using that as an ICBC headquarters for that region -- which has to be built in any event -- is an exciting prospect.
I am told that they're proceeding very, very prudently. They have spent some money, as I say, in getting options. The most recent option lapsed; that doesn't mean the project has lapsed. ICBC is still very interested in pursuing the development. They see the Whalley area as obviously a significant regional centre. I happen to believe they're right. Discussions are under way at the moment with regard to building precisely that kind of synergy I talked about earlier.
What else? The costs
D. Jarvis: The Victoria ICBC building is moving, and I just had a
Hon. D. Lovick: Yes, it was.
[1530]
B. Penner: I have some questions regarding photo radar. I'd like to begin by attempting to clear up some confusion that I think the minister created last week about the costs attributable to ICBC for the photo radar program.
At 4:13 in the afternoon on Thursday last week, the minister stated that the approximate costs to ICBC for photo radar are $3 million. Half an hour later, he stated as follows: "Regarding the photo radar more specifically, some $2.5 million was spent on development. The operating cost is $4.5 million, for a $7 million total." When I compare that to what the minister responsible for ICBC said last year in the Legislature, the difference is startling. Last year we were told that the cost of operating photo radar attributable to ICBC was in the range of $10 million. In fact, only a couple of weeks ago I asked the Attorney General that question here in the Legislature. He stated as follows: "I'm told by the assistant deputy minister that the cost last year was $9.6 million and that this year it will be $10.74 million" -- for operating photo radar. I'm wondering if the minister can attempt today to clear up some of the confusion and the conflicting information regarding the cost to ICBC for photo radar.
Hon. D. Lovick: I want to be charitable, so I'm not going to say anything about where the confusion might reside -- okay? Let me just point out, for one thing, that we may not be using the same calendar years, for starters. All right? Secondly, we've made it very clear what time frame we were referring to. From April to December of '97, total ICBC operating costs were $9.075 million; in 1998, $7.046 million. I think that's consonant with what the member was quoting.
B. Penner: Not quite. Perhaps it would help if the minister could provide us with the detailed cost breakdown for the various components of the photo radar program -- specifically, if we could be given figures for: the policing component for photo radar; the cost of photo radar equipment maintenance; the cost of ticket-processing operations; the capital and development costs; the cost of the charging officers -- who, I believe, are separate from the RCMP officers sitting in the vans themselves; the cost of process serving; the cost of increased court operations; as well as advertising and promotion related to the photo radar program.
I know, for example, that there is a significant cost incurred as a result of process serving -- at least, we should expect that there would be a significant cost, because of the number of photo radar tickets that have to be personally served on individuals in British Columbia. That comes at a
[ Page 12726 ]
considerable cost -- at least, I think it does. I'd appreciate it if we could get a breakdown of those figures.
Hon. D. Lovick: I will endeavour to get the member as detailed a breakdown as we
can provide. However, just for his information -- for the nonce -- he might like to know
that in the figure I quoted for 1998 -- $7.046 million
B. Penner: I wonder if the minister can tell us when we can look forward to that information.
Hon. D. Lovick: I'm reluctant to commit people around me to doing something that's going to cause them extra stress and whatever. We'll do so as quickly as we possibly can. I think we've already given a reasonable breakdown, though clearly not in quite the detail the member is requesting. I will undertake to get that to him as quickly as we can -- probably tomorrow morning.
[1535]
B. Penner: One concern I have relates to the cost of process-serving people who receive photo radar tickets. There have been reports in the news media that people are receiving photo radar tickets that are as much as two and a half years old. In fact, a constituent of a colleague of mine, in North Vancouver, was just served a couple of weeks ago for a ticket from March 1998. I'm familiar with a case in the Supreme Court of Canada known as Regina v. Askov, which has to do with unreasonable delay. In that case, the Supreme Court of Canada said that after eight months from the date of the original charge to the date of trial, the accused person may be entitled to have those charges dismissed due to unreasonable delay.
Now, the case of Regina v. Askov has been refined somewhat in appeal courts, and it has
also been revisited, I believe, by the Supreme Court of Canada itself. But when you're
talking about more than one year's delay for something as simple as a motor vehicle
infraction -- or in some cases, a two-and-a-half-year delay
My concern is the amount of money ICBC ratepayers are paying to process-serving companies to serve tickets that are probably dead in the water from a legal perspective. I'd like to get a bit of a handle on how many of these tickets are beyond one year of age, in terms of when the offence was committed compared to when the tickets are actually served on individuals. Again, the tickets are really of no legal consequence unless ICBC can prove personal service of the ticket to the person charged. Merely getting it in the mail is not sufficient proof that the person actually received the ticket, and unless ICBC can prove that the person received the ticket and that the time has elapsed in which to challenge the ticket, then no conviction can be registered against that person's driving record.
I'd like us to consider how much we're spending to serve tickets that are probably going to be found void if challenged on the basis of unreasonable delay.
Hon. D. Lovick: Well, first, I want to step back just a moment. The member has legal training, so he knows that we have to be a little bit careful about suggesting that everything will be thrown out. It's about demonstrating due diligence; it's about a number of other things beyond simply whether you got the ticket. It is also possible, of course, that certain people who were about to be served did everything they possibly could to avoid being served. And if that's the case, then, again, their court case has a lot less strength.
It is a problem -- there is no question. About 45 percent of tickets that are mailed
are paid for immediately -- people immediately pay the ticket. Others don't, for whatever
reasons. In some cases, it's a matter as simple as not finding an address. After 45 days,
the process and process serving has begun
B. Penner: I want to make it clear that I'm not saying charges are dismissed automatically because they are of a certain age. Rather, courts have said that if the charge is more than 12, 14, 16 months of age, then they will look very seriously and closely at dismissing the particular charge, due to unreasonable delay being an infringement of the Charter of Rights and Freedoms guarantee of a trial within a reasonable period of time.
[1540]
I'd like to go back to another matter of some confusion, and I don't think the minister can point fingers over here and say that the opposition is the cause of this confusion. On May 5, 1999, most major media outlets reported that the photo radar program was expanding and acquiring ten additional photo radar vans. This was in fact based on a statement contained in a press release from the integrated traffic safety unit, which falls under the responsibility of the minister in his capacity as the Minister Responsible for ICBC. Later that week, when I asked the Attorney General about this expansion, he appeared somewhat uncomfortable and told us that the cost for the additional ten vans would be $50,000 per year in leasing costs. In addition, there would be an extra seven police officers that would have to be hired -- at a cost of $80,000 per police officer -- to operate the additional vans. And that's on top of the existing 83 police officers, at $80,000 per person, which are currently on the payroll in this capacity.
Towards the end of the debate, the minister had this to say -- and I quote from May 6, 1999: "Obviously the matter proceeded without my knowledge and without the knowledge of the Minister Responsible for ICBC." Now, if that's true, who's in charge? Who's running the show? To the person on the street, this has every appearance of a bureaucracy that's run amok and is in charge of its own decision-making process without accountability to elected representatives here in the Legislature.
We can chuckle about it perhaps, but I think it does raise a very serious questions. Who in the bureaucracy is committing taxpayers' money to programs of perhaps questionable quality, when the elected representatives don't even know about it? Can the minister explain why neither he nor the
[ Page 12727 ]
Attorney General knew that something within his jurisdiction, a part of ICBC, was going out and committing taxpayers' money for ten additional photo radar vans?
Hon. D. Lovick: Mr. Chairman, I have to wonder whether this is really a good use of estimates debate time. This was canvassed at great length in the Attorney General's estimates. He gave a full explanation, I am sure, at that time. We made the point very clearly -- and the minister clarified this -- that we knew about the program, but it was the fact of the timing of the thing which rather caught us by surprise.
To clarify for the member, it was the ITCU, the integrated traffic camera unit, that issued the press release. That is in effect the police. The police don't give me their press releases; therefore I was not anticipating the press release. But beyond that, the Attorney's comments in the Legislature, I believe, have answered all the questions. And I don't, frankly, know why we're going over this ground again, especially when what the member is referring to are costs that are borne by a ministry other than my own.
B. Penner: The minister's lack of interest in this topic is of great concern, because the issue is: who is responsible? If the bureaucracy is out there committing taxpayers' money to projects of dubious quality, I think it's the job of elected representatives to know about it. In fact, let me just tell you, hon. Chair, what the Attorney General said. I'll repeat the quote -- actually, I'll provide a more complete quote. And here it is: "But it was my understanding that it was stopped, pursuant to some discussions that I had last year. Obviously the matter proceeded without my knowledge and without the knowledge of the Minister Responsible for ICBC."
Who's in charge of the henhouse? Is the fox running the henhouse -- committing taxpayers' money to million-dollar programs? And the ministers responsible say that they don't know and don't want to debate it here. I think it's a matter of great concern. I didn't plan to spend this much time on the topic.
Hon. D. Lovick: This isn't about who's guarding the henhouse; it's about somebody else over there pretending to be Chicken Little and telling us that the sky is falling. Look, there is not a problem here. This is not difficult.
ICBC is an investor in road safety. That's what we do. That's one of the things we're very much involved in, and we work in cooperation with the police. Speed cameras are one of ICBC's investments. The enforcement activity -- the policing activity -- belongs entirely to the police, as it should. ICBC doesn't talk about law enforcement, nor does the Minister Responsible for ICBC. Neither of us does that. That's the Attorney General's responsibility.
[1545]
ICBC's interest is strictly in reducing the numbers of injuries and the numbers of deaths and accidents and the property damage on our roads. In 1997, claims savings were $30 million, and in 1998 there were similar results. The member continues to make reference to the fact that this program is of questionable worth. I suggest that it isn't of questionable worth. Speed kills. It's just that simple. If you can do something to grow a culture where people drive a little bit more carefully, respectfully and safely, then we can save lives, and we can save people from horrible injuries and inconveniences. At the end of the day, we can also save money, which I'm sure all of us are interested in doing.
I hope I have clarified for the member
B. Penner: ICBC is responsible for paying the operating costs of photo radar. That falls within this minister's jurisdiction. He should take some interest in what his minions are committing taxpayers' dollars to.
As for the reliability or the performance of the photo radar program, he should talk to the Attorney General about what the Attorney General's view is. The Attorney General is not as convinced as the Minister Responsible for ICBC of the capacity of photo radar to slow down traffic. Let me quote from the Province newspaper of May 11, 1999. The Attorney General said: "I am not sure an expansion of the program will help with the objectives of reducing crashes, reducing injuries and reducing fatalities." That's hardly a ringing endorsement of the photo radar program that has been a dismal failure in British Columbia.
Don't take my word for it; listen to Transport Canada. Two weeks ago Transport Canada, an independent agency, reported that British Columbia was the only province in Canada where traffic fatalities went up last year. In Ontario, where they scrapped photo radar, fatalities were down over 17 percent. In Alberta they were down over 11 percent. For the first nine months of 1998, fatalities on our roads in British Columbia were up by 5.4 percent -- to 313 people killed in traffic-related accidents between January and September of 1998. That is not strong evidence suggesting that photo radar is improving safety on our roads. Maybe it is, but those statistics don't seem to indicate it.
My question was fairly simple. Who is responsible for committing taxpayers' money to a
dubious program? The Attorney General, a couple of weeks ago, said that he was surprised
when he heard about the expansion of the number of vans and indicated he was freezing the
expansion and would try to get taxpayers off the hook for the extra $50,000 per year in
leasing costs for those ten additional vans. I'm looking for some indication
Hon. U. Dosanjh: I think I answered the latter, as well as the former, part of that question exhaustively in my estimates. With respect to the vans, they would be used by corrections and court services without any extra money being charged to the ministry, because those vans are needed as replacement or additionally.
In terms of the photo radar, the hon. member is actually making a very misleading
statement, and his conclusion is not appropriate. What I said, and I will clarify again
[ Page 12728 ]
[1550]
It's a question of the optimum use of resources. That's what I said, so let's have the record straight. Photo radar works. It works wonderfully; there is no difficulty with it. There is the record to show, over the last several years, of declining fatalities, injuries and crashes, and I believe that the hon. member should look at the entirety of the comments that I have made on that issue and then proceed to other issues that deal with this debate here.
B. Penner: The Attorney General's answer raises a few more questions. I have been looking at the Attorney General's statements in their entirety. He said on May 10 -- I believe it was -- in this House that he wasn't aware of the statistics from Transport Canada indicating an increase in fatalities in British Columbia last year, when in other provinces traffic fatalities in fact decreased. That appears to be an uncontradicted fact. So ICBC and this government are in a bit of a dilemma in trying to justify the photo radar program on the basis of decreased fatalities. The evidence before us, from an independent source like Transport Canada, does not support this government's contention that photo radar is saving lives. The evidence is the opposite.
That's why the official opposition has taken the position that the current photo radar program is a dismal failure. It's been plagued with problems, not the least of which has been the commitment to ten additional vans, seven more police officers, hundreds of thousands of dollars of taxpayers' money -- and no minister wants to take responsibility for the decision. Some underling made the decision, and when it's exposed here in the Legislature, then the program's frozen. But we're still not sure just how the decision was approved, implemented and announced without the minister responsible knowing about it or being aware of it.
The answer from the Attorney General on the ten additional vans, which taxpayers are already on the hook for, is that they're going to be put to other uses in corrections and other government departments. Who's going to pay ICBC for the cost of those ten vans? Or will ICBC be indirectly subsidizing the operations of other government departments? The cost for those ten additional vans was $50,000 per year, according to the Attorney General. So I'd like some clarification about just who's going to be paying for the cost of those vans.
Hon. D. Lovick: That budget item is not in this ministry. It's not my responsibility; it's in another ministry. We're discussing here the Ministry of Labour -- my estimates, ICBC. The figure that the member refers to, the budget item, is not in this ministry or my responsibility.
B. Penner: Here we go again. This government has a hard time being accountable. When I asked the Attorney General in his estimates about operating costs, I was told: "That's the responsibility of ICBC. ICBC's responsible for the operational costs of photo radar." Then I asked this minister about the cost of the ten additional vans at $50,000 per year. That sounds like an operational cost to me. The minister says: "It's not within ICBC's responsibility."
I'm genuinely seeking some clarification here. Why is ICBC, if they're responsible for the operational costs of photo radar, not responsible for the cost of $50,000 for the ten additional photo radar vans?
Hon. D. Lovick: I think the member is saying, as he defines operational, that
therefore we should be paying for the vans. Is that
[1555]
The Chair: Members, the Chair should caution that we are now getting into repetition of debate.
B. Penner: Hon. Chair, you'll be glad to know that I propose to move to the topic of red-light-intersection cameras. This was also a matter that I discussed with the Attorney General a few weeks ago. Again, it's an area of shared responsibility. The Attorney General makes some decisions and takes the lead, but again the operational responsibility falls under the jurisdiction of ICBC -- so here we go again. But I'll attempt to get some clarification about the costs and the status of the proposed red-light-intersection cameras.
I'll preface my remarks, too, by saying this program seems to have some problems getting off the ground. In years previous, in debating the Attorney General, we were assured that he hoped that the program would be up and running by the end of whatever year we asked the question -- fill in the blank. And we're still not quite there; we're still at the pilot project stage. Last year the minister responsible for ICBC said that it was his hope that the program would be operational by the end of 1998. Here we are, just about halfway through 1999, and the program is not yet operational. I wonder if the minister responsible for ICBC is in a position to tell us about the current and anticipated development costs for the red-light-intersection camera system.
Hon. D. Lovick: If I understand the member's question correctly, he is asking for the costs. I can tell him that we're finalizing negotiations at the moment with the supplier. We expect, however, that the one-time implementation costs will be close to some $14 million. Once the program is fully up and running, the ongoing operating costs will be about $2 million per year.
B. Penner: Is the minister in a position to tell us how much has been spent to date on getting this program operational and bringing it this far?
Hon. D. Lovick: I believe we have already answered that question. It's been reported as $2.2 million, I believe.
B. Penner: How many police officers will be required to operate the red-light-intersection camera system?
[1600]
Hon. D. Lovick: I can't be as specific as I would like -- nor, I'm sure, as the member opposite would like. I can tell the member that the ultimate objective in this is to install the minimum of 30 cameras -- ISCs, as they're called -- rotating at 120 high-crash intersections. That system would be in place by the fall of the year 2000.
B. Penner: So the minister is not in a position to tell us how many extra police will be required to implement that program.
Interjection.
[ Page 12729 ]
B. Penner: And I have a follow-up question to that: how many other employees in
other agencies will be required to implement this program? If we're not going to be using
regular police officers for this program, will we be requiring other enforcement officers,
or other technicians employed by the government in various forms, to operate this system?
I can think of a few things: exchanging the film, inspecting the cameras, moving the
cameras from location to location -- because the minister indicates the cameras will be on
a rotating basis amongst 120 sites throughout the province
Hon. D. Lovick: We don't have that kind of detail, simply because the program isn't implemented yet. Obviously we are still negotiating. We don't think that there will be any police officers involved in doing that. We don't think that's necessary, unless there are some compelling reasons presented to show otherwise. We're talking, though, about a budget item of, we anticipate, about $2 million per year, as I said just a moment ago.
B. Penner: Is the minister in a position to tell us who the contender is to provide the province with these intersection cameras?
Hon. D. Lovick: The public tender was issued in mid-March. Canadian Public Technologies Inc. was selected for further equipment evaluation.
B. Penner: That's the agency that the government is now negotiating with to finalize an agreement. Is that correct?
Hon. D. Lovick: That is correct.
B. Penner: Have any research studies been done in terms of the anticipated number of intersection tickets that will be issued under this program?
[H. Giesbrecht in the chair.]
Hon. D. Lovick: I'm sorry; I'm not sure that I understood the member's question. Was he talking about a cost projection, or was he talking about something else?
B. Penner: Can the minister tell us how many tickets the government anticipates will be issued under the intersection camera program?
Hon. D. Lovick: Obviously that will depend entirely on the behaviour of drivers. I think that for me to speculate beyond that would truly be in the realm of speculation.
B. Penner: I was just checking to see if the government had changed its figures, because last year the minister responsible for ICBC indicated that they anticipated 30,000 to 50,000 tickets per year. You can do the math. I think a usual ticket for running a red light is $150 per ticket. If you do some mathematics, I think -- I have it written down here somewhere -- you get a certain amount of money.
[P. Calendino in the chair.]
Hon. D. Lovick: How much?
B. Penner: About $11 million per year, I believe. I wonder if the minister can confirm that figure in terms of projected revenue from this new program.
Hon. D. Lovick: I can simply tell the member that that is wildly exaggerated -- no, nothing even in that magnitude.
B. Penner: Could the minister enlighten us? He's obviously got some figures in front of him. I wonder if he could share those with the House.
Hon. D. Lovick: I don't think that we're well served in this particular dimension of debate, because we're all engaging in absolute and pure speculation. I don't think that I would be responsible in doing that.
B. Penner: It is an important question that I think should be discussed here in the chamber. This is part of the budget estimates. The question concerns the amount of revenue that the province can expect to garner from this new program. The government is asking approval from the Legislative Assembly for funding of this ongoing project. I think that we are entitled to an answer about how much money will be collected in revenue from this new program.
Hon. D. Lovick: Mr. Chairman, the member is starting to approach high dudgeon over what is, quite frankly, a rather silly proposition. The proposition is simply that we will know how many people are going to violate -- are going to run red lights in those intersections that have cameras. Now, who in heaven's name could possibly, with any credibility, stand up here and say: "Oh yeah, we know exactly how it's going to happen in September of next year at each of those intersections; these are the number of people who are going to run through and therefore will be charged and therefore who we will get tickets from and therefore who we will get a certain amount of revenue from"? That is speculation piled upon speculation upon speculation. Surely we shouldn't be wasting our time engaging in that silliness.
[1605]
B. Penner: I didn't think I would say this, but I believe the minister is overstating his own ignorance. The government has just completed a pilot project around British Columbia. I believe that they had six cameras in operation; I stand to be corrected. A pilot project has been carried on for a considerable period of time around the province. From that pilot project, the government must have some idea about the percentage of drivers who are running red lights. Projections can then be made about how many tickets would be issued, when you multiply that by 30 intersections at 120 different locations around British Columbia.
Why else do you undertake a pilot project but to determine things like costs and revenue? I don't think that's asking too much of a pilot project. I don't think it's asking too much of the minister to share the information that I believe he has right in front of him. As members of this Legislature being asked to approve the minister's budget, I think we have the right to an answer.
Hon. D. Lovick: There is no money coming to ICBC from the red-light program. Let's get that straight first. Secondly, it's
[ Page 12730 ]
worth noting, I think, that the research that I am familiar with and that I have been told about -- and believe me, I'm not hiding anything from the member, I assure him -- and what I have read somewhere or other is that the incidence of people going through red lights is not huge. It's not like speeding; it isn't so common. It's rather that the significance and the seriousness of running a red light is the issue. When you do that, the odds are that you're going to kill somebody or you're going to do huge damage to another vehicle or another person. That's why it's so important. It's the severity of the incident rather than the frequency of the incident. So that's the key difference that I think we should note.
B. Penner: Maybe we can try this a different way. Could the minister tell us the result of the pilot project? What information has been gleaned as a result of the pilot project that's been carried on in British Columbia, at taxpayers' expense, with intersection cameras? And I note that any revenue does go to the provincial government, into general revenue. We can argue about whether ICBC ratepayers -- that is, everyone who's a motorist -- should be paying for something that they don't get the direct benefit from because the money goes into general revenue. That's a different issue. But clearly we are talking about (a) approval for ICBC's budget from this Legislative Assembly, and (b) the revenue from that program, the intersection camera program, going into general revenue of the province of British Columbia. So I think it's a relevant question.
But to get back to the point, what has happened as a result of the pilot project? Please bring us up to date.
Hon. D. Lovick: The pilot project was intended to test the equipment. That's
what its purpose was. The results of that, which I have been giving, is that they average
some six tickets per day. With all civility and respect to my colleague across the way,
the difficulty is that if we try to extrapolate and say, "Could we project forward in
terms of how many we could likely extrapolate would occur in downtown Vancouver as
compared to, say, the place where the pilot was undertaken
B. Penner: Hon. Chair, I'm just about concluded with my participation in these estimates debates. However, I'm left with a question about why it's taken so long to get on with the intersection camera program. We've been hearing about it now for several years. Every year, the minister responsible says: "Hopefully, by the end of the year it'll be up and running." Now we're being told that they're not even hoping for it to be completed by the end of this year but maybe by the end of the year 2000. Perhaps the minister can tell us what kind of problems or roadblocks have been encountered along the way to developing this project, because I am sincerely curious about what the difficulties have been.
[1610]
I'll also end just with the following comment. I am still perturbed that the ten additional photo radar vans were acquired without the approval, seemingly, of the ministers responsible. Now, they may argue that they agreed in principle but just not about the timing. But I would suggest that even that is a serious issue -- that if they disagreed about acquiring those vans now or next year or the year after, that's a serious issue. And I hope that the ministers will go back to their staff and find out just what went wrong. The Attorney General at the time said that obviously there were some "crossed wires." I hope that the government will take some steps to uncross the wires, so that in the future, taxpayers' money isn't committed when it shouldn't be.
Hon. D. Lovick: I thank the member for his comment. I'm sure that it's well meant and will be accepted in the same spirit.
The question he poses re -- I think his term was roadblock, and I'm careful of using
that -- the obstacle, if you like, to full implementation of the program
B. Penner: If I take the minister at his word, what he's saying is that the primary holdup to the program has been resistance from municipal governments. I know that municipal governments have been hoping for a revenue-sharing agreement with the province, in terms of the money collected as a result of intersection cameras, before agreeing to have those cameras located in their communities. However, two weeks ago the Attorney General said that he would not let a disagreement about revenue-sharing in any way impede the development of the intersection camera program.
So again we have one minister saying something and another minister apparently saying something a little bit different. The Attorney General has been clear in the last year that his position is to move ahead with the cameras and sort out the revenue-sharing details later. I may not agree with that position, but that -- at least in my mind -- is what the Attorney General has been saying. He's been pretty consistent on that; I'll give him that much. But now I hear the Minister Responsible for ICBC saying that the primary holdup seems to be negotiations with municipalities. I wonder if we can sort that out.
Hon. D. Lovick: I think the member's question was: what has been the problem historically? And I reported what has been the problem. I think we have advanced significantly on that particular front. Indeed, there appears to be a pretty good understanding and relationship now between those two levels of government. Therefore we are optimistic and hopeful that this will sort itself out sooner rather than later.
B. Penner: I have no further questions.
D. Symons: Speaking of cameras, I'd like to ask the minister if he's aware of something called the infrared inspec-
[ Page 12731 ]
tion system, which is a way of judging as trucks pass whether their brakes are working.
Apparently it's a local B.C. firm that developed this system. They approached the
government two years ago and asked the government if they would become involved in
assisting with the program, because they wanted to sell a unit -- at a fairly hefty price,
I must add. It was around $300,000 for a van equipped with all the equipment. But I went
out and took a look at this van in operation, and I thought it was pretty impressive,
actually. You can sit in the van in comfort. They have a little antenna at the top, with a
dish that ends over
Interjection.
D. Symons: My constituent? No, he's not.
Anyway, about two years ago they approached the government. I looked at it, and it was impressive. As the trucks were moving into a weigh station, they could point out that the front right brake on this particular truck wasn't operating properly.
[1615]
In one case, I went and asked: "What's that? That's not one of the brake drums, obviously." And he said: "The differential is obviously not working properly, because it's overheated."
It tells a lot of things about the exhaust system -- but particularly, though, the brakes. One of the major issues on our highways with commercial vehicles is the fact that the brakes of these large trucks are frequently the cause of an accident because they aren't properly adjusted or indeed are worn out.
It seems that we were offered a system and tended to be lukewarm to that system. So I'm wondering if the minister might be able to give me a little bit of an update on where you are now in relationship to something that seems to be really good. It can scan a lot of trucks as they pass, rather than the current method, which is hit-or-miss. You pull a truck over and do a full inspection of it -- a manual inspection where somebody goes around it. But in the time you're doing that, a hundred trucks have gone past that may or may not have problems on them. This one pinpoints the ones that do have problems. You can see them without having to use a hit-or-miss process of pulling somebody over and inspecting the brakes.
Hon. D. Lovick: I appreciate the member's question. It's one of those that I am familiar with. Indeed, I was sort of anticipating that this would be a question period question at one point.
The gentleman who's developing the system -- I believe it's called the IRISystem -- is a man by the name of Fergus Savage. He approached the corporation, as the member correctly points out, in 1997. They had some discussions. I believe that at that point the corporation's response was that the cost was apparently prohibitively high. It was perhaps too expensive for what they got.
They also reported to me -- the corporation, that is -- that this is not the only
supplier, nor is this the only technology of this kind. Indeed, there are other people in
the marketplace doing something very similar
Interjection.
Hon. D. Lovick:
ICBC -- in, I guess, carrying out something analogous to a precautionary principle -- wants to ensure that this is adequately tested, which is also costly, of course, as the member intimated a few minutes ago. But what we found out is that this testing is indeed being done in the United States. The conclusion, then, was: "Well, if they're already doing it, why don't we simply wait and see the results of their review? That would be helpful."
I understand, by the way, that the IRISystem doesn't measure brake performance. It
essentially just tells you whether it is or isn't functioning, and that is probably not as
comprehensive a report as one wants if you're looking for measuring road safety,
especially commercial vehicle safety. I see the member for Peace River North, who's been a
trucker, I believe
So it isn't as if this new technology would be providing us something entirely and uniquely new. But we're taking it seriously. I'm pleased to note that it has some possibilities, certainly. I wouldn't, obviously, suggest for a moment that it doesn't have any hope of going anywhere. But for the reasons I've outlined, it therefore hasn't been acted on at this point.
D. Symons: Well, having witnessed the system in operation, it does indicate
whether the brakes on the vehicle -- and individually, not just collectively -- are
working. They can point out that some on this vehicle are and some aren't. What the
advantage of this is, of course, is that it can manage to do 100 in an hour or so, just as
the vehicles pass. They can screen them as they pass, whereas the system that's currently
in place
[1620]
The other advantage is that in the present system you have, it takes time to set up the commercial vehicle testing you're going to do -- these mobile systems you have. In minutes, you can move this one from one highway to another highway or one testing station to another location. Within minutes, you can have it set up in a new location.
Once the CB radios get going there, they phone each other and say: "Well, you know, they're testing your brakes on such-and-such a route. You'd better take a different route if you feel you might have something that's not going to pass." They do that for weigh stations now, you know. They say
[ Page 12732 ]
what weigh stations are open or not open. That information goes around in minutes. Therefore you can end up, with this system, moving it very quickly and avoid the truckers avoiding going through a test station.
You know, you mentioned the Americans. Actually, when this was sort of, I'll say,
rejected -- it may not have been quite rejected, but it was close to it
"Visitors of the I-64 welcome centre near Shelbyville today couldn't believe their IRIS. They were witness to cutting-edge technology utilized for the first time, right here in Smallville. The infra-red inspection system or IRISystem, is expected to soon become a superhero in the highway safety industry. The $270,000 van of steel was purchased by the Kentucky transportation cabinet's division of vehicle enforcement and the federal highway administration as a pilot project and is designed to make the inspection of commercial vehicles super-easy, super-fast and super-efficient. Kentucky is the only state on planet Earth -- or at least in North America -- to begin using the new technology and will share the equipment with North Carolina, Georgia and Tennessee."
It's just a shame, in a sense, that something that was developed here in British Columbia has to go to the States to get some interest shown in it. Indeed, I think we will find -- as these tests will show that the trucks are efficient and they can save lives on the highways -- that we in British Columbia will be considering it soon, I would hope.
G. Hogg: I seek leave to make an introduction.
Leave granted.
G. Hogg: I'm pleased to welcome 49 French immersion students from my alma mater,
White Rock Elementary School in White Rock, their teachers
Interjection.
G. Hogg: I did graduate from White Rock Elementary School.
The Chair: Before I recognize the minister, I would also like to say bienvenue to all those students up there.
Hon. D. Lovick: It seems that everybody in the chamber today is bilingue,
monsieur le pr�sident. Bienvenue � tout le monde. Je
Interjection.
Hon. D. Lovick: No, I wanted to say something
Interjections.
Hon. D. Lovick: Yeah, yeah. Exactly. I was thinking of particular members.
I want to thank the member opposite for his comments. I think it's absolutely right and legitimate that we should indeed be thinking about research and development and trying as much as we possibly can to encourage those things that are homegrown -- that are B.C.-made technologies. I'm confident that the corporation may well do that at the end of the day.
What I will do is ensure that the member gets an update on just where this particular thing stands. As I say, it's been around since 1997. The corporation certainly met with Mr. Savage about his system and has been monitoring it, and I'll find out if anything further has developed.
[1625]
However, I just want to say this -- and here is, if you like, the cautionary note: in
the relatively short time that I've had responsibility for this particular portfolio, I've
probably met with half a dozen different people who have ideas for technology, mostly to
do with safety and improving road safety -- most of which, quite frankly, sound absolutely
wonderful. I'm very, very reluctant, then, you know, to stand up in this chamber and say,
yeah, this is absolutely a great one, and then discover that there are some good and
compelling reasons that I don't comprehend as to why one doesn't do it. With that
cautionary note, I would say again to the member
D. Jarvis: I think that questions on photo radar and intersections all fall in
your purview anyway. I was going to ask most of those questions anyway, but seeing that
the member for Chilliwack is the expert
We are worried that this is not going to be the same sort of cash cow, for government purposes, that photo radar was with intersections. And that could happen. The figures that I was given were that the revenue was going to be anywhere from $3 million to $5 million a year, and the costs hadn't been determined yet. So that was the main concern.
On that same point, I was wondering
J. Cashore: I ask leave to make an introduction.
Leave granted.
J. Cashore: I'd like the members to join me in welcoming six students and some volunteers that are visiting from
[ Page 12733 ]
Woodin Elementary School, south of the border in Woodinville, Washington, U.S.A. These grade 6 students are learning about comparative government and local history. I'm very glad to see that things are rather subdued in the House at this time. I think that this should contribute to the impression they receive. Would the members please join me in making them welcome.
Hon. D. Lovick: First of all, let me just make the point that photo radar, from my perspective and the government's perspective, is not a cash cow. It was never intended to be a source of revenue. Rather, it was a safety issue entirely. I think at the end of the day, it's so close to a wash in terms of what it costs to put on versus what you get back that, to all intents, it's revenue-neutral. There may be some slight deviation but not enough to suggest for a moment that it's a way to make money, because it certainly isn't.
Re the drug recognition experts program, I don't have the detail here in terms of the cost, but I understand that it's quite small. I think it was about $25,000 last year.
D. Jarvis: The minister has really made me think that he's been in government
too long, when you figure that the costs and premiums to
[1630]
I want to ask another question to the Premier or -- maybe he could be Premier one day
-- to the minister. Could he tell me if there's an unlicensed driver problem in this
province? Now, I couldn't make it out from the financial statements, but I read somewhere
that there are approximately 3.3 million active driver's licence holders in British
Columbia. Well, we've only got a population of 4,000,014, and a great segment of those are
either under 16
Hon. D. Lovick: I don't have any figures to read into the record, but I am advised that motor vehicles tells us that this is not a significant problem. There is simply nothing to be concerned about.
I wouldn't dispute for a moment, however, that if you did some random checking, there would be people that you would discover that didn't have valid licences. But it isn't at epidemic proportions, nor is it something of a significant order of magnitude, according to all the reports I've been given.
D. Jarvis: I'm slowly winding down here and getting to sort of loose questions. But there was one that came to mind. It was the fact that a memo came out a couple of days ago, on the 20th, to the agents in the province, saying: "As part of our continued efforts to support optional insurance sales" -- in other words, we're trying to drive the competition out of British Columbia -- "there is going to be a rate reduction for comprehensive, fire and theft and collision." I wonder if the minister is prepared to comment on that. Also, seeing that this is going to be another '99 rate reduction, why didn't you deduct it from the $47 million, which you did for the other rate reduction for the year previously?
Hon. D. Lovick: The short answer is that it hasn't been announced yet. What the member is referring to, of course, is the e-mail or whatever that was sent to the brokers in the business, saying that on June 17 we're looking at doing something, without defining it too very much. In terms of the details, amounts and so forth, that will only become evident at the point when the specific announcement is made.
I think what happened is that the corporation perhaps forgot that every public-policy-making body today lives in the proverbial goldfish bowl. Whatever they say to anybody will suddenly have a chance of being either on CKNW or BCTV, and that's, alas, what has happened here. I can't tell the member about the details or anything, but I would remind him that he might want to look at Hansard for May 20, when he and I had a brief exchange about the corporation in terms of competition and how it was dealing with the competition. He could, I think, if he read that over, accuse me perhaps of foreshadowing the announcement he refers to today.
D. Jarvis: I wonder if the minister could tell me
[1635]
Hon. D. Lovick: I would first of all point out to the member -- just to put this,
if I might, in a little bit of context, and I think he's aware of this -- that there are
various differences, if you like, governing insurance coverage -- off-road vehicles, for
example, and industrial roads and things of that sort. It's conceivable that in Nisga'a
territory or in others that there may be parts of the territory that are not part of the
normal road structure. In that case, I suppose, some kind of variance or exception could
be
But generally speaking, it's the case that on all public roads, all Crown roads and all roads open to the public, for that matter, standard vehicle and driver licensing, vehicle insurance and commercial transport requirements will continue to obtain. That's certainly the case in the Nisga'a territory.
D. Jarvis: So I can rest assured that if I drove up there into Nisga'a territory on the new road that the government's building or if I had permission to go off onto some of the ancillary roads, in the event of a collision, ICBC would look after it no matter who's at fault. Especially if I was the innocent party, I wouldn't have to resort to the uninsured motorists' fund or something like that. They are covered by ICBC.
Hon. D. Lovick: The member is quite correct.
[ Page 12734 ]
D. Jarvis: I wonder if the minister could give me some kind of discussion or breakdown on the decentralization -- this new regionalization -- that ICBC is putting forward.
Hon. D. Lovick: The basic driving force behind the regionalization initiative of the corporation, essentially, is to put responsibility for claims and for road safety and all of the ongoing programs, if you will, that the corporation is responsible for, as well as the simple matter of insurance, under the control of a regional office, directed then by a regional vice-president. That's the intention. The head office then would take on responsibility rather for the larger, more strategic initiatives in terms of the future development of the corporation.
D. Jarvis: Is this going to result in a
Interjection.
D. Jarvis: Well, the latter part of your life, anyways; let's put it that way.
An Hon. Member: A good part.
D. Jarvis: A good part of your life. You know how inefficient you have become, yourself.
I'm just wondering how much it is estimated this is really going to be costing the corporation and if it really is that necessary. You're going to have to put more men out into the field. How do they estimate? Are there enough employees out there in the field now in the different divisional offices that can look after this? Or is this going to mean a larger rehiring or a bigger bureaucracy being created by ICBC?
[1640]
Hon. D. Lovick: I can give the member this assurance, I think. It is certainly not the intention of the corporation or government, you know, to do anything to increase the size of the bureaucracy. We're talking about greater efficiencies; we're talking about making the system work better. We think that -- to use an old phrase -- closer to home probably works fairly well, especially if you're talking about things like safety initiatives. For example, the program that you want to use in the Cariboo will not be the same as you would use in Burnaby perhaps. Some fine-tuning and some discretion to the regions in terms of how they operate a safety program, we think, is desirable. So in that sense, I think I can give the member comfort that nobody is going crazy and saying, "Oh boy, another opportunity to increase FTEs," or something like that.
I can't resist, however, reminding the member of a point about bureaucracy. I had this
discussion with a constituent in my office just last week -- on Fridays, as you know, we
try to do constituency days -- a young man who was absolutely convinced that the solution
to all of our problems was simply to get rid of the bureaucracy. We've all heard that,
haven't we? I just made the point that we should never forget where it came from.
Bureaucracy was a concept created, essentially, by the French Revolution. The purpose of
it was to give power to the officeholders, rather than the politicians, so that you could
protect the people against politicians looking out for their own interests. What nobody
quite figured out for a very long time was that perhaps the officeholders might be looking
out for their own interests rather than the people, not in terms of corruption but in
terms of
Interjection.
Hon. D. Lovick: The pendulum has swung, somebody says -- and maybe so. But I think the important issue about bureaucracy today is that all of the people involved in it -- or certainly the preponderant majority -- believe that they are doing the best they can to provide the service. The danger in bureaucracy, above all, is that people are afraid that if they stick their necks out or make a decision, they might be liable. Therefore this elaborate structure tends to be established to protect people against having that kind of vulnerability and having to take responsibility and, frankly, having to take abuse for making decisions with which people don't agree.
I guess what I'm saying is: let's try and see it from the bureaucrat's point of view as well and perhaps be a little more supportive of the people in bureaucracy, rather than fall into the trap of simply pointing the finger there -- which we're all guilty of, me included.
D. Jarvis: I am not trying to, first of all, blame the bureaucracy for getting
larger and larger, although it's
Anyway, I'm going to go on to another subject. In regard to ICBC
G. Plant: I'm delighted to have an opportunity to participate in this debate and will endeavour to refrain from asking any more questions about photo radar.
[1645]
I do want to ask questions about chiropractors. I have been given copies of some correspondence: a letter from the minister to the B.C. College of Chiropractors dated just a month ago, April 24, 1999, and preceded by a note from someone at ICBC -- the manager of BI support services -- dated April 21, 1991, and addressed to the Chiropractic Association. There are, as I gather, some concerns on the part of chiropractors about the prospect that ICBC is on the verge of amending, or causing to be amended, regulations under the Insurance (Motor Vehicle) Act that will affect the way in which chiropractic treatments are dealt with.
I understand that there was an intention that there would be some meetings between ICBC and the Chiropractic Association in late April and mid-May. I don't have an update over the past day or so about the status of this matter. I wonder if
[ Page 12735 ]
the minister could, by way of introduction to the topic, generally indicate whether there is something that's not working with the way in which injured victims of motor vehicle accidents have access to chiropractic treatment and -- if it ain't broke -- whether there are plans to fix it.
Hon. D. Lovick: I thank the member for his question. The ongoing review, I guess, is the short answer, in a phrase, in terms of how we deal with any of the groups with whom we interact on a regular basis to ensure that the services being provided are appropriate and that we're paying the appropriate amount, etc.
I understand that there have been preliminary discussions with the B.C. Chiropractic Association and also, I hear, with the B.C. College of Chiropractors, with a view to developing practice guidelines through some kind of joint pilot project. As well, I understand, a review panel has been organized by the B.C. Medical Association -- oh, I'm sorry, I'm looking at a different one, I think; or maybe I'm not -- to provide advice to ICBC on the basis of evidence and research into emerging forms of therapy.
The reason I did a double take when I read that is because I know that the BCMA traditionally looks with some suspicion on the whole area of chiropractic. I stopped myself because I thought: I don't want to leave the suggestion that the review is because of what BCMA is doing. That's not the case. It's rather the fact that it is, as I say, an ongoing review to make sure that the best practices are being followed -- thus the direct involvement of the college and the B.C. Chiropractic Association.
G. Plant: When the minister refers to what he calls best practices, I get the sense that he's talking about quality of care -- the kind of treatment that is provided by chiropractors -- and ensuring that it is up to a certain standard. That is, the focus is on treatment. The focus is on what it is that chiropractors do for their patients, rather than, for example, a focus on limiting the number of treatments by regulation or something like that. The minister knows, for example, that physiotherapy has a special regime that applies to it. There are a limited number of treatments that I think a victim or injured person is entitled to before having to get, I guess, special dispensation for more treatments. The chiropractors, I think, are a little concerned about the prospect that this is what ICBC may have in mind for them. That is, I believe, quite a different issue than saying: "Well, no. What we're really interested in is making sure that the profession of chiropractic is being administered in a way that's keeping up with standards from a health care perspective."
[1650]
Hon. D. Lovick: I want to be very careful in how I answer the member's question, because I certainly don't want to mislead. I don't think it would be fair to say that there is a discussion going on about the standards, the approaches and the processes involved and that nobody is contemplating, in any way, an examination of the number of visits and what the rules are regarding the number of visits. I think it would be dishonest to suggest that.
Having said that, though, I'm advised that there's a good working relationship between the Chiropractic Association and the corporation, and part of that discussion, I am sure, would involve the normal projected number of visits for a particular kind of injury. I think the member opposite knows as well as I do, because he's probably had similar experiences with physio and chiro and massage and various things. At some point those become -- I think it's safe to say; for me it is -- a feel-good experience. One can argue the case: how much of that should be part of a compensable claim?
I wouldn't presume to say at what point that is, but I'd use myself as an example. Okay, I walk with a pronounced limp, and my misfortune in life is to do damage to myself as I walk or run or whatever else. Accordingly, then, I go and get fairly regular massages. I would love to be able to say: "Well, that should be payable by the Medical Plan." Indeed, I could probably persuade my doctor to give me a prescription to do that. But given my income and everything else, it strikes me that I ought to accept that -- that's just who I am; it's the way I'm built.
I use that example only to make the point that I think it is the case with many of us as we get older, and we have aches and pains and so forth, that it would be lovely to have an opportunity to have unlimited visits to massage -- or chiro or physio or whatever it may be.
I want, as I say, to be as candid as I can about what I think the corporation is doing. Obviously they want to balance, I suppose, absolute fairness to their clients -- to those people who have been injured -- with, at the same time, protection for the taxpayer in terms of whether there should be limitations on the number of visits.
G. Plant: I guess I should begin by saying that I can't claim the same level of experience that the minister has had with the variety of health care professionals that he talks about, although there are days when I have felt the need.
Let's see if I can unpack some of what the minister has said. First of all, the minister has -- in what he describes as a certain amount of frankness, for which I'm grateful -- indicated that among the issues being discussed are the issues of whether, for certain therapies, for certain kinds of treatments, it may be appropriate to set limits, to set standards that say that if this is the need and this is the therapy, then there may be a certain limited number of visits that go hand in hand with that. The minister is essentially saying that those are among the issues that are on the table, along with the other ones that he's talked about. Perhaps I could get the minister's confirmation that that's so.
Hon. D. Lovick: I understand that there was no specific concern about what chiropractors do and the number of treatments they were giving. In other words, it wasn't the case of: let's meet with the chiropractors because we're thinking about reducing the number of visits. Apparently that's not the case, so I ought to clarify that first.
Second, though, I would point out that
[1655]
[ Page 12736 ]
ICBC, then, is involved in that rewrite. I understand that the important message of the process that's going on is that the rewrite clarifies what the existing rules are -- namely, that ICBC is required to provide coverage for all necessary physiotherapy and chiropractic treatments up to the number provided by the Medical Services Plan, and may cover all subsequent treatments under medical advice. That's the existing rule, and the rewriting of the regulation, I understand, won't change that. That same point will be extant and will be clarified.
G. Plant: The minister has anticipated one of my questions with that answer. But I do feel the need go back to clarify the issue about what might be, for want of a more elegant term, the cap on the number of visits issue. Is the minister saying that that is essentially not part of the current discussions from ICBC's perspective? We are now dealing only with chiropractors. Or is that, from ICBC's perspective, a matter that is on the table?
Hon. D. Lovick: I think the answer to that question is to simply say that what ICBC's policy is, has been and continues to be is consistent with MSP. In other words, it's not an unlimited number, but rather it can be extended beyond the MSP, given the appropriate recommendation.
G. Plant: Right. So the limits, such as they are, are those established under the Medical Services Plan, with ICBC reserving to itself the right, in particular circumstances, to fund additional treatments should that be considered appropriate. Have I stated it correctly?
Hon. D. Lovick: Yes, indeed, the member has stated it correctly.
G. Plant: Then the last aspect of this issue, which I think the minister has
really already touched upon when he talked about the approach which the B.C. Medical
Association takes to the issue of chiropractic treatment
Hon. D. Lovick: I shall indeed assure the member that that is not the intention.
D. Jarvis: I sort of feel that if anything is indicative of a Big Brother organization -- in any aspect of ICBC -- it has to do with the automobile repair business end of it. ICBC has for years and years had a system going where people had to claim that they went out and had two or three estimates and then went back, and an insurance adjuster went through the estimates and ascertained which was the best way to go about it, or either the cheapest or most economical way to repair it, including making sure that all the damage that was claimed for was proper, etc.
[1700]
Then a few years back, they got together with the ARA, which is ostensibly controlled
by the larger outfits like
I just find that you're shrinking the competition in the business. We know that over
the years, competition or the marketplace
I just wonder if the minister could tell me if it is their plan to proceed with this program -- to the point where they have now got control of all the body shops, and they are the ones that say what work will be done and what work will not be done, whether it's a repair part, a used part or a rebuilt part. I wonder if the minister would like to give some comments on the subject that we're talking about.
Hon. D. Lovick: I don't quite agree with the member that it's about Big Brother or something. I don't think that metaphor quite fits, but what the heck.
The short answer to the question is that, as I announced some weeks ago now, the whole business -- this whole matter of differential rates -- was under review for precisely the kinds of reasons that the member alludes to in his comments. People have some concerns and say: "Well wait a minute. Is it fair? Is it discriminatory against certain regions of the province and against smaller operators?"-- and so on. Therefore, all of that is under review. What they come up with at the end of the day remains to be seen.
What I would note, though, are two things. First, the accreditation program itself has been around since 1996; that's when it came about. Second, even with the reduced rate -- if that were to be the going rate at the end of the day for certain shops -- that is still, I think, the highest rate in Canada.
Interjection.
D. Jarvis: But there's a reason, as one of the members was just mentioning: it's expensive to do business in British Columbia. That's why they need that money -- those dollars up there.
[ Page 12737 ]
There's also a suggestion that this wage rate may have been inflated and in fact that they are trying to control what and who will do the work in this province. But it comes down to this point: how does ICBC have the right to determine who is the best body shop in town? It's the customer who's the one that should be determining whether they're satisfied with their repairs. That's the way the marketplace has always worked. You're interfering with the marketplace, and all it's going to do in the long run is cost us money. It will cost ICBC and the motorists that pay for the premiums more money in the long run.
I'm going to refer it to the gentlemen from the South Peace.
[1705]
Hon. D. Lovick: I will be brief and simply say that what this is about, remember, is a quality assurance program; and it isn't the case that every other jurisdiction which said, "Simply let the marketplace decide," has a spotless record. There's lots of evidence to show that things that are supposedly done right are not. People have been seriously injured and indeed, in some cases, died as result of that.
Automobiles and automobile repair, I understand -- my dad was a mechanic -- has become a hugely complicated thing where you now almost need computer training to do any kind of diagnosis of a contemporary engine -- all right? It's a different world. The industry, we are advised, has spent a huge amount of money upgrading and getting ready for this -- getting ready to deal with a modern and more complex automobile. Not everybody has done that.
The question is: should those who are able to provide you better quality -- and indeed an assurance of their work -- then deserve perhaps a somewhat better rate? Again, that's under review; that debate is ongoing. The point I simply want to emphasize is that it's about quality assurance. Also, I don't mind saying quite clearly that I don't have quite the same faith in the market as the solution to all our problems. The market does a number of things very well, but it doesn't do everything very well.
J. Weisgerber: I tend to agree with the concerns raised by the member from North Vancouver with respect to body shop accreditation. Let me say at the start that I have had some experience. I spent ten years working for a major insurance company specializing in physical damage repair, so I have that bit of experience. I also owned an automobile dealership that had a body shop, and I operated that for a period of seven or eight years. When it comes to autobody repair and the role of the insurance company in it, I don't claim to be an expert, but I certainly have some knowledge.
I have no argument with ICBC's desire or wish to accredit body shops. If indeed the adjuster or the claims office is asked, "Can you recommend a repairer?" it seems to me prudent for an insurance company to say: "Yes. We know X, Y and Z, and we can recommend that shop to you." That's quite a different thing from charging $800 or $900 a year for accreditation and having such an incredibly inflexible set of requirements for accreditation.
I raise that particularly as a representative for a rural constituency. Some of the communities in my constituency have one body shop. That body shop simply doesn't do enough volume for it to maintain all of the frame-straightening and technical equipment, nor is there, quite honestly, in those small communities the access to a customer bathroom, as important as it might be if you've driven across town with a carload of children all wanting to go to the bathroom at once. If you live in Pouce Coupe, chances are that you're down to the body shop and back again in a short period of time.
[J. Cashore in the chair.]
What's important for you is to have a local shop where you can get repairs with people that you know. As a prudent owner, you might well decide that the local shop -- the small shop -- simply isn't equipped to deal with a $10,000 collision repair. My fear is that the path that ICBC is heading on is that the customer will be robbed of the choice for the $2,000 repair, of which the local shop may be totally capable and may very well be expert in.
[1710]
The reduction of the rates, this differential rate that's proposed, part of the increase going into effect soon -- a reduction, I understand, of $5 an hour -- is pretty much written in stone. I attended a meeting that ICBC held in Fort St. John with body shop operators. This notion of reducing rates on January 1, 2000, didn't sound like an idea under discussion but in fact like a decision that was made.
Before I get off on too many different tangents, I really want to focus on the concern that this policy will ultimately drive a number of small shops in small communities out of business. That's bad for the customers; it's bad for the town. I think that it will ultimately be bad for ICBC. Perhaps before I go any further with that, the minister would like to comment.
Hon. D. Lovick: I'm just making a note
First of all, let me deal with the penultimate point -- namely, that maybe this is
written in stone rather than being under review. My assurances from the corporation are
that given all the concerns that have been expressed, including those raised by the member
opposite, those will be seriously taken into account. The fact that the member, as he
said, attended a meeting and felt that nobody was hearing what the small community was
saying at that point
I think the issue he raises -- for example, about the $2,000 job versus the $10,000 job -- on the face of it, has validity. To be sure, the small-town operator doesn't have the kind of equipment to do that big job but may well be able to do the other and therefore ought to be able to do so. That's a very legitimate concern to raise. I can't tell him categorically that here's how it's going to happen at the end of the day, but I am going to say that I am listening closely -- as I hope the corporation is -- to precisely those kinds of concerns raised by him and raised by his colleague from Peace River North, who I understand also met with some people there.
I'm not so sure, however, that to say that this will drive certain smaller operators
out of business
[ Page 12738 ]
still patronize the local autobody shop or repair shop if they thought: "That's a
good place, we know them, they're doing it, and we know why they're not buying into the
bigger stuff." I don't know that, but again, that's just in response
I also want to suggest that
If the notion of saying that we want all businesses to achieve a certain standard like
clean washrooms and so forth
I hope I've dealt with the principal concerns the member has raised.
J. Weisgerber: I don't want to leave any wrong impressions. My argument with respect to bathrooms in Pouce Coupe was simply that in a town where it can't take more than five minutes to drive from your home to the place of business, the availability of a washroom is probably less important to a customer than in a big, urban area where, in fact, it could be a two-hour drive to the body shop. That was the only point there. If the shop wants to make one available, and if there is a customer demand, I'm convinced they will do that.
[1715]
With respect to driving the small shops out of business, the decision which I think
ICBC has made -- which is to have a reduction of roughly 10 percent in the amount paid to
the small body shop for the work it's doing now -- may well have the effect of driving
those companies out of business. There aren't many businesses in British Columbia or
anywhere else that can very comfortably handle a 10 percent rollback in wages. And that's
what you're doing. There is absolutely no other way
There was a comment made earlier in the debate about the labour rate in British Columbia. The fact of the matter is that body shops operate on two premises. One is where the insurance company and the adjuster do an assessment of the claim and make a decision to authorize repairs based on their estimate of time. That tends to be real time, and the wage rate has to reflect that. If you're working in a competitive environment, nobody cares what the rate is. You can charge $50 an hour or $70 an hour or $30 an hour, as long as you get enough money to do the job.
So the comparison between a province where the insurance company dictates the amount of time and the labour rate is entirely different than a province or jurisdiction that works in a bid-process environment. Just so we have it on the record, mechanical shops where the work is very, very similar and the mechanical chargeout rate is approved by the manufacturer tend to be 20 percent to 40 percent higher than the rate that ICBC pays. And ICBC will know that. ICBC will know that if they send a car to a GM dealer for non-body repairs and are obliged to pay the mechanical chargeout rate, it is going to be significantly higher than the $53 or $45 that they propose to pay to the body shop.
The point I'm wanting to make is that I think body shops are probably making a profit. I hope, for their sake, that they are, because certainly the sound of banging metal and the smell of paint fumes themselves are not enough reward for the work that they do, so a profit should be part of the equation. I think that they're not in a position to accept that 10 percent rollback. I say to you: pay everybody the same rate -- that is, what you've determined, as ICBC, is a fair wage in British Columbia for the work that's done. Do an accreditation -- charge the people, if you must, for accreditation -- and then let customers decide.
But this getting in there and twisting everybody's arm with a wage-rate differential is, I would argue, unacceptable in the workplace, would be unacceptable to the employees of ICBC, if they were subject to that kind of arm-twisting, and should be unacceptable on behalf of the corporation and its relationship with small, independent businesses.
[1720]
Hon. D. Lovick: I'll respond very briefly by thanking the member very much for his comment. I think that's precisely the kind of information that has to come before the corporation and everybody else involved in making that decision. I listened very carefully. He raises a number of points that, I think, bear serious consideration and a close scrutiny, and I thank him for them. I will certainly ensure that anybody in the corporation who is charged with making that decision at the end of the day is well and truly aware of the points you made. I think they're valid.
D. Jarvis: As the member previously mentioned, in case people aren't aware of
it, if you have a big auto collision now, the dollar figure is not even put on the
estimates anymore. You go into ICBC, and it's hours, and then you go out and shop it
around. That has taken away my right to go to whatever shop I want, to a certain degree.
If I want to go to a shop that's not an accredited shop, which I feel
Going back to the ARA again
[ Page 12739 ]
tion. I think that ICBC has now given that second thoughts and has changed its mind on it.
I'm going to change to another subject right now, and it's another one where ICBC is interfering with everyone else in the world except those that require to have their vehicle insured. They are interfering with everyone. Back in January 1999, a compliance circular was sent out by ICBC with regard to GVWs and recreational vehicles. I've talked many times with different gentlemen from ICBC -- Mr. Heather and Mr. Dueck. They are very cooperative, and they've given me some information. They were going to control this so that it wouldn't get out of hand, but it has gotten out of hand. This is like Topsy: this is growing. And every time we turn around, something is happening.
Right now I'm going to turn it over to my friend from Peace River North, as he is quite
familiar with the same situation. He is experiencing a lot of problems with constituents
of his that are
R. Neufeld: Well, I'm not sure if it's going to be an earful, but I am interested in ICBC's comments about some of the issues that are taking place in regards to small vehicles -- that being half-tons, three-quarter-tons and one-tons specifically -- as they relate to GVWR and GAWR. This issue has had a huge impact in the constituency that I represent and the constituency that the member for Peace River South represents, because of the high usage of those kinds of vehicles, not just for work but as a vehicle that's readily available in the household. There are not very many cars in my constituency, in comparison to one-tons or three-quarter-tons, simply because of the highways that we drive on.
In fact, it reminds me of an elderly lady who phoned the Highways ministry one time and said that she couldn't get down her road to her home. She was getting stuck. She had to get the tractor to come and pull her vehicle, and she was told that she should go and buy a 4-by-4. Those are the conditions that some of these people live under.
[1725]
I think -- and there are a lot of people that think exactly as I do -- that there is a move by ICBC to target those vehicles in a big way since the motor vehicle branch has been completely moved over to ICBC. And it has, as I say, a dramatic effect on those that work in the oil and gas industry and on those who just normally operate a farm in their business. No longer can they just load up their cow or a few hogs and take them to market legally. They're forced to break the law and go around weigh scales. It will have a huge impact on tourism, and that's not only where I come from. Those people that drive through my constituency on their way to Alaska get there by coming through the lower mainland, the Vancouver area or even Vancouver Island, which the minister represents.
[W. Hartley in the chair.]
I wonder if I could just start with the small vehicles and get an explanation from the
minister as to why the combined axle weights on smaller vehicles
Hon. D. Lovick: To the member's specific question -- why gross vehicle weight rating as opposed to the two axles -- I don't have technical folks with me. I think that somewhere in my pile here I may have an answer to that question, but I don't have it at my fingertips. Suffice to say that the argument I have been given, essentially, is that for safety concerns pre-eminently, this is the rating we are going with. The member knows as well as I do what the concern is: simply that people are using vehicles that weren't designed to carry a huge payload or an excessive load, and the concern then becomes a safety one. That's the short answer. I will look through and see if I can find the technical thing, more specifically, and if I can't, I will get that information to the member.
I will make two other points. Number one, there has been a stakeholder group established to talk about these matters, obviously with a view to allaying the concerns and making sure that people understand what the rules of the game are and so on. The other point I want to make, though, is that there has not to my knowledge been -- and I have said that I would not want there to be -- any targeting of particular regions or kinds of vehicles. I think the member suggested that maybe there was indeed a move to target, and I can give him my own assurance that, based on everything I have heard, that is absolutely not the case, nor will it be the case.
R. Neufeld: Maybe before we get along the road too far
We're going to go a little further than small vehicles. Would the minister be more comfortable in setting that off until tomorrow or something and doing it at that time? There's no point in me getting up and asking questions for an hour when the ministry or ICBC doesn't have the answers here -- and a year from now I get a response from ICBC answering my questions. It's usually not the way to do it. Would that be better?
[1730]
Hon. D. Lovick: I'm afraid of scuttling the process or something for an issue that may well be sorted out on the basis of technical information. I will certainly give the member my assurance that I will get that information, arrange for the appropriate people to meet with and so forth.
What I'm saying is two things. Number one, we are advised through the corporation -- and I've got documentation -- that ultimately this is a safety issue. That's the concern. Number two, it's a consumer issue -- that people are, in fact, purchasing vehicles, which they want to use for purpose X, that really shouldn't be used for purpose X but only for purpose Y.
Thirdly, I can give the member the assurance that there isn't a targeting of those vehicles. Now, whether or not we need to have a discussion in the chamber about more than that, I will ask the member to determine. If he's convinced that we need to have an elaborate, detailed discussion about why one system of measurement is used by, in this case, the corporation -- or the RCMP, for that matter -- and in other jurisdictions, whereas another one is used by another jurisdiction, again, that's his call. I was assuming that we could probably get on with these estimates sooner rather than later and then move on to the Ministry of Labour. But I leave it to him.
[ Page 12740 ]
R. Neufeld: I guess that says: "No, we won't wait; we'll go ahead with
it." My experience in this process has been that I can meet with ICBC
So I'm going to ask, then, I guess: does ICBC have information available that demonstrates that people who are driving those lightweight vehicles, which may be partially overloaded at some time, contribute to road hazard, to road accidents? It's because we're talking about a safety issue -- that's what the minister continually comes back to -- in GVW. You can't go over the GVW, as I understand from the minister, because it's unsafe -- the GVW rating that's on the vehicle, I should say. That makes that vehicle unsafe.
I just want to confirm with the minister that ICBC does have documentation. To my knowledge, I've asked for it and never received it. I want to see the documentation that actually demonstrates to me that the farmer who has always used his three-quarter-ton, for all the issues around the farm that I can think of, is now today a greater hazard on the road than he was a year ago, before we started enforcing the GVW rating on all vehicles.
Hon. D. Lovick: I'm going to suggest to the member that what he might like to
do, because obviously this is an issue with which he is familiar and has some real
concerns about
R. Neufeld: My question was: does ICBC have information that
Hon. D. Lovick: Sorry, I was speaking generically in saying: "Give me all the questions, and we will provide those detailed answers as a matter of the public record." Right? To that particular question -- are there bits of evidence to suggest that vehicles that are overloaded, which exceed the manufacturer's recommended weight for gross vehicle weight rating, have caused accidents or are a threat or a safety concern? -- my understanding is that evidence is available.
[1735]
R. Neufeld: I guess I'll put on the record that Mr. Conway, who is a spokesman for ICBC, says there are no examples of excess weight being a contributing factor in accidents for non-commercial vehicles -- that being a half-ton, a three-quarter-ton or a one-ton. Now, those are the differences. That's why I say that I can meet with ICBC, and you can get the answers to my questions, but if we don't have a good dialogue between myself or the member for Peace River South or the member for North Vancouver-Seymour and the minister's people, then we're all just shooting in the dark, because there are differences of opinion, obviously, right within ICBC that we need answers to.
So again, shall I ask? Shall we wait until tomorrow? I want to go into commercial weights, and I want to deal with those issues in the motor vehicle branch. Rather than me just laying out a dozen questions -- which I'll have 24 more questions to, but I don't have them right now, because I don't know the answers that you're going to give -- shall we do that?
Hon. D. Lovick: Let's.
D. Jarvis: I have just one quick question before I retire for the moment, so I'm going to ask it, and then the member for Vancouver-Point Grey has a question that he wants to put forward.
If the minister doesn't have the information with him right now, would he get it to me as soon as he can? What is the cost of all the advertising of ICBC for this past year, for 1998 -- and I emphasize "all."
Hon. D. Lovick: The total advertising expenditure for the corporation is $11,336,750 -- and that concerns all the vehicle safety things.
G. Campbell: I have just a brief series of questions to ask with regard to a specific case. I want to ask it in general, and if the minister would like to give me an undertaking that he'll respond to my specific questions with regard to the specific case, I'd appreciate it.
This case has to do with one of my constituents. His name is Neville West. He was injured in a car accident that took place as a result of a drunk driver hitting his car. This has gone to court. It's gone through the various procedures.
The concern that the case raises for me -- and I think for others -- is the way that ICBC has treated this case. There are incidents where, for example, the injured party's parents were phoned. The ICBC investigators represented themselves as representing a private business that was thinking of hiring this gentleman for an executive position, to try and secure additional information with regard to him.
I guess the first question that I have to the minister is: how do we protect the
interests of the injured party with regard to ICBC when we have a situation that is
unfortunate in that a drunk driver has been involved? How do we protect the injured party
that also counts on ICBC -- who's also a client of ICBC -- in terms of their personal
Hon. D. Lovick: I thank the member for the question. I have to advise him, however, that the matter is apparently currently under review and therefore it's obviously difficult for me to comment on the specifics of the case. And also, obviously, I don't know that case except as presented to me. What I can tell the member is that there are guidelines by which officials of the corporation operate -- and are obligated to operate -- that state very, very clearly that one is absolutely forbidden from misrepresenting him- or herself, pretending to be somebody else. If indeed that is the case and is demon-
[ Page 12741 ]
strated to be so, somebody will clearly be appropriately disciplined or reprimanded for doing so.
[1740]
G. Campbell: Two questions here. Are those guidelines public? Could the minister make those guidelines available to me?
Hon. D. Lovick: If they aren't public, they will be -- and yes, I will.
G. Campbell: Thank you very much.
I guess my second question to the minister
My question is: do we have any policy, or were there any directives given, to balance that out? At the end of the day, when we basically have a publicly owned insurance corporation and when there's not really very much in the way of choice out there, I think we have to be careful that we're protecting the client, or the injured party, as well as the insurer. Are there guidelines with regard to that, which are available for the public or for myself?
Hon. D. Lovick: The answer, I am advised, is absolutely. There are guidelines. We would be more than happy to share those with you.
G. Campbell: Is the minister aware of any situation where these guidelines are
in conflict? Are there very many examples of this kind of conflict arising at ICBC as a
result of their obligations as an insurer? There's also their ability under section 17(1)
-- I think it is -- of the Freedom of Information and Protection of Privacy Act: "The
head of a public body may refuse to disclose to an applicant information the disclosure of
which could reasonably be expected to harm the financial or economic interests of a public
body
Hon. D. Lovick: I'm advised that that particular provision of the act -- the
regulation, legislation, whatever -- governing ICBC, which the member quotes
G. Campbell: Then if they couldn't, they wouldn't. Is that correct?
Hon. D. Lovick: That is correct.
G. Campbell: Well, I have a number of detailed questions which I understand the minister is not going to be in a position to answer today. But I would like the minister's undertaking that when I provide him with those questions on behalf of my constituent -- I will provide them to him in writing -- he will respond to me and to the constituent.
Hon. D. Lovick: The matter is under review now, and it is being actively looked at. But certainly I am prepared to give the member that assurance.
K. Krueger: We're getting close to wrapping up the ICBC estimates except with regard to the GVW issue that the member for Peace River North will pursue, presumably, at the end of Labour estimates. This evening we'll be covering WCB.
[1745]
We had some initial exchanges with regard to ICBC's departure in its advertising practices from the guidelines it lived under for some 20 years. I would like to know if the corporation has published, internally or elsewhere, a change in advertising policy.
Hon. D. Lovick: I guess, given this environment, we're all wondering what that question is really about -- thus the tentative quality of the response.
I understand that given that ICBC has now found itself in an increasingly competitive
market, that's perhaps one reason for a change in advertising from the way it used to be
for -- I think the member said -- 20 years. The other, of course, is given all the road
safety activities, therefore perhaps a change in mandate as far as advertising in
concerned
K. Krueger: The question wasn't meant to be crafty. The change in advertising was the departure from explanation of product or explanation of road safety initiatives to actually advertising comparison premiums across the country on a basis that many people had disputes with.
Hon. D. Lovick: The answer is simply that, again, because of the competitive challenge, somebody else obviously was suggesting that they could do it better, and therefore ICBC's defence was advertising that was more aggressive about its rates.
K. Krueger: With regard to reserving -- particularly for bodily injury claims, but reserving in general -- is ICBC's policy still to reserve for ultimate probable cost of past years' claims?
Hon. D. Lovick: Yes.
K. Krueger: Noting the hour and being aware of the fact that commitments have been made to other resource people for this evening, I'm not going to ask for a detailed response in these estimates to this question. The line on the first page of the annual report, which deals with prior years' claims development, indicates a steadily rising number -- which makes sense -- but it's risen quite dramatically from 1994. We'd like the minister's commitment to provide us with a letter detailing why that figure is rising so dramatically, and also referencing the ultimate probable cost of reserving the system.
Hon. D. Lovick: I'm not sure I understood the member's second question -- the
ultimate probable cost of
K. Krueger: The relation between that and
[ Page 12742 ]
Hon. D. Lovick: We seem to be searching for something, so my job is to entertain you for the duration. I'll tell you what. What I will do is I will simply get that information and give it to the member tomorrow.
K. Krueger: Similarly, I'd be happy to have a written response to this question. Last year we canvassed the corporation's unplanned absenteeism record and asked if the corporation had a goal for unplanned absenteeism. It used to be 2 percent; the corporation would try to get its unplanned absenteeism down to 2 percent. I think last year we were told that there was no goal. I'm hoping that has changed. I'd like to know what the goal is, what the rate is and what progress has been made toward the goal.
Hon. D. Lovick: I believe the member asked for a written response to that, so I will certainly provide that.
K. Krueger: Then, noting the hour and the fact that the committee is ready to report out, I move that we rise, report progress and ask leave to sit again.
Motion approved.
[1750]
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. D. Lovick: I move that the House at its rising stand recessed until 6:35 and thereafter sit until adjournment.
Motion approved.
The House recessed from 5:52 p.m. to 6:39 p.m.
[The Speaker in the chair.]
Hon. D. Lovick: I call Committee of Supply. In Committee A, we are debating the estimates of the Ministry of Municipal Affairs. Is that correct? I hope I'm right. And in this House, we are debating the estimates of the Ministry of Labour.
The House in Committee of Supply B; W. Hartley in the chair.
ESTIMATES: MINISTRY OF LABOUR AND MINISTRY RESPONSIBLE FOR
THE INSURANCE CORPORATION OF BRITISH COLUMBIA
(continued)
On vote 39: ministry operations, $24,045,000 (continued).
Hon. D. Lovick: Mr. Chairman, by agreement, tonight we're going to begin with the Workers Compensation Board and that discussion, and I thought I might just offer a few opening comments about that. It's an important issue that I think everybody in this chamber, regardless of which side they may sit on, would agree is hugely important and deserves our attention.
Let me start by simply quoting a few statistics -- very few. The 151 most recently accepted fatalities are startling to all of us. But I think it's worth noting how those figures reverberate and how they create circles, just like a stone dropping in a pond. For instance, of those 151 fatalities, that meant that 147 spouses became widows or widowers, 115 dependent children and one unborn child lost a parent, and four children became orphans. I think that kind of statistical indicator is important.
When we talk about workers' compensation and we talk, above all, about the prevention culture, it's not just a matter of being there at the end. It's about the prevention culture. I think that's a reminder of why we do what we do. And I know I speak for members opposite when I say that we're all committed to doing something to improve that culture and that circumstance.
I want to say just a word or two about the people in this organization, and I can't think of a better way to begin doing that than by referring to what Judge Gill, chair of the Royal Commission on Workers Compensation in B.C., wrote. He said: "While the responsibilities for administration of Workers Compensation are heavy, the commission was impressed with the knowledge and dedication of many people at the board."
Again, there's another thing that I think we tend to forget. There's lot to criticize in the WCB, and we all know it. Given the nature of the work it does, criticism, it seems to me, is inevitable. We shouldn't forget, however, that the huge, preponderant majority of people involved are doing what they do with a kind of missionary zeal. They want to improve things; they want to make things better.
Accordingly, I want to refer -- just as a symbol -- to one member of the operation: a person like Deborah Mills. Deborah was a director of compensation services for the board in the interior region who passed away a few weeks ago after a battle with cancer. Despite the burdens of chemotherapy -- which, I understand from my experience with friends and others, are pretty awful -- until just days before her passing, she was in contact with her colleagues about how best to continue providing services to workers and employers in the interior. I think that's perhaps a measure of the dedication people bring to bear.
Let me touch briefly on some of the successes that I think the corporation
[1845]
Another sign of success, I think, is that injured-worker satisfaction with our service continues to improve. The royal commission confirms that service delivery, as they refer to it, is the area most in need of reform at WCB, and indeed this has been a major focus of WCB's strategic plan. Based on independent surveys conducted by the Angus Reid Group, 84 percent of workers now rank their satisfaction with the services they
[ Page 12743 ]
receive as an eight, nine or ten on the ten-point scale. We hear a great deal about complaints, but there's another side that I think we also have an obligation to at least acknowledge.
The third point: public awareness of health and safety issues is relatively high. That's back to my opening comment about a prevention culture; what we're really trying to create is a climate in which injuries and accidents and deaths don't occur. More than 75 percent of British Columbians are aware of health and safety standards, and some 83 percent rate these standards as important or very important. Again, I think it's a good measure of success.
Another indicator of success is sound financial funding and lower assessment rates. I don't think it's well known, but at $2.01 per $100 of assessable payroll, B.C. assessment rates continue to fall and are now at their lowest level since 1992. A funding ratio of approximately 106 percent means the board is fully funded and can meet its obligations to permanently disabled workers, to widows and to other dependents into the future. A real rate of return of 10.3 percent contributes to this funding level and has helped moderate assessment rates.
I want to touch briefly on another heading -- namely, accountability. The auditor general set out and announced, and did carry out an independent assessment of WCB's accountability reporting. His report made 39 specific recommendations, one-third of which have been fully implemented with action plans, and there are now action plans in place for implementing the others.
What are the issues today? Well, the one that I am sure my colleagues across the way will want to talk about is the status of the royal commission report -- surprise, surprise! The Royal Commission on Workers Compensation in British Columbia released its report in January of this year. Their first report on occupational health and safety issues, we all recall, was released in October of 1997. I want to state here very clearly that I think we owe a huge debt of gratitude and appreciation to the commissioners: Judge Gill, commissioners Oksana Exell and, of course, the late Gerry Stoney, who, as we know, untimely departed too young. All of those people worked diligently and at huge sacrifice to themselves -- notably, of course, Mr. Stoney -- to complete the report and give us their best detailed and comprehensive analysis and advice, and I think we should be grateful for it.
If I may, I'll just say, Mr. Chairman, I'm in a little bit of a conflict because I knew Gerry very well -- an old friend and all that. But it's worth noting that he knew he was sick, and the last three years of his life he devoted to the work on this commission, because to him it meant a great deal. I for one am very grateful for that.
The other issue that obviously I want to touch on briefly is the provincial ombudsman's report entitled "Fair First." That was also released earlier this year. The report acknowledged the forward thinking of WCB in creating such a position -- i.e., an ombudsman -- and made nearly 80 recommendations for improving operations and services. Many of these recommendations, I'm pleased to note, have already been adopted -- are or were already in place -- and the board is considering other changes to make this office even more effective in making the board both fair first and fair always.
The challenges. Well, there are many -- huge. I wouldn't presume to list them, because I know I'd leave some out. Let me start by saying that prevention must of course continue to be the focus. We need to do things once people are injured, obviously, and do them well. But the focus must be on prevention. We must also carefully marshal our resources and our forces to ensure that short-term and longer-term cases get the value they deserve. That sometimes means judgment calls in terms of where one puts one's resources and energy. We must also, of course, work harder to provide information to workers and to employers which is accessible and is simple and ready to understand. In this day and age, I think we have no choice but to put it on line in an absolutely accessible format. We're doing that.
[1850]
I think the corporation obviously has to, as well, make sure that it addresses the changes in the economy and the society, recognizing that the workplace of 1999 is not the workplace even of 1979, let alone 1949. Hospitals and related industries, it's worth noting, rank first in the number of new claims. When we think of WCB, I think most of us tend to assume heavy industry, primary industry. The highest incidence of a number of significant accidents and injuries is now reported in the health care field and in other related fields.
We also have a problem with an aging population. Our demographics demonstrate clearly that people are indeed living longer, and in many respects we say: "Isn't that wonderful." But we should also recognize that there are financial implications -- namely, longer claims. These are claims that will go on for considerably longer, and we have to factor that into our calculus.
A third one, of course, is the fact of more women in the workplace. That has meant a greater number and proportion of injuries to women. At the moment about 30 percent of all injuries occur to women, which I think is roughly commensurate with numbers in the workplace but obviously dependent on particular sectors. Worth noting again, when you talk about the health field and related fields, is that the significant majority of those people are, of course, women. So that's another whole dimension of the problem of dealing with injured workers.
All things considered, I think the board can point with some satisfaction, and indeed pride, to its accomplishments. But we know the danger in pausing for a moment to say that everything is proceeding as it ought, because there's a huge amount yet to be done. And we must obviously look carefully at that. We shouldn't forget that more than three million days were lost due to workplace injury and disease last year. Prevention and rehabilitation or return to work must, of course, remain the key objectives. I'm sure my colleagues don't disagree with that. The financial costs are significant. We obviously have to invest money in this -- in this case, largely the employer community. Money must be invested for workers, for families and for our communities. But we shouldn't forget that the dollar costs, those financial costs, are merely the indicator. The real cost, of course, is in human terms, human suffering and ideally human improveability -- to make people better and happier and more productive in society. So with those few comments, I would welcome comments from my colleagues opposite, and I certainly look forward to answering their questions and will do the best I can.
Oh, I'm sorry. Before I sit down, I know that these people are well known to one and all; but Terry Bogyo, from the corporation, is the man who has all the answers to everything, and Don Cott, an ADM in the Ministry of Labour, is also, of course, the chair of the panel of administrators, which is now the governing body for the Workers Compensation Board.
[ Page 12744 ]
L. Reid: My colleague from Kamloops-North Thompson will certainly have some questions for you. I simply want to put on the record our condolences for Debra Mills's family and certainly to express our condolences at the loss of Gerry Stoney. It was my privilege, frankly, to monitor the royal commission on the workers compensation system -- "For the Common Good." All of you will know that he and I rarely agreed, but when we did disagree, it was on issues that were fundamentally held on each side. I owed him a great deal of respect, and I thank you for the opportunity to make that known.
K. Krueger: The minister has anticipated questions about the royal commission and its recommendations. I thought he might launch into a bit of a summary of the status of things, but he didn't do that. I guess he's actually waiting for the question.
Certainly it was a prodigious effort and a huge investment of resources. I think we all are amazed at the tremendous sacrifice that Mr. Stoney made. When a person knows that there isn't much time left to him on this earth, many people would turn away from working on essentially other people's issues at that point and try to concentrate on family and the time that they had left.
[1855]
I know there are people all over this province that are anxiously awaiting the outcome -- word of which recommendations are being embraced by the government and by the board and which perhaps are not. Expectations vary widely. Certainly we've had conflicting input on some of the recommendations, and I know the government has too.
I very much appreciate the briefing that the gentlemen with the minister gave us. There aren't going to be any questions on matters we already know the answers to. We don't want to waste any time here tonight. But this obviously is an entity, the Workers Compensation Board, that has tremendous bearing on many people's lives. There are a lot of unhappy people around the province, with varying degrees of justification, of course. It's a huge subject -- over 200 recommendations to deal with. We certainly aren't looking for an item-by-item breakdown. But we would like an overview of the status, from the government's point of view, of the recommendations of the royal commission.
Hon. D. Lovick: I'm wondering if the member wants a short answer or a long answer to that. He's quite right: it's a huge task. We should have no illusions. The document is 1,348 pages -- it's about that thick -- with 222 recommendations. Some of those recommendations, which most of us would probably regard as the more contentious ones, we don't have unanimity on. Indeed, we have dissenting opinions from the two wingers sitting with Judge Gill -- i.e., the business rep and the labour rep. So government clearly has a tough judgment call to make on how we deal with all of those things.
To answer the member's question -- where does it sit? -- WCB has been spending a considerable amount of time doing some analysis. I've had a number of briefings about bits and pieces of it. I have not yet been able to get it to cabinet in terms of where we think we ought to be going with it. So I can't talk in specifics -- you know, recommendation No. 23 we're going to do X with.
But what I can tell the member is this. He'll recognize, of course -- because he knows the report, I think, pretty well -- the major categories that they dealt with, starting with governance and all of that. What we did by way of analysis was look at the document and ask: "What is doable right now without legislative change? What are those administrative things that one can do to change?" -- guided above all by the proposition that what we ought to be acting on are things that will improve the service, as the individuals receiving the service would recognize it.
So I have asked WCB officials to break out for me those areas in which we think we can
do something now without much difficulty and where we will have, if not unanimity, at
least broad consensus on, ways we could have things happen instantly, so nobody will say
-- and I wouldn't be surprised to anticipate this: "Well, you're just sitting on it.
You're stalling." We don't want to stall on it; we want to make it happen. But by the
same token, as I'm sure the member for Kamloops-North Thompson would certainly
acknowledge, some of the recommendations are incredibly contentious and are going to be
difficult. Accordingly, what we've done
[1900]
The other one, of course, is the legislative changes. Some parts of it, again
The short answer, then, is that we've broken it essentially into two chunks: those
procedural matters we can deal with, we think, quickly
The final point I would make is that what we also did with the royal commission recommendations is we went to the stakeholders, to the major voices that contributed to the royal commission, and said: "Please give us your input. You've seen the recommendations. What do you think?" The response will be surprising in some cases. On some things that we thought -- or I thought, at least -- everybody was clamouring for changes to, people are saying: "Leave it alone. It's okay. Better to leave it than to tamper with it at this point." So all of that information, I'm hopeful, will be released fairly soon. Certainly I'm hoping that my colleagues on the opposition benches may also offer some formal responses to the recommendations of the royal commission.
K. Krueger: I was about to ask if the minister would commit to releasing the documentation of the responses that were received, and I think he just did that. Am I correct?
[ Page 12745 ]
Hon. D. Lovick: The member is quite correct, with only one caveat -- unless anybody says: "Please don't say that we said this." But otherwise, yes.
K. Krueger: WCB senior management has prepared a response position paper with regard to the recommendations, as I understand it. I wonder if the minister would be willing to share that with the opposition as well.
Hon. D. Lovick: That document is still in process, as I think I alluded to earlier. I am not at liberty to say that that will be done, and the board can't do that until they get direction from cabinet. But that would certainly be the case I would argue. I'm hopeful that at the end of the day, yes indeed we would release all that. And I say that simply because I'm a believer in public policy discussions about issues as important as this -- that we all benefit from the information rather than some of us having it and other people saying, "Well, if you knew what we knew," and that kind of thing. So I'm hopeful that we will, at the end of the day, make all that available.
K. Krueger: A number of the recommendations would have an effect on our economy, and our economy has substantial difficulties already. It's not just fragile; it's pretty much prostrate. I'm wondering if we could have a commitment that the government will submit these recommendations to its business lens procedure prior to implementation.
Hon. D. Lovick: I feel quite comfortable in saying that yes, we would support that proposition. The member is quite right. If we don't have buy-in and support from those people who are financing the operation, then it's not going to work. I suspect that the employer community would probably be quite supportive of that. I think that government recognizes very clearly that it will work if, and only if, they are supportive and understanding of it. I suspect that there will be a fairly major debate on some of those bits and pieces as they come down. But the answer to the member's question is yes.
K. Krueger: I'm pleased with that answer. I think the investment community and the business community will be pleased. I think there's a general understanding amongst the workforce in the province, as well, that without a robust economy, without people coming in and creating jobs, we're all in trouble. I can't imagine too many negative reactions to that. There are provisions such as inclusion of stress claims, and so on, that will definitely be costly and worrisome to business.
I don't think I'm going to carry on further with a line of questioning on the royal commission recommendations. We accept that it is a tremendously weighty matter and that there are sharp disagreements on the wisdom of implementing some of the recommendations. I think that the interested community around the province has been very patient for those same reasons. But we're glad to know that things are being moved forward, and we look forward to documentation of the responses received.
[1905]
I'd like to turn to the WCB's 1998 annual report and some of the financial information contained on pages 55 and 56, which notes that the average duration, days paid, per claim has escalated fairly rapidly from 1990 to 1998 -- during the term of this government -- from 32.8 to 47.5 days off work. We see an increase of 45 percent. I wonder what the reasons are, in the mind of the minister and in the opinion of the WCB, for the length of claims escalating in this manner. Is it an indication that somehow we're failing to return people to work in a timely manner.
Hon. D. Lovick: I'm sure, Mr. Chairman, that the answer is much more complex, but the one that obviously comes to mind is about the matter I alluded to earlier -- namely, the aging population. I understand that in the period of time referred to in that graph, the average age of the population has gone up by a factor of two years, which I understand has a hugely significant impact in terms of the duration of length of claims. There are probably other reasons, but that's the first one.
K. Krueger: Has WCB administration done an analysis of all of the reasons that they have been able to discern for that increase in duration? Might the opposition have that documentation?
Hon. D. Lovick: The answer to the question is yes, they have done some work. They have some preliminary findings, but the work is ongoing. It is, as I say, rather complicated.
K. Krueger: Would the opposition, then, be able to procure through the minister a copy of the analysis that has been done? In that analysis, is there any indication that the downturn in the provincial economy has inflated the average length of claim?
Hon. D. Lovick: I think the answer to the member's first question is that the study, the information so far, is essentially anecdotal -- i.e., this is what we think has happened -- rather than an elaborate longitudinal study of anything or other. That may come. I can answer the member's question -- rather than give him a copy of this nonexistent long study -- by simply telling him what we believe we have recognized thus far. Duration is going up, as the member points out, and there are a few reasons that are adduced to explain why. The first reason is precisely what the member says. The duration, I understand, generally increases when the economy slows down, and that's simply because it is more difficult for rehabilitation staff to find placements for workers. The hiring obviously will typically slow down. Clearly, if there's no job for the individual, then you're not going to push very hard to say: "Get out of our particular arena."
Second, the document says that certain sectors of the economy have been doing better
than others during this economic slowdown. However, the resource sectors typically have
longer duration than other sectors, simply because it is harder to place workers in these
areas. Many individuals would require training to switch career paths. As well, people
coming from those sectors
There's also a third reason, the one I talked about -- namely, duration is also impacted by the age of the worker. As I said, in the last couple of years it's gone up by a factor of two years.
L. Reid: Just to continue in the same vein as my hon. colleague, certainly the downturn in the economy has had an
[ Page 12746 ]
impact on forestry, fishing and mining. My sense is that in many cases the WCB would be used as the alternative income source for these individuals -- not so much a rehabilitation question but simply that there are no jobs available in the sector. What basic research has the Workers Compensation Board done to illuminate the extent of that problem?
[1910]
Hon. D. Lovick: I've never had this explained to me in quite this way before, so I'm fascinated by it. Workers have entitlement to benefits if there are no jobs.
Interjection.
Hon. D. Lovick: I see the look on the member's face. I think she's maybe having the same reaction that I did. I wasn't quite aware of it, put in that way. Insofar as somebody is totally disabled, of course, then they have entitlement. They don't have to go back to work. But similarly, there is consideration given to the fact that the economy, or one sector of the economy, doesn't have jobs. Therefore the entitlement continues for a longer period than would be the case, say, if there was full employment and jobs were going begging.
L. Reid: I appreciate the minister's answer, but what research has the Workers Compensation Board done to illuminate the extent of the problem? What number of injured workers today would be using Workers Compensation funding as an alternate income source as a result of decreased opportunities in their sector?
Hon. D. Lovick: The entitlement, I understand, is until one is maximally medically improved. So that's the saviour, if you will, against it being forever. There apparently hasn't been any particular study done, and the reason, I gather, is essentially that it's virtually impossible to establish what the benchmarks would be. How do you measure those kinds of things?
Suffice it to say that if we look at the list of reasons I gave, I think we all have to, in all honesty, argue that the caseload, if I can put it that way, is larger given the fact that the economy is not buoyant. I think that it's probably also safe to go beyond that and to say that those involved in the system, and paying for the system, I am sure wouldn't be surprised to hear me say that. They would know that.
K. Krueger: Again referring to page 55 of the 1998 annual report, administration costs are demonstrated to have risen by 73 percent between 1990 and 1998 -- from $131 million to $226 million -- which, of course, in many people's minds is a dramatic move in the wrong direction. Presumably money that's spent on administration could have been spent on assisting injured workers. Would the minister comment on the increase in administrative costs and advise what action he has taken and will take to reverse this alarming trend?
Hon. D. Lovick: I've just been given a note that has a number of bullets on it. I'm always familiar with one or two of these, but when I see five or six, I think I don't know this stuff -- so it's better to look. Operating costs for WCB did indeed increase in 1998, mainly reflecting significantly increased resources for prevention; expenditures for developing projects aligned to the board's strategic plans, such as the employers services strategy; and one-time charges largely relating to the Y2K phenomenon.
[1915]
The board apparently has a major internal cost review underway as we speak, searching for ways to significantly extend the reach of the board's services to workers and employers but to do so at lower cost. I am advised -- and I have every confidence -- that administrative costs are closely monitored to ensure that the board is providing good value for its services. I think we have a couple of indicators that that is indeed the case. Essentially, the fact is that we're talking about reducing premiums, and we're talking moreover about reclassifying particular jobs, because we're worried about the fact that people may be being charged at an unfair rate because of classification. So I think the indicators are, if you will, that the board is being prudent and fiscally responsible. But clearly there are some of those costs.
Let me see
L. Reid: Certainly my colleague addressed the 73 percent increase in
administration. It's my understanding that approximately $40 million of that was health
and safety -- was in fact the prevention dollars that the minister alluded to. What, other
than the Y2K
Hon. D. Lovick: I think the member referred to a couple of the points that explain that. The other one, as a generic, is investments in technology to make the service better as we perform it. The example I would give -- probably the best example, and I use this because I was there and I saw it; the member may have done the same -- is the call centre operation that they now have in Richmond, which I understand was a project done in consultation with a number of people, including BCIT. Their computer people came in to work and make this all happen.
For those who aren't familiar with it, it's a wonderful phenomenon. I know the member
for Richmond East certainly knows this. One of the standard complaints about WCB for many,
many years was that people would call in and be kept waiting on the phone forever or be
referred to five or six different people and, at the end of that, still not get any good
information. What the call centre does as an approach to case management
L. Reid: The 73 percent increase is actually $95 million. The minister has accounted for $40 million in terms of health and safety -- the prevention side of the question. My understanding of the Y2K question is that it's less than $10 million and probably closer to $5 million. I will stand corrected if the minister has the actual numbers. So what I'm looking for is how the additional $45 million was spent.
[ Page 12747 ]
Hon. D. Lovick: Well, the immediate answer is that Y2K was more expensive than that, somewhere in excess of $20 million, we understand.
L. Reid: Well, hon. minister, that brings us to $60 million. Indeed, we're still looking for the whereabouts of $30 million in increased administration costs. I'm happy to receive the actual breakdown. If it's not available now, I'm certainly happy to receive it. But indeed, for the record, there's a $95 million increase in actual expenditure.
Health and safety accounts for $40 million. The minister will say that the Y2K project is $20 million. If the minister could provide me with the whereabouts of the additional $30 million.
Hon. D. Lovick: I don't think I can give that off the top, but I will certainly commit that I will undertake to give the member a detailed breakdown as soon as I possibly can.
L. Reid: I just want to pick up on another comment that the minister made in terms of the call centre. I need some clarification in terms of what the target would be for returning phone calls. There are lots of individuals today who continue to have the concern raised to me that indeed it's not a 24-hour or even a 48-hour turnaround when they have placed a call on a voice mail service at the board. Is there a target for that level of customer service?
[1920]
Hon. D. Lovick: The call centre entitles approximately 65 percent of claims, and approximately 40 to 45 percent of the calls are final. Okay? That's done with.
Regarding the other issue, I gather that the great majority of things, as I say, are done expeditiously -- almost immediately. There's also a policy in place to return calls the same day. But when the issue gets complicated and difficult and one has to go and do extra research and perhaps consult with others, then I gather that sometimes those cases have a way of extending forward in time. But I'm advised that they're working very hard to ensure that people are not kept waiting for an undue or disproportionate amount of time.
L. Reid: If I might ask the hon. minister: would the minister share a copy of that policy that says that calls should be returned within one business day?
Hon. D. Lovick: I understand that that is the operational training that the people working in the call centre receive.
L. Reid: I appreciate the minister's clarification. However, I believe that we're talking about the 35 percent that are not handled expeditiously through the call centre. Is the policy extending to those other individuals as well -- let's say the general entitlement folks? Are they under some policy directive that they indeed return phone calls within one business day?
Hon. D. Lovick: I understand that we have to differentiate between paper files and electronic files. Paper files, because only one person can work with them at any given time, will frequently take longer, and only one person can indeed go through them and do the sorting. With electronic files, there's a kind of rule of thumb or general operation, though I don't think it's enunciated in any formal way -- namely, that the turnaround should be 48 hours.
L. Reid: I certainly appreciate the minister's clarification that paper files will necessarily take a little bit longer. My only request is that for those times when that does arise, could the person making the call receive a phone call back, simply saying: "It'll take some time. We'll come back to you with the answer"? I have individuals in my constituency office. Some have waited seven days, some have waited 14 days, and no one has acknowledged the phone call. So if any of those things can be taken into consideration, I would certainly appreciate it.
[1925]
Hon. D. Lovick: I would just say that I thank the member for her suggestion, and I will certainly take it under advisement.
K. Krueger: In April 1998, British Columbians saw 4,000 health and safety regulations passed into law, adding 1,300 new regulations to the provincial regulatory burden. The province of Alberta has only one-third the volume of health and safety regulations that we have in B.C., yet they have an injury rate that is 30 percent lower than ours. So the simple conclusion seems to be that they have a far more efficient safety system and get better results. Can the minister comment on the reasons for this and whether any comparative analysis has been done between British Columbia and Alberta?
Hon. D. Lovick: I think that the primary reason why it is alleged that Alberta has a better safety record is that in Alberta apparently only 70 percent of the workers are covered by their legislation. In British Columbia it's in excess of 90 percent. So that's the first order of magnitude to suggest the difference.
There are also, of course, factors like the structure of the workforce and the nature of the geography. It's probably safe to say that the workforce and the composition of the workforce is a hugely important factor. I don't know details; all I can do is say what I'm told.
It's worth noting, though, that of the new regulations that we are talking about, only about 25 percent are actually new. The other ones are well known and have been in place for a while. Moreover -- and I see the yellow book on the member from Richmond's desk -- the board has been working assiduously to produce a handy-dandy, user-friendly guide to the regs. Rather than saying to people, "You are responsible for memorizing pages and pages and pages of this," they are saying: "Here is a kind of user-friendly guide to the regs and what you need to know." So I hope that answers the member's question.
K. Krueger: It certainly sounds as though a comparative analysis has been done with Alberta, and I ask whether that has been documented and could be copied to the opposition.
Hon. D. Lovick: I am advised that we haven't done a comprehensive comparative
analysis, but we have some individual indicators. I have one before me. The number of new
Alberta WCB claims is the heading that I have, and the categories here concern falls and
[ Page 12748 ]
tion; in 1997 -- 6,498 falls; in 1998 -- 6,441. In British Columbia for the same period, there were 6,635, despite a significantly larger workforce. So in terms of whether we have a better safety culture than Alberta, I think we can argue that we're probably doing just fine, if that one tiny indicator means anything. I wouldn't presume to say that I know it does for sure, but there's an indicator.
[1930]
K. Krueger: Well, of course, one statistic doesn't go very far for any of us.
I am intrigued with this business lens approach. I think that if it's genuinely adopted by government, it's going to move us in the direction of more investor confidence. I wonder if the minister would consider committing to subjecting the existing WCB regulations to the business lens approach and determine thereby the cost -- and perhaps the unwarranted cost -- of some of these regulations to B.C. businesses.
Hon. D. Lovick: I understand that the business lens and that legislative model
means that all new policies and regulations will indeed be subject to
K. Krueger: I don't think it would hurt to look back at some of the existing regulations using the same model. In my previous life, we had a program we called "Rule it out." It essentially invited staff to have a look at our procedures, our regulations and our ways of doing things and determine whether they were actually accomplishing the goals set out or whether they were still a good idea. Some jurisdictions enact legislation with sunset clauses where, unless it's specifically renewed by legislation, it dies at a given date. Would the minister advise whether he has any programs in place at the WCB to look at removing and lessening the regulatory burden that flows from WCB to business in B.C.?
Hon. D. Lovick: I understand that part of a regulatory review that I alluded to earlier is indeed going to do just what the member talked about -- so that, I hope, will give him some comfort. As well, I am advised that we have already recognized and identified some problems with the OHS regulations, simply because the main stakeholders have said: "Wait a minute; we have difficulty with this." I understand that we have committed, when those kinds of circumstances come before us, to subject those to a business lens review.
K. Krueger: That leads into my next question, which is: since substantial
portions of Bill 14 haven't been proclaimed -- and that bill did add 50 or so pages of
legislation and regulation to B.C. workers and employers, contradicting some existing
regulations and adding even more new ones
Hon. D. Lovick: Much as I'd love to say, "Oh yes, that's just what I said," no, that's not what I just said. The proclamation of Bill 14 is imminent. We have been going through that elaborate process. As I say, it started six years ago or more. We think, as I said, that we probably have, to all intents and purposes, been through a business lens kind of adjudication. I've also given the member some assurance that in those areas where we do see clear and definite problems -- where the parties involved are saying this could be problematic -- we'll undertake to do that, but we're not about to stop that entire piece of legislation -- the occupational health and safety act -- from going through. I don't think the member really expected that I would say yes on that one, anyway.
[1935]
K. Krueger: Well, it would be a heroic gesture and well received by those who drive
the economy in B.C. The regulations themselves
Hon. D. Lovick: The short answer is no -- okay? But obviously I'd like to explain. Bill 14, I think we need to remember, was the product of significant consultation among the stakeholders. As well, it was the product of a royal commission that did that job. We have had significant discussion about occupational health and safety and the regs that ought to obtain. What the legislation also did was rationalize the existing regulatory framework for occupational health and safety in one place. To a huge degree, I think, it's absolutely fair to argue that we have done what the member is, in effect, asking us to do.
I should also just add, if I may, a brief comment about the little yellow book we have been referring to. That book is intended to tell the small business person everything she or he needs to know about occupational health and safety legislation. That's what it's intended to do. So I don't think we need to worry too very much, then, about: "My goodness, how do I find my way through this labyrinth of regulation and rules, and how can I possibly function in that environment?"
K. Krueger: Well, no point in flogging a dead horse, I guess. The minister seems to have his mind made up. And the dead-horse analogy, in a lot of people's perception, isn't that different from our economy. I just ask him to sleep on it and reconsider. If he changes his mind from his answers this evening, I don't think there are going to be many tears shed in this province.
Moving back for a moment to the royal commission, there was criticism of WCB's history of spending large amounts of money on projects without any examination of the business case or the results of earlier phases of the project. In fact, in volume 1, chapter 4, page 9, the report indicates that WCB proposes to spend $245 million on projects up to the year 2002.
Would the minister please indicate what safeguards have been implemented, or will be installed, to prevent a further lack of accountability and a waste of funds?
[ Page 12749 ]
Hon. D. Lovick: I think I can give the member some assurance that the money is being well spent on projects. Every project that comes before the board must have a business case presented. Every technical project must go before a committee of senior management, again with a business case attached. All of these projects, technical or otherwise, have to be brought before and approved by the panel of administrators.
In other words, it isn't the case that you have people in the bureaucracy saying: "Gee, wouldn't it be nice if we could get these new toys to work with?" Rather, there is the panel of administrators who aren't directly connected, as we know, and who are a kind of oversight committee for ensuring that the money is indeed being well spent.
[1940]
L. Reid: Just to follow up on my colleague from Kamloops-North Thompson and again on the expenditure, which I believe is stated on page 9, the report states that WCB intends to spend $245 million on various computer-based business initiatives by the year 2002. This is a quote from the report:
"The board's own internal audit group has pointed out the difficulties the board would face if it were to actually try to evaluate the extent to which major initiatives that achieve their expected outcomes and estimated benefits. They observed that there is no independent or objective evidence which could be quantifiably verified. Instead, the projected benefits of the initiatives are based on the best estimates of the same managers who are seeking funds and approvals for the proposed projects."
So I think our concern is noted and is certainly valid. The measurement aspects are
missing; the benchmarking is missing. The ability to evaluate the long-term benefit to the
employers in the province and to the injured workers in the province
Hon. D. Lovick: I understand that the panel of administrators has in fact offered opinions to the senior management -- said that the projects that the member referred to should be slowed down and that the money will not be spent in the time frame that was initially anticipated. Rather, it had to be subject to some careful scrutiny and evaluation to ensure that it was appropriate and above all guided, I gather, by the report of the audit that was done -- making sure that those recommendations are indeed acted upon and implemented.
L. Reid: So who will this panel of administrators share this act of scrutiny with?
Hon. D. Lovick: I understand that there is a subcommittee of the panel of administrators that has the responsibility of serving as the audit committee and that one of their standard practices, apparently, is to rely on external evaluations for those perhaps perceived to be problematic or contentious or difficult ones. People like Coopers or Peat Marwick or folks like that will often be called upon to provide that subcommittee with the comfort that what is being done makes sense and is defensible in a purely economic way.
L. Reid: If it's indeed the case that external evaluators are going to come in, is that information then public domain information? Will that be shared directly with the employers who fund the organization and with the injured workers who would benefit from the services of the organization? My concern -- and the member opposite will know this -- in the past was that that information takes some kind of interesting hiatus and is gone for months before it comes back into the public domain. If the minister is prepared to assure me today that those evaluations, which look at whether or not these are valid expenditures, indeed are public, I would welcome that information.
[1945]
Hon. D. Lovick: The kind of information we're referring to is, and must be, privileged information for the panel to use in making its decision. Until the decision is actually made, that information would clearly not be disseminated in any significant way -- or would not be disseminated, period. Once the decision has been made, though, that kind of information joins the realm of FOI and becomes, in effect, public property.
L. Reid: If the record could show that indeed there's $245 million of
expenditure that's anticipated though the year 2002. What I'm hearing the minister say is
that there's very little ability for the funders of the organization, the employers of the
province or even the injured workers to get a handle on whether or not that's a legitimate
administrative expense. Certainly many of the questions we opened with this evening were
about accountability and whether or not a 73 percent increase in administrative costs was
warranted. I'm not comforted by the minister's remarks, in that whether or not the panel
has any grid, any framework, to base their decision on
Hon. D. Lovick: I know that the member said she didn't take comfort from my last remarks. Maybe she'll take comfort from this one. All of those expenses, all those projects and the projected expenses for them go through the consultation process with the stakeholders. People do indeed know what the panel of administrators and, through them, the board are talking about doing -- that this is what the operation plans to spend money on and why they think it's a good idea. They've obviously had to defend that position, that proposal, before those people who are indeed, as the member says, funding the operation.
L. Reid: If we might spend just a moment on governance, I know that one of the suggestions in the Royal Commission on Workers Compensation talks about a tripartite system: three workers, three employers and three lay individuals. Has that recommendation fallen on fertile ground for the board? Will there be a change to the current structure of the panel of administrators within the next six months?
Hon. D. Lovick: I began earlier by talking about the status of the royal commission report. You will recall that the royal commission has particular things to say about a governance model. What we've already determined, in consultation with stakeholders, is that there is no unanimity on the governance model -- old, new or current, for that matter. Therefore
[ Page 12750 ]
I can't say that a decision has been made, because it hasn't. I informed the member's colleague that cabinet hasn't yet looked at the package that we propose to recommend. But I can say this, I think, without telling tales out of school: I don't think it is likely that we'll see that change to the panel of administrators in the immediate future.
L. Reid: If the minister could kindly tell me how many people currently sit as members on the panel of administrators and if there are any changes anticipated -- let's say in the next six months -- as well.
[1950]
Hon. D. Lovick: The panel of administrators consists of five persons. The chair of the panel is an ADM in the Ministry of Labour -- in this instance, Don Cott -- and four other people are sitting with him.
L. Reid: The second part of the question was: are there any changes anticipated in the next six months?
Hon. D. Lovick: The answer to that is no, simply because we want to see our way to the next defining moment, I guess, when we say what we're going to do with the royal commission recommendations.
L. Reid: There's another item I would simply put on the record. Again, it comes back to the benchmarking measurement accountability framework discussion we've had -- this minister and I -- over many years. Is there any discussion -- any commitment on behalf of the government -- to commit to any kind of cost-benefit analysis for any of the recommendations of the royal commission?
Hon. D. Lovick: My understanding is that every policy change made by the board goes through their policy shop, and part of that process is to do some kind of cost-benefit analysis. That's the way it is now done, apparently.
L. Reid: That, frankly, warms my heart, hon. minister. Is that information made public, and will it be made public surrounding the recommendations of the royal commission?
Hon. D. Lovick: It's something similar to an answer I gave not too many minutes ago to another question -- namely, that once recommendations become policy, then the information becomes public information and FOI-able. However, in addition to that, it's worth noting that in the course of the consultations, when we talk about should we or shouldn't we do recommendation X, frequently the cost-benefit analysis information will be part of that consultation.
L. Reid: If I might enter it into the record, my understanding is that the administrative cost per claim in 1989 was $150 and in 1998 is over $400. Can the minister confirm that those are indeed factual numbers?
Hon. D. Lovick: I don't believe we have the figures that the member is specifically looking for, but I can give her a little information and, if she wishes, could get her some more. It's worth noting that administration costs were apparently flat from 1993 to '96, though they did rise by 4 percent in 1997. I understand that those costs are mostly attributable to the shift from paper to an electronic system and that that's the primary reason for the additional cost.
L. Reid: Then I'll simply leave this one for further clarification. Again, my
question was on 1989
My colleague the hon. member for Kamloops-North Thompson talked about the duration increasing, and certainly the research supports that. The duration of claim is certainly up. I'm going to take the construction industry as an example: "The injury rate in construction has dropped by 25 percent over the previous nine years." But, indeed, duration has increased. Yet when you make some comparisons with what's happening not just in Alberta -- but if you go to Alberta, to Ontario, to Nova Scotia -- they don't have the same issues around duration.
[1955]
What they say in terms of cost is that their cost is
I heard earlier what the minister said to my colleague, but it doesn't explain the disparity between this province and the three provinces I cited: Alberta, Ontario and Nova Scotia. So if the minister could clarify further his response around British Columbia having what I see as very substantial costs to this system, but the product -- i.e., getting workers back to work in a much timelier fashion -- not being something on which we are doing well in comparison to the other provinces.
Hon. D. Lovick: Without for a moment wanting to trivialize -- and, believe me, I don't -- I'll just point out that we're in danger of doing apples and oranges. In the province of Nova Scotia, for example, there is a three-day waiting period before one can begin to collect on a claim. We pay from day one. There's one example. It's also worth noting that all of the western provinces -- Alberta, Saskatchewan, Manitoba, British Columbia -- are at the moment experiencing and recording increases in duration. The same is true, by the way, for the Northwest Territories and for the Yukon.
Again, to make the point about apples and oranges, it's worth noting that in Alberta, for instance, the maximum coverage -- the wage rate -- is $49,000. British Columbia's is $57,000. There is a huge number of those kinds of differences, so I simply point out -- not to dismiss the concern; far from it -- that when you look at some of those specifics, you discover that what we're doing I don't think is any way either (a) aberrant or (b) problematic. I think, rather, that we're doing very well, thank you, in B.C.
L. Reid: I appreciate the minister's comments on wage rates -- you know, $49,000 and $57,000. But I would also make the very strong case -- and I'm sure he will agree -- that this is a much more expensive province to live in, so I don't know if we're truly comparing apples and oranges. I think we're
[ Page 12751 ]
probably just making some reasonable comparisons. The number of individuals who are injured in British Columbia is apparently far higher than in those other provinces. Injury rates per hundred person-years of employment are apparently significantly higher in British Columbia.
So what is it that we're doing not as well, if you will, which allows more British Columbians to avail themselves of the workers compensation system? I think the minister and I agree that the enormous anguish and pain and suffering and trials for families are something that all of us would choose to avoid if possible. We're not avoiding those trials and tribulations as successfully as the other provinces I mentioned. Again, I await the minister's wisdom on this question.
Hon. D. Lovick: Well, as I said some while ago now, I don't know whether there is a nice, easy answer that says this is why B.C. has a higher incidence of injury per capita than Ontario or something. I think the predicament is that our workforce is hugely diverse and disparate. In places like our sister western provinces, for example, I don't think that same diversity can be found in any of those three provinces -- as to what we have in B.C. in terms of the nature of work and the kinds of industries available and moreover the incidence of injury in those.
I also think it's worth noting that it is precisely because of that long-term phenomenon we've perceived in this province about the high incidence of injury that we have decided we need to spend more, we need to invest more, in prevention. That -- as the member will recall, because I said it ad nauseam -- was essentially the justification for doing what we did in Bill 14, occupational health and safety. We have this horrible, horrible track record in this province -- no question. Surely, then, our obligation is to try to find ways to create a culture to change that record. I'll leave it at that for now.
[2000]
R. Thorpe: Could the minister please advise me why there's a difference in how benefits are calculated for an injured or disabled worker as opposed to surviving children or surviving widows? In particular, I would appreciate being advised why there's a difference in the application with respect to the Canada Pension Plan.
Hon. D. Lovick: I'm not sure I heard the first question that the member asked. But to his question regarding CPP, the answer is simply that our legislation, section 17 of the act, says that Canada Pension Plan will be deducted.
R. Thorpe: The first part of my question
Hon. D. Lovick: The answer is essentially the same -- namely, that our legislation stipulates how the benefits will be calculated.
R. Thorpe: I'd just like to know if the minister and the staff have had many inquiries into this apparent inequity. And is it under some degree of review at WCB?
Hon. D. Lovick: The answer to that question is simply that that was a refrain, I gather, that came before the royal commission in its deliberations -- the royal commission that has just completed its work. That matter has been acknowledged in and is part of a recommendation in the royal commission, and as I was saying earlier, we're in the process of reviewing all of those recommendations. Certainly we've been made aware of what the member refers to quite correctly as the perceived inequity.
[2005]
L. Reid: I referenced earlier the "Workers Compensation Board of British Columbia 1998 Annual Report." It's my understanding that under section 69(2) of the act, that must come before this Legislature by March 25 of each year. It's my understanding that it was much later this year -- April 13 to be exact. Can the minister explain that discrepancy?
Hon. D. Lovick: The Workers Compensation Act makes very clear that the board -- not the minister -- must, on or before March 25 in each year, make a report. The board did so, then I as the minister tabled the report, I think within the compliance as spelled out here -- or very close to it, if not exactly.
L. Reid: I think the minister -- for the record -- was over the line. But in terms of questions that I have to continue with this afternoon's discussion, some of the other issues in here take a different approach -- a different fiscal approach, if you will -- over the way that long projects are amortized. It's not done over the length of a project now; it appears to be done over five-year terms.
My question is more of a concern in terms of what the objective is in terms of amortizing that type of project over a five-year time frame. It begs the question: what's hidden behind that new mechanism of fiscally reporting out? That's a very long amortization period, when indeed these projects are of much shorter duration. Some of them are less than a year and would now be amortized, from my reading of this, over a five-year period. I trust there is some very salient explanation for that.
Hon. D. Lovick: Three parts to the answer, essentially. First is that this was introduced after consultation with the auditor general and indeed approval of the auditor general. Second, this is considered to be fiscally prudent. And third, which is a variation on number two, the judgment essentially is that if you're going to introduce a system which will be of benefit to employers for perhaps five or ten years, why should only the current generation of employers be paying for that? Rather, let's amortize over a period of five years, because those other people are also getting the benefit from it.
L. Reid: If indeed that is the case, can the minister perhaps highlight some of the projects that would have long-range benefit? I'll be happy with two examples.
Hon. D. Lovick: I seem to be dealing in threes, Mr. Chairman. I've got three examples of what the member is asking for. One is the employers services strategy, which I think we've already referred to at some point; second, the case management or call centre activity that I described in some detail earlier; and third, the E-file project -- not to be confused with "The X-Files," of course.
L. Reid: If I could just ask the minister to reference and explain the first example he gave. I'm more than familiar with the other two.
[ Page 12752 ]
Hon. D. Lovick: Again, employer services strategy refers to three things: rate-making, classification and ERA.
[2010]
L. Reid: In that time is short for this evening, if someone could simply send me
some background on exactly what that looks like, what it costs
Interjection.
L. Reid: Yes, the employment services strategy. My thinking is that it probably figures prominently in that $90 million we discussed earlier, and there is probably a cost breakdown.
Interjection.
L. Reid: The minister would suggest $30 million. It could be. I look forward to receiving that information.
I have a number of very specific questions, and they probably pertain to the estimates
of the last two years, where we talked about the creation of special funds. It was often
at the behest of different groups within the sector served by the workers compensation
system. My understanding, as of last year, was that those funds would not go forward. They
were almost dollars to do research on various aspects of sectors -- whether it be
roadbuilders, whether it be construction
My current information tells me that it will be back up for discussion in either the second or the third week of June of this year for possible implementation in September. I would trust that that's not the case, but I would seek some clarification from the minister on that question.
Hon. D. Lovick: I understand that there is only one proposal that was raised last year that conforms to what the member was describing, and that was the idea of a worker training centre, under the heading of occupational health and safety. Since that time, I understand that a number of different initiatives have been presented to the board for consideration -- by employers, largely. And they are going to be reviewed -- not implemented -- in the time frame that the member talks about. It's simply a consideration of that material.
L. Reid: So just for my certainty
Hon. D. Lovick: I'm sorry, member, I didn't give the last part of the information that I was given. My apologies. What they're going to be discussing in June is the development of an overall policy in terms of how we deal with these requests that come forward. So I guess the conclusion is that we're miles ahead of ourselves talking about implementation at this stage of the game. It's simply a matter of saying: "If you're getting all of these things coming before you, how do you deal with them? What mechanism should you use -- what criteria for evaluation and so forth?" That's apparently what's going to be discussed in June.
L. Reid: I appreciate the clarification. Will there be some mechanisms
Hon. D. Lovick: I can tell the member that the criteria will be made public -- which, it would seem to me, is the answer to the other question, because if the criteria are made public, then obviously people will be able to say: "Gee, I'd like to do that," or "I want to know what else is out there," or "I disagree," etc.
L. Reid: I appreciate that the criteria will be public once the process is in place and that people will begin to apply. They'll be applying based on those criteria. My question is: earlier in the process, will all parties to the funding and participation within the organization have the ability to be part of the group that massages the criteria, that creates the actual application document?
[2015]
Hon. D. Lovick: All I can tell the member for the nonce is that the criteria will be evaluated by the panel, and then the panel, of course, will make recommendations in terms of how it's distributed at that point.
L. Reid: Again, just to follow the process one step further along. The panel's going to make the recommendations -- my understanding would be -- back to you, as Minister of Labour, for acceptance. Or who, indeed, would the panel be making those recommendations to?
Hon. D. Lovick: The panel will determine what the criteria are. That's the first step. The panel may decide that this set of criteria should go out for a further consultation process, in which case it would then come back to them for the revised version of criteria. When the panel finally decides what the criteria will be -- however they get to that conclusion -- it simply becomes policy, and it goes on the board's web site -- end of story. It doesn't get referred to the minister.
L. Reid: That was my concern. If the panel were to accept the draft and then adopt criteria and put them out there for the public to make application, those who fund the organization could conceivably have absolutely no impact on how those funds are made available and, in turn, how those funds are expended. Am I hearing the minister correctly on that?
Hon. D. Lovick: The member is hearing me correctly, except that the employers
are represented on the panel. Given the nature of WCB funding and how the operation
functions, I think it's probably safe to say that mischief would not be done -- okay? --
to the employers by the panel, because obviously they work with and rely on
L. Reid: Perhaps just one last item for clarification. My understanding today is that unanimity is not required on the panel for decisions to go forward. So as the number of panellists grows, there would be opportunity for some groups to carry more weight than others. That, I believe, would also be the case.
Hon. D. Lovick: I am advised that the panel operates on a consensus model, and in the time that it has been working,
[ Page 12753 ]
they have never had a disagreement or a need for a vote -- or anybody suggesting that they do. But that apparently is no accident of circumstance; rather they work very hard to achieve that consensus.
L. Reid: I appreciate that. I'm going to take from that, if I might, that the discussion will happen in June, and creation of these criteria will happen sometime through the fall. This decision will probably not allow for the expenditure of funds until early in the year 2000, probably. Would that be the minister's likely time frame as well?
Hon. D. Lovick: I don't know if I can give the member the assurance that I think she's seeking, simply because I am advised that there are certain organizations and player organizations -- like the Road Builders, for example -- who are very eager to get their project up and running. They're absolutely convinced that it should be done sooner rather than later. I would think, given the nature of the project and the panel's own assessment of what due diligence is required, that they may well be able to do something more quickly than otherwise. That's the best answer I can give the member.
[2020]
L. Reid: Just for the record, because I have an enormous caution around this question, the Road Builders are looking for $600,000 -- an enormous sum of money. I would hope -- I would trust -- that some kind of check and balance is in place before any decision is taken about the expenditure of those dollars, because there are individuals on the front line awaiting claimant decisions who believe they've been disenfranchised by the organization. They see that expenditure, frankly, as a slap in the face to lots of them who are waiting for a $40-a-week increase in pension. So in terms of securing some kind of balance around those questions, I would only put my caution on the table.
In terms of other issues I wanted to canvass this evening, my sense of the claims adjudication model, which is now the case management model, is that, frankly, it is not moving along as readily as some would wish -- and certainly not to where we were led to believe it would probably go this time last year when we were in the estimates process. What today are the major stumbling blocks to getting that on line? Is it the fact that so much of what is required financially is tied up in the electronic file system and that there hasn't been a process in place to follow the paper through to the electronic file, so there's really no ability to adequately canvass what has gone before? People seem to have enormous confusions around how that process should work, and frankly, they believe it's not working today. If the minister could comment.
Hon. D. Lovick: I understand that we are making significant progress in this area. The areas where it's already in place are Prince George, North Vancouver -- I understand it's in process in Kelowna -- and one other, the Richmond service centre. The difficulty, I gather, is that as the member knows full well, it's essentially about transferring from an old technology to a new, and while you're converting to the new technology, you still have to deal with the old one. That's the first obstacle to a speedier implementation.
The second is the fact that in switching to the new technology, you also have to do a fair bit of training. People need to learn skills and acquire abilities and aptitudes that they perhaps didn't have before, under the old system. Therefore the approach has been to do it on the basis of small, discrete sectors -- get those in place. We're hopeful that it will continue to expand and be implemented across the province, but it isn't as easy as anybody hoped. Given that -- and we've obviously had the experience of being able to do urban centres like North Vancouver and Richmond, and a medium-sized city like Prince George. I think we would hope that if we can do those, then the others ought to come on fairly quickly.
L. Reid: It's my understanding that Ian Munroe used to be responsible for E-files and that that is no longer the case. Indeed, he is now, I believe, managing the files in the interior. Who is responsible for the E-file transformation today?
Hon. D. Lovick: The vice-president for compensation services is Mr. Dave Anderson -- not to be confused with a politician that I've heard hangs out in Victoria sometimes.
L. Reid: One of the other issues I want to canvass this evening is the criminal injury compensation program. I certainly made my intentions known at the briefing that we had. To be perfectly candid, I don't get a lot of calls on this question, but the ones I do receive trouble me.
[2025]
There seems to be some lack of clarity around defining what is indeed a criminal injury as a result of workplace employment. Certainly this issue is not one, in terms of the administration, that was going to be readily canvassed by the Attorney General in his estimates. The suggestion was that the administration of this program truly rests within the Ministry of Labour, under the workers compensation system. So I would just be interested in the minister's concern, or comment on my concern, on whether indeed this group of individuals has overcome some of the difficulties around how this program has been delivered. I only raise it because I've been elected for seven or eight years, and it's only in the past year that I've had concerns raised about how this program operates. Has there been a change in policy? Has there been a change in the planning framework for this division of the workers compensation system which would shed some light on these current problems?
Hon. D. Lovick: I understand that there is a new policy manual being developed in this area. They've done the preliminary work, and it has now gone out for consultation among those people with expertise in the field. I guess we are, to coin a phrase, waiting to see at the moment.
L. Reid: Then I won't belabour the point. If the minister could kindly give me some guidance as to the time line for when it might be in place. I would happily pass it on to the constituents if I could have some guidance as to when it might become public.
Hon. D. Lovick: I don't have that information at the moment, but I will ask staff to make a note of it, and we will advise the member when we have some further information.
L. Reid: I thank the minister.
One of the issues we canvassed earlier was the $40 million health and safety allotment. I would be interested to learn from the minister what portion of that looks at the television
[ Page 12754 ]
ads, the radio ads -- or if indeed that's a separate fund. So my first question is: do the public relations expenditures of the board today come from the $40 million health and safety allotment?
Hon. D. Lovick: To be specific, Mr. Chairman -- and I think that's what the
member wishes in her question -- the WorkSafe program is obviously intended to foster that
culture of prevention that we talked about earlier. Accordingly, it then comes, in
budgetary terms
L. Reid: I understood the discussion of fostering the prevention culture. I'm interested, further to that, in understanding what portion of the $40 million would be allotted to the radio and television ad profiling campaign.
[2030]
Hon. D. Lovick: I believe the only advertising we do now is the WorkSafe program, and therefore that's probably the figure the member wants. The total cost for WorkSafe awareness advertising in 1998 was about $1.8 million. That's the equivalent, by the way, of about $1 for every worker in B.C.
L. Reid: I appreciate that figure. In terms of the minister's response, if $1.8 million goes to television and radio WorkSafe advertising, would the additional $38 million go to the actual delivery of the WorkSafe program in British Columbia?
Hon. D. Lovick: The remainder of that $40 million goes to all the prevention activities. I think that's what the member was asking.
L. Reid: If the minister could provide for me some guidance on the tendering
process
Hon. D. Lovick: Some of the television and other communication work is done
in-house and some by outsiders. The tendering question
L. Reid: I believe I heard the minister say that's a public tendering process.
So once every three years the Workers Compensation Board would seek individuals to provide
a service for a duration of three years, and every three years
Hon. D. Lovick: We're not sure of the exact figure on this one, so pardon me if I'm tentative. I'm advised that we believe that everything over $50,000 -- though it could be a slighter lower threshold than that -- goes, as a matter of course, to an RFP process.
L. Reid: Just for my information, then, the minister will perhaps send that
information on to me on what the baseline is -- if it's $50,000, over or under. I would
appreciate
My hon. colleague may have raised this issue earlier in terms of cost-benefit analysis of the regulations. If I can simply put on the record that I trust that that information will come -- if not this year, certainly over the next ten or 15 months. I think the cost-benefit analysis of those regulations will have some impact on whether or not additional regulations are implemented as a result of the royal commission. I think there is just so much regulation that is sustainable by the province, and I'm not convinced that we haven't already reached that point. Certainly other provinces have often taken the stance that if indeed new regulations are required, then older regulations must be taken off the books. Is that a philosophy that this minister aspires to?
[2035]
Hon. D. Lovick: It was Ben Jonson who said, about 300 years ago:
In small proportions we just beauty see;
And in short measures life may perfect be.
Yeah, I must admit that I have an inclination
Again, I would point out, though -- and we did canvass this ever so briefly with your colleague -- that the process was to rationalize, essentially, the regulatory framework for occupational health and safety in the province. Putting that together was a six-year process. We now have this set of regulations, as the member knows full well. We've tried already to render that into something user-friendly and considerably shorter. In addition, as I pointed out not too many minutes ago, we have recognized that there may well be some problems with some of those regulations as written, and we have undertaken that when the stakeholders draw that to our attention, we will indeed review, with a view to saying: "Do we need it, or can we simplify or modify?"
I'm hopeful that having done the huge, gigantic job of establishing a regulatory framework, all things working beautifully, we may well discover that we can in fact shorten it somewhat and that we don't need to cover more. I share with the member the view that the last thing we need is to make it any larger.
L. Reid: I will simply conclude this particular issue by saying that when it comes to this government, "rationalize" tends to mean more. This government tends to rationalize by increasing. In this instance, it's 4,000 new regulations with none expiring, if you will. So this is only additional overlay.
I appreciate the minister's comment that it's rationalizing the new framework, but if indeed that's the direction and he was sincere when he talked about simplifying, simplifying, simplifying, I would only encourage him to continue down that road when it comes to the layer of bureaucracy that builds
[ Page 12755 ]
upon the next layer of bureaucracy, which is, frankly, insurmountable for many small businesses today. They simply can't hire yet another person to absorb the manual and to put in place the new level of regulation. If I leave the minister with any comment, it's simply that small businesses across this province would appreciate regulation being depleted from the books, if indeed a new regulation is going to come on line.
Hon. D. Lovick: We did canvass this a little bit earlier, and just for the
record, I want to make clear
Second, the manual that we've already referred to on two or three occasions
The third point I want to make, in as courteous and civil a manner as I possibly can, is that it is true that the regulatory framework seems sometimes to be an impediment to doing business. But the alternative is, alas, too scary to contemplate. We need to have that regulatory environment for precisely the reasons that the member was referring to about 20 minutes ago -- namely, that British Columbia has, traditionally, the worst record of death and injury on the job.
I know she shares with me the concern that we need to do something about that. Our differences, I think, are minor, are about: "Well, do we really need all those regulations?" But we must have a regulatory framework or regulatory environment. I think the compromise we have is probably the appropriate one.
K. Krueger: We agree that the debate tonight has been, as the minister characterized it, civil and courteous and good. Frankly, that's the way we'd like it to be all the time. Dealing with workers compensation, we're dealing with people's lives and their only recourse. This is the alternative justice system for them. It's not only the businesses, of course, that are affected by the regulations but the claimants themselves. Pretty well everybody I meet at WCB I like, and they seem to be very sincere people, really well-meaning. But there's such a thing as incorporating too many good ideas in trying to accomplish your goal, especially when you can impose them on other people.
[2040]
I just can't let the evening conclude without one more stab at this, because it's really onerous not just to small business but to large business. I have a desperate letter in hand. It's dated March 15, 1999. It's from the Council of Forest Industries, and I'm going to read part of it into the record. This is a serious, serious problem for business of all sizes.
Interjection.
K. Krueger: Yes, minister, it is from COFI. And it's written to Mr. Cott.
"As the April 15 deadline for full compliance with the new occupational safety and health regulation approaches, employers are growing more and more apprehensive. It was written one month before the effective date. Despite a number of meetings and conversations with WCB staff on the subject, there has been little evidence that the board appreciates the magnitude of the problem.
"The process of crafting the new regulation was as much political as it was scientific. It was not unusual, in order to resolve a stalemate between the two representative stakeholder groups, to defer to the drafting of new policy or operating instructions in order to clarify the meaning of contentious regulations. While this did serve to keep the process moving, it also resulted in some vague wording being drafted. There were other sources of confusion as well.
"As is the case with most regulation-setting exercises, there are a number of regulations that produced 'unintended consequences.' These are regulations that were written with full consensus and properly 'translated' that impacted sectors of the workforce -- not considered by the drafters -- in a negative and unforeseen way.
"In addition, there were a number of changes to consensus wording that presumably occurred during the transition from draft language to regulatory language. Many such changes have altered the meaning of the regulation in question.
"Add to this over 34 regulations -- affecting the forest industry alone -- whose economic impact and dubious benefit render them 'undoable.'
"The result is a regulation very much in need of clarification and interpretation. Guidance was expected in the form of operating instructions. These are instructions to board officers as to the meaning of the regulations and what compliance should look like. The document is also useful to workers and employers for the same reason. A draft version has been circulated for comment, but the quality was so poor that little comment -- save 'redo this mess,' was possible.
"Since that time, the board, properly concerned with the need to inform officers of the meaning and compliance requirements of the new regulation, conducted training sessions. The result of those sessions was over 700 questions as to the meaning and intent of the regulation. When combined with the questions that have arisen out of the public information sessions conducted by WCB staff, the total number of questions -- we believe -- now exceeds 1,200.
"While there is recognition of the scope of the problem by senior board personnel, we are unaware of any plans -- involving employers -- to deal with the situation. We are at the point where compliance by April 15 is simply impossible, not because of any unwillingness on behalf of employers, but rather out of an absence of understanding as to what is required.
"It is essential that this issue is addressed by the WCB and those areas of confusion are identified and a process put in place to deal with regulations that are contentious or unclear. We believe that any such process must include the members of the advisers on regulation review -- ARR. This group, which is responsible for drafting the new regulation, is knowledgable as to the intent of the individual regulations. It is also the group best equipped to deal with contentious regulations.
"I urge you to treat this matter as a critical priority. There is a great deal of frustration and cynicism in the employer community over this issue. Compliance with many of the regulations that concern the forest industry is costly and without apparent benefit.
"To date we have been unsuccessful in our attempts to resolve this matter through discussions with senior WCB personnel and therefore turn to you for assistance. I look forward to your reply to this urgent matter."
We've heard the minister say that some of the regulations that seem ambiguous, that seem to create problems, will be reviewed. But one can see where these employers feel as though they're now in a very vulnerable position, if they are required by law to comply with these regulations but they don't even understand them. They don't make sense to them; they seem impractical. Even the staff who were trained in them had 700 questions that, according to this letter, haven't yet been answered. The situation's becoming chaotic for them.
[ Page 12756 ]
[2045]
If we look at Alberta having one-third the regulations that we do, and we consider the problem of jobs being exported from British Columbia to Alberta, and we see this as being a factor that could exacerbate that situation, then we all in this chamber have a responsibility to have a second look. Whether it's a period of amnesty for the regulations that are in contention or whether it's actually withdrawing them, surely we can do something. When we say that only 25 percent of the regulations are new, even if the minister is correct with that percentage, that's 1,000 new regulations; industry says it's 1,500 new regulations. Either way, it's mind-boggling, tremendously expensive and a disincentive to doing business in British Columbia. Surely the minister can offer these people some solace other than what we've heard tonight.
Hon. D. Lovick: The chair of the panel advises me that his reply is in draft stage, and it will be thorough in terms of dealing with all the points made in the COFI letter. Suffice it to say that what we're given there is very clearly a point of view -- one, I must confess, that I'm not immediately attracted to. Remember that there has already been a year of amnesty. I mean, the legislation was passed some time ago. Certainly the board has made offers and efforts to try and discuss with people -- "Here's what we're trying to do." There was certainly no secret about what was coming down.
I think, alas, that what may well be the case -- in certain quarters, at least -- is that this is the self-fulfilling prophecy. I mean, all kinds of people were saying things like that when the legislation was first tabled, and it sounds as if the song sheet hasn't changed very much in the past year. Now, I don't mean to dismiss or otherwise treat with less than proper regard the points made in the letter, but that's a pretty broad and sweeping set of challenges in terms of this regulation. I will look forward to the response from the chair of the panel, because I know that that will give us the other side. And the truth, as is always the case in these things, will be found somewhere squarely in between, I am sure.
K. Krueger: Well, this is clearly a difference in philosophies between an opposition that believes in laying out the goals and measuring by results and a government that spells out chapter and verse. This applies not only at WCB but right across the board in British Columbia.
In closing my argument on that subject, I just want to make the point that the methods that have been employed throughout the 1990s in B.C. haven't resulted in a better economy, more jobs or, apparently, more safety to workers. These approaches are failing, and we would really like to see a change in the way things are done in B.C.
The criticisms that I hear about WCB, in spite of the good efforts of the good people that I'm meeting, continue to be -- from employers and claimants alike -- that they aren't really listened to; they're consulted with, but the approaches don't change. There isn't really a customer service attitude at WCB toward claimants or employers. Examples are the treadmill sensation people have in dealing with WCB -- that they're not really getting anywhere; that WCB remains too much a law unto itself; that claimants' personal doctors are ignored when their input is provided; and that strangers' professional opinions are weighted more heavily. The same complaints. If we're going to invite consultation and accept input but then do what we thought was best in the first place anyway, then people will become cynical and feel we've wasted their time. So this is a last plea for the employers who are raising the alarm about these regulations for reconsideration.
We're getting close to the time when we had committed to wrap up this debate; I see the other committee is prepared to report out. My colleague from Richmond East has spent a lot more years on WCB issues than I have, so the last word is going to go to her.
[2050]
L. Reid: I am conscious of the time, but I will indicate to the minister that I have three additional issues to canvass. I believe we can accomplish that goal.
The minister commented in his opening remarks on the number of women who are suffering workplace injury. I understand that 30 percent of claims are now as a result of women being injured on the job. My concern would be around issues of home maintenance and around issues of child care. In the homes of those individuals now off in vocational rehabilitation and rehabilitation programs generally, those jobs are, frankly, now being left undone.
I'm simply wondering if the minister can give some thought -- whether or not the board
has given some thought -- to how best to accommodate a vastly different workforce in 1999,
which includes far more women, as the minister indicated, than in earlier years in the
history of the organization. These injured workers come with a greater array of demands on
not just their professional lives
Hon. D. Lovick: I appreciate the question. It's an important one, and I think it's worth noting that depending on the circumstances of an individual case, some of the kinds of interventions that the member refers to do already occur. For example, sometimes child care will be picked up if, as I say, circumstances dictate that it's absolutely required. Similarly, homemaker service has been provided on occasion for particular people.
I think the important point to note is that as the clientele increasingly becomes women, alas -- insofar as the incidence of injury; when I say "alas," that's what I mean -- pretty clearly the board is going to have to grapple with precisely the circumstance that the member describes. My hope is that they would respond in a sensitive way, as I think they already have in some cases.
L. Reid: I will take that from the minister to mean that they will respond in a sensitive way, and we will canvass that at next year's estimates.
The minister indicated that David Anderson is the VP of compensation services. Ron Buchhorn was the previous vice-president of compensation services and I believe had approximately four to five years of service with the board. He has now left the board. Was a compensation package paid to that individual, and if so, what was the amount?
Hon. D. Lovick: I can't give that information to the member, simply because it is still under negotiation at the moment, and therefore the amount is to be determined.
[ Page 12757 ]
L. Reid: To conclude this particular item, then, was Mr. Buchhorn let go for a cause, or did some other scenario unfold?
Hon. D. Lovick: I can assure the member that the compensation package will certainly be within the guidelines, as I've already hinted -- I shouldn't say as I've already hinted; as has been told to me. It was ultimately about a change in leadership at the board, and therefore Mr. Buchhorn went on to something else. Also, I would just note that I think the whole matter of dealing with severance and the reasons for it and so forth is one that I feel most uncomfortable talking about in a public venue such as this, respectful as I think we should be of people's privacy.
L. Reid: The minister referenced a severance grid. I certainly appreciate the minister's final comment. Would he make that available to me in terms of giving me a greater understanding of what four years of service to a particular agency of government looks like in terms of a severance package?
[2055]
Hon. D. Lovick: The grid is really the Public Sector Employers Act guidelines. I think it's outlined in the legislation, so it's a public document.
L. Reid: I have one other issue that I wish to canvass with the minister. It's under his Labour hat, if you will. I appreciate that this may not receive an answer this evening, but I simply wish to put it on the record for consideration tomorrow or the day following. It's regarding the issue of employment standards, and it's going to cite, specifically, the exemption that was given to the high-technology sector this year.
I'm going to ask the minister to consider a similar exemption for mentally handicapped adults in our communities. The Parents Support Group for Families of Mentally Handicapped Adults has spoken to myself and my colleague the MLA for North Vancouver-Seymour on this very question, because this spring the ability of their adult children to be employed in a variety of settings around the province will be severely curtailed if not eliminated entirely.
Their desire, frankly, is a substantive one. They wish to see their offspring employed in those settings. They have come with the very genuine belief that that is a far better use of their young people's time than where they say they are today, which is in fact on walking programs in shopping malls and spending many countless hundreds of hours a week engaged in television programming, if you will. They want to see some kind of substantive program, and they like the programs that had gone before. They see the curtailment of employment standards as something that will only be to the detriment of their children.
In all sincerity, I simply put it on the record for the minister's consideration. They see that exemption for the high-tech sector as being valid; they believe their proposed exemption to be equally valid. They would like to see those opportunities be available to their adult children. These are individuals, as the minister is fully aware, of 30, 40 or 50 years of age who will somehow have what they have come to know and expect as routine, as integral to their life, be denied them. I leave that for the minister's consideration. If there's any way he could cast his mind to coming back to this particular group, the Parents Support Group for Families of Mentally Handicapped Adults, with some kind of response to that, in their minds, very urgent request, I would be grateful. I thank the members opposite for their time and for their attention. Thank you.
Hon. D. Lovick: I will just say to the member that I am indeed familiar with that case. The member recalls that there has been a three-year exemption given with a view to try and sort out the problem. I'm not sure that we have entirely arrived at a solution to the problem. As the member knows, we're trying to balance the absolutely legitimate needs of individuals who can't otherwise be gainfully employed in the dominant society and yet protect those same individuals against exploitation. We're finding the balance. I would be happy to elaborate and expand on that during tomorrow's discussion, but I take the member's point. I share her concern. It's a difficult one, but I'm hopeful that we will indeed be able to find a way to the solution.
With that, noting the lateness of the hour, I would move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
[2100]
Committee of Supply B, having reported progress, was granted to leave to sit again.
Committee of Supply A, having reported resolutions, was granted leave to sit again.
Hon. D. Lovick: Hon. Speaker, I would advise the House that we do indeed sit tomorrow. With that, I would move that the House stand adjourned.
Hon. D. Lovick moved adjournment of the House.
Motion approved.
The House adjourned at 9:01 p.m.
The House in Committee of Supply A; E. Walsh in the chair.
The committee met at 2:48 p.m.
ESTIMATES: MINISTRY OF MUNICIPAL AFFAIRS
(continued)
On vote 40: ministry operations, $46,529,000 (continued).
Hon. J. Kwan: I'd like to introduce my staff who are with me this afternoon: Suzanne Veit, my deputy; Lori Wanamaker, assistant deputy minister for corporate services; Ken MacLeod, assistant deputy minister for local government; Gary Harkness, assistant deputy minister for safety and standards; and Leta Hodge, who is the executive coordinator for the deputy minister's office. When we move to the HPO, we will also have Shayne Ramsay, the CEO of the homeowner protection office, and Dan Maxwell, who's the director of finance.
[ Page 12758 ]
T. Nebbeling: Last week when we completed the first day of the first session of the estimates process, we exclusively focused on some of the changes that were made to the Municipal Act that impact on how communities have -- and in the future will have more -- power or are regulating and authorizing their own action. I think it is fair to say that municipalities, villages, towns and cities throughout British Columbia -- and regional districts as well -- clearly have a strong desire to indeed have more say over issues that are of true importance to their own communities.
[1450]
Where I got stuck last week was the fact that I think the minister truly feels that the attempts made recently with changes to the act have put municipal councils, in particular, on the way to self-control. I think that last week, when we discussed some of these impacts, it became clear -- for me, at least -- that the empowerment that we have been discussing, for the minister, is not really focused on the empowerment of communities through their elected bodies but is more to empower organizations or minority groups in these communities to actually undo some of the things that municipal councils decide are important for the future of that community and for the future of the people living in that community.
I focused in particular, of course, on the counter-petition aspect, and I think that in the end the minister did in fact agree with me: that if a counter-petition driven by 5 percent of the voting population was presented to council, the council really only had two options. These two options were: to go with a referendum, regardless of whether the cost was justified; or a decision not to go with a referendum, either because of cost or for other reasons. If the council takes that choice -- and we are talking about choice for communities, choice for councils -- and decides not to go with that referendum, then a project that an elected body had chosen as being good for the community is dead.
That is what illustrates to me very strongly that the empowerment that the minister talks about through new sections in the act is really not the empowerment of the municipal councils or the elected bodies; it is truly the empowerment of 5 percent of the population. I think that is going to set some very dangerous precedents. We're going to see more and more situations where people who often oppose for the sake of opposing find enough bodies in a community to put blocks in the road of projects that truly will make a difference for a community and its well-being.
I hope that as part of the discussion last week, the minister will indeed see an opportunity to revisit that issue -- and not just in particular cases, like the minister saying: "Well, maybe when it comes to health facilities, I would consider this revision of that number, but when it comes to some other socially driven issues, maybe I would reconsider." I think that the choice should be up to the communities in general, and I hope that that, at least, came out of the meeting last week as a positive. Not everything that I say -- and it may sound so -- is meant to be just criticism. My questions are often driven by getting the clear picture of what have been the consequences of some of these changes to the Municipal Act; with a change to what has been introduced, things may actually work out much better for all parties concerned.
The same happens, of course, with the P3, the public-private partnerships approach -- again, great opportunities for municipalities indeed to find ways of getting the infrastructure in place that would be needed to create a healthy community, be it education facilities, be it recreation facilities or be it health facilities.
I'm still not 100 percent clear. But I think I'm right to say that if indeed a project
of that nature has to be amortized over 25 years, then under the conditions that are
available today, only through a long-drawn-out process can that 25-year amortization
period be achieved. If the minister is not willing to go through that process
Anybody who's ever gone out for a mortgage and looked at the debt service of a mortgage should know that if it cannot be amortized over 25 years but has to be done in a shorter period of time, often people will not even be able to take out a mortgage, because the debt service would far exceed the ability of the individual. The same principle applies to the public-private partnership theory as well. If partners have to amortize over too short a period of time, the payments will just not be there to justify the debt service.
Hopefully, we will get more clarification on that particular one. Otherwise, I would suggest again that this is not just to criticize, but it is meant as constructive criticism, in the hope that in the future we will see some changes that would accommodate long-term partnership without having to go to cabinet or go through the statute amendment process.
[1455]
Having said that as my introduction to what we're going to do today, we have seen a
great initiative, I think, and that is the consolidation of home warranties in British
Columbia. I've taken time to look at how long the debate on home warranties has really
been going on, and I have gone back to 1993. Already in 1993, I recognize that industry
Oh, maybe I should wait until Mr. Shayne Ramsay and Dan are here. Want to wait till they're here? You're not going to call the vote now?
The Chair: No.
T. Nebbeling: Well, with you I never know. You're supposed to be watching me; I have to watch you all the time.
The Chair: Member
T. Nebbeling: As I just said, Madam Chair, this afternoon -- and maybe this evening; we'll see where it goes -- I would like to focus on the homeowner protection office and some of the programs that the homeowner protection office is responsible for. When the homeowner protection office was created, at that time there was a considerable agenda associated with the creation of that office. We all know what drove the creation.
The leaky-condo inquest held by Mr. Barrett clearly showed that there was going to be some need for people who are into purchasing homes having some certainty that what they purchase indeed is wholesome and that people could rely on being able to live in that purchased condo or single-family home without having the same problems that we have seen developing over the last number of years, especially in condo development.
I'm not going to be here to point fingers at who is responsible. I think the leaking problem is a consequence of many
[ Page 12759 ]
various groups that all have had a part in making decisions and acting on these decisions. Suffice it to say that, for me, something being put in place for once was a good thing.
As I said earlier on, I look back to meetings that the Ministry of Municipal Affairs has had in the past, with various industries' participation, focusing on the condominium problems. I've gone back as far as 1993, when, indeed, the first leaky-condo situation started to become a real issue. Through various industry bodies, discussions were held and directions were given as to how that problem could be taken on. Unfortunately, of course, not much did happen.
Then in 1996 another study was done to again establish its seriousness, I suppose, and to establish opportunities to remedy the serious problem of leaky condos. Actually, a lot of people began to run into financial problems because of that. Again, I'm repeating history a little bit. Thirteen recommendations were made to the government to deal with the problem, and again nothing happened.
Then the problem became so colossal, and people affected by the consequences of the
leaky-condo problem
[1500]
Two faults. Of course, first of all is the role of the homeowner protection office. We
have discussed this before, and I will ask some more questions on that during these
estimates. But the other part that I would like to focus on, and I think that is where I
would like to start today, is whether the manager or the CEO
The Chair: Through the Chair.
T. Nebbeling: Through the Chair to the minister.
Hon. J. Kwan: To my right is Shayne Ramsay. He is the chief executive officer of the homeowner protection office. To my left is Dan Maxwell. He is the director of finance of the homeowner protection office.
T. Nebbeling: Maybe the minister can give me a quick overview, a bird's-eye view of the day that the homeowner protection office was established in a legal form and what has happened since that time, right up till today. Maybe at the same time the minister can identify what functions are being exercised in the office and whether there are other functions that are not directly done in the office but still have to be the responsibility of the office. If the minister can talk somewhat on that too.
Hon. J. Kwan: I will briefly talk about the role of the homeowner protection office. I believe that my office has made available to the member a copy of the business plan, which outlines the work of the homeowner protection office, including all the respective positions within the office. But generally speaking, the homeowner protection office was established last year, arising out of the Homeowner Protection Act, which was passed in the Legislature last year.
The homeowner protection office, essentially, works towards strengthening the residential construction industry by way of providing a no-interest loan program for leaky-condo homeowners who are faced with this crisis. There is a set of criteria which apply with respect to the loans. They also work on other program areas, including the residential builder licensing program in terms of licensing builders. They also work on ensuring that the framework for the mandatory warranties is in place, and the research and education component as well, with respect to residential construction. Finally, much of this work is really to ensure that we do learn from the experiences of the past and that we do bring in new programs and enact the legislation that was brought in last year to ensure that residential construction in British Columbia addresses consumer protection for the public.
T. Nebbeling: I'd like to focus a little bit on the whole warranty issue. It's no surprise that the whole warranty issue, and the providing of warranties to potential builders, has so far been a colossal failure, to say the least. What I would like to ask the minister is this: could the minister, again, give me an overview of how the whole process of becoming a provider of home warranties through the homeowner protection office is being considered? We'll take it from there.
[1505]
Hon. J. Kwan: Previously, with respect to warranty programs for the residential construction industry, they were done on a volunteer basis. Last year we brought in legislation that requires a mandatory warranty program in this area. In terms of the terms of the provision, a warranty provider must meet what is stipulated in the act that was passed in the Legislature last year. For a warranty provider to be up and running, they must also have approval from FICOM in order to be operational.
T. Nebbeling: So anybody can declare themselves a provider? If that's not the case, how is that process done -- to qualify and be certified to become a provider of home warranties?
Hon. J. Kwan: In order for a home warranty insurance company to be approved by the Financial Institutions Commission, they need to ensure that they are skilled in the area of insurance underwriting and that they will be financially capable of honouring their long-term commitments. Of course, FICOM is under the Ministry of Finance, which really does that work.
T. Nebbeling: As a side question, then, were the New Home Warranty people certified to provide it under FICOM, or were they outside that requirement because they were more of a voluntary warranty provider?
Hon. J. Kwan: The new home warranty program is a volunteer program that was established by the Canadian Home Builders Association. That is regrettable, because as a result of their collapse, many of the homeowners find themselves in a compromised situation. But New Home Warranty is a volunteer program. It is not under the scrutiny of FICOM.
T. Nebbeling: When New Home Warranty was being considered as one of the providers of the mandatory warranty
[ Page 12760 ]
program, did that mean that at that time the homeowner protection office requested that the New Home Warranty people go back and start the whole process of certification again, as they would have changed from a warranty provider on a volunteer basis to a warranty provider under a mandatory requirement by the government?
Hon. J. Kwan: If New Home still existed under its previous incarnation, they would have to have the necessary approvals from FICOM for them to meet the requirements of the act. They would have to follow whatever procedures are necessary, as required by FICOM.
T. Nebbeling: Did that process happen? It is understood that at the time -- let's say February-March -- when we were talking with the homeowner protection office about the availability of a mandatory warranty provider, New Home Warranty was actually going to be the provider of the service. There were some other companies lurking on the horizon that were also interested in providing the insurance. But I was given the message that the justification for the May 1 date for the introduction of the mandatory warranty program was, to a certain extent, driven by the fact that New Home was actually going to be the major provider, as they had the portfolio pretty well under control -- since they had been, up to then, on a voluntary basis, the only one. So New Home was, indeed, recommended by the homeowner protection office as a provider. Did New Home, at that time, have the certification from FICOM that was required from all the other operators or providers that were seeking certification?
[1510]
Hon. J. Kwan: Just to clarify one point. First of all, the homeowner protection office does not recommend anybody for the warranty programs. The warranty providers are, indeed, private providers -- from the private sector -- and anybody can come forward. As long as they meet the tests of the act and are approved by FICOM, they can become a warranty provider.
With respect to New Home, as far as we understood, they were in fact embarking on a venture to join up with somebody else to create a new company and to become sufficient, not as a voluntary warranty provider but to partner with somebody else and become a full insurance company. That, we eventually learned -- through the media and others -- collapsed. So therefore that did not proceed.
The biggest issue with respect to the delay is that there were some 1,600 builders who were clients of New Home as the warranty provider. Because of the 1,600 builders who had relied on what they thought was a viable third-party warranty provider, to proceed on our original schedule would, we believed, cause some problems for those 1,600 builders. We didn't want to create that situation for those builders, so we extended the warranty requirement until July 1.
T. Nebbeling: Without getting into debate, if the minister felt the level of
confidence about the providers available for builders
For that reason I am asking if the New Home Warranty people, who already had a
portfolio of 1,600 builders -- they had to look at new projects as well, of course -- were
certified under FICOM or had a special dispensation from having to provide that kind of
assurance, in a sense, because of the licensing requirement. That answer has really not
been given yet. I believe -- just to round it off -- that around February and March, if
there were requests to the homeowner protection office
Hon. J. Kwan: There were some applications for licensing that did come into the office. However, they did not secure the warranty requirements per the act, because New Home did not meet the requirements per the act and did not have the necessary approvals from FICOM to be the warranty provider.
Just for the member's information, New Home Warranty was not an insurance company. They were a non-profit company that was established in the 1970s by the Home Builders Association to run a voluntary warranty program for its members. New Home's funds were based on the fees that were collected from its members and were not subject to the strict requirements relating to the setting of fees, reserves and other business financial tasks that real insurance companies must undergo through the provincial and federal regulators. New Home's reserves were not sufficient to withstand the financial pressure of the leaky-condo crisis. As a result, they collapsed. Prior to that time, no providers were in fact in the position to offer the warranty requirements per the act and to meet the tests of FICOM -- until recently.
[1515]
T. Nebbeling: There is no documentation anywhere that would say to a builder who wanted to apply for warranty status on a new project that they had been directed at this time that there was only one provider -- not an insurance company, but a provider of the service available -- which was then New Home. That didn't happen, I take it.
Hon. J. Kwan: Absolutely not.
T. Nebbeling: At the time of, let's say, around February, March, April, how many applications to provide home warranty services were in front of FICOM?
Hon. J. Kwan: I actually don't have that information. That is with the Ministry of Finance. FICOM is actually with the Ministry of Finance, and I don't have that information.
T. Nebbeling: That's strange, because when I met with people in the homeowner
protection office
[ Page 12761 ]
was told -- although the number wasn't sure or certain -- besides New Home's, there
were a minimum of three other certifications in the process and that indeed these
certifications were about to happen. A licence number would be issued to these three other
companies, thereby having a pool of four different providers of home warranties in British
Columbia. Maybe the minister can check with staff to see
Hon. J. Kwan: As far as we know -- again, this is within the purview of the Ministry of Finance -- there could be three in progress. One, we know, has been approved, and that's London Life Insurance Co., to whom they've actually made an announcement that they're operating and they've been approved.
T. Nebbeling: I received a letter from the minister on April 14, after I'd written to the minister urging her to reconsider the introduction date of the home warranty program. I had some information that led me to fear that very few builders would have been able to get the home warranty and, indeed, in order to get a building permit, the home warranty had to be part of the approval process. With the information that I had, it was just not going to happen.
I did urge the minister at that time
The minister says she doesn't know how many were applying or how they were applying -- how the process was working -- because it was the responsibility of the Ministry of Finance. But her letter to me indicated differently. Can the minister stipulate or maybe explain to me why then, on April 14, she denied that there was any problem with the startup date of May 1, as she stated to me in her letter?
Hon. J. Kwan: The process of a warranty provider's application certification is one where the provider would have to go through FICOM, which falls under the Ministry of Finance.
[1520]
Up until recently, my office has been in touch with various folks to inquire about the progress to date with respect to potential approvals of warranty providers. We have no way of making any statements for certain, one way or the other, because we do not control the approval process. We have been kept up to date, to advise us that there are a number of providers who are interested and who are in that process. As the member knows, the one that was approved for April 30 and that is now operating was London Life. That is the history with respect to warranty providers and the approval process.
Hon. Chair, I'd like to just ask a question through you to the member, for the purpose of clarification and efficiency of staff time. My understanding is that the member intends to continue on the homeowner protection office issues right up until dinnertime and that it is his intent to go back into Ministry of Municipal Affairs issues after dinner. If in fact that is the case, could the member please confirm with me, and then perhaps I could send my ministry staff home and then have them come back after dinner, for the purposes of efficiency within the ministry's work.
T. Nebbeling: Certainly we will continue with the team here, so anybody else
with other things to do
Interjections.
T. Nebbeling: I'll have to recall your last answer: we have one provider now. Maybe this is time to change a little -- though we're still talking about the warranty -- and look not so much at the role of the homeowner protection office and the working relationship. I'd like to ask a couple of questions on the providers of the home warranty. Maybe the minister can tell me the fees that will be charged for providing the services -- the warranty. Are they a uniform fee? Are they controlled through a body, or is every warranty provider able to set its own fees and the conditions under which the home warranty would be provided to a builder?
Hon. J. Kwan: We anticipate that the fee would be somewhere between $600 and $1,200. That would be dependent on the qualification of the builder, as well as the type of housing the builder is building. It would also depend on the geographic location.
T. Nebbeling: How would these fees balance out against what the New Home warranty traditionally cost?
Hon. J. Kwan: Generally speaking, they're about two or three times higher than what New Home Warranty -- which has gone bankrupt -- was providing.
T. Nebbeling: Once there is a second, a third and a fourth provider available, would these fees be subject to market forces? The reason I'm asking this is that we could consider that there's going to be a relatively small demand for this warranty program, especially this year -- next year it's foreseen as well -- because of low housing starts. How does the minister see the protection for the buyers of the warranty -- that indeed, for what they pay, they're going to get what they would expect, which is full coverage? Is there any way that we can see providers going into competition with others? Often it is going to be the price of the product that they sell that will dictate the successful provider.
[1525]
Hon. J. Kwan: Certainly market forces will dictate in terms of what the fee structure would be over time. That will certainly be impacted, I anticipate, with the rebuilding of the confidence and the quality of the residential construction industry. That will also, I'm sure, impact the fee structure. But that would happen over time, in terms of that development.
With respect to protection for the consumers, there would be minimum standards, which have been established in the act, that the warranty provider must meet. And in order for the warranty provider to be a warranty provider, they must also, as we said earlier, meet the tests that have been set out by FICOM to ensure that the protection is there for the consumer.
[ Page 12762 ]
[B. Goodacre in the chair.]
T. Nebbeling: FICOM keeps coming back, and obviously the minister is not
responsible for that body. However, much of what her agency will use, I suppose, to
monitor the success of a provider as far as fulfilling his or her obligation to their
clients
Hon. J. Kwan: As mentioned earlier, a warranty provider must be approved by FICOM, who will ensure that they are skilled in the area of insurance underwriting and that they will be financially capable of honouring their long-term commitments.
T. Nebbeling: Especially that last part
Hon. J. Kwan: To further clarify the New Home warranty and the voluntary structure, the voluntary structure was one that was established by New Home without any regulations in place. They were not required to meet any financial tests with respect to FICOM and other regulators. I think that would be the major difference between New Home and what is now existing with respect to the mandatory warranty program. The mandatory warranty program requires a basic level of minimum protection for consumers. In addition to that, they must also meet the regulators' tests to be an insurance company, and to meet the test of being able to provide for long-term commitments, the assets each of these companies that would be approved by FICOM must demonstrate that they have sufficient assets to do so. As well, generally speaking New Home was a single-purpose company, if you will, versus the large general insurance companies with billions of dollars of assets.
I think that that would be the most significant protection for consumers -- being able to pay out your commitments when required to do so, which New Home was not able to do, because they weren't regulated in any way, shape or form.
[1530]
T. Nebbeling: I appreciate that explanation, because I think that that is the thing that worries me the most -- that down the road the providers who feel the crunch one way or another, whatever it's caused by, would not have the opportunity to do what New Home Warranty did, and that is basically declare themselves insolvent and then walk away. It's still something that I think we have to go a little bit deeper into.
I understand that the warranty providers do have an underwriter, and I would like to talk a little bit on that. One of the abnormalities I see now is that the applications that were supposed to be approved in March, and then in early April still today don't have their certification number. I'm talking about three of the companies. I've got them named here somewhere, but I'm sure that Mr. Ramsay has got the names there; I can find them if you want me to. Something has been holding back FICOM from issuing these permits.
I would like to ask Mr. Ramsay if he's got any knowledge as to why it takes so much time. I think the providers are fairly well recognized insurance providers, and it surprises me, considering that the expectation, in March at least, was that these certification numbers would be received within a week or two. Clearly two months later they're still not there. Has the minister any idea what could be the cause of that?
Hon. J. Kwan: I believe that the companies the member might be searching for include New Home Warranty, National Home Warranty, the Willis Corroon Group and Residential Warranty Co.; and as I said earlier, London Life has received their approval. Part of the problem, I'm advised by staff, is the application, in terms of providing FICOM with all the necessary information for FICOM to check thoroughly the ability of these companies to provide the insurance necessary. As far as we know, some of the applications went in last month, so the time in terms of when you put in the application is a factor for consideration, as well as the tough tests -- fair enough to say -- that FICOM has established to make sure that in the interest of consumer protection, whomever they approve are actually in the position to meet their financial commitments, if that is required, over time.
T. Nebbeling: I am not trying to be a panic creator or see the sky falling down when the sky is not falling, but there is something which just doesn't jive at this point. To me, what really is a warning signal, without being able to identify it, is the fact that after two or three months of a warranty provider trying to get certification from FICOM, it is not happening. Now, at the same time that this is not happening, there is something else happening, and that is that the building industry has gone down considerably as far as new building starts are concerned. If indeed these building starts are not happening, obviously they're not going to apply for the home warranty. It would mean that the warranty providers are looking at considerably less income than, I'm sure, they anticipated at the time when they were looking for certification.
[1535]
My question for myself and maybe to the minister as well is
It's only the underwriter who will provide the assurance that in the long run the warranty is being covered. It doesn't take a mathematician to figure out, with the reduced development in this province, that it has a consequence; it has financial consequences. Has the minister any information on that aspect?
Hon. J. Kwan: Just to clarify, first of all, the insurance companies that we're looking at or who are brokers, if you
[ Page 12763 ]
will, in providing the insurance on residential construction are multipurpose general insurers, versus New Home, which is essentially a single-purpose insurer. So there's a difference in terms of their asset base and the line of business that they engage in.
The other thing, as well
T. Nebbeling: As the minister and her staff are aware of the situation with the underwriter, does the minister have information on what the minimum requirements are for underwriters to sign a contract with these providers, as far as the warranty program is concerned?
Hon. J. Kwan: No, we don't.
T. Nebbeling: Is the minister aware if any contracts have been signed between the providers and the underwriters?
Hon. J. Kwan: Those are private business arrangements between the underwriter and the broker. We don't have that information.
T. Nebbeling: Maybe, then, I can enlighten the minister a little, and her staff
as well. I have it from a very reliable source within the system that the minimum premium
payment on an annual basis
Hon. J. Kwan: With respect to the question about whether or not a company would have to pay out $1 million in order to get an underwriter, we don't have any of that information. Nor are those requirements or any such business arrangement established by the provincial government. It is entirely up to the company itself to negotiate and work out whatever arrangements they need to engage in this business.
[1540]
T. Nebbeling: I understand that the provincial government cannot dictate these conditions, but at the same time the provincial government is very interested in having a pool of providers available, as companies that can provide the services that are required under the new mandatory requirements. So maybe this is something that could be taken not as advice from me but as a comment that you can check on. The information I've been given is that indeed one of the reasons the providers are facing serious trouble in getting the certification is because of the lack of creating that financial premium amount that those providers would require in order to complete a deal.
I am concerned about this, because if this is indeed the case, then we could well face, come close to July, one provider of the warranty. If that is the way we should have this program being done, then that's up to the ministry, of course. But I think there was always some level of accommodation in the fact that there was more than one provider.
Let's go beyond the financial situation. Once a home warranty company has underwritten
a project, can the minister tell me what the role of that warranty company is, then, as
far as
Hon. J. Kwan: They're not required to be involved. However, what they would likely do is inspect various high-risk projects.
T. Nebbeling: The underwriter accepts the project and signs the deal. Because of the deal, the building permits are issued. Then, after that, the underwriter has the right or the liability to go onto a site and monitor the project in the process of the project. Is that what the minister is saying?
Hon. J. Kwan: The underwriter or the broker would have the right to inspect any project that they wished to inspect.
T. Nebbeling: That is after the insurance has been provided, I take it.
Hon. J. Kwan: Yes. Presumably they would want to inspect to ensure that the building is being developed as per the plans, and meeting various regulations, etc.
T. Nebbeling: Isn't that the role of the building inspector in a community, or the building inspection branch of a community -- to establish that indeed the building is built according to the plans?
Hon. J. Kwan: Yes. The inspection role, of course, falls within the municipalities, which have various inspections, and they will continue to do that work. However, if the underwriter and/or the broker wish to do their own inspection, that's completely for their own purposes with respect to the risk that they might be faced with -- to assess the risk that they're faced with, in terms of financial risks.
T. Nebbeling: That's an interesting scenario. If indeed the insurance company goes on a site and finds something that is not totally to their satisfaction, what rights do they have to deal with that?
[1545]
Hon. J. Kwan: In that function, I presume that the insurance company -- the broker or the underwriter -- would have a contract with a particular builder. If the particular builder is not meeting the requirements of their contract, then they would have appropriate actions that they may want to pursue.
T. Nebbeling: So the minister is actually saying that we have a Building Code and we have building standards that we impose on builders, but in order to allow the provider of a warranty to feel comfortable providing that insurance, the company can actually impose new rules and regulations as far as the construction of that building is concerned.
[ Page 12764 ]
Hon. J. Kwan: Not new rules, but rather to make sure that if the insurance company or the broker wishes to inspect various buildings to make sure that their financial risks are protected, they have the authority to do that. Their inspection would be no more and no less than what has already been established in terms of what the code is. It has been clearly stipulated.
I think the main point here is this, hon. Chair: that for the insurance company to engage in this exercise, if they wish to, it is to protect themselves in terms of the financial risk with respect to them providing the warranty provisions with a particular builder. If they wish to assess the financial risk, they may well engage in that exercise, although they are not required to. And with respect to ensuring that the inspection and codes are applicable, it would be all the existing codes and regulations that are in place.
T. Nebbeling: These are, then, the codes and the regulations that are dictating the action of a building department, as well, when they do inspection. I heard the minister saying earlier on that before they have a contract with a builder, the server or the provider of the insurance has to write out and put some conditions in there that they want to see met. That is what concerned me, and that's why I am asking the questions.
Do insurance companies have the right to stipulate conditions that would not be required under the Building Code or the building standards branch and that would in a sense be either more demanding than a building department or an engineer's plan would reflect? I don't understand where the authority for a warranty provider is given to do the checking of the product and the quality of the product, when that is exactly the role that the municipal building department would fulfil.
I would suggest that in order to avoid conflict and potentially serious problems, it's
either-or: either the insurance company does the inspections and then certifies the
quality to be according to the plans or the building inspector does. If a building
inspection department approves an occupancy per building, and the insurance company says:
"Well, wait a second. We are not totally satisfied; we would like to see this being
differently
[1550]
Hon. J. Kwan: Just to clarify the process with respect to consistency on Building Code requirements, if the broker or underwriter wishes to inspect a builder's particular project, they have the authority to do so. They have the authority to ensure that their financial risk, with respect to the insurance of this particular project, is minimized by ensuring that the builder's project meets the existing code. They do not have the authority to impose what would exceed the code that has been established. It would be important for them to make sure, if they wished to do so, that the builder was building to code, for them to assess the financial risk that they may have with a particular builder.
T. Nebbeling: So it is duplication of what the building department is supposed
to do, by law. For any violation of the code, the building department red-tags the
building and gets it corrected. Are there any authorities given with the insurance company
If the insurance company finds something in a project that they deem to be
non-complying with what they expected to be built, based on the code and regulations, and
the building inspector of a community where this building is being developed says:
"No, no. This is exactly the way we want it
Hon. J. Kwan: The member is speculating on what may happen. Based on that speculation, the issue would need to be dealt with between the various parties for it to be resolved.
T. Nebbeling: I mean, it's fair to say that interpretation of a code
Then the next question I have in relation to this is: if indeed the parties cannot come to an agreement of who is right as far as compliance with the code is concerned, what authority would that insurance company have as far as dealing with this client, who, up until then, the insurance company has provided a warranty for?
[1555]
Hon. J. Kwan: Just to be clear, with respect to any inspection, if the insurance broker or the underwriter wishes to inspect a particular project, that inspection would be entirely for their own purposes; it would not be for anybody else. If they do do that, it would be entirely for them to assess the financial risk they are faced with by being the insurance provider of a particular builder. That would be why they would engage in that work.
In terms of a discrepancy that might arise, it would be between the broker and the builder, through their builder's agreement. If they have discrepancies or disagreements arising out of that, they would need to resolve that amongst themselves.
T. Nebbeling: Does the insurance company -- if they do not come to terms with the builder -- have the right to cancel the insurance?
Hon. J. Kwan: We do not regulate the agreements between the insurance provider and the builder. It is entirely up to those in the private sector themselves to come to their arrangements and agreements with each other.
[ Page 12765 ]
T. Nebbeling: The whole purpose of the warranty program is to ensure that in the future no builder can build a product that, if proven faulty -- with certain conditions in place; the two-, the five- and the ten-year provisions -- would leave the warrant company liable for rectifying the damage.
What I hear now from the minister is that a builder applies for a warranty. He gets approval; otherwise, the builder cannot get his builder's licences. Then he builds his product. The building inspector of the jurisdiction approves the product. The home warranty people come in, have a look at this and say: "We still find, as it stands there, that it's too much risk for us, so we want you to do more." This means that the builder has to go over and above what the building codes and the regulations stipulate, because that has already been taken care of through the building inspection process.
Then the minister says that there may be a way for the home warranty provider to get out of the deal by saying: "You're not complying with our requirements, and for that reason, we will cancel the insurance." A consequence of that is that here is a builder who has built a project and has maybe sold the project already, and we're going to have a whole group of new owners sitting on the project where, for the next five or maybe ten years, we're going to have a legal debate about whether they're insured or not insured.
I mean, this has to be so clear. This is something that really worries me -- that we allow the door to be open for warranty companies to reassess their commitment to a project by having the right to basically argue with the Building Code, the regulations and the people that enforce them. This is not speculation; this is a consequence that can happen. Can the minister assure me where she has found the assurance that a scenario like that will not develop?
Hon. J. Kwan: If a warranty is revoked during a construction for whatever reason, then all the sales -- if sales were made prior to completion of the project -- would collapse. It is required by legislation that the dollars be returned to the purchasers.
T. Nebbeling: You, the minister, have given incredible powers to warranty
providers here, because basically, unless a builder is willing to play to the whims of
whoever does the inspection on behalf of a warranty company
[1600]
I mean, this is unbelievable. With regulations like that, who is ever going to invest in this province in construction projects when that kind of cloud hangs over their head at any time? So where is it written that insurance companies and providers of home warranties are going to have that kind of incredible power, undermining many of the things that we had hoped this whole program would do?
Just to go on for a second, if I take the word from the minister correctly, she says:
"So, you know, the project goes on its way, and then for some reason there's a
discrepancy between the warranty provider and the builder. So the insurance company pulls
out, the money is refunded to the potential purchasers -- whatever down payment they made
-- and then we are going to have an empty building there that according to the building
department is just fine." But because an insurance company deems it not to be to
their liking
I just don't understand how the minister can be on this path, giving insurance companies that kind of power and, worse than that, allowing financial institutions, builders and new homeowners to see their deal collapse time after time, not because of government regulation but because of interpretation by an insurance company on the compliance of a building. It just doesn't make sense.
I think that once that becomes public, it's going to be doing even more damage to the building industry. So maybe the minister can respond to that.
Hon. J. Kwan: The fact of the matter is that the warranty provider needs to build a relationship with the builders. They need each other for both of them to engage in this private sector business. The builder needs the warranty provider, and the warranty provider needs the builder. So it's important to remember that as well.
Government does not regulate the agreements between the builder and the warranty provider. Those in the private sector themselves engage in negotiations and discussions with respect to what that agreement would entail and how it would look. And finally, with respect to the warranty provider somehow exceeding the regulations and requirements per the Building Code, or with the municipalities through their inspection, it is highly unlikely that that would happen. In fact, they would not be able to establish any standards. That is inconsistent with the existing Building Code.
T. Nebbeling: This is a very serious situation, and I agree with the minister
that no warranty provider can establish conditions that would erode the Building Code,
that would be below Building Code standards. But I would suggest that the way the minister
creates the scenario and gives the insurance companies power, they could well demand
standards far in excess of the Building Code and in excess of the building standards
branch. So this is an incredible tool to not only undermine the building industry again
[E. Walsh in the chair.]
The government cannot say: "Well, it's just between these parties." No, it is a mandatory warranty program that this government is demanding. I think it is the responsibility of the minister to ensure that the process of this program is going to be done in such a manner that it will indeed provide assurance for homeowners that if something goes wrong, they are insured -- and in such a manner that it will not be seen as undermining the building industry, as it would in the way the minister has just explained the powers she thinks insurance companies should have.
I can't go on on this one, because I would just repeat myself. But I think this is going to be a big debate in the
[ Page 12766 ]
building community. I'm certainly going to call the people I know in the industry and make them aware of this, because before anybody is going to commit $30 million or $40 million for a multi-complex, I think they want to make sure that nobody can put a gun to their heads. The consequence is what we've just been discussing here.
[1605]
So I would urge the minister to revisit this issue and really, somehow, find ways to
eliminate the warranty providers' opportunity to put conditions in front of builders
More building supplies businesses will look at who they are going to supply. In this
business, as the minister is well aware, you pay a percentage up front, and then the
builder's work starts, and at the time the building gets sold the bills get settled. Well,
if I was a supplier, and I knew there was an opportunity for a warranty program provider
to pull the insurance back again because of the conditions under which the minister is
willing to allow warranty providers to work, then, I would suggest that, as a building
supplies supplier, I wouldn't necessarily be welcome
I think this is a very serious situation, and hopefully, the minister will continue to look at it and then put things in place that will deal with my concerns that are, in my opinion, real.
Hon. J. Kwan: Just to reassure the member opposite -- for particularly the high-risk buildings where, I suspect, an insurance company or an underwriter may go and do some inspection -- one thing to remember is that the conditions that are established in the agreement between the various parties are conditions that would be established in their agreement up front. And if any inspection is undertaken, it would be to ensure that those conditions are indeed met. If those conditions are not met, then that's where the discrepancy may arise.
It is important to note, as well, that in meeting those conditions, you can match it
per the plans and the specs that have been provided by the builder to ensure that those
two things are consistent. So essentially
T. Nebbeling: Just quickly then, as a follow-up to the last statement
So I would suggest to the minister that the way out here is that if a building department approves the work done by a builder and gives occupancy to that building, no warranty provider, wherever they come from, has the right to question the building department's issuing of the occupancy permit, because the issuing of an occupancy permit has some legal triggers in advance, as the minister knows. You have to advertise, as the builder; you have to make legal statements that you have complied. So if it was worked into the whole system that the warranty provider cannot argue or debate a building department's decision to give occupancy, that would put my mind considerably at ease. If that is not the case, then I know that we will be walking into a nightmare. What is worse, with that kind of condition there is no investor who will invest in a project that may not be approved at the end of the day -- sees its warranty broken and sees its potential customers having been refunded the down payment. It is serious, and I think we will visit this one again, not necessarily today. There is definitely something fundamentally wrong.
[1610]
If an insurance company would go and inspect the building, do they have the right to charge for the cost of this inspection, be it the travel of the inspector or the hiring of a consultant who does the inspection? Is there any provision that the builder will not be given an additional bill related to an inspection that an insurance company wants to provide?
Hon. J. Kwan: That would be up to the builder and the agreement which the builder enters into with the insurance provider.
T. Nebbeling: I've seen an application form that was presented to me and a couple of my colleagues as a very simple document. You know, you fill out the name of the company. You fill out this, and you get a stamp there, and you're in business.
Now I hear the minister suggesting that each development would require -- because of ministerial demand -- a warranty program to be associated with the development; that each development can actually have an individual contract, with individual conditions on that building. If that's the case, I would like the minister to clarify that a little bit better.
Hon. J. Kwan: The answer is no. It's a third-party relationship between the builder and the insurance broker. They can enter into whatever arrangement they wish. We are not requiring them to engage one way or the other; it's entirely up to them.
T. Nebbeling: The construction industry, when presented with the mandatory warranty program, reacted with some concern -- not about the program itself, which they supported, but they were certainly concerned about the financial consequences of a mandatory program; there had to be some guidelines so that this couldn't get out of control.
What I hear now from the minister is that there is really no limit to what insurance companies can charge as part of providing that warranty, including -- who knows? -- three inspections, with a consultant coming from out of town to look at the project and whatever else the consultant can come up with. The builder, in order to get the warranty -- because he's got a gun to his head because of the mandatory form of this warranty program -- has to basically accept everything
[ Page 12767 ]
the warranty provider stipulates as conditions for consideration of insurance.
I mean, this is going to be a further nightmare if the minister cannot understand that,
unless how the mandatory warranty process works is regulated
[1615]
But to hear now that there are going to be opportunities to set the terms and that if
you're not willing to do it even if these terms go well beyond the Building Code and the
building standards, then you're not interested
My main, main, main concern, ultimately, is that this is the attitude and the scenario that will further cut new building starts in British Columbia. I come from a business background. I've dealt with a lot of developers in Whistler, and no one more than the developer knows that unless he or she can get that project off the ground and have a project that can be sold, they're not going to be there.
Banks will have a very difficult time looking at mortgaging -- you know, construction mortgages -- if they somehow, halfway through the project, can have an insurance company say: "Well, we're really not totally happy with that. I know the Building Code says you can do it this way, but we would like you to use four layers of gyproc in order to create more safety as a fire barrier." It's outrageous that a company is given the right to put builders in that position, and I think this is just going to come back and haunt this government for as long as you're here. In future, changes will have to be made.
So I think I've put on record my thoughts on the warranty program and how it will be implemented. I think the minister is going to be exposed quite soon to some of the problems that I've identified here, because this is just an open door. Normally I would call it a shotgun clause, but there is no clause; this is just a gun to the head of builders. I don't think this is how we do business in British Columbia.
I would like to go to the reconstruction loan fund, if I may. There's still a lot of confusion about the reconstruction loan fund, primarily about the decision-making process -- who gets it, who doesn't get it, who qualifies, who doesn't qualify. Maybe the minister can give me a quick overview of the program -- where the funds are, how they are distributed -- and we will take it from there. I have some other questions.
Hon. J. Kwan: With respect to who's eligible for the homeowner reconstruction loans, they are essentially for people who do have homes that leak because the building envelope has failed sooner than it should have. If the homeowner does not have sufficient savings or investments to pay for the repairs, they are eligible for the loan. The requirement is $10,000 in liquid assets, excluding assets in RRSPs and pension plans. If the homeowner does not have enough equity in the home to qualify for a standard loan through the bank, they can then apply through the HPO to access the loan program. The homes that would be considered are based on the coastal climatic zone; and, as well, leaky co-ops are also eligible for the loan. As of May 18, 1999, some 526 loans for over $10 million have been approved. The homeowner pays the principal of the loan, and the HPO pays for the interest on behalf of the homeowner.
T. Nebbeling: Can the minister explain where that fund is -- the $75 million that is earmarked for this? Is that actual capital, or is that just to cover the interest of the loans?
[1620]
Hon. J. Kwan: The government has committed up to $75 million for the reconstruction
loan program. To date, the dollars that have been spent on the interest side
T. Nebbeling: So this is interest -- and that is interest over how many years?
Or is it just interest on an annual basis -- the $8-10 million? Does that reflect the
interest? Is it over the amortization period of the loan, or is it just an annual
Hon. J. Kwan: The $8 million that was identified is the interest component of the loan programs that we have committed to. In terms of the repayment plan, generally speaking, you're looking at perhaps a 25-year time span. But those are engaged individually with the particular homeowner, where we engage and agree on a repayment plan for them. So it varies from homeowner to homeowner.
T. Nebbeling: There must be a formula that works here. If, for example, that
$8-10 million -- let's say $10 million, to round it off -- reflected the interest to be
paid on the capital that will be repaid by the individual homeowners
So the $10 million -- or the $8 million, if you feel more comfortable with that number
[ Page 12768 ]
Hon. J. Kwan: The formula the member is asking for, I believe, is the interest rate that would be applied to the principal of the loan. The interest rate is what is we take from the bank prime rate. So we use that to calculate the interest. The $8 million, just to clarify, covers the interest component. It also covers some instances where we have a deferred-payment loan program, where people are at much higher risk. They're not able to attain the loan program in a normal standard, and they're not able to pay back the minimum $50 repayment into the principal of the loan. We make a special arrangement with them. Those are what we call the deferred-payment loans. The $8 million also covered that component as well -- as well as, of course, the administrative cost.
[1625]
T. Nebbeling: I understand that this is maybe a bit complicated, but the point is
that there is a $75 million fund available to assist homeowners who, under certain
circumstances, require assistance from the provincial government. What I need to hear is
that this $10 million or $8 million that has been spent so far on 526 projects
Hon. J. Kwan: To break it down for the member, with respect to the $10 million; $8 million is actually from the banks and $2 million is through the homeowner protection office on the deferred-payment loans. Of course, we've committed our bridge financing and will utilize the dollars as they're necessary, as the program evolves.
T. Nebbeling: Now, that explains it. The $8 million is really the money that the banks have paid out and the $2 million is the portion for the destitute who just do not have the money at all and cannot pay either. So the government is actually out $2 million, in a sense, and not $10 million. I think that's important to know, because people get the feeling that the government has paid $10 million toward these programs. I didn't think that was the case.
We now know that $2 million of that $10 million fund includes the payments of deferred
payments for people who are just not in a position to even pay their regular loan. How do
people who are in this situation or in conditions where they just cannot even fulfil the
obligation of payment of the loan itself -- not counting the interest
Hon. J. Kwan: Generally speaking, the people who will qualify for the deferred-payment loans are folks who are on fixed incomes, particularly seniors. Generally speaking, their monthly net income is less than $1,200 a month -- or rather, $12,000 a year, in terms of their net annual income -- and their repair costs are greater than their net income. They're unable to secure a loan through the bank in the regular process. Then they come through to the HPO, and then we assess them on that basis.
We also have for the member, if he wishes to have it, a copy of the frequently asked questions about the homeowner protection reconstruction loan program. We can provide that to the member as well. It actually highlights some of those questions that the member has raised and perhaps other questions that he may have.
[1630]
T. Nebbeling: I think that it would be helpful for any MLA anywhere to have these
kinds of questions answered. There are a considerable number of people who really do not
understand how to get into the program. Maybe the minister, for my clarification and that
of my colleagues, could give me an overview of the process -- not only how to apply, where
to get the forms and how it is being assessed, depending on the decision by whoever makes
the assessment
Hon. J. Kwan: We actually do have a guide for the homeowner reconstruction loan program. It talks about who is eligible and what climatic zone, how a person applies, what happens after they apply, what the maximum loan available to them is, and what the obligations are as the borrower. We can provide these documents to the member, which highlight all of those questions.
T. Nebbeling: Could the minister, then, also explain to me
Hon. J. Kwan: There are four loans officers at the homeowner protection office. They assess all the applications to ensure that there is consistency. They also issue the approvals to the bank. If the bank is not in agreement, then on those deferred loan programs, we actually approve them through the homeowner protection office.
There isn't really a formula per se that is applicable but rather the overall criteria for eligibility, which I touched on with respect to basic assets, maximum liquid assets -- the RSPs and pension funds; an individual is not required to cash their RSPs or tap into their pension funds, etc. Those would be the criteria that we would apply. As I said, we can make that guide, in terms of eligibility, available to the member.
T. Nebbeling: I was distracted by my colleague for a second. Did you give me the dollar figure that is allowed as income on an annual basis? Or is there a dollar figure where the assessors would automatically say: "With that kind of income, you do not need our services" or "You do not have the need to go into the reconstruction loan fund"? Is there a dollar figure like that?
Hon. J. Kwan: There isn't an income level per se that would be applicable, because the other components that would have to be taken into consideration would be the
[ Page 12769 ]
individual's mortgage, in terms of how much they have to pay with respect to their mortgage, the debts that they have to service and a variety of other things. So we don't base it necessarily on the income level per se, because different people have different situations which they have to address, and we take all of those issues into consideration.
[1635]
T. Nebbeling: I understand that there are many factors that have an impact on that,
and that's why I assumed that you understood I was talking about net income. So once all
payments are done -- all financial obligations are fulfilled -- is there an amount that if
they go above, then what is left for the individual to consume, so to say
Hon. J. Kwan: No, there isn't a base level such as that. I mean, aside from taking into consideration their mortgages and the debts which they then have to service, the factor of the cost of the repair also comes into play. So it really varies from person to person, in terms of what their situation would be. But ultimately, I think the last test is this: if a person can go to the bank and apply for a loan on their own -- which indicates that they are able to finance their own repairs accordingly per the standards of the bank -- then they would not be eligible for a homeowner protection loan through the homeowner protection office.
T. Nebbeling: I'm trying to see if I can eliminate some questions, because I'm not going fast enough, and I'm looking at the time.
I want to change a little bit, then. We have talked about individuals who because of
their situation would qualify. And as you stated earlier, of the 700-plus applications,
526 were approved. Do they always get approved for the full amount? Or do we see
situations where the decision is made to finance half and then the individual
Hon. J. Kwan: There is no specific amount that's identified through the loan
program. Again, taking into consideration the factor that building and individual
circumstances vary
T. Nebbeling: I'd like to look at another group.
No, before I do that, maybe the minister can clarify. What parties have been exempt from paying into the fund? And is that group the same as it was at the time that the homeowner protection office was officially put in place?
Hon. J. Kwan: The main categories are rental housing, social housing, single-family construction and owner-builders.
T. Nebbeling: My colleague wants to know if the exemption includes condos at Whistler. I don't think so -- recreational properties. Well, I couldn't ask that myself. We studied that this morning.
Just to move on with the home protection fund, I would like to look at the group that became a beneficiary or potential beneficiary of the reconstruction loan fund at a later date, and I'm talking about co-op buildings. Can the minister give me a history on why co-op buildings were not part of the property owners that could apply for the reconstruction loan fund? And what caused the minister to change that group from being excluded to being included?
[1640]
Hon. J. Kwan: Originally the reconstruction loan program was targeted to individual homeowners. The co-op sector, as I know the member well knows, is not considered as individual homeowners in that sense. Since that time, they have written to me as well as to the federal government, requesting assistance from the federal government. The federal government has not responded positively to their request. They subsequently have written to me and asked for assistance from the provincial government. I then went and travelled to Ottawa and met with the minister responsible, highlighting the problems that the co-op sector was faced with -- because a lot of the co-op programs themselves are indeed under the federal government's programming -- and asked them to review their policy around this issue. To date, the federal government has not responded positively. The co-op sector was faced with a tremendous issue, and they have asked me to reconsider our provincial policy on that. We have made changes to include them in the reconstruction loan program.
T. Nebbeling: Can the minister then explain to me what the potential financial consequence would be on the reconstruction loan fund by including projects rather than individual owners?
Hon. J. Kwan: We anticipate that the impact may be somewhere between $30 million and $60 million in repair costs.
T. Nebbeling: Can the minister maybe tell me how many more dollars have been put into that reconstruction loan fund to absorb that potential $60 million drain on a fund that was intended for individual owners in dire straits? And I have some other questions on that.
Hon. J. Kwan: I think it's important to recognize that the $30 million to $60 million is the total cost of repair, so it's principal and interest. It would only be the interest component that would be impacting the $75 million bridge financing that the province is committed to providing for the reconstruction loan program.
T. Nebbeling: That's interesting, because when we talked earlier on and I tried to find out, that was my reason for asking questions on the $10 million -- what indeed that represented. I think that if we read back in Hansard, we will see that the minister stated that $8 million of the $10 million was actually the money paid out by the banks, and $2 million was other programs. There was not even talk of interest. So why would the $60 million that could be the potential cost of the repairs of the co-op structures not be treated in the same way as the $8 million that has been paid out by banks so far?
Hon. J. Kwan: The application of the loan program would be the same for individual homeowners as it would be for the co-op sector. Generally speaking, we anticipate that if
[ Page 12770 ]
the loans are somewhere between $30 million and $60 million -- that includes the entire repair cost -- the interest component would be about maybe $2 million a year.
T. Nebbeling: Let me know where that bank is. I want a loan on that basis, at that bank.
The point I'm trying to make is that the $75 million that has been earmarked as the reconstruction loan fund includes the bank portion, as far as the amount is concerned. The ministry doesn't pay it out, but you guarantee it. And the bank guarantee will require that these assets be consolidated somewhere. It's like a certified cheque. We will not pay the cheque, but if something goes wrong with the construction or the payments, then the government is on the hook. I believe that to be the case.
[1645]
So the $75 million
Hon. J. Kwan: The $75 million that the government has committed for the reconstruction loan program is for the interest component. The co-op sector will operate in the same way as the homeowners themselves in the reconstruction loan program. The principal component of the loan would be covered off by the banks. It's the interest component that would come out of the reconstruction loan program.
T. Nebbeling: Now we're back to the discussion we had earlier on. When we were
talking about the $10 million, I was trying to find out, in questioning if that $10
million reflected the value of the interest the government has committed to, and if that
is then
Hon. J. Kwan: The $8 million is not part of the government funds; it's the dollars that are provided by the banks for the principal component of the repair costs.
T. Nebbeling: Is that $10 million taken out of the $75 million total, or is it not taken out of the $75 million total?
Hon. J. Kwan: What the government has done for the first year is approve the first $10 million for the reconstruction loan program out of the $75 million in its entirety. Of that $10 million, we have now expended $2 million in the areas of the deferred loan programs, etc. So the $75 million bridge financing is committed and is there. The HPO would be able to get access to it, if it is required.
T. Nebbeling: You talked about bridge funding. In general, bridge funding means that you get your funding done, and then it comes back into the fund. Is that what you mean by bridge funding?
The other thing, of course, is that if it's bridge funding, these are, in general,
short-term loans. A builder's loan is bridge funding. That money is available for a
six-month period, and then that money comes back with interest into the fund. Now, in this
particular case, if we talk about bridge funding
[1650]
Now, I hope you're not going to give me the answer that it may be 25 years or it may
also be shorter, if the amortization period is shorter. I hope we're not playing with
numbers here. If we have so far paid out $10 million, of which $2 million is for preferred
clients and the other $8 million is to cover the loans that have been paid for by the
banks -- who in return obviously want to see security for these loans -- and that $10
million is not available until it has been paid back but will take 25 years
I know that this year and next year and every year you're going to get some money back that will replenish the fund. But that payback will be substantially less than what you're going to need because of the $60 million obligation that the homeowner protection office has taken on. So that is where I'm concerned now -- that the people who need the help right now, besides the co-op owners, are going to get shortchanged because the funds are not there. Or is there an attempt to increase the funds? Is that maybe what's happening?
Hon. J. Kwan: Just to clarify, with respect to the co-ops, the $30-60 million
projected repair costs for the co-op sector include the principal component. So we're
anticipating that annually there might be about $2 million, in terms of the interest
component for the co-op sector, that would apply to the reconstruction loan program. So we
have $75 million in terms of bridge financing that the homeowner protection office could
get access to for the reconstruction loan program. So out of that $75 million, if the
co-op sector
In terms of the question with respect to bridge financing, it is true to say that the provincial government provided these moneys to get the programs up and running. And it was clearly established through the Barrett recommendations and through legislation that we would collect a levy that would
[ Page 12771 ]
pay back the province, over time, the bridge financing dollars for the reconstruction loan program.
T. Nebbeling: One more question on that, and then I'll go on. When a loan is paid out by a bank or a credit union, does the government guarantee that loan or not?
Hon. J. Kwan: Yes, we do. It's insured by CMHC. But the provincial government indemnifies CMHC, and within the business plan we also booked a component of the dollars in terms of potential losses for default loans.
T. Nebbeling: So good bookkeeping practice means, then, that if the government guarantees the loan, these funds are held somewhere in a reserve to back up that loan guarantee. That is how it is done in normal business environments, and I would suggest that this is applicable to this loan program as well. So we cannot say, on the one hand, that for the 500 loans we have given out so far, there's a $10 million deduction of the fund, representing $2 million for individuals who need that preferred payment program, and the other $8 million is actually the guarantee for the $8 million that has been paid out by banks.
[1655]
The moment that co-ops are going to pool their $60 million, if it is $60 million
I would like to ask the minister if that had been considered at the time that the co-ops were pooled into this program, as they were not considered at the time that the $75 million was put into the reconstruction loan fund and was presented as being sufficient to deal with the needs of people that have the problems and cannot finance them themselves. That principle that was accepted at the time -- that the $75 million was the magic number -- doesn't hold up any longer, because of the commitment to the co-op people at a later date. So was there any consideration for more money to go into that fund to deal with all the applications that undoubtedly will come? When you add them all up, they will add up to more than $75 million.
Hon. J. Kwan: If there's a requirement down the road for additional dollars for this program, that will be taken into consideration. At this point in time, we don't anticipate that to be the case. But certainly we'll watch as the program and as things evolve over time.
I think what's really important is to make sure that the program provides for the assistance for individuals -- in this instance, as well as co-ops -- to ensure that those people who are living in those projects can get the repairs they need without losing their homes, which is the whole thrust behind the reconstruction loan program.
On the loan loss provision on the co-op side, my staff estimates it to be somewhere between $1.2 million and $2.4 million. As I said earlier, as well, we have booked the loan loss provision in our business plan in anticipation of potential defaults on the payments of the loans.
T. Nebbeling: What percentage of the loan has been put in that default clause section as a potential write-off?
Hon. J. Kwan: It's 4 percent.
T. Nebbeling: Is that standard in accounting, to calculate 4 percent?
Hon. J. Kwan: It's based on CMHC loan losses. As well, the provisions have been audited by the auditor general. We have just completed our first-year audit of the office. Although they are unqualified reports, we have just received our auditing process from the auditor general's office.
T. Nebbeling: The 4 percent is standard practice in situations where things are quite fluent and fairly normal. I would consider this particular situation -- and the seriousness of it -- very abnormal. There are many people who, at a latter stage of life, are confronted with the situation that they have to make serious expenditures on their home. You know, they try to take on that new liability. It is not sure that even with the consideration of an interest-free loan, most of these people at the end of the day will be able to comply with the requirements, be they financial or with the construction. And I fear that 4 percent in no way reflects the reality out there. There are many people who are looking at: "Well, we'll give it a shot, but if it doesn't work, we'll just leave the key behind." So I hope it's no more than 4 percent, because then it is less tears and heartache for owners than I anticipate could be the case. But that's speculation. I just say that as an anecdotal add-on to what we have been discussing.
[1700]
I'm not so sure that the numbers are going to work for the government. The $75 million is obviously not enough. And with the undertaking of the $60 million for the co-ops, we're going to be really watching the other 18,000 condo owners that may have to tap into this reconstruction loan fund. Some will be approved; some will be rejected. But at least there must be sufficient funds for other parties as well.
The minister made a point of how the fund is being created and that the government, in
a sense, guarantees the $75 million. But that fund will be replenished or will, at the end
of the day, be made up of contributions from builders who will pay a levy or a fee -- or
another tax, I would consider calling it -- for every unit that they built. At the time
that this was all being considered by staff, I would assume that
Hon. J. Kwan: In the business plan, staff have projected that the replenishment or repayment of the reconstruction loan program to the province through the levy would be over the course of ten years.
T. Nebbeling: At the time these calculations were made by either staff or actuaries -- I don't know -- I'm sure that certain levels of development were anticipated in the province. These numbers -- whatever you came up with --
[ Page 12772 ]
clearly must be turning out considerably lower. The forecast by the building industry was lower than the ministry's forecast in the first place, and I think it was by 5,000 units. I don't know if you saw the release today, but CMHC has again reconsidered the numbers of new home starts, or new building starts, in this province and has reduced it from a deplorable 18,000 for this year to 13,000 -- a reduction of 5,000 units. These are 5,000 units that put thousands more people out of work, of course, but it also will mean that there is considerably less money coming into the reconstruction loan fund.
Talking to the building industry, especially when it comes to the multiple-unit developers, most of the developers that have been responsible for major work in the bigger cities have all closed down their shops and moved to the States. They're building in Phoenix; they're building in Portland; they're building in San Diego. That's where you'll find all of the Vancouver and lower mainland bigger builders, and the reason is that they will not start any project under the conditions that today's builders are forced to construct under -- in particular, of course, the financial cost.
So 13,000 home starts. In 1994 -- just for the minister's benefit -- there were 42,000
new home starts and new building starts in this province. So to see new building starts go
down by almost 28,000, to the levels that we face today, and very little hope that the
industry will come back until they see considerable changes in how the building industry
is being taxed
[1705]
How are you going to stand up to the ten-year program of recuperation of this fund,
based
Hon. J. Kwan: With respect to projected starts for this year, staff have accounted for slower starts in their ten-year forecasts to reflect that. In fact, for the year 1999-2000, staff projected 2,500 units in terms of development with respect to the collection of the levy that would be applicable. So staff have accounted for the lower starts, and we anticipate that there will be a recovery to the housing starts over time. Of course, part of the exercise with respect to the work of the homeowner protection office is to rebuild the confidence in the community and to engage and to encourage homeowners to purchase new homes. So we have to take that work into consideration as we work towards rebuilding confidence in the residential construction industry.
T. Nebbeling: The number right now is 2,500 new starts. What were they in October of last year? I take it that because of what is happening in this province, staff have revised their numbers as well. I would like to know: in the ten-year program, how much was there originally? And how much has it come down? If I could have the ten-year forecast or projections from the minister as well, that would be very helpful.
Hon. J. Kwan: For the year 1998-99, staff didn't project any housing starts as they apply to the $750 in terms of the levy.
Interjection.
Hon. J. Kwan: For 1998-1999. The program was not up and running, so they didn't project any. Reflected in 1999-2000, 2,500 units will be applicable for the levy application. Those numbers have changed from a higher number. I think that staff recollect somewhere between 5,000 and 7,500 in terms of starts. Because of the implementation delays, etc., what was eventually adopted in the business plan for 1999-2000 were housing starts of 2,500 units to which the $750 levy will be applicable.
T. Nebbeling: Maybe just a quick clarification, then. If the levy were to only be charged against 2,500 units, how many units in real terms did you expect to have started this year?
Hon. J. Kwan: For our purposes, we actually don't project what the housing starts will be, overall, for all of the construction. Rather, that would fall under the Ministry of Employment and Investment. We only project what will be applicable to the reconstruction loan program.
T. Nebbeling: In order to expedite this process, I'm going to leave this one alone, but I may ask the minister to provide me with the ten-year projection.
Hon. J. Kwan: It's in the business plan.
T. Nebbeling: Is it in the business plan? Perfect. Thank you. The reason that I haven't seen it is that I didn't receive the business plan until Friday of last week. This weekend I had many other things to do; otherwise, I would have been aware of that.
I quickly would like to touch on the relationship with the federal government. As part of the reconstruction loan fund's buildup, the minister some funds from the federal government as well. Can the minister tell me how much she was looking for?
[1710]
Hon. J. Kwan: We were seeking to get $75 million in bridge financing from the federal government at zero interest or a nominal interest.
T. Nebbeling: So this was not a grant. You were looking at a repayable loan, but interest-free, I take it.
Hon. J. Kwan: That's correct.
T. Nebbeling: At the same time, I believe the minister was indicating that she would like to see relief from the GST on building products.
Hon. J. Kwan: Yes, we were also asking the federal government to consider not charging the GST on the repairs of leaky condos and other homes. We were seeking the federal government to allow taxpayers to deduct the cost of leaky-condo repairs from their income on their income tax returns, to allow for the funds to be used from RSPs to be tax-free for the purposes of repairing leaky condos as well as assistance for the co-op program, in addition to the $75 million bridge financing at below bank rates.
T. Nebbeling: At that same time, did the minister suggest that if the federal government had indeed given relief on
[ Page 12773 ]
GST and if the federal government had allowed relief or, well, the ability to deduct
certain costs from income tax
Hon. J. Kwan: What was offered -- and the offer still remains on the table with the federal government -- was for us to jointly work out a tax relief program for leaky-condo homeowners.
T. Nebbeling: Clearly the minister wasn't very clear on the components that she wanted to see the federal government contribute. Was she as clear about the contribution that the provincial government was willing to make when it came to similar taxes -- such as the GST, the provincial sales tax, the income tax write-off from the provincial portion -- and any other suggestions that were discussed with the minister?
Hon. J. Kwan: In my discussions with the federal minister, what I asked the minister's consideration for is for their office and my office and the Ministry of Finance office to work on a tax relief package. That tax relief package could include a variety of things, and the things I've listed are some of them. The PST component is another component. But what is important is for us to work out if there's agreement to provide for a tax relief package for leaky-condo homeowners and for us to sit down and work out what that package and what those components would be.
T. Nebbeling: It's no secret, so I'm going to talk freely. At the time that these discussions were going on with the federal government, it was at least reported -- and I'm not saying that it reflected the truth, but it was reported -- that the provincial government was asking the federal government for considerable financial concessions. And at the same time, the provincial government was really not willing to give anything themselves. Let's take the $75 million. The government is picking up the interest. I don't know why, at the time that this was discussed with the federal government as an issue, it didn't get solved. Now there are still letters going backward and forward to bring the federal government into the program. Are there any areas where the provincial government can show some concessions that would entice the federal government? Or does the minister think the federal government is just not willing to come to the table?
[1715]
Hon. J. Kwan: With respect to different programming on the $75 million bridge financing, the federal government originally had offered and -- I thought -- had agreed to partner up with us on the reconstruction loan program. It was after the fact that they had decided not to provide the bridge financing to us at a reduced interest rate. What they offered us was an interest rate that is current -- at the bank rate. The provincial government can actually borrow at a better rate than what the federal government is offering to us. So that is something that is not acceptable to us in terms of being responsible to our taxpayers.
To date, we have not heard back from the federal government in terms of whether or not they have reconsidered this issue. We have repeatedly asked them to reconsider. I certainly look forward to any assistance that the member may be able to provide us with respect to the involvement of the federal government on this very important topic.
T. Nebbeling: I have already started to write a letter to the federal government on this particular issue. I hope that we can see something in the near future.
But the bottom line is: what is the provincial government really giving that the federals could duplicate? I think the GST issue is being batted around. But I've not heard the minister -- and maybe today she can do that -- say that she would be committed to seeing the provincial sales tax also being taken off the purchase of building materials and any other area where the GST removal would apply. That would, I think, make a big difference when the message has to go back to Ottawa again.
Hon. J. Kwan: What the province has tabled is the offer to work jointly with the federal government on a tax relief package. If the federal government comes in with the suggestion that they would indeed eliminate the GST and suggests that the province should eliminate the PST, those are the kinds of considerations that we would be very happy to engage in with them and to work on a tax relief package for the condo homeowners.
T. Nebbeling: Maybe we have gone on long enough on this one. I think I've still got six hours of work, and I'm really trying to get it in before 6 o'clock, so I'm going to go quickly now.
The homeowner protection office finances obviously, due to the fact that you so far
have succeeded in bringing one builder on side who dutifully paid his $625
Hon. J. Kwan: The provincial government has actually provided $500,000 to the homeowner protection office to get the office up and running. Those funds are committed by the provincial government. With respect to the collection of the licence fee, as well as the levy that would be applicable to the operation of the homeowner protection office, the dollars have not yet been collected. Until those dollars are collected to repay the provincial government, the office would operate on a deficit financing basis.
T. Nebbeling: It's a good thing that this is a government agency, because in the private sector you would be busted. I had hoped that this agency would indeed have a bit of a business approach, where the financing was done within and the cost of the operation was going to be effectively collected from the charges that you impose on the builders, if indeed that was the strategy. So for the rest of the year I suppose somebody else has to carry the bag.
[1720]
Can the minister maybe explain how, for next year, when the projections for new building starts are still considerably lower than even the homeowner protection office must have anticipated, based on the fact that by next year the guidelines and the regulations and the legislation will be in place to impose these new taxes that will finance your organiza-
[ Page 12774 ]
tion
Hon. J. Kwan: First of all, to clarify for the record, the licensing fee that is collected through the homeowner protection office and the levy for the reconstruction loan program are not a tax but rather a fee that has been established for the purposes of the work of the homeowner protection office. With respect to the financing of the office, the projections are clearly established in the business plan, with the housing starts anticipated and the dollars that the office anticipates generating by way of revenue and expenditure. Those are the numbers that staff are operating with. If there's a requirement for change for whatever reason, then that work will be undertaken by the homeowner protection office.
T. Nebbeling: Well, call it a fee; call it a levy; call it anything else. But if it looks like a tax and it's collected like a tax and it hurts like a tax, believe me, it is a tax. It is taxing builders beyond belief, and it will continue to do so.
Part of the homeowner protection office function was the policing of the developers throughout British Columbia -- throughout the areas where the warranty and the code applies. Can the minister, first of all, tell me how many people were hired by the homeowner protection office to fulfil that so-called policing function that is an integral part of the whole approach that the homeowner protection office has taken?
Hon. J. Kwan: What the office is working on is developing a third-party inspection process. And likely the office would hire third-party inspections outside of the HPO to undertake the work of enforcement. But what would be really important, of course -- what would be the requirement for any builder to build -- is the permitting process that is now already in place through the local governments, and all of that is still applicable.
T. Nebbeling: Who would these third-party inspection forces be made up of? Is it consultants? Is it a private plumbing company who would do inspections? I mean, you must have, in the program, who the people will be who will do these inspections. Will they be on a per-case basis, or will they be on a retainer? Or will they be on a paid job or on a yearly financial commitment?
Hon. J. Kwan: The third-party inspectors would be qualified inspectors who the homeowner protection office would retain for their services. They would likely be paid on a per-inspection basis, and we would have three to five working for the office.
[1725]
T. Nebbeling: Has anybody been hired so far, or has anybody signed a contract with the homeowner protection office at this point?
Hon. J. Kwan: The office is currently evaluating the qualified third-party inspectors right now.
T. Nebbeling: Are any persons hired for that office component -- the four or five office workers -- or have you hired anybody at all to organize this function? Or due to lack of funding, as nothing is coming in, is the work to evaluate the program done by staff that are already in place -- for example, the financial manager -- doing other things?
Hon. J. Kwan: We have four licensing folks right now at the homeowner protection office, but the contracts to enter into with them were delayed because of the delay of the program. We didn't want to have them in place when the program has been delayed for two months.
Much of the work, however -- I should acknowledge -- has been done by the chief executive officer, Shayne Ramsay as well as Dan Maxwell, the director of finance. We also have a registrar at the office, Bob Maling, who has done a variety of work within the homeowner protection office.
T. Nebbeling: Can the minister give me a bit of a picture of how the
participation of the people that will be hired in the field to do inspections is going to
be triggered? Is it
Hon. J. Kwan: Likely the inspection would just take place on a random basis -- to send folks out to ensure that they're following the various requirements stipulated by the act. I know that we will also operate on a complaint basis as well.
T. Nebbeling: I still don't understand how the individual is going to be notified. Is the idea there that every project will get a visit from an inspector, or is it only because somebody complains or a violation has been noted by another authority?
Hon. J. Kwan: We'll do inspections on a complaint basis. We'll do spot checks. Clearly not all of the projects would be inspected in that way; otherwise, the cost to the office would be overwhelming. Keep in mind also that for any builder to develop, they must meet the requirements in terms of a builder permit; and for anybody to get a builder permit, they must be licensed and also have warranty program coverage.
T. Nebbeling: Would the inspector be involved in analyzing the permit application that the builder has to send in, as far as the ability of that builder to indeed build or construct a project of a certain size? We have talked about this in the past. The minister anticipates that not necessarily every builder who applies will get a project approved as it is presented. For reasons that are not known to me, the homeowner protection office may decide to reduce the size of the project because they feel the builder is able to do a project of that size. Is that still part of the whole deliberation before a builder licence is issued?
Hon. J. Kwan: The main requirement for a builder to be licensed is that they demonstrate that they have met the warranty requirements. Of course, the warranty requirements would be through their agreements with the warranty provider.
[1730]
T. Nebbeling: So who's making the decision, then, that the building that has been proposed to be constructed by a builder is indeed within his or her ability to build in such a manner that it will comply with the Building Code and other
[ Page 12775 ]
regulations? It is still not clear to me if the role of the so-called part-time
inspector that you intend to hire in the various communities would also be part of that
approval process or if it is just a matter of somebody in the office in Vancouver,
together with the warranty people
Hon. J. Kwan: What we do check for is violations of the act. It would essentially be the warranty provider who insures that the builder meets the standards that they anticipate through their provision of the insurance.
T. Nebbeling: Well, I'm not going to go back to warranty supply. You know my position on that one, and I think we will just watch that very carefully.
The cost of these random inspections -- who would carry that?
Hon. J. Kwan: That's paid for through part of the builder licensing fee.
T. Nebbeling: So it's $625 for the licence to be a builder, then there's the donation toward the reconstruction loan fund. Is the funding that will provide for these random inspections be exclusively derived from builders registering with the homeowner protection office, or are there forms of taxes or levies -- whatever the minister likes to call them -- that would go toward the operation's cost?
Hon. J. Kwan: The licensing fee is set at $600 for new licences, $500 for renewal and $25 per unit as each unit is being built. Those fees that are collected go into the operation, which includes the inspection component -- or the policing, if you will -- of the office.
T. Nebbeling: I'm happy to hear this, because in the past, when we had
discussions with staff
I'm happy to hear that the minister agrees that any costs related to these inspections are solely the responsibility of the homeowner protection office and that no other fees can be collected over and above what is already in the legislation. The question obviously is: can the minister confirm that the statement -- as the deputy minister saw that I just made -- is correct in that the ministry, through the homeowner protection office or any other means, will not impose any further fee other than those stipulated in the legislation, in the regulations?
Hon. J. Kwan: The fees that are applicable would be what has been and is stipulated in the legislation.
[1735]
T. Nebbeling: We have now talked about all kinds of different steps that builders
have to take. We have talked about the various parties that are involved in ultimately
getting a project done. The minister should realize that we're not talking about a major
project like we see happening in Vancouver or the 24-condo project in Mission, for
example. What I see there is that not only do the municipal authorities have control over
a project
I think that what we're seeing here is the creation of a tremendous amount of red tape
and bureaucracy -- at a time when the government goes out and says: "A 35 percent
reduction in bureaucracy right here." I cannot understand how the minister can
justify the implementation of the various programs related to home warranty and the
homeowner protection office that we have been discussing here today. I should say that I'm
really concerned and very disappointed that some of the issues related to the homeowner
protection office that we brought up
What I would like to do now, Madam Minister
Interjection.
T. Nebbeling: Okay. Then I would like to go and research
Interjection.
The Chair: Through the Chair.
Hon. J. Kwan: The member was asking how late we should go. My suggestion is that
we go until five to six
Interjection.
Hon. J. Kwan:
T. Nebbeling: Okay. Then I will stay a little bit longer on the homeowner
protection office, and if possible
I think that in all fairness -- I have asked the questions, and I'm not going to sit here making up questions -- I'm going to go on to the approval process. Now that we have identified all the various involvements in the whole approval process, there is, within the process, the time when the homeowner protection office can tell a builder that the project that has been presented for approval cannot go ahead as presented, and that for reasons that the homeowner protection office decides, a reduction in size is in order. Could the minister tell me what kinds of qualifications or standards are being used by the homeowner protection office to assess the ability
[ Page 12776 ]
of a builder to build that which he is proposing and for which he is asking for a licence?
Hon. J. Kwan: The homeowner protection office does not license each individual builder for an individual project. What they would have to do is get a warranty for each individual project. When they meet that requirement, they will be able to get the licensing through the homeowner protection office.
T. Nebbeling: I'm surprised. I didn't think that the authority of the homeowner protection office includes denying a building permit because it feels certain standards are not being met. If that is not the case, I'd like to hear from the minister that that tool is not there.
Hon. J. Kwan: The homeowner protection office can revoke or cancel licences, but that would be on the basis of infractions of the act.
[1740]
T. Nebbeling: These infractions that the minister is talking about are infractions on the project that is in progress, then. Basically what I hear the minister saying is: "Yes, we will issue a licence on request by a builder. We do have an inspection. If we find serious infractions or we find an undermining of the act through the works, we may red-tag it, in a sense" -- if I can make that comparison with a building inspector -- "or we can shut the project down."
But what I was looking for is: is there a point in this process, prior to a developer going to pour his foundation, where the homeowner protection office can actually dictate to a developer that what he wants to build is not acceptable? Then obviously you will have to give your reasons for that.
Hon. J. Kwan: As long as they meet the requirements of the act in ensuring that
they provide for a warranty provision
T. Nebbeling: When you say, "If, in the process, infractions have been
registered or noticed, the licensee or licence holder could lose that licence
Hon. J. Kwan: One example would be not using compulsory trades where they're required to. Take electricians as an example. That would be one reason why a person could lose their licence.
Noting the time, hon. Chair, I move that Committee A rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:44 p.m.
The committee met at 6:43 p.m.
[E. Walsh in the chair.]
ESTIMATES: MINISTRY OF MUNICIPAL AFFAIRS
(continued)
On vote 40: ministry operations, $46,529,000 (continued).
G. Abbott: I have a few questions about an area of municipal taxation which might be referred to as Bill 55, railway taxation relief. I don't know if you have the staff here that should deal with that or whether some allowance needs to be made on that.
Hon. J. Kwan: My staff advises me that they are equipped to answer the questions with respect to Bill 55.
G. Abbott: Bill 55, of course, revolves around tax relief for railways on their
improvements in the province of British Columbia. As I understand Bill 55 and the way it's
operated, there are basically two approaches to achieving the goal of tax relief for
railways, and the two depend on whether the jurisdiction in question is a municipality or
a regional district. In the case of a municipality -- again, as I understand it, and the
minister can certainly correct me on this if I've slipped up in some detail -- the loss of
railway assessment was not to have an impact greater than 6 percent of the total tax base
of the municipality. Therefore in some cases
[1845]
What I'd like to know, firstly, is whether that assessment of the municipal side of Bill 55 is correct. Secondly, does that -- to use the hypothetical example of 40, 50 or 60 percent of a bridge in order to keep it up to that 6 percent threshold -- remain in perpetuity?
Hon. J. Kwan: The 6 percent impact is in fact correct. Staff is uncertain of whether or not it is in perpetuity per se. However, we can certainly check on that and let the member know, in terms of the duration of the impact.
G. Abbott: I'm a little surprised that you're unable to say whether that is the case. I'm not sure how it would become anything other than the case. Would it require a change of government policy in order for that eventuality to occur? What could happen which would result in anything other than the 6 percent threshold being in place?
Hon. J. Kwan: My staff believes it to be indefinite. However, we would like to double-check that to make sure that it is in fact the case.
G. Abbott: Good. I'll look forward to receiving that information, because it is certainly of considerable consequence to many municipalities in this province that have significant railway properties within their assessed tax base.
The other way in which tax relief for railways on their improvements was to be achieved was the approach that was taken in regional districts. As I understand the ministry's approach here, they were compelled, because of the complexities of regional district financing, to do something different
[ Page 12777 ]
than had been done in municipalities. As a consequence of those complexities, they entered into an agreement with the regional districts which would see what might be termed the "assessed railroad improvements" reduced by 25 percent per year over four years and their complete removal after the fourth year. Is that correct?
Hon. J. Kwan: The cash assistance will continue beyond the four-year period, unless there is a better formula or approach to it. They are now in discussion on that item.
G. Abbott: That's reassuring. I just want to make sure that I have it right. The
railway improvements have been phased out over a four-year period. I think the final year
of the phase-out is 1999-2000, although I'm not certain of that. Perhaps staff can advise
the minister of whether that's the case. But in any event, it is at or near the final
phasing-out. As the percentage of those railway improvements that are taxable has been
reduced
[1850]
Hon. J. Kwan: First of all, yes, to the question of whether or not the 1999-2000 year is the last year. Second, with respect to the amount, the total is $527,640, which is split out to rural areas and municipalities within the regional district.
G. Abbott: The final question is, then -- and this is simply a matter of
confirming, I think, what we have learned
Hon. J. Kwan: Yes, unless, as mentioned earlier, the group finds a superior way of doing the calculations.
T. Nebbeling: Just to stay with railways for a minute, as the minister's aware, communities along the B.C. Rail line receive a grant in lieu of taxes. These grants were introduced, I think, four years ago now. At the time that the grant money was established, it was a maximum of up to $2 million committed to the communities. Today, the communities still receive $2 million in total. There has never been any consideration given for inflation. There has never been any consideration given for the fact that the tax levels the government pays on behalf of a Crown corporation that is profitable never really reflect the real value of the real estate that is owned by B.C. Rail, the Crown corporation.
There have been a fair number of discussions going on over the last little while, I believe, between the municipalities, the UBCM and the Ministry of Municipal Affairs to bring the amount of money that comes to the communities a little bit more in line with the real value that it would represent if a Crown corporation were paying property taxes like any other entity. Is the minister aware of these discussions, and what are her thoughts on an increase in funding for these communities at this time?
Hon. J. Kwan: Yes, the Ministry of Municipal Affairs facilitates the discussion with local government and with the minister responsible for B.C. Rail, and we continue to play that role. So we have been engaging in discussions with other ministers and the Crown corporations secretariat on this issue.
T. Nebbeling: Can I translate this, then, as a kind of: "Yes, we are looking at an increase"? The reason I'm saying this is that over time, even at the time that this program was introduced, there were commitments given that the amounts that were going to be paid to these communities were going to reflect a more realistic connection to property tax assessment for non-Crown corporations in these same communities. I think it is very important at this time that we give serious consideration to an increase. Primarily, communities throughout British Columbia, including the ones along the B.C. Rail line, are clearly suffering from the cuts in provincial grants that we have experienced over the last number of years -- of course, the bad one being the $40 million that nobody really saw coming until the message was delivered to the joint council.
[1855]
There are communities that have experienced even worse than these cuts that I just
mentioned. Let's take North Vancouver, for example. North Vancouver saw a colossal
reduction in property tax from the sale of the wharves in North Van to B.C. Rail. Lands
that were privately owned -- or privately managed, at least -- by a B.C. stevedoring
company suddenly became Crown corporation land because of the sale to B.C. Rail, and all
the property tax that was related to that property totally disappeared, and no
compensation or any consideration for compensation has been given to North Vancouver, I
believe. If you add up the cuts in grants that we're experiencing because of the lost $40
million, the impact of Bill 55, whose consequences North Van is also having to live with
So that's why it is important that this issue gets dealt with. Is the minister aware of the hardship that has been created in North Van, which has forced North Van not only to cut in the public safety and public recreation areas but also to increase property taxes substantially? Was the minister aware that the hit was considerably more there than anywhere else?
Hon. J. Kwan: The B.C. Rail grant-in-lieu issue, I know, is one of great concern
for the UBCM. They have raised two issues with me. One is with respect to the amount, and
that is the quantum. The other is with respect to stability in terms of the tenure of the
agreements. To that end, what we were able to secure -- and that was announced back in
December -- is the B.C. Rail grant-in-lieu for the duration of the five-year period, to
provide for the stability question. The quantum question remains an issue, and I do
understand that from local government's point of view
T. Nebbeling: Then I'd like to add another element to this short discussion on B.C. Rail and cash-in-lieu, because of what's happening in Squamish right now. Squamish has a fairly small commercial tax base, as it is today, but one of the more important elements of the commercial tax base is that there is a fair amount of land owned by B.C. Rail that has been, for the longest of times, earmarked for commercial
[ Page 12778 ]
development, be it a deep-sea port or other economic opportunities. Squamish has been looking toward the day that these lands would indeed turn into something that would add to the tax base.
As the minister is aware, there are discussions going on right now about that land being given up by B.C. Rail for an exchange of land with the Squamish nation. This land would, in part, become estuary and, in part, would become a dry log-sort area, if possible. Again, the future income that the Squamish were looking for from these commercial activities that would have happened on what is today Crown land will disappear with this land exchange that is in the middle of being put together.
Is the minister aware of this issue? Secondly, has she any idea how we can safeguard Squamish from losing even more opportunities to have a healthy tax base so that, as a community, they can start doing these things that they really have to do, like the infrastructure programs? What are the minister's thoughts on that?
[1900]
Hon. J. Kwan: Yes, we're aware of the issue. However, the discussions of the developments around this issue really fall with the minister responsible for B.C. Rail.
T. Nebbeling: I understand that that's the position. But, at the same time, it's the Minister of Municipal Affairs whose first interest must at all times be the relationship with municipal authorities and also developing these municipalities that the minister, through her grant program, has a tremendous input or influence on. How would I say this? I'm not formulating this well. The role of the minister clearly has to include a responsibility for the financial structure and opportunities that municipalities in general are going to need to do the bare minimum of what the municipal council is elected for -- that is, the administration of the municipality and public safety and public works.
We are going to come back later to an initiative that the minister took last year together with the UBCM -- the study on local authority financial management -- and maybe at that time I can bring this issue back again, as the minister has a problem answering the questions that may well be in the purview of another minister.
These last couple of questions were really led by the questions of my colleague from
Shuswap, inspiring as he always is -- he inspired me. I will go to what I was really going
to try to address first of all tonight, and that is the
Well, the minister must be aware of a study done by Gary Williams and Associates this year. This study was done to establish the validity of the arguments that the minister is making -- or, maybe stronger, the excuse that the minister is always making -- on why municipalities and programs have to be cut off from funding: because of the federal government. The study by Mr. Gary Williams was quite interesting in providing numbers that clearly show that the assumptions made by the ministers are not correct. So first of all, is the minister aware of this study? Can she explain why this study refutes numerous statements on the topic of the provincial government's need for off-loading on the municipalities because of off-loading by the federal government through reduced transfer payments?
[1905]
Hon. J. Kwan: With respect to the Williams study, which I understand the UBCM had
done, it provided a list of grant dollars reductions to local government
I think that notwithstanding that, what is important to focus on is the fact that, irrespective of that study and others, the pressures on the provincial government budget remain significant, and that the province has identified health care and education to be the key priorities of government in terms of budgeting, as well as looking at some economic issues. The priorities of health care and education are consistent with what the UBCM themselves have surveyed and identified to be top priorities.
T. Nebbeling: Now, the minister is wrong
If we take the update, the 1996-99 study, it clearly shows that the amount the federal
transfers have been increased by -- for 1999, for starters -- is considerably higher than
the cuts that the provincial government has justified in that same time period. So I'm
focusing on the federal grants and the increase in grants, when at the same time this
government has reduced municipal grants. The correlation between these two clearly shows
that the argument that the minister is always making -- that this has to be done, that
these grant cuts have to happen because of federal grants being reduced
Hon. J. Kwan: I actually do have a copy of this update on intergovernmental transfers, 1996-1999, prepared by Gary Williams and Associates. The text and the context of what they put forward were used by the UBCM in their list of grant implications.
With respect to the impact on the provincial budget of federal government transfer payments -- while I'm not the Minister of Finance, and this is just off the top of my head -- the federal government transferred $1.3 billion in terms of grant reductions in the areas of education, health care and also social services onto the province over the last couple of years. It is true to say that they did provide for some transfer payments back to the province through this budget year;
[ Page 12779 ]
however, that doesn't nearly cover the losses the province absorbed over the last number of years. Consequently the impact and the pressures on the provincial budget are still significant and continue to be there.
T. Nebbeling: Before I move on, let's put it this way: if I add up every dollar
that has been promised and then pulled back again by this provincial government over the
years that I've been in this Legislature -- since 1991, maybe, in general
[1910]
I think of the capital project freeze. I think sometimes the Ministry of Health has
used the transfer payment reduction as the reason for not underwriting certain programs.
The municipalities, the local governments, certainly have been dramatically impacted by
the cuts since 1991. But it is also true that since 1996 and 1997 there has been a
reversal. At the time that the government took another $113 million -- that was 1997, I
believe -- after very, very firm promises that when they redid the whole grant formula
after discussions with the UBCM, that formula was going to stand up for a long, long time
Over the years this government has cancelled and taken back from projects a lot more than all the transfer payment reductions added up to. But there was at least a reversal, and that was the approximately $200 million that should have been calculated within the equation of the grant reduction. That should have been the reason that the $40 million that was taken again this year from municipalities was totally unjustified -- if indeed the transfer payment reduction was the reason in the past. That argument just doesn't hold water anymore.
In the study by Gary Williams and Associates, there is a fair amount of emphasis put on
the consequences of grant reductions on policing and fire prevention -- fire department
personnel. As an aside, I couldn't help but think that when we had the Fire Commission
sitting in the public gallery last week, they heard that the work of firefighters will be
recognized in a similar manner to how the federal government has recognized firefighters
for their long-term commitment to their job. At 25 years the federal government provides
firefighters with a medal for loyalty to their profession. At the same time, there is also
a federal medal for bravery. When we introduced similar recognition as a province, I
couldn't help but think that
From my experience as the mayor of Whistler, we were very fortunate. Because of the way Whistler was growing, we were getting considerable tax revenue from that growth, and we could accommodate the grant cuts without having to go and look at policing and fire prevention as possible areas where cuts could have been implemented. I think that is something that we should never forget. Every time we cut grants to municipalities, often it is policing and the fire department that are taking the first hits. Councils are forced to make decisions: "Okay, that truck, does it really need replacement? Could it not really go for one more year? We have 12 air tanks. Do we really need 16, or could we have a system where the tanks get filled faster?" These are all things that happen today in fire departments that undermine, to a certain extent, the safety of the firefighter.
[1915]
To make them feel good with a medal is, to me, a form of tokenism. We should not ever, ever take the tools away from people who are willing to risk their lives in order to save the lives of others, and I think that is a consequence that this minister somehow has to deal with. Is the minister aware of fire departments that have seen serious cuts or a delay in the purchasing of fire prevention material in the last year or so because of municipalities having to make decisions, at the time of budgeting, that funding is just not available?
Hon. J. Kwan: With respect to the legislation that was introduced in recognizing the firefighters, that piece of legislation is something that we'll debate in the House. I'll simply say that it is important to recognize the voluntary service and the fact that firefighters risk their lives every time, as they work to protect our communities, our families and our workplaces. The medal and the recognition through legislation is simply a symbol to recognize and to express our gratitude for their continuous commitment to our communities.
I also want to say that with respect to setting spending priorities for local government, whether it be for fire services or other things, those priorities are entirely in the jurisdiction of the local government. They have the full authority to set those priorities.
Recognizing, you know, that times are changing and that there are more and more demands and pressures at all levels of government, including the municipal and provincial government as well, we reflect that in terms of our budgeting process. That's also reflected in terms of the priorities. As was said earlier, the priorities for the provincial government have been established to be health and education, and we're working very hard to maintain those areas of priorities.
The Chair: Just before recognizing the member, I'd like to remind all members of the House that under standing order 61, it specifically states that only the administrative action of a department is to be open to debate, and any previous discussion and debate on legislation is not to be discussed in Committee of Supply.
T. Nebbeling: Just to make sure that the record shows it, I was talking about the federal government's program, where they recognize 25 years of service and bravery through a medal. So I was talking about the federal situation. The minister brought in the legislation that right now is in front of us.
So having dealt with the firefighters, there is another element of the municipal workforce that is of extreme importance in the municipality -- especially these days -- and that is policing. The Attorney General, the minister and, I think, all on the side of the government make statements about the
[ Page 12780 ]
need for the right amount of policing in communities from time to time. We see an exacerbation of crime in the streets; we see new forms of crime like home invasion; we see especially the elderly feeling very uncomfortable to even be in their homes.
In the past it was always that the elderly would say: "I don't really like going out at night, because I don't know who's in the streets, and I don't feel safe any longer." Well, today that same argument is made even when they're in their home. We have seem some horrendous examples of how elders have been having their homes invaded -- often with physical pain, as they've been forced to give up whatever the invaders were after. Considering that the government has made fighting that form of crime a priority, it is beyond me that, again, municipal councils -- who are responsible for the budgets, who are responsible for appropriating money to various places -- are forced to look at cuts because of the grant reductions imposed by this government. And one of the areas they often have to look at is policing.
[1920]
Chilliwack, which was just starting to hire police, had to freeze their whole hiring program. They were not looking for more police for the sake of having more police; they were hiring more police because of certain problems that are happening in that community. On the one hand, we have a government that believes in certain values -- or at least says that it believes in certain values. It's a government that initiates programs to deal with these safety issues, and then when it comes to putting their money where their mouth is, they aren't home.
It is through the Ministry of Municipal Affairs in particular that we have seen how the
government has used that tool of grant reductions as a way of depriving municipalities and
cities of the necessary funding for the effective way of dealing with the crimes in the
streets and the effective way of putting firefighters into situations where lives are at
stake and where our moral obligation is to make sure that they indeed have the tools to
come out of these situations in one piece. I thought that the minister really had to stop
for a moment and think about it, because in the future we will again see statements by the
government
My last question on this particular part is: have we seen grants cut to the bone? Do municipalities now have a way to feel reassured -- or assured at least -- that no further cuts are contemplated by this government? I don't know if the minister has made any commitments to the UBCM or through another forum, but if something of that nature is in place, I would like to hear.
Hon. J. Kwan: I'd just point out that the reduction of the $40 million this year for local government is approximately 1.1 percent of their total municipal revenues. That varies from community to community, but the impact of elimination of unconditional dollars was capped at no more than 2.5 percent for any one municipality in terms of their total revenue.
The other piece in terms of commitments made is that commitments have been made to communities with 5,000 or less, in terms of their population, that they would be fully protected not just for this year but also for the next two years.
T. Nebbeling: The cut of $40 million was just more salt in the open wound. The first year was 1996-97. That was a $113 million reduction. You know, once that money is gone, it doesn't come back. It is not that the next year you reinstate that amount again, so the total cut is $113 million. No, from then on, every year the grant program is reduced by that amount. So when the $40 million came around, in spite of everybody believing -- if the words of the former Minister of Municipal Affairs can be believed -- that this wouldn't happen, it did happen.
I always think about when, in 1998, the government tried to go even further in grant
reduction. The Minister of Municipal Affairs found out about it -- the previous Minister
of Municipal Affairs. He was on holiday; I think it was in Hawaii. He heard that cabinet
was considering a grant reduction for the year 1998-99, and he just blew his top. He got
on a plane and flew back, and he walked into that cabinet room and said: "I'm here to
stand up for the communities of British Columbia. I made commitments, after the last cut
of $113 million, that it would not happen again." And here you guys are trying to
pull this one, and another government didn't pull it. So that was '97-98; in 1998-99
nothing happened. And then we saw
[1925]
So there was a minister who stood up for the communities after the last colossal cut
and said: "Enough is enough." Then this minister came into play, and the
previous minister went on, and the minister proved very quickly that enough was not
enough. That was the $40 million. So I'm asking the minister now: the enough-is-enough of
the minister last year
Hon. J. Kwan: With respect to spending priorities, clearly each year cabinet assesses its spending priorities, those are evaluated accordingly, and the budget is then sent forward. The $40 million reduction in unconditional grants -- it's true -- was lost to local government, but in its place we also introduced a three-year program of conditional spending on infrastructure building, which is also something that I know local governments want to see in place. Consequently, we were able to bring back a $150 million commitment to infrastructure building over the next three years.
In addition to that, we also brought the $13.2 million in traffic fine revenue-sharing, which is also something that local government has wanted for a long, long time -- as far back as when I was on city council. That was something that was introduced this December as well, amongst other initiatives. So suffice to say that spending priorities do change, and recognizing that there are financial pressures on all levels of government, the package that was introduced was an attempt to balance out all the different competing demands and at the same time provide some new initiatives and dollars to local government.
T. Nebbeling: I welcome some talk for a little while on the three-year infrastructure grant program that the minister has been talking about now for two years and that will not come into effect until next year, I believe -- well, I know.
But before I do that, I'd like to ask the minister one more question which is related to the grant reductions that we have experienced since 1991. The minister knows that the UBCM
[ Page 12781 ]
has tabulated all the reductions in grants and other fees that traditionally were coming its way, and they came to the conclusion that up to now $800 million has been taken back from municipal authorities and disappeared into general revenue of the government. Does the minister agree with that number?
Hon. J. Kwan: With respect to the Municipal Affairs grant cuts to municipalities, the total is $168 million: a $15 million reduction in grants in '93-94; $113 million in grants and transfers in '97-98; and $40 million in '99-2000.
T. Nebbeling: Can the minister tell me what formula was used prior to '93 to establish the amount of conditional grants that were paid out to municipalities?
Hon. J. Kwan: We don't have those figures with us. Staff can try and dig back prior to 1993 in terms of what is on the record with respect to government grant dollars.
T. Nebbeling: I was not looking for the amount, although I can enlighten the minister. I believe that in 1993 it was $120 million. But I was more looking for the formula that was created to assure municipal authorities of an annual fund that increased in value over time, and the fund sources were established by legislation in the eighties. So it is the fund sources that I was looking for.
[1930]
Hon. J. Kwan: According to my staff, the formula that was used was something like this: one personal tax point, one corporate tax point and 6 percent of everything else except for federal transfers. I don't know what this means, but I'm sure it means something to somebody. The old revenue-sharing formula lasted from 1976 to 1991.
T. Nebbeling: It would take too much time, but I will write to you what those are. But suffice it to say that these various sources created a total annual fund of approximately $120 million by 1993. That was not only how municipalities could calculate their own contribution towards the infrastructure required to service the community, but it was also the role that the government undertook -- to be partners in these infrastructure projects, for one particular reason. And the reason was that government, in general, imposed requirements on municipalities for infrastructure reasons that often, capital cost-wise, would exceed the ability of a tax base. So that was the reason for that.
Anyhow, then in 1994 the formula
The Chair: I'll remind the members that the estimates are on 1999.
T. Nebbeling: Well, we are doing them on 1999, but they have to look at the history of how we got there.
The Chair: The debate should be pertinent to 1999 and relevant to the 1999 estimates that we are presently debating.
Interjection.
T. Nebbeling: Well, look at that idiot there.
Interjection.
T. Nebbeling: You heard me.
Interjection.
T. Nebbeling: No, you heard me.
Interjection.
The Chair: Members, order.
T. Nebbeling: Exactly -- keep them in order.
The Chair: Shall the vote pass?
T. Nebbeling: I had a question, and the minister was being advised by her staff. So I don't understand why you are not waiting for the minister to answer a question about the 1994 local revenue-sharing formula that created the funds for municipalities to deal with the infrastructure program. That is my question to the minister.
The Chair: Member, as I said earlier, 1994 estimates are not relevant to 1999
estimates. The estimates up for debate are 1999 current, and the questions are to be
relevant. I would suggest that you perhaps refrain
T. Nebbeling: Is there any relationship between the amount of grant money that is made available today to the municipalities throughout British Columbia and the revenue-sharing act that was established in 1994? If not, what is different today compared to what was done in 1994?
Hon. J. Kwan: There are no relations in terms of the quantum. There are relations in terms of the distribution but not the quantum.
[1935]
T. Nebbeling: Could I have the relationship, then, in the distribution of the funds between 1999 and 1994?
Hon. J. Kwan: In 1994 the formula was on a per-capita basis. In 1999, small communities are fully protected. With mid-sized communities and larger communities, there are mitigating dollars.
T. Nebbeling: We're obviously not going to find common ground on the principle that I believe is at work here. That is that once you cut X amount of dollars from a program in any given year, that cut just flows over into following years. Hence the justification for the UBCM stating that in 1999, since this government got into place, grant reductions add up to approximately $800 million. By the time this government has sat its full term, it will add up to $1 billion. But that's speculation, and we're not supposed to do that. I just thought I'd give that for your information.
I would like to go, then, to what the minister already talked about, and that is the Infrastructure Works grant. As
[ Page 12782 ]
the minister is aware, we have had the pleasure, for the last six years, of having a
tripartite agreement with the federal, local and provincial governments to find funding
for the infrastructure needs of communities in British Columbia. That program has come to
an end, and the minister has been talking about a new infrastructure grant program. It is
a bipartite agreement -- the municipalities and the provincial government? Can the
minister tell me where
I remember when this happened. I recall that at no time
[1940]
Hon. J. Kwan: With respect to conditional dollars, there was never a base amount for conditional grants through local government. However, dating back to 1994-99, the province had committed to $119 million as conditional grant dollars to local government. From that point of view, there never was a base set, and when the Infrastructure Works program ended its first and second phase -- which is actually under the Ministry of Employment and Investment -- the program that was reintroduced in December, as the member has identified, is a new program that the Ministry of Municipal Affairs initiated.
T. Nebbeling: Can the minister explain the criteria for communities to apply for the new infrastructure grant program -- if these criteria include a three-year commitment to communities, or if this truly is $50 million a year, and once you've had your share, somebody else gets on the plate?
Hon. J. Kwan: With respect to the infrastructure grant criteria, there are essentially four basic ones. They're being evaluated on health, environment concerns, communities in transition and communities who are faced with growth. Those are the priorities that the grant dollars are being evaluated against. With respect to the program itself, it is a three-year commitment of $150 million over the three years, at $50 million each.
T. Nebbeling: How many applications have come in for cost-sharing? How many have been approved? And what is the average of an approved project?
Hon. J. Kwan: We received some 600 applications, totalling $623 million. To date we have committed to 35 projects, totalling $19,425,688.
T. Nebbeling: Can the minister maybe spend a little bit of time on the municipal contribution? I believe the municipal contribution is part of the conditions for receiving grant money. Does it have to be matching funds, or is it a percentage? How does this work? Is there, again, a set formula for the contributions of the municipalities?
Hon. J. Kwan: The grant is based on a 50-50 cost-sharing formula. Local governments can come up with their 50 percent in whatever way they deem to be appropriate for them.
T. Nebbeling: Are any of these grants that have already been decided on -- or any of the grants that are for consideration -- commitments for more than one year of funding, so that a project in the municipality can spread its contribution over a two- or three-year period in order to bring a project to fruition? Would the grants allow that to happen, under the conditions set by the minister?
Hon. J. Kwan: Generally speaking, municipalities break their applications into different phases. We would then approve one particular phase for this project. But generally speaking, as well, the projects are multi-year projects, because it takes longer than one year to have the infrastructure built and completed. In those instances, those multi-year phased approaches are taken into consideration.
[1945]
T. Nebbeling: So the option is there to work that flexibility into the system. The $50 million is a lot of money. But when it comes to infrastructure for this province, especially with so many older facilities being in place that often need replacement or upgrades based on provincial regulation -- I think of waste treatment sewage plants, for example -- how do communities that have infrastructure needs that go beyond what the program is providing for, you know, deal with their infrastructure programs?
Where do they find the funding? I think that if a town like Chilliwack looked at the replacement or a series of upgrades of the sewage treatment plant, it would look at something on the order of $60 million. That would be $30 million provincial, $30 million in-house. First of all, you have the question of whether the community could pick up that tab. But more important, how does the provincial government deal with communities in applications of that size under this program?
Hon. J. Kwan: Clearly the requests from local government far exceed what is available within our grant program. As I said earlier, for this first year we have $50 million in terms of commitments that we can make. The applications that came in total $623 million, far exceeding what we are able to commit. In those instances there will be people who are and would not be successful in their grant application.
Recognizing the importance of infrastructure-building, we also note that the Minister of Employment and Investment has committed and tabled the offer to engage in another Infrastructure Works program with the federal government, and we're waiting to see what develops out of that. In other instances, what we try to do is also break down the project into different phases, so that you don't end up doing a project that is more than the entire allocation of the program -- in those instances where the phased approach might be appropriate.
T. Nebbeling: I think that it is an important issue to look at -- how larger communities are pretty well excluded from this process. I quickly calculated, from the numbers that the minister just gave me, that the average grant is $550,000, which means you're talking about a $1.1 million infrastructure program. That is an infrastructure program, in my mind, that
[ Page 12783 ]
is only able to service a small community, regardless of what it is. I didn't think that the larger communities were -- not on paper, maybe, but through action -- excluded from an opportunity to tap into this project as well.
That, to me, reflects in a sense the lack of recognition by the government that things
have fundamentally changed in British Columbia. There was a time when 90 percent of the
population were living in rural communities; today it's the other way around. In 1999 it
is these places, where the population centres are now, that often face these humongous
improvement needs, because of the growth of these communities away from the rural areas.
This sounds like a good program for smaller communities, but it will certainly not deal
with the larger problem that British Columbia is facing. If you look at a town like
Burnaby, with an infrastructure that is getting to the end of its life span
[1950]
I want to ask the minister what kind of remedy she sees at this time for these communities that just do not have the opportunity to go back to the tax base because of all the grant reductions that they have had to absorb already. Has the minister had any thoughts on that?
Hon. J. Kwan: In terms of eligibility for larger and mid-size communities, all
of them are equally eligible for this application, based on the four criteria that we have
set out. Take as an example -- and this is previous commitments to the city of
In this infrastructure evaluation, larger municipalities have got grants as well. Just off the top, Chilliwack, as an example, received $1.3 million for a sewer upgrade system. Others include Campbell River. In fact, Campbell River, I think, was engaged in a three- or four-year phased sewer upgrade. This commitment, which was $3.4 million, would have been the last commitment to complete all of their sewer upgrade infrastructure. So those are the kinds of approaches that people do engage in -- that is, a phased approach, recognizing that the dollars to do anything at one time would be very costly and very significant as well.
I should also point out that in terms of smaller communities versus larger communities, clearly a larger municipality would have a far greater capacity to generate the dollars required for the infrastructure upgrade than that of a smaller community, just because of their tax base and the limitations of their tax base.
T. Nebbeling: I appreciate the example that the minister gave of a major contribution towards a project in a bigger city. That was in '95-96, I believe. To date, there are still a lot of major projects that have to be undertaken for environmental or health reasons. It's an example that the previous program did address, because of the magnitude of the dollars -- $3 billion from the federal government, I believe. That made the project work. There was a magnitude of dollars. The $50 million that we are now looking at is a form of tokenism. It will not really deal with the problem that this province is facing.
Today we have a situation where another community really should be looking at the infrastructure for their raw sewage, and this is right in the town we are in now. Earlier on, when the Vancouver project, Annacis Island, was approved at $400 million, Victoria was also looking at funding at least to get a primary or secondary system in place. Because there was no funding available, it would have meant that the community as a whole had to absorb it, and they couldn't. So they never did anything. I think they even had a referendum on this. The community could not absorb the cost on its own. The urgency for Victoria then is just as urgent today. I don't know how low is acceptable debt, you know. The raw sewage goes into the Pacific. I didn't think environmental standards in this province would allow it -- and certainly in the future shouldn't allow it.
The minister made a good case that, you know, funding for major projects has to be part of the provincial consideration. If that doesn't happen, then these projects that truly matter for massive amounts of people will just not come to fruition. I think that is an environmentally unrealistic approach these days, but I think it is also a health issue. It could become a health issue in the long run.
[1955]
The minister alluded that she may have had some talks -- or is considering some talks -- with the federal government to see if we can do another round of tripartite infrastructure programs. Can the minister maybe give a little bit more details -- where these discussions are going at this stage, or if these discussions are indeed taking place, and the responses of the federal government and what kind of money we are talking about? Are we talking again about the magnitude that we talked about in '95-96?
Hon. J. Kwan: With respect to the Infrastructure Works program, which falls under the Ministry of Employment and Investment, all discussions are under that minister's portfolio. As far as I know, there has been an offer from the province to engage in another Infrastructure Works program with the federal government to initiate the work that had been done previously, and any details around that would be most appropriate under the estimates for the Minister of Employment and Investment.
G. Abbott: Just to follow up on that point briefly, about the possibility of an
additional federal-provincial-municipal infrastructure program
The principal problem that emerged with that second program was that the municipalities or their representatives really didn't come on board in terms of the scope and the
[ Page 12784 ]
parameters and the format of the program until after the federal and provincial governments had concluded it. As a consequence of that, there were a lot of tensions, particularly between the federal and provincial governments, but also between, I suppose, all three levels of government around what should or shouldn't have been in the program and who was going to get what, when and why.
I pursued this point with the minister a couple of years ago, and I'd be interested in
hearing the observations of the current minister today about whether municipalities in the
current instance, assuming that the federal government responds in a positive way
Hon. J. Kwan: With respect to our infrastructure grant program -- that is, the $50 million commitment for this year and the $150 million for the duration of the three years -- an offer was in fact made to the UBCM to invite them to the table and to also choose in fact the commitments that would be made by the province. That invitation was declined by the UBCM executives.
With respect to any Infrastructure Works program, I will certainly endeavour to bring forward the municipalities' thoughts and opinions, if there should be any, to the minister responsible -- that is, the Minister of Employment and Investment.
G. Abbott: I think I can probably deduce why the UBCM might be reluctant, for example, to get into the business of being a part of the divvying-up of the current infrastructure program. I think what I was getting at is quite a different thing, and that's around the broader basis on which a tripartite or federal-provincial-municipal infrastructure program would be structured in the future. There it would not be the municipalities coming in to talk about the divvying-up of funds, but rather a prior step to that, where they would be talking about whether, for example, sewers might be a part of it -- or whether sewers, roads and water would be a part of it or, I suppose, the 50 different permutations of things that might be included or not included in an tripartite infrastructure program. That's where I was going with my question, as opposed to the divvying-up of a program which had already set its parameters.
[2000]
Hon. J. Kwan: I should simply say that with respect to any potential Infrastructure Works program, it's all very hypothetical at this point in time. It is my understanding that the Minister of Employment and Investment has indicated to the federal government that the province would be interested in engaging in another Infrastructure Works program. Given that the Minister of Employment and Investment used to be the Minister of Municipal Affairs and understands the needs and the desires of local government very well, I have no doubt that in his discussions with the federal government he will reflect those desires accordingly. Those considerations of local government have been brought to my attention, and I have also expressed their views on this matter to the minister responsible.
T. Nebbeling: To conclude this section, one of the statements made by the minister is that, as a consequence of this $50 million-a-year grant program for three years, there will be 4,000 jobs created. Can the minister explain how she got to that number of 4,000?
Hon. J. Kwan: Those are projections with respect to construction activity that will be generated out of the Infrastructure Works program and any spinoff activity arising from it.
T. Nebbeling: What criteria -- what formula -- are then being used by the minister to come up with that 4,000 number?
Hon. J. Kwan: I am advised by staff that they used statistics in areas of economic activity in previous infrastructure building to project the job creation in the infrastructure program, given the dollar amount that would be committed.
T. Nebbeling: I hope these studies are from 1999; otherwise, I'm out of order
asking for them. Which studies are these? Again, what criteria are being used? Is it the
Canadian labour standards
Hon. J. Kwan: Generally speaking, the formula that would be used would be based on stats in terms of how many dollars are being committed for a particular project, which ultimately in this area of construction would create this many jobs, etc. Those are the kinds of projections that staff used in projecting the 4,000 jobs in this instance.
T. Nebbeling: I was worried that indeed the dollar number was going to be used to establish the number of jobs, because traditionally that's what a government does. The best example is, of course, again this year, when we see Forest Renewal B.C. creating untold thousands of jobs, although they've never really created the jobs before based on the dollars. But it is again on that firm line of, well: we're spending $400 million, therefore so many jobs are being created.
I hope that the minister doesn't see these as long-term or permanent jobs, because once
the program is over
Hon. J. Kwan: The projections of the 4,000 jobs in the infrastructure grant program are very much based on person-year jobs. That is to say, during the construction of the infrastructure, those are the jobs that would be created during that period.
[2005]
T. Nebbeling: I'd like to move on to another section, where I just have a few
questions, and that is intergovernmental relationships. Much of that which we have been
talking about today and last week, as well, from time to time
[ Page 12785 ]
Nevertheless, the interest of the communities of British Columbia, which has to be the primary interest of the minister, has to be represented. So I'd like to talk a little bit about how the minister feels she fulfils that role and what kind of formal bodies are available to her to represent the well-being of communities on so many issues -- be it infrastructure, which is in a different ministry, or be it the road projects, which is another ministry, or be it community health, which is again another ministry. I hope the minister is willing to go with me on that path and give me an idea of how she sees her role and how she exercises her role in relationship to action of her colleagues.
Hon. J. Kwan: Generally speaking, aside from the direct responsibilities of the Ministry of Municipal Affairs, our office and I engage with other ministers through cabinet, through committees, through discussions with my colleagues on issues that relate to local government and that are of concern to local government. We facilitate bringing the issues to the attention of other ministers and other administrative bodies with respect to concerns of local government. By and large, that is much of what we do. It's that facilitation role, as well, especially on issues that actually don't fall directly in the Ministry of Municipal Affairs purview.
T. Nebbeling: I expected the answer of the minister to be positive -- that indeed the intergovernmental relationships are of paramount interest to her ministry in particular. What I would like to see the minister expand on a little is: what kind of bodies are used for various ministries to come together and discuss issues that are of interest to a multitude of ministries?
Hon. J. Kwan: There's a whole variety of ways in which issues relating to concerns of local government are brought up. As an example, it could be through the deputy ministers' committee, where deputy ministers from all the ministries come together and talk about issues. They can raise issues through that forum, through the assistant deputy ministers' role, through my role in my discussions within cabinet or within other structures. So there are a variety of ways to do that. There are also some informal ways of raising an issue as well, where I can engage in a discussion with my colleagues on issues relating to local government.
[2010]
T. Nebbeling: Thank you for that answer.
Now let's take an example. Right now, everywhere in the province there are discussions going on about how health boards operate. I think the overall direction I hear from communities is that they would like to see local government again being represented on health boards. I figure that the minister from time to time in discussions with local authorities, when she meets and goes a bit broader beyond just Municipal Affairs issues, gets to talk about this kind of issue as well. This is just one example.
How would the minister, if she felt this is a sentiment that truly is important for communities for whatever reason, go about getting that viewpoint to a minister? Would she actually have the opportunity, as the Minister of Municipal Affairs representing communities, to make a pitch for that idea? It is a question I am often asked: how does this work? I think the minister is aware that in North Vancouver, there has, for the longest time and right up to now, been talk about how elected municipal officials can play a role in how a health board acts -- by being elected, by being appointed. They do ask me: "How can we get involved there? How can we get a message to the right authorities?"
Of course, as the Minister of Municipal Affairs -- and you're representing these
councillors
Hon. J. Kwan: In terms of engaging with my colleagues on a variety of things, as I said earlier, there are a number of ways of doing that not only just through my deputy but also through the ADMs, through various committees, through committees that I sit on, through cabinet, sometimes through correspondence to my colleagues, etc. So there are a variety of ways of raising with my colleagues issues that are of concern to local government that fall outside of the Ministry of Municipal Affairs purview.
In terms of, specifically, the issue around health boards, etc., again that's an item
that has been brought to my attention. The role which we can play from time to time, not
just on this issue but on other issues as well
T. Nebbeling: I had a number of other questions, but I'd like to go to another level of intergovernmental relationship, and that is with the federal government. Can the minister briefly lay out her communication plan with federal authorities? And to what extent does the minister work together with federal authorities to avoid duplication?
Hon. J. Kwan: It's difficult to focus on a particular issue unless the member identifies it. Take as an example the area of the homeowner protection office and the reconstruction loan program, etc. There is clearly direct communication with the federal government on this through myself and my staff. It's difficult to respond to that question unless we know more specifically the issue or area of concern that the member is talking about.
[2015]
T. Nebbeling: A good example is what's happening right now. Many communities are under threat of flooding. That will often include federal waterways. Is the minister in her role participating in finding ways to deal with the elimination of the threat of flooding? Is this one of these occasions when the minister is actually working together with the federal Minister of Fisheries? I say this in particular, because the federal Fisheries ministry's representatives are often very, very strict and very stoic in their position when it comes to
[ Page 12786 ]
federal waterways and fish-bearing streams. And, of course, because of the mitigating remedies that have to be performed right now to avoid serious flooding of communities, they are often in stark conflict with the federal guidelines. How does the minister, at her level, deal with issues like that? Or does she?
Hon. J. Kwan: The two lead ministries on the issue of flooding are the Attorney General's office and the Ministry of Environment, Lands and Parks. They're the lead ministries that raise the issues with the federal government. Where local government raises the concerns around flooding, generally speaking, it is to simply identify that they have a concern for a particular area and say what their concerns are. What I do is convey those concerns to the ministers responsible to ensure that they are aware of them.
T. Nebbeling: There are some other examples of where I would see a need for the minister to somehow have a relationship with another minister without her normally having the authority.
Right now we are seeing a liquor distribution review. I know that it is not within the minister's purview to deal with that issue. However, within the recommendations are a number of positions taken by the consultant, Mr. Surich, that are in direct conflict with the principles that the minister so strongly promotes -- or seems to promote or intends to promote -- when it comes to the empowerment of community councils. One of the most serious ones, of course, has been identified as the issue where expansion of pubs and nightclubs -- not the expansion of space, but the expansion of patrons -- can happen by, rather than going to the established number under the liquor control branch direction, instead going with a concept where the fire department's guidelines are being used. So it becomes an issue of quantity of zoning.
Without giving my yes or no on that one, what I am appalled about is that the voices of municipal councils have been excluded from the process. And as the minister knows, many of these places were given permits because of conditions that, according to the councils at the time that these permits were requested, were acceptable to the community around these places. When we see a potential doubling of the patrons, with all the consequences that go with the doubling of patrons, municipalities should have a say somewhere in that decision.
Under the new guidelines, that voice has been totally eliminated. As a matter of fact, in the recommendations by the consultant, it is stated that municipalities do not play a role in the expansion of patrons of a club. As I said, I'm not here judging the concept or the idea of increasing patrons or not. That's not the question for me. For me, what is a question is the fact that municipal councils are no longer even required to express their concern and have an opportunity to be heard on justifying these concerns, be it police-related, be it parking-related, be it noise-related -- it doesn't matter.
[2020]
The fact that the review includes sections like that
Hon. J. Kwan: With respect to liquor-licensing issues, those are issues that indeed fall under my colleague's jurisdiction -- in fact, of several of my colleagues. In that process, there were concerns that were identified from the UBCM in terms of the consultation. That was brought to the attention of my colleagues, and subsequent to that, consultation did in fact take place with local government with respect to proposed changes for the liquor-licensing area. The final decision of cabinet is yet to be made in this area. Certainly cabinet will engage in further discussions around this issue, in which case I will continue to play the role that I have been playing in terms of bringing forward concerns of local government to my colleagues' attention.
T. Nebbeling: In a similar situation, we see where the authority of gaming is in the purview of the Minister of Employment and Investment, and at the same time, of course, there are sections in the gaming review -- the White Paper on gaming -- that clearly have a very negative impact on municipal authority.
I know that the minister, in the past, has always spoken the way she speaks now in '99
on the impact of gaming. I have a letter here that is quite cynical. This is a letter from
the minister when she was still a councillor, reflecting her opinion on gaming. Without
going into too much detail, it comes to the point: "If the Liberals were elected,
would they legalize commercial casinos across the province? This is the question I threw
at Mr. Farrell-Collins, although
Of course, that was never the case, but the point is that the minister reflected her emotions that she clearly still has today in 1999 on the issue of gaming and the impact on the municipal social infrastructure and the impact on the cost of policing that communities have to absorb because of the forced introduction of certain elements of gaming in communities. The minister is aware that the city of Vancouver and the city of Surrey are still in a bitter fight about the authority for gaming and what type of gaming in the communities is to be in the hands of the local authorities. Has the minister had any meetings with either the city of Vancouver or Surrey to discuss this matter from a Municipal Affairs perspective?
Hon. J. Kwan: The letter that the member references is a letter that I had indeed written when I was a councillor in the city of Vancouver, relating to the expansion of for-profit casinos in the city of Vancouver. More specifically, it ties into the Seaport Centre proposal that was being discussed at the time, and there were a lot of concerns from the community as well as on council with respect to any development of for-profit casinos.
I recall, at the time when I was on city council, that the member for Vancouver-Little Mountain, on behalf of the Liberal caucus, came before city council and put forward his perspective in terms of what the approach should be with expanded gaming in terms of gaming developments. The position was to say that if the municipality wants it and supports it, it should simply go ahead. Since that time, that is indeed the current policy of the provincial government with respect to expanded gaming facilities -- that is to say that any facility that is to be developed in any municipalities must have the support of the local government. That is in fact the case.
[2025]
[ Page 12787 ]
With respect to the gaming issue in general, again, the lead minister responsible for
gaming is the Minister of Employment and Investment. He has issued a White Paper for
discussion in the community and at the request of the UBCM, to which
T. Nebbeling: I'm tempted to come back on this issue, but I don't want to dwell on the letter that the minister wrote on March 2, 1995. It is just that the emotions that the minister from time to time expressed over the issue of gaming were so in contradiction with the emotions that she expressed in this letter. That led me to believe that -- what happens with the provincial government right now -- the minister would have been motivated, through her opportunities in intergovernmental relationships, to express that view once again -- that she's totally opposed to gaming, that she does not believe that municipalities should have at least the right to a referendum to express their feelings on gaming.
What I really want to know is that while this White Paper has been out, in the hands of
the ministry for a long time, has the minister taken any steps to make sure that the views
of a number of communities that are violently opposed to the imposing of gaming activities
in their communities, of a nature that they feel is not compatible with their community
So my question once again -- and maybe the minister can just give me a brief answer, so
we can go on, in that the next section I want to deal with is empowerment: can the
minister tell me
Hon. J. Kwan: When I meet with local governments, oftentimes they raise a number of different issues. From time to time they do raise gaming issues. In some instances municipalities tell me that they very much support gaming expansion, and in some other instances they very much tell me that they don't. A case in point would be my continuous meetings with the previous president of the UBCM, Mayor Steve Wallace of Quesnel, who is a strong proponent in support of gaming expansion.
So from that point of view, whenever local governments raise their point of view on any issue which they wish me to bring forward to the attention of the minister responsible, I always endeavour to do so.
T. Nebbeling: Now, this is a typical example. The minister makes a statement about Mr. Wallace, the former mayor of Quesnel -- or he's still the mayor. I do not believe that I have ever heard Mr. Steve Wallace, as the mayor of Quesnel, state that he is in strong support of casinos in communities. What he has said is: "Treat us as adults and ask us the question: 'Do you want it?' We will ask our community. If the community is in favour of it, we will ask: 'Well, what kind of gaming do you want?' "
So the empowerment of communities as a tool to get a sense of what the community wants is really what he was focusing on, not an endorsement of the gaming policies of this government. He's been very, very clear on that one.
But let's talk about accountability. This past season the minister has been involved in a series of meetings on local government accountability. She has visited a number of communities. Can the minister give me a quick overview of what type of discussion directions were given to the participants in these forums?
[2030]
Hon. J. Kwan: With respect to the regional advice sessions on local government accountability issues, I travelled to Nanaimo, Grand Forks, Terrace, Cranbrook and Burnaby to hear from the public their perspectives. Generally speaking, the topics of discussion included things like in-camera sessions, conflict of interest and disclosure of campaign spending. Those are some of the issues that were raised, but there are many other items that have been highlighted through the consultation process.
T. Nebbeling: Can the minister explain why, in certain communities, public participation was solicited through the media, while in other areas no media was used to advertise these meetings?
Hon. J. Kwan: The regional sessions, by and large, were advertised, not through a paid advertisement process but rather through earned media -- I think that would be the appropriate word to use. So from that perspective, it really is up to the media that wish to cover the issue and to generate the issue in the respective communities.
T. Nebbeling: Did you advertise in Nanaimo?
Hon. J. Kwan: I cannot recall, nor can my staff, whether or not we advertised in Nanaimo specifically. However, I should simply point out that much of the media coverage was not paid media coverage, but rather earned media coverage.
T. Nebbeling: I don't know what the minister is trying to say by earned media over paid media. I'm talking about the ads that have appeared in newspapers in Grand Forks and Terrace, for example -- ads paid for by the government to entice the public at large to participate in these forums. I question why the minister would go through the process of advertising in a town like Terrace, while at the same time, when it comes to a community like Nanaimo, that effort is not being made. That is really what I would like to have answered.
Secondly, if the public was not notified through the press, through paid advertising on
the forum, how did people get knowledge about the meeting -- through what vehicle? It's a
simple question, but if it wasn't an ad
[ Page 12788 ]
Hon. J. Kwan: As far as I can recollect -- and I would need to double-check with my staff, who are not here today -- the process that we engaged in on the regional advice sessions was that we sent out media releases to all the different places to which we were travelling. Because it's regional contacts, the releases were sent not just to the location where we went but also to the surrounding regional areas. I really don't recollect whether or not we actually advertised in Nanaimo; we may not have. Subsequent to that, because that was the first forum, if we didn't, then in all likelihood somebody probably suggested that we do for future forums. That might be what staff had considered and therefore engaged accordingly.
As well, I know that staff also took into consideration whether or not to engage in paid advertisement is dependent on the kind of coverage that the local media had provided to us. If in fact there was good coverage, then perhaps there was no need to spend taxpayers' moneys to advertise such a forum. If there wasn't such good coverage in the attempt to get the word out to the public, then advertisements were taken into consideration.
[2035]
I also know that staff had sent out letters inviting participants to come to the forum -- to those who had previously expressed an interest in the area of local government accountability. Also, the non-profit groups in the area were sent invitations -- through potential interest shown in previous correspondence and contacts with the ministry.
T. Nebbeling: Well, let's see. If a meeting was not advertised in a rather large
town and surroundings -- Nanaimo
Hon. J. Kwan: This is off the top of my head. My recollection is that there were a lot of people that showed up for the Nanaimo forum -- close to 50 or maybe even more; I don't know. However, my staff would have a record of who actually showed up and would be able to provide the specific number to the member. I just don't remember, off the top of my head.
T. Nebbeling: I wanted to know if the minister knew, because it was 62 or 63. What disturbed me was that the community was not invited, and 62 or 63 people did show up. When I looked at the list of people who had been notified, it was made up of a lot of the local elected people, unions and other brother and sister organizations. They were invited, and that list included more than 60 names.
I have got a feeling that with the attendance at that meeting, which was supposed to be
a meeting on empowering the community in a forum, the empowerment was kind of controlled
through only inviting certain people to that meeting. I don't need the number from the
minister. I've got the list, I've got the number, and I've got the people that were
invited. I don't think it was very democratic, especially because I can say that in the
next communities -- Prince Rupert, Grand Forks and Terrace -- ads were in the paper before
November 5 to announce to these communities that indeed these forums were going to be held
in these communities. That argument that only after the Nanaimo staff came to the
conclusion that it should start advertising to entice more of the community at large
I think some suspicion is justified, but the unfortunate thing is that it really has put a considerable cloud of lack of integrity over these forums. For me, the value that I had hoped to get out of reading about these forums clearly has been reduced by what I consider to be manipulative action -- who to have in a meeting and who not to.
One question to the minister before we go on: during these forum meetings, was there at any time in any of these meetings a Mr. Paddy Smith?
Hon. J. Kwan: I'm sorry; I just need a clarification from the member. Was his question: at these regional advice sessions did a Patrick Smith come to the meetings and make a presentation?
T. Nebbeling: Perfectly correct.
Hon. J. Kwan: I do not recollect the list of names of who attended the meeting and who made a presentation. There is a record of that -- of all the people who made a presentation to me at these advice sessions. All of that is documented by staff. I suspect that the member may even know whether or not a Mr. Patrick Smith has attended one of these advice sessions. If he doesn't, I will endeavour to ask my staff to check the attendance record and to provide that information to the member.
[2040]
T. Nebbeling: While she's asking for Mr. Patrick Smith's involvement in any of the forums, in particular the one at Burnaby, I would also like the minister at the same time to ask if a Mr. Kennedy Stewart was there. If the minister can advise me of that later in writing, I would appreciate it.
The reason I am asking is that these two gentlemen are responsible for a study that in part was financed by the Ministry of Municipal Affairs, called "Making Local Accountability Work in British Columbia." And although we have very little time left, I should state that this document, presented by the two gentlemen to the ministry, has clearly tried to make a case for a ward system and empowerment of the local community -- not the local elected official body. There is a lot of stuff in there that we won't be able to go into. I know this was not commissioned by the government, but I do know that staff within the ministry have worked with this document quite comprehensively. I know that because of a number of e-mails that I have received under the Freedom of Information Act, clearly reflecting not only the endorsement of the study by these two gentlemen, but also some statements on how the role of the ministry could be diminished because of pressure put on the ministry by the press. If the minister has never seen these e-mails, I'll happily provide them to her; they come from her ministry. But because of this study, I think the ministry may well have used a lot of the input in preparing future changes to the Municipal Act -- whenever that will happen. For that reason, too, I have some questions on these two participants, their participation in the public forums and the role of that participation.
Now, if the minister doesn't know, maybe the minister can then explain to me why her staff -- in communications with these two people -- made so much effort to diminish the role of Municipal Affairs and the minister in the analysis of the consequences that these two gentlemen came up with in "Making Local Accountability Work in British Columbia."
[ Page 12789 ]
Hon. J. Kwan: With respect to the study that the member references, it is a study for which the Ministry of Municipal Affairs -- through my predecessor -- provided a grant to Simon Fraser University, whereby Simon Fraser University produced a document for the ministry relating to the governance structure issue. Again, that was a grant that was provided to Simon Fraser to study the governance structure of local government, and the report was produced accordingly. It was not a report that was commissioned by the ministry. As well, subsequent to that, there was another report that was posted on the Internet and sent to the ministry by Paul Tennant and Julian West, if my memory serves me correctly, with respect to governance structure issues as well. So those are a couple of reports on government structure that have been produced.
In terms of the work on local government accountability issues
[2045]
T. Nebbeling: So the minister has never met or spoken to either Patrick Smith or Kennedy Stewart at any time on any of the material in this study. Or is the minister at all aware of the study?
Hon. J. Kwan: Yes, I have met both of them. Patrick Smith, now that I've identified his whereabouts, was a professor of mine when I was in university at Simon Fraser, taking poli sci 101. That's the last time I believe I met him. I might have met him on other occasions as well, through the course of the last number of years, in my capacity as councillor for the city of Vancouver and subsequent to that. Kennedy Stewart presented me his report. I received it from him, and we had some general discussion around it. I believe that was the last time I met him in my capacity as Minister of Municipal Affairs.
The Chair: Member -- noting the time.
T. Nebbeling: I thought we were going to 9 o'clock. Ten minutes. Yes, that was
the notice we were given: that the session would be from 6:30 to 9 o'clock. So that's
The Chair: For the information of the hon. member, the big House -- Committee B -- will have to be adjourning by nine. We are to report to Committee B about 15 minutes prior to adjournment.
T. Nebbeling: Okay. Well, my last question, then, on this particular issue is
Starting on page 50, there are a number of statistics showing voter turnout in
municipal elections. The average turnout in a city like Colwood, with 40,000 people, is 29
percent. In Langford, with 19,000 people, the turnout is 22 percent. In Oak Bay, with
18,000 people, it's 35 percent. However, in Vancouver, it's 42 percent, and for the city
of Delta, it's 52 percent. I hope the minister keeps this in mind: when this whole
discussion -- which will blossom, no doubt, in the very near future, about wards and
further empowerment of the minority, which the minister likes to focus on
Having said that and considering the time, I think that we on this side, although we have more questions, feel that, in order to move on, we are satisfied. We'd ask to see the vote called.
Vote 40 approved.
Vote 41: local government grants, $92,725,000 -- approved.
Hon. J. Kwan: I move that Committee A rise, report resolutions and ask leave to sit again.
Motion approved.
The committee rose at 8:50 p.m.
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