2000 Legislative Session: 4th Session, 36th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, MAY 2, 2000
Morning Sitting
Volume 19, Number 5
[ Page 15193 ]
The House met at 10:05 a.m.
Prayers.
M. Coell: I'd like to introduce to the House David Roberts, who is the deputy consul to the British consulate. Would the House please make him welcome.
[1005]
Tabling Documents
Hon. J. Doyle: By leave, I'd like to table four documents. The documents are a letter of October 9, 1996, from Doane Raymond; another letter from Revenue Canada of September 11, 1997; client letters that were sent out by FRBC to clients in the forest worker transition program on February 20, 1998; and a writ of summons dated January 27, 2000.
Orders of the Day
Hon. D. Lovick: I call Committee of Supply. In this chamber, we are going to be debating the estimates of the Ministry of Forests and in the Douglas Fir Committee Room, the estimates of the Ministry of Aboriginal Affairs.
The House in Committee of Supply B; T. Stevenson in the chair.
ESTIMATES: MINISTRY OF FORESTS
(continued)
On vote 34: ministry operations, $297,814,000 (continued).
[1010]
G. Abbott: I want to resume our debate around the forest worker transition program taxation issue, which we have been pursuing for several hours now. I want to continue that discussion. Again, the issue that we're discussing here is the plight faced by some 6,300 displaced forest workers who participated in the forest worker transition program. Because of advice around the taxability of the income support that they received, they find themselves in the position of owing in some cases several hundred dollars and in some cases several thousand dollars to Revenue Canada. They additionally owed money to the province of British Columbia, but that is proposed to be forgiven in an agreement-in-principle which the Forests minister has announced.
The core of the discussion here is around the suitability of the advice that was provided to those clients as a matter of public policy in the province of British Columbia. To date we have looked at the evolution of this from October '96, when Doane Raymond, an accounting firm, sought a ruling from Revenue Canada on that matter. Between October 1996 and September 1997, when that ruling was received, Forest Renewal B.C. apparently had some interest in pursuing it. But there is in fact no evidence to document that in the way of phone calls, e-mails, correspondence or other points. The government has assured us at a number of points here that FRBC was interested in the issue, although some may not be satisfied with that explanation.
In September of 1997, Revenue Canada delivered
Pursuant to that
Subsequent to that, on February 28 there was a letter sent out from Forest Renewal B.C. to participants in the program which said, in part, that "Revenue Canada has told us that, in their opinion, both the training support and income support you received under the forest worker transition program are taxable." But the letter then went on to say, "I am writing to inform you that Forest Renewal B.C. is disputing that decision," and a little later in the letter: "Based on this professional opinion, Forest Renewal is challenging Revenue Canada's decision to tax the income support you have received." It then goes on to recommend filing of a T4A slip as a bursary on line 130. The income support should be shown, on the T5007 slip, as social assistance on line 145. So on the one hand, Forest Renewal was saying: "We've got an opinion from Revenue Canada that all of these benefits will be taxable, but notwithstanding that, we're challenging it. We believe they're wrong, and we recommend that you file your taxes this way."
Now, we've had a long go-round on some of these points. I hope the minister will agree that this is a fair summary of what we have discussed to this point.
[1015]
In making that decision to move from an approach which would incorporate Revenue Canada's decision on the taxability of this, in moving from that T4A approach, where these forms had been prepared, and moving to the T5007 approach, which is showing the income as social assistance contrary to Revenue Canada's ruling -- or advice or opinion
The government stated yesterday that the decision was based on a legal opinion which was provided by the firm of Lawson Lundell and contained in a letter of February 26, 1998. Yesterday, at the end of the day, the minister indicated that he would be able to get me a copy of that if I couldn't get it myself. I've been able to anyway, but I do appreciate the offer. I have had an opportunity to review that letter. Again, not being a lawyer, I may well be limited in my understanding of this particular document. But it seems to me that a commonsense reading of it would indicate that, if nothing else, Lawson Lundell is saying that the issue is not clear and that we aren't on particularly strong ground here. That's obviously my interpretation.
In reversing a very important public policy decision, the government must have seen something else in this letter that hasn't arrested my attention. I just want to note here
[ Page 15194 ]
states: "As discussed, given the lack of judicial and statutory authority in this area, we are unable to provide you with a firm opinion as to whether the income support payments made under the program constitutes 'social assistance' for the purposes of paragraph 56(1)(u) of the act."
Then the letter goes on to say: however, a number of arguments could be put forward with respect to this if you want to do it. I think the critical thing is that they are saying: "
It seems to me, as well, that my particular concern about the lack of clarity and the somewhat ambivalent tone of this letter are also reflected in the second last paragraph on page 8, the final page of the letter. I read this into the record yesterday, and I'll do it again today, because I think it does very much point to a lack of clarity with respect to the ground on which the Forest Renewal B.C. decision was based:
Every day I am grateful that I am not a lawyer and don't have to write letters like this. It seems to me that if the lawyers in this case thought that the client was on strong ground in issuing T5007s, they would say: "We believe that you are on strong ground in issuing T5007s." But they don't say that. They say on page 6: "We can't really give you a firm opinion on that." Further, they say on page 8: "Well, you can do it, and you would not be acting unreasonably in doing so." The letter doesn't even say that you'd be acting reasonably. It says that you would "not be acting unreasonable." It seems to me that unless there is something in this letter that provides a whole lot more surety to Forest Renewal B.C. and the government in the way in which they reversed themselves on the T4A versus T5007 approaches, there must be some other reason why that change of approach was made. I invite the minister's comments."Given the arguments set forth above, and the complete lack of judicial guidance in relation to paragraph 56(1)(u) of the act, it is our view that, should Forest Renewal B.C. decide to take the position that income support payments made under the program constitute 'social assistance' payments for the purposes of the act, Forest Renewal B.C. would not be acting unreasonable in doing so. Accordingly, it is our view that Forest Renewal B.C. would not be acting unreasonable in issuing T5007 slips to the recipients of such payments."
[1020]
Hon. J. Doyle: I can't speak for the lawyers' choice of words, but I'd like to go to page 3 of the same letter of February 26, 1998 -- the top two paragraphs. This was a letter that was sent by Lawson Lundell to Forest Renewal B.C. There's a question at the top of the page: "You asked us to review the Doane Raymond letter and to consider whether there are valid legal grounds for Forest Renewal B.C. taking a position contrary to that set forth in Revenue Canada's technical interpretation." Lawson Lundell is saying back to Forest Renewal B.C. in their "Short Answer" that "strong arguments do exist to support Forest Renewal B.C. taking a position contrary to that set forth in Revenue Canada's technical interpretation letter."
G. Abbott: Again the law firm is saying: "Well, there are strong arguments you can put forward." But that is way different than saying: "In our opinion, you would be in a strong legal position in doing that." I mean, I guess I can argue any infinite number of propositions about the way the world is and the way the world should be. But regardless of whether I can put forth strong arguments, that would not necessarily put me in a strong legal position.
Again I say to the minister: what is it that made Forest Renewal B.C. feel comfortable in effectively defying a ruling or an opinion, or whatever you want to call it, that had come down from Revenue Canada?
I mean, clearly what people had an opportunity to do in February of 1998 is make some decisions about how they are going to manage their tax situation. If they know the facts, they can make all kinds of decisions which will help to mitigate that tax impact. If they are given faulty advice or if they are led down a road that ultimately proves to be wrong, they end up being penalized for that. You don't have the opportunity to go and try to retrofit your tax situation retroactively; you can't do that.
So again, is the letter saying something more? Well, then strong arguments can be put forward. But notwithstanding the fact that strong arguments can be put forward, again on page 6 they're saying: "
Hon. J. Doyle: Member, there is no judicial precedence in this area; this is new ground. Therefore we fall back on the strong arguments as mentioned in the letter to FRBC.
G. Abbott: Again, are those strong arguments that theoretically exist strong arguments legally, or are they strong arguments politically? If the strong arguments exist
[1025]
Hon. J. Doyle: I have to say that the member is entitled to his opinion on the interpretation of the letter. But at the end of the day, these things are resolved on a legal basis.
G. Abbott: We had a long discussion of this yesterday. But again, the logical inconsistency of the argument that has been put forward by the government is that they take the position that they had a strong enough argument, a strong enough case, in the winter of 1997 and the spring of 1998
[ Page 15195 ]
to act on behalf of the displaced forest workers and take their side in an action against Revenue Canada. There is a fundamental inconsistency there, and I want the minister to address that.
Hon. J. Doyle: In discussions yesterday I said that the legal argument was only one of many options we were looking at. At the end of the day, government decided to go with the AIP.
G. Abbott: One of the documents that I received recently is an e-mail from Carolyn Mills of FRBC to Paul Corns. This was around the eligibility letter and how some offices treated this issue. I'll quote from this:
And it goes on. This is from Carolyn Mills, who is with the forest worker transition program in Prince George."I've attached a copy of the eligibility letter used up here" -- and that's Prince George. "The letter went through various changes, so I'll give you a quick overview:
"1. First clients came into the program as a result of a plant closure in Fort Nelson in April 1997.
"2. By June 1997 the following sentence was in the eligibility letter: 'Any income support you may receive under this program may be subject to federal income tax.'
"3. By August 1997 the letter included the following: 'Please be aware that any support you receive from the forest worker transition program may be subject to federal income tax. Income tax will not be deducted by Forest Renewal B.C. or any of our designated agents.'
"4. By February 1998 the letter said: 'Please be aware that any income or training support you receive from Forest Renewal B.C. or from the forest worker transition program is subject to federal income tax. Income tax will not be deducted by Forest Renewal B.C. or any of our designated agents. The forest worker transition program will be issuing T4s.'
"5. By March 1998 the letter contained the following paragraph, which was bolded: 'Please also be aware that income and training support you receive from the forest worker transition program is subject to federal income tax. Note that the Forest Renewal B.C. or its designated agents may not deduct income tax from client support payments.' "
I guess that's one example of how one regional office dealt with it. They said, at one point, "may." Then they said "is," and then they bolded the "is." Again, I'm puzzled. If there seems to be an acknowledgment that the Revenue Canada position is going to prevail, why doesn't Forest Renewal treat it as such? Why continue the false promise that somehow these income support payments will not be subject to federal taxes in the end? Why maintain that false hope? Particularly, given that when the opportunity does arise -- and we've talked about this -- to challenge Revenue Canada, the government backs off
[1030]
Hon. J. Doyle: In the hours that we've been discussing this item, the opposition has been saying that we were not in contact with the workers on a regular basis. I think the events that the member read out from the correspondence he has in front of him prove that FRBC was, to the best of their ability, in contact with the workers. And we must remember that the word we got from Revenue Canada was not in any way clear.
G. Abbott: Apparently it wasn't clear to the government, but I don't know how anyone could read it as not being clear. Revenue Canada said the same thing.
Let me pose this to the minister: has Revenue Canada at any point during the period from October of 1996 through today
Hon. J. Doyle: The answer is yes, and we're aware of at least one individual who has won a case in this matter.
G. Abbott: The minister didn't answer my question. Does he have any evidence that he can provide to me that Revenue Canada has at any point varied from its opinion that those benefits were taxable? They never have; we know that.
Hon. J. Doyle: No.
G. Abbott: The letter that was sent out to clients on February 28, 1998, says in part, after they mentioned the Revenue Canada opinion: "I am writing to inform you that Forest Renewal B.C. is disputing that decision." And then later on it says: "Based on this professional opinion, Forest Renewal is challenging Revenue Canada's decision to tax the income support
Hon. J. Doyle: Continued discussions with Revenue Canada.
G. Abbott: So the term "Forest Renewal is challenging Revenue Canada's decision" was merely a promise to talk to them about it. Often, when the word "challenge" is used, one summons up the notion that a legal challenge is being contemplated. This is not the case in this letter.
Hon. J. Doyle: No, that is not the case.
G. Abbott: No, that is not the case -- the premise that I have put forward -- or no, that is not the case that Forest Renewal was contemplating a legal challenge when it wrote this letter?
Hon. J. Doyle: The letter did not tell people that there was a legal challenge.
G. Abbott: I'm presuming from that that, again, it was one of those unstated points and that people might, on their own, get a sense that there was going to be some sort of challenge of the ruling from a legal perspective, rather than simply saying: "Well, we don't agree with you." I can say all day and all night that I don't like a particular tax provision that Revenue Canada has, but I can talk forever. Unless I take a legal challenge of those provisions, I'm not going to win -- go on forever. Clearly just saying that we're going to talk to Revenue Canada about it is something short of what I would anticipate was expected by the displaced forest workers when they received this letter that Forest Renewal was challenging Revenue Canada.
[1035]
In any event, we talked again yesterday at some length about the offer that was made by Revenue Canada to Forest Renewal B.C. in August of 1999. Again, my understanding of the situation is that, in some measure at least, Forest Renewal
[ Page 15196 ]
was guided in its decision-making around whether to accept that proposal or to negotiate further on that proposal from Revenue Canada by the legal opinion. Is that correct?
Hon. J. Doyle: Revenue Canada were asked for $2 million in what they know they were owed by these workers. So FRBC decided, or government decided, to shut the door.
G. Abbott: Did they do that after an attempt to negotiate a better agreement at that point in time?
Hon. J. Doyle: The answer is yes, and Revenue Canada would not renegotiate on the number.
G. Abbott: Was the negotiation conducted by e-mail, by registered mail or by oral conversation?
Hon. J. Doyle: Oral conversation.
G. Abbott: We may come back to that issue again. The upshot of it, though, was that in making the decision not to accept the proposal that had been put forward by Revenue Canada, the government or FRBC also made a decision that they would continue to treat the issue of income support as social assistance, in the same manner in which they had prior to August 23, 1999. Is that correct?
Hon. J. Doyle: The answer is no, and in November 1999 we issued T4As.
G. Abbott: What was the decision for doing that in November, when it had been rejected the two years previous?
Hon. J. Doyle: Even though Revenue Canada had an unclear opinion, they threatened to fine Forest Renewal several million dollars.
G. Abbott: Didn't Forest Renewal B.C. feel comfortable in the legal decision they had obtained from Lawson Lundell that they would be sustained in any challenge of their accounting practices? After all, if it was good enough to base the tax treatment of tens of millions of dollars to 6,300 displaced forest workers who participated in this program, surely it was good enough to sustain Forest Renewal B.C. when they were threatened with a fine. Is that not the case?
[1040]
Hon. J. Doyle: We had confidence in the legal advice we were given. We could not have gone ahead with a legal challenge until the reassessments were done in November 1999. We did discuss this item yesterday, and we mentioned this very same item.
G. Abbott: But wasn't this the spectacular opportunity that we had to test the proposition? Was it not? Surely you can go ahead and say to Revenue Canada: "Go on -- take us on. We got a legal opinion here that says that we're right and you're wrong. Let's resolve it." They'd have you in court before you knew it, and you'd have an opportunity to test your proposition. Why not?
Hon. J. Doyle: The answer is no.
G. Abbott: Why not?
Hon. J. Doyle: Because the court case wouldn't have addressed the issue.
G. Abbott: If Revenue Canada was saying that it was going to fine Forest Renewal B.C. several million dollars for incorrectly managing the tax situation for these people, why would it not have become the cornerstone of the case? It seems to me to be spectacularly self-motivated to hear the government say: "Well, you know, we were happy to go along with the way in which we were doing our accounting practices, because we had a legal opinion that said that we had some strong arguments to support it." Yet when the corporation itself is threatened with a fine of several million dollars, suddenly the confidence has gone. Why is that? Why don't those powerful legal arguments that sustained you through the previous three years sustain you when the rubber hits the road here, and you're threatened with a fine?
Hon. J. Doyle: Tax liability rests between the taxpayer and Revenue Canada. Only those challenges between Revenue Canada and the taxpayer can challenge and determine the legality of the tax status.
G. Abbott: I may not be a lawyer, but it seems to me that you can't say that these two issues are separate and apart. Surely the case with respect to an individual worker and how they had filed their income tax
Forest Renewal B.C. maintains, based on a legal decision, that it's appropriate for T5007 slips to be issued to show income support as social assistance, and the same holds true with respect to Revenue Canada threatening Forest Renewal B.C. They're saying: "You're doing this wrong. You should not be issuing T5007 slips; you should be issuing T4A slips." Forest Renewal B.C. is threatened with a fine, and they reverse. But when people are advised: "Well, you know, Revenue Canada has told us that in their opinion, the training support and the income support are going to be taxable
Hon. J. Doyle: They are related issues, but a legal decision can only be made in a case between the taxpayer and Revenue Canada. As you've mentioned sometimes in the last days, you are not a lawyer. We can forgive you for not knowing these facts on arguments of law.
[1045]
G. Abbott: And I forgive the minister for the inconsistency in his understanding of this situation as well. I think it is absolutely deplorable that FRBC, when they're threatened with a fine from Revenue Canada, suddenly shifts the ground away from what was apparently very strong ground when it was dealing with the fate of its individual clients. Apparently, somehow these strong legal arguments, which we have never actually identified in this letter, suddenly evaporate. Suddenly now they're of no consequence. Suddenly they wouldn't sustain Forest Renewal B.C. if they were challenged by Revenue Canada.
[ Page 15197 ]
Again, it seems to me to be entirely too convenient on the part of the government to say: "Well, it worked up until we were threatened with a fine." That's effectively what the minister said: "It worked up until we were threatened with a fine. When our interests were threatened to the tune of several million dollars, we thought, well, maybe we aren't in such a good legal position." That's in fact what has happened here, and that's entirely clear from this.
I'm glad to accept the minister's forgiveness for not being a lawyer. I don't know whether the 6,300 displaced forest workers in this province, who still owe tax bills of several hundred dollars or several thousand dollars, are going to forgive this minister for taking the position that we had a strong enough legal opinion to give tax advice one way for close to four years; yet when Revenue Canada threatens FRBC with a fine, suddenly that's reversed. That's the fact, and I don't believe those forest workers are going to forgive you. We'll find out in the longer run whether that's going to be the case or not.
There's a few other issues I want to canvass as well. There is an issue -- and obviously some difference of opinion around it -- with respect to the involvement of the Premier's Office in this matter. According to the chronology around this issue that was prepared the IWA Local 2171, they have a number of comments on that. They say, for example, in that document:
The document then goes on to state that in a brief meeting with"A meeting was coordinated for May 25, 1998, by Ron Wickstrom from the Premier's Office and was held in the MOF Victoria office. In attendance were Roger Stanyer from FRBC, Bill Duvall from the MOF, Gary Wong from Vancouver FWTP and Ron Wickstrom, who joined the meeting by teleconference.
"All other parties firmly and passionately stressed to Mr. Stanyer that FRBC's position was unacceptable and that the credibility, integrity and competency of FRBC were at stake. Mr. Stanyer was reluctant to give any firm commitments, citing that the matter must be dealt with at the board level. Several potential contingency plans were discussed. Mr. Stanyer assured that if required he would call an emergency telephone conference of the board."
Does the minister concur with the chronology with respect to the involvement of the Premier's Office and the Ministry of Forests?"The Vancouver centre was urged not to resign but rather to continue pursuing the matter" -- that's Mr. Wong. "As it had already been dealt with at the most senior levels of FRBC bureaucracy, the centre sought relief through the Premier's Office and the office of the Minister of Forests. In a brief meeting with Premier Clark on February 13, 1998, he stated that he also was told FWTP supports were not taxable. He assured that workers who were provided with false information would not be abandoned."
Hon. J. Doyle: The answer is no.
G. Abbott: Could the minister advise in what respects the IWA is factually incorrect in its chronology?
[1050]
Hon. J. Doyle: There was no agreement to pay the taxes.
G. Abbott: So the IWA is incorrect in claiming that at any point in time they were given assurances, either by the Premier's Office or by the Ministry of Forests, that some provision would be made to assist workers that had been affected by this program?
Hon. J. Doyle: I'm reading from a letter from Dave Haggard, the president of IWA Canada, dated January 4, 2000. The closing comments to the Minister of Finance are, "I urge you to take responsibility for this situation and to take the lead and immediately forgive the provincial government's share of this tax bill, some $3 million owing," signed by Dave Haggard.
G. Abbott: The minister didn't answer my question. In what respect is the IWA account, which is committed in their chronology of December 3, 1999, factually incorrect?
Hon. J. Doyle: There was no agreement reached. I'm reading from a letter from the president of IWA Canada.
G. Abbott: Obviously either Mr. Haggard wasn't involved in the discussions, or there is some other reason why there is such a gap between the account of Local 2171 of the IWA and indeed Mr. Wong. Mr. Wong says, in a faxed transmission to Kelly Nontell on March 25, 1998: "I would also appreciate being advised of any progress with respect to implementation of the contingency plans to deal with the income tax issue pursuant to an agreement previously reached between Roger Stanyer, Ron Wickstrom from the Premier's Office, Bill Duvall from the Ministry of Forests and myself."
The faxed transmission makes reference to an agreement; it also makes reference to contingency plans. Is the minister telling me that in both cases, Mr. Wong is not being truthful in his assessment of the situation?
Hon. J. Doyle: I can't speak for Mr. Wong, but I can tell the member that there was no agreement.
G. Abbott: Why would Mr. Wong think there was an agreement? Why would he think there are contingency plans? Is it possible that somehow you could fabricate this? Clearly he had some meetings. Clearly Mr. Wong felt that there was an agreement and that there were contingency plans around the implementation of it. How could he possibly come away from meetings with that view if, as the minister says, there was no agreement?
Hon. J. Doyle: In the last question, I feel I answered the question. I cannot speak, as I said, for Mr. Wong, and I can tell you that there was no agreement.
G. Abbott: Can the minister confirm that Bill Duvall from his ministry participated in meetings with Roger Stanyer, Ron Wickstrom from the Premier's Office and Gary Wong around this issue?
Hon. J. Doyle: The answer is yes.
[1055]
G. Abbott: What was the consequence, the upshot, of that meeting?
Hon. J. Doyle: The agreement was that we would continue to look for an agreement, but there was no agreement reached on the tax issue.
[ Page 15198 ]
G. Abbott: So at the meeting the problem was discussed clearly; this is, again, March 25, 1998. Clearly, prior to March 25, 1998, Mr. Wong certainly had the apprehension that some of the participants in the program were going to be getting, at some point in time, a very rude surprise around the tax issue. Is that correct? Is that the disposition that Mr. Wong brought to the meeting?
Hon. J. Doyle: All clients got a letter on February 28. Everyone was aware through that letter that there was a problem to do with the tax issue.
G. Abbott: Was Mr. Wong assured in the meeting that Forest Renewal B.C. had a legal opinion that suggested they could successfully challenge the decision of Revenue Canada?
Hon. J. Doyle: The answer is yes.
G. Abbott: Was there any additional commitment made around that? Did the Premier's Office or the minister's office or Forest Renewal B.C. say: "We have a legal opinion and we are going to challenge Revenue Canada on this"?
Hon. J. Doyle: The answer is no.
M. Coell: I seek leave to make an introduction.
Leave granted.
M. Coell: I'd like the House to welcome some students from Parkland Secondary School in my riding, who are hosting some students from Holman, Victoria Island, in the Northwest Territories. They have an exchange of the schools. Parkland has just come back from Holman, and now Holman has joined our students here. The member for Bulkley Valley-Stikine has organized a number of meetings for them with the Speaker's office and then a reception in the Ned DeBeck Lounge. Would the House please make our students from Parkland and Holman welcome.
G. Abbott: We understand that Gary Wong was assured that a legal opinion existed, which would be used to challenge the ruling of Revenue Canada. But he was not advised that there would be a legal challenge mounted. I think that would be a fair summary of what has been said. What other promises were made to Mr. Wong to assure him that, unlike what eventually happened, somehow clients in this program would not be liable in the end for the product of bad advice around how to proceed with taxation?
Hon. J. Doyle: No promises were made.
G. Abbott: No promises were made. Okay. Well, that's interesting, and I guess Gary Wong can work with the historians on that -- whether that's the case or not.
The government certainly did have some discussions around how to deal with the dilemma they were faced with in the spring of 1998, when it was very clear that the way in which Forest Renewal was managing the tax situation would ultimately be challenged by Revenue Canada. That's very clear. Obviously the distress that's shown in Mr. Wong's comments is one aspect of it.
There's also a briefing note that was put forward -- presumably for the executive of FRBC -- back on May 4, 1998, which I think gives us a good indication of how Forest Renewal B.C. was looking at the different options they could pursue with respect to the tax issue.
[1100]
This paper says: "
Hon. J. Doyle: The answer is no.
G. Abbott: But we know that on February 28, Forest Renewal B.C. advised its clients that FRBC would be disputing the decision of Revenue Canada, that Forest Renewal would be challenging Revenue Canada's decision to tax the income support.
When I asked him if that would involve a legal challenge, the minister said: "No. It would involve discussions." Were there no attempts to get the forest worker transition program retroactively recognized and accepted as a program that was providing clients with non-taxable social assistance?
Hon. J. Doyle: It was explored in August 1999, but it wasn't possible.
G. Abbott: It was explored in August 1999, which I presume would be coincidental with the letter from Revenue Canada that lays out the package, which Forest Renewal subsequently rejected. There was no attempt to get the FWTP accepted as a social assistance program prior to August of 1999?
Hon. J. Doyle: There were ongoing discussions with Revenue Canada from the spring of 1998, and this is only one of the options that we've looked at.
G. Abbott: Option 2 is, I think, an important one given the extensive discussion we have had around the legal opinion and the legal position that Forest Renewal B.C. enjoyed or did not enjoy in respect to the taxation issue. Option 2 is -- and I'll quote from the document:
Given all that, why didn't we take Revenue Canada to court?"Take Revenue Canada to court. Forest Renewal could challenge Revenue Canada's interpretation and assessment action on behalf of all clients, by taking Revenue Canada to court.
"How: Work with Ministry of Finance and legal counsel to mount a formal class action challenge on behalf of all clients.
"Pros: Forest Renewal would be seen by its clients and stakeholders as doing the right thing. Forest Renewal would be treating all clients equally. Forest Renewal, and the government, could gain favourable public coverage in taking on the 'taxman.' "
[1105]
Hon. J. Doyle: We didn't have a final ruling until November 1999, and then it could only be done with the taxpayers.
[ Page 15199 ]
G. Abbott: Is Kelly Nontell incorrect in her understanding of the legal situation when she puts forward this memo in May 1998? Or is she looking to the future and thinking that sometime late in '98 or early 1999, such a challenge could be mounted?
Hon. J. Doyle: The member is quoting from a briefing note that was the opinion of the individual who wrote it, who was not a lawyer.
G. Abbott: So apparently her legal understanding was incomplete, and therefore she was putting forth an option that simply could not be exercised. Is that correct?
Hon. J. Doyle: I've asked the member to repeat the question. I just missed it.
G. Abbott: The question is: was it a reflection of Kelly Nontell's incomplete legal understanding that she would put this forward as an option in May of 1998? Is that correct? Are we saying that this was simply an option that was not a real option?
Hon. J. Doyle: It wasn't a real option until Revenue Canada made a decision on it. I guess I must correct the record; I understand that Kelly is a he.
G. Abbott: Again, just to complete the circle here, when this option became a real option -- and you did have real live bodies to take this action on behalf of -- it was concluded that either the case was not sufficiently strong to act on their behalf or suddenly the negotiating option was much more fruitful. Is that correct?
Hon. J. Doyle: All options were looked at. At the end of the day, a decision was made to go with the AIP.
G. Abbott: That was despite the fact that apparently the legal opinion received was the foundation of public policy around the tax issue for the previous three and a half years. Again, I think I need to point that out. Option 3 in this paper was to pay the tax bill on behalf of the clients. I'll quote:
Did the corporation give serious consideration, based on option 3, to paying the tax bill on behalf of the clients?"Approach Revenue Canada with an offer to pay the tax liability on behalf of the clients and to negotiate a settlement on the payment of a further tax liability that such a payment would generate as another taxable benefit to each client and negotiate a process for dealing with the tax liability in 1998, 1999 and 2000.
"How: Work with Ministry of Finance to approach and negotiate with Revenue Canada.
"Pros: Clients would be happy because they will not have to pay any taxes on financial support received under the program.
"Cons: Could be very costly to Forest Renewal -- approximately $6.75 million for 1997 alone. Would put a severe strain on the FWTP budget or on Forest Renewal's continuity fund. Forest Renewal could be accused of giving up without a fight -- but if we're going to lose anyway, why spend money fighting a losing battle?"
[1110]
Hon. J. Doyle: The answer is yes.
G. Abbott: Could the minister advise what form that consideration took?
Hon. J. Doyle: We went to Revenue Canada. They said that the bill would be $11.6 million, which was $2 million more than the taxes that were owed.
G. Abbott: Did Forest Renewal demand a reasoned explanation for why it was $2 million more?
Hon. J. Doyle: Forest Renewal did make that request. I think we talked about this yesterday. And Revenue Canada wouldn't explain why there's $2 million more than the taxes that were owing.
G. Abbott: Did Forest Renewal believe it to be a fine of some sort for faulty management practices?
Hon. J. Doyle: The answer is no.
G. Abbott: Did they believe it to be a misunderstanding of the actual taxes to be paid?
Hon. J. Doyle: The answer is no.
G. Abbott: Again, the letter of August 23, 1999, enumerates the year, the federal tax owing, the provincial tax owing and the interest owing. And it does '96, '97 and '98 in columns. Is the amount that is added up in all of those columns -- which, it seems to me, should be around perhaps $10 million
Hon. J. Doyle: There's $10.9 million. But in later information Revenue Canada did say that it was an inflated number. They said later that it was $9 million.
G. Abbott: They said later that it was $9 million. When did they say that?
Hon. J. Doyle: In media reports quoted by the opposition.
G. Abbott: In media reports quoted by the opposition -- that's intriguing. What's puzzling me is the minister saying: "Yeah, we tried to negotiate on behalf of the clients, but Revenue Canada was inflating the bill." But it seems to me that what they're doing in the letter of August 23, 1999, is enumerating the amounts owing as they understood it as of August 23, '99. Is that not correct?
Hon. J. Doyle: Yes. Later they reported to media that it was $9 million.
G. Abbott: We're getting into an interesting, slippery area here. Why would we assume that in this deal
[1115]
Hon. J. Doyle: Revenue Canada refused to negotiate, and that was the end of the story.
G. Abbott: It seems to me that what Revenue Canada did was say: "We are still committed to the position that we have
[ Page 15200 ]
had from day one, which is that income assistance is subject to taxes. Here's what they are. If you undertake not to recover it from the employees and if you undertake to issue proper information slips in the future, here's the deal." It seems pretty straightforward to me. I don't think there's any question, as the minister has suggested, of Revenue Canada inflating the figure. That, it seems to me, is a red herring of the strongest variety. In fact, the government simply said: "We're not going with this deal. We don't want to pay that amount of money." Is that not the case?
Hon. J. Doyle: Revenue Canada refused to negotiate.
G. Abbott: By refusing to negotiate, does the minister mean that Revenue Canada refused to retreat from the position which they had taken since '96?
Hon. J. Doyle: Revenue Canada refused to explain how they came to that number.
G. Abbott: Well, it's pretty clear from the letter how they came to that number. You add up the years, you add up the federal tax owing, the provincial tax owing and the interest owing, and it comes to a figure. What's to be explained?
Hon. J. Doyle: It is not based on an actual; it is based on a Revenue Canada staff estimate.
G. Abbott: But surely the agreement, in the end, would have been that the amounts would be what is legally owing. Would it not?
Hon. J. Doyle: The answer is no, it was not.
G. Abbott: What does the minister presume it would have been based on, then?
Hon. J. Doyle: It would be based on a Revenue Canada estimation of the taxes owing.
G. Abbott: It was the estimation of the government or Forest Renewal B.C. that Revenue Canada might be trying to pull a fast one on the province? Is that the suggestion here?
Hon. J. Doyle: We were doing the due diligence to see if the amounts were reasonable.
G. Abbott: And somehow the conclusion was reached that they were not reasonable? Is that correct?
Hon. J. Doyle: The answer is yes.
G. Abbott: On what basis was that conclusion reached?
Hon. J. Doyle: I'd like to read out some items that we talked about in the House yesterday on this very issue. First, a federal offer at that time was only for the 1997-98 tax year, or some 6,300 clients enrolled at that point. Even then, their offer was approximately $2 million higher, in their own estimation, than the taxes owed. Add to this the 1999 enrolments and those who would not graduate until the spring of this year, and the total number of clients pushed to 8,618. The cost of the so-called deal on Ottawa's terms rises as high as $20 million. With those terms, Forest Renewal B.C. decided it could not justify settling for the 1997-98 clients only, when the 1999-2000 clients had been given substantially the same information.
More importantly, given all the efforts made to communicate the facts to the clients, as mentioned, there was no reason then -- just as there is no reason now -- why Forest Renewal B.C. should be responsible for the taxes that individuals face.
[1120]
G. Abbott: I'm appreciative, again, for the minister reading that extensive answer into the record about this. Again, I shake my head every time I hear, at the conclusion of that submission: "Well, Forest Renewal really didn't have to negotiate anything. They were right, and we're just doing this to be benevolent and assist them in a difficult situation."
Again, when one considers that the proposal of August 23 was rejected, yet somehow by the spring of this year we have a so-called agreement-in-principle with Revenue Canada -- which in fact, as I've enumerated on a number of occasions, simply outlines the commitments of the province to pay some portions of the money owing to the federal government or to forgive the B.C. taxes
Hon. J. Doyle: Forest Renewal felt from the beginning that the taxes weren't due on this forest worker transition program. They felt clients should not have to pay any tax on the money. The agreement-in-principle reflects this on funds within the provincial jurisdiction.
G. Abbott: We are clearly still dreaming away over there.
The fourth option, with respect to this paper put forward by Kelly Nontell on May 4, is to do nothing. I'll quote: "Let individual clients pay their own tax bills. Offer no funding to assist clients with these payments. How: Do nothing. Pros: Costs Forest Renewal nothing in terms of funding. Cons: Puts Forest Renewal in the position of saying to clients: 'Even though we gave you inaccurate advice, you are on your own and we won't help you.' " Is that, from the minister's perspective, a fair summary of what was done up until -- I presume he will argue -- the agreement-in-principle recently reached?
Hon. J. Doyle: The answer is no. The record will show that Forest Renewal continued to pursue many options.
G. Abbott: When this option paper says as one of the cons: "Puts Forest Renewal in the position of saying to clients: 'Even though we gave you inaccurate advice, you are on your own and we won't help you
Hon. J. Doyle: Yes, it was being a devil's advocate.
G. Abbott: So the minister still maintains that clients were not provided inaccurate advice?
[ Page 15201 ]
Hon. J. Doyle: Correct.
[1125]
G. Abbott: To continue this delightful rewriting of history, I want to quote from a Forest Renewal B.C. briefing note. The date is September 10, 1999. In this, Christine Lattey, vice-president, communities and workforce, is providing some information on the forest worker transition program income tax issue. In the background section of the briefing note, it reads: "Initially, due to a combination of inaccurate information, inconsistent direction to delivery agencies and staff, and staggered program startup dates, clients entering the FWTP in 1996 and early 1997 were told a mixture of things about whether or not training and/or income support provided under the program were taxable."
Does the minister disavow that description of background?
Hon. J. Doyle: We've already said that was the case, but on February 28, 1998, that was clarified in a letter to all clients.
G. Abbott: So the minister is saying: "Yeah, we acknowledge that up to February '98 there was inconsistency and there was misinformation, but the letter of '98 set it all straight." We've talked about that letter on numerous occasions now, where the clients were advised of the opinion of Revenue Canada and advised that Forest Renewal B.C. was going to be challenging that decision.
One of the options discussed in the briefing note of September 10 is a loan program with no appeal/challenge. Just to pursue that loans program only: "Forest Renewal does not pursue a challenge/appeal. Forest Renewal provides loan funding to individual clients in need who contact us regarding this matter so they can pay taxes owing on the income support."
One of the things we've not discussed around the agreement-in-principle is whether there is a loan program in place to help deal with the consequences of it. There is, after all, the lion's share of the taxes owing to Revenue Canada still in the hands of the displaced forest workers. Is there some loan program still being contemplated?
Hon. J. Doyle: The loans program that was being contemplated and being talked about was similar, at the end of the day, to the AIP that was worked out a month or six weeks ago.
G. Abbott: One of the points made in this document -- and it's an interesting one in light of some of the discussion we've had around whether there was a regional inconsistency as well as an inconsistency over time in the advice from contractors or delivery agents
I'm not sure on what basis Ms. Lattey or Ms. Rowe make that conclusion. But is it the understanding of the minister that there was some regional variation in what clients were advised as well as the variation over time, which we have discussed?
[1130]
Hon. J. Doyle: The answer is yes.
G. Abbott: Just to flesh that out, is the understanding of the minister that clients in the interior were advised from an earlier date? What is the distinction among the regions? Indeed, was there a difference set of advice done in each of, I believe, the six regions of Forest Renewal B.C.? Or are we talking about simply an interior-coast split here?
Hon. J. Doyle: Yes, there were some regional variations. And for the member's information, the interior program didn't begin until June 1997.
G. Abbott: Notwithstanding that, I understand that the agreement-in-principle will apply to all participants in the program regardless of geography.
Hon. J. Doyle: The answer is yes. It's across the board to all clients.
G. Abbott: The option paper of September 10 from Katherine Rowe outlines an option: "Pursue a negotiated settlement with Revenue Canada for the 1997 taxation year only and approach the Ministry of Finance to forgo the owed provincial income taxes." Was that attempted?
Hon. J. Doyle: The answer is yes.
G. Abbott: The intention was obviously unsuccessful. Can the minister outline the reasons why?
Hon. J. Doyle: Revenue Canada rejected it.
G. Abbott: So the only way that we were going to reach any agreement with Revenue Canada at that point was if Revenue Canada moved off their position that the benefits were taxable and said that they would forgive those. Is that correct?
Hon. J. Doyle: The answer is no.
G. Abbott: If no, why not?
Hon. J. Doyle: Revenue Canada presented a take-it-or-leave-it option, as I mentioned earlier to the member.
G. Abbott: Option 2 appears to be the one that was ultimately accepted. Option 2 was to decline Revenue Canada's offer and let them reassess clients from all three taxation years. Is that the option that was selected, and why?
Hon. J. Doyle: I have told the member why Forest Renewal rejected the Revenue Canada offer.
G. Abbott: I think that we could probably go on for some time on this issue. But I'm not sure that there would be enormous value in that. I guess one of the things we should talk about briefly, though, is the implementation strategy that the government is proposing around the agreement-in-principle. Can the minister outline that for me, please?
[1135]
[ Page 15202 ]
Hon. J. Doyle: The agreement will be signed by May 15, the delay being that Revenue Canada staff are busy at this tax season time.
G. Abbott: Given that the agreement-in-principle involves no commitments whatsoever on the part of Revenue Canada, can the agreement not proceed without their concurrence?
Hon. J. Doyle: Revenue Canada has to agree to accept the payment. They have to sign to accept the payment.
G. Abbott: I'm sure that they will be pleased to sign to accept the payment. I can't imagine that would be a problem.
The issue of a possible legal challenge
Hon. J. Doyle: No. Forest Renewal has provided a summary to clients of the agreement-in-principle, and avenues are still open to them, as they were before, to take any action they wish.
G. Abbott: Is Forest Renewal B.C. still contemplating providing assistance in such a legal action?
Hon. J. Doyle: Forest Renewal B.C. has provided legal opinions two times.
G. Abbott: But has the corporation concluded that it will not directly assist clients in any challenge of the Revenue Canada ruling?
Hon. J. Doyle: The answer is no.
G. Abbott: So theoretically, if a displaced forest worker or a former participant in this program decides that they would like to challenge the ruling of Revenue Canada, FRBC may make a contribution to that fight. Is that correct?
Hon. J. Doyle: FRBC's contribution has been legal advice to all clients.
[1140]
G. Abbott: The impact on people's lives around this issue has, in many cases, been quite devastating. Certainly you can imagine that people, in the sometimes vulnerable positions they're in, receiving a notice that suddenly they owe several thousand dollars to Revenue Canada
Hon. J. Doyle: The record shows that from when this program started through till today, Forest Renewal has cared for the clients. There are many, many workers, including some in the member's riding, that have been assisted from this program. Somebody in Armstrong, a 55-year-old woman, was laid off from a plant where she was an optimizer-trimmer-grader. She took office administration and, at 57, is now working full-time in the field in which she was trained. There are many others. There are 20-plus that I have right here from across the province -- people that I mentioned yesterday when I made my opening remarks, who got between $5,000 and $27,000. They're retrained, and 80 percent of the people that graduated are working. The program has been a success.
G. Abbott: I didn't ask the minister if he can drum up a success story to try to mitigate the spectacular disaster that the government's management of this tax issue has been. I asked the minister whether he and/or FRBC have learned anything from this entire boondoggle. Again, we had a situation that was allowed to go on from October of 1996, where people were advised to claim their income support as social assistance under T5007 forms. That was clearly contrary to the ruling of Revenue Canada, and those people have ended up with tax bills of several hundred to several thousand dollars. I'm asking the minister not to trot out a success story or any number of them. I'm asking the minister whether he and/or his ministry and/or FRBC have learned any lessons as a consequence of this very bitter experience for some 6,000 to 8,000 British Columbians.
Hon. J. Doyle: Forest Renewal B.C. feels that it has been a good program. What, if anything, we have learned is that discussions we've had over the years with Revenue Canada are very complex and that it's very, very hard to reach agreement with them.
G. Abbott: Based on the fact that for three and a half years, the corporation attempted to maintain that income support could be taxed as social assistance, in the face of consistent advice and consistent direction from Revenue Canada that it would be taxed and certainly was taxed in the end, what has the government learned from that? What has FRBC learned from that? If this program was starting up today, would the government -- after all it has been through on this -- not treat the tax issue in the way that was recommended from the start by Revenue Canada?
[1145]
Hon. J. Doyle: If we were entering this program today, if we turned the clock back to the start of this program, there's no doubt that FRBC would be trying, if at all possible, to get a definition from Revenue Canada as soon as possible and sooner than we did get it.
G. Abbott: So if Revenue Canada says that this income support is going to be taxed, then the government and FRBC will treat it as if it's going to be taxed. Is that correct?
Hon. J. Doyle: Forest Renewal did not have a final definite answer from Revenue Canada until November 1999. But
[ Page 15203 ]
we must remember, as I said to you earlier, that today there are thousands of people who graduated from this program -- which ran from '96 till today -- and who are working in full-time work.
G. Abbott: But again, I think it will be entirely clear from the record of our discussion over the past days that when FRBC had their opportunities to correct the way in which they were managing the tax situation for their clients, they failed those clients on numerous occasions. I believe they failed them between October '96 and September '97 by not vigorously pursuing an answer from Revenue Canada about the situation. One should have assumed, based on the initial discussions around this with Doane Raymond and others, that the cautious, safe, prudent course would be to treat that as taxable income.
Further, when that was clearly stated by Revenue Canada in September of '97, again there was an immediate opportunity to get the program on a sound footing from a tax perspective. Again, the situation was allowed to carry on, even though staff made the appropriate adjustments and in fact prepared T4As for the income support based on what was clearly a weak legal opinion that's reversed. The envelopes were unstuffed, and again clients were told, "Here's your T5007. We recommend that you do it this way: we recommend that you file it as social assistance" -- knowing full well that's contrary to the ruling of Revenue Canada.
[1150]
I'm distressed at every point when what I see is calculated ambivalence, saying, "On the one hand, we've got this opinion from Revenue Canada; on the other hand, we're challenging it. We've got a legal opinion. We're going to take on Revenue Canada on this," when no one, it appears, was ever going to do that. Further, the argument's made that: "Well, we don't give tax advice." Yet that's exactly what's being done in the letters of February 28 and subsequent letters. They say: "We recommend that you report income support shown on the T5007 slip as social assistance." Clearly tax advice is being given.
Again, I find it most distressing -- and I'm sure clients of this program will find it most distressing -- that this situation, this calculated ambivalence, is allowed to continue through until November '99 when FRBC is threatened with a massive fine unless it changes its practices. It's that -- it's not the distress to the workers or the potential distress to the workers -- that prompts the change. It's not Revenue Canada's earlier decision and the arguments around it that prompts the change. What prompts it is the threat of a several-million-dollar fine.
Again, I think that Forest Renewal and the government of British Columbia have failed these workers and failed them badly. Notwithstanding this very one-sided attempt by the province to bail themselves out of this issue, I don't think anybody's buying it. The minister can stand up and tell me that he's had so many phone calls, but we get lots of calls too. There's lots of people who are very unhappy with the situation that they continue to be in. They are still owing the lion's share of those several hundred to several thousand dollars in taxes, and they don't know how they're going to make ends meet.
Frankly, this situation didn't have to be. There was some very bad judgment made at a number of turns here, and I'm not convinced that even to this day, we've learned from it. Frankly, I'm still hearing: "Well, we always thought we were right." Well, a lot of times you have to adopt the cautious, prudent course and protect the best interests of your clients. There was an obvious case here where the government took the easy road. It wasn't until they were threatened with a several-million-dollar fine that they decided to get off the easy road and recognize reality.
Obviously the minister will want to respond to me. Perhaps I'll reserve my right to respond to him as well, but that completes my questioning on this particular subject.
The Chair: Minister, noting the time.
Hon. J. Doyle: I just want to make a short statement. The record reflects that we did act in the best interest of clients in this very unclear issue and that we kept clients informed along the way. I'd like to read a short statement from a newspaper circulated in Campbell River, the Courier-Islander. On February 3 of this year, the headline is: "Workers Were Told FRBC Funds Taxable":
"You have reported on the 'tax grab' by Revenue Canada of the moneys paid to forest workers from FRBC. Reported was a claim by [the hon. member for Shuswap] that the lack of information to workers who received FRBC money was 'deliberate, deceitful betrayal'. Strong language and totally wrong.
"I've worked in the forest industry for 25 years and was a beneficiary of some of their programs. In 1997, I was told that FRBC money would be treated as UIC benefits and therefore taxable. I was not alone when this information was given. You quote a Mr. Paul Corns from FRBC saying that FRBC did not hide this fact from their clients. I do not know Mr. Corns, but I can verify I was told, in the company of several other people at the Nanaimo office of FRBC, to expect that Revenue Canada would at some time treat FRBC funding as taxable.
"FRBC certainly has had many faults, but to claim that they did not inform their clients is simply not true.
"Amongst others, all forest industry employees will attest
. . . UIC, or as it is inaccurately called, employment insurance. . . . "[The member for Shuswap's] implication that forest workers, hewers of wood that we might be, were taken by surprise by his federal Liberal colleagues, bloated with excess billions, with another tax grab is an insult to the intelligence and experience of the working women and men. The provincial Forests minister" -- at that time, the member for Cariboo North -- "is quite correct, by the way, in saying that the province cannot refund the money: Revenue Canada would tax it again as income.
"Signed, Robert R. Ralston."
[1155]
I'd like to just repeat something I stated yesterday afternoon when we started back in these estimates. The program has been a success. Forest Renewal B.C. has assisted over 8,000 displaced forest workers through this program with up to $27,000 in income support and training allowance -- a very generous program. A hundred million dollars was provided to clients over the last four years. As of today, over 80 percent of the program graduates are working. If the opposition had its way, there would have been no program, no help provided -- nothing.
G. Abbott: I didn't realize that we were going to be closing with testimonials. I'll be back at this after lunch, and we can exchange testimonials for a while. I can tell you that for every story the minister would like to trot out about what a
[ Page 15204 ]
great program it was and how well people were treated, I can trot out ten others that say exactly the opposite -- that they were misled, and cruelly so, in this situation.
Noting the hour, I move the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. D. Lovick moved adjournment of the House.
Motion approved.
The House adjourned at 11:58 a.m.
PROCEEDINGS IN THE DOUGLAS FIR ROOM
The House in Committee of Supply A; D. Streifel in the chair.
The committee met at 10:17 a.m.
ESTIMATES: MINISTRY OF ABORIGINAL AFFAIRS
On vote 10: ministry operations, $40,607,000.
Hon. D. Lovick: I'm delighted to be standing before this committee once again presenting the estimates of the Ministry of Aboriginal Affairs. It's been about two years since I last did this, I believe, and I lament the fact that I didn't have the opportunity to do it last year. Can I say it better than that? I'm sure my colleague across the way also laments the fact that I did not have the opportunity to do it.
In any event, a great deal has happened in those last two years, and I want to spend a little time just sketching that out. My remarks will not be hugely long, but I do want to give an overview, if I might, of what the ministry has been doing -- and, I think, doing very well.
Let me start, however, by acknowledging those people who are with me today, for the benefit of the Chair and for my colleagues on the other side of the chamber. To my immediate right, of course, is my deputy minister, Dr. Philip Steenkamp. On my left is the assistant deputy minister, negotiation support division, Patrick O'Rourke. Seated directly behind Patrick is Peter Smith, our communications person. Directly behind Philip is Anne Kirkaldy, our finance person. I think that between us we ought to be able to answer all questions that might come before us.
As I said a moment ago, a great deal has happened since I last presented estimates for this ministry. Obviously the stellar accomplishment, we on this side of the House certainly believe, is the Nisga'a treaty. It is complete. We also have an agreement-in-principle signed with the Sechelt, and also several land and cash proposals have been presented. Some people fail to recognize how significant a step that is in the negotiation process. To get to the point where we're actually tabling a land and cash proposal is a hugely significant accomplishment. Whether the offers are all accepted with alacrity is, frankly, rather secondary in some respects, because the fact that we have got that far is a testament to our successes.
[1020]
The six-year-old B.C. Treaty Commission has obviously faced a number of challenges in the last few months. Indeed, a number of people have suggested that it is falling apart or is doomed to failure, etc. We have made some significant progress towards achieving agreements. I would simply emphasize here that it's absolutely essential, in my view, that we do reach land claims agreements for a number of reasons, not the least of which certainly is the economic one. That veil of uncertainty hanging over the province as long as land claims are unresolved is hugely important to all of us.
If I say anything at all about the success, or lack of, of the process, I would be remiss if I didn't acknowledge the most recent news -- the late-breaking news, to coin a phrase. This morning I listened to my friend Miles Richardson, chair of the B.C. Treaty Commission, reporting out on the meeting that we had on the weekend -- last Friday? I'm trying to remember; I believe it was last Friday -- with the principals. Those are the regular meetings; we tend to have three or four per year. Those are the ones with the province of British Columbia, the government of Canada, the First Nations Summit and the B.C. Treaty Commission.
That process has been rocky; it's been difficult. Some of those sessions, a number of us have said, appear to be simply to talk shop. We're all guilty of posturing, I suppose, and sometimes one despairs of whether we're ever going to accomplish anything. We attempted some months ago to improve that process. We did so essentially by mandating our senior officials from each of the bodies to get together in advance to prepare agendas and to establish working plans for the coming meetings.
That approach seems to have made a huge difference. At our last meeting we were successful in doing two important things. One is that we got an agreed statement by all of the principals on interim measures. The second is that, as a result of a workshop and working groups getting together, we were also able to get an agreement on how we proceed to try and find certainty language, if it is agreeable to all the parties.
As my colleague across the way and his colleagues will certainly know, the issue of certainty language has been a huge one in the process. We think what we did in Nisga'a, the language we used there, was absolutely appropriate. But a number of first nations are not persuaded yet that that language isn't indeed the equivalent to extinguishment, and extinguishment is simply a non-starter for first nations in the province. We think we have a protocol now which will get us over significant hurdles and obstacles to treaty settlement under the heading of certainties, so we are quite proud of that achievement.
As most members in this House will know, there are 42 first nations groups that are currently active in the B.C. Treaty Commission process. That's a significant number. One group,
[ Page 15205 ]
as I suggested a moment ago, Sechelt, has signed an agreement-in-principle. Sechelt is now in the process of trying to ratify within its own membership, and therefore the chief has been going around, literally from door to door, talking about the agreement. There are many rumours emanating from Sechelt suggesting that it doesn't have a hope and that it's over. Others are saying: "Oh no, we still think it's happening." In any event, it's in their hands at the moment. We are pleased by the agreement-in-principle, and we hope it might indeed get us that much closer to actually establishing another treaty.
There are 37 other tables that are now in the agreement-in-principle stage. That, of course, is the substantive stage of negotiation where things really get difficult, because you are no longer talking about broad principles. You're talking about land and cash and how the deal is going to look on the ground. Of those 37 tables, B.C. and Canada have tabled five agreement-in-principle proposals since October. I want to, if I might, give a quick summary on what those look like and what we've put on the table, for the public's information as well as the information of my colleagues. Let me list them.
First, the Ditidaht-Pacheedaht. Ditidaht and Pacheedaht are two different groups, Mr. Chairman, but they sit together at the same table. The proposals tabled by Canada and B.C. to the two first nations were put forward on October 26, 1999. They included cash totalling $22.35 million and 3,534 hectares of treaty settlement land. Canada would also be providing, under the terms of this proposal, an additional $500,000 toward a capacity-building fund. It's worth noting that that would be a first in the B.C. treaty process.
[1025]
Three days after that proposal was tabled, a land and cash proposal was also presented by Canada and British Columbia to the In-SHUCK-ch N'Quat'qua first nation. Again, it's worth noting that those are two separate entities too -- In-SHUCK-ch and N'Quat'qua -- but, again, are normally run together that way. This offer includes 16,024 hectares and $29.75 million to be transferred over a period to be negotiated.
On November 29 we proposed a settlement with the Gitanyow, the neighbours to the Nisga'a. For the Gitanyow, that would include some $13.5 million and 20,802 hectares of treaty settlement land.
As well, a proposed settlement package for the Snuneymuxw or the Nanaimo first nation, was released on January 17. That package, tabled by Canada and British Columbia, includes 2,128 hectares of treaty settlement land, including existing Indian reserves, and $40.3 million. If I might, I'll just explain that significant differential and discrepancy in terms of land-cash. Obviously the ratio is the more land on the table, the less cash. In Nanaimo, frankly, there isn't a lot of Crown land available; thus, as you see, significantly more money than land is on the table.
Finally on January 28, an offer to the Sliammon first nation was made by Canada and B.C. That includes land, resources, cash and governance. The offer includes $16.75 million and 5,369 hectares of treaty settlement land.
Those are the five we have tabled. It's no secret, of course, that those offers have not exactly been met with cries of enthusiasm; the comments have essentially been rather pre-emptory rejection. I think that shouldn't come as any surprise; that's the nature of negotiation. We believe that offers and counteroffers and negotiation, of course, are the clear and only way to get us to further negotiations and ultimately to settlements. It's a rough part of the process, when you table an offer and people say, "Well, we were expecting hugely better," but it's an inevitable and necessary part of the process.
We are obviously very, very committed to carrying on, and despite those cries of anguish that seem to have emanated from certain tables, it's worth noting that nobody has walked from any table. So I think we are indeed on the right track.
We plan, I should note, Mr. Chairman, on obtaining financial and specific mandates so that settlement offers can be made at up to six more treaty tables in support of accelerated agreement-in-principle negotiation. If everything were to go magically, we would indeed hope to initial two to three more agreements-in-principle this year.
Consultation for all of these negotiations, I might note, has been extensive. Local governments, public advisory committees and other third parties have all informed provincial and federal negotiators concerning the local interests. This consultation will, of course, continue throughout the process.
Let me say just a little bit about Nisga'a, if I may. It was passed by the federal Parliament on April 13. It establishes what we regard as a new direction and marks a new beginning for aboriginal and non-aboriginal relations in British Columbia. We think it's a historic moment in B.C.'s history. The passage of the Nisga'a treaty in Canada's Parliament means we have finally concluded the first modern-day treaty settlement in our province.
Of course, I want to acknowledge all of those who worked so hard to make that happen -- it's been 111 years in the making -- the officials from the Canadian government and from our own government, but also the Nisga'a themselves. They have been hugely patient and I think have comported themselves with dignity and with a marvellous sophistication and, dare I say, charm throughout this entire process.
As I say, we think the treaty marks the beginning of a new relationship between first nations people and non-aboriginal communities in B.C. We're looking forward to implementing that agreement, which will clearly promote self-reliance for the Nisga'a nation and will also establish certainty for the regional economy.
We're working now to establish the effective date for the treaty. We anticipate that will probably be May 11. Thereupon, we go through that day-to-day process of implementing the provisions of the treaty. The province will of course be working with local government, stakeholders and communities throughout that entire implementation process.
[1030]
In addition to those main treaty tables and those activities, we also have a number of other tables that I think are worth reporting on briefly. Outside of the treaty process, the government has been active, working to reach agreement with first nations on several other outstanding issues.
For example, just the other day, on the weekend, we signed an adhesion and settlement agreement. This was more of a ceremonial signing, actually, because we'd done it earlier. But the settlement agreement, the adhesion to Treaty 8 by the McLeod Lake Indian band, occurred just a few days ago -- a wonderful feeling. That agreement settles a lawsuit that was begun by the band in 1983. To refresh members' memories, that lawsuit resulted in an injunction in 1988 against logging
[ Page 15206 ]
in the area that was claimed by the band. The agreement, then, was negotiated. It was settlement of the litigation. I guess that's the best way to put it. It wasn't formally, then, part of the B.C. Treaty Commission process.
Under the agreement the band will receive the benefits of the 100-year-old Treaty 8, which in their minds is appropriate. They don't seem to want a modern treaty; they're happy with the adhesion, including 19,810 hectares of provincial Crown land, which will have reserve status, and $9.75 million from Canada. Legislation will be introduced this spring -- as a matter of fact, I hope within the next day or so.
More recently, on March 29 the provincial government and the Nuu-chah-nulth central region chiefs reached an interim measures extension agreement for Clayoquot Sound. This agreement, which is intended to expand opportunities for first nations and to provide economic stability for the region, is also, of course, designed to try and maintain that wonderfully rich and unique environmental character of the Clayoquot Sound region. The agreement was tough sledding but, I think, a good one. Most of us would probably agree. It certainly reflects our commitment to responsible economic development for local communities as well as first nations.
Just last Thursday, I had the pleasure, along with the Premier and my federal counterpart and the Minister of Forests, to sign a political accord with the Wet'suwet'en first nation. This accord commits all of the three parties to working cooperatively to increase the Wet'suwet'en involvement in the forest sector and to finding solutions to forestry issues. It commits the Wet'suwet'en, the federal Department of Indian and Northern Affairs, the Ministries of Forests and of Aboriginal Affairs to work together to create economic partnerships in lands and resources between local industry and the Wet'suwet'en. The immediate focus, of course, will be on economic opportunities in the forest sector.
I just would point out, if I might, that the significance of the political accord with Wet'suwet'en is huge when you recognize that the Wet'suwet'en are in the heart of Delgamuukw territory. That's where Delgamuukw came from. The Wet'suwet'en willingness after a long and difficult court battle to talk about a political accord
Herb George, who spoke at the ceremony, made an observation which I noted, because I thought it captures in many respects what this is really all about in terms of our ministry and our mandate. Herb George said: "The one thing we want above all else is to take care of ourselves." That's what guides us in this process and guides, I think, most of the first nations -- indeed probably, it's safe to say, all of the first nations.
I alluded a few minutes ago to the fact that the treaty process has been stumbling a little bit. I don't think there's any point in pretending otherwise. Accordingly, we have taken a number of steps to try and revitalize and improve upon that process. One of those key issues, of course -- and it's no surprise to anybody who reflects on these matters -- was to find a way to address first nations' concerns about land and resource issues while treaties are being negotiated. What first nations typically will say to us at the table and in other venues is: "You're asking us to be patient, and you're asking us to negotiate treaties with you in good faith. But in the interim, what's happening to our land and resources?"
So that large issue of interim measures -- what do we do until we get a treaty? -- is a hugely important one. One of the ways that we have been trying to deal with that difficult issue is by linking treaties to interim measures. To be sure, one will have interim measures that don't necessarily have a clear connection with treaties, but at some point one has to make the political calculus, if you will. If all you do are interim measures, then you effectively remove the incentive to treaty. So it's a balancing act.
[1035]
But one of the things that we have done, as I say, is work with our federal counterparts to do a very clear linkage between interim measures and treaties. The concept -- I think members have heard me say something about this before -- is called treaty-related measures. The exciting thing about treaty-related measures, beyond the fact these are indeed new tools to help us in the process of negotiating treaties
Treaty-related measures may involve a benefit or an arrangement that the three parties at the treaty table agree will form part of a treaty -- an initiative, if you like, that will facilitate the negotiation and ultimately, of course, the conclusion of a treaty. They will facilitate economic development. They'll help resolve land and resource issues while treaties are being negotiated.
Under this heading, I'm pleased to report that in our new budget $5 million in cash has been set aside for treaty-related measures. This funding will be enhanced with Crown land and resources for the express purpose of reaching interim measures at treaty tables, bringing the total to $20 million from the province. For the first time the federal government will be contributing, as I said, to these interim measure by paying half the cost of treaty-related measures. Happily, the federal government recently announced its intention of working cooperatively with us on this issue. My ministry's budget, I should also note, includes some $2 million in new funds for staff to undertake the negotiations of treaty-related measures. This backs up the government's commitment to interim measures by providing the resources to do the job.
I need to point out here that these are difficult things to do. Treaty-related measures are incredibly complicated and complex when you start looking at them, and you truly need the resources. You need the qualified and capable people working for you to negotiate them. It's not a simple matter of saying: "Right, we're going to give you some money." It doesn't work that way. I can report, though, that we are now negotiating those first initiatives, and we expect some of these treaty-related measures to be in place in a very short period of time.
The ministry also has some commitment to jobs and training promotion activities. We administer the First Citizens Fund, which promotes the establishment and expansion of aboriginal businesses through the business loan program. In 1999-2000 we awarded 115 loans totalling $3.8 million. I think that's a significant amount of money. It's obviously the case of
[ Page 15207 ]
saying: "Wouldn't it be nice if we had more?" But there's a fairly good takeup and a fairly good demand for those loans. I think the success record is pretty good, too, in terms of those businesses.
Last September we put $300,000 into the heritage, language and culture program. Some would call that a restoration of funding. That's simply because in 1990 we negotiated an arrangement whereby we set aside some $10.7 million over a period of eight years from 1990 to 1998 just for, as I say, that express purpose of heritage, language and culture, which is absolutely central to first nations. That's, in many respects, the most important thing in their view of the universe, save and except perhaps land and their own resources for community. But language, culture and heritage are absolutely crucially important.
The deal was that the province would do this on our own hook for this period of time. The hope was that the federal government would then come in as we disengaged. Well -- surprise, surprise -- it doesn't always work that way. Accordingly, then, we were under considerable pressure last year to fund it at a very significant and high rate on our own hook again. We said: "No, no, the arrangement was that the federal government was supposed to be coming in." I'm happy to report that it now looks as if we will get some assistance from the federal government.
[1040]
In the interim we did, as I say, put in some $300,000 last September. And this year our budget makes provision again to make a sizeable donation -- "contribution" is probably a better term -- to first language, heritage and cultural activities. We haven't quite nailed down the programs, particularly, but it's good news, I think, for first nations.
I want to say just a bit about aboriginal youth. Aboriginal youth are pretty obviously one of the principal concerns. We hear this again and again from first nations. First nations cultures are now growing; first nations populations are growing. The incidence of young people is, indeed, greater in first nations communities than in the larger population. That's a statistic that I've seen for a few years now. Understandably, then, first nations governments and governors are saying: "What about our young people? What can we do to break that terrible pattern of the past?" I think everybody here knows the social indicators, starting with everything from high rates of dropping out of schools, all the way up the continuum to something as horrible and gruesome as teenage suicide. Aboriginal youth are a priority issue, then, for the federal government as well as us.
Last December, therefore, we announced -- I in fact had the pleasure to announce -- that a national plan to improve the lives of aboriginal youth had been developed, done mostly by our people in B.C. We were obviously working cooperatively with the federal government and with the national organizations, but it was B.C.'s work for the most part. I think it's a good step. The plan provides a framework for addressing the health, employment, training, education and social development needs of aboriginal youth. It's a significant step forward, I think, to achieving an end that I'm sure we all agree ought to happen.
When you talk of aboriginal issues in this province, of course, you can't avoid for a moment talking about forestry issues. Aboriginal people have taken a hugely more significant role in forestry in this province in the last decade, I guess it's fair to say, than was ever the case before. It's a huge increase, but it is still an issue that is incredibly important to first nations communities. Therefore we have been working closely with our colleagues in forestry to try to do what we can to assist aboriginal communities in taking and playing a larger role in forestry activities.
For example, at last October's Premier's Summit on Economic Opportunity that was held in Campbell River, there was a workshop on first nations involvement in the forest industry. That workshop proposed the creation of the first nations timber access steering committee. It's now in process. The committee would oversee the development of pilot projects which would provide first nations with opportunities to more actively participate in the forest economy.
[1045]
I made reference earlier to the interim measures agreement, the principles for interim measures that we recently agreed to with our counterparts at the principals' meeting just a few days ago. That, of course, is essentially to ensure that we do something about providing those economic opportunities while treaties are being negotiated. These forest-specific initiatives will build on the framework for treaty-related measures we concluded with Canada. We're also committed to exploring concepts such as joint ventures, access to forest tenures and capacity-building in first nations communities.
One of the sidebar kinds of activities that generally, though not necessarily, falls under the heading of forestry issues is that whole realm of partnerships. I want to commend industry -- forest companies come to mind instantly, in terms of their efforts to work with us and work with first nations, to say, in effect, to a first nations community: "We know that the resources we are talking about harvesting here are ones that you claim some ownership of -- title to. Rather than end up in court, we are prepared to work with you to provide some opportunities for you in terms of the exploitation of those resources."
So those kinds of partnerships are indeed happening. We've done some pretty impressive ones. For example, in the central region, the Clayoquot area, in the Nuu-chah-nulth territory we've done a major partnership with what used to be MacMillan Bloedel -- now Weyerhaeuser -- and the first nations company, the Nuu-chah-nulth company, called Iisaak Forest Resources. There are a number of other ventures like that which I think are a good indicator perhaps of the new way we will, and indeed must, do business in this province.
I made a reference earlier to the Wet'suwet'en at the heart of Delgamuukw territory. One can't talk about aboriginal affairs without acknowledging that landmark piece of legislation which, if nothing else, has certainly been the catalyst to get negotiations and activity moving in this province.
The problem with Delgamuukw is that you still have essentially two different readings of the document. Many first nations see Delgamuukw as effectively saying: "We have ownership of all the land." And we are saying: "No, rather, there is a test there that you need to go through." Between those two poles, negotiations occur.
One of the things that Delgamuukw also makes very clear is that there must be a serious and meaningful consultation process mandated. I'm happy to report that we have now produced a consistent consultation regime in accordance with what Delgamuukw tells us. That has been, I'm happy to report, translated into line ministry activity across govern-
[ Page 15208 ]
ment. It's also information that we have shared with municipal governments. I think they have done good service as well in recognizing their obligations and commitments.
For the year ahead, there are lots of different initiatives on the horizon. We are preparing to present proposals for land resources, cash and governance arrangements at up to six more tables. We're hoping to initial two or three agreements-in-principle. We're certainly negotiating and implementing treaty-related measures.
I note, Mr. Speaker, that your red light is on. Should I
The Chair: It's one of the difficulties of sitting here, minister; the Chair can't see the red light. I guess if you can't see it, it becomes irrelevant. Carry on, minister.
Hon. D. Lovick: Thank you, Mr. Chairman. I thank my colleagues for their patience. I shan't be much longer with this. I was just summarizing what I think are initiatives that we see on the horizon. I referred to tabling some six more treaties -- treaty proposals. I also talked about our hope to perhaps initial two or three more agreements-in-principle. We're certainly going to be negotiating, as well as implementing, treaty-related measures.
We're going to be signing some settlement agreements to resolve some specific cut-off and adhesion claims with Canada, one of which we've just done. We'll be managing the implementation of the McLeod Lake Treaty 8 adhesion and settlement agreement. We'll be concluding implementation of the Osoyoos cut-off claim settlement. We'll be facilitating land exchanges among the province, first nations and Canada, and I believe we have one agreement we're proposing to sign there. As well, we're going to be encouraging coordinated efforts of the appropriate ministries in implementing the national aboriginal youth strategy that I referred to a few minutes ago.
Mr. Chairman, the ministry is very pleased that additional resources have been provided in the 2000-2001 budget to support the treaty process and programs associated with heritage, language and culture. We received overall a 23 percent budget increase; that's from $35.351 million in fiscal year '99-2000 to $43.307 million for fiscal year 2000-2001. Broadly, what that increase does is provide additional resources to support the treaty process. It also provides support, of course, to programs that are associated with first nations heritage, language and culture as follows: $5 million for treaty-related measures, and I think I referred to it earlier; $2 million for negotiating costs for treaty-related measures; $1 million for an increase in B.C. Treaty Commission negotiations support funding. We're looking at about $900,000 for heritage, language, culture and youth initiatives.
In conclusion, then, we think we're on the right track. It hasn't been easy sledding; I would be dishonest if I suggested that. And I know my colleagues are aware -- have been watching that and are well aware. We think we're on the right track, however, because certainly in my concerted opinion and in the opinion of my government, negotiating modern-day treaties is the only way to bring justice to aboriginal people. Certainly it is also the only way to produce and bring greater economic stability and opportunity for the rest of British Columbians. I think we're on the right track.
I'm pleased to be here again, and I'm certainly looking forward to answering questions from my colleagues in the opposition. I understand that we have shared with them the performance plan. There have been technical briefings, and a huge amount of material has crossed the floor, as it were. So I'm looking forward to productive and worthwhile estimates and to their questions.
[1050]
M. de Jong: Well, Mr. Chair, that pretty much covers it.
The Chair: Shall vote 10 pass?
M. de Jong: Almost -- a couple of things. First of all, welcome back, to the minister -- to his post. Let me begin by thanking the deputy and his staff for the time they took to provide that briefing and also the material that they have sent over. I notice that my binder is only slightly less thick than the minister's. But I think we're aware that there was some material that we weren't going to receive. We'll try to work with the material that we did receive.
Maybe I can begin by giving the minister and his staff a quick overview organizationally of how we might approach this. Let me begin. I did say to the deputy that I would alert him and his staff to a particular issue. I hadn't done that, and I'll do it now. We won't deal with it today. But I talked about wanting to explore some of the audit issues that arose with respect to the federal government -- the transfer of funds and proceeds to various groups. The specific example that I will want to look at -- we won't, I think, do it today -- is related to the Métis Provincial Council of British Columbia. I will have questions about other examples, but that is a specific one. So to the extent that the ministry has information or needs to get information about that, I'll give the staff and the minister the heads-up.
What I would like to do is
I'd then like, using some of the documents that have been provided, to review some of the progress that has been made at various tables. I can tell the minister and his staff that we'll begin with the southern lower mainland region and work from there. Some of my colleagues will have some questions relating to issues that are of unique and specific significance in the areas they represent. Finally, there will be a grab-bag of specific issues that we'll canvass. Broadly speaking, that's the approach I would like to take.
[1055]
Maybe I can start by making this observation, perhaps for the minister's comment. He has generally alluded to this
[ Page 15209 ]
notion that there is far less optimism today than there was a year ago about the present status of negotiations in this province. It is interesting to examine the Treaty Commission's assessment and their optimism and how that has flagged, particularly over the course of the last six or seven months. A month or two ago, the Treaty Commission, in one of its regular updates, mentioned that optimistic predictions for positive results that existed last year have virtually disappeared from the map. At some point, that optimism has disappeared. The minister can talk, and we'll get into the land-cash offers that have been tabled. The minister says that is a significant achievement and that meetings have taken place on the weekend that give him cause for optimism.
But something very dramatic, I think, has taken place. I will ask the general question: "What accounts for that attitudinal change, the disappearance of that optimism?" I can tell the minister that when we engaged in this exercise with his predecessor a year ago -- actually 11 months ago -- he talked optimistically about signing three agreements-in-principle and said: "Certainly we'll have a treaty with the Sechelt within a very short period of time." He was brimming over with optimism, and none of what he had to say has come to fruition. Was he misguided? And if he wasn't, what accounts for the failure of the government to achieve any of what it said in May 1999 that it expected to achieve in this area?
Hon. D. Lovick: Well, I have to say that I don't think it's true to say that the government has failed to achieve anything of what it said in May 1999. In fact, as we go through the performance plans, I think we can point to a number of things we have done. Clearly, however, it is absolutely true that we did not achieve as much as we had hoped. I think my colleague, my predecessor in this ministry, was obviously persuaded that things looked a little bit brighter than they perhaps were.
I think there are a number of reasons to explain why things have not gone quite as well as we had hoped. It's worth noting that we've been on this process for about six years now. One of the reasons why things have not gone as quickly as we had hoped is that, ironically enough, we're prisoners of our own success. More first nations entered the treaty process than anybody ever anticipated. That, of course, meant a huge draw on our resources and personnel. Quite simply, our inability to perhaps respond as quickly as we would otherwise have hoped, as I say, simply because so many jumped into the process immediately
I gave a speech not too long ago, Mr. Chairman, to the aboriginal subcommittee of the Union of B.C. Municipalities in which I spoke at some length about my understanding or my sense of why things have not gone as well. Let me just give some discrete categories, if I will. I don't want to make this into a half-hour speech, just categories. One is the revolution in rising expectations of first nations. And I think that is inextricably connected to certain legal decisions and court cases that have come down, notably Delgamuukw. Remember that the process was in place four years before the Delgamuukw decision came down. And Delgamuukw, as I alluded to some moments ago, has given first nations communities a sense that they are in a much better position than they were in 1993 when the B.C. Treaty Commission process was first established.
Similarly, there are some political realities that I think we have to grapple with. The political reality, of course, is that when there was a leadership contest in the province and you had three people vying for the leadership of the New Democratic Party, first nations quite understandably and predictably were looking at the contest and saying: "Well, I wonder who's going to win. And if we get person X as opposed to person Y or person Z, maybe the rules for treaty negotiations in the province will change." Accordingly, then, I think they slow-walked the process at that point for a period of time.
[1100]
Expectations are perhaps too high -- the fact that we are now getting to the particular point in the process where we're saying, "Here is what is on the table," and it wasn't quite as much as some first nations had anticipated. That can obviously have a somewhat slowing-down effect on the process.
Anyway, as I say, I could offer a number of different hypotheses, but I don't think that I am pessimistic at all. Perhaps we aren't quite as optimistic as we were, but I would point out that the chair of the B.C. Treaty Commission is now very clearly saying that he thinks we have got over that rough patch, and he is looking forward to good things happening.
The other thing I should point out is that one of the results of that culmination of political affairs, political events and the legalistic one, the legalistic universe I referred to
It's a complex field, a complicated field. I'm still optimistic. I think we're on the right track, but I think we had to go through that little period when everybody said: "Gee, maybe the rules will change; maybe we are going to radically modify the mandate in British Columbia." The message has been slow to get through that we are essentially maintaining the same mandate we have used for the past six years now, albeit we are trying to do something to address the particular concerns that first nations have expressed. This may be my longest answer.
The Chair: The Chair will help hold the minister to the promise.
M. de Jong: Let me make this general observation again. When I listened to the minister's predecessor last year, he had some remarkably similar things to say about the government being a victim, as it were, of its own success -- of the number of bands that had entered into the treaty negotiation process, and that represented something of an impediment to moving forward. This was something that he pointed to and recognized, and notwithstanding that fact, he had some very specific things to say about where he thought the process was going to go. I think he invited us to judge the government on its ability to meet the targets and expectations that he laid out during the estimates process. I can't imagine why else he would have made some of the statements that he did.
[ Page 15210 ]
I'm not aware that anything in that respect has changed in the intervening 11 months. I'm not aware of anyone else entering the process -- of there being more players, more tables. I'm not inclined to place a lot of stock in that part of the minister's argument. If there's been a hiccup, I'm not inclined to attribute it to the "we're a victim of our own success" argument. The minister had some other interesting things to say about a perception that may have existed on the part of first nations that there was the possibility that the government's approach to this issue -- to the resolution of these treaty claims -- might be changing or that there may be significant changes. I presume the minister's not talking about subtle issues at the negotiating table but the possibility of a dramatic change in direction taking place.
[1105]
We don't have to spend a lot of time on what-ifs, because the minister has concluded his response by saying that that's not the case and that the government hasn't undertaken a dramatic change. I thought I heard the minister say he believed that some of the delay was attributable to that feeling arising on the part of first nations, insofar as it applied to the governing party's leadership convention. Have I understood that correctly? Is that an observation the minister has made since reassuming his role? Is that something that he is having to contend with and remind first nations people of, now that the leadership contest is over and the government is presumably getting on with doing the people's business?
Hon. D. Lovick: Yes.
M. de Jong: I haven't heard or read what Mr. Richardson had to say following the meeting that took place on the weekend, but a month or two ago the body that he is in charge of made this observation: "It is now difficult to say when an agreement will be achieved at any of the tables where an offer by Canada and British Columbia has been made." And the five or six that I think the minister alluded to earlier -- again, sounding a note of genuine pessimism
Hon. D. Lovick: I have to advise the member that my sense of optimism tends to ebb and flow as the weeks pass -- right? One day we will hear from a particular table that it looks like we may have a breakthrough, and then three days later we'll discover that's not the case. It's hugely variable and dynamic. It's certainly not a stable process in any way.
I'm optimistic, though, because as I said in my opening comments, despite all those cries of anguish -- I think that was the term I used -- when people saw the proposals we tabled, the fact is that nobody has walked from the table. Rather, we're in the process of counteroffers. We're down to the hard part of negotiation.
To the member's particular question as to whether I'm optimistic that there will indeed be X number of agreements-in-principle this year, I'm very reluctant to quantify that. I would dearly hope we might be able to get a couple. We're certainly committed to doing whatever we can to get a couple, but there are so many variables. It's the first nations and Canada and ourselves and cleavages and factions within particular first nations.
It's not a slamdunk for any chief, as Garry Feschuk from the Sechelt band discovered. After all the time that they had spent, recall, in court or not in court, then back to the table and then to get an agreement-in-principle, I am sure Chief Feschuck assumed, or hoped at least, that he could probably go to his people and say: "Behold, I have delivered." But instead, people are saying: "We're not sure we like what you've delivered." I tell that story simply to be as candid as I possibly can and to make the point that this is not predictable. This ain't science. This business of negotiating treaties is much more art than science.
M. de Jong: Maybe, then, I can make this statement for the minister to comment on or disassociate himself from. Unlike the year previous, when the government cabinet representative was very willing to make some very specific predictions about what was going to unfold in terms of progress on negotiations
[1110]
Hon. D. Lovick: If I were a betting man, I would probably be looking at two tables that I have some confidence in at the moment. Again, I hasten to point out -- so the person who's doing this next year doesn't have to answer the question -- that this minister said two, and what happened to them? That's hope to a huge degree on my part, but I think it's informed hope as well.
M. de Jong: Our ability to share in that hope is perhaps contingent on the minister informing us which of the two tables he's most hopeful about.
Hon. D. Lovick: I apologize for the delay. I really wanted to check with the deputy before I answered that question, because one can, of course, condemn something not to happen by saying it will. And I'm mindful of that.
But let me just say this. The two tables that we are now feeling pretty good about
M. de Jong: Just to confirm, the Lheit band that the minister referred to has not received a comprehensive land-cash offer at this point.
Hon. D. Lovick: That's correct.
M. de Jong: Just one issue that arose, while we're here, Mr. Chair
[ Page 15211 ]
component of that offer was 5,369, and the figure I have is 3,462 hectares. I suspect that the minister was talking about a combined land -- existing reserve lands and new lands -- and the figure I have is for new lands only.
Hon. D. Lovick: I will check the exact figures, but I think the member is correct.
M. de Jong: If we could just spend a little bit of time again on some of the things that the Treaty Commission has had to say about what it perceived to be obstacles to moving forward on this issue. In its earlier statement it made the observation -- I think this was February or March -- that there is even disagreement on the part of those who have received these comprehensive offers as to whether or not they actually represent offers; they characterize them as proposals that will give rise to whole new rounds of negotiation. I'm not sure I understand the significance of the distinction between an offer and a proposal, but apparently the Treaty Commission believes it is a significant distinction in the minds of the bands, the first nations that are involved. What is that distinction? Why is it significant? Has it been resolved?
[1115]
Hon. D. Lovick: I'm resisting the temptation here to give a long explanation, because it's the only one I know, and it's anecdotal. I think it may be useful, however, so I'll give an abbreviated version. You, Mr. Chairman, will appreciate it especially, because it deals with the people you know very well -- i.e., In-SHUCK-ch N'Quat'qua.
We have a problem with the In-SHUCK-ch N'Quat'qua proposal, because the chief made it very clear to his people and the various bands on whose behalf he was negotiating that he was dealing with the government. It wasn't going to be an offer, because an offer is perceived to be a take-it-or-leave-it proposition among first nations. We don't necessarily see it that way, but they did. Therefore he said to us: "Please call it a proposal." Somehow in the communication of the proposal the language of offer was presented in the Vancouver Province. That was sufficient to make the chief very unhappy -- to feel that somehow we had not in fact been bargaining as fairly as we should have been.
The basic point of departure, though, is essentially that an offer is perceived by first nations -- this is a huge generalization, but I think I can say so -- as a matter of a take-it-or-leave-it proposition, whereas a proposal is simply a step along the way to an offer. We use the terms, frankly, so they overlap. I think that's the basic explanation as to why the Treaty Commission registered that concern. If I may leap ahead ever so slightly from that base of information, I suspect the Treaty Commission, given its network and its sources, was afraid that circumstance might be duplicated at other tables throughout the province, and therefore that's why that story was told.
M. de Jong: I guess the short question that flows from that is: as a result of the meetings that apparently took place on the weekend, has that matter been resolved to the satisfaction of all the parties?
Hon. D. Lovick: We didn't deal with that particular matter at our last principals' meeting, but I can tell you that what the issue seems to be, rather than proposal versus offer, is how public the offer is. First nations are concerned, when we make a public offer -- or proposal, if you will -- that they regard as ridiculous, that they are being terribly pressured by the public instantly knowing what's on the table. They are arguing that puts them in a difficult position -- as appearing to be overly greedy or something like that. That matter of whether the existing protocol of making offers public immediately is one that we can in fact sustain -- or should sustain throughout the B.C. treaty process -- is a matter for debate and will be on our agenda, probably on June 4.
M. de Jong: Interesting point. What is the government's position on that? The question at this point is: are the minister and the government prepared to adopt a different position with respect to exposing
[1120]
Hon. D. Lovick: We haven't made, nor are we likely to make, any decision or radical change. The member is quite right, if I understand his question -- the concern that: "Wait a minute; will negotiations suddenly become a secret matter, as opposed to an open one?"
At the moment, we have and function by an openness protocol with the Union of B.C. Municipalities that I think means a great deal to all municipal governments in the province. What we have committed to do is to talk to the UBCM, as well as to our colleagues at the principals' meeting, about what appears to be an obstacle to settling treaties in the province. That is what, as I say, appears to be an obstacle -- namely, the openness protocol. If we can find ways to get over that hurdle to the satisfaction of local governments, then by all means, I would be receptive to doing so. By the same token, we obviously can't do that if local governments are saying, "Wait a minute; we now have to grapple with the issue of behind-closed-doors and secret negotiations and all that" -- which would similarly be as much of a threat to the process as the current situation. It's the old balancing act; here we go.
M. de Jong: Not to be argumentative, but does the government desire -- whether or not it can unilaterally require this -- renegotiating the openness protocol with the UBCM? Do I understand the minister correctly that that would be a prerequisite to altering the process that took place with respect to these six offers?
Hon. D. Lovick: First to the member's question: it would indeed be a prerequisite -- right? You couldn't go in and redo the way you negotiate with those six -- or anybody else for that matter -- until you had agreement, because we do have that protocol. To the second point, no, it isn't really a desire. The desire is simply: what can we do to improve the process so all the players and all the parties to the process feel good about it, but perhaps improve its efficiency and its efficacy? That's all. It isn't the case that I am going to the next meeting with a position to say: "Here's what we have to do." That's not the point.
M. de Jong: I think I understand that. I think what I'm hearing is that the minister and the government have been
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made aware that there are concerns on the part of first nations about how the openness protocol is operating, particularly with respect to the tabling of cash-land proposals -- offers. That's a problem for first nations. They've indicated to the minister apparently that it is problematic, insofar as relations with their own constituents are concerned.
The minister has, I think, pointed out to the committee that recognizing that concern on the part of first nations -- if something is going to be done to address that concern in a meaningful way -- is going to require revisiting the openness protocol that governs these negotiations. The government of British Columbia does not object to revisiting that openness protocol. But it is unaware, I presume, what the position of the UBCM would be but is prepared to raise that issue at least with the UBCM. Have I summarized that correctly and not exaggerated any aspect of what's taking place here?
Hon. D. Lovick: I think the member has indeed summarized it as accurately as one can in these circumstances. I just point out that that one piece of what we would discuss with UBCM is only a piece. We could talk about other arrangements, I suppose -- other protocols we might establish to achieve the same end but without perhaps causing the problems for the first nation.
Again, I ought to point out that the Treaty Commission has referred to the matter, as the member points out. The summit has raised the matter. In-SHUCK-ch N'Quat'qua raised the matter with me, though they were less concerned about the ambiguity regarding proposal versus offer. Snuneymuxw -- Nanaimo -- raised the matter with me and said: "Could we possibly do this without you guys tabling the offer?" We said: "I'm sorry, we're stuck with the protocol; we must do so."
My bottom line, if I can use that terrible expression, is that I am prepared to look at just about anything we can to improve the process so we can get treaties in this province. But I recognize in doing so that I can't do that unless both parties -- or all the parties -- are prepared to play. You can't change it if you're just going to make somebody else angry and upset.
M. de Jong: Has the ministry communicated the concern it has received from first nations? I think the minister has fairly alerted the committee to what that concern is. Has the minister taken this step yet to pass that on to the UBCM and sought their response to the kind of exploratory negotiations or discussions that the minister is alluding to?
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Hon. D. Lovick: Yes, I have. I took it to the UBCM at the conference I spoke to, and my officials, I know, pursued the matter after I spoke.
M. de Jong: Is it too early for the minister to alert the committee to what the initial response from the UBCM is or was? Maybe I could ask this as part of that question: what is the life span of the existing protocol arrangement? I must confess I'm not aware of when it is up for renegotiation in the natural course of events.
Hon. D. Lovick: The protocol agreement, as far as we know, isn't time-limited; it's an ongoing one. I don't know if there have been formal follow-ups, but I do know that José Villa-Arce in our ministry has had formal discussions at least with UBCM people.
M. de Jong: Am I correct in concluding that at this point at least, absent a formal agreement with the UBCM, the signatories to the openness protocol, any subsequent cash-land offer of the sort we are dealing with in the group of six we are discussing right now would fall within the parameters of the openness protocol and be released to the public in the manner we saw with the previous agreements?
Hon. D. Lovick: That is correct.
M. de Jong: I think, on a related matter, the Treaty Commission pointed out in its report
Hon. D. Lovick: It means, essentially, simply to reconfigure the deal -- in some cases more land, less cash, and in other cases the opposite.
M. de Jong: I think what I heard the minister say is that these are proposals and the government doesn't rule out, for example, in the case of the Ditidaht the 1,800 hectares going to 1,900 hectares or the $17 million going to $18 million. Is that what the Treaty Commission was referring to when it made that comment about the position of the two governments?
Hon. D. Lovick: Clearly I can't speak for what the Treaty Commission might have meant by that. If I was too quick with my previous answer, I apologize. It is possible that the Treaty Commission may be alluding to some of those statements being made by various first nations that we need to rethink the process and are going into the realm, for instance, of cojurisdiction, comanagement and those kinds of things, which we have said are not part of our existing mandate.
We are, though, staying the course in terms of working within our mandate. We're talking about reconfiguring -- perhaps indeed improving the offer -- because that is the nature of negotiation, nevertheless working within the mandate given us by government and by Treasury Board and by cabinet.
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M. de Jong: Maybe what I'm trying to ascertain here is whether or not the Treaty Commission is under some sort of incorrect impression. What they've said here is that specifically with respect to the amount of cash and land that's being put on the table
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sion saying: "We have heard from Canada that this is not a final offer. Or we have been told by British Columbia that this is not a final offer"?
Hon. D. Lovick: Two points. Number one: I think the member is correct in saying that, yeah, this is not in fact a final offer, that when we present a proposal -- a.k.a. offer -- this is to continue the negotiation -- all right? "We've met with you; we've discussed this; we've considered your claim to the entire traditional territory, etc. Here's what we propose as a way to solve this problem." The first nation says, "No, that isn't enough," and they come back with a counteroffer, and so it goes. I think the member is quite right in saying that.
I would point out that the other question of it, I think imbedded in the question, is: what else might we be prepared to do? I made a very detailed and very explicit speech to the First Nations Summit in October, in which we spelled out: "Here are what you perceive to be the problems, and here is what we will do in order to accommodate what you consider to be required to make deals." Implicit, of course, in my statement is also: "Here is what we will not do." We spelled out what our position is in terms of comanagement, shared jurisdiction and all of those things.
I think it's a fair conclusion to draw that the B.C. Treaty Commission, which attended that and certainly is aware of what we said at that point, would have concluded from that that it's what British Columbia is prepared to do. Assumedly, they're saying the same -- that Canada has also effectively signed on and has a willingness to do those kinds of things.
But our basic mandate
M. de Jong: I'm not sure I received the transcript of the minister's address, which might account for the fact that my binder is an inch or two
Hon. D. Lovick: It is thick. I'll autograph it for you.
M. de Jong: Well, maybe let's just take a moment, because I'm curious to know in a little bit of detail, from the B.C. government's perspective, how these offers arise. We had a bit of a discussion last year -- and actually in previous years with the minister, as you know -- about the process for developing mandates within government and the involvement of the various departments and cabinet.
But let me ask about specifically these cash land offers and the process that is involved in developing them. For the moment, I guess, I'm most interested in what happens within the government of British Columbia. I think the minister will allude to the negotiating process that takes place with Canada. He might want to alert the committee to who the point person is or who or which department within the bureaucracy is in charge, whether it's the negotiators at the table, and how that works vis-à-vis the federal government.
As these offers are developed, the path they follow through government, through the minister's office and, if it's through cabinet, through cabinet -- that would be helpful. It would be helpful to understand with respect to the existing offers, and ultimately how those offers might be changed and how approval for those changes would be granted.
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Hon. D. Lovick: That's a very open-ended question and has a great deal of information requested in it. What we will do
Broadly, though, what happens is that there is an existing mandate that government has, which came, of course, through cabinet and Treasury Board and all of that. That's the starting point, and that's been around for awhile, obviously.
Then there is, of course, the matter of the individual tables, those tables and the negotiators at those tables working with ministries and line agencies, with at least two -- probably more like three -- levels of government, at some point then coming up with a proposal that the table in its wisdom thinks is the appropriate proposal to make. That matter then comes back to the minister for discussion and approval. Then it goes from there to, generally, Treasury Board before cabinet -- to Treasury Board and then to cabinet -- in terms of
M. de Jong: That's helpful. As I understand the minister, any of the six comprehensive cash-land offers that have been made would have been made following specific approval by Treasury Board and cabinet.
Hon. D. Lovick: That's correct.
Also, I neglected to point out one other piece of that process, which I perhaps should give right now -- namely, that the deputy ministers' committee would also review it to ensure that other ministries' interests are represented.
M. de Jong: If we then recognize that all of the offers have, for the moment, been rejected aggressively and recognize what the minister has said about the government's preparedness to look at altering those offers, what represents a threshold by which the proposed amendments or changes need to go back through the deputy ministers, Treasury Board or cabinet? Is there a threshold? Presumably, if he was adding 500 hectares to an offer, the minister might not feel compelled to subject the offer
Hon. D. Lovick: This is the micromanagement part of the ministry, so I'm relying on my deputy a bit here.
If it's a new financial mandate, then it would go to Treasury Board. If it's within the existing financial mandate, then it doesn't. In other words, the offer that we put on the table
In terms of if you alter the land selection model, though, then it has to go back to the deputies' committee to make sure that you get the involvement of the other line ministries.
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M. de Jong: Thanks; that's also helpful. It sounds like pretty much any change to land requires a review of the approval process or a renewed approval process. With respect to cash, it sounds to me like what the minister has
Hon. D. Lovick: I'm advised that if the request is over and above the mandate, we need to go back to Treasury Board. If that's not the case, then we don't.
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M. de Jong: I just want to make sure I've got it right. In the case of the Ditidaht, is the mandate $17 million?
Hon. D. Lovick: No, that is not the case. But I will give notice to the member right now that I can't and won't reveal what the mandate is.
M. de Jong: At this point I thought the minister and I might get to that point where we had a tug of war. I just want to verify, then, that the ministry is at the table with a mandate to settle that exceeds $17 million in cash, so that if as part of the negotiating process the final figure arrived at is in excess of $17 million, the ministry wouldn't necessarily have to go back to Treasury Board for approval. It's possible that the Ditidaht claim could be settled for more than $17 million without any further cabinet approvals or Treasury Board approvals required.
Hon. D. Lovick: To make the offer, we could do that without going to Treasury Board. But to approve a final agreement we would have to go back to cabinet. Yeah, cabinet ultimately must make that agreement.
M. de Jong: Thanks. But just so I have this accurately for the last time, the cash component
Hon. D. Lovick: The member is correct -- partly, at least -- insofar as there is not a particular land mandate and a particular cash mandate. There is rather an overall mandate incorporating both -- okay? -- which notionally, of course, has a cash value. I hope I haven't confused. In other words, it's not a matter of saying that there is a magical figure called the cash mandate in the Ditidaht deal. It's rather that there's a total package of land and cash which will equal X amount, and that's the mandate.
M. de Jong: If I can just emphasize again, this is not designed to be a microscopic critique of the Ditidaht deal. I'm just using one of the examples. Just so I understand, then, is it fair for me to suggest to the minister that the combined value of 1,802 hectares and $17 million, which is the offer that has been made in the Ditidaht negotiations, falls below the ceiling mandate for combined cash-land values?
Hon. D. Lovick: Mr. Chairman, I want to offer, if I may, a caution. I appreciate the fact that the member is obviously trying to do his required job and do it well. The answer is true -- you know, that is true. But I think we're venturing into territory where I would have to table or give too much information; that would make it impossible for us to negotiate. So I just offer that cautionary note. But the answer to the member's question is yes, that is the case.
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M. de Jong: I think the minister will understand the obligation I feel to ask the question. I think I know what the answer is going to be. Will the minister advise the committee what the mandate is -- the cash-land, combined-value mandate that he presently has -- for the Ditidaht or in fact any of the negotiations? Is that information he's prepared to give to the committee?
Hon. D. Lovick: I say this not to be confrontational, but no.
M. de Jong: I wonder, then -- rather than pursue that -- if I could ask this question: what operates to
Hon. D. Lovick: I think the member's question is really about strategy and tactics, and I'm a little loath to say too much about it. Broadly, that's for the chief negotiator at the table, obviously, with his colleagues, to work out and say: "How do we get to yes?" It's the obvious question for any negotiation, and to a huge degree, that's left to the skill and the expertise of the negotiators. As I say, I'm reluctant to offer much comment -- "Here is the standard pattern they use," or something like that.
The Chair: Member, just a note, a question from the Chair: if you're approaching the end of this particular line, with an eye to the clock
M. de Jong: Oh, I'm happy to make the motion, hon. Chair, that we rise, report
The Chair: No. That's the correct motion, member.
Motion approved.
The committee rose at 11:48 a.m.
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