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)
THURSDAY, JUNE 15, 2000
Afternoon Sitting
Volume 20, Number 14
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The House met at 2:11 p.m.
Hon. D. Miller: I would ask all members to join with me in welcoming to the House Doug McIntyre. Doug has Huntington's disease; he lives in Nass Camp in my constituency, in the Nass Valley. He's had a remarkable journey. He left the Nass Camp on May 20, and he has ridden his bike all the way here to Victoria. He arrived last night. It's just a remarkable journey for this gentleman, to highlight the issue of Huntington's disease. I would ask all members to give him a very warm welcome.
B. McKinnon: I would like to welcome to the precincts today David Annis, who is executive director of the Canadian Diabetes Association for the B.C.-Yukon division. David is a constituent of mine, and I ask the House to give him a warm welcome.
T. Stevenson: In the gallery today are a couple of individuals I'd like to introduce. One is my constituency assistant Rick Barnes. And I understand there's a constituent from Vancouver-Burrard, Mr. Peter Seidel, and a friend of his in the gallery as well. I hope everyone will make them welcome.
G. Hogg: There are 15 students from Semiahmoo Secondary School, my alma mater, along with Maureen Linklater, Cindy Barrett, Claudia Semaniuk, Sheila Bensley and Bev Pederson. Amongst those students is one Nathan Christie, who's an avid watcher of us on TV. So I trust the House will please make them very welcome.
Hon. M. Farnworth: I'd like to make an important introduction today, because in the gallery we have Mr. Warren Williams, president, and -- as the member for Surrey-Cloverdale has already introduced -- Mr. David Annis, the executive director of the Canadian Diabetes Association.
A number of members on both sides of this House had breakfast with the association this morning. It was an opportunity to attend a briefing session and to get a better understanding of the importance of the work that the Canadian Diabetes Association does here in British Columbia and right across the country, and the importance of diabetes in terms of a health issue in this province -- because we have some unique factors surrounding the disease -- and the changes that are taking place in knowledge and technology, not only in diagnosing but in treating the disease. So I would ask the House to please make them most welcome.
D. Symons: Today is a special day in that it's the fortieth anniversary, I believe, of the birth of B.C. Ferries. I think it's maybe time that we take a moment to reflect on how B.C. Ferries has grown from a couple of ships and a couple of routes to 40 vessels serving the people of British Columbia and on the workers and all those who have contributed to it over the years. I wish we could commend them today for the service given to the province of British Columbia.
C. Hansen: I'd like to join the Minister of Health in welcoming the delegation from the Canadian Diabetes Association. In addition to those who have already been recognized, I'd like to recognize Peter Fairley, who is the chair of their advocacy committee. Will the House join me in making them all welcome.
G. Farrell-Collins: I just want to add to the welcome that was extended by the member for Vancouver-Burrard to one of his constituents, because as well as Peter Seidel being one of his constituents, he's also a former legislative intern. I understand he's here with his mother Magdelina from Vancouver-Burrard, and I just want members to make them welcome.
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MISCELLANEOUS STATUTES
AMENDMENT ACT (No. 2), 2000
Hon. A. Petter presented a message from His Honour the Lieutenant-Governor: a bill intituled Miscellaneous Statutes Amendment Act (No. 2), 2000.
Hon. A. Petter: I move the bill be introduced and read a first time now.
Motion approved.
Hon. A. Petter: I'm pleased to introduced Bill 24, the Miscellaneous Statutes Amendment Act (No. 2) -- a much anticipated act in this House, I might say. This bill amends a number of statutes. They are: the Assessment Act; the Criminal Records Review Act; the Crown Counsel Act; the Employment Standards Act; the Fisheries Act; the Forest Act; the Forest Practices Code of British Columbia Act; the Law and Equity Act; the Legislative Assembly Allowances and Pension Act; the Liquor Control and Licensing Act; the Liquor Statutes Amendment Act, 1999; the Local Government Act; the Municipalities Enabling and Validating (No. 2) Act; the Ombudsman Act; the Petroleum and Natural Gas Act; the Residential Tenancy Act; the Royal Roads University Act; the Strata Property Act; the Technical University of British Columbia Act; The Bank of Nova Scotia Trust Company Act, 1997; the Transport of Dangerous Goods Act; and the Vancouver Charter.
I will be elaborating on the nature of these amendments during second reading of this bill. I therefore move the bill now be placed on orders of the day for second reading at the next sitting of the House after today.
Bill 24 read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
AGRI-FOOD CHOICE AND QUALITY ACT
Hon. C. Evans presented a message from His Honour the Lieutenant-Governor: a bill intituled Agri-food Choice and Quality Act.
Hon. C. Evans: I move the bill be introduced and read a first time now.
Motion approved.
Hon. C. Evans: Hon. Speaker, this legislation is important to enable our food industry to remain competitive in meeting consumer needs. Ministry staff are working with the agrifood industry to develop policies and principles that will
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be used to administer this legislation. We've made good progress over the course of the last year, and I'm committed to working with industry to complete the work in these areas.
This bill will enable the agrifood industry to establish voluntary certification programs and tell consumers about quality and production standards for B.C. agriculture and food products. More and more, I'm hearing from consumers that they want better information about the food that they're eating. They want to know what's in it and what's not in it, and they want to be able to get the kind of food that fits their needs. This bill gives the industry the tools it will need to respond to consumer demands. For example, under this legislation industry can certify that food does not contain genetically modified organisms and that standards and an auditing system are in place to verify that fact.
The bill also enables industry to gain competitive advantage for B.C. agriculture and food products in the marketplace. The B.C. agrifood industry produces some of the highest-quality food in the world. We have good land, clean air and water to grow it on, and we produce our products using the best environmental practices on the planet. Consumers value these things, and these create marketing opportunities for producers and processors.
This bill gives the industry the tools to showcase the quality of B.C.'s agriculture and food products to consumers and our trade partners around the world. The legislation is a win for consumers and a win for industry. Industry will be able to respond to consumer demands for verifiable information and to demonstrate the high quality of our food products.
Hon. Speaker, I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.
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Bill 26 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
LONG-TERM HEALTH CARE STRATEGY
FOR NORTHERN AND RURAL AREAS
G. Campbell: For years now, patients and health care professionals throughout the north and rural communities have been urging this government to come up with a long-term strategy to solve the northern and rural health care crisis. The government has responded with band-aid solutions, but they've done nothing to address the long-term pressures which are leading to the crisis that is being faced in Prince George today. Patients in the north are being threatened because, like the government, the doctors are failing in their responsibilities.
My question to the Minister of Health is: what is the government going to do to get the doctors back to work in the hospitals and to provide nurses and caregivers with the support they need, so that the people that live in northern communities -- in Prince George -- can get the care they need, when they need it, where they live?
Hon. M. Farnworth: We've been working to develop a long-term strategy that deals with both northern and rural communities and, in particular, with the situation in Prince George. We recognize that there are some unique circumstances around Prince George, because it is a referral centre for northern and rural British Columbia.
That's why we have tabled a solution to deal with some of the key issues that were raised around the retention of physicians and, in particular, around the attraction and retention of specialists in the Prince George area. Part of that involves dealing with the immediate situation through financial incentives to attract and retain physicians -- or specialists in particular -- in Prince George.
A long-term part of that also revolves around the ability to upgrade Prince George's teaching and training capacity as a training centre for medical positions. That's very much part of the long-term plan. That is in place; that's what we've been trying to implement this past week. It's part of an overall strategy that has seen such things as the negotiation of a rural and northern agreement in British Columbia.
The Speaker: The hon. Leader of the Opposition has a supplemental question.
G. Campbell: It's this government that put the system on life support, and it's now the doctors that are pulling the plug. I want to be clear, hon. Speaker. Both of them are wrong.
The crisis in the north has been getting worse and worse. Two years ago we urged the government to develop a non-partisan long-term strategy to restore people's trust and confidence in the system -- confidence of nurses, confidence of caregivers, confidence of patients and, yes, confidence of the doctors. The government has failed on all of those counts.
We said to the government: "We should depoliticize this." We urged the government to bring both sides of the House together and have the legislative committee on health tour the northern communities and establish a long-term strategy that people would know would be delivered upon. My question to the minister is this: why is it only in British Columbia that we have the virtual collapse of a regional health care system in a place as important as northern B.C. and Prince George? Why is it that the government always waits for a crisis before it decides to act?
Hon. M. Farnworth: I'm pleased to hear that the Leader of the Opposition wants to find a constructive solution and wants to work with the government. I would ask him to join us in the message that we have given the physicians today -- that is, to take advantage of the opportunity that is available to the physicians of Prince George by the fact that the BCMA's top negotiator has been up in Prince George to advise them and to work with them on succeeding in concluding an agreement, to join with us in urging the health board that is working with our top negotiator and to get back to the table. We are willing and ready right now. We have a key negotiator who is willing to do that. The BCMA has its top negotiator up there, who can work with the physicians in order to conclude an agreement. I am confident that with the involvement of top-flight professional negotiators, we can conclude an agreement.
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HEALTH REGION BUDGETS
C. Hansen: Quite frankly, the hon. minister should have ensured that his government took those kind of initiatives about two years ago so that we wouldn't be faced with this problem today.
Is it any wonder that we are seeing health care coming apart at the seams in this province? We are now 11 weeks into the current fiscal year, and the central interior health region does not even know what its budget is yet. In fact, every health authority in this province is waiting for this government to tell them what their budget is for the year that we're almost three months into. Will the Minister of Health tell us why it is taking so long to tell the health regions in this province how many dollars they have to ensure that patient care can be maintained not only in Prince George but in every other community in this province?
Hon. M. Farnworth: We have been working with health authorities in terms of identifying their needs, as we do every year, and ensuring budget allocations. That's why there's an increase this year in health care budgeting -- over $560 million.
The issue around northern and rural health care is not unique to British Columbia but is something that exists right across the country. We have been putting in place the strategies to deal with it. We have involved and developed a rural and northern health care agreement to address the needs of small communities in British Columbia. We have been working with communities to identify what other areas the government can develop strategies for -- whether it's around nursing, whether it's around the attraction of specialists and physicians to small communities in British Columbia -- to make sure that they have the health care system they require. We will continue to do that.
The Speaker: The hon. member for Vancouver-Quilchena has a supplemental question.
C. Hansen: Every single province is facing these challenges of health care in northern regions, but this is the only province that allows it to get to a crisis -- where patients are being denied health care -- before action is being taken.
The headline in the Kamloops Daily News sums it up when it talks about the budgets for the health regions. It says that the health budget is on a waiting list. Will the minister tell us today when the central interior health region is going to be given its budget letter for this year? And when will every other health authority in this province be notified of their budgets for this year, so we can bring some stability to health care delivery?
Hon. M. Farnworth: It's interesting that the member raises the issue of budgets, because as I said a moment ago, we are working with the health authorities to identify what the key needs are this year and where the allocation should be going. They will be receiving their budget letters in short order.
This is the same opposition and the same Leader of the Opposition that said $6 billion was enough for health care when the budget at the time was $7.5 billion. That would underfund the system, hon. Speaker.
TREE FARM LICENCE 46
AND REVIEW OF YOUBOU MILL
G. Abbott: The Ministry of Forests is currently undertaking an independent review of the economic viability of TimberWest's Youbou mill. However, at the same time, the Minister of Social Development, the member for Cowichan-Ladysmith, has recently implied that if the mill closes, she will block any transfer of the tree farm licence. I want to ask the Minister of Forests: is he awaiting the outcome of the independent review? Or has he, apparently like his cabinet colleague, already formed his conclusions about TFL 46?
Hon. J. Doyle: I'll say that this government's got a very, very good record when it comes to transfers of wood from one community to another or people asking for change of ownership. Anytime there is a transfer, we put someone in place to listen to the people. In the case of Youbou, there is no one asking to take over their cutting rights or their mill in Youbou. I will wait until that time happens, and I will send my parliamentary secretary out at that time to listen to the people in the area.
The Speaker: The hon. member for Shuswap has a supplemental question.
G. Abbott: I hope the Minister of Forests would agree with me that the last thing we ought to be doing is raising expectations, raising hopes among forest workers in that area that somehow this possibility won't occur, in advance of the independent review. Does the minister agree that unwarranted speculation about terminating cutting rights will lead not only to raising false hopes but also to further poisoning of the investment climate in British Columbia?
[1430]
Hon. J. Doyle: I do believe in the free press and in any member's right in this House to express their opinion, including the member from Duncan. Also, I'd like to remind the member that when the PriceWaterhouse report came out some months ago, the return on capital in British Columbia was exactly the same as it was right across Canada.
RESULTS OF JOBS AND TIMBER ACCORD
M. de Jong: Well, speaking of Forests, it was heralded by the former minister as the greatest announcement of the decade. And the former Premier characterized it as the most ambitious job creation package in the history of Canada. It will be three years ago next week that the NDP government shut down the Legislature so it could roll out its multimillion-dollar ad campaign celebrating its promise to produce 21,000 jobs as part of the jobs and timber accord, Mr. Speaker.
Well, we've checked, and guess what. Guess what: not one additional job beyond 1996 levels. So the question for the Minister of Forests on this, the third anniversary, is: will he confirm that the NDP government hasn't created even one of the 21,000 jobs it promised under the jobs and timber accord?
Hon. J. Doyle: To my sheep-farmer friend across the floor, I would like to say that during and from the time that the jobs and timber accord was announced by the former Premier, there was a major downturn in Japan. We are pretty well back from that now, and I'd like to announce, too, that the
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jobs that were in the forest sector in 1996
The Speaker: The hon. member for Matsqui has a supplemental question.
M. de Jong: That's not what the leader of the NDP said just a few short years ago. Here's my favourite, Mr. Speaker -- the leader of the NDP, the Premier of the day, saying at the time: "This is the biggest announcement that I've ever been involved with. It's the equivalent of six megaprojects." Six megaprojects.
My question for the Minister of Forests is: which of the following megaprojects best characterizes the jobs and timber accord? Is it (a) the Vancouver Trade and Convention Centre, (b) three aluminum smelters or -- who could forget -- (c) three fast ferries? Which was it?
Hon. J. Doyle: I'd just like to speak about something in my own constituency. The member for Peace River South said about four years ago, when the Liberal Party of the day joined the B.C. Reform Party to join him and his party
INTERIOR SPORT FISHING INDUSTRY
E. Conroy: My question is to the Minister of Agriculture, Food and Fisheries.
Interjections.
The Speaker: Order, members.
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E. Conroy: I've seen this minister running up and down the west coast, doing what he does with all the aquaculture folks and with the wild salmon farmers -- you know, doing his job, basically. But I don't come from the west coast, hon. Speaker; I come from the interior. We too have a fishing industry in the interior, and that's the sport fishing industry. I want to know what this Minister of Fisheries for the west coast is going to do for the sport fishing industry in the interior of the province of British Columbia.
Interjections.
The Speaker: Order, members, order. I'd ask the
Hon. C. Evans: Hon. Speaker, what an incredibly irresponsible question comes from that member. [Laughter.] This is a serious place. That member has been badgering me. He thinks that government should declare -- get this -- a free fishing day for children in British Columbia. Can you imagine the precedent it would set for people if government said that all the children could go fishing for free? I will resist this member to my last breath -- unless, of course, the other people in the room start to agree with him, in which case I might have to capitulate.
The Speaker: The bell ends question period.
G. Campbell: Hon. Speaker, I rise this afternoon pursuant to standing order 35, as outlined in my letter to you of this date, for the purpose of debating a matter of urgent public importance -- namely, the northern and rural health crisis in Prince George.
It is urgent that this House give a clear direction to the government in this matter. The timing of the debate is critical. An immediate solution to the health care crisis that is facing patients in the north who depend on the Prince George health care system is needed. For over two years this crisis has been simmering in Prince George as nurses, physicians and patients have all tried to get the government's attention. Now the crisis has reached a boiling point, because this government has offered only band-aid solutions. And some doctors in Prince George are now withdrawing their services. Both actions are dead wrong and need to be corrected urgently. At this point patients in the north are being stripped of their fundamental rights under the Canada Health Act and denied even the most basic level of health care services. That is not acceptable to the opposition and should not be acceptable to the government. It's up to all members of this House to make that perfectly clear to governments and physicians alike.
I therefore move the following motion: that pursuant to standing order 35, the House do now adjourn in order to deal with a definite matter of public importance -- namely, the northern and rural health care crisis.
Hon. D. Lovick: On the motion, Mr. Speaker, it's very tempting for we who inhabit this side of the House to respond with alacrity to that motion and suggest that we'd love to have a debate, simply so we could put on the record what the opposition represents when it comes to maintaining health care in this province, because we know we'd win that debate.
The point, however, Mr. Speaker, is that you -- as we -- are bound by a particular set of rules in this chamber, the rules regarding standing order 35. Standing order 35, as the Speaker well knows, talks not about the urgency of the matter but rather about the urgency of debate. What decides a standing order 35, then, is ultimately the opportunities for debate. We have just completed the Ministry of Health estimates. Today we had questions on this very subject. Moreover, we have been grappling with this perceived crisis for about a month now, I believe, in terms of negotiation. The conclusion, therefore, is pretty abundantly clear -- that the urgency for debate is not manifest. Rather, we have had opportunities for that debate. Therefore a standing order, I believe, would probably not be acceptable by the rules of this chamber.
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G. Farrell-Collins: I will respond to the comments of the Government House Leader. He mentions that this issue has
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been simmering for a month, I think he said. In fact, the Health estimates were completed some two months ago. The urgency required under this motion is that this House is about to adjourn for the next ten days or so. There will be no opportunity, tomorrow, next week or anytime at all in the foreseeable future for this House to give direction to the government. That is the need and the reason for the urgency for this debate to take place today. It's important that we don't adjourn this House and leave this issue hanging while the people in Prince George are waiting yet again for basic health care.
Hon. M. Farnworth: We don't need a debate to determine the direction. We know what the direction is, and that is for the physicians to get back to the table and the government to get back to the table, which we are ready and willing to do right now.
The Speaker: I thank all the members for their submissions, and I'll reserve my decision and get back as soon as possible on it.
Hon. A. Petter: I have the honour to present the 1999 annual report for the Children's Commission.
Hon. D. Miller: I'm just tabling a report of the northern development commissioner from July '98 to July '99.
Hon. J. Sawicki: I am pleased to table in the Legislature the Muskwa-Kechika Advisory Board annual report for 1998-99.
Hon. J. MacPhail: I have the pleasure to present the 1999 annual report for the Labour Relations Board of B.C. and the '98-99 annual report of the B.C. Racing Commission.
G. Abbott: I ask leave to table documents.
Leave granted.
G. Abbott: I'd like to table two documents, both related to the Enderby television society. The first is the 1999 property tax first demand notice in the amount of $946.84. The second -- hot off the presses, hon. Speaker -- is the 2000 property tax notice in the amount of $1,454.38.
G. Plant: That's what we said it was, and there it is -- amazing.
G. Abbott: Exactly. That's what I said it was.
Interjections.
The Speaker: Order, members.
Interjections.
The Speaker: Members. Would the member for Richmond-Steveston come to order.
Hon. D. Lovick: I call Committee of Supply in both chambers. In Committee A, we will be debating the estimates of the Ministry of Employment and Investment; and in this chamber, we shall be debating the estimates of the Ministry of Finance.
The House in Committee of Supply B; T. Stevenson in the chair.
The Chair: We will take a short recess until ten minutes to three.
The committee recessed from 2:44 p.m. to 2:54 p.m.
[T. Stevenson in the chair.]
ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS
(continued)
On vote 30: ministry operations, $104,761,000 (continued).
Hon. P. Ramsey: Just before lunch we were talking about the implementation of the Deloitte study. I'm pleased to provide the opposition with a copy of my letter to all Crown corporations earlier this month talking about the Deloitte study, the legislative amendments that are going into place as part of Bill 18 and the establishment of both a policy advisory committee and a steering committee and working group to make sure we are implementing it.
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The member is also asking about ICBC's involvement. ICBC is not part of the overall project steering committee, for the following reason: what we sought to do is have on the steering committee those who are responsible for the great majority of the $3 billion in capital spending that is taking place in this province this year. Those on the steering committee represent responsibility for some $2.6 billion of that expenditure.
I would also point out to the member
G. Farrell-Collins: I guess we'll pursue that further, if we need to, with the ICBC estimates at the time they arise. What I really wanted to get from the minister, I guess, was a sense of how that's coming along as well as what sort of changes have been implemented in anticipation of that within the various Crown corporations. What actions have they already taken, knowing that this is coming down the pike? Has there been a change in procedures at the Crown corporation level in anticipation of this policy?
Hon. P. Ramsey: What the Deloitte study said is that we needed an overall framework for management of capital projects, both ministry capital and capital that was under con-
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struction by Crowns. We needed an overall framework that incorporated best practices. That's what has been worked on -- the overall framework. So that's really the goal here.
I'm not sure I can go too much further than that. As we debate the estimates of individual Crowns, there's ample opportunity to ask them specifically both how they're working with the policy implementation process run by the Minister of Finance and what they're doing internally.
What the Deloitte study found is that there was a variety of both good practices and practices that needed improvement in the area of capital. What they recommended to us was that we bring all up to the same level by developing an overall framework and putting best practices in place. That's the work that's going on right now, and as I said, we expect to have the implementation plan ready by the end of this month.
G. Farrell-Collins: I assume that the best practices will be applied to projects that are currently underway as well as future projects. Is that correct?
Hon. P. Ramsey: You know, part of the problem here is not knowing
The other thing I'd point out is that we are quite determined to move expeditiously on this. The Deloitte study said
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G. Farrell-Collins: I guess the concern I have is that if a project or projects are
That's really what I was looking for: is there going to be some sort of a retro-assessment of those projects that are out there right now, to be able to determine whether or not there are identifiable risks that
Hon. P. Ramsey: I think the member and I are in agreement on the principle that you don't wait for brand-new projects, that you find out what you can apply and start putting it into place right away. I think we're in agreement on that. My only point was that absent the outcome of the implementation work and a plan for implementation, it's difficult to get specific about what can be applied and to which projects.
I'd also point out that for the ones that I think the public is most concerned about, some of the high risk is because of the magnitude of the project -- initiatives such as SkyTrain. The Deloitte study had, I would say, some reassuring words about the level of accountability and reporting that's in place. The SkyTrain project, as the member knows -- I think we had the Transit debates yesterday -- are actually posting their quarterly external review of progress, budget and whatever on the Web for anybody to take a look at. So the openness is there that I think would meet the test -- I assume would meet the test -- of what comes out of the implementation study.
G. Farrell-Collins: Obviously we will be watching that closely and seeing how it progresses over the next little while. I'll be marking my calendar for June 30 and awaiting the implementation plan. I hope I don't have to come in here the next week and ask about it. We'll see how it goes. I assume everything's on track.
My colleague from Okanagan West has a question which concerns a capital project -- a school project -- within her constituency, which
S. Hawkins: This is an issue, I know, that the minister is well aware of. I believe this is probably the fourth or fifth time I've raised it in the House with this minister. It's the Kelowna Secondary School issue. I was pleased to hear from the Minister of Education
I know it's a complex package where land has to be sold. There are deals with the college, there are swaps -- all that. I know there was a question with parents who were quite concerned that we might get left short and that at the end of the day the local taxpayers would be picking up that tab. But the Minister of Education assures me that that's not the case and that the government will come through on that. That issue, I hope, has been laid to rest.
The second one is a little complicated. I know that the minister would probably like me to go away, because he's sick of dealing with this issue with me, I'm sure. But another concern has arisen this year, just as we start cleaning up the site and cleaning up the issue. Last year I believe it was the environmental impact study that we were discussing. Well, this year the city of Kelowna has a concern.
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Let me assure the minister that none of the parties -- the school, the parents, myself, the city and, I'm sure, the government too -- want to see this school stalled. We want to see this school built. There is a dire need. We want to make sure our kids are in a safe place for learning.
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The problem is that there are two parcels of land on the site that is supposed to be sold, which the city says they transferred in trust to the school board. These two packages of land
There's obviously an issue here now with who owns the land. The city thinks -- and they've got documents to back it, minister
None of this is being raised to stall the completion of the school. The city makes that very clear. I believe that what the city is saying is that at the end of the day they would like to see that land stay zoned for school purposes. In order to have a healthy community, they want to see families and children downtown. They don't want the downtown to turn into a place that's not friendly for kids and families. So that is their purpose of raising it with the minister. They want to clarify the situation. They do not want to see the school stalled.
I would ask the minister, first of all: what's his recap of this situation? What discussions have they had with the city? What legal documents is he relying on? And has there been a decision made, or are there more meetings that are going to happen to decide this issue?
[J. Cashore in the chair.]
Hon. P. Ramsey: As the member says, she and I have debated the legitimate desire of the people in Kelowna to see a new Kelowna senior secondary for four years now -- three years in my previous portfolio.
Interjection.
Hon. P. Ramsey: We're early this year; she's quite right.
The Chair: Hon. members, I'd really like to have these comments on the record.
Hon. P. Ramsey: Let me say this, first of all. There are apparently a number of issues to be worked out still, as far as legal liability and responsibility for the cleanup of the environmental issues on some of the new site and some of the issues around title on the old site for KSS.
Neither of those issues is going to retard the issuing of tenders for the new Kelowna senior secondary in August of this year. Staff are quite confident that we will meet that time line. These issues do not need to retard that. So that, I think, is the positive message for students and parents and people in Kelowna.
As far as what the actual resolution will be as to the land title, we will have to wait and see. I don't know what the member opposite was doing in 1947; I was three years old.
Interjection.
Hon. P. Ramsey: She wasn't doing anything, I hear.
This is indeed yet another interesting piece of this. As the member knows, this was probably one of the most frustrating projects to get going that I experienced in my time as Minister of Education, because there seemed to be a new preferred solution from the school board and the city and the community every six months. I think we have everybody walking on the same line. I'm sure we do. Tenders will be done this August. We will get that project underway.
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S. Hawkins: I'm glad the minister clarified that this will not stall the project. That's good news. I wonder if the minister would keep me apprised of what's happening on this file. I would appreciate that. I know that the officials from the city are very interested in meeting with the Ministry of Finance. I would hope that the minister would accommodate their request, and hopefully we will come to a good resolution where we meet the city's needs as well. I think that is a good goal to have: to keep the downtown revitalized with families and kids.
I thank the minister for his time.
K. Krueger: I wish to make an introduction.
Leave granted.
K. Krueger: With us in the precincts today -- I trust they're up above me; if not, they are somewhere nearby -- is a class of 40 grade 7 students from Arthur Stevenson Elementary school, their teacher, Mrs. P. Sharpe, and five adult companions. I'd like to ask the House to please make my constituents welcome.
G. Farrell-Collins: We're now ready to ask the questions on the sinking funds that we had talked about earlier. My colleague from Kamloops and I did get a briefing from the debt management people, which we appreciated. I understand that my colleague has a few questions that he would like to ask on the issue as well.
K. Krueger: I have in my hand the schedule of repayment for the sinking fund for the Clearwater improvement district. These moneys were borrowed in 1981 to put in a water system and the total borrowed was $125,000. The schedule shows that at the end of the payment period, which is a 25-year period, the Clearwater improvement district will have paid $492,000 in interest, plus a little. In fact, it will have repaid almost $516,000. Yet because of an apparent mistake with regard to the sinking fund factor, they will still owe a balance of over $63,000 -- more than half of what they borrowed -- in spite of having paid four times as much as what they borrowed.
I do appreciate the briefing that was given to us, but I would like the minister to account to my constituents on the record for how this could have happened.
Hon. P. Ramsey: As the member knows, this is a historical artifact, almost. These rates were set in the 1980s. The prevailing interest rates at the time they were set were in the order of 15 percent. I surely remember those times. At the time the fund was set up, a rate of return at 12 percent seemed
[ Page 16668 ]
reasonable. In the era of the single-digit interest rates that we are experiencing here in the late nineties and the early twenty-first century, it doesn't seem so reasonable. Hindsight is always 20-20 in these. I don't intend to do anything other than just try to set the record straight on what was done in good faith, I think, by all parties at the time.
K. Krueger: It's true that a sinking fund factor of 12 percent at the time was not unreasonable, because those earnings were coming in. Since then, of course, things have changed substantially. As I understand it, the ministry employs professional debt managers to watch for these events and to deal with them when they begin to arise. Yet the Clearwater improvement district wasn't alerted to the problem until it received a letter from this ministry dated July 7, 1999, that had been written to the Ministry of Municipal Affairs, which didn't bother forwarding it to the CID until February 2, 2000. As the end of the time period approaches, where the Clearwater improvement district had quite legitimately believed that this debt would be paid in full, they find to their consternation that they are still going to owe more than 50 percent of what they borrowed.
[1515]
We had an exchange in question period on May 16 about this, and the minister said that perhaps I would like to talk to the person who was Minister of Finance on December 11, 1981. I think that in retrospect and outside the heat of that moment, he would agree that it was a perfectly reasonable number to use in 1981. The problem has arisen because the sinking fund factor wasn't changed subsequently. The Clearwater improvement district is run by volunteers who are elected locally. They do have an audit every year. But none of them really have the responsibility to review this question, nor would they have had any reason to do so, because they're trusting the senior government to be protecting their interest and fulfilling its fiduciary duty.
Can the minister explain why those professional debt managers failed to alert the Clearwater improvement district well in advance of the letter that was written in July 1999?
Hon. P. Ramsey: I'll say this: improvement districts have been receiving annual account balance reports from the debt management system. What the member is saying, I think, is that somehow the import of those was not fully recognized at the improvement district level. Since then, the provincial treasury has tried to assist by creating additional analytical reports that do the analysis, really, for the district, rather than have the district rely on their expertise within the district. I think that's what the member is referencing that happened in 1999 -- a fuller report. But there was information provided. The import of the analysis -- from the member's questions and obviously from the concerns of his constituents -- wasn't fully understood at the time. The provincial treasury has now sought to make sure that we are providing information on additional payments that the individual improvement districts could make voluntarily, if sinking funds are estimated to fall short at maturity, and on other options that they have.
K. Krueger: The debt management branch, as I understand it, charged a fiscal agency fee at the time of the debt issue and has charged a further annual what's known as a "funds management fee" ever since to this and other improvement districts. They presume this to mean that they are paying those fees for this ongoing professional service. Is that accurate?
Hon. P. Ramsey: Yes, they do pay the fee that the member describes -- the fund management fee.
K. Krueger: Then, does the minister not agree that it's reasonable for them to expect much prompter advice when problems like this begin to arise? The document of July '99 that I referred to was actually a letter from this ministry to the Municipal Affairs ministry alerting them. Clearly the Ministry of Finance perceived that even the Ministry of Municipal Affairs didn't know about the problem, let alone the improvement districts. The Municipal Finance Authority itself -- since 1971, as I understand it -- has used a 5 percent sinking fund factor and has been able to demonstrate a surplus. As I understand it, all of their funds have come to fruition.
[1520]
Considering that the one ministry has been doing the job so differently and that this ministry has been paid to do the job for this improvement district and others, doesn't the minister agree that people in Clearwater have reason to feel that the provincial government let them down badly?
Hon. P. Ramsey: I was with the member right up until the last question there.
What has happened here is that annual reports were being sent out. The import of those and the necessity for dealing with what those reports said, as the member says, was something that the Clearwater improvement district did not recognize.
What the ministry has now done -- as the performance plan that we're actually debating here talks about -- is said that we want to improve the service we offer to clients. The provincial treasury and B.C. Investment Corporation have started to send out an information package on sinking funds to ensure that all clients fully understand what the funds are, how they work and explain the options available to improvement districts to deal with any projected shortfalls in their sinking funds.
I mean, I must reject the idea of negligence on the part of staff. I think they have been working hard in the past to make sure that accurate accounts reports were received. They've been working hard to improve the services they provide to clients.
K. Krueger: On May 16, when we had an exchange in question period about this matter, the minister said that the Ministry of Finance is working with the improvement districts to find a solution. He spoke of one option a few moments before. What other options are available to the improvement district and others to get themselves out of this box? One that had been offered to them by letter was to reborrow the amounts that will still be outstanding when this bond issue is complete. That clearly isn't something anybody's happy to hear about. I'd like to know what other options the minister suggests.
Hon. P. Ramsey: It's difficult to find a great number of additional options. I think the two that do refinance for a
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longer period really would be extending the period or term of the debt. The other one would be to increase contributions, to retire it at the expiry or at the maturity date, which I believe is 2006 for Clearwater. Also, there is that opportunity, for the next five years, to simply do that. I would say that several improvement districts have set aside reserves of their own to deal with it, once their analysis showed that the rates of return for these instruments from the early eighties were not going to be sufficient. So I think that the options are there, and the Ministry of Finance will continue to work with the Clearwater improvement district to identify one that works for them.
K. Krueger: The affected improvement districts, as I understand it, have all relied on a bylaw that was signed by the inspector of municipalities of the day. This bylaw clearly states that if the payment schedule compiled by the government is followed, a sinking fund sufficient to retire the debt will have accumulated at the time of debt maturity -- enough to retire the debt. The improvement districts have been expected to comply with this document and the payment schedule supplied by the Ministry of Finance, and they have done so in good faith.
[1525]
The Clearwater improvement district put it to me very bluntly that it feels the government of British Columbia must stand by this official document, which was signed by its representative of the day. I think if the minister or myself or anyone in this House had a deal with a bank that was signed and if we kept our end of the bargain, we wouldn't stand for still owing more than half our principal when the loan was supposed to be paid out.
Hon. P. Ramsey: Staff do not have with us a copy of that bylaw. I'd be pleased to have them review it with the member and advise him of their reading of obligations under it.
K. Krueger: When the staff reviews that document and if the Clearwater improvement district's position is valid -- that the document exists and says what I just quoted them as telling me it says -- would the minister agree that just as in the present session of this Legislature, we've been enacting legislation to oblige lending institutions to fully disclose the cost of credit right at the start and to conduct themselves in accordance with contracts, presumably the government must have a look at that too.
I see that the government has at least two options that the minister hasn't talked about today. One is to absorb the outstanding principal when this debt is supposed to be retired. The other is to look at buying back the current debt and reissuing it at a lower rate of interest -- the interest currently being paid is 15.75 percent -- and using the associated interest savings to offset the predicted shortfall. What does the minister think about those options?
Hon. P. Ramsey: First of all, I'm not prepared to comment on what action would be required by government pursuant to the bylaw that the member has quoted until we have had a chance to review it and assess its import. As far as other options, the difficulty with asking central government or Finance to absorb or refinance -- and really, at the end of the day, they amount to the same thing -- is the inequity of treatment with other districts that borrowed money under the same rates at the same time, analyzed their positions and dealt with what I think the member and I agree was an unrealistic anticipated rate of return.
Without casting that very broadly, it's hard to figure out how to deal with the few districts that have found themselves in the predicament of the Clearwater improvement district. So I do not think that the simple absorbing works. It wouldn't be just a few districts. I think there are around ten that had these early eighties debt issues with unrealistic rates of return.
K. Krueger: The critic has sternly advised me that I only get one more question, so I'm going to lump a couple together here. Actually, I just wanted to give the minister notice that my colleague from Okanagan-Penticton has a very similar situation with the West Bench improvement district. Of course there are others as well.
I do want to have it firmly on the record that the Clearwater improvement district feels that this is both presently a breach of fiduciary duty on the part of the senior government and potentially a breach of contract. Just to clarify the record from May 16, in answer to one of my questions in question period the minister had suggested that the bond was actually issued "to the school district in the region." I gather that was in error, and I wanted to have the minister clear up the record. That will conclude my questions for now.
[1530]
Hon. P. Ramsey: I must say that the opposition critic has managed to find a way of limiting the questions of the member for Kamloops-North Thompson. It's something that no one on this side of the House has been able to manage in four years.
In his references to the question period exchange that we had back in May, the member is right; I was briefed incorrectly. The actual sinking fund instrument is not held by the school district in the region, but by another one. However, it is the case that that school district is relying on that instrument. The fact that there are two parties to this remains true. What is of benefit to one may be of detriment to the other.
G. Farrell-Collins: I have one last question on the debt management side. I was looking through the performance plan for the ministry, and I noticed that there are no goals set for debt management plan targets, those types of things. Is that something you've decided not to put into the performance plan -- setting targets for debt management and then reducing debt over a period of time? Is that something the minister has decided not to put in his performance plan?
Hon. P. Ramsey: There are a number of areas in the performance plan where the ministry's looking at how to minimize borrowing costs. In other words, for the same amount of borrowing, how do you reduce the costs on the borrowing side? What the member is talking about, of course -- you know, what the debt management plan is -- is actually contained in the budget documents for the year 2000. What we did, as we did in 1999, was set a range of 22 to 27 percent of GDP and track where we were within that. Last year we set a target, if memory serves, of 22 point
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G. Farrell-Collins: I have no further questions in that area. My colleague from Coquitlam
Interjection.
G. Farrell-Collins:
C. Clark: I'm all for making the member for Vancouver-Little Mountain Speaker of the House. I think he'd do a terrific job.
Anyway, my questions are about PSEC. I want to start at the top, but does the minister need to get staff for that? Should I wait a moment?
Interjection.
C. Clark: Okay, good. This may be a question that the minister can answer without staff's assistance.
PSEC has been through a whole host of people at the top since the government came in, in the last decade. It started with Gary Moser. They had Gary Moser; they had Russ Pratt. They both got shuffled off, and then they had Bill Adams. Then they shuffled him off, and now they've got Gary Moser back again. So what happened? Maybe my first question should be: what happened? Why did they shuffle off the most recent guy and bring in a new guy?
Hon. P. Ramsey: I was just trying to confirm with staff my understanding of senior personnel. PSEC was established in '93 as a result of the Korbin commission. If memory serves, the first CEO of PSEC was Linda Baker. Mr. Moser was, I believe, second in command or vice
[1535]
C. Clark: The minister didn't address my question, which was: why was Bill Adams replaced?
Hon. P. Ramsey: I don't discuss personnel matters in this chamber. It was a decision made by the council. The CEO is employed by the council. This is not an OIC; it is employed by the council. The council took a decision to ask Mr. Adams to step aside and ask Mr. Moser to assume the duties as CEO.
C. Clark: Did the council take that decision with any involvement from the minister or the minister's office or the executive council of government?
Hon. P. Ramsey: It certainly did.
C. Clark: What was the severance that Mr. Adams received?
Hon. P. Ramsey: The work on determining severance for Mr. Adams is currently underway. I don't have a final figure to provide the House or the member.
C. Clark: Can the minister tell us what parameters he's considering the severance package within? Is it going to be within guidelines? Is it is going to be just a monetary package? Is it going to include other incentives in the package? What is the minister considering at the present?
Hon. P. Ramsey: It'll be within the normal guidelines for severance for deputy ministers.
C. Clark: Will the minister notify the public as soon as that severance package is concluded?
Hon. P. Ramsey: My assumption is that the public is entitled to know the details of severance arrangements. I'll endeavour to find a vehicle to make it public.
C. Clark: When will those negotiations be concluded?
Hon. P. Ramsey: I would hope expeditiously. I don't have a firm date.
C. Clark: It's not often that you hear about a public servant being shown the door by the government and saying, "Okay, I'm going to walk out the door," without any kind of agreement about what the terms and conditions are going to be of them leaving. It seems to me to be a little bit hard to believe that the government doesn't have any idea of what the terms and conditions of his leaving his position with PSEC will be, when he's already agreed to leave, and he's been replaced. It's just a little bit too much of a stretch. Perhaps the minister will forgive me, but that doesn't seem to me to be the normal way of operating in government.
When someone in any position of employment decides to leave a position, they usually do it after they've negotiated some kind of a package, or there is some kind of agreement, some kind of understanding, of the terms under which they will leave. If Mr. Adams is in limbo at the moment, where is he? Is he currently continuing to be paid by the government while we're also paying Mr. Moser? Has he taken another position in the government while he's waiting to conclude his agreement? What's his status while he's in limbo?
[1540]
Hon. P. Ramsey: This is a personnel matter; this is under discussion with Mr. Adams as we talk. Mr. Adams is not going to be an employee of the government. He has not been offered another position. Discussions on
C. Clark: All right. So Mr. Adams is out; Mr. Moser's in. Mr. Pratt was out not so long ago, but he was the guy who pretty much got us to where we are with the public sector negotiations that we've had. Now, maybe the minister can tell us: what were Mr. Pratt's qualifications for the job, given that today we are going to be very much discussing the product of his work?
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Hon. P. Ramsey: I'd be pleased to provide the member with Mr. Pratt's résumé some time. I don't have it with me in the chamber. He has a lot of experience in negotiations, and I'm very pleased that he has served PSEC well for several years. He has moved on to other things; we have Mr. Moser there.
I think this is a good signal for the employers councils of the province. We had a PSEC meeting this morning. Mr. Moser was
C. Clark: Mr. Pratt certainly did serve somebody well; that's for sure. He got us to where we are today in terms of the public sector agreements we've got. There are some serious questions about how we got here that I want to examine for a few minutes.
PSEC amended its guidelines to create the so-called zero-zero-and-2 policy in the monetary mandate framework. Can the minister tell us when cabinet approved that policy?
Hon. P. Ramsey: In the fall of 1997.
C. Clark: And I assume it went to Treasury Board before cabinet approved it. Is that correct?
Hon. P. Ramsey: Yes, it did.
C. Clark: What about the accord process? When was that approved by cabinet and by Treasury Board?
Hon. P. Ramsey: The general framework was approved in the fall of 1997. As negotiating strategy evolved in 1998, the process for accords also
C. Clark: I want to be clear. Was the accord process approved by cabinet and by Treasury Board before it was advanced?
Hon. P. Ramsey: As individual elements of accords were proposed, they were vetted through Treasury Board.
C. Clark: My question was about the process for negotiating the accords. There were two processes going on. One was to negotiate the so-called zero-zero-and-2 collective agreement monetary framework that the government set up, and the other process, which was clearly a whole process that the government sent a whole bunch of guidelines out about, was the accord process.
My question: if the government approved the process for zero-zero-and-2 and all those guidelines, when did the government and cabinet and Treasury Board approve the process -- not the individual accords but the process for negotiating those accords?
Hon. P. Ramsey: The member does describe that there were a variety of terms of reference for accords and expectations of them. Those terms of reference did go through a formal approval process by cabinet. I must say that staff do not have the information as to whether it was the fall of '97 or early '98. I regret to tell the member that I can't out of my own memory come up with the month or the quarter in which it occurred. I do know that as negotiations proceeded in the spring of 1998, those terms of reference for accords were well understood and acknowledged by people who were doing work for the government.
[1545]
C. Clark: Not only was the accord process approved by Treasury Board and by cabinet, but the minister has already indicated that the individual accords were also viewed by Treasury Board and by cabinet as they came forward. Can the minister confirm that for me?
Hon. P. Ramsey: No, I didn't say that. What I did say was that the offers of individual accords were vetted by Treasury Board, so there was a clear understanding of the cost implications of them.
C. Clark: So Treasury Board knew what was in the accords, cabinet knew what was in the accords, and everybody knew that they were being negotiated. They were going through them bit by bit so that they knew the exact cost. But the Premier says he didn't know what was in the accords. He said he never knew what the costs were going to be.
How is it possible that the Premier could have remained uninformed when he was Attorney General, when he was on the Treasury Board? When this Finance minister was on Treasury Board, how is it possible that he could have remained in the dark, completely ignorant of what was going on in the accord process -- how much it was costing -- when in fact this minister and that Premier were sitting at the Treasury Board table vetting those accords on a cost-by-cost basis?
Hon. P. Ramsey: I'm sure we'll have a good debate. I'm very pleased, actually, with the work that Treasury Board did earlier this year. It released in April the rollup of all accord costs and all negotiation costs for the last three years. It reveals fully what was negotiated and where. Just for the record, so we can get it on the record straight and understand what the heck we're talking about, here is the record. The total ongoing funding-base lift within the zero-zero-and-2 time frame, in what's usually considered direct wages, amounts to some $494 million over the three years of the accord. Of that amount, approximately $220 million, or 44 percent, is for low-wage redress and pay equity.
At the time when the zero-zero-and-2 was announced, it was also very explicitly said that we intended to give workers who are low-paid or subject to pay equity more money than the zero-zero-and-2. The other costs were service enhancements for around $270 million, for base-funding adjustments totalling $674 million over the three-year period.
G. Hogg: I seek leave to make an introduction.
Leave granted.
G. Hogg: We are joined in the gallery today by 49 students from White Rock Elementary School, my alma mater as an elementary school. They are French students in grade 6. They are accompanied by their parents and teacher Mr. Dean Hollett and Ms. Marie-Madelaine Viredaz. I would ask the House to please make them most welcome.
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C. Clark: Not only did the minister know about the cost of the accords as they were coming through Treasury Board, not only did the Premier know about it
Why is it, then, if he knew about those costs and he knew as far back as 1998 what was going on, that he didn't inform the Premier?
[1550]
Hon. P. Ramsey: We said when we released the report on April 6 that while we had the general guidelines in place, the total rollup on a fiscal-year basis of the individual accords had not been done until we undertook it in April.
The other thing I would say is that the member keeps pounding away at the parts of this that are "accord costs." When she looks at those, the actual amount of this money that goes to "accords" is very, very small. We have money here for service enhancements that I think is significant, and I know
I'm a little puzzled, because I did hear the critic for Women's Equality, in earlier debate in this chamber, actually agree with the priority that we'd placed on low-wage redress and pay equity, and that is a significant part of the money here that, in the opposition's views, is "outside the guidelines" and somehow therefore a nefarious deal. We think it was the right thing to do.
So we have rolled up all the things. We have said very clearly that we intend to have this as a standard for release of information around public sector negotiations, both contracts and fiscal-year impacts. I think the work done by Treasury Board staff in April in doing this rollup for three years was valuable for all of us -- to take a hard look at what had been achieved and at what costs -- and it will continue in the future.
C. Clark: I'll just start by noting that the money that's going for service enhancements as a result of these contract settlements and these accords is going to be less than a quarter. It's going to be 21 cents of every new taxpayer's dollar going into service enhancements as a result of these negotiations. So when the minister gets up and talks about nurses and teachers and all the great benefits that taxpayers are getting out of this, he's wrong -- he's absolutely wrong. When it's less than a quarter from every dollar that's getting out there, that's not very good value for the taxpayer's dollar.
The second point I want to make is this: if the government is going to use this as the standard for disclosing information about what's going on with public sector contracts, British Columbians have a long way to go before they're enlightened about what this government's doing. The information that the government has provided is terrible. It's not anywhere near the standard that we need.
What the government could have done is provide the information that PSEC was supposed to be collecting, which is a contract-by-contract costing. Even the PSEC web site, the PSEC public information, says very clearly that they were going to be costing-out each of these contracts, they were going to be relying on the employer groups to supply that information, they were going to be checking it out, they were going to be getting back and forth, and they were going to be going on with an ongoing cost for those contracts. So why didn't the government release that information in a form where we could understand how much each of those contracts cost as opposed to what it cost each ministry?
Hon. P. Ramsey: Collective agreements are reported to the Labour Relations Board -- filed with them. They're public documents. Anybody can go and obtain a copy of a collective agreement. If you want to cost a collective agreement, it's there for you to look at and cost. This is not exactly rocket science.
The Business Council of British Columbia costs collective agreements, both private sector and public sector, all the time and publishes its results. This is not any dark mystery, contrary to what the opposition seems to believe. So I am slightly puzzled by that sort of approach to it.
What we have done here in this document is said: "Right. Instead of having individual ministries and employer associations deal with the totality of what the financial impacts are year by year, we want to do a rollup of it all and release it." That's what we've done.
Let me correct the record. The member is simply wrong when she talks about service enhancements and their impact here. Here are the figures: the total impact, ongoing commitments here, in the zero-zero-and-2 negotiations -- what was negotiated in those three years that has impacted on base-funding adjustments -- is $764 million. Of that amount, $269 million is for service enhancements.
That amounts to 35 percent -- over a third -- of the remaining $494 million. Now, $219.48 million is for low-wage redress and pay equity. If she wants to say that's not important, fine. Go ahead. I think it's an important symbol, and I'm very proud, actually. As I said when I released this information, not only have we talked about pay equity in the broad public sector, we have almost completed achieving the goals for pay equity that PSEC set for itself when it was established some seven years ago. As for direct pay raises, there is around $275 million for direct pay wages in that.
That's $764 million in adjustments to base funding for broad public sector wages as a result of agreements, accords and others in negotiations in the zero-zero-and-2 time frame. That's what the document says. I'm very proud of the work it does in rolling it out and revealing it. I don't think these things should be behind closed doors. I think we need to have on the record both what the costs are and what we got for it. Now, if that $270 million is something the opposition wishes to say is not valuable, let them. I believe it is.
[1555]
C. Clark: Let's talk about service enhancements, because this government has been out there telling British Columbians for five years that they're going to spend hundreds of millions of dollars in protecting health care and education -- just pumping money into the system. And they've been leading
[ Page 16673 ]
the public to believe, very clearly, that that's going to mean lots more teachers, lots more doctors, lots more nurses, lots more services. What it really means is more expensive services.
It doesn't mean that people are going to get more service; it just means that it's going to cost more money for every service that they get. If that's not intentionally trying to lead the public down a road that doesn't fit with the truth, I don't know what is. When you're only taking 25 or 21 cents on every dollar and pumping it into service enhancements and the rest of it is actually going into making your current services more expensive, that is not meeting the government's promise.
I want to get back to this question of accounting, because the minister stands up and says: "Oh well why don't you just account it? All those documents are public. Why don't you just go and add them up and see what it is?" If it's so easy to figure out what those documents cost, what all those accords cost and what all those collective agreements cost, why was it such a shock to the Premier to find out the day he became Premier -- after he had been sitting in cabinet, had been privy to all the documents, had been at Treasury Board, had seen all these approvals come forward
Hon. P. Ramsey: I'm not quite sure what the question was in here. Look, I guess the assertion is that there's nothing in this $764 million of admitted changes to base funding as a result of contracts and accords negotiated in the zero-zero-and-2 time period, from 1998 through the spring of 2001. There's nothing in there of value. The $220 million spent on low-wage redress and pay equity is simply not valuable. We shouldn't do that? We shouldn't invest money in that? If that's the assertion, that's fine. Your critic for Women's Equality doesn't seem to think so. But if you don't think that's a valuable investment of public funds, then stand up and say so.
Within the Ministry of Health, I would point out that the incremental lift to the Ministry of Health was some
The other part of that $200 million investment is for additional services. The fee adjustment, hon. opposition critic, is a 2 percent adjustment to fees for physicians in, if memory serves, September 2000. That's the only part of the agreement with the BCMA that involves an actual increase to fees. The other one is to make sure that we have the volume in place so that we can avoid RAD days, so that we can avoid shutdowns, so that we can make sure the BCMA is committed to making sure that services are delivered to British Columbia. Maybe she doesn't consider that valuable; I do.
[1600]
We've debated repeatedly in this chamber whether the $150 million investment in new teachers to lower class size, restore teacher-librarians and make sure that specialists are available in our schools is important. We on this side of the House think it is. That's a service enhancement that I would support; maybe the opposition doesn't. They voted against the lower class sizes; maybe they oppose this as well. But the figures are there: $220 for low-wage redress, $269 million for service enhancements, $275 million for direct lifts to scale. That's the result of the three-year negotiating period.
C. Clark: Well, you know what I think is valuable and what I think most British Columbians would think is valuable? A government that's honest with them about what it's actually spending their money on, a government that's honest with them and doesn't say, "Oh, we've got a zero-zero-and-2 guideline for public sector settlements, and that's all it's going to cost you, folks; don't worry; trust us," when in fact it cost $1.3 billion in new money.
If the government decides that it wants to go out and take the vast majority of the increases to its health care budget and spend it on existing services instead of adding new services, and they think that's what's going to make the public happy, well, then tell the public. Don't mislead the public into thinking that there's going to be more beds open in hospitals as a result of the increase, or that there's going to be more new top-notch machinery that they're going to have available in their hospital, or that waiting lists are going to shrink in their hospital as a result of the increases. The vast majority of the increases that this government has brought out for the public sector has gone to enrich existing services -- not for new services, not to shrink waiting lists, not to build schools, not to add teachers. That's not where the vast majority of it has gone -- 21 cents on every dollar has gone to that.
A good investment would be in a government that was honest about that with people. If that's your platform, fine; run on it. Be honest about it, but don't hide behind it. And don't use the veil of this document, which is difficult at best to try and boil down, to try and make it seem as though you've got some kind of a transparent process. Because if this is the kind of accounting that this government's going to provide for future public sector settlements, like the CUPE settlement that they've already concluded, then that doesn't go anywhere near living up to the Premier's commitment to be a transparent, honest, understandable government. If the government has the numbers, has done the costing for all of these agreements, will the minister stand today and commit to release those within the next couple of weeks so that we can all see? If it's all publicly available and anybody can figure it out anyway, let's at least make sure that he can provide it to the public, and we can make sure that the Premier sees a copy so that he knows what every one of those agreements actually costs.
[T. Nebbeling in the chair.]
Hon. P. Ramsey: Well, a lot of heat there -- I'm not sure about the light.
Six million dollars of the amount we're debating today went to an agreement between the Ministry of Health and the BCMA for rural health services in small communities. Given some of the difficulties we're having in my home riding, I think that's a valuable investment. It was done through this sort of a process.
I believe that most British Columbians support the idea of smaller class sizes in schools. I believe they support hiring more nurses and see this as improvements to services and
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enhanced services in their communities. The Premier made a commitment to open the books on zero-zero-and-2 on everything from the costs of provincial court judges to home care workers, and we've done exactly that. The facts are here. The members opposite want to put their interpretation on it. I think the facts speak for themselves as far as what the costs were for every part of negotiations during the last three years. We intend to keep releasing those costs.
G. Farrell-Collins: I think the issue that's before us is a lot simpler than the minister makes it out to be. Here's how the public perceives it. I notice in the performance plans for the Ministry of Finance that one of the goals of the Ministry of Finance is to think like a taxpayer. That's one of the strategic aims of how they want to deport themselves: to think like a taxpayer. So let me try and think like a taxpayer for a minute, if I may.
[1605]
The taxpayer out there has been seeing repeated cost overruns in government, failure to hit deficit targets and inability to hit any of the targets of the debt management plan year after year after year. They see their taxes going up, and so they look out there, and they say: "Well, what's going on here? Why is it that the government can't hit its balanced-budget targets? Why is it that year after year they never manage to hit those deficit targets?"
The taxpayer is sitting at home
People at home in Prince George are sitting there saying: "The government isn't balancing its budget, but they tell us they've been keeping the line on wage rates and they've been putting this new money into health care, so they're probably doing the best they can." That's how the taxpayer perceives it.
So later, when not just the taxpayers but apparently the Premier -- moving into the Premier's Office -- find out that in fact all of the money that's been going into health care and education hasn't been going to reducing class sizes or reducing waiting lists or giving better health care service or improving doctors' services
That's the way it was presented to the public: all that new money was going to new services. The issue that the public has with the government
That's the problem that the taxpayer has with the way the government has presented this information over the last number of years. And I would hazard a guess that if they weren't thinking that way -- if they all understood where all the money was going, if the government was making a point of telling them that -- there would have been no need for this huge coming-clean disclosure process and the request for absolution that resulted from this collection of data. I think that's what the issue is.
So the minister can stand today and say, "Well, the opposition don't want more money for health care; they don't want more nurses; they don't want lower class sizes," and he's missing the entire point. To me that says that despite this absolution process -- or this request for absolution, this disclosure process -- the minister still doesn't get what the taxpayers are thinking. And he says he's going to think like a taxpayer. Well he'd better start thinking like a taxpayer, because the taxpayers think they've been misled over the last number of years.
That's the point that's being made here today. I think the minister should accept that and understand that's what it is. I think that the actions of the government over the last number of years indicate that perhaps some of them in government -- if not the minister, some people -- may be starting to get that.
C. Clark: This is a yes or no answer. Will the minister table for us the costs of each collective agreement that's been signed as a result of this PSEC process by agreement -- not across government, not across ministries, but the cost by agreement? If they have that information, why won't they table it?
[1610]
Hon. P. Ramsey: Staff undertook to do that sort of detailed breakdown in the document that, I think -- maybe the member doesn't have it before her -- had an April 6 release. If you turn to the back of it -- for example, flip to the Ministry for Children and Families -- it isolates compensation increases due to specific agreements, whether it's nurses levelling funds, health sector-related increases or low-wage redress and pay equity, and for which year -- previous commitments from agreements signed before the zero-zero-and-2 years of '98-2001.
The information is broken down in a great amount of detail, down to the level of some things that, frankly, I hadn't been that aware of. For example, I must confess that I wasn't aware of the impact of the judicial compensation increase when this House dealt with it, I believe, back in '99 of some $4 million, I guess it was, in '99 and another $1 million in 2000-2001. Everything has been broken out here in a level of
[ Page 16675 ]
detail that, I think, does allow
We made a commitment to open the books. We have done so. Government is a people business. So as we have public sector workers right across, a large proportion of the provincial budget that we have debated and are debating in estimates does concern pay and benefits. And obviously the expansion of services through hiring more nurses or teachers involves payment of salary and benefits.
C. Clark: All right. I'll take that as a no.
My next question, though, is really about the parameters that were set on this, because $1.3 billion is nowhere within zero-zero-and-2, which is what the public was led to believe these agreements were going to cost. It ended up costing us $1.3 billion. What parameters were set in place to control the costs of the accords which added so much to the total cost of this so-called zero-zero-and-2 negotiating framework?
The minister admitted in his press release of a couple of months ago, which he's just referred to, that the government knew that there were going to be added costs as a result of the accords. So my question is: if they knew there were going to be added costs, where were the parameters and the guidelines to control those costs?
Hon. P. Ramsey: We have released a full list of all accords that were negotiated.
The other thing that I would say to the member is that contrary to what seems to be the belief of the members opposite, accord costs in these three years are not the major component of what she wishes to look at. Accord costs amounted to some $5 million in '98-99.
I look at this and say I understand the desire to hammer away on that. The great majority of costs that are contained in this agreement were for such things as, let me say it again, pay equity and low-wage redress, service enhancements, base salary costs. We agree with the member opposite that the sort of rollup and release of those needs to be done in a more systematic and orderly way. That's what we undertook to do in April, and that's what we've undertaken to do for subsequent collective agreements.
[1615]
C. Clark: So the government had no parameters or guidelines to control the costs of the accords, I have to assume, because the minister sort of dodges the question and refuses to answer. The government did have a guideline in place for zero-zero-and-2, but we know that the total compensation costs add up to $1.3 billion. Where did the process get off the rails? And why weren't there any guidelines for that portion of the process that wasn't covered either by the accords or by zero-zero-and-2?
Hon. P. Ramsey: Let me say it again. The member keeps referencing this larger figure. Ongoing base funding costs as a result of the contracts and accords negotiated for the '99-2000 period, the ongoing lift, the component of the budget that goes to public sector wages, was $764 million. This year, in the year 2000 budget, the lift was $509 million. We have a budget increase of around $1.2 billion this year. Of the $764 million break it down yet again: around $219 million for pay equity and low-wage redress, $275 million for base salary adjustments, $270 million for service enhancements -- and we've discussed what those include.
The member can say as many times as she wishes that she wants to include adjustments to base from previous years -- and that's fair; we revealed that as well. But they were not part of the negotiations during the '99-2001 period; they were from the negotiations that concluded in prior years. What we have done is said, "Hmm, there are some things in that period that affect the ongoing wage bill even though they're not the subject of negotiations in those years," and we have reported those as well. We've also reported one-time costs which don't have an ongoing impact, some of which were part of accord discussions.
So we've tried to be -- as the Premier said -- as open as we possibly can, by opening the books on what happened during that period, what the effect of contracts negotiated prior to that period was and what the results have been. There's page after page of detail as far as what was achieved and what the costs were.
C. Clark: Some of the costs that are included are future costs, and I assume the government must know what that's going to be. Jo Surich did a report for the government on the CSSEA contract, the community social services contract. He estimated that that would cost about $860 million by the middle of the decade.
Can the minister tell us when he's going to table this full and frank disclosure of all the future costs of the contracts that have been signed so far, past the budget year provided in this rather thin document that they provided for us two months ago?
Hon. P. Ramsey: A thin document. I count it as 16 pages of the detailed work plus a cover document of an additional five pages. I assure the member opposite that when we released this, those who were looking at it from the gallery and others who were examining it found it far from thin. There is indeed a lot of information in here.
We will obviously, as we move forward in developing the fiscal framework for budget 2001 and beyond, quantify costs of salary and other pressures as we move forward in the planning for that budget. You know, the Premier said that we're going to open the books on zero-zero-and-2, and we have done so. As we get new agreements -- the member referenced earlier the CUPE agreements -- we will be releasing the information on those cost impacts in the same format as we've done in April, so that everybody can see what has been negotiated and what the costs are.
[1620]
C. Clark: The question was: when is the government going to release the cost of the contracts that have been signed so far, past budget year 2001? There are big implications in many of those contracts for 2002, 2003, 2004. The ministry must know what those costs are; they must have quantified them already. I have to assume, for goodness' sake, that they know what they are. If they do know what they are, when is the minister going to table those?
Hon. P. Ramsey: As we did with budget documents this year, where we've released very clearly what the wage
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impacts were in the coming year, we intend to do that in future years. We've said in the budget documents exactly what components of changes in budget were due to wages right across the piece. We intend to be doing that in future years as well.
C. Clark: That's a pretty sneaky approach for a government that says it's committed to transparency and openness, for goodness' sake. The government should be providing the details of these contracts for the life of the contract. Those are the costs that they should quantify. If the contract is negotiated to include a wage lift in the year 2003, for example, the government must know what that number is. If the government knows what the number is, why won't the minister just share it with the public, for goodness' sake?
Hon. P. Ramsey: Man, oh man. I'm not sure that we can advance this debate a whole lot further.
We have said very clearly that collective agreements are part of the public record, and they are. We have sought to do a rollup of costs for the last three years and projected forward to the end of March 2001, and we've done that. We've said that as further collective agreements are negotiated, we'll reveal, in the same format, the cost of those. We've said that as we do a fiscal framework and move forward, we will definitely quantify the costs, and we've done it, by ministry, in the last budget. We'll continue to do it so that taxpayers know what compensation increases are.
There's a lot of information out there. I think the public understands fully what part of their tax bill is going to wages and what part is going to other objects of expenditure. We'll continue to work hard to make sure that the public has as comprehensive information as we can provide.
C. Clark: I'll take that as another no from a minister, a member of the government that, despite the fact that they say they're committed to transparency, are still committed to being sneaky and pulling accounting tricks out of a hat when they have the numbers and are just refusing to disclose them to the public. It's the public's money; the public should know where it's being spent. For the minister to just sit on the information when he has it demonstrates again that this government has no commitment to changing, to being honest and open with the public, which doesn't bode well for the future
This government is now embarking on its next round of negotiations, and I'm curious
My question, though, is: what is the government doing to prepare for these negotiations that are coming up? Last time they embarked on negotiations, it was in June that they announced that they had guidelines for negotiations, that they had a mandate. That was when they came out with their phony zero-zero-and-2 guidelines; that was in June. And this government doesn't even seem to have any kind of negotiating strategy in place at all. When is the government going to be prepared to have its negotiating strategy in place? Or is it just simply going to wait and hope that these collective agreements don't finally get negotiated before we come into an election?
[1625]
Hon. P. Ramsey: PSEC had a meeting this morning. All employers councils were represented. Mr. Moser, as the CEO of PSEC, was there to begin the task of working with employers organizations and with members of government as we work forward to produce mandate, process and structure for bargaining for the next round in the broad public service. That's the work that will be undertaken. We expect to have those recommendations on process and structure in place by the fall for consideration of employers council and government. I'm undertaking that work as chair of PSEC, and I think we will have a good structure in place. Mr. Moser brings a wealth of experience to his role as the senior staffer involved in this. We will be getting those mandates in place.
I'm not going to respond to the rest of the member's speech. I must say that one of the things the opposition critic and I discussed earlier is the one thing that has not happened in this session of the Legislature: reform of the estimates process. Frankly, the sort of debate we've had the last little while demonstrates, again, the need for that sort of reform. I wish we had been able to move forward. I think the late Fred Gingell had some excellent ideas about how we do that. We haven't been able to. It surely wouldn't be the sort of debate that we're engaging in now.
C. Clark: I'm all in favour of reforming the way this House operates. One of the big reforms that we might have is maybe getting a government that would be prepared to answer questions instead of just dodging them or intentionally giving an answer that's intended to mislead people. I mean, for goodness' sake, government has the numbers for these contracts, and they just simply refuse to release them.
My question, though, was about the negotiating mandate. It was not about the process and the structure that the government is setting up. My question is: when will the government have its negotiating mandate in place, and when will it be prepared to make that public?
My concern is that we are already in June. Those agreements are going to be expiring in March of next year. The last time the government embarked on this process, we knew in June what the guidelines were. Granted, the guidelines were phony, but we knew what they were. By waiting I can't see that the government is going to be in any position to be ready to negotiate with the public sector unions. So when is the negotiating mandate going to be ready? Or is it simply a matter of the fact that the government is going to stall on these negotiations as long as they can, so that they can avoid settling any of these agreements and the embarrassing costs that might be attached to them before they get to an election?
The Chair: Minister, I would like to make an introduction. We have the honour and the pleasure of visitors from Emerald Park Elementary School in Kent, Washington. They are accompanied by their teacher, Ms. Keyes. I would like to ask the House to make them all very welcome.
Hon. P. Ramsey: At the PSEC meeting this morning the consensus was that work on mandate, process and structure should commence at once and be in place by the fall. The expectation, as I understand it, at both employers associations and public sector unions is that negotiations begin early in 2001. That's the sort of time frame that we're working on. I must say that I find it
[ Page 16677 ]
G. Farrell-Collins: I'd like to move on to the Superannuation Commission now, if we can. While we're waiting for staff to come, I have a question to the minister. It is not on either of those topics, but I think he should be able to answer for me fairly quickly while we're waiting for staff to come in. It was raised earlier in the session.
It's the issue of letters being written by a number of consecutive Ministers of Finance to the B.C. Ferry Corporation to guarantee their debt and give assurances that they would be there to backstop the Ferry Corporation, because they were essentially insolvent, and to avoid reservations being placed on their financial statements. Can the minister tell me for how many fiscal years that was done?
[1630]
Hon. P. Ramsey: The consensus seems to be two years.
G. Farrell-Collins: I'm sorry; I didn't mean to ambush the minister with it. I just thought we'd take a moment to do it. I thought it might be an easy thing.
Can the minister tell me if there have been any other Crown corporations or agencies who've had similar letters written for them by the Ministry of Finance over the last number of years?
Hon. P. Ramsey: Staff have no recollection of any others. We can go back and check. This was precipitated, as I think the correspondence shows, by an auditor's request on examination of the books on B.C. Ferries. We'll get back to you if we find any others.
G. Farrell-Collins: I look forward to receiving that information as soon as the minister can make that determination. I assume it won't take too long to find that out. A couple of days or a week or whatever is fine with me; I don't need it today. That's fine. I would like to know how many times and also, if there were any others, what they were. What were the particulars around them, if there were other instances of that being required?
I wanted to move on to the Superannuation Commission. I thank the minister's staff and officials for providing a briefing on this issue earlier, but I wanted to get some of the issue on the record and hear from the minister himself.
My understanding is that somewhere in 1996 or so the Superannuation Commission embarked upon a plan to upgrade its systems to make them, I assume, more technologically advanced, more responsive, and to improve the quality of service to pensioners, etc. My understanding, as well, is that to date that project is still not up and running 100 percent. My understanding is that it's getting close, but there have been some substantial difficulties over the years in getting this system up and running properly. The minister perhaps can give us an idea of what the opening budget or the anticipated cost of this system was initially, where it is now and when the minister expects it to finally be up and running properly.
Hon. P. Ramsey: One thing I need to correct the member opposite on: there is no Superannuation Commission. There is in place the Pension Corporation, which came into full operation as of April 1, 2000. We're joined in the chamber by Louise Young, who's vice-president of information management, finance and administration in the Pension Corporation. As we've debated in this chamber, there has been a real attempt to bring pension administration for public sector pensions into a more modern configuration, with those who benefit from pensions participating more, possibly on boards and the board of the Pension Corporation. We have made some significant strides.
One area that was worked on, as the member says, starting in '96 was indeed a new information management system. The initial cost of that contract was projected to be $17.3 million. In '97, I believe it was found that that was regrettably not going to do everything that was required. The budget was revised to $23.3 million; that will take it into full completion.
[1635]
The new system was, I would say, fully operational in the fall of 1999, though the corporation has done a number of new releases. Usually you've got around a six-month shakeout before you're sure that everything is going as smoothly as possible. The last of those releases is anticipated to be next month, July of 2000. That will mark the end of the implementation process of the new system.
G. Farrell-Collins: That's about a 34 percent increase in the budget costs in a fairly short period of time. That's a fairly significant cost overrun for a project; $17.3 million to $23.3 million is about 34-something percent. It's a fairly significant cost overrun for a project of any kind. Although I understand that systems sometimes have a way of doing that, it's still a fairly significant cost overrun.
I know that some of the problems experienced were backlogs and people getting some sort of an idea of what their pension benefits would be upon retirement, as well as proper disbursements, proper pension adjustment numbers, etc. So those are not insignificant inconveniences for people.
I don't want to ride the government too hard on it. I know that writing new software for the systems is a difficult and tricky prospect. Can the minister tell us what portion of that is hardware and how much of that is software? Does that $23.3 million include staff time?
Hon. P. Ramsey: The member is quite right: this was a significantly more expensive project than was originally anticipated back in 1996. There was a vendor change in the middle of it in '97 -- really, a rescoping and retrofitting of the project and shifting to the product of the new vendor. So this was an implementation that was surely not as smooth as one would have liked.
As far as the breakdown of costs, we don't have the exact figures. We can get them for you. The guess is that roughly around 25 percent to a third would be hardware. The remainder would be software and staff time to get it underway.
The member is quite right -- I assume this is what gave rise to his wanting to raise the issue in debates -- that as we worked through this and the shift over to the new system, there have been some real delays in service and some real problems. I imagine that he has received correspondence from public pension plan members, as I have, concerned about delays in getting figures on the value of their pension or what pension benefits they could receive upon retirement, or figures related to purchase of past service. There have been some delays in the Pension Corporation as this new system has been developed and now put into place.
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[1640]
G. Farrell-Collins: Can the minister tell me whether or not the new entity
Perhaps the minister can tell me whether or not there has been a performance plan done for the new entity that would indicate some of those measures for targets on how to deal with backlog, some time frames for how long members should have to wait for information, etc. Is there something? Has something been put together like that to give us an idea of where the goals are?
Hon. P. Ramsey: The expectation is that the Pension Corporation will have a performance plan for subsequent fiscal years; it did not for this one. It only came into formal existence as of April 1. Their big challenge has been the transition. They're working hard with their board right now on what measures the board expects of them. I would say this is one of the interesting things about the new corporation. They now have accountability not only to the Minister of Finance because they're a Crown corporation that the minister's responsible for, but they will have direct accountability to a board of directors that represents pension plan members. So there's a new structure of accountability being established as this corporation moves forward.
I would only say this: there is a
G. Farrell-Collins: I would appreciate receiving a copy of whatever performance measures the corporation comes up with as targets, because I think that would be helpful to know and to monitor over time as well. The minister is right: I have received correspondence and phone calls from people relying on the corporation, people working in the corporation, who have been worried about this and aren't really comfortable with how this has all come together.
It is a significant amount of money; $23 million still is a lot of money. I am concerned about that. It's a lot of money to pay for a system. I know it's a complex system. I know it has significant, varied demands on it, but that's still an awful lot of money. To me, this looks like a capital project. A system, whether it's software or hardware
[1645]
Hon. P. Ramsey: One of the things that the corporation will be undertaking once the final version of the system has been released is to do a post-implementation review to see what lessons we can learn from this. I'd be pleased to provide the member with a copy of that when it's completed.
In my experience in my time in government, I must say that among the most difficult projects to accurately cost and scope on the monitor seems to be the development of new systems software. Some that I've been involved in have gone smoothly. Others have had problems that kick them off track halfway through. Either the technology changes or vendors change, or whatever. One of the things that I know we've been seeking to do, of course, with the development of ISTA is to have a central agency in government that can be the source of expertise as we move forward in those sorts of system developments and, as much as possible then, to take risks in such projects -- and there clearly are -- as much as possible shifting it to the vendors that we're contracting with, rather than in government.
Is this always possible? No. Occasionally you find that something does go awry, as it clearly did in this case. I think we're on track. I think we will have a smoothly operated system. There are backlogs. The corporation will be hiring additional staff to clear those backlogs and make sure the system achieves the prompt response that pension plan members have a right to expect.
I. Chong: I just have some very brief questions, following along the line of the old Superannuation Commission. Last year when I debated with the minister, we discussed the changeover to the Pension Corporation, to the investment corporation.
At that time it was also in conjunction with the joint trustee agreements that are being developed. As I understand it, the college pension fund has proceeded with that. I think the teachers pension fund did vote on it at their AGM. I don't believe the public service has. I think the municipal pension fund has still not proceeded. I just would like the minister to provide us with an update as to where we are with the joint trusteeship.
In addition, I'll put all these questions on, so maybe he could answer them all at once and save time. With the public service pension plan there have been some concerns with the retirees still, which I indicated to the minister last year. They do feel that their voice is not being heard. There are a substantial numbers of retirees. They have an organization. They feel that they should have a voice at the table. If there is any way that the minister will reopen that discussion and look at that, I would implore him to do so.
Many of our public servants are going to be retirees. We've been celebrating Public Service Week. In addition to that, we should be looking forward to protecting their interests, so that they know that they have some control over their pensions. I would ask the minister to also comment on that.
[1650]
Hon. P. Ramsey: First of all, on the issue of joint trusteeship, as the member knows, there has been an agreement ratified and concluded for the college plan. Negotiations have pretty much concluded and ratification is underway for joint trusteeship agreements both for the teachers plan and for the public service plan. So those negotiations have gone fairly well. Discussions are underway in the municipal plan. I don't know what the chances of concluding an agreement will be. So the new legislative framework that this chamber debated and approved plan members are taking advantage of now. Discussions have gone fairly well in the past six months.
As far as the voice of retirees on boards goes, it is an ongoing issue, and not only in the public service directly but
[ Page 16679 ]
for retired members of other plans, whether they're teachers, college instructors or municipal employees. The negotiations on joint trusteeship are looking at ways to address that.
I must say we've got, really, as I'm sure the member knows, three sorts of governing boards here. First you would have the joint trustees of the actual plan, then you have the board of the Pension Corporation, and then you have the investment corporation. So as negotiations go on, you try to make sure that all voices are heard. Can you get everybody around the table? Sometimes no. There aren't enough chairs, frankly. So you've got to figure out what sort of agreements among plan members, active and retired, might be made in their selection of representatives for joint trusteeship, and that's the sort of work that has gone on through the negotiations. Once I have something concluded and ratified to report to the member, I'll be pleased to do so.
I. Chong: I appreciate the minister's effort to provide any conclusions or resolutions that are made. But I still submit that retirees do deserve a place on the board; they represent a substantial amount of those who belong to the pension funds. In addition, this is their major source of income for their retirement. They, rightly so, would like to have decision-making abilities on their investments and where their pension funds are headed.
I realize these are defined benefit plans; I acknowledge all the things that were discussed last year. But I still want to say for the record that if there's any movement the minister can make toward allowing that discussion to take place, that dialogue to happen, to allow the retirees to have a voice so that they are satisfied that their interests are taken care of, I think we owe that to them.
With that, I'll conclude my remarks on the Pension Corporation.
G. Farrell-Collins: The next area that we want to address is the
Interjection.
G. Farrell-Collins:
K. Krueger: Earlier the minister and I discussed a matter briefly. I know that it does touch on the Ministry of Municipal Affairs, but it's also a matter of taxation of small business and a change that has brought some hardship to a small business in my constituency, which is the radio station Broadcasting N.L.
The broadcasting industry had suffered a change whereby they were moved into the definition of telecommunications, which caused them to be treated as a utility even though they're not a utility. They're funded by advertising sales. They don't have user fees such as cablevision companies do. The consequence to them was that their broadcast towers had an increase in taxation of 335 percent.
This change was successfully appealed through B.C. Assessment. But B.C. Assessment has since advised the company that they're going to appeal that decision to the Assessment Appeal Board, all of which is a matter of grave concern to this local company. They simply have to take an increase of $18,000 in taxes, if it happens, off their bottom line. That causes them to have to consider cutting back on services which they essentially provide for free in rural communities around B.C. For example, in Clearwater they have a booster. They provide their programming in Clearwater, even though they derive very little advertising income from Clearwater.
[1655]
I have had good cooperation from Mr. Brian Walisser, the director of policy in Municipal Affairs. I wanted to seek the minister's assurance that he will be keeping a watching brief on this file, in that it does touch on his ministry, and trying to ensure that justice is done and this correction is made -- which I gather may well be made through regulatory changes and not necessitate any legislative changes. That's all I'm looking for from the minister: an indication that he will participate in trying to resolve this matter as expeditiously and fairly as possible.
[T. Stevenson in the chair.]
Hon. P. Ramsey: Welcome to the chair, hon. Chair.
I'm always interested in seeing justice being done, but I must say, the way this issue touches on my ministry is pretty tangential. This is thoroughly within the realm of B.C. Assessment. As the member said, he's been working with people in B.C. Assessment and in Municipal Affairs on this issue. That's where the issue about changes in the regulatory regime really lies, and I think that's the appropriate place for it to go. I know that the results of that are, of course, remission of taxes to the provincial government, but the actual change and the responsibility for the regulations around how B.C. Assessment operates do not go through my office or through my ministry. So while I appreciate the member's interest and will obviously ensure that my colleague the Minister of Municipal Affairs, who's responsible for B.C. Assessment, is aware of it, it really is in that minister's and that authority's purview to deal with this issue.
G. Farrell-Collins: The issue I want to deal with today is one particular case that I know that the minister is familiar with, as is the deputy minister -- and I assume other officials are as well. It deals with the Countertop shop. The Countertop shop
This gentleman has been in business for I think about eight years. He worked for another countertop company previous to that. He self-assesses his PST. He has done so and remitted his taxes, my understanding is, on time, monthly -- the middle of the month, every month -- without fail for the time he has been in business. His number came up, and he was due for an audit. He was audited and was told that he had an assessment of some significant amount of money -- in the thousands of dollars -- because he had not been charging his customers PST on the waste that went into installing their countertops.
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For example, if one buys these lengths of preformed countertops in eight-foot lengths or larger and only needs six feet or 6 feet 3 inches -- as we know can happen when you're building things -- there's a chunk left over which is essentially useless. You can't do anything with it; you can't install it anywhere; you can't glue them all together. It's garbage. Unfortunate as that is, it's waste. This individual has to put that into recycling or in a dumpster and pay to have it hauled away. It's essentially a significant cost of doing business.
He bills his customers for the length of product that they use and assesses them the PST for that and remits that to the government. He has been told now that he needs to pay the PST and assess himself the PST on the entire eight-foot length, despite the fact that a chunk of that goes away as waste and is never used. The ministry has told him that the act says that any commodity, any item used or consumed in providing a good or service is taxable. His argument is that it doesn't fall within either of those. It's not being used; it's not being consumed. It's being thrown out; it's in the garbage. It's pretty hard for him to go and
[1700]
I suppose if we were back in the old days, where you cut your lumber, measured it all and built the thing yourself, it would be a little easier for businesses to reduce that cost. But in this case, when you're buying preformed product, there's nothing that can be done with the leftovers; it's garbage. To charge tax on it and then for him to also have to pay to have it hauled away or recycled or whatever it is that's done with it, is difficult for that taxpayer to understand.
As I said earlier, the ministry is trying to think like a taxpayer. Here's a taxpayer who thinks it's not fair. I'm wondering if the minister has some comment on that. I know that the ministry has spent some time dealing, I think reasonably, with the individual. It's a policy that's there, and interpretation of the policy
Perhaps he can also advise me if this is a common problem with this type of business? Have there been a number of these audits that have turned this up? Is it a regular problem? There may be other instances I can think of where there are similar scenarios. With a plumber or an electrician, there may be chunks of wire that get thrown away or big chunks of pipe that can be expensive. But in most cases, those are still usable in some form or other; there are not huge amounts of waste. This is a unique situation, where the individual buys a preformed product and either uses it or throws it out.
Hon. P. Ramsey: First of all, as I'm sure the member's aware, confidentiality provisions of tax statute really
The difficulty, as I understand it, is this: what is being done here in the sale of a countertop is classified under tax statute as an improvement to real property. It is not a retail sale. Therefore, in matters that involve improvement to real property -- whether it is a cabinet installation or a countertop or installation of a plumbing system or whatever -- it's the total cost of materials to the installer which is subject to tax.
The member's quite right. This is how you get the
[1705]
G. Farrell-Collins: So if the individual were to set up his company differently so that he had two companies -- one company that was a retailer of premade countertops which he purchased wholesale and sold retail and the other that was an installation service -- he could then go and sell the product to the client at whatever cost he chose for the countertop and go in and install it, and you'd only have to charge the person PST on whatever the amount was that he charged them for that product. Is that correct?
Hon. P. Ramsey: The short answer is, of course, that individual citizens have the right to arrange their affairs to take advantage of how tax statutes work, as they see fit. Retail sales are different from the charges on installation, though installation itself may be a taxable service. So there are shifts back and forth in the tax statute. It is unfortunate when individuals sometimes get caught in some of these -- what shall I say? -- misunderstandings or misinterpretations of what's gone on, and the ministry seeks to work with them to clarify those. But individuals can indeed organize their businesses or their affairs to take advantage of tax statutes. We have entire professions that are devoted to doing that.
G. Farrell-Collins: And the minister has professionals whose entire job it is to close those loopholes. We see those year after year in the estimates or in the legislation that comes before the House -- the Budget Measures Implementation Act. Then somebody gets more creative, and around and around we go. But I guess there's no end; you never get the perfect tax system.
But, again, I come back to my comments earlier about thinking like a taxpayer. For someone out there who has been trying to do the right thing
Small businesses, in particular, that struggle on a daily basis to compete and keep their heads above water
I know, because I meet these people and I talk to them. I know how difficult it is to run your business, let alone figure that out what the PST guys are trying to make you do, let alone trying to figure out what the GST rules are, let alone wondering what the city is giving you with the property tax and their assessment, and you've got to appeal that. It gets to be pretty onerous.
[ Page 16681 ]
[1710]
I don't know if there's an answer. I don't know if there's an easier way. But there's got to be some way, I think, to make the tax system a little more friendly for the taxpayer, especially people that are really
Hon. P. Ramsey: I certainly agree with the member opposite that, at times, finding a way
They issue something like over a hundred public information bulletins that outline various tax applications for each legislative session, and will do so after this session. They produce a bulletin outlining any amendments that have been made to consumption tax statutes and mail the bulletin to all registered vendors. There is a taxpayers services section in Vancouver that's dedicated to responding to telephone and written enquiries on various tax applications. They have a web site, of course. Every newly registered business receives an information package, and on and on. But these are complex issues, and when misunderstandings arise in spite of the work that the branch does to make sure that everybody is treated in a way that appears fair
G. Farrell-Collins: It's interesting the minister raises that, because I have a number of cases where constituents have phoned the PST office, taxation branch, to get information. They get one set of explanations and start working on it. Then they call back just to check one point and find out that that wasn't really what they should have been doing in the first place. It just shows you how complex this stuff is. Either the interpretation that the person on the phone is hearing or the way they're hearing the explanation is difficult; or the person giving it, or two separate individuals giving it, are giving different information.
I know, because I talk to so many people out there -- and I'm sure the minister hears it, too. It is just so frustrating for them, especially when they're really trying to do the right thing. There are so many operators out there that are probably installing counter tops that you don't even know about. They are just doing it and taking cash, and you don't even know they're out there. When you find someone who's trying to play by the rules, who has been reliable in their payments, has not missed payments, has done everything they thought was right and then gets dinged with a bill for thousands of dollars, which can put them out of business
I'm not encouraging that in any way, shape or form. In fact, I strongly discourage it. The reason I'm asking those questions is because I want the ministry -- and I'm sure the individuals do -- to think like the taxpayer, as it says in the performance plan. There are lots of people who are doing their best to run their businesses and be experts on the tax they have to pay. When they hit a snag, I think they look for a little bit of understanding and a little bit of time and a little bit of flexibility. The alternative is that they go away. I think the minister needs to think about it.
[1715]
I do think we as a government need to look at the complexity of the tax system, particularly the PST system. It is very complex. It's what's in and what's out. And we know the second you start putting in exceptions, it gets more complicated yet. I just want to raise it as an issue. I want to flag it for the minister, because I would hate to see people like this -- good corporate citizens who are employing people and paying their taxes -- pushed into the black market and the underground economy because of something like this. I think we have to go that extra little distance to try and help people get the information -- the minister has listed some ways that it's available -- and also to provide a certain amount of leniency and encouragement when errors are found and provide some flexibility to rectify those errors. When people try and do otherwise, the alternative isn't good for anyone.
Hon. P. Ramsey: I find myself in almost complete agreement with what the member opposite said.
The only thing, I guess, that I would add is that part of thinking like a taxpayer is also to say that one would hope that those collecting taxes would try to seek out those who are seeking to subvert the system. I mean, if I am playing by the rules as an individual or as a small business person, part of what I expect is that those responsible for the tax system will, as much as they can, try to seek out and make sure that those who are trying to subvert it are adhering to them.
It is a complex one. I was actually reflecting the other day, when the member for Oak Bay-Gordon Head and I were debating the tax on income. I looked over to my right at the staff person with me who had the Canada tax statutes, and it was a book, I swear, six inches thick.
G. Farrell-Collins: That was one of them.
Hon. P. Ramsey: The member opposite says that was maybe only one of them, and he may be right.
[ Page 16682 ]
You're right. We have developed exceedingly complex systems. It often occurs to me as I work with the Business Task Force on reducing red tape that we have over 530 different initiatives. We're monitoring some 40 percent of them; we've now got close to completion. We've got another 60 percent to go. It's been in existence for nearly two years now. There has been some progress there, but at times I think this is ongoing work, really, for quite a long time. Provinces that have sought to do a comprehensive review, looking back as well as forward -- we're working on doing that as well -- have found it can take as much as a decade to do that thorough sort of review.
These are complex systems that we have developed as a society in the system of law that we seek to adhere to, and I agree with the member that we have to make sure that we work well.
The one other thing that I wanted to point out to the member that the consumer taxation branch has done is actually establish a Consumption Tax Advisory Committee that brings together people who are on the receiving end of both the rules and the audit procedure. The committee works with them to see how we can make sure that we are thinking like a taxpayer and are being fair and equitable and open in how we administer the statutes of the province.
Just before I sit down, I wanted to tell the members of the chamber that the Deputy Minister of Finance, Mr. Chris Trumpy, is no longer with us. That's not because he's not fascinated by the debate, but because his son Chris Trumpy, Jr. is graduating from high school this afternoon. I know that members opposite share the respect that I have for Mr. Trumpy and wish him and his son a very, very pleasant graduation day.
[1720]
G. Farrell-Collins: I'd like to extend my congratulations to him as well. A far more important place to be than here is at his son's graduation. I'm glad he left and went to do that. I hope he does have a good day as well. Those only come once, so I'm glad he's doing that.
I don't have any more particular questions on this issue; I think we've addressed them. As I've said, I'm not sure what the minister can do for this individual. But I really think that when you find people who've shown over the years that they want to be part of the system, it's not only smart, it's financially smart to keep them in the system. I think there has to be some way of ensuring that that happens, and I hope the minister, now that he's aware of this issue, will watch it, monitor it and perhaps let me know how things progress.
I want to make sure that this one individual, at least, doesn't slip through the cracks and that others who are in similar situations, as well, find there's a good way to deal with the auditor when he arrives, that it's not always a bad thing and that there's some ability there to ensure that he continue to be part of the economy and produce good-paying jobs for people and produce economic activity and to be able to do it aboveboard as opposed to the other way. I'll move on, then, with the minister. I thank his staff for coming in today and for the briefings I've received from them recently and throughout the year as well.
The next issue I would like to raise with the minister is the small business income tax holiday, and I don't know who it is he requires for that. I will speak to that as well. Again, it's an individual case that I wish to bring to the minister's attention, but I think it probably represents other cases that are out there.
This is one that I know of that was brought to my attention some time ago by the member for Okanagan East, from Kelowna. He has a constituent who had a company but has structured another company to take advantage of the small business income tax holiday in order to secure contracts on work -- I think it was actually outside British Columbia -- through a process that perhaps my colleague from Oak Bay-Gordon Head, who's an accountant, can explain better than I. This company qualified for the tax holiday in one year, and at the end of their fiscal year in the second year, with five days left, did some corporate restructuring. For a period of five days there was a linking of those two companies, and as a result, for the rest of the 360 days of the year, they became ineligible for the small business income tax holiday.
Once again, thinking like the taxpayer, I think you might be a little upset with the advice that you received as the taxpayer, but the reality is that's what happened. I certainly don't think that that was the intent of the legislation when we passed it in this House, but I believe this individual or this company has run afoul of the act on a technicality and, as a result, is stuck in limbo with a fairly significant tax bill as a result. Perhaps the minister can comment on that. I know my colleague from Oak Bay-Gordon Head, as well, has done some research on it and may have something to add.
Hon. P. Ramsey: I'm a little hampered, because I don't know the specifics of the situation that the member describes in the individual case. If there is correspondence that the member for Okanagan East has on it, I'd be pleased to have staff review it and respond expeditiously to the member and to the constituent on the issue to see if there is some way of dealing with it if there has been some misinterpretation.
[1725]
The tax holiday is a two-year tax holiday, as the member says. There are some eligibility rules. I don't think I'll go into them, because I'm not quite sure what the specifics of the restructuring are that the member is referring to. I assume that what happened is that somehow they fell into the associated corporation strategy and therefore were not eligible. But without knowing the specifics
G. Farrell-Collins: I've forwarded the correspondence to the minister. I know his deputy is aware of the issue, because there has been some correspondence involving the deputy minister. I've sent some of the information to the minister. I'd be pleased if he or his staff could look at it again.
Again, in this case the issue really is
I recall when the issue was raised in the House and the legislation was debated. I certainly don't think it was the
[ Page 16683 ]
intention to tag people who came in within a week of the end of their fiscal year with the taxes because of some restructuring like what has taken place in this case. I know when the government brought the legislation into the House -- the small business tax holiday -- the idea was to create jobs. I think that was done in this case. It was for new business. That was certainly done in this case, because they qualified for the previous fiscal year. At the very end of the second fiscal year, with the restructuring, they technically didn't qualify for a small period of time -- I think it was five days. I don't know if that was a long weekend or
I'm familiar with the act. I know what the act says, so I think the ministry is technically correct. There was an association within that 12-month period, but it was clearly an inadvertent error. It wasn't an intention to
So I'm concerned about it, and I think there are also some implications on the personal income tax angle for the individuals who own the company as a result of dividends and payments that were made. Perhaps the minister can give us a sense of what recourse this one individual case might have.
Hon. P. Ramsey: I guess I'm almost tempted to quote Shakespeare -- the fault is not with the stars; it's with ourselves. We passed this act, and we put these provisions into it. What the ministry staff have done, and what I am charged as a minister with doing, is administering what we passed. That is the great difficulty. I think the member and I agree that ministry staff have applied the law as it is written. Was this intended? Probably not. Is it a fair application of the law? Probably yes. So the fault is with ourselves, not in the stars. I think the only thing that I can suggest and commit to is that over the coming years we'll take a look at subsequent legislation and put this on the list of issues that need to be reviewed. There's usually a fairly long list of issues that need to be reviewed in application of tax statute in British Columbia.
[1730]
I. Chong: I don't want to belabour the issue. If staff are here, I think they recognize that it's the problem that is traditionally known as associated corporations which is causing the problem. The letter from the deputy minister to this individual does state specifically that there isn't a provision from exempting where there's an association with another company or an association with an inactive company. I agree; that's correct. Again, the individual did not intend to be associated with the company from which he was trying to double-dip and further the tax holiday. Clearly it was set up to have another venture, and in those mere five days, a shell company being used created an inactive company association. That is not what was intended.
Even if an amendment could be made to the legislation
I would implore the minister again to seek out staff to see whether amendments can be made and, in so doing, take a look and see how many people would actually be caught up in this situation with an associated company. How many other individuals have been denied the tax holiday as a result of an association that happened at the end? If this is the only individual or the only firm that has fallen into these criteria, then, perhaps the minister and staff can have a look at that. I don't know what the statistics are. I would imagine or venture a guess that they would be very, very minor.
People who are involved in associated companies usually have tax professionals, as this company did. He probably didn't see his tax professional and went ahead and structured a company -- a situation -- prior to meeting with his tax professional. That is certainly no fault of his. This is obviously a business person wanting to create jobs in our province. We shouldn't be penalizing him in this way.
So I give those ideas to the minister in an effort to try to resolve this in a fair and equitable way, which I think is possible.
Hon. P. Ramsey: One of the most difficult things, obviously, for public servants to do is deal with the issues of intent or spirit. What they are charged with doing is administering a statute based on the actions of individuals. That's what they're charged with doing, and they have to treat those fairly and equitably.
Though I'm reluctant to, I agree that on the surface of it, this case
I'm less convinced that I want to look at the retroactivity provisions, particularly given the opposition's strong objection to retroactivity. I wouldn't want to place the member in a conflict between what she's saying today and how she might have to vote on a piece of legislation next year.
[1735]
On a more serious note, I do take this seriously. I've asked staff if they see any other avenues for administrative relief. I'm not sure I see any right now. The fault is with the legislation as written, not with the work that has been done by people employed by the Ministry of Finance and Corporate Relations.
G. Farrell-Collins: The minister is right; the opposition isn't fond of retroactive legislation. I suppose that's because, as I stand here and think, every single piece of retroactive legislation that has come before this House has been one that benefited the government, not the public. Perhaps there's an opportunity there for the minister to level the scales of justice a little bit and deal with the issues.
[ Page 16684 ]
I would encourage the minister to look at, as he said, whatever other sort of administrative relief may be available, if there is any. Certainly the legislation that we've passed over the years, in the time I've been here, is never perfect. Sometimes it's really bad; it's not even close to perfect. It's really bad, and we have to come back and fix it. Sometimes we know it's bad and it passes anyway; other times we're not aware that it's bad.
This is a case where there is a significant unintended consequence resulting from legislation that was passed by this House. Everyone who looks at it can see that there's a fairness issue and an intent issue. I certainly think there has to be some way to try and make the law relevant to the cases. I'll await the minister's look at this, and I'll see what he can come up with. I hope he'll keep me apprised of the status of that and what options may or may not be available. I really hope that there's something that we can do.
I don't even know if this company did any business during those five days. They may have completed whatever it was they had done well before that deadline. All of their activities took place within the period when they weren't associated. It's an extremely unfortunate technicality. I don't think it's fair for us to just leave it hanging like that and say that we'll get around to it in the future.
It's a significant amount of money, I understand. For a company and for individuals that have done everything possible to comply with the act and that did exactly what it was that the government intended them to do -- create jobs and economic activity -- to then be tripped up because of a five-day filing error is unfortunate. That is certainly well beyond the intent of what we in this Legislature intended.
I'm not holding the staff responsible; their job is to apply the act. But the minister's job is to lead, and maybe there's an opportunity for him to lead here and provide some of the reflection of intent that he knows comes from the people who pass the law, the members of the Legislature. I hope he will do that.
That's the last I have to say on that matter. I do have, in the short time remaining to us, a couple of other questions for the minister. I don't believe he needs specific staff for them. I'd like to thank the officials who were here to deal with this issue for their time, not just today but over the past year.
I have a couple of questions for the minister. One of them deals with a quick question as far as contingent liabilities that the government sees out there. I don't know if he deals with the Attorney General's office at all, but over time there are a number of court cases outstanding where the government plays a role. I don't know what the process is, but is there some communication between the Minister of Finance and the Attorney General's office and perhaps other ministries to determine what potential contingent liabilities there are out there that could pop up? Or does the government just sort of deal with them as they arise?
[1740]
Hon. P. Ramsey: Before I deal with this question, I wanted to assure the member and the member for Okanagan East that I have asked staff to take another look to see if there are any further avenues that we could pursue in this particular case. While I obviously don't want to discuss particular cases in the chamber, I will keep the member for Okanagan East and the opposition critic informed of what we find.
On this issue, my understanding is that contingent liabilities are disclosed in accordance with generally accepted accounting principles consistent with what the private sector does. Obviously what you have then are individual ministries consulting with their lawyers on a particular case. It may be the Attorney General; it may not. They're required to report to the office of the comptroller general when there is a contingent liability. It's my understanding that that is then disclosed in the Public Accounts.
G. Farrell-Collins: I was curious about that. I know that the Carrier Lumber case is one example; there are other lawsuits in regard to the Ministry of Forests that are still outstanding. I was wondering how government accounts for that and where it shows up. The minister, I think, has explained that, and I'll go hunt for them and try and find them.
I have a few questions to the minister that I want to ask which deal with an issue that has given me some concern over the last year or so. That is the consolidation of the securities exchanges across Canada and, in particular, the consolidation of the Alberta exchange and the Vancouver exchange, which in itself I think is great. I think the shift to some specialization in the exchanges is something that's probably good for the industry, good for the economy and good for the country as a whole.
My big concern, though, is that Vancouver is the third-largest city in the country. It has a reputation -- sometimes not great, but often not bad -- for raising venture capital. I know there's an interesting history there, which we don't need to get into, but I'm glad to do that if the minister wants to. Certainly Vancouver has been able to raise significant amounts of venture capital for mining ventures and other startup companies. Everyone knows those are high-risk ventures. Startups are always high risk; venture capital is an adventure, in some cases. There was a reputation and a history there that showed that Vancouver played a significant role, nationally and internationally, for raising venture capital.
Since the merger of the Alberta and Vancouver exchanges, it seems that Vancouver's role is getting less and less. In fact, the head office, we now know, is being moved from Vancouver to Calgary -- something I thought, and we were all assured, was not going to happen. I would have hoped that there would have been, if anything, a transfer of activity from Calgary to Vancouver. There's a natural reason for that, I suppose, given the size of Vancouver and the economy, etc. I'm wondering what the minister's views are on that and if he has any explanation for why he thinks that the choice for headquarters was Calgary, Alberta, instead of Vancouver, British Columbia.
[1745]
Hon. P. Ramsey: I share his view that the principles of this restructuring of exchanges across Canada was a positive move -- to try to really tag specific purposes and expertise in specific exchanges. Surely the role that CDNX plays in being a market that deals with specializing and listing of emerging issues and attracting venture capital is a vital one, really, to stock exchanges right across the country.
I have had the pleasure recently -- I believe it was the week before last -- of meeting with the president of CDNX and, as it may come as no surprise to the member, raised with him precisely the issue that he has now raised with me. I said: "Look, we have a board of directors there which includes
[ Page 16685 ]
eight from B.C., eight from Alberta, I think four from Ontario and one from Quebec. We expect that this is going to be a significant part of the financial community in our province." He assured me that they had no intent of moving the operation's centre from Vancouver to Calgary and that the great majority of CDNX employees continue to work in Vancouver. I said: "That's great. I'll watch." I want to make sure that Vancouver, Canada's third-largest city, as the member said, has a vibrant role in this aspect of markets.
I share the member's concern. The merger seems to have gone well. It is a very active market. I'll try to phrase this as delicately as the critic did. One hopes that some of the historical activities that have attached themselves to venture capital markets in Vancouver do not attach themselves to the future of CDNX as it moves forward. I think the signs are positive. I think this will play a valuable role in the financial community of British Columbia.
G. Farrell-Collins: I guess what I was looking for from the minister is some sort of an explanation from his point of view as to why they chose Calgary over Vancouver.
Hon. P. Ramsey: Had I known that was the question, I might have got staff or Doug Hyndman or somebody here to deal with that, because he was obviously intimately involved in the negotiations that lead to the establishment and role definition from the Montreal exchange, Toronto exchange and CDNX.
I would venture only this: part of it was a need to respect both exchanges. It was: where is the operations centre going to be? Where's nominal head office going to be? How do you broker that deal? Everybody had to be seen to be having a role in the sun. But that's only a guess. I would really have to have a detailed conversation with Mr. Hyndman and others who were intimately involved in the unfolding of this new exchange.
G. Farrell-Collins: My concern rises from this. I think it's going to be very difficult to have a head office in Calgary and an operations centre in Vancouver. I worry about that from day one. It's hard to have the head office that far away and still keep a tight rein on what's happening at the operations centre. That's just human nature.
There will be a natural inclination evolve to have them centred in one location or another. The momentum at this point is to have that location end up in Calgary. That's where the shift has taken place so far. I'm very concerned about that. I think it will be a major blow to British Columbia's role and Vancouver's role as a location for head offices, as a location that's able to raise venture capital. I think it will have a long-term, very negative impact on British Columbia's ability to diversify its economy, particularly into the new economic sector -- into high technology, biotechnology, research and development, etc. Those companies thrive off venture capital and in fact can't exist without it.
[1750]
I worry that if that exchange leaves Vancouver
British Columbia is at the edge of something that could be very prosperous for us or could just stagnate, wither and die. That is the new development in the new economy. We have some natural synergies here; we are a half-hour or 45-minute flight to Seattle, the home of Microsoft, which is one of the largest companies. It may become a number of large companies, but it's still there. We are several hours flight down to San Francisco -- an hour and a half or two hours to San Francisco -- where Silicon Valley is.
There are some real natural synergies there. We have a highly-trained, highly-skilled workforce here. We have some good research and development ongoing, as the minister is aware. We have a real nucleus of an opportunity to create a real industry here. I don't think we're there yet. We're sort of on the edge of whether it's going to go or whether it's going to wither. One of the key components to that is access to capital, and access to capital here.
It would be a major drawback, a major blow, for British Columbia and Vancouver if the exchange were to leave Vancouver, whether it's a year from now or three years from now or five years from now. It's an integral component of trying to build a new economy here. I hope that the government -- the Minister of Finance, as it's his area, but certainly the Premier and others as well -- takes it very seriously and puts an awful lot of time and energy and effort into ensuring that people involved are told repeatedly so that the communication is clear. We want that exchange to stay here, we expect it to stay here, and we're going to do the things, eventually, to make it worthwhile to stay here. There's going to be some significant opportunity. Because if we lose it, we're going to regret it for a long, long time, and we're not going to get it back.
Perhaps the minister can give me some assurances that that will occupy some corner, if not the centre, of his desk over the foreseeable future -- that he'll undertake to make sure that people right across that sector understand that British Columbia is serious about keeping the exchange here.
Without getting too political, I think the reason that the evolution is tilted towards Calgary is because of the negative investment and business climate that's been created by the rhetoric of the government over the last number of years. Particularly in the last five or six years there has really seemed to be a war on investors and a war on capital and a war on business. The government was picking sides, and they weren't on the side of small businesses.
I certainly hope that the minister will give us some assurance about that. I hope he will take it seriously, and I hope he'll play a role in making sure that the exchange stays here forever, quite frankly.
The Chair: Noting the time, minister.
Hon. P. Ramsey: I'll be brief in reply. Up until the last couple of sentences there, I agreed with everything that the member was saying about the importance of sending the positive signals to the exchange and the importance that we attach to it in British Columbia. I will undertake to keep this file at the centre of my desk.
The only thing I would say to the member is that my understanding, after discussions with both CDNX and members of the Montreal exchange, is that the real issue here is not physical location of the head office anymore. We're moving into a world of international exchanges, seven-24 in a virtual world. What we need to find ways of doing is to make sure that CDNX aligns itself along the grain of that so that we are
[ Page 16686 ]
well positioned to continue to attract capital, as the member says, for expanding operations here in British Columbia. So I'll only say that in closing. I thank the member for his participation.
[1755]
G. Farrell-Collins: I won't take much longer, but let me just say that despite the assurances the minister has that the technology is changing, and it doesn't really matter where the exchange is, it does matter. NASDAQ doesn't exist in any one place, but I can tell you that it exists in New York. It's on the Internet -- it's out there -- but I can tell you that the centre is New York. There's a reason why Montreal was so happy to have the first foreign branch of the NASDAQ located in Montreal -- because the people will be there who make the decisions. It's important where the exchange is. Don't let anybody tell the minister otherwise.
With that, I'm prepared to move on. I understand that we have the Speaker coming in shortly as well.
Vote 30 approved.
Vote 31: registries, $8,256,000 -- approved.
Vote 32: Crown corporations secretariat, $1,000 -- approved.
Vote 33: product sales and services, $1,000 -- approved.
Vote 48: management of public funds and debt, $1,008,996,000 -- approved.
Vote 49: B.C. family bonus, $152,000,000 -- approved.
Vote 50: contingencies (all ministries) and new programs, $125,000,000 -- approved.
Vote 56: Public Sector Employers Council; $3,119,000 -- approved.
Hon. P. Ramsey: I move that the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The committee rose at 5:59 p.m.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported resolutions, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
The Speaker: Just before adjournment I have a short statement in regard to the motion that was made under standing order 35 today.
Hon. members, today the hon. Leader of the Opposition sought to move adjournment of the House pursuant to standing order 35 to discuss a definite matter of urgent public importance -- namely, "the northern and rural health care crisis in Prince George."
At the outset I wish to comment on the process used under standing order 35. The member who raises the matter provides notice to the Speaker, as happened in this case, states the matter and hands a written statement to the Speaker for review. The motion is not moved or debated until such time as the Speaker determines that it qualifies under standing order 35 by meeting the test for urgency of debate. The Speaker may seek input from other members on that issue, but debate at this stage is inappropriate.
[1800]
In the case at hand, I've reviewed earlier Speakers' decisions on standing order 35, including in particular the decision in the Journals of April 28, 1998, at page 43, relating to the same topic and presented by the same member. The member stated that the matter is ongoing. I note that the Health estimates were debated as lately as June 5, 2000 -- an appropriate opportunity for debate. For this reason and the reasons outlined in the earlier decision I've cited, it's my opinion that the matter does not qualify under standing order 35.
The Speaker: In addition, I have the honour to present the annual report of the police complaint commissioner of British Columbia, 1999.
Hon. D. Lovick moved adjournment of the House.
Motion approved.
The House adjourned at 6:01 p.m.
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
The House in Committee of Supply A; D. Streifel in the chair.
The committee met at 2:56 p.m.
The Chair: I call the committee to order. Before I recognize the minister, I'm going to remind all the folks in the committee room that cell phones and communication devices are not permitted to be active in here. If they're active, just check them at the door. It's like an old bar, folks -- from the old west, that is.
ESTIMATES: MINISTRY OF EMPLOYMENT
AND INVESTMENT
(continued)
On vote 25: ministry operations, $37,154,000 (continued).
G. Abbott: I want to ask a few questions about Skeena Cellulose Inc. on behalf of the critic for Employment and
[ Page 16687 ]
Investment. I understand that at the briefing for this ministry the critic was promised a financial statement for the current year. Is that correct, and is that available to us now?
Hon. G. Wilson: That is correct. Unfortunately, it is not available as of yet. As soon as it is, we'll make sure you have a copy.
G. Abbott: Could the minister advise what there is available? I've seen, I think, a wire story, which I presume is a media release from Skeena Cellulose, indicating that the net earnings for the period ending March 31, 2000, were $15.8 million. Is there anything additional to that that can be provided to the opposition critic at this point in time?
Hon. G. Wilson: That quarterly report is available now, as the member opposite might know. We expect that within roughly one month the financial reports will be available, on a consolidated basis.
G. Abbott: We'll return to a look at the financial situation with Skeena Cellulose shortly, but I want to begin our discussion today -- as I think I've begun the discussion of issues around Skeena Cellulose over the last couple of years -- by inquiring of the minister whether it remains the goal of this government to sell its shares in Skeena Cellulose as soon as possible.
Hon. G. Wilson: The answer is yes. We continue to retain Goepel McDermid, and they are in some discussions at this time.
G. Abbott: Can the minister advise whether discussions between Goepel McDermid and Enron continue or whether that has ceased?
Hon. G. Wilson: I'm advised that there are still some discussions underway.
[1500]
G. Abbott: Generally, as I understand it, the measure of whether a prospective buyer is seriously interested in the acquisition of Skeena Cellulose is whether a confidentiality agreement is embraced by both parties. Does that still remain a fair assessment of seriousness?
Hon. G. Wilson: Previously that was the case. However, that's not a requirement that we have put in place at this time.
G. Abbott: Is the confidentiality agreement with Enron Corp. still in place?
Hon. G. Wilson: No, it's expired.
G. Abbott: Could the minister, then -- given that the confidentiality provision has expired -- provide us with an update with respect to the progress of talks between Enron and SCI around the disposition of these assets?
Hon. G. Wilson: I think the member opposite obviously will understand that there is a relative sensitivity around discussions of one particular company, given that there are a number of companies that we're in discussion with. There really is not a great deal of information that we would be prepared to share publicly at this point, because it may compromise other discussions with other companies.
G. Abbott: I can appreciate the sensitivity around the specifics of any discussions with potential buyers. I won't quarrel with the minister on that point at all. I do, though, want to get a general sense of how these discussions are proceeding. Again, I hope the minister can forgive me if we push too hard. What I want to have is a sense of how many discussions are ongoing and in what direction they are going. Are there any confidentiality agreements in place at this time with potential buyers?
Hon. G. Wilson: There are serious discussions with two other groups. There are others who are making inquiries of a more general nature. It is important to note that we allowed the confidentiality agreements to expire because they also required exclusivity. Because we don't want to be tied on an exclusivity basis, we've allowed that to expire so we can seriously explore other options.
G. Abbott: So it would appear that there are serious discussions underway with two other potential buyers in addition to Enron. Is the minister able to advise what those two organizations are?
Hon. G. Wilson: Enron is one, as the member knows. I personally would have no problem, but I think the company would have a problem. They're, I think, at a point where they would prefer that their business not be disclosed publicly at this time, for reasons of their own. So I'm going to respect that.
G. Abbott: Am I correct in understanding that there are two other groups interested in acquiring SCI beyond Enron? Or is it just the one in addition to Enron?
Hon. G. Wilson: I want to be as specific as I can. With respect to those who, we would say, have gone through due diligence, there's Enron and one other. But there are others who are expressing interest and on whom we're now doing some due diligence to see whether or not we would entertain them as a serious potential.
G. Abbott: Can the minister advise whether the one other prospective serious buyer who has done due diligence is B.C.-based, Canadian-based or an international?
Hon. G. Wilson: It's an international company.
[1505]
G. Abbott: This is merely a supposition on my part. I'd be quite interested in hearing what the minister, after consulting his staff, would say in respect of this supposition -- that is, that the task of selling SCI has probably become more difficult as a product of the rising pulp market and, I presume, improving bottom lines on the part of SCI. I'd be interested in knowing whether in fact that's the case and generally how those talks are proceeding.
Hon. G. Wilson: I'm tempted to say that the disposal of Crown assets and the difficulty of disposal of Crown assets is
[ Page 16688 ]
a relative thing. I think that Skeena Cellulose may actually be an easier sell than some other assets we might be trying to dispose of at this point.
Having said that, let me say that given that pulp prices are rising, obviously there's a greater interest. Clearly it looks like it's a better deal. But the value of the asset also has gone up, therefore it's kind of a give-and-take on that side.
Really, there are two issues that are relevant to those who are looking at it: price and availability of fibre. Those are the two critical components, presumably, that will make a determination in the minds of the companies as to whether or not they're seriously interested. Obviously the pulp prices, where they are now, have brought more interest, but there is a sensitivity around supply of fibre.
G. Abbott: It's difficult to quantify this or probably describe it with precision, but I do need to ask the question: are we close to sale? Or are we some considerable distance from that at this point?
Hon. G. Wilson: It would be wrong to characterize this as saying that there's something imminent. But by saying that, I don't want to mislead the member into thinking that there isn't serious interest and that there aren't some excellent prospects for sale. We're confident that those prospects will materialize into a sale. But there's nothing imminent; we're not about to sign off.
G. Abbott: The international corporation, other than Enron, that is seriously pursuing the possibility of acquisition -- do they currently have any holdings in the province of British Columbia?
Hon. G. Wilson: The answer is no.
G. Abbott: Is the focus of that international firm on the pulp side, on the solid wood side or on both?
Hon. G. Wilson: Their business is pulp, but they also have a serious interest in the solid wood side.
G. Abbott: One of the issues that I've discussed with previous ministers responsible for this file has been the issue of whether selling the assets of SCI -- and here, obviously, I'm talking about the solid wood division and the pulp division -- always involves selling those as a block, or whether the government would contemplate, for example, a sale of the solid wood division independently. To date, the ministers have indicated that it was a strong preference or even a precondition to see the sale of those assets as a whole. Is that still the case?
[1510]
Hon. G. Wilson: I think the member will be aware -- and maybe more aware than I, given his critic portfolio on the Forests side -- of the difficulty, when you have a company that is as vertically integrated as SCI is, of trying to split it off and to sell one and hold the other. That's not to say the government hasn't looked at that, but it would appear that it's becoming increasingly difficult to separate those two. The likelihood is that we would move the two in a unit.
G. Abbott: My understanding is that both of the groups that are seriously considering the purchase of SCI have an interest in both. Is that correct?
Hon. G. Wilson: I don't think it's a secret that Enron is looking at the pulp mill. The other, I think, would look at the unit -- the two together. But as I say, it's becoming
G. Abbott: I take the minister's point about the vertical integration of SCI because of, I guess, its unique geography, among other things. But of course there are examples. Pacifica Papers, as the minister well knows, is one of the best examples of a paper division being spun off a larger whole. The question is really, though: given the kind of political history here, where the government undertook the action of purchasing SCI to apparently protect jobs up there, is it a precondition of the government, as they approach the possibility of sales, to say that any buyer must, as a precondition to purchasing this, commit to the operation of all parts of the whole?
Hon. G. Wilson: The short answer to that question is no, because I think -- and we're speaking hypothetically here -- it's conceivable that a new owner may want to, on the sawmill side, rationalize and consolidate part of the sum of the whole of that particular side of the business. So the answer is no, we're not saying: "You have to run it as is."
G. Abbott: So, not to put too fine a point on it here, when the government sells these assets termed Skeena Cellulose Inc. to a private sector venture, the government will then be treating it just the same as any other private corporation in the province of British Columbia -- no conditions, preconditions or anything else around what they might or should do.
Hon. G. Wilson: Within the context of it running as a pulp mill within the forest sector, we're not going to impose conditions that wouldn't otherwise be felt by companies in the industrial sector. We're not, on the other hand, going to rush out and sell it to a group who want to, say, turn it into a power island or make scrap metal for the Chinese market or those other things.
[1515]
G. Abbott: Fair enough. The government is, effectively, going to do due diligence around what the interests and aspirations of the firm are. Once they've resolved that the potential buyer is going to be operating in a manner that is going to fit well with the interests of the northwest, the sale will be executed, presumably -- if buyer and seller can agree on a value. At that point it will become a private sector interest, the same as any other in the province of British Columbia.
Hon. G. Wilson: That's correct.
G. Abbott: Could the minister, hopefully with the assistance of his staff, give us a little bit more information than what's contained in the Skeena Cellulose press release of March 31? The net earnings for the period ending March 31, 2000, were $15.8 million. Could the minister advise what portion of that was net earnings in the solid wood division and what portion was in the pulp side?
[ Page 16689 ]
Hon. G. Wilson: The answer is $24.1 million for pulp operations and $4.6 million for solid wood operations, for a total of $28.8 million, less depreciation, which is $15.8 million.
G. Abbott: When SCI records a profit, do the funds go against the operating line? How are those funds managed?
Hon. G. Wilson: Yes, they go to pay down debt, and the first column is indeed against the operating line.
G. Abbott: There was an issue -- it would probably be about a year ago now -- around the shares that are held by the pulp workers' union up there and some difficulties surrounding whether they were going to play ball in terms of the sale of SCI. Have those issues been resolved at this point? Or is there still an outstanding issue there?
Hon. G. Wilson: My advice is that the issue was resolved about three weeks ago, and we're currently putting the paper together.
G. Abbott: I'm delighted if the issue has been resolved. Obviously it must have posed a very considerable difficulty as an impediment to securing even interest around the sale of SCI. Can the minister provide some detail for me on how the issue was resolved three weeks ago?
[1520]
Hon. G. Wilson: As I am sure the member would appreciate, there was a very long and protracted and very difficult negotiation around share apportionment. The resolution was 1/7 each year. We are now preparing a paper that outlines and formalizes that agreement.
G. Abbott: I'm sorry -- I didn't quite catch the response. The agreement is 1/7, did the minister say? Could the minister explain in more precise terms, perhaps, or a greater level of detail how that agreement is structured?
Hon. G. Wilson: I'm going to try and get this right. If I don't, I'm sure my staff will correct me. It gets a little bit complicated. As the member may be aware, there are three groups. When the government moved and there was an apportionment of shares, there were three groups involved. There was the PPWC Local 4; the BCGEU, which is the office and administrative workers; and management. The dispute was with respect to the apportionment of shares -- how much each year would be paid out. The final agreement is 1/7 each year.
G. Abbott: The way I'm understanding it, and again, I expect the minister to correct me if I'm not characterizing it correctly, is that when the original purchase -- or the rescue package, I should say -- for Skeena Cellulose was developed
Hon. G. Wilson: I think I've got this right: there was a 20 percent apportionment. That was based on a 10 percent wage cut, which is maybe where the 10 percent comes in. So every year, the government essentially apportions out 1/7 of the 20 percent.
[1525]
G. Abbott: I thank the minister for that clarification. As part of the negotiation that apparently was concluded three weeks ago, is there agreement that if company X successfully reaches agreement with the province on the acquisition of the province's shares of SCI, company X will also have an opportunity to purchase the 20 percent that is in the hands of the PPWC and BCGEU groups?
Hon. G. Wilson: Any prospective buyer is going to have to deal with the 58 percent government shares, the 22 percent TD shares and the 20 percent union-held shares. Generally speaking, the 58 percent and the 22 percent are being negotiated in a block, as a group. But they would have to come to an accommodation with the unions with respect to their 20 percent.
G. Abbott: So when the government or the Ministry of Employment and Investment
Hon. G. Wilson: I don't think there's any hard-and-fast rule as to how the potential buyer might want to do this, but what is the rule so far is that the companies who have expressed interest seek to deal with the 80 percent first. If they were successful, which none of them have yet been, then they would have to deal with the union. But I don't think there's any rule that says they can't try to negotiate concurrently.
G. Abbott: I would deduce, perhaps incorrectly, from the nature of the agreement to effectively buy back that 20 percent share over seven years at 1/7 per year, that the existence of those 20 percent shares in the hands of PPWC and BCGEU has probably been something of an impediment to sale of the larger block. Is that the case? Is that the motivation for the agreement to acquire that 20 percent over seven years?
Hon. G. Wilson: We're a little confused on this side as to what you were asking. If the member is suggesting that somehow we're acquiring that 20 percent, we're not. What we're doing is we're issuing that out, 1/7 per year. So we're not acquiring that 20 percent. If, on the other hand, what the member was saying is the fact that that 20 percent is basically held union, or management-union, is that an impediment to a potential sale? I mean, that's clearly an issue that a potential buyer is looking at.
[1530]
G. Abbott: There are a couple of other areas I wanted to ask about here as well. The capital expenditure program at SCI, the cap ex program, as I recall, was reduced last year
[ Page 16690 ]
from $170 million to $110 million. We had a brief discussion of that in the last go-round of estimates in 1999. What's the current situation with respect to the capital expenditure program? Is it still set at the $110 million level? And what proportion of the $110 million has been expended in the past 12 months, since the last round of estimates?
Hon. G. Wilson: It is still at $110 million. So far this year we have placed about $53 million, and by the end of the year we expect to have placed about 80 percent of that amount.
G. Abbott: Could the minister advise what the principal components of that expenditure have been?
Hon. G. Wilson: The components are -- and I'm happy to get this to you in a different form if
G. Abbott: Just the major ones and then
Hon. G. Wilson: Okay. Chlorine dioxide is $16 million; the boiler upgrades, $62 million; A and B bleach plant modification, $13 million; digesters, $5 million; sky lab and the consolidated information systems, $5 million. Then there are some smaller projects such as structural upgrade of the B mill and building upgrades and some chip handling materials, $9 million.
G. Abbott: Could the minister advise where Skeena Cellulose sits currently with respect to AOX releases? The government has mandated -- as I'm sure the minister is aware -- that companies shall achieve zero AOX by, I believe, December 31, 2002. Most pulp producers in British Columbia now are at 0.5. I understand Skeena to be in the neighbourhood of 0.9. Perhaps the cap ex program has changed that. Can the minister advise what the case is with respect to AOX?
Hon. G. Wilson: My advice is that right now we'd be at about 0.7, although we anticipate to be at about 0.5 by midsummer. There are some months, however, where we've been as low as 0.3. So there is hope.
G. Abbott: Does the minister anticipate that the current capital expenditure program of $110 million is going to, by December 31, 2002, achieve that zero AOX objective?
Hon. G. Wilson: The answer is no. I think that's a bigger and broader issue than affects Skeena Cellulose.
[1535]
G. Abbott: It certainly is; the minister is quite correct in saying that. In fact, I hope he can take back to his cabinet colleagues, perhaps, a little common sense around this issue. As the minister probably knows, virtually every pulp producer that uses AOX is likely going to go out of business rather than go to zero AOX. It's more a concept than something that can in reality be done.
I'm not an expert on pulp, but my understanding is that pulp produced with zero AOX has a very limited attractiveness in the marketplace. Frankly, virtually every jurisdiction in the world has gone to 0.5 as the standard. Likely that's where British Columbia should be too, if they want to be in the marketplace and have however many thousands of people employed in the pulp industry in British Columbia. I'd be interested in the minister's comments on that.
Hon. G. Wilson: I thought for one moment that the member opposite might be reading back my Hansard from past years. There is a huge challenge to get below 0.5. I think there is still considerable debate as to the viability of the sort of economic enterprise to try and get there. It's an issue that I've spoken on publicly before, so it will come as no surprise that from my point of view, chasing zero is probably something that we might want to relook at. But that's my point of view. As to taking common sense, I think it was, to my colleagues
G. Abbott: I'm pleased to hear that the minister tries to inoculate his colleagues with common sense on a daily basis. That is a most commendable goal. I particularly wish him well in meeting the challenge when it comes to the current Environment minister. As a reading of Hansard would reflect, she is somewhat brassier about the likelihood of Skeena Cellulose achieving zero AOX by December 31, 2002. Frankly, it just ain't going to happen.
S. Hawkins: Well, that's because they won't be sitting over there by then.
G. Abbott: Perhaps. That might make it easier. In any event, that's
I'm pleased to hear that the minister is acknowledging that there does need to be more debate around the AOX goal. It is not a debate that has, to this point, been injected with a whole lot of common sense, and I hope it is. I do hope that cabinet has an opportunity to revisit that and in fact to try to do it on the basis of reality.
In terms of the $110 million capital expenditure program, is it the view of the government that when that's completed, we will have what might be termed a world-class complete facility in Skeena Cellulose that will not require additional capital expenditure, either by the government, should it not be sold, or by the firm that would acquire it, should it be sold to the private sector?
Hon. G. Wilson: The expectation is that by the time we have expended the $110 million, we will certainly be in a world-class position in the first quartile -- certainly either in the bottom of the first quartile or very high in the second quartile. But we certainly will be world-class at that point. If we look at the earnings with respect to Skeena Cellulose in comparison to other mills, I think our ranking would suggest that by the time we've completed that expenditure, we will be par with or better than most.
G. Abbott: One of the issues that I have raised in previous estimates on SCI is the potential for government as landlord and regulator to be caught in the dilemma of also trying to be a participant, effectively, in the marketplace as well. It's in large measure a perceived difficulty or a perceived conflict, but I am sure that at times it becomes difficult to be all of those things. I know the critic for Employment and Investment has one example of where these different roles may produce difficulty in being all of those things, and I'll invite her to carry this.
[1540]
[ Page 16691 ]
S. Hawkins: You'll have to excuse my voice. I hope you can hear me; it cracks once in a while. I thank the member for Shuswap and the other members for helping me out today, when I'm trying to get through these debates.
As the member points out correctly, last year, with the then Minister of Employment and Investment, we had this debate -- whether the province puts itself into a position of conflict or a perception of conflict when it is not only the landlord, the regulator, but also a shareholder in this enterprise, SCI.
The minister has received a letter, and both the member for Shuswap, who's the Forests critic, and I have received a letter from the firm of Clark Wilson and the lawyer Lyall D. Knott, regarding Babine River Provincial Park and Silver Hilton Steelhead fishing lodge. This letter was written. Apparently the lodge has been trying to engage the government and the ministry in looking at this issue and has written letters. They have received no response from the government. I just want to outline the problem. The letter is very well written, if I can just read parts of it. I hope I'm saying this right: Kispiox.
Mr. Knott writes, on behalf of his client: "I am writing to express the concern of the future of the unique park, Babine River Provincial Park, which was created last year
They have some very practical concerns laid out very neatly in this letter, and let me quote a number one concern:"Skeena Cellulose has applied to Kispiox forest district for a forest development plan amendment that would allow it to build a road and carry out logging on two cutblocks adjacent to the park. The fishing lodge has reviewed the plan, and they feel that it will damage the area's natural viewscape and the wilderness experience Silver Hilton and other lodges have been promoting for years."
Number three is the concern that we want to deal with today, and that is:"1. Less than a year after it was created, the Babine River Provincial Park is being threatened by logging and the roads that make logging possible. If the Skeena application is approved, we believe this is really just the thin edge of the wedge and that additional cutting and road building will creep even closer with time towards the Babine.
"2. The application as it currently stands will cause the Babine viewscape to be critically altered. Sadly, we have seen no evidence or research to the contrary. Consequently, to build a road and cut accordingly, only to find out later that a mistake was made, will be too late."
That was the point that the Forests critic, the member for Shuswap, was trying to make last year in estimates in engaging the minister of the time in the issue of what happens when you have a third party, like this, who is affected and makes an application to a body that makes a decision. But that body, being the government -- the regulators -- also owns the property that they're being asked to decide on."Silver Hilton is a small lodge and obviously disturbed by the less than arm's-length relationship between the applicant, Skeena, and the decision-making body, the province of British Columbia. Frankly, like the other lodges and river rafting operators in the park, we feel we are up against a two-headed Goliath, since Skeena is owned by the province and the provincial government sits on the company's board of directors."
Last year we didn't have a case. I think it was thrown out as hypothetical. The perception was: "We'll deal with it when we get it." Well, now we're dealing with it. Now we have an application to government from a lodge owner saying: "We have concerns. We feel that government is not at arm's length, and we feel that there is a conflict of interest here, in that we're making our application and the person who is making the decision also owns the mill."
[1545]
So I'm wondering if the minister can tell us: what comfort will he give these lodge owners or applicants such as this that there will be a fair, unbiased process that will deal with this application and the concerns that this lodge owner -- I believe his name is Norman Stowe -- has? And if the minister can outline that process so we all feel comfortable that the perception of conflict or the real conflict is addressed to the satisfaction of applicants such as Mr. Stowe and Silver Hilton fishing lodge
Hon. G. Wilson: The member raises a number of issues, some general in nature, more on the whole question of Crown ownership and where that fits when there is a matter of land use policy change or an application for policy change or use of land, and whether or not the Crown then, because they are an owner or maybe a partial owner, might find themselves in conflict.
Let me say, in the more general nature, that I disagree that the Crown finds itself in conflict, for several reasons. First of all, it seems to me that the CEO of the company makes application directly to the regulators. It doesn't go through the board, and the board doesn't contact the Ministry of Environment. There's no pressure brought to bear, because there is a process in place, and that process will apply whether the government owns Skeena Cellulose or whether we sell it off to somebody else who decides that the need to do this roadwork is equally there. So that process is going to proceed whether the government is there or not.
Now, the member makes the point that the regulator is the Ministry of Environment or that the regulator may be applying to the Ministry of Environment or may be applying to some other aspect or agency of government and that therefore, because the government as a whole -- or portions of the government of the whole -- is going to at some point make a decision, that somehow puts it into conflict.
Well, I can assure the member that there are times when the Ministry of Forests wants to construct a road or put in a culvert. Or the Ministry of Highways may want to go ahead and do some work on a river stream and may have to deal with another government ministry and find that the due process that has to be there frustrates their ability to get something done. I think it would be completely wrong to assume that because the government is, in general, a part owner of a mill, somehow they have an opportunity to bypass or override due process. That's not the way it works; it doesn't happen.
That brings me to the second part of the member's question, which is: what comfort? The comfort I would give to the lodge owner is that we have, I think, a very good open process with respect to public hearing -- requirement of people to make their case. In many instances the public, through that process, has prevailed. I would urge the lodge owner to become fully familiar with the process, avail himself or herself -- those who are in opposition to this -- of all of the rules and go in to exercise all of their rights under the process. They can have assurance from me that the government per se -- and
[ Page 16692 ]
that would assume cabinet, because that's the only area where you'll have corporate decision -- isn't going to wade into what is essentially a local land use issue and somehow override due process.
[1550]
S. Hawkins: I'll have to disagree with the minister, because I don't think he's given any comfort at all to the lodge owner. You not only have a perception of conflict here; I believe we have a very real conflict here.
This isn't just a case where you have the government as landlord, as appointed regulators that are going to make a decision for a third party. What you have here is a government who's a landlord, who's an owner of a mill, who needs to consider the viability of the mill to return profits so the government sees returns at the end of the day. That's what you have here. Didn't I just hear a few minutes ago that the government is 58 percent owner of this mill? Whether you want to believe that the government is going to act fairly or not, there is a very real conflict here, and there is a very real perception of a conflict.
I don't think it's good enough to say that the lodge owner should feel comfortable that there are open processes, that there is going to be a process that is fair and that he should avail himself of his options. He has availed himself of his options, and he's gotten legal advice. They have taken a very real look at this case.
And unfortunately for the government
Hon. G. Wilson: Let me try it this way. I don't know if I'll be any more successful at allaying some of the member's concerns. The argument as I understand it, as presented by the member opposite, is that somehow because the government is a 58 percent owner in Skeena Cellulose, it has a pecuniary interest in seeing this road go through. It will potentially -- and it's only potentially -- help the company make more money, and therefore there's a greater chance of return to the government.
The government, first of all, goes to great pains to make sure that whatever applications Skeena Cellulose may be putting forward are not treated any differently than any other applicant. This brings me to the point that if we take this down to the municipal level, one could mount exactly the same argument that the member has just mounted to me. A municipality that is looking to rezone land to commercial or industrial land from which they are going to gain a greater tax base, when hit with opposition from members of the public, who may say: "I don't want to have that land zoned industry
That's a specious argument, to be quite blunt. Government is the regulator. The fact that government may have financial involvement in a company doesn't automatically
Given the fact that there is due process underway, that there is absolutely no evidentiary information presented here to suggest that the government has acted in any way that's inappropriate, the owners of the lodge -- and if they have legal counsel, that's probably advisable, so they can get proper legal advice -- should avail themselves of the rules and follow the rules.
That's what government intends to do as well. It will follow the rules. Whatever the process eventually decides will be the decision, as it would be in any other case.
[1555]
S. Hawkins: I guess the minister and I are going to agree to disagree, because I don't think it's a specious argument at all. In this case we have a government that is a majority shareholder in a mill and is appointed regulator, and it has a process that's going to decide whether this road's going to go through the park. We'll just find out, at the end of the day, if it satisfies the needs of the lodge owner, insofar as making him comfortable that the due process that the government has in place is fair, neutral and unbiased. There is a perception of conflict, as I said. I believe there could be an argument made for a very real conflict, in that there is certainly, as the minister pointed out, a pecuniary interest in the government ensuring that the mill does well, to get the profit and to get the returns. There's a huge investment that the taxpayers of the province have made in this mill.
If you want to compare it to local government, that's fine. Local government zones and tries to get the best buck out of the money it invests in the land it zones, for the interests of the general public. Who's to say that that's not what the province is trying to do here as well? The province might be doing the same thing. They're 58 percent owner in this mill.
I'm just raising the flag, raising the issue. Given the record of this government, it's no wonder that lodge owners such as Mr. Norman Stowe would be concerned about how government makes decisions. So I raise it for you. I know Mr. Stowe and his advisers will be looking at the Hansard. I know they're looking for a response to their letter, written to you and other cabinet members as well.
I'll turn it back to the member for Shuswap. I know he has more questions on Skeena. But I did want to raise this, because last year we raised it, and we didn't have a case. But there is a perception of conflict here that needs to be addressed -- or at least some comfort given to lodge owners like Mr. Stowe that the process will be fair and unbiased.
Hon. G. Wilson: I think -- given that there may be lawyers reading the Hansard, if the member opposite is correct -- that we should correct the record. Norman Stowe is not the
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owner of the lodge. He is, I understand, a communications consultant or somebody who works with a PACE group. So we need to correct her on that.
We may agree to disagree on this. Let me just flip the coin. One can't, because the government is the owner, expect to raise that flag in an effort to subvert the process, to get your own way. What I would argue is that there's a danger if we are to go down this road in a public policy point of view -- and never mind the incidentals of this particular case, because those regulators are going to look at the specifics of this case.
But there's a real danger if every time the government has an interest, those people who deem that their rights may be infringed because of an application for land use change or road application can raise the flag of government conflict -- that the government can't follow due process. I think you have to be careful that we don't somehow suggest, because the government is an owner, that due process can't be followed because it is also ultimately the regulator. You'd be surprised how many times one ministry trumps another and how frustrating that is when that occurs.
S. Hawkins: For the record, I do apologize. I read the record wrong, and the minister is absolutely correct about Mr. Stowe. He is the communications person for the lodge.
I'll turn it over to the member for Shuswap, because he does have more questions.
G. Abbott: Of course, the best way to resolve the issues around perception bias is for the government to get out of the business of owning and operating a pulp mill. Obviously the efforts of the ministry and Goepel McDermid are dedicated in that direction. Hopefully we bring an end to issues like this by actually having the private sector operate the business, which would appear to be the right thing to do in any event.
[1600]
Before we engaged in that discussion, we were discussing the AOX objective. The minister noted that SCI generally is at the 0.7 level in terms of AOX emission. The industry standard in British Columbia generally is around 0.5 right now; certainly other firms in eastern Canada and United States are generally around 0.5 as well. What portion of the capital expenditure program is devoted to reducing that AOX from the SCI operations below 0.7, presumably down to 0.5?
Hon. G. Wilson: For an exact dollar amount, I'm probably going to have to get back to you on it. I know a little bit about the pulp industry, so I could make a guess as to which of these projects will have an impact on AOX. But I think that probably the better thing to do would be to have somebody who's a lot more knowledgable than me actually work it out and give you a specific dollar figure. With respect to the $16 million, certainly the new generator system is directly associated with AOX production.
G. Abbott: Again, just so I'm clear on what the objective of SCI is with respect to AOX, the aim by December 31, 2002, is to bring the AOX level down to the 0.5 range, which is the industry standard in Canada and the U.S.
Hon. G. Wilson: We'll be at 0.5 this year.
G. Abbott: My understanding is that there is no specific plan to take it down to zero at any point.
Hon. G. Wilson: That's correct.
G. Abbott: I hope that frank admission doesn't get the minister in too much trouble with the Minister of Environment. But I'm sure it will make for a splendid discussion at some point in cabinet. I wish I could be a fly on the wall during it, but obviously I'm not going to be.
I want to briefly discuss the issue of TFL No. 1. As I understand it, the Nisga'a agreement had the impact of reducing TFL No. 1 by somewhere in the neighbourhood of 35 percent to 40 percent. Is that the understanding of the minister as well?
Hon. G. Wilson: The total AAC expressed in cubic metres is 2.464 million. The reduction with respect to Nisga'a is 129,600, which is 5.2 percent.
G. Abbott: That, I'm presuming, is not just TFL No. 1. That 5.2 percent would be reflective of all of the holdings of SCI in the northwest. Is that correct?
[1605]
Hon. G. Wilson: It is the Terrace forest licence. It is the Terrace TFL 1. And it is Arend in Buffalo Head, the Nass TSA.
G. Abbott: The 5.2 percent is of course just above the upset figure of 5 percent in terms of companies securing compensation for losses under the provisions of the Forest Act and probably of the treaty as well. Is that the minister's understanding? I believe that's clear, but is that the minister's understanding? In the interests of time here, can the minister advise what has taken place in recent months with respect to discussions around compensation for that?
Hon. G. Wilson: The member is correct, but our discussions on compensation are at a very preliminary level at this point.
G. Abbott: Are the preliminary negotiations around compensation being undertaken by corporate counsel for SCI, on behalf of SCI?
Hon. G. Wilson: Yes. The answer is that John Sparks is the corporate counsel.
G. Abbott: Is there a process now elaborated as to the scope and time lines around those negotiations?
Hon. G. Wilson: It's fair to say that we're obviously cognizant of the need to get matters resolved in light of the fact that there may be a potential sale. But there are no specific time lines in place now.
G. Abbott: I'd be interested in watching the evolution of that, given that the Nisga'a treaty is the first modern-day example, and SCI, as it turns out, is the resource enterprise that has been most affected by the provisions in the treaty. Again, I guess it goes back to the point that the critic was making earlier around the sometimes awkward nature of being both in government and being the owner of the asset. I would hope that a process for dealing with these issues is developed or will be developed. Presumably, if we move ahead with other treaties in the years ahead, we'll want to see
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some kind of formalized process developed whereby those who are impacted by the provisions of treaties engage in some relatively firm process around resolving it. I'd be interested in the minister's view on that.
Hon. G. Wilson: There is a process, and the process is actually spearheaded by the Ministry of Forests. The process is there; it's defined, and we will be using it.
G. Abbott: So the minister is saying that we're just early in the process -- that's all.
In terms of the operation of SCI, it's my understanding that with the buoyant pulp prices we and indeed all producers in British Columbia have enjoyed in recent months, both the A and B lines have been operating on a consistent basis at Prince Rupert. Is that correct?
Hon. G. Wilson: That is correct.
G. Abbott: Could the minister advise as to the three solid wood divisions? Have they been operating on a continuous basis, or have there been seasonal or market shutdowns there?
[1610]
Hon. G. Wilson: I am advised that the four mills are operating on a regularly scheduled basis, save and except for scheduled maintenance shutdowns or, in some cases, market shutdowns.
G. Abbott: Just a few final questions in terms of wrapping this up. As the minister knows, Mr. Ralph Torney was engaged by the government to do a report on the future of SCI. He came in with a number of recommendations, and we discussed those last year. Some of the Torney recommendations have been implemented; some have not. I just want to follow up on a couple of the recommendations that had not been implemented at the time of the last estimates, approximately one year ago.
Among those that hadn't been, at that point, followed up on was recommendation No. 3, which is to create an advisory committee to the board. Mr. Torney says: "I had recommended that the board of directors appoint an advisory committee comprised of representatives from the small to medium-sized forest sector business community and community leaders. This committee would report directly to the board of directors."
That had not been done at the time we debated estimates last year. Has the government moved with respect to that recommendation in the current year?
Hon. G. Wilson: The answer is no, with the following explanation. Over the last year the mill has been far more concerned with survival than it has been with general forestry practice concerns. Their energies have been in making sure that they are there and that they can be competitive. They are now proving that they are.
G. Abbott: I can appreciate that they were, for a period, preoccupied with survival; that's certainly true. Given that at least as long as pulp prices hold up, the company appears to have turned a bit of a corner here, is it the intention of the minister to proceed with recommendation No. 3, now that the company is presumably enjoying a bit of breathing time in terms of economic survival?
I'm guessing that in making this recommendation, Mr. Torney had in mind that this advisory committee would be a mechanism whereby the small to medium-sized forest community, plus community leaders generally, would have an opportunity to be giving advice to the board. Is the minister still committed to the principle embodied in recommendation 3? And is it his intention to see that recommendation implemented, now that there is a bit of breathing space in terms of economic survival?
Hon. G. Wilson: While Mr. Torney made some excellent recommendations, some of which we have implemented, this is one that we will not be implementing. The reason is because we are focused on sale, and we want to make sure that we keep our focus on that.
G. Abbott: I appreciate that explanation.
Recommendation No. 5 had not been put in place either, and that is: "
[1615]
Hon. G. Wilson: This is one recommendation that is under active consideration. The person has not yet been appointed, the reason being not only because of the need to keep the company focused on putting itself in a good sound fiscal position but also because there were fairly intensive discussions around a potential sale. That is an issue that the board is taking under advisement and may indeed act on.
G. Abbott: Is it correct, then, to assume that the board of directors remains comprised of two, that being Mr. Lofthouse and Mr. Callbeck?
Hon. G. Wilson: Mr. Lofthouse and Mr. Callbeck are on the board of 552, which is the company that holds it. Mr. MacIntosh from TD Bank and Mr. Lofthouse are on the board of CFI.
G. Abbott: I think the final question I have around SCI is the deferred stumpage, which SCI is still owing the province of British Columbia. As part of the rescue package in -- I guess it would have been -- 1997, there was about $20 million in stumpage owing by SCI, deferred by the Ministry of Forests. Could the minister advise whether, again, given the more positive financial results of SCI in recent months, if perhaps not recent quarters, that amount of deferred stumpage remains at $20 million?
Hon. G. Wilson: Just before I do, just to correct for Hansard, I think I inadvertently said CFI, not SCI, before. So if you could just correct that. We're not talking about ferries, thank goodness.
It was $21 million; it is now paid down to $17 million.
G. Abbott: Have the other deferred amounts, either to Ministry of Environment for waste permit fees or deferred
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taxes owing municipal governments
Hon. G. Wilson: I'm advised that there is progress being made in all of them, but they have not all been eliminated. There is still $14 million in property taxes owed, and there is still $3 million in waste permits owed and the $17 million on deferred stumpage, which I mentioned earlier.
G. Abbott: I'm presuming that the bulk of the $14 million in property taxes owing is probably owing to the municipality of Prince Rupert. I expect there are smaller amounts owing to perhaps the regional district government and other municipalities. Is there a drawdown schedule of sorts that exists between the municipalities and SCI around the discharging of that debt?
[1620]
Hon. G. Wilson: The bulk is to Prince Rupert. There is a drawdown. We don't have that with us right here, but I'm happy to make sure staff makes that available to the member.
G. Abbott: That's fair enough. It's an issue of detail that I wouldn't expect you to necessarily have there. Perhaps the minister can give me a general sense of whether it's expected that the debt owing would be drawn down perhaps over a year or two years. Or is it all dependent on the financial returns of the corporation?
Hon. G. Wilson: I'm advised that it would be three to four years' expectation for debt retirement.
G. Abbott: Those are all the questions that I had on SCI. If the minister has any concluding comments around the objectives of the corporation over the coming year, I certainly would welcome that. We've clearly discussed some of them. Probably the principal one will be to see the sale of SCI at a level that provides a return to the people British Columbia on their investment in SCI to date. But if the minister has other goals and objectives that he'd like to identify as we conclude our discussions here
Hon. G. Wilson: I appreciate the opportunity. I suppose the only thing, the only comment I would offer in closing, is that there has been a rather remarkable turnaround or recovery for Skeena Cellulose, in the sense that in the first quarter they're posting about a $15.8 million profit -- $8.5 million in April; that's good. If one looks at it in terms of its ranking now, in terms of net earnings summary for the quarter ending March 31, 2000, it ranks 11 out of 23 mills. So it has clearly worked its way up there.
That's good news from all of our perspectives, because it clearly makes it now a more attractive proposition for a potential purchaser. We are committed to selling, as I've mentioned earlier, and we are hoping that we'll be able to have a successful conclusion on a sale soon.
Obviously the investment in Skeena Cellulose is something that has been of great importance to the people of Prince Rupert and to the north generally. I am pleased for them that there has been a recovery, because it looks like there is now a fairly solid employment base there. I am pleased for the province that it looks like we are going to be able to get out from under our investment and that this matter is going to work out fairly well. I think that's in all of our interests.
G. Abbott: Just a final question here: based on the discussions to date with prospective buyers, does the minister anticipate that the full investment that the people of British Columbia have made in SCI to date will be recovered? Does that remain the goal of his ministry and Goepel McDermid as they pursue the possible sale of SCI?
Hon. G. Wilson: Well, obviously that's the goal. Whether we get there or not, time will tell. We think we are fairly close in discussions, so we're confident we'll reach the goal.
D. Jarvis: I just wanted to ask the minister a few questions surrounding the natural resource community fund. I believe that's in your purview. As the minister knows, for the last nine years I've been an advocate for the mining industry throughout this province. A lot of concerns come out with regards to where the moneys are coming from in order to run this province, especially with things like the natural resource community fund.
[1625]
As an interesting segue into it, I had a note the other day with regard to an article in one of New York's financial, economic and political-social commentary papers. So I was reading it, and it was the international forecaster for May 2000 in New York. Basically it stated that British Columbia mining had another grim year in '99, and there won't be a B.C. mining industry if taxes aren't lowered and regulations eased. Everything was down last year, but the most alarming trend was the continued decline in the hunt for new sources of ore. The key to development in the future of mines means staying in this industry.
The sellout of mining in British Columbia began in the early 1980s with the VSE, unfortunately now defunct. The superintendent of brokers did everything they were instructed to do, which destroyed the mining resource companies in British Columbia. This is an industry that supplies over 20 percent of the province's income, and this was destruction from within.
The province is now paying the price of this duplicity. Exploration and development spending in the mining industry in '99 was a measly $19 million, down from $22 million to $25 million in 1998. Only $1 million of that was actually spent in grass-roots prospecting. First it's $3 million the year before, and at one time it was up over $200 million. Junior companies included in total mineral exploration in '99 was $25 million. As I said, that figure back in the early nineties, before your government took control, was up in excess of $260 million.
This international forecaster report, which goes to nearly everyone in the world who invests money in British Columbia, stated that 14 mines in B.C. had closed last year, but only seven opened. This is not all new to you, but mining in other provinces is doing so much better due to easier taxation and regulation.
It went on to say that the socialists didn't connect the healthy mining sector with greater tax revenues to feed their free social programs, and that is because socialists are stupid.
S. Hawkins: That's a direct quote.
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D. Jarvis: Yeah, these are direct quotes. Of course I wouldn't say that if it wasn't a direct quote. Here's an industry that lost $133 million last year and $156 million the year before, and the operation from it declined by $60 million. This is a textbook case of how to destroy an industry with a bunch of rabid leftists -- that you have destructed B.C. mining, and it's dying in British Columbia.
The Chair: Hon. member, come to order for a moment, please, and help the Chair with the relevancy of this, if the hon. member could explain to the committee how this falls under the Employment and Investment ministry. Is it more appropriate under the Ministry of Mines? If the hon. member could help the committee with an explanation
D. Jarvis: I could, Mr. Chair. My purpose in reading this report out of New York is to lead into the aspect of the natural resource community fund, which is supported. My question is going to be about how they retain or obtain their money -- that it's through the natural resources in this province. One of them is in the mining industry.
I won't go on and read any more of these nice things in the letter. So I will turn around; I was using that as a segue into the questions that are necessary to find out information about the natural resource community fund. On that basis, I would ask the minister if he could explain to me just what this natural resource fund is about and how they raise their moneys.
[1630]
Hon. G. Wilson: I completely agree with the members opposite that letters like that do poison the investment climate in British Columbia. I hope that they wrote strong letters rebuking the author for putting out such nonsense.
With respect to the natural resource community fund, however, I would point out to the member that this fund has been in place since 1992. It essentially is about a quarter of 1 percent of the consolidated revenue fund, and it is reported annually. It is a fund of last resort and is one that has been used from time to time to try to put in place training and retraining and skill development opportunities for displaced workers, do job creation and job maintenance initiatives, assist local government in paying operational costs in the case of major economic disruption, and make other adjustments, where necessary, for opportunity workshops, planning issues, feasibility studies and so on.
It is a relatively modest fund, one that is not intended to be used for anything except to come in for emergency aid to those people who need it as a result of the downturn in their particular community.
D. Jarvis: So it's ostensibly to help the resource-dependent communities in this province. Can you tell me if there are any resource communities in this province that were helped through this fund last year?
Hon. G. Wilson: Well, there were none for last year. I think the member may have the briefing note with respect to Elk Valley and Granisle and Trail and Port Hardy in previous years.
D. Jarvis: Could the minister please tell us how much? I think it's about 0.05 percent that they take from the resource industries. How much was put into the fund last year?
Hon. G. Wilson: The number is $10.8 million, which will flow back to general revenue.
D. Jarvis: I just want to confirm that the moneys do not stay in a special fund in that essence. It actually goes back into general revenue and is used by the government for photo radar or whatever it may be. Is that correct?
Hon. G. Wilson: It's capped at $25 million. Anything above $25 million flows back to general revenue.
G. Abbott: I just want to follow up on the comments made by the member with respect to the natural resource community fund. There is a useful explanation of the natural resource community fund in one of the government publications, and it is, as has been discussed, aimed at assisting communities largely dependent on a single resource industry to adjust to severe economic declines that result in business closures. The fund receives 0.5 percent of all revenues other than fines, and the value of the fund is not to exceed $25 million.
We've discussed this in previous estimates as well. In last year's estimates, I put it to the former minister that clearly this fund had not operated as it was intended to. When one looks at how the fund has operated, it's patently obvious that that's the case. Since the fund was created in 1992-93 -- and this is from the government's own document here; this is as of 1999 and would actually be about $10 million higher now, I guess, with the current expectation -- the fund has earned $54 million in revenues from natural resources and $7 million from investment income. During that time, it has transferred $49 million back into the general fund and paid out $1.75 million in assistance to eligible communities.
I don't think I'll get much quarrel from the minister that when one weighs, for example, $49 million -- now likely to be $59 million -- in funds returned to general revenue versus $1.75 million returned to communities, the natural resource community fund simply has not worked as it should.
I presume it didn't work as it should because alternative mechanisms have been used, like Forest Renewal B.C. and others. To cut to the chase, all this begs the question of whether in fact we ought to be looking at whether we need a natural resource community fund or whether we might better go in another direction so that we actually have a fund that's being used in the way it was intended.
Hon. G. Wilson: The member makes a good point, and that does beg the question, because it's a good thing that the money isn't being wasted, for sure. One might argue that if there had been that amount of money coming in and we had fired it off for building golf courses and doing other kinds of crazy things with it
[1635]
A Voice: Ferries or something.
Hon. G. Wilson: Well, that's a source that hadn't actually been thought of, members.
No, I think that one would have argued that that would have been an irresponsible way to use the fund. The question that the member poses is a legitimate question. There is a cost to having an insurance fund, and that's what this is, essen-
[ Page 16697 ]
tially. That insurance fund is paid for as a result of a levy against the companies who are doing business in the province. The question is: is it worthwhile having that or not? That is a legitimate public policy question. I personally think that there is need for insurance funds for those communities that are in dire need, serious need.
I think there was only one application last year. It wasn't successful, because the community applying was not deemed to be in real need of this fund, and there were other ways -- as the member correctly points out -- in which we could accommodate their needs. The community of Lillooet, I think, was the community that was applying.
It is a legitimate public policy question. I personally think that one has to have some level of insurance for job protection. When communities go down, like Gold River -- and now we're seeing issues in Tumbler Ridge -- the first place that people come rushing for assistance is government. If government is properly funded and has those insurance funds in place, we are often in a place to do some real good.
G. Abbott: Did Gold River apply for and/or receive any funds out of the fund?
Hon. G. Wilson: The answer is no.
G. Abbott: Just to be clear: no, Gold River did not apply for funds.
Hon. G. Wilson: My understanding is that they did not formally apply, although some inquiries were made.
G. Abbott: The minister noted earlier that no amount of money had gone out of the fund to resource-dependent communities in the past fiscal year, but I believe he noted, in saying that, that there had been one application and that the application had been refused. Where was that application from, and what was it for?
Hon. G. Wilson: It was from the community of Lillooet. When looked at by those who were charged with making a decision on the fund, it was deemed that this was not an emergency -- that it didn't meet the test of the act -- and therefore would not be granted.
I wonder, hon. Chair, with the indulgence of the members opposite, if we might have a three- or four-minute recess.
The Chair: The committee will recess until 4:45.
The committee recessed from 4:38 p.m. to 4:46 p.m.
[D. Streifel in the chair.]
G. Abbott: I wanted to ask a couple more questions on the natural resource community fund, and I know others probably have a few questions on this as well.
I think the Mines critic makes a very good point about the difficult situation facing that particular industry. It seems to me that one of the ways in which we might, in a very immediate way, improve the situation for mines in the province would be to free them of the 0.5 percent tax on their income to feed the natural resource community fund.
Effectively, given that close to $60 million has gone from this fund into general revenue over time and only $1.7 million has come out of the fund to communities, I think it is fair to suggest that the 0.5 percent tax on all revenues, including mining revenues, has the effect of being just another tax. If the fund had been the other way -- if $60 million had gone out of the fund to communities and $1 million had gone to general revenues -- one might say: "Well, that's fair enough. The fund is working as it was intended, and this is an appropriate tax on the industry." But that's not the case; it's the reverse.
So I'll put the proposition to the minister that here's an opportunity to provide at least some small measure of relief to the mining industry. If you're going to have the fund, leave it capped where it is now and gradually expend it. At the current rate it's going out, it would in fact never run out, because I'm sure it's accumulating interest faster than it's been going out. So let me put that proposition to the minister and see what his response is.
Hon. G. Wilson: Let me clarify something. First of all, this is not an increase in tax. Essentially, we're clipping from the existing tax, so it's not as if we've come and put an additional tax on the mining industry. That's the first point.
Secondly, I would have thought that the members opposite would have been more critical if we had been expending this money on projects that didn't meet the test of the act -- the law. What we've done has been being diligent with respect to making sure that only as a matter of last resort will this money be expended. If one goes back to look at the expenditures that the member referred to earlier, the roughly $1.75 million, you will see that those were expended in times when there really was no other alternative. It's an insurance fund, and I don't think one spends one's dividends on insurance on anything other than a time when you really need it.
[1650]
S. Hawkins: We've had the discussion about this fund last year and how ridiculous it is to have a fund that has basically been skimmed off for general revenue. The intention of the fund -- and the auditor general lays it out really well in a report he did a couple of years ago -- was: "This special fund was established to assist communities largely dependent on a single resource industry to adjust to severe economic declines that result in business closures or industry workforce reductions."
There are criteria for this fund, and it's amazing that in the years that this fund has been established, more money has gone into general revenue than into communities that in the last four or five years have frankly been devastated by situations in the economy.
Last year when we discussed it with this minister, we talked about this statutory fund basically being a fund of general revenue, and maybe it shouldn't be. Maybe it should just be eliminated and everything go into general revenue. It seems ridiculous to have a fund called -- as the minister points out -- fund of last resort. I wonder how well this fund is marketed. You know, I wonder how many communities even know this fund exists. You have one community inquiring, and then basically they're told that they don't fit the criteria. I find it just amazing.
I think the intention -- and the minister can correct me if I'm wrong -- is to not use funds in this fund. It's not to use money in this fund, because when I look at estimates last year, '99-2000, we had the same money going in the fund as going
[ Page 16698 ]
out. It's a zero balance, basically. And this year it's the same way: $10,865,000 expected into the fund and $10,865,000 going into general revenue. The fund's capped at $25 million.
So what that tells me is the ministry isn't planning to use money in that fund, you know. I just find it interesting that we have a fund that is being set aside for communities and is being funded by the natural resource industries. And okay, it's not an additional tax; it's a part of the tax. But the intention of the fund is to help those industries, and we're not doing that. So if we're not going to do that and there's no intention to do it and it's a fund of last resort, why don't we just -- there must be some cost to maintaining this fund -- make it general revenue? Why don't we eliminate this fund?
We asked the minister last year, because it does give a false impression to communities and to members on this side of the House that this fund is actually there to be used and to help communities. Obviously that's not what it's there for, because the minister tells me it's a fund of last resort. Out of $60 million, less than $2 million has been expended to help communities. It just seems ridiculous to have a fund of that amount not being used.
If you're going to take the money out of general revenues anyway or allocate it to other budgets to help those communities, why have this fund? I want to know how well this fund is actually marketed so that communities that are in trouble know about it. I think if they don't know about it, they can't apply for it. And when they do apply for it, they're discouraged, because they're told there are other sources they can access for help. I want the minister to comment on that.
Hon. G. Wilson: I'm amazed at the position taken by the member opposite. First of all, let me address the Mines critic, who was up here bemoaning the fact, and reading from some shameful piece of literature, that the mines industry was paying. Out of the mines portion comes $165,000. That's it -- $165,000. Most of it comes from forests and petroleum. This isn't money that we take separate from the central revenue fund. It comes from the central revenue fund as insurance for those communities -- of last resort. The fact that we haven't had very many communities hit that point is a good thing. This is a good thing.
S. Hawkins: That's according to your criteria -- the last resort.
Hon. G. Wilson: The member says that is according to our criteria. It is according to the criteria that are generally accepted not only by those communities, who, incidentally, all know about this fund
[1655]
S. Hawkins: According to your criteria.
The Chair: Through the Chair, hon. member for Okanagan-West.
Hon. G. Wilson: The member says according to our criteria, according to what is out there. Let's take Gold River. Gold River was a potential candidate. We managed to work through other agencies. As the member for Shuswap has said, there are other areas in which we can start to work on that. We've managed in Gold River, I think. Now this community is a community that's able to move ahead. Tumbler Ridge, if we can't get all things together, may in fact end up being a candidate for this. We hope not. We're working to try and find other ways to get away from pushing to the point of last resort.
The communities are fully well aware that this fund exists. They know that if they get to that point, they can make application. The fact that the communities themselves, with the exception of Lillooet, who made application when in fact they did not meet the criteria by any standard or measure -- and I think when one looks at the economy of Lillooet you can see that's the case -- haven't been making application means that they themselves accept
S. Hawkins: But this hasn't been marketed.
Hon. G. Wilson: They say themselves that they don't need it.
The member says we don't market it. We don't need to market it, because the communities that are resource-dependent and resource-based all know about it. The reason they know about it is because the companies who see this contribution coming forward into general revenue make sure they're aware of it. People who work and are dependent on the resource sector are fully aware of this program. I find it startling, frankly, that the members opposite would suggest that there was somehow a problem that the government didn't go out and spend $50-odd million when, in fact, we didn't have to.
G. Abbott: I don't know how much longer we need to go on with this. I think at some point it becomes rather like the Monty Python sketch around the cheese shop. "Do you have any of this kind of cheese or that kind of cheese? No. Well, is this a cheese shop?" I sense a little of that here, where we have a natural resource community fund but no one actually using it. Nor have they ever used it, except at one point, well, $1.7 million worth.
Anyway, I think, at the risk of adding to the Pythonesque nature of this, that we have a parallel situation. At UBCM a couple of years ago, the Premier announced a community infrastructure investment fund, where at the direction of government, the FRBC took, $10 million and put it in a fund that is administered by the Municipal Finance Authority. Over the years, no one has ever used it. I mean, that's how well that fund's working.
There's no point in belabouring this. I think government needs to look periodically at the funds they have, and say: "Has the design of this fund worked as effectively as we would like?"
I'm happy to advise the minister that I've persuaded FRBC that perhaps they should rethink the $10 million investment they have with MFA. No one has used it, and no one's interested in using it, because MFA offers exactly the same thing. People prefer to have the security of working through MFA.
So where I'm happy to leave this is by putting the proposition to the minister that his ministry revisit this fund. Is it
[ Page 16699 ]
working the way it was intended? Has it worked as effectively as it should? If it's not, do we revisit the criteria, or do we revisit the concept of the fund itself? That is where I'm happy to leave this discussion.
R. Thorpe: Could the minister advise which cabinet ministers besides himself are working on the committee looking at a Vancouver convention centre?
[1700]
Hon. G. Wilson: The Minister of Small Business, Tourism and Culture is responsible for actually bringing people to Vancouver and filling it up. He is the only other minister who is actually directly working in relation to the convention centre.
R. Thorpe: Just so I understand the minister
Hon. G. Wilson: There's a private sector task force that's working on the convention centre, but there is no committee of ministers.
R. Thorpe: In the issue of Trade Talks of summer 2000, yeah, this is the Premier speaking. The reason I ask the question is that he says: "There's a group of cabinet ministers working on several issues. The trade and convention centre is one."
So it would appear on this particular point that the minister may want to talk to the Premier about that and maybe get back to us and advise us who's on that committee. What is the current
With respect to the Vancouver Trade and Convention Centre, what is the current status in winding it up? Where do we stand with respect to the inventory -- the $24.9 million or approximately $25 million of inventory items? Where do we stand on that?
Hon. G. Wilson: I'm trying to get you as specific a set of numbers as I can. I'm told that there is 10,600 metres of pipe not sold. The balance of materials has been sold, most of which went to the expansion of the cruise ship pier.
R. Thorpe: In that information that I received through a delayed freedom-of-information request, about $24.9 million in assets were going to be disposed and identified. Ten million dollars had been identified as the amount of money that was going to be captured on the sale. Can we confirm that that is the amount that has been anticipated, or do we anticipate a further write-off?
Hon. G. Wilson: I'm advised we're getting about 80 cents on the dollar for the pipe, and we're well ahead of where we had projected that we would be.
R. Thorpe: Are there any funds in the current budget for vote 25 in the ministry allocated to developmental work, seed work, with respect to this project that's being worked on?
Hon. G. Wilson: The answer is no. I think there's one person who is doing some consulting and contract work, and that's all.
R. Thorpe: So then it's fair to say that at this point in time and in the plans for the ministry for the coming year, no work will be done on a Vancouver Trade and Convention Centre. Is that correct?
[1705]
Hon. G. Wilson: I wouldn't want to leave the member with the impression that we're not doing anything. We do have some staff who are obviously monitoring the industry task force If the industry task force and the federal government were to come back to outline to us that they have the soft costs covered and that they're ready to move on the west side, clearly we are mandated and would be able to act on our mandate to work with the federal government and the industry task force to get this project up and moving.
R. Thorpe: In that answer, do I take from the minister that the government's position now is that if and when something happens in the future, it would only take place -- unlike the first time -- with the financing locked in place, whether it be the federal financing or the private sector financing that's locked in place, unlike the first attempt?
Hon. G. Wilson: I think that's a fair comment.
R. Thorpe: Could the minister advise what former member of the House Mike Harcourt's role is in the Vancouver Trade and Convention Centre?
Hon. G. Wilson: He has no formal role.
R. Thorpe: I don't want to get tied up in the technicality of words. Could the minister say what type of role he has or did have in the Vancouver Trade and Convention Centre?
Hon. G. Wilson: I think it's important to note former Premier Harcourt is on the port authority; therefore he clearly has an interest in seeing the development of a trade and convention centre on the port. I don't think it's any secret that he has that interest, and he has expressed that publicly on a number of occasions. But he has really no role to play with respect to the government position at this time.
R. Thorpe: Could the minister advise in what role the former Premier Mike Harcourt received a briefing document on this project on October 21, 1999?
Hon. G. Wilson: I could only speculate, and I'm not sure that would be particularly productive. I wasn't the minister at the time. He sits on the port authority, and that may well have been the reason.
R. Thorpe: Can the minister advise whether he received any payments, any remuneration, with respect to this project?
Hon. G. Wilson: Not from this ministry.
R. Thorpe: I'd pass through
[ Page 16700 ]
about the committee of the ministers. This was one of the projects that they were working on in the future -- if you could pass that on to the minister.
There are no plans in place now. There's some staff, and I assume some staff at Pavco are maybe doing some liaison on this. What expectations does the ministry have of what is going to happen on the convention centre in this fiscal year?
Hon. G. Wilson: The industry task force is completing its work. As the member probably is aware, they have identified a site and they've identified a design. They are essentially going ahead with that, doing estimations on costs through their engineering. I've met with Mayor Owen of the city of Vancouver to see that the city would be onside with what is going ahead. He has indicated a clear interest.
There have been discussions with Ottawa, between the Premier and the Prime Minister, with respect to the convention centre. There are also other discussions with relevant ministers in terms of the federal involvement. We have made a commitment that if and when the federal government formally commits to the project, we would be interested in seeing that project move ahead.
[1710]
R. Thorpe: Shifting gears totally, I thank the minister and the staff for the answers to those questions.
The minister has apparently made some comments about developing, within the Employment and Investment ministry, a set of shopping lists of tax breaks and training incentives to help economic development in the aboriginal communities in British Columbia. I'm just wondering if the minister could take the time to outline to us what those are and what the status is of his plans in that area.
Hon. G. Wilson: I'd be happy to comment. I'm assuming that the member is reading from a newspaper article that is a little bit confused as to what exactly we are doing.
The concern that has been expressed to me is a concern that essentially revolves around the fact that some first nations have been approached by consultants who are suggesting that there are tax breaks and environmental regs that can be bypassed and so on -- and that they, on retainer through the first nations, are out selling this notion to potential investors coming into the province of British Columbia.
My concern is that when these investors then come to government and ask government for its advice or opinion on what these independent consultants are advising that they can or cannot do on first nations land, we have a proper set of documents with a proper set of rules and regulations and laws to be able to provide these potential investors so that they are not misled into thinking that just because they locate on first nations land, they may be eligible for tax breaks that in fact they're not eligible for.
What I've asked internally, through my deputy, is for us to properly research what the benefits are and what the liabilities may be with respect to investment from international or other Canadian investors investing on section 91 lands -- reserve lands -- in British Columbia, so that we can be properly informed of what the benefits and the liabilities are, so that people are not misled into thinking that if they do indeed invest on first nations land, somehow they can skirt the law.
R. Thorpe: When will that project be completed?
Hon. G. Wilson: I'm told within a week or so.
R. Thorpe: I'm sure the minister would be more than pleased to provide the opposition with a copy of that documentation.
I'll give the minister the opportunity to clarify the record here. Contrary to what may or may not be in newspaper articles, what I thought I heard the minister say -- and that's why I want to get it clarified -- was not considering a special set of criteria for investment but what actually is available. I just wanted to give the minister the opportunity to clarify that.
Hon. G. Wilson: Well, that is correct. There are people who have been retained by first nations to go out and promote international investment. We are getting inquiries -- and I as minister am getting inquiries -- from people who are potential investors, who are under the understanding, or believe that somehow they can get a better deal if they invest on first nations land than if they don't.
It's our view that we need to have a proper set of rules prepared and outlined, so that when people do make those inquiries, they can see what the law actually provides and not what they may be misled into thinking, so that there's no confusion with respect to investors.
[1715]
We're not out promoting investment on first nations land. We're not out saying: "Come to British Columbia; you can get a better deal." In fact, quite the contrary; we're saying: "Look, if you're coming and putting your investment on first nations land, this is what the law says, and this is how that law will affect your investment." I'd be more than happy to let you have a copy of that when it's done.
R. Thorpe: So I guess, again, what the minister -- at least what I think I'm hearing the minister
Hon. G. Wilson: Well, the laws do apply now. What we're arguing or what I'm suggesting -- it's really not an argument; it's a question of developing some data -- is that we don't want people to come into British Columbia under false expectations. That's all. Now, if we can attract onto first nations land, where joint venture work can happen, where first nations can get an opportunity to expand employment and all those sorts of things, then that's terrific. More power to them, and I would help them out. But I don't want investors coming here under false expectations. I think it's incumbent on our ministry to make sure that when they do come, they're given a proper set of rules.
R. Thorpe: Within the ministry and the budget, is there a separate team or a group of employees assigned to investment and employment opportunities within aboriginal lands?
Hon. G. Wilson: No, there's no separate team.
S. Hawkins: I was given a document of the Crown corporations, agencies, boards and commissions that are
[ Page 16701 ]
administered through the Ministry of Employment and Investment. I thank the ministry staff for the list. I'm particularly interested in a committee that has had members on it since 1996 and a recently appointed member, which is the minister. It's the Committee on Building British Columbia's Future.
It says that the mandate of this committee is to provide advice to the executive council respecting appropriate economic, regional, sectoral, equity, employment and training goals for government spending; develop criteria for reviewing expenditures from the special account; and review expenditure proposals and make recommendations to Treasury Board and the executive council on funding allocations; and to develop new initiatives that fulfil the purposes of this act -- pretty lofty goals for this committee.
There are four members from the government's side are on the committee. There's no expiry date for these members, and the minister is the chair of the committee. There have been members appointed since 1996. I'm wondering when this committee was struck, how many times this committee has met, if there are reports that this committee has published and any other information. Apparently the committee has remuneration for reasonable travel and incidental expenses. I wonder if the minister can fill me in on what this committee's all about.
Hon. G. Wilson: I'd be happy to. It's what was formerly known as B.C. 21. The only moneys that remain are moneys that have yet to be expended from projects already committed. I don't know what the total amount of money is, but it's not substantial. We could get it. I know there's a bunch of T-shirts, but beyond that
S. Hawkins: Is the minister telling me it's just a recent name change? Will this committee be meeting, or is it defunct after the B.C. 21 program expires?
[1720]
Hon. G. Wilson: No, it's always been called this, so it's not a recent name change. It did handle B.C. 21 community grants. I understand there's $1.4 million that has yet to be expended from projects already committed. The only thing I could think that this project might do if a new Infrastructure Works project happens or a community grant -- that may be a vehicle through that; I'm not sure. At the moment all it's there to do is essentially administer the final expenditures of moneys on grants that have already been committed.
S. Hawkins: The mandate of the committee is a lot wider than just expending grants. I'm wondering if the committee has ever sat on anything more than expending grants. The minister says that in the future it might. But in the past, has the committee done anything more than that?
Hon. G. Wilson: Obviously the committee met regularly when it was administering a $100 million fund. It was one of the funds that was clawed back, and as a result, as I say, there's only $1.4 million left to be expended. Those projects are already committed, so there's no reason at this point for that committee to meet, except to make sure that that money is expended properly.
As I say, it may be a vehicle -- given, as the member correctly points out, that the mandate is fairly broad -- through which community development opportunities may be used if a new Infrastructure Works were to come and if that was seen to be the appropriate vehicle. If not, my guess is that it will be wound up.
S. Hawkins: I want to talk about another fund quickly, as well, and that's the immigrant investor fund, if we can move to that fund. The ministry's 1999-2000 goals and targets progress report stated that BCIF made three investments in 1999-2000 totalling $9.3 million -- $3 million in Agro Pacific industries and two in B.C. Transit totalling $6.3 million. Could the minister please outline why the BCIF invested $6.3 million in B.C. Transit?
Hon. G. Wilson: It was for bus acquisition. It was a very safe investment, one that would satisfy the immigrants' desire to make sure that the investments were made in a corporation that would be a safe investor and therefore would reduce their liabilities.
S. Hawkins: Can the minister outline for me what the criteria for investing this money are? Obviously investors are putting into this fund, and there are terms of reference or criteria for investment. If the minister could outline that for me, I'd appreciate that.
Hon. G. Wilson: The main criteria obviously are security of the fund -- to maintain and pace the fund -- and, secondly, to invest in something that's going to be of benefit to the province. If one looks at the investments that have been made, they're in very solid and extremely well-secured investments.
S. Hawkins: Can the minister provide the numbers and amount of investments coming into B.C. through this fund in the past three years? Does he have those numbers?
[1725]
Hon. G. Wilson: Let me see if this will help the member opposite. I'll provide this information, and then we'll go from here. I'll just read from this so that I don't make an error:
S. Hawkins: Can the minister advise the member where the investment money is coming from? Do they track who the investors are? I don't know if I'm framing this question correctly, but where does the money come from -- what kind of immigrants?"The BCIF, or the immigrant investor fund, is an immigrant investment fund owned by the province and authorized to sell up to 100 units worth $350,000 each to prospective immigrants. To date there's $24.8 million, and the BCIF has made six investments to date totalling $18.5 million: two investments in BCIT totalling $3.9 million, three investments in B.C. Transit totalling $11.6 million and an investment in Agro Pacific Industries of $3 million. The fund is fully invested according to the CIC requirements, and further investments will be made as additional funds flow in from subscribers as they close."
Hon. G. Wilson: I'm not quite sure what the member is asking. This fund is done under the federal Immigration Act, and the immigrants come from all over the world obviously. If we sell units up to $350,000 each to prospective immigrants, they may be from all over the world. Most of the money that's coming in is actually coming from the Asia-Pacific area. Hong Kong would be high -- I'd guess China, Taipei and so on.
S. Hawkins: What does the ministry do to go out and attract these investors? Is there a plan the ministry has to do that?
[ Page 16702 ]
Hon. G. Wilson: The answer to that question is that the CIBC Asian banking unit is contracted to do all of the work with the potential investors.
S. Hawkins: The member from Delta just advises me that Agro Pacific Industries is in receivership protection right now. Is the ministry aware of that?
Hon. G. Wilson: Yes, we're aware of that, and we do have a professional money manager who is involved in this. We've also done due diligence with respect to the future of that company, and we are fully confident that the $3 million is fully secured.
S. Hawkins: Is there an insurance fund that would provide insurance liability in case this money was lost?
Hon. G. Wilson: I'm tempted to say that I thought the member opposite didn't like insurance funds.
Interjection.
Hon. G. Wilson: The answer to the question is no, there is no insurance fund. However, before one does an investment, obviously you want to make sure that the investment is given protection. Having done due diligence with respect to this particular investment, we are now quite confident that
S. Hawkins: If the minister could do the time line for me, when did we invest the B.C. immigrant investor fund money, $3 million? Agro Pacific -- when did they go into receivership protection?
[1730]
Hon. G. Wilson: Just so we don't go too far down this road thinking that somehow this $3 million is at risk, let me be clear that (1) we are a secured creditor, and (2) that investment was roughly a year ago. I think they went into receivership sometime in April this year; that's our best estimate. It was the last few months, anyway. The province is a secured creditor. It's our view, based on the advice of a professional money manager who is now acting on our behalf, that this company will survive and that not only will they be able to fully pay their creditors but in fact they may even, if fortunate, be able to pay dividends.
S. Hawkins: When the minister says they do due diligence before they invest in a fund, who does that due diligence?
Hon. G. Wilson: The money managers are Canadian Western Capital and ACM Advisors. I just want to make sure the record is clear. This company is not in receivership; it's under court protection to reorganize its financing. They are substantially different issues.
S. Hawkins: I think I did say that it was in receivership protection. I had a few other questions on this fund, and I can't find my notes. I may come back to that.
If I can just move on
Hon. G. Wilson: Our communications budget covers 18 FTEs, which covers both Energy and Mines as well as Employment and Investment. We also make a contribution to the central communication strategy.
S. Hawkins: What services does the communications area provide day to day? I'm sure there are things they do. But are there brochures, advertising and work with regions done within this budget? Can the minister advise us?
Hon. G. Wilson: One of the things we have to do is put out information countering the nonsense that the Mines critic was talking about earlier on; we do have to counter some of that stuff. It's normal communication materials. We put out brochures; we run a web site. We're engaged, obviously, in putting out information packages with respect to potential investors. We also work with the private sector with respect to incoming trade missions to make sure that people are adequately and properly informed about who's coming and what they're doing. So it's a normal kind of communication function.
[1735]
S. Hawkins: I met with some EDC officers, and I know that different communities have set up economic development commissions and officers. I'm wondering if the ministry liaises with them on a regular basis and what kind of work they do with the regional EDCs to help promote employment and investment in their areas.
Hon. G. Wilson: Yes, we do. There's regular communication. In fact, there are agreements with them such as Linx B.C., which is on the call centres. So there is an active interaction between EDCs, EDOs and members of the ministry.
S. Hawkins: The minister mentions the call centre initiative. I'm wondering. That is something that the EDCs in Kelowna and certainly in the interior are working on. Can the minister just inform us what they're doing with respect to inviting call centres into the regional economies?
Hon. G. Wilson: We do have roughly $75,000 set aside for marketing this year, with Telus. And there are a number of interior communities -- Kelowna is among them -- who will be part of that marketing strategy. The idea is to market those communities as potentials for call centres.
I've had a chance to meet with a number of players in this industry who look at British Columbia as a major centre both for callout as well as callin. They're two quite different sets of requirements. Clearly this industry is burgeoning in British Columbia.
I did attend the opening of a call centre in New Westminster not so long ago. The thing that struck me about that call centre was the fact that not only were there a lot of people engaged in this activity who might otherwise not have held work -- who had been trained, who had been skilled -- but
[ Page 16703 ]
the composite group that I looked at was highly multicultural in their ethnic origins, which is a good thing. They were people of all ages from very young to more senior. There were a large number of women and men there, and they were earning good wages. I mean, these were not minimum-wage jobs at all. These were people who were going to be earning upwards of $14 to $16 an hour.
There are real opportunities in British Columbia, and there is a great deal of interest from the province's perspective. We are going to be doing some aggressive marketing with Telus and with some of the interior communities. Kelowna is one of them.
S. Hawkins: With respect to the call centre initiative, how do we rack up against other provinces as far as attracting them?
[1740]
Hon. G. Wilson: We rack up very well -- in fact exceptionally well. Mind you, we are not going to get into a bidding war with other provinces. That is something that obviously we have to be very careful of, because the modern name of the game now is that they are quite obviously looking for benefit to come here.
Our benefit, I think, is in the workforce. We are extremely cosmopolitan. We have a large cross-section of people from various ethnic backgrounds who speak various languages, which is of benefit to them. We are in a preferred time zone. Because of our time zone, we're good for the west coast as well as the east coast in terms of our marketing. There's a whole series of other reasons why British Columbia has become an attractive place to be. We are generally well connected; we are generally well educated. Even the American researchers who have done analysis and studies of the B.C. workforce rank us among the top in North America. We do extremely well.
S. Hawkins: That's good to hear. I'm glad the minister has some good news in that respect.
Unfortunately, when I talk to EDC officers and people on the economic development commissions, I don't get a lot of good news. I understand that small business has no idea about some of these initiatives that E&I works on, so there are jurisdictional problems between ministries. The people between ministries aren't talking to each other about what they're doing. That causes difficulties. What they're telling me is that they don't need any more roadblocks. So if E&I is doing something good, hopefully we're working with other ministries to inform them of what we're doing.
The marketing approach -- I've heard about marketing B.C. in other jurisdictions and around the world; I'm not using my own words -- I hear, is embarrassing, abysmal. I don't like to hear those kinds of words. I understand that we don't market what we have to offer; we don't market it well.
There is a centre called IDRC, the International Development Research Centre. I understand that a couple of years ago the federal government got every province to put money into a pot, and they hosted a suite. B.C. refused to participate. In fact, B.C. didn't go. They gave $2,500 and brochures and pins for promotional materials. That was 1998; the brochures were from 1995. I'm hoping we've come a little further in the year 2000. I'll await the minister's comments on that.
Hon. G. Wilson: To answer the last part of the question or comment first, we're in Boston and New York, and we'll be in Seattle. We clearly are going to be active participants.
I don't know who it is that the member opposite is talking to when she hears the word "abysmal" or she hears -- I forget the words she used -- derogatory comments with respect to the investment climate in British Columbia. I have to tell you that that clearly is not what any of the American research is showing with respect to our labour front, with respect to our investment climate, with respect to our potentials.
When the trade ministers met not so long ago in Quebec, they were talking
What I think you need to do when you hear those kinds of comments is counter them. You need to stop the people in their tracks and correct them, because only through countering and correcting those kinds of negative and misleading comments will we put out a more positive climate with respect to our investment.
[1745]
S. Hawkins: The only way you can correct it is if you have the facts, and the facts speak for themselves. B.C.'s economy grew at twice the rate of Canada's during the first half of the nineties. Since then growth fell from first to worst, and those are the facts. B.C. posted the worst economic growth rate in Canada in 1998 and 1999. That's a fact. In 1995 to 1999 it was the weakest period of economic growth B.C. has seen in 35 years. That's a fact. When you talk about all the
B.C. recorded the worst rise in business bankruptcies in Canada during 1992-98. Sure, we're seeing a little bit of recovery now, but I would say no thanks to the government, frankly. And the minister talks about the member reading from the International Forecaster, which when the member for
A Voice: North Vancouver-Seymour.
S. Hawkins: North Vancouver-Seymour, that's right. He got up and quoted from the article. Well, the facts speak for themselves. Junior companies in 1999 -- their investment in total mineral exploration was $25 million. In 1990 it was $268 million. I mean, that is quite a decrease in investment dollars.
You know what? The world looks, I think, at records. What was this province doing in years before? What are they doing now? Why is the change? Why aren't people investing? Why has the total investment dropped in the province? In this article anyway, in the International Forecaster -- and this is
[ Page 16704 ]
May 2000, so it's only a month old -- yeah, the author does an absolutely scathing review of the NDP's term in power the last ten years. It's an editorial in a magazine that goes around the world. And you know what? I can bet the author wasn't a socialist. Yeah, I can bet that. The author wasn't an NDPer, because if you're an NDPer right now, you're going to give the kind of facts this minister stands up and gives and ignore the facts the way they stand. You know, the facts are that the government has decimated the mining industry. People around the world know that. That's why we're not getting investment here.
I think that is the point that the member for North Vancouver-Seymour was making. The minister ridicules him and says that's just nonsense. Well, that is the opinion of industry, minister. That is the opinion of industry, and that is the opinion that industry around the world is reading. Government should look at itself in the mirror before saying: "We're doing great, thank you very much." If we were doing so great, thank you very much, how come we've had the lowest level of investment across Canada?
We've seen other provinces absolutely rise in the levels of investment they've seen in the last three or four years. Even Saskatchewan, for goodness' sake, has an NDP government, and they've seen their investment dollars quadruple and go through the ceiling. We haven't seen that here. Hopefully we will, I think. As soon as an election's called, I know we will, because the members opposite will find themselves sitting on the opposition bench. I know there will be growth and prosperity in the province after that.
Those are my comments. I'll have the minister comment, I'm sure.
The Chair: I recognize the minister, noting the time, for a short rebuttal.
Hon. G. Wilson: Hon. Speaker -- or hon. Chair, excuse me.
The Chair: I wouldn't mind the pay.
Hon. G. Wilson: Yeah, right. That might be good too.
Hon. Chair, look, the truth of it is that international investors don't have a vested political interest in trying to point to a whole bunch of negatives and embellish upon them for their own political gain, which is what the member opposite is trying to do. International investors know full well that the commodity prices took a tumble in the nineties. They know full well that the Asian economy took a nosedive. International investors know exactly how tied we are to the Asian economy.
[1750]
Frankly, to hang one's hat on an editorial writer whose claim to fame is that he sends his document around the world
So with those remarks, noting the time, hon. Chair, I would suggest that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:51 p.m.
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