2001 Legislative Session: 5th Session, 36th Parliament
HANSARD
The following electronic version is for informational purposes
only.
The printed version remains the official version.
(Hansard)
TUESDAY, MARCH 27, 2001
Afternoon Sitting
Volume 22, Number 12
[ Page 17521 ]
The House met at 2:09 p.m.
M. Coell: I have a number of people to introduce to the House today. It's a group of South Island Young Liberals: Katherine Bergen, Sonia Manhas, Lisa Caroway, Janet Mackenzie and Ivan Watson. Also from my riding are a number of students from Stelly's Secondary School. They're accompanied by five adults, their teacher Ms. Hayashi and some friends from Japan.
I'd also like to welcome Paul Sam to the House, who's the NDP candidate running against me in my riding. Would the House please make them all welcome.
[1410]
J. Reid: Jim Stewart from north Nanaimo is joining us in the gallery today. I'd ask the House to make him welcome.
I. Chong: Today it is also my pleasure to introduce a number of South Island Young Liberals who are here to watch question period. They are: Myra Sweeney, Keir Wilmut, Kara Flanagan, Perry Prewal, Cheryl Maitland, Mike Schroeder, Roger Doucet and Vince Haraldsen. Would the House please make them all very welcome.
G. Farrell-Collins: I too have a group of B.C. Young Liberals who are here today: Naveen Bains, who's the president of BCYL; Aneal Basi; Jag Bains; Perry Bhaniwal; Kaleim Manji; Savik Sidhu; Nab Gill, who's the president of the Camosun College B.C. Young Liberals club; T.J. Parhar; Bikrum Gill; Reet Bains; Amar Bajwa and Jonathan Chau. I want the House to make them very welcome.
G. Campbell: I'd like to welcome an exceptional young British Columbian, an incredibly good-looking young man. My son Nicholas Campbell is with us today. Would you make him welcome, please.
R. Thorpe: I'm very pleased to have two guests in the House from Penticton. Would the House please make Diane and Pat King very welcome here today.
Oral Questions
ICBC COMPLIANCE WITH
BUDGET TRANSPARENCY AND
ACCOUNTABILITY LEGISLATION
G. Plant: I have a question for the minister responsible for ICBC. We
have obtained a copy of a confidential letter sent by the Deputy Minister of
Finance to the ICBC president on the subject of ICBC real estate investments.
The letter is dated February 27, 2001. I want to quote from that letter:
"Section 14 of the Budget Transparency and Accountability Act requires that
a capital project plan
My question to the minister is this: why is her Crown corporation breaking the law?
Hon. J. MacPhail: The purchase of the Telus building, which has guaranteed renters for fully 15 years, was all released publicly when it was purchased.
The Speaker: The hon. member for Richmond-Steveston has a supplemental question.
G. Plant: Well, it's too bad that the minister didn't share the capital plan with the Deputy Minister of Finance, because according to the deputy minister, there was no capital plan. Frankly, if there was a choice, I'd prefer to believe the Deputy Minister of Finance.
Mr. Speaker, the letter also makes it absolutely clear that as a matter of law, ICBC is required to file any investment in its property development arm within 14 days of the purchase. Yet the letter goes on to say that as of February 27, these filings had not been completed for the November 2000 purchase of the Telus building or the 1999 purchase of 910 Government Street.
Can the minister tell us again: why is it that she allows her Crown corporation, ICBC, to break the law set by this government?
[1415]
Hon. J. MacPhail: It is interesting to note, hon. Speaker, that the
Liberals now choose to rely on the very Finance officials that brought in the
revenue forecast for this budget. They now uphold them as the bastions of good,
sound advice. And yet all the last month, they have been saying: "Oh, these
Finance
These same investments that had ICBC get such good returns for last year have all been released publicly. In fact, the information is within the public purview. The Budget Transparency and Accountability Act will be complied with. But I will say to you that if, for some reason, the Liberals are suggesting that this isn't the most transparent financial transaction that exists in Canada, then this would prove the point, hon. Speaker. Let me just say that all of the documents are within the public purview and will definitely be provided to the Ministry of Finance.
G. Plant: Mr. Speaker, what is perfectly transparent is that this is a Crown corporation and a minister responsible for a Crown corporation that is in breach of the law, and the minister doesn't even have the beginning of an answer to the question.
There's no secret to any of this. These transgressions of the law identified in this letter include the following statement: "My understanding" -- this is the understanding of the deputy minister -- "is that ICBC's board is aware of this issue." In other words, ICBC's board knows that ICBC is in breach of the law. The minister sits on that board. Why has she allowed the Crown corporation for which she is responsible to break the law that this government so constantly trumpets as being the cure to all the evils that have preceded it?
The Speaker: The question was answered.
C. Clark: Let's remember that this letter was dated February 2001. This was after a directive went to ICBC two years
[ Page 17522 ]
earlier, telling them what the rules were. In the letter, the Deputy Minister of Finance clearly accuses ICBC of flouting the law. He says that as far back as September 1999, ICBC was informed that Treasury Board wanted to review all future real estate investments on a case-by-case basis. And he says that, nonetheless, ICBC went on to go out and buy two properties since that date without either Treasury Board or cabinet reviews.
Let's remember: these are the government's own rules. Can the minister tell us why ICBC will break the rules -- just go ahead and flout them? Why does her government even bother to make the rules if the guys over at ICBC don't even want to bother following them?
Hon. J. MacPhail: All of this information was in the public purview, and if the information isn't already with the Ministry of Finance, we will absolutely ensure that it is. These are the most transparent rules that are in existence.
Around the issue of ICBC investing, ICBC has a multibillion-dollar investment fund. I think it would be interesting, if the government actually interfered with that investment fund, what reaction the opposition would have if government -- cabinet -- interfered with that investment fund. We simply do not do that. The multibillion-dollar investment fund, $6 billion, is done independent of government -- done following all of the rules.
But let me just tell you about Telus, hon. Speaker. Yes, it was an investment
by ICBC of $98.25 million. It has secured tenancy for 15 years. That'll be the
reason that wonderful investment fund of ICBC which
[1420]
In terms of the transparency issue, it has complied with all of the other rules. But let me just say: it's that kind of investment that has allowed us to keep rates frozen for six years, give dividends and make sure that it all stays within the public purview, unlike what they would do -- opening it up to competition. That $6 billion investment fund would disappear overnight, hon. Speaker.
C. Clark: The fact is -- and the Deputy Minister of Finance pointed this out -- that the government's own agency broke the rules. And this minister doesn't seem to care about that. You know, the only time this government cares about breaking the rules is when they get caught. And guess what: they've been caught.
The deputy minister says in his letter that it is his understanding that the board was aware of the issue. Well, the minister sits on that board. So my question is this: has she been taking lessons from the Premier, and did she (a) miss that meeting, or (b) was she not present for the meeting? Or (c) is she going to tell us that perhaps the inexactitude today of her comments is present?
Hon. J. MacPhail: Hon. Speaker, I answered the question.
The Speaker: The hon. member for Port Moody-Burnaby Mountain has another question.
C. Clark: I somehow think that the minister is trying to avoid answering questions about why this government wants to break the rules.
The Speaker: Order, member.
C. Clark: Now, why do you think that would be? Do you think it's because this government's been caught breaking the rules so many times that they don't even bother making excuses for it anymore? Or is it possible that on the eve of an election, this minister doesn't want to stand up and demonstrate to British Columbians once again just how and why this government is so bad?
The Speaker: Do you have a question, member?
C. Clark: Hon. Speaker, this is a board that is headed by Bob Williams, the ultimate insider for the NDP. It's a board that's made up of insiders from the New Democrats. So my question is this: when the minister makes her rules, when the government makes their rules, are they rules they expect everyone to follow except for the insiders on the NDP?
Hon. J. MacPhail: I guess if anyone's trying to obfuscate here, it's the Liberals, who would actually have to admit that their platform -- their New Era platform, which says that they would open up ICBC to competition -- means that overnight that $6 billion investment fund would disappear. The return on the investment fund that each and every ICBC policyholder gets each year is the equivalent of $175. That means this Liberal opposition would be taking $175 out of people's pockets.
Let's just deal with the issue about the poor financial management around
this. I will ensure
The Speaker: Thank you, minister.
Hon. J. MacPhail: That would be out of order completely. And secondly, the investment committee is managed by the best people in the world, including Andrew Saxton.
TRANSITION HOUSE FUNDING
R. Kasper: The Sooke Transition House provides valuable service, with temporary accommodation, to women and children leaving violent homes or relationships from as far away as Port Renfrew and also fills in the gaps that are currently provided by other transition houses in the capital regional district. The society that runs this service has been advised by the B.C. Gaming Commission that no further funds will be forthcoming. That's a $37,000 reduction from a $104,000 budget.
My question to the Minister of Women's Equality is: at a meeting on March 19 -- last week -- when this society had requested assistance for their coming budget and their coming funding year, why did the ministry advise that there were no further moneys forthcoming? And that's despite the fact that in the current budget, it shows under this program area that there is a $6.4 million increase in funding in your ministry.
[1425]
Hon. E. Gillespie: Every transition house in this province faces very severe service pressures. There is a very
[ Page 17523 ]
strong need for transition houses across this province, as there is in Sooke. My ministry has met with the Sooke Transition House Society, and my ministry officials have met with me. We have offered our assistance to assist the Sooke Transition House Society to provide the best possible service with the resources available.
The Speaker: The member for Malahat-Juan de Fuca has a supplementary.
R. Kasper: The B.C.-Yukon Society of Transition Houses has used the Sooke Transition House as an example of inequities in funding for transition houses. I also have letters of support from Hill House Transition House, the Sooke RCMP, the Ministry for Children and Families and the Sooke RCMP victim services division. My supplementary question is this: why is it that when staff in my office contacted the ministry, the 13.3 percent increase in the budget was not an increase at all and the moneys that had been allocated, we were advised, were going to go for pay raises within the ministry and for those program areas?
Hon. E. Gillespie: The additional funding in the budget for transition houses under the Ministry of Women's Equality is for low-wage redress that has been negotiated with that sector.
The Speaker: The member has a further supplemental question.
Hon. J. MacPhail: Are you in favour of low-wage redress?
R. Kasper: Well, hon. Speaker, I don't think there's any member here
who's opposed to low-wage redress. But more importantly, is that
Interjections.
The Speaker: State your question, please, member.
R. Kasper: Well, I listened to you guys for nine years; you can at least listen to me for 30 seconds.
My question to the minister is: what kind of message is she sending to those women and children who are trying to leave a violent situation in rural British Columbia, purporting to express the interests of those who live in the urban parts of our province and ignoring the needs of those who are in rural British Columbia? What is she going to do about the needs of the rural children and women leaving violent situations?
The Speaker: Noting the time, minister
Hon. E. Gillespie: As I said in my answer to your first question, my ministry has committed to working with the Sooke Transition House Society to make sure that they are able to provide the services necessary in that community.
The Speaker: The bell ends question period.
Tabling Documents
Hon. G. Robertson: I rise to ask leave to table a report.
Leave granted.
Hon. G. Robertson: I present to you the report of the aggregate advisory panel, March 2001.
Hon. T. Stevenson: I also wish to ask leave to table a report.
Leave granted.
Hon. T. Stevenson: I have the pleasure of tabling two reports: the first, the 1999 annual report of the Job Protection Commission, and the second, the 1999-2000 annual report of the Ministry of Employment and Investment.
Orders of the Day
Hon. G. Janssen: I call Committee of Supply to debate supplementary estimates. For the information of members, we will be discussing the supplementary estimates for the Ministry of Education.
[1430]
The House in Committee of Supply; D. Streifel in the chair.
The committee met at 2:30 p.m.
SUPPLEMENTARY ESTIMATES:
MINISTRY OF EDUCATION
On vote 24(S3): ministry operations, $83,000,000.
[1435]
G. Hogg: I wonder if the minister could provide us with information with respect to the provincial populations as they adjust it over the course of the year and whether or not the projections that the year started with are consistent with the projections as they went throughout the course of the year.
Hon. J. MacPhail: Just to be clear, these are supplementary estimates about expenditures that have occurred, and I'd be happy to know under which category he feels that question falls. It's an open-ended question that really doesn't have much to do with the supplementary estimates.
G. Hogg: With respect to the minister's question, the concern is that the projections with respect to the population have been declining over the past two years. If, in fact, we're looking at supplementals and additional costs, I'd like to be able to compare them with the number of students that we were dealing with based on the original budget.
I'm expecting the minister, then, to advise me that the number of students that are being addressed with this amount of money is irrelevant with respect to it. I find that an interesting approach to reviewing a request for supplemental dollars on top of what was originally budgeted for a number of students.
That aside, I see there is a cost of movement of teachers in terms of the salary grid, and that cost is $4.5 million. I wonder if the minister could advise whether or not this was something that was anticipated or if this was a shift in the salary grid that was not anticipated and therefore not budgeted for in this matter.
[ Page 17524 ]
Hon. J. MacPhail: With due diligence and prudent financial budgeting, Treasury Board asked the Ministry of Education to look at the salary grid for teachers and see whether there were any savings to be achieved. In the course of that budgeting process, they put a ribbon around $4.5 million to see whether those savings could be achieved. Indeed, upon close examination there were no savings to be achieved in the salary grid, and so the money is released.
G. Hogg: It's my understanding that salary grids are able to be projected for an extreme length of time, that there should be no surprises with respect to the salary grids and the teachers who are receiving increments with respect to those salary grids. Therefore I don't understand the answer to the question, saying that the money was there and you were asked to find savings, and now the money is being released. Does that mean that the $4.5 million is being included as part of a salary grid that was unanticipated? Or does that mean that it is being released back to some other place?
Hon. J. MacPhail: There was discussion by the Ministry of Education
about whether the projections about what would be the nature of the experience
of the teacher and what actually occurred
[1440]
Treasury Board asked to see whether the ministry could find $4.5 million in savings based on the ministry's projections about how experienced the teachers would be that the boards are hiring. However, at the end of the day, it's the boards that do the hiring and determine the composition of teachers. That saving was not achieved, and so instead of cutting funding for education, we restored that savings.
G. Hogg: I understand the minister to say that we don't have a system in place where we're able to anticipate the salary grids, the improvements as teachers move up that salary grid, and that we don't have in place a human resources system or financial system that can tell us exactly the amount of movement there will be on the salary grid with respect to teachers. I find it difficult to fathom that the system is not there for each one of our teachers and that we don't have a system of being able to say, "This is the movement that will occur on this grid this year," and that we are not able to project that with considerable accuracy, with the exception of those new teachers who come into the system. We may not know exactly what their experience is or how they fit into the system. Is the minister telling me that we're not able to project that salary grid with any more clarity and specificity than the number here reflects?
Hon. J. MacPhail: Well, under an NDP government, Education's budget is almost $3.7 billion. Of that, the salary budget for teachers exceeds $2.5 billion. It's almost $2.7 billion under an NDP government. I don't think that would happen under a Liberal government; that's for sure. That salary would be decreased to who knows what level.
But yes, under a $2.7 billion salary budget for teachers -- where the school boards do the hiring; where the school boards don't know who's coming back or can't predict exactly who's coming back the next year; where the school boards can't, until the actual school year starts, determine the composition of teachers -- yes, you're right: there is not a fail-safe salary grid prediction in place. What a surprise.
However, in a $2.7 billion budget for teachers' salaries -- under an NDP government, let me be clear -- which will be put at risk if the Liberals ever get in, it was under prudence to say: "Is there about $4.5 million that you can predict in savings?" However, because we protect health and education, because that is a priority for our government, when those savings could not be found because of the composition that the school boards hire in teachers, we didn't cut funding for education. We restored it.
G. Hogg: The minister made reference to a question I asked earlier, saying that it was irrelevant and not part of this. Certainly the ramblings the minister has just provided us with are not a part of this review either. I would appreciate having a focus on the questions that are being asked.
I'm willing to move on to the heating assistance for the schools. Could the minister please advise us as to the projections shown by school boards across this province in terms of their needs with respect to heating assistance and what percentage of that total the $9.2 million represents?
Hon. J. MacPhail: It's the full cost of natural gas for the fiscal year.
G. Hogg: Could the minister advise what the quantum is on that number?
Hon. J. MacPhail: It's $9.2 million. You announced it before. Didn't you just say the $9.2 million?
The Chair: Before I recognize the member, I'd ask the minister to direct her comments through the Chair.
G. Hogg: Is the minister advising me, then, that the full projections with respect to the fiscal year that each school board of this province has shown in terms of their increased heating costs are going to be covered by $9.2 million?
[1445]
Hon. J. MacPhail: For natural gas.
G. Hogg: Are there other heating assistance moneys being provided to school boards beyond the cost of natural gas?
Hon. J. MacPhail: That's under review as we speak.
G. Hogg: When can we expect an answer to that?
Hon. J. MacPhail: Soon.
G. Hogg: I will go back to my office and look up the definition of "soon."
With respect to the special education enrolment and the $100,000, could the minister please explain the shift within the costing for the special ed additions?
Hon. J. MacPhail: Under recalculations, special education funding increased by $12.75 million -- $1.284 million for
[ Page 17525 ]
severe behaviour children, $10.464 million for severe handicapped children, $806,000 for multiple handicapped children. In special education I have included aboriginal education and ESL, but really those are separate categories as well. So aboriginal education funding increased by $1,587,800, and English as a second language went down by $1.39 million. That's how you reach the $12.75 million figure.
G. Hogg: And that figure, then, shows to be $100,000. The $100,000 that is reflected in the supplementals is the amount above that?
Hon. J. MacPhail: You asked specifically about special education, but the puts and takes in recalculation is a net of $113,933. That's after we take into account all of the puts and takes.
G. Hogg: Thank you. Well, I'm almost reluctant to ask this question, hon. Chair, because of the response I received from the minister at the beginning with respect to enrolment numbers. But perhaps she will interpret the supplementary estimates actually to involve enrolment, because her papers reflect enrolment buffer savings of $10 million. So I wonder if the minister could respond, once again, to the question of the population of the students of this province and how those have been adjusted, therefore providing the buffer savings which is reflected in this. Can the minister please advise of those numbers and the enrolment changes that have occurred to give this $10 million buffer saving?
Hon. J. MacPhail: For this specific year in recalculation it's a 0.6 percentage enrolment decline equivalent to $15,880,325.
G. Hogg: Thank you to the minister for recognizing that the populations actually are a part of the estimates process, or the supplementary estimates process, and for focusing on those figures. With respect to the independent school funding formula change, could the minister explain the $5.2 million?
[1450]
Hon. J. MacPhail: It would be interesting to note what would happen to independent school funding if the Liberals ever brought in a tax cut of $3 billion. Independent school funding here of $5.2 million is $3.5 million to ensure that grants remain status quo for independent schools and also $1.7 million for an increase of 258 students in group 1 schools and 231 students in group 2 schools.
G. Hogg: I understand that the formula, then, for the calculations of increases to the independent schools is the same formula that is utilized with respect to the public school system, and the small increase over that is based on an increase in student population. Is that in fact correct?
Hon. J. MacPhail: That's the first half that I described to you, and
the second half is the increase in category 1, group 1 students, and group
G. Hogg: Well, that's the second half of what I stated as well. So thank you for that.
In determining those percentages, is it true that the actuals are used for the public school system and then the percentage that is developed for the use of the independent school system is based on the initial grants, and therefore there may be a different formula utilized, in terms of the numbers of students, for calculating the funding?
Hon. J. MacPhail: I'd be happy to provide a technical briefing on all of this information. The formula that's used is: for group 1 students it's 50 percent of the per-pupil amount for the district in which the independent school is located, and for group 2 calculations it's 35 percent of the per-pupil amount in the district in which the independent school is found.
G. Hogg: My question was with respect to the increases, not with respect to the formulation that occurs with independent schools. My question was focused on the way the percentage increases are developed for the public schools, and then the policy is to provide that same percentage increase to the independent school system. That's where there was a glitch in the budgeting process last year, and then the government changed its mind and came through to provide a similar percentage.
My question was on the formulation of that percentage. And that percentage, when it's done with the public school system, responds to and is adjusted based on the actual expenditures that occur, whereas with the independent school system it's done on the original grant, with no opportunity to change it. So there's a slightly different inflection in the formula, and I was just asking if that is, in fact, how this was developed -- using those original grants, versus the actuals that occur in the public school system. Therefore, with that practice of implementing it, the percentages do not reflect directly across for the actual uses of the independent system versus the actual uses of the public school system.
So my question is: has that percentage been developed on a grant with the independent school system as it starts, at the beginning of the year, and with the actuals for the public school system?
Hon. J. MacPhail: My answer doesn't change because the question was asked again. The amount given to independent schools is a percentage of the per-pupil amount that's established for the district in which the school is located. The per-pupil amount doesn't change. The percentage is the same.
[1455]
G. Hogg: I guess I'm not able to ask that question in a way that it can be understood in terms of the overall granting. My concern was not the issue of how it's done with each student as a percentage of the school district in which the independent school functions but of the overall projection of the amounts. But it's apparent that I'm not getting an answer to that, so I have no further questions with respect to this.
Vote 24(S3) approved.
The committee recessed from 2:56 p.m. to 3:01 p.m.
[D. Streifel in the chair.]
SUPPLEMENTARY ESTIMATES:
MINISTRY OF ADVANCED EDUCATION,
TRAINING AND TECHNOLOGY
On vote 11(S3): ministry operations, $228,000,000.
The Chair: I call the committee to order.
[ Page 17526 ]
J. Weisbeck: First of all, I'd like to refer to the Michael Smith Foundation. This is a five-year funding project, yet we're giving all of the $110 million in the first year. Obviously there's some great advantage to the society to have all that money up front. They accrue quite a bit of interest income over those five years. But I wonder if there's any advantage in doing it this way or whether it wouldn't be a better idea to spread it over those five years. When we start leveraging money to try to get some other funding, whether it be from the Canadian Institute of Health Research or CFI or the knowledge development fund, I wonder if there would be more of an advantage in having those funds spread over the five years.
Hon. C. McGregor: I know there are probably a number of models that could be proposed. This is one that suits the foundation and government as well. In particular it suits the foundation from the point of view that they are able to accrue interest on the full amount of the $110 million, and that can then be used to supplement those investments in health research. So it serves a very good purpose for them to have the full amount and be able to garner the benefit that the interest accrued will provide.
J. Weisbeck: Is there any estimate of the amount of money that could be leveraged using this fund with the other development funds, etc.?
Hon. C. McGregor: The estimate is that we will garner between $4 and $7 of federal research funds for every dollar invested from the provincial fund, so it's a very good return.
J. Weisbeck: I wonder if I could have a little explanation of how that's going to work under the business plan. What happens to those moneys? Right now I look at the business plan, and I see that they are spending -- $18 million, $20 million, whatever -- the full amount of the funds over the five years. What happens to those extra moneys? Do they have plans for those?
Hon. C. McGregor: Those will flow to specific projects on the basis of application to the federal funding mechanisms.
J. Weisbeck: In the briefing we were told that this foundation is set up at arm's length from government. Yet I noticed that 34 percent of the board members are being appointed by the government. I don't understand how that works on an arm's-length basis when the government has such an influence on who sits on the board.
Hon. C. McGregor: I think it's fair to note that 37 percent is far less than half, so clearly government cannot cause the board to take a particular direction. I think it's appropriate for there to be some representation from government.
In part it facilitates communication between the non-profit society and the provincial government. There can be a transmission of information in both directions in order to facilitate better access to information around funding issues, things like the B.C. knowledge development fund, for instance, having a representative from government who can speak to the nature of those criteria and how the foundation might be able to access those dollars. This is just one example of how communication might be facilitated by having a government ministry representative. It is going to be the deputy minister who will sit on that committee, and he's really looking forward to it.
[1505]
J. Weisbeck: The next item is a $46 million item that is split into two parts, one of them being an equipment grant. I'm curious to know how you arrived at that $23 million.
Hon. C. McGregor: Much as I love all the stakeholders that are part of the Advanced Education portfolio, if they had their wish list, it would probably include multimillion dollars' worth of equipment and library acquisitions.
What we did was we looked at the original budget, which was about $12 million to $13 million annually, and we sought to double that. We doubled it on a one-time basis in order to really supplement the support we've been able to give institutions. Then, of course, that is assigned to institutions on a formula basis in order to create fairness to institutions around the province. Also, to make sure that the member understands exactly how the formula worked, there were greater dollars that flowed to BCIT in particular, because of the very technical nature of many of the programs they offer. They are in more need, in large part for different equipment, as part of their basic programs.
J. Weisbeck: You've answered part of my question, how these funds are distributed, but I would sure like to have a breakdown of the various institutions.
I guess my concern always is that the rural communities get their fair share. I've said numerous times that Okanagan University College doesn't think it's getting its fair share of some of these dollars. If I could have your opinion, as well, and a breakdown of that distribution.
Hon. C. McGregor: As soon as we're finished the final details on the allocation formula and have talked to the institutions one last time to make sure that we're meeting, as best we can, everyone's concerns on this question, we'd be happy to give you the list for each institution.
Like the member opposite I want to make sure that those rural institutions outside of the lower mainland get their fair share.
J. Weisbeck: The next part of that line is the indirect costs of research. Can we leverage those funds, as well, to try to get more federal dollars, or is that separate from those applications?
Hon. C. McGregor: These dollars are really designed to supplement the federal grant dollars, because much of the federal grant program doesn't cover many of the costs of the institution in order for it to do the research program. As I understand it, the universities council in particular is continuing to lobby the federal government on actually including indirect costs of research as a part of their grant structure or to create some new formula through which universities can be awarded those costs.
I think it's fair to say that it is a strain on the institutions to have to pay fully the cost of overhead and staff salaries over
[ Page 17527 ]
and above the costs of the research. So it's a cost that we want to recognize, and we think the federal government should as well.
J. Weisbeck: This particular funding is directed only at universities. Once again, Okanagan University College does some research, yet it is not getting a chance to apply for these funds. When I look at Tech B.C., for example, where they've talked about some of these funds going to furniture and equipment, I guess I would like to see some of these funds being directed to some other research areas in the province.
[1510]
Hon. C. McGregor: With the $23 million we talked about earlier, the equipment and library resource budget, the OUC or any other institution -- for instance, Malaspina also does some very interesting applied research -- can take those dollars and apply them to those programs, if they wish. We were trying to be fair to all the institutions, so universities will get a share on the indirect research side with their $23 million, and $23 million will flow to colleges and university colleges.
J. Weisbeck: This is a one-time grant. What is the estimate of the ongoing costs of the indirect costs of research? I know the university has talked about a number, and I wonder if you could just confirm that for me. I thought they said that it was around $20 million annually. This is obviously just a one-time grant.
Hon. C. McGregor: At least in part, some of these costs come through annual operating costs that are given from government to the institutions, although we do recognize that there are those pressures, and we have those conversations with them. As a result of that, they made the submission that the member makes reference to that they believe the actual annual costs are $20 million. This is a step in the right direction. We fully acknowledge that it's not all the way there yet, but we saw it as an opportunity to address one of the university's concerns.
J. Weisbeck: One of the lines calls for post-secondary accords of $19.3 million. I just noticed in our briefing that it says: "New costs outside zero-zero-and-2." I wonder if I could have an explanation of that number, please.
Hon. C. McGregor: First, hon. member, I think it's better to make reference to these being parallel agreements, as opposed to outside of. These were processes that went on simultaneously at the bargaining table.
There were a number of issues addressed through the accord process, including at the university support staff level, a pay equity agreement that cost $6.252 million and an improvement to health and welfare benefits in that same sector that had a cost of $6.276 million.
As well, there was the BCIT faculty and support staff accord, and they were doing polytechnical advisory council workload analysis at a cost of $125,000. The college support and technical staff accord agreed to a pension review committee and a joint benefits trust, as well as a long-term disability, short-term illness and injury plan, which had a full cost of $5.21 million.
Then as a part of the BCIT faculty and support staff settlement framework, there was a short-term professional development leave provision that amounted to $75,000 and the college support staff common agreement, which was another low-wage redress implementation at $703,000, for a total of $19.317 million.
[1515]
J. Weisbeck: The last question I have relates to the natural gas. I understand the $3.5 million accounts for a third of the actual cost of the gas. I want to know how that difference is going to be made up. It seems to be a lot of money, if it's another $6 million. It's a lot of money that has to be made up by the institutions. I guess my concern is the impact it has on the dollars per student and access and course selection. I wonder if the minister could respond to that and if there has been any sort of allowance made for making up that difference.
Hon. C. McGregor: When we did the original calculations, the actual costs as the year went on came in higher than we had originally anticipated in the initial survey with institutions. So clearly there's a gap there, and we recognize that. We'd like to do some more work on it, and we hope that there might be more we can do.
But I think in part we also are depending on the institutions to take initiatives internally for savings, and that isn't encouraged if one fully funds the full natural gas bills. So in other words, there has to be a reason why they would want to reduce costs in that area. I know institutions are working very hard on strategies they can apply that will save energy costs in their own institutions, and have done so in the past as well. So we're going to continue that work with them.
There's also the green buildings initiative in which we're using that strategy with BCBC and our own institutions to make sure that future new building designs and retrofits give us a capacity to reduce energy costs as well. The member notes that this is an area of concern. It is for me as well, and we're going to continue to work with the institutions on that.
Vote 11(S3) approved.
The Chair: We'll take another short recess while the ministers and the officials change.
The committee recessed from 3:18 p.m. to 3:20 p.m.
[D. Streifel in the chair.]
SUPPLEMENTARY ESTIMATES:
MINISTRY OF FINANCE AND
CORPORATE RELATIONS
On vote 57(S3): seismic mitigation, $9,700,000.
G. Farrell-Collins: Perhaps the minister can tell us how this figure was arrived at.
Hon. P. Ramsey: As I think the member learned during a briefing on the supplemental estimates, during the last year ministry staff has been working with the office of the comptroller general and the office of the auditor general to make sure that we are treating both capital and operating expenses appropriately. One of the things we discovered as we went
[ Page 17528 ]
through it was that the seismic program, which had been booked as a capital expense in Budget 2000, should really be treated as an operating expense. So this is simply the amount of the seismic program that was in the capital budget now being moved to a voted appropriation in the operational budget.
Vote 57(S3) approved.
On vote 58(S3): B.C. energy rebate, $78,000,000.
G. Farrell-Collins: This is the portion of the energy rebate that relates to the means testing as to whether or not an individual claimed and qualified for the GST rebate, which is something that is administered by the federal government.
There were some concerns, when the federal government did their energy rebate using this mechanism, that individuals who had passed away were receiving cheques and individuals who were in jail were receiving cheques. Now, I know that there is a piece of legislation which we discussed this morning in second reading and have not yet discussed in committee that had some provisions around that. Perhaps the minister can give us some assurances that similar problems won't arise with the program the provincial government is putting in place.
Hon. P. Ramsey: Without going into great detail about the energy rebate program, as the member recognizes, this is one of about five different components of the program that was announced in February by the Premier and myself: the $200 B.C. Hydro rebate, increased energy audits through the B.C. Hydro program, the green program, funds to schools and colleges -- which I think we've debated in some previous supplementary estimates -- and this portion.
The member is right: the trigger for access to these funds is GST eligibility during the 1999 tax year. It depends on income level, then, and family circumstances, depending on who's eligible for it. A single person will be eligible for $50, with a maximum family income of up to $32,000. If you're a single parent with a child, that maximum goes up to $38,000, and you qualify for $100.
The member asked two specific questions. I'll try to answer them. One is about deceased persons. The two qualifications for the program are: (1) you file the '99 return, and (2) you're a resident in the province from January 1 through March 31, 2001. Individuals who are deceased prior to April 1, 2001, will not be eligible for it; however, their spouse may be. So that is how we've attempted to deal with this. CCRA is planning to deliver this rebate at the end of April or early May. Anybody who was deceased before March 31, 2001, would not be eligible.
[1525]
G. Farrell-Collins: Hopefully the minister will indulge me for just a moment. There were other components of this, as he said -- five components to this rebate. This is one of them that requires legislation. There are rebates that were granted through B.C. Hydro, for example. There were rebates, as well, that were just granted from general revenue -- the ones we spoke about earlier that went to health care and education. There were no rebates given to the social services sector in any way, shape or form, and I assume, therefore, that they're not contained in this or any of the other votes. Can the minister tell us why the decision was made to exclude them?
Hon. P. Ramsey: I'm not sure whether you're asking about recipients of income assistance, who would obviously qualify for this rebate, or the social services sector.
Interjection.
Hon. P. Ramsey: Okay. When we were looking at the rebate, we canvassed ministries for pressure points where ministries felt that institutions were going to be unable to meet the pressures of increased energy costs in the winter of 2000-01. That sector did not identify this as a major pressure on their budgets. Health did but not to a significant extent, having received, as the member knows, the benefit of two large supplementary estimates in the fall. Education certainly did, and I think the member heard concerns around the province. Colleges and institutes did, and the minister spoke to that.
G. Farrell-Collins: Had the minister responsible for the social services sector made the Minister of Finance and cabinet aware of pressures within the social services sector, it may well have been considered in ways similar to the Ministry of Health and the Ministry of Education.
Hon. P. Ramsey: And had Treasury Board staff ascertained that such was the case. Treasury Board staff did a lot of due diligence on this to make sure that the money was indeed needed and represented real incremental costs.
G. Farrell-Collins: It's amazing how much trouble government has getting money from the taxpayers. Every year we amend legislation over and over again, so it's not surprising that it's sometimes difficult to give it back to them. Maybe that's a new area of study for legislators and legislative drafters in the years ahead.
I do want to ask another question, because I've received calls -- as I know other members of the Legislature have as well -- about these rebates. One of the examples that I received -- and it's not directly with the GST rebate, but rather the component of the Hydro rebate -- was one where households were to receive, I think, $100 per household. Sorry, $200 per household?
I don't know. I don't think I've received mine yet. I don't know if I have or not. I'll look and see. Actually, I had overpaid my Hydro bill, so I had a credit anyways. That's one of the hazards of Internet banking; I hit the wrong key.
But I had one example, and I know there are others out there, of a co-op that purchased their power as a chunk and will receive one rebate despite the fact that there are many people living in that co-op. Was there any attempt to try and address those kinds of scenarios as well?
Hon. P. Ramsey: Yes, this was examined, as were many other scenarios,
including
[ Page 17529 ]
who were the neediest and had the highest costs got the most rebate. And we'd have probably been able to deliver a cheque sometime in August at a cost of $10 million in administration.
[1530]
We very deliberately chose measures that -- I will absolutely acknowledge to the member -- are in some cases rough. We did it so we could get the money in the hands of those who have been grappling with high energy costs as soon as possible. Actually, I had hoped to beat CCRA back and have them deliver the cheques a little earlier -- like the end of March rather than into April. In spite of excellent work by staff, we were unable to persuade them to move any faster.
So it is not -- and I will never say that it is -- a perfect program. It is a program that puts some $300 million from Hydro and another $78 million here back into consumers' hands, and I think that does provide some significant assistance with high energy costs this winter.
G. Farrell-Collins: Can the minister tell me whether there was any discussion or debate around rebates to small business that may have been impacted by these significant costs as well?
Hon. P. Ramsey: We did look at that. One of the things we had a great difficulty in doing was separating out small businesses. I use the greenhouse sector as an example, because I think the member and I have both heard from them -- huge variations in the actual cost of energy within that one sector. Some had managed to lock themselves into long-term contracts at a relatively low cost and were, frankly, doing fairly well. Others had chosen a different business strategy, had exposed themselves to spot market prices and were facing $12 a gigajoule for gas all of a sudden. So rather than do it with this route, we have been open to working with businesses through the job protection commissioner, which is what we did for the greenhouse sector, which resulted in access to a loan program to help them over the winter and adjust to other sources of energy.
Vote 58(S3) approved.
Hon. P. Ramsey: I move that the committee rise and report the resolutions.
Motion approved.
The committee rose at 3:33 p.m.
The House resumed; the Speaker in the chair.
The committee reported resolutions.
The Speaker: When shall the report be considered?
Hon. P. Ramsey: Forthwith, hon. Speaker.
I move that the report of resolutions from the Committee of Supply on March 27, 2001, be now received, taken as read and agreed to.
Motion approved.
Hon. P. Ramsey: I move that there be granted from and out of the consolidated revenue fund the sum of $398.7 million. This sum is in addition to that authorized to be paid under section 1 of the Supply Act, 2000-2001, section 1 of the Supply Act, 2000-2001 (Supplementary) and section 1 of the Supply Act, 2000-2001 (Supplementary No. 2) and is granted by Her Majesty towards defraying the charges and expenses of the public service of the province for the fiscal year ending March 31, 2001.
[1535]
Motion approved.
Introduction of Bills
SUPPLY ACT, 2000-2001
(SUPPLEMENTARY No. 3)
Hon. P. Ramsey presented a message from His Honour the Lieutenant-Governor: a bill intituled Supply Act, 2000-2001 (Supplementary No. 3).
Hon. P. Ramsey: I move that the bill be introduced and read a first time now.
Motion approved.
Bill 16 introduced, read a first time and ordered to proceed to second reading forthwith.
Hon. P. Ramsey: Since it has already been circulated, we don't need to take that pause here. The use of supplementary estimates is consistent with the way this government has been functioning since the passage of the Budget Transparency and Accountability Act, in accordance with the recommendations of the Enns committee and the auditor general.
This supply bill is introduced to provide supply for the operation of government programs for the 2000-01 fiscal year, as outlined in the Supplementary Estimates (No. 3) tabled earlier. The bill will provide additional funds required to defray the charges and expenses of the public service of the province for the fiscal year ending March 31, 2001. As required by the Financial Administration Act, special warrants are also included in this bill. Schedule 1 lists the warrant approved in the 2000-01 fiscal year.
The government has made a commitment to restrict the use of special warrants to extraordinary circumstances. Clearly the circumstances relating to the British Columbia student assistance program were extraordinary. The use of special warrants in extraordinary circumstances is contemplated in the Budget Transparency and Accountability Act, and the government has fully complied with the enhanced disclosure requirements for special warrants.
In accordance with the established practice, the government seeks to move this bill through all stages this day.
The Speaker: Thank you, minister. In keeping with the practice of the House, the bill will be permitted to advance through all stages in one sitting.
SUPPLY ACT, 2000-2001
(SUPPLEMENTARY No. 3)
(second reading)
Hon. P. Ramsey: Hon. Speaker, I move that Bill 16 be now read a second time.
[ Page 17530 ]
Motion approved.
Bill 16, Supply Act, 2000-2001 (Supplementary No. 3), read a second time and referred to a Committee of the Whole House for consideration forthwith.
SUPPLY ACT, 2000-2001
(SUPPLEMENTARY No. 3)
The House in committee on Bill 16; D. Streifel in the chair.
Section 1 approved.
On schedule 1.
[1540]
G. Farrell-Collins: Schedule 1 is the $80 million which is retroactively being granted as a result of the special warrant which was issued by the government some time ago. Perhaps the Minister of Finance can explain to us the particulars surrounding the discovery of the expenditure of $65 million without legislative approval and how we came up to today, where we're asking for $80 million retroactively.
Hon. P. Ramsey: Actually, the $80 million, I understand, covers the program for the entire fiscal year, both retroactively and prospectively, since the special warrant was approved. The circumstances are these. In the summer of 2000 the Ministry of Advanced Education, Training and Technology reassumed responsibility for the B.C. student loans program as a result of the chartered banks deciding they no longer wished to participate even with a risk premium to administer that loan program.
At that time staff advice to both the Minister of Advanced Education and myself was that this could be authorized and put in place by an order-in-council, and that order-in-council was indeed passed, if memory serves, on July 12. Anyway, it was July of 2000. There it rested. Loans were issued, and it was not until early in 2001 that Treasury Board staff -- and I think staff in the Ministry of Advanced Education also -- started puzzling about whether what we had done was sufficient and whether a supplementary estimate of some sort would be required once the House had been resumed.
It became apparent in the first week in March that this program was more seriously out of line with the requirements of the Financial Administration Act than I or the Minister of Advanced Education had thought. It was clear that we could not wait for a supplementary estimate, and the program was indeed suspended because it was not in accordance with the Financial Administration Act.
At that time I canvassed ministry staff for options for dealing with it. The options were essentially three: One, recall the House on the 7th or 8th, even though the House had been scheduled to be recalled on March 14. Introduce a supplementary estimate and pass it. That seemed to be an abuse of tax money, since we were going to be reconvening the following week in any case.
Two, wait until the House reconvened and then pass a supplementary estimate. This would disadvantage literally thousands of students who had approvals for student loans but who would not get any disbursements because the program had been suspended until a supplementary estimate was passed.
Having exhausted those two as inconveniencing the taxpayers' purses or students, it was decided to use the extraordinary provision and put in place a special warrant.
G. Farrell-Collins: The minister told me today -- and this is news to me right now -- that government was advised that it can be done by OIC and that that was done. I wasn't made aware of that, but I am now. My understanding is that in the first week of March -- I think it was the 6th -- the minister finally cut the cord for this program and put a halt to it. It was the first week of March anyway, the 6th or 7th. Now, obviously it wasn't discovered that first week. This had been known for some period of time. When did the Ministry of Finance and the Ministry of Advanced Education first realize that this was a problem and that this amount had not been funded properly?
Hon. P. Ramsey: Treasury Board staff and staff in Advanced Education had discussions. Staff advised me in late January around this issue. The Minister of Advanced Education became aware that further legal authorization for the program would be required on February 21. My recollection is that I was advised somewhere around the same time.
[1545]
At that time staff advice was that the program could continue until the Legislature resumed, and we could do a supplementary estimate. It was not until the first week in March that there was further review by staff, and their advice to me and to the Minister of Advanced Education said: "This is a program that is very seriously offside with financial administration." They were not comfortable with having it proceed and wait for the House. I was not comfortable, and the program was suspended.
G. Farrell-Collins: I think the minister said that the Ministry of Finance became aware sometime in late January. I think that was what he said -- late January. The Minister of Advanced Education was made aware on February 21, as the Minister of Finance himself was made aware at roughly the same period of time. Then it was March 7 when the plug was finally pulled on the program. Can the minister give us some detail of the original assessment and what changed in that assessment in that intervening period of time that made the problem a much more magnified one?
Hon. P. Ramsey: Actually, my understanding is that further work by staff was ongoing within the Ministries of Finance and Advanced Education, examining the issue and, I believe, starting to prepare for a supplementary estimate. They consulted various other officials, including the office of the comptroller general. Then at that point I think anxiety heightened all around.
I must say that had I known last December what I knew on February 7, we would have introduced a supplementary estimate for this in December when we had that one-day sitting of the Legislature. Had I known in September, the same thing would have happened. Having been advised by the comptroller general and senior staff that this was seriously offside and that action had to be taken and that it couldn't wait for a supplementary estimate, we then suspended the program, examined options and moved to the special warrant.
G. Farrell-Collins: This program previously was run by the government. In the years it was run previously by the
[ Page 17531 ]
government, was it not required that an estimate be passed, a vote be passed, that included the amount that would be required to grant the loans?
Hon. P. Ramsey: Staff and I are looking around for a finance official from Advanced Education, and he has just arrived.
G. Farrell-Collins: He thought he could go home.
Hon. P. Ramsey: Actually, I thought they were going to take all the questions on the warrant, not me.
My understanding is that what we authorized in the past, prior to the banks taking it over, was an expenditure for losses, essentially. There is a loss provision for this program. When the banks took it over, that became another version -- the risk premium that we paid to the banks in order for them to pick it up. But these are financing transactions that need an authorization under the Financial Administration Act, and therefore we found ourselves, contrary to anybody's expectations, without the correct authorization in place.
We can pursue this, but I'm quite willing to provide staff to brief the member on the details of it. There is still a review internal to the Ministries of Finance and Advanced Ed to actually discover how this slipped through the cracks. This is a significant program, and yet it was not caught when we did the OIC in July; it was not caught when we did supplementary estimates No. 1 in September and supplementary estimates No. 2 in December. And the necessity for prompter action was not caught when we started to review needs for supplementary estimates in January, even into late February. How it slipped through the cracks of what I think are highly competent staff, both in Advanced Education and Treasury, is something we're now looking into so we can ensure that this incident does not recur.
[1550]
G. Farrell-Collins: I'm glad to hear that that's ongoing. I don't think anybody wilfully went out and spent $65 million without approval. I think it's just one of those things. But I do think the special warrant is something that happens behind closed doors. It is a little bit more transparent than it was previously; however, I do think that there is a duty to ask these questions in a public format, so that the public has some sense that we are closing the loop on the accountability.
I appreciate the answer that the minister gave, and I'm glad that a review is being done. I expect that we'll probably learn something from that review.
I do want to ask the question again, because
Hon. P. Ramsey: I thank the member for his question. I agree with him that special warrants are unusual, extraordinary, and that they should be probed and explanations should be offered.
I have learned from staff that we actually have three different sets of circumstances. Prior to '95 what we did was, really, guarantee loans by third parties, and the appropriation made then was for bad debts. From '95 to 2000 we had an agreement with chartered banks that was essentially risk-sharing. The theory, at least, was that government would reduce its exposure to bad debts. Banks would secure a relationship with clients who might be assumed to be prosperous and well-heeled clients in the future, and that was worth some sort of risk to the banks. As of 2000 the banks said: "No, it's not worth it to us in a business sense. We're out of there."
From July on we have been engaged in direct lending, so it is different from the situation before '95. Without presuming to forecast what the conclusions of the audit may find, it may well find that that difference is one of the reasons why it slipped through the cracks.
G. Farrell-Collins: I'm assuming, though, that prior to 1995, when government was providing loan guarantees, the provision for potential bad debts was included in the estimates, was voted upon and was not done by an order-in-council. Is that correct?
[1555]
Hon. P. Ramsey: The member is correct. There was an appropriation to cover bad debts prior to '95. When we went to the risk-sharing, there was an expenditure in budget estimates devoted to the cost of risk-sharing, and that amount actually continued into this budget. The issue with this budget and the need for this warrant is not to deal with the issue of bad debts. That money was in an appropriation already approved by this House. It is the authorization for doing the loans, which was not a requirement prior to '95.
G. Farrell-Collins: Does government loan money to people other than students?
Hon. P. Ramsey: This is fascinating. I thank the member for his question, but we are getting into a seminar which is going rather far afield.
As far as loans to individuals, just off the tops of our heads, we were able to identify two. One is damage deposits for income assistance recipients, and the second is the reverse mortgage provision for property taxes for seniors, which I think is treated as a loan on government books. There are at least a couple of other programs there, and I'll bet if we scratched our heads a little longer, we could find a couple more. But fascinating as this is, this is well beyond the bounds of the special warrant.
G. Farrell-Collins: Just to give the minister some reassurance, I intend to make it relevant, if he could just grant me a moment or two.
In those two instances that the minister just gave examples of, I'm assuming that government provides an appropriation for the granting of the loan and an appropriation for provision for bad debt -- loans that aren't repaid. Is that correct? If so, is that done in the estimates?
Hon. P. Ramsey: An interesting question. You have now exceeded the level of expertise of the staff I have with me in the chamber. I will take that question under advisement and provide the member with an answer.
[ Page 17532 ]
G. Farrell-Collins: I have a couple of other questions that perhaps the minister can answer either now or later. It is not as common a practice as it used to be, but I understand it still happens that government actually provides loans to businesses from time to time. I would ask the same question: when government grants a loan to a business as opposed to an individual, is there an appropriation for the loan and an appropriation that goes into the risk side and that says in the event that the loan is not repaid, here's what the charge might be?
[1600]
Hon. P. Ramsey: There are a number of programs around. The obvious one is the industrial incentive fund, which operates under its own act, and then there is a program in the Ministry of Small Business, Tourism and Culture where you do indeed budget for both the loans and the risk. Again, you've pushed the limits of our expertise in the chamber, and we will get back to you with that information.
G. Farrell-Collins: So in all of the examples the minister has given me that we've discussed so far, where government actually grants a loan to an individual or business, it is done through an appropriation. Can the minister give me any example other than this example -- i.e., the students loans -- where the government grants loans to individuals or businesses based on an OIC?
Hon. P. Ramsey: Staff advise that loans under the industrial incentive fund are done pursuant to OICs. There may well be others. The other thing I would say, though, is that there are different provisions for different programs. I would go back to what I said earlier about the fact that the program prior to '95 does not look like the program post-2000. Prior to '95 we were only guaranteeing loans -- no appropriation and appropriation for risk. In post-2000 we're both making the loans and covering risk. And I think, as I said, without jumping to conclusions ahead of the actual audit work that's being done, that may well be the source of the mistaken advice that led to this falling through the cracks.
G. Farrell-Collins: With the industrial incentive fund as an example that the minister used, that appropriation has already been voted by the Legislature, and then it's merely the allocating of that appropriation which has been granted by the Legislature.
In the case of the student loan program, which we inherited at the end of July of the year 2000, there was no appropriation to be allocated. It hadn't been made. I'm wondering if there are any examples that the Minister of Finance is aware of where loans are made through order-in-council, where a previous appropriation has not been made for those loans, and the OIC merely breaks up and allocates those funds.
Hon. P. Ramsey: Staff don't know of any.
G. Farrell-Collins: I'll wait to hear the answer from the minister on that one as well.
When it became obvious, first of all, that we would be inheriting this program -- and that happened sometime prior to the end of July last year -- was there any discussion between the Ministry of Finance and the Ministry of Advanced Education on how government was going to respond to that? This was essentially being dumped in our lap. Was there any discussion between Finance and Advanced Education to try and figure out how we were going to manage this new program which was dropping in our lap? Was there any discussion at that time about it?
[1605]
Hon. P. Ramsey: The member's question provoked a good seminar for the minister on what was going on back in June. Yes, there was contact between the Advanced Education ministry and the Ministry of Finance, in terms of what options were available to replace the risk-sharing that was there. One option that was proposed was that we could pay a very high risk premium to a bank -- some 13 percent, rather than the 5 percent we had in risk-sharing. That was thought to be not appropriate.
So we, again, took it upon ourselves. Staff satisfied themselves that the vote that they had in Budget 2000 allowed them to pay for bad debt. The part that was missed was the lack of an appropriation to actually acquire an asset -- i.e., make a loan. Just listening to staff, I think the review of how this went wrong will be fascinating as people ascertain who knew what when and why this slipped through the cracks.
G. Farrell-Collins: That review is a good exercise. I assume everybody will learn something from that. I'm glad to hear it's progressing.
The reason I asked that is twofold. I wanted to be sure that the Ministry of
Advanced Education wasn't sort of left hanging out there with a program that
perhaps didn't have the knowledge base or the expertise to fire up and run and
wasn't as aware of the requirements and provisions as perhaps staff in the
Ministry of Finance might be. The minister assures me that as early as June
there were discussions between the two ministries as to how to deal with this. I
suppose that at that time, had the government been aware that
I will be intrigued, as well, to sort of find out how this developed over that period of time. It seemed to me that there was a fair bit of discussion surrounding this, starting in June, at least, and perhaps before -- I don't think this thing just sort of surprised everybody, but it may have -- right up until February and March of this year. I will be intrigued to see what the various stages were as a bit of a case study to see how that all came together. Obviously had that dawned on us, there were opportunities back when the House was sitting in the spring and summer of last year to deal with it, and there were other options as well.
I can't think of any example -- but I'm not necessarily an historian and haven't been here that long -- where this type of thing has happened. I don't know if the minister is aware of the government making expenditures without legislative approval in the past.
[ Page 17533 ]
I'm wondering how that actually happens. Having never been on the government side of the House, I'm asking the question in a very frank way. How is it that cheques get cut and at the end of the month somebody doesn't do the reconciliation and say: "Hey, where did that money come from? Who authorized that cheque?" I don't know how it works. Perhaps the minister can enlighten me a little bit.
[1610]
Hon. P. Ramsey: The short answer is that ministries are not allowed to
make commitments without an appropriation. That's the rule. It happened in this
case. The review will ascertain why. Once you're able to make a commitment
G. Farrell-Collins: I used to fly airplanes for a living, and I was always leery of the autopilot, because once you engage it, you're allowed to fall asleep. And airplanes sometimes fly into the sides of mountains and things like that. It appears that this program was sort of operating on autopilot. Somebody engaged it around the end of June, into July, and the pilots went off and did other important things and let this plane fly.
I know the review will highlight what steps occurred that went wrong in this, and I understand that. I guess my question was a little more on the other side, as to why it wasn't caught. Or are there ways it should perhaps have been caught? I don't want to do the review right here, but I do want to explore this for a little bit. The government prepares reports every quarter and issued a number of them prior to this being discovered. As the ministries were preparing their quarterly reports, did nobody notice that there was a larger increase in the number of dollar bills that were going out of the ministry for this program? Is there no reconciliation along the way where that would pop up and appear as a red flag?
Hon. P. Ramsey: I'm not sure the autopilot analogy is entirely appropriate, but I think there are aspects of it that might be accurate. It is not intuitively obvious that this should or could have been caught in preparation of quarterly reports. In a $24 billion budget you're looking at around $6 billion a quarter, more or less. Though this is a significant program, $15 million or $20 million a quarter is significant but not a huge piece of what you're dealing with.
I think we're going to have to wait for the review to do its work. I recognize the member's interest, but frankly I'm feeling that I'm getting a little bit out of my depth in trying to explain the intricacies of this. So with the Chair's indulgence, I would say to the member: let's wait and see what the review turns up, so that this does not recur.
[1615]
G. Farrell-Collins: I'm prepared to do that. I just thought
It leads to a whole bunch of questions, which I won't ask here today. But it does lead to a number of questions. What sort of monitoring of expenditures is done in ministries on an ongoing basis throughout the fiscal year? Or when we start to prepare next year's budget, do we just sort of look back at roughly what was spent and find out if there are any problems? I wonder how closely that's monitored on a policy basis. How closely are those expenditures monitored, on an ongoing basis, so that this doesn't happen in other places? How do we know that other ministries don't overspend their appropriation without Treasury Board finding out about it, without the Ministry of Finance finding out about it?
It would seem to me that there needs to be some monitoring throughout the fiscal year, so that if something starts to get off the rails, it's picked up on earlier. Perhaps we'll have to wait for the review to find out the answer to that. But just as somebody looking from the outside who has never been on the inside, it's baffling to understand how $65 million can be spent without anybody knowing that there's no money there to spend. I just find it odd that that wouldn't have popped up somewhere along the way. Perhaps the review will focus a little bit on that. I would think that of all the things we may learn from this, that may be the most valuable -- as in, how do we monitor expenditures throughout the fiscal year and catch erroneous figures or inflated numbers or money that, as the minister says, just goes without being approved? I'll be interested to hear what the minister has to say or what the review will deliver when the time comes.
But I must say that there were a lot of eyebrows raised in British Columbia when they found out that $65 million had been spent with nobody approving. That just baffles the taxpayers' minds when they see that happening. I think they know that in their homes or in their businesses, if a significant chunk of money just went, they would notice it, and they'd notice it by the end of the month or pretty quickly thereafter. I'm intrigued by it. I await the review to see what we can learn from it, but I must say that my head shook for a little while when I heard that as well.
Schedules 1 and 2 approved.
Preamble approved.
Title approved.
[1620]
Hon. P. Ramsey: I move that the committee rise and report the bill complete without amendment.
Motion approved.
[ Page 17534 ]
The House resumed; the Speaker in the chair.
Bill 16, Supply Act, 2000-2001 (Supplementary No. 3), reported complete without amendment, read a third time and passed.
Hon. J. MacPhail: I call Committee of the Whole on Bill 2.
CHILD CARE BC ACT
(continued)
The House in committee on Bill 2; D. Streifel in the chair.
On section 4 (continued).
The Chair: Would the members please take their seats so we can effect the count.
[1625]
Section 4 approved on the following division:
| YEAS -- 38 | ||
| Conroy | Zirnhelt | Doyle |
| Gillespie | Kwan | Waddell |
| Hammell | McGregor | Giesbrecht |
| Farnworth | Lovick | Petter |
| Mann Brewin | Pullinger | Randall |
| Sawicki | Priddy | Cashore |
| Orcherton | Stevenson | Robertson |
| MacPhail | Dosanjh | Bowbrick |
| Janssen | Evans | Ramsey |
| Smallwood | G. Wilson | Miller |
| Sihota | Calendino | Walsh |
| Boone | G. Clark | Lali |
| Kasper | Goodacre | |
| NAYS -- 34 | ||
| Whittred | Hansen | C. Clark |
| Campbell | Farrell-Collins | de Jong |
| Plant | Abbott | L. Reid |
| Neufeld | Coell | Chong |
| Sanders | Jarvis | Anderson |
| Nettleton | Penner | Weisgerber |
| Weisbeck | Nebbeling | Hogg |
| Hawkins | Coleman | Stephens |
| J. Reid | Krueger | Thorpe |
| Symons | van Dongen | Barisoff |
| J. Wilson | Roddick | Masi |
| McKinnon | ||
G. Farrell-Collins: I just noticed that the member for Rossland-Trail joined us in the House today, and I want to extend to him a welcome. It's good to see him.
Section 5 approved on division.
Sections 6 to 24 inclusive approved.
Schedule approved on division.
Title approved.
[1630]
Hon. M. Farnworth: I move the committee rise and report the bill complete without amendment.
Motion approved.
The House resumed; the Speaker in the chair.
Bill 2, Child Care BC Act, reported complete without amendment, read a third time and passed.
Hon. G. Janssen moved adjournment of the House.
Motion approved on division.
The House adjourned at 4:33 p.m.
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