Hansard -- Volume 4, Number 6 -- Thursday, March 14, 2002

The following electronic version is for informational purposes only.
The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY



CONTENTS

	Routine Proceedings
		Page

Committee of Supply		1935
	Supplementary Estimates: Ministry of Health Services Hon. C. Hansen J. MacPhail Hon. G. Collins J. Kwan Supplementary Estimates: Ministry of Competition, Science and Enterprise Hon. R. Thorpe J. MacPhail J. Kwan Hon. G. Collins

Introduction and First Reading of Bills		1942
	Supply Act, 2001-2002 (Supplementary) (Bill 12) Hon. G. Collins

Second Reading of Bills		1943
	Supply Act, 2001-2002 (Supplementary) (Bill 12) Hon. G. Collins

Committee of the Whole House		1943
	Supply Act, 2001-2002 (Supplementary) (Bill 12) Hon. G. Collins

Report and Third Reading of Bills		1943
	Supply Act, 2001-2002 (Supplementary) (Bill 12) Hon. G. Collins

Committee of Supply		1943
	Estimates: Ministry of Community, Aboriginal and Women's Services (continued) Hon. G. Abbott J. Kwan

Hon. G. Collins presented a message from Her Honour the Lieutenant-Governor: supplementary estimates for the fiscal year ending March 31, 2002.

Hon. G. Collins moved that the said message and the estimates accompanying the message be referred to Committee of Supply.

Hon. G. Collins: I would just move a short recess to the call of the Chair while the estimates are being distributed.

Hon. C. Hansen: This supplemental estimate is being brought to the House today to provide for the funding necessary for physician remuneration in British Columbia. It arises out of the retroactive payments that we have committed to for doctors in the province. This being the first opportunity to bring this forward, we are seeking the authority of the House to extend the spending of the Medical Services Plan to provide for this $230 million.

J. MacPhail: I hope the executive council will bear with us as we ask these questions. It's been very short notice of the arrival of these supplementary estimates. We're trying our best to analyze them, so we will be asking a series of question in terms of just the intent before we get into the discussion of the advisability.

The minister states that this is for physician payments. What aspect of physician payments is this covering?

Hon. C. Hansen: Specifically, what it does is provide for the retroactive increase for fee-for-service that was indicated by the arbitrator — the retroactive payments of 6.2 percent on fees that would be retroactive to April 1, 2001. That's for the period of April 1 to October 31, 2001. Then for the period from November 1 to March 31, 2002, there is an increase of 11.6 percent. What it amounts to is the 6.2 percent retroactive to April 1, and then effective November 1 is a further increase, compounded, of 5.1 percent. That's how you come up with the 11.6 percent.

In addition to that, there is funding that is allocated to deal with the other issues around what was in the arbitrator's report. That includes on-call. That includes a retroactive increase for salaried and sessional physicians. It includes some other miscellaneous things that are there. A lot of the details of this, unfortunately, still have to be sorted out in terms of exactly how this gets structured. The ministry has done a significant amount of work trying to estimate exactly what is going to be required in terms of spending authority to deal with the retroactive components, and that's what's in this $230 million of increase.

J. MacPhail: I note that in the estimates of '01-02, the Medical Services Plan vote net of recoveries was $2,262,488,000. That's the figure which will now be restated in this estimate. Could the minister please break down the absolute dollar value that's been attached to each of these components of retroactivity?

Hon. C. Hansen: What this does is…. We had already…. There was a certain amount in the base, so the $230 million that is being added is added to $77 million, which was already identified in the base as being available. The total amount of the retroactive components, the retroactive issues, that we have to deal with is $307 million. That $307 million gets broken down to $140 million for fees. There would be $80 million allocated for on-call, volume issues would be $30 million, and then there are alternate payments and strategic initiatives of $57 million, for the total of $307 million less the $77 million which has already been provided for, for a net of $230 million that we are seeking increase in authorization for.

J. MacPhail: The $140 million for retroactive MSP fees covers the 6.2 percent and the 11.6 percent lifts.

Hon. C. Hansen: It's 6.2 percent retroactive to April 1 and then a further increase effective November 1 of 5.1 percent, for a compounded increase of 11.6 percent.

J. MacPhail: Thank you for clarifying that. That's exactly the discussion we were trying to have in Minis-

My point was, and the minister can nod, that the 11.6 percent uplift at the end is what the $140 million is for — the cumulative effect of that.

Hon. C. Hansen: This is one of these areas where I want to be careful not to bring more confusion than enlightenment to this discussion. Because the 6.2 percent is a full-year increase going back to April 1 and then the next stage starts halfway through the year, the actual net effect of the increase on the total year is 8.5 percent. If you were to take all of the fees for the total 12-month period, we would see an increase of 8.5 percent. But because the second stage is increased halfway through the year, it goes up to the 11.6 percent only halfway through the year. If you look at it from a total 12-month perspective, it would be 8.5 percent.

J. MacPhail: Yes, thank you for that, but what I'm trying to figure out is…. The real effect of an 8.5 percent lift is what you're identifying as the $140 million cost — okay.

First of all, perhaps the Minister of Health Services can update us on the status of negotiations with the B.C. Medical Association on these payments.

Hon. C. Hansen: I'd seek some guidance from the Chair in terms of the latitude of this discussion. I must say I've never had to shepherd a supplementary estimate through the House before.

I guess the short answer is that there are not currently any negotiations with the BCMA.

J. MacPhail: The reason I'm asking that question is to try to figure out why we're here. I assume that we're here — I take the minister at his word — to pay the retroactive portion of the arbitrated settlement for physicians in this province.

I'm trying to figure out whether the government is looking on this as a solution to what has been an amount of tension in the real world out there. As I understand it, there are looming…. Actually, I don't know whether there are looming deadlines in any area other than the necessity to spend money before March 31, which is why we're here.

I'll be very frank. I know that for this government, when they were in opposition, this kind of activity was anathema. When we were in the chamber doing supplementary estimates in '01 and in December of 2000, it was exactly this kind of circumstance that we found ourselves in, and the then opposition was vociferous in their ridicule of the government at that time. It wasn't a special warrant; it was a supplementary estimate in both of those circumstances. It was to provide adequate funding for health authorities. As per the new legislation — the Budget Transparency and Accountability Act — that existed at that time, government was required to come in here and explain, as the minister is doing very forthrightly. The then opposition ridiculed the government for doing that — absolutely ridiculed it. I'm just trying to figure out what the change is here.

I assume, because we're so close to the deadline — April 1 — that when there's a new source of money available to the government, there's some urgency to give the minister permission to spend this. Perhaps the minister could explain the urgency.

Hon. C. Hansen: I think, as the member knows from her experience as a Finance minister, that expenses that are incurred against a particular year have to be in the spending authority for that year. We can't start taking out of our next year's budget to pay for the retroactive payments to doctors.

When I first became Health minister, one of the big surprises that I got from the then deputy minister is that the ministry's budget had been increased by $800 million and yet at that point was already facing a projected cost overrun of $408 million.

I think one of the big differences from past years is that we have actually been able to manage the budget within the Health ministry in a way that I'm very proud of. I think the staff in the Ministry of Health Services have done a fabulous job of bringing costs under control for the first time in a long time in the Ministry of Health Services and its previous incarnations. Had it not been for the doctors' arbitration and the size of the retroactive component, which we did not see coming — we did not see the magnitude of that coming — we would actually, for the first time in history, have had a budget in the Ministry of Health Services that would not have been in the red. I'll tell you, I was very proud of the work that was done by ministry staff to get us to that point.

Clearly, we have an unforeseen expense. That's why it is coming forth in the supplementary estimates, and that's why it's before us today.

J. MacPhail: I very much look forward to exploring exactly those issues with the minister during his estimates, where he has full latitude to explain the success of his management. I look forward to it, actually. We had some of those discussions at the Romanow commission this morning. It was very, very enlightening.

What I'm trying to figure out now is the urgency of this payment right now and the difference in the treatment of this particular payment in terms of wages compared to the actions taken elsewhere by this government. The urgency, as I understand it, is because the government feels it's precluded from making retroactive payments that cross over fiscal years.

Hon. C. Hansen: I was a bit taken aback by the member's question. I did double-check with staff that my understanding of this is correct. Given generally accepted accounting practices, you have to accrue the expense against the years in which it was incurred. We have doctors providing services — they're seeing patients today — in this current fiscal year. We cannot

charge that against a future fiscal year. We have to have the spending authority vis-à-vis the 2001-02 fiscal year. I can't take money out of next year's budget to pay for expenses that are actually incurred and charged against this current fiscal year.

That's why it's before us today. It's a requirement under legislation, as I understand it. In terms of the details of that, you may be able to get the assistance of the Finance minister. Certainly, the way in which these charges have to be costed is why they're in supplementary estimates today.

J. MacPhail: Let me just be clear, then. We're here because the government is going to distribute that amount of money before March 31. Is that the case?

Let me just try to follow through on this. We're here because the government has to pay for the expenditures in the year in which they occur. That's what I understand. That's why we're here. Am I wrong? That will also mean, then, that every single billing will be in to the government and paid for by March 31, if you carry forward on what the minister said.

Hon. C. Hansen: I'm a bit bewildered. For the benefit of this former Finance minister, let me just walk her through some elemental accounting principles. If she gets her paycheque for the pay period from December 15 to December 31, but she doesn't actually get the paycheque until January 2, that's still income against the previous year, even though she didn't get the cheque until after January 1. If we have expenses that we incur prior to March 31, it doesn't matter when we cut the cheques to pay for it. It's when the expense is incurred. I'm surprised that she's asking these questions, to be quite frank.

J. MacPhail: Mr. Chair, the Minister of Health Services didn't even know just weeks ago that he didn't pay his own MSP premiums, so I think it's a little bit cheeky for him to do this. If the government thinks it's somehow inappropriate for these questions to be asked, when the public — through us — found out at ten after nine that 230 million of tax dollars were going to be spent expeditiously, then I'm sorry. I'm sorry if it's difficult for him to have these questions asked. The urgency of this is something we're just trying to figure out. That's all.

There is the matter that the real world out there is looking very carefully at what this expenditure is about. On the one hand, there are many people in the public who have been convinced by this minister's articulation of the wage settlement of being an average of $50,000 per doctor as extreme. There's been lots of discussion by the public, who have said: "Well, those doctors — what are they complaining about?" That's part of the discussion that the minister has provoked. On the other hand, the physicians themselves have a different point of view on the value of those negotiations — the dollar value of those negotiations and the value of the process.

Here we are today with $230 million just before March 31, and all I'm trying to do is understand the urgency. To carry forward with the minister's explanation, he is saying that if the amount is determined to be expended in that fiscal year, the amount of money actually has to be in the pot. That's exactly what the minister is saying. What happened to the concept of reconciliation of the books?

Hon. G. Collins: Perhaps I can offer some input on this issue. It's a common practice with accrual accounting, as I'm sure the former minister is aware, that one has to budget for a charge when it's incurred. There are charges incurred to the public purse in this fiscal year, which expires March 31, 2002, that are retroactively determined by the arbitration and the government's legislation that determined the amount we would pay for that arbitration. The minister has described the details of how that's allocated.

Suffice it to say, if we'd had this retroactive arbitration in, let's say, September of the next fiscal year, then because the books for this fiscal year had been closed, government would have had to incur, account for and expend the money in that year. There's really no option. You can restate the numbers for this year, but that's where the money would have to be voted on.

This fiscal year has not yet expired; it's due to expire in a little over two weeks. So there's still an opportunity for government to come into the Legislature, which is the proper way to do it, to say that the cost for physicians for this fiscal year is going to be higher than was budgeted for last year by the previous government's budget in March of last year and by the update on July 30 and the estimates approved by this House at that time.

There is insufficient money that has been voted upon — approved — by this Legislature to expend for those costs. Since the fiscal year has yet to expire, it is incumbent upon government to recognize those costs and come into the House and say: "Here's what we think the costs will be, as best as we can anticipate it. Therefore, we need to get approval from the Legislature in order to increase the budgeted amount — the estimate — for what we're actually going to spend in this fiscal year."

In our estimation, given the numbers the Minister of Health has laid before you, it is going to be required that the people of British Columbia incur a charge of an additional $230 million for this fiscal year. At some point in time — it may be a week or three weeks from now, or it could be past the end of the fiscal year — government actually starts cutting the cheques, but it is appropriate accounting policy, public policy and legislative precedent for government to come into the House in the proper way and get a voted appropriation in order to pay for that in the fiscal year we're in right now.

J. MacPhail: I hate when the Minister of Finance is right. Thank you. That was exactly the point that I was

trying to make: the expenditures, the actual cutting of the cheques, can occur after April 1. The minister is taking an approach about transparency that I actually happen to agree with. In fact, we revised legislation to allow for that. I am absolutely sure that when I get back in a few weeks, I won't be agreeing with the Minister of Finance on anything — but right now I am.

What I want to be assured of here is that's the only reason we're here. It was the previous government that amended legislation that required that kind of transparency in terms of supplementary estimates only being allowed. Special warrants have to be avoided. In fact, special warrants were the refuge of last resort, and that's why we're here right now.

I want to ask the Minister of Health Services what his view is on this as an issue. What does he plan on doing with the $230 million in the next two weeks he now has available to him? That's why we're here right now. What does he plan on doing in terms of resolving the tensions with the medical association? How does this help him?

Hon. C. Hansen: First of all, I just want to point out that with supplemental estimates, we are obligated to have this authority approved before the end of the fiscal year. This is not something we could have waited into April, May or June to do. This is the time we had to move with this particular thing, so there's no mystery as to why this bill is coming before the House at this time. It's because it has to be done before the end of March, and this was the opportunity to do it.

What I hope comes out of this in the sense of communication, aside from the financial and accounting requirement to have the authority in place, is that this sends out a strong signal to physicians in the province that we're serious. This is real money we're putting forward to provide for all the issues that are near and dear to them. There is lots of concern among doctors that somehow we're going to renege on this or renege on that.

The fact of the matter is that we're putting up the money necessary to deal with the issues in this supplemental estimate to deal with the current fiscal year, and it has been built into the budget to deal with next year. There has been some discussion about whether this is a one-time-only lump sum payment that will apply only to the current fiscal year. All you have to do is look at the budget, and you'll realize it's built into the base for next year, the year after and the year after that.

What we're trying to do from this exercise is demonstrate to physicians in the province that we are serious about delivering what we said we would deliver in terms of increased remuneration for doctors throughout the province.

J. MacPhail: Just to follow up, I have a couple of questions that arise out of that in terms of tactical questions.

With the revised '01-02 vote 33, the supplemental — vote 33(S) — now has '01-02 at $2,262,488,000. Then we go over to what the minister is trying to reassure the physicians — that this lift carries forward into '02-03 and is therefore an ongoing payment. Then we would have to go to vote 31, I think it is. Just bear with me here. Vote 31 then has a lift of the estimates for '02-03 at $2,517,611,000. Am I correct in reading those figures?

J. MacPhail: So that's the idea of giving the reassurance. I'm sure the physicians could have figured that out themselves. I meant no disrespect, physicians — none. The lift is at least…. Well, there's a greater lift. If somebody has a calculator over there, I'd appreciate it. It's $2.262 billion lifted to $2.517 billion from '01-02 to '02-03, blue book to blue book. Sorry. What is that lift?

J. MacPhail: No, I don't want a percent. I just want the dollar value. Does anyone…? Well, I see everyone's doing it with their hands. I could do that too.

J. MacPhail: No, no. Sorry. I'm looking at this. In the blue book, $2.262 billion is what the '01-02 main estimates were. The main estimates for '02-03 are $2.517 billion. What is the difference on that? That's blue book to blue book.

Hon. C. Hansen: Just to restate the question, if I can. If we take the blue book number from last year of $2.262 billion and the blue book for the coming year of $2.518 billion, if you round it out, it is an increase of $255 million.

J. MacPhail: The doctors could have figured out that there's been a lift of $255 million, blue book to blue book, starting April 1. I think probably they had the reassurance that there was a substantial amount of money there starting April 1 to pay them. It is the retroactive payment we're dealing with. There's no question about that.

What I'm trying to ask the minister here is in terms of the reassurance. I accept the Minister of Finance's point of view that we're here for transparency of spending. I accept that, but in terms of the contribution to the dispute we have or the potential dispute we have, what assurances do we have through the minister that this will calm the fears of physicians out there? Here's what I'm worried about.

I have to be clear for the minister. In no way does my colleague or I condone withdrawal of physician services. At no point should the minister or the government interpret these questions as giving encouragement to the physicians that, in their dispute, they have a right to withdraw patient care. I expect that the minister and I agree on that.

What I'm concerned about, and what I want to allay the fears of the public about, is that this is a step in the right direction to preventing physician withdrawal of services. That's why I asked how this initiative is reflecting on the broader context of negotiations with the physicians. Here's the point.

Hon. C. Hansen: If we went out and said to the physicians of the province that we're going to provide for the retroactive increase, provide for the retroactive on-call and provide for the increase in payments to salaried and sessional physicians in the province…. If we went out and said we were going to do that and then created no capacity in the budget to actually authorize that expenditure, we would be acting in bad faith. We're acting in good faith. We're saying to the physicians of the province that we're going to do those things. Now, today, we're coming to the Legislature to get the Legislature's authority to provide the spending authority so we can actually deliver on what we told physicians we were going to do.

J. MacPhail: I understand that point. That perhaps helps to restore some of the credibility the government lost in terms of breaking an arbitration process, breaking a deal with the physicians. I understand that's an attempt at restoring credibility. What I want to know is what kind of tool it is to assist the real dilemma, which is crisis in our physician-delivered health care. I only read this in the newspapers, so maybe the minister….

The Chair: Member, I'd like to remind you that we must stay in the scope of the debate.

J. MacPhail: Actually, part of this, as I asked the minister first, is an on-call payment valued at about $80 million. I'm getting to the point of that particular part of the supplemental estimates. Thank you, Mr. Chair.

The minister says there's an allocation of approximately $80 million for on-call payments. Isn't that an area that might incite a negative response when the physicians now understand it's legislated that that's what's available? That's an issue of major dispute, as I understand it. Maybe I'm wrong.

Hon. C. Hansen: I think what would get physicians upset is if they found out that we hadn't provided in the budget for it, and we are providing in the budget. If the member wants to talk specifically about the on-call, there are some details in terms of how we implement that, which I'm sure she will have questions about. I don't have answers, because there is not certainty around how the retroactive on-call payments get processed.

I think it's one of the areas that was problematic in the McEachern report. He didn't give direction in terms of how that should be implemented; he didn't cost it out. It's one of the areas where we've got to be able to sit down with the B.C. Medical Association and figure out how we actually implement these retroactive on-call payments. What is it that we accept as records from physicians who would want to put in submissions for eligibility from this budget?

What we have to do before we can sit down and start sorting out how cheques flow is make sure we've got the authority of this Legislature, in fact, to do it. That's what we're asking for today.

J. MacPhail: Well, then perhaps I could ask the minister to just guide us on how he will explain this after he gets this authority. How will he explain (1) to the public and (2) to the physicians about what occurred here today?

Hon. C. Hansen: In terms of explaining it to the public, this is a commitment that was made by government: to provide the retroactive payments that were among the issues dealt with in phase 1 of the arbitration. In terms of how we'll explain it to physicians, it's that we're showing good faith and actually providing the budget. Now let's sit down and figure out how we process that and implement it in a way that will result in doctors getting payment for the on-call coverage they have given to British Columbians from April 1 last year onward.

J. MacPhail: My apologies. Yes, the minister did say that. But is the message to the physicians, as the government sits down for negotiations, the same?

Hon. C. Hansen: We are certainly anxious to get on with discussions with the BCMA and any of their other sections within the BCMA. We're anxious to get on with that as quickly as possible, because I know that physicians in this province are anxious about, basically, seeing the structure of how the on-call amounts will be disbursed. We're very anxious to get on with that, and we're showing good faith by providing the dollars necessary.

J. MacPhail: My last question to the minister is: does the passage of this supplementary estimate then obligate the minister — or is he maybe not obligated but sees it as his responsibility — to start up negotiations with the BCMA?

J. Kwan: I'd just like to ask a follow-up question on that. Is there any signal from the doctors that they are

prepared to come back to the table? Has the minister received any signal at all?

J. Kwan: What makes the minister think that this passage of the supplementary estimates would actually entice the doctors back to the table?

Hon. C. Hansen: Well, I think we're providing for the budget, and we have an obligation to make sure that these retroactive payments are implemented. We made that commitment to doctors, and we're going to do that. We think the best way to do that is for us to actually sit down with BCMA or their representatives and make sure we do it in a way that meets the needs of doctors.

As I said to the BCMA in my meetings last Saturday when I was there for two hours meeting with the board, there are two ways we can proceed. We can proceed in a cooperative way of sorting out what works best from everybody's perspective, or, alternatively, government can proceed unilaterally. That's not my choice. I don't want to proceed unilaterally and have government decide on how these dollars get disbursed to doctors around the province. Basically, I believe that the B.C. Medical Association and their respective sections are going to be able to bring value to the discussion around how we can best shape these payments so that they actually meet the needs of doctors in the province and, more importantly, so we can start addressing some of the issues that have been of major concern to physicians. I believe that a consultative process of negotiation is the best way to proceed.

Hon. R. Thorpe: This vote provides for the recognition of cost related to the restructuring of the provincial government's direct and indirect interest in Skeena, including payout of loan guarantees, provision for write-off of fiscal agency loans and other outstanding financial Crown claims.

J. MacPhail: I'm hoping the minister will walk me through this because, as I understand it, this is a brand-new vote. Is that correct?

J. MacPhail: The last report that we have about Skeena Cellulose, in terms of the government financing, I took from the '02-03 budget and fiscal plan. I know it's for '02-03. It says here, looking forward, that Skeena Cellulose — which is, just for the record, 552513 British Columbia Ltd.…. The revised forecast for '01-02 there…. I'm at page 49. Is that where you're at too?

J. MacPhail: Okay. Really. The government had written down, as far as I can tell, or booked taxpayer-supported debt of $142 million.

Hon. R. Thorpe: This write-down of $340 million reflects $168 million of loan guarantees by the previous government to the TD Bank, reflects $92 million in loan guarantees incurred by the previous government with respect to capital loans and reflects $80 million in miscellaneous government receivables — namely, stumpage, corporate capital tax, social service tax, motor fuel tax, and environmental and waste permit fee costs.

J. Kwan: Will the minister please break that up line by line for the opposition members?

Hon. R. Thorpe: Again, let me say that the $340 million is made of the following: $168 million paid to the TD Bank for loans guaranteed by the previous administration; $92 million in fiscal loans from the province guaranteed by Skeena; and a further $80 million for miscellaneous government receivables related to stumpage, corporate capital tax, social service tax, motor fuel tax, and environmental and waste permit fees.

The member for Vancouver–Mount Pleasant was asking for a breakdown of the $80 million.

Hon. R. Thorpe: There was $34.7 million for stumpage, roadbuilding, forestry permits and licence and fees owed to the Ministry of Forests. We don't have the exact amounts here — if the members would like them — for capital, motor fuel tax, social service tax owed to the Ministers of Finance and Provincial Revenue. Then we have further amounts of $1.9 million for environmental waste permit fees, and we have $45 million for environmental claims and recognition of Crown liabilities related to environmental remuneration of Skeena.

J. Kwan: The minister said that of the $340 million total, $168 million came from the TD Bank loan, $92 million from the fiscal loan from the province guaranteed to Skeena, etc., and $80 million of miscellaneous items. By my calculation that comes to $240 million. We're actually missing $100 million. I'm sorry. I stepped out of the chamber for just a minute. Maybe I missed that.

J. MacPhail: Sorry, I just clarified for her that it was $168 million, not $68 million.

Hon. R. Thorpe: That's correct. It's $168 million, $92 million and $80 million.

J. MacPhail: I'm curious to know, then — and perhaps the minister could clarify if this is how he will distribute the money, as I understand it…. He's just given us a breakdown of the $340 million. This is how the minister or the government will distribute the money. Maybe the Minister of Finance needs to answer this question: how will this change other aspects of the revised estimates of the overall budget?

Hon. G. Collins: I will try and walk through this as clearly as I can. If I am not able to, then I will get the information for the members directly. There is an impact to the CRF of about $340 million as a result of this write-down, to the negative. The benefit to the Crown corporations sector as a result of the write-off of the loans is $220 million to the good. The Crown sector will improve by $220 million. The net costs of the write-off of the residual assets is roughly $104 million. The total is $116 million to the good.

There is also a provincial portion of the forecast loss of $38 million, so the summary account impact on government — to get down to the very bottom line — will be approximately $261 million on the bad side. That's what the summary account will deteriorate by as a result.

J. MacPhail: I would very much appreciate that — not before now, but in writing, if I could, please. What I was curious to know then is — I'm looking at table 1.7 of the '02-'03…. I'm sure that's where everybody is. Tell me how that changes.

Hon. G. Collins: This gets to be pretty complex. We own Skeena, and so Skeena owes money to us. We're the shareholders, so when we pay it off, we're paying ourselves. There's some of that back and forth.

I would be more than happy to provide a briefing to the member. It will probably take more time than we have here to go through it step by step. We'd probably end up confusing each other.

I'm very glad to have officials sit down and walk through how this number will change as a result of this, if you'd be willing to do it that way. There is nothing tricky, but it is complex. We could try and do it step by step here, but I think we'd spend a lot of time and end up being confused. It could probably be done in about ten minutes in a briefing. If that's fine for the member, I'd be glad to do that.

J. MacPhail: Yes, that's fine from the Minister of Finance. I'm fine with that.

Here's why I'm raising these questions. The public, the taxpayer, may understand that $340 million of their money is gone. I'm urging the Minister of Finance and the Minister of Competition, Science and Enterprise to be very careful in how they explain this to the public in terms of what the net impact is on the public finances.

The Minister of Finance doesn't even have to mislead on this at all in order to put a particular point of view out. What I think would be healthy, in terms of assuaging the concerns of the northwest and also the public about what the exact consequences in total of this creation of the new vote 57(S) are for the public purse….. That's why. Then we can guide ourselves accordingly, as well, with that information.

I do want to just ask a couple more questions, please, of the Minister of Competition, Science and Enterprise. In terms of the expenditures, could he please edify as to how, if at all, the $340 million here relates to the sale of Skeena Cellulose and the terms of sale.

Hon. G. Collins: Perhaps I could respond to the member's comments first, and then my colleague can answer the more specific question.

As complicated as all of this accounting is, and given that we're the shareholder and we have essentially borrowed money from ourselves to ourselves…. There was a bank guarantee. There were unsecured creditors. All of that stuff that's there does get very complex. The bottom line for clear transparency for everybody is that at the end of the day, the taxpayers will have put $340 million into this that they will receive nothing back for. That's the estimate at this point in time.

No matter how you break it out and move the numbers around, at the end of the day the bill to taxpayers will be $340 million.

Hon. R. Thorpe: I think I want to say to the member that this number, $340 million, reflects our best estimates at this point in time. We do not anticipate the situation getting any worse.

With respect to the details of the sale, I know the member for Vancouver-Hastings will respect this. This sale has been and is being guided by the courts of British Columbia. It's currently in the CCAA process. Therefore, as the member will respect, I cannot get into those details.

I can tell the member, though, that there is a creditors vote on April 2 in Prince Rupert at which all creditors and classes of creditors will have the opportunity to vote on whether they want to see the process of CCAA move forward or if they want to see the company go into bankruptcy. If the vote approval takes place on April 2, it's anticipated at this point in time that the closing of the sale would be about April 26.

J. MacPhail: I very much respect the court proceedings, and I take the minister's caution, but that's also why I was discussing this in the context of what the message is to taxpayers, because they're linked. They're completely linked, and they're very much more linked in the minds of people in the northwest, the taxpayers there — even more so than us.

I had assumed, given the Minister of Finance's answer about being very clear about the bottom-line cost, that he had taken into account the sale of Skeena Cellulose and the implications of that sale in terms of revenue stream, opportunity costs, etc. In my mind it's a

tiny bit of a mixed message between the two ministers. I would assume that until the sale is complete and the details of the negotiations are finalized — and the implications not only to the public purse but to the revenue stream — the bottom-line costs couldn't be determined. Maybe not. I don't know.

Hon. G. Collins: The member will note that this is called an estimate. Everything is not quantified down to the final penny, because the deal hasn't been completed. Government needs to recognize the risks and costs. At this point government has made a decision to move forward with this sale. As a result, we have to account for that in some way. The attempt to account for that is the estimate before us, which gives government the ability to spend the money that's being asked here today. That is triggered out of government's decision to go forward with this sale. That's why we're here.

The number may vary somewhat from this. That's always a risk when the thing is finally completed, but this is our estimate of what the costs are to the taxpayers. That's why we're in the Legislature today seeking approval for this appropriation.

J. MacPhail: Yes, this is an estimate. That's why I'm pursuing my questions in this area.

In terms of the final sale being toward the end of April, how does the minister anticipate proceeding with…? Does the minister see that being reflected, then, by the reconciliation of the sale versus the ability to spend in '01-02 up to $340 million? Will the reconciliation of those be reflected, perhaps, in the first quarterly report of '02-03?

Hon. G. Collins: Because government has made the decision to accept this deal and to move it through the process now, we believe it's appropriate, given when the decision was made. It should accrue to when the decision was made. This will come out in the public accounts when the books for this year are finally closed and stated. All of this and the actual final number, to the best of our knowledge at that time, will be included in the public accounts. That's where all of this will be reconciled.

J. Kwan: I'd like to just ask the Minister of Competition, Science and Enterprise a quick question on the terms and conditions of the sale of Skeena Cellulose. There's the financial one that we now see. Are there any other terms and conditions attached?

Hon. R. Thorpe: As I said to the member for Vancouver-Hastings and I'm pleased to repeat to the member for Vancouver–Mount Pleasant, this is a court-approved process that we are currently in. It's called CCAA.

I am not at liberty, due to confidentiality agreements and due to the guidance of the court, to get into the details of the arrangements, other than that I can advise the member that on April 2 there will be a creditors meeting in Prince Rupert, at which time all creditors will have the opportunity to vote on whether they want to see this process move forward or see the company go into bankruptcy.

We are hopeful that the creditors will give due consideration to the weight of both options. If the creditors approve this offer under CCAA, then it's our intention to move to conclude the sale by April 26. If the creditors turn down the sale, we will then move into bankruptcy proceedings.

J. Kwan: Yes, I am aware of the court proceedings, and I'm respectful of them. I'm curious to know if the creditors that the minister has mentioned include the people who are owed wages.

I move that the report of resolutions from the Committee of Supply on March 14, 2002, be now received, taken as read and agreed to.

Hon. G. Collins: I move that there be granted from and out of the consolidated revenue fund the sum of $570 million. This sum is in addition to that authorized to be paid under section 1 of the Supply Act, 2001-2002, 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, 2002.

Hon. G. Collins presented a message from Her Honour the Lieutenant-Governor: a bill intituled Supply Act, 2001-2002 (Supplementary).

Mr. Speaker: Hon. members, we'll just take a few moments while the bill is distributed to all members.

Hon. G. Collins: Mr. Speaker, the use of supplementary estimates is consistent with the spirit of the Budget Transparency and Accountability Act. This supply bill is introduced to provide supply for the operations of government programs for the 2001-02 fiscal year, as outlined in the supplementary estimates tabled earlier. The bill will provide the additional funds required to defray the charges and expenses of the public service of British Columbia for the fiscal year ending March 31, 2002.

In accordance with established practice, the government seeks to move this bill through all stages this day.

Mr. Speaker: In keeping with the practice of this House, the bill will be permitted to advance through all stages in one sitting.

Bill 12 introduced, read a first time and ordered to proceed to second reading forthwith.

Hon. G. Collins: Mr. Speaker, I move that the bill be now referred to a Committee of the Whole House for consideration forthwith.

Bill 12, Supply Act, 2001-2002 (Supplementary), read a second time and referred to a Committee of the Whole House for consideration forthwith.

The House in Committee of the Whole (Section B) on Bill 12; H. Long in the chair.

Hon. G. Collins: I move the committee rise and report the bill complete without amendment.

Bill 12, Supply Act, 2001-2002 (Supplementary), reported complete without amendment, read a third time and passed.

Hon. G. Collins: In this House I call Committee of Supply. For the information of members, we'll be debating the estimates of the Ministry of Community, Aboriginal and Women's Services.

Hon. G. Collins: I move that the House recess for about five minutes at the call of the Chair to await the members of the opposition.

Hon. G. Abbott: I don't know whether it's possible for the opposition members to advise how they see the day proceeding just in terms of staff — appreciating, of course, that obviously whether my answers are satisfactory or not to the opposition will in some measure determine the flow of things. If they can advise — again, just for the purposes of staff timing.

J. Kwan: If I could get the answers from the minister in a manner that is satisfactory, I expect that on the

housing portion of this, we should be able to wrap it in a couple of hours I do have a series of very serious questions around the housing piece. A lot of these questions, quite frankly, are coming from community members, and they'd like to get the answers. I'm hopeful that we could be done in a couple of hours.

Yesterday we left off on the issue of mitigating dollars for societies whose projects have not been awarded the allocation or for whom the allocation has been cancelled. The minister — just to recap a little bit — said that there would be mitigating dollars for these societies who have lost money up front.

Will the minister be initiating that process with the respective societies to see what losses they have incurred and then be proceeding to compensate them accordingly? And what budget allocation has the minister included in his budget for this component?

Hon. G. Abbott: Further to our discussion last evening, as I mentioned at that time, the housing projects that are not proceeding were advised of that situation yesterday by letter. What will occur in the days ahead is that B.C. Housing will be contacting each of those project proponents to discuss the details with respect to their projects. An appropriate allocation has been made in the budget to deal with what we anticipate the costs to be with respect to that.

J. Kwan: So B.C. Housing will be initiating a process with the societies that are sponsoring the thousand or so units that have been cancelled and will begin the process of talking about compensation for the costs that have been incurred by these societies as a result of the cancellation of these projects.

What is the exact amount? You may not have the exact amount, but I would imagine that the ministry might have some sort of estimate or budget line attached to these mitigation dollars.

Hon. G. Abbott: Just so we're clear with the member, in a number of instances here we actually have B.C. Housing being a proponent of projects not proceeding. Or, in the case of the Woodwards Building, we actually own the building. So not in every instance will there be any issue around mitigation. In another instance, one of the projects that did not proceed voluntarily requested that their allocation be withdrawn.

There will be, in some instances, an issue around mitigation. An appropriate amount has been provided in the budget for that. I do believe it would be inappropriate for us to give a precise figure. We don't want to create expectations. We're committed to providing a fair, reasonable and appropriate mitigation in those circumstances where it's warranted.

J. Kwan: I'll get to some of the specific projects later, as we go down the list. I have the list that I had FOI'd last year from the ministry on the 1,700 units that were on the "frozen" list. I have cross-referenced with the announcement from yesterday which ones have proceeded and which ones have been cancelled, and I'll be going through each of those respectively.

I am wondering, because this is a big question that community groups themselves have said to me over and over again, where the societies have incurred costs. It's true that societies have not incurred costs on all projects on the list, because some of those, as you mentioned, are projects that involved the government itself in that sense. But there are projects where people have incurred costs, and they're very anxious around this. I know that in the stage where the government, in Affordable Housing Week, announced that the projects were frozen, even between that time and now, people have incurred costs. I know that some societies are literally at the brink of almost being unable to manage.

As I mentioned yesterday, I was at Williams Lake last weekend. I know there's a housing society there that I believe had purchased land. They advised me that they've purchased land there. They're in the midst of fundraising. They actually have to assume the mortgage on this. I didn't see their project on the list of approvals that was announced yesterday. There's a lot of anxiety out there.

I'm wondering: from the minister's estimates, how many projects does he project will be in a position to claim compensation? Even if the minister can't give me an exact figure, I understand that — but just a ballpark estimate of how much the mitigation costs are going to be that are incurred by government.

Hon. G. Abbott: The first point around mitigation is this, and we did discuss this last night. The reason why I advised all of the projects under the 1,702 units very early that we were bringing their projects under review was to ensure that they did not incur additional costs. That was the whole purpose of advising them that we were bringing those projects under review. Obviously, again, we will look at costs incurred prior to notification that the projects were under review. We are, as I have said previously, committed to managing those issues in a fair, reasonable and appropriate manner.

Just so the member knows, the Williams Lake project is actually one that will proceed. Just to be clear, in Williams Lake the one we're talking about is the Cariboo Park Home Society, 534 Oliver Street in Williams Lake. It's a supportive seniors housing project of 34 units. I know the member has mentioned a couple times now about a project in Williams Lake not proceeding. I'm presuming that perhaps she just had incorrect information. The one Williams Lake project that we know of is proceeding.

J. Kwan: The minister mentioned that the issues around the notification to the community groups at the time of the announcement on Affordable Housing Week, when the 1,700 units of affordable housing were frozen…. The intimation is that it was so the societies themselves would not incur additional costs.

The fact of the matter is that I know some societies had to continue to incur costs, because they were still waiting to see whether or not the projects would be unfrozen. They were still hopeful that they would get the allocation. If they stopped incurring those costs, they would definitely put the project into the jeopardy of actually not getting the allocation. I know that societies and boards had to make that tough decision. Do they just abandon it and say: "This is just not on, and we can't wait. Or do we continue?" I know that different societies have made different decisions at different times.

I hope the minister will look at that in terms of the approach to fair compensation to these societies. I know that in Ontario, as an example, when the new government was elected and went into office, at that time they cancelled housing projects, just like what this government is doing now. The societies actually took the government to court and won a significant amount of compensation because of that. I'm hoping that British Columbia will not follow every step of the way of the Mike Harris administration and will not force societies to have to step into that arena. It again incurs costs for the societies and incurs costs for the government as well. I certainly hope we will not be heading down that road.

The minister hasn't answered the question around the ballpark number of mitigation costs and how many projects he is anticipating will fall within that category. I just need a ballpark figure to see whether or not, within the budget of the ministry…. What are you looking at within your budget?

Hon. G. Abbott: Again, I've answered this previously, Mr. Chair. To deal directly, we don't want to create any false expectations among groups with respect to mitigation. Whether we say it's X or Y number of millions of dollars, we will create either too high or too low expectations, or whatever.

Our very professional and knowledgable staff at B.C. Housing have done what they believe to be the best estimate of what's fair, reasonable and appropriate here. We have made budgetary provision for it. Again, I don't want to go to a precise figure, because I think that creates some expectations which will work an unfairness here.

I think, because I agree with the member, that she does make a reasonable point around unavoidable costs incurred after the time of notification. There will be instances where societies, in order to preserve their legal or land position, would have to incur additional costs. We are going to look fairly, reasonably and appropriately at those. I do accept that point.

The most important thing here…. Again, obviously, the possibility of recourse to the courts is with us every day. We have no interest in litigation, which is why I have always committed to treating groups fairly in this difficult process. We will, as I've stated many times now, treat groups fairly. It's worth noting that in Ontario, as well as freezing some projects that had not commenced, they also froze projects that had already commenced and were in the construction phase. That's where the bulk of the litigation in the Ontario case occurred.

In British Columbia, where construction has begun, we have actually allowed them to proceed to completion. Most of them now are getting near completion. It's a very, very different situation than what we saw in Ontario.

J. Kwan: In his budget, the minister says there is a budget allocated for mitigation compensation costs and that the staff has been working on this issue and has some understanding in terms of what those costs are. Yet he's not prepared to share that information, for whatever reason.

I'm not sure on the issue around low or high expectations…. If the staff has done their homework and it's factual — I understand it's an estimate and could go up or down — then I just want to get a ballpark sense of what we're looking at. I'm not sure why the minister is being very evasive on this issue. I think, as taxpayers, they have the right to know. Is it wise for government to cancel these units? What's the flip side of it? By cancelling these units, not only will you not get affordable housing developed in the communities that need it, but the flip side of it is that the government actually has to pay out costs for compensation. I'd just like to get a sense of that comparison, of what we're looking at.

Hon. G. Abbott: I do want to take some time to do this carefully. What we want to do as a government is be sure that everyone is treated fairly and equitably in this process.

Again, the member insists on using the term "cancellation." Again, these are projects that are not proceeding at this time. Some of the projects are B.C. Housing projects. Woodwards is a building we own. Woodwards actually comprises about a quarter of the units that are not proceeding. The B.C. Housing projects…. They comprise a considerable number here too. In at least one case the proponents actually asked for their allocation to be withdrawn. Clearly, they're not looking for compensation or mitigation.

Again, we don't want to, in fairness both to the proponents and to the taxpayers of British Columbia, create an expectation around a specific number. What we do hope is that a number of these projects will take up the challenge we've issued to try to find ways to bring more resources to the table, whether it's through development cost charge waiver or land or equity contribution from the non-profits or, indeed, from the private sector.

We saw some of the projects yesterday — absolutely remarkable contributions from the private sector in both the YMCA project in downtown Vancouver…. The Salvation Army project brings a remarkable amount of private capital to the table. We believe there are a number of these projects that are well grounded and that are well partnered. We just need to see some

strengthening before they'll proceed. We're happy to talk to everybody about the situation we're in. We will, through B.C. Housing, be dealing fairly, equitably and appropriately with them.

In terms of if it's more expensive to cancel the projects than to have them proceed, the answer is no — clearly no, and by a large margin. The year 1 subsidy costs for the 1,000 units that are not proceeding are well in excess of what we anticipate the largest possible mitigation charge would be.

J. Kwan: I guess we'll carry through with my questions. I still have a lot of unanswered questions in this area, and I hope the minister, after the lunch break, maybe — after he's gotten some food into him — will be more forthcoming with some of the answers.

J. Kwan: Well, we can have some fun too. It depends on how the minister goes. That will determine how long this set of estimates will take.

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

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