Hansard -- Volume 5, Number 10 -- Monday, April 8, 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

Introductions by Members		2559

Introduction and First Reading of Bills		2559
	Community Care Facility Act (Bill 16) Hon. K. Whittred Sustainable Resource Management Statutes Amendment Act, 2002 (Bill 22) Hon. S. Hagen Transportation Statutes Amendment Act, 2002 (Bill 25) Hon. J. Reid

Statements (Standing Order 25B)		2560
	Sport development S. Brice Tynehead park D. Hayer Organ donations L. Mayencourt

Oral Questions		2561
	Cost of referendum on treaty negotiations J. MacPhail Hon. G. Abbott Effectiveness of referendum on treaty negotiations J. Kwan Hon. G. Abbott J. MacPhail Expansion of Vancouver convention centre L. Mayencourt Hon. R. Thorpe Ban on open pens in aquaculture industry M. Hunter Hon. J. van Dongen Youth traffic safety R. Lee Hon. R. Coleman

Second Reading of Bills		2564
	Taxation Statutes Amendment Act, 2002 (Bill 3) Hon. G. Collins J. MacPhail I. Chong Corporation Capital Tax Amendment Act, 2002 (Bill 4) Hon. G. Collins I. Chong Registry Statutes Amendment Act, 2002 (Bill 20) Hon. G. Collins

Committee of the Whole House		2570
	Deregulation Statutes Amendment Act, 2002 (Bill 8) J. MacPhail Hon. K. Falcon Hon. S. Hawkins

Reporting of Bills		2571
	Deregulation Statutes Amendment Act, 2002 (Bill 8)

Third Reading of Bills		2571
	Deregulation Statutes Amendment Act, 2002 (Bill 8) Hon. G. Collins

Committee of Supply		2571
	Estimates: Ministry of Finance Hon. G. Collins J. MacPhail Estimates: Ministry of Children and Family Development Hon. G. Hogg S. Orr J. Bray J. Kwan

	Proceedings in the Douglas Fir Room

Committee of Supply		2610
	Estimates: Ministry of Forests Hon. M. de Jong J. Kwan B. Belsey R. Hawes P. Bell J. MacPhail

H. Bloy: Mr. Speaker, it gives me great pleasure and honour today; it's the first day my son has been in the House to see us while we're sitting. I'd like to introduce my son, Jeremy Bloy, and his girlfriend, Jennifer Breakell, and my daughter Katie is here again. If the House would please make them welcome.

Hon. G. Abbott: Mr. Speaker, we have some distinguished guests in the gallery whom I'll have the pleasure of meeting a little later on today. They are Mr. Hugh Dobbie, who is an applied science technologist and president of the Association of Applied Science Technologists and Technicians of B.C., and, with him, Mr. John Leech, who's the executive director of the association; John Watson, a professional engineer and president of the Association of Professional Engineers and Geoscientists of B.C.; and John Bremner, a professional engineer and executive director of that organization. I'd like the House to make all of our distinguished guests welcome.

A. Hamilton: It's my pleasure to introduce Wendy Hobbs, a trustee from Sooke school district 62. Would the House please make her welcome.

Hon. K. Falcon: I'd like to introduce a delegation of students from the Cloverdale Learning Centre in Surrey and also the Woodroffe High School in Ottawa. The students are participating in the YMCA's Great Canadian Migration Youth Exchange. We've got their teacher sponsors, Odeel Washlander and Sandra Ross. I believe they're here today. From Surrey we've got Marilyn Middleton and Terry Tether. I would ask the House to please make them welcome.

Hon. K. Whittred presented a message from His Honour the Administrator: a bill intituled Community Care Facility Act.

Hon. K. Whittred: I move that Bill 16, intituled Community Care Facility Act, be read a first time now.

Hon. K. Whittred: The Community Care Facility Act governs the licensing of community care facilities in British Columbia. The primary purpose of the bill and its regulations is to protect the health and safety of vulnerable and dependent persons cared for in licensed facilities. While this government applauds the intent of the existing act, which is substantially in the same form as originally enacted in 1969, we feel that the act needs to be repealed and replaced with legislation that better reflects current licensing trends and practices.

Community care facility services have evolved. Current practices recognize that there is a continuum of care with varying levels of care services. This legislation is more focused on protecting the health and safety of dependent and vulnerable persons, in contrast to the current scheme. The new Community Care Facility Act will create a framework that permits health authorities and communities to provide better and more flexible community care while ensuring that consistent standards remain in place so the health and safety of persons receiving those services is not compromised.

Some existing provisions in the Community Care Facility Act are obsolete or unnecessarily restrictive, and, in general, the act needs to be modernized into plain language for purposes of clarity and consistency in interpretation and application. This new legislation clarifies the roles of the provincial and local authorities to avoid duplication and to provide greater local autonomy.

This government wants to provide an opportunity for public consultation in health authorities across the province this spring and summer in order to get feedback directly from community care constituents.

I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 16 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Hon. S. Hagen presented a message from Her Honour the Lieutenant-Governor: a bill intituled Sustainable Resource Management Statutes Amendment Act, 2002.

Hon. S. Hagen: I move that Bill 22, entitled Sustainable Resource Management Statutes Amendment Act, 2002, be read a first time now.

Hon. S. Hagen: I am pleased to introduce this bill today. The Sustainable Resource Management Statutes Amendment Act, 2002, includes amendments to the Muskwa-Kechika Management Area Act, the Water Act and consequential amendments to the Forest Practices Code of British Columbia Act.

With respect to the Muskwa-Kechika management area, this area is a unique wilderness area in northeast

British Columbia. It is bestowed with a globally significant abundance and diversity of wildlife as well as outstanding natural resource development values such as oil and gas.

This bill makes some changes to the way government will continue to manage this significant area. These changes balance government's commitment to the long-term management and maintenance of the Muskwa-Kechika with government's new-era commitment to maximizing taxpayer dollars in a fiscally responsible way.

This bill makes changes that increase the incentive for more partners to donate funds to the trust fund and in that way is consistent with the government's commitments to establish funding partnerships with the private sector and foundations.

The bill continues to ensure adequate funding for planning, research and conservation work in the Muskwa-Kechika. Through the Muskwa-Kechika Management Area Act and Forest Practices Code of British Columbia Act amendments, the bill reflects changes in ministry functions and authority regarding land use planning resulting from government reorganization and reflects government's direction to eliminate joint signing authority for land use planning between ministries.

With regards to the proposed Water Act amendments, this bill reflects our government's new-era vision to create a thriving private sector economy, reduce the cost of government by increasing efficiencies, reduce red tape and the regulatory burden on B.C. businesses, provide for faster approvals and greater access to Crown resources, and accommodates government reorganization. The bill assists in achieving turnaround targets for water licensing decisions and supports backlog reduction commitments announced by this government.

Practically speaking, the Water Act contains some cumbersome and time-consuming procedures. For example, the requirement for a written approval for diverting or using water for the short term — i.e., not exceeding 12 months — can create difficulties for certain businesses with widespread operations but very short seasonal windows. The proposed amendments would make the notification requirements more consistent but less prescriptive.

I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 22 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Hon. J. Reid presented a message from Her Honour the Lieutenant-Governor: a bill intituled Transportation Statutes Amendment Act, 2002.

Hon. J. Reid: I am pleased to introduce Bill 25, Transportation Statutes Amendment Act, 2002. Bill 25 includes amendments to three statutes: Ministry of Transportation and Highways Act, Ferry Corporation Act and Greater Vancouver Transportation Authority Act. Bill 25 also provides authority to repeal the Ferry Act, which applies to inland ferries.

The most significant amendments contained in this bill allow for a new section to be created in the Ministry of Transportation and Highways Act to provide for inland ferry administration. This change will ensure equitable treatment of ferry service delivery between inland and coastal communities and will ensure sufficient revenues to protect and maintain existing services.

Two other amendments of a housekeeping nature are contained in Bill 25. The first amendment remedies a concern raised by the auditor general with respect to the accounting treatment of provincially owned SkyTrain assets leased to TransLink. The second amendment removes a requirement to affix the ministry seal to contract documents.

I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 25 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

S. Brice: It is important that the 2010 Olympic bid be embraced by the whole province of British Columbia and not be perceived as a lower mainland event. As we prepare our bid for international acceptance, we can readily imagine the positive results that will accrue during and following the games. We must maximize this eight-year lead-up time to establish a provincewide vision for sport development in B.C. to enable people to enjoy good health through sport and recreation — a vision starting with young people participating in community programs and a vision of B.C.-based athletes to lead Canada in participation and podium performances. This can be facilitated by tapping into an existing sport network.

The PacificSport Group is the B.C. network of national and regional sports centres committed to world-class athletic services, coaching excellence and long-term sport development. PacificSport includes national centres in Victoria and Vancouver and regional centres in Nanaimo, Abbotsford, Kamloops, Kelowna and Prince George. We should involve the talent pool of the professionals and volunteers within that PacificSport Group.

Until recently, I had the privilege of chairing the board at Victoria National Training Centre, and I am very excited about the potential for all our B.C. athletes. To be the best, you have to compete against the best. There are 12-year-old kids in all parts of our province, kids who will be reaching their competing prime in 2010, kids who can get to know the power of the athlete and the joy of achievement. PacificSport can help make their dreams come true and contribute to an Olympic Games that leave a legacy of a healthier, more active British Columbia.

D. Hayer: Thank you for the opportunity to speak today on a topic that is very dear to my heart. As you know, Vancouver's crown jewel is much-loved Stanley Park. There are few who ever visit who do not take advantage of a trip to Stanley Park and its magnificent setting. Well, we have the opportunity in my community to create an equivalent to Stanley Park, a park that will be loved by Surrey residents as much as Stanley Park is loved by those who live in Vancouver. I am talking about Tynehead Regional Park. It is the namesake for my riding: Surrey-Tynehead. It occupies the heart of my constituency.

As most people are aware, at the current rate of growth it won't be long before Surrey's population surpasses that of Vancouver. Tynehead offers a unique opportunity to create a park that will have a wide appeal in the heart of what will soon be this province's largest city. Tynehead was conceived in the mid-1960s, but it wasn't until 1992, in the western half of the park, that some development began with natural trails and a fish hatchery. Yet while those projects are relatively minor, almost 300,000 people visit Tynehead park each year. Just think how many will use it when it's fully developed.

I am happy to say that options are now being explored to take advantage of the full 800 acres of this parkland gem. The first public consultation meeting was held in my riding recently, and in the coming months more will take place to get input on what those people would like to see Tynehead become. I am encouraged, and I urge everyone with a desire to retain and protect public spaces to participate.

L. Mayencourt: I want to speak today about the B.C. Transplant Society. They're in the business of saving lives through the organ donor registry, and last year in British Columbia 83 of the people they helped by providing a donation of a kidney got that gift of life through a living friend or relative.

Who are those people who donate a part of their own body so that someone else can live? They are ordinary people who have followed their hearts and performed a heroic task. One of those people sits among us in this chamber today — a person who donated his kidney and in doing so saved the life of his desperately ill cousin. He doesn't call himself a hero, but his family, friends and colleagues do. I know that his story has inspired others to do likewise, and that's important, because over 400 British Columbians are waiting right now for such an act of generosity. Over a half-million British Columbians have signed on to the new organ donors registry. I salute each and every one of them. We need everyone in British Columbia to register, so I urge you to call the B.C. Transplant Society and offer someone a chance at life.

J. MacPhail: The treaty referendum and the government's question-writing skills are fast becoming the laughingstock of the country. Pollster Angus Reid said that the referendum is one of the most amateurish, one-sided attempts to gauge the public that he's ever seen.

To the minister responsible for Aboriginal Services, a very straightforward question: how much does it cost taxpayers every time a ballot is returned and counted — tax dollars that could be going to audio books, to legal aid for single moms or to refugees?

Hon. G. Abbott: I think, clearly, the best example of "amateurish" we had around was actually the NDP government of British Columbia over the past decade. That's certainly the best example of amateurish we have around.

The second-best example is the pathetic and, I think, completely ill-advised attempt by the NDP party and the opposition here in the Legislature to try to divide British Columbians around the questions that have been posed in the referendum.

We have a far greater belief in the common sense and goodwill of British Columbians. I believe that British Columbians are embracing the opportunity to have a voice at last in the treaty process. We salute that. We believe that British Columbians will want to express their views with respect to this. They will want to reinvigorate and re-excite the treaty process, which we believe will ultimately be successful, despite the efforts of this opposition.

J. MacPhail: Not only did the minister not answer my question, but he's completely out of touch with what's going on in the rest of British Columbia. The referendum questions are so one-sided that, in fact, Jacques Parizeau would blush about these questions.

I'll tell you something: British Columbians know that they deserve a lot better. There are absolutely millions being spent on this referendum in order for the government to get the answers that they want.

Now we understand that there's a provincewide yes campaign tour going on by members of the government, starting with the Attorney General. Can the Minister of Aboriginal Services tell British Columbians how much government money is being wasted to prop up the government's yes-side campaign — money that could be spent on lowering drug costs for seniors or on audio books, just to name two?

Hon. G. Abbott: The issue is an interesting one. What we have seen over the past decade under the former government's leadership was a treaty process that did not engage the people of British Columbia. As a consequence, we have seen the expenditure of about half a billion dollars on that process without any results. What we want to do through this referendum process is, again, to re-engage the people of British Columbia around the principles which should guide our treaty discussions.

The member might remember — and occasionally I point this out to them — that we spent about half a billion dollars on fast ferries under this former government. How many treaty referendums could that have bought?

J. MacPhail: Whenever this minister raises fast ferries, it's sort of like the equivalent of a bad hair day. He has nowhere else to go.

At a time when this government is cutting support for seniors, the disabled, single moms and the blind, it insists on spending millions — millions — on a divided, one-sided referendum.

The Minister of Aboriginal Services has still not answered the question about either how much his government is spending on this referendum or how much taxpayers can save by not sending in their ballot. Stop the rhetoric, and answer the questions. Tell British Columbians how much money British Columbians will save if they decide not to send in their ballot. British Columbians want the answer to that so that they know what a good strategy is about whether to send in their ballot marked no or to boycott.

Hon. G. Abbott: I know that the Attorney General, the Minister Responsible for Treaty Negotiations, actually has been entirely open about the cost of this referendum.

You know, this opposition was certainly expert about trying to manipulate public opinion when it came to issues around the Nisga'a treaty. There was no limit to the amount they were prepared to spend there. Yet here, where I think we're trying to do something much more fundamental…

Hon. G. Abbott: …where we are trying to engage the people of British Columbia for the first time on the principles which should guide treaty-making in British Columbia, surely the member opposite is not suggesting that somehow democracy should be constrained by the small cost that's associated with canvassing the people. I think that's entirely wrong. Again, I guess it goes some measure to explaining a government that made so many ill-advised and poor decisions over their ten-year tenure that we have the unfortunate legacy of failure from this government that we inherit today.

J. Kwan: There is more than enough confusion in the province over this government's ill-conceived referendum. Now that the ballots have been mailed out, further questions arise. Handwriting experts note that the error rate in authenticating a person's signature is up to 25 percent. This means that legitimate ballots could be rejected and forged ballots could be counted. Will the minister admit that this process is so flawed, so meaningless, such a waste of time and so open to error that the only sensible course of action is to cancel the referendum and redirect those tax dollars to aboriginal services?

Hon. G. Abbott: There certainly is a certain amount of confusion with respect to the issues, and they rest entirely in those two seats over there. That's where the confusion really exists. It's interesting.

Hon. G. Abbott: This is the remnants of the party that governed British Columbia for ten years. One of the pieces of legislation they passed during that period was the Recall Act, and the measures that are used to test public opinion are precisely those that were contained in the Recall Act. So if there's some confusion, it rests entirely in those two seats.

Mr. Speaker: The member for Vancouver–Mount Pleasant has a supplementary question.

J. Kwan: It is clear that what is driving this silly referendum process has nothing to do with listening to people, nothing to do with democracy. The ballots are being tossed out with other junk mail that people receive. People living in apartments are receiving ballots addressed to those who moved out months ago, and others are not receiving ballots at all, despite the fact that they've been on the voters list for many years. I myself have not received a ballot. Now we see that even if you do not….

J. Kwan: Now we see that even if you do cast a ballot, you have a 1-in-4 chance of it not being counted. Will the minister admit that this is an amateurish, error-ridden, inconclusive referendum that is an affront to democracy and to British Columbians?

Hon. G. Abbott: It's interesting. Since the last election when, of course, the scourge of British Columbia was thrown out and we finally got a new government here in British Columbia, we've been hearing this Chicken Little: "The sky is falling; the sky is falling."

Hon. G. Abbott: Well, actually, it isn't. We have a new and brighter day in British Columbia, and it's based on the view that British Columbians are a great people and that if you give them an opportunity to express their views, they'll take us up on that. That's exactly what we want to do here. Where the failure lies is in those two seats, the remnant of the government that purportedly governed British Columbia. We believe, Mr. Speaker, that in allowing people to give us their advice on the principles that should guide us in the province, we can reinvigorate the treaty process. We can see some successes, unlike the complete lack of successes that we saw when the NDP government was in office in British Columbia.

L. Mayencourt: My question is to the Minister of Competition, Science and Enterprise. Last Friday was the deadline for the request for expressions of interest from potential private investors in the expansion of the Vancouver Convention and Exhibition Centre. Will the minister please tell us how many applications were received and who they were from?

Hon. R. Thorpe: Some more good news for British Columbia today. The request for expressions of interest closed last Friday. We have received six proposals from private sector investors for development of the convention centre: four from British Columbia, one from Ontario and one from a combination of Quebec and France, showing that international investors and domestic investors have confidence in British Columbia and know that the province is open for business once again.

L. Mayencourt: That is indeed good news, because for many years tourism operators in my riding and across the province have been stressing the need for the expansion of the convention centre to ensure the strength of the tourism industry in British Columbia. Can the minister please tell us what steps are now going to be taken in order to move to the successful completion of the convention centre in Vancouver?

Hon. R. Thorpe: It appears that the members of the opposition across the House are against this private sector investment in British Columbia. Let me tell the member over there one thing our government will not do, and that is waste $72 million like the NDP did before they had a plan to move forward. Our government won't do that. We're moving forward now with a process of technical review and evaluation. We expect that to be completed by the end of May, and we're excited about working with the federal government, the city of Vancouver, the private sector and the tourism industry of British Columbia and moving forward with this project.

M. Hunter: I have a question for the Minister of Agriculture, Food and Fisheries, who I think knows that aquaculture is playing an increasingly significant role in many local economies throughout coastal British Columbia. Critics of aquaculture development keep saying that open-pen fish farms should be banned and replaced by closed-containment or land-based facilities. Could the Minister of Agriculture, Food and Fisheries give us his opinion on what a ban on open-pen fish farming would do to the industry?

Hon. J. van Dongen: If closed containment was imposed on our salmon-farming industry, it would mean the end of the industry in British Columbia. Higher capital costs, higher operating costs and lower capacities will result in the industry being economically not feasible. Every other country in the world uses open-net technology, and if our industry is prevented from doing so, then they will simply be out of business.

M. Hunter: I think many of the people I represent feel that after ten years of being ignored, this government is finally listening to their concerns, and I appreciate the minister's response. The last thing my constituents and I want to see is actions that might hurt the recovery process and the development of the aquaculture industry. Can the minister expand on his answer and tell me what the impact of banning open-pen fish farms might have in a community like Nanaimo?

Hon. J. van Dongen: Certainly, the loss of the salmon-farming industry would have a direct impact on many of our coastal communities. Five thousand direct and indirect jobs, not just on farms themselves but also in the processing plants, the manufacturing sector, the transportation sector and all of the service industries — biologists, divers, veterinarians — would all be lost, and $375 million in direct sales. Loss of all of these jobs would have a direct impact on all of our communities like Nanaimo, Port Alberni, Port Hardy, Tofino, etc.

R. Lee: My question is to the Solicitor General. In recent weeks several young lives have been taken in tragic accidents involving street racing on the roads of British Columbia. Police, parents and communities are all struggling to find ways to get the message across to young people that speed does kill. Can the Solicitor General tell us what he believes is a possible solution to this serious problem?

Hon. R. Coleman: Having once again returned to my home community on Friday to find the lives of two young people whose family I know had been snuffed out by a serious car accident, and also knowing the other parties involved in the accident, I think we all can tell that the effect of the way young people handle motor vehicles at times is tragic, as is any accident or any loss to anyone. I don't think there's enough time in question period to actually give you the answer, hon. member, but we have to change behaviour. We need to do more education. We need to involve parents.

We've taken steps to have administrative suspensions on the side of the road. We as government are also looking at possibilities of seizing vehicles and other options that we can do on the enforcement side.

This is a huge community tragedy. This is the fourth time in five years that I've lost young people in my community, most of whom I've known. We have to get a handle on this by working with parents, educators and ourselves as legislators to find a long-term solution. Everyone is involved in this issue, and everyone must work together to find the long-term solutions.

Hon. G. Collins: In Committee A, I call Committee of Supply. For the information of members we'll be debating the estimates of the Ministry of Forests.

Hon. G. Collins: I move that Bill 3, Taxation Statutes Amendment Act, 2002, be now read a second time.

Bill 3 amends several taxation statutes to meet the tax policy and revenue objectives laid out in the budget speech and the government's three-year budget and fiscal plan. In summary, the changes continue the process of building a competitive tax environment in British Columbia. They introduce new revenue measures to fund compensation increases for skilled health care workers and professionals, improve the administration and fairness of the tax system, and streamline the legislation.

To further enhance competitiveness and reduce compliance costs for eligible manufacturers and businesses in the resource sectors, the provincial sales tax exemption for parts for exempt production machinery and equipment is expanded to include all parts for such equipment. This measure will significantly simplify compliance for both suppliers and purchasers and will allow the maximum economic benefit from the overall exemption for machinery and equipment to be realized.

Competitiveness is also enhanced through an increase in the amount of taxable income to which the small business corporate tax rate may be applied, or the small business threshold, from $200,000 to $300,000. This government has made a commitment to strive to keep our corporate income tax rates competitive.

This increase in the small business threshold, in combination with the reduction in the general corporate income tax rate in January, will help ensure that our overall corporate taxes are in line with those in Alberta and Ontario. The increased small business threshold, as well, brings B.C. into line with the other western provinces. This change will encourage small businesses to invest in British Columbia, resulting in economic growth and job creation.

To encourage tourism in the province, an exemption from the provincial sales tax is provided for boats and travel trailers brought into the province by non-residents for recreational use. This exemption will be of particular benefit to local businesses that store and service boats and travel trailers for non-residents who return to the province for their vacations year after year and will ensure the tax does not discourage these non-residents from continuing to vacation in British Columbia and supporting these businesses.

To support interest in land acquisition for natural gas production, the Petroleum and Natural Gas Act is amended so the eligibility period for acquisitions of land subject to the base 9 royalty rate may be extended retroactively from December 31, 2002, to December 31, 2003. The government intends to introduce a regulation to extend the base 9 royalty rate to lands acquired before December 31, 2003.

Additional compensation costs for recruiting and retaining high-demand doctors, nurses and other health care professionals have resulted in the government increasing health care spending by almost $700 million this year. To ensure these additional costs are dealt with in a deficit-neutral manner, the government made the difficult decision to raise additional revenues.

Bill 3 includes two measures designed to help offset these additional costs. The general sales tax rate is increased from 7 percent to 7.5 percent to raise $250 million. Bill 3 also increases the refundable tax credit by 50 percent to $75 per adult. This balancing measure will protect about 700,000 low-income families from the additional tax payable as a result of the one-half of 1 percent rate increase.

The tax rate on tobacco is increased by $8 per carton to $30, and the tax rate on fine-cut tobacco is increased by a similar amount. These increases are expected to raise $150 million annually and, in the long run, should help to reduce health costs by encouraging current smokers to quit and, hopefully, by discouraging young British Columbians from starting in the first place.

The remaining measures in Bill 3 are designed to improve the fairness and the administration of the tax system. The government recognizes that persons with disabilities and their caregivers have needs that can limit their ability to pay taxes. For this reason, the government is amending the Income Tax Act to increase the credits for mental or physical impairment, the infirm dependent credit and credit for in-home care of a relative. These credits will increase the assistance available through the tax system by about $100 to $370 annually. Furthermore, the enhanced tax assistance will increase over time because these new higher credit amounts are now indexed to provincial inflation.

The Social Service Tax Act is amended to meet a new-era commitment to eliminate the sales tax on purchases by parent advisory councils. The amendments will provide a refund of tax paid on goods purchased for schools with PAC-raised funds. The refund is provided to both PACs and school boards to accommodate PACs that purchase goods directly and those that make purchases through their school boards.

The Income Tax Act is amended to change the provincial alternative minimum tax rate and the rate at which minimum tax is credited. The new rates will be set at the ratio of B.C.'s first tax rate to the federal first tax rate. With federal and provincial tax rate changes in recent years, this will mean the tax adjustment rates for alternative minimum tax will be 37.8 percent for this year.

In addition, the calculation of the B.C. overseas employment tax credit is changed. The new calculation will provide a credit amount that provides a percentage reduction in B.C. tax equal to the percentage reduction in federal tax as a result of the federal credit.

As well, amendments to the Home Owner Grant Act confirm the requirement that applicants of the homeowner grant for persons with disabilities must incur substantial costs for physical assistance or structural modifications in the home to qualify for the grant. The intent of the grant is to provide financial relief to persons who, due to loss of mobility, are required to make costly home modifications or to pay for physical assistance to allow them to live independently in their homes.

The amendments validate the use of the supplementary form introduced in 1997 for the years 1997 to 2001 inclusive. They also confirm the requirement that applicants incur substantial costs for structural modifications or physical assistance in the home. As well, effective for this year, 2002, regulatory changes will be introduced to replace those current forms with a new, simplified form. The homeowner, rather than a physician, will verify that costs are incurred for physical assistance or structural modifications to the home. A regulation will also be introduced to ensure that the existing recipients of the grant do not have to reconfirm their eligibility.

The School Act is amended to allow the province to set different tax rates in different parts of a school district for one property class. This will give the province the flexibility to deal with situations where there are wide disparities in average residential values within a school district. This will benefit residential taxpayers in Tofino this year, where high property values are not currently offset by lower tax rates under the existing school tax rate formula.

The Hospital District Act and the Assessment Authority Act are amended to add a reference to a school tax exemption. This will ensure consistency of exemptions throughout all taxing authorities which use the hospital base and will confirm existing practice.

The annual multi-jurisdictional vehicle tax, which is an annual tax in lieu of the provincial sales tax, was introduced in 1996 with the support and input of the provincial trucking industry. This bill amends the Social Service Tax Act to harmonize the eligibility requirements for payment of this tax with ICBC's international registration plan licensing requirements. Both of these initiatives provide one-stop shopping for eligible businesses that operate vehicles in more than one jurisdiction, thereby eliminating the need to make individual licence and tax payment arrangements with every jurisdiction in which they operate. This will extend the benefit of the annual tax to businesses that are eligible for a pro-rate licence but use pickup trucks and other lightweight service vehicles to carry on their businesses.

The Social Service Tax Act is also amended retroactive to March 31, 1998, to provide an exemption for chemicals purchased by pulp mills to produce ammonium bisulphate for use as a catalyst or direct agent in the production process. This amendment parallels an exemption that was introduced for kraft mills in the 1998 budget.

Another amendment clarifies the application of sales tax to royalty payments and licence fees to correct a legislative error made in 1998. This amendment confirms that tax is payable on such payments regardless of when the item was purchased.

Finally, Bill 3 includes two measures to provide additional revenue to TransLink to assist in meeting its obligations for transit and transportation infrastructure in the lower mainland. On behalf of TransLink, the gasoline and diesel fuel tax rate collected in the greater Vancouver transportation region is increased by 2 cents

per litre. This fuel tax adjustment was proposed by TransLink during its recent round of public consultations. The $42 million generated will help to put TransLink on a more sound financial footing.

In addition, in keeping with the public and binding cost-sharing agreement between the previous government and TransLink, an amendment is made to provide TransLink with the authority to increase its tax rate on parking in the greater Vancouver transportation service area up to a maximum of 21 percent.

In this budget the government has chosen a path of sound fiscal management — a path that leads to a stronger and prosperous economy and greater opportunities for all British Columbians.

J. MacPhail: On both Bills 3 and 4, our questions will come at the committee stage, where we'll be examining all of the change in great detail.

I. Chong: I take this opportunity to speak to Bill 3, the Taxation Statutes Amendment Act, 2002. I do want to express the very good news and the support I have for this piece of legislation, which allows for the budget measures and taxation measures introduced in Budget 2002 to come to fruition.

I have gone through the bill and as in previous years in opposition, when I would go through taxation bills, I pick out those things which I think are important and relevant, and point out those that have not been of great benefit to my constituency. In the past, when in opposition, there were many things that were not satisfactory to my constituency. In this particular bill there are so many more things and so much good news that I do want to speak to that.

In the last decade B.C. has experienced a decline in economic growth and investment. We have seen our real per-capita GDP decline as other provinces grow. We've seen economies in the competing jurisdictions such as Alberta and Ontario continue to grow, and we've seen their take-home — taxpayers' disposable dollars — grow. Here in British Columbia we continue to lag behind. We continue to see that people were getting further and further behind and that a government refused to listen.

When we were elected last May, thankfully, the people said that they were ready for change, and they wanted change. They wanted change that would affect all citizens from various taxpaying groups. They wanted to see that low-income earners would also be considered. I'm pleased to see that our Minister of Finance has brought in the piece of legislation which does just that.

I just want to touch upon some of these sections in this bill that the Minister of Finance has already alluded to. First of all, which I find particularly comforting, is section 6 of this piece of legislation, amending the Income Tax Act by increasing the infirm, dependent and in-home-care relative tax credits. That is very important.

So often as a professional accountant in my prior career, I would have people come into my office and explain the financial challenges they had in dealing with disabled dependents at home. They were spending so much more and were limited to the amount of tax credits they were able to claim. It just didn't seem fair, nor did it seem to make any sense. These people were saving taxpayers' dollars by taking care of them in their homes as opposed to being a burden on a health care system that was continually having more demands on it than it was able to keep up with. Section 6 will do much to help those families as they deal with the inflationary pressures, the financial pressures that they are particularly affected by.

Another piece of this legislation, section 7: increasing the credits for the mental or physical impairments. That is also important. Again, when I used to prepare tax returns for a number of my clients, they wondered why it took so long for government to acknowledge the benefits they would be providing. The cost that they had to outlay was so much greater that: "Why couldn't government come in and make a change on an annual basis or at least review it?" It was about time this province took a look at that.

Section 12, which the Minister of Finance spoke of, regarding the increase of the maximum personal income tax sales tax credit from $50 to $75. It's a long time since that has been reviewed. That is to deal with our low-income families. I realize the one area of the legislation that some of us were not particularly fond of seeing was the increase in the sales tax, going from 7 percent to 7.5 percent, but we did acknowledge that was necessary to deal with the other cost pressures our province was faced with.

The fact that the Minister of Finance took into consideration that increase in sales tax and increased the sales tax credit for those low-income families is of great comfort as well. A $25 increase — what that means is that a family would have to spend an additional $5,000 or over $5,000 before they would see the benefit of this sales tax credit. That would be on items that would have sales tax applied to it. For low-income families, I can't see requiring them to spend an additional $5,000 a year, which is about $400 more a month. I do believe that these low-income families will benefit from that.

As well, section 16, which deals with the income threshold for small businesses, is again another good-news story. We watched other provinces become more aggressive and more competitive in their tax regime to ensure that their small businesses thrive. As we all said before in this House and we continue to say, small businesses fuel our economy. We have to make sure that small businesses have a way of thriving and will stay in our provinces.

I saw provinces such as Alberta and Ontario moving in this direction. Even Manitoba has been considering this. The previous administration, the NDP, refused to put in a plan or to even hint this was a way that they would move forward and be competitive. I'm so pleased to see that we have increased this threshold.

For those small businesses, which will now become profitable because our economy will start to grow, they need to know they can reinvest those tax dollars back into their businesses. Their profitable dollars can be pumped back into their businesses as opposed to the provincial coffers.

Of the last few sections I want to talk about in this legislation, section 33 is one area that I'm particularly pleased about. It exempts boats and travel trailers from being brought into this province for long-term use by non-residents from the tax that would have otherwise been imposed under section 16 of the Social Service Tax Act. People may recall that when we were in opposition, myself, the member for Saanich North and the Islands, who is now the Minister of Human Resources, and the member from Shuswap, who is now the Minister of Community, Aboriginal and Women's Services, got up and spoke against this tax that the NDP wanted to bring in, which dealt with a tax on tourism.

Those of us who had marine businesses in our ridings were being threatened with huge losses. These were small businesses again. It's been some time. These businesses have been waiting patiently, recognizing that a government which understood the value of tourism and small businesses would do something about it. Again, we have now taken care of that problem, and the Minister of Finance has rightfully corrected an error the NDP had put forward.

Lastly, sections 34 and 36, which I think are important pieces of legislation, again show our government's commitment to volunteers, in particular to parent advisory councils who raise money and use that money to purchase goods or services directly benefiting our school children. The fact that they were having to raise dollars that would be spent on these goods and services and then have to pay an additional provincial sales tax didn't make any sense at all if that money had been paid for directly by the school boards. An indirect tax in that way didn't make sense. The fact that we were able to correct that error, as well, is good news.

In closing, I just want to say that this piece of legislation, more so than any other taxation statute act I've seen in the last five years that I've been in this chamber, has so much more good news than any other piece that it would be hard not to support it. I know that myself and all my colleagues support Bill 3 wholeheartedly.

Mr. Speaker: On second reading of Bill 3, the Minister of Finance closes debate.

Hon. G. Collins: I want to just add a few comments to what I said earlier, in closing the debate, and to reflect perhaps a bit on some of the comments of my colleague, who worked with us in opposition on a number of these issues as policy items. I want to thank her for input today as well.

In particular, there are a number of the issues contained in this piece of legislation that were raised with me — certainly by staff who are aware of all of them from time to time and certainly by members of government caucus — with relation to how they affect their constituency. The multi-jurisdictional vehicle issue is one instance. Both members from the Peace River raised that issue with me a number of times, and I was pleased to be able to make the changes that are contained in this legislation in an effort to correct what I think was an unfortunate, and to rebalance that legislation and make sure that those using smaller vehicles are extended the same benefit that accrued to larger vehicles.

As well, the issue the member for Oak Bay–Gordon Head mentions with regard to the taxes applied to non-residents bringing their boats and trailers into British Columbia for use here was an issue that I know members of this House heard a great deal about when the previous administration first introduced this tax. We pushed hard in opposition at that time to have the legislation not proclaimed until such time as a review could be done of it, and that was the case. I undertook a bit of a review afterwards, and I heard from many members of caucus — particularly those from the Okanagan, the Shuswap, the coastal areas of the province and other areas as well. I heard from a wide number of MLAs that this was an issue that they and the small, tourism-based businesses in their community were very concerned about. I think we've managed to balance that legislation quite appropriately here.

As well, there were two other issues that I wanted to speak on. The first is the tax for parent advisory councils. That is something that we heard a great deal about prior to the election from individual communities, school districts and parent advisory councils. It was a commitment the Premier made to parent advisory councils that we would remove the requirement in legislation for them to pay the PST, the sales tax, on purchases they made. Many of these parent advisory councils go out, with the assistance of students and others, and raise funds for services, goods and programs within the school district. We felt it was important to encourage that, rather than discourage that. It was a commitment we made during the election campaign in our New Era document. For those parents who put countless hours in as part of their parent advisory councils in an effort to improve the education of not only their children but the other children in the school, it's a gesture by the government of British Columbia to say thank you, that we appreciate the work that they do, and to make sure that we aren't obstructing that work but rather are encouraging it. I'm pleased to be able to do that, as well, in this legislation.

The last item I want to address is the issue of the two areas in the legislation where government is actually increasing taxes, which is something that we said at the time of the budget we do not do with any sense of pleasure. In fact, it's the last thing we ever wanted to do, but given the over $700 million in pressures in trying to recruit and retain health care professionals and doctors in this province, there were very few options available to government. This is the option that I chose. That is a half percentage point increase in the PST and

I note that since we introduced this budget, other provinces, particularly across western Canada, have introduced their budgets and have in fact increased their tax rates higher. In some provinces they've gone to $32 a carton, a fairly dramatic increase. They've done that in Alberta and Saskatchewan. I believe Manitoba either has just introduced or is about to introduce a budget. We'll see what they do. I don't know what they might do, but given the pattern there's that possibility.

I think the fact that there is a cohesive track across the country, or at least the western part of the country, on tobacco taxes will help to mitigate some of the risk in enforcement in smuggling that could be there otherwise. Certainly since September 11, the issue of this product being moved back and forth across the U.S. border is somewhat restricted as well.

We hope we'll be able to manage that appropriately. We believe we can. We believe it's reasonable. I also hope that it encourages many people to decide that it's an expensive habit that perhaps they should work hard to stop. I know that's not easy. My younger brother, who was a smoker for some time, quit recently — prior to the tax increase, I might add. He has certainly been working hard to stay off the cigarettes. I know it's an extremely difficult thing for people when they try to do that, but I hope this encourages them. I hope that it encourages young people not to take up the habit because of the cost.

On the PST. It's a tax that nobody likes, but it is a consumption tax. The more people consume, the more they pay. As well, we tried to provide an increased tax credit at the low end to make sure that people who are at the low-income levels will have those pressures offset. Certainly, government will continue to review that tax in the future and year after year as we review taxation. It's certainly near the top of my goals to be able to correct. With that, Mr. Speaker, I thank the member for her comments, and I move second reading.

Hon. G. Collins: I move that this be referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

	YEAS — 60
Falcon	Coell	Hogg
L. Reid	Halsey-Brandt	Hawkins
Whittred	Cheema	Hansen
J. Reid	Bruce	van Dongen
Nettleton	Roddick	Wilson
Masi	Lee	Thorpe
Hagen	Collins	Nebbeling
Stephens	Abbott	Coleman
Chong	Jarvis	Anderson
Orr	Harris	Nuraney
Belsey	Bell	Chutter
Mayencourt	Johnston	Bennett
R. Stewart	Hayer	Christensen
Krueger	McMahon	Bray
Les	Locke	Nijjar
Bhullar	Wong	Bloy
Suffredine	MacKay	K. Stewart
Visser	Lekstrom	Brice
Hamilton	Sahota	Hawes
Kerr	Manhas	Hunter
	NAYS — 2
MacPhail		Kwan

Bill 3, Taxation Statutes Amendment Act, 2002, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Collins: I move that Bill 4, Corporation Capital Tax Amendment Act, 2002, now be read a second time.

In July 2001 we announced the phase-out of the corporation capital tax on corporations that are not banks, trust companies or credit unions. On September 1, 2002, the second stage of that process will take effect, eliminating the tax on general corporations for taxation years that start on or after that date.

Bill 4 streamlines the Corporation Capital Tax Act by removing all remaining provisions relating to corporations that are not banks, trust companies or credit unions for taxation years beginning after August 31, 2002.

The amendments simplify the legislation by eliminating onerous calculations relating to partnership interests because financial institutions have limited ability under the federal and provincial legislation to participate in partnerships.

We are also simplifying the legislation by extending to banks and trust companies the investment allowance previously allowed only to credit unions. The investment allowance currently allowed to credit unions removes an element of double taxation that can occur

when a credit union owns shares of another financial institution that is itself taxable in British Columbia.

With the elimination of the tax on general corporations, it seems logical that corporations that remain subject to the tax be treated consistently. Restricting the allowance to shares in other financial institutions that are taxable in British Columbia addresses the issues of consistency under the act and double taxation within the province. The amendments contained in Bill 4 will shorten and simplify the legislation considerably, in line with this government's commitment to reducing legislation.

Mr. Speaker: For further debate on second reading of Bill 4, the member for Oak Bay–Gordon Head.

I. Chong: Once again I'm pleased to rise to speak on second reading of Bill 4, Corporation Capital Tax Amendment Act, 2002.

I don't have a lot of comments to make, except to say again that I wholeheartedly support this bill. When it was first introduced last year that there would be changes to the corporation capital tax, I can tell you that those I know in the investment community were very pleased that we were finally acting on a promise that had actually been made by a previous government, by a previous Premier. In fact, I think it was Mike Harcourt who said back in 1994 or '95 that it was his goal to remove it, but he never did. His government never acted on that, nor did anyone ever move that forward with an initiative.

While I was in opposition, as chair of our opposition caucus committee on economy, I met with many people throughout the province. I recall on many occasions meeting with various groups, investors waiting to bring their dollars into this province, who said there was one tax they just could not understand, which made British Columbia that much more uncompetitive with other jurisdictions in Canada if not in other parts of the world. That was our corporation capital tax. They could not wait to hear that it was finally being dealt with by this new government.

In addition, I remember meeting with a group of Asian investors. At one point this province thrived on the investment that the Asian community, our Southeast Asia partners, brought to British Columbia, particularly to the lower mainland. From various parts of the southeast Asian community, when I met with a group, each and every one of them, one after another — about a dozen of them — asked me what this tax was all about. When I said it was not a tax on profit, that in fact a company would be taxed on this investment if it was not profitable, it just made no sense.

Here in Victoria, as well, while I was in opposition I met with small businesses — small in the sense that they hired maybe 50 employees, but they had a substantial amount invested in capital in their plant, their land and their equipment. Meeting with one of these, I recall, back in 1997, he indicated to me he had lost money in that taxation year. He could not contribute towards taxes on profits, because there were none, and he himself had to not take a salary that year. For him to then have to pay out a corporation capital tax of about $30,000 made no sense and provided no benefit.

That's the real kicker, I think. When corporations are asked to bring their dollars into this province to invest, to create jobs and to help our economy to move forward and when they have difficulty at times and are struggling and not able to show a profit, to then be taxed for no other reason than having brought their investment to our province made absolutely no sense.

I think this move we are making is a good move. It's supportable. I know all my colleagues and I see this as an initiative that's going to spur our economy to get investment coming back to British Columbia, investment that for so long has avoided this province. With that, Mr. Speaker, I thank you very much for my time.

Mr. Speaker: Further debate on Bill 4? The question is second reading of Bill 4.

Hon. G. Collins: I move that the bill be referred to a Committee of the Whole House for consideration at the next meeting of the House after today.

Bill 4, Corporation Capital Tax Amendment Act, 2002, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

This bill proposes a number of amendments to the Company Act, the Manufactured Home Act, the Partnership Act and the Personal Property Security Act. These statutes provide a mechanism for registering and accessing information that facilitates and supports commerce in the province, including information pertaining to businesses, to the ownership and location of manufactured homes and to security interests against personal property.

For the most part these amendments provide regulation-making power that will enable the registries to implement electronic service delivery, moving the registries from a paper-based registration system to an electronic one. The amendments will facilitate the option of on-line filing of high-volume forms and documents. For example, over 270,000 B.C. companies are now able to file their annual reports with the corporate registry electronically. In addition, these amendments enable the registries to implement mandatory electronic filing at some future date. As a result, the costs and inefficiencies associated with the paper-based fil-

Another amendment in this bill is the removal of the signature requirement for registering a general partnership or a sole proprietorship. The current requirement that each partner file a signed declaration creates a significant impediment to the electronic filing of documents with the corporate register. The amendments lessen the burden of filing information with the registrar by providing a more streamlined process for the registration of partnerships and sole proprietorships.

The amendments also authorize the registrar to convert paper documents filed with any of the registries to digital form. This will serve at least two important functions. First of all, converting paper documents will ensure sufficient storage capacity for information filed with the registries. Secondly, digitized information will provide increased access for all users of the registries' information services. British Columbia is the most connected province in Canada with six out of ten British Columbians having access to the Internet.

These amendments are another step towards bringing e-government to the people of British Columbia by providing on-line access to core government services 24 hours a day, seven days a week. Mr. Speaker, I now move second reading.

Hon. G. Collins: I move that the bill be referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Bill 20, Registry Statutes Amendment Act, 2002, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

The House in Committee of the Whole (Section B) on Bill 8; T. Christensen in the chair.

J. MacPhail: Mr. Chair, I have a question that's of a general nature but can only be asked in committee. Could the minister please tell me what feedback he has had on this legislation? He can tell me whether there's been any feedback on any of it and what sections.

Hon. K. Falcon: Actually, very little or no feedback. I think there was a letter to the editor on one of them, but that was about it.

Hon. S. Hawkins: I move the amendment to section 27 standing in my name in the orders of the day.

Hon. S. Hawkins: This amendment addresses concerns. The member was asking before. The Minister of State for Deregulation asked me to deal with it. This concerns the information and privacy commissioner's concerns regarding potential impacts of the amendments on the Name Act. Bill 8 amends the Name Act to require that the director of vital statistics publish the date of birth and place of residence of individuals who have changed their names. Name information is published to assist law enforcement agencies and creditors to identify persons who have changed their names.

The publication of birthdate and residence information will enable more accurate information, but the privacy commissioner had expressed concerns that the publication of information in this form that read "readily accessible to the public" might facilitate identity theft and may create risks for women who had changed their names for safety reasons. In consultation with him, this amendment then addresses those privacy concerns by limiting the disclosure of name-change information to qualified applicants. The ministry staff did consult with the privacy commissioner on this change. He supports the proposed amendment.

The Vital Statistics Agency will establish a secure subscriber-only website and grant access only to qualified applicants. The definition of who is a qualified applicant will be established by policy by the director of vital statistics after consulting with the privacy commissioner.

J. MacPhail: Does this amendment take care of all the information and privacy commissioner's concerns?

Hon. S. Hawkins: That was my understanding. He is happy with this now. Who is a qualified applicant, then — the definition of that term — will be established by the director and the privacy commissioner.

Hon. K. Falcon: I move the amendment to section 44 standing in my name on the order paper.

J. MacPhail: Could the minister please explain the reason for this? There are some aspects of retroactivity here that are added, I believe. What's the intent of that?

Hon. K. Falcon: Perhaps the easiest thing for me to do would just be to go over the whole thing for the member. The amendment replaces the proposed commencement section to ensure that the elimination of the licensing requirements for the livestock artificial insemination is effective by March 31, the end of the current licensing year. To ensure that the repeals coincide with the end and the beginning of the fiscal year, this section will make the repeals of the Special Enterprise Zone and Tax Relief Act and the Trade and Convention Centre Act effective March 31 and the repeals of the outdated Ministry of Industry and Small Business Development Act and the Ministry of International Trade, Science and Investment Act effective April 1, 2002. The section provides for the Name Act amendments to come into force by regulation, and this provides time for the director of Vital Statistics to prepare policy respecting forms and electronic filing. The remainder of Bill 8 will come into force upon royal assent.

Hon. K. Falcon: I move that the committee rise and report the bill complete with amendments.

Bill 8, Deregulation Statutes Amendment Act, 2002, reported complete with amendments.

Bill 8, Deregulation Statutes Amendment Act, 2002, read a third time and passed.

Hon. G. Collins: It's my pleasure to introduce the estimates for the Ministry of Finance for the fiscal year 2002-03. Before I begin to outline the ministry's plans for the coming year, I'd like to talk a bit about the fiscal year that has just ended. I think it's important to reflect on the past as a check against future plans and directions. A lot of the work and the changes we achieved during the 2001-02 fiscal year are the seeds from which the ministry's three-year strategic plan will grow.

Since June of last year, dedicated professionals across government and in Crown agencies have helped to prepare major government announcements, including June's personal income tax announcement that sees British Columbians in all tax brackets receive a 25 percent cut in their provincial personal income taxes; July's economic fiscal update; the workforce adjustment strategy; our government's first full budget, which included a three-year government strategic plan; and three-year service plans for ministries and Crown corporations.

Unprecedented disclosure and transparency were a hallmark of each of these announcements, in keeping with our commitment to make sure British Columbians are fully informed in a timely manner. I thank all those involved in these major milestones, especially those in the Ministry of Finance, for their hard work, their dedication, their long hours and their professionalism.

The work they're involved in goes far beyond numbers, spreadsheets, charts and graphs. The Ministry of Finance has been and will continue to be at the forefront of our government's effort to chart the course that will result in a better economic and fiscal climate in British Columbia, one where our future is definitely brighter than our past.

Many of the integral parts of the government's plans have been mapped out in the Ministry of Fi-

nance's three-year service plan. Back in November at an open cabinet meeting, I was given permission to oversee four strategic shifts in the Ministry of Finance's business. First, to move from advising and treating all ministries and Crown corporations the same to focusing on those ministries and Crowns where major financial risks exist.

Second, to move from a command-and-control approach to one where ministries, Crowns and agencies are more accountable through their service plans and performance measures. This means the ministry will focus as much on outputs and outcomes as on inputs such as dollars and FTEs.

Third, to expand our planning from a one-year horizon to a multi-year framework.

Fourth, to expand our current focus on ministries, Crown corporations and agencies to begin to include schools, health agencies and some post-secondary institutions, thereby making our books more comprehensive and inclusive.

Achieving these shifts in the way we do business will include both challenges and opportunities. Some come from within the ministry and government, while others are external and beyond any single government's control. Challenges that all economies face right now include uncertainty in worldwide economic growth and commodity markets that create risks for government revenues and expenditures. While we face challenges, many opportunities exist as well. For example, new technology provides opportunities for greater productivity.

In order to achieve the shifts I've just outlined, the ministry is reorganizing to concentrate on four core business activities. The first involves providing advice to support government's financial and economic objectives. The ministry already does this in a variety of ways. Ministry of Finance staff provide advice and support to the Minister of Finance, to cabinet, to Treasury Board and to government caucus committees on financial, social and economic policy issues. They also provide support to ministries and agencies on policy development and budget planning, and they give strategic advice and support for public sector labour relations.

In order to measure our performance in these areas, we have set out a number of goals and objectives. Balancing the budget by 2004-05 is just one of them. To that end, we've implemented a three-year planning framework for all ministries. Each ministry and Crown corporation's service plan was made public on budget day, February 19. These plans contain measurable ways of evaluating performance that both ministers and ministry staff are accountable for. They will be updated every year. Our progress here will be easily measured: did we or did we not achieve our budget targets? Needless to say, we have no intention of missing them.

A second goal is to encourage public-private partnerships and alternative service delivery for the provision of public facilities. By doing this, we'll get the best value for every dollar we put into public infrastructure and public services. This will increase accountability and performance. To reach this goal, we're developing a new capital management framework and restructuring the capital division. Last year there were 50 FTEs in the capital division. In 2002-03 we will have ten. Accordingly, the division's budget will decrease from $4.5 million to $1.8 million by 2004-05.

The streamline team will provide advice to the public sector regarding public-private partnership opportunities for public facilities as well as establish best practices in capital asset management across the entire public sector. We'll measure our progress by the number of P3s and alternative service delivery projects that have been initiated and that have financing in place.

Our third goal in this area involves creating a competitive tax and business environment that encourages economic growth. Over the next three years we'll be implementing strategies to continuously improve B.C.'s ability to attract investment and innovation. On July 30 of last year we announced a business tax cut package. These cuts returned $221 million back into the economy last fiscal year and will inject $628 million back into the economy this fiscal year.

The tax changes announced in the budget to help fund salaries in the health sector will have some impact on business, but the overall tax reductions will still be about $450 million in this fiscal year. These business tax cuts complement the 25 percent cut in provincial personal income tax that we made on our first day in office. Today British Columbians in the lowest two brackets have the lowest income tax rate anywhere in Canada. This comprehensive tax rate overhaul is just one way we're making B.C. an attractive place to live and to do business.

Our government has also taken a hard look at the number of policies and regulations that impede economic growth. Over the next three years all government ministries, Crown corporations and agencies will reduce the number of regulations the government puts forward by one-third.

How will we mark our progress in establishing a competitive and business environment? We'll do this by measuring our province's ranking of our personal income tax rate for the bottom two tax brackets, and we'll monitor how B.C. ranks against other provinces as far as taxes that affect our competitiveness. In the Ministry of Finance we'll reduce the number of regulations from today's 68,000 to approximately 45,000 by 2004-05.

Our fourth goal in supporting government's financial and economic development objectives is to effectively manage public sector compensation.

The second core business activity we'll concentrate on is providing effective financial management and regulation. Key in this area is the removal of barriers to business investment and economic development by streamlining regulation and introducing a new company act. While taking steps to make our province more investment-friendly is important, it's only one

part of the equation. Managing our accumulated debt effectively is equally important in providing effective financial management and regulation. By taking advantage of opportunities in domestic and international capital markets, we're minimizing the costs and risks associated with government's debt.

A team of dedicated professionals manages this debt to make sure we get the absolute best interest rate possible on the money we need to borrow, thereby minimizing the interest rate risk for British Columbians who are paying for these expenses.

Another way we'll manage our debt is by providing comprehensive support for credit rating analysis and expanding investor-relations activity. Our progress in managing our debt will be measured in a number of ways including the credit rating we're given by credit rating agencies. Another measure of success is our taxpayer-supported debt-to-GDP ratio. We'll measure our progress here by our debt service costs. Currently, we rank third behind Alberta and Manitoba. Over the next three years we plan to maintain or better that position.

In providing effective financial management and regulation, we'll also become more efficient through technological advancements. I mentioned earlier that we're making changes to the Company Act. One of those changes involves electronic registration. With changes to the act, all corporate and personal property registrations will be performed electronically within three years. All management policy manuals will also be revised and consolidated electronically. We'll move away from a multitude of paper-based processes. Progress in this area will be charted by the percentage of personal property and corporate registrations that are filed electronically.

Another way we'll provide effective financial management and regulation is by moving towards a risk-based approach to managing government's resources. This shift towards risk-based management will mean that we'll direct our time and energy toward areas that present the greatest opportunities and/or risks for government.

It will also mean that we'll expand government's self-insurance program to Crown corporations, public sector hospitals and educational institutions. Over the past 15 years we estimate that we've saved approximately $350 million in taxpayers' dollars through self-insurance. This year we expect to save $25 million; the year after, approximately $30 million; and by 2004-05, approximately $35 million annually.

This risk-based approach will also mean the expansion of the enterprise-wide risk management program to all government agencies that will help us manage our risks more effectively and minimize our exposure to major claims in the future. Lastly, it will mean focusing internal audit resources on areas of greatest risk and opportunity. These opportunities could include the expanded use of debit and credit cards in paying for government services, as well as the automated distribution of welfare payments.

The third core business activity we'll focus on over the next three years is providing comprehensive, timely and transparent financial reporting. We have a number of goals in this area. Top of the list is to fully comply with generally accepted accounting principles, known as GAAP, and to meet statutory reporting and budgetary requirements. We've already started the massive process of moving towards GAAP and plan to have it completed by 2004-05. As well, we'll further improve our statutory reporting and budgeting requirements by tabling the public accounts this year on July 11, more than one month ahead of the required date of August 31. We will continue to provide quarterly reports, budgets and estimates according to the legislated schedule, following the highest standards of disclosure and transparency anywhere in Canada.

The fourth core business activity we will focus on is providing effective executive and administrative support services. Our primary goal in fulfilling this activity is to provide effective leadership and planning. Under the Ministry of Finance's leadership, all ministries and Crown corporations tabled three-year service plans this February 19, and these plans will be updated annually.

My ministry will review its progress in meeting targets outlined in its service plan every three months to ensure that we stay on track. We will continue to publish an annual service plan report that outlines our progress in meeting those goals. We will also provide efficient financial and administrative services within the ministry and to our clients and our stakeholders.

Finally, before I conclude, I'd like to take a moment to talk about one of the larger corporations that reports to the Ministry of Finance. Almost 30 years ago, in 1973, the Insurance Corporation of British Columbia was established to provide universal auto insurance to British Columbia motorists. Building on the election of our government, ICBC, with its new board of directors, management team and a leaner structure, will be focusing on two major areas: offering choice in the insurance field and becoming financially sustainable. I'll have more to say about these subjects in the months ahead.

I want to conclude by complimenting the Ministry of Finance staff again on the effort they have put into developing the Ministry of Finance service plan. This kind of work is just one of the many examples of excellence in the public sector. Taking British Columbia from its current status as a have-not province to its rightful place as a national economic powerhouse will take vision. It takes leadership; it takes a solid, long-term economic and fiscal plan. I'm proud of the foundation that the Ministry of Finance has built in all these areas, and I look forward to the pivotal role the ministry will continue to play in realizing government's new era of hope and prosperity in British Columbia.

J. MacPhail: For the minister's staff, this is how I'll be asking questions. First of all, changes to the ministry in terms of structure and staff; second, the closing of the '01-02 books. We've seen some expenditures recently as a result of that closing of books. On that basis,

I'll be examining the revenue, both '01-02 and '02-03 — that's table 1.3 — and examining expenditures by ministry, '01-02 versus '02-03. That's table 1.6.

Next, I want to talk about the budget transparency — I think it is now — and ministerial accountability act.

Then, just a few questions on GAAP. Then I want to talk about tables A9 and A10. I'm referring to the tables in the budget and fiscal plan — A9 and A10, which are assumptions and sensitivities on revenue and expenditures.

Next, I want to talk about capital changes and then Public Sector Employers Council and then ICBC, so we should be finished by tonight.

I see this as an opportunity to seek information. There are many other areas where I have more strongly held views than books. I don't have anything that interests me as much as these books, but I don't have strongly held views on them other than their accuracy. The thrust of my estimates will be their accuracy, looking backward, now, and looking forward. That will be the nature of my examination of the Ministry of Finance estimates.

I don't plan on doing a lot of yelling, which will make this the first — no, maybe second — set of estimates where I don't plan on doing much yelling, but answers based on numbers will help.

My first question is on the changes to the ministry that have occurred both structurally and personnel-wise.

Hon. G. Collins: I'm not sure if there's a specific area or a specific position or structure that the member is looking for an answer for, but if she does or if she wants to work through them, I'm glad to do that as well.

Hon. G. Collins: Okay. Give me a moment, then, and I'll summarize them. I'll try and run through it. There haven't been huge changes, but I'm glad to itemize those ones that I think are perhaps the most pertinent. If the member has other questions, then I'd be glad to answer those.

As I mentioned in my opening comments, there has been a fairly significant change in the capital division. There were about 50 FTEs there previously. That division has shrunk down to ten people that will remain in what is sort of known as the capital division. That reduction has taken place in a number of ways. Some people who were in the capital division, who previously had as their file a particular ministry and a capital program within that ministry, may well have been moved into that ministry. They have left the capital division in Finance and actually are now held within and work directly for the ministry they were previously dealing with.

As well, there may be some of those people that were in the capital division, analyzing and doing what is normally done there as projects progress, which have been brought back into TBS, Treasury Board staff. Those are the changes that have happened there.

As well, across the ministry there was the expenditure side and the revenue side. We've put that together in what we call now a performance budget office to link those a little more closely. You'll certainly notice — probably on the outside you won't notice a change — that we hope to be able to get better integration within the ministry and better use of staff talents in that way.

J. MacPhail: What's the overall FTE reduction in the Ministry of Finance as a result of the changes?

Hon. G. Collins: The reduction is from approximately 600, down 159 to a total of 441 over three years, I might add.

J. MacPhail: I have that as the figures from page 11 of the service plan. Anyway, that's what the numbers are on the estimates still. Okay.

All right, I'd like to turn to tables 1.1, 1.3 and 1.6. The reason why I say 1.1 is that it's the summary table — so just whatever changes may occur there.

I sincerely hope our economy is on the turnaround. I do not ascribe to the point of view of people being naysayers and doom-and-gloom predictors about the economy. I think that when that happened in the past, it was terribly unhelpful both internationally and outside the borders of our province in Canada as well. I don't plan on doing that at all, but I do want to know, if I can, through the examination of this, where the strengths and weaknesses are in our economy and our government's role in smoothing out the valleys and strengthening the peaks in the economy.

The way I feel most comfortable doing that — to start, anyway — is through the examination of revenue and expenditure, and the reasons why government has chosen to collect and expend. What's the logic behind their collections and expenditures based on where our economy is going?

I'll leave table 1.1 until the end. If we can look at, first of all, the expenditure by ministry, if we may. One of the things that I need help with is these most recent expenditures, end-of-year expenditures, that have occurred and how the books have been closed off, ministry by ministry, so that we would know what money is left over. If I could have an accounting of that by ministry and whether anything else in the plan has been revised. I'm looking at table 1.6. Sorry, I'm doing these in reverse — 1.6, 1.3, 1.1. The column in table 1.6, revised forecast '01-02 — I assume it's in now, by ministry.

Hon. G. Collins: Certainly, the final numbers are not in yet. It's April 8 now. As the member knows, it

takes some time for the final reconciliation to come together. We believe we have a pretty good idea of where the numbers are finally going to fall. There's still some time as these numbers sort themselves out and as we close the books. Obviously, the final numbers will be included in the public accounts when we get there.

J. MacPhail: The minister must know about the Attorney General and education. Maybe we could start with those two, because the minister announced expenditures in those areas as a result of savings that were found internally. Perhaps we can at least start with the two that he's gone public on.

Hon. G. Collins: Certainly in education. The member will recall that we made a commitment during the election campaign not to reduce the spending, to protect the budget for the Ministry of Education. We also did that for advanced education. I could perhaps deal with both of those first.

In education, K-12, as a result of savings in the ministry, there were savings, I believe, of about $43 million, where it looked as though the core ministry was going to be under budget. We analyzed that. Education is one where it's a little easier to do, given that the majority of the amount is either spent or not when you send the grants to school districts at the beginning of the year. There's some left, but relative to the size of the budget most of it is out the door, and you can nail it down pretty clearly.

As we got towards the end of the year, it was clear that there was going to be underspending in that ministry. This government made a commitment not to reduce the budgets, so we felt it was important to put that money back out into the school districts. We set one condition on it, and that was where school districts had, in the past, borrowed externally — i.e., from a bank or a credit union or something — for some aspect of their operations, the first thing that money should be used for would be to pay down that debt. That could be done immediately, within that fiscal year.

Any leftover funds that may or may not be available to a school district — depending on what their deficits were or their debts that they borrowed externally were — they could use as they saw fit for the betterment of the education system. That is what took place there. We anticipate that the Ministry of Education will come in virtually precisely on budget this year, given those changes or those expenditures that I just spoke about.

The Ministry of Advanced Education had some underexpenditures as well. Ministers right across the board have worked extremely hard this year to try and make sure they came in on or under budget. We've been putting a great deal of effort into that. Certainly, Treasury Board staff and I, early on in the mandate, identified a number of ministries that had historically overspent their budgets. We focused more of our energy on those ministries. We set up monthly meetings, and in fact every two weeks staff would meet, and monthly the ministers would meet to go over the plan that ministry had to manage its budget and to come in on or under budget. We put a great deal effort into focusing our resources. Some ministries have done very well; others have struggled and will continue to struggle, I expect, for some time, given the types of services that they provide.

Advanced Education is another example where expenditures are fairly easy to track because they're given as grants to the universities and colleges, etc. There was an underspending in that ministry which we were able to identify fairly well. I believe the figure was $23 million, but I'll confirm that. I think it's $23 million.

The government made a commitment in the election campaign to a series of leading-edge endowments whereby we would fund an endowment which is held arm's length from government. There would be a normal selection process based on peer review for research and development in a variety of areas, from environmental to science to health care to resource…. I mean, really across the spectrum. Government has committed to fund those during our term in office. There was underspending in the ministry this year, and as a result we used those funds to help start to fund those endowments perhaps slightly ahead of where we had hoped. So that's positive as well, and that's in keeping with our commitment to protect the funding for that ministry.

I think that deals with the two Educations. I don't know if the member has any questions on those.

J. MacPhail: We should assume, then, that the books will close out at $1.892 billion for Advanced Education in '01-02 and for Education, even with this expenditure, at $4.842 billion, '01-02?

Hon. G. Collins: That's correct. In fact, that's how those figures were determined. Those ministries were coming in under budget in the core ministries, and we put that money back into service delivery or, in the case of Advanced Ed, the endowment funds.

J. MacPhail: Under what circumstances would a board of education have debt-servicing costs that they could use to pay down first? How does that arise?

Hon. G. Collins: School districts have the ability to go out and borrow money on their own for certain things. In fact, over past years school districts have incurred debt — not huge amounts, but some — by borrowing from private institutions — credit unions, I assume, and that sort of thing. I'm sure that the member opposite, as a former Minister of Finance and Minister of Education, would have been around when some of that borrowing took place.

Government is moving towards GAAP, as I mentioned in my opening comments. At some point it's likely that the school districts will come under the entity that we know as generally accepted accounting principles. It's important, I think, to recognize that there are debts outstanding with those school districts. The intent of this grant was to try and pay those off

where possible and, if there was money left over in a district, to use that for educational services.

J. MacPhail: Maybe we should discuss this when we discuss capital changes. What boards of education, what school boards would have debt-servicing costs that they incurred themselves that weren't funded through the vote? And could the minister introduce his staff, please?

Hon. G. Collins: I'd be pleased to. I'm sorry. I'd started my opening comments before they arrived. I'd be glad to do that. On my left is Paul Taylor, the Deputy Minister of Finance. He didn't look nearly this good two weeks ago when he left on vacation, but he just came back much rested and ready to go. Dave Woodward, who's the acting deputy secretary for Treasury Board, is to his left. As well, there is Nick Paul, who manages all the other interesting stuff that we do — producing documents, economic issues, etc.

J. MacPhail: What school boards have debt-servicing costs that aren't covered by the vote?

Hon. G. Collins: I can perhaps give the member an idea. I don't know, and I'm just checking to see, what extent I can get into the detail of it. There are, looking at the number, probably a dozen or more school districts. Those numbers are from June 30 of 2001, or these districts that I have. Unless I'm told not to, I think I can give you the districts, anyway. These are from their financial statements: Quesnel, Surrey, Delta, Burnaby, Maple Ridge–Pitt Meadows, North Vancouver, West Vancouver, Sunshine Coast, Prince Rupert, Peace River South, Sooke, Alberni, Fraser-Cascade, Cowichan Valley, Vancouver Island West, Stikine and the Nisga'a school district. The total is about $31 million.

J. MacPhail: So $31 million of the $44 million will pay off those debts. Is that right?

Hon. G. Collins: It was actually a per-capita grant, so some school districts would have been able to pay off all. Some school districts would have been able to pay off most. Some school districts didn't have any debt, so they wouldn't have to pay off any.

J. MacPhail: What operating line would this debt servicing come under on a school board budget?

Hon. G. Collins: I don't know. She'd have to ask a school board. I don't know that. Those are their books. They're held separate from ours. That's part of the process of bringing them back into the entity under GAAP, which I expect will create no end of challenges for government.

J. MacPhail: Well, the reason why I'm trying to find this out is because the Education minister's estimates closed, and then the money was released, so I couldn't ask any questions there. I'm just wondering what, if any, impact the $44 million will have on protecting against cuts to programs. That's where I'm going on this question. If it were a debt-servicing line…. It would be folly for the minister to assume that I know the answers to these questions. I've had several portfolios, and there's still stuff that I don't know about. That's why I'm asking these questions. I'm trying to figure out what that money contributed to in terms of preventing school closures, teacher layoffs, etc.

Hon. G. Collins: My understanding is that school districts often have an operating line outside. Some of them, I expect, in the past and perhaps now…. I don't know; the member will excuse me if I don't have all the answers to her questions either. Certainly, some of these may have been very short interim financing for capital projects until such time as government dispensed payments for them. Some may have used them to finance deficits. I'm looking at some of the school districts and believe that's probably the case — past deficits.

It's difficult for me to give the member an exact calculation of each school district — what they may have used that for. The reason for it is that the numbers I have for the member, which I said added up to about $31 million, may have changed, because that was June 30, 2001. We don't have all of that information. We know that those school districts have in the past had outside debts. They're relatively small in the scheme of things, but they're there. I'm not able to know the exact numbers.

We've asked the school districts, when they make these decisions to pay off these debts, to tell us what they've used the money for or how much they've paid off, so we have a sense of that. It really is somewhat outside of my ability as Ministry of Finance and to a certain extent the Minister of Education. We can request this information from school districts, but it's difficult to force them to provide it — not that they would necessarily fight us on that. It's just that we don't control this type of provision that they may have.

I expect that where there were outside debts, that would have been the first line of expenditure they would have used these one-time grants for. The only condition we applied to these grants was that in the fiscal year that just expired, they take that grant and use a portion of it to either fully or partially extinguish that debt. I don't have the details on that, nor am I likely to have the details back from the school districts for some time. I'd be glad to provide it when it comes.

J. MacPhail: I'm just curious, too, because school boards aren't supposed to run deficits. The minister quite clearly said debt servicing, so I assume it wasn't for the deficits.

Hon. G. Collins: First of all, on education, if I can. The debts they would have incurred are accumulated

deficits perhaps or other capital they may have done…. Again, these numbers are from June 30 of last year, which was about 24 days after the new government was sworn in. I can only assume that those pre-existed, and I would be glad to get the member more information on that. I don't know all the details of how they were accumulated in the past, but I'd be glad to find out for her, because I know I'm curious myself.

Second of all, in the Attorney General's ministry there were a number of expenditures. I spoke earlier about some of those ministries that have found it more challenging to hit their budget targets. I would say that historically, Attorney General has been one. Health care has certainly been another.

Part of the reason in the Attorney General's ministry, I think, although it doesn't excuse it in its entirety, is that they have a number of statutory requirements that are driven by the law. They are expenditures we can try and budget for, but when the charge comes, there's not much we can do about it.

Expenditures for people or settling lawsuits tend to come out of the Attorney General's ministry. Those debts can result out of court actions that are taken up by people outside government in response to an action government may or may not have taken in a ministry, and that results in a lawsuit. Sometimes government settles those lawsuits. Sometimes they go to court, a decision is made, and government is required to pay.

One of the things we're trying to do in the Ministry of Attorney General is see how we can allocate the risk to ministries, so they take perhaps a little more thought in the process as they set policy and make administrative decisions to avoid lawsuits in the future. That's another issue, which we can certainly talk about if the member would like.

In the Attorney General's ministry there were a number of areas over the last year where there were requirements to access contingencies. They were generally small amounts, but there were several of them. As we reached the end of the year, in areas that had been allocated to contingencies and had approval of access to contingencies, because we'd continued to work their plan with them on almost a weekly basis, there was in some cases the ability to reduce the pressures that were in the budget.

In this case, there was about $7.6 million that had been allocated and approved through contingencies, which was in the Attorney General's budget. We then came in slightly under what was expected, to the tune of about $7.8 million. It was felt that there had been — again, in a similar case to the school districts — deficits that had been run up at the Legal Services Society over the last number of years.

From government's point of view, there wasn't attention paid to their budgets. There was a budget given to them at the beginning of the year, and almost year after year the costs were over what was budgeted. No action was taken, and as a result there was an accumulated debt there from previous deficits. The money that was provided was to pay off the debt — not in whole, I think, but certainly in part. I think the majority of it was paid off.

That, of course, will provide the Legal Services Society in the future more capacity within their budget for program delivery, because they won't have to put as much of their budget toward servicing that debt.

J. MacPhail: Am I correct in saying that it's not Attorney General that will come in under budget by $7.8 million, and therefore it's contingencies? Is the money that was charged against contingencies for some other project being used for the legal aid?

Hon. G. Collins: If the member turns to this year's budget and fiscal plan — the report — on page 108, table 3.3, you can see what the allocations were to contingencies at the time this budget was introduced on February 19. It was about five weeks from then until the end of the fiscal year, and we continued to try to manage those pressures down to the point where there was not as large a requirement.

We felt that it was important, given the work that the ministry had done to manage their costs, not to just claw that all back but to try and reward that behaviour. We'll try to do that more as time goes by. As a result, there was some money available. We put it to legal aid, to the Legal Services Society, to allow them to pay off their debt, which is something we'd all have to pay off eventually anyway. It then gives them more room in their budget to provide service.

J. MacPhail: So, in effect, that announcement about the $8 million of money coming out of contingencies was made on February 19.

Hon. G. Collins: In fact, the announcement around the money in contingencies allocated to the Attorney General's ministry was in the budget on February 19. Since then, as we've managed those and other pressures within the ministry, trying to keep those costs under control, they came in under the amount allocated to them. Rather than claw that money back, in order to try to reward some of the more fiscally responsible behaviour that's happening and that's building there, we tried to leave some of that funding with them to use for other purposes. In this case they used it to pay down a debt which had been incurred over time at the Legal Services Society, thereby allowing them to provide a greater portion of their budget in the future to services as opposed to debt services.

J. MacPhail: What is the underspending on the Attorney General's budget, then?

Hon. G. Collins: As the member will recall from the number of open cabinet meetings where I presented fiscal updates to the public, one of the ministries that was continuously having challenges to get its budget on track was the Attorney General's ministry. If you look at the contingencies on page 108 and add

them up, you come to the number that is how much the Attorney General's ministry is over the budget allocated to it on July 30. Had we not expended the $7.8 million at the end of the fiscal year, that number would have been $7.8 million lower.

If I can be clear, then, if you take the $8 million, the $5 million, the $8 million and the $16 million, that's $37 million. That's what was allocated. After this was allocated, as we were managing it on a biweekly basis, the actual expenditure looked like it was going to come in under budget to the tune of roughly $7.8 million. Rather than claw that back, government chose to leave that money with the ministry to encourage the work they had done. The $7.8 million was allowed to be allocated to pay off accumulated deficits which now formed a debt held in the Legal Services Society. That's why they received that grant.

The amount that the Attorney General's ministry will be over is still $37 million, approximately.

J. MacPhail: The reason why this has piqued my curiosity is because when the announcement was made about the money being found, people said that there was nothing new in that, that it was announced in February. I didn't know what they were talking about. These were lawyers who were curious as to the reason why the announcement was made last Thursday. They said it had been announced in February as part of the budget. The minister has quite helpfully showed me what they were referring to.

I just wonder why the announcement of the same money was made a second time on Thursday.

Hon. G. Collins: Perhaps I can clarify a little bit. I think we're getting into subtleties, but I'm glad to try and walk the member through them. As she knows, Treasury Board will notionally allocate spending pressures to contingencies. They approve access to contingencies. In fact, legal aid services was disclosed roughly, I guess you could say, in the budget on February 19, on page 108. The announcement that that grant was being given and was going to pay down the debt was made just prior to the end of the fiscal year. Government often makes decisions at one time and announces them later and discloses them when they're required to or when they choose to. That's what happened.

J. MacPhail: Well, forgive me for being suspicious, because when I called up people to ask them whether their concerns around the provision of legal aid were at all alleviated by the $8 million announced last week in the first of the new fiscal year by the Attorney General, they said: "No, no. We were well aware of that money being allocated in the budget of February." Indeed, the Attorney General had discussed that money with them previously. They had actually assumed it was new money beyond the $8 million that was incorporated in the allocation of the contingencies and then found out it was exactly the same money.

Back to table 1.6, then. We have explanations for a couple of the ministries. Can the minister tell me, if he's been doing biweekly management of it, what the state of the other ministries are?

Hon. G. Collins: I'm glad to answer that to the best of my knowledge at this point in time. I just want to make it clear to the member that these numbers may well change over the next little while as the books are finalized and final decisions are made, etc. But beyond Attorney General and perhaps the Solicitor General, I think — there may have been some pressure there — and of course the Ministry of Health, which we're all well aware of as a result of the supplemental estimates, there should not be many others. There may be a slight overrun in the Ministry of Energy and Mines as a result of a statutory appropriation, but other than that I believe just about every ministry is scheduled at this point to come in on or under budget. Again, that will be disclosed when we get to the public accounts. At this point, that is my best estimation of where we're at.

J. MacPhail: The reason why I'm heading in this direction, Mr. Chair, is not just out of curiosity. There are cuts happening in other areas of government. The minister has already chosen to prevent those cuts from happening in a couple of areas, and therefore I'm curious to know whether the underbudget spending.… If the total expenditure does come under budget, does it go to pay down deficit, does it go to pay down debt, or are programs going to be restored?

I would also ask the minister to go through table 3.3, the contingency allocation, as he started to do with the Attorney General, and tell me what, if any, of those contingencies have been expended or are planning to be expended.

Hon. G. Collins: I want to be clear on this, because I don't want to leave a false impression with anyone. Government's goal is to manage its finances and, where under-expenditures occur because of good management, to underspend. There are a few cases where there may be exceptions. The case of health care and education are two examples — K-to-12, post-secondary and health services. The reason for those ones is our commitment during the election campaign, and repeatedly since, not to cut the budgets for health care and education but rather to protect those budgets. We're doing that.

Where there are savings, government will try and run those ministries as efficiently as possible. If we can save money, if we can do things more efficiently, if there is money left over at the end of the year, then we want that money to go back into the provision of services in whatever way it can be done. That is a commitment we've made, and we're going to continue to follow through on that.

I think I've explained the example I gave from the Attorney General. Certainly, the member can look through it. It is not the intent of government to change

the service plans, to throttle back the plans that government has. Ministries are expected to continue to implement their service plans. In fact, ministers have personally signed off on those service plans and the fact that they'll hit those targets. Government is continuing to do that, with the exceptions I've outlined.

J. MacPhail: Well, there was one other announcement of money being spent, and that was about a million dollars from the Ministry of Community, Aboriginal and Women's Services. What category does that fall under?

Hon. G. Collins: Many of the underexpenditures that will be happening this year are not large, but they will be happening in some ministries. One of the things we've encouraged ministries to do, where possible, is absorb in their underspending the costs of the restructuring.

For example, and I think I mentioned this the other day in the supplemental estimate, if a ministry came under budget by $2 million or half a million dollars or something and had adjustments — restructuring costs, leases, severances, etc.; part of what we've been working on — then they were expected to absorb those within their budget prior to accessing the contingency or the additional vote which we put through the other day. I expect ministries to do that.

In the Ministry of Community, Aboriginal and Women's Services I believe there was about a million dollars which they put out in the form of one-time grants to deal with the restructuring, and that was the intent there.

J. MacPhail: Oh, so the money was to pay for severance. Is that what the minister means — for severance? To organizations funded by the….

I thought it was the Minister of State for Women's Equality that made the announcement, so I'm just curious. I don't think it went beyond the women's programs, so was it there for severance?

Hon. G. Collins: I expect that there will be restructuring costs across government and in other groups, etc. To the best of my knowledge, although I'm not the minister, my understanding is that those were unconditional grants that were given to the women's centres, and they'll do with them as they choose. I'm expecting, though, that may well end up being used for restructuring costs.

J. MacPhail: Could the minister then go through table 3.3 with me, as he has on the Attorney General, and explain what funds are being expended out of contingency or not?

Hon. G. Collins: These contingencies are allocated as they were on February 19. I expect there may be some changes in or out, depending on the pressures and the spending of the various ministries between February 19, now and when we finally close the books and issue the public accounts. At this point I'd like to stick with what's there, although, as I've said all along, the numbers will move between then and now, and now and when the public accounts are finally issued.

J. MacPhail: Again, these are pressures from contingencies for '01-02. I'm just curious as to Elections B.C., the aboriginal treaty referendum. For instance, that's a pressure. Well, that can't be because there's not been a cent expended until this….

I'm curious as to the situation such as some severance and benefit costs and shared services under management services. I'm curious as to what it means under health services: health services, urban specialists and facilities compensation and nurses' settlement.

In those estimates, we discussed all of those as part of the operating budget of '02-03. Those are a few that come out as being curious.

Hon. G. Collins: First of all, with Elections B.C., the treaty referendum. Government made a decision the day it was elected. Well, prior to the election it made the decision as a party to do it when it was elected, if it was elected. When it was elected, government started to implement its decision to hold this referendum, and I believe the commitment was to do so within our first year in office. A certain amount of work in preparation, I believe, getting the ballots ready, etc., was done prior to the end of the fiscal year, so some of those costs which were incurred in last year's fiscal year will be charged there. That's a notional allocation. Again, I said those numbers may change slightly between now and when the books are finally closed. Some of it will be in this fiscal year, because the counting of the ballots and other processes will be taking place in the current fiscal year. That's the reason for what the member sees there. That sort of straddles both fiscal years.

With regard to the nurses' settlement, for example, there are some portions that are retroactive and some portions that will happen this year. The biggest chunk will be next year. That's an example of a pressure.

J. MacPhail: I'm sure the minister is well aware that this is a huge contingency fund from '01-02. We're dealing with…. This is perhaps the most focused year ever in B.C. history where some things have been underestimated, certain things have been overestimated, and the consequences have been fairly severe in terms of cuts anticipated.

I'm trying to get a handle on it — if somehow this contingency is going to disappear and therefore we'll have an extra $300 million that we can add to the bottom line. I know that the week before last the minister suggested that the reason why he couldn't take the government restructuring costs of $95 million, as is listed there, was because of the pressures of, I think he said, Tech B.C. So clearly he must have an accounting of what's in and out, because we've already discussed things that couldn't be covered off here because of

Hon. G. Collins: If the member looks at the budget her government introduced in March of last year, a little over a year ago — on page 61 — the contingency vote at that time was $220 million. If I recall correctly, previous governments, when I was in opposition, for a long time didn't have contingencies. If they did, they were very small. I seem to remember the first year it was $75 million or something around $100 million. Those contingency numbers have gone up since then.

In preparation for the budget that was presented in July — and I'm going by memory here, so I stand to be corrected if I'm wrong — it was clear at that point that there were other issues that we were trying to grapple with. We had already, in the short time in office, experienced — I would say that I experienced — a number of surprises. Those surprises continued right up until July 30, and unfortunately they continued well after July 30. Some of them were due to outside economic issues. Many of them were due to changes or decisions that the previous government had made, which gradually came to my attention. The fallout of those came to my attention over time.

If I recall correctly, at the time of the July 30 budget I increased the contingency budget to $360 million — I stand to be corrected if that's wrong, but I'm pretty sure that was what the process was — because of the uncertainty, because of these little surprises that were popping up. For this year the contingency budget is $210 million. It is not the intent of government…. That is on page 40 of the budget that was introduced on February 19.

What we're trying to do is have a budget for contingencies that reflects the risk that we think might be there and that is prudent and conservative. Obviously, if we were to enter into a year where there were all sorts of things happening, wild fluctuations of expenditures — perhaps we're going into a year when there is going to be an awful lot of collective bargaining done and a potential big risk to the budgets — a minister, myself or others in the future, may choose to increase that contingency. That's a call the Minister of Finance has to make, and that's where we got those numbers.

J. MacPhail: Yes, but, Mr. Chair, there's been discussion of these numbers since then, under the supplemental estimates to deal with severance costs. The minister was quite clear that the reason why he had to come in for a supplemental estimate was because of the "horrendous overexpenditure" at Tech B.C. The whole contingency must have been either used up or accounted for or something. I'm just trying to figure out how he knew that all the contingency had been used up.

Hon. G. Collins: The issue that the member raises…. Let me walk her through it. At the point when the budget was introduced on February 19, it looked as though there was sufficient room in the contingencies budget to fund the $95 million, which was mentioned in November when we first announced the workforce adjustment. As I said the other day — last Thursday I guess it was — when I brought in that last supplemental estimate, I still hoped that that would be the case. I also mentioned there was this other issue which had come up, which was in the category of tens of millions of dollars. It was the restructuring costs of extracting Tech B.C. and the Ministry of Advanced Education from the lease which ICBC properties and it had entered into — and, I've learned from Tech B.C., not without a great deal of pressure put on them.

There is some number in the tens of millions of dollars which has yet to my knowledge to be finalized, which will have to be allocated somewhere. It would have been my preference to maintain the $95 million in this contingency as it was presented in February. Although it doesn't matter, that would have been my preference — and if we needed a supplemental estimate to do that for the Tech B.C. costs.

The challenge was that at the time the end of the fiscal year was coming when we needed that supplemental estimate, it was still not finalized what the exact amount would be. Now we knew roughly what it was going to be, and I still know roughly what it's going to be, but the final number has not been determined. However, the decision to wind Tech B.C. out of ICBC's property was made prior to the end of the fiscal year, so we wanted to be able to book it in the year the decision was made.

I made a choice as Minister of Finance to obtain a supplemental estimate for the $95 million for restructuring costs in the event that we needed to use it. As I said, as we get closer to finalizing the books and as we finalize the number on the Tech B.C. lease, we'll have a much better idea. If possible, and we can contain the Tech B.C. lease and these workforce costs within the contingencies budget, that would be my preference. Then we wouldn't need to draw down on the spending authorization we received in that final supplemental estimate. If we can't, then the supplemental estimate is available to government. It can draw down those funds in the proper way.

J. MacPhail: I'm just trying to figure out where the books are settling here so there is least harm to people who are trying to get services from the government. It's hard to find out where these books settle. I expect to fully explore that issue about the unwinding of Tech B.C., which was on an operating lease, from ICBC under the estimates later this evening. I'd be very curious to know how it could be in the tens of millions of dollars when it was an operating lease. The minister will be well prepared to demonstrate that and the discussions with ICBC.

This government is famous for saying, just as they very successfully did: "Oh, if you hadn't built fast ferries, you could have done that." In opposition this government spent the value of the fast ferries, I think, about 37 times over. Of course it was a capital expenditure as opposed to an operating expenditure. Now to

avoid an explanation that anyone can actually understand, they wave a flag in front of a bull, saying: "Oh, that bad Tech B.C. Here's what we had to do to unwind that disaster, Tech B.C." That's the explanation I had just ten days ago from the Minister of Finance about why we were in for $95 million worth of supplements — sorry, supplemental estimates. Some people would want supplements as well.

We've gone through the Attorney General. We find out that was there and could be expended. I find it incredible — the explanation around the aboriginal treaty referendum that there could not possibly have been $4 million expended prior to March 31. We don't know what happens to the government restructuring money. I expect I'll get an answer on Tech B.C. later this evening, when we do ICBC, and just see what it costs the taxpayers to close down Tech B.C. Is the minister suggesting…? Other than those topics we've discussed, then, he's sticking with these contingency allocations?

Hon. G. Collins: First of all, Tech B.C. We will get into it when we do ICBC. My understanding is that we're going to be doing ICBC tomorrow morning. I think ICBC is planning on that. We can certainly talk about it — arrange that schedule, probably not on the floor of the House but elsewhere.

The member talks about the Tech B.C. lease being an operating lease. That's true, but the reality is that they'd signed for more than one year. They signed, I believe, a 15-year lease or something — certainly longer than that. In order to buy themselves out of the lease, because there was a contract signed, there is a charge. There is a cost to get out of a lease. You don't just walk away from a lease, as much as one might like to. In fact, this government has kept the school going. It's now a subsidiary of SFU. There's an SFU campus in Surrey. The people of Surrey are thrilled to have the stability in a university south of the Fraser River in a way that's going to be sustainable in the years ahead.

With regard to the referendum, as of February 19 my estimate of the cost that would be incurred in that fiscal year was $4 million. The rest would have been incurred in the current fiscal year. As I said, all of these numbers in the contingencies and elsewhere may shift slightly over the next number of weeks until such time as we produce the final books in the public accounts. That is my best estimate as of February 19.

As well, the member is looking for some assurances on the bottom line. I am assured and I am comfortable at this point that it is highly unlikely that the government will go over the budget that was set — the $1.964 billion deficit number — and it will in fact come in somewhat under that. I'm trying to make sure that it's as far under as we can possibly make it.

J. MacPhail: The minister does financial accounting exactly the opposite way I do.

J. MacPhail: That's right. You know what? That's exactly right. This government believes in cutting services to people, cutting education and cutting health care, cutting legal aid, cutting home support, cutting audio books. That's exactly what this government believes, and I don't. If the minister comes in with a huge reduction in the deficit on the basis…and uses that kind of accounting to do massive cuts to programs, I will be very upset — very upset. The backbench MLAs can applaud all they like. I take great pride that we ran deficits to protect programs and ended up balancing the budget. This government runs deficits and cuts programs at the expense of people. I'm not coming at it from a point of view of figuring out how the minister has underestimated his deficit; I'm coming at it from the point of view of how much he has overestimated his deficit and done unnecessary cuts to services that are needed by people — exactly the opposite of what the back bench here would applaud.

Perhaps we could turn now to the expenditure side — table 1.3, I think it is. No, I want to start with table 1.2. My apologies; I said 1.3 earlier. Revenue by source. The ministry is doing end-of-year expenditures. I assume the minister is, I assume — and I take the minister at his word — not going to increase the deficit, so there must have been some understanding of the revenue source as well. Can the minister update me on the revised forecast for '01-02 on revenue?

Hon. G. Collins: As I said earlier, the numbers on the expenditure side will move up and down a certain amount as we finalize the books. I expect the numbers on the revenue side will move up and down slightly as well. The latest forecast I have, which I have made public, is the one before the member, which is included in the budget that was released on February 19.

J. MacPhail: The third quarter report has come out subsequently. Have you published the third quarter report at the same time? Are these revenue estimates a result of the third quarter?

Hon. G. Collins: The revised forecast is from the third quarterly report. Because of government advancing the budget date to the third Tuesday of every February, it made a decision, as well, to include the quarterly report release at that time just for the sake of consistency of numbers, etc. That's where it comes from, and it's on page 105 of the budget report.

J. MacPhail: Perhaps the minister can tell me: is it for the year '01-02 that we get a transfer payment from the government for being a have-not province?

Hon. G. Collins: Subsequent to the budget being released on February 19 but prior to the end of the fiscal year, we received the first equalization payment — not a transfer payment, but an equalization payment — from the federal government, which is retroactive as well. The amount was $27 million, because there's an

equalization payment that is higher, which also affects the amount of your transfer payment, which goes down. They net out to about $27 million — not a large amount of money in the scheme of things, but that's what we received retroactive. It was recorded, and it will be recorded in the public accounts as having occurred in '01-02 because we received the cheque prior to the fiscal year.

We anticipate we will now begin to receive cheques on a monthly basis, going forward. The way this works is that there are a number of revisions as they recalculate and sort this out as time goes by, so the $27 million figure could still change somewhat. British Columbia doesn't have a lot of history of booking equalization payments, so I'm sort of getting up to speed on this as well. The $27 million will be booked this year, and in future payments, as well, we receive them in advance of the finalized accounting. They're based on an estimate and a forecast, and then there are six or eight revisions that the federal government goes through to try to narrow the accuracy and get them more precise as time goes by. We'll be booking those in the month that they arrive, and there'll be changes which will roll through as well. To the best of my knowledge, that's how it works.

J. MacPhail: The minister stated that we became a have-not province in '99-2000. Is the $27 million retroactive for the period from '99-2000, so '99-2000, 2001 and 2002 — three years? Three years of payments equal $27 million?

Hon. G. Collins: I wanted to make sure I was accurate in confirming which years it was for. We became a have-not province in '99-2000. We bounced back out of it in 2000-01 as a result of the energy revenue spike and fell back into it in '01-02. I believe that at this point the $27 million is the net of the payments for everything up to and including the fiscal year that just ended. That's my understanding. If it's other than that, I'll let you know, but that's my understanding. Then we'll be getting estimates and monthly payments going forward, based on where the federal government projects we are at that time.

J. MacPhail: Are these payments made in the same fiscal…? The minister said that they're monthly payments. The have-not payment covering three years is $27 million — for three fiscal years. Is it the fiscal year ending March 31, '02?

Hon. G. Collins: I want to be clear. We receive an equalization payment which is larger than the $27 million. In fact, in '99-2000 it looks like it was about $94 million. In '01-02 it was about $132 million. The equalization portion is much higher, but it's netted out because of the way it's calculated and the way it affects the CHST…

Hon. G. Collins: …as it is in every province, such that the net figure is $27 million. But the actual equalization payment is $226 million, I think, for that retroactive portion.

J. MacPhail: The equalization payment in every province is netted out of transfer payments. When a province lists its equalization payments, it's the net amount.

I'm just trying to figure out what the allocation is on an annual basis. I was hoping the minister could read it into the record. I went to the website myself and figured it out, but I didn't have time to get it off the website.

It will be interesting to see how those equalization payments continue over the coming years. My information is that the vast majority of that equalization payment is for the fiscal year just ended and that it will continue to increase substantially. It's not exactly the trend that we would wish in this province.

In the estimates for B.C. Hydro, I quizzed Hydro about their dividend payment to the provincial government. Those books have closed, and that's a fairly easy dividend payment to calculate. Can the minister tell me what the dividend payment from B.C. Hydro has closed at for fiscal '01-02?

Hon. G. Collins: I will answer the first question first while we get the number for the member.

The comment from the member…. My understanding at this point is that the forecast for the gross equalization payment for '02-03 is $327 million. Again, that may change. I can almost guarantee it will change somewhat over the next number of years.

The pattern that brought us to where we are was established in previous years. One can look at the pattern if one wants, and I certainly would be pleased to provide the numbers for the member opposite. In 1994-95 British Columbia exceeded the level at which it would start to receive equalization payments by about $2.6 billion. The next year it was down to $2.5 billion. The year after that, '96-97, it was down to $2 billion. In '97-98 it was down to $1.4 billion. In '98-99 it was down to $400 million. In 1999-2000 we went into the red, so to speak, by $94 million. The trend line has been pretty obvious for some time. That's why I was surprised when I stated at an open cabinet meeting that government was concerned and the indications were that British Columbia had become a have-not province in '99-2000. In fact, I believe I said that prior to the election as well, looking at those figures. I was surprised at the level of surprise of the member opposite at that time. I think the quote she used was something to the effect — I'm only paraphrasing, though — that I was like a good fairy…

Hon. G. Collins: …or Tinker Bell sprinkling pixie dust in people's eyes, trying to convince them of some-

thing that wasn't true. About two weeks later it turned out that in fact the federal government confirmed what I had said, which was that the government believed and our estimate was that we had become a have-not province in '99-2000. We had come out of that in 2000-01, but it was likely that we were going to go back into it in '01-02.

I'm glad to pull the record for the member opposite, if she would like. If she gives me one moment, I'll get her the number for B.C. Hydro.

If the member goes to page 49 of the budget document from February 19 — table 1.7, Crown corporations and agencies — the revised forecast at that time is $395 million.

J. MacPhail: Why this number for contributions on table 1.2? The contributions from the B.C. Hydro and Power Authority are estimated at $329 million. What's the difference?

Hon. G. Collins: I'll try and walk through this step by step, if I can. If the member turns to page 49 of the document, table 1.7 — which I advised before — the gross for Hydro is $395 million. The transfer from the rate stabilization is $195 million, for a net income of $200 million. Then if she goes back to table 1.2 on page 32, the payment to the CRF, the consolidated revenue fund, from Hydro to the government is $329 million.

J. MacPhail: That doesn't add up to me at all. What is the number that we're booking or estimating to book in the bottom line as a contribution — $329 million or $395 million?

I know it's an estimate. Here it is: "The transfer to the rate stabilization fund would net a $200 million transfer on $1.7 million." Here we've booked on table 1.2 a contribution from government enterprises of $329 million for the B.C. Hydro and Power Authority.

The bottom-line contribution to the summary statements of B.C. Hydro is $200 million. That's the change. If Hydro had another $100 million, it would be $300 million; if they had $100 million less, it would be $100 million. Their net impact on the summary statements is $200 million.

With the $200 million, are we on forecast? Where are we at in terms of B.C. Hydro?

Hon. G. Collins: My understanding is that with that number, we are on forecast from what we had in the July budget.

J. MacPhail: Perhaps the minister could then walk me through on a similar exercise for the B.C. Lottery Corporation — the differences between table 1.7 and table 1.2, which shows a much lower figure for contributions from government enterprise.

Hon. G. Collins: I'm going to try and walk through this explanation, if I can. If I can't, I'll get some more information. The B.C. Lottery Corporation's net is $600 million, and that's on page 49. I'm told that we pay a certain amount to the federal government. We pay a certain amount to the casinos and the operators, etc. The amount that's recorded into the CRF is on page 32 in table 1.2 under the B.C. Lottery Corporation, which is $444 million. I'm more than happy to have a more detailed briefing on how all these fold into the CRF and the summary statements, etc., for the member if she'd like, because it does get complicated.

It's the same thing around Skeena Cellulose. All of these Crowns have a similar…. The numbers are more complex than they at first appear. If she'd like more detail on that, I'd be more than happy to provide it for her.

J. MacPhail: The reason I'm asking about the B.C. Lottery Corporation is because I'm trying to find out where the $125 million goes for charities, the charity contribution, the agreement that there was a minimum contribution of $125 million. I'm happy to have that explanation, if that's what it is. That's almost what the difference is between the $600 million that is taken in, in revenue and the contribution transferred to government, which is $444 million. The new gaming legislation doesn't provide for a guarantee to charities, so I'm trying to just follow the money in that area.

Hon. G. Collins: Maybe I can add to that a little bit. If the member goes down, on page 49, self-supported commercial Crowns, towards the bottom it says "other accounting adjustments." There's a footnote 4.

Hon. G. Collins: On page 49, table 1.7. If she follows down, very near the bottom it says "other accounting adjustments" and footnote 4. If she goes right to the bottom, it says, "includes transfers of British Columbia Lottery Corporation revenue to charities and local governments," and then there's some other adjustments as well. My eyes are starting to go, and I can't read that from this height.

J. MacPhail: My last question on revenue sources is from table 1.2, the footnote around forests, footnote 4. I need to follow the money about what happened with the windup of FRBC. Where's the money?

Hon. G. Collins: When Forest Renewal B.C. was wound up, the programs they were involved in were rolled into the Ministry of Forests in the forest investment fund. In fact, there's a forest investment vote, I believe, as well. Essentially, what's happened is that there's really just been a restatement of the amounts —

and included them into the Ministry of Forests. I'm assuming that if the member goes to the estimates book, she will find there is in fact a vote which will have that there. The forest investment fund is vote 29 on pages 132 and 133 of the estimates book.

J. MacPhail: The forest investment vote has the revised forecast of expenditures of $361 million, closed off fiscal year '01-02 and $146 million for the fiscal year of '02-03 in terms of expenditure. Perhaps the minister or his staff could point me to what money was in FRBC before it was wound down. How much money was in FRBC?

Hon. G. Collins: If the member turns to page 113 of this year's budget document report, looks at table 3.7 down to natural resources and follows it across, she'll see Forests. It is in this full year or the revised forecast for '01-02 — that's the shaded column, the furthest one on the right under Forests — and it's $1.082 billion. If she takes that and adds it to the $163 million that was in FRBC, she'll come up with a number that's $1.245 billion, which is the number that is restated in Forests. It's $1.082 billion plus $163 million, which is $1.245 billion. That's what is stated in Forests.

J. MacPhail: Okay. I remember there was a surplus in FRBC, because a surplus built up at the beginning of the fund before expenditures could be drawn down. It often had an operating deficit, but it was actually a surplus fund. I'm trying to figure out where the money went.

Hon. G. Collins: My understanding is that FRBC's expenditure, their net income for the revised forecast for '01-02, was a $198 million loss.

Hon. G. Collins: Right. The revenue for FRBC was $163 million. In fact, those are the numbers I think the member is looking for.

J. MacPhail: But that's an operating deficit. There had been a surplus built up of which the operating deficit drew down on. There was a separate vote for FRBC before. Help me here. Show me the last accounting that this government has of FRBC. It can't just have disappeared off the face of the map. I've got every book here you could possibly imagine. Just point me to it.

Hon. G. Collins: I think I understand what the member is asking. I'm glad to try to source that for the member. However, I do know that the Ministry of Forests estimates are ongoing right now. I'm sure he would be able to answer those questions in greater detail, although I'm certainly prepared to track them down from the Ministry of Forests. That question could easily be asked to the Minister of Forests, who will probably answer it quite quickly for the member if that's what she chooses to do. If not, I'll try to find the numbers for her.

J. MacPhail: I've actually asked it several times. I asked it of the Minister of Finance in one of the supplemental estimates. Yes, it's surely something the government can get within the next couple of hours — about what happened to the FRBC accounting. Here's what I'm saying: in the surplus account of FRBC there was more than what was transferred into the forest investment fund. I want to know how much wasn't transferred into the forest investment fund from the FRBC account. And where did it go?

Hon. G. Collins: I'll try and determine whether the assertion of the member opposite is correct, and if it is, I'll try and get those numbers for her. As I said, the Minister of Forests estimates are ongoing, and this really is a detail of his budget and his ministry. In the estimates I try not to be the minister of every ministry, although I do try and provide whatever information I can. If the member is unsuccessful in getting that from the Minister of Forests, I'd be more than happy to provide it for her when I get it.

J. MacPhail: Yes, that's fine except my assertion is that the Minister of Finance took money from it and put it into general revenue. If he says no, great, but that's what I'm asserting. As soon as I'm finished here, I'll go into the Ministry of Forests and see whether he'll answer my question. In the meantime, the ministry staff can look that up for me.

The next question I have is on the Budget Transparency and Accountability Act. I think this government brought in a new…. I think it's called the Balanced Budget and Ministerial Accountability Act or something. On what numbers in this book, the Budget and Fiscal Plan 2002/03-2004/05, do the ministers keep their salary or gain their salary back — what numbers?

Hon. G. Collins: The ministers themselves are expected to meet the spending target that's set out in the estimates. Government will be as a whole, because, as the member is aware, there are two components to it. Half of the reduction in salary can be earned back if the minister comes in on budget. The other half is if the entire government comes in on budget. That will be the bottom-line number.

J. MacPhail: Are the numbers listed in table 1.6, the numbers that the ministers have to meet or beat?

J. MacPhail: Well, I assume they're the same numbers. This is a summary document of the estimates book.

J. MacPhail: Are the numbers of the Crown corporations included in the targets set?

Hon. G. Collins: Not for individual ministries. The ministers are responsible for the performance of the ministries they've signed off on. However, it does affect the bottom line for government, and that's obviously a risk that government will have to manage as best it can.

J. MacPhail: When is the government moving toward the generally accepted accounting principles? We were told in Public Accounts that it's going to take a few years. What's the current estimate of that?

Hon. G. Collins: The current estimate is the same one that's in the legislation which was passed last year, and that's 2004-05.

Hon. G. Collins: Many. It is a very complicated process, much more complicated than perhaps I initially thought. There are procedural as well as policy obstacles, I would say. Procedurally, it will be very difficult for government to contain within it all of the schools, hospitals, etc.

As the member knows, it is difficult at the best of times to keep track of each individual ministry and its expenditures, let alone what's happening in school districts, what's happening at hospitals, what's happening at other entities which, under GAAP, would likely become part of the new entity. It is challenging. There's no doubt about it. I think there are obstacles there that perhaps even auditors general across the country didn't really think about.

That's why we are appointing an advisory committee to help government get there, to grapple with these obstacles as we more forward on the policy decisions that government will have to make, as well as the procedural challenges we'll face. I expect it will be a very difficult challenge to do that. We'll continue to work at it. We committed to do that by 2004-05, but it won't be an easy task.

J. MacPhail: What have the professional accountants told you about this? They were quite adamant with the previous government that it had to be done now.

Hon. G. Collins: They're still pretty adamant that it should be done as soon as possible. I don't think they've changed their tune on that at all. Part of involving them in the advisory committee is a two-way learning process to make them understand, as well, the challenges unique to government that may not exist in the private sector. I think there's a two-way street here. Many of these accountants are on the board that helps to set these generally accepted accounting principles.

As we stumble over the rocks and cliffs and gravel, as we try and solve this challenge, I think it will be enlightening and helpful for them, as well, to participate in this process and for them to be there to watch it happen and perhaps help us make it happen. But so far they certainly have not been reluctant in continuing with their assertions, as they were previously, nor have the auditors general.

J. MacPhail: I'm moving to table A9 and table A10 now. A9 is revenue assumptions and sensitivities. I assume sensitivities is a word for risks. It's very new age. I don't know whether the minister has met with his Economic Forecast Council since the budget or what advice…. He has some wonderful experts in his own ministry in terms of the direction of economy.

We get certain numbers, such as retail sales and unemployment numbers. We don't need to hurry through this, but there's no need to go into a huge amount of detail. What changes have there been in assumptions or sensitivities, even in the last six weeks, or confirmation of the sensitivities that exist? Let's do A9 first, which is revenue.

Hon. G. Collins: I don't believe the sensitivities will have changed much, but I stand to be corrected. In fact, sensitivities indicate what happens to the dollar figure if such-and-such happens. For example, right at the very top: a plus or minus 1 percent change in economic factors determining growth equals plus or minus $15 million to $25 million in revenue. That's a sensitivity. It's an indicator.

The sensitivities will not have changed. What may have changed is if one were to take the assumption in the case, let's say, that GDP growth forecasts had gone up by a full percentage point. If that had happened, then one could argue that the revenues for this issue will have gone up $15 million to $25 million.

They are sensitivities, the assumptions that government makes in putting together its budget. I am not at this point changing any of the assumptions we have put in there. I will say to the member that four members of the forecast council have, subsequent to the information we've put in the budget, changed their forecast somewhat. In one case, B.C. Central Credit Union — on March 27 in Business in Vancouver; I think that's what that says — raised their forecast for this year from 0.9 percent to 1.5 percent and for 2003 from 2.8 percent to 3.3 percent. That's a 0.6 percent increase this year and a 0.5 percent increase next year. The Scotiabank on March 28 increased its forecast for this year, 2002, from 1.2 percent to 1.6 percent. For next year, it remains constant at 2.6 percent. The Royal Bank on April 5, which was three days ago, moved this year's

number from 0.7 percent to 1 percent, a 0.3 percent increase, and it remained constant for the following year.

There's one other — that is, William Tharp with M. Murenbeeld and Associates Inc. They changed their number for this year alone, according to a Business in Vancouver article on March 26, from 0.6 percent to 2 percent, a fairly significant increase, and for next year it remains constant at 4 percent. Those are the only changes that we are aware of at this point.

As the member will be aware from watching the media, there have been a series of upward revisions in the forecasts for the U.S. economy as well as the Canadian economy. I expect, given the fact that we're an open trading economy, we'll be affected by that somewhat on the upside, the same way we were on the downside.

J. MacPhail: That's good news that they're moving in the right direction. That's good news on the trend.

There have been some changes very recently in the oil and gas area. I'm sure the minister has had a briefing note on that. Perhaps he could tell me. I'm looking at table 89, page 148: "Petroleum, natural gas and minerals." Actually, I'm trying to find out where petroleum is under there. Perhaps the minister could indicate what it means — the potential for increased oil and natural gas prices.

Hon. G. Collins: Certainly, the budget that was introduced by the previous government had fairly high numbers. In retrospect, anyway, one would say fairly high numbers for natural gas, oil, etc. I would say that the forecast that I brought in, in July, in retrospect, was also high. It had came down some, but it wasn't a lot. The natural gas price came down very dramatically very quickly in the summer-fall period, I think it was. I think it bottomed out around $2 briefly — somewhere around there, if I recall.

The forecasts we have here, the member can see, are fairly conservative for this year. They are slightly higher for next year and very slightly higher above that for the year afterwards. There is risk both on the upside and on the downside. I tried to be relatively conservative here, given the volatility that we've seen. I personally think it's unlikely that we're going to see $6 gas any time soon, but who knows? That number has been up and down quite a bit in the last little while.

All I can say is that we are not amending those forecasts. Other than that, we are watching. If at some time in the future we feel that there is reason to change those numbers, I assume we'll do that, and you'll probably hear from us at that time. At this point I'm not inclined to change those numbers.

J. MacPhail: The forest numbers — the spruce, pine, fir price — have been much higher. They've been averaging for this full year around $300. What does that do to…? Given the failure of the softwood lumber negotiations, can the minister suggest the update in the revenue forecast for forests?

Hon. G. Collins: The member is correct that the number included in revised forecasts, the budget estimates, is about $250. The SPF number has been about $300 for the last little while, although that can go up and down as well. There's risk both on the upside and on the downside there.

The sensitivities column makes it clear that a $50 change in SPF price equals approximately $125 million to $150 million in revenue. However, there is a volume risk, as well, as a result of the softwood lumber dispute. These two things affect each other and fluctuate inversely — not always; they can fluctuate the same way, I guess. Certainly, there is large volume risk to what may happen as a result of the softwood lumber dispute.

As I've said, I've tried to be conservative in the forecast. As I said on budget day, I based our forecast on there not being a resolution. I stand by that. I'd say it is still too early in the year to be able to evaluate in any meaningful way what the cumulative impact both on price and on volume is going to be on revenue to government.

J. MacPhail: How often does the minister get reports on this matter in terms of revenue effects?

Hon. G. Collins: I get frequent reports on general revenues, where we're headed and what's happening with the economy, as I believe the member opposite did when she was minister. As well, this is obviously an area where we're going to be spending some time. There's a large risk. One can look through the sensitivities. There aren't many places where a small change results in revenue changes of $125 million to $150 million.

This is one that we are focusing on. We work with the Ministry of Forests on an ongoing basis. Certainly, if there are big changes or impacts that are unexpected, I expect to hear about them as soon as we are aware of them and have some data. Anytime I'm curious, I'll seek the information as well. As I said earlier, there's an ongoing update that I get frequently on how all revenues are going and all expenditures are tracking, and I continue to do that.

J. MacPhail: I have three final questions on revenue. One is on the tobacco tax. It says the forecast, which is an increase of $150 million in revenue, assumes some change in behaviour in response to the higher tax rates. I assume that means smuggling. We have now had six weeks of experience with the new higher rates — at least six weeks, or almost two months. What is the experience in terms of smuggling?

Hon. G. Collins: The risk there is not just smuggling, but it's also reduced consumption. I'm very hopeful that with the change in the price and the taxes…. There's obviously a downside to that — people

have to pay more — but the upside from a public policy point of view, which I'm sure the member opposite would support and is aware of, is that we hope people stop smoking. We hope that fewer people start smoking.

Included in that behavioral change is, perhaps, people looking to smuggle cigarettes and people choosing to consume less. I might say that as a result of the budgets that have come out in both Alberta and Saskatchewan, the tax that has been applied in those two provinces is $32 a carton; I believe that's the case in both those provinces. British Columbia's, with our $8 increase, went to $30.

I don't know what Manitoba is going to do. I don't think they brought in their budget yet, but I expect it's imminent. As the member is aware, the border between Saskatchewan and Manitoba is quite porous. The border between Ontario and Manitoba is less so, given that it's harder to get through. There aren't many roads. I don't know what Manitoba may do, but certainly, if they were to respond in a similar way to what the other provinces have done, that would help to mitigate the smuggling issue.

Second of all, given the events of September 11 and the subsequent tightening of the border with the United States, I know that law enforcement has found a significant increase in their — at least, I read it in the newspaper, for what value you can put on that — confiscations of drugs — marijuana, etc., — at the border crossing. I expect that given the unique situation we're in, if Manitoba were to respond similarly to what the other western provinces have done — and I don't know what the other provinces might do as well — certainly the ability for smuggling would be mitigated and perhaps is mitigated already, given the U.S. border issue. We hope that doesn't become a big problem, but obviously we'll be watching it with both the Minister of Provincial Revenue and the Solicitor General and will be speaking to other provinces and the ministers in those provinces as well as the federal government to watch that as an issue.

J. MacPhail: Will that be part of the first quarter report? Will there be a report on the effect of the changes in terms of behaviour?

Hon. G. Collins: Certainly, we'll have a revised forecast, I would guess, at that time or some estimate of what the number might be. What the result of that number is, whether it's higher or lower…. What the cause is of that number being either higher or lower than a forecast would be difficult to determine, for the reasons I've mentioned. It may be a reduction in consumption. That's probably easier to quantify. It's hard to tell, other than anecdotally or through police reports, what the level of smuggling might be, or provision of counterfeit tobacco. We'll certainly, as I said, monitor it across ministries and across governments, but at this point I don't know that we'd be able to break that out for the member. If we can at that time, I'd be glad to do so.

J. MacPhail: My next question is on the change in terms of liquor sales — what effect the minister is predicting it will have on revenue.

Hon. G. Collins: The revenue stream from the sale of liquor, I believe, is based on status quo policy. Government has made a change subsequent to the budget, I believe, in open cabinet with regard to the liquor licences now going to the two-licence method or system. I don't recall off the top of my head if, at the time, we forecast an increase or a decrease. I don't know, and I don't know if it's still too early to be able to estimate or forecast that either. There may be some change. I doubt it would be large. If there was a change, I would expect it would happen over a longer period of time as people perhaps change behaviour and as tourism responds, etc. I don't believe there was a big revenue implication factored into that. I stand to be corrected if the Solicitor General has a different opinion that I'm not aware of, but I'm giving the member my impressions of that at this point.

J. MacPhail: My last question is on an assumption that I couldn't find a sensitivity around anywhere. I may not be looking. That's on the rate of investment increase in the province, both public and private sector. What are the forecasts for that? I can't find it anywhere in here.

Hon. G. Collins: We don't identify that. There's no revenue directly attached to investment. It's more of a general impact on the economy. You won't see that risk here, because it's very difficult to link an increase or decrease in public or private sector investment with the revenue stream. It would be risky to do that. It would be part of the impact of a general increase in the GDP and the result in revenues across all revenue streams as a result.

J. MacPhail: Does the minister or his staff have the latest predictions on public or private sector investment in the province?

Hon. G. Collins: The member will recall, because we talked about it a few moments ago, that at the beginning of last fiscal year the forecast for natural gas prices was around $6. It's certainly much lower than that now. As a result, the investment forecasts in the oil and gas sector were quite high at that point in time. They fell off dramatically in the last year. That's part of the problem Alberta is facing, with a pretty significant drop-off in their revenue streams — not unlike what we've done here.

StatsCan came out in February with their key provincial indicators, public and private sector investment intentions. Alberta's forecast is down 7.7 percent. B.C.'s forecast is down 1.2 percent, and that's primarily

driven by the oil and gas reaction to the lower natural gas prices and oil prices.

J. MacPhail: If you combine public and private sector investment, is there a net reduction of 1.2 percent?

Hon. G. Collins: Just to add some context to that, the forecast for Canada as a whole is negative 1 percent.

J. MacPhail: I know, but this was supposed to be the big turning point in our province, so we'll see.

Anyway, I wish the best. I hope the government change does have a positive effect on investment in this province. I truly do.

This leads nicely into the change in terms of capital expenditures here on page 68 of the fiscal plan, "New Approach to Capital Planning." I'm wondering if the minister could explain in very concrete, simple, practical terms what the new approach to capital planning means for the ordinary minister, the ordinary bureaucrat, the ordinary citizen.

Hon. G. Collins: The member asked for sort of a straightforward layman's explanation of what we are trying to achieve here. I'll try to do that.

Previously, anytime a ministry or an MLA or a minister or a government wanted to build something, they went and asked for money to build it. They may or may not have evaluated what the operational requirements of the ministry were. It may be that they wanted to build a project to help get a MLA elected. It may be that they wanted to build the project or at least announce the project, because they thought it would help move numbers. Or there may well have been a legitimate need to solve an operational problem with an investment in capital.

What we have tried to do is put a bit of discipline around that. What we're saying to ministers is: "Build your operational plan, decide what services and programs you're going to deliver to the people of the province, and then decide what the best way is to do that." Now, that may be by using capital in a more efficient way. Some of the traditional examples are year-round schooling and going to a semester system at a university or college, where you actually can have more seats yet use the same capital. There are all sort of ways that we can look at doing that. Another way may be to — much like what was done with the Port Mann Bridge — stick three lanes going one way and two lanes going the other way. You're up to five lanes instead of two, and you've put a bit more money into capital, but you haven't built a whole new bridge, so you're using that capital with a little greater capacity. There's a whole range of things.

What we want to make sure ministers and ministries do is actually think about this and plan. If they base their capital requirements on the service delivery model that they're trying to achieve, we think we'll get better and more realistic demands for capital on an ongoing basis.

Then the next step kicks in, and that is: what is the best way to acquire that capital? What we're trying to say is: "Don't assume the public sector is going to do it or can do it better, and don't assume the private sector is going to do it or the private sector can do it better. Look at what it is you're trying to achieve. What are the goals you're trying to achieve operationally? Then look at all of the options that are available." That may include having the private sector do all of it. It may include having the public sector do all of it. We're not trying to approach it from an ideological point of view. What we want to do is examine that. There are a variety of scenarios in between. It could be publicly financed but privately built and operated and various combinations thereof.

What we're trying to do in the capital division is, first of all, set the overall policy for government that says build your capital and draw down your capital based on what your plans are to provide service. We see our role as being to provide the structure and the framework to make sure that the evaluation is done properly and to make sure that the project, whatever the scenario it chooses, goes ahead in a way that's successful. That, in a simple way, is what we're trying to achieve with the restructuring of the capital division.

J. MacPhail: Where can the minister point me so I can find out what it is the government's spending in the year '02-03 on building things?

Hon. G. Collins: The member can turn to page 52 — with a bit of a break-out — table 1.8, which is capital expenditures. As well, she could look on the previous page, which deals with capital spending. That's the section in this budget document that was released on February 19 which has it. As well, on page 54 the member can actually look at some of the project-by-project numbers, because under the BTAA, the capital projects greater than $50 million need to be disclosed as well. All that information is there for the member.

J. MacPhail: Okay. Let me just tell the minister where I'm going. I'm trying to figure this out, and I'm getting there. What I'm curious at is that on page 146 — maybe putting too many charts together, but on page 146 — table A8, one will note on the bottom line, just prior to the total, debt servicing. Now, as I understand it, debt servicing is for the accumulation of deficits and capital expenditure. Basically, those are the two major components. You'll note, Mr. Chair, that there's a huge rise in '02-03, '03-04 and '04-05 of debt-servicing costs. Yet then I go to try to find out what's being built to increase those debt-servicing costs, and, basically, it's a reduction in capital expenditures. Help me here.

Hon. G. Collins: If the member looks at page 55, there's a total provincial debt chart. If she goes back to page 51, which I think is the one she was looking at, capital spending is declining. Yet the numbers for debt servicing — the ministry of public debt, essentially — increase in the future. That's a combination of the reduction in capital spending as well as the debt service of the accumulated deficits. It's a combination of the two.

When one gets to '04-05…. We're not at that point yet in the three-year plan, but certainly as these three-year plans roll out and the budget is balanced in '04-05, depending on what government does with the money, if they're running surpluses, one would certainly expect that it would taper off, and that number may in fact start to drop over time. That certainly would be our hope.

J. MacPhail: If we can go to page 146, that shows the debt-servicing costs increasing. I assume this is just taxpayer-supported debt. We're not including the commercial debt servicing in this. I guess the most recent forecast for '01-02 is $798 million. Then it increases to $1.182 billion for '04-05. That's an increase of what? About $382 million. What is the breakout of that increased debt servicing for deficit financing, deficit servicing and capital expenditure servicing?

Hon. G. Collins: I am told this number on page 146, debt servicing, is just the debt servicing of the accumulated operating deficits — okay? Perhaps that's helpful.

J. MacPhail: Two keen, eager people, Mr. Chair. Where can I find the number that's the infrastructure debt servicing?

Hon. G. Collins: If the member turns to page 163, interest costs, about half way down the page, total provincial and then taxpayer-supported interests costs are forecast for 2003 to be $2.007 billion.

J. MacPhail: And that doesn't include the debt servicing on the operating deficits? Or is it included?

J. MacPhail: I note that the minister suggested there would be public accounts on July 11. That's also very good news. I will be watching those carefully.

Perhaps the minister could also tell me the schedule for the first quarter report. Is it September?

Hon. G. Collins: It's about the same day that my first child is due. It's the first part of September. It may be one of my colleagues releasing it, but we'll get it done on time. There's not much we can do about one, but we can do a fair bit about the other. That's the plan: sometime in early September.

I just want to add, too, in response to the member's question, that the numbers on the interest are the accumulated deficits. There is some forecast, some risk, of interest rate rise as well.

J. MacPhail: I didn't know the minister was expecting. Congratulations. I'm thrilled. That's great — really.

My last questions before ICBC are on PSEC. I don't have many on those — the minister is responsible for PSEC, the Public Sector Employers Council — just the schedule of upcoming negotiations for '02-03.

Hon. G. Collins: As the member will know, there are many, many different groups that are bargaining, and their schedules are quite different. I could try and go through all of these pages and give the member the expiry of the collective agreements, if that's helpful. There are about three pages of them. I don't know if she wants that or not. I'm not sure if that's what she was looking for.

J. MacPhail: I'm looking for the expiry dates in '02-03 of major collective agreements.

Hon. G. Collins: I won't try and categorize them as major or minor. I'll leave that for the member to determine.

B.C. Hydro and WCB expired March 31, '02. School district 28, Quesnel, support services expired February 28, '02. Capilano College OPEIU expired March 31, '02.

Simon Fraser, UBC, UNBC and UVic. Some support groups — not all, I see by a footnote, but many — expired March 31, '02. I believe that includes some sessional lecturers as well.

In April '02 the B.C. Lottery Corporation and BCBC expire. On December 31, '02, some of the B.C. Rail Group do. On June 30 of this year, school district 60, Peace River North, support group expires. The common agreement for support staff in the colleges sector expires June 30, '02.

BCIT and Okanagan College, support groups — June 30, '02. UBC admin and professional services, management and exempt — June 30, '02. UVic faculty librarians, general practitioners, expire June 30, '02. UBC teaching assistants and sessional lecturers expire August 31, '02, and UVic sessional lecturers expire August 31, '02. I think that's it for '02.

J. MacPhail: I believe I heard at one point a government executive council member suggesting that there would be zero money available for wages in the next two or three years. Can the minister clarify that?

Hon. G. Collins: In fact, on budget day…. I believe it's disclosed in the budget documents, as well, that

were released on February 19, the negotiating mandate on the monetary side. Going forward is zero-zero-and-zero for the next three years.

J. MacPhail: Is zero-zero-and-zero what the government will fund for wage increases, or is that what employers are allowed to give for wage increases?

Hon. G. Collins: That is the negotiating mandate the government is giving. In fact, we've just had one group, IBEW, with B.C. Hydro that settled. It was a 67 percent ratification vote. It did include, however, some market adjustment provisions. I said at the time, as well, that there would be exclusions to the bargaining mandate for market adjustments where there were employees or skill sets which were in high demand, and government needed to respond in order to deal with it. Other than that, the mandate is zero-zero-and-zero.

J. MacPhail: How does one enforce that as a mandate? What are the penalties if an employer negotiates a wage increase?

Hon. G. Collins: Well, certainly, if an employer did that, government would respond pretty strongly, I expect. In past cases where boards have approved an agreement that was beyond the mandate, the boards were replaced. Government would probably respond accordingly. I hope that doesn't happen; I don't expect it to happen. I suppose there is a variety of options, and then one has to deal with what's left afterwards. We intend to make that very clear, and I have made it clear to the various employer associations that's what the mandate is. I have not heard a huge response back, but I don't expect it's going to be easy. We already have one agreement that's settled, but we are in tough fiscal times, and government is setting that mandate.

J. MacPhail: When was the last time the minister met with the Council of Public Sector Employers?

Hon. G. Collins: I think about a month ago — within the last month, anyways. I think that's the appropriate time. I don't know the exact date.

Just so the member knows, on page 156 of the appendices of the budget document the negotiating mandate is disclosed as well. In my lockup with the media on the day of the budget, I made reference to that as well.

J. MacPhail: Yes, yes, I know it's not a secret. I'm just wondering how the government will manage that. Was there discussion at the Council of Public Sector Employers about what would happen if an employer negotiated an increase?

Hon. G. Collins: I don't think that question was asked. I must say that part of what I tried to present to them…. There was a lot of information exchanged, but I certainly gave them a very clear picture of the province's fiscal situation looking forward in our economic situation and the challenges we face. The mandate is clear, and there were no questions asked about it. I haven't yet felt the need to reinforce that, but if it's necessary, I'll do so.

J. MacPhail: I have two areas of curiosity in asking this question. One is in the area of faculty at universities, where the claim has been by universities that the reason why they need to raise tuition is to properly pay faculty. I would assume that would mean an increase compared to what they're making right now. I'll be watching very carefully to see how the fact that faculty get zero-zero-and-zero…. I don't want to exaggerate here. There will be no increases for the three years. It'll be interesting to see how one recruits or how one deals with that issue of increased tuitions going toward paying faculty more.

Hon. G. Collins: As I said earlier, there may be market adjustments required and exceptions under market demand. We've done that with IBEW, the electricians at B.C. Hydro, where certain skill sets are in high demand and it's been difficult to retain people. Even under the mandate that was there before, it was difficult to retain people.

The same principle would apply in the entire public sector. If there is a case to be made that the zero-zero-and-zero would stop them from attracting or retaining the skilled people a public sector needs to provide a level of service, then we are willing to hear that argument, but we're not looking at across-the-board exceptions. There would be specific exceptions directed to very particular skill sets that are required. That perhaps gives the member a sense.

I assume that in universities and colleges, particularly universities, some professors are in much higher demand and, because of their unique talents, can attract research dollars and graduate students that the university may want to build as well. We're expanding, for example, the medical school at UBC, UNBC and UVic. I would assume that that faculty could be particularly difficult to attract and bring their research dollars with them as well, so those are the kinds of exceptions.

I don't want to suggest that it would automatically be approved or not, but those would be the kinds of examples I can think of off the top of my head where I can foresee a university or college making a case, coming and saying: "We have a problem here. For this individual, or in this sector, computer science, we're uncompetitive. We're losing people." If they can make the case with some real facts, then government would be willing to look at it.

J. MacPhail: Is there any money provided, or is there any room in a negotiating strategy, for pay equity?

Hon. G. Collins: We're having so much fun here, I know, that we're sort of pushing past 6 o'clock. I'm fine with that, if the member is, but I'll leave it in her hands.

There is an existing pay equity policy in the public sector. That continues. To my knowledge there's been no change in that.

J. MacPhail: We're going to move on to ICBC. I thank the minister for accommodating the discussion tonight.

I had a brief discussion with the Premier around ICBC, and he basically referred questions to this place, which is appropriate.

Hon. G. Collins: ICBC, like the other Crowns, is undergoing the core review process. They have been grappling with the wide range of options that exist.

As you'll recall, the government was elected with a mandate and made a commitment to look for opportunities to provide greater competition to the people of British Columbia. ICBC has really been given two mandates. One is to pursue that option in whatever way they think — or at least to come up with alternatives — and, in doing so, examine a wide range of options. In fact, they've been encouraged to do that. Those may range from status quo to something quite different from what exists right now. We have not tried to approach it from an ideological point of view but just from a commitment to live up to what we offered.

They are undergoing that now. They have looked at a multitude of options. At some time in the future, government will be making a preliminary decision on what model we would like them to pursue at greater length. Once they do that, then I expect the next phase would be that they come back to government again for an examination of what that option entails and what sort of strategic shifts would be required to get there. After that, they would probably come back with an implementation plan.

It's a very similar process that all the other ministries applied as we developed the core review process. I would anticipate that ICBC will be not much different, although each one has been slightly different.

J. MacPhail: The minister gave the plan for implementation but no time line. Could I have a time line, please?

Hon. G. Collins: I don't want to prejudge the time line, because what we found as we went through core review for ministries is that some ministries took longer at various phases than others. Some would reach so far in the process and find they needed greater time. They hit upon complexities, and as a result they tended to slow down. Others went through the process quite quickly, so I don't want to prejudge what that time line might be. That's really all I can say on that. I expect that it will move forward in whatever way allows us to come to the best solution with the best information, having examined all of the choices.

J. MacPhail: The reason why I'm asking this, Mr. Chair, is because at least with the line ministries we've had the benefit of the core review process influencing the service plans. What we have here is — it's the same as with B.C. Hydro basically — a service plan on the basis of the current model, and yet the core review will lead to a model that may be entirely different. In fact, if the government carries out its new-era commitment, it will be entirely different.

J. MacPhail: Okay, maybe not necessarily. Good. But when you read this service plan, you would say: "Wow. There's a pretty good corporation." The indicators are working. This wasn't written by, you know, some commie pinko government. Well, maybe — I don't know. It was written by the current Liberal government. It's hard to know where my questions should go, so I'm just going to ask them and hope the minister can understand that there's not much to ask in this document, given the fact that the new-era commitment is for change.

Let me just proceed, then, on asking: is it the core review that will decide how much competition to introduce into ICBC? If the answer is no, who decides that?

Hon. G. Collins: As with all the core review — core review is a committee; it reports to cabinet — cabinet is the final decision-maker on all those scenarios.

As the member mentioned in her comments in the preamble, the service plans that exist for this and I think virtually all other Crown corporations are status quo service plans, assuming no major structural change. However, I said at the beginning that ICBC, the new board, was given two mandates. One was the core review, to increase the competition, provide for more competition, which is what our new-era campaign platform included. The other was to make the company sustainable and viable.

Certainly, if one looks at what was there a few months ago, the corporation was not sustainable on that track, so the new chair and now the new CEO have been engaged in trying to get ICBC on a more sound fiscal footing. That included some rate increases. It also included a spending reduction and the reduction of a number of employees. That is a big part of what they're doing as well. The service plan deals with their mandate to try and get the company fiscally sound and moving forward in a sustainable way, but it does not reflect any changes that may arise out of the core re-

J. MacPhail: Okay. I understand that it's not the core review committee that will be deciding about competition, but is it where the questions are asked to determine the next steps of ICBC's future?

Hon. G. Collins: Core review, as I said, is a committee of cabinet. They will do the examination in a very detailed way. Then they will report out to cabinet. Cabinet will examine and question, I expect — possibly at great length; it depends — whatever the minutes are from the core review meetings. Ultimately, cabinet makes the decisions on a going-forward basis. Core review makes no decisions. Core review makes recommendations to cabinet, and cabinet does not necessarily rubber-stamp or just approve instantly whatever reports are out from any of the committees. Core review is no different.

J. MacPhail: Fair enough. This, in terms of the introduction of more competition into ICBC, would have a major status change in employment, as opposed to other changes that the government may be considering in other Crown corporations. I'm wondering: what is the estimate that the government has for various levels of introduction of competition and how that may affect employment at ICBC?

Hon. G. Collins: The government has no estimates for that. ICBC may internally have some estimates based on a variety of scenarios. I certainly have not been made aware of any. I don't believe the examination has got to that stage, from what I've seen. There may be a variety of scenarios that result from the core review. One of them, ultimately, will be chosen by government. At that point in time, there may be changes. I would say, though, that the current board and the current chair and the current CEO have engaged over the last number of months in a fairly significant downsizing in ICBC's FTE complement. There was about $50 million expended in the buyouts, etc., and voluntary departures.

As the member is aware, ICBC has a no-cut contract. You can't lay anybody off who works at ICBC — period. You can't do it, no matter how much you give them. It's unusual, I think, but it's there. The previous administration signed that collective agreement in the mid- to late nineties.

In order to make those reductions and get ICBC on a sound fiscal footing…. The member will recall that in open cabinet, when the new chair presented around the rate increases, there was discussion about the workforce adjustment plan at ICBC. I think it was about $50 million. There were just under 1,000 employees, I think, who left the corporation at that time and brought it back to the standard it was at about two or three years ago — about the same level of employment. It seemed to ramp up in the last few years. That cost about $50 million.

The collective agreement remains in place. I don't want to speculate on what may be the impact of any changes that may come out of the core review, because I don't know what they may be. As I said, I don't know to what extent, above and beyond what they've already done, ICBC has planned for any provisions. Certainly, providing more competition may just be policy changes. Providing more competition could be moving a part of the corporation into the private sector. I'm assuming the employees would probably want to go with it. I don't know that, and again I don't want to say that that's where this may end up. It's one of the options.

J. MacPhail: Well, maybe the minister could ask: does ICBC have any plans for more layoffs under the current model?

Hon. G. Collins: Certainly, there are no major plans for reductions in the staff at ICBC at this point. I believe that process is complete or pretty close to complete. ICBC is ongoing looking for ways to be more efficient, more effective, more cost-effective. There may be other small changes in the future, but the big change that resulted from getting back to a sustainable corporation, I think, has pretty much run its course.

Hon. G. Collins: In 2000 it was as high as almost 6,500. It is now about 5,600.

Hon. G. Collins: There were approximately — and, again, these are approximate numbers — 700 people contained in the bargaining unit who left voluntarily as a result of the packages that were offered. About 300 in the confidential and managerially excluded people left the corporation as well.

J. MacPhail: Actually, I was more interested to know: what did they do before they went?

Hon. G. Collins: I just want to clarify my last answer a bit, if I can. These 300 people were non-voluntary; they were managerially excluded staff. There were also confidential and managerial staff included in the 700 who took the voluntary. I just want to be clear that they weren't all just bargaining unit people.

These people were dispersed right throughout the company from, I assume, communications to bodily injury to adjusters to advertising people to senior executives. I understand that they were really right across the company, widely dispersed.

I might add for the members or for the audience — whoever's listening — that the increase in staffing in the late 1990s was as a result of ICBC taking over the motor vehicle branch. That's what the increase in employment was about.

I'm wondering what will happen with ICBC's expense ratio now with those 900 layoffs. What will it be reduced to?

Hon. G. Collins: I will try and respond to the first comment made by the member while I'm getting the answer for the last part of her comment.

In 1997 there were about 4,800 employees, or FTEs, at ICBC. That went up to 5,800 in 1998, which was the big change.

Hon. G. Collins: Right — all of the other things that the previous government rolled in. There were about 1,000 employees there.

That was at 5,800. As I said, in 2000 the number was 6,400, and it's now down to 5,625. That sort of gives the member a sense of where we're going.

On page 21 of the service plan the member will see the forecast, or at least the targets — I won't call them forecasts; I'll call them targets, because that's what ICBC calls them — for operating expense ratios. I think that speaks for itself.

J. MacPhail: Indeed, if these operating expense ratios continue, the ICBC will compare to be about two-thirds of the expense ratios of the private sector, which are at about 30 percent — 20 percent at ICBC versus about 30 percent.

I must say, the minister can be fully aware of where I'm going on this. This government campaigned on changing ICBC, and they won the election on it. I have my personal views about the value of public auto insurance, but this government won an election on changing ICBC. I'm not going to fight it, but I do want to make sure that my insurance rates aren't going to go up, and I do want to make sure that my kid, who will be 16 in two and a half years, gets a fair break when — if — he starts driving. I just want to know that the company is in good hands, and I want to make sure that our roads are safe as well. It's not an ideological battle that I'm having here. The election was very clear on this issue.

In terms of the lobby, the minister may know that the opposition doesn't have a lot of time to be able to go to these actual lobbies, even though we're invited to them. There seems to be a fairly intense private insurance company lobby going on — not to be unexpected. What has the minister done in terms of meeting with the private auto insurance lobby? What meetings has he had?

Hon. G. Collins: I would say that the public has quite an interest in what happens at ICBC. I have heard from MLAs. I've heard from mayors. I've heard from brokers. I've heard from auto dealers. I've heard from private sector insurers. I've heard from the union. I've heard from — probably you name it, and I've heard from them — repair facilities. I'm trying to think of others — the trucking industry, BCAA. I mean, you can think of a group that might have an interest in ICBC, and I've heard from them. They've come to see me. Unions come to see me. I've had lots of correspondence, reports, consumer groups. Gee, I can't think of a group that I haven't heard from at one time or another over the last number of months. I have met with whoever asks to meet with me, and that includes right across the board. I'm trying to think how many meetings I've had on ICBC. Probably at least a dozen or so, I would say, and certainly lots of representation and input from others as well. I would say that the debate and the discussion about ICBC has been pretty vociferous, pretty active, and I think that's good.

I also approach this from a point of view that is not ideological. I don't believe necessarily that a private sector company could do this better or worse. I don't know whether ICBC is the best scenario or not. That's why we're doing the review.

As a government, we ran on a platform. We wanted to provide more competition. As I said, we're not trying to approach that from an ideological point of view but rather from: "Let's see what's out there; let's see how this works." There is a scenario that would provide for more competition just as policy changes without a big, structural change to ICBC. I'm not trying to prejudge that. I'm making sure that as minister responsible, I do what I was assigned to do as a minister when I was asked to do this job, which was to make sure that the corporation examines all the options in an effort to try to live up to our commitment.

I have heard from all of them. I have forwarded just about probably everybody who's written to me or come to see me or asked to see me on to the chair of the corporation as well. I expect that he's heard from many, many people also. I know MLAs have heard from lots of people also. That doesn't surprise me.

J. MacPhail: Good. Well then, we're on the same wavelength, although I must say, as a person who was raised in Ontario without the benefit of private auto insurance, I have come to greatly appreciate public auto insurance and the value of its investment in the community, literally, and its value in investing in road safety as well.

The minister has answered those questions. Let me ask the minister this: are there any private auto insurance companies whose headquarters are in Canada?

Hon. G. Collins: We believe there are, but we can't come up with the name right off the top of our heads. So I'm glad to try and find that out for the member.

J. MacPhail: The member for North Vancouver–Seymour is assisting, except that the ones that he's listing have substantial American ownership in them — just for him to keep current.

Anyway, I would appreciate that information from the minister, just to know. I'll be curious to know whether the expansion into the private auto insurance business would be a made-in-Canada solution.

I want to move on to road safety, if I may. How much is ICBC predicting to spend in '02-03 on road safety initiatives?

Hon. G. Collins: It's about $42 million that's forecast in the 2000 calendar year, for ICBC's fiscal year, to be spent on road safety services.

J. MacPhail: Okay, that's how much was spent in 2000. But what's…? In 2000?

J. MacPhail: Yeah, okay. So it's $42 million. That's about what was expended in the year 2001 as well. It's flatlining, but nevertheless it's still $42 million into road safety.

Will the government continue to spend that money on those road safety initiatives if there's a decrease in public auto insurance sales?

Hon. G. Collins: I think that's a hypothetical question. I don't know what the final result will be from core review, so I don't really want to comment on that. I assume that certainly will be part of it. That's all I can say on that.

J. MacPhail: I'm just trying to figure out how the commitment from the new era fits in about moving to more competition — what that means for road safety. During the election, the now Minister of Education said that while the government won't stop doing public road safety, I guess we need to ask ourselves: "Should that be funded just out of ICBC?"

I'm just wondering where that is on the agenda. Is it protected? Or will there be a requirement for private auto insurance companies to contribute to road safety, which would be a first in Canada if that were the case?

Hon. G. Collins: I think people would agree that the road safety initiatives have brought benefits to the people of the province as well as to the corporation. Certainly, ICBC is only part of the road safety program. Solicitor General, the Ministry of Transportation, police and municipal governments all have an interest in that. I'm sure the Premier would like for us to continue to try and see benefits where they can be made. I don't want to prejudge and get into a hypothetical discussion on how that would be done, because we'd be getting way ahead of ourselves and way ahead of the core review process.

J. MacPhail: All I can say is that our road safety programs are amongst the best in the world. For the government to, in some ways, lessen investment in road safety will have a direct impact on lives.

J. MacPhail: No, I understand the minister is not saying that. I'm saying what I will be watching for very carefully around ICBC.

It's had the changes. The investment in safe roads programs and the whole policies have had a huge impact on the behaviour of young drivers. I know there's a huge amount of concern about the recent speed crashes. We should all be terribly saddened by those crashes, but the fact of the matter is that they're down. The number of crashes, among young people as well, is down substantially.

I with a great, cynical…. Knowing those statistics, I wonder why there's so much attention paid, other than the tragedy of the loss of youth. The fact is that it's about high-speed crashes, and I wonder who's putting that on the front pages. I am suspicious, frankly, about private auto insurers who want to focus on young reckless drivers.

There's no question that young reckless drivers had the highest incidence of accidents and fatalities, but that incidence is on the decrease. It's much because of the safer-roads programs of ICBC and the graduated licence program, where the costs are absorbed by ICBC. We are truly world leaders in that area, and I want to continue that.

There was a proposal put forward by the Liberals, then in opposition, around private members' bills to particularly penalize drunk drivers in terms of their costs for insurance and rehabilitation. Does the minister remember that? What's the status of it?

Hon. G. Collins: No, I don't remember it. I'm certainly prepared to go back and find it and look at it. I think that indicates its status, at least in my agenda, but I'd certainly be glad to look at it again.

Responding to what the member said about the crashes, I agree with her. My understanding is that the numbers are down, and as I said earlier, I don't think anybody would argue that the road safety initiatives have provided benefits. They have.

I think part of the reason why these issues receive attention the way they do — and there seems to be a great deal of focus on this — is that in spite of the fact that it's a huge tragedy for those people involved and

for the province…. I think the member has been involved in politics long enough to understand that the media can tend to focus on something and grab it and run with it, to the exclusion of other items that may be creating news.

I don't want to try and turn her away from her suspicions, just to say I'm not aware of any effort by anybody to try and give the issue any greater attention than it seems to be receiving by the media all on its own.

J. MacPhail: The other area of concern in terms of moving from a model different from an ICBC model is the uninsured driver. What's the rate of uninsured drivers in British Columbia now, under our current model?

Hon. G. Collins: It's very low, and that's certainly one of the beneficial attributes that have been put forward by those who favour the current model of public sector auto insurance. Because of the linkage between registration and licensing and that there is this insurance, there is a very low level of uninsured drivers. That's one of its features. I know that's probably what the member is going to say next. All of that will be taken into consideration as well.

J. MacPhail: Good, because it's a huge issue of benefit to those of us who actually pay our insurance here in British Columbia. We good guys don't want to be penalized for the bad guys. In British Columbia one of the advantages of a public auto insurance system is that even the poor drivers are substantially covered for insurance, or else there's a government pool to cover it off. That does not exist elsewhere in Canada in other private auto insurance jurisdictions or in the United States.

The fair rates, as we like to call them in British Columbia, are based on legislation that doesn't allow for rates based upon discrimination for age, gender, occupation, residential stability, employment stability, marital status or number of not-at-fault claims. Is part of the review being done by the government to ask private auto insurance companies to continue with that non-discriminatory fair rate policy?

Hon. G. Collins: We aren't asking anybody to do anything at this point. What we're asking ICBC to do is look at all the options. I suppose one of the options could be that government could — probably would — remain a regulator in whatever scenario, even the far-ranging one that ICBC became a private sector company in some form or other, which is at one end of the spectrum. Government would still be a regulator. Government could, I suppose — and I'm just thinking of this as I'm speaking to the member — provide some regulatory framework that took into consideration the issues the member is raising.

Certainly, one item that has come to my attention, not as a surprise but just repeatedly mentioned to me over the last number of months since I've been doing this job, is that very issue. Many people like that non-discriminatory pricing policy that ICBC has, although I must say that has changed over time. New drivers, in fact, do pay more under the current system than drivers with ten years of claim-free experience, because they don't have that claim-free experience. They pay the going rate without the discounts, so our system that is in place right now is not completely equitable.

It is perhaps more equitable and non-discriminatory — to use the words that are commonly used — than other models, but it is not entirely non-discriminatory. In fact, people will pay a different rate depending on the type of vehicle they choose to drive. They will pay a different rate depending on what region of the province they're in. Now, you may be a very good driver who happens to live in an area where there is a very high claims incidence, and you will pay the rate that's commensurate with that area as opposed to just your driving record. While we are somewhat more equitable, we are certainly not completely equitable either.

J. MacPhail: One of the areas that I know the minister has been using to make some point is that the loss this year for ICBC is estimated to be $258 million. I note in the financial performance of the document itself that the company is including in that $258 million a write-down provision of $100 million for the asset at Central City development. That's an asset write-down. That's the value of the asset. Why is that booked as an operating loss?

Hon. G. Collins: It is a decline in the value of the capital assets that the corporation has. That is an operating loss for the year in which it's booked. That's common accounting practice.

J. MacPhail: Call me crazy; I didn't know that. Are you telling me that — what's the portfolio, six billion bucks for ICBC? — as the asset value of that portfolio changes, it gets booked as an operating loss?

J. MacPhail: What accounting principle is that? The $6 billion investment portfolio fluctuates, and it gets…. I mean, the $6 billion portfolio could lose its value by 20 percent.

Hon. G. Collins: These are generally accepted accounting principles that would apply to an insurance corporation. In fact, in this case the write-down is recognized because an audit or an evaluation was done of the project. It was determined that it was worth approximately $100 million less than it was on the books for, and there's a write-down. That flows to the bottom line in the same fashion as B.C. Rail, for example, or B.C. Ferries. When the member was in government, they took a fairly large write-down. That affected the bottom line as well.

Hon. G. Collins: There is an operating impact on that as well. This is not anything new; it happens all the time. In fact, it happened…. I'm trying to think if the Ferry Corporation write-down was when the member opposite was minister. In fact, the same thing happened there as well.

J. MacPhail: When the ferries were written down, it was written down on the debt side, not the operating side. Call me crazy; I'm surprised that an asset gets written down on the operating side.

Hon. G. Collins: I'd be glad to refresh the member's memory, if she would like a briefing on what happened with the Ferry Corporation. I'd be glad to do that. I would just tell her that these are common accounting practices that are required under generally accepted accounting principles. There's nothing new here. This is how it works. It's how it has worked for a long, long time, I expect. It's how it probably will continue to work until accountants decide to change it. That's the way it is.

This year, for example, if you look in the budget documents, there is a write-down for B.C. Rail, I think, and the dollar figure was…. Perhaps not. Anytime you take a write-down on an asset, in the year that you take that write-down it affects the debt, but it also affects the operating side for that year. That's the way it is. I'd be glad to provide the briefings if the member wants them. We can sit here and argue whether it is or isn't, but that's the way it is.

J. MacPhail: I'll do my own. I'm not going to pursue this any further. I think this is financial accounting that is not the common practice, and I will be investigating this further, because it is not what happened at B.C. Ferries at all. The increased operating expenses were for debt servicing, and that was accounted for on the operating side.

What is the cost for the operating lease on the Tech B.C. change — the increase that I was asking about earlier, the increased expenditures that ICBC has had to absorb by writing off the operating leases for Tech B.C.?

Hon. G. Collins: Just so the member knows, the financial reports for…. If she looks at page 25 of the financial plan…. There will be financial statements issued for ICBC, but she should know that PricewaterhouseCoopers Inc., the auditors, have signed off on their statements. All I can say is that the member is misinformed on this. It is common practice. It's a standard accounting practice, and I will offer whatever reassurances she would like in order to make her comfortable with that.

The issue the member raised was the lease of Tech B.C. with regard to Surrey Centre. We spoke earlier, and the member was incorrect. It in fact is a capital lease that was signed. It was signed for 25 years, and in order to extract Tech B.C. — the government of British Columbia — from that lease, we are into negotiations with ICBC as to what the true value of that lease is, what the other value might be from somebody else assuming that lease, what the market might be. In order to extract ourselves from that, to some extent we have to make ICBC whole.

Those negotiations are ongoing, and once we know what the final number is, then that will be public. As I said earlier, it's in the tens of millions of dollars.

J. MacPhail: If the government makes ICBC whole, then the summary accounts are unaffected. Is that correct?

Hon. G. Collins: Yes, the member is correct. If government pays ICBC some amount, X amount, to extract themselves from this lease, ICBC would record that as a gain. On the bottom line in the books, in the summary statements, there would be no effect. Certainly, to the CRF there would be an effect, and to the contributions from the Crown corporations, there would be an effect — an equal and opposite effect.

J. MacPhail: We now have the summary accounts. By virtue of the then opposition pushing that the summary accounts were really the only vehicle to judge the well-being of the government finances on, then that's a wash — that particular suggestion that somehow Tech B.C. was the one that drew down on the contingency fund and therefore led to having to do supplemental estimates, etc. The bottom line in summary accounts for the taxpayer is a wash.

In terms of the service plan that's listed here for the Central City development, what are the corporation's future plans for Central City development?

Hon. G. Collins: The member is correct when she says that there's no effect to the bottom line of the summary statements. However, we still need an appropriation in order to deal with it. That's why we need the supplemental estimate. Whether it's a wash or not, there still needs to be a voted appropriation by this House in order to expend those funds, even if it is just to pay them to ICBC.

Hon. G. Collins: Well, actually, it is a loss to the taxpayer. It's a benefit to the people who drive vehicles and pay for it through ICBC. It is not a benefit to the taxpayer, if you want to argue the semantics of it. The reality is that having the Crown corporation build a building worth $100 million less than was invested into it has a bit of an impact on the people of the province. If the member doesn't see that, that's a problem.

Hon. G. Collins: I'd love to have this debate. If the member wants to pursue it, then let's do it because we've got a little while longer.

The question the member had was what the plans are for the building at this time. I think the ICBC chairman mentioned at the open cabinet meeting that they intend to try to find the best use for the building. As the result of Tech B.C. withdrawing, obviously they'll be trying to find someone else to take the lease and mitigate any of the impact.

Given that the lease negotiated with Tech B.C. was well above market rates, ICBC anticipates the value of the asset is not the $250 million that they have and will put into it through land and costs. Construction projects: $209 million. There is — I don't know what the exact figure is — $41 million approximately for the land. That's real money. That's what has been and will be spent in order to build this building. The market evaluations that have been done say the building is worth $150 million. Therefore, $100 million went by the wayside. There's nothing fancy or strange about that. That is the way it works.

J. MacPhail: I might just note for the record that the same officials that negotiated the lease costs for Tech B.C. are the same officials who are in charge now. There was no political interference. They're exactly the same people who are operating the good work of our public service — then and under the current government.

I'm not quite sure why the minister keeps making these allusions that there was some sort of nefarious, gross activity going on in terms of the lease costs being high. The person negotiating on behalf of the government is the Deputy Minister of Advanced Education — then and now. He's doing an excellent job representing the taxpayer interest now and was then as well.

I have no further questions on ICBC. I'll be watching with interest as the information comes about, when there's actually some change that occurs according to the new-era commitment.

Hon. G. Collins: I just want to respond briefly, if I can. We heard from people at Tech B.C. that they felt that the lease they were in was expensive. As the member will know, the civil servants who do the work are at the direction of or at least accountable at the political level to the ministers. I don't think for a minute that anything nefarious was done by any individual. I think government as a whole mismanaged this project from the beginning. I think the fact that there's $100 million missing is an indication that's true.

The member can decide what she wants. I expect it was that kind of fiscal accounting, that kind of fiscal monitoring and that kind of leadership that her government showed when they were in government that got us into many of the messes we're in now and that we're trying to clear up. I think the last ten or 15 minutes have, if anything, indicated where a lot of the problems we're trying to solve came from.

Hon. G. Collins: I call the estimates of the Ministry of Children and Family Development.

Hon. G. Hogg: I'd like to introduce Chris Haynes, the deputy minister; Sarf Ahmed, the director of management services and financial planning; and Janice Aull, the executive director of strategic management services. They are here to assist and support and, no doubt, provide all those answers that I won't be able to.

There are indeed unique challenges as we face the complexities of redefining government in the post-industrial age — challenges that each province is addressing, challenges which place the long-term economic health of our province at the centre of our current budget, challenges which will move us off the have-not province rolls and onto the path of economic prosperity, challenges which will lead us to a strategic social support system — difficult challenges — challenges requiring solutions that recognize that welfare, unemployment and crime are symptoms both of a social structure and of personal opportunity and must be addressed through both systemic and individual change.

Efficiency has often been portrayed as a goal in itself. It should be a means to help us achieve our goals. Efficiency in and of itself is of value when it helps free resources for services which are valued. As Edward Luttwak said: "I believe that one ought to have only as much market efficiency as one needs, because everything we value in life is in the realm of inefficiency — love, family, attachment, community, culture, old habits and comfortable shoes."

Our post-industrial world has seen a growing mismatch between a globalized, borderless private sector and a transnational volunteer sector with such wonderful representatives as the Red Cross — that and a fixed-standard, bureaucratic public sector. Our relationship to the fixed financial resources of our budget is a dynamic one based on governance processes, and it understands, respects and responds to the mismatches which become ever more evident in our post-industrial world.

Janice Gross Stein, in her Massey lecture series, investigates these changes and the role of efficiency,

effectiveness and accountability in the process. She highlights three paradoxes which are evident in our service plans and in our processes.

Firstly, we often turn away from the state to the marketplace for efficiency, but we turn back again to the state for accountability. We demand that the state assure us of the quality of the public goods that the market provides. The face of the state is changing.

Secondly, efficiency in markets has enabled a growing conversation about choice. Choice has evolved from a freedom to a right. As we turn away from the state to create public markets, we turn back to choice — choice as an entitlement provided by the state. We want the state to provide the right to choose from among the public goods which it guarantees.

The third paradox is found within our language and our thinking about choice. We talk about choice and accountability. We must also ensure public conversation around our value conflicts as they apply to choice and to purpose. Stein argues that without a discussion of purpose, effectiveness makes no sense, and without discussion of effectiveness, efficiency is stripped of its analytic power and becomes a cult.

This is about accountability. Social commentator Alan Wolfe said that the nineteenth century was about economic freedom, the twentieth century was about political freedom, and this century is about individual freedom. Individuals will have more ability to determine for themselves what it means to live a good and virtuous life.

This budget, especially the service plans, move us into this century and the choice we want to have for our citizens — choice which, with economic growth, will mean better lives and better services for the people of B.C.

The Ministry of Children and Family Development provides services to hundreds of thousands of British Columbians, some of whom are in a state of critical need. Our task involves the 400,000 citizens who receive our services as well as almost 5,000 skilled and dedicated ministry employees and roughly 25,000 more in many organizations, including foster homes, that contract to deliver services to our clients.

To make real changes in a ministry as large and as complex as the Ministry of Children and Family Development, we need to give everyone affected by the process a chance to be heard. That's why we opened up our core review process to the public.

We met face to face with individuals and organizations in communities all around the province. We posted discussion papers on our core review website and asked for responses, which we immediately posted as well. For two months we received and posted more than 400 submissions from ministry staff, clients, families, service contractors and advocacy groups. Most of the submissions were sincere, thoughtful and based on years of personal and professional experience.

Some common themes emerged: the need for more flexibility and choice in services and service delivery, the importance of family and community in the development and delivery of services, and the need to move the balance of power away from government and toward communities, families and individuals. The overwhelming majority of submissions in some way stressed the need to move toward a community-based service-delivery model.

As well as our direct meetings, we had more than 100,000 visits to our website. Most of them read the submissions that we received. This was real community consultation, and it served us well. We received a great deal of useful advice that gave us confidence in moving ahead. We let our public and partners know that we value their experience and their insight.

That community consultation will continue as we move through the next three years to implement our service plan. Our core review website has been replaced by an MCFD change site. It will let people know where we are in planning and implementing the transformation of the ministry to a future of community governance. It will allow them to continue to influence the final shape of the new structures of governance, service delivery and accountability. It's a demonstration of our commitment to open, transparent and responsive government. We want everyone to know what we are thinking, where we are going and how they can be a part of that process.

Repeated tinkering over the years has failed to address the constant criticisms levelled against the ministry's predecessors, despite the work of thousands of dedicated and well-trained staff. The nature of our large, bureaucratic organizational structure has held many staff back from using their full skill and training for the benefit of the people of B.C. It's increasingly clear that what we've been doing has not been working as well as we want and that now is the time for radical, not incremental, change to our delivery service.

The number of children in ministry care grew by 60 percent over the past seven years to more than 10,000. Aboriginal children and youth continue to be represented in our child-in-care population. Currently, they make up 40 percent of that total — 40 percent — while aboriginal children and youth represent just 8 percent of the province's population. B.C. maintains a high ratio of children in care — almost 11 children per 1,000 — while the national average is about nine.

We believe we may be starting to do something right. In the last ten months we've actually seen a caseload decline. The number of children in care has dropped by nearly 7 percent since June 2001. This decline is not part of the normal seasonal trends, and it is not related to any legislative change. It may be due in part to the ministry's focus on building family and community capacity and the reflection of this in social work practice. Some of it may come from filling the holes that existed in our front-line staff, particularly in the north. Despite this modest decline, we realize that we need an approach to service delivery that is new and vibrant and that moves the balance of power from government to families and communities.

In our search for a new service delivery approach, we looked at some profound cultural shifts in the way

the ministry serves B.C.'s most vulnerable people. We're moving from a closed, reactive and defensive culture to open, accountable and transparent relationships with our clients, stakeholders, media and public. We're moving from a centralized decision-making and service delivery toward developing community capacity to protect children and to support child and family development.

We want to see services that have clear goals, clear time lines and clear measurable outcomes. We are shifting from a system that has tried to protect children by removing them from their families. We believe that the safety and well-being of children is better secured by promoting family and community capacity.

For adults with developmental disabilities and their families, we must move toward a comprehensive, community-based service delivery system that promotes choice, innovation and shared responsibilities.

Aboriginal communities, too, need support to build their capacity to deliver a full range of services with emphasis on early childhood and family development.

As we make these shifts and as part of our budget process, the ministry is reviewing all of its contracts. More than 75 percent of our budget is spent on contracted services. That adds up to roughly 15,000 contracts. We are comparing the expectations and outcomes of these contracts to the ministry's mandate and the principles of our strategic shifts. We want to make sure that they are truly strategic investments that build capacity and resiliency in children, families and communities.

Over the coming months the ministry will phase out contracts that do not support direct service delivery to clients. Contracts that are coming to the end of a term will be reviewed, and those that do not meet the ministry's strategic shifts will not be renewed. The ministry has been meeting and will continue to meet with contractors whose contracts are expiring to give them adequate notice periods regarding their termination. Again, we will make every effort to protect those contracts that provide direct services to clients.

As I stated a moment ago, we're reviewing all of our 15,000 contracts to make sure that they are truly strategic investments that build capacity and resiliency in children, families and communities and that they meet the ministry's mandate to promote and develop the capacity of families and communities to care for vulnerable children and youth and to support adults with developmental disabilities. We are focusing our resources on vulnerable children and adults with developmental disabilities.

Providing support services to young adults who are no longer in care or subject to a youth agreement is not part of the ministry's primary role. These young adults will continue to have access to a full range of financial and educational supports that government provides to others in their age group. Although the ministry stopped making new agreements with youth under the post-majority services program in August 2001, we will honour all existing agreements until they expire.

One new initiative, which I am pleased to announce, is the youth education assistance fund. This one-time government commitment of $2 million from the Ministry of Children and Family Development is an exciting option now available to former youth-in-care. This fund, which is like a bursary, gives youth the ability to access a maximum of $2,500 per year to pursue their educational goals.

Community governance. We are also building the capacity of communities and families to raise healthy children in safe, caring and inclusive environments. The ministry is taking a new approach to governance, moving from a centralized to a community-based structure. We recognize that new government structures are not an end in themselves but rather a way in which to achieve our strategic shifts. We reviewed a wide range of service delivery models and looked at the systems in place in other provinces and in other countries. We looked at models based on children's aid societies in various jurisdictions, and we even reconsidered the status quo.

Ultimately, we agreed that new governance structures are necessary and that these structures must maintain or enhance the quality of life for our clients. We have adopted a model that facilitates regional coordination of services for child, youth and family development. It will provide the full range of services currently offered by the ministry. We are moving to five administrative regions for child and family development services: a northern region, interior, Vancouver Island, Vancouver coastal and Fraser region.

These five regions are established on an interim basis, and they coincide with the new health regions. The ministry and community representatives will begin to assess each community's capacity to assume the delivery of services, with a full transition targeted for April of 2004. Aligning the new structure with health service boundaries offers many opportunities for co-planning, collaboration and development of community capacities. Provincial resources such as youth custody and forensic services will continue to report to a much smaller ministry headquarters.

One of the ministry's key challenges has been in the delivery of services to the aboriginal communities. One of the most effective actions we can take is to strengthen the capacity and authority of aboriginal communities to develop and deliver services for their own children and their own families. We have made progress in that area. We now have 20 delegation authorities with aboriginal communities, and we are working on more. New governance for aboriginal services is expected to preserve existing federal funding relationships, provide a greater range of services under aboriginal control and support established aboriginal networks and respond to the unique circumstances of aboriginal communities.

We are currently in consultation with aboriginal communities to discuss their needs in the new system that we are developing. It is too early to judge how the aboriginal governance issues will be addressed. Clearly, it is an honest consultation that understands

the needs that exist. At this time our governance model for aboriginal services is not finalized and will take further consultation. We will continue to involve communities as our efforts unfold.

As part of the new governance structures for community living, child and family development, and aboriginal services, up to 2,800 ministry staff, most of them child protection workers, will transfer to new regional authorities. The need of services to children with special needs and their families is another major area under discussion and debate. This government has made a major investment in early childhood development. Here, too, we are looking at new service delivery models that move authority from government to the family and community. We are still considering whether services in this area would be best delivered through the five child and family development regions.

While the ministry has no statutory mandate with respect to adults with developmental disabilities, we have always maintained a relationship with that community. We have acted in an agent-like role for these clients in the selection and delivery of services.

Our new service delivery model has this broad outline: establishing a permanent provincial authority with a board appointed by government; enabling the provincial authority to redesign and direct services to adults with developmental disabilities and their families; making the provincial authority accountable to government, to adults with developmental disabilities and to their families; and enabling the provincial authority to develop a coherent and corporate approach to delivering a broad range of services.

These changes would require a legislative framework. They will, however, allow B.C. to take the next step in assuring that the developmentally disabled become fully participating members of our society. They and their families will have greater say and control over their services. It is the right thing to do. Our partnership with so many clients, parents and service providers will make it possible, and I thank them. We have led, as a province, in the deinstitutionalization of a number of facilities. Now we can actually take the next step in ensuring that all of the developmentally disabled move into the full mainstream of society.

Accountability is a major component of new service delivery frameworks and governance models. It includes legislation, funding agreements, collaborative planning and the appointment of boards and CEOs. Each regional authority board will be expected to integrate its service delivery planning with the boards of other regional authorities. Boards will be given basic parameters and flexibility to carry out activities with key performance measures in place to ensure accountability.

Accountabilities will be clearly set out within empowerment agreements. Empowerment agreements will promote shared responsibility among government and the regional authorities. These agreements will focus on realistic goals and will embed benchmark and outcome measurements. Funding agreements will identify budget targets and encourage communities to be innovative. Collaborative planning will allow the authorities to make their own decisions in the planning of community projects and regulations. Authorities will identify stakeholders and invite their participation, gain agreement among participants and call for consensus planning and decision-making.

We believe that our new service delivery system framework is flexible and that it's comprehensive. We believe it will encourage innovation, focus on outcomes and demand results. It will be cost-effective and offer local access to services. It will respond to the unique social, economic and cultural circumstances of aboriginal children, families and communities. Finally, it will share responsibility with families, consumers, community partners, ministries and other levels of government. We are committed to stopping the endless restructuring of the past. The ministry will make its choices, implement them quickly and stick with them.

We have already appointed interim CEOs for the five children and family development regions, and we hope to recruit CEOs and make board appointments later this year. We're in the process of appointing the regional consultation and planning groups that will help guide this process.

Later this spring we expect to introduce kith and kin agreements and family court conferencing as safe, humane alternatives to taking children directly into the ministry's care. We are still in the process of establishing a new service delivery approach for aboriginal services and hope to have a decision made regarding this approach by early fall. We will also be introducing draft legislation in the fall session which will enable us to move to our new governance structures. Our funding formulae, transfer agreements and organizational plans will be in place by 2003. By 2004 we will begin the transfer of our contracts, implement the new service delivery models and begin to have ministry staff report to boards.

Our task in the ministry has already begun, and the work involved is reflected in the budget for the coming year. In 2002-03, despite the severe fiscal pressures the government has inherited, the budget of the Ministry of Children and Family Development will actually increase by almost $6 million. That will cover the costs of transition to the new governance model while protecting the delivery of services. Those extra dollars at such a difficult time are a measure of this government's commitment to the children, youth and adults which this ministry serves.

We've set a number of goals for ourselves in this coming year. We will establish a baseline on the numbers of families receiving individual funding support. We will reduce the overall per-capita rate of children in care from 11 per thousand to ten per thousand by providing family development supports and services. We will increase the percentage of children placed in foster homes rather than more costly, less efficient, less effective residential resources from 73 percent to 74 percent.

I expect to be back here next year and expect to be asked how we did in addressing those goals. Because this ministry, like government, has made a commitment to accountability, we will honour that commitment.

Within the total budget there are targeted increases in services and expenditures and some savings in other areas. The most significant increase is in the area of early childhood and family development, where we are investing some $20 million more than the current year's spending. A substantial part of the spending is directed to aboriginal children, who make up 40 percent of the children in the ministry's care. The increase occurs mainly in the budget line for early childhood development, which is up by approximately $11 million and in line for family development. About $10 million will be redirected to family development initiatives.

Much of this increase is, again, directed to early childhood development services. We know from research that children's development from conception to the age of six is rapid and dramatic and affects lifelong learning, behaviour and health. We know that investment in early childhood development can produce dividends in lower costs to child welfare and youth justice as well as broader human and social benefits.

The ministry is providing one-time-only grants totalling more than $9 million for early childhood development programs and services — services that provide greater supports to young children and their families in their communities across British Columbia. This one-time investment supports our strategic shifts, building family and community capacity, developing a consolidated community-based delivery system and building capacity within aboriginal communities. More importantly, it will improve the social, economic and educational outcomes for both children and families. Ultimately, this will save future costs for government and for communities.

We continue to take advice from some of Canada's leading academics and professionals as well as agencies, families and caregivers to make sure our programs are based on the best evidence and emerging scientific and medical knowledge.

Spending on services for children and youth with autism will grow to $16.56 million, an increase of some $4.3 million from the current year. Just over $14 million of that will be spent on children ages zero to six, including $4.7 million for individualized funding, so parents can choose the treatment that works best for their child and for their family.

As I mentioned, we are moving toward a new governance model for community living services for adults with developmental disabilities. Our goal in this area is very clear, and it's worth repeating. We want to promote an environment where adults with developmental disabilities can participate in and contribute to their communities and live full and valued lives. There are approximately 5,500 adults living in facilities funded by this ministry with a budget of some $409 million for accommodation in the coming year. The living arrangements consist of community residents, semi-independent living, respite and relief, intensive adult care and specialized tertiary services. The cost of residential service averages about $64,000 per year per adult, but it varies widely depending upon the type of living arrangement and the level of care required.

We intend to review the scope and variety currently offered to make sure it provides maximum choice, flexibility and effectiveness. We will introduce a range of funding options, including individualized and direct funding, to better meet the needs of individuals and families. We are not satisfied with the options presently available for individuals with the highest medical and behavioral challenges.

We are working with the community to find more effective specialized community living centres larger than the typical four-bedroom home but considerably smaller. We're looking for efficient community-based methods of service delivery. We want to eliminate the Willows and have a progressive, community-oriented replacement.

The ministry's capital budget provides $24.5 million over the next three years to develop these community-based alternatives. It's worth pointing out that the budget for adult community living services, both residential and non-residential, is increasing this year from $555 million to $577 million due primarily to wage increases in the contracted sector. Those figures do not include any of the three-year capital allocation.

As previously announced, we are closing youth custody institutions at both Boulder Bay and Centre Creek. We can do this because of the very welcome decline in B.C.'s youth custody population. After the closures, which involve a total of 39 beds, there will be 311 youth custody beds in the system. Current occupancy levels, which are on a clear downward trend, average about 260 young people, so there will still be ample resources within the system.

While the ministry's budget is holding steady in 2002-03, we expect it to drop in the following years as we move past the costs of transition. By 2004-05, we are projecting a total ministry expenditure of just under $1.2 billion, down 23 percent from the current year. Half of the saving will come in the area of child protection and related services, where we are working to provide responsive, effective services that are family- and community-focused, services that will support families.

Our performance target is to reduce the ratio of children in care from its peak of 11 in every 1,000 in this province. In three years we expect that number to be down from 11 to nine, which is the current Canadian average. For those who might worry about the implications of this goal, I want to point out that nine children in care per 1,000 is the ratio that prevailed in this province just five short years ago.

I want to point out that 65 percent of the apprehensions that are made by this ministry are of single parents who are on B.C. Benefits — often women who,

with some support within the context of their family, would have the ability to support their children. We need to have more creative ways of responding to their needs than to simply apprehend.

The ministry receives on average about 100 calls a day alleging abuse and neglect, and we are apprehending, at its peak, almost 11 a children a day. We must do better. We must support families better. We know the outcomes that exist with children who come into care are not the outcomes we'd want for the children of this province.

Compared to 1997, our front-line workers are now better trained and have better tools to work with. They will be working in an environment that is more responsive to local conditions, needs and opportunities. They will have a stronger and more effective range of programs that will provide families with the support and skills they need as parents.

These are challenging and exciting times for the Ministry of Children and Family Development and for all of the people that work within and for the ministry. We are on an unprecedented journey. This move to decentralization is outside the experience of the ministry, but I believe we can make the changes that will put us on the leading edge of innovative, effective and fiscally responsive and responsible service to children and to families.

We all know that change can be stressful, and I want to pay particular tribute to the way in which the ministry and its staff have responded over the past ten months. When I spoke to this committee in August, the ministry was facing $55 million in unbudgeted cost pressures. The number of children in care had grown rapidly to a record level and showed no signs of slowing. Today I can tell you that the ministry has absorbed that cost pressure and, in fact, finished the year within budget. The children-in-care caseload has dropped steadily and has moved towards our three-year target.

Thanks to an effective human resource management plan, we are well on our way to meeting our staffing targets without having to resort to any layoffs. This ministry has shown an impressive ability to manage change and to manage within change. For that, the staff at all levels deserve credit and support.

I've been able to touch on a few of the highlights that will be before us in the next three very busy years, and I'd be pleased to take any questions from members.

S. Orr: I want to thank the minister for that very good explanation of everything that's happening in his ministry. I also would like to make a comment that I, too, have had extremely good help from the ministry staff, and I commend the minister on his staff.

I do have questions. These are questions I have had put forward by my constituents, so that's why I would like to go through them. I have several questions, actually, and I think what I might do, as the member for Victoria–Beacon Hill also has questions…. I don't want to hog the floor, but I might still hog the floor. We might be able to go through these fairly quickly, because you've actually said an awful lot in what you just spoke to me about.

Anyway, the first question. The ministry is adjusting for a 23 percent cut over three years. My constituents need to understand: how does the minister propose to make this cut without endangering the lives of vulnerable children?

Hon. G. Hogg: Firstly, within the context of the developmental disability community, the community living services sector, we've been meeting and working with a very impressive group of parents and service providers to look at options in terms of the service provisions that are there. As I commented a little earlier, currently it costs about $64,000 on average for every client that comes into the care of the ministry. We haven't created options.

As one of the members commented earlier to me today, a constituent arrived at his office last week with his developmentally disabled sister and a suitcase, saying: "I can't continue to support my sister any longer. I need support costs of some $400 to $500 a month to be able to do that." Our current structure doesn't allow us to do that. Currently, if that sister had dropped her sister off and she had come into the care of the ministry, that would have been, on average, a $64,000 bill in terms of being able to provide the service, and it wouldn't have been the quality of service that we want to have.

In working with this community, the community is saying that they can look at and find ways to provide better services and do that with about a 20 percent reduction in terms of the services that are there. They see duplication. They see creative ways of providing the responses. They see creative ways of looking at individualized funding that will look at some 20 percent savings in terms of the services. That's one big way that we look at being able to address…. That requires a new governance model that looks at and is modelled after a provincial authority that would provide those services.

The other big area of expenditure within the ministry is that of child protection. Some of the big issues that exist within that are very much the same types of issues. The ministry has had a growth of some 60 percent in terms of the number of children coming into care over the past six years. Each child that comes into care carries with them an annual cost of about $40,000. We know; we're very clear. The research, over and over again, not just in this province but around the world tells us about the outcomes that exist for children when they come into care.

Those outcomes are not the types of outcomes that we would want to have. We want to be able to support families. In fact, I received a letter today from a psychiatrist who commented to me that she deals on a consistent basis with children that have come into care, and even those who have gone through some very difficult circumstances still have their attachments in terms of their biological parents. Often, if there is some

way to hold those attachments together, we're going to have better outcomes in the long term.

We need to refocus a number of those dollars to provide the supports that exist within the context of a family. By doing that, our targets show us coming back to the types of levels that were in existence in terms of the number of children in care just five years ago. The test is going to be our ability to put the dollars and support services to ensure that we support that single parent who may be on B.C. Benefits, who's going to need that type of support, who wants to keep her children and her family together and is finding that challenging.

Our social workers are going to be working in communities to provide those supports, to provide those options. If we can shift those numbers to about five years ago, to the same types of levels with those types of supports for children in care, and if we can do the types of things that the community living sector tells us they can do, then we're going to be able to come in around that 23 percent target figure that you made reference to.

S. Orr: I just have to say that I appreciate very much the passion you have in the job that you do. It reflects in the passion with which you give your answers, and that's good.

The second question I have, personally, I think has been covered in Hansard. If it has, just say that, because we can go through this. I think I heard it. It's been noted that the number of children in care is on the decline and has been over the past six months, which is a rare trend in B.C. Why is this happening? Are the changes being made in the ministry reflected in this downward trend, and how do we know these children are safe?

I think I heard of bunch of those questions answered in your speech, so I'm going to leave you with that one to let me know what you think.

Hon. G. Hogg: I think I did cover that in the previous comments, but I might just highlight a little bit on that. There has been a 7 percent reduction in the percentage of children in care since June. We're not exactly sure why that may be, but we certainly believe that our staff are feeling there is some support for them and the decisions and initiatives they're taking. We have clearly said we want to refocus services around keeping and supporting families together. There will always be children who will have to be apprehended. That will always exist, and we'll have to make those moves.

The research is pretty clear as you look at the accuracy of some types of judgments. The research says that if you have a very skilled social worker applying the very best of case management practices, the best we can expect is still about an 80 percent accuracy in terms of the decision-making that exists around that. That presents a number of initiatives that look at both the 20 percent that's outside of that, plus false positives and false negatives that may exist. There really are some challenges that exist us for us in providing that.

We are going to be putting more services and more support into those families. We believe that ultimately the very best way we can protect children is by having support within the family and the community that builds around them. It's much like looking at traditional support systems where communities and neighbourhoods knew about the children and the resources that we have. Rather than having a large, monolithic bureaucracy like the ministry overlaying the province and trying to deal with challenges that exist at the individual, the community and the family level, we want to have a system that exists and responds to those challenges at the community level so that it will be much more involved with and a part of it. Ultimately, the type of support and safekeeping that will exist for children within that context is much better, and the outcomes for those children will be much more positive as well.

S. Orr: My next question I think you basically answered with the last question, so I'm not going to do this one.

The ministry's budget as a whole is very clear. I've seen it and read it thoroughly. What we have yet to hear about are the specifics of the cuts. Can you tell my constituents, in the process of reviewing the ministry's 15,000 contracts with service providers, which contracts will be cut in the coming year, and how will these be determined?

Hon. G. Hogg: We have applied a number of principles to all of the contracts that the ministry has — some 15,000 contacts. Those principles include the paramount principle that we want the contract to be focusing on direct service to our clients, to the clients of the ministry. That is the most important focus. If that's where services are being provided, then those are the types of services which are being maintained.

As we go through that triaging process with respect to the contracts, at the other end of the continuum there are some contracts which provide coordination for agencies that do provide more direct services. We are trying to redirect and focus those. There are some services that provide a shotgun approach across the whole province in terms of services to children. Again, we want to make sure that we start to focus those in on the most vulnerable children that exist in the province.

We have had our staff go out and apply these principles to the contracts that exist in an effort to ensure they are focused on those of greatest need, so that we can use evidence-based research to make decisions around that. They're to be focused on those in greatest need, and they're to be programs that are not shotgunned but which have evidence-based research that suggest they are effective in providing the types of services we want to provide.

Under the new budget, what options will be available to children ages 17 and 18? There has been some criticism that the ministry was about to remove those children from care. Is that the case?

Hon. G. Hogg: Children who are in need of the care of the ministry and who in fact are in the care of the ministry will remain in care until age 19 if those services are needed. They certainly will not be precluded from those types of services because they reach that age.

There is an independent living approach that exists for some children. Also, youth agreements may be used for some youth who are not in care but who do need some services. Within that context we're also looking at the same driving principle of providing family supports so that young people can be safe. If they have to be brought into care, that will also be available at that age, should that be the prevalent need and the best way to respond to their issues.

S. Orr: Will the ministry continue to offer post-majority services — for example, vocational training, education expenses — for children in care when they turn 19 and start their lives as adults?

Hon. G. Hogg: Any agreements that we currently have with youth for post-majority services will be honoured to the end of that service. We have started a scholarship program. We have placed $2 million into that. Those who reach the post-majority age will be able to apply for services that will assist them in post-secondary education. They will be entitled to scholarships of up to $2,500 to assist in their education.

S. Orr: The next line of questioning I have is actually on the governance structure. I think what I am going to do is read Hansard tonight and tomorrow, because I think you covered an awful lot of this in your initial speech.

What I am going to do now is hand the floor over to whoever the Chair chooses. I do have other questions, but I'm going to see if some of them get answered through other questioning.

J. Bray: I appreciated the words the minister had in his brief introduction, which did cover off many of the issues. I would like to explore some of them a little bit further.

As I have had the pleasure of doing with some of the other ministers, I'd like to congratulate the minister's staff on their strategic plan. This is an excellent document that has been very helpful for me as a member of this Legislature and also something that has been very helpful as I've communicated with constituents. As a document for them it answers a lot of their questions, and I think it's a great innovation. I congratulate the minister and his staff on putting together a very thorough and well-laid-out strategic plan.

It's with that plan I would like to start my questions. The first is that one of the strategic shifts the minister speaks about is moving to open, accountable and transparent relationships. I think he has made some comments about the difficulty, sometimes, that front-line staff have had in dealing with a ministry that is always highly charged and always has significant issues in the media. I'm just wondering if the minister can expand a bit. He talks about a more open and transparent relationship with staff, the media, community partners and the public. I'm wondering if he can just outline a bit more some of the specifics around that shift to make the public more aware of what the ministry does and to involve the public a bit more.

Hon. G. Hogg: Perhaps I can start with an anecdote which I'm fond of telling. When I first became the minister, I received a number of PTNs, as they were called in those days. I didn't know exactly what they were at first, but I found that it referred to a point to note. The point to note was usually around some unfortunate incident or perhaps even tragic incident that had occurred with respect to a child. Invariably the response which we could give to that was simply that we felt very badly about what had occurred, that we were looking into it and that legislation precluded us from being able to talk about it. It seemed that the ministry was always on the defensive, because when they came to us, it was always around an event that was emotionally charged and often, as I say, quite a tragic event.

We've really tried to, firstly, reposition ourselves to give some context in terms of what this ministry deals with. We started out by talking incessantly about the fact that the ministry receives 100 allegations a day of abuse or neglect across this province; that some 70 to 80 of those go on to requiring an investigation, and 11 children a day are being apprehended; that the magnitude of the issue is pretty dramatic; and that when we see issues that happen out there that line staff…. Reporters seem to think that, obviously, if a child is in a tragic situation, somebody must have done something wrong. The research is very clear that that's not the case. I alluded earlier to the fact that even having the best-trained staff utilizing the very best of tools, the expectation internationally is that the best you're going to achieve is some 80 percent. We need to be able to provide that context in an open and transparent way so that the province understands the challenges that our staff are up against.

Our staff have to make perhaps the most difficult decision in child protection that we can ask any employee of the state to make: to be able to go into a family and make a decision about apprehending a child. That's an enormous responsibility, and it's happening daily across this province. Our staff do a wonderful job in terms of making those decisions about the best interests of protecting children, but we need to move to be able to give them a little more flexibility, a little more support in terms of doing that. As a ministry we don't

need to be defensive. We can be pretty darn proud of the work our staff does out there.

But when the media grab hold of it and do something with it, that's the closest correlate between an increase in the number of children coming into care that we can find. So when something happens, a tragic event, and the media cover it, we see an immediate spike-up in the number of children that come into care right around that event. That tells us that we need to provide more support — first of all, that the media in the province need to understand and the people of this province need to understand the issues that are there and some of these problems they're going to have.

After a recent tragic event in this province, the media came to me and said: "What went wrong? Who did something wrong?" I said: "The very fact you've asked that question tells me you don't understand the issue." The issue is that our staff can do everything right and that still there are going to be things that go wrong. We need to make sure that's part of the culture and part of the understanding of the media, who are our conduits to the public in general, and of the public — that they understand these issues and that our staff who are doing those most difficult jobs know that we support them, know that we understand the very difficult challenges they have and know that if they make those good decisions, we're going to be there to assist and support them through that.

J. Bray: I thank the minister for that answer. Moving on along that line, the minister mentioned the strength of staff in the Ministry of Children and Family Development. Having worked for the civil service, I concur wholeheartedly with the minister, and I know that perhaps there are no civil servants in the public service who take more public criticism without any opportunity for defence than front-line social workers and resource workers. I don't think people recognize that for the few sensational stories that make it into the press, there are literally thousands of success stories and excellent work being done by our social workers.

That's my next line. Obviously, the strategic shifts outlined in the service plan are bold and exciting and, I think, are going to lead to great enhancements in our ability to provide service to the public. I'm wondering if the minister, who I'm sure has had opportunities to talk to staff, can perhaps elaborate a bit for us on how he sees the opportunities that this shift will present for them — and I'm speaking specifically of front-line social workers and resource workers — to actually be able to operate the full scope of practice.

Hon. G. Hogg: Firstly, I think there's clearly, across the province, some fear around the uncertainty associated with where we're moving and the challenges that exist with that. All of us have some concern about the issues as we start to move out and delegate those authorities and responsibilities and move control. It's much easier to hold onto control here than it is to allow that control to go out and start to exist in the community, but it's not as effective to do that.

In fact, we looked at a specific case, and there was one instance where a social worker had 11 central or outside agencies reviewing the work that she was doing. She's doing her work, and 11 agencies pass judgment on that. In many of those instances, some of the judgments they were passing were in conflict with other organizations. You get the ombudsman, the advocate, the coroner, the supervisor, audit — all kinds of organizations looking at what's going on with them.

Our staff are instantly put into a very defensive position with respect to that. That, combined with having staff all over this province who are having to respond to the model, the bureaucratic structure that comes out of Victoria, having to meet and address those issues while working within the context of Vanderhoof or Cranbrook — small communities throughout this province…. For them to get the opportunity and chance to actually work for a small organization, a community service delivery organization within one of those areas, so that they're actually not working for Victoria — they're not working for this big bureaucratic structure across the province, but they're indeed working on behalf of individuals and families within the community in which they live — we're going to find much better services that are going to be provided.

The research is replete with examples of how that works and how effective that can be. There have been little examples that have started to happen across Canada. There was a small example of some of that work in Ontario, another small example in Manitoba. There have been a couple of projects that have been tried in British Columbia but not been continued.

In British Columbia we have the biggest child welfare system in Canada and I think one of the biggest in North America. We need to look at ways that we can start to break that down and actually give social workers a chance to do the things that they went to school to learn. Their passion is to work with people, and we have been restraining them. We need to give them greater freedom to actually get into communities and work with, respond to and address the best interests of the people of this province.

This type of service delivery model, where they exist within the communities, is going to give them the chance to do that. I think it's going to be awfully exciting for them — those people that trained — to actually use their skills and their education within the context of communities to do things for people instead of doing things that have to address this large bureaucratic structure's need to be fed through all of these other types of policy and procedural issues.

J. Bray: Perhaps my next question will be easy to answer. I think the minister addressed it in his opening remarks.

I've had some contact in my constituency office about the number of FTEs, and it's a rather large number. I think it's somewhere in the neighbourhood of

2,800. There's a concern that's actually staff who will no longer be providing service. My understanding is that's staff who, over time, will be transferred to this community-based model and will still be working and providing social work services but will in fact be employed by community agencies rather than by the state. I'm just wondering if the minister can confirm that.

Hon. G. Hogg: In fact, it is 2,800 staff members who will be continuing to do that type of work. They are primarily protection workers who are going to be community development workers, who are going to be working in the community. Again, they're going to have much more time to be involved in the issues that are important to their communities than they have when they have to respond to our bureaucratic needs.

So, yes, you're correct. Those are not reductions in staff. Those are staff who are going to be doing the same work, but they're going to be co-located with agencies and organizations across this province that provide community development initiatives. They're going to be working in community development, as the best way to be both preventative and protective within the context of service deliveries to children.

J. Bray: The minister very kindly, earlier on this week, accompanied me to a community resource, James Bay Community School, which has a lot of the services and supports that the minister has talked about. I'm wondering whether or not the minister has been able to make any suggestions or have any discussions with staff about the potential of actually starting some pilots with that co-location model with existing ministry staff and trying out service delivery family support services within existing agencies.

Obviously, I think Victoria — and James Bay is a prime example…. I'm wondering if the minister has had a chance to engage in any discussions with staff about co-location pilots.

Hon. G. Hogg: Yes, we've had a number of opportunities to look at and discuss that type of initiative. In fact, I said to the ministry and our regional executive directors a number of months ago that while we're looking at legislation to actually enable this type of governance model coming back in place perhaps a year from now, we want to now start co-locating. We want to now start moving out so our staff have some experiences working in these organizations and working within that context while still reporting to and being part of this large monolith until we're able to make the governance structural changes that will allow them to move more permanently into that.

There are a number of pilot projects that are starting to come into existence now. In Grand Forks there is an exciting pilot that is starting to look at co-location. There is one between three non-profit societies in Delta and Surrey that is looking at some co-location and some modelling around that. There is a large one in the Western Communities right here in the lower Island where they're looking at a pretty creative and positive response to being able to provide that service delivery.

The member made reference to a visit to James Bay Community Centre. I think that's the first opportunity I've had to go there in that context. I've been there with the opportunity to play basketball on many occasions, and they have in fact come and met with me in my office. I've been very impressed with the services they provide. We did talk about some of the possibilities that may exist for co-location there. I have talked to the deputy and our staff about that as a possibility. Clearly, if we can get some consensus within the community around that, that's an initiative we'd like to explore and carry on further.

There is a possibility we could look at placement of some of our staff from the lower Island into an environment like that, which is so involved with and a part of a community. That's where we need to look at and to work to provide the services that we want to provide in the most effective way we possibly can.

J. Bray: I'm very pleased to hear that. I think James Bay has made itself known around B.C. as being a very progressive area that has developed a lot of good community-based services. I know they'd be eager to participate in this exciting shift that the ministry is going through.

I have a couple more questions I will ask at this time, and then I will relinquish the floor to some of my other colleagues who I know have some questions. The minister spoke a while ago about the area of contracts. I know the minister answered a previous question that there are about 15,000 contracts that his ministry currently holds. I'm wondering if I can explore for a moment the areas of contracts not to do with individual service plans for families. I'm talking about contracts where there's actually a service being provided by a non-profit or perhaps for-profit area.

The minister may know I have some concern that in the past how government has operated is that it has a budget of money, and then it allows for proposals to come up to provide a very particular service. It looks at the proposals, and then it grants a contract. Over time, there are some very good, strong community agencies that have several of these contracts providing siloed services where they have very little flexibility, yet we know they deliver good programs. Perhaps there might be the chance to look at a different way of contracting. Those agencies that have established records and that we have some confidence can deliver some outcomes could perhaps look at more of a bulk funding formula or a single envelope with a series of outcomes and outputs we measure to ensure that we're getting the services we need rather than having the programs that they've applied for.

I'm wondering if the minister can comment on whether or not his staff has had a chance to review the contracting model for those services and to look at alternatives such as bulk envelope funding for large agencies with a series of outcomes and outputs to be measured.

Hon. G. Hogg: One of my frustrations since coming into this job is the fact that we do have 15,000 contracts and we don't have an ability to actually identify them — to break them out and to look at what they are. We don't have the information necessary to make good management decisions. Obviously, you need information to make decisions that are going to be effective in terms of the models for providing service delivery.

We've looked at the new governance models we're moving to. We're looking at empowerment agreements and outcome measurements. The first triaging we've done of the 15,000 contracts is based on a set of principles that include evidence-based research that suggests there are some outcomes that will work with this. Then, so we can set our contracts, the appendix A of those contracts is geared to the outcomes that are included within that, so we can address those in effective ways.

We have appointed a transformation committee to look at the issues of accountability. We have people from across Canada with recognized expertise in issues such as accountability. That committee is looking at the best research that's in existence, so we can have the best framework and theoretical model for providing it and so that we can make it work and integrate it with the service that we have.

We see ourselves as making some dramatic shifts in the issues of accountability. As we move to governance models, the ultimate responsibility of government in those services is to fund them, to ensure that the standards of care are there, that the quality of care is there, and to assure that there is accountability in the service of those models. Those are the three concepts we have to look at. Those are the concepts we're asking this accountability group to look at and work at.

We have to get the information system in place to support and manage that, or we won't have the type of structure the member is referring to. It is very important across all our service delivery to ensure we have that so that we will have systems that do focus on the best services for the most vulnerable in this province.

J. Bray: Just to follow up, then, is it possible that the minister…? As this committee does its review and actually looks at an inventory of what we've got, what we're delivering and what we're measuring…. If there is a common thread that in certain communities there are strong organizations providing a multitude of services but in these silos, would there at least be the exploration of possibly looking at congregate contracting or bulk contracting and possibly multi-year funding in the same way as education and health budgets from the provincial government have been laid out, with very strong outcomes, if we can develop those? Those agencies can then operate within the community with some flexibility to meet changing priorities and demands within a contract period.

This would also be recognizing, as I'm sure the minister is well aware, that some of the outcomes are longer term and will not necessarily be achieved within any one 12-month period. For fairness, for ensuring we get the service outcomes…. If we look at these multiple-year contracts, that might ensure that we actually deliver some of those. Is it fair to say that the minister would be prepared to look at some of those things once we get this inventory in place and get a better sense of where we're at today?

J. Bray: Thank you, Mr. Chair, and thank you very much to the minister. I'll be happy to make any contribution I can towards that.

The final area I just want to explore before I yield the floor is, as the minister knows, certainly in the capital region. My colleague the member for Victoria-Hillside may also want to explore this issue. We've had a lot of feedback with respect to the school-based funding envelope. A lot of it has been in the news. A lot of it has been information, and some of it has been misinformation. I'm wondering if the minister can provide us with some clarity as to what the status is right now with the school-based funding envelope and where he is at with his review of that issue.

Hon. G. Hogg: As the member is no doubt aware, there was about $43 million in that envelope over the past year. In this year's budget, it is about $36.6 million that exists within that. Because the school year exists differently than the funding of government, we have ensured that those programs are fully funded to the end of June.

We are now meeting with school districts to look at ways we can more effectively and efficiently provide those types of services. We want those services to be there, but we have to look at efficiencies we can generate and ways we can provide that service delivery in the most effective fashion.

I've been meeting with the Minister of Education and the Minister of Finance in efforts to find ways to look at and to manage that. We recognize that school districts are going to need to know or have some level of assurance as they start to build their budgets for next year. We're trying to work with them around their time frames and their envelopes. There are a number of issues, however, that we have to look at and work with.

We have, on the other side of it, expanded the early childhood development funding by about $11 million to ensure the whole of the issues of preparedness for school are addressed in better ways. We know from Hertzman and from Mustard and from a lot of the research — Burton White — that tells us very clearly about the impact and import of being able to ensure that children are ready for school.

The better prepared they are for it, the better they are able to deal with the issues. We recognize that there are issues that also have to be addressed, once they do start school, to assist and support that. We're continuing to work with school districts, with other ministries and with staff to try and find ways to achieve the maintenance of those services.

J. Bray: I'm glad to hear that some of that work is ongoing. Certainly, my constituents have expressed a great deal of concern. We have several inner-city schools in my riding and in the capital region in general, so this is an issue that's certainly at the top of my agenda. I'll continue to work with the minister on that.

At this point I will yield the floor to my colleagues, who I know also have some questions.

J. Kwan: I will begin my questions by first advising the minister of the order of the areas in which I'll go, so that the minister could advise his staff accordingly. I'm going to first go into the child protection area. I will canvass a series of questions around child protection. Then I'll move forward to family support.

After that it will be foster care, followed by supported child care and then to aboriginal issues, to early childhood education, to special needs and then to the social equity envelope — a little bit of it has been touched on, but I have a lot of questions in that area myself — community living, and then independent funding, institutional care, youth justice, child and youth mental health, youth services and the corporate services program, regional management. Then there will be some other miscellaneous general questions to follow. That's the order in which I'll be going, so the minister can advise his staff accordingly.

First, I'd like to put on the record this letter that I have received from a constituent — not a constituent in my own community. It's a short letter, but I think it's an important one. It perhaps will put to the minister many of the concerns that British Columbians have around some of the changes regarding the Ministry of Children and Family Development. The letter is actually addressed to the Premier. It reads as follows:

I read this letter into the record, hon. Chair, because I think it frames, to a certain degree — perhaps to a large degree — the state of mind that many people are in, in British Columbia. I know that it is a letter dated December 3. The anticipation at that time was that the cuts to the Ministry of Children and Family Development were going to be around 30 percent. That number has been slightly reduced to 25 or 23 percent — 23 percent, more specifically — but I think that it is still a valid sentiment in the broader community. I put this letter on the record and therefore cast many of the questions in the light of the concerns that many, many British Columbians have.

Let me begin with the child protection and family development area and put to the minister more of a broad question in this area. The government has decided to implement many of the recommendations from the Morley report. This includes the elimination of the Children's Commission as well as the office of the child, youth and family advocate. The B.C. coroner will now take over the job of reviewing the cases where a child under the age of 19 dies, and the ombudsman will be providing the independent reviews into individual cases within the child welfare system.

The children's officer, an officer under the Attorney General, will be responsible for much of the advocacy work done by the child, youth and family advocate. What has the Minister of Children and Family Development done to ensure that extra funding will be available to the B.C. coroner and the ombudsman for taking on the added responsibility of investigating the treatment of children in this province?

Hon. G. Hogg: Thank you to the member for giving us the outline and the issues and reading the letter into the record. Clearly, as we've been going through the issues in this ministry, it has not been an easy time doing that and trying to work with and address so many issues within the context of a budget allocation. We believe we can do that, and we believe we can do that in providing and improving a number of the services that we do provide.

Within the framework of the specific question around the central agencies, clearly they're not within the purview of this ministry and therefore not directly within our estimates. At the same time, they do apply to some of the initiatives that we're taking.

I made reference earlier to some of the hardships which our staff work under, particularly our line staff,

and the fact that in many instances or at least in one instance…. I think it was 11 agencies that made comment on and reference to the type of services that our line staff were doing. I'm confident that we don't need that many central agencies looking over it. I think that's counterproductive.

When things go wrong, governments, within the context of bureaucracies, traditionally pass new legislation, appoint a new central agency, put a new audit process in place and say: "We're going to inspect you differently." We build all of those things onto it without even looking at the integrity of the service delivery model within the beginning and the central part of that.

We want to stop building onto those things, and we want to free up the staff to actually provide the services that we want to have provided. The most integral and most important person in the service delivery model for this ministry is the line staff. It's the social worker, who's out there daily working with the most needy and the most vulnerable within our society.

The services which the member has alluded to are all services which will be continued and which will be managed. With respect to the specific issue of how and whether we've put more funds into the two offices that have been referenced, I don't know the answer to that. They don't fall within the context of this ministry.

I do know there has been a commitment to maintain the services that were contained within the context of those central agencies within the broad framework of government, so I expect that we will still see the types of reviews that the member is making reference to with respect to the coroner in terms of children's deaths. The coroner references those in any event and will be providing focus more specifically on those that need to have a review rather than all of those. We expect that services will be more efficient, more effective and more responsive to those areas of specific need.

J. Kwan: I asked this question, and I know that the responsibility does not necessarily fall within the ministry but is related to the work of the minister, particularly in the area of child protection and family development and advocacy initiatives, investigations and so on. I take it from the minister's answer that there is no funding from the minister allocated to the B.C. coroner and to the ombudsman in ensuring that this work is taken on — the added responsibility that's assumed by these offices — and that the work will continue.

The minister is confident, though, from what I heard in his answer, that there won't be any lapse in ensuring that investigations take place with respect to the treatment of children in the province. Can the Minister of Children and Family Development assure this House that children and youth in this province will have the same access to advocacy resources as when the child, youth and family advocate existed?

Hon. G. Hogg: I would like to first point out that a couple of reviews have been done with respect to those services over the past. Children in care have been asked who their most effective advocate was, when we had this myriad of service providers or central agencies to provide those. The most common response, the most common answer that children in care gave to that question was that it was their social worker. The social worker, the person they had contact with, was the person they had confidence in as their advocate.

A number of the procedures we're doing is going to free up the ability of those social workers to be even better advocates, because we're going to free up the time. Secondly, they're not going to be working directly for government, so they have a little less reluctance to be critical of procedures and practices that exist within it. We are actually creating more time and an organizational structure to ensure that the social workers can be more effective and better advocates for the children in care. That, I think, is a really important approach and an important part of the service delivery initiatives that exist within that.

As for the rest of those services, as I said earlier, the majority of them do not exist within the context of this ministry. This ministry expects those services to still be there. I expect that the services the children need in terms of advocacy will in fact be enhanced by the ability of the social workers to address their needs from the context of the personal contact and relationship they have developed with our children in care.

J. Kwan: I am noting the time. Other people and the Chair from the small House have come in, so they are ready to report out. I actually do have a series of questions around this area. I'm not going to ask further questions. Perhaps we'll wait until tomorrow. I've just started the estimates process, so we'll engage in further questions with the minister tomorrow.

Noting the time, I move that we rise, report progress and ask leave to sit again.

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

Committee of Supply A, having reported resolutions, was granted leave to sit again.

Hon. M. de Jong: I'm sorry. They're Bronwen Beedle, from the ministry; deputy Don Wright, from the ministry; and Laurie Stein, also from the ministry.

J. Kwan: I have a series of questions to ask the minister. Just for the minister's information, I'm going to go in an order something like this: the working forest land base, the results-based framework, the softwood dispute, cuts to the FTEs. Then related to it, there are a number of questions around compliance enforcement, results-based, Forest Practices Code and recreational forests. These will be the broad areas which I'll canvass, and of course, there may be, from time to time, general questions that arise.

I understand, also, from the deputy Whip, that many government members will be interested in asking questions of the Minister of Forests. I will simply advise them that when they wish to have access to the floor, just signal me, and I'll try and wrap up my area, and I'll yield the floor to other members.

I'd like to begin with the working forest land base issue. In order to achieve the minister's goal of sustainable development of land and resources, the Ministry of Sustainable Resource Management's service plan stated that a working forest land base will be established. Could the Minister of Forests explain how his ministry and the Ministry of Sustainable Resource Management are collaborating on this issue?

Hon. M. de Jong: The member correctly identifies an issue that relates in part to a promise the present government made in the lead up to and during the campaign, to establish a working forest land base. In addition, the manner in which we and the Premier have opted to ensure that we meet that commitment relates to a realignment of the government itself and the creation of the Ministry of Sustainable Resource Management. That has necessitated a degree of cooperation insofar as under previous policy regimes, functions that now fall squarely within the ambit of the Ministry of Sustainable Resources were dealt with by the Ministry of Forests.

What we now have is a ministry which is charged with the task of making the land use decisions and coordinating the land use planning and a Ministry of Forests which, once those determinations have been made, assumes responsibility for ensuring that the forest practices conducted on those designated lands meet the standards that the Legislature deems appropriate.

J. Kwan: Then, is it the case that the Ministry of Forests will be doing the enforcement side of this work?

Hon. M. de Jong: Under the service plan, which the member undoubtedly has had access to, she will note that compliance and enforcement very much remain a function of this ministry and, in fact, a highlighted function, one that we take seriously today and will continue to take seriously in the future.

J. Kwan: Yes, I do want to have it on record from the minister in this set of estimates because we did talk about questions surrounding enforcement and compliance issues with the Minister of Sustainable Resource Management, and he had deferred much of it — in fact, all of it, by and large — to other ministries' areas of responsibility, so I wanted to get that on record.

Could the minister please advise: is this plan designed to increase industry's access to forests in British Columbia?

Hon. M. de Jong: Having answered the last question as I did, I think perhaps I clumsily did not draw the distinction properly. The ministry that the member was referring to, the Ministry of Sustainable Resource Management, will actually have responsibility for, if we called it, the zoning aspect of land use planning and the designation of the working forest. I think, as I recall from reviewing the exchange that took place in estimates, the member canvassed the rationale that would be employed by the Ministry of Sustainable Resource Management in making those determinations involving communities and consultation at the community level to make what are essentially land use planning decisions.

J. Kwan: I don't think I heard a response from the minister to the question I asked of the minister: is the plan designed to increase industry's access to forests in British Columbia?

Hon. M. de Jong: If I understand the member's question correctly, she is, I think, asking what is motivating the decision to establish a working forest land base. It is most assuredly to establish some certainty around the practices that can take place on a designated piece of Crown land within the province. Is there a hope that through the employment of enhanced silviculture activities, we may be able to, overall across the province, over time grow the annual allowable cut — a determination, I might add, that is made at arm's

length from myself by the chief forester? Certainly, those are objectives that I think everyone would share.

J. Kwan: On the question then, the goal is to increase the annual allowable cut, and on the flip side, of course, you would also want to ensure there is a sustainable resource. Who is to manage that balance? Do the decisions rest with this minister then, or do they rest with other ministers?

Hon. M. de Jong: Quite obviously, again from referring back to the service plan, the ministry continues to have a responsibility for the application and enforcement of sustainable forest practices. We will, I'm sure, during the course of this estimates discussion, refer to the government's plans around a results-based forest practices code. The point I think I want to emphasize to the member is that by statute, the decisions around AAC determinations in any given district or timber supply area are made by the chief forester, as they have been now for many years, based on scientific data that he and his department collect and based on an application of the principles of sustainability, as they have now for some time in this province.

J. Kwan: In the service plans from the ministry there's a bullet which reads: "Increase the allowable annual cut over time through scientific forest management, proper planning and incentives to promote enhanced silviculture. Planning, research and silviculture activities will be funded through the forest investment vote." Could the minister please advise how much funding has been dedicated for this work and how much of it goes into the scientific research side of sustainability?

Hon. M. de Jong: The global figure for the forest investment account, as I think the member might have referred to or knows, is $146 million. In terms of the land-based operations of the sort I believe she is referring to, that figure would be $90 million.

J. Kwan: Has there been any consultation on this initiative with the stakeholders, with forest-dependent communities, first nations, environmental groups, recreation?

J. Kwan: Could the minister provide the opposition with a list of the stakeholder groups with whom the ministry or the minister has consulted and the comments from these various groups?

Hon. M. de Jong: I think we can provide a summary, not immediately, now. We can provide a summary of the consultation that took place, the discussions and the submissions — extensive submissions, actually — that we received, particularly over the course of the fall, as we were developing this plan.

J. Kwan: Thank you to the minister. Is a week or two weeks time frame reasonable to expect that information?

J. Kwan: What is the time line for the development of the working forest initiative?

Hon. M. de Jong: Actually, on this question I will refer the member back to the lead ministry. That work, as I think the member knows from the exchange that took place during those estimates, is ongoing. There is a desire on the part of government to move to fulfil our commitment in that respect in a timely way. I would suggest that the appropriate authority to get an accountable answer from would be the Minister of Sustainable Resource Management.

J. Kwan: The Minister of Forests is working with the Minister of Sustainable Resource Management. I would assume that this minister will be working very closely and, therefore, will have some input in terms of the time line around that. Does this minister have any inkling with respect to a time line or time frame?

Hon. M. de Jong: I think it's fair to suggest, in response to the question, that different circumstances exist in different regions of the province. I should also say that from the Forests ministry's perspective, our management of this issue is tied, at least in part, to fulfilling our commitments around the results-based code that I'm sure we will canvass later in these proceedings.

J. Kwan: I'm going to ask this one question, and then I'm going to yield the floor to other members in this House because I have other matters that I have to attend to for the next little while. Let me ask this question, then: could the minister please advise who will decide how much of the land base will be part of the working forest, and how this process will occur?

Hon. M. de Jong: The ultimate decision will come in the form of a recommendation from the Minister of Sustainable Resource Management after what I am certain will be consultations with the Ministry of Forests, other ministries in government and, of course, the public.

B. Belsey: I have one question for the minister. It's concerning a part of the Queen Charlottes and something that happened a few years back called the South Moresby forest replacement account. It was an account set up between the federal and provincial governments to administer funds set aside after they decided not to harvest on South Moresby. I wonder if the minister can tell us where we are with the account and when those in the Queen Charlottes will be able to see some of this fund that was set aside.

Hon. M. de Jong: It's a bit of an ironic situation that exists with respect to this fund. Generally, in these dif-

ficult times we are confronted by a plethora of will and an absence of means. In this case, one could argue that the opposite is true.

There is $24 million set aside for this fund. The dilemma, it seems — and this is something that has been ongoing for a number of years — has been finding agreement on the part of local officials to both the structure under which these funds would be extended and for what purpose. It seems that there is a desire now on the part of some to put these funds to work for projects that are not necessarily contemplated by, particularly, the federal legislation. The dilemma we have is that there is apparently an unwillingness on the part of the federal government to contemplate any changes.

The challenge we have inherited — and I think the member knows this from the work he has done on behalf of his constituents — is to find a way to meet those local aspirations in a way that is consistent with the statutory parameters that presently exist. The challenge — and the member will know this from a meeting that he attended — that we have laid before these people, the folks in the Queen Charlottes, is to work with us to get on with finding a solution to the concerns they have expressed. To that end, I've had discussions with the federal minister responsible, Mr. Dhaliwal, and there is a working group now in place to try and resolve those outstanding matters.

The issue — and I'm happy to put it on the record — is this: if we can't find a way to overcome the concerns that have been expressed at the local level, my fear is that these funds will disappear. I know that the member has been instrumental thus far in helping to coordinate the government's attempt to find a resolution to this matter, but the situation can't linger forever. To be blunt, it would be a shame if we lost the opportunity to put this money to work for the purpose it was originally intended in a part of the province, quite frankly, that could sorely use the injection of these funds, merely because of a turf war or concerns around control. If there is a will, we should be able to find a way. That is the challenge that we face over the next weeks and months.

R. Hawes: I also have a couple of questions for the minister, if I might. The export of raw logs is where my questions are going to come from.

I know that the IWA has taken a very strong position that they want to see no raw logs exported. I'll start by asking: has the minister responded to that demand, I guess I'll call it, from the IWA?

Hon. M. de Jong: Before we were interrupted, I think the member posed a question about log exports and the potential for a ban on log exports. I think he was referring to that in the context of retaliatory measures arising out of the softwood lumber dispute, or he may have meant just in general terms. I think today that question generally arises when discussion turns to the situation we find ourselves in with the Americans.

The member has also correctly pointed out that it is an issue that is near and dear to the hearts of, I think, all British Columbians, but particularly people who work within the forest sector and members of the IWA. That union, on behalf of its members, has taken a particularly strong stand, all the more so now following March 11 and the threatened imposition of the duties by the Americans.

I can say a couple of things to the member. First of all, I hazard to guess that 99.9 percent of British Columbians canvassed would say that they believe timber harvested in B.C. should be processed in B.C. It is something that makes sense to us. The jobs that are created are jobs that we would like to keep in British Columbia. I think, at the same time, people would acknowledge that in a couple of local situations, depending on what the needs of a mill are, an exchange of fibre makes sense. But by and large, we like to think that trees harvested in B.C. will be processed here.

The question then, in April 2002, is: is there some value to training our minds to ban outright the transportation of unprocessed logs beyond the borders of British Columbia?

Certainly, I think it's fair to say that the volume of unprocessed logs in general has increased. The vast majority of that relates to log exports off private lands, which falls squarely within the ambit of the federal government and a federal regulation, which, as I understand it, is applied virtually exclusively in British Columbia and is a remnant of the Second World War. There has also been a slight increase in export volumes from provincial Crown lands, over which the province does have jurisdiction.

I will repeat to the member what I said to the president of the IWA of Canada a couple of days ago, when we last discussed this matter. It is something that we are considering — I should say, more particularly, the imposition of a tax rather than an outright ban.

The question is not really a complicated one in the context of the trade dispute in which we are presently engaged. Can we inflict a degree of discomfort and harm on our trade adversary that outweighs the harm that we would undeniably be imposing upon ourselves with respect to the workers that are out in the woods engaged in a certain degree of harvesting activity? I

can't pretend to have firm figures for the member. There is a degree of conjecture and guesstimation involved. The job loss from a tax or a ban could be in the range of 2,500 to 4,000 additional workers finding themselves out of work. Measure that against the reaction that it might elicit from the American side. I suppose that would depend in part on the impact it had at the processing level, were that fibre to be denied to the Americans. That, as well, is a difficult thing to quantify. We're in the processing of doing that. We're working, I think it's fair to say, cooperatively with the IWA to make that assessment.

At the end of the day the objective is not to impose greater hardship on a sector of the economy that is already suffering terribly, but it is one of a select and limited number of tools in our arsenal. Admittedly, the government is presently examining the possible use of that tool.

R. Hawes: Thank you, minister. Your somewhat longer answer's a little more informative than the shorter one.

Just then to continue a little bit. The previous government through the Forest Jobs Commission, I think it was called, persuaded a number of companies in this province to expand and to create jobs. In doing so, business plans were put together for those companies that often entailed the right to ship raw logs. I think those plans, if I'm not mistaken, were done on a year-by-year-by-year basis. There are several companies in this province that are in the middle of those plans, that have a debt load to carry that is somewhat dependent on their ability to continue to ship raw logs. In fact, I'd go further than "somewhat dependent." It's entirely dependent at this time on their ability to ship raw logs.

I wonder, then: could the minister maybe tell me whether he's looked at that side and the impacts on those companies and how they would carry their debts. What will happen to those companies as their export permits expire?

Hon. M. de Jong: The mechanism by which people or companies can acquire the right to export unprocessed logs is fairly limited. In short order there is a provision for what is, I think, termed a standing green application, which can be brought by order-in-council. There is a surplus test that exists for timber that has already been harvested. Over time, a third avenue, as it were, seemed to develop, tied, as the member correctly points out, to the establishment of these job creation plans or economic plans.

I guess that in the short time I've had the job, I would have to make the observation that to a certain extent these job creation plans became…. Whatever the motivation, there are examples where they dealt with very little other than provisions for the export of unprocessed logs, which, I think, admittedly, were key to the ongoing viability of the companies that were involved. It strikes me, however, that one could make the argument that it was a less than transparent use of that tool. However, be that as it may, we now have a series of these plans where the provisions for the export of unprocessed logs are very much key features.

When the member asked the original question about an outright ban, presumably those plans would be captured by such an order. The impact on those companies, I dare say, would be significant in the negative direction so that as disturbing and unpalatable as it is for British Columbians to see, particularly at this time when a lot of processing workers are out of work, truckloads or bargeloads of logs leaving British Columbia unprocessed, some of them — in fact, the majority now — for the U.S., we have to weigh that against changing that or taking direct action to prevent it from happening. We have to weigh that against the additional burden that would befall not just the company but the people that work for those companies were that avenue of activity removed entirely from them.

R. Hawes: As the minister, I think, is aware, there is at least one company in my riding that is dependent at this time on having a renewal of their right to export. I think the minister further knows that this particular company ships very, very few logs to the United States. The bulk of its shipments are to Asia. Unfortunately, because of the current softwood situation….

I know everything is sort of held up while a decision is made on which direction the government should go. I know the minister is spending a lot of time looking at the adverse impacts on an outright ban and even on imposing an export duty to the United States.

Perhaps the minister could let me know whether there's a way to look at, then, at least freeing up the export to other than the United States so that some of these companies can continue. I will say, in the particular case of the company in my riding, there are 350 jobs that are sort of hanging in the wind. I do have a letter from their chartered accountant, via their banker, that says that their line of credit is now being held up pending our decision. It puts them under considerable time pressure in the short run.

Hon. M. de Jong: Well, the question, and I thank the member for it, highlights how high the stakes are in terms of assessing what our next move is on this issue. This member has been diligent in the extreme about pointing out the impacts that a decision one way or another could have for upwards of 350 working families in the Mission, Maple Ridge and Abbotsford areas of the province — the employees that live throughout that region.

The specific question relating to the ability to differentiate between raw log export markets is one I don't have a specific answer to insofar as it relates to the application of international trade law provisions, which I would hesitate to interpret on the fly.

I know that I am aware of the specific example that the member has raised and will undertake to provide that agency and his constituents with an answer as quickly as possible and in keeping with the thrust of the direction the government intends to head in as it relates to international trade.

R. Hawes: Thank you for that. One last question. I don't know whether the minister can answer this. It relates to the timing. Does the minister have any sense of when some form of definitive response is going to come forward so that these companies can go about planning their futures?

Hon. M. de Jong: Well, I'm always mindful of trying to set a target that is both realistic and reflective of the seriousness of the situation for companies and people in the position the member has described.

I will say this. Over the course of the next four weeks the dispute with the Americans will take one of…. The direction that dispute takes will be clearer. It seems to me that contemporaneous to that issue we should be in a position to provide the member's constituents with an answer on a question that I know is of paramount concern to them.

J. Kwan: Before the interruption in the House I was asking the minister about the land-based decisions, who will be making the decisions around the working forests and how this process will occur.

I'm sorry. Because of the interruption I only caught glimpses of the minister's answer. I wonder if the minister could go back to that question, and then I can carry on with my questions in this area.

Hon. M. de Jong: Well, it's a clever technique, and I don't underestimate my capacity to contradict myself in the short span of 20 minutes.

I think the answer I gave, or intended to give, was to point out that at an operational level, land-use determinations will be made via the Ministry of Sustainable Resource Management. That will occur and involve extensive consultations with this ministry — undoubtedly with other ministries in government — but these questions relate to the working forest so, in that case, especially this ministry, presumably, but also the public.

I think, insofar as timings…. Those timings will vary depending on the region of the province we are in, the stage which land use planning discussions are at and the degree of uniformity or difference of opinion that exists. I think the last thing I said earlier related to the interest this ministry has as it relates to both our stated desire to move to more area-based or defined-area management of forest practices and the process that we are undertaking with respect to rewriting the Forest Practices Code to reflect a more results-based approach to the management of forest practices.

J. Kwan: Many of those decisions will rest with the Ministry of Sustainable Resource Management, and that work will be done in consultation — this is what I heard from the minister — with the Minister of Forests. The process will also involve consultation with the broader public. Does the minister know how much this process will cost, in terms of its creation and the implementation of the land base? Is this included in the minister's budget? If so, how much?

Hon. M. de Jong: Well, insofar as these issues go to the heart of what the Ministry of Sustainable Resource Management was created to accomplish, I suppose one could argue that that ministry's budget reflects a significant portion of the cost that will be involved in fulfilling the commitment we have made to the electorate. There will certainly be consultation with this ministry, and that will consume or attract the attention of people within the ministry, so there will be a cost in terms of the attention and people power that is devoted. I'm afraid I would be speculating at this stage in a way that would not be fair to the member if I attempted to peg a figure.

As I say, the Ministry of Sustainable Resource Management was created in large measure to follow through on this commitment and to make these land use planning decisions and coordinate the effort of government. I suspect, though I didn't listen to the entire exchange between the member and the Minister of Sustainable Resource Management, that a lot of those questions were fleshed out during the course of that estimates debate.

J. Kwan: In the discussions with the Minister of Sustainable Resource Management, because there were overlapping areas of responsibility, essentially what I gather from the minister is that there are different ministries involved, and therefore different ministries will have to contribute towards the decisions and the process around this area.

On the question around the structure of the annual allowable cut for the working forest land base, it looks something like this: the Ministry of Forests is responsible for forestry and is home to the chief forester, and the Ministry of Sustainable Resource Management is responsible for land base or land use planning and the working forest, while the Water, Land and Air Protection ministry is responsible for safeguarding the ecosystems.

Here you have, really, three ministries involved. I'm trying to pin down, from the minister, the decision-making structure around this issue. On the one hand, the Minister of Sustainable Resource Management is saying that somebody else is responsible for that. The Minister of Forests is saying it's the Minister of Sustainable Resource Management, which then also involves WLAP. There are three ministries, essentially, involved. How does the minister and this government coalesce its decision-making structure? Maybe the minister can shed some light on that.

Hon. M. de Jong: There clearly is an element of coordination. There are clearly, also, a number of different areas of government that impact upon achieving

the ultimate outcomes that we are looking for. Under previous administrations there was an office of land use planning, where decisions were made around the types of activities that would take place in various parts of the province. In some cases they were exclusive activities. In other cases there was a broad range of activities that would take place and engage the attention of various ministries.

I don't think I quarrel with the assertion that there is some degree of shared responsibility. I think that in an agricultural area like the Minister of Agriculture and I live in, there is a zoning component which is administered by the ALC and various line ministries, be they environment, be they Agriculture, discharging their responsibilities to enforce applicable standards and ensure compliance with those standards.

J. Kwan: The process that has been set up appears to me to be one that is complicated, that has conflicting interagency organizations with different mandates from the new-era approach of this government, which is to streamline decision-making. Could the minister then advise how this actually contributes to the streamlined decision-making process of the new-era government? When there are conflicts that arise between the ministries in this supposedly collaborative effort, how are those conflicts resolved?

Hon. M. de Jong: Actually, it is the last part of the question and the member's statement that attracts my attention. It speaks to the issue of conflict resolution.

I think an argument can be made that formerly we had an administrative regime in place in the province that largely pitted one agency of the provincial government against another. That was not always productive, from a number of different perspectives. One of the objectives here is, admittedly, to develop an ethos of cooperation and collaboration within government.

I can tell the member that prior to taking this job or being in opposition or being in politics, the thing that mystified me most of all was seeing one arm of government suing the other. What a remarkably wasteful expenditure of tax dollars to have the Crown suing the Crown. Hopefully, she would share the opinion that this is not a productive expenditure of scarce public resources and, while she may quarrel about the model, would also share the objective of seeking to establish a framework that encouraged a greater degree of collaboration, recognizing the objective to ensure that the highest levels of enforcement and compliance are maintained.

J. Kwan: On the question around decision-making and the structure the government has set up for decision-making, having been in government before, from time to time I've seen where there are conflicting approaches and even mandates within the different ministries. I'm interested, from the minister, in how those conflicts would be resolved when that situation arises.

As an example, what would happen in a situation where the Minister of Water, Land and Air Protection stood up and said no to a proposed developed or increase in forestry activity in a certain area because of environmental concerns? What happens in that situation? Who gets to override that decision? Is it this minister, the Minister of Forests, or is it the Minister of Sustainable Resource Management?

Hon. M. de Jong: Happily, under this administration there need be no lingering uncertainty around what those mandates are for the various ministries. That was certainly not the case previously, but those mandates are set out in unprecedented detail in the service plans that each ministry has tabled and which are available from a number of sources, including the government website.

Is there a possibility that there will be conflicting interests around land use and the employment of practices? That is certainly the case. There is an elaborate dispute resolution process in place, depending on which statute one is concerned with. In this ministry's case, it might be the Forest Practices Code. In the extreme, of course, the possibility that a third party whose interests are being impacted by a decision would have recourse to the courts for judicial review…. Everyone shares the objective of minimizing the number of times that would be necessary. That is a lengthy and costly process — not just for the applicant, the third party, but for the Crown as well.

J. Kwan: I appreciate that the approach is to try to prevent things from arriving in the court system, but having said that, one of the areas that needs clarity from this government is, of course, who ultimately gets to make the decision. In this case, I'm talking about land base decisions, and should a conflict arise, who overrides the other? Is it this ministry, the Ministry of Forests? Is it the Ministry of Sustainable Resource Management, or is it the Ministry of Water, Land and Air Protection?

Hon. M. de Jong: It depends on the specifics of the situation. If it's a land use planning issue, then that mandate falls squarely within the ambit of the Minister of Sustainable Resource Management, who will make those decisions. They will be confirmed and debated at public cabinet meetings. That has already taken place and, again, is unprecedented in the British Commonwealth — the openness with which those decisions are made.

In other circumstances, the existing statutory regime places the final decision-making authority on, in some cases, the Minister of Forests and in some cases, the Minister of Water, Land and Air Protection so that it is difficult to answer in a blanket way. If we are talking about land use planning, that is clearly the Minister of Sustainable Resource Management.

J. Kwan: What about the case where, on the issue around the use of best science, the varying ministries

have some role to play in this area when making resource allocation decisions and utilizing the best science from the respective agencies?

In the case where the scientists from WLAP come forward with information that conflicts with the information put forward by the Ministry of Forests and with the goals of the Ministry of Forests — who overrides in that instance?

Hon. M. de Jong: These are not hypothetical situations. They have, admittedly, occurred in the past.

The statutes dictate who in a given circumstance has authority. For third parties, that is at times a very frustrating exercise. If we take the example of a logging contractor or licensee who believes they have fulfilled their requirements under the Forest Act but are later told they are proceeding in a way inconsistent with other statutory provisions, that is admittedly a frustrating exercise.

I think the member knows that there are processes in place. I think one could again make the argument that they are not perfect processes and may need to be examined. There are processes in place where the dispute that exists between the various arms of government can be resolved. In extreme cases where they cannot be, the option is recourse to the ultimate adjudicating body, which is the courts.

J. Kwan: What I'm trying to get from the minister is to understand the decision-making structure within government, given their intergovernmental agencies or ministries that have a hand in this issue.

What we have heard from various ministers today is that the government is going to use best science when making resource allocation decisions. We've also heard and learned that WLAP is the agency responsible for compliance and enforcement. WLAP is responsible for holding all of these other departments and agencies accountable.

What happens in the case when the information from WLAP scientists conflicts with the goals of the Ministry of Forests? What happens in that situation? Who, ultimately, has the authority to make the decision? Is it the Ministry of Forests, or is it the Ministry of Water, Land and Air Protection?

Hon. M. de Jong: I wonder if I might attempt to answer the question in this way. In general, unlike other arms of government, enforcement and compliance for forest practices falls within the Ministry of Forests. There is a difference there, if we are talking about conventional forest practices — harvesting procedures. Hopefully, distinguishing this ministry in that respect helps the member a little bit.

The other potential situation relates, for example, to a question around wildlife management, where, admittedly, that engages the attention and the jurisdiction of the Ministry of Water, Land and Air Protection. In those cases, under those statutes, that ministry has the ability to render an order which takes precedence — absent intervention by an adjudicating body like the courts.

J. Kwan: The minister advises that enforcement and compliance issues relating to forests fall within the jurisdiction of the Ministry of Forests. On the question around land-based decisions, those are made with the Ministry of Sustainable Resource Management. For the Ministry of Water, Land and Air Protection, their area of responsibility would be matters that relate to the environment but do not tie into the forests land base decisions. How does one separate issues around our environment as they relate to forestry practices, on the question around enforcement and compliance, from that of the Ministry of Water, Land and Air Protection? How does one separate that distinction when clearly, land base decisions and forest-related matters have an impact on the overall environment?

Hon. M. de Jong: I don't mean to be flip or trivial, but what one does is to read the statute which enumerates where those paramount authorities lie within the legal regime. In some cases they fall to the Ministry of Forests and in other cases Water, Land and Air Protection.

It is difficult to answer a general question specifically or a specific question generally. Actually, the latter isn't that hard to do, but it's not very helpful. If we go through and want to take specific examples, we can do that, but I must confess that beyond reading out the relevant statutes to the member, I'm not sure I can be much more helpful.

J. Kwan: Well, often, actually, in question period, when the opposition asks specific questions, we receive general answers. The minister is absolutely right: when that happens, the answers are not particularly helpful. The minister knows that's exactly what goes on in the House often, particularly around question period times.

J. Kwan: The minister says he doesn't like the question period format. Actually, he could assist in that process by encouraging his colleagues, including himself from time to time, to answer directly the specific questions that have been put forward by the opposition. Maybe then we can actually get some real answers and move forward.

The minister keeps on referring back to the statutes. I appreciate that, because ultimately, the issue centres around it. Particularly when there's a conflict and it may lead to the court, one would have to rely on the

statutes and what it says. Then the court will ultimately be in the position to bring forward a resolution to those conflicts.

In a political context, though, hon. Chair, those questions oftentimes may not necessarily arrive in the court system and probably shouldn't arrive in the court system, as the minister has identified. In those circumstances, I'm trying to get an understanding on the decision-making procedures and process within the government.

Who gets to override in conflicting information that comes forward from different ministries in the question around land base resources with respect to the working forests? Am I right to understand that in a case where conflicting information comes before the minister or cabinet for consideration from the Ministry of Water, Land and Air Protection and from the Ministry of Forests relating to the working forest question and the land base resource decision, it is the Ministry of Forests which ultimately gets to make that decision and not WLAP?

Hon. M. de Jong: I think the difficulty I'm having — and it may be my difficulty — is that we seem to be bouncing back and forth between specific questions around land use planning and more general questions around enforcement and compliance. I would make this observation. First of all, in any of the statutory regimes or models that exist or will exist, presumably the objective — it is certainly the objective of this government — is to remove the opportunity to impose or substitute a political response for the response that the science dictates as being logical. So that's the first thing.

If we are dealing specifically with the land use planning process, I think it is fair to say that there will be consultation at the community level. The minister responsible will take that information and make certain assessments about it and, ultimately, bring those decisions back to the cabinet. Again, in an unprecedented way, he will make his recommendations to the cabinet in a very public way. The discussion will unfold around that recommendation on a land use planning issue. We have already seen examples of that in the ten months that the government has been in power. We will undoubtedly see more examples of that in the future. I think that's a healthy process.

J. Kwan: Maybe the trouble is this, because I'm not getting a clear answer from the minister on this issue: on the land base decision, the minister advised that it is the Minister of Sustainable Resource Management who ultimately gets to make the land base decision relative to the working forests, and then, on the issue around compliance, what the minister has said is that the compliance and enforcement aspect falls under the Minister of Forests. So, let me ask this question: can the minister tell me who is responsible for safeguarding the ecosystem relative to working forests? Is it the Minister of Forests, or is it the Minister of Water, Land and Air Protection?

Hon. M. de Jong: Again, it might be the generality of the comments. Safeguarding the system is quite clearly a shared responsibility. If we are talking about wildlife, it falls to a certain ministry. If we are talking about water quality, it falls to a certain ministry. If we are talking about a sustainable cut on the timber side of things, it falls to the Ministry of Forests. If the member is looking for the definitive answer that says, "All of these issues are dealt with and determined by a single individual at the political level within government," I'm afraid she's going to keep looking.

J. Kwan: That's not what I'm looking for. What I'm trying to find out from the minister is: who's responsible for what? When there's conflicting opinions from the two different ministries, who gets to override in what area? Ultimately, who is the minister responsible for these decisions? That's what I'm trying to get at.

Maybe, within the whole issue around ecosystems, the safeguarding of the ecosystem breaks down into a variety of different areas. Therefore, when you have broken that down into different areas, it falls under different ministries. Then, maybe the minister can give me a comprehensive list of how his ministry views the safeguarding of the ecosystem: under that, what area falls under his responsibility in terms of ultimate decision-making and what falls outside his ministry's responsibility into WLAP and other ministries. Maybe that would help.

Hon. M. de Jong: Well, I can do that, hon. Chair, but the document she receives will bear a striking resemblance to the statutes that govern what the individual ministers and ministries are responsible for.

If the member has a specific example that she wants to proffer to the committee and say, "In this case, how does the decision-making process break down?" I'm happy to engage in that level of discussion with her. Absent that, I think she has my answer.

J. Kwan: Well, I'm just trying to see if the minister…. Maybe he has a list of areas which fall under his ministry in terms of overriding decisions, and maybe he can advise the House of that.

Hon. M. de Jong: I'm happy to try and oblige the member. What I will ask ministry staff to do is, essentially, summarize the statutory provisions that exist and enumerate the responsibilities that accrue to this ministry. If that's helpful, I'm happy to try to do that for the member.

J. Kwan: I would appreciate it very much if the minister could provide that information and illuminate for me which is his area of responsibility — in what areas he gets to make those decisions in terms of overriding decisions, especially when a conflict arises.

I'd like to now yield the floor to other members of the House. I've been advised that other members would like to ask the minister questions.

P. Bell: I have a number of questions. I'd like to start, if I may, around the Forest Service campsites that the ministry currently maintains. I know there's a shift there in terms of what will occur with the Forests ministry sites, and I'm wondering if the minister would give us an overview of what the shifts are that will take place, how that will impact campers throughout British Columbia and what that might look like over the next year or two.

Hon. M. de Jong: Thanks to the member for the question. He has identified an area that is of intense interest to a number of people who utilize our back roads and access some beautiful and pristine Crown lands across the province. He is correct, also, that the ministry has, as part of our review of priorities and mandates, undertaken something of a shift. That shift involves, as it were, largely reducing the functions that the ministry has traditionally performed as it relates to both road maintenance and the maintenance of what are called forestry rec sites.

I know the member knows this, but others reviewing these debates may not: we are talking about something other than provincial park campgrounds. We are talking about sites that are generally more isolated that have minimal facilities — sometimes an outhouse, sometimes a firepit and rarely more than that.

What has emerged from our review process is a decision that our priorities in this ministry lie in areas other than maintaining those sites on an ongoing basis. I should say, as well — I think the member knows — that there are, amongst the approximately 1,400 sites that exist in the province, some that are called enhanced sites, which, as near as I can tell, are generally sites that are used more. They tend to be located closer to populated areas, and they receive, historically, more visits.

The ministry's ability to maintain those sites is limited and has been for some time, actually. We have acknowledged that fact, and we have said a couple of things. We have said that where there is an interest at the community level to assume responsibility for the continued maintenance of those sites, we are happy to devolve that responsibility to community groups. It might be wildlife groups; it might be local rod and gun clubs. We have already received a healthy degree of interest.

We have also said that along those lines we are not going to, except for reasons of safety or environmental concerns, decommission those sites. We're not going to be going out there and removing the firepits or if there are picnic tables — I'm not sure many have picnic tables — removing those facilities or the outhouses, for that matter. But you'll have to bring your own toilet paper, unless a community group is intent on servicing the site to that level. They have over time, I think, provided a valuable outlet and served a valuable purpose. What we are dealing with today is an attempt to more fully capitalize on the interest that exists at the community level in terms of soliciting their involvement in the ongoing operation of those sites.

P. Bell: Thank you, Mr. Chair and minister. A couple of further comments on that, or if I can just get you to expound a little bit more. The first question is with regard to the community interest. You'd indicated that there'd been some expressions of interest already by different groups and/or organizations on taking over some of the campsites. I wonder if the minister could outline for us what the process would be for groups that would be interested in taking over some of these sites, so that they could move ahead and participate in that.

Hon. M. de Jong: A good starting point, I think, would be to notify the district office of the ministry, and I would, at the risk of burdening my colleague, suggest that it would not be inappropriate to notify the local MLA that there was an interest in playing a more active role in servicing the management of those sites.

I think, as we speak to groups, we want to emphasize to them that these are not to become sites for exclusive use by any one group. The objective is to ensure that the public has ongoing access. Within those broad parameters, I think we're open to offers and suggestions from all quarters.

P. Bell: I'd like to thank the minister for his offering of my services to my constituents. That was wonderful. As the minister well knows, I probably have more forestry rec sites in my constituency than perhaps the rest of the province combined. I'm not sure, but it certainly would be up there, so I appreciate his volunteering of my time.

I'd like to pursue, actually, another question because this has come up in my office already. The minister alluded to it, indicating that he would not be prepared to allow for exclusive use of these sites by specific groups or individuals. That question has occurred in my office already, and there was a concern expressed by a local constituent that, you know, perhaps someone would be allowed to take over one of these sites on some sort of a lease basis and then go out and build a cabin, and it would become an independent-use facility. I'm glad to hear the minister indicating that that's not the case, and maybe I'll just ask him to expand a little bit on that.

Hon. M. de Jong: I guess the point bears emphasizing then. That is not what is contemplated. The objective is to ensure that where there is interest and ability at the local level to maintain these sites, that they are available — in the case of a local group, obviously to that group's members, but also to the broader public.

The Outdoor Recreation Council is playing a role in helping to coordinate the discussion that is taking place

around the province. The member is quite right. The numbers of these sites in certain parts of the province are quite impressive. He has a great number in the Prince George area. There are a number of sites in the southern part of the province and along the west coast. I think, actually, as we move forward, the challenge we will face is in some of the more sparsely populated areas of the province. Some of these sites are very remote. I think it bears stating today that I'm not at all certain we will find agencies to manage or operate all of the approximately 1,400 sites that exist across the province. I think a goodly number of them will be adopted and remain available for use by the public.

P. Bell: I, too, am optimistic that will be the case. I believe there are many groups that will welcome the opportunity to adopt some of these facilities and probably improve upon them. It's an excellent strategy.

Before I move on, just one final question with regard to Forest Service sites, which surrounds the issue of enforcement. This question, as well, has come into my office.

I believe that currently you're allowed to stay at one of these sites for a maximum of two weeks. There have been instances, I'm led to believe, where parties would stay at the site for an entire summer, or locate part of their camp at the facility, and then perhaps travel back and forth to the local community and that type of thing, thereby not enabling other folks to utilize the particular facility. Will there be kind of a limited level of enforcement, or is that not something that we would be in a position to pursue down the road?

Hon. M. de Jong: The problem associated with summer-long parties seems to me to be something that bears closer examination by the minister personally.

My suspicion is that the kind of problem which the member has discussed tends to occur in those sites that fall within the description of enhanced sites by virtue of their proximity to more populated areas. It is possible that problem occurs elsewhere, but if we just take that example for the moment. They are called enhanced sites because they actually have a certain commercial value by virtue of the traffic they generate. That being said, they are likely to be the easiest sites to find operators willing to administer them. Quite clearly, the rules around use of the sites would need to be there and enforced in a way that addresses the issue of equality of access. These are not designed to be summer homes, as attractive as that might be for some people.

P. Bell: So I take that to mean there would be a limited level of enforcement, then, for an opportunity if there wasn't abuse of a situation?

Hon. M. de Jong: I think the short answer is yes. That is particularly the case. It's easier to contemplate that level of enforcement in the case of the enhanced sites and in the other examples where it is possible to find local agencies to administer the site. My guess is that those local organizations will have the interest and probably the means the ministry didn't have to ensure use of the sites wasn't abused in the way the member has described.

P. Bell: Now we're through the forestry site issue, and we know what's happening there. Now we need to get to the forestry site, so I'd like to talk about Forest Service roads, if I may, for a few minutes.

I know there are some thoughts in terms of strategic shifts around how we will be dealing with Forest Service roads. In my particular constituency I have many individuals who are concerned about the constant deactivation of Forest Service roads that is taking place and are looking forward to perhaps some changes in that as well. I wonder if the minister would take a few moments to talk to us about the strategic shifts around how we will be dealing with Forest Service roads in the future.

Hon. M. de Jong: I think the first thing I'd like to do is to recommend to those many people who do have a legitimate interest in this area to access the service plan document, which enumerates some of those shifts the member has referred to.

Once again, partly as a result of our examination of the priorities that should guide the activities of the ministry and, admittedly, partly as a recognition of the financial means available to government generally and the ministry in particular, we have looked at the role the government and the ministry traditionally have played in the establishment and maintenance of Forest Service roads. We contemplate some significant changes in that respect.

If my memory serves me correctly, there are upwards of 40,000 kilometres of Forest Service roads in the province of British Columbia. Already I think it is fair to say that the majority — approximately three-quarters or just under three-quarters — of those roads are generally maintained by licensees whose lands these roads traverse. For those remaining 13,000 kilometres of roads, there is a process of devolution contemplated that would shift responsibility for the maintenance of those roads, bridges and rights-of-way to the licensees.

That gives rise to a number of questions. There is the concern that the member has talked about. There are two concerns that I, and I think he, largely hear about. One is access, period, and the possibility that licensees might deny access. That is not what is contemplated by the ministry. One of the responses I generally offer refers back to the 27,000 kilometres of roads that licensees presently maintain and the fact that this generally takes place without serious disputes around access, although they do arise from time to time on an isolated basis.

The other issue the member alluded to relates to the question of deactivation. I think that for many people,

based on past practices, particularly following the advent of Forest Renewal B.C., there is a justifiable reason to be suspicious. A great deal of that activity took place. That is not our intention. I don't, and the ministry and government do not, intend to expend vast sums of money decommissioning roads that provide access to various parts of the province.

Now, as always, there can be exceptions to that where there is a compelling environmental or safety reason. What is not contemplated is the massive deployment of government resources to dig up roads and render them impassable.

Having said that, I think the member was instrumental…. I should extend my thanks and congratulations to him and a couple of colleagues who, in discussing the liability issue that licensees occasionally argue when it comes to public access to these roads, spoke some time ago to the issue of redesignating these roads as wilderness roads and establishing a different standard. Not only do I think that makes sense; that is something the ministry is in the process of following through on.

In establishing a wilderness road, admittedly that is not a right-of-way that this member from Prince George will want to take his Cadillac or Jaguar on, but I think he will have no difficulty getting either his Jeep Cherokee, Bronco 4-by-4 or whatever other vehicle he has in his garage along those roads.

There's a different model in place. We think we can address the liability issue. At the end of the day I think access is going to be preserved at least as well as we have seen to this point.

P. Bell: I think that's very good news. I think people will be very appreciative of that. Principally, I don't think they're interested in taking either their Jaguar or their Jeep, but specifically they're interested in taking their Polaris or Honda ATV on some of these roads. I think people will be very appreciative of that, and I congratulate the minister on his action.

I'd like to move on, if I can, to another subject for a few moments. I've had a number of concerns expressed to me by owners of private lands, particularly farms and things of that nature, with regard to a potential strategic shift as outlined in the ministry's plan revolving around forest fire fighting on private lands and the costs associated with that. I wonder if the minister could outline for us to a little bit greater extent what his plans are around forest fire fighting on private lands.

Hon. M. de Jong: I guess the first point that I want to make…. It is an entirely legitimate issue to raise, because we do refer in the service plan to a shift. Part of that is tied fairly directly to our desire to move to more of a defined area–based forest management structure. That has implications really throughout the ministry's operations. In addition, there is admittedly a desire, again, to ensure that the principles of user-pay are applied in ways that make sense.

In the case of private land owners there are existing protocols that determine the extent to which recovery from those landowners can be pursued by the Crown. In general, and the member can correct me if I'm wrong, the concern is that an individual landowner could be pursued for costs that extend into the millions and even tens of millions of dollars for the outbreak of a fire. While the details of all of the protocols have not been finalized and won't be for some time — and I want to point out that there will be no changes for the forthcoming fiscal year that we are concerned with here — we will apply ourselves to this exercise employing common sense insofar as the objective is not to, in an unfair or unjust way, saddle people with extravagant costs that they have no hope of being able to remit to the Crown.

P. Bell: I'd like to move on then to a different topic, that being our annual allowable cut. My understanding is that in the last few years the province has been in somewhat of an undercut position, not cutting the full allowance that we have available to us. I believe that last year that was something in the neighbourhood of 78 million cubic metres.

I wonder if the minister can tell us what the strategies might be around the undercut: will that cut be utilized in the future, and what direction are we going with it?

Hon. M. de Jong: I think it's a very good question because it goes to the heart of the confusion that many people have when they hear about issues like a fibre supply shortage in various parts of the province and try to reconcile that with the fact the member has just raised, that there is an overall undercut.

The simple answer would be to attempt to describe a strategy that would have us accessing that undercut volume at all costs. I'm not sure that is…. Actually, I'm relatively certain that would be the incorrect strategy.

Some of that undercut volume — and the circumstances vary depending on where one is in the province — isn't harvested because it is not economical to do so. What I think we have to be careful and diligent about is understanding that the challenge for us in various parts of the province is to affect the kind of change that will allow the industry itself to revitalize, to make the changes and to upgrade itself in ways that will take some of what is presently uneconomic timber and move it into the category of being economic timber. In some cases that just won't be possible.

There are obviously a number of features to this that complicate the equation — disputes with trading partnerships being one. In the member's part of the world, a pine beetle infestation throws the entire equation askew when you are trying to determine what is economic and what isn't. Overlapping both of those is an environmental and forest health component that probably takes precedence.

Maybe I'll leave it there, because I'm sure the member has questions that flow out of that general response.

P. Bell: One of the challenges I believe that the forest industry faces is a stagnation of facilities. I do not recall when the last major sawmill was constructed, certainly in my part of the world and provincewide perhaps. I really attribute that to the strategies of not just the previous government but of governments going back some period of time, a lack of willingness to revitalize the industry and establish new entrants into the business.

With the AAC being in somewhat of an undercut position at this point in time and with the possible consideration of uplifts depending on current inventory assessments, growth models, mountain pine beetle infestations and the amount of available mature stands, what thoughts does the minister have around the revitalization of the forest industry specific to the availability of new entrants in the marketplace?

Hon. M. de Jong: Well, it really does go to the heart of what we as a government are trying to accomplish in terms of the overall revitalization of the industry. Again, one of the parts of the theology that I have learned in the time I've had this job is that it is difficult to generalize, or you generalize across the province at your risk, when it comes to forest management.

The type of processing facility that exists in the interior of the province, particularly where the member comes from, tends to be in some cases ultra-modern. In many cases it's presently underutilized. I know the member wasn't doing this, but if we simply set as a benchmark for measuring our success the construction of X number of additional processing facilities, that, in certain parts of this province, would both be a meaningless statistic and run counter to what we need to do in terms of utilizing existing capacity.

On the coast the situation is far different. We certainly have facilities that are outdated, and for a number of reasons, the technological upgrades that need to take place to increase efficiencies, competitiveness and productivity simply haven't taken place.

It's the kind of question we could probably go on about at length in our exchange. We have, as the member knows, tabled a broad package of reforms to the Forests Act that deal with a cross-section of forest management policy that goes back upwards of five decades. Many of those policies, as the member and I have talked about in the past, as laudable and defensible as they may have been when they were first introduced, now represent impediments to achieving the objectives that I think the member has in the forefront of his mind in terms of ensuring that productivity is there.

In making those changes, in severing that link between harvesting and processing in the way that we have suggested would be appropriate…. That causes a degree of anxiety, and understandably so. People have been accustomed to a policy regime that has evolved over time and, in some instances, has postponed or shielded companies from the need to make those kinds of upgrades or, at a minimum, has limited their ability to effect the kind of return that would make that reinvestment attractive in the first place.

In broad terms I think that is one of the challenges we face as a government: to effect those changes, recognizing that there is going to be a transitional cost associated with that but driven by the belief, as I am, that if we release this industry to be more responsive to prevailing market conditions, we will, over the short term — not even the long term — lift the constraints that presently exist against realizing the kind of success that at one time did characterize this industry and, I think, can again.

P. Bell: I'd like to move on, then, to another topic, if I may. There was some discussion around a new stumpage model. During the last provincial election we talked extensively about eliminating the waterbed process. I'm wondering if the minister can enlighten us on how we're moving forward in terms of the stumpage model and if that will be part of the process of eliminating the waterbed.

Hon. M. de Jong: In fact, we are making progress. I think the member was at the meeting of the truck loggers convention a month or two ago in Vancouver where I indicated, I think fairly specifically, that we would be doing this in stages. I should say, first of all, that the commitment to the reform of timber pricing and the elimination of the waterbed as a feature of the existing stumpage system remains ironclad.

These are remnants of an approach to timber pricing that the government was elected, on a platform, to change. We have, admittedly, focused our attention for the moment on the coastal situation, where I think it is fair to say the situation is somewhat worse than we find in the interior and where the imperative for immediate change is greatest. I suppose for that reason the appetite for immediate change is greatest.

I think in the weeks ahead the member will get a flavour…. Given his background, he will know more than the average person what this new model can look like: a market-based pricing system.

I should say this as well. In the past the member has kindly and gently transmitted the concerns of many of his constituents who ply their trade in the forest sector about the rate at which these changes are being made. I must tell him that I share somewhat that frustration. It is not an excuse. But the fact of the matter is that these were issues very much at the forefront of the discussion we were having with the Americans. I don't think it's any secret that I would have preferred to be unveiling these changes as part of a comprehensive trade package resolution of that dispute. That didn't happen. I think, in recognizing that fact, the argument for change is that much more apparent. It is that much more urgent that we proceed with those changes.

P. Bell: Moving on again then. Another new-era commitment that was made was to move towards a working forest land base. I know that the Minister of Sustainable Resource Management is also working on that project, but I wonder if the minister can give us a brief overview of what his ministry is doing in relation to that particular project.

Hon. M. de Jong: I could, and hopefully it would bear a striking resemblance to the extensive explanation I gave to the member from Vancouver over the first hour or so of these estimates.

Suffice it to say that it is very much a priority. There is work taking place between the two ministries. It is tied to our stated commitment in our service plan to move to a defined area-based management structure. It is, I think, an important component in the plank of certainty that people who invest — and who we want to invest — significant dollars in this industry…. It is a prerequisite to providing them with the assurance they need to justify making that investment and being able to secure those capital dollars.

P. Bell: Moving on then, I wonder if I could get the minister to speak for a few minutes on two issues that I think are directly related, and those would be woodlots and the direction of woodlots or the direction that this minister and this government intends to pursue with woodlots and also, in connection with that, generally speaking, small-scale forestry — which I think really is almost synonymous with woodlots in the sense that it applies to working over a relatively small forest land base and managing that land base effectively. It represents a relatively small portion of the total annual allowable cut, something under 2 percent, and is often overlooked. Just perhaps some brief thoughts on where that might go.

Hon. M. de Jong: The member correctly identifies woodlots and small-scale forestry as important pieces in the puzzle, and he would know because he participated in a series of meetings that we have had with, for example, the woodlot owners associations of B.C., who make a very compelling case for the value they bring to the management of their holdings — and also make a very compelling case for the challenges they face in trying to realize on their asset.

I would say a couple of things. I think the member will know that we have addressed some of the concerns raised by the woodlot association. I think we made some regulatory changes to deal with the ability to transfer the woodlot outside of a stricter definition of family. We all seem to be in agreement on that point.

In addition, I think the feature we are planning which I think, over the longer term, will have the greatest impact on that segment of the forestry community is our stated desire to place greater reliance upon them via our adoption of results-based forest management systems. There are funds within the forest investment account dedicated to involving them in the streamlining component of forest practices management on their holdings.

I think, depending on where you are in the province, there are some serious challenges facing the owners of those woodlots and smaller holdings. If you are in the area of the province the member calls home, the same challenge that larger licensees face around the proliferation of beetle-infested wood visits very directly on the owners of some of those small holdings. The available market to take the timber for processing and the possibility that someone could see a lifetime of work compromised as the beetle infestation spreads are issues that can be devastating for the owners of those small holdings and tenures.

In general, I have seen a real willingness on the part of organizations like the woodlot owners association to work with government to capitalize both them and the state on the contribution they bring to the management on that part of our forest resource.

P. Bell: Has the thought been to expand the woodlot program at all, or is the minister happy with the level of involvement that woodlots currently have in the overall annual cut?

Hon. M. de Jong: I'll try to be as candid as possible with the member. I have heard some pretty compelling cases for why that would make sense. What I have to tell the member is that some other issues have demanded a degree of attention that has precluded not just me but the ministry itself from turning its mind to that very question and what, if any, opportunities exist for the expansion.

Happily, we have received some pretty relevant and comprehensive submissions from people involved in that business. Happily, as well, I know that this member and his colleagues on the Government Caucus Committee on Natural Resources have developed some expertise and some ideas around the direction the government might take with respect to this issue. I guess, for the moment, the short reply is: no decisions, but it is something that, clearly, we need to turn our minds to in ways we just haven't done thus far.

P. Bell: Just one final direction of questioning, and that's on the forest investment account. The minister announced, I believe, last week or within the last couple of weeks a commitment of $12 million towards international marketing and a further $8 million towards expansion of the value-added industry. I understand that the $8 million is directed towards finding incremental sources of fibre for the value-added operators for some further training and that kind of thing. I wonder if the minister could talk to us a bit more about general strategies around value-added, what might occur with some of that money and how it will be administered.

Hon. M. de Jong: Actually, the fund is charged with the task of doing what the member described and then some. We're obviously interested in product development. We are interested in expanding the range of markets to which our value-added products and our primary products might flow. We have structured this in a way that I hope will facilitate the direct involvement of the industry and those involved in the value-added sector.

I'll take advantage of the question to speak to an issue that was very much front and centre in the first year of this government's term in office, and that was the windup of Forest Renewal B.C. — the examination of how it operated and the pledge we made to either fix or scrap it.

I think the member knows, as I do, that the submissions on that question tended to be fairly uniform — on the one hand, an assertion that there was but one thing to do with Forest Renewal B.C. in light of its burden of administrative costs and its unsustainability in terms of moneys in and moneys out over the years, quickly followed by the admonishment: "But for heaven's sakes, don't touch this one program in my community, because it has some merit." Undoubtedly there were certain features of what took place that did have merit. The problem was that overall they were occurring on an incredibly unsustainable basis.

In effecting the transition, we have ensured there would be funding available for the first quarter of this year where some of those value-added agencies and marketing agencies were receiving that funding. We are in the process now of assessing, with the benefit of the direct input of stakeholders, how those funding arrangements need to be, and should be, changed. I think it goes without saying, but maybe better with saying, that at the end of the day it is surely in all of our best interests to ensure a policy framework is in place that eliminates the impediments to the development of a truly competitive value-added sector, whilst at the same time remaining true to the notion that this is a government which will not countenance direct subsidies to any sector of the economy.

P. Bell: Just a final question along those lines, then, if I may. I know one of the gripes from my end of the world with regards to Forest Renewal B.C. was that an incredible amount of cash left the northern region, particularly, and did not appear to have been respent back into the northern areas. A commitment we certainly made during the election was to ensure that this did not occur in the future and that in fact what we referred to at the time as superstumpage dollars would be returned to the areas from where the money was originally taken.

Again, one of the things that really disgusted many of my constituents was the large number of dollars leaving the community under the previous administration and not being respent back in the area. I wonder if the minister can give us an outline of how he plans to strategize making that happen.

Hon. M. de Jong: I think the member does correctly identify a source of frustration that he lived and lives with on an ongoing basis. The first thing I want to point out — and he knows this, and I'm sure most others do as well — is the degree to which FRBC, in the form we inherited it, was economically unsustainable. It was, over two or three years, budgeted to spend roughly twice the amount of money it was due to take in on the revenue side of the equation. That wasn't a recipe for long-term disaster; that was a recipe for short-term disaster. I think there were great concerns about where some of those spending priorities lay and the degree to which administrative costs factored into that operation.

Happily, as we move toward market-based stumpage, the distinction between regular stumpage and superstumpage will disappear. The cry from the communities that the member accurately brings to this committee, however, will continue. That is, if you live in Prince George, Quesnel, Vanderhoof or Fort St. James, the province derives tremendous revenues out of the extraction of a resource from those areas, and the people that reside there want to see some return on those Crown revenues. That is the pledge we have made that will guide us in implementing the forest investment account.

The allocation formula is in the process of being finalized so that on a year-to-year and cycled basis communities will know precisely what the revenues are that will be dedicated to expenditure in their area on the basis of recommendations made by people from their area. I think that is a significant departure from what we have seen in the past. I don't know about the member, but one of the most serious and recurring criticisms I would get in the period leading up to the elimination of FRBC was the fact that these decisions seemed to arise out of a great void somewhere and bore very little resemblance to the priorities held by the people in the area from which the tax was collected in the first place.

J. Kwan: I'd actually just like to follow up on some questions around the forest investment account. The minister had mentioned that Forest Renewal B.C. has now been cancelled by this government. Could the minister advise what the dollars that used to go into Forest Renewal B.C. are now put towards?

Hon. M. de Jong: I say this to be informative rather than meddlesome: actually, we have a separate vote, vote 29. Although I'm happy to talk about the issue as part of this discussion, the forest investment account is reflected in vote 29, a sum of $146 million.

J. Kwan: The minister advises that is a separate vote. Is that the separate vote we'll be dealing with

Hon. M. de Jong: It is technically a separate vote, but for the member's benefit I'm happy to engage in the discussion as is convention in the first vote of the ministry.

J. Kwan: The minister advises that it's $146 million for the forest investment account. Could the minister please advise: are the dollars that used to go into employment retraining under Forest Renewal B.C. and all of those kinds of initiatives now going to be under the forest investment account?

Hon. M. de Jong: I hope this is what the member was looking for. The budgeted allocation for the final fiscal year for FRBC was $294 million. The member referred to job retraining. That was the global figure for FRBC, so it would have captured much more than just job retraining. It's budgeted revenues for that same period were roughly half that amount.

J. Kwan: Could the minister please advise: how much does the government collect from stumpage now?

Hon. M. de Jong: The budgeted revenue for the ministry is $1.145 billion for the fiscal year we are dealing with. That's the forecasted amount.

J. Kwan: Since the election and since the dissolving of Forest Renewal B.C., the dollars that were within Forest Renewal B.C., which the minister advises is $294 million approximately….

J. Kwan: The budgeted amount. Could the minister tell this House: have the dollars that were allocated for Forest Renewal B.C. been redirected for employment training initiatives for those who have lost jobs in the forestry sector, or have those dollars been reverted to general revenues?

Hon. M. de Jong: Let me see if I have answered the question by telling the member that the budgeted…. I've already gone over the fact that the budgeted amount on the expenditure side for FRBC far exceeded, almost by double, the amount of revenue it was anticipated to receive. What we did, taking account of what our priorities as government were and taking account of what the revenue availability was, was create the forest investment account. There are $146 million devoted to that account.

Because it's the second time the member has referred to the job retraining provisions, I should say that there was another significant expenditure this year — in fact, this month — which related to a problem that arose with respect to the forest worker transition program that the previous administration established as part and parcel of FRBC's mandate. The member was not at any time in the previous administration the Minister of Forests, but she undoubtedly will know that the administration of that program gave rise to a huge issue for participants insofar as the faulty advice they were given.

The member will recall an earlier exchange this month, where I pointed out that some of those funds, some of the precious tax dollars that might otherwise have been spent on other matters, were spent, to the tune of $25 million overall — the last amount was, I think, $17 million — correcting that problem, a problem that we now know, via a number of investigations, including the ombudsman, should never have been allowed to get to the stage it was at and only got there because no one wanted to admit the mistake in the first place. I remember, as the issue unfolded, that was very much the issue.

You know, governments and people can make mistakes. The disturbing aspect of that particular issue was that once it became clear that a mistake had been made, the previous administration was reluctant to make that admission. As a result these people — some of them facing unanticipated tax bills of $3,000, $4,000, $5,000 or $6,000 at a time in their lives when they were not particularly well equipped to absorb that kind of hit — were obliged to launch legal actions and take other direct steps. Some of these moneys — and I say a significant amount, $17 million in this last kick — went to fixing that problem, a problem that need not have been allowed to develop unresolved as it did.

J. Kwan: The minister advises that in the budget of the forest renewal account was $294 million, of which $146 million has gone into the forest investment account. He advises somewhere between $17 million and $25 million has gone into repaying the forestry workers who had to pay taxes as a result of the funding that they received for the retraining.

Just to be clear on the issue, as far as I understood, the staff at that time were advised by the federal representatives that those moneys were not to be taxed. Therefore, they had advised the recipients accordingly. As it turned out at the end, it was wrong. The matter has now been resolved.

According to my calculations then, there's still $123 million outstanding. Where have those dollars gone?

Hon. M. de Jong: Actually, the calculation is flawed. I will accept for the moment that it may be attributable to lack of clarity in my response.

The $25 million — $17 million in this last instance — is not part of the $146 million. It falls outside of that amount. That funding did not come from the budgeted amount for the forest investment account. In terms of doing the math, the member can add $146 million to $25 million, right off the top.

We can talk about some other unfunded liabilities that the government inherited. One is the central coast

land use plan that elicited a last-minute commitment from the previous administration which affected people, I think, welcomed. They might have tempered their enthusiasm had they known that the previous administration didn't budget any moneys for that announcement — that oversight, deliberate or otherwise, to the tune of $35 million.

The incoming administration has been confronted by a number of circumstances which have required — because it was the right thing to do — the allocation of funds that the previous administration chose not to make, albeit in some cases they chose to make announcements suggesting that they were prepared to allocate those funds. Their words signalled one thing, and their deeds signalled something else.

We can continue the exchange — and I'm happy to — but there's a little more information about where some of those funds were required and are required.

J. Kwan: Yes, I would be interested in finding out exactly where the dollars went. As the minister mentioned, the $25 million or so pertaining to the tax issue is separate and apart from the $146 million. That's how I've done my calculations. What I've done is started with the $294 million, which is what the minister advised is the budget for Forest Renewal, minus $146 million for the forest investment account. That gives you $148 million, minus $25 million — I accept the number for the upper end at $25 million for the tax issue. That leaves $123 million, minus $35 million for the central coastline use planning. That leaves $88 million. If the minister could advise where the rest of the $88 million goes, I would appreciate that.

Just by way of a preface, in terms of the previous administration. I know that it is often the case that the new-era government ministers will say that these items weren't budgeted for. Well, once governments get into office, they have to determine where their priorities are and where the funding will come into play for the various initiatives that they're committed to. In that sense, governments have to make those adjustments accordingly. As such, if there was a different administration in office, the issue around the tax cuts, as an example, would have been different. The big corporations and the wealthiest British Columbians would not have gotten their tax cuts.

In any event, I'm not arguing about the outcome of the election. I accept the outcome of the election. It is the way it is. I am interested in where the dollars have gone with respect to this particular budget item. There's $88 million yet unaccounted for. Could the minister please advise where those dollars go?

Hon. M. de Jong: Actually, there's not. It is very instructive to listen to the methodology that the member employs in rendering these calculations. Much as the previous administration did, she begins with a mythical figure, and that is the budgeted amount for FRBC, which of course was unfunded. There weren't the revenues. The previous government cast that budget knowing that having budgeted $294 million, there was only going to be revenue to cover slightly over half of that amount. The truer calculation, I'm going to suggest to the member, is to use her previous administration's own figures about what the revenue to FRBC would have been and determine what the expenditures of that amount have been.

I think she is in possession now of information which accounts for those moneys. If we are going to engage in an exchange that says, "You know, we budgeted $400 million even though there was no money there," I guess the simple response to that question is: "Well, you know, the money wasn't there." There are no funds. The member wants to ask the government now what happened to these mythical funds. Well, they never existed.

J. Kwan: The minister knows this very well. The fact of the matter is once government gets into office they make determinations on priorities. What priority areas the government puts their dollars in are subject to different administrations. Under the previous government, with the budgeted dollars for Forest Renewal B.C., perhaps dollars would have been put into Forest Renewal B.C. from the tax cuts, as an example of one area in terms of it being a priority.

The fact is there was an election. The election was held. The new-era Liberal government was elected. In their budgeting priority they have chosen to put moneys elsewhere. That's the reality. I accept that reality. What I'm trying to get at is: where have the dollars gone?

The minister is suggesting that those moneys were never there. Well, there certainly was enough money to give to the wealthiest British Columbians or to the biggest corporations by way of a tax break. If the government wanted to make sure there was money in the Forest Renewal account, it could have actually put those moneys into the Forest Renewal account, but it didn't.

I'm trying to get at where the moneys have gone. The minister's answer has told me — which is why I think it goes to answering the question of resolving the Forest Renewal B.C. account — and it's because this government, I think, may not necessarily have been prioritizing the issues around the needs of resource sector communities and its workers and its families. The Forest Renewal B.C. initiative was to support those families and those workers and those communities. That's what those dollars were put aside for. They were to support the community and its development and for training and employment initiatives for resource sector workers. Now we know. Now we know in terms of this government's priority, or lack thereof, in this area.

I want to go back, then, to ask the minister the question around the working forest land base. Could the minister please advise how much land or the percentage of the Crown land the minister is projecting to set aside for the working forest land base?

Hon. M. de Jong: Well, I suppose this moment was destined to come in these debates. What an extraordi-

nary presentation. The member is part of a government that establishes a program with a particular funding formula attached to it, that is the provision of a particular stumpage charge. Now, as if none of that ever existed, she stands here and says none of that was relevant. She was part of the government. She knows as well as I do what the revenue projections were for that funding mechanism, what those stumpage revenues would realize. She extraordinarily stands here today and says: "None of that matters. You just pick a figure." Actually, that's what they did on the spending side of the equation. They just picked a figure.

If the member wants to be honest about differentiating one government from the other in terms of spending priorities, let's do that, because I will make no apology for the fact that this is a government that prioritizes its spending first and foremost on what is affordable, on the revenues that accrue from the taxpayers that end up paying the bill. We could, I suppose, as the previous administration did, ignore that fact entirely and budget expenditures without any regard for the revenue side of the equation, but we have chosen not to do that. If that is the measure by which we are to be differentiated from the previous administration, then I say: "Bravo." Then I say: "Good."

As baffling as I found the earlier presentation by the member, who now wants to rewrite history around the basis upon which FRBC…. I don't know; maybe she hasn't had an opportunity — she has many things to do, and I recognize that — to review the funding formula upon which FRBC was established, and maybe she hasn't had time to review the figures that were part of her administration's last budget. Well, that's fine. When she has a moment, she may wish to do that. But what she has said and what actually transpired and was part of the previous administration's policies and approaches bear very little resemblance to one another.

I think the question the member asked — and we have returned to this notion of land use planning — is one that falls squarely within the ambit of the Ministry of Sustainable Resource Management.

J. Kwan: If one wants to rewrite history and redefine government's decisions and their priorities with respect to spending and how those dollars are allocated, let's begin with this government. This government is now in office, and they campaigned on the notion that they would protect education. They campaigned on the notion they would protect health care.

What have we seen? We now know the Minister of Education's definition of protection means cuts to education programs. Talk to school trustees out in the broader community. They'll tell you exactly what protection means in the new-era terminology, and it's doubletalk by this government. Let's just be clear in terms of where we stand on these issues and how those definitions are defined.

On the issue around spending, it's affordability. The minister raises the point. Well, don't take my word for it. The auditor general went to review the matter and found that in the last five years, government was actually spending within its ability to pay. We may want to rewrite history, but let's make sure we get the facts. Don't take my word for it. Go to the auditor general. He has already issued a report on this.

I won't belabour the point, because it's not what this set of estimates is about. What I was trying to get from this minister is, of course, how he has accounted for the dollars. As I say, I think what we've found is that those dollars are not going to be dedicated for the forest resource sector communities who've been hard hit. That was formerly budgeted for under Forest Renewal B.C.

On working forests and the land base question, the minister says it's not his determination but rather one that rests solely with the Ministry of Sustainable Resource Management, so this minister has no contribution towards what percentage of the Crown land is dedicated for working forests.

Hon. M. de Jong: Let's try it again, because we have been over this now a number of different times. The Minister of Sustainable Resource Management and that ministry would have responsibilities for bringing recommendations to cabinet around land use planning decisions. As a matter of moving through the decision-making process and insofar as the Ministry of Forests is involved on the working forest initiative, he would work and has worked with this ministry.

As the member knows from our earlier exchange, there is also a component of public consultation involved in that. Again, without precedent, the final decision-making process takes place in a very public setting — that is, the public cabinet meetings the Premier has commissioned.

J. Kwan: I guess this is very much like all the ministers in this government. What they like to do is pass the buck. They say: "Don't ask me. I don't know the answers. Don't blame me. I didn't make those program cuts." This minister knows very well they have forced local authorities to make cuts. Take as an example the areas of education and health.

The minister is fond of saying: "It's not me. It's the Minister of Sustainable Resource Management." Surely, the minister must know in his working cooperatively with the Minister of Sustainable Resource Management how much land is being projected to be set aside for working forests. Surely, he must have some inkling around that, because he would need to know that in order to plan for the annual allowable cut. Surely, the minister must have some inkling. Maybe he just doesn't want to share it in this committee.

Hon. M. de Jong: If it's helpful to the member, who I'm sure is burdened by a great number of duties, I can refer her to the government website, which lays out in detail the duties and responsibilities held by each of the present members of the executive council.

The other observation I would make is this: it is probably a testament to how the previous administration conducted itself that this member would think I could respond in a detailed way to a question I have already suggested to her involves a degree of public consultation.

J. Kwan: If this government is really true and honest about public consultation, then we would not have seen legal aid being cut to the tune of 40 percent. The consultation took place after the cuts were made, and the poorest of the poor are now going to be denied access to justice. The minister knows that. The minister laughs at issues around consultation. As though this government truly honours consultation. That, quite frankly, has so far been a farce.

On the whole issue around transparency and accountability from this government, I have seen very little of it. All the staging with the open cabinet meetings — of course we've seen what happens there. You have the Minister of Health Planning spending $10,000 to get a power point to present maps to British Columbians in an open, accountable, transparent government.

We know what this government is about in terms of their open cabinet meetings. It's a series of charades, if you will. We know about consultation as well, because we've seen how this government has done consultation.

On the issue around land base, the minister is not prepared to share what the approximate percentage of Crown lands being set aside for working forests is. That's what the minister is not prepared to provide the answer for. The minister says: "But it's not my responsibility; it's the Minister of Sustainable Resource Management's responsibility." If government is supposedly working in cooperation with other agencies and other ministers, I will submit that this minister ought to have some sense of what the game plan is for the purposes of planning. One would have assumed that.

Maybe this minister either wants to be secretive around these issues, or simply doesn't know. That speaks to the issue of competence relating to the work of the ministry.

Let me ask the minister this question: there's been much speculation about this ministry's proposed move to the results-based regulatory framework. We've heard from other ministries that this is also known as performance-based or outcome-based. Could the minister provide some clarity about what results-based standards are and how they will be implemented?

Hon. M. de Jong: I suppose it is part of the exercise that the member would bring her observations to the floor around her notions of appropriate consultation. It is an interesting lecture to receive from a member who finds herself in difficulties before another committee of this House around another form of consultation she decided to engage in.

Be that as it may, this government does intend to proceed with another one of the pledges we made in advance of the election and campaigned around. That is a move to a results-based forest practices code. It is a complicated and important issue for the government to deal with. Let me take a moment to describe both why we believe it is necessary and how we intend to accomplish the task.

First and foremost, we do believe and said quite clearly prior to and during the campaign that the existing Forest Practices Code is in our view far too prescriptive a document. It removes the opportunity people have to employ their ingenuity and inventiveness to achieve the objectives I think most people share around managing to the highest standards of environmental sustainability and stewardship, the woods. We would like to create a regime in which that creativity can be freed up, recognizing as well that there is an important role for the ministry to play in terms of compliance and the enforcement of the outcomes that we wish to achieve.

I have said on numerous occasions that anyone who thinks this is a recipe for cutting corners environmentally is going to be sadly mistaken. The stakes are too high for the province. We will not allow a few bad apples to give British Columbia a bad name amongst those that are watching around the world in our various marketplaces and elsewhere.

We have said we would do this in a particular way. We are very close indeed to releasing a White Paper, a discussion document, that will be remarkable for its degree of detail. We have said that we want to provide stakeholders from every quarter with an opportunity to dissect that document and to critique it from every possible perspective, whether it is a practitioner on the ground or on the coast or an environmental watchdog organization that will bring their perspective to the analysis. That process will be ongoing over the course of two or three months. It will involve, as I say, people from all walks of life: the public, the technicians, the operational people and the communities.

At the conclusion of that exercise, the government will review the submissions, take that information, apply it to the document and create a bill that I hope will be ready for introduction at the fall session of the Legislature. There will then be an opportunity, obviously, for the debate to involve all members of the Legislative Assembly.

In short, hon. Chair, we are taking remarkable steps, I think, to ensure that in rewriting this very significant piece of legislation, we do not fall into the trap that the previous administration seemed far too willing to fall into. That is to exclude people and find themselves in a situation where, in the years following the introduction of the Forest Practices Code in 1994, no session was complete, it seemed, without a bill being tabled that included significant amendments to the act to account for situations and oversights that no one had contemplated at the time of introduction and that presumably could have been avoided had there been the

degree of transparency and accountability that a statutory document of this magnitude deserves.

Even given the unprecedented level of public involvement that we are insisting this document be subjected to over the course of the next number of months, I anticipate that there will be a couple of instances that the government, years down the road, is obliged, or feels obliged, to revisit. My hope is that we can minimize that in ways that apparently eluded the previous administration. We will only be able to do that if the arguments that people have and the debate that needs to take place around what a results-based code should look like can occur now. That is the invitation I have extended to everyone in British Columbia with an interest in the forest sector. Let us have that discussion now, prior to the bill being finalized and tabled, rather than wait until it is cast in legislative stone.

J. Kwan: I just want to go back for a moment to the issue around consultation. Consultation is supposed to be open; it's supposed to be accountable. From the Ministry of Attorney General what we have seen is that there has been very little, if any, consultation taking place in one area, just one area, of the government in terms of its legal aid services cuts. In fact, the Attorney General sat in that very chair where the minister is sitting now and complained about questions around consultation when I canvassed those questions with the Attorney General. The Attorney General sat in his seat and said he hated those kinds of questions.

Hon. Chair, please, if this minister wants to advise me about what consultation should be and how it should be done, perhaps he should be talking to his own colleagues with respect to consultation and advise his colleagues not to hate that process so much, given that the New Era document has made promises around openness, accountability and consultation.

The minister advises that there will be a piece of legislation tabled in the fall sometime regarding the results-based standard. I'd like to ask the minister if he could describe for me what he thinks a good outcome would be for any — let's just use the example of a watershed — given watershed after a clearcut logging exercise. Could the minister please advise what a good outcome would be in that scenario? How would he ensure that compliance and enforcement occurs?

Hon. M. de Jong: Happily, the member won't have long to wait. She will be able to rate, as will all British Columbians, the measurements we would propose to include as part of a results-based code package in short order.

It is the second part of her question that I think is valid, more so, and would be instructive for us to spend some time focusing on. I think the strength of this document will be tied, in part, to the degree to which the ministry dedicates the resources to ensuring that there is compliance and enforcement and that the penalties provided in the code represent an adequate deterrent to those who would presume to utilize it as a means, as I said earlier, for cutting corners from a stewardship point of view. I want all of the members and all of the stakeholders to know, and I make this point repeatedly, that we will take a very dim view of and that the act will address in very specific terms — for some, probably harsher terms than they would care to imagine — the results that will befall any agency, organization, corporation or individual that would risk giving British Columbia a black eye on the environmental management side of things for personal gain.

J. Kwan: I don't think I heard the answer from the minister about what he considers to be a good outcome in the case of the watershed example that I've given. I didn't hear that. Maybe the minister doesn't have an opinion on that, or maybe he is not prepared to answer the question. I'm not sure. In any event, I didn't hear an answer from the minister on this question.

The reason why I ask this question is that I think it's an important one. Governments have their priorities, and they have their perspectives and standards which they want to adopt. To shed some light on the White Paper that would be available for discussion, the results-based standards paper, the premise in which that paper would be cast — how it would be cast, in what light — some of that, I expect, would come from the opinions of ministers, perhaps in consultation with staff, amongst others. I'd be interested in the minister's own perspective on this issue. How does he envision the outcome would be measured? What standard does he envision would be one that is acceptable?

Hon. M. de Jong: Well, happily, I have just described for the member a three-month process that will provide her, and any other British Columbian so inclined to participate, a discussion around that very issue. I think I want to emphasize to this member, as I have to others that part of engaging in a meaningful consultative exercise is to present something that has sufficient particularity that people actually have a target that they can shoot at, as it were — that they can actually say: "No, that doesn't make sense to me. I think you're heading in the wrong direction." Or: "That misses." Or: "I don't believe that gives me the level of comfort I need when it comes to establishing what the outcome should be or what the rules should be that give rise to the achievement of the outcome."

I know that the member is anxious, as I think many are, to have the benefit of going through the White Paper. I can tell her that release of that document is imminent. Again, I suppose she is suspicious that what she will see there is cast in stone. Why wouldn't she be suspicious? That was very much the pattern of the past government, but I can tell her that this process is actually designed over an extended period of time to elicit meaningful opinions, opinions that will matter and factor directly into the drafting of a final statutory instrument.

J. Kwan: I think that the minister has lapsed again into a time-warp, which is the new-era approach that

we now live in under the Liberal government. That is a reverse in time into the Dark Ages, quite frankly. If the minister would like to suggest, on the issue around consultation and openness, that this government is somehow more advanced than the previous administration, then I have news for the minister, quite frankly.

Let's look at another issue: the issue around the referendum. The minister suggests that they were open to receive the opinions of British Columbians and the public. The committee was struck to travel around to do that work. You know, many British Columbians had expressed the point of view that they do not wish to see a referendum in the province, but was that an option included as a determination when the committee went about asking what the questions should be? No, that wasn't an option.

To pretend that somehow this government is open and accountable and that they don't have their own hidden agenda is a myth, and quite frankly the minister is lapsing in his current memory of what is going on right now in the Legislature with this government and with the Premier at the helm. The fact of the matter is that many of those decisions actually took place in the Premier's office, and the minister knows that.

The White Paper that the minister talks about. Is the option of not adopting the model of this results-based or performance-based standard of measurement included in the White Paper?

Hon. M. de Jong: Well, I suppose people will examine this detailed document and provide their opinions around whether or not the standards of environmental stewardship and sustainability that we are seeking to achieve will be matched.

The member said something earlier that I thought was candid and generous on her part. She talked about an election result in which the people cast their votes. She's right. Those results stand, and we are all now playing our part in the consequence. But I should point out to her that the group that presently sits in government made some specific promises. It may elude this member, and she may want to selectively refer back to her interpretation of what those promises were, but first and foremost when it came to forestry was a commitment to move towards a results-based forest practices code. She may disagree with that, but before I took this job I reminded myself of what those commitments were and said, "I have responsibility for following through" — as do all of the ministers and members of the government caucus. Again, if that is a foreign notion to this member, then I suppose that speaks volumes about the value she assigns to making these sorts of promises as part of an electoral platform. We all have our own ideas about what our obligations are. She has hers, and I have mine.

I will move that we report progress and seek leave to sit again, or recess, or whatever the motion is.

J. Kwan: As I hear from the Chair, normally the practice is we actually don't move to report out, but rather we move into recess. Before we recess, let me just make a quick comment in terms of broken promises. I can't resist, hon. Chair. I cannot resist because the minister brought up issues of broken promises.

He says he checks himself on issues of broken promises to make sure that they don't engage in a process of broken promises after the election. Well, let me just ask the minister this one question: did he go and talk to the Premier when the Premier broke the promise of tearing up contracts when he said he wouldn't? Did this minister check with himself when that was the campaign in the New Era document, and he rose in the House and ripped up collective agreements and contracts? Maybe he forgot to check himself on those broken promises. We have a long list of broken promises to go into, but I won't do that.

J. Kwan: We were engaging in discussions around the results-based regulatory framework. Could the minister please advise: are there any other jurisdictions that use this method of management in forestry? And could the minister please advise what their conclusions have been in this area?

Hon. M. de Jong: There are certainly examples of other jurisdictions who have, to one degree or another, embraced the notion of a results-based methodology in terms of achieving sustainability and appropriate levels of environmental stewardship. Ontario has made a move in that direction. I am advised our neighbour to the immediate east, in various aspects of its code, employs similar target-setting practices in certain areas. Other jurisdictions internationally have historically adopted a less prescriptive approach as compared to the structure that the existing Forest Practices Code in B.C. represents.

I think it is, however, fair to say that the product that emerges from the consultative exercise we are on the verge of embarking upon will undoubtedly be unique, to take account of the unique features associated with forest management policy in B.C. and the unique features around our needs, our geography, our differing issues as they relate to wildlife management — all of those things that make the practise of forestry in British Columbia at times very challenging. I think we need to approach this exercise from that perspective — that is, we will benefit if we are able to construct a document that meets those unique demands of British Columbia.

J. Kwan: The minister mentioned a couple of jurisdictions. Maybe the minister can provide the opposition, at a later date, with the list of jurisdictions that have adopted this kind of management approach to forestry and also what their findings have been and the conclusions of the adoption of this methodology in their jurisdiction. If we could receive that information, I would appreciate it.

Could the minister please advise how much it would cost industry to come up with the action plans to accommodate the results-based regime? Will they have to hire professional biologists, foresters and other scientists?

Hon. M. de Jong: Just before I answer the question, we'll get the information the member referred to, but I do want to emphasize that we are not presuming. Again, I say this not to be troublesome. I think I understood the question, but we are not modelling this on anything that actually exists, although I understand the question is: where, in general terms, has this approach been followed? I think we can muster that information for the member.

I think, again without prejudging the outcome of the consultation that is about to take place, it is fair to surmise that in a results-based regime licensees, practitioners, will necessarily be placing greater reliance upon the expertise afforded by some other professions that the member referred to. We think they will be doing that in ways that presently they don't have an opportunity to. In a more prescriptive methodology, they are essentially told how it is they will practise particular harvesting activities, restorative activities and silviculture activities. In the regime the government contemplates, a results-based regime, they will have the opportunity to tap into some alternative practices that professionals will have developed. Admittedly, in employing those procedures and processes, the challenge will be to meet the objectives set out in the code.

J. Kwan: What I'm trying to get at is whether or not the minister anticipates that the industry would have to hire these specialists in order to engage in the performance-based results measurement. If one is assuming industry would have to monitor themselves, one would assume they would have to have these specialists in place to make sure the results and the performance are actually up to par. At the same time, what might the projected extra costs be for industry?

The flip side, of course, is that there may well be projected cost savings to the industry. Has the minister engaged in looking at what the potential cost savings might be to large multinational forest companies as a result of the results-based approach?

Hon. M. de Jong: With respect to the first part of the member's question, depending on the size of the organization that we're dealing with…. Remember, we could be talking about a large licensee of the sort she's just described or a much smaller contractor. Some of these organizations already have that expertise that she's referred to in house and will no doubt avail themselves of that professional assistance. Others don't and will seek it out on a contract basis or, depending on the scale of their operation, may decide to hire on a full-time basis. Those are decisions they will have to make in determining how to best meet the objectives set out for them by the code.

The difficulty I have in answering the second question — it's a fair question because it goes to the issue of cost and benefit — is that to answer that with any degree of specificity or particularity, one really has to have the product in front of one, and we don't have that yet. That is the exercise we are about to embark on creating. I don't dismiss the relevance of the question. It is something that when we are debating specific legislation in the fall, the member could quite properly bring to the floor of the Legislature.

As I recall, it was very much a criticism of the original Forest Practices Code, admittedly before this member was a member of the House, that no such cost analysis took place. As a result, it became necessary a few years later to readjust in ways that took account of those costs, many of them apparently unanticipated at the time. It would be unwise for us to fall into a similar trap as we move through this process.

J. Kwan: Then once the White Paper is available in the fall and the work has been done, I would assume that the ministry would have gathered information around increased costs or extra costs to industry for those large and small and somewhere in between, for those who may have specific professionals in their industry to provide the information and others who do not and who would have to hire, and what those costs might be for the different sizes of the various companies. The ministry will then also have the cost savings projections for large multinational forest companies as well as the smaller local forest companies.

When that becomes available, could the minister provide the opposition with that information? I'm sure there'll be an opportunity to canvass it again once the matter is in the House, but one would assume that the information would be available to the minister before the matter surfaces in the House. Could the minister commit to providing that information to the opposition at that time?

Hon. M. de Jong: The answer to that is yes. It may have just been an inadvertent slip by the member, but I just want to emphasize that the process we intend to follow is to present the White Paper shortly, which would then be before the public and in the public domain. In the fall what I hope we are in a position to present to the Legislature is an actual bill for debate in the House.

J. Kwan: Yes, I anticipate that in the fall there would actually be a bill, and the White Paper will be

Could the minister also advise if there has been a risk-analysis study of the deregulating of the forestry sector, and what the conclusions were?

Hon. M. de Jong: Just to avoid getting off in the wrong direction, when the member uses the term "deregulation," is she using that in the context of the proposed change to the Forest Practices Code or something else?

J. Kwan: Let's start with the proposed changes to the Forest Practices Code.

Hon. M. de Jong: Well, I think the point I want to make is that whilst our objective is to curtail unnecessary regulation and red tape, a results-based forest practices code represents a different model or different type of regulation. I think we'll have a healthy debate through the next two or three months via the White Paper and, ultimately, legislation about the degree to which the finished product adequately protects environmental standards and notions of sustainability. That's fine. That's as it should be, but as I have said earlier, this is not to be taken as some attempt to roll back the agenda to another time and era.

The member or others may say: "Well, I am suspicious, and I don't believe you." The argument I have offered in response to those who articulate those suspicions is: at the end of the day, the degree to which I can instil a feeling of confidence in you is perhaps less relevant than the fact that if we fail in meeting this objective, we will fail overall. The international community will, as they once did, target British Columbia, and our ability to achieve our goal of revitalizing the forest sector within our province will be compromised. We will be shut out from markets. It is in everyone's interest, irrespective of where and what one does within the forest economy in this province, to ensure that this does embrace the highest levels of environmental stewardship. To fail in that respect will ultimately lead to a much larger failure.

J. Kwan: Is the bar for measurement one that is based on international actions — calls for boycotts, if you will, of forestry products stemming from British Columbia? Would that be the measurement of success or failure in the area of environmental stewardship in relation to the forestry sector? Is that the basis of the risk analysis the minister is utilizing as a measure on the question of deregulating the forestry sector?

Hon. M. de Jong: No. I think there are far more specific measurements that we can and will and should employ in British Columbia. I think at the same time, though, it is relevant and legitimate for this member or others to remind everyone, including the government, that a program that elicits that kind of reaction internationally will compromise the province and the forest sector. I don't think we should be blind to our need to present a credible product that we can openly defend as meeting the highest environmental tests.

J. Kwan: That is why risk analysis on the deregulation of the forest sector is so important and why I asked the question: has the minister undertaken this work, and what are his conclusions around that? We want to prevent precisely that kind of situation from taking place. Has anybody examined the threats to, as an example, streams and waterways and wildlife habitat that deregulation poses? Is that something this ministry does?

Hon. M. de Jong: I think it is, again, a legitimate area for the member to explore to her satisfaction. This is not designed to be a licence for backing away from the environmental test standards that presently exist; it is designed to afford practitioners in the forestry realm with the opportunity to utilize their inventiveness and ingenuity to find other ways to meet those standards. We think that in so doing, there can be some cost savings, but it is certainly not designed to create licence, as I say, to back away from the standards that heretofore have been in place around any number of the issues, whether it is riparian zone management or watershed protection. These are all issues that are of paramount concern today and will be of paramount concern in a results-based regulatory regime.

J. Kwan: Is the minister, then, advising the House that if a risk analysis has not been done, there will be one done on the issue around the changes to the forestry sector relative to the legislation that will be tabled in the fall? By the time it arrives at the stage where the coming changes have been decided, in terms of what they are, and you table them in the fall by way of legislation, there would have been risk analysis done on all of these issues. If I understand the minister correctly, in that there would be such work done by that stage, I would also ask the minister to share that information in terms of what study has been done and its results.

Hon. M. de Jong: Again, happily, some of that work — perhaps not 100 percent of it but much of it — will become apparent and will take place during the course of the next two or three months as questions are posed by the public and involved stakeholders.

There are a number of areas where I think it is fair to say a difference of opinion will exist about where the line should be drawn between affording that degree of flexibility and the need to ensure that the standard is met. That is partly what this process is about — to ascertain where that line should be drawn, where the public confidence lies. I expect there to be a healthy debate around that as we bring greater definition in some of these areas via this exercise.

I think the ministry will examine the finished product and assess where we believe the risk lies and to what extent. Again, I think those are entirely legitimate

issues for this member and other members to canvass through the consultative process and as we move into a discussion around legislation.

J. Kwan: I take it from the minister's answer that there will be such work done as we evolve in that process. By the time we arrive in the Legislature in the fall, there will be a risk analysis done by the ministry on the program that is going to be proposed in the fall. I take it from the minister's answer that he will be prepared to provide the information and share that information with the opposition members. Am I correct in understanding that? If that's the case, I'll move on.

Hon. M. de Jong: My only reason for hesitating is that I take these undertakings seriously, and I want to make sure that what I say to the member I'm in a position to follow through on. I think that in certain areas within a draft results-based code, that kind of analysis will be important to do. My hope is that as the work that is done in this respect evolves, the public will have the benefit of examining it through the consultative process. Certainly, by the time we get to engaging in a debate around legislation, the work that is done should, in my view, be available to this member and any other so that they can make their own assessment about, again, where that line should be drawn.

J. Kwan: One would hope that would be the case. Also, sometimes for members of the public the information which they receive from government may well not be as detailed as it might otherwise be. What I'm interested in, of course, is the studies the ministry would have undertaken to make sure that they identified the risks associated with the deregulating of the forestry sector and for that information to be shared with the opposition so that the opposition can take a look at it and see what work has been done and pass their own judgment around that. That is, of course, in the spirit of openness and transparency and accountability.

I take it from the minister's answer that yes, he would be able to share that information with the opposition caucus and, broadly speaking, with the public as well. I see the minister nodding on that, so I'll move on to my next question, unless I'm being disputed by the minister in any way on my request.

The minister earlier mentioned that on the issue around risk, it is the goal to maintain the level of protection for the environment with the performance-based standards that will be coming in the fall. Then it is safe to say that the performance-based standards would not erode the current level of protection for the environment.

J. Kwan: What role does the minister play in maintaining drinking water quality in the province?

Hon. M. de Jong: Statutorily — and we can start there and work our way through this — the existing code provides standards as they relate to activities within watersheds. The code also provides for sign-off by, previously, the Minister of Environment, now the Minister of Water, Land and Air Protection.

J. Kwan: So it's a dual role? This minister and the Ministry of Water, Land and Air Protection will be required to sign off on the quality of drinking water in this province. Does the minister anticipate any deregulation around watershed protection or stream protection as part of the changes to the Forest Practices Code?

Hon. M. de Jong: I will verify. I have a notion somewhere in my brain that there was recently a regulatory change where there was formerly dual sign-off statutorily and now that sign-off rests exclusively with the Minister of Water, Land and Air Protection. I'm not 100 percent certain of that, but I could check.

Insofar as the second part of the question is concerned, the objective clearly is to ensure that the standards we achieve as a result of changes to the Forest Practices Code in all areas, and particularly with respect to the protection for drinking water, meet or exceed what is presently in place.

J. Kwan: Could the minister please confirm: is it his responsibility, also, in relation to drinking water quality in the province, or is it just WLAP? I would appreciate that. I'd like to get that clarification from the minister. Of course, if it is just WLAP, then, on the question around drinking quality, I would imagine that monitoring as well as the enforcement of deregulation around watershed protection, stream protection, etc., would also fall under the Ministry of Water, Land and Air Protection. If that's the case, I'll ask WLAP the next set of questions. I'll assume, for all intents and purposes at this point in time, that that in fact is the case — unless the minister wants me to ask him a series of these questions.

Hon. M. de Jong: No, I think that is correct. The monitoring of water quality is certainly something that falls within the ambit of Water, Land and Air Protection. Of course, I think the member knows there is a responsibility that accrues to the Health ministry as well.

J. Kwan: I'm going to skip over the softwood dispute issues, because I expect that my colleague from Vancouver-Hastings, the Leader of the Opposition, will be in the House, and she has been taking the lead on this matter. I will skip over this set of questions that I have put aside, and leave it to her to canvass with the minister.

I'd like to turn now to the issues around…. Maybe I can work backwards in my binder on this issue: questions regarding recreational forests. I received this letter, actually, from Williams Lake, from somebody I met when I was meeting the community and individuals in Williams Lake. He has written this letter and shared it

with me. I'd like to ask the minister to comment on this letter, so as I go through, I'll read parts of the letter into the record and get the minister's comments on this.

J. Kwan: The number from the letter being used is 80 percent; 80 percent of the campsites in the Cariboo region will be closing, and the remaining 20 percent will be transferred to other agencies and organizations. According to this individual's calculations, that means 132 campsites will be closed. He's also asking how many of the 35 Forest Service trails will be affected.

Hon. M. de Jong: Unfortunately, the member was not here earlier when we canvassed this issue with other members. The fact of the matter is that the premise upon which the question is based is incorrect. We're not closing and/or decommissioning forestry rec sites. I suppose I will take some issue with the suggestion that the government and the ministry have been cryptic about what our plans are, because it's for this very reason that we tabled the service plans. I will read from the document, which is widely available. "The Forest Service will no longer be responsible for funding the maintenance of Forest Service recreation sites. All current Forest Service rec sites and trails will be transferred to other agencies and organizations" who may wish to take advantage of them.

I think the point is this. I think for people like the author of this letter, there is a concern that they would have continued access to their favourite recreational site. It may be a fishing hole on a lake somewhere or some other location — undoubtedly one they would like to continue accessing.

We've made some decisions, as the member said earlier, around prioritizing scarce resources. I should say to the member that there are upwards of 1,400 of these recreation sites across the province. We think the vast majority of them will find adoptive parents in the regions in which they are located. They will continue to be available for use. The ministry has no plans to decommission the sites, except if there were a compelling environmental reason to do so. They generally have few amenities — perhaps a burn pit, a garbage can and sometimes an outhouse. We have already received indications of interest in assuming the responsibility for maintaining those sites. We think that in the majority of cases we will be able to wed interested groups with those sites.

There are some more popular sites which are called enhanced forest rec sites. They tend to be sites located closer to populated areas and are more popular. The usage is such that a fairly compelling commercial case can be made for someone assuming conduct of their maintenance and continued operations. We don't anticipate any great difficulty there.

I should, lastly, emphasize a point I made earlier in this debate. A prerequisite to groups assuming responsibility for a forest rec site would be their agreeing to ensure access to all members of the public and not just the members of the particular club or organization that has taken that job on.

J. Kwan: From the minister's answer, it sounded to me like none of the campsites will be closing. What the government is looking to do is to have them transferred to other agencies and organizations. I think that's what I heard from the minister. He was saying that the numbers were incorrect and that these sites would be transferred, save and except for environmental reasons.

J. Kwan: Now the minister is saying, "Not quite," so maybe he can just give me a short answer on this. I'm hopeful that I can finish canvassing the recreational site issue before there's a switch for me to go into the big House for Children and Family Development.

Hon. M. de Jong: I want to try to provide information as accurately as possible. It is entirely possible — in fact, likely — that some of these sites will not find takers. In that case, some of them will close in the sense

that they will no longer receive the maintenance they historically have received.

We think the majority of them will find adoptive parents, as it were, to ensure their continued availability. That work is ongoing. We have certainly provided ourselves with ample time to explore all of the options. I have to tell the member that I've been relatively heartened by the kind of response we have gotten, but I also don't want to mislead her. It is entirely conceivable that maintenance of some of these sites will not be assumed by community groups.

J. Kwan: Of the 1,400 sites the minister mentioned, what percentage or number of sites does the minister anticipate would be transferred to other agencies or organizations, and how many would not have takers?

Hon. M. de Jong: The objective we have set for ourselves between now and 2004 is to find willing takers for all of the forest rec sites. I am suggesting to the member that, given the location of some of these sites in very isolated parts of the province, we may find that in 2004 there are some who have not received an offer of the sort that we are contemplating. But the objective is to find participants for as many as possible.

J. Kwan: I appreciate that the minister is suggesting that the government is attempting to find owners, if you will — individuals or groups to manage the sites. But the minister also said earlier that may not happen. Does the government have any projections at all in terms of how many of those sites are going to be taken by someone for the purposes of management? Surely there must be some sort of projection.

Hon. M. de Jong: I am advised we have a projection that I don't have at my fingertips. I'll happily provide it to the member with the attached caveat that, as I just said, the objective is to find stewards — and I know this was not a purposeful statement by the member — but not owners. The prerequisite here is that this will remain Crown land and that access will be guaranteed to all members of the public.

J. Kwan: Yes, I used the wrong word. I don't mean ownership by way of ownership of a house or anything like that but rather ownership of the management in terms of taking that role over from government.

I would appreciate it if the minister could share that information in terms of what the projections are. Because the minister has the projection, then which site does he project will be undertaken by another agency and which site will not? That would be helpful as well.

I will proceed with the rest of the letter here. The letter then goes on to say:

I'll stop there and let the minister answer the questions. How will the ministry deal with the fact that without maintenance low-risk sites will develop into high-risk sites, which will pose a threat to safety? What happens to these high-risk sites? Who'll be monitoring the low-risk sites as they deteriorate into high-risk sites? What is the government's legal responsibility for these deteriorating sites, and what are the liability issues involved?

Hon. M. de Jong: I think the author of the letter describes one possible scenario, and certainly, one that would be applicable in the case of a site for which we identified no willing partner to assist with the management. My expectation is that in areas like the Cariboo, where traditionally these sites have usage rates at the upper end of the scale, we will find those willing partners.

In fact, I may even prevail upon the member in corresponding back with this individual, as I'm sure she will, in providing him with copies of this exchange, and she might suggest that he contact this office. It sounds to me as if he would likely have — and I think it was a he — suggestions about who within his community, including himself, might logically want to partner with government to ensure the ongoing viability of the site that is uppermost in his mind.

J. Kwan: I will share the request with the individual, and then I'll leave it up to the individual in terms of what he may or may not do with that particular request. What he's asked, though, are issues that centre around liability and, of course, seeing low-risk sites evolve to being high risk because of safety and environmental issues and health risks, etc.

Does the government have a plan on addressing liability issues? I know the government is looking for other agencies to take over these sites, but that may not happen. In the event that it doesn't happen, are there plans from the government for addressing liability issues? On the issue around monitoring, on checking up on these sites to see what state they are in, is that going to be undertaken by the government?

Hon. M. de Jong: Clearly, there is a monitoring function for the ministry, particularly with respect to sites for which we have not identified a management partner. I think the example the member raises, if we are confronted two years hence with a situation where there is no management partner and we have a deteriorating outhouse, we will need to take action to ensure that levels of safety are maintained.

J. Kwan: I take it from the minister's answer, there will be monitoring done if there's nobody undertaking to manage these sites. On the question around liability, is the plan of the government to make sure that there are action plans on the question of liability — or potential liability?

Hon. M. de Jong: As in any governmental endeavour, we will need to proceed, being mindful that there is an aspect of liability attached to inviting people onto a Crown facility. That is what these forest-rec sites represent. They are, by definition, less developed than, for example, a Parks campsite. The threshold for liability is to be adjusted accordingly, but there is clearly an ongoing responsibility, as there is with respect to forestry roads, that the government needs to remain cognizant of and weigh in the decisions it makes and the action it takes.

J. Kwan: Could the minister please advise if the government is actually looking at other organizations or agencies to manage these rec sites? Is the government looking at the option of privatizing these sites?

Hon. M. de Jong: I just wanted to ensure that I had a clear understanding of what she meant in posing her question.

There are, as I alluded to earlier, enhanced forestry rec sites which entertain visitors on a scale and volume that renders them more commercially attractive. There are fees associated with the use of those enhanced sites now. The possibility and probability that an individual or agency might assume conduct of those sites and the collection of those revenues is real, but I want to hasten to add that devolution in that sense would be very much contingent upon the terms of an agreement that ensures the continued availability of the site to the general public.

J. Kwan: From what I understand, then, from the minister's answer, yes, the management of these sites could potentially be privatized. It wouldn't necessarily just be non-profit organizations or agencies who would be managing these sites. What I didn't hear the minister say is no, the privatization scheme is not something the government is contemplating. By not hearing that, am I assuming correctly that the answer is yes?

Hon. M. de Jong: I'm not sure you are. If a first nations organization assumes conduct of a forestry rec site, does that represent privatization of that site? I'm not sure it does. If a local rod and gun club assumes responsibility for the management of a site, I don't know if that qualifies as privatization of that site. In other instances, other organizations may assume responsibility on some of these enhanced sites for maintaining and collecting the revenues historically connected with those sites. I'm just careful about the member's use of the term "privatization."

J. Kwan: I see that I need to get into the big House very quickly. I'm going to move through other questions arising from this letter fairly quickly as well. Perhaps, instead of stopping at different places, I'll move through some of the highlighted areas and get the minister to answer the questions all at once.

"So what about the interior? What are the Liberals doing to boost tourism here? Well, in addition to closing most of our rec sites and some forest roads, they are also closing as many as six provincial park

I'm going to stop here with the quotes from this letter, but there are some salient questions that the writer has identified. They relate to campsites that revert back to vacant Crown land. Can it be logged? Can it be sold or leased to a private company for a lengthy period of time? What is the potential impact to tourism throughout the interior as a result of the decision not to maintain the logging roads and the dangers, of course, which that poses, again going back to the liability question? I ask the minister to answer these questions, and I'll make sure his response is shared with the writer. I'll also ask the writer to contact the minister if he's interested in following up with the minister's request earlier.

Hon. M. de Jong: I know that in communicating with the author, the member will take pains to draw to his attention that the intention and objective here is not the wholesale dismantling of the 1,400 forest rec sites that compose the network of recreational sites around the province. In the event that a willing partner isn't found, the sites remain Crown land and part of the provincial forest.

There is an aspect, though, to the submission made by the author of that letter which the member related here to the committee that is important because it speaks to a concern I have, admittedly, heard from various sources. That is: it is one thing to have the rec sites remain and managed cooperatively; it is quite another thing if you can't get to them in light of the state of the road or the Forest Service road that exists.

The member and, I'm sure, the author of this letter will want to know that there are upwards of 40,000 kilometres of Forest Service roads in British Columbia. Approximately 27,000 kilometres of those roads are presently managed by licensees. Although incidents arise periodically on an isolated basis, access to those areas via those roads is generally not an issue, and in devolving responsibility for the maintenance of the vast majority of the remainder of the Forest Service roads, I would expect that to continue.

I do, however, understand the concern and the suspicion, because following the advent of FRBC, one of the phenomena that I am advised did occur in many parts of the province was the wholesale decommissioning of roads. For many people that was a very puzzling exercise, because they were roads to which they previously enjoyed access and relied upon for access to favourite parts of the back country.

The assurance that I want to offer to the author of this letter via the member, who has happily brought his concerns to the committee's attention, is that that is not the plan or objective. Except in cases where a compelling environmental reason can be made, the objective is to ensure that access to those roads continues. I think this will ensure that people aren't put out unnecessarily.

I will say to the member that these are wilderness roads and may be designated as such. She quite properly focused earlier on issues of liability. That is something the Crown needs to be cognizant of, as do people who take advantage of using these roads, although my experience is that people who are using forest service roads don't expect them to be paved four-lane highways. They expect a minimal level of maintenance but are generally expecting them to be what they are, which is back-country roads.

J. Kwan: I will take the information and relay it to the individual who has shared the letter he's written with me and advised the minister, actually, when he raised the issue that he was not particularly happy about the actions of the government. Nonetheless, I will endeavour to share that information, particularly the words of the minister, taking the words of the minister strictly from Hansard so that it's not taken out of context in any way, shape or form.

I'm now going to yield the floor to my colleague from Vancouver-Hastings, who has some questions for the minister, or to other members in the House who may wish to join the debate. I'm going to move myself to the big House to engage in the estimates of the Ministry of Children and Family Development.

J. MacPhail: I want to talk about softwood lumber. Can the minister update what the plans are to prepare for May 9, with the imposition of the 29 percent duty?

Hon. M. de Jong: Well, I think the member knows there is speculation now around whether or not there will be re-engagement on a government-to-government basis at the negotiating table. We are certainly having talks with our provincial partners and the federal government around the wisdom or benefits that might flow from re-engaging at that level. To be candid, I think the member heard me say a week or two ago, in the immediate aftermath of the imposition of the final order, that it was difficult to contemplate, in light of the conduct of the U.S. at the table, how we might expect to achieve a more reasonable outcome in those talks than we might have achieved prior to the imposition of the final numbers on March 11.

Having said that, there have been some signals, which I think the member is aware of, from the American side and the coalition about a willingness to sit down and have further talks. Absent some tangible signals around their willingness to be more reasonable in terms of the outcomes they expect to achieve, it is, as I say, challenging for us and our other provincial partners to have a clear notion of what might be achieved, but I'm not ruling that out.

In the meantime, of course, the member is aware that the Premier, this ministry and others are engaged

in intensive discussions with the federal government around a support package for workers and their families. The Premier is in Ottawa today and tomorrow having those specific discussions at the highest levels with the federal government. There is a summit meeting planned for the week of April 26 to which, I think, the member has received an invitation or is about to receive an invitation. I'll be happy to provide her with those details.

Hon. M. de Jong: The government, the Premier and I have been pretty specific that — having conducted these negotiations as part of Team Canada in a way that, admittedly, has not taken place in the past — we think the intransigence and protectionism that existed on the American side, which ultimately precluded us from arriving at a satisfactory settlement, now necessitate that all governments band together and provide the level of assistance that workers and their families are going to need to sustain themselves through this fight, if indeed we find ourselves having to proceed through to a ruling from the WTO or NAFTA panels.

Now, it may be that at some point along the way we find a greater willingness on the American side to conclude a negotiated settlement. I'm never ruling out that possibility, but these are the people, the workers — thousands of them in B.C. — that are bearing the brunt of this dispute. I believe and will continue to argue that there is a role for both levels of government to play to ensure that that support is there, be it in enhanced EI benefits or other support mechanisms they will require to ensure that they are there — that our most important resource in the forest economy is still there — when this dispute is ultimately resolved.

J. MacPhail: Well, it's hard to know what is affecting our forest-dependent communities or our forest workers. There are several approaches this government is taking toward the future of forestry in this province. On the one hand we have the softwood lumber dispute. On the other hand we have forest policy reform that this government has decided to engage in at exactly the same time. It's hard to know what's on one table and what's not on the table in the United States.

For instance, the IWA would have you believe that the biggest job killers that threaten their future are the ending of appurtenancy and removal of cut control. Is that on the table with the U.S. negotiations? Did the minister put that on the table in the U.S. negotiations for the softwood lumber dispute?

Hon. M. de Jong: Well, it's an interesting question. The member knows, precisely from the briefings that I provided to her throughout this process, what was on the table as part of those discussions. She knows that in November of last year we tabled a comprehensive package of proposals that were relevant to what we hoped would ultimately lead to resolution in the softwood lumber dispute. At the same time she knows, because I told her, that in the case of the proposed changes to things like appurtenancy, minimum cut control and mill-processing requirements, the government believes that these policies, some of which date back four or five decades and have served a purpose, now need to be re-examined.

The government is intent upon tying the behaviour of our industry more directly to market behaviour and prevailing market conditions. In many cases these are policies which represent obstacles to some pretty fundamental notions, like getting the right timber to the right mill. There is both a desire on the part of government to effect these policy changes, like the move to market-based timber pricing, and they admittedly share a relevance to a trade dispute that we had hoped would be settled, which is not. They presumably continue to hold a relevance to the resolution of that dispute.

J. MacPhail: In negotiations timing is everything. This minister has decided to put it all on the table — domestically, internationally. The reason why I'm asking specifically if the minister put it on the table — removal of appurtenancy and cut control and linking the requirement of mills to be in communities — is because in the last three rounds of negotiations in trade disputes, no American ever brought up at any time appurtenancy or cut control. Yet it seems to be a factor in this particular round of negotiations.

I do know the domestic industry wants those changes, those forest policy reforms, but somehow they've ended up on the trade dispute table as well. The reason why there's confusion is because, I guess, the Americans think that if our government put it on the table, then it must be there for a reason. Will these changes be proceeded with, separate and apart from the softwood lumber dispute?

Hon. M. de Jong: In certain cases, they will. In certain cases, they represent a clear articulation by the government of its desire to eliminate or alter provisions that we believe are counterintuitive to some of the changes that need to take place. We can take the coastal industry, for example. I hope the member would agree with me that the industry on the coast and the people that rely upon the industry on the coast find themselves in a crisis situation, due in part to the trade dispute challenge but due also to some lingering problems that have gone unresolved for too long.

Hon. M. de Jong: Dr. Pearse was asked to prepare that report for a number of reasons: his experience, his expertise. In passing, I might add that presumably his credentials are such that they are beyond reproach in the way of representing a particular political persua-

sion, for which politicians, like the member and I, usually attack individuals. In fact, I believe the last time Dr. Pearse was involved in an examination of forest management policy it was at the behest of the first British Columbia NDP administration.

His findings provide, I think, a compelling argument in favour of change and, more particularly, change along the lines of what we are proposing. We can pretend, for example, that there is not overcapacity in the coastal industry. Dr. Pearse makes a compelling case, I think, for the proposition that there is. We can pretend, for example, that market conditions have not changed in 25 years, when we know, as Dr. Pearse points out, that in fact they have. We can pretend that societal values around land use decisions have not changed in the last three decades but, of course, we know that is the case. Yet our industry has not made adjustments that fit with those changes.

When the member asks whether we are intent upon proceeding with these changes, I say: "Look at the industry around us." The argument, I think, can be made with great strength — now more than ever, particularly in light of what has happened vis-à-vis the United States and the trade file — that there is an increased urgency for us to get on with doing those other things that need to occur if we are again going to allow an industry to create itself in a way that will attract the investment and reinvestment we need in order to begin the process of rebuilding and recreating investment in ways that we just haven't seen over at least the past decade.

J. MacPhail: I started this off by saying timing is everything in negotiations. Frankly, the negotiating strategy of British Columbia is so confusing that I'm not sure what track we're on and with whom, and here's why. It may even be deliberate, this provincial government's strategy. The changes in forest policy which the minister has just talked about will proceed regardless. Yet they have now become a part of the negotiating table in the softwood lumber dispute, as well, because the minister decided to make these announcements about changes at the same time that the softwood lumber dispute was proceeding. In previous rounds of negotiations on softwood lumber, those issues were never a factor of any accusation against the provincial government — ever. But now they are. Now the Americans use them as examples of how our industry is subsidized, etc. What I'm saying is, the minister has confused the issues through his timing.

Maybe this is why: if the minister truly cares about those forest-dependent communities and those workers, he would have to assume responsibility for those forest-dependent communities being decimated and a whole bunch of laid-off workers as a result of his forest policy reform, separate and apart from the softwood lumber dispute. But now that they're part of the softwood lumber dispute, under the guise of that being a federal responsibility, he can just off-load all of those transitional costs onto the federal government.

The IWA workers, the CEP workers and the PPWC workers are seeing through that. They see very clearly. This is the document that I'm working from. It's an end-of-February 2002 document from the IWA about how the biggest challenges they face in terms of being decimated from an employment point of view and that communities face in terms of revenue in their community are the forest policy changes this minister is bringing in — separate and apart from the softwood lumber dispute.

One, if indeed the minister did tie the two together — forest policy reform and the softwood lumber dispute — it was poor negotiations. Two: if indeed it was just because the industry was so intent on getting this government of theirs to make those changes, the minister didn't care about the unfortunate timing. Or three: he really doesn't care about the workers in those communities and about those communities, so he's willing to sacrifice those communities through his forest policy reform.

Hon. M. de Jong: It's an interesting theory on the part of the member. There's perhaps at least one significant flaw, and that is the accuracy of the premise of the question in the first place. The member will know that the petition to which we are responding before the American Department of Commerce, the International Trade Commission and the trade representatives office was filed enumerating the complaints against Canada and British Columbia while her government was in office, not mine. That doesn't make her or her government responsible for an action taken by a foreign country. It does, however, suggest — well, it confirms — that these were issues the Americans intended to pursue and were enumerated in detail. If the member is shaking her head and doesn't believe me, she should read the petition, which lists the menu of items that were to be the subject of discussion.

You know, hon. Chair, I could ask the member, at least rhetorically, what steps were taken by the previous administration in those formative and crucial days leading up to March 31 — and the steps that the government took in the immediate aftermath. But I'm not sure what would flow from that discussion, because here we are a year later trying to deal with the matter.

The other point I should make to the member to disabuse her of any notion that this negotiation and the strategy around this negotiation unfolded somehow in secrecy or caught industry and labour in British Columbia by surprise…. The fact of the matter, I'm told, is that in an unprecedented way, all of those agencies were at the table with government and, in fact, sat as an advisory body to the minister, to the government — the industry, various components of it, the IWA.

Does that mean that there was agreement on every facet and every feature and acceptance of what impact a resolved trade package might have on various components? No. But to suggest somehow that parties and partners and stakeholders were caught off guard…. I should say to the member, as well, that….

Hon. M. de Jong: Given the magnitude of the issue we're facing, I know that this member would want to address this issue in a responsible and constructive way.

I was shocked. One of the first things we did upon assuming our new role was convene a stakeholders meeting in the province. It turned out that we had three of them, and we're going to have another version of that here in a couple of weeks. I was shocked to learn that it had never been done before by the previous administration. There was a degree of involvement on the part of British Columbia stakeholders in developing a strategy that we could take into these negotiations that was unprecedented, absolutely unprecedented.

I think that what eludes this member is the strength of desire that existed right through the industry and on the part of labour to try and achieve an agreement that would get us off this recurring treadmill of trade disputes. Admittedly, we set an ambitious goal for ourselves — that is, a comprehensive, long-term trade package that would guarantee us unrestricted free trade, free access to the American market. Everyone understood that it was a lofty and noble objective and our ability to achieve it would depend, at least in part, on whether or not the Americans were prepared to put their money where their mouth was, particularly the administration.

The member may want to criticize the government and suggest that we should have set a goal for ourselves that fell short, as was done in the past, and that we should have been satisfied with a deal that was based around quotas that limited the ability businesses have to grow their business. That was apparently good enough for the previous administration. Okay, we set a loftier target, a loftier objective, and to this point the member can say, "Well, you haven't achieved that objective," and she would be correct.

At the same time, we set an objective to work cooperatively not just with stakeholders within British Columbia but across the country. We thought in the negotiations we were faced with, with the Americans, that would serve us well. Again, if the measurement is the achievement of an agreement, the member would say: "Well, it didn't serve you very well at all, because you didn't get an agreement." But confronted by the kinds of offers we received in the negotiations at the final stages in Washington, I would suggest to the member that she go to whatever page of that document she has in front of her from the IWA and read the part that says: "The only thing worse than no deal is a bad deal." That's what the Americans were offering.

It was in the spirit of that admonishment from people like the IWA — those very folks who were bearing the brunt of our failure to get a deal — that we said to the Americans: "Thanks, but no thanks. If you are unwilling to push back against the forces of protectionism in your country, well, then we have another way. We have an alternative. If you need to be told by an international trade tribunal that you are in violation of both your treaty obligations and your own domestic legal processes, then so be it. It's not our preferred option. It's certainly a route we are prepared to go."

I want to say to this member, who I think is attempting as best she can to give voice to some of the people who are hurting as a result of the breakdown in these negotiations, that the strongest proponents of walking away from a bad deal were the people represented in that paper, who said: "Do not sacrifice our long-term interests. Do not sacrifice our ability as British Columbians to determine the future course of forest management policy in this province for the sake of achieving a short-term deal."

Yes, there is a degree of debate around those policy changes that we have proposed independent of — and intend to proceed with, independent of — the trade file. Fair enough. That's a healthy debate for us to have. I have it with the IWA, and I have it in communities with the IWA.

I hope the member can at least take it upon herself to acknowledge in this forum and in this committee that the status quo for the forest sector in British Columbia is not an option. It has been in steady decline over the better part of a decade. Absent some radical change, that decline will continue. I, quite frankly, didn't take this job to preside over the ongoing demise of the industry.

J. MacPhail: It is completely appropriate that I be allowed to express disagreement with the negotiating strategy of this minister. He doesn't have to take cheap shots about what happened in the past, etc. Frankly, the '96 accord around softwood lumber is proving to be more effective than what's happening right now.

If the minister reaches success in these negotiations, hallelujah. So far there's no evidence of that whatsoever. Yes, I'm in disagreement with what this government's doing around the softwood lumber dispute now. Do I want a successful outcome? Absolutely. I have, with the very limited resources we have, put forward, day after day, suggestions on mitigating the effects of the softwood lumber dispute for this minister to pursue, none whatsoever of which have been taken up.

Let's just go back in history. There were two options about what to do around the softwood lumber dispute. One was to negotiate, and the other was to take our chances in terms of free trade with the WTO and NAFTA. It was this government that chose to negotiate. It was this minister that put the negotiating strategy on the table, which responded to every single complaint they had ever had.

The minister put everything on the table at some point. I recall there was even a floating, sort of different way we were going to tax. We were going to tax on a

profit tax or something that the Ministry of Forests floated around for a couple of days , and the industry and everybody went nuts. Then we floated another balloon around appurtenancy, then another one around cut control and another one around tenure reform.

It was this minister that put the timber auction on the table in response to the complaint. Then it became a matter of whether the timber auction…. The Americans thought the minister was serious about negotiating the timber auction part of the change in the industry. It turned out that his number wasn't high enough. That was all. Nobody was negotiating in bad faith. The Americans weren't negotiating in bad faith around the timber auction.

It was this government that put that issue on the table. The Americans thought this government was serious about negotiating it. What I am saying here is that negotiations are everything in these matters. So far our negotiating strategy has failed, in part because of the confusion with forest policy reform that has taken place at exactly the same time and in part because of a complete breakdown in negotiations where both sides are accusing the other of bargaining in bad faith — both sides. If negotiations commence again, what is the new negotiating strategy?

Hon. M. de Jong: I am disappointed in the extreme that we cannot have this debate without the member standing up and putting on the record her belief that in these negotiations, it was the Canadian side — in the face of all the evidence she has received from people other than I, she would suggest it was the Canadian side — that was negotiating in bad faith.

J. MacPhail: That's exactly what I'm suggesting — as well as the American side. That's exactly what I'm saying.

Hon. M. de Jong: I think, hon. Chair, it is instructive that British Columbians understand the position that this member and the opposition bring to this debate. I think it's also important that they understand the lack of understanding, apparently, that the member has about the process itself.

She began her rambling dissertation by saying: "You had a choice. You could negotiate or litigate." Well, it is a testament to her fundamental lack of understanding of how this process works that she doesn't appear to be cognizant of the fact that we are in litigation — have been since last August — and apparently believes that it is either-or, that to have made the decision…

Hon. M. de Jong: …to negotiate precludes the opportunity to engage in some manner of….

Here is the strategy that the Leader of the Opposition would employ. She would say and has today said to those workers and those families: "If I were in charge, I would commit us to a litigation process that we know can take upwards of two years or more, and I would not explore the possibility of reaching our objective of free trade via a litigated settlement that might take a lot less time."

That's an interesting strategy: sit down, pour yourself a cup of Ovaltine, and in two years, we'll come back and talk to you. That's the strategy the NDP and this Leader of the Opposition want to employ: "We don't see any obligation to explore with the Americans and the other provinces and the federal government and the U.S. federal government whether or not we might be able to contract the period of time it takes to get to agreement." No. She would say that's not the way to proceed.

Well, okay. That's an interesting strategy one could employ. It is, admittedly, not the one this government and I chose to employ. I saw the government having a duty to those thousands of forest workers to, on the one hand, prosecute with vigour the defence of this claim by the Americans, a spurious claim, in front of the international trade tribunals. I saw that as our paramount responsibility, but I also saw a responsibility on the part of the government to explore every other possible avenue to achieving the agreement.

I guess we're different. I guess this member is lot less ambitious in terms of desiring a negotiated settlement. You know, it has been my experience, in a previous life where I was involved in litigation, that even in cases where the law was on your side, even in cases where it was certain that the result would be in your favour, there were reasons to explore the possibility of a negotiated settlement.

Now, this member says that would not have been her preferred choice. So be it. I guess there's the difference. People can judge for themselves whether her result, which we know with certainty would have us in exactly the same place we are today…. Unless she has a magical solution for accelerating the litigation process that countless lawyers have not been able to ascertain….

She apparently has an insight into the legalities of international trade dispute litigation that no one else has, and she sits here and keeps it to herself. Well, how selfish. How selfish. She apparently has a secret weapon that throughout this process, she has refused to share, not with the Legislature but with the families that are suffering right now, because she knows a better way to get through the litigation process quicker.

She wouldn't negotiate. "That's a foolish strategy," she says. Well, I'm waiting. I am always willing to learn. If the member has that silver bullet, the means by which we can expedite the litigation process, I'm all ears.

J. MacPhail: If that's the way the minister in fact negotiates, no wonder we're in the situation we are.

Here's what I said: that you can litigate or you can negotiate, and that litigation was a completely viable option at the conclusion of the agreement. Exercise free trade, and if it failed, litigate expeditiously. Instead, what this minister did is that he went in and said: "Oh God, we've got to go in there, and we've got to negotiate. Here's the list of things they've got concerns about. Let's throw everything onto the table." That's exactly what this minister did, and it hasn't worked.

Don't stand up there and put words into my mouth about what I should do or not do. I'll tell you something: I wouldn't have negotiated the way this minister negotiated — yes, I say that right as loudly as one could possibly have imagined — in fact, to enter into the style of negotiations where every day there's a floating balloon, where the next day there's, "Let's put Afghanistan on the table," and the next day, "Iraq." It was: "Let's float a profit tax on the corporations. Let's do a timber auction worth 13 percent." All that kind of floating of trial balloons for negotiations was incredibly unhelpful. In fact, Madam Chair, I could use stronger language, but it was incredibly unhelpful.

What I am trying to get out of this minister is what his next steps are. He's in negotiations. Actually, I don't even know whether he's in negotiations. The last time this minister spoke to the issue, he was calling George Bush a hostile foreign power. I'm wondering where our negotiating strategy has moved along since then.

Hon. M. de Jong: Who is advising the Leader of the Opposition — the American Coalition for Fair Lumber Imports? Are you getting your advice from the other side? This is an astounding submission.

Look, I don't know if the member understands this. I may answer this question in two parts. I am at a loss to explain how the litigation schedule, which was commenced before the WTO by Canada, by the provinces, last August, has been affected by one day by anything that has transpired. It would help me to answer the question if I knew that.

J. MacPhail: The minister has bolstered a case that could be brought against us by his negotiating style when in every other court action, none of those arguments have prevailed against Canada.

By the way, if the minister somehow once again intimates that I am not a loyal, concerned, dedicated British Columbian, there will be a motion of privilege. I am serious about that. For him to somehow suggest for one second that I am allying myself with anybody other than British Columbia families will bring forward a motion of privilege.

J. MacPhail: Somehow your wonderful negotiating strategy that's failed is what we're all to agree with?

Hon. M. de Jong: Well, the member may be all of those things, but when it comes to understanding the litigation process, she is also woefully ill-informed and was apparently incapable of answering the question around her earlier assertion about how the schedule of litigation has been at all impacted by anything that has transpired. However, we can go around that circle endlessly. The issue now is where we find ourselves today.

I think we began this exchange by my fairly candidly offering to the member the question that relates to the issue of resuming negotiations with the U.S. It is an interesting and intriguing proposition now that the numbers are known.

One has to question, given the manner in which these negotiations unfolded…. You know, if the member doesn't believe me, let her ask any of the other representatives from British Columbia that were present for these negotiations, kept in the loop and advised on not only a daily but an hourly basis around the responses we were getting. They will tell her that we were dealing with an administration that showed absolutely no willingness or desire to push back on the forces of protectionism that were saying to that U.S. federal administration: "We don't want to deal."

The member's strategy might have been to keep offering. It might have been. In fairness to her, it might have been to leave those negotiations sooner than we did, than Canada did, than the other provinces did. Okay? That's an issue she may want to take up with the government on a tactical basis. I've already said to her that I thought our obligation extended to exploring every possible avenue to arriving at a negotiated solution. When it became clear that that was no longer possible, or there was no prospect of that happening, the talks collapsed.

Just for the benefit of others, if not this member, when one is confronted by a negotiating stance on the other side that says, on the one hand, "Yes, we are interested in your Canadian proposition for a bi-national panel to avoid this treadmill that we have been on for resolving trade disputes in softwood lumber; that's an interesting proposition," we say to them: "But you know, we need to have an impartial referee to resolve these disputes — one that both sides of the border can live with." The response is: "We have just the perfect authority. It's the Senate Finance Committee headed by Senator Baucus from Montana, the head of the protectionist forces." You begin to get a sense that perhaps the other side's notion of impartiality and fairness is different from your own.

Can we re-engage with that group? I think perhaps. Can we do so in advance of the injury determinations that are scheduled for May 9? Perhaps, but I would need to see and get a signal from the U.S. side that

there was a genuine willingness to engage in reasonable and meaningful negotiations in the way that hasn't existed to this point. It certainly did not exist in the final stages of the discussions leading up to March 11.

J. MacPhail: What I'm having trouble understanding from this minister is how things changed so badly during the negotiations. When I met with this minister in August, he was thrilled about the appointment of Governor Racicot, a Republican from a forest-dependent state. He thought that was great.

It was the minister himself who put timber auctions on the table. It was the minister himself who put an export tax on the table. Where did the negotiations change so that the government…? What I'm told is that the minister was more than amenable to an export tax to make up…. He can stand up and deny it. People who were there told me that, so stand up and deny it. That's fair enough. I'll have him correct the record.

Where was it that the minister finally figured out just how bad the Americans are, if indeed it just dawned on him? At what stage in the negotiations, month after month, did the minister figure out that Americans were protectionist?

When was it that the minister thought, "Oh my God, we should stop negotiating. We should stop putting things on the table," after months of putting things on the table?

Hon. M. de Jong: I guess it's confession time. I will confess to the member that when we began convening our stakeholder meetings in August, when I began by having my discussions with her, I was admittedly hopeful that we could engage in fruitful discussions with the Americans. I was admittedly hopeful around the appointment of Governor Racicot. I recall having a discussion with her. I actually recall making arrangements for her to meet with Governor Racicot. I recall meeting with her after that.

If my willingness to engage in that exercise and that discourse was a tactical blunder, it is interesting that I search my memory for an indication from the member at that time that she harboured those suspicions. I find it curious that she would now somehow try to portray that as a negotiating blunder, that we would have engaged in discussions with Governor Racicot. I thought the appointment….

I will tell the member that, as she knows from our discussions, I was frustrated following the appointment of Governor Racicot — as I think all the British Columbia stakeholders were — that we did not, in the weeks immediately following Christmas, see the level of engagement on the American side we were led to believe would occur.

The expectation was that we would engage in meaningful talks through January and February, mindful of the pending March date. That didn't happen. The member knows it didn't happen, because she quite properly asked questions of me about that fact in the House. That was frustrating, and it gave rise to frustration on the parts of all the parties. There was an understanding that there was a looming date — a suspicion that perhaps what was taking place here was a calculated strategy on the part of the American front to simply slide towards that date. We sought to bring pressure to bear on the Americans to come to the table in a cooperative and meaningful way. They left it very late. I think it is fair to say that we were well into the latter part of February or the beginning of March before those discussions began to take place at a level where you could say to yourself that there was some prospect of us getting somewhere.

Again, I suppose it was an option at that point to throw our hands in the air and say, as many of us suspected, that the American side was not intent on conducting good-faith negotiations and that their preference was to simply let this slide into final determination and let it proceed to the WTO, if that was the case. The industry coalition had no interest in making a deal, and the American government had no interest in doing anything that would offend the industry coalition.

As we proceeded down that path, the member will recall that many of our efforts were directed at engaging the full attention of the federal government and the Prime Minister's office and ensuring that the representations were made at the highest level to the President of the United States. The member will recall that poignant scene of the President and the Prime Minister standing in the rose garden making the comment, with the President saying: "I have directed my staff to ensure that we get a settlement by the following week, or within the next ten days." Pretty strong words from the President of the United States.

I suppose at that point we could have thrown our hands in the air and walked away. We said: "No, perhaps that's a meaningful statement. Maybe what we've failed to do to this point is elicit the full attention of the United States, and apparently we now have that. Apparently the President of the United States is directing his negotiators to do what is necessary to get a reasonable outcome."

It didn't translate into action. I said at the time: "Those are nice words, but will they translate into action at the table? Will they translate into a more reasonable and reasoned approach to resolving these issues?" They did not.

It became apparent — to answer the member's specific question, I suppose — in that final week in Washington, as Monday turned into Tuesday into Wednesday with a Friday date looming, that there simply wasn't a willingness on the American side to settle upon a policy-based resolution of this matter. Sure, they're interested in a permanent border provision of some sort. We'll do their dirty work for them. We'll increase the cost of production and shipping product in Canada so they don't have to, and we'll lock our industry in at those rates.

Well, we said no; we said we weren't going to do that. If that meant taking the matter and proceeding with the litigation option that had been ongoing — although I might say, and I think the member knows this, not cooperatively on the American part…. Not only did they not want to negotiate a solution, but they erected an obstacle every step of the way in terms of the litigation and the appointment of panel members. "We don't want to negotiate with you in a meaningful way, and we don't want you to have your day in court." Now, you could say that's the kind of negotiating tactics you'd expect from the most powerful nation in the world. I expected a little better, and we didn't receive that.

Now our option remains what it was when we commenced litigation back in August: to see that process through, unless there is a stronger signal from the American side that they are prepared to re-engage on a meaningful basis at the negotiating table.

In the meantime I think this discussion began around contemplating the measures that we could take as governments in Canada and British Columbia to provide some support to those people that will bear the brunt of this dispute remaining unresolved.

Hon. M. de Jong: Well, the member will get her agenda, but we will certainly discuss the range of options available to us. I don't want to prejudge what the circumstances might be. It is conceivable perhaps that we will again be at the table with the Americans. I don't know that for certain. I've seen no signs to suggest that at this point there's any point in proceeding down that path.

We will be considering the options that are in the process of being refined in terms of the support we think needs to be made available to families. The member hasn't asked me, but I know she has made comments in the past about other statements that federal ministers like Mr. Dhaliwal have made about a broader support package. My concern, I've said candidly, is not so much what the Americans think, but whether or not we do anything to jeopardize our chances in front of the international trade tribunals. We will have a discussion around those topics as well.

J. MacPhail: We have until May 9 — four weeks. When does the minister decide whether the strategy is to go back to the negotiating table? Has it ever been contemplated that British Columbia would not attend negotiations if called?

Hon. M. de Jong: I'm reluctant to answer in the hypothetical. At this point, there has been no call to the negotiating table. We'll have to make that assessment if and when the situation arises. So the member is clear, rather than wait passively, we are continuing to explore via other channels, via industry who are having discussions with their counterparts in the U.S., whether or not there is a basis upon which to restart those discussions. Candidly, I'm not interested in reconvening a meeting to rehash old ground and confirm again where the points of division are. There has to be some indication that there is a willingness or a prospect to move closer towards resolution.

J. MacPhail: Who in government makes the decision to go back to the negotiating table or not? Is that a cabinet decision, or is it done in the Premier's office or the minister's office?

Hon. M. de Jong: The issue is on a magnitude where, obviously, the minister is involved, but the Premier has been involved from the outset. It's a decision we make in consultation with our negotiating team, with the Premier, and, obviously, the minister is involved.

Hon. M. de Jong: I actually thank the member for the question because one member of the negotiating team is sitting beside me. That is Deputy Minister Don Wright, plus Bruce McRae from the ministry and additional officials.

I don't have the document with me, but the member, I'm sure, can appreciate the level of disappointment that existed amongst the officials from industry and other agencies who were in Washington for that final two weeks of discussion when it became clear those discussions were not going to result in an outcome. In virtually all of the communications that followed in terms of the reports and press releases from organizations like the B.C. Lumber Trade Council — and I do want to put this on the record — remarkably in the face of that disappointment, each one of those organizations made a point in their communiqués of congratulating the team of negotiators from British Columbia for the effort they put in, the strategy they employed and the effort they expended in trying to get an arrangement, to get a deal.

It was remarkable because of the unanimity of opinion that existed around the room and amongst all of the players. I have to say, and it's my opportunity to say it in a public way, the effort expended by the B.C. negotiating team in terms of liaising with the federal government and keeping our British Columbia stakeholders informed every step of the way was a remarkable achievement, and one that as a politically involved individual I'm very proud of.

J. MacPhail: If we're not going back to the negotiating table and we're proceeding with litigation and we may have some proposals for helping the industry in transition, what are these discussions that are going on with Weyerhaeuser right now?

Maybe I've missed something. I saw in the paper where Weyerhaeuser is saying they're going to give up 25 percent of their tenure. Is that in the context of some negotiating strategy, or is that a forest policy reform strategy? Let me just ask this question: in terms of Weyerhaeuser, one of the largest companies in British Columbia, how does it help, as a signal to America, to know that 25 percent of Weyerhaeuser's tenure is up for grabs for expanding a timber auction? How does that help our negotiating strategy?

Hon. M. de Jong: Actually, I guess you'd have to ask Weyerhaeuser. I have not had direct discussions with them about the surrender of 25 percent of their tenure.

J. MacPhail: I am asking the minister that question. It was reported that they met with forestry officials. Did those discussions occur? If those discussions could have occurred — and the forestry officials could have said no — how does that help in terms of moving our argument forward on any basis? Now Americans would think there could be a surrender of 25 percent of…. I think they had the second-largest Crown land tenure or the largest. Did the ministry meet with them?

Hon. M. de Jong: The short response is: I am not aware of an offer like that having been made either to me or to the ministry insofar as its relevance to the trade dispute. I suppose we can speculate about how such an offer would be viewed, but not having received it, I'm not inclined to embark upon that speculation.

J. MacPhail: Did the ministry call up Weyerhaeuser on this report and say: "What's going on here? Where did this come from? This is a very sensitive time. We're at a very fragile state"? Was the article just so inaccurate the ministry thought they didn't even need to respond to it and that it didn't have any bearing on the negotiations?

Hon. M. de Jong: The member hasn't referenced the article specifically. We are surmising that it was a Saturday article in one of the national newspapers. I am advised that the ministry has made an initial inquiry as to the source of the story. Today is Monday. We've been in estimates, and I'm afraid that's the extent of my report to her.

J. MacPhail: That is the article. That's the only one that's appeared. To me it seemed pretty significant. It seemed like a real stupid move on the part of Weyerhaeuser, but who am I? I would have thought it would have been something that there would have been a call to first thing in the morning, saying: "What the heck's going on here?"

People are suspicious of Weyerhaeuser. They have major operations on both sides of the border. Maybe it's wrong to be suspicious of them. I don't hold that suspicion, but certainly others do. I would think that given the sensitivity of the time, etc., that would have been a fairly high-priority phone call to make — even to find out to dismiss it so that people aren't out there.

Of course, part of the issue is, as I understand it, that in negotiations with the United States, Canada — and British Columbia in particular — were making counterproposals right up to the very end in terms of tenure change, policy change, export taxes, level of timber option, etc. That is why I was curious as to when we learned…. The minister made the statement that we had no idea how protectionist they were going to be. Did that occur the minute before they rose out of their seats and left? Proposals and counterproposals were being made right up until that very moment.

What I want to know is — and it's a rhetorical question, because I've asked this minister the question already — what we've learned from these negotiations, to not repeat or to not reuse those tactical negotiating strategies of engaging right up until the very last moment on their working document.

I have great questions, yes, about the negotiating strategy, and this is the place to ask those questions, not out there in the public. I think if we enter into negotiations again and we repeat the same negotiating strategy, we will end up in an even worse position in terms of evidence given to the Americans for the litigation — completely. The Americans can just table our negotiating strategy as evidence on their behalf at the WTO and the NAFTA panel.

Also I would hope that the minister…. I'll free him up as we speak so that he can go and call Weyerhaeuser to either get them to stop blue-skying in that fashion, which interferes directly with the major issue on the American side, which is timber auction, or to explain what it is that they were talking about.

I know that the member is experienced enough at the art of negotiation of agreements to understand the concept of without-prejudice discussions. Even she will acknowledge that the proposition she tabled here around the use of proposals tabled during the course of negotiations is not an accurate one.

However, I have the benefit of the member's opinion and advice. She is correct; this is the forum we have as legislators to engage in that discussion, and I'm happy to have done it.

Hon. M. de Jong: I move that the committee rise, report resolutions and seek leave to sit again.