2003 Legislative Session: 4th Session, 37th Parliament
HANSARD
The following electronic version is for informational purposes
only.
The printed version remains the official version.
(Hansard)
WEDNESDAY, MARCH 5, 2003
Afternoon Sitting
Volume 12, Number 7
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CONTENTS | ||
Routine Proceedings |
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Page | ||
Introductions by Members | 5235 | |
Introduction and First Reading of Bills | 5235 | |
Unclaimed Property Amendment Act, 2003 (Bill 15) Hon. G. Collins |
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Statements (Standing Order 25b) | 5235 | |
Transportation infrastructure J. Wilson Small business in Victoria S. Orr Economy in Tri-Cities area K. Manhas |
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Oral Questions | 5236 | |
Poll of B.C. Liberal caucus J. MacPhail Hon. G. Campbell Economic growth in B.C. J. Kwan Hon. G. Collins Economic partnerships between Indian bands and private sector D. MacKay Hon. G. Plant Highway 11 improvements R. Hawes Hon. J. Reid Health care services for northern B.C. residents P. Bell Hon. C. Hansen Impact of gasoline tax increase on public transit J. MacPhail Hon. J. Reid |
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Petitions | 5239 | |
T. Christensen | ||
Second Reading of Bills | 5239 | |
Budget Measures Implementation Act, 2003 (Bill 6) Hon. G. Collins J. Kwan J. MacPhail I. Chong Income Tax Amendment Act, 2003 (Bill 7) Hon. G. Collins J. MacPhail I. Chong Hon. S. Hagen Auditor General Act (Bill 9) Hon. G. Collins I. Chong |
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Committee of Supply | 5255 | |
Estimates: Ministry of Education Hon. C. Clark L. Mayencourt J. Kwan S. Orr E. Brenzinger R. Masi |
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Proceedings in the Douglas Fir Room |
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Committee of Supply | 5286 | |
Estimates: Ministry of Provincial Revenue Hon. B. Barisoff P. Bell W. Cobb Estimates: Ministry of Skills Development and Labour Hon. G. Bruce Estimates: Ministry of Public Safety and Solicitor General (continued) M. Hunter Hon. R. Coleman R. Nijjar Estimates: Ministry of Finance Hon. G. Collins J. MacPhail |
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WEDNESDAY, MARCH 5, 2003
The House met at 2:03 p.m.
Prayers.
Introductions by Members
J. Weisbeck: In the gallery visiting from Kelowna to attend meetings in Victoria is Dr. Peter Ricketts. Dr. Ricketts is the v-p of academics for Okanagan University College — heavy on the "university," Mr. Speaker. Would the House please make him welcome.
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Introduction and
First Reading of Bills
UNCLAIMED PROPERTY
AMENDMENT ACT, 2003
Hon. G. Collins presented a message from Her Honour the Lieutenant-Governor: a bill intituled Unclaimed Property Amendment Act, 2003.
Hon. G. Collins: I move that Bill 15 be introduced and read a first time now.
Motion approved.
Hon. G. Collins: It's my pleasure to introduce Bill 15, the Unclaimed Property Amendment Act, 2003. This act fulfils a commitment made under the Ministry of Finance in its 2002-03 service plan — namely, to divest itself of its unclaimed properties responsibilities. This legislation provides for program delivery by a non-profit organization according to principles already established in the existing Unclaimed Property Act.
The new administrator will provide the same service to the public that the government provides now. It will make location efforts, maintain a public database of unclaimed funds, and assess and pay out claims. While the goal of the program remains the same — to unite owners with their property — the act also allows the administrator to donate excess funds to charities around British Columbia. In this way the new program delivery model will benefit British Columbians from all regions of the province.
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 15 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.
Statements
(Standing Order 25b)
TRANSPORTATION INFRASTRUCTURE
J. Wilson: Since the days of the pioneers, efficient transportation routes have been the lifeblood to the heartlands, delivering people to the Cariboo and ensuring that the resources get to market. The roads may be a little fancier and the vehicles a little faster, but the basic need for quality roads is unchanged, which is why investing in transportation infrastructure is so vital.
Our government has made a major commitment to fixing roads in the heartlands as we understand the economic opportunities that flow from safer roads. In the past there has been plenty of talk but precious little action taken to improve the roads. The work is long overdue, and we are committed to improving the roads in the Cariboo.
The province, in conjunction with the federal government, is spending $9 million to upgrade the Cottonwood Bridge just north of Quesnel. Originally constructed in 1957, the Cottonwood Bridge plays an important role in the regional transportation network as well as providing a vital road link between the northern and southern parts of the province. Unfortunately, the steep grade of the road, coupled with a hairpin turn, has made this section of road a notorious crash site — none more spectacular than how badly the previous government has handled this issue. The residents of my riding have been shouting for years for this upgrade. Unfortunately, until recently those shouts fell on a government more focused on regulating a problem road than fixing it. This upgrade will ensure long-term and stable access to Quesnel and provide a safer transportation corridor for both residents and visitors.
We want to open up B.C. to the world, and we need to ensure that they travel and enjoy the whole province. This is just the start, though. The Premier has announced $609 million over the next three years dedicated to the upgrade and development of infrastructure projects throughout the province. This money is key to part of our heartlands economic strategy.
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SMALL BUSINESS IN VICTORIA
S. Orr: Polls are interesting beasts. Some look at them with keen interest, some analyze them, and in most cases we pretend not to be interested in them. Well, truthfully, I am. So when the Ipsos-Reid poll came out recently, I found it very interesting. It felt really good seeing external figures confirming what we all knew. Eight out of ten — that's 78 percent — of all small business owners say that we are moving in the right direction, 44 percent say that the business climate is already in better shape since we took over as government, and 66 percent say that it will be in better shape two years from now. It's a good feeling to be in a government that's been endorsed by a huge group of people who are the engine behind the future of economic growth.
Victoria-Hillside is home to over 50 percent of this region's small businesses. Over the past couple of days, I did some checking around to get my own snapshot. It is good. One of my local furniture stores, Dodd's Furni-
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ture, said that they have had their best year in a decade. Furniture sales are always a good indicator. Auto sales are another good indicator. One of my local car dealers told me yesterday that in 2002 they had their best year since 1991, and this year they are already ahead of 2002 by 15 percent. Herman Rednaris, a builder friend of mine, sent me a news clipping yesterday with figures showing that residential construction is the key driver for the building industry, and they have had their best year since 1989. Even my local Starbucks says business is up.
On the weekend, when I was running my own little survey and walking through one of my malls, I noticed several stores had "Help wanted" notices in the windows, and it's not even Christmas. Boy oh boy, things are starting to feel good again. Thank goodness.
ECONOMY IN TRI-CITIES AREA
K. Manhas: Our government has worked hard to develop a competitive economic foundation for the entire province. We declared that B.C. is open for business, and we delivered a competitive tax structure and measures that will have tremendous long-term benefits to businesses and communities across the province. We laid that foundation, and now communities and businesses need to build on that foundation to achieve economic success.
I know that my community has great economic potential to build jobs. Our region encompasses the municipalities of Port Moody, Coquitlam, Port Coquitlam, Anmore and Belcarra and is commonly dubbed the Tri-Cities among area residents. In our region we have multi-jurisdictional boundaries, but we also have many synergies and interdependencies. We need to work together to achieve our potential in the heart of the lower mainland. The municipalities need to work together to attract business and investment and agree on transportation connections. We need a coordinated plan, a marketing strategy and a strong brand that will sell our strengths.
That economic revitalization has already started to happen, and jobs are coming to my region. The tourism task force has reinforced the need of a brand in their recommendations. That is a key to our success. We know we have the raw materials. We have to sell the package. That means looking at what we share as a region, giving it a tangible name and marketing that to people outside the region and inside the lower mainland.
The Okanagan, the Kootenays, the Sunshine Coast and the North Shore — all these regions have done an exemplary job of packaging themselves. The Tri-Cities region must do the same. Perhaps it means a new name, one that speaks to our common strengths and our common geography, but no matter the name, the communities need to market their combined strengths. The identity will help draw people, tourism, jobs and investment, and within that identifiable brand name, each municipality can accentuate the individual characteristics that make them unique.
When our communities work together, we all stand to gain. In the long run, I believe it will mean more jobs in our communities.
Oral Questions
POLL OF B.C. LIBERAL CAUCUS
J. MacPhail: Why did the Premier hire B.C. Stats to conduct an opinion poll of his own caucus? Was he worried they would be too afraid to tell him personally what they really thought?
Hon. G. Campbell: The Premier's office is very concerned about measuring performance — measuring performance of cabinet ministers as well as of deputy ministers. We did what's known as a 360-degree performance analysis of all members of cabinet and all deputy ministers.
Mr. Speaker: The Leader of the Opposition has a supplementary question.
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J. MacPhail: My question is: why did the Premier hire B.C. Stats to survey his own caucus? The opposition has obtained an internal B.C. Stats report that says that the Premier's office hired them to conduct a poll of all 75 members of the Liberal caucus. The Premier has an army of staff who are on public payroll to communicate with Liberal caucus.
Interjections.
Mr. Speaker: Order, please.
J. MacPhail: Was Steve Vanagas too busy? Martyn Brown couldn't pick up the phone and ask them himself if the Liberal members were happy with the Premier? What about the caucus chair? Isn't it his job to manage caucus? Again to the Premier: are the inner workings of his caucus so dysfunctional that he has to…
Interjections.
Mr. Speaker: Order, please. Order. Order, hon. members. Let us hear the question.
J. MacPhail: …contract with B.C. Stats — a government agency — to find out what his own MLAs are thinking?
Hon. G. Campbell: So the member opposite knows this, I have no concerns about my caucus whatsoever. I think that the critical things our caucus believes in are public accountability and assuring that evaluation processes are independent, clear and concise. We use B.C. Stats because they do this with deputy ministers. They're doing it with cabinet ministers. For the first
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time, we're actually having measurement to see how people are performing.
Mr. Speaker: The Leader of the Opposition has a further supplementary question.
J. MacPhail: Well, the fact is that the Premier is right that this is the first time ever he's used public money to conduct a poll of his own caucus. If the Premier is correct that he wants to be open and accountable and that he did something that should have been done by the staff, the public has a right to know what they got for their money. Will the Premier today, in the open and accountable way he just admitted to, table the questions that were asked by B.C. Stats of his own caucus, the responses that were given and the amount of money this ridiculous exercise cost?
Hon. G. Campbell: It is a fundamental tenet of trying to come up with performance evaluations. This is known as a 360-degree performance evaluation. I am sure that the member opposite has no idea what performance evaluations are. If the member opposite had, I don't think the people of British Columbia would have sent a 77-to-2 performance evaluation in the last election.
The critical component of performance evaluations is their confidentiality. Our performance evaluations will remain confidential, but I will tell the member opposite this: we have a great cabinet and a great government.
ECONOMIC GROWTH IN B.C.
J. Kwan: Instead of hiring B.C. Stats to conduct a poll of his caucus, maybe the Premier should hire them to tell him what's happening to our economy. Yesterday the Conference Board released a report forecast for B.C. for 2003, and guess what. Who would have thought — dead last in economic growth in Canada. Two years of the new era, and we're number ten — ten out of ten. Can he explain why he's spending money to get B.C. Stats to conduct polls of his own caucus on how satisfied the caucus is with the Premier, when he should be reading their reports on B.C.'s abysmal economic performance?
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Hon. G. Collins: I would encourage the member opposite to read the research that B.C. Stats has done over the last number of years. They showed a progressive decline in British Columbia's performance year after year after year under the previous government.
Interjections.
Mr. Speaker: Order. Order, please.
Hon. G. Collins: I know that was the rallying cry of the previous administration for ten years. Let's look at the facts: 78,000 new jobs created in British Columbia last year; near record growth in the housing market; buoyant housing sales across the province, retail sales and automobile sales. British Columbia has done astoundingly well in the last year, and we're going to go in one direction, and that's up.
I'll also be glad to send the member opposite the report by the Toronto-Dominion Bank, a little over a month ago, which said that in 2004 British Columbia is going to be number one in Canada.
Mr. Speaker: The member for Vancouver–Mount Pleasant.
Interjections.
Mr. Speaker: Hold it a minute, please — a moment until we have some order. The member for Vancouver–Mount Pleasant has a supplementary question.
J. Kwan: Not only were we dead last in economic growth, our youth unemployment is rising as well. Last month it was up 16.1 percent — well above the Canadian average. For five straight months we have lost jobs in B.C. — lost jobs. When the Premier took office the unemployment rate stood at 7 percent. It is now over 8 percent. How many other polls of his own caucus has he authorized…? To the Premier: how many polls of his own caucus has he authorized to find out if they're unhappy with his own performance?
Interjections.
Mr. Speaker: Order, please.
Hon. G. Collins: One of the very encouraging things underlying the job performance numbers and statistics numbers is that young people are coming back to British Columbia. Contrary to the distorted statistics of the members opposite, last year, for the first time in the history of British Columbia ever, over two million people had jobs and were working in this province.
Mr. Speaker: The member for Bulkley Valley–Stikine.
Interjections.
Mr. Speaker: Order, please. Order.
Interjections.
Mr. Speaker: Will the Leader of the Opposition please come to order. The member for Bulkley Valley–Stikine has the floor.
ECONOMIC PARTNERSHIPS BETWEEN
INDIAN BANDS AND PRIVATE SECTOR
D. MacKay: My question is to the Minister Responsible for Treaty Negotiations. It has come to my atten-
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tion that several native bands throughout the province have entered into negotiations with developers who are looking at investing in British Columbia. These ongoing negotiations between the native bands and developers are targeted at the developers who are being asked to enter into revenue-sharing agreements with the natives. There is no risk to the native bands. They just want a share of the revenues.
However, I am concerned that all we have done to date to attract new investors will be compromised by the actions of a few native bands. Could the Minister Responsible for Treaty Negotiations advise my constituents of the government's position on this issue?
Hon. G. Plant: Part of our task in building a climate of hope and economic prosperity in British Columbia is to find a way to ensure that economic development is there for the benefit of first nations and non-aboriginal people across the province. We're also doing that within a framework where we as government have to meet the obligations that have been established in judicial decisions around consultation and accommodation. In fact, those judicial decisions suggest that in some cases there are obligations on third parties.
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My message to the investment community and to the developers of British Columbia is to open up the dialogue for partnerships with first nations where it makes good business sense, because in the long run, good business sense means good business sense for aboriginal and non-aboriginal British Columbians and greater opportunity for everyone around this province.
HIGHWAY 11 IMPROVEMENTS
R. Hawes: Highway 11 between Mission and Abbotsford has been identified as one of the most dangerous pieces of highway in British Columbia. The engineering for the widening of this highway has been completed for several years, and the councils in both Mission and Abbotsford are asking when the widening might proceed. To the Minister of Transportation: can she tell my constituents when they might see actual work begin on widening of this highway?
Hon. J. Reid: Highway 11 is a priority for this government. There are many aspects of the highway, not just the specific one the member mentioned. In fact, in today's announcement — with the federal government and the partnership — that was made of $336 million going into transportation infrastructure, there are two projects on Highway 11 in Abbotsford that are included for a total of $6.5 million. Along with that, the stretch the member mentioned, where widening is necessary and the engineering work has been completed, is a high priority now that we have the dedicated transportation funding. We are drawing together the plan for that. It is a very likely candidate to be included, and that would be four lanes from Harris to Clayburn with an intersection upgrade.
HEALTH CARE SERVICES FOR
NORTHERN B.C. RESIDENTS
P. Bell: After a detailed analysis from the member for Prince George–Mount Robson and myself, it has become apparent that the northern regions are relying heavily on the coastal health authority for services to northern residents. As a result, many of my constituents and the constituents of the member for Prince George–Mount Robson have to travel a long distance to get those services. Can the Minister of Health Services tell us what steps this government is taking to allow northern residents to receive the services where they need them, when they need them?
Hon. C. Hansen: I certainly appreciate the work the two members have put into the analysis of patient flow in the province. As a result of the redesign that we announced almost a year ago, there has been a real strengthening of health care delivery in the north and greater capacity, more nurses being trained and more doctors being attracted to those regions. In addition to that, we've got a $50 million capital expansion underway at Prince George Regional Hospital. What that means is that in the future, more of those procedures that now get delivered in other parts of the province will be able to be delivered in the north. We are looking at strategies to ensure that we can build capacity in the north and at the same time make sure those dollars are reallocated so those services can be delivered for northerners where they live, when they need it.
IMPACT OF GASOLINE TAX INCREASE
ON PUBLIC TRANSIT
J. MacPhail: I wonder if part of the survey that B.C. Stats did for the caucus dealt with the 3½-cent-per-litre gas tax increase. We know today that bus service is at risk in Kelowna, in Victoria and in the lower mainland because of the increased fuel taxes for public transit. We also know that this government has not dedicated one cent of that gas tax to increased public transit. To the Minister of Transportation: can she identify what economic impact study she did on public transit that would determine the effect of the increased fuel tax on cuts in public transit service? Who is affected? Who will be harmed? How are you going to make up the difference?
Hon. J. Reid: Public transit is very important to this government. We have maintained the funding for public transit. When we've looked at what was happening within transit, we realized that there were efficiencies to be obtained within the transit system. That was confirmed over the system. As we've looked at getting those efficiencies into the system, we've been consulting with municipalities about that. Prices of fuel have always been volatile. That's part of the budgeting mechanism within…
Interjections.
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Mr. Speaker: Order, please. Let us hear the answer.
Hon. J. Reid: …the transit system. While we still are looking at efficiencies that are in the works, we are going to pursue that, and we're going to achieve those to the benefit of all users of the transit system.
[End of question period.]
Interjections.
Mr. Speaker: Order, please. Order, please.
Petitions
T. Christensen: I have a petition from 313 of my constituents encouraging government to work with the North Okanagan regional district to maintain and enhance the community economic, environmental and social values of the small-scale salvage program in the Vernon forest district.
Orders of the Day
Hon. G. Collins: I call second reading of Bill 6.
Mr. Speaker: Second reading of Bill 6 will continue in just a moment.
Members will please make their way about their business as quickly as possible. We're on second reading of Bill 6.
Minister of Finance.
Hon. G. Collins: Sorry, I forgot to call Committee of Supply in Committee A, and for the information of members, we'll be beginning the estimates of the Ministry of Provincial Revenue followed by Skills Development and Labour and, depending on progress, followed by Finance.
Second Reading of Bills
BUDGET MEASURES
IMPLEMENTATION ACT, 2003
Hon. G. Collins: I move that Bill 6 be read a second time.
Bill 6 amends a number of provincial statutes to implement many of the 2003 provincial budget measures announced in our second budget on February 18, 2003. The measures included in this bill will help to achieve our vision of a prosperous and just province for all British Columbians through a continued focus on restoring sound fiscal management and revitalizing the economy.
The government has already taken important steps to restore sound fiscal management, and it's working. Spending is under control, and as the economy strengthens, we'll be in a better position to invest even more in high-quality services that British Columbians require.
Bill 6 amends three provincial statutes and includes one transitional provision in order to implement the non-tax measures announced in the 2003 provincial budget. The Balanced Budget and Ministerial Accountability Act is amended to clarify the reporting obligations of ministers of state in terms of what they must make public — the actual results achieved respecting their accountability under the act to become entitled to their salary holdback amount. This amendment will provide more flexibility with respect to the timing of the reporting of the actual results.
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In addition, this act includes a transitional provision that allows the Minister of Health Services and the Minister of Health Planning to table interim service plans until final service plans reflecting the new federal funding for health care are completed. These final plans will include final ministerial accountability statements for both ministers, as well as for the Minister of State for Mental Health and the Minister of State for Intermediate, Long Term and Home Care. Those plans will be made public at the same time as supplementary estimates for the new federal health care funding are tabled in the House.
For the purposes of the Balanced Budget and Ministerial Accountability Act, the estimated amount of operating expenses for each Health minister will include the appropriate amount in the main estimates for which they are responsible, as well as the approved amounts included in the subsequent supplementary estimates reflecting the new federal health care funding. The expected results, as defined in the act for the two ministers of state, will be outlined in a Treasury Board regulation that will be issued once the final service plans are made public.
The Financial Administration Act is amended to provide for payments from the consolidated revenue fund for fees, commissions or expenses relating to public-private partnership projects. This amendment will provide Treasury Board with the authority to approve funding for public-private partnership projects that may arise during the fiscal year. Any funding approvals would have to be accommodated within a minister's operating expense target as defined in the Balanced Budget and Ministerial Accountability Act.
The working capital account referred to in the Purchasing Commission Act is repealed effective March 31, 2003. The purpose of the special account was to provide the working capital funding for the acquisition of capital assets for use by special offices and ministries. The account has been inactive for several years because special offices and ministries now receive funding directly for capital asset acquisitions.
Bill 6 also includes measures to further enhance the competitiveness of the provincial tax system, improve fairness, provide a revenue source for opening up our transportation infrastructure and clarify existing legislative policies. I am pleased to describe and explain the rationale for these amendments as well.
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The Social Service Tax Act is amended to further improve the competitiveness of the tax system, enhance consistency and add clarity. Amendments are introduced to allow for the expansion of the exemption for machinery and equipment. The exemption is amended by extending it to contractors who supply and install such equipment on behalf of eligible manufacturers and other eligible persons under lump sum contracts. This will ensure that those who are intended to benefit from the exemption do so, regardless of how the contract to supply and install the machinery and equipment is structured.
The act is also amended to improve consistency by treating aggregate producers like mineral producers for the purposes of the act. The result is that aggregate producers will now qualify for the exemption for explosive supplies that has long been provided to mineral producers.
The act is amended to clarify and confirm the longstanding application of the tax to birdseed and other agricultural feeds used to feed wild birds, pet birds and other domestic pets. This clarification does not affect the exempt status of agricultural seeds and feeds for poultry and other animals that provide food for human consumption.
The Corporation Capital Tax Act is amended to raise the exemption threshold for small financial institutions from $5 million to $10 million. This will allow those small, local trust companies and credit unions to expand to a more sustainable size before being required to pay the corporate capital tax.
A technical amendment is also made to clarify that the adjustment to an authorized foreign bank's paid-up capital to allocate the capital to other jurisdictions is restricted to capital employed in Canada. Because the act only applies to a foreign bank's Canadian operations, any allocation of its capital outside the country would inappropriately reduce its tax payable and be inconsistent with the overall scheme of the act. This amendment is retroactive to June 6, 2000, the date the act first applied to authorized foreign banks.
The Motor Fuel Tax Act is amended to help fund the transportation plan announced by the Premier on February 12, 2003. The 3½-cent-per-litre dedicated tax increase effective March 1, 2003, may help the province leverage more than $1.7 billion in additional transportation investments. Projects under the transportation plan will benefit all regions and communities and will help to open up the province to more investment, job creation and economic growth.
I am very pleased with the joint announcement today with the Prime Minister and the Premier with regard to two of those projects that are on the target list: the Trans-Canada Highway at Kicking Horse Canyon as well as some of the border-crossing initiatives and planning for some transit infrastructure. We're already seeing the biggest partner come to the table on the transportation infrastructure plan, and I think everybody's very pleased with that.
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The Motor Fuel Tax Act is also amended to provide authority to exempt from tax marine gas oil used in turbine-powered commercial vessels. The exemption for marine gas oil parallels the exemption that was provided for bunker fuel in 2001 and will level the playing field for cruise ships that use this cleaner fuel.
The bill also amends the B.C. Transportation Financing Authority motor fuel tax regulation under the Build B.C. Act. This amendment implements the clear fuel tax rates that have been collected on behalf of the B.C. Transportation Financing Authority since June 1, 1999.
As part of the restructuring of B.C. Ferries, the Motor Fuel Tax Act is amended effective April 1, 2003, to return to the consolidated revenue fund the 1¼-cent-per-litre clear fuel tax that's paid to the B.C. Ferry Corporation. The corporation, which currently operates as a Crown corporation, will be restructured into an independent company renamed B.C. Ferry Services. The government will support coastal ferry services through an annual grant negotiated with the new company rather than through the fuel tax means.
As well, the Property Transfer Tax Act is amended to improve the fairness and effectiveness of the first-time home buyers exemption. The major changes are as follows. We add a new proportional exemption for first-time buyers who purchase homes valued at up to $25,000 above the current maximum property value thresholds and a new prorated exemption for first-time buyers who do not fully meet the requirement to live in the home or maintain the required level of mortgage financing for one full year following date of registration. Both of these changes improve the fairness by replacing the previous start dividing lines between eligibility for the exemption and full taxation with the new system of partial exemptions.
Other changes include extending the prepurchase residency requirement to former residents of British Columbia who have filed B.C. income tax returns in any two of the previous six years, restricting eligible mortgage financing to arm's-length lenders to better target the exemption to those in need of support, clarifying the definition of "permanent resident" to add clarity and certainty, and ensuring that the penalty provisions for those who apply for the exemption more than once are effective and can be enforced.
The Insurance Premium Tax Act is amended to increase the tax rate on property and automobile insurance premiums paid by insurance companies to 4.4 percent from 4 percent. The $14 million in annual revenue will be used to help offset provincial costs incurred in fighting forest fires. Forest fires can and do threaten communities in different areas of the province, and the province's fire suppression program is essential to minimizing property damage and loss.
In addition, the act is amended to require payment of the tax by all businesses that are required to have an authorization under the Financial Institutions Act to carry on insurance business in the province. This levels the playing field for all businesses that carry on such business in this province.
The Tobacco Tax Act is amended to increase the cigarette tax rate by $2 per carton to $32 per carton of
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200 cigarettes and the tax rate on fine-cut tobacco by a proportionate amount. This increase will bring British Columbia's tax rate into line with the other three western provinces. It will raise about $25 million annually to help fund provincial priorities and will help to reduce future health care costs by encouraging current smokers to quit and discouraging young British Columbians from starting smoking in the first place.
Bill 6 contains several changes to the property tax statutes as well. Three acts — the Local Government Act, the Vancouver Charter and the Taxation (Rural Area) Act — are amended to exclude buildings and structures from the property tax exemption for dust and particulate-matter eliminators. These amendments respond to a court decision which expanded the exemption far, far beyond its original intent.
The provincial surveyor of taxes is responsible for levying, collecting and recovering property taxes on behalf of all taxing authorities in rural areas of the province. Bill 6 amends the Taxation (Rural Area) Act, effective for the 2004 taxation year, to expand the cost-recovery fee charged by the surveyor of taxes for this collection service to three additional taxing authorities. However, broadening the cost-recovery base will be done on a revenue-neutral basis so the extension of the fee to include B.C. Transit, the Municipal Finance Authority and hospital districts will allow for a reduction in the fee for those currently paying.
The University Act is amended to confirm longstanding assessment and taxation policy of university land. Commercial occupiers of university land and university land used for commercial purposes have long been assessed and taxed. This ensures that users of such land compete on a level playing field with other taxpayers and help to pay their share for the services they receive. Substantive changes to longstanding policy are not anticipated but, if required, would only be made after consultation with those universities involved.
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Finally, a number of statutes are amended to validate interest charged prior to February 19, 2003. In summary, the amendments in Bill 6 continue to open up and revitalize the economy through further improvements and refinements to the provincial tax system, provide funding for essential transportation and infrastructure projects without increasing provincial debt and, ultimately, will help balance the budget in 2004-05.
It's not only with sound fiscal management and a balanced budget that we'll be better able to ensure that British Columbians will continue to have access to the services they need when they need them. This bill takes us closer to achieving that objective. I move second reading of Bill 6.
J. Kwan: Let's take a look at some of the numbers that we are faced with in the B.C. economy. Almost two years later, after the government has been elected, the results of the tax cuts are in. Personal income tax revenue has gone down by over $1.2 billion. Corporate tax revenues have gone down by $299 million. Revenue from the corporation capital tax has gone down by $358 million.
While revenues from personal and corporate taxes have plummeted, revenues from regressive taxes and fees have gone through the roof. Revenues from the sales tax, which the Liberals hiked last year, went up $370 million; from the fuel tax, $151 million last year, and here — this year and under this bill — another $211 million. From MSP premiums, revenues have gone up $516 million. This is the first billion of the Liberal tax cut clawback.
Of course, there have been a huge number of other fee and licence increases — from filing court documents to taking families camping, your Hydro bill, ICBC rates and even renewing your driver's licence. Those fees are going up, and they are too numerous to count. This year the cost of house insurance will be increased by $4 million in this bill — from this budget — and will be increased another $14 million next year. That's something the government doesn't talk about. The MLAs don't get up and start to chant and raise this issue for the information of the public. It's buried deep in the budget information.
School taxes will be increased by $34 million this year. Of course, none of that money is going into education this year. Next year, $62 million more — and that is on the school taxes. A million dollars more this year from rural property tax owners and $2 million more next year….
There we have it. We are well on our way to clawing back. In fact, I would argue that we have already clawed back — from the middle-income families, the low-income families, the single moms, the seniors, the students — the second billion that this government handed to the wealthiest in our province. It is interesting. If you look at the tax shift, is it really a tax cut that the Liberals had given to the middle-income or to the lower-income people? Or is it a shift in the tax burden? In fact, there was an analysis done. If you actually look at some of the tax categories, you will see that, indeed, it is a shift of the tax burden from the wealthiest and from the big corporations to the middle income and low income.
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Revenue sources. I just want to highlight for this House progressive taxes and the shift of that tax burden to regressive taxes. In the year 2000-01, the amount of personal income tax under this list of progressive taxes was at $5.963 million. For '03-'04 it dropped to $4.7 million. Corporation income tax was over $1 million; for '03-04, $755,000. Corporation capital tax in the year 2000-01 was at $459,000. For '03-04 it dropped down to $101,000.
Regressive taxes. The social services taxes. The sales tax, a shift in burden — in 2000-01, it was $3.6 billion. In '03-04, it went up to $3.9 billion. Fuel — $715 million. It went up to $866 million. Tobacco — in 2000-01, $460 million. It went up to $635 million. MSP premiums — $894 million in 2000-01. In '03-04, $1.4 billion. The lists go on.
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You can see the flavour of it in terms of the shift in tax burden. This is all happening, of course, at the same time when equalization funds — federal support — are actually increasing for this government. Even then we still see the highest deficit ever in the history of B.C. The total revenue in the shift of the tax burden on a percentage basis from progressive taxes to regressive taxes…. Progressive taxes went down from 26.8 percent to 21.5 percent, and regressive taxes went up from 22.5 percent to 29.4 percent.
When we're talking about tax cuts, it is actually not a tax cut which particularly the middle- and lower-income people got. They simply got a shift in tax burden. The government cast the increase in taxes in a number of different lights. Some of them are indeed outright tax increases like the PST, like the fuel tax increase. Others were hidden by way of forms of a licence, of a fee or of increases in numerous ways.
[J. Weisbeck in the chair.]
We already know that most recently Pharmacare costs are also going to go up, as another area. For students who are faced with tuition, their costs are going up. They went up last year 30 percent and this year another 30 percent. Just imagine for one moment, if you were someone who is struggling and who is trying to make ends meet, what those impacts would be.
The government and the Minister of Finance are very proud of their record. What record do we have to look at? After two years in government, the Conference Board just released a report yesterday to say that we're number ten — ten out of ten — in terms of economic growth. That's something this government and all the government bench MLAs are really proud of. In the survey that was ordered by the Premier's office for B.C. Stats to survey the caucus to see how happy they are, I wonder if that question was asked. Are you happy with the fact that under the new-era agenda, we are now number ten in economic growth?
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What about this information? The unemployment rate has gone up under this government from 7 percent to 8 percent. Youth unemployment has gone up to 16 percent. Guess what. Private sector investment is expected to go down 3 percent this year. This is the record of the new-era agenda; make no mistake about it. This is the record of this Minister of Finance, this Premier, this Liberal government.
The $1 billion that was invested in business taxes has not gone into reinvestment in British Columbia. It's gone somewhere else. I don't know where. It has not gone into reinvestment in British Columbia. Our economy is very fragile. We're faced with many difficulties, yet somehow this government is oblivious to that. They don't see that. They don't sense that.
Somehow you don't hear the MLAs getting up in this House raising concerns from their own constituents, like maybe the MLA from Prince Rupert. You might think that the MLA from Prince Rupert might want to come into this House to say, "You know what?" in one of those soft-lob questions to the ministers: "I'm very concerned for my community, because we have a 60 percent unemployment rate. Minister of Finance, Minister of Competition, Science and Enterprise, what are we going to do about that? How can we move those numbers down, not up?" You never hear those kinds of questions in this House from the government bench. All they do is come in and say how great they are and how wonderful everything is. Yet when you talk to the real people in the real world, they have something else to tell you. The reality is completely different from what goes on in this chamber and what is in the minds of the MLAs.
The survey was conducted, ordered by the office of the Premier and paid for by the taxpayers to find out the satisfaction with caucus procedures. Maybe that money should be invested into surveying the issues around economic growth for British Columbia. Maybe that should be directed to see if we can find solutions that would help our community deal with these challenges instead of saying: "Are you happy with the Premier's performance? Are you happy with the way things are?"
It seems to me that all the MLAs are capable of doing is simply thumping their desks and saying, "Hooray, everything is fine. Everything is rosy under the new-era agenda," when reality tells you something completely different.
J. MacPhail: I rise to address this piece of legislation, and I must say that the remarks of my colleague the member for Vancouver–Mount Pleasant were thoughtful and very much to the point. I want to add a few things to the many issues that my colleague has already covered in this bill.
One of the areas that I want to talk about, though, is this government's direction from its effect on the macroeconomy. We are an open economy in British Columbia, and that means that we are an export-driven economy. We're a small, open economy, just a little under four million people now in a country of over 30 million, and in the North American continent which, including Mexico and Latin America, is well over 400 million people.
There are two ways that our economy can grow or two ways that the GDP increases. One is to actually increase exports, to increase the business that British Columbians do with the rest of Canada and North America, and with offshore exports as well. What's taken away from that are the imports that British Columbians have to bring here, which we can't produce ourselves — all very basic, and I know everyone understands that.
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That's one way you can grow an economy. The other way that an economy flourishes, albeit for a short period of time, is a consumer-driven economy. A consumer-driven economy can exist in an open economy even when exports are in decline. In fact, a consumer-driven economy is driven by monetary policy. When money is made cheap to borrow, then people are able to spend more money, and in fact, people feel more comfortable investing in debt, shall we say.
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That's what's happening across North America right now. The economy is not growing because of economic growth through exports. Certainly in British Columbia this is suspect, but the economy keeps going because it's consumer-driven. When this government in British Columbia stands up and says that house and furniture sales are great and therefore aren't we wonderful…. Well, no. That people are spending money on houses and furniture actually has absolutely nothing to do with this B.C. Liberal government. I'm happy that people are spending money on houses and furniture, because if we didn't have the consumer, our economy would actually be in decline.
Exports are down. Non-residential building permits are down. Manufacturing output is down. Jobs over the last five months are down. Income tax revenue is down. Corporate tax revenue is down. Sales tax revenue in the last few months is flat. So, thank God for the consumer.
Why is the consumer purchasing? They're purchasing because the Bank of Canada, for a substantial period of time, kept interest rates at the lowest rate in 40 years. That was good. It was excellent that Mr. Dodge, the governor of the Bank of Canada, did that. There's been a slight shift in that as of yesterday. The governor of the Bank of Canada increased interest rates, and we'll have to see what effect it has on a consumer-driven economy.
The U.S. economy is softening substantially. Of course, the U.S. is our largest trading partner, and the share of exports to the U.S. grows. Certainly, it has grown in the late nineties and the early two-thousands.
It's very important that we have consumers who have money to spend. It's the only thing that's working in the British Columbia economy. It's working far less well in British Columbia than anywhere else in Canada. We are number ten. Our forecast economic growth in the year 2003 — the third year of this B.C. Liberal government — is dead last. This is the third budget that this government has brought down. We're dead last in economic growth, and our debt-to-GDP is on the rise.
What are we doing to help the consumer? Well, this legislation is taking money out of consumers' pockets. It's raising taxes. That's what it's doing. It's all very well and good to give corporations tax breaks, but the minister himself, in the most recent issue of B.C. Business, is quite scathing about the business community's contribution here in British Columbia. This is out of the March 2003 B.C. Business Magazine. The article is called "Diminished Returns." I'll just read the opening of it: "The economic revival we've been anticipating is falling behind schedule. Celebrations are on hold, and voters are getting grumpy. Should the Premier and his government accept all the blame for this sluggish pace of change?"
[1505]
I read this with interest. It is a business magazine. I wanted to see what, indeed, the government's contribution was to this. In this article — which we will go into in more detail in estimates with the Minister of Finance, and I'll quote from it when we're in estimates — the Minister of Finance is basically saying that the business community hasn't done what it's supposed to do. He, of course, tries to blame it on the last decade. I wonder how long that's going to last. But here we are, the third budget of this government, and investment is on the decline, and the B.C. Finance minister accepts no responsibility for it. Regardless, if he doesn't accept responsibility for it, the fact is still there that the business community is not using its tax breaks to invest in British Columbia, so all we have to rely on is the consumer.
This legislation takes money out of consumers' pockets. Middle-income families have lost their tax break. Low-income families lost their tax break a long time ago. This legislation increases the taxes that low- and middle-income families have to pay so that they actually have less money to spend in their communities. That's going to have an impact on a consumer-driven economy right now.
Of course, the taxation increase in this legislation will be exacerbated negatively by the increase in interest rates brought yesterday by the governor of the Bank of Canada. Consumers are getting hit twice: higher taxes by the B.C. government and higher interest rates by the governor of the Bank of Canada. Our economy, already dead last, is in even worse trouble today than it was four weeks ago, before this budget was brought down and before interest rates were increased.
Now, these tax increases hit everybody. Gas tax — today the gas tax increase…. I asked the Minister of Transportation what she's doing to help public transit, and she has no answers. The people who take public transit, who don't drive cars, are going to be hit by this as well. In Kelowna they're talking about having to increase bus fares. In the lower mainland they're being hit with a $1.3 million gas tax increase because of this government — the transit authority. In Victoria here, they're having to talk about cutting 10,000 hours of public transit service because of the gas tax increase. So even public transit users are being hit as a result of this gas tax increase.
The Pharmacare increases are regressive. Jon Kesselman, UBC economics professor…. I know the Minister of Finance likes to pick and choose what economics professors he listens to, but Jon Kesselman had an excellent piece in the Vancouver Sun about how even the income-testing that this government has brought in for Pharmacare assists the high-income taxpayers in this province at the expense of the middle-income taxpayer.
There is a tax shift going on here like we've never seen before, as my colleague from Vancouver–Mount Pleasant pointed out. Take from the low- and middle-income, and give to the wealthy. Everything this government does is on that bent. It's never been seen before, and this bill epitomizes that.
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We have a bill that directly attacks consumers and therefore will undermine the only good thing about the
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economy in British Columbia today — and even that's waning — that is, a consumer-driven economy. As importantly, this bill attacks people on fixed income. I've been talking to seniors around the province over the last few days, who are very concerned that even their fixed income is declining. The stock market crash is now affecting their fixed income in many ways. RRIFs, retirement income funds, are paying out less today than they did last year. The return that retired people are getting on their investments is on the decline. We can't even say that people on fixed incomes have a steady stream — that regularized non-employment-related earnings of retired people are on the decline…. As their disposable income shrinks, this government is hitting them with the same taxes that they're hitting the people who live in West Vancouver, the high earners who live in West Vancouver.
We have a situation where the rural property taxes, the school property taxes, the gas tax increases and, of course, the Medical Services Plan increases and the Pharmacare increases are all hitting seniors. It's a double whammy for them. They do not have the opportunity to go out and get two of those part-time jobs that were created last year and make up a full income. They just can't do that.
This legislation is the wrong direction to go during a fragile economy. It's exactly the wrong direction to go when the only solid aspect of the British Columbia economy is the consumer. Even that is under threat now with higher interest rates. The proof of the pudding that this government has nothing to do with increased consumer spending is because disposable income under this government for low- and middle-income people has gone down, and the interest rates that drove consumer spending are controlled in Ottawa. Just the same way that this government can't have an effect on those interest rates, they cannot claim any success for any of their failed economic policies.
I would be happy — I just said this out in the hallway — to sit down and have a discussion about the direction of the B.C. economy. I objected, throughout the 1990s, when this Liberal government in opposition got up every day and spread doom and gloom. Every day, no matter what happened, this Liberal opposition spread doom and gloom despite the reality of the economic situation. I said I am not going to do that. I want the economy of British Columbia to be strong and growing and inflation-proof and interest-proof. I want us to have a vibrant, open economy, but it isn't happening. Instead of passing legislation like this bill, it's time for us to sit down and rethink the direction of the economy. It can be done in a way where there are not slings and arrows thrown, like this government did throughout the 1990s.
The silly mantra of this government that somehow suggests that everything was a failure by previous governments is just wrong for a commodity-driven, commodity-reliant, open economy. It's just wrong, because they're going to be hoisted with their own petard. They already are. Their third budget — and they're number ten. Their third budget — and they have the largest deficit in Canada. Their third budget — and their rate of debt growth is the biggest in Canada.
[1515]
It's time. Maybe the provincial congress that the Premier is calling on Monday is exactly the time to discuss the proper direction of the economy. I'm sorry, I didn't even mean to use that word — discuss alternatives to economic policy that could be considered now. A strong British Columbia is what we all want, including the opposition. A strong economy is what British Columbia deserves, and this legislation does exactly the opposite.
I. Chong: I, too, would like to rise and respond to second reading of the Budget Measures Implementation Act, 2003. Contrary to the opposition members, I wholeheartedly support this bill, because it does put in place the measures, incentives and initiatives that were introduced in Budget 2003 — which, of course, I support as well.
I want to pay particular attention to a couple of sections of this bill, because I think they're important. Section 5 of this bill deals with the Corporation Capital Tax Act. I think it's relevant and important in this day and age, when our small financial institutions are starting to grow and needing some relief, to know that they're not going to be taxed on more, additional investment. Our small communities rely on these small financial institutions, so increasing the threshold amount from the $5 million to $10 million is a good start. I think we will find that those small communities, those in the heartlands in particular, will be very grateful for this particular move.
Also, I want to make note of some changes to the Social Service Tax Act, where there are some amendments to the definition and where there is clarification made to some tax exemptions pertaining to things such as agricultural feeds and seeds. I think these changes are important in a budget measures act, to have some housekeeping items to provide clarity and, in particular, those that were not well defined in the past and need to be addressed.
I do want to speak to the Motor Fuel Tax Act and the changes that have been made to provide for the application of the 3½-cent-per-litre fuel tax that is going to be used and dedicated to road improvements and to our transportation strategy that was introduced by the Minister of Transportation. Never before has a government been as bold as to ensure that these future and forward-thinking ideas are considered, but not on the backs of future generations, and that it is a pay-as-you-go system.
We are going to see very shortly that these are going to pay off in spades. As these roads and bridges are improved in our heartlands and in other parts of our province, we're going to see economic development occur, and people are already talking about it. Small communities are excited about it, and all that excitement will only lead to more investment and more job creation for our young people. So I think that is a good
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thing. It's already starting to pay off in dividends as well, in that the Prime Minister of Canada has made announcements about wanting to participate and share with our renewed sense of investment in our transportation system.
Section 48 of Bill 6 also makes reference to the University Act. I want to speak very briefly on this, because I represent a university in my riding — the University of Victoria. What this section does is confirm that the exemption from taxation for property that is vested in a university will continue to apply to only those properties that will be held and used for university purposes. That's important, because in Victoria, due to a very substantial bequest that was left to the university, some properties had been left — in particular, some commercial properties. In fairness, it would have been exempt from property taxes, and that would have been an unfair playing field for the businesses that competed with that.
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While the university was very grateful for this bequest left to them, they also realized that taxation would have had to apply to that. But ensuring that those properties, if they were to be used for university purposes, would qualify for the exemption…. That clarity needed to be made, because I think there were some concerns about that. Again, that deals with fairness, and that deals with equity.
I want to touch very briefly, as well, on some comments made by the members of the opposition. It's always very disturbing to hear them speak of the members on this side of the House when we were in opposition, suggesting that we always spoke of doom and gloom. To be fair, that is exactly what they're doing on a daily basis. They may not think so, but that's what I hear from them. They're naysaying. They're fearmongering at each and every opportunity they have.
The concerns that we raised when we were in opposition were valid, because they took us from a have status to a have-not status, so we were right to raise the alarm bell. We were right to tell them that they were bringing our economy to a downward and a backwards approach and that we needed to revitalize our economy. When they spoke today of being the number ten economy, I have to remind them that they're the ones that put us there. When they started off in 1991, we were the number one economy, but they put us in number ten.
We've been here but a short 21 months, and it's pretty hard to reverse all the damage that they've done in ten years. It took them ten years to do this, so I think they should give us some time to reverse the trend that they've put us in. It's starting to work. It's starting to pay off, because we do see private sector investment returning to this province.
I mentioned it in my response to the budget speech about a week and a half ago when I spoke of investment from the United States that affected their ridings — in particular, in Vancouver. I spoke about the former Ford Centre for the Performing Arts being purchased by investors from the United States. They said to me specifically, because I asked them: "Why did you do this? Why did you put your dollars in British Columbia?" They said: "We have confidence in your province. We have confidence in your fiscal plan. We have confidence that our investment is going to be safe in British Columbia. We're prepared to bring our dollars up here. We're prepared to invest them in British Columbia, and we're prepared to continue to invest in British Columbia." That's not doom and gloom. That's a very positive indicator.
Another issue I would like to mention, which again supports what we're trying to do with Budget 2003 and Bill 6, is private sector investment. When I was in opposition, I had met with the Investment Dealers Association. They're a group that look at investment opportunities across Canada. They rate each province. They do a profile of each province. I recall meeting with them, and they said to me at one time: "You know, we put all our provincial reports out. We throw them out on a table when these foreign investors come, and they say, 'Where do we want to put our dollars?' The books that were always pushed aside were always the British Columbia reports. They didn't want to look at British Columbia. They didn't want to invest their dollars here when the NDP were the administration in charge."
Now, after 21 short months, the investment dealers have said that the trend has started to reverse. The investors now consider British Columbia a good place. Our ranking is now not number ten, or last place in that respect; it is now number ten. We are trailing behind Alberta, and we are trailing behind Ontario. But I know it's only a matter of time, when we bring our balanced budget in next year and when we show strong fiscal plans and economic growth, before the investment dealers are going to propel us forward another step. I can't wait for that day to happen. I hope those two opposition members will be here to watch and to thank us for that, because they certainly didn't help us when they were in government.
[1525]
You know, I find it really hard to take their comments this afternoon very seriously. I was quite distressed when they said that they wanted to sit down and talk about some solutions and things of that nature. Well, I really wish I could take their advice, but their advice is what has caused the problem that we're in and the structural deficit that we had to inherit. As I said in my response to the budget: thanks, but no thanks. They can keep their advice. I think what they need to do is to come on board, to work with us, to see how these things are changing and to see the fact that there are more opportunities, more job growth, more investment, and to help us revitalize our economy.
When they talk about the unemployment rate…. Again, these are numbers. They're numbers that can be adjusted, and it all depends on the number of people who have put their names forward as looking for jobs. I don't doubt that perhaps the unemployment rate has risen, because more people are putting their names down for jobs. More people are interested in jobs, and the problem is that we can't place them as quickly as
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we can. We've heard the Minister of Human Resources indicate the extra moneys that he's allocated toward employment programs. People are coming off of temporary income assistance and finding work. All of this is beginning to pay off, and people are beginning to see that this is happening. I think that when they speak about the unemployment rate, they should put it in perspective. Private investment is up. Jobs are up. In two short years we've already seen some of the dividends paying off. I think it's very important to acknowledge those accomplishments.
The bond-rating agencies have given our government a thumbs-up as well. Our financial instruments have been purchased. They're scooped up as quickly as they can. We haven't experienced a credit downgrade, despite the deficit budgets we've had to bring in. But that NDP opposition, when they were in government, went through two credit downgrades. If they want to talk about the confidence that people have in our province, I think they better start looking at their record before they start judging us and ours, because we're doing exactly the kinds of things we need to do to turn our economy around.
Bill 6 is absolutely an important piece of legislation. It brings into force items that were introduced in our Budget 2003. I say: let's get on with it. I say: let's support our tax measures that are going to see more opportunities. With that, I thank you for the opportunity to respond.
Deputy Speaker: Closing second reading debate, the Minister of Finance.
Hon. G. Collins: I want to thank the members for their contributions to the debate today, especially the member for Oak Bay–Gordon Head, who has been paying attention to the economic file at least since she was elected in 1996 and, I expect, as a CGA long before that. I do put a great deal of value in her comments and her input. She never hesitates to offer it, and I never hesitate to accept it.
I want to address some of the comments made by the member for Vancouver-Hastings, if I can for a moment, because she made a comment that she has made in the past, over the last couple of years. As well, people like Jim Sinclair of the B.C. Federation of Labour and other traditional supporters of the NDP government have made it over the last couple of years. It is that we sit down and have a rethink about the government's economic strategy and our tack, because they think there's a different way of doing it. Those offers have always been put out there, with the caveat that we roll back the tax reductions that are in place, that we increase spending, that we stop the deregulation process and we stop trying to get better value for the dollars that we do spend as government. In essence, they want things to go back to exactly the way they were on May 17, 2001. They want the same economic policy and strategies in place that got us to where we ended up on May 17, 2001. By "us," I mean the province of British Columbia.
We as a province used to lead the country, and certainly in the late eighties and early nineties we regularly were number one or very near the top of the charts as far as economic growth goes in Canada. We had done very well. I think 1998 is a very important date, because in that year British Columbia — this is while North America was booming, I might add — and Chiapas, Mexico, were the only two regions in North America that were in recession, and Chiapas, Mexico, had a civil war ongoing. I think that gives you an indication of how the province had declined over that period of time.
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I remember comments prior to the election, in the years leading up to the election and, briefly, post-election when as Finance critic…. Members of our caucus in opposition said it as well — that British Columbia was running the risk of becoming a have-not province. I remember the member for Vancouver-Hastings going out and saying, "Oh, the member must have pixie dust. He's trying to sprinkle pixie dust in people's eyes. There's no way. That's pure fiction. He doesn't know what he's talking about," and she says that every day.
The reality is that Statistics Canada and the federal government have informed us that in 1999-2000, British Columbia became a have-not province.
Interjection.
Hon. G. Collins: The member opposite seems so proud of her accomplishment. The reality is if you go back and look, year over year over year, you can see British Columbia's position declining relative to the rest of the provinces in Canada. You can see it year by year by year. The trajectory on the graphs is very clear that we were headed for have-not status. We became a have-not province in 1999-2000.
In 2000….
J. MacPhail: What happened in 2000?
Hon. G. Collins: I'm glad she asked that; I was about to say it. In 2000-01 B.C. Hydro, as a result of the electricity meltdown in California and some other jurisdictions, had profits and cash flows to government of over a billion dollars. As was commented at the time, those were really one-time revenues. They weren't revenues that were going to continue to be there year after year.
Interjections.
Deputy Speaker: Members, order.
Hon. G. Collins: It wasn't economic growth. It wasn't that we had created a new economic base for the province. It wasn't that there were going to be new jobs or new businesses that were going to be there year after year. They were one-time funds. You can actually see on the equalization formula, if you look at it, that
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British Columbia was on this steady decline. It was on a steady decline, and in the year where B.C. Hydro records the energy revenues, we bump up just barely. Once those energy revenues disappeared again, the trajectory continued.
It's important to see how we got where we are and how we got where we were on May 17 and where those economic policies got us. I talked about "us" in the broad sense of British Columbia, but the member opposite should reflect on where that economic policy got her and where that economic policy got the New Democrat Party in the province of British Columbia. They got a resounding whopping by the people of British Columbia in the polls, because the people knew that British Columbia was on the wrong track. They chose a different track with a resounding endorsement for change — a 58 percent endorsement, 77 of 79 seats, a record in the province of British Columbia. This government, day in and day out, has been delivering on that agenda, and we're starting to see the results.
Perhaps I can warn the member opposite that if she's got earplugs, she should put them in now, because I'm about to give her some more good news, and I know she doesn't like to hear it. Let me put forward to the House some of the positive economic indicators we're seeing in British Columbia. The economic growth is the same as political growth. It's not so much where you are as the momentum and the direction that you're heading.
J. MacPhail: Being dead last isn't relevant — yeah. Dead last is not important.
Hon. G. Collins: If the member was concerned about being dead last, why didn't she do something when she was in government for ten years to stop us from being dead last?
Interjections.
Deputy Speaker: Order, please. Order.
Hon. G. Collins: I've warned her to put in her earplugs, so let me start with some of the good news. Small businesses. An Ipsos-Reid poll was just put out, and 78 percent surveyed said the provincial government is moving in the right direction with changes to help small businesses. Two-thirds say the business climate will continue to improve over the next two years.
Investment intentions in British Columbia — private sector investment intentions — are the second-highest in Canada. Data from Stats Canada shows that capital investment in British Columbia is expected to increase by 5.1 percent in 2003, the second-highest of all provinces and more than double the expected 2.1 percent national increase. Those are dramatic numbers for private sector investment.
Interjections.
Deputy Speaker: Order, members. Order.
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Hon. G. Collins: Private sector investment is what will drive the economy and what creates new jobs. New vehicles sales growth in British Columbia was the second highest in Canada. New motor vehicle sales in B.C. in 2002 showed the second-highest increase in Canada, with a gain of 13.1 percent from 2001 — more than 50 percent stronger than the national increase of 8.5 percent.
J. MacPhail: Thank God for the Bank of Canada.
Hon. G. Collins: The value of residential building permits in B.C. in 2002 was up 37.4 percent from 2001.
What the member fails to mention, when she talks about thanks to the Bank of Canada, is that the same interest rates are in every jurisdiction in the country. So if we're outperforming the country in all of these statistics, we can thank the Bank of Canada. But I think we should also be thanking the new vision and the new economic policy of the province of British Columbia.
Interjection.
Hon. G. Collins: I've just given the member three examples of where B.C. is number two, Mr. Speaker.
As far as job creation, in 2002….
Interjection.
Hon. G. Collins: The member should be careful. She runs the risk of becoming a caricature of herself as she does this.
Last year, in 2002, British Columbia gained 78,000 new private sector jobs.
J. MacPhail: Thirty-one thousand jobs by your own stats.
Hon. G. Collins: Seventy-eight thousand new jobs in 2002. Well, that's according to StatsCan. If she's got a better source, she should let us know, Mr. Speaker. According to Stats Canada, there were 78,000 new jobs in British Columbia from December 31, 2001, to December 31, 2002. It's an increase of 41 percent.
Housing starts in British Columbia in 2002 were up 25 percent from 2001, surpassing forecasts by the provincial government, CMHC and the Economic Forecast Council — again, good numbers.
The member talked about wages in British Columbia going down. Actually, the average weekly wage increase in British Columbia was the highest in Canada, number one of all provinces in 2002.
A record year for B.C. home sales as well. Home sales in British Columbia in 2002 totalled more than $19 billion, up 27 percent from 2001 — a remarkable number.
Interjection.
Hon. G. Collins: The member opposite talks about nominal numbers. The fact of the matter is that if you
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measure us relative to every other province in the country, we are not number ten. We're number one for weekly wage increases. She can argue with StatsCan all she wants. She should go do that. The fact of the matter is that she's wrong now, she was wrong the last two years, and she's been wrong for ten years. That's what got us in this position in the first place.
Interjection.
Deputy Speaker: Order, member. Leader of the Opposition, please come to order.
Hon. G. Collins: She should get herself one of those little red noses and the floppy shoes. It would suit her performance some days.
The B.C. mineral exploration in 2002 — let's talk about that. When that government — the NDP — took office, mineral exploration in British Columbia was about $200 million but declined over their ten years to $20 million. It is starting to go up — not down, but up. I think that's important.
The port of Vancouver ships record cargo volumes in British Columbia as well. Container traffic at the port of Vancouver increased 27 percent in 2002, rising from 1.15 million 20-foot equivalent units in 2001 to more than 1.46 million last year.
Cruise ship traffic was up in 2002 as well. The city of Victoria saw a 43 percent increase in cruise ship visits in 2002 over 2001. In 2002, 110 cruise ships stopped in Victoria, compared to only 77 in 2001. There were 343 cruise sailings from Vancouver, up 11 from the previous year. So there's improvement in the tourism sector in the cruise ship industry as well.
[1540]
One of the signals that you see happening in British Columbia, as the member for Oak Bay–Gordon Head talked about, is the new attitude of private sector investors. After ten years of watching the decline in this province, they've waited to see the changes come into force. They're starting to come back to British Columbia. Asian investors are coming back. PeopleSoft, the second-largest software company in the world, has chosen to locate a branch office in Vancouver and has been hiring 150 or more employees, and more people to come.
Mr. Speaker, eBay has chosen Burnaby, and I know members from her constituency would probably love to have some of those jobs. One of the largest web retailers in the world, if not the largest, eBay chose Burnaby to create their customer service centre, with 600 jobs coming to that community. I know the people of that member's constituency will be lined up looking for those jobs as well, and I think that's something she should be excited about instead of spreading doom and gloom in people's minds.
As well, the wireless tech companies in British Columbia are expected to double their employment. The report released by PricewaterhouseCoopers says that employment at the 67 wireless technology companies in British Columbia that they surveyed is expected to double from more than 1,500 in 2001 to almost 3,300 by 2004.
I know that the member opposite doesn't like to look at those numbers, doesn't like to hear those numbers and doesn't like to realize the change that's happening and the progress being made. I think what she needs to do is look at what government has achieved and what government is hoping to achieve.
J. MacPhail: Your own book. You've got to be accurate when you're Minister of Finance. You can't make it….
Deputy Speaker: Order, member, order.
Hon. G. Collins: I've got to put that one on the record just so that everybody hears it. The member for Vancouver-Hastings says: "You've got to be accurate when you're the Minister of Finance. You can't just make it up." I wish she knew that when she was in the NDP caucus in 1996, when they lied to the people of British Columbia about the state of the finances year after year after year.
The member opposite…. I'll be glad to send her the statistics. She can look at the sources, and if she wants to wrestle with StatsCan and B.C. Stats and all the other independent bodies that provide those statistics, she can do that. I look forward to that discussion when it happens.
I think the member did say one thing accurately, and that is that British Columbia is a small, open trading economy. That's what we are. There's no question that a big portion of our industry and our GDP historically has been the resource sector. There's no question about that. The mining sector was devastated over the last ten years. There wasn't one new mine opened up in the latter part of the decade. In fact, they drove the industry right out of the province with their corporate capital tax, with their regulatory policies and with their ridiculous land use and environmental regulatory policies that didn't make sense and weren't based on science. All of those things went to destroy British Columbia's number two industry.
We're starting to see that come back. They're not going to flock in overnight, as the member can imagine, but they're starting to come back, and we're starting to see those investments. Noranda, for example, after leaving British Columbia, has now said that it's coming back to British Columbia to invest, to explore, to build new mines and to create great jobs for the province and the people of British Columbia. I think that is a huge advantage for this province and the economy.
All one has to do is look at the devastation that the NDP wrought on our number one industry, the forest industry, in their time in office. I remember that member standing up here and giving speeches when she was Minister of Finance about the jobs for B.C., the jobs in the forests, the forests jobs accord, the 20,000 — or was it 41,000? — new jobs. I can't remember. Mr. Speaker, 41,000 new jobs — now, there's a backhoe full
[ Page 5249 ]
of pixie dust for you. Not one new job was created; in fact, we lost tens of thousands of jobs in the forest sector.
At the same time that workers were being laid off, they were driving past billboards paid for with their tax dollars talking about how behind every tree there's a job. They were going around and around those trees looking for a job for ten years and never found them. We saw that. That member opposite stood up in this House time and again and talked about the jobs they were creating. She smiled into the camera and talked about the jobs they were creating in the forest sector. It was not factual in the least, and they knew it wasn't factual, but they stood up over and over and over again and told people that. The member opposite says we're right about that.
[1545]
Interjections.
Deputy Speaker: Order, please. Order.
Hon. G. Collins: If she says now that we shouldn't have believed her then, why should we believe her today? What's changed, Mr. Speaker? What's changed? If she was lying to the people of British Columbia with her jobs and timber accord back then, why should we believe what she says about the forest sector today? What credibility does that member have to stand up in this House and say that we are right, that she was misleading the people of British Columbia, misleading rural British Columbia, misleading the forest workers in this province by telling them there were there were thousands and thousands of jobs being created, when she knew that jobs were going down? When that member says to me in this House, "You have to state the facts when you're Minister of Finance. You can't make them up…." Was she making those numbers up when she stood up in this House as Minister of Finance and put that out? There we go.
Interjections.
Deputy Speaker: Order, please. Order.
Hon. G. Collins: I bet that member never talked about the three — count them: three — aluminum smelters that they were going to bring to British Columbia — never once. She says she never talked about that. She never talked about the jobs that were supposed to be created — never once. Where was she then? She never stood up in this House and said: "Oh, by the way, the jobs and timber accord is smoke and mirrors; it's pixie dust." When she was in government, when she sat around the cabinet table, she never once stood up in this House and talked about the pixie dust and the lies she was perpetrating on the workers of this province. Never once did she stand up and do that. She brought in three budgets in this House. Right through….
J. MacPhail: No, I didn't. Two. Both were balanced.
Hon. G. Collins: Two budgets. It just seemed like three. She brought in two budgets in this House, and I don't remember in those budget speeches her standing up and saying: "Oh, by the way, the jobs and timber accord is a bunch of hooey." I don't remember her saying that even once. I don't remember her once standing up and saying that the aluminum smelters were the dream of the then-Premier of the province — not once. That was not leadership. That was followership, and she did it again. When she finally decided she wanted to be leader, she resigned, started a campaign and got zero support from her own caucus.
Let's come back to the reality. If that member misled the people of this province year after year about the state of the economy when she was Minister of Finance, if she admittedly — now, as we know in the House today, which I find remarkable — knowingly misled the people of British Columbia….
J. Kwan: Point of order, Mr. Speaker.
Point of Order
J. Kwan: On two occasions now, the Minister of Finance has called my colleague a liar or said she lied in this House. I would ask him to retract those words without condition.
Hon. G. Collins: What I said was that the member opposite had misled the people of British Columbia, and I was merely quoting what she had said back to me.
J. Kwan: On a point of order. No, I heard very clearly the Minister of Finance say on two occasions, where he used unparliamentary language to call my colleague a liar and implied and, in fact, said that she lied in this House. That is unparliamentary. I demand that the Minister of Finance withdraw those words without condition.
Hon. G. Collins: I was referring to the comments made by the member for Vancouver-Hastings. If I've offended her in any way, I certainly withdraw my comments.
Deputy Speaker: Member, I did not actually hear the word "liar," but I heard the minister actually say that the member had lied. So, if the minister could please withdraw those remarks.
Hon. G. Collins: Thank you, Mr. Speaker. I just did.
J. Kwan: I'm asking the Minister of Finance to withdraw those words without condition.
Deputy Speaker: Member, I believe he did. Can you take your seat, please.
J. Kwan: New rules in the new era….
[ Page 5250 ]
Deputy Speaker: Member, you're completely out of order. You're out of order.
Hon. G. Collins: As I've said, if I've in any way offended the member opposite, I withdraw whichever comments they were that offended her. I don't know how much more unconditional I can be.
Deputy Speaker: Minister of Finance, proceed.
Hon. G. Collins: So let's come back….
Interjections.
Deputy Speaker: I ask the members of the opposition to please come to order.
Debate Continued
[1550]
Hon. G. Collins: Let's come back to the issue of the member's comments with regard to taxation policy. What the member failed to mention is that when we raised the PST in British Columbia, we also increased the PST exemption for low-income families by 50 percent. She failed to mention that. She also failed to mention that when the MSP premiums came up to fulfil commitments and a process through bargaining that was actually started under the previous government, we provided increased premium assistance to 230,000 low-income British Columbians who actually saw their MSP premiums go down. They actually saw their MSP premiums go down and, in many cases, are no longer required to pay the premium.
The member forgets to talk about the progressive portions of those changes to the tax structure that we put in place for low-income families. The new Fair Pharmacare put forward by the Minister of Health Services also is structured, so I think 280,000 will see their Pharmacare costs go down. That's my understanding. I'm glad to be corrected if I'm inaccurate. Certainly, the goal of that plan is to make sure that it's based on people's income. There are a whole bunch of low-income families who were paying pretty exorbitant Pharmacare costs over the last number of years. Under the new income-tested process we're putting in place, those low-income families will benefit substantially from those changes. The member fails to mention that. I think it's something that requires comment and requires putting on the record. I'm glad to have the debate about the job numbers if the member wants to. We'll do that in estimates, and I can explain to her….
Interjection.
Hon. G. Collins: No. What I'll do is explain to her how those numbers worked, because she obviously didn't learn them when she was Minister of Finance. I'll be glad to explain them to her. Those are three instances where the member talked about the increase cost to the public but didn't talk about the progressive additions to those changes we made so that low-income families in British Columbia benefited from those changes as opposed to being hurt by those changes. I think that's important as well.
Now, I was speaking earlier about British Columbia being a small, open trading economy. The forest sector has been hit very hard by the softwood lumber dispute; there is no question of that. I think everybody understands that. We are all working very hard to try and come to terms on that with governments of all political stripes across the country. It's something we're trying to do not just on behalf of British Columbians but on behalf of Canadians. We're going to continue to work to make sure either that we get a fair agreement or that we win the case which we think is strong at the WTO. So that, while it's a burden on the community and it's a burden particularly on forest-dependent communities, is something we are all working very hard to solve.
We are not helped, however, by the billion dollars in costs that the previous government ascribed or put on that industry and the workers in that industry through their overly burdensome and restrictive Forest Practices Code. That's a stat that the member can go back and check, because her Forests minister at the time actually used that number. He said that over a billion dollars in additional costs have been added to the forest sector of this province for no net environmental benefit. Boy, could those businesses and those communities and those workers ever use that billion dollars about now. Yes, there are difficulties….
Interjection.
Hon. G. Collins: There are difficulties in the forest sector, and the member laughs about the tariff and the fact that working families and working communities are being hit by that tariff and having to send those dollars to the United States. I don't happen to think it's a laughing matter, nor do members of this House.
Interjections.
Deputy Speaker: Order, please.
Hon. G. Collins: I know the truth hurts. It hurt for ten years, and I guess it still hurts because nothing's changed. I think what we've seen today are a number of…. Oh, hot off the presses. Actually, I guess, it's not just hot off the presses. It was December 2, 2002. Bell Mobility opens a western call centre, network switching and operations facility. It was actually in the member opposite's riding.
Interjections.
Deputy Speaker: Order. Order, please. The minister has the floor.
[1555]
Hon. G. Collins: That is just amazing information. That is so exciting — the fact that that company, a na-
[ Page 5251 ]
tional company, is choosing.… Of all the communities in the country, of all the ten provinces in Canada, they choose not only British Columbia, not only Vancouver, but that member's riding. I'll take the "Thank you," and I'll say: "You're welcome."
Maybe we should have sent that over to her, because I didn't notice it in her budget speech. Next time I'll make sure we do that.
There's no question that there are challenges still to be faced in British Columbia. There's no question that there are still challenges. We are not out of the woods yet. We have a lot of work to do. We have to stay the course. The fact of the matter is that we are seeing good trend lines. We are seeing good numbers come in.
We are starting to see the turnaround. I know that British Columbians feel good about it, because the one thing that her colleague mentioned was growing disappointment, I think, in British Columbia. In case that member hadn't checked, I think the latest poll had us at 50 percent in the polls, which I think is important. I think it is important to note that British Columbians threw their support behind this government during the last election because they wanted to see a change in direction. They're seeing that change in direction. British Columbia is back.
Interjections.
Deputy Speaker: Order, please.
Hon. G. Collins: We're getting the job done. We're seeing the job growth. We're seeing the economy turn around.
The one the member forgets to mention is the Toronto-Dominion Bank report, which says that next year British Columbia will lead the country in economic growth and be number one again.
[1600]
Second reading of Bill 6 approved on the following division:
YEAS — 62 |
||
Falcon |
Coell |
Hogg |
L. Reid |
Halsey-Brandt |
Whittred |
Hansen |
J. Reid |
Bruce |
van Dongen |
Barisoff |
Roddick |
Wilson |
Masi |
Lee |
Thorpe |
Hagen |
Plant |
Campbell |
Collins |
Clark |
Bond |
de Jong |
Nebbeling |
Stephens |
Abbott |
Neufeld |
Coleman |
Chong |
Jarvis |
Anderson |
Orr |
Harris |
Nuraney |
Brenzinger |
Bell |
Long |
Chutter |
Mayencourt |
Johnston |
Bennett |
Christensen |
Krueger |
McMahon |
Bray |
Les |
Locke |
Nijjar |
Wong |
Suffredine |
MacKay |
Cobb |
Visser |
Lekstrom |
Brice |
Sultan |
Hamilton |
Sahota |
Hawes |
Kerr |
Manhas |
|
Hunter |
NAYS — 2 |
||
MacPhail |
|
Kwan |
Hon. G. Collins: I move the bill be referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Bill 6, Budget Measures Implementation Act, 2003, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
[1605]
Hon. G. Collins: For the information of members, we'll be restarting the estimates of the Solicitor General and Public Safety in Committee A, for members who have questions. We'll be doing that briefly.
In this House I call second reading of Bill 7.
INCOME TAX AMENDMENT ACT, 2003
Hon. G. Collins: Bill 7 reflects the government's ongoing commitment to maintain a competitive tax environment so that business and families can prosper and build successful futures in British Columbia. Bill 7 implements sector-specific tax cuts for the film, mining and book-publishing sectors. These measures are designed to foster the growth and diversification needed to build a strong and vibrant economy in British Columbia.
B.C. is home to a billion-dollar film industry that employs approximately 50,000 people. Clearly, it's important that we maintain British Columbia's competitiveness, compared to other jurisdictions, to ensure that the film and television industry can continue to thrive. Bill 7 extends the Film Incentive B.C. tax credits and the production services tax credit for an additional five years. These credits were scheduled to expire in 2003, but as announced by the Premier last year, the credits are now extended to 2008. These credits will maintain British Columbia's competitiveness and provide a solid foundation for future growth and job creation in the film and television industry.
Bill 7 also introduces enhanced regional income tax incentives for film production in B.C. heartlands. The existing 12.5 percent regional credit, under Film Incentive B.C., will be changed to make it easier for film and television productions to qualify. A new 6 percent regional credit will be available for productions that
[ Page 5252 ]
qualify for the production services tax credit. The enhanced incentives will be effective where principal photography of the production begins after March 2003. The existing regional credit will continue to apply to productions where principal photography begins prior to April 1, 2003. These regional credits are intended to make B.C.'s heartlands competitive with other jurisdictions for attracting location-based productions.
The 2002 provincial budget signalled government's intention to develop incentives to encourage digital animation. Budget 2003 follows through on that commitment. Bill 7 implements a refundable corporate income tax credit of 15 percent of B.C. labour expenditures incurred for digital animation or visual effects. Digital animation and visual effects are created through digital technology and are becoming increasingly important in film production. The new credit will highlight British Columbia as a key location for film productions and help foster animation and visual effects technology in the province. The new credit will be available as a top-up to film productions that qualify for the existing Film Incentive B.C., or production services tax credits where principal photography begins after March 31, 2003.
Despite the expansion of alternative forms of media and communications, book sales have continued to grow in Canada and in other countries, and there are opportunities for B.C.'s book publishing industry to contribute more to this growth, given the right competitive environment. Bill 7 introduces a refundable corporate income tax credit for B.C. book publishing firms that receive a contribution through the federal book publishing development incentive program. The credit will be calculated as 90 percent of the federal contribution received by the corporation. The credit will help B.C. book publishers compete nationally and internationally.
[1610]
The government has already taken actions to restore a competitive tax environment for the mining industry, and Bill 7 continues to improve British Columbia's competitiveness. Bill 7 extends the B.C. mineral exploration tax credit for an additional three years. In addition, effective April 1, 2003, the credit will be extended to active members of partnerships that undertake mineral exploration in the province. This credit will continue to encourage mineral exploration, which has increased 25 percent since 2001, a period which saw exploration in many other jurisdictions decline.
The sector-specific income tax measures in Bill 7 will assist the film, book publishing and mining industries. These targeted tax cuts continue the work of ensuring that British Columbia has a competitive economy where business and families can thrive and prosper.
I move second reading of Bill 7.
J. MacPhail: I'll have questions on the effect and the studies that led to the economic impact studies, which led to these choices of tax cuts. I want to make a couple of points, though. While these tax cuts are targeted at specific industries, again, the industries that are targeted here are part of an open economy. The industries that are affected here compete with not only other North American jurisdictions but in the commodities-based sectors, such as the mining sector. They're competing with South America, Indonesia and South Asia as well.
While we have a situation here where tax policy is being used to drive the economy, there are many other factors that will influence the success or failure of those particular sectors here in British Columbia. Just to take an example, one of the factors that affected the film industry's growth throughout the 1990s — and in fact it started in the early 1990s under the previous Social Credit government — was an acknowledgment that the industry's comparative advantage would be held in the training of people. Therefore, programs were instituted and expanded greatly throughout the 1990s so that no matter what happened in terms of either tax policy or a high dollar, there was a well-trained workforce that attracted the industry.
In fact, when we were actually doing our Finance Committee prebudget consultations, people in that industry came forward and said that the things that will hurt the industry as much as anything else would be the cuts to the training programs that provide good, solid, well-trained crews. The other factor that the industry commented upon was the fact that you need not only crews but infrastructure in order to have the industry flourish.
I will put this question to the minister so that he can be prepared for it in committee stage: what is the relationship between this tax credit and the dollar? If the dollar changes, what effect does the tax credit have, and at what point does the tax credit maximize or at what point does the tax credit disappear, given the change in the dollar?
Secondly, in terms of the mining tax credit, it is true that mining exploration has increased from $25 million a year — which was the last year under my government — to $40 million this year, at the end of 2002. At the recent mining conference in British Columbia it wasn't about regulation, and it wasn't about policies. It was about land use — the issue around land use. It wasn't about tax credits either. This government and I probably don't agree on the issues of land use, but that doesn't take away from the fact that mining exploration is not stalled because of tax credits — although the tax credit is welcome; the extension of it is — but it's about land use. Those issues remain unresolved in this province. Those are some of the issues that I'll be exploring at committee stage.
[1615]
I. Chong: I rise to speak to Bill 7, the Income Tax Amendment Act, 2003, and will just make my comments very brief. I again support this piece of legislation, because in fact it does bring into existence the targeted sector-specific tax measures that were introduced in Budget 2003. I'm very pleased that some of
[ Page 5253 ]
these measures are targeted to things such as new media, book publishing, television and film, and the cruise ship sector.
Here in Victoria, as the Minister of Finance stated earlier, the cruise ship sector is very important. I know that in the Prince Rupert area, where their economy has had difficulty in diversification, they are looking very much for the cruise ship sector there to grow as well. I am particularly pleased about these sector-specific tax measures and will watch very closely to see how much they are going to impact those areas, especially in our heartland.
I am pleased, as well, because these are in fact sector-specific. They're not business-specific, as what was done in the past. In the past we had things such as Skeena Cellulose bailouts. Those were business-specific. We are getting out of those kinds of initiatives. We want to ensure that industries are targeted and that everyone in a particular industry has the opportunity to avail themselves of particular tax measures.
I would agree with the member opposite regarding the fact that tax measures, in and of themselves, are not the only way to see an economy grow. She's absolutely correct. On the Finance and Government Services Committee that I toured on with her, we heard from people about things such as our skills shortage that we have to address, and we are going to address it. I know the Minister of Advanced Education is working on a comprehensive plan as well. So, absolutely, taxes in and of themselves are not the sole solution. They must be complemented by a number of other initiatives such as our labour shortage.
We also need to deal with things such as red tape and regulation. Again, we have a minister of state who is dedicated to reducing red tape and regulation. With all those issues and with those initiatives and measures that we're going to introduce, I am confident we are going to see some positive results in all parts of our economy and in all parts of our province.
I'm very pleased to support Bill 7.
Hon. S. Hagen: I just wanted to add some thoughts I had with regard to this, and I support what the Finance minister is doing wholeheartedly. I just want to make a comment on the member for Vancouver-Hastings' comments about land use planning.
Land use planning is moving along at a very good pace in this province, unlike in the previous ten years. That's not to say there aren't some very, very serious challenges to be met. One of those challenges is to get a discussion going between mining interests and tourism interests. I'm pleased to say that the mining industry in B.C., represented by the B.C. mining association and the B.C. and Yukon Chamber of Mines, has agreed to enter a forum with the Council of Tourism Associations together with first nations who will be invited to discuss — at a very high level — the philosophy behind joint land use in the province of British Columbia to arrive at some consensus on the use of land involving both extraction resources and the tourism industry.
Hon. G. Collins: I'd just like to close debate on Bill 7, if I may. I want to add a very few brief comments. I think the Minister of Sustainable Resource Management makes a very good point. I think the member opposite is correct in mentioning land use and access to the land base as key concerns of the mining industry. There's no question of that. That's why it's important that we resolve the issues not just of environmental land use but also of access to the land base and how our relationships with first nations are structured. The government has made some fairly significant moves on both those fronts in the last two and a half years.
I want to thank the minister, as well, for some very successful contributions that he's made in trying to make sure the dialogue between first nations, industry and government continues to be open. We may not agree on everything, but I think it's important to identify where we don't agree and try and work through those disagreements. That effort alone, I think, is starting to be heard out there. It's starting to build a sense of trust, and those are the first stages to getting long-term solutions. I would encourage him and others to continue in their work and do it in good faith so that we all understand that access to the land base, the use of those resources, can provide good, family-supporting, community-supporting, high-income jobs and futures for the province. It's a huge asset that we have. It's something that should be available to everybody, aboriginal and non-aboriginal alike.
[1620]
We've taken some first steps to try and make sure that we continue to re-attract some of the investment that was historically here in British Columbia. We're starting to see some of the progress with those changes to the tax policy. That's one element. It's not by any means all that's required to get our mining industry back up and running, but it is one.
The corporate capital tax elimination sent a very strong and powerful message to the mining industry and investors in that sector, as well as the removal of the provincial sales tax on production machinery and equipment. All of those things are very positive messages to investors and to those communities and those workers who make their livings from the mining sector. I think mining has a great future in this province.
Certainly, technology has improved in the last 20 years. Modern mining is much, much more environmentally sound. It can be done in a way that can coexist with other uses of the land base. I think that's something we should all be pleased with. I certainly look forward to further progress in the future.
We'll certainly have more opportunity to speak on the other items in the bill in greater detail during the committee stage debate. We can talk about how some of those tax incentives are designed to drive the competitiveness of those various industries and to make sure that we can continue to compete and grow those industries in the province.
So with that, I thank the members for their comments, and I move second reading of Bill 7.
[ Page 5254 ]
Motion approved.
Hon. G. Collins: I move that the bill be referred to a Committee of the Whole for consideration at the next sitting of the House after today.
Bill 7, Income Tax Amendment Act, 2003, 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 call second reading of Bill 9.
Hon. G. Collins: I move that the bill now be read a second time.
The new Auditor General Act replaces legislation first passed in 1979. The present Auditor General Act no longer reflects current auditing practices, nor does it adequately support the evolving needs of the Legislative Assembly.
The auditor general is an officer of the Legislature and is the Legislative Assembly's auditor. It is the Legislative Assembly to whom he or she must turn for direction and to whom he is accountable. This act will clarify and strengthen that relationship. The accountability of the auditor general is demonstrated by the mechanism, frequency and standards of reporting to the Legislature — a requirement to present annually a three-year audit plan and a service plan to a committee of the Legislative Assembly and a requirement for an independent audit of the accounts of the auditor general's office itself by an auditor appointed by that committee.
Independence is key to the work of the auditor general. The new Auditor General Act supports that independence by providing for the review and approval of the auditor general's estimates by a committee of the Legislative Assembly, the ability to collect and use fees with the approval of the committee, and the elimination of any role government previously had in the appointment, reappointment and suspension processes.
The new act clearly identifies the scope of the audit coverage provided by the auditor general. The act defines audit coverage in terms of the government reporting entity. As the government reporting entity changes, so, too, will the coverage by the auditor general. It confirms that he or she may request appointment as an auditor of any government organization or trust within the summary entity. It allows the auditor general to request appointment as auditor of any new government organization or trust fund for its first three fiscal years. It ensures a balance between work done by the auditor general and external auditors as well.
Finally, the new legislation provides statutory authority to do value-for-money audits and to comment on whether a government or government organization is operating effectively. It confirms the role of the auditor general in the appointment of external auditors and preserves the role of local boards in the appointment of their auditors.
An update to the Auditor General Act is very welcome and long overdue. We have before us a piece of legislation which addresses the accountability and the independence of the auditor general, the scope of audit coverage and services provided by the auditor general, and which confirms practices that have evolved over the years. This legislation also has the full and unqualified support of the auditor general for British Columbia.
[1625]
I also want to take a moment, if I can, to thank the current auditor general as well as his predecessor, George Morfitt, for the work that they have done — over at least the last decade that I'm aware of — to try and update and modernize our act. I believe that if this legislation is passed by the House, it will place us at the forefront in Canada for transparency and independence of the auditor general. It's something that we can all be proud of. I also want to thank those individuals in the Ministry of Finance who have worked hard on this: Arn van Iersel, who is the comptroller; Murray Crowther, who took this on as a special project that I know at times he didn't think was very special. But they managed to work through it.
There is always a healthy tension between government and the auditor general, and so it should be. I'm very pleased to say that with the work those members as well as others have done, this legislation has now come before the House. I think it's a comment on the commitment and determination of the government to live up to its commitments in its New Era document. It also opens up, I think, an era of greater accountability and greater independence for that officer of the House.
I. Chong: I just want to add some brief comments to the Auditor General Act, particularly since I have watched over the years — in my first term in opposition and now in government — the requests made by the auditor general — first with the previous auditor general, George Morfitt, and now with the current auditor general, Wayne Strelioff.
I want to pay particular respect, as well, to the late Fred Gingell, who was the member for Delta South. I had the very distinct privilege of working with him when he chaired Public Accounts. He helped me understand the importance of that committee as well as the work of the auditor general's office — how his independence was imperative and how the Legislative Assembly benefited from that work, as well as what was brought forward.
As the Minister of Finance has stated, the changes to this act are long overdue. The first time I think it was passed, back in 1979…. I recall when I spoke to George Morfitt, having been elected in 1996, and he said: "Well, I hope we can finally all work together and have these changes made." I don't know why it took so long.
I think these changes reflect our moving into the twenty-first century. I know we are leading edge, and I know other provinces will be watching us as well. It was time that we moved forward. It was time that this act was updated and brought forward.
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I just want to confirm, though, for the members of this House, that this act in no way affects the independence of the office of the auditor general, and that is very important. While certainly there's healthy debate that sometimes occurs at Public Accounts Committee, the independence of the auditor general has always been maintained. I've always respected that and always held that in high regard when I was in opposition and now in government.
I just wanted to add those remarks to this bill, because I think it's important that we do respect that. I think all members of this House have worked together over the years to bring it to fruition, and I'm very pleased to see that it's finally here.
Hon. G. Collins: I thank the member for Oak Bay–Gordon Head for reminding me. I was very remiss in not mentioning Fred Gingell and the great work he did over the years in trying to improve this process as well. He's somebody we all honour to a great extent, and his contribution to this shouldn't be missed as well.
I move second reading of Bill 9.
Motion approved.
Hon. G. Collins: I move that the bill be referred to a Committee of the Whole for consideration at the next sitting of the House after today.
Bill 9, Auditor General Act, 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 call Committee of Supply, and for the information of members we'll be debating the estimates of the Ministry of Education.
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Committee of Supply
The House in Committee of Supply B; J. Weisbeck in the chair.
The committee met at 4:32 p.m.
ESTIMATES: MINISTRY OF EDUCATION
On vote 19: ministry operations, $4,859,939,000.
Hon. C. Clark: I'm pleased to present the 2003-04 budget estimates for the Ministry of Education.
I would like to introduce the ministry staff who will be joining me in a moment: Tom Vincent, the assistant deputy minister of management services; Keith Miller, director of school funding and allocation and capital planning; and Rick Davis, superintendent field liaison. My deputy, Emery Dosdall, will be joining us later in the estimates.
Our government is committed to providing quality education for all students, an education that ensures today's students become tomorrow's successful citizens. Government is reforming the education system to ensure that all students have the opportunity to become well-rounded citizens who contribute to the province's prosperity and democracy.
In order to ensure that B.C. students receive a quality education, we focused on five key areas. We're committed to protecting and enhancing education funding. We're focusing on increasing accountability across the system, providing more choice for students, creating more opportunities for parents to become involved in their children's education and, above all else, improving student achievement.
Education, as I've said many times, is the best possible investment in the future of this province. That's why we, our government and our Premier, are committed to protecting and enhancing education funding. Funding for '03-04 is being maintained at $4.86 billion despite a projected enrolment decline of about 4,700 students. This means that on average, we are providing $51 more per student in B.C.
As laid out in the recent budget, education will receive $83 million more in '04-05 and $60 million more in '05-06, for a total of $143 million in additional funding over the next three years. Factoring in further projected declining enrolment, this equates to $243 more per student by '05-06.
It's important to recognize that because of our commitment to funding through '06, school boards now have the multi-year funding envelopes that they asked for to allow them to improve their long-term education planning and long-term budgeting.
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Boards also asked us for a simpler funding formula, and we delivered. Under the current allocation system, funding is being delivered in just two ways: a student base allocation and supplementary grants. The student base allocation provides a standard amount for every student enrolled in school, and the student base allocation accounts for more than 80 percent of every district's budget. The balance is made up of supplementary grants.
The multi-year funding envelopes and simpler funding allocation system are critical to help boards plan for their future. This is even more important, because boards have to contend with the school-age population that is continuing to shrink. Almost every school district is seeing student enrolment fall from year to year. A substantial decline in the number of students can create huge financial challenges for districts, because it can mean a considerable loss of funding over a relatively short period of time.
Our new funding system protects districts caught in this situation. Each year we compare current enrolment to enrolment for the previous year. If the decline is more than 1 percent, districts receive half of the per-student funding amount for every student exceeding that 1 percent threshold. This is an improvement on the previous system. We understand that school districts face a dilemma, particularly rural school districts, and they may find themselves in difficult situations because of shifting demographics. We in this ministry are
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committed to doing all that we can to help those communities in the heartland.
We fulfilled our new-era commitments to funding, but we must not lose sight of our goal of a quality education for every student. That's why we have made student achievement our number one priority. We know B.C. has a good education system, but we also know there is always room for improvement. We have great teachers, administrators and school districts. We have lots of involved parents and thousands and thousands of terrific students. Our job is to make sure that our system is performing optimally for all of them.
As part of the education reform, government has already taken a number of major steps to give local school boards more autonomy, flexibility and control over delivery of education services in their local communities. Each school district has drawn up its own local accountability contract that states their public commitment to improving student achievement.
Accountability contracts are based on student performance. They're based on information at the classroom, school and district levels and reflect the needs of different school districts. It's an important part of our drive to make sure that we are making evidence-based decisions and that our money is being spent as well as it possibly can be to improve achievement for every student in B.C.
Ninety-three percent of districts in their accountability contracts have set improved literacy as their main goal. Other major goals include improvements in math, human and social development, safety and graduation rates. Providing more autonomy to school districts in requiring more accountability supports our commitment to devoting more of each education dollar to improving the quality of education and less to supporting bureaucracy.
School districts are now committed to student achievement and to measuring and reporting on their progress — doing so publicly so that parents and taxpayers can see for themselves how our education system is performing.
Accountability contracts also provide an opportunity to identify problems and to set goals for improvement, work out appropriate strategies and interventions to meet those goals and then to monitor progress from year to year.
Ministry review teams have been established so we know if districts are reaching the goals they've set out for themselves in their accountability contracts. The review teams will report on each school district, identify which districts are doing well and celebrate those successes, and identify where districts need to improve so that we can help them make sure they can find ways to increase student achievement. They'll also examine district accountability contracts. Over the next three years review teams will visit every single district in this province.
Last fall I appointed a task force on student achievement. One of the task force's key responsibilities is to ensure that we have an appropriate definition of student achievement and to make sure it's described broadly, so the focus is not just on academics and just on the 20 percent of students who are preparing to go to university. Academics are critically important. We need to continue to support that and continue to do that well, but we have to recognize, as well, the whole student and the broader needs of creating good citizens. We want to make sure that the definition of student achievement is applied to all students, including those who go on to college, to apprenticeships or to technical school and those who go directly into the world of work.
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It's a fact that last year nearly three-quarters of B.C. high school students who graduated pursued some kind of post-secondary education, with most students training in trades, technology, tourism and health care. I am determined, our government is determined and our Premier is determined to build an education system that produces students who are well rounded and well positioned for future workplace demands. The report has now been completed. We're reviewing it, and a detailed response will come soon.
We are promoting excellence in our schools and the success of each and every student. We want to make sure that no one gets left behind. All students have the same right to a quality education no matter where they live in this big province.
We're concerned about the unique needs of rural students, and we want to find ways to enhance the quality of education for students in rural and remote communities in the heartland of British Columbia. Government currently provides a number of supplemental grants. These total $132.8 million, in addition to the per-student base allocation that goes specifically to help kids in rural districts. Some of the funding provides added support to districts that have very isolated schools with small student populations, recognizing the extra cost of delivering an equitable education program in far-flung areas. School boards serving these communities face unique challenges in providing a quality education to students. There's no doubt about that. They're dealing with declining enrolment, challenges in recruiting and retaining teachers, and difficulty in transporting students to their schools.
Rural students have very different needs than those in urban areas. With that in mind, last fall I appointed a rural education task force to look at approaches to ensure that students in rural and remote communities have access to a quality education, and I know that the rural task force will have much to offer for the heartlands of British Columbia when it's released shortly.
There's also been a fair amount of quite justified concern about aboriginal students, who are still scoring well below other students on average across B.C. The Ministry of Education recently released a report called How Are We Doing?, and it identified some of the problems for aboriginal students in communities in dealing with our public education system. It also offered a number of solutions. We have already started to put in place some of the recommendations and put them into practice. The culture, history and language of aborigi-
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nal students must become a part of the educational experience for all British Columbia students. We are wealthy in the number of languages and cultures that British Columbia can boast in our aboriginal communities, and it's something that certainly our education system can do a lot better in accommodating and recognizing.
We also know that we need to include specific goals for aboriginal students in school planning exercises. We also need to make sure that we're able to monitor their academic and social progress through school and make sure that we are doing the right things to help them succeed. School districts are developing aboriginal enhancement agreements in partnership with aboriginal communities. In fact, seven agreements are in place, and 16 are now in the draft stages. I was honoured to be the first Minister of Education to attend the official ceremonial signing of an aboriginal enhancement agreement in Langley last week. I can't tell you how moving that ceremony was when I had the opportunity to talk to native leaders who had been working at this agreement for almost a decade, and it's finally completed.
We won't stop at 16, though. We expect all districts to have an agreement in place by 2005, and our goal is to help children succeed in the public school system while honouring their historic cultural ties. That's what the aboriginal agreements reflect. It's our government's new-era commitment to devote attention and resources to addressing the unique challenges and needs of aboriginal children in our public schools.
Government is also committed to supporting more flexibility and choice in public schooling, and changes are currently being proposed to our graduation program — something about which we've had an extensive and very healthy public debate. Our goal is to increase individual choice so students will be able to tailor their education to meet their own individual needs. Students may wish to pursue specialized training such as a millwright course or a systems analyst program to make them more employable in their local area. Districts are being encouraged to develop more creative, innovative programs possibly in partnership with the employers community or other interested members of the larger community. We're also seeing more students who want to start early training in areas where there is a job demand or an opportunity in their local community.
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We've proposed strengthening core subjects while also helping students focus on an area of study such as tourism, business, health care or technology. All focus areas could lead potentially to university, college, trades or employment. Students can concentrate on more than one area or switch between their focus areas if they change their minds, which, as we know, students often do.
We know that the public school classroom must be connected to post-secondary education and to the world of work, if we are to serve students well. Students who find their education relevant to their future are more likely to graduate, go on to further training and become productive members of our province's diverse society. The proposed changes to the grad program are designed to improve academic achievement and enhance life skills so students are well rounded and ready for future challenges.
Districts are also starting to provide more choices so that students can access the educational programs that work best for them. We are encouraging school districts to offer individualized programs or develop magnet schools where possible. Although the public school curriculum must be consistent across the province, schools may also offer specialized programs in fine arts, dance or even in sports like hockey, depending on what the local demand is. Students will be able to choose to attend any public school in the province, subject to space availability.
Some school districts already offer a number of choices such as fine arts, international baccalaureate, Montessori, on-line learning, first nations studies, language immersion and outdoor education specialties. We expect this list of options to expand. With the maturity of these types of schools, we expect some of them to be able to draw students from across the province as well as nationally and internationally.
Most importantly, we are encouraging parents to take advantage of every opportunity to be actively engaged in their children's education, because we know the more involved parents are, the more likely their children are to do well in school. It's clear that many successful schools are the product of collaboration — collaboration between teachers, administrators, school boards, students and parents. That's why the right of parents to volunteer in their children's school is now guaranteed, for the first time ever in British Columbia, in legislation. We will continue to listen to parents and what they have to say about their children's education.
We've put in place an annual satisfaction survey that's distributed to students in grades 4, 7, 10 and 12. Parents, students and school staff across B.C. are being asked how satisfied they are with our education services. The surveys help us identify important opportunities for improvement. We recognize that parents are absolutely vital partners in education, and their opinions and their ideas must be listened to, and they must be acted upon.
That's why we created school planning councils. School planning councils have a major responsibility to consult with the local school community in developing, monitoring and reviewing school plans for improving student achievement. As part of our government's education reforms, these councils are being formed in schools across the province and will be in place by this September. The school planning councils ensure a strong voice for parents in every school. The stage is certainly set for parents to play a broader role and a much more meaningful role in our education system than they ever have been able to in the past.
Our ministry and our government have been working with school districts to bring about a number of reforms to the system, and we are starting to see re-
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sults. But we have to maintain our focus. We have to stay the course. Student achievement must remain our highest priority, and that's why this government has done what is necessary to protect our education system and to help kids learn and grow into productive and successful members of our society.
The reforms I've described represent a major shift in the way our education system operates. We're telling everyone who is a part of the system that student achievement must be at the top of their agenda. We're setting goals to improve student achievement, and we're reporting publicly on our progress. We're encouraging parents to work with us and other educational partners to help achieve these goals. We're promoting excellence in our schools, but we want to make sure that no one is left behind. We're giving school boards more autonomy, and we're also requiring them to be more accountable.
I am extremely proud of the progress that our government has made in transforming B.C.'s education system into one that's child-centred and one that is parent-focused. Our goal is nothing less than to make this education system demonstrably the best in Canada and without question, as well, one of the best in the world.
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L. Mayencourt: It's great to be here today. I wonder if I could pose a question to the minister. Recently — I think just around budget day — we heard from the Premier and from the Minister of Education that somehow she had managed to save $50 million. They declared that every single penny of those dollars was going to go into the education system and be transferred out to school boards. My school district is facing a bit of a shortfall, and they'd like to know how many of those pennies are coming their way.
Hon. C. Clark: As the member noted, this year we were able to grant an additional, unexpected $50 million to school districts at the end of the year, as a result of prudent budget management across government. That's been part of our government's commitment to making sure we support the education system. When the Premier and the rest of us ran in the election, we said education was going to be our top priority. We are demonstrating that when we find savings across government, that's where the money is going — into education. That's where the $50 million came from. It's the benefit of staying the course, of staying on track, of being prudent and of having a plan and sticking with it.
Given that Vancouver has almost one in ten of the students across B.C., Vancouver's portion of the $50 million is almost $5 million. Actually, more precisely it's $4,981,470, which I know they will put to good use to make sure that every child in their district gets a top-quality education.
L. Mayencourt: That is indeed good news. I had a meeting with Andrea Reimer, one of our school trustees. She's newly elected — a real great person with a great commitment to education and kids in our school system — and I know she's going to make sure those dollars go to good use. Andrea and I had a meeting, along with some parent advocates, a few weeks ago. She informed me that there were some savings that the Vancouver school board had from '02-03, so the approximately $5 million will be added to that, and that'll help make sure they are able to deliver the services they want and that the people of Vancouver deserve.
You mentioned in your opening comments that we have some of the finest teachers in our education system here in British Columbia. I have one school in my neighbourhood where that's particularly true, and that's Lord Roberts Elementary. The principal of that school, Patti Lefkos, was here the other day, and we had an opportunity to meet briefly with you. We came away from that short meeting, and the one question that was left remaining for Patti was the information on the new school that's proposed for False Creek north. I believe that's going to be called Elsie Roy Elementary.
In my little neighbourhood we've had a growth in the enrolment. The community that I live in is actually growing, and more and more families are moving in. Right now in my district, I've got Lord Roberts at overcapacity, Roberts Annex at overcapacity, and I've got 170 kids from my neighbourhood going across the Burrard Street Bridge to Henry Hudson or across the Hastings corridor to Lord Strathcona Community Elementary. We're busting at the seams there, and it's really important we get that school built. Do you have any news on that school?
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Hon. C. Clark: It's a great question. It's a much-needed school in a growing and really vibrant community. I visited some of the schools down in the member's riding and know that they're certainly bursting at the seams and need some relief.
I'm delighted to be able to tell him today that if all goes according to plan, the school could be finished by next spring. Now, the district may decide to open it in September, which would seem to make sense if it's finished in the spring of next year. But they could, I suppose, open it earlier. Right now we added another half-million dollars to the budget for the school from the ministry, and the district and the ministry are now negotiating with the low bidder on the project to make sure we can keep the costs under control. We hope that if this process continues as we've planned and the district completes its end of the process by the end of March…. No reason it couldn't be up and going by the spring of next year, which will be very, very good news for all those children in the member's riding.
L. Mayencourt: It will be great news for all the parents, the kids and especially the teachers that are feeling the pressures there. I just believe that at Lord Roberts Elementary, which is really overflowing right now, they're doing a great job, but that extra pressure — the kids colliding in the hallways and stuff — just leads to
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a bit of unsafety in that school. I'm really glad to hear we're moving forward with that and that we'll get the school built.
It's also right beside a really great child care centre. It's in the heart of the Concord Pacific lands, and it's a terrific addition. I think when the plans come out, you'll see that it's joined in there, and it's going to be a really nice addition to the neighbourhood and a much-needed resource. I'm excited about that. I think that's all I have for now. I think I have to go and phone Patti Lefkos and tell her she's getting her school. I thank the minister for her comments.
Hon. C. Clark: I don't want to just leave this subject without paying tribute to the teachers who work down in the member's district. It's been difficult, I know, to function in some schools when they're overflowing. The fact that schools continue to function as well as they do and continue to be safe, nurturing, caring, educational environments is due to the staff that are in those schools — the incredible teachers, the incredible administrators — and the involvement of so many caring parents. That is what schools are built on. I've visited a lot of schools across the province. Some of them are brand new; some are very old and in need of replacement. But I can tell you that at every single one of those schools, they are filled with enthusiastic, caring, well-qualified teachers who really, really want to make sure they do the best for their kids. That's what keeps all these schools together. I didn't want to leave this subject without paying tribute to all of the work that they do.
J. Kwan: I have many questions for the minister. To start off with, I would like to just deal with some of the issues around the general funding aspect of it. Much has been made lately of the Ministry of Education's funding and its distribution to school districts around the province.
I want to start off today, though, by attempting to set the record straight on all of the numbers swirling around in the newspapers, amongst various groups and even in this House. What we know so far is that the total funding for education as listed in the budget document will remain frozen for the year 2003-04. What we know is that there is a $50 million one-time grant for districts that could be used to cover costs for this year, and it could also be used for next year. This one-time grant, similar to a $42 million one-time grant from last year, is based on savings from the ministry, according to the minister. Could the minister please elaborate on where this $50 million came from and how those efficiencies were specifically achieved?
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Hon. C. Clark: The savings are largely from debt service savings across government and in this ministry. That is a result of the fact that our government is well perceived finally, for the first time in over a decade, by investors worldwide — people that invest and finance our debt. They're giving us some better interest rates for the first time in a decade, because we — for the first time in a decade — have a responsible, prudent, well-managed government.
J. Kwan: Yes, the ministry release actually says that efficiencies were from prudent fiscal management and lower debt-servicing costs. I would like to have the minister please describe perhaps in more detail around the savings. Is it just debt servicing? How much of that $50 million is from debt servicing? How does it all break down? How much is from prudent fiscal management? Under this so-called prudent fiscal management category, how does it all break down? Can one expect this funding to continue for next year?
Hon. C. Clark: Most of it is from debt service. We do hope, though, there will be an education dividend next year as well. No reason to believe that this government won't continue to be prudent and well managed. There's no reason to believe that investors won't continue to look kindly on the job that this government has done and the turnaround that we're finally achieving in government in British Columbia. Although we've announced this as a one-time grant, last year it was a $42 million one-time grant. This year it's a $50 million one-time grant, and I'm very hopeful that next year, we'll also have an education dividend that we can deliver as a grant to school districts as a result of our continued fiscal prudence.
J. Kwan: The minister didn't answer the question. How much of this was for debt servicing? Let me just ask the one question first, and then I'll go to the others.
Hon. C. Clark: It's $37 million; amortization, $3.2 million; MSP savings, $3 million; audit savings for adults, $0.6 million; international, $0.4; and ministry savings, $3 million. Other was $2.8 million.
J. Kwan: When did the districts know that this was going to be part of their revenue for the year 2002-03?
Hon. C. Clark: They knew at the beginning of the year that any favourable variances that we had at the end of our fiscal year would be going to school districts.
J. Kwan: When did they know the amount that they were to receive? The minister always talks about: "Oh well, if there were savings, they could have it." But nobody knew exactly when or how much. So when did they know the details of it — that this was going to be part of their revenue for 2002-03?
Hon. C. Clark: February 10.
J. Kwan: For the year 2003-04, it has been announced that there will be increased funding for the ministry. The BCSTA notes that in '04-05, only $50 million will be added to the district operating grants. Therefore, it appears there really hasn't been an in-
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crease at all in that area. Or can the district expect a one-time grant next spring as well, just like the last two years?
Hon. C. Clark: As I just said, we certainly hope so. There's no reason to believe that this government won't continue to be prudent and well managed, and there's no reason to believe that international investors won't continue to look kindly on the very good job that our Minister of Finance and our Premier have done.
J. Kwan: Have there been any instructions on how the boards should spend this money? Have they been given direction to put this $50 million in the bank accounts or to create surplus accounts to spend in the year '03-04?
Hon. C. Clark: They have been instructed to spend it on improving student achievement, which is our number one priority as a government.
J. Kwan: Well, it's interesting, you know. I wanted to get some basis in terms of the general funding questions, and there will be a lot more. People are very thrilled with this money. Don't get me wrong, Mr. Chair. The extra funding announcements are welcome, because there have been deep cuts by this minister and this government in the area of education. I'm positive that no school district would complain about the added funding.
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However, the reality is this. Boards are still struggling to provide the services that they are charged with, and many insist that these announcements are not enough to cover the added cost pressures imposed by this government, this minister and this funding freeze which continues into the next year and future years. It is obvious, though, that the minister and this government have felt the pressure from parents, from students, from school boards and from teachers. That is why we're seeing funding announcements. As I said — don't get me wrong — I'm happy about those funding announcements, but we must not forget that there are tremendous pressures in the education system right now, and I will be going into those areas in a few moments.
I'd like to ask the minister: can the minister explain how the backtracking, if you will, of the government in making last-minute funding announcements provides for a stable education system, provides for a stable funding system for the school districts?
Hon. C. Clark: The member is mischaracterizing our government's motivation when she suggests that the government was pressured into providing more money for education. That's not correct. Our government ran on a platform that said education would be our number one priority, and we're living up to that commitment now. Our government ran on a commitment that when there was more money available, we would plow it into investing in kids in our public education system, and we are living up to that commitment now. That's all we're doing.
We told school districts at the beginning of the year that if there were any savings as a result of good, prudent management, we would make it available to them. We didn't take that money and siphon it off and spend it on fast ferries or anything else. We took it, we delivered it to school districts, and we said: "Folks, spend this on student achievement, make sure it gets down to the classroom, and make sure you spend every dollar as well as you can." Those savings, when we realize them at the end of year, are things that we pass on. I suppose there are other governments that might have decided to redirect that money, to put it back into general revenue, to go spend it on pet projects, to keep it from school districts or to have it go somewhere else. We decided that we would distribute it to school districts, and we would distribute absolutely every penny that we had.
We're telling school districts to think about the fact that there may be an education dividend next year. We can't guarantee that. But we're certainly intending to continue to be a prudent, well-managed government, and we continue to stay on track with our budget plan. That budget plan is already beginning to yield results.
J. Kwan: Let's be clear, Mr. Chair. The fact of the matter is this: this government and this minister campaigned on protecting education, and nothing could be further from the truth. The reality of what's happened is that this government did not protect education. What have we seen since this government took the reins of power? Instead of protecting education, they actually froze the education budget. Instead of actually providing dollars in the education system into the classroom, you know what happened? Schools had to close. Over 40 schools had to close across the province, and somehow in the minister's mind, that is protecting education. Then you know what happened? For the first time in the history of British Columbia, children had to bus to Alberta in order to get an education. That is a proud record for this minister. They have somehow protected education.
For the member for Vancouver-Burrard, maybe he's proud of that too, when you see dollars in the classrooms being reduced, when you see special needs children not getting the support that they need, when you have ESL children not getting the support that they need in the classroom, when you have teacher librarians actually not being in the classroom, not being there to support the children who need to get support in library services. Libraries are closed across British Columbia. Richmond right now is talking about further closures. In Vancouver they are talking about further closures. Here in Victoria they're talking about further closures, and somehow for the Minister of Education this is all good news.
Interjection.
J. Kwan: Well, actually, I think we're operating in different worlds. The minister can only see through
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one lens, and that is the lens of what the government tells her to say. That is the lens…. I suppose it's the Premier's survey that really counts at the end of the day — the survey that's been ordered by the office of the Premier to ask the caucus how satisfied they feel. But you know what? Maybe the Premier should be doing a survey asking parents how satisfied they are with the education system.
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Let me go on with some of the other issues that the minister actually needs to address for members of this House and needs to address for the public with respect to funding. You know what? This minister did not protect education funding. She did not protect education. She increased pressures on the education costs, downloaded that on to the school districts and said, "Hey, we gave you flexibility. We gave you choice. We gave you all the tools to actually do your job" — with the exception that the minister did not give them the resources to do the job. You know who got hurt in that process? The children who need the education are the ones who got hurt in this process.
While the minister and the backbench MLAs are clapping and thumping their desks and feeling very proud of themselves, I ask them to go out and talk to the parents and see for themselves to see what's happening in the classrooms. Then, when the pressure hits the roof, when people and parents are being sent away from the schools that they want their children to go to because those schools have been shut down, there is a problem. There is a problem that this minister refuses to acknowledge. She just sits there and smiles and happily goes along and says: "Hey, everything is fine."
Let me ask the minister this question. The minister constantly says that she's providing stable funding. The reality is that she hasn't provided stable funding. The reality is this: many of the school districts for the last year have been adamant that they're being underfunded by the ministry, by this minister and by this government. They have had to make deep cuts to programs, reduce the number of teachers and even reduce maintenance activities for schools. The minister is very proud of granting the districts more flexibility and choice, but as I said, they have not given them the capacity to use that choice in a meaningful manner.
Could the minister please explain how this deliberate underfunding is actually a comprehensive process? How is it providing for stable funding in the school system? How is it good for the children in the classrooms?
Hon. C. Clark: It is good for students in classrooms for school districts to be able to have a window of planning. It's good for students in classrooms for school districts to be able to know how much money they're getting year over year so that they can do their planning better.
What is not good for school districts is what the previous government used to do, which was to deliver their budgets late every year, which was to always fiddle with the funding formula based on their political needs, which was to build schools only where there were NDP MLAs and to heck with everybody else. That is what is not good for students.
We need to deliver education fairly across British Columbia to all children regardless of the views of their parents. That's our obligation as a government. That's what we're living up to. When we said we would protect the education budget, that is exactly what we did. Our education budget has been stable and has actually been enhanced since we came into government, despite the fact that we were left with a terrible mess by the previous government to clean up and despite the fact that there is declining enrolment, which means fewer children to educate. We did that because education is our number one priority, and that's why when we have extra money, we deliver it to school districts so that they can deliver it into classrooms.
In British Columbia today there are 15,000 fewer students in kindergarten than there are in grade 12. If the member wants to think about a picture for herself here, it's like the pig going through the python. The pig is getting to one end of the python, and the python is getting really skinny at the other end. That's because, aside from the politicians and the press gallery, not that many people are having babies in British Columbia anymore. We're just not reproducing at the same rate.
We have declining enrolment in our elementary schools at a pretty alarming rate. Victoria is an excellent example. Victoria is a school district that has 2,200 empty student spaces. They had a declining enrolment.
Hon. S. Hagen: I did my part.
Hon. C. Clark: The Minister of Sustainable Resource Management did his part. That's true. He had five kids. Keep at it. We need those kids.
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But 2,200 kids are a lot of kids in Victoria. That's 3.7 percent declining enrolment that they've gone down just over the last year. That means that one in every three students in Saanich or Sooke could move to Victoria and transfer into the Victoria school system tomorrow, and there would be a space in the classroom — one in every three. I was up in Prince Rupert yesterday. Every single student in Prince Rupert could fit into the empty spaces just in Victoria.
When the member gets up and goes on and on about school closures, she should get up and tell this House what she thinks the best investment of taxpayers' dollars is. Does she think that when school districts have to make difficult decisions — and there's no question school closures are very difficult decisions for them — they should say it is more important to fund an empty space in a classroom, which isn't taken up by a child, than to fund a teacher or a textbook or a computer or an aide for a special needs child? Those are the decisions that school districts need to cope with. I know where I stand on that issue. I'd be very interested to find out where the member opposite stands.
J. Kwan: It is interesting. After all that rhetoric, the minister didn't actually answer the question. The ques-
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tion is this: how does a one-time grant provide for stability in the system? You know what? The minister would like to say: "Hey, you know what? That's just the opposition jabbering on. It doesn't matter, and let's ignore her." Members are going to say: "That's right; that's right. Don't listen to the opposition. Damned be it that they actually rise in this House and attempt to hold the government accountable."
Let me tell you something. Let me just put on the record what others — not I — have to say about the performance of this minister and the funding for the education system. I'd like the minister to respond to their concerns with respect to the instability, the disabling situation, that this minister has caused in the education system, because there is no stability in education funding.
From the North Shore News, the headline: "One-Time $2 Million Won't Solve Budget Woes." I'm just going to quote parts of the news article, because it takes too long to put them all in. I want to cover a number of different areas, because it's not just in one area that they have this concern. They raised this question with the minister: "Yes, people are happy and welcome the money, but they cautioned…."
Interjections.
J. Kwan: For all the seals that are barking somewhere in this chamber…. "They cautioned that the money is only one-quarter to one-third of the funding needed to cover anticipated cuts to education budgets next year. Phil Turin, secretary treasurer for the North Vancouver school district, described the money as a step in the right direction, but warned it still leaves the school district with a $3.4 million shortfall." It goes on to say: "It still leaves a tremendous shortfall. The government is basically giving us money they took away." North Shore News, February 12, 2003.
North Island Gazette, February 26, 2003, Port McNeill: "'Much of the education grant announced last week will be quickly eaten up,' secretary treasurer John Martin of the North Island school district told regional district directors last week." It goes on to talk about the impact of the cuts: "'The 2004-05 budget will be very critical,' Martin warned. 'We're running out of places to cut costs.'"
Kimberley, February 17. Here's what that community has to say: "The extra funding is a great help to the district, but cost pressures and uncertainties continue. We have continued pressure in providing adequate service to our special needs children and a lot of uncertainty about the price of fuel. We have a clear focus in this district to try to direct as much funding as possible direct to schools, but uncertainties continue to impact that goal."
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The Interior News. Here's what they have to say:
"School districts across the province are still struggling with covering the legislated increases in teachers' salaries, the support staff salary increases and the yearly increases in benefits for all staff.
"This is the second year in a row that the provincial government has come up with a one-time grant partway through the school year. This is a purely political move driven by their need to be seen to be doing something about education when they have damaged it so badly. It has nothing to do with providing a stable or predictable funding level for the students or the province. They haven't changed their minds about how to fund education. They're simply tossing out a little bit of money, which they hope to use to placate the public."
Another one — Hope Standard. Here's what they have to report: "Although the provincial Liberals promised a simplified system for funding for school boards to bring stability for long-term local planning, details on where the new cash will be directed to be spent by the province and exactly how much the funding will be remain a mystery."
Chilliwack. Here's what they have to say:
"The challenge is that one-time grants can't be counted on. Once spent, next year, if it doesn't come again, it creates problems for the following year. My main concern, however, is that when the government talks about the importance of stable funding for education, it is clear that these one-time grants do not allow for any real long-term planning or stability."
This is just a small cross-section of what's been reported in the newspaper from various advocates in the education system, whether they be secretary-treasurers of a school district, teachers, parents or others who have comments to make.
For the minister to sit here and pretend that somehow she's done her job by freezing the education budget, that somehow she has actually protected education by injecting one-time grants into the system, that they would somehow provide stability into the education funding system…. I have to say the minister is wrong not just from my own perspective but from others who are directly involved with delivering the education system in various school districts.
I ask the minister again: does she think that actually providing one-time grants is stable funding?
Hon. C. Clark: The advantage of standing up and quoting from newspaper articles is that, first of all, you don't have to say who said it and, second, you don't have to express your own opinion when you do it.
I would be interested in the member's opinion on some of these matters. I would be interested to know how she would have managed this, because for the first time we have actually seen savings. I know this wasn't much of a likelihood under her government. But if, theoretically, they had actually been able to save money across government because, theoretically, they had been good fiscal managers and had been responsible with taxpayers' dollars…. Let's take that theoretically, no matter how bizarre or how outlandish the example might be. What would she have done in the situation if they had saved money across government?
She would have had three options. First, she could have not given it to school boards, kept it and spent it somewhere else on one of her former Premier's pet projects. Second, she could have taken the option of being imprudent at the beginning of the year — over-
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budgeting — making very, very liberal projections about what interest rates might have been and taking a huge risk with taxpayers' dollars, risking that her budget wouldn't come in on budget and add to the public debt. Third, she could do what our government has done, which is manage the public's money well, find savings, manage it conservatively, make sure that we budget conservatively and make sure that we don't want to take the risk of adding to public debt — which is adding to the burden that our children we're trying to educate today will be carrying on their shoulders — and then deliver it to school boards.
Which one of those three options would she have chosen? Does she have up her sleeve some other option she'd like to suggest to government? Or is her role here today just to stand up, complain and say how awful it is that the government funded half of the contract for the first three years, provided $42 million in an education dividend last year, found $50 million in an education dividend this year, funded $20 million in increased MSP…
Interjections.
The Chair: Order, please. Order.
Hon. C. Clark: …costs and is devoting another $100 million to the education system over the next three years? Which one of those options would she have chosen? I'd like to know, because for once I'd like to see the opposition stand up, take a stand on something, talk about what they'd like to do, instead of just complaining that the impossible never can happen.
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J. Kwan: It's actually comical — the comments from the minister. You know what? The previous government — you know what they did when there were salary increases? They funded it to the full. That's what they did. They made sure that those fixed costs were not actually passed down to the school trustees and the school districts so that they have to take money away from the classrooms.
That's what this government is not doing. They impose costs by calling the Legislature back and imposing a salary on the teachers. Then they walked away and said: "Hey, you know what? We're not going to fund that in the education budget. You know what? School districts, you're going to have to take that money, and it's your decision because we gave you more choice and flexibility. You have to take that money away from the classrooms, from the children."
That is what this government is doing, and that's not what the previous administration did. The previous administration never imposed those kinds of fixed costs. I wonder whether or not this minister's going to fund the gas tax that this government has just brought on, which will also increase costs for the school districts.
Is the government going to fund that? Or would the school trustees have to scramble once again looking for money in the classrooms to fund those fixed costs, sort of like the MSP premiums? The government increased the cost of MSP premiums. You know what? Pharmacare costs are also going to go up in terms of the coverage because of the government changing the Pharmacare plan to increase costs for British Columbians. When that happens, those costs are being passed on down to the school district. Is this government going to fund it? Is this minister going to fund it, so that the school trustees don't have to take that money away from children in the classroom?
Hon. C. Clark: The member still hasn't answered my question. She stands up, and she quotes a letter from the union president. Certainly, the union president has a right to have views. There's no question about that. I've certainly had debates with many of them, but I would be interested in the member's views and how she would have managed any prudent savings should her government have had them.
Now, I know it's not a question that her government ever had to consider, because for the first time in two generations this government came under budget in every ministry. That's not something that ever, ever happened on her watch. In fact, what happened on her watch is that her government decided they were going to make sure they used up not just all the resources from this current generation but all the resources or many of the resources…
Interjection.
The Chair: Order, please. Order, please.
Hon. C. Clark: …that might otherwise be available to future generations. That's not responsible.
We have an obligation as a generation to make sure that we clean up our fiscal house in British Columbia. We have an obligation to future generations to make sure that they have the same kind of choices to build the same kind of British Columbia that we had the opportunity to build. It is irresponsible to continue to go down the path that that member advocated for ten years, because under her plan the next generation — her children, my children, the children of all those people who are in school today — won't have any choices about what they want to spend their money on.
My question to her is this. If $42 million and an extra $50 million and $20 million and an extra $100 million aren't enough, then how much more would she have added to the education budget? How much more, and where would she have got that money? The second question, when she answers that one, will be this: if that's how much she wants to add to the education budget, where is she going to take it from? Is she going to take it from the health care system? No, she's not, because instead of managing the public's money well, she wants to add to that.
Interjection.
The Chair: Order, please. Order.
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Hon. C. Clark: Guess what, Mr. Chair. It's not just those two budgets that she wants to add to. It's the environment budget. It's the transportation budget. It's all the slush fund budgets. It's the fast ferries budget. It's the Premier's office budget. It's all the whole kit and caboodle, because that's what they did for a decade in government, and that's what has led British Columbia down the path to being one of the slowest-growth economies in this country.
We are determined as a government to turn that around. We are determined as a government to get our priorities straight, and education is at the top of our agenda.
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J. Kwan: You know what? You can always tell that the Minister of Education is nervous. You know why? She does not want to answer any questions. She wants to say: "Hey, you know what? Don't ask me. It's not my responsibility to answer the questions. Don't blame me either. I didn't make those cuts. I can't see what cuts I've made, and I can't see it because it's not happening." That is what this minister would like to pretend and merrily go along. That's what she has been doing for the last two years.
God forbid, should the opposition have the gumption to come in to this House and ask this minister pointed questions around education funding and cuts to education funding. She just wants to flip it around and say: "Well, it's not me. I shouldn't have the answer to the question; you should have the answer to the question."
Mr. Chair, I'd be happy to answer the questions when I am the Minister of Education. But it is the responsibility of this government and this minister to be open and accountable to the public. That's what the process of estimates is about. It is for this minister to answer the questions and address the concerns that have been raised by the public and that are being raised in this House by the opposition. It's her job to do that.
The minister still has not answered the question around stable funding. In fact, by the minister's own admission last year in estimates, she admitted there wasn't enough money in education. Just to quote Hansard from last year, Minister of Education, March 13, 2002: "Over three years the government is funding $16.8 million of the pressures, and the total pressures is $33.6 million." My colleague from Vancouver-Hastings, the Leader of the Opposition, says that's fine. The $16.8 million is because the minister clarified today that it is not a one-time grant. It is added to the base. Okay. Good. The $33 million, I assume, is because we are calculating on the basis of the real cost to the school board in terms of the school year. We have $33 million minus $16.8 million. What's that? That's $16.2 million in cost pressures for the school board just on salaries. The Minister of Education's response is half. That makes it $16.8 million.
On these numbers alone, for the minister to rise in this House, by her admission, that they only funded half of the salary increases…. That somehow she has protected education is a farce. It is a complete insult to the public, to the teachers and to everyone who is working hard to try and make the education system work and be the best that it could be for the children. The reality is this: with the lack of resources from this government, the lack of funding of pressures that the previous government always funded, this government is taking education funding away from the children. That is the reality of it, and that is by the minister's own admission last year.
Mr. Chair, I also want to raise a couple of issues in this line of questioning. I've heard from numerous boards that they went through a painful year of cuts and closures. Then, all of a sudden they get an infusion of money. Surrey, as an example, got $5 million; Vancouver as well. But had they known that money was coming, they would have spared some of the valuable programs for the year.
I know in Victoria, in speaking with the trustees here, they say the same. Everyone is glad to have the extra money; make no mistake about that. Yet the minister somehow claims that one-time funding is stable funding, is providing stability in the system. It's dead wrong. People who are trying to cope with this situation find they have to make cuts that perhaps they might not have had to if they knew that money was there. It's not providing for stability there. In fact, some people…. You know what they call that kind of funding? They call it the Santa Claus dividends. That's what they call it. How does that help the school board plan for the long term?
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Hon. C. Clark: I think it's important to be clear on the difference between base funding and one-time funding. The base funding for school districts remained stable this year, which is good news for school districts. It's good news that they've had a three-year budget window they can look forward to and that they can plan around. School districts asked us for this because the previous government, when they asked, didn't listen. The previous government was so obsessed with its own political agenda that it refused to take heed of school boards when school boards said they needed some planning opportunities and needed some long-term windows. I know that school districts have received the three-year planning window very, very well. In addition to that, we've provided, as the member pointed out, $50 million in additional funding this year, which school districts will be applying toward their budgets as well, which I know is welcome.
The NDP gets up and complains. I don't know how much new money it would take for the opposition not to stand up and complain about the money, but I suspect there isn't enough to make the opposition happy or to persuade them to say anything positive about it. I will say this, because the member gets up and runs down our public education system, runs down how well it's doing and runs down the quality of the system and says it's just become a terrible system. Well, do you
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know what? The fact is: that is not true. Our public education system and our public education teachers are doing an absolutely tremendous job.
While the member stands up here and runs down the quality of our public education system and the people that work in it, I want to correct that statement. Here are the facts. Here we are in terms of the results. We need to make evidence-based decisions in this ministry and across government, so here are the results. In the foundation skills assessment, grade 4 reading is up. Grade 4 writing is up quite substantially. Grade 4 numeracy is up. Grade 7 reading is stable. Grade 7 writing is up. Grade 7 numeracy is up. Grade 10 reading is down a little bit, which is an area of concern, and I've noted that in the past. Grade 10 writing is up. Grade 10 numeracy is stable.
When we look at the results this year over last year, when this government was in power, we see we are continuing to improve in our public school system. Yes, as I always say, there are areas where we can continue to do better. But let it be said and let it be said clearly that while members of the opposition and critics of this government like to spend their time running down the quality of our education system, the evidence just doesn't bear that out. Our public education system, our teachers, our school boards and our administrators are doing a tremendous job, and the evidence bears it out.
J. Kwan: I rise to actually correct the minister. It is not the opposition that's running down the education system. It is this minister and her lack of commitment to our public education system that are causing the problems. Make no mistake about it. The districts are doing the best they can, and they are stuck with all the tough decisions. Why? Because this government, this minister says: "I am not responsible. Don't hold me accountable. I didn't make those cuts. I didn't close those schools. Go and talk to the school trustees. Don't blame me when there are problems." That's what this minister is saying.
Do you know what? While she's running down the education system by underfunding it, by not resourcing it and by pretending that somehow she's protecting the education system — she said it in estimates last year probably about a hundred times how she's protecting the education — once again, if you go and cross-reference with the real people who actually will tell you that they are being hurt by this minister's action and this government's action and their lack of care and priority in the education system, something else emerges. That is the truth, and that is the reality of it.
I can accept from this minister's point of view that she thinks the opposition's words should not be listened to. This government thinks it's right all of the time. "The opposition doesn't know what it's talking about, and we should just discount everything they say," which is why, actually, when I pull up articles, it's not what I say. It's what other people say that, perhaps, the minister should take note of and pay attention to and stop sitting there with a smile, as though somehow everything is just hunky-dory — like everything is just fine and that there are no problems. If you walk out into the real world and talk to real people, they'll tell you something else.
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Let me actually put this on record. It's a Times Colonist article by Jeff Rud, February 11, 2003.
"'B.C. school boards received a $50 million injection from the provincial government Monday, but it won't be enough to cure what ails public education in this province,' says the head of the greater Victoria school district. Greater Victoria will receive nearly $1.8 million through a one-time grant from the Ministry of Education. The money can be used however a school board sees fit. 'The caveat is that this isn't nearly enough, and it's only one-time funding,' said Charley Beresford, chairwoman of the greater Victoria board."
Then it goes on to say:
"The money will help the greater Victoria board address an expected $5.9 million shortfall for next school year, not counting about $3 million additional annual social equity funding that is still in question for next year. That money comes from the Minister of Children and Family Development and is used for things such as youth and family counsellors and school meals. 'It will only allow us to plug some of the holes in the dike, not all of them,' Beresford said. 'It doesn't cover the size of our shortfall, and it doesn't cover the years after that.' Sooke chairwoman Denise Riley, whose district is facing a shortfall of between $2.7 million and $3 million, echoed Beresford's comments. 'This is definitely helpful,' she said, 'but it's certainly not going to come close to meeting the challenge of $3 million.'
"'The new grants have been provided to school districts on a per-student basis as a result of savings in the Ministry of Education's budget,' said a ministry release. According to the release, the money was achieved through 'prudent fiscal management and lower debt-servicing costs.'
"The province's largest school districts will receive the lion's share of the grants. The Surrey district will get nearly $5.2 million; Vancouver, $5 million; Coquitlam, $2.7 million; and Burnaby, $2.1 million."
Quote from Gordon Comeau: "There's no guarantee that money is going to be there next year." "We need ongoing funding year after year," Riley added. Beresford said that greater Victoria is hoping to carry over some dollars from this year's budget to help address next year's concerns — money that has been achieved through a series of small cuts. "It hasn't been good for the system."
This is what the school trustees have to say, to which the minister just praises how well they're doing and what a wonderful job they are doing. I would agree. They are doing a good job, but under impossible circumstances which this minister, this government, has imposed on them. They are not only now just looking at cuts to programs — fat; some people want to call it that. They're cutting to the bone. That is the reality, and that's what they're saying.
So while the minister can stand up and pat herself on the back, she can hardly do that in public, because the public has something else to say. The public is telling this minister that she has underfunded the educa-
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tion system, and children are getting hurt. They're not getting the support they need. For the minister to quote how well the public education system is doing…. Actually, the public education system is doing well. In the last number of years we've ranked one of the highest not just in Canada but in comparison to other jurisdictions as well. Our system, for the most part, is servicing its students.
The problem with its servicing under this government, this minister, the Liberal government and this administration is that they're underfunding education. They have frozen the education budget for three years. When you look in the blue book, the funding for education has actually not increased. It has not increased. Blue-book-to-blue-book comparison indicates that funding wouldn't increase until at least next year. That's, of course, not counting inflation costs, salary costs and the gas tax.
I want to go back to this question for the minister. What we know is that there is no stability in education funding. These one-time grants do not provide for stability. People have already said that. I have already quoted various people onto the record to say how it doesn't. The minister refuses to acknowledge it, because she's blind. She's blind to any criticisms of her actions or her government's actions. She has refused to acknowledge the reality of what's happening out there. There's no point in asking her that question again. We all know the difference. The people who wish to open their eyes wide and see reality will see the difference; those who want to stick their head and keep it in the sand will see something else. The Minister of Education has chosen to do that.
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I'm going to ask another question. What about costs relating to the gas tax increase of 3½ cents per litre? That is going to be transferred right into the education system. Is this government funding that separate and apart from what the budget for the education system is right now? If the government does not inject additional moneys for the gas tax, what that would yield is cuts in the classrooms and cuts in services for the children.
Hon. C. Clark: You know, if the member's questions were a little bit shorter, I might make sure that I get to answering all of the things that she packs in. I'll try to be brief and answer the question and correct some of the comments that she made.
She talked about how the education system used to be a great one and how we used to do really well. You know what? The fact is that we are continuing to do extremely well. This year British Columbia science students brought back — and we're 10 percent of the national population or a little more than that — 40 percent of all of the medals at the national science competition. Our math students continue to rank top in the world along with Finland and Korea. We are doing extremely well in our education system with some of the highest-qualified, most motivated teachers in the world; with some of the most engaged parents of any jurisdiction in the country and maybe even the world; with some of the best school administrators, some of the most qualified administrators, some of the most dedicated school boards and, of course, a terrific Ministry of Education that's absolutely dedicated to making sure that students achieve everything they can and that none of them get left behind.
I just sort of want to put the rhetoric aside for a moment, because I do want to speak quite seriously about something. The member does like to stand up and say that government doesn't think there are any problems out there, that it's all just rosy times. I want to correct her about that, because I know there are difficult times out there for many people. It's not a new situation. It's something that's been going on for many people for some time.
I was in a district recently where they have a much-needed school lunch program. One of the kids there was getting in trouble. A teacher saw him do this. He got in trouble from his older sibling in the schoolyard because he ate the peanut butter sandwich that he got for his school lunch. He got in trouble from his brother because he was supposed to take that sandwich home for his family.
I know there are lots of problems out there in lots of families. There's poverty; there's family dysfunction. There's more that we can do in our schools. There is always more that we can do in our schools. My commitment as minister, our government's commitment and our Premier's commitment is to do all we can to try and make sure that no child in our education system, in our social welfare system, falls through the cracks, because that is our obligation to the next generation.
The Chair: Member for Victoria-Hillside.
Interjection.
S. Orr: Thank you, Mr. Chair. I….
The Chair: Excuse me, member. Would you please sit down. Take your seat.
Member, this House is not for your exclusive use. Other members have a right to ask questions as well. I've given you sufficient time, I think, to ask questions. Now it's time for some other member to ask a question. You're out of order.
S. Orr: What I would like to do is very important for me and my constituents. I want to ask some questions. I'm allowed to do that, I think. Last time I checked, I was.
What I want to do is get some clarity. This is really important, because I have had a lot of parents speak to me personally and call me and talk to me, and there is confusion. There is a lot of confusion out there, and I would like some clarity.
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I've had five children go through the schools, and teachers are great people. Schools are great places. I have had my children in every type of school, actually,
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from private schools to public schools. I can tell you, and I'll say this in this House, that the best education my kids got was in the public school system. I respect teachers. In our district we have got some of the best teachers.
I read the service plan, and I look at the objective strategies and the performance measurements, and I see a plan. I'm thinking, God, this is great. We have a plan. This is really good. This is good stuff.
My first question is this. I represent a very large school district, school district 61. Our budget is $133.710 million, if I'm not wrong. What I want to know, because there's always so much talk about what's in that budget…. First question I would like to clarify, which I've had before, is: is that the entire budget, or is there anything extra? I mean, building maintenance costs, other things…. Is that the whole budget, or is there more on top of that? I hear constantly from people: "That's all we have to cover building maintenance." So that would be a great question, if I could get that one answered. I have more after this.
Hon. C. Clark: I'm afraid I don't have the exact number in front of me for building maintenance, which is the annual capital grant that we provide to school districts, but that's $100 million that we disburse across the province to districts every year. Victoria's share would be in the range of $4 million a year that they can plow into fixing carpets and things like that.
In addition to that, of course, we have a separate budget envelope for renovations and additions which, depending on how the demographics move around in a district…. Even in districts that are doing closures…. For example, in Coquitlam they're talking about closing three elementary schools, but we are building a brand-new $20 million or $12 million secondary school in the same district. So depending on how the population is distributed, they may also be getting money out of a separate fund that comes from the ministry to support their new capital requirements.
The member is quite right. It's $133,710,099 in operating funds for the district. In addition to that, as I said, they've got their annual capital grant. There would be some money that comes out of the ministry's budget to support new capital, and then, of course, they would receive money, as well, in the budget from the Ministry of Children and Family Development, which is substantial, I think, in Victoria. In addition to that, they probably receive money from other sources, as well, that support the education system.
S. Orr: Great. Question one clarified. We get more money. Thank you. That's what I needed.
The second question I have is this. I am facing school closures, and this is a huge concern. Children don't like to move from school to school. We all know that. We don't like to move from house to house or from job to job, but we do that. This is what I need to know. I need to know the figures around the capacity in my school district. I need to clarify, really, how many spaces we have. Well, as one of the hon. members said before, there aren't big families out there anymore, and we're having fewer spaces. I'd like that number or something close to it, if you could get it for me.
Hon. C. Clark: In Victoria, in fact, I do have that exact number. It's a correction on the number that I stated earlier. The number of students enrolled in Victoria is 19,475. The operating capacity in Victoria is 22,713. That's a net difference of about 3,200 spaces, which are empty.
The challenge for school districts is between keeping those spaces open — which comes at a cost and is often the easy decision to make because no one likes to court controversy in politics; that's for sure — or perhaps reallocating that money from those empty spaces towards textbooks, towards teachers or towards learning resources for kids who are actually in the school. No doubt about it, those are difficult decisions for districts and for parents and for children, but school districts, I know, are prepared to make some of those very responsible choices.
[1755]
S. Orr: Interesting. You said something there…. A little click went in my brain — it does occasionally — and that's this. I almost see that as a positive, because if I've got a school with 70 children and with a capacity of, say, 200, you're telling me that when we close those schools and move them — in my district the schools aren't too far from one another, but, again, it's still hard on families…. We take those resources of keeping that school open with fewer children, and we can move that now. We'll put them in the resources of a school that has space, so those children will have a better deal. Am I right? Great. That's number two. We're moving along here quite nicely.
My school board has concerns….
Interjection.
S. Orr: I know I'm good, because I'm getting clarity here — and about time, because I'm fed up with people not understanding it. So why don't you listen and learn?
My school board had concerns….
Interjection.
S. Orr: Just listen and learn. It will do you good. My school board has concerns about a cut, they've said, of $9 million. Can you give me some clarity on that $9 million that they constantly talk about, please?
Hon. C. Clark: I'd like to respond to that directly once I have a chance to sit down and look at the Victoria district's budget, and we could have a more precise discussion about it. I expect some of the pressures that are on their list are due to the fact that there is a 3.2 percent — or a little bit more than that actually, 3.8 percent — reduction in the number of students they
[ Page 5268 ]
have in the district. That, of course, impacts their funding when those kids move to Surrey, for example. Those kids take a little bit of that money with them.
Nonetheless, Victoria will be continuing to benefit from some of the new money that we've pumped into the system. They'll benefit from their part of the $50 million that we distributed.
I do have a more precise answer for the member on the total funding that's available for annual capital grant. Sorry, it took me a minute to lay my hands on it. It's almost $4 million a year. It's $3,937,989 that Victoria receives every year, or somewhere in that neighbourhood, to support their maintenance needs in their annual capital grant.
Hon. G. Plant: Noting the hour, I move that the committee recess until 6:35 p.m. precisely.
Motion approved.
The committee recessed from 5:58 p.m. to 6:36 p.m.
[L. Mayencourt in the chair.]
S. Orr: I've got two final questions that I would like to get clarification on. I thank you for giving me some clear answers prior to the break. It really helps with me reporting back to my school board, my school district and my constituents.
This question is about my school board's concerns about additional funding and one-time grants. What my constituents would like to know is…. We've talked about funding; we've talked about the one-time grants. They want to know if this is it. Is there more funding? How are they going to progress the year after and the year after that if they receive just one-time grants?
Hon. C. Clark: This year the greater Victoria district's share of the one-time grant, the $50 million, was $1,772,974. Next year we don't know how much the education dividend might be, but hopefully it'll be a big number. Last year it was $42 million. It's impossible to predict in advance, but we intend to continue to be a prudent, well-managed government, so we intend to have an education dividend again next year.
S. Orr: Thank you. That's very important.
My final question is clarification. I really want this on the record as much as I kind of know the answer, but I want it on the record. That is what I always refer to as the social equity package. That is the moneys that are used for school lunches, school-based counsellors, community school money. I have constituents that are getting information where they believe that that money is coming out of the original budget that I talked about — the $133.710 million.
Now, I had understood that the social equity package money comes from Children and Family and Development, and that money has actual strings attached when it goes to the district. So, I need a clarification of that and a clarification that that money cannot be used for anything but the social equity package.
[1840]
Hon. C. Clark: The member's understanding is absolutely spot-on. It's not Ministry of Education money. It flows through the Ministry of Children and Family Development. They attach strings to it, and they require that school districts spend it in the ways that it's intended to be spent — on those specific projects. School lunches, inner-city school funding, community school funding and school-based counsellors are the four categories that they've traditionally had in the Ministry of Children and Family Development. Again, that's on top of the money that the district gets from the Ministry of Education. It's a separate envelope of money, and it's specifically dedicated by the Ministry of Children and Family Development to go to those purposes.
S. Orr: So, clarification is that the cheques are actually cut at the district that pays — I don't want to call them stakeholders — the people who supply the services. The cheque is cut by the school district, but the actual money does not come out of that budget. That's very important to have on the record.
I have finished the questions I have that are very specific to my school district. I have to say that it's very, very important for me, my constituents, my school board and the school district staff to have really clear answers, because there's a lot of confusion out there, and I can understand why. There shouldn't be, but there is. What you have just done is put it on the record. We've got it clear. I'm very pleased, and I thank the minister for doing that.
E. Brenzinger: I'm standing up here today to ask the minister a couple of questions. I'm an MLA from Surrey, and I want to say that our school trustees are very dedicated and hard-working in Surrey, trying to keep it all together.
I'd like to ask the minister a couple of questions. The first one is: can you give me a little update on the school planning councils — how they've been received and heard feedback on how they're doing?
Hon. C. Clark: Good question, because the district of Surrey has been a leader in the province for many years in engaging parents in the education system. Their board is very reflective of parent concerns. I know that board is largely elected from parents who were involved originally at the PAC level and in their local schools and came to this political job out of concern for their kids and their kids' education. It's no surprise, then, that Surrey really has been a leader in making sure that school planning councils come into place as quickly and effectively as possible.
I don't have an exact number in front of me, because they're continuing to work on electing the councils, and, of course, Surrey is the largest school district in the province. One in ten students attends there, so
[ Page 5269 ]
they've got a lot more schools to think about, as well, and to organize these planning councils for.
I do know that they've elected many of their school planning councils. Just as importantly, I know that the board in Surrey has a genuine commitment to listening to those boards and making sure that parents have real, meaningful input into planning for their individual children's schools.
E. Brenzinger: The next question I'd like to ask is a bit about the dollars — the funding that is provided through the ministry to our district. If the minister wouldn't mind giving us a little bit of information on how many more dollars in Surrey compared to last year's budget….We've received more money. How does that compare to last year's? Also, the simplification of the funding formula — how is it done in Surrey? If you could just give me a little bit of a breakdown on how that's being put into effect.
Hon. C. Clark: I certainly can do that. The Surrey budget is up this year over last by about $15 million, although they've had an enrolment decline of 0.9 percent across the district. They're certainly in a position to take more money and stretch it over fewer students in the district, which is good news for them.
[1845]
E. Brenzinger: I have two other questions. One is about the accountability contract. I wonder if you could elaborate a bit on that for me.
Hon. C. Clark: Again, the Surrey accountability contract is a model provincewide, because it was very specific. It was entirely appropriately focused, and that was on student achievement. It reflected a lot of consultation throughout the district. It reflected the expertise of the staff and the genuine commitment of the board. It really set an example, I think, for other districts to follow.
Surrey, by the way, is also doing extremely well in coming close to meeting the goals that it set. They were ambitious goals, but they set them. They set them publicly, they're focused on the right things, and now they're well on their way to meeting those commitments.
E. Brenzinger: This is my last question. I'm hearing from constituents. They're concerned about class size increases. I wonder if you would mind talking to that.
Hon. C. Clark: My understanding from the Surrey district is that they made a commitment not to increase class size last year, even though they struggled with what they'd originally predicted might be a $19 million deficit. As I understand it, they managed to keep class size stable, despite all the rhetoric we hear out there and all the negativity. They did a tremendous job of making sure that worked.
I do want to correct one of my earlier statements. I said that Surrey had gone down by 0.9 percent in its enrolment, and that's not correct. It's actually gone up by 1.2 percent. It continues to be one of that minority of districts across the province that's still growing.
E. Brenzinger: I just want to emphasize the fact that we are growing and working within our budgets. It's always a challenge. Thank you very much.
J. Kwan: I would like to just quote the minister, who spoke these words before the break. She was beginning to talk about a child who she visited in a particular district. Here's what she said:
"I was in a district recently where they have a much-needed school lunch program. One of the kids there was getting in trouble. A teacher saw him do this. He got in trouble from his older sibling in the schoolyard because he ate the peanut butter sandwich that he got for his school lunch. He got in trouble from his brother because he was supposed to take that sandwich home for his family.
"I know that there are lots of problems out there in lots of families. There's poverty; there's family dysfunction. There's more that we can do in our schools. There's always more that we can do in our schools. My commitment as minister, our government's commitment and our Premier's commitment is to do all we can to make sure that no child in our education system, in our social welfare system, falls through the cracks, because that is our obligation to the next generation."
This is what the minister said.
[1850]
I would like to ask the minister this question. If her goal is to ensure that children in our education system and in our social welfare system do not fall through the cracks, and because she deems that to be her obligation to the next generation, why would the minister then support a budget…? Albeit, it is a piece that relates to the MCFD — the social equity envelope funding, otherwise known as school-based funding — to which the minister answered a question from the member from Victoria around that. Why would the minister actually support a budget cut of some $7 million in that envelope? That envelope funds hot lunch programs and breakfast programs. It funds inner-city schools, community schools, counselling and ESL support for parents — all of those values that the minister purports to support. Yet this government is cutting that funding. Why? Why would she support that?
Hon. C. Clark: I know that the Minister of Children and Family Development will speak to this when his opportunity comes in estimates, so I don't want to steal his thunder from him. He maintains a very firm commitment to making sure those programs continue to be supported, and I know he's looking at ways to make sure that they're equitable and fair and that we maximize every dollar we spend. I'll leave it at that, because it's not my budget. It's a Minister of Children and Family Development budget issue, and I know the member of the opposition can certainly have an opportunity to ask those questions of that minister when his estimates arise.
The member asks a very general question that I would be happy to answer about why I would support
[ Page 5270 ]
this budget. Here's why I'd support this budget: $100 million more for education over the next three years, $11 million that's being plowed into early childhood education — that's great news — $30 million more in base funding that'll be going to the Ministry of Advanced Education, a deficit that is $3 billion lower than predicted and a dividend of $200 million that isn't going to be going to pay the banks in interest that would otherwise have been if her government had remained in power. That $200 million will buy a lot of teachers. It'll buy a lot of textbooks, it'll build a lot of schools, and it'll take care of a lot of kids who are stuck on social assistance and need help.
I support this budget because it's a budget that says to the public: we are sticking on track, we're sticking with our plan, we're managing your money well, and we in British Columbia, after the sacrifices that many British Columbians have made over the last year or so, are starting to see the dividends of our managing their money well.
J. Kwan: Only this minister would get up and say what a great job they're doing. What she neglected to talk about are the cuts in the education system and the cuts in the educational programs. I know she likes to say, "Hey, you know what? It's not my responsibility," and yes, the opposition will be going into questions with the Ministry of Children and Family Development on the cuts — $7 million cuts, approximately — in the social equity envelope which funds the hot lunch program.
The minister says she wants to make sure children don't fall through the cracks in our education system. When she sees a child eating a sandwich and getting in trouble with an older sibling because that sandwich was supposed to go home for his family, and in the same breath this minister gets up and supports a budget that actually cuts funding specifically to deal with hot lunch programs and meal programs for children, her words don't match her action. It's as simple as that. Her words don't match her action. That's what it has been to date.
When she says she wants to make sure that our children in our social welfare system don't fall through the cracks and when we have a cut in this year's budget from this minister, which she endorses, and from this government, which she endorses — a $260 million cut in welfare — her talk does not match the walk. That's going to hurt children.
When you look at the Ministry of Children and Family Development and the cuts that are there for family protection programs — and the list goes on — and when we look at the cuts for women's centres and women's services, the list goes on. When she says she cares about the next generation and that it is her obligation, she's not living up to the obligation that she claims she is going to try and protect. That's the reality of it.
I don't want to engage in budget debate with respect to the other ministries. I raise these questions because the minister says — and she actually took the time to answer the member for Victoria-Hillside about social equity envelope funding…. I thought, given that the minister is answering that member's question on another ministry's area of funding, I may as well get up and ask the question along those lines as well. But not to my surprise, the minister would not answer the question, because we know the cut in education funding is going to hurt. The cut in the MCFD funding for that program is going to hurt children, and we know that.
[1855]
I want to get back to discussion around general funding issues. We were discussing, before the break, cost pressures that the school districts would be faced with. In the past when school districts were hit with large and unexpected budget increases through no fault of their own, the province, being the funder of the education system, provided and covered those unexpected funding pressures. I would like to ask the minister this question: will the minister give a commitment to school districts that should gas prices or electricity rates go up — and we know gas prices are going up due to the decisions of this government — the province will provide the funds to cover those district costs in addition to the budget that has now been allocated for education?
Hon. C. Clark: The member complains that I don't answer the questions that she asks directly enough. I might want to suggest, as a matter of process, that if she didn't load up the question with preambles which contain so many mischaracterizations of what's actually going on, I wouldn't have to spend so much time in my answer correcting them, and I might be able to get to the answers a little bit more quickly.
Having said that, let me just make a couple of comments about the member's statements. Only a member of the NDP would look at numbers that show that 60,000 people are back in the workforce and characterize it as something we should feel terrible about. That's great. People are back working, back being good models for their kids, back in the workforce, back getting self-esteem and the dignity of a paycheque. There is nothing the matter with that, and it is something our government should be proud of.
Only the NDP can characterize an increase of over $100 million to the education system as a cut. Only the NDP can stand up and say that health care funding has been cut, when it has gone up by $1.1 billion last year and is projected to go up by $1.3 billion this year. Only the NDP, only the members of the opposition — who live in a world that is so closed off, so stuck in the past, so framed by their negativity and by their constant focus on how everything is going wrong — could take those facts and misconstrue them so badly that they no longer have any relationship to the reality of what is going on out there.
J. Kwan: It is laughable. It is actually laughable when you listen to the minister's answer. Not only did she not answer the question, she just made up some
[ Page 5271 ]
rhetoric so that she can go on to talk about it in this House.
You want to talk about unemployment rates? Under this government and the Liberal administration, unemployment rates went up, not down. Look at Stats Canada. Actually, under the previous administration, employment was at 7 percent. With this government, it's over 8 percent for the last two years. I'm not making up those numbers. Just look at them.
You know what? I do want to get back to education in spite of what the minister wants to do — evade the questions. These are tough questions for the minister. She likes to pretend that she's protecting education. She said this over and over again: "I'm protecting education." Last year here's what she said: "We protected education funding this year despite the fact that there's a declining enrolment in B.C. I'm confident that school districts, although they certainly have some tough management decisions to make, will be able to manage within those resources."
[1900]
Apparently, now the minister admits that she was wrong a year ago. Why else would the government actually feel so pressured to grant extra moneys to the districts?
I want to ask the minister this question very specifically. I'll say it very slowly so she actually gets the question, and maybe she'll actually attempt to answer it. Will this minister give a commitment to school districts that if gas prices or electricity rates go up due to the decisions of this government, this minister will provide the funds to cover those districts' costs in addition to what has already been allocated in the education funding budget? Will she? Yes or no.
Hon. C. Clark: I could answer that question as slowly as it was asked, but I don't have any questions written phonetically in front of me. I'm going to have to go a little bit quicker here. The member's questions are, as I said, always easier to answer when they're not quite so front-end-loaded with all the rhetoric that she adds in. It's irresistible for me, after all these years in the House, to get up and not respond to some of the rhetoric that's contained in the question. But anyway, I will on this occasion resist filling in and answering all of that rhetoric that the member got up and put out on the table.
Last year there was, for example, an unusually mild climate. School districts had savings in their costs that they would have had for heating. We didn't take any of that money back. Under the previous funding formula, the government used to go in and specifically ask districts: how exactly does your heating work? What exactly is the formula? There were over 400 formulas that the previous government used to use in its resource-cost model to try to fund school districts. The advantage of that for the government, from a political perspective, was that they could go in — and they did this — and fiddle with the formula every time they wanted to do a political favour for somebody who might be facing a difficult political time. That's how we ended up with such a complex, unmanageable and widely despised funding formula.
We have simplified the funding formula. I went through it in some detail with the member last year. I think she may understand it by now. If she doesn't, I can try to go through it with her. I think she's fully cognizant of how we do the funding. It's mostly on a per-student basis. We also provide money for geographical features, which recognizes the increased costs for rural districts — something that I'm very concerned about. If she would like me to go specifically through the formula with her again…. I know we did this, I think, pretty profoundly last year, and she went through it in a briefing again this year. She might also want to listen to….
You know what? The member might have heard an answer in my question if she'd been listening, but perhaps my voice is wasted. Perhaps my answer is wasted. Perhaps all of our time is wasted if no one can actually hear what the answers to the questions are in this chamber.
J. Kwan: Yes. I know that to the Minister of Education, for the opposition to ask questions — for anybody to ask questions that she doesn't like — is somehow wasting time. This is the way of this government under the new era — no transparency, no accountability. Heaven forbid should anybody want to ask the question.
I asked the minister a very simple question, Mr. Chair — a very, very simple question. All she has to do is say yes or no. It's not really that complicated. It's not that complicated. She went on and on about it, and she never actually answered the question.
[1905]
I'm asking a very simple question of the minister once again. Yes or no. As a result of this government's action that would result in increased costs for gas for the school district, which we know already happened, because the government has increased the gas tax by 3½ cents per litre…. Let me just focus on the gas issue. Will this government pay school districts and give them money so that they can cover the increase in gas costs — not take money away from the existing budget that has already been allocated, but add to it and pay the actual costs and not take the money out of the budget that has already been allocated? Yes or no?
Hon. C. Clark: The member sometimes asks a question. She sometimes demands an answer. She sometimes demands that the answer be one of the things she wants it to be, but she never actually answers any questions or gives any positions herself. But that's okay. I would remind her that she doesn't get to actually decide what my answer is going to be, which is something I think she's trying to do tonight.
Here's the answer. Our funding formula is based on per-student amounts. We pump as much money as we can into the population-based funding formula. That's gone up from $53.08 per student to $53.65. School districts are expected to manage their budgets as effi-
[ Page 5272 ]
ciently as they can. For the transportation budget this year, we've told school districts: "If you can find savings and if you can operate more efficiently, you can go out and spend that money somewhere else." School districts are, for the first time, being incented to go out and try to make sure that their transportation systems are working efficiently — transporting as many students on as long a distance as they need to much better. I think that's a big, big improvement, and school districts think that's a big improvement.
J. Kwan: Under all of that rhetoric, the answer then is simple; it's no. The government will not come up with additional dollars to pay for the increase in gas costs. That's what the minister is saying, essentially. She went on and on and on about a whole bunch of other things but actually never provided a simple answer to a simple question — yes or no.
When gas prices go up, will the government — and gas prices have gone up….Will this minister pay for it and cover those costs for the education system? She refused to answer that question. You know why? The answer is simple. It's no. This minister is not going to pay for that. She's not going to cover that.
You know what? Previous governments covered the actual cost. They actually covered the actual cost. They covered the salary increase pressures. They covered the gas increases. They covered actual costs. They didn't take money out of the classroom. They did not take money out of the classroom to do that. That is the truth. So let me ask the minister. We know that for the increase in gas costs, this government, this minister, will not pay for it. It's supposed to come out of the existing budget — dollars to be taken out of the classroom. That's what we know.
I want to ask the minister this question. If the privatization of B.C. Hydro services results in increased costs to the school system, will she cover those costs? Now, the minister, I presume, will just get up and say: "Well, you know, the per-student funding will actually cover it." I want to know from the minister specifically: will she put additional funding to the existing budget to cover those increased costs that are actually caused by this government's action?
Hon. C. Clark: I don't know what part of $100 million the member opposite doesn't understand. The other thing I think she's having difficulty with is the fact that this government is not privatizing B.C. Hydro — period. We've said that. We will not privatize the core assets of B.C. Hydro, and no matter how often the member opposite wants to repeat that, it doesn't make it true. The good thing about hearing that member repeat it is that she has so little credibility that I'm sure it adds to the government's consistent and constant support for B.C. Hydro in the public's mind.
J. Kwan: We'll get to the $100 million, and we can actually see who can do the math and who cannot. Again, not comments from me — comments actually from the public about the minister's performance very specifically on this so-called $100 million. We know, according to the budget book, there is no increase in the $100 million in this year's estimates. You can look through it, and it is simply not there. You can pretend that it is there. The reality is that it isn't. The blue book doesn't lie.
[1910]
The question to the minister is this. The minister keeps on saying: "Tell us what your position is." You know what, Mr. Chair? Estimates process is for opposition to ask the minister questions and for the minister to answer the questions. So far we have gotten no answers at all. So far the opposition has asked the minister: will she cover increased gas costs, increased pressures that the district will face as a result of this government's action by increasing the gas price by 3½ cents per litre? We already know that. We can surely project that the increased cost in gas for school districts is going to go up. Will the minister pay for those additional increased costs? So far she skated around it. What we can decipher from all of the rhetoric is that the answer is no. There will be no additional dollars for the school districts to cover those increased pressures, increased costs, brought on by this government's action — direct action brought on by this Liberal government and endorsed by the Minister of Education. We know that.
Hydro services. It is anticipated that hydro costs will also go up. If that should happen, then the school districts are going to be faced with increased costs. A simple question to the minister: will this minister cover those increased pressures? Will she pay for those increased pressures and not ask school districts to manage it, as she likes to say — which means take services away from the classroom to pay for them? That is the reality.
We have already established that the school trustees are forced to cut the bones of the education system, not just the flesh. All the flesh and fat is gone. We're now cutting into the bone of the education funding system. Will she pay for those increased pressures caused directly by this government? The answer is no. The minister likes to talk about rhetoric. A simple question once again — yes or no. Will the minister pay for those additional cost pressures? So far I have not heard the minister come forward to say, yes, she will. What I've heard is, "Hey, you know what? The per-student funding base is covering that," which is equivalent to no.
Let me ask the minister this question. If the cost of operating school buses goes up dramatically due to increased gas prices, will this government provide additional funding to the districts to cover those costs? Additional funding, but not just to say take the money out of the per-pupil funding that exists now under this budget that has already been tabled. Will she provide additional funding if that eventuality should materialize?
Hon. C. Clark: I can only assume that the member also believes that the opposite would be true; that is, if
[ Page 5273 ]
it doesn't materialize, the government should take the money back and go spend it somewhere else. That is, if we want to be logical about this, where we would end up, and I'm not sure that always has a place in these estimates debates.
I know the previous government was fond of going in and deciding exactly what school districts should be spending their money on. The former government was fond of requiring that school districts account for every single cost, and then they decided whether or not it was going to fund those specific costs. In which case, I have always wondered why the previous government even bothered with the charade of having school boards, because the member opposite's view clearly was — based on her government's management of education budgets — that school boards were redundant. She thinks that all these decisions should be made in Victoria. We don't think that. We think we should plow every extra dollar we have into the per-pupil funding, and if per-pupil funding has increased — whether or not fuel prices go up — school districts will have the discretion to decide how they want to spend that money.
Here's a good example of how things are different. Previously, under the former government, school districts that had signed a long-term contract for fuel and had savings wouldn't necessarily see any incentive or any new money or any saving from that savings, because the previous government would snatch it back. Now, under the new formula, school districts that find savings and efficiencies in their transportation systems can keep that money, plow it into more transportation if they like, but plow it into other areas that benefit student achievement as well.
[1915]
J. Kwan: That will be the third question, after the dinner break, that the minister did not answer. No answer for the gas prices question. No answer on the increased hydro cost pressure. No answer on the school buses when the costs go up on those. The minister likes to bring up a whole bunch of irrelevant issues to mask her answer, because the answer is shocking. This government is imposing direct pressures on the school system. This government's direct action is causing that, and they're not going to cover it. This government is not going to cover it. This Minister of Education will not provide for additional funding when those increased pressures go up. Same thing as last year when we had increased pressures for teachers' salaries and for other staff salaries. Same thing when we had increased pressures on MSP premiums. Same thing on….
Interjection.
J. Kwan: Actually, same thing. Partially funded, and the minister is very proud of that. She sticks out her tongue, and she says: "We funded $20 million of that." But the reality is that she only funded partial funding, just like the salary component of it. She only funded half of it and is on record in Hansard from last year.
Interjection.
The Chair: Order. Order, member.
Hon. R. Thorpe: Point of order. The comments made by that member…. That member's been in this House long enough. She knows better than to make comments about members of this House. I'd ask that she withdraw that comment.
Interjections.
The Chair: I'd remind the member to be mindful of the decorum of the House.
J. Kwan: I want to get back to the issue around the funding for the education system, because the reality…. As I said, there were three questions which were asked. The minister did not answer any of those questions — not on the gas pressure increases, not on the hydro cost increase. I think I'll wait. The minister is actually not in the House to answer questions or to hear my questions, so I'm just going to wait.
The Chair: Member for Vancouver–Mount Pleasant.
J. Kwan: I'm going to request a recess for perhaps ten minutes. The minister seems to be occupied with another member. I have no ability to determine whether or not she'll be listening to my questions, so I'd like to request a ten-minute recess.
R. Stewart: Yes, I do have some questions….
J. Kwan: On a point of order, Mr. Chair. I have just requested a ten-minute recess. Is the Chair denying the request for a ten-minute recess? I'd like an answer for that, please.
The Chair: Is it the wish of the committee to grant a recess?
[1920]
Motion negatived on the following division:
YEAS — 2 |
||
MacPhail |
|
Kwan |
NAYS — 53 |
||
Falcon |
Hogg |
Hawkins |
Whittred |
Hansen |
J. Reid |
Bruce |
Santori |
van Dongen |
Barisoff |
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[1925]
Hon. C. Clark: I know that there are many other members in this House who would like to debate the estimates of the Ministry of Education. Of course, if the member opposite would like to take a ten-minute recess, and she needs to do that for personal reasons or whatever, she's more than welcome to do that. I'm sure that she can leave in some comfort, knowing that we won't pass the vote without her here for the next ten or 15 minutes.
Perhaps if other members of the House would like to get up and ask some of the questions they have about the Ministry of Education estimates, that member could take the ten-minute recess that she's been seeking.
J. Kwan: The reason why I requested the ten-minute recess was that I was asking the minister questions, and she actually departed from her chair and went somewhere else, into another seat. I find it difficult to carry on estimates when the minister is not sitting in her chair, because she won't be able to answer my questions. That's the only reason I asked.
Interjections.
The Chair: Order, order.
J. Kwan: But now that everything is back in order, I'll ask the question of the minister.
Interjection.
The Chair: Order, member. The committee will resume estimates on vote 19.
J. Kwan: Happy to resume the estimates on the Education ministry.
I was asking questions earlier which, we have now come to the conclusion, the minister would not answer. But we know what the answers are, given all her rhetoric.
The questions are around increased pressures as a result of this government's direct action on increased gas taxes. Will this minister pay school districts for these increased pressures that this Liberal government has put on the education system? We know the answer is no. I would love it if the minister would get up and contradict me and say that I'm wrong, that they will pay for those increased pressures in addition to what's already budgeted in this set of estimates.
I asked the question of the minister: would the privatization of B.C. Hydro services, which may result in higher costs to school districts…? Will this Minister of Education, this Liberal government, cover those increased costs? What we have figured out from the estimates and answers from this minister is that the answer is no. The minister will not cover those increased costs, because her answer consistently is: "Take it out of the per-pupil funding that is already now in place." The answer is no. She will not cover those increased pressures that are caused as a direct result of this Liberal government's action.
I asked the question: if costs of operating school buses go up dramatically due to increased gas prices, will this government provide a grant to those districts to cover those costs? Once again, the Minister of Education did not answer the question. Based on her rhetoric before, you can come to the conclusion that the government will not cover those increased costs that school districts will face. We know that.
[1930]
The minister likes to claim…. This is what she said: "We're protecting a $3.79 billion school district grant." The first thing we know is that the budget, of course, is frozen. If you look at the blue books, there's no increase in funding for education — zero dollars of increase.
Last year the minister and I, as well as my colleague from Vancouver-Hastings, had quite a discussion about the funding freeze. We pretty much established that a freeze — or the definition from the minister's point of view, protecting — is the same as cuts because of added cost pressures on schools and incremental increases in the cost of various services. We'll get to more cost pressures later. For now, can the minister explain how she sees this frozen budget as adequate for the school districts? How is it adequate when we see classrooms having to cut services, schools having to close? How is that adequate?
The Chair: The member for Delta North.
Interjections.
The Chair: Order, order. Order. The member for Delta North has the floor.
R. Masi: I have a number of questions for the minister. First of all, I'd like to open with a question on standardized testing and the ultimate value in approaching evaluations of students and schools in terms of basing it on standardized testing. Would the minis-
[ Page 5275 ]
ter comment on whether this is good educational practice?
Hon. C. Clark: The member is a former educator, I know, and someone with a great deal of expertise in the field. There's a broad debate about standardized testing and its value to the system. We do use standardized testing in British Columbia to, I think, great advantage, but we need to have a balanced approach. Certainly, standardized testing gives us a picture, gives us a snapshot of where kids have ended up at a certain point in time. That's very useful for comparative purposes, and it's very good for being able to chart our own success as a system.
We also need methods of assessment that tell us more precisely how far the system has brought children. One of the things I often talk about is the fact that a child who may get 90 percent on an exam at the end of the year might not necessarily be performing that well, because he might have started with an ability to get 90 percent. So the system didn't bring him that far. Yet there are kids who get 60 percent on an exam for whom it is an absolute miracle, and we should celebrate those kids. We should celebrate their teachers. We should celebrate their parents and everybody in the system who made it possible for them to do that.
We need different methods of assessment. I don't think standardized testing is the only method of assessment we can rely on, and I also don't think that standardized testing, if it is overused, continues to be a valuable tool. You can tend to get situations where teachers teach to the tests and where it actually starts, I think, to undermine the broad goals that we've set for ourselves in education.
R. Masi: I'm glad to hear that the minister acknowledges there's probably more than one way to establish evaluation of students. It seems to me that the concern today out there in the field is that there's an overemphasis on this and that it's perhaps an overweighted methodology of establishing rankings of schools. Consequently, I was wondering if the minister could comment on alternatives and probably supplemental forms of evaluation that might be used in the evaluation of schools and the ranking of schools.
[1935]
Hon. C. Clark: I agree with the member that standardized testing is sometimes — you know, if it's used broadly — not as helpful as many jurisdictions that have had this experience had expected. Texas is a good example of a jurisdiction where it hasn't worked out as well as they'd like. I think the U.K. probably has some experience around this that they could share with us as well. There are districts that have employed their own district-based assessment methods as well. Maple Ridge–Pitt Meadows is a good example of that. They have actually developed their own method of assessment for reading, and they're moving into writing.
There are performance standards that different classrooms are using across the province where the teacher can look at an individual student and on an ongoing basis assess how well that student's doing and how far that student's come compared to where they should be arriving. They're very, very useful tools that are classroom-based and that depend on teacher expertise but, at the same time, have a level of standardization across the system so that they're consistently employed across the system. Also, they are expertly developed by some of the best minds with some of the best experience that we have not just from this jurisdiction but from across the world.
R. Masi: It brings about a question along a similar line, and that's bridging and entering universities and colleges. My understanding is that there's some question about the status of the existing parade of government exams, which is very useful, in fact, to a student in terms of entering universities and colleges throughout North America. Now, if there is a proposed reduction in the number of government-style exams, what methodology will universities and colleges use in terms of establishing entrance requirements?
Hon. C. Clark: We are in discussion with the deans on that issue. I know that this issue of a seamlessness and a seamless flow of children from high school on to post-secondary institutions was a major theme for the Select Standing Committee on Education, which I know the member is vice-Chair of, and he was very active in formulating those recommendations. So we are discussing these changes with the deans. We won't embark on anything that would result in a rupture for kids or that would make it difficult for universities to be able to assess how well children are doing.
The proposal that we've got in front of the public right now is one that would actually expand the number of areas that kids are all assessed in so that we have a picture of how every child is doing in science, how every child is doing in mathematics — not just how every child is doing in language arts. It would be a broader assessment. It would be more competency-based, not just information-based. You know, do they have a good memory? Can they jot down what they learned in the class last week? We're talking about a portfolio assessment as well, which would be a very broad look at some skills that we don't really have adequate methods of assessing at the moment, like critical thinking skills — skills which, of course, are absolutely essential for not just people who want to go into the workforce but people who want to be healthy, functioning, full citizens in this democracy.
R. Masi: I guess my concern here is — and I'm not sure…. Maybe this is a question that has to be put forward to the Minister of Advanced Education. Are the universities considering entrance exams because of the reorganization of the exam program?
Hon. C. Clark: We still have lots of exams in the major faculties. I don't think we're going to be short there. As far as I'm aware, post-secondary institutions
[ Page 5276 ]
aren't considering doing U.S.-style entrance exams at this point.
R. Masi: In terms of the aboriginal students, I know that the minister is very concerned about the performance levels as indicated for aboriginal students. I could be wrong on this, but the graduation rates are somewhere in the 30 percent area.
Hon. C. Clark: Forty-two percent.
R. Masi: Forty-two percent in that area, which really is a long way behind the general population. What steps are we taking right now in terms of assisting young people in the aboriginal community?
[1940]
Hon. C. Clark: The member pointed out that it's about a 42 percent graduation rate for aboriginal students, which is just awful. We've got to do better than that. Those kids certainly deserve to be full partners in society, and they can't do that if they don't have their grad certificates at the very least. That's compared to a 75 percent graduation rate for the general population. So it's way below where it needs to be. It's risen, though, from about 35 percent in the last five or six years, and that's a good jump. We've got a long way to go.
So here's a couple of things that we're continuing to do. We're signing on with the enhancement agreements, and we intend to have all 60 — one in every district — signed by 2005. That will be a big step, because enhancement agreements are agreements that come out of a process of discussion on the part of the school district with every aboriginal community — from the Inuit to every first nations band to the Métis — agreeing on what the goals and outcomes they expect for their kids should be and agreeing on what kind of programming they should be providing to make sure that they get there.
As I said earlier, I was honoured to be part of the signing of the enhancement agreement for the district of Langley with their first nation bands. The chiefs that got up and spoke at that signing spoke eloquently about how much education meant to them and to their communities, because they know that education is absolutely an essential part of making sure that those communities can be independent and proud and that all of those kids can live with the kind of dignity and the kind of self-reliance that their parents want for them.
R. Masi: I can certainly appreciate the initiative there. I wonder about the situation with the Nisga'a lands in terms of the results there — if there are any more positive results in that area since the Nisga'a treaty was signed.
Hon. C. Clark: The Nisga'a have shown some incredible gains in their literacy results. They have done just a tremendous job with their kids. They provide just a marvellous example of where, if first nations are an intimate part — and in their case they're absolutely in charge of designing their own children's education — they can make tremendous progress to help those kids.
R. Masi: I'm certainly happy to hear that. It's an important segment of our education system that we have to be very cognizant of.
In terms of the preapprenticeship programs, could the minister give me an idea in terms of numbers of students involved and roughly how many programs are available to students in the province now and the progress of it?
Hon. C. Clark: We are, in this ministry and in this government, very supportive of trades programs and trades training, making sure that kids who are good with their hands are equally valued in school to kids who are good at other things. That's got to be an important part of our high school education system. We can't just say, "Well, we're training all you kids to go on to university," when only 20 percent of them do. We need to say that there's some value in the other things that other kids are good at.
When I visited the Career Technical Centre out in Abbotsford last week, I was so tremendously impressed by the work that they're doing out there. Compared to a 75 percent general graduation rate in B.C., they have something like a 98 percent graduation rate because they make their programs relevant for their kids. Those kids want to get up and go to school every morning, and they want to stay in school because they know that when they graduate, they've got a bright future ahead of them.
We're in a little bit of transition on apprenticeship. The Ministry of Advanced Education is rethinking its role in apprenticeship and how we provide those programs. We're, of course, considering changes to our graduation program that we think will have a really positive impact on making sure that kids are able to access the trades training that they need and are valued for the things that they're good at.
Lastly, I'd say we're also in discussion with the Vancouver Board of Trade and the B.C. Business Council about how we can make sure that employers are fully ponying up and making sure that they are full partners in providing placements and assisting us in providing apprenticeship positions for kids, because right now that's where the real shortage is.
R. Masi: You know, this is an area that I've been discussing with various ministers of education over the last seven years. I just wonder if the minister has a feeling in terms of whether these programs have advanced, in fact, over the last seven or eight years or whether they've more or less levelled off.
[1945]
Hon. C. Clark: We, in fact, have seen lots of growth in apprenticeship programming over the last few years. It's been really tremendous to watch. We've got a long
[ Page 5277 ]
way to go. There is still a big shortage of placements for kids. There's still a lot to do. Although the percentage growth has been reasonably large, the absolute numbers haven't been as large as we'd like them to be. We need to continue to work on that. It's got to be an area of focus for us for the next year or many years.
R. Masi: In terms of these programs, then…. In terms of skill training in the high schools, it has been my limited experience that a lot of this is attitudinal. A lot of it is the problem of getting young people involved and, as is quite often the case, the attitudes of parents. I'm wondering if there will be a major thrust in ministry activity in terms of redeveloping that attitude.
Hon. C. Clark: We're working with Advanced Education on that and making sure that we educate people about the value of the trades. The member is absolutely right. Big drivers of these decisions are parents, not just the students.
When I went to the Career Technical Centre out in Abbotsford last week, I talked to the director about the fact that he goes out to schools. He recruits in schools to try and get kids to come to the CTC. What he tells them is: "You can make more money as a mechanic or a tool-and-die maker than you can sometimes as a general practice practitioner in medicine. There's no shame in doing that kind of work, and there's certainly lots of money in it."
R. Masi: In terms of the independent school system, I know we're suffering an enrolment decline in the public school system. I think it's somewhere in the neighbourhood of 3,500 kids this year or something to that extent. What is the state of the independent school system at the present time?
Hon. C. Clark: Independent school enrolment last year went up by 2,266. The public school system went down by about 7,000 students. I've always said I believe the public school system can compete toe to toe with the independent schools. Independent schools form a very important part of our system. They provide valuable competition for us, and they provide choice that we just don't provide in the public system and never will. Religious education programming is a good example of that. The School Act has always prohibited that in the public school system. Independent schools — Catholic schools, for example — have provided a very, very valuable form of choice for parents out there, for things that they just can't access in the public system.
So, certainly we continue to support independent schools and the work they do — not least, though, because they keep the rest of the public system on its toes. They make sure that the public school system is able to compete.
We can do a better job of competing, I think. One of the things we need to do is start getting out there and blowing our own horn about how great our public education system is; make sure the public knows how well our kids are doing, how good our results are and the fact that they're improving. All this rhetoric that we hear from the critics and from the opposition, running down our public education system, does nothing but undermine public confidence in it. We as government have a job to make sure we build that back up and make sure that confidence is there. We can do that by getting out there and telling them just the facts.
Interjection.
The Chair: Order, order. The member for Delta North has the floor. Order, member.
R. Masi: The usual question I'm asked when I'm talking to anybody connected with the independent school system is: "How is the funding, and is there a funding certainty?" Is it assured for the next year or so?
Hon. C. Clark: We made a commitment during the election that we wouldn't monkey with the formula, and we're living up to that commitment.
R. Masi: I'm happy to hear that. In terms of innovation and moving to new forms of structure in the school system….
Interjections.
The Chair: Order, members. Order.
R. Masi: I was interested in some of the approaches by different school districts, in terms….
[1950]
Interjections.
The Chair: Order, members. Order, member. The member for Delta North has the floor, and we are going to listen to him.
R. Masi: In terms of reconstructing school years and school schedules and flexibly scheduled schools, how much progress really is going on in the province now, and how many…? They're not really innovations in terms of North America, but they are for British Columbia.
Hon. C. Clark: The Boundary school district has actually moved to a four-day week across the district. They're starting to see improvements in student discipline problems and in absentee problems with both staff and students. So they're seeing some real positive results as a consequence of moving to a four-day school week. Other districts are considering it.
Some districts are moving to, with certain schools, year-round schooling so that they distribute the summer holiday longer and over different periods of the year. There is a fair amount of evidence to suggest that many kids don't benefit from spending two months away from school and losing all the information they
[ Page 5278 ]
had accumulated, so when they come back for September they need to start from scratch again. There are a lot of experiments going on out there. A lot of school districts are coming up with very innovative ideas to try and make sure that they structure their school calendar in a way that meets the needs of the children in the district.
R. Masi: I certainly appreciate innovation. One of the things, though, is: can we guarantee, if we go to four-day weeks and year-round schooling, that this is academically sound? I know there's been some research done in these areas. Do we have, in fact, information on this to verify that these can stand up to academic standards?
Hon. C. Clark: There is a fair amount of evidence in favour of many of the different models that are out there. There is a fair amount of evidence to support the fact that extended days benefit student achievement. The experiment in Boundary is having either neutral or positive effects on student achievement. They're monitoring that on an ongoing basis. Many jurisdictions have different experiences with these different plans. In some cases, it will depend on the composition of the student population.
For example, some large native communities have a hunting season that's outside of the summer. Those kids might be around to go to school all summer, but they're not around in September-October when they're out hunting with their folks. There's a good example of where a district could change a school calendar at a specific school and a specific neighbourhood which would benefit those kids, but it will depend on those kids.
I advise school districts, when they consider a modified calendar, not to do it because they're going to save money. Do it because it's going to improve student achievement. That has got to be our overarching goal with all of the changes and all of the decisions that we make in our education system.
R. Masi: Could I ask the minister, in terms of the teacher support for these innovations — the year-round schooling, the four-day week…. It's been my experience that there's always a certain amount of resistance to change. Where do we sit now in the districts that have opened this up?
Hon. C. Clark: My understanding from Boundary, for example, is that the teachers there have generally been pretty supportive of moving to a four-day week. The experience with year-round schooling is sometimes a little more mixed amongst teaching staff, although there are schools where they've talked about it where the teachers have been overwhelmingly in support of it. One of the advantages one teacher pointed out to me is if they can take their holidays at other times of the year, not only does it match up better with perhaps the holidays that their spouse is able to take, but it also allows them to travel a little cheaper in low season because they're not always travelling in summer and at Christmas. We've had some very positive responses from teachers to some of the modified calendars that have been tried around the province.
[1955]
R. Masi: In the experience over the last year or so in Boundary, has there been any evidence in terms of academic studies, in terms of progress, or is it a neutral…? Is it a wash, as is commonly said?
Hon. C. Clark: Boundary is still collecting the data to determine the net impact on student achievement across the district. The only thing that they've really been able to pinpoint and nail down so far, because we haven't had a broad-based assessment from, for example, the FSAs, the foundation skills assessments, yet…. But they have noticed that discipline problems and absentee problems are on the decrease, which ultimately has got to have a positive impact on student achievement, I think. But we're monitoring it. They're monitoring it very closely, as are many of the other districts that are looking and thinking that perhaps they might want to move to the same model.
R. Masi: In terms of school districts and local taxation, it seems that the boards are moving towards a more self-sufficient state in terms of budgeting, with the dollars being supplied and very little direction now, or enforcement, by the ministry in terms of how to spend the dollars, which I think is a good thing. But is there more of a tendency now for districts to think, "Well, we can supplement our income by local taxation," and is there a position on this by the provincial ministry?
[J. Weisbeck in the chair.]
Hon. C. Clark: That's a good question, and one that I've actually received from a number of districts. Typically, though, the districts that are interested in levying local taxation are the ones with the largest tax bases. My concern about moving to local taxation is that it would disadvantage districts that have a small tax base. That's particularly true for rural districts. We're not considering allowing districts to go back to the system where they were able to levy their own local taxation, simply because I'm concerned that that would create a patchwork quilt of uneven services across the province. Our obligation is to make sure that every child has equal access to a quality education.
R. Masi: In the same light, we have encouraged local districts to, in fact, supplement their incomes through more or less free enterprise innovations. I get questions asked of me from, primarily, local teachers associations: "If, in fact, we're importing students and charging them great sums of money to be educated, are we not taking away spaces from local kids?"
Hon. C. Clark: The answer to that question is no. School districts use empty and vacant spaces to ac-
[ Page 5279 ]
commodate international students, who more than pay for themselves. There's a tremendous economic benefit, as I know the member knows, from international students. The benefit in a place like Kimberley, and the benefit for a parent who wants to send their child to a place like Kimberley, could be tremendous.
From the parents' point of view, if they're sending their child thousands of miles overseas to go to school, they want to know that that child is somewhere safe, that that child is in a community where they'll be immersed in English, that they don't need to worry about them day and night, and that they'll probably have a reasonably low cost of living. From the child's point of view, they get to come to Canada and learn English, and they can perhaps earn a Dogwood Certificate, which is an internationally recognized commodity. Plus, they probably get to ski and enjoy beautiful British Columbia in the heartland. From the school district's point of view, those kids come over, and they pump money into our system, which then goes in to support our B.C. kids. It's a win-win-win situation and certainly something our government is encouraging.
[2000]
R. Masi: I know there was some question about the minister and surveys that came up earlier in the estimates. My understanding is that there was quite a comprehensive survey done of parents, students and teachers earlier in the mandate.
One of the things I recognized in the results was that there was a strong concern about physical fitness. These concerns were established by the parents' surveys. What steps now is the ministry taking in terms of encouraging overall fitness and health in the schools and for our young people?
Hon. C. Clark: It certainly is a concern of parents. I've heard that while I've been out there talking about this proposal for mandatory PE in grades 11 and 12. I've also, though, heard a lot from students. Parents tend — it's a generalization, and it's not true of all parents — to really like the idea, and students tend to really hate the idea, except of course for the students who are in grade 12 now and who won't be affected by the idea. Two broad categories: students who love it, parents who hate it. But it's been a really good debate. That's been one of the proposals we came up with to address some of these concerns. As we get a little further down the road and announce the changes in graduation requirements later this season, we'll make a decision about whether we're going to have mandatory PE in grades 11 and 12. That's one of the things we can do.
Another thing I've heard, though, in the course of this debate is that the existing curriculum isn't really meeting the needs of a lot of kids out there. It's very much more focused on learning to play a sport, for example, than on learning to love sports or love fitness or love physical activity. That's another thing we need to think about. We need to think about making sure that young people, from the day they start school, integrate physical activity as part of their daily routine, not just as a part of phys ed class.
We're thinking about active, healthy lifestyles, and we're also talking about — through the portfolio assessment, should we decide to do that — assessing kids on their general level of physical activity. I want to be clear about this. We're not talking about, "Are you physically fit?" because that certainly discriminates in favour of the kids who are naturally gifted athletes. I certainly wasn't one of those when I was young. Nonetheless, lots of kids work really hard to try and be physically active. They just have, sometimes, a little bit different results. We should be recognizing, assessing and rewarding that where reward is due.
R. Masi: One of the concerns I have in terms of this whole topic of physical fitness and the schools is that, as the minister knows, childhood obesity and obesity generally across North America are a major, major problem. It's a crisis. What we have to do is bring about, as the minister just said, an understanding of how to be fit and what fitness really is.
The concern I'm getting, of course, from secondary principals, is: "How are we going to run these classes?" They naturally think in terms of having to double the phys ed, etc., in scheduling — and so they should, because that's their job.
I guess I'm looking more for direction here on the programs, the curriculum and the whole involvement of fitness right from grade K up, in terms of what we can do to bring about a major change in our attitudes. As the minister knows — and you will know further as time goes by — young people are locked to computers, they're locked to television sets, and you don't see them out on the streets playing as much anymore. It's a major problem. I would like to make a plea maybe at this time that the minister look at it from a long-range and in-depth concern for physical fitness.
Hon. C. Clark: That's an excellent point, something we need to consider and that we will certainly consider as we think about taking a different approach to physical education.
Really, what the member is talking about is making sure that every child, from the very beginning of his or her education, is instilled with a love of physical activity. That's how we'll combat this really pervasive problem of childhood obesity. That's one of the ways we'll combat it. Yes, absolutely, we need to look at that. We are starting to look at that now. The debate that we've had about mandatory PE has sparked our thinking about that.
[2005]
The challenge that we have — and I think the member would agree with this — in making phys ed mandatory in grades 11 and 12, of course, is not just that you're forcing kids to do it at a much later age, but it's also that in taking physical education as a mandatory course, they give up an elective to do that. They have actually fewer choices in selecting their courses and kind of designing their own pathway, depending
[ Page 5280 ]
on who they are and what they're good at. That's really in opposition to what we are proposing in the rest of our agenda, which is very much in favour of choice and opportunities and broadening the spectrum that's available for kids. So I think the member is absolutely spot on. We need to rethink the way we deliver physical activities or physical education curriculum starting in kindergarten.
J. Kwan: I'd like to carry on questions with the minister around the funding issue. As I established earlier, the minister has not answered key questions that I've asked. I want to ask another question relating to funding. Some districts are now experiencing Canada Customs and Revenue Agency coming around to collect the GST costs on hot dog sales that were organized by parent groups. They were, of course, organized to raise funds for schools. Districts are caught off guard, not prepared for such costs, since they have no revenue-raising capacity, and they're now in a bind. Does this government, does this minister intend to provide assistance to help these parent groups to offset this cost?
Hon. C. Clark: The situation in Prince George is obviously a troubling one. Our provincial government has worked very, very hard to try and support parents in being involved in their children's education, to the extent that we've exempted school supplies that are bought by parent advisory councils from the PST. We so much want to encourage those parent organizations to be involved. That's a big change from the way the previous government approached parent involvement in schools, and I think a very positive one and one that's been very welcome.
Clearly, this move by the federal tax collector is unsettling for people in the Prince George district, but we intend to abide by the agreement that the previous government abided by with respect to tax collection between the two jurisdictions. That is to leave this as a matter between the tax-collecting jurisdiction and the authority or the merchant from whom they are attempting to collect it.
J. Kwan: What we now know is this: increase in gas prices, going up; increased pressures for the school district. The ministry will not provide additional funding to offset those costs for school districts. Increase in the privatization of B.C. Hydro services, resulting in a potential increase in hydro costs. The government, this minister, would not provide for funding to offset those costs — increased pressures as a direct result of this government's action. Increased costs for school buses, let's say, where they will see a dramatic increase in the gas prices and therefore costs for school districts. This minister and this government will not provide for additional moneys to cover those increased costs as a result of this government's direct action.
Then we have school districts, particularly in Prince George, facing Canada Customs and Revenue Agency coming around to collect GST, and there's no plan from this government to offset those exceptional costs. We have established that the government would not pay for these increased pressures.
[2010]
The minister and her colleagues, like the Minister of Finance, have made a big deal about the upcoming increases to education. I want to explore that and find out exactly where that money will go and how much of it actually gets to the students in the classroom.
First, on the $50 million grant, which is the one-time grant. We have established that it is a one-time grant. Then there is the funding from the Premier's infomercial, which supposedly brings an additional some $100 million into the education system.
I wrote a letter to the minister, and I'd like to just refer to it now. There are some specific numbers in this letter from the minister, which I would like the minister to respond to. The letter is addressed to me, and the minister states:
"Thank you for your letter regarding school operating funds and the capital review process. We're following through with our commitment to deliver as much money as possible to the classroom. We're protecting the $3.79 billion school district grant at a time when student enrolment is declining. School districts will be getting an extra $50 million this year as a result of savings in the Ministry of Education's budget. This is the second year in a row that we earmarked ministry savings for classrooms.
"The additional funding breaks down to about $85 per student and comes on top of the $35 per student that was provided last fall. This additional funding will amount to more than $6.9 million for the Vancouver school district. Further, the provincial budget includes $143 million in new funding for K-to-12 education.
"The base education budget, $4.86 billion, will increase by $83 million in 2004-05, with a further lift of $60 million in 2005-06 that will boost per-pupil funding by another $192 a year. Not counting one-time funding, the annual budget for the Ministry of Education in 2005-06 will be over $140 million higher than it is today, with a total lift of $243 per pupil."
That's what the minister said in part of the letter, and I want to actually go through these figures in more detail with the minister. The letter suggests: "The additional funding breaks down to about $85 per student." Can the minister explain, of that $85, how much she would anticipate would go directly to students and not to things like debt servicing?
Hon. C. Clark: I'm going to try a different approach. I'm going to answer the final thing the member says first and then get on with some of the details in her prelude to her questions second.
The answer is: it all goes into the districts, and they are, we expect, going to spend it on improving student achievement in their classrooms. With respect to some of the other things she said, the reality is this. We are plowing every dollar that we can into increasing our per-pupil funding. That's gone up from $5,308 to $5,365 this year, which is a big gain for students.
We are not privatizing B.C. Hydro. I repeat: we are not privatizing B.C. Hydro. We are letting districts keep the money that they save from transportation as
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opposed to snatching it away, which was a practice of the previous government. That's all very good news for school districts.
J. Kwan: You know, for the minister, I suppose, this is a strategy of the government. If they themselves say it enough times, they'll come to believe it as well.
The reality is that with the increased gas price that this government has imposed on British Columbians, it does not exempt school boards from having to face those increased costs not just for transportation but for heating their school and other things that require gas. They would actually have to pay for those increased costs. Somehow the minister thinks that those costs would reduce. Somehow she thinks that, and she keeps referring to it as though somehow those costs reduce.
What the previous government did was actually pay for the actual cost of these items — things like salary, things like gasoline, things like electricity. What this government is not doing…. They're increasing these pressures, and then they're not funding it. They're not funding it; let's be very clear about that.
[2015]
The minister, by her own admission, from estimates last year, stated that they're only funding half of the increased pressure in the area around salary increases. They're not fully funding the MSP increases. They're not funding any of the gas increases. They're not funding the eventuality, should the hydro costs actually go up. They're not funding any of that. They're not funding increased costs for running buses as a result of this government's direct action for increasing gas taxes. So, Mr. Chair, the minister can say a million times: "Well, you know, we won't take the money back if they don't spend it."
The reality is this. The question on the flip side of that is: will the government pay for it, if those cost pressures are not covered by this year's budget? Will the minister pay for it? We have already established that the minister will not pay for it. What does that mean? Well, it means that the per-pupil funding would have to come out and fund these increased pressures. That means funding in the classrooms will be impacted. That means funding in the classrooms for the students would have to be taken away to pay for these increased pressures. It's not that complicated.
What we will know then, in this year's budget and in future years, is that this government is putting more pressure on the education system. The sad part of it is this: the children will lose out. Then when the minister makes some broad statement earlier today, how she would ensure that no child in our education system, in a social welfare system, falls through the cracks, because this is our obligation to the next generation…. You know what? The minister is already failing in her commitment on that statement she just made today. She is already failing that commitment to live up to the obligation she says she would, because the children will be hurt by this minister's action and by this government's action.
The minister said, according to the letter that she's written to me, that there would be an $85 increase per student. I want to know from the minister — she has not yet answered the question — how much of that $85 will go directly to students. How much of that $85 might have to be siphoned off to pay for increased tax costs? How much of that will have to be siphoned off to pay for potentially increased hydro costs? How much of that has to be siphoned off to pay for debts? How much of that would have to be siphoned off to pay for MSP increases? How much of that has to be siphoned off to pay for the salary increase which this government did not fund? So, how much of that $85 does the minister anticipate would go to the classroom for the students?
Hon. C. Clark: As I just said — I think pretty clearly — the money has been given unconditionally to school districts. Our only request is that they spend it on student achievement. School districts, I know, work hard to deliver every penny that they can to the classroom.
J. Kwan: Well, the reality is this. I would anticipate that a significant portion of the $85 per student, as the minister likes to claim, will go directly for student achievement, if she counts student achievement as things like paying for increased taxes — as an example, the gas tax that's been put on by this government onto the school district. I suppose you can attribute it to that, because, after all, the classrooms do need to be heated, especially in cold winter months up north. You would need to make sure that the classrooms are adequate and safe.
[2020]
It may be that the minister just looks at that as a global thing that will provide for student achievement. The school trustees, already worried about the lack of commitment from this government to support education, worry that education services are going to be cut, and they already know they're going to be cut. I'll go through it district by district at a later time.
Let me ask the minister this question. Here's the statement in the letter: "The provincial budget includes $143 million in new funding for K-to-12 education." The letter continues to say: "That will boost per-pupil funding by another $192 a year." The paragraph ends by stating: "The ministry's budget in '05-06 will be over $140 million higher than it is today, with a total lift of $243 per pupil." My question to the minister is this: how does this change the actual dollar amount given in the district grants? Will the current $5,308 per pupil go up by $243?
Hon. C. Clark: The answer is: it might go into special needs, which is class composition. It might go into supporting ESL students; it might go into the basic per-pupil amount. If the member would take the time to understand how the funding formula works, I'm sure that would be quite obvious to her.
J. Kwan: Actually, last year we spent quite a bit of time going through the funding formula to which the
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minister did not provide the answers. This year, at the request of our office, we got the deputy minister's office to provide us with a briefing, who actually did give us the funding formula breakdown. We will go into that. We tried, actually, by the way. We phoned the minister's office almost three weeks ago to this date and had no response, so we went directly to the deputy minister's office. They responded immediately. I should like to thank the minister's office — the deputy minister's office, more specifically — for getting back to the opposition and providing us with a briefing. I think it was just yesterday, before estimates began. We will be going into the formula question, no doubt about it.
This is what it says in the minister's letter that she wrote to me. She says that there will be a total lift of $243 per pupil. It makes it sound as though that money is going into the base funding when, in fact, I don't believe that's the case, which is why I asked the question directly. Maybe one of these days the minister will come forward with a straightforward answer on these questions. Then maybe the estimates process will proceed much more quickly.
The minister says…. Well, she won't answer. Chances are, I suspect, the answer is that the per-pupil lift would actually not go up by $243. One can then only assume that the $85 lift per pupil that she claims is in place with this one-time grant…. Is that per-pupil base going to go up by $85, then?
Hon. C. Clark: The per-pupil amount I referred to in the letter is $51 in '03-04 plus $139 in '04-05 plus $53 in '05-06.
[2025]
J. Kwan: No, actually. I have the letter right in front of me, and here's what it says: "The provincial budget includes $143 million in new funding for K-to-12. The base education budget of $4.86 billion will increase by $83 million in '04-05 with a further lift of $60 million in 05-06 that will boost the per-pupil funding by another $192 a year. Not counting one-time funding, the annual budget for the Ministry of Education in '05-06 will be over $140 million higher than it is today, with a total lift of $243 per pupil." That's what the letter says.
On the $85 piece, that paragraph reads as follows: "The additional funding breaks down to about $85 per student and comes on top of the $35 per student that was provided last fall. This additional funding will amount to more than $6.9 million for the Vancouver school district."
That's what the minister said. She wrote this letter, which we received February 28, not that many days ago — just a few days ago, about four days ago or so. That's what the minister said. So now that number has decreased. That number has now decreased in terms of actual dollars from $85 to $51, and actually, I think I heard that in the minister's opening statements.
Maybe this will clarify it, because on budget day the Minister of Finance said that the per-pupil amount is going to be over $6,000. So the question really is: how is that possible? The answer we got from the ministry staff is that the Minister of Finance took the total education budget and divided it by the total number of students. Of course, the total budget includes things like the ministry's operations, debt servicing, etc.
So the question is: isn't that just a little bit misleading? All these figures being tossed around as if it was the total actual base grant figure that was increasing, when in reality the base allocation per student is staying the same this year as it was last year. Isn't that correct?
Hon. C. Clark: I think we've been through this a whole number of times in the media, but I'm happy to explain it to the member again in the House if she needs further clarification.
The budget documents reflect a $143 million increase to the Ministry of Education budget in '04-05 and '05-06. That includes a $35 million increase that goes to districts to make sure that they can comply with GAAP — generally accepted accounting principles. That isn't money that's going to be directed right to schools or to classrooms. The Premier, quite frankly, talked about what was more than a $100 million increase for schools. That's where the money is going to be going. Now, that doesn't include the $35 million that's been allocated by the Minister of Finance for GAAP. That may be why the member has some confusion when she reads the numbers.
J. Kwan: Well, there's been much discussion in the media, and I will refer to some of the comments that have been made in the media around this, because actually the math doesn't add up. When you look at the infomercial from the Premier, what was said was that there would be a new injection of funding in education to the tune of some $100 million. The same rhetoric was actually put in the budget book. But when you look at the budget, and you want to sit down and look and see how much real money is put into the education system, you realize, actually, that this year there's no increase in the education budget at all. It's remained constant, as it was last year. That's one thing, and it is, in my view, very misleading to suggest that somehow there was $100 million to be injected into the system over the next number of years, when in fact this year there is no increase at all.
Second to that, if we look at the base allocation — the $143 million that the minister likes to claim will be new moneys to the education system two years from now — there is the big question about what the base funding allocation per student will be. When you look at the general accounting principle issues, when you take away those dollars, the amount is actually a lot less than what the minister would like to proclaim it to be.
Let's just go through this step by step. Exactly how much of that $143 million goes to the generally accepted accounting principles?
Hon. C. Clark: As I just said about three minutes ago, $35 million.
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J. Kwan: Yes, I actually do want to go through this step by step, because by the time we whittle through all of this, all of a sudden $143 million doesn't add up to $143 million in the classroom, and that is the point. All of a sudden you realize that in the classroom, the funding that the minister likes to say that she's protected — that she's added money into the classroom — actually doesn't add up. Hence, there are some articles that come out with headlines like "Trouble with New Math," "New Education Funding Less than Stated," "School Trustees Wrestle with Budget Math." And the list kind of goes on, because the numbers don't add up as the minister would like people to believe.
[2030]
Let's look at this step by step. From Gordon Comeau, a Vancouver Sun article, February 20. Here's what Gordon Comeau has to say. The article headlines "Education Funding Gets Positive Spin, Trustees Say," and the article starts off with some of these kinds of comments. Let me just go to the second paragraph here:
"After a day of digesting budget numbers released Tuesday, the association says the actual increase in dollars for schools is $50 million, not the $107 million touted by Education minister Christy Clark.
"Gordon Comeau, president of the trustees association, says the minister wasn't being deceptive. 'It's a different way of looking at it,' he said.
"He said the ministry is increasing the allotment to school boards by $50 million in 2004-05, raising it to $3.84 billion from $3.79 billion. It will maintain block funding at $3.84 billion in 2005-06. That, according to Comeau, amounts to a $50 million increase in education funding. But he says the ministry has multiplied that $50 million by two, since it will be paid out in 2004-05 and in 2005-06 to come up with $100 million.
"There's also $7 million for pay equity, bringing the government-announced increase to $107 million. 'Is there $100 million of new money added to the budget? No. But there is $100 million that the boards will be spending over the next two years,' Comeau said. 'It's not as clear as it should be, because the public now believes that the education budget has increased by $100 million, and it hasn't. It's increasing by $50 million.'"
Then it goes on to say: "'They've added money, and that's positive. That's a positive step, But it's not enough to cover the costs we're incurring as school districts,' he said, noting that boards face a variety of inflationary costs as well as the recent gas price hike."
Then Gordon Comeau of the BCSTA actually handed out the breakdown of the figures. The breakdown of the figures is as follows. School district operating budget. In March 2003, school boards will receive a $50 million one-time grant. This money can be spent in the current year or in the '03-04 budget year. In '04-05, $50 million will be added to school district operating grants, raising the total grant from $3.79 billion to $3.84 billion.
In '05-06, the school district operating budget will be maintained at $3.84 billion. In '04-05, the overall provincial public school budget will increase by a total of $100 million to $4.188 billion, which includes $50 million to school district operating grants; $35 million will be provided to districts to address the costs of implementing provincially required new accounting practices; $7 million is for pay equity. And then there's $8 million, which is being held in reserve.
The actual figure, when you subtract and work through all the numbers…. There's only a $50 million increase out of this total of $143 million that the government likes to say that they have injected into the education system.
Isn't that correct? Isn't Gordon Comeau correct in his assertion that at the end of the day, there's only $50 million added to the education system and not what the minister suggests — over $100 million?
Hon. C. Clark: No. The member is incorrect. Mr. Comeau is incorrect. I'd like to quote Mr. Comeau as well, if I can. On February 10 he said: "This is a welcome announcement as school boards begin their budget deliberations for '03-04. The minister promised us that she would direct as much money as possible from the education budget to classrooms via school boards. With this announcement, she has succeeded and deserves credit for keeping her promise."
[2035]
J. Kwan: That was February 10, and after people digested the numbers on February 20, which is the article that I actually read out with the numbers, accordingly, the minister says that Gordon Comeau is wrong in these numbers. I'd like to know specifically from the minister which part of Gordon Comeau's analysis is incorrect. Let's go through this step by step. Mr. Comeau says that the ministry is increasing the allotment to school boards by $50 million in '04-05, raising it to $3.84 billion from $3.79 billion. It will maintain block funding at $3.84 billion in '05-06. Is that incorrect, or is that correct? Is Mr. Comeau correct in that statement?
Hon. C. Clark: I think it's fair to say that was the best information Mr. Comeau had at the time. It wasn't correct, though. The $100 million is actually $107 million that the ministry will be allocating or that will be allocated to the ministry, which will flow through to public schools. If you add on the money that's provided to make sure that entities comply with GAAP, it's $143 million.
J. Kwan: Yes, I'll go to the other parts about the accounting principles as well as the $7 million for pay equity, but I do want to break down this total amount of $117 million step by step. The first part of it is this. When Mr. Comeau says that the ministry's increasing the allotment to school boards by $50 million in '04-05 and then raising it to $3.84 billion from $3.79 billion, and that it would be maintained at $3.84 billion in '05-06, isn't that figure correct? The figure I'm looking for confirmation on from the minister is the $3.84 billion for '04-05 and '05-06.
Hon. C. Clark: As I said, the answer is no.
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J. Kwan: If it is not $3.84 billion for '04-05 and '05-06, then what is it?
Hon. C. Clark: It will be about $3.84 billion and then certainly at least $3.86 billion.
J. Kwan: Okay. The minister says it will be $3.84 billion and that it might be $3.86 billion. The $3.86 billion — what's the increase? What's the increase from?
Hon. C. Clark: From the $100 million we've just allocated.
J. Kwan: That's interesting. So the minister says Mr. Comeau is wrong. In '04-05, the $3.84 billion that has increased from $3.79 billion will actually be $3.86 billion in '05-06? That's what the minister said. I'm just going to set that aside for one moment, because we'll actually see where all the numbers come from and how it adds up.
The article goes on to say: "That, according to Comeau, amounts to a $50 million increase in education funding. But he says that the ministry has multiplied that $50 million by 2, since it will be paid out in '04-05 and in '05-06, to come up with $100 million." Isn't that statement correct?
Is the minister suggesting there's an additional $100 million each year, or is it just adding the base twice for two separate years? I think Mr. Comeau is correct, and maybe the minister will actually want to look in the budget book and make sure that she's providing the correct answer in this House.
Hon. C. Clark: The answer to the member's question again is no.
J. Kwan: Maybe the minister can explain, then, to this House and to Mr. Comeau, who I'm sure is very interested in the minister's answer: how is he wrong?
Hon. C. Clark: I've had a lot of discussions with Mr. Comeau, and those continue.
J. Kwan: I'd like the minister to address in this House how Mr. Comeau's statement is wrong.
Hon. C. Clark: His numbers are wrong, as I've already pointed out.
[2040]
J. Kwan: Can the minister be specific about the number? Which part of the number is he wrong about? Is he wrong in suggesting that the minister is actually counting the base funding twice to come up with $100 million? Or is it actually $100 million each year?
Hon. C. Clark: Yes, he is he wrong in suggesting that. I'm sure it was the best information that he had at the time, though. I don't want to suggest for a second that there was anything intentional about that.
J. Kwan: I'm asking the minister to be very specific. On what part of it is he wrong? How much is he off by?
Hon. C. Clark: I'm happy to repeat the answer for the third or fourth time, I guess. I'm getting to the end, though, of repeating this answer: $3.84 billion in '04-05 and $3.86 billion in '05-06.
J. Kwan: Why isn't it reflected in the budget book?
Hon. C. Clark: The member is talking school year numbers and fiscal year numbers. She may know from her time in government, although she was never Minister of Education, that those two are different.
J. Kwan: Actually, the numbers that people go by are what are in the budget book. That's what people go by.
Let's just set that aside and pretend for one moment that there is actually going to be an additional $100 million not counted twice, as the minister suggests, because I expect the minister to be wrong on that. Isn't it the case that out of the $147 million, there is $7 million that goes towards pay equity?
Hon. C. Clark: Sorry. Can you repeat the question?
J. Kwan: Of the $147 million, isn't it the case that there's $7 million that would go to pay equity? We have $35 million that will go to accounting principles, and then we have $7 million that will go into pay equity — of the $147 million.
Hon. C. Clark: We'll check that for the member. Perhaps she can get on with her questions.
J. Kwan: That's what Mr. Comeau asserts in the article — that there is $7 million for pay equity, bringing the government-announced increase to $107 million. If you actually go through the calculations as such, you have $143 million which the government claims it has increased the education budget by. You subtract $7 million from that. Then you have $136 million. Then you subtract $35 million from the accounting principles, and it actually brings you to about $101 million in education funding.
Then, of course, that $100 million is divided by half, because $50 million of new moneys is going into next year's budget. It's being added again for the next year on the same base, so you actually have the same amount of money. It really amounts to $50 million in increases.
This is what Mr. Comeau is asserting. The minister says Mr. Comeau didn't have enough information, and he's wrong on these numbers, yet she can't answer in this House whether or not $7 million, as Mr. Comeau asserts, has gone to pay equity. Why can't she, if she actually knows what her numbers are?
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Hon. C. Clark: I've been advised that there's no pay equity. That $7 million the member has identified for pay equity is not included in the '04-05 and '05-06 numbers.
J. Kwan: Okay. The minister says that there are no pay equity dollars with the '04-05, '05-06 numbers. She's now said this on record, so we'll mark that — sort of like last year when she said they were paying for debt servicing in addition to the education budget when, in fact, they didn't. Later on the government had to actually come out and was forced to make an announcement that they would actually pay for debt servicing. We're going to mark all these, because the minister may actually have to come back and make a further announcement later, like she did last year. That's how she got caught short with her own budget.
[2045]
The minister denies that the $100 million is being counted twice. She refused Gordon Comeau's assertions and says he's wrong. Yet other people who've looked at this say otherwise. There's a whole bunch of articles relating to that. Maybe this individual is wrong as well.
The Prince George Citizen: "New Education Funding Less Than Stated, teachers say." It's dated February 22, 2002.
"The government's budget announcement this week of an additional $143 million for education over the next three years actually boils down to only $50 million in new money for students in classrooms, says the president of the Prince George District Teachers Association. 'Beyond a one-time special grant of $50 million announced earlier this month, there is no additional budget for education for '03-04,' Carolyn Rowland said Friday. 'The $50 million from this week's budget speech that actually goes to school district operating grants applies to the '04-05 school year.'
"In a Thursday update to trustees and superintendents, the B.C. School Trustees Association said that of the $100 million overall increase to the provincial school budget by '04-05, $50 million will go to the school district operating grants, and another $35 million will go to the transitional costs of changing school districts over to new accounting practices. Besides this, $7 million will go to implement pay equity for support staff, and $8 million will be held in reserve, the BCSTA said. Of the $50 million one-time-only grant, the Prince George school district's share is about $1.45 million." — according to the member from Prince George North.
He says assertions by the BCSTA and the teachers unions are based on incomplete information. 'If you include the previously announced $50 million one-time grant for '03-04, the total additional money going to the province's school districts over the next three years is closer to $200 million,' he said. 'Furthermore, the money going to the Ministry of Children and Family Development for inner-city schools will benefit school districts, as will other expenditures not directly in the area of district operating grants.'"
This is what the MLA for Prince George North said.
Is the minister saying that the MLA for Prince George North is correct — that there's actually a $200 million increase now in the education system?
Hon. C. Clark: I've travelled the province quite a bit in the last little while, and it's true the union is quite consistent with the opposition in taking $42 million last year, $50 million this year and $100 million over the next three years, and reducing it to zero pretty fast. They did that within 24 hours. I mean, I'm certain that average B.C. citizens don't buy that line. They know that it's quite typical of opposition groups to find anything they can from government to criticize. We're quite delighted that there's going to be another $100 million flowing into our education system. It's good news for kids; it's good news for parents and good news for teachers. It's good news for our society.
J. Kwan: You know, the minister can't suck and blow at the same time. When she goes around saying that she really appreciates the work of the teachers, and then she turns around and just kicks them — you know what? — it actually doesn't add up. It doesn't add up to say that you actually appreciate the work of the people in our education system. You can't suck and blow at the same time.
It wasn't just the TF from Prince George who had this to say. The BCSTA — are they fearmongering too? The trustees — are they fearmongering too? What we now know is that the minister says the increase she said is there…. The $7 million does not go to pay equity, and we're going to actually mark that and check that.
The other question is: what about the $8 million held in reserve? Is that a correct figure — that the BCSTA has said there would be $8 million being held in reserve? Is that a correct number, or is Gordon Comeau also incorrect in that?
Hon. C. Clark: The member shouldn't worry. We'll find a way to spend all the money that we've been allocated on kids.
[2050]
J. Kwan: You can tell the minister doesn't want to answer the questions, because she doesn't want to be caught.
That's another $8 million. She already has to account for $7 million, and if the $7 million doesn't go to pay equity…. It would be great news, actually, for the school board, because all of a sudden they would have some extra moneys for the classroom. But, accordingly, the understanding is that money is supposed to be earmarked for pay equity. Maybe the minister will actually come out with another announcement to say: "Hey, don't worry. Here's the pay equity dollars that will offset that $7 million." Then maybe the minister will further come back and say: "You know what? It wasn't counting the $50 million twice. There actually is an additional $100 million each year in the budget year. The budget book happens to be wrong, and there are additional moneys."
I look forward to those announcements. I hope that is really the case, but I expect the minister would have to come back and clarify that, because there are still a lot of questions. There are still a lot of questions with respect to the minister's math and her accounting of the
[ Page 5286 ]
budget and the funding she has announced in the education system.
On the $8 million, is the minister saying that money would not be held in reserve and that it's up to the school trustees to decide how they want to spend it? Or is she saying that money is held in reserve? What is the answer? Is Gordon Comeau correct on that $8 million or not?
Hon. C. Clark: Part of prudent financial management, particularly over a longer term, is making sure you have enough money to be able to accommodate unexpected expenses. Things like interest rates could go up, and independent school enrolment could go up. We really can't predict that far out. Part of prudent financial management — and I know this is a new thing for the member, so I want to introduce it to her slowly over the course of the evening — requires that one be conservative in one's estimates and make sure there's enough money for unexpected events, should they arise. I know I can guarantee her this today: we will find a way to spend every single penny the Ministry of Education is allocated in the best interests of kids, and every single dollar we can deliver to the classroom is going to get there.
J. Kwan: It is impossible to get a direct answer from the minister. It's a simple question. Gordon Comeau makes the assertion that there is $8 million going to the reserve. The question is: is he right, and is he correct on that? All the minister has to say is yes or no. I expect that her answer is, yes, they're going to put $8 million aside to be held in the reserve, and that of the $143 million, by the time you siphon off the dollars that will not go into the classroom, you actually don't get $143 million into the classroom.
The issue around the $100 million. I want to just canvass that in the next few minutes, and then we'll probably have to go back to this tomorrow morning as well. The minister says there's $100 million in addition to the funding. That's up $50 million in '04-05 to $3.84 billion, up $20 million in '05-06 to $3.86 billion. That equals $70 million, not $100 million, so there's $20 million missing.
Is it the same money as her deputy minister said in the newspaper story might be there, but don't hold your breath? There's an article that actually stated for people not to hold their breath. Is that how the minister has actually accounted for the amount of money? Or is it, alternatively, that the MLA for Prince George North is correct and in fact the minister is wrong in her projection and numbers? Gordon Comeau is wrong, and in fact there is more like a $200 million injection into the education system over the next three years.
Hon. C. Clark: I'm not sure what the question was, so I hope the member will forgive me if I don't answer it as directly as I might otherwise like to. As I explained, the numbers are different from the way that they were characterized by Mr. Comeau — I'm sure entirely unintentionally, given the information that he had at the time.
The member says that she's got lots of questions, and I look forward to canvassing those. I hope she can come up with some new ones tomorrow. I hope I don't have to answer all the same ones again that I did tonight.
In light of the time, I move that the committee rise and report progress.
J. Kwan: For clarification, is the motion to ask the committee rise, report progress and ask leave to sit again? I just want to clarify, because that wasn't clear from the minister's motion.
Hon. C. Clark: My understanding from the Chair is that the "leave to sit again" part isn't actually necessary, but if the member would like me to restate that, I'd be happy to do it. I ask that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 8:55 p.m.
The House resumed; Mr. Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported resolutions and progress, was granted leave to sit again.
Hon. C. Clark moved adjournment of the House.
Motion approved.
The House
adjourned at 8:57 p.m.
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
Committee of Supply
The House in Committee of Supply A; H. Long in the chair.
The committee met at 2:58 p.m.
ESTIMATES: MINISTRY OF
PROVINCIAL REVENUE
On vote 33: ministry operations, $49,617,000.
Hon. B. Barisoff: It's my pleasure to introduce the estimates for the Ministry of Provincial Revenue for the
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fiscal year 2003-04. Before I begin, I'd like to introduce my staff who are with me here today: my deputy minister, Chris Trumpy; assistant deputy minister Greg Reimer from revenue programs branch; and Harold Hilton, director of corporate services and senior financial officer.
The Ministry of Provincial Revenue provides a central service to the province for revenue and debt administration and collection, including income, consumption, resource and property taxes as well as medical services plans, premiums, certain fees and outstanding debts and receivables. We manage billings and receivables and tax appeals and administer loans on behalf of the province.
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My staff also work with taxpayers, debtors and government and promote voluntary compliance through public education, assistance and service. We also represent B.C. with Canada Customs and Revenue Agency with respect to the taxation statutes they administer on our behalf. We handle tax collection functions for other agencies such as the Greater Vancouver Transit Authority, Build B.C. and local governments.
In 2002-03 we will collect roughly $15.4 billion in revenue from both tax and other revenue sources. That's a rise in total government revenue of close to $1.3 billion. Revenues we collect support the delivery of government programs the public values and relies on, such as health care and education.
Since the ministry was created in June 2001, we've had considerable success in achieving our performance targets. Our long-term vision remains the same: to be the centre of excellence for revenue and debt collection in government. We will continue to do this through providing quality customer service and through new technology that makes it easier for people to voluntarily meet their obligations.
My service plan builds on five goals we set last year. Our first goal is to increase voluntary compliance. This means customers take responsibility for meeting their obligations without requiring the ministry to enforce payment. Voluntary compliance is the most cost-effective means of collecting revenue and debt.
The ministry is undertaking many initiatives to improve services and maximize voluntary compliance. My ministry is continually updating bulletins and notices so that taxpayers can stay updated on changes to tax laws and regulations. Staff from my ministry continue to hold regular informational seminars for interested business groups and organizations. I'm pleased to be able to tell you that at the end of the third quarter last December, we were meeting our targets to receive on-time payments from the public 85 percent of the time.
We are also maximizing the use of new electronic technologies to provide customers with better information and make it easier to pay. Through the Internet our clients can access ministry information 24 hours a day, seven days a week, at their convenience. We've had close to 334,000 visits to our website, well above our target for this year.
We've increased our use of electronic service delivery in a number of ways. We've implemented PC telephone banking for rural area property tax payers. In addition, we've added PC telephone banking for non-tax customers and are now averaging over 500 payments a month that way. There has been a 56 percent increase in the number of businesses enrolled to make electronic payments for provincial sales tax through their bank. Businesses can fax us their tax return for social services tax, the PST, when they have nothing to report for that month, and it is now directly uploaded into our internal tax administration and compliance system, reducing manual processing time.
Even more is planned. We'll be making it possible for people to pay their Medical Services Plan premiums through pre-authorized bank payments. We've made substantial progress toward developing electronic filing and payment capability for property transfer tax.
Increasing our audit activities is another method that has already made a big difference in increasing voluntary compliance. By increasing the number of auditors this year, we were able to increase the number of audits performed. As of December our auditors had already completed over 182,000 audits, well above our performance target of 145,000.
Through a combination of improved audit, collection and enforcement activities, we expect to collect $115 million in new incremental revenue in the year 2002-03, well above our service plan target. We have also been able to reduce the number of dollar amounts of our overdue tax accounts receivable. One of the reasons the Ministry of Provincial Revenue was created was so that government could pay more attention to collecting revenues it was owed.
Our second service plan goal involves increasing our efforts to collect outstanding amounts owed to government. We are doing this in a number of ways. We are enhancing audit, collection and enforcement activities. Over the next three years we plan to hire 58 more auditors and compliance staff. We are also reducing the key overdue accounts receivable ratios by centralizing collection within the Ministry of Provincial Revenue, making collection activity more uniform and consistent. By consolidating collection activities in one ministry, we free up other ministries to focus more on their service delivery responsibilities.
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Last year we forecast an average annual assessment per auditor of $500,000. We projected that we would be able to increase it to $525,000 by the year '04-05. I am pleased to be able to tell you that as of December 31, we are well above our target. A number of debt portfolios will be transferred to the collection this year and next year. They include immigrant sponsorship, non-motor-vehicle-related court fines and overdue student loan accounts from loans funded since August 2000.
We're increasing revenues through expanding our use of Canada Customs and Revenue Agency's set-off program. With this program, if a taxpayer is owed a tax
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refund, the province is notified, and all or part of the refund goes toward the debt that is owed.
Goal number three involves ensuring that taxes are administered fairly, efficiently and equitably while at the same time meeting taxpayers' needs. Taxpayers and clients increasingly expect high-quality, responsive service, including 24-hour, seven-day-a-week availability.
I'd like to give you some examples of how we're doing this. The single change of the business address went live on the ministry website this year. It allows businesses filing taxes to enter their address only once. This address then is automatically updated for all the participating partner agencies, including Canada Customs and Revenue Agency, Industry Canada, our consumer tax branch, the B.C. corporate registry, the Workers Compensation Board and 58 municipalities. We've also completed the first phase of a project to develop a single business number, which is expected to be in place by this fall.
We've also started implementing measures to improve performance and accountability by CCRA in the way they administer numerous provincial tax programs on behalf of the province. This includes increased interaction and liaison with the federal officials at the local, regional and national levels to monitor B.C. tax programs.
We are also working to consolidate debt administration across government through multi-year accounts receivable projects. Currently, we have more than 40 accounts receivable systems spread across government, making it difficult to get a full picture of what is owed or overdue. We have therefore set up a revenue receivables management project to develop a fair, flexible and efficient revenue and receivable management system. It will use an integrated single window into government.
Key strategies of the program include providing customers with accurate and timely information, including a single view of their revenue picture across government programs; timely and accurate reporting of the state of the government's revenue and receivables within and across government programs; accurate identification of all customers owing money to the province; and finally, complete, timely and accurate calculation of billing the amount owing.
The ministry's first transition of an accounts receivable program from another ministry was completed last September, when we successfully transferred the responsibility of handling the Medical Services Plan premium billing and overdue MSP collection accounts from the Ministry of Health Services. We will be working on similar projects with a number of other ministries over the next few years.
Another way we will continue providing fair and equitable administration is by improving administrative fairness and due process for appeals. We are also working to eliminate unnecessary regulations. By the end of December 2002, we reduced the regulatory burden on taxpayers by eliminating a net total of 1,009 regulations, and we will meet our 8 percent target for this year. We're aiming to eliminate another 13 percent next year.
The fourth goal in my ministry's service plan involves improving our performance and accountability. Doing more business electronically, improving our internal efficiency and service to customers and using alternative methods to collect outstanding debts are some of the areas we're focusing on. For example, consumption tax credits are now being processed within 24 hours. We also introduced an automatic telephone call distribution system for our tax collection services area. Despite heavy volume, 97 percent of the incoming calls from customers who owe tax are picked up immediately by one of our staff.
We're developing a customer relations management strategy for our tax areas. CRM is a well-established business tool in the private sector but has not been well developed in governments generally. In keeping with our commitment to innovation, our ministry is one of the first to lead the way in the public sector use of this proven business tool. CRM is intended to improve our ability to cost-effectively provide the service our tax customers want, and in doing so, we will enhance voluntary compliance. As a first step, this year's work will include a customer-service survey of 400 businesses, 400 citizens and 100 new businesses to determine their requirements and desired level of tax-related service.
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The Ministry of Provincial Revenue's fifth goal is to ensure that we retain our highly skilled, motivated, innovative employees and recruit other talented professionals as needed. To do this, we are creating a growth-oriented work environment that attracts skilled and motivated employees. We conducted an employee survey last June, and in that survey, 80 percent of our employees responded favourably about working for the ministry.
To improve employee knowledge of our new ministry and its goals and performance objectives, my deputy ministers held a series of information sessions that have been attended by almost all Provincial Revenue employees. We committed to creating learning and development plans for 50 percent of our staff this year and have actually achieved well beyond that goal. These plans identify the core competencies and skills that the ministry staff should have for each type of job. They also help identify skills gaps, training needs and faster career development. By the end of this year, the same tool will be available to all staff as a web-based program they can use to update their individual plans as they develop new skills to identify learning needs.
We are also managing staff composition and succession carefully to ensure that the ministry continues to operate smoothly. We are having success in attracting people to fill auditor positions we need, thanks to a comprehensive targeted approach. We're continuing our outreach program by attending career fairs to attract accounting program graduates and through holding recruitment sessions with professional associations.
I'd like to conclude by acknowledging our staff for the dedication, hard work and commitment to excellence over the past year. In that time the Ministry of
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Provincial Revenue has undergone major expansion, reorganization and transition as we've taken on more responsibility and streamlined business processes to become more efficient.
Our work continues without significant service disruption to our clients despite the ongoing changing environment. This is due to contributions made by many individuals and an excellent team and leadership we have established and continue to develop in this ministry. I would like to extend my personal thanks to our staff for helping us meet, and in many cases exceed, the performance objective we've set. I'm pleased to respond to any questions.
P. Bell: I note, as the minister said, there is an increase in the FTE count in his ministry from 937 in '02-03 to 988 in '03-04. I wonder if he could just give us a bit of a breakdown on how that will occur and where those employees may be placed.
Hon. B. Barisoff: Forty-eight in the auditing program and three in the homeowner grant program.
P. Bell: I wonder if the minister could just expand a bit, by region, in terms of how that might break out.
Hon. B. Barisoff: There will be 22 in the Vancouver area, 20 in the Victoria area and six in the regions. That's the auditors. The homeowner grant people will be here in Victoria.
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P. Bell: I'm relieved to hear there won't be too many more in Prince George.
I'd like to just touch on page 137 of our estimates book. Under executive and support services, the minister's office is outlined at $430,000, but then there's strategic initiatives and administration, a lift from $44.39 million to $46.561 million. I wonder if the minister can expand on what those strategic initiatives are and how they might impact our constituents throughout the province.
Hon. B. Barisoff: It starts off in the strategic initiatives. Then there's the information systems branch, the appeals, corporate services and billings and receivables.
P. Bell: Can the minister perhaps go into some of the new initiatives he's anticipating this year? It's an endeavour, I understand, where we're looking for a lift of $1.3 billion in collections to a total of $15.4 billion. Maybe you could give us a few examples of what some of the initiatives might be that will help us achieve that goal.
Hon. B. Barisoff: It starts off with auditors and black stock tobacco, special investigations unit. Some of the other initiatives are: to administrate the T2 corporate income allocation project to ensure corporate income is accurately attributed to British Columbia; undertake phase 3 of the T1 residency project, focusing on compliance for income tax returns of individual residents of British Columbia filing personal income tax in other provinces — we got, I think, $11 million the first year and $9 million or $10 million this last year, which has been a great program; to implement and enhance an ACD phone system; enhance provincial-federal cooperation and administration of British Columbia's tax programs for CCRA to identify appropriate performance measures and accountability; manage the phase-out of the non-filer compliance initiative of the corporation capital tax program for non-financial corporations; to complete the implementation of the Cognos information system, including the Insight decisions support system, an application that analyzes business data and presents it to the users to make business decisions more easily; increase participation in various federal-provincial working committees; pursue increased development in the branch's mandate of being primary contact with CCRA; implementation of findings and recommendations from the fuel-tax project; move forward on the single business number; implementation of the audit risk base verification process of refund section; development and implementation of a customer relations management strategy for the revenue programs division; establish a framework for the implementation and administration of the digital animation and visual effects of the tax credit; and employ development and learning program web interface.
In collection, loans and management branch, it's to implement preauthorized payment for MSP clients; implement improvement efficiencies and new methods to billing receivables process; and to continue to consolidate the other government receivables programs into the ministry.
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The decision support system, the management information reporting system: to complete phase 1, completion of the single business number I mentioned in my speech; disaster recovery planning; production migration architecture; real property taxation system requirements; enterprise architecture; and the PMO implementations.
P. Bell: That was a very thorough list. Thanks very much. It sounds like we'll make good headway.
The minister commented earlier that the performance target for this year was 145,000 audits, and I gather that was completed audits. We actually were successful in completing 182,000 audits. I'm just wondering if that was as a result of an uplift in the number of staff that we had in the previous year, or if they were just much more efficient in getting out in the field. What led to that improvement?
Hon. B. Barisoff: It's actually a little bit of both. We did have the ability to hire more auditors last year, and I think the fact that when we get more auditors, they seem to be creating a little bit more efficiency in the field also. When you combine the two of them, I think what's happening is that we're getting a lot of effi-
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ciency throughout the ministry. I've got to give credit to staff, because they're doing an exceptional job for us throughout the province and with audits outside the province.
P. Bell: I would agree with the minister that the staff are doing a great job out there.
Just moving on, if I can, and continuing on the auditor function, I understand that the objective — I gather this to be the case — for each auditor is a collection value of half a million dollars. I thought I heard the minister say that was exceeded. I'm just wondering what we were actually able to achieve in this last year.
Hon. B. Barisoff: First of all, we don't have a set figure that the auditors have to get $500,000 or whatever the figure might be. What we do is that the auditors have been reaching the $500,000 figure and actually going substantially past it in some cases, but there's no set figure they're actually reaching. It's just a matter that some of the audits seem to be, I think, as stated before…. Sometimes you're picking the low-hanging fruit that hasn't been done for the last number of years. Auditors are out there doing their jobs, but there's no set figure that they should be at $500,000 or $200,000 or $700,000. It's just whatever. They're doing their jobs as auditing for the province.
P. Bell: I'd like to refer to page 141 in our estimates guide, under tax administration and collection, and the Build BC Act (Motor Fuel and Social Services Tax). In 2002-03, we have budgeted $203.2 million, and in 2003-04, we're at $418.3 million. I gather that is money dedicated to the B.C. Transportation Financing Authority. Part of that would be as a result of the increase of 3½ cents in the provincial tax, but the numbers don't quite jive for me in terms of understanding just where the $203 million came from last year and then the $418.3 million this year.
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Hon. B. Barisoff: The $203 million was the 3¼ cents per litre that was implemented before. Then, of course, the 3½ cents per litre that is implemented now picks up the other $211 million.
P. Bell: Maybe the minister can expand on the way the fuel tax is applied at this point. I was, I guess, understanding that there was 10 cents per litre applied provincewide and then various other amounts depending on where you live. Was it in the past that 6¾ cents went to general revenue and 3¼ went to this account? If you could just expand a bit.
Hon. B. Barisoff: Effective March 1, 2003, the tax payable on clear gasoline and clear diesel will, of course, increase by 3½ cents per litre. An additional tax allocated to British Columbia Transportation Financing Authority for the purpose of financing the province's transportation infrastructure…. That increase brings the total BCTFA tax allocation to 6¾
cents per litre. The 3½ cent increase is expected to generate an additional $211 million, as we've indicated. The Greater Vancouver Transportation Authority service on clear gasoline is 20½ cents per litre tax. Clear diesel is 21 cents per litre. The Victoria regional transit service is 17 cents per litre on clear gasoline and 17½ cents for clear diesel. The remainder of the province is 14½ cents per litre on clear gasoline and 15 cents per litre on clear diesel.
P. Bell: Am I correct in saying that a portion of that money goes to general revenue and a portion goes to the Transportation Financing Authority?
Hon. B. Barisoff: Yes.
P. Bell: Moving on to page 142, in tax administration and collection, the Tobacco Tax Amendment Act, I gather we're going from $1.5 million to $2.2 million in tax collected. Is that a result of the extra $2 per carton, I believe it is, that has been added to the tobacco tax?
Hon. B. Barisoff: The reason for that, of course, is the increase in the tobacco tax. We collect the tax on behalf of the Cowichan band. That's where the increase, the $2.2 million, comes from.
P. Bell: Great.
I have one last question. Of the revenue that is collected by Provincial Revenue, there is obviously a component that's paid on time and in the appropriate manner within the existing structure that it is supposed to occur. I wonder if the minister has an idea of what the percentage might be of revenue that is not paid within the compliant period that is currently designated.
Hon. B. Barisoff: Eighty-five percent of the revenue is actually paid on time. Fifteen percent of the revenue isn't paid on time, but it's not that we don't collect that revenue.
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P. Bell: Of the 15 percent that isn't paid on time, what is the standard we've established or the benchmark we expect for payment? Is there a certain amount we are writing off within our budgetary process?
Hon. B. Barisoff: If the member would refer to page 184, the total bad debt expense for all of government is actually $154 million that is written off.
P. Bell: That would be, I gather, reflected throughout all ministries. Does the Minister of Provincial Revenue have a target for his baseline, or is that $184 million, as I believe he just said, inclusive of only his ministry?
Hon. B. Barisoff: Our bad debt numbers are actually $35.585 million.
P. Bell: As a percentage what would that be?
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Hon. B. Barisoff: If our calculations are right here, we figure it out to be roughly about 0.4 percent.
P. Bell: I didn't mean to try and ply the minister's calculator-like mind, but I'm glad he was able to do the calculation for us. Certainly, I trust his numbers.
Just as a final question, and perhaps the minister will have to get back to me with this…. I don't know if it's possible to calculate this, but I understand that on audits, there are three forms of funds that can be required. There is the actual amount that was owing in an audit if it was found to be not in compliance. There is an interest component on that, as well, for whatever length of time the money was outstanding. Thirdly, I understand there is a penalty amount that may be applied if it was anticipated that the taxpayer was, perhaps, doing it in a fashion where they should have been aware there was money owing to them.
I wonder if the minister can give us an indication of how much money is actually collected in those three processes in terms of an interest component, a penalty component and then, I guess, the amount owing. I gather the amount owing would be the roughly 15 percent, or 14.6 percent, that we do collect. If he doesn't have that at his fingertips, I'm happy to get that later. It's not a problem.
Hon. B. Barisoff: We don't have that at our fingertips, but we will get you that information.
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W. Cobb: Part of one of my questions was answered, but you mentioned in the preamble that you were going to do cross-ministry collections and whatnot. I didn't see anywhere in the document where it shows that income. Is that still listed within those ministries? As far as the staff goes and your uplift in staff, is that relative to the decrease in staff in the other ministries for those collections?
Hon. B. Barisoff: One example I could use is the MSP, where we took 36 staff from the Ministry of Health and moved them into the Ministry of Provincial Revenue. We took all the collections of MSP as of September 1. When we do take on collections from other ministries, we try to make sure we have a corresponding number of staff that come with it. We've found that some ministries tend not to give us as many staff as they were originally using for it, but with the great efficiency that the Ministry of Provincial Revenue has and with my great staff, we seem to be able to manage and keep continuing along the way of making sure all the collections are done for government.
W. Cobb: Is that revenue specified in here, or was it just in overall? How do you keep track of what's owing to the other ministries if you're collecting it for them?
Hon. B. Barisoff: All of our money flows right into the consolidated revenue fund. If I can use the MSP as an example again, the almost $1.395 billion we collect just flows into general revenue. Then, of course, the Minister of Finance would have that disbursed within the ministries it goes back to.
Vote 33 approved.
The committee recessed from 3:37 p.m. to 3:41 p.m.
[H. Long in the chair.]
ESTIMATES: MINISTRY OF
SKILLS DEVELOPMENT AND LABOUR
On vote 36: ministry operations, $25,637,000.
Hon. G. Bruce: It's been another year, and the only difference between this year and last year is that the 20-point type I used here I could see before, and now it's blurry. That's not something I'm looking forward to next year. Next year, not only will I not be able to see it, I won't be able to hear you either.
At any rate, I'm pleased to present the estimates for '03-04 for the Ministry of Skills Development and Labour. I'd just like to take a moment to review some of what has gone on in this past year and to take a little look at what we're intending to do over the course of the next year.
In '02-03 we initiated a number of legislative and structural changes in labour relations, employment standards and workers compensation. We're continuing to fulfil the new-era commitments that will help revitalize the economy throughout British Columbia. Much of our aim has been to find ways to encourage employees and employers to develop healthy workplace relationships that lead to good, sustainable jobs, and government is delivering core programs and services in the most cost-effective way possible.
In respect to the field of labour relations, Bill 42, the Labour Relations Code Amendment Act, was introduced into the Legislature in May 2002. The changes included imposing a duty on the LRB and others that exercise authority under the Labour Code to interpret and apply the code in keeping with stated principles. These include recognizing the rights and obligations of employers, employees and unions; fostering employment in economically viable businesses; and encouraging cooperative participation between employers and trade unions.
The government has also restored the right of employers, employees and unions to communicate during union certification and decertification drives. In December a five-member committee was appointed under section 3 of the Labour Code to address the need for further Labour Code reforms, and that committee is currently working through.
In regard to the field of employment standards, Bill 48, the Employment Standards Amendment Act, was introduced in May 2002 to protect vulnerable employees and simplify workplace rules. Those changes included providing greater flexibility and work hours; simplifying recordkeeping, overtime and statutory
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holiday pay rules; enhancing enforcement in problem areas; and mandatory penalties that are the highest in Canada.
In July the employment standards branch implemented a self-help kit that helps employees determine if they have a problem and provides a step-by-step process to work with their employer to solve that problem. The employment standards branch gets involved if the employee and employer can't solve the problem themselves. For the first while, it has been very successful, as we've noticed a great appetite to be able to resolve these issues amongst the principals before the branch actually has to get involved.
In July the ministry and the B.C. Restaurant and Foodservices Association signed a memorandum of understanding. This provides for an employment standards officer to work exclusively with the association to educate employees and members and help in resolving disputes. You'll recall that this was something we took as a result of the success of this program implemented in Alberta, and we've since seen improvements in respect to that field. We are currently exploring similar arrangements in other industries and other sectors.
The Workers Compensation Board. In May legislation was implemented to ensure sustainability of the workers compensation program, to modernize how benefits are calculated and to improve management of the system by restructuring Workers Compensation Board governance. In October legislation was introduced to implement a new WCB appeals process. The new process reduces the levels of appeal of WCB decisions from three to two and imposes strict time lines on how long this process can take.
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Now, people who want to appeal a WCB decision go first to the review division within WCB. Their next level of appeal is to the independent Workers Compensation Tribunal, commonly called WCAT. That came into effect this past Monday.
In December a seven-member board of directors was named to review, restructure and rebuild the WCB to make it more responsive to the needs of employees and employers. I would like to say that we have a very good group of people that have taken that task on.
Where are we going in '03 and '04? We're continuing to improve and modernize the legislative and operational framework for all programs under the Ministry of Skills Development and Labour. In employment standards we're looking for opportunities to build sectoral partnerships that will improve compliance and protect vulnerable workers. We're looking at various sectoral regulations to make sure that rules meet the needs of employees and employers.
Under the direction of the new chair, the Labour Relations Board will be responsive to the legislation, to the needs of the parties, the community and the province. The LRB will look at recovering costs for certain services. This will involve consultation with interested groups and will likely come into effect in 2004. There has been a significant change in how the LRB is working, much to the credit of the chairman and his team of people that are working with him to bring that about.
The section 3 committee is a five-person committee. They will develop an informed, well-researched objective discussion and analysis of the issues I put before them and provide a report to me by March 31 of this year.
We are also working toward deregulation targets through reviews of WCB and other employment legislation — a staggering number of rules and regulations in respect to WCB. We are also bringing barbers and cosmetologists in line with other trades with the repeal of stand-alone legislation.
Our goal is to make B.C. a better place to live, to work and to do business. The coming years for this little ministry will be both busy and challenging as we move ahead in this. We have a very small organization that has done yeoman service in the first 18 months. With me here today is the deputy minister, Lee Doney; my assistant deputy minister, Betty Notar; my other assistant deputy minister, Richard Longpre; and my budget manager, Margaret Parkinson. Along with a very good crew of people throughout the ministry and our front-line people, we're moving to try and change the culture in how we do things here in the province relative to employment standards, labour relations and the WCB.
I might just note in passing that in the first 18 months of this government, I think we brought through and handled somewhere in the neighbourhood of 15 pieces of legislation from a tight little shop. I would like to thank them all for the extra effort they made in bringing through that first part of the agenda of this government. There were many, many extended hours of time and effort to bring that about. I would also like to thank the front-line people for the very aggressive and interested way in which they've tried to assist in bringing these changes to the public right out there on the front lines.
Vote 36: ministry operations, $25,637,000 — approved.
The committee recessed from 3:49 p.m. to 4:17 p.m.
[H. Long in the chair.]
ESTIMATES: MINISTRY OF
PUBLIC SAFETY AND SOLICITOR GENERAL
(continued)
On vote 34: ministry operations, $480,862,000 (continued).
M. Hunter: I just want to confirm that we are on vote 34 — correct? Okay.
I had a couple of questions on the issue of keep-of-prisoners, which is listed as an expenditure line under the corrections chapter of vote 34. Could the minister explain how much of the $188.397 million goes to this line item, please?
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Hon. R. Coleman: This may be a little bit of background. When I became the minister in 2001, as we did our review, one of the things we were finding was that we had a disproportionate numbers of dollars being spent on keep-of-prisoners by day and by per diem in different jurisdictions all across the province. The first step we did was to try to normalize that.
This year we've cut the budget for the keep of prisoners and have reallocated it based on some historical numbers. What we're doing from there is that we will actually establish an hourly rate for keep-of-prisoners in the future.
The member's own council has had some concerns about it in Nanaimo, which we're aware of. The fellow who's responsible for that has been meeting with the city of Nanaimo to deal with those issues. Just so he knows, we're actually in discussions with them.
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The ministry's current budget calls for a reduction in keep-of-prisoners from $5.2 million in '01-02 to $3.47 million in '02-03 — or 39 percent — and a further reduction to $2.6 million in fiscal '03-04, which would be a 50 percent reduction overall.
M. Hunter: The minister has supposed my question is about the city of Nanaimo, and he's quite right. The city has been advised by the RCMP detachment in Nanaimo of a reduction in funding available to pay the city for this program. I appreciate the minister's explanation, and I'm pleased there are discussions underway with the city.
In the meantime, the city has expressed the view that it will not take on prisoners once the budget runs out. I'm not quite sure at what point of the year that will occur. Does the minister anticipate any public safety issues as a result of this apparent dispute that is now being worked on with the city of Nanaimo?
Hon. R. Coleman: No, I don't. The threat in Nanaimo is simply that. I think we will work through the issue with the city of Nanaimo. Once they have a better understanding of how we're actually going to deal with this, they may want to adjust how they actually manage their keep-of-prisoners at a municipal level with the RCMP.
We have found different models for management and different labour numbers versus the number of prisoners we actually have in different lockups across the province. As we did that review, like I said, it was very disproportionate. It was ad hoc. Previously, there was no system to actually measure the keep of prisoners or the cost.
We will move forward from that through our discussions on the keep of prisoners to where we'll normalize this. I do have a correctional institute in Nanaimo, and Nanaimo might want to take into account the fact that they do have the benefit of that correctional institute and its employment in that community.
As a result of reviewing that particular facility and the good education program and some of the rehabilitative programs I saw there, it was one of the ones I chose to keep open. I'm sure there are benefits to the community as a result of that, but frankly, it also probably gives us an outlet, if needed.
So far, all the communities that had a concern — after they had met with my staff and had it explained to them, have gone through it and looked at how they'll manage prisoners in the future — have been satisfied. I don't doubt that we can reach the same accommodation with Nanaimo.
R. Nijjar: One of the issues that comes up often right across the region in the lower mainland is the government's ability to provide safety in neighbourhoods because of the SkyTrain stations and SkyTrain lines that run through our communities. What is the ministry doing to create a policing force that, as it says in the service plan, coordinates the services of the various police forces in a region?
Hon. R. Coleman: I have been pretty consistent on the issue with regard to SkyTrain policing. I do not believe we need another police force on the lower mainland that I have difficulty in the integration of information or passing of information with. I don't believe you take a strip of land across municipalities and actually designate a policing area for a special police force.
As a result of that position, we are in discussions with SkyTrain and have been for some time about the security in and around that, and with the various police departments along the lines that have, frankly, received the benefit of having SkyTrain in their communities. It has brought a significant amount of development, both residential and commercial, as a result of having the benefit of SkyTrain within their communities.
TransLink…. We have made it pretty clear that we want an integrated relationship in policing in the lower mainland and that we do not want a separate police force for SkyTrain. We want them to negotiate either a seconded model or have police in the communities come up with the relationship. Some have accomplished that. Some still have a way to go. Police services is working with the various jurisdictions to accomplish that. Clearly, we will not be having a separate police force for SkyTrain.
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R. Nijjar: Is it the belief of the ministry, in other words, that the ball is in the court of TransLink and that, ultimately, TransLink has to come to the ministry with a proposed solution?
Hon. R. Coleman: The bottom line is this: (a) we're not having a separate police force for SkyTrain, and (b) I want a seconded or integrated model. I think police forces in the communities have a responsibility to patrol and police their entire communities and should not expect that, because they have a highway, they're going
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to get a separate police force for a highway or a separate police force for a skytrain.
We will come up with that model. We're in discussions with the various departments and municipalities along the line. Should we not be successful, as the Solicitor General I have power under the Police Act to basically put in place a model that we would do. At that point in time the funding would be directed by the ministry, because we have the power to dictate that to the communities. We don't want to go that way. We would like to have the communities and SkyTrain come to an accommodation. Failing to do that, though, we will find the accommodation.
R. Nijjar: Marijuana growth operations being rampant in the lower mainland raises many issues. There are a lot of ways of tackling that problem. One of the subsets of the solution is the relationship between the police forces and B.C. Hydro and the transfer of information. Has the ministry, through the police forces, ever had any discussions with B.C. Hydro in regard to Hydro working with the forces to alleviate the problems of marijuana growth operations on private property?
Hon. R. Coleman: We already do that with the security of B.C. Hydro. They work very well with our police forces on the sharing of information where there are suspicious dealings with regard to power.
I should tell the member that the estimate is at least $50 million a year of stolen power going to grow ops in the province. Grow ops are an insidious organized crime operation that fuel organized crime and a whole bunch of other criminal activities in our province. We are going to make it a very big portion of our dialogue on crime with our courts, our prosecutors and police when we move forward in our dialogue on crime later on this year, because we think it's something that needs to be highlighted.
We have highlighted it at the federal level. We have made it very clear to the federal government how we feel about outlaw motorcycle gangs being involved in organized crime in British Columbia and how it relates to our grow ops, our cocaine trade and our methamphetamine and speed trade as well as everything else. We have that relationship with Hydro. We are building an integrated relationship in policing in the province — period — in the province, which is one of the reasons we just introduced PRIME-BC.
Basically, we will not slow down in building those relationships so that we can have the evidence to execute search warrants or lay charges with regard to this type of activity.
R. Nijjar: Is one part of your goal to be very aggressive with criminals and the drug trade? In that process have you looked at the Ontario legislation, Bill 30, in regard to an act that provides civil remedies for organized crimes?
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Hon. R. Coleman: Yes, we have. We are looking at that legislation. We're watching carefully as to how it will withstand certain Charter challenges and what have you, and we have some work ongoing with regard to that type of legislation in the province. It's not anticipated for this spring session, but we are watching it and doing some work on it.
R. Nijjar: I'm personally very supportive of that direction. My concern is that there may be a culture — not legally speaking, but a culture — amongst the police forces and the cities and those with whom you have to coordinate the acceptance of such a law and that there may be some type of resistance to this. Has the ministry considered what type of roadblocks there might be outside of Victoria?
Hon. R. Coleman: There is no culture in law enforcement in B.C. that would be opposed to this type of initiative. We work with our law enforcement community all the time to understand what tools they think can be of value to them. They actually give us feedback as to how they think it might work in British Columbia versus other jurisdictions. The member should know that a law in Ontario, given how we deal with the Charter in British Columbia in our courts, sometimes doesn't work exactly the same, so we have to strike the balance as we move forward. If there's one thing I can say about law enforcement in B.C., it's that it has a better cooperative base than any jurisdiction in the country.
The prime example of that is PRIME-BC, simply because no other jurisdiction in Canada can so much as get on a common radio system, let alone a common information management environment for all police forces. We actually have buy-in from all the police on that. We have buy-in on integration, we have buy-in on regional models, and we have buy-in on integrated homicide units and those sorts of things as we're moving forward. I'm pretty comfortable that if there's one thing we don't have, it's a culture that's going to stop us from moving forward.
R. Nijjar: Another major concern that's been raised in my area and throughout the lower mainland is the sentiment of the public when it comes to their sense of safety as it relates to the judicial system and the sentences that have been brought down in the recent while and for many years. They often ask the ministry, through me, through private members, to address that issue. From a public point of view, from a community organization's point of view, they feel that their values and their safety are not being reflected to the highest degree by the judicial system. What can the minister say to those organizations through the service plan or to them as individuals outside of an elected office?
Hon. R. Coleman: This is a delicate comment for a minister to make, so I will walk down this in a delicate manner. First of all, the judiciary is basically reflective of, I guess, the community, so our communities need to let the entire people of the province, including our judiciary and our Crown, know how they feel. I think
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that is part of our dialogue on crime. It is not appropriate for a minister to criticize the sentence of a judge, particularly one that is responsible for the police. I don't think we would do that.
I will tell the member, though, that both the Attorney General and I, at federal-provincial justice ministers conferences, petitioned the federal government to make some changes with regard to sentencing in Canada, particularly when it involves violent or sexual assault–type crime. We don't believe that conditional sentencing should be an option in those cases, and we are pushing forward with that as an initiative on behalf of the province. The Attorney has been very much public about the position that we take and that we would look forward to seeing some support for that as we move forward with our colleagues across the country.
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I think that, on balance, our communities can rest assured that Canada is actually a pretty safe place in comparison to crime statistics worldwide. We have, at least in my opinion, the best police officers in the world, or at least in North America. We have some highly qualified people.
We have a very big commitment from law enforcement to community policing and to policing in general. As we move forward with our five-year plan and the lower mainland policing strategy we're bringing into place now, then start to bring in more integrated units as we move the compliance section from ICBC and look at an integrated traffic team that can actually move community to community and across border to improve that relationship and the visibility of policing, I think you can look forward to more successes in policing.
Noticing no more questions from the members opposite and knowing some still may have some discussion, I move adjournment of the debate on the Ministry of Public Safety and Solicitor General estimates at this time.
Hon. R. Coleman moved adjournment of debate.
Motion approved.
The Chair: The committee will recess for two minutes.
The committee recessed from 4:38 p.m. to 4:43 p.m.
[H. Long in the chair.]
ESTIMATES: MINISTRY OF FINANCE
On vote 23: ministry operations, $39,249,000.
Hon. G. Collins: I just want to take a few moments to talk a little bit about what the ministry has accomplished in the last year and what we hope to accomplish in the year ahead. Primarily, the Ministry of Finance has been involved in leading the service plan development and the restructuring through Treasury Board staff of government over the last year. We certainly were heavily involved in preparing the initial service plans, which were tabled with the budget last year.
This year we're involved in working with and providing advice to the government caucus committees as well as Treasury Board as we looked at the service plans that were presented by the ministries that are now contained in the budgets for this year. The process this year was to plan for the second year of the previous three-year plan as well as to add the next third year in the rolling service plans.
We continue to embark upon and deliver what I think is one of the most accountable, innovative processes for developing a budget, one of the most transparent and certainly something I'm very proud of. I'm also extremely proud of the staff who work in the Ministry of Finance who've done yeoman's service not just this past year but the year before — and, I sure hope, next year — as well in putting forward this service plan and helping the government create the budgets for the various ministries.
Certainly, other parts of the ministry have also been working diligently this past year. I know that the comptroller general and his office have been working very hard with the ministry but also with other ministries as well as with other parts of what currently is, or may become or might not become, known as the government entity as we move to generally accepted accounting principles in 2004-05.
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I know that is an onerous task we've set for staff and for government as a whole to try and sort out the myriad of not necessarily generally accepted accounting principles, but we're getting there and trying to be the first government to do that — and do that in legislation. I was very proud on behalf of the government and on behalf of the ministry to accept an award from the Chartered Accountants with regard to B.C. being the first government to legislate that and put that into force. I know there's a lot of work that's been done so far as well as a lot of work that is yet to be done.
We also continue to have, I think, one of the best debt management branches in the country in the Treasury. They do excellent work in making sure we access the debt markets in a way that is the most advantageous to the citizens of this province, that ensures we have a stable borrowing program in place, which gives us some certainty, and that also takes advantage of the opportunities provided to us as a result of our double-A credit.
I know they've done a great deal of work organizing investor tours and road shows in the last year, which we've participated in. We've had very good reception in our travels and very good attendance at our presentations and certainly a great deal of enthusiasm from the investor community. I know that doesn't just happen automatically. It happens with a lot of preparation and work beforehand. I want to thank those people in the ministry for their effort there as well.
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Without question, there are also lots of things happening in the policy branch of the ministry, which deals with financial institutions and the regulatory role that government plays. That portion of the ministry has been working day and night over the last year, previously, to develop the new Business Corporations Act.
The work didn't finish last year with the introduction and passage of the first new act. There are consequential amendments coming forward. There is other work that needs to be done that will be coming forward to the House, as I said last year. They'll be coming this year. I know there's a great deal of work involved in that and long hours and lots of decisions that need to be made.
I want to thank the members and the staff who are involved in that work as well. It really is a modernization of the financial structure in the industry in this province. I know we're working closely with the Ministry of Competition, Science and Enterprise on securities changes. There is a bit of an overlap in some of our goals — not necessarily our responsibilities but certainly in our goals and the outcomes we're trying to achieve. We work very closely with that ministry as well.
I also want to take the opportunity to thank those who work at the Public Sector Employers Council for the work they've done over the last year. It has been a time of big change. They have borne up very well, I think, under great pressure to try and rein in and get control of some of the collective agreement process that government has been involved in for some time.
I know government's stated policy of a zero-zero-and-zero negotiating mandate presents challenges for them. I know it means they have to work that much harder and be more creative to try and find ways of resolving the collective bargaining process in a way that both parties can agree upon. That is not always the end result, of course, and it's unfortunate when that happens, but I do respect and thank very much those individuals who've been doing that work for me and for the government and the people of the province over the last year.
We have tabled, as all other ministries have, a service plan that lays out our workplan not just for next year but for the next three years. We've accomplished a great deal of what we were expected to achieve, not the least of which is the beginning of the P3 initiative here in British Columbia.
In the last year we created a new corporation, Partnerships B.C. We now have a new CEO in place in the form of Larry Blain, who has been an outstanding contributor to that sector in British Columbia over the years. He certainly was consulted widely by the previous administration, as well, as they looked tentatively at opportunities for public-private partnerships, particularly toward the end of their mandate but certainly throughout it.
There are big changes happening there. We are starting to see the rollout of some of those projects. Certainly, the new hospital and health care centre and cancer centre in Abbotsford has been a major project for Partnerships B.C. I had the pleasure of opening the bidders meeting in Abbotsford — I think it was a week ago or so — to great reception from potential partners from around the world who were very enthusiastic about this opportunity.
I think we can look forward and the Fraser Valley can look forward to some very creative and innovative solutions to the health care needs of the people of the Fraser Valley. I think that's very exciting. There has also been the ambulatory care centre at VGH, which is, I think, a natural public-private partnership. There's been very good interest in that project, as well, and there are others to come.
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Certainly, the infrastructure plan that the Minister of Transportation is presenting will provide us with plenty of opportunities to involve partners in building new infrastructure in the province — people with expertise, people with the finances to help, people with proven track records of success from around the world. I look forward to having that be part of the success we see in the next couple of years.
With that, Mr. Chair, I am prepared to take questions from the member of the opposition or from any member of the Legislature, for that matter, as we review the service plan and the budget for the Ministry of Finance. I look forward to the debate.
J. MacPhail: Could the Minister of Finance tell us the status of seismic upgrading?
Hon. G. Collins: Yes. We have, as the member will be aware, a seismic upgrading program that's in place. It was scheduled to run its term next fiscal year. We decided this year that there was an opportunity, because of underspending across government, to advance the funds for next year to the current fiscal year and give those available resources to the various school districts, hospitals, etc., as part of that plan. We look forward to them making use of those in an expedited fashion to try and deal with some of the challenges that I know we face.
J. MacPhail: Could I have the numbers, please, of what the plan was and how it was expedited, and then the total that will be spent?
Hon. G. Collins: In the fiscal year we're in, the budget number was $50 million. Next year the budget is $40 million. There was a $6 million lapse, because projects weren't being done quite as quickly as the dollars were provided for them. What we've done is that we have now added $46 million — the money from last year plus the lapsed funds for this year — and put those out to the various authorities.
J. MacPhail: As I recall, it was a three- or four-year plan. I wanted to know the entire amount.
Hon. G. Collins: It was a $133 million program over five years, and '03-04 was to be the final year. We
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are expecting to flow, if not the entire $133 million…. It might be $130 million. I'm not sure. I think it's $130 million.
J. MacPhail: The prepay is '03-04 in the budget '02-03, which will make it $130 million?
Hon. G. Collins: These are unconditional grants that we're giving to the authorities. They will be able to do with it as they please. They know it's for seismic. This is something that was there. It will be $130 million in total for the whole plan. As it was originally intended, I think it was $133 million. It'll be about $130 million. It was scheduled to expire in '03-04, which is the upcoming year, and so those funds were flowing in the form of an unconditional grant this year too.
J. MacPhail: So by the end of this fiscal year, there will have been $130 million given to institutions. Is the minister saying that if there are now questions about whether seismic upgrading is done or not, it's up to the institution to decide that?
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Hon. G. Collins: As the member will be aware, we're trying to make sure school boards and the health authorities have more flexibility to implement all of the outcomes that they are required to — in education, under their contracts, and in the health sector, under their accountability contracts. They all have capital plans. They have operating budgets, and they are expected to accommodate. Now that this fund, this five-year project, is complete, they will be expected to fund any further changes to seismic out of their new capital plans and their new operating plans, as well, out of the new money that they're receiving.
J. MacPhail: What does an unconditional grant mean? What restrictions are there on using the unconditional grant?
Hon. G. Collins: There are no conditions other than they need to use it on seismic.
J. MacPhail: This is an important issue in my riding. So it's an unconditional grant for seismic upgrading? Perhaps the minister could explain what the change is.
Hon. G. Collins: The change is that they're getting the money this year. It is an unconditional grant to be used for seismic. Perhaps I can quote from a draft letter we're going to send, so the ministers might want to listen. It's a letter they're going to receive with regard to this, and it says: "I'm pleased to inform you that in the next few working days, your ministry will receive an unconditional grant payment" — or your entity, if it's a school district or hospital or health board, of a certain amount. "Treasury Board has approved accelerated completion of the seismic mitigation program, effective March 31, 2001." That's the kind of direction they're going to receive, and they'll be expected to use that grant for seismic. How they do it within what their needs are is really up to them.
J. MacPhail: What's the monitoring process for ensuring that the unconditional grant is spent on seismic?
Hon. G. Collins: Normal accountability, and they all have auditors. The ministry has audits, and that's sort of the normal process as we check up to make sure that all ministries and agencies use the dollars they receive for the intended purpose. That's a normal process of government.
J. MacPhail: Okay, so if I go to my school board and say that I believe this school should be seismically upgraded, then the school board will make that decision. But in terms of accountability for an unconditional grant for seismic upgrading, where does one go to check to make sure that the money is being spent on seismic upgrading?
Hon. G. Collins: First of all, to the school board, which is elected and accountable to use the dollars they receive from the public in the way they are prescribed. Certainly, the Ministry of Education, I would expect, would monitor expenditures and audit expenditures as they do for all the money they send to the school district. This really would be no different than any other dedicated resource they might have.
J. MacPhail: There is a new system that has just been tried this past year. I'm working with my school board on this matter, but in terms of accountability, those matters are still being worked out in terms of the allocation. In the past it used to be that the ministry — at some point the Ministry of Education but then the Ministry of Finance — would actually allocate the funds, and they would be approved by Treasury Board. That no longer is there, so what happens? How does it happen now?
One of the questions I have is: how does one know, from the provincial government's point of view, how much has been allocated to what school board?
Hon. G. Collins: The process that's currently in place for monitoring and making sure they would spend these funds on structural or operating changes is the same. That continues. There will be no difference there, no change. It's just that we're advancing the money to them earlier. I have a list of all the school districts and what their grant is anticipated to be. If the member wants, I can get a copy of that for her. If she wants to know about Vancouver specifically, I can tell her that in Vancouver, the expectation for 2002-03 is $5 million. It's $500,000 for non-structural and $4.5 million for structural.
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J. MacPhail: I am concerned about just my own school board. Thank you very much for that. And that's
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it. That's the money. That will then be their full allocation of the whole program.
I'm on page 30 of the Budget and Fiscal Plan, and I'd like to review the risks to the fiscal plan, if I may. I actually want to go through the risks. It would probably be helpful to engage in a discussion, rather than just a monologue. Let me ask specifically about the first risk, which is: "Assumptions underlying revenue and Crown Corporation and agency forecasts such as economic and population growth, commodity prices and weather conditions."
I certainly understand commodity prices and weather conditions. What are the assumptions underlying population growth, for instance, that would be a risk factor? I have read all of the tables around the assumptions underlying it. I'm asking more specifically about why it's listed as a risk?
Hon. G. Collins: The member says she's aware of the tables, so I won't direct her to them, but they are there. If others want to look at them, it's page 90-something-or-other.
It's identified as a risk, because I think it is one. It's not a huge risk, but it is a risk. Certainly, if there were a long-term, negative trend in population, that might affect the census data, which could affect an equalization the government might be entitled to. As well, declining population may well have an impact on expenditures in the area of schools. If we had a declining population, or a declining population in particular age groups, you might have a reduction in demand, or an increase in demand for not only education facilities but also health facilities.
There's both a spending and a potential revenue risk there. I don't think it's a huge risk, but it's something I think is worth identifying as something that does have an impact on the fiscal plan. Certainly, if lots of people are coming here and buying new houses or buying houses, that creates pressure on the housing market, which can also drive property transfer tax revenues. It's something that is a risk and a driver for the economic numbers in a whole series of ways, and I think it's worthwhile identifying that that's a risk.
We have a projection of what our model shows we think, what our best estimate is, of what the population trend lines might look like. Certainly, you could go to private-sector forecasters, and you would get all sorts of projections as well. I know that as the former minister, she would be aware of the Economic Forecast Council. This is one of the things we talked to them about as well. They give us numbers, and they can be quite divergent. This last year there were some forecasters one way and some the other way, and it's not uncommon for that. I think we just identified it as something that does have an impact. It is a risk, up and down. It's something that we should be aware of.
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J. MacPhail: I assume that all of those factors are taken into consideration when one makes one's forecasts, so I appreciate the minister's comments. It is listed specifically, over and above, as a risk, not only factors to be taken into consideration as a forecast. Believe you me, I don't have the answer. It's not as if these are provocative questions. I am curious as to why that's a risk.
If you go to table 3.6.4 on page 88, it has population growth as increasing 0.9 percent this year. Maybe we could ask, first of all: the 0.9 percent increase is what? Is it immigration? In-migration? What's it from?
Hon. G. Collins: The population change she sees in table 3.6.4 is a total number. For 2003, it's 0.9 percent. If you go down, you can see the net in-migration — international and interprovincial. You can break that out.
J. MacPhail: Perhaps the minister could suggest what the underlying premises are of the change in population in those two areas.
Hon. G. Collins: The international is B.C.'s component of the federal forecast. The interprovincial is based on comparative performance, province to province, and it's based on a B.C. Stats model.
J. MacPhail: Okay, it doesn't say it's a B.C. Stats model. That's why it leapt out at me — the 2,300 increasing for interprovincial. It does seem to be a substantial turnaround in the trends. Is there some evidence for that as we speak?
Hon. G. Collins: If the member looks at the table where it says interprovincial, in 2002 if you go across, it says 3,700. There's a number 1 for a footnote, which is B.C. Stats' estimate. That's what we have there.
As I said earlier, if you look at the various growth rates that are forecast by the private sector economists — particularly if you take, for example, the Economic Forecast Council that the minister meets with in December — there will be a divergence in GDP forecasts based on their own assumptions, and they may be different assumptions. That also helps to drive, or partially drive, the interprovincial migration numbers.
You'll see, as well, a divergence of forecasts amongst private sector forecasters for interprovincial migration numbers based on assumptions they may make about the automobile sector, the demand for cars. The growth of the U.S. would drive numbers in Ontario, which would put us relative to Ontario.
Certainly, if other provinces underperform, we overperform. That tends to draw people back and forth to different places across the country. It's not just a strict comparison with any one province; it's a comparison across the country. Certainly, labour mobility is something that continues to be an advantage to Canada and our economy, but it is also something that tends to put pressures on social services that we provide, as do various governments across the country. It's not anything new. It's based on those economic assumptions.
J. MacPhail: Is the fact that makes this a risk, then, the fact that this is turning from negative to positive — the interprovincial growth?
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Hon. G. Collins: I'm not sure I heard all of the question. It was a brief one, so I think I'll answer what I thought I heard.
This number is a risk because all of our programs are demand-driven. Health care is demand-driven. Education is demand-driven. Social services are demand-driven. Virtually all of the high-cost social service programs we have are based on demand. That has an impact on it. Certainly, revenues can be impacted by those numbers as well. That's why it's identified as a risk. I hope that was the question the member asked. If it wasn't, she could perhaps ask it again.
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J. MacPhail: No, that's fine. We're just having a dialogue here.
I note in the economic review and outlook of the Economic Forecast Council, on page 93, it says this was one area where there was quite a divergent point of view, as the minister has said. Let me ask this. I'm sorry for having to flip back and forth. I'm on page 93. It says: "The divergent views were reflected in the wide range of forecasts for net in-migrations. Forecasts range from 13,000 to 40,500 people."
Now, it seems to me your interprovincial totals are up at — what? — 32,000. And the minister is quite correct that this is a key indicator of the economy. So the minister has chosen to insert 32,000 net in-migration out of a range from 13,000 to 40,500? Is there something beyond what's published here? Could I have a breakdown of what…? Well, there are the ranges, yeah, but it's not by person. Anyway, I understand that might be a lot of work.
So out of a range that wide, you chose the upper 20 percentile?
Hon. G. Collins: As the member knows, statistically you have mean, you have average, and you have a number of samples. I think on that one, for this year — 2003 — you have 12 of the group that actually submitted data, so it's a pretty small sample. We also run numbers through our own model, and as the member will know, that's a wide range. If you look at 2002, it was 8,000 to 37,000, so it's a pretty big dartboard you're trying to shoot at.
Our numbers have been based on a model that's longstanding in the ministry that reflects these numbers, and that's our best estimate. Sometimes we're high; sometimes we're low. That's just the way it works. The chances of you getting any of these forecasts dead-on, as the member knows, is pretty risky, I guess you would say. It's rare that you hit it dead-on, and sometimes it might be by luck.
Certainly, you know, economic principles drive certain numbers. Overall, economically, the member will know that our forecasts for economic growth are more conservative than the forecasts by the Economic Forecast Council, and that's generally reflected through the decisions and the numbers that go into our model as well.
J. MacPhail: Still on the same bullet: assumptions underlying revenue and Crown corporation and agency forecasts. I'm sorry. I'm having trouble understanding it. Is it forecasts such as economic and population growth related to Crown corporation and agency forecasts? Is that it? The separate assumptions related to underlying revenue and Crown corporation and agency forecasts is not a separate risk. It's a risk associated with economic and population growth. Is that…?
Hon. G. Collins: This is drafting, and I'll try and explain what we're trying to say here, if it's not clear to the member. These are risks, and they include assumptions underlying revenue and Crown corporation and agency forecasts. So revenue forecasts, Crown corporation forecasts. Some of the risks that underlie those two forecasts are — and then you have "such as" and it lists some examples. There are probably others, but these are things, the main ones, that might drive assumptions around revenue as well as assumptions around Crown corporation performance and revenue targets.
J. MacPhail: Perhaps, then, the minister could say what…. I'm particularly interested in the prediction of weather conditions as it relates to B.C. Hydro. I understand that one cannot predict the future, but what are the underlying assumptions?
Hon. G. Collins: I'll get the numbers for this year. Hydro gave us a forecast toward the end of their cycle based on, I believe it was, their December numbers — their December water levels snowpack — that resulted in about a $400 million decline in the target they had for this year as opposed to what was in the plan for this year in last year's service plan. That declined substantially.
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Going forward, I believe Hydro has an assumption that you will have average water years. That's sort of how they build their plan until they're close enough that they can actually deviate from that to say, "We now have data that says it's a high-water year or a low-water year," and they can solidify it. You have a long-run forecast that is sort of an average. That's their best estimate. Of course, you don't have a clue what the snowpack might be a year from now, but you do know this year we're in right now what the snowpack is presently. Periodically, they do measure that.
As we get toward the service plan and start to lock in the revenue numbers and the Crown corporation numbers…. Hydro is one of those Crowns, and a big one. It's fairly volatile. The number we have for Hydro in the plan has a bunch of assumptions. The one about water and snowpack drove about a $400 million decline in their revenues or their contribution to the bottom line of government.
That was based on their December snowpack data. The last measure was, I think, end of January. The numbers are a little better, so the snowpack has increased in the intervening period. Certainly, when we get to a quarterly update…. The first quarterly report comes out in September. We will then have an update as far as Hydro's projections as well.
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J. MacPhail: Is the risk associated with B.C. Hydro revenue just associated with weather conditions, or is it associated with markets as well?
Hon. G. Collins: If the member goes to page 124 and looks at the number for B.C. Hydro…. It's on the top, to the left-hand side. It's table 87 on page 124. You can see the Hydro net income. For this year, '03-04, it's off $470 million. Next year they are forecasting to be about $160 million lower. It's partially water, but it's also the cost of gas.
Natural gas, as the member knows, has taken a bit of a spike lately. That drives some of Hydro's costs, because they do buy electricity as well. They also generate electricity at their facility on Burrard Inlet. They are also a buyer of electricity and a buyer of natural gas to generate their own electricity. When those prices go up, that hits their bottom line as well.
J. MacPhail: Thank you. I understand that. I'm asking whether or not the decline is a shrinking export market in times of available electricity.
Hon. G. Collins: I think that right now, in particular, they'd have a great market for electricity. We're hearing about possible brownouts in Ontario, so I think there's a great market for electricity, but as Hydro has continued to…. As the economy in B.C. has grown into the capacity that exists, as the member knows, the surplus that is available for trading and time-shifting declined. Your ability to generate those trading revenues decreases as domestic demand reaches capacity.
Certainly, I think that in the last four years…. Maybe even next year the forecast is that we'll be a net importer of energy as a province. That's an ever-growing challenge. Certainly, as consumption gets closer and closer to our capacity, the opportunity to take advantage of big price spikes or extra demand for electricity, either in the summer in California or in the winter in the colder parts of North America, declines. There's a market there. They just don't have the resources to get in and supply it and take advantage of that market.
That's part of the energy policy. That's why we've tried to encourage and set up the energy policy such that we'll have private sector investors come and build additional capacity, which will deal with our domestic capacity. One of the benefits of that, I would argue, is that it would stave off the day when our domestic demand would so far outstrip our domestic capacity that we would be unable to benefit from trading and that, in fact, we would actually end up suffering by having to go into the market to buy electricity at times when those prices are high.
J. MacPhail: Let me ask the question this way, then. What is the forecast contribution that Powerex is going to make this year?
Hon. G. Collins: We'll get that number for you.
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J. MacPhail: I'm at bullet No. 2: "The outcome of litigation, arbitrations and negotiations with third parties." One listed there is the softwood lumber dispute. What litigation and arbitrations are risk factors?
Hon. G. Collins: As far as softwood lumber goes, there is the WTO process, which is winding on its way. That is something we need to be mindful of. There are also the negotiations that are underway in an attempt to see if there is a way to come to some agreement through negotiation without having to go to the WTO.
J. MacPhail: I am aware of the softwood lumber stuff. I was referring to the other, the outcome of litigation, arbitrations and negotiations. I'm on page 30, risks to the fiscal plan.
Hon. G. Collins: At any time, there is any range of issues that government is in the courts over. Unfortunately, that's just the way it is, and it's probably becoming more so as our society changes and tends to use those sources.
I would say that globally for government, risks that would be from litigation could be litigation with first nations. It could be litigation around any number of files with regard to historic grievances that individuals or groups of individuals may have with the Crown. Whether it's through long-term issues with children in care, etc., those kinds of things would be there.
Certainly, the member is aware that there is ongoing disagreement with our customers in California, I would say, with regard to some of those revenues that were generated during the years when California had its energy crisis, where Hydro and Powerex sold power into those markets and has been unable, to date, to collect on all of those revenues. Those are the types of things that could happen, and there are others as well. Without sort of getting into the legalities of the various cases — I would rather not get into specifics — that paints a general picture of the types of things that would be included here.
Certainly, in the case of the litigation that's ongoing with Powerex and the California energy customers, it's in the hundreds of millions of dollars. If you were to come to some agreement on that, or if the courts came to some agreement, that may have an impact on Hydro's numbers and subsequently on government's final numbers as well.
J. MacPhail: I assume that there are some specific cases. That's what I'm looking for. For instance, I noted last year — when I say "last year," I mean '02-03, although we're still in it — that out of the contingency funds is the ongoing investigation into the disappearing women and the litigation that arises out of that. I assume there must be some list that is available so we can monitor that.
Hon. G. Collins: I don't feel briefed enough to be able to determine, sitting here, the legalities of those
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various cases and to know what I can disclose publicly and what I can't. I've tried to give a general sense of what some of those might be and the ones that I'm aware of that are in the public venue. I would suggest that those questions would better be put to the Attorney General during his estimates, and then he'll be able to make a better determination on behalf of the Crown of what he can disclose and what he can't.
J. MacPhail: I'm not actually asking for details of what the negotiations are. I'm just asking for the list. I noted in the contingency fund of this year that there was a substantial and unexpected allocation of funds that dealt with litigation. I understand that the details can't be revealed. Now, we're dealing with unexpected expenditures. I would assume that's what a risk is. In order to know what the unexpected may be, one has to know what the expected is.
Hon. G. Collins: The expected number is what's contained in the service plan, not just for me but for the Attorney General. He has the Crown Proceeding Act. What we've put in there is a budget of what we think the most likely ups and downs might be.
They're not all downsides either. Let me give you an example of one that is a cost: Air India is potentially a very expensive trial. We can try and budget for that, but the longer it gets delayed, the question…. We've booked it in different years. It could go back as far as when she was Finance minister. I'm not sure. She may have had something booked in her budget for that investigation and a potential trial. I'm not sure of the timing.
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As the trial has been delayed, it gets pushed off into out years. If the trial actually started, it if it were a protracted trial, depending on the role the federal government played in funding that trial, there is a risk, a somewhat volatile risk, to the Crown Proceeding Act for what might come out of that, as well as just a cost for the ministry to provide the legal aid, the legal services, that are involved. There's one example of something that could cost us more.
Now, if we budgeted an amount in the budget and then the trial didn't happen, it would actually be an upside risk, in that the costs wouldn't have materialized that year, and that would help. Another one is the one I mentioned with regard to California. If, for example, we were owed a bunch of money…. Let me give you an example. I'm pretty sure it's public. I've been advised it is. I hope it is.
There was a finding between Alcan and B.C. Hydro recently where Alcan was required to pay the government $150 million. There's a standstill agreement in place as discussions occur about how to deal with that. Potentially, if they were required to pay that tomorrow, that could be an upside risk. They'd pay $150 million in cash tomorrow; then that could be an upside risk to the plan we're in right now. If it were a month from now, it could be an upside risk there, so it is volatile. It's up and down.
It's one thing the risk management branch is trying to look at — all the risks across government — and see if there's some way to balance them out and use what's an upside risk in one to counter a downside in the other so that we can get better budgeting long-term of this cost of government. Aside from that, again, I've tried to characterize what I think are the main ones I'm aware of. Certainly, the place to go, if the member has more specific questions or lists, would be the Attorney General.
It's not because I don't want to give as much information as is available to be given to the public. It's just that I'm nervous about doing that, not knowing and not having the Deputy Attorney General sitting beside me telling me what can be disclosed and what can't. I'd prefer if the member asked those more specific questions of the Attorney General. I think I've tried to give a sense of what they might be.
J. MacPhail: In our country, actually, cases that go to court have a name, so that's not secret. Litigation means it's filed in court and can be made public.
What about arbitrations?
Hon. G. Collins: Off the top of my head, I don't know of any that are outstanding, although there could be arbitrations going on in the labour relations world, in the public sector and in particular areas, that could drive costs of government. That's an example of something…. I was just advised that if the member wants to look at the Public Accounts for 2001-02, in the notes to the summary financial statements under 27 on page 52, there's a list of some.
I can just perhaps give the member a sense of what they were in that year — a general sense. They're more grouped around types of costs. You have negligence and miscellaneous: in 2001 it was $62 million, and in 2002 it was over $1 billion. Contract disputes in 2001 were $285 million, and in 2002 they were $196 million. Damages to persons or property, $77 million in 2001 and $130 million in 2002. Expropriation disputes, $79 million and $91 million.
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Timber harvesting rights disputes, $37 million and $31 million. Property access disputes, $25 million and $13 million. Motor vehicle accidents, $12 million and $10 million. Tax disputes, $10 million and $7 million. It is a volatile number. This characterizes the types of things. Again, though, if the member wants more specific numbers, then I've already advised her where she might find those.
J. MacPhail: Let me ask two specific questions around arbitrations and/or negotiations with a third party. What, if any, is a risk to compensating forest companies for changes in forest policy, and what, if any, negotiations are ongoing with the doctors? That would be listed as a risk. I'm not asking for specifics. I'm saying risks.
Hon. G. Collins: Physicians have signed an agreement now, so I think…. I stand to be corrected by the
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Minister of Health Services, but my understanding is that all of those outstanding disputes with the physicians have now been signed and settled and are in the service plans — the costs of those. I don't know if there are any other ones that are there as a result of the past process. Certainly, in the future we're going to be bargaining with everybody, including trying to bargain with doctors, which, as the member knows, is often challenging. That's an outside risk in those out years.
The compensation for forest companies as a result of forest policy changes. The member will know that the minister is currently preparing for those changes. We anticipate that by the end of the fiscal year or prior to the end of the fiscal year, those changes and the obligations that result from the changes will have been crystallized in the form of, probably, legislation before the House that will be completed. We expect to accrue costs this year for those changes — as well as other liabilities that exist in the forest sector, as a result of other changes — to the tune of about $275 million.
That's our best estimate of what those costs to government might be. We are crystallizing the obligation with the decision that's made. We will be accruing what we think our best forecast and best estimate is of those costs — what they might be. We will be negotiating those on an ongoing basis. That number may be higher, or it may be lower. I expect that it's pretty accurate. Again, there will be lots of discussion that takes place before those dollars actually start to flow. That's my understanding and my estimate.
J. MacPhail: The minister has pre-booked $275 million in forest-related costs in the budget of '02-03. Could he break down the accuracy? As he just said, he feels fairly accurate. Could he break down how he arrived at that $275 million.
Hon. G. Collins: We are not pre-booking it.
J. MacPhail: You're pre-paying.
Hon. G. Collins: No, we're not pre-paying either. We're booking it in the year when the decision is made. That's accounting policy. The decision is crystallized. You have to book it this year. The details of that, I think, are more appropriately put to the Minister of Forests. I can try and give the member a rough idea of what they might be.
If she'd like to have a more detailed discussion of what those might be, then the Minister of Forests would certainly be the estimates under which that happens. As the member knows, it hasn't changed much since she was Minister of Finance. A lot of the revenue numbers and expenditure numbers for forestry, in particular, come from the Ministry of Forests. We don't have a whole shop in Finance that does that. We actually rely, to a great extent, on the work that's done in the Ministry of Forests. The expertise rests there.
J. MacPhail: I assume the $275 million must have been approved by the Minister of Finance and Treasury Board, so is there some…. Well, the minister offered me a rough estimate. I'll take the rough estimate.
Hon. G. Collins: And it is the best estimate that the Ministry of Forests has. The member would know how accurate, or inaccurate, they are in forecasting those numbers, and we continue to rely upon them as we have in the past.
J. MacPhail: Yes, I know. I'm asking for the details of what made up the rough estimate.
Hon. G. Collins: What I'm saying is that the member should ask the Minister of Forests for more detail as to what's in the $275 million.
J. MacPhail: Does the Minister of Finance not know?
Hon. G. Collins: I know generally. I could send somebody out to the Minister of Forests and try and get the actual breakdown, dollar by dollar. It is a forecast. It is their best estimate. I expect that they are round numbers. Certainly, the numbers I've seen are round numbers. I'd be glad to try and get that information for the member. She could get it from the Minister of Forests, but I'd be glad to try and find that for her and give her whatever information we have that's able to be made public.
The member should also be aware that there are going to be negotiations ongoing with respect to that money. I expect that there are going to be some tough negotiations — with industry in particular — around how that works and what the obligations might be. I don't want to get into a detailed discussion of that, because I'm not party to all the details of those negotiations, as they're ongoing.
I think it would be better if she asked those questions of the Minister of Forests, who is a part of those negotiations and who will be much more comfortable in being able to disclose the details, in probably as much detail as he could, without harming those negotiations and without harming the interests of the province and the people of British Columbia.
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J. MacPhail: I'm trying to figure out where, properly, these matters are debated. This is a situation where, as the Minister of Finance has just said, the decision was made in '02-03, and therefore, it's booked in '02-03. It was not part of the estimates for '02-03 in either the Ministry of Finance or the Ministry of Forests. Is this $275 million an expenditure that's booked against the budget of the Ministry of Forests for '02-03?
Hon. G. Collins: Ultimately, it will be, yes. Again, we are forecasting…. The member's referring to the quarterly report, which is contained in the budget that we presented in February. The estimate is that this will be attributed, at the end of the day, to the Ministry of Forests. That is correct. We believe this is an opportu-
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nity, actually, to restore some confidence in the industry as they're going through big changes, and I think that's a positive decision by government.
J. MacPhail: I'm being directed to the Ministry of Forests here to discuss a $275 million item, and it says that it's going to be booked against the Ministry of Forests' budgets. Does that make the Ministry of Forests over or under budget?
Hon. G. Collins: The Ministry of Forests and, more particularly, government as a whole have looked at this as a decision we've made corporately. We have decided as cabinet that this is the kind of thing we are able to use — the savings that exist in the under-expenditures in the government budget, corporately — and we expect this will be something that will help the forest industry. As I said in the lockup on budget day, there will be an exemption provided to the Minister of Forests for this expenditure, as it's a corporate decision and it fits within the portion of the budget that we are all responsible for, collectively, as cabinet.
J. MacPhail: Sorry. Is this in neverland, then — this $275 million? The minister has just directed me to ask the Minister of Forests. I'm just trying to get detail of over a quarter of a billion dollars of expenditure. I'm being directed to the Minister of Forests, but now I'm told it's not being part. Somehow there's a category of expenditures for which the whole government is responsible, and it therefore doesn't get booked against ministry expenditures, and therefore we don't use them in determining whether they're over or under budget.
Hon. G. Collins: If the member goes to page 2 of the budget document, right at the very beginning…. It's actually the very first page where we start to get into the budget and, in fact, the third paragraph, which I'm sure she would have seen by now. Certainly, I drew attention on this to members in the lockup on budget day as well. It says: "For 2002-2003 the deficit is now forecast to be $3.8 billion, $600 million less than budget, including a reduced forecast allowance of $300 million. All ministries are expected to be on or under budget, excluding a one-time forest restructuring provision."
J. MacPhail: That's where my questions arise. Fine, but what does it mean when you include the one-time forest restructuring provision? I'm asking for the positive of this statement.
Hon. G. Collins: The cost of that will be booked, as it always has to be, to some vote in government. In this case it will be the vote for the Ministry of Forests. As I said, an exception will be provided to the Minister of Forests. This is a corporate decision based on the savings that we have cross-ministry. As you'll know, half of ministers' holdback is based on government's ability to come in on or under budget corporately.
This is a corporate decision. It's an extensive one. It's $275 million. As we evolved through the process, it became clear there were likely to be costs. There were also likely to be some significant savings this year, and we're able to fund that corporately through government. That is the part we're all responsible for, for our corporate, joint-as-cabinet 10 percent. We're able to do that and still come in under budget for all of government.
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J. MacPhail: Could the minister refer me to whatever legislation it is that allows for this exception? The minister has said over and over, separate and apart from the contingency fund issue, that all ministries are on or under budget. What would happen, I'm wondering, if another government made a decision to spend — I don't know — $275 million on operating some ferries and said that that was a one-time restructuring, etc.? Would the minister accept that then?
Hon. G. Collins: Certainly, if the hypothetical government the member is speaking of had accountability provisions in place that had half of the minister's salary set aside based on government's ability to hit its overall deficit target, it would depend on whether or not that drove government over their cross-ministry corporate target. Not really thinking of what year that hypothetical government might have existed but knowing generally what has happened historically, I think that probably would have pushed the government over its overall target and every ministry of government would have suffered. Every minister would have had to pay the price accordingly.
The reality is that with the budget that's before the member today, the quarterly report, we anticipate we will be making a decision as government to crystallize an obligation. The obligation, to the best of our estimate, is $275 million. We believe that's something that should accrue to all of government, and we will be providing an exemption to the Minister of Forests for that decision. It's a corporate decision of government. The member will have an opportunity to vote for or against that as well.
J. MacPhail: Perhaps the minister could point me to where in the legislation those corporate decisions are permitted to exempt people from hitting the targets.
Hon. G. Collins: As I said, we'll be providing an exemption, and the member will have an opportunity to vote against that when it comes before the House.
J. MacPhail: No, my question is very specific. First of all, the minister makes a claim, over and over again, that all ministries are in, on or under budget. Yet, in this document he makes an exception. It's an exception that he makes for himself and his government. What I'm asking is, on these targets when this money is allocated to the Ministry of Forests, because it has to be,
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where's the legislative exception to say that doesn't put the minister over budget?
Hon. G. Collins: We'll be providing that, and she'll have the opportunity to vote against it.
J. MacPhail: Under what section of the legislation and under what legislation is that vote permitted?
Hon. G. Collins: The legislation will come before the House in the form of an exemption, and the member will have the opportunity to vote against it.
J. MacPhail: I'm not asking about voting against it or not. I'm asking: will there be legislation created to allow for an exemption so the Minister of Finance can make his claim that every ministry is on or under budget?
Hon. G. Collins: That's what I've been saying. Perhaps I wasn't saying it clearly enough for the member. There will be an amendment brought before the House to provide the exemption for the minister, because all of that has to ultimately be allocated to a vote. I don't think it is appropriate to penalize the Minister of Forests who has come in under budget, on or under. I think he's actually forecast to come in under budget this year.
I think he has done a very good job of managing his budget. This is an unforeseen expense. It is something that corporately we're going to deal with and corporately will be allocated to the Minister of Forests vote. We'll be providing an exemption in the form of an amendment in order to make sure that is the way it's viewed.
J. MacPhail: We're going to have an amendment to the legislation to cover the tracks of the Ministry of Finance claim that every minister is on or under budget. Well, isn't that good news. That's absolutely wonderful. It makes a mockery of the claim. The $275 million restructuring is going to arise out of forest policy changes or is going to arise out of something other than forest policy changes.
What is it that makes this an exemption? What is it? It comes out of forest policy changes. Why is it being exempted? What makes it different as a corporate entity as opposed to a forest policy change entity? Does that mean that the Attorney General, who is responsible for treaty negotiations, gets exempted as well if he's over budget in that area?
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Hon. G. Collins: The decision of government is that if there is a corporate decision that government makes across government to initiate what, in this case, is a very big change — I think it's been stated in the media as the single largest restructuring of the single largest ministry of the province ever in the history of the province — we believe there are going to be costs associated with that. We believe they may be fairly large. We also think there will be benefits that accrue to the province as a result of that.
I don't think and government doesn't think it's appropriate to say to the Minister of Forests: "Sorry. You haven't performed this year. You haven't managed your operating budget. Therefore, you should take a pay reduction as a cost because of this decision that government has made." The cost of this still fits within government's overall budget. In fact, we're still substantially under our deficit forecast. The member may not agree with that. That's up to her.
This was something I talked about on budget day. I talked about it in the lockup. It's in the budget document. I think I was even asked a question in a televised interview about it as well. It's a decision government has made. The member can decide to vote for it or against it. She can vote for the restructuring fund or against the restructuring fund. She can vote for the exemption provided to the Minister of Forests or against it. That will be her prerogative. She's also free to characterize it in any way she wishes.
I think it's an important public policy decision. It fits within our fiscal plan as government, and we're going to do it that way. I think it's something that the people of the province will benefit from as a result.
J. MacPhail: As always with this government, with their huge majority, they think that if they use their huge majority to change the law then the truth becomes as it's described with the law.
This minister made a claim that every ministry was on or under budget. He said it just earlier today in the Legislature. He didn't say "excluding forestry." It's true that the people of my riding would have to read this book. Nor has he ever once, or maybe he has…. Has the minister admitted that he's going to have to change the law to accomplish this?
Hon. G. Collins: I've said over and over again, not just here but elsewhere — I believe I even said it in the budget lockup — that an exemption would be provided to the Minister of Forests for that expenditure. We felt it was something that was across government, that it was corporate. We can do it within our fiscal plan. We think it's a corporate decision. It's not like he went out and overspent his budget. Government has made a decision corporately to make this fairly significant investment in forestry restructuring in the province. We think it is an important decision. We think it's a beneficial decision to the transition, to the communities, to the workers, and we're going to provide that.
I'm surprised to hear the outrage from the member opposite, because she voted against the legislation when we passed it in the first place. It's not something that she gives a lot of credibility to, or cares a lot about or thinks — and I've read her speech on it — that it's something that's worthwhile doing. I think it is. I think you should look at the performance this year of the ministries and what they've done. You should also look at this expenditure as something that is beneficial to the people of the province. It still fits well within the
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government's budget target. We're way ahead of schedule. I think it's the right thing to do.
J. MacPhail: The Minister of Finance makes these claims, and he takes a lot of pride. He says them over and over again: "For the first time since" — I think he says 1951 — "every ministry is on or under budget." He excludes the contingency fund from that. That's number one. Now they make a $275 million decision that's directly related to forest policy, and he excludes that from the decision. He's actually got to go in and change the law.
My outrage isn't about the fund. I actually can't even get any details about the fund. I have no idea whether to be outraged or not. The minister on the one hand refers me to the Minister of Forests, saying it's his business, and then on the other hand says: "Oh, it's not his business. It's corporate." I still can't get answers. We have, first of all, contingencies excluded from determining who's got the great record, and now we're going to have to bring in the law again. Seventy-four MLAs will put up their hands and say: "Oh, right. We need this exempted."
Let me ask this question. Family bonus was brought in, and it cost about $400 million per year. It was brought in mid-budget. If this legislation that the minister is guiding himself under now was in place, we'd need an exemption for the family bonus. What would the minister's reaction be to that? The minister responsible would get her bonus even though her budget was $400 million over expenditure.
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Hon. G. Collins: It's a hypothetical question, because the legislation wasn't in place when that happened. I don't have with me the financial numbers from that year, but I don't recall the ministry or the government as a whole coming in on or under budget in any of those years. Perhaps they did, and she can advise me, but if the $400 million were to be contained within government's overall expenditures and hit the government's corporate forecast and accountability numbers for the deficit, then I would have to look at it. I don't know the particulars. The member is giving us a hypothetical.
J. MacPhail: It's not. It's a real example.
Hon. G. Collins: She's giving me a hypothetical. The legislation wasn't in place — if this occurred, when it occurred. The legislation wasn't in place, and I know that the member wouldn't have put it place, because she voted against the legislation when it was brought before the House.
J. MacPhail: Actually, we had budget transparency and accountability legislation that was in place. The reason I voted against this minister's legislation is because it weakened the previous budget transparency and accountability legislation. In the previous legislation, there were specific deficit targets that had to be met, and this government removed them.
The Minister of Finance is the person who is actually supposed to be the responsible, conservative person — not manipulating laws, not manipulating numbers. The Minister of Finance stands up and says: "We beat our target. As Minister of Finance, I made a target of $4.4 billion in deficit — the largest ever — and the fact that I came in at $3.8 billion after having raised taxes for a substantial amount of money in that same budget, I'm supposed to be given credit for."
Fair enough. That's the 10 percent of salaries that all the ministers get for the corporate work. They get to make the numbers, and then they get to judge whether they came in on or under budget. Fair enough. That's the way that ministers of finance budget. Paul Martin did it. I think I had an $890 million deficit forecast that the current Minister of Finance went absolutely nuts on. The budget happened to have been balanced that year. But that's what ministers of finance do.
In this particular case, we have a double whammy. He now also gets to determine, in his own words, who is in on or under budget. Contingency funds are separate. Public accounts be damned. And now we're going to bring in legislation that makes a mockery of ministerial accountability. Then, Mr. Chair, why is it that I can't get an answer about the $275 million breakdown if it's not the Minister of Forests' responsibility? It's a budget item, and I assume it's the Minister of Finance's responsibility.
Hon. G. Collins: I've told the member probably half a dozen times that it will be charged to the Minister of Forests's budget but that we'll be providing an exemption for that expenditure within his having to hit his direct ministry spending target, because it is the feeling of government that it is a corporate decision. It's in the best interests of the province. It fits well within our fiscal plan and well within our targets. The $3.8 billion target the member speaks of and the $4.4 billion forecast included any tax changes that were made at the budget last year. It's so it's not like something happened in a big way midyear that mitigated that.
Let me give the member another example. The Ministry of Health has submitted a service plan this year, as I said. Prior to budget day and the open cabinet meeting, she may have been aware of, and certainly, on budget day itself. In the speech, as well, I think I mentioned it. The Ministry of Health is expected to receive from the federal government a flow of money this year, next year and the year after that.
As the budget was being put together, and probably to this date, we still don't have a fixed number of what that's going to be or how it's going to flow in those various years. We produced a budget and a service plan for the Ministry of Health that had a status quo number in it. We also said that we were going to have to provide an exemption and amend the act to accommodate the provision of the federal money.
The goal here is to force ministers to be fiscally accountable. They are fiscally accountable. Look at the
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performance of the ministries this far, this year. We're at third quarter. We're doing very well. Something might happen between now and the end of the year that's unexpected. That may happen. I don't anticipate that, but that's a possibility. Ministers are on track. They've done an exceptional job of managing their budgets this year. I think that it's something we can be proud of. The act is achieving its end, and it's something the people of British Columbia are pleased about.
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The member may not like that, and the member may not like the accountability structure. I know she doesn't, because she didn't support it. She can vote against the exemption for the Ministry of Health and the exemption for the Ministry of Forests when it comes up before the House. I'm sure she'll make a very loud, very prolonged speech about how it doesn't work and that it's not the right thing to do. I think the verdict from the public of British Columbia on how the government has been managing the finances will be positive.
The Chair: Leader of the opposition, this should be the last question, as we will recess till 6:30.
J. MacPhail: Sure. Thank you, Mr. Chair.
The situation about the Ministry of Health budget, of course, is one about transfer payments into government. The exemption the minister is giving to his Minister of Forests, let alone all those other six ministries that will be over budget once public accounts are tabled, is an exemption of an expenditure — not a revenue transfer but an exemption of an expenditure.
I know that the minister likes to mock the debate in the House, but thank God the opposition is there to debate these issues. We now have an expenditure of over a quarter of a billion dollars that this minister, by the heavy hand of his 74 Liberal MLAs, will change the law to make go away. The minister will use the law and the majority to make it go away so that his claim is the truth. It's kind of saying that you can legislate that the emperor does have clothes.
Hon. G. Collins: Just to correct some of the facts that the member makes, the Minister of Health will not be responsible for a revenue flow. The Minister of Health will be responsible for an expenditure flow. In the service plan there will be a new number for expenditures for the Ministry of Health, just like there is this year in the Ministry of Forests. There will be an exemption provided to the Minister of Health, because he will have to expend those funds and there will be spending involved in the expenditure of those funds.
I think it is inappropriate and certainly contrary to the intent of the act to penalize the Minister of Health for the fact that there will be additional expenditures in the Ministry of Health because the federal government has come to the table. In the same vein, I think it's inappropriate to penalize the Minister of Forests, who has done an exceptional job of managing the budget he was given at the beginning of the year, because there is a corporate decision that fits well within the spending plan and the corporate budget for government, for which we were all accountable collectively. There is an expenditure limit there that we are accountable for.
I think it's inappropriate to penalize the Minister of Forests for that decision, which involves an expenditure of funds as well as the Ministry of Health does — in this case to the tune of $275 million to deal with the transition that will happen in the forest sector. I think it is entirely appropriate to provide an exemption for the Minister of Forests, as it is appropriate to provide an exemption to the Minister of Health for the expenditures that will be over and above the service plan that he was accountable for, based on the new expenditures in the Ministry of Health.
With that, Mr. Chair, I move the committee recess for 30 minutes. Till 6:35, I guess, is the traditional number.
The Chair: Members, the committee stands recessed till 6:35.
The committee recessed from 5:59 p.m. to 6:38 p.m.
[H. Long in the chair.]
J. MacPhail: What other exemptions will be made, other than Health and Forests, under the act, as we were discussing before the break?
Hon. G. Collins: None.
J. MacPhail: What is the section of the legislation that will be amended? Will it be a stand-alone piece of legislation, or will it be part of a miscellaneous statutes bill?
Hon. G. Collins: It still hasn't been determined exactly how that would be drafted and where it would appear, but I'll make a point of drawing the member's attention to it when it comes forward.
[1840]
J. MacPhail: Well, I find that surprising. I find it surprising that the minister doesn't know what legislation needs to provide an exemption. I will take the minister at his word that he will bring it to the public's attention as he introduces it.
We're back on the risks to the fiscal plan. I note in the fiscal plan that interest rates are forecast to be around 3 percent in this fiscal year. That's how I read the chart. Perhaps the minister or his deputy can suggest what kind of discussions they're having amongst other Finance ministers about risks associated with interest rate rises.
Hon. G. Collins: I don't know if the member is looking at page 77 of the budget document. Chart 3.3 has the interest rate assumptions. We were forecasting in 2003 for interest rates to go as high as 4 percent and a continued rise over 2004 up to 5 percent. The member
[ Page 5307 ]
can see the forecast assumptions for the Bank of Canada overnight target rate.
J. MacPhail: At the risks here — interest rates of one percentage point difference — I assume that the $130 million is one percentage point on our own taxpayer-funded debt, not a percentage point in terms of the GDP but the interest rate effect on the GDP. I assume it's on our own taxpayer-supported debt that the $130 million makes. In terms of debt servicing, how much of the debt-servicing costs have a built-in factor of interest rates rising to 4 percent?
Hon. G. Collins: There were a couple of questions there. I'll try and see if I'm answering all of them. If I'm not, she can perhaps restate them.
The rise to 4 percent is included in our fiscal plan, so that risk of assumption is there. If it goes more than 4 percent, then there obviously would be an impact. If it's less than that, it would be a positive impact. The $130 million is based on all government debt, not just taxpayer.
J. MacPhail: On the positive side, I'm hopeful, one might have a cushion built in of interest rate debt-servicing charges, and that's good. However, let me ask the second part of my question about whether there has been any discussion amongst Finance ministers about monetary policy.
Hon. G. Collins: It's something we informally discuss. I don't recall it being on the agenda as an agenda item at any of the Finance ministers' meetings I've attended, but it's certainly something we're all aware of.
As the member knows, as a small, open-trading economy, interest rates and the impact they may or may not have on the value of a dollar are something we have to be mindful of. We do discuss it. Unfortunately, because of the way our country is structured with the largest portion of our GDP generated in Ontario, primarily, but in Quebec as well, and with us being sort of out here on the edge with a not infrequent, countercyclical economic profile, we sometimes end up suffering from that.
That's been the case in the past, where the country is doing very well and the Bank of Canada is raising interest rates in an effort to try and dampen inflation. We suffer because we're not in that growth spurt that the rest of the country is in. We can also end up on the other side of that, I suppose, suffering if we were booming when the rest of the country was slow and interest rates were coming way down. That could, perhaps, drive inflation in British Columbia higher than we would normally expect.
You know, it could have an impact on that side as well. It's something we're aware of. It's something that in my meetings with people from the Bank of Canada…. I've had several, where they've come out here and talked about it. It's an issue I raise with them, saying they need to be mindful of what the impact is — not just what it is in Ontario, but what it is regionally — when they make interest rate decisions.
[1845]
David Dodge did come and present to the ministers of finance in 2001 in our December meeting, as well as in 2002. I think it was December that we met as well. He came and presented his economic outlook for the country, as well as where he thought the global economy was going, where the bank thought the U.S. economy was going, what the risks were. We're obviously very mindful of that and listen very attentively whenever he comes to present to us.
J. MacPhail: When is the next ministers of finance meeting, and will the minister be putting this item on the agenda?
All the reading I've done in the last 24 hours suggests that the interest rate rise, as an inflation fighter, is solely — not solely, but vastly, proportionately — accounting for the energy price rise as it has affected inflation in the east. I'm saying our inflation rate is at 3.3 percent and, given a slowing economy, wouldn't have forced the Bank of Canada to raise the interest rate. Does the minister think this is an item that will be on the next ministers of finance territorial-provincial meeting agenda?
Hon. G. Collins: Certainly, if it continues to be an accelerating problem, and we get a sense that the bank is doing something that may have a negative impact on British Columbia, we would not hesitate for a moment to get it on the agenda — to request that David Dodge come and meet with the ministers as he did in December. I certainly wouldn't hesitate for one second to make sure that the federal government and the bank understood how their decisions might be impacting economic development here in British Columbia.
J. MacPhail: I also think, just beyond debt servicing, both for private debt and public debt there's one issue, but there's also the other issue of the rising dollar as a result of interest rate increases as well. Again, on a small, open economy, this is very significant. Perhaps the minister can tell me whether this issue is a matter of discussion for those who are trying to resolve the softwood lumber dispute, for instance.
Hon. G. Collins: I have not been privy to the detailed negotiations or discussions. I try to stay briefed from the Minister of Forests on the issue and the progress. Obviously, the ministry does as well.
I'm trying to, perhaps, guess what they might be saying about that. The member had mentioned that in the second reading debate earlier today, as far as the impact of a tariff. Certainly, a rising dollar would be an added burden to our competitiveness. Certainly, I would think that — as they're negotiating a possible repeal of the tariff, replaced with some sort of a border regime, which has been hypothesized as one of the possible solutions to the softwood lumber dispute — the measure of that tariff and how it impacts on pro-
[ Page 5308 ]
duction would certainly need to be sensitive to a big spike in exchange rates.
I think it's a good point the member raised earlier today. I think she's making it again. I think it's very valid. I'm assuming they're operating on that understanding, but I'll make a point of speaking to the Minister of Forests as well and passing along to him that it's certainly something they need to take into consideration as they're negotiating what mechanism might be in place to deal with the removal of the tariff and some other sort of measure that would replace it. Certainly, it would need to be exchange-rate sensitive, and I'll make sure that he's aware of that. If he isn't already, I'll make sure that he is aware of it.
[1850]
J. MacPhail: One of the reasons I'm asking this question is that I note on the risks for revenue…. Now, we've already dealt with the expenditure on the restructuring and costs that arise out of changed forest policy, but I note on the revenue side that there's nothing that deals with revenue on the restructuring of the forest sector, except for the outcome of the softwood lumber dispute. Does that mean that in the year '03-04, all of the changes in revenue as a result of forest policy changes have been booked?
Hon. G. Collins: As I said on budget day in the lockup and, I think, in the press conference afterward as well — and I don't recall if it came up in media interviews subsequent to that or not, because it was mentioned a number of times — we have booked what we think the cost of the restructuring will be. We have not booked what the potential upside might be in the form of additional revenues to government from that restructuring or from a settlement of the softwood lumber dispute.
Neither of those are certainties, so we have not done that. There is a status quo projection of revenues from forestry, so there is no impact in those numbers on the restructuring and the changes in forest policy that are about to take place. I expect that if and when they happen, depending on how they're implemented and when they're implemented and depending on all the other negotiations and all the other uncertainties that may come as we go through that process, if they all resolve themselves, it is very possible that there is an upside risk to the revenue number from Forests.
[I. Chong in the chair.]
I mentioned that and referred to it on budget day as well. We can't pin that down. We don't have any clear certainty on that, and until we do, it's not likely to be put in as a revenue stream. When we know more, then we'll be able to advise on what those projections might be. As it is, it's a status quo projection.
J. MacPhail: I'm not talking about the softwood lumber dispute. I did hear that part where the minister is not booking any changes as a result of the softwood lumber dispute. I'm just talking about the changes in forest policy. Is the minister suggesting there's no risk to revenue as a result of the forest policy changes?
Hon. G. Collins: The assumption is that there is an upside risk, that in fact as you go to a market-based system, there may be additional revenue to government. This is outside of the softwood lumber. This is just the restructuring. In fact, you can see in two places in the budget document, certainly on the letter from the deputy minister where he attests to the risks, there is mention of that. As well, on page 31…
J. MacPhail: I'm sorry. Could you quote the paragraph, please, so I don't have to….?
Hon. G. Collins: Sure. On page 31.
J. MacPhail: No, in the letter.
Hon. G. Collins: In the letter. It is the second sub-bullet, I guess: "The status quo will prevail in the U.S. lumber dispute and the B.C. industry will continue under the burden of the 27 percent tariff." That's with regard to softwood. See that, on the letter.
J. MacPhail: That's not my question, though.
Hon. G. Collins: No, no, I understand that. I'm dealing with the two risk items the member mentioned. There is the fourth full bullet: "Status quo on the softwood lumber." We continue with the tariff. If you go to page 31, just above the bolded "spending" — the paragraph above that…. Again, that's with regard to softwood lumber and a possible border tax. I think we just assume the status quo on the revenues, and there's no positive impact.
On page 13, at the bottom of the page in the "forests" bullet, about halfway through, it says: "The forecast assumes no resolution to the softwood lumber dispute and no change to stumpage policies." If there were to be a change in the forest policy as we work through those structural changes, there is a possibility of an upside risk to the forest revenues.
J. MacPhail: In the risks to the fiscal plan, I appreciate that the forecast assumes no resolution. I'm on page 13, where the minister has pointed out that it says: "The forecast assumes no resolution of the softwood lumber dispute and no change to stumpage policies." In my view, anyway, the softwood lumber dispute resolution can't make things worse, so I appreciate that it's fair to predict there's only an upside resolution risk to that.
But I don't understand that on the stumpage side. I'm just wondering why forest policy changes, which clearly have been decided, because we're booking $275 million…. Is the minister suggesting there are only upside risks to the stumpage changes? I think it would come as a surprise to a lot of industry people that
[ Page 5309 ]
they'll be paying more revenue to the government under the new system.
[1855]
Hon. G. Collins: I wouldn't want to categorize whether they'd be surprised or not. Changes in stumpage policies would clearly come from a restructuring of the forest sector and changes to market and tenure reform. Market reform means stumpage policy change. The assumptions for revenue are based on no changes in stumpage policies. It's clear that government is going to try and do that.
We believe we will make a decision before the end of the year to crystallize the costs, but we are unable, at this point, to determine necessarily all the timing. There's still lots of work that needs to be done as we roll out the changes in policy. I'm not prepared to book the potential increased revenues that may result, but it is the assumption of the Ministry of Forests that the market reforms will result in more revenue to the Crown. Again, this is independent of softwood lumber.
We have to make these reforms because we need to be more competitive, more modern, etc., etc., but it is also the assumption in the negotiations that if government makes these policy changes and does tenure reform and market reform, moving to a more market-based measure will result in higher revenue to government. That's part of why I would argue — although I'm not at their side of the table — that some of the proponents from the U.S. side want the government to pursue those market reforms. Their argument is that we underprice our product.
We're going through this structure, and we're going to determine at some point what that might be. We don't know those numbers. We may have forecasts or rough estimates, but until we're through the negotiations and the restructuring, we won't know what the revenue impact might be. Until we do know that, we're not prepared to book it. We're working with status quo numbers.
J. MacPhail: The minister addresses one side of the question, but it's actually not my point. My point is that I think there's a risk that there will be less revenue. While the minister somehow suggests that the softwood lumber dispute will be that the market expands, there's another way of resolving it that is also on the table by the Americans. That is to reduce the amount of lumber produced.
In fact, I assume that's what is going to happen when this government plans to compensate forest companies for giving up tenure. There will be a reduced supply of wood going. I would assume that there is a potential for a risk for loss of revenue. I'm just wondering why it's not included in there.
Hon. G. Collins: I understand the point the member is making. It is the assumption and the projection of the Ministry of Forests that there is not a likelihood we will see a revenue decline as a result of the forestry changes — the restructuring and market reforms that we'll be making here in British Columbia.
[1900]
Certainly, if there were to be, around the negotiations around softwood, some determination that we were going to reduce our cut by 75 percent or something, which is not going to happen, that might have an impact, obviously, on revenue to government. It would depend on what the market value of that product became, and I don't know that. We are assuming, as you do with accounting, that we are going to book the costs that we know of at this point in time, given our best estimate.
The assumption we have from the Ministry of Forests is that the market reforms themselves will result in an increase in revenue to government of some amount yet to be finalized, obviously, because of the processes that we need to go through. That's what we're operating under. I don't anticipate that you're going to see a massive reduction in exports from the province into the United States of the nature that perhaps the member is hypothesizing.
J. MacPhail: I'm not estimating anything. I'm just saying it's unusual that where revenue is a substantial portion, there's no downside risk to a restructuring that actually contemplates removing tenure. I'm just trying to put together the pieces of what the forest policy implications are.
I have two more questions on the issue of natural resources. Then I'm going to ask questions on contingency, and then I want to ask questions on PSEC, if I may. Then after that, just for the order, I have questions on GAAP and the gas tax.
I note on page 33 that the minister is describing catastrophes and disasters as being allocated to budgets, mainly the Ministry of Forests, Ministry of Public Safety and Solicitor General and Ministry of Water, Land and Air Protection. These amounts are based on a ten-year history of actual spending. What is the minister's estimate of…? No, I was going to ask a question about how many lakes are not discovered yet. Can the minister point out to me what amounts for catastrophes and disasters are allocated on these budgets?
Hon. G. Collins: If the member looks at page 132 in the document at the top, she'll see the Emergency Program Act, which has natural disasters, earthquakes, floods, etc. Annual costs have varied from $1 million to $48 million, so we've tried to pick a most likely number. If she goes to page 31 and just flips over, she'll see direct firefighting costs as well. There are some assumptions there and some targets or some planning numbers of $55 million a year that are put in there as well. Again, that number has varied from $19 million to $154 million, so it's a fairly significant variance possible. In the year we pick a number that we think is the best we can do, the most likely, a historical median, and work from that.
J. MacPhail: I hope I didn't mislead the minister to suggest…. I assume we're doing ICBC estimates tonight as well. That's a whole other separate topic.
[ Page 5310 ]
So then any expenditures above that get booked to contingencies, is that it?
Hon. G. Collins: That's correct. We try and estimate as best we can. We are going to get some years, obviously, where costs will be higher than anticipated. One of the things we are exploring is perhaps looking at ways to put those together — not together, but looking cross-government at these various volatile risks that we don't have a lot to say about. With forest fires, there's not.… We can do something, but if we have a really dry year and there are a lot of fires, we have to deal with them, so that can be very high. In other years there may be very few.
Then you have the Crown Proceeding Act, which I mentioned earlier. It can sometimes be higher or lower. I've also mentioned floods and those sorts of things, which can be higher or lower as well. You could feasibly — or at least, this is the way the insurance business works — put all those into a big pile and look at them. They're mutually exclusive.
You may have a year where two of those are quite down. You have a wet year, so there are few forest fires and few results of Crown proceedings, but you might have a lot of floods. They might to some extent be related, and in others, not. Is there some way to pool those risks and come up with a better budget target overall for government, year over year?
[1905]
We're looking at that as well, through the risk management branch, to see if there is an opportunity to do something there so we can get more accurate forecasts. There will always be risks, so you try to budget for what you think is most reasonable, given past track records, but you have to have some ability to deal with those when they happen.
J. MacPhail: Further to that, the minister has stated in the past that the contingency fund is to be used for extraordinary expenses, events that cannot be reasonably anticipated. We have this debate going on. I'm sure the minister and I will not agree that the contingency fund should be allocated to budgets to determine whether ministers are on or under budget. Setting aside what will be a disagreement, if the minister is allocating catastrophes and disasters — I've already asked him about the risks around litigation and arbitrations; that's why I was exploring those matters — what is it that's left for contingency?
Hon. G. Collins: There is a definition in the actual blue book for the estimates of contingencies. It's on page 181. It is the same definition of contingencies that has been there back a number of years — five, six, seven. It's actually in the estimates blue book. I think there's a copy right in front of the member. If she wants to look at page 181 in the thicker one, she can actually see the definition of contingencies.
I'll read it into the record, because I think it's important. It is a paragraph:
"This vote provides additional funding for items budgeted in other votes to accommodate the financial consequences of unanticipated and contingent events. Unanticipated events include developments during the year that could not be reasonably anticipated when the budget was prepared. Contingent events include developments that could be anticipated but not with enough certainty to make a reasonable estimate of budget costs, or where final costs are dependent on a pending decision by government or another party. This vote also provides for unanticipated events not budgeted in other votes, but which are consistent with the general purposes of these votes. This includes natural disasters, emergency relief and assistance for those in need. Ex gratia payments" — which are sort of out of the goodness of our hearts in order to correct a wrong — "are also provided for in this vote. In addition, this vote provides for the funding of new government programs."
That is the definition that I know hasn't changed for at least five or six years, that I'm aware of. I can check and find out how far back it goes.
J. MacPhail: That's the definition I'm familiar with, and that's why contingency funds are always, at the end of the year, allocated to ministers' budgets. Why are they excluded then — payments that are made, program payments — from ministry budgets? Why is it that the legislation says "just the main estimates"?
Hon. G. Collins: Because the contingency vote is my budget, and I'm accountable for it. If it is over, I take the pay cut. It's one of the votes that's attributable to me, as Minister of Finance. There are a number of them. There's the restructuring vote. There are a couple of others. I'll be glad to move them later tonight, I hope, and the member can see them all. I'll just read some of the ones that are here. There is PSEC. There are contingencies and new programs. There is government restructuring. There is the B.C. family bonus, a commission on collection of public funds and allowances for doubtful revenue counts. Those are all votes that I, personally, am responsible for.
J. MacPhail: Yes, but contingency funds aren't allocated to the Minister of Finance under public accounts. They're programs. They're allocated to individual ministry votes when public accounts does their work. That's the point.
[1910]
The disconnect here is that the government once again set up its own rules about when they get the good pat on the back via salary payment, and when they don't. The minister has said that for determination of salary payments, contingencies aren't going to be allocated. We all know that in order to do what every public account does under the British parliamentary system, contingency program spending — and, in fact, any contingency spending — gets allocated to ministry votes. The definition being exactly the same as it was in previous years would lead to saying that all of that money should get allocated to the individual ministry votes.
Hon. G. Collins: In fact, nothing has changed with the way public accounts are presented. The Ministerial
[ Page 5311 ]
Accountability Act refers to the estimates votes that are listed in the Estimates. The contingency fund is a vote that is allocated to the Minister of Finance. That's been clear. That's what it says in the act.
J. MacPhail: The minister is saying the rule hasn't changed, that when Public Accounts comes out, spending under contingencies will be allocated to ministry programs, ministry budgets.
Hon. G. Collins: Let me give the member an example, which I think might help to clarify it a little bit. She may not like the way it's done, but I think it's important that we understand what it is we're doing and can at least agree on what's happening.
Prior to last year's budget, in January of last year, when we rolled out the draft service plans and had the big press conference with all the ministers and the deputies there, I made a point of identifying that, as per the definition of "contingencies" where it says that "final costs are dependent on a pending decision by government or another party." There's a definition of "contingency."
At that rollout I said that the school-based programs were going to be reviewed. It was yet to be determined whether they were going to be in the service plans of the Ministry of Education or whether they were going to be in the service plans for the Ministry of Children and Family Development. At that point in time government had yet to decide. There was going to be a process we went through in the intervening months before the Public Accounts would be printed for the 2002-03 fiscal year, which will be June or July of this year coming up.
The government would make a decision based on which budget those should be in, which service plan they were going to be delivered by and which ministry they were going to be delivered by. As a result, we were going to fund the school-based programs out of contingencies for the fiscal year we're in right now. At that press conference as well as in the budget last year, there was an allocation within the contingency budget for the funding of school-based programs. It wasn't in either service plan because government hadn't decided yet which ministry was going to implement those programs, so we put it in contingencies.
Government has made a decision that those programs will continue to be in the Ministry of Children and Family Development. At the end of the year when the Public Accounts come out, you will see the money that was notionally allocated in contingencies attributed to the Ministry of Children and Family Development. Now, the Minister of Children and Family Development is not going to take a pay cut because of that.
J. MacPhail: Exactly.
Hon. G. Collins: Right. Nor should he. It is beyond belief to think the minister should have to take a pay cut for implementing a program that we said was going to continue in one form or another and was going to be funded out of contingencies. If the member doesn't agree with that or like that, then that's fine. She can say that. That is the way the act is designed. That is the way contingencies work. That is the way they'll continue to work.
J. MacPhail: Look, the minister has not told me anything different. It's the fact that he stands up there and tries to justify it, that somehow…. I'll tell you something. It's absolutely meaningless for any minister to be credited now under this government for coming in on or under budget. There's exception after exception after exception. This government sets its own rules. If I hear one more time, "I said it at a press conference," or whatever…. The minister gets up and gets to make the rules, change the rules and then pat himself and all of his colleagues on the back because they met their own changed rules.
[1915]
It's like the spin that's all throughout this document, by the way — for the first time a political spin in a budget and fiscal plan — saying: "We're staying the course — staying the course from the week before, when we raised gas taxes." Yeah. Wow. That's good. You stayed the course for a full week between the time you raised gas taxes and when you tabled the budget. That's really staying the course. All throughout this document there's that kind of information — the "staying the course." Oh, good. That's good. That's what we call attention deficit disorder, when you can stay the course for one week in between raising taxes and tabling a budget.
The minister and I will disagree on this, but I'll tell you something: other ministers of finance across the country disagree with what this minister is doing as well. His legislation isn't a model for anything — not anything — for holding ministers accountable. He can stand up at a news conference, give a contingency budget and say: "Oh, we know we're going to do this, but we're going to allocate it to contingencies just in case." Just in case.
For instance, the Solicitor General. Was there some sort of discussion that the Solicitor General's money should be allocated to something else? Is that right? Or the UBC grant. Was that a decision about maybe it would be allocated here and allocated somewhere else?
The fact of the matter is that these are decisions solely within the control of government that should be legitimately allocated to ministry budgets as they are all across the country. I had to laugh when I heard the minister stand up and proudly say: "Oh, other ministers of finance should try this to keep their ministers under budget." "Maybe they could take the lead from me," he said. Well, a sieve is an impermeable skin compared to this legislation.
Hon. G. Collins: First of all, Madam Chair, I want to say one thing. This is the second time now that the member opposite has attacked people in the Ministry of Finance for producing a document that she says is
[ Page 5312 ]
full of political spin. If she has a concern about what's in the document, she should hold me accountable.
J. MacPhail: Well, then, I hold you accountable.
The Chair: Through the Chair.
Hon. G. Collins: Fine. I will be glad to be held accountable for it. I sign off on everything that goes in the budget, and it is something that I will be accountable for, but I do not expect, nor do I appreciate, her attacking the staff, who cannot get up and defend themselves. Attack me by all means — I'm used to it — but do not attack the staff in the Ministry of Finance.
J. MacPhail: I attacked the document.
Hon. G. Collins: I know what you just did.
J. MacPhail: Well, how so?
The Chair: Through the Chair.
J. MacPhail: I said this document is full of political spin.
The Chair: Order, member.
J. MacPhail: That's what I said.
The Chair: Order, member.
Hon. G. Collins: Thank you, Madam Chair.
J. MacPhail: So you tell me how that's attacking the staff.
The Chair: Member.
Hon. G. Collins: It's not the first time the member opposite has done it, and I won't tolerate it. She can attack me if she likes — I think that's fair — but she shouldn't attack people who can't get up and defend themselves. Madam Chair, I want to address some of the comments made by the member opposite, because I think it's ludicrous.
If you look at the budget from 1999-2000, I believe the member opposite was the minister responsible. She talks about some of the items that were allocated contingencies, and it was unbelievable, unreasonable, just incredible that we would do that.
J. MacPhail: No, I don't. That's not my point.
Hon. G. Collins: Yes, you did.
J. MacPhail: He doesn't even understand my point.
The Chair: On the vote, member, and through the Chair, please.
Hon. G. Collins: Let me give a couple of examples that I've heard the member talk about. I've read her interviews in the media. I've seen some of the things that she has said about how the contingency process works and how unreasonable it is to allocate some of these things to contingency. There's no way they should be allocated to contingencies. Let me deal first of all with….
[The division bells were rung.]
The Chair: The bells have rung. Do you want…?
Hon. G. Collins: I'm assuming it's a quorum, Madam Chair.
The Chair: We should just quickly check, but if you'd like to continue.
Hon. G. Collins: Some of the items that I've heard the member refer to — that, you know, we're ridiculous and how the government had changed the rules….
The Chair: Sorry to interrupt, minister. It is a division call.
We'll recess until division is completed.
The committee recessed from 7:19 p.m. to 7:28 p.m.
[I. Chong in the chair.]
Hon. G. Collins: The question from the member off line was where the breakout of the restructuring vote can be found. I will try and determine that right now. Certainly, if I don't have it here, I'll try and at least find some more information and walk the member through it. If she can just hang on for one second, we'll see what we've got.
J. MacPhail: No, it's just for the future. It's not right now. You can go on.
Hon. G. Collins: I don't know to what extent the member is looking for more detail, but on pages 66 and 67 of the Supplement to the Estimates there is a bit more of a breakout as far as salaries and others. If she wants more than that, I can try and get that for her at a later date, unless she wants it for the debate. Otherwise, I'd be glad to try and provide her with information off line. If she was trying to get more for today, I can try and see if we have more detail here, above and beyond what's in here. I can do it later. I can get her far more detail at a later date, perhaps.
[1930]
J. MacPhail: I understand. What I'm trying to do is accommodate, give the minister as much information about the debate. Well, I want to debate the $190 million. We can't pass that vote until I have that information, or I won't be voting in favour of the vote until we have that information.
Hon. G. Collins: This is a forecast. It is really based, though, on what we receive as requests from the minis-
[ Page 5313 ]
tries, depending on their restructuring. One could look at the service plans to get a sense of the types of requests we generally anticipate them bringing forward as the year progresses. A big chunk of it will be the early retirement plan. That will be a big chunk of it.
The budget document actually does say, in the second paragraph of page 33: "As ministries implement their restructuring plans, better estimates of actual costs will become available. This could result in restructuring costs being higher or lower than assumed in the fiscal plan." It really is sort of a demand-driven process. Each ministry has been and will continue to develop its restructuring requests to government in order to meet the service plan targets.
I don't know if that helps. I'll give a bit of a breakout, the best we have at this point. This is the information we have at this point, so I'll give it to the member. It's really pretty straightforward.
There's a workforce adjustment. This is the operating side. A workforce adjustment strategy is estimated to be $65 million; accommodation restructuring — that would be leases and buildings, etc. — is $65 million; and other restructuring costs, $60 million. I'll try and find out what's included in the "other" category to give you a better sense. That's the $190 million. There is some capital as well. On the capital budget, there's accommodation restructuring of $10 million and some other restructuring costs within the capital side of $5 million, for a total of $15 million. All of that, both operating and capital combined, comes out to about $205 million.
As I said before, the $65 million, $65 million and $60 million are generally forecasts based on what we've seen in other years and what we anticipate is likely to happen — ballpark — this year. It really is a demand-driven process. Just to go over it again, it's $65 million for the workforce adjustment strategy, which would be early retirement, etc. There's $65 million for accommodation restructuring, and $60 million for other restructuring costs.
I'll try and give the member a sense of what's included in that. That's the operating, for a total of $190 million. Then there's $10 million for accommodation restructuring on the capital side and $5 million for "other" on the capital side, for a total of $15 million. The grand total of both operating and capital budgets is $205 million.
J. MacPhail: Thank you. I will have questions, then, when we get to vote 43.
Hon. G. Collins: I am prepared to take those questions. We could sort of do this all at once. If she has questions, I'm glad to do that. At this point I think I've given about all the real detail we have. I'm not sure what more I can add.
I'm just told that the other restructuring costs, that $60 million, is predominantly systems write-offs. I'm sorry: an example of the type of thing would be systems write-offs and those types of things.
J. MacPhail: Okay. I'm happy to ask my questions now. The minister was in the middle of an answer, and I'm sure he wants to make sure he gives that answer. Or I'm fine to move on. It doesn't matter. My point here is that this is our opportunity to ask questions, and the minister is responsible for vote 43. Is the minister also responsible for the family bonus, vote 44? I'm sorry. I have questions about that as well.
On vote 43. Workforce adjustment, I assume, includes severance and ERIP. Is that right?
Hon. G. Collins: That's correct.
[1935]
J. MacPhail: What does accommodation restructuring include?
Hon. G. Collins: The accommodation would be as you're reducing the size of government. You may vacate some office space, and there may be a lease that you need to terminate. There may be a cost in that, unless the lease was coming up on its own. As well, taking various offices and consolidating them into one space may, in fact, end up being a new space, for example. You may end up having some tenant improvements that are part of consolidating those people as well. Those would be the kinds of costs with regard to accommodation restructuring that would be included in that part of the vote.
J. MacPhail: I assume this is net, then. Accommodating expenses is net. How much of this accommodation expense is paid to BCBC?
Hon. G. Collins: Most of these costs are to get out of leases where we are currently occupying private sector or privately held buildings — office buildings as an example. That's where the majority of those restructuring costs for accommodation would come from. We're breaking leases or reforming or renovating space in order to accommodate different work groups. Those would all be restructuring costs.
J. MacPhail: So this is the private sector part of the accommodation restructuring costs. What are the restructuring costs that, of course, would not be allocated here because, I assume…?What are the BCBC restructuring costs? I assume the minister must know this, because he knew the answer that these are private sector costs.
Hon. G. Collins: I think I've got this right, so I want to make it clear. The costs that are here are predominantly for breaking leases or incurring costs with regard to private sector office space, as an example. We pay that to BCBC, and they then pay it to the private sector on our behalf. It just flows through. If it's a BCBC space, then we pay BCBC. It all comes out through the consolidation when they come out of the books at the bottom of the line. It's predominantly the private sector, but there would be some others in there as well.
J. MacPhail: Let me ask this: are there other accommodation restructuring costs over and above the
[ Page 5314 ]
$65 million that would show somewhere in BCBC books, either money that a ministry…? Unless it's changed. It was always that ministries had to be responsible as a line item for BCBC costs. Are there other returned moneys to BCBC as a result of accommodation restructuring?
[1940]
Hon. G. Collins: The actual costs of breaking a lease or renovations, etc., we would pay to BCBC. Some of it would actually go to BCBC because they actually own the building, so we would pay it to them. In other cases, BCBC would have helped us. That's what they do: find office space in the private sector. We pay it to BCBC. They would then flow those moneys to the private sector. All of that would be contained within this estimate for those costs of accommodation restructuring.
J. MacPhail: So when we look at BCBC's books, there isn't a line saying "recoveries of money for broken leases," over and above this?
Hon. G. Collins: No, I don't believe there would be.
J. MacPhail: Well, it will be one of the areas I'll be looking for under BCBC.
Just to carry on with vote 43, I note that the estimate for government restructuring for '02-03 was $230 million. There's no adjustment for that in the updated third-quarter forecast, so I assume that the $230 million for '02-03 is going. I'll carry on as the minister is looking this up. There's $230 million for '02-03 and then another $190 million, for a total of $420 million, restructuring costs, in the first two years of the fiscal plan.
Hon. G. Collins: The forecast in the budget last year was for $230 million. If the member goes to page 105 of the budget and fiscal plan document, where it's the consolidated revenue fund…. This is the third quarterly report, page 105. Toward the bottom of those lists of votes, you'll see "Government Restructuring (All Ministries)." The forecast was for $230 million for the full year. The updated forecast is $221 million, which means that at this point, we're forecasting it to be underspent by about $9 million.
You can take that — if it ends up being exactly the $221 million, or it might be something above or below that as we get to the very end of the year — and add that to what's in the plan for this year, and you'll have that total. You should also add the actual from 2001-02, which was $81 million. So it would be $291 million plus $81 million, which is actually the same on page 105. You could add those two together — that's $302 million — then add in the forecast for this year. This is operating and not capital, so it would be $190 million for this year. It's $205 million total, including capital.
J. MacPhail: Just as a curiosity, I referred to page 6. It says: "Changes: three year fiscal plan update. Changes from Budget 2002." How did it work? Would the changes of the government restructuring be incorporated in one of those lines?
Hon. G. Collins: It would be included under "Other programs" on page 6.
J. MacPhail: On the expenditures of last year…. Sorry, I thought I would be able to tell. Perhaps the minister could just help me. Which subvote is it that's accommodation restructuring? What number here? Then I could figure out, just generally. It must be the same subvote both years.
Hon. G. Collins: It would generally be the same vote unless something's changed in government's restructuring, then the votes get moved around. My understanding is that it's $43 for '03-04. There it restates what it was for the previous year as well. You go right across on pages 66 and 67 of the supplement to estimates, and you can actually see the number for last year, which was $15. Sorry, it would have been $190 million in '03-04, and '02-03 it was $230 million.
Interjection.
Hon. G. Collins: For last year? I'll try and find out what the number is for accommodation last year. I'm assuming it would be roughly proportional, but I'll try and find that number for you. While I'm doing that, I might draw the member's attention to the actual estimates book, the thick pale blue one, on page 211. If she has questions about which votes apply to which ministry, there's a list there that explains where they are, so you shouldn't get confused with that.
[1945]
We have our forecast for last year. I'm trying to find how it would have broken out last year. I don't know that off the top of my head. It was $230 million in '02-03. Salaries and benefits, $65 million. I'll try to find that number for the member. I have what I think are the most recent numbers for the 2002-03 fiscal year for all of this, if the member wants them. Again, these are rounded numbers: $65 million for workforce adjustment, $135 million for accommodation restructuring and $30 million for other restructuring.
If you were to look at last year's budget document — the purple one — there's actually a topic box on government restructuring on page 67, and it has those numbers as well for '02-03.
J. MacPhail: Just one other number. Perhaps it's in that purple book — don't put it away: restructuring for '04-05 costs.
Hon. G. Collins: There are none in '04-05. The restructuring is expected to be completed by the end of March 2004. Any other restructuring that ministers have to do beyond that date will have to be done within their budgets. We are expecting that ministers will have completed those restructuring costs and made the decisions necessary to accrue those costs
[ Page 5315 ]
prior to March 31, 2004. In fact, if you look on page 17 of the budget document, you will see, under government restructuring, all ministries, in the '04-05 and then the '05-06, there's no money in the budget for those two years.
J. MacPhail: The estimates are that there will be $492 million spent on restructuring on the operating side and then several tens of millions more on the capital side. I've added it up — $81 million, $221 million and $230 million. Prior to that, will we be able to tell from the updated service plans…? Is the minister anticipating that, if there are to be restructuring costs, those will be outlined in the service plans of individual ministries?
Hon. G. Collins: I don't think they would identify the costs. I think they would identify the decisions they're making that drive those in the service plans. The cost of the restructuring is something that's reflected in the restructuring vote. The cost of those would be in the restructuring vote and not contained within the ministries' service plans. You probably wouldn't find the actual financial numbers in the various ministries' service plans, but you would find the decisions they were making in order to reduce the size of their workforces.
[1950]
J. MacPhail: I have questions on the family bonus — vote 44. There's a reduction in expenditures from $91 million on family bonus down to $85 million. Is that reduced caseload in terms of human resources?
Hon. G. Collins: If you look, I'm pretty sure it's in the Ministry of Finance service plan. It was there last year as well. As the federal government adds money to the family bonus program, the provincial government has stepped out a portion of that, so our cost of running that program is going down a little bit. The federal government is coming in and starting to participate in that program more. The overall impact is that the value of the benefits to families is actually going up. There is some stepping out of the provincial government over time. As the federal government comes in, the overall value of the program and the benefits that accrue to families is increasing.
J. MacPhail: If we look on page 105 of the blue book, the actual expenditures for '01-02 on the family bonus were $103 million. The updated forecast for this concluding year, '02-03, is $91 million, and the forecast expenditure for '03-04 is $85 million. I'm wondering: is all of that the provincial government getting out and the federal government getting in? Was that the arrangement for the family bonus — that provinces could exit as the federal government came in? That's question one.
My other question is: what is the — I hate to use the word "caseload" — takeup over those years in terms of how many children are being served? It makes a difference. If the minister is saying benefits are increasing, I need to know, in order to verify that, how many children are eligible for the family bonus.
Hon. G. Collins: There is a somewhat challenging structure to this, because part of it is tax credit and part of it is actual payments. I don't think we know the number of people that are receiving it, although we're trying to get that. For about four years, at least, government has been gradually reducing its provincial commitment as the federal government comes in. As the member opposite knows, I think the previous government started this program, encouraged the federal government to get involved. The federal government picked up on the program, thought it was a good idea and is putting more money into this program over time.
The previous government, as well, started to back out of its portion of paying for that as the federal government came in. Although I'll check, I think the ratio was 50-50. As the federal government put $100 in, the province would have taken about $50 of its own out, so there was a net benefit of $50. The total benefit that accrues to the public goes up, but the portion of it that's paid by the province is declining and has been for about four years.
J. MacPhail: I understand that perhaps the information isn't available for the vote, although it is a very big vote. It's bigger than a lot of ministries. I have a very different recollection of the family bonus and the arrangement between the federal government and the provincial government. However, memory is not 100 percent anymore. What I remember is that the provincial government was not allowed to reduce its contribution on the family bonus.
[1955]
Here's the information I would appreciate. In the form of a letter is fine. I assume this is a stat that's fairly easy to get, if the staff could do so. If memory serves me correctly, it wasn't until about 1999 that the federal government did anything on the family bonus — anyway, the first year of the federal family bonus — and the impact that had on the provincial portion of the family bonus. I also recall that two changes were made to the family bonus under the previous government. One was the restoration of the $50 federal tax per child. That's an annual federal tax.
We had made a mistake, which I fully admit was a mistake, by saying that when we introduced the family bonus, it was to withdraw the federal tax credit. So we restored that in whatever budget. Then the other thing is that there was a dollar or two increase in the family bonus per child. I am unaware of any other changes to the family bonus. In order to fully comprehend how much the province is now contributing to the program, I also need to know what — and I'm sorry, I can't think of a polite term for it — the uptake is for it — how many children are served by the family bonus.
Hon. G. Collins: That's fair. I will try and give the member — if I can, if that information is available — a
[ Page 5316 ]
year-by-year progression of how that is worked. I'm advised, though, that this…. I do recall, in the very first round of budgeting I was involved in, in government, being briefed that that was something that had happened and was something we could continue to do. But I will try and get to the member a breakout of those years, how that happened and the various amounts. I do believe it's been going on for about four years, which would be the 1999 fiscal year. So I'll get that; I'll commit to do that. If we can determine the numbers that are receiving that benefit and how that's changed over time, I'll certainly provide that to her as well.
J. MacPhail: On page 105…. Sorry, I'm finished with votes 43 and 44 now. But I do….
Hon. G. Collins: I'll get that to you.
J. MacPhail: Yes. Sooner, if that's possible, please. On page 105, table 4.8, could the minister explain footnote 3, please?
Hon. G. Collins: As is done in the public accounts, as will be done in the public accounts and as is reflected on page 105 on the far right, the footnote actual for 2001-02…. In the top right corner there's a footnote 3 — that really small 3 there…. I find it hard to see it, too, these days. All of those, the contingencies in the public accounts, would be restated to the ministries, and that hasn't changed.
J. MacPhail: So we will see 2002-03 with footnote 3 on it. I think that's been my point all along.
I've got questions on GAAP and gas tax and then ICBC. Oh, I'm sorry — and PSEC. GAAP. We've had some discussions about GAAP at Public Accounts. I'm particularly interested in the progress that's being made in the…. Are we calling it the MASH or the SUCH? Is it called the SUCH sector now, still? SUCH — okay. What progress is being made on implementing GAAP? I'm really interested in the K-to-12 sector, but I'd appreciate an update in the other sectors as well.
[2000]
Hon. G. Collins: On the education sector, the original goal was to try and get them towards GAAP for this fiscal year.
J. MacPhail: K-to-12?
Hon. G. Collins: Yes — sorry — K-to-12. That wasn't happening. Perhaps I can get more detail, but I think it was a very difficult task, and some of the school districts are more prepared for it than others. Some have more ability and more expertise, because of their size, than perhaps others. We continue to work with them. It's expected that they will be complete by 2004-05.
The health authorities, I think, are coming along. They are obviously much larger entities now. There are six of them. They certainly have the capability to do that, and we don't anticipate…. I won't say we don't anticipate any problems. I expect there'll be lots of problems along the way, as we try and do it. We certainly anticipate getting that done by 2004-05.
J. MacPhail: Some of these questions could be addressed at the Public Accounts. But when is the minister planning on appointing committees?
Hon. G. Collins: I anticipate those committees should be appointed shortly. The Committee of Selection, I expect, will meet shortly as well. As the member knows, government will try and determine who it is that they would like on the various committees. Once that's done, then we'll try and charge those committees. I do know that Public Accounts has lots of work, as it always does. Even if we can get that one appointed sooner rather than later, that would be my preference. I know this is going to be something that the Public Accounts Committee continues to be interested in and has been for some time. We have some working groups that are working with the various entities to try and get us there. There is still the debate — what's in and what's out — that continues to go on, although I think we've pretty much come to agreement on most of the entities.
Universities continues to be a tricky one. They certainly don't want to be in, for all the reasons that they're considered to be independent, etc. I think they make a very good case. I think there are issues that we need to look at — lots of grey areas. Certainly, our discussions with the implementation committee, as well as the accounting advisory committee that I struck earlier, are ongoing. I expect that in the not too distant future, we'll finally be making a determination as to what's in or what's out. Hopefully, there'll be agreement amongst everybody as to what that final determination will be.
J. MacPhail: Just to note, as a member of the Public Accounts Committee, we did ask the minister in our report to appoint the committee as expeditiously as possible, because of the very heavy workload that the Public Accounts Committee has — GAAP being one.
We did have discussions at the Public Accounts Committee about what challenges are faced under the K-to-12 sector. I'm very supportive of moving to GAAP, but I'm also well aware of the challenges incorporated in moving in that direction — one being accountability measures.
Perhaps the minister could update the committee on how progress is being made. Who's at the table? What are the plans for resolving issues? One of the questions that I asked at Public Accounts is: if there is a dispute — an irresolvable dispute — between the entity and the provincial government, how does that get resolved? I'm also curious to know who's paying for the adjustments under GAAP.
[2005]
Hon. G. Collins: I get questions from the member opposite on ICBC almost every day, so we're up to date and current.
[ Page 5317 ]
A couple of things. The accounting policy advisory committee is where any sort of discussions or disagreements are taken and resolved. To date, there have been no unresolvable issues. The schools and colleges are in. We're still discussing whether or not the universities will be in or out, as I mentioned earlier. Hospitals obviously are in. That's part of it.
There are steering committees which are made up of the ministries of Finance, Education, Advanced Education and Health. As well, there are representatives from the various sectors. The CFOs, or financial officers, from a number of entities are also part of that. We continue to work through that, and I think we're making good progress.
All of their accounting procedures are up to date. You never know with this, because bumps can come along the road as you move along, but we're making good progress on it, and we anticipate getting there by '04-05.
J. MacPhail: Then my other two questions were: what happens when there are irresolvable disputes, and who pays?
Hon. G. Collins: If there are issues that can't be resolved amongst the entities, then the accounting policy advisory committee sits there as the mediator to try to work that out. To date, we haven't had anything that couldn't be worked out through that process. Certainly, the entities themselves have to accommodate the costs of moving to GAAP. We believe there's no lack of resources in the Ministry of Health to do that — colleges as well. Education received additional one-time funding as well.
I know it's something they'd rather not have to deal with. It's something, quite frankly, we'd rather not have to deal with, but it's a commitment we made. We think it's important. We think it's the right thing to do, so we're going to get it done. Those entities are helping us do that.
J. MacPhail: How much are the anticipated costs?
Hon. G. Collins: We don't have an estimate of what their administrative costs might be to do this. It may be very different in different entities, depending on the size. I don't know those numbers. It has been something that's been mentioned to me. Also, as you know, there have been lifts in their budgets in the out years as well.
It hasn't been something I will say I have had pounding down my door — the administrative costs of going to GAAP. I know there are some. I think for the most part, it's been more of an inconvenience for many of them and, I would say, probably a frustrating inconvenience at times. But I do think it's important that we get this done, that we move to GAAP and that people get a really clear sense of what the finances are.
J. MacPhail: I said earlier that I'm in favour of moving to GAAP. I just want to know what the costs are. That's all. My understanding is, and maybe my information is wrong, that the K-to-12 sector has put forward estimated costs of what this is going to mean for them. I'm just wondering whether that information is available.
[2010]
Hon. G. Collins: I'm not clear if the member is talking about the administrative costs of just working through it all or, as you go through these changes, whether or not there are actual changes in accounting procedure that create costs. If that's what she's referring to, then there's been additional funding — base lifts — that's gone into the Ministry of Education in the out years. We think that can easily be accommodated. It's a small number in comparison to the lift they received, and it's something they shouldn't have too much trouble grappling with. It's obviously there, and that's part of what drives the accounting change.
J. MacPhail: I'm wondering whether the minister would actually give me those figures. My understanding is — and I'm happy to be corrected on this — that there are liability costs that will be incurred and that it's in the millions of dollars, particularly in the K-to-12 sector. There are additional administrative costs as well. They may be minimal, but what are those?
Hon. G. Collins: I can't quantify the administrative costs for the member, because I don't know that. I can try and find that out. I could ask the Minister of Education if she has had reports from individual districts on what that might be. There was a $25 million lift in '04-05 and $35 million in '05-06, which actually goes to contribute to the impact…. Sorry. This is the implementation of GAAP topic box on page 44 and 45 of the blue book. If you look on page 45, the top left paragraph, it's right near the bottom — the last sentence.
J. MacPhail: Here's what it says — thank you for pointing this out: "In addition, school districts will receive $25 million in '04-05 and $35 million in '05-06, further reducing the possibility of a negative impact from moving to GAAP." Is that funding over and above the funding that was announced by the Premier in his state-of-the-province…?
Hon. G. Collins: It's over and above the $100 million the Premier referred to in his state-of-the-province address.
J. MacPhail: In terms of the $100 million…. Of course, we asked these questions of the Minister of Education and remained confused even after question period. The lift of the Education budget…. There's a $50 million lift in '04-05, and then there's another $50 million lift in '05-06. That's the $100 million the Premier announced in the state-of-the-province address. Then there's $7 million for…. In '04-05 and '05-06 there's a lift of…. By the end of '05-06, school boards over that period of time have received $107 million over two years.
[ Page 5318 ]
It's not a budget lift of $107 million. Is there a place here that the minister can refer me to, which shows where the $25 million and $35 million are?
Hon. G. Collins: Certainly, the member saw it in the topic box. If she goes to page 2 of the blue book, she will see the funding for education in the bottom right-hand side. There's $83 million and $143 million. The bottom right-hand side of page 2. Actually, page 2 isn't numbered. It's opposite page 3, though. It says $83 million in '04-05 and $143 million in '05-06. There's $83 million in '04-05, and $25 million of that is for GAAP. In '05-06 it's $143 million, and $35 million is for GAAP.
J. MacPhail: Okay. I understand. Good. Thanks.
Sorry. I have another question on that, then. How would I find the same thing for health? Or is it just for education that the extra lift is there? Is there any other part of SUCH that has to move to GAAP that gets any money?
[2015]
Hon. G. Collins: We don't expect any fiscal impact of GAAP in the health sector, any appreciable impact.
J. MacPhail: In terms of monitoring GAAP, in terms of the cost and the progress made, it would be very useful for this to be an item — again I reiterate — to put to the Public Accounts so that Public Accounts can act as a monitor to have this as the most effective way possible of implementation. I just urge that once again.
[H. Long in the chair.]
Hon. G. Collins: I'm always glad to have the Public Accounts oversee the public accounts. I expect that's part of what the committee will look at when it reviews the public accounts each year. Certainly, the Public Accounts is its own master. Of all the committees, it's probably the one that has the broadest mandate to deal with a variety of issues.
Certainly, if there are ever any questions about it, I know that both the comptroller general and the auditor general will be glad to come and answer questions or discuss that with the committee. I also know that as the auditor general decides whether or not he's going to sign off on our books in '04-05, that'll probably be a topic of discussion as well.
J. MacPhail: On the gas tax, the Premier has stated in his state-of-the-province address that all the money collected from the 3½ cents a litre will go to new and improved roads and budgets. How do we know that? Where is the line item that will show in the books?
Hon. G. Collins: If the member turns to page 35, there's a topic box on the transportation investment plan — page 35 in the blue book. At the bottom, there are two bolded lines. One is the revenues. It's $211 million in '03-04, $218 million in '04-05 and $224 million in '05-06, for a total revenue of $653 million. It's a forecast. I'm sure those numbers will change.
At this point the round-number forecasts for the various projects are $158 million, $166 million and then $326 million, for a total of $650 million. As we get through those plans, that one-half of 1 percent, I'm sure, will be consumed by the transportation investment plan. All those dollars flow through the Transportation Financing Authority as well.
J. MacPhail: That's what I'm asking. I'm asking what line…. Rather than flowing into CRF…. The gas tax doesn't flow into CRF. Can you show me where it flows to, please?
Hon. G. Collins: It is included in the TFA amount. Certainly, the Minister of Transportation would be able to identify and give you a better breakout of that. It's part of the Transportation Financing Authority.
J. MacPhail: Okay, I know. Could you name the page in the book where it is, please?
Hon. G. Collins: There is an overall revenue and expense for the Transportation Financing Authority on page 127. You can see the lifts in both the revenue and the expense. It's the second one from the top, right under that great investment Skeena Cellulose. It's the Transportation Financing Authority. It has a revenue and expense for '03-04, '04-05 and '05-06. You will also see it in the service plan for the Ministry of Transportation. I believe there's a more detailed breakout in their service plan.
[2020]
J. MacPhail: Does the gas tax go into the CRF? It does, doesn't it? No?
Hon. G. Collins: You really have to look at the Transportation Financing Authority service plan. All of the dollars that are collected from the fuel tax will go into the Transportation Financing Authority. There are expenses here, as well as amortization, in a number of the lines you're going to see here. If you go to the Transportation Financing Authority in the Ministry of Transportation service plan, you will see more detail.
J. MacPhail: Yes, I'm fully aware of that. I'm trying to figure out how someone, just an ordinary citizen, can understand that the 3½-cent increase is actually all going to highway expenses. It seems to me you would set up an account — because this is a promise the Premier has made — in order to make sure that is true, that would show the extra 3½ cents going in and expenditures going out. It's my understanding that the 3½-cent-a-litre increase is going into general revenue, into the CRF. I'll just finish my question. Under taxation revenue on table 1.5, there's "Taxation Revenue: Fuel," and that shows huge increases, which I assume is relative to the 3½-cent-a-litre increase.
Hon. G. Collins: As an average citizen, you could log onto the website, and you could click on the Minis-
[ Page 5319 ]
try of Transportation and go to their service plan. You would see in the TFA how the money flows in and the money flows out. I think that would be very clear. There's a topic box in the budget that explains how the money is flowing in and flowing out.
That is the way it worked previously. That's the way it's going to continue to work. We're not creating another whole Crown agency. We're not creating a special account. We're raising revenue. It's all going in, every dollar of it. The Premier's been on the record. I'm on the record. The minister is on the record. MLAs are on the record. Every dollar of it will go into the Transportation Financing Authority, and that will be in their service plan.
You can actually see what their planned expenditures are as well. We're not going to create a special fund. We're not going to create a special Crown corporation. There's already a Transportation Financing Authority there. It's the mechanism by which we do this. Every dollar will go into the Transportation Financing Authority and be used for transportation infrastructure improvements.
J. MacPhail: How does a citizen then distinguish between the 3½ cents and the other money that goes…? I assume it's what the Premier's commitment was where the 3½ cents increase would go…. An ordinary citizen doesn't know how much volume is sold, and there's an estimate right now. An ordinary citizen wouldn't be able to tell from anything here, as far as I can tell, how much of the fuel tax is the 3½ cents that's going to the transportation authority. You can't tell from table A10, and you can't tell from table 1.5 how much of it is estimated to be the 3½ cents.
Hon. G. Collins: This sort of ties in with the previous line of questioning the member had around GAAP. As we go to fully consolidated books, if you were to look at the table 1.5 that the member refers to in this budget year and compare it to table 1.2 last year — I know the member doesn't have the document, but it's page 32 of last year's plan — it was just CRF in that table. That was a pretty common, pretty standard revenue by source consolidated revenue fund table that you would have seen year after year.
[2025]
Now that we're moving to GAAP next year — we had a briefing with the media three weeks before the budget where we were walking through all the table changes and how this money is now as we go into the world where this stuff gets consolidated — in table 1.5 you will not just see CRF; you will also see the flow to the Transportation Financing Authority because we're going to a set of consolidated books. I know that may be confusing for the member, but as we go to GAAP, this is how we have to move. This is the direction of the auditor general.
The best place to go is the service plan for the Transportation Financing Authority in the Ministry of Transportation. The budget process and the budget documents — much to the chagrin of the media, I know — are now much larger than they were, because we have service plans for all these agencies, ministries and Crowns. There's much, much more detail in there. There is much more information available to the public than there ever was before. That is really the source.
This is a document that sums things up. It's the budget document. If you really want to get into more intimate detail in a lot of these programs and service deliveries, you have to go to the service plans. It's not hard to access them. They're public; they're there. You can get the printed binder, or you can get it on the website. If people call and ask, I'm sure the Minister of Transportation would be glad to forward them on in written form.
In moving from what we had before to GAAP, we're consolidating these items. The revenue you saw before was called "Revenue by Source Consolidated Revenue Fund." Now it's called "Revenue by Source." That's what happens when you go to generally accepted accounting principles.
J. MacPhail: Even given that, where's the breakout of the 3½ cents a litre under GAAP?
Hon. G. Collins: Let me compare the numbers. Last year, for example, the number for '02-03…. If you were to have in front of you last year's budget, page 32, table 1.2, "Revenue by Source Consolidated Revenue Fund," you would see that for fuel tax it was $395 million. In '02-03 in the budget estimate, under "Consolidation," that $395 million goes to $668 million. As you go to GAAP, you take all these revenue sources and consolidate them. That's what the auditor general is telling us we need to do, and that's what we're doing as we move to generally accepted accounting principles.
You can compare these numbers and do the addition and subtraction. Every dollar goes into the Transportation Financing Authority for transportation. The Transportation Financing Authority's service plan will give the member the detail that she's looking for.
J. MacPhail: Under last year's budget we've got a table where it shows fuel for '02-03 is $395 million, and fuel for '02-03 in this year's budget — the updated forecast — is $673 million. What is that difference? The new fuel tax was only in place for one month of the fiscal year.
Hon. G. Collins: You should probably stick with the $668 million number in '02-03 to have comparisons, because it's document to document. The $395 million in '02-03 did not include the TFA's revenue stream. The $668 million in '02-03 in this document, which would be the same number, added to it, however, the TFA revenue stream. You can put those two together. If you want to take that and add the new 3½-cent tax, you're going to come up with a higher number, which should be roughly $200 million or $211 million higher.
J. MacPhail: Okay. It's fair enough that all of the fuel taxes are in one place, but it's all of the fuel taxes.
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It's not the 3½ cents a litre. No matter what you call it — the CRF, the GAAPed accounts or whatever — it's one source. It flows into general revenue. It's now called general revenue.
Just tell me where a citizen goes to see how much of the fuel tax is the 3½ cents. You can't figure it out from here.
Hon. G. Collins: You can figure it out if you walk through and do the math. The easier way to figure it out, as I've said before, is to go the Transportation Financing Authority service plan within the Ministry of Transportation. That's where you see it. That's where you find it.
The service plans are part of the budget documents. If you were to go there, you would….
[2030]
Interjection.
Hon. G. Collins: Mr. Chair, I understand the issue the member is trying to raise. I think it's a valid one, to make sure that she's got a comfort level on. We made a commitment that 3½ cents of every litre sold will go into the transportation infrastructure plan, that every penny of it will. That will happen.
If the member wants a more detailed briefing on how these documents change with GAAP and all the math and how it works, I'm more than happy to have staff provide that to her and give her those assurances. I know she will be comforted by that, because I know that's how all these numbers work out. The TFA service plan will also clearly help the member. As I said, it gets to be very technical, but I'm more than happy to have staff provide the member with a briefing on how this works, and she can ask as many questions as she wants about that structure. If she's not happy with it, then I know she'll come back and ask me many more questions in the House.
The Chair: Leader of the Opposition, a new questioning?
J. MacPhail: I'm sorry?
The Chair: Is this a new questioning other than the questions you've asked on occasion on this issue?
J. MacPhail: Well, I'm not sure why…. It's a continuation of the questioning, Mr. Chair.
Hon. G. Collins: If the member turns to page 128 as well, this will provide a bit more information to help the member with how these numbers work and where they come from. This is the material assumptions and sensitivities around revenue, but it helps. As I say, the penultimate document would be the service plan for the Transportation Financing Authority. I'm glad to collect all these bits of information and put it for the member and have staff walk her through it step by step, because it can get very technical. Certainly, when you throw GAAP in there as well, it gets even more confusing because there's another whole set of numbers and a different way for laying out.…
J. MacPhail: No, this is fine. This actually does explain it right here. It's table A11, "Material Assumptions and Sensitivities Revenue." It's part of the appendices. But this is a new appendix from previous budget documents in terms of outlining this. This explains it. So will this continue to be part of all future budget plans?
Hon. G. Collins: I'm told that we normally…. This appendix is sort of new, the policy changes that are highlighted here. I believe that appendix was there last year as well. It was on pages 154 to 156; those were the consolidated revenue ones. And Crown was pages 158 and 159. So there was a table there last year that was similar. There's one this year, and there should be one next year as well. It's part of what we're trying to present to people so that they can see the changes.
J. MacPhail: Yes, I accept that the beginning of it was last year. But the detail of this, particularly on the revenue side…. But it answers the questions, so I'll just be looking for this for every year.
Hon. G. Collins: That's fine. If at any point the member wants more briefing on it or an update, we'd be glad to provide it as well.
J. MacPhail: So the other thing that the budget does is remove the gas levy for the B.C. Ferries. Presumably that is part of the fuel tax listing. Whatever the figure was that we were looking at, the 600-plus figure, has these approximately $73 million. So what happens with that money? Is it offset by a service contract to B.C. Ferries? Rumour has it that the auditor general has signed off on the fact that this now allows B.C. Ferries to be considered a private entity when you have a flow of…. You have the equivalent of what used to be the gas tax flowing in the form of a service contract. Has the auditor general signed off on that?
[2035]
Hon. G. Collins: I expect that those discussions are still ongoing, and at some point we'll know the answer. That's ongoing.
If the member looks at page 19 of the budget, you can see the service contract for the Ferry Corporation in '03-04 and '04-05 of $112 million.
J. MacPhail: Just to be clear, there are still ongoing discussions between the auditor general and the B.C. Ferry Corporation about whether this is a privatized entity or not.
Hon. G. Collins: I'm always learning about negotiations and discussions back and forth between the auditor general and government as to what's in and
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what's outside the entity. Certainly, as government makes changes, I expect those discussions will continue to go on. In '04-05 we'll be compliant with GAAP. We anticipate a sign-off on our books for the first time in a long time. I expect that between now and then, there'll be lots of discussion. I expect after that, there might even be lots of discussion in the years ahead. I think, as accounting policy is ongoing and changing, that we'll continue to have those discussions.
As well, if the member wants to look, there's a topic box on page 40 for Crown corporation restructuring update, and the Ferry Corporation is mentioned there specifically as well.
J. MacPhail: It's not an accounting question I have. It's a question about the transactions between two entities — one being public and one either being public or private — and whether those interactions through exchanges of money allow an entity to be considered a private entity and therefore its debt to not have to be booked. That's my concern. It has nothing to do with GAAP. Could the minister just give me some information about how one would follow the ongoing determination around this issue?
Hon. G. Collins: You could go spend a lot of time in the comptroller general's office, I assume, but that's not likely to happen. In the next number of weeks we continue to have the discussions, trying to look at how GAAP works. This is a GAAP issue, and it is an accounting issue, because it's what drives the determination. We continue to have those discussions, and when we finally resolve what they are, we'll know, but we're not there yet. It's still something we're working on. I'll certainly let the member know, if she has any further questions on it.
J. MacPhail: I assume that all future activity of the B.C. Ferry Corporation rests on this decision, because the capitalization of the Ferry Corporation has been announced that it will be off-book. That flows from this decision. That's my curiosity as to why.
Hon. G. Collins: There's a debate going on between control and the service contract. It's one of those lovely accounting discussions that go on. We're trying to do what we think is the right thing and set up the right model for delivery of ferry services in the province. We have the right model. As we work towards ironing out all of the details of this, there may be changes — a little bit here and there — in order to make sure that this works for the people of the province. At the end of the day there'll be a determination, and we'll go from there.
J. MacPhail: Last question on this, then. My recollection is that a cent and a quarter of gas is about $75 million — $73 million or something.
The service contract payments to B.C. Ferry Services. The change in the plan here is about $112 million. I note that the line does say: "Transportation, mainly service contract payments to B.C. Ferry Services." Could the minister just explain what part of it does go to Ferries and, of that service contract, where else it goes — the $112 million?
Hon. G. Collins: If the member looks at the Crown corporation restructuring update on page 40, the second bullet talks about the $75 million in fuel tax — so yes, she's correct — and then the service contract as well.
[2040]
J. MacPhail: I wanted an explanation of what the difference is between the $75 million…. That was the subsidy that went from the government revenues to B.C. Ferry Corporation. It was a cent and a quarter, and they were to do everything with that. I'm just wondering what the difference is between the $75 million and the new $106 million payment.
Hon. G. Collins: I know that when this Crown corporation restructuring was rolled out, there was all sorts of information put out with regard to this. I'm glad to get that for the member, if she'd like it.
J. MacPhail: A figure wasn't listed. They hadn't determined it yet.
Hon. G. Collins: Oh, okay. I can certainly get more information for the member if she wants. There's also, in my understanding, a federal subsidy through the provision of this service that the federal government gives us every year. I'm trying to remember the amount. I thought it was around $40 million. I can get a breakout of the full amount. I don't have that. Certainly, the Minister of Transportation could give it to the member in greater detail. It may well even be in the service plan. I don't know, but I can certainly try and find it for the member.
J. MacPhail: Where in revenue does it show the transfer in of the federal subsidy to revenues?
Hon. G. Collins: We're discussing this, and there is a whole bunch of little things in there. The subsidy to seniors is something we have to pay for now. It'll come out of government. It's a decision of government to provide that discount, so we'll pay for it. It's a small amount. There is a whole series of little things like that, which add up to the $106 million. I'd be glad to get that information for the member. I know the Minister of Transportation would certainly have it in her estimates, but if the member wants it in advance, I'll try and get it for her as soon as I can.
The Chair: I just want to go on the record as saying that we will have to rise in the next five minutes so this committee can report to the House. We will go at five to nine.
J. MacPhail: Yes, I'd appreciate this information before the estimates of the Minister of Transportation and Highways, if I may, please. Here's the issue: the
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Ferry Corporation and the relationship between revenues flowing from government to the Ferry Corporation, so the information about what the $106 million entails — the details of that. Where is the federal subsidy for B.C. Ferries? It's a federal government subsidy. It's not a fuel tax subsidy at all. If I could have, please, the information about…. I understand that the provincial fuel tax revenue is $75 million, so that would flow over as part of the service contract. But the difference between $75 million and $106 million…. What were those payments? Were those payments made previously, or are they new payments?
Hon. G. Collins: I'll get all that.
J. MacPhail: Okay. Thanks.
[2045]
Hon. G. Collins: We're going to start ICBC now, if staff want to come forward.
I'd like to thank the ever-diligent, hard-working staff of the ministry for their support. We'll try and get that information to the member as soon as we can.
J. MacPhail: It's been reported that ICBC has a profit for the year 2002. Could the minister explain the substance of the profit.
Hon. G. Collins: My understanding is that the claims were less than anticipated over the latter part of the year. That's what I recall from my briefing previously. It's relative to the plan. I think it was $33 million, and it's now $44 million or something. The final number of $45 million was the number that was reported out. I believe it was due to a series of things. Chief amongst those — and I'll check to see if that's accurate — was the decline in claims, but I'll get more detail.
J. MacPhail: I recall that part of the justification for a rate increase was an increased cost in claims. What happened?
Hon. G. Collins: It was due primarily to three things. The $33 million was their forecast for the budget. The actual comes in at $45 million, so $12 million….
J. MacPhail: Both in profits — right?
Hon. G. Collins: Yes, so $12 million better than forecast. The three primary areas are: lower than anticipated claims in the last quarter — I think that probably could have been weather-induced; it was a pretty nice fall and winter in most parts; an increase in value of premiums written — either more people or more premiums written or a higher value of those premiums because they're different vehicles, etc.; and a slightly better performance in investment income than anticipated as well.
J. MacPhail: The second part of my question was that part of the justification for the increase in premiums was increased claims-related costs. Could the minister put those two factors together, please?
Hon. G. Collins: Yes, ICBC obviously makes a forecast of claims. When the rate increase request came to cabinet and was decided at open cabinet, we were still in the midst of ICBC's final quarter. As the quarter progressed, the claims came in lower than anticipated — not dramatically so. For the size of the operations of the entity, they're moderate changes.
As the member knows, when you look at the fluctuation and the profit losses of ICBC over the years, to have a difference of $12 million isn't a lot within where they generally fluctuate. It was marginally better. Income earned from investments was marginally better. Premiums written were marginally higher. It's a pretty small fluctuation from what the forecast was. ICBC obviously looks out beyond.
Part of the core review of ICBC is that they will no longer come to cabinet for those rate increases. They'll go to a regulatory body, probably the Utilities Commission or a revamp of the Utilities Commission. The public will have the opportunity to have their say as to what they think should happen, and ICBC will have to account for its costs, its service levels and all of those things before they get any rate increase in the future.
J. MacPhail: When can we anticipate that regulatory agency being in effect?
[2050]
Hon. G. Collins: I anticipate legislation coming into the House this session.
J. MacPhail: And the regulatory agency being in effect?
Hon. G. Collins: I anticipate it being in effect for any rate increase that ICBC would look for, for the 2004 calendar year — their fiscal year.
J. MacPhail: Or not.
Hon. G. Collins: Or not.
J. MacPhail: What is the difference between…? How much revenue accumulated to ICBC as a result of the premium increase?
Can I just clarify? All of the data we're talking about now is a fiscal year ending December 31, '02. Just for the record, ICBC has a different fiscal year, so we know exactly. We're not dealing with forecasts here. We're dealing with reality.
Hon. G. Collins: We're just trying to pull that number. Given that the difference between the plan, which was $33 million, and the actual, which was $45 million — $12 million in there — I would anticipate that it wasn't a big number. There are three things that have increased to the upside. One is lower expenditures, one is
[ Page 5323 ]
higher premiums written, and one is better investment income. I will try and find the number.
There we go. The forecast was $2.625 billion, and the actual was $2.628 billion — so $3 million difference for premiums written in on this. That's like 0.015 percent, I think, or something like that. It's a pretty small number.
J. MacPhail: Well, then what happened? The premium increases were in effect June 1, as I recall. When did the premium increases go into effect?
Hon. G. Collins: They were January 1 of 2002. The rate increases took effect January 1. There was a forecast. On $2.6 billion they came out $3 million higher — a pretty small amount.
J. MacPhail: Sorry, I didn't make myself clear. What portion of the revenue collected…? How much of that $2.625 billion is as a result of premium increases?
Hon. G. Collins: It's $181 million of the $2.628 billion.
J. MacPhail: So included in the original forecast of $33 million profit was a $180 million premium increase. That's fair enough.
Just for the record, included in the $33 million profit forecast was a premium increase of $181 million approximately. What we've been talking about is how much of that extra $12 million can be attributed to the portion of the premium increase. That's fine. I don't need any further explanation on that.
Mr. Chair, I'll list for the minister…. We have to rise and report progress. I have discussions around no-fault benefits.…
Interjection.
J. MacPhail: No, no, no. There is no-fault benefit in place right now.
There's CounterAttack, motor vehicle branch, systems update, optional insurance coverage versus mandatory coverage, and vehicle insurance as it relates to commercial and private.
I move that the committee rise, report resolutions and progress and ask leave to sit again.
Motion approved.
The committee rose at 8:55 p.m.
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