Hansard -- Thursday, March 6, 2003 a.m. -- Vol. 12, No. 8 (HTML)



CONTENTS

	Routine Proceedings
		Page

Committee of the Whole House		5325
	Employee Investment Amendment Act, 2003 (Bill 8) Hon. R. Thorpe J. Kwan

Reporting of Bills		5326
	Employee Investment Amendment Act, 2003 (Bill 8)

Third Reading of Bills		5326
	Employee Investment Amendment Act, 2003 (Bill 8)

Committee of the Whole House		5326
	Small Business Venture Capital Amendment Act, 2003 (Bill 3) Hon. R. Thorpe J. Kwan

Reporting of Bills		5334
	Small Business Venture Capital Amendment Act, 2003 (Bill 3)

Third Reading of Bills		5334
	Small Business Venture Capital Amendment Act, 2003 (Bill 3)

Second Reading of Bills		5335
	Police Amendment Act, 2003 (Bill 12) D. MacKay Hon. R. Coleman

	Proceedings in the Douglas Fir Room

Committee of Supply		5338
	Estimates: Ministry of Finance (continued) J. MacPhail Hon. G. Collins

Hon. G. Collins: In Committee A, I call Committee of Supply. For the information of members, we will be debating the estimates of the Ministry of Finance followed by the Ministry of Public Safety and Solicitor General. In this chamber I call committee stage debate of Bill 8, the Employee Investment Amendment Act, 2003.

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

Hon. R. Thorpe: I'm pleased to be here today to entertain questions on this bill. Most of these questions are housekeeping.

I just wanted to take a second to introduce the staff that are with me today, the staff that have worked hard on bringing this forward. Beside me is Ian Harper. Behind me are Dale Sketchley and my deputy minister, Don Leitch. I'd be pleased to answer any questions that members may have.

J. Kwan: I first have a general question. I think perhaps these questions would best fit under the definitions component. During second reading stage, the minister said that the bill amends the act to reduce red tape. Could the minister please advise: how does this bill reduce red tape? How many regulations or requirements will be eliminated by this amendment? Which ones? Why?

Hon. R. Thorpe: I'm not sure I did say that about this bill. It may be Bill 8, which is next. But let me just let the member know, though, that these amendments in this bill…. There was one additional regulatory requirement added. On the other side, there are three regulatory requirements to be eliminated for a net reduction of two regulations, therefore staying in line with our commitment to reduce red tape by one-third in British Columbia.

J. Kwan: Just to refresh the minister's memory, according to Hansard on March 4, the minister stated: "First, Bill 3 amends the existing legislation for venture capital corporations. These amendments will reduce red tape and address the concerns raised by investors and small business about the existing legislative framework." It was in that context that I asked these questions, so, minister….

The Chair: We're dealing with Bill 8, Employee Investment Amendment Act, 2003.

The Chair: All right. We'll give you a couple of moments to gather your thoughts and your papers.

Hon. R. Thorpe: Perhaps if the member needs some papers from her office, maybe staff or someone else could help her. We all know the condition the member is in. I can particularly relate to that, given what has happened in our family this past week with my daughter.

I do want to say that this bill, though, Bill 8, does cut red tape. Two regulatory net changes will be eliminated, so we are cutting red tape in Bill 8 also.

J. Kwan: I apologize for the disruption this morning. Our office was advised that the order of the bills was 3, 8 and 13, but my understanding is that some of the advisers for Bill 3 for the government have not yet arrived and are on the Helijet. Therefore, we had to switch at the last minute, so my apologies. On Bill 8, actually, the opposition doesn't have questions regarding this bill. Therefore, I reserve the questions that we have for the other bills at a later time.

Hon. R. Thorpe: I move that section 9 of Bill 8 be amended by deleting "Section 7" and substituting "Section 8."

Hon. R. Thorpe: I move the committee rise and report the bill complete with amendment.

Bill 8, Employee Investment Amendment Act, 2003, reported complete with amendment.

The House in Committee of the Whole (Section B) on Bill 3; J. Weisbeck in the chair.

Hon. R. Thorpe: I just wanted to again take a moment to introduce staff that have worked on this. The staff member that has worked the longest and hardest, Todd Tessier, is in transit. He's worked very diligently on this, and he will join us in a few minutes, hopefully. Also with me are Dale Sketchley and my deputy minister, Don Leitch. I look forward to answering any questions that members of this House may have.

J. Kwan: My first question to the minister…. These are generally more broad types of questions, so I'm going to try and ask them under section 1.

As I said earlier, the minister said that the bill amends the act to reduce red tape. Could the minister please advise: how does this bill reduce red tape? How many regulations or requirements will be eliminated by this amendment? Which ones are they, and what's the purpose of that change?

Hon. R. Thorpe: One of the things that, under the leadership of the Premier, our government is committed to doing is cutting red tape. We've set a very high threshold for ourselves of reducing red tape in British Columbia by one-third over a three-year period.

Cutting red tape means getting barriers out of the way for folks. It means saving them time. As all members of this House know, especially those who have worked in small businesses, time is money. Time is taken away filling out forms and being tied up in administrative duties. In a small business it's time unnecessarily taken away from training employees, selling products, developing new products, developing new markets.

This bill gets rid of barriers to business and to investors, which have been put in place by government. One example is that investors will now be able to invest directly through their RSP accounts. Investors will also receive tax credits for the prior year purchases in a VCC if it's made during the RSP season. That puts more money in their pockets through their tax return, and they don't have to wait until the next year. It gives them money to invest, money to grow British Columbia, money to hire new employees, money to develop new markets. That cuts red tape.

It also gives the investors in businesses the opportunity to increase the investment from $3 million to $5 million, again recognizing the need for business development through the heartlands of British Columbia and through the rest of British Columbia, and the need for additional dollars. We are removing unnecessary red tape.

There has been some degree of red tape layered on this sector. There hasn't been fairness between the small business venture group tax program and the labour-sponsored. Now the funds will be on a level playing field.

All of these changes individually, some would argue, are very small, but when you start adding all of these changes up, that's how this bill is helping cut red tape in British Columbia.

J. Kwan: I'm not sure if I get the minister's suggestion that this bill actually reduces red tape then, because what the minister has listed out are ways in which a person can invest, but it doesn't actually reduce regulations or requirements. This bill does not reduce regulations or requirements. If they are re-

duced, I would ask the minister to be specific about what regulations or requirements are being eliminated.

The one example the minister gave that says RRSPs could now be used to directly invest — for people to directly invest with RRSP…. That was always the case. People could actually do that before as well. So I'm not quite sure where the reducing-red-tape element fits into this bill. If the minister could be very specific about what regulation is being eliminated or what requirements are being eliminated by this bill….

Hon. R. Thorpe: Thank you very much, Chair, and thanks to the member for her question.

Let me add another example here. Previously, a small business had to set up a holding company in order to provide tax credits for investors. We're eliminating that requirement. We're eliminating the filing costs for investors and businesses. We've eliminated those incorporation costs as well. Our government knows that this money is more effective in the hands of entrepreneurs and investors than in the hands of government, and that accelerated access means less red tape. We're also introducing in this program the streamlining through the introduction of the direct investment model. That cuts red tape.

J. Kwan: So from this bill, how many regulations or requirements are being eliminated?

Hon. R. Thorpe: That's an excellent question. I am advised by staff that we don't have that number here, but we'd be pleased to get that to the member as quickly as we possibly can. Hopefully, we'll have that before noon for the member.

Hon. R. Thorpe: There will be some minor regulations required as we go to the streamline. But, as I said earlier, regulations will be eliminated as we remove the requirement for small business to set up a holding company. Again, as I said to the member just a second ago, we will get that detailed count for the member before lunch today.

J. Kwan: I'll also be interested in how many new regulations will be added, as well, so that you can actually juxtapose the claim on reduction of red tape. If you're eliminating some — and we don't know how many from this bill — then on the flip side of it is: how many new ones are being added, and what is their nature, and what is the purpose of these changes?

I'd then like to ask the minister this question. The minister touched on it briefly in his answer a little bit earlier, and in second reading stage the minister also suggested that the new model proposed by these amendments will provide for more investment to coastal and interior communities and businesses. Aside from the notion that there's an additional amount to which people can invest, from $3 million to $5 million, could the minister please advise this House how specifically this new model proposed by these amendments would provide more investment to coastal and interior communities and businesses? At what price…? What type of new investments will be attached to, say, Bella Bella or Fort Nelson or 100 Mile House?

Hon. R. Thorpe: To the member's opening comments on the regulatory count, we will provide the reduction, we will provide any increase in the regulations, and we'll provide the net gain for the member. Also, if the member requires a detailed briefing on that, I am pleased to offer that when we supply the information. But what the question here now is: what additional support for the heartlands of British Columbia happens here? The direct investment model will increase access to capital for small businesses in the heartlands. Let me go through a few examples here.

The direct investment model not only cuts red tape, it builds on the success of the programs operating under the act. The venture capital programs under the act have invested $105 million in 135 small businesses in the heartlands. That's not just in high tech. For example, the labour-sponsored fund has raised $140 million in capital from residents in the heartland but has reinvested only $12 million in small businesses operating outside the lower mainland.

Currently, 98 percent of venture capital is managed and invested in the lower mainland. Introducing these amendments can only help reverse this trend and accelerate the opportunity in the heartlands.

Further evidence that this model holds promise for the heartlands is based on our consultation with investors, small business and economic development agencies throughout the province. Since the introduction of the proposed amendments to the act in January of 2002, 87 written responses have been received in support of the changes to the act — especially with respect to the introduction of the direct investment model, which receives support from more than 34 respondents based in the heartlands, including Community Futures of north Cariboo, Mid-Island Science and Technology Association in Nanaimo, B.C. Wood Specialties Group, the University of Northern British Columbia and the economic development commission of the central Okanagan.

Finally, I would like to point out that this government has committed additional tax credits reserved for investment in rural communities. British Columbia is the only province in Canada that reserves tax credits for small business investment outside major urban centres. As the member may be aware, that is done through regulation. In crafting these amendments to this act, our government has listened to the needs of the heartlands, not just to the capital fund managers based in the lower mainland.

I want to discuss for a moment the member for Vancouver-Hastings' comments on sophisticated investors. During second reading, the member said that the only people who will benefit from these changes are

the people working on Howe Street. I want to tell her that that's not correct. I want to say that the residents in my riding of Okanagan-Westside and residents throughout the heartlands of British Columbia are going to benefit. They are sophisticated investors also throughout British Columbia. These significant investors throughout the heartlands have used this program to create the Vance Creek Hotel in the community of Silver Star Mountain Resort in Vernon, Pacific Insight Electronics located in Nelson in the Kootenays and the Wells Hotel in the heartlands community of the Cariboo.

Let me say what some of the other people in the heartlands — not Howe Street; the heartlands — are saying about these changes. Let me just say what Marilyn Hutchinson from the Mid-Island Science, Technology and Innovation Council in Nanaimo is saying: "These changes will no doubt see increased growth of technology and knowledge-based businesses throughout British Columbia's regional communities, and today's announcements demonstrate positive support of regional economic development." Mr. Robert Fine of the economic development commission in the central Okanagan congratulated the government '"that steps have been taken to look at easing the accessibility and availability of venture capital in the province."

Talk about what's going to benefit the heartlands — how about the employees of the more than 200 high-technology firms in the Okanagan Valley, generating in excess of $300 million in revenue a year? With respect to the direct investment model, Robert Fine said that the economic commission in the Okanagan is strongly supportive of this move. It will streamline the process. It will reduce red tape. Mr. Fine "looks forward to reaping the benefits as a community from the proposed changes."

Michael Kerr of the National Research Council at UNBC, in the heartlands community of Prince George, had this to say about the changes: "The proposed tax incentive program is a positive suggestion to help small firms, especially remote and rural small firms, attract investment capital." Greg Lawrence, a general manager of the Community Futures Development Corp. of the North Cariboo, said that these changes will clearly assist in the availability of venture capital for small businesses. John Bowman, from the College of New Caledonia in the heartlands community of Quesnel, said: "The proposed changes to the act will respond to the acute demand for seed capital outside of the lower mainland and, in particular, to the needs of the north Cariboo region of the province."

These are just a few of the quotes and comments we've received as we've gone through a very, very thorough dialogue with British Columbians in the lower mainland, on the Island and through the heartlands of British Columbia.

J. Kwan: The minister highlighted a list of quotes that really centres around generalities. However, the question I'd like to canvass with the minister is: more specifically, what type of new investments does the minister anticipate would, as a result directly related to this bill, actually result in the rural community, in the smaller communities? How many new investments does the minister anticipate would result from this? The direct investment loan is applied across the province, and the tax credit the minister talked about was in existence already, as it were. Therefore, the situation has not substantively changed. What we do know, though, is that investment has actually gone down. It's projected to go down by about 3 percent for British Columbia. From that perspective, what type of new investment does the minister expect this bill would bring? How many new investments would be brought to the rural small communities?

Hon. R. Thorpe: You know, I'm proud of the accomplishments of our government. I'm proud that 78,000 more British Columbians are working this year than last year. I'm proud that for the first time in the history of British Columbia, two million British Columbians are working. I'm proud of those achievements. I'm proud that we're cutting red tape by one-third. I'm proud that we've left $900 million in the pockets of hard-working British Columbians through 27 tax cuts. I'm proud that we've left $350 million to $400 million in the coffers of businesses, small and large, in the province so that they can be the masters of their destiny.

I am disappointed in what I believe is the direction of the question of the member. What disappoints me is that now we want to know who we anticipate is going to access these funds, how that is going to be facilitated, who's going to facilitate that. What I tried to do in my previous answer was say that this has broad acceptance from those that live in the heartlands of British Columbia, whether it be Nanaimo, Quesnel, the Kootenays or the Okanagan.

Our government, unlike the former government, is not about to pick winners and losers. That is what the business community does; that's what the investment community does; that's what entrepreneurs do. We are putting in place a framework that will provide the opportunity for them to access capital, to grow their businesses, to chase their dreams, to build on their dreams and to create employment in British Columbia.

J. Kwan: You know, what I've gotten so far from the minister is a bunch of rhetoric and no answers to the question. I asked a simple question. Given that the minister can stand in this House and claim that all this investment is going to come to British Columbia, given that the minister has just finished saying that the heartlands are going to get all these new investments and everything's going to be fine, then in determining and creating this bill, I'd like to know specifically from the minister — arising from this bill — how many new investments projected, approximately, would actually result in the smaller communities and the rural communities to back up his claim. What kind of new in-

vestments are we looking at to back up his claim? But not high-level rhetoric like what the Premier and all the other government members have already done to date with the tax cuts that don't pay for themselves.

Approximately a billion dollars has been given to the corporations in terms of tax cuts, yet investments are down. They're projected to continue to decrease for British Columbia. The minister can get up on his high horse and throw out all the rhetoric he wants, but the reality has to match what he's saying. If he's saying this bill is going to somehow yield investments in the small rural communities, I'd like to know what kind of investments he thinks will actually materialize. How many new investments would actually materialize?

The minister talks about job creation, but you know what? Unemployment rates have gone up under this government's administration. They have gone up; they have not gone down. That is the reality as well. I wish the minister would actually take off his rosy red glasses and take a look and see what really is happening.

I'm asking the minister a very simple question to back up his claim that this bill will bring investments, new investments, to the small communities, to the rural communities. What kind of new investments and how many new investments does he anticipate?

Hon. R. Thorpe: We expect that, annually, up to $67 million in seed capital will be invested in up to 85 small businesses throughout British Columbia. With respect to the heartlands — which the member from Vancouver, since she's been in opposition, seems to have taken a liking to, unlike when she was in government — over the coming three years we would expect that 66 small businesses will receive capital and create just under 2,000 new jobs in the heartlands of British Columbia.

J. Kwan: The minister says $67 million to $85 million throughout British Columbia. He expects there would be new investments, and that's throughout B.C. First, can he break down that $67 million to $85 million into how much of that or what percentage of that would fit into the heartlands' new investments?

Hon. R. Thorpe: Of course what the member is trying to do is get a number on the record right now so that next week or next month or next year or whenever, they can come back and say: "Well, you didn't invest $67 million; you only got $63 million." Let us be very, very careful here, and let us try to tone down the rhetoric in this House, especially from the negative Nellies.

I've always been troubled by what the member from Vancouver and her colleague from Vancouver have against the heartlands of British Columbia. Let me restate again what the goal is. I know this next part is a concept that's very difficult for the members over there to comprehend. We actually aren't going to try to pick winners and losers. The market is actually going to do that. I mean, you picked a real winner in fast ferries. You picked a real winner in Skeena Cellulose. We actually believe that the market and the entrepreneurs and the small businesses of British Columbia should pick the winners and losers.

Let me tell you again, and please listen carefully. Over the next three years we expect that up to 66 small businesses in the heartlands will receive financing through this investment program and will create just under 2,000 jobs. Let me also, if this will help, give you some examples, because this is not a cookie-cutter approach. This is not, as the previous government wanted, a one size fits all. Again, we've got the examples here. the Vance Creek Hotel in Vernon is an example, the Blue Mountain Vineyard in Oliver is an example, the Pacific Insight Electronics Corp. in Nelson is an example, the Wells Hotel in the Cariboo is an example, and the Wickaninnish Inn on Vancouver Island is another example.

What the member should be able to see here is that by allowing and following the changes our government is putting in place — cutting red tape, making it easier to do business here, giving employees the opportunity to build their own businesses…. It can be in a variety of areas. It can be in the grape and vineyard business. It can be in environmental technologies. It can be in the tourism industry. It can be in the high-tech. It can be in the biotech. There is actually no limit to the possibilities when our best and brightest not only stay in British Columbia but come back to British Columbia. They're going to have the opportunity, through programs like this, to invest and build and create jobs in their communities.

J. Kwan: The minister would be wise to take advice from himself to cut down on the rhetoric, because the only person who's actually thrown rhetoric around is the minister.

The issue here is this. What I'm looking for is the minister to back up his claim, his rhetoric around creation of jobs, how this new investment is going to boom in British Columbia, particularly for the heartlands, and so on and so forth. What I'm looking for is evidence, for the minister to back up his claim in this House.

You can't get up in this House and say that here's the introduction of a bill and here's how wonderful it is and here are all these things that it's going to do without anything to back it up or even some projections which the ministry might have looked into. I'm looking for actual experiences elsewhere on the basis of this model that the minister claims is really successful. Where is it?

What we have learned so far is this: some $67 million to $85 million, the minister says, over the next three years…. There will be new investments in British Columbia, a very broad-scale kind of thing. What percentage of that will actually be taking place in small communities? No answer from the minister.

The minister says there will be some 66 small businesses that will receive funding from the government on this issue, and therefore that would create jobs over three years — 66 small businesses. I'd like to ask the

minister this question: of those 66 small businesses, how many does the minister anticipate to be existing businesses? Or does he anticipate that these are all new investments?

The reason I ask this question is this. In order to substantiate the minister's own words, he's got to be able to put up information and evidence or even projections that the minister might well have in mind in order to back up his claims. You can't just make all these claims without that backup, because then on what basis is the minister measuring his own performance to see whether or not this bill is actually successful? Surely the minister must have some measurements that he's set aside in order to determine whether or not this bill will be effective.

Hon. R. Thorpe: Let me just say, first of all, how much will be existing and how much will be new. One of the things this does is allow the investment to be raised from $3 million to $5 million. Perhaps some existing businesses will, through investors, have the opportunity. Our new streamlining approach is obviously going to create an opportunity for new businesses. There could be a combination of different multiples here that that's going to work on.

The member asks: which businesses is government going to invest in? I want the member to understand that our government is changing. British Columbians do not want the status quo. Our government will not be investing. This is what investors do. This is what the private sector does. This is not what this bill is about; it's not about government investing in businesses. It's about investors and entrepreneurs and employees, etc., investing in the businesses. In fact, it was the previous government that reduced the budget from $12 million to $6 million in this area and kept it at that level for three years. Then, only after some pressure, they increased it back to its original intent.

But let me just say that our direct investment model is innovative. This is a first for British Columbia and has been designed taking into account the positive experiences drawn from other provincial jurisdictions that have direct investment programs. Those jurisdictions are Prince Edward Island, Quebec, Newfoundland and Nova Scotia. British Columbia's model has been designed to improve upon the shared experiences of these jurisdictions, especially with respect to investment in the heartlands necessary to ensure the maximum benefit for all taxpayers and all businesses in British Columbia.

If the member would like to see a copy of one of the reviews we used in our consultations, I would be very, very pleased to supply the member with a review from Nova Scotia. I'm surprised that the member and the former Finance minister haven't read it, because it was dated March 2001. But I am very pleased to provide this to the member.

But I want to put this on the record, because I know there's a sense that the minister and the government members like to insinuate that these questions being asked by the opposition are irrelevant. I think he called me earlier a negative Nelly or something to that effect. But you know what? It's not me who's making up this information.

There's an article in B.C. Business, March 2003, written by Paul Wilcox. In it, in different sections, he interviews various people about the economic situation. The article is entitled "Diminished Returns." Let me just quote a paragraph from this article. The paragraph begins with the lead-up to investments from the business community. I quote:

Then the article goes on to say that the projection for investment is actually going to go down approximately 3 percent for British Columbia. There are lots of other places in the article that talk about the economic climate and some of the issues with which we are faced today.

So while the minister can get up and claim that somehow this bill will reduce red tape or somehow it will create investments — particularly in the heartlands — there is nothing that the minister is providing to back up that claim. That's where it becomes problematic. That's where it becomes questionable in terms of how the minister himself would measure his own performance on that basis and given that projections from economists and others seem to indicate that the economy is actually going down. Yesterday at the Conference Board, the report came out saying that British Columbia, in terms of growth rate and GDP, is going to be number ten under this administration and is going down. So investment is going down, and the economic growth rate is also going down.

I would love it — don't get me wrong — if there were new investments in British Columbia. I would love to see that. The opposition would love to see that. But it is just hard to understand the wild claims that the minister and many of the backbench MLAs come up with — to say that all of a sudden we're going to get all of these new investments because of Bill 3 or because the government says that's what it wishes to see…. The reality so far does not match up.

I won't belabour this question, because obviously the minister doesn't have the answer. He obviously doesn't even, perhaps, have projections, which then, of course, makes one wonder how he measures his own performance on that basis. I'm going to leave it at that instead of asking the minister further questions on it, because he will just get up and enter into yet another

high level of rhetoric, which I don't think serves anybody in this House. Let me go to another general question.

What models in other jurisdictions were reviewed or examined before the minister decided to introduce this particular one?

S. Brice: I'm delighted to introduce in the Legislature this morning the students from St Margaret's school in my riding of Saanich South. They are here to watch the proceedings — 19 students along with five teachers. I ask the House to make them welcome.

Hon. R. Thorpe: I'm glad to see that the member of the opposition joins our government in working and wanting investment and new job creation in British Columbia.

Let me just start this answer by repeating an answer I gave a second ago. I did ask the folks to take over a copy of one of the reports that we used from one of the jurisdictions, and hopefully the member received that. We consulted extensively. We consulted and learned from Prince Edward Island, Quebec, Newfoundland and Nova Scotia.

The new model has been designed to ensure that the tax policies issued to investors work for all taxpayers of British Columbia. With this in mind, the legislation has been crafted to ensure that the program capital is only invested in small businesses that are engaged in activities that further diversification and growth and prosperity in British Columbia. That will be done by regulation. Program capital is to only be spent on activities that create or expand the growth of small businesses. The legislation has the ability to recover tax credits from small investors or businesses in situations where there's been abuse. We're putting in controls here for the taxpayers of British Columbia.

We've also, looking at this program, noted that in Nova Scotia in the year 2001 the department of finance in that province conducted a review of 277 small businesses that received capital directly from investors under their equity tax program since 1994. The results were that the program capital of $30.8 million was invested in business at a cost of $9.1 million in tax credits. Fifty-two percent of the program capital was invested in rural regions outside Halifax area, similar to one of the objectives we're trying to achieve here. The five-year survival rate for small businesses was 72 percent versus a national rate of 29 percent, and as the member over there knows, British Columbia has the highest rate of small businesses of any jurisdiction in Canada. Payroll expenditures and employment levels doubled within one year of receiving program capital investment, and by 2001 the province had earned back $9.6 million in incremental tax revenues.

Clearly, the results from Nova Scotia show the potential of this model in assisting small businesses throughout British Columbia and in the heartlands with access to venture capital, while demonstrating sound taxation policy. We have provided the members the examples, but the member uses one selected article which, quite frankly, did not reference this program. Let's see what some people that actually are in the business, actually understand the business, have to say.

As a matter of fact, in a column called "Money Business" in Business in Vancouver, a Mr. Harry Jaako says: "The changes of the rules of the Small Business Venture Capital Act to make VCC shares more attractive to investors. Possible changes include — to look more like mutual funds — allowing VCCs to partner with institutional investors allowing redemption of VCC shares to resolve liquidity problems." He's saying it's a good idea.

The technology industry and a writer by the name of David Raffa of Business in Vancouver: "Putting the proposed changes to the Small Business Venture Capital on the front burner of the legislative agenda. These changes are designed to make it easier to receive tax credits for investment in small business. Easing these rules would spur on investments in early stage companies which have been particularly hit hard by the market conditions." These are the folks that actually do this stuff all of the time.

Haig Farris, a well-known angel investor, a leading British Columbian, said in a recent article: "Investors are also anticipating amendments to the province's Small Business Capital Act in the spring that could help encourage more early stage investment in British Columbia companies." It goes on and on and on.

You know, Mr. Chair — and apparently the member wasn't listening earlier — I can go through a list of endless people. I said we received 87 written responses — 87. The consultation that went on in this process is unprecedented in the province of British Columbia. We have not received one negative written comment. What we've received is overwhelming support from small businesses, from entrepreneurs, from economic development, from high-tech associations to seed capital organizations throughout the entire province: "Get on with it. Give us the tools so that through the heartlands and through the rest of British Columbia, entrepreneurs and investors have an opportunity to access capital so their businesses can grow, so that they can create jobs — all of this done by the private sector." That's what we're doing, Mr. Chair.

J. Kwan: The minister can rant on with his own rhetoric, and he obviously seems to believe in it even though there's no evidence to back it up. Then he goes on to say that I don't know what I'm talking about — or insinuate that — and then say: "But here's all the experts who say that." Let me just put this on the record,

Mr. Chair. People who actually would know the economic situation in the business community very well — here's what they have to say further in this article.

Jimmy Pattison, when asked a question about economic investment around this…. Here's what he had to say…

The Chair: Member, just a reminder that we should stick to the contents of this bill and to committee stage.

The Chair: We're dealing with Small Business Venture Capital Amendment Act, 2003.

J. Kwan: This is how the information that I'm just about to give to the House relates to this bill. The minister just went on to make a long list of people, to hear what they have to say around this in terms of the economic recovery that is needed for British Columbia. I'm putting on the record other people in terms of what they have to say….

The Chair: Member, take your seat for a moment. I just want to remind the member that the minister referred to people making comments on this particular piece of legislation. I was hoping that you would do the same thing. Any comments that you have would be related directly to this bill.

J. Kwan: Thank you, hon. Chair. Yes, it does all relate to that what this bill does; it deals with our economy. Our economy has very different components related to it, and investment is a key piece around it. The minister claims that the changes to this bill will somehow bring millions of dollars of investment into particularly the smaller communities and the rural communities, but yet in the global picture, as we look and see what is going on with our economic situation and investments, what we do know is that investment is down. It was down last year. What we do know is that investment projections are going to go further lower this year.

It's not just me who is saying that. It's people from the business community who are saying that, and that's the point I wish to make here. I'm again going back to the whole notion of how you back up the claim that somehow this bill is going to create all these new investments in the community. I fail to see that connection. The minister has so far not provided any information to actually make that link.

Judging on the basis of what other business people, people who are experts in that field, have to say…. I would like to share this information with the House and then ask the minister questions following from it.

Jimmy Pattison. Everybody knows that Jimmy Pattison is a person who is very much involved in a variety of economic development and businesses in British Columbia — elsewhere as well, but let me just stick with British Columbia. When asked about this issue around our global economic uncertainty…. That is also the issue that one must take into consideration on the question around investment, whether small or large investments or otherwise.

Here's what Jimmy Pattison has to say. "Judging by the long silence that greets a question on the relatively weak economic performance under the Liberals…." Here's what he has to say.

That's just one example. Then you go on to another statement, from Mark Milke. Here's what he has to say. Milke says it's not just about past reputation. The Liberals themselves are sending some mixed signals about their commitment to a truly open economy.

These are individuals who are from the business community, who have something to say — that the piece that ties into all of this is the global economy. You can't just ignore the global economy and say: "Hey, we'll go merrily on our way in our own little silo here, and everything will be fine." It doesn't work that way. Each and every one of these pieces ties together and is interrelated. That's where I think the minister actually fails to make that connection as well.

Notwithstanding, notwithstanding…. The minister's going to say: "Hey, you know what? That's another thing. That's big business. It's not about small businesses." But within the picture of our economic development, you do have to link all the pieces together in order to see what the picture is.

The minister said earlier that he would expect that some 66 small businesses would receive tax credits. I just want to reconfirm that from the minister. Is that new businesses? Is that 66 new businesses that would receive tax credits?

Hon. R. Thorpe: Well, I'm going to try to remember all of the points that the member raised over there. I'm actually going to comment on some of them.

I did not say, Mr. Chair, that the member did not know what she was saying or did not know what she was talking about. Actually, only the member knows whether she knows what she's talking about. I can't pass judgment on that, nor would I.

Let me just say that when the previous government was here, foreign investment in British Columbia represented about 8 percent. It's now up to 20 percent. I believe that's a positive sign. Let me also say that with respect to the businesses through the heartlands, 66 or 67 businesses that we would anticipate would have a funding through this…. As I said — this must be the third or fourth time I've said this — because we are raising the limits from $3 million to $5 million, some of those businesses may need…. Some of that funding may go to businesses that are growing because of the

renewed business climate here in British Columbia, which are actually adding private sector jobs here. It will be a combination of existing and new.

I am actually quite pleased that the member made reference to Mr. Pattison, a well-known British Columbia entrepreneur, an entrepreneur who actually knows where you should be doing business today. I just wanted to point out — perhaps the member isn't aware — that Mr. Pattison is in the process of relocating a business from Manitoba, which I believe has an NDP government, to British Columbia, in the city of Penticton. I want the member to listen carefully. Who is running that business for Mr. Pattison, who is investing in British Columbia, is a former Premier, Glen Clark. He has confidence in British Columbia today. [Applause.]

J. Kwan: This is the first time I've heard people cheer for the previous Premier in this House.

Actually, part of the job the previous Premier is doing very well for Mr. Pattison is that he expanded his business once he got involved with Mr. Pattison. You know what? Good on him. He's actually applying his skills in the private sector and increasing the revenue for his boss. That's the job he is doing, and he's been doing it ever since he got involved. Let me just be clear. It's not because of this bill. It has nothing to do with this bill and has everything to do with the capabilities the previous Premier has engaged with his new boss.

That is not the issue here. The issue here is this: the minister likes to claim…. I want to go back to the issue here. You know, all of a sudden Glen Clark is working hard and making money for his boss. Therefore: "Let's claim that and say it's our credit. It's to the Liberal government's credit that Glen Clark is helping Jimmy Pattison make money." Help me here. How do you make that link?

Setting that aside, the minister said that of the 66 small businesses that would receive tax credits, some would be new and some would be old. What is his percentage breakdown on that? How many does he expect? The crux of the issue here is this: the minister keeps on saying that this new model, this new bill, will bring new investment to the heartlands. Well, how many jobs, how many new investments, will yield from this bill? Not old investments or existing investments, but how many new ones will it yield? Can he give a simple answer to that, a simple percentage — 50 percent, 60 percent, 80 percent, 20 percent or whatever? A simple answer from the minister would be appreciated.

Hon. R. Thorpe: Well, I'll try to answer that question once again, and I'll try to answer it in such a way that the member can understand it.

Hon. R. Thorpe: Well, I'm actually going to try to give a simple answer. Our experience is that through these programs, 70 percent have historically been new businesses. If we had 70 new businesses and our historical trends stayed in place, that would be 49 new businesses. That's the trend.

It comes out once again that the biggest issue with this member is how they believe they should engineer what businesses are going to be brought into British Columbia. They want to engineer how many people are going to work there, and they want to engineer what they're going to make. Our government doesn't operate that way. Our government believes in British Columbians. Our government believes in the entrepreneurs and the spirit of creativity and the dreams of those in the heartlands. You know, whether they're existing businesses, 30 percent, or new businesses, 70 percent, what does the member over there have against 2,000 new jobs in the heartlands of British Columbia?

J. Kwan: You know what? For the minister to rise in this House and make claims like he is making that this new bill, Bill 3, will somehow bring millions of dollars in new investments into our communities — into the small communities and rural communities — with nothing with which he can back it up…. There is a problem here. There is a problem with credibility here, with this government. He's unable to back up his claims with anything substantive. He's not even able to back up his claim with anything that he can measure his own performance on. That is the issue here.

Just yesterday the Premier's office ordered B.C. Stats to do a performance survey on his own caucus. You would think, on the basis of the need to make sure that there's a performance survey, that the government, this minister, would put some sort of performance measure here on the successes that he claims would be part of the result of this bill.

So far we have heard nothing from this minister on that basis, because either (a) he doesn't know, or (b) he has no confidence with his bill. Therefore, he doesn't know what the projections would be in terms of the investment climate, in terms of how many new investments would actually be yielded as a result of this bill. He's unable to answer any of those questions. Perhaps lastly is: (c) all of the above. The minister simply doesn't know, and he's just throwing it out there and wishing that somehow these things will materialize.

The minister's obviously not going to answer questions, or he doesn't have the answers, because he has no projections whatsoever from his own ministry. Yet he can go out and make these wild claims, as though somehow they're true when, in fact, he has nothing to back it up — zero credibility whatsoever, Mr. Chair.

Hon. R. Thorpe: Let me once again try to answer the question. When I say 66 or 67 businesses in the heartlands will access additional funds, I believe that's a real, quantifiable number — that the target….

Hon. R. Thorpe: As I said earlier, and I realize that…. Well, never mind. I did say in my last answer that 70 percent of the businesses are new. That's the historical trend, if the member would care to acknowledge that. We did say that. Therefore, that leaves 30 percent which will be existing.

Let me just tell you what happened last year. Twelve new VCCs registered in the province of British Columbia. That raised just slightly more than $8 million in seven small businesses located in the heartlands of British Columbia, creating 140 jobs. Now, you can't get much more real numbers than that. Our government has confidence in British Columbians, and apparently the member over there doesn't. This bill is not about picking winners and losers; this bill is about creating opportunities for all British Columbians so that they can have access to funds, they can have access to capital, they can finance their ideas, and they can finance their dreams and create jobs in their community.

The Chair: I'd like to remind the member that I'm calling on section 1 of Bill 3.

J. Kwan: Yes, we'll measure the minister's answer on the basis that he says, out of those 66 businesses that will receive credits, that some 70 percent would be new investments. We'll measure the government's response and see whether or not that materializes. We will look to see whether or not this bill actually adds — as a result of this bill directly — to new investments in British Columbia and particularly, as the minister claims, in the heartlands. I hope that it does. I want to be very clear that I hope it does and that there will be new economic activities to all British Columbia. I can tell you that in Prince Rupert, as one community alone, their unemployment rate is at 60 percent — six-zero, hon. Chair. That is significant in terms of the impact for the communities here. I hope that somehow the government will do something about that to turn that around.

The lumber industry, what's happening with softwood lumber, is directly related to some of the many, many troubles our communities are dealing with. We do need to look for different ways of transition and different ways of economic activities.

It's not the opposition who says the economic trend is going down. It is people in the area, economic experts, who are saying that, who are projecting that economic activities are going to go down. The GDP growth, as I mentioned earlier, in yesterday's report from the Conference Board shows that we're number ten behind P.E.I. under the Liberal government's administration. Economists say that investment is expected to go down by 3 percent under the Liberal government's administration and that it went down last year. Investments went down last year under the Liberal administration. The opposition will look to see how that turns around.

J. Kwan: No, it's not CCPA — for people who actually like to claim that somehow CCPA is discounted. Ask any credible economists out there, and they will tell you these answers. Pick up a magazine. B.C. Business Magazine tells you that information, not exactly CCPA.

We will look and measure the government's claim and particularly this minister's claim that somehow the investments will actually go up and skyrocket because of this bill. We will look to see whether or not that will actually materialize.

Hon. R. Thorpe: I move the amendment to section 20(b) standing in my name on the orders of the day.

Hon. R. Thorpe: I move the committee rise and report the bill complete with amendment.

Bill 3, Small Business Venture Capital Amendment Act, 2003, reported complete with amendment.

Bill 3, Small Business Venture Capital Amendment Act, 2003, read a third time and passed.

Hon. R. Coleman: I move that the bill be now read a second time. The Police Amendment Act, 2003, is about PRIME, the Police Records Information Management Environment. I'll have more to say about the bill shortly, but I would like to yield the floor to a member who has travel arrangements to fulfil and does want to speak to the bill. So I will yield the floor now and take my spot with leave later.

D. MacKay: I would like to rise at this time and speak in support of Bill 12, entitled the Police Amendment Act. But before I get to the reasons why I'm supporting the bill, I think it's important that the province look back at the history of where we are going with policing in this province.

I want to take you back to 1962, when I arrived in this province. I arrived in British Columbia as a 19-year-old police officer for my first posting in Nanaimo. I'm going to jump to today's computers that we have on our desks; we have this cut-and-paste program that allows us to move stuff around, thanks to technology. Well, back in 1962 we also had cut-and-paste, literally cut-and-paste, because information was received through the mail.

In those days we received sheets of photographs, and they were all on one sheet of paper. We received another sheet of paper that had the information relating to the photographs we had received. Because I was the junior man at the detachment in Nanaimo, it was my duty on night shift to cut and paste. With a pair of scissors I would cut the photographs out, and then I would cut and paste the information that was contained on a separate sheet and put them together, and then the data was filed away for retrieval. So that was cut-and-paste. The information we received was probably weeks or months old by the time it actually got into the filing system for retrieval, to be used for what it was intended — to assist in police work and for the apprehension of criminals.

But I've got to go back again to 1962. When I arrived in Nanaimo, we did not have radios in the police cars. We would drive around Nanaimo, and we would look for lights — blue lights — on top of certain buildings. When the blue light was on, we then had to go find a phone to phone the detachment to find out why they wanted us. It was terrible. If you happened to miss the blue light or if the blue light was burned out, you could spend your whole shift never responding to a call, even though you were wanted. But there was no….

There was no way for the office to get a hold of us in those days, so it was a bit of a challenge. The blue light was a critical part of police work in those days because we didn't have radios or telephones. And telephones were difficult to find in the middle of the night; they weren't all over the place like they are today.

So it was a bit of a problem trying to do police work back in the 1960s. Eventually the police cars did receive radios, and we were able to talk to the office and we were dispatched. But we were still in the dark ages, because we were still relying on information that was distributed throughout the province through a section called the crime index section in Vancouver. That information was all gathered. The police departments all reported major crimes and crimes of interest to the crime index section. They would gather that information and distribute it throughout the province by mail. So the information we received was quite old, and often it was useless by the time it was received. That's the way it worked years ago. Finally, when the police cars became equipped with radios, we started looking at radios for members on foot patrol so that the members did have some contact with the office and some contact with the members in police vehicles when they were needed.

Then, in the late sixties, we had this technology marvel called CPIC come on stream. It was a computer system that allowed for the input of data with serial numbers for names of wanted people, and it was available across Canada. But it was only available in the office. If you had a name that you wanted to check, you would call in the name and as many descriptive features that you had on the individual, and a radio operator at the CPIC terminal would then check the name.

It was never foolproof, because there was no photograph to make sure that the person on the street that you were talking to and querying was in fact the person that was identified through what we called a CPIC hit. There was a suggestion that a person with that name was in fact wanted. There was no way of tying those two together.

Stolen property was also put on the Canadian Police Information Centre, but it had to have serial numbers attached to it. That moved a lot of stolen property from the criminal element back to the rightful owners, because if people took the time to put the serial numbers down and retain them and they were later the victim of a crime, we were able to put that data into the CPIC bank. If a person in Vancouver had property stolen from them, and they decided to drive to Prince Rupert to get rid of it…. If the Vancouver police entered that stolen property on CPIC, and a member in Williams Lake checked the piece of equipment driving through Williams Lake a couple days later and they ran the serial number, quite often the property was recovered. We were moving ahead. Technology was moving ahead, making police work a lot easier in this province.

Stolen vehicles. When I got to Prince George in 1965, we had a chalk board there, and that's how we kept track of stolen licence plates. We had two columns that we had to match up. We'd have 20 or 30 cars stolen

in an evening, and it was a bit of chore keeping track on the boards where the cars were stolen from. We didn't know if they were stolen from Vancouver. We just kept track of the ones in Prince George.

I can remember sitting down at a computer terminal the first time. I'd come in from night shift, and I had some licence plates written down in my book, and I wanted to check to see if they were stolen. I couldn't believe the excitement when I sat down and typed in that licence plate number and got a hit. It meant the vehicle had been stolen. My goodness, the technology was moving ahead in leaps and bounds, and it was great. It allowed us to do police work faster and better for the people of this province.

At the same time, we were able to track crime statistics by community, by province, by region. We could look to see what the trends were — whether there was an increase in auto thefts or an increase in break and enters — and it helped us track what was happening throughout the province.

Moving ahead, I think everybody knows today that the cost of crime is costing the taxpayer huge sums of money. Just as an example, the average cost to hire one police officer in this province — one man per year — is roughly $100,000. That's a ballpark figure. It is an expensive operation but a necessary one. I expect the municipal police departments are probably looking at similar costs. With this new program that the Solicitor General has introduced today, the capital cost of this program is going to be covered by the province. We are going to look after the capital cost for this new program that the Solicitor General talks about and that is mentioned in Bill 12.

I wanted to give you a little bit of history of what it was like working in this province 40 years ago as a police officer and where we're going today and the technology and what it's doing to make police work a lot easier in this province. In this province today we have very many dedicated, professional, well-educated people on the front line doing police work to make our streets safer for us. Can we do more to help them with those jobs? We certainly can, and one of the things we're doing today is the introduction of Bill 12 to put PRIME in the police vehicles and in every police office across British Columbia.

Every police officer, regardless of where they are, regardless of which police department they're with, is going to be connected with one another all the time. They're going to be able to exchange information back and forth. That's what police work is all about: gathering information, deciphering what that information means and acting on it.

I have been fortunate, having lived in British Columbia now for 40 years, to have seen some of the changes and the technology and what it's doing to make our streets much safer for the people of this province.

We in British Columbia are a leader in crime fighting. We are a leader in technology in Canada, and I suspect we are going to see other provinces looking at what we are doing in this province to combat crime. As the member for Peace River North always says: "More good news."

Bill 12 is, in fact, good news. It's good news for the taxpayers. It's good news for the police officers. It is bad news for the criminals. For the criminal element in this province, you should know that this piece of technology is going to do wonders. It's going to allow police officers sitting in a car anywhere in this province, because they're all going to be connected, to pull up a photograph of an individual if, in fact, their name comes up on a hit to suggest they might be wanted. There's no more second-guessing. Photographs are going to be available. This thing is going to do so much for police work. People who are in the criminal element should maybe have a second look and maybe look for a second career, because this is going to do wonderful things.

I applaud the Solicitor General. I look forward to the results of this bill and the results of the PRIME program that will be introduced into this province and what it will do to combat crime.

Hon. R. Coleman: I thank the House for agreeing to allow the member for Bulkley Valley–Stikine to have the opportunity to speak, since he has to be at another responsibility.

This is an exciting moment in the history of British Columbia in policing. The legislation we are considering here today creates a framework for the management and use of a new police records information management system that we call PRIME. PRIME is a multi-jurisdictional, integrated information-sharing system designed to provide timely, accurate, accessible and comprehensive information to police and other justice partners. It is in real time. Input into this system when it is up and running…. Within five minutes anywhere in the province, information by a suspicious roadside check will be on the computer terminal of every police officer in the province. They will start to break down barriers for investigations of serious crime and minor crime in British Columbia.

Under the legislation, police agencies will be required to use one platform to serve as a common information management system. PRIME will integrate police information from the lower mainland, the lower Island and the heartlands of British Columbia, and will be the first integrated system of its kind in British Columbia. Not only is PRIME itself a system that we've tested and we know works, the big step here is what we're doing today with the future of policing. The big step is this: you cannot find a jurisdiction in this country or that I can find in the United States where all law enforcement police agencies are on one system, one system where there are no barriers and where information in real time will be passed through to each other. That's the big breakthrough. It's not the technology. We can find technology platforms that work in other jurisdictions, and we can apply it to policing in British Columbia. What's important is that the Vancouver city police, the Delta city police, the Richmond RCMP, the

The member for Bulkley Valley–Stikine talked a moment ago about some of the changes in policing — when they first got their radios and then moving on to when they got portable radios and so on. One of the challenges in policing in his era of policing, which was some time ago and over a 28-year period as I understand it, was that even when we got radio communication in policing, the biggest problem was that they couldn't talk to each other.

I can remember a hostage-taking in the city of Calgary where a person was taken hostage. The Calgary city police were following the car. There had been shots fired at a gas station. The RCMP were picking up the file to support it as it came out of the city and went right across the southern portion of Alberta into Saskatchewan. You know how the police officers communicated even though they both had radios? They weren't on the same frequency, so the radio rooms in the two police departments were talking by phone and relaying the information from the police officer in the field back and forth so they knew what the other cars were doing. What that creates is silos, barriers, inefficiencies and the ability for criminals to have an advantage over police. That's not acceptable.

The step we're taking that is bold with regard to this legislation is that we're standing up and saying: "Sorry, folks, you don't get to go get your own mousetrap; you don't get to make your own choice. We have PRIME in B.C. — period." No other police department can go and have a different information management environment. It has to be PRIME, it has to be integrated, it has to work in real time, and it has to be built on a platform that can build for the future of technology in the province. We think we've got all of that.

In addition to that, we are actually changing how people will look at policing. We know PRIME works. We tested it in Vancouver, Richmond and Port Moody. We also know that it was the system that did the 2002 Olympics in Utah. It's the system that's being used in Tampa Bay, Florida, for their police department. We know where this system works. It's just that nobody has ever taken the step to say it is the one system for policing so that you can't have those barriers that exist.

In Alberta the information management between the Calgary city police and the RCMP doesn't exist. In our province it will exist between all our departments. As we move forward and they see the success of the system, I wouldn't be surprised if other jurisdictions take this bold step. There are two portions of the step they have to make. First, they have to identify the system and they have to legislate it as being the system, which is what we're doing today. Second, in order to make it work, you have to have people in your government that have the temerity to actually decide to spend the money to make it happen.

When I identified PRIME as the system, as the Solicitor General, through working with my ministry, the first challenge I knew I would face was that somebody was going to say: "We're not taking it, because we don't want to pay for it." Then we would have a hole in the middle of information management and policing in the province. Even during times of tough economic times and cuts, I went to Treasury Board and asked them to fund the system provincewide — that the province would pay for it so that we could have the system in the field and it could be integrated completely into policing and there would be no excuse for not doing it. They saw that vision too, and as a result of seeing that vision, we are funding PRIME in B.C.

The nice thing about PRIME is that the computer systems that exist in our police cars today can handle PRIME. We don't have to go buy a bunch more equipment to make this thing work. This thing will work, and we'll roll it out in the entire province. We'll be finished between 18 and 24 months from now. We already have the teams working on the different rollouts within the province that will go forward.

Without an integrated system, there's a lack of timing and accurate information, often making effective policing very difficult. In addition, there is currently no ability to conduct crime analysis to identify trends or types of problems within and amongst communities. This kind of analysis would allow police to effectively target resources, to use the personnel they have effectively and to deal with crime effectively and not be hit-or-miss on how they can get their performance.

Police departments do not all have the same investigative and information management capabilities today. PRIME provides all police officers, regardless of location or department size, with the same extensive information management and investigative capabilities of any other department. The central problem today is that systems used in B.C. agencies, both RCMP and municipal agencies, cannot provide the comprehensive information necessary to implement contemporary policing strategies such as problem solving, community policing and integrated investigations.

You heard the member for Bulkley Valley–Stikine talking about cut-and-paste. Well, he wasn't kidding. Even today in many jurisdictions, if there is a rash of break-ins with a trend in one area of the lower mainland, the information doesn't necessarily flow to the other areas of the lower mainland so they can track that trend or look for suspects or have information they could use at the street level. We're changing that.

To achieve true multi-jurisdictional information sharing by police agencies and other justice partners requires police agencies to use a common records management system and to publish key information concerning offenders, cases and incidents in a form that other agencies can query and analyze. That's what PRIME is about to do.

It is something else when you see it in operation and you see what other things can be added onto its abilities. PRIME will solve many of the current problems inherent within the current police information

management environment and the investigative management of crime. With PRIME, critical information can be communicated instantly, allowing police to match similarities between different crimes. It will improve the basis for their effective communication. Down the road, I envision PRIME hooking directly to the national sex offender registry and other national crime-fighting databases. PRIME will give us the ability in the province to build our own sex offender registry if the federal government doesn't meet us the halfway that we need them to meet with us to make a national sex offender registry work.

As I said earlier, we know PRIME works. For the last two years we have run pilot projects in three B.C. locations: Vancouver, Port Moody and Richmond. There are a number of examples of how that can work. I will tell you those examples.

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

J. MacPhail: Yesterday we wrapped up, I believe, talking about premium lifts, etc. What I'm now interested in, then, is…. From what I understand, there was $181 million of revenue that flowed to the corporation as a result of premium increases. How many vehicles were insured at the end of 2001, and how many vehicles were insured at the end of 2002 with ICBC? Just so the minister knows the direction I'm going in here, I'm curious to know if he could break that down between optional and…. Sorry, I've lost it about…. What is it?

J. MacPhail: Okay, yeah. The breakdown of that, 2001 versus the end of 2002, on both the optional and basic.

Hon. G. Collins: I'll try to get a breakout between optional and basic, but overall Autoplan policies…. In 2001 there were 2.661 million. In 2002 it was 2.705 million. Those are numbers rounded to the thousand — so 2.661 million to 2.705 million.

J. MacPhail: How does that compare? That's an increase of about 44,000 policies. How does that compare historically?

Hon. G. Collins: I'm looking back. I have numbers going back as far as 1998. Where are we here? Number of policies. It was 2.552 in 1998; 2.572 in 1999; in 2000 it was 2.614. You can sort of see how that goes back over five years. It gives you a bit of a trajectory.

I'm just pulling the numbers for basic and optional. Basic: in 2001 there were 1.47 million. In 2002, 1.618 million. That was basic. In 2001 optional was 1.029 million. In 2002 it was 1.141 million.

I just want to be clear. The numbers I gave for basic and optional are dollar figures, and they are in billions. They're not numbers of policies. I'm advised they don't break it out.

J. MacPhail: This may be an area in which I commend the government. I mean this seriously: ICBC is flourishing. But I am curious to know…. As I recall, part of the change that was announced was that the corporation would be moving toward permitting greater competition in the optional area. Perhaps that's not the right way of saying it. They would properly price the optional coverage, which would make it competitive but not an advantage.

I see here that there's a change of about 120 million in optional coverage. Perhaps the minister could explain the trend around optional coverage, which has either been encouraged or…. Let me just make this clear. The trend in optional coverage with ICBC, as opposed to private coverage: how has that changed or remained the same in 2002?

Hon. G. Collins: It has pretty well remained the same. There hasn't been a big upturn or downturn in that. The goal of the restructuring of ICBC and the result of core review is to create a healthy market in a competitive marketplace on the optional side. This will be the regulator's role: to determine and ensure that the

costs associated with optional are reflected in the optional side and the costs associated with basic are reflected in the basic side. Then the pricing should take care of itself on the competitiveness side.

The goal there is to ensure that there is no cross-subsidization one way or the other between optional and basic and also to look at non-financial barriers to competition, to make sure that ICBC isn't using its virtual monopoly, even on the optional side — about 95 percent of the market — to behave in a way that is unfair or uncompetitive. That is the mandate we will be giving to the regulator, and that will be their role.

J. MacPhail: Are those objectives reflected in anything in 2002, or are we anticipating that this year?

Hon. G. Collins: That will be part of the core review that we rolled out toward the end of ICBC's last fiscal year, which ended December 31. That has not been implemented yet. I know that ICBC is preparing for it; at least I hope they're preparing for it. I'm sure they are. The regulator will receive legislative structure early this spring. There will be directions given to the regulator, and then there will be a process that starts. I expect that will take some time to sort itself through. It's not going to happen overnight.

I know that private insurers will want to make a representation as to what they think should happen. I know ICBC will certainly want to make a representation as to what they think the market should look like — what should be in and what should be out, etc. I expect that advocates for the motoring public will also have comments on that. As well, probably, individual British Columbians will have comments. That will be part of the process the regulator will undertake. The goal, obviously, is to have a very healthy, very competitive market on the optional side — where there is choice, where there is service and where there is appropriate pricing. That's the goal.

J. MacPhail: Is Mr. Nick Geer still the CEO and chair? Is that a permanent appointment now?

Hon. G. Collins: Nick was brought in as the chair of the corporation. When Kevin Benson left, it was determined, for an interim period of time anyway — there was a lot of uncertainty around ICBC as the core review was being done — that rather than go out and search for another CEO when you may have a period of fairly significant transition and volatility at the corporation…. It might be difficult to attract the calibre of CEO we needed, given that. Until this settled out and we knew what the corporation was going to look like, it was determined that for a transition period, Nick Geer would take on the job of CEO as well. The goal is still to find a permanent CEO. The board, as well as government, will be part of determining when the best time is to do that.

Hon. G. Collins: Obviously — and government's policy around board governance has been — we don't like to have the chair and the CEO be the same person. Just as a board process, you will see that a board governance philosophy has evolved in both the private and public sectors over the last number of years. That's a goal you see even happening in the private sector: to keep the chair and CEO as separate individuals for accountability purposes. Our goal is to do that as soon as it is practical and as soon as we can get the right person for the job.

J. MacPhail: Yes, I'm well aware of it — except the two largest Crown corporations now have chairs that are CEOs: ICBC and B.C. Hydro.

I'd like an update on the no-fault portion of benefits around access to no-fault benefits — the uptake in 2001 versus 2002. Secondly, what kind of community outreach or community advisory system is in place to ensure the allocation of these benefits?

Hon. G. Collins: Two questions. First of all, there have been no changes to the no-fault benefits that exist within ICBC. As far as the uptake, I think it's pretty much the same, as far as we can tell.

With regard to the outreach, there is a president's advisory committee, which is somewhat longstanding at ICBC, I think. It has been around for a while anyway. The chair has met with them both prior to and post–core review to get their input. As the member knows, having been minister before, it is made up of a whole bunch of stakeholder groups: health care providers, brokers, etc. There really have been no changes there.

J. MacPhail: Am I to understand that when the minister says there's no change, it means that there's no change on how one qualifies for no-fault benefits?

Hon. G. Collins: You never know, but nothing has changed. We haven't changed anything. You would think if status quo were controversy-free, then the answer, I guess, would be yes.

J. MacPhail: I'm interested in CounterAttack programs and the safe roads programs of ICBC. Could I have an update, please, on the amounts spent in the year '02 versus what's planned for '03?

Hon. G. Collins: I'm just breaking out the question for the member. The CounterAttack spending in 2001 was $8.9 million. The same amount was budgeted in 2002. However, we have had somewhat protracted negotiations with the RCMP and municipal police forces as to how they were going to implement that. As a result, the actual expenditures are about $4.7 million

We've concluded most of those agreements towards the end of last year, if not all of them, and we expect a full expenditure of the budget in 2003.

Hon. G. Collins: The answer is yes. The amount budgeted is expected to be the same. We are in negotiations with the Solicitor General and the RCMP to see if we can arrange a longer-term contract. The intention is that that will be the same sort of an expenditure over a period of time.

J. MacPhail: Yeah, well I'm assuming it will be $9 million for the year '03.

Road Sense, beyond CounterAttack. What's the budget for Road Sense? Safe roads I guess it's called now, isn't it?

Hon. G. Collins: The forecast for 2002 as at December 10— so we get towards the end of the year. It's not a final number. The forecast is that we will have spent about $37 million. The budget for 2003 is $47 million.

Hon. G. Collins: The number I gave for 2002, which was toward year-end, was below budget, and the number was $37 million. I'm trying to find out what the budget number was for 2002, but I think it was around $47 million as well, so there's some underspending in 2002 — one of the examples I gave the member. The intention is that the plan for 2003 will continue with sort of a normal budget for road safety.

J. MacPhail: Does the number of $47 million for '03 include the $9 million for CounterAttack?

J. MacPhail: So about half of that underspending for '02 in all-over road safety programs is because of protracted negotiations. Where did the rest of the underspending occur? That's kind of like: where did the money not get spent?

Hon. G. Collins: The other portion of that is just that as the road safety programs went through a review — as all of ICBC did, as the member knows — there was some major downsizing of the corporation and reductions in staff and individuals programs. I think when Kevin Benson was there — I can't remember the number — there were a huge number of projects underway. What he wanted to do, and I remember him speaking to me about this, was to make sure the projects that were underway were actually getting us maximum efficiency, etc.

I know there was a review that went on. There was about a 26 percent reduction in costs in the corporation over the last little while and a 20 percent reduction in staff since 2000, so some pretty big changes at ICBC. As a result, there was underspending. The other portion of that underspending would have been caused by that, but we're not reducing the budget. The budget is going to be $47 million. It will be spent, probably, on slightly different things or different projects where we think we can get better value, but the budget remains at $47 million.

J. MacPhail: I'd like an update on the motor vehicle branch portion of ICBC's services in terms of integration. I remember having a discussion — I can't remember under which government, and it could have been yours or mine — about program outreach, services outreach that may return money to the motor vehicle branch, etc. What's the financial status of the motor vehicle branch portion of the ICBC services?

Hon. G. Collins: The motor vehicle branch side for driver services and then commercial vehicles — so they're sort of two separate components — in 2001, was about $67 million in expenditures. That declined by about 15-ish percent in 2002 to about $56 million. That was just reflective of the overall efficiencies and the reductions in costs at ICBC.

The FTEs went down, as well, by a smaller percentage, around 4 percent reduction in the staff for 2001-2002. One of the key areas, certainly in the driver services, would have been the graduated licence program up and running. Now that it is running, the costs of running it on an ongoing basis are less as well. It's an example of the kinds of things that are happening.

J. MacPhail: Do the increased fees for drivers' licences go to ICBC or into general revenue?

Hon. G. Collins: The increase in the licence fee is collected by ICBC. It is remitted to government. It is to help with some of the costs we have in Solicitor General with just managing some of those pressures that come from the motor vehicle side, enforcement, etc. That was the intent. ICBC collects the fee and it is remitted to government, as they do now with all of those fees.

J. MacPhail: Is ICBC committing any of ICBC's resources to road upgrades, road improvement anywhere in the province?

Hon. G. Collins: Yes, about $10 million. That's been an ongoing budget, and what ICBC measures to determine — this is the longstanding principle — is that they have to be able to see that they're going to get a $2 savings in reduced claims for every dollar they invest. They look for, as the member knows, particular intersections where there may be a problem or a high-

accident area, in an effort to try and get their costs down. They participate in that. That has gone on for some time, and I do recall the chair of ICBC presenting at open cabinet a couple of times, mentioning that it is getting harder and harder to find those. They've sort of dealt with the low-hanging fruit and the intersections that were really problematic, and it's getting harder and harder to find those investments where you know you're going to get back that guaranteed flowback.

J. MacPhail: How much of the budget for the next two years of ICBC is committed to changes on the Sea to Sky Highway?

Hon. G. Collins: I'm advised no, but we're going to check that out and just make sure. We'll get back to the member on that.

Hon. G. Collins: We think there might have been some. But as I said, I'll find the number and get it to the member.

My last question, depending on the answer, is about systems update in terms of changes to information systems at ICBC in '02 and plans for '03.

Hon. G. Collins: Last year it was about $5 million across ICBC, and in 2003 the forecast is that it will be about $16 million. There is a major upgrade of the computer hardware and software to about $11 million coming in this year, in 2003.

J. MacPhail: In terms of BCPSEA, which is the B.C. Public School Employers Association, will there be…? There's membership in that association of people who are not elected. When do you anticipate changes there?

Hon. G. Collins: There are five people on the board that are, I guess, government. One is the past president — in this case, it's Ken Denike. It's not a voting position; he doesn't vote. Then there are four government board members that we appoint. There were changes done in the fall of 2002 to those four positions.

Hon. G. Collins: The new president is Ron Christensen. He's the board member from the Kootenays.

J. MacPhail: What's the status of the review of bargaining structure in the K-to-12 system?

Hon. G. Collins: Actually, under Bill 28 last year, that was something the Minister of Labour took on — looking at public sector bargaining in the K-to-12 system. That question would be more appropriately put to him. I'm not dictating that or running that; that's something he's determining. We certainly give him our opinion and our advice, but I'm sure he's getting opinion and advice from elsewhere. I don't know the current status of it. I expect he's working on it.

J. MacPhail: Perhaps the minister could tell me what collective agreements will be expiring in the K-to-12 sector in the next 15 months.

Hon. G. Collins: As the member is probably aware, the support staff contract is up June 30, 2003. On June 30, 2004, the teachers' contract is up.

J. MacPhail: I'm interested to know. It would seem to me that the bargaining strategy of government would be related to the bargaining structure. We are 15 months away from the expiry date of a collective agreement that will be affected, I assume, by a review. Does the Minister of Skills Development and Labour then report to BCPSEA? How does that work? How does the mandate get set for bargaining of a group? I assume that by "support staff," the minister means CUPE and operating engineers, etc. There are about 30,000 employees there, as I understand.

Hon. G. Collins: First of all, the support staff in the K-to-12 system includes about 19,000 FTEs represented by CUPE, about 24,000 full- and part-time employees. There's that. The teachers are about 40,000 full- and part-time — 28,000 FTEs.

The mandate for negotiation is set by me through PSEC. I'm not going to discuss that in this venue because it's obviously a bargaining mandate. The structure and the rules within which all that happens is the purview of the Minister of Labour, and I'm sure he's aware of the time line. However, the support staff bargaining process was not part of Bill 28. It was the teachers' bargaining that was part of Bill 28, and that contract expires in June 2004.

J. MacPhail: Will the bargaining structure for '03, K-to-12 support staff, be board by board?

Hon. G. Collins: The same process remains in place. BCPSEA oversees it, but they delegate it to local boards. They will be monitoring it, but it's still board by board. Nothing's changed there.

J. MacPhail: In terms of mandate for negotiations across the public sector, the fiscal plan says zero-zero-and-zero in '03-04, '04-05 and '05-06. Is that across all sectors, including commercial Crowns?

Hon. G. Collins: Any entity or Crown where government appoints board members would be under that

J. MacPhail: The zero compensation for three years. Is that across government or across unionized employees?

J. MacPhail: What is the allocation for raises for non–collective agreement employees?

Hon. G. Collins: It's zero as well, unless there is some area where there's a need for market adjustment. That applies on the collective agreement side as well. For example, last year or so there were negotiations, and the zero-zero-and-zero mandate was in place as well. At B.C. Hydro, the linemen — the people who actually climb the poles and do that sort of stuff — are in very high demand. We were losing some of them. It takes a long time to train them up, and it's a very risky job. Because of their training and their expertise, they're able to command a good dollar. We were losing a lot of them down to places of high growth, California, etc. We were having difficulty retaining the ones we had and attracting new ones.

In that case, for example, they have to come to me through PSEC and apply for the ability to go outside the mandate. We've said to the unions and to management that if there is a market issue, then we are glad to look at that. You can come and ask for special arrangements for that, and we'll look at it on a case-by-case basis. There have been a number of those in the last year. You have to prove the case, and there have been a number of requests that have not been approved as well.

J. MacPhail: The mandate is clear that it says zero for compensation. How does the minister define compensation?

Hon. G. Collins: Certainly. It's an envelope. We've told the unions this as well. If you can come with a plan that shows increased productivity or better performance and that will save government money, then we're glad to share that in some other way. It has to be concrete. It has to be real. It has to be achieved.

There's also, within the benefits versus actual pay, the ability to move. If there can be an efficiency found on the benefits side, you can put that into pay. If you want to spend less of the envelope on pay, then you can work with benefits. We try to be flexible within that. I know zero-zero-and-zero is a cap. There's not a ton of flexibility, but within that we're willing to look at anything that works better for employees and government, as long as it fits within the envelope.

J. MacPhail: Just to be clear, the envelope includes total compensation. It's the wage bill, including rollup costs.

J. MacPhail: What are the negotiations that will be occurring in this upcoming fiscal year, '03-04?

Hon. G. Collins: Starting this year we have the Community Social Services. It's approximately 300 agencies, approximately 9,000 FTEs. It's BCGEU and CUPE — 16,000 full- and part-time employees — and that expires March 31, 2003.

I've mentioned the public schools, Crowns and Tourism B.C. They expire March 29. That's 70 FTEs represented by BCGEU. ICBC has approximately 5,000 FTEs. They're represented by OPEIU, and that's June 30, 2003.

The Assessment Authority is approximately 500 FTEs. That's CUPE, and it's December 31 of this year. The PNE, which is approximately 165 FTEs — that's CUPE — is December 31, 2003.

Hon. G. Collins: Of those that I just quoted, none of them have started yet.

Hon. G. Collins: Their contract expires March 31, 2003. They have to come to the bargaining table within 60 days of that. There are preliminary discussions occurring now between the employers and the employees.

J. MacPhail: In terms of the role that PSEC plays in executive compensation, in terms of monitoring severance, etc., could I have an update on the legislative changes that were brought in — the implementation of those changes and the status of the reporting?

Hon. G. Collins: Bill 66 and the time line for all those reports to be in is March 31 of this year. Any contract over $125,000 will be part of that report, and any severances that occur, or are about to occur, we expect to know about immediately.

J. MacPhail: In three weeks there will be a public report released on compensation?

Hon. G. Collins: The legislation requires that that information be submitted to us by March 31, 2003. It will take us some time to assemble that before we can

Also, I misunderstood the minister on what he was saying about severance. I thought there was a requirement for public reporting of severance as well.

J. MacPhail: There will be a reporting of severance as it occurs? For instance, in my health authority, the Vancouver coastal health authority, three people were let go. I don't recall there being any public reporting of those severance provisions.

Hon. G. Collins: Certainly, we've put some parameters around what the maximum severance could me. There is a reduced maximum from 24 months to 18 months. We will also do an annual report on severances. That will start for the fiscal year upcoming. My assumption is the first annual report on severance would happen after next fiscal year. That's what the legislation says, if I'm not mistaken.

I'm just advised that we'll be able to have a report based on the current fiscal year, as well, at some time in the not too distant future.

J. MacPhail: The minister may be aware of the Vancouver coastal health authority changes, so I assume those will be reported in this report that the minister has just described.

J. MacPhail: The other implementation aspects of Bill 66 require, I believe, a monitoring process. I'm wondering whether that has been set up by PSEC, or do we get just one annual report?

Hon. G. Collins: The employers groups are directed to monitor these. They need to report to PSEC within 15 days of any new contract being signed. We get an annual report which covers everything, and then during the year, as new contracts might come on line, they need to present them to us within 15 days.

J. MacPhail: Can the minister tell me where in the estimates book, either the supplement or the Estimates, I can find the line for fee-for-service from the government to the Partnerships B.C. corporation?

Hon. G. Collins: It would be in the corporate services line on page 36 and 37 of the Supplement to the Estimates — vote 23, the ministry operations, partway down. It's executive and support services. There's minister's office, and then there's corporate services, which is the deputy's office and other corporate services.

J. MacPhail: In '02-03 corporate services were $11.307 million, and for '03-04 there's $17.933 million. That difference is accounted for by Partnerships B.C. fee-for-service.

J. MacPhail: The fee-for-service for Partnerships B.C. is $7.9 million. I assume the fee-for-service that's listed here comes from government.

Hon. G. Collins: The amount from the Ministry of Finance is $2.1 million. The other, I'm told, is other project fees that they would anticipate, I'm assuming, receiving from other agencies or partners, etc.

J. MacPhail: Fair enough. So the portion that's the retainer for services comes out of the Ministry of Finance corporate services budget.

I'm looking at the Partnerships B.C. service plan resource summary. There's a line for revenues that is retainer for services, $2.1 million. We've just been told that comes from the corporate services budget of the Ministry of Finance. Where does the fee-for-service of $7.9 million come from?

Hon. G. Collins: The $7.9 million is project commissions. When we complete a project and the money flows, there is a small portion, for a fee for its role in that, that goes to Partnerships B.C. As the projects are done, they would reach a certain stage, and there would be a fee that flows to Partnerships B.C. The anticipated number for this year is $7.9 million.

Hon. G. Collins: It could be an agency. It could be a ministry of government. It could be a private partner.

J. MacPhail: An agency could be a public agency — so public agencies, ministries or private partner? What is the anticipated breakdown of contribution for the $7.9 million amongst those three groups?

Hon. G. Collins: As much as I'd like to, I'm advised that I can't break that out because we'll be in negotiations with private sector partners throughout the year. We don't want to put forward what our assumptions are as we go into those negotiations. For commercial purposes, I think it best I not break it down any further than that in public. I think I should probably just leave it at that.

J. MacPhail: Does that hold true for '02-03 as well? How will there be reporting for '02-03? For instance,

there is a budget of fee-for-services of $500,000. Will that be reported out in Public Accounts?

J. MacPhail: What are the rules around freedom of information and Partnerships B.C.?

Hon. G. Collins: It has been attached to freedom-of-information, so it is subject to the legislation.

J. MacPhail: Is it considered a commercial Crown? Is it a Crown and, if so, is it a commercial Crown?

J. MacPhail: We've talked about fee-for-service, and we've talked about retainer for services. What's the source of other revenue, which up until at least '05-06 is no more than $189,000 each year?

Hon. G. Collins: It is anticipated that would be interest income from money that is held for a temporary period of time.

J. MacPhail: I have the list of employees here. How do we find out what the breakdown is for compensation?

Hon. G. Collins: The Financial Information Act requires disclosure. It would be in the Public Accounts as well. As with any other agency of government, that all appears in the Public Accounts. It is required by law to be disclosed, and that is where that information will be available.

J. MacPhail: What was the change in the Ministry of Finance's compensation budget as a result of the setting up of Partnerships B.C.?

Hon. G. Collins: The budget for the Ministry of Finance came down by about $3.3 million when we restructured the capital division.

J. MacPhail: Does Partnerships B.C. completely replace the capital division?

Hon. G. Collins: Certainly, in function it primarily does. There were some people in the capital division that went back to various ministries. We thought there should still be a certain amount of expertise retained in the ministry, so there will be some in those ministries as well.

J. MacPhail: What the minister is saying, as I understand it, is that for '03-04, the compensation and benefits for Partnerships B.C. is a real increase of about $520,000 over and above what would have been expended through the capital division of the Ministry of Finance.

Hon. G. Collins: It's very difficult to compare the two. The whole workings of the capital process in government have changed. As I mentioned, some people would have left and gone back to ministries. Some people probably left altogether. Others have gone with Partnerships B.C. Partnerships B.C. has hired new people as well, so there has been a lot of change that's gone on.

I don't have the numbers in each individual ministry of what their costs for employees would be in those ministries that previously would have been involved in capital. I have the numbers for Partnerships B.C., which is what I'm responsible for. There have been a lot of changes with people coming and going, moving from place to different place. It's really difficult to try and take what was there before and what's there now and say what the total figure is.

I could probably try and do that. I'd have to canvass each ministry and find out what they've allocated. They may have made changes since we devolved those capital people. They may have replaced them with other people. They may have added some and may have removed some. I don't know that. I suppose I could try and find that from all the ministries and then do a comparison, but I'm not sure there would be much analytical value that would be gained by that. If that's something the member would like us to try and do, I could try and see if that's doable.

J. MacPhail: Actually, I was just doing the arithmetic based on the information the minister gave me. The minister knew quite quickly that the wages and compensation had declined by $3.3 million in his own ministry, so I assume that was in answer to the question I asked about what changes had occurred as a result of Partnerships B.C. being set up. I was just doing the math: $3.3 million down, $3.82 million up. That's a $520,000 difference.

Hon. G. Collins: To give another example of why it would be very difficult to compare these, under the previous government, as well as in the first year or so of this government, there was the partnerships division, which was held outside of the Ministry of Finance. It was in Land and Water B.C., so there was a component there as well. That's why I'm saying there are all these different pieces, and it's very difficult to say here's what we paid before and here's what we pay now.

They're not doing the same things either. They have different projects, different goals. The whole structure of capital procurement in government has changed dramatically. I'm not trying to keep information from the member. I just don't have access to all of that here. Part of it lies in previous years. Part of it lies in other agencies or Crowns or ministries that I'm not responsible for, and I don't have that information. I'm giving

J. MacPhail: I know that the budget process involved a lot of reallocation of program moneys in the budget documents, so I assume the reallocation has been done. Actually, this isn't an issue I thought was going to be controversial. I was literally just doing the math of what the minister said to me, and I assume, actually, that that realignment and reallocation has been done, because it's required by budget to do.

I want to ask a question: will the compensation and benefits expenses be reported for the period '02-03 in public accounts? But that will be only a portion of…. Partnerships B.C. was created in May. When was it staffed up?

Hon. G. Collins: The '02-03 numbers will be in public accounts when they are produced in June or July of this year. As I mentioned earlier, there have been people who were transferred to Partnerships B.C. from government, from a couple of different places in government. There were people who left government, and there were new people who were brought on. All of these will be included beside the individual in public accounts, the way it's always been done.

I note in the goals and objectives…. It's on page 8 of the service plan — goals, objectives, strategies and performance measures. "The primary goal is to develop P3s and innovative service approaches that result in value for money, while protecting the public interest." I want to talk about that in a moment.

The second goal says: "To accomplish these goals, PBC's supporting corporate goals are to become a commercially viable organization…."

Hon. G. Collins: We're anticipating three to five years. From the first few projects that come through and the experience we've seen in other places that have ramped up the partnership process successfully is that in the first year you have a couple of projects. Then you have a few more in the next year, and then more in the out years. Then you start a process, and the culture's in place where these things tend to happen more quickly.

We anticipate that within three to five years — I know that's a fairly wide range — the entity of Partnerships B.C. itself will become a commercially viable entity.

J. MacPhail: What will be the indicator of a commercially viable entity? Will that be the disappearance of retainer for services?

Hon. G. Collins: Yes. It will be when they start paying their own bills and we don't have to pay them.

J. MacPhail: Yes, but I actually mean more specifics than that. I understand from our earlier question that fee-for-services can come from public agencies but that the retainer for services is different. It's a revenue flow, a revenue stream, directly from the Ministry of Finance to Partnerships B.C. I assume that fee-for-services will continue to Partnerships B.C. from government agencies. I assume the minister would say that that wouldn't prohibit it from being called commercially viable. It's the retainer for services that will disappear.

Hon. G. Collins: The retainer may not disappear entirely. There are still services that Partnerships B.C. will give to the Ministry of Finance — i.e., advice to Treasury Board and that sort of thing.

My understanding is that that doesn't prohibit it from becoming commercially viable. It becomes commercially viable when it's generating enough revenue through the services it gives to pay its bills.

J. MacPhail: I'm just reading a message from the president-CEO on page 1 of the service plan, paragraph 3. This is dated January 31, 2003. The president and CEO is Larry Blain. "In the coming year, as we progress with our mandate, we will begin to position the company to become commercially viable by 2005-06." However, I see that in '05-06 the retainer for services, which is the amount that comes directly out of the Ministry of Finance to them, is still $1.8 million. It's like $2.1 million this year. What did the CEO mean by saying "commercially viable?"

Hon. G. Collins: We will be buying services from Partnerships B.C. They will be advising Treasury Board staff and Treasury Board. I anticipate that will continue over a period of time, so there will always be some retainer there because they will be providing services to us. I expect they're not going to do it for free, so we're going to have to pay for those. They will have that as part of their fees. I think it's about 20 percent or less of their revenues. That will continue. I don't foresee a time, if the current capital structure remains in place, where they will no longer provide any services to government.

J. MacPhail: I'm trying to figure out…. Commercially viable is a business term, so there must be a plan for commercial viability. I'm looking here to determine, in '05-06, what changes amongst revenues or expenses make the operation commercially viable.

The revenue flow stays pretty much the same between '04 and '05 and '05-06 from all categories. The

Hon. G. Collins: The entity Partnerships B.C. will have to build up some retained earnings so that it can start to flow those through, advance and invest its own dollars as it deals with these projects up front. Eventually, as they earn profits from these various years, they will start to build up some working capital, some retained earnings that they can then use going forward. At that point, we're expecting they'll have their own working capital and they'll be able to fund themselves.

They'll be making a profit or breaking even each year, and they won't need to rely on government for assistance through that process. However, government will continue to be one of their clients, because they do provide advisory services, not just based on individual projects but ongoing advisory services to government as well.

J. MacPhail: Where will it be reported about what services are provided to government in exchange for a fee? Is there some sort of financial statement or annual report where this Crown corporation will publish that?

Hon. G. Collins: There'll be a service contract, an agreement that we sign with Partnerships B.C. That will be subject to FOI as well.

J. MacPhail: Do we have any experience, for instance, on the retainer for services for '02-03 that the minister could give me some examples of?

Hon. G. Collins: There's a whole range of services that Partnerships B.C. provides. Certainly, as we move to this new model, we're determined to get it right. We are looking in government for all sorts of advice on public and private sector comparables and some of the processes that we go through with these partnerships. All of those things are advice that we would get. There would also be advice on particular projects that might be candidates for partnerships as well.

J. MacPhail: There are three or four things I need to put together here. The minister said that would be available under FOI. It's a commercial Crown. I'm asking for specifics here. Is there any specific the minister can give me under the '02-03 experience — either what fee-for-service has been, just as an example, or a retainer for services, an actual money spent by Partnerships B.C.?

Hon. G. Collins: Let me give you an example. Government needs to and needed to develop a policy on how to treat unsolicited proposals. Not only do we have projects and ministries and agencies have projects that they think might be good partnerships, which we would evaluate, but there is also — and this is part of the partnership process where you add value as well — the private sector that may come to government and say: "I've got a great idea. Here's a partnership that we can do. We'll put up some money. We've got some expertise. We could build this bridge; we could build this highway; we could build this school, I suppose, in a development."

Heaven knows, you'll get hundreds of unsolicited proposals. Some of them will be wacky. Some of them will be brilliant, we hope. What you need to do is establish a policy as to how people come to government with those. Certainly, if they've thought up an idea that nobody else has thought of, there is some value to that idea. How does government receive that idea, yet still have an open bidding process for the project that's contained in that idea? How do you ascribe value to the intellectual property in developing that idea, yet still try and make sure you get a competitive price?

That kind of stuff is very complex, very tricky. It is important that you get it right, otherwise you won't get any unsolicited proposals. It's also important that you get it right so that you don't end up paying a premium for unsolicited proposals beyond their real value. It's complicated. It is something other governments have grappled with as they've tried to develop a policy for unsolicited proposals.

I've had a number of people who have come to me, through written form or directly, to say: "We've got a great project. We can't tell you what it is. It is an infrastructure project. We've got a great idea as to how we can make this work, but we're not going to present it to you until we see what your policy is and how you're going to protect our intellectual property or how you're going to value that intellectual property." That is an example of a service that Partnerships B.C. can provide.

We have retained people from around the world, on a project-by-project or issue-by-issue basis, who have the best expertise we can find on this to help us develop those policies and then give that advice to government. Then, we make a decision on what the policy is going to be. There's an example of something that would have been billed for in the retainer for services that happened in the last year and is ongoing.

Hon. G. Collins: I don't know that we break that out by individual exercise that we give them to do. I could probably try and see if we can quantify that for the member at some point, but for that one, for example, I don't have a number right here. Maybe they can do an evaluation to determine what they actually paid or what it actually cost. I don't have it here.

J. MacPhail: This is a new Crown corporation with a substantial budget, and I'm just trying to figure out what the exchange of money is for. We're weeks away from ten months of experience with this corporation, and I can't actually get a figure for what services are offered for how much money. I'm not actually even sure in what direction the money flows. Is Partnerships

Hon. G. Collins: Probably a bit of both. Partnerships B.C. would have some expertise within itself, but we have tried to keep it relatively small. On a project-by-project or issue-by-issue basis, Partnerships B.C. may go out around the world to find the person or the business or the consultants that could provide us the best advice possible and will retain their services to get that information and provide that to government. So Partnerships B.C. itself may act as a conduit.

If government needs some information or advice, Partnerships B.C. says: "Well, we know a certain amount, but we're not going to go hire somebody and bring them in here full-time to do that, because we don't have sufficient work for them. But we are going to go to, let's say, Australia and find a company who's got a lot of experience with this, ask for their advice — maybe find someone else to do that as well — pull it together and then package that advice and give it to the Crown." The Crown can then say: "Okay. Thank you for that. Now we can decide on a policy."

There are things within Partnerships B.C. that they have the expertise right there. Another example is the negotiations around Burns Bog. The government's made a commitment to buy Burns Bog to protect it. There are some very complicated legal processes that we're going through right now and probably will for some time — not just legal issues but issues with the people that are involved, the various parties involved.

There's some corporate knowledge that was in government on that file. That is now retained in Partnerships B.C., and as government various ministries get advice on how to deal with that and what are the options available to us. We want to be the purchaser. Somebody will eventually, we hope, be the seller, and we need somebody to act as our agent to deal with those negotiations, give us legal advice, tell us if we're getting it at the right price, etc.

We would contract with Partnerships B.C. to do that, and it would be based on the number of hours they put in and the numbers of people they have involved in that file. That's not an uncommon process for a business that provides advice to an entity, whether it's in the public sector or the private sector.

J. MacPhail: I'm sure we'll get more information at the next round of estimates in terms of how this works.

Let's try to figure out how it works in terms of specific projects. Goal No. 3 of Partnerships B.C. is to increase provincial P3 capacity. This goal recognizes Partnerships B.C.'s role as "the province's lead facilitator and educator in the emerging area of P3s."

I'd like to know what projects are…. Is there a list of potential…? What's the scope of the emerging area of P3s? Is that a group of specific projects, or is it a concept?

Hon. G. Collins: It's probably both. You will find there are…. As far as the education role or the fostering of the capacity to do this, Partnerships B.C. would work with ministries to make sure their staff are up to speed on how this works and what their opportunities are. They may also host a conference or hold meetings. They may bring people, I suppose, in from outside to help with that. There are a number of things there that might happen.

There's probably a never-ending list of potential projects that will cross the spectrum from those that are really simple, straightforward, can be done in a very short period of time and not very complicated — and yes, there is a clear opportunity for a partnership in that case — to those that are somebody's interesting and creative, yet probably not very practicable idea for a partnership.

So yeah, there are probably hundreds of things that you could put on that list, and part of Partnerships B.C.'s job is to help ministries and help government identify and match what people are bringing forward as projects with what the goals of government are in their service plans and see where there's a match and where there's a deal that's doable and then devote resources to that.

Part of what they do is to take first glances at things that come in and say, "There's just not a deal there. It's not going to work," or "That's a harebrained idea; it won't work," or "Hey, that's a really creative, interesting idea. Let's get the ministry, because the ministry's trying to achieve the same goals. Let's get these people talking and see if there's something we can do."

J. MacPhail: Let me just ask some questions on specific projects that have been in the public domain already about selling off. The LDB warehouse, Bridge Studios and the Coquihalla Highway are three. Those are sales. What is the role of Partnerships B.C. in those?

Hon. G. Collins: If those projects were to go ahead, Partnerships B.C. would be the adviser to government. They would analyze the various options. They would provide advice to government — and that means ministries, as well, or agencies or Crowns — as to what the options were and what the best value for the people of the province might be so that the government could make a decision. That would be their role.

J. MacPhail: I just want to make it clear. Perhaps I was being unfair in lumping those three together. What the public is talking about in the public domain, about Coquihalla, is that it's a potential P3. It's also a potential privatization. But Bridge Studios and the LDB are listed as outright sales. Does Partnerships B.C. have anything to do with outright sales of public assets? What role, then, is Partnerships B.C. playing specifically in the Coquihalla Highway?

Hon. G. Collins: Ministries are free to access or to draw upon the expertise that is in Partnerships B.C., if they're looking to sell an asset, for example, but they're not required to. If they believe it's pretty straightfor-

ward, and they can do this on their own, then certainly they are not required to come to Partnerships B.C. for advice. But there are some that will be more complicated, or where the expertise doesn't rest within a ministry or a Crown, and they may choose to get that advice. They can certainly come to Partnerships B.C. for that support.

There has been, as the member knows, widespread discussion about what might be done or not done with the Coquihalla. I know work was done when the previous government was in office as well. That's an example of the type of advice that Partnerships B.C. would provide to government: whether or not it's feasible, whether it's doable and whether it's a good deal for the public or not. That's the kind of work the previous capital division would have done and the partnerships division would have done, and it's now the type of work, in general, that would be done by Partnerships B.C.

J. MacPhail: Actually, we don't have to talk in the speculative, because this is ongoing right now. There are public discussions. Bob Plecas is up working with regional governments on a specific proposal. Is Partnerships B.C. involved in those discussions?

Hon. G. Collins: Partnerships B.C. would certainly be involved in providing advice to government on what the options might be and what the best value would be for the people of the province.

Hon. G. Collins: We have not been asked to be involved in the liquor distribution branch process. We're available. If we can add value, if they think we can add value, that's up to them. Bridge Studios — we were involved in putting the RFP together and providing advice on that.

J. MacPhail: I heard the minister say that there was an endless list of possibilities. Is that list public?

Hon. G. Collins: No. Nor would it be. I think there are, as I mentioned, unsolicited proposals that would come forward. At the early stage, you wouldn't want them out there. That would be part of, I suppose, violating the confidence that you were entering into by accepting an unsolicited proposal.

As I said, there are lots of them. Ones that have been talked about…. The member mentioned Bridge Studios as one that's been out there. At open cabinet it was identified that the Knowledge Network was something the ministry was going to get out of and something where Partnerships B.C. could provide some advice. Coquihalla is one that the member has identified. The VGH ambulatory care centre is one where we were involved. The Fraser Valley Health Centre is one where we'd be involved. There will be others. Those are the ones I'm aware of off the top of my head that are public at this point.

J. MacPhail: It's up to the individual ministries to decide whether to access Partnerships B.C. or not. I put that in the form of a question, and then a supplementary to that is: is it possible, or is it so, right now, that ministries could be doing their own P3s separate from Partnerships B.C.?

Hon. G. Collins: We certainly are, to my knowledge, made aware of all of…. I guess I can only be aware of what I'm aware of, but I'm assuming we're aware of any of the partnerships that are out there that ministries might be exploring. They've been told that as part of the capital asset management and framework, the capital process, when they believe there's an opportunity for a partnership, they should approach Partnerships B.C. to see whether or not Partnerships B.C. can provide them any added value.

In some cases we can. Probably in many cases we can, in one form or another, but not necessarily. One of the things we would do is look at a project and say: "Sorry. You're not going to get anybody to come to the table with that. It's just that there's no revenue stream. There's no way to monetize this, and you'd better do that through the normal capital procurement process." Not everything is a P3. There's no question about that. Lots of things won't be P3s and should just be built the old-fashioned way — well, not the old-fashioned way but the traditional way here in British Columbia.

We certainly encourage ministries to do that. I have had a number of ministers come to me over the last year with projects, and I've had MLAs come to me with projects they hear about in their communities. I generally put them on to Partnerships B.C. Sometimes, with a cursory look, they can determine whether or not there's anything there, and sometimes it might require more work. We don't have it written down anywhere that they must use Partnerships B.C. for any sort of process they're involved in at all.

J. MacPhail: The Crown agency Land and Water B.C. is the agency that manages the Crown assets of the province of British Columbia. What's the relationship between Land and Water B.C. and Partnerships B.C.?

Hon. G. Collins: Their job — Land and Water B.C. — is to manage the land and water, so they do that on an ongoing basis. However, if there's a partnership that comes forward or a potential partnership or project that comes forward that might involve Crown land or water, then we would work with Land and Water B.C. to see if there was a sharing of goals and an opportunity for a successful partnership.

J. MacPhail: But does Land and Water B.C. still have the mandate for Crown asset sales?

Hon. G. Collins: You'll recall that earlier in our discussions, I said the partnership division previously was in Land and Water B.C. Then when we talked about the budget and the staffing and stuff, I said that

component has come into Partnerships B.C. now, so they don't have an involvement in the sale of Crown assets other than Crown land or water rights. That would be the extent of their work. If Crown land or water rights were involved in a broader project, then we would bring them in, as well, for their advice and their recommendations.

J. MacPhail: But Crown land sales and leases are still the responsibility of Land and Water B.C.

J. MacPhail: Has the minister booked for '03-04 a figure of revenue flow from Partnerships B.C. in the budget?

Hon. G. Collins: It doesn't flow through the CRF. It would be to Partnerships B.C. It would be $10.128 million. Certainly, as we consolidate and go to GAAP, then their revenue would be our revenue and their expenses would be our expenses. Depending on how it all works, it would all come out in the wash at the bottom of the summary statements. We had a bit of a discussion about that last night around revenue streams for government.

J. MacPhail: Yes, I know. I'm sorry. I don't see the ten…. Could the minister point…?

Hon. G. Collins: Go right to the bottom. Total revenue: $10.128 million for 2003-04.

J. MacPhail: Oh, I'm sorry. That doesn't help me because that's the total revenue to the Partnerships B.C. I'm talking about revenue that the government gets via P3s from the Partnerships B.C.

Hon. G. Collins: We could not book a revenue until a deal was done. Until some deal is finalized and we actually have a commitment and there is a revenue flow to government as a result of a potential sale of an asset, we don't put that in the budget. It's not realized, and as part of the accounting principles you can't book that until it actually happens.

J. MacPhail: Budgets can also forecast. There's nothing in the budget that forecasts revenue?

Hon. G. Collins: There is nothing to my knowledge in the budget that would forecast the sale of an asset through a partnership in this year or the out years. I said that on budget day. There may be a partnership on the Coquihalla, there may be a partnership on rail that might have some net flow to government after debt was dealt with, but we can't account for that until such time as a decision is made and an agreement is entered into.

J. MacPhail: Any forecast profitability amongst Crown corporations or in the budget doesn't entail an asset sale or a public-private partnership. I'm thinking about particularly, let's just say, B.C. Rail for an example. That profitability is not based on any asset sales or a P3.

Hon. G. Collins: On Rail I want to be careful because they have signed an agreement or entered into an agreement — I don't know what stage the agreement is at — with P&O to sell the marine division. With that caveat, I know there is nothing in their plan with regard to a potential partnership for the delivery of freight service, for example, or passenger service. I do know there is a sale in the works, and I honestly don't know what stage it is at, at this point, with Rail and their marine division. Depending on where that deal is and how certain it is, it may or may not be reflected in Rail's bottom line. I can try to find that out for the member, but off the top of my head I don't know the current status of that.

J. MacPhail: My last question is: in the first quarterly report for 2003-04, where will the financial reporting of Partnerships B.C. occur?

Hon. G. Collins: Partnerships B.C. would have its own quarterly report, like the other Crowns do. Hydro has a quarterly report; Rail does; ICBC does. Partnerships B.C. would be no different.

J. MacPhail: Those are my questions. I would ask the minister if he could provide the information that he has so kindly offered to give me as quickly as possible, because I will need it for other estimates. Having said that, those are my questions. Thank you to staff.

Hon. G. Collins: Staff is endeavouring to do that already and will continue to try and get the information to the member.

I was just passed a note from my deputy that the Rail service plan does not book the revenue from the P&O sale of the marine division, but once the deal is finally done it will be included in their quarterly, I assume, whenever that happens.

We will endeavour to get the information to the member that I've committed to get to her. We'll try to do it in a timely fashion. I know that one of the risks of having Finance estimates early is you sometimes end up answering questions from other ministries. There were some things I mentioned to the member that would probably be better asked to the ministers of those ministries. We'll try and make sure those ministers are aware of the line of questioning so they're prepared to provide answers. As well, where I've tried to provide specific numbers or details, we'll try to do that in advance of the other estimates if that's possible at all.

I want to thank the member. I want to thank other members and thank the staff from the Ministry of Finance for their help and support. We can start getting ready for next year. Thank you.

Vote 42: contingencies (all ministries) and new programs, $170,000,000 — approved.

Vote 46: commissions on collection of public funds and allowances for doubtful revenue accounts, $1,000 — approved.

Hon. G. Collins: I move the committee rise, report resolutions and ask leave to sit again.

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