Hansard -- Tuesday, March 25, 2003 p.m. -- Vol. 13, No. 4 (HTML)



CONTENTS

	Routine Proceedings
		Page

Introductions by Members		5613

Introduction and First Reading of Bills		5613
	Coalbed Gas Act (Bill 16) Hon. R. Neufeld Securities Amendment Act, 2003 (Bill 24) Hon. R. Thorpe

Statements (Standing Order 25b)		5614
	Marijuana grow operations legislation R. Nijjar Proteomics research facility S. Brice Marijuana grow operations D. Hayer

Oral Questions		5615
	Eligibility review for disability benefits J. MacPhail Hon. M. Coell Sale of fast ferries R. Stewart Hon. J. Reid International languages in high school curriculum P. Wong Hon. C. Clark Independent power production proposals J. Les Hon. R. Neufeld Homelessness J. Nuraney Hon. G. Abbott

Tabling Documents		5618
	Industry Training and Apprenticeship Commission, annual report, April 1, 2001, to March 31, 2002

Petitions		5618
	P. Nettleton J. MacPhail

Second Reading of Bills		5618
	Supply Act (No. 1), 2003 (Bill 26) Hon. G. Collins

Committee of the Whole House		5619
	Coastal Ferry Act (Bill 18) J. MacPhail Hon. J. Reid J. Bray

Royal Assent to Bills		5638
	Museum Act (Bill 2) Motor Vehicle Amendment Act, 2003 (Bill 17)

J. Weisbeck: In the gallery visiting from Kelowna on behalf of the Myra Canyon society are two members: Carl Marcotte and Mr. Ken Campbell. Would the House please make them welcome.

B. Belsey: I have the pleasure of introducing the Prince Rupert anchor for CHTK TV and The Mix, Devon Keller, who's down here joining us for a couple of days. Would the House please join me in making her welcome.

R. Visser: Joining us today is the new mayor of Gold River, Dave Lewis, a consulting forester and one of the great young political minds in this province. He's going to lead that community on to great and good things in the future. Would the House please make Mayor Lewis welcome.

S. Brice: In the House today there are 30 children from Glanford Elementary School along with their teacher, Barbara MacAulay. I would ask the House to make them welcome.

P. Sahota: Joining us in the gallery is a constituent of mine, Ms. Noreen Boudreau, who is the executive director of Janus Family Programs in Vancouver and the president of the Federation of Child and Family Services of B.C. Would the House please make her welcome.

B. Lekstrom: This afternoon, joining us in the gallery are three hard-working young ladies who do a fabulous job for all of the government caucus. Would the House please join me in welcoming Caitlin Quinn, Laura O'Connor and Lisa Johnson, who is also celebrating her birthday today. Happy birthday, Lisa, and welcome.

P. Bell: I see in the gallery today we have a very good personal friend of mine and my campaign manager, a wonderful gentleman from the beautiful community of Prince George. Would the House please make Mr. Jim Blake very welcome.

Hon. S. Bond: Not to be outdone by my colleague from Prince George North, I too have a constituent and friend in the gallery today who works with the Prince George airport. He's here, as you can imagine, to speak to the Minister of Transportation. Please join me in welcoming Stieg Hoeg.

B. Belsey: On behalf of my colleague from the Skeena riding, I would like to introduce His Worship Jack Talstra, the mayor of Terrace, who's joining us today.

Hon. R. Neufeld presented a message from Her Honour the Lieutenant-Governor: a bill intituled Coalbed Gas Act.

Hon. R. Neufeld: I am pleased to introduce Bill 16, the Coalbed Gas Act. The Coalbed Gas Act removes uncertainty over the ownership of coalbed gas and creates economic opportunities in British Columbia's heartlands.

The Coalbed Gas Act is an integral component of this government's heartland economic strategy and fulfils our throne speech commitment to open up coalbed gas resources in British Columbia.

Coalbed gas is an important and untapped source of natural gas that offers tremendous potential for our province. Energy demand is rising, and new opportunities like coalbed gas have the potential to diversify British Columbia's energy supply. British Columbia has been endowed with a wealth of energy and mineral resources. These resources have the potential to help revitalize our economy and usher in a new era of prosperity that all British Columbians can enjoy.

In the past, investment in coalbed gas was hampered by legal uncertainty around ownership of coalbed gas rights. This act removes that uncertainty and establishes, in legislation, the longstanding policy that coalbed gas is and always has been owned by the natural gas owner.

Coalbed gas potential in the province is estimated to be equal to 90 trillion cubic feet. This legislation will help unleash the potential of our vast coalbed gas resources by creating the stability and certainty that industry needs for investment. The creation of the Coalbed Gas Act sends a clear message that government is taking action to open up new economic opportunities across the province and that we are working with industry to make this province a more competitive and attractive place to invest. The act I'm introducing today demonstrates our commitment to create a thriving private sector economy that supports high-paying jobs for British Columbians.

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

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

Hon. R. Thorpe presented a message from Her Honour the Lieutenant-Governor: a bill intituled Securities Amendment Act, 2003.

Hon. R. Thorpe: I move that Bill 24 be introduced and read a first time now.

Hon. R. Thorpe: I'm pleased to introduce the Securities Amendment Act, 2003. The primary purpose of this bill is to make amendments to improve the investment environment in British Columbia. The amendments decrease a number of requirements, support efficient capital markets and increase investor protection.

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

Bill 24 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

R. Nijjar: It is estimated there are 7,000 to 10,000 marijuana grow operations in the city of Vancouver and over 20,000 in the lower mainland. I've been working in my community since the election to deal with this issue. Community groups and police often feel at a loss. They're very frustrated. Growbusters in my neighbourhood has six officers working on this issue, but they will never catch up. When police do arrest criminals, they're reluctant to lay charges because of the amount of paperwork for what seems to be a lack of appropriate sentencing. I've heard marijuana grow operators say that the penalties are merely the cost of doing business.

I've looked into the possibility of a bill requiring the registration of hydroponic equipment, at the relationship between B.C. Hydro and our police forces, and I've looked into encouraging sentences that reflect the public's values. Repeatedly, police have said they need help with more severe penalties and the appropriate sentencing from the judicial system, and I agree.

In Ontario legislation, the Remedies for Organized Crime and Other Unlawful Activities Act is designed to take the profit out of unlawful activity, disrupt and disable corrupt organizations and prevent people from being victimized. The legislation allows the province to (1) ask civil courts to freeze, seize and forfeit assets that are the proceeds of unlawful activity or that are likely to be used as instruments in the commission of unlawful activity; (2) take to court two or more people who conspire to harm the public; and (3) enable direct victims of unlawful activity to claim compensation against the forfeited proceeds.

Now, there are those who will say we already have proceeds-of-crime legislation. The Ontario legislation would strengthen our ability to confiscate the proceeds or the apparent proceeds of crime. This legislation would give our judicial system more teeth, with more power not just to compensate victims but to cripple criminals by attacking what is most important to them — their assets. I encourage everyone to support this direction.

S. Brice: Recently, along with the Minister of Management Services and the member for Oak Bay–Gordon Head, I attended an event at the Vancouver Island Tech Park in Saanich South. We welcomed the relocation of the Genome B.C. proteomic research project. The move resulted from an agreement between MDS Metro Laboratory Services, Genome B.C. and the University of Victoria.

This agreement is a great example of our government's efforts to stimulate new partnerships between academic, business and biotech communities. Proteomics research is an exciting new field that extends from genetics research and focuses on proteins. The ability to unravel and analyze proteins gives valuable insight into the diagnosis, monitoring and treatment of disease.

The move to the Vancouver Island Tech Park brings the UVic facility close to MDS Metro Lab and advances proteomic research in collaboration with the private sector. The UVic research facility provides protein chemistry services, and MDS Metro provides a full range of lab services to help treat, diagnose and monitor patients.

Two groups will share a pool of skilled and talented researchers and technicians and sophisticated instruments in over 20,000 square feet of lab space. The move will also give increased opportunities for students and bring biotech research into the marketplace.

The third partner, Genome B.C., is a committed investor in the project and in helping to develop research infrastructure in the province. These new partners are joining a technology community of other terrific, cutting-edge companies, all happily working together in the most progressive and environmentally designed building in the province. The project brings new promise for treatment of disease and ensures that B.C. is a leader in high-tech development and research.

D. Hayer: Marijuana grow ops are expanding at an alarming rate in the riding of Surrey-Tynehead. They have invaded Fleetwood, Fraser Heights, Port Kells, Tynehead, Cloverdale and many other communities

across the lower mainland. Some areas reportedly have more than half a dozen grow ops in a single block.

These are family-oriented neighbourhoods. Residents are frightened, and they're frustrated. They tell me they fear for their children's safety and feel threatened by the potential for drive-by shootings, home invasions targeting the wrong homes, and fires. Residents are also frustrated by the light penalties handed down to the grow operators. They tell me there seems to be an apparent lack of seriousness in our courts to the risk these grow ops represent to our neighbourhoods. Time and time again, the police arrest these operators only to see them right back on the street and back in the business in someone else's neighbourhood.

Grow ops are organized crime. They are invading my riding of Surrey-Tynehead and many other communities that were once considered safe places to raise our children in. We must clamp down hard on marijuana grow ops, and we must ensure that our courts take a hard line and punish these criminals appropriately.

We need to make our voices heard in Ottawa and encourage the federal government to change the Criminal Code. The communities must also come together with local government representatives, the RCMP and B.C. Hydro to share information and explore ways to stamp out grow ops.

I look forward to participating in the Premier's dialogue on crime to share my constituents' concerns about grow ops, identify ways to act to take our neighbourhoods back from these criminals and restore justice to our judicial system.

J. MacPhail: Yesterday the opposition revealed that the Minister of Human Resources had made an error in informing people with disabilities about the appeal period. Today we learn that because of our raising the issue, he has corrected his error and the appeal process will now conform with his own regulations. Let's see whether we can make some progress today on some other fronts.

The Minister of Human Resources said yesterday that the disability review process was not about cost-cutting. Then in the next breath he said that the previous system was growing at a rate that was not sustainable. To the minister: which is it? Is it about cost-cutting, or isn't it? His own documents say that the plan is to kick 9,100 people off disability benefits. It's a straightforward question. It's not a hard question. What is it? Is it about cost-cutting? Is it about kicking people off benefits or not?

Hon. M. Coell: The government wants to provide income assistance to those people who are most in need. We've done a review of the previous DB-2 clientele, and we want to make sure we're targeting our funds to those most in need.

I think you'll find that over the coming years, the caseload continues to rise. I've said this before. The caseload for people with disabilities will continue to rise, but it will rise at a slower rate than it had been in the past. In the past it had been rising at about 11 percent per year since the changes were made. The average in Canada was about 2 to 3 percent, and we'd like to see it rise at those levels.

J. MacPhail: Well, in fact, it isn't about percentages. It's about people in need, as the minister says, and people with disabilities getting what is due to them in terms of government support. Again, if this province doesn't want to be reasonable in that area, then I guess we fall to tenth place in that area as well.

Yesterday the Minister of Human Resources accused advocates for disabled British Columbians of fearmongering. He said that they've chosen to misinform….

J. MacPhail: The minister said that they have chosen to misinform and spread fear among the very people they have been advocating for. The issues that have been raised in this House are from the advocates of people with disabilities.

The minister should be ashamed of himself, as should his government. From day one it's been his own incompetent handling, as we showed yesterday, of this review. It's caused fear, anxiety and enormous suffering for thousands of British Columbians.

Can the minister tell this House what advocates for the disabled are supposed to do when they have people with disabilities coming to them, who he's kicked off benefits, and are now panicked by the complicated and bureaucratic appeal process? What are they supposed to do?

Hon. M. Coell: I think I said "the member and her friends," and she can take that for what it's worth.

The government wants to make sure that people who need assistance get assistance in British Columbia. We're spending approximately $450 million on continuous assistance for people in need, and we're pleased to do that. We're pleased to make sure that people who have needs have those needs met in British Columbia. But we also have a responsibility to make sure that the people receiving the funds from government are reviewed periodically, and a review every five years is something that we put in legislation and that we intend to do. In the previous government there

was no review, no medical review of any files. What we want to do is make sure that funds collected by the taxpayer are going to those who are most in need.

J. MacPhail: Yes. The opposition is raising concerns of every single person with a disability in this province who can't get representation from their own MLAs, and that's who this minister is accusing of fearmongering.

J. MacPhail: Not once has one of them stood up to defend people with disabilities.

J. MacPhail: Disabled British Columbians have reason to be frightened. In the few days that the minister is allowing for appeal — even now, according to his own rules — disabled British Columbians, some of whom have trouble reading and writing, are supposed to navigate their way through a maze of bureaucratic hoops and provide extensive documentation countering the ministry's case. It can take days to get an appointment with the social worker to get back the 23-page form to begin the appeal process. It takes days, sometimes weeks, to get an appointment with the doctor to provide an opinion on the appeal. It can take weeks to get an appointment, especially in rural areas, to get a legal advocate to help prepare a case. Many will just give up. Will the minister at the very least show some humanity, admit that his appeal process is a bureaucratic maze with no reasonable time lines and extend the appeal time lines for disabled British Columbians who he has kicked off benefits?

Hon. M. Coell: I think it's important for the member to know that over 7,500 new applications have been received since September. That's 7,500 people who believe that the new criteria fit their needs, have taken the time to pick up an application, have gone to see a doctor and a health care professional…

Hon. M. Coell: …and have put their applications in. I think it's important, too, to know that 3,200 more people are receiving disability assistance than when the previous government was in. We've increased from $200 to $400 the amount that people can earn on disability assistance. We are spending $24 million…

R. Stewart: Three years ago the Premier of the day admitted that building them was a mistake, and yesterday we found out how much they are worth. Yesterday British Columbians were shocked when the NDP's legacy, the three fast cat ferries, sold for a combined total of just $20 million, less than 5 percent of what they cost to build. Some British Columbians are asking today whether government was thorough enough in its attempt to mitigate the loss caused by the NDP's fiasco.

To the Minister of Transportation: could these fast ferries have been sold sooner and for more money?

Mr. Speaker: Hon. members, let's have some order so we may hear the answer from the Minister of Transportation.

Hon. J. Reid: Over the last 20 months we have been very diligent in our examination of the three ferries. We looked at all possible uses.

Mr. Speaker: Order, please. Order. If you wish to make comments, please address the Chair. The Minister of Transportation has the floor.

Hon. J. Reid: We looked at the route the ferries were built for and why they were losing as much money as they were, operating on that route — that they carried the wrong mix of traffic for the route. We looked at using them on different routes. We looked at replacing the engines with conventional engines, which would have cost about $30 million a vessel in addition. We looked at the lack of loading and unloading facilities, to use them on different routes. We examined everything that people brought forward to this office.

It became apparent that there wasn't another use we could put them to that wouldn't require a huge investment and ongoing loss of taxpayer dollars. We realized, as independent reports indicated, that a sale was the best route to go with these ferries, and we pursued a sale of the ferries. The previous government had had an offer of $88 million on the ferries. They decided not to pursue that because of the timing of the election.

Hon. J. Reid: After the election we pursued that option, that opportunity. Changes occurred in the world marketplace. That option and opportunity was no longer there. For the last two years we looked at every other opportunity, and yesterday the true value of those ferries was realized. It's a very sad end to an experiment of the previous government.

Mr. Speaker: Order, please. Question period will continue when the Leader of the Opposition comes to order.

P. Wong: My question is to the Minister of Education. Proposed changes to high school graduation requirements would reduce the number of international language courses offering provincial exams. My constituents are concerned that these changes could reduce the emphasis that international languages currently have in the high school curriculum. To the Minister of Education: why are these changes being proposed, and what impact would they have on high school language training?

Hon. C. Clark: In answer to the member's question, one of the ideas that surfaced during the course of our review of grad requirements in British Columbia was the suggestion that perhaps we would cut back on the number of exams. Since we've been on our consultation about that, I've heard quite a bit of concern, particularly from members in the Chinese community and the Punjabi-speaking community. I have heard lots of representations from this member and from the member for Burnaby North in particular. Their concerns are that it will undermine the value, or at least the public perception of the value, of having a second language and that it might damage children's chances of applying to university, because they need those courses. I take those representations very seriously. We've wrapped up our consultations, and we'll be coming forward with a decision very, very soon.

J. Les: My question today is for the Minister of Energy and Mines. Last fall the minister tabled a new energy plan for the future in British Columbia. A key provision of that plan was the ability of the independent power producers to competitively supply new electrical supply for the future of our province. B.C. Hydro has since requested proposals for new electrical generation, but certain self-interested groups, mostly associated with the previous failed and discredited government, have maintained that B.C. Hydro's new direction is determined to fail.

J. Les: I would love to hear from the minister what the response has been to those proposal calls both from the IPP community and from the financial community in British Columbia.

Hon. R. Neufeld: There has been great response to the calls that B.C. Hydro made in May for customer-based energy in the province. They called for about 800 gigawatt-hours. They received proposals for 6,800 gigawatt-hours. In the fall, in October, they called for clean energy, another 800 gigawatts of power, and received about eight times what they wanted in proposals.

The IPP community has stepped up to the plate. They say they're willing and ready to be able to do it for the province. In fact, VanCity Credit Union in Vancouver has proposals on its desk and has approved financing for one of the projects in British Columbia. It's more good news for the province.

J. Nuraney: My question is to the Minister of Community, Aboriginal and Women's Services. While in Vancouver earlier this month the Prime Minister of Canada announced a $400 million initiative for homelessness across the country. We in Vancouver and in the lower mainland have a dire need to tackle this problem. I think, in my opinion, it is a real blemish on our society.

J. Nuraney: This reminds me of my old car. After I switch it off, it still continues to putter.

J. Nuraney: …tell us how we are going to benefit from this? When can we expect the implementation of this initiative?

J. MacPhail: I won't be done for quite awhile — until you stop making people homeless….

Hon. G. Abbott: The issue of homelessness does remain a very important provincial and national issue; there is no question about that. As the member noted, the Prime Minister and the federal minister responsible — Claudette Bradshaw, the Minister of Labour — when they were in British Columbia recently, did announce an extension of the SCPI program of about $400 million, as the member noted, nationally. We are still awaiting some detail from the federal government with respect to that, but we do expect that British Columbia will receive somewhere between $16 million and $17 million annually for three years as part of the renewed SCPI program.

We are certainly looking forward to working with Minister Bradshaw, with whom both the Minister of Human Resources and I have an excellent relationship. We're looking forward to working with her. We have partnered in the past through the Ministry of Human Resources and through Community, Aboriginal and Women's Services — B.C. Housing — to partner with projects with the federal government and with local governments to address the issue of homelessness.

We certainly are looking forward, in the weeks and months ahead, to seeing other projects roll out. Certainly, we were delighted to have the sale of the Woodwards Building at a discounted rate to the city of Vancouver. That's important. Certainly, we're looking forward to announcing other projects in conjunction with the city, other local governments and non-profits to address the very serious problem of homelessness that we have in this province and in this country.

Hon. S. Bond: I am presenting today the annual report of the Industry Training and Apprenticeship Commission for the period April 1, 2001, to March 31, 2002.

P. Nettleton: I wish to submit a petition signed by 677 citizens of British Columbia intent on stopping the further privatization of B.C. Hydro.

J. MacPhail: I rise to present a petition from Cedar Cottage Neighbourhood House concerning cuts to child care. Cedar Cottage Neighbourhood House is committed to providing quality accessible child care at affordable rates. Cedar Cottage….

J. MacPhail: There are rules for one side of the House and not the other, eh? This petition…

Mr. Speaker: The Chair resents that last remark, and I would ask the member to withdraw it, please.

Hon. G. Collins: This supply bill is in the general form of previous supply bills. The first section of the bill represents 1/6 of the voted expenses as presented

in the Estimates to provide for the general programs of government. Fifty percent of financing transaction requirements set out in schedules C, D and E of the Estimates have been provided for in the interim supply bill. This will allow time later for more complete debate on those items.

The third section requests the disbursements related to revenue collected for and transferred to other entities which appear in schedule F of the Estimates. As there's no impact on the deficit borrowing or debt from these particular financing transactions, 100 percent of the year's requirements is being sought in this supply bill.

Hon. G. Collins: I move that Bill 26 be referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Bill 26, Supply Act (No. 1), 2003, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

The House in Committee of the Whole (Section B) on Bill 18; J. Weisbeck in the chair.

J. MacPhail: I want to talk first about the definition of "core ferry services." There's a definition for core ferry services later on in the legislation. I assume core ferry services…. By definition, it says it's about transportation services that ferry operators are required to provide under contract. The minister separates out, when she talks about it, core routes and core services and says both will be protected under the new legislation.

Does the definition of core ferry services include core routes? How does the minister distinguish between core routes and core services?

Hon. J. Reid: There are two definitions. One is "core ferry services," which does indeed refer to services. The next definition is "designated ferry routes," which would be the core ferry routes.

J. MacPhail: Is it the minister's view that the only services the ferries operate are the transportation routes, that there are no other services provided that are core services?

Hon. J. Reid: I was wondering if the member could clarify the question. I'm not sure if she's talking about ancillary services — in addition to — or if she's talking about the routes and whether additional routes are possible. If she could clarify the question, that would help with the answer.

J. MacPhail: I'm sure everybody thinks of the Ferry Services as just the service of moving a ferry from point A to point B. My understanding is that there are other services that the ferry corporation provides, ancillary services in terms of contributions to communities and also rescue services — requirements under the law to provide services to communities that are ferry-dependent — or services related to medical evacuation, those kinds of things.

Hon. J. Reid: All those services would be covered in the contract between the corporation and the government.

J. MacPhail: How do they get guaranteed? Is it that we have to read the contract in order to understand that those get guaranteed? My understanding is that the contract won't be made public until…. Will it ever be made public?

Hon. J. Reid: This contract will be made public after it's signed. The contract is for 60 years. The services the member was referring to — medical emergency, evacuation — would be part of the 60-year contract.

J. Bray: Just a couple of quick questions on definitions. With respect to designated ferry routes, I'm wondering if the minister could just advise us whether or not it limits the ability for additional opportunities for entrepreneurs and other people to provide ferry services on the coast and to designate new routes or to determine other opportunities with respect to ferry routes under this definition.

Hon. J. Reid: We certainly would like to see additional routes that could be offered, that could be operated, so this certainly doesn't restrict the offering of additional routes. In fact, as we get further into the legislation…. One of the roles of the commissioner is to foster competition, so we believe that principle is built into this legislation.

J. Bray: The other question I have under section 1, then, is under the definition of "ferry operator." Is it then, with respect to this legislation, that there may be other individuals down the road who may be involved in ferry operations outside of the coastal ferry services contract provider — that this doesn't limit the ability of other individuals to become involved in the provision

Hon. J. Reid: Certainly, to encourage ongoing competition with regard to delivery of transportation services, subcontractors can be used, just as they are now, to deliver those core services. That's certainly an option. This doesn't limit in any way the ability for other ferry operators to enter into a business plan and fulfil that business plan. We know right now in Nanaimo there's a foot passenger ferry underway that's totally separate from what government does, totally separate from what exists in this legislation. In no way does this legislation impact people who want to offer ferry service in the future.

J. MacPhail: Well, further to the questions just asked by the member for Victoria–Beacon Hill, what is the business plan where the minister has made predictions, forecasts, for fare increases? What does the business plan entail in terms of competition that will still say that ferry increases are limited to the amount that she has announced?

Hon. J. Reid: I would suggest, if the member doesn't mind too much, reserving that for when we discuss section 39, because that's when we're going to be talking about the price cap and the fare increases. There's a much larger topic there, so if that works well, then I think it would be better in the larger context of that discussion.

Just to be clear, then, the company that purchased the three fast cat ferries yesterday can operate all three vessels within the waters now served by B.C. Ferries.

Hon. J. Reid: The waters that B.C. Ferries operates in are certainly not B.C. Ferries' waters, and so anyone can operate in those waters. What we're looking at here is the situation around terminals and the property and the access to those terminals, again making sure that people on the coast know that their core services are protected, are ongoing, and that rates are going to be predictable and certain for them. It doesn't preclude, again, any entrepreneur from looking at new opportunities within the waters of British Columbia.

J. MacPhail: What I actually meant was: was there any part of the bid yesterday that required the vessels to be used outside the waters now used by B.C. Ferries?

J. MacPhail: Mr. Chair, I want to thank the Ferry Corporation for a briefing on this legislation, but as a result of the briefing I need some guidance as well, just in terms of what sections to discuss it under. As part of the legislation, the Ferry Corporation is set up as an entity under section 2 but then is converted to an entity under the Company Act. Could the minister just quickly point me to that section? Oh no, I'm sorry. It's not in the legislation about converting to the operation under the Company Act. Or if it is, point me to the section, please.

J. MacPhail: This is a section that establishes the capital — the ability for the corporation to raise its capital exclusively, as I understand it. Could the minister explain the intent of this section, please?

Hon. J. Reid: This section is simply a technical provision to allow for the ability of the authority to have money to cover the voting share.

J. MacPhail: This section makes the first directors of the authority the same as the existing directors of the B.C. Ferry Corporation, and of course, the existing directors of the B.C. Ferry Corporation are OIC appointees, government appointees, cabinet appointees. How long will this board be in place?

J. MacPhail: There was great fanfare about this government. In fact, this has been the government of the day's position when they started announcing the changes they were going to make to the B.C. Ferry Corporation — that it was going to be an independent authority and that it was going to be free of political meddling. Well, this board will be in place until the last year of this government's mandate, so how would the public notice the change?

Hon. J. Reid: This board would be in place until April 1, 2004. What's important here is that the board that's been in place has been there going through the core review of B.C. Ferries. It has been instrumental in understanding this direction in choosing a new CEO for British Columbia Ferry Services and certainly is integral to the orderly transition to a new system. That's the purpose of the year.

J. MacPhail: Yes, but my understanding is that the new corporation is in place days from now — April 1. The new corporation will be in place. All the work of

changing it over has been done. We're passing legislation. It doesn't seem that anybody else maybe has any difficulty with this. What's the need of exactly the same politically appointed board for a brand-new structure that's independent?

Hon. J. Reid: While the new entity will be in place April 1, there's still a considerable amount of work to be done to complete that transition. I think it should be fairly obvious that this is quite a significant undertaking. For example, in looking at the board of the new authority, while there is representation from regional districts, there is still work to be done in working out that process with community consultation to get to how those board members will be brought forward. We do expect that this board will be able to be in the best place to achieve the work that needs to be done, and I certainly believe they're going to be very busy over this next year in order to achieve that.

Hon. J. Reid: They will be getting paid the same as they are currently getting paid, but to be absolutely clear for the record, if I could bring that answer back very shortly…. I don't want to misquote a figure, and we don't have the exact figure. We will get the answer, and I shall bring it back into the debate in just a few minutes. It will be the same as they're currently getting, and we'll establish that exact amount in a few moments.

J. MacPhail: I'd appreciate the chair's compensation as part of that as well, please. I guess that will be an annual figure for the next year, the next 12 months.

Was an interim board with new members considered as an alternative at all to continuing the board of directors of the B.C. Ferry Corporation? I note that the government likes to talk about this model being the same as or similar to or modelled after the Vancouver Airport Authority. It started with brand-new directors. Now, there was no airport authority in place before, but there were still exactly the same transition issues. I'm just curious as to whether this government even considered a brand-new board.

Hon. J. Reid: In fact, as we looked at the airport authority model, we learned some things from the airport. We certainly had discussions with them, as well, as to what worked and what didn't work. One of the strong messages was how important continuity was. Once again, there is a tremendous amount of work that the board has been involved in, in developing this model and in being able to execute it and turn it over to others. While we did consider the different models and the different options available, we believed the advice we were receiving about continuity and the importance of transition. The amount of knowledge the people on the board have amassed in working extremely hard through a very complex process, we feel, is very valuable to carry on through this next year.

J. MacPhail: The term of the office of the first directors of the authority expires March 31, 2004, so I assume they won't be eligible for the board of April 1, 2004.

Hon. J. Reid: There is nothing with regard to the appointment of the current directors. There's nothing to exclude them, but there's certainly nothing to include them. There's no provision made for those people to carry on into a future board.

To answer the previous question with regard to the current levels of remuneration for the B.C. Ferries board members, the chair receives an annual honorarium of $30,000, the board members receive $15,000 annually, plus there's $750 per day to attend meetings.

J. MacPhail: I'm not sure whether the corporation is on a fiscal that ends in March or a fiscal that ends in December. Perhaps we could actually have the real compensation for the directors — what they actually got.

Hon. J. Reid: Just for clarification, are you asking for how many meetings they attended so, therefore, how much money was allotted to them? I obviously don't have that information with me at the moment. Maybe the member can clarify. In looking forward to the next year, is that the context of the question?

J. MacPhail: Is the minister going to get that information for me? Sorry, I just missed it — whether she was or not.

Hon. J. Reid: It will take some time to pull that information together. If I don't have it during this discussion, we'll submit it to the member's office and provide her with that information.

J. MacPhail: That's fine, because we still have estimates to go through. We can discuss these matters around estimates, but I do need it before that. I am interested to understand, then, why the stutter step of saying that we've got the interim board when it's very possible that the interim board could become the new board of the independent authority. It is possible. I just asked the minister whether they were precluded, and she said no, they're not precluded. There's nothing to prevent this government from making the interim board the permanent board, as I understand it.

Hon. J. Reid: The regional districts will have involvement in choosing members to represent coastal communities so that there is, again, this process that is to be developed with consultation with those communities to make sure there is that representation. How the current board could end up in that position…. I can't figure how that could happen.

J. MacPhail: No, that's a good point. The board members that are, then, separate and apart from that…. In fact, I understand that…. Well, we'll get to that in section 5, I guess — about the board members other than the coastal community appointees.

The Chair: Minister, we have an amendment on section 5. Do you want to pass that amendment and finish?

Hon. J. Reid: Yes, Mr. Chair. I move the amendment to section 5 that's in the possession of the Clerk.

[SECTION 5, in the proposed section 5 (4) by deleting "and 6 (2)," and substituting "and 6 (3),".]

Hon. J. Reid: It's a typographic error. In the proposed section 5(4) we're proposing to delete "and 6 (2)" and substitute "and 6 (3)."

J. MacPhail: Section 5 talks about the directors that will be in place as of April 1, 2004, and 5(1) says: "Directors of the Authority, other than its first directors who are in their first term of office with the Authority, must be qualified individuals and must be appointed in accordance with this Division."

I need two separate explanations. What does the phrase "other than its first directors who are in their first term of office with the authority" mean?

Hon. J. Reid: It's just simply to say the current directors as such for the first year, and thereafter, the directors will have to be the qualified directors.

J. MacPhail: So the phrase "other than its first directors who are in their first term of office" refers back to clause 4 and no one else?

J. MacPhail: Could the minister then define…? The Lieutenant-Governor-in-Council is going to determine qualification for the directors after April 1, 2004, as I understand it. That's 5(2). How is the government, the cabinet, going to determine qualification?

Hon. J. Reid: That section refers to the 13 regional districts being broken down into four appointment areas. It has nothing to do with who will get appointed from those areas.

J. MacPhail: Sorry — 5(1) means the qualification is that they come from the right geographic area? I'm looking at 5(1). It says: "…must be qualified individuals and must be appointed in accordance with this Division." I assume "must be appointed in accordance with this Division" means coming from the different districts, but I'm asking what "must be qualified individuals" means.

Hon. J. Reid: I'd like to refer the member to the definitions section. In the definitions section is the definition of qualified individuals.

J. MacPhail: Okay. So those are the only limitations. I assume, then, that…. Well, let me ask this. Are those the only limitations on qualification?

Hon. J. Reid: In addition, under section 9, the member would note that there are sections of the Company Act that would apply to the authority and its directors, and that would be in the Company Act. People who are excluded would be bankrupts, people under the age of 18, etc.

J. MacPhail: Well, that's good to know. My questions around qualification relate to my previous line of questioning about what prevents the board from just rolling over then. I note further on here in the same section, section 5(3), it says that nine individuals have to be appointed by various geographic groupings of coastal communities, but the qualifications also say that it can't be the elected people from those various geographic areas. So clearly the geographic clusters are going to have to appoint someone, other than the elected officials, from themselves. Why couldn't they just appoint someone or be asked to appoint someone that's currently on the board? There's no residential requirement. I don't note that there's any requirement that you live in a particular community or anything.

Hon. J. Reid: This process in involving the coastal communities. We trust that the coastal communities will know how to best send forth their representatives, so we're putting as few restrictions as possible in order to get a good-quality board. While the member is speculating that in theory, some very bizarre circumstance could happen, the likelihood of that happening is, again, hard to estimate. What's important here is that the coastal communities in the different groupings will put forward their nominees, and I trust those coastal communities will put forward people that they believe will represent them.

J. MacPhail: I'm not speculating. I'm just asking for information about how it won't be a possibility. I can only imagine that if a coastal community wishes to keep a particular service going or whatever, there may be various alliances or allegiances developed. That's all. I'm just trying to see how independent this new authority actually is. There is a way of defining true independence, and this legislation doesn't do that.

Let's go to 5(3), then. It talks about the appointees, the nine individuals who will be appointed. The first group of the nine…. Oh, I'm sorry. Does the board of directors that consists of nine individuals…? Let me just see here. That doesn't include the CEO, as I understand it, of the new authority

Hon. J. Reid: The CEO could be, but if so, it would come out of one of the two at-large members.

J. MacPhail: Okay, so let's go through 3(a). Four of the nine are to be appointed from the nominees provided under 6(1)(a), and 6(1)(a), as I understand it, defines an appointment area. This is the work that the minister will be doing over the course of the next year. How will that work be done to determine appointment areas, and with whom will she be consulting?

Hon. J. Reid: The process will be that the board of the authority will do the consultation with the communities and will bring forward their recommendation.

J. MacPhail: Why are there four appointment areas? I assume area literally means area, a geographic area. Does it?

Hon. J. Reid: I'm going to read into the record the regional districts and the areas that we've defined. We have the northern and central coast area, and in that would be the Skeena–Queen Charlotte regional district, Kitimat-Stikine regional district and the Central Coast regional district. There is the northern central Vancouver Island area: Mount Waddington regional district, Comox-Strathcona regional district and Nanaimo regional district. There's the southern mainland area: Powell River regional district, Sunshine Coast regional district, Squamish-Lillooet regional district and greater Vancouver regional district. Then there's southern Vancouver Island area: Alberni-Clayoquot regional district, Cowichan Valley regional district and the capital regional district. That is what we have defined and how we have grouped them.

J. MacPhail: So the government has taken current regional districts and clustered them into four groupings. Was the UBCM consulted on this?

Hon. J. Reid: There has been some dialogue with UBCM , but I wouldn't say that there's been specific dialogue on this specific appointment process.

J. MacPhail: What happens if the community consultation suggests a model different than that? I've been trying to find out, with my limited resources available, where this model came from. I'm not in any way suggesting that it isn't going to work — I have no idea whether it's going to work — but it's not embedded in anything that has a history to it, and it certainly hasn't come from the Coastal Council, for instance.

The minister has just acknowledged that it hasn't come from the UBCM, so what if it doesn't work? What if the groupings aren't appropriate? I have some experience, and some of the staff of the minister there have experience as well, in setting up something called the GVTA , the Greater Vancouver Transportation Authority, and there were certainly huge amounts of toing and froing amongst areas to be established for appointment. What if this doesn't work? Is there an opportunity for change?

Hon. J. Reid: There is flexibility because this will be determined by regulation, so there is flexibility in how these appointment areas work. But it is the coastal communities we heard from that said they do want to be part of the authority. They do want representation. It is in response, indeed, to representation from coastal communities that this is part of the act.

J. MacPhail: Yes, I'm just focusing on the four cluster areas and understanding geographic pride and sometimes competition. I'm trying to focus on what opportunities there are for input into that.

I note that the…. Oh well, I'll get to that in a moment. I want to talk about the two consecutive terms and term limits. The next one is to be appointed. Section 5(3)(b): the trade union representing the employees of the British Columbia Ferry Corporation will get one appointment. Does the Ferry Corporation have only one trade union?

J. MacPhail: What consultation was done with the union about this particular clause?

Hon. J. Reid: We have one representative on the board of B.C. Ferries now representing the union, and we indicated to them early on that they were important to the process moving forward and so made a commitment, again, to make sure they were included.

J. MacPhail: Yeah, but sorry. I know that appointee very well, but he's not from the union. He was way, way, way back, but his most recent life of the last 20 years was different. I'm just wondering if it was up to that appointee, then, to consult with the union about this.

Hon. J. Reid: With regard to this, it is the union who gets to decide, in the future, who to nominate. As long as they go by the qualifications that have been included in the definition, it is the union that does get to decide who their nominees will be.

J. MacPhail: My question was about whether they were consulted on getting an appointment to the board

at all and the limitations to the qualifications. The union gets to have an appointment — and I haven't heard that the union objects to this at all — but the definition of "qualified individual" says it can't be a member of the union under any circumstances. Then there are further limitations on preventing conflicts of interest.

I'm just wondering whether the union was consulted, because there are other boards that allow union representation and allow that there be exclusion from board of director meetings when personnel matters are conducted.

Hon. J. Reid: The decision was made that there would be representation from labour management. There wasn't a broad consultation process with any of these designations, because what we have done is list the qualifications and then allow those groups to put forward their nominees. We believe, again, that we are reacting to a genuine desire for parts of the province to be represented in this. As the member has said, we haven't heard negatively from the union that they have a concern about this.

J. MacPhail: The director that will be appointed under this section will ultimately be chosen by the government from a list of nominees put forward by the union. The union has to put forward a list of at least three and not more than five nominees. Then the government chooses amongst that. Is that how I read the legislation?

Hon. J. Reid: I think I need to clarify a very important point here. It is not government that will pick the members of the authority as we move forward; it is the members of the authority in working through the processes. It is not government that picks those future members of the authority.

J. MacPhail: Okay. Well, then let's go through this. Is it kind of like a pyramid thing or a reverse pyramid? Who do you start with to start the process, then? There is a selection process required for the appointee from the trade union. They have to submit three to five nominees. Who is it that selects that? Does that nominee get to participate in the selection?

Hon. J. Reid: It's standard practice in boards to have a subcommittee of the board as a selection committee, which then works with the people who have been put forward as nominees, looks at the criteria and selects the future members of the board of the authority.

J. MacPhail: Yes, I'm talking about the board that will be brand-new starting April 1, 2004. How do you get it going? Just walk me through how it works. I'll ask my question then, so you can also answer this. Section 5(3)(d) says: "2 are to be appointed from qualified individuals." I need clarification on that. Just walk me through. How is this new board going to be produced come April 1, 2004?

Hon. J. Reid: The current board of the authority would select, within their members, a subcommittee. That subcommittee will work with what has already been determined through the process over this next year of the divisions with the regional districts.

That subcommittee will call for nominees to come forward. The names will come forward to the subcommittee. That subcommittee then will have a skills profile to work with. Their objective is to get a well-balanced board, so they will work through that as, again, is current practice in boards.

They will then make those selections, with two exceptions. There are two members of the board that the provincial government gets to appoint. Other than that, they will work through the nominees, the skills profile, a well-balanced board. Then there are the two members at large that the board also gets to appoint; it doesn't require nominees in order to do that.

J. MacPhail: It will be the interim board that will be making the appointments. I guess you've got start somewhere. It still does mean that the OIC appointments of this government will be making the determination of the independent board.

Having said that, is the government then, come April…? The determination for the board that will take office April 1, 2004, will be a completely hands-off process of the government, except for those two L-G-in-C appointments.

Hon. J. Reid: Yes, that's correct. Just to remind the member, while the current board makes the appointments, they have to make them from the nominees that other people have provided.

J. MacPhail: So the board won't be working with the Premier's appointments office.

J. MacPhail: Section 5(4) says that the length of a term is three years and that there is a term limitation of six years, as I read that — a maximum of six years. That means that every six years, at a minimum…. Maybe my math is wrong on this. At a minimum, every six years there will be a brand-new board and no continuity.

Hon. J. Reid: In section 6(3) the member will note that there are staggering provisions so that, indeed, as these appointments are made, they're made for different lengths of time. As the board goes through the processes, there is, again, what we believe to be very important — continuity.

Section 5(5) says: "A director of the Authority is removed as, and ceases to be, a director of the Authority on the passing of a resolution to that effect by the remaining directors." What's the history of that clause?

Hon. J. Reid: In the event of a conflict of interest or incapacity, this gives the board the ability to act.

J. MacPhail: By history, I meant: is this out of the Company Act? Are there other jurisdictions that use this as a model for removal of board appointments?

Hon. J. Reid: We have drawn this from the Company Act, the Utilities Commission Act and the Hydro and Power Authority Act. I can't say how common this is, but there is history.

J. MacPhail: Perhaps the minister could describe what the passing of a resolution means. Is it by simple majority, or is it by two-thirds or three-quarters?

J. MacPhail: I don't know whether my question has been resolved by the amendment the minister just passed under section 5. But as I read section 6(2)…. It says that the way the process gets started is under 6(2). Maybe this is where my confusion came in about how the whole thing gets started, because it says here: "On or before the expiry of the term of the first directors of the Authority, the Lieutenant Governor in Council" — government, cabinet — "is, subject to section 12, to appoint 2 qualified individuals as directors, and must promptly notify the directors of the Authority of those appointments." That's just to start the process of the government-appointed directors. They're not the first ones to be appointed. Then everything flows from there.

Hon. J. Reid: The member is correct in that. This is just the mechanism that government will use to appoint its two directors, but those directors do not have an influence on the decision-making or the selection process.

J. MacPhail: Section 8 deals with conflict. As I see it, it's conflict by directors, conflict rules that apply to the directors of the authority. Where has this language come from?

Hon. J. Reid: Once again, we drew from the Company Act, the Utilities Commission Act and the Hydro and Power Authority Act.

J. MacPhail: I do. It has, under the term of my government. It was quite scandalous, as a matter of fact.

J. MacPhail: Sorry. It's absolutely not true that my whole government was ridden with scandal — absolutely not true. Perhaps the Minister of Human Resources will live to regret that comment with his own conduct to people with disabilities.

J. MacPhail: Where does the language "beneficial interest" come from? What is the legal interpretation of beneficial interest?

Hon. J. Reid: We will get that information for the member, and we will get the right staff person to provide the right information.

J. MacPhail: It's just a term that I'm not familiar with. Clearly, the qualification of "beneficial" must have legal meaning. Perhaps just while the legal people are listening…. How much interest, in what, can a director have and still be a director? That is the nature of my question. But I will wait for that answer.

J. MacPhail: Under the previous government there were broad, general standards of conduct for all board members. Does the current board have standards of conduct under this government?

Hon. J. Reid: The board will have to draw up their bylaws. Those bylaws would be based on best practices in the corporate world and certainly be incorporating the different measures that the member is discussing.

Hon. J. Reid: If we just take a moment, I will be able to answer the member's previous questions in just a moment.

The beneficial interest that the member was questioning…. There can be two types of owners. There can be a registered owner, and there can be a beneficial owner. They're not necessarily the same. This beneficial

interest captures both, so even a person who isn't a registered owner but is receiving a benefit would be captured by this.

Thank you for the distinction, but where is the registered owner captured? Is that in the first line, where it says: "Subject to subsection (5), every director of the Authority who, in any way, directly or indirectly…"?

J. MacPhail: Okay. Perhaps the minister could explain 8(5) that talks about…. Well, perhaps she could just explain it.

Hon. J. Reid: This section is to capture the occasion where a person would have potential conflict if they were heavily invested in a mutual fund that was dominated by transportation interests. So it is to, again, look at that eventuality or that possibility and try and capture it here.

J. MacPhail: So will part of the process of determining qualified individuals be for them to submit their financial holdings?

J. MacPhail: Section 9 is application of the Company Act. I assume this is application of the Company Act to directors, because I think later on there's a section that talks about…. I was asking about the conversion of the B.C. Ferry Corporation, and I was pointed to section 19.

The minister can explain what these sections from the Company Act mean. I thought we passed a new business corporation act at some point. Is it that it's not proclaimed yet, and that's why we're using the term "Company Act"?

In the meantime, I will respond to another part of the question, and that's in section 9, the reference sections of the Company Act apply to the authority directors, persons disqualified, register of directors, powers and functions, duties, validity of acts of directors, resolution of directors in writing. Those are the references.

J. MacPhail: Mr. Chair, I can wait for the answer about the name of the act.

The only reason I raise it…. I mean, it's fine if we have to make an amendment to the Business Corporations Act, but I thought there were different sections too. I mean, we changed the sections under the act as well, with the new Business Corporations Act.

Hon. J. Reid: The Business Corporations Act is not yet proclaimed, so the Company Act prevails.

J. MacPhail: Are these sections from the old Company Act? The sections that are referred to in this Company Act, in this legislation, will have to be amended consequentially, I suppose, when the Business Corporations Act is proclaimed. But are these sections replicated in the Business Corporations Act?

Hon. J. Reid: The answer is yes. When the act is proclaimed, there will be consequential amendments.

J. MacPhail: I can do this research, but I assume, then, that the intent of this clause will remain the same even with the new Business Corporations Act.

J. MacPhail: Section 13 is the role of directors. What's the model used to establish the role of the directors?

Hon. J. Reid: This is modelled on a standard corporate model, and it's driven by the mandate of the authority.

J. MacPhail: I might be confused here, but 13(1)…. The reason why I asked that question was, of course, because we do have Crown corporations where the CEO is the chair. In fact, in the B.C. Ferry Corporation, the CEO is the chair. Section 13(1) refers to the B.C. Ferry Corporation, but isn't it the B.C. Ferry Authority that we're talking about? Am I confused?

Hon. J. Reid: This section is referring to prior to conversion. It's still the B.C. Ferry Corporation. Upon conversion, it becomes B.C. Ferry Services.

J. MacPhail: Section 13 refers to prior to the conversion to the authority, which occurs April 1? If it does, then the government is in violation of this, because the CEO is the chair.

Hon. J. Reid: There's a technicality here. The act is proclaimed prior to conversion, so the references to B.C. Ferry Corporation…. It's a technical, legal procedure, because upon conversion, all of this then would apply to B.C. Ferry Services.

J. MacPhail: Okay. Look, I don't understand it, but my questions are on the record. I assume that greater minds than mine are straightening all of this out —

except that 13(1) is pretty key because this government has a history of saying CEOs are chairs. I understand I made a mistake in this particular situation, because I think the CEO is Mr. Doug Allen, so that's not the case here. But it is the case at Hydro, and it's the case at ICBC. The two largest corporations have the CEO as the chair. I take it that the legal officers of the government have this all straightened out.

Section 13(6) says: "The directors must make public the location of the Authority's head office." Is there a possibility that the authority's head office will not be Fleet House?

Hon. J. Reid: The necessity here is that the records of the authority need to be available, so it's important for people to know where the authority's head office is. That's why it's included. The intent of the board for this next year is that, while within transition, the head office will be remaining in Victoria.

J. MacPhail: I'm sorry, I missed that part. The head office will remain in Victoria? I didn't hear the last part.

Hon. J. Reid: The intent of the current board in the transition is that the head office this next year would remain in Victoria.

J. MacPhail: Okay. Well, Fleet House has a long history to it. I certainly hope that history continues.

You know what would help me greatly? The corporation did provide me with this, and I just don't have it in my binder here. It was a diagram of how the authority relates, etc., because this next section…. I'm wondering whether they have an extra copy of that. It was like a chart. That might help me. My apologies. The corporation did provide me with that, and I just don't have it here. The next question here is on…. Oh, sorry. Are we on section 14 yet? Okay.

J. MacPhail: Section 14 is remuneration for directors. Now, does this section apply to the directors that will be in place…? What directors does it apply to?

J. MacPhail: Okay, so perhaps the minister could explain 14(2)(b). It says: "if, on any day for which the director" — which I assume is of the authority — "is not receiving remuneration from British Columbia Ferry Corporation, the director performs directorial services for the Authority, the director is entitled to remuneration for that day equivalent to the daily remuneration that may be paid to a director of British Columbia Ferry Corporation for performing a similar service."

Hon. J. Reid: For the first year the directors are the same on the authority and B.C. Ferry Services, so this avoids them getting paid twice.

J. MacPhail: Will annual general meetings be conducted? I notice this says that the authority must hold an annual general meeting within six months after the end of each of its fiscal years. Is that the same requirement as under the Company Act?

Hon. J. Reid: We're not sure whether it's four or six. We're getting that information right now to answer the member's question precisely.

J. MacPhail: This question may be appropriate to section 19, but I'll ask it, and if it's appropriate to section 19, the minister can just answer it under 19. I note here that the annual general meeting must be open to the public; subject to reasonable restrictions imposed by the directors, the public can address the meeting; and directors must place the annual report before the annual general meeting. These are provisions that are also available under the Company Act, soon to be the Business Corporations Act.

If this corporation is being privatized, why do we need this legislation? Why can't we just do it under the…? I understand why we need it for transition, but why do we need this legislation if the corporation is really a private model under the Company Act?

Hon. J. Reid: This legislation is largely about transparency, about people being able to understand the conversion. The member would note that the majority of this legislation, by far, relates to the creation of the authority and the authority holding the share. Certainly, very little of it relates to B.C. Ferry Services, because the member is correct: it will be governed under the Company Act.

J. MacPhail: Okay. I appreciate this chart the minister has sent over. Of course, the new business structure doesn't have the B.C. Ferry Corporation in it. My questions still apply about where it will be that…. Let me ask this. I assume there will be a CEO of the authority?

J. MacPhail: Who will be the head guy operating it — or person or woman? Where will that person reside on this chart, and what will her title be?

Hon. J. Reid: The operation of the ferries takes place under B.C. Ferry Services, and the authority is the governing entity over B.C. Ferry Services. That authority has the board structured with coastal representation, etc. The CEO comes in under the B.C. Ferry Services and on the operational side.

J. MacPhail: I know we've passed section 13, and I don't plan to revisit the vote on it, but 13(1), where it says: "The directors may appoint one of their number as chair but in no event may the chief executive officer of the British Columbia Ferry Corporation be the chair of the directors of the authority…."

Let me ask this question: can the CEO of B.C. Ferry Services be the chair of the B.C. Ferry Authority?

Hon. J. Reid: Everything that applies to B.C. Ferry Corporation continues after the conversion into B.C. Ferry Services.

J. MacPhail: Fair enough. Do we know that from section 19? I'm just looking for it. Sorry.

Hon. J. Reid: We have very publicly stated that the new corporation will be B.C. Ferry Services Inc. Section 19 refers to the conversion. We stated publicly that the name of the new company will be B.C. Ferry Services Inc. Section 19, indeed, talks about that conversion.

J. MacPhail: I just think that for public transparency, it would be nice somewhere in the legislation to have the words "B.C. Ferry Services." I can't find it anywhere. I know I'm not the test for people who can understand these things, but a lot of the documentation in this legislation, and the reason why it exists here, is to explain the conversion.

I'm getting confused by the fact that the first 18 clauses refer to the B.C. Ferry Corporation and limits on the directors there and the relationship of that to the authority, when indeed in the new model, starting on section 19, the new business structure is the relationship between the Ferry Authority, B.C. Ferry Services and the regulator. It's just a suggestion that perhaps that link could be made in legislation. It's not necessarily the name that I'm interested in. When the previous government established the Greater Vancouver Transportation Authority, that transportation authority changed its name or named itself differently, but at least the legislation was transparent on that front.

J. MacPhail: Section 19 is the conversion section, conversion division, where the B.C. Ferry Corporation will no longer exist, and the new structure is created under the Company Act. This section also says that on conversion the Ferry Corporation Act is repealed, and without limitation the corporation ceases to be an agent of the government, and the Minister of Finance ceases to be the fiscal agent for the corporation. My first questions are on whether the business structure and the financial arrangements regarding the coastal ferry services contract have been approved by the auditor general.

Hon. J. Reid: The auditor general has been extensively consulted and worked with and has been provided briefings and briefing materials on the B.C. Ferries restructuring as it has developed. Based on these consultations, the auditor general has confirmed that he supports the proposed accounting. The auditor general's final review will be when he releases his opinion on the summary financial statements of the province in 2004.

J. MacPhail: How would I know that the auditor general supports this? How would the public know it?

Hon. J. Reid: I am telling the member that this consultation has occurred, that the auditor general has confirmed his support of the proposed accounting. I suppose if the member wants further confirmation, she's free to talk to the auditor general.

J. MacPhail: Yes, I will do that. Here are the questions that either the minister can answer, or the auditor general can. There is a history around auditors general allowing relationships between government and various government-provided services to be severed or not. That relationship is determined by the financial link between the commercial, privatized corporation and the government.

The coastal ferry services contract is a $105 million, 60-year continuous link between government and the new corporation. Proportionately, that is a much stronger link than existed between the government of the day and Skeena Cellulose, for instance. Skeena Cellulose, as I understand it, was issued an opinion by the auditor general that it was not a separate enough link from the government to be declared a separate and privatized entity.

These kinds of things are very important, because it would only be the auditor general's opinion confirming the separation of government and corporation that would allow the corporation's debt to be off-book.

Hon. J. Reid: The criteria that we've been looking at and discussing with the auditor general are based around the issue of control. In this particular set of circumstances, the authority and B.C. Ferry Services are separate from government. The issue of control and the criteria around control are defined in accounting practices and in the accounting profession.

With regard to the contract, the contract is a fee-for-service, and that's not seen as an issue of control. As well, while we have a 60-year lease, it's a five-year commitment within those 60 years.

J. MacPhail: Yes, but a fee-for-service can also be determined to be rent. It's a relationship where a service is provided, and the government pays the corporation for that service.

I mean, I'm fine if the auditor general has signed off on this, but I'd sure like to know how it distinguishes from other decisions that the auditor general has made in relationship to the Ferry Corporation. The minister herself has been floating how there were previous deals examined, so she must be familiar with where the auditor general has declared certain financial arrangements — where construction is going to be off book, but there's going to be a leaseback or a contract for those services — to not be sufficient separation to allow for that debt to be off-book.

The rulings that the auditor general made around Skeena Cellulose Inc…. This government made a big deal about having to write down that debt, etc. — a huge deal. I'm just wondering how this particular situation has been distinguished from those past decisions by auditors general. How would I find that out?

Hon. J. Reid: We certainly have done a lot of analysis of this. We can provide the member with the criteria that we have used for the analysis and how we have come to that conclusion.

I certainly understand the member's concerns. Those were certainly government's concerns as well. We have worked through this process quite diligently. I think one of the factors is that the debt of the B.C. Ferry Corporation was taken on by government a number of years ago. Its debt is considerably lessened, moving forward into the new model.

J. MacPhail: No, I'm not worried about the current debt. This is about future debt that will be incurred by the corporation. In fact, I think the whole reason why this model is being set up is to make sure that future debt incurred in building ferries will be off-book. It's not about anything in the past. It's about the future.

I'm not quite clear. Was the minister offering me the criteria of the auditor general? That's great. I would like that, if I may, before the estimates, so we can explore that at the time.

I also make note that unless I missed something, and I'm not absent from this House very often, the House Leader hasn't appointed and allowed for the convening of the Public Accounts Committee. He promised he would. The previous Public Accounts Committee asked for that to be done urgently. It still hasn't happened, and we're a third of the way through this session. I'm quite curious as to why that is. Perhaps the minister could urge the House Leader to convene the selection committee so that the Public Accounts Committee can be appointed. Until that is done, none of these questions can be asked. Certainly, it's a blight on the record of the government in terms of the work of this Legislature.

Under section 19, section 19(4) allows for the creation of subsidiaries. It also says it will "…establish a subsidiary for its maintenance and refit operations." I assume that's the work that's currently done by Deas dock. Perhaps the minister could confirm that. Does it incorporate any other work done elsewhere, physically, by the corporation?

Hon. J. Reid: Yes, this is in reference to Deas dock. The only other subsidiary is CFI, which will get collapsed. This section does allow for the creation of other subsidiaries in the future for good business reasons.

J. MacPhail: Do successor rights apply? Sorry, Mr. Chair, I'd better make that clear. Do successor rights under the Labour Relations Code apply to the creation of this subsidiary?

J. MacPhail: In the briefing, the corporation staff talked to us about pension and benefits, etc. Can the minister, for the record, explain what work is being done to ensure a proper succession of transfer?

Hon. J. Reid: I would ask that we deal with that when we get to the section under employees, which is just a few sections long. I'm sure there will be other questions with regard to employees.

Hon. J. Reid: Hon. Chair, I move the amendment to section 20 that is in the possession of the Clerk.

           [SECTION 20,
           (a) by deleting the proposed subsection (3), and
           (b) by renumbering the proposed subsection (4) as subsection (3).]

J. MacPhail: Is this adding or changing what has to be provided in the terms of service plans? Perhaps the minister could explain the amendment. It's just the amendment to section 69 that I'm interested in.

Hon. J. Reid: I'm not quite sure of the member's question. There are the three amendments: section 20, section 30 and section 69. If she's referring to section 69, do you want that explanation when we get to section 69, then?

Hon. J. Reid: We're on section 20 now. The question I have is: did she want an explanation around the amendment to section 20 at this moment?

J. MacPhail: Yeah, I'm sorry, Mr. Chair. All my amendments are on the same page, but I see there are three separate amendments. My apologies. Yes, that's fine.

J. MacPhail: Section 23 talks about the transfer of employees to the maintenance subsidiary. Section 22, just for the record, talked about transfer of all other employees. Perhaps the minister could explain, in the context of section 23, what the provisions are now for working with the union about transfer of employees in relation to wages, working conditions and benefits.

Hon. J. Reid: With the agreement of the pension trustees, all new employees will continue to be covered in the public service pension plan at a minimum to April 30, 2004. All existing employees will remain under the public service pension plan as well. With regard to all the other benefits, all the other benefits continue.

J. MacPhail: So the terms of the collective agreement apply beyond the benefits as well?

J. MacPhail: That's an interesting date, because of course, the new authority board — the new board, not the interim board — will not be in place. So how does bargaining take place?

Hon. J. Reid: The bargaining is conducted between B.C. Ferry Services and its employees in every normal way. It's not done with the authority.

J. MacPhail: Yes, but it's the authority that has to ratify the contract. Anyway, it'll just make for an interesting round….

J. MacPhail: Sorry? The board of directors doesn't have to ratify the contract? Well, who does?

J. MacPhail: Oh, I see. So there will be…. Well, let's back up a step, then. The board of directors of the B.C. Ferry Services is different than the board of directors of the authority. Am I right? Is that what the minister was saying?

Hon. J. Reid: They are two separate legal entities. They could have the same members. They potentially could have different members on those two boards. The board that has to ratify will be the B.C. Ferry Services.

J. MacPhail: Sorry, could the minister point out to me…? Is it under the Company Act, then, that the board of the B.C. Ferry Services is established?

J. MacPhail: And the government will have no input into that board whatsoever, then?

J. MacPhail: Okay, we're looking at this in terms of ratification of collective agreements; that's why I'm discussing this. The collective agreement expires while the interim B.C. Ferry Authority board is in place and the new Ferry Authority board isn't in place. So the B.C. Ferry Services operating company will have its own board of directors established by the Company Act, and they will be the ones determining ratification of the collective agreement.

Hon. J. Reid: The answer to the question is yes. However, the board of the B.C. Ferry Services will initially be the same as the board of the authority.

J. MacPhail: Sorry, I apologize for being so thick here. Could the minister refer me to a model elsewhere that I could look at where there's that relationship? B.C. Ferry Services is the holding company; it's not the subsidiary. I was trying to think about whether this was the same as the relationship between the GVTA and TransLink board of authority, and then there's several operating companies beneath that have their own boards of directors — except that B.C. Ferry Services is the holding company from which subsidiaries flow. Am I correct?

Hon. J. Reid: I want to clarify the role of the authority and B.C. Ferry Services and any subsidiary. The authority is there to provide the overall governance, and it holds the voting share. It provides the governance.

We then have the B.C. Ferry Services. This is not a holding company. This operating company, in the

model…. If we look at the airport model, they're one and the same. Here we've separated them so that they're not one and the same. There is that distance; there is that independence. There is that differentiation between.

Any subsidiary — for example, Deas dock maintenance — would then have its own board of directors. That board of directors would be determined by B.C. Ferry Services.

J. MacPhail: Again, this goes back to my point. B.C. Ferry Services isn't mentioned anywhere in the act — not that I can find — unless the government has combed through and can point to me where B.C. Ferry Services is listed. B.C. Ferry Corporation is listed, but there is no conversion other than the ferry corporation to the authority. When I was asking for other models…. Even the Vancouver Airport Authority model isn't this.

The board of directors for the B.C. Ferry Services will be determined…. Come April 1, it's going to be the same board as the B.C. Ferry Authority. Isn't that kind of like a magic line, like the dotted line between the two is irrelevant? If they're both the same board, if there's no legislative protection for the B.C. Ferry Services board of directors, why separate them? It certainly isn't separated in reality.

Hon. J. Reid: I did want to respond to the question about B.C. Ferry Services Inc. and where that appears. It was in my second reading address, in talking about B.C. Ferry Services. As I mentioned earlier — for the purposes of legislation, because this gets proclaimed technically before the conversion — all the wording here legally has to refer to B.C. Ferries Corp, which then gets rolled into B.C. Ferry Services. I apologize that I hadn't made that point earlier, but it was in my second reading address.

There are differences between the authority and the B.C. Ferry Services, and there's a difference in the roles. During the transition they are the same members, but there's no need for them to be the same members in the future. The roles are such that the authority has the role and the members of the board of the authority have the role to act as shareholder and governance in that aspect.

The members of the board of the B.C. Ferry Services act as operating and looking over the operations of B.C. Ferry Services. Certainly, there is a difference in that approach, that role and those responsibilities. So while during the transition the boards are one and the same, there is no need in the future for that to be the case.

J. MacPhail: Perhaps the minister, then, could explain. If in the future they're not one and the same, how does B.C. Ferry Services operating company board of directors get appointed?

Hon. J. Reid: Under the Company Act, by the authority who is the shareholder.

J. MacPhail: So for all intents and purposes, for this round of negotiations in late 2003 it will be the B.C. Ferry Authority that will be ratifying the collective agreement, because it's the same as the B.C. Ferry Services operating company board of directors. Yet I assume that board of directors is the same board that will be changed come April 1, 2004. Has the minister contemplated that in determining collective bargaining — the expiry of it? It does seem to me that it's almost as if negotiations will take place….

The reason why this is important is because I think the wage bill is fully a third of operating costs or maybe even more — no, about a third of operating costs. It's a huge bill. Is it not possible, then, that the collective agreement could be renegotiated without the approval of the new board or without the acquiescence of the new board which will be appointed three months later?

Hon. J. Reid: I am somewhat puzzled over what the issue is. Let me be clear, because there are legalities involved. There is a separation between the board of the authority and the board of B.C. Ferry Services after transition, after the changes here. Yet they are the same people, so we have to be careful to say that it is the board of B.C. Ferry Services that will be responsible for the contract. Indeed, yes, they are the same people, but there is a legality there — so just to clarify that.

Yes, there's ongoing business. Yes, there will be a labour agreement that has to be reached. Yes, subsequent to that, there will be changes in the board. Yes, those are the practicalities as we move forward. I'm not sure what is disturbing to the member about these realities.

J. MacPhail: Well, I asked the minister at the very beginning why the necessity for a year of an interim board. That was to provide consistency. There was a lot of business to be done. But we have a situation here where fully one-third of the operating costs of the authority, which is theoretically independent, will be predetermined by the interim board. It could either tie the hands of the future board or be unduly harsh on the employees, which wouldn't be the wish of the permanent board. It does seem to be a bit weird that the interim board will be responsible for determining fully one-third of the operating costs.

I may have that figure underestimated, by the way. I thought it was around a couple of hundred million dollars or maybe $280 million — the wage bill and benefits — out of about a $600 million operating cost. That's what I remember, but I could be wrong.

That huge chunk of operating costs would be embedded for quite a period of time and then handed over to the independent authority. That's all I'm saying. If one wants to give true independence to the authority, perhaps that should have been considered in the timing of the transition.

Hon. J. Reid: There is a transition period. That transition period does include labour negotiation. Labour

negotiation is just that: negotiation. Moving forward, there will be more labour negotiations in the future under different boards of directors. Again, it's a reality; it's a business practice. I have confidence that they're going to be able to conduct themselves with their employees in a manner that's going to work. Obviously, it has to work. The employees are very valuable for the ongoing success of this new entity. Again, the answer is yes. These will be the directors, and the new corporation will have to negotiate that contract. We have to learn how to live together and move on — yes.

J. MacPhail: Is the new permanent authority board appointed April 1, 2004, legally required to assume the contract negotiated by the interim board?

J. MacPhail: Section 25 is entitled "Essential service designation and other Labour Relations Code matters." There are two pieces of legislation that govern the ability of the employees of the Ferry Corporation to carry out free collective bargaining. One is under the Labour Relations Code, and the other is under, I think, the B.C. Rail and B.C. Ferry act. Someone get me the name of that, if they can. Honestly, I'm having a mental block here. It's an act that applies to B.C. Rail and to B.C. Ferries, and it's an act that allows a cooling-off period.

Anyway, so those two provisions affect collective bargaining. Perhaps just while the minister is looking up the information of what that other act is, she can explain how the declaration of B.C. Ferries as an essential service under this legislation does not take away the right of B.C. Ferry Services employees to withdraw their services subject to Labour Relations Board rulings.

Hon. J. Reid: I believe the name of the act the member was looking for is the B.C. Railway and Ferries Bargaining Assistance Act. There's nothing in the Coastal Ferry Act, the legislation, that would prevent an application for the designation of essential services from being made regarding B.C. Ferry Services.

J. MacPhail: Under that act, the B.C. Rail…. A designation of essential services under the act the minister just said or this act? Okay, yes. Sorry, when the minister stands up and answers the question, if she could repeat the name of the act, and maybe I'll remember it. So that act is still in existence and still has full force and effect? My concern here is that this act, Bill 18, in addition to the act that the minister just listed, declares B.C. Ferries an essential service and then says that Bill 18 prevails over the Labour Relations Code. Currently, it's my understanding that employees of the B.C. Ferry Corporation have the ability to withdraw their services, or the employer has the ability to lock out employees subject to going to the Labour Relations Board and having essential services designated by the Labour Relations Board. What changes with this act? What changes that process, given that Bill 18 now supersedes the Labour Relations Code?

Hon. J. Reid: This act just clarifies this particular point. It makes it clear that the delivery of ferry services is an essential service under the Labour Relations Code and that the level of that service would still have to be set by the Labour Relations Board. We have the two past awards by the Labour Relations Board that have set essential service levels, so the process would still be the same. It would be the Labour Relations Board that would set that level of service.

J. MacPhail: Again, for clarification, this section is entitled "This Part prevails over collective agreements." There are two parts to it. The first part says: "A collective agreement that conflicts or is inconsistent with this Act is void to the extent of the conflict or inconsistency."

My questions are on the second part: "If a provision of a collective agreement requires British Columbia Ferry Corporation to negotiate with a trade union to replace provisions of the agreement that are null and void or materially altered as a result of legislation, that provision is deemed not to apply in respect of this Act." As I read this in the best possible light, the act prevails over a collective agreement. The second part says that if the collective agreement says…. There are sometimes clauses in collective agreements, as I recall, that say if any part of this collective agreement is changed by legislation, the employer is required to negotiate the effects of that change.

Is it that kind of clause that the second part of 26 refers to and basically says if that kind of provision is in the collective agreement, that provision remains legal and enforceable in the collective agreement?

Hon. J. Reid: Yes, the member, I believe, had the right context here. This section is written to address one known aspect where the collective agreement is in conflict with the legislation, and that's the appointment of directors. The legislation provides for a nomination from the union of one director, and the collective agreement provides for two. With regard to provisions, they do remain with regard to all other acts. They would be ongoing and enforceable.

J. MacPhail: I'm happy to have a discussion around the service contract in estimates, or I'll tell the minister the questions I'm asking. I assume the coastal ferry

services contract which covers off sections 27, 28 and 29 refers to the top part of the chart of the new business structure that says "Coastal Ferry Services Contracts." I'll just assume that's what it refers to.

This is the fee-for-service that will be paid by the province to the B.C. Ferry Authority. I understand from the government announcement and from estimates with the Minister of Finance that the value of that service contract for at least the initial couple of years is $105 million. Perhaps the minister could confirm that.

Hon. J. Reid: The amount is $105.5 million for each of the first five years.

J. MacPhail: What is the total operating budget of the corporation now? Is it about $660 million or something?

J. MacPhail: Oh, I'm sorry — $450 million. Sorry, I had that wrong. How much is the wage bill?

It would be helpful if the member could give me some indication of where she's going with questions around contracts, so I can give her a better context.

J. MacPhail: It was a throwback to my previous question about how much the wage bill is — how much of the wage bill is the total operating costs of the Ferry Corporation.

So $105 million of a $450 million operating budget comes from the government. I'm happy to do the contents of the service contract in estimates, but the Minister of Finance couldn't provide it for me and referred me to the Minister of Transportation.

I'm fine to do it under estimates. It will be the nature of not only what services are provided for the $105 million but the amount of the services — whether they're new, just recently recognized or have been long established. What I mean by the category of "just recently recognized" is that perhaps the Ferry Corporation is now being paid for school bus service, etc.

On the question of the power to enter into contracts, who is it that signs the contract? After the establishment of the new authority and the establishment of the commissioner, who is it that actually negotiates the contracts and signs the contracts?

Hon. J. Reid: On behalf of government, it would be the Minister of Transportation.

J. MacPhail: Well, what role will the commissioner…? The government negotiates the service contract with whom?

Again, I'm not quite sure of the context — whether the member wants to know if it's going to be on the website or however else we make things public. It will be a public document that people will have access to and will be able to freely examine.

Maybe I should just clarify this. The government, the minister responsible, would negotiate with B.C. Ferry Services that contract or any changes to that contract. That contract is overseen by the commissioner, so the commissioner has a role to make sure and certainly can have that discussion. The actual contract — the contents of that contract — is determined by government.

J. MacPhail: My questions will flow further on this when I talk about the Freedom of Information Act under section 83 of the legislation, but I just wanted to confirm that the contract itself would be made public.

Hon. J. Reid: Hon. Chair, I move the amendment to section 30 that's in the possession of the Clerk.

Hon. J. Reid: Taking out "improvements." The improvements are included in "land," so this is just not required.

Section 30. This is a transfer of assets to the B.C. Transportation Financing Authority, which is a government entity and will be on the government books. Perhaps the minister could explain what stays in the public domain.

Hon. J. Reid: It would be the water lots and the lands that remain in the public domain.

J. MacPhail: What will be the relationship between British Columbia Ferry Services and the government in ensuring access through government-owned assets to British Columbia Ferry Services?

Hon. J. Reid: There are a number of accesses — for example, continuing highway lands. This will all be stipulated in the lease document.

J. MacPhail: I assume that because the minister has said that the services may not just be limited to British Columbia Ferry Services but that there may be other service operators, all service operators will have equitable access?

Hon. J. Reid: The lease will be with British Columbia Ferry Services, and then it would flow from British Columbia Ferry Services if there's other access.

J. MacPhail: Something that drives me crazy about my telephone bill is the fact that I can now use long-distance services, but in order to get them through Telus, I have to pay a fee for that access. It drives me crazy as a consumer, but it's been all through the CRTC and all of that, so I have to have that.

But it is a way. It's acknowledged as a way of a stutter step where the first person in, who has the original monopoly, has a way of controlling access through billing of an access fee. Is that available to British Columbia Ferry Services — being able to charge an access fee to competitors?

Hon. J. Reid: I want to clarify "access." There are several different accesses we could talk about. One is land access — so the roadways, for example, that will be stipulated in the lease to make sure those accesses are available. The other is access to terminals by other operators of, say, ferry systems or other vessels.

To answer the question around other access on the water, that indeed would be…. The lease is with British Columbia Ferry Services. British Columbia Ferry Services has the contract with government to provide the core ferry services, so ultimate responsibility is with British Columbia Ferry Services. If they enter into a business arrangement for other access, they still have to make sure that the contract they have with government is fulfilled first and foremost. That's what our greatest concern is, of course, with that contract. If they have other business arrangements, they would be able to enter into those other business arrangements.

J. Bray: Section 31 speaks about leasing of ferry terminal properties. I just have a few questions on this section. It's written with some legalese. I'm wondering if the minister could just clarify, in general, what the intent of section 31 is.

Hon. J. Reid: This enables government to enter into the lease with B.C. Ferry Services. It also enables the government to enter into any future arrangement, so if there is a new ferry service that government wants to enter into an arrangement on, or a new terminal site, government has that ability as well.

J. Bray: Earlier the minister provided some information on some of the definitions, which I found very helpful. During second reading debate there was some talk about the ability for this act to create some competition, some opportunities for improved service. Is there anything in section 31 that prevents the ability of the Ferry Services operating company to enter into subleases with other operators to provide, if I could ask, service on designated routes?

Hon. J. Reid: The member is correct in the concept of greater competition. We'll get into that in further sections here of how we facilitate or ensure that competition takes place. There is nothing here that prevents B.C. Ferry Services from entering into those arrangements.

J. Bray: Then my last question on section 31. Given that the Ferry Services operating company, acting as a service integrator, may well be dealing with other entities with respect to designated routes and route clusters for services, is there anything in section 31 that would limit the ability of the Ferry Services operating company to actually look for other opportunities for revenues by subleasing or going to subleases for companies to be providing services on non-designated routes — in other words, to be able to leverage those assets for entrepreneurs who are looking for other opportunities to get into the operation of marine ferry services?

Hon. J. Reid: There's nothing in this section that precludes the concepts the member was referring to, but I would like to mention again that because of the contract government has or will have with B.C. Ferry Services, that takes a priority. Whatever other business arrangements B.C. Ferry Services wants to enter into and whatever other competitive provision of services is encouraged, in fact, by the commissioner, we have to keep in mind that the core services will take priority. That indeed is the arrangement that government primarily has with the future B.C. Ferry Services.

J. MacPhail: Section 33(3) allows for the expropriation of land necessary for the provision of core services. Who applies for the expropriation — the government or the B.C. Ferry Services?

Hon. J. Reid: The future B.C. Ferry Services would make application to government. Then it would be up to government to decide whether indeed the expropriation was in the public interest and then to use the mechanisms available to proceed.

J. MacPhail: There's nothing in section 33 that provides for compensation. Does the Expropriation Act apply?

J. MacPhail: How would we know that, given 33(2), which says: "If the minister is satisfied that the action…proposed by the ferry operator is reasonable and necessary for the provision of core ferry services, the minister may (a) take the proposed action, or (b) take any other action, mutually agreed between the minister and the ferry operator, that the minister has power to take under one or both of the Highway Act and the Ministry of Transportation and Highways Act"? There's no reference to the Expropriation Act in the legislation.

Hon. J. Reid: Under the provisions of these acts, it does require compensation. While these are the powers, certainly compensation is part of that mechanism.

J. MacPhail: Does compensation flow from one of these two acts — either the Highway Act or the Ministry of Transportation and Highways Act — or does it flow from the Expropriation Act?

Hon. J. Reid: For my immediate answer, practically speaking, the expropriation compensation flows together. With regard to these particular acts and their particular sections and their linkage to the Expropriation Act, I would have to get detailed information on how those linkages work. We're certainly willing to provide the member's office with that information as we procure it for her.

J. MacPhail: Section 34 deals with liability. We had a very extensive discussion around liability in the last session around the Highway Act, and I note that all of the concerns — my concerns about changes in liability and the government basically opting out of liability, particularly here under 34(2) and 34(3) — are the same concerns that I have.

For the record I must be clear on this. There were liability provisions enacted in the last session under the Highway Act about which I had serious concerns. The minister and I debated those at length, and I actually voted against them. The liability under this legislation, as it's articulated under section 34(1), (2) and (3)…. Well, actually, subsections (1), (2), (3), (4), (5) and (6) encompass the same liability changes, and I had the same concerns — exactly the same concerns. We will refer to that debate that occurred in the last session, and I will vote against this on division.

Hon. J. Reid: I'd just like to make note for the record that the act the member is referring to, where the debate took place, wasn't the Highways Act. It was the Transportation Investment Act.

The same concerns I had with the transportation and highway act are replicated here, and it will be on the basis of that debate that I will be voting against this section.

J. MacPhail: Section 35 begins division 1 of part 4 that establishes the British Columbia Ferries commissioner. The ferries commissioner, I assume, is modelled after the B.C. Utilities commissioner. Or is there another model that it follows?

Hon. J. Reid: This is a different model than the BCUC, and this commissioner is separate. It's a stand-alone. The commissioner does not serve at pleasure, and this is an incentive form of regulation.

J. MacPhail: I note that there's no ability to remove the commissioner, which, on the one hand, is a good thing. But what happens if we have a rogue commissioner that everybody agrees is a rogue commissioner?

Hon. J. Reid: We would have to wait until the term ends. We would have to live with that person.

J. Bray: Section 38 talks a bit about the role of the commissioner. I'm just wanting to explore that for a minute or two, because I think there are some unique features here — just to make sure I understand.

Section 38(1)(a) states that the priority is to be placed on the financial sustainability of the ferry operators. My understanding is that relates somewhat to an answer the minister provided for me earlier. I'm just wanting to make sure, though, that it is certainly not the only avenue the commissioner will be looking at. I'm wondering if the minister could just comment on that particular point.

Hon. J. Reid: I think those details are listed in the act. There is financial sustainability, but also, the ferry operators are encouraged to adopt the commercial approach and to seek additional alternative service providers to be competitive. I'd just refer the member to the different details on that section, because indeed the role of the commissioner is much broader.

In subsection (3) it says: "ferry operators are to be encouraged to seek additional or alternative service providers on designated ferry routes through fair and open competitive processes." It is my understanding, then, that this is one of the roles the commissioner will be ensuring — that the Ferry Services corporation is

operating in a way that is going to encourage and foster entrepreneurs and other interested people who are going to be looking to provide marine ferry services, to ensure that the primary company, in fact, is looking to enhance its ability to provide service in competition.

Hon. J. Reid: I want to clarify the member's question with him. Subsection (3) refers to ancillary services, such as parking, etc. With regard to our….

Hon. J. Reid: Okay, the member, then, would be looking at 38(1)(c) and talking about the competitive processes. The company is commercially oriented. The commissioner's role is to make sure that the new B.C. Ferry Services is looking at all possible ways to deliver cost-effective services. Certainly, the ability for other people to provide those services has to be considered. The commissioner will have a role in considering what B.C. Ferry Services has done to engage alternative service providers and, indeed, to provide cost-effective services.

J. MacPhail: It's my view, pursuant to the question raised by the member from Beacon Hill, that the way this legislation is written, it clearly says: "priority is to be placed on the financial sustainability of the ferry operators." It is the only clause that's listed as a priority, and therefore it prevails, and everything else follows from it. I expect that's the way the commissioner will be forced to interpret the legislation.

The role of the commissioner is going to be to determine fees and tariffs charged for riding ferries. The commissioner is provided with the list of factors he or she has to take into account. One of the factors he or she will have to take into account is that "cross subsidization from major routes to other designated ferry routes is (i) to be eliminated within the first performance term of the first Coastal Ferry Services Contract to be entered into under this Act, and (ii) before its elimination, to be minimized."

I understand the first contract is five years long. This will be an interesting aspect of the new structure of the authority, where there are four board members or directors who come from various regional districts, because there are regional districts where cross-subsidization is the order of the day for ferry service.

Perhaps the minister could…. Does the minister have a list of routes that are cross-subsidized?

Hon. J. Reid: I'm going to answer the member's question in reverse, to say which routes are not subsidized. There are three routes that don't receive the subsidy at the present time. They are routes 1, 2 and 30 — route 1 being Tsawwassen to Swartz Bay, route 2 being Horseshoe Bay to Departure Bay and route 30 being Tsawwassen to Duke Point.

J. MacPhail: So all other routes are subsidized, and the subsidization has to be eliminated in the next five years is how I read this. No?

Hon. J. Reid: The fee-for-service continues on with all those other routes to provide for that service, so all that's being restricted here is that the profits from these particular routes won't be directed towards the other routes. The contract that government will have with B.C. Ferry Services provides the funding in order to ensure the delivery of those services.

J. MacPhail: Yes, except that this particular clause has to be read in conjunction now with 38(1)(f), as well, which says: "the designated ferry routes are to move towards a greater reliance on a user pay system so as to reduce, over time, the service fee contributions by the government."

So the next shoe to drop is that the service fee contributions are going to be reduced over time for those routes. You're absolutely right that it's a two-step process, but it's a two-step process to say that on the subsidized routes, people are going to be paying a lot more.

Hon. J. Reid: Government acknowledges that there will be routes that will always be receiving government money to support them, but we do believe there is the possibility of a greater independence in some routes. That is the encouragement that we want to see over time — that where it's possible, where it's feasible, those routes become more independent, with less reliance on taxpayer support. Certainly, that is the intent, but obviously there will always be routes that will rely on that taxpayer support.

J. MacPhail: Well, Mr. Chair, I predict that at the end of the five-year contract, even during the five-year contract, there will be major fee increases, tariff increases, to routes that are now currently subsidized.

J. MacPhail: Section 39 provides for tariff increases, price increases, to ferry service. It is for the first performance term. Perhaps the minister could clarify: does the performance term start April 1, 2003, and run to March 31, 2008?

J. MacPhail: So the fee increases that occurred this past November are not included in this averaging?

J. MacPhail: I think we had a tariff increase of about 3.9 percent — something like that — in November of 2002.

J. MacPhail: Thank you — 3.8 percent. Now, this legislation allows for no more than a 2.8 percent increase each year on major routes and no more than a 4.4 percent increase each year on other routes. Let me see. That means over five years, the maximum increase can be 14 percent for major routes and 22 percent for other routes. Is that right, or is there a possibility that some routes actually will increase more than that because these are average percentage increases?

Hon. J. Reid: The route has to adhere to that average, but there is the flexibility — as long as it averages — on any given route to charge more, say, for peak times and less for off-peak times as long as it doesn't exceed that average that's been set.

J. MacPhail: And is that per route, or is it per route group that averages are determined?

J. MacPhail: So, indeed, the overall fares for one route, at every point in time, could be higher than the average?

Hon. J. Reid: There's a possibility it could be higher, but that would require that some then be lower.

J. MacPhail: And on the major routes? I notice it refers to the route group of major routes, so is the same premise for major routes applicable? In other words, one major route overall fare increase at every point of the day and every point of the season could be higher than average?

Hon. J. Reid: B.C. Ferry Services would determine the fare, but the fare has to align with the price cap. It's the job of the commissioner to make sure that those requirements are met.

Hon. J. Reid: We would anticipate that it would be part-time, but there are times — for example, at the end of a performance term, where a review was being conducted — where it would take considerably more resources.

J. MacPhail: Mr. Chair, is it okay if I…? I'm sorry. I missed that answer.

Hon. J. Reid: The question was around whether the commissioner is part-time. The answer is that we anticipate that the commissioner, indeed, would be part-time for most of the work needing to be done, but there are times when the workload would increase — for example, at the end of a performance review — and would require significant additional resources.

J. MacPhail: Section 40 establishes the conditions which the commissioner has to review in order to approve the price cap. Will there be further regulations beyond this legislation, or is this it?

J. MacPhail: Section 41, as I read it, is that the price cap review has to be guided by the principle of returns from the ferry operator. Where does the principle of public interest come into this? There are communities that are ferry-dependent. Therefore, at some point, I assume, there has to be a principle of fairness as it relates to the public interest — access to their homes, access to the quick delivery of goods for the sustenance of their economy. Where is that listed here?

Hon. J. Reid: If the B.C. Ferry Services tried to raise a tariff beyond what would meet the test of public good, it is incumbent upon government…. Government has the opportunity to step in and revise the contract, the fee-for-service, in order to meet that need. It will always be back to government to make sure that that public good is protected and that there is a reasonable provision of services for reasonable cost, especially for some of our more out-of-the-way and inaccessible communities.

J. MacPhail: Mr. Chair, I move that the committee rise, report progress and ask leave to sit again. The L-G is coming.

Committee of the Whole (Section B), having reported progress, was granted leave to sit again.

Mr. Speaker: Hon. members, I've been advised that the Lieutenant-Governor is in the precincts. I would ask all members to please remain in their places, and we'll ring the division bells to call some of the other members.

Her Honour the Lieutenant-Governor entered the chamber and took her place in the chair.

In Her Majesty's name, Her Honour the Lieutenant-Governor doth assent to these acts.

In addition to providing transcripts on the Internet, Hansard Services publishes transcripts in print and broadcasts Chamber debates on television.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY