Hansard -- Thursday, March 4, 2004 a.m. -- Vol. 21, No. 6 (HTML)

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY


CONTENTS

	Routine Proceedings
		Page

Committee of Supply		9081
	Estimates: Ministry of Health Services (continued)
	J. Kwan
	Hon. C. Hansen

	Proceedings in the Douglas Fir Room

Committee of Supply		9091
	Estimates: Ministry of Energy and Mines
	Hon. R. Neufeld
	J. MacPhail
	P. Nettleton
	D. MacKay

Hon. R. Coleman: I call Committee of Supply. For the information of members, in Section B, the chamber, we will be doing the estimates debate for the Ministry of Health Services. In Section A we will be doing the debate for the Ministry of Energy and Mines.

J. Kwan: Yesterday we were dealing with questions around the health services plan. I'd like to continue in that vein. Later on I'd like to move on to hospitals, for the minister's information and his staff's information.

Let me start by asking the minister…. Yesterday I think he said…. I'm sorry. I didn't grab Hansard Blues this morning. He was advising the House of the '03-04 budget for each of the health authorities. I wonder if we could start with that. If he could tell me what they are again, then we'll begin with that.

Hon. C. Hansen: What I read out yesterday evening was the base budget for '03-04 for each of the health authorities. The Fraser health authority was $1,358.7 million; the interior health authority is $908.7 million; the northern health authority, $313.2 million; Vancouver coastal health authority, $1,647.7 million; Vancouver Island health authority, $984 million; and provincial health services authority, $839.9 million. The final one is the Nisga'a Valley health board, which has its own allocation at $600,000.

J. Kwan: On that basis, the '04-05 estimates…. I know the minister doesn't have the exact figures, but he did advise the House yesterday that the reduction in the health services plan — which states the reduction in the estimates of $6.594 billion to $6.495 billion — is because of the change to GAAP.

With that in mind, could the minister advise…? The minister also advised that he was certain the budget for the health authorities had actually gone up, even though the budget book shows that it's gone down. Can the minister advise by how much it has gone up with each of the health authorities — or generally, even though I know he doesn't have the exact figures? I'm trying to figure out what the impact of GAAP is on the reality of the budgets for the health authorities.

Hon. C. Hansen: If you look at the total amounts that include their base amounts, the global budget that we talked about yesterday, the one-time operating moneys that are there for some of the transition plans, the capital moneys which we talked about last night and the accounting change that takes place this year because of the move to GAAP that the member indicated, the total funding — when you combine all of those from last year to this year — is an increase of about $14 million that would be allocated. As I indicated last night, we are not at a position yet to determine exactly how the population needs–based funding formula will determine exactly how much each health authority is going to be receiving, but we expect to have that number to them sometime later this month.

J. Kwan: Yes, well, the increase of $14 million in terms of the global budget — I see that. However, could the minister break that down for me in terms of the $14 million? What areas got the increase, and how does that break down?

Hon. C. Hansen: There is the base allocation that I think the member is aware of for the regional programs. The one-time operating moneys that are allocated for this coming year are $65 million, which is a slight increase over what it was last year.

If you start looking at the operating grants for capital purposes, this is where we see the shift in accounting. There are two categories. One is the operating grants for capital purposes, which we see come down to $67 million, and the funding for major capital goes up by $89 million from last year as a result of the move to generally accepted accounting principles.

J. Kwan: The minister says that the one-time operating moneys went up $65 million? Did I hear him? It is at $65 million. What was it the year before?

Hon. C. Hansen: Last year the allocation in the base budget was for $63.9 million. This year it's $65 million, so it's an increase of $1.1 million.

J. Kwan: Okay. Then the operating grant for capital went down $67 million, and that's because of the change to GAAP. The major capital went up $89 million, and that's also because of GAAP.

Hon. C. Hansen: Last year the base allocation for operating grants for capital purposes was $165 million. This year it's $67 million. The decline in there, in part, is as a result of the $89 million that shifts from being operating grants for capital purposes to the category of

funding for major capital, which is the change that was required by the move to GAAP.

J. Kwan: Could the minister give me the number for last year for the major capital?

Hon. C. Hansen: There was no specific allocation for major capital last year in terms of the regional health budget. We allow the health authorities now to determine their capital needs, but they have to be able to provide within their operating budget for the debt-servicing costs for those capital allocations. Last year there was not a specific base allocation for major capital. That $89 million goes from zero to $89 million because of the changes in the accounting principles that we are implementing across government.

J. Kwan: If we don't take into account GAAP, how do the numbers compare from last year to this year? Setting aside GAAP, if you just want to compare the accounting on the basis of what it was last year, could the minister give me the figures for the base allocation and the operating grants for capital for last year and this year, so I know what the difference is if we didn't have GAAP?

Hon. C. Hansen: If it had not been for the changing accounting principles, then the allocation for the operating grants for capital purposes would have been $165 million last year and this year would be $156 million. The change to move to generally accepted accounting principles means that that $89 million moves from that one category to the other category of major capital.

J. Kwan: Then it actually went down $9 million this year if there was no GAAP. Okay. What about the operating?

Hon. C. Hansen: From the base allocation last year to the base allocation for the coming fiscal year, it would go from $6,116.8 million to $6,139.5 million.

J. Kwan: Okay, so it's $6,116.8 million to $6,139.5 million. So that's a slight increase in terms of the operating. Okay. Thank you very much for those numbers.

Now, the major capital, the capital side, from $165 million to $159 million, if we were comparing it without GAAP…. It's not major capital; I should just call it capital. It went down $9 million. Does the minister have a list of the projects that he's anticipating would require the capital dollars — in other words, a list of approved projects?

Hon. C. Hansen: The $89 million that is being shifted over into the area of major capital — that is for projects over $100,000 under the new criteria.

To give the member some examples of where that…. It's actually $88.9 million if you want to be very precise on it. The projects that would be included in that would be the Kelowna, Vernon and Kootenay Lake maternity and obstetrics renovations; the provincial health services authority radiology patient archiving communications system, which is our digital imaging system; Lions Gate Hospital isolation room upgrades and reconfigured pharmacy space; in Whistler, emergency room renovations; Powell River, relocate mental health and public health to the hospital; in Nanaimo, ICU renovations. Then there are various IT projects across all health authorities that also fall into that category.

The balance, which we see as being the $67 million, is all smaller capital projects. In some cases they're minor renovations; in some cases they could be repainting. But those are all projects that would fall under $100,000 and therefore can still be considered in the operating budget.

J. Kwan: The list of projects that the minister read off…. I presume he has the full list there. Who generates that list? Is it the health authorities that generate the list in the order of priority, or does the ministry generate that list? Who gets to decide which project gets the funding?

Hon. C. Hansen: To answer the member's specific question, it is the health authorities themselves that get to decide on their priority projects. What they receive is an allocation for capital expenditures, and then within that allocation they can determine what their priorities are. There still is accountability through Treasury Board for major projects, but we do allow the health authorities themselves to now pick the priorities.

The other thing I should add…. The list I gave of the seven projects within that $89 million budget is an example. Those are the ones that are identified to date. They are still health authorities that have not used up their capital allocation. They will be coming forward with projects in the months ahead to be undertaken during this particular fiscal year.

The note that's being written for me is that the health authorities now do not have their specific allocations of that $89 million. That's also part of what will be rolled out to them, hopefully before the end of this month. These are projects that are already identified from their priorities that would be fitting within that budget.

J. Kwan: So the health authorities identify their list of priorities, and then it has to go through the normal course of checks and balances through Treasury Board. Treasury Board minutes then get reported to cabinet. It goes through that process.

Without putting the minister in jeopardy about confidentiality relating to cabinet or Treasury Board — and I'm not sure if the minister is actually on Treasury Board — could the minister advise whether there have been occasions where a health authority's request for a

priority project has been turned down and another priority project has been put forward by cabinet's initiative or directive?

Hon. C. Hansen: There are actually three projects that we refer to as new-era commitments, and they're being done under the old capital model where the allocation is actually in the ministry's budget. We're modelling these ones under the old capital model. They are the new MSA Hospital, the new Omineca Lodge in Vanderhoof and the new psych facilities in Kamloops. Those are commitments that we brought with us into government.

The other major capital projects are all initiatives that have been undertaken since we became government. There is, for example, the $138 million capital allocation for community projects for mental health to allow for the downsizing of Riverview, but to make sure that the community facilities are put in place. Again, there are allocations that are put in place for each of the health authorities. They can determine the projects that make sense for their particular region, but they do have to come back to us for sign-off on those particular projects.

Basically, under the new model, the priority setting is really up to the individual health authorities, and then they may have to come to Treasury Board for approval over very significant projects. If I'm reading this right, the threshold is $50 million. What I'm informed is that for projects over $50 million, there has to be a public notice published notifying of that particular project. That's the one threshold in place that has a slightly different handling.

J. Kwan: Let me just go back to the numbers again, because I've just been able to work it out in my head here. The minister advised that…. Correct me if I'm wrong, because here are my calculations. The capital budget, comparing without GAAP, is a reduction of $9 million from $165 million to $156 million. Then, on the operating side is an increase of $22 million, from $6,116.8 million to $6,139.5 million. That's an increase of $22 million — yeah, I think it's $22.7 million. Yes — $22.7 million. Here's the sheet that I calculated it on.

That's really a net increase of $13 million when you account for both operating and capital together. Am I right so far, in comparison to the '03-04 budget and the '04-05 budget?

Hon. C. Hansen: That's correct in terms of comparing the base budget last year to the base budget this year. What that does not yet include is the new federal money, of which we have yet to get clarification from the federal government and the various other agencies that have to determine how it's allocated.

But $260 million is B.C.'s share of that money. As is noted in the budget documents, it is our hope that we will be able to allocate that as an additional $130 million for this coming fiscal year and another $130 million for following fiscal year. In other words, even though it is part of the three-year health accord moneys, we are certainly hoping there isn't an expectation that we have to somehow spend a portion of that before the end of March. We're also hoping that we don't have to bring all of it into next year's budget, because we really do want to make sure that it is spread out to meet the needs of patients over the remaining portion of the three-year time frame that it was originally intended for.

J. Kwan: I'll turn to the federal dollars in a moment. I fully recognize that the numbers the minister gave me do not include the federal moneys. I'll have a set of questions around the federal moneys, and I'll turn to that in a minute.

Maybe the minister can clarify this for me. According to the budget speech that was delivered by the Minister of Finance on February 17, it states: "With this budget, we will continue to build on our progress in health care — increasing annual funding an additional $1 billion by 2006-07."

According to my account here, this year's increase is $22.7 million. In '06-07, then, are we expecting the budget to increase by $978 million? Am I right?

Hon. C. Hansen: I would refer the member to the budget and fiscal plan that was tabled with the budget. On page 17 it gives a breakdown of that $1 billion increase.

What the Finance minister indicated was that from the base budget that was tabled last year at this time to the budget for '06-07, there would be a $1 billion increase. That takes us from a base of $10.211 billion up to $11.258 billion.

J. Kwan: I'm sorry. Actually, I should have the document, but I don't have it. Could we just recess for five minutes so I can go down to my office and grab that document so that we can compare the pages? Thanks.

J. Kwan: I now have the documents before me. The breakdown, as the minister was saying, on page 17, in each of the respective years was what the expected increase would be. Then for '06-07 it reads $1.047 billion.

Let me turn back to the $22 million that I've calculated according to the information the minister has given me today. Given that the Ministry of Health Services and the Ministry of Health Planning have now been combined into one because of recent changes…. Formerly, I think the budget for the Ministry of Health

Planning was about $24 million. Is that what accounts for that $22 million increase — the merging of the two ministries?

Hon. C. Hansen: First of all, what was the budget of the Ministry of Health Planning — none of that would have been part of what we refer to as regional programs. The regional programs budget was exclusively Ministry of Health Services in the past and continues to be. The numbers we have in here when we compare last year's numbers for the overall ministry are restated numbers. The numbers in this year's budget documents have been restated to include both the Ministry of Health Planning and the Ministry of Health Services, so we can compare apples to apples, year over year.

Let me then turn to the federal dollars. Could the minister advise last year how much money we got from the federal government?

Hon. C. Hansen: Yes. Last year $319 million of the federal funds were included in the '03-04 budget.

J. Kwan: Did all of that money from last year go into direct…? Well, no. Let me ask this question. Were there conditions attached to how those moneys were to be spent? If so, what were the conditions?

Hon. C. Hansen: The breakdown of the $319 million was this. There was what is referred to as the CHST supplement. It was $129.4 million in this current fiscal year. There was the health reform fund of $130 million, and then there was the diagnostic medical equipment fund of $60 million, for the total of $319.4 million.

The member's question was: are there strings attached? In the case of the CHST money, no. That was actually just an increase in the allocation to the province and simply based on the aggregate amount that the federal government had allocated. It was allocated to the provinces on a strictly per-capita basis, so our share of that was roughly 13 percent.

The second category, the health reform fund. There were some very specific strings attached to those moneys. It had to go towards catastrophic drug coverage, home and community care and/or primary care. There, the federal government, the way this has evolved, is not saying…. It had to recognize that provinces were at different stages in developing their own programs around those areas, because they're not Canada Health Act programs, and each province has had to fund that entirely themselves. There are obviously different standards and different levels of support across Canada.

That allocation under the health reform fund can be put towards these areas towards attaining minimum national standards. Some of those minimum national standards are in fact still being developed, even after a year later. Once a province has actually met those national standards, then the province is free to allocate their dollars under the reform fund to other needs in the health care system.

The final area, under equipment. That is not just the capital purchase of the equipment but also training. One of the issues we have talked to the federal government about is the need not just for training and capital but also for operating dollars for some of this new diagnostic equipment and equipment needs generally.

That's the breakdown of the three areas. Obviously, in the area of capital, that also comes with strings attached to it, because that's exactly where it has to be spent.

Hon. C. Hansen: Yes. And actually this was an area…. The capital funds the federal government had put up before were even more restrictive in that they largely didn't cover training and they did not cover IT systems. This new fund that was put in place a year ago is a little broader in scope in that it does include some information systems as well.

J. Kwan: The government had made commitments that the federal dollars…. Let me ask this question. When the federal dollars flow through to health authorities, on what line item in their budget does it appear?

Hon. C. Hansen: First of all, I need to correct something I said earlier with regard to information systems and information technology. I am informed that most of the dollars that are flowing from the federal government are coming under the Canada Health Infoway fund for IT systems. When it comes to that equipment fund flowing from the health accord, there are very limited ways that it can be used for information systems. One example, as I understand it, would be the PACS system — the picture archival and communications system — that is being implemented in many of the health authorities.

To answer the member's more recent question, there is not a specific line item. The dollars that flow from the federal government flow into our global budget. The share that is allocated to the health authorities would flow into the regional budget and then be allocated according to the population needs–based formula we discussed earlier.

In the budget letter that goes out to each of the health authorities, we ask for a very specific accounting for the equipment moneys. One of our requirements back to the federal government is that we have to report exactly how that $60 million in this current fiscal year's budget is being spent. That is a report that goes back to the federal government. We do have in the budget letter a specific requirement for them to report

back to us on how they spent their particular allocation. We do give them an allocation of that equipment budget, and then they are accountable for reporting on it.

J. Kwan: The tracking of the equipment dollars is very stringent because you have to account for that to the federal government. The rest of the money just goes into the overall operating budget for the health authorities.

How does the minister ensure that the dollars to the health authorities in fact go directly to patient care? The Minister of Finance and, I think, the minister himself have said and promised that that's where the moneys would go. How do you know that? What accountability systems do you have in place to be able to make that statement?

Hon. C. Hansen: Over the last couple of years we have got away from the approach of saying to the health authorities, "This is a particular line item, and this is how you must spend this particular dollar," because what we found was that that led to distorted priorities at the health authority level. We've given them the responsibility to allocate that budget to meet the needs within their particular region.

Some of the accountability is, just to give the member an example, around administrative and support costs in the health authorities, where we have said to the health authorities that they must reduce their administration and support costs by a minimum of 7 percent. In doing so, that is freeing up dollars. In fact, the dollars that are being focused in on patient care are even greater than the increases that would flow into their budgets — whether it's federal dollars or other dollars that would flow into their budgets. The impact on patient care is actually greater than even those additional dollars because of the fact that we are reducing the administrative and support costs throughout the health authorities.

They do have very specific accountabilities back to us in our performance agreements to make sure they meet those targets. In fact, as I understand it, I think all of the health authorities have either met that or are certainly well on track to doing it, and some have actually gone well beyond the 7 percent.

J. Kwan: The minister mentioned — I think he said — the Canada infofund when I was asking the question about the IT dollars. He rose and then corrected the record to say that the majority of the IT dollars came from a thing called the Canada infofund. Did I hear him correctly? Could the minister elaborate on that, please? I assume, then, that is additional moneys from the federal government towards the health care system for the IT side of things. If that is the case, how much money was provided from the federal government towards the IT changes?

Hon. C. Hansen: It is correctly referred to as the Canada Health Infoway. It's a national program where the federal government has allocated $1.5 billion to this project over a number of years. They are funding cutting-edge projects across Canada. It is not an allocation based on population. They actually receive applications for specific projects and then approve them based on the merits of those projects.

The goal is to build an electronic health record. If there is a project that is original and innovative — leading-edge — they will fund 80 percent, or 80 cents on the dollar. Once that project is being replicated by other jurisdictions, they would then fund 50 cents on the dollar. B.C. has been quite successful, both from the individual health authorities and from the province generally, to secure some of these dollars, and several of them are in fact at the 80-cent level.

Let me read this out, because it might give a little bit more detail here. The Canada Health Infoway was given initial funding of $500 million, which was subsequently increased to — a correction here — $1.1 billion. I think I said $1.5 billion earlier. The initial focus of the Canada Health Infoway has been an investment with partners to develop, replicate and deploy robust, reusable and interoperable electronic health record and telehealth solutions. Investments will be made in the following program areas: infrastructure such as standards and tool kits, registries, client provider and facilities, drug information systems, diagnostic imaging systems, laboratory information systems and telehealth.

G. Trumper: We have in the House today 25 grade 4s and 5s from French Creek Elementary School in Coombs, which is in my riding. The teachers are Mr. Paul Anders and Ms. Sheila Spendlove — and lots of parents. They came yesterday, and they will be going back tomorrow. They are visiting the Legislature today and will then be going to IMAX and doing a lot of other exciting things. I would ask the House to please give them a very warm welcome.

J. Kwan: Of the $1.1 billion from the Canada Health Infoway envelope, how much was British Columbia able to access? Who makes the applications? Is this the health authorities, or is it the Ministry of Health? Who makes these applications to the federal government?

Hon. C. Hansen: I don't have a precise number in terms of how much of this money is flowing to British Columbia so far. In terms of the process for these applications, there is a central provincial coordination, because one of the things that Canada Health Infoway

is requiring is that these projects be aligned with the province's priorities and the province's strategic approach to health reform.

There is also what we refer to as a CIO council, and that's the chief information officers. Each of the health authorities will have a chief information officer who serves on that council. They meet on a fairly regular basis to try to provide some provincial perspective on some of these. The applications themselves could go in from the health authority, once it's been vetted through this central coordinating body, or it could go in directly from the Ministry of Health Services.

In terms of projects that have been approved so far, one is the PACS program in the Fraser health authority. That is the picture archival and communications system I mentioned earlier. Also, the provider registry is one where B.C. is seen as a national leader in that regard, so we are able to access the 80-cent dollars. There are a couple of other projects — I don't have them at my fingertips now — that have apparently been approved.

One of the big frustrations we have is the slowness in approving some of these. The money is sitting there, this $1.1 billion fund, and they have been very slow at getting the approvals processed so that we can get on with some of those projects.

J. Kwan: I'm just curious. In terms of trying to break down the health care budget, how much of it is actually provincial dollars and how much of it is federal dollars? Then for the federal moneys, what are the strings attached to it? It seems to me this $1.1 billion on application basis, as applications go in…. In spite of the slow process, eventually somewhere along the line approvals are made, and then British Columbia has been able to access some of those dollars. I'm just trying to figure out, with this Canada Health Infoway envelope, how much of those moneys contributed to the overall health care budget for the province. If the minister doesn't have that information today, I presume the minister can get that information at some point later today or later this week. Maybe the minister can give the opposition that information then, if that's agreeable.

Hon. C. Hansen: Certainly, I will endeavour to get that information for the member in terms of — just so I have got it right — the Canada Health Infoway projects that have been approved so far and how much they are for. The other thing I will endeavour to get for the member is how those dollars flow, whether they flow through the operating budgets in what years. I'll certainly try to get as much detail as I can around that subject.

Are there any other federal dollars or special funding programs to which the province can try and get access to in the health area, such as the Canada Health Infoway? Are there other programs that exist with the federal government, and if so, what are they? Again, the same question flows: has British Columbia been successful in trying to access some of those dollars, and if so, in what ways?

Hon. C. Hansen: We have been putting our heads together here trying to think of what other programs there are where dollars are flowing into the provincial health budget. One is the primary health care transition fund. That was a $72 million fund over five years. It amounts to about $19 million a year. There are some hepatitis C dollars. That's not a specific amount because it depends on the claims, and in fact that is a fund that runs out, I think, at the end of this fiscal year. There is also a very small amount of money pertaining to tobacco strategies that flow as part of public health.

So the hepatitis C fund for the past fiscal year…. This is with regard to the hep-C fund, and it says under the undertaking between B.C. and Canada in September 1999, B.C. 's share of the fund was $66 million over the 20-year life of the undertaking, based on the estimated number of persons infected with hep C. B.C. is to issue its first public report on the use of the funds in September of '04, and $22 million had been received by March of '03.

J. Kwan: I assume, then, those are all the areas of federal funding that British Columbia gets. If that's not the case…. I understand that there might be some other program somewhere that hasn't popped into the minister's head at the moment, but when he compiles that list of how that funding breaks down — the Canada Health Infoway funding — if the minister could have his staff put their minds to other funding and also incorporate into that list what the other fund is for and how the funding breaks down, etc., that would be great. I won't belabour that question in terms of federal dollars. Then that's for '03-04, generally speaking.

Does the minister have the information — he doesn't have to give me that information right at this moment; again, that could be information that is given to us in that list of things the minister is going to provide — about the previous years in terms of 2000-01 and then '02-03? We have arrived at '03-04. Once we get to '05-06 — when the government knows exactly what the federal dollars are for '05-06 — could the minister provide that information as well for those respective years?

To clarify, it is just so I can compare over the years where the federal government has been with respect to helping British Columbia in the area of health services in terms of funding, so I could have the year breakdown and the areas of funding. That's where I'm going with this.

Hon. C. Hansen: What we were discussing is just the complexity of trying to look at some of these years past with some of these funds. In some cases, dollars would flow directly to the health authorities, and in other cases they would flow through consolidated

revenue, depending on the nature of the fund. We will certainly endeavour to pull together as much information as we can that might help the member in determining that.

The one thing I do want to underscore is the commitment we made with regard to the additional health accord moneys and the additional CHST moneys. The commitment we made was that every dollar of that would be added into the health budget, and we have in fact done that. What I find surprising is that most provinces can't claim that.

J. Kwan: In that instance, do they lose the money — those provinces? I know this is a little bit out of the scope of estimates, but it's just triggered something in my mind. If it's the case that the other provinces don't actually meet those conditions in spending the dollars where they're supposed to spend them, then presumably those moneys go back to Ottawa. Maybe there's a chance that we could get more is what I'm thinking. Does the minister know what happens?

Hon. C. Hansen: I wish that were the case. But no, I expect that all of the provinces, obviously, would live up to their obligations under the health accord to meet the requirements for the health reform fund — the standards that everyone has to work towards. It's only once they exceed those levels that they're able to allocate the money from the health reform fund anywhere they want. The additions to the CHST transfer they're free to spend basically anywhere in the health system.

What we've seen in other provinces is that their total health budget has not gone up to the same amount as the increase in the federal funding that has been designated for health. So, in fact, some provinces have been using that increase in federal moneys to decrease their share. What we've said in British Columbia is a commitment that we will allocate every single dollar of increased federal allocation to the health budget in this province, and that is what the Minister of Finance has done.

J. Kwan: I see what the minister means. The other provinces actually do spend the money, but they are decreasing their own budget. I wish, actually — as a side issue — that other ministers in this government, when they get federal dollars from the federal government, would do exactly what this minister is doing in the area of health.

I will use one example, and that is the area of housing. Housing dollars have come in, and actually, instead of the provincial government continuing on with provincial dollars towards housing, what is actually done…. This government has actually taken provincial dollars away and used the federal moneys in the area of housing and, in fact, are not doing housing anymore, as we established yesterday. The minister of housing is actually spending the dollars in building assisted living and supportive housing and therefore not building affordable housing anymore.

I only wish that the minister perhaps would talk to his colleagues about engaging in the same practice that he is with respect to federal health dollars in other areas throughout government. I wish that was the case, because then we would actually see advances in other ministries in terms of supports in our community.

Anyway, that is a side issue, and I will take that up with several different ministers when we get to that in those other areas around housing and child care, amongst other things.

Okay, so we've got the federal piece there clarified. Now, we expect that this year $260 million will be forthcoming from the federal government over two years, I believe — $130 million each year. That is the expectation. When does the minister expect the confirmation from the federal money? I guess it would be after their budget. Is that the deadline in terms of the date for confirmation?

Hon. C. Hansen: As I understand, it does not have anything directly to do with the federal budget to be tabled, because this $2 billion actually comes out of the current fiscal year which ends March 31 — the current federal budget of this current fiscal year. It is actually a $2 billion disbursement from that budget. The challenge that we have is saying B.C.'s share of that $260 million…. It comes down to the accounting treatment of that. If we have to expense it all in the year that the federal government allocates it, then basically we've got less than a month to burn through $260 million, which obviously would not be in the best interests of patient care.

We are working with our auditor general and the comptroller general in the province to determine, with appropriate accounting principles, how it can be allocated. That still has to be determined. We're waiting for the determination from the federal government in terms of how it will be structured and how it will be allocated. Only then can our auditor general and comptroller general determine how we can disburse it over what we hope will be the two years remaining in the three-year health accord. As is indicated in the budget, it is our hope that we can allocate $130 million in this coming fiscal year and $130 million in the following fiscal year, because that will give some stability over that period of time.

When the first allocation of the health accord moneys was allocated a year ago, certainly our auditor general was very helpful in trying to make sure we could allocate it in a way that met the best interests of patients. I think we succeeded in doing that with his help while still remaining within the rigid accounting principles that obviously he wants to uphold.

J. Kwan: The question is not whether or not we'll get the $260 million. It is not even about whether or not the amount is $260 million. We know it is $260 million. The only question, really, is about how quickly we

must spend that money and in which fiscal year. In that light, we actually know what the total health budget is in federal and provincial dollars. We already know.

The only thing we don't know is in which year we have to spend it. Just for the sake of this discussion, I suppose, over two years we have $260 million, no matter what. In that sense, we do know exactly how much we've got. The number is fixed. The period of time in which you have to spend it is fixed. Within these two years, hopefully, it could be more later rather than a substantially big portion of it in the front end.

Those are the only questions the minister is trying to sort out. There is no mystery there in terms of the federal money. We do know, in my view, what the federal budget is in the health budget for the province — right?

Hon. C. Hansen: Essentially, the member is correct. What we don't know yet is how that $260 million will flow. It's not up to me as a health minister to say: "Well, you know, I'd really like to have it all to spend in June of this year, all $260 million." It doesn't work that way. It really comes down to what the accounting principles will allow. If you think of a worst-case scenario for us, it would be a ruling from those accounting principles that says: "If the federal government disbursed it in '03-04, then the province has to spend it all in '03-04." That clearly isn't going to meet the needs of patients in B.C.

The other alternative could be that they say that because this was a three-year allocation, it has to be allocated over three years — $260 million divided by 3 in each of the three years, including the one that's going to end in a little over three weeks. Again, we don't think that's in the best interests of patients.

There are still a lot of unknowns. We know that it's $260 million. We just don't know what the accounting principles will dictate to us in terms of when that has to be allocated. We are working with the auditor general and the comptroller general. As I mentioned before, it is our hope that we can allocate that as $130 million next year and $130 million the year after.

J. Kwan: Has the money flowed yet, or is it still in the federal government's account?

Hon. C. Hansen: As I understand it, $2 billion gets set up as a trust, and then only once it's determined how it is going to be allocated will it flow to the provinces. It gets disbursed from the federal government into a trust and then from the trust to the respective jurisdictions.

J. Kwan: When does the minister expect that the accounting issues would be resolved?

Hon. C. Hansen: Our best guess is that this could be resolved by the end of April. The reason it's a guess for us is that it really is up to the auditor general and the comptroller general to do their due diligence around this particular file. I wouldn't want to second-guess the amount of time they would want to take in order to get through that process, but it's our expectation that it will be by the end of April.

J. Kwan: The reason why I ask this is that as we know, there is a pending federal election — sometime soon perhaps. I'm just wondering: is there any chance that we could be caught up in a situation where a federal election is called and the matter is not yet resolved? Then we don't know what's going to happen. How do we deal with that?

Hon. C. Hansen: The $2 billion that goes into this trust…. To put it into the trust requires federal legislation. It is our expectation that that legislation will be introduced sometime this month, before the end of the fiscal year. Certainly, I guess anything's possible. You know, that's all conjecture as to when a federal election will be called. We're certainly working on the assumption that this legislation to set up the trust will in fact be passed and be given royal assent prior to an election being called, but as we know, in politics you can never predict with certainty a lot of things.

J. Kwan: Stranger things have happened. I just want to make sure we get the money. That's my bottom line.

All right. I'm just going to move away from the federal dollars. I think I've asked all the questions I have around that front.

Let me move to this statement that was made in the budget speech from the Minister of Finance on February 17, where he states: "We're focusing some of these savings" — he's talking about savings the government has and spent moneys for the year that just ended; it's $66 million, he says — "to help address wait-lists and meet other pressing needs in the health care system, to offset maintenance costs for post-secondary institutions, to improve literacy…." Could the minister advise: of that $66 million, how much money did we actually get towards health services and towards wait-lists?

Hon. C. Hansen: I apologize for the delay. It took us a bit to find the right page in here.

Again, this is in the budget document that we had been referring to earlier. I know the member has the budget and fiscal plan. If she refers to page 118 in that document, it gives a breakdown of the entire $66 million. The share that came to the health sector was $33 million. Well, the breakdown there is this. There's a grant to Action Schools, the LegaciesNow–Action Schools project, of $1 million; reimbursement of SARS costs to the health authorities of $2 million; additional funding to the health authorities to address wait-lists and other priorities, $20 million; and to the Michael Smith Foundation, $8 million. Of the $20 million that went to the health authorities, approximately $10 million has been specifically allocated to deal with wait-lists.

Okay. I would now like to turn to the questions around Pharmacare in terms of the budget. We now know the changes around Pharmacare that have been brought in by the government — what the government has been advertising as Fair Pharmacare. We also know that a lot of people, including seniors…. Many of them have said to me that they've had to pay more. In fact, most recently, just this last weekend, I was at an event — a seventy-fifth anniversary celebration of one of the Chinese organizations in the community. Several seniors came up to me and started to tell me about how they're paying more towards their drug costs.

I wonder if the minister could walk me through the budget line for Pharmacare. I see that the amount is going up this year and is going up year over year. Is it because it's a function of increasing population, or is it because the ministry is not seeing the savings they had anticipated with Pharmacare? Could the minister walk me through that, please?

Hon. C. Hansen: First of all, the changes we made to the Fair Pharmacare program last year were driven by trying to bring more fairness into the system, to try to make sure that young low-income families who were facing very high deductibles would receive more financial assistance under the new Fair Pharmacare program than they would have in the past. It also meant that individuals with higher incomes would be paying more. It was essentially a redistribution of the financial benefits of Pharmacare from high-income individuals to low-income individuals and low-income families.

The cost pressures that the member indicated…. Yes, we are still facing double-digit increases to the Pharmacare budget, and that is projected to continue as we go forward. The biggest element of that is growing demand pressures, primarily because of our aging population. That really accounts for the biggest chunk of it. The second-biggest chunk of that is non-wage inflation, which provides for increased drug costs.

As the member, I'm sure, knows, there are lots of new medications being developed, and the price of those new medications is considerably higher than new medications we saw in past years. We are under lots of pressure, obviously, to approve even more new medications, and that has to be managed within our budget allocations.

The Fair Pharmacare program was not going to reduce the rate of increase in the Pharmacare budget. We still have those same cost pressures. The intent of Fair Pharmacare was to make sure that the distribution of the financial assistance was skewed more to low-income families — low-income non-senior families and low-income senior families.

If you look specifically at the seniors in the province, you have to go to about the 66th percentile of income before you find that seniors are in fact paying more than they would have under the old plan. Roughly speaking, the seniors who were in the top third of income, based on their income, may see some increase. The two-thirds of seniors that have lower incomes would in fact either stay the same or receive more financial assistance under the new Fair Pharmacare program.

J. Kwan: I know of at least one case where that's not necessarily true. It's about people I know. Their income is just a basic pension income for both of them. This is combined Pharmacare and MSP premiums.

Because both of them receive a pension — and it's just your average pension — their threshold is just over the amount for the subsidy for MSP, so they have to pay almost the full amount for MSP. They pay about $1,000 for their MSP coverage. For Pharmacare they've had to pay all the upfront costs until they reach the threshold of spending — I forget what the amount is now — and then X amount of money towards Pharmacare. Then it's being covered.

Really, their health care costs, both MSP and Pharmacare, have actually gone way higher than what they used to be — way higher. They're definitely not in the top 30 percent wage bracket amongst seniors, because they are just basic pensioners. So I know of at least one case where that differs from the minister's understanding with respect to that.

Hon. C. Hansen: I'm trying to remember off the top of my head what the median income is for seniors. I believe it's approximately $26,000 a year. The other thing I remember from some of the information when we were rolling out the Fair Pharmacare program — I haven't got it right in front of me to double-check it — is that a senior at an income level of about $33,000 a year would be in about that 66th percentile. When we rolled out Fair Pharmacare, you may recall that we indicated that 82 percent of seniors would get either more financial assistance or the same amount. That basically factors in those who have very small Pharmacare needs in the province.

If you have an individual who is on a basic old age pension and a guaranteed income supplement, all of those individuals would wind up with better financial assistance under Fair Pharmacare than they would have had under the old program. If you look again at the MSP rates, the eligibility for premium assistance would click in, I believe, for all individuals who would be on old age security and the guaranteed income supplement. In fact, I can say that with certainty.

If a senior — whether they're a senior single individual or a senior couple — is on guaranteed income supplement and old age pension as their income, they would be eligible for premium assistance under MSP, and they would be better off under Fair Pharmacare than under the old system in terms of the deductibles. Under Fair Pharmacare everyone is faced with a deductible starting January 1 of each year. Well, no, that's not true. There are some seniors covered from the first

dollar of coverage, but generally speaking most individuals wind up with covering the cost of their drugs until they hit their deductible level. Certainly if this couple you are talking about were relying on old age security and guaranteed income supplement, they would be eligible for premium assistance on MSP and would be better off under the new Fair Pharmacare program.

J. Kwan: Maybe they're doing something wrong, because I know they were not qualified for the MSP premiums. I know they had to pay $1,000 towards it, and in fact I know their children pay it for them. Anyway, I will look into that case, because that doesn't sound right then if that is what the minister is saying. Sorry, I got sidetracked because that case has been on my mind for some time.

Drug costs. The minister says increased drug costs because of increased population, and those attribute to why Pharmacare costs are going up according to the budget book year over year. When the minister says increased drug costs, could he clarify? Is it the increased cost of new drugs into the system, or is it utilization?

Hon. C. Hansen: When I talked about the demand pressures, that includes utilization. So we do see some utilization growth. When I talk about the non-wage inflation, that includes the actual price of the medications.

J. Kwan: Does the minister have a breakdown of how much is attributed towards utilization and how much is attributed to inflation or other factors?

Hon. C. Hansen: The demand pressures, which include population demographics and utilization, account for about $66 million worth of the increase, and the non-wage inflation accounts for about $36 million of inflation of the increased budget.

J. Kwan: Can the minister give us a quick update on what's happening with reference-based pricing?

Hon. C. Hansen: The reference-based pricing remains in place. If you go back to the report done by the former auditor general, George Morfitt, around the reference drug program, he made a series of recommendations which included leaving the reference drug program in place but also doing a fairly comprehensive review of Pharmacare. That is currently underway now, so we are following through on the recommendations of Mr. Morfitt.

J. Kwan: Are we doing more on reference-based pricing than what we have been doing? Aside from continuing on with the program, are there more things that the government is working on with respect to reference-based pricing? If so, what are they? And how is it going?

Hon. C. Hansen: The reference drug program actually covers five therapeutic classes: H2 receptor antagonists, nitrates, non-steroidal anti-inflammatory drugs, angiotensin-converting enzyme inhibitors — now I'm going to get really tongue-twisted on this one — dihydropyridine calcium channel blockers. I never did take Latin, as you can tell. Those are the five therapeutic classes that have been in place for a number of years now, and those remain in place. We have not added any additional classes since that time.

J. Kwan: Are you looking at adding more? Is there work…? In other words, what I'm trying to get at is: aside from continuing on with what we have been doing that was started by the previous government, are there plans to expand the reference-based pricing initiative?

Hon. C. Hansen: The short answer to the member's question is: not at this time. We are undertaking this Pharmacare review, and clearly, depending on the outcome of that review, we'll be taking a second look at the future of the reference drug program in terms of whether it should be continued or whether it should be expanded. Those are all issues that may come out of that Pharmacare review.

J. Kwan: Did I hear the minister correctly when he said whether or not it should continue or be expanded? So there's a possibility, through this review, that it could actually stop?

Hon. C. Hansen: I don't want to second-guess the outcome of that review, but that all flows from the Morfitt report. The Morfitt report is a public document, and in there he sets out some of the issues around the reference drug program. One of his recommendations is that we continue it pending this review, and that's exactly what we have done. If you go to the Morfitt report and look at the…. I believe, off the top of my head, there were nine recommendations. We are basically following through on those recommendations, and that is what is guiding the review.

Hon. C. Hansen: I don't have a specific due date for that, but I do expect that it will be coming to me at some point over the next few months.

J. Kwan: Just another quick question. The minister referenced federal funding, actually, about tobacco — some dollars going into the tobacco initiative. Could the minister give us a quick update with respect to the tobacco situation? I know the matter is before the courts at the moment, and there might be some things the minister might not be able to engage in discussions with, but I just want to see if the minister can give us a quick overall update in terms of what's happening there.

Hon. C. Hansen: Perhaps it might be best if I read this as a bit of an update for the member.

I think the bottom line on our ongoing tobacco strategy is that B.C. is a leader in Canada when it comes to the prevalence of smoking among Canadians 15 and older. We have, in fact, the lowest rates of every province in Canada. I will be the first one to say that it's not good enough and that we still have to make sure we drive those rates down even further.

J. Kwan: With respect to the court case, the matter is now being appealed and is before the courts. Is it the government's intention to continue on with the court challenge — not back down, in other words?

Hon. C. Hansen: I'll read this one paragraph here. It has been before court, and I understand that a decision is expected at any time. We don't know when that decision will come down, but I'll just read this for the benefit of the member.

J. Kwan: "Health Benefits Operations" — is that the budget line that reflects the privatization of MSP services?

J. Kwan: Could the minister outline for this House the process that is currently underway for the MSP privatization?

Hon. C. Hansen: Noting the hour, I will endeavour to have this answer ready when we reconvene.

I would now like to move that we rise, report progress and ask leave to sit again.

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

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

Hon. R. Neufeld: I am glad we're starting this process early this year with estimates. I have with me the Deputy Minister of Energy and Mines, Sheila Wynn, and the new appointment of Minister of State

for Mining, the member for Prince George North. I also have some other staff with me.

How I'd like to go through the estimates, if it works for the opposition, is to do B.C. Hydro and BCTC first, and they can go, and then to go on to energy — I notice clinging of the hands — and then mines. Before I start that, maybe I could ask the member if she would propose something different.

Hon. R. Neufeld: Sorry for the confusion. If the Leader of the Opposition has no problem with the agenda the way it's set out — B.C. Hydro, BCTC first — then we'll go on to energy and then into mines.

I'll just say a few words before we start. We've had a busy year in the Ministry of Energy and Mines — in fact, exceptionally busy — trying to facilitate all the activity taking place in both mining and in oil and gas and anything to do with implementing the energy plan. We've had a record amount of rigs working in the province this year, up to a high, I think, of about 173. In mining we have had a record amount of claims staked this year and a fairly large increase in the amount of exploration dollars spent. This is driven, of course, in part by some of the programs the ministry brought forward, but also — I've always been very clear about this — it's driven by price. Obviously, the price of natural gas has stayed stable, oil is fairly stable and minerals have increased quite dramatically over this last year — specifically, that being mineralogical coal and copper.

That has spurred a lot of development in the province and a lot of optimistic viewpoints about some of the mines that are on care and maintenance opening again, which will create hundreds of jobs in the heartlands in British Columbia. I'm referring mostly to Gibraltar, who have a plan in place, as we speak, about opening up. The oil and gas industry in northeastern British Columbia is moving along very well with lots of employment and investment and a record amount of wells drilled this past year, in the neighbourhood of about a thousand or 1,100. That's a high for British Columbia.

On the electricity front we've seen B.C. Hydro go out for requests for proposals for clean energy, and $800 million worth of projects came forward that Hydro or the Crown are now working with to try and bring to fruition. That's good news because that moves Hydro closer to their expected target of acquiring 50 percent of their new incremental supply, going forward from clean sources.

All divisions and Crowns that are under my responsibility, including Columbia Basin Trust and Columbia Power Corporation, which is working on the Brilliant expansion as we speak…. I was just there the other day. That's a great project moving forward which will benefit all British Columbians but will benefit those in the Columbia basin to a huge degree.

We look forward to the programs that we just initiated last year, in fact, increasing — by a huge amount — the amount of activity that we'll see in oil and gas across the province. We continue to work with industry to try and get the Bowser and Nechako basins more active. I'm sure there are some members in the House here that would love to see that happen, and so would I, to get the industry actually moving forward to doing seismic and, at the end of the day, hopefully extensive drilling.

Coalbed methane. We're doing a number of studies around the province on air quality and cumulative effects, that being in the Hudson's Hope region of the province, in northeastern B.C. and in some other areas. There is some activity that looks like it may move forward on that front, and that's good news for British Columbians — again, coalbed methane being fully interchangeable with natural gas. It is a sweet gas; it doesn't contain the sulphur that a lot of the natural gas does.

I want to thank those people that work in the ministry. They've all worked hard. We've had some changes in the ministry, but generally speaking, the people that work in the Ministry of Energy and Mines work very hard and diligently at producing what we had this year, which was a revenue of about $2 billion from oil and gas activities — that being from royalties and lease sales and from mineral royalties.

All that money goes to provide health care and education for British Columbians all across this province. It's great to be able to have that kind of revenue to provide good health care and education, regardless of where you live in the province. Those are the two main themes of this government. We said we would continue to fund them at the level they were funded when we came into office, and in fact, we've increased funding for both those ministries substantially, in small part due to what this ministry, the Ministry of Energy and Mines, does.

J. MacPhail: We've been told that the B.C. Hydro's staff time is extremely valuable, so let's just see how valuable it is. They can't sit around and wait like they were forced to do with the previous administration.

What are the rules for expense claims for B.C. Hydro executives? Can the minister produce them, please?

Hon. R. Neufeld: Yes, I don't have those rules with me, but I will get them produced for you and get them over to you.

J. MacPhail: The Hydro executives are sitting right there. They should know. Just tell me.

Hon. R. Neufeld: As I said, you asked for the written information. We'll get that written information to you. I don't think…. Maybe I should correct myself. I don't think they have in the back of their minds all the policies around expenditures. We can ask them for a verbal one, but it won't be complete.

The Chair: Would the member for Prince George–Omineca please wait his turn. The Leader of the Opposition has the floor.

J. MacPhail: I don't know why Hydro isn't prepared for this. It's been in the news. It's controversial, and it's their time to correct the record, if at all possible.

What I noted from the expenses that were released in the newspaper is that they far exceeded what the Treasury Board orders are for claiming expenses. I assume there's a different set of rules for B.C. Hydro executives. What are those rules? I would also assume that the executives themselves know those rules.

Hon. R. Neufeld: I'd like to introduce on my left, Bob Elton, president and CEO of B.C. Hydro and Yakout Mansour from BCTC. Who do I have in the back here? Actually, we'll just leave that for the time being.

If the member would ask specifically which policy she wants. What is she looking for directly? Is it room charges or any of those things? I would assume, and I'm only guessing, that the policy probably hasn't changed that much since the last administration was around.

J. MacPhail: Just for the minister's information, the public is real tired of him holding himself up to the standard of the previous government. They claim to be different. The previous government got thrown out of office at the behest of this minister, so let's see where the changes are. I expect this is an area where there are substantial changes. There are substantial changes in the rates of pay as a result of this government taking office, so let's see about the expenses.

What is the per-diem rate? When does one get to claim a per-diem rate? What are the meal rates, and what are the hotel accommodation rates? What are the rates for travel permitted?

Hon. R. Neufeld: When Hydro executives are in British Columbia, if they happen to stay in hotel rooms, it is the B.C. government rate they would acquire from whatever hotel they stay in. It's the same with meals. When they are out of the province, what they have to do is try to minimize their costs as much as they possibly can, wherever they happen to stay. Travel is no different from what it is for executives of government. If it's over four hours, you can travel in business class.

J. MacPhail: How did the Hydro executives for…? Let me ask one question first. What is the fiscal year end for Hydro?

J. MacPhail: I assume I can't…. The books haven't been closed there. The expenses reported for Hydro executives in '02-03 — does the finance committee review those and declare that there should be changes? Has there been any review of expenses, either before those news articles appeared or after?

Hon. R. Neufeld: The audit committee consists of five members of the board. That's internal in B.C. Hydro. They would review those costs. We're not exactly sure when the last time they reviewed it was, but there has been no review since the newspaper article came out. I would assume there probably will be, before long.

J. MacPhail: What is the expenditure of…? Well, first of all, what is the executive cost of Hydro for '02-03, all in?

J. MacPhail: Well, I'm glad we're going first for B.C. Hydro because they surely came fully prepared. What was the percentage of executive increase in '02-03? Was there any?

Hon. R. Neufeld: There were no pay increases for the executive. If someone went from one job to another that would actually have a higher salary base, it would be a pay increase. But there was no general pay increase.

Hon. R. Neufeld: I'm told that over the last two years the vice-president category has gone down from 22 to ten, so there has been a reduction. As far as people moving, there have been some changes. But from one job to another, I don't have that information. If she wants that information, we can get it for her.

J. MacPhail: The question was, have there been any additions to the executive?

J. MacPhail: The reduction of vice-presidents from 22 to ten inside B.C. Hydro — did that arise out of the creation of the B.C. Transit commission?

Hon. R. Neufeld: It's B.C. Transmission Corporation. One moved from B.C. Hydro to B.C. Transmission Corporation.

Hon. R. Neufeld: No, they weren't fired, but B.C. Hydro has reduced the number of vice-presidents from

22 to ten over two years. Some of those people may have taken retirement. Some of those may have moved on to other jobs someplace. Some of them may even, in fact, have been demoted.

J. MacPhail: That's why I wanted to actually know what executive compensation was, to see what affect this has had on the bottom line. These changes arising to the executive complement, what has it changed in the way of costs to the corporation — up or down?

Hon. R. Neufeld: Well, reducing from 22 to ten, and with zero percent increase in their salaries, I would assume it's down.

J. MacPhail: Can I have some numbers, please? Did the nine vice-presidents who are no longer vice-presidents get severed? Does that mean the whole executive is that many fewer people? Did the combination of the executive of B.C. Transmission Corporation and B.C. Hydro Corporation…. Is the overall executive of those two groups fewer than the original B.C. Hydro group? There are a few questions to start.

Hon. R. Neufeld: There were some retirements — one severed. As I said, one — Yakout — moved from B.C. Hydro to BCTC. We'll get the dollar number for you. They're working on that now so they can give you the correct amount.

J. MacPhail: The last question was: is the combined executive of BCTC and B.C. Hydro less or more than B.C. Hydro prior to the creation of BCTC?

Hon. R. Neufeld: As I understand, in the last two years we went from 22 to ten. We now have, if you combine them both, 15. With BCTC and B.C. Hydro there would be 15.

Hon. R. Neufeld: B.C. Hydro says yes. For B.C. Hydro it's ten; for BCTC it's five.

J. MacPhail: Okay. Who are the executive, then? Let's name them. Let's name the positions.

J. MacPhail: You said previously you went from 22 to ten VPs at B.C. Hydro. That would be…. Is the entire executive of B.C. Hydro VPs?

Hon. R. Neufeld: Well, if you'll just wait while the staff gets the names on the positions for you. As I understand, over two years we went from 22 to ten. We have five in BCTC, so we have 15 today, compared to the 22 of two years ago.

J. MacPhail: Sorry. Mr. Chair, I'm waiting for the answer. The minister said: "If you'll just wait, we'll get it for you."

The Chair: Would the member like to ask another question while they're getting that information?

J. MacPhail: Honestly, I don't know what this minister would do if he faced more than one challenge. How ridiculous. We accommodate B.C. Hydro's agenda here, and then he shoves it up the butt of someone who accommodates his agenda. How ridiculous.

The Chair: Pardon me, member, but I think that comment is unparliamentary, and I think we should withdraw it.

J. MacPhail: Which part is unparliamentary, just so I know what not to refer to again — "shove" or "butt"? I mean it — seriously.

The Chair: I'm asking the member to withdraw her comments, please. It's unparliamentary.

J. MacPhail: I withdraw, Mr. Chair, and I look forward to a discussion with you after about how it was unparliamentary.

J. MacPhail: Let me ask this question, then: what's the bonus plan for this new executive on both sides — both BCTC and B.C. Hydro?

Hon. R. Neufeld: Through all that excitement…. I'm talking to the members behind, trying to get the information for her. Would she repeat the question, please?

J. MacPhail: What's the bonus plan for this executive — both at BCTC and B.C. Hydro? How has it evolved over the last two, three years?

Hon. R. Neufeld: B.C. Hydro. Mr. Elton has a target bonus of 30 percent of base. Other executives have a target bonus of 20 percent of base, which he informs me is about the same as has been in place for the last two or three years.

BCTC. Senior vice-president is 25 percent; VPs are 20 percent. They have a target performance that they

have to meet, both corporate goals and personal goals, to acquire those bonuses. We're checking to see if all of those bonuses, and how they arrive at bonuses, are on the website or not. I've asked for that information.

Hon. R. Neufeld: No one in B.C. Hydro reached their maximum bonus, and we'll get the information as to what they did reach.

J. MacPhail: Well, how about the people sitting with you? How about those people?

Hon. R. Neufeld: We'll get those numbers for you so that it's not confusing. They'll document that for you.

J. MacPhail: Well, that's interesting. I certainly know how much I'm paid. I can't afford not to know how much I'm paid. I can't afford to not know how much is in my pay packet.

I'm merely asking: what's in the pay packet? The people there apparently can't tell me.

I had an interesting discussion with the Minister of Finance yesterday about Hydro revenue forecasts. This year Hydro revenue was forecast by Hydro to be minus $70 million. It's coming in at plus $263 million or $260 million — around there. That's a swing of $300 million that Hydro underforecast.

The reason why I was sensitive about this is because the now Minister of Finance made a huge deal about Hydro revenue forecasts in my government's last budget. The Minister of Finance actually admitted yesterday that oh, well, it turns out he was wrong, the then Minister of Finance was right, and Hydro was wrong.

We have a situation where Hydro is going and asking for a 7.2 percent rate increase to the B.C. Utilities Commission. That 7.2 percent rate increase is forecast under this budget to increase the bottom line of government by $263 million. The government, using Hydro's forecast last year, was out by $300 million. They're now going to BCUC. Actually out by $300 million — in other words, the taxpayers benefited by $300 million more than Hydro forecast. In the meantime, people are cut off welfare, schools are closing, programs for children and families are cut, native courtworker programs are cut, and victim services are cut.

What does the Minister of Finance do this year? He uses B.C. Hydro's revenue forecasts again, even though he admitted that the Minister of Finance previous to him got it right by not using B.C. Hydro's forecast. The consequences are more serious this year in that the swing, or the forecast, is actually going to cost British Columbians $263 million out of their own pockets. What presentation is the government and/or B.C. Hydro making to the B.C. Utilities Commission to justify the $263 million they're going to take out of British Columbians' pockets in increased Hydro rates?

Hon. R. Neufeld: For the first time since 1992 or 1993, B.C. Hydro will actually appear before the B.C. Utilities Commission, a panel of experts, to have all of their costs reviewed, each and every one of them, to make sure B.C. Hydro is providing the lowest cost base hydro that they possibly can to the ratepayers in the province of British Columbia.

I think that's something that is long overdue. Something that used to be set in a cabinet room — rates frozen for whatever reason…. We now have the system back on line, where the B.C. Utilities Commission will review costs of B.C. Hydro from top to bottom to find out whether they are providing services to the ratepayers in the least possible way. We will still enjoy, even if the increase does go through…. That's not for certain yet, although there is an interim rate increase. That still could be refused at the end of the day by BCUC if B.C. Hydro doesn't prove why they need a rate increase.

I think that's great. It's a good check and balance for the people in British Columbia. As I'm told by B.C. Hydro, what they'll put forward to the B.C. Utilities Commission — which is an open public process — are the facts of purchase of higher energy costs and a lot of maintenance — catching up with some of the maintenance that was lax over the last ten years.

J. MacPhail: Well, unless the minister rewrote Bill 85, Hydro rates aren't going to be examined top to bottom. There are exclusions from what the B.C. Utilities Commission can examine. In other words, they're not allowed to examine the heritage contract. They're prevented from examining that. That's 90 percent of the costs of Hydro, according to the minister in his own estimates last time. So top to bottom? How about from your ankle to your toe is what BCUC is going to be allowed to examine?

Let's be specific here now. The government is going to be taking $263 million out of the pockets of British Columbians in increased Hydro rates. How much are the costs for B.C. Hydro going up?

Hon. R. Neufeld: Well, no. We're not rewriting Bill 85. BCUC will review all the costs associated with B.C. Hydro. The heritage contract lays out the electricity that's generated out of those facilities that are listed in the schedule of Bill 85, so people know what's there. The heritage contract is actually a contract for British Columbians.

We've adopted BCUC's recommendations on how to create the heritage contract. In case the member doesn't remember, we asked the BCUC to come back with some recommendations to the government on how we move forward with this. They did that with, I believe, over 20 recommendations. We adopted them and put that forward.

So they will review. In fact, before we get to the next question, they will review all costs related to ABS, Accenture Business Services, as to the contract that B.C. Hydro signed with them. We all know that the contracts are on the website for everyone to read if they want to read it. The confidential parts of it have been taken out, but BCUC will be able to review those confidential agreements in their entirety to decide whether the saving that B.C. Hydro says they'll get out of the contract with Accenture Business Services is actually true.

As I said earlier, they are going to the BCUC, saying purchase of higher-cost energy and maintenance across the whole system.

Hon. R. Neufeld: They've asked for 7½ percent this year and 2 percent next year. They'll have to justify that.

J. MacPhail: How much are they predicting, forecasting, for maintenance costs increase, and how much are they predicting for higher energy costs?

Hon. R. Neufeld: As I understand, the whole submission is on the website for viewing by anybody who wants to read it. It's actually fairly lengthy. They tell me at least two binders.

Hon. R. Neufeld: We'll get the numbers for the member so that we have the right numbers for her for the maintenance and the higher energy costs — so we have those two numbers for her.

J. MacPhail: So far, in almost 50 minutes of debate, the minister hasn't answered one of my questions related to numbers — not one. Is it that difficult for someone to remember how much they're asking for as a result of maintenance cost versus how much they're asking for in higher energy costs? I mean, that's what the corporation does. Did the minister think this question wouldn't come up? I find it outrageous that ministers of the Crown say: "Oh, it's all on the website." The Minister of Finance said: "Oh, it's all on page 159." Do they not know that this is a source of information for the public, this particular debate? How is it that the government and B.C. Hydro do not have these numbers? I don't understand it.

Hon. R. Neufeld: Actually, the reason I don't know the numbers for that is because we no longer set those rates or make that direction in the cabinet room, as was done under your administration when you were in government. We actually opened that process — a transparent process in front of the B.C. Utilities Commission. They've made that application to the B.C. Utilities Commission for those rate increases.

If you want to read it, it's on the website. I said I would get some more information for you so that you can have it. You know what? It's B.C. Hydro that is asking for the rate increase. It's B.C. Hydro that goes to the B.C. Utilities Commission. No longer do we politically get involved in setting rates. I know that's strange to the member across the way because she's done that for a long time, but no longer does that happen.

Hon. R. Neufeld: This comes from a Crown to the BCUC to a panel of experts, and they will make that decision — not a cabinet minister, like it was in your administration.

J. MacPhail: Unbelievable. Actually, I should just let the minister keep talking. It's fascinating. I'm sure the ratepayers of B.C. Hydro will love to hear this minister distance himself from a $263 million grab out of their pockets. He can't even justify it. B.C. Hydro is sitting right there. In fact, they're so important, we had to get to them first. We accommodated that. We were happy to accommodate the important position of B.C. Hydro, and not one number can they give us. The minister sits there and says, "Oh, well it doesn't have anything to do with me. It's B.C. Hydro," as if B.C. Hydro's not in the room.

When is B.C. Hydro going to the B.C. Utilities Commission to justify the $263 million grab?

J. MacPhail: I'm wondering whether Hydro would like to stand down their estimates and perhaps do some of this work, and we can carry on with other items.

Hon. R. Neufeld: We're accommodating the member. As I recall, at the start of it I asked the member if she wanted to start with B.C. Hydro. If she didn't want to start with B.C. Hydro, we'd accommodate her. She said she didn't care. She said: "Let's just start." We started. No, we're not standing anything down. We're carrying on with the estimates, as we should.

J. MacPhail: A man of his word. Actually, Mr. Chair, here's what happened. The minister came in here. He wanted a completely different order of debating estimates, to the surprise of his own caucus. He said it was because B.C. Hydro was here and he didn't want to waste their time. I said I didn't care, assuming that B.C. Hydro would be prepared, knowing how important their jobs are. It was the opposition who accommodated the minister's schedule. How outra-

You know what? I feel very sorry for the B.C. Hydro executives, that he's put them in this box — absolutely shameful what he's done. It's actually a tradition of the government since, let's see, December 28 and the raids on the Legislature that the government likes to distance itself from anything that's the least bit controversial. "Well, I don't know. That doesn't have anything to do with me."

Did the minister meet with anybody on the B.C. Rail deal outside of government before the deal was completed?

Hon. R. Neufeld: Let's see. I didn't meet with anyone other than two mayors within my constituency, which would be normal — Mayor Steve Thorlakson, Fort St. John; and Mayor Chris Morley, Fort Nelson.

J. MacPhail: Did the minister meet with anyone, outside of any government, related to the B.C. Rail deal?

J. MacPhail: Is there any relationship between B.C. Hydro and B.C. Rail in terms of costs or any transactions?

J. MacPhail: And that relationship is? The customer relationship — what is it?

Hon. R. Neufeld: They actually use electricity at B.C. Rail to light up their buildings, I guess, and those kinds of things.

J. MacPhail: Did the minister's staff, to the best of his knowledge, meet with anybody outside of government related to the B.C. Rail deal?

J. MacPhail: Is there some reason why the minister is saying: "To my knowledge"? Is he unaware of what his staff does, or is he saying that he just can't be sure?

Hon. R. Neufeld: Well, I didn't come here to answer B.C. Rail questions, but I'm accommodating the member. I don't actually follow all the staff around that work in the Ministry of Energy and Mines, Columbia Power Corporation, B.C. Hydro, BCTC — all those agencies that I'm responsible for. I don't actually hover over each one of them to see what they do. What I'm saying is that I'm qualifying it: to the best of my knowledge, no.

J. MacPhail: Actually, I'm asking these questions because I can't get any answers to B.C. Hydro questions, Mr. Chair. We're just trying to give them maybe an opportunity to do their work.

Did the minister sit on the review committee? Was he one of the ones that sat on the B.C. Rail review committee or not? I don't know. Did the minister sit on the B.C. Rail review committee established by the Premier?

J. MacPhail: Okay. That's fine. That's all I wanted to know. It was a question he was able to answer.

The Minister of Finance admitted yesterday that he met with the head of Omnitrax, Pat Broe. Was this minister ever approached by Pat Broe, the head of Omnitrax, to have a meeting?

Hon. R. Neufeld: He never approached me, and I haven't had a meeting with him.

J. MacPhail: How about with CN? Was the minister ever approached by CN to meet on the B.C. Rail deal — anybody at CN?

J. MacPhail: It's interesting. I was making the point yesterday that those lobbyists who charge big bucks to their clients had this minister listed — all of them. I assume they'll have to give back their fees now. Those lobbyists will have to pay back all those fees that they charge to their clients because…. I take the minister at his word. I absolutely think that the couple of questions he was able to answer are true. I expect there will be fewer donations flowing to the B.C. Liberal Party as a result of that, but at least their clients won't be charged outrageously.

The B.C. Transmission Corporation began operations in August of 2003. Is that correct? Were they fully up and running?

J. MacPhail: The BCTC, as I recall from our discussions, was created to allow — this is what the minister said — private, independent power producers to access the B.C. transmission system. But I actually had someone from the BCUC say that since 1997 the BCUC has required that B.C. Hydro provide full, non-discriminatory, wholesale transmission access. Is that not true?

Hon. R. Neufeld: I think the member's well aware of…. That's not the only reason I said that we created BCTC. It's to be able to continue to facilitate trade in the U.S. On average, Powerex receives $150 million a year, and that actually goes to the bottom line of ratepayers in the province, which helps keep our rates low. When you look into the future of what's taking place with hydro generation and transmission…. This is an area we're going to have to move to. We thought that we could move to it sooner, that we'd have things in place. We now have a board and a chair that are totally responsible for BCTC as to its maintenance. It's looking out into the future to see what it needs for building transmission.

To be perfectly honest, the independent power producers who wanted to access the transmission system — and, I might add, will access the transmission system under a rate that will be set by the B.C. Utilities Commission, not by anyone else; that will be a process that BCTC will have to go through so that they can sell their electricity — weren't fully trustful, I guess, to use that word, of dealing with Hydro, which is a huge generator of electricity.

The independent power producers — and the member will know that even when they were in government — always had that kind of hesitancy about dealing with access to the transmission system. We're making it very clear, very open and very transparent, so they can access the system if they so want to — if they actually want to access it for export of power. To date, I don't think there's anyone who has approached BCTC for that purpose, but in the future they may.

J. MacPhail: I'll repeat my question. Since 1997 the BCUC has required B.C. Hydro to provide full, non-discriminatory, wholesale transmission access. Is that true?

Hon. R. Neufeld: The answer to the first question is yes. The second part — and I answered that to a degree in my last answer — is that IPPs feel a lot better working directly with BCTC than through B.C. Hydro. They have a greater sense of security dealing with BCTC than they did with B.C. Hydro. That's ongoing as we speak.

J. MacPhail: Well, I guess they feel warm and fuzzy, do they? Nothing's changed. Nothing's changed for them in terms of their costs or their access, and nothing's actually changed in reality since the creation of BCTC. But, oh, we've got a warm, fuzzy, good sense from the independent power producers. I expect that's not how they feel either. I expect that this is not what the independent power producers expected out of this government.

All the more reason why…. If nothing's changed as a result of the creation of BCTC, it would be interesting to know what the costs are of running BCTC, and I can't get that information either.

On November 28 of this year, the government sent out an information bulletin, Government Okays Recommendations, Secures Low-Cost Power. That was on the 22 B.C. Utilities recommendations. They accepted 22 recommendations. I assume that was all of the recommendations — was it?

I'm sorry. There were 27 recommendations. The government accepted 22. There was the minister claiming that BCUC had helped them. Which of the five recommendations did they not accept?

How much of the energy plan of the government that has increased energy supply over the last 18 months is as a result of sources from clean, green energy?

Hon. R. Neufeld: In the last 18 months the only energy that has been signed up by B.C. Hydro is clean energy.

J. MacPhail: The last part of that is: how much of that is a part of the overall supply?

Hon. R. Neufeld: The overall supply is about 50,000 gigawatt-hours, so it's 2,700 of that.

J. MacPhail: So the overall supply is 50,000 gigawatt-hours, and over the last 18 months there has been an addition of 2,700 gigawatts of energy, and it's all clean and green?

Hon. R. Neufeld: No. That's how much would be generated if those plants are all built at some period of time. You've got to understand. When they sign the contract…. When you call for the independent power producers, as B.C. Hydro does, that you want electricity, numbers of them come forward and make applications to B.C. Hydro that they'd like to generate. B.C. Hydro accepted 2,700 gigawatts of electricity. About a third of the 2,700 gigawatt-hours is on line now. The

J. MacPhail: What is the government's commitment on the percentage of power generated by B.C. Hydro that will be clean and green?

Hon. R. Neufeld: Well, we know now that almost all of B.C. Hydro is hydro-generated, and it's clean. We're talking about the incremental supply going forward, which is about 1½ percent of their total output on an average yearly basis. All that they've accepted to date, and what is generated now, is clean energy.

J. MacPhail: I'm wondering whether I could just get some numbers from the minister. They made a commitment — let's say, their overall energy plan, then. How much was going to be clean and green?

Hon. R. Neufeld: As I stated, very good — because what has come on stream since then and what B.C. Hydro has contracted for is all clean energy.

J. MacPhail: Yes, but it's a 5 percent increase delivered on about 5 percent of the goal. When is this 50 percent supposed to be delivered?

Hon. R. Neufeld: It's 50 percent of the new incremental supply going forward. The new supply going forward is 10,000 gigawatt-hours for the next ten years.

J. MacPhail: Okay. Was that, like, by 2010? Or what year — 2012? What year?

J. MacPhail: Okay. We've got 2,700 gigawatt-hours so far. That's about a quarter. When are the rest coming on stream?

Hon. R. Neufeld: As I said earlier, as Hydro needs new energy, they will make more calls for that energy. This is over a ten-year period to get 10,000 gigawatt-hours. They've contracted for about a third of it. I believe they'll be making a call next year and moving forward on a yearly basis to acquire that energy.

J. MacPhail: But wouldn't you have a time schedule for all of this? Wouldn't that be related to the costs of future energy that Hydro is putting forward for a rate increase? Wouldn't we know?

Hon. R. Neufeld: BCUC will require that plan moving forward. As I understand, that plan of how we move forward to acquire the rest of that energy over the next ten years — to 2013 — will be given to the BCUC at the end of March of this year.

J. MacPhail: I assume, given this minister's focus on oil and gas development strategy — and we see, as he announced, that revenues have almost…. Well, I don't know whether they've doubled or not. In fact, they've gone up, but certainly not at a rate that the government is allowed to brag about. Certainly, their focus is on oil and gas development — coalbed methane. We'll get to that in a moment.

That's all part of the energy plan. Certainly, there is the huge aspect of people claiming that kind of coalbed methane oil and gas isn't clean and green, so the 50 percent expansion related to clean and green must come from B.C. Hydro, I assume.

Then we also have this challenge as a government — well, certainly not this government. This government doesn't see the Kyoto protocol as a challenge. They've rejected it completely, but Canada has committed to reducing emissions to 6 percent below the 1990 levels by 2012. Is this reduction in emissions the sole responsibility of B.C. Hydro?

Hon. R. Neufeld: In the energy plan Hydro is challenged with acquiring 50 percent of their new incremental supply going forward from clean sources. That's what Hydro is challenged with doing. There are some who say we should have set that not just as a target but arbitrarily. We said: "Let's give Hydro a chance to get to the 50 percent." I think that's not a bad thing to do. Previously it was 10 percent. We're asking them to get to 50 percent.

No, it's not just up to Hydro, but as we continue to consume natural gas — whether it's in the form of coalbed methane or natural gas or oil — going forward, we need more supply in the province. The member knows that. We use it on an everyday basis, and we need to be able to continue to provide that for British Columbia residents.

J. MacPhail: Well then, let me be clear. How much of the forecasted energy demands of the province as a whole will be met by B.C. Hydro? Let's stop there.

Hon. R. Neufeld: First off, they're two separate…. Energy demands for Hydro are electricity — moving forward. I've already explained that one. Energy demands for British Columbians as they relate to the other fossil fuels, whatever they encompass — whether it's hydrogen or all those kinds of things — are all done within my ministry, and we move forward with all those things.

J. MacPhail: I understand that. This minister, who's responsible for all of it, must have a forecast of future energy demands. I assume that Hydro must know this.

It's part of the proposal they're going to make to the BCUC that they will know how much is going to come from coalbed methane, how much from Hydro and how much from natural gas — all of that. That's how they're predicting what their future energy costs will be. Future energy costs are based on demand and supply.

The overall energy plan of this government has a component of increased energy supply from Hydro and an increased energy supply from other sources. How much of the increased demand for energy forecast is from sources other than Hydro energy?

Hon. R. Neufeld: I can give her some statistics. I don't have the amount of increase in consumption of natural gas or oil as it would apply to British Columbia overall on a yearly basis. That's affected by all kinds of issues out there. You could see an increase, and we have seen an increase in the mining industry, which consumes a lot of fossil fuels. We'll try to get a percentage number, but I'll give her these numbers.

Today in British Columbia we only produce, I believe, under 15 million barrels of oil. We consume 55 million barrels. That's what we consume today: 4.7 billion litres of gasoline and diesel fuel. We produce 1.1 trillion cubic feet of natural gas on a yearly basis, and we consume about 45 percent of that. The balance of that is exported to the United States.

J. MacPhail: I would predict, given the tendency of this government, that they're going to boost oil and gas and coalbed methane, and that ain't clean and green. In fact, it's exactly the opposite of clean and green.

Of course, in the energy plan there is no effective strategy for reducing greenhouse gas emissions. In fact, it actually encourages production of fuel that expands greenhouse gas emission. What is the government's plan for reducing greenhouse gas emissions?

Hon. R. Neufeld: The climate change plan, actually, is within the Ministry of Water, Land and Air Protection. I don't think their estimates have been up yet, but you could ask the Minister of Water, Land and Air Protection that question.

I can tell you that in my ministry we're working on hydrogen as we move forward. The Premier's committed to a hydrogen highway in the lower mainland in British Columbia. We're world leaders and are recognized for hydrogen development across the world, regardless of where you go. People understand that British Columbia is a leader in the development of hydrogen, and we want to continue to do that.

We have committed in our ministry to work closely with the Premier's committee on hydrogen development so that we can have something in place by 2010, by the time the games hit in Whistler. Hydrogen, in today's world, needs a fossil fuel to produce it. We should not think that you can just create hydrogen with nothing. We're going to need fossil fuels. If you listen to Dr. Geoffrey Ballard, he will confirm this. For the next 50 years or more — 50 years minimum — we'll be using natural gas, oil and coal to produce hydrogen.

I would assume that technology will change through that period of time in how we collect greenhouse gases from burning those fuels. That work is ongoing in universities and agencies across North America on how we capture and deal with greenhouse gases as they relate to the burning of fossil fuels. All that process is in place. We don't do the research within my ministry, but we know we're going to continue to use this product for a long time into the future, because today, as we speak, it's the cleanest fuel that we know of to move forward with.

J. MacPhail: When was the last time the minister or his government attended a federal meeting to discuss the Kyoto protocol? Has the federal government called a meeting on that in the last while?

Hon. R. Neufeld: I can't remember off the top of my head, but I would think it's well over a year ago since I attended a federal meeting jointly with the Minister of Water, Land and Air Protection in regard to the climate change plan. As I understand it, when Russia didn't agree to sign on, they didn't have the required number of countries signing on to actually validate the Kyoto protocol. What I've heard — the same that you've probably heard from the current Prime Minister — is that they want to work forward with a Canadian plan to deal with greenhouse gases, so we will be in consultation with the federal government when they get around to dealing with it.

J. MacPhail: My last question is about the failed Duke Point energy plant. What's the government's plan through B.C. Hydro about the future of energy expansion on Vancouver Island?

Hon. R. Neufeld: The call for tenders for electricity on Vancouver Island — I just want to check some of the dates — was called September of last year. The member will recall — and I'll put this on the record again — that under the last administration they had granted an exemption to B.C. Hydro to have to go forward to the BCUC to get a certificate of public convenience to build a gas-fired plant on Vancouver Island. That was the agenda of the last government.

Under our administration I instructed B.C. Hydro to go to the B.C. Utilities Commission to find out whether that was the best plan they were putting forward to put generation on Vancouver Island. They said no. They wanted some more information, and they asked Hydro to go out and make another call for tenders, which they did last fall.

That call is out there now. There's a firm that will…. There are a lot of IPPs that have bid into it. I think there are 23 IPPs that have bid into the process of providing energy moving forward. B.C. Hydro will review all those and, by October, will make a decision in conjunction with BCUC oversight as to what is the best option

to provide new electricity on Vancouver Island, which I understand is going to be needed by the year 2007.

Hon. R. Neufeld: I wouldn't say it's dead, because as I understand it, 14 of the 23 proposals that came forward to B.C. Hydro were for gas-fired plants.

J. MacPhail: Sorry. Gas-fired plants or to do a gas-fired plant? Are we looking at more gas-fired plants than just one at Duke Point?

Hon. R. Neufeld: I'm sorry if I confused…. It was for this one client and for this one called-for generation.

J. MacPhail: I'm not even going to get into the debate about the previous status of Port Alberni job creation cogeneration. So here we have a government all on its own — can't blame anyone else; can take the full credit itself — and half of the proposals are for a gas-fired plant on Vancouver Island. The Sumas 2 decision may be out already. I don't know. Has the minister heard about what the decision is on Sumas 2? What is it? I'm sorry, I haven't heard. Perhaps I could just….

Hon. R. Neufeld: As I understand, the National Energy Board turned down the application.

J. MacPhail: Is this not gas-fired Duke Point energy? How does it compare to Sumas 2? Is the minister concerned that they're replicating what failed at Sumas 2?

Hon. R. Neufeld: First off, we should remember that the Canadian portion failed — the access to transmission lines — and we have been opposing it as a government, this Sumas 2, because of the airshed. Whether Sumas 2 gets built or not is not our decision as a government or a federal government decision. That's actually a decision that's left up to the state of Washington.

The second part is, as far as generation on Vancouver Island, that when we made the call, we went out there and made the call. We didn't encourage anyone to do anything else other than respond to B.C. Hydro to produce that kind of electricity, and 14 of the 23 applications were natural gas. Does that mean that one of them will actually succeed? I don't know that, because once they evaluate them all, they may find some other type of energy. I mean, we have some wind energy on Vancouver Island that's bid into the green call, that's contracted to B.C. Hydro. So you never know. There could be something else that comes forward, and B.C. Hydro will be making that decision at the end of the day along with oversight from the BCUC as to what best meets the needs of people on Vancouver Island and what is the cheapest, most efficient alternative to getting electricity on Vancouver Island.

J. MacPhail: I showed in estimates last year that the same airshed that starts in the Fraser Valley goes over to Nanaimo on Vancouver Island, so it is the same issue. Will the B.C. Hydro review of proposals be informed by the National Energy Board decision made around Sumas 2?

Hon. R. Neufeld: Again, two totally different issues. What just happened was the National Energy Board said no to access to the transmission. It's not to the plant. The plant is in a different country. It's in Washington. We don't have authority over whether it gets built or not. There could be other alternate ways that they can get that electricity to the market in Washington. I don't know that. Those are two totally different issues. The National Energy Board has, as I understand, approved the pipeline crossing, the GSX. That's been approved by the National Energy Board. They've also, I believe, reviewed the plant to a degree. They took it into account in the GSX review.

I don't know what will happen once this decision is made. There's an EA process that that plant has gone through and has had approval for. I don't know whether that plant will be built at Duke Point or not? That decision is in the future.

P. Nettleton: I'm delighted to have an opportunity to get a couple of answers directly from the horse's mouth with respect to rate increases and B.C. Hydro. The formation of regional transmission organization is surely part of the driving force, I would expect, behind the recent rate increases.

There are high costs associated with doing business with the United States and meeting their standards in what is essentially a massive outsourcing and deregulation move by B.C. Hydro. Mr. Yakout Mansour is here today — I hope I've got the pronunciation correct — senior VP of BCTC, the new Crown corporation that controls the transmission of electricity. He has stated that the decision to make transmission independent of B.C. Hydro's generation system was not driven entirely by American demands. I take this to mean that Americans are demanding changes — changes that are in fact occurring at B.C. Hydro, changes that are expensive and geared to the U.S. market, such as the separation of transmission from generation, which is an expensive proposition.

I would ask: can the minister provide an accounting to the people of B.C. of the true costs of integration — if he has this information — with the northwestern U.S. electricity grid through the regional transmission organization, or the RTO? Specifically, how much has been spent to date, and what are the projected costs for aligning B.C. Hydro with the RTO?

Hon. R. Neufeld: First off, a number of errors in the member's statements, and we should get them correct on the record. There is no move to deregulate B.C. Hydro. Actually, I'm sure the member understands regulation. I know he understands regulation. He continues

to use deregulation. B.C. Hydro has been re-regulated under this administration, re-regulated under the B.C. Utilities Commission, as it was prior to the last administration coming to office. That's re-regulation. That's to keep rates at cost base for the province, the lowest we possibly can. We enjoy the third-lowest rates in all of North America in this great province of ours with the system we have.

The member should also know that we've been tied in to the U.S. system since the sixties; otherwise, we wouldn't have the system we have today. If we couldn't have sold all of that electricity to the U.S.A. through the Columbia River Treaty, through a system of interconnect in transmission, we wouldn't have the low rates that we do today. It would be impossible to have those good rates. There's been an integration between B.C. and the U.S. — Washington, Idaho, California, those states — since the sixties.

What RTO West is…. We'll see if we can get a costing for it, because it goes back to discussions that started in the early or mid-nineties, under the last administration with U.S. transmission utilities and generating utilities as to how we could further improve the system of moving electricity north and south. It happens both ways. We don't just sell into the U.S. market; we buy out of the U.S. market. Three of the last ten years, we've been net importers. Thank goodness we had an integrated system. Thank goodness we had a system we could depend on, so we could buy that electricity south of the border and actually keep the lights on in British Columbia — through no fault of anyone's, because we didn't get enough precipitation and our dams weren't full.

It is important to British Columbia — extremely important. In fact, electricity trade is averaged at about $150 million a year for the next ten years. Those are the numbers I'm given by Powerex that we will make out of electricity trade.

Some years will be up; some years will be down. It's volatile. They work on a market. We don't. Alberta works on a market; we don't. We work on a cost-base system. To integrate that, it would be to our advantage to be there at the table, talking about the benefits for British Columbia. That's what we're at the table to do so we can have the benefits for British Columbians to make sure that we continue to be able to access that market, both north and south.

Those discussions are ongoing. I'm told it could be up to five to eight years away before there's any conclusion as to how that's going to work. I don't know. It's interesting. From the mid-nineties out another five years to seven years of discussions…. Hopefully, they come up with something that works well for British Columbians and the whole system so that we can integrate it into the system. We will see the benefits of that in the province.

We are not deregulating in B.C. It is pure regulation and cost-based power so that we continue to have the lowest rates in North America.

P. Nettleton: The minister made the comment that he doesn't know. I take that to be a response to my question. My question was, and I'll repeat my question: what are the costs that have been incurred to date with respect to integration, and what are the projected costs?

Hon. R. Neufeld: As negotiations have been ongoing since the mid-nineties in regard to RTO West and how that would work, we don't have those numbers at our fingertips, obviously, but I can try to get those numbers from B.C. Hydro and BCTC. They will probably mostly come from B.C. Hydro. It will take a while to get them, because it goes back so many years.

P. Nettleton: Another question with respect to rates. There has been conflicting information coming from B.C. Hydro on what precipitated the increase of the rates. Hydro CEO Mr. Bob Elton, again here today, claims that it's because the increase would allow Hydro to continue maintenance of an aging infrastructure. In contrast to this, Mr. Elton further stated that money from the rate increases, about $177 million in the first year and $231 million in 2005, will be used for infrastructure projects and buying energy from other companies. According to Mr. Yakout Mansour, the rate increase is designed to make power production more attractive to private companies and further conform to U.S. requirements. Does the minister want to comment on that, please?

Hon. R. Neufeld: I think we dealt with that earlier with the Leader of the Opposition's questions. The two main issues in the rate increase application are for maintenance of the system, which hasn't been maintained properly over quite a number of years or maintained to the standard that it actually should be to look to the future; and for the purchase of energy, moving forward. We will provide the member with the same information that I promised to get to the Leader of the Opposition. It's all on the website, but we'll break it out and get it to you.

P. Nettleton: Is the minister trying to tell me and, more importantly, British Columbians that this rate increase has nothing to do with attracting private sector investment in energy? Is that his position?

Hon. R. Neufeld: This rate increase has nothing to do with attracting private sector investment in the province. We're looking to the private sector to actually develop electricity, with independent power producers moving forward — something's that not new to British Columbia. In fact, it's been going on since the mid-eighties. We're doing nothing today than we didn't do back in the mid-eighties.

D. MacKay: To the minister, a couple of questions having to do with IPPs. Could the minister tell me how many IPPs we have in the system today?

D. MacKay: We have contracts. Could he tell me the status? Are we actually purchasing energy from any of those IPPs at the present time, and how much are we going to be purchasing over the next two years?

Hon. R. Neufeld: Twenty-eight are running and producing electricity for the system. The balance will be on stream, as I understand, by 2007, so some of them are at different stages in the process.

I don't have a firm number, but I'm told it's about 4,800 gigawatt-hours out of the 28 total that are running, remembering that some of those 28 have been producing since the eighties.

D. MacKay: I would like to go to the transmission side of B.C. Hydro and ask a couple of questions about transmission lines. When I read from Larry Bell's — who is the chair of B.C. Hydro — letter to the minister, he mentions in here that the B.C. Transmission Corporation was formed in May 2000 to provide equal access to the transmission system for all users and to ensure continued electricity trade.

Does that include some of the more remote parts of the province, including remote mines that are coming on stream or will be on stream in the near future? If we're talking about all users, I would suggest that mines are, in fact, a user. The question is going to be: what is the B.C. Transmission Corporation doing to make sure that the mines coming on stream will have access to power?

Hon. R. Neufeld: Of course, they'll have access to the transmission lines as long as there's space on those lines, as long as they can handle it. If there's an upgrade needed at some site around the province to accommodate a new mine, which the member might be referring to, that would be a negotiation process between the mine owner, whoever that is, knowing they're going to need X amount of electricity for the foreseeable future…. They would work that out with BCTC as to how they're going to get served with that load and, for the power part of, with B.C. Hydro.

The Chair: Members, noting the hour, I'll let the member ask one more question.

D. MacKay: Following up on the answer I got, it sounds like it would be a cost-sharing thing between the B.C. Transmission Corporation and the mine.

Hon. R. Neufeld: Sorry if I confused the member. There is a tariff set for access to that line. The tariff will set the rate for access to the line, and if there is new construction required to accommodate the use, that tariff will also deal with that through the B.C. Utilities Commission so that it's done by a separate body overseeing how those costs would be apportioned between the consumer, B.C. Hydro and BCTC.

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