Hansard -- Tuesday, April 20, 2004 a.m. -- Vol. 23, No. 8 (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		10203
	Estimates: Ministry of Forests (continued)
	P. Nettleton
	Hon. M. de Jong
	J. MacPhail

Proceedings in the Douglas Fir Room

Committee of Supply		10215
	Estimates: Ministry of Small Business and Economic Development
	Hon. J. Les
	J. Kwan
	R. Sultan
	P. Sahota

Hon. S. Hagen: In this House, I call estimates debate, committee stage, Ministry of Forests. In the Douglas Fir committee room, I call estimates debate, Ministry of Small Business and Economic Development.

P. Nettleton: Thank you for this opportunity to again raise questions within the estimates of the Ministry of Forests. In this instance, they're tied, certainly, to my riding — that is, the riding of Prince George–Omineca.

In any event, I have in front of me a news release from the Ministry of Forests announcing…. It is dated, I should say first off, March 20, 2004, following signing ceremonies which were signed in a ceremony hosted by Saik'uz first nation at Stoney Creek in their traditional territory southwest of Vanderhoof, which lies within my riding. There was a time, of course, when I would have been invited to such a signing ceremony. But it seems that things have changed, so I did not receive an invitation to the signing ceremony. I had no knowledge of it, certainly, from the Ministry of Forests.

I do have a press release, as I say, dated March 20, 2004. There were some glowing comments made with respect to the government's, particularly the Ministry of Forests, involvement with first nations in terms of creating opportunities for them within the forests and expanding — as it is entitled — the fight against pine beetle infestation.

There is a quote here in the press release from Yekooche Chief Allan Joseph, and it reads: "'This accommodation agreement with Yekooche first nation shows this government is making good on its promise to enter into partnerships with first nations, address the pine beetle problem and begin implementing meaningful treaty relationships,' said Yekooche Chief Allan Joseph." A glowing commendation, it appears, of this government and the ministry — and the minister, for that matter — with respect to involving first nations.

There is another comment made, apparently from another chief, reading: "'This government has shown a willingness to work with first nations to a degree that is unprecedented,' said Burns Lake Chief Robert Charlie." There is also another quote from another chief, Chief Martin Louie from Nadleh Whut'en: "'This agreement demonstrates the willingness of first nations and government to collectively fight the mountain pine beetle epidemic,' said Nadleh Whut'en Chief Martin Louie." That's the government's press release with all of these wonderful comments from chiefs in that part of the province.

I have, as well, in front of me an e-mail from Hope Hickli, public affairs officer with the Ministry of Forests, which is dated Thursday, March 18. It reads: "Hi, Chief Louie. Let me introduce myself. I'm Hope Hickli. I'm with the Ministry of Forests communications branch, and I'm just finalizing the news release and wanted to send you a suggested quote for your final approval." So this would be a quote for the press release to which I've just made reference.

This is the quote that this officer with the Ministry of Forests wanted to credit to Nadleh Whut'en Chief Martin Louie: "This government has shown a willingness to work with first nations to a degree that is unprecedented. This agreement will allow us to further pursue the economic benefits of the forest sector while helping in the fight against the mountain pine beetle infestation." So that was the quote they wanted to attribute to this particular chief in their press release — that is, the ministry's press release — coming out of this signing ceremony.

I have, as well, in front of me a copy of correspondence dated March 31, 2004, to the minister, the Hon. Mike de Jong, and it references the March 20 signing ceremony at Saik'uz. It is from the office of the tribal chief of the Carrier-Sekani tribal council, Harry Pierre. I'm going to make reference to this, if I may. It reads:

As well, it goes on to say this regarding the signing ceremony, to which I made reference earlier:

Finally, he makes reference to the e-mail that I have referenced earlier, as well, as to the press release from the Ministry of Forests which followed the signing ceremony in Saik'uz, and he states: "We also object to the manner that you deceived the media and public through your press release. I have attached an e-mail that includes quotes that your staff manufactured in order to support your agenda."

Ministry of Forests staff tried to convince Chief Martin Louie to use this quote: "This government has shown a willingness to work with first nations to a degree that is unprecedented." But when he refused and commented that it was inappropriate, Chief Louie sent this e-mail correspondence from your office for review by the Carrier-Sekani tribal council. Thereafter Ministry of Forests staff, I am told under your orders, immediately requested these same words from another chief, and in fact, that's what happened in the press release.

It goes on to say: "If you want flattery, then tell your staff to do so. But don't attempt to manipulate us and deceive the public. How many other chiefs in B.C. have been misquoted or given quotes by your staff to be used as propaganda? I look forward to your prompt action and reply."

Perhaps the minister, then, can give us some sense as to whether or not this is standard procedure with respect to conveying information, conducting themselves with respect to their interaction with first nations, and specifically respond to the letter of the chief.

Hon. M. de Jong: Thanks to the member for the question. Well, let me say, first of all, that the government, as part of an overall strategy as laid out in the forest revitalization plan, has set about to take concrete steps to meaningfully involve first nations in the forest economy. It strikes me — it strikes the government — that it is a logical thing to do. First nations, while many of them are engaged in treaty negotiations that are complex — complicated — have taken an excruciatingly long period of time…. Although of late, we have made significant progress with some AIPs — one of them in the region of the province that the member hails from, with the Lheidli-T'enneh and Chief Barry Seymour. There are other examples of that. It is a fact that concluding final treaties is taking much longer than I think anyone in this House or most people had thought or hoped.

So the question, then, is: do we ask people to put their lives on hold pending the completion of those negotiations or seek out or initiate certain actions that will facilitate genuine economic development and opportunity in the interim? I would opt, and the government has opted, for the latter. Now, we are assisted somewhat along that path by certain directions that the Crown has received from the courts, which have pronounced a legal obligation to accommodate the interests of first nations in asserted traditional territories pending the hearing of a final claims case or the conclusion of a treaty. That is a legal obligation we have and recognize.

We have sought to accomplish both objectives, both the involvement of first nations in economic activity in the forest sector and meeting our legal obligations by negotiating what we call forestry agreements or forestry and range agreements. In some cases, there are rangeland implications depending on where you are in the province. Again, the motivation is clear. The forestry resource is that resource which surrounds a vast majority of first nations in this province where they live. For years, if not generations, they have been troubled by the use being made of that resource and no appreciable return accruing to them. That also lies at the heart of these agreements.

We negotiate them with willing partners. They contain provisions that provide for licences to go to first nations. I believe, to this point, agreements involving volumes in excess of seven million cubic metres of timber have been signed and in excess…. Well, let me move to the second….

Hon. M. de Jong: Yes. Seven million, for the member who posed the question — over 40 bands now, involving seven million. The number seems high. It involves, in many cases, beetle-uplift wood and undercut volumes in certain parts of the province, so it is high based on what the ultimate replaceable volumes would be some ways down the road.

In addition, the agreements contain something that has not been included in negotiated agreements, interim or otherwise, with first nations. That is a revenue-sharing component. There is now, I think, in excess of $40 million that is flowing into the hands of first nations. There is, over a three-year period, a budget provision for just under $100 million, and that money is now flowing via quarterly cheques to a great number of bands.

To a certain extent, we are collectively a victim of some success because of the speed with which these agreements are being signed. There are a couple more, I think, slated for this week or next. That's good news. It doesn't in and of itself represent a recipe for guaranteed success, because the forestry business is still a tough business to be involved in these days, but there is some financial capacity.

There is obviously the tenure opportunity. What we seek from the first nations in return is an accommodation protocol for the term of the agreement. The agree-

ments are not permanent; they're temporary. They're for a five-year term. We seek that accommodation protocol so there is a clear understanding of the administrative and operational decisions and how consultation will occur around both. We also seek from the first nation, as part of the agreement, acknowledgment that for the term of the agreement, there has been accommodation of their asserted aboriginal interest within the asserted territory.

I think that is an accurate summary of what is contained in the body of these agreements. Obviously, the amounts — both the volume of tenure and the quantum of money — vary depending on where in the province we are and the size of the band or first nation involved. Happily, there has been enthusiastic uptake or agreement with a vast number of bands. There are over 150 bands in the province, and we are closing in on having signed agreements with a third of those bands. I think that's good news. We've still got a lot more work to do.

Chief Harry Pierre of the Carrier-Sekani tribal council doesn't like the agreements. That's fine. That's his right. He has made it clear to me personally that he does not wish to sign an agreement, that he doesn't wish the Carrier-Sekani tribal council to sign an agreement, that he believes the terms are bad and is uncomfortable with them. He is not alone. There are other first nations who take that position.

Where I begin to have a little bit of difficulty with Chief Pierre — and told him so on the day in question, the signing at the Saik'uz nation — is when he purports to claim that the member bands of the Carrier-Sekani tribal council are opposed to these agreements. I'm puzzled by that statement, because the majority of them have signed those agreements of their own free will. I mean, we can cast about terms like paternalism, but the chief of the Saik'uz, Chief Alison Johnny, is an eminently capable woman who represents her people passionately and effectively and is obliged to consult with her council and the members of her band in the same way that any leader of a community is. That community and that leader have come to the conclusion that they do, of their own free will, wish to enter into one of these agreements — similarly, Chief Martin Louie and the majority of the Carrier-Sekani tribal council.

Now, I understand that Chief Harry Pierre disagrees with them. That's the great thing about living in a democracy. He gets to do that. He gets to talk publicly about what he sees as the shortcomings of this agreement or this style, this manner of agreement. But to suggest that there is no support in a situation where the majority of the bands that comprise the Carrier-Sekani tribal council has indicated in a very tangible way otherwise is, I think, grossly unfair and certainly inaccurate. I told Chief Pierre that. I don't think Chief Pierre likes me very much today, because I was pretty direct with him. He didn't like the fact that the government came, at the invitation of the Saik'uz, and had a ceremony. He didn't like the fact that there were two bands there that day who proffered enthusiastic words of support.

The member points to the news release and the manner in which that document comes together. I'm not going to be shy about articulating the process I think is followed, and has been for some time. When a release is prepared to be issued in concert with a particular event, there is a desire to include a quote or indication from one or several of the participants, so the drafter will contact those participants and offer up what might be a suitable quote for them to approve or disapprove. Sometimes they're disapproved. Sometimes the person for whom the drafter has created a quote or statement says: "No, I'm not comfortable with that, and here is what I am comfortable with."

If that is problematic for Chief Pierre, so be it. From his point of view, of course, it's not an issue because there isn't going to be a news release for Chief Pierre because he's not going to negotiate an agreement. And I'm actually glad the member raised it, because there was a significant difference of opinion. As I say, I take some solace from the fact that of the member bands…. They may be equally divided, so I should be careful about how I characterize that difference of opinion within the CSTC. But the fact that there are now three or four bands who have signed on to these agreements encourages me. As I say, we've got more work to do.

We recognize — I recognize — that some first nations are simply going to say no. They may choose to try to engage the Crown in a different manner, or they may choose to avail themselves of the route available through the courts. That is also an option. I think most people agree it is not the most productive of options, but it is certainly one a first nation can avail themselves of. I appreciate the member raising the issue, because it gives me an opportunity to clarify from my perspective some of the positive features of what has taken place and what took place on the Saik'uz lands.

While I'm here, I also want to thank the Saik'uz for their hospitality for what was a pretty memorable event, and I continue to wish them well in some exciting endeavours. They have a lodge that they operate in the member's constituency, which I understand is doing very well and is gearing up for a successful season. The member has kindly provided me with an opportunity on the record to wish them well.

P. Nettleton: I thank the minister for that summary with respect to the obligations of the provincial government in terms of accommodating aboriginal interest. His summary was a useful summary, and there was nothing in his summary that I found objectionable or took issue with — apart, of course, from his reference to Harry Pierre, the tribal chief of the Carrier-Sekani tribal council.

Chief Harry Pierre has an obligation and a responsibility as spokesperson for the tribal council with a number of member first nations to in fact articulate the position of the tribal council with respect to not only forestry-related issues but other issues. That's his job.

That's his responsibility. He's more than a chief of a particular band or first nation. Harry Pierre was, some years ago, in fact, chief of Tl'azt'en nation, which is headquartered in the village of Tache outside of Fort St. James, which, again, is a community — a first nation — that falls within the riding of Prince George–Omineca, which I represent.

For the moment, Chief Harry Pierre has been providing strong leadership. He's been articulating a vision which is quite a different vision from that of the provincial government with respect to the future of first nations not just within the forest sector but throughout. In terms of an overall vision, it's quite different from that of the provincial government.

I also want to make the comment that I understand and I think most people understand that the negotiations with first nations, whether it's the treaty process or AIPs or revenue-sharing agreements with first nations…. That is a tough job. It's a tough task, and I don't envy the minister in the task that he has before him. One of my concerns — and it's a concern that's articulated by Chief Harry Pierre and others — is with respect to good-faith negotiations, that in fact things be done in good faith, that there be some good faith. That certainly is not something that one finds amongst a number of the first nations — this sense that in fact things are being done in good faith.

The minister made the comment that in fact the member bands that have signed on have done so out of their own free will. I don't claim to speak for Chief Harry Pierre, nor should I, but I can tell you from my discussions with him and others that one of the concerns, at least, that they had with respect to the member bands that signed on to these agreements which were signed on to in Saik'uz late in March of this year…. A number of the bands were in tough fiscal straits. It was near the end of their fiscal year. It was his sense and the sense of others that in fact it was desperation that drove them to sign on to these agreements.

Chief Harry Pierre, certainly from my discussions with him and others in the tribal council, is not opposed to agreements, is not opposed to many of the things that the minister talked about being committed to and moving forward on. Rather, his position is such that, as I say, he wants these negotiations to be conducted in good faith. He wants these agreements and negotiations to lead to results which are favourable to first nations. He doesn't want member bands signing on because they need cash.

That's one of the comments that I feel I should make with respect to responding to the minister's comments. Again, I think it's important that this minister and this government work together with people like Chief Harry Pierre and others who are working very hard for the people that they represent.

Hon. M. de Jong: To the member, who will, I'm sure, convey — for better or worse — my comments to those who are interested in this aspect of the development of policy and reconciliation of the relationship between first nations and non–first nations in B.C.

Let me offer up this response and then provide what will hopefully be evidence that I am not simply manufacturing my views in this respect. I have always thought it dangerous to presume to know what is in the minds of others, unless they tell me what is in their minds. So while I accept that Chief Pierre assumes genuinely a responsibility and the burden of ensuring or attempting to ensure that agreements are signed that are of positive effect for the members of the Carrier-Sekani tribal council, I also know that there are some very powerful leaders who comprise the member bands and are very capable.

If I might go back a couple of years — and the member was involved in this when attempts were made, actually, to negotiate with the tribal council itself…. I should say this was in the days before we had developed the budgetary capacity to include revenue-sharing dollars. It was in the days when tenure uplifts were just occurring through the part of the province infested with the pine beetle. We were attempting to allocate some of that fibre to first nations.

The original attempt was to engage the Carrier-Sekani tribal council as a group, as an entity, in which case the leader…. In those days it was Chief Mavis Erickson, I believe. This is not meant as a criticism, because we all have challenges associated with trying to bring groups with unique circumstances together. But the fact of the matter was that as a group, as a single entity, the Carrier-Sekani tribal council couldn't agree amongst themselves on how the division within the family was going to occur.

It is not a criticism. I understand the challenge associated with doing that. That, as I said to them at a meeting that the member may or may not have been — I can't recall now — in attendance at, left us as government with one of two choices. The first choice was to simply do nothing. The second choice was to engage bands individually. We opted for the latter, because the bands came to us and said — some of them: "That's what we want you to do. We don't want to remain stagnant. We don't want to remain mired in the circumstances we find ourselves. We want to get involved in forestry. There is activity taking place. There are increases in the AAC taking place, and we want to be involved. We want to negotiate with you." The negotiations weren't easy.

I look at the list. Just to highlight that point, Mr. Chair, look at the group of first nations, some of them that we have dealt with and signed agreements with: the Haisla, the Heiltsuk, the Kitasoo, the Wuikinuxv, the Cowichan tribes and Chief Harvey Alphonse, Kitselas, Kitsumkalum, the Metlakatla, the Saik'uz, the Gitga'at, the Lax Kw-alaams. That is an example.

You know, I think he is well known around the province, and I apologize to the member, but I want to take a moment to address this. Someone like Art Ster-

ritt, who negotiates with the Gitga'at and the Turning Point nations…. Now, no one's going to accuse Mr. Sterritt of being a shrinking violet at the negotiating table. He is very capable. When he is displeased with the approach or the position or the offer, I have never known him to be reluctant to make that clear. When we finally came to an agreement, thanks to the leadership on both sides of the table, Art Sterritt stood up and said…. And I have used this. I have shamelessly referred back to this many times. He said: "This agreement is like a new suit. We're going to try it on and see how it fits, see if we're comfortable in it. We think we will be; we hope we will be. But if at the end of five years or even under the terms of the agreement in advance of that, either of the parties isn't comfortable in their new suit, they'll take it off."

These are groups that have strong leaders. They are represented by very able legal counsel. To suggest that anyone has been coerced into an agreement I must say I think is a self-serving statement on Chief Pierre's part. That is a different sort of paternalism, in my sense, that says: "I know better than the chiefs and the teams that they have gathered around them to negotiate these agreements."

There is no surrender of anything, and that is explicitly set out in the agreement. Sadly, I have heard individuals who are opposed to moving forward with these agreements make that assertion, and it's simply not true. I'll say this — and it is not meant to be unnecessarily argumentative, certainly not with the member or with Chief Pierre, and the member is doing his job by bringing these concerns to the floor of this chamber: it is often much easier to remain mired in the past. Sometimes it's easier to fight, easier to argue. It takes courage and leadership to take the first step towards practical progress, reconciliation and economic development, because there are big risks involved. There are economic risks. There are risks for leaders within the community who may face opposition in the process of doing so.

On that day at the end of last month, when the Yekooche first nation received an invitation for almost 50,000 cubic metres of timber; the Burns Lake received an invitation to apply for 125,000 cubic metres of timber; the Nadleh Whut'en, an invitation for three-quarters of a million cubic metres of timber, all over a five-year period…. There was, for the Yekooche and Burns Lake bands, revenue-sharing in the amount of $443,000 and $224,000 respectively.

Those leaders and those bands signed those agreements because they believed, on balance, that they were good agreements. If they didn't believe that, they wouldn't have signed them. No one would have forced them to sign them. They signed those agreements because they believe, as I do, that they represent a first step in a new relationship and a new opportunity to generate some genuine economic activity that will be beneficial to the people who live in their communities and the people they represent.

If Chief Pierre disagrees with that, that is his right. I respect, obviously, his right to have that opinion. I have a different one.

Hon. I. Chong: I know the debates on forestry are riveting. To that end, I would like to welcome a number of students here who are going to be watching for a while. They've already had a tour of the buildings and are, as I say, sitting in the gallery at this moment watching the debates.

They represent a group of students from the Salon de Provence, located in France. They have arrived here and have been billeted with students at Oak Bay high school, a school in my riding. They're here for another week. They've enjoyed their time here. I have encouraged them to come back at a future time. They're accompanied by two adults, two teachers, Ms. Monteux and Ms. Delcros. Sixteen of these students are here joining us today, and I ask the House to please make them all very welcome.

P. Nettleton: In conclusion, with respect to my comments on this issue, it's easy for us here in this sanitized environment, in this ivory tower, to have these discussions with respect to first nations. But I remember a tour of one of the first nations at issue here — Yekooche first nation, which lies outside of Fort St. James — which I conducted with the Minister of Forests, who was at the time the critic for aboriginal affairs when we were colleagues. We were colleagues for five years, I think, in opposition to the previous administration.

I provided a tour of that band for the gentleman who is now the minister, a band which really — certainly as long as I've been familiar with that band — has lived very much in Third World conditions. I believe it was in the early hours of the morning that we drove down the dirt strip which is the main street in that band, the Yekooche band, and saw children peering out of dirty, stained windows in homes that I have had the privilege of being in. I can attest to the living conditions of many of those children living in that band.

To suggest there is no sense of desperation in a band like Yekooche in terms of economic opportunity is simply not stating the truth. Frankly, I don't care how many high-priced lawyers they may have that work out of Vancouver offices. The people in that village — and that's not the only village, certainly, in which there is some sense of desperation…. Certainly, the young people and the elders in that particular village are desperate for any opportunity, any glimmer of opportunity, whether it is in the forest sector or other sectors.

I've spent many hours in that village as a legal aid lawyer, oftentimes talking to young people with hopes

and dreams and aspirations, and I've seen them sometime later with those dreams dashed as the reality of living there has impacted their lives. It's an awful position. It's not something with which we have any familiarity in terms of ourselves — having been raised and lived for any length of time under those kinds of conditions.

So don't tell me, Mr. Minister, that there is no desperation in bands like Yekooche and for the people that live there, because I'm going to tell you something. There is in fact a very real sense of desperation. Perhaps you didn't get that sense when I drove you down the main drag in Yekooche. Let me tell you here, now, today that there is a very real sense of desperation in bands like Yekooche. And we have a responsibility — certainly, I have a responsibility — to raise that in this ivory tower, in this academic, sanitized setting, and to remind this minister, remind this government that they have a responsibility to treat first nations fairly and justly.

Hon. M. de Jong: Just briefly then, I remember the visit very well that the member referred to — that day we travelled to the Yekooche, one of the reserves, one of the villages. He paints a grim picture because it was a grim picture. To my knowledge, I have never, ever impugned or attempted to impugn the sincerity of his motives in raising these issues in this chamber or outside of this chamber, and I hope he would not impugn mine in candidly expressing what is motivating the Crown or me or the government to embark upon the negotiation of these agreements.

I think there is a desperate desire on the part of a band like the Yekooche to become economically self-sufficient, to generate some opportunity for the people in their communities. This is a first step — I repeat that — a first modest step to attempt to work together to achieve that end. If we are never prepared to take that first step together, then we are condemning one another to remain where we are today.

These are agreements of a limited duration that require the surrendering of nothing — merely an agreement to work together for the period of five years to engage in regular consultation with one another and to provide some initial opportunity, some revenue-sharing. If any of the bands that we have signed these agreements with come to the conclusion that they are not serving their purposes, then they will take action accordingly. So as grateful as I am to the member for raising the issue, I want to emphasize to him, and through him to his constituents, that it is precisely because of the awareness one has of the dire circumstances that many of these bands are confronted by that we are embarking upon these measures.

J. MacPhail: This has been a very interesting discussion between the member for Prince George–Omineca and the Minister of Forests. I do appreciate the member for Prince George–Omineca raising this as what I consider to be a case in point, a very important case in point. But I would ask the minister this: what does his government have as a coordinating effort in dealing with land use and publicly owned resources in the context of the settlement of aboriginal land claims? What's the committee structure or the decision-making structure inside his government to deal with these matters?

Hon. M. de Jong: If the member will permit, I'll do this in two stages. I won't offer this as a complete answer but the first part of an answer, and I will focus at this stage on the relationship that exists between the Forests ministry, the Forest Service and the treaty negotiation office.

My first remark would be that there is by necessity a close operational working relationship, and it stems from the following factors. We certainly have an interest within the Forest Service in knowing from the treaty negotiation office where their priority files are. I think the member or her colleague may have in past years had discussions with the Attorney General about the establishment of priorities for the negotiation of agreements-in-principle and subsequent treaties. So there is that track of governmental interaction with first nations, which is a hugely important one obviously.

Within the Forest Service, we try to establish, for the purpose of negotiating these accommodation agreements…. I should say this. A vast amount of our efforts now are focused on the negotiation of these agreements. Not to the exclusion of all else, because there are some other forms of agreements that exist on the west coast that require attention and maintenance, but the vast majority of our energies are now devoted to the negotiation of these agreements. That involves identifying where volume is available. The fiscal part of the equation is tough, but it's not tough because it's complicated. There is a budgetary allocation, and it is a question of dividing that money up.

We establish, then, some priorities for us. I should say to the member and those who review these debates — particularly first nations who might be interested in what goes into the development of those priorities — that that is everything from who we think we're most capable of reaching an agreement with to where we have available volume. The term "good-faith negotiation" was bandied about a while ago. It would hardly be good faith to sit down with someone and attempt to negotiate an agreement involving currency that we don't possess.

I should say, as well, that much of the volume we are dealing with from a tenure perspective at this point is undercut volume because, as I think the member heard in earlier parts of this debate, we are still moving through the reallocation exercise that would see an additional 4.2 million cubic metres in long-term replaceable volume coming available. We don't have that yet, so we're largely doing this on the strength of undercut volumes that are available.

You combine that, and we try to coordinate…. I should say this as well. We are also guided by where forestry operations in the province are being impacted

by the relationship with the first nations, where there is pressure around the issue of accommodation as well. That all goes into the mix, and what we try to do is work in a complementary way on the negotiating front, recognizing that there is — I know people find this hard to believe — limited capacity on the government side and certainly limited capacity on the part of the first nations.

If I might anticipate a question that the member might ask, at a table where a negotiation is taking place with a forestry agreement, the lead would be an individual from the team within the Forest Service, and if a treaty negotiation office person wasn't there, there would be very close consultation with that individual. In a couple of cases we have signed agreements with bands that are not in the treaty process, but they have been the exception rather than the rule. That speaks, in part, to the relationship between those two agencies.

The member has also asked about land use planning processes, and if she wants to expand on that, I will endeavour to answer that.

J. MacPhail: Well, what I want to know — I am sitting here asking this in the interest of the taxpayer — is who's keeping track of the ledger in the big picture, the ledger of what is flowing to first nations in terms of permanent land use, permanent forestry agreements, ongoing compensation either from forestry revenue or permanent land use allocation. Who is keeping track of that, and who's keeping track of the actual 20 percent takeback reallocation to first nations?

When the minister said that he has allocated seven million cubic metres of cut to first nations, I was taken aback, because I remember our discussions about the overall allocation to first nations out of the 20 percent takeback. It was going to be around a total of four million cubic metres. Then he did clarify, for those who aren't expert in the field, that this is not a reusable resource that has been allocated. It is a one-time cut of, I would imagine, mainly bark beetle — but whatever.

Who actually is keeping track of all of this, and where can the public find out the tally on the ledger?

Hon. M. de Jong: Here is the answer I can give with some certainty. First of all, ledger is the correct word, because that is how I think of it. We are ultimately dealing with a finite quantity. I know people don't always think of that when they think of the forests in B.C., but it is a finite resource. AAC is a finite amount, and the budgetary allocation for the revenue sharing…. On the ministry website there is actually a ledger of the agreements that have been signed, which sets out the date of the agreement, the quantum of timber involved, the quantum of money involved. So that cumulative total is there.

The second part of the member's question, however, related back again to the 20 percent takeback and reallocation process. We're right in the midst of that now. That involves firstly identifying by licence the volumes — that has largely been accomplished now — and then identifying the areas within those licences or TFLs or TSAs that are going to be impacted. That is influenced greatly by how many first nations reside in the area. The interests that have been expressed by community forests and our need for representative timber for the market pricing system…. Half of the volume of the approximately 8.4 million cubic metres that is caught by that process is for the purpose of timber pricing. But the remainder of it, the vast majority, is for first nations.

The short answer is that inventory is being kept, is being managed within the Forest Service. But it is very much a work-in-progress where we have a team that is charged with the task of finalizing the takeback portion of that and another team charged with the task of working on the reallocation. The second team can't finalize their job until the first team has done its job, but they are working in concert because what I don't want is for us to proceed in a way that says, "We won't begin the process of reallocating until we're done the process of taking back," because then there is going to be a gap. And that's what people are afraid of.

Ideally, you would work in a way that says, when the ministerial order is signed around the takeback, that volume would flow directly into a timber sale or directly into a first nation and that harvesting would continue largely unimpeded — albeit the holder of the licence may change. I think the member's last question around that, "Where can the public go to track the progress on that?" is a more difficult…. That's not more difficult. I'm not sure at this point they can go anywhere because of the fact that it is very much a work-in-progress in which we have tried to provide information to the interested and affected parties — like the IWA, the truck loggers, the contractors — and engage with the communities.

I think that amongst the stakeholders, the various targets, levels, amounts and quantums are pretty well known and have been widely distributed. But as I said previously for the ledger of actual agreements, I don't think there is that ledger — I'm certain there isn't on the website — that people can go to, because it is still very much a work-in-progress.

J. MacPhail: As I recall, treaty negotiations are usually settled by…. The economic side of treaty negotiations is settled by a combination of cash and land and the resource use of that land either through economic development or resource extraction. We are now at a time where this government is moving forward toward agreements-in-principle. At the same time, there is also the 20 percent takeback and reallocation of that.

What I am interested in knowing when I say, "Who's keeping track of all of this?" is: is there a coordination between the treaty negotiation office and the 20 percent takeback and reallocation of that to first nations? Is the reallocation of the portion of the 20 per-

cent takeback to first nations on the basis of exclusive use of Crown tenure, or is it land that is turned over to first nations? What law governs that? I mean, this is a time that could be one of huge renewal in the forest industry, or it can be a time of us collapsing upon ourselves in great confusion.

Hon. M. de Jong: Like the member, I prefer the former and abhor the latter, but I think I understand better the question she has been canvassing here. There is certainly coordination, but I think her question also goes to the heart of what these tenures are…. When I say seven million cubic metres, what is that?

They are conventional licences — the terminology, the slang, is NRFL, or non-replaceable forest licence — as any other licence. So they don't represent either an ongoing evergreen or replaceable volume, and they are not a transfer of an interest in land.

Now, the member is right. As these negotiations involving, as they may, a forestry or range agreement…. While agreements-in-principle are negotiated and may mature into a treaty, it is conceivable — in fact, probably predictable — that the first nation will want…. Well, certainly they will want an interest in treaty lands themselves, and there is a possibility that as part of that negotiation around the treaty, there may be an interest in an ongoing forest tenure that could take any number of forms. The best thing I think I can say to the member is: what we are talking about are conventional five-year, non-replaceable licences upon which regular stumpage is payable. Contrast that with a treaty regime where were harvesting to take place upon the treaty lands, those would be first nations lands and there wouldn't be stumpage payable to the Crown.

So there is a difference there. It is possible — and, in fact, in many cases predictable — that as part of that treaty discussion and final treaty settlement, there may be a licence involved. I can't think of an example — and even if I could, I probably wouldn't try to intervene in that process — to give the member of where that is taking place, although even as I say that, there's no secret that is a function of the discussion with the Lheidli-T'enneh, for example. They have an agreement, but they are also seeking, as part of their treaty discussion, an ongoing forest tenure opportunity.

J. MacPhail: What law applies to first nations forestry operations after treaty settlement, if there is forestry use?

J. MacPhail: Sorry. I meant what forestry law, whether it be the Forest Practices Code or the Forest and Range Practices Act. Or is it considered private forest land?

Hon. M. de Jong: That is very much a function of the negotiation and will be determined by the terms of the treaty. The example we can draw on in this chamber is the Nisga'a treaty which, to the best of my recollection, includes provisions that say harvesting activity will take place, if it does take place, but the regulatory provisions must — and I think the terminology is — meet or beat the standards set in laws of general application in the province. So that's one model that was adopted in that negotiation. As settlements emerge and as agreements-in-principle mature into treaties, as we hope they do, that will be the document that determines what legal regime will be in place or guide harvesting activities.

J. MacPhail: Does the minister have any examples from his own government's time in office of how they have approached this matter? I'm familiar with the Nisga'a approach on the meet-or-beat test, but I'm wondering: has this government carried on that negotiated principle — in AIPs?

Hon. M. de Jong: My concern is that I not misstate or direct the member somewhere that is inaccurate, of course. Let me say that the first point, with respect to the agreements that I was talking about with the member for Prince George–Omineca, is not an issue. I think the member understands that. All of the laws of general application apply to those licences.

I am trying to think of the AIPs that have been made public and trying to recall to what extent, if any, they refer to the question that the member has put. I can't. I can try to find out. I note the minister responsible is, I think, shortly due to engage in this debate as well. The short answer is: I don't have an answer for the member.

J. MacPhail: Mr. Chair, the reason why I'm asking these questions is not because of a matter of treaty negotiations. It's a matter of stability and consistency and continuity in the forest sector so that we move forward on resolving the softwood lumber dispute and also bring some stability to the industry — and, hopefully, change in modernizing it and making us once again truly competitive.

We now have a situation — and the minister and I have already discussed this just before we concluded our estimates debate last night — that there are now two ways of applying the law of the land to forest licences. One is under the Forest Practices Code; the other is under the Forest and Range Practices Act. We are going to continue that discussion in a moment. At the same time, we have forest agreements being made with individual bands and/or tribal councils that are time-limited — not permanent, not renewable. We also have treaty negotiations, some of which have resulted in AIPs that actually turn over land to….

J. MacPhail: Sorry. I'd be happy for the government to engage in this debate.

Turn over the use of land through forest use through AIPs and what the nature of that is in terms of the rela-

tionship to the British Columbia taxpayer, separate and apart from the first nations…. Then we also had the 20 percent takeback — part of which, I think up to 50 percent — which will be reallocated to first nations.

Who's coordinating all of this so that there is value for money on both sides of the equation — the B.C. taxpayer and first nations? Is there a cabinet committee that deals with all of these matters, for instance?

Hon. M. de Jong: I'll start with the member's final question, because I remember it, and then probably muddle through the ones I don't remember.

To the extent that the member asks about cabinet committee level oversight, there is clearly a role here for Treasury Board insofar as any of these agreements may have fiscal consequences for the Crown. Those fiscal consequences visit upon the Crown in different ways, and the member knows this — everything from cash settlement costs to quantifying costs associated with transfers of land and resources. Insofar as the forestry agreements I have been talking about, that is not an issue, because they are conventional licences. They fall within the ambit of any other licence. They generate revenue for the Crown, so they are offered in the conventional way. The laws of general application apply.

There's no doubt that in addressing our obligation to first nations and insofar as that in part is responsible for the reallocation exercise, there are a lot of balls in the air. Everyone is impacted as long as the juggler is keeping all of the balls in the air, let alone if someone drops one of the balls, in which case the impact can be very negative. The workers, a company crew impacted in Hope by the fact that an entire licence…. In that case, an entire licence. Because of the number of first nations — generally, I think, the Stó:lo — who have to be accommodated in that area, that licence has been affected in its entirety. That has an impact on the workers in that company crew, and that, of course, has an impact on the community.

Where there are contractors involved, they obviously have an interest in how this is playing out. The communities themselves have an interest. The Crown seeks to achieve its objective in making sure it has representative timber across the province for the timber sales program and for first nations, for woodlots and for community forests.

We had a meeting in Revelstoke on Friday, with representation from an array of communities all excited about the prospect of garnering a community-based tenure. That's good. I'm glad they're excited. I've had to tell them that the volumes involved, based on the reallocation, are about 300,000 cubic metres. That's a far cry from what many communities would like it to be, but we'd best, at this stage, manage within the envelope that we've been handed.

Anyway, I can go off on any tangent I want, but the point I think the member was making is that all of this is interrelated, and all of it needs to be managed in concert with recognizing the impact one has on the other. The bulk of it is something that is managed within the Forest Service. Insofar as there is an obvious relationship between the negotiation with first nations of forestry agreements and treaty discussions, there also needs to be a bilateral coordination between those two departments of government.

I think there is. I think it has worked reasonably well. That's based on my observation on the ground. I think the member knows that I don't negotiate, but I tend to come along at a point where much of the work, if not all of the work, has tended to occur. My sense is that that coordination is working pretty well.

I suppose the ultimate validator for that is the other party at the table, which is the first nation, which I have not heard…. I shouldn't say that. I have occasionally heard observations that the government needs to coordinate the effort better. By and large, the comments have been positive. Mind you, I tend, in that setting, to be speaking with groups that have either just signed an agreement or are about to sign an agreement, so I may be getting a skewed view of that as well.

J. MacPhail: When I was asking about cabinet, yes, Treasury Board, but Treasury Board doesn't get to determine — unless this is new under this government — the nature of the use. They get to determine the economic and financial evaluation for the taxpayer and its own government.

In previous governments — the Social Credit, the Harcourt New Democrat and the Clark New Democrat governments — there was a committee called ELUC, economic land use committee. It was a coordinating committee of cabinet to determine the proper economic use through land use planning. Does any such thing exist with this government?

Hon. M. de Jong: Maybe this is of assistance to the member. There is certainly a committee composed of cabinet members and a private members committee dedicated to economic, environmental and resource development, which as a matter of course would consider matters around land use planning. I don't, however, want to leave the impression with the member that in negotiating a forestry agreement of the sort we've been talking about, in each instance that would go to that committee.

The mandate for the negotiation of those agreements has been established, has been ratified, at the cabinet level. There are parameters set around the quantum of land as set out in the forest revitalization — not the quantum of land, the quantum of licence opportunity, or AAC — and obviously, on the fiscal side, the money. So yes, there is that avenue for the consideration of land use–related decisions, but I don't want to create the impression that each time one of these agreements is negotiated, it is brought before a body like that for debate or discussion.

J. MacPhail: Well, with the minister acknowledging — and I totally agree with him — that there are many

balls in the air, and we are at a very crucial time of modernizing our forest sector, a time at which I wish the province to succeed, I would urge him to consider some sort of coordinating body to manage all of these issues, some sort of coordinating cabinet decision-making body to coordinate all of these issues. As these matters become more complex and at a time when there is great economic value attached to the outcome, the competing pressures are going to only increase.

Is there an opportunity, or have there been any opportunities exercised by a forest company holding a forest licence entering into an agreement with a first nations band where the government has not been involved?

Hon. M. de Jong: Again, we may have to do this in two stages. There are certainly lots of examples, many examples and a growing bank of examples of first nations who have negotiated contractual relationships with non–first nation corporate interests to harvest timber and process timber. I can, whether it is the Dididaht or Iisaak…. There is certainly no end of examples of those kinds of partnerships.

I wonder, however, if what the member is driving at is whether there are now examples of situations where first nations have acquired tenure or a licence independent of government involvement. She is indicating that that does go to the heart of her question. I am certainly aware of situations where attempts have been made to do so, and if the member gives me a moment, I will try to plumb my memory to see if I can provide more than just that.

Just off the top of my head, I can tell the member there are examples where tenure is held jointly between a first nation and a non–first nation corporate interest. I don't think that is new, and I mentioned one of the examples. Since the changes to the Forest Act have taken place, which provide for and facilitate transfer of licences, I can advise the member that we have seen some examples.

I'm thinking now of the effort that the Cowichan first nations made to purchase TFL 46. My understanding is that they were not at this point successful and another operator was, but that there is work taking place between the Cowichan and the successful bidder. So there is an example, albeit not a successful one, of a first nation going into the marketplace and saying to a licensee: "We actually want to purchase your licence without any governmental involvement. We don't want to simply rely on the government as a source of fibre. We're prepared to negotiate with licensees to purchase all or a portion." In this case it was the Crown portion of TFL 46.

J. MacPhail: The minister is correct. Late last year this government brought in the ability for a forest licence holder to sell off or give part of his or her forest licence or tenure to another party. Does that get added in any calculations to deal with treaty negotiations, or is that a separate business transaction completely?

Hon. M. de Jong: In the general terms we're talking about, I would say no. That would be a separate transaction. The first nation would go out into the marketplace and try to increase their stable of tenure, unless it somehow got captured and was a transaction that occurred within the ambit of a final treaty settlement. But with the kind of examples we've been talking about, no. I would think that would be a band using its resources and the laws of the land to purchase tenure as any other licensee might.

J. MacPhail: I believe I read it was Grant Aldonas that was here recently to have a tour with the B.C. negotiator on softwood lumber, Don Wright, for him to look at our forest policy changes. In the course of that tour, did Mr. Aldonas express any interest in the new role that first nations are playing in our forest industry? Perhaps the minister could enlighten the public on what concerns, if any — positive or negative — the American forest interests have in the emerging role of first nations in forestry.

Hon. M. de Jong: I won't pretend that Mr. Aldonas and I had extensive discussions, and I wasn't on the tour. We did have some meetings prior to the tour, and he professed in a very general way an appreciation for the challenge that the province collectively has — first nation, non–first nation — to resolve these issues. I might say that he is an individual who has been involved in British Columbia in the past as counsel on matters related to forestry, so he has some knowledge and appreciation.

The best thing I can offer the member is probably that we were very clear with Mr. Aldonas and the Department of Commerce about the magnitude and the volume of timber involved in this transition. I am not aware that either he or the officials within his department have articulated any concerns around the manner in which we are proceeding.

We obviously have an interest, and we have a legal obligation we are seeking to meet. I wouldn't presume to speak for Mr. Aldonas, but my sense is that in the grand scheme of things, there is a desire to see transactions take place on a competitive footing. The example we were talking about earlier, where a first nation goes out and seeks to purchase a licence or a portion of a licence, would presumably take place on a competitive footing, unless some company was out to do someone a favour or achieve benefits otherwise.

So no concerns were expressed to me, but we didn't spend a lot of time discussing that issue. I can make inquiries of the negotiators, and if I learn something different to be the case, I will alert the member to that.

J. MacPhail: Mr. Chair, I'm going to return to my questions that I left last night around compliance under the Forest and Range Practices Act. We were discussing last night that this province is in a state of transition between the application of Forest Practices Code, the old law, and the new law, Forest and Range Practices Act. I had asked a question about the govern-

ment's effectiveness evaluations, which they themselves have committed to publishing three times a year. I was about to ask the minister what factors the evaluations examine, and therefore I put that question.

First of all, the member is correct about the…. We talked last night about what is in effect a self-administered audit exercise. We have created this new regime where we have embedded within the legislation the requirement that we manage for certain qualities, certain issues — whether it's wildlife, whether it's water or whether it's soil.

The process that is being developed is in concert with the Forest Practices Board, and that is, in part, because it is an internal version — although results will be made known — of what the Forest Practices Board does. It is being developed in concert with them, and the process itself will be vetted through the public advisory committee that was created pursuant to the Forest and Range Practices Act. Why don't I start there and see if that helps?

J. MacPhail: Let me ask this question. I'll just give you one example of what the ministry's own service plan talks about as an indicator. The ministry service plan says it intends to reduce the "instances of significant non-compliance with the Forest and Range Practices Act" from ten in '03-04 to zero in '04-05.

I have to tell you, Mr. Chair, I read this service plan with…. I liked it, given that there are some very specific numbers in here. Other service plans from other ministries don't have base numbers to deal with. They give vague percentages based on no agreed-upon starting point. This ministry does, and there is a specific example. That would be a good point for the minister to explain — how they're going to achieve a complete eradication of significant non-compliance under the Forest and Range Practices Act this year.

Hon. M. de Jong: The question is an entirely legitimate one. In the context of the discussion — and I don't want to mislead the member — we were having around the effectiveness audits that were taking place, while this is certainly, in terms of measuring the overall effectiveness of the Forest and Range Practices Act…. The specific item the member has focused on goes to the heart of the compliance and enforcement section. I think it's fair to say that, in part, you consider the effectiveness of your legislative regime by whether or not you are meeting your objectives as set out in a particular section like compliance and enforcement.

How do we work towards that objective? It is an objective. If I might say this parenthetically, my hope is — and I think I almost heard a backhanded compliment of the fact there is some detail in there; if that is so, I hope that is the case and others will come to that conclusion — that as we move forward with this, we will be rigid in reporting numbers that acknowledge whether we are achieving those goals or not. If we don't get to 100 percent compliance, I hope the report will reflect that fact. People can come to rely upon this.

But in terms of trying to achieve the objective, I can tell the member that C and E staff have been reorganized to consist of full-time…. Their duties will be full-time C and E, and they've received additional training to what C and E personnel in the past have received. There have been regional special investigation units created. We're seeking to improve communications with other agencies within government and with those that operate on the land base as well. We have issued directions that C and E, whether they're special investigation units or others, should focus their inspections on higher-risk sites.

That is somewhat of a menu of some of the reorganizational items that have taken place, which we hope will help us achieve and realize on the objective that the member has referred to in the service plan.

J. MacPhail: Well, it was a straightforward compliment on the service plan. Those of us who are caucus members sit on Public Accounts, and we are working very closely with the auditor general on the effectiveness of government reporting. Service plans are key to that, not only setting out so we discuss at length the setting of goals and the targets but also, then — performance evaluations are the next step that the Public Accounts Committee will be examining — the effectiveness of the evaluations that the government is doing based on the service plans that it puts forward.

The minister is quite right. The Ministry of Forests will be a ministry at which we will be able to determine, just as he has outlined, the effectiveness of the original goals. The reason why I asked about this question particularly is because yesterday we discussed the 10 percent cut not only in staffing levels but also in funding levels of the compliance and enforcement section of the Ministry of Forests. Those are the people on the ground using the resources available who will determine whether this particular goal has been achieved. Getting rid of all significant non-compliance with 10 percent fewer resources will be a challenge.

The service plan notes that 85 percent of high- and very high-priority sites are going to be inspected under the forest and range practices compliance regime. How did the minister arrive at saying that of very high- and high-priority sites, only 85 percent of those will be inspected? That's one question. In other words, the corollary of that is: why aren't they all being inspected? I'll ask that question first.

Hon. M. de Jong: What I wanted to begin my response with was giving the member some sense of the order of magnitude of how much of our annual allowable cut falls within the high-risk category. I don't have that number. For me to say it's somewhere between 10 percent and 50 percent doesn't help us very much, so I don't have that number for the member.

How do we come to 85 percent? I don't think we can do them all. I think to suggest that we are going to be inspecting every single high-risk site would lead people to doubt the credibility of the report.

How does one justify not getting to every single site? In part, I think you can argue, with some credibility, that there is a degree of similarity in how licensees — larger licensees — will operate at various locations. If they are a poor operator at site A, there is some reason to suspect that they may be a poor operator at site B. Similarly, if their practices are sound at site A, there is perhaps some reason to believe that they will be employing similar diligence at site B.

That provides some measure of comfort, but that is probably, at the end of the day, the best answer I can give about why that figure appears as opposed to 100 percent.

J. MacPhail: Well, the minister did anticipate my next question, which is: what percentage of sites are not included in this category? That's key, and the percentage of sites not included in the high- and very high-priority who are…. What percentage of those sites are inspected? Or is it just 85 percent of the high- and very high-priority sites that are inspected and all else not?

Hon. M. de Jong: To answer the specific question, no. The compliance enforcement will not focus exclusively on the high-risk sites, although there will be, as I just mentioned, a focus.

There will be inspection work taking place on low-risk sites, though I am advised that the type of work — the type of compliance and enforcement activity — that will occur there will be different. In a high-risk site you may have the C and E officer spending considerable time walking the territory, examining the hydrology, examining the specific risk, whether it is the capacity of the culvert to deal with water flows at certain times of the year…. In a low-risk site you may have an official spend considerably less time, arrive on the scene and have a look around to make sure things are in order without spending the same amount of time or walking through. So there is the distinction. Work will take place in both areas, but as I said, there is a concerted effort being made to focus in on the high-risk areas.

J. MacPhail: For the first time, under this new Forest and Range Practices Act, site-level plans will not be required to be produced. I do understand that that doesn't preclude companies from doing site-level plans, but they are no longer required for an industry to get approval of the forest stewardship plan.

In certain situations the impacts of logging could only have been determined at the site level. For instance, site-level plans used to be required to have silviculture prescriptions. Then, the Ministry of Forests and government wildlife biologists could identify what the practical changes to the logging plans would mean for environmental, recreational and social values other than just the economic values. But those aren't required anymore, the site-level plans.

With what I would consider to be far less information on industry logging plans now required, how will the practical changes at the site level which may influence environmental, recreational and social values…? How will those be tracked when there is no site-level plan produced for review?

Hon. M. de Jong: When the member first articulated her question, she said this correctly and then not quite so correctly at the end, though I think she understands…. The site-level plan must still be produced. It is not approved. So there is still a site-level plan that flows from the forest stewardship plan under the Forest and Range Practices Act.

The issues and values that the member referred to are first of all dealt with in the forest stewardship plan, so there is a requirement to address those issues. The member is posing the legitimate question about how dealing with those values at the plan level is reflected in the site-level plan. Well, they need to be, and when a compliance and enforcement official arrives or indicates his or her desire to conduct an inspection, the site-level plan must be produced immediately. It is, I think, an offence under the act not to do so when requested. There is a strict requirement for that site-level plan to be required.

Similarly, there is a requirement that the silviculture work conform with the silviculture plan that is required under the act. So the tools are there. Admittedly, they are utilized differently, but the tools exist for the C and E official to take both the forest stewardship plan and the site-level plan and measure it against what has actually taken place on the ground.

J. MacPhail: I have more questions on this, particularly around site-level plans, but noting the hour, I move the committee 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. J. Les: Some opening comments if I might, Madam Chair, with respect to the ministry.

Hon. J. Les: Certainly. You'll have to indulge me with your patience from time to time. This is my first time, as you know.

To my left is Deputy Minister Andrew Wilkinson, and to my right is Deputy Minister Annette Antoniak. Staff with us this morning is Lee Teason, Doug Callbeck, Doug Caul and Michael Shoop.

The total voted appropriation is $139.689 million, as I suggested a moment ago, including $71.3 million for the Vancouver Convention Centre Expansion Project and $5 million for the B.C. Pavilion Corporation.

The mission of the Ministry of Small Business and Economic Development is to promote strategic leadership in government to create a strong, prosperous and diverse economy in all regions of the province.

This vote provides for ministry programs and operations under the five following core business areas: B.C. Olympic Games secretariat sport and culture, improving British Columbia's investment climate and competitiveness, marketing and promoting British Columbia, enhancing economic development throughout British Columbia, and executive and support services.

A statutory appropriation of $500,000 is for the northern development fund special account. A $625,000 appropriation is for the Olympic arts fund special account, and $2.2 million is for the physical fitness and amateur sports funds special account.

On July 2, 2003, Vancouver was privileged to win the right to host the 2010 Olympic and Paralympic Winter Games. The Olympics are expected to create about 200,000 jobs in all sectors across British Columbia. Tourism employment is expected to jump from 114,000 in 2001 to 164,000 in 2010.

The ministry's B.C. Olympic Games secretariat will focus on maximizing the economic benefits of hosting the games; facilitating the provision of regional- and provincial-level training and services to athletes; developing and implementing components of the active sports, active communities and organized sport action plans; and encouraging the development of a sustainable arts and culture sector.

A balanced budget allows British Columbia to accelerate its Olympic investment plan in 2003-04 and to cover nearly 20 percent of B.C.'s overall commitment to the games. This includes $51 million towards early venue construction and a $55 million endowment to sustain the operation of certain venues after the games conclude.

Another $126 million will be invested in Olympic commitments over the next three years. LegaciesNow will embrace the Spirit of 2010 with new initiatives to bring out the best in sport, music, art, culture and volunteerism. Over $25 million in one-time funding in 2003-04 will be invested to support these initiatives.

Small business remains a critical source of strength in the British Columbia economy. Small business accounts for almost 98 percent of all businesses in British Columbia, and nearly one million people are employed by small businesses in the province. This represents 58 percent of all private sector jobs.

B.C. has one of the lowest small business corporate income tax rates in the country, and the threshold for this rate was increased to $300,000 in the last budget. In addition, B.C. now has the second-lowest top marginal income tax rate in the country. It has eliminated the corporation capital tax for general corporations and has introduced a new sales tax exemption for production machinery and equipment to encourage new investment and growth by small business.

We've introduced competition to venture capital funds, which has had a dramatic impact on the level of venture capital. Business registrations have increased by more than five times, and venture capital raised has more than tripled from $15 million in 2002 to $51 million in 2003.

We're in the final stages of implementing the single business number. The single business number will simplify the relationship between business and government by creating a common identifier for business among partner agencies. It also expands on the one-stop business registration services offered by the three levels of government.

We're going to continue to oversee the governmentwide deregulation initiative to make sure that our government meets its new-era commitment to reduce unnecessary red tape and regulatory burden by one-third within three years. Between June of 2001 and December of 2003 our government had eliminated 89,235 unnecessary regulations and added 16,199, for a net reduction of 73,036 regulatory requirements.

We continue to exceed our promise to eliminate two requirements for every one introduced. Currently our reduction ratio is more than 5 to 1. We are already more than two-thirds of the way to meeting our new-era commitment, and the remaining legislation we need to reach that final target is being prepared for this

current legislative session of the Legislative Assembly and will be in force by the end of December 2004.

The ministry will continue to work to market British Columbia as a preferred place to live, invest and do business. Just last month KPMG released its 2004 competitive alternative survey, which confirms that our government's economic strategy of tax cuts, deregulation and flexible standards to revitalize the economy is working.

Overall results for 12 business operations show that B.C. cities have lower business costs, including taxes, than all of the 43 U.S. cities profiled. The survey also identified Vancouver, Kelowna and Chilliwack to be cost- and tax-competitive with key competing locations across North America.

British Columbia is uniquely positioned for accelerated growth, and there are significant cost advantages to operating in British Columbia. The ministry will develop and implement strategies to market and promote awareness of our competitive advantages and opportunities.

In the last year the ministry supported Leading Edge marketing missions by the Premier and ministers to California, Texas, New York, India, Great Britain, Korea and Taiwan and to the World Economic Forum in China and Davos, Switzerland. We also undertook four sales and marketing efforts to the United States which specifically targeted the film and TV industry.

In 2004-05 we'll continue to promote B.C. through a number of trade and investment missions, key events and sector-focused sales and marketing initiatives. We'll also build on opportunities for increased visitation and international profile generated through our hosting of the 2010 Olympic and Paralympic Winter Games.

A new Invest British Columbia website that highlights British Columbia's competitive advantages was launched in cooperation with regional economic development partners. Through Leading Edge British Columbia, a new partnership with industry and other stakeholders in the technology community, more than $8.3 million will be invested over three years to aggressively market British Columbia as an internationally competitive location for technology investment and research.

Finally, B.C. has been extremely successful in attracting international customer contact centres to the province. Through the public-private partnership of Linx B.C. we have been involved in attracting ten U.S.-based contact centres that will create 7,350 jobs and provide more than $150 million in direct investment. New contact centres have been announced by eBay in Burnaby, West Corp. in Central Saanich and J.P. Morgan Chase bank in Surrey.

The ministry is developing and implementing strategies to revitalize the economy and to create greater economic diversification. We have established a fast-track approval process to ensure that critical economic and investment projects proceed with minimal red tape. This is a cross-government initiative to accelerate project capital investments by aggressively reducing the time required to issue the necessary provincial permits.

We are working on a B.C. tourism strategy which sets out a plan to stimulate and grow tourism throughout the province. The four primary objectives are increased numbers of visitors, increased tourism investment, increased use of tourism resources and using the Olympics to leverage new tourism opportunities.

We have reached an agreement with Tourism Vancouver that cements the partnership between the tourism industry and the provincial government on building the $495 million convention centre expansion. Tourism Vancouver will contribute $90 million to the expansion. The project will generate up to $5.1 billion in economic activity and be a magnet for international events.

Through the Canada–British Columbia Infrastructure Works program the provincial and federal governments have invested more than $216.8 million in 155 community infrastructure projects in regions throughout the province. A further 49 projects totalling $198.8 million have been approved for the lower mainland and southern Vancouver Island. In 2004-05 the program will continue to fund projects to improve drinking water quality and wastewater disposal as well as to improve economic and cultural opportunities for communities through projects focused on tourism and recreational opportunities.

Finally, the ministry is developing a port strategy that recognizes the significance of ports to both the provincial and national economies. Our government is committed to making sure that B.C.'s ports remain competitive. The strategy will provide direction and establish key priorities for provincial government action to support the long-term sustainable development and growth of B.C.'s key trading ports.

Those are my opening comments, and I'd be pleased to respond to questions that members may have.

J. Kwan: I'd like to begin first with the minister on some general questions around the service plan.

Looking at the statutory appropriations for the ministry, I note that in this year's estimates for the northern development fund special account the amount is $500,000, which shows a marked decrease from the 2001-02 budget year, when the amount was $2.5 million. I'd like to ask the minister to first provide us with an update on the status of this account and to explain to the House where the spending decrease came from and why.

Hon. J. Les: The northern development fund has a business plan in place that would have about $5 million being spent over a five-year period. In the last several years they have not spent any money at all, so we have been budgeting less money to reflect a provincial contribution simply because there's been no uptake on the part of the northern development fund.

J. Kwan: Maybe the minister can explain to the House, then: what are the requirements for people to access the northern development fund, and how much was accessed in previous years? Let's just do a comparison. Has it been steadily decreasing, with no uptake? What's the situation there?

Hon. J. Les: The board of the Nechako-Kitimat Development Fund Society, which was established in 1999, expected to commit at least $1 million in funding in 2003-04. In the event, they approved 23 projects involving grant funding of $845,000.

Our government is committed to the sustainable economic development goals of the northern development fund, and the society is on track to achieve or exceed its objective of investing $1 million in the northwest this year. That funding will enhance the economic development of the northwest.

J. Kwan: I'm sorry, but the minister didn't answer my question. I know that the questions were severalfold, so let me just break down the questions. My first question around the northern development fund is: what are the criteria for evaluation for successful projects?

Hon. J. Les: The purpose of the account is to promote sustainable economic development in northwestern British Columbia. Expenses are to support investment in new or existing businesses, to create new employment or to stabilize existing employment, to support other goals consistent with the act, and for the operations of the Nechako-Kitimat Development Fund Society.

J. Kwan: But I presume that those are not the criteria one uses to evaluate projects. Having been a minister, having dealt with grants and so on and so forth — even though, in my own capacity as a minister, I didn't approve grants directly — I knew that staff had a list of criteria established. Then they would evaluate applications as they came in. On that basis, decisions would be made.

I understand the objective of the fund, which is what the minister put out, but that cannot be the criteria one uses to evaluate applications. I'm looking for the detailed criteria for evaluation of applications.

Hon. J. Les: The criteria that are used are developed by the board of the society. They set the criteria, and the only restriction that we have in place is that no subsidies to business are allowed.

J. Kwan: The board of the society — and that fund, because it's government money — falls under the jurisdiction of this minister. This minister is therefore responsible for it. Again, in my former capacity with another fund — which we did not administer; another society would administer it, for example — we had to know what the criteria were. So I would presume the minister knows what the criteria are for evaluation of projects.

I'm looking for that specifically. There's no trick here. I'm just wondering what the process is. How are projects evaluated? What criteria are being used? I'd like to have that specific information from the minister, please.

Hon. J. Les: I'd be happy to get that information for the member. We don't have that here with us, but I will undertake to ensure that she gets that information.

J. Kwan: Okay. So the minister doesn't know what the evaluation criteria are for the northern development fund. What we do know is that the government had earmarked $1 million in the '03-04 year for this fund, to which 23 projects were awarded and $835,000 went out. Now, that $1 million dollars, then…. Let me ask this question: was that based on a 50-50 cost share? Is that half a million dollars from government and then half a million dollars from Alcan, therefore totalling a million? Or is it a million dollars from the government and another million dollars from Alcan?

Hon. J. Les: The $1 million appropriation is $500,000 from the provincial government and $500,000 from Alcan.

J. Kwan: So for the 2003-04 budget year the unspent dollars…. The amount was earmarked a million bucks, and only $835,000 was spent. What happened to the unspent dollars?

Hon. J. Les: In spite of the fact that there was an allocation made in last year's budget, at the end of the fiscal year no money had flowed from the budget into the northern development fund. There is a considerable balance there. We find ourselves usually prodding them to get on with the various projects that have been approved and funded. If provincial moneys are simply going to flow to be held in a fund with a considerable balance…. On that basis we decided last year that no money needed to flow into the northern development fund.

J. Kwan: Let me just try and get this straight: $1 million was set aside for the northern development fund for '03-04; 23 projects were approved, totalling $835,000; but none of that flowed to the 23 projects. Zero dollars actually flowed out. Am I right in understanding this? Let me stop there.

Hon. J. Les: The northern development fund has a current balance of about $7.5 million. Last year the budgeted amount in the provincial government's budget was actually $1.5 million. They brought forward roughly $1 million worth of projects, and I believe they actually proceeded with 23 of those.

They have considerable positive balances on their books. For that reason, frankly, it's totally unnecessary for the provincial government to be advancing funds at

this time, as they have sufficient funds to cover the existing projects being proposed about seven times over.

J. Kwan: The minister said, when I first asked the question, that the budget for '03-04 was $1 million. It's now $1.5 million, so that figure has changed. There's a current balance of $7.5 million. Is that to say, then, that the unspent dollars assigned to the northern development fund remain in the northern development fund account? It doesn't fall back to general revenues, or anything like that; it just stays in that account until all the dollars are spent. Let me just get that, and then I'll have further questions.

Hon. J. Les: The member is correct. The money stays in the account of the society. For clarity around the $1.5 million and $1 million issue, in fact $1.5 million was budgeted last year. The society expected to commit around $1 million in '03-04. To roughly January of this year they had approved 23 projects involving grants of $845,000.

J. Kwan: There's something amiss here, it seems to me. If the budget for the account is $1.5 million, why would the society only budget to expend $1 million? They're targeting, then, to underspend. Are they targeting to underspend purposely?

Hon. J. Les: This is a freestanding society that we're talking about. They make their decisions autonomously. My ministry has been encouraging them as much as possible to bring forward projects for funding so that this money could actually be spent, but they are autonomous. They make their own decisions, and they don't take direction, particularly from me or my ministry, as to how to spend the money. A surplus has accumulated. There are certainly opportunities there, but if the member is looking for specific answers to questions about why it is that they are not coming forward with more projects, she would have to refer those questions to the society.

J. Kwan: No, the minister is responsible for the society. This fund comes from government, and the minister has to answer these questions. That's the purpose of the estimates process here, and the minister has this society under his umbrella. He can't just shirk it off and say: "Don't ask me questions; go ask someone else." No, Madam Chair. Boy, if this is the approach in which this minister takes his responsibility right off the start, he's off on a bad footing. He can't just say: "Oh well, I don't know why they do that. I don't know what's happening over there."

It's government money. There's accountability here — accountability that rests with the government, that rests with the minister responsible. I would expect that the minister would find out. There are many, many societies under the former government or this administration that fall under the umbrellas of various ministers. You don't hear ministers saying: "Well, don't ask me. I'm not responsible for that." That's just nonsense. It's nonsense to say that you don't know the answers or that you're not going to find out. If anybody wants to find out about it, go and ask the society. Good grief.

Let me try again here with the minister. Let me ask, then, questions dating back to the process. The society that was established: who is on the board of this society?

Hon. J. Les: I don't have the exact names of the folks that are on the board of the society, but I can undertake to get them for the member, if she's interested in getting those. I underline again that we have here an autonomous society that is making decisions based on local needs and local aspirations. I very much take the position that the people who live in the northwest, in the Nechako area, know best what is in the interests of the people of the area. Frankly, I don't think it's a problem at all that this ministry or this minister does not micromanage what happens within that fund. Local interests will prevail.

J. Kwan: It's not micromanaging; it's called responsibility and finding out what's even going on. Here we have a minister in this House who has allocated $1.5 million to a budget, to a line item for grants for the community — yes, albeit for the grants to be decided by the community, presumably. We don't even know who's in this society that makes those decisions. Presumably, and I'll grant that much, it's the community that makes these decisions. This minister doesn't even know who is making those decisions or what the criteria are for making those decisions on allocation of dollars.

He has no idea what's going on, and that's a million and a half bucks for last year's budget. Then there are previous budgets as well. I'm sure of it. We're not talking about micromanagement. We're just talking about a basic knowledge base of what's going on with this ministry by this minister, and he has no idea. I only just began to ask questions about the northern development fund because it looked strange to me.

It looked strange to me in the budget book that showed estimates for '03-04 at $1.5 million, and then in the '04-05 year, we're looking at $500,000. I only just started to canvass the questions, and all of a sudden, we find out….. Actually, it seems to me that the minister knows less than I do. That's frightening, I have to say, because this minister is responsible for this fund. He should know the information. He should care to know the information and not just pass the buck and say: "It's managed by some other society that's independent of government, so therefore, I don't know." Who appointed this board? Is it the government?

Hon. J. Les: The member is correct. These appointees are made by government.

J. Kwan: Well, then, there you have it, Madam Chair. The government appointed the board. The government chose the members in the society. The government gave the society its mandate. The government

told the society: "Here's the mandate of what you should do." You would think that this minister would stop and say: "Hey, wait a minute. Given that we appointed you, given that we established the society, given that we have given you the mandate, I would actually undertake to find out what is going on here."

That's not to say that the minister will make decisions about who gets the grants, and it's not even necessarily to say that the minister will establish the criteria for the grant applications. To say the minister has no information about who is on this board, how funds are expended, why funds are underspent in this line item and why that is…. It's frightening for the minister not to have this information.

Hon. J. Les: The appointments to this board are governed by the relevant act. We don't have with us today the specific date on which the last appointments were made, but again, I will undertake to get that information for the member.

Hon. J. Les: That would be the BC–Alcan Northern Development Fund Act, 1998.

J. Kwan: Let me, then, get further information, if I can, about this fund. The society was set up in 1999, according to the minister, and I presume the fund has been set up since. What was the budget since the fund was set up, in each of the six successive years? We know the answer for the '03-04 year, which was $1.5 million, and then we have the answer for the '04-05 year, but what about previously?

Hon. J. Les: I think we have a slight problem here. I thought we were here to discuss the estimates of the 2004-05 fiscal year, and I think we're trying to recreate what might have happened as early, it seems to me, as 1999. We don't have that information with us, so I would ask, Madam Chair, that you direct the member to the current estimates.

J. Kwan: Well, this is off on a good footing. Here you have a minister who doesn't know answers to questions put to him — simple questions, I might add — and he's now trying to play that card to say: "Don't ask me questions about previous budget years." The exception is this: there's a current balance of $7.5 million in this account, which is under this current year. Where did the dollars come from? Year over year, how did they accumulate? It makes it all relevant for today's debate under this current year in '04-05.

I would urge the minister not to play this kind of politics and this kind of card in estimates debate, because it will not serve the minister or the government or the public well. The questions I am asking are basic questions that the minister should know. The minister should know these answers.

The minister is responsible for this society. It was established by government. The members of the society were chosen by government. The mandate of the society was given by this government, so don't sit there and say: "I'm not responsible; go ask the society these questions." Don't pretend that somehow by asking these questions and seeking these answers someone is trying to micromanage the society's functions. Nothing could be further from the truth. This is basic accountability on grant projects, funds the minister is responsible for in his ministry and for which he should be providing answers.

Let me try again. The surplus of $7.5 million that exists in this account today — where did it come from year over year? How did it accumulate to that $7.5 million? We know a portion of it, but we don't know all of it. I'd like the minister to explain where all the dollars came from in the current amount in this account today.

Hon. J. Les: I repeat again: we came here ready to discuss the estimates for 2004-05. If the member wishes us to provide a chronology and a history of where the funding came from since 1998, we will be prepared and happy to provide that information, but we will have to get that for her later. In the meantime, I'd be really happy to get back to the current estimates.

J. Kwan: It doesn't get any more current than that. The current account balance is $7.5 million. An explanation from the minister on where those dollars came from is, in my view, fairly current.

You know what? If I check my account in my own account book and I see the balance….

J. Kwan: I don't have $7.5 million. No, I don't, but it doesn't matter what the amount is. You know what? I want to know exactly how that bottom line was arrived at — where it came from, where the expenditures went and where the deposits were made. Where did it come from? If all of a sudden my account shows $7.5 million without my knowing about it, I would have, well, a freak-out. I would be phoning the bank and saying: "What's going on here? Why do I have $7.5 million?" Under no circumstances should I be having $7.5 million, for example, even though somehow it dated back to whatever date — that somehow an error somewhere along the line happened.

It's fairly basic here in terms of getting this information. Current account balances relate to today. The minister would like to assert that somehow it's not relevant today. If it wasn't relevant today, the account balance would not show $7.5 million where the budget is only $1.5 million. It wouldn't. It's that simple.

What we've established so far is this: we have a minister who does not know who the members of the

society are. We have a minister who does not know what the criteria are for successful applicants under the northern development fund. He doesn't know what the criteria are in his evaluation process. We have a minister who doesn't know how it is that the current account with a budget allocation of only $500,000 this year and $1.5 million last year shows a $7.5 million balance. Where that balance came from, year over year, the minister does not know.

The minister says 23 projects were approved. Let me ask this question: how many applicants applied?

Hon. J. Les: I'm sure the member won't be surprised by this answer. I outlined earlier that the board is an independent body. It receives these applications. They are not referred to government. Again, if she wants that information, she's asking at the wrong place. She would have to refer to the society for those answers — or to her BlackBerry.

J. Kwan: You know, the minister thinks he's cheeky. He says I can refer to my BlackBerry. Yes, I just e-mailed my staff to get the information, a court decision, on the basis of what ministers are responsible for and their level of accountability — a court decision that was made.

This minister consistently tries to get away from actually having to answer questions. The government appointed the society. The government appointed its members. The government gave the society its mandate. The government allocates the dollars to the society so that they will spend this money. To all the questions I've asked the minister so far, he says: "Well, if you want to know the answers, go ask the society." Except that at the end of the line, as one might say, the person who's responsible and who has to be answerable to these questions and responsible for these funds happens to be the minister. He is responsible for answering the questions.

How dare the minister say: "Don't ask me. Go ask the society if you want to know"? My gosh. Is there no end to where the members of this government, will say: "We're not responsible for anything"? Is there no end in trying to pass the buck? This is pretty basic stuff here. I'm not even necessarily asserting there's any wrongdoing. I'm just trying to find out some basic facts under a line item that is specifically, clearly outlined — northern development fund special account under the Ministry of Small Business and Economic Development — as the minister's responsibility.

Right in the blue book it actually says the mission of the Ministry of Small Business and Economic Development is to promote strategic leadership in government to create strong, prosperous and diverse economies in all regions. Presumably, the northern development fund is to do that. Presumably, the minister, whose mission is to promote strategic leadership in government to create strong, prosperous and diverse economies in all regions, would care to find out what is going on in the northern development fund. Presumably, the minister would say, "Hey, given that my job is to make sure there are economic activities out there, I would want to find out how come in this account there has been year-over-year underspending," and talk to the society — not sit there and say: "Hey, society, just go and do your own thing and whatever. For all we care, don't spend any of the moneys; for all we care, let there be no economic development going on in the province in each of the regions."

It leads one to think that when you have a minister who not only does not know the answers but when asked says: "Don't ask me. If the member wants to find out, go and ask the society." That is just insulting. It is insulting for the minister to say such a thing and to take his responsibility so lackadaisically. I find that absolutely shocking.

Does the minister not know how many applications came in? Is that the reason why he won't answer the question? He would be better off admitting that he just doesn't know rather than saying: "Don't ask me."

Hon. J. Les: We don't have that information here with us today, but I'm sure we can get that information, and when we do, we will provide it to the member.

J. Kwan: Like I said, I think it's disappointing that the minister doesn't know, but I can accept that. I can accept that the minister says that he doesn't know and doesn't have the information, rather than to say, "Don't ask me. Go ask the society," because the minister should know.

Okay, here's what I would like to get. I presume that the minister actually doesn't have the answers to all of this, so let me just put on the record the information that I'm seeking about this fund. Quite honestly, I'm just trying to find out what's going on with this fund. I have no trickery up my sleeve. I don't have any special information. I started to ask the questions on the basis of the difference in the amounts, and it led to this, so now I'd like to look into the fund a little bit more.

I'd like to know who is on the society. Actually, the OIC that appointed these individuals would be helpful. I'd like to know the budget amount since the society was established, the funds that have been expended since and how it is that the current balance shows $7.5 million. How did it accumulate over the years to this amount? That is why it's important to get back to the previous years. Presumably, that's how the amount increased over the years. It accumulated over time. I'm making that assumption. Maybe I'm wrong. Maybe it was somehow some other thing that happened.

I'd like to know, then, relating to that, how it is that the amount accumulated to $7.5 million. Year over year, how many people applied? Who applied? How many projects were successful and for what amount? I'd like to also receive the evaluation criteria. Year over year, have they changed? Maybe they haven't changed. Maybe it's been the same set of evaluation criteria that's been used, but maybe it's changed. I don't know; I'm wondering about that. If it's changed, how has it changed year over year?

Presumably, I would assume that the process is such that each year the budget amount is set up, the partner — and that is Alcan, in this instance, which contributes half of the dollars…. Is it the case that Alcan just deposits the amount of dollars at the beginning of the fiscal year into this account — as the government amount is deposited into this account each year — and then it's drawn down as dollars are spent? I would like to know that.

The other piece of information that I would like to know about this account is…. The members of the society that serve on this account — are they being paid? Presumably they receive a per diem; I don't know. Maybe there are staff. Are there staff responsible for the northern development fund, its operation functions? I would like know that in detail as well.

If the minister knows any of the answers to the questions that I've posed to him, I certainly would be happy to receive the answer. If not, I'd be happy to receive them in writing at a later time.

Hon. J. Les: There was a question, I believe, about the Alcan contribution towards this budget. In the earlier years, Alcan put up a contribution of $7.5 million, which was spread out over the first three years of the operation of this fund — $2.5 million in each of those three years. That was matched by the province for a total budgetary amount, a total accumulation of funds, of $15 million. That has been drawn down to date to the extent of about half of that money — about $7.5 million — which leaves an unexpended amount of about $7.5 million. I think that should clarify the contribution question.

As to the board members — are they paid? They are paid per diems on the usual provincial scale, and they have a staff of one manager. The balance of the information — if there are further questions that I haven't been able to answer today — again, we'll undertake to get that for the member.

J. Kwan: Yes, I would like the rest of the information. There were many questions that I put to the minister to which I did not get answers, and I would like the answers for them.

The minister also said there's one staff person for this. Who is that staff person, and what is the title of the staff person?

Hon. J. Les: That person works for the society. We will get the information as to the name and the specific job description for the member as well.

Hon. J. Les: As I outlined earlier, the global amount — $7.5 million from Alcan, $7.5 million from the provincial government over a number of years, about half of which has been expended to date.

J. Kwan: So it's in part paid for by government. That's the point that I want to make. That goes back to the point of responsibility and accountability and where that rests. Ultimately, the buck stops with the minister and with the government. We can't just pass it on to the society. For the minister's information, I actually did use my BlackBerry and received the information that I requested from my staff about accountability.

I would remind the minister, and hopefully this will set us in good footing for the rest of estimates in terms of questions to the minister, that the government has undertaken a thing called GAAP, which then allows for all kinds of entities — the SUCH sector and others — to be included under the jurisdiction of government and, therefore, accountable to government. All the dollars, expenditures and revenues coming in under SUCH and all SUCH entities fall under the responsibility of government. That was an accounting change. That's one thing that clearly outlines where accountabilities lie.

Secondary to that, of course, is a court decision by Justice Macaulay, who actually outlined that behind an issue that was raised around the Ministry of Health Services — where Health Services were saying, for example, that the health board and other such entities are not their responsibility and the jurisdiction doesn't fall within them. The court actually found that not to be the case, given that it is the government who appoints the health board, provides the funding and gives it its mandate to do its work. Therefore, ultimately, the buck stops with the minister and the government, and the government is responsible. As long as the government makes the appointments of these individuals, as long as the government funds it and as long as the government gives it its mandate to do its work, the government is responsible for these societies, these boards or whatever else that you might want to call them.

Therefore, the questions that I put to the minister are completely legitimate. The rest of the questions from time to time that I may float might feel or seem to the minister that they're not relevant or not his area of responsibility. I would remind the minister of the court decision and the GAAP decision undertaken by this government.

All right. Now, there is a thing called…. As far as I understand, under the B.C. Rail deal there was also a fund called the northern development fund that was created. Are these the same things?

J. Kwan: They're completely separate accounts, completely separate funds and administered completely separately by different people?

J. Kwan: Presumably, this other northern development fund falls not, then, within this minister's area of responsibility but rather in the Ministry of Transportation?

J. Kwan: I was just trying to be clear so that we know, because we can ask these questions to the Minister of Transportation. Presumably, this other fund called the northern development fund, which is not to do with the B.C. Rail deal, has nothing to do with this minister. Then it is the responsibility of the Minister of Transportation — am I right?

Hon. J. Les: That fund is not the responsibility of this ministry. I could undertake to find out for the member exactly which ministry does bear that responsibility.

J. Kwan: That would be appreciated. I am assuming that it is the Ministry of Transportation, given that is a B.C. Rail deal–related fund. It was confusing because here you have the same name for this fund, but it appears to me — as the minister has now confirmed — that they are different. I would appreciate it if we could find out exactly where that is.

Okay. That wraps up my questions on the northern development fund, which I didn't anticipate was going to generate so many questions. I only actually had that one question on my list. It turns out there were many more questions. I'll receive the information from the minister. Then if there are further questions as a result of the information that we receive from the minister, I assume that I could follow up with either the minister or ministry staff for further clarification. Given that I don't have the information right now, who knows what other new questions might be generated once we receive the information. Maybe there are none. Maybe there will be none, but maybe there will be some. If there are, I presume it'll be all right for us to follow up with the minister or with the ministry staff.

My next set of questions is around film. I note that the ministry has key performance measures, from which I quote: "North American ranking of film production expenditure." The goal of the government is to maintain B.C. as the "largest production centre in North America after L.A. and New York." Could the minister advise how much money is going to B.C. film producers?

Hon. J. Les: There are two agencies: the B.C. Film society which receives $2.28 million from the government, and the B.C. Film Commission which receives $1.2 million from the provincial government.

J. Kwan: B.C. Film, which is a feature film production program…. Maybe the minister could tell me: where does B.C. Film fall under? Is that the society's program, or is that the commission's program?

Hon. J. Les: I wonder if the member could put her question again. I'm not sure we understood correctly exactly what she was getting at.

J. Kwan: There is a program, as far as I understand, called B.C. Film, which is a feature film production program that helped finance some 23 film productions over the last three years. I'm curious to know: does this program called B.C. Film fall under the society's mandate or under the commission's mandate or maybe some other entity? I don't know.

J. Kwan: The $2.28 million and $1.2 million for the society and the commission — that's the '04-05 budget year?

J. Kwan: The funding provided by the society…. Let me ask this question. B.C. Film — for that direct program, is the budget $2.28 million? Is that the whole society's budget? If not, what is the amount?

Hon. J. Les: There are small additions to that budget. In the course of a year they will charge some small fees for services. In addition, they've had a positive bank account over many, many years, and they've been able to attract interest, of course, as a result of that. It's basically, the provincial government grants, some fee-for-services and interest that accrues to their account.

Hon. J. Les: Just to review the base budget allocations from provincial funds over the last several years: it was $2.26 million in 2001-02; $2.53 million for 2002-03; and, as I said earlier, $2.28 million for 2003-04. Those last three budgets were augmented by a three-year, $5 million feature film fund, which ended on March 31, 2004.

J. Kwan: Is the minister aware that for every dollar that B.C. Film puts into a film, it leverages an average of $7.62 from the federal government and $6.81 from the private sector?

Hon. J. Les: I think it's fair to say that we all recognize there are leveraging opportunities whenever there is funding invested in endeavours such as these. There's significant federal funding that comes and

matches in some cases the provincial contributions, and then of course there is the multiplier effect in the private sector economy as well.

J. Kwan: That's a pretty good investment I'd say. For every dollar that British Columbia puts out, we yield $14.43 in total — federal and private investor funds — in return. I'd say that's a pretty good investment. It's a 1-to-14 return approximately.

Is it the case that the agency, while continuing to receive its core funding — which is the $2.28 million…? Basically, it's equity financing dollars, which was the $5 million that the minister mentioned. The last of it was granted on March 31?

Hon. J. Les: The base funding for B.C. Film will continue as before — the $2.28 million — which in fact is very much the same as the funding that was provided, for example, in 2001-02 of $2.26 million. The $5 million feature film fund did in fact end on March 31, 2004, and while that funding was flowing, some of it was in the form of equity financing and other funding was in the form of direct grants.

J. Kwan: My understanding is that about $4 million of that amount went into equity financing. You know, whether it's $4 million or $5 million, in any event, if you use the multiplier of $14.43 — that is the leverage one could get through the federal government and private sector — that really yields approximately $57 million in terms of return in economic activities as a result of this investment. Really, $4 million for a $57 million return in economic activities is a pretty good investment, in my view.

On that basis, why would the government end this fund on March 31? Why not renew it? Because $4 million to yield a $57 million return is a pretty good investment.

Hon. J. Les: There are many competing pressures, of course, for government funding, as the member will know. Over the last three years, when that $5 million was made available to the film industry through B.C. Film, we saw a continued reduction in that activity, so I think it was difficult to argue that the funding was actually making a positive difference in that industry.

J. Kwan: Actually, the stats, in terms of the return I cited, come from B.C. Film themselves, so the government actually provided that information, which is that every dollar it has put into a film has leveraged an average of $7.62 from the federal government and $6.81 from the private investors. The statistics came directly from B.C. Film. To suggest that somehow the return is not there is mystifying, because those are the stats the government itself, through its agency, collects. For that kind of leveraging, $57 million, if that return is deemed to be not sufficient — boy, what kind of return are we looking for? Four million bucks for $57 million.

Hon. J. Les: The film production industry, like any other sector of the economy, has benefited greatly from many of the other economic measures we have put in place since 2001. It's not just a matter of whether or not they get a $5 million grant extended. The tax cuts, for example, that we put in place several years ago — the sales tax credit, the elimination of the corporate capital tax — are all measures that the film production industry has benefited from as well.

There are, however, many factors that are outside of our control. Telefilm Canada has reduced their funding. We have a new phenomenon today that has been around now for several years called reality television. That has really cut into the film production industry as well.

We do the best we can, but when you have the realities of Fear Factor, for example, that some people apparently watch over other more culturally enlightening endeavours, there is only so much the government can do. We feel we're being very supportive of the film industry through the measures I've just mentioned. I think, frankly, given the assets we have in British Columbia, there's a very bright future ahead for the film production industry.

J. Kwan: Yes, I expected the minister would say that tax credits would deal with all the issues I've raised, but the reality from the film production group — from the people, I would say the experts, in the field — is they say that tax credits, while they're important, only kick in after production has been completed. In fact, let me just quote from someone from the industry where they reported…. Actually, I should just quote a little bit more of this article so that what the individual is saying is not out of context. This is an article from the Globe and Mail, April 7, 2004:

The article then goes on to say…. There are quotes from various industry folks saying how pathetic that is, but anyway, I'll just move on.

J. Kwan: Well, it actually states the individual who made this comment — well, then let me just put the whole quote on record. The minister wants to know who said it. I hope that doesn't mean that there are negative consequences for this individual; albeit, it is a public document that I'm putting on record here.

Then there are a couple of other quotes from other people. Particularly, Dolman says she knows of several film-making friends from British Columbia who are now moving their productions to Saskatchewan where the funding benefits are better, etc.

I think that given the ending of this investment in feature films, there are ramifications for people in the industry. It has been reported from people in the industry that they will be moving elsewhere.

Let me ask the minister this question, because according to the newspaper they now say we are about the same as Ontario. In terms of competitiveness and advantage in this area for the film industry, how do we rank with the rest of the provinces? Is it correct, as per the article, where they say we are now in the same situation as Ontario was five years ago?

Hon. J. Les: Last year we saw quite an increase in production in British Columbia, whereas in Ontario there was a very significant decrease.

J. Kwan: The minister says that last year the grant was still in place. This year it's not. I'm talking about this year when the grant ended March 31. According to the people in the industry, their comment is that with this grant ending, we are now at the same place as Ontario in terms of support for the film industry, in terms of leveraging dollars and in terms of really trying to promote the film industry in British Columbia. That's what I'm talking about.

Hon. J. Les: At this point this is editorial comment only, and the proof will be in the pudding. We will review, as we constantly do, the performance of this industry and many others to see where we can best assist. For the moment that program ended on March 31, and I am somewhat optimistic that the growth we've recently seen in the industry will continue.

J. Kwan: That's interesting, because people in the industry are saying something different. In fact, people in the industry are saying that they are now going to go to Saskatchewan for their productions. That is what has been reported in the paper, and that's what people are now saying.

The government says in its service plan, in its key performance measures, that the goal of the government is to maintain B.C. as the largest production centre in North America after L.A. and New York. With the elimination of this grant, let's see whether or not the government can maintain that status. We'll certainly be watching, as I have outlined the issues and concerns from people in the industry.

I know that when we were in government, the previous administration worked very hard to actually put British Columbia ahead with all kinds of incentives — tax reductions and so forth — precisely to promote film-making, not just in the lower mainland but throughout British Columbia. I hope that we can maintain that status.

Madam Chair, I know that my colleague from West Vancouver–Capilano has questions for the minister around the film industry. I'm going to yield the floor to him so that we can maintain some sort of continuity around areas of questions put to the minister.

R. Sultan: I thank the member for Vancouver–Mount Pleasant for yielding, for continuity purposes, on this very important industry.

For further background, I refer again to a Globe and Mail story yesterday. They had a very interesting piece by Stephen Hunt referring to, if I can quote:

It goes on to talk about the film commissioners in attendance coming from Ontario, British Columbia and even Newfoundland and Labrador, talking about the obstacles faced by the Canadian film and television production industry caused by a significantly stronger Canadian dollar; the SARS outbreak, which particularly impacted Ontario; and the emergence of a number of shiny new rivals for Hollywood's billions, including such popular film-making spots as Romania and Iceland.

The Ontario commissioner conceded that their volumes are off about 10 percent, but our B.C. Film's Julie

Bernard was quite optimistic about the continued prospects for what she described as a $1 billion British Columbia industry.

These numbers continue to astonish me — before long it will be one-quarter the size of the mining industry, to which I have devoted a good chunk of my life — as I realize that film-making is creeping up on us to that extent.

The size of the industry in my riding has also been a subject of much education for this MLA. The industry ran off some numbers on employment and payroll on the North Shore, and I find the numbers astonishing. If you look only at the unionized sector, because of the way the service bureaus make out payrolls, we find on the North Shore alone 4,500 people receiving a unionized pay of some sort or another and a total taxable income of $92.6 million. That does not include people employed in a non-union capacity by Lions Gate studios, E.P. Canada, Sharpe Sound, West Media, rental companies or any business reliant on the film industry. One might speculate that if we included these entities, the total payroll on the North Shore would be — who knows? — $150 million. It's certainly a big number. The deputy minister is pointing higher, and I accept that.

This is a big industry on the North Shore and a big industry in the lives of my constituents. There's much talk in the news these days about B.C. Rail and the turmoil and the controversy and all the…. I was going to say the nonsense. These are serious issues. B.C. Rail is an important entity, but my goodness. In the lives of the North Shore, the film industry dwarfs B.C. Rail by a long shot.

Last fall the industry, through its Motion Picture Production Industry Association, or MPPIA, launched a concerted information campaign with provincial and local governments, addressing, in particular, one aspect of government policy vis-à-vis this industry — namely, the provincial sales tax. Their quest at the time was to receive exemption in some degree from provincial sales tax.

They made two arguments: that B.C. Film is uncompetitive with most other provinces, notably Ontario and Quebec, which offer exemptions from provincial sales tax, and Alberta, which doesn't have any provincial sales tax at all. That was the competitive argument.

They also offered a logical argument — namely, B.C.'s policy in respect of this industry is inconsistent with provincial tax policy in that the film industry is considered to be a manufacturer for income tax purposes but was excluded from the manufacturers PST exemption when it was introduced in 2001. In response, as I'm sure the minister and ministry staff know well, the Ministry of Finance people argued that the other provincial tax credit programs provide substantial film industry benefits, referring to such things as the Film Incentive B.C. program, FIBC, a package of economic incentives developed to encourage film and television production in British Columbia. Indeed, that has been, as I understand it, a very successful program.

Back to the PST issue, which really did become a focal point of their efforts. They gave me a comparison of a real live production with a total budget of $26 million that was considering locating either here in B.C. or in Ontario. The total labour costs of this film in either jurisdiction: roughly $6.8 million. The purchases and rentals considered film inputs — that is to say, in front of the camera — that are PST–exempt in Ontario but are currently taxable in B.C. are around $2.1 million. The PST on the above is about $162,000. With other cost differentials in B.C. being somewhat higher, we basically end up with a cost handicap vis-à-vis Ontario on these items of about $250,000. In other words, they would save $250,000, taking into account these miscellaneous small items but mostly the PST, if they shot the film in Ontario versus B.C. That's 1 percent of the budget.

You can say, well, gosh, you know, the weather, the great skilled film crews we offer here, the experience, the lifestyle and everything else — not to mention the abundant government assistance programs in other areas — should easily accommodate 1 percent, but they responded by saying: "Well, if the government had removed the PST — $162,000 of those savings — and forgone that revenue, the PST paid on other elements purchased in producing that one film would have about been a wash. It would have been a break-even."

Then you get into the questions of multiplier, as the member from Mount Pleasant was talking about. Their estimate in terms of the government's own multiplier in terms of added tax collections on provincial income tax, etc., is around 10 to 1, so the government would be far ahead of the game, as you say, strictly on the numbers exempted.

My question to the minister is this. In this severely straitjacketed fiscal regime, which we all appreciate rightly must continue to be the strong priority of the government, particularly as we go into the budget balance year of '05…. Of course, the plan in the budget is set. What has been done has been done, and unfortunately, we could not offer relief to the industry this year. I would ask the question as to philosophy in the longer term, and the specifics of this tax in particular, as we see this extremely mobile industry…. It's almost like a cruise ship deciding to take on passengers in Vancouver or perhaps — who knows? — Bordeaux, France, or something.

This industry, with decision-making next to the Pacific Ocean down there in Hollywood somewhere, is extremely mobile, and a 1 percent cost difference, I perceive, in their world is a big cost difference. It's enough to set movement into motion — plus the fact of the higher Canadian dollar, which has hammered us to the degree of about 15 percent, which as before was really a no-brainer advantage. We've lost that, and I think probably it's a good thing we did.

We're going to have to be a little sharper. We see jurisdictions, notably Ontario, sharpening their pencil quite aggressively to try and win back production.

I don't know if I did add one final point that the people who came to see me, at least, thought their

volumes were going to be off in '04 by 20 percent. Other jurisdictions are probably winning market share at our expense. I just thought it would be helpful, both to my constituents and to the industry, to get some idea of the minister's philosophy in terms of trying to stay on this cost-competitiveness treadmill, appreciating that there's no end to it.

Hon. J. Les: I appreciate the question from the member, and I certainly recognize the importance of the film industry to his riding in particular and to that general area of our province.

On the matter of the provincial sales tax exemption, we're certainly sympathetic to the suggestions that have been made by the industry. However, as the member is also aware, for the first time in many years we balanced the budget this year — but just barely — and we need to continue our diligence to ensure the budget remains balanced.

Happily, we also see a good recovery taking place in the provincial economy. If that's maintained, and I'm very positive that it will be maintained, we will have some choices that we'll be able to engage in, in the years going forward. One of those choices could well be another look at the provincial sales tax as it applies to the film industry. I don't think the negative position of government to date in any way reflects a philosophical position; it simply reflects a financial reality. Once those realities turn positive, then I, for one, would be very supportive of having another look at this particular issue.

P. Sahota: As I was sitting here listening to the debate and listening to the member for West Vancouver–Capilano putting into context in terms of the competition and the long-term vision for this very important industry, it occurred to me that we do rely heavily on the American market — be it in the forest industry, be it in the film industry. If something happens in the American market, it hurts our industries up here.

I actually would like to know from the minister in terms of the long-term vision, in terms of other parts of the world…. I know the deputy minister…. We were in India last year and looked extensively at the Indian film industry, and they are very much interested in coming here and being part of, you know, producing and productions — being part of our film facilities. Is there any thought in terms of how to attract feature films, etc., from that part of the world?

Hon. J. Les: We have, of course, in place a tax credit system that applies equally to everyone. When companies come in from the United States to make films here, they are accustomed to our environment. It is similar to what they experience in places like California or New York, for example. When they come in from other countries such as India, they find our cost base very high. It sometimes makes it difficult for us to attract film-making from those countries.

We are a government that is very interested in being economically competitive, and we need to continue to address those issues to make sure we have an economic playing field that is as level as possible with other countries in a rapidly globalizing economic environment. I think as some of those economies — in India, for example — mature and progress, their cost bases inevitably will rise as well.

I personally tend to be fairly positive in terms of the potential of working with the film industry in India and Great Britain, in Europe and other places, but they're not all going to come overnight, because we do have economic realities that we have to deal with here in British Columbia. As I pointed out earlier to the member for West Vancouver–Capilano, we're not going to jeopardize our balanced budget to try and entice new industry to come into British Columbia.

The Chair: Minister, noting the time, I wonder if we could have a motion to rise and report progress.

Hon. J. Les: Noting the time, I would move that we rise, report progress and ask leave to sit again.

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