Hansard — Thursday, April 19, 2007 a.m.

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		6895
	Estimates: Ministry of Forests and Range and Minister Responsible for Housing (continued)
	B. Simpson
	Hon. R. Coleman
	N. Macdonald
	N. Simons

Proceedings in the Douglas Fir Room

Committee of Supply		6907
	Estimates: Ministry of Advanced Education and Minister Responsible for Research and Technology (continued)
	R. Fleming
	Hon. M. Coell

Hon. M. de Jong: I call Committee of Supply — for the information of members, in this chamber continued debate on the estimates of the Ministry of Forests and in Committee A the estimates of the Ministry of Advanced Education.

ESTIMATES: MINISTRY OF FORESTS
AND RANGE AND MINISTER
RESPONSIBLE FOR HOUSING
(continued)

B. Simpson: I just want to clarify a couple of things from yesterday. The minister closed by suggesting, in a discussion of the concentration on the coast, that I was blaming the company for that concentration. I want to be crystal-clear before we start today that that is simply not the case. There's been a suggestion a couple of times here that I'm putting blame on the companies for doing what they need to do.

I have full expectations that a CEO of any company will act in the best interests of its shareholders. That's their job. That's what they get paid for. That's what they're accountable to their board for. What I was asking questions about yesterday was the minister's role in allowing the corporate concentration to occur.

I've met with Mr. Hert, the CEO of Western Forest Products, and my sense of Mr. Hert is that he's trying to do the best he can, given the constraints that he's got on the coast. Other people who have worked with Mr. Hert find him very well-intentioned.

He was explicit early on about his desires for the removal of private lands. I told Mr. Hert, in a meeting with him, that we would not support that. I also told Mr. Hert that I believe we have created a significantly difficult circumstance in the log market on the coast by allowing Western Forest Products to get the concentration that it's gotten.

My contention is not that the companies are at fault. What I was suggesting was that the minister did not exercise his legislative authority. So my question to the minister is: in the review of Western Forest Products, was he counselled that it would create a monopoly on Vancouver Island in particular?

Hon. R. Coleman: I was given, as I said yesterday, all of the options and information. There were some concerns about levels of concentration, but there were also upsides in the strength of the company and players on the coast with regards to the future of the coast. As I said to the member yesterday, I balanced that information as I came through and made the decision.

B. Simpson: My question to the minister: now, after the fact, does the minister believe that the monopoly on Vancouver Island in particular is one of the reasons that we have a log market issue — a log shortage issue — on Vancouver Island?

Hon. R. Coleman: I won't point to any particular thing being with regards to the shortage of logs, as the member says, on the coast. It has everything to do with price, weather. In some cases Western made investments in their mills that made them have the ability to actually produce more from their mills and use more of their fibre internally, which stabilized the jobs for the people in those areas. Plus, the mills in Saltair and Cowichan saw investments.

I guess we can go around this for some time, but I looked at this. I looked at the levels of concentration, I looked at the strength of the industry, I looked at the company, I looked at the information in front of me, and I made the decision. I won't say today that this decision is the reason there's an issue with the shortage of logs on the coast.

B. Simpson: Well, certainly as I tour Vancouver Island in particular and the coast in general, that is one of the decisions that this government made and the minister made which people point to as a situation that exacerbates all of the other forces that the minister has indicated.

The undercut on the coast that the forest revitalization strategy didn't address, the weather conditions notwithstanding — and we'll get into that when we look at climate change…. One major issue on the coast is the power that Western Forest Products now has over the marketplace. So the minister's comments don't reflect what I hear throughout the coastal region, including from some of the major associations out there.

With respect to the idea of blame, again, I want to be crystal-clear. I'm blaming the government, and I'm blaming the minister for not exercising his legislative authority. It is a big issue out there. It's an issue that comes up over and over again. The government is the one that broke the social contract — not the CEOs, not the companies. They only did what they had to do.

The government is the one that constructed the forest and range agreements and forest and range opportunities in such a way that first nations can't get the volume to the marketplace, and now they have to figure out how to fix it. The government is the one that failed to act in

the interest of the public good in the release of the private lands in 2004 and again this year. Taxpayers were done a disservice because there was an expectation of compensation, and taxpayers should have been compensated for that.

The government is responsible for the creation of the monopoly and the oligopoly in the interior that's causing significant issues for logging contractors, significant issues for independents and value-added getting access to logs. The government is responsible for signing off on a softwood lumber agreement that, over top of all of that, makes a bad situation even worse for many players in the industry.

I just want it to be crystal-clear on the record that in none of my statements do I blame either the minister's staff or how the ministry tries to do its operations, nor the corporations that are out there working, nor the associations.

Any appointment of blame that I make is directly to the minister and to his government for their actions, for their policies. Their policies favour only one group in the forest sector, and that is the large corporations. They are only one group, and they are a group that many, many people are now wondering what the future of that is given where the marketplace is going, given all of the issues surrounding the consolidation movement.

With that in mind, my question is to the minister about his comments around Third Avenue Management. What is it that the minister will be doing to ensure that all of the forest sector isn't eaten up by Third Avenue Management — that they become a major shareholder in every area of this province? They're already making inroads in Catalyst. They're making inroads in Canfor. Weyerhaeuser's units in British Columbia basically are waiting for somebody to pick them up and do the rationalization that's necessary there. Pope and Talbot is on the hub in many respects because of softwood lumber and various other operating issues that they've got.

What is it that the minister is going to do to exercise his obligations on behalf of the people of British Columbia to monitor and manage what is happening with Third Avenue Management investments in this province?

Hon. R. Coleman: First of all, I guess he enjoys saying that it's the government's fault to do this and the government's fault to do that. He likes to have revisionist history and forgets about the big stage show in Prince George a number of years ago when the Premier of the province at that time, Glen Clark, stood up with the NDP and said, "We've got the jobs and timber accord; we're going to create 21,000 jobs," and he didn't create any.

There was a Forest Renewal B.C. that didn't have a business plan for five years and spent half a billion dollars, money which was taken unnecessarily out of the pockets of companies in British Columbia so they could be competitive in a global forest economy back in the 1990s. There are different things you can point to.

Now, you can do that, and we can have a debate all day on those particular things if the member wishes to, or we can get past that. I believe that the government made the decisions that need to be made. I believe that we are moving in the right direction. The member disagrees with me. I get that. That's fine.

I can point to history and to lots of things that were done in the forest sector long before this government ever came to power and probably long before even the NDP ever was in power, where decisions were made that affected the forest sector negatively by governments. At some point in time, government just has to set a basic format of operation to see if actual competitiveness and investment can come back into the forest sector.

On the other questions from the member with regards to Third Avenue Management, I do understand that this company is making some investments in forest companies in British Columbia. I do not know the total concentration yet because I think it's in the early stages, and we don't know what their intentions are.

I haven't met with Third Avenue Management. I don't know whether they're bringing investment or ideas and concepts. I'm not in a position today to enter into a debate about the intentions, the concentration or the ownership of Third Avenue Management in companies in British Columbia because I don't have enough information in front of me.

B. Simpson: I find the minister's words very interesting because he wants to talk about history. I'm talking about the present. I'm talking about the present government's decisions. I'm talking about the present government's process for making decisions and the present government's ideology about how they make decisions.

I can tell the minister that everybody I've talked to in the industry says that it's about time we recognize that the industry is made up of more than just the large corporations, who have been favoured in the Forestry Revitalization Act and strategy and all the subsequent changes to that. I'll get into that when I look at the value-added because that's a group that has been very much disadvantaged as a result of those changes.

My question to the minister is: given all the changes that occurred in 2003 to the Forest Act, what rights do the minister and the government now have to monitor and manage ownership of tenure and ownership of companies within British Columbia?

There used to be all kinds of rights given to the Crown because it was a public forest. The minister had the ability to review tenure changes. We got a 5-percent takeback as a hammer, if you will, for some of those changes. That included even the change in corporate ownership, not just necessarily a buyout or a consolidation.

We had a mandatory mill closure review requirement that would have kicked into gear and would have had the minister look at closures like the Queensborough mill, where the minister would have actually engaged

in that process and done what was necessary to try and keep that mill open if at all possible or helped with mitigation strategies if the mill had to close.

Given today's legal context and regulatory context, what are the minister's obligations under legislation and policy to examine and explore what is happening with the consolidation in the industry? As I indicated in my opening remarks for estimates, the buzz and the feeling in the interior is that we're going to do exactly what has happened on Vancouver Island. We're going to default to one major corporation, one major licensee with a few megamills, when we get past the mountain pine beetle.

What is it that the minister has, as a right and obligation in the Forest Act, to manage that so that we don't get into a single entity in British Columbia, particularly a party like Third Avenue Management that does like to come in at the end-game in many circumstances and cash out a lot of assets as part of the consolidation process?

Hon. R. Coleman: First of all, we have a philosophical difference between me and the critic. The critic would believe that we should step in and keep a mill open. Actually, his former colleagues in the government did that once and dropped half a billion dollars of taxpayers' money on Skeena Cellulose.

Hon. R. Coleman: You could do some intervention. The member is right. But it didn't work. It's known that it didn't work. It actually put in situations where there were fewer competitive companies.

On the transfer of licence, we actually have the ability to give a notification to proceed or not. On asset acquisitions, we can look at the deal after the case to see and take action, with the undue lessening of certain aspects of it. And we can also have the federal Competition Bureau.

You can have a collaborative process like you had with the Slocan and Canfor merger that took place a number of years ago, which obviously neither one of us was involved in. As a result of that, Hampton opened up and took over the one mill up in the north, because the Competition Bureau suggested they had to give up a mill.

The fact of the matter is that there are things government can do, as I've outlined. If information came to us that some of these things were taking place, we do have the ability to look at it and refer it to the federal Competition Bureau, or both. We would do that on a case-by-case basis.

I'm okay with the fact that the member thinks there should be an intervention in the market from government — by a socialist government. But I actually believe that the market has to decide at some point in time whether we can build competitive companies in British Columbia. The member thinks we should decide what the return on investment is, what investments people should make and what opportunities and how they build their companies.

Well, he can do that. But you know what? I'm not going to tell a company how to run its business, because it's not my job. The member talks about all the failures of these different things, and he mentions all these people that are so-called small operators that are having so much difficulty. They happen to be coming into my office and telling me how much better it is — including Downie Timber from Revelstoke, who have made it absolutely clear how much better things are for them.

The reality is that the member and I can spend the next couple of hours talking about the philosophical differences we do have. The transfer licence needs notification to proceed from us as the government. We can look at any asset acquisitions after the case and take action, which includes either referring it or having the federal Competition Bureau involved with us with regards to that.

N. Macdonald: Just to take the opportunity to speak with the minister. This is something that I've been following carefully, and I've enjoyed very much the conversations between the two critics.

I know that very often the example is used of Skeena Cellulose. I'm not familiar with the particulars on that, but what I do know is that the mills in each one of the communities that we represent are tremendously important. I know the minister knows that.

I would use the example of Evans Forest Products, and I think you have staff that are very familiar with that. I don't know the particulars of other communities, but I know that was an intervention that worked very, very well.

Evans Forest Products — it changed. It is now a highly successful business. The intervention needed the government to be there. I think there are people that played a key role in making that a success.

So each one of these needs to be judged. There is a role for government. There is that social contract that predates the NDP. It's a Social Credit idea. It is something that allows these communities to thrive. To say that government does not have a role, I believe, is really incorrect. It has a role.

The decisions that are made here have huge impacts on the communities, and I put forward the example of Evans Forest Products. That was a project that worked. It brought in $200 million of new investment. It is a mill that continues to thrive as a Louisiana-Pacific asset. I know that my friends and neighbours very much appreciate the work of Doug Kerley and the others in forestry, including people that are there with you, to make that work. So it is an example that is worth looking at as well.

That commitment to the social contract and to these communities is really important. I know that living and coming from a small community, whether it's Revelstoke I'm talking about or Radium or Invermere

or Canal Flats…. These mills sit at the heart of the community. They provide good family-supporting jobs.

I'd like to put that in there for the consideration of the minister, and I thank you for the opportunity to participate. Certainly, as I say, I enjoy listening to the discussion on what I think is one of the key industries in this province and will be for the future.

Hon. R. Coleman: I can respond frankly, and I will. My staff tell me that probably the only bailout that was actually successful was that one you just described.

Hon. R. Coleman: Malakwa closed, and Evans Forest Products therefore gained some marketability. So something closed in order for more competition, more access and success on a higher level to take place.

I get the member wanting to make an intervention and a comment, but I would have liked to have heard from the member…. Quite frankly, I know his party and the opposition are opposed to the softwood lumber deal. But in actual fact, there's a company in that member's community that came to me and told me that softwood saved all of those jobs in that community.

They got their debt paid down. The high-value cap in the softwood lumber deal changed their business case and has made them successful today. They will sit in a room, and they will tell you that. They sat in a room just before Christmas and told me that. They came down to Vancouver specifically to thank me for making that deal, having the high-value cap in there and letting their company survive.

In the community of Revelstoke there are a lot of jobs now that are there, stable, because of that deal. I know the members opposite are opposed to the deal, and I know that they're going to find everything negative about it. I can accept that. I know the member wants to bring one intervention about one thing in forestry. We do have those abilities, like I said, to do interventions with regards to stuff, and we do that on a case-by-case basis. But the reality is….

At the same time you want to get up and make a point, it would be nice to hear just once — because I've read the quotes from the member — somebody on the other side of the House stand up for a company in their community and say: "You know what? For that company you did the right thing." That's what we did in that particular instance.

Downie doesn't mind me saying this. I hear from the critics and the member opposite how all the little companies are in trouble, blah, blah, blah. They say there are people out there that don't know this and don't know that. I meet with these people all the time, and I get a totally different response from them. So that's fine. Maybe it's because of the negative environment that's brought when the opposition talk to them and the positive environment brought when I talk to them.

I don't know what it is. But I can tell you that in this industry today, there are companies like Downie that are very successful simply because somebody did the right thing on softwood. We're not in a softwood debate, but if we're going to get up and do an intervention or make comments about one piece of this debate and not recognize the other things within that particular riding that are successful because of some other decisions of government, I think sometimes that's a bit disingenuous.

B. Simpson: What I think is disingenuous is to suggest that because one company tells the minister they're happy, that means it worked for everybody. It simply didn't. The minister knows that. The minister knows now that major corporations are beginning to question where we're at with the deal as well. It is not simply the opposition members who are questioning the softwood lumber deal. It never has been only the opposition that is questioning the softwood lumber deal.

What is also not appropriate is the minister continuing to suggest and put words into my mouth. I never once suggested that the minister should step in and stop the closure of the Queensborough mill. In fact, if the minister goes and looks at the public record of reports on my speech at that mill, I got in trouble with lots of people at that mill because I said I didn't believe that it was a savable mill.

I stated categorically to the union leaders at that meeting that I believed there was a timber supply shortage and that I could not support more timber going to Western Forest Products, given the monopoly they had. But what I did say to those folks is that the issue is not with Western Forest Products; the issue is with the government and with the minister who created that situation in the first place. Again, I ask the minister to stop putting words in my mouth, because I'll correct them every time.

The minister talks about the free market. This is not a matter of socialism versus capitalism. The minister seems to forget that the free market is based on a public forest, in which the allocation of that resource is done by public policy — not by free market. It's public policy that determines tenure. It was public policy that took 20 percent back and tried to redistribute it. It's public policy that when tenure flipping occurs, the minister actually took a look at that before the changes were made to the Forest Act.

There's a problem, and it always has been the problem. If anything, it is the root problem. That is the allocation of the fibre into the market and then what happens after that. What the companies will always want is the lowest-cost inputs that they can get away with, and under this government…. What the government has done is discount all of the public good to get those costs down. That's what I have struggles with.

It is a public resource. There is an expectation of a social contract and a return to the public good. That's what this government has removed. It is not a debate about free market versus some sort of social intervention. The social intervention is a given in this case because the resource is a public resource.

The other case that I want to get into is that looking after the fact…. That's what the minister said: that he

would go to the Competition Council or whatever the case may be. What rights does the minister have if he can only wait until after the case? In most cases, the Competition Council or the Competition Bureau has already ruled.

When the Competition Bureau rules and the minister or the Crown believes that it's still too much of a concentration in an area or that it's going to cause some grief, what rights does the minister have after the deal closes to go in and rectify a situation where a monopoly or an oligopoly or whatever we want to call it has been formed?

Hon. R. Coleman: First of all, let me be clear. I absolutely disagree with all of the preamble to that question. We're going to deal with that type of preamble all morning I guess, but I disagree with the preamble.

In the Canfor situation…. First of all, we can cancel tenure as we look at the deal as it comes through after it's done. Somebody buys something, and that's when this kicks in. When the Canfor-Slocan deal took place…. Let's be clear. There's no competition council; it's the federal Competition Bureau — right? — who worked with us on that one.

The Fort St. James mill was sold to Pope and Talbot. I'd just like to go back. I hope I didn't hear what I thought, but I just want to make sure it's correct that the member says that Pope and Talbot is having difficulties and concerns either with softwood or otherwise. That would be an incorrect statement on behalf of that member. I would suggest that he talk to Maria Pope to confirm that, because I can tell you that I was with her. She has been a very big champion on everything we've done on that and has been a big asset in British Columbia and does not sit there and say that they're in big trouble.

I don't think that should be on the record, if that was the message the member was trying to send, because it's a very good company which I think has a very good reputation in this province and is doing great work.

West Fraser — when it did its one merger, the Burns Lake mill had to be sold. That was taken over by Hampton forest products. Those were both decisions that came out of the federal Competition Bureau.

B. Simpson: Let me clarify the Pope and Talbot…. Who knows what actually comes out? We'll have to check Hansard to see how it was couched, but my intent was to say that there is another wave of consolidation that is likely to happen in the interior. Pope and Talbot, being a small operator there, is one of the ones that people are talking about that may, therefore, be susceptible to that consolidation.

I may have used the words "in trouble," but what I mean is susceptible. Weyerhaeuser is another unit that is susceptible, as would be Tembec or others. Just in the nature of consolidation, those are the kinds of ones that larger companies are going to come in and look to pick off.

With respect to the Competition Council, I used "council" just because of the B.C. one. I meant bureau, and I appreciate the clarification.

I just want to be clear. The minister stated that after a sale the minister can cancel a tenure. If I understand it correctly, if there was another deal — another wave of consolidation in the interior, for example — and a purchase between two companies occurred and if the minister felt that created a monopolistic situation or created a constraint on the fibre flow in that region…. After the sale and after the bureau has done its finding, is the minister saying that he has the right to step in and cancel tenure afterwards?

Hon. R. Coleman: We can do that independent of the bureau. We can do that ourselves. The Competition Bureau actually looks at the monopolistic side of this thing and whether there's a lack of competition and that sort of thing.

I should be clear to the member that we are aware of some of the challenges that may face the interior, and we'll watch it very closely on a case-by-case basis. We know the size of the consolidation in the interior. That will, quite frankly, affect any future decisions with regards to any other purchases in the interior of B.C.

B. Simpson: I appreciate the minister's comments about the interior. Again, it is one of those concerns floating around there, particularly as the cut levels start to come down.

With respect to that, is part of the coast restructuring discussions that are being undertaken just now the possibility of some of that tenure takeback — again, as another way of rationalizing the tenure control on the coast? Is part of the discussion that the minister may be considering some more tenure takebacks on the coast?

Hon. R. Coleman: Not at this time on tenure. The recommendations coming forward, of course…. You know, I really can't speak to what will be accepted or rejected as they come through the process of government. I'm just the minister, not executive council. This is something that I'm sure will go through executive council at the end of the day. But there's no intention to take a tenure back today.

B. Simpson: I guess what this is getting to is the whole issue of…. Again, one of the things that the minister likes to speak of is areas of agreement, although one day I'm very tempted to go back and look at the minister's comments when he was in opposition and see how many times he mentioned areas of agreement as an opposition member. Unfortunately, I don't have the time to do that.

Anyway, notwithstanding that, in the forest revitalization strategy there's a very interesting comment that's made, and it's at the heart of what I'm trying to understand here. It's based on a chart that shows distribution of timber. It states: "Currently more than

70 percent" — at the time it was around 75 percent — "of B.C.'s harvest of Crown timber is under long-term licence to major manufacturers."

That's where, again, my comment is that public policy drives that. That's not the market. That's public policy that drives where that tenure goes, and that's why this is a fundamentally different kettle of fish when it comes to the free market and public policy.

It says: "Immediately after tenure reallocation" — so the 20-percent clawback — "this will fall to about 60 percent. In the longer run, with the elimination of the forced marriage of tenure and timber processing and with other policy changes, this will fall even further, perhaps to 50 percent or less." So we're four years out.

First question: did we achieve the 60 percent? And second: are we on track to the 50 percent?

Hon. R. Coleman: We took 8.2 million cubic metres back, as the member knows, and that got us to our first goal. The major change was that now we've allocated that out to communities, first nations and B.C. Timber Sales, which has four million cubic metres.

We will get the detailed numbers for the member. You will find that the numbers will be confused by ratio because of the uplifts in mountain pine beetle, I'm told. We will run whatever sheet we run to get you those numbers.

B. Simpson: I appreciate that, and I understand the uplift issue. Again, we'll explore that when we look at the mountain pine beetle.

Can the ministry staff tell me — on a percentage basis, not on the volume basis — what percentage of the land base is currently under long-term licence?

B. Simpson: When I looked at it, I believe…. Again, I don't have that piece of information in front of me, but I think it's still in the same order of magnitude that it was before all this began. It certainly isn't down to 60 percent, and it certainly isn't on track to 50 percent. So again, I just want to point out that an explicit objective of the forest revitalization strategy is not being achieved, but I'll look forward to those numbers and being disabused of that notion.

The minister mentioned the other day…. When we were talking about first nations, he talked about the fact that the volume allocation to first nations was too small. It's one of the major issues they have in getting that volume into the marketplace — the five-year non-renewable licence, etc. The minister mentioned that they're going to be working on that. Again, I think it was ill-conceived in the first place, and now you're having to step in and do a fix.

We talked about the woodlots and the fact that they haven't been doubled. So the woodlot allocation is still sitting out there. My question is: is that allocation still available for woodlots in all timber supply areas? Is the volume available?

Hon. R. Coleman: I always find it incredible that the member says that because we're trying to work with first nations to make things more for capacity-building that we're fixing something that's broken or a mistake was made and something was wrong.

The reality is that this is an evolution. You work with these folks, and you try and help them with capacity. That's what we're doing. I don't think anybody expected otherwise when we started to make the moves to give first nations the opportunity on the land base.

I said yesterday to the member, because we talked about the doubling of the woodlot, that the woodlot numbers weren't there today because I had concentrated more fibre on community forests. That's what we did.

B. Simpson: First off, first nations said right at the very beginning of the FRA and FRO process that they weren't going to work. That's what I'm getting at. So right at the beginning of it, they said that the volume is not big enough. The five-year non-renewable isn't going to work, and it's going to be a problem getting that volume out because we don't have the capacity. Most of them signed FRAs, and the minister should well know this, because there was cash upfront.

There was an attempt then to change FRAs into FROs partly because of court rulings against the forest and range agreements, and partly because the first nations, including the Union of B.C. Indian Chiefs, were starting to publicly state that forest and range agreements were not working.

Again, there was a change in the forest and range opportunities in which, effectively, first nations were only invited to apply for volume. Those changes were asked for at the very beginning of that process, and the minister should well know that.

With respect to the woodlots, I'm not asking the question that I asked yesterday. I'm asking the question: is there sufficient unallocated volume available in each of the timber supply areas? When the government does address the issues with the woodlots that have been going on for the last four years and will continue to go on — which is what the minister said in estimates — for some time yet to come, will there actually be the volume available in the various timber supply areas to double the woodlot program?

Hon. R. Coleman: The comment the member made about everybody at the beginning saying FRAs would be a failure is, frankly, not true. So let's get that out of the way. We have first nations today that signed right away in 2003 and are now talking about the next five years because they've had success on the land base.

The member can couch comments, but to just say something that's patently not true is frustrating to me as a minister because it isn't true. Everybody didn't say they would fail. Everybody didn't say they wouldn't work. Everybody didn't say this. The member can couch that, but it's just not true.

The fact of the matter is that a number of these things have had great success, and we've got a number of success stories in FROs and FRAs. The other thing he said is that we had to change FRAs to FROs. Maybe the member would like to do a little homework with regards to FRO versus FRA and find out that as the new relationship came through, the First Nations Leadership Council said: "We would like to see some more compatible language with our values in FRAs, and we would like them to be renamed as FROs."

So we did that accommodation. It wasn't because the FRAs weren't working for a number of first nations. It was because they wanted additional language in there that would be more respectful of the relationship they wanted to build with government and with communities. I know that because I processed that change to FRO from FRA, hon. Member. So to make that statement is patently incorrect.

He can get up and say, "You're wrong, Minister," and I can accept that. I just know what the background was, and I know because I was there at the time. I know exactly what the discussions were with the First Nations Leadership Council because I was there.

Now to the member's second question. There are areas of the province where we will not be able to double the woodlot program. The land base is changing, particularly in the mountain pine beetle area, where a long-term tenure may not be the answer when we have the falldown and loss of the value of the fibre as quickly as we have.

You can sit down with some woodlot operators in the interior who will tell you that in the last couple of years basically the woodlot value has disappeared. They don't have a long-term opportunity on the land, because it's dying.

We do not have the capacity today in some areas of the province to double the woodlot program, and that's just the way it is. There's not much we can do about that. There are some places where we do have the volumes.

As I said yesterday to the member, as I looked at the two programs — woodlots and community forests — as the minister, I took into account the benefit of community forests versus woodlots and thought that it would be better for small communities like McBride to have an opportunity and a stable environment in their community forest when it actually helps 2,000 or 3,000 people versus just the woodlot operator. So I shifted the priority to concentrate on community forests. Another six or seven new community forests were created last year. There are about 30 now that have come in that have been invited to apply.

I know the member's next statement is going to be that the volumes are too small. Maybe he should talk to the community of Dunster and find out just how excited they are that they might get 15,000 cubic metres in a woodlot and what difference it would make to that very small rural community in that valley.

I think that the woodlots have some other technical things they need to work out with regards to how they do their planning and how we can find efficiencies for their costs. We're working with them through that.

We still have wood set aside for woodlots. We want to structure that properly as we come through it, but there are areas where we won't have the volume to double the woodlot program because of changes to the landscape and because of priorities.

B. Simpson: It's a good thing this isn't question period. In question period I'm always at the disadvantage of the minister getting the last word. Again, I never said everybody. I said first nations. That doesn't mean everybody.

There were a lot of first nations communities that challenged the FRAs to begin with. And if the minister's recollection is strong, he'll remember that they were challenged in court in the Huu-ay-aht case, in which the court deemed them unconstitutional.

It wasn't a matter of respectful language to the new relationship. It was a court finding that they were unconstitutional in the structure, in the arrangement, in the cash payout. That was one of the things that drove the Union of B.C. Indian Chiefs to call them into question and send a resolution to the minister saying that they had to be changed, independent of the new relationship.

Again, I did not claim that everybody was against them. I said that first nations — a number of first nations communities in particular, some even going to court — and certainly the Union of B.C. Indian Chiefs all said from the very outset that they were structured wrong and that they would not work for first nations. The fact that a few communities have benefited from it doesn't detract from that.

The minister's raised the issue; let's get to it, then. There have been a number of FRAs, FROs that have been issued. How many of the first nations have an FRA or an FRO? Not the volume. What's the exact number of the first nations that actually have brought volume into the marketplace, that have actually accessed their volume? What's the number?

Hon. R. Coleman: We don't have that information in front of us. We will try and get it for the member. I'm not going to get into the debate. Frankly, the member's description of the court case and its findings is nowhere near the description of the complexity of what the case actually dealt with and what came out of it.

If he wants to be a constitutional lawyer, maybe he can enter that debate with the Attorney General. There's not much point entering into it with me. I don't think he's a lawyer, and I know that I'm not. I know I'm not a constitutional expert, and I do know that the summary of that case was not just based on unconstitutionality.

We will get you the numbers. You will find, though, that since there's been a rapid uptake in FROs in the last 12 months, they're just getting them. There were a number that were signed back in 2002 and then

2003 right through to 2006-2007. We will find out. We'll see if we can get the numbers for the member of how many of them are actually logging on their tenures.

I think that was the question. I don't think he asked me to determine the actual volume on every one of those, which would be, frankly, unnecessary work for my staff. We will get him how many are logging, how many are in the process and what stages some of them might be at.

B. Simpson: I look forward to that. Does the minister, through his staff, have a gut feel for that, percentagewise? They've been out there since 2002, as the minister has indicated. There have been a number of first nations that have had access to them. Some of them are going to be coming up for renewal.

Let me ask two questions. If the minister has a kind of gut level, based on the staff, of a percentage of the first nations communities — and the minister has got it right — that are actually logging the volume allocated, then the second question that I would ask is: is there a possibility that these end up in some cases, if not in fact quite a few of the cases, where they will come up to their renewal period without having been logged at all?

L. Krog: Joining us in the gallery today from Pauline Haarer, a school in Nanaimo, are a number of grades 5 to 7 students, accompanied by one of their teachers, Lynne Stafford, and some other adults, I'm sure. I would ask the House to please make them welcome.

Hon. R. Coleman: I won't speculate to the member. I don't do that. I will see what information we have to get to him, and we will get it to him.

B. Simpson: Going back to the woodlots, has the minister done an appraisal of what districts or timber supply areas will not be able to meet the stated objective of doubling the woodlot program? Has that appraisal been done?

Hon. R. Coleman: The appraisal and assessment on the amount of fibre available in both community forests and woodlots has basically been done. There is something coming to me for my decision. It may actually be in cycle right now, but I do know it's coming. I will make the determination at that time.

B. Simpson: In the case of woodlots, one of the issues, of course, is whether…. They're area-based tenures; they're not volume-based tenures. Has the area appraisal been done? There are some areas where they're not in the forest health issue. There may be available volume, but the question is: is there an appropriate area for a woodlot? Has the area assessment been done in areas where the doubling may be able to take place? Has the area been evaluated?

Hon. R. Coleman: We have both areas and volumes identified in areas around the province that would come as part of that decision to the minister. At that time, I will take into balance both the woodlot and the community forest programs to make the decisions that need to be done.

B. Simpson: Is it the intent of the minister, then, to communicate that out to the two associations that are involved in this?

N. Simons: It gives me great pleasure to have the opportunity to ask a few questions. Just so the hon. minister knows, my background is not in forestry, so some of my questions might need a little explanation in the answers, unlike my hon. colleague to my right.

First of all, I'd like to ask a couple of questions about community forests. My understanding is that anything under an annual allowable cut of 50,000 cubic metres is not financially viable at the current stumpage rates. This is probably open to interpretation, but most community forests are under that amount. I'm wondering if there's an explanation on what approach the government might have to address that particular problem.

Hon. R. Coleman: First of all, it's not correct that 50,000 cubic metres is the required amount. What you'll find is that we have community forests as small as 8,000 cubic metres that are actually viable for those communities because of the partnerships they work with — the licensee, or whatever the case may be. It really comes down to how they manage them and how they build their partnerships.

In addition to that, community forest pricing is such that the community forests are very pleased with how things are operating for them today. It was a very good initiative on behalf of government to work with community forests on that.

We have volumes that are going out now where people are quite excited to get as low as 10,000 or 15,000 cubic metres. I think the member for Nelson-Creston actually thanked me for one that was over in the Nakusp or Slocan area, and it was somewhere around 8,000 cubic metres. It depends. In some areas they're tough to be viable because of the downfall like the mountain pine beetle, where they wouldn't normally…. You know, there's just so much volume out there. In some areas the terrain, the distance to markets and those things have an effect as well.

For the most part, it's not a volume that makes them viable. It's actually whatever business relationships they build and how they manage them.

N. Simons: My understanding is also that there was a stumpage break that was given to community forests in the past, and that changed under the softwood lumber agreement. I'm not sure what changed and what might have changed since the end of last year. How has that affected community forests, and what measures are taken to address it?

Hon. R. Coleman: There was no break, first of all. We did recognize that they were log sellers selling into the market, so we simplified their approach and their administration so that they didn't have to have the same costs, maybe, because we have simplified how they could do things. That was taken into account.

N. Simons: So it simplified the process and was cheaper because of the process being simpler. Did that change, and is that something that needs to be addressed?

Hon. R. Coleman: We've continued for the existing cutting permits. That didn't change. We're consulting with the association on pricing and efficiencies going forward, and we're working to a final solution with that for them. They're pretty comfortable with the process that we're going through with them. The last time I saw some guys from Community Forest, they were comfortable with the fact that we've got a commitment to them to make this thing work and have a long-term stable environment rather than having to go back and forth as has happened over the last number of years.

B. Simpson: I'm actually going to jump in here. The member still has some more questions. The minister couched it as "no break." Didn't they give the community forests a percentage of the tabular rate?

Hon. R. Coleman: Yeah, they did get a percentage of tabular. We recognize that community forests are unique from the standpoint of the benefit they bring to communities and of the number of people they actually help in communities.

We took into account that they were log sellers and that we could streamline their efficiencies, which basically reduced our costs to the point that we could look at a percentage of tabular rate for them. Then, basically, also recognizing the benefits that these particular things bring to communities, where they actually bring stuff back into the community…. There have been cases where there have been community centres built and that sort of stuff as a result of the money made on community forests, so there's an overall global benefit to the community as well.

The community forest is very unique in that it is something that benefits a large number of people, and by building efficiencies in with the organization, we're able to give them a percentage of the tabular rate.

B. Simpson: Before I get misquoted, we're very much in favour of community forests. We would like to see a lot more of them. In fact, what the minister is talking about with respect to the benefits of community forests…. I canvassed the minister yesterday about why communities were not involved in the coast's restructuring, explicitly because I believe that they would stand up and say that what we — not the minister — need to do on the coast is to actually give more community forests a greater portion of the land base.

The minister's response was that he's not going to go around willy-nilly giving away areas of the land base for communities. So there's a bit of a disconnect between what the minister is saying about community forests today and what he said yesterday.

My question to the minister is this, because language is very important. Part of the issue here is that as far as I understand anyway, there weren't any efficiencies or whatnot. It was a brass tacks negotiation, where in order to keep community forests afloat the stumpage rate was X and they got, I believe, 25 percent. It was all they had to pay.

What was the percentage of the tabular rate that the community forests had to pay? The tabular rate, for those who read Hansard or are watching, is the rate that everybody else would have to pay for stumpage. What was the rate the community forests had to pay? I don't know of other efficiencies or streamlining. They just got a break in stumpage, which the minister said, in answer to the other member's question, they didn't get. What is the break that they actually did get?

Hon. R. Coleman: When we were talking yesterday, and this is where the confusion would come, I didn't take it that the member was opposed to community forests. At that time I thought the member was suggesting that we give large tenures to communities — like take large blocks of Vancouver Island and say: "Here they are. You manage the tenure for all the licensees." That's how I took that conversation, so if that's been mistaken, I apologize.

We had five new community forests issued last year. Over the past years we provided new opportunities to apply for community forests to 30 communities, including some first nations communities. Just so the member knows, on the coast that includes Ucluelet, Port Alberni, Bella Coola, Masset on the Queen Charlotte Islands, the Haida, the Sliammon, of course. Different other areas of Vancouver Island and the coast have had invitations to apply. Then there are a number of them on the coast that have community forests already.

We're not giving people a break. What we're doing here is that we allow a table rate in the interior of 15 percent to table and 30 percent on the coast. Most licensees are on a full appraisal system process in B.C. By going to this type of thing, it really lowers the costs and reduces the overheads for us to operate community forests, from a ministry perspective. We were able, therefore, to provide those rates.

B. Simpson: I guess I won't bother getting into the semantics, because 15 percent of the tabular rate or whatever would be a break to most people.

How long does that tabular rate go? How long will that go? The issue wasn't so much Ministry of Forests efficiencies; the issue was viability of the community forests. That's why we went to a percentage of the tabular rate. That's why they got that break. How long will that go, and what planning is being done to actually put in the efficiencies that the minister is suggesting are already there or to change the volume or do whatever needs to be done to make sure that those community forests are viable whenever this break comes off?

Hon. R. Coleman: It exists right now. It will continue, I guess, basically indefinitely on the cutting permits that are out there. We're working with the organization to find a long-term pricing solution for them and whatever other efficiencies they want to look for.

On community forests, though, if the member wants, I could actually arrange for a more detailed briefing that might be more helpful than this discussion. There are a lot of nuances, briefing notes and stuff that we could probably share with the member.

B. Simpson: I would actually love a briefing on some of these comments. I have to say — and I'm going to state it on the record — that over the last number of months, particularly last year, I asked for briefings on things, and they did not come. They did not happen, and they weren't scheduled. I've also asked for information from various agencies and groups that work with the Ministry of Forests, and the response I get back is: "Please put this response through the minister's office."

I'm very happy to not bring a lot of these discussions into the estimates debate if in fact when I do ask for a briefing from the minister's office, I get it in a timely fashion. I'm very happy to go down that path and do this in that fashion. If the minister is willing to commit today that I get a free flow of information on this file, that I'm free to go and talk to people…. The deal that we had struck before was that as long as I copied the minister's ministerial assistant, the ministry could engage me in conversations. If I ask for a briefing on a topic and I get it in a timely fashion, I don't have any problems with that — if I get that commitment.

Hon. R. Coleman: I'll check on some of those comments when I get a break at noon.

What I'm saying is that if the member would like a detailed visit on community forests, I'm happy to provide that. So if the member wants that, we can arrange that post-estimates, I guess, because we're both going to be in here for a while. After that I don't see any reason why we can't, in a fairly timely manner, arrange that briefing.

N. Simons: Can I be invited? That wasn't my question. Maybe you can roll it into the answer to my next question. That sounds like an interesting opportunity. I'm not going to say anything about needing a debriefing afterwards.

My question, to carry on about community forests. I've heard rumours…. People have talked to me about this possibility that the ministry's considering somehow privatizing the timber from community forests to get it through the softwood lumber deal. I'm just wondering if there is any discussion or any talk about that. I mean, I don't usually bring rumours to the House.

Hon. R. Coleman: I was trying to think of a glib comment I could make with regard to inviting the member for Powell River–Sunshine Coast to the briefing, but I guess we could probably let you come.

I do know, Member — nothing to do with softwood or anything — that at times in meetings with staff, communities have sort of brought up things like, "Could we have our community forests similar to the endowment lands at UBC?" — or stuff like that. There's nothing in the works right now to deal with that, but in fairness to your comment, that would be the type of rumour you might hear from people. They will bring ideas to us, and then they'll say: "Jeez, this is a good idea, and we think the government will go for it."

In actual fact, it's not really down a road far enough to have any process attached to it. It's just somebody who has an idea. That happens a lot. It doesn't matter whether it's in forestry or any other ministry of government. In every ministry I've been in, there have been lots of rumours about what somebody might or might not do, but it isn't something that's in discussion.

N. Simons: I like the idea of community forests because of the benefits they can potentially bring to the community in a number of ways. What's been brought to my attention is that the marketing for community forest product is…. Basically, it's sold in the same market structure as industrial wood.

I'm just wondering. It seems to me that the benefits that are accrued from the promotion of small-scale, forest-based industries are hampered by the fact that community forests have to compete exactly the same way as any other harvester, as far as I know. I'm just wondering if the minister can explain if there are other ways of increasing the benefits to the communities.

Hon. R. Coleman: There's a lot of flexibility here, actually. Some communities choose to sell their logs directly to a manufacturer. Others will use a log broker. Others actually don't necessarily manage it for much of a forest operation but for other values in the forest that they see. Each community is actually a bit different.

They have a lot of flexibility to do what they wish with their community forests. Some of them actually manage it for water as much as they do for the fibre supply because a number of community forests are managed in community watersheds. They set those values and their goals with regard to their community forests. We work with them on all of that.

Of course, we also work with the provincial Community Forest Association on issues, and they may come to us from time to time and ask for us to look at efficiencies, marketing opportunities or whatever the case may be. It wouldn't be unusual for us, if they came with a marketing or business proposal, that we would help fund it to help the association build capacity with their membership or opportunities for them.

N. Simons: Just in the interest of time and entertainment value, I thought I would go through my final points, sort of as rhetorical questions that may elicit a response. I hope so, anyway.

I understand that community forests are expected to end up promoting the secondary and local value-added industries. I'm not saying this is policy or whatever, but some people suggest it would be common sense to reduce or eliminate stumpage for community forests, with the stipulations that they brand their wood as community forest wood somehow and that they only sell their wood to local or provincial markets.

As the minister likes to say, as we move forward we look for other flexibilities and such. The continuation of that thought would be that the wood products from community forests would be exported but not wood products that are on the commodity list of the softwood lumber agreement.

Anyway, my thought would be that this would accomplish a few things. It would promote the value-added market — I'm not sure; this is not my area of expertise, as the minister well knows — and it would be giving a tax break for doing this. I would suspect this is what we want to do in our communities anyway.

The second thing it would do is that it would probably, I'm told, deal with the issues of the softwood lumber agreement adequately. The third is that it would open up a number of other opportunities for increasing the community involvement, and it would probably encourage the local control or management of forests faster and move it along.

Hon. R. Coleman: No idea is a bad idea, first of all. You know, some of the ideas the member mentions are the type of thing we hope…. We actually help fund the Community Forest Association. That's why we have dialogue: to try and come up with ideas. The one thing we'll never compromise is environmental standards, no matter how we do it, and those sorts of things — practices. But if a community forest association has ideas like this, I mean, there's an ear for it, quite frankly.

I wouldn't necessarily tie the idea into the trade agreement, though, because in actual fact it can work either way. It's a question of whether they want to….We give them the opportunity. They get to direct the fibre. They can decide whether they want to be a market logger or to direct that fibre.

For instance, I know that in one community it goes into a forest products operation. The community has some value-added plus some other manufacturing. The community has done very well in their partnership with the particular operator in the community. They've actually managed to develop some other smaller niche markets, like some log-home stuff, because of the way they'll take a little extra time to maybe sort the log versus what a larger yard might do — that sort of thing.

I'm a big fan of the community forests. As a minister, I think that there are more opportunities to come with them as we build capacity with them. I think it's a good exercise to have a good provincial and regional organization that has a relationship with us and communities and they come in and share these ideas. Out of those people do come ideas, and they will actually see how somebody's made one opportunity work for their community versus another.

That's the important part of that aspect of the community forest, I think: that whole provincial relationship among the participants and the sharing of information that they have. They have got some very innovative people involved in community forests in B.C. They also have some real champions too — some people that really champion the value of these things in their communities. When they do that, they are great messengers for communities, and they are also great partners for us to work with.

I wouldn't discount any of your ideas with regards to that. I would certainly say, if you have a couple of community forests in your riding, and I think you do, that you talk to whoever is responsible for that or a member of the association and encourage them to bring those ideas forward to the association, which would then come forward to us.

B. Simpson: One of those champions, of course, as the minister knows, is Robin Hood, a man who actually sometimes would make the minister look like a small person. Robin and I have spent a lot of time around Likely community forest, which of course is one of the shining lights. I thoroughly enjoy the opportunity to go to their AGMs because most of the community shows up and celebrates what that community forest is doing.

Again, I believe both sides of the House want to see success here, and the questions we're asking are more structural and policy-related than anything to do with whether or not we want community forests. We would like to see them progress.

Back to the point that I want to make in the whole theme of this part of estimates, around the area of revitalization strategy. Just a reminder that four years ago…. What we've found so far is half a billion dollars to take back 20 percent of the land base and get it back out in order to…. Explicitly, the target was to get a free flow of logs into the marketplace. In fact, the document itself says:

The intent was to grow a value-added sector. The intent was to get more players into the market and to give more players access over the land base. As we've seen in the discussions, that intent hasn't really been realized. There are structural problems with the way the first nations get access; structural problems with the woodlots so that they won't be doubled for quite some time if at all; structural problems, as we've just explored, with the community forests.

Those are works-in-progress, but it has been four years, and it was a very expensive enterprise to try to get to where we're at now. As we'll look at this afternoon, B.C. Timber Sales, which is now going to be one of the largest licensees in the province — and we'll explore that this afternoon — is having its own structural problems, both in getting volume out and in how its goals and objectives are set by government.

The explicit side of this was to get new entrants into the marketplace, and it states in the revitalization strategy that the intent was to achieve a competitive, more dynamic value-added industry. What is the minister's sense of over the last four years? Have we created a competitive, dynamic value-added industry in the province?

Hon. R. Coleman: There's been growth in some and shrinkage in others, depending on markets. We've obviously dealt with the entry of China into the marketplace, as the member knows, with some other competitive advantages that they have, particularly in the cost of labour. That's why we put first mill and a high-value cap in the softwood lumber deal. I know we're not going to get into a debate on that again, and the member and I know what the agreements and disagreements are on that.

We're working with B.C. Wood to more aggressively provide sector support and some marketing efforts with regards to it. FII is doing some things on value-added in other jurisdictions. Of course, as we come through some of the things we're working on, we're actually planning on applying some rigour to some of the things to deal with the value-added sector.

I must say this about the sector. I was recently at the B.C. Wood awards. It's really remarkable, actually, some of the products we make out of wood in British Columbia. That's why I want to more aggressively support the sector through B.C. Wood and that, because there's such a variety.

I have a number of people in the Fraser Valley who have gone into the industry in the last few years who are door manufacturers and floor manufacturers. The quality of the stuff they make is absolutely amazing. I look at it and — I'm sure the member is the same — whether it be high-value or whether it be even just a mill, I'm always amazed at how man comes up with these technologies and develops products.

It's just absolutely incredible how humanity is so brilliant on some of this stuff. I wish I had some of those talents from an engineering perspective or the ability to see something and do that. I don't have that. I can build things out of wood, but I couldn't tell you how to set up a mill or come up with the idea.

B.C. Wood tells me that there are more entries in their organization, that they are very bullish on the value-added sector. They are going to be working with us and with the value-added sector as we come forward to aggressively apply sector support to this in a number of ways as we come through the processes that I'm involved in right now.

B. Simpson: On many of those points the minister and I agree. It is an area of great ingenuity. In fact, one of the silent areas of the forest sector, which doesn't take enough credit, is the people who do the technology and who find ways to manufacture and to change the technology.

I saw a report one time that looked at the value of that sector, and it's huge. When I did the mill build in Pensacola, Florida, it was all B.C. technology that was going into that mill. It's a major component of the sector, and we underestimate its contribution, I think.

The issue here, I'm being told, is not ingenuity. We have that. The issue is not the ability to get into the market. We have that. The issue, I'm being told, is that they can't get logs. They can't get access to the fibre. Remanners, because they've had to give up their tenure, can't get access to fibre because they don't have the leverage anymore.

My question is just straightforward: is the minister being told by this sector that log supply, log shortage and fibre shortage for remanners have become critical issues for the value-added sector and the remanufacturing sector in the province?

Hon. R. Coleman: We had a study done by UBC. Just for the member's edification, the top issue for the value-added sector was skilled labour, followed by access to capital, marketing skills, technology transfer, and then it was access to certain types of fibre.

I do know, and the member would know this too, that even when I was in opposition — which was a lifetime ago, actually about six-plus years ago now — when we travelled around, the value-added sector always had a concern that they couldn't get somebody to sort the log out of the pile that was the fibre they were looking for, even back then.

That's something we're continuing to work on — looking at how we also do some of the other little awards that we can do — and that's why some of the legislation stuff that we've done.

I think I'll leave it at that. I notice we have company. Noting the time, Madam Chair, I move that the committee rise, report progress and seek leave to sit again.

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

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

ESTIMATES: MINISTRY OF
ADVANCED EDUCATION
AND MINISTER RESPONSIBLE FOR
RESEARCH AND TECHNOLOGY
(continued)

R. Fleming: Yesterday afternoon the minister and I were discussing issues around student financial assistance — the overall performance of British Columbia within the Canadian post-secondary context. I'd like to continue with that this morning and ask how the budget estimates will advance some of the stated goals of the government, how the funding will break down in terms of student financial assistance to advance students into institutions and how we're performing.

I think we'll get back to the Auditor General's report on the 25,000-by-2010 spaces initiative, but I wanted to start with some questions around what we touched on yesterday, which was high school graduates transitioning to advanced education.

I know that for the past number of years, B.C. has only advanced below 20 percent of its graduates to advanced education, to public universities. I'm wondering if the minister can reconcile that, describe the actions being taken by the ministry to improve that, in light of the comments he has made here and elsewhere about the needs of the labour market and the projections in the future for people with post-secondary education.

Hon. M. Coell: Actually, that's a good question. Historically, what we find is that after grade 12 about 51 percent of the population move into post-secondary education. The next year of that cohort another 11 percent show up somewhere in the system, and the year after that about 5 percent. So you're looking at just shy of 70 percent showing up into some form of post-secondary education or another — which, to be perfectly blunt, isn't good enough for British Columbia. We can do better.

What we've done, and tried to do, with the 25,000 seats is spread them regionally and spread them through colleges, institutes and universities so that there are more open spaces. I've been working with the Ministry of Education as well to try and target the ability of people to move into apprenticeship training while they're in grade 12 so it helps, mostly, young men to stay in school. So we can do those sorts of things. We're looking at a number of pilot projects throughout the province on that as well, through Economic Development, Education and Advanced Education.

I guess the other thing, too, is making education relevant to those kids who might not find it relevant. We've added another 100-plus degrees in the system in the last five years and are continuing to do that to allow students more opportunities.

I think one of the things that we've done and that we've seen some success in is keeping more aboriginal students in school, and then more aboriginal students staying and moving on into post-secondary education. That's a slow process, but it is working. Again, that's making some of the courses relevant to first nations students and making sure that they feel comfortable on campuses. So we have got a whole range of programs for aboriginal and first nations youth to make campuses comfortable for them, make them want to stay on campus and, indeed, finish their programs and degrees as well.

It's a multifaceted problem when you look historically. We were talking last night about B.C. not having the number or the percentage of students going to college. I know it's one that previous governments have tackled and one we're tackling as well. I think we're starting to make some headway on that — in the last few years, in any event.

R. Fleming: Thanks for the answer. I cited a statistic of high school students going to university. I think the number you gave back to me was students going to any form of post-secondary education. So can the minister make the numbers that he has available to him about transition from the K-to-12 system to advanced education?

Hon. M. Coell: They are actually on our website, but I can get you a copy of them. I've got them right in front of me.

R. Fleming: Just in terms of collaborating and where these statistics come from, is it something that is done jointly by the Ministry of Education and the Ministry of Advanced Education? Maybe I'll start there.

Hon. M. Coell: Yes it is. It's the data-sharing program that we've embarked on. The only flaw I would see in it is that it doesn't track students who leave and go to other provinces. There would be a small percentage of people who go to trade school or university in different provinces or even in different countries, and we haven't been able to track those at this point.

R. Fleming: Well, the minister has talked on a number of occasions, and in his opening remarks as well, about B.C.'s historically poor post-secondary completion rates. I know that one of the government's great performance measures for the golden goals, for the great goals — I'm sorry; I've got my slogan wrong here — deals with post-secondary completion. There is a performance measure within this ministry, and it has been established as a baseline in 2004, which confirms that British Columbia was indeed below the Canadian average.

The subsequent year we have for monitoring post-secondary completion is 2006, I think, and instead of B.C. making progress to the performance goal — which is to exceed the Canadian average — the gap has actually been widened. Canada's participation rate has increased and B.C.'s has, nominally. I wonder if the minister can comment about his ministry and the performance there — that the gap with the rest of Canada is actually becoming greater.

Hon. M. Coell: It's an interesting question because — as we were talking about last night — there are so many variables that account for this. I think what we want to do is set the goals to move ourselves ahead. We find that we're having more students work part-time and go to school part-time — older students as well.

We also have the same problem as Alberta. We have economies where there is basically zero unemployment, so if someone wants a job that's paying well, it's easy to get one. Historically, that creates a problem for colleges and universities and institutes, but I can assure the member that what we're trying to do is improve our lot in life, so to speak, when it comes to the percentage of students who leave high school, go on to post-secondary education, and those that complete. I think that both he and I have had the experience of going to university and seeing a lot of people come in and spend…. I think they lose upwards of, in some instances, 30 percent in the first year of people who just aren't comfortable or who decide that it is not what they want to do.

As I was saying earlier, one of the things we're trying to do is expand the programming, expand the number of bachelor's degrees and the variety of programs offered at colleges and universities, to give people that opportunity to stay and to find something they like and to finish. But it's clearly a historical problem for B.C., one that we feel we can tackle. We've started to put the building blocks in place to achieve those goals.

R. Fleming: Well, I think the answer didn't clearly acknowledge that we're slipping. But what are the consequences? You have these performance measures in your ministry. What are the consequences of falling further behind, which we're doing right now in terms of post-secondary completion rates? The gap is growing with the rest of Canada. What are the consequences for your ministry? I think I know what they are for the economic well-being and social well-being of the province over time. But in the immediate sense, what does it mean for the minister and his ministry?

Hon. M. Coell: I'm smiling to myself, because it means I failed if we don't move forward on these items. That's something that as a ministry you don't want to do. I think that from the perspective of British Columbia, with an extremely hot economy, we have to expect that there are going to be some people who take advantage of that. I think that one of the things that we have to do to combat that in a sense is to make sure that what our institutions and colleges and universities are producing for students is of interest to them.

We've seen a great deal — not necessarily in this ministry — of apprenticeships expanding rapidly in the province. That's an opportunity for post-secondary education as well. So I think that we have to make sure that the opportunities are there with new degrees, new apprenticeship programs, new seats, new graduate seats.

I think, too, that one of the things that the Ministry of Education and the Ministry of Advanced Education launched last month was a program called Perspectives. What it is, is a planning 10 tool for students who are in grades 10 and 11 and are thinking about what they're going to do with the rest of their lives. They've asked a whole bunch of questions on what college is like, what trade school or university is like. Then we've gone out to universities, trade schools and colleges and had the students actually answer the grade 10s — everything from how much it is going to cost to if they will fit in, what their prospects are, what the opportunities are. Those are sometimes daunting for a grade 10 when they're thinking of planning the rest of their lives.

We've launched a whole bunch of these programs to try and get people interested in post-secondary education while they're in grades 10, 11 and 12, with the hope they stay in grade 10, finish grades 11 and 12 and then move on with the opportunities that we've given. I can get the member a copy of that whole package. It's in the schools now. All the planning 10 teachers and programs have it, and I'll get a copy of it for this afternoon.

R. Fleming: Maybe the minister could also provide…. I have some numbers around where British Columbia stacks up in terms of the amount of undergraduate degrees issued per capita. The last year for which I have that data is 2003, so I'm wondering if he has anything more current.

In 2003 B.C. only produced 69 percent of the Canadian average in undergraduate degrees granted per capita. Does the minister have numbers for that, and does he also have numbers for graduate degrees issued per capita? Again, for those in graduate studies that were completing for the year 2003, we were only 84 percent of the Canadian average.

Hon. M. Coell: There is one, I guess, flaw in those statistics in that they don't count our university colleges in British Columbia. They just count universities to universities. So when you add in that, it does make a difference.

But we're not where we want to be. That's why we developed the university college. The Thompson Rivers University went from a university college to a university. That's why we did the UBC Okanagan and UNBC expansion up there. It's to provide opportunities. Then, with the strategic investment plan of 25,000 seats…. To plunk those in regionally will help. I think if we hadn't done that, you would have seen us not move ahead. I think you're going to see us move ahead with the infrastructure that we've put in place.

The other one, and I think probably the first thing that came onto my agenda when I was given this opportunity to be minister, was the graduate student association at UBC and other graduate student associations saying that we needed to put more money in and more seats available for graduate students.

We've done that by adding another 2,500 seats for graduate students in the province. Then there will be a whole series of scholarships and bursaries and internships that go with that, as well, so that will encourage people to stay here.

We have great graduate schools in B.C. Some of them are going to expand and even become better. But I think that's the crux of…. How do you want to expand the opportunities? Well, you've got to expand regionally. So we've done that with the three new universities. We've done that with the 25,000 new seats, the 2,500 new graduate seats, and then the expansion of the types of bachelor's degrees and the types and increase in the number and quality of the programs at the graduate level.

I think what we've done is laid the groundwork in the last few years for really quite significant growth and potential for the next decade or so.

R. Fleming: Okay. I want to maybe build on that answer and just ask about the university college system, because the minister raised it in his response there. I think we'll get into this more on an institution-by-institution basis. But overall there has been an enrolment drop in the university colleges and colleges outside of the lower mainland and I suppose southern Vancouver Island, although that…. There is some concern at Camosun College as well.

It's been suggested in the Auditor General's report on the space initiative — and it's been suggested elsewhere, particularly by students and their families around B.C. — that with the rapid increase in tuition fees under this government's mandate, it is more difficult for less affluent families in rural areas. I think the government used to call it the heartlands. This is where we're seeing student enrolment dropping most drastically at university colleges and colleges.

Their inability to afford those fees, it's been suggested, is one of the reasons for really quite a staggering drop in enrolment at some of those institutions. Has the ministry, in response to this emerging trend over the last number of years to declining enrolment in rural areas, conducted any studies to see what the major reasons are for this phenomenon?

Hon. M. Coell: I think there are probably three potential correlations. One would be using the back-end grant process, whether that's had any effect. We found that hasn't had a major effect, whether there's a grant up front or one in the back, as yet. There may be. Tuition would be another one. But when you look….

I can give you a good example: the hot economy in an area where you have a mine. You have seen full employment in a mine and less students in a college or a region. Or in the northeast in the oil areas, as well, you've seen a decrease in college participation and an increase in employment.

One of the things that we have done to counteract that is we've invested $2 million in a mining program at Northwest College. That will hopefully attract some of the people who might be working into getting a better paying job in the mine if they have some training.

I think we have to be pretty flexible at what we do. When you find an area where you've got an institution that may be down 15 percent, but the unemployment has gone from being 15 percent to 5 percent, we know exactly where the students are. They're working.

We have to make our college system in rural areas relevant for them to come back. If the economy slows down, historically they naturally do come back. But things like the mining program at Northwest are an attempt to do that, and we'll attempt to do that in other parts of the province as well.

R. Fleming: Part of my question was around whether the ministry has conducted research, and the minister started to answer by saying that he thinks there are correlations between declining enrolment and a whole bunch of variables.

In order to be precise and to have accurate information on why this trend is occurring and where it might stop and what policies government might craft to redress the issue, there's the need for research to know specifically what is going on with those students. To suggest that in certain areas a better-performing economy is the reason why people are not going to school….

He cited an example of mines. One would think that in some of those cases — construction, for example — it would drive an increase in demand for education.

I guess the question really is: is the minister conducting research specific to the declining enrolment phenomenon

in rural colleges, and does he have research that he can share with legislators?

Hon. M. Coell: I think that historically government has done that, and we're continuing to do it. One of the things, and why I said correlation, is that we can show correlations between employment and the number of students going to a college or tuition or grants or probably a variety of other things. It's hard to show cause, but you can show a correlation. We do have some information that I'll put together for the member and get it to him.

R. Fleming: On some student assistance initiatives that I presume the ministry has crafted in response to declining enrolment and other trends — lower participation rates by students coming from low- and middle-income backgrounds. I want to ask him about some of these programs that have been announced in recent weeks. Most of them were announced by the Premier.

Part of my question is: who's funding it? The Pacific leaders B.C. loan forgiveness program, was announced last month to help indebted students and workers specifically in the B.C. public service. I understand why this maybe was announced in terms of recruiting and retaining public service employees. I understand it is in the context where you're recruiting, perhaps, graduates who have paid high tuition fees and have high debt levels. We know B.C. is second in Canada for average debt upon graduation.

Is the minister's department going to be paying for the Premier's post-secondary loan debt program for the public service?

Hon. M. Coell: We will be administrating that, but it will be the Public Service Agency that funds it — basically, government as a whole.

One of the things we're finding as we do a human resources plan for the province is that we have a ton of people who are 50-ish. If you look at the retirement at 55 and 60, we're going to have a huge hole in government, as is the private sector. We want to make sure that we attract the best and the brightest to the province, and we feel we can do that by some incentives.

We think some of the debt reduction and some of the programs for children of people who work for the civil service, as well, will help — not to say that the private sector isn't doing similar programs.

I think that when this generation keeps moving through, you're going find that more and more companies as well as governments start to put incentives in place for the attraction of the brightest and best new employees and also the ability to keep an employee. Like some of the programs we've done in the ministry…. If someone stays with the government for four or five years, we'll pay off their entire student loan. It's just one way of attracting and keeping good employees.

R. Fleming: Okay, the program is funded by the Public Service Agency and administered by this ministry. Was the minister informed of the Premier's plan before the program was announced on March 27? It was only a couple of weeks ago.

R. Fleming: The Pacific leaders program, I know, is limited to the immediate public service, direct employees of government, but of course there are a variety of other sectors out there described as the public service that have a very difficult time attracting and retaining employees, where there are real labour needs.

There has been some correspondence that I have received — and the minister, I suspect, has too — around teachers in rural areas, specifically. Has that been contemplated in terms of incentivizing — the location? I know they're not among the professions that can access the debt reduction programs that currently exist.

Additionally, maybe the minister can tell me if there was any consideration to trying to use a program like this for the major urban centres to attract hospital caregivers. I ask that because often the caregiving professions pay a very small wage but require a length of study that is equivalent to other professions. I think it's the case in the south Island — and indeed in most parts of the province, especially urban areas — that there are tremendous difficulties attracting people to those kinds of health care, caregiving professions.

Hon. M. Coell: I don't disagree with the member. I think what we tried to do was to identify…. We identified physicians, nurses, midwives, nurse practitioners, pharmacists, physiotherapists, speech pathologists, occupational therapists and audiologists to start, because we found there were parts of the province that didn't have any. So we were attracting the one by having the debt basically a write-off.

I think one of the things we've been dealing with the Minister of Education on is that in some areas of the province there may be teachers with specialties, maybe in hearing or vision impairment, so we're considering having an expansion of the program to do debt reduction for them as well.

The idea of the Premier's announcement was that that's core government. Let's deal with core government first. We've sort of dealt with areas around the province where you have limited or, in some cases, no representation of a pharmacist or something like that. So we wanted to attract people to parts of the province or maybe to keep someone there who is thinking of moving as well.

It seems to be working. You know, it was slow to start. We had a few hundred people take us up on it in the first year, and it seems to be building. It helps, if you've got have a rural area. If you need a pharmacist and you keep a pharmacist, it's a great thing. I like the structure of the program. I think it works for the province.

I must admit, though, that when you look at nursing shortages in Vancouver, you can make a pretty good case for loan reduction to keep nurses in Vancouver. I guess the fact is that we just don't have enough nurses.

We're graduating more than we've ever graduated in B.C., and we'll continue to do that, but there are going to be labour shortages in different parts of the province that will need more than just debt reduction to keep people there. They'll need major incentives of different kinds as well.

R. Fleming: A part of the question that maybe I can ask again is around the caregiving professions in the health sector. This government announced that it was going to create 5,000 long-term care beds in 2001. By 2005 that didn't go so well. Subsequently they've become assisted living, but still you're talking about caregiving professions involved even at a greatly reduced level for that type of care.

When the government — I think they've put 2008 as the new target date, and I'm doubtful that it will be achieved — sometime in this decade or the next finally completes that target, it's been suggested that 4,000 caregiver-type professions will be needed. We're not attracting people to study that currently, and nobody knows how we'll meet that specific labour market need.

As I said earlier, this is not a lucrative profession, and it's one that's very vital to caring for our seniors in this province. Has there been consideration…? Has there been anything that's come across your desk from other ministries asking the Ministry of Advanced Education to use incentives so that the Ministry of Health, for example, can attract people that it desperately needs?

Hon. M. Coell: The two that come to mind are long-term care aides and early childhood educators — which are generally not highly paid and are year or ten-month courses, in some cases. Those are ones that we're looking at as well.

R. Fleming: I'm pleased to hear that it's being looked at because I think you have seen an exodus from that type of employment over the last several years. When wages were cut by 15 percent and more, it certainly led many people to reconsider their line of work, and I think it also discouraged a lot of people from getting into that field. I know that a number of colleges have seen enrolment declines in long-term care attendant programs.

Can the minister give any statistics that show that colleges are addressing that problem, or is it something that the ministry needs to take a lead on?

Hon. M. Coell: The enrolment is still moving ahead for the long-term care aides. What we've been doing is to work with the colleges to make sure that they've got the funds for capacity in their programs.

R. Fleming: Okay. We may return to that when it comes to a college-by-college analysis on enrolment trends.

I wanted to ask a question again that we started getting at yesterday, which is around tuition fees — now that the government is collecting almost a billion dollars from B.C. students in tuition fees at its many public institutions around the province.

We've seen some problems with the space expansion initiative related to tuition fees. We've seen the growth in average student debt for B.C. to become the second-highest in the country now, related to the doubling of tuition fees. Tuition fees are still increasing.

Has the minister considered…? Have there been any proposals to Treasury Board or otherwise to look at tuition fee relief for students? I know that we heard it from every corner of the province in the Standing Committee on Finance when it travelled last fall. It appears, from the outside, that it didn't resonate at all with this minister or with this government.

Hon. M. Coell: The commitment made by the government previous to the election was that we would hold tuition to the rate of inflation, which we've committed to do for this term. But one of the things we talked about last night was the amount of money that the 2-percent increase is, and the interesting thing is that they changed the number of students — the increase in students and the increase in part-time students. You have the increase across the board, which is really only $17 million a year, but there are actually more people involved to take it higher than that.

Our increase, the government's increase to the budget, is $125 million this year. We've got a new $125 million coming into the system from the taxpayer plus the capital program that we've got, and the increase in tuition from the general population would be $17 million.

R. Fleming: Yeah, $17 million out of $44 million of new tuition fee revenue — I understand that. That's a big chunk of the spending part of this budget. Again, though, the question really is around looking at policy options that are for consideration by this government.

Tuition fees have increased tremendously in B.C. — in fact, the most rapidly among any of the provinces in Canada over the past five years. It is creating problems. We've talked very briefly, and we will talk some more, about rural college enrolment being linked to the rise in tuition fees.

In terms of the Auditor General's report on the 25,000-spaces initiative, it's one of his key findings that just as the government was announcing a space expansion they basically sabotaged that effort by deterring and giving a disincentive to go to school — by increasing tuition fees by 30-odd percent every year for three years. Cumulatively, it went up over 100 percent.

Can the minister tell me whether discussion is occurring in the ministry to look at tuition fee relief for B.C. students?

Hon. M. Coell: I think that when you look at tuition fees and debt reduction and loan forgiveness…. This year we're writing off $77 million worth of student debt. That's a significant amount of money. I think that that far outweighs the 2-percent increase in tuition for money back in their pockets.

R. Fleming: On the tuition fees again, I think that really, the question for government is…. They now

have an independent view. They have the view of many ordinary British Columbians repeatedly, over a number of years, looking at the tuition fee question.

The government's policy…. I appreciate its commitment going into the last election, but the government's previous commitment to that was that tuition fees would not rise above the Canadian average in British Columbia. They are now almost 15 percent above the Canadian average, so B.C. students pay more than other Canadians just because they live here. That conflicts with what the government said was its policy goal several years ago.

The tuition fees have gone up that much. B.C. went from among the most affordable jurisdictions in Canada to among the most expensive and well above the Canadian average now. Surely, given that it conflicts with that earlier policy intent of the government, it has been examined by the minister.

Hon. M. Coell: I want to give the member an example because I don't think he understands, really, what a great program we've got with loan forgiveness. If you take the private universities out, we're at 7.6 percent above the Canadian average right now. That's a couple of hundred dollars. The loan forgiveness program will roll back their debt by $3,000 a year. I consider that a pretty good deal on a pretty good program.

R. Fleming: I think students who are aware that grants through years 1 and 4 were eliminated — it was worth many thousand dollars more per student on a four-year program — would consider that a very bad deal. I don't think there is much that's impressive about the takeup rate around the loan forgiveness program either.

Perhaps that's why the government keeps it — because it's cheap for them to do. The regulations around it exclude many students from accessing it when they complete their studies because they can't do it within the parameters. The minister has already talked about the rise of part-time studies in British Columbia, and that's part of it. We'll get to that a little later.

I want to talk around fees again, maybe moving to ancillary fees here. Last year in the estimates debate the minister committed to ensuring that ancillary fees are included in the tuition fee cap to close a loophole that was being used by institutions to avoid complying with the tuition fee cap.

Can the minister confirm that he is ensuring that no post-secondary institution is going to be out of compliance beyond the tuition fee cap through the use of rising ancillary fees?

Hon. M. Coell: I can let the member know that when the CFS brought a couple of instances to my attention, I dealt with them, and they were rolled back. To date I am not aware of any others that are out of line with the 2-percent policy.

R. Fleming: I'm looking at the policy, though, and one of the things that leads institutions to try this again and again is that ancillary fees are outside of the government's tuition fee cap policy. So there is no explicit direction to the administrations that it's a no-go area to try to achieve more revenue and subvert, really, the intent of the tuition fee cap by charging more in ancillary fees.

I think there is a caveat in the policy that post-secondary institutions are only encouraged to reflect the spirit of the tuition limit policy, as regards to mandatory fee increases. Rather than intervening on a case-by-case basis, would the minister consider changing this policy, giving more concrete and explicit directions to institutions that they are not to subvert the tuition fee cap by trying to increase ancillary fees?

Hon. M. Coell: I've directed staff to do that, and it is in process. The website actually should be changed very shortly.

R. Fleming: The ministry is doing a review of this, and they are contemplating including it in the tuition limit policy?

R. Fleming: I want to talk about tuition fees as they relate to adult basic education. In 2002-2003 the government deregulated tuition fees. We've just been talking about some of the impacts that had, broadly speaking, on post-secondary students in B.C.

This move, this deregulation in that year, allowed community colleges to charge tuition fees for the first time — since the '90s, anyway — for adult basic education courses. Previously they had been free of tuition, and that was by a specific policy of the previous government.

Does the minister recognize — in terms of the employment, labour market projections and all those things we've been talking about; in terms, frankly, of helping people get education to improve their life and get out of poverty — that we do need a fully accessible adult basic education system? Has he considered restoring the funding for programs and restoring, most importantly, the requirement for adult basic education that is free of tuition fee barriers?

Hon. M. Coell: I think one of the issues…. I've had, as I'm sure the member has, a number of people come to offer advice on this issue, and I've been pleased to get that advice. One of the things that we're looking into, and I mentioned it last night, was that some of the…. For example, at Thompson Rivers Open Learning they do charge. Northern Lights doesn't charge. Okanagan College doesn't charge. There are a number of them that don't; some that do. It's an inconsistent policy and one that I'm dealing with right now.

I think that for some sort of fairness for students throughout the province, we need a policy that's the same throughout the province, so I'm looking at that right now.

R. Fleming: What the minister has described is accurate. There is a complete patchwork of fees, and there is no consistency across British Columbia right now on adult basic education fees.

The minister says he is looking at it. I think this has been an ongoing concern for several years. Why is that? You had a brilliant opportunity in this budget to address this once and for all. I mean, looking at the fiscal position of the province is maybe just one aspect of an opportunity that was not chosen.

Can the minister be more specific? Is he recommending to government…? Can he fund, in this year, the elimination of adult basic education fees?

Hon. M. Coell: It's still under consideration. I think the important thing to know is that for those who haven't graduated, it's free throughout the province. The only small difference is that it's for people who left in grade 10 or 11. Some areas are free, and some aren't, so it's a small number of people. But I think it's an important policy to have consistency throughout the province.

R. Fleming: Well, making that distinction is almost meaningless. Adult basic education should be seen as a ladder to further education. We've already talked — and the minister talked in his opening remarks — about where the jobs of the future are going to be.

They're not going to be for people who complete a Dogwood certificate later on in their lives when they return to school and that's it. They are, hopefully, going to do that as a precursor to achieving another credential that is an area of need and will benefit the individual and is what society needs in terms of labour market skills that are in shortage.

What are needed are incentives in the reduction of barriers. Say you have your grade 12 but you need to have some course upgrades, or you didn't do courses needed for another career program when you were in high school. You're facing fees in the hundreds of dollars. I don't understand why the minister simply couldn't make it cleaner. The review has been underway for some time, as I understand from your remarks. Why can't it be done forthwith?

R. Fleming: The minister has reviewed it, as he said. Surely there is a cost estimate to doing this. Can you share that with the committee?

Hon. M. Coell: Yes, and I did last night. It was $4 million to level the playing field.

R. Fleming: I just want to go to the 25,000-spaces report. Again it's related to all the topics we've been discussing in terms of why it's so far behind schedule, the poor rollout and its relation to policy choices made by government that have transferred costs from society to the individual for advanced education. They have transferred debt levels to students in British Columbia, where we're the largest indebted student population in the country now — or second, I think, in Canada.

Around the 25,000 new student spaces by 2010. It was originally announced in 2004, so the schedule in that announcement was that the 25,000 spaces would be fulfilled in the 2009-2010 academic year. Is that commitment still on target for the 2009-2010 academic year?

Hon. M. Coell: By 2010 we will have funded the 25,000 seats. One of the things that the member mentioned that is worth maybe a little bit more discussion is student debt. Some years ago there was a cap — a federal cap and a provincial cap — on student debt, and there were a number of studies done at the federal level all across the province on what they called unmet need. The federal government increased the level of debt that students could borrow.

That's one of the big…. When you look at the increase in student debt, it was the increase in the availability of student debt. Students may have had that debt but outside of the federal and provincial funding formula. We don't know to what extent that was.

I think it was probably a good thing for the federal government and for us to increase the level of debt that someone could borrow so they didn't have to borrow at expensive rates or on charge cards. That's had a tremendous effect on the level of debt, and I think it's something worth considering or something worth more discussion.

R. Fleming: I couldn't agree more. It's worth more than discussion. I think it's worth action. I think the elimination of the B.C. student grant program is the culprit behind that rise in about $10,000 worth of debt average upon completion of a four-year program. This government has had several years to review the result of that policy and so far in this budget does very little to address that.

However, I didn't hear an answer in the last question around the completion target date for the 25,000-by-2010 spaces initiative. Is it on track for the 2009-2010 academic year?

Hon. M. Coell: Just to follow up on student debt. Over the next three years we will reduce student debt by $213 million, which is in our plan. So that's a significant back-end student grant, if the member wants to view it like that. It's not coming at the front end. It's coming when you complete one year or four years. I think $200 million–plus is a significant amount of money.

With regard to the 25,000 seats, we will have funded 25,000 seats by 2010. It's up to our partners to produce those seats. I believe they will. I think that we have added something to the mix in the 2,500 new graduate seats as well over the period of time.

They've definitely got their work cut out for them. To create funded seats is a difficult thing when you've got to build labs and you've got to build buildings on campuses. Both the member and I are graduates of UVic. You go up to UVic right now, and there are five cranes on the property, building buildings. Those are for the 25,000 new student seats. When you fly over UBC, there are probably ten cranes working at UBC, building buildings. Those are for the 25,000 and a chunk of the 2,500 graduate seats.

I think we have to allow the partners in this system the ability to fill those seats as quickly as they can. I believe they will.

R. Fleming: Okay. I guess what I was looking for was whether that 25,000 seats by 2010 has slipped a year — whether the ministry is now projecting it out to a further academic year in fact. This would be in response, I think, to the key finding of the Auditor General report, which was that at the date that snapshot was taken of where the government was at in its target, it was only at 54 percent of the target of where it should have been.

Anyone would acknowledge that there is a significant amount of work to do to meet that target, and my question is: is the government moving the goalpost? Is it moving the dates back to where it says: "Look; we have created 25,000 seats"?

Hon. M. Coell: As I said, we will have funded them by the end of the year 2010. The additional 2,500 graduate seats change the picture a little bit for some of the universities. I think they will get there. The Auditor General points out that it was slow to start, but he's confident we will get there as well.

R. Fleming: Well, I certainly hope there will be a follow-up audit to verify that.

There were a lot of comments in there about why the poor results have been observed to date. One of them is around policy choices that the government made that, in effect, sabotaged attracting new students and increasing spaces. The other, though, is really around the blurring of the funding. Now, I know most of the dollar commitment that this government makes — in fact, $4 out of $5 — is for capital.

The minister talked about cranes on campuses as an excuse for why there aren't more students. I remember, by the way, cranes on campus when I was studying in the 1990s. I was, indeed, a UVic student, and I remember a new engineering building and a new business building and a new teaching and learning centre and other buildings — a new sciences centre — being built on that campus. There was a greatly increasing enrolment at that time, so it wasn't a disincentive then.

I think one of the differences was that tuition fees were affordable back then, quite frankly. There were four years of grant programs so that everything that you borrowed, if you were from modest means…. There was immediate forgiveness, if you like. There was an offset, an incentive, to make school more affordable for low- and middle-income students. That's not there today.

So very little of the 25,000-spaces initiative funding is for operations. The Auditor General said very clearly in his discussion in that report that institutions, through the block funding model, which doesn't adjust appropriately for inflationary costs…. There are considerable costs within post-secondary. New-space money is being used to maintain the status quo. There are no additional seats coming. They're taking that money that's earmarked for new spaces simply to continue operations as they are. Can the minister comment on that finding?

Hon. M. Coell: I think the member knows that of the increases in an institution, the average institution in British Columbia, 75 percent of those are wages. We're covering 100 percent of that. We also have an increase in this year's budget of $125 million, so a significant amount of new money is going in — apart from the capital funding that is over and above that, and covering all the wage settlements.

When you look back through the history of British Columbia, I think this ministry has always done well. I don't think there's ever been a time where the system shut down and was flat. But I can tell you, through the Chair, that there are more students involved in this system now. There's more money in the system. There is more building in the system, and I think there is more optimism in the system than I've ever seen in my lifetime.

R. Fleming: In terms of the spending side, the operational side of increasing support for those new spaces…. I notice the minister repeatedly says that we will commit to fully funding those spaces. It doesn't actually translate into seats, so I think the part of the report that discusses how new spaces are counted is of particular interest here.

When it comes to resources for new spaces, can the minister confirm that in the 2007 budget and fiscal plan for the next three years, in this year only $8 million of the government's remaining $82 million allocated for the spaces project is to be spent in the coming year?

Hon. M. Coell: I'd have to ask the member to repeat the question. I just simply don't understand it.

R. Fleming: I think I'm looking at page 33 of the service plan. Sorry, that's the wrong page.

The question, though, is: in terms of the allocation and the rollout of funding for the new spaces over the three-year service plan, can the minister confirm the breakdown for the coming year and what percentage it is of the remaining dollars in this initiative?

Hon. M. Coell: The answer to that is: $41 million for new growth in this year's budget.

R. Fleming: And that's growth for specifically new spaces? Or does that include growth for, as he was alluding to earlier, inflationary costs, institutional operational costs plus new spaces?

Hon. M. Coell: The strategic investment plan portion of this year's budget is $41.1 million, and the negotiating framework is in the $40 million range as well. Grad seats are $7.5 million. On top of that are all of the capital costs that will be accrued this year as well.

R. Fleming: Last year in the three-year fiscal plan the government…. My understanding is that they proposed to spend $100 million in two years towards creating the 25,000 new students spaces. This year's fiscal plan proposes $82 million over three years. Can the minister confirm that?

Hon. M. Coell: On just the growth, it was approximately $40 million last year as well.

R. Fleming: Between last year's estimates and this year's, though, has there been a reduction in the amount allocated for, specifically, the new student spaces initiative allocation? And has the time horizon changed?

Hon. M. Coell: No, it hasn't changed. It's $40 million last year and $40 million this year.

R. Fleming: His annual service plan says — and I think it's a direct quote: "We will improve our competitiveness and productivity through education. We promise to create 25,000 student spaces by 2010, and we have already funded almost 12,000 of them."

Can the minister explain how this squares with what the Auditor General found in his December report: that your ministry had only created 7,400 spaces to date?

Hon. M. Coell: I guess the easy answer is 7,400; a year has gone by, so plus an additional 4,000 in this year brings you up to 12,000.

R. Fleming: Is there a disagreement in the ministry with the Auditor General and with some of the educational institutions about how one accurately counts spaces?

Hon. M. Coell: No, we have no problem with how he viewed us or how we were viewed by him.

R. Fleming: Can the minister explain the significance of referring to the 25,000-spaces initiative as a funding commitment, as opposed to earlier iterations where it was a commitment to create 25,000 new spaces? Is that a change in language and policy direction?

Hon. M. Coell: I guess the reason for the language is that we will fund them and build them. The students have to come. We can't force the students to come, but they will be there. They'll be funded. I'm very confident that more than that will come and show up.

R. Fleming: On the numbers again, is the ministry going to restate the current count? This was a recommendation in the Auditor General's report — page 44, I believe. It was advised that the base count be restated so that the actual versus funded seats is clearer, more transparent and easier to understand.

Hon. M. Coell: I think it's worth saying that we're at 97 percent of our funded capacity throughout the whole system. There are institutions that are creating more than they are being funded for. They might be running at 105 percent or 107 percent. There are some that are less than that, but overall, it's at 97 percent. We fund them. Those are the spaces.

We believe that's the best model to go. I think the problem with the Auditor General is that if there was a lag in one year, they wouldn't catch up. But if we say we're committed to funding them and we actually fund them and they build them, they will be there. I think the discrepancy would be quite small, probably, in any event. But I think we have a better model, and we just have to hold the institutions accountable for actually producing those seats.

R. Fleming: The point I want to get to with the minister is that governments have these silly habits of setting targets sometimes that are unreachable. I remember that the government famously said that it would reduce regulations by one-third in its first mandate, with no real….

R. Fleming: Forty percent. Well, I'm pleased that we added a very good one yesterday. The Solicitor General introduced one.

I want to ask about this 25,000 target, because there is a tendency to put a grandiose number out there, and it becomes unattainable. We've heard the audit findings in the case of this initiative to date. Realizing that the target may fall short, is there discussion already in the ministry about recounting or counting in a different way what new spaces are and how you measure their actual achievement?

Hon. M. Coell: We changed the way we counted FTEs about a year and a half ago. We did a technical briefing with the member's predecessor, and we'd be willing to do that with him. It's a very small amount. It's about 100 or 300 or something like that. I would be more than willing to put that briefing on.

What we wanted to do was make sure the whole system was counting the same way. Then we restated it, as well, in our three-year plan. I don't disagree with the member when he says that governments — plural, many governments — set targets. I think we have to set targets. You have to have a way of measuring whether you get to that target or not.

I think the easiest way is to set a dollar figure and have agreement with the institutions and colleges and

universities on what that is, and then we fund it. They have the expertise of supplying it. At the end of the day, we'll hold them accountable for what we've funded.

From my two years in this position, I can say that we have an excellent partnership and one of mutual respect. We seem to be getting what we want.

One of the things — and we may want to spend time discussing it — is some of the reallocation within institutions, where we would say that we want to take a few seats away from an institution and put them in another institution where they can use them so that you're not funding a seat that's empty. You're funding something that has got a student in it.

We have been able to work with all the institutions to make those changes. We made some last year and are making a few this year as well.

R. Fleming: I appreciate that comment, because I think what we've seen…. The suggestion is that new funding for new spaces has gone to institutions that haven't produced new seats and that it's tied to the funding formula that the government uses — the block funding formula, which I know it has reviewed but has yet to make any changes to that I'm aware of.

The minister mentioned that there was a lag year in this 25,000-space initiative. I think the Auditor General described it in differing terms from that. I think he was very critical of the execution and the rollout of this initiative, of the expectations of the institutions and of the clarity of how the funding would in fact create new spaces.

Is the minister, in light of this, going to provide new numbers? Because you've had a lag year — and that's your word — are you going to put out new numbers that look at accelerated targets that you're going to meet?

Hon. M. Coell: The sum is the same when you add up all of the seats in institutions. You may find that one college gives up 20 seats and puts them to another college or that a university gives up ten seats here and puts them somewhere else. The number is still 25,000. But from the allocation when we started, some are able to say: "We can't use those seats. They're better used at a different college." So that has been reallocated and will continue to be reallocated, but the sum is still 25,000.

I just want to comment on the Auditor General's report. I welcome reports like this as a politician. I think that when the Auditor General comes into your ministry and says, "I want to see what you're doing," that's good for democracy. That's good for government, and it probably helps the opposition because it gives you ammunition to use in question period.

It's a good thing. Then we can learn from it, and we can improve on it and move forward. I look forward to having an audit when we're finished.

R. Fleming: I'm pleased to hear that because I think it benefits the people that…. We're here beyond ourselves and beyond partisan advantages, and that's how the system should work. So I appreciate the statement there on accountability.

We talked a little bit yesterday about how the slogan, "25,000 by 2010," was created. This isn't a facetious question. I mean, some of the significance…. Was it tied to some kind of a demographic-crucial year there? The year 2013 is something that the CCL, the Canadian Council on Learning, talks about as a significant year for greatly increased needs, where Canada will hit a wall in terms of the skilled labour that it will need.

This government chose 2010. Is that related to the Olympics? Is it because it's beyond the 2009 election and results won't be known until after? What are the factors that led to that year being chosen, presumably for a good reason?

Hon. M. Coell: Actually, this plan was in place before we won the Olympic bid. It's a nice coincidence, but it was in place before we won the bid.

We talked about it last night — doubling the cohort of 18 to 29 and then saying: "How much do we think we can afford? How quickly can the system absorb 25,000 seats?" At that point staff said: "Well, if you double it, it'll take you to 2010 for 25,000 seats."

We had to find…. Then you go to your Finance Minister, and it's in the three-year plans, and it just keeps rolling over in the three-year plans. I believe it was actually in place before there was Council on Learning of 2013 as well.

R. Fleming: Just in terms of the lag year, though, because in year 2 of the expansion, government was only at 54 percent of its target. That was the finding. So is it the case that there is an acceleration effort for the spaces in the remaining years of this initiative?

Hon. M. Coell: Sorry for the delay. I was just mulling over, I guess, a couple of the ideas. One of the things…. When I said a lag year, it was a year that was fully funded. The seats were there, and they were available. It's the students who didn't show up.

I think if what we did the next year was to say, "We'll only fund you to the level that you did last year," then you wouldn't meet your target. I think what you have to do is keep funding so that the classes are there. Maybe one year there'll be ten people in a class, and maybe the next year there'll be 30. The important thing for us is the opportunities of making sure that there's a classroom and a professor, teacher or technical worker there for the students.

The other side of that, and one we talked about a bit previously, was: how do you encourage people to fill those seats? You have to make sure that the grade 10 goes to grade 11 and grade 12 and has the incentive to go to college or university. I think one of the things…. Probably the best part of the system that was worked out — and it wasn't me who did it; it was a couple of previous ministers — was that we would fund the seats, create the classroom, create the position and give

Now, there's the problem. How do you get the student into the classroom? You do that in a number of ways. One is making sure that you have a program that is desirable for students. That's why we've increased by over a hundred degrees, so there are more types of degrees — so that students have the opportunity, by actually having the class open and the faculty member there, by some of the loan reduction and payback programs and by having the federal government increase the loan level that students can have.

But there's more to do, and we're open for ideas. As I say, I meet regularly with students and faculty, with university and college presidents and with board chairs to get their ideas as to what we can do to make the system more desirable for grade 12s. We are seeing an increase in grade 12 graduation rates, an increase in aboriginal graduation rates and an increase in aboriginal students in universities and colleges. I think we're moving in the right direction. To be perfectly honest, there is more that can be done, and we'll look for those opportunities.

R. Fleming: Well, on where the minister concluded, we've already talked this morning about how in British Columbia the gap is opening up in terms of completion rates for post-secondary education with the rest of Canada and that this is in contrast to one of the great goals and the performance measures for this ministry.

I appreciate in this discussion around the 25,000-space initiative that this isn't an easy thing for government to do, but I don't think you get to say that you're creating these spaces when in fact it doesn't mean anything in terms of whether the takeup rate by the students, whether you actually have more people in the system, is occurring or not. That's kind of the point I'm trying to get at this morning.

I think the Auditor General made a number of comments about the implementation of this initiative — where the funding pots were mixed, where the block funding formula has caused complications so that institutions haven't clearly understood how they would create these new spaces and where we've seen a disincentive to study in B.C. because the costs have gone up so much for the individual. The debt levels upon repayment are a factor in any young person's psychology as to whether they choose to participate or not. I think it's conflicting with that goal.

Looking at the overall service plan and the funding increase that's contemplated there — I want to look at it in the third year, using the Canadian average and the B.C. average for inflation — can the minister confirm that by year 3 in the service plan the per-student funding will drop by more than 5 percent from today's levels?

Hon. M. Coell: I don't believe that to be the case. One of the things we're looking at in British Columbia is the lowest unemployment rate we've ever seen, more jobs for young people, to attract them away from post-secondary education.

It's a good place to be, to have the lowest unemployment rate in the country. I think the difference…. When you look at participation rates across the country, participation rates are great when you have a 15-percent unemployment rate. When you get a zero unemployment rate, which is basically what British Columbia has, you have other options for students — other options in rural areas, as we talked about yesterday, where you've got a mine that pays $50 an hour for a student out of grade 12. There are other options they take.

Hon. M. Coell: I notice one of the members would like one of those jobs. Far better paid than….

R. Fleming: The question wasn't about the employment rates in the province. It was about the service plan and the funding levels over the next three years in terms of per-student funding.

Using a standard rate of inflation projected for three years…. And that's very generous, as the minister will know, because most people in the field, most administrators, will tell you that in fact inflation doesn't apply when it comes to higher education. It's almost like health care, where a normal rate of inflation is something like 6 or 7 percent. People talk about this index, the higher education price index, which is 3 percent, 4 percent, 5 percent.

Using a standard, generous rate of inflation, can the minister confirm that by year 3 of the service plan, per-student funding is going to decrease by 5 percent?

Hon. M. Coell: I would disagree, because during the next four years the Ministry of Finance is going to cover all of the staffing increases, all of the pay and wage increases, in all of the colleges, universities and institutes. That was, I believe, almost $40 million of new money this year into the system to cover that. That would be, I guess, what would be part of the inflation within universities, or what they would consider inflation within universities.

The other was the $40 million within our strategic investment plan as well — new money into the system to create new spaces. So there are a number of opportunities where inflation is taken care of by us taking care of the 75 percent of their inflation cost, which is wages.

R. Fleming: I'm talking about the per-student funding level. I'm not getting an answer here. In real terms — real, constant spending–dollars, adjusted for inflation — can the minister tell the committee whether per-student funding, using the numbers that you projected inclusive of the spaces you hope to create, will decline by 5 percent in three years time?

Hon. M. Coell: I think I understand where the member is coming from. What the member doesn't take

into consideration is that during that time our budget will actually increase by $309 million, and we will be paying all of the wage costs within the sector. I think that the number of funds that are coming in are very significant, and they are quite capable of taking care of increases in our strategic investment plan, which is the $309 million, and wages. There is a huge amount of money going into the system — more than ever before.

R. Fleming: Well, I'm talking about the portion funded by government. When the minister uses figures like that, he's looking at new tuition revenue; he's looking at higher recoveries from student loans.

Well, I'll maybe give him some of my numbers, then, which are based on the numbers provided in the service plan. I know we will be recessing in 20 minutes or so.

A different question to change tack here. I know the minister has said there are a number of capital projects underway on campuses across B.C., and there are. Since the provincial election, have there been any university, university college or community college capital projects put on hold? Could he itemize those?

Hon. M. Coell: There are none on hold as of now; they're all moving forward.

R. Fleming: Have any of the capital projects that are underway, or are to begin shortly, had their scope changed and reduced?

Hon. M. Coell: I don't think significantly. I think when we're working with the institutions, they are continually…. You know, they all hire their own architects and do their own design. Some of them do design-build. Some of them do in-house or direct contractors, but there are none that are significantly changed.

R. Fleming: Can the minister confirm…? I'll just throw out one example here: the Kwantlen trade centre. I believe the scope of that building was changed. Could he describe whether that has occurred and maybe give an overview of that?

Hon. M. Coell: I'll get that information for the member. I don't believe there was any significant change other than design changes during the initial design of the building, and I believe it's to be opened very soon.

R. Fleming: Well, in terms of capital programs and capital planning…. This week we're getting an idea, I think, around the Trade and Convention Centre, about how cost overruns are being managed, if that's the word.

When it comes to capital projects on campuses and cost overruns that they may encounter, can the minister explain what assistance or what involvement his ministry has in helping institutions deal with cost overruns on their campuses — where the additional capital dollars come from, if they come from the ministry, if they're funded out of operations of the institution?

Hon. M. Coell: With regard to the Cloverdale campus, we have $39 million into that. It hasn't changed.

One of the things that the university and college sector has done — and they've done it quite successfully for a number of years, working with us — is that they budget for inflation, very conservatively, and most, if not all, of the projects are coming in on budget in the ministry.

R. Fleming: I hope that doesn't mean the minister is going to be shuffled out of here and take on a new portfolio where maybe his management services are in demand.

There are probably some examples where that is the case, and there are some examples where I know it to be not the case. When we go through the institutions, I may have some questions about more specific projects.

In terms of the partnership that was created on the old Finning Tractor site between the media centre there with UBC, UVic, BCIT and Emily Carr, there has always been contemplated a private sector partnership element to that. I'm just wondering if the minister could tell me how the private sector is directly involved in the governance and maybe the administration of that institution.

Hon. M. Coell: I share the member's optimism for the partnership of the four institutions. We have one private sector person on the board, and that's Lynda Brown from New Media. The development of the private sector onto that site with New Media and the WIN Bell system, as well, is just in its infancy. It's just getting underway.

R. Fleming: One of the things the minister announced for the Great Northern Way campus was a one-time grant for a new master's program in digital media. I'm just wondering if the ministry has decided how they will fund the seats for that program. Is it going to be on a full cost recovery basis, or will those students be charged fees that are more like other master's programs in our system?

Hon. M. Coell: I'll get the member the tuition fees, but the $40 million was to fund the seats of the program. I'm not quite sure what the tuition was. There was actually a fairly large ad in the newspaper a month ago — I think it was the Vancouver Sun — outlining what it would be and how much it would be. I'll get that information after lunch.

R. Fleming: I just want to ask the question, sort of a one-off within the ministry, about its communications. When the communication services were transferred from the public affairs bureau to the Ministry of Education, it got a $2 million lift in the minister's office. Has that occurred in Advanced Education?

Hon. M. Coell: I believe the answer is no, but if you wanted to just expand on your question a bit…. I'm a little confused as to the question.

R. Fleming: Well, I guess the question is really: who does your communications, what campaigns are you planning, and how is that paid for?

Hon. M. Coell: Thanks for the clarification. It doesn't come out of the ministry. It comes out of the public affairs bureau. But one of the things I would like to see — and we're talking to Education — is how we get some programming around literacy and some encouragement for people to get involved in some of the programs that we've got to enhance literacy. But that's just one area.

R. Fleming: Just on federal-provincial issues again. We sort of looked at it yesterday. There are potentially hundreds of millions of dollars that B.C. may benefit from that the minister…. I know a lot of university presidents have said: "Where is it?"

Do you have a better idea today of where that money has come from? I believe it was originally in an omnibus bill called Bill C-48. It was a $1.5 billion package. Granted, it was by the previous minority government, but I think the new minority government has at least maintained it as an item. But it doesn't seem that anyone in the ministry knows exactly where it is and if there are any restrictions on that money. Is there any new information the minister has been able to obtain?

Hon. M. Coell: I will get that information for the member. He's correct. It was one-time funding from the federal government to the provincial government.

R. Fleming: Can the minister tell the committee whether the government has prepared a contingency plan? The service plan goes three years forward, and by 2009 the millennium scholarship fund is set to achieve its sunset year. Has the ministry prepared a contingency plan for that loss of dollars and what it would mean for students that rely on student financial assistance to pay for their education?

Hon. M. Coell: It's about an $11 million problem in '09-10. It's one that we're concerned about. The Ministry of Finance knows it's there. We're continuing to work with the federal government as well. I'm optimistic. I think the federal government knows this was a good program, and they'd be foolish to cancel it.

R. Fleming: I'm pleased to hear that there is optimism there. There are obviously a lot of issues on the table at the CMEC meetings. We are very much behind Europe, I think, and the United States in coordinating a better pan-Canadian system of post-secondary education. That's just one of many items.

Mr. Chair, I move that the committee rise, report progress and ask leave to sit again.

Hansard Services publishes transcripts both in print and on the Internet.
Chamber debates are broadcast on television and webcast on the Internet.
Question Period podcasts are available on the Internet.