2007 Legislative Session: Third Session, 38th Parliament
HANSARD


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


Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)


THURSDAY, MAY 3, 2007

Morning Sitting

Volume 19, Number 8


CONTENTS


Routine Proceedings

Page
Introductions by Members 7489
Committee of the Whole House 7489
Parks and Protected Areas Statutes Amendment Act, 2007 (Bill 24)
     S. Simpson
     Hon. B. Penner
Report and Third Reading of Bills 7499
Parks and Protected Areas Statutes Amendment Act, 2007 (Bill 24)
Proceedings in the Douglas Fir Room
Committee of Supply 7499
Estimates: Ministry of Finance (continued)
     B. Ralston
     Hon. C. Taylor

[ Page 7489 ]

THURSDAY, MAY 3, 2007

           The House met at 10:04 a.m.

           [Mr. Speaker in the chair.]

           Prayers.

Introductions by Members

           C. Evans: On behalf of the member for Yale-Lillooet, I would like to introduce 20 grades 7, 8 and 9 students — who I think are perhaps up above, where I can't see them — from Kumsheen Secondary School in Lytton and their teacher Noni McCann. Will the House please make the students welcome.

Orders of the Day

           Hon. C. Richmond: In this chamber I call committee on Bill 24, Parks and Protected Areas Statutes Amendment Act, 2007, and in Committee A the continued Committee of Supply estimates debate, Ministry of Finance.

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Committee of the Whole House

PARKS AND PROTECTED AREAS
STATUTES AMENDMENT ACT, 2007

           The House in Committee of the Whole (Section B) on Bill 24; H. Bloy in the chair.

           The committee met at 10:07 a.m.

           On section 1.

           S. Simpson: Section 1 deals with a number of the issues related to the potential compensation around expropriation and improvements in Crown land. I wonder if the minister could tell us how decisions about compensation will be made.

           Hon. B. Penner: With this amendment, the existing provisions that pertain within the Forest Act are referenced and would be applicable.

           S. Simpson: I can be corrected on this. Under the Forest Act, I believe that in large part the compensation comes in the form of money, though I believe that it is possible for it to come in other forms, whether it be around land or other things. So under that act, what forms, and what's the expectation? What forms might that compensation take — cash versus other options?

           Hon. B. Penner: My understanding is the expectation is that the compensation would be cash primarily. For example, last year with the establishment of 20 new conservancies, there is a compensation amount of about $11.65 million.

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           S. Simpson: We have an example there, as we say — something to build on — last year around the conservancies.

           The minister has said it would be primarily cash. Under what instances might it be something else — properties or whatever? How does the determination get made that maybe there's another option? It could be, and I'd be interested to know…. I assume that other option would be land, but maybe there's something else that I don't envision here.

           Could the minister tell us what the other choices are, even though it will be primarily cash?

           Hon. B. Penner: From experience, I'm advised that it is normally cash that the form of compensation takes when you're extinguishing tenures. Of course, those tenures are not just forest tenures. As we saw last year with the 24 new conservancies, there are also mineral tenures that need to be addressed. So the figure that I quoted earlier, the $11.65 million figure, was not just for forest tenures. It also included mineral tenures that were existing.

           I'm further advised that the lead ministries for either the mineral tenures or the forest tenures — that is, the Ministry of Energy, Mines and Petroleum Resources or the Ministry of Forests and Range — take the lead in determining the form of compensation and how much that compensation will be. They have compensation advisers that take part in those negotiations on behalf of the Ministry of Environment.

           S. Simpson: To be clear, the valuations that need to be done here will be done by those other ministries. They will then provide that information…. Let me just start again here.

           The Ministry of Environment informs — let's say, for example — Energy that these are the properties that are being taken back — for example, out of a tenure. The Ministry of Energy then goes through its valuation process, comes back, provides the Ministry of Environment with a number, and the bill gets paid. Is that roughly what happens?

           Hon. B. Penner: Essentially, yes. The one other component is that information is conveyed to Treasury Board and a budget allocation is made to the Ministry of Environment budget.

           S. Simpson: The minister is foreshadowing my next question, which is: where does the money come from? I didn't see in the budget this year, though I may have missed it, the kind of line items to pay for this, though they certainly may be there. I might have missed them. If there is a line item in there, I'd be happy to know what it is.

           I'm assuming that this negotiation or this valuation takes a period of time to occur. Would we then be seeing numbers in future budgets? What is the expectation on what the number is? Maybe it's in the budget, and I missed it.

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           Hon. B. Penner: This year there's an amount of $14.85 million budgeted in the Ministry of Environment's fiscal plan for 2007-2008 for compensation. Now, not all of that money may actually need to be spent. It depends on how much progress we make in finalizing the arrangements for additional conservancies or other protected areas this year.

           Last year, as I indicated, the amount was $11.65 million. We're continuing to do work, as the member knows, in determining the precise boundary alignments in conjunction with advice from local first nations.

           S. Simpson: We'll get back directly to this. There are 41 conservancies included in Bill 24. How much land has had to be taken back out of tenures in order to accommodate the establishment of those 41 conservancies — land that will need to be compensated for?

           Hon. B. Penner: For the 41 new conservancies that will be established by Bill 24, there are no mineral tenures that we're aware of in those proposed 41 conservancies.

           In terms of forest tenures, I can relay the following information to the member. Our analysis indicates that there are an estimated 27 small area-based timber licences, four area-based tree farm licences and four timber supply areas, which incorporate volume-based forest licences. Those are the forest tenures that need to be addressed.

           S. Simpson: Does the minister know how many hectares that would be for the total package?

           Hon. B. Penner: We don't have that number with us. It's possible that the precise number of hectares is still being identified by the Ministry of Forests. They've told us what the tenures are, the type of tenures and the number, but I think they may still be finalizing the exact number of hectares.

           S. Simpson: Has the valuation, the negotiation, the process of compensation for those properties that are identified in Bill 24…? Has that process been completed, or is it the expectation that after the bill passes, then the negotiation on compensation comes after the fact?

           Hon. B. Penner: I'm advised that the negotiations will take place once the conservancies are legally in force and in effect.

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           S. Simpson: Then I'm to presume that the $14.85 million currently in the budget is the pot of money that's sitting there expected to…? I don't want to presume what those negotiations, those valuations will finally end up being, but that's the fund that it's expected this compensation will be paid out of after that valuation is completed?

           Hon. B. Penner: That is the fund the money would come from. It is our hope and our expectation through the negotiations that that full amount of money will not be required to settle these claims. It's our expectation that the government negotiators will drive a hard bargain.

           S. Simpson: I know that these are negotiations and you never can be exact about timing on negotiations, but when is a reasonable expectation and what time frame is expected, based on past experience doing this, for these negotiations to be substantively completed so that that number will become clear?

           Hon. B. Penner: Apparently, there's no hard-and-fast rule or rule of thumb that applies. Some licensees may be able to negotiate agreements fairly quickly if they're fairly small operations. I'm told, for example, that as a result of the 24 new conservancies established last year, some of those negotiations are still ongoing and have not yet been completed.

           S. Simpson: At the point that the negotiations are finalized, how will it get reported out what compensation was paid for what amount of property so that we and of course the public, more importantly, can look at those numbers?

           Hon. B. Penner: In the case of the resolution of negotiations regarding forest tenures, typically those settlements are announced either by way of news release or information bulletin from the Ministry of Forests and Range.

           S. Simpson: One other question in relation to this section. I know that discussions around tenures and forest policy and decisions that are taken…. I understand from comments the Minister of Forests and Range has made previously in the Legislature that there's an awful lot going on within his ministry in terms of looking at policy related to forest policy and relationships with the major players and companies, and there's a lot of back-and-forth on what the future of this industry looks like.

           With these particular negotiations, does the Ministry of Environment assure itself that these negotiations are separate and distinct? Or do they potentially become wrapped up in a larger negotiation with a tenure holder who may be looking to deal with a whole range of issues related to their tenure, and this becomes part of that negotiation and valuation as we kind of trade different kinds of things around policy and that? Are these separate and distinct negotiations around compensation, around valuation, or are they wrapped up in what might be a broader and more complete piece of work being done by the Ministry of Forests?

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           Hon. B. Penner: My understanding is that the Ministry of Forests would concern itself only with the value of the tenure that is being affected by the establishment of a new protected area conservancy or park, but I'd have to defer to the Minister of Forests and Range for exactly how that process works. My understanding is that they would concern themselves with the value of the

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compensation required for those particular tenures that are impacted.

           S. Simpson: Just a quick comment on that. I am pleased to hear that, and I hope that is the case. All of that work that Forests and Range is doing is very important, and it's part of the broader government initiatives. I'm sure that the Ministry of Environment, on the work it is doing around conservancies and protected areas, doesn't want to be part of the negotiation in those things that another ministry is engaged in to deal with its policy objectives. I would hope that, in fact, these would stay separate and distinct at this point. That's just a comment I would make.

           On this section I'll sit down and take my chair.

           Section 1 approved.

           On section 2.

           S. Simpson: Section 2 creates and talks about a whole series of additional parks. Could the minister tell us how much new parkland actually gets created by all of the properties identified in section 2?

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           Hon. B. Penner: We haven't added up the complete tally for section 2 here. We could because the numbers are listed, but I don't know if we want to use the Legislature's time to pull out the calculator here. It could be tabulated.

           Combining, though, the additional land from section 2 and section 5 of this bill, I can provide a total of 2,060.16 hectares of land added to the schedule.

           S. Simpson: Once the bill passes and those parks and some of the areas identified in section 5 come into play, how do the operational budgets for those areas get put in place? And what is it expected that the operational costs will be to institute these new parks?

           Hon. B. Penner: Most of the additional lands are additions to existing parks, and we don't expect significant operational pressures as a result.

           There are three new class-A parks that are established by Bill 24. Those parks currently don't have any facilities that I'm aware of, and so we don't anticipate a significant operating cost this year. Eventually it's possible that there will be park management plans put in place, and there may be some future plans or initiatives for those three new parks, but that's work to be done in the future.

           S. Simpson: So there's no expectation of any sort of front-line staffing requirements with anything affected by section 2?

           Hon. B. Penner: It's possible that the existing operational budget will be used, depending on the various regions where these extra lands are located. I do note — and I think I mentioned this at the start of the estimates debate, in my opening remarks there, for the Ministry of Environment budget estimates for fiscal 2007-2008 — that there is an additional allocation of resources for park rangers. I think there's something in the order of four or five additional FTEs for this fiscal year.

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           S. Simpson: It doesn't have to happen now — I agree that we don't want to spend time unnecessarily here — but could we possibly get a little bit of information just about how much additional acreage is going into which parks? I know there are some of the details here, but if we could get that on a single piece of paper or something, that would be good — some time in the next little while. There's no rush to do that right now.

           Hon. B. Penner: Just to note that we didn't put it out in acres, but we put it out in the form of hectares. That's attached to a backgrounder that was released about two weeks ago. It is available on the Ministry of Environment website — the individual additional hectares per park that are being added as a result of Bill 24.

           Section 2 approved.

           On section 3.

           S. Simpson: Very quickly here, section 3 refers directly to one park, Shuswap Lake Park. I wonder if the minister could tell us what the changes are around this particular park in this section that allowed for it to have a section unto itself.

           Hon. B. Penner: It's a good question on the part of the member. The balance of the provisions in this bill is designed to come into force upon royal assent for Bill 24. The one exception in the bill is section 3.

           Interjection.

           Hon. B. Penner: Pardon me; now I'm told that there are two exceptions. I'll have to find out what the second one is in a moment. Section 3 and section 4 apparently come into effect by order-in-council. The reason for section 3 is that there are some additional land transfer documents that need to be prepared, I believe, with the Columbia-Shuswap regional district.

           Section 3 approved.

           On section 4.

           S. Simpson: I do want to talk a little bit about section 4. This is the section that deals with Mount Robson Park. It deals with a situation that is the most unique piece of this, because it really does deal with decisions to remove 500 hectares from the park for the purposes of pipeline expansion or extensions.

           Could the minister tell us: were the policies or the principles in the park boundary adjustment policy used to look at the decision to incorporate this into Bill

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24? Was that the approach that was taken to make the decision to put this in this legislation?

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           Hon. B. Penner: For the record, the amount under discussion is 478 hectares in Mount Robson Provincial Park, or an area of land representing less than 2/10 of 1 percent of Mount Robson Provincial Park.

           This change is not precedent-setting. This has been done previously, including by the previous government from time to time. I understand the previous NDP government had something known as the "boundary integrity policy" under which a number of boundary adjustments were made to accommodate various construction projects, etc.

           This particular amendment did follow the boundary adjustment guidelines policy which, if memory serves, was established in 2004 and is available on the Ministry of Environment website.

           S. Simpson: I would agree with the minister that this isn't an absolutely unique decision, by any means, but as the minister points out, it is a boundary adjustment. One of the requirements of that, of course, is to bring it back to this place and allow us to have a discussion about those adjustments and hopefully a discussion that applies the policy so that we can all be satisfied that the policy has been followed.

           When we look at the policy around this, it suggests that alternatives or options should be considered before decisions are made to go through parks. Was there a discussion around any alternatives or options? Or was it deemed very quickly that this was the only choice?

           Hon. B. Penner: It's important to note that there's an existing pipeline that's been in that location for decades — I think since the 1950s, if I'm not mistaken — so this is basically permitting work along an existing right-of-way. There will be some changes made in order to minimize environmental impacts as much as possible.

           I can answer the member that yes, the very first item that needs to be addressed under the boundary adjustment policy, which as I indicated is available on the ministry website, requires that alternatives must be considered.

           Maybe just for the member's benefit, I'll summarize the six key issues that need to be addressed under those guidelines: (1) alternatives to avoid the park should be considered or must be considered, (2) overall economic benefits to the province have been documented, (3) social and environmental impacts have been documented, (4) mitigation and restoration have been identified, (5) first nations have been adequately consulted, and (6) the local community has been consulted.

           In this case, all six of those steps were followed. I understand that the ministry has received a letter of support from local first nations, that they don't object to this particular amendment.

           Also, members may be interested to know that in terms of precedents, the boundary at Beaver Creek Provincial Park in the Kootenays was amended in 1999 to permit the construction of a pipeline there.

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           S. Simpson: I appreciate the minister reading into the record the six key guidelines or considerations that need to be dealt with in doing a park adjustment. Now we'll talk about those in a little bit more detail.

           As the minister noted in his comments, alternatives to avoid the park have to be considered. There need to be options on the table to be considered. What was the option in the case of Mount Robson?

           Hon. B. Penner: As indicated under policy guideline 1, alternatives to avoid the park have to be considered, and further detail to that, reasonable alternatives must be considered. That was done in this case.

           The proponent documented a number of alternatives. Those included alternative pipelines, whether there was any other capacity existing to move the fuel product to B.C.'s lower mainland. It was determined that there are no other existing systems capable of transporting the refined products or the other fuel products from Alberta to the lower mainland.

           Another option considered was transporting the fuel by alternative methods, such as truck or rail. However, this would increase the risks of oil spills, increase pollution from moving the oil and result in much higher transportation costs.

           A third option was considered, and that was locating the loop outside of Mount Robson Park, either to the south or the north. But the conclusion was that this was not reasonable or feasible since the route would negate the environmental merits of following the already established pipeline route and other transportation corridors that already exist in Mount Robson Park.

           To establish an entirely new right-of-way would have entailed building quite a number of new crossings across streams and rivers in that part of British Columbia.

           S. Simpson: The second guideline says that overall economic benefits to the province have been documented. I believe this pipeline would be the revised…. I guess it's to change the Enbridge project to bring oil down to the coast and then to the United States. Have those benefits been documented, and is that documentation available?

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           Hon. B. Penner: This is a major energy infrastructure project that will bring construction jobs and spinoff economic benefits to the province and to that region. For example, the company estimates that the employment impacts of the project will be approximately 1,357 full-time-equivalent jobs in B.C. The project will create almost $66 million in additional provincial GDP or gross domestic product. Overall, the project will result in approximately $135.6 million in total construction expenditures in British Columbia.

           Now, the company has committed to working with B.C. Parks as well as Parks Canada because there is a

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part of this pipeline that goes through Jasper National Park. They've committed to work with us on a net-benefits project intended to ensure that there are long-term net benefits to the park system as a result of this project. Those discussions are still ongoing.

           S. Simpson: It's my understanding that this project is going to dramatically increase the amount of oil that comes forward. I believe the projections say that it will, as it evolves…. It goes up from about 75,000 barrels a day to about 625,000 barrels a day of oil as this project evolves, and it may get larger as we move along.

           As we look at the next requirement here, which is the social and environmental impacts, what level of social and environmental analysis has been done on this project around the pipeline? Has it been exclusively related to the actual loop here, or has it looked past that at some of the broader social and environmental implications of the project?

           Hon. B. Penner: Under step 3 of the guideline, which I believe the member has in front of him, the project is analyzed in terms of potential impacts on the social and environmental values of the park. That was done, including how the project may impact park users or park visitors.

           In addition, because this is an interprovincial project, crossing provincial boundaries, it did fall under the jurisdiction of the National Energy Board, which conducted a review as well, in conjunction with the Canadian Environmental Assessment Act. So there was a CEAA review, as well as the National Energy Board oversight, and the Ministry of Environment participated in that process.

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           S. Simpson: So the Ministry of Environment participated. Am I then to assume that the Ministry of Environment didn't do its own social and environmental analysis of this and that it used information from National Energy Board studies or the Canadian environmental assessment process? Are those the processes that it used in order to be able to satisfy point 3 in the guidelines?

           Hon. B. Penner: I should back up a bit here for the member. The six-step policy that we've been discussing around considerations for possible park boundary adjustments is something that the Ministry of Environment always follows for park boundary adjustments. In addition, for this particular project, because it was interprovincial in nature, that triggered a Canadian Environmental Assessment Act review and also some oversight from the National Energy Board.

           The Ministry of Environment had input into the CEAA process in helping design the terms of reference. We provided information through that process to assist with the environmental assessment that was done. In addition….

           I'll give you an example. We obtained a report from a pipeline engineer to scrutinize the proponent's pipeline design and its expected integrity, out of a concern for the security of the park. That is an example of some of the extra scrutiny we provided. In all cases, we did follow the policy guideline that is available on the ministry website for considering park boundary adjustments.

           S. Simpson: So as the guideline says: "Social and environmental impacts have been documented." It says:

           "All potential impacts of the proposed development on the social and environmental values of the park must be identified. This should include consideration of how park use patterns and visitors' safety may be affected by the proposal. Assessment of the social and environmental impacts will assist in identifying potential mitigation, restoration or compensation members that would preserve the recreation and/or conservation values of the park."

           Does the ministry, then, have that documentation, where it has looked at all of those potential impacts, and can it make that documentation available?

           Hon. B. Penner: I suspect that information is already public. It is our understanding that we would have submitted that information as part of the CEAA review and the oversight by the National Energy Board. That should be available on at least one or two websites, I would think. If not, we could endeavour to get that to the member.

           S. Simpson: I would appreciate if it would be made available without having to chase it around websites. Thank you.

           I just want to be clear on the product that we are talking about here in terms of these pipelines. This is crude oil we're talking about pumping through these pipelines, just to be clear.

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           Hon. B. Penner: Advice that I've been given is that it is an oil pipeline that moves petroleum products. So from my limited understanding of oil pipelines, they also move finished and refined petroleum products from time to time. It doesn't move a single product. At least, most pipelines that I'm familiar with that are oil pipelines often can move refined petroleum products.

           S. Simpson: We know that on this particular piece of the project…. I believe it talks about it being called the anchor loop project — this particular aspect. What we know is that this pipeline, as the minister noted in his earlier comments, is very significant. I believe the last estimate was about $1.7 billion to put this pipeline in place — the entire pipeline from Alberta in to completion in British Columbia. This is one loop of it. It appears that what is occurring here is that it is being built in these loops through the area down through the province.

           [S. Hammell in the chair.]

           When the Ministry of Environment looks at this particular aspect — because it is within the park — and

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it looks at that loop, does it consider the rest of the project, or does it just consider this one aspect of the project when it's looking at social and environmental impacts?

           Hon. B. Penner: Pursuant to the policy guidelines for park boundary adjustments, we looked at this project from the perspective of the impact on the park. Under the CEAA — the Canadian Environmental Assessment Act — review process, which was also done in conjunction with the National Energy Board, the broader environmental impacts were considered.

           S. Simpson: And possibly here, because I accept that — as far as Bill 24 goes — this looked very specifically at impacts related to Mount Robson. Maybe we'll get a chance to talk about this in another venue around the specifics of that question.

           What I would like to know, though…. Point 4 of the guidelines talks about mitigation and restoration having been identified. Could the minister tell us what the assessment has been? What are the issues related to mitigation and restoration that have been identified, and how are they being dealt with?

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           Hon. B. Penner: For the most part, the pipeline route follows an existing, or passes through an already heavily used transportation corridor. That includes the highway, a CN Rail line, power transmission lines, an existing pipeline and telecommunications corridor.

           There is the expectation that this project will result in some additional forest clearing. As well, there could be — and we identified this — some potential disturbance to wildlife during the construction phase from the presence of workers and equipment. There is a mitigation plan that the proponent will have to follow including, I think, a five-year review or assessment that needs to be done at the expense of the proponent.

           S. Simpson: Just so that I'm clear, the mitigation plan has been prepared for the proponent? It's done? And is it available?

           Hon. B. Penner: The answer is yes to the member's question. Specific protection measures have been identified for sensitive habitat, rare plants and communities, wildlife in critical wildlife areas, heritage resources, water wells and springs, timber salvage, fire prevention, forest pathogens like the pine beetle, weeds, spill prevention, noise reduction, waste management, erosion and soils, traffic management, use of explosives, and watercourse crossings.

           As I mentioned in my last answer, five years after the completion of the project the proponent is required to file an environmental monitoring report with the Ministry of Environment. Some of the things to be monitored do include wetland function, revegetation, and the spread, potentially, of invasive fish species.

           The proponent will be held accountable by the Ministry of Environment and other regulators, including the National Energy Board, for ensuring that their mitigation during the project and their restoration after the construction is complete has been effected.

           S. Simpson: Could the minister tell us: are there issues related to migratory routes of species here? And if so, how is that being dealt with in terms of those species being able to cross over the pipelines? How does that work?

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           Hon. B. Penner: It's important to note that this project, for the most part, follows an existing right-of-way. The pipeline was initially constructed in 1952, so it's been there for a long time. This proposal envisions much of the work being buried. I think 60 kilometres or so of the pipe will actually be following a trench that will be excavated and then refilled, with the original material returned.

           Some of the impacts on wildlife that were identified as having a possibility of arising include disturbance by personnel and equipment, as I said already, during construction. There are a number of things that have been required to help mitigate the impact on wildlife. For example, the pipeline avoids grizzly-denning habitat. Bear conflict-avoidance practices will be required. Employees are not permitted to hunt or harass any wildlife. The proponent will be required to replant with shrubs adjacent to the pipeline to speed up recovery of the flora in that area. A number of other measures will be required as part of the mitigation that's been approved and required for this project.

           S. Simpson: Could the minister tell us how much of the pipeline is going to be above ground, then, and how much of it will be buried?

           Hon. B. Penner: My notes indicate that about 60 kilometres of the pipeline will traverse Mount Robson Provincial Park, and another note says that about 60 kilometres of that pipeline will be buried. I'm guessing here, which is dangerous, but my guess is that where the pipe is over land, it will be buried. There are a number of crossings over creeks and rivers, and I suspect that there it will be exposed going over the waterway. That's just a guess, though.

           S. Simpson: The minister talked about a review in five years to see how the project's doing. A couple of questions in relation to that review. Who does that review in five years' time? Does the company do the review based on a set of questions from the ministry, or is there an independent review done to determine whether there has been an impact?

           Hon. B. Penner: The proponent will be required to file an environmental monitoring report with the Ministry of Environment. I would expect they would be hiring a qualified environmental professional, who would be held responsible through their professional organization for the integrity of the information they provide. Nevertheless, Ministry of Environment personnel, specifically

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B.C. Parks personnel, will be monitoring that project on an ongoing basis.

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           I can also inform the member that there are a number of other additional mitigation measures required to address wildlife concerns, including a requirement that there be no clearing undertaken during the migratory bird window from May 1 to July 31. Environmental protection plans have to be filed with the National Energy Board to ensure no wildlife mortality occurs. Again, there are a number of steps on the list to make sure that there's revegetation taking place wherever possible and a number of other measures, as well.

           S. Simpson: Just so as to understand this — because I believe the minister has said that there's the existing pipeline, and this one will be a companion or an additional pipeline — could the minister tell us: what's the right-of-way now that's allowed for the current pipeline, and how will this change that right-of-way once the new line is put in place?

           Hon. B. Penner: The current right-of-way that runs through the park is about 60 feet wide. We're taking out of the class-A park status enough land so that they can bring in equipment to work, in some cases, to put in parallel pipe, but not throughout the entire length. It's just in certain portions, I'm advised. In much of the right-of-way, there will continue to be one pipe, but it may be new pipe that has greater capacity. In some cases there will be looping, as the member has already suggested.

           Once this work is completed, the government does intend to bring forward legislation to put that land back in class-A park status. What the final right-of-way will end up being is yet to be determined. It will be no more than is necessary. Right now the challenge is that, apparently, that 60-foot width is not sufficient to allow the equipment and crews to work safely to get the construction done. They need additional space to move their equipment and assemble the pipes and do whatever they're doing, and that's more than the 60-foot width currently permits.

           That's why this additional space is being provided to them. Once that construction work is done and the crews and equipment have left — safely, hopefully — then it is our intention to re-establish that land as class-A park.

           S. Simpson: So I'm clear here, I understand that during the construction period there will be some additional requirements because of equipment and such to be able to do the work, but the minister has said we have a 60-foot right-of-way now. My interest is: after the area that has to be opened up for construction purposes is restored, does the minister then expect that the 60-foot right-of-way will be sufficient for the additional pipeline? Or does the minister expect that there will need to be expansions on that right-of-way?

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           Hon. B. Penner: I can't give the member a precise figure in terms of how many feet, although it is our expectation and our desire to minimize the final right-of-way as much as possible. It's entirely possible the right-of-way will remain at 60 feet once the construction is completed.

           I did misspeak earlier. Even that portion within the 60 feet will be returned to class-A park status, so the entire area will be within a class-A park. It is our expectation that the proponent will be given a park use permit for that corridor right-of-way. Even so, as I've already mentioned, the mitigative measures require additional vegetation to be planted, and the 60-kilometre length of the pipe will be buried. So over time, while there will be this right-of-way that shows up on a map, I suppose, as some kind of a legal notation of a right-of-way, there'll be vegetation in that area.

           S. Simpson: I appreciate that and that the visual impacts will be minimized to the greatest degree possible. But I assume — and I would be happy to have the minister correct me on this — that with a pipeline like this, obviously there are security issues around protecting the integrity and security of the pipeline. So what happens? Is there fencing that goes up? What happens in terms of security measures within the park to protect the integrity of the pipeline? Clearly, you wouldn't want damage done to that, and you'd want to make sure that it remains secure.

           Hon. B. Penner: I've only been to Mount Robson Park a couple of times, but I'm not aware of any fencing that exists along the current right-of-way, so I don't expect there would be any additional fencing. I don't have that exact answer here, but my understanding is that there is no fencing today. Maybe it doesn't need to be there, if the pipe is buried.

           S. Simpson: Certainly, if the pipe is buried, I can understand where it might not be necessary, but if it's above ground, I had suspected that there would be some — especially with our increased notions about security these days that are on everybody's mind. I would think that on an oil pipeline, there would be some security measures around it to protect against both mischief and more serious possibilities.

           I'd certainly be interested to know, hon. Chair, because as we know, one of the things that we would never want to happen would be for somebody to do something malicious there. Who knows what the potential impacts of that are? I don't understand pipelines well enough to know how much damage you could do to them, the actual structure of the pipeline, but I would be concerned that something could be done to this pipeline and we could end up spilling some of this oil because of malicious activity on the part of somebody. I would be interested in knowing what security is put in place.

           Maybe the question here is: does the minister have an interest in the question of security exactly for those reasons — not just concern about the property of the pipeline owner but clearly to protect habitat or species

[ Page 7496 ]

from malicious action from someone around the pipeline? What would the minister's view on that be?

[1125]Jump to this time in the webcast

           Hon. B. Penner: Yes, of course I take a great interest in maintaining the integrity of our provincial park system. The pipeline expansion will include higher-than-usual standards for pipe strength in the portion through the park, an automated leak-detection system linked to automated pipeline valves to minimize the amount of oil that could escape in the event that a leak did occur. The automated system will be supplemented by regular manual surveillance of the pipeline by the proponent. In addition, the National Energy Board has required the proponent to maintain an emergency response capability in case a leak does occur.

           S. Simpson: The next policy-related matter here talks about first nations having been adequately consulted. Could the minister tell us which first nations would be impacted by this project in Mount Robson Park, and what was the consultation with them around this matter?

           Hon. B. Penner: I am advised that the first nation that is interested in this matter is the Simpcw First Nation. We have received correspondence from their legal counsel indicating that they do not have concerns about this amendment that we're debating here today.

           S. Simpson: A last question related to this matter for right now. Have any of the surrounding communities been consulted? What was that process of consultation on the part of the ministry to community interests other than first nations, and what was the response?

           Hon. B. Penner: In addition to consultation with the Simpcw First Nation, there were discussions with the public that started in 2004. These consultations included public open houses in Valemount, Hinton and Jasper in 2005 and meetings with local government officials.

           I'm also advised the proponent held a series of four meetings with environmental organizations and other stakeholders to review the project, identify issues and develop mitigation. Funding was provided by the proponent for these organizations to obtain external expertise, if needed, to help them review the project and develop proposals. B.C. government staff also attended these meetings to hear what was being said.

           S. Simpson: Could the minister advise us on what reports he got from his staff in terms of issues or concerns or support raised by those communities for this project?

[1130]Jump to this time in the webcast

           Hon. B. Penner: I'm advised that local governments or local communities didn't raise any opposition to the project.

           S. Simpson: I believe he said that the proponent provided or consulted with the environmental interests and provided them with resources to allow them to do some additional assessment as well. Could the minister tell us whether his staff reported back on concerns raised by those environmental interests?

           Hon. B. Penner: I don't have a list of the environmental organizations that were involved in the discussions, but questions were raised about downstream water quality, effects on wildlife, pipeline integrity, and spill prevention and response as well as the ecological integrity of the park ecosystem. As already discussed in a previous answer, there is a fairly long list of mitigative measures that are required of the proponent to help address those concerns.

           S. Simpson: I believe the minister said — maybe not, but I think he did — that he would be able to make available that list of the mitigation measures and requirements and the expectations that are being put on the company about what they will be required to do in order to satisfy the Ministry of Environment on these matters. I believe the minister said that he would make that available, but I will just clarify that.

           Hon. B. Penner: Yes, that information is available.

           Sections 4 and 5 approved.

           On section 6.

           S. Simpson: Section 6, as the minister will know, is the section that provides for all of those protected areas that will fall under schedule E, and this includes the whole array of conservancies. I believe it includes 30 or 31 of the conservancies that will be incorporated as a result of the central and north coast agreements.

           As we know, there are another further 45 conservancies that I believe are anticipated to be dealt with next year — possibly next spring — when the minister is prepared to bring them back. Maybe for the record here, could the minister tell us what work it is that needs to be done on those other 45 conservancies that didn't allow them to be brought forward in this package?

           D. Jarvis: Permission to make an introduction, Madam Chair.

           Leave granted.

Introductions by Members

           D. Jarvis: I'd like to introduce approximately 23 students from Brockton School in North Vancouver–Seymour, and their teacher Ms. Manon Palmer. They're here to watch the Minister of Environment spend their parents' tax dollars.

[1135]Jump to this time in the webcast

[ Page 7497 ]

Debate Continued

           Hon. B. Penner: I think we discussed this a little bit, maybe in second reading or maybe it was yesterday in the estimates debate. I can't recall which; it kind of blurs together in my mind.

           Considerable time and resources are required to complete the necessary legal boundaries to list the conservancies in the schedules. I know that every so often from year to year we occasionally have to update park boundaries that were established decades ago as more refinements are made in terms of surveying techniques.

           We're trying to take the time necessary to get the boundaries right the first time. In addition, of course, there's ongoing consultation that's taking place with first nations and other government ministries to confirm the boundaries, to again make sure that we get them right.

           S. Simpson: These conservancies, the 41 conservancies which are included in sections 6 and 7 together, comprise about 165,000 hectares or something roughly of that magnitude, I believe. Could the minister tell us what the difference is between a conservancy and a park in terms of the Ministry of Environment's responsibilities?

           Hon. B. Penner: This was canvassed extensively last year when we debated the bill that established conservancies and established that new definition. I think we also touched on it yesterday during estimates debate. If I'm not mistaken, the member for Coquitlam-Maillardville talked about that.

           S. Simpson: Maybe I'll explain a little bit where I'm going with this, and then we can maybe get there even quicker.

           I know that there are similarities. We have a very significant amount of acreage here, and there are expectations around parks in terms of the responsibilities of the ministry, around staffing, around resources and around how it supports those parks in a variety of ways. I'm wondering: what are the responsibilities, then, of the ministry operationally to support these conservancies?

           Hon. B. Penner: Our legal responsibility is the same in terms of being responsible for managing that area. There is no one answer about what kind of management regime is in place for any particular class-A park or any particular conservancy. It depends on what the purpose of that particular park or conservancy is.

           We are committed to working in a collaborative way with first nations to work on management plans for the conservancies. I would expect, in most cases, that we'll flesh out in some detail what the operational management regime will be for that particular conservancy.

           S. Simpson: If the responsibilities are roughly the same for a conservancy as for a class-A park in terms of the obligations of the ministry…. I would expect that, actually, in some ways, because I believe there are co-management responsibilities with the appropriate first nations. That may actually add some complexity to the administration of these, because it requires another level of discussion at a government-to-government level with the appropriate first nations.

           The minister talked about, I believe, four or five FTEs in terms of park rangers, park staff. What is the expectation in terms of staffing and resource requirements for these areas? How much is it going to cost, and where are the dollars for this?

[1140]Jump to this time in the webcast

           Hon. B. Penner: As I said, we want to do much of the management planning process in a collaborative way with first nations. That work is yet to be completed. In some cases it's underway, but it's certainly not completed for the majority of the conservancies. I can indicate, however, that we expect that the conservancies will largely be managed in their present remote natural state, which will require little parks-related infrastructure and maintenance.

           S. Simpson: In order to manage these as protected areas, as parks or as conservancies, does the ministry expect to need to put additional conservation personnel in there, or are park personnel playing a conservation role? I understand and I appreciate, hon. Chair, that it may not require significant recreational facilities — that that would be in parks in more populated areas. Certainly around protection of habitat, species and protected areas there are obligations and requirements for staff and resources to do that. Now that these are under the auspices and responsibility of the ministry, what personnel does the ministry anticipate needing to put in?

           Maybe I'll add the second question here. I understand there are still discussions to go on with first nations. What's being done in the interim, or what will be done in the interim, after this legislation is passed until we get some agreements in place with those first nations?

           Hon. B. Penner: New resources have been allocated for planning and administration of the new conservancies. Last year, I think, we were here discussing the $1 million that had been allocated for managing the new conservancies, including management planning, collaborative management agreements and operations.

           Budgets are currently being finalized in conjunction with the integrated land management bureau, the Ministry of Agriculture and Lands; however, we're looking at about $1.5 million this year. That's an increase from last year's amount.

           As much as possible we are hoping, through a collaborative way, to enlist the support and help of the local first nations in being the eyes and ears for us in these new conservancies. In fact, B.C. Parks has gone some way in that regard. I know that we have hired a number of people from the local first nations communities to

[ Page 7498 ]

work with us in previous years, and that continues to be the direction that the ministry is pursuing.

           S. Simpson: To follow up on that a little bit, we have a million and a half dollars on the table for this year to do this work. It's an awful lot of acreage to deal with, with a million and a half dollars. Is it the expectation that these agreements, the management agreements with first nations, will primarily be a case of the ministry hiring or contracting people from those first nations to do the work, or will it be the ministry providing resources to the first nations for them to in fact take the leadership role in doing the work in those protected areas themselves?

           Hon. B. Penner: The collaborative management process and the discussions we're having with first nations will look at both of those options. I expect, at the end of the day, that we could see some combination of both.

[1145]Jump to this time in the webcast

           S. Simpson: I'll ask this question, and then we'll move on to the next section.

           Could the minister tell us: in the discussions around management plans and the development of management plans, is it the expectation that those plans will be put in before there is any activity or economic activity — either small-scale or the kind of activity that I believe the minister spoke about in second reading? Before those activities are in place, is it the expectation or the intention of the minister that management plans be put in place — both for those areas that fall in section E and in section F?

           Hon. B. Penner: I'm advised that management plans will be put in place prior to the issuance of park use permits authorizing new use in those conservancies.

           S. Simpson: As we know, and the minister has said, this is a collaborative effort with the first nations to develop those management plans related to those conservancies. The other communities, the non–first nations communities in the adjacent areas of these — have they been active participants in those discussions, and are they part of the discussion around those management plans?

           Hon. B. Penner: Local governments were involved, as the member knows, in the LRMP process that led to the historic agreement that was announced last year by the Premier to establish these conservancies — more than a hundred eventually — up and down the midcoast and north coast of British Columbia.

           I think it's ultimately protecting an area equal in size to something like three times the size of New Brunswick, if my memory serves me correctly. It's a huge area of land. The management planning process is just getting underway now, and there will be an opportunity for further local community involvement in that process.

           S. Simpson: I do want to see if we can finish here by lunchtime, and I think we should be fine with that, hopefully. That's the plan.

           Maybe the minister could just tell us: what is the table like for that management plan? I understand it's a table that has the ministry. It probably has other government interests there. It has the first nations at the table in this discussion of the development of the plan. The involvement of the non–first nations communities: are they going to be consulted, or are they going to be at that table as part of the broader, more ongoing discussion?

[1150]Jump to this time in the webcast

           Hon. B. Penner: It's my understanding that there will be an opportunity for everyone who is interested in having input into the process.

           S. Simpson: I appreciate that everybody should have an opportunity to have input. My question was around the formality and the role.

           We know that the role, obviously, of the government and of the first nations is very specific. I'm trying to determine here whether the role of local government is to be another stakeholder to this who gets consulted in that process, or are they going to be at that table as a more formal part of the broader discussion? Even if it's to be there at the invitation of the provincial government, since those local governments clearly constitutionally come under the auspices of the province…. I understand the government-to-government relationship.

           I'm trying to determine whether they will be there, or will they make representation, and then will it be considered by the province and the feds — if they're there — and the first nations? Or will they actually be part of that ongoing discussion?

           Hon. B. Penner: There may be different processes for different management plans for different conservancies, but there will be an opportunity for input for everyone into the plans developed for the conservancies.

           S. Simpson: I am going to assume by that — because we did try it a couple of times — that the answer about whether they are there as a full participating partners…. They will be consulted in some form. I clearly got that message from the minister. But I also believe I got a message that said they're not going to be there at the table in the same way as the province and the first nations. The minister will have a chance to correct me if I'm wrong on that, I'm sure.

           With that, I think I'm good on section 6.

           Section 6 approved.

           On section 7.

           S. Simpson: Section 7. The distinction, we know, between these two sections is largely around roadbuilding. Could the minister tell us why these ten particular conservancies were included in section 7?

[ Page 7499 ]

           Hon. B. Penner: Only those conservancies where there was no alternative access to access resources beyond the conservancy were included in schedule F. That's, I think, what the member is referring to. Guidance was received and input obtained from the Ministry of Forests and Range; the Ministry of Energy, Mines and Petroleum Resources; and the Ministry of Agriculture and Lands. It's my understanding that the local first nations support this.

[1155]Jump to this time in the webcast

           S. Simpson: To be clear on that, the first nations were consulted as part of this arrangement? They were part of the process of determining that these ten conservancies would be included under schedule F, and it was with their concurrence or agreement to that.

           Hon. B. Penner: We're not aware of any objections from local first nations. In fact, during the whole planning process and the discussions leading up to the establishment of conservancies, the local first nations made it very clear that they did not want the conservancies blocking access to other potential economic opportunities.

           S. Simpson: I believe the minister said during second reading — I'll ask for clarification here — that any anticipated roadbuilding in the section F conservancies will not go forward until there are management plans for those conservancies. Is that correct?

           Hon. B. Penner: No new roads in schedule F conservancies will be authorized by way of park use permits until a management plan is prepared.

           Sections 7 to 10 inclusive approved.

           Title approved.

           Hon. B. Penner: I move the committee report the bill complete without amendment.

           Motion approved.

           The committee rose at 11:57 a.m.

           The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

PARKS AND PROTECTED AREAS
STATUTES AMENDMENT ACT, 2007

           Bill 24, Parks and Protected Areas Statutes Amendment Act, 2007, reported complete without amendment, read a third time and passed.

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

           Hon. C. Richmond moved adjournment of the House.

           Motion approved.

           Mr. Speaker: This House stands adjourned until 1:30 this afternoon.

           The House adjourned at 11:59 a.m.


PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF FINANCE
(continued)

           The House in Committee of Supply (Section A); J. McIntyre in the chair.

           The committee met at 10:10 a.m.

           On Vote 31: ministry operations, $54,555,000 (continued).

           B. Ralston: Looking at Vote 31, and I'm looking at the subvote on Treasury Board staff. I'm looking at the job description in this subvote, which includes:

           "…financial management advice to government, including advice on economic performance and on management of ministry and operating spending, revenue, capital spending and debt.

           "This subvote also provides for: the development and management of the provincial government's budget and three-year fiscal plan; production of the budget and fiscal plan, the estimates, quarterly reports and other related documents; development of economic, revenue and spending forecasts and plans; and advice and recommendations to Treasury Board on financial management issues."

           Does the minister accept responsibility for the advice that she receives from Treasury Board staff?

           Hon. C. Taylor: Yes, I do. That does not mean that cabinet or government always agrees with some of the recommendations, but yes, I certainly take responsibility.

           May I introduce Nick Paul, who is the assistant deputy minister and deputy secretary to Treasury Board, who has just joined us.

           Traditionally, members of the opposition do us the courtesy of providing some sequencing of the order of the day, in terms of the issues that you would like to canvass. It would be appreciated if you could give us some idea, so I'll make sure we have the right staff here to deal with your questions.

           B. Ralston: There are a number of areas I would like to canvass, but whether answers will be forthcoming, I suppose, is an entirely different question. I'll endeav-

[ Page 7500 ]

our to provide that shortly, perhaps if we take a break somewhere near mid-morning.

           Given that the Treasury Board provides that advice, I understand one of the divisions in the Treasury Board is corporate and project finance, which is part of the Treasury Board operation. Can the minister confirm that?

           Hon. C. Taylor: In fact, it's part of the provincial treasury, not Treasury Board staff.

           B. Ralston: On the ministry website under the Treasury Board button there is a list of current projects. One of those is the Vancouver Convention Centre Expansion Project. Will the minister confirm that's one of the projects that particular division of the Treasury Board is reviewing or implementing?

           Hon. C. Taylor: I just want to make sure that there is clarity. It is not the provincial treasury that is involved with this project. Treasury Board staff certainly do an analysis of all of the major capital projects.

           B. Ralston: As part of that analysis and ongoing monitoring of the project, is that something that this particular staff does and advises the minister, or at least the deputy minister, of the progress of that particular project?

           Hon. C. Taylor: They are reports, of course, of another minister's capital project. Treasury Board staff work with that ministry. These reports do go up to Treasury Board.

[1015]Jump to this time in the webcast

           B. Ralston: The minister is not, I gather, avoiding responsibility for monitoring this project. Obviously, there are regular reports coming from that division of the ministry to the deputy minister and to the minister about the ongoing status of that project.

           Hon. C. Taylor: I think it has been no secret that we have had concerns all along about this project. Any time a project has increases in budget, which this one has done, it is a concern for government. I would say that Treasury Board staff, certainly, and government, as well, have been concerned about this project for some time. That's why we were very careful in the wording in our budget to say that at this point we don't have the final number for that project, but it will be in the range of $800 million.

           B. Ralston: In addition to Treasury Board staff in the major projects part of the ministry or that division of the ministry reporting to the deputy minister and to the minister, is there any other person or persons who report to the minister on the status of this particular project, the Vancouver convention extension project?

           Hon. C. Taylor: We have, in the course of this major project, obviously had a lot of meetings. The comptroller general has certainly been involved; Treasury Board staff has been involved; the Ministry of Tourism has been involved. We've received reports, some verbal and some in writing, from all of those people at one time or another.

           B. Ralston: Is that an exhaustive list, or is there anyone else who reports to the deputy minister and minister on this project?

           Hon. C. Taylor: Hon. Chair, I'm not sure if I'm understanding exactly what you mean by report. I receive reports, but these people don't report to me. Certainly, VCCEP has given reports to the ministry, and to the Ministry of Finance as well, but they don't report to me in that sense.

           B. Ralston: In Mr. Dobell's calendar, which was obtained by a freedom-of-information request, on April 6, 2006, he met with Ministers Taylor and Ilich; Tamara Vrooman, the minister's deputy; Murray Duncan; Roger Hughes; Virginia Greene; Russ Anthony; and Colin Smith re VCCEP — that is, the Vancouver Convention Centre Expansion Project — a credit watch meeting.

           Can the minister then advise if Mr. Dobell was reporting directly to her on the status of the convention centre project, contrary to what she has just said earlier?

           Hon. C. Taylor: The way these meetings work — and we have them from time to time, whenever we have concerns or issues about any large project — is that it is with the minister responsible, who was the Minister of Tourism at that time. They bring with them any staff or individuals that they wish to have at the table.

           It stands to reason that when we're having a discussion about the Vancouver Convention Centre, the VCCEP people would be there as well.

[1020]Jump to this time in the webcast

           B. Ralston: Can the minister advise what the subject of this meeting was? There's a note, as I've said, in Mr. Dobell's calendar about a credit watch meeting. Can the minister advise what this discussion was at that meeting?

           Hon. C. Taylor: These credit watch meetings are considered status reports, where they let us know how the project is going.

           B. Ralston: And what was the minister told at this particular meeting on April 6, 2006?

           Hon. C. Taylor: We've had many meetings, and I would not know the specifics of that particular meeting.

           B. Ralston: Is the minister then saying that her mind is a complete blank as to the substance of the meeting, or can she provide any assistance to the public as to what might be discussed on this now $800 million, and rising, project?

[ Page 7501 ]

           Hon. C. Taylor: I will put aside personal insults. That's just silly. These are important credit watch meetings, and when we are looking at a major project like the convention centre, what we do try to do is see how the contracts are going, if the contracts are on schedule, what costs were fixed, what costs were rising, what the time line for completion looked like, what some of the issues were.

           I remember one of the meetings was specifically looking at some of the city of Vancouver requirements for the development permit that added extra costs. So these credit watch meetings were quite fluid, and we looked at all of the issues as they arose, because we were concerned.

           B. Ralston: Just so it's clear, I'm questioning the minister in her ministerial capacity, not in her personal capacity. I think I'm entitled to ask questions about the minister's recall of an important meeting, and without inviting the suggestion that that's a personal comment.

           If I could continue then, is the minister saying that she was only there at the invitation of Minister Ilich, or was it she and her staff who convened the meeting?

           Hon. C. Taylor: We convened the meeting.

           B. Ralston: And these meetings on this project were a regular occurrence. Is that right?

           Hon. C. Taylor: We instituted these meetings approximately late fall of 2005, and then they carried forward from there.

           B. Ralston: So these meetings continue. Can the minister advise when the most recent one took place?

           Hon. C. Taylor: The most recent presentations and meetings have been at Treasury Board.

[1025]Jump to this time in the webcast

           B. Ralston: And is the minister or staff able to provide a date or an approximate date as to when that meeting took place?

           Hon. C. Taylor: There have, as I said, been repeated meetings with Treasury Board. The most recent has been in the last four weeks, but I'd be very happy to get the dates if they're important.

           B. Ralston: Was the minister present at that meeting, and was it convened by her?

           Hon. C. Taylor: Treasury Board meetings are convened by me.

           B. Ralston: This may seem a little obtuse but just to be clear: was the minister present at the meeting?

           Hon. C. Taylor: Yes.

           B. Ralston: Can the minister then advise who else was present at the meeting. In particular, was Mr. Dobell present at that meeting?

           Hon. C. Taylor: Mr. Dobell was not present at that last meeting.

           B. Ralston: And why was that?

           Hon. C. Taylor: It was intended to be an introduction, really, of the new workplan that Mr. Podmore is bringing forth and a look at the time lines for the construction project, what details still have to be worked out, what contracts there are that are being negotiated.

           B. Ralston: Was the minister advised that the project is still on time and will be completed on its expected completion date in 2008?

           Hon. C. Taylor: We do not at this time have either the final budget or the exact date of completion. We're awaiting that report. Obviously, I think we would all hope that that report comes sooner rather than later, but at this point we don't have the final scheduled completion date.

           We have been warned of risks that I believe the minister has talked about quite openly in terms of the labour, the material issues and some of the changes that the city required to the project. But at this time we don't have a scheduled firm completion date or the final budget.

           B. Ralston: What risks did Mr. Podmore or ministry staff advise on as to the likely final cost of this project?

           Hon. C. Taylor: We have been advised that there are a range of estimates, which is why in the budget we were careful to say "in the range of $800 million." At this point we have not got a report back to Treasury Board yet or from the minister that states exactly what that number will be, and we will all be very happy to make it public when we get to that point.

[1030]Jump to this time in the webcast

           B. Ralston: Just so that I'm clear, then. Mr. Podmore will be preparing that report, and it will be presented to the minister in a meeting of the type that took place four weeks ago?

           Hon. C. Taylor: He will present it to his minister, the Minister of Tourism, and that minister will bring it forward through to Treasury Board.

           B. Ralston: I understand there was some attempt by Mr. Dobell to negotiate a fixed-price contract in the latter part of last year, and apparently those negotiations were unsuccessful. Is there likely to be any change in that status of the contract, or is the minister able to advise?

           Hon. C. Taylor: I think it is public information that Mr. Dobell was trying to negotiate a fixed-price contract for

[ Page 7502 ]

at least part of the project. At this point, all I will say — because I think that everyone can understand the commercial sensitivities here — is that there are ongoing negotiations. When everything is complete and we have the final number, it will go through Treasury Board to cabinet, and it will become public information.

           B. Ralston: The ministry's website — on the Treasury Board part which monitors current projects — has a total number of $615 million, which I pulled off last night. Now, that's obviously out of date, given what was in the budget. Can the minister advise when was the last time she was given a firm number for the cost of the project?

           Hon. C. Taylor: The number $623 million was in the budget. We did make it very clear to everyone that we expect that it will be in the range of $800 million, but we didn't have a specific number — when you take in all of those risks that were out there. That's why we've made it clear, in terms of our fiscal responsibility, to let everyone know there is an issue with the overrun. But until we get the final number, we can't be more precise.

           B. Ralston: Well, I appreciate the difficulty of estimating the cost of a rapidly escalating project. But the range of $800 million — when, and on what basis, did the ministry decide on that number?

           Hon. C. Taylor: I would refer to page 133 at the bottom, where in explaining the situation, we say that further work is underway to review the impact of higher than expected construction costs on the project. There was work that the minister responsible, the Minister of Tourism, was doing with Partnerships B.C. I believe that the board of VCCEP itself was doing an analysis, but the minister said to us that he was not yet ready to say with any confidence what that final number would be. That's why we put the range of $800 million in the budget.

           B. Ralston: Well, I understand the imprecision, as I've said, but there appears to be a relatively firm number of $623 million, and then there's a jump to something in the range of $800 million.

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           I'm wondering: what was the decision-making process or the reporting process that led to that jump of approximately $200 million, which is substantial, certainly, for most people?

           Hon. C. Taylor: The $623 million represented the known value of the contracts that had been signed. There were negotiations going on, and therefore we couldn't put the specific value of what those would be on top of the $623 million, other than to say it was our expectation that it would be in the range of $800 million.

           B. Ralston: Well, as I understand the construction process, there would be an initial estimate at the outset which would include an estimate of the costs of all contracts and subcontracts necessary to complete the project.

           Is the minister saying that there was a separate number in addition to the $623 million that was uncertain well into the project, or was there a specific number which was being exceeded by cost pressures in the range of $200 million?

           I'm not clear what the minister is saying.

           Hon. C. Taylor: I want it make it clear, first of all, that government is not happy about this overrun. We've faced the numbers climbing in part because of material costs and in part because of expectations that the city placed on the project in terms of changing the scope.

           That is why we are trying to be as transparent as we can with this and say that it's going to be a great increase in dollars. It's going to be in the range of $800 million. The difference between the $623 million was for contracted work that was already certain, and the remaining dollars up to $800 million was for work that was still to be done or contracts still to be signed.

           The minister in particular didn't want to be too specific, even if he could make a closer estimate, because when you're negotiating contracts you don't really want to tell the person you're negotiating with what those exact dollars would be for each piece. So it was with the minister responsible, the Minister of Tourism, working with VCCEP people, with Partnerships B.C., with Treasury Board people and presenting to Treasury Board that it was our best estimation at the time of writing the budget that it would be about $800 million.

           We have not yet seen the report that gives the final number. It will be presented to the minister. The minister will bring it to Treasury Board, who will bring it to cabinet. We will make it public as soon as we can.

           B. Ralston: The initial cost estimate for completing the entire project was $495 million, I understand. Am I correct in that? That was the initial cost estimate for completing the entire project — all contracts, all subtrades, the whole package. Can the minister confirm that?

           Hon. C. Taylor: That is correct.

           B. Ralston: So the escalation to $623 million, the number that was given publicly, was an escalation only in the cost of a part of the contract — is that right then? — the part of the contract that was completed up to the point that that number was publicly divulged.

           Hon. C. Taylor: It wasn't necessarily work completed but contracts signed.

           B. Ralston: Did the minister or Treasury Board staff direct Mr. Dobell to attempt to negotiate a fixed-price contract back in 2006?

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           Hon. C. Taylor: We actually asked Mr. Dobell, VCCEP and the minister responsible to come back to one of our credit watch meetings with a proposal that

[ Page 7503 ]

would show how they were going to meet the budget. It was part of that proposal where he felt that the best opportunity would be if he could get a fixed-cost contract signed.

           B. Ralston: I understand from what we've discussed earlier that these so-called credit watch meetings on this project were regular occurrences. I have another one in Mr. Dobell's diary on July 5, 2006.

           When did the first meeting with the new Minister of Tourism, Sport and the Arts take place? I understood that in August of last year he was sworn in to that ministry. Perhaps the minister could advise when he first met with Mr. Dobell and the minister.

           Hon. C. Taylor: Yes, I know that all of my agendas have been FOI'd, so you've probably got the information, but I'm happy to look it up.

           B. Ralston: Well, as efficient as our small research staff is — compared to the huge support staff that the minister has — I don't have that diary just yet. But if the minister is willing to share it without the necessity of an FOI request, that would be very helpful. Perhaps I could get that by later today. I could use that as the basis for some questions this afternoon. Is the minister making that commitment?

           Hon. C. Taylor: What I understand the request is, is for is the date of the first meeting that we had with the new Minister of Tourism, and I'll do my best. While I'm talking, I hope somebody's listening, and they might start looking.

           B. Ralston: Did the credit watch meetings then continue through the fall of last year with the participation of the Minister of Finance and the Minister of Tourism, Sport and the Arts?

           Hon. C. Taylor: We had a series of discussions, of course, through the fall with the minister because we were preparing — throughout that fall time, it's very busy, with our Treasury Board schedule — the budgets for February.

           B. Ralston: I appreciate that the Treasury Board staff is monitoring the ongoing costs of the project and that so is the minister. I'm interested in what communication there was between the Minister of Finance and the Minister of Tourism, Sport and the Arts in that period between August of last year and the tabling of the budget, the explanatory note in the budget. Can the minister advise?

           Hon. C. Taylor: Is the member opposite asking for every meeting I've had with the Minister of Tourism all last fall?

           B. Ralston: Well, that may be what I'm asking, but I understood that there were regular, so-called credit watch meetings, which appeared to take place monthly or bi-monthly. I would assume a new minister would be briefed on the status of the project, and then would enter into the stream of briefing on this very important project — probably the biggest potential cost overrun in his ministry, in any event.

           Hon. C. Taylor: They were generally quarterly, unless there was a specific issue that we wanted to discuss or the minister wanted to discuss. But I would say that the convention centre was a topic in other meetings as well, as you can imagine, because all of government was concerned about this.

           B. Ralston: The minister has said that at the point that the $623 million figure was arrived at, it was for work done and contracts committed to. That dollar figure was the sum of those contracts, but there are obviously a number of other contracts for the work to complete the project.

[1045]Jump to this time in the webcast

           Would the minister agree that, at the point the $623 million figure was given, it was well known that the project was going to require substantially more dollars to complete?

           Hon. C. Taylor: Yes, we tried to make it well known. That's why we printed it in the budget. That's why we said that there are still other risks and other costs. Our best estimate at this point would be that it will be in the range of $800 million.

           B. Ralston: Well, maybe the minister is misunderstanding me. I'm interested in a little retrospective analysis. In November 2005 the then minister advised the House that $615 million would be the final cost of the building. That's very close to the $623 million figure.

           So I'm wondering if what was being thought by Treasury Board staff and if the advice given to the Finance Minister at that time was that that was the final figure for everything. Or was it $623 million thus far, with a further undetermined amount to complete the project?

           Hon. C. Taylor: Throughout that time, starting from the $495 million figure, we were told that this was the final budget number. As we went along, unfortunately, the presentations kept increasing. It's public information; everybody knows that. At each step of the way, we were told that there were risks but that the minister felt that these numbers could be met.

           B. Ralston: In his negotiations to conclude a fixed-price contract, what assistance did Mr. Dobell have from Treasury Board staff?

           Hon. C. Taylor: None.

           B. Ralston: Was his relationship, then, simply one of reporting to the Minister of Finance or to the Minister of Tourism, Sport and the Arts? Or was he reporting

[ Page 7504 ]

directly to the Premier, and then it would filter down through some other mechanism?

           Hon. C. Taylor: Under our Crown agencies secretariat and rules, the Crowns report directly to the minister who is responsible, so Mr. Dobell was reporting to the Minister of Tourism.

           B. Ralston: At the present time the minister and the government are awaiting a report from Mr. Podmore. What's the expected or promised completion date of that report?

           Hon. C. Taylor: Everyone involved in this would like to get that final report to know what the final number is and just concentrate on building this beautiful facility. We are hoping that we see this final report by summer, but Mr. Podmore has not made any promises because he came into this and had a lot of work to do to speak to all of the contractors and design people involved, to the city and to Canada Place. He is doing that work, and I hope that we will see a final number and a final report by the summer.

           B. Ralston: Mr. Podmore is a very busy person. Is he working full-time on preparing this report, or is he working in association with Treasury Board staff? Has he engaged his own staff to assist him in the preparation of the report?

           Hon. C. Taylor: I couldn't speak to exactly how Mr. Podmore is working with the minister responsible, the Minister of Tourism. I would leave that to Minister Hagen to speak to. In terms of Treasury Board, our role is to wait for that report to come in, to make an analysis, to bring it forward to Treasury Board, to cabinet and, as quickly as possible, into the public domain.

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           B. Ralston: While the minister is waiting for the completion of that report, and respecting the confidentiality of contracts that may still remain to be negotiated, has the minister set a contingency amount that would reasonably be required to complete this project? My expectation would be that it would be something in the range of $900 million, but perhaps the minister could confirm that?

           Hon. C. Taylor: In identifying this possible cost pressure, we also, therefore, had to make room in our capital plan for an increase in costs, and you may have noticed that we increased our capital contingencies from 5 percent to 9½ percent. So there is a $950 million contingency there for not just the convention centre but for other projects as well.

           B. Ralston: In that capital contingency, what other projects are included?

           Hon. C. Taylor: What else is included is listed in the budget. It's on page 50. It says that in addition to covering risks from higher than expected cost inflation on projects including the VCCEP, the capital contingency includes a preliminary allocation for hospital projects in Victoria, Kelowna, Vernon and Fort St. John.

           B. Ralston: Is the minister prepared to assign a rough proportion of that $950 million contingency to the extension project?

           Hon. C. Taylor: Yes. By the evidence in the budget, we are assuming that the cost will be up to in the range of $800 million. So the difference between the $623 million and the $800 million is included in that capital contingency.

           B. Ralston: Given the history of the project, I'm sure the minister is cautious about making an estimate of the final cost of the project. But it seems to me to be not beyond the realm of contemplation and, indeed, likely that it will come in at something higher than the low $800 million range. What part of the contingency or what contingency has been assigned to deal with that possibility?

           Hon. C. Taylor: Contingency is by definition a block fund. It's recognizing that we don't have the exact numbers.

           As I said before, $950 million is there for unexpected pressures or projects such as the ones I have listed. Approximately $200 million of that $950 million right now, it is assumed, will probably have to go towards the convention centre. If it were slightly more than that or more than that, it would come out of that $950 million. We are quite comfortable and our rating agencies, who look at these things very closely, are very comfortable that we have put in adequate contingencies to cover these eventualities.

           B. Ralston: The Budget Transparency Act requires a disclosure in the budget of capital projects greater than $50 million. That is in the present budget at page 52, and there is a number of $281 million. The identical table the previous year showed a figure — and that's for the provincial contribution — of only $8 million less, so the inflation or the increase in cost in the budget from this budget over the previous budget was only $8 million. In view of all that the minister has said, can the minister explain why that is so?

[1055]Jump to this time in the webcast

           Hon. C. Taylor: We actually went beyond the requirements of the BTAA. The note, if you look at the bottom of page 52, says:

           "The amount represents the provincial portion of this cost-shared project with the federal government and the tourism industry. An additional $8 million is reflected in 2008-09 to meet the escalated cost of contracts to meet the project's current schedule."

Those are the known contracts and costs.

           "Further work is underway to review the impact of higher-than-expected construction costs on the project, and preliminary estimates of an updated project cost are in the range of $800 million, depending upon the contract model selected."

[ Page 7505 ]

           So what we've done there is we, once again, have identified known costs, known contracts and our best estimate of what the final cost might be. But we are really careful to keep saying "in the range of," because we just don't know at this point, and we won't know until that report comes from VCCEP to the Minister of Tourism and then up to Treasury Board.

           B. Ralston: The note, which I have highlighted here, refers to the contract model selected. So I take it that, given that the fixed-price contract that Mr. Dobell was negotiating was not possible, is that a reference to those alternatives? What amount is set aside further in contingency, given that the method appears to be a cost-plus contract rather than a fixed-price contract?

           Hon. C. Taylor: There are, of course, a variety of models that you could look at in terms of either fixed cost or risk transfer. These models are being looked at, negotiated, and I cannot, in the public domain at this point, jeopardize any of the commercial information or negotiations, endanger any of those negotiations. This will all be public information just as soon as we have the final report.

           B. Ralston: What is Mr. Dobell's continuing involvement in the management of this project, if any?

           Hon. C. Taylor: I don't know. You would have to ask the minister he reports to — the minister responsible, the Minister of Tourism.

           B. Ralston: As part of the process of coming to a final number that Mr. Podmore is engaged in, is he giving advice on what form of contract the remaining work should take place in — for example, as a fixed-price contract — or not?

           Hon. C. Taylor: Yes, of course. He's heavily involved in working towards a final report.

           B. Ralston: Sorry, I didn't hear that answer. If the minister could repeat it, please.

           Hon. C. Taylor: I said yes, of course, he is heavily involved in not only writing the final report but putting all the pieces in place that will ensure that we can have a number that we have certainty in.

           B. Ralston: Does that advice, then, as part of trying to achieve some certainty in the rapidly rising costs of this project, include giving advice on the form of contract that the remaining work should take?

           Hon. C. Taylor: I assume so.

           B. Ralston: Perhaps the official from Treasury Board could assist on that point.

           Hon. C. Taylor: Treasury Board and Finance staff are not involved in the negotiations.

           B. Ralston: Perhaps I'm not clear then. I assume that there's an ongoing monitoring process, and as a greater certainty emerges, if that's what's desired, Treasury Board would be advised of that and ordered to calibrate the contingency as part of their overall monitoring of government finances. Is that not the case?

[1100]Jump to this time in the webcast

           Hon. C. Taylor: Mr. Podmore just…. The date I have that he was actually asked to do this was the end of March. So he came in, as I mentioned before, with a preliminary workplan in terms of what he felt his responsibilities would be and the issues, costs and structure he was looking at

           As I think I've made clear, he is working very hard at this point to put the pieces together. When he has a report ready, he will report to his minister, the Minister of Tourism, who will bring that forward to Treasury Board for analysis.

           B. Ralston: I'd like to switch topics if I could. I want to deal with what are called contractual obligations or alternative service delivery as part of the overall overseeing of the financial plan and the finances of the province. That's part of the strategic advice given by Treasury Board staff, as I understand it, and the strategic and corporate policy section.

           [R. Cantelon in the chair.]

           Can the minister advise what she sees as the advantages to alternative service delivery arrangements to the province's finances?

           Hon. C. Taylor: I have just been informed that in fact we believe Mr. Podmore was engaged by mid-February. We don't have the exact date. If that's important, we can certainly get that for you.

           I didn't understand if your question was about alternative service delivery or whether it was about Partnerships B.C. If you don't mind repeating the question, please.

           B. Ralston: No, my question wasn't about Partnerships B.C. at this point. I'm more interested in alternative service delivery arrangements — for example, the delivery of the Medical Services Plan and Pharmacare services with the ten-year agreement with Maximus.

           I'm wondering if the minister could advise what strategic advice she receives from Treasury Board staff or from the strategic section of the ministry as to the long-term advantages — presumably the minister thinks there are some — to delivering government services in that way.

           Hon. C. Taylor: The contracts that are being referred to, of course, are before my time, so I couldn't give you personal knowledge in terms of how they were handled. But generally, when a ministry decides to do a contract that is ASD, the contract would be analyzed by Treasury Board staff.

[ Page 7506 ]

           B. Ralston: Can the minister advise what the criteria are that are used by Treasury Board staff to evaluate such contracts?

[1105]Jump to this time in the webcast

           Hon. C. Taylor: Primarily looking at value for money and service offered to the community.

           B. Ralston: Is the only source of advice on the wisdom or not of entering into a contract something that's provided by Treasury Board staff, or is there any external independent evaluation of the wisdom or not of a particular contract?

           Hon. C. Taylor: If I can walk through an example of what happens, then you'll see how many ministries get involved. If a minister — for instance, the Minister of Health — decides to look at a contract — and I can't say what contract he might be looking at or not looking at — he would go to the alternative service delivery, the ASD, secretariat. That sits with Minister Ilich. So you would have a ministry that initially is looking at the idea. You would have Minister Ilich, who has the secretariat as her responsibility.

           They would work through the contract. There are many experts now who are within government developing the expertise that's necessary to make these analyses. After that is completed, then the contract comes to Treasury Board. So it's really primarily Minister Ilich's area, the ASD secretariat.

           B. Ralston: I'm interested in what oversight Treasury Board staff would provide as to the cost of the contract and in how it would be compared to the cost of providing the service through the traditional provision of public services through government. Presumably, there is some oversight on that issue. I'm interested in the role of Treasury Board staff in providing that oversight.

           Hon. C. Taylor: As I mentioned before, the minister who is initiating the contract would work with the experts in alternative service delivery in Minister Ilich's ministry. They would do the analysis of whether it makes sense and what the contract might look like. That report comes up to Treasury Board, where Treasury Board staff would do our due diligence of looking at the contract, and then it's presented to Treasury Board.

           B. Ralston: Aside from the analysis at the ministry level and a review at the Treasury Board level, is there any independent — that is, outside of government — analysis of the wisdom or not of entering into a given contract?

           Hon. C. Taylor: Again, I can't give you the details of how these ASD contracts worked before I became part of government. Since I've been here, Treasury Board staff have not brought in an outside consultant to look at any ASD contracts that I'm aware of.

           B. Ralston: Is the Treasury Board staff presently reviewing any new ASD contracts — that is, for the delivery of services by an alternative service delivery agreement that hasn't been in existence before now?

           Hon. C. Taylor: At this time, no.

           B. Ralston: Is there a Treasury Board workplan that, looking out respectively over this year, includes a review of any potential areas for alternative service delivery agreements?

[1110]Jump to this time in the webcast

           Hon. C. Taylor: I would make the assumption that there are several ministries — maybe many ministries, maybe a few ministries — who might be looking at these. I just can respond for Finance and Treasury Board. At this time we are not working on any specific one.

           B. Ralston: There are a number of contracts in existence. They are disclosed to some degree in a very brief fashion in the summary financial statements. What is the ongoing role of the Treasury Board or the Ministry of Finance in monitoring these contracts, in the sense of the service that's being provided and whether or not it is the service that was contracted for?

           Hon. C. Taylor: It's done by the minister responsible.

           B. Ralston: Well, if that has a revenue component — if, for example, there is a renegotiation or if there are penalties assessed for nonperformance of aspects of the contract — is that not the point at which the Ministry of Finance's interest would be engaged as either a source of revenue or a source of future projected expenditure?

           Hon. C. Taylor: In the case of the Maximus contract, which I believe had penalties, that would have been handled by the ministry themselves. If we have a contract that is to be renegotiated, changed or expanded, then the ministry would put that report together and present it to Treasury Board for analysis and comment.

           B. Ralston: Just so I'm clear, what's the revenue treatment of, say, a financial penalty? Is that deemed to be own-source revenue to the Ministry of Health? In other words, if there is nonperformance of — and I'm speaking hypothetically because I don't think this was ever released publicly — the Maximus contract, if there is a fine that's imposed for a breach of the contract, is that deemed to be revenue to the Ministry of Health, or does that go into the consolidated revenue fund?

           Hon. C. Taylor: It would flow through the ministry into the CRF and would show up as other revenue.

           B. Ralston: In the case of assessments or fines for nonperformance, can the minister advise what that dollar amount was in the last fiscal year?

           Hon. C. Taylor: From our point of view, it is lumped together under other revenue. I'm not the expert on this because I am not the Minister of Health, but I

[ Page 7507 ]

would suggest that if you're asking specifics, it be addressed to him. I think I recall in question period the Minister of Health saying there was a confidentiality agreement about that. But I'm not certain, and it's not my ministry, so I would direct the question to him.

           B. Ralston: Well, there are other ministries engaged. I understand that with the Minister of Small Business and Revenue, the EDS contract for revenue collection services…. Would that similarly be treated as revenue to the Ministry of Finance and then find its way to the consolidated revenue fund as well?

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           Hon. C. Taylor: Again, the expert on that contract is the Minister of Small Business and Revenue, but under that contract what they are doing is collecting revenue that is owed to us. It's tax revenue that is owed to the government.

           B. Ralston: I know the office of the comptroller general regularly conducts audits of certain parts of the government operation. Is there any plan, either in the office of the comptroller general or at the Treasury Board level, to conduct audits of these substantial alternative service delivery contracts, with the view to deciding whether or not the public was receiving value for money?

           Hon. C. Taylor: The internal audits that are done are initiated by the ministers in various areas, and I believe that the member opposite has the full list of all the internal audits that have been done.

           B. Ralston: Indeed I do, but I'm thinking prospectively. This, I think, would be an audit of a slightly higher order in the sense that it would be more complex. But I'm wondering what the mechanism is for review by either the Treasury Board or the comptroller general of the operation and effectiveness of these alternative service delivery agreements.

           Some of them are very lengthy. The Maximus one is a ten-year agreement. The EDS one is a ten-year agreement. It's not unheard of during the life of a very lengthy contract for there to be, at the very least, fluctuations in the quality of service delivery that may impact the public.

           So I'm interested in what the view is of the minister and the ministry in terms of monitoring the good delivery, or not, of these services by these agreements.

           Hon. C. Taylor: It is the ministers who monitor these contracts. From our point of view, we are always watching any of our contracts or any of the businesses we do. If anything seems irregular or is a concern to any minister, then they ask for the services of internal audit, which is with the comptroller general, who does an internal audit for them. But it is the minister who is responsible for monitoring these contracts and has the ability to ask for an internal audit.

           B. Ralston: Obviously, I accept that the minister in each case would be ultimately accountable. But I'm wondering whether the minister finds that an adequate safeguard for reviewing some ten-year contract — only if something comes to the attention of the minister. Is there no mechanism for periodic external or independent audit of the operation of these contracts?

           The Maximus contract is a value of approximately $324 million; for the EDS contract, the government's base contractual obligation is $301 million. It seems to me that the minister might very well be interested in whether these services are being delivered effectively and whether the public is getting good value for the vast amount of money that's being spent.

           Hon. C. Taylor: Hon. Chair, may I introduce our comptroller general who has joined us, Cheryl Wenezenki-Yolland.

           I have to congratulate you, Cheryl. This is our first estimates in this role. We're very pleased that Cheryl has taken on comptroller general.

           Again, it is primarily the ministers, who are closest to these contracts and monitor them, who would be the initiators of an internal audit. However, there is always the possibility, because we are constantly doing risk analysis, that if we felt that there was something unusual or worrisome or a particular risk, we certainly could do an audit.

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           B. Ralston: I'm looking at the notes to the summary financial statements for the fiscal year ending March 31, 2005. It refers to four separate alternative service delivery agreement contracts.

           I'm going to ask the same question about each one. The delivery of the Medical Services Plan and Pharmacare services' ten-year contractual obligation of approximately $324 million…. Has there been at any point an external audit of that contract? If not, is one contemplated during the life of the contract?

           Hon. C. Taylor: We couldn't quite hear the beginning of your question. Was it about Maximus?

           B. Ralston: Perhaps I can clarify for the minister. I'm looking at the summary financial statements, fiscal year ended March 31, 2005, on page 60. I'm sure the comptroller general will probably have that document. That appears to refer to Maximus, although it is not named in this note.

           I'm asking a specific question about that contract. A ten-year agreement with the province has a five-year renewal option. A ten-year obligation is $324 million. Has there been an external audit of that contract to date? If not, is one contemplated at any point during the life of the contract?

           Hon. C. Taylor: We are not aware of any external audit. I should also say that at any time the Auditor General may choose to audit if he thinks there is something that is important to look at.

           B. Ralston: I appreciate the reference to the Auditor General as a general proposition. Is the minister aware

[ Page 7508 ]

of any imminent or present activity by the Auditor General to undertake an audit of this particular alternative service delivery agreement?

           Hon. C. Taylor: We are not aware.

           B. Ralston: Moving to the next note there: the delivery of corporate human resources and payroll services with a ten-year agreement. The province has a five-year renewal option. The ten-year contractual obligation is approximately $170 million.

           Has there been an audit of the delivery of this agreement to date? If not, is one contemplated during the life of what is potentially a 15-year agreement?

           Hon. C. Taylor: Not that we're aware of.

           B. Ralston: The third one that's referred to here is the delivery of revenue and collection services with a ten-year agreement and a similar five-year renewal option. The ten-year base contractual obligation under this agreement is $301 million, and there is a revenue-sharing arrangement, since this is largely a collection contract. I understand there is a percentage that accrues to the provider upon successful collection. I believe it's 40 percent, but I'm not sure.

           Similarly, has there been an external audit — conducted by either the comptroller general, Treasury Board or anyone else — of the functioning of this contract to date? If not, is one contemplated over the life of this agreement?

           Hon. C. Taylor: We are not aware, but once again, I must say that with all these contracts…. They sit with the ministries involved. It would be that minister's decision if they feel that an internal audit is warranted. I'm not aware of any external audits.

           B. Ralston: The fourth one that's listed here in this note is the delivery of corporate information technology services with a ten-year agreement. The province has a two-year renewal option as well as a one-year transition option. The ten-year contractual obligation is approximately $300 million.

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           The same question: has there been an external audit by the comptroller general or any part of the treasury operation of performance on this contract to date? If not, is one contemplated during the life of the agreement?

           Hon. C. Taylor: The same answer. We're not aware of any external audits that are being done on these, but once again, a number of these contracts are fairly new. I wouldn't say that we will never look at them. They would be part of the risk analysis assessment that the comptroller general does every year, and if it's warranted, we can step in and do an audit.

           B. Ralston: The minister says these are fairly new. In each case can the minister advise what the commencement date of the contract was? Some of these, as I understand it, are at least two or three years old.

           Hon. C. Taylor: Yes, that's what I mean by new.

           B. Ralston: Given that there are no external audits underway of any of these and none contemplated during the life of the agreement, and it appears to be left very loosely to the discretion of the minister — without any policy from either the Treasury Board, the comptroller general or the Minister of Finance — is the minister contemplating a policy that would see some form of external audit of these contracts in order to test their efficacy and value, given the huge dollars that are involved?

           Hon. C. Taylor: Just to keep the record straight, I said I am not aware of any external audits, but they do sit with the ministers responsible. It's quite possible that the ministers have considered this or done this. I don't know. Those answers belong with the ministers who hold the contracts.

           We do, as I mentioned before, a risk analysis every year that picks out areas that we really want to particularly have a look at. So it would be part of that process, and I never said that we would never do an external audit.

           B. Ralston: Never is a long time, I appreciate. But it doesn't seem — and perhaps the minister can correct me if I'm wrong — that there's any sense of this being a high priority or an urgent matter. Is the minister prepared to contemplate the formulation, within the Treasury Board or the office of the comptroller general or strategic and corporate policy — all of which fall within Vote 31 — the development of a policy that would test these contracts for delivery of value?

           Hon. C. Taylor: You know, government is a big business. We work very hard at our risk analysis, and we believe we do it well. Major contracts or exposures are always considered as part of our risk analysis. We draw up audit plans. You would know better than I, since we've given you the information on exactly how many internal audits we've done, but it's a very large quantity.

           I would think that from government's and taxpayers' points of view, they should feel relieved that the management is such that we are doing these internal audits all the time. I always stand up when another one is released because every internal audit…. The whole point is to think of how we can do things better. Someone will point out one particular thing that we didn't do well, and I'm always able to say: that's why we do internal audits. They're a good measure for us. It's a way for us as government to continually improve.

           If anyone for a moment thinks that we do things perfectly, we don't. We're always trying to get it better, and an internal audit is an important tool for us.

           All of these major contracts that have been picked out certainly get looked at from a risk analysis point of view. We can immediately, if we felt that there was

[ Page 7509 ]

some risk issue to the taxpayers or to government, do an internal audit.

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           B. Ralston: Given then the minister's understanding and the reporting that's taken place from the different ministries of these contracts, is there a policy to contemplate these kinds of contracts for other areas of government in the future? I'm not speaking of an individual minister coming forward with a new idea. I'm thinking of a policy direction given by the Ministry of Finance, the Treasury Board or anyone else under the minister's direction.

           Hon. C. Taylor: You don't have to do the ASD model if you're a minister and you have a major contract, but we are all encouraged to look at the model and see where the best value for money and the best service to British Columbia lies. We believe that the ASD model is a good one, otherwise we wouldn't be using it. We do believe it's a good one. That doesn't mean you have to use it, but it is a model that we are encouraged to look at.

           B. Ralston: Perhaps if I could draw an analogy, then. The Premier in his speech to the Union of B.C. Municipalities issued a directive to municipalities — and this is obviously a different form of contract in public-private partnerships — that any project in which the province had over $20 million invested would be required to contemplate a P3.

           In a similar way, are ministries advised when considering service delivery to consider alternative service delivery as a first priority in deciding policy and how to deliver service, or is it a little more vague than that?

           Hon. C. Taylor: We are all encouraged to look at ASD models, especially if there is risk transfer involved. We are just looking for the best value for British Columbians and the best service for British Columbians, and we believe this model is one that will be a big part of our future going forward.

           B. Ralston: Well, with respect, I don't think that really answers the question I posed. I'm interested in how these prospective agreements might be considered by individual ministers following direction from the Ministry of Finance.

           Is there a directive, beyond considering them in a general sense, to consider them as a first choice? Is there any protocol on how to make that decision? Is there any memo or are there any documents that guide the ministers, and presumably at the deputy minister level, when policy is being formed? Or is it simply a profession of faith in the way that the minister has described it?

           Hon. C. Taylor: There has not been as clear a directive as there has been with P3s, but I think the word I'm using is the right word. We are encouraged when we're doing large contracts, particularly if there is a possibility of risk transfer, to look at the ASD model.

           B. Ralston: Is there a written policy or directive at the Treasury Board level or at the deputy minister level that the minister is prepared to share with me and therefore with the public?

           Hon. C. Taylor: I would encourage the member opposite to ask the minister who is responsible for the ASD secretariat. I am not aware whether or not she has put out a policy directive on this.

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           B. Ralston: Well, I suppose the point of these alternative service delivery agreements is that there's some calculation on the part of the government and the Minister of Finance that it's a cost-effective way to deliver a service and has an impact on the budget, on budget planning, on the three-year fiscal plan and all those other financial effects.

           I'm interested in not necessarily only what the minister who is administering the secretariat has to say, but in what the minister has to say at the policy level about these kinds of agreements. Is there any direction or any policy that's been reduced to writing, beyond verbal exhortation, on this topic?

           Hon. C. Taylor: We have not issued a specific policy directive from Treasury Board telling all of government that this is what they must do. But when a minister does come forward with a particularly large contract or one that has risk transfer, then we do direct that minister to do the policy analysis, to look at the ASD model.

           B. Ralston: Just so I'm clear, is the minister saying that in every case where a large contract comes forward, the minister is directed to do that kind of analysis as one alternative?

           Hon. C. Taylor: As I said before, it's really general guidance that Treasury Board gives to the ministers who are coming forward, particularly with large contracts or if there is a risk transfer possibility. The guidance usually directs the minister to work with the ASD secretariat, which is Minister Ilich, to do the analysis before Treasury Board looks at the contract.

           B. Ralston: The minister has mentioned risk transfer. Is there a methodology that the Treasury Board recommends as a way of evaluating risk transfer in an alternative service delivery contract?

           Hon. C. Taylor: Hon. Chair, we are building up expertise within government in a couple of areas. Partnerships B.C. we all know; that sits within Finance. We are also building up expertise on alternative service delivery. That sits with Minister Ilich, and she would be able to answer as to the kind of analyses they do.

           B. Ralston: So beyond that general direction, that's not a methodology that has been approved or signed off by the Treasury Board. That's something that has

[ Page 7510 ]

been left to the discretion of that minister and that ministry.

           Hon. C. Taylor: There are at least two levels of due diligence going on, because the minister who is initially looking at these large contracts would have input especially in terms of what kind of service they're looking for, for British Columbians. Through the ASD secretariat, which is with Minister Ilich, they would have their format for analysis and risk analysis, and for how they would present the report to Treasury Board.

           Treasury Board then has another level of due diligence where, of course, we look at cost-benefit analysis, at net present value and at the service that is a result of the contract. So you have several levels of eyes looking at these large contracts, which I believe is the proper way to manage this.

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           B. Ralston: Well, that sounds like it's as it should be, but what I'm interested in is finding out what the process of evaluation is that's done at the Ministry of Finance level. Beyond that general description, is there a protocol — something written, steps to evaluate — that the minister is aware of or can be advised of and is prepared to release to myself and to the public?

           Hon. C. Taylor: We don't have a checklist that we go down on a contract. We have experts in finance. We have experts who are economic analysts. We look at these contracts from the point of view of what kind of service the people of British Columbia would receive, what value the contract has in terms of the other issues I mentioned — the cost-benefit analysis we do, and we look at net present value. There are a lot of tools at hand to look at a contract and see if in our judgment it is a good contract for the people of B.C. or not.

           B. Ralston: Looking at the structure of the ministry, does that evaluation take place with the Treasury Board staff?

           Hon. C. Taylor: Yes.

           B. Ralston: Is there a specific section of the Treasury Board staff that undertakes these analyses?

           Hon. C. Taylor: It is the performance budgeting office.

           B. Ralston: That consists of how many people?

           Hon. C. Taylor: Approximately 22.

           B. Ralston: I wanted to switch topics slightly, just in view of the hour. I have a few questions about another topic. This concerns tax policy for low-income British Columbians.

           The Progress Board in their report on the social condition in British Columbia recommended that the government should support the introduction of a federal earned-income tax benefit and cooperate in the integration of its income-tested programs with the federal program. That's on page 22 of the report on the social condition in British Columbia.

           Has the minister or the ministry received this recommendation, and what steps have they taken to consider it?

           Hon. C. Taylor: We tabled that report. We have not got it before us. Since we're coming up to a break soon anyway, perhaps you can tell us what page, and we'll look it up. When we continue, we can respond to that.

           B. Ralston: Thank you. I appreciate that.

           I'm looking at page 22. Perhaps I can provide a series of questions that will provide a context in which the answer might be received.

           What this Progress Board recommends is what's called a federal earned-income tax benefit. What the purpose of the benefit of the policy — and I understand it was introduced in the recent federal budget, at least in a summary form — is to encourage people to take paid labour and enter the workforce, even if their wages are relatively low, and then to provide a tax subsidy for that, because participating in the labour force has all kinds of other social benefits that are probably obvious. It's a policy that's recommended by some policy institutes in the States, and I believe the federal Minister of Finance is contemplating it.

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           What this report also says is that "the federal proposal represents an important policy opportunity for the B.C. government. The introduction of a WITB would require careful federal-provincial coordination and integrate different income-related programs."

           My question again will be — I suppose seeking the answer after the break: what steps, if any, has the government taken, firstly, to consider the report and, secondly, to engage the federal government in that contemplation? What are the results of those discussions?

           Finally, I suppose, in the area, this report speaks of the minimum-wage policy in this context and says that because the provinces are responsible for setting the minimum wage for most of the labour force, a federal-provincial understanding about minimum wages may be required.

           Now, the minimum-wage issue is something that the minister has already spoken about publicly. I'm wondering if there's been any consideration of an interprovincial and federal joint response to the issue of minimum wage and to integrating people into the workforce in the fashion that the B.C. Progress Board suggests.

           Hon. C. Taylor: Yes, I'll certainly speak to your last question, and then we will continue with the other question after lunch.

           The minimum-wage issue is always a difficult one, I think, for governments across the country. The best possible situation is when you actually find jobs for people. One of the things we've tried to do in turning

[ Page 7511 ]

the economy around is get the economy going so that in fact more and more people are making good earnings and wages in the province of British Columbia — 300,000 new jobs just in the last few years.

           In terms of the minimum wage for a single employable, we are at the highest level that is paid by provinces in Canada. We do believe that is an important issue, and we disagree with the presentation, in fact, that was made by the members opposite in terms of increasing the minimum wage by $2 and then taking down the small business tax by 1 percent.

           The problem there, of course, is that if you increase minimum wage by $2, that is a hit to small business — primarily small business — of between $200 million and $400 million. They have said quite vocally to us that that is a hit they just can't afford to take. To say that we will reduce your small business tax by 1 percent is $72 million by our calculations. So you're giving back a little bit, but you're really hitting small business quite significantly.

           The member opposite is correct. I have spoken out against that, particularly given the fact that we are currently, with our single employables, sitting at the highest level paid by provinces in Canada.

           B. Ralston: The minister mentions a study presumably conducted by Treasury Board within the confines of Vote 31, as to the likely cost to small business of an increase in the minimum wage of $200 million to $400 million. Is the minister prepared to table that report publicly?

           Hon. C. Taylor: It wasn't a report; it's mathematics. The Leader of the Opposition said there were about 110,000 people this would apply to. If you say they work part-time, that would be a cost of $200 million. If they work full-time, it would be a cost of $400 million — $440 million to be exact, $220 million to be exact.

           B. Ralston: What the B.C. Progress Board points out…. They say: "If the minimum wage is not maintained in real terms, the cost of an EITB would grow more rapidly and the benefit could become a subsidy to low-wage employment."

           Given that the federal government seems to be heading in this direction and given the minister's views on maintaining the minimum wage at the level that it's been since the last increase in 2001, some six years ago, is the minister not concerned that the federal government and provincial government would be then subsidizing low-wage employment?

           Hon. C. Taylor: This is the complete policy difference between the two parties. I don't think I'll ever be able to convince you of our point of view, and I disagree with your point of view. We believe that the way to really help people who are low income is to turn the economy around, to get taxes as low as possible.

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           With the three tax initiatives that we have taken as a government since 2001, we now have the lowest income tax of any province in Canada for an individual earning up to $108,000.

           Leaving more dollars in someone's pocket is really the way that you help low-income people. We have also, with these initiatives, taken 250,000 people off the income tax list. Helping at the lower-income end, for people to not have to pay tax at all or to pay very low tax, we believe is the right approach in terms of trying to help people have more dollars to look after their families.

           B. Ralston: The provincial Liberal government in Ontario recently announced proposed increases to the minimum wage, which would take it above $10 an hour in, I believe, a year and a half — up to $10.25. Over a period of time it would be phased in.

           Obviously, the minister not only disagrees with me but disagrees with the provincial Liberal government in Ontario. Is that correct?

           Hon. C. Taylor: Noting the hour, may the committee rise, report progress and ask leave to sit again?

           Motion approved.

           The committee rose at 11:52 a.m.


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