Hansard — Monday, March 31, 2008 p.m.

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY


CONTENTS

	Routine Proceedings
		Page


Introductions by Members		10631

Tributes		10631
	North Peace area athletes
	Hon. R. Neufeld

Introductions by Members		10631

Tributes		10631
	Prince Rupert amateur hockey champions
	G. Coons

Introductions by Members		10632

Tributes		10632
	James Morrison
	Hon. M. de Jong

Introduction and First Reading of Bills		10633
	Utilities Commission Amendment Act, 2008 (Bill 15)
	Hon. R. Neufeld

Statements (Standing Order 25B)		10633
	Downtown Eastside Women's Centre
	J. Kwan
	Elimination of racial discrimination
	J. Nuraney
	Korean Canadian businesses in Coquitlam
	D. Thorne
	Jennifer Atchison
	H. Bloy
	Downtown Maple Ridge Business Improvement Association
	M. Sather
	PuCKS Program
	M. Polak

Oral Questions		10635
	Police investigation of former Solicitor General
	C. James
	Hon. W. Oppal
	M. Farnworth
	J. Kwan
	N. Macdonald
	M. Karagianis
	D. Thorne
	S. Simpson

Petitions		10640
	S. Fraser
	R. Lee
	G. Coons
	B. Simpson

Committee of the Whole House		10640
	Electoral Reform Referendum 2009 Act (Bill 6) (continued)
	J. Horgan
	Hon. W. Oppal
	S. Simpson

Report and Third Reading of Bills		10650
	Electoral Reform Referendum 2009 Act (Bill 6)

Committee of the Whole House		10650
	Budget Measures Implementation Act, 2008 (Bill 2)
	B. Ralston
	Hon. C. Taylor
	J. Horgan

Royal Assent to Bills		10665
	Ministerial Accountability Bases Act, 2007-2008 (Bill 5)
	Electoral Reform Referendum 2009 Act (Bill 6)
	Local Government Statutes Amendment Act, 2008 (Bill 7)
	Forests and Range Statutes Amendment Act, 2008 (Bill 8)
	Prevention of Cruelty to Animals Amendment Act, 2008 (Bill 9)
	Housing Statutes Amendment Act, 2008 (Bill 10)
	Musqueam Reconciliation, Settlement and Benefits Agreement Implementation Act (Bill 12)

Proceedings in the Douglas Fir Room

Committee of Supply		10666
	Estimates: Ministry of Transportation (continued)
	M. Karagianis
	Hon. K. Falcon
	B. Simpson
	C. Evans

Hon. S. Bond: Today marks the end of the celebration of excellence that we've called education month. We are joined in the gallery today by numerous leaders in education including students, teachers, administrators and in fact a ministry staff person.

Joining us today are three of B.C.'s winners of the Canada's Outstanding Principals award: David Betts, district principal in Sooke; Carol MacWilliams, principal at École KLO Middle in Kelowna; Tarjeet Mann, principal at Braefoot Elementary in Victoria.

Also visiting us today is the female provincial coach of the year, Nicky Carroll of Windsor Secondary in North Vancouver. We have Rhonda Draper of Glenmore Elementary in Kelowna, who won the Governor General's Award for Excellence in Teaching Canadian History; Britta Gundersen-Bryden, the 2008 winner of the Cornouiller d'or prize of the Fédération des francophones de la Colombie-Britannique. We're very excited to have her as part of our ministry staff.

Most significantly, today we have a number of student leaders who rode their bikes 500 kilometres to raise money and awareness for the homeless as part of the à vélos pour les sans-abri cycling for the homeless project. They are Samuel Daigle and Michael Legault from Kitsilano Secondary in Vancouver, Jeremy Desrochers from Carihi Secondary in Campbell River, and Kassym Dorsel from École de l'Anse-au-sable in Kelowna.

I want to also thank their team leaders: Michelle Thibeault, director of the Centre for Leadership and Adventure in Nature; Manon Landry, special needs coordinator for the Conseil scolaire francophone; and Laurent Brisebois, vice-principal at École Kitsilano Secondary School.

We recognized all of these individuals for their excellence in education, and we're delighted to have them join us in the gallery today.

A. Dix: It's good to be back. I want to introduce 48 of my constituents who are participants in the Collingwood Neighbourhood House seniors wellness program. Every week they get together and do all kinds of very interesting activities in our community. Today their interesting activity is coming here to the Legislature and watching question period and watching and touring the Legislature and touring Victoria.

On behalf of everyone here in the Legislature, I would like to wish them a great welcome to Victoria.

Hon. R. Neufeld: Although they're not in the precincts, I want to actually recognize some athletes from northeastern British Columbia, who so seldom get recognition. The Fort St. John senior Flyers won the senior men's triple-A Savage Cup after defeating the Powell River Regals in a five-game series. Congratulations to the team and coach Adam Brash. They will face Bentley Generals for the Mackenzie Cup starting April 3.

The Fort St. John–North Peace Eagles won the B.C. hockey women's senior-A championship with a 5-4 victory over the Delta Jets in March. The team and coach will travel to Winnipeg for the Western Shield championships in April.

The Cooper rink, consisting of Travis Cooper, Reid Johnson, A.J. Lebonski and Josh Johnson, went undefeated at the juvenile men's curling provincials. They will also travel to Winnipeg for the Optimists under-17 international championships, April 2 to 6.

Congratulations to all of these great athletes who are representing the North Peace as they act now.

Hon. K. Krueger: Joining us this afternoon in the chamber for the first time is Silvana Costa, one of the remarkable public servants we are fortunate to have working in the mining and mineral division of the Energy, Mines and Petroleum Resources Ministry. She's a senior project manager in the policy and sustainability branch of the division, originally from Brazil, and has been living in Canada the past ten years.

This spring she'll be awarded her PhD from the UBC Norman B. Keevil Institute of Mining Engineering. Her studies, work and interests focus on sustainability in natural resources development with an emphasis on mining sustainability principles, mining communities and camps, as well as human resources issues in mining.

G. Coons: Prior to the Easter break I also mentioned some events happening throughout the province — the B.C. Amateur Hockey Association Championships. In Prince Rupert the girls bantam-A was won by Kelowna.

I would like to acknowledge and congratulate two local northern teams from Prince Rupert, the Prince Rupert bantam-A Wampler Sea Wolves coached by Dave Feser and the Prince Rupert Canfisco midget-A reps coached by Bruce Tessier, for winning the provincial championships in their divisions and bringing home the bragging rights.

Hon. M. de Jong: Jacob Wilson, Dave Pauls and Nathan Krellencamp are all grade 5 students at King Traditional School in Abbotsford school district 34. They are here along with Jacob's father, Paul Wilson, to watch this chamber in action, learn about politics and take the lessons they have learned back to their civics class at King Traditional School in Abbotsford. I hope the whole chamber will make all four of them welcome.

D. Routley: We're just coming back after a break, but during that break — this Saturday — there were a whole lot of people out in front of the buildings here from the Western Canada Wilderness Committee with Ken Wu as their leader and the Pulp, Paper and Woodworkers of Canada with Arnie Burkhoff and many others.

There were over a thousand people outside expressing their concern over old-growth logging and their expectation of a transition to second growth and a more sustainable practice. I'd like the House to thank all of those British Columbians who came out on the weekend and expressed their concern and support for this Legislature doing something about their issue.

Hon. S. Hagen: Previously, Rhonda Draper was introduced by the Minister of Education. Rhonda is here today with her son Dylan from Kelowna. The reason that's such an honour for me to have met with them over the lunch hour is that 50 years ago this year, Rhonda's mother, Marie Johnson, and I graduated from Camrose Lutheran College. It was such a pleasure today to spend some time with Marie's daughter and her grandson Dylan. Would the House please make them welcome.

H. Bloy: It's a real pleasure to rise in the House today. I want to introduce my bride of 31 years, who is here to see me. She's up in the gallery. We spent a nice weekend in Victoria visiting with family and friends. Would the House please join me in making her welcome.

D. Jarvis: I have on the premises today a group of students from Argyle Secondary School in North Vancouver, one of the highest scholastic and sports schools on the North Shore. They are accompanied by their teachers Ryan Hughes, Daniel Royer, Katie Wells, Rachel Tessier and Mark Fortin. If everyone would make them welcome, that would be appreciated.

D. MacKay: I have a rather special guest I'd like to introduce in the House today. I don't suspect she's at home watching. She's probably with her mom and my son. Obviously, a lot has happened over the Easter break.

On Friday afternoon I was blessed with a granddaughter that was seven pounds. Her father, my son…. I know she's not watching today, but I would like the House to welcome her to British Columbia.

R. Hawes: I'd like to just remind the member for Burquitlam that his wife of 31 years is named Anita. So could the House make Anita welcome.

B. Bennett: In the House today there is a delegation from Guangdong province in China. They're from the Jiangsu Provincial People's Congress there. They're here on a study visit to study the budget oversight and public consultation process here in B.C. More generally, they're part of the Canada-China legislative cooperation project.

With the greatest apologies to them for the way I pronounce their names, I am going to introduce them. We have Mr. Xue He; Mr. Tang Zhushan; Mr. Chen Guihua; Ms. Li Mei; Mr. Li Ping; Mr. Zhang Xiaojian; Mr. Wu Jun; Mr. Yu Wei; Mr. Ivo Balinov, who is a program officer with the Parliamentary Centre; Ms. Liu Naiwen; and Mr. James Zhihong.

R. Hawes: Just to straighten out some of the confusion that seems to be here this afternoon, the latest MacKay grandchild is named Montana. I understand the grandfather has got some memory lapse sometimes. We'd just like it on the record that Montana MacKay is the newborn grandchild.

Hon. M. de Jong: Sadly, I have to announce to members the passing of a great British Columbian — a hero, in fact.

James Morrison was born in Scotland in 1911. He arrived about ten years later in British Columbia, and that was his home for the remainder of his life. In 1939 James Morrison, upon hearing of the declaration of war, enlisted and was a proud member of the British Columbia Regiment and the Duke of Connaught's Own.

But he didn't wait until the war to be a hero. I learned at his memorial service last week that in 1937, he actually witnessed someone jumping from the dizzying heights of the Lions Gate Bridge and jumped after them into those ferocious waters that are the narrows. He was awarded the Medal of Bravery in 1937 for having rescued that individual.

Besides his family, which, of course, was his first passion in life, he had two others. The work he did within the organized labour movement, particularly with the food and beverage workers through the '50s, '60s and '70s…. He was the creator of a union newspaper aptly named, for that sector, The Mixer. There was a legion of contributions that he made through the years to that movement.

He was also passionate about politics. He was a longtime member of the B.C. Liberal Party. I'm reminded by a former member from Burnaby, Patty

Sahota, that well into his 90s he had no qualms about calling up and offering advice and campaigning strenuously on her behalf, particularly at the George Derby Centre, which was his home from the year 2000 on. It's a veterans home, and he was proud to be there. He was a very popular fellow through the years.

A few years ago he was awarded the Queen's Jubilee medal as a signal of thanks from a grateful nation, a grateful monarch, a grateful province. He passed away on March 20. He was a great brother, a great father, a great husband, a great grandfather, a great British Columbian and a great Canadian, and he'll be missed.

Hon. R. Neufeld presented a message from His Honour the Lieutenant-Governor: a bill intituled Utilities Commission Amendment Act, 2008.

Hon. R. Neufeld: I move that the Utilities Commission Amendment Act, 2008, be introduced and read a first time now.

Hon. R. Neufeld: I am pleased to introduce the Utilities Commission Amendment Act. On February 27, 2007, the government's new energy plan was released. The B.C. energy plan places the province at the forefront of environmental and economic leadership.

Today we propose the Utilities Commission Amendment Act, 2008, which will bring the existing act in line with the conservation, energy security and climate action goals of the energy plan. The amendments align the act with the province's energy objectives — to encourage utilities to reduce greenhouse gas emissions, pursue energy conservation and efficiency, produce and obtain electricity from clean or renewable sources, develop energy transmission infrastructure and capacity in time to meet customers' needs, and leverage innovative energy technologies.

It is my honour to introduce legislative amendments to ensure that our energy targets are met. Furthermore, the amendments will create a new process for provincewide electricity transmission planning so that long-term transmission needs will be met. As well, there are provisions to ensure the competitiveness of rates.

It is the commission's role to regulate on a cost basis. The B.C. Utilities Commission can take action to ensure our rates remain among the lowest in North America and still meet the goals of the 2007 energy plan. Overall, the changes to the Utilities Commission Act ensure that the government sets the energy policy framework within the B.C. Utilities Commission, and the B.C. Utilities Commission will regulate utilities.

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

Bill 15, Utilities Commission Amendment Act, 2008, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

J. Kwan: I would like to express my congratulations to the Downtown Eastside Women's Centre for celebrating their 30th anniversary last week. High levels of violence, homelessness, addictions and poverty characterize the downtown east side community. Women and children are particularly vulnerable to exploitation, injustice and injury.

Life on the street poses more dangers and exploitation for women. The centre is one of the few safe places in the downtown east side for women and their children. They provide support for over 300 women every day by providing hot meals, clothing, secure mailing addresses, phone and computer access, and functioning and secure toilets and showers.

The inequality for women continues today in Canadian society. There are 67 percent more women than men who earn less than $30,000 a year. One in five women continues to live in poverty in Canada; 56 percent of lone-parent families headed by women are poor compared to 24 percent of those headed by men. Women and youth account for 83 percent of Canada's minimum-wage workers, and 70 percent of workers living in abject poverty in the world are women.

Rural women constitute the majority of the 1.5 billion people who live in absolute poverty. Women own only 1 percent of the land in the world, according to the food and agricultural organization of the United Nations. Women work 2.3 percent of the world's working hours, producing half of the world's food, but earn only 10 percent of the world's income. Yet they own less than 1 percent of the world's property. And 37 percent of women of colour in Canada are low income.

The link between poverty and health is clear. The lack of access to affordable housing, transportation, food and non-secure health benefits such as medications leads to poor health. Women and children who are poor are also more likely to be socially isolated, which contributes to ill health.

I ask all members of the House to help me congratulate the women's centre for their good work and commitment to ending poverty for women.

J. Nuraney: I rise in the House today to recognize the International Day for the Elimination of Racial

Discrimination. It was 42 years ago in 1966 that the general assembly of the United Nations resolved to condemn and abolish all forms of racial discrimination around the world. Since then, the motion has been turned into an annual international day of awareness, activism, learning and celebration.

We honour this worthwhile cause on March 21. During this day of recognition and awareness, people around the world celebrate cultural diversity but also pause to consider the harm racism has wrought on the people and the communities around the world.

The world has come a long way since that fateful day on March 21 in 1960 when police in Sharpeville, South Africa shot into a crowd of black protestors, killing 69 and injuring 180. We can say with assurance that there has been definite progress in preventing racial discrimination and in promoting acceptance and understanding.

There remain, however, many places in our world and in our own communities where racist attitudes remain pervasive. We must resolve that March 21 serves as a day when we recommit ourselves to working towards acceptance, as a day when we express our outrage about racial discrimination and as a day when we acknowledge the pain that innocent people have suffered because of racism.

I would ask the House to join me in showing their support for International Day for the Elimination of Racial Discrimination.

D. Thorne: I am pleased to rise today to speak about the importance of Korean business in Coquitlam. Many immigrants from Korea have moved to the Coquitlam area in recent years, and with them have come an increasing number of Korean Canadian businesses, particularly in the North Road corridor. A number of these business people have joined the North Road Business Association, which is working very hard to assist them to successfully take their place in a vibrant business community.

A few months ago I participated in an interesting networking event with Korean Canadian business and community representatives from Burnaby, New Westminster and Coquitlam. One of the people in attendance, Andrew Lee of Angel Investment and Finance, has located his business office directly across the street from my constituency office. He has passed on to me several suggestions for how government might improve services to facilitate Korean investment.

SUCCESS is a local organization that is providing services to Korean immigrants, entrepreneurs, through its business and economic development division. Since 2004 this division has provided business services to more than 500 Korean clients. Korean-speaking staff assist immigrants by providing one-on-one business consultation, business start-up seminars and networking opportunities such as open house and information sessions.

Recently a delegation from Paju, South Korea, visited the city of Coquitlam and met with municipal officials to discuss a possible twinning relationship. Whether an official twinning will come about is still unknown, but the visit by the mayor and his delegation confirms the importance of the Korean community in Coquitlam.

I look forward to many more opportunities to build personal, cultural and economic relationships with the growing Korean Canadian business community in Coquitlam.

H. Bloy: It continues to be a privilege to rise in this House and speak of the people of my community who give back to this province to make it the best place on earth to live. I know that all of us here are dedicated to helping others, or we wouldn't be here. But today I am speaking of those who give their whole life to volunteerism, who ask nothing in return for their good deeds, who very simply excel at giving back to the community.

One example of this is found in my own riding of Burquitlam. Jennifer Atchison is a recipient of the 2008 community achievements awards which were announced on March 13. She is recognized for her tireless and ongoing efforts to protect and rehabilitate Burnaby's Stoney Creek.

Jennifer has demonstrated her leadership on this and other important environmental issues. She pulled together stakeholders from across the industry, different levels of government, and the community to preserve Stoney Creek. I do appreciate it, and my wife Anita, in the audience, appreciates it, as we live on Stoney Creek.

Jennifer Atchison retired in 1994, but she didn't stop contributing to her community in a big way. While exploring the Stoney Creek area, she initiated a birdwatching club with the assistance of the Stoney Creek Community School. Soon after this involved forming the Stoney Creek Environmental Committee in 1995 after conducting a thorough research paper, which was provided. Her proposals were then adopted by the Greater Vancouver Regional District.

Allow me a moment to list her past achievements. She has been honoured by the Department of Fisheries and Oceans with Canada's recreational fisheries award. She has received the B.C. Ministry of Environment award for her project, the Great Salmon Send-Off, which runs every year at Stoney Creek.

She was recognized in Burnaby as a local hero, and she received recognition in Canadian Living magazine. Jennifer's written work continues to inspire environmental experts. Through applying Jennifer's recommendations, the city of Burnaby….

M. Sather: Business improvement associations, or BIAs, are non-profit organizations that represent business and property owners in neighbourhoods across British Columbia. The Downtown Maple Ridge BIA was created in late 2006 and was officially launched on May 1, 2007.

They have a dedicated and active volunteer board of directors, including Bob Masse, Racine Barbour, Chrislana Gregoray, Lynda Lawrence, Ernie Beaudin, Tammy Diniz, Bob Jones, Peggy Logue and Tom Meier. They, along with their staff, work with members to develop and manage programs that support both large and small businesses in the area. As a non-profit organization, the BIA office is supported by the community with donated office space, furniture, manpower, web design and publishing services.

Members of the Downtown Maple Ridge BIA volunteer for two-year terms on four key committees: beautification, events and marketing, revitalization, and safety and security. Their Shop Local campaign encourages residents to stay within the community to do their shopping. Sparkle Week enlists businesses in sweeping sidewalks, cleaning doors and windows, and perhaps creating a window display.

The property trespass, crime reporting and core area patrol programs utilize trained patrollers who deal with significant issues like property break and enters and homelessness. Renewal, improvement and growth — these are the fundamental building blocks for long-term success of any healthy town centre. The Downtown Maple Ridge BIA is yet another of our community leaders helping people make Maple Ridge a better place to live.

M. Polak: Street hockey is a Canadian tradition. All you need for a neighbourhood game in the cul-de-sac are some sticks, old baseball gloves and some couch cushions for the goalie. But for kids who wish to take their hockey dream to the next level, it costs money. If your child has a disability, it can cost even more. Thanks to the PuCKS program, hockey is becoming accessible to more and more kids whose dreams would otherwise end in the cul-de-sac.

PuCKS stands for promoting community through kids in sport. Their goal is to offer hockey to all kids with or without disabilities, regardless of their financial circumstances.

Through partnerships with organizations such as VanCity, WestJet and TEAM 1040 Sports Radio, PuCKS provides equipment and financial support to kids like Maranda Rudolph.

I met Maranda and her family when I, along with my colleague the Minister of Aboriginal Relations and Reconciliation, had the opportunity to present her with a new chest protector on behalf of PuCKS. Maranda is the goalie for the Langley girls Peewee C Sharks. At the 2008 Ice Classic in Richmond, Maranda was the game MVP against Kamloops, facing 70 shots and allowing only nine goals. Maranda is also a PuCKS hockey scholarship recipient. Through PuCKS, Maranda receives gear and financial support to ensure her continued success.

Not only will Maranda continue to excel as an athlete, but her involvement in sports has given her the confidence to set important goals for herself in other areas of her life. At 15 she is looking forward to attending university once she graduates from high school.

With the help of PuCKS, Maranda can look forward to more game MVPs and — who knows — maybe a future NHL contract.

C. James: For nine months the former Solicitor General has been under criminal investigation. For nine months the public knew nothing. Only when the media asked the right question was this serious matter made public.

My question is to the Attorney General. Do the people of British Columbia deserve to know when the top police official in the province is put under criminal investigation?

Hon. W. Oppal: Our system of criminal justice operates on the twin pillars of independence and accountability, and the appointment of a special prosecutor is within the specific and exclusive jurisdiction of the assistant deputy minister for criminal justice. The criminal justice branch has complete control of the appointment of a special prosecutor. That was done in this case.

C. James: This is about accountability. This is about ethics. This is about transparency and openness for the public. This is about confidence in the criminal justice system. This is not about an ordinary citizen. This is not about an ordinary MLA or an ordinary cabinet minister. This is about the highest-ranking police official in this province, the person who oversees the RCMP.

Again, my question to the Attorney General: why is the public kept in the dark about a criminal investigation into the former Solicitor General until someone asks the question? Doesn't he believe that the public has the right to know?

Hon. W. Oppal: You know, our system of disclosure and our system of prosecution are based on the Crown Counsel Act. The Crown Counsel Act is based largely on the recommendations of Stephen Owen, who conducted an independent commission of inquiry

into public prosecutions in this province and concluded with a report filed in November of 1990.

In that report he makes certain recommendations. Those recommendations translated into legislation. Our legislation — with respect to disclosure, independence and all of those pillars and all of those principles that we rely on — is the envy of the world.

C. James: It's very clear the Attorney General has not been listening to the public in British Columbia, because I can tell you that they do not have confidence at all in the openness of this government.

Over the last nine months the former Solicitor General has been negotiating a new contract with the RCMP. The former Solicitor General has taken a firm position on police amalgamation to fight crime, calling it a red herring. In the time the former Solicitor General has been under criminal investigation, he has been involved in every important matter involving policing and crime.

My question again to the Attorney General: how can the public have any confidence in a government that keeps them in the dark about possible criminal activity by the former Solicitor General?

Hon. W. Oppal: I will, for the benefit of the Leader of the Opposition, read from the Stephen Owen report, Discretion to Prosecute Inquiry, page 107. He deals with this very issue of public disclosure.

It reads as follows: "Where the general public or the victim of an alleged crime knows that a police investigation has taken place, the potential for perceived improper influence or any otherwise unjust decision can arise. In such situations it should first be said that it is never appropriate to disclose a police report or other sensitive investigation documents to the public when a decision not to prosecute has been made."

M. Farnworth: Well, the special prosecutor was appointed nine months ago. There was no disclosure made. Yet the only reason there's a disclosure made is because someone — in this case, the media — asked the right question. Nothing has changed other than a question was asked: "Was the former Solicitor General under a police investigation?" It was at that point that they said: "Yes, he is."

The Attorney General says that he wasn't informed. So how can the Attorney General defend a process where it only becomes public when the right question is asked? Does it mean, then, that in the future what will happen is that the media or this side of the House will ask once a week: is a member of cabinet under a police investigation?

Hon. W. Oppal: I say, with the greatest of respect, that the member opposite has missed the whole point of what we're doing here. The policy set out by the criminal justice branch, which is based on Stephen Owen's recommendations, is that where the matter is not in the public domain and a special prosecutor is appointed, there should be no announcement made.

Hon. W. Oppal: Not all investigations result in charges. It would be unfair, to say the least, to reveal the state of an investigation where it does not result in charges. Innocent people are often subject matters of investigation. That's the reason why persons who are under investigation…. Their identity is not made known to the public. It's called fairness. It's based upon the presumption of innocence, which is a basic part of our criminal justice system.

M. Farnworth: What it comes back to is that the media asked the question. They just asked the question straight up, and they were given an affirmative answer that, yes, the Solicitor General is under police investigation. So it's not interference. It's just a straight-up question.

The Attorney General didn't want to answer the question: "Okay, are we going to have to ask every week whether someone in cabinet is under police investigation?" Perhaps he can answer this question. Does he think it's appropriate that he finds out through the media that the top law enforcement officer of the province of British Columbia is under police investigation and that he has not been told about that?

Hon. W. Oppal: For the benefit of the member opposite, I didn't find out through the media. I found out through the Deputy Attorney General.

Hon. W. Oppal: Let me read to the hon. member the provisions of the Crown Counsel Act, section 7(3). It reads: "If the Assistant Deputy Attorney General appoints a special prosecutor, the Assistant Deputy Attorney General must advise the Deputy Attorney General (a) that a special prosecutor has been appointed, and (b) the name of the special prosecutor."

You will note from that that the legislation that was passed unanimously in this House in 1991 specifically excludes the Attorney General from being notified, and

there's a very good reason for that. It's to keep politics separate from the independence that's required in the prosecution and the investigations of wrongdoings in our society.

J. Kwan: The Attorney General just told this House that he found out from the Deputy Attorney General that the former top cop in the province of British Columbia was under criminal investigation. My question to the Attorney General is: when did he find out?

J. Kwan: So let me just get this straight. The Attorney General says he found out at 5 p.m. on Friday. The press release was sent out to the public at 5:30 from the government. All through, by happenstance, a question….

J. Kwan: The press release went out from the criminal justice branch to the media at 5:30.

J. Kwan: And in the meanwhile, the criminal investigation has gone on for nine months. Had the question not been asked by the media, would it be the case, then, that the former Solicitor General would still be the top cop in the province of British Columbia?

Does the Attorney General think that this is appropriate for the investigation to have gone on for nine months before the public finds out that the top cop in British Columbia is under criminal investigation?

Hon. W. Oppal: …by the criminal justice branch. In part, it reads as follows:

The author of that is Robert Gillen QC, the Assistant Deputy Attorney General. Those are the guidelines that were used in the exercise of Mr. Gillen's discretion in this particular case.

N. Macdonald: Okay, this is a matter of public confidence. For nine months the top public official in charge of policing in this province was under investigation. By the government's own standards…. This is their stated position. The Premier's stated position is that as soon as a special prosecutor is appointed, a minister steps down. That is the stated position of this government. Those are the Premier's words.

That didn't happen. It didn't happen for nine months. That it happens to leak out through the media is a very weak way of handling this sort of issue. By the government's own standards the Attorney General has failed. The question that I have for the Attorney General is: why?

Hon. W. Oppal: You know, the members of the opposition don't seem to…. I recognize that there's a political component to this, and I recognize that all of them are going to get up and ask….

Hon. W. Oppal: I recognize that they're all going to parrot the same question. I recognize that. It's a part of the game. But you know, our criminal justice system is regarded as being the best in the world because of its independence, its fairness and its presumption of innocence. It has no place for castigating innocent people who may be subject to an investigation and who may never, ever be charged, let alone convicted. For people on the other side of the House to start castigating characters of people who may or may not be charged is grossly, grossly unfair.

N. Macdonald: The Attorney General deliberately misses the point. The point is this. If it was the right thing to do on Friday for the Solicitor General to step down, why was it not the right thing for the Solicitor General to do that nine months ago? All that we hear here… All that we hear from….

N. Macdonald: All we hear is that for this Attorney General, the fact is that unlike everything that we've been taught, ignorance is an excuse. What I want to know from the Attorney General is: why did he not act on this nine months ago? And if it is because he was ignorant of the fact, why doesn't he set up a system where the Attorney General knows what's going on?

Hon. W. Oppal: Well, it's obvious that that member has missed the point of what's being discussed here. For starters, the Solicitor General didn't know. The Solicitor General wasn't supposed to know. Nobody was supposed to know. You see….

Hon. W. Oppal: Our system is based on the fact that where there is a special prosecutor appointed and dealing with issues of that sort, then the subject matter of that investigation is not made known — public — unless it gets out into the public domain. The reason for that, again….

Hon. W. Oppal: The reason for that, again, is that many people are investigated, but not all of them are charged. It's a question that's based on fairness.

Hon. W. Oppal: Stephen Owen addressed these very issues in his report. I would recommend that the members opposite read the report. Read the report. Then read the act. As a matter of fact….

M. Karagianis: The Premier said in 2003: "We have always been clear as a party and as a government that when a special prosecutor is appointed to help the police carry out an investigation, it is appropriate for someone to step down." He didn't say in there that a cabinet minister will only step down when the public finds out about the investigation or the media asks the right question.

M. Karagianis: The Premier did not say anywhere in his comments that a cabinet minister will only step down when the public finds out about the investigation or the media asks the right question. The process here is flawed.

Is the Attorney General saying that the only trigger for accountability in his government is when the media asks a specific and right question? Otherwise, there is no trigger for accountability for cabinet ministers. Is that what he is saying to us?

Hon. W. Oppal: I will attempt to answer that question as best I can, keeping in mind the somewhat questionable premise upon which the question is posed. For starters, the Solicitor General did the honourable thing here. When he first learned of the appointment of the special prosecutor, he stepped aside. I don't understand that question at all — how the Solicitor General was supposed to resign back in June of '07 if he didn't know about the appointment.

M. Karagianis: Well, I believe that the Attorney General has stumbled upon the very gist of this entire question. How are we to know? Is the Attorney General trying to tell us that for nine months the top cop in this province has been under investigation — for almost a year — and no one in government has known anything about it? Is the public supposed to…?

M. Karagianis: Well, it is reasonable to think that the public deserve a better answer from this government than that.

For nine months the Solicitor General has been under investigation, and this government is claiming they're completely ignorant of that. How many other cabinet ministers are currently under special investigation? How will we ever have any accountability in this government? This is a government riddled with scandal. We have seen the Dobell case. We have seen the B.C. Rail sale scandal.

Now we are seeing that investigations take place against a senior cabinet minister in this government for nine months, and nobody on that side of the House knows anything about it. I do not believe for one minute that it is reasonable to expect that the only way we will find out what is going on behind closed doors

Will the Attorney General admit that this is a flawed process that needs to be changed right now?

Hon. W. Oppal: I think I'll answer the last part of that question, when she talks about changing the act. It should be remembered that the opposition, at the time of the passage of this act, called it landmark legislation. The Crown Counsel Act is model legislation. It's the envy of all jurisdictions.

Hon. W. Oppal: I don't think the member opposite would seriously want to change the act if she understood it.

D. Thorne: The Attorney General may feel that this whole process and everything that has happened since Friday afternoon is acceptable, but it's pretty clear already to me and to the people on this side of the House that the people of British Columbia don't think it's acceptable. The Attorney General….

D. Thorne: The Attorney General may not have found out from the media what happened on Friday afternoon, but he certainly found out right after his assistant deputy minister found out that the media had the information. So it's really the same difference, isn't it?

I want to know: can the Attorney General really rationalize this and say he finds it acceptable that he only finds out after the media make an inquiry?

Hon. W. Oppal: This is a statement of Bob Gillen, the Assistant Deputy Attorney General. He states:

S. Simpson: The Attorney General has decided to quote the law here, so let me quote section 7(4).

S. Simpson: Well, let's quote the law. Section 7(4) of the Crown Counsel Act says that if after a special prosecutor receives their mandate, the Attorney General, Deputy Attorney General or Assistant Deputy Attorney General gives a direction to a special prosecutor in respect of any matter within the mandate of the special prosecutor, that direction must be given in writing and be published in the Gazette.

By implication, yes, the Attorney General can be told about these matters. Yes, the Attorney General can look at the public interest, and he has the ability to give direction, including the direction to make the public aware that a senior cabinet minister is under investigation — and not wait nine months to do it.

Did the Attorney General misspeak earlier to this House when he said he shouldn't be informed, or is he just covering up?

Hon. W. Oppal: Well, that's a cute little statement completely devoid of any substance.

Hon. W. Oppal: You know, if you're going to quote subsection (4), read subsection (3) first.

Hon. W. Oppal: Let me tell you what the law is. Let me tell you what the law is, through the Speaker.

Subsection (3) states that if the Assistant Deputy Attorney General appoints a special prosecutor, the Assistant Deputy Attorney General must advise the Deputy Attorney General (a) that a special prosecutor has been appointed and (b) the name of the special prosecutor. That section comes into play before subsection (4).

S. Fraser: I have a petition from British Columbians once again asking this government to act on the safe antifreeze legislation.

R. Lee: I have a petition with 527 signatures requesting the House to restore full funding to B.C. child care programs.

G. Coons: I have a petition collected in Tlell and Port Clements, concerns with dramatic increases to fares and requesting a moratorium against any fare increases.

B. Simpson: I present a petition — 84 signatures from Cariboo North — in support of the private member's bills, the Right to Know Act and the Toxics Use Reduction Act, introduced by the MLA for Vancouver-Fairview.

Hon. M. de Jong: I call in this chamber committee stage debate of Bill 6, the Electoral Reform Referendum 2009 Act, and in Committee A, Committee of Supply — for the information of members, continued estimates debate on the Ministry of Transportation.

The House in Committee of the Whole (Section B) on Bill 6; K. Whittred in the chair.

J. Horgan: We were in the middle of this section when we rose at adjournment for the spring break. I'm wondering if we could spend some time on section 5 — in particular, the reference to what is discussed in the community that's interested in this subject, the supermajority, and why it is that the referendum proposed for electoral reform requires a supermajority in respect to the number of ballots cast and also with respect to the number of electoral districts.

In light of the public sentiment that followed what many perceived to be a successful referendum in 2005, why is it that the government chose to carry on with a supermajority as they did the first time around?

Hon. W. Oppal: It's essentially the same rationale that went into the last referendum, and that is that this would require a significant change in the way we vote. For that reason, it was thought…. The intent was that we have a more-than-bare majority. That's the reason for it.

J. Horgan: Well, the Attorney will know, although neither he nor I was in this place before 2005, that the referendum did take place. The question, although we don't know what the question will be, is likely to be similar to the question that was asked in 2005.

For many citizens, there was an expectation that the near 60 percent threshold that was achieved in 2005 was sufficient. If we're not changing the threshold and if we're not changing the question, and we're only going to encourage more participation by providing more funding for proponents than opponents, are we going continue to having referendums until we get the answer we want? Or is it a matter of just keep putting this on the ballot to see how people feel about it?

Hon. W. Oppal: I think the fact that it came close to hitting the threshold last time is probably good evidence or a good basis for the fact that it should be put on again. That's the reason why we're doing this all over again. It came close the last time, which indicates that a significant number of people wanted change. I think it's in the public interest that the public get the opportunity to decide this question once and for all.

J. Horgan: Well, I look back to the Charlottetown referendum. I look at other referenda that have been held in the province of Quebec, where those supporting sovereignty and those opposing sovereignty have been battling for generations. Each time the question is put to the public, the support for the question appears to be rising. For those democrats in Canada, you only have to look back at the last referendum held in Quebec, where it was a matter of fractions of percentage points that was the difference between success and failure.

With that, and being democrats who have modelled ourselves as a 50-percent-plus-one society, why is it that the government continues to support a supermajority in this instance? Is it a result of the initial legislation? Is it specifically for this question? If there were other referenda proposed by government, would you also have a supermajority?

Hon. W. Oppal: The first part of the question can be answered by the fact that there's now more public information regarding the referendum.

The question regarding the requirement of more than a simple majority can be answered as follows. That is, there are similar provisions in other legislations. For instance, in the Clarity Act on the federal level, seven provinces have to give their consent before any change is made. Many local government initiatives require a two-thirds majority where there is a significant change being proposed.

That's really the reason for it, because the STV process, if it is adopted, would mean a very significant change in the way we select our representatives. For that reason, it is thought by most people that we should have a significant requirement — more than a bare majority.

J. Horgan: When I worked in the House of Commons around constitutional issues at the end of the '80s and the early part of the '90s…. I can remember vigorous debates on the 7/50 rule for constitutional amendments and how that was going to play out across the country.

We saw some very interesting and innovative tools used by members. Certainly, the Attorney will remember Elijah Harper and his famous feather in the Legislature in the province of Manitoba. That sort of standing up against the majority won kudos from those who were opposed to the Meech Lake accord and, of course, acrimony from those who were in favour of it.

I go back to 2005. At the time of the referendum, this place was in significant imbalance. There were 70-plus members of the government and very few members of opposition. The government had initiated an innovative approach to electoral reform. The constituent assembly, people from across the province, was brought together to discuss and look at different methods and techniques of managing and balancing our democratic institutions. I don't think you could have found a time in our history when interest in this subject could have been any higher than it was at that time. Despite that, the question didn't meet the supermajority.

We've had three years go by. It'll be four full years before the public is given an opportunity to answer that question again. The balance in this place has changed. Government has stepped back from some of its more draconian policies, and I believe, based on what I hear in my constituency, that people are, by and large, satisfied with the electoral system.

With that in mind, could it not be argued that it's a bit of waste of money and resources and energy to put forward a question again with a supermajority that wasn't achieved at the height of discussion on electoral reform?

Hon. W. Oppal: The member raises some valid points. However, the major difference here is that the Electoral Boundaries Commission has now made recommendations relating to the single transferable voting system. For that reason, we think it's something that's worth revisiting.

J. Horgan: I agree with the Attorney that certainly the electorate will have a better understanding of the implications of STV now that we have maps or…. Once this place accepts the recommendations of the Electoral Boundaries Commission, I assume we will have legislation to that effect coming forward, and that will help inform the Lieutenant-Governor-in-Council with respect to a question for the referendum that's proposed for next year.

I've been spending quite a bit of time going to various on-line forums and looking at the debate around this question. I was not a supporter of STV last time. I was one of those who voted against it and made that clear to constituents when they raised the issue with me. But I have been doing quite a bit of research since that time, primarily because the two members of the constituent assembly who were from my constituency are very compelling in their arguments that I should pay more attention in looking at this.

As a result, I've looked at the discussion and debate on-line mostly and through academic submissions about the impact of a supermajority on a question of electoral reform. A fear in that community, who quite honestly live and breathe this stuff…. Inconceivable to many of us, but there are people in the community who are very passionate about this subject. The supermajority is an impediment in their mind to success for this initiative, which they believe will make our system more accountable to the people in communities.

Beyond the fact that the Attorney and the leg. counsel who drafted this piece of legislation feel strongly that it's important enough to have a supermajority, is there another compelling reason why a 50-percent-plus-one vote wouldn't be sufficient in this case?

Hon. W. Oppal: I don't know if I can make it any more clear or if I can articulate the position any differently than I already have except to say that in 2003 when the announcement was made that more than a simple majority would be required, there were no serious objections. Afterwards, there were some objections when it failed to meet the necessary threshold.

The only thing I can say again — and I will resort to the same argument — is that it's a proposal that really requires fundamental change. Because the change contemplated is so fundamental, the proposal is to have more than a simple majority.

J. Horgan: I guess when cabinet is faced with approving legislation, you take it to your caucus and put the question to the caucus. You say: "Well, we could have gone with 50-percent-plus-one, or we could have gone with the supermajority. We chose to go with the supermajority."

The challenge that poses for all of us here as we vote for this legislation, presuming it's going to pass, is that we'll go back to our constituencies, and there will be many who will say — and the Attorney will hear from them, I'm certain — that we are protecting our vested interests here in this place. The first-past-the-

That's not my argument. I want the Attorney to be clear on that. I don't have a quarrel with our system. I believe in representing an area rather than representing a point of view, so I'm quite comfortable with what we've got. But as I've said in the debate, I do hear from a lot of people in the community — not just my own, but since I've been taking an interest in this — that by putting forward a supermajority, we are protecting our self-interest.

Does the minister have a comment on that or on how I could better make the case when I go home — that I'm not doing that?

Hon. W. Oppal: Well, I'm sure the persuasive powers that the member opposite has will suffice in the circumstances. I'm sure that with your skills, Member, you'll be able to convince your constituents one way or the other.

I think the point to remember here is that the government, by virtue of the fact that it's putting this back in the public arena, indicates that we're paying attention to the number of people who voted in favour of it. I don't know if I can say anything more than that.

J. Horgan: We've talked about 60 percent of the ballots. Section 5(1)(a): "at least 60% of the validly cast ballots vote the same way on the question that is stated for the referendum." Now we go to subsection (b): "in at least 60% of the electoral districts…."

Now, this is a challenge for me. We haven't really had a fulsome debate, and I suspect we will when we deal with the Electoral Boundaries Commission report in the form of legislation before we rise in May. But we're now presumably up to 85, if the motion that was passed by this House is any indication. We'll have 85 electoral areas, which increases the likelihood of a defeat of this question because, of course, the 60 percent will mean more constituencies will have to vote in favour of it than not.

Again, that means that areas that are not equal in votes, in terms of those in downtown Vancouver, who are above the median — those that are above the 50,000 or whatever the figure ended up being — and those that are drastically below, in some of the rural areas of B.C…. There's a disproportionate amount of voting power in those rural seats.

Again, we've had some discussion about this. This is not new. Certainly, in this parliament we've been debating aggressively the Electoral Boundaries Commission process. There have been some ups and downs — some hiccups, if I could be generous — in that process. But now we're going into a supermajority where it's not only the number of votes cast, but it's the number of constituencies.

I appreciate the minister's confidence in my eloquence and ability to sell this back home to the folks — my Malahatians and my "John" de Fucans. But the question is: how do I justify large urban areas voting in favour being defeated by fewer votes in a larger number of rural constituencies?

Hon. W. Oppal: I think the best way I can answer that is to say that the rural areas may look at this quite differently from the urban areas. So the legislation does its best to level the playing field and offer…. It's a recognition of our unique historical landscape. So we have a tendency to ensure that those rural areas are not under-represented even though they may be losing population to urban areas.

J. Horgan: Well, I would argue that with this supermajority proposed in section 5(1)(b), they're overrepresented. There are fewer votes in those northern constituencies. If we have a low voter turnout in the rural areas because of…. Let's assume that with the frantic weather we're having these days, we have some snowstorms next May and people can't get to the polling places. Fewer people in those rural constituencies can impact the voting system for the rest of British Columbia because of this supermajority required in constituencies as well.

As I understand it — and, you know, the Attorney gets certainly more, if not better, legal advice than I do — if we look at the 85 seats that are proposed as, I guess, the fallback position of the Electoral Boundaries Commission, we are in fact increasing the likelihood that urban voters are disproportionately penalized in a supermajority versus rural voters.

I'm wondering if the minister has had any opinions from his ministry on that or if he has any thoughts on how that would affect the outcome.

Hon. W. Oppal: Actually, the increase in the number of seats has taken place in the urban areas where there has been a greater increase in the population. That's where there are more seats now — in those areas. Yes, the northern seats are to be kept there — or the intent is to keep them there — so as to not deprive the people in those areas of representation. But the greatest increase has taken place in the urban areas.

J. Horgan: Well, I'll have to respectfully disagree with the minister on that. Had the Legislature taken into consideration the first report of the Electoral Boundaries Commission, where they recommended 81 seats — removing seats from rural British Columbia, northern British Columbia, the interior, Kamloops area and in the Kootenays — I would have had to agree with him.

But if I am to understand that the House supported a motion calling on 85 seats, which is two more than the final report recommended — so we went from 81 to 83, and we will be approving in the weeks or months ahead 85 — that increase from 81 to 85 is all in rural British Columbia.

The deviation for rural versus urban went from…. I think the median was going to be 52,000 residents, and it has now dropped down to 49,000 or 50,000. So that is

disproportionately favouring rural British Columbia. I don't have a quarrel with that with respect to electoral representation in this place under our existing system. But when I look at this legislation and I look at two supermajorities — one for votes cast and another one for constituencies — I think that changes the dynamic somewhat.

So I would ask the minister again: did he receive any advice before tabling this legislation that suggested to him that it was disproportionately favouring rural residents against urban residents?

Hon. W. Oppal: Well, I must disagree with the member's assessment. You see, in 2005 there were 79 electoral districts. In 2009 there'll be 85. What that really means is that the rural areas have kept their seats. There hasn't been any increase, and there has been no decrease, whereas the urban areas, because of an increase in population, have an increase. I think that's the best way I could answer that.

J. Horgan: I'll just use Vancouver Island as an example. One seat was added on Vancouver Island. It was not in the capital regional district, and it was not in Nanaimo. It was added in the Cowichan Valley, which is a beautiful place, and I'm proud to represent it, but it could certainly not be described as urban.

By redrawing the maps around cities on the Island, by redrawing maps in the Fraser Valley and in the Okanagan, we are creating smaller constituencies around those urban centres, and we are — as you say, quite rightly — preserving current seats as they exist on the 79-seat configuration in the 85-seat configuration. But it doesn't change the fact that those seats in the north, which were below the deviation provided for in the constitution before the Electoral Boundaries Commission and are even more below now…. It doesn't change the fact that those constituencies have fewer people in them. To get to the 60 percent majority in those constituencies would be easier to do than it would be in terms of numbers of votes in urban seats.

Therefore, my argument is that if you put the two supermajorities together, it disproportionately favours a pro or a con vote in rural B.C. over urban B.C. I don't know how else to say it.

I understand that the minister doesn't see it the same way I do, but perhaps he's going to get some assistance from his staff.

The challenge for us on this side of the House is that we take this stuff very seriously. Certainly there are many, many people in the community that take this very seriously. I think it's incumbent upon us to fully canvass this issue and ensure that government, in discharging its responsibilities, has contemplated these variables in coming to the conclusion that a supermajority — not just one, but two — is the appropriate way to go.

Hon. W. Oppal: I don't know if there's anything more valid that I can say except to say that these are the boundaries that have been proposed by the Electoral Boundaries Commission, an independent commission. We think we have to live by them. I think, maybe, that we'll have to agree to disagree on this. I don't know if there's anything more I could add to that which I've already said.

J. Horgan: The Electoral Boundaries Commission, as independent as it was, recommended 83 seats. That was their recommendation. It wasn't: "It's 83. But maybe, if you'd rather, do 85." It was 83 seats.

In an appendix of the report, they said: "If you really, really want to have more seats, you could add two — one here and one there." I'm all good with saying that the commission was independent and the commission recommended something, but it didn't recommend what we voted on last week, and it didn't recommend what we're going to vote on in the weeks ahead.

We have added in this Legislature, both sides of the House, two more seats. By adding two more seats, we've increased the likelihood of this referendum failing. So when I go back to my constituents, when I get in the chat rooms, the STV chat rooms out there on the Internet…. Believe me, those watching at home, they're out there. If you want to find them, just google "STV B.C.," and you'll find them. There are some very articulate and thoughtful people in these forums, and their biggest concern is the question of supermajorities.

Why I continue to ask the questions is that it's not wishful thinking on my part. I'm just hopeful that government has, in the past three years, given more than just a passing thought to this question, and that now that we're increasing the number of seats and we're increasing the threshold for success, there's a reasonable rationale for why we did that.

Hon. W. Oppal: This proportional test is the same test that was embodied in the previous legislation. I don't know if I can add anything more.

J. Horgan: Moving on to section 5(2), it says, "If the result of the referendum (a) is binding on the government in accordance with subsection (1), and (b) the ballots referred to in that subsection are in favour of adopting the single transferable vote electoral system, the government is required to introduce the legislation needed" — etc.

So what this section does is ensure that if the referendum vote is successful, we will have new boundaries, new maps. Will it mean another electoral boundaries commission or will we be proceeding on the maps that were prepared by the most recent group?

Hon. W. Oppal: Well, obviously, we are not in a position to bind any future Legislature. However, according to the law, according to the act, there will be a further electoral boundaries commission appointed after the 2013 general election.

J. Horgan: This section says that before the election is held in May 2013, legislation will be introduced to implement the STV system. So I guess my question is:

does that mean a new round of finding three wise people to travel the province again? Or are we going to be using the maps that were presented and prepared by this commission when we accept the recommendations or findings of the electorate in the referendum in 2009?

Hon. W. Oppal: Well, again, without attempting to bind any future Legislature, the intent was to rely on the advice given by the commission on the STV recommendations that have been made.

J. Horgan: So then I'll just say this and see if I can get agreement from the minister. We have an Electoral Boundaries Commission that has reported back. They have given us a final report. We will put into legislation the boundaries for the coming election in 2009. Should the referendum, which we're discussing today, pass in 2009 — meet the requirements of the supermajority at both levels — we will then proceed, as it's prescribed in this section, to prepare for the May 2013 election on the boundaries that have been put in the commission's report for this round, for 2009.

The maps that were prepared, part and parcel of the documents that we've been receiving from the commission, will form the basis for the 2013 election. There will not be another commission?

J. Horgan: With that, I give the floor to my colleague from Surrey-Whalley, if he has any further questions on section 5.

S. Simpson: Section 6 speaks of penalties respecting misuse or non-repayment of funds, presumably for the proponent or opponent groups after they've received their funding. Could the minister tell us what the government has in mind in terms of the kinds of things that a proponent or opponent group might do that would be deemed to be a misuse of the funds — other than, presumably, theft of the funds — in terms of their conduct, of their action, as a proponent or opponent group? Are there particular activities that the minister presumes might constitute misuse of funds?

Hon. W. Oppal: Well, I would contemplate just the misappropriation of funds, if anything of that sort takes place. Let's assume for a minute that a party secures funds for purposes that are legitimate and then uses them for an illegitimate purpose, for a wrongful purpose, for a purpose that's not contemplated by the legislation. In those circumstances the penalty section would come into effect.

S. Simpson: When I read 6(1) — or it's referenced again in 6(2) — it says that a person who contravenes a provision of a regulation under this act that relates to the use or repayment of amounts, etc., under section 4, which is the section that applies the money…. To me, that looked like there may be particular activities that wouldn't be "illegal activities," — i.e., a misappropriation of funds or anything of an illegal nature — but in terms of how they conduct themselves….

It has the potential to be interpreted that there may be regulatory measures put in place about the breadth of conduct for one of these groups, the proponent or opponent groups, that would be outside of the allowable use of the funds. I'm wondering whether that was the intention of the minister.

Hon. W. Oppal: Where the funds are used for political purposes in promoting some candidate as opposed to what the intent of this section is would be an example of violating the provisions of this act. Obviously, if there's a misappropriation or something of that sort, the criminal law would come into play. But section 6 contemplates a regulatory process under the act where the conduct might fall well short of criminal sanctions or criminal conduct.

S. Simpson: So then, just to be clear, and setting aside, of course, that criminal activity wouldn't be allowed…. We all understand that. Now, the minister is saying that overt partisan activity in favour of one political party or another…. Overt partisan activity by the proponent or opponent would be a disallowed use. That wouldn't be allowed to occur. I believe that's what I hear the minister saying.

Are there other activities, other than those of an overtly partisan political nature, that the minister envisions as not being allowable?

Hon. W. Oppal: Well, I would expect that when the regulations come into effect, they will specifically state the purpose for which these funds are to be used. So the disuse, if you will, of the funds or the misuse of the funds would attract the effects of this section. If they are used for some partisan purpose other than the promotion or the non-promotion of the referendum, then obviously in those circumstances section 6 would come into play.

S. Simpson: I know there are some more specific matters in section 8, and we'll get a chance to talk more specifically about these organizations that will come into play and what they can and can't do.

Just in regard to the issues around funds, presuming the passing of this legislation sometime in the not too distant future, when does the minister presume to write those regulations and make them available or have them made available in public? And is there a process of consultation to go on around what those limits or those regulations might be?

Hon. W. Oppal: The intent at this stage is to consult with the Chief Electoral Officer and make regulations that are appropriate. That is the present intent.

You know, there is no process in place now to have any kind of consultation. However, having said that, I think that's something that may be worth considering. That's all I can say.

S. Simpson: I appreciate that the minister is suggesting that this is a matter that…. He may want to consider broadening this discussion out. I mean, clearly, responsibility for development of the regulations rests with the executive council. If they're giving that authority to the Chief Electoral Officer, the Chief Electoral Officer will support that.

I'm glad to hear that, because this is a bit of a unique situation in terms of this kind of referendum in British Columbia where the government has gone out and provided resources to pro and con organizations and said, "We want you to be active on this and to represent these two views and be able to represent them in a strong and articulate fashion so that British Columbians have as much information on both sides of the argument as is available" — as well, of course, as the independent neutral information that will be provided directly by government through Elections B.C.

But the need for both those groups to be able to, and sometimes pretty vociferously…. As my colleague spoke about earlier, I certainly have heard from many proponents of STV who are very enthusiastic and are looking forward to being able to make their case, and from the other side, people who support the current system and believe the current system is appropriate and should stay as it is.

So I would hope that the minister will have that discussion. I'm assuming that those folks within the Chief Electoral Officer's precinct or within government who know pretty well who the different voices are on both sides of this argument…. Hopefully, there is some discussion with them because I'm sure that what nobody wants is either of those bodies to develop strategies that later become deemed to be possibly inappropriate.

It's a bit of new ground for us as we do this in British Columbia. It's certainly been done elsewhere, but it's a bit of new ground. So I do hope that the minister will consider…. As he's indicated here, he thinks that there may be some merit to that question of further consultation. I do hope that he would make the decision to have those discussions there.

Just in terms of this…. Maybe it comes more appropriately, actually, later on around reporting. If that is the case, the minister can let me know, and I'll save those questions for section 8. Clearly, part of the issue around this is use of the money and repayments of amounts that are used inappropriately. How is the accounting of this anticipated to take place? How will these groups have to account for this money so that, in fact, the government has confidence that it is being used in the way it was envisioned?

Hon. W. Oppal: I think that's a question that ought to be considered under section 8.

S. Simpson: Looking at section 8, my particular questions here come down to looking at section 2(c). Then there are a number of subsections under that that I'd like to talk about a little bit.

What this section does is lay out some of the parameters for the establishment of regulations that allow for the proponent and opponent groups to be put in place, the payment of dollars, and some of the obligations and restrictions and limitations that might be put on those expenditures. I think this actually begins to talk about some of the things that in section 6 we talked around. It's a little more clear here.

I just need a clarification here. I believe that the minister said in comments to my friend from Malahat–Juan de Fuca…. He talked previously about comments from Hansard where he said that the other office…. He talked about the budgets for the two offices and who would determine who the proponent and opponent groups are.

It says here that Lieutenant-Governor-in-Council will do that — so the executive council, presumably. The question I have is: how will it be determined how to establish the opponent and proponent groups and who they might be? How does that decision get made?

Hon. W. Oppal: The regulations will provide for that process, and the Chief Electoral Officer will be responsible for it.

S. Simpson: This is one of those pieces of legislation. We sometimes say that the devil is in the details, and there certainly are some details here to be had.

Is it the expectation of the Attorney General that there will be one proponent group and one opponent group, or will there be a variety on both sides?

Hon. W. Oppal: We dealt with this issue last…. It's difficult for anybody to contemplate how many groups there are. We debated this last day, and the most that I can say is that it will be for the Chief Electoral Officer to determine if there are splinter groups or if there is more than one group that represents a particular side. It's premature for us to speculate at this stage as to how many groups on each side there will be.

It's important to remember that there are X number of dollars available to each side, and I would think it would be in the interest of all parties concerned to unify their efforts on one side or the other.

S. Simpson: I would agree with the minister that, ideally, you would have one organization or one group on the pro side and one on the con side. They would sort out their differences within those folks on either side of that fence and then speak with one voice in general terms and expend the money in that way so that it was more clear.

How do the regulations anticipate…? How do we even reach out? How does the government plan to

reach out to those folks on the two sides of this debate to even figure out who's out there or to motivate them to come together, coalesce and, hopefully, achieve this objective of one group on each side?

Hon. W. Oppal: Well, there'll be extensive public notices made available so that the members of the public know that they have the right to align themselves on either side of the debate. I don't think there'll be any shortage of information out there that advocacy groups can get involved.

S. Simpson: When is it anticipated that these groups would be put in place, actually recognized and, presumably, funded?

Hon. W. Oppal: Well, the intent at this time is to start the process in the latter part of this year, in the fall, and have the funds available in early 2009. That's the intent at this stage. Hopefully, those target dates will be met. There's no reason why they can't be met at this stage.

S. Simpson: Then is it reasonable to expect that sometime later this year the overtures will be going out saying, "Those of you who stand on one side of this or the other should start talking to each other about this," or: "Here's a set of criteria for what a group needs to do or not do in order to be considered for funds"? Is that how the preparation will happen?

Will the government facilitate that to start to coalesce those groups? I realize the government's not going to choose who participates and who doesn't in the makeup of those, but at least to motivate or facilitate the coming together of people to sort out their own positions….

I do have a concern that people will to some degree, not in terms of having an opinion but in terms of coming together in some organizational way and starting to talk through what might be some differences…. I'm sure there'll be differences on each side about where the final positions and advocacy should lay.

Is the government going to play a role in helping to facilitate that? If so, how?

Hon. W. Oppal: It's intended that all of that would be done through the office of the Chief Electoral Officer. The government would be at arm's length from that.

S. Simpson: When these groups hopefully come together and hopefully we accomplish what I think is everybody's objective to have one strong, clear, coherent voice on each side of this that can make the best case possible for their view and help British Columbians to find their way through this and make a decision as to whether they think a change is in order for the province…. Should those groups on either side of this not be able to come together and not be able to come to an agreement on this, has the minister got any thoughts about whether the response to that is…?

It seems like there are a couple of possibilities. One is that either the government…. This is the government through the Chief Electoral Officer, who I realize — the minister is saying — will make those determinations, but that the regulations they will follow will be written by the government. Will the government be looking to say, "Okay. Well, we're going to take your half a million dollars on your side of the argument and divvy it out to three groups in some fashion," or to say, "No, we're going to make a determination here about which of those groups most reasonably reflects the view" — understanding it's not government but the Chief Electoral Officer making that decision?

Is there a preference for the minister here over whether it's, "Okay, we divvy up the money three ways if we can't come to some consensus on that side of the debate," or: "Yes, Chief Electoral Officer. You make a decision over who best reflects that point of view"?

Hon. W. Oppal: I think it might be unfair to put the burden on the Chief Electoral Officer to determine which person or persons are entitled to represent either side. So the answer to that will be found in the regulations.

The Chief Electoral Officer clearly does not want to be involved in settling disputes between groups that purport to represent one side or the other. The Chief Electoral Officer would be in a position where he would allocate the funds, but there would be regulations there to guide him.

S. Simpson: I think that's wise that the Chief Electoral Officer not have to necessarily design the system or make those judgments solely on their own. Presumably, then, somebody else — the ministry on behalf of the government — will draft the regulations in a way that is balanced and fair.

I guess, then, the question would be: does the minister have any sense of what that regulatory regime might look like to deal with this kind of dilemma? I know from my own personal experience being involved in community affairs — and I know that the minister knows this well, also — that when you put half a million dollars on the table, you're likely to get a few organizations that think that they might be the best people to use that money to achieve the objective. It may be quite a few people, and it may be very difficult to cull that down or coalesce that in a way that works.

Part of the concern I have is that we may create quite a malaise on either side of this argument by hanging this half-a-million-dollar carrot out there, which I think is appropriate. I support the notion of funding of pro and con groups, but once that money's out there…. What I'm looking for is some insight from the minister about how we get around that issue, because it's likely to be a real question.

Hon. W. Oppal: The question raised is a valid one. The concern is a valid one. While I'm not in a position at this stage to give a concrete or definitive answer, I think that if we look at section 32 of the Recall and Initiative Act, it provides for a process where those issues can be addressed. It might well be appropriate to rely on that legislation.

S. Simpson: I'm not going to ask the minister to entirely recall the section of the act by memory, but maybe the minister could just give us some sense of what those initiatives are or those matters within that legislation that might provide some guidelines or protections to deal with that matter.

Hon. W. Oppal: It's a lengthy section, but really it sets certain standards for financial agents for the opponents. For instance, 32(1) states: "The chief electoral officer must designate financial agents for opponents in accordance with this section as soon as possible after the end of the application period…" Sub (2) goes on to say: " If one individual is proposed under section 31 as financial agent by 50% or more of the total number of applicants under that section, the chief electoral officer must designate that individual as financial agent for the applicants by whom he or she was proposed."

It's a fairly extensive section, and it states the circumstances or the requirements of financial agents for the opponents. It's well worth looking at.

S. Simpson: That's curious. Let me understand this. Is the minister saying we could end up with a situation where there are three or four or five groups on the pro or the con side of this who all are looking for some of the resources in order to advocate their particular perspective on STV — yes or no — and that the government could make the decision to appoint a financial agent, who a majority of those groups endorsed, and the money would go to a financial agent, who would then make decisions about administration of the money?

Hon. W. Oppal: The financial agent would be in a position to make that decision, not the government. So that's what's contemplated under the Recall and Initiative Act, and that may be of some assistance.

S. Simpson: I appreciate that. We'll talk a little bit about the obligations of financial agents. I know that under that law, much like the laws that govern us when we have our elections, I appoint a financial agent and my financial agent, of course, has legal obligations to ensure that the funds that I bring in through donations and the way that I expense those and claim them are all done within the parameters of the law. Presumably, a financial agent for the pro or con side would have the same obligations under this exercise here.

What I'm trying to get at here is that I thought I heard the minister say…. Well, let's cut back to an election. We potentially have cases in British Columbia where the parties often have financial agents that might represent the interests of a number of candidates running in different constituencies. There's an administration by an overall financial agent who has legal responsibility for that and makes sure everything is done appropriately.

Is the minister then saying, with this, that where it may not be possible or it may not be desirable for the government to say, through the Chief Electoral Officer or through regulation, that we're going to boil this down to one group on each side of this argument…? Yes, there may be three organizations on the yes side or four organizations on the no side, but at the end of the day we are going to appoint a financial agent who will have responsibility for the half a million dollars, and they will have responsibility as financial agent for deciding the distribution of that money to these organizations that are on the pro or con side.

Maybe the minister could just clarify whether I'm heading in the right direction here.

Hon. W. Oppal: Well, the intent is to attempt to get people to coalesce, so if there is a financial agent that represents one party and another financial agent that represents two parties, it may be in their best interests for the parties to get together to nominate a common agent. These are really…. We dealt with this the last day, and a lot of this really comes to…. We're speculating as to what may or may not take place, but that's the process we expect would happen — and that is that there would be groups that would nominate a particular financial agent on either side of the question.

S. Simpson: I think I concur with the minister that groups on both sides will clearly do that, because that'll be a requirement for them to have eligibility for any of these funds — to have a financial agent.

The minister spoke about the act and about bringing people together. The minister just spoke again about the instance where there maybe are three groups, one of them represented by one person who's been a nominee for financial agent, the other two groups agreeing on a potential nominee for financial agent. Is it the intention of the government to require a single financial agent on both sides of this debate?

Hon. W. Oppal: The short answer is no. It's not the intention of the government.

S. Simpson: With this, when these groups come together, are there going to be requirements or is there an expectation that there will be any requirements for these groups to have any legal standing — to be a legal entity? Are you going to require that these groups be incorporated in some fashion or that they be ad hoc or that they're free to be ad hoc? Are they going to require that there be some legal entity attached to them in some way?

Hon. W. Oppal: No. There's no requirement that they be incorporated. They could be individuals. They could be associations. It could be a group of individuals. There's no set rule, and it would be against the public interest to have some kind of a required corporate structure.

S. Simpson: Are there any classes of groups or organizations that would be excluded from this process? For example, I presume political parties may be excluded from being able to participate formally as

proponents or opponents. Are there any other groups — I'm assuming political parties — that would be excluded?

Hon. W. Oppal: I would think at this stage political parties, candidates, constituency associations and people of that sort that have firm positions. Keep in mind that this is a follow-up of the recommendations of the Citizens' Assembly. So the intent here is to get people at the grass roots involved and not political parties or candidates or associations.

S. Simpson: I would agree with the minister that those of us or the organizations that are explicitly partisan by their nature shouldn't have a formal role in this process. We will have lots of opportunity to have voice in this debate, if we choose to do it.

Section 2(c)(ii), I think, says: "the making of payments to financial agents and the limits on payment." It talks about, I guess, the setting of regulations as to how money would be administered. What is the thinking when it says limits on payment? What's the thinking about what the intention of that is?

I understand the first part that says the making of payments. Presumably, if organization A is deemed to get $250,000, then that will be the amount of the overall payment. What's the thinking on what limits on payment means?

Hon. W. Oppal: The limits on payment phrase here makes reference to the money that would be spent by the constituent groups. For instance, if there's only one group on the yes side, they would be entitled to the $500,000. But if there are a number of groups to one side, there would have to be some formula as to the limits on payments that they would receive that they would have to live by.

S. Simpson: Has there been any thinking yet — it may be early for this — about how those moneys get distributed? The minister spoke about trying to have some decision-making early in the new year as to who those groups may be, one or more on either side, the proponent or opponent groups.

What's the thinking about how the money gets distributed? If I have an organization that's a proponent of this and I've been told I'm one of two, and I get a quarter million dollars as my allocation that's been agreed to, do I get the quarter million dollars all upfront? Does it get disbursed in some way over a period of time? Do I put in a budget for that to say: "Here's how I'm going to spend the money"? Or do I just say: "Give me the money, and I'll tell you what I did with it afterwards and hopefully what I did was legal"?

Hon. W. Oppal: It's somewhat premature to speculate as to what may take place. But a realistic scenario would be that persons on either side would propose a budget to the financial agent, and the financial agent would determine what is appropriate in the circumstances.

S. Simpson: I see that if we go on, when we look at section (c)(iii), it talks about "obligations, restrictions, limitations or conditions in relation to the holding, use and disbursement" of the money. Is there any expectation on the part of the minister and the government that in the regulations there would be any limits on some of the uses of the money — i.e., I get a half a million dollars and decide that we're going to go out and be proponents of this, and I'm going to get $100,000 salary for this four months to go out and campaign against this versus some other things — where potentially individuals on either side may have direct benefit?

I don't think anybody argues about people being fairly compensated for their time if they're committing to do this full-time, and I would expect that some of the money would be spent there. But is there thinking that there's going to be any effort to have limits or consideration of how much personal gain or benefit an individual or individuals on either side of this might be able to experience out of that money?

Hon. W. Oppal: Well, you know, the intent here is to use the money to educate the public, for holding forums and for holding meetings and disbursements that are used. It's certainly not intended to provide salaries for workers or that sort.

It is, as I said earlier, money to grass-roots organizations that may not have the wherewithal to hold public meetings or to travel to places to hold meetings to convince people of their particular position. That's the object of providing funding to both sides.

S. Simpson: I would agree with the minister. That should be the object, and I would agree that the majority of those resources should be used for things like travel, communications, promotion of materials — you know, if people want to produce a video and take the video out or do some advertising or whatever. That makes more sense.

That being the case and the position of the minister that that should be the emphasis for the use of this money, does the minister anticipate putting any limits on the ability to have people be compensated? Obviously, there's going to be a need for some staff resources if this is a major campaign. There may very well be. But is there thinking about putting any limits on compensation, either for employees or for consultants, because we all know about consultants?

Hon. W. Oppal: I would think that there'd have to be some kind of limit put on it. At the same time, I think the point raised by the member is a valid one because you still have to pay clerical staff, and you have to pay people to come in and clean offices and all of those things that are incidental to the operation of any particular office. I would think that in those circumstances there would be some kind of a reasonable accommodation made to cover those expenses.

S. Simpson: I have some agreement with that. I anticipate, though — I could be wrong; we'll see — that in addition to some clerical support and those kinds of things, we're going to see some kind of request for some organizational support. These are going to be fairly short campaigns — three months, maybe a little bit longer from the time that people kind of start to get up and running to the time of election day in May of 2009. It's going to be pretty intense.

It's a provincewide campaign, so there clearly will be some organizational staff resources needed to be there for either side, I would imagine, to be able to make their case, whether it's organizational expertise or communications expertise. So there are going to be dollars spent on that, and I think there are legitimate reasons to do that.

The question I have, though…. I'm not asking for a specific number, because I know it's premature to do that. But then, just to be clear, is it the minister's thinking at this time that there will be some limit put on the ability to drive money to consultants or to people who are going to be paid more than the person who answers the phone — if the minister knows what I mean — in terms of organizational or strategic or communications staff or consultants? Is it his desire that there be a limit put on how much can go there versus spending on travel, communications, etc.?

Hon. W. Oppal: I think the best way I can answer that is to state that the funds really are to be used for furthering a particular cause. There may be expenses used for incidental purposes for matters that are associated with that. It's not contemplated that they be used for salaries or extensive salaries, although obviously some would be contemplated. So it's a little premature to really give a definitive answer on that. I think that's the best I can do in the circumstances — without speculating.

S. Simpson: We wouldn't want politicians on either side of the House speculating about anything.

I do have a couple more questions, but I'm going to bounce back just for a second. We had a bit of a discussion under section 6, and it maybe even applies more under section 8, where we had talked about the role of consultation with some of those proponents on either side, the advocates on either side of this. The minister mused a little bit about maybe there was a need to have a level of consultation that is greater than had initially been anticipated to make sure some of this stuff gets sorted out in a way that ensures that it protects the integrity of the process, but that people have the latitude to do the job they have to do, whichever side of this debate they're on.

Would the minister agree that maybe when developing the regulatory regime around some of these sections that are specific to these groups, that some earlier consultation — "early" being sometime before the end of the year — is a good thing and should occur?

Hon. W. Oppal: We're pleased to receive public input or input from groups. However, there's not a lot of time left. This work has to be done commencing in the early summer so that the office would be open by the fall. That doesn't leave a lot of time. There's not enough time for extensive public consultations.

However, having said that, if some suggestions are made, it may be appropriate to consider them. In the meantime we have to get on with this, assuming that the act will pass.

S. Simpson: Maybe just to clarify there. The minister just talked about the office opening in the fall. Is the minister saying that we're talking about the "neutral" office opening in the fall and then that office having a role to play in all this, or something else?

Hon. W. Oppal: Sorry. I think I misspoke. What I meant was that the application process would begin in the fall, and the office would be open in early '09. But the intent is clear here. We don't have a lot of time left. This has to be done, providing the legislation passes. We're up against some time constraints here.

S. Simpson: I would agree with the minister that the time is limited on this. I might encourage that if his office or the Chief Electoral Officer's office is going to drive this process, it may be, as the minister has also said…. We've got a pretty good idea who some of the key organizations were in 2005 around this debate. I'm sure the Chief Electoral Officer has heard from them, as has the minister — from groups making their case on one side or the other.

I would think that there might be at least some time to get together, maybe sooner rather than later, to provide some guidance that the ministry is then going to have to make its own decisions about. I would hope there's some room for discussion here. Otherwise, there's the potential that when the regulatory regime is put in place for this, we're going to spend time talking about critiques and criticisms about what's good and bad about the regulatory regime rather than what's good and bad about STV, and that's what we should be talking about.

I would hope there would be some time for that, though I would agree that it can't be so onerous that it limits or impairs the ability of the government to move ahead in the way that it has to, to start getting this process moving forward.

Under (c)(iii) it talks about obligations, restrictions, limitations and conditions in relation to the money. What are we thinking about when we talk about those limitations and conditions? I understand the financial obligations or restrictions, and we talked about that in section 6 — the need to spend the money in certain ways. But does any of this relate to any conditions on the activities of the organizations — expectation about conditions on activities?

Hon. W. Oppal: No, I think the section speaks for itself. It talks about the "obligations, restrictions, limitations or conditions in relation to the holding, use and disbursement of amounts received…" in the accounting. Clearly, it makes reference only to the financial

aspects of the process. It doesn't have anything to do with the limitation of what they do in their advocacy.

S. Simpson: When I go back now to subsection (c)(vi), it talks about "the publication of any matter in relation to a payment made to opponent groups or proponent groups." Is this — maybe it's how I understand it — going to be sort of a question of transparency and the reporting out? Some public reporting of where dollars go, how they get spent and who got them — is that what this is intended for?

S. Simpson: The last question I have around this is: when this whole process comes forward and groups apply…? The minister spoke about organizations maybe sometime early in the fall making application to be the proponent, the opponent or part of that.

So there is some process of application that is going to occur in the fall, to get ready for early next year. How is that process going to be transparent so that we know which organizations have made an application to play that role? And is that going to be public information, along with some sense of how the determination is made about who in fact gets resources and gets recognition as proponent or opponent?

Hon. W. Oppal: Well, it's clear that the process itself will be made public. The invitations to the public to get involved in the process — that'll be public. But I think it's premature to say at this stage whether the public could have knowledge as to which groups are on which side. There may be people who may not want their particular positions to be publicly disclosed. It's premature. I can't give an answer to that at this stage.

S. Simpson: There may be groups on either side that, for whatever reason, don't want to disclose. But I would think that any organization that's receiving funding or requesting public dollars, who are asking for part of the half a million bucks on the pro or con side and may receive it…. The public should know who's asking for that money and then who is deemed to get it.

The concern I have is that, as we talked about a little bit previously, there could well be a long list of groups that think they're the best people to get that money. Then there's going to have to be some determination, whether it's arbitrary or however it's done. I'll assume it's done in the best way possible. However it's done, there are likely to be organizations who are disappointed that they didn't get dollars.

The question I have is: are the groups that ask for money to make the case on one side or the other going to be made public? Will that be part of the condition of the application for dollars? And then, obviously, the list of the groups who are successful in getting dollars….

Hon. W. Oppal: Well, the public will know who the successful parties are. The public needs to know that. The groups will know within each side who the other groups are. The CEO will ensure that that takes place. Short of that, I can't speculate as to what other eventualities may take place.

S. Simpson: Just to clarify here. On either side of this argument, while there may or may not be a public notice of all the groups that have made application, those groups will know who each other is. Is that what the minister is saying — that if there are ten groups that apply for resources on the pro side, those groups will all know who each other is?

Two or three of them get the money. They may do or not do what they do about whether they feel that was a process they support. It will probably have something to do with whether they get any money. So they will know everybody else who was an applicant on that particular side of the argument. Is that accurate?

Hon. W. Oppal: I move that the committee rise and report the bill complete without amendment.

Bill 6, Electoral Reform Referendum 2009 Act, reported complete without amendment, read a third time and passed.

Hon. B. Penner: I call committee stage debate on Bill 2, Budget Measures Implementation Act, 2008.

The House in Committee of the Whole (Section B) on Bill 2; S. Hammell in the chair.

B. Ralston: The present Arts Council Act in section 3(1) gives the council the discretion to — and I'm reading from section (b) — "allocate the money appropri-

ated annually for the council by the Legislature." The amendment proposes to require the council to make recommendations to the minister, thereby, I suggest, removing control of that expenditure from the council itself.

Can the minister advise why this discretion was removed from the council and given to the minister?

Hon. C. Taylor: Because the B.C. Arts Council isn't a separate legal entity, we were unable to put the special account into the B.C. Arts Council. This is a way to have them involved and give advice, but the account has to sit with the minister.

B. Ralston: Well, I suppose, on behalf of the Arts Council, they would be interested to know what force their recommendations would have, if that's the explanation for not letting them make the decision themselves.

So what's the intention — if the minister can explain that? Are these intended to be recommendations that are binding on the minister, or will the recommendations be merely advice and leave the ultimate decisions entirely to the discretion of the minister?

Hon. C. Taylor: Just on a personal note, I have talked to some of the individuals involved, and they've been very pleased with this. They see it as a great increase in terms of the dollars that they will be able to give advice on to the arts communities around the province.

But it is intended, obviously, to be a partnership with the minister responsible, and it is intended to encourage cultural sites and festivals and activities throughout the province. We think this is a very important way to use a significant part of the surplus this year — to set up this special account.

B. Ralston: I don't disagree with anything the minister has said in that respect, but I suppose I'm interested in the process that is going to be developed by this legislation. Is it intended that the recommendations will be merely that — just advice to the minister? Or is the council going to be relied upon for its expertise — its knowledge of the province, the projects and the applications — and its recommendations be accepted?

Hon. C. Taylor: From Finance's point of view, we made the decision to use some of the surplus from last year to set up this special account. What we focused on was how we could do this legally, and we've set up the structure.

Those are excellent questions that I would ask you to ask the Minister of Tourism, Sport and the Arts during estimates.

B. Ralston: Well, with respect, that's not a very satisfactory answer. This is a $150 million fund, as I understand it. The arts community is understandably interested in how the fund will be disbursed, and at this point we're discussing the very legislation that's going to set that process into motion. So to brush me off and send me off to estimates, which may or may not come to pass given the reduced number of hours that are available for estimates….

That question may never be posed. I wouldn't want anyone reading the transcript of this to think that there will ever be an answer to that question. I'm going to ask the minister again. Can the minister at least give some sense of the thinking of the ministry about…? Obviously, the drafters have chosen these words. What is the process intended to be? Will the advice of the council be relied upon?

Hon. C. Taylor: With due respect to the member opposite, of course this has already been discussed, so it's not that it won't be discussed. It was discussed during supplementary estimates. The minister, at that time, said that they will have major involvement with the decision on what projects would be successful.

From our point of view, we were unable, because it's not a separate legal entity, to set up a special account under B.C. Arts Council. We believe this is a good alternative. It sits with the ministry, and we specifically named the B.C. Arts Council as the group that would give advice to the minister so that projects throughout the province would have their advice and, hopefully, support.

B. Ralston: I think it would be relatively simple to constitute the Arts Council under the Society Act. A lawyer could do that in about half an hour, I'm sure, if that were the real concern.

I guess, just to conclude on this, I can take from what the minister is saying that the word "recommendations" is empty of any content. The recommendations may be relied upon or they may not be, and that's going to be at the discretion of the minister. Is that really where we are at this stage?

Hon. C. Taylor: We believe this is a really important initiative. We have taken $150 million out of the surplus from last year and put it into a special account so that, in fact, around the province cultural groups will benefit from these dollars going forward.

We are very appreciative of the B.C. Arts Council and the work they do. That's why we specifically named them as a group that would give advice to the minister.

B. Ralston: Well, having served on the Finance Committee and having listened to the representations from arts groups around the province, I'm aware, as I think most members of the Legislature are, that the arts community is keenly interested in this. They do bring a special expertise to the process, and they're regionally dispersed. They're familiar with the applications, for the most part, and understand the history.

I'm just disappointed that there's no answer in terms of whether their advice will be relied upon or not. I can understand that if their recommendations were considered binding and the minister was merely

in the legislation to make the announcement…. That would probably be understandable. But given the answer here, it doesn't seem as though the minister is prepared to give any solace to the Arts Council that their advice not only will be given but will be relied upon to make decisions about how the funds from this new fund will be disbursed.

J. Horgan: I, too, would be interested to know if the minister could advise this House if anyone else will be making recommendations on the expenditure of funds from the special account.

Hon. C. Taylor: There is nothing that specifically precludes other groups from giving advice to the minister.

J. Horgan: Then other groups could potentially include other members of executive council. It could include caucus members of the governing party. The range is limitless on who could provide the minister with recommendations on spending this money.

Hon. C. Taylor: The intent of this legislation and of this special account is that the B.C. Arts Council is named as the group that will give advice to the minister, and it's our expectation.

J. Horgan: It's your expectation, but not the only group that you envision could be making recommendations on expenditures.

Hon. C. Taylor: I will leave the minister responsible to give you his interpretation of the answer to your question in estimates.

From our point of view — and that's what I have to answer for — when we were setting this up, we were not legally able to give the dollars to the B.C. Arts Council. Therefore, we set up the special account within the ministry but specifically named them, because we have so much respect for the work they do around the province. We specifically said that they would give advice to the minister.

J. Horgan: I note in this section that there's no commitment by the government to accept those recommendations. Is it contemplated that all the recommendations from the B.C. Arts Council will be accepted?

Hon. C. Taylor: As I said earlier, I'll leave that to the minister to answer.

J. Horgan: Certainly, the government received applause from the arts sector. When my colleague from Surrey-Whalley and I were travelling the province with members on the government side, in virtually every community we heard from members of local arts councils concerned about the lack of funding relative to other jurisdictions across the country and about the importance of arts funding.

When we heard the minister rise in this place and in the budget speech talk about the cultural fund and the creation of a special account, it was cause for optimism. Now I don't hear the same level of confidence in the minister's voice when she's speaking about what may well happen with the proceeds from this fund.

Again I'll ask her the question. If we were all set to issue press releases on budget day and receive pats on the back…. Now that we've got the legislation before us and the minister has an opportunity to stand in her place and say to the Arts Council again that their recommendations will be accepted by government and that any proceeds from this fund will go directly to those arts councils, I would think she'd want to take that opportunity.

Hon. C. Taylor: I can certainly say with confidence that approximately $7.5 million, that being the interest off of the special account — perhaps more in some years; we hope for more in some years — will go to the arts communities around this province. We have set this up so that the B.C. Arts Council gives advice on which groups and which festivals and which events those would be.

J. Horgan: I'm anticipating a response, but I'll ask the question anyway. One of the concerns those of us who don't live in Greater Vancouver have when funds like this are set up is that there's a disproportionate amount of money that goes to the large hole in Vancouver and that those of us on the periphery are left wishing we had more.

Again, in this Budget Measures Implementation Act we have no indication that there will be an equitable distribution of that interest. We have a half-measure commitment to accept recommendations from the Arts Council. Is there any opportunity for the minister to give some assurance to those living outside of major urban centres that they will have equal access to these funds?

Hon. C. Taylor: This question of making sure that our cultural groups around the province give support is the very reason why we named the B.C. Arts Council as the body that would give advice to the minister. I have a list here of the B.C. Arts Council representation, which is from around the province.

Therefore, we believe that their advice will be invaluable to the minister, because none of us want to be supporting arts just in the lower mainland. We want to support the cultural groups around the province. Certainly that's what the Finance Committee heard, and that's what we were trying to respond to.

B. Ralston: The minister makes reference to a legal opinion. Is the minister prepared to table that legal opinion here in the Legislature?

Hon. C. Taylor: As I said earlier, the B.C. Arts Council is not a separate legal entity. Therefore, we were given advice that the special account would be set up in the ministry.

B. Ralston: Why was the legal alternative of simply incorporating it as a society under the Society Act, which is relatively straightforward to do, not considered or taken?

Hon. C. Taylor: The B.C. Arts Council has a budget of over $13 million a year. It has been working well as it is currently set up. We really saw no need — and I personally had not been asked — to have a change in structure. We think it works well. We think that these extra dollars will be invaluable to the arts community around the province.

B. Ralston: I understood the minister to say that the reason that this amendment was required was because the Arts Council, as it's now constituted, wasn't an appropriate legal entity to receive the money. One of the ways you could do that is to simply reconstitute it, a fairly straightforward way of doing that. I'm not quite sure, and I'm asking, why that alternative wasn't taken or even considered.

Hon. C. Taylor: We just simply believe that the B.C. Arts Council, as it's currently set up, works well, and we didn't really see any reason to try and fix something that isn't broken. We think that it works very well as an organization.

We were looking for a way to increase funding to the arts around the province. We've got great respect for the B.C. Arts Council and for their advice, and that's why we specifically have named them as the group that would give advice to the minister.

B. Ralston: Other than just simply adding the name of this account, is there any other purpose for this amendment? It seems to be routine in the sense that it'll be added to require a reporting of the expenditure of this sub-account to the reporting requirements of the Arts Council. Is that correct?

Hon. C. Taylor: This amendment is simply to make sure that there is accountability and that there will be a report on the disbursement of the amounts.

B. Ralston: Will there be any provision for the council to report on their recommendations — and those recommendations if all, or if not all, of those were accepted by the minister — in the expenditure out of this sub-account?

Hon. C. Taylor: This provision is simply to ensure that we have an accounting of how the dollars are spent that go out as interest from the B.C. Cultural Fund.

B. Ralston: Well, to go back to section 1 then, the council will make recommendations. Is it intended that these recommendations will be public, or will they be subject to cabinet confidentiality, so that the public will never be able to compare the recommendations made and the recommendations accepted by the minister? There may be a disparity between those, and some legitimate public debate may arise as a result of that. What is the intention of the government on this issue?

Hon. C. Taylor: As I've said a few times now, the intent, and why we set this up in this way, was so that the B.C. Arts Council would be recognized and respected for its expertise and its ability to give advice on what cultural activities would be supported around the province. That's why we have actually written it in.

I will leave it to the minister responsible to talk about how the relationship works currently with the B.C. Arts Council and how he anticipates it will work in the future.

The Chair: Member for Surrey-Whalley on section 3. Member, may I remind you, please, to direct your remarks through the Chair.

My question is to the minister on section 3. This is an amendment to the B.C. Railway Act. It's amending section 6 of the act. In 3(a) there's a minor amendment which reads: "…and subject to any conditions specified by the Lieutenant Governor in Council." Can the minister give an example of the conditions that might be specified by the Lieutenant-Governor-in-Council?

What the section appears to be dealing with is exemption from tax, which is ordinarily the school property tax, but there are some others that are referred to here — the hotel room tax, the fuel tax and the social service tax. What would be an example of conditions that might be specified by the Lieutenant-Governor-in-Council? If the minister could assist.

Hon. C. Taylor: For example, the direction might be that it be paid on a capped rate, and I would cite as an example the ports competitiveness policy.

B. Ralston: I'm thinking whether under the Railway Act, perhaps…. I can only think of North Vancouver where the Railway Act might apply to a city that was a port — and maybe Delta as well.

Can the minister just clarify the intent of this amendment? From what I read, it's an amendment specifically to prevent B.C. Rail from gaining an exemption from some of the changes that are proposed to the school tax for the province. Is that a correct assessment?

Hon. C. Taylor: This is in fact an enabling amendment, so it enables B.C. Rail to pay the tax.

B. Ralston: Ordinarily, Crown corporations would make a grant in lieu of taxes. What change does this

bring about to the ordinary process by which Crown corporations would, in their dealings with municipalities…? The government would give grants in lieu of taxation on specific Crown corporations. What's the change that's being contemplated here?

Hon. C. Taylor: For clarification, have you moved on to the next section, which is talking about these issues?

B. Ralston: There's only one section, section 3, that I'm dealing with, but there's an (a) and a (b) to that section — to the proposed amendments. We hadn't specified that we were dealing with them as subsections, according to the ruling from the Chair. I can deal with section 3(a) first and then go to 3(b) if it's clearer for the minister.

The Chair: Minister, yes, the member is correct. We were dealing with section 3, which has an (a) and a (b) section.

Hon. C. Taylor: Hon. Chair, I'm aware of it and happy to answer it. I just wasn't sure whether the question was specifically to the (a) part or the (b).

With (b), the point here is that B.C. Rail has been allowed to pay grants in lieu of taxes to municipalities, but now this enables them to pay it to the province as well.

B. Ralston: So the surveyor of taxes, then, is the provincial agent that would collect the taxes on behalf of the province. That appears to be referred to in the legislation there.

B. Ralston: If one were in a community that B.C. Rail, in its present form, now serves — for example, some of those towns along the line, whether it's Quesnel, Williams Lake or Squamish…. What would be the difference in the tax revenue of any of those individual municipalities? Would this make any difference to any of them or not?

B. Ralston: This amendment is simply a device to enable B.C. Rail to pay taxes to the provincial government. Is that correct?

B. Ralston: In the modelling that Treasury Board has perhaps done — or some of the officials in the Ministry of Finance — can the minister advise what the anticipated revenue to the province is from these changes?

Hon. C. Taylor: It's approximately $500,000. The point of doing this is that we have been trying to move our Crown corps — in this case, B.C. Rail — on to a more commercial footing so that it's a level playing field with other companies. So this would work out to about $500,000 a year for the provincial government.

B. Ralston: This section initiates a number of subsequent sections which deal with a significant change to the corporation capital tax and create a so-called minimum tax on financial institutions. I do have a number of questions for the minister in this area.

First of all, just beginning with section 6(a), section 1(1) is amended by repealing the definition of financial corporation and substituting the term "financial institution." I'm wondering what the reason for that particular change is.

Hon. C. Taylor: Because we are introducing the financial institutions minimum tax act, we are just matching up the words.

B. Ralston: Well, that begs the obvious question then. If it's following the title of the act, why was that title chosen for the act? It's been called the corporation capital tax. Ordinarily, that kind of change in nomenclature is not necessary. I'm just wondering what the motivation for the change is, if there is any.

Hon. C. Taylor: We just believed that the "financial institution" was more specific as to whom this minimum tax would apply to. We felt that the word "corporation" might be more broadly interpreted.

B. Ralston: I take it that this is not a specific request of any of the institutions or corporations being regulated. This is simply a choice of the drafters of the legislation.

Hon. C. Taylor: No one knew ahead of time, of course, that we were discussing this internally, and no one asked.

B. Ralston: Well, since the minister does raise the question of discussions…. The minister has been quoted in the media as saying that these changes will facilitate — I think the minister hopes — the establishment of Asian financial institutions in Vancouver. By that, I think what is meant is banks with headquarters in Asia.

My review of the Lobbyists Registration Act and the listed lobbyists does not disclose anyone who has lobbied on behalf of any Asian financial institution or bank. Can the minister advise who advocated specifically for legislation with the goal to establish Asian financial institutions — and that's the minister's choice of phrasing, I believe — in Vancouver?

Hon. C. Taylor: This was brought to our attention by the head of the International Financial Centre, Mr. Fairweather.

B. Ralston: Mr. Fairweather, who runs the International Financial Centre and has for some time — and, I believe, is about to retire — has had those views, I think, for some time. I'm wondering whether anyone else other than Mr. Fairweather…. Is that what the minister is saying — that no one other than Mr. Fairweather saw these legislative changes as necessary in order to attract so-called Asian banks to Vancouver?

Hon. C. Taylor: This specific example was brought to our attention by Mr. Fairweather, but the broad question of those who talked to us about the need for eliminating this capital tax was very broad. I have to say that in almost all of my meetings with businesses and other business leaders, when I would ask the question of how we can draw more investment to British Columbia, the capital tax was raised as a very major impediment.

B. Ralston: Well, I'll deal with that in a moment. Just to return to the International Financial Centre. As I understood it, the focus of the International Financial Centre was to encourage institutions to locate in British Columbia. But a precondition of being accepted into the centre, with the legislation, was that their trade was oriented externally.

In other words, in the briefing I was given, an example was the treasury department of a German chemical company that was previously located in, I believe, New Jersey and chose to locate in the International Financial Centre, but its dealings were entirely externally focused. It was not receiving deposits or anything like that and not participating in the day-to-day financial activity in Vancouver. It was dealing with its suppliers and its treasury operations abroad.

That's what I understood the focus of the International Financial Centre to be. The International Financial Centre, as it's presently constituted, does relieve the participating companies of any obligation to pay provincial tax. I think it was probably brought in, in the late '80s. It's nothing new.

It seems to me that this tax and the way in which it's being introduced has a bigger impact than the narrow confines of the activity that's spoken of in the International Financial Centre. Is that what the minister is saying?

Is the minister saying that it was solely to encourage businesses to locate in the International Financial Centre that this change was brought in — or not? It hardly seems probable, but I want to hear the minister out on that.

Hon. C. Taylor: My response was in response to the question of where the example came from about an Asian financial institution that might be interested in locating in British Columbia. As I said before, it came through the head of the International Financial Centre. It is my hope, in fact, that by eliminating this capital tax, we will be able to draw financial institutions to grow their business or locate their business in British Columbia, and that would not require being part of the International Financial Centre.

By moving to eliminate the capital tax, it's not meant to be narrow at all. It's meant to be very broad and to, hopefully, have people look at British Columbia and recognize that if they are a Canadian financial institution building their Asia-Pacific business, what better place to build up their back office and perhaps locate their analysts than in British Columbia, or the reverse.

If you are an Asian financial institution that's looking to maybe have an office in North America, what better place than British Columbia? We felt that the capital tax certainly was an impediment for people. It worked against them locating here, and it certainly worked against them expanding here.

B. Ralston: Beyond the anecdotal and the rhetorical, I'd be interested if the minister is prepared to divulge any studies conducted by the Ministry of Finance or any representations. I heard representations from the Canadian Bankers Association. I asked them to provide me with banks — although probably recent market conditions have changed that a bit — that were expanding in British Columbia, adding branches, adding staff and doing quite well in British Columbia, say, to show how that was impacting their expansion decisions vis-à-vis even Alberta. Nothing ever was forthcoming from them in terms of any written documentation.

Beyond an inclination, which I suspect is ideological, can the minister demonstrate from any material studies produced in the ministry that suggest that this measure will have the effects she is speaking of?

Hon. C. Taylor: If you go to the website of the Canadian Bankers Association, their stats, I think, show quite dramatically that in fact they have not been building their business in B.C. In the last ten years in Canada, employment by the banks has risen by over 12 percent across the country. In B.C. the employment growth in this sector was less than 3 percent.

B. Ralston: Well, I suppose it's a bit surprising that the minister would take up the cudgels for the Canadian Bankers Association when they were not prepared to make that argument themselves in meetings where I met with them. Mr. Griffin, on behalf of the association, was unable to say that the presence of the tax had any impact on expansion decisions made by Canadian banks in British Columbia.

I'm going to repeat my question. Beyond the anecdotal and the rhetorical, is there any study or modelling that the minister is prepared to table here in the Legislature to support the position that's being taken by this legislation?

Hon. C. Taylor: I think perhaps the member opposite is accurate when we say that this is just a basic policy difference between the opposition and government. We have moved every step of the way to reduce taxes wherever we can. We think that higher taxes are an impediment to businesses coming here. We think that the evidence of our having reduced taxes across

the board in the last few years and the turnaround in the economy as we're weathering some pretty difficult international storms here are the evidence that we would cite in terms of cutting taxes being positive for growing investment.

I know that the member opposite has asked about this. Specifically, with the corporate capital tax when it was eliminated previously for non-financial companies — in combination, of course, with these other tax cuts that I talked about — we really have restored a very positive investment climate to British Columbia.

Between 2000 and 2006 average growth in business investment was 6.6 percent annually. That compares to 2.5 percent annual growth between 1990 and 2000. That's a significant annual increase in investment in business growth. Average annual investment growth was 2.5 percent from 1990 to 2000 and 6.6 percent from 2000 to 2006.

I will concede that the opposition feels differently about how you encourage business to locate in British Columbia, but every step of the way, if we have a chance to eliminate or reduce taxes, we will do it. We believe that this capital tax has been negative and discouraged financial institutions from locating in British Columbia, and we'd like to turn that around.

B. Ralston: First, is the minister suggesting that the presence or absence of the capital tax explains the difference in growth? I hardly think the minister is suggesting that, so I think that can really be dismissed fairly as simply rhetoric.

The minister makes the point that there's a difference between this side and that side. The difference here is also between the government of Premier Bill Bennett, who brought in the tax on banks and significantly increased it. I would say that this is probably a first for a government of British Columbia. The populist parties of the Right and the Left have fought to keep the control of the province out of the hands of bankers in downtown Vancouver, and this minister seems to be quite happy to take the economic leadership of the province in that direction.

To return to Asian banks, since I am unable to discern any registered lobbyists for Asian banks, what specific representations did the minister receive in writing from any Asian financial institution — and I mean those headquartered outside of Canada or outside of British Columbia — to lift the corporate capital tax? And if there is such documentation, what specific representations were made as to what change in activity, if any, that might bring about?

Hon. C. Taylor: I believe I've said this three times so far, so I'll say it again. This issue was brought to our attention by Mr. Fairweather, who is head of the International Financial Centre.

B. Ralston: Is the minister then saying that there were no representations made by any Asian financial institution about the wisdom — or not — of continuing with the corporate capital tax?

Hon. C. Taylor: This issue was brought to our attention by the president of the International Financial Centre.

B. Ralston: Given that the minister is unwilling or unable to divulge any representations made by any representative of any Asian bank anywhere in the world, one wonders why this change is being made when the stated reason is to attract those very institutions to British Columbia. It seems to me a bit of a shot in the dark, if I could be permitted that metaphor, without any basis, any supporting documents, any modelling by treasury, any representations by anyone. It seems to be a bit of a flight of fancy, if I may be permitted that metaphor as well.

Just to clarify before I close on this topic, the minister has refused to state and give any example of any representation made to her, the government or the ministry by any Asian financial institution saying: "If the corporate capital tax were lifted, we would consider investing in British Columbia."

Hon. C. Taylor: I'd be rather horrified if I am hearing the question from the opposition that is suggesting that we should only respond to lobbyists. I mean, that would be quite a departure from what I would expect to hear from the opposition.

What I am telling you is where we did hear this idea. This was just part, and I would say a smaller part, of why we believe that we should eliminate the capital tax. We believe that our Canadian banks will see the opportunity when we lower taxes, especially this capital tax but also the corporation tax broadly, to locate and expand in British Columbia.

It is a fundamental difference between the opposition and government. We believe that every time we lower taxes we encourage people to locate in B.C. We grow our economy. We have the lowest unemployment in 30 years. We are withstanding some very significant international issues. We still anticipate growth of at least 2.4 percent going forward

We do believe, in part, that it is our lower taxation policy. It's also our lower regulation policy. It is the way we are trying to encourage business to locate here. We think that if we can keep our economy strong, it brings in the dollars and the larger surpluses so that we can put it towards our priorities, like health care and education.

I understand that the opposition may disagree, but this is a policy that we believe is right for government. I say again that we do not only respond to lobbyists when we're developing policy. We look at our fundamental ideas about how an economy moves forward, and this is part of it.

Anyway, I'm sure that word will be passed on to those who are lobbying the government on many sundry issues that they needn't lose heart. Other people are responded to sometimes as well.

Just to clarify, the minister is saying, then, that there was no representation by any lobbyist on behalf of an Asian bank in crafting this legislation. Is that correct?

Hon. C. Taylor: I will say it, I think for the sixth or seventh time. We'll have to read Hansard and check it out. The representation I received on this issue came through Mr. Fairweather, who is the head of the International Financial Centre. I personally did not have a visit or have any lobbying done by any Asian international financial centre.

B. Ralston: Was Mr. Fairweather's representation reduced to writing, or are there any notes of what he said that the minister is prepared to table here in the Legislature so that we might evaluate the fullness or the detail of this opinion?

Hon. C. Taylor: This came about in a meeting. It was verbal, and it was in conversation.

I find that my approach has been to listen very carefully when people talk to me about issues, and this seemed like an idea that really could be something that we could work on. We have said that Asia-Pacific strategy is important to us.

While the initial thrust, I would say, for eliminating the capital tax was thinking about Canadian institutions, as the member opposite would know, the credit unions, not just banks, have been very vocal about this particular issue. This is an important tax to eliminate.

Alberta has already gotten rid of it. Ontario has promised to phase it out. The federal government has asked us to get rid of this regressive tax because they have said repeatedly that it is a deterrent to bringing in investment. We agree with them, and we are moving to eliminate this tax.

I must say in terms of the credit union movement, which is very strong in British Columbia — we've got an excellent credit union movement — that they've been very vocal in wanting to have this tax eliminated.

One of our members from Cranbrook mentioned the other day — I believe in the House, but certainly he mentioned it to me — that when he was at a meeting, someone who is involved with the small credit union there thanked him for this policy of government. He said for his business it would mean $100,000 a year that would help them grow their business.

I personally was at another business meeting where an individual who's involved with a credit union in Prince George came up and said that this is one of the best things we've done as the government to encourage investment and growth in this province. He said that for his particular credit union it would mean a difference of $150,000 a year.

Let's not be distracted by the fact that there are many groups who think that this is an important initiative for government to take. I won't let any member of the opposition paint it as just being in favour of banks. It is the lobbying that came officially, and the opposition has asked to see who has had meetings. It lists, certainly, the banker association, but it also lists the credit union organizations.

This is just a very important issue for us to move forward on. Fundamentally, we believe that anytime we have a chance to lower taxes or eliminate taxes, it will encourage businesses to locate in B.C.

B. Ralston: Is the minister prepared to release the modelling, presumably done by the Treasury Board, about the impact of lifting this tax? I suspect, and I'm sure the minister would want to confirm this, that although these examples are given, the vast majority — if not, I would say, at least 95 percent — of the tax will be tax relieved on the major chartered banks rather than on individual credit unions.

Is the minister willing to table the modelling about the impact of the tax, or at least chronicle it here, and confirm that the vast majority of these tax reductions will be enjoyed by the major chartered banks?

Hon. C. Taylor: For the $110 million we've been talking about, approximately $84 million is paid by banks and $26 million by credit unions and trusts.

B. Ralston: The minister mentions credit union and trusts together. Ordinarily, trusts are federally chartered institutions. Is there any breakdown between credit unions, which are creatures of British Columbia statutes, and trusts, which are federally chartered and usually, since the change in banking in the late '80s, almost invariably subsidiaries of major banks?

Hon. C. Taylor: Of the banks…. Of course, with the $84 million number that I mentioned, that's 32 banks. I think that sometimes people just assume that there are only a few banks in Canada. That's 32 banks who pay that, and 27 credit unions pay approximately $20 million of the $26 million that I cited.

B. Ralston: The minister appeared to be giving a response reading from a list. Is the minister prepared to release that and provide it to me and to the public?

B. Ralston: Perhaps we could take a brief…. I'd like to go over the list of 32. Could the minister tell me if there is a number beside each of the banks as to what…?

Hon. C. Taylor: I said I would release what I was just reading from. Because of privacy of tax matters, as the member opposite would know, we cannot release it by individual companies or individual persons, but we can give you…. I can just repeat the cumulative numbers for you. I was responding to the question in terms of how much was paid by banks and how much by credit unions and trusts.

B. Ralston: Just to confirm my understanding, then, $27 million was the total for credit unions and trusts,

and of that, $20 million is credit unions. So if my simple arithmetic is correct, $7 million is from trusts, then. Is that right?

B. Ralston: In the sections, it goes on in some detail to describe, and I suppose we'll get to that, the minimum tax payable. Can the minister explain: what are the ingredients of the minimum tax that might be payable?

Hon. C. Taylor: The base has not changed in how this will be calculated, but the percent will be 1 percent.

B. Ralston: What I'd suggest, Madam Chair is that I have some more detailed questions about that in section 9, so perhaps we could deal now with section 6 and move on in that direction.

B. Ralston: This section is entitled "Deduction from tax payable — transition to minimum tax." There's a formula set out here that is one of those things one sometimes encounters in tax documents or legislation. Could the minister briefly describe in words the transitional provisions that this section embodies?

Hon. C. Taylor: The formula has been designed so that the financial institutions, in the first year, would pay two-thirds of the tax that they are currently paying. In the second year it would be one-third, and it would be eliminated by the third year.

B. Ralston: Is there any particular magic or reason for spreading the reduction over three years? I'm curious. I can understand a minimalist approach in some respects, but I'm just wondering why the three-year time horizon was chosen.

Hon. C. Taylor: Yes, there were a couple of reasons. First of all, the federal government, which had been very actively encouraging all the provinces to eliminate this tax, had asked us to do it by 2010. That was part of the reason. As well, businesses, we know, like certainty, so it was important to signal that this was the way we were moving.

From our point of view as a government, we believed that this was, financially, a way for us to ease this tax out.

B. Ralston: I do have a number of questions on that. They're somewhat related to section 11. Could the minister define — and this seems a little difficult to follow — the term that appears in section 3.6(1)? The reference is to "net paid up capital." If I could ask the minister just to define that term as it applies in this section.

Hon. C. Taylor: This is a term that is used quite frequently in the financial world. The paid-up capital is shareholders' equity, and "net" has broken out the part of that that is in British Columbia.

B. Ralston: I understand it in the case of a credit union that may be chartered and operate only in the province. What's the process in the case of a national institution such as the Canadian Imperial Bank of Commerce, just to choose one? How is the decision made as to what the paid-up capital in British Columbia is for the purposes of calculating this tax?

Hon. C. Taylor: As I mentioned earlier, there is no change in the base or the way this is calculated from the way it has been traditionally happening over the last number of years. We're just changing the percent that will apply as a minimum. It goes down to 1 percent from what has been 3 percent. We're not changing at all the base that it'll be applied to. It's a formula that is used by the Income Tax Act.

B. Ralston: Can the minister, then, for those who may be interested in this, in a summary form explain how, in the case of a national bank such as the one I've given an example of, the B.C. paid-up capital portion is decided?

Hon. C. Taylor: This comes out of a formula in the federal Income Tax Act. As I mentioned before, this legislation we're bringing in today is making no change to that base or to the way the formula works. It is very complicated, and we would be very happy to offer anyone in the opposition a full technical briefing.

Because it's no change in this legislation in terms of how that base is worked out, we follow the formula in the federal Income Tax Act. The legislation here, in introducing the minimum tax, is simply saying that it will be 1 percent of the formula that has been used for years in B.C.

B. Ralston: I thank the minister for the offer of a briefing, although my colleague from Malahat–Juan de Fuca and I got one in the Finance Committee in the fall. The deputy minister sent us a leaflet or a paper, and no briefing was forthcoming, so I'll take that generous offer with a grain of salt.

Is there any tracking, then, of B.C. net paid-up capital that might be undertaken or modelled to show that, or is this simply a tax concept? Presumably, again, the argument that the minister's advancing is that greater investment would flow because of these changes.

I'm wondering whether that would have any impact on the calculation of B.C. paid-up capital, or is that an income tax internal calculation that bears no resemblance to the actual investments that a bank might make in British Columbia?

Hon. C. Taylor: First of all, we are assuming and hoping that no one pays this minimum tax, because we hope that the institutions are very successful and pay us much more in tax. This is brought in to ensure that the people of British Columbia know that there is a minimum, so that always financial institutions who are located in British Columbia will be required to pay 1 percent as a minimum tax. But we really do anticipate that banks will be paying us much more in tax than that.

The only thing I can say about the capital tax that has been paid by financial institutions is that it has gone up very, very little in the last few years. We think, in part, that's because they have decided not to expand or locate here. Therefore, we would hope to see, in fact, some growth in that sector.

B. Ralston: Once again reference is made to decisions being taken by banks, but no concrete instances are proffered to substantiate that.

In this section, 3.6(1), there's a reference to the financial institution having had a permanent establishment in British Columbia. What does that term mean?

Hon. C. Taylor: It means that they have a fixed place of doing business in British Columbia.

B. Ralston: So it's not intended, for example, that a financial institution like Wells Fargo in the United States, which offers loan sourcing over the Internet, for example…. There are other financial institutions that enter the market here electronically; I'm thinking of some of the other financial institutions. They would not be subject to this tax because they don't have a permanent establishment in British Columbia.

Hon. C. Taylor: The bank does have to have some sort of permanent established base here.

B. Ralston: In the section beyond the phrase "net paid up capital" there's a reference to "the prescribed amount." What does that refer to?

Hon. C. Taylor: This particular section enables us — and it's our intention to do this — to say "institutions of a billion dollars or more." We were, in our minds, thinking that for the smaller credit unions…. We weren't trying to capture them in this, but we were trying to capture the large financial institutions.

B. Ralston: Is it intended that that prescribed amount will then be fixed by regulation and may vary? Is that the device?

B. Ralston: In section 3.7 there are a number of deductions from the minimum tax payable. Unless I'm misreading this, it seems pretty unlikely that any institution would ever pay the minimum tax, given the range of deductions that are available.

Can the minister explain the rationale for 3.7(1)(b)? This is an amount that can be deducted from the minimum tax payable. "The financial institution's unused corporate income tax credits for its 7 taxation years immediately before and its 3 taxation years immediately after the taxation year."

It's basically a ten-year window, and all those can be deducted from any minimum tax that the institution might have to pay. Can the minister explain the rationale for that?

Hon. C. Taylor: This parallels the federal income tax, where you can carry forward for seven years or three years into the future your tax credits.

B. Ralston: So the only rationale is to follow the federal act, then, in this case. That's the beginning and the end of it. There's obviously a discretion not to do that, but that's the path that has not been chosen.

Hon. C. Taylor: This is done so that we are sure that it will be called a minimum tax by the federal government.

B. Ralston: Many will be familiar with the federal Finance Minister's recent exhortations on tax policy. Is this something more than an exhortation that has been reduced to writing or policy by the federal government, or is this one of Mr. Flaherty's exhortations?

Hon. C. Taylor: The federal Finance Minister has asked all of the provinces to look at a number of things. One is to try and get the corporate tax rate down to 10 percent, because he believes that if Canada is going to go abroad and encourage investment in Canada, if we can say as a country that our tax for business is 25 percent — so that's 10 percent from the province and 15 percent from the feds — it will draw business into Canada.

So he has asked on the corporate tax rate. He asked all of the provinces to consider eliminating the capital tax, because it's seen to be a regressive tax. He also asked us to look at harmonizing the PST and GST.

As the members opposite would be aware from the budget speech, we have moved on two of these issues because they were in concert with our belief that every time you can reduce or eliminate taxes, you will draw investment and business to British Columbia. So they are completely in harmony with his request on those two things. We did not move on PST.

B. Ralston: I take it, then, that this is a political speech by the federal Minister of Finance at a meeting of provincial Finance Ministers, or something like that. This is not policy, particularly, insofar as it concerns this specific legislation. Is that right?

Hon. C. Taylor: I would hope that perhaps the federal Minister of Finance has watched the example in British Columbia and that, in fact, he has decided that we have, in moving to cut taxes, done something that's very positive for the economy.

B. Ralston: Well, we'll leave aside what the Minister of Finance for Ontario might think about Mr. Flaherty's exhortations, but obviously his views don't prevail everywhere in Canada.

If I could, then, look at section 3.7(2). I'm looking at sub (b): "subject to paragraph (c), an amount may not be claimed.…" Then it talks about unused corporate tax credits for another taxation year.

I'm struggling a bit with the wording there. Does that mean that they have to be considered sequentially from most recent year to most distant, or how is that…? I'm having trouble following the sequence there.

B. Ralston: Presumably, once you reach zero, then you don't have to use your subsequent deductions. Are you able to carry those forward to a subsequent year?

I believe that in 3.7 it speaks of minimum tax payable for a taxation year, and then this is part of the calculation. So if sequentially you don't go through the full unused corporate income tax credits for the seven taxation years, then are you entitled to use those unused credits for the calculation of the minimum tax in the subsequent tax year?

Hon. C. Taylor: Any tax credits that you haven't used up you can carry forward for seven years.

B. Ralston: In 3.7(2)(e): "the amount deducted under subsection (1) for a taxation year may not exceed the financial institution's minimum tax payable…." So I take it you can reduce your tax to zero, but you can't go into the positive territory. You can't get a credit out of it.

B. Ralston: Given the array of deductions from the minimum tax that are set out in this subsection, what's the calculation of the ministry as to the likelihood that any financial institution will wind up paying the minimum tax?

I appreciate that some of the information on which that question is based would be proprietary and not available to the ministry, but they must have some idea, I suggest, of how this is going to work.

Hon. C. Taylor: We are assuming that the financial institutions who come to British Columbia will be successful and be paying far more than the minimum tax. So we haven't made any assumptions on revenue from the minimum tax.

B. Ralston: I'm not quite understanding. Obviously, the institutions, insofar as this tax is concerned, may wind up paying nothing or very little, but the minister's referring to other taxation of the institutions that are located in British Columbia. Is that…? I'm not quite following the logic.

Hon. C. Taylor: This minimum tax only comes into being if the financial institution's corporate income tax falls to the 1 percent level. So we are anticipating and hoping that these are very successful financial institutions, and they'll be paying much more in tax. But if a financial institution goes through a rough patch and is having difficulties, the people of B.C. are assured that they will at least be paying 1 percent of the net prepaid capital.

B. Ralston: Ordinarily, if you don't make money in terms of ordinary income tax, corporate income tax, if it's 10 percent or 12 percent…. If you don't make a profit, then you wouldn't be paying any anyway.

Is this some kind of bow — sort of as a vestigial corporate capital tax — at the taxation policy that's being phased out? I'm not quite sure of the logic here. Or is it simply that the likelihood is no one will wind up paying it, so it's okay to put in the legislation?

Hon. C. Taylor: This is simply intended so that even if a financial institution is going through a difficult time, they will still pay the 1 percent at the 1 percent level.

B. Ralston: I'm looking at 3.8 of section 9. Other than it being a transitional provision to the 2010 taxation year, is there anything else that this section seeks to accomplish?

B. Ralston: The minister can correct me if I'm wrong, but this refines the definition, as I understand it, of paid-up capital, or it's part of the definition of paid-up capital. In section 2(a) it sets out that ingredient: "…the capital stock of a financial corporation includes all shares in the financial corporation." So is that intended to be part of the definition of the B.C. paid-up capital?

Hon. C. Taylor: This just clarifies and ensures that all of the equity shares of a financial corporation are included, and what is not included would be the non-equity shares of a credit union.

B. Ralston: Does this change increase the taxable capital of the banks or not?

B. Ralston: Can the minister explain the rationale for subsection (2)(b), the non-equity shares, excluding them from the capital stock of a credit union?

Hon. C. Taylor: This exemption for non-equity shares from credit unions has always been in there, and this just clarifies it.

B. Ralston: I'm looking at section 12(a). I understand that it adds some subsections that deal with how tax credits for the three future years will be dealt with. That's looking prospectively in terms of calculating the tax over the phase-in period of three years? Is that what this is designed to do?

B. Ralston: Ordinarily, when you make instalment payments, there's a calculation of interest as well. Does that affect the calculation of interest on instalment payments?

Hon. C. Taylor: This is really intended so that you don't reduce your instalment payments.

B. Ralston: I'm afraid the minister will have to explain that a little more thoroughly. I don't quite understand that. That may be a personal failing, but perhaps you could explain it more thoroughly.

Hon. C. Taylor: This is intended really to have the instalment payments based on what you know, so you can't anticipate what might happen in future years and apply it to your instalments. Your instalments are based on what you currently know.

B. Ralston: I'm not clear on the effect of this amendment. In the definition section — section 13, which is being amended — the "savings institution" means…. It says: "(a) a bank, (b) a credit union, (c) an insurance company, (d) a trust company, and (e) a financial institution that accepts deposits from the public in the normal course of its business." The effect of this amendment is to eliminate (e), the "financial institution that accepts deposits from the public in the normal course of its business."

I confess I don't understand the rationale for taking that subcategory out of the definition of a savings institution.

Hon. C. Taylor: This is a housekeeping amendment. From (a) to (d) covers all of the financial institutions, so (e) is not necessary.

B. Ralston: So the (e), then, is subsumed in the other definitions. Is that…? It's just tidying up the drafting, then. I don't have any further questions on that section.

B. Ralston: This is a proposed change to the Financial Administration Act, in section 18 and subsequent section 19, so I may amalgamate my questions on those two sections.

I can see what the legislation amendment proposes. It proposes to permit the Treasury Board to pay expenses for MLAs acting in their official capacity as members of boards, councils, commissions, acting under the directives of ministers or acting as ministers or as parliamentary secretaries.

I'm wondering…. I travelled with the Finance Committee around the province, and certainly, no one seemed to be terribly upset about this issue. I didn't hear a single representation on it.

It seems to have the effect of authorizing payments to members of the Legislature who sit on boards — and they would almost always be government appointments — or on commissions or councils at the request or direction of a minister to get some extra pay for that. Given the sensitivity of these issues of payment of public officials, I'm a bit surprised to see this here. Can the minister explain the motivation for including this in Bill 2?

Hon. C. Taylor: The member opposite referred to work on the Finance Committee, and members who sit on the Finance Committee get paid the $61 per diem. The intent of this is to ensure that others — parliamentary secretaries, other MLAs who are on government businesses or boards — are treated in exactly the same way. So this is just consistent with what the member opposite's experience currently is. It's to ensure that everybody is treated on the same basis.

B. Ralston: Well, I suppose if the example of the Finance Committee is being chosen…. I sit on that, as do three other members of the opposition and six members of the government. It's a legislative committee. It's going about doing the business of the Legislature.

This amendment appears to contemplate people, MLAs acting — and I'm looking at the language over the page — "as a member of a board, a council, a commission, a body or other entity created or established by the Executive Council." There's pretty well an infinite proliferation possible under this language. It's open-ended.

It seems that there's an opportunity for additional compensation, I would say, only or almost exclusively for government members who are appointed — because the words are "Executive Council" — by the cabinet.

First of all, can I confirm that that's the plain meaning of that section? Secondly, why does the minister feel that government MLAs who are performing appointments which may broadly be considered part of their duties deserve extra compensation?

Hon. C. Taylor: On two issues. That last statement doesn't properly reflect what's happening here, because it's not compensation. It is to take care of expenses. It's not additional, because these individuals currently can put in their different expense bills. So this is just to ensure that everybody is on the same page, that everybody is getting paid the same way, and it's a $61 per diem.

B. Ralston: Well, if government MLAs can currently claim, as I understand it, the per-diem expense of $61 a day, then why would they…? They're acting in an official capacity, carrying out business on one of these bodies. It seems to me this section is redundant. Am I missing something?

Hon. C. Taylor: In fact, they are being compensated for their actual expense billings. What we do with this particular act is put everybody on the same basis, which is $61 per diem, rather than different individuals having different amounts by their different bills and different hotels or meals. This just gets everyone, whether you're an MLA sitting in the House, whether you serve on a legislative committee or whether you're a parliamentary secretary or an MLA on this government business…. Everyone will have the same, which is $61 per diem.

B. Ralston: So in the case of a parliamentary secretary, at the present time…. Is that person being compensated for their expenses by some other mechanism? Will this in fact be…? I assume that if they have reasonable expenses for a hotel or travel, and they submit them, they're being paid. Are they doing it without being paid at the present time?

Hon. C. Taylor: I'll take another run at this. Currently, they are being reimbursed for their expenses, but you can imagine it would be different for different people in different parts of the province and different hotels and different meals. This brings everyone onto the same basis. Instead of being reimbursed for your actual expenses, which was just one category that did that, everyone now is on the $61 per diem.

B. Ralston: Is the net effect of this policy, then, likely to be a reduction in the expenses of government or an increase in the expenses of government?

Hon. C. Taylor: We've made no determination as to whether it'd be more or less, but we believe in equity. We believe that anyone doing this government work…. Everyone should be on the same basis, so everyone should receive $61 per diem. It complies with the members' remuneration and pension act, and we just think everyone should be treated fairly and in the same manner.

B. Ralston: Under the present legislation, section 27(1)(d), which is the section of the Financial Administration Act that's being amended, gives the power to make regulations respecting the amounts or allowances, travelling and other expenses incurred by persons with the power to set different rates.

It seems to me it's open to the Treasury Board, at this point, simply to use that legislation to set the one rate that's being referred to. I don't understand why a legislative change is necessary to solve what appears to be a relatively simple problem — if it is, indeed, a problem.

Hon. C. Taylor: This just provides extra clarity so that everyone knows that they will all be compensated in the same way.

B. Ralston: With respect, looking at the section, it doesn't say that anyone will be paid the same way. It says may "make regulations establishing amounts or allowances, to be paid out of an appropriation…" It doesn't say that they'll be paid equally. It's equally unclear, if that was the intention, as the previous 27(1)(d).

Again, I don't understand the motivation. If there's some principle of equality here being enunciated, it's not in there.

Hon. C. Taylor: I think this is clear. What we would like to do is have everyone treated the same way. We recognize the words that were cited by the member of the opposition, but we think for clarity that what we should do and why we've proposed it in the budget legislation is just to lay it out and say that MLAs who are on government business, who are on legislative committees or who are sitting in the House all will be paid $61 per diem.

The language in section 27 that is quoted by the member opposite talks about amounts and allowances. We're just saying here in this legislation that everyone will be treated the same way. It's a matter of equity, and we think it's good legislation.

B. Ralston: I hate to disagree with the minister, but (b) says a regulation may "establish different amounts or allowances for different persons or circumstances." There's no commitment to equality.

Can the minister advise: is this an issue that has bubbled up from the government caucus, and there's some effort to correct some lingering grievance among government MLAs about their compensation for their work on these different bodies of boards or councils?

Hon. C. Taylor: This is about equity. We believe everybody should be paid the same amount per diem.

B. Ralston: It's sometimes frustrating to debate with the minister, because at a certain point she simply

begins repeating the same answer and not engaging in any dialogue. I'm sincerely trying to understand this amendment. I don't think the answers are at all responsive to the question.

Equality is spoken of. I'm trying to get a sense of…. Ordinarily, in legislation you're seeking to correct or set something straight, particularly when you bring an amendment like this.

I don't understand. Maybe the minister can explain to me: what is the source? What is the motivation? Where did this grievance, this unhappiness that necessitated this amendment to the Financial Administration Act come from? Why is this before us?

Hon. C. Taylor: I'll frustrate the member opposite once again. I do have to give the same answer because it is the honest answer, which is that we believe that everyone should be treated the same way.

We don't think that it makes any sense to have MLAs who are sitting in the House being paid $61 per diem and MLAs who serve on legislative committees, $61 per diem, but then you've got a group of other MLAs doing other government committees or boards, and they are doing it on a different basis, which is reimbursement of actual expenses. This is an attempt to bring equity.

It's quite interesting, because this is one that is housekeeping. It's making sure that everybody's on the same page. For a very busy spring legislative session, it's amazing to spend so much time on the question, basically, of why should everyone be treated equally.

B. Ralston: There's lots of time for legislation. We don't have any estimates in the chamber, so we've got lots of time to debate legislation.

This section does not say that everyone will be treated equally. Obviously, that statement is not something that anyone is going to disagree with. I don't think that this amendment says what the minister says it does. It simply gives further power to create regulations similar to the previous one, so I think the amendment that's proposed here is unnecessary.

B. Ralston: Section 20 proposes a number of amendments to the Home Owner Grant Act. There are some that I think are straightforward in terms of changing any exemptions, but there are some definition changes which I do have some questions about.

"Permanent resident" is redefined as having "the same meaning as in the Immigration and Refugee Protection Act (Canada)." Other than harmonizing with the federal statute, is there any other problem that this was designed to rectify? Have there been any issues about the interpretation of the definition of permanent resident that are different from the federal legislation? I'm just wondering why this was brought.

Hon. C. Taylor: This was just for clarification. A question came into the ministry about someone who wasn't sure whether this applied to them or not, so this just clarifies to whom it applies.

B. Ralston: The definition of spouse that's set out in 20(b). There are a number of revisions. I'm looking at 20(b)(iii) — "the filing of an application by either of them for a low-income grant supplement" — and I'm not clear. It turns on the definition of when, I suppose, the marriage-like relationship begins. I'm not quite sure why this particular subsection is brought as a trigger to determine the length of that period of time. I don't understand that, so perhaps that could be explained.

Hon. C. Taylor: This definition has been there with the homeowner grant application. It was an oversight when we did the low-income changes last year that we didn't put it into that section as well.

B. Ralston: I take it that this section is designed to clarify the somewhat ambiguous wording of "permanently resident" in the previous section and to follow the definition that was set out above in 20(a). Am I right in thinking that?

Hon. C. Taylor: Yes. It's to ensure that the definition applies to the owner of the residence.

B. Ralston: I'm looking at an amendment to section 2(6): "(c) by striking out 'and' at the end of paragraph (b)…." There's a new definition related to a deceased owner. I don't understand the requirement of the change there. I'm not sure that…. Anyway, if the minister could just clarify what the intention of the drafter is in that section.

Hon. C. Taylor: I wonder if I could ask the member opposite to repeat the question. We're not sure what sections you're talking about.

B. Ralston: I'm in section 22(c): "by striking out 'and' at the end of paragraph (b)…." I take it that this is an amendment to 2(6).

So 2(6) presently reads…. There's an "and" at the end of that subsection, and (c) says: "the residence is registered in a land title office in the name of the deceased owner, that owner's estate, the spouse or relative."

It's proposed to substitute the following paragraph, which is set out in the bill: "the deceased owner met the requirements under subsection (1) at the time of the

deceased owner's death." I don't understand what the section is trying to accomplish here.

Hon. C. Taylor: This is added, and what it's trying to make clear is that the deceased owner must have met the eligibility at the time of death. For instance, if the owner happened to be in another province and wouldn't have qualified for the homeowner grant and then died, his relatives couldn't claim it at that time.

B. Ralston: There is an issue that arises. I'm not sure if it arises here or maybe in the next section. It's about the eligibility — I think this is something that the B.C. Real Estate Association has inquired about — of owners of fractional interests in apartments.

As I understand it, it's a legal device that was designed to, to some extent, circumvent the Condominium Act because specific municipalities were forbidding conversion from rental housing to condominiums. So this device was a creative legal solution to skirt that ban in certain municipalities.

Basically, the form of title is what's called a fractional interest. It's a form of strata title. I think I may have the letter in my material. I don't have it right at hand. The Real Estate Association was concerned to know if the homeowner eligibility applied to owners of fractional interests in that form of title.

B. Ralston: The representations that I've received — and the minister may have received the same representations — are that, notwithstanding that, it's legally defined as an individual interest in a fixed location, and to all intents and purposes it's an interest in the apartment or the dwelling unit that they occupy.

I think the actual entitlement to the specific unit may not be on the land title certificate but is in the legal documentation that accompanies the way in which the units are legally created. So I think the suggestion is being made that this is something that the minister might want to consider and extend a homeowner's grant to those owners. I'm not sure whether it falls properly within this definition or not, but it is a matter that I think is appropriate to raise here.

Hon. C. Taylor: As I mentioned, it has been our policy with these fractional interests, because they are fractional interests in the ownership of the property and not ownership of a specific unit, that it is the one ownership that gets the homeowner grant, rather than split to all the owners of that particular piece of property.

However, it is entirely appropriate if the real estate group or members opposite wish us to look at this. Every year we make adjustments to the homeowner's grant, and if representations come forward, we're happy to look at it again. But the position that we have at this point is that because it's fractional and doesn't relate to a specific unit, you can't give a number of homeowner grants.

There was one worry, for instance, that if you have two people on title — if I have a house and if I had a mother who was in the basement, and perhaps we both have our names on title — that that would be considered similar to a fractional interest and, therefore, you'd be paying two homeowner grants to a single-family house. So I would say to the member opposite that we're happy to look at this again, but I think there are some issues around this one.

B. Ralston: I thank the minister for that commitment, and I'll advance the issue outside the confines of this proceeding. I think it's something where a creative public administration might well come to a solution.

Since we are on the topic, broadly speaking, of homes that would be eligible for the grant, another inquiry that has come forward — I'm not sure whether it falls within this definition section or not — is whether the grant applies to float homes. I understand that it doesn't.

It the minister or the ministry prepared to consider the application of a homeowner grant to float homes?

Hon. C. Taylor: Yes, we did deal with a request for information on this. A floating home may qualify for a homeowner grant. There are a few conditions that they have to meet.

The floating home must be anchored or secured for a period of 60 days or more during the year. It's called a manufactured home park, even though it's a water marina. The manufactured home park is land that's rented for the accommodation of manufactured homes, but this also includes land covered by water. If it's in a municipality, then it has to have municipal permits and certificates. So already there are allowances, but there are certain conditions that the floating home would have to meet in order to receive the homeowner grant.

B. Ralston: This section brings in amendments that deal with what's called an extended absence from the principal residence. One can understand that if a person is absent from the principal residence due to fire or flood or something like that, that this would be a reasonable exception. But these amendments in section 29 appear to extend some further distance than that.

I'm reading the act. It says that it extends it up to two years absence for reasons other than natural disasters and any reason other than incarceration. I'm wondering what the motivation or the thinking is in extending the grant. Is it simply the convenience of administration to avoid people having to drop their

eligibility and then reapply, or is there some broader concern that these amendments seek to address?

Hon. C. Taylor: In the past when we had the one-year rule, it applied across the board, whether it was fire, a natural disaster, whether it was because you were in a nursing home or a hospital or if you were travelling or at school. We had some apartment owners approach us, saying it takes more than a year to rebuild.

In changing it for apartment buildings, we just also changed it for consistency to any situation, because there are times you might be away at school for two years or you might be travelling, but that's still your principal residence. So we believe the two-year rule across the board would be a good one.

B. Ralston: Has any calculation been done as to the likely financial impact of this decision, were it to be passed?

B. Ralston: I just wanted to confirm what I think is my understanding of this amendment. It's designed to make sure that spouses can't receive grants for the same residence, so it's either one spouse or the other. This is just clarifying language. Is that correct?

B. Ralston: Can the minister explain the motivation for this proposed amendment?

B. Ralston: I overhear the tones of the Government House Leader, who is suggesting that it might be an appropriate time to conclude. So perhaps with this question, if the minister is able to respond, we can then adjourn for the time being.

Hon. C. Taylor: Would you mind repeating the question? I'd be happy to answer it.

B. Ralston: Yes, we were on section 33. What section 33 does — and this may be something that we wish to pursue when we meet again on this bill — is strike out language from sections 21(1) and 21(14) of the Hydro and Power Authority Act. It strikes out the language "and within the borrowing limitation set out in section 25."

Hon. C. Taylor: Yes. With the borrowing limits in, what has happened is that the borrowing limits have been increased 13 times since 1964. Since it's a stated policy of this government that we will be moving forward to ensure that we, as a province, are self-sustaining in energy production, we are making the assumption, not only for the current heritage facilities but for new facilities, that borrowing will be required.

But if I may, I would like at this time to move that the committee rise, report progress and seek leave to sit again.

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

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

Mr. Speaker: Hon. Members, the Lieutenant-Governor is in the precinct. If you would remain in your chairs, he should be in shortly.

His Honour the Lieutenant-Governor entered the chamber and took his seat on the throne.

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

Hon. S. Point (Lieutenant-Governor): Just one announcement. I have the pleasure of announcing my granddaughter's birth two days ago. She couldn't wait to get here. She came two months early.

Mr. Speaker: There are some benefits to this place. The granddaughters just keep reappearing.

M. Karagianis: I'd like to pick up the questioning where we left off prior to the spring break. We were talking about the William Bennett bridge, and I did have a number of questions. We had got to a certain point in our discussions, but I wouldn't mind refreshing a little bit of the discussion with some questions that I have, if I may, through to the minister. We talked early on about the $185 million, where the minister said that this is an accounting issue, that there was a disparity of approximately $40 million.

I know that when we talked about the Kicking Horse bridge the minister also alluded to the initial capital costs, some accounting costs and other costs that the ministry absorbed. I think in the case of that, it was a much more modest figure than this. I know that the minister referred to this as being an accounting issue, that the real capital costs of the bridge remained at $144½ million but that the budget itself has got it listed as $185 million.

It is a considerable differential between what we discussed in the Kicking Horse project which, I think, was in the neighbourhood of $7 or $8 million for accounting. Could the minister just enlighten me a little bit on why it's a $40 million discrepancy there, in this particular project?

Hon. K. Falcon: Yeah. The issue is one of accounting treatment, and it has to do with how the accountants decide they want to allocate costs on a project. It has absolutely no bearing on the capital cost of the project. That does not change. It has no bearing on the total cost, as the member will know. If the member looks in the budget, she will see that the total costs — the construction costs, the capital costs, the ongoing maintenance costs — for the 30-year term of the project remain unchanged.

The accountants have to make decisions on how they allocate costs. The primary difference is interest during construction. The accountants in the Auditor General's ministry, in cooperation with the internal ministries of government, have deduced that the interest-during-construction costs will form part of capital for accounting purposes.

It doesn't add to the capital cost of the project. It makes no difference. That's still $144½ million. But for accounting purposes, they allocate some portion of interest during construction onto the capital costs. That's an accounting issue. Frankly, it's of great fascination to accountants.

It's not of particular fascination to me because my concern is: what is it costing to build this project? Is the project still on budget? Will it be built for $144½ million? The answer to those questions is yes. How they allocate it for accounting purposes…. I'm happy to let the accountants figure that out.

M. Karagianis: Would the minister then verify: is this $40 million in real money? Who pays that, and where is that? It's not just a number somewhere in the accounting books. Who's actually paying that money?

Hon. K. Falcon: Before I answer, I apologize. I was remiss in not introducing our staff. I should do that for the benefit of the members opposite and for any of the viewing audience. Joining with me here today is my assistant deputy minister of finance, Sheila Taylor; my deputy minister, John Dyble; assistant deputy minister, partnerships department, Frank Blasetti; Assistant Deputy Minister Mike Proudfoot; and Assistant Deputy Minister Kathie Miller.

As to the member's questions, I think the best way to do this is to suggest this to the member. For Budget 2008, the office of the comptroller general, the office in the provincial government responsible for developing and maintaining the latest standards in accounting guidelines, developed accounting guidelines for P3 projects in Budget 2008.

The guidelines are referenced in page 89 in the 2008 Budget and Fiscal Plan, which I would draw the member opposite's attention to. It results, in accordance with all the accountants, in the consistent accounting and reporting of P3 project costs across government so that there's a consistency on how these projects are reported out.

As I mentioned on the William Bennett bridge in terms of the allocation of counting costs, of the $40 million that the member referenced, $30 million of that is interest during construction. So the interest-during-construction piece of this project will be allocated, for accounting purposes, as capital. That does not add to

the capital costs of the project. It's for accounting purposes in terms of how they report out, and it will be allocated as capital.

There's $10 million in decommissioning costs for the old bridge. That was basically getting rid of the old bridge, which has always been part of the budget. It still is part of the budget, but according to the office of the comptroller general, that cost should also be, for accounting purposes, recorded as part of capital.

The costs were always anticipated as part of this project but were never included in the initial $144½ million capital cost of building the actual bridge. If the member looks at table 2 on page 89 of the 2008 Budget and Fiscal Plan, you will see that the total cost — as I referenced, the $586 million capital cost and operating costs — over the 30-year term of the contract has not changed.

How they allocate the dollars within that envelope for accounting purposes has made a slight change, but that is an accounting change. It does not affect the capital cost of the project, which remains at $144½ million.

M. Karagianis: I understand the $10 million decommissioning cost. That's very reasonable. The $30 million in interest — is this then incorporated and we as taxpayers pay for that in the $586 million repayment plan that we make to SNC-Lavalin?

Hon. K. Falcon: The answer is yes. It's part of the performance payments that are made on this project.

M. Karagianis: So $30 million in interest that we are paying is incorporated in that $586 million. The $586 million, as we discussed in our last estimates session, over the course of this contract for the next 30 years, goes towards road maintenance, upkeep, operations, improvements — all the things that the minister listed in here when we discussed the Kicking Horse project and, obviously, this one as well. I know that the minister did outline things like snow removal, sweeping, salting and plowing.

Can the minister tell me: what is the actual current maintenance cost for that particular stretch of road and bridge? There has been an existing bridge there prior to this one being rebuilt. What have the maintenance costs been on that?

Hon. K. Falcon: No, we don't have that information here with us, but we could certainly dig that information up and make it available to the member opposite.

M. Karagianis: Perhaps also the repair costs over, let's say, the last ten to 15 or 20 years. I'm sure we must have a list of those. That would be excellent as well.

I know that when I asked the minister previously about the long-term operations of the bridge, because it certainly has a 75-year life span that has been reported out…. This bridge has got this 75-year life span. The minister talked about some of the other upkeep and operations. The minister said here that the pontoons would be inspected, repairs would have to be made, and steel inspections and adjustments to some of the other components of the bridge.

Could the minister explain to me how we've got a bridge that has a 75-year life span and yet…? What does that 75 years apply to? If it's not the pontoons and if it's not the road surface…. What are some of the other things that the minister has listed in here? Then what exactly are we getting as a 75-year life of a bridge, if it doesn't include any of those components?

Hon. K. Falcon: The 75 years refers to the length of time in which a new asset like that which has been built will last if you provide it with the normal repair, maintenance and rehabilitation that you would normally provide to a concrete and steel structure like this bridge. Obviously, if you didn't provide those services, that would shorten the life span of the bridge.

The member will well know that part of our ministry's job in government is maintaining our existing assets to ensure we maximize the benefit to the public by servicing, maintaining and rehabilitating those bridges such that we extend their useful life for the benefit of taxpayers, subject to structural integrity and all the usual things that play into these things, of course.

The bottom line is that that 75-year figure is the estimated span of the structure, subject to government investing, through the contract, in the normal maintenance and rehabilitation that you would expect on a bridge structure like this.

M. Karagianis: Certainly, I would expect those to be all of the things we're getting for our $586 million that we're paying out in the course of the contract.

The minister did also mention in our last discussion, again, in response to what we were getting under this maintenance contract…. The minister made reference to a heavy risk associated with doing this "where we make payments based on performance, where we are protected and where we get a project with a heavy risk associated, especially in terms of construction," and talked about the challenges.

Can the minister explain what other heavy risks are associated with this project?

Hon. K. Falcon: The significant risk that I talked about is that floating bridges are really a rare species in the construction world, and they have unique risks associated with them. To put it in perspective, two of the last seven floating bridges that have been either constructed or had major work done on them in the last 20 years sank — one during some significant maintenance work that was being done in Washington State and the other while it was in the course of construction, also in Washington State. Both those bridges sank.

There is clearly a very significant amount of construction risk and engineering risk associated with these things. That's why on large complex projects like this, the government in some cases — and this is one of them — entered into a private-public partnership arrangement.

The construction risks are significant, especially given the experience of having two similar structures sink next door, actually, just south of the border. Two of only seven floating bridges in North America — certainly western Europe and North America — have had that record. It really points to how important it is for government to transfer those kinds of risks, which we have done under this P3 arrangement.

We now have, I'm very pleased to say, the rather exciting position of seeing a very complex project like the William Bennett floating bridge being constructed on schedule and on budget, for the benefit of folks in the Okanagan, that will be open by this summer in time for the busy summer season. I think that that's something, certainly as the Minister of Transportation, that I'm very proud of and that I know we're very proud of as a government.

I think it really goes to this whole issue about P3s, and it goes back to the earlier discussion I had with the member opposite, which is that the belief of this government isn't that the P3 model is the ultimate model and therefore the only model that should be utilized when undergoing major construction projects.

But it is our belief that it is a model that is suitable in some cases, even in many cases, where you've got the same characteristics that should give rise to some concern in government, in terms of government's ability to deliver those kinds of programs on schedule and on budget. Those concerns have to do with complexity of the projects, particularly the construction challenges and the construction risks.

As a government, wherever we can enter into an arrangement, as we have here, where we have a fixed price that we pay based on performance and on them achieving the objectives set out in terms of the schedule, in terms of the quality issues, that can be very advantageous for taxpayers.

The record that I alluded to earlier with the member…. In British Columbia we've had 24 P3 projects representing value in excess of $8 billion in the province of British Columbia. All of them, all 24 of those projects, have been characterized by being on schedule and on budget. That is the kind of record that we think lends itself to further use of the P3 model where it's appropriate. The William Bennett bridge is, in my view, a classic example of where it's appropriate.

M. Karagianis: The minister, in discussing the kind of risks that could take place with a floating bridge, also alluded to force majeure. That would be government's responsibility.

How would you determine, in the case of a high-risk incident with the bridge, where it is the contractor's — in this case, SNC-Lavalin's — responsibility and where force majeure takes over and it therefore becomes our liability? Where does that line get drawn?

Hon. K. Falcon: The issue of force majeure is really something that…. Where the line gets drawn is based on previous experience in the government, including under the government of the member opposite. In this case, the issues of force majeure are also outlined in the agreement themselves, but they typically refer to things that would be outside of the scope of the proponent to have any control over.

That would be things like an act of war, a massive earthquake, issues of terrorism — things that would, obviously, be completely outside their ability to control. In those cases, those rare cases…. I'm not aware of force majeure ever coming into play, and — knock on wood — it will never come into play on any government's watch, hopefully. In those exceedingly unlikely circumstances, yes, government would naturally assume responsibility under the terms of the contract for force majeure.

M. Karagianis: One of the other things that the minister talked about when we were talking about the $144½ million budget for SNC-Lavalin was that that's a fixed cost. I asked the minister if they were simply going to eat any additional costs above and beyond that. The minister did say yes, but he said: "Of course, one of the things that we try to build into these contracts is also incentives."

I followed a different line of questioning for a while, but I'd like to get back to that and ask exactly what kind of incentives the minister was referring to and what those costs would be.

Hon. K. Falcon: When I talk about incentive payments…. There are really two areas that we're referring to with respect to incentive payments.

The first is early completion. What happens is the earlier they complete the project, the sooner they will start receiving payments. The payments are based on lane availability. In other words, they're based on the premise that when the lanes are available for the traffic and the public to start utilizing, that's when payments can be made.

That is a strong incentive for the proponent — in this case, SNC-Lavalin — to try and get the project up and running as quickly as possible. If they can do it ahead of schedule, they start receiving their performance payments ahead of schedule. That's one benefit.

The second issue of incentive payments is really incentive/disincentive. There are provisions built into the contract which state that qualitative measures are also going to be a major issue for the government in terms of the bridge itself.

That means, for example, that if there are problems with the pavement — say they tried to use a lower grade of pavement or something that resulted in early potholing or what have you — then there would be deductions made from the performance payments to the contractor. If the quality of paint, for example, started resulting in early flushing off or fluffing off of some of the paint — or chipping off or what have you — there would be demerit payments that have the potential to be made on the performance payments to the contractor.

This is why I think that these are such exceptional agreements. What we do in the government is end up paying for performance. It is as straightforward as that. They get incentivized properly, as they should be incentivized, when they are delivering major complex projects ahead of schedule. They'll receive their payments for lane availability early, and I think that's a good thing. It incentivizes them the right way.

There are also incentives based on the quality of the project such that should there not be the highest level of quality that the government expects and has outlined in the concession agreement, there are deductions made from the performance payments to the contractor — there again protecting the public and the taxpayer appropriately from those kinds of risks.

M. Karagianis: Are these incentives above and beyond the $586 million, or they are included in that?

M. Karagianis: SNC-Lavalin is getting $586 million through the course of their contract, regardless of whether they've performed well or not well. The minister says that they get incentives for early completion and doing exceptional work. They get demerits and get some of their incentive held back, but at the end of the day, they get the $586 million regardless, because everything…. There are no incentives above that. The demerits come out of that.

All I can see is that the contract that was negotiated by SNC-Lavalin for $586 million is pretty much a sure deal. As long as the bridge doesn't collapse or something extraordinary doesn't occur, they will get their money one way or the other through the course of this contract.

Hon. K. Falcon: No, the member has mischaracterized what I said. I think this is an important point for the member to know. The $586 million total cost, for the benefit of the viewing public out there, refers to the capital cost of building the actual bridge itself and then the ongoing maintenance, rehabilitation and all the other costs that will take place over the 30-year period that the bridge is in operation. That's where the $586 million comes from.

The $586 million is based and predicated on an assumption that there will be full payments made, but that assumption is only realized if the asset is performing as is expected and laid out in the agreement that we have with the concessionaire, in this case SNC-Lavalin. That means that the lanes must be fully operational and available for traffic.

If anything happens in that term, under the auspices of their concession agreement, that in any way shuts down lanes or impacts traffic, lane availability, etc., then deductions are made. They will not, then — of course, ergo — receive the full $586 million. Deductions will be made. If there are any of the qualitative issues that have not been fully met by the concessionaire under the agreement, again there will be deductions made from the performance payments. Ergo, they will not receive the full $586 million.

For the benefit of the member, the reason why that is so important is because what we want to do, of course, is make sure that not only do they build a first-class asset — which, I have to say, they are definitely doing, and I've been up there and viewed it many times — but that they also are maintaining the asset and that they are ensuring that it is fully utilized to the benefit of the public, in the public interest, over the term they're responsible for maintaining and looking after the asset. That is the right level of incentive and disincentive.

Had we had that situation in place on other past capital projects that have historically been undertaken by government — say, for example, in the building of ferries — we would have had a situation where, if they didn't perform as they were supposed to, we wouldn't be making payments to the people that built them. That's the beauty of a structure like this. It is based on performance and delivery.

For example, to contrast and move to a parallel situation, when B.C. Ferries had a situation where they brought in new vessels, which are now operating in British Columbia to the benefit of the people of B.C., they were not required to make any payments until they were delivered into British Columbia waters and had gone through all their testing to make sure they met all the needs of British Columbia Ferries. Only then was British Columbia Ferries required to make payments. That is a very different situation than having to make payments throughout and then finding out that you've got a lemon at the end of the day.

This, I think, is really leading edge in terms of how you should structure P3s to protect the interests of government and taxpayer and make sure there are the appropriate incentives and disincentives in ensuring that you get the kind of performance you want to see out of a proponent. I believe we've done that.

Certainly, in the great discussions we've had in the course of estimates over the years that I've been Minister of Transportation, it has just been, frankly, fascinating to me, too, as the minister that as we delve into these more and more, as we did in the previous estimates on the Sea to Sky Highway…. The more you delve into them and realize the protections that are in place, the more you really recognize what a tremendous benefit these are in terms of protecting taxpayers from the kind of risk that, unfortunately, has historically been a pattern in the province.

M. Karagianis: Perhaps the minister could give me an example of where we have held back on performance payments with one of these P3s.

Hon. K. Falcon: The Kicking Horse Canyon is the only project that's actually up and running now where performance payments have started to be made. I'm pleased to say, as the member well knows, that in the Kicking Horse Canyon they've done an exceptional job of delivering that project a year and a half ahead of

There have been no deficiency payments made that I am aware of, because they've done an exceptional job. The lanes are available. It's very safe. Down the road I'd be happy, in future estimates, to continue to update the member.

I should say this too. As the Minister of Transportation, I'll tell you that I have no problem in having deficiency payments made. If there are deficiencies, you are darned right that you ought to be making sure that that gets deducted from performance payments. That's why they're called performance payments. If they don't perform, they ought to be deducted. That's something that I'm actually proud of.

I will be the first one to step forward and acknowledge whenever there has been a deficiency in the kinds of performances that are outlined in the concession agreements. I'm happy to stand up and say that they were penalized as a result of that and that their payment was reduced to reflect the agreement that they signed.

These are all big boys and girls who enter into these agreements. They're well aware of what their responsibilities are. We have absolutely no hesitation in holding them to account. The good news is that on the only project which is up and running now in the Ministry of Transportation, there's been no requirement for that to this date.

Is the minister aware of any legal challenges in any other P3s, say, elsewhere on the continent or elsewhere globally, that are further along in their performance payments or performance expectations than this project?

Hon. K. Falcon: I can only tell the member what I'm aware of in the province of British Columbia. Not to be facetious, but I just haven't got time to sort of understand what's going on all around the world. I wouldn't be surprised. In major construction projects somewhere around the world there are probably lawsuits flying. In the United States of America, where there's a lawsuit filed every minute of every hour of the day…. It wouldn't surprise me at all if there were lawsuits somewhere.

I can say that in British Columbia I'm unaware of any lawsuits to date pertaining to any of the 24 P3s, representing $8 billion of capital projects. I'm not aware of any legal issues outstanding at this point.

M. Karagianis: Certainly, it is theoretical at this point that the process will be flawless and will be everything that the minister expects it to be.

The $586 million, we will assume, is the contract price negotiated by SNC-Lavalin to take on this project, both capital and operating, over the term of the contract. But until we've actually been through that process, there is no way to know whether or not there will be any flaws in the system.

I can see immediately that the ongoing maintenance and upkeep and repaving and all of the things that the minister listed as being normal and expected under the contract could be seen as being just the common wear and tear.

How would the minister ever determine that the contractor hadn't lived up to their agreement in some way? If in fact they're responsible for patching, paving and inspecting, they're going to be overseeing their own work. Perhaps the minister could tell me who is doing the oversight, then, on their performance.

Hon. K. Falcon: When putting together these P3 arrangements, we had a team of people representing some of the best minds from Partnerships B.C., from the legal services branch, from Ministry of Transportation staff that worked together in putting together these agreements. They were guided and informed not only by our experience in doing P3s in British Columbia but, more importantly, by the experience in other agreements around the world, particularly the U.K., North America and Australia.

The best practices and lessons learned, particularly in jurisdictions that had a lot more experience in P3s than we've had in British Columbia, were brought to the table in terms of making sure that we build and structure these private-public partnership arrangements in a way that provides enough certainty for their private sector proponents to perform as one would expect, demand and require of them but that also protects the interests of government and taxpayers in terms of how these projects go forward.

To directly answer the member's questions in terms of the standards — what the standards are, etc. — the standards, as the member would know, are laid out and available on our website. In the contract we have staff that are assigned to monitor and audit those standards to ensure that the standards are being maintained and adhered to, whether those standards are qualitative in nature or whether they have to do with lane availability or what have you.

That, I hasten to add, is actually on top of the performance quality standards process that is in place by the contractors themselves. SNC-Lavalin also puts into place their own performance measures and standards, which they require their staff to have in place to ensure that they meet those. On top of those, as I say, we have dedicated staff that also oversee and audit their performance.

M. Karagianis: Can the minister break out what the costs of our oversight of all of this will be, in addition, obviously, to what's being paid to SNC-Lavalin?

Hon. K. Falcon: The answer for the member is that this would form part of the duties of the operations manager and of the operations staff under the operations manager for the region. Obviously, they have, as

part of their duties, responsibility for a number of structures, and this structure will form part of that.

I don't have a breakout number, in terms of what the dollar amount is, for the member, but the way things work in this ministry is that it will form part of their responsibilities to oversee and audit the structure, as they do on other structures that come under the domain of the Ministry of Transportation.

M. Karagianis: The minister outlined that SNC-Lavalin is going to be responsible now for all of the ongoing maintenance and upkeep. Who is the current contractor doing that, and what becomes of their contract?

Hon. K. Falcon: The current maintenance contractor on the William Bennett bridge is Argo Road Maintenance. What will happen is that Argo Road Maintenance will have that responsibility removed from their contract requirements.

I believe that I've got this correct. Once the new bridge becomes open and available — and obviously, the old bridge will be decommissioned — they will no longer have responsibility for maintenance of the William Bennett bridge. They are currently looking after the old bridge. Let's call that the existing bridge. Their contract will be reduced proportionate to the amount that they were responsible for looking after the William Bennett bridge.

Then, of course, in the future, when the maintenance contract for that area is tendered out sometime down the road — I'm not sure when that one comes due, probably in another number of years — it will be bid upon without the William Bennett bridge as part of their maintenance jurisdiction, as it is of course being looked after and maintained by SNC-Lavalin.

M. Karagianis: So SNC-Lavalin brings their own maintenance people to the game. Argo Road Maintenance loses that portion of their contract for 30 years, one would guess, because SNC-Lavalin has got the contract for the bridge and, I believe the minister said, several portions of road leading both on and off the bridge proper.

I'm also, in looking at their contract…. We have got staff that will do oversight and provide that ongoing Transportation Ministry responsibility for oversight of that facility. At the same time, SNC-Lavalin apparently will have their own people to do oversight as well, so we're paying twice for that portion of it. Has that been factored in, in any way?

Hon. K. Falcon: That's not quite correct, actually. I think that it would be expected, as I'm sure the member would hope, that a company like SNC-Lavalin…. By the way, it's a proud Canadian company which is involved in major construction projects around the world and has an exemplary record in not only building and delivering but also in maintaining major infrastructure assets. It will come as no surprise to the member opposite that they would have their own performance management approach in place, as we would expect them to have and as they do.

What we are saying is that as part of our Ministry of Transportation obligations, we would oversee this bridge. It's not paying twice for anything. I mean, this is part of what you would expect the Ministry of Transportation to do. Just because a project is being maintained and looked after by a contractor doesn't mean that we don't evaluate the work they're doing. Just as we evaluate the work that's going on, on the maintenance of our highways each and every day and oversee those different contracts, we will oversee this contract no differently.

The same kinds of requirements will be in place. The regional operating manager will be responsible, with his operation staff, for making sure that they adhere to the terms of the contract, just as we require our maintenance contractors to adhere to the terms of their contract. So it's not a double payment at all. It's strictly exactly the kind of operational responsibilities that form part of the work that the great people of this ministry do each and every day.

M. Karagianis: Just out of curiosity, with the current contractor, Argo Road Maintenance, is this going to result in layoffs to employees in that area? Does SNC-Lavalin bring their own people from elsewhere? How do they actually manage that operations part of their contract?

Hon. K. Falcon: To directly answer the member's questions about if the Argo Maintenance contractor would be laying off any people as a result of having this one portion removed from their responsibilities, presumably when the new bridge becomes operational, the short answer is that I don't actually know the answer to that. That would be, of course, subject to whatever their own collective agreement states with their own employees. I just don't have that information off the top of my head. They're a private company that has its own collective agreement.

Because I meet regularly with maintenance contractors around the province, one of the things I do know is that the men and women that provide maintenance services across B.C. are extraordinarily talented individuals. Given the incredible strength of the British Columbia economy these days and the difficulty in finding good, qualified people, I suspect that were any to become available — and I'm not suggesting that there were — I can pretty much guarantee they would be snapped up awfully quickly in the kind of tight labour market that we have today.

I just don't honestly know in this specific case whether that's even the case, because I don't know the terms and conditions of the collective agreement that Argo Road Maintenance has with their own employees.

M. Karagianis: The next question I have here…. We've kind of gone through and looked at the William Bennett from the time line, the budget, the performance

payment schedule. What aspects of climate change and the new climate change policy will affect this project, and how will it affect it dollarwise?

Hon. K. Falcon: The short answer is that it won't have any financial costs associated with it, but there are some very significant benefits. I appreciate the member opposite reminding me of that.

One of the key things that the new construction of the bridge, the overpasses on the Westbank side and the improvements being made, and the coordination and the great work that the city of Kelowna has done in terms of coordinating the street lights along Harvey Avenue and changing the traffic flow throughout downtown Kelowna…. One of the big benefits the accumulation of all of those things has is reducing congestion, and reducing congestion has a couple of benefits. One, obviously, is that when you have a car sitting idling, it is something that is not particularly good for the environment, so we see a real benefit there.

The second is that it also provides us a very significant piece of the new RapidBus system that is going to be operational in Kelowna, which will provide rapid bus service from Westbank to not only across the bridge and through downtown Kelowna but ultimately right out to the UBC Okanagan.

Again, as we know in the history of rapid transit and transit, it is effective only when people can actually see a benefit. RapidBus will move more efficiently than even a car option would be, and that's how you pull people into rapid transit.

That, as the member well knows, is why we are also investing, with TransLink, $180 million in the Port Mann Bridge rapid bus to achieve the same thing — to ensure that we have a bus system that is going to be so efficient that it will pull people onto it.

The third and final thing is that we also have a significantly improved cycling capability now across the bridge. It's safer, wider. And something that right from the very beginning formed part of the planning process as part of the new William Bennett bridge — we wanted to ensure that we had something that would induce more pedestrian and cycling use across the bridge. As an active cyclist myself, I think it's something that is being widely applauded by the cycling community.

I think that all three of those are very significant benefits as far as climate action and, hopefully, getting people more active and using options other than the automobile by taking advantage of the transit, cycling and pedestrian options that'll be available.

M. Karagianis: I think that the minister may have perhaps missed my question. I may have just not stated it very clearly.

There certainly is going to be a cost for climate change to SNC-Lavalin. This contract with them was negotiated before the government put in place their new climate action plan. What are the implications to SNC-Lavalin of the government's new climate change plan? What will the costs be?

Hon. K. Falcon: I somewhat apologize to the member, because I'm maybe not understanding the question. I'm not sure what costs the member is referring to.

Perhaps the best way I could aid the member in this is to advise the member that whatever costs are a result of legislative initiatives undertaken by the province of British Columbia that are affecting the entire province and apply universally across the province are risks that have to be absorbed by the concessionaire. Unless we passed a piece of legislation that was specific to that project that involves some kind of financial punishment or impairment of the return to the concessionaire, then they may have some rights to complain. In fact, they would have rights to complain.

But when we undertake, as the province of British Columbia, legislative changes which are driven towards ensuring that we have a 33 percent reduction in greenhouse gases by 2020 and lead the world — and North America, for sure — in terms of the initiatives we've undertaken, that's just the way it is. Any concessionaire…. As you know, we talked about this with Kicking Horse. It's the same thing with the William Bennett bridge. That's their responsibility to deal with whatever impacts may result.

I'm unaware, actually, of any at that point that would in any way impose any additional costs. Perhaps the member can inform me of what those might be. But whatever they are, that would be the responsibility, again, of the concessionaire, not of the province.

M. Karagianis: I can think that SNC-Lavalin is going to have additional fuel costs. There's a fuel tax that's gone on, and they would be responsible for the next 30 years for running a whole maintenance operation as well as repairs and upkeep that will have additional costs and who knows what costs in the future. How does SNC-Lavalin square that off with their shareholders?

They have a contract here that specified a number of expectations, duties, responsibilities, based on the existing legislation the day they signed the contract. There will certainly be some costs in the future. I mean, the fuel tax alone is going to impact them. Do they have a way of opening that contract again to recoup those costs or any other costs that the province may deem necessary in the future?

Hon. K. Falcon: The short answer is that they are responsible for dealing with those issues, just as they are when the price of oil goes from $70 to over $100 a barrel. That impacts their operations not just in B.C. but anywhere around the world, and in North America. I mean, those are part of the risks that these corporations take on each and every day. They're fully aware that the price of fuel is something that is changing virtually daily in the province of British Columbia, as it is right across every environment, virtually, in the world, certainly wherever they operate.

As I say, they're big boys and girls in these companies. They know exactly what they're getting into. One

thing I will say is that, as the member well knows, the implication of the carbon tax that's been implemented in the province of British Columbia…. We made a commitment. The Premier and the Finance Minister made a commitment that was put into legislation that every penny of revenues raised from that would go back into tax reductions, not only personal tax reductions but also corporate tax reductions.

These companies will have their proportionate benefit of a reduced corporate income tax load as a result of the reductions that are being made in the general corporate tax rate in British Columbia, which by 2010-11 will be about 10 percent in the province of British Columbia. That's down six full percentage points from what it was under the previous member's NDP government in the 1990s — something that I believe has, in part, fuelled a resurgence of economic activity in the province.

I'm very comfortable with the fact that SNC-Lavalin is fully aware that the price of fuel goes up and down every single day, and they have to deal with that. I don't know how they deal with it. Maybe they enter into futures contracts. Maybe they have some way of structuring fuel purchases that tries to protect against the downside. That certainly wouldn't be abnormal in the business world today. But that will be their responsibility. It's not the responsibility of this government. It is fully their responsibility to deal with any of those issues associated with that.

M. Karagianis: Well, I'll let SNC-Lavalin react to those comments from the minister, as I am sure they will when they hear about the minister's comments.

I know that the minister and I disagree on the premise of P3s here, but I have some questions for him. I know that he's a firm believer in these P3s. Is the minister familiar with the UBC P3 project, and what does he think of it?

Hon. K. Falcon: I'm not familiar with the UBC P3 projects. I'm not certain which one the member is referencing. I presume that she must be referring to a transportation project that UBC is undertaking, but I'm just not aware of what UBC is doing at UBC.

I am certainly aware of the transportation P3 projects that are going on in the province of British Columbia. I'm happy to talk about those. I'm less able to discuss projects that UBC is involved with. They, obviously, are an entity unto themselves, and they enter into their own contracts and manage their own risks and deal with those contracts on their own.

M. Karagianis: Well, the UBC P3 project is being run by a couple of professors, Vining and Boardman. They are doing an analysis of public-private partnerships in Canada, theory and evidence. They have done a study and talked about the real social costs of P3s and how they are often excluded from the consideration.

Is the minister familiar in any way with this concept of a sort of triple bottom line, which includes a social cost of public-private partnerships, and would he like to comment on that?

The Chair: Member, could you please relate how that relates to the estimates that we're discussing today?

M. Karagianis: Certainly. I'm very happy to. We are having a discussion about public-private partnerships. I have several more that I'd like to ask some questions on. Some of these questions are pertinent to the discussions we've had. I have several others that are just general questions about P3s that will apply specifically to the other projects that the government has engaged in.

The Chair: The debate is for the Ministry of Transportation. All the questions should relate to that.

M. Karagianis: Yes, it does relate to P3s. I think we're discussing the second or third of the P3s that the government is involved in.

Hon. K. Falcon: No, I'm not familiar with these academics. I do know, though, and I think we should put it on the table, that there is a clear ideological chasm between the members opposite and some public sector unions, and even some private sector unions, about the efficacies of private-public partnerships. I'm quite okay with that.

I think it's a healthy debate, and I think it's a debate that we ought to have in the province. I think debate is always best informed when it's based on facts, and often, sometimes, the facts are dramatically absent in some of the critics.

A former staffer for the New Democratic Party and a senior adviser to the former Premier, Mr. Bill Tieleman, I was reading in 24 Hours, was talking about how the P3 for the Abbotsford hospital and cancer centre was originally, according to him, supposed to cost $211 million, and it went up to $355 million, which he called a 60 percent cost overrun. But again, as is so important in these kinds of debates, it must be based on facts. And the fact is that he forgot to mention that the increase was the result of adding an entire new cancer centre to the Abbotsford hospital, which is, obviously, why the cost went from $211 million to $355 million. Our government made the decision that we wanted to add a major cancer centre south of the Fraser that will have a tremendous benefit for serving the people.

I think that it's a healthy debate. But the one thing I do know and that I think the public needs to know and that I do my best to make the public aware of is that P3s aren't…. We don't pretend that they're a magic answer to every project. But we do know that the 24 projects that we've undertaken in British Columbia, representing a value of $8 billion in capital, have been projects that have been delivered on schedule and on budget, projects that have had significant savings to the taxpayer. Value-for-money reports demonstrate the savings that are realized as a result of these projects, based upon what it would have cost had these projects been traditionally procured by government.

These are not insignificant savings. They are very, very significant. It is the position of the government of British Columbia, based on our record of success in these kinds of P3s, that in some cases, sometimes in many cases, they are appropriate ways to try and protect the public and the taxpayer against overruns.

I will say this, and I've said it before publicly: I think that the convention centre is the classic example of why we want to enter into private-public partnerships. That was done under the model that the members opposite prefer, which is the traditional procurement government-run project.

Unfortunately, back in the days when we started out with that project, we didn't know how to deliver public-private partnerships. We knew we wanted to, but we discovered we didn't have the capability in government, and that's why we set up Partnerships B.C. — to bring in private sector expertise that could advise government through an independent Crown corporation that could review projects and determine whether those projects would be projects that would be eligible and good candidates for being delivered as private-public partnerships.

I would say that Partnerships B.C. have done an exceptional job in that regard — so exceptional, in fact, that they are routinely engaged by other provinces to provide advice on projects that they may be looking at. Other provinces are looking to them, at the model that we set up with Partnerships B.C. The federal government is setting up a similar secretariat modelled on the Partnerships B.C. model to provide the kind of expertise that just didn't exist in government, because this was a new way of delivering major projects.

But I totally get that it is still a subject of some debate. I have no doubt that there are academics around the world that are writing things that are good, bad and indifferent about private-public partnerships. A lot of it, in my view, based on what I've read and seen, really comes down to the ideological prism in which they look at these things.

As I've always said, I don't, frankly, care how we deliver a project, except that it's done in the manner that best delivers a project safely, responsibly and financially accountable for taxpayers. How we deliver that project depends on the characteristics of the project.

On the $200 million Pitt River bridge project that is under construction today. That was a project that we delivered as a design-build method of procurement as opposed to a full private-public partnership, and that's because the analysis indicated that in that case we could deliver that project in that manner.

In the case of the project we've been discussing, the William Bennett bridge — a project where there is a considerable amount of complexity, a considerable amount of risk, with major incidents of these bridges sinking just south of the border…. Clearly, that is a project with a level of complexity that lends itself to a P3 delivery method. In this case, I believe, it's been borne out by the evidence in terms of the project being delivered on schedule and on budget.

M. Karagianis: The minister refers to the number of projects and talks about the savings to taxpayers and the value for dollars, but the minister also admitted earlier in my questioning that the performance contracts have only just begun. So it's pretty early in the process for us to judge, in fact, whether there is going to be true value for money or long-term savings for taxpayers.

We don't know, because the minister has said and confirmed earlier that we're pretty early in this whole process. And we won't know, probably, for a number of years whether or not these P3s will live up to their reputation, certainly around the long-term operations and the performance of those contracts, to determine whether or not there was real value for money for the taxpayers.

I would just say to the minister: what's our current borrowing cost? What's the current interest rate for government to borrow?

Hon. K. Falcon: I think the member should at least acknowledge — as I'm sure the member would, on reflection — that the largest component of risk associated with projects like these is not so much in the maintenance of these projects over the 25- or 30-year term, dependent on the particular project, but actually in the construction. That is where things have gone disastrously wrong for governments in the past.

I gave one example of a project that was undertaken under this government: the convention centre project. Of course, the difference between the convention centre project and, say, the fast ferries is that the convention centre will be operational — will run and will service the residents of the province of British Columbia, particularly of the lower mainland — for many years to come. It's an asset that will provide a capability of allowing enormous conventions to come to British Columbia that otherwise would not have been here — convention business that is valued well in excess of a billion dollars. Nevertheless, there was a hard lesson learned there in terms of what can happen to construction costs on a major capital project like that if we go through the method of construction that the member opposite prefers.

I think the member should know that the one thing that gives me a tremendous amount of comfort is the fact that in British Columbia today…. The member is absolutely right to point out that these projects have, in many cases, just completed construction, at least in the Ministry of Transportation. Only one of them — the Kicking Horse Canyon, which was delivered 18 months ahead of schedule — is now up and running, and performance payments are starting to be made.

The member is absolutely right to point that out, but I think that the member must acknowledge that the greatest risk associated with those projects was in fact in the design, engineering, construction and completion of these major capital projects. That's where the tremendous risk involved in these projects really comes to bear.

I think the member is right, though, to point out that yes, in the performance payments that will be made over the next 30 years, predicated on the issues

of safety outcomes or lane availability or qualitative assurance issues, it's still…. Of course, we won't know until we go through a long period of time exactly what that is, but in terms of the overall risk profile of these projects, it is a very minor price. I'm sure the member would acknowledge that.

The final thing I would say is that on some of these projects — for example, one that we are a funding partner…. It's not our project, but we committed a major amount of money to the Canada line — a $435 million commitment by the province, if my recollection serves me correctly. Again, it's a capped contribution that the province of British Columbia is making to that project, payments that will be made throughout the course of that.

You know, it had a value-for-money report…. Again, I'm going by memory, but I recall that it demonstrated a $92 million benefit to the taxpayer over the traditional procurement method. Now, the member may say, and would rightly say, that that is based on assumption, so the real issue comes down to: were those assumptions reasonable?

In that regard, at least in that project being delivered by TransLink, I am comforted by the words of the Auditor General, who reviewed the value-for-money report and concluded: "The Auditor General concludes that final project report" — referring to the value-for-money report — "fairly describes the assumptions, context, decisions, procurement process and results to date of the Canada line rapid transit project."

What the Auditor General, in effect, is saying is: "I've reviewed the assumptions. The assumptions are reasonable, and the conclusions that were reached as part of the value-for-money report were based on reasonable assumptions." That's really all we can do in government: ensure that the assumptions being made are reasonable.

But as I say and as I'm sure that the member will acknowledge, the biggest risk for taxpayers is always in the construction of these major capital projects, and the record in British Columbia is actually staggering in terms of the success of at least the construction phase of these private-public partnerships. As I said earlier, to date we have seen a situation where we've had 24 different projects, representing a capital value in excess of $8 billion.

That is $8 billion, and all of them — every single one of those 24 projects — have been characterized by two things. They've been delivered on and, in many cases, ahead of schedule. It was the case in the Kicking Horse Canyon and will be the case, I predict, in the William Bennett bridge. And they've been delivered on or under budget.

I think that is at least something I would hope that anyone, whether they're professors or members of the opposition or folks in the street, would say is a pretty decent result for 24 construction projects representing over $8 billion of capital in an economy that is seeing real shortages of labour and real rises in the value of many of the construction ingredients that go into these projects — steel and concrete, particularly.

That, I would think, would be something that would at least be acknowledged, if not applauded, by members of the opposition, particularly given the history of some of their projects and the experiences that they had, disastrous though they were, during the 1990s.

Does that mean that you will have a universal chorus of acclaim for private-public partnerships? Certainly it doesn't. Does it mean that you may find professors, whether at UBC or other institutions, who have spent their life in academia — probably not, I hasten to point out, in the construction field…? Will they have good and bad things to say? Yes, they probably will. I've certainly read lots of different things about P3s over the years.

But what I will continue to do as the Minister of Transportation is simply say to my staff, as I always do: "You make the decisions as to what the best procurement method is on a project, based on what is in the best interests of the Ministry of Transportation, government and the taxpayers of the province of British Columbia, and I will be guided by the recommendations that you make."

I never, nor will I ever, go into a project and tell them upfront what method of procurement they are to utilize in a particular project, (a) because I don't believe that's my area of expertise and (b) because there are a lot of people that are a lot smarter than I am, that spend a lot more time thinking about these projects both in my ministry and in Partnerships B.C., that will go through that process. I can tell you that I am at this point in time, as the Minister of Transportation, extraordinarily gratified with the results that we've seen to date in private-public partnership.

I have had the pleasure of being at the receiving end of some very good questions by the member opposite and the previous critic on the issue and the nature of P3s that have actually educated me in aspects of these P3s that even I wasn't aware of. As the member opposite will know, these are very thick agreements, very complex agreements. But, as I say, the more we delved into those agreements, the more even I learned as a minister in terms of what some of those benefits were and how the interests of taxpayers were being protected. I appreciated that.

M. Karagianis: I think the minister did admit that, yes, we won't know for many years whether or not we truly benefited in the way of savings to taxpayers and got value for money. But if you look, as the minister has very clearly outlined, the highest risk is in the capital investment, the original construction.

I think the minister has clearly outlined here that in the case of the William Bennett — that's a $144 million project with $30 million interest built in — the least risk is in the maintenance and upkeep portion of the contract for which, let's be fair, SNC-Lavalin is being paid handsomely for the lower-risk portion of this contract. Over the course of the contract they will have made $586 million, and the bulk of that will be the non-risk portion of the project. So it would be interesting…. I'm

sure that somewhere there will be academics who will look at that and tell us at some point in the future whether or not we did get fair value for dollars for the taxpayers.

One of the things that interests me — perhaps the minister can comment on this — is that most of the European P3s now have moved away from the 30-year contract. There are very, very few, if any, P3s going on anywhere in the world now, other than here, that are doing 30-year contracts. They are going to five-year contracts. Frankly, I think there's a lot of logic in that. I wonder if the minister can make any comment about that.

Hon. K. Falcon: In British Columbia when we look at private-public partnerships in terms of the term of these contracts, typically we look at a range of from 20 to 35 years. How we ultimately settle on what that period will be is going to be based on a number of aspects related to the project: the risk profile of the project, the complexity of the project, a number of issues around that.

When the member refers to this apparent trend that the member sees in Europe of moving away from longer-term projects to five-year projects, I think the member should recognize that I'm unaware of any in the transportation sector, though I would be interested if the member can cite one. They typically will be what are called turnkey projects, where essentially what has happened is that they've said, "We'll deliver this, we'll build it, we'll be responsible for it for five years, and then we'll turn it back to the government" — or whoever the proponent is, with a big huge payment being made to the concessionaire, whoever the concessionaire may be.

Now, one of the things that is important to us as a government is on the issue of the subject of latent defects. We are very interested in not just having a project built. The advantage of having a concessionaire responsible for the costs associated with that program over a longer term of 20, 25 or 30 years is that that can also dramatically affect how they construct the project.

It stands to reason that if you acquire the rights to build a project…. Let's use the Sea to Sky, for example, or the Kicking Horse — or whatever section you want to use. You know that you're going to be responsible for maintaining that highway for a number of years, and you know that there's a history of things like avalanches or head-on collisions that can have the effect of not only having horrible fatalities and injuries but also shutting down the highway for extended periods of time — or extended hours, at minimum. When they go to construct these projects, knowing they're going to be responsible for the longer term, you will find that it often drives how they construct the projects.

They will invest very heavily, for example, in providing — as we saw on the Sea to Sky Highway — a significant expansion of the number of kilometres of median barrier that we were going to see on the project and of the use of the rumble strips that were going to be utilized on the project. They went and spent a lot more on what's called cat's eye lighting, a highly reflective lighting that's utilized in the line painting, because they want to reduce the accident results, etc. In many cases, they used thicker pavement so they won't have as much potholing and they can have reduced costs down the road.

So they spend a lot more on providing…. If the member has the opportunity to tour the Kicking Horse Canyon, she'll see the unbelievable amount of work that's been done in terms of reducing the risk of avalanche and rocks falling onto the highway, with massive, huge, essentially concrete fences that are constructed that can handle rocks the size of Volkswagen vans coming down the hill and smashing into these retaining walls as opposed to going onto the highway and not only damaging the road but injuring or killing anyone unfortunate enough to be in the line of these kinds of events.

We just happen to believe that that drives differently how they will look at these projects. I think it's important, and the member correctly points out, that there have been some short-term turnkey projects that have been delivered, but you also have to remember, in fairness, what you give up when you enter into a contract like that.

What we want to do is make sure that we control the qualitative nature of these projects and the ongoing performance of these projects through the performance payments that will ensure that the lane availability is there; that it's performing as it said it would perform; that the qualitative issues are in place; and that we build into these projects the right, as I said earlier in our discussions, to make deductions if those contract requirements are not met.

M. Karagianis: I would ask the minister, in view of his comments: where is the allowance, then, for innovation? I mean, if we look at the contract of 30 years, a lot of things have changed in 30 years. A lot of things have changed with how technology is implemented, and I expect things will change even more in the coming 30 years, especially given the fact that we now have a climate change imperative and other pressures, other changes, other new technology, other new environmental upgrades and innovations that will be brought into this industry in particular. Where is the room for that kind of innovation in these projects?

If you have a contractor who now has a 30-year contract to maintain — whether it is a stretch of highway, a floating bridge or a Canada line — where is the room for innovation in this, and how does that contract provide that flexibility for change? In 30 years we will see an entirely different world than we are living in right now. Much of what we are now building in infrastructure doesn't allow for that. If that's been built in, where is the cost factor there?

I would say that that is a much bigger risk in these long-term P3s than anything and that it has cut off that avenue for change, for upgrades and for responding to changes around the world with our own way or modus operandi of transporting ourselves. There will be huge changes in the next 30 years. Where is the allowance for that in any of these contracts?

Hon. K. Falcon: This is actually a great discussion, because one of the things that we have found in the Ministry of Transportation as we've gone through these private-public partnership procurement processes is…. I guess the open question at the beginning of starting this process of P3s is: what kind of innovation would we see, particularly in the upfront portion of these? That's really the big issue when these projects are being built and constructed. What benefits would the province and, therefore, the taxpayers and the members of the public see out of these things?

We found that we have seen tremendous innovation, particularly upfront in these projects. As I was saying to the member in my earlier answer, because these concessionaires are going to be responsible not just for building it but responsible for maintaining and rehabilitating and looking after that portion of road or bridge or whatever the case may be for many, many years — in some cases 20, up to 30 years — what kind of innovation would we see? What we discovered was that there was a significant amount. I alluded to the Sea to Sky Highway as one of the examples of what I was talking about.

In the value-for-money report, it talked about the additional highway improvements that we received beyond the baseline that we expected to see as part of the procurement process. Of course, there were minimum requirements that we as the province set forth that we wanted to see as part of the procurement of the Sea to Sky Highway improvements. What we got were additional benefits as a result of this that were huge benefits in terms of the public.

We had 20 kilometres of additional passing lanes — a very significant improvement for the public not just in terms of their own convenience but also because the more passing lanes you have, particularly on that highway, the less opportunity you have for the kind of irresponsible driving that has been a characteristic of the Sea to Sky Highway.

We saw 16 kilometres of additional median barrier. If my memory serves me correctly that 16 kilometres was about an 80 percent improvement in terms of the amount of median barrier on the Sea to Sky Highway. Median barriers are particularly important on that corridor because you get a lot of head-on collisions, crossover collisions, as a result of the fact that you can't put median barriers there today because of the narrowness of the corridor.

As they straighten and improve the corridor, they're adding, as I say, 16 kilometres' worth of additional median barrier above and beyond what we expected as part of the contract and 30 kilometres of additional shoulder and centre line rumble strips where most effective.

Rumble strips, for the benefit of the viewing audience, are the indentations you have on the road that when you cross over into the middle lane or to the side, you feel that rumbling take effect. We know from experience that those can be, in many cases, highly effective for reducing accidents, particularly accidents that have resulted from those that are sleep-deprived or not paying attention — talking on their cell phones or whatever the case may be.

We had ten kilometres of additional wider shoulders to improve safety and to accommodate cyclists. Increasingly, the Sea to Sky Highway is an area that cyclists particularly enjoy utilizing for the beauty of the trip itself and for the fact that it's something which increasingly receives worldwide attention. It's so beautiful. But it was and is very, very unsafe under the old highway that was going up there. So those improvements will be helpful.

Improved sightlines and improvements in terms of the protections they have in place to stop avalanches on that corridor. Now, it doesn't mean they stop all avalanches, but they have invested considerable dollars to try and minimize the frequency of avalanches on that corridor, which sees a lot of them because of the fact that it's a mountain pass.

Those are the kinds of innovations that we see. There will obviously also be innovations during the period in which they are responsible for operating. As I mentioned in my earlier answer to the member…. The member was no doubt pleased to find out that risks like increased fuel costs, etc., are risks that the proponent is going to be responsible for absorbing, that the concessionaire will be responsible for absorbing. I know that the member views that as a positive development, as I do.

That does not mean that they will not look to innovative measures to try and deal with those risks, and they clearly will. Obviously, as they often do, they probably will spend every day they wake up thinking about how they can deliver the contractual services they're required to deliver in a manner that is done in a way that can be innovative and delivered to meet the terms of the contract while trying to hold down their own costs.

I'll leave it up to the concessionaires to figure out how that's done. They've got a lot of experience in these kinds of things. So I think you'll see that innovation throughout the entire course of the project term.

M. Karagianis: I'm sure it will be interesting to have discussions with the proponents here, or the private partners ten years from now, when things change considerably here and they are unable to deliver innovation under the contracted agreement that they have.

I will look with very big interest to see, as requirements change here over the climate change action…. We have only seen just the very smallest sliver of what that is going to do here. We have a fuel tax, but we certainly haven't seen the larger climate change action plan that the Premier has promised us. I expect that that will have some implication on the way we travel. I would certainly expect that it will have significant implications on the way we travel and maybe on the way we build highways and the way we provide services for transportation in the probably not too distant future.

I have one other concern here around P3s and the whole issue of risk. There is an article that ran in the Globe and Mail in January. It talks here about a much bigger risk that's going on, and that is insurance con-

cerns. It's actually this particular article written by Tara Perkins from the Globe and Mail, January 26, 2008. It talks very specifically about one of the major contractors that we are currently engaged with, which is Bilfinger Berger.

This particular article talks about something very significant that's taking place that I am sure the minister is probably quite concerned about. This is the issue around bond insurers and their ability to maintain bank loan backing. So it says here that "following negotiations in London, bond insurer" — and this is the bond insurer for Bilfinger Berger — "Ambac Financial Group Inc. agreed in early 2006 to wrap half of the bank loans, guaranteeing them to boost the credit rating and lower costs. XL Capital Assurance Inc. wrapped the other half."

Two years on these bond insurers and their competitors are on the brink of posting massive losses. Fitch Ratings has downgraded both of these organizations. Moody's and S&P are reviewing their ratings. The two insurers depend on stellar ratings to guarantee hundreds of millions of dollars in debt.

In the case of where they have been downgraded, now we have a crisis occurring in their ability to guarantee those loans.

The article goes on at great length to talk about the fact that financing costs will rise in connection with the degree of downgrades. Now, this is fairly recent, and I expect that, even in this volatile market, things may be even more risky than they were a couple of months ago.

Does the minister at this point have any comment about this impact, this risk, which is a global risk? And certainly, in the very volatile market we see today, what implications, if any, is this going to have?

I know that the minister talked…. When I mentioned the other day about what happens if one of the private partners goes bankrupt, the minister said: "That would be my dream scenario." Now, I'm sure he didn't really mean that that would be his dream scenario, that a company would go bankrupt, but in the case of this, where these are influences well outside British Columbia's ability to control or influence, what is the long-term impact here on the borrowing costs and how does this affect taxpayers in British Columbia?

Hon. K. Falcon: One of the things that I think is important for the member to understand is that these companies that engage in these projects are very, very large concerns. As I refer to them, these are big boys and girls. They know exactly what they're getting into.

That was one form of financing, financial wraps, that they utilized, apparently, on one project, where if there were additional costs associated, then Bilfinger Berger, presumably, is going to have to eat those costs. You know, that's a risk that the private sector takes every day when they enter into agreements. They are very large concerns. In many cases, companies like Bilfinger Berger are massive companies backed by, as the member well knows, banking concerns that are some of the largest in the world, certainly equal to the size of British Columbia if not larger, in terms of assets under management.

I'm not aware of financial wraps being utilized on any of the Ministry of Transportation projects that are under our purview, but if that was a method that one of the concerns decided to enter into, and they had something that caused them additional costs — financing went up; whatever it may be — that is a responsibility that they're going to have to eat. They are big boys and girls. That's why I like how these deals are structured, because at the end of the day, as I said to the member — I talked about my dream scenario — I don't like to see anybody lose money.

I'm sorry if a contractor enters into a contract with their eyes wide open and signs an agreement and then finds out later through whatever happens — whether costs go up or financing goes up or the myriad risks that the private sector deals with each and every day result in them losing money…. I genuinely feel sorry for them. I'm sorry that their shareholders are going to have to eat that, and no doubt their shareholders will hold management accountable at some point if they do too many of these kinds of agreements that result in impairment of shareholder value. Ironically enough, many of the shares are held by union pension funds to prefer and secure the future of their own members. But that's their responsibility.

What I said to the member is that the great thing about how these deals are structured is if that scenario ever unfolded and, for whatever reason, a large concern like Bilfinger Berger, a massive company with offices around the world and a massive network, somehow went into bankruptcy or anything similar to that, then these contracts are structured in such a way that, again, the taxpayers are protected.

In fact, there could potentially be significant benefit because if it is turned back over to the taxpayers of the province, we receive an asset that was constructed at virtually no cost, depending on how the particular deal was structured, to the taxpayers. Then we'll maintain it over the life of the particular asset.

That's unlikely to happen, of course, because what will happen is that the lenders who provided some portion of the dollars that went towards the particular project — and, of course, these lenders being amongst the largest companies in the world — would step in and ensure that the project continued to be maintained and looked after over the term of the contract.

Of course, if for whatever reason, they didn't fulfil that obligation and make sure that the requirements set out in the concession agreement are being met, then we do have step-in provisions where the province can assert that asset back into the province's hands and make sure that we receive all the benefits, and they would receive no future payments.

Obviously, I think that's very unlikely, but as I say, if it happened, it would be of tremendous benefit to us. Unlike the way the projects were delivered under the previous government — many of the big risky projects where the government took all the risk and subse-

quently took all the hits when these projects went disastrously wrong — we are in a position where we are actually protected. We will make performance payments based upon performance. If they do not deliver on that performance, frankly, whatever is going on in their world — if fuel prices are going way up, if their lending is going way up…. Do you know what? Too bad. They've got to deal with it.

They are big boys and girls. These are major corporations, in many cases, that are responsible for bidding on these projects. They're going to have to manage and understand their own risk profile and look after it however they do. I'm not here to look after the interests of the private sector. I am here to look after the interests of the taxpayer of British Columbia, the public of British Columbia.

What I know from the projects we've done in the province of British Columbia — 24 projects representing a capital value in excess of $8 billion — is that all of them have been characterized by being delivered on schedule and on budget. Do you know what? What happens over the next 20 or 30 years on each of those individual projects, in terms of how they're maintained, is going to be the responsibility of the concessionaires, most of whom are companies that have been around for many, many years and have dealt in markets that have been much more severe than the kind of marketplace we see today. They'll have to handle things however they have to handle things.

These contracts, in short, to summarize for the member, have been structured in such a way that anticipates any of those kinds of eventualities happening and once again protects the interests of the taxpayer and the public by ensuring that we have reversion and step-in rights and that we are protected in the form of a payment stream that is based on performance, as all these projects are.

M. Karagianis: Does the minister anticipate that in any way we could be paying up front for some of these risks? I mean, certainly this kind of scenario here…. Actually, this was about the Golden Ears bridge, which I'll ask some questions about soon. Certainly, this particular article in the Globe and Mail was directly about the Golden Ears bridge and the implications to that specific project.

Is the minister not concerned that with the kind of borrowing risks here that companies like Bilfinger Berger are experiencing, and others…? I'm sure most of our private partners here have the same risks for borrowing. They're borrowing at a much higher rate than we would if we were borrowing that money directly ourselves as government. It is not inconceivable that those contracts that they're negotiating…. As the minister said, they're looking after themselves, and I would expect that we are seeing a much-inflated borrowing rate.

How has the minister analyzed that? What compensation do we have in the future around inflated borrowing rates from these companies as more and more of these kinds of insurance risks are created, making their borrowing rate much, much higher than that of the government? Can the minister please comment on this?

Hon. K. Falcon: As I mentioned to the member, financial wraps are a financial instrument that can occasionally be utilized by large companies like Bilfinger Berger for projects that they're involved with where they have a significant equity position and where they've also got a level of financing involved in these projects.

The project the member refers to correctly is, in fact, the Golden Ears bridge. It is not a Ministry of Transportation project. It is a project being undertaken by TransLink. This is a project that, to my understanding, is proceeding on schedule and on budget, which is exactly what we look for in a P3.

I've got a copy of the article that the member refers to from the Globe and Mail. As I read this article, it says that the bond insurers' troubles will not affect the Golden Ears bridge project or TransLink, according to their spokesman.

I'm reading from the article directly. "There will be no implication for the project itself, agreed Massimo Polveraccio, senior vice-president of project and corporate finance at Bilfinger Investment Co." It says, "Bilfinger would be on the hook for any additional costs," subject to the rating actions, "according to the people involved." There you have it, Member, exactly as I said.

These are companies that are very large concerns. Whatever financing arrangements they enter into, they're responsible for. If there are going to be any additional costs as opposed to rating agencies' decisions on how they rate the debt or the RAPs or whatever it is, those companies are going to be responsible financially for that.

The issue is that in the Ministry of Transportation, none of the projects that we are involved with…. None of the concessionaires have utilized that particular financing instrument. It doesn't preclude them from doing it, but none of them have chosen to do it. If they do choose to do it, they will obviously receive whatever benefits may flow, but they will also be obligated to be responsible for any risks that may flow.

That's why these companies like Bilfinger Berger — a company that does projects around the world…. Some of the largest projects that you will find taking place around the world are delivered by companies like Bilfinger Berger. They are well aware of what the risk profiles are. They are well aware of how to finance projects. These are companies that are well skilled in how to structure these deals, what the debt equity alignment will be in these projects, how they're going to do them, whether they do it through a traditional lending instrument or through RAPs. That is something that they will best figure out.

As I understand, according to the article on the structure of the Golden Ears bridge project, it does not in any way affect the bridge itself. It's being delivered

I give TransLink credit for moving forward on that bridge as a private-public partnership. I can only imagine the horror that would have unfolded had they decided to go the traditional route that the members of the opposition prefer. Fortunately, they didn't, and I think, in this case, we will see again — as we have seen in 24 projects across the province representing a value of $8 billion…. I expect that TransLink's project, the bridge, will be delivered on schedule and on budget.

M. Karagianis: The minister didn't address my question, which was about borrowing costs. Because at the end of the day, the taxpayers are paying. We are paying for the borrowing costs that these large companies are negotiating into these contracts. How do they relate? What is the exact cost analysis of what we could borrow money for versus what companies like Biflinger Berger are borrowing for right now in the market?

Hon. K. Falcon: That's exactly why these projects go through value-for-money reports. Those value-for-money reports set out exactly what all of those assumptions are and then determine what additional value, if any, is being generated to the benefit of taxpayers.

I don't know about the Golden Ears bridge project because it's not one of my projects. I presume they did a value-for-money report. I believe they did, if my memory serves me correct, because I thought I read something about it in the media. That report would lay out what the benefits were, just as other reports that are being done. I know that TransLink is also delivering the Canada line project. The value-for-money report, as I recollect, showed a $92 million benefit to taxpayers. That is almost $100 million. That is a pretty significant benefit.

The member opposite and the NDP, generally, always like to point out that the government can borrow money cheaper. Well, yes, government can borrow money cheaper. That's true. We all know that. That's because government has taxing authority. The cost of capital is not just reflected and the risk is not just reflected in how capable you are of borrowing money and at what rate. It is predicated on what the risk profile is. So there is no benefit.

That member's government borrowed money very cheaply to build the fast ferries, but they were supposed to cost $211 million — if memory serves me correct — and came in at $463 million. So the fact that you borrowed money cheaply to build them, frankly, makes no difference because you get absolutely hammered when the projects are delivered grossly over budget and, in that case, aren't even usable for the corporation and virtually bankrupted the ferry corporation.

Whereas, had it been structured as a private-public partnership, if done properly, you would not have had to make any payments until those vessels were delivered, until they had passed all the operational requirements that would have been set out by the corporation. Then if they didn't, they wouldn't have been paid. Wouldn't that have been great had that happened?

Unfortunately, it didn't. That's why, not surprisingly, the new independent board of B.C. Ferries said that when they go out to get ferries built, they're going to go to the marketplace and say: "Who can build these for a fixed price, deliver them in terms that are going to benefit" — not we as politicians — "not the unions in the shipyards but the 20 million people a year that utilize the system?" That's where the benefit should go towards, and that's who they're looking towards.

They now get ships that are delivered on schedule, $10 million under budget, where they don't need to make any payments until the ships are actually delivered to B.C. waters, have to go through all their trial runs, make sure they meet all the specifications of Transport Canada. That sounds to me like a lot better deal than the kind of deals that have historically been done.

I think that that's my point. These companies that enter into these contracts are big companies. They know exactly what they're doing. Just because we can borrow money cheaper as government doesn't mean that we can deliver large, complex projects more effectively than the private sector. What they do is that value-for-money reports are undertaken and in some cases are reviewed by the Auditor General, as they were in the Canada line, which demonstrates significant financial benefit in the value-for-money report. We rely on those.

The member is very correct to point out that they are based on assumptions, and in some cases time will tell whether those assumptions are borne out — no question. None of us are mind readers. We don't have crystal balls.

But we do know enough to know that 24 projects with a value of $8-plus billion in the province of British Columbia have all been delivered on schedule, on budget. And we do know that that is where most of the risk lies, on delivering those major, complex projects on schedule and on budget.

I am very satisfied, as Minister of Transportation, in that regard — that we are well looked after and that the value-for-money reports defend and reinforce the fact that these decisions are being made to the net benefit of the taxpayer of British Columbia, as borne out in the value-for-money reports. The cost of borrowing, frankly, is only one component of what is ultimately going to be the final cost of major projects like these.

M. Karagianis: I find it very interesting, then, that the minister said that the only analysis we've done is simply accepting the value-for-money report, when in fact they highly inflate the borrowing rate of government. They actually predicate the borrowing rate of government as being the same as for the private sector, when in fact that's not true at all.

Therefore, the business case begins to fall apart, especially when you're talking, as the minister has so emphatically reminded us several times here, of projects to the tune of $8 billion. If you are inflating your borrowing rate by 2½ percent on that, that is significant

money that the taxpayers are paying. You know, I see that the minister's reliance on strictly the value-for-money reports may have a flaw in it because it does not in fact reflect the actual value to taxpayers here.

If that rate originally…. If the value-for-money report assumes right off the bat that government borrowing is the same as private or corporate borrowing, that's a flaw right there — 2½ percent inflation on the numbers. Based on the quantity and magnitude of dollars involved in these projects, that's a significant disparity in what the real borrowing power of government is.

Certainly, when you look at the kind of borrowing risk inflation that many of these companies have put in…. The reason I brought to the minister's attention the issue here with these insurers…. If you read the entire article, it does talk about the fact that this considerably increases the borrowing costs for the corporate sector. If their borrowing costs are in fact higher than the presumed 2½ percent higher than government, then the business case is flawed. We could see a disparity here of more than 2½ percent on billion dollar projects. That's costing the taxpayers billions of dollars.

How can the minister say that, in fact, we're getting good value for money based on a flawed premise from the very beginning?

Hon. K. Falcon: I can't ignore some irony here. It was the previous TransLink board, which this member has been so quick to defend as the ideal structure, that entered into an agreement that now, presumably, this member feels is deficient.

I would disagree with the member. I think that they entered into a sound agreement. It's not my project. It's TransLink's. In fact, it was the former TransLink structure that actually entered into the agreement. Frankly, TransLink will be held accountable for whatever agreements they enter into, obviously. But I just couldn't miss the irony there.

One thing I will say, though, is that again the member misstates the fact that somehow this is going to cost billions of dollars more for…. That's a ludicrous statement. You can't just throw out stuff like that without backing it up. You can't just make assumptions and surmise that things must happen because there is something that is not being borne out by any of the evidence.

We talked about value-for-money reports, and the member apparently now doesn't feel that the value-for-money reports are appropriate. Well, that's fair comment, but the value-for-money report that I can think of on the other project done by TransLink, with significant financial contribution as a funding partner by the province of British Columbia, was reviewed by the Auditor General.

Whatever people may think of what I say as the Minister of Transportation or even of what the member opposite says as a critic…. They can discount a lot of what we say, I imagine, because we come from two very different approaches, but I do think that most people would suspect that the Auditor General is probably a reasonable authority in terms of reviewing these kinds of things.

If the Auditor General found anything wrong that suggested anything near what the member opposite is talking about, with billions of dollars of additional costs that apparently only this member opposite is aware of — nobody else has deduced this so-called additional cost — no doubt, the Auditor General would have been quick to jump on it.

I remind the member what the Auditor General said. The Auditor General concluded that the final project report "fairly describes the assumptions, context, decisions, procurement process and results to date of the Canada line rapid transit project."

The Auditor General didn't say that it doesn't correctly define those, that the assumptions are flawed, that the Auditor General has concern about the rate of interest that was utilized — none of that. The Auditor General recognizes that the assumptions are in fact reasonable. I'm prepared, frankly, to listen to the Auditor General on issues like that more, with the greatest respect to the member opposite, than I am to the NDP, whose own record of financial management…. I'll let the record, obviously, judge that. I don't need to say anything about that myself.

Again, I would just refer the member to the value-for-money reports. I would refer the member to the record of construction on over $8 billion of P3 projects undertaken in British Columbia, representing 24 different projects, all of which were delivered either on or ahead of schedule and all of which were delivered either on or under budget.

I would think that at some point even the members of the opposition, as ideologically blind as they often are, would acknowledge that. At least on the construction side, there appears to be some level of success that would be acknowledged. I haven't yet heard that. I rather doubt I would or ever will, because their backers and their union backers will not allow them to say that.

I think that the evidence is incontrovertible, and I think that is why British Columbia continues to receive plaudits, not just nationally but throughout North America, for the P3 projects that we've entered into, in terms of the success of these projects, how they've been delivered in difficult markets on schedule, on budget and often ahead of schedule and under budget. That's something I'm certainly proud of as the Minister of Transportation.

It doesn't mean that something couldn't happen in the future. I don't pretend to have a crystal ball, but I do know that on the construction side we have been thrilled with these projects. We have been thrilled with the level of professionalism that the contractors, including Bilfinger Berger, have brought to the table in terms of delivering these.

I would remind the member opposite that although she's talking about the Golden Ears bridge, which is not a Ministry of Transportation project, it does happen to be the same contractor, Bilfinger Berger, that was responsible for delivering the P3 in the Kicking Horse Canyon 18 months ahead of schedule — a project that is receiving recognition internationally for the scale of

the engineering achievement and the scale of the project being delivered, as I say, on budget and well ahead of schedule. It is really a testament to what can happen under private-public partnerships.

I don't imagine I'll ever hear the members opposite acknowledge those successes. But I can tell you that members of the community of Golden, including the mayor of Golden, a very wonderful gentleman, Jim Doyle, who was, ironically enough, a former Transportation Minister under the NDP government…. He has come forward and said very clearly that he no longer supports the party and joined the B.C. Liberals in part as a result of the commitment we're making to major infrastructure projects that have huge benefits to his community.

Also, he reminds me every time I have the pleasure of visiting Golden of the fact that these projects are being delivered to such benefit for the community, not just to all the people that are hired and working — virtually everyone in Golden that is not working is available to work on these projects — just in terms of the improved safety and the fact that they're being delivered so efficiently and so much ahead of schedule. That's something that I as the Minister of Transportation remain extraordinarily proud of.

M. Karagianis: The minister, of course, took my remarks about…. I was talking about your $8 billion in projects, not just the singular Golden Ears bridge. I realize that TransLink is building it. And although the minister likes to talk like that's a foreign organization in a foreign country that has nothing to do with him, I think that's a little bit of a stretch, considering that that is all taxpayer-owned assets and that organization.

Because the minister has been talking about the Sea to Sky as being such an innovative thing, let's talk about the cost analysis just on that particular project and how this really interesting little formula works here.

Partnerships B.C. does the value-for-money analysis. Let's just look here at how they come to the value-for-money analysis on the Sea to Sky project, because in this very specific project they inflate the borrowing costs of government by 2½ percentage points at the very beginning, and therefore, the cost analysis immediately is flawed.

A value-for-money cost comparison for the Sea to Sky Highway. Partnerships B.C. estimates that the present value of the costs the government would incur over a 25-year lease period are about $790 million. Approximately $580 million of that would be in lease and payments through their performance contract. In comparison, the expected present value cost that government would incur if the project were done conventionally would total $744 million. The expected expenditures would be $660 million for all of the maintenance and upkeep and other performance contract items.

There is clearly a discrepancy immediately in the overall costs here of about $80 million. Partnerships B.C. basically tries to adjust the actual procurement costs that government would go through in order to make the case of their value-for-money discussion. Now, how could that be fair to taxpayers? That's an $80 million bill that taxpayers are going to be paying, and the value-for-money report has just arbitrarily made that a condition of their value-for-money report. In fact, the figures don't in any way show that to be true. That's falsely inflated.

Hon. K. Falcon: Over my years as Minister of Transportation I have spent considerable time with the NDP, trying to educate them on understanding how P3s work — obviously, not to any success. They repeatedly, as this member has done, characterize the information that is laid out in value-for-money reports as being, to use the member's terms, inflated, falsely done — whatever the terms are that the members opposite like to throw around. As irresponsible as I think it is for the member to do that, it's not altogether surprising, though she does it with a little more reckless abandon than did the previous critic.

I think what I will say to the member opposite, though, is not to listen to the answers that I'm giving to the member, if the member prefers not to. I'm very comfortable with the fact that the member might take my answers with some dose of skepticism, though I try very hard, knowing that my answers are always on the public record, to be very accurate when answering questions from the member opposite.

As I say, again, the member is now referring to the Sea to Sky Highway project. The Sea to Sky Highway project — let's remind ourselves — is a project that is award-winning, that is proceeding ahead of schedule, on budget. It's a project for which I probably receive more positive comments than almost any other project we're working on in the province of British Columbia. Virtually everyone is excited about the pace and the progress of that report except for, apparently, the member opposite.

The member opposite doesn't believe the assumptions, again, as we've seen in the past, that have been made under the value-for-money report that was prepared by Partnerships B.C., which looked at the Sea to Sky Highway project and undertook what's called a public sector comparator to compare what the costs of delivering a major project like that would be using the traditional government procurement process, which that member prefers over the private-public partnership method.

As the member well knows, there was a significant additional benefit to the public in terms of moving forward on the private-public partnership model. It also happens that the project was reviewed by the Auditor General. I know that the member won't listen to what I say about this project, so I will quote from the review done by the Auditor General of British Columbia. Hopefully, the words of the Auditor General…. The member might have some assurance or respect on the work of the Auditor General. I'm just going to read a portion of the review done by the Auditor General of British Columbia.

I'll read the key sentence for the member. I'll read it into the record so the member opposite can go back

and look at that and, hopefully, hang it on the wall in the NDP caucus office and review it.

Hon. K. Falcon: I know the member wouldn't hold her breath, but I do think that there's genuinely widely held respect for the Auditor General and the work they do. It's totally independent of government. The Auditor General, I think, does an exceptional job on behalf of British Columbians, as they did in this case.

What the Auditor General report says on the Sea to Sky Highway project is: "Based on my review, nothing has come to my attention that causes me to believe that the report prepared by Partnerships British Columbia does not fairly describe the assumptions, context, decisions, procurement processes and results today of the Sea to Sky Highway improvement project." End of sentence.

So the Auditor General, in the Auditor General's review, made it very clear that nothing — not a little bit, not some things, not certain things, not interest rate issues; didn't accept any of those issues the member opposite talks about — has come to the Auditor General's attention that causes the Auditor General to believe that the report that was prepared by Partnerships B.C. did not fairly describe, in all aspects, the assumptions that were predicated when preparing that report.

This minister and this government are comfortable with the fact that that value-for-money report showed significant benefits — some of which I listed to the member in response to an earlier question — to the public of British Columbia, as confirmed by the Auditor General and the Auditor General's review that those assumptions were reasonable, based on the assumptions that were undertaken when preparing that value-for-money report, which included a public sector comparator.

I for one, as I have said many times before to this critic and to others in the past from the NDP, am quite prepared to say that I'm comfortable with the assumptions that were undertaken in terms of the weighted average cost of capital that's utilized when determining what the discount rate is for these value-for-money reports. The assumptions are considered reasonable by the Auditor General, and that's good enough for this Minister of Transportation and this government.

M. Karagianis: I certainly believe that the Auditor General did analyze the report given to them from Partnerships B.C. and said: "Yes, this report is sound, and it states truthfully what it was expected to state." But at the end of the day, my question is not about whether the Auditor General signed off on a report that Partnerships B.C. gave them and said: "Yeah, this is accurate. Your numbers all add up. It's all correct, and it balances."

My question is: dollar for dollar, are we as taxpayers of British Columbia getting the best deal in P3s? That's my question, and I'm not entirely sure. You know, the minister talks about great benefit to the public. I'm not entirely sure we're getting that. That is the purpose behind my questions.

The minister can quote the Auditor General all he wants, because the Auditor General will certainly review the report given to him by Partnerships B.C. and say: "Yeah, this is correct. Your assumptions and your claims and your tally of how this works — they balance. They are true within this report." At the end of the day, does that deliver real value for the taxpayers now and long term into the future? I'm not so sure.

P3s are being questioned all over the world for various reasons that we have discussed here today. Some of them are being downgraded from 30-year contracts. Certainly, there is a growing concern about the cost of borrowing and whether the taxpayers are getting the best value for their dollars. We're the ones to pay, at the end of the day.

Certainly, the minister has admitted here that the $144 million William Bennett bridge project is going to deliver to that private partner $586 million, at the end of the day, for which the majority of risk has already now been overcome in the construction capital investment portion of that. Basically, they're going to be paid for the next 30 years for the very low-risk maintenance portion of that contract.

Many of these contracts are very similar. Is it good value for money for taxpayers? Big question in that, and I do not believe that at this point I've heard anything from the minister that convinces me that we are, dollar for dollar, getting the best deal. I know that the minister believes in these P3s wholeheartedly. I can hear it in his responses. I have no doubt whatsoever that he thinks that they're fabulous. I don't think they're fabulous, and I haven't seen any rationale here that tells me they're fabulous.

I guess, because they're new to this province — as the minister said, we've only just embarked on them — we'll find out. I hope at the end of the day it's not a big disappointment that we have a 30-year contract which we paid through the nose for and didn't get value for money for and that the taxpayers have been on the hook for 30 years for something that is long outdated and is no longer delivering on the original promises. But neither one of us will probably be around to see the termination of that contract, so how will we know to analyze it?

That's the problem with these P3s. It is that 30 years from now, when the contract has been completed, you can look back and say: was it a successful contract, or was it a failure? Well, you don't know, because you know what? The people who instituted it, those of us sitting here now in government, are not around. Thirty years from now maybe there will be a few people in our caucus, but I'm not sure anyone in this room, particularly. Perhaps some of the younger pages and stuff that we have here will be around in 30 years. But there is no way of telling whether you're actually getting value for money for your tax dollars.

My concern is that I don't see the business case. I see one side of a business case. I do not necessarily see a hard, cold analysis of any scenarios, other than the

value-for-money which has been purported and developed by Partnerships B.C., which — let's admit it — is in the business of promoting public-private partnerships. That's what they are. So when I'm sold just one scenario here and I don't see the business case…. Frankly, I would be very happy if the government could show a business case that offset….

Here's what the public-private partnership procurement process delivers dollar for dollar, and here's what would happen if this was done as a standard procurement through government, where we did the borrowing and we contracted for the capital and we did the ongoing operation and maintenance. Dollar for dollar, here's what you get. Here's what you get in the private scenario. Here's what you get in the private scenario. Here's what you get in the public scenario.

If I saw that clearly outlined in real dollars, I would be quite impressed with that. I will certainly say to the minister that some aspects of public-private contracting engagements are very workable. I've seen them work. The minister himself has admitted that in some cases there's public procurement going on, in some cases there's design-build, and sometimes there's design-build-operate. There are all kinds of scenarios.

I do think that, in all fairness, it should be a very easy business case analysis built on both sides that the public would agree with and that, in fact, many of the analysts would agree with. We don't see that. We don't see any kind of analysis here from all parties that says: "We can see clearly what's happening here, and yeah, there is good value for money." Or: "You're trading off this to gain that." I don't see that here. I see lots of comparators, and I see attempts to offset costs with risk analysis and a number of things that, frankly, are a bit hard to quantify accurately and to portray accurately in this analysis that we're talking about.

Let me ask the minister, then, seeing as we are talking about the Sea to Sky…. He doesn't want to talk about the Golden Ears because TransLink is in charge of that. The Sea to Sky project. Where are we at right now in the time line? Where are we at in the budget? How much has it cost us? What's the cost today to the taxpayers of the Sea to Sky Highway project?

Hon. K. Falcon: I'll answer the last part of the member's question first and then make some comments based on some earlier comments the member made.

The Sea to Sky project is over 50 percent completed up to this point. It is on schedule. It is still scheduled to open in the fall of '09, which has always been the date on which this project will be opening. Up to this point we've made approximately $75 million worth of performance payments on that project. The project, as I say, is continuing to proceed extraordinarily well. I'm very pleased with the project and how the contractor and the concessionaire in this case, Peter Kiewet and Sons, is doing. They are doing an exceptional job on behalf of British Columbians. There's no question.

One thing that I would just take a little bit of issue with. The member went on a little bit about P3s and mentioned the issue of a business case and why there isn't a business case that the member can see. An interesting comment, I have to say, given that the member was a staffer in a government that didn't even have a business case for the fast ferries project.

It would have, frankly, been a wonderful thing if we'd had a business case that was reviewed by the Auditor General. That could have saved the taxpayers of British Columbia not only an enormous financial but practical embarrassment in terms of how completely off the rails that project went because there was no business plan. And unfortunately, the board was made up of appointees that, of course in retrospect, had no experience with overseeing large complex projects like that.

In this case there is a value-for-money report that the member can refer to. The member talks about how there's nothing there that tells her whether this is a good deal. When I read a value-for-money report that talks about $130 million of additional benefits for the taxpayers of British Columbia in terms of additional four-laning that was not predicated under the original plans, that talks about a median barrier that gets extended 16 kilometres farther than we had ever anticipated, that sees over 80 percent more rumble strips on the corridor and that sees all of the additional investments that were made that were valued as a benefit to the public in terms of the value-for-money report at $130 million, it strikes me as a pretty good business case.

That strikes me as a pretty good review of a major project going on in the province of British Columbia which, as I mentioned earlier, is over 50 percent completed and being delivered on schedule and on budget. That's something that ought to be applauded, not criticized. Remember, as I pointed out to the member, those assumptions that came forward with the $130 million of additional benefit for the taxpayers of British Columbia were found in the Value for Money Report prepared by Partnerships B.C. that was reviewed by the Auditor General of British Columbia.

I'll say again, the Auditor General said…. In fact, I'll read the opening quote, which is different from the other one that said: "The accompanying report, entitled Project Report: Achieving Value for Money Sea-to-Sky Highway Improvement Project, has been prepared by Partnerships British Columbia using assumptions with an effective date of December 19, 2005." This is the Auditor General speaking: "I have carried out a review of the report and of the support provided by Partnerships British Columbia for the assumptions, context, decisions, procurement processes and results to date of the Sea to Sky Highway improvement project."

The Auditor General goes on to say later, which I read into the record: "Based on my review, nothing has come to my attention that causes me to believe that the report prepared by Partnerships British Columbia does not fairly describe the assumptions, context, decisions, procurement processes and results to date of the Sea-to-Sky Highway improvement project."

Now, I'll tell you this: does that mean that the value-for-money report is perfect? No, because in any report based on assumptions, naturally, there can be variations in the assumptions. None of us has a crystal ball. The issue really comes down to whether the assumptions are reasonable or not. In this case, we had a report prepared by Partnerships B.C. with a ton of supporting information as to how they based their assumptions, the whole issue of the average weighted cost of capital and how they made that allocation of selecting a 7½ percent discount rate. All of those things were explored in great detail and then reviewed by the Auditor General, who said that the assumptions are reasonable.

The Auditor General did not say that they were unreasonable. The Auditor General did not say, "Everything that is in this report causes me concern, and I think they're unreasonable assumptions" — nothing remotely like that. In fact, the Auditor General said that they're reasonable. That provides a great amount of comfort to me.

I only wish that on the project that I referenced, where the member was a staffer in a government that undertook…. That particular ferry building project did not see the same kind of business case, because they didn't have one. It would have been nice had that business case been reviewed by the Auditor General. My goodness, what a tremendous difference we might have seen in terms of the horrific outcome of that particular scenario.

It doesn't mean that we have got perfection here, because we don't. But we do know that in this case we have a major project, another P3, that is being constructed with the completion project scheduled for the fall of 2009. It is over 50 percent complete, on schedule, and on budget.

It's not just a case of this minister believing and wishing and hoping that it will stay on budget and get completed on time, but of a minister that is able to say, actually, that we've got 24 other examples representing a capital value in excess of $8 billion that we can show the member opposite were delivered utilizing a P3 procurement process, either on schedule or ahead of schedule, and on budget or under budget.

All of them, to my knowledge — and I remember some of them off the top of my head; I remember hospitals — had value-for-money reports that were made public. All of the reports were made public. All of the reports, you know, reviewed the assumptions and explained what the assumptions were for those projects. All of those projects, as I say, are on or ahead of schedule and on or under budget.

That, I think, goes to the very heart of what we're talking about when we talk about the Sea to Sky. This was also a project that had a business case called Value for Money Report. It was a project that did the comparator that the member opposite talks about, called the public sector comparator, which looked at what costs would be involved in delivering the project under the traditional basis.

It came forward with the outstandingly good news that there are $130 million of identified additional benefits for the taxpayers of British Columbia. Furthermore, that report was reviewed in an engagement report by the Auditor General of British Columbia, who also confirmed that the assumptions that underlay that report were reasonable assumptions.

That, I think, is extraordinarily good news for the taxpayers of British Columbia and certainly extraordinarily good news for the Sea to Sky Highway project. As I've always believed, this project continues to be delivered exceptionally well under sometimes very difficult conditions. Again, it is a project that's receiving recognition around the world in terms of the complexity of the project and the efficiency and speed at which the contractor is performing the duties.

M. Karagianis: Could the minister just clarify for me the budget? The minister said that we're on budget. What is that budget, and what are the performance payments? What's the schedule there for the private partner?

Hon. K. Falcon: I'm pleased to report to the member that the capital cost of the project has not changed from when the project was announced. It is $600 million in 2002 dollars. There are performance payments. I've referenced the fact that approximately $75 million worth of performance payments have been made to date on the Sea to Sky Highway contract.

The member will know from the budget documents that the total contract value over the 25 years, including the construction phase and the performance payments over the remaining just over 20 years now of the contract, is $1.613 billion. Of course, as the member well knows, that includes not only the capital component of the agreement but also the interest costs, the financing cost and the maintenance operation. We have all those usual things.

What I can do for the member opposite is provide a schedule of what the performance payments are going to be, or I could read them into the record if the member wants. I'll make sure the member gets that document, which shows the breakout of what the annual payments under the contract are, right out to 2030.

M. Karagianis: I see from notes provided to me by the previous critic that the Auditor General said the total cost of the Sea to Sky project was $1.9 billion. I'm just trying to add these costs up. So $600 million from the original capital cost, and the value of the 25-year contract is $1.6-some-odd billion. I'm wondering if that is what the Auditor General was referring to. Is the minister aware of what it was that the Auditor General was referring to — $1.9 billion?

Hon. K. Falcon: The differential, for the member's benefit, is that approximately $230 million of project work was undertaken by the province of British Columbia outside of the concession agreement. That was

important work that we entered into, arrangements where we entered into a shared-risk model to determine the best construction methods for some of the particularly difficult and challenging sections of the Sea to Sky so that we would have some evidence to provide the bidding consortiums that would also try to answer the questions of how to deal with some of the challenging construction risks.

The more certainty we could provide to bidding groups, the more effective the bids were likely to be in terms of the innovation and the additional benefits that were provided, as was borne out in the contract. That's primarily where the difference is. The Ministry of Transportation's portion of the work was approximately $230 million, and the balance will be found as part of the concession agreement with the concessionaire.

M. Karagianis: I know that the minister alluded earlier to the fact that there was additional work done, like the additional four lanes. The minister had a list of things that were considered to be value-added to the project. In reality, those have been compensated for in some way, because of course we all know that there's no free lunch. Presumably, all of those additional benefits that were put into the contract by the private partner will be paid for somewhere in this $1.6-billion-plus contract over the years to come.

Would the minister agree that all of that is being incorporated, very similar to the previous projects that we've talked about, that this will be where they recoup their investment, their profits, and that certainly we can expect that there's a pretty healthy profit margin built in there for them?

Hon. K. Falcon: Of course the member is right. I mean, obviously, the payments that we will make in the contract will be payments that go towards the additional benefits that are being provided and that were identified in the Value for Money Report. We're thrilled about that. The thing to know is that in a competitive procurement process like this, what you're looking for is which of the bidding partners or the bidding concessionaires will put forward the maximum amount of work for the maximum benefit to the taxpayers of British Columbia for a fixed price.

In this case we received additional benefits that were identified as $130 million worth, many of which I covered in my previous answer. That was, again, reviewed as part of the engagement report by the Auditor General and confirmed the assumption. Very clearly, the member is right. Obviously, these people are getting paid for the work that they do.

M. Karagianis: There are several other members here that would like to ask some questions. I will turn the chair over to some of my colleagues here, but I just wanted to clarify one point.

So the minister very specifically…. In talking about the fact that this project was on budget — the original budget stipulated $600 million — the minister very interestingly added "in 2002 dollars." Now, we've discussed the budgets here from the other projects and the minister has not clarified or qualified that that money was in 2002 dollars. I'd like to know what the exact cost is in 2008 dollars rather than in 2002 dollars. So could the minister clarify, because he particularly added that. I'd like to know what that means and what the costs are in today's dollar.

Hon. K. Falcon: Nothing new. This is the same process that was utilized when the member was in government. Whenever you establish a project budget, you've got to establish it in some form of constant dollars, the dollars of the day, so that you've got a comparator that you can always look at that is in constant dollars.

The project gets completed. They use a discount value to get back to what would it be in terms of the dollars of the day — the 2002 dollars in this case — so that you can determine whether or not the government met its requirements and built it in accordance with the budget that they established in that day in those dollars.

That's all we're doing here. It's the same thing we've always done as government, and it's what governments previous have done, including the member's own government.

B. Simpson: I am getting pressure here to get through my questions fairly quickly, so hopefully, I can ask questions that are specific and explicit and the minister can give me a response.

I want to canvass a little bit. We canvassed last year the ten-year maintenance contracts, and I'd like to just canvass that a little bit more again. My understanding…. There was a meeting sometime in the past year around those maintenance contracts, because a lot of them were coming up to their three-year window for having a look at them and making sure that things were going okay.

Again, my understanding is that there were some discussions about how tight those ten-year contracts are, specifically given — and we canvassed this last year — the impacts of climate change, the changing weather conditions and the kinds of things that people are experiencing.

My question, to be specific, to the minister is…. That meeting went on…. Are there any of these ten-year contracts that are now in jeopardy of not being continued, of any of the maintenance contractors potentially losing their rights? I know there's a bonding process and everything in there, but are any of those contracts in jeopardy of being cancelled or withdrawn?

Hon. K. Falcon: The member would be aware that our maintenance contracts are staggered so that they don't all come up at the same time. But all of the maintenance contracts have five-year performance bonds. They are responsible, as maintenance contractors, that when those five-year performance bonds come due, they have to, obviously, get their bonding renewed.

To date there have not been many — maybe just a few — that have actually gone through that process of

having their performance bonds renewed. There haven't been any problems. I'm unaware of any problems that we're anticipating in that regard as the future maintenance contracts come up.

With respect to these maintenance contracts, the government now, of course, is adding the fuel tax. That fuel tax will escalate over the next number of years. Will these maintenance contracts have scope to absorb the incremental costs of the fuel tax on their operations?

Hon. K. Falcon: We do have an inflation formula provision built into the maintenance contracts that covers off things like labour, fuel, etc. Those are all reviewed annually. There are published indices which establish what those inflation allowances will be. Those indices kick in depending on what the particular inflation situation is throughout North America and, in particular, in Canada, as identified by the indices that are utilized as part of the inflation review that's done every year.

B. Simpson: These are additional cost burdens put on by the government's decision to go down this path with respect to climate change and putting a price on carbon. Has the ministry done a cost calculation on either a contract basis or a global maintenance cost year over year so that we know exactly how much additional costs we're putting on these maintenance contracts year over year through until 2012?

Hon. K. Falcon: Yeah. I mean, we pay in accordance with the inflation factors that are established as part of the agreements. Anything that would be above that…. They're going to have to manage those risks. They knew that, obviously, when they went into these contracts. That's why we do have an annual review. The inflation formula is built into the contracts, which provides an increase based on labour and fuel indices that are published, and they're well aware of that.

I have to say, though, that we have been meeting with the entire roadbuilding community, including the maintenance contractors, and we have been very clear that we are going to work with them.

As we move forward in our climate action agenda in the province of British Columbia to make sure that we meet our commitment to reduce greenhouse gases by 33 percent by 2020, we want to work with the entire industry, including the maintenance contractors. They are very eager, I must say, to be part of that, so they are already instituting best practices, including anti-idling measures, for example, that will find ways that they, too, can reduce a lot of their operational costs to deal with the challenge that so many of us face as we see fuel prices increase.

As I say, they get an annual review. It's an inflation formula that's put in place. It deals with issues associated with that. If there's anything above and beyond the inflation amount, then they've got to manage that.

This isn't a case where we enter into contracts where government assumes every single risk associated. That wouldn't make any sense. But they also recognize that these are contracts in which they enter into ten-year contracts where they get to manage out and spread out those risks over the term of the agreements.

B. Simpson: I find the minister's logic here troublesome because this isn't a risk. This isn't some unknown economic factor. This is a deliberate choice on the part of the provincial government to tax fuels.

The maintenance contractors are fuel-intensive. We're already, as we would say, skinny on those contracts with respect to being able to maintain our roads. The minister is well aware of the complaints that come from all around this province about the level of maintenance, particularly related to the fact, as we canvassed last year, that plus or minus two degrees causes more problems in maintaining those roads over time.

This isn't some outside risk factor that pops up and is unknown. This is a year-over-year escalation of the fuel tax by government policy.

My question to the minister was very explicit. Did the ministry do a cost calculation based on even this year's or last year's budgets for their fuel costs so that we know year over year how much incremental costs we're adding to all of these maintenance contractors? Do we have those figures?

Hon. K. Falcon: Look, the member should know that the increase that would form part of the carbon tax of 2.6 cents a litre — which will take place, I believe, in June of this year — is, frankly, minuscule compared to the increases that the maintenance contracting industry has had to deal with over the last several years. The price of oil has more than doubled in the last three or four years, so they're well aware of what the costs of fuel are and how it impacts their businesses. It's one of the reasons why we have an annual inflation formula to compensate, in part, for the inflationary pressures that they will see in the labour markets and, of course, in fuel too.

What the government is doing is, frankly, almost completely lost. In fact, in many cases many have…. Others, not myself, have described publicly the fact that fuel increases have been far beyond the fact that the government is moving forward with a modest carbon tax in June of this year to, in part, help deal with the challenges of greenhouse gas.

The industry is very much aware of that. They've been dealing with these issues in the past. Again, these are contractors that have the certainty of ten-year contracts too. This is very important to them because they get the certainty of knowing that there will be some years, as the member and I have canvassed in the past, where they have very mild winters, and it's financially a big benefit to them.

But they also know that there may be some winters that are particularly tough, and we have seen a couple of those kinds of winters where they've really had to

suck it up. They've expended enormous amounts of money that in the short term they feel. There's no question about it. But there will be years where they don't have those kinds of winters, and they will get a big benefit out of that.

That's the advantage of having a ten-year contract. They are able to understand those risks and know that they've got an ability to spread those risks over a ten-year contract, unlike an annual contract where something like that obviously would be pretty devastating.

As I say, we've got an inflation formula that is in place. It's based upon agreed-upon, published indices that the community is well aware of. This has been a long-established standard, and I'm very comfortable with their ability to deal with anything that may go above and beyond that.

B. Simpson: I find the minister's logic, again, quite interesting — that this fuel tax is a bump on the whole inflationary cycle that we're going through with fuel costs. That goes to the whole argument of whether or not it's going to have a significant impact on changing people's behaviours.

My question was very explicit. Has the ministry done the work necessary to understand what the costs of this are, because it is a fixed additional incremental cost?

Let me generalize it. Has the Ministry of Transportation, as a global calculation, calculated the costs year over year out to 2012 of the fuel tax on their operations? Do you have a line item that you understand the implications of that fuel tax on the government operations under the Ministry of Transportation?

Hon. K. Falcon: The answer to the member's question is that we in the ministry do exactly what we expect our contractors to do. That is, we manage to the published indices that suggest whatever the inflation pressures are going to be in the different aspects of labour or fuel or whatever the case may be, and we have to manage that. If they end up being higher than the inflation indices are projecting, then we as a ministry have to manage that. That's just part of our operational responsibilities.

We as the Ministry of Transportation don't get to run and cry because fuel prices have gone up higher than we expected them to. We'll have to manage to those, whatever that amount is, just as everyone out in the whole real world has to, just as they impact every other industry, whether it's airlines or taxis or whatever the case may be.

All of them have to try and manage as best they can, given the fact that we've seen fuel prices escalate dramatically in the last number of years. We all deal with it. We will deal with it under our budget, just as everyone else out in the real world has to deal with it in their budgets.

B. Simpson: The government said that everybody wouldn't have to deal with it in the real world in their revenue-neutral carbon tax plan, where they said that they were going to recognize this as an incremental cost to the taxpayers, to businesses, to corporations, and as a consequence, they will give them a reduction in taxes in accordance to what they were going to add as a cost burden. So this revenue-neutral thing apparently applies to everybody else. What I'm trying to understand is: does it apply to government?

Let me add another one, because I'll take that as no, you didn't do the calculations on cost of maintenance, and no, you didn't do the calculations on cost to government.

Let me add another twist to this. The government has a program of carbon-neutral by 2010. That tonnage cost is accorded at $25 a tonne. What will be the Ministry of Transportation's charge on that by 2010? How much is that program going to cost the ministry?

Hon. K. Falcon: So the Ministry of Labour and Citizens' Services are the ones that are doing the work that will be associated with establishing the baseline across government as to what the baseline is going to be for carbon neutrality and how we're going to, then, move forward to meet our objectives.

I can tell you that in the Ministry of Transportation we are looking at all aspects of travel within the ministry as part of that effort to make sure that we look at every way we can to try and reduce the greenhouse gas costs associated with transportation. We will continue to do that work. But as I say, this is being led by the Ministry of Labour and Citizens' Services, and once they establish that baseline and do that work then, obviously, we will adhere — as all ministries will adhere — to whatever comes out of that.

The other thing I would say to the member, which the member did mention, that I think is a good point and worth reinforcing, is the fact that the carbon tax that we talked about is, in fact, totally revenue-neutral. The member will know that that's written in legislation. It is now the law of the province that every penny that is generated as a result of the carbon tax will be returned to businesses and individuals in the form of tax reductions. That includes, of course, businesses that are involved in the road maintenance business. So they will see tax reductions.

We have already, as a government, as the member would well know…. To move away from the disastrous economic situation we had in the 1990's under the NDP government, we've moved towards a very aggressive tax reduction program that saw our corporate general tax go from 16 percent to 10 percent by 2010 — a dramatic and substantial reduction. Our small business tax, of course, has been reduced very dramatically, such that we now have the most thriving and fastest-growing small business community anywhere in the country.

So we will continue with those efforts. I'm not for a second pretending that that fixes all of the problems. It doesn't mean that there won't still be challenges to companies out there. Carbon tax is a tax shift, and that's exactly what it does. It shifts the tax burden. We

will all have to work hard to try and deal with whatever the implications of that are.

I can say that I'm proud to be part of a government that has through action, not words, said that we take the issue of global warming seriously. We are proud to be the first government in North America to move towards a tax shift that will see carbon, instead of being a free good, as a good that has a cost and a tax associated with it.

B. Simpson: I would appreciate it if the minister doesn't say what I well know or do not know. I don't think that's appropriate — to ascribe to me beliefs about the '90s or anything else. The minister has an impression of what happened in the '90's, and I have an impression of what happened in the '90s. The minister can't speak on my behalf.

The issue of carbon-neutral, though, as the minister has addressed it…. The combination of carbon-neutral and the carbon tax means that for government we go to $40 a tonne for carbon by 2011. So in that 2010-2011 year, it's $40 a tonne. Out at 2012 it's $55 a tonne, and nowhere in this so-called revenue-neutral system is there any ability that we can see for a chargeback for government. We don't get the tax reductions. We don't get the income tax relief or the small business tax relief or the corporate tax relief. What I'm hearing from the minister is that those calculations and implications haven't been taken into consideration.

But I am conscious of time for today. I have some explicit things that I need to get into with the minister specific to his budget. With respect to the budget, I would like to look at the mountain pine beetle strategy funding. My understanding is that that was a $90 million allocation over three years.

In the ministry service plan, page 31, it shows that the funding is $90 million out through 2011. Was no money spent on this in the '07-08 fiscal, when this was first announced? Otherwise, it's $120 million, not $90 million.

Hon. K. Falcon: This is indeed a good-news story, as I'm sure the member will echo.

Hon. K. Falcon: I hear some snickering on the other side. Apparently, they don't believe it's as good a news story as I do.

Hon. K. Falcon: I'm just commenting to the member opposite. I know he's sensitive about me putting words in his mouth, and God knows, I don't need to do that. He can do that himself. All I was suggesting was that I heard snickering, which suggests to me that perhaps there's some disbelief about the financial contribution being made as part of the mountain pine beetle effort.

The member will be pleased to know that in fact there is not just the $30 million commitment this year but an additional $30 million a year over the next three years. If the member does the math, he will know that that is $120 million on that. That's above and beyond the $90 million the member talked about.

I appreciate the member raising this, because it demonstrates this government's commitment to dealing with the issue of the mountain pine beetle by, in fact, increasing that amount from $90 million to $120 million that will be invested, not just this year but over the next three years in addition to this year.

B. Simpson: My snicker was the result of the minister standing up, and the first words out of his mouth being that I would take it as good news. Again, it has nothing to do with this; it has to do with the minister putting words in my mouth.

The question to the minister then, before I make a determination if it's good news or not, is: where is the plan and the project completion for the first $30 million? Where can I go and find that so that I can find a list of all the projects done, all the work done, so that I can make sure it was incremental to the Ministry of Transportation's operating budget?

Hon. K. Falcon: I don't have that list, obviously, at my fingertips now. I'd be happy to get that list over to the member. It's certainly a good-news list, and we'll be happy to make sure that the member is provided that list.

B. Simpson: My question to the minister is: where does the list exist so that people in my constituency can go and take a look at it and find out what's going on? I'll add a corollary question to it: where is the list for the next three years? Those are questions that I get. If this is incremental to the Ministry of Transportation's budget, where is the plan for it, where are the explicit projects, and where can the general public go and find that?

Hon. K. Falcon: As I said, I'm happy to get the member a list of that. Each and every year we actually work to develop the list. We work in cooperation with the forest industry. We like to determine where the future cuts are going to take place. In many cases, we like to get ahead of them so that we can go and strengthen the road base or, in some cases, do improvements and replace bridges, etc., recognizing the impact of the future haul and what it's going to do to the roads.

That's done annually, but again, I'm happy to get the list to the member of the work that's been done to date. We'll provide a complete list of all the projects so that the member can share that list. It resides with the Ministry of Transportation. We roll out these projects with great frequency. Obviously, when you're spending $120 million over four years, that's a considerable sum of money. All of the projects are made public. People see the work happening and taking place.

As I say, each and every year we do an analysis in cooperation with the Ministry of Forests and the industry and our own team to make sure that the work we're going to do is going to be consistent where the beetle haul is going to come from.

B. Simpson: My question isn't about the issue of whether or not that work is getting done or is consistent with what the ministry's plans are. My question is whether it's incremental. That's the question that the public has, because this money was billed as incremental.

We have a lot of legacy roads out there that had damage done. We're no longer logging in those areas, but the roads are already damaged and need repair. People have been asking for those roads to be repaired, and they don't know what the process is to find out how to get that done. It was a mountain pine beetle salvage operation that damaged those roads. So I look forward to the list. I also would like to see what the projection is going out.

On the same note, in the budget but not in the ministry service plan is $10 million that has come up for local government for mountain pine beetle–impacted roads. The minister will recall that we asked in the last estimates debate about why local government was left out. Forest service roads got some additional incremental money, supposedly, and the Ministry of Transportation got incremental money, supposedly.

We pointed out that in my community of Quesnel, for example, 600 logging trucks go through that main street downtown that this government passed off and downloaded to the local government to take care of. As a consequence, what I'd like to know is: what is the program for the $10 million that's in the budget for road infrastructure for municipalities? Who's managing the program? What's the nature of the program? How do local governments get access to that fund?

Hon. K. Falcon: I should correct the member's record. Actually, it was the NDP government in the '90s that shifted that and downloaded the cost of local roads onto local government. So the member might want to check the record on that.

No doubt this is another piece of good news. It's $10 million. We are going to work with different communities and assess what the needs are and provide one-time grants to assist them as they deal with this issue too. We did something similar to this in the first term to try and provide extra assistance to some of the local communities that were particularly impacted by some of these things.

I can tell the member opposite that this was very widely supported and applauded, but we will make those announcements as time and our work with the local communities and our assessments are undertaken.

B. Simpson: This is the government that promised to be open, transparent and accountable. My question is very explicit to the minister. What is the process for local governments to submit or to ask for assistance? What is the transparent process to assign this money where it's most needed?

Hon. K. Falcon: I want to emphasize to the member that this government is putting aside these dollars for particularly small communities. Quesnel is not considered a small community in the scale that we're talking about. We're talking about very small communities that don't have the capabilities or the same access to revenues as some of the larger communities do.

We're going to work through that process. We don't, unlike the member opposite, establish a big, complex labyrinth of process to deal with an issue of $10 million. What we do is talk to our local managers, our staff throughout the different municipalities. We work with these small municipalities that we're particularly concerned about. That's why we've allocated these dollars for those particular small communities. We will work with them and make a determination as how best to spend the money. But we don't intend to set up a complex apparatus to establish criteria, etc.

We will work with the communities. Our local staff are very familiar with what the needs are in these different small, rural communities. We will work with them, and there will be announcements forthcoming.

B. Simpson: So it's an in-house process at the discretion of the minister and his staff that's open and transparent and accountable. I guess it will be accountable when we see the press releases.

By the way, I don't represent just Quesnel. I have Likely, Horsefly, 150 Mile House, Big Lake, Wells, Barkerville, a whole bunch of unincorporated communities. I heard the minister say that these are small municipalities. Yet in my riding and in many other ridings, unincorporated communities are probably the least capable of addressing the needs of the impacts of the mountain pine beetle on their roads.

So are they off the list? Are they on the list? If so, if the minister is going to do something in Likely, who is he talking to? It's an unincorporated community with no representation. The same with Horsefly. So will unincorporated communities be getting some of this money, especially since they need it the most?

Hon. K. Falcon: Unincorporated communities come under the jurisdiction of the Ministry of Transportation, so those will be improvements that…. In the normal course of events of managing the road network and the highway system across the province, we will continue to be responsible for making those investments. We're talking about very small communities, in this case, that will be eligible for these particular dollars.

The unincorporated communities are covered by the Ministry of Transportation. We'll continue to make those investments based on the usual standards that we apply, which are vehicle volume, accident history, safety issues, road conditions and all the other things that we typically apply before making decisions.

C. Evans: The minister will remember that I made a private member's statement on the subject of the ferry crossing Kootenay Lake and on the suggestion that we slow it down. The member for East Kootenay and Cranbrook suggested that such an idea was so simple and wise that had it been in the East Kootenay, they would have thought of it years ago.

C. Evans: I was paying attention, and I appreciated the sort of double-negative compliment in your comment.

As the minister knows, I've written a letter to him and the Minister of Environment and the Ministry of Finance asking if we could meet or if we could make progress on this wonderful idea to reduce carbon, make the chamber of commerce and tourism happy by making the ferry run on the hour and reduce $300,000 a year's worth of fuel consumption. I wonder if the minister has an answer to my letter or would like to suggest a meeting or has a resolution of the issue.

Hon. K. Falcon: I appreciate the member asking that question, actually, in a very concise way. It's much appreciated. The ministry is very interested in finding ways to reduce greenhouse gases, and I appreciate the work that the member has done. I think that the member is genuinely looking for ways that we can try and achieve that objective together.

We're currently, in the ministry, reviewing that whole issue — the proposal and the issue of ferry usage. There are many options that are available to reduce fuel burn. Implementing an hourly schedule is, obviously, one option.

I can let the member know that this proposal was discussed at the February 27 meeting of the Kootenay Lake ferry advisory committee. The stakeholders in that meeting agreed that additional review would be required, as all the costs and impacts had not been fully considered, apparently, in the proposal that was made. So some more work is going to be done to try to flush out what those may be.

Once that information is gathered, we will probably have a better idea of what is the best way to move forward to try and deal with that issue. But I appreciate and thank the member for the member's work in trying to bring forward solutions to help us all achieve a common goal.

C. Evans: I would like to know from the minister: what is the state of contract negotiations with Western Pacific Marine Ltd., the contractor that operates the ferry? Does the timing of those contractual negotiations impact on the ability to change the schedule once the contract negotiations are finished?

Hon. K. Falcon: The member probably knows that we're still in negotiations with the operator, but clearly, if we enter into a situation where we require additional hours of service, there are going to be additional costs associated with that. That'll form part of any agreement we enter into with the operator to ensure that, obviously, they're going to have those costs reflected in the service that they're providing.

We're in the midst of negotiations. In no way does that impair the discussions and the work that's being done on whether this may be one way of trying to help us achieve our greenhouse gas objectives.

Of course, as I have mentioned to the member, there were some identified gaps in the proposal, in terms, I understand, of the cost side. More work needed to be done to identify exactly what those gaps are and what the dollar amount of them might be, but none of that in any way, it is our belief, impairs the negotiations that we're currently conducting with the operator.

C. Evans: I'd like to shift the conversation to the Arrow Lakes, the set of lakes and ferries just to the west.

I hope that the minister knows this, but just to reiterate, the present situation in the logging industry has resulted in the closure of the Castlegar sawmill that feeds Castlegar pulp mill. The price of lumber is low. The price of pulp is high. Therefore, there are literally dozens of chip trucks crossing Arrow Lakes right now to feed the Castlegar mill that were never there before, because they are having to make up for the flow from Castlegar.

It's the middle of winter. It doesn't feel like it here, but on the Arrow Lakes it's winter. There is no tourist traffic, and yet we have people having to wait one, two or three ferries right in the middle of the day because of the amount of chip traffic.

There are no bathrooms at the ferry landing for truck drivers or tourists. There is a real bottleneck, both at the Fauquier ferry and also at Shelter Bay–Galena Bay, developed because of industrial travel. Plus we have the perennial inability of loggers to get to…. Loggers like to go to work early in the morning. The ferry doesn't start until office workers' hours.

We have to resolve this issue prior to tourist season, because we're already having blockages in winter. Once folks from Alberta and the lower mainland start coming to visit the Nakusp area for summertime, they will be unable to get across. They will be angry. They will not stop in the town.

There's a music fest that happens. Thousands — actually, tens of thousands — of people visit Nakusp and use those two ferries to get there, and that buoys the economy of Nakusp. Given that we have just knocked the logging community upside the head, we need to accommodate chip traffic. We need to accommodate tourists. We need to keep the economy of the region going.

That's five issues related to those two ferries which I would like an extensive conversation on. If I guarantee civility in the room and creativity, will the minister come with me to Nakusp to address ferry traffic on the Arrow Lakes?

Hon. K. Falcon: I appreciate the question from the member. I'd be happy to meet with the member and

talk about this issue. Whether I can physically go to Nakusp, obviously, is going to be dependent on schedule. I wouldn't want to be flippant about that, but I know the member asked the question.

In fact, it's a very legitimate issue. We do have exactly what the member is talking about. We have real fluctuations in terms of the volume of people utilizing the ferries. Sometimes that can happen in very short periods of time, which creates a real challenge to deal with.

The member talks about those challenges in terms of bathroom facilities. Although there are bathrooms on the ferries and at both ends of the journey, the member knows well that some of those long lineups can result in a problem, so this summer we are going to have portables put in place along the lineup to make sure that anyone further back from the ferry locations will at least have a bathroom option to deal with. That is obviously a short-term issue.

I think that the member should know — and I want to say on the record — that we're very much aware of this issue. We have been very much informed by some of these traffic surges that the member is talking about, and we're working hard. As part of the discussions that we're having not only with the operator but with our local staff in the communities, we're trying to look at ways that we can best deal with that.

I will say to the member that I'll try and keep the member up to date on how those discussions are going and what progress we're making in terms of trying to deal with that.

Having said that — and noting the time, Mr. Chair — I move that the committee rise, report progress and ask leave to sit again.

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