Hansard — Tuesday, April 8, 2008 a.m.

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY


CONTENTS

	Routine Proceedings
		Page


Introduction and First Reading of Bills		11021
	Oil and Gas Activities Act (Bill 20)
	Hon. R. Neufeld

Committee of the Whole House		11021
	Utilities Commission Amendment Act, 2008 (Bill 15) (continued)
	J. Horgan
	Hon. R. Neufeld

Report and Third Reading of Bills		11031
	Utilities Commission Amendment Act, 2008 (Bill 15)

Second Reading of Bills		11032
	Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act (Bill 16)
	Hon. R. Neufeld
	J. Horgan
	On the amendment
	J. Horgan

Proceedings in the Douglas Fir Room

Committee of Supply		11035
	Estimates: Ministry of Advanced Education and Minister Responsible for Research and Technology (continued)
	Hon. M. Coell
	B. Ralston
	R. Fleming

Hon. R. Neufeld presented a message from His Honour the Lieutenant-Governor: a bill intituled Oil and Gas Activities Act.

Hon. R. Neufeld: I move that the Oil and Gas Activities Act be introduced and read a first time now.

Hon. R. Neufeld: Mr. Speaker, I am pleased to present the Oil and Gas Activities Act. The oil and gas industry in British Columbia has become a major force in our provincial economy since 2001. The oil and gas industry is the largest resource contributor to B.C.'s provincial revenues. In this recent fiscal year we set a record-breaking $1.2 billion in oil and gas rights sales, which contributed to an estimated $2.5 billion in total oil and gas revenues.

This illustrates the confidence that industry has in investing in British Columbia and in British Columbia's energy plan, released in 2007. The B.C. energy plan outlined the province's commitment to become one of the most competitive oil and gas jurisdictions in North America and to lead in environmentally and socially responsible oil and gas development.

The sector has expanded and matured since the current regulatory framework came into effect a decade ago. The Oil and Gas Commission was established as the agent of the Crown and the regulator of the oil and gas industry. The Oil and Gas Commission approved all elements of oil and gas activity and relied on a number of acts governing the oil and gas sector, such as the Petroleum and Natural Gas Act, the Oil and Gas Commission Act, the Pipeline Act and the Forest Practices Code Act. The Oil and Gas Commission will now have one act.

There are a number of new elements in this new legislation, particularly the strengthening of environmental regulations such as streamlining the application and approval process for oil and gas permits; creating a modern, comprehensive compliance and enforcement regime that fully equips the Oil and Gas Commission with the compliance and enforcement tools needed to regulate a complex industry; encouraging and enabling innovation for an increasingly efficient and environmentally sound industry; setting new requirements for notification and consultation with individuals affected by oil and gas proposals; establishing new regulatory powers to improve the protection of environmental interests; and establishing a new appeals process to address administrative fairness principles with respect to the decisions of the regulator.

This new legislation complements our approach as set out in the B.C. energy plan. The Oil and Gas Activities Act will strengthen B.C.'s position as a great oil and gas jurisdiction in which to invest and foster industry innovation while at the same time supporting commitments to job creation, healthy and prosperous communities and environmental leadership.

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

Bill 20, Oil and Gas Activities Act, 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.

Hon. C. Richmond: In this chamber I call committee stage of Bill 15, Utilities Commission Amendment Act, 2008, hon. Minister of Energy, Mines and Petroleum Resources; and in the little House, Committee of Supply, estimates debate on the Ministry of Advanced Education.

The House in Committee of the Whole (Section B) on Bill 15; K. Whittred in the chair.

J. Horgan: Good morning to members on the other side, members here. I look forward to a briefing on Bill 19, the other energy bill — the other, other energy bill — at some time in the near future.

We were yesterday, when we adjourned the debate, speaking about section 14, which is the energy supply contract section of the existing act. I'm wondering if the minister could tell me if there's anywhere in this amendment where the commission is to consider price as a factor in approving or rejecting a contract.

Hon. R. Neufeld: Before we start, maybe I'll reintroduce the staff with me here today: Deputy Minister Greg Reimer; and from the ministry, Les MacLaren, the assistant deputy minister for electricity and alternative energy. Shelley Murphy is the director of the electricity policy branch in the ministry. They're the people with me today.

Yesterday we left off…. We didn't have very much time to discuss this section, so I want to give a little more context to this section. I know the member had asked for that yesterday, and in the shortness of time we couldn't explain it as fully as he probably would have liked to have happen.

What happens now when B.C. Hydro or a utility goes out and makes a call for electricity? They first have to go to the commission and actually get approval to do that process. Then, once they've received interest — bids from companies that want to supply electricity — they have to take each one of those individually to the commission for a review. There's a way that we can actually do this a little simpler and with less staff time involved and actually streamline the B.C. Utilities Commission process.

What this section does…. It does deal with costs. The utility will come before the commission and say: "Here are the terms and the conditions and the prices that we think we would get in this call."

There could be a range of prices that are for different types of generation, but some range. Utilities have a pretty good idea what those costs are. Everybody has a good idea what it costs to build this generation, whether it's in British Columbia or some place else. They'll put that before the commission. The commission will review that, in the first instance — the terms and the conditions and the prices that are set out there.

What happens then is that the utility makes a call, and they can actually move forward with awarding energy purchase agreements if in fact the proposals meet the terms, conditions and prices that were set out in the first place to the commission.

It makes the second step unnecessary, where the commission has to individually go through every contract and look at them — as long as they meet the conditions, terms and prices. In section 2, and to answer the member's question about, "Is there any place that the commission can deal with prices?" — yes. We know that prices would be something that would be forefront, but (2.6) is where they do. The other one is in (2.5)(d): "the interests of the persons in British Columbia who receive or may receive service from the public utility…." That's the ratepayers. Then (2.6) says yes.

That maybe briefly explains better to the minister — I mean the member — where we left off yesterday.

J. Horgan: Prescient — yeah. I love saying prescient, just for the ring in my ear. I don't have a ring in my ear. The ringing in my ear would be a better way to say that.

Well, I thank the minister for that, and I reviewed the section overnight just so that we could have a quicker debate on this section. I believe I get where the minister is going and why staff have recommended these changes, but this is where I would like to move an amendment to, in my opinion, add a little bit more certainty to this section in the interests of ratepayers.

J. Horgan: It's my view that by including this clause, particularly with the word "excessive," it would provide some certainty to the broader community that doesn't spend a lot of time reviewing the Utilities Commission hearings and looking at orders and so on — that the fundamental objective of the commission in this instance, when it comes to energy supply contracts, is to ensure that the costs of those contracts are not excessive.

Just speaking briefly to the amendment, as I said, not everyone…. I know that many members of this place don't spend a lot of time contemplating the activities at the Utilities Commission. I myself have said on occasion: "Mothers, don't let your babies grow up to be regulatory lawyers and attend Utilities Commission hearings."

I am eternally grateful to all those interveners and all those staffers at the commission who go through the very, very difficult and sometimes tedious work of ensuring that complicated contracts — whether they be with independent power producers or they be projects initiated by B.C. Hydro — are done in the least cost fashion and done with the ratepayer in mind.

One of the concerns that certainly we've been echoing on this side of the House — and the minister would probably be tired of me saying it — is that we're significantly concerned, in fact, that the cost of independent power contracts are above what the market would bear because of the value of that power, the time, the dispatchability, the reliability and so on.

What I believe we're doing by adding this amendment is ensuring that at the end of the day, when the contracts are being deliberated upon by the commission and the interveners have had their say and the utility has had its say, the commission can, in the interests of the public, reject those contracts if they believe that the costs are excessive.

I know that is a layer of complexity that the minister, by introducing this amendment, is trying to relieve. I believe it's something that the public wants to see. I believe it's something that the public expects from its regulator.

When it comes to increasing energy costs, we talked about this when we introduced the lifeline amendment

yesterday to do what we could in this place to relieve some of the pressures of escalating energy costs for seniors, people on fixed income, low-income British Columbians. There are mechanisms available to us as legislators that take this esoteric discussion down to a plane where ordinary folks can understand it, and excessive cost is something that everybody understands.

If you can buy something for $45 a megawatt hour, why would you then pay $75, which the minister said yesterday was the average cost of the last call from B.C. Hydro? I think most people try and find least cost options when they're doing their household purchases. When they're preparing for any eventuality, they try and save as much money as they can. It doesn't grow on trees. The minister is fully aware of that. Some might argue that it grows under the ground in the Peace, and we're pumping it out.

The minister just said, in introducing his last bill, that certainly there's a great deal of wealth coming to the treasury from energy costs that are being realized as benefits to us here in this Legislature and through other ministries such as Health and Education and social services.

We all want to see more revenue coming to the Crown, but we don't want to see more costs coming to consumers. It's my view that this amendment, by including in section 14 excessive costs, would meet that test and would demonstrate to the public that we in this place are working on their behalf, not necessarily in the interests of independent power producers or in the interests of utilities who want to find power that may be easier to get but more costly. We would like to see people sharpen their pencils.

I know that the minister, when he was on this side of the House in debate…. I can remember many times talking about inflated costs at B.C. Hydro and an expectation by the then opposition that the commission had an obligation to ensure we were paying as little as possible for our energy.

When the minister stands, I know he's going to say that we do have among the lowest electricity costs in North America, and that's a good thing. We want to preserve that position. And why not? When we have an opportunity, when we're opening up a complex bill like the Utilities Commission Act, why not take that opportunity, as we did with the lifeline amendment, and ensure that the regulator has a bottom line — that is, excessive cost.

There are projects out there that may appear on the surface to be easy to get off the ground. We have now in this bill a date certain for self-sufficiency. Again, we talked about this yesterday, and I'm not going to belabour the point, but the minister should take some comfort that we won't have to spend a lot of time on this in estimates.

There is a silver lining in this debate, and that is that if we have to go into a negotiation in 2015 to meet our 2016 objectives, I think that the public would expect that the commission will override the policy directive of self-sufficiency if it's not economically viable to do so. If excessive cost would result from signing those contracts to meet a policy objective that's now becoming a law with respect to the 2016 date for self-sufficiency, I would think that at a minimum, the public would expect us to protect their interests by saying that we will not pay more than we have to pay for electricity in 2016.

That's the motivation for this amendment, hon. Chair. I know that the minister will have some comments on it. I hope other members of the House will participate in this debate. I think everyone here has constituents who are on fixed incomes, who are feeling the squeeze of increasing energy costs and other costs.

Energy costs, of course, lead to increasing costs for food, increasing costs for other services and goods in the community. It's the backbone, in fact, of our economy. The minister has said that many, many times, and I share that view. But again, as legislators, we have an opportunity here today, while this act is open before us, to amend it in a way to assist individuals, not just streamline public policy for the government of the day.

Hon. R. Neufeld: We're not streamlining for the government of today. I would assume that these amendments to the Utilities Commission Act will remain in the act for a long time into the future, as long as they're useful to meet the needs of British Columbians and as they relate to electricity supply across British Columbia and how our Crowns and other utilities actually develop those resources across the province.

I get that the member wants to be dependent on the U.S. and Alberta for electricity in the province of British Columbia. I get that the NDP wants to spend $300 million or $400 million, and an escalating number at hundreds of millions of dollars per year, in those markets in the United States and in Alberta to acquire electricity — what he thinks and deems to be real cheap electricity. It's not always cheap electricity, as I brought out to the member yesterday.

We think and we believe — and I think most British Columbians believe — that with the resources we have in the province of British Columbia, we should actually develop those resources in the best interests of ratepayers in the province so that we can actually be self-sufficient in British Columbia with electricity, as we were for decades prior to the 1990s.

That's when we started going backwards. That's when we started being net importers. That, and in the early 2000s, is when we started requiring up to ten to 15 percent of our total consumption of electricity in the province of British Columbia…. We had to depend on places like the U.S. — Washington, Idaho, not California so much, but Arizona, Nevada, all of those places — and Alberta to actually meet our needs in the province of British Columbia.

I get that the member wants to send that investment, those jobs and that certainty to some other jurisdiction. I get that the NDP doesn't want the jobs and the activity to happen in the province of British Columbia. I understand that. They've made it very clear that they don't

care about jobs in British Columbia, that they don't care about the investment in British Columbia, that they don't care about actually having enough electricity to meet our needs in the province of British Columbia. I get that.

I don't understand it, and the member has not said to me anything yet that would make me think that that's what we should be doing or to agree with him that that's what we should be doing. I get lots of calls and people talking to me about the fact that we should be electricity self-sufficient.

This isn't built on any particular sector. This is actually to look at how we can be energy self-sufficient in the province of British Columbia. So the amendment that the member brings forward is not needed because it's already taken care of in the act. I explained to the member earlier that it's already there.

Subsection (2.3). I'll say it again. Subsection (2.3) says: "setting out the terms and conditions of the contract…." The one thing that I did neglect to tell the member is that the commission does not have to use this if it wishes not to. This is a part of the act, the amendment, to actually streamline how the commission operates, not to interfere with how the commission operates.

I mean, we get information from people that work on the commission that they would like to see some streamlining. I know streamlining and moving into the new world is something the NDP doesn't care about. We do. We actually like to see people use their time productively. If the commission has the utility come before it and say: "Here are the terms, the conditions, the prices.…" It may be a cap. It may be a range. It may be different rates for different production of electricity. The commission has the opportunity to say: "No, I don't want to do that. I actually want to review every one of those EPAs individually." So it's entirely up to the commission.

We've given a lot of ability to the commission to actually review these in totally different ways, to streamline it. I think that would make sense. I can't imagine why the NDP wouldn't want to streamline some of this and still maintain the prices.

The amendments say that price is still a huge part of this, but what they have to deal with along with price are the environmental concerns in the province of British Columbia, and those kinds of things. There's nothing wrong with that — nothing at all.

So the amendment is not needed. It's already there in the act. It's already contemplated in the act. The sections lay it out. In fact, the commission would not approve and has never approved a project that is way out of balance. We know that. Even when the NDP were in power, when they were constantly giving direction to the commission to exempt different projects…. Then the commission doesn't have the authority. But in here, the commission has the authority to accept from the utility the terms, conditions, the prices — all of those kind of things that might surround a call for electricity — and say: "Yes, if you actually come in with your EPAs that meet those terms and conditions and prices, you're okay to award an energy purchase agreement."

That's called streamlining. There's nothing wrong with that, but I want to say, again, that the commission doesn't have to do that if it doesn't want to. It can actually stay and do it the way they've always done it. First the utility has to come to the commission and make the pitch. They have to back it up that they need electricity.

It's certainly not a secret that we need electricity in the province of British Columbia. Those are not my numbers. B.C. Hydro came forward in their integrated electricity plan — a Crown corporation. Certainly, I didn't tell them how to write that IEP. They wrote it. They said that in the next 20 to 25 years we need 30,000 gigawatt hours of electricity — new incremental supply for growth that's taking place in British Columbia.

They came forward with that. They didn't just release that. They went to the commission. A quasi-judicial body reviewed that IEP. In fact, I think they asked some 3,000 questions about it, and the Crown actually had to answer those questions. The BCUC approved it — totally arm's length from government. It said: "Yes, we need that." I think it's incumbent now on government to say: "Well, if it's 30,000 gigawatt hours, we better figure out how we're going to get it."

Now, if the member is comfortable, and I guess he is, with acquiring that new incremental supply, as we move forward for another 20, 25 years, from the United States of America, from other jurisdictions, from Alberta and who knows where else, he can go ahead and do that. He can sell it to the public. He can say to the public: "We think that we should be dependent on another jurisdiction for up to 30 percent or 40 percent or 50 percent of our electricity going into the future." Or you can actually start sticking up for British Columbia, like we do, and say: "You know, there are entrepreneurs in British Columbia. There are people in British Columbia. There are Crowns in British Columbia — Columbia Power Corporation. B.C. Hydro has the ability to go out and build new generation."

There are all of those kinds of things that could happen in British Columbia that provide jobs and provide security for the province of British Columbia in electricity supply, which we enjoyed through the '60s and '70s and '80s.

What's wrong with that? I can't see anything wrong with it. Why would you want to spend, in today's world, $300 million in the United States and Alberta for electricity that we consume here today if we can actually generate it ourselves and sell some of that back into the market instead of having to buy it off the market?

We can have an argument about market rates and all that. They are volatile, and they change. I know that the member tries to use average market rates. I appreciate that, but they don't always stay at that. And you know, other jurisdictions are growing too.

In fact, I understand that a lot of the pension funds are buying into things that are happening just south of the border with generation of electricity, with billions

of dollars of expansion. I for one think we ought to be able to build that here in British Columbia.

This act allows that to happen, and the commission has every right under this part to actually streamline how they do things or to stick with the old way of doing things. They have the control, because they are there to represent the ratepayers of the province of British Columbia, to make sure that they're meeting their needs in the best way possible.

I don't agree with the amendment. We can deal with it in a hurry. We don't need the amendment. It's already there. Member, we already put it in the bill before you brought the amendment forward. I appreciate that you brought the amendment forward and that you bring forward the issue you're talking about — excessive. The commission already has that ability and, under sections of this, has the ability to say yes or no to those.

J. Horgan: Again, the minister simplifies a complex debate and, therefore, is maybe taking the public and those in the gallery here on a course that I'm going to have to now correct. That's unfortunate, because we were going to be moving through this fairly quickly this morning.

For the minister to characterize the position of the opposition as not recognizing the need for new energy supply is not correct. Everyone understands that we need new energy supply. We've always needed new energy supply. In the 1990s new energy supply did come on stream. The minister knows that. Some of it was natural gas–fired, which at the time was acceptable and was happening all across North America.

We pull out of the ground a significant amount of natural gas. We distribute that throughout North America, and it is burned to generate electricity in many, many jurisdictions. If it's against his ethic to burn natural gas, then perhaps we might not want to bring it out of the ground and sell it to other people. When he comes up and says that Elk Falls — 300 megawatts of new energy supply in the 1990s — was somehow misguided and wrong, I think I would beg to differ with that.

I also feel that the Keenleyside power plant, the Brilliant expansion in the southeast, upgrades at Stave Falls, Seven Mile, and on and on the list goes…. The minister is aware of that. To characterize the 1990s as a time of no growth is not correct. To characterize the opposition as being opposed to finding new sources of energy is not correct.

Our issue is with a directive to the Crown, to the utility, that they cannot go forth and generate new sources of supply by way of micro-hydro, by way of alternative energy supplies. That's the direction from the 2002 energy plan as I read it. Certainly, based on the complete absence of any proposals being put forward by B.C. Hydro, I would assume they are taking that direction to heart, and we're leaving the field completely open to the private sector.

The minister knows that I support a mix of public and private. We can have a debate. We have a debate internally on that issue, and I'm certain the members on the other side have a debate internally on that issue. For those in the gallery, for those at home watching, they want balance; they want flexibility. Ultimately, they want the Crown corporation, which has served British Columbians for generations, to do what it can to keep costs down, to do what it can to generate new sources of supply in a clean and green and environmentally conscious way. Everybody wants that, Minister. It's not an us-and-them issue.

Where we divide, again, is on this section in particular — referring back to the directive to the commission, when this bill passes — in the act that says that we shall be self-sufficient by 2016. I then go to new energy contracts that come forward in 2015 to meet that 2016 date. Where's our negotiating ability at that time? Where's the protection for the public? What will the commission say or do in 2015 if it doesn't have some point to go to in the act to say, with these contracts, whether the terms and conditions were arrived at through consensus, negotiation and compromise, as the minister suggests?

Where is the public comfort that least-cost energy supply is going to be a higher priority than just meeting the objective of self-sufficiency by a certain date? That's the problem with this policy, Minister, and I'm not the only person in B.C. who feels that way. I'm not the only person in this Legislature who feels that way.

It strikes me that for the minister to say, "We're in favour of this, and they're against that," is just not the appropriate way to proceed with this debate. I know we're going to be doing that from now until the election, and I guess that's the way it's going to go. We have a significant difference of opinion on how best to meet our energy targets into the future.

Where we do agree is on conservation. We've talked about that. We patted each other on the back. There's consensus. We are one on the question of enhancing our conservation capacity at B.C. Hydro. But why not allow B.C. Hydro to get into the game?

Why not put into that marketplace a competitive player who has experience in electricity generation, understands the market, knows the landscape, knows when they need power or when they don't need power? Why wouldn't you want to see the utility playing the market in the interest of its ratepayers, not just in the spot market but on generating new sources of energy? Why wouldn't you let B.C. Hydro build micro-hydro in appropriate locations to provide power at appropriate times? High value, useful to the utility and certainly acceptable to the commission.

My concern and the rationale for this amendment are quite simple. It's specifically to do with what will be part 3, section 13, of this bill — which will become section 64 of the Utilities Commission Act — which is to ensure that when we get closer to the self-sufficiency date that the minister has now prescribed in legislation, the commission has an overriding requirement to ensure that any new contracts coming forward in that final year or subsequent years, which is a requirement of that section of the act….

It says as follows: "…by the 2016 calendar year, achieve electricity self-sufficiency according to the prescribed criteria" — which is critical water years, if I recollect what the minister said yesterday — "and maintain, according to the prescribed criteria, electricity self-sufficiency in each calendar year after achieving it."

So every year after 2017, the imperative self-sufficiency may well override least-cost options for ratepayers. By including this amendment, by this one simple line, "unless the commission determines that the price of the electricity to be supplied under the contract is excessive," I believe it protects ratepayers. It protects the utility, B.C. Hydro, from having to purchase high-priced power to meet the self-sufficiency objective.

I think the public would be quite satisfied to know that in this place, at least on this day, there was unanimity that the ratepayer should be paramount in these objectives. It shouldn't be independent power producers; it shouldn't be perpetuating government policy, whether it be ideologically driven or not.

The priority for B.C. Hydro, the priority for the commission, should be to ensure that costs remain low for British Columbians. That's why we have a public utility. That's why we've been served well by it for generations. That's why we should continue to do that into the future.

I don't know if the minister might be reading more into this than he has to, but I see this as a golden opportunity for compromise in the Legislature. It's an amendment brought forward thoughtfully in consultation with stakeholders.

We've talked to interveners about this. They believe that it's a good course of action. It's not just me saying this. There's a range of people that frequent the Utilities Commission who believe this is a reasonable amendment to ensure that in outgoing years, as we get closer to the date that the minister has selected for self-sufficiency, ratepayers will be protected — not an unreasonable thing to do. Not an unreasonable thing for legislators to do.

From all across British Columbia we're assembled here, 79 of us coming from different communities and different perspectives. Each and every one of us, virtually, with the exception of those in the southeast of B.C. and maybe a few in Prince Rupert and New Westminster, is provided our electricity by B.C. Hydro. By picking a date in the future to become self-sufficient when we know there are ups and downs in the marketplace, there are mill closures…. I think 30 mills have closed in British Columbia in the past 18 months. That's a big hit on our energy demand, I would think — a significant hit on our energy demand.

When Hydro brings forward its integrated energy plans, or its IEPs, they're taking forecasts as they assume industrial growth is going to continue in a certain direction. Well, we've had a downturn in the forest sector. We had a strike in the forest sector before that, which shut down our pulping capacity, which is a big driver of energy use in British Columbia.

It goes up and down year after year. It's complicated. The minister knows it's complicated. So to stand and say simply, "Oh well, you're against this, and you don't want to generate power in B.C.," is just not correct. Of course we want to generate power in B.C. We would prefer to see it being public power.

Public power has served us well. We talked about this at great length at second reading, and the minister has had it ringing in his ears for at least a few days on this particular bill. If public power is important to those on that side of the House, if ratepayers have a high priority in the consciousness of the government side, why wouldn't they support an amendment that says that contracts can be rejected if the price is excessive? It seems to me a reasonable thing to do.

Hon. R. Neufeld: Yeah, it is. The commission has the authority to do that already with these amendments. That's what I'm trying to tell the member. We don't need a convoluted amendment from the opposition at this present time to take care of what's already in the act and already in the amendments that we're putting forward now.

The commission has the ability to reject it. If the terms and conditions are not in the interest of the ratepayers of the province of British Columbia, yes, they can turn it down. I think that's pretty well known. I'm not sure whether the opposition doesn't know that or doesn't want to read it into this.

What this is, is streamlining. I explained the process of streamlining now twice. I have explained it twice that, actually, the commission doesn't have to do the streamlining if they don't want to. This enables them to do it. I can't imagine that the member or the NDP would want to not streamline some processes that we have, instead of stringing them out forever. This has the ability of actually looking at all the things that the member talked about — the prices, all of those kinds of things.

What we're giving to the commission is enabling them to say: "Yes, we can do it up front. Yes, utility, you can come forward to us with the terms and conditions, which include the prices. If we think that's in the best interests of the ratepayers, we can say to you, 'Yes, go ahead and do your energy purchase agreements under those terms and conditions and prices.'"

Or they can say: "No, we don't agree with that. We think some of the conditions and terms or prices that you've put forward are the wrong ones. What we want to do is actually review every one of them." Nothing wrong with that. It gives the commission some latitude to actually look at all of those kind of things, and they're there already, Member.

I mean, it's an interesting discussion that we have. There's a huge difference of opinion. Actually, the difference is that on that side of the House, the NDP thinks everything has to be built publicly. Government knows best. A while ago you were talking about B.C. Hydro being excessive in things. So what you're saying is that B.C. Hydro should build it all.

I don't think B.C. Hydro has to build it all. I think there's opportunity here to use the entrepreneurship

and the ability of other people to build some smaller projects. B.C. Hydro's expertise is not building two- and three-megawatt run-of-the-river plants or those kinds of plants across the province.

There could be a whole host of different things. Their expertise is in large projects. You know, the member says that they're curtailed from actually doing anything. Well, that's wrong.

I want to remind the member that they're actually in the process now of installing another 500-megawatt turbine in Revelstoke — 500 megawatts. They're actually in the process of talking about another 500-megawatt turbine in Revelstoke. They're actually contemplating two more 500-megawatt turbines in Mica. They're now working at W.A.C. Bennett and Peace Canyon dams across the whole province of British Columbia, actually increasing the generation from those projects that were built a long time ago with new technology. They're not curtailed from doing that.

In fact, they're explicitly told to do that. That wasn't so in the '90s, if we want to get back to the '90s. The member talked about the '90s.

Hon. R. Neufeld: Across the way they say they do. Be careful what you wish for.

In the '90s Campbell River…. The member talks about Campbell River — the largest project in British Columbia that's an IPP ever undertaken. That was undertaken in the 1990s. It's a natural gas–fired plant on Vancouver Island. Remember, this is an IPP.

I go back to the '90s, and I can find dozens of comments — from ministers responsible for B.C. Hydro to Premiers from the 1990s — from the NDP era that all said: "There's nothing wrong with IPPs. We should be building them in the province. This is good for the province of British Columbia."

In fact, the present House Leader for the NDP is on record in many places saying that it's good for the province to have independent power producers build generation in British Columbia. It came from Glen Clark. It came from Ujjal Dosanjh. It came from the member for Yale-Lillooet. On and on and on.

In fact, even my critic, the member that's questioning independent power producers now, is on the record saying it at different times. Maybe he forgets that he's in favour of IPPs, that he's in favour of independent power production — until we get in the House, where he wants to try and make some political hay on: "Oh, we're not in favour of it. It just has to be public power. You can't actually use any of the private power."

What is so contrary in that whole argument is the fact that that member will talk…. The NDP have endorsed it. I guess they have a policy about this. It would be interesting to see their energy policy, because it changes day to day. They want to actually be totally dependent on the market for, it could be, up to 50 percent of our electricity needs in the future — the market, folks.

To those out here listening, the market is in the U.S. and a little bit in Alberta. Both those jurisdictions are building generation as we speak today, too, that costs about the same as what it does in British Columbia to build. But those are independent. That's private power, privately developed power, in those jurisdictions, which the NDP advocate that we should actually depend on for our electricity.

I can only take from that that you actually want to depend on privately developed power, independent power producers in other jurisdictions, to meet our needs into the future, but you're totally against having any of that generation happen in the province of British Columbia. You would rather spend $300 million or $400 million a year buying electricity off the market from the U.S. or Alberta than actually spend that money in British Columbia.

I don't know how that socialist theory works, but it's interesting. It's really interesting to me to listen to that argument.

You know, Member, when you talk about…. We set a date in here — 2016 — to be energy self-sufficient so that they can actually plan for that. I told the member how we arrived at 2016 — through the integrated electricity plan; through B.C. Hydro; through studies; through studies by the B.C. Utilities Commission, an independent quasi-judicial body — and that 2016 was chosen as the day that could actually be met.

So there's a target for them to go to. The member says: "We shouldn't have a target. We shouldn't have a date. It's crazy to have a date." Well, that's a very quick way of not meeting the target. The target to be first in a game is actually to win, to cross the finish line at a certain time.

We actually want the Crown, the utilities in the province, to be at that finishing line in 2016 so that we're self-sufficient, so that we have enough electricity in the province to actually meet our needs in British Columbia — still trade on the market, still buy and sell off the market, still do those kinds of things.

The development of those projects in the province wouldn't go ahead — the commission wouldn't allow it to go ahead — if those costs were exorbitant. It wouldn't. But it's within the realm of what it costs today to build that new generation, regardless of who's doing it — whether the public purse is doing it or private developers. All we're saying is that we believe in the private developers to actually be able to go out there and do those kinds of things across British Columbia for the benefit of us here in the province.

The member talked about mill closures. Yes, unfortunately, there are mill closures. There are some negative things happening in the forest industry. None of us relish the idea that that's great. I don't think so. But we certainly can't plan electricity generation by saying: "Oh, I guess all of those mills are going to stay closed forever." I think the member was referring to that a bit. We can't do that.

We actually have to make sure that we have electricity. We'll always be able to buy and sell off the market.

We're in an integrated market. We can do that. So I have full confidence in the commission. Maybe unlike the opposition, I have full confidence in B.C. Hydro and in the utilities to actually do what's in the best interests of British Columbians moving forward.

There are two checks and balances there. The utilities have to plan it, and then the B.C. Utilities Commission gets an opportunity to review that and say yes or no. It's a great system. It works good.

All this section does is allow the commission to say there's a different way we can go about it so that we don't have to do things twice, so that we can actually look at them in a reasonable fashion. So I do have full confidence in the commission.

The member talks a little bit about Campbell River. You know, I would caution the member. Campbell River, as I said, is an independent power producer. It's an American company that built a plant in British Columbia and burns natural gas. The contract that was signed by the NDP at the time was that the people of the province of British Columbia — the ratepayers, B.C. Hydro — would have to guarantee the fuel supply, would actually have to guarantee the space in the pipeline, would actually have to guarantee to the company that they will take X amount of electricity. If Hydro doesn't need it and they curtail that plant, they still have to pay that plant for that electricity. That's just kind of a high level of the contract.

Maybe that's why the members opposite don't like IPPs anymore. I don't know. But they're certainly on record — in radio talk shows, in Hansard, all over the place — that they approve of IPPs. That was in the '90s. This is a little bit later, and today it seems to be in vogue to oppose them. I appreciate that. There is a huge difference between that side of the House and this side of the House as to how we should get new power.

Hydro is not curtailed in the development of electricity from its present plants, and they're investigating Site C today. But let me tell you, when the member says that if we haven't reached self-sufficiency by 2015, my goodness, those prices are going to jump enormously…. Well, let me tell you, by 2015 if we aren't really close to self-sufficiency, we're in trouble.

You can't build a plant, you can't go through all the processes that the member and I talk about here through the B.C. Utilities Commission, you can't go through all those processes, and you can't go through all the environmental processes and all the community processes you have to go through and actually build a plant and get it on stream in a year. That doesn't happen. It just doesn't happen.

You have to start planning for those things long before that magic date of 2016 happens. That's what we want to actually have happen. That's the difference — the huge difference. We actually want to have enough electricity in the province of British Columbia for our own use and well into the future for future British Columbians.

This act allows everything to take place. This section is a well-worded section. The amendment that the member put forward is not needed in this section at all because it's already there. In the interest of the ratepayers in the province of British Columbia, the commission will make those decisions.

So excessive prices would be, I would assume, without telling the commissioner, because I don't do that…. I don't tell the commissioner unless something actually happens, and this act allows that to happen. You can actually send in an order that tells the commission what to do. But I don't tell the commissioner to look at all those contracts. They make those decisions themselves with all the information they have, and I think they do a darn good job. We should depend on them and know that they will continue to do that.

J. Horgan: I don't know. I guess the minister wasn't listening. I said not 20 minutes ago that I believe there needs to be a mix of public and private in the energy sector. So I don't know if that's being on the record or not. Those who were here heard it.

J. Horgan: No, it's not the first time I've said it. I say it all the time. I'm Mr. Middle-of-the Road, hon. Chair. You know that. I get tremendous support from my middle-of-the-road friends on the other side when I say that.

We can go around and around on this. I think we need to come to a vote on the question.

Certainly, we on this side of the House want to ensure that energy costs are not excessive now and in the future, to protect ratepayers, to protect the people who vote for us and send us here to do their business — the people who anticipate that when we come here, we're working on both sides.

Mr. Middle-of-the-Road, myself, my friend from Peace River South — I know that he hates it when I associate myself with him because it brings him down in the eyes of his more zealous colleagues…. Those of us in this place who come here to try and do business in the interest of all British Columbians don't think that this is a problem to say: "Let's put one more caveat on this section of the act to ensure that prices remain low." What better way than to say in the legislation — all of us assembled here, laymen and women from around B.C., not experts in regulatory processes, not experts in energy policy but ordinary citizens elected by our peers to come here and speak for them….

I came here today after consultation with people who attend the commission regularly, after consultation with people who watch the energy market very closely. I said to those individuals and groups, "Would it be appropriate to put this amendment forward?" and they said that it absolutely would be.

With the support of those who were paying attention, with the support of the people in my community and those middle-of-the-road members on the other side — I know there are four or five of them — I think it might

be appropriate that we put this question to a vote, hon. Chair, and just see how we go.

J. Horgan: This section, again for those who don't have the benefit of this weighty tome, the actual Utilities Commission Act…. We're now amending section 125.1, if anyone's following on their computer. In this section it's the "Minister's regulations."

I'm just wondering if the minister could explain. In the existing act it says "regulations." That refers to the Lieutenant-Governor-in-Council, which, as we talked about yesterday, is the cabinet, of course. I'm wondering if the minister could explain why we've added his, in this case, or future ministers as the "Minister's regulations."

Hon. R. Neufeld: The regulations actually will speak to the energy plan. It would make sense that the minister responsible for Energy be responsible for this section.

J. Horgan: Well, there is some concern that these amendments again give additional and potentially extraordinary powers to the minister responsible for B.C. Hydro. The Utilities Commission Act is the responsibility of the Attorney General, and yet it's the Minister of Energy who's prescribing regulations.

In those regulations, section 2, "The minister may make regulations respecting the government's energy objectives, as defined in section 1, including, without limitation…" the following…. It goes on from there for a number of clauses.

My concern is that when we're doing such legislation as this, we as legislators don't have a clear understanding of what those regulations might be. They'll come in the future. They will come in waves. They will come without notice to this place, and you have to be paying attention to pick up on it.

When will the minister be completing these regulations as outlined in this section? Can he give me an indication? Again, this is an opportunity for the minister to look forward. I know that he likes to do that, and I appreciate that, sincerely, when I say that.

My concern is that…. By the amendments that we've been doing to this point in time — getting to this stage, the very last few pages of the bill — we've been saying, in essence, that the government's energy policy is now to be the overriding preoccupation of the commission when it's setting rates, when it's deliberating on contracts, when it's reviewing plans for the transmission authority, plans from B.C. Hydro and others as we get to the back of the act.

How does the public get comfort that this is not going to be just a moving target pending on the whims of the minister? I'm not suggesting that the minister is whimsical when I say that, but again, the Queen sends us here as her loyal opposition to shine light on these issues. I'm wondering if the minister could give some comfort in the substance of this debate, as to what authority he believes the minister now has by setting out regulations prescribing government policy — which, in essence, is ideological, party-driven policy rather than in the interest of ratepayers.

Hon. R. Neufeld: I appreciate the question. I think yesterday we spoke a number of times that when those regulations become available that I'll make sure, as I always have since the member has been my critic….

I've always been forthcoming and have had staff actually brief the member on legislation and, in fact, estimates and those kinds of things. I will not stop that with the regulations. I committed to the member that when the regulations come out, we will make sure, once they're adopted by cabinet, obviously, that he's aware of it and that the opposition is aware of it.

It's to deal with the detail. We now have an energy plan in the province of British Columbia. In fact, we've had two energy plans — both brought forward by me as the minister responsible. This government is proud of both those energy plans. What we want to do is have the Crowns, B.C. Hydro, actually respect those

The commission has to know, also, what kind of direction they should follow, what kind of policy. What we're trying to do is put in this act the basic policy. The member, I know, has been around long enough to know that there are all kinds of nuances that come from that, depending on who's interpreting one word. What we need to do is make sure that the plan is followed and that the minister responsible for B.C. Hydro and the Power Authority Act has the ability to make some of those regulations so it doesn't get off base and off line. That's what this section actually allows us to do.

J. Horgan: I do appreciate the minister's openness and the amount of access I have to his very capable staff. I've appreciated that right from the beginning of our relationship as adversaries in this place. For those who are watching or here in the gallery today, this is an adversarial relationship, but the essence of what we're trying to do here on both sides of the House — and unfortunately, we weren't able to achieve a positive amendment to the bill — is try and improve it, as we see it, to meet the needs of ratepayers.

I know that the minister and his staff are always at my disposal for discussions or questions on these issues. I'm grateful for that. But not everybody has that access. One of the privileges of being in this place is that I'm able to steep myself in this stuff, not just through access to the public servants, who do such good work every day for the people in this place, but also through talking to people who are participating as interveners, people who have axes to grind, as it were, people who are unhappy with some of the decisions that the commission makes or that B.C. Hydro makes.

That's the essence of this place. Most days it's adversarial, but every now and again the minister and I nod at each other. I think the public should know that it's not always beating each other up. That's in the interest of public policy development.

I'll just continue. We're almost through this, Minister. You can take a breath before we start the next bill. I'd like to go to the section in section 17 which will be the new 125.2, "Adoption of reliability standards, rules or codes." There are a number outlined here — standard-making bodies such as "(a) the North American Electricity Reliability Corporation, (b) the Western Electricity Coordinating Council, and (c) a prescribed standard-making body."

Hon. R. Neufeld: The reliability standard is actually something that B.C. Hydro and B.C. Transmission have dealt with for decades.

There's a reliability standard set by the North American Electricity Reliability Corporation, the Western Electricity Coordinating Council. What we're saying is that we want to actually make sure that our system reflects what is in place in the Pacific Northwest in the areas that we specifically trade in. We should make sure that our system is compatible so that we can continue to do the trade and continue to sell and buy in the market south of the border.

What we've said, to be sure that we still remain in control, is subsection (2) of 125.2: "…the commission has exclusive jurisdiction to determine whether a reliability standard is in the public interest and should be adopted in British Columbia."

What we're saying to the commission is: "We believe that you have the ability to make sure that what happens here to become…." I'm not saying we're not in sync with the North American Electric Reliability standards, but to make sure, as we move forward in the future, that we are. The commission has the oversight to actually look at that and make sure that we remain as masters of our own house, of our own transmission system.

J. Horgan: Well, we're at the end of the bill. We're on section 21, page 17. The section is called "Commencement," and it makes reference to when the provisions of the act will commence, at royal assent. It particularly makes reference to section 11, the rate rebalancing component, which we voted unanimously in support of yesterday.

I want to conclude my remarks on this bill by highlighting just one more time for the record our concerns and those areas which we support. We do support the decision by the government to introduce legislation with respect to the rate rebalancing component, and as I said, we supported that unanimously yesterday.

We did submit an amendment in that section that would have provided for a lifeline rate which would have been a new tariff for electricity consumers in British Columbia. It would have provided an opportunity to protect low-income seniors, particularly those who are hardest hit by the increasing costs of energy in our currently prosperous economy, by trying to find a way that we can protect and buffer those residents, those citizens of B.C., from the negative impacts of our prosperity.

As costs go up, as profits are made and people do well, those at the lower end of the socioeconomic strata quite often are captured in this, and in a negative way. We believe that the lifeline rate would be an appropriate way for government to intervene through the commission to ensure that those that need the protection most are afforded it. So I was disappointed that the lifeline rate was not supported by government.

We've talked at length about the smart meters, the standing offer, and the energy self-sufficiency components of the bill, where we took issue on this side of the House with government. There are significant issues there, and I'm not going to rehash those. Those who are interested in what was going on in that debate can review Hansard. They'll see that our primary concern with respect to smart meters was not the implementation of the

technology. It was not seeing that as a demand-side management technique to reduce consumption, to encourage ratepayers to not use as much electricity as they're using today.

It's not the principle that we have trouble with; it's the implementation. The implementation, as I understand it, as I read this, is to see these smart meters proceed….

J. Horgan: It's on the commencement section, yes. That's what I'm speaking to, section 11 and the rate rebalancing. I'm right on target, Minister. Fear not.

Those issues were raised in debate and are profound concerns for us on this side of the House.

The last amendment, which we just defeated…. For those who have been watching or paying attention this morning, it was the view of the opposition that this was an opportunity, while we're debating the Utilities Commission Act, to provide certainty to residents that excessive costs of new contracts, which are being primarily supplied by independent power producers, were held in check by the commission.

With that, we will be voting against this bill. That was fairly clear at second reading. I know that my good friend, my dear friend, from Peace River South, who I constantly draw toward me in the interest of spreading joy in this place, will recognize that we will be voting against the bill for the reasons I've outlined.

We do support those elements that bring costs down for residents. We do support new energy supply in British Columbia, but we prefer to see a mix on the marketplace. We prefer to see B.C. Hydro back in the game, looking at micro-hydro as an opportunity for new energy supply developed by the Crown, not exclusively by independent power producers.

Hon. R. Neufeld: I know — on section 21, the commencement — we outlined all the things that this government has done to actually deal with people who may find themselves in a position where they're on a fixed income or something that allows them not to meet some of the lowest hydro rates in North America. We talked about the SAFER grant. We talked about removing income tax to zero on people below $15,000 a year in revenue, something that the NDP had in place prior to that. We talked at length about those kinds of things.

We talked about smart meters, and I'm glad to see that the member is starting to realize that there is some technology out there that can start helping us meet our demand-side management targets of 50 percent. I'm glad to see that they're talking a little bit in favour of conserving, instead of just continuing to buy off the market.

I know that self-sufficiency is an issue, and the member brings it up again. I think the public says it would be pretty smart to actually be able to be self-sufficient in the province of British Columbia and that we should move forward with that.

We talked at length, in the last amendment, about the ability of the commission to review costs associated with new projects. The member brought up Campbell River. It was interesting to me that he would bring up Campbell River in the context that he believes that the commission should review those kinds of contracts really closely — should actually pick them apart, should actually make sure that they're in the best interests of the public, all of those kinds of things.

He talked about that an awful lot. But lo and behold, when we look at the Campbell River deal, it's the largest IPP ever built in the province of British Columbia — 265 megawatts of natural gas–fired power where the province, the ratepayers, take on the expensive pipeline space. That's a yearly cost of millions of dollars. They take on the cost for the natural gas, and that's an awful lot. That's the biggest part of the contract. Actually, if they curtail Campbell River for any length of time, they have to pay the proponent for electricity that isn't generated. They felt so secure in that deal that they exempted it from B.C. Utilities Commission oversight.

Public, when you hear the NDP talk about, "We want to have the commission look at excessive rates and to be there for the public," that's today. It wasn't yesterday, when they were in government, because what they did was just direct. It's similar to directing B.C. Hydro to go to Pakistan to build a plant in Pakistan instead of in the province of British Columbia. That happened under the NDP's reign also.

Those two things, I think, stick in everyone's mind when we listen to people that think they want to use the Utilities Commission to its best advantage. We do, and this bill allows them to look at the energy plan, to say, "This is where British Columbia wants to go. Sustainability is smart. Smart meters are smart" — to look at those kinds of things, review all those costs as we move forward.

I think it's a great bill and one that everyone on this side of the House — and I know, in their hearts, on that side of the House — actually supports.

Hon. R. Neufeld: I move that the committee rise and report the bill complete without amendment.

Bill 15, Utilities Commission Amendment Act, 2008, reported complete without amendment, read a third time on the following division and passed:

Hon. C. Richmond: I call second reading of Bill 16, intituled Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act — hon. Minister of Energy, Mines and Petroleum Resources.

Hon. R. Neufeld: I move that the Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act be read a second time now.

I am pleased to present the Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act. British Columbia is a national leader in climate action and clean energy. We are taking positive, practical steps to reduce our greenhouse gas emissions and decrease our reliance on non-renewable fuels.

This legislation directly addresses a significant source of greenhouse gas emissions in British Columbia — transportation fuels. It creates a regulatory framework that will reduce the carbon emissions intensity of transportation fuels to meet our reduction target of 10 percent by 2020. It will enable the province to set requirements for the amount of renewable fuel in B.C.'s diesel fuel and gasoline blends.

This will enable us to meet the B.C. energy plan commitment of having an average of 5 percent of renewable fuel provincially by 2010. It meets our commitment to adopt a low-carbon fuel standard similar to California's.

This legislation uses market-based mechanisms to ensure that it will be responsive to consumer needs and cost effective. It uses performance-based standards with averaging, crediting and transferring to facilitate implementation and compliance. The Greenhouse Gas Reduction Act will promote a diverse fuel supply that includes renewable and low-carbon fuels.

This legislation will help to establish a sustainable market for renewable fuels and low-carbon fuels in our province and create new economic opportunities at the same time as reducing greenhouse gas emissions from transportation and supporting our important climate action goals.

J. Horgan: It's just a delight to be on my feet again here at second reading of Bill 16, which is the low-carbon fuel standard bill, the Renewable and Low Carbon Fuel Requirements Act.

I have tabled with the Clerks an amendment, or a motion, and I'm just getting a ruling on that. So I'll continue on with my remarks here at second reading in the hope that the Clerks can advise us on whether my motion is in fact in order.

I will be the designated speaker for Bill 16, so that the Speaker is aware of that. I want to begin my remarks by saying this is enabling legislation. For that reason, I think that I can have some comfort that the debate on this issue will be thoughtful. I'm advised it will be — I'm hopeful — useful to the minister and the government.

One of the challenges we have as a community with low-carbon fuel standards is that it, in essence, perpetuates the fossil fuel economy. It just provides an opportunity to reduce the amount used at any one time. The theory goes that by reducing the amount of carbon produced by the burning of the fuel, you're somehow achieving a savings along the road. But the science on this matter, hon. Chair, is shifting.

What we thought in the mid-1990s — even late 1990s, even the turn of this century — about alternative fuels, biofuels, ethanol and so on…. The science on these questions is starting to shift. I know that the minister will know this. He gets briefed regularly by his very capable staff on these matters.

Just recently the World Wildlife Federation issued a very substantive report following on the OECD. It's called Plugged in: the End of the Oil Age. It's a very thick and useful document. If members of the Legislature haven't had an opportunity to look at it, I know they

can pick it up in the Legislative Library, and I commend it to their attention as we debate this bill at second reading.

Again, one of the things that we see in the community, I know here in the south Island, Columbia Fuels, provider of home heating oil for residents in my community of Malahat–Juan de Fuca and across the south Island and in fact, across the Island, have a big push on for biodiesel, biofuels to reduce greenhouse gas impacts on using fossil fuels. The challenge, however, is that we're finding that in some instances….

Deputy Speaker: The motion is in order. So we will now debate the amendment.

J. Horgan: So I am again on my feet, and for those who are trying to keep track at home, what I've just done is introduce a motion to suspend debate on this bill until such time as a committee of the House, all members, both sides of the House, can sit and review the subject matter, to ensure that it is in the public interest.

This is an appropriate thing to do, I believe, on an issue such as biofuels and alternative fuel sources. I made reference to food security as one of the challenges. What we've seen, and what the scientific community is telling us, is that ethanol production primarily from corn here in North America and across the Peace has led to the creation of food for fuel. It has displaced other food sources because there's a dollar to be made selling corn for ethanol production. That displaces other food sources and pushes up the cost of wheat, soy and other products, which has a negative impact not just on consumers but also has a negative environmental impact.

The other challenge we have is in terms of sustainability when it comes to this matter. Is it sustainable to use greenhouse gas–producing fertilizers to rapidly grow food products for energy use? This is a significant debate, one that we can have in this place, but I think, more appropriately, it can be done at a committee where interested parties from across British Columbia and international experts…. There's no shortage of them on this matter. If we could find international experts to come to advise legislators here in this place about the needs of food security versus the needs for alternative fuel production….

As I say, it's not just me. The OECD and numerous periodicals have been writing about the challenges of food for fuel: Time magazine, New York Times — noted periodicals such as that. Just recently, B.C. Stats, an entity of the government of British Columbia, issued a report in January of 2008. Hon. Speaker, I'll read from it, if that's all right with you. Environmental Statistics is the heading, and the headline on the article from January is: "It Ain't Easy Being Green: Why Biofuels May Not Be the Answer."

Now, I pay a lot of attention to this stuff as the energy critic, and I know others do as well. Certainly, many of my colleagues do. My good friend from Saanich South is an avid watcher of these things. Emissions are profoundly important to him and the people in his community. So we watch these things quite closely to ensure that, as legislators, as people sent here to make decisions about issues such as these on behalf of the broader community, we're as informed as we can be.

I know, certainly in the Peace, that the notion of food for fuel may or may not be an acceptable debate to have in this Legislature. I think that it's an appropriate debate to have at a committee where we can work together in a non-partisan way — a bipartisan way, rather — to come to some answers for the broader public, because there is a divided community, whether it be the scientific community, the agricultural community and so on.

So this is a bill that…. Although I was pleased to see it when the minister tabled it, I looked at it carefully, and I looked at the enabling components of it, and it felt certainly to me and to those of us on this side of the House that this was an appropriate piece of legislation to be referring to the committee on legislative initiatives in the hope that we could have a fulsome debate and bring in experts from around the world and bring in our local experts from B.C. Stats, who, as I said, have produced this recent report.

It talks about the supposedly environmentally friendly alternatives to fossil fuels. The theory behind that, of course, is that there are benefits in reducing our greenhouse gas emissions from burning traditional fossil fuels. It's interesting to note that, in this bill, the only two fuels covered are diesel and gasoline. Marine fuel is not covered by this. Jet fuel is not covered by this. I don't know if we've….

J. Horgan: Exactly. The minister is quite right. One of my colleagues said he didn't want to be on that pilot project when they're testing biofuels on 747s.

But certainly marine fuels are a great contributor to greenhouse gases. B.C. Ferries, as I understand it, would be exempt from this. As a Crown when it wants to be a Crown, as a private company when it wants to be a private company, you would think that they would want to be on the vanguard here and provide some leadership with respect to alternative fuels. Again, it's an opportunity for us to have a broader discussion on these issues in committee, where we can have a free flow of ideas and exchange of views on the matter.

As I said, just from January, B.C. Stats has found that recent studies claim that previous research has underestimated the impacts of fertilizers. When you're growing food for fuel, your threshold for nitrous oxide and other harmful climate change–producing chemical fertilizers is not restricted. If you're growing food for consumption, there are levels of fertilizers and growth enhancers that you are not allowed to use, and that's a good thing.

When we move to massive food-for-fuel agriculture, what we see is that the emission savings or the carbon intensity of the process, the ratio of carbon produced to generate the product to reduce the carbon at the other end of the life cycle is not in balance. In fact, in some instances, according to the scientific community….

Again, I'm not an expert on this. I try to be as well read as I possibly can be. It's the contradiction in the literature that brings me to this place today, standing here on behalf of my constituents, urging this Legislature to support a motion to refer this bill — an important bill and one that we were welcoming when the minister tabled it. But as our in-boxes have started to fill with people who are very concerned about us embarking on an alternative fuel strategy over the next two to four years, that may well not be in the interests of our climate change objectives.

One of the challenges we've got in general about the government's climate change policies is that they are, by and large, being made in back rooms. Whenever you hear the backroom argument, it's implied that there are some nefarious aspects to that. That's not what I'm trying to do. What I'm saying, though, is the discussion….

R. Lee: I have a group of visitors from Jilin province in China. They are led by the vice-director of the foreign affairs office of Jilin province, Mr. Zhanwu Wang. The members include Dong Chen, the deputy chairman of Jilin City Committee of Chinese People's Political Consultative Conference; and Dahuo Chen, deputy mayor of Baishan City; Jianhua Lai, vice–secretary general of the government of Songyuan City; Xianglin Chen, division chief of the overseas Chinese affairs office of Jilin province; Yi Luan, director of the foreign affairs office of Tonghua City; Jianguo Zhang, director of the foreign affairs office of the Baicheng City. Welcome.

J. Horgan: I thank the member for that introduction. It gave me an opportunity to wet my whistle.

So I'll continue on. The debate in the scientific community, who are passionate about these greenhouse gas issues, is that there are mixed reviews. I'll read again from the B.C. Stats report from January with respect to the impact of fertilizers. I believe that's where I was at when the member took his feet.

The study claims that we are underestimating the impacts of fertilizer. It goes on and reports on the nitrous oxide emissions from biofuel production as calculated in what they call a carbon dioxide equivalent. Put more simply, what this report says is that the fertilizers used in the production of biofuels contribute as much or more to global warming as the amount saved by not using fossil fuels.

Again, B.C. Stats. has done this as a result of a broad literature search, reviewing all of the scientific data, and they've come to the conclusion that there are downsides to this biofuel initiative.

Now, that comes as a surprise, I think, to many people at home or those watching in this place today. We've had campaigns by producers of biofuels, producers of ethanol, extolling the virtues of these additives and the reductions to greenhouse gases as a result of using them for combustion and energy use. That's fair enough.

What we've discovered, probing a little bit deeper — peeling the onion, as it were — is that the life cycle of the carbon dioxide train or the greenhouse gas emission train is not as simple as just looking at the end result. As much as this is enabling legislation — and the minister has brought it forward with the best of intentions, I'm certain — it's not really up to the mark with respect to ensuring that all of us in this place and all British Columbians, in fact, have a clearer understanding of the pros and cons of biofuels and ethanol as alternatives to gasoline and diesel. So I believe that my motion to refer this bill to a committee of this Legislature is an appropriate one to discuss at this time.

I've mentioned three issues in the motion to refer. One was the question of food security. We've seen costs go through the roof. Wheat has never been so high. If you're growing wheat on the prairie, you probably couldn't be happier with that. If you're growing wheat in the Peace, you probably couldn't be happier with that.

What's the impact of high wheat prices on consumers across British Columbia and North America? More money out of your pocket. The prices, as I understand it, are artificially inflated because land is being displaced from agricultural production for food consumption to growing food for energy consumption. We need to have a clear understanding as legislators, before we approve or reject a bill such as this, that we're doing it in the best interests of the broader community.

As much as we need to do everything we can to reduce greenhouse gases, we want to ensure that by taking two steps forward that we're not taking three steps backward. That's why I would prefer to see a

little bit of transparency on the climate change file from the government on the other side, allowing more input from members on this side of the House and from broader community interests.

I know that the Climate Action Team has met with a number of British Columbians over the past number of weeks and months. I don't know who they are. Freedom-of-information requests have gone into the Climate Action Team for a request of their meetings, their minutes, what's going on, and what they are talking about. Nothing comes back. We get a lot of whiteout paper, a lot of section 12s and section 13s.

It's difficult for us on this side of the House and, in fact, for all British Columbians to have any confidence that these discussions and issues are being conducted in a transparent way.

Again, it's not just us on this side of the House. I have in front of me a letter dated April 4 to the Minister of Energy from the Privacy Commissioner, copied to me, expressing concern about the Freedom of Information and Privacy Act exemptions within this bill.

That speaks to the secrecy in my motion. This is a serious question. The Privacy Commissioner doesn't comment on every bill that comes before the House, but he has commented on Bill 16 and Bill 18, the two flagship pieces of legislation that we're dealing with in this session to address climate change.

We have a challenge here. We have a concern on this side of the House that not all members are getting equal access to information to service our communities and our constituencies. Not all members of this place are getting information so that we can go back to our peers, the people who sent us here, and explain in layman's terms just what the heck is going on with respect to climate change.

It's a profoundly important issue to people in my community. They want to know that I'm making decisions in their best interests and in the best interests of the planet. When it comes to Bill 16, when it comes to the Greenhouse Gas Reduction Act with respect to low-carbon fuel standards, I'm not confident today, as the Energy critic, that I can give them a reasonable explanation as to why we should proceed down the road toward energy additives such as ethanol and biofuels.

We're going to hear over the course of this debate, I'm sure, pros and cons on both sides. I know my colleague for Esquimalt-Metchosin has some very strong views on biofuels. She's a strong advocate for biodiesel here in our community, and I listen to her very carefully.

In fact, she has been such an advocate that she's won me over to her position without difficulty at all.

Then again, I read Stats B.C., I read the OECD reports, I read the report by the World Wildlife Federation, and I'm concerned. What's the deal here? Who's right? Who's wrong? If we can't decide…. If I can't say in good conscience to this Legislature and to my colleagues in the official opposition on behalf of Her Majesty that this is the right way to go, then I would think that my motion is an appropriate one.

I don't do it frivolously. As much as I enjoy standing in this place talking about issues of importance, issues of public policy, this is a profound issue that will set us down a course that we may well not want to follow. It's with that sincerity that I move the motion.

Secrecy, food security, and the third issue of concern to me is sustainability. One of the challenges we have, as we chase our tail on climate change…. We're well behind the eight ball.

You'll know, hon. Speaker. You were a member of this place back in 2000. I was not. There was a greenhouse gas plan, a climate change plan, put forward by the government of the day in 2000. It was exhaustive. It was following shortly on the heels of the Kyoto protocol.

Everyone now knows the Kyoto protocol. It happens to be just a city in Japan, but it has taken on mythic proportions. A leader of another Liberal Party named their dog Kyoto. That's how profound the shift has been toward trying to get an understanding of the importance of climate change.

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

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

Hon. M. Coell: I promised to get as much information as I could for one of the members regarding UBC asset-backed commercial paper. I have contacted the University Presidents Council and asked them a number of questions. I can just read them into the record for the member, if that's all right.

Who will be accountable for the potential $67 million loss? The response back was: "We're not aware of any projected $67 million loss. UBC's current impairment projection for the third quarter financial statements is $18 million. When first made aware of the challenge in this area, the university moved quickly to limit its exposure and to communicate the challenge to the community."

The other question was: where did they get the investment advice from? Along with the other institutions and corporations, UBC treasury took advice from money market brokers of the major chartered banks and relied upon the ratings approved by Dominion Bond Rating Services.

B. Ralston: Yesterday the minister, in response to some of the questions I raised about this issue, suggested — indeed, stated — that UBC is an autonomous institution, that he was confident in their ability to manage their finances and that everything seemed to be running very smoothly there.

Usually, when one raises these types of questions, one is often referred to the website. Indeed, the websites of public institutions are often considered to be the portal through which public inquiries are attempted to be answered.

So I did go there last night. This information is reasonably current. The most recent minutes of the board of governors of UBC are May 22, 2007. So almost 11 months have gone by since the last minutes of this public institution were posted to their website. According to what's on the website, minutes will be posted to the minutes section of this site once available. According to their website again, they have meetings in January, March, May, September, November and a retreat in July.

By my calculation, they met — if that schedule is to be followed; one doesn't know, because there are no minutes posted — in July, September, November, January and March through 2007 and into 2008. Given that this public institution, on its website, doesn't bother, apparently, to publish the most basic public disclosure — the minutes of its board meetings — and that the cabinet appoints the majority of the people to the board, is the minister satisfied that UBC is performing basic public disclosure? And does that give him increased confidence in some of the statements he made yesterday?

B. Ralston: Well, perhaps I could suggest that it doesn't appear that the minister's oversight of this important public institution is taking place at all. This is the most basic level of public disclosure, and it's not being done. I think it's shocking, frankly.

This is an issue of finance. On the website someone named Nicole Byres is listed as chair of the finance committee. Again, on the website she's not listed as a member of the board of governors. Can the minister explain why the chair of the finance committee, who would be overseeing this loss, isn't listed as a member of the board of governors? Or is that too trivial for the ministry to make that inquiry?

Hon. M. Coell: It's my understanding that she is rotated off the board, and they would have a new chair.

B. Ralston: Well, once again, the public disclosure of this important public institution doesn't seem to have caught up. There's a media relations department that appears to have a number of people working for it. Can the minister explain why basic public disclosure doesn't appear to be a priority of this institution, particularly under his watch?

Hon. M. Coell: The member knows that there is disclosure from all the universities and colleges. I will check in to see what problems they're having with their website.

B. Ralston: Doubtlessly there are back-channel discussions between senior employees of the university and senior employees of the ministry, but the point here is that this is a public institution with some obligation, I would suggest, to make public disclosure on what it's doing. It hasn't published its minutes for almost a year. The list of the board of directors…. The chair of the finance committee, when this important issue is taking place, isn't even the actual chair. It seems to me an absence of even the most basic elements of public disclosure.

I want to just continue for a few moments on what the universities council has apparently reported. It is indeed true that when this matter first came to light as a result of my questions to the Minister of Finance in January of this year, the UBC treasurer, Peter Smailes, calculated a write-down of $18 million.

What has happened since then is that this issue has moved quite a bit. There are a number of national discussions led by Purdy Crawford, and the calculation that I provided is something that took place at the end of March. I would suggest — and for the minister's comment — that this calculation of a write-down of $18 million is completely out of date. More current information would suggest that the write-down is much more likely to be in the neighbourhood of what I've suggested.

Given that this information and that comment came out in early January from the treasurer of UBC, does the minister have any further update on what has taken place over the last several months?

Hon. M. Coell: As the member knows, all of our institutions have audited financial statements every year for accountability. They also have a budget letter that is public every year as well. They did have, in UBC's case, a press release in October of '07 with regard to the issue that we're discussing. The comments I made earlier are from the University Presidents Council as of yesterday.

B. Ralston: Back when this issue arose in January, Mr. Smailes — and I'm quoting from the story in The Vancouver Sun — said that the impacts…. "'There will be no budget cuts to university teaching and research,' Smailes said, 'and no core programs will be affected. New students will have the same opportunities and programs will continue.' He said: 'The impact of the write-downs will be on discretionary spending, such as classroom upgrades, additional teaching assistants or additional research support.'"

That was when the write-down was calculated to be $18 million. If it is, as I suggest, the more realistic and more prudent write-down of $67 million, can the minister advise what the impact on UBC's operations, students, faculties and programs will be?

Hon. M. Coell: UBC has confirmed this morning that their write-down will be $18.3 million.

Hon. M. Coell: Based on them getting back to me with a number. I'm sure it's based on sound financial practices.

B. Ralston: Well, the minister may be willing to accept a simple assertion from the UBC treasurer. I'm not, and I don't think that the minister should either. More prudent and up-to-date analysis of this evolving financial crisis of asset-backed commercial paper would suggest the write-downs are far bigger than $18 million in this particular case.

I gave him the example of the analysis from the RBC Dominion Securities analyst, Andre-Phillipe Hardy, who estimated that the market value of asset-backed commercial paper is approximately 56 percent of its face value.

A simple assertion, I would suggest, is not satisfactory. Can the minister advise the public in a more fulsome way than simply rehashing — and a simple assertion from someone at UBC?

Hon. M. Coell: I can tell the member that the UBC website is being revamped and the board package for February '08 and board of governors are on the website, not just the minutes. The advice that I get from UBC is that they'll have a write-down of $18.3 million.

B. Ralston: With respect, that answer is simply unsatisfactory. The minister knows that the Lieutenant-Governor-in-Council, the cabinet, appoints the majority of these governors to the UBC board of governors.

Has the minister had a discussion with Mr. Bennett, who is the chair of the board, about this financial problem, or is that politically off limits to the minister?

Hon. M. Coell: Both the staff of UBC and my staff have discussed this issue.

The chain of accountability, I would suggest…. As the minister said yesterday, this is an autonomous institution, according to him, and the cabinet appoints the majority of the board of governors. Mr. Brad Bennett is the board chair. Has the minister had a discussion with Brad Bennett about this write-down?

Hon. M. Coell: I've met with the board chair and the president of UBC many times over the last three years.

B. Ralston: Since January 11, 2008, has the minister met with the chair of the board, Mr. Brad Bennett, and had a discussion with him and had an explanation from him of this write-down?

Hon. M. Coell: I can assure the member that UBC's credit rating has the highest rating of any Canadian university, and there's no reason to be concerned. I have met with the president and the board chair to discuss future growth of the institution and where we move to enhance the institution.

B. Ralston: Then I'm going to make the following suggestion, and I'll ask the minister to disagree with me if it's wrong.

The minister has not met with Mr. Bennett, the chair of the board of governors, to discuss this write-down at all since January and has no intention of doing so apparently. Is that correct?

Hon. M. Coell: The president of UBC and the chair are doing a fine job. I know my staff have discussed this and many other issues with him. I have not.

B. Ralston: I'm going to suggest, with respect to the minister, that the absence of any discussion between the chair of the board and the minister on this important point — where UBC says the write-down is $18 million, a more prudent and realistic assessment would be $67 million, I would suggest — will have a major impact potentially on UBC programs and teaching staff, courses, teaching assistants and other UBC programs. For the minister to simply leave that to staff to discuss, I would suggest, is an abdication of his duty to prudently supervise and oversee one of the leading public institutions in the province.

Hon. M. Coell: The member and I may disagree over a number, but the auditors this year will do their audit of UBC finances and report out.

B. Ralston: While we're waiting for that leisurely process to unfold over the next nine months, I'm interested, and I'm sure others are interested…. I would suggest there's an obligation to report publicly on what the impact of the real write-down will be on UBC programs.

These funds are taken from what UBC describes as its $525 million working capital fund. I would suggest that the impact of…. First of all, the $122 million is frozen. The $18 million write-down is an accounting entry. There's no access to the $122 million at all, because it's simply frozen. But if there is to be a market created as a result of the negotiations and there is a write-down of $67 million, I think the public is entitled to, and the minister is obliged to exercise, some oversight over the B.C. Liberal government's appointee — their chosen chair of this board, Mr. Brad Bennett — as to what is going on and have some public accountability about that.

The minister seems willing to just wait for some leisurely process of audit which will take place in due course, no doubt, but will not answer any immediate questions. Is the minister going to aggressively move on this file, or is he simply going to sit back and wait passively for things to unfold?

Hon. M. Coell: The member may not know, but within 90 days the auditors will present their financial audit of UBC.

B. Ralston: As the minister also knows, this is my one opportunity — I'm the critic for Advanced Education — to question the minister publicly in this forum. After the estimates debate closes, we don't have this opportunity for another year. So this is our one opportunity, on behalf of the public, to answer these questions.

The minister may prefer it that way. No doubt he prefers some off-the-record chats between his staff and UBC staff, but this is our one opportunity as the opposition — and for the minister — to account publicly for what's going on here.

When the financial statements are released, unless there's something raised in question period, there will be no opportunity for us to question the minister directly. So this is the opposition's one opportunity. I'm asking the minister to answer what he intends to do about this, rather than simply wait for the outcome of the routine audit.

Hon. M. Coell: As the member knows, about 48 percent of UBC's funds come from government. They have funds from many other sources. I have confidence in their president and their board chair. Every year we have audited financial statements from all of our institutions, and I think that is a good way for accountability.

I did offer the member a technical briefing with UBC, the University Presidents Council and my staff to go over this issue, if he wishes.

B. Ralston: As the minister knows and as I pointed out yesterday, the technical briefing I will accept, but reluctantly. I think the real forum of accountability should be here in the Legislature, not in some technical briefing that will take place away from the public and where no record is kept of it that can be produced to the public to advise them of what took place.

I just want to conclude by saying that I think the minister's oversight of UBC and his dealings with the board chair leave much to be desired. In my view, the minister has not responded to the call for the necessary public disclosure and accountability as to what is taking place in the finances of the University of British Columbia as this financial crisis unfolds.

R. Fleming: I want to bring the minister back to the overall ministry budget cuts that were announced by his ministry on March 12, letting the college and institute, university presidents know of the 2.6 percent reduction in funding against what was anticipated and outlined in the three-year service plan.

Because I find myself hanging on the minister's every word, I had to reread some of the Hansard from yesterday in his answers that we were asking on an institution-by-institution basis. There was a discernible pattern. It became clear, after reading a few pages, that in response to questions from opposition MLAs about institutions in their communities, the minister would not answer directly when he was invited to speculate what his ministry's cut on anticipated funding would mean for those institutions. Rather, he fell into a pattern of reading off lists of commitments from days gone by to funding other projects.

I think that's disappointing, because obviously the minister would have received strategic advice from inside his ministry as to what might be the implications for not delivering on the second-year commitment of his three-year budget plan. He's obviously received considerable feedback from board chairs and from institution presidents as to the March 12 memorandum that was delivered to those presidents.

I want to ask him again today: what strategic advice has he received about the impact that a 2.6 percent funding reduction, as against previous commitments, will have on these institutions? What is he prepared to live with in terms of cuts to programs and course offerings in those institutions?

He said that one of the rationales for cutting is to then reallocate moneys towards funding for aboriginal spaces, nursing students and a couple of other areas now deemed a greater priority for him. But as he well knows, the decision to fund that by reducing FTEs elsewhere will cause a great deal of displacement in the institution.

I want to ask him again — the strategic advice that he received from his ministry and the feedback from presidents of these institutions — to give the committee here an indication of what cuts he's prepared to live with.

I think that in the fullness of the last seven years, you look at the budget increase of 40 percent for my

ministry. A massive amount of detailed growth was managed by all of our institutions, be they colleges or universities or university colleges. It took a great deal of skill to manage that 40 percent increase in budget and make sure that you have 120 new degrees, and the faculty needed to deliver those new degrees. Also, I found their ability to manage $1.5 million worth of capital infrastructure very impressive. In doing that, they've created new opportunities for students throughout this province.

I think the crux of our discussions yesterday and the day before was that we've come to a position where enrolments have slowed, where there are, I think, glaring needs for new nursing and new trades and skill spaces and new graduate spaces and research spaces in the system. What we changed was a pattern that we had been developing of general growth throughout the system, to build the system, to what is more specific and to focus growth for the next number of years.

I think we can have both of those things in tandem, where you have a period of general growth followed by a period of specific growth to pick up the areas which you may have missed.

We talked about nursing, and, of course, I think that's probably the most in demand of anything in the province when you have 1,800 nursing vacancies. We had to move quickly, and we did move quickly. But I think one of the things….

Every time you make change, there is a challenge with that. I admit that the institutions will have a challenge to make this change. We're working with them. We want to see them continue to be the successes they are and to grow in areas that are helpful to British Columbia as a whole.

Over the next month we'll be working with them to see what changes they'll make within their program mix to bring in the new seats and to possibly not have some of the courses that may be redundant, which have been in the institutions for decades. We're looking at that with them. I certainly have confidence in them.

I know there have been a few that have said they'll make some changes they don't wish to make, but I think working with them will make the changes that will work for British Columbia as a whole.

R. Fleming: I think a lot of people are mystified by the minister, in defending his budget cuts this year, publicly citing the statistic, which he has repeated over and over again — often a different number — that there has been a growth in funding to B.C.'s post-secondary institutions of 40 percent over the last seven years. It's news to those institutional presidents. He has used the figure 36 percent on occasion too, depending on which media outlet he's talking about.

I'm mystified, because if you look at the last seven years and compare it to this year, and use the "Material assumptions and expense" pages from his ministry's own records, the funding increase is more like 19 percent, and the growth in operating grants to the institutions since 2001-2002 is 24.5 percent. Yes, that's growth, but when one looks at the increase in FTEs and in the inflationary costs and the implications in negotiated agreements and non-salary inflationary costs that institutions have to deal with, 24.5 percent is not a substantive increase. It is not 40 percent, as the minister claims.

Is he looking at a different set of books than the annual service plan reports that his ministry provides to the Legislature and to the public? By our calculation this government's first action in 2002-2003 when it took office was that it cut grants, albeit slightly, to institutions. Cumulatively, over seven years the total increase to operating funding is 24.5 percent, almost less than half of the number the minister is using publicly.

Perhaps he's talking about own-source tuition fee revenue from the deregulation experiment of tuition fees, which is actually costing FTE growth. We've already established that. Or perhaps he's throwing in capital numbers. I'm not sure, but I want him to comment on his use of that 40 percent figure, because it is baffling to university presidents. It's confusing to anyone trying to follow his ministry's actions over the last seven years, because cumulatively, based on the service plan reports, it's a 24½ percent increase.

Hon. M. Coell: I would gladly give a detailed accounting to the member, and we'll do that.

I think you need to realize that there are a number of changes, with the ITA leaving my ministry. If you look at the restated numbers as to how much funds are actually going to institutions…. I will definitely break that down for the member.

R. Fleming: The minister should provide a thorough explanation, because I think it's causing some annoyance to people out there — institutions that have to be accountable to their boards and to their students. The minister says that everybody has received a 40 percent increase, and clearly, board statements do not reflect that. The ministry's own estimates do not reflect that.

It's important — and I don't think I have to tell this minister about that — that clear and real numbers be used when dealing with the public and the media. I think many people would wish they had had a 40 percent increase and would wish that the funding increase for this year in the service plan was being delivered on, but the fact of the matter is that that's not the case.

Another number I want to check with the minister here this morning…. Yesterday I asked about the trend line on per-FTE funding. I again quoted his ministerial service plan for this year and the material assumptions contained in the budget and fiscal plan. We calculated the number of per-student FTE funding this year, ministrywide, as $8,852. That's a 3 percent decline from previous amounts year over year. The minister answered and said: "No, that's not the case. FTE funding is going to $9,301 per capita." So I wonder if the minister can tell me again if his ministerial service plan is wrong in this regard.

Hon. M. Coell: I want to clarify for the member, because I don't want to leave any discrepancy.

If you look at 2001-2002, the final operating grant allocations, student FTE targets excluding ITA programs, you have a change from the subvote, 2001 to 2008-2009, of $524 million, which is actually a 41.8 percent increase. That is in the entire budget. The budget for the institutions has gone up by 36 percent, and that's the difference between when the member mentioned the use of the term 36 percent for the institutional budgets and 41.8 percent for the ministry as a whole.

R. Fleming: I thank the minister for that. I think, again, that it's a matter that he has to transparently report these numbers, because they are used intermittently. They are used at different times, and they don't reconcile with numbers that people intend to rely on through the ministry service plan that show the funding increase in terms of grants to institutions over those seven years as an increase of 24½ percent.

I would ask the minister to, perhaps, produce a document — if he would supply that to me, and I will, in turn, supply it to other interested parties — that clearly outlines that and that is an apples-to-apples comparison with and without the ITA funding. I know there's a change again this year, where ITA skills training dollars are now back in this ministry and reflected there. I would appreciate that very much.

I also think it's useful to describe some of the changes in the ministry. There have been new institutions or new designations created during this government's tenure, just as there were new institutions created in the 1990s at Royal Roads and at UNBC. If one were to look at the previous decade and look at this decade, a fuller explanation would also look at institutional changes and give an indication there. One might draw the wrong conclusion and think that every institution had, in fact, received the increase that there was in the ministry overall when, in fact, that is not the case.

I think where I'm going with this is as it relates to FTE utilization in the universities. Whatever the funding increase to those institutions…. My numbers say 24½ percent over seven years.

I want to ask the minister if he can comment to me and maybe give me some numbers about FTE utilization in the university sector, really since 2001-2002. He gave me a number for this year yesterday, although it may have been a 2006-2007 number, because that was the one available. If he could give me now an indication on FTE utilization in the university sector going back as many years as he might have data available, I'd appreciate that.

Hon. M. Coell: With regard to the member's request for more detail on the percentage increase by year for the institutions, I will put a package together for him.

The only information I've got before me is 2005-2006 actual and the estimate for the fall of 2007-2008. The actuals for 2006-2007: Royal Roads, 100.6 percent; Simon Fraser, 106.2 percent; Thompson Rivers, 83.8 percent; University of B.C., 100.7 percent; University of Northern B.C., 82.3 percent; and the University of Victoria, 103.4 percent.

The estimate for the fall of 2007-2008 — I'll give that to the member as well — is: Royal Roads, 105 percent; Simon Fraser, 107 percent; Thompson Rivers, 83 percent; University of B.C. Vancouver, 99.6 percent; University of Northern B.C., 88.8 percent; and the University of Victoria, 98.8 percent.

R. Fleming: I thank the minister for those numbers. It's pretty clear that in the bigger picture what's happening in this year's budget, by taking out the 2.6 percent and also layering on a reduction in FTEs to the university sector, is that in actual fact the minister's reward for institutions that have been overproducing, if you like, on their FTE utilization — in other words, doing a good job and working with this ministry to meet the targets set out in his post-secondary expansion plan — is to lose funding for that effort this year and also to have FTEs that were supposed to be part of their growth plan reallocated to other institutions. We're seeing that at UBC Okanagan, 343 spaces, and we're seeing it elsewhere.

I want to ask the minister if that in fact is the case — to take money and take expansion seats from those institutions that are generally overproducing on their FTE utilization and redirecting that towards other institutions within the post-secondary system.

Hon. M. Coell: I know that we did touch briefly on this, I think a day or so ago.

The Campus 2020 report said one thing to me, that the system needs to work as a whole. It has to be viewed as a system. I think what we tried to do in this year's budget is to be fair with everyone, to make sure that the restructuring challenges are across the board and that they would be of a level to meet the targeted funds coming in. Universities do get all of the graduate targeted funds. So they're getting graduate seats. Nursing seats are spread, of course, through universities and colleges.

I think we need to — and they need to — look at themselves as a system, as a group of institutions that function within one another and with one another, for the benefit of students. I think that's what we're looking at in the targeting. We're saying: "We can fill these seats with the new targeted areas rapidly. They can help us achieve those goals."

From my perspective I really felt that when we did the Campus 2020 report there was a new way of working together for the entire system, not just colleges separate from universities or university colleges or institutes. They're all one and the same. They're all delivering a valuable service to students in B.C. We try to treat them all as equals.

R. Fleming: What I think is interesting about Campus 2020…. There was a lot to digest in the recommendations in that report. What's interesting is that the major

recommendations, which pointed out some deficiencies and competitive challenges that B.C.'s post-secondary sector has, all had enhanced funding implications to them. While the minister described Budget 2008 as fair, I don't think Budget 2008 is exactly what Mr. Plant or anyone who participated in that consultation exercise had in mind as the first year of the rollout of moving forward to 2020 in terms of investment in R and D, in terms of core institutional funding and stability, and all of those things.

In fact, the previous policies around the modified block funding model that the ministry is using has been backtracked in this budget, and that's what we've been spending a lot of time talking about this morning.

I want to ask the minister about increases for institutions this year. Yesterday he said that Simon Fraser University's overall budget increase for next year is 3.8 percent. I want him to tell us how that 3.8 increase compares to the combined effect of the government-approved wage increase, the government-mandated increase in the number of student spaces for that institution and the impact of inflation on that institution.

How does he anticipate that will impact on SFU's expenditures this year as compared to last? In other words, there'll be a 3.8 percent increase from the ministry. What does he understand that Simon Fraser's estimated increase in expenses would be for this operating year coming up?

Hon. M. Coell: The base budget that they're starting from is $187,386,181. The growth that they're getting is $2,959,200. The grad seats that they're getting is $2.18 million, and the negotiating framework is $6,933,294. So their budget, as the member knows, is $194,226,785, and their 2009-10 budget is $206,960,221.

It should be noted, too, that for the first time in probably a decade, I think, government is actually supplying the negotiating framework. I can remember in the '90s when they had to find the negotiating framework within their budget.

R. Fleming: I want to ask the minister about a comment that the president of Douglas College has made in response to the sudden March 12 announcement that the institutions will have their funding increase rolled back by 2.6 percent. I'll read the comment into the record and then, maybe, ask the minister to comment on it.

This is a memo to staff and students at the institution who had questions, so it's an information memorandum that has been typically circulated at all the institutions. I'm picking this memo randomly. She said:

I want to ask the minister to comment, because these are the kind of things that are being said around British Columbia as a result of his actions from a few weeks ago. I know the minister understands the nature of academic planning, that programs have durations of any number of years, that to see plans through takes several years on a cycle and that these are things that are carefully put together. They involve marketing, recruitment, hiring, those kinds of things, in order to work students through to the completion of programs.

He is aware that the strategic investment plan was there for institutions to follow in terms of expanding the programs they're delivering. I want to ask him, in light of this comment, whether his ministry has lost confidence and will no longer be using the brand name "strategic investment plan" in its dealings with institutions, because it's no longer following that plan.

Hon. M. Coell: As we talked earlier about government being able to achieve their goal of the B or better for university entrance…. There are changes in the strategic investment plan, where we're now targeting funds in specific areas.

I want to be clear, because the budget letters that went to all the institutions last year were clear that the out-years, years 2 and 3, are subject to legislative approval. We talked yesterday about BCIT, obviously, doing a number of scenarios. I think that if they hadn't done a number of scenarios, they're probably doing that now with consultation from my staff.

As I say, I have confidence in the sector to be able to manage these changes. I think they're changes that we needed to make.

R. Fleming: I think, from the minister's answer there…. Years 2 and 3 of any strategic plan or service plan are not legislated. That really throws a lot of things into play in the sector. It raises more uncertainty than maybe he intended in his answer. If institutions and boards and presidents can't rely on plans developed by his ministry and commitments made to be supported in expanding their efforts to increase spaces and to have stable and secure funding, then I have to ask the minister how any student in B.C. can have any confidence in his policy to limit tuition fee increases to 2 percent, because that's not legislated either.

I ask the minister on the record: how can he expect students to believe that he will follow through in future years on commitments made around tuition fees when he has failed to follow through on commitments that were made previously, here in estimates last year and publicly to institutional presidents, on stable, long-term funding?

Hon. M. Coell: I think that I'm pleased with all of our institutions that have honoured the government request to keep the cap of inflation for tuition. That's obviously been done in the four years that we will be government.

I think that it's incumbent on institutions to always have flexibility in their planning process, and I believe they will do that.

The Chair: Committee A will stand recessed until the vote in the House is complete.

R. Fleming: Before the bells rang, we were talking about general parameters and strategies that the minister has, I guess, to understand and measure the impact of cuts that were made a few weeks ago to the expected funding envelope for our institutions.

I just want to pick up on that again. I asked him previously what strategic advice he had received that gave him the comfort to have the view that this cut to the funding that had previously been promised would not negatively impact the institutions. I don't think the answer was very precise. He repeats that he has confidence that it will be managed and nothing will happen.

Yesterday we asked: what will the impact be at Simon Fraser in regards to their academic reorganization? We asked about other institutions that have already said that programs — some of them decades old — that train out people and link them to 100 percent employment opportunities in the communities will be lost as well.

Because I know it's an issue that is near and dear to him and one that was stressed by Mr. Plant in his report last year, I want to ask him if he received any assurances or strategic advice in his ministry that quality of education, as measured by student-teacher ratios in the classroom environment and by other measures in the institutions, is not going to be compromised from the minister making a decision to not increase the funding in the way that he promised in that service plan.

Did he receive advice and assurances from anywhere in the ministry or externally that quality in B.C.'s institutions will not suffer as a result of the funding decision that he made?

Hon. M. Coell: I think it's important to remember that every institution got more money in their budget this year. We had a $68 million increase — an increase in a long series of increases in institutions.

Institutions do make changes. They create new programs, and they change other ones that have been in existence. I expect that those changes will be discussed with my staff over the coming month before they get their final budget letters. But the increase is significant at $68 million, again, in targeted funds — targeted in areas that we feel will be of benefit to British Columbia as a whole.

I look back at the increased opportunities that we've developed in, really, just the last six years where you've got new trade schools, a new aerospace school and new university campuses in areas of the province that weren't served. There are a lot of opportunities for access for students that weren't there six or seven years ago — a lot of opportunities for access in different parts of the province, but also access in different programs.

I look at the 120-plus new degrees that are offered throughout the sector as well as all the new trades training components that are in the new trade schools that have been built and developed. I'm confident that the quality of education in B.C. continues to rise and continues to reflect government's desire to have B.C. as a highly educated area.

R. Fleming: I'm wondering if the minister can tell me and maybe shed some light on the real budget-making process that goes on in government.

The minister failed, basically, to get the funding increase approved by Treasury Board that he had planned for and announced to all of the institutions last year, that he'd presented to estimates this time last year. He failed to get that through Treasury Board. For some reason, and I think the public wants to know, it's still a subject of some mystification.

For some reason, this government chose to find $50 million to claw back from a previous funding commitment in the Ministry of Advanced Education — an odd choice. Obviously, government has competing priorities, but it says something about a government when one of the priorities they're prepared to compromise is advanced education, because I think everyone agrees that's an investment in people. It's an investment in the economy, and it's an investment in making up a skills gap that this province has that is costing us opportunities.

Yet Advanced Education was chosen by Treasury Board as a place to claw money back. I wonder if the minister can tell me exactly how that worked, how he failed to secure the money in year 2 of his three-year service plan.

It seems that other ministers and ministries have succeeded. It seems that VANOC, whenever it needs some new money, is able to get it. It seems when cost overruns on things like the convention centre spiral out of control, the money is found, but when it comes to securing and sticking by an investment in students and in the future of this province and in the human capital of British Columbians, this was chosen as a place to sacrifice this year.

I wonder if the minister can just tell me why that $50 million was taken out of this ministry. It has been suggested by his staff — I think, by ministry personnel to others by way of an explanation — that this government was preparing for a softening in the market and a softening in the economy. That's why the funding increase wasn't going to be in place this year that was promised last year.

I wonder if the minister can tell me, within government, within cabinet, why his ministry was targeted to find $50 million.

Hon. M. Coell: When I look at funding institutions and colleges and universities…. When we decided to have a medical school, we decided to invest $300 million in a

medical school and have it in three parts of the province. The administration of the universities was able to manage through that. When we increased nursing spaces by 85 percent, they were able to manage through that, develop new programs and the like.

I think what we've come to here is that the enrolments in all the institutions combined are lower than we expected. The Auditor General made that perfectly clear in his report. We also have competing needs in the province. We have a need for skilled tradespeople. We have a need for nurses. We have a need for graduate students in research and technology.

I think we have to be prudent with taxpayers' dollars. We have to spend it where it's going to do the most good. I can tell you that I'm sure the universities could spend more money in areas that would be important to them, but I have to tell you that we're going to spend money in the universities and colleges this year in areas that are important to British Columbians as a whole.

That's why we've directed the funds, and I think that's why that is important for us to do that. From time to time, I believe, governments do things like that in the best interests of the province as a whole, not necessarily of an individual institution.

R. Fleming: I asked the minister a question as to why his ministry was targeted for money to be taken out at Treasury Board, and he outlined a scenario from years past where the government was in an expansion mode of funding and the funding came with the expectation to create new schools, new faculties. What we have this year is the reverse of that.

The expectation of expansion on behalf of the institutions, the creation of new FTE spaces, is still there, but the anticipated funding is now reduced. I think we're going to be evaluating whether that is wise and whether that is possible and achievable.

It certainly wasn't what was recommended out of the Auditor General's review. He's not getting it from the Campus 2020 report. In fact, any of the strategic advice that is publicly available said the exact opposite and said that the problems around creating new spaces actually should be addressed with careful consultation and working with the institutions.

What we have had in the past three weeks was a very ham-fisted effort to simply claw money out and announce very suddenly over a teleconference that the institutions would not be receiving the money that was committed to previously.

I know that the minister is aware that some people are very upset in the sector. It throws their plans sideways, and their boards of governors and their finance committees are having to deal with that right now. At some of the universities the cut is several million dollars, tens of millions of dollars, and they're having to identify ways to find the money.

I wanted to ask the minister whether he will commit to working with institutions that…. Yesterday he gave a non-answer around institutions that are planning to offer deficit financing plans to meet the objectives or the new funding grant from the government.

I want to ask him again today: what does he see in looking ahead until next year? The funding reduction that was provided three weeks ago — is that to be a recurring reduction for the third year of the service plan? Or does he expect that government will fund, next year, the FTE growth that's expected of them and get to the 2009-2010 funding commitment that was outlined in the previous budget letter that the minister sent out to those institutions? Is this drop, this cut that happened this year, going to also have an impact in year 3?

Hon. M. Coell: Just to comment a little further. When faced with a declining enrolment, I think we have to be prudent when we use taxpayers' dollars. I think we have to balance the needs of all institutions with the needs of the province, and I think that's what we're doing.

I'm not being facetious to the member, but there'll be an election next year. You may be on this side of the House; I may be on this side of the House. It's not something that you can predict, next year's budget. But I can tell the member that we'll continue to improve the quality of the post-secondary system and will continue to work with institutions to make sure that their goals are met as well.

R. Fleming: I guess the answer there, if I can read it properly, was that all bets are now off for year 2. The direction has been given.

I guess the signal that those that are trying to manage the budgets that have been given to them in the university sector is that year 3…. It will be a recurring cut, and they will have to struggle with it again next year — although the minister won't comment on whether he will give permission to institutions to avoid cutting programs and perhaps run operating deficits this year and, basically, build their way or bide some time to manage those cuts.

I think that's disappointing, because that's something that's going to be on his desk very soon, if it's not already. The fact that he hasn't considered anything like that yet and won't say here in committee, definitively, which way he leans on that issue is disappointing, I think. We're going to monitor that very closely.

I wonder if the minister has…. He has probably heard this criticism from people in the sector, that perhaps one of the deficiencies of the budget, the ministerial accountability act and the BTAA is that it really only impacts the minister when it comes to managing his own small ministry budget.

What we have here is a situation where committed funding has now been reduced to the institutions but their ability to meet the parameters of that legislation and the minister's accountability for what happens inside those institutions…. There's no link there. I wonder if the minister has any thoughts on that and whether he would consider expanding his accountability to include all of those institutions, how they manage

Hon. M. Coell: It's an interesting thought. There is a link, of course. If there are deficits in the colleges, that goes to the ministry or to the government's bottom line, and that affects the accountability of ministers as well.

R. Fleming: I want to ask the minister some questions about Campus 2020 and some of the recommendations that that report outlined. There are some critical ones that I know the minister has discussed and agrees with.

I wonder if he can tell me how the targets outlined in that report…. They are for the year 2015, which is not that far from now. How does Budget 2008 further us along to the goal of conferring more post-secondary credentials per capita than any other province by 2015? And how does a budget that is reducing anticipated funding this year carry us towards the goal of achieving the highest level of participation in post-secondary education per capita in Canada?

Hon. M. Coell: I want to outline a number of areas where I think we're making great headway. One is graduate students. I think that was one of the areas where the presidents of the universities came to me after the last election and said that British Columbia could do a lot better if we had more graduate spaces. In last year's budget and this year's budget we have added in graduate spaces, so we're graduating more master's and doctoral-level students.

The other area is aboriginal students. We have actual spaces for aboriginal students. We've added, with our partners in the sector, programs that are more culturally sensitive for aboriginal learners. We want to increase the aboriginal participation rate. We want to increase graduations of grads.

The other area is the scholarship programs that we've put in place through a number of endowments, which will help add people into the system as well. Over the last number of years we've added 120 new degrees — a significant increase in the degrees granted.

It's also important, I think…. Trade certificates and apprenticeships, the number of apprentices that are involved in the province now…. So I think we're moving in the right direction.

I gave the example of building a new facility, building a new lab and having only 11 out of 22 students in it. There's capacity built into the system now that should last a number of years so that as the FTEs come on that we're paying for now, you don't have to repay for them when they actually show up. So there's a lot of capacity in the system that will help us over the years to move and to achieve the goal that the member states.

R. Fleming: The minister touched upon graduate education in his response. I'm pleased that he did, because he knows that one of the things that was under discussion in the Campus 2020 report was that B.C. is 25 percent behind the national average in graduate degree production. It's behind. It's dead last amongst the big four provinces of Ontario, Quebec and Alberta.

While they make giant steps, it has been suggested that B.C. is taking baby steps towards equalizing with those provinces. I want to ask him, in light of the grad student scholarship program…. There was an opportunity to not only announce one, as he did recently, but to build on it in every single budget year. But what he has done is created a program that has only 250 grad student spaces per year for four years in the scholarship fund. It doesn't even escalate over time. It's a flat-lined scholarship sponsor program.

That says to me that Geoff Plant's goal or the Campus 2020 report's goal to match and overtake these other provinces by 2015 will not be achieved seven years from now, because the steps have not been bold enough from this government to give grad students an ability to pursue their studies and afford to pursue their studies.

I want to ask the minister…. Over the next four years, there will be 32,000 graduate student FTEs, about 7,800 per year from the service plan estimate that I was given. The scholarship plan is for 1,000 scholarships to be handed out over the next four years. So my reading of that is that 3 percent, roughly, of graduate students in B.C. can expect to compete for and receive a scholarship award.

I wonder if the minister can tell me if it's the case and if it's his intention that scholarships should roughly apply to about 3 percent of graduate student FTEs over the next four years.

Hon. M. Coell: As the member knows, we committed to increase the number of graduate students, and to fund those spaces, by 2,500. The universities can only bring in a certain number per year. We have spaces, 625 this year, to bring them on line. The member also possibly remembers that the Pacific Century Graduate Scholarship is $10 million, and it's to fund B.C. graduate student scholarships over four years.

Hon. M. Coell: We were, just before we recessed, talking about scholarships and bursaries. I have an appendix, actually, with all of the scholarships and bursaries that the institutions, the province and the federal government do. I'll table that for the member, for his information.

R. Fleming: We were talking about graduate education because of its importance and its link to research and

development efforts in B.C. and, of course, its link to patents and spinoff companies and jobs and, basically, deepening B.C.'s knowledge-based economy and its development and the greening of our industries here in the province.

I want to ask the minister, because…. One of the recommendations that Campus 2020 contained in the body of the report that got a lot of excitement and attention was around increasing the levels of university-based research and development funding from the province. The suggestion in that report was that B.C. needs to come up and join the research-intensive provinces of Alberta and Ontario, and needs to do a better job of funding university-based R and D in a direct way.

I know that if we are to catch up to Alberta, that probably has a cost implication of around $200 million of new R-and-D funding from the provincial government. That was the implication of this Plant recommendation. I see that in this budget, Budget 2008, the new funding available to research and development is approximately $1.5 million that's contributed by the province. It grows from roughly $11½ million to just over $13 million.

In light of the boldness of the recommendation to catch other jurisdictions that are doing so much more than B.C., that are competing for grad students, competing for researchers at their universities, and the magnitude of the recommendation — the catch-up of $200 million for B.C. to compete on the same playing field as those other R-and-D intensive and investing provinces — I wanted to ask the minister if he has basically unrolled an unannounced 80-year plan to catch up to Alberta with this announcement of only a $1.5 million increase to R and D.

Hon. M. Coell: I'm very pleased with the amount of money that we have been able to secure for research and development, about $1.5 billion since our term in office. I would draw the member's attention to some of the funding announcements that were made last month, where we had Genome B.C., the climate change solutions for UVic and the other research-intensive universities — $100 million there. Genome, I think, was $50 million. In previous years we funded the Michael Smith research foundation — $120 million, I believe, was the total government funding. We have funded the Centre for Drug Research and Development at UBC — $25 million.

So what we've been doing is endowing large amounts of funds for research and development that will be there in perpetuity to assist with graduate students, and I think too — and the member correctly cites — the idea of a commercialization in the spinoff companies that come with that. So a lot of the large amounts of dollars that we put into research have been in the endowment fields. I think that will work well for British Columbia.

R. Fleming: I didn't quite get an explanation on why the direct R-and-D new spending this year is so paltry in the budget, and it's a $1.5 million increase. You know, the attention that's coming to this deficiency, this competitive disadvantage that is accruing in B.C. relative to other jurisdictions, has not just come to the attention of opposition members or people who are looking for a critical angle to address the government. It's coming from the Premier's own Progress Board.

I just want to quote one of the key findings there that supported what the Campus 2020 report also recommended. The finding of the B.C. Progress Board was that the levels of research and development investment are well below levels appropriate to knowledge-based economies. Canada is a disturbing 14th amongst OECD countries, and B.C. consistently lags behind the Canadian average for research and development investment. In fact, at one time the only province that was below us in terms of their per-capita R-and-D investment was Prince Edward Island, and we still do lag significantly behind other provinces.

Anyway, the minister has said that there's no strategic response to that recommendation from Campus 2020, and I don't think anyone would disagree that Budget 2008 is putting us on a course to meet the challenge that the Campus 2020 report laid out for us.

I want to ask the minister a question about private advanced education, because we talked about this last year. Last year there were a lot of things happening in the headlines that were causing concern internationally from foreign governments about students who were, quite frankly, ripped off in this province and had no recourse to petition government and seek redress.

I think the minister, himself, would admit that the response to institutions that have violated the Degree Authorization Act and other pieces of legislation in falsely marketing themselves and in running very poor operations that disadvantaged students…. I think you would agree that the response has been unacceptably slow to both shut down those institutions and also to better regulate those operations.

I want to ask the minister if he can tell me what legislation British Columbians can expect that will create a regulatory regime that requires private post-secondary institutions, both degree-granting and those that offer other credentials and ESL language schools. What initiative is he taking to bring them under a regulatory regime that will ensure that no student, again, who is defrauded from tuition fees or treated as poorly as some of the high-profile examples that he's very familiar with…? What is he going to do to make sure that doesn't happen again in B.C.?

Hon. M. Coell: As the member knows, both the Campus 2020 and Watson reports made some recommendations that I have moved on.

One of the things — and government announced a couple of months ago what we intended to do — was to create a quality assurance program, which staff are developing at this point and that will hopefully be launched in the fall, whereas both private and public institutions would be recognized and given a quality

assurance stamp, for lack of a better word, that could be recognized across continents. So we're working on that.

We believe that if someone isn't in that quality assurance program, they won't get the students from overseas. The overseas students will either go to the programs identified as having the quality assurance stamp of approval by a separate regulatory body…. I think that this is a program that will work. I think we need to have a program in place where it's easy for someone to see both public and private — who has the quality assurance and who doesn't. I think that will greatly help allay the fears of some of the governments in India, China and Korea.

R. Fleming: Well, the minister says he thinks that will go some way to addressing international concerns that have arisen about this sector and about how their foreign nationals have been treated in Canada and left this country empty-handed with no credential and completely financially broke. When we asked about this in estimates last year, he promised the public that a thorough review would be conducted.

He later named Mr. John Watson, former BCIT president, to head that exercise. Mr. Watson reached conclusions significantly different from what the minister has said today, here and elsewhere. He said that in order to bring some compliance and to give some assurances abroad, B.C. needed to move into the direction of a better, stronger, regulatory environment.

What he's just outlined here today is a voluntary program. It's almost no different than the voluntary registration that is currently conducted under the PCTIA, where you pay a very small fee, and you get to use a little logo on your school saying and implying that, somehow, there is oversight of your institution when, in fact, he knows that there is very little oversight of those institutions. It's a very small cost of doing business for anyone who has dishonest intentions and motivations in operating their schools.

I want to ask the minister again. Will he commit to implementing all 12 of the recommendations in Mr. Watson's report, in whatever form it is required — be it legislation, the funding implications or otherwise — and will he put that on the record here today?

Hon. M. Coell: I think both the member and I have a great deal of respect for both Mr. Plant and Mr. Watson, who have given us some recommendations after due consideration and discussion with stakeholders.

The program that I outlined is the one that government feels that we will move forward with. My staff is, as you know, reviewing all the recommendations of both the Plant and the Watson reports with, hopefully, suggestions and recommendations back to me during this year.

R. Fleming: I think one of the obvious places to start is to have a robust and transparent complaint process in this industry so that it reaches the ministry's attention and so that complaints are dealt with expeditiously. One of the major problems was that students were left hanging, in some cases for years, after they had endured all manner of things at these institutions.

As the minister knows, one of the other deficiencies in the sector is that though there is a student training completion fund, it can only be accessed when an institution under its own motivation applies for bankruptcy or otherwise closes its doors. It cannot be accessed for tuition fee refunds in cases where students have simply been sold a false bill of goods and paid good money for an education that is essentially worthless.

That training completion fund, the minister knows, has a large surplus in it. I wonder if he will direct the PCTIA to enhance that fund and make it available to complainants who have quality-driven complaints about the institutions they study with, and that its terms of reference be broadened so that it's not just in the event of closure but in the event of a substantiated complaint about a false credential being sold to a student.

Hon. M. Coell: Again, that's one of John Watson's recommendations, and staff is looking into that at this time.

R. Fleming: I wonder if the minister can comment on the ESL language sector. I know that elsewhere he has said that he doesn't know how big that is. Mr. Watson suggested there are a hundred thousand students in that industry. I use that term loosely, but it is an industry for sure. It's a billion-dollar-a-year industry, he estimated, and the minister was on record last year in Hansard as saying that regulation of ESL language schools "is under active consideration" by his ministry "as one of the options in making the private sector more credible."

I wonder if he could tell me if he still shares that sentiment almost a year later, with the benefit of a thorough review from Mr. Watson recommending that exactly that take place. I wonder if he could tell me whether he shares that view and will be pursuing it.

Hon. M. Coell: As the member points out, there was a thorough review done by my staff as well as by John Watson in his report. At the end of the day, government has decided to go ahead with an education quality assurance program, which will brand the B.C. brand that will be available to ESL, to the private sector and the public sector. We're moving forward with that, hopefully, to have a completion and an opening of that in the fall of this year.

R. Fleming: Well, I think there have just been an incredible amount of delays here, and students have not received any justice or recourse for complaints that are outstanding for four and five years now in some cases. Many of them have simply just taken the hit and moved on in their lives. They've gone back to their home countries, in the case of international students. They have spread the word about B.C.'s education brand, and it has been severely damaged.

The minister is delaying further to the fall to laboriously consider recommendations that are basically an emerging consensus — not only from Mr. Watson but from the Progress Board that studied international education. I think that's unacceptable. I think it's more dithering from the minister on this file, and I don't think it's going to serve us well at all in trying to repair the damage done to B.C.'s reputation.

I want to ask the minister about performance measures in this service plan. There were in recent years 22 measures that were reported in the service plan. This year in his ministry it's down to seven. I note that, of the seven, there isn't a single performance indicator recorded by his ministry that has anything to do with affordability or financial accessibility in the system.

I wonder: even though that remains as a goal of the ministry — to somehow have an accessible and affordable post-secondary system — his ministry now does not measure anything that relates to measuring whether the ministry is achieving that goal. If he could comment?

Hon. M. Coell: It was government's direction, and I think you'll see it in a number of service plans, to simplify the goals and to make them more transparent. So that's what we've done.

R. Fleming: Could the minister tell me where that direction came from? There's a suggestion that it came from the cabinet operations committee or that it was centrally directed to his ministry. I'm wondering if there's an organization, or a committee of government caucus, that has a role in vetting, reviewing and recommending the elimination of performance indicators in his ministry.

Hon. M. Coell: I think it was simply a government decision to make more transparent and more easy-to-read service plans. That would have gone through government caucus committees as well as the ministry staff working through those changes.

R. Fleming: Government caucus committees — it's interesting that the minister acknowledges that. That would seem to…. Instead of a parliamentary committee, which has bipartisan oversight over the issue of performance indicators, in fact we have a partisan committee of the governing party reviewing important, key indicators that ministries use to report the activities and the achievements of the public service to the broader public.

I think it's inappropriate. The minister has acknowledged that there's a role for a government — i.e., Liberal Party — caucus committee to decide and make recommendations on what performance indicators should be measured by government.

I am mindful of the time here, but I want to ask the minister one other question.

We have touched on student financial assistance at the beginning of this year's estimates. His staff has kindly given me some data on government student loans. The trend has been observed that the number of applicants for student loans is going down. That's why this year again the budget for StudentAid B.C. is being cut.

There's an observation here, from the data that's been provided to me, that the number of students with severe levels of debt upon graduation has skyrocketed, and those with more than $15,000 of debt now graduating from British Columbia institutions is now 30 percent. Only four years ago it was 18 percent.

I wonder if the minister can tell me. He previously commented on the record that average student debt in B.C. has now surpassed $26,000 for a four-year program.

I wonder if he can tell me, because it wasn't explicitly in the terms of reference of the student aid review, whether an additional goal of pursuing student aid policies that reduces student debt beyond unacceptable levels will be added to that terms of reference, and to just generally comment whether he's concerned that debt seems to have continued to rise in the province of B.C. for students.

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	YEAS — 27

S. Simpson	Fleming	Farnworth
Kwan	Ralston	Cubberley
Hammell	Coons	Thorne
Simons	Puchmayr	Gentner
Routley	Fraser	Horgan
Dix	Trevena	Robertson
Karagianis	Evans	Krog
Austin	Chouhan	Wyse
Sather	Macdonald	Conroy

	NAYS — 36

Coell	Ilich	Christensen
Les	Richmond	Bell
van Dongen	Roddick	Hayer
Lee	Jarvis	Nuraney
Cantelon	Thorpe	Hagen
Oppal	de Jong	Campbell
Taylor	Bond	Hansen
Penner	Neufeld	Coleman
Hogg	Sultan	Lekstrom
Mayencourt	Polak	Hawes
Yap	Bloy	MacKay
Black	McIntyre	Rustad


	YEAS — 40

Coell	Ilich	Chong
Christensen	Les	Richmond
Bell	van Dongen	Roddick
Hayer	Lee	Jarvis
Nuraney	Whittred	Cantelon
Thorpe	Hagen	Oppal
de Jong	Campbell	Taylor
Bond	Hansen	Abbott
Penner	Neufeld	Coleman
Hogg	Sultan	Bennett
Lekstrom	Mayencourt	Polak
Hawes	Yap	Bloy
MacKay	Black	McIntyre
	Rustad

	NAYS — 29

Brar	S. Simpson	Fleming
Farnworth	Kwan	Ralston
Cubberley	Hammell	Coons
Thorne	Simons	Puchmayr
Gentner	Routley	Fraser
Horgan	Dix	Trevena
Bains	Robertson	Karagianis
Evans	Krog	Austin
Chouhan	Wyse	Sather
Macdonald		Conroy