2009 Legislative Session: First Session, 39th Parliament
HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

official report of

Debates of the Legislative Assembly

(hansard)

Tuesday, October 6, 2009

Morning Sitting

Volume 4, Number 1

[ Page 951 ]

TUESDAY, OCTOBER 6, 2009

The House met at 10:02 a.m.

[Mr. Speaker in the chair.]

Prayers.

Tabling Documents

Mr. Speaker: Hon. Members, I have the honour to present the 2008-2009 annual report on the Representative for Children and Youth.

Orders of the Day

Hon. M. de Jong: Good morning. I call in Committee A, Committee of Supply — for the information of members, the estimates of the Ministry of Forests and Range — and in this chamber, continued committee stage debate on Bill 5, Finance Statutes Amendment Act.

Committee of the Whole House

BIll 5 — FINANCE STATUTES
AMENDMENT ACT, 2009

(continued)

The House in Committee of the Whole (Section B) on Bill 5; C. Trevena in the chair.

The committee met at 10:05 a.m.

On section 11.

B. Ralston: Good morning. Resuming debate in committee on Bill 5 at section 11, can the minister explain the purpose of this amendment? It appears to allow regulations with respect to insurance agents who deal with insurers. So can the minister explain the purpose of the amendment?

Hon. C. Hansen: This, again, is dealing with rules to deal with unlicensed insurers. Just as an example, there would be requirements that they must disclose or provide to the client information on the financial strength or the creditworthiness of an unauthorized insurer or that the insurer is, in fact, unlicensed and the insured must pay insurance premium tax. So this, basically, is to provide for beefed-up rules with regard to unlicensed insurers.

B. Ralston: And these rules are enforced by the Financial Institutions Commission — are they?

Hon. C. Hansen: They would be enforced by the Financial Institutions Commission.

Section 11 approved.

On section 12.

B. Ralston: In the minister's speech at first reading, he said that these amendments would "give the regulator new powers to take action against non-compliant mortgage brokers." I'm wondering if he could give some anecdotal evidence, at least, of the need to make these amendments, given that there appears to be a concern about non-compliant mortgage brokers.

Hon. C. Hansen: One of the things that this is trying to correct is…. First of all, if you wind up with a mortgage broker that is unregistered, there is not an avenue for recourse against that individual or that particular operation, because the ability to…. The only recourse that the province has against a mortgage broker is against those who are registered.

[1010]

Therefore, if they're not registered, we don't have recourse, or if an individual is trying to avoid repercussions of an action that they have taken, then they can do so by handing in their registration. These amendments allow us actually to ensure there is appropriate recourse not only for registered mortgage brokers but for those who are unregistered or had previously been registered.

B. Ralston: It's my understanding that the mortgage brokerage business is one that has grown dramatically over the last ten or 15 years. Indeed, some estimates are that up to a third of the mortgages that are signed or put together in British Columbia are done through the agency of mortgage brokers in conjunction with different financial institutions.

Can the minister give a sense of how many registered mortgage brokers there are? And what is the ministry's sense of how many unregistered mortgage brokers there are that this legislation might apply to?

Hon. C. Hansen: There are about a thousand firms that are registered, and that includes about 4,000 individuals who would be registered pursuant to the Mortgage Brokers Act. There is not a count in terms of how many unregistered.

What it means, basically, is that an individual or a firm that is providing a service that should be covered under the mortgage act…. As we identify those, we send out cease-and-desist orders to them. It's about one a month that is identified as a firm or an individual that is engaging in a practice that should be covered under the act.

B. Ralston: I don't read this in this amendment, but is there anything in the act that prohibits a financial institution, whether a federally chartered bank or a
[ Page 952 ]
provincially chartered credit union, from dealing with an unregistered mortgage broker? Or is that something that's left to the individual financial institution at their discretion?

Hon. C. Hansen: If a bank or a credit union chose to deal with an unregistered mortgage broker, they would do so at their peril. Certainly, if that came to the attention of the superintendent of financial institutions, he would be following up with those institutions and advising them that that practice would be inappropriate.

B. Ralston: Given the concern that the minister expressed about non-compliant mortgage brokers, is there anything in these amendments or elsewhere in the act or regulations that requires mortgage brokers, in their advertising, to record the fact or display to the public the fact that they are a registered mortgage broker pursuant to the act?

[1015]

Hon. C. Hansen: There is currently a prohibition that prevents even a registered mortgage broker from advertising the fact that they are registered. It's a provision that goes back a long ways, and when we go through the next review of this legislation, it's something that would be looked at as we do a more comprehensive overview or review of the terms of the legislation.

B. Ralston: Two questions. First, when would the next review of the act be contemplated, given the legislative calendar and given, I suppose, the peregrinations of the Insurance Act? I can't imagine it's a very frequent occurrence. So that would be the first question.

Secondly, in the amendment there's a reference in 1.2(b) to "an administrative penalty of not more than $50,000." Looking at the previous version of that — I believe that's in 1.1 in the current act, the unrevised version — it's an administrative penalty of not more than $50,000.

Ordinarily, when acts are updated, there's usually an opportunity to revise the penalty section upwards in accordance with inflation. Given that mortgages, certainly in the Lower Mainland, may be between half a million or a million dollars almost routinely, a maximum administrative penalty of $50,000 seems rather low, looking at the financial interests that are at stake

Was there any reason why it wasn't thought to revise the potential administrative penalty upwards?

Hon. C. Hansen: As I mentioned, we have initiated a review. There's not a specific timeline on that, but it is work that the ministry will be undertaking to look at the broader issues around this act.

Something like the level of penalties that would be appropriate is something that would be part of that review. This particular amendment was really meant to address a very narrow issue, and that was the challenge we had with unlicensed brokers.

B. Ralston: I appreciate that these amendments may make it administratively easier to move against non-compliant brokers. Can the minister give an idea of approximately how many hearings for alleged violations of the act by mortgage brokers or unregistered mortgage brokers occur per year at the present time?

Hon. C. Hansen: In a typical year there might be anywhere from six to 12 hearings that would take place involving unregistered brokers.

Section 12 approved.

On section 13.

B. Ralston: This amendment appears to just give greater force to orders of the registrar by authorizing them to be filed in the Supreme Court, to have the same powers as an order of the Supreme Court. I take it that's something that's been a problem in the past, and there's a greater potential for actual enforcement here. Is that the purpose of this amendment?

Hon. C. Hansen: Yes.

Sections 13 and 14 approved.

[1020]

On section 15.

B. Ralston: This is an amendment to the Partnership Act — section 15 of the bill. It proposes to amend section 131 of the Partnership Act. That section of the Partnership Act gives the power to make regulations, and there's a substantial change proposed here. Can the minister explain the purpose of that change?

Hon. C. Hansen: The purpose of this amendment is actually just to clarify the regulation-making power that government has as it pertains to the TILMA agreement and the ability of companies to act in either province.

The previous wording had said that regulations could be made "respecting the form or manner in which the registrar may accept records, filings, applications, information, forms, notices and fees in matters governed under this section."

What this amendment does is simply add another subsection that says: "and (ii) in respect of foreign partnerships, limited partnerships, and extraprovincial limited liability partnerships from a designated province" — being obviously Alberta, in the case of TILMA, but in the future could incorporate other provinces as well.
[ Page 953 ]

Also, I just want to take this opportunity, if I can, hon. Chair, to correct something that I had said in the discussions yesterday with regard to a foreign entity from a designated province — which, of course, is relevant to this section as well.

A foreign entity from a designated province refers to an Alberta company — in the context of the B.C.-Alberta agreement, but in the future could be other provinces as well — that is not yet registered in B.C. Once registered, it would be an extraprovincial company under the Business Corporation Act. So I just wanted to clarify the record on that.

B. Ralston: I thank the minister for that clarification. That appears to make sense. At least the explanation it offers makes sense.

Can the minister then explain what would be the change to public access or searches of corporate records that this amendment would bring about? Would it bring about any changes in the search?

If, for example, a company is registered in Alberta, it has certain rights by operation of these amendments within British Columbia. For the purpose of searching those company records — just to confirm incorporation and, perhaps, who the principals and the directors are — where would that search physically have to take place? Or is it all electronic and on line? I think people might be interested in knowing that.

[1025]

Hon. C. Hansen: Basically, in terms of companies that are registered in British Columbia as well as extraprovincial companies that are registered in British Columbia, all of that access is now available on line.

B. Ralston: Similarly, a company registered in Alberta but operating extraprovincially here — would that same access be available? I suppose the question that arises is: is there a fee for requesting those records?

Hon. C. Hansen: If a company in Alberta has elected to be registered in British Columbia, you would be able to have access to that on line from here. Also, in terms of fees, the same kind of search fees that apply today will apply under these new provisions as well.

Section 15 approved.

On section 16.

B. Ralston: These sections that follow are really enabling the same purpose, and I understand that this is related to the mandate of the Canadian Public Accountability Board. These amendments are designed to facilitate the operation of the auditor oversight body. I'm wondering if the minister could broadly explain the purposes of this series of amendments, and perhaps we can deal with them more or less as one.

Hon. C. Hansen: What these amendments do is provide for a recognition of the Canadian Public Accountability Board, which has been very recently established nationally in Canada. It provides for recognition under our Securities Act. It also provides for our Securities Commission to have oversight over the activities of the CPAB in British Columbia, and it also provides for the ability to coordinate with other jurisdictions across Canada.

B. Ralston: In section 16 there is an amendment to the definition section, section 1. The auditor oversight body…. It refers to "means a self regulatory body." Is that meant to be the Securities Commission, or is that a reference to the Canadian Public Accountability Board itself? Also in the definition section, it refers to a self-regulatory body. I'm wondering what the reference is specifically — which agency that is to.

[1030]

Hon. C. Hansen: Actually, both of these terms would cover the activities of the CPAB as an auditor oversight body, which they are explicitly, but in the act there is also reference to a self-regulatory body. This definition will make it clear that CPAB is in fact a self-regulatory body for the purpose of this legislation.

B. Ralston: Just so it's clear, because obviously there is some unfortunate history in British Columbia of public companies that would not necessarily comply with audit standards in some ways. Certainly, on occasion some of the auditing practice by individual companies has been questioned publicly, I think perhaps most notably and repeatedly by Mr. Baines of the Vancouver Sun.

I'm wondering, in practice, how this will work. Is the work intended to be carried out by the Securities Commission as a delegated piece of work, or will it be carried out by the Canadian Public Accountability Board themselves using the opening that's created by the amendments that we're dealing with today?

Hon. C. Hansen: It would be the latter. It would be under the CPAB. The CPAB's work would fall under the broad general framework of the Securities Commission, but it is the CPAB that would be undertaking those kinds of reviews.

B. Ralston: In an interview published in the Globe and Mail, August 18, 2008, Mr. Le Pan, who is the chair of the Canadian Public Accountability Board, said this. I'm just offering this for the minister's comment. "We're now in the smaller group of firms — not the big guys, the smaller guys. We're getting repeat offenders. We need
[ Page 954 ]
to ratchet up the consequences. That's normally how a regulator would work. Well, our ability to ratchet up the consequences may be constrained because of this."

He's speaking of the absence of immunity for the work that might be done by his office. He appears to think that there's work to be done. Beyond these amendments, is there any sense of what the scope of operation is? Has there been any discussion of how this might come to play in fact, or are we simply at the level of administrative amendments to the act and not really concerned with operations here?

Hon. C. Hansen: CPAB has been in existence in Canada now for six years approximately. What this legislation will do…. Other provinces are passing comparable legislation, some with somewhat different approaches but, generally speaking, all with the intent to give CPAB clear powers for the audit reviews that they would be doing in British Columbia. It also would provide for them the appropriate statutory immunities.

B. Ralston: This is related to this amendment. There obviously has been discussion repeated and most recently by the federal government about a national securities regulator. In the event that a national securities regulator was agreed to…. Certainly, that's been the position of the federal government recently, and I believe the minister has supported that, which is a change in position for British Columbia.

[1035]

What impact, if any, would a national securities regulator have upon the operation of the Canadian Public Accountability Board? Would there be any? Or would it simply operate in tandem, more or less in the same way these amendments contemplate?

Hon. C. Hansen: Just to clarify our position, we have indicated that we support in principle the concept of a national securities regulator. There's still a lot of work to be done to actually flesh out exactly what that might look like, and we're working very actively with the federal government to try to help design a program for a national securities regulator that would be in the interests of British Columbia.

I was very pleased when the federal Finance Minister decided to ask Doug Hyndman, previous chair of our Securities Commission, to chair the national transition committee for that, because I think Doug Hyndman is very highly respected across Canada for this work and will do a very good job of exploring the opportunities that a national securities commission would offer.

In the work that has already begun around the concept of a national securities regulator, they have looked at what kind of provisions should be in place to provide the powers for the CPAB. They have asked to see the legislation that we have proposed here, and we anticipate that we'll be working closely with them as initiatives around the national securities regulator are developed. It would be our anticipation that if we wind up with a new national securities regulator, it would wind up covering and providing to the CPAB the powers that they deem necessary.

Section 16 approved.

On section 17.

B. Ralston: These amendments in the description section in the bill say that it "provides an auditor oversight body with a statutory power to compel the disclosure of information from its members or participants, other than privileged information which requires consent."

It simply says "compel." Is that in the nature, then, of a subpoena? What is the remedy if the request for disclosure is declined?

Hon. C. Hansen: They would provide a written request, with specific deadlines for providing access to documents and disclosure of information. If a company refused to provide that information, they would have the option of providing penalties of up to a million dollars in certain cases. The other route, to actually compel disclosure — they would be required to go to court and get a court order for that.

B. Ralston: And by "court," I take it the minister means the Supreme Court?

Hon. C. Hansen: That's correct.

B. Ralston: In this section, proposed amendment 32.4 appears to be a prohibition against compelling any…. The auditor oversight body or anyone working for them in any capacity cannot be brought before any proceeding other than a criminal proceeding.

[1040]

In his interview with the Globe and Mail that I referred to earlier, Mr. Le Pan said: "If we don't have statutory protection, my board is legitimately worried that, as we get to these higher levels where consequences are bigger for the audit firms, we will be tied down endlessly in lawsuits because there isn't statutory protection for the CPAB, for directors, for officers."

So it would seem that this section, this proposed amendment, is designed exactly to meet the concern expressed by Mr. Le Pan. I just wanted to confirm that.

Hon. C. Hansen: This section may be part of that, but the most important section with regard to immunities that Mr. Le Pan was looking for is actually covered in section 19, which we are coming to, which specifically deals with immunity.
[ Page 955 ]

B. Ralston: In this same article, Mr. Le Pan says that there are avenues to deal with auditing firms who, in the view of CPAB, are not compliant. One that he speaks of is going to the board of the company that's been audited and…. He says in this article: "In the most serious cases it would disclose its findings to the Securities Commission, which could make them public."

I'm wondering: in these amendments, is there power for the audit oversight body to refer the results of an investigation to the Securities Commission with a view to having those results made public?

Section 32.3 says…. It's entitled "Auditor oversight body may require disclosure," but that appears to refer to disclosure from the firm to the auditor oversight body.

I'm wondering where the avenue, if any, exists in these provisions for public disclosure through the provincial Securities Commission.

Hon. C. Hansen: This actually flows from a previous amendment where we provided for a clarification of the definition of a self-regulatory body — in the definition section — to make it clear that the CPAB, in fact, fits the definition of a self-regulatory body.

In section 169.1 — which remains the same, which isn't being changed — is a provision that allows for the sharing of information between self-regulatory bodies, which, of course, would mean that the CPAB would be able to share information with the Securities Commission as they deemed appropriate.

In terms of public disclosure, there is nothing that would prohibit public disclosure, but we also recognize that part of the success of bodies like the Securities Commission or the CPAB would ensure that…. Basically, the fact that they can get access to information that is confidential in nature and keep it confidential is an important part of their ability to do their work.

[1045]

B. Ralston: Well, I suppose one has to balance against that the right of the public to know. Certainly, if these are public companies and there are deficiencies in the audit and they're being publicly traded, that obviously has an impact, potentially, on their market value. It would seem to me, from the tone of Mr. Le Pan's interview back on August 18, 2008, that he thinks major improvements are necessary.

I'm just going to quote from what he says. "Aside from the Big Six" — and he's referring to the big six accounting firms — "CPAB investigates dozens of smaller auditing firms. While it has seen improvements, 'We still believe there's a ways to go,' Mr. Le Pan said."

So he's of the view that the standard of audit practice as it concerns public companies needs improvement. He's speaking not only of the national firms but of the smaller auditing firms. One can readily imagine that those might come more into play in some of the more dubious ventures that we sometimes see launched in British Columbia — certainly in the past, in any event. Unfortunately, I think that still continues.

Is it then left to the discretion of the Securities Commission whether or not to make the results of those kinds of investigations public? It would seem to me there's an important public interest. If the audit of a publicly traded company is deficient, the public should know about that.

Hon. C. Hansen: The legislation provides both the Securities Commission and the CPAB with the powers necessary to undertake their investigations. Part of those powers is access to certain confidential information. Both these bodies have the ability to make public disclosure when they deem that that's in the public interest, but I also think their objective is to ensure that we have the appropriate protection of the public interest. That's not always best served by requiring public disclosure of confidential information.

If we're going to have faith in the process and companies are going to be willing to cooperate with the work that is done by these bodies, the public interest is not necessarily served by requiring public disclosure when the actions can be corrected in more appropriate ways.

B. Ralston: Again referring to this article, Mr. Le Pan says: "In its most recent review of the Big Six firms," and he lists them, "it looked at 130 audit files and found deficiencies in 11 of them. In five cases it believed the financial statements of the public companies that had been audited would need to be reissued, restated or corrected the following year. In each case the auditors agreed to carry out more work or add documentation to the file."

Then he goes on to talk about the passage that I quoted earlier: the dozens of smaller auditing firms where he says he believes there's a long way to go.

I understand and respect the need for confidentiality. Obviously, solicitor-client confidentiality is fairly bulletproof legally. I'm wondering whether the statement that the minister has just made is the best approach for the public interest if publicly traded companies have audits which need to be reissued, restated or corrected. Surely the public is entitled to know that.

Certainly in the government finance, the government has made much…. There's a process whereby the Auditor General examines the public accounts and issues an independent report about whether they agree or not with the way in which the comptroller general has stated the public accounts. I can't see that, in general, it would be contrary to the public interest to have those sort of things publicly disclosed.

[1050]
[ Page 956 ]

Hon. C. Hansen: If there was an order that was issued to require a company to refile or to restate and that firm chose to ignore that order, then there is action that CPAB can take in terms of disciplinary action against that firm, which would include public disclosure and, of course, providing and sharing that information with the Securities Commission.

Sections 17 and 18 approved.

On section 19.

B. Ralston: This is the section concerning immunity that the minister referred to earlier. I'm wondering if the minister could broadly state the result of these amendments in terms of the immunity of officers, directors and employees, I think it is — it's very broad — of the Canadian Public Accountability Board.

Hon. C. Hansen: The Canadian Public Accountability Board and its directors, its officers, its employees are exposed to the threat of legal action when making decisions because those decisions or omissions could result in significant losses for audit firms, auditors, companies and investigators. This potential liability may hinder CPAB's ability to attract quality staff and take appropriate action. Therefore, it is felt that this immunity for CPAB and its officers, directors and staff is appropriate.

Sections 19 to 25 inclusive approved.

Title approved.

Hon. C. Hansen: I move the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 10:53 a.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

Bill 5 — FINANCE STATUTES
AMENDMENT ACT, 2009

Bill 5, Finance Statutes Amendment Act, 2009, reported complete without amendment, read a third time and passed.

[1055]

M. Elmore: I seek leave to make an introduction.

Leave granted.

Introductions by Members

M. Elmore: I'd like to welcome…. Visiting the Parliament Buildings today from Victoria–Swan Lake are students and adults from Elizabeth Buckley School. We have 15 visitors visiting us today — 12 grade 5 students and three adults, with Mrs. Gillian Petrini. I'd please ask everyone to give them a warm welcome to the precinct.

Hon. B. Penner: I call committee debate of Bill 6, Insurance Amendment Act, 2009.

Committee of the Whole House

Bill 6 — Insurance
Amendment Act, 2009

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

The committee met at 10:57 a.m.

Section 1 approved.

On section 2.

B. Ralston: I suppose we'll be at this for a while. It's a very lengthy bill and has taken some considerable time to get here.

Section 2 repeals the definition of "prescribed." Can the minister explain why that is being proposed?

Hon. C. Hansen: This, basically, is housekeeping to clean up the act with provisions and definitions that are no longer required. In terms of the definition of "prescribed," that is now covered specifically in the Interpretation Act, so it is not required in this act. Also the definition of "vehicle" is not required, because this legislation no longer deals with vehicle insurance.

B. Ralston: This section also repeals the authority to define through regulations classes of insurance. There was an explanation offered in the minister's discussion paper. I'm wondering if the minister could briefly refer to that and explain why that's necessary.

Hon. C. Hansen: A new harmonized and streamlined set of 16 classes of insurance has been developed by federal and provincial insurance regulators for licensing and business reporting purposes. The new FIA power will allow for the adoption of these harmonized classes, thereby significantly reducing the regulatory burden for insurers operating in more than one province.

B. Ralston: I appreciate that there's been extensive consultation on this bill — I think some six years in
[ Page 957 ]
the making. The reason that these would be included in regulation is to make future change easier, rather than requiring legislative change. Would that be the reason?

[1100]

Hon. C. Hansen: This, as I mentioned, is intended to streamline the set of classes. Previously there would have been about 50; there are now about 16. This is to differentiate the regulation-making powers that the FAA has with regard to the business portion, separate from the insurance portion. Later, as we get farther into this bill that's before us today, we'll be setting out specifically the regulation-making powers as they pertain to the insurance industry.

[L. Reid in the chair.]

B. Ralston: The minister's discussion papers on this topic referred specifically to the expansion of the definition of "title insurance." Can the minister explain why that direction was contemplated and what the result was?

Hon. C. Hansen: The title insurers in British Columbia are looking for an expansion of scope. We do not deal with that explicitly in this bill but rather, if government were to make a decision in the future to alter the scope that title insurers could operate in, we would be able to do that through regulation.

B. Ralston: I appreciate the minister's answer. I think it's broadly included in this section since it's fairly broad and is talking about classes of insurance. Can the minister explain briefly what the scope of title insurance encompasses now and what might be contemplated for the future?

As I understand it, typically for real property, the system of land registration — the so-called Torrens system that we have here — has its own guarantees built in. At least I was taught, and I believe generations of lawyers were taught, that there's no requirement for title insurance in this jurisdiction because the Torrens system acts very effectively to provide almost complete certainty of title.

I'd be interested in what proposed expansion of title insurance the ministry, as opposed to the minister, might have in mind in the future.

Hon. C. Hansen: In terms of the current scope, title insurance pertains to real property. There have been requests made that we expand it to include personal property, such as an automobile, for example. We have certainly received some of those representations, and we are not moving on those at this point, but it is something that could be done in the future if government were to decide that that change was necessary or in the public interest.

[1105]

B. Ralston: Well, I can understand the financial interest of title insurance companies to create new markets for their products. But surely if the Torrens system works as it's supposed to do, the land title office is guaranteeing the title, and it's not necessary to search the antecedents of title in the way that it is in some other jurisdictions and provide some measure of certainty by searching back through the generations to discover the origin of the original grant from the Crown.

So it seems to me that the only way a market for this could be created is if the public institution designed to administer the system is not doing its job or is perceived to be not doing its job. Similarly, with title to, I suppose, automobiles, there are public registries which purport to offer opinions as to the genuineness of title that is offered to automobiles. Again, if the public registries are not doing their job, then a market might create it.

It seems to me that if this is a direction that is being contemplated, the minister might want to provide more detail about that.

Hon. C. Hansen: No direction is being contemplated. I thought that I had made that clear in my previous response. I'm just saying that if a government in the future were to look to change the scope of what might be covered under title insurance, that power would be provided for as part of the regulations. There are no changes that are being contemplated.

Section 2 approved.

On section 3.

B. Ralston: Can the minister explain the purpose of this section? I believe in his opening remarks, it refers to the Marine Insurance Act, which I understand is ultra vires the province, although it's a statute that has been…. Some provincial aspect has been in existence for some time. But can he broadly explain the purpose of this amendment?

Hon. C. Hansen: The member is correct. The Insurance (Marine) Act, which is a provincial act, is not relevant because it is superseded by the Marine Insurance Act that has been passed by the Parliament of Canada. So part of this legislation — this bill that's before us — is to repeal that provincial act, but also in this section and this amendment is to make it clear that this act does not apply to the provision of marine insurance that would be covered under the Marine Insurance Act of Canada.

B. Ralston: The provincial government, then, is making a concession about jurisdiction. Is this a view that is shared by other provinces — perhaps, notably, on the east coast, whether it's Nova Scotia, New Brunswick,
[ Page 958 ]
Quebec, Newfoundland or Prince Edward Island? Is there any concern about their views on this? Is this a significant concession, or is this housekeeping?

Hon. C. Hansen: This move is being done on the advice of legal advisers and the general legal community in British Columbia. In terms of the Atlantic provinces, they have not taken similar actions. British Columbia is the first province to repeal its marine insurance legislation.

[1110]

B. Ralston: Aside from, I suppose, the legal interest of the jurisdictional question, does this have any business consequences? Is there any particular business insurance company here that would be affected by this change, or is it simply a question of tidying up legislatively?

Hon. C. Hansen: This action will actually be a benefit to the marine insurance business in British Columbia in that there has been some confusion as to which act applies, and this will make it clearer for them that the federal act applies.

B. Ralston: I'm advised that there's a report by the Canadian Maritime Law Association which agrees with the position taken by the government. Has there been any litigation on the issue, or is that simply at the level of legal opinion rather than a decided case by the court?

Hon. C. Hansen: This does go back to a court case that was started in the 1980s and was heard by the Canada Supreme Court in the early 1990s. In that case they indicated that the provincial marine law did not apply. It wasn't the province of British Columbia that was the subject of that case. Basically, the discussions and the opinions and the advice that we've received from the legal community subsequent to that have led to this action today.

B. Ralston: The minister seems to be saying that it's a fairly clear and decided law. I'm wondering, then, if there's an explanation as to why other provinces haven't made a similar concession. Or is that just, I suppose, the ordinary speed with which a government sometimes moves?

Hon. C. Hansen: The Supreme Court decision in the 1990s wasn't explicit around saying that provincial law was ultra vires. Rather the Supreme Court ruling was that there were very broad federal powers in this area.

Some of the review of that decision and discussions and advice that has subsequently come forward has increasingly coalesced around the view within the legal community that the provincial law would not and should not apply in this case. So it was not something that sort of happened overnight but, basically, a body of opinion that has evolved over the decades. This was the appropriate opportunity for us to take the action to remove the provincial legislation from the books.

[1115]

Section 3 approved.

On section 4.

B. Ralston: Some of these sections exist in slightly different form later in the act. The explanatory note says that the purpose is to move these existing sections into introductory provisions. It does appear that there are some wording changes.

Is it the intention of the drafters to change the meaning of the sections, or is it simply making it clearer? I'm thinking particularly of section 2.1(1): "An insurer must not make a contract that is inconsistent with this Act." That would appear to be self-evident, but it's a slightly different wording than the previous section 4.

Hon. C. Hansen: The provision that the member referenced at section 2.1(1) is the only new provision that's in here. I think, as the member indicated, it is quite a minor provision, but it allows us to be consistent with the Alberta legislation.

B. Ralston: Section 2.2, "Liability of continuing insurer." This would appear to be contemplating a situation where someone's going out of business and passing, by sale, the book of business to someone else. This appears simply to clarify the rights and the continuing authority of the continuing insurer to take over the business. Is there anything else that the minister can add to that admittedly, perhaps, brief description of that section?

Hon. C. Hansen: The member is correct.

B. Ralston: I don't hear that too often, so I appreciate hearing that.

I would like now to turn to section 2.3. This appears to speak of the effect on contracts of violation of the law. I wonder if the minister can explain the effect of this section.

Hon. C. Hansen: This allows for payments in certain circumstances that would not have been allowed under the previous legislation. In the current wording of the legislation, a company could not pay out an insurance payout if an offence had been committed. What this clarifies is really the circumstances whereby there may still be a payout even if an offence had taken place in certain circumstances.

[1120]
[ Page 959 ]

For example, if the individual who committed the offence had intent to bring about loss or damage, then there would still be restrictions on payouts. But if there was no intent that can be demonstrated, then this allows for payouts in certain circumstances.

B. Ralston: I suppose I'd ask the minister to just consult with his staff. Generally, my experience is somewhat limited, but the word "intent" in both the civil law and the criminal law is very broad. Is it anticipated that by adding this, this would reduce litigation? It would seem to me that without a definition or some very specific circumstances, this might be unclear.

Hon. C. Hansen: This provision is provided for in the statute now — that the inability to provide payouts where an offence has occurred is part of a common-law practice. What this does is clarify some of the language in the provision and really provides for an update of the language from what is in the statute currently.

Sections 4 and 5 approved.

On section 6.

B. Ralston: This sets out in section 6 the types of contracts to which part 2 applies. Is there any substantive change from the previous act?

Hon. C. Hansen: The previous wording was found to be confusing in some cases. The new wording was meant to bring certainty to this and to eliminate some of the confusion that had developed from the wording of the existing statute.

Section 6 approved.

On section 7.

B. Ralston: This section itemizes the information that must be contained in writing in a policy. I suppose the most significant change here is section (1)(j), which refers to limitation periods.

Given some of the decisions of the court — I'm thinking of KP Pacific Holdings, where there was litigation up to the Supreme Court of Canada on limitation periods within the old act — can the minister explain the purpose and what is intended to be achieved by 8(1)(j)?

[1125]

Hon. C. Hansen: This actually provides for that statement that must be incorporated into the wording of a policy. It's to make sure that the insurance consumer is properly informed of the existence of limitation periods and to reduce the possibility of their being caught unawares that limitation periods exist.

B. Ralston: Is it intended that in the policy in writing the exact limitation period itself will be spelled out, or simply will it be this indirect reference to the time set out in the Insurance Act? I'm sure most people will appreciate it's not the…. Having the Insurance Act on hand is not something that most consumers would do.

Hon. C. Hansen: It was felt that since some of the expiry periods can be quite complex in themselves, it would be simpler in the actual policy to reference the act. It is felt that in some of these more complicated expiry periods, it would require legal advice to an average consumer. Therefore, it basically sets out that these provisions are there and should be noted.

Later in the legislation when we talk about regulation power, there is the ability to make regulations around the kind of notice that would be required to be sent out to a consumer prior to the expiry of a policy.

B. Ralston: I appreciate that we'll deal with that later on and some of the concerns that have been raised by the industry.

The minister refers to more complicated provisions. I suppose that for most people, the typical policy would be home insurance on your house or your condominium or townhouse — your strata property. Was it not contemplated or thought of for those…? I think those are the typical consumer products. Was it not thought that it might be more helpful to the consumer to have that spelled out in the policy itself rather than just an oblique reference to the Insurance Act?

Hon. C. Hansen: This legislation is designed to apply to a range of insurance product that would be offered — everything from surety insurance, house insurance to interim title insurance, as we were discussing earlier this morning. Each of those has their unique features when it comes to expiry periods. What we will be providing for is the requirements for notice to be given that may differ in different types of insurance, and that would be done through regulation.

[1130]

B. Ralston: Section 8(2) says: "This section does not apply to a contract of fidelity insurance or surety insurance." Fidelity insurance, I'm told, is insurance against loss caused by the dishonesty or non-performance of an employee of the insured. Surety insurance is sureties or guarantees issued to third parties for fulfilment of contractual obligations such as bidding bonds and performance bonds. Why does this section exempt them from what would appear to be relatively straightforward provisions?

Hon. C. Hansen: What this change in (2) does is simply change it from the current wording where it
[ Page 960 ]
says that it would "not apply to contracts of guarantee insurance." What the term "guarantee insurance" had been meant to refer to is fidelity insurance and surety insurance. So for clarity, we are changing it to actually say fidelity insurance and surety insurance.

The reason the provisions under (1) would not apply to those types of insurance is because there are certain aspects of fidelity insurance and surety insurance that would not pertain to the items that are listed under (1).

B. Ralston: Can the minister give a little more detail as to what in 8(1)(a) to (i) would not apply to fidelity or surety insurance?

Hon. C. Hansen: Well, first of all, this is not a change from the existing provisions, only in terms of the wording and clarifying what is in fact guarantee insurance. But just one example is that in terms of…. Some types of fidelity insurance or surety insurance may not have terminations to them, which is, of course, provided for in (i) above. Also, the consumers of fidelity insurance and surety insurance are sophisticated consumers. This is not your average John Q. Public that would be purchasing this type of insurance.

So it is a very sophisticated market, and therefore the provisions that are provided in (1) were not felt that they would need to be spelled out specifically for these classes of insurance.

B. Ralston: This provision talks about dispute resolution and sets out a procedure. In the discussion paper — the minister's discussion paper on the act — it was proposed that insurance companies offering home, life or A&S insurance be required to have in place an internal dispute resolution system and to participate in a dispute resolution service that offers mediation of disputes between customers and insurers. The list of acceptable services would be set out in regulations or alternatively prescribed by order of the Financial Institutions Commission.

[1135]

In 9(7) it proposes that "Each party to the dispute resolution…must pay the representative whom the party appointed, and each party must bear equally the expense of the dispute resolution process and the umpire." It also says in subsection 9(3) that either the insurer or the insured may demand in writing the other's participation.

It would appear to be at the option of either side, the insurer or the insured, to…. There's a requirement to enter into this process, yet each party is required to bear their own costs, and then they split the costs for the third-party umpire.

Is the minister not concerned that this…? Given that insurers would be much more familiar with the process, whereas an insured — say, a typical consumer — might only be entering in this process for the first time and would have no understanding, or little understanding, of the costs and might be hesitant to enter into the process or participate fully…. Was that considered in devising this provision?

Hon. C. Hansen: This continues an existing process that is there. It is very specific in how it applies. In the current provisions, it actually provides for the valuation of property in a fire damage claim. This is actually a bit broader in that it is to determine the value of property in a property insurance claim. But this provision is the same as is currently there in terms of who can trigger the process and how it is funded.

We have not had complaints that have arisen out of this, because it is for a very unique type of dispute resolution. The broader areas around disputes resolution are actually provided for in section 106 of the legislation.

B. Ralston: Can the minister give an estimate of the typical costs that would be set out in subsection 9(7), if this is a pre-existing provision?

Hon. C. Hansen: I don't have that type of information available to me.

Section 7 approved.

On section 8.

B. Ralston: Section 12(3) is clarifying that renewal by renewal receipt of a contract is sufficient compliance with that subsection. Can the minister explain what that involves and why it was necessary?

[1140]

Hon. C. Hansen: This subsection (3) is new, as the member indicated. It provides an exception to the requirement that all terms be set out in the policy when the contract is renewed. In a renewal, it is sufficient that reference be made to the original contract.

Sections 8 to 11 inclusive approved.

On section 12.

B. Ralston: This involves extending a limitation period. Can the minister explain how that arose, and what is the purpose of this amendment?

Hon. C. Hansen: This provision provides for an extension to the limitation period to two years. The clarification and standardization of the triggers will significantly increase consumer protection. Having only one set of rules applicable to all property contracts will eliminate confusion and unfairness caused by the need to first classify the contract.
[ Page 961 ]

Section 12 approved.

On section 13.

B. Ralston: There are a number of provisions in this proposed section. I'm looking at section 27.1. In the previous section, there used to be a clause entitled "Action," which stated the limitation period. That will be removed, and none of the statutory conditions mention the two-year limitation, which we just spoke of in the previous section.

As I understand it, a differently worded statement about the limitation period must be included somewhere in the policy. I take it that would be the general provision that we talked about earlier in section 7 — the reference to the time set out in the Insurance Act. Is that correct?

Hon. C. Hansen: That's correct.

B. Ralston: Is the minister concerned at all, or not, that in the view of some, that may diminish consumer protection in that it does not specifically refer to the actual limitation period and simply refers to the Insurance Act?

Hon. C. Hansen: In terms of the overall legislation, it is designed to enhance consumer protection. I guess the question is: how do you best ensure that consumer protection is actually appropriate?

One of the provisions, for example, as we discussed earlier, is providing notice of expiry. You know, a lot of consumers, if they have an insurance policy, don't necessarily have it noted in their diary as to what the expiry date is. Having a reminder being sent to them prior to the expiry, whether it's two months or three months prior, is obviously going to trigger their recollection that they're going to have to take appropriate actions for renewing it.

That, of course, is provided for in regulation, as we indicated. The intent of this is to actually ensure that there is enhanced consumer protection, not diminished.

Section 13 approved.

On section 14.

[1145]

B. Ralston: In section 14, proposed section 28.4. This refers to "prohibiting insurance coverage exclusions related to the cause of a fire…unless the exclusion is prescribed by regulation, or related to circumstances of the fire or the prescribed peril that are prescribed."

In the minister's discussion paper, it was stated that the insurance industry has been asked to provide all earthquake coverage, fire and shake, in one separate earthquake policy rather than including fire coverage as a mandatory coverage in a fire multi-peril policy and selling shake coverage in a separate earthquake policy. Can the minister explain why the decision was made to proceed in this manner?

Hon. C. Hansen: I'm certainly aware of the representations that have been made by the industry in this regard. We felt it was appropriate that this be covered under a regulatory power rather than being embedded in the legislation.

Being able to cover this by regulation also allows us to make appropriate changes in the future, in order to stay consistent with other Canadian provinces. We think it's a desirable objective to ensure that there is consistency from province to province. We are achieving that with Alberta with this legislation, and there may be the opportunity to extend that further in the future.

B. Ralston: The minister made reference to the views of the industry. In the recent meeting of the Finance Committee two Mondays ago, Mr. Corbeil, on behalf of the insurance industry, stated…. I'm sure the minister is familiar with this view, but I just want to draw it to his attention for the record.

"We have a few comments regarding the bill. Section 28.4 of the Insurance Amendment Act provides that where a contract insures against the peril of fire or other prescribed peril, an exclusion relating to the cause of fire or the cause of the other prescribed peril is invalid unless the exclusion is prescribed through regulation.

"As the government embarks on a process to amend the Insurance Act regulations, we would like to strongly caution against limiting the ability of insurers to exclude fire following terrorism and earthquake on the basis that it would have profoundly negative implications for claimants and the public in general."

Can the minister, given those views…? I don't necessarily endorse them, but as the critic, I want to bring them to the minister's attention. Can the minister comment on the view that is expressed there — I think he's familiar with the position — and explain why the government has decided to go in a different direction in these amendments?

Hon. C. Hansen: I think the member indicated that he's not necessarily endorsing it, and I guess the government is not necessarily endorsing it either.

As I mentioned in my previous answer, we are aware of the representation that's been made by the industry. We will certainly consider that as we go forward, but we have not seen up till now any compelling arguments that would motivate us to make those changes. Should there be compelling arguments and if it was determined to be in the public interest in the future, that change could be made via regulation.

[1150]

B. Ralston: In the same meeting of the Finance Committee, Ms. Olson on behalf of the same organiza-
[ Page 962 ]
tion, in response to a question, spoke about the exclusion of fire following terrorism and said the following:

"The insurance industry requires having a solid understanding of what the maximum losses can be and being able to price accordingly for that. So terrorism is very problematical. The actual peril of terrorism is usually excluded in policies. But fire following terrorism, which can have the same…dollar impact, would not be excluded unless it is prescribed as described earlier.

"When you look around the world where terrorism and fire following terrorism coverage is part of the policy, it is provided in jurisdictions where there is government backstop behind the insurer.

"In Canada there is no such government backstop, and so what happens is if you are forcing the primary insurer to provide that coverage, and yet there is no government backstop and little if any reinsurance available, then the dollar magnitude of those dollars could easily wipe out those insurance companies. So what we don't want to see is no reinsurance and no government backstop and…having insurers forced to provide that coverage."

That is set out in 28.4. Fire following terrorism would be "another peril prescribed by regulation." Again, could the minister give a response to this view of the industry?

Hon. C. Hansen: We are certainly not aware of any difficulty that the insurance industry is having with regard to reinsurance in this area. Coverage is being provided. We also feel that the current restrictions that are in place with regard to exclusions are appropriate and in the public interest, but we are certainly prepared to consider representations that the industry may make.

B. Ralston: I thank the minister for that, and I'm sure the industry will take note of the minister's comments. I did understand, though — and perhaps I'm incorrect — that this was a position, certainly on fire following terrorism, that the industry had brought to the minister and the ministry in the process of this review. I know the member from West Vancouver had also engaged in a consultation process. This is referred to in the minister's discussion paper.

So I'd understood that this concern, in particular the absence of reinsurance for this peril, was well known. I'm a bit surprised by the position that the minister is taking here, but I think that's counterbalanced by the offer of further consultation — although this act has been in consultation, I think, in the view of many, long enough.

Is the minister then committing to review that with a view to whether or not in the legislative scheme there'll be regulation power to deal with this question? Is the minister then committing to review that prior to enacting any regulations?

Hon. C. Hansen: We are planning consultations on the regulations. That will be the next step after this bill is passed.

B. Ralston: In the same meeting of the Finance Committee, the question was asked about the peril of fire following earthquake, and the response of Mr. Corbeil was that the argument for allowing the exclusion of fire following earthquake that they had made with the government before is one of "consumer clarity, in terms of what is covered under what policy outcomes."

Can the minister confirm that he has received those representations and has agreed to disagree with that view?

[1155]

Hon. C. Hansen: I'm not sure exactly what communications precisely the member is referring to. I've had meetings and discussions with the industry, and they've been very constructive, very positive and very helpful.

It would not be correct to say that we agreed to disagree. It's that we have received their representations. We understand what they are requesting as an industry, and we are motivated by what is the consumer interest in this.

We will continue to look at this issue as we go forward. We have not come to any conclusions one way or the other, but certainly if there is a decision that is made to change policy and approach, we would be able to facilitate that as a result of regulations.

B. Ralston: I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:57 a.m.

The House resumed; Mr. Speaker in the chair.

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

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

Hon. C. Hansen moved adjournment of the House.

Motion approved.

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

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF FORESTS
AND RANGE

(continued)

The House in Committee of Supply (Section A); H. Bloy in the chair.
[ Page 963 ]

The committee met at 10:09 a.m.

On Vote 31: ministry operations, $464,137,000 (continued).

D. Donaldson: I have a couple of quick questions for the minister. The Bulkley Valley TSA…. It used to be called the LRMP, but that was back in 1997. Since then the recreation access management plan, the RAMP, has been left unresolved.

[1010]

I've reviewed the file, and there have been numerous letters to the ministry from the Bulkley Valley Community Resources Board, from tourism groups, to get the RAMP completed. First nations and even the former MLA for Bulkley Valley–Stikine wrote to the Minister of Forests at the time.

People are wanting to see the RAMP completed, but they've been told by ILMB staff that there are no resources. So will there be money in this budget this year to resource the long-overdue completion of the RAMP in the Bulkley TSA?

Hon. P. Bell: We understood that ILMB questions would be occurring at 10:30 or 11-ish today, so I don't have staff right now that are capable of answering that question. If it's possible to defer it until they arrive, we should be able to respond at that point.

D. Donaldson: I have another ILMB question, and I'll delay it. But I do have one that isn't ILMB-related, and it's around bridges and Forest Service roads.

There are bridges on Forest Service roads that are in a state of disrepair in my constituency, and these roads — the bridges that these roads are on, the Forest Service roads — lead to privately deeded property where people live full-time. The people who live there have been told that the bridges are going to be pulled, and they have been told they can pay for a properly engineered bridge to be installed at their own cost. But they must assume the financial liability for the Forest Service road after that, and that's just too onerous for these people who live further along the road. There are at least two examples of this.

Is there funding in the budget to replace bridges on Forest Service roads that lead to privately deeded property where people live as their main residence full-time?

Hon. P. Bell: This is a very important issue to rural residents in British Columbia and a very complex one because of the number of roads and the length of roads that have been built historically by the forest industry, accessing areas where they would go in and harvest timber.

Then gradually, over the years…. In some situations, people have residences that they live in year-round, and in other situations they have residences at least that they use on a recreational basis. Then there are also things like traplines and guide-outfitters that require access and structures, the mining industry…. There's a wide variety of users.

The description that the member provided is certainly one I've heard in my constituency office and across the province. So as a result of that, there have been a couple of actions that our government has taken. One was that the Premier at UBCM in 2008 announced $20 million; $5 million of that was in the '08-09 fiscal year, and $15 million of that was in the '09-10 fiscal year. It might have been the other way around. I'm not sure. But it was $5 million and $15 million, or $15 million and $5 million.

Most of that work has started, and those projects have all been defined at this point. That will have fully utilized those dollars. I'm presuming that the constituents that the member is talking about perhaps did not qualify, or those projects didn't qualify.

The process generally that we use is that each district manager — we have 29 forest districts across the province — looks at all of the sorts of infrastructure projects that they believe are important. They rank them in the order of people's residences, where they're living, other users of the road system, the volume of traffic. Then they determine on that basis where the funds are best allocated.

[1015]

I don't know the specifics that the member is referring to. I'd be happy to look into them, if he wants to provide me with that information, either now or at a later date. There is each year a small amount of funding that's provided to each district manager, and they make decisions in terms of how those funds are applied.

More importantly, the Premier in a 2008 Union of B.C. Municipalities speech established a committee that was co-chaired by the Minister of Community Development and a member from the Union of B.C. Municipalities to look at this issue.

As forest companies no longer have harvesting requirements in specific areas and they pull out of those areas, they are faced with decisions about deactivating roads or taking the risks associated with leaving the roads active. Then at some point in time, as bridges or other access structures deteriorate — it could be culverts or a wide variety of different access structures — they will eventually be faced with a liability issue and a decision that they must confront. The question then becomes: who should bear the responsibility of that particular access structure? Should it be the users? Should it be the broader range of taxpayers?

Those are all complex questions. I'm not particularly favouring one outcome or another. I'm not suggesting that there's any single answer to this. I think it is a complex question that needs to be resolved by this committee of the Union of B.C. Municipalities and the Minister
[ Page 964 ]
of Community Development — I sit on that committee as well — to determine what the long-term solution is here, but it is a difficult one.

We have literally hundreds of thousands of kilometres of Forest Service roads across the province that people recreate on, that they live on and that need to be maintained on an ongoing basis for those purposes. That cost cannot be borne by the forest industry, especially when they're not working in those areas.

I hope that kind of gives the member a general overview. There is money available. I'd be happy to look at the circumstances that the member refers to. There is a bigger picture working on this overall issue, in terms of determining how to deal with it in the long term, but it is a very complex one. It would require literally hundreds of millions of dollars, if not edging into the billions, to really deal with it, if one wanted to carry that cost strictly to the taxpayers.

M. Sather: I have a question for the minister about the Blue Mountain provincial forest in Maple Ridge, an area that I'm sure the minister will be familiar with, as the Blue Mountain Kanaka Creek Conservation Group have made many petitions to government to try to establish at least a part of that area as a conservation area.

There are many uses on the area, including three woodlots and first nations involvement. The Katzie First Nation is in the process of trying to get a community forest, and the Kwantlen First Nation also has an entitlement there. The Blue Mountain group — and they have wide support, I think, in the community for this — feels that there should be a conservation aspect, as well, in the provincial forest — also for passive recreational uses.

On the forestry side, they have nailed down their requests, I think, fairly specifically. It seems to me — and I've had involvement with this over the years — that it's smaller, certainly, than it was. They're asking that the riparian and management zones to the west of Katherine Creek and to the east of Kanaka Creek, plus the area in between the two creeks, be left unharvested and that that be a conservation area.

I might add that this is very important to the residents below the forest there, as well, because they're all on wells. They've had concerns. There have been times in the past where they've had to shut down their water system because of detritus and the like that got into the wells from runoff from the community forest. So that's their request.

[1020]

I know that the minister has, as I say, heard of this issue many times, but I would like to hear if this is going to be a possibility, as he sees it, that there can be a conservation area within the Blue Mountain provincial forest and, if so, how extensive he sees that being.

Hon. P. Bell: As I think the member knows, there's been some correspondence on this issue over the years and some interest in it. I think that, perhaps, the dynamics changed a bit and really relate to what the member opposite is talking about in terms of both the Katzie and Kwantlen First Nations and their interest in this area.

I'd be pleased to meet with the member sometime over the next couple of weeks to review the entire situation to see if there is, perhaps, a reason to revisit some of the decisions that have been made in the past on this and do a bit of an overarching plan.

There are multiple ministries involved. Clearly, the Ministry of Environment, as a result of the species at risk issues in the area, would be involved in it, as well as ILMB and Forests. I have responsibility, of course, for both.

It could be that the Ministry of Aboriginal Relations and Reconciliation would have an interest in the file.

A Voice: Tourism.

Hon. P. Bell: And maybe Tourism as well.

I think what would be appropriate is if the member opposite and I get together. Next week is an out-week, so it may not happen before the end of this week, but perhaps the first week when we get back in session. We can have a broader-ranging look at it, sit down and discuss the opportunities.

I think the member knows that there have been some set-asides in terms of wildlife tree patches, riparian management reserves and so on, and those are permanent reserves. But I don't think that meets the test of what the member is looking for in this area. He's looking for something a bit more expansive than that.

If the member is satisfied with that, I'd make that offer, and we could meet in the next two or three weeks.

N. Macdonald: Just going to turn to the community wildfire protection plans, to begin with.

As the minister knows, the Filmon report in 2004, which dealt with the response to the Kelowna wildfires, was fairly specific in saying that the province needed to lead the efforts in terms of community protection and doing the preventative work that was necessary. The minister has emphasized the fact that it's a partnership. Filmon, recognizing that there would be many levels of government, insisted that one take the lead, and logically, it's the province that's expected to do that.

It is now five years since the recommendations were put forward. The information that the minister provided to me is that 71 of 189 local governments have community wildfire protection plans completed. The minister has also indicated, at the UBCM last week, that staff have been added to bring that number towards a more complete number.

If you're bringing staff over, presumably they're coming from other areas. I guess that the question is: what expertise do the 16 — and you can correct me if it's
[ Page 965 ]
not 16 — individuals that you're bringing over have in the creation of community wildfire protection plans?

[1025]

Hon. P. Bell: The specific questions that the member opposite asks are: what skill sets do these individuals bring, and do they have specific expertise in preparing wildfire management plans? The skill sets are varied. They're varied for a reason, because they need to bring skill sets such as mapping technologies. I think there are three GIS specialists in the team that's being brought in. They're largely either forest technicians or RPFs that are part of that team.

But they are not the only 16 people that will be working with communities in developing wildfire management plans. They will be working with the six wildfire specialists that we have on staff right now to help support that plan development.

So it's an incremental 16 people that will be working within the protection branch, and while their primary responsibilities will be the support of the development of wildfire management plans, they will not be the only 16 that will be working on those plans. Particularly the six specialists that we have — they'll be working under those individuals.

They bring with them all of the normal skill sets that you would expect out of a trained forest professional, either a technician or an RPF. There are these three individuals in particular that we brought because of their GIS capabilities.

N. Macdonald: Just to step back, there were a number of documents that were promised yesterday. Now, I just want to be fair in terms of how much time it takes to prepare those. The question I have is just: are those ready now? If not ready now, when will they be expected?

[1030]

Hon. P. Bell: The documents that we have a record of being asked for, I think I have here today. So this document — I don't know whether the member wants it tabled or if he just wants a copy of it. This is the matrix that we referred to yesterday in terms of how decisions are made for inspections. That I have available for the member.

The jobs per cubic metre the member asked for, I have that as well. I just want to clean it up a bit for him. This copy has been written on a bunch, but we'll get a copy of that for the member.

The third question I think we were to respond to was a list of communities that have completed fuel management strategies, and we do have that list as well if the member would like that.

N. Macdonald: Thank you for that. The other thing that my colleague here asked for was just a TSA-by-TSA breakdown on the forest health issues. The minister had said that the information they were interested in was broken down by TSA. I remember the discussion around the 14 million hectares. If that's possible, then we could get that information.

Just continuing, then, with the community wildfire protection plans. The minister, just so that I understand…. The 16 individuals who have a range of backgrounds have been brought in to augment six fire specialists that presumably — and you can correct me if my presumption is wrong here — were working with communities in the past on putting these plans together.

It leads to a couple of questions. I'll give the minister two, and then you can move from there. First, does the government set the criteria for the community plans? And do these experts within the ministry then judge the appropriateness of the plans?

Hon. P. Bell: We will follow up. I'm not sure that we understood that we'd made that commitment, but we're happy to follow up on the TSA-by-TSA forest health breakdown. What might make sense is to arrange for a detailed briefing of the two critics on that issue. Then that information probably can turn into more of an interactive opportunity. Rather than paper flying back and forth, we can probably answer a lot of the questions for the members.

So back to fuel management. There is a provincial fuel management working group. That working group consists of our team of specialists and staff from the Union of B.C. Municipalities. It's a collaborative working group. That working group developed the planning template that is used by communities in the development of their wildfire management plans. Once the plan is complete, it's reviewed by our experts, who then approve the plan.

So I think the answer to both the member's questions is that there is a set of criteria. That set of criteria has been developed jointly by the Union of B.C. Municipalities and our fire specialists, and the plans are reviewed and approved in the end by the specialists.

[1035]

N. Macdonald: Just coming to the 53 of the 71 who have initiated or completed. After five years since Filmon, how many of the communities of those 53 have completed the work that is needed to be done as laid out in the community wildfire protection plan?

Hon. P. Bell: The member asked yesterday to get a list of communities that have completed their fuel treatments. We've started that work, but there are still fire centres to report. There are four of the six fire centres that have reported, and two are outstanding. So the list I'm going to give the member right now is an incomplete list, and there will be more that will report in.

The completed fuel treatments have been reported for the communities of Houston, Burns Lake, Prince
[ Page 966 ]
George, Kamloops, Merritt, Logan Lake and Mackenzie — from the fire centres — and then, of course, many of the other communities are well underway.

I would note that the Glenrosa fire actually is an example of one that…. All of the fuel treatments have not been completed for that particular community. Obviously, it doesn't appear on the list that I just provided the member. But the fire team that was on that fire said that certainly the fact that there had been fuel treatments done in a couple of specific areas helped our team protect the homes. As the member opposite knows, there were three homes lost in that fire, and we had the potential to lose hundreds. So I think it was a very good news story.

Finally — and I know I've said this before, but I'll just repeat it again: even though Houston, Burns Lake, Prince George, Kamloops, Merritt, Logan Lake and Mackenzie have completed their first round, that doesn't mean they're done. It's not something that you can put a tick mark in and say: "Yep, we're done, and we never have to do that." It's an ongoing challenge and an ongoing issue, and that's reflected in the wildfire management plans.

So even though initial treatments may be done, that doesn't mean they're completed, by any stretch of the imagination. The other communities that engaged in that work engage on a priority basis, and clearly in the Glenrosa situation, that was a successful outcome.

N. Macdonald: Okay, so we have seven of the 53 that are completed, the minister has said. What I hear anecdotally is the same thing: that the work that is completed, even if it's only a partial plan, was found to be very useful in terms of defending buildings and properties.

Just anecdotally, in contacting a few of the communities that are listed as initiated…. It's very anecdotal, so I hear of 2 percent to 5 percent of the work done, but there must be a range of areas completed.

So two questions. First, does the ministry have a sense, in the remaining communities, of what the range of completion is? Are most of them in the area where they're close to being completed? At the UBCM — and I understand that it wasn't a set speech; I think that it was just off the top of your head — you said that most were near completion.

Likely it would be more of a range than most being near completion, but can you give a sense of where the remaining communities are in terms of getting to completion? I guess what I'm looking for there is: do you have a sense, for each community, how far along they are?

[1040]

The second question is on a community that reports itself being finished and having done the work. Is that something that the ministry verifies independently, or is that simply something that a community reports as the fact that they've completed the work?

Hon. P. Bell: I just wanted to make sure to correct one thing that the member opposite said. He identified, from my opening remarks to the last question, that only four of the six fire centres have reported out on who had completed and that there were seven communities that had completed. I don't know if the other two have lots or none or somewhere in between those two places, so that number of seven will likely change as those final two fire centres report out.

The second thing. The member commented that he didn't think my speech was a prepared speech. He'll know that I rarely work from prepared notes. It is one of the annoyances that my staff have with me — that I tend to speak more from my heart than from my notepad.

I should let the member know that my comments really were focused on the preparation of the wildfire management plans, not the physical work that was being done. So when I commented that many of the plans were coming close to completion, it was reflective of the plan, not of the actual work being done on the ground.

But to the member's question, we do have fuel management specialists in all of our six fire centres. There's an individual that is a fuel management specialist. That fuel management specialist works with each and every one of the communities in their fire centre's region, and he does that on the basis of the interest that the local community displays in completing the wildfire management plan.

There are some communities that are very proactive, that want to complete their plan. The locally elected officials have directed that to staff. Those folks are the ones, certainly, that we're working with.

There are others that have not shown the same level of interest. We certainly communicate with them and encourage them to engage in the development of a wildfire management plan, but it really needs to be driven out of the community — the establishment of the plan.

We're there to help them, and that's the whole point of the addition of 16 individuals — to help support the development of those plans over the winter season. So we're hopeful that that will get some of the communities that have not, perhaps, shown the interest in the past moving on their individual plans.

[1045]

The member opposite asked: do we verify completion? Yes, we do verify completion. We go out and look at the work that's been done to determine if it has been done in the way that was expected and whether or not that will meet the objectives of the wildfire management plan.

N. Macdonald: We've canvassed some of the barriers that were identified, and you've talked about the fact that you're aware of those and that we might be in disagreement about whether the liability issue still exists as a problem.

I just want to get to the funding issue, which is something that the UBCM addressed as well. The UBCM has
[ Page 967 ]
said that rather than 50-50, the UBCM is going to move to 75-25 as a cost share.

The question I have is: the amount of money that the UBCM is dealing with — are there increases to the amount that they were given from the province to deal with this issue, or is it still the same sum of money? The minister could indicate again what the sum of money is.

Then, also, if the minister could give an indication of the ministry's estimated costs for completing fuel management identified in community wildfire protection plans. This will, of course, be a very rough number, since many of them haven't completed them. But do we have an idea of how much, in total, the ministry is expecting this effort would cost compared to the amount of money that the province has so far provided to the UBCM?

Hon. P. Bell: The numbers the member asked about. Initially, the Union of B.C. Municipalities was provided with $37 million. My understanding is that $14½ million remains in that fund. There were no incremental dollars intimated or announced over and above that $14½ million that remains. We'll see, as the new funding formula kicks in, how that resource continues to be deployed. Once it is depleted, certainly, we'll look at it.

One of the questions the member asked was: has there been an estimate done on total costs on the wildfire management plans that have been completed? While I suspect that on an individual plan-by-plan basis, that information may have been estimated, we would have to collate that data in order to come up with a number. But it is a significant one, and it far outstrips the $14½ million that remains, which I think is the point the member is trying to get at and is a fair point.

What I will say is that we look beyond simply that one fund as a tool to implement the fuel reduction strategies. Some of the other things that I just very quickly wrote down that I'm aware of in chatting with staff very quickly here — tools that we use.

The member is aware of the job opportunities program recently announced. I think it was $671,000 to Barkerville to perform fuel reduction strategies in the immediate area around Barkerville. I think that's about $5 million or $6 million that's been expended out of that fund specific to fuel treatments.

[1050]

In my meetings with various communities over the Union of B.C. Municipalities week, I did refer them to that fund specifically as an opportunity to deal with some of their fuel treatments.

Another one that we do use is in any of the B.C. Timber Sales operating areas we look to try and lay out blocks in an area that makes sense for a fire break strategy around communities. One of the communities in my riding, the community of Bear Lake, would be a good example of that, where it happened that the actual community of Bear Lake falls right in the middle of the BCTS operating area. So BCTS employed a strategy that included removing all of the dead material from that area, and it was a very successful one.

I did mention to the member in the last day, or perhaps previously, that we are reviving — or bringing back, I should say — the small-scale salvage program and looking at a way of utilizing that to help support the activities around fuel reduction strategies as well. I think that can be very successful. The forests for tomorrow program as well as another program that we utilize to reduce fuel loadings in and around communities — there's a significant amount of money available there.

Finally, I would add that as we are implementing the bioenergy strategy, we're seeing good uptake. Those individual users of biomass — for pellets, for hog fuel, for pulp mills, for those sorts of uses — are tapping into this resource as well. So it is a program that spreads right across the ministry in terms of utilizing all of the different opportunities.

While I don't have a specific number, of course, pertaining to the amount that's been assessed as a result of the existing wildfire management plans, I think what the member is trying to get at is that that would outstrip the $14½ million. Certainly, I would concur that that would be the case.

N. Macdonald: The other question I was going to ask, and it is something that the minister has talked about, is the ongoing costs.

Now, all of the elements that the minister talked about, things that the ministry could try to do to assist communities, are things that actually support the argument that the ministry needs to take the lead in this. I know that they have to work with communities, but very clearly, very often, we're dealing with the Crown land. Very often the ability that the minister has is critically important to making sure that the plan is going to work.

There's no question that there is a significant sum. I think that Filmon put a number to it, and it was significant. But compared to the cost that we've seen this year, where you're having to fight these fires in very often a very difficult situation….

What Filmon argued, obviously, was that it was a wise investment for the ministry and for other levels of government to make sure that these plans were in place. I think that the minister has indicated that where they were in place even partially, there was assistance to the effort of trying to save the facilities that were there.

The question I have next is around the $52 million that is part of the budget for fire. I just want to understand that. I want to understand if any part of that is part of the preventative work that still very clearly needs to be done. Are there fixed costs related to that $52 million, or is that simply a figure that would only be used in fighting the fires?
[ Page 968 ]

I realize that there is a series of questions there, but if the minister could explain that $52 million and see if it ties in, in any way, to the preventative work that needs to be done.

[1055-1100]

Hon. P. Bell: There are a few things I wanted to touch on prior to answering the member's question.

The member kind of intimated in his opening remarks that the Ministry of Forests and Range does not accept responsibility for the lead in responding to the Filmon report, and that's inaccurate. We do absolutely accept that responsibility. We very firmly believe that we are the appropriate agency to have the lead on the delivery of Filmon's recommendations and have moved forward on that.

[J. Thornthwaite in the chair.]

To clarify that again very clearly, Filmon says everyone needs to be engaged. Just because we're leading doesn't mean that there's no role for other levels of government and other individuals to be involved.

Second thing I wanted just to touch on — and I think it's important to say — is that the member's hypothesis, I think, leads one to believe that if all fuel reduction treatment strategies were employed, there would be a significant cost savings to the overall direct fire budget. I think that's unclear.

It reduces risks to people's homes, most certainly, when that work is done, and that's a positive thing. It certainly protects some of our firefighters in terms of putting them in dangerous situations, and that's critically important from our perspective. So all that work needs to be done. But I think it's unclear that, when you look at a fire like Clinton, like Smith River….

Smith River is a good example. It was a reasonably expensive fire — it's up in the northeast portion of the province — a very large fire, one of the ones that burned a lot of hectares this year, yet it is remote from any community. There would never have been any fuel treatments performed in that area under Filmon or under any other recommendation. It would not fall in that category.

I think the member and I see eye to eye in terms of the importance of fuel treatments and making sure that we protect people's residences. I think the real proof is in the outcome that we saw this year, which is a total of seven structures lost. There are a few of those that were just vacant buildings — so four or five homes, I think, all together versus the 334 homes in 2003.

That's not just about reducing fuel loading. It's also structural protection units that have proven to be very, very successful, and I think a lesson that perhaps jurisdictions like California and Australia and so on will be looking at employing. That's another very useful resource. In some ways, I would argue, in some situations, perhaps it's even a better resource to deploy than a fuel protection strategy — in certain circumstances. I don't want to minimize the importance of that, though.

The question the member did ask, though, was: is there any money available for direct fuel mitigation work as part of our preparedness budget, which is $51.7 million? There are two budget lines, the member will recall: $51.7 million for preparedness and $409 million for direct fire. Those are the two budget lines that are there.

Direct fire is strictly the cost of fighting fires. It can also include work going in and restoring a watershed that's been impacted by fire. So that is another possibility for that budget line, but that budget line is very limited in scope and does not include fuel management strategies.

The $51.7 million, which is fire preparedness, does however include a far broader scope in terms of the type of work that can be done. That is the area where we locate the fuel specialists who work with individual communities and help support the work that goes on.

I think the real answer to the question the member is asking…. Are there additional moneys that are provided to communities to perform fuel reduction work out of that budget? Generally, the answer to that question would be no. Perhaps on a very limited exception basis, but I think, generally, the answer to that question would be no.

The Chair: Minister. Or sorry — Member.

N. Macdonald: No, that's fine. Thank you. It sounds very nice.

[1105]

Thank you for the answer. Let's go to, maybe, next year's projected budget of the $52 million. We've had this discussion in the media, but I still don't understand completely the use of the $52 million. I know in the past there were explanations of a ten-year average. I mean, just ballpark, it's not a ten-year average — I think that would be closer to $112 million — and it's certainly not a five-year average.

So I don't understand why what appears to be an arbitrary number would be used. Maybe just an explanation of why that would be appropriate in the budget. I understand that these are not predictable in any way, but the minister has said, I think very accurately, that it's likely that we're going to have more of these costly fires than less. So just an explanation of the rationale for that $52 million in the budget for not this year but for the upcoming year.

Hon. P. Bell: The member asks, I think, a good question. I'm not sure that we've ever been able to find a way to get this message across to the public, so I welcome the opportunity to be able to do that today.

The way that we arrive at that budget…. It's not so much about averages, because a year like this year or a
[ Page 969 ]
year like 2003 clearly blows through any sort of average number that one would spend for a direct fire vote. I think it's just not even possible nor appropriate to try and budget a number that would meet that very high level of spending. That's why government has a contingency vote. It's held by the Minister of Finance. The Minister of Finance makes those decisions.

Now, I know that the member opposite knows that the Ministry of Forests has the statutory authority to spend whatever is necessary. So it's not like I have to go back to Treasury Board and ask for more money. We continue to spend whatever level is necessary in order to achieve our mandate in that area. So it's a bit different than what most ministries have to…. The Minister of Finance has to accommodate that inside his budget.

What we really look at is what a normal year would cost us in terms of direct fire costs. So that is the approach that we've taken. If you go back over the last ten years, for five of those ten years, the number is very close to the $52 million number. There's one year that was very low. It was only $21 million, but you know, I think that was an anomaly as well.

I'm just reading out the numbers for the member opposite for the other four years: $51.495 million, $53.79 million, $37.78 million, $47.2 million. So that kind of $52 million number is a normal year. When you blow through the top of the budget, though, you tend to blow through it in a pretty significant way, and you get a year like 2003-04 that was $371 million.

This year, well, right now we're projected at $409 million. We're at $357 million as of yesterday, I think. So we're clearly going to be, you know, in that range again. So you get those very, very large numbers that would be virtually impossible to kind of accommodate in any sort of a logical budgetary process.

While we establish our budget, we look at what a normal year is, and we'll be revisiting that when we look at next year. I'll remind the member that the actual budget line we're debating here today is $409 million, not the $52 million that the member referred to. I understand he's referring to the '10-11 budget that's currently in the budget document, but we'll review that when we go through the budgetary process.

I'm sure there will be input come in through the Finance Committee. I'll be making presentations to the Minister of Finance in terms of what we think the appropriate number would be, but historically how we have arrived at that number is to look at what would be a normal fire year and utilize that number. Then if we have to go into contingencies, that's what that budget is built for.

[1110]

N. Macdonald: We're going to turn over to ILMB in just a second. The ministry is going to go through an internal review of the fire season and look at many of the issues that the minister has talked about, including…. One of the premises around Filmon, as I understand it, is that there is a cost saving. It's not the only reason that you would do the fuel management. It also relates to safety and all of these other issues, but the premise is that there's a cost saving. I think the minister is saying that that's not a case that has been proven, in his mind.

In part of the internal review, it would be something that…. You know, I wonder if that's something that would be part of what would be looked at: how the resources are actually spent. Then the second part is that many would ask why there's not an external review.

I mean, there's obviously expertise that is regularly shared with other jurisdictions. We've had people come here and have experience from other jurisdictions. Is there thought given to an external review that would include expertise from other continents, other parts of North America and other parts of Canada that would be part of the review of this fire season? As the minister has, I think, quite correctly characterized it, this is something that's going to be an ongoing issue.

I guess the question is: is there thought about making it, rather than just an internal review, an external review? Then after that we'll just have a series of questions for ILMB.

Hon. P. Bell: Madam Chair, I may have left the member opposite with an incorrect perception with my previous remarks, so I just want to make sure I correct them on the record. The member opposite, I think, suggested that I believed that there might not be a cost savings on fuel treatments as a result of fire management, or reduced cost of fire management, and I certainly didn't intend to leave the member opposite with that impression, if I did. It was simply that it is unclear, depending on any individual fire, what the savings would be. There may be some cost savings.

I do want to correct the member, because the member suggested that one of the primary drivers in the Filmon report was that reducing fuel loads would reduce costs, when in fact the Filmon report quite clearly, I think, articulated that reducing fuel loads protects people's homes and their lives and makes it easier to fight those fires. If there is a cost reduction, it may be more from the perspective of rebuilding those communities and those sorts of activities.

[1115]

But in terms of actually…. You know, would we have spent…? Let's presume we get to the $409 million that is budgeted in direct fire this year. If every fuel reduction strategy had been fully implemented across the province, would that mean that that $409 million would have been reduced to $300 million or $200 million or $350 million? I think it's unclear that that's actually the case. It does give you a much better chance of protecting people's homes and their lives, and I think that was demonstrated this year as well.
[ Page 970 ]

I don't want to leave the member with the impression that I think there wouldn't be a cost saving. Clearly, there would be something there. I just don't know what that is. Every fire is different, so it's a very complex environment.

However, the question the member asked, which is the more important point, was…. I think the question was: why wouldn't we have an external review? Or perhaps it might have been: is there any external input? I'm not sure, but it was kind of one of those two things, and they both come to the same point.

In fact, every jurisdiction that came to support us this year, which included Australia, New Zealand, the United States and every province in Canada, is contributing to the review. And in fact, because Ontario had so many members here — over 500, I think; we capped out at about 571 members, if memory serves me correct — Ontario is likely almost going to do a mini-review of their own. So the input from all of the various specialists from across the world will be provided, and that will all be included in the work that we do this year.

I had one other thing that I promised the member yesterday that I hadn't provided to him. He asked me what the total savings were as a result of reducing the school component of the property tax on industrial facilities. The member opposite asked the question specific to forestry. I think the answer to that actually is $25 million, but the overall broader saving to the industrial category was $60 million per year.

L. Popham: My questions relate to the integrated land management branch. I have three questions and thought I'd ask them all at once.

Interjection.

L. Popham: Okay, one at a time.

According to Judge Hinkson of the B.C. Supreme Court, B.C. still controls the tenure for aquaculture. I would like to know how the ILMB will now act to control aquaculture tenuring.

Hon. P. Bell: That falls squarely under the auspices of the Ministry of Agriculture and Lands. I know that well because I was over there. I appreciate what the member is saying, so I'll just kind of outline this.

The ILMB, the integrated land management bureau, operates under the direction of the Ministry of Agriculture and Lands in that specific area as a service provider. So we accept the policy direction from the Ministry of Agriculture and Lands, and then we issue permits under the mandate provided to us.

That is all under review as a result of the court ruling at this point in time. So I think it is…. I am unable to answer the question in a specific way in the sense that the court decision is being reviewed, and we're in negotiations, I believe, or in discussions — I shouldn't say negotiations; discussions — with the federal government in terms of how to respond to that court decision. As the member opposite knows, it was not appealed.

L. Popham: So under that direction, will B.C. be granting any new open-net finfish aquaculture tenures during the time of the transition? Has the minister had any direction in that regard?

Hon. P. Bell: Again, as previous Minister of Agriculture and Lands, I can share with the member opposite that it is the statutory authority of the Minister of Agriculture and Lands to issue any of those tenures, not the integrated land management bureau. So those would be best discussed under the Ministry of Agriculture and Lands budget estimates.

[1120]

D. Donaldson: I'll re-pose the question I had earlier. The Bulkley Valley TSA was completed…. The LRMP process, that is — if you still call it LRMP; I'm not sure anymore — was completed back in the '90s. Part of that was a recreational access management plan, the RAMP. But the RAMP wasn't fully completed back in 1997, and there have been many issues left unresolved around that.

The Bulkley Valley Community Resources Board has written to the ministry numerous times around completing the outstanding issues on the RAMP. Tourism groups have written, and first nations. In fact, the former MLA for the Bulkley Valley–Stikine, a colleague of the minister's, wrote the former Minister of Forests to ask that the outstanding RAMP be completed.

Again, people are waiting for the RAMP to be completed, but they've been told by ILMB that there are no resources. Will there be money in this budget to resource the long-overdue completion of the RAMP for the Bulkley TSA?

Hon. P. Bell: A couple of pieces of the equation I can add for the member opposite. Last year we actually, through the integrated land management bureau, did offer money to the community regional board, and it was declined. We understood that they either ran out of time or there wasn't the level of interest in moving that forward. So we did provide an opportunity for funding last year.

The second thing. Our regional executive director for northern British Columbia, who is located in Smithers, has suggested to the group that they work with the University of Northern British Columbia and that that might be an opportunity to move this very divisive file forward.

As the member knows, there are people on all sides of this file. To come to a successful conclusion, I think,
[ Page 971 ]
will require some very talented efforts, and UNBC has always been one that I think people have been able to count on and help support.

The third thing I wanted to touch on in this area is pretty clearly as a result of the various court decisions that have been brought to bear on first nations consultation obligations for the provincial government. Any future land use plans or planning processes or access development plans would need to include first nations in the discussion. They would need to play an integral role in those discussions.

[1125]

We've had good success in some areas. Haida Gwaii is a good example. The Great Bear rain forest would be another one. We've been working with the Taku River Tlingit as well on a land use plan. There have been other good plans brought forward as well in the member's area.

But the first nations, at least at this point…. I'm not sure. I think I heard the member say that the first nations have been calling for this as well. That's not the information that we have. There hasn't been a clearly defined priority on the part of the first nations that this is an area they wanted to move forward on.

We may need to do a bit more work in that area to determine if that is the case. I think that's what I heard the member opposite saying. We certainly will do that. But the member opposite should know that there was money offered last year. I do not have a budget line this year that has those same funds available.

D. Donaldson: Thank you for that answer, and you've provided a segue into my next question, which also involves ILMB, the integrated land management branch. As you're aware, the Tlingit land use plan — the maps, actually — was revealed in September. I was in Atlin to witness that, and it was an incredible event — the maps that the Tlingit provided around development on their territories and where they would see appropriate areas for that.

I just wanted to let the minister know — I'm sure he's aware — that the ILMB staff have done a fantastic job up there. They've put in a lot of work. I think that work with the community at the ground level has borne fruit in the way that this plan is rolling out.

They've completed about 90 percent of the work, by their estimates, as far as the public consultation goes, and now there's 10 percent left for them to do. What I would like to know is…. The face-to-face meetings are very important, as you know, in rural areas. The development of the relationships only goes so far on the telephone, and we really need the face-to-face meetings that have made this plan successful till now.

The ministry has invested quite a bit of time and effort and resources into getting to this point. As I say, it's important to finish that off with the final thrust. My question, then, would be: is there resourcing in the budget for ILMB staff to travel to Atlin for community meetings, like they've done in the past, to get the final part of this process done in a face-to-face manner?

Hon. P. Bell: Just to correct the member — and a frequent mistake, so it's not an issue — it's the integrated land management bureau, not branch. We've got to somehow….

Interjection.

Hon. P. Bell: They like to be a bureau, not a branch, so we encourage that.

The Taku River Tlingit file is a priority file for me personally. The member may be aware that when I was Minister of Agriculture and Lands, I was the one that went and initiated this, actually flew up and signed off on the initial part of the process. In fact, I still have a paddle in my office from that visit.

It is a priority file for me personally, for us collectively as the integrated land management bureau. There are specific resources available for staff from the Smithers office to travel and complete this work in a face-to-face manner.

I will just add that I think, as the member opposite has articulated, our staff have just done a fantastic job. When you look at some of the historical differences that governments of all political stripe have had with the Taku River Tlingit, to see the collaboration that has been established between the TRT and the province of British Columbia and all of the local community I think is very positive. I think it bodes well for the economic environment in that part of the province. So I'm sure the member opposite shares those views with me.

[1130]

N. Macdonald: There's very limited time left, so I'm going to switch back. I apologize for moving everyone around here, but I'm going to switch back to some questions on raw logs.

Let's move to raw logs, and just the coast. This is something the minister will hear in communities that he represents. Certainly, when the co-critic and I were in Mackenzie, it wasn't raw log exports they were talking about but just concern about logs moving out of community. It's even a stronger sentiment when you move up the Island and on to the coast, where people are talking about the export of logs. This will be nothing that is new to the minister.

Basically, you had in 2007, Ken Dobell's coast forest action plan. There was a recommendation in there that, effective February of 2008, log export fees on timber from Crown land would be linked in a way to reduce raw log exports. My understanding is that that wasn't implemented, and it's just a question of: why was that not implemented?
[ Page 972 ]

Hon. P. Bell: In fact, the export fees were revised in 2006. Prior to that period it was a flat fee, and it was changed to a percentage. So as log values went up, depending on species, grade and pricing in the marketplace, the fee increased as well. There is a table of fees that we do have. I don't have a copy of it here but happy to provide that to the member opposite. That was the change that was recommended and made.

I should add, actually — and it could be what the member is pointing to — that there are a few exemptions to that. On the north coast there were some exemptions provided as well, and while the member pointed out that there is opposition in some areas to the shipment of logs, there are some that are of the view, including many first nations in the province, that that should be an opportunity for log sellers. So there are some mixed views on this issue.

N. Macdonald: I think the minister would agree that most British Columbians would feel strongly, certainly as you went up the Island. I realize there are specific cases where there would be concern that nothing would be going on if we weren't able to harvest logs. But the preference — and I think minister would agree — clearly would be that the log would then move to create more jobs with manufacturing.

[1135]

I guess the question, then…. Perhaps I misunderstand, but my understanding was that Ken Dobell was quite specific in taking what was in place and adding provisions that would add additional costs for anyone who hoped to export logs. The question is: was that ever acted on — the recommendations from Ken Dobell and his so-called coast forest action plan? I think that was from 2007.

Hon. P. Bell: I just want to step back to a comment the member made on log exports. He commented that most British Columbians feel strongly that they prefer to see the logs stay in British Columbia for manufacturing. I concur with that remark. In fact, in the round-table report I think we were pretty clear on our recommendation.

We said that what we'd ideally like to do is have no log exports, but we need to rebuild the manufacturing industry, particularly on the coast, in order to allow that to happen. I share the member's feelings on log exports and the desire to see those logs manufactured in British Columbia.

But the reality of where we live today is that there are some jobs, particularly in the northern part of the coast of British Columbia, that are dependent on their ability to ship logs. We are working to correct that.

That wasn't the question that the member asked, although I do want to actually touch on one other thing very quickly. One of the things that I think is really important about this is that we have a good surplus test in place to determine whether or not the logs truly are surplus to the needs of the domestic market.

Again, part of the round-table report was to review those standards that are in place right now and make sure that they do accurately reflect the desire to keep those logs in British Columbia for manufacture wherever possible.

I can share with the member opposite that I actually met with the timber export advisory committee last week — TEAC — during the UBCM. It was interesting because I was asked the question: "Do you want to make logs easier or more difficult to export?" My response was: "Well, really neither. I want to make sure that the only logs that get exported are the ones that are truly surplus to our domestic manufacturing needs."

I have tasked that committee to come back with any recommendations. I think that committee is best suited to make recommendations in this area because they deal with export applications each and every month. They see all of those applications come through. I think it's a good blend. There are people there from labour, local community, mayors from small communities, small manufacturers, large manufacturers. There's a broad range of individuals that sit on that committee.

I think it's a good makeup of individuals. I look forward to their advice on really meeting the objectives of the members opposite and my objective here.

[1140]

But the member asked a question, and the question was: why did we not implement the Dobell recommendations? The report was delivered in the fall of 2007.

There were a couple of things that happened during that period of time that led the minister of the day and the previous minister to make that decision. There was also extensive…. There were actually results of the softwood lumber agreement, but there were lots of discussions around exports and export tests at that point in time as well.

One of the discussions did involve taxes that set federal responsibility — or duties, which are a federal responsibility — on log or any other exports. So that was part of the overall discussions there.

The objective of the government at that time was to see lumber that was manufactured from logs from private land in British Columbia exempted from any border taxes. That was not achieved, although that's still under review, and I think we discussed that earlier in the estimates, if memory serves me correctly.

The other issue was that log exports had plummeted during that period of time as well. In 2006 there were 1.1 million cubic metres of coastal logs exported from Crown lands. In 2008 that was down to 586,000. So the circumstances had changed during that period of time, and it was felt that the existing test in terms of a percentage of value was appropriate.
[ Page 973 ]

That's a long way of getting to the member's question, but I hope I've answered it.

N. Macdonald: Speaking of TEAC, did the ministry recently ask the timber export advisory committee to consider changes that would allow increased exports of high-quality logs from a wider range of species? Is that something the ministry has approach TEAC about?

Hon. P. Bell: Noting the hour, I'll answer this question quickly, and if the member has — I don't want to cut him off — a final question, then we'll do our thing.

The answer to the question was yes. It was specific to balsam, which is a species that is not broadly utilized by our coastal sector at this point. It was a couple of higher grades of balsam species that were discussed.

[H. Bloy in the chair.]

N. Macdonald: Just to quickly wrap up. Obviously, we just touched the surface on what is an incredibly important ministry. I'm particularly referring to integrated land management. We hardly even danced on the surface, so there are estimates coming up again in the spring.

I just want to thank staff, and I look forward to the materials that have been promised. We'll look forward to those.

With that, I think the understanding we have is that we're going to move forward. We're going to do the votes now. Is that how it's going to work? Okay.

Vote 31: ministry operations, $464,137,000 — approved.

Hon. P. Bell: Just before I read these votes, I wanted to thank the member opposite for the very respectful way in which he treated the estimates debate. I think it was a good debate, worthwhile, and I look forward to continuing to work with him in the coming year and going into the spring estimates.

[1145]

Vote 32: integrated land management bureau, $68,678,000 — approved.

Vote 33: direct fire, $409,000,000 — approved.

ESTIMATES:
OTHER APPROPRIATIONS

Vote 50: Forest Practices Board, $3,827,000 — approved.

Hon. P. Bell: I move that the committee rise, report resolution and completion of the Ministry of Forests and Range and ask leave to sit again.

Motion approved.

The committee rose at 11:46 a.m.

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