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

Afternoon Sitting

Volume 4, Number 2

[ Page 975 ]

TUESDAY, OCTOBER 6, 2009

The House met at 1:33 p.m.

[Mr. Speaker in the chair.]

Routine Business

Introductions by Members

L. Popham: First of all, I'd like to introduce my three friends visiting us today: Julie Kaye, Susan Adams and Phillipa Fairburn. Julie and Susan are here for the first time. It's great to see them. You all may recognize Phillipa as she's with the Sergeant-at-Arms here, keeping us safe.

I would also like to make another introduction. We have Claremont high school here, a grade 11 social studies class, with their teacher Phil Ohl. I'd like to make them welcome.

Hon. C. Hansen: There are three representatives of the Arthritis Society that are joining us in the gallery this afternoon. I had the pleasure of attending their Bluebird Gala, their annual big fundraising dinner in Vancouver just last week, where they raised nearly half a million dollars in that one evening. It's money that will go towards research and support for the more than 600,000 British Columbians living with arthritis.

The three who are here today are Marg Vanenberg, a longtime friend, who is the executive director; and Quincey Kirschner, the director of education and services with the society, who is obviously no stranger to this House and to its members. Also, Lorne Mayencourt is joining us today. He is, of course, a longtime member for Vancouver-Burrard who has just recently become the director of major gifts for the Arthritis Society. Will the House please make them welcome.

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Hon. K. Falcon: Just following up on the introduction by the Finance Minister, I too want to recognize the three individuals that the Minister of Finance recognized.

I also want to thank Cheryl Koehn, the president of the Arthritis Consumer Experts, and also a couple of doctors who were here at an event I was at, at 12 noon, and were not only promoting the results of the Where Is Arthritis Tour that undertook a tour across British Columbia but also tested the Minister of Health along with some of my other colleagues to make sure that we are aware if there are arthritic conditions. Fortunately, I think I passed the test at this point.

But I do want to thank Cheryl Koehn, the president of the Arthritis Consumer Experts, and also the two doctors that came along, Dr. Jason Kur, rheumatology clinical instructor at UBC, and Dr. Ada Mann, who has a residency in rheumatology at UBC. They were all there today, and we want to make them welcome.

Hon. M. de Jong: It's been 33 years since the Indian men's national field hockey team has been in Canada. They were last here to participate in the 1976 Olympics in Montreal, but they are here again to participate in a seven-game super series taking place from October 9 to 24 in Victoria and Surrey.

They are led by their management team: Mr. Anupam Ghulati; their coach, Mr. Jose Brasa; assistant coach, Mr. Ramandeep Singh Grewal; and their goalie coach, Mr. Romeo Jones. I know that members will want to make them feel welcome as they will watch us stickhandle our way through the legislative proceedings.

Introduction and
First Reading of Bills

Bill M202 — lobbyist REGISTRY
reform act, 2009

C. James presented a bill intituled Lobbyist Registry Reform Act, 2009.

C. James: I move that a bill intituled Lobbyist Registry Reform Act, 2009, be introduced and read a first time now.

Motion approved.

C. James: The Lobbyist Registry Reform Act introduces amendments to B.C.'s Lobbyists Registration Act. The official opposition has introduced lobby reform amendments in previous private members' bills, including the Accountability Act introduced by the official opposition in 2008.

Like the Accountability Act, this bill reflects recommendations made by the Information and Privacy Commissioner in his letter to the former Attorney General dated October 6, 2008. In his letter to the registrar, David Loukidelis called the existing act inadequate and advised that amendments to the legislation providing "robust mechanisms for compliance oversight" were needed at the earliest opportunity.

Here we are today halfway through our fall sitting of the Legislature, and no legislative amendments have come forward.

This bill introduces Information and Privacy Commissioner recommendations to make the lobbyists registry more effective. Those amendments include an obligation the public office holders verify registration, the power for the registrar to levy administrative penalties and a provision making it an offence to obstruct the registrar. The legislative authority to set regulations regarding registration fees has also been removed.
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These amendments will provide clear rules to ensure that lobbying is done ethically and transparently. Members of this House will recall the many commitments to openness and transparency made by the government. This act actually establishes stronger, more open and more transparent requirements for the ethical conduct of lobbyists and public office holders in this province.

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

Bill M202, Lobbyist Registry Reform Act, 2009, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Statements
(Standing Order 25B)

PARENT ADVISORY COUNCILS

S. Fraser: The district parent advisory council is an organization made up of representatives of school PACs which act as a liaison between schools, the school board and also a provincial parent body called the B.C. Confederation of Parent Advisory Councils. Some 1,700 parent advisory councils — or PACs, as they're known — cover for critical shortfalls in the education system throughout the province. Their work has become essential for the well-being of our students. Their vital funding comes from direct access gaming grants, and the parents involved lever the value of every dollar they get from that money.

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With recent unexpected and massive cuts to those funds, volunteers will have to redouble their efforts. Our PACs provide for everything from sports programs to reading clubs, from outings and field trips to playground equipment. If it were not for the selfless work and dedication of the parents involved, dropout rates would be higher, grades would be lower, and grad rates would be down in the province of British Columbia.

The PACs fundraise too. The breakfast club at Eighth Avenue and ADSS — Alberni District Secondary School — in Port Alberni are examples of this and are largely run through donations. The PAC at ADSS feeds over 300 students breakfast every day. When children have food in their stomachs, then it's shown that their behaviour improves, grades improve and attendance improves.

The parental advisory council at E.J. Dunne Middle School in Alberni Valley has provided needed bursaries, social responsibility programs such as the Roots of Empathy, anti-bullying education and breakfasts for hungry children. And there are more hungry children in British Columbia than ever before.

In these trying economic times and especially in resource communities like Port Alberni that have been hit hard, the importance of parent advisory councils has never been greater. Let us all in this House never forget that.

STURGE-WEBER SYNDROME

R. Lee: Earlier this year I had the pleasure to meet a constituent of mine named Deirdre Forbes McCracken. From Deirdre I learned of a rare congenital disease called Sturge-Weber syndrome that affects her son Connor. Next week is Sturge-Weber Awareness Week, and I would like to share some of what I have learned.

At birth Sturge-Weber is usually associated with a port wine stain, a reddish to violet discoloration of the skin covering the eyelid and the forehead.

With this condition, a collection of abnormal blood vessels overlying the brain affects brain function. Sturge-Weber can be associated with epilepsy, often beginning in the first year of life. Progressive weakness of one side of the body, similar to that caused by a stroke, is common.

Learning disabilities, intellectual impairment, behavioural problems and in some cases symptoms similar to attention deficit disorder or attention deficit hyperactivity disorder can be present.

Glaucoma may be present at birth or can appear months or years later. Increased fluid pressure with this condition may damage the optic nerve and result in vision loss.

The cause of Sturge-Weber syndrome remains unknown, as does a cure. However, the Sturge-Weber Foundation of Canada is working to change this. I encourage all members to visit their website at www.sturge-weber.ca where we can learn more about this condition.

This site also has information about a fundraiser on Saturday, October 17 at the Massey Theatre in New Westminster. I hope this event is very successful and that one day a cure will be found.

RESPONSE TO TYPHOON
IN THE PHILIPPINES

M. Elmore: I'll be speaking today about hope for victims of Typhoon Ketsana in the Philippines. This is a story of hope in the midst of disaster. It is about ordinary British Columbians responding to the needs of Filipinos devastated by Typhoon Ketsana.

As of yesterday — Monday, October 5 — latest reports say there are 288 fatalities with 42 people still missing, and damage to infrastructure and agriculture is estimated at over $193 million Canadian.

A total of nearly 800,000 families, or four million persons across the country, were affected by Typhoon Ketsana. During this traumatic period I sympathize greatly with all those trying to rebuild their lives today — especially with the women, who are often made more vulnerable as a result of natural and manmade disasters such as
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this. I understand that since women are overrepresented in the informal and agricultural sectors, areas greatly hit by Typhoon Ketsana, a large number of women are left without a means of income as they struggle to provide for their family and daily needs.

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But as I witness the calamity brought by this typhoon, I also recognize the hope that organizations and individuals are trying to give to the victims. Soon after we heard about the devastation wrought by Typhoon Ketsana, efforts were underway to provide relief to the victims. Within 48 hours meetings were held, donation drop-off points were set up and fundraisers were organized. I applaud all of these initiatives, and I think it's fantastic that many in the Filipino and broader community have taken the initiative to raise funds for the Filipino-based organizations closest to their hearts.

Given the widespread destruction resulting from the typhoon, it's urgently important to mobilize as much help from as many people as possible. During this very difficult time I'd like to recognize a number of organizations with fundraising efforts: Canada-Philippines Solidarity for Human Rights, Migrante B.C., Committee for Domestic Workers and Caregivers Rights, Salamat, the Typhoon Ondoy fundraiser through the Enspire Foundation and local church groups working with the National Council of Churches in the Philippines. Thank you to everyone who has already donated and given their time for this relief work.

HARMAC MILL

R. Cantelon: They said that it couldn't happen and it couldn't be done, but they were wrong. It was about a year ago that a group of employees under the banner of Nanaimo Forest Products petitioned the court in June in Vancouver to take over the pulp mill from Pope and Talbot.

Now, there were a lot of bottom feeders there — I was there in the courtroom, and I could tell you it was high drama — who said: "Nah, they can never make it. Just break the mill up, sell the parts, ship it overseas, do whatever." Well, these were determined people, and I was happy to see that the province, under the Attorney General, gave the court to consider the fact that there were jobs at stake here and that they were at risk.

But it was about more than jobs. It was about the fact that these employers and union workers got together, and they were ready to risk their homes — risk everything to make this venture work. It was about more than just their jobs. It is a critical core of employment for the entire city of Nanaimo.

In fact, it's fair to say that this was really the way the pulp industry was going with many mill shutdowns — virtually the last stand of the forest industry. If we were to lose a pulp mill, it would have a domino effect throughout the forest industry on Vancouver Island.

These workers are committed not just for their employment but for the employment of their children. It was really something. Both sides of this House have said often: "We need to work together, put management and union together, and develop a new rapport." We talked about it, and they did it. They created a new model that's working very, very well in Nanaimo.

I credit Levi Sampson and the energy and leadership he brought. He brought investors with new money, fresh ideas and fresh entrepreneurship. The naysayers said: "It won't last until Christmas." Well, last Sunday they celebrated the first year of successful operation. There are 216 employees there, and they're reaching production levels of a thousand metric tons per day. Pulp prices are up to $6.60. Now no longer is the issue: can we make it? It's: where do we go from here?

HARRY NYCE

R. Austin: I would like to tell this House about a remarkable constituent of mine and his long journey of public service for his small community, his first nation and, as of last week, this province.

The constituent is Mr. Harry Nyce Sr., who is the newly elected president of the Union of B.C. Municipalities. Harry has been the elected chief councillor of his community of Gitwinksihlkw — or Canyon City as it is called in English — for 14 years.

Harry has served the broader public as a director of the regional district of Kitimat-Stikine for the past 23 years. As one of the principal negotiators of the Nisga'a treaty in 1988, Harry Nyce was given the name of Sim'oogit Saga'ween — Sim'oogit meaning chief and Saga'ween meaning sharp tooth. This is a historical family name that belonged to a great hunter and fisherman.

In 1996 Harry began serving on the executive of UBCM. Looking at the long history of UBCM, I noticed that there have been presidents from all four corners of this province. While representatives from the larger cities have dominated this important position, there have also been a few from smaller communities. Lillooet, Mackenzie and Trail come to mind as examples. But let me share why this election is quite extraordinary.

First of all, Harry is once again breaking ground in being the first aboriginal leader to hold this post. Second, he hails from a community that has a population of only 250 people, a small village resting on the banks of the Nass River where the original Nisga'a population of another community had to resettle after the last volcanic eruption in this country around 250 years ago.

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There are no stores there and just a one-way bridge across the river. Only 25 years ago there wasn't even that
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bridge, and everything was barged across the beautiful Nass River. I'm sure that when Harry first went to Alberta and then to the University of British Columbia to study political science, it must have been just a dream to enter public life and serve his community. That dream has come to a great climax, and I wish Harry well. I'm sure that his experience and wisdom will shine and that all of us will be the beneficiaries of his leadership.

COMMUNITY LIVING MONTH

J. Thornthwaite: Community Living Month is celebrated nationally each year to acknowledge the gifts and talents that people with developmental disabilities bring to their communities. I was fortunate enough to meet Caitlyn Sassaman and Mary Dowdall in my office at one of my first appointments in my constituency in June.

Community Living B.C., a provincial Crown agency, believes that adults with developmental disabilities and their families have the right to pursue good lives in welcoming communities. Part of a good life is feeling safe where you live, go to school, work and play.

This year CLBC is celebrating Community Living Month with Start with Hi, an initiative to encourage British Columbians to make individuals with developmental disabilities feel safe and included in their communities. Start with Hi was created to build all British Columbians' awareness and to help people with disabilities feel safer and more welcome in their communities by simply saying hi.

Start with Hi is built on a social networking basis and encourages British Columbians to share their stories of inclusion and safety on a microsite, startwithhi.ca, and through Twitter and Facebook.

We're all responsible and have a role in building an inclusive and supportive community for our fellow citizens who live with developmental disabilities. During Community Living Month and beyond, we ask everyone to start with hi and take it from there. It can be the beginning of a small connection that can lead to a larger sense of safety, belonging and welcome for someone in your community.

I encourage all members to take part in Community Living Month and Start with Hi. Great things can happen through small actions.

Oral Questions

IMPACT OF HARMONIZED SALES TAX
ON TOURISM INDUSTRY

C. James: A report commissioned by the Tourism Industry Association of Ontario shows that tourists in that province will be paying a lot more because of the HST. Here's just one example from that report. A weekend holiday for two people alone will see a 44 percent increase in taxes under Ontario's HST.

My question is to the Minister of Tourism. What analysis did the B.C. government do on the impact of the HST on the tourism industry, and will he table that information today?

Hon. C. Hansen: What we know is that the tourism industry in North America does well when the economy does well. We also know, according to leading economists throughout Canada, that the shift to the HST is probably the single biggest thing that we can do to create jobs and stimulate economic growth.

But I can also tell the Leader of the Opposition what is a recipe to destroy the tourism industry in British Columbia. It's a recipe that calls for a 20 percent increase in their wage costs, which was proposed by that Leader of the Opposition, and it's also measures that would ensure that the….

Interjections.

Mr. Speaker: Members.

Minister, just take your seat for a second.

Continue, Minister.

Hon. C. Hansen: And the tourism industry in British Columbia also knows that making sure they have some of the most competitive corporate taxes in North America will allow them to thrive and allow them to flourish in British Columbia in opposition to the kind of policy that the Leader of the Opposition announced last week, which would ensure that they do not get the benefit of tax reductions that this government has announced.

Interjections.

Mr. Speaker: Members. Members.

The Leader of the Official Opposition has a supplemental.

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C. James: I guess that's the answer from this government to the tourism industry: "We're bringing in a new tax that's going to hurt your industry, and sorry, we did no analysis whatsoever — none." That's basically what the minister said to the tourism industry today — no analysis on a new tax that is going to negatively impact the industry.

Let's take a look at what the Ontario report said: "The application of the HST on visitor-related goods and services will result in widespread increases to the total price by the consumer. Whether it's movie tickets, taxi fares, parks admissions, hotel rates or restaurant meals, consumers will be paying more under the HST, and an entire sector of our economy will be hurt."

Again my question is to the Minister of Tourism. During a time when revenues are down and tourism has
[ Page 979 ]
already been taking a hit, how can this government justify forcing a new tax on this industry with no analysis of the impact?

Hon. C. Hansen: I think what the tourism industry should be asking of the Leader of the Opposition is…. If she's such a big supporter of the tourism sector, why is she denying them some of the most competitive tax rates in North America?

In terms of the tourism sector, there is no question. There are some things after tax that are going to be a little bit more expensive. There are other things that are actually going to be less expensive, and a hotel room is one of those things that will come down in terms of the tax rate that will be applied to the consumer.

We know that the HST is going to stimulate the economy. It's going to create jobs. Even though we do not have an unemployment rate in British Columbia that is anywhere near the unemployment rates that we saw in the 1990s, we still have an unemployment rate that is unacceptably high. This initiative that we are taking will stimulate those jobs, stabilize those communities and make sure that families are going to be able to travel and enjoy the tourism product that is offered throughout British Columbia.

Interjections.

Mr. Speaker: Members. Members.

The Leader of the Opposition has a further supplemental.

C. James: It's obvious that the government hasn't listened to anyone in the tourism industry, because the clear message that's coming across is that the HST is going to hurt the industry, and this government is not listening to the tourism industry. That's what's clear.

They didn't consult, and they didn't do any kind of analysis around how this is going to hurt the industry. It's very clear. The HST was brought in by stealth in the middle of a recession, weeks after the polls had closed. Now B.C. consumers and the economy will pay the price.

So my question is again to the Minister of Tourism. Why are the B.C. Liberals, in a recession, taking a hammer to the tourism sector without a shred of consultation or analysis?

Hon. C. Hansen: Well, I wonder if the Leader of the Opposition consulted with British Columbians before she said to the tourism industry that she was going to take away their small business reduction.

I wonder if the Leader of the Opposition consulted with British Columbians before she came out in opposition to the 2010 Olympic and Paralympic Games. I can tell you, Mr. Speaker, the Olympic and Paralympic Games are going to be the biggest benefit to the tourism industry in British Columbia not only for 2010 but for 2011, for 2012 and for the next decade ahead.

That is exactly why in the September Budget Update, we put an additional $39 million into tourism marketing in British Columbia to make sure that the world knows that British Columbia is one of the best tourism destinations anywhere on the planet.

Interjections.

Mr. Speaker: Members.

Just wait, Member.

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S. Herbert: Well, I think what we've seen from that side is that there is no Minister of Tourism. The government promised to double tourism by 2015, but then they hit the industry with a new tax, the HST, which the Council of Tourism Associations says will be devastating and ruinous to businesses. The B.C. Liberals did it without consultation and have done zero studies on the impact of the HST on our province's biggest employer — the tourism industry.

Well, I'll tell you what the Ontario tourism study shows. It shows costs massively increasing for consumers and says that the HST will be a big negative for that industry.

My question for the Minister of Tourism, if he should decide to stand: why did the B.C. Liberals fail to analyze the impact of the HST on the number one employer in our province? And why should these businesses and employees pay the price, through bankruptcies and job losses, for the HST betrayal and this government's incompetence?

Hon. C. Hansen: If this member is such a big supporter of the tourism sector, why was he out advocating that they should have an instant 20 percent increase in their wage costs in British Columbia? If this party on the other side is such a big supporter of the tourism industry, why was their leader out opposing the bid for the Olympics, which is going to be one of the biggest benefits for the tourism industry?

I recommend to the member opposite that he actually read the study that was done by the TD Bank chief economist, which came out just two weeks ago, that shows that, yes, there is going to be a very, very small increase…

Interjections.

Mr. Speaker: Members.

Hon. C. Hansen: …in consumer prices in Canada. It would be about a 0.9 percent increase in consumer
[ Page 980 ]
prices, and that is a far cry from the grandiose increases that the member is purporting.

Mr. Speaker: The member has a supplemental.

S. Herbert: Again, we see that the Tourism Minister is missing — missing on this file that's crucial to their industry. The Tourism Minister — and I'll quote him since he won't speak in this House — is quoted as saying that the tourism industry's fears are unfounded.

Reality check, Mr. Minister. Tourism revenues are already falling. Businesses are already struggling to keep from going under. People are already travelling less.

Interjections.

Mr. Speaker: Members.

S. Herbert: So what do the B.C. Liberals do? They slam these businesses and consumers with the HST which, according to this new report, will increase total taxation for a weekend holiday by 46 percent; a family camping trip, 33 percent; conventions, 37 percent. That's not unfounded, Minister. That's an attack.

Commenting on the B.C. Liberals' attack on tourism, Jon Garson, vice-president of the B.C. Chamber of Commerce, said: "We see government standing behind the tourism industry, pushing them off the edge." Pushing them off the edge, Mr. Minister.

My question to the Minister of Tourism, should he finally choose to stand: when he calls the industry's fears unfounded, is he just incompetent, or is he intent on pushing the tourism industry off the edge and the employees out of their jobs and the businesses into bankruptcy?

Hon. C. Hansen: I think if the member took the time to check, he would find that the B.C. Chamber of Commerce is not only an active supporter of the HST, but they have been an active supporter of the HST since the mid-1990s.

Mr. Speaker, I'll tell you what would have slammed the tourism industry in British Columbia. What would have slammed the tourism industry in British Columbia is…

Interjections.

Mr. Speaker: Minister. Minister.

Hon. C. Hansen: …a 20 percent increase in their wage cost, which was advocated by that member and that party in the last election.

N. Macdonald: Well, British Columbians know that they're paying for a Minister of Tourism, and I think the question most have is: why? This is a minister that is supposed to be able to stand in this House and answer a question.

You have Panorama, Revelstoke, Kicking Horse, Kimberley, Fernie ski resort. All draw heavily from Alberta and the prairie provinces. Panorama says that 80 percent of the people that they attract are from those jurisdictions.

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The HST is going to add a new 7 percent tax on lift tickets, meals, ski and snowboard rentals, ski school fees, day care, and the list goes on and on. It is a predictable result. It will be devastating. That is what the industry is saying. How can the minister defend this government imposing a job killer of a tax with no study at all into the repercussions and with no consultation?

Interjections.

Mr. Speaker: Members.

Hon. C. Hansen: What those visitors will find after next July when they come to British Columbia is that their hotel room costs are actually going to be lower because of a reduction in the hotel costs.

They're also going to find that when they enjoy that nice meal at that restaurant in any of those resorts, that bottle of wine — that nice B.C. wine that they have along with that meal — is actually going to be lower in cost.

You also find that the success of ski hills around British Columbia does better when the economy is doing well, and they suffer when the economy is doing poorly. In the 1990s when we never had a single year where the unemployment rate was below 8 percent, it was a difficult time for the tourism industry because unemployed British Columbians don't get the chance to enjoy those resorts and facilities.

The HST will stimulate the economy, it will stimulate job creation, and those employed British Columbians are going to be able to have the opportunity of enjoying our fine tourism offers around this province.

Mr. Speaker: The member has a supplemental.

N. Macdonald: Well, having heard that weak defence from this minister five or six times here, I completely understand why he didn't want to make it during the election. I completely understand.

What the industry is telling the Minister of Tourism, if he cares to stand up and speak in this House, and what the Minister of Finance is hearing is clear. It's not just the Kootenays; it's the Okanagan. Big White Ski Resort describes the HST as terrible. They say: "It's like a brick wall right in front of us." Management says that it's not only the list, which I've already spoken about here; it's also 7 percent on flights.

It is a complete reversal of B.C. Liberal pre-election promises. It is a job killer. The question I have for the
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Minister of Tourism is: how could he enter into and support a tax that he has not studied and that the industry is saying is a job killer? How can he stand and support that — or will he stand?

Interjections.

Mr. Speaker: Members.

Hon. C. Hansen: I recommend to the member that he actually read some of the material that's been put out by Canada's leading economists not just this year but over the last number of years, which actually indicates that this shift to a value-added tax — like 130 countries around the world have already done, including 29 of 30 OECD countries — is the single biggest thing that British Columbia can do to stimulate the economy and create jobs.

M. Farnworth: The taxpayers of this province are paying for a Minister of Tourism who sits silently in this House. He's very brave outside the House, like on NL Radio this morning where he's saying that the fears of the restaurant industry are unfounded, that he's going to find that the restaurant industry's concerns are nowhere near as drastic as the industry thinks. That's what the Minister of Tourism said this morning.

Will the Minister of Tourism have the courage of his convictions, have the guts to stand in this House and tell the public of British Columbia why those restaurant owners are wrong, why they shouldn't be worried and what studies he's done to back up the words that he said this morning on radio?

[1410]

Interjections.

Mr. Speaker: Members. Just to remind members….

Interjections.

Mr. Speaker: Members. No personal attacks, please.

Hon. C. Hansen: I've had the pleasure of meeting with the tourism industry since the middle of July. I've also had the opportunity to meet with representatives of the restaurant associations on several occasions. We've had good, constructive dialogue. We've certainly talked about the impact that HST is going to have on those industries.

When I hear news reports of a representative of that sector talking about how this is going to be an additional 12 percent tax, it sort of underscores for me some of the hyperbole and exaggeration that exist out there around the impact of the tax.

When I hear the member from Vancouver-Burrard talking about this increasing costs by 46 percent, it shows me either that there is some pretty faulty research or that he simply doesn't understand how the tax will work.

We continue to work with the industry representatives, and we will certainly look at what measures we can take to make sure that they continue to have dynamic and thriving industries, particularly as we go into the 2010 Olympic and Paralympic Games and reap the benefits of a new, energized economy that will flow afterwards.

GOVERNMENT ACTION
ON WOMEN'S EQUALITY AND
VIOLENCE AGAINST ABORIGINAL WOMEN

M. Mungall: Today the West Coast Legal Education and Action Fund released its report on B.C.'s compliances with the UN convention on the elimination of all forms of discrimination against women. A few of the grades: missing and murdered aboriginal women, F; women in housing, D; women in social assistance, D; child care, D.

This government offers little — or even detrimental — action for women's equality in B.C. How does this government justify it?

Interjections.

Mr. Speaker: Members. Members.

M. Mungall: Hon. Speaker, I would gladly ask the minister of women's equality, but that ministry was cut in 2001. So taking that into consideration, let's pick one of the topics: missing and murdered aboriginal women. We'll direct that question to the Solicitor General.

Interjections.

Mr. Speaker: Members. Members.

Hon. K. Heed: I want to advise the member opposite that investigations that are ongoing in matters in front of the courts…. I will not comment on it.

But I will also advise members that our primary goal has always been to ensure that we have front-line services available for people who become victims of violence in society. As mentioned, we are investing $43 million into programs to ensure that we have victim assistance available, whether it's members from a disenfranchised group in life or who fall victims of violence.

Mr. Speaker: Member, there were two questions. The first one wasn't answered, and the second was a second question. So on to the next person, please.

Interjection.

Mr. Speaker: Member.
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WOMEN'S ACCESS
TO LEGAL AID SERVICES

K. Corrigan: The report card gave the government an F — an F for failure to ensure that women have access to our justice system. Why has this government gutted legal aid services and allowed critical services like the Family Law Clinic to close their doors?

Hon. M. de Jong: Actually, the member is incorrect. Funding for legal aid services from the government has actually gone up again this year.

[1415]

That is not to say that there aren't challenges experienced by the legal aid society. Their other sources of funding, relying as they do on investment incomes driven by interest rates, are challenged this year.

That's why the government, in addition to providing that legal aid support, has pilot projects in place in communities like Duncan, for example, and in the Fraser Valley. They're designed to work with women, work with victims of domestic violence, and to ensure that the support is there and the training for prosecutors who can actually specialize in the prosecution of domestic violence crimes is there.

We will continue to provide that support where it's needed and when it's needed.

Mr. Speaker: The member has a supplemental.

K. Corrigan: This report, which is generated by West Coast LEAF, a highly respected organization, lays the blame at the feet of this government. Just this year the Family Law Clinic was axed, dispute resolution referrals eliminated, extended services for family law cases suspended and the Legal Services Society gutted.

Can the Attorney General please explain how dismantling the legal aid system will improve outcomes for women, particularly single parents who desperately need these services?

Hon. M. de Jong: I think it's an important subject. I think it's a vitally important subject. But I also think that the member as a legislator and an occupant of a seat in this chamber has a duty to check her facts.

Interjections.

Mr. Speaker: Members.

Continue, Attorney.

Hon. M. de Jong: She chooses either deliberately or inadvertently to bring information to this House and present facts that are not facts.

The funding for the Legal Services Society from government has actually increased. Now, that may not fit within the parameters of the political story that the member chooses to advocate, but it is a fact.

There is still much work to be done. That's why we continue to have the pilot projects. That's why we continue to ensure that there are trained prosecutors specialized in addressing the needs of the victims of domestic violence. We have done so in the past, and we will continue to do so in the future.

ACTIONS OF
OLYMPIC GAMES SECURITY UNIT

L. Krog: Chris Shaw is a professor of ophthalmology at the University of British Columbia and an outspoken critic of the Olympic Games. Friends and former family are being questioned by members of the Vancouver 2010 Integrated Security Unit about Professor Shaw's activities and associations.

Professor Shaw is exercising his democratic rights in criticizing a major government expenditure. We all enjoy the protection of the Charter of Rights and Freedoms, so my question to the Attorney General is simply this. Does he think it appropriate to send the RCMP out to harass the government's critics?

Hon. K. Heed: The province of British Columbia, in partnership with the federal government, is committed to delivering a safe and secure Olympic Games. We certainly believe that every person has a right in Canada to peaceful protests, and I believe the police understand and will respect those rights.

As you can imagine, this is a very, very large task that the RCMP have to ensure a safe and secure games in Canada. You can imagine the volume of information that comes in with respect to security around such a large event.

[1420]

The RCMP are engaging with security experts from all over the world, gathering that intelligence. It's incumbent upon them to check out each and every lead or piece of intelligence they have to ensure that we have those safe and secure games in British Columbia.

Mr. Speaker: Member has a supplemental.

L. Krog: Hon. Speaker, that is an outrageous statement in response to a clear breach of trust. Danika Surm is a 24-year-old student. Has she been involved in any anti-poverty protests? No. "Have you been involved in any type of street protests?" "No." "Have you ever been arrested?" "No." Yet two — two — members questioned this woman about her association with a citizen who is protesting the Olympic Games.

We're coming to November 11. Is that member going to go to his Remembrance Day ceremonies and shake the hands of the veterans and compliment them for
[ Page 983 ]
what they did, while his government is engaged in this kind of activity? I want to hear from this minister who in this government authorized these investigations and the harassment of ordinary citizens.

Hon. K. Heed: As you can understand — and I hope the members opposite can understand — the RCMP have a very, very important function. Could you imagine if they didn't check out the information that they get? What would happen if something occurred during the Olympic Games which they had the duty and ability to prevent? Our goal is to ensure that we have those safe and secure games. I expect law enforcement to do whatever they can to ensure that security and to prevent incidents from taking place.

In order for us to have safe and secure games, we will balance the individual rights of people in British Columbia, people in Canada, with ensuring that we provide safety and security to people in our province, to athletes that are coming and to visitors that are coming to our country. If people in the public have a complaint with respect to the RCMP or members of the integrated unit from a municipal agency, there is a process for them to take their complaint to.

S. Simpson: Professor Shaw is a peaceful critic of the Olympics and has been a critic for some period of time and has always done that in a peaceful manner. There are letter writers, writers of letters to the editor, writers of articles. These are the people who we now are discovering that the Integrated Security Unit is visiting — visiting their families, visiting their friends and inquiring about these people in this manner that is a breach of their civil liberties. The B.C. Civil Liberties Association, among others, has raised this concern.

My question is to the minister. Does the minister support these actions, or will the minister tell the Integrated Security Unit to respect people's civil rights and back down?

Hon. K. Heed: This government continues to ensure a safe and secure Olympic Games for Canada. We do not direct the RCMP on what they should be doing. But I can assure you that we do not intend in any way whatsoever to abuse people's rights. We will act within the law, and that's my expectations of the police that are out there to ensure that we have the safe and secure games.

[End of question period.]

Orders of the Day

Hon. M. de Jong: In Committee A, Committee of Supply — for the information of members, the estimates of the Ministry of Transportation and Infrastructure; and in this chamber, continued committee stage debate on Bill 6, the Insurance Amendment Act.

Mr. Speaker: Hon. Members, just before we get started, one member failed to introduce his petition.

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Petitions

S. Simpson: I'm pleased to present a petition with 370 signatories from the Raise the Rates campaign, looking to increase income assistance, end eligibility barriers for welfare, increase the minimum wage and build some affordable housing.

Committee of the Whole House

BIll 6 — INSURANCE
AMENDMENT ACT, 2009

(continued)

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

The committee met at 2:28 p.m.

On section 14 (continued).

B. Ralston: Just before we broke for lunch, the minister had made reference to representations by the industry and, I think, had expressed an uncertainty as to just what representations had been made on this particular point.

In October 2008 the Insurance Bureau of Canada made a submission to the Finance Committee, and it was a written submission. I just want to quote the passage, and this is on this issue of prescribed exclusions.

"IBC recommends that the list of prescribed exclusions relating to the peril of fire, to be set as per section 28.4(1) of the Insurance Amendment Act, include the current list of permitted exclusions set out in section 122(1) with the addition of losses or damage resulting from terrorism and nuclear incident. IBC also strongly recommends that earthquake be added to that list of permitted fire exclusions to allow the creation of a stand-alone earthquake insurance endorsement that would incorporate coverage for both the shake and fire following an earthquake."

Now, I gather that the position of the previous Minister of Finance was that to permit what the IBC suggests would lead to concern or confusion among consumers, because they would expect that fire, regardless of the cause, would be covered.

Is that the reason that the minister is taking the position that he takes, when considering the comments and the representations made by the Insurance Bureau of Canada?

[1430]

Hon. C. Hansen: The position we are taking today on this particular issue is the same position that we as a government have taken for the last number of years, so there is no change in policy as a result of this.
[ Page 984 ]

The member may be referring back to a discussion paper that was put out in 2007. That was not reflecting the views or opinion of the Minister of Finance of the day, nor was it reflecting the views of government, but rather was a discussion paper and was meant to stimulate discussion and input back to government.

B. Ralston: I thank the minister for that answer and that clarification.

The insurance industry seems to be suggesting that the suggested framework, where insurers would be statutorily required to cover the fire peril in situations where the cause is linked to circumstances prescribed by regulation, would introduce substantial contractual uncertainty that could undermine market stability in the province. Does the minister share that concern or not?

Hon. C. Hansen: As I indicated this morning, we do plan to engage in consultations with the industry and others with regard to the regulations before they're put in place. That would be the time when there would be an opportunity for that kind of input and discussion.

B. Ralston: I want to turn now to section 28.5. This appears to be a new definition of causes of fire. It doesn't include damage caused by contamination of radioactive material caused by fire or any other cause excluded under regulation authorized by section 28.4(1). Can the minister explain why damage caused by contamination of radioactive material caused by fire was not included?

Hon. C. Hansen: The amendments here do not change the intent of the legislation. What it does is basically clarify some of the wording, but there is no change in application that would flow from these amendments.

Insurance coverage for radioactive materials is a very difficult area in which to insure. There are obviously federal guidelines that apply with regard to how radioactive material can be used and how it needs to be cared for. Therefore, there is nothing in terms of application that changes as a result of these amendments.

B. Ralston: Dealing with section 28.6, 28.6(1)(d) speaks of an exclusion that would apply to a person who is in a class prescribed by regulation. Can the minister advise who might fall into that class or what is contemplated there?

[1435]

Hon. C. Hansen: Again, we see this as part of the consumer protection measures that are being introduced in this bill today. This is a fairly significant measure which will increase the protection for a non-culpable person or parties who may otherwise be denied insurance coverage because of the wrongdoing of another. So it is merely there to protect the interests of a party to an insurance policy who is non-culpable in terms of an offence or an action.

B. Ralston: Thank you to the minister. I think I understand the general explanation.

In describing members of that class…. How would that be done? It seems that in the discussion paper there's a reference to innocent co-insured, and I think there are two examples given in the paper — a child causing damage and, I think, an abusive spouse. It says that in Washington State, a co-insured spouse cannot be denied coverage if they file a police report. Given that those were raised in the discussion paper, are those the sorts of examples that are contemplated might be included in this class prescribed by regulation, or am I completely off base?

Hon. C. Hansen: In terms of the regulations that may flow from this section, we'll certainly be open to input that will come from the industry as to whether or not there should be exclusions or what those exclusions should be, if there are exclusions. But none of that has been determined at this point and would certainly be a subject of the consultation process leading up to the regulations.

B. Ralston: Well, I certainly appreciate all of that. But surely, by including this provision that offers the prospect of consultation, there must have been something that is contemplated and some — if I can put it this way — occupants of the class, or prospective occupants of this class prescribed by regulation.

Can the minister, without obviously binding himself to doing this or not, give some sense of the thinking of the government and the legislative drafters in including this section (d) in this amendment?

Hon. C. Hansen: At the time of drafting there are certainly some of the obvious classes that would benefit from a provision like this. An example might be a wife or a husband in an abusive relationship who would be a co-insured yet may be totally non-culpable to an act that may be perpetrated, as well as children who may have a benefit or financial interest in property that would be impacted.

[1440]

But in drafting, rather than being that specific in terms of how this might be applied, it was felt that by giving us the powers in regulation, we would certainly leave the opportunity open for us to explore other areas, as well, and other classes of individuals or entities that should be excluded under these provisions.

B. Ralston: Given that this section is about recovery by innocent persons, I suppose the concern would be: given the length a consultation might take, is there any sense of
[ Page 985 ]
a timeline? This act does appear to leave a lot to regulation. So it seems that when the statute comes into law, the work will begin again on another round of consultation about the shape that the regulations might take.

I'm not saying that consultation isn't required, but it does seem that the opportunity to have something definite — particularly on this section where it does concern innocent persons at law — might take an unduly long period of time.

Can the minister give — I understand you can't give a firm commitment — some sense of where it might be in the list of priorities for the drafting of regulations which will flow from the passage of this statute?

Hon. C. Hansen: In the absence of a specific regulation that would flow from this section, the provision is provided for broadly. Once this legislation is brought into force and this section is brought into force, that provision will be there unless there is a regulatory decision made to prescribe a particular class in the future. But should that be required, at least the legislative authority is there for it. In the meantime the provision would be there and would be in effect even prior to any regulations that may be drafted pertaining to other particular sections.

So there is not a specific timeline that would apply to any particular class that would be designated under this section.

B. Ralston: I thank the minister for that response. On section 28.7, subrogation — does this amendment change any of the traditional legal operation of subrogation or not?

Hon. C. Hansen: Under the previous wording, the provision applied only to fire insurance. Now it applies more broadly to all classes of insurance that are covered under this legislation.

Section 14 approved.

On section 15.

B. Ralston: This section adds some definitions. Are there any unusual features that the minister wishes to highlight here, or is this all relatively routine? I understand that much of the purpose of these amendments is to bring the act, which was originally drafted in 1926, up to contemporary business standards in the insurance industry. These definitions appear to fall into that category. But I'd just like the minister's assurance that that's what is being done here and nothing else.

Hon. C. Hansen: That is what's being done. These changes really are just a part of the modernization of the act and trying to ensure that definitions are in accordance with contemporary understanding.

Sections 15 to 17 inclusive approved.

On section 18.

[1445]

B. Ralston: This section makes what appears to be a minor amendment, striking out the words "rights and status of beneficiaries" and adding "the rights and status of beneficiaries and personal representatives as recipients of insurance money." Is that a reference to the wills and succession process or something else?

Hon. C. Hansen: The net effect of this amendment is to add the words after beneficiaries "and personal representatives as recipients of insurance money." This is really meant to just reflect the fact that it could be individuals other than specifically beneficiaries. It could be, for example, executors. But the term "personal representatives" is defined in the Interpretation Act and therefore is just meant to broaden the scope of individuals to which this would apply.

Section 18 approved.

On section 19.

B. Ralston: This is a proposed amendment to section 32. It requires the insurer to issue a copy of the policy and application to the insured, and that's to be defined in distinction to the person who bought the policy.

I'm advised that this is designed to cover the situation where many people have, for example, group life insurance that's paid for as a benefit at work through their employer. Is this then a requirement that although they didn't pay for it, they're entitled to a copy, and a requirement that a copy of the policy be given to them? Is that what this is intended to do?

Hon. C. Hansen: The answer is yes.

B. Ralston: Then section (b) of the same proposed amendment sets out conditions under which the insurer is required to provide a full copy of the policy to the insured. I did refer to group insurance previously. It does then refer to it in, I think, subsection (b)(5).

I take it that's consistent with what we've just discussed in subsection (a) — that there is a requirement to provide an individual who is a subscriber to a group life insurance with a copy of the policy. And it says "any written statement or other record." I'm not sure quite what that might be, but presumably something to do with the conditions on which the policy was issued. Is that correct?

Hon. C. Hansen: Yes, under subsection (5) that pertains specifically to group insurance. Information that
[ Page 986 ]
may be requested, for example, may be a medical report from a medical doctor or other information that may be necessary.

[1450]

B. Ralston: Just so that I'm clear. There are obviously many of these group life insurance policies, and they're a common feature of conditions of employment. Many people have them as part of the benefit package they get from their job.

It would appear that it's not mandatory for the insurance company to issue a copy of the policy. It's just available on request. In subsection (7), the insurer is entitled to charge a reasonable fee to recover its expense in furnishing copies other than the first copy furnished. Is it intended to set those fees by regulation as well then?

Hon. C. Hansen: It would be the insurer that would determine what a reasonable cost would be to cover those expenses. If there was a dispute, then certainly the insured would have the ability to go to the regulator.

Section 19 approved.

On section 20.

B. Ralston: This proposed section amends section 33 and strikes out the words "the circumstances in which the contract lapses and…." I understand that is information that was required to be stated in the policy. Can the minister explain why it's proposed to strike out that phrase?

Hon. C. Hansen: This is part of the process that we've gone through in trying to make sure that our legislation is harmonized with that of Alberta. This actual change allows us to be consistent with the two provinces. It was deemed that that particular portion of the sentence was not relevant and not necessary in this legislation. Therefore, the easiest solution to making sure that the two pieces of legislation were consistent with each other was to remove that particular section out of this section.

B. Ralston: Well, I appreciate that the goal is consistency. But if the provision in the other province is not particularly helpful or well written, it would seem not really worth the effort to make it consistent with something that's not doing the job.

I suppose what I'd seek from the minister is that not only is it consistent with Alberta, but that the Alberta provision that consistency is aimed with is clear and achieves the legislative purpose.

I understand that the second part of the paragraph will read: "the conditions on which the contract may be reinstated if it lapses." That will be required to be stated in the policy. Is that the ultimate grammatical result — that the legislation in both provinces will say that then?

[1455]

Hon. C. Hansen: As was pointed out to me, in the case of life insurance, there are many policies which in fact do not and cannot lapse if they were for policies that would not have circumstances where they could be terminated or allowed to lapse. So by having this reference in the legislation, it was indicated that that could lead to confusion over its interpretation. Therefore, it is felt that that particular portion of the sentence was not necessary as it pertained to this class of insurance.

Section 20 approved.

On section 21.

B. Ralston: This provision requires that group insurance contracts set out provisions that would remove or restrict the right to designate beneficiaries. Can the minister advise of the circumstances where that might arise and why it's necessary to advise in writing of that?

Hon. C. Hansen: One example would be an insurance policy for a key person in a company's organization. It could be a senior-level executive where the company would actually take out a life insurance policy, but it would be payable to the company. Therefore, in circumstances such as that, it would be appropriate to limit the ability to change a beneficiary of an insurance policy because of the basic purpose and intent of the policy in the first place.

B. Ralston: Sometimes examples are much more helpful to understand the point, although I would think that in that case, that would be an individual policy rather than a group insurance policy, given that it would be crafted to ensure the life of a single individual rather than a group of individuals that are typically covered by a group insurance policy.

In section (g) it speaks of contracts replacing each other and whether the beneficiary designations in the old contract would apply in the new contract. That would be required to be set out in writing. Is that correct?

Hon. C. Hansen: Yes.

B. Ralston: The final subclause here. This appears to follow the general scheme of the legislation that speaks of limitations by referring to the Insurance Act rather than to a specific limitation period, such as two years. I think that's fairly apparent, but I just wanted to confirm that.

Hon. C. Hansen: This is totally consistent with the other section that we discussed earlier this morning, and the wording is the same.
[ Page 987 ]

Section 21 approved.

On section 22.

B. Ralston: This is a requirement of group insurance certificates requiring the major terms and coverages of the policy but not a full copy of the policy. Can the minister advise why he's decided not to require the provision of a full copy of the policy?

[1500]

Hon. C. Hansen: In some cases providing every member of a group plan access to all of the paper document could be a fairly substantive piece. In the case of group coverage, what we're saying is that they would have access to the group certificate, and then, as is provided for in one of the other sections we discussed, would have access to the overall policy as it pertains to them. But it's not necessarily the whole policy if there are sections of the group policy that would not necessarily pertain to, say, that particular group of employees.

Section 22 approved.

On section 23.

B. Ralston: This proposed amendment contains a very interesting term that calls for the termination of the contract by the court where a person believes that their life or health is at risk by the life insurance remaining in place. Can the minister perhaps give an example where such an application might be made to the court? I can imagine a few, but I hesitate to suggest them without the benefit of the kind of advice that perhaps the minister has access to.

Hon. C. Hansen: This section provides for a new mechanism to protect insurance persons in some very rare circumstances. Currently a life-insured individual who is not the policyholder cannot cancel the life insurance policy even though the policy owner may no longer have an insurable interest in that person's life. This situation may arise, for example, upon termination of employment or upon a divorce. The person whose life is insured may feel uncomfortable or even at personal risk knowing that their death will benefit another individual.

Sections 23 to 26 inclusive approved.

On section 27.

B. Ralston: This is the issue about duty to disclose to an insurance company on a medical examination. It sometimes arises in litigation where the insurance company will claim that the lack of full disclosure by the person who bought the insurance should lead to the insurance company not being obliged to pay on the policy.

Can the minister explain what the consequence of these changes is? This would seem to be a relatively important amendment given that it concerns, ultimately, the validity of the policy that the insured is purchasing.

[1505]

Hon. C. Hansen: This is to bring greater clarity to the language that currently exists in the statutes. For example, if the misrepresentation only occurred with relation to an application for extra coverage, then that misrepresentation should not negate the entire policy but rather should impact on the extra coverage that was being applied for at the time. So what this is doing is making it clear and ensuring fairness to consumers.

B. Ralston: Perhaps if I might try an example, just to make sure I've understood this. If a person, say, had some term insurance on their life and they wanted to increase it from — I don't know — $250,000 to $500,000…. They underwent a medical examination. It was deemed that they didn't make full disclosure of a pre-existing medical condition during that examination. That might negate the increase in the value of the policy from $250,000 to $500,000, but the original policy would still stand. Is that what's intended?

Hon. C. Hansen: The member is right.

Sections 27 to 29 inclusive approved.

On section 30.

B. Ralston: This amendment allows someone's coverage to be reinstated automatically if they make a premium payment within 30 days after their 30-day grace period. I understand that's in section 68 of the bill. Is that what this is intended to clarify?

Hon. C. Hansen: That certainly is part of this particular section, but it also, in addition, clarifies that the section does not apply to a creditor's group insurance. It also limits the maximum interest that may be charged by an insurer to the amount determined in accordance with the Court Order Interest Act. So the member is right. Part of it does pertain to automatic reinstatement within a 30-day grace period.

Section 30 approved.

On section 31.

B. Ralston: This section deals with the termination and replacement of group policies, and that would appear
[ Page 988 ]
to be a circumstance where the employer might change insurers for the purposes of providing group insurance. I understand that it prohibits exclusions based on non-attendance and work on the date the replacing contract comes into effect. Is that correct?

Hon. C. Hansen: Yes.

Section 31 approved.

On section 32.

B. Ralston: This is something that we'd referred to earlier — insurers' right to restrict the designation of beneficiaries. This section appears to contemplate regulations that would limit that ability of an insured to restrict the designation of beneficiaries. Again, this is an area that I presume there would be some consultation with the industry and consumers' associations, presumably.

Can the minister advise what the thinking of the ministry is on the direction that these regulations might go?

[1510]

Hon. C. Hansen: I think, as the member noted at the outset of the discussion, that this changes some legislative provisions that go back three-quarters of a century. So while we are trying to put in language that deals with some specific issues — and we talked earlier, again, about the key person insurance within a corporation — we want to ensure that the language is broad enough that it would give us flexibility in the future to deal with changing circumstances, should they arise.

B. Ralston: On this section, as I read subsection (6), it requires an insurer to tell the member of a group contract whether their designated beneficiaries are still eligible under the replacement contract. So if the change is made, and there is a change in beneficiaries, that has to be communicated to the insured. Is that correct?

Hon. C. Hansen: Yes.

Sections 32 and 33 approved.

On section 34.

B. Ralston: This probably involves some overlap with the statute that my colleague from Nanaimo was discussing, the wills and succession act. It appears to deal with wills that designate a beneficiary but are declared invalid. Can the minister explain the effect of this amendment? Is it a change in response to litigation, and what ultimately is the legislative goal here?

Hon. C. Hansen: There is no substantive change as a result of this. It is really just to make sure that the wording is clarified. The only change is actually under subsection (4) where the word "subsequently" has been…. It used to say: "…purports to be a will and subsequently the instrument if valid as a will…." So this change is simply to strike out the word "subsequently" and insert the words "if it were valid as a will." So it's a very minor change that has no substantive change and is really just to make sure that it is clearer than was previously worded.

B. Ralston: Just confirming, then, that this is something that's a drafter's choice rather than something that's arisen out of litigation that generated an ambiguous interpretation.

Hon. C. Hansen: Yes.

Sections 34 to 36 inclusive approved.

On section 37.

B. Ralston: This section, looking at it, appears to clarify how insurance money payable to a beneficiary cannot be claimed by creditors to pay off the debts of the insured. Is that the purpose of this amendment?

Hon. C. Hansen: The member is correct. That is the intention of this entire section. The amendment that is being made is simply wording in subsection (2). Again, like the previous section that we discussed, it is not a substantive change, but rather, as the member rephrased it, it's a drafter's choice in terms of appropriate language that would ensure more clarity.

Sections 37 to 40 inclusive approved.

On section 41.

B. Ralston: The only substantive change that I'm able to locate in this is in subsection (3.1) that says that if an interest in a contract is assigned to a person, that assignment takes precedence over beneficiaries that were designated before the assignment except if the beneficiary is designated irrevocable. Is that correct?

[1515]

Hon. C. Hansen: Yes. It is simply to clarify the existing interpretation.

Sections 41 to 44 inclusive approved.

On section 45.

B. Ralston: This section 45 amends section 63 and appears to establish that the payment of insurance proceeds must follow the law of the jurisdiction in which the
[ Page 989 ]
insurer was resident on the date of their death, even if it is outside British Columbia and even if their beneficiaries or representatives are resident in British Columbia. Is that correct?

Hon. C. Hansen: This is a relatively minor change, and it's simply to make it clear that the payout is in terms of where the individual is resident as opposed to where the individual is domiciled, so it is to provide that clarity.

Sections 45 and 46 approved.

On section 47.

B. Ralston: This concerns the issue of limitation of actions. It increases various limitations from one to two years, and there appear to be some changes in the language describing the commencement of a limitation period. Can the minister confirm that that is the intention and effect of these proposed amendments?

Hon. C. Hansen: The original language that exists now actually goes back in the context of simply life insurance where the commencement of the period is usually determined, whether the person is alive or not alive. In the case of things like disability insurance, then obviously commencement can become a different issue completely, so this is to provide that clarity.

Sections 47 to 50 inclusive approved.

On section 51.

B. Ralston: This clarifies the language of section 72, and I think this is something that was dealt with in the revisions to the wills and succession act. When simultaneous deaths occur, there's a deeming provision as to which death is presumed to have occurred first. Does this bring about any substantive change in section 72? In my reading, it doesn't, but I just wanted to confirm that.

Hon. C. Hansen: No substantive change.

Sections 51 to 55 inclusive approved.

On section 56.

B. Ralston: This part changes a number of definitions relating to accident and sickness insurance. This appears to be consistent with the general thrust of updating the language and definitions in contrast to the previous act and make it consistent with modern insurance products.

[1520]

Other than that wish to update the definitions and provide new ones where they're required, is there anything else that is achieved in this proposed amendment?

Hon. C. Hansen: This is to ensure that it's consistent with the life section definitions that we had covered previously. But there is no substantive change that comes out of this other than a modernization of some of the language.

B. Ralston: Perhaps it's worth noting and just confirming that the more expansive and modern definition of "spouse" that's included here, et al. "means a person who (a) is married to another person, or (b) is living and cohabiting with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender" — which would appear to be consistent with contemporary practice. Is that correct?

Hon. C. Hansen: Yes.

Section 56 approved.

On section 57.

B. Ralston: It creates a new subsection 81.1, which says: "Sections 10 and 11 apply to contracts of accident and sickness insurance." Other than that, is there any other change that's included in the proposed amendments in this section?

Hon. C. Hansen: No.

Sections 57 and 58 approved.

On section 59.

B. Ralston: This is a very detailed section giving details on issuing a copy of the full policy to people who are insured, including under group policies in which the person who has purchased the policy is different from those who are covered.

In the discussion paper there was some substantial discussion, and proposal 7 set out some recommendations. In my reading of it, these proposed amendments appear to be consistent with proposal 7. These provisions are, of course, consistent with what we've discussed previously on this topic elsewhere in the act. Is there anything else that the minister wishes to add by way of comment on this amendment?

Hon. C. Hansen: This is actually quite a significant expansion of the rights of the insured when it comes to the accident and sickness sections. Previously it had simply just said that an insurer entering into a contract must issue a policy. Now it clearly sets out what the rights of the insured are and what they can expect. Also, it makes this particular section and this language totally consistent with the language that was in the life insurance section as well.
[ Page 990 ]

Section 59 approved.

On section 60.

B. Ralston: I just wanted to confirm and draw to the minister's attention that there's a reference to limitation periods, but the formulation — the one that appears elsewhere in the act that we previously discussed — refers the reader to the Insurance Act rather than stating what the limitation period actually is. Is that correct?

Hon. C. Hansen: Yes. I hope we get full marks for consistency here.

Sections 60 to 64 inclusive approved.

On section 65.

B. Ralston: I'm advised that in the revisions that have taken place here, condition 12 is omitted. I'm wondering if the minister can advise why that might be so. That is a reference to limitation of actions.

[1525]

Hon. C. Hansen: This provision actually gets replaced by other provisions, one of which we have already come to. There's another provision that comes up later in the bill that replaces this provision that is being eliminated.

Sections 65 and 66 approved.

On section 67.

B. Ralston: I just wanted to confirm that section 91.1 refers to limitation periods much in the same manner as elsewhere, which we've discussed previously, and also defines the commencement of limitation periods for the same reasons that the minister set out earlier in relation to another section.

Hon. C. Hansen: Yes.

Sections 67 to 70 inclusive approved.

On section 71.

B. Ralston: This section appears to mirror the one we discussed previously, where there's a provision to apply to the court where a person may believe that the continuation of the insurance policy may endanger their health or life. Is that intended as a companion provision in the case of this type of insurance?

[C. Trevena in the chair.]

Hon. C. Hansen: The answer is yes.

Sections 71 and 72 approved.

On section 73.

B. Ralston: I just wanted to confirm that this change parallels the previous one we discussed about the duty to disclose and that it's included for the same reasons. This is for this type of insurance as well?

Hon. C. Hansen: Yes.

Sections 73 to 76 inclusive approved.

On section 77.

B. Ralston: This relates to group policies, termination and replacement. It appears to mirror the same provisions in the life insurance section. Other than that, I don't see any other differences. Can the minister confirm that?

Hon. C. Hansen: Yes, this is intended to parallel the provision that's in the life section.

Sections 77 to 83 inclusive approved.

On section 84.

B. Ralston: We'd spoken of these parallel provisions earlier — the priority of an assignee over an irrevocably designated beneficiary. I just wanted to confirm. In my reading, it parallels the amendments proposed in the previous section. I just wanted to confirm that that was correct.

Hon. C. Hansen: Yes.

Section 84 approved.

On section 85.

[1530]

B. Ralston: This section appears to describe insurance money that's exempt from seizure. Can the minister explain how this section would operate in practice?

Hon. C. Hansen: This is to protect from seizure payouts that would be designated specifically to a spouse or a child or another family member, for example. This is not a substantive change from the previous wording, but rather, there are some very minor wording changes that are really just meant to clarify.

Section 85 approved.
[ Page 991 ]

On section 86.

B. Ralston: These changes relate to the assignment of insurance contracts. They appear to parallel amendments made to sections 55 and 57 of part 3 by sections 38 to 40 of the bill in every respect. I just wanted to confirm that that is the case.

Hon. C. Hansen: Yes.

Sections 86 to 90 inclusive approved.

On section 91.

B. Ralston: This section relates to minors, authorizing the insurer to pay money to a minor's trustee or to a public trustee or guardian unless the minor has reached 18 years of age. I take it that's an amendment, given the age of the previous act, that changes the age of majority. Is that correct?

Hon. C. Hansen: If the member is referring to subsection (5), this is not a new provision to the legislation. It's a new location within the legislation, so it is being moved to this section.

Really, the intent, the substance of it is not a change. It still allows for a person at the age of 18 to provide a discharge, and that is a current provision. It's just a new location within the act.

Sections 91 and 92 approved.

On section 93.

B. Ralston: Section 93 amends section 113 by striking out $2,000 and substituting $10,000. That would appear to be simply a case of inflation. It concerns the amount an insurer can pay out to someone, such as a relative or caregiver, who has incurred expenses caring for the insured.

Other than that, is there anything else contemplated here?

Hon. C. Hansen: This is simply to reflect the fact that a certain amount of inflation has occurred since the original $2,000 provision was put in the act.

Sections 93 and 94 approved.

On section 95.

[1535]

B. Ralston: This appears to be a clarification, striking out the words "or at the time the action is brought" for "is so authorized at the time the action is brought." Can the minister explain what the intent of this proposed amendment is?

Hon. C. Hansen: This is not a substantive change. It is merely a clarification. It is to provide that an action on an insurance contract with a British Columbia–regulated insurer may be brought in the province regardless of where the contract was made. The only thing that has changed is the addition of the words "is so authorized." They are new to the section, but it is not a substantive change.

Section 95 approved.

On section 96.

B. Ralston: This is what's described as a presumption against agency. Can the minister describe what the purpose of this amendment is? It appears to be clarifying the language. I presume that this might well have been the subject of litigation and appears to provide a defence to the insurance company against the actions, or not, or advice of certain employees or officers. Is there anything major contemplated here, or is this just clarification?

Hon. C. Hansen: The purpose of this change is to clarify that this consumer protection rule also applies to a debtor insured. What it does is fill a gap to ensure that this protection applies to consumers of creditor's group insurance as well as consumers of other products.

Section 96 approved.

On section 97.

B. Ralston: And just to clarify, this deals with, I suppose, the comments of the Supreme Court of Canada in KP Pacific Holdings, which gave rise to the two limitation periods in separate sections of the old act.

Presumably these amendments, given that they're now in the general insurance provisions, will put to rest those problems and all the comments that the Supreme Court of Canada said about the litigation that resulted. I think the quote was: "Surely there can be little which is less productive or more wasteful than litigation about such technicalities." This will lead to perhaps the end not of litigation but certainly litigation about these provisions.

Hon. C. Hansen: That is the intent.

Sections 97 to 99 inclusive approved.

On section 100.

B. Ralston: This appears to give broad powers in terms of regulation. Again, this seems to be a theme of the act. Is there anything new in terms of the regulation power that the minister wishes to draw attention to in section 100, which amends section 192?

[1540]
[ Page 992 ]

Hon. C. Hansen: I think, as was indicated, this is legislation that goes back many decades. This is to modernize the bill but also to modernize the regulation-making powers. So this actually gives us the regulation powers necessary to ensure that the consumer is protected properly.

Sections 100 to 103 inclusive approved.

On section 104.

B. Ralston: This is a consequential amendment to the Financial Institutions Act. Can the minister explain what the effect is of these proposed amendments?

Hon. C. Hansen: It's been determined that this definition is no longer required. Instead, each statute will have its own classes of insurance set out in regulation for its own purpose. Allowing the classes to be determined by regulation will enable the adoption of a nationally harmonized set of classes for regulatory purposes.

Section 104 approved.

On section 105.

B. Ralston: I propose to deal with section 80.3, "Complaint resolution." This is something that I hope I had alerted the minister to in my discussion at second reading.

Section 80.3 imposes on insurers a mechanism for dispute resolution in dealing with complaints. It's not clear from the definition what type of complaints it might deal with, but it does leave discretion as to how the complaint is to be handled in the hands of the insurer, as I read it. There's no reference in the legislation to an independent third-party ombudsman.

In my discussion at second reading, I made reference to the body that is established by the Canadian insurance industry, which is the GIO — the General Insurance OmbudService. Its goal is to provide consumers of car, home and business insurance in Canada with a cost-free, independent and impartial process to resolve their complaints. It's an independent organization and have set out there that they appear to be able to deal with most of their complaints within a very brief period of time, and anything I've been able to find out about it is that it works well.

Now, what I understand from this legislation is that it is not going to prescribe the dispute resolution process. I think, in particular, the president of the consumer association expressed concern about…. The legislative choice that's being made here, in his view, doesn't provide sufficient protection for consumers who want to have a complaint decided or dealt with by the insurance company in a fair and efficient manner. So I think there's an opportunity for the minister to respond here and to deal with those concerns.

I have heard variously, occasionally in the constituency office, where disputes arise with insurance companies…. I'm sure the minister and other members have heard that. The ability to resolve disputes varies very much from one insurance company to another.

[1545]

This mechanism, the GIO, appears to offer an avenue which would, I think, satisfy most people and would be effective and particularly cost-effective for individual consumers.

Hon. C. Hansen: If the member actually looks forward to section 106, where there are amendments to section 289, and if you look at (p.3), which is a new provision, it says that the Lieutenant-Governor-in-Council has the power to make regulations "requiring an insurer to be a member of a prescribed organization to deal with complaints that are not dealt with to the satisfaction of complainants under section 80.3," which is the one that the member was just referring to. So there is that subsequent avenue of appeal.

There are actually two bodies in Canada that provide an ombuds service pertaining to insurance. The General Insurance OmbudService — the GIO as it's referred to — is a well-respected and effective consumer complaint resolution organization. The federal government requires federally regulated insurers to belong to the GIO. I understand that Alberta is actually also considering the GIO as an ombuds service provider for its local insurers.

However, the GIO has been established to resolve disputes only relating to property and casualty insurance. A parallel organization, the Canadian Life and Health Insurance OmbudService, assists consumers with concerns and complaints about life and health insurance products.

There are other dispute resolution services available as well. If there are several qualified organizations providing similar service, it is possible that they will all be prescribed. The regulation powers provided for in section 106 would allow for that.

B. Ralston: If I could just summarize what I take the minister to be saying. I want him to correct me if I'm wrong, obviously. No choice has been made as to which agency will be selected. There may be a number of agencies that would fall into the category under the succeeding section — I think, section 106 — about being a prescribed organization.

I suppose I want to express the concern that if there's a plethora of organizations or an organization springs up to deal with the disputes that arise in this jurisdiction, it may be unnecessary and redundant, given that there appear to be organizations that are very effective and are already in existence.

From the perspective of the consumer, I suppose that what one would want would be one place to go with one
[ Page 993 ]
speedy, effective and particularly cost-effective method of resolving disputes. That would certainly be in the interest of the consumer and, I suppose, ultimately in the interest of the insurance company in that fewer disgruntled customers probably means more business in the long run.

So besides offering the prospect of some consultation and some powers under regulation that may be exercised at a future date, what commitment will the minister make to consumer protection in this area now as opposed to down the road?

Hon. C. Hansen: Our commitment is to ensure that there is solid consumer protection provided in this legislation, that there are avenues to resolve disputes between the insurers and the insured, and that there are appropriate avenues to resolve disputes that could arise.

This provision in the legislation gives us the flexibility to make sure that we pick the best organization or organizations to ensure that those objectives can be met. But at this time, no precise determination has been made as to which organizations would be called upon to provide that service.

B. Ralston: I understand the flexibility that regulation confers upon the government, and it enables perhaps a more measured decision about choice. But by not making a choice now, I'm not sure that the signal being sent is a very reassuring one.

[1550]

I accept that the minister is concerned in a general sense about consumer protection, but this is an opportunity to designate a couple of organizations — the most effective ones — in the legislation. That opportunity is not being taken.

I suppose the assurance that I would look for would be: what is the reasonable time frame that the minister expects to come to a decision to designate an organization, or more than one, to deal with consumer complaints arising against insurance companies?

Hon. C. Hansen: We feel that the flexibility that this provides is important. I think if we were to name a specific organization in the legislation, we might find ten years from now that either that may not continue to be the most appropriate organization or there may be a better one. So it gives the ability to make those changes as may be necessary in the future.

In terms of timing, we will be going out consulting on these, as I indicated. My hope is that we would be able to have regulation in place that would pertain to this certainly within the next 12 months. But I think a lot depends on what kind of feedback and timeline would come out of the consultation process and how soon we could put this in place.

B. Ralston: Will the minister then confirm a commitment that every provincially incorporated insurance company under the changes incorporated here and operating in B.C. and Alberta or incorporated in Alberta and operating here will be required to be a member of a prescribed organization to deal with complaints?

If the minister can give that commitment, I think it would be an important one to give while we're discussing this legislation.

Hon. C. Hansen: There is certainly the intent that there would be that kind of consistency. But in addition, if I could point out that the requirement for a complaint resolution process or procedures is not…. There are exceptions. For example, a mutual company where you've got a group of farmers who are providing insurance. They meet regularly, and it is a cooperative decision process. We would not necessarily require a specific complaint process where there's that kind of structure.

B. Ralston: Just another comment on the GIO that was referred to, the General Insurance OmbudService. The minister said that it was designed to deal with federally chartered and regulated companies.

I understand — and I'm looking on their website — that in Alberta only the GIO helps policyholders resolve complaints about auto premiums in accordance with provincial legislation. Obviously, Alberta is very frequently a touchstone here.

The GIO has come to an agreement, apparently, with the province of Alberta to deal with complaints about auto premiums pursuant to provincial legislation. So it would seem that the advice that the GIO would not be appropriate may be…. Certainly in the case of Alberta, there appeared to be an exception, and there may be an opportunity to designate that here.

[1555]

I'm wondering if the minister has any comments or whether he'd simply like to take that under advisement based on what I've said about what's on the GIO website.

Hon. C. Hansen: This legislation that we have before us in this House is the same as has been tabled in the Alberta Legislature. So the provisions are the same. Just as we will be looking for the appropriate organization or organizations to handle consumer complaints, Alberta will be going through the same process, and an organization like GIO would certainly be one of those potential organizations.

Sections 105 to 112 inclusive approved.

On section 113.

B. Ralston: This says simply that the act will come into force by regulation of the Lieutenant-Governor-in-
[ Page 994 ]
Council. Is there a target date for the coming into force of this legislation given that it's about to pass?

Hon. C. Hansen: The answer is no. There is not a target date at this point. The industry has indicated that they feel there is considerable work that needs to be done with regard to the regulations that need to be developed and other aspects of this. So we are not anticipating that this would be brought into force in the near future because of the amount of work that would still need to be done on the regulatory side.

B. Ralston: I appreciate it's difficult to give an estimate, but I'm going to ask anyway. Prospective date within a year, 18 months, two years…? In the minister's mind, what's the realistic target that the ministry has set in its workplan to achieve this?

Hon. C. Hansen: I think in the member's question he indicated a year to two years, and I think the appropriate answer is thereabouts.

Title approved.

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

Motion approved.

The committee rose at 4 p.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

Bill 6 — Insurance
amendment act, 2009

Bill 6, Insurance Amendment Act, 2009, reported complete without amendment, read a third time and passed.

Hon. G. Abbott: I call committee stage debate of Bill 8, intituled Strata Property Amendment Act, 2009.

Committee of the Whole House

BIll 8 — Strata property
amendment act, 2009

The House in Committee of the Whole (Section B) on Bill 8; C. Trevena in the chair.

The committee met at 4:03 p.m.

Section 1 approved.

On section 2.

S. Simpson: Could the minister tell us what kinds of resolutions or expectations there are that would need to be adopted before that first annual general meeting, which would require this particular amendment?

Hon. R. Coleman: First of all, to my left — just so I introduce my staff — is Jill Sinkwich, the manager of financial and corporate section policy branch, and on my right is Molly Harrington, one of my assistant deputy ministers in the Ministry of Housing and Social Development.

Section 11 provides that in the period before the first annual general meeting — and this is the section we're amending — which, with some exceptions, a resolution that could otherwise require a three-quarter vote may be passed if it receives unanimous support…. What this does is reword the section to clarify the application of the revision with no substantive changes.

Basically, it clarifies the manner in which the resolution requiring a three-quarter vote may be passed before the strata corporation's first annual general meeting. That would be with regards to things like definition of limited common property, special levies, things like that.

[1605]

S. Simpson: Could the minister tell us what was the determining factor to decide it would be a three-quarters vote?

Hon. R. Coleman: It was already in the act before, the three-quarters, and there was no substantive push from anybody to change the three-quarters. This also clarifies that anything before the first annual general meeting…. It's there now, but it's just clarity of language to make sure everybody understands that it has to be a unanimous vote for any changes prior to that first annual general meeting.

Section 2 approved.

On section 3.

S. Simpson: Section 3 of the bill puts limits on the ability of strata owners to pass resolutions that restrict the strata council from taking certain actions in regard to members who have to pay remedial costs or in exempting people from some bylaw considerations.

Could the minister tell us what the thinking is on the bill that you would restrict owners from being able to direct their council on this matter?
[ Page 995 ]

Hon. R. Coleman: Presently section 27 of the act enables owners to direct or restrict strata councils in the exercise of their powers of duties. Subsection (2) of that section limits the ability by providing that the owners may not interfere with the council's discretionary jurisdiction over bylaw infractions and punishments.

The proposed amendment provides that the strata corporation — i.e., the owners — may not direct or restrict the council if the direction interferes with the strata council's discretion to determine, based on the facts of a particular case.

The case of this is where a strata council has made the determination on a fine, whether it's because of parking issues or whatever the case may be. Then it's whether the person should be required to pay the cost of remedying a contravention of bylaws and whether a person should be granted or denied an exemption from a rental restriction bylaw.

The reason for the amendment is that these are other discretionary sort of quasi-judicial decision-making powers of council, which should, for consistency, also be immune from owner direction. So it's basically adding a couple of sections to that discretionary ability for the strata council not to always have to go back to a meeting when it comes to something that's basically an infraction that already exists under the bylaws of the strata corporation.

Section 3 approved.

On section 4.

S. Simpson: In section 4 — and I'm sure the minister has probably heard this from others — there has been some particular concern raised about whether there may be unique conflicts for owner-developers who continue to own a portion of a building as developers in addition to individual owners.

[1610]

Was there any consideration given for that — whether there's particular or unique conflict-of-interest considerations for owner-developers? And if so, what were they?

Hon. R. Coleman: This applies to both owner-developers and owners. If you look at the present section, it says that a council member "has a direct or indirect interest in (a) a contract or transaction with the strata corporation" and basically sort of stops there. What we're adding is a section that says: "(b) a matter that is or is to be the subject of consideration by the council, if that interest could result in the creation of a duty or interest that materially conflicts with that council member's duty or interest as a council member."

Basically, it requires that a council member disclose if they have an interest in any matter being discussed — which would include anything to do with owner-developer, obviously — at a council that could result directly or indirectly in a conflict with their duties as a council member.

It didn't exist before. The reason for the amendment is to extend the requirement for disclosure with similar requirements regarding disclosure in other corporate statutes, similar to what would be applied elsewhere in other corporate statutes. This is in keeping with the standard of care of the council member, which requires the council member to act in good faith in the best interests of the strata corporation and not their own individual interests.

S. Simpson: Is there any penalty here for somebody, whether they be an individual owner or an owner-developer, regardless of who…? But is there any penalty here for an owner who does not fully disclose a conflict — a direct or indirect conflict?

Hon. R. Coleman: If it was a contract, that contract, if they were in a conflict, could be ousted by the courts just by the fact that they had a conflict of interest. They could be removed from the council by the members because they had a conflict.

It's not about actually putting penalties in this particular act for a punitive relationship in what is basically a group of volunteers that actually manage strata corporations as volunteers.

There are provisions for arbitration, mediation and obviously legal consequences for conflicts of interest that you can take to the courts. But it is not the intent to put some punitive thing within the act that then would probably change that entire relationship between the volunteers who are sitting on these boards and trying to run these strata corporations.

S. Simpson: Maybe I'll just pursue this a little bit more here, and then we won't have to deal with it later on. It is one of the areas where there is an omission in this, which is around offences and penalties — which is something that other strata acts, whether they be in other jurisdictions, have in place that puts some consequence in — and that determines a level of accountability.

[1615]

I appreciate the minister's comments around volunteers. I've spent enough years in volunteer organizations to know that you don't want to create a situation where you discourage volunteers from giving their time.

What we have here, though, is not just those volunteers. Potentially, we have a situation with owner-developers who have a different relationship from a kind of strata owner, a more traditional strata owner. We also, obviously, have management interests and other interests that work for the strata.

In those cases, it's not about volunteers and discouraging volunteers. So is there any thinking here that there
[ Page 996 ]
are penalties of any sort? Or are there clear offences that are identified around these conflicts? I don't know whether the minister wants to speak to this now or will engage this in other parts of the bill — the whole question of having some consequences for breaching the intent of the Strata Property Act, which currently doesn't seem to have any of those offences or penalties in place.

Hon. R. Coleman: I'm glad to hear the member's opinion on this. Obviously, it comes down to where this actually evolved from day one — through the relationship with strata properties. But the intention of the Strata Property Act has always been one that is a regulatory….

It's not a regulatory statute with a bunch of offences in it. It's actually intended to be a statute that's rather a framework for governance of legislation for the people that are being governed. It's a framework for the governance of strata corporations. So there is a difference between that and maybe some other more punitive acts.

It is not the intention to do that with this piece of legislation. I'm glad to hear the member's opinion of it. I'm not going to enter into debate on the value of it one way or the other, because it's really following on what has been the historical relationship within this particular piece of legislation as a governance framework for strata corporations — trying to establish a bit more clarity with this particular section, because there was no clarity before with regards to conflict of interest.

As we go through it, you'll find that this isn't an act that's about penalizing somebody but rather a framework for governance that will lead to people being able to have their legal relationship under their bylaws with regards to management of individual stratas.

The Chair: Before you proceed, I'd like to remind members to turn the sound off of any electronic devices. Please have them on mute for the rest of the committee meeting.

Sections 4 and 5 approved.

On section 6.

S. Simpson: I appreciate the minister's comments, and we'll talk about this a little bit more, I'm sure, as we proceed through this in terms of whether there are requirements for some consequences to some actions.

As the minister says, though, if this is about governance and about improving governance…. I think everybody wants to do that, and Bill 8 is intended to do that. Under section 6, it identifies the right of an owner to request and receive a hearing before the council and embeds that in the act, which is a good thing.

But what isn't embedded in the act — and the question I would have for the minister — is that there is not a requirement that any member of a strata council by right can attend meetings of the strata executive — that they have the right to go to those meetings. Now, it's written into many bylaws, but it's not an obligation of the bylaws that it be there and can be excluded from the bylaws.

Was that a consideration of the minister in preparing this legislation — that members of a strata have by right the right to attend the meetings of their strata council, even just as an observer?

[1620]

Hon. R. Coleman: It's not intended at this point to hard-wire that into the act. It's contained in most bylaws. What this amendment does is…. The act actually contains a set of standard bylaws that provide procedural and operational guidelines for strata corporations.

The standard bylaws include some provisions that contain fundamental democratic rights for owners, including the right to be heard at council meetings. Because the bylaws can be amended, strata corporations can and sometimes do remove these rights. So moving this provision from the bylaws to the act will ensure that these important minority rights cannot be intentionally or inadvertently removed. That's basically for an individual who has an issue that they want to bring to a council.

At the same time, as we looked at this…. My understanding is that the decision to leave the rest of it in the bylaws versus putting it into the legislation was done that way.

S. Simpson: I think the minister to some degree makes my point — that there is a standard, boilerplate set of bylaws there for stratas to adopt. But as the minister quite rightly points out, there's nothing to stop a strata from amending those bylaws and excluding some of those democratic rights that the minister has spoken about.

I know that with most organizations — not all, clearly, but with the vast majority of organizations, particularly ones where people have a financial interest, like owning a portion of it…. There is usually some right for those members to participate or at least to observe and be able to access information. We'll talk about minutes of meetings in a little while.

I guess the question I have is: if the minister felt that it was critical to entrench the right to request a hearing, why was it not critical to entrench the right to attend the meeting?

Hon. R. Coleman: As we talked to folks about this, this was the balance we struck. Basically, by application in writing, a person can request a council hearing.
[ Page 997 ]

"(1) By application in writing stating the reason for the request, an owner or tenant may request a hearing at a council meeting. (2) If a hearing is requested under subsection (1), the council must hold a council meeting to hear the applicant within 4 weeks after the request. (3) If the purpose of the hearing is to seek a decision of the council, the council must give the applicant a written decision within one week after the hearing."

That was what we put in to strike that balance. I'm not going to enter into a debate whether that's all the way we should have gone, but that's what we've done in this particular section.

In our conversations with those who are in the business in and around stratas and strata corporations, there was, quite frankly, a division of what they wanted on this. Some said: "Don't, because it's logistically impossible in a large strata to know how many people are going to attend a meeting at any given time, if we don't have some way to manage our corporation." In the smaller ones, they thought they probably could manage it.

In between was this conflict between the groups where they couldn't really give us, quite frankly, a clear answer, which isn't unusual in the whole Strata Property Act stuff. We tried to strike a balance so that an individual would be able to at least ask for a hearing, come to a council and then get a response.

[1625]

Section 6 approved.

[H. Bloy in the chair.]

On section 7.

S. Simpson: I know that we'll get, a little later on in a subsequent section, to some more specifics around the reports. But it is my understanding, at least under this section, that there isn't a requirement necessarily in this section that depreciation reports have to be produced or obtained by the strata corporation. Any reports may need to be available, but there's not an obligation that those reports be produced. Would that be true, as well, under section (n.2) regarding repair and maintenance of items?

The question here is: what is the obligation for those reports to be produced and available?

Hon. R. Coleman: This provides that a strata corporation must retain certain records, and this is really an update on what that should be. The proposed amendment basically updates the records that a strata corporation must retain to include depreciation reports and auditor reports, "any reports obtained by the strata corporation respecting repair or maintenance of major items in the strata corporation." It rewords the existing obligations to keep documents handed over by the developer to clarify its scope.

The reasons for the amendment, quite frankly, are that it updates the records that the strata corporation must retain, given the proposed amendments to sections 94 and 103 in the act, to require a strata corporation to obtain depreciation reports and audit reports. It increases the accountability of a strata corporation to ensure those records of importance are retained.

The most important piece of this is that if somebody that is purchasing, particularly, a used condo or…. Obviously, the scope of work that would be included, even with the as-builts and that sort of thing, with regards to the construction needs to be retained by the strata corporations in a place that they'll always be there.

But the other reports, whether they be with regards to major maintenance and those sorts of things…. There has been some wash and some concerns of some people purchasing as far as being able to get all the information they felt they should be allowed to have with regards to making a decision to purchase. So this upgrades the requirements of what records must be kept in addition to, which would be the normal two years of minutes and that sort of thing.

S. Simpson: In regard to that list of requirements, one of the things — and I may have missed it here — that I don't see on that list of requirements is the minutes of strata meetings. I know, as somebody who has purchased a condominium in the past, that it was an important thing in my due diligence to be able to get a couple of years of those strata meetings and have my realtor or myself look back through them and see if issues were raised about things that might raise flags for me. I'm not sure that I see in here where those minutes would be made available in the same way that some of these other reports are. Could the minister comment on that?

[1630]

Hon. R. Coleman: Right now section 35 says that you have to prepare and keep minutes as a strata corporation. The regs actually identify different reports, other than these ones, and how long they have to be kept with regards to the minutes. A purchaser coming in to…. They have to keep six years of minutes, under the regs. That was the note I just got. I thought it was five, but six sounds fair to me.

Basically, the person that doesn't have the right to that information is the purchaser. The owner has a right to that information. So as part of their contract of purchase and sale, the minutes are requested as part of the condition of sale. They have to be produced — otherwise, the sale's not going through — and that owner then requests it.

I know when I've done sales of condos of my own, I had to phone the property management company or the strata council and say that I'd like the minutes back to X and give them a little note saying: "I authorize this to be given to X real estate agent so that it can be transferred over to the other real estate agent so that the purchaser has the opportunity to read them."
[ Page 998 ]

Section 7 approved.

On section 8.

S. Simpson: Just one quick question on this: are there any time limits on this requirement? It says here that a former tenant has a right to request information on the period of time that they were a resident in a strata, either as an owner or a tenant. They can request information for that period.

After they've left the strata, is there any time limitation there — a couple of years; whatever it is — before they can no longer request that information?

Hon. R. Coleman: It basically provides owners and tenants the access to strata corporation records. Obviously, if it's gone beyond six years and the records have been destroyed, they wouldn't have access to those. So there would be a period of time that this would….

The proposed amendment is to give former owners access to information pertinent to the time they owned the strata lot and is also consistent with the current access provisions of former tenants who have been assigned a landlord's right to access information. Persons authorized in writing by the former tenant would also have this right. Basically, it could be a long-term lease where rights have been sublet over by agreement by parties. Those folks may have a legal reason for needing to have information down the road.

The reason for the amendment is that it's important for the owners to be able to access and review information that may impact their legal and financial rights and obligations, sometimes even after they no longer own the condo. This amendment is consistent with other corporate statutes. So it gives them the right to go back and have a look.

If I could use an example of one particular unit that I actually owned at one time. The previous owner was entitled to whatever would have been left over from the remediation of the building. So they all paid in, and then when the remediation was done, the previous owner, in a contract of purchase and sale, had in there that they would be able to access their portion of whatever was returned to the owner.

So in this case, let's say that there was a $50,000 repair bill, and it would only cost $40,000, but they'd paid $50,000. In their contract of purchase and sale, the purchaser assigns — in this case, it was myself — if there is money coming back, like the $10,000, that it would go to them. So they need the right to know from the corporation when this thing is complete, because sometimes if there's legal action or whatever case — it could be two or three years — and then they can make a request of the corporation: what is the status of this particular remediation amount of money that I may be entitled to?

[1635]

Then, because the new owner has made it in the contract of purchase and sale, they also have to know that the new owner, when the money can be paid out, has signed the declaration saying it can be given to X, who is the previous owner of this particular product.

That's a rather long explanation. Because of the multitude of rights that could exist under certain aspects of ownership over a period of time, there could be, because of subletting or other tenancies and leases and what have you…. That's why it gives that sort of broad flexibility.

Section 8 approved.

On section 9.

S. Simpson: Could the minister provide us some insights as to why he chose 20 percent as the new standard versus 25 and not, say, 10, for example?

Hon. R. Coleman: I'm familiar with this one. Over the years there's been a lot of discussion about this one.

Basically, if you want to do it, we sawed it off to what we thought might be reasonable. A lot of people felt 10 percent was too low and that, therefore, a lot of time and excess effort would be spent on things that weren't relevant.

The reason for this amendment is basically that the 25 percent thresholds are difficult to attain and are considerably higher than any other modern corporate statutes. As a result, issues are not easily brought forward for the strata corporation to consider. At the same time, if you go too low in your threshold, you get the reverse.

The amendment will improve democracy within the strata corporation by ensuring that issues of importance will come forward, because with the 20 percent threshold, although not unachievable, at least you have to have a good reason to achieve it to bring the issue forward. Given the time and cost associated with holding special general meetings, it was felt that the amendment should still retain somewhat of a reasonably high standard to achieve its objectives.

S. Simpson: I appreciate the minister's answer and certainly know from involvement with organizations that this is a question that often gets raised.

I'm wondering if the minister considered percentages that might be a little different. If I own a condominium in a building that has 14 units, then 20 percent might make sense. If I can get two of my neighbours, along with myself, to agree that we should be talking about something, then we get our 20 percent and we go and talk about it. But if the building is 150 units, 20 percent becomes a different story.

I'm wondering whether there was any consideration given to the size of developments in terms of what's a reasonable number to expect — those volunteers, who
[ Page 999 ]
the minister and I have talked about before, and people who are living their lives and have a concern or an issue or whatever it is and want to get it onto an agenda and get it dealt with.

Maybe the idea that you've got to get 30 of your neighbours to sign doesn't make as much sense as 15 if the building is bigger. I just wonder whether there was any thought given to minimum numbers or some consideration of the size of the condominium developments when this decision was made.

Hon. R. Coleman: There was some but, to be honest with the member opposite, not a lot. It's the age-old adage. You described the problem yourself, actually. If you have a strata of 14, 20 percent is easy to achieve. The guy at 15 says, "Well, why can't I have that same threshold?" and then the guy at 50 says, "Why can't I have a different threshold than the guy at 100?" and vice versa.

To try and get a mean average that made some sense is why we went to 20 percent. That's why we're there.

Sections 9 and 10 approved.

The Chair: Section 11 pass?

S. Simpson: With this section 11….

Actually, my apologies to the Chair. But I would, with the Chair's indulgence, go back and ask one question on section 10.

[1640]

The Chair: Continue.

S. Simpson: Thank you, hon. Chair, and my apologies for the mess-up.

One of the issues…. I think it's a good thing to involve the Provincial Court in the decisions to take matters out of the Supreme Court to the greatest degree possible and put them in the Provincial Court. It is cheaper, clearly. It is less litigious in many ways and may be a good place to put those matters that relate to stratas.

One of the concerns that has been raised to me about this, which has nothing to do with stratas so much as it has to do with the Provincial Court, is the backlogs in the court — a year and a half, two years in some cases, of backlogs in the court.

Has the minister given thought to that as to how we deal with that matter in terms of trying to expedite what was intended by this to get at a cheaper way to resolve things, when you have these problems of these long backlogs?

Hon. R. Coleman: I guess the first comment I'd make is that it's certainly less than Supreme Court.

This really grants the concurrent jurisdiction of the Provincial Court to get us to small claims court. Basically, small claims court doesn't have the same backlog and is actually moved along pretty quickly, usually. I don't know what the actual wait times are. But I know from experience and from talking to people with other sorts of administrative justice issues and other areas of the ministry — like residential tenancy, what have you — that they don't say a year and a half to us when we're talking about that particular piece on small claims.

What the section is, is just to get us out of that sort of expensive, difficult process that goes with having to probably have legal counsel, in many cases, to go to Supreme Court versus getting us to where a lot of these smaller disputes can be resolved in small claims court. A person can actually do their own paperwork on small claims court and file it. So it's easier for the strata council to file or vice versa.

Oftentimes it's actually resolved as a result of the application by the two parties on a quicker hearing basis than going to some punitive or lengthy court proceeding. That's why we're doing it.

I wouldn't be able to answer the member's question with regards to what the time of wait would be for small claims court at this point in time, but we could try and get him that information.

The Chair: Member for Vancouver-Hastings on section 11.

S. Simpson: I have one more question. The minister has prompted one more question on section 10.

The Chair: Please continue.

S. Simpson: Just a clarification here. My understanding from the reading of this — to be correct, though — is that if a strata council, a strata operation, was looking for injunctive relief from something somebody was doing, a member was doing, and wanted to injunct that so that they in fact could deal with something relatively quickly, hopefully, while they dealt with the litigation or whatever…. I'm to assume that they would then just move around the Provincial Court matter, go to the Supreme Court, which has the ability to deal with an injunction, whereas obviously the Provincial Court doesn't. Would that be their route?

Hon. R. Coleman: Good question. It was one that I wasn't until now actually in full understanding of. Basically, this act gives us the ability to do injunctive relief. We are now able to give…. Our legal opinion indicates that these matters can be dealt with in small claims court, although they may have to change their procedures to accommodate non-claims action. But we can actually give to that court the power to do the injunctive stuff as well as the small claims.

[1645]
[ Page 1000 ]

S. Simpson: I appreciate the answer. Just to follow that with one more question because of that. Will that then require or does that require other legislative changes? I know that when we get to the end of this, the bill comes into force after regulations are prepared. I believe that's what the bill says we'll get there.

So is that something that will be able to be done through regulation and order-in-council to do that, to put that in place to give the courts that additional authority to deal with these matters — authority that they don't necessarily have now in most cases? Or am I just not getting this?

Hon. R. Coleman: No, it doesn't require any other further legislation. What it does is…. As we've done this in parallel, the Attorney General is working on the change of rules for small claims court to be able to parallel this type of administrative justice.

On section 11.

S. Simpson: This is a question that relates to section 11. Section 11 talks about the ability of the strata president to cast deciding votes and that. I'm not sure where else I might find this in the bill. If the minister can direct me to a better place to ask this question, I'll be happy to do it.

This comes to an issue that's been raised to me by one of the strata associations, so I'll put it to the minister. It's the question in regard to owner-developers who own a significant number of units that have not been sold and that they continue to retain. This might also potentially become an issue as we get to the rental ability that this legislation affords down the road, where an owner-developer may choose to retain a number of units for rental purposes if that was their business decision.

A concern that's raised is that you potentially have this one interest there that controls potentially a block of votes relative to a number of matters, including the election of a strata executive. Did the minister give any consideration to whether there should be some limits on owner-developers who own a multiple number of units in a development, in terms of their ability to block-cast those votes either in elections or in other matters?

Hon. R. Coleman: First of all, this section doesn't deal with that. I'll just describe what the section deals with, and then I'll comment on the member's question, even though it's not on this section.

Basically all this does is add a new provision to authorize a bylaw that provides for a tie-breaking vote. So right now what the member describes is somebody who has a block of votes they're voting to take majority control over. This is in a case where you have a meeting where the bylaws give the chair at the general meeting an extra vote in the event of a tied vote. The tie-breaking vote mechanism is provided by bylaw conflicts with a one-lot, one-vote provision in section 53. So this removes, basically, the conflict between bylaws and the act and clarifies all that. That's the reason for this amendment.

Strata corporations that don't wish to give the chairperson an extra vote would, as in the case now, be free to amend their standard bylaws to remove it. So that's what the section deals with.

On the other one, the challenge that the member describes, in reality, whether it be an owner-developer or a person that's an investor, in a small complex in particular…. So let's say we have a complex of ten, and I choose to have one that I live in and rent two in the same complex. I literally have 30 percent of the vote in that complex. Yet the reality is that each one of those titles is independent of the other title.

So I have a unit entitlement to a strata unit under the law that's registered under the land titles. To say, "I want to take away your personal property rights," because you happen to own more than one, would go, frankly, counter to the entire concept of having a strata title unit in the first place, which gives you the right to own and the right to deal with it as the bylaws and the law say you can.

[1650]

The rental thing we'll probably talk about later. But the whole issue on the rental thing is to be able to say: "Today when you buy…." Whether you're the developer and you're holding something or you're buying in a complex and you buy it with a statement of disclosure that says that your unit can be rented if you choose not occupy it….

What we're trying to fix there is that somebody can't come across later on with a three-quarter vote a year from now, after you've made that investment, and say, "Sorry, you can no longer rent it," and take that right away. We believe that the right of what your investment is…. Because you've made it on your unit, entitling your individual lot, you should be able to rely on that. A reasonable person should be able to rely on that information to make their decision and rely on the fact that that would be honoured as part of your purchase and ownership of that particular unit.

The challenge…. The owner-developer issue has not very often actually raised its head with regards to the issues in and around this. Owner-developers will most often, today, particularly in a market like today….

In a hotter market they may not put a provision for rental in, but they usually put a provision for rental in because they want to attract the maximum number of buyers that the market may provide. That would be an investor that wants to have a rental property, somebody that wants to own and live in the building, etc. They make their decisions based on the statement of disclosure and the description of what they're allowed to do with the unit.

This one just amends that from a technical clarification. Basically, the other challenge the member describes
[ Page 1001 ]
can occur whether you are the owner-developer or, in the case of investments I'm familiar with, where somebody bought half a building. Let's say a 45-unit building, and somebody bought 25 units. They still have their 25 votes because any decision that is made still affects the individual rightful ownership of each individual unit, and they should have the right to have a say in those decisions, considering the fact that they've made the investment in the individual unit.

S. Simpson: I agree with the minister that it's a complicated question and that people make those purchases and they have certain rights when they make those purchases because of their property. The ability to vote those in some way, or to be able to participate in meetings where decisions are made that affect those properties — they have some right to that.

The issue here, as the minister may recall…. I remember back…. I don't remember when it was. It was a number of years ago. We used to have situations in municipalities — I remember in Vancouver — where property owners got to vote their property as an individual. As an individual, they got a vote. But if they owned properties, they got to vote those properties at one time. Of course, those laws were changed quite a while back to say, particularly in elections, that you had…. It was about our proverbial one person, one vote.

The question I have is…. This is separate from the question of being able to influence decisions or vote decisions that are made about expenditures or those kinds of things that are made by the council on expenditures and your ability to those votes.

The question is about your ability to elect the executive, which is a more democratic situation in some ways. The issue of one person, one vote versus being able to, as the minister said…. An issue that he recalls is an example where, arguably, the individual who bought half the building gets to elect the whole executive every time as long as they hold half the votes. There is nothing terribly democratic about that, obviously, in many ways. The question I have is: what consideration is given, or what is the thought of the minister about how to not have that circumstance arise?

We'll talk more about the rental issue when we get to those sections. But the potential of investors using stratas and condos for investment purposes becomes significantly greater, potentially, if the rent disclosure issues can be put on the table and people can confidently know that they are purchasing properties for investment purposes with the full intention of using them as rental properties and they know they have some protection, that the rules can't be changed on them. That becomes a more secure investment.

I can see more of that occurring in the future as people look for places to invest their money, but I do get concerned that they are able to deal with those questions like elections of strata councils. Does the minister share any of those concerns?

[1655]

Hon. R. Coleman: Only, frankly, on a minimal level for me, if you want to ask about my concerns.

I come at it from maybe a bit of a different direction. I know that if we decided tomorrow that we were going to take away the owner-developer's right to have the vote on individual strata title units that they own in a property at the very front end…. If I was a person that was developing strata properties in British Columbia, I would pick a different form of development.

I don't think we should decide that because somebody owns more than one property, we should, basically, affect their investment or the investment they're making or the risk they're taking in order to actually produce housing in B.C.

It would be like saying that we can't have somebody own three houses on one block because they might affect lobbying the municipality — because there are six other houses on the block — on snow removal. I know it's a bit of a silly description, but it's the best I could come up with at the moment.

I just think that you have to recognize what we're talking about when we talk about a strata property. We have a unit that is unit entitlement, that is separated by title. It's like if you took 100 units in a condominium building and you took them to a subdivision somewhere. You would have 100 units of lots in the subdivision. It's 100 units of lots.

Each individual one is registered as an individual title with individual ownership, so each one has its own individual ownership rights. Whether I own five, ten or one of those, I have my individual rights to my individual titled unit. To try and blur that line I think starts to blur the ability for us to attract investment into the sector.

I know one thing. I don't know of a single developer that I've ever come across that owned multiple units in a building and, as they were passing them through for sale, decided to take away the rental obligation, knowing full well that they might have ten units left in a 100-unit building.

That's where their profit sits and their cash flow, and they may have to rent those in order to satisfy an obligation to the bank. They're not going to take that rental away, because they actually need that in order to satisfy their financial obligation to whatever financial institution they have.

I think the important thing is to remember that whether it's one, ten or 15 units, they're individually owned. It's not like a rental apartment, where you own the entire one title and all the units are owned by one person, who then rents them out to individual tenants within a building under a separate act like the Residential Tenancy Act.
[ Page 1002 ]

This is really individual property rights of ownership. When you start to decide who should own how many of what and what their rights are on private property rights, I think you've stepped down a road that might actually affect the future development and the production of housing in B.C.

S. Simpson: I don't think anybody is wanting to talk about limiting the ability of people to buy as many units as they think makes sense for them and being able to do that.

The question potentially becomes…. I'm not interested in debating this with the minister either, because we may just not agree on this. But the concern comes when blocks of those units, either because they were the original developer or because somebody has come in and made a strategic business decision to purchase a number of units for investment purposes and has an inordinate ability to influence….

Those other individual property owners have certain rights and certain circumstances where they are connected to the other owners of strata units and expect some sort of equal playing field in terms of their ability to have their interests looked after and are concerned that somebody has, because of their investment, the ability to influence or overinfluence that decision by who gets elected to boards of strata units or by other decisions.

I just think that I can see some potential challenges there, and we all have heard stories about some of the complexities of strata councils and how they sometimes are challenging for people who live in them.

I know the purpose of this act, among other things, is to try to alleviate some of that and make that a little easier for people, but I'm not sure that that decision to allow this kind of voting procedure necessarily does that.

I just make that as a comment. I don't really necessarily expect a response.

[1700]

Section 11 approved.

On section 12.

S. Simpson: I know that the minister referenced this a little bit in regard to the disclosure of information certificate, and I know it talks about the need for recent depreciation reports. Could the minister tell us what other reports are required? I have the list. Other reports that would be required as available information along with those recent depreciation reports?

[L. Reid in the chair.]

Hon. R. Coleman: I could read into the record for the member all of them. There are subsections (a) to (m) under subsection (3) of the information certificate under the act that has to be disclosed and under subsection 59(4) copies of the following which includes section (a) to (c) plus a couple of others. If you wish me to do that, I'll just…. Otherwise, I'll just refer you to…. Let me give you a flavour of what the….

Basically, the certificate must disclose the monthly strata fees, the amount the owner owes to the strata corporation, any outstanding debt — the one that you're buying from the individual — and any agreement under which the owner takes responsibility for expenses relating to alterations to the strata lot. I'll go down now — any court proceeding or arbitration which the strata corporation is party to and any judgments with regards to that. The number of strata lots in the strata plan that are rented. Those types of things.

And then under subsection(4) it's things like the rules of the strata corporation, the current budget of the corporation and a rental disclosure statement, if applicable — those sorts of things.

Basically, what we're doing is adding two other minor policy changes, for lack of a better description, which should be on that information certificate under section 59(1) and under subsection 59(3) and 59(4) of the act. The first one is basically parking spots and storage lockers allocated to the strata lot.

That's actually become a very important issue within a number of strata lots, particularly in places like the city of Victoria, where the city of Victoria, and Vancouver now to another degree, have started to not put as many parking spots in their requirements for strata as there are units in the building.

So what happens…. It actually happened in one disclosure I dealt with, whereby it was on the listing agreement. The information was that there was a parking spot available to the strata unit that was being considered for purchase. Upon asking questions of the manager, which was where you had to go at that time to get that information, "Oh, there's a parking spot, but the rights to that parking spot are extinguished upon sale, and you now go on a waiting list to get a parking spot...."

That affects dramatically the commercial viability or value of that property if you have a vehicle. You may decide: "I don't want to buy here." Or if you're somebody that doesn't have a vehicle, you might decide differently. It actually has an effect on the commercial relationship, but if that's not disclosed, you can get a situation where somebody could actually buy something and find out they have nowhere to park their car. So that's why we're adding that.

The same thing with storage lockers. There are buildings in Victoria that have the same thing — don't have as many storage lockers as there are units. So somebody is thinking, "Well, on the listing agreement it says there's parking spot number X and storage locker number Y," and at the end of the day they find out both
[ Page 1003 ]
of them are extinguished upon sale and they go on a waiting list.

You wouldn't have made that same decision to buy that particular property if those two things affected you. So we're adding that in so that clarity is there — that they have to disclose that information.

The other piece really deals with depreciation reports. This amendment really needs to give the depreciation report, and it's an important piece of information that is made available to would-be owners of a strata property because that up-front disclosure of that type of information affects the commercial viability of the unit you want to buy.

[1705]

You could have an assessment, a property assessment, an appraisal sitting out there with this, but if you don't know what the depreciation is and you haven't actually seen whether they've actually allowed for the repair of the roof and certain aspects of carpet and things like that within the building that should be dealt with in a depreciation and a capital reserve, you could wake up and find out that you've got a whole bunch of other expenses you didn't anticipate when you bought your unit in that particular building.

We felt — and we were told — that those were two that should be added to that extensive list that's in that section already.

S. Simpson: Just in regard to that, would this include reports that I know are referenced in an earlier section around major repairs that have been done or those kind of things that might link, of course, to the whole question of, at some point, the leaky condo question? Is there any obligation of disclosure of those major repair items in that certificate for somebody who's considering a purchase?

Hon. R. Coleman: This certificate is what the disclosure is. It is required if somebody is requested by an owner or a purchaser or person authorized by owner or purchaser to get. The previous part was information that would be required for the owner to get for the purchaser under the contract of purchase and sale, and that's the more detailed reports. That's what allowed that to happen so that those other reports would also be made available.

S. Simpson: If I am to understand, this would be similar to the discussion we had about strata minutes. If I'm purchasing a condominium, I get my realtor to go to the owner's realtor and say, "Okay, the deal is contingent on my wanting this information," and that owner makes that information available to me or not, and I make a decision about whether I want to buy the condominium based on that. Is that generally what we're talking about?

Hon. R. Coleman: Yeah. Fundamentally, there are two pieces. One is an information certificate that would sort of be a standard form of questions that would include these pieces that any realtor who has a purchaser, or a purchaser, could request of a strata corporation.

The larger reports, which are also requested at the time of purchase, have to be requested by the owner because they are probably, under some relationship, a bit more protected by privacy or corporate relationships. You wouldn't have anybody just being allowed to come in and ask for those. Now, if you're selling, you're…. The seller has to go get those and give it to the purchaser, because they're more complex than just the certificate of that information.

S. Simpson: Just to clarify, and I'm pretty sure I know the answer to this. The strata, of course, is obliged to provide that information to the owner or the seller-owner/seller if they want to make that information available to a prospective purchaser.

Hon. R. Coleman: That is correct.

Section 12 approved.

On section 13.

S. Simpson: Just a quick question. Section 13 is the changes it makes, and it also references further on to 14 as well. Just a clarification here. It says e-mail can be used now through this to be able to provide notices of meetings and other information on behalf of the strata.

This in no way, I assume, relieves the strata of the obligation to provide that information in other forms to people who may not have e-mail. I think of some of our older strata owners who may not be in the e-mail business quite yet.

Hon. R. Coleman: That is correct. This is just basically encompasses a new form of communication many people live by. Those that wouldn't have access to that would still be able to get their documents by mail or hand-delivered or whatever the case may be.

[1710]

Sections 13 and 14 approved.

On section 15.

S. Simpson: Section 15, as I read it, is the section that starts to require a strata corporation to, in fact, obtain depreciation reports, whereas I believe they were permitted in the past to do that. It now is a requirement of the strata corporations under this amendment to get those reports done and bring them forward. It talks about being prepared by a qualified person.
[ Page 1004 ]

Could the minister tell us a little bit about…? Just maybe to follow that up, it also talks a little bit, or not, about the frequency of the reports and how often they need to be done and those things, and that that's going to be defined by regulation. So I want to pursue a couple of questions here about what the thinking of the minister is about what those regulations might include in some cases — some specifics.

Certainly, when I talk to people who are involved in condominiums and in stratas, they all like this. They think it's a good idea. But of course, with anything that's done by regulation, there's a little bit of uncertainty about the devil in the detail, so to speak, and what's there.

Maybe the minister could help us a little bit in terms of the thinking about what that includes, how frequently it happens and who's qualified to produce these reports.

Hon. R. Coleman: The member is right. This is actually a very important amendment to this particular act, and the reason is because strata corporations need to have a depreciation report to understand, quite frankly, what they need to be setting aside for capital reserves, repairs and that sort of thing.

One of the weaknesses that has been in this system is that some do it; some don't. And a lot don't. Then they find extraordinary costs that come along, and they say: "Where did this come from?" They haven't been looking, basically, at their building as a business that needs to be managed in such a way that it protects its long-term value.

Basically, the requirement of this is that within two years of this reg coming into place, everybody has to get their first depreciation report. By regulation, we will establish whether the following depreciation report is either every two to five years….

We will do that in consultation with people like accountants, who are people that do this type of thing with regards to depreciation — how you should manage it over a scale; and people like quantity surveyors and architects and engineers, who would also give us input with regards to that so that we get the technical piece right.

Quite frankly, we'll probably engage with those who are in the other form of the housing business — how they do their depreciation on a commercial property, like a rental property for housing. That will take place before we actually do the regulation, because that piece we'll make sure that we have that figured out before we bring the regulation into consideration.

There are a couple pieces of this that have to be worked out as we go through the reg, and that is, a bare land strata, where the buildings are actually owned and the land is only part of the strata. Even though they're caught within the Strata Property Act, they probably need an exemption to this, because what's the depreciation on the property unless there's water and sewer that are paid for by that bare land strata?

If it's municipal services and internal roads, it's a whole different kettle of fish than if you're, for instance, a five- or four-storey wood-frame-construction building with decks that need to be looked at — from what the life span is of the Duradek that's on them, what the situation is with the roof or the eaves or whatever the case may be, to how often should it be painted and that sort of thing.

[1715]

This is to bring some rigour, through these depreciation reports, to that piece of this business so that there's a bit more understanding for everybody involved as to what that is. The regulatory piece will take a bit of work in order to get there, but we need to give ourselves the ability to do that and make sure the reg is flexible enough to understand those nuances of different stratas and their form of ownership across B.C.

S. Simpson: The minister talked about consulting with a number of people who bring expertise to this discussion — engineers, accountants, all of those folks.

What's the expectation of the minister in terms of that consultation for discussions with condominium owner associations or the folks who are directly involved in that business? I think CHOA and the Vancouver Island folks are probably the two biggest. How are they to be involved in those discussions around the development of the regulation?

Hon. R. Coleman: Obviously, they will be involved. But it will be on the basis of what expertise they have in this particular piece of the business, because this is a fairly technical piece as far as how you do, basically, depreciation. Somebody that might be a property manager from the standpoint of running meetings and that sort of thing would not necessarily have the expertise and the understanding of depreciation. They will be consulted as part of it. That's what we're doing.

But we'll also make sure we seek the technical expertise, because this is one where we really have to have the reg reflect how depreciation should be managed in order that people can be clear on how that depreciation report should be crafted and, frankly, after crafting, how it should be acted upon in the management of that. So all of those parties will have to be involved.

S. Simpson: I don't disagree with some of the minister's comments there. From the technical side of producing or saying what has to be incorporated and included in these reports, I think that is a place that makes sense. You get the experts who have the background to be able to provide that.

I would hope that there would be some discussion with these groups early on in the development of the regulation to get their input or thoughts about that and then, maybe even more importantly in some ways,
[ Page 1005 ]
some further discussion when the regulation is coming together around what it looks like, to ensure that those groups have some input at that time to say, "It looks pretty good; it includes everything we think should be there" or "We see a hole here" or "We see a problem here," and the ability to have that conversation before those regulations get OIC'd and become the law, essentially, or are required.

The question to the minister would be: would it be his expectation, or would it be his desire, that they kind of not have sign-off — obviously, that belongs to the minister and his colleagues in cabinet — but that they have that consultation early and late? Then in the middle, obviously, the technical work needs to be done by people who bring those skills to the table. Would the minister agree with that?

Hon. R. Coleman: The intention is to have consultation. To describe it, to form that consultation in this debate would be unfair to the process.

The intention, however, is to get the consultation done in a timely manner so that we can protect the value of these people's assets by getting these depreciation reports as soon as possible. The longer we wait, the longer it takes for the two years to go.

This is here because many of the organizations, like the Condominium Home Owners Association, told us this is something they wanted put into the act. We've already had discussions with them.

There are two pieces. Obviously, it's the reg that describes the depreciation report and what the qualified professional is, and then it's the discussion with them as to how that is practically managed on the ground. That's the important piece for those organizations so that they know how it can be practically managed in this particular strata corporation.

We will do both, and we will do them in as timely a manner as possible. We think that these amendments should be moved to regulation in consultation as quickly as possible so that we can actually effect the change that's necessary and that these things are trying to achieve.

[1720]

S. Simpson: The amendment talks about a class of strata corporation prescribed under regulations that will be developed that would be exempted or excluded from these requirements. Could the minister tell us, then, who that might be or what the conditions of a strata might be for it to have that exemption?

Hon. R. Coleman: Yeah. It would be ones like a bare land strata, where there is no common property to actually have anything to do with depreciation. Those exist within strata ownership in B.C. Those classes of property would be not well served by being required to do this when there's nothing to do it to.

S. Simpson: The minister made mention here of the issue of common property. I know that's sometimes a conversation in stratas when you're setting fees and all of those kinds of things over who's paying for common property and how that gets divvied up.

Is it the expectation that there'll be some clearer definition, maybe through this reporting or other reporting, as to how that gets decided — as to what common property is and how it's accessed?

I know there's some debate about that. I don't claim to know it well, but I understand there's some debate. Maybe the minister could tell us how common property is going to get dealt with in these matters.

Hon. R. Coleman: What the member describes has nothing to do with this section, but maybe I can try and answer.

Within strata properties there are common properties and limited common properties. Common properties are the areas that everybody in the property has access to. That could be the hallway, the gymnasium, the driveway, the gardens, the back yard, whatever the case may be.

Then there's limited common property which I, as a strata owner…. It limits your access to my limited common property, which could be my deck on the fifth floor of a tower. Where that's limited, because it's not actually owned…. It's not in my strata lot, but it's actually part of the strata limited common property.

All of those common and limited common properties are basically the responsibility of all of us, as owners, to maintain. We have a relationship there that says that we're all paying strata fees to maintain the pieces of the property that are governed outside my unit entitlement.

The only place we've never actually come to a solution on…. An example would be: what are the bordering issues between units? An issue between two demising walls between two units that are attached to each other where the property line for the unit entitlement is between the two…. Who takes responsibility for what's between them? It's not limited common property, and it's not common property. It doesn't happen very often that it becomes an issue, but that's just one example. Usually that's worked out by the strata council and by the owners.

Basically, it is pretty clear in a vast number of strata corporations exactly what is common property and limited common property. It's in your statement of disclosure from the very beginning. Your unit entitlement is very clearly defined, and what your limited common property access is, as well, is clearly defined.

This section doesn't deal with that, but that's the description of what that is.

S. Simpson: I appreciate that the section doesn't quite deal with that. I couldn't find the section in here where
[ Page 1006 ]
it would deal with it, so I thought I'd throw it out there and see if we could have a conversation.

I know that part of the challenge here around the common property issue, of course, is how you end up allocating requirements around fees and those kinds of things and who's responsible for what. Sometimes that's where conflicts will arise around people who believe they should or shouldn't be directly paying for certain things.

[1725]

The issues around class of strata corporation — going back a little bit to that — that may be exempted from the requirements around the depreciation reports. I'll be asking this question again in the next section, so I'll just put that out there. Is this going to have anything to do with the size of the developments?

Hon. R. Coleman: No, it doesn't. It's the form of the development. Unit entitlement is still unit entitlement. Common property is still common property. Limited common property is still limited common property.

What we always have to be understanding, though, as we debate this particular piece of legislation which deals with strata properties in British Columbia is to remember that there are other forms of ownership in B.C. that go back to way before strata properties actually existed.

You can go to Oak Bay, for instance, and find a building where there are 15,000 shares per unit in a corporation that is effectively run like a strata corporation, but it's actually a company. That has never been covered under the Strata Property Act.

In Vancouver, particularly for the member for Vancouver–West End — it used to be Vancouver–Burrard — he experiences a different form of ownership that's not covered by this act.

Way back when, there was a time when you could do a 99-year lease. That was allowed to take place in the city of Vancouver before a loophole, I guess, in law was closed many, many years ago. There's actually no common property in those particular facilities. The person actually got a 99-year lease on what we would call the unit entitlement unit, but all the common property and all the management rights and all the limited common property are, in actual fact, still owned by the original owner of the building under a 99-year lease.

So there is no power for those folks to be able to even have the ability to go back and have a voting relationship, like a strata property has. That's why the Condominium Act actually came into force when it originally did and why the Strata Property Act grew out of that. It was to deal with those types of early forms of home ownership that were put into place in the days when people didn't understand — in Canada, in particular, because obviously some jurisdictions were ahead of us on this — the whole idea of an ownership of a unit entitlement and being registered on title.

Back then, in some cases, they couldn't do it. That's why they formed a corporation like in Oak Bay. In some cases, it was a way to retain your ownership but still sell off a portion of your building.

Today in this piece, this is just really about the development and the phased development. Even if in a phased development, you have to be told in your disclosure statement that there are more units coming and how that would affect your unit entitlement or your common ownership with regards to common properties and that sort of thing. Those have to be outlined in the disclosure statement.

S. Simpson: The minister spoke about looking forward to doing these regulations in a timely way so that they could start the clock on the two years for condominiums to get into compliance and developing those.

Could the minister tell us — assuming we get this piece of business done today or tomorrow — what that timeliness looks like, in terms of when he hopes to have these regulations completed?

Hon. R. Coleman: I've learned — in the nine years I've been in government, dealing with legislation and watching legislation for the five-year period as a critic — that you don't put finite terms on that. Sometimes regulations, as we start to develop them, run into issues that legal counsel bring up with regards to them that take us to a longer drafting period or whatever the case may be. "Timely" is as soon as they can get started. I'd hope they get done as quickly as possible.

Section 15 approved.

On section 16.

S. Simpson: The audits that are talked about in section 16. Are we talking full-blown audits here, done by CAs or CGAs?

Hon. R. Coleman: There are a number of forms of audits. A full-blown audit on an annual basis would probably be an unnecessary expense to a small strata or even a large strata.

[1730]

On all of our…. Particularly on our social housing, for instance, we require our non-profits to do an audit on an annual basis. They're usually in a relationship with a chartered accountant, CGA — that type of individual — where their books are brought in by their bookkeeper. They do a review, an audit of it. They look at what's in their capital reserve, and they make comment with regards to that.

That's an annual cost of somewhere between $2,000 and $4,000. You could go way higher than that, but our intent would be to have that form of audit. We would
[ Page 1007 ]
work with the accounting profession to make sure that we had the rigour around it and that it wasn't going over the top. We don't want them having to do such audits that somebody's coming in and doing it almost like a forensic audit. Unless there's some criminal element going on, why would you do that?

It's to really get to the financial statements, which today are oftentimes, maybe, even produced internally, that are basically: "This is what we spent this month, this is what we spent last month, and this is what we have in reserve." You get this document that has no professional designation behind it.

Now you want to get to where the audit is. The accountant is actually reviewing the books, making comments and saying that this is what you need to do as a board in order to make sure your financial package is correct. That then informs both the membership and the board as to what they need with regards to the management of the financial business of the strata. It really is to improve accountability. The reason for this is just that — to address concerns for strata corporations that accounts aren't being properly kept.

It's not a case that somebody should just be able to have a ledger off the side of their desk and do the books for the strata corporation. There has to be some accounting rigour to it. On an annual basis they should be reviewed at that level of audit by a certified professional.

S. Simpson: I appreciate the comment. I have certainly been involved with a number of organizations over the years, non-profits that did the kind of review that the minister has talked about. It certainly wasn't the full-blown $10,000 audit, but it was something where we brought in a CGA or a CA. They looked at the books, and they gave us a letter that said that we were doing it right or we weren't, or here were the places we had to do things better. That certainly makes sense, and it's a good thing to do.

I took from the minister's comments that those kinds of audits would need to be done by people who had the proper certifications as accountants to be able to do that work before they'd be acceptable under the legislation.

This piece of legislation. I suspect this may be a little different than the depreciation reports in terms of what the classes of strata corporations are that might get exempted from this or have limited obligations under this section. Could the minister tell us what the expectations are about those stratas? What kinds of strata corporations might be exempted from this requirement?

Hon. R. Coleman: Basically two, I think. We have to pick a unit number, and we will do that as we come through regulation.

The first one is like the bare land strata, where there's really nothing that's more than just the land. The other piece would be that for a small project — like a strata title duplex, for instance — you wouldn't require to do a $3,000 audit every year, because there are only two paying into the relationship, or four, or whatever. That number we're going to work on with the industry to come up with.

That's basically those types prescribed, so we'll come up with a class. As the member knows, if you only have ten units in a complex and you're paying $100 a month in strata fees, you know that it's $1,000 a month. There's a $12,000-a-year annual budget on a little townhouse project. To say that you've got to go do a $3,000 audit every year probably goes outside what the intent of the legislation is. So the intent is to find a balance on that particular piece with the numbers.

S. Simpson: I would agree with the minister that for small developments — a dozen units or whatever — that's pretty hard to do. Has the minister given any consideration in here to saying: "Okay, we know that with those small developments, it doesn't make sense. It's not practical to ask them to spend $3,000 or $4,000 a year to do an audit on a dozen units, but we are going to require them every few years to have somebody else take a look at this who has another qualification"?

[1735]

I don't know what that looks like, but has some consideration been given to: well, every few years we're going to do that, even though we're not going to require this to be done on an annual basis?

Hon. R. Coleman: We think that we accomplished that through section (a), which is basically that by resolution of a three-quarter vote at an annual general meeting or a special general meeting, they could, within that prescribed period, waive the requirement for the financial statements to be audited. That allows for that smaller group to be able to do that.

Then also, if they're prescribed in the other strata corporations, the prescribed ones that would be exempted, we think we'd catch them both with that ability to do that.

The challenge we have with trying to prescribe a particular period of time to all of these thousands of properties around B.C., then, is: who is going to actually police and monitor that on that basis? We think that by saying that the rigour is here for the audited financial statement…. If they have, for instance, a ten-unit project and we go to a level where we exempt them, then they're out immediately, and those folks should be able to resolve their issues.

If it goes to something that's a bit larger and they say, "Well, we don't really want to do this, this year, because we think we could do it every two years," they can, by a three-quarter vote of their own members, decide to do that. They're basically informed by that decision that
[ Page 1008 ]
they're making, that decision in knowledge. I think we catch it there.

We have to see how this works to see if there's going to be a problem as we go forward. This hasn't been something we required before, and it's certainly been something they asked for — to have this ability. I think we just have to see how it works.

Section 16 approved.

On section 17.

S. Simpson: This talks about special levies and special accounts being set up by a strata for purposes — whether it's repairs, a new roof or whatever that purpose might be — that the strata deems necessary by its vote.

Just to make sure I understand this. This money is to be kept in a separate account, totally separate from the operating or other capital funds that the strata might hold — reserve funds, those things.

You do a special levy. It's a totally separate account. It's accounted for separately in your books and dealt with. As the minister talked about before, if at the end of the day you have money left over, that's a totally distinct account — kind of firewalled or something, if that's the right term — on its own from everything else, from the other money of the strata. Is that correct?

Hon. R. Coleman: Yeah, essentially that's correct.

Sections 17 and 18 approved.

On section 19.

S. Simpson: Could the minister maybe explain this section a little bit? As I understand it, it makes amendments to the Strata Property Act that ensure a person's right to mediation in those circumstances.

Could the minister maybe talk a little bit about that and about what the thinking is here around dispute resolution? I'm sure that in many cases you would hope that this would be the avenue that's taken to keep us out of Provincial or Supreme Court and doing something that's much less intrusive and costly. Maybe the minister could talk a little bit about what the thinking is around this and how this would work.

Hon. R. Coleman: I'd be thrilled to do that.

The current provision allows a strata corporation to provide for a volunteer dispute resolution process in its bylaws and establishes rules relating to the content of such a bylaw. What the proposed amendment does is amend subsection 124(3) to provide that the use of a voluntarily dispute resolution process does not preclude the use of the new mediation process referred to in section 33 of the bill.

[1740]

Basically, that means that we amended subsection (4) to provide that admissions, statements, documents and records made solely for the use of voluntary dispute resolution processes may not be used in mediation. It protects that voluntary dispute resolution process and somebody's right to think that what they talk about in that particular process can't be used against them in another process.

Then the amendment also reflects the proposed inclusion of mediation procedures found in sections 33 and 34 of the bill. I hope that helps.

R. Lee: I ask leave to do an introduction.

The Chair: Is leave granted?

Introductions by Members

R. Lee: In the gallery today we have four visitors from China Central Television, CCTV: editor Jie Zhou, director Da Li, cameraman Gang Wang, and the representative and executive director in the Vancouver office. They are here today to make a documentary about British Columbia and Canada. Would the House please help me to give them the warmest welcome.

Debate Continued

S. Simpson: To follow up on part of the minister's comment here, he talked about the ability to restrict in some way the use of information that's used in a voluntary dispute resolution process from then being used in some subsequent process. I'm not sure whether I heard that correctly. Is what this says: "Okay, we agree to try to settle this thing through some kind of ADR system, alternative dispute resolution"?

We put all the information on the table that helps to do that. I kind of expose myself in some way around this to be able to solve this thing, and then you can't come back and use that as a stick to beat me over the head with. Is that essentially what we're saying?

Hon. R. Coleman: Yeah, very much so. Basically, it says that an admission, a statement, document or record that is made only for the purpose of a voluntary dispute resolution process in the bylaws may not be used in a court or in an arbitration or in a mediation or in any other proceedings.

So it's adding "in a mediation" in there because we're adding mediation into the act. What it does is it protects you in that voluntary process — that there's not something that is used against you in another process.

Section 19 approved.

On section 20.
[ Page 1009 ]

S. Simpson: Could the minister maybe just briefly tell us what the thinking is here? It says to require unanimous consent, essentially, to amend bylaws in some forms of strata plans prior to a second annual general meeting. So just maybe a bit of an explanation about what the purpose of that is and why this is a question of unanimity versus, say, a vote or those kinds of things.

Hon. R. Coleman: This changes what previously existed, where you couldn't amend anything without a unanimous vote before the first annual general meeting, to the second.

The reason for this is some of the questions the member brought up earlier. The unanimous vote required to amend the bylaws of a strata corporation before its first annual general meeting reflects the fact that strata corporations tend to be somewhat unsettled in their early years of operation.

Basically, if the lots remain unsold, they may still be largely controlled by the developer. Since the bylaws can affect significant matters such as rental and age restrictions, allowing changes to be made at this early stage could be unfair. So these concerns apply even after the first annual general meeting.

Extending the period to amend the bylaws to after the second annual general meeting will help ensure that the bylaw changes reflect the needs of the owners. As well, a freeze on bylaw changes until the second annual general meeting may assist the developers and owners in stability of the building.

Sections 20 and 21 approved.

On section 22.

S. Simpson: The next two or three sections deal with this question of rental disclosures, and maybe we'll have a bit of a discussion around this.

[1745]

On section 22 itself, my reading of this is that it essentially says that a member of an owner's family can come in, can rent that place from the owner, who is their family member, and they pretty much…. They have a pass on that, regardless of the bylaws that may be in place, if they're a family member.

Maybe the minister could comment on that. And what constitutes a family member? How direct a family member do you have to be?

Hon. R. Coleman: There are buildings that exist out there today with limits on the number of rentals. This is really a clarification so that we can make sure that if an owner wants to rent the property to their own family member, it's not included — let's say there's a rental restriction of ten units in the building — in the ten or if there's a hardship situation, where it's also caught.

What can happen today is that if I'm in a building and there's a rental restriction and they have ten units that are rented in the building…. That's the maximum they allow today, and you can't change that, because it requires bylaw changes, and we don't make retroactive legislation. But we can say that if you're a hardship case….

In other words, let's say you have a condominium in Langley. Now your job says you need to move to Yellowknife, but the market is such that you will lose money on your condo in Langley, or you need to have that for the future. You can go to your strata corporation and say: "As a hardship because of my job, I need to rent out my unit, for financial purposes and whatever, because it would affect me."

The strata council corporation can make that decision. But we're saying: "You make that decision, but you can't then discount it against the rights of others of the ten units that are allowed for rental in the building."

The second piece is the same thing, similar to that. If I'm an owner and I choose to rent the property to a spouse of an owner, to the parent or child of the owner — so my mother and my father, who might be the grandparents to my children, obviously; that was a silly statement, when I think about it — or to my children, then I should be allowed to rent that to my family or a parent of a child or the spouse of the owner.

You run into situations where you get families that split. They split, but as part of the settlement, somebody says, "I'll rent you back the unit. You stay there; I'll move here" — whatever the case may be. We feel that those situations should be covered.

If you're going to rent to a family member, you should not be put into the pool of the number of restricted rentals in the building. That piece of life that…. That would restrict the ability for me to rent my unit, and it should not be included in the ten rental units that would be restricted under the bylaws of a particular building. That's the description of what we're trying to do here.

S. Simpson: I think I understand this now. It doesn't affect the pool, whatever that pool is. Now, in the case of a family, the minister talked about those obvious family members — kids, parents, those things. Will it identify who family is? You know, my second cousin from Saskatchewan who I met once — are they family?

Hon. R. Coleman: Under section 8.1, under part 8, called "Rentals," in the act under the strata property regulations, it defines it there now, and I can read it for the member. "For the purposes of section 142 of the Act, family and family member mean (a) a spouse of the owner, (b) a parent or child of the owner, or (c) a parent or child of the spouse of the owner." So if my wife had children from another relationship, I suppose, if we were in a rental, we could rent it to that child.
[ Page 1010 ]

"In subsection (1), spouse of the owner includes an individual who has lived and cohabited with the owner, for a period of at least 2 years at the relevant time, in a marriage-like relationship, including a marriage-like relationship between persons of the same gender." So that's what the reg does now.

Section 22 approved.

[1750]

On section 23.

S. Simpson: Maybe the minister could just talk a little bit about the intention of section 23 and how it affects and changes the act.

Hon. R. Coleman: This is one where I'm actually just going to read the transitory notes into the record for the member, because it might be the best way to apply it. This is a major policy change and one that some people who I know in the business are opposed to and some that are in favour. But I just think it's about the rights of the owner of something when they make an investment.

The current provision, section 143(1), provides that a bylaw that prohibits or limits rentals does not apply to a lot until one year after the bylaw is passed. This is intended to give owners a chance to make appropriate arrangements. So that's a bylaw that actually allows them to change the relationship on the property, and you have a year, basically, after that to not rent it anymore, because that's the issue in and around what exists today.

Section 142 today states that a rental restriction bylaw does not apply to a lot that has been designated by the developer as a rental lot on a rental disclosure statement under section 139 until the lot is conveyed to the first purchaser or until the date that the rental period, as disclosed in the statement, expires, whichever occurs first.

The second piece of that is that you would be buying it, and you would know that a rental was going to expire. This doesn't apply to that. But the first piece does, in the fact that it says you can't change that rental disclosure before it's conveyed to the first purchaser.

So the proposed amendment provides that the one-year grace period does not apply if the rental restriction bylaw is passed by an owner-developer. In other words, when you buy it, the bylaws state that these units can be rented, and you've bought it, and that's been passed by the owner-developer. There's no one-year grace period. You actually get to rent it.

It provides, in the case of the rental disclosure statement filed after December 31, 2009, that any rental restriction bylaw that a strata corporation may pass will not apply to a strata lot designated as a rental until the date that the rental period expires as disclosed in the statement. The conveyance of the property will no longer trigger the application of a rental restriction bylaw.

So the key piece of that proposed amendment is this. Some units that you'll buy say you're allowed to rent them until 2014, for instance, and that expires. You've got that agreement. That's a contract. That's understood. Some today would say: "You're grandfathered in the old rental arrangement, so as of X date, when we decided the strata corporation, you could no longer rent the unit. You had a year. When you changed your renter, you cannot rent it again, because there's no grandfather." What this says is basically that you can't do that anymore. You can't take away my right either way.

First of all, let's say I had a five-year thing in my purchase of sale, and in my bylaws it says that I can rent it for the first five years of ownership, and at two years you changed this rule. You can't stop me from renting for the next three years, because I have that agreement and you can't extinguish those rights. So that's basically where that sits.

The reason for the amendment is that the one-year time delay in section 143(1) applies to bylaws passed by the developer before the strata lots have been conveyed. Since there are, by definition, no owners at this time, the one-year adjustment period is unnecessary and could be problematic for the developer. In the new strata developments the ability to rent units would be established at the time of the filing of the developer.

So he's filing the disclosure statement. You and I are going to go purchase a unit. We know now, if we're going to buy it, each as individual investors or owners, that rentals are allowed or not allowed in the building. So we're walking in with our eyes open and making that decision.

This amendment provides greater certainty and clarity for purchasers, owners and tenants and will allow new strata developments to better meet the market demand for rental units. That was the objective of what we set out to do here.

As well, the change should limit the number of situations where strata corporations pass rental restriction bylaws that negatively affect the rights of owners and purchasers and the marketability of the units, because that's very critical for this piece to work.

[1755]

Section 139 of the act, which is referenced in this section of the bill, pertains to the filing of and amending of rental disclosure statements by the owner-developer. Existing strata owners — that is, any strata where the original rental disclosure statement was filed before January 1, 2010 — will not be affected by the major policy change in section 143(2). So after January 1 this comes into effect, and after that you can no longer go in and change the rules on somebody that's bought a unit — whether they'd be allowed to rent it or not.

S. Simpson: A couple of questions around this section.

We have a building that has rental allowance for five years — 2014. You can rent. There's an agreement in
[ Page 1011 ]
place. I purchase. I can rent to 2014. Now, I understand that the minister is saying that if a new strata council comes in and says, "No, we want to make it 2012," for whatever reason, they can choose to do that, but it can't affect the agreement that I have. I still have the right to go to 2014.

Does it also mean that if I decide to sell next year, the new purchaser also has the right to rent till 2014? They purchase the agreement that I made on that unit, and they purchase that right as well. Would that be accurate?

Hon. R. Coleman: That would be accurate.

S. Simpson: If you have a development — and I have no idea whether this would occur, because there are always people interested in rentals…. If I understand this correctly, the developer goes out and builds 50-unit condominium X, puts a rental disclosure on it and says: "These units are available for rental as well as" — often — "for purchase." So you can buy it, and you can rent it.

Once the owner puts that in place, is that then in place for all 50 units forevermore, for the life of that building, regardless of what a future strata council may determine and regardless, even, of if they had a 75 percent vote of people saying, "No, we want to make that change because we want to make this ownership exclusive" or "We want to limit the amount of rental, and not 50; we want to make it ten" — or whatever number you pick out of the air — and they vote it by 75 or 80 percent to say they want to do that?

They would not be allowed to do that, and all those units would remain available for rental based on the disclosure that the developer put in at the outset. Would that be the way it works?

Hon. R. Coleman: Yes, and that is the major policy change here. In other words, we're saying that if you made an investment and you thought you could rent your property, they can't extinguish that right for you to rent that property, whether you own it or sell it to somebody else, because that's the basis the investment was made on.

If you wanted to limit the number of rentals in the building, you should have done that at day one. You can't come back after the fact and take away the rights of somebody that made an investment on that basis. So basically, the member is correct.

S. Simpson: I understand, and I agree with the minister that you don't want to change the rules for anybody. They came in, and they had an expectation. They should be able to have confidence in that expectation — that what they signed on for is what they got.

If the developer sets those rules at the outset and the strata wants to make changes, they can't. I understand, then, that they're not able to make those changes for somebody who buys in as an investor and says, "I'm buying five units" — or two units or one unit — "and I'm going to rent it," and that's what they do. They rent it off.

But can they put any limits on that ability, on that condition, should that investor sell that to somebody subsequently? Is there any limit that the strata council could put on that if they're trying to pull back on some of that rental? I'm just trying to understand this.

Hon. R. Coleman: No. This will bring a rigour to the process at the very beginning.

If a developer is deciding to build a building and wants to have the opportunity for a future strata council to decide that they want to restrict rentals, they would put into their statement of disclosure that rentals are allowed in this building to X date of X year, after which the strata corporation can make a decision on whatever happens with the rentals. They could put that in their disclosure statement.

If they don't put it in a disclosure statement and it clearly says that these can be rented, they're rented. You can't go back and take away that right. This was the issue when this was changed a couple times over the years. People said: "Look, I made an investment."

[1800]

One of the biggest complaints we got, frankly…. I heard from people who were Asian investors who bought units in Vancouver on the basis that they thought they could rent them out, that they could have some cash flow towards their investments, which they were going to hold. After they bought them, along came a strata corporation and said: "Those rentals are no longer allowed here."

A guy that made an investment wakes up one day, and now he's got a vacant unit in a community. He doesn't want to sell it, necessarily, because the market might be down or it's actually an investment, but all of a sudden, somebody took away his right to make the cash flow on that unit, by an arbitrary decision.

So it was felt that the only way you could stabilize this is to make it clear at the front end when you purchase something that if that is in place, that's in place and cannot be changed arbitrarily by somebody, unless it's tied to a specific contract that extinguishes.

You could say that for every unit you buy in X building, on January 1, 2015, the rentals are no longer allowed, and it will be up to the strata corporation to say if rentals will continue. You can make your purchase decision on that. But if you make your purchase decision on the fact that you can rent it, then you should be allowed to continue that relationship.

S. Simpson: Does this have any effect on existing buildings, or is this, essentially: "These are the rules from
[ Page 1012 ]
here on in"? Existing buildings have rules set by stratas — rentals, obviously — other than protecting, not being able to go back and change the rules on existing agreements on rental.

As the minister said, "If you've got an agreement to 2014, you can't go back and change the rules on me now," but those buildings that have the 10 percent or 20 percent rental limits, those kinds of things — none of those rules change for existing stratas? This is talking about what comes for new development?

Hon. R. Coleman: Yeah, that's correct. We're not going to do retroactive legislation. Frankly, governments don't do that. Legislation is go-forward. That's why there's the date of January 1, 2010. We'll move forward on this, and then we'll deal with it that way.

There's nothing stopping a disclosure statement, though — just for the member's information — saying, "This building will be restricted to 25 percent of the units being rented," within their bylaws or their disclosure statement, as long as it's clearly defined upfront in what you purchased, in the business agreement that you've entered into. That's the key.

You've made an investment based on what you've been told and what was disclosed to you at the time. For somebody to extinguish that right, particularly on a financial arrangement, is the concern. That's why it's being done this way.

Sections 23 to 30 inclusive approved.

On section 31.

S. Simpson: This is a small matter. It talks about "an arbitrator" instead of "the arbitrator." My understanding is that this is just a language issue about not requiring them to put specific arbitrators in place and being able to go to whomever they choose to deal with these matters.

Hon. R. Coleman: This is a technical, structural amendment, basically. What happened here is that the amendment reflects the proposed repeal of sections 179 to 186 found in section 30 of this bill. After those sections are repealed, section 187 will contain the first reference in the act to there being an arbitrator.

Therefore, the reference should be to "an arbitrator." It refers to any arbitrator. Basically, that's just a technical and structural amendment to match up to the sections we've already approved.

Sections 31 and 32 approved.

On section 33.

S. Simpson: Section 33 addresses a number of areas where it talks about regulations being put in place to deal with the completion of this piece of legislation with the regulatory package. It says, though, that it would allow regulations to be made regarding these areas. That doesn't suggest that they in fact will be done.

[1805]

Is it the expectation that all of these areas will have regulations? Versus saying that there will be, it says that it allows it to occur, so it doesn't seem quite that prescriptive. Is it the intention that all of these areas will in fact have regulations put in place?

Hon. R. Coleman: Some of these regulation-making powers exist, but you may want to amend, let's say, the standard bylaws at some point in time. It allows for that flexibility, because to have to rewrite a piece of legislation can take you, if you get into the cycle, 18 months. If you find something in the bylaw process that needs to be amended, by what the particular affected owners or organizations tell you, you do have to have some flexibility.

This also allows us to do the regulations of defining people as qualified with regard to the audits and those types of things that we've already talked about earlier. It allows us to do that as well.

It basically amends the regulation-making powers. It allows for regulations to clarify how the newly amended provisions respecting depreciation reports or audited financial statements apply to strata corporations, and it allows for the possibility of regulations requiring strata corporations to have a process as a first step toward resolving conflict within a strata quickly, informally and without costs. It allows us to do the mediation and those sorts of things and to make those powers.

If you look at the act, we already have a number of the other regulating powers. We've just put them in there as well.

S. Simpson: When we get down to section 37, it talks about how these amendments will all come into play when the regulations are done, and that's when the act or the amendments will come into play. Will this require that either all of these regulations be written or current regulations be signed on to for all of the categories of areas? There are seven or eight categories here.

Are all of them going to require regulations that have been approved before the act will come into play, or are some of those not going to be essential?

Hon. R. Coleman: Some of them we require in order to bring the act into play — for instance, the qualified person, depreciation reports, definition of "qualified person," that sort of thing. Things like the classes of strata corporations don't necessarily have to be in place before we would bring the act into place, and that may take some more work.

We're not tied to the fact that they all have to be in place before we can bring the act into place, but some
[ Page 1013 ]
of them to make the act work, the amendments we're making, would be the qualified person and those types of things.

S. Simpson: I know that some of this would be obvious, but for those folks who are paying attention to this and have an interest in this, the series of items that I have here, obviously, is: the interest rate payable on overdue levies, the requirement for voluntary dispute resolution systems for strata corporations, the qualified persons for depreciation and audits, the period of time for purposes of a waiver of a depreciation report or waiver of an audit prescribing that period of time, prescribing the classes of strata corporations that might be exempted from one of these requirements, the information that's in a depreciation report and the standards for purposes of an audit.

Could the minister, just for the purposes of this, tell us which of those that I have on this list I've put together will be required to have the regulations done as a certainty before the act will be able to come into play?

[1810]

Hon. R. Coleman: There's one thing that we want to get done by, obviously, January 1, 2010, and that's the rental restriction. So if the other regulations are not ready, we would still implement the act so that we would have that restriction in place.

The others are like a placeholder. They'll get their work done and added as regulation over time. It's not a requirement to implement the act that these all be in place on day one.

Given the time it can take to write regulation, our first priority will be towards the date that's in the act with regards to the change for January 1. Then the others that we think will be necessary — like defining a qualified person, prescribing a period for the purposes of the sections, prescribing the classes of strata corporations — those three will probably be part of that other.

Then the rest are things like the maximum amount of interest and those types of things. Regulations can be added without impacting our ability to perform on the date.

It can be implemented in pieces, as we go forward, once we do it. We can do it that way. Our hope would be that we wouldn't have to, but I do expect that some of these amendments will take a bit more time. The critical pieces…. We want to make sure the rental restriction thing is settled first, as soon as possible.

Sections 33 to 36 inclusive approved.

On section 37.

S. Simpson: This just comes back to the comment that the minister made under our last conversation about section 33. I appreciate that, and I believe that the way the legislation reads, it will bring into force the changes the minister is looking for under section 23 of this, which changes rental disclosure.

That has some very specific dates on it, when it comes into play. I assume that once this gets royal assent, those things will come into play and will happen as they're deemed necessary.

I know for a number of the organizations or the people who are involved around strata, as well, that's certainly of keen interest to them. They have a whole lot of interest about many of the other amendments that this legislation brings into play and when those might come into force. So I can understand the minister….

The minister said that we don't need all of the regulations in play to bring the act into play, and then talked about the need to make the changes around section 23 that allow the rental disclosure piece — the major policy piece here in terms of policy change.

Accepting that that's going to happen on the first of January, by the act, will other parts of this come into play before those regulations are in place, to the degree they can? Or will we see the rest of this, other than the rental disclosure, sort of sitting out there waiting for completion of those areas identified under section 33 for regulations?

I just worry about…. We're going to get the rent disclosure piece that changes the policy. There's a lot of other stuff here that strata folks want. How does that come into play? Or does that potentially get tied up with what can, as the minister says, sometimes be complicated regulatory writing?

Hon. R. Coleman: Section 37 is technical. It's the commencement provisions of the act. There is no current provision for this within the present act. The amendments to the bill can come into force by regulation. That provides that.

The reason for that amendment is actually what the member described. Delayed implementation is needed to enable the development of regulations for various matters, including dispute resolution and depreciation reports.

As well, different provisions of this bill may come into force at different times, depending in part on the complexity of the regulatory development required and, frankly, some of the consultation we want to have with the industry that the member talked about earlier.

[1815]

We think a lot of the provisions, other than some of those ones in and around those descriptions we talked about, can all be done by January 1 because they're technical in nature. They're part of the act. They are not needing to have consultation for definition. With some of the ones that will, we'll take the time. We can implement the balance of the pieces of the legislation in stages as we get those pieces done.
[ Page 1014 ]

S. Simpson: Just so I understand that, then the minister is saying that it's his expectation that portions of the law, the legislation, the amendments, will be able to come into play over the next couple of months by January 1, whatever, and that there are other portions that will require additional time simply because the work hasn't been done yet to allow the detail of those to come into play. Presumably, regulations needn't be written.

I hope this is my last question. Could the minister maybe just tell us which significant pieces — not some of the minutiae, but which significant pieces — he does not anticipate being ready for January 1?

Hon. R. Coleman: Probably the two biggest ones will be the depreciation reports and the definition of the audit. We need to do some work with regards to that to make sure, as we discussed earlier, how those would come into play. And then the dispute resolution process, which we think has to take some time, to understand how we can deal with it from the mediation and stuff.

It may not be able to be done by January 1, and I don't think that we should rush it, because it's a change to arbitration and mediation. If we can spend some time looking at it with the industry and getting the condominium owners to start to understand the change and the benefits before we implement it, that's probably a good thing. So that's basically it.

S. Simpson: There's always one more question, hon. Chair.

This refers back to just one of the other changes that's here as well. The minister referenced this before when we were talking about the courts. The minister referenced that the Attorney General is bringing forward some changes around small claims provincial court that would allow certain aspects of this to work in terms of the authorities the courts would have to allow some things.

Does that get held up, obviously, until the Attorney General completes that legislation, and is there an expectation around the timeline on that?

Hon. R. Coleman: That is one of the ones we can't get done by January 1. The member is correct, and we'll work through that. I can't give you a definitive period now. I don't think it requires legislation so much as it requires a passage of the act, the development, the regulation in concert with the Attorney General, and then the implementation period. So that's one, for example.

Section 37 approved.

Title approved.

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

Motion approved.

The committee rose at 6:18 p.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

Bill 8 — STRATA PROPERTY
AMENDMENT ACT, 2009

Bill 8, Strata Property Amendment Act, 2009, reported complete without amendment, read a third time and passed.

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

Hon. I. Chong moved adjournment of the House.

Motion approved.

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

The House adjourned at 6:20 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
TRANSPORTATION AND INFRASTRUCTURE

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

The committee met at 2:32 p.m.

On Vote 42: ministry operations, $755,783,000.

Hon. S. Bond: We're very pleased to be here this afternoon. I know it's going to be an interesting number of days.

I'd like to begin by introducing the members of my executive team that will be joining me over the course of what will be, I'm sure, the next couple of days. They are a fantastic team that work in this ministry, and I want to introduce them to you: Peter Milburn, who is the deputy minister; David Byng, who is the chief operating officer; Mike Proudfoot, the ADM of the highways department; Sandra Carroll, ADM, transportation planning and policy department; Frank Blasetti, ADM, partnerships
[ Page 1015 ]
department; Nancy Bain, our ADM of finance and management services; and Dave Duncan, our executive director for the Evergreen line project.

With that, Chair, we're going to get started. There's so much to talk about that I'm sure we will discuss over the next couple of days. We look forward to answering questions and spending some time talking about the aggressive transportation plan that we have in place.

H. Bains: I just want to take this opportunity to thank the minister and thank the staff that is here to help us navigate through some of the questions that we need to ask so that people out there understand the complexity and all the issues involving the challenges faced in our Transportation Ministry.

I just want to say a couple of words on this side. Our member for North Coast will be helping me. He's my co-critic. Basically, we'll be dealing with the estimates around B.C. Ferries. Also, he will be posing questions about and around rural transportation and ports. I will deal with the issues surrounding TransLink, B.C. Transit, the Gateway projects and so on and so forth.

I want to say also that I actually was delighted when I was appointed as critic for Transportation and Infrastructure. Congratulations to the minister, as well, once again, for this very important portfolio that she's taking on.

[1435]

I just want to say that transportation, in my view, is one area that is very key in moving the economy forward. I think it's in everyone's interest, too, that we manage it prudently, that we always keep people in mind, because at the end of the day, it is all about movement of people — making it convenient for them to move from point A to B, whether it is to go to work or for any leisure purposes or to do business — and also to move the goods so that the goods they need on a daily basis, for them or for their children, are there and arrive on time and in a timely fashion.

Also, I think the other important part of dealing with transportation issues prudently and with vision and common sense is that this also plays a key role in dealing with the climate change that we are all facing in this world right now. So I think I will also….

I must say that the government has failed in many of the initiatives that they have taken and they should have taken, or the initiatives they haven't taken or they should have taken. Also, they have actually increased the cost of doing business in the province for the people who are trying to move the goods and, at the same time, people who are stuck in traffic jams for hours and hours on end. I think it also costs them money, because they could be working. They could be earning money, or they could be with their families. That hasn't happened.

We have failed miserably, in my view, in dealing with climate change as well.

Now, I want to say, also, that this is no reflection whatsoever on the staff or the workers that are involved in the Ministry of Transportation or those people who are delivering those services. Any criticism that is there, it is all….

I'm sure the minister has broad shoulders, and she will take it on, on behalf of the government because it is, at the end of the day, the leadership. It is the vision, and it is the direction that the government takes through the office of the minister that is affecting the people at the lower end. So any criticism is of the government, not of the staff, because I know that they are wonderful people. They're working hard with what they have.

All the people down below who are actually carrying on with those duties that they are given the task of doing…. I think those people are wonderful people. They are family people. They are many of our friends. Many of them actually belong to a lot of us in family circles. So I think those are real people that are delivering these services, but they do have limited resources provided to them, and they have been given priorities that they believe, and that in my view, aren't in the right direction.

So with that, I want to thank the minister for taking the time, and we can start asking some questions now.

Interjection.

The Chair: All the discussion goes through the Chair.

H. Bains: Hon. Chair, thank you very much to the minister for the reminder that I ask questions and the minister answers the questions. That's very, very, you know, helpful of the minister.

I want to start with the issue of TransLink, if I may. As we all know, the review was called off both B.C. Ferries and TransLink when this minister was appointed and soon after. Can the minister advise whether that review is completed and, if it's completed, why it hasn't been released?

Hon. S. Bond: The member is correct. There is a review. Currently the comptroller general is finishing her work. She has finished the investigation part of her work. She is putting that work together, and that report and her recommendations will ultimately be presented to government. Government will consider that, and the report will be made public.

H. Bains: My understanding from the government press release when the review was called for was that the review would be completed by September 30. My question to the minister is: if that deadline isn't being met, what's the reason?

[1440]
[ Page 1016 ]

Hon. S. Bond: In fact, the review part of the comptroller general's work is complete. She is assembling the report, and we expect it to be presented to government shortly. At that point we would look at the recommendations, and the report would be ultimately made public.

H. Bains: Is the minister saying that the minister or the government has not received that report from the comptroller general yet?

Hon. S. Bond: That's correct.

H. Bains: Can the minister advise the House: when will that report be presented to the government, and when will it be released publicly?

Hon. S. Bond: Very likely, within the next couple of weeks government would receive the report, and it would be made public after government has reviewed the recommendations.

H. Bains: So that we know the timeline, how long will the government take, after it receives it from the comptroller general, to review it?

Hon. S. Bond: Well, that will certainly depend on the magnitude of the report. It will certainly take us some time to look at her recommendations. We're absolutely confident she will have done a great job. We've made a commitment to make the report public, and we confirm that today.

H. Bains: Just a rough timeline — is it a week? Is it two weeks? Is it going to be three weeks, or is it going to be a month? What is the appropriate time to review a report of this nature?

Hon. S. Bond: The most important thing is that the report will be made public, and we will move as expeditiously as we can once we've actually seen the report. We remain committed to making it public, and I'm not going to speculate on whether it will be one week or three weeks. We will make it public as expeditiously as we can. Once we've had a chance to actually review her recommendations, the report will be made public.

H. Bains: Maybe I could ask this way: will it be released before the end of this session?

Hon. S. Bond: Well, again, the key important detail is that we will be making the report public. I have not received the report yet, and neither has government. Once the comptroller general has completed her work in terms of compiling the report, we'll have a better sense of when we'll be able to release it publicly. Government does not even have the report at this point in time.

H. Bains: I think that the minister would appreciate that this is one of the most important works that this minister has taken on — trying to review the work of B.C. Ferries and TransLink — and this is a time when the public is waiting to see what is coming out of that report. They're waiting to have some decisions made. I think that it is only a reasonable request, on behalf of the public, that we have some timelines to see when the report is going to come out.

I once again suggest that it is very difficult to go through estimates without having that piece of paper before you, because it will become a key part of deciding which direction this ministry is moving so that we can ask some questions on that — what were some of the shortfalls that they found in both of those areas — and to show us, you know, what is being done to correct that.

I think, Minister, that it's only reasonable to give us some timeline, rather than saying "whenever." Respectfully, I put to you again: give us some timeline. Is it weeks, or is it months? Can we expect it before the session?

Hon. S. Bond: As I have said, we will move the report as expeditiously as possible. It is absolutely an important topic for discussion, and in fact, government is waiting to review those options that the comptroller general might provide to us.

[1445]

We've agreed and committed to making the report public. We will do that as expeditiously as we can, and we await the receipt of the work being done by the comptroller general as well.

H. Bains: I just want to remind the minister that the three terms of reference mentioned in this review are the same as were there in the 2006 review. One is the division of responsibility between the province and respective entities. The second one was the size, composition, appointment process and compensation for the board of directors. The third one is the operating cost and service delivery models, including the company's effort to reduce costs using alternate service providers and actions to increase productivity and quality customer service. These are the same ones that were there in 2006.

My question to the minister is: is the attempt by the minister to correct the work of the previous minister — her colleague's mistakes?

Hon. S. Bond: In fact, we actually believe that from time to time it's important to go back to make sure that the organizations we have in place that are managing important issues like ferries and transit are being run as efficiently and as effectively as possible. There certainly has now been a sufficient amount of time for us to go
[ Page 1017 ]
back and look at the model that's in place to see if there is a way to improve it.

We think that it's always important to touch bases and ensure that when taxpayer dollars are involved and service to the public is involved…. We should be doing that as effectively as possible. That was the reason for the review that was requested.

H. Bains: It doesn't say much about the confidence that the minister is showing in the previous minister's work. In fact, if you look at the facts, the 2006 review actually resulted in the 2007 Greater Vancouver Transportation Authority Act. In this act the previous minister stressed that TransLink's finances would be sustainable and that its long-term growth strategy would be fixed. That's 2007.

Now we are going through the review. That didn't even last three years. How did that happen?

Hon. S. Bond: Certainly, in any comments that I've made, it's been clear that our goal is not to change the operating model. What we are doing is going back to say: "Is it possible that we could actually do things better?" I think taxpayers in British Columbia expect the government to do just that. So we await the work that's been done by our very competent comptroller general.

The purpose is to ensure that, financially, both organizations are running as efficiently as they possibly can be. That's what every organization is expected to do in the challenging economic circumstances we find ourselves in. We felt the timing was appropriate, and as I said, we await the outcomes of the comptroller general's work.

H. Bains: Again, I just want to remind the minister. I have a number of quotes from the previous minister after the 2006 review and when, in 2007, the Greater Vancouver Transportation Authority Act was brought in. The minister at that time said that he introduced these changes in order to secure TransLink funding and planning. He said: "With respect to TransLink funding arrangements, Bill 43 provides for a new, sustainable funding framework…."

However, less than three years later, TransLink is still having significant problems. We all know that. So how does the minister reconcile that?

Hon. S. Bond: Again, to the member opposite: I think it's important, especially in difficult financial times, that we actually make sure that every single dollar that's invested by taxpayers in British Columbia is being used effectively, particularly when organizations like TransLink are asking for more money. Our belief is that before we ask for more, we better make sure that what we have in place is actually being used effectively.

[1450]

You know, I think the member opposite would want to agree with me that if you look at some of the work that's been accomplished by TransLink, it has been an absolutely amazing success. One simply has to look at their partnership in the delivery of the Canada Line, at their role in terms of the Golden Ears Bridge. By anyone's expectations, one could suggest that they not only have been successful but have exceeded people's expectations in terms of the phenomenal improvements they have brought to Metro Vancouver transit.

There have been some good things that have been accomplished, and we would like to recognize those. But I think it's prudent for government, when taxpayer dollars are involved, to ask some important questions about the use of those dollars and about the governance model. I think it's just prudent and makes incredibly good sense.

H. Bains: I think this is the right thing to do — for the minister to call for the review. I don't have any quarrel with that.

I think the issue here is that there was a minister here two years ago who made these decisions. At that time the minister said that TransLink was projecting a $200 million deficit by 2012. He said that the 2006 review and the subsequent legislative changes would solve that.

However, in less than three years it seems that these changes have only created more problems. Right now we all know that TransLink is dipping, to the tune of $130 million per year, into its reserve fund.

This was brought in by the minister and assured the House, assured the public, assured the transit users that the work that that minister was bringing through Bill 43 was to deal with the issue of revenue for TransLink on a long-term basis. Within three years — a little over two years — we are in a deeper problem today at TransLink when it comes to the financing and the funding of its projects than we were two years ago.

If I was the minister, I would do the same thing that she's doing, because I clearly see that there's no confidence in the work of the previous minister. I haven't seen in a long time the minister calling to review the work of the previous minister in the same government. I think that this is the first time that I could see it in a long term. I've seen it when government changed. The review was conducted by the new minister of the previous ministers.

Maybe the minister could agree with me that the decisions made two years ago are the reason that we're in the mess that we are at TransLink.

Hon. S. Bond: I want to assure the member opposite that this has absolutely nothing to do with the minister previous. In fact, he did an extraordinarily good job of managing one of the most aggressive transportation plans in the history of British Columbia. In fact, British
[ Page 1018 ]
Columbians today, and in particular in the member's own part of the province, are reaping the benefits of the incredibly good work that he did. It has nothing to do with our previous minister.

What it has to do with is, actually, good management practice. I would be positive that the member opposite wouldn't be suggesting that from time to time reviewing the outcomes of a decision made six years ago or ten years ago or even 15 years ago is not prudent and important.

The fact of the matter is this. There has been some excellent work done by TransLink. There's no doubt about that, and I have listed several of the projects that come to mind quickly. But the fact of the matter is that there are fiscal challenges facing TransLink and, ultimately, facing the taxpayers of Metro Vancouver.

[1455]

We want to be sure that every dollar that's being invested through TransLink is being done wisely. We want to make sure that, first and foremost, our organizations are actually looking at their own internal expenses, because all organizations are doing that, including this government.

We believe that a review is prudent, and we think that at that point, we will be able to assess the recommendations made by the comptroller general.

H. Bains: I just want to go back again, because to keep on bringing change to make the same mistake over and over isn't the answer. I think if somebody made a decision ten years ago, yes, from time to time you want to review the outcomes of that decision. That's not unreasonable.

But the decision made two years ago, especially when the statements were made that the purpose of Bill 43 was with respect to TransLink planning process: "Bill 43 provides for a new comprehensive planning framework that involves the preparation of a long-term strategy covering at least 30 years…." That's two years ago that that statement was made by the previous minister.

He went on to say: "That will establish TransLink's long-term goals and directions and identify the key initiatives and other measures that will be needed." That's two years ago. The long-term strategy proposed in the new legislation hasn't even lasted three years, let alone 30 years. So when we are talking about making decisions for a 30-year plan and in two years they fall apart, I think that there's absolutely something wrong with it.

Will the minister agree that those decisions made two years ago were wrong decisions, that they were so wrong that — never mind 30 years — they fell apart after two years and that we need to go back and fix it?

Hon. S. Bond: I don't think it'll be any surprise to the member opposite that I disagree with the summary that he's provided. In fact, to suggest that there hasn't been a degree of success is simply not accurate. I mean, we look at the magnitude of projects that have been delivered successfully. In the case of the Canada Line, on time — ahead of time — and on budget.

In addition to the projects that have been delivered, TransLink actually has looked at 30-year planning, and it has put together information in a plan called 2040. So there has been a lot of important work done. The question is: is there a need for us to look at how we can do that work better?

I don't care if it's six months or six years. I think we should always be asking that question, particularly when taxpayers — both investment and impact — are going to be affected.

We've also given TransLink a number of financial tools that we would expect them to be contemplating for the delivery of transportation in Metro Vancouver, and we need to assess whether or not those tools and the appropriate degree of consideration has been given to those.

So a review is timely, it's important, and in fact, it's good management.

H. Bains: I think the success, as the minister put it, how TransLink has been successful in delivering some of the projects…. Yes, no one is blaming TransLink in this one. I think it's a decision made in this building by the minister that was in charge here before this minister, the result being — talk about successes — that we're facing, right now, an option of drastic cuts at TransLink. A 40 percent service cut we're facing in the next year. That's the success of the previous minister's decisions. That's before us. Those are the facts.

The success the minister may want to talk about is that the minister has put us in such a financial mess that we are going through this review. This is what the minister said at that time to deal with the issues of revenue for TransLink. In 2007 this is what he said about the way that TransLink was governed and being funded.

[1500]

This is 2007: "The expenditure side of TransLink plans are often fully developed while the sources of revenue that would be necessary to fund those plans are usually not identified beyond the immediate short-term requirements."

So aren't we right now identifying the exact problem the minister was saying two years ago that he tried to fix with the decisions that he made with Bill 43? So how have the funding and planning mechanisms by the previous minister broken down so soon?

Hon. S. Bond: Again, we're going to continue to agree to disagree. The fact of the matter is this. It is important from time to time to actually look at decisions that have been made to see if the vehicle that has been created is
[ Page 1019 ]
actually delivering the best value for taxpayers in British Columbia.

There is no doubt that TransLink has been given a number of tools, and each one of those has an impact, potentially, on taxpayers. We have certainly seen that there is still capacity in the tools that have been given to TransLink. You know, what we're simply saying here is this: is there room for improvement? If there is, where might that be?

In fact, this government, I think, made a very wise decision by requesting that the comptroller general actually take a look at both TransLink and B.C. Ferries in very difficult fiscal times to say simply that these organizations need to be making sure they look internally for fiscal savings. They need to make sure that they are running an efficient organization and that they're using the capacity that they've been given before they request additional taxpayer dollars. The review will look at all of those things.

The Chair: Member for Surrey-Newton, I want to remind you to direct your comments towards Vote 42 and the budget estimates for 2009-10.

I want to remind all members not to make comment while someone else has the floor, and no comments should be made directly to a minister when they're speaking.

H. Bains: The minister talked about getting value for our dollars. One of the decisions that was made by the minister previously through that bill at that particular time was to create a board that was appointed rather than a board that was accountable and elected. One of the first things that the board did was to give itself a huge salary increase. The minister then was quoted as saying that he had no control over that. Isn't that one of the decisions made by the previous minister that's the reason for this review?

Hon. S. Bond: I know that we have much discussion ahead of us, and I do want to remind the member opposite that there are no dollars attached to the discussion around the review. In fact, we're talking about estimates of this ministry. So I will simply point out, in terms of that question, that the salary composition is included in the review that the comptroller general is doing.

The Chair: Member, again to remind you to direct the questions towards the budget estimates and not towards administrative responsibilities.

H. Bains: My question would be that the money from the ministry is money not being used to…. Maybe the question is: there are no dollars being used from the ministry towards this review at all?

[1505]

Hon. S. Bond: No.

H. Bains: Perhaps I could ask some questions about the TransLink funding model. Can the minister advise us: what is the total TransLink budget for 2009?

Hon. S. Bond: Well, the reason we're having a discussion is because, in fact, it's outside of Vote 42, because it's TransLink's budget. I understand that their budget is just under a billion dollars, but it's outside of Vote 42.

H. Bains: Perhaps can the minister identify the areas in the budget — any area — dedicated to TransLink and the TransLink-related projects — both operational and capital spending?

Hon. S. Bond: We will endeavour to get a list for the member opposite. We will have that list put together, and we'll certainly prepare that for him.

H. Bains: Perhaps the minister could answer this question. Whether the minister believes that the provincial transit plan that was put together…. Is it still achievable, given the TransLink financial situations?

Hon. S. Bond: We remain committed to delivering that plan.

H. Bains: Can the minister tell us how much of the $14 billion that was announced some time ago has been spent since the inception of the plan, and how much is being spent during this fiscal year?

[1510]

Hon. S. Bond: In fact, we have just over $4 billion that has either been expended or committed.

H. Bains: And how much of that is being spent during this fiscal year?

Hon. S. Bond: In fact, we will get the breakdown. It is a significant part of that, but we need to point out that much of this has already been expended. So it's either expended or committed to be spent. We will get the breakdown for this year.

H. Bains: Is any part of that…? Or I would say, how much of the provincial transit plan is being used to accelerate as a stimulus in this particular year's or previous to this year?

Hon. S. Bond: Well, we have a number of envelopes, which is why we will…. I'll describe two of them. Directly attributable to the stimulus — we are probably looking at about $70 million by 2011, to do a number of things. That's to accelerate primarily highway work
[ Page 1020 ]
but looking at projects on Highway 1, Highway 7 and Highway 99.

In addition to that, we have some special bus priority measures that would be included there. That is considered stimulus, obviously, because it needs to be completed by 2011.

[1515]

We also have the Building Canada envelope, which has different criteria, but obviously, does stimulate jobs and does a number of other things. The commitment there is $187.3 million.

H. Bains: I guess I want to go back to the provincial transit plan. The minister said that they are committed. But the TransLink board of directors as well as the TransLink executive staff have indicated that in order to achieve that provincial transit plan, they need about $450 million — new money — in the operational budget. But the minister has been quoted as saying that they already have the sources to generate that money. Can the minister clarify whose calculations are wrong?

Hon. S. Bond: Well, we remain committed to the provincial transit plan. This is a government that has the most aggressive transportation plan in the history of British Columbia, and obviously, the transit plan is critical to us.

We recognize that there are challenges in working through the gap that has been suggested by TransLink. Our goal is to work with the council of mayors to ensure that…. First of all, I also reference capacity that is there in terms of the tools that have been provided to TransLink. It also is about looking at internal efficiencies and making sure that those dollars are being used wisely.

It will take an effort of working together. We're committed to doing that with the council of mayors. We remain dedicated and committed to delivering the program that we laid out, and we're going to work hard with the council of mayors and TransLink to ensure that that happens.

H. Bains: Can the minister list what the current sources of revenue are for TransLink right now and what they actually generate each year?

Hon. S. Bond: Well, I'm going to remind the member opposite, once again, that I will provide this list of where the revenue comes from. But it is outside of Vote 42, so in fact, it's not related to the estimates today.

The sources of revenue include the gas tax, farebox, commercial land development, parking sales tax and property tax — to name most of them.

The Chair: Member, can I remind you that I would like the discussion to range on Vote 42 and what's in the budget estimates. There's been a lot of latitude given, and I would appreciate it if you could keep your questions confined to that area. Thank you.

H. Bains: Yes, hon. Chair, I appreciate that. But the question for the minister is, I think, relevant in this area, because there's a discussion going on whether the minister is going to the table with the expectation to help them pay for the provincial transit plan. If the province is asking TransLink to comply with the provincial transit plan, then there comes with it a responsibility to answer some questions about how it is to be achieved. I think that's where these questions are coming from.

[1520]

Right now the mayors and the TransLink board have identified the extra sources available to them — whether that is additional gas tax, a vehicle levy, an increase in the rate of tax on parking or to raise the fares. All of that will generate, according to their report, to the tune of $260 million to $275 million.

The minister, on the other hand, is saying that in order to deliver the provincial transit plan, they already have sufficient sources to pay for the provincial transit plan.

According to the mayors, it takes $450 million, so there's a gap of $170 million. How are they going to come up with it, to pay for that $170 million?

Hon. S. Bond: I will simply point out that this is outside the scope of Vote 42. We believe that TransLink has capacity left within the tools that they've been provided with, and that's a discussion we'll be having with TransLink. The provincial government has placed their funding on the table for the provincial transit plan, but any discussion about TransLink funds is outside of Vote 42.

H. Bains: But this is a key component of our transit plan. We are talking about the Ministry of Transportation, which is actually responsible for TransLink. For the minister to not answer questions in this House about TransLink…. The expectation by the public out there is that the minister will be showing some leadership, and it's the minister who actually called for the review as well.

If the minister has nothing to do with TransLink or this budget has nothing to do with TransLink, then I guess the question comes up: what is the minister's role in dealing with TransLink?

With all due respect, I'm asking the minister because that issue is before us right now and needs to be dealt with. The mayors are looking for leadership, and the TransLink board is looking for some direction.

If we don't give them the resources that they need, we are actually, as the commissioner's report says, facing drastic cuts in the Lower Mainland in delivery of our transit services. We're talking about a 40 percent cut,
[ Page 1021 ]
and the commissioner came back with a report that the base plan, which will give them $130 million, is just to keep them going and buy them some time.

There is expectation from the public for some leadership to show where the transit plan is going to go. I think that's why I'm asking some of these questions so that the public can have some comfort that, yes, some of these issues will be dealt with.

My next question is: has the minister looked at any alternative ways that are not currently enabled in the legislation in order for TransLink to finance the provincial transit plan?

Hon. S. Bond: We are delighted as a province to take leadership with the provincial transit plan. The discussion today is about the provincial government's role.

Again, that question is outside the scope of Vote 42.

The Chair: Member, I'll ask you again to direct your questions towards Vote 42.

H. Bains: Yes, hon. Chair. It's very frustrating, actually. With respect, I say that it's the role of this government to provide a provincial transit plan. They said that they will. They said they are still committed to it, but they refuse to answer any questions about funding towards it.

[1525]

In order for the TransLink portion to deliver the provincial transit plan, they need some more revenue resources, as they have asked for. For the minister to refuse to answer questions, I think, is an aberration of the minister's responsibility towards this. So I'm asking those questions.

They say: "We need $450 million in operation money." There is an expectation for the minister to come to the table. They say that the sources that the minister has given them through legislation provide them only $275 million. There's a gap of $170 million. How do they come up with that $170 million to fill that gap?

Hon. S. Bond: As frustrating as it might be for the member opposite, TransLink is not under the authority of the provincial government. The budget of the Ministry of Transportation is what is actually being discussed here today.

I have been extremely indulgent and, in fact, answered questions outside the scope of Vote 42, but I do need to remind the member opposite that TransLink is not under the authority of the provincial government, and therefore not captured in the discussion about Vote 42. Those, the member opposite knows well, are the rules of procedure in this House.

The Chair: Before you start, Member. I've examined Vote 42, and there's no mention of TransLink within Vote 42. I'm going to ask you to move on to another line of questioning, or we can call the vote.

H. Bains: Let me ask some questions about the government portion of the Canada Line, if the minister is prepared to answer some questions on that. Can the minister confirm the funding between the provincial, federal and TransLink? What is each government's contribution?

[1530]

[D. Hayer in the chair.]

Hon. S. Bond: Sorry for the bit of delay there. We have so many projects underway that it's hard to actually sort through the massive amounts of money.

I will point out to the member opposite that for the province, the maximum we will contribute is $435 million over a 30-year term. By the end of March of 2009 we had provided $267 million in funding during construction.

H. Bains: Does the estimated cost of Evergreen still remain at $1.4 billion — total cost?

Hon. S. Bond: Yes.

H. Bains: What is the commitment from the federal government?

Hon. S. Bond: The contribution that has been received in partnership with the federal government is $417 million.

H. Bains: What would be the contribution expected from TransLink?

Hon. S. Bond: In fact, this is public information. It is outside the scope of Vote 42 because it is TransLink's budget, but I will remind the member opposite that TransLink has said that they would bring $400 million to the partnership.

H. Bains: That would leave a gap to the tune of $170-or-so million, if I add them up correctly. How are we going to pay for that gap? Is anything listed in Vote 42 — any ways — to pay for that?

Hon. S. Bond: Well, there certainly is…. The member opposite did his math, and so did everyone else. There is a gap of $173 million, and that's the reason we're going to have a conversation with the council of mayors. That's how we're going to have a discussion with TransLink. That why we're partly having a review in terms of the comptroller general.

But we've already looked at what options might be considered, and there are a number of things to contemplate
[ Page 1022 ]
— savings from design or construction efficiencies, transit-oriented development opportunities.

It is being considered for a potential public-private partnership. Certainly, this ministry has demonstrated exceptional success with public-private partnerships right across British Columbia.

[1535]

Obviously, the final option, or one of the other options, would be additional funding from the project partners. So there are a number of ways that we're going to look to close that gap. It will be reliant on a discussion with the council of mayors and also the TransLink board.

H. Bains: As I looked in Vote 42, the provincial contribution to the Evergreen line has decreased or shifted by $5 million between February and September. Can the minister explain: where did that money go instead, and what priority does that represent?

Hon. S. Bond: We — our staff and I — would appreciate some clarity about the difference. We'll be very clear. We remain committed to delivering the project, to the government's contribution. It may be that there is a difference between what's in the three-year plan, but if the member opposite has a more specific question, we'd be happy to try and answer it.

H. Bains: But it's in the line item. It clearly shows what was allocated in the February budget. When you compare that with the September budget, there's $5 million less allocated. Either it's shifted to some other place, or it's a reduced budget. So that's what I was asking the minister to explain. How is that possible, and where did that money go?

Hon. S. Bond: If you look at the reasons we have budget updates, it's so that we can actually look at the most effective project scope and schedule that we can. In fact, there is a refined cash flow change to more accurately reflect project scope and schedule. We remain completely committed to delivering the project, and it's simply that more work has been done to accurately reflect the schedule and the scope of the project.

H. Bains: So not only does TransLink have a challenge of coming up with the operations budget to deliver the provincial transit plan, but they're also facing a challenge about the capital plan to the tune of $173 million.

I think that's something that…. The question that I asked the minister was…. You know, you've mentioned a number of those areas where there could be savings. Can the minister explain: how much savings has she anticipated in those areas?

Hon. S. Bond: No. In fact, what I did say was that there were a number of options, that it required further discussion and that it requires everyone coming to the table with an attitude of willingness to work together to deliver what has been the desire of a significant part of Metro Vancouver for a very long time.

We're committed to delivering it, we want to do that in partnership, and we want to be constructive. I simply gave a list of options that we would want to consider, because we think it's important to deliver on the commitment that was made — not just by this government but by the previous TransLink board, who actually agreed that this was a key priority project and, in fact, made that very clear to the public. We think it's time for us to work together, find the money and deliver the project.

H. Bains: I think the bigger challenge, as we see the commissioner's report, is that the capital money may be there if all the parties come to the table, but it's the operations money. If they are not provided with the resources to come up with the operations money, then the Evergreen line will not go.

[1540]

I think that's the question that they would be asking and that I'm asking. In Vote 42, have you identified those priorities that the TransLink board needs help in, in coming up with the operations money so that we can have the Evergreen line? According to them, if we don't have that…. What's the point of having a project sitting there if you don't have the operation money to operate it?

Hon. S. Bond: Well, in fact, one thing I do know is that we're committed to delivering the project. It takes creativity and a consultative process. But the discussion that the member opposite raises and the question that he asks is completely outside of the scope of Vote 42.

The Chair: Member, on Vote 42.

H. Bains: Yes, on Vote 42.

Also, in the line item, if you look at the federal contribution to the Evergreen line, it has decreased by $11 million between February and September. So can the minister explain that part? What happened to the $11 million from the federal contribution?

Hon. S. Bond: The answer to the member opposite would be that similarly to the answer I gave, it related to the provincial reason for that change. It's about timing, it's about cash flow, and it's about looking more accurately at project, scope and schedule. One can imagine that if we actually had to adjust ours to do a more accurate reflection of those things, the federal government contribution would do the same thing.

The bottom line is: it's an incredible story of partnership when two senior levels of government between
[ Page 1023 ]
them bring over $800 million to the table. We're very excited and pleased with the partnership we have with the federal government. The commitment remains the same. The timing has changed, and the numbers reflect that.

H. Bains: One would think that this is the time when the economy needs stimulus, needs government support in investment infrastructure. How could the minister describe that putting $5 million less this year, or between February and September, is a real commitment to these projects when, at the same time, we see the federal government also ended up coming up with $11 million less?

Hon. S. Bond: First of all, we just need to look at the record of this ministry and this government in delivering enormous projects all across British Columbia on time, on schedule and on budget. So in fact, this is normal practice within the management of any major project, and taxpayers would expect us to look at cash flow.

What this represents, and I will say it again, is a minor adjustment to correct year-by-year cash flow. That's simply what it is. We remain committed to delivering the project, and we expect to do it as well as we have the numerous other projects that we have worked in partnership to deliver across the province.

H. Bains: Going back to the Evergreen line. We have seen communities…. The minister talks about the government's commitment to these projects and the successes that the government has seen. But if you look at the council of Port Moody and what they have done, they're basically walking away from this government. They have looked at this government's commitment under this budget, and they're saying that the Evergreen line isn't coming.

[1545]

They passed a motion in their council just two or three weeks ago saying that they will have zero or minimal growth. They do not want to go through the densification along the Evergreen line, because they don't believe that the Evergreen line is coming.

So how do you assure communities, such as Port Moody and others south of the Fraser, that the Evergreen line is coming? I think that their issue is not so much about the capital funding, but their worry is that because the operational money or the capacity is no longer there, the Evergreen line will not be delivered.

Hon. S. Bond: The point of the estimates process in our House is actually to discuss the budget of the provincial government. What I can tell the member opposite related to this question is that we remain committed to delivering the Evergreen line.

We certainly look forward to partnering with Port Moody. If the member opposite has a concern about the budget or the issues related to Port Moody, they certainly are not part of Vote 42, and I would urge him to contact Port Moody to have that discussion.

The Chair: Member, at this time I want to state that the minister has stated repeatedly that TransLink and any of its projects are not in the purview of the current estimates before this committee, Vote 42. I have examined the description for Vote 42, and I see no reference either to TransLink or…. Accordingly, I ask the hon. member to pursue the line of debate connected to Vote 42.

H. Bains: Thank you, hon. Chair. I appreciate that. Let me ask some questions along the Gateway. Hopefully there is some discussion we can have there.

Can the minister tell us: are there any components of the contractor procurement phase of the Gateway that ensure and prioritize the uses of the local tradespeople?

Hon. S. Bond: I'm actually glad to be able to answer this question, because I know that job creation and using local tradespeople is incredibly important, and I certainly know how important it is for us to look at that.

[1550]

While our contracts do not specifically require that practice, what in fact has happened is that our contractors have done an exceptional job of doing exactly that. In fact, if you look at the work that's been subcontracted on the Port Mann bridge alone, it is over $400 million of work there.

When we look at subcontracted work on the South Fraser perimeter road, it's another $100 million. If you look at the Gateway program in general, it is the largest job creation program, in fact, that's taken place in terms of transportation investment in the province.

So while not required, certainly contractors have worked incredibly hard to ensure that that happens, and we've seen that happen.

H. Bains: Can the minister answer, then: how many international workers actually have been brought in, who actually are working on the Gateway project right now?

Hon. S. Bond: In fact, we don't have an exact number. What I can assure the member opposite of is that there obviously are some specialized workers that have come to British Columbia, but as you would expect, those go through the appropriate process and procedure. There are regulations about how and when that can be done.

Again, I want to reiterate the fact that our contractors are well aware of the importance of using local labour
[ Page 1024 ]
and local tradespeople wherever that's possible. We've seen that to be the case. The vast majority of workers are local, and we think that's important. We've seen significant job creation, and any international workers that are in British Columbia have gone through the appropriate process to be here.

H. Bains: Can the minister, then, answer the question about how many of those workers have the permits issued to them? And when are those work permits actually expiring?

Hon. S. Bond: I'm not able to answer the question the member opposite has asked, because neither my ministry nor this government actually regulates the intake of international workers to the province.

I should say this. I think it is so important to be on the record that it is an exception rather than the rule when specialized workers are brought to British Columbia. Our contractors are acutely aware of the circumstances in terms of the global recession and the importance of having local skilled tradespeople involved. They have worked very hard to do that.

So again, this is not within the scope of the estimates that we're discussing, but I'm sure the federal government would have the numbers of international workers that have gone through that process to be here in British Columbia.

H. Bains: My information is that there are, for the minister's knowledge, about a hundred or so workers that were given a work permit in February of this year and that those permits will be expiring after one year. They were given a one-year permit.

[1555]

Then there were about ten, I believe, specialized machine operators that were brought in, and their permits will be expiring within a year as well.

I ask the minister if the ministry has taken any initiative — because of the way the economy is right now, because there are so many people out there looking for jobs — instructing those contractors or the federal government that those permits shall not be extended.

Hon. S. Bond: I want to point out once again, patiently, that in fact the regulation of international workers coming to British Columbia is certainly not the job of this government nor is it at all to be discussed in the estimates process.

What I can tell the member opposite is that we are proud of the track record of job creation that the transportation plan in this province has created. Literally thousands of people across British Columbia will be engaged or have been engaged in building and leading the most aggressive enhancement of transportation infrastructure in the history of British Columbia.

Again, on the record, our contractors have worked exceptionally hard to make sure that wherever possible, local tradespeople, local labour are involved in these projects. It has proven to be very successful.

The Chair: Member, I would remind you again to focus on Vote 42.

H. Bains: Yes, hon. Chair.

Let's go back to the budget that was tabled in February. The Ministry of Transportation investment in the Gateway project program looks like $32 million less now in September than in February. Can the minister explain why that is?

Hon. S. Bond: Not unlike the question asked previously, this is a very large project. The budget and the scope of the project remain the same. It is an issue of cash flow and how quickly or slowly the project proceeds. It's a significant project, so this, again, is a matter of timing and cash flow.

H. Bains: Let me ask a few questions about Highway 1 expansion. Minister, can you advise if the contractor has been chosen?

[1600]

Hon. S. Bond: Perhaps we could ask the member opposite to be more specific. The Highway 1 project is a number of projects, so if there's one specifically…. It is a massive project, and there are a number of components to it.

H. Bains: Right now I am actually concentrating on the expansion of Highway 1 between, Boundary Road over to 200th Street or thereabout — turning it into six lanes, I believe, or eight lanes. Perhaps the minister could explain if the contract for that particular portion is awarded yet.

Hon. S. Bond: Yes, the contract has been awarded. The work is underway, and it's Kiewit.

H. Bains: Can the minister give us the completion date?

Hon. S. Bond: Again, a massive project. The bridge we expect to be finished by the end of 2012. Certainly, by December of 2012 we expect the bridge work to be done. There will be Highway 1 work that will complete during 2012. Some of the finishing work may extend into 2013. But the fantastic news is that by 2013, certainly, travellers in the Metro Vancouver area will be benefactors of a fantastic project that includes a bridge and major enhancement to Highway 1.
[ Page 1025 ]

H. Bains: Is there one total budget item allocated to the expansion of the highway and the Port Mann bridge, or are they separated?

Hon. S. Bond: The project is a design-build project. It is one contract.

H. Bains: What is the total budget for the entire project?

Hon. S. Bond: It's $2.46 billion.

H. Bains: Can I get the breakdown of what the Port Mann bridge portion is and what the budget is for the rest of the project?

Hon. S. Bond: In fact, it's a fixed-price, lump sum contract, so it's one contract and many components.

H. Bains: But there are different contractors picked, as I understand. If the minister could advise if there's only one contractor to build the new Port Mann bridge and the expansion of Highway 1, or are there different contractors?

[1605]

Hon. S. Bond: The contract is one contract. It is lump sum. It is design-build. The main contractor is Kiewit-Flatiron, and as I mentioned before, they have worked very hard to subcontract over $400 million of their lump sum contract.

H. Bains: Can the minister tell the House if the plan to tear down the old Port Mann Bridge and to build a new bridge is still in the plans?

Hon. S. Bond: The answer is yes.

H. Bains: Can the minister tell the House if there's been any actual business case study showing the reasoning for having one bridge rather than twinning the old bridge?

Hon. S. Bond: In fact, it really is about a process. We did a thorough analysis to look at how we could create a project that was most cost-effective for the taxpayers of British Columbia. After that analysis, it was determined that we would actually go to the market and ask those people who are experts and are innovative about what is the most cost-effective way to create that structure.

At the end of the day, the low bid, the successful contractor, determined that the most efficient way and the most cost-effective way for taxpayers was actually to build a new bridge, and that was the contract that was successful.

H. Bains: Can the minister then explain why nine months earlier, then, when this decision was made by the previous minister…? Apparently, they had done all the discussion, they had done their business analysis, and it was determined that the way to go was twinning the bridge.

[1610]

Only nine months later they decided that no, that analysis was wrong, and somehow we needed to go to one big bridge and tear down a bridge that still had 40 years of life.

Hon. S. Bond: There certainly was significant discussion about potentially twinning the bridge, and our ministry did a lot of work having that discussion. But we certainly learned as we went through the process that in fact what was most important was providing contractors with the ability to look at options.

At the end of the day, what we wanted was an opportunity for a safe structure for people who were going to use it, and we wanted to give contractors the option of how best to do that. They came back. The low-bid contractor actually said that the best way to do this was to actually build a new bridge. We said: "That's appropriate. It is much more cost-effective for the taxpayer." That's how the change was made.

H. Bains: But how one can take that — that nine months later you say this is the decision that was made based on the analysis and based on the advice of the contractors — when nine months earlier supposedly all of that was done also.

All of the analysis was done. Contractors were consulted. An analysis was done, and a decision was made that it would be a twinning of the bridge. But then nine months later that got changed, you know, going through the same process. All of a sudden now the decision is made to tear down the old bridge and build a brand-new bridge.

Hon. S. Bond: I think it's an ironic question — that the member opposite is questioning the fact that the ministry worked with a process that actually is going to benefit British Columbians, and it will see a much more cost-effective structure being created.

We did do significant work, because we needed to move ahead with the project approvals and a number of other things. I think that it's actually extremely prudent when you look to the market, to the place where the people with expertise, in the process of exploring the options, come back and say: "We think that we can do this more effectively." Of course we agreed with that, and now we will be seeing a new bridge being built.

H. Bains: The question, then, to the minister would be: who came up with that case study, who did the busi-
[ Page 1026 ]
ness case, was it presented to the minister, and who presented it to the minister?

[1615]

Hon. S. Bond: In fact, the ministry did create what is called a reference concept. What that means is the ministry thought that potentially twinning the bridge might be the appropriate method.

Having said that, whenever we go to the market with a design-build project, we allow for there to be flexibility from the people who actually have expertise, and we also want to motivate innovation. That's exactly what happened. The market came back and said to us: "We can build a bridge that costs less money. We can actually give you more benefits with that bridge, with building a single bridge."

Why in the world wouldn't we have accepted that decision, when it provides additional benefit and saves taxpayers money at the same time?

H. Bains: Is that business analysis, as done by the market, available? Can the minister provide that to this House?

Hon. S. Bond: Well, no, in fact. It is their bid. They come back with their bid on the project. They take all of those things into consideration. The low-bid contractor won the bid and, in fact, is building the bridge as we speak.

H. Bains: You know, before it goes to the bidding process, somebody has to let the market know what exactly we are asking for in the bids. If the bids call for twinning the bridge, then that's what you would assume that the bids would come in for, unless there was a separate process to determine whether twinning the bridge was a reasonable thing to do and the prudent thing to do, rather than having one bridge.

[1620]

Hon. S. Bond: There are two very different processes used when we look at how these projects are done. In a traditional tender we would actually say to the people who are going to bid: "Here's what we want you to build." We would be very specific about what we want them to build.

When it comes to design-build, we use a design-build opportunity when we think that there's room for innovation. We do use a reference concept, and in fact, that's what we did. We said: "You know, this might be how it could be built." But the difference is that we actually say to someone in a design-build process: "Here's what we need. You tell us how you would build it." That's exactly what we did.

For example, we would simply say: "We need ten lanes." So they would come back…. That's exactly what happened. We saw not only innovation but cost savings. Going out to the market and having them give us their best suggestions for how the bridge might be built resulted in a bridge that will show more benefits and cost savings. The design-build process worked very well.

H. Bains: Can the minister, then, advise where the saving is and what those savings are — if they were actually passed on to the minister before the decision was made?

Hon. S. Bond: Probably the way to capture the biggest saving is by looking at the fact that we no longer would be required to take care of the old bridge. One of the things it's important to note is that would literally result in the savings of hundreds of millions of dollars because as the structure…. If we had gone to twinning, as the contractor would have pointed out to us, it would require lots of maintenance on the already aging bridge. As the bridge continued to age, maintenance costs would be accelerated.

In fact, that was a significant savings. In addition to that, there are additional savings, if you look at seismic considerations — all of those things. I think from the perspective of the taxpayer and also of the people who actually use the structure, the design-build contract brought us cost savings and certainly additional benefits as well.

H. Bains: I think I'll ask the minister again: is this by word of mouth from those folks? Was there a business analysis done, and where is that business analysis? Is that available?

Hon. S. Bond: I have already answered that question. It's actually contained in their bid. When they make a bid to win the contract, they outline all of the benefits. They outline how they're going to do the bridge and identify those savings. That's exactly what they did, and they were the low bid. They received the contract and are building the bridge.

H. Bains: Is that information available? Can that be made public?

[1625]

Hon. S. Bond: I want to say to the member opposite that just as it is the practice when you look at the tender process, in fact, what is not made public is what is commercially sensitive. The rest of the information…. Actually, the member opposite could go to our website. On there he would be able to see the RFP process, the timelines associated with it, environmental approvals and literally thousands of pages of information about the due diligence related to this project.

[C. Trevena in the chair.]
[ Page 1027 ]

H. Bains: If somebody has done the comparison — whether it was the contractors who were bidding or the ministry people — to have one bridge versus twinning the old bridge, is that information available on the website, or is it available anywhere else?

Hon. S. Bond: I can tell the member opposite that we don't make public the losing bids. However, I am prepared to tell the member opposite that there was a bid that actually had a twin structure, and it was more costly than the bid that won the contract.

Again, I would reference the member to the website, where there is ample material to outline for the member opposite what the framework was for the information that was sent to the market. The lowest bid was accepted, and that design included a single bridge.

[1630]

H. Bains: Can the minister confirm whether this is a P3 project?

Hon. S. Bond: It is a design-build.

H. Bains: Can the minister advise: by taking on the funding by the ministry, the government, how much saving was realized?

Hon. S. Bond: There certainly were some challenging circumstances with this project, and that was partly what led to our decision.

One of the most significant factors was that there was instability in the marketplace, and we were very concerned about that. When we looked at why we might contemplate this mechanism, we recognized that there was a very high cost for capital, and our ultimate goal and our ultimate conclusion was that there was better value by financing the project ourselves. So that is why we believe that this is the most appropriate way to deliver this project.

We have certainly had enormous success with P3s in other circumstances. We certainly don't believe in a P3 in every circumstance. We look at every single one individually, look at the merits and the circumstances and make our decision. Those were the reasons that we made the choice about financing the project in this way.

[1635]

H. Bains: The minister gave us the reason why she went design-build rather than P3, but my question was: were there any savings, and how much were they by going design-build versus P3?

Hon. S. Bond: To reiterate to the member opposite, our concern was the fact that, when we looked at what was the most cost-effective way to do this for the taxpayers in British Columbia, there was market instability, and we wanted to ensure that we got the very best value we could by financing ourselves. We should point out that we never concluded a P3 arrangement.

Secondly, we reached the threshold where we actually believed the best value for funding and financing was by doing that ourselves. So we don't have a cumulative total in terms of the savings that will be generated.

H. Bains: I believe the number $200 million was mentioned by a number of people. If the minister could confirm whether those were the savings realized by the government securing the loan versus the private sector, in the interest rate difference alone.

Hon. S. Bond: The number estimated at the time was certainly as the member opposite reflects. We have no other specific numbers at this point in time, but that was an estimate that was generated.

H. Bains: I just want to confirm again. Correct me if I'm wrong. The number I heard for the entire project was $2.46 billion.

Hon. S. Bond: That's correct.

H. Bains: And it is a fixed-price project?

Hon. S. Bond: That's correct. It's a fixed-price lump sum.

H. Bains: So that I'm absolutely clear on this. The number and the total budget for…. So $2.46 billion is the total price that will be paid to have this entire project completed and delivered, and if there is any cost overrun, it will be borne by the private sector, or the contractor?

Hon. S. Bond: That's correct.

[1640]

H. Bains: I want to go to one more different area of questioning here. I want to go back to TransLink again. The minister has said that Vote 42 does not include TransLink, but looking in the ministry's service plan, it's mentioned about 15 times. There are some grant programs involved in it, so there are a number of questions in there.

My question is about the security on TransLink lines. In 2007 it was mentioned that both the existing SkyTrain and Canada Line would have turnstiles. That was the statement made and the decision made by the minister then — and closed-circuit cameras at every station before the 2010 Olympics. This past year it became clear that the turnstiles will not be coming in until 2012.

Can the minister identify how much is in the budget for turnstiles or smart cards?
[ Page 1028 ]

Hon. S. Bond: I simply want to remind the member opposite that the Chair has already ruled twice about the scope of Vote 42. I certainly can address the issue related to fare gates, because in fact, they are in our budget. They are in our capital budget. There is $40 million from the provincial government. There is $30 million for the federal government, and the TransLink portion of that would be the smart card piece of that entire model of looking at how we would do that.

In fact, we expect to go to requests for proposals this fall. Again, I'm happy to talk about the fare gate contribution, because it's in our budget, but the Chair has ruled twice in terms of the discussion around TransLink.

The Chair: Member for Surrey-Newton, bearing in mind the Chair's previous rulings.

H. Bains: I believe the information that is before us is clear. We are talking about the item that is included in this budget about the turnstiles. So can the minister advise: what is the realistic date of having the turnstiles project completed?

Hon. S. Bond: We expect to be able to work toward the commitment we made. We will be going to requests for proposals this fall. The successful proponent will be, hopefully, announced next spring, and we would hope to see these in place by 2012, as we made that commitment to.

H. Bains: I've got a few questions on Canada Line, if I may. Can the minister advise: what is the total capacity of Canada Line as far as the total passenger carrying capacity?

Hon. S. Bond: We don't have that information available here in the room. My deputy wisely tells me that it depends on how many trains you're running and how far apart they are and various other variables. We don't have that information here, but we'd be happy to get it.

H. Bains: Before I ask the next question, is the staff ready to go to the B.C. Ferries questioning?

The Chair: The committee can recess for ten minutes while we have a change of staff for the ministry.

The committee recessed from 4:45 p.m. to 4:58 p.m.

[C. Trevena in the chair.]

H. Bains: I want to thank the minister and the staff for their patience in waiting to move into a different part of the estimates — B.C. Ferries. I will regroup and then come back, perhaps sometime tomorrow, to ask more questions on the transportation side. Basically, my area of questioning I want to ask is on priorities for infrastructure projects and the discretionary funding and a few other things.

In the meantime, I will cede the floor to my colleague from North Coast.

G. Coons: We appreciate the time and the opportunity for the switchover to ferries. I notice that quite often it's referred to as not part of the minister's responsibilities. It's not mentioned in the service plan. It is in Vote 42. If we look at Vote 42, the total budget for coastal ferries is $171.9 million, and that's up from, I believe, about $147.6 million.

I do have to note that the budget for B.C. Ferries, the coastal ferries, is more than for eight ministries. So when you look at the impact of the budget, I think it's quite significant that we have an in-depth analysis of what's going on and how the ferries are operating and being run and how the money is being spent.

The eight ministries, just for those out there who are actually paying attention: Aboriginal Relations and Reconciliation; Healthy Living and Sport; Labour; Citizens' Services; Energy, Mines and Petroleum; Small Business, Technology and Economic Development; Tourism, Culture and the Arts; and Finance. So it's a fairly significant amount of the budget.

[1700]

I appreciate the opportunity to spend some time with the minister and her staff. I did notice in the budget that there are huge cuts to about 12 ministries altogether, plus a cut to many sections of the Ministry of Transportation, including the Transportation budget.

But B.C. Ferries was not cut. I believe that's why we were having the review coming up — a wise decision of the minister, after six or seven years of the Coastal Ferry Act in operation, to analyze what's going on.

So just a few things. I'm just wondering: how many FTEs are in the Transportation Ministry, and how many are responsible for B.C. Ferries?

Hon. S. Bond: Our FTE numbers are roughly the same as last year's. They are a little bit over 1,400, and we have approximately five or so people who deal with marine policy.

G. Coons: Okay. As for the five members that deal with marine policy, what specifically do they do at B.C. Ferries?

[1705]

Hon. S. Bond: Obviously, marine policy deals with issues broader than B.C. Ferries as well. In fact, the general role that our staff would have with B.C. Ferries is to review issues that pertain to our service contract.

G. Coons: Well, yeah. I start to see the concern that the minister had when she called the review on B.C.
[ Page 1029 ]
Ferries, because this government set up a process, the Coastal Ferry Act, where there's no minister in control. The government can't control their budget. They can't control the salaries of board members of the management team. They can't control the board or the authority — the board of B.C. Ferries or the board of directors for the authority. Can't control the president or the CEO. And there's debt that's spiralling out of control.

When we look at the review that's coming up…. I was here when the minister talked about the review and that they don't have it in their possession yet, but as soon as possible they'll get it out there. But I think it's key that after six years of the Coastal Ferry Act, they're looking at the division of responsibility between the province and the entities and looking at the compensation and the appointment of the board of directors and the powers of them and looking at hard caps on compensation and transparency and public accountability.

For the last four years or so we've been talking about public accountability and the lack of it with B.C. Ferries. I guess the huge surprise to all of us of the CEO being the million-dollar man really brought forth the reality of the lack of transparency and accountability. So I'm pleased to see that the review is going forward and look forward to that.

I just have a question about the public interest. When we have an entity like B.C. Ferries that's a monopoly, the regulator is usually designated as the one to look after the public interest. I'm just wondering who the minister, under her new ministry, thinks looks after the public interest of British Columbians with the $171 million under Vote 42?

Hon. S. Bond: I do want to make sure that we recognize the tremendous success that B.C. Ferries has experienced, and I think it's important that we take a balanced approach to a discussion like this. I think many people would agree that we've seen some significant improvements. We've seen vessel replacements. In fact, we've seen customer satisfaction rise fairly dramatically since the change in the model. We've seen some economies in terms of fuel, a number of things.

In fact, B.C. Ferries has done some very good work. I think that needs to be recognized as well. We know the role of the commissioner does take into consideration some issues related to the public interest, and we think that is an important role of the commissioner. But we currently are awaiting the final report of the comptroller general.

Obviously, some of the issues that the member has talked about here are things that the comptroller general will bring back in terms of the work that she has done and her views of whether or not the public interest is protected sufficiently and considered efficiently. That is exactly what one of the purposes of the review is.

[1710]

G. Coons: Yes, thank you. We've had this discussion for the last, I guess, four years, trying to determine…. The previous minister said that it was the ferries commissioner that makes a judgment that is in the public interest. Meeting with the ferry commissioner…. Under his six points for public interest, his No. 1 point is looking after the financial sustainability of the corporation.

I believe that British Columbians, when they spend $171 million, expect that the public interest is taken into account. I look forward to the ferries review coming out and dealing with a lot of transparency and accountability issues that we've seen lacking.

I do have to mention that during the debates on the Coastal Ferry Act, the minister of the day, Judith Reid, said: "If the B.C. Ferry service tried to raise a tariff beyond what would meet the test of public good, it is incumbent upon government…. Government has the opportunity to step in and revise the contract…in order to meet that need. It will always be back to government to make sure that the public good is protected."

I'm thrilled that this review is going through and that we will finally have, perhaps, some changes in looking after the public good.

My next question. I wanted to get into some stuff with B.C. Ferries and the HST that's coming in, I believe, next July. B.C. Ferries buys lots of materials a year from building supplies, lumber, steel, nuts, bolts, coffee. You name it. The list goes on. I'm just wondering if the ministry has studied the impact of the HST on B.C. Ferries, on their revenues. Will these costs be downloaded to the users in fare increases?

Hon. S. Bond: I would like to point out to the member opposite that that is not within the scope of Vote 42, in fact. Any questions that are related specifically to the HST should be better directed to the Finance Minister during those estimates. But that question about revenue, etc., is not covered. It doesn't affect the service contract — so not covered in the scope of this discussion.

G. Coons: Well, yeah, at this point we may not believe that it's covered. But when we start looking at the ferry commissioner's decision on the second performance fare caps, which the ministry has a lot to do with…. They have five people monitoring the service contract in fair caps and where we're going. The ferry commissioner used projected traffic statistics to look at performance caps for the next four years, 2009 to 2012. The HST was not taken into account.

I do believe that the minister has a responsibility to see if the HST will have an impact on fares in the second term for price caps and fares. I'm wondering, within
[ Page 1030 ]
her staff of five, if they've talked about that and whether or not they will have to revamp this service contract to alleviate the HST on ferry users.

[1715]

Hon. S. Bond: I know that this is not news to the member opposite: B.C. Ferries is an independent company, and in fact we contract certain services with them. Any impact of the HST, or a discussion about the HST in terms of that, is outside the scope of Vote 42. The HST would be a discussion to have with the Finance estimates.

The Chair: Member, I have to agree that the HST on this issue is something that has to be discussed in the Finance estimates. The previous Chairs have ruled, again, that it was out of order to discuss in here, so I hope we are going to be moving on.

G. Coons: I'll just make a last comment on that, because even B.C. Ferries is saying that they will have to ask. They aren't too sure, and they aren't yet able "to quantify the full impact of the…HST on our business. We expect it will add costs to our operations. In response, we are considering our options, including an application to our regulator to allow a fare increase to recover the added HST cost." That was just in the end of their last-quarter financials ending July 30, 2009.

I was just wondering if the minister had known that B.C. Ferries will be looking after their own HST.

It's interesting, because the minister talks about this contracted-out, semi-privatized, quasi-privatized model. But I'm just wondering: who's in charge of B.C. Ferries? Who's the boss?

Hon. S. Bond: I think it would be no surprise to the member opposite that the CEO of B.C. Ferries is David Hahn.

G. Coons: Well, somebody sent me something. They had spent some time on Wikipedia, and they tried to learn who owns B.C. Ferries, who it is accountable to and how it operates.

It says it is "organized as a privately held company with the provincial Crown as sole shareholder." It's not an arm's length away, and it's not an independent business. The Ferries website is silent on public accountability. Regardless of what the minister says or B.C. Ferries or the government, it's not a quasi-separate corporation. The responsibility is the minister of the Crown, who currently is the Minister of Transportation — the ultimate accountability boss. The minister is a sole shareholder.

I'm just wondering: does the minister accept the ultimate responsibility for what the corporation does or fails to do as its owner? Does she intend to explain regularly to B.C. citizens how she exercises that control?

Hon. S. Bond: The fact of the matter is that B.C. Ferries is a privately owned company. The province of British Columbia is a preferred shareholder, but it is a non-voting shareholder.

[1720]

We should be very clear that there was a very clear strategic decision made to set B.C. Ferries up this way — independently, to preclude government intervention. While the member opposite may want to engage in a debate about whether the minister is responsible or not, it is in fact a private company.

There is a Ferry Authority, and that authority is made up of a number of representatives from coastal communities. It also does include two government representatives. In essence, they are responsible for oversight of the B.C. Ferries board and B.C. Ferries proper. In fact, it is a privately owned company with the CEO being David Hahn.

G. Coons: I feel that with $171 million we're looking at in Vote 42, which is more than eight ministries in this government, the minister would take the overall management control responsibility, because it begins and ends with her. But I'll stop there.

I'll get into some of the finances. I'm sure that the minister and the staff have been going through the finances of B.C. Ferries, because that's one of the concerns we have, and I'm sure that the minister has, as far as the direction we're going.

If you look at the year-end results, which was March 31, 2009 — net earnings in that year — there is a 24 percent decline. It went from $37 million from 2008 to $9 million in 2009. Is the minister concerned about the drop in earnings with B.C. Ferries?

Hon. S. Bond: Certainly, we're concerned about dropping revenues. I would be even more concerned if B.C. Ferries was the only transportation mode that was actually suffering from dropping revenue. If you ask the owners of cruise lines, if you speak to airlines, if you speak to busing organizations — all of them are facing the impacts of what is the worst recession in decades in British Columbia. So yes, we are concerned.

We also had significant weather events last winter in British Columbia, which had an impact on B.C. Ferries. B.C. Ferries is working hard to look at how they can mitigate that drop in revenue. In addition to that, the work that the comptroller general is currently putting into a report for government will obviously look at the issue of dropping revenue as well.

G. Coons: Yes, it is a real concern. We go back to the year-end report. Revenue was up 6.4 percent in the year-end, even though there was a sharp decline from last year, and expenses were up 9.5 percent.

Again though, the key is traffic. The passenger traffic was down 5 percent, and the vehicle traffic was down 5.2
[ Page 1031 ]
percent. When we look at the dilemma that B.C. Ferries is in, it seems like a perfect storm, especially when the only way to increase revenues is through fare increases or a provincial subsidy. That is what we're voting on right now, I guess — the $171 million.

[1725]

When we look at fares and look at revenues and look at traffic, price elasticity is a real key component of what is happening in British Columbia right now. If fares increase 10 percent, ridership would go down. I'm just wondering if the minister or her staff have reviewed any price elasticity statistics or data with B.C. Ferries.

Hon. S. Bond: Again, I think it's important to continually put this in context. The changes facing transportation in British Columbia are not simply focused on B.C. Ferries, and that's an important piece. Everyone is looking at how they can look at doing things more efficiently and effectively.

Because of the model that we've chosen to use, government isn't responsible directly for the issue of price elasticity. In fact, we've been very pleased with some of the measures that B.C. Ferries has actually put in place, such as CoastSaver, which did result in seeing increased ridership and was an incentive for people.

The reason that we have the model we have is that we rely on people who are skilled in this particular field to actually be able to maximize ridership and also minimize additional costs and look at the most efficient way to operate a ferry system. We decided that it was best to preclude government from being involved directly with that. That's why we have the model that we have. B.C. Ferries works very hard to try to deal with the issues, balancing the cost of using the ferries and the cost of operating the service.

G. Coons: Yes, and I also believe, as the minister stated earlier, that we do have one of the best ferry systems in the world. I believe that we're coming up to the 50th anniversary of B.C. Ferries, where it has served the coastal communities for decades with reliable, affordable service.

[H. Bloy in the chair.]

Again, I'm pleased that the minister has done a review. I'm just wondering what the current long-term debt of B.C. Ferries is right now.

Hon. S. Bond: I'm sure the member opposite would be able to best and accurately find that information in the annual report of B.C. Ferries.

G. Coons: Yes, okay, I did. It was $1.4 billion — the long-term debt at B.C. Ferries, which is a real concern, I would believe. You know, $1.4 billion is what we're looking at, with ridership going down, revenue going down. Instead of asking the question about shareholder equity…. Shareholder equity of B.C. Ferries is $314 million, and our debt-to-equity, which is a $1.4 billion debt-to-equity to the $314 million, is a 5-to-1 ratio, which is a very high ratio. A high ratio translates into a huge risk for shareholders.

British Columbians are the shareholders of B.C. Ferries. The minister is the one responsible for the one share.

My question to the minister: is this extremely high ratio a concern to the minister?

[1730]

Hon. S. Bond: I'm not sure that we see it as unreasonable when we look at that debt-to-equity ratio. Far be it from us to be the only ones that look at that. In fact, if we were to look at the credit rating of B.C. Ferries…. I would think that experts look very carefully at that debt-to-equity ratio in determining that.

B.C. Ferries actually has an A credit rating from Standard and Poor's. So I'm assuming that when we look to experts in the field, they would see that as a fairly strong company.

G. Coons: Yes, and last year the debt-to-equity ratio was 4 to 1, and this year it's 5 to 1. Hopefully, it's not getting any higher because, as I said, it translates into a high risk for stakeholders.

I do want to just comment on when the minister said that I could find the information with B.C. Ferries in their year-end report or on their webpage. I am under the impression the review that the minister is undertaking has the Auditor General's report taken into account and that the comptroller general is going to analyze that.

The second recommendation talks about: "We recommend that the Ministry of Transportation issue, separately or as part of its annual service plan report, a comprehensive summary report on the coastal ferry system."

That's one reason, I believe, that we're here now trying to get questions. We have concerns with accountability, with transparency and with the public interest.

The Auditor General, the independent Auditor General of British Columbia, says that because the ferry system is no longer administered by a single corporation but rather a collection of several separate legal entities, information is reported by more than one source, and it would be of value to taxpayers, ferry riders and the Members of the Legislative Assembly if a single summary was presented into the Legislature.

So I do hope that's going to be one of the recommendations that the minister comes up with, or one of the recommendations from the report that the minister follows up on.
[ Page 1032 ]

I want to look next at return on equity. Now, this is part of the legislation where, I believe, through the act, B.C. Ferries is required by the commissioner…. The commissioner is required to have a reasonable return on equity, and right now the commissioner is required to maintain 13.6 percent return on equity. In 2006-07 it was 17.5 percent, so it was above the target. Last year it was 12.5 percent, so it was missed. This year, in '08-09, it was 3 percent, versus the 13.6 percent return on equity that the commissioner has put on B.C. Ferries to meet.

They didn't meet the 13.6 percent, because their earnings were only $9 million. They needed $42.7 to meet their target. So my question is: what is the minister going to do to ensure that return on equity? Is that the legislated reasonable percentage?

Hon. S. Bond: In fact, B.C. Ferries is an independently operated company, and it is their responsibility to work to meet those targets. We have certainly seen that they are making every effort possible to return to meeting that target. We've seen some success, and obviously they will continue to work hard to do that.

[1735]

As the member opposite knows, the ferries are regulated and reviewed by the commissioner. We certainly commend B.C. Ferries for the work that they are doing to deal with that missed target. They will continue to work hard with the expertise that they have and in their role as an independent company to meet the targets that are expected.

G. Coons: Yes, I have one more question on the year-end finances. But again, the only way to increase the return on equity is to raise fares, increase the provincial subsidy, cut services. All of that goes against the public interest. So it's a real dilemma that we're in.

The last question on year-end finances with B.C. Ferries is their interest expenses. Last year interest expenses were $33 million, and this last year-end report, it was up to $50 million — a 51 percent increase due to, basically, the issuance of the bonds.

Again, when we look at interest expenses, in 2008 it accounted for about 46 percent of earnings from operations, and in 2009 it's about 87 percent of earnings from operations. So there's a real concern there. Interest expenses in one year went up 51 percent.

What is the minister going to do, or what strategies can she employ? What happens if the interest expenses become greater than the operating expenses? Or is she confident that operating earnings will be solvent?

Hon. S. Bond: I do want to go back and just remind the member opposite that before this government actually starts to support looking at things like cutting services, we look for efficiencies first. That's precisely what we expect B.C. Ferries to do, and we expect TransLink to do that as well. From our perspective, the last thing we're going to look at is how we reduce service to British Columbians.

In terms of our confidence in B.C. Ferries, I think that of course we're confident in B.C. Ferries. I think it's unfortunate that the member opposite refers to them in the way that he has, especially when he has been the benefactor of some of the incredible investment and expansion of the fleet.

If you look at the new vessels, one could expect that there would be higher interest costs because B.C. Ferries is adding significant new infrastructure. Of course, that's expensive, and there will be…. But there is a direct benefit to people who use the ferries that are being put in place.

We have confidence in the management. Having said that, I do believe that it is prudent to look at those kinds of issues. That's exactly why the comptroller general is now in the process of writing and finalizing her report, and she will, I'm certain, be looking at the very kinds of issues that the member opposite has raised.

[1740]

G. Coons: Yeah, and when we look at cost efficiencies, I have a comparison here of B.C. Ferries from 2001 and 2008. In both time frames, they had 25 routes; 38, 37 vessels; 47 terminals. In 2001 there were 273 managers; now there are 450 managers. Passengers, just about the same amount — 21 million passengers for each. And 7.9 million vehicles in 2001 and 8.5 million now. We can see where efficiencies need to be looked at, and there's a prime example.

One concern when the minister and her government went to this new model is that B.C. Ferries lost out on low borrowing rates enjoyed by Crown corporations, so that's an impact on fares and perhaps service. Well, we know service is being cut, I believe, in Nanaimo, Departure Bay, coming up in the next couple of weeks.

I'm just wondering: has the ministry done any cost analysis on how much B.C. Ferries would have saved if they'd remained a Crown corporation?

Hon. S. Bond: We designed a model that doesn't leave debt on the backs of taxpayers in British Columbia. If you look at B.C. Ferries, they're actually able to raise their own debt at a very reasonable rate, and that's because of the strong management that's in place at the company.

G. Coons: That's not very comforting, I don't think, coming from the person who is the boss and ultimately responsible for B.C. Ferries.

I come back now…. I'm off the year-end. I'm going to be looking at their last quarter results — April, May and June — which ended June 30, 2009. In this three-month period….

[1745]
[ Page 1033 ]

We talked about interest, interest expenses and operational earnings. Right now their interest expense was more in that three-month period than their earnings. Interest expense was $15.8 million, and operational earnings were $12.2 million. A three-month period — B.C. Ferries shareholders are in the red by $3.6 million. So net earnings is a negative number.

Over the years in the same quarter: in June '03 the net earnings were $12.3 million; in June '04 it was $12.3 million; in '05, $14.4 million; '06 it was $14.9 million; '07 it was $14.4 million; '08 it was $8.4 million; and now it's negative $3.6 million. So we've got a situation where our interest payments are more than what we're earning with B.C. Ferries.

Again, the minister may have confidence in what's going on, but this is the first time, I believe, in B.C. Ferries history that in a quarter they've had no net earnings, and I think that's very, very disturbing.

This government created this monster, this creation of arm's length, but it isn't. We're still shareholders, and we put in $171 million that we're voting on in Vote 42, which is more than for eight ministries in this Legislature. It's a significant amount of taxpayer money that we need accountability for.

So what is the minister going to do to ensure that B.C. Ferries meets their obligations — basically, the minister's obligations — to pay the interest that they owe?

Hon. S. Bond: I need to say to the member opposite that if B.C. Ferries by itself was facing the impacts that the member opposite has described, I would show a much greater degree of concern. In fact, the world is facing a worldwide recession, and the vast majority of organizations are actually struggling with the same circumstances that B.C. Ferries is today.

We continue to remind the member opposite that it is the Ferry Authority that has oversight over B.C. Ferries, and that is exactly the model that we designed. Unlike the members opposite, we actually believe that we should preclude government intervention in the day-to-day management of B.C. Ferries.

Having said that, as I have said on more than one occasion, we do think it is prudent after six years to actually have the comptroller general look at B.C. Ferries' circumstances to assure the taxpayers of British Columbia that in fact the organization is being run efficiently. If there can be improvements made, I think that it's wise for us to look at that question. That's exactly what the comptroller general is doing as we speak.

[1750]

G. Coons: I'm glad that the minister brought up the authority, because in the Auditor General's report of 2006 — the independent auditor — they said that as far as the B.C. Ferry Authority and the board of directors, they're answerable to no shareholder, and there's no accountability. So the Auditor General had concerns about that.

They also had concerns over the monopoly position of B.C. Ferries and that the commissioner is paid by B.C. Ferries. The independent regulator is actually paid by B.C. Ferries, and they had concerns with regulator capture, where the commissioner may identify themselves with the company versus being objective.

Those were just some of the concerns in the Auditor General's report. I'm sure they'll be covered in the comptroller general's review, and I'm sure that the minister will follow through on that. But I don't have great faith in the B.C. Ferry Authority or the board of directors when the Auditor General says that they are answerable to no owner, no shareholder, and there's no accountability. That's a major concern for me, as a member of the Legislative Assembly who is going to be voting on $171 million for B.C. Ferries.

When we look at where we are with this no net earnings of minus $3.6 million in the red for this last quarter, the last three months…. I guess it happened. Interest expenses on the huge debt of $1.4 billion finally overwhelmed their earning capacity. As I mentioned before — or maybe I didn't mention this — in the first quarter of 2007 interest payments accounted for 35 percent of earnings. In the first quarter of 2008 interest payments accounted for 61 percent of earnings. Now in this last quarter of 2009 interest payments accounted for 129.5 percent of earnings. So it's fairly significant.

Again, I'm pleased that the minister has recognized the mess that we got into with the Coastal Ferry Act and is monitoring it and going to re-evaluate the governance model and the stipends of the directors and the board of directors and improve transparency and public accountability.

But I just want to know…. Today we are, as the minister said, in a worldwide recession, and it's happening to everybody else. But this is happening to B.C. Ferries, which the minister is responsible for. So what's the minister going to do to safeguard the shareholders of British Columbia, the taxpayers, especially when our interest expenses are overwhelming our earning capacity with B.C. Ferries?

Hon. S. Bond: You know, the member opposite is certainly entitled to his own opinions and views about B.C. Ferries' solvency. I want to remind him once again that industry experts, actually, whom I would probably rely on in terms of their view of B.C. Ferries and their fiscal capacity…. In fact, they have an A credit rating, so obviously, experts in the industry have more confidence than the member opposite does.

I would also remind the member opposite that the Ferry Authority and the commissioner are actually responsible for the oversight of B.C. Ferries. In the commissioner's case, it is the commissioner's job to review
[ Page 1034 ]
the plans that B.C. Ferries has to ensure that in fact they are viable and that the company remains solvent.

[1755]

Again, I am not going to speculate about the short-term circumstances for B.C. Ferries. There are a number of mechanisms in place to manage through that, and that's exactly the model that we set up. Again, unlike the member opposite, we're not going to be intervening in the operations of an independent company.

G. Coons: Yes, and I'm glad that the industry experts have great confidence in B.C. Ferries. But they aren't putting in $171 million of taxpayer dollars that we're seeing in Vote 42. I would expect that when we look at where we're going with B.C. Ferries…. Obviously, I keep referring back to the review, and I'm thrilled with the review. I'm looking for some solid results.

But again, I just have a question to the minister: if something happens to B.C. Ferries, and they cannot repay their debt because their net earnings are not there, and they become bankrupt, what happens?

Hon. S. Bond: Well, we can spend the rest of the afternoon speculating about whether or not B.C. Ferries is going to go bankrupt. I can assure the member opposite that the ferry commissioner actually reviews the plans of B.C. Ferries to ensure that they will remain viable and solvent and that industry experts actually have deemed B.C. Ferries to have an A credit rating. So I, for one — the member opposite may all he wishes — refuse to speculate about the solvency of B.C. Ferries.

The Chair: Member, may I remind you to direct your questions to the budget that we're speaking to, Vote 42. No hypothetical questions are to be asked. It's to relate directly to the budget estimates.

G. Coons: Thank you, Chair, for that reminder.

Again, I guess it's all covered under the Coastal Ferry Act if something happens, and everything reverts back to the minister responsible. I guess we incur the debt and try to make our way forward.

Now I'll continue with the financial statements for B.C. Ferries. In the last three months long-term debt is up, and our equity in the company has gone down, as well as their assets and liability. The debt-to-equity has gone up higher — closer to 5 to 1.

Return on equity, which is a measure of the company's profitability…. Since there was no profit, there's no profitability. So return on investment — the commissioner somewhat mandates a reasonable amount, and I think that we said it was about 13.6 percent — for the last quarter was negative 1 percent. There was no profitability, no earnings. We now had a return on investment that's negative.

When we start looking at the commissioner ensuring the financial sustainability of B.C. Ferries, he does that through the return on equity. Right now…. As we said, B.C. Ferries over the years…. Their return on equity was supposed to be about 13.6 percent. As I said before, in '06-07 it was 17.5 percent, in '07-08 it was 12.5 percent, the year-end report was 3 percent, and this quarter it's negative 1 percent.

Obviously, we need changes in the legislation so that we don't see B.C. Ferries running into a situation where it's got to revert back to the minister responsible.

I do have a question, because what I was questioning the ex-minister about — return on investment…. I was asking him about something from Pricewaterhouse, because they had data that was mentioned by the commissioner that conflicted with the commissioner's decision of the 3.6. The ex-minister said that he didn't have access to the Pricewaterhouse data about return on equity. I found that very hard to believe. But that's what he said, and I let it go.

But now, when we look at B.C. Ferries being exempt from freedom-of-information, does that mean that the Minister of Transportation that is responsible for B.C. Ferries cannot get information from the commissioner about such things as a Pricewaterhouse report?

[1800]

Hon. S. Bond: We've already referenced this numerous times in terms of the extraordinary circumstances that are facing British Columbia, and in fact, the rest of the world and every other mode of transportation and probably most independently owned companies.

So we have a fundamental disagreement about who should actually monitor and manage B.C. Ferries. We believe that we have a ferry commissioner in place whose job it is to do just that. We also disagree that governments should intervene in those processes. In fact, we're going to allow the ferry commissioner to do his job.

G. Coons: So I guess that I didn't get an answer to that — whether the minister falls under the Freedom of Information Act and cannot get access to information. So I'll ask that question. Does the minister fall under the freedom-of-information…?

The Chair: Member, Member. If I can remind you to direct your questions through the Chair and to direct your questions towards Vote 42 and the budget estimates for 2009 and 2010.

G. Coons: Okay. Thank you.

The Chair: Please continue.

G. Coons: And this was in reference to the return on equity information that was necessary so that we can
[ Page 1035 ]
move forward with return on equity, which is part of the $171 million, I believe, for Vote 42.

So I'm just wondering if the minister falls under the freedom-of-information exemption.

Hon. S. Bond: I'm really pleased to say that we have a very good working relationship with B.C. Ferries. We're always happy to share information with them. The technical answer is that the minister has access to any information that's related to the $171 million that taxpayers invest in B.C. Ferries.

[1805]

G. Coons: I just want to look at one last thing out of the quarter 1 financial report, and that's traffic — passenger traffic and vehicle traffic. In the year-end report they're both down about 5 percent, and we're back to 2001 levels for traffic.

I realize that we're in tough recessional times and it's difficult to initiate traffic, but the government did put in some money — I believe $20 million. Those on the Island and those in the tourism industry saw the huge benefits of that. The minister talked about the CoastSaver that went in, and there was a huge, significant impact when fares went down.

So I'm just wondering: as the minister in her new portfolio is moving along and hearing the concerns about fare increases and ridership, what can she do as a minister to help increase passenger and vehicle traffic?

Hon. S. Bond: First of all, starting with government itself. As we look at other organizations, including B.C. Ferries and others, we do expect them to look at ways to be more innovative, to be more efficient. I mean, very difficult fiscal times call for all of us to do that.

I think we have to keep putting the member's comments back into perspective. We are facing the worst economic circumstances British Columbia has faced in decades. We can expect there to be an impact right across a variety of sectors. But you know, B.C. Ferries continues to work very hard, and it is not all about government being solely responsible for looking at how we see increased traffic. In fact, B.C. Ferries is reporting an increase in summer traffic. We see that passenger traffic is up 0.3 percent.

B.C. Ferries, during the summer, ran the CoastSaver and driver fare promotions on Tuesdays and Wednesdays and looked at a number of ways to try to improve their traffic numbers. So it's a matter of working to be more innovative, looking at being efficient first and foremost. That's where we're going to look before we look at any other types of adjustments to the circumstances we're facing.

G. Coons: As the minister and her staff know, there are going to be service reductions in Nanaimo on the Nanaimo-Vancouver run, I believe, October 14 between Departure Bay and Horseshoe Bay. They're cutting probably eight sailings between Departure Bay and Horseshoe Bay, and I'm just wondering if the provincial government approved the October 14 service reduction for this.

Hon. S. Bond: The government is not involved in the day-to-day management of B.C. Ferries. It is a business decision, and it comes with impact for people, and we understand that. It is difficult to accept those kinds of changes. I'm sure that other organizations have had to make reductions and look at ways to manage.

It's important to point out that B.C. Ferries is still meeting its contractual obligations to provide the core number of sailings that need to be made. So I'm sure that as these decisions are made, there is a great deal of thought and care. It still has an impact on people. We recognize that, but we are not involved in the day-to-day decision-making related to B.C. Ferries.

[1810]

G. Coons: If I refer to page 12 of the second performance term submission, and this is in that, it says: "The contract provides for adjustments to be made to core service levels for such reasons as to improve customer service and enhance operational efficiency. Such changes in core service levels may be made with the approval of both the provincial government and B.C. Ferries."

I'm under the assumption that the approval for the service cuts for Departure Bay and Horseshoe Bay was made between the provincial government and B.C. Ferries. Am I mistaken?

Hon. S. Bond: The contract provides for some flexibility for that type of decision-making. It did not impact the core number of sailings, as I mentioned, and therefore, the provincial government was not involved in that decision.

G. Coons: Noting the time, I move that we rise and report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:12 p.m.

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