2011 Legislative Session: Third 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, May 24, 2011

Morning Sitting

Volume 22, Number 8

[ Page 7299 ]

TUESDAY, MAY 24, 2011

The House met at 10:02 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Hon. R. Coleman: Good morning, Mr. Speaker. Today in this House we will start out first by doing Bill 7, intituled the Miscellaneous Statutes Amendment Act, 2011, in committee. If we have time later this morning, we'll move to second reading of Bill 12, intituled the Police (Independent Investigations Office) Amendment Act, 2011. In Committee A today we will be doing estimates of the Ministry of Transportation.

[1005]

Committee of the Whole House

BIll 7 — Miscellaneous Statutes
Amendment Act, 2011

The House in Committee of the Whole (Section B) on Bill 7; D. Black in the chair.

The committee met at 10:07 a.m.

Section 1 approved.

On section 2.

L. Krog: I'm wondering if the Attorney General could just explain exactly what the reason for section 2 is — why it's required and perhaps give a cogent example.

Hon. B. Penner: This amendment would clarify that a property guardian does not need to be provided with authority in respect of specific property in order to gather the adult's property. So in other words, I think a more general authority would cover the person's ability to deal with the property belonging to the person that's the subject of the matter.

L. Krog: If the minister could just explain: was there some court challenge or reason for this particular change? I'm not aware of anything, so I'd be curious to hear what the reasoning for this is.

Hon. B. Penner: It wouldn't have been a court decision, because it's not in force yet. I'm told it's a housekeeping amendment that was caught possibly by in-house counsel. Just looking at this — the existing wording that was initially passed — it was felt that this was a better way to describe the authority.

Section 2 approved.

On section 3.

[1010]

L. Krog: Again, is this section housekeeping? If so, what's the purpose of it?

Hon. B. Penner: I'm advised that this is also a housekeeping amendment to make sure that the language here is consistent with language elsewhere in this statute. In particular, it's to clarify that where an adult has both an advance directive as well as a representation agreement, a health care provider is to follow the instructions of the advance directive when the adult's representative does not have decision-making authority in respect of that matter.

L. Krog: Just so I can clarify what the effect of this section is. If I've made the advance health care directive, which is a much simpler document, potentially, than a representation agreement, then that advance health care directive will take priority, if you will, or precedence over the decision made or the decision proposed to be made by someone who has been appointed a representative.

I guess if that's the case, I just want to express some concern here. I want to hear the Attorney General on this. Advance health care directives may not have required the same amount of consultation, consideration, advice that could be given by a professional as a person appointed in a representation agreement.

So it seems to me that, in fact, we may be giving priority to a directive that's prepared without the kind of consultation that's appropriate — giving that priority over a representation agreement, which is presumably going to be a somewhat more complex process requiring the advice of professionals. If the Attorney General can just confirm that and provide his opinion on that, I'd appreciate it.

[1015]

Hon. B. Penner: I'm advised that the member doesn't have it quite correct. An advance directive will take priority over a representation agreement, unless the representation agreement is silent about the health care matter. Stated differently, if the representation agreement stipulates that some specific authority is given to deal with the health care matter, then it would take precedence, potentially, to the advance directive.

Section 3 approved.

On section 4.
[ Page 7300 ]

L. Krog: With respect to section 4, I'm just curious: why this particular change? I'm just wondering if it might have some impact. When we talk about "a practising member of the Law Society of British Columbia or a member," that clearly means you're qualified and licensed to practise law in British Columbia.

We're changing it to "a lawyer or a member in good standing," and it strikes me that "lawyer" would have a broader definition. It could mean someone licensed to practise law in some other jurisdiction. I'm wondering if that has any impact on this particular section. What's the point of changing the section?

Hon. B. Penner: This does not change the meaning or definition of the term "lawyer." Some might say sadly. However, what it does is rely on the definition of "lawyer" in the Interpretation Act. I'm advised that in section 29 of the Interpretation Act the term "lawyer" is defined as "a practising lawyer as defined in section 1 (1) of the Legal Profession Act."

Then for cross-reference purposes, the Legal Profession Act defines "practising lawyer" as "a member in good standing who holds or is entitled to hold a practising certificate." So it does not change the meaning of the term "lawyer."

Sections 4 to 6 inclusive approved.

On section 7.

L. Krog: Again, I see a similar change in definition from "a practising member of the Law Society of British Columbia or a member" and substituting "a lawyer or a member in good standing." With respect to subsection (b), it substitutes the following after putting that section in, in its entirety. The explanatory note suggests it provides "consistency in references to lawyers and notaries public, and provides that employees or agents of lawyers or notaries public in good standing may act as witnesses."

I wonder if the Attorney General could just give an example of where they can act as witnesses. What particular documents? I assume it's with respect to representation agreements, but again, why the reason for this change?

[1020]

I appreciate that some of this legislation has not been proclaimed yet, etc., and we're waiting, but if we could again have an explanation as to why this particular change is required.

Hon. B. Penner: Could the member clarify? Are you referring to sub (b) or sub (b.1)?

L. Krog: Sub (b.1).

Hon. B. Penner: The proposed amendments would provide flexibility for lawyers and notaries by providing that even when a lawyer or a notary public is appointed as attorney, employees or agents of the lawyer or notary may act as witness to the execution of the enduring power of attorney.

The original provision contained in the act prohibited employees or agents and other non-arm's-length persons of the attorney from acting as a witness, but this section was amended in 2008 to provide an exception when the named attorney was the Public Guardian and Trustee or a financial institution authorized to carry on trust business under the Financial Institutions Act. These proposed amendments would extend the exception to lawyers and notaries. It's for ease of administration.

Section 7 approved.

On section 8.

L. Krog: Again, if the Attorney General could just provide an example of where section 8 would apply and what the change actually means.

[1025]

Hon. B. Penner: I'm told that staff determined that the two subsections didn't make sense in the context of subsection 17(3). The reference to 16(2) and (3) referred to signing by adults as opposed to attorneys, in particular. So this clarifies a provision…. I'm just trying to get the original statute. We don't have it right here in front of us so I could do a better cross-reference for the member.

Section 8 approved.

On section 9.

L. Krog: This section, according to the explanatory note, simply makes it clear that if you've drawn a will and you've left instructions with your lawyer or notary prohibiting its delivery to anyone who holds a power of attorney…. That appears to be what the section says, but sub (6) talks about "a person having custody or control of property belonging to an adult must deliver the property promptly, on request of the adult's attorney, to the attorney."

I'm just curious to know. It talks about "property" but not using the term, for instance, "all property," and then goes on to talk specifically about a will. I'm just wondering: why these two particular sections? Has it been an issue? Again, is there any court case, any complaints from the bar? What's led to these subs (6) and (7)?

[1030]

Hon. B. Penner: Similar to a question the member asked a moment ago, this is not a change made in relation to a court case. As the act has not yet been brought
[ Page 7301 ]
into force, it hasn't had an opportunity to be reviewed by the courts.

However, the purpose here is to ensure that the attorney is able to access the property of an adult so that he or she can meet their obligations. Stated differently, it enables the attorney to compel somebody who is in possession of certain property to turn it over to the attorney so that they can deal with it as instructed.

L. Krog: I appreciate the Attorney General's response on this, but I'm just curious. I would have thought that the power of attorney in and of itself would have given one that particular authority, where the court case is decided prior to these changes being enacted.

I appreciate that they haven't been set subject to a court case, because they haven't been proclaimed, but are there court cases that have indicated there was a limitation that would prohibit a holder of power of attorney from demanding delivery of property?

Hon. B. Penner: We're not aware of any court actions or pronouncements with respect to this type of provision. However, by making this amendment in this section, we'll make the language parallel or consistent with the language used earlier with respect to property guardians. It's just felt by ministry lawyers that this is a better way to phrase the authority.

[1035]

Section 9 approved.

On section 10.

L. Krog: This section, according to the explanatory, simply clarifies that an adult "may authorize a representative to make specific decisions about the adult's personal care or health care."

Again, I would have thought that the terms of the statute and the general representation agreements would have allowed that in any event. What specifically created the concern that led to this proposed change?

Hon. B. Penner: This is intended to be a clarification of the type of authority that may be granted. Without the addition of the phrase "in relation to the personal care or health care of the adult," which is the new wording that's being inserted with this amendment, sub (b) would start by saying a person may "do one or more things, including any of the following…." So this helps frame the authority and clarify what that authority relates to.

Sections 10 and 11 approved.

On section 12.

L. Krog: Again, if the Attorney….

Interjection.

L. Krog: Ah, yes, the member for Chilliwack is always anxious to speed up government.

To the Attorney General: if you could just explain again, what's the reason for this change?

[1040]

Hon. B. Penner: The purpose of this proposed amendment is to clarify that there is regulation-making authority for deeming extrajurisdictional representation agreement type of documents to be either section 7 or section 9 representation agreements. Section 7 representation agreements, I believe, are more limited in scope, whereas the section 9 are broader in scope.

This amendment here recognizing extrajurisdictional representation agreements clarifies that they could be viewed to be either the section 7 type or the section 9 type, depending on the circumstances.

J. Les: I seek leave to make an introduction.

Leave granted.

Introductions by Members

J. Les: It gives me pleasure this morning to introduce 29 grade 9 students from Timothy Christian School in Chilliwack who have just arrived to watch the proceedings in the House.

This is not question period, folks. You'll find this is a much more civilized affair than what other school groups sometimes are exposed to. This is a very thoughtful process on a committee stage of a miscellaneous statutes amendment act.

I hope the members of the House help me in making the students from Timothy Christian feel very welcome.

Debate Continued

Sections 12 to 15 inclusive approved.

On section 16.

L. Krog: Following on the words of the member, I'm not going to take personal offence at the suggestion that question period is anything other than the most civilized aspect of British Columbia's Legislature, although I'm sure the children listening will appreciate, if they've ever had an opportunity to see it, that it is one of the least — as the member is quite correct — civilized aspects of this place — high theatre and sometimes, on bad days, low theatre.

Nevertheless, with respect to section 16, this change requires debtors or creditors to file promptly a change of address with the director. This raises an interesting
[ Page 7302 ]
question, given its timing, given that the postal service may be on strike shortly.

Firstly, I just want to know: is this a significant problem for the family maintenance enforcement program?

Hon. B. Penner: I am advised that the program does experience challenges or difficulties from time to time with receiving considerable amounts of return mail. That can be a concern, obviously. We want to be able to notify the debtors of their obligations in order to support their former spouse or children.

Similarly, we want to be able to contact the creditor, the person receiving the financial assistance, so that they can actually get the benefit of that financial assistance. It is important that we receive this information in a timely way for the program so that they can notify the spouse that's supposed to be supporting the other or the children and, conversely, notify the recipient that there are funds available, for example.

[1045]

I, too, would like to welcome the people here from Timothy Christian School on a fine Tuesday morning. Just to give you fair warning, if you're wanting to avoid the potentially interesting but lowbrow theatre, or high theatre, called question period, you have until about 1:35 this afternoon to vacate the premises.

L. Krog: I note the change says that it will be in a form and manner required by the director, so I assume that perhaps e-mail will be appropriate and the director will take that into consideration. But when it says the director "is not required to take any steps to determine the debtor's or creditor's current address," I'm curious to know, given that the director is available: is the intention to rely on that absolutely, or will some steps be taken?

The reason I raise this is that often, as I mentioned in second reading debate on this bill the other day, in a situation where someone has gone from the high life — perhaps in the forest industry is the most common example — to a situation now where you've potentially run out of EI and you're on assistance, simply filing a change-of-address form, the cost of doing that, is arguably prohibitive if you're up against it. I'm just wondering if in fact that financial consideration, if you will, has been taken into account.

Is the director's plan like if you're going to get…? If you send out a piece of mail and it comes back — the address is unknown, or the person has moved, etc. — is that it? Or will the director in fact, in practice, be taking any further steps? I mean, I appreciate that the legislation says the director is not required to take any further steps, but I appreciate also that there is what the statute allows and what the practice is likely to be, and I'm really more curious about the practice here.

Hon. B. Penner: I'm told that the effect of section 9.1(2) is that we will continue in practice the current search actions that the program undertakes, and they are varied and many. That will continue. But it means that the efforts to collect on a debt would not be fatal if those actions weren't taken to the fullest extent of the normal practice. So it protects the creditor from losing their ability to receive funds if someone were to argue in court that the program didn't use all available means to try and track them down.

To the member's question and concern that he expressed both just now and during second reading debate about the cost of change of address, I'm advised the program will accept notification of change of address by telephone call, e-mail and postcard or letter.

L. Krog: I'm going to assume that for the purposes of a telephone change of address, that would require some verification and presentation of your ID number for FMEP purposes, etc. I'm satisfied to see a nod from the director in that regard.

I also want to ask specifically…. It provides in the proposed change: "…may proceed with any enforcement or other action…." Would that include an application, for instance, to have someone committed?

[1050]

Hon. B. Penner: I am advised that the phrase in 9.1(2)(b), which states "any enforcement," does potentially include applications for a committal hearing. In the event that a matter is proceeding in that direction, where a person may end up facing an order of detention for non-compliance or failing to pay as required, notice would be served on the individual, I believe, by the court services branch, by sheriffs.

L. Krog: That's what I wanted to confirm. I would have found it somewhat surprising that a judge is ever going to allow someone to be committed without actual personal service. So there is no question that personal service will still be provided in those situations where committal is sought.

Hon. B. Penner: That is correct.

Section 16 approved.

On section 17.

L. Krog: My understanding of this section is that we are now going to make the default fees that can be recovered annually enforceable, as if they were an order of the court. In other words, it's not just what I will call an example of a civil debt between parties. In fact, it will be enforceable as if it were the order for support itself. Am I correct in that understanding?
[ Page 7303 ]

Hon. B. Penner: I believe the member is correct.

L. Krog: I wanted to be very clear for the record this morning, to the Attorney General. The concept of a family maintenance enforcement program is absolutely essential in British Columbia. It was one of the better things that government has done in the last few decades in this province. It's extremely important.

But the issue I raised with the Attorney General in second reading still continues, and in some ways, my concern arises out of what I had to say the other day, and that is this. We still have orders being made in Supreme Court pursuant to divorce or a Family Relations Act matter. The order is made there. Parties need to vary it. They need to cancel arrears that have accumulated. There've been dramatic changes in circumstances. They have no ability to do so, whether the default fee was $100 or $400 or $10,000.

For some of these people, it will be absolutely impossible for them. As my granny might have once said — it's a North Country expression — you might as well be hung for a sheep as a lamb. There is really no difference.

That's one of the concerns I have with this. For practical purposes, in those very difficult situations — which are, hopefully and I believe, the minority of cases of people who are caught up in the family maintenance enforcement program because they've defaulted…. In some of those cases there is just no realistic prospect of them being able to go back and vary the original order. They're not going to get legal aid to do it. They can't afford counsel to do it.

It's not easy to go into Supreme Court on your own. I think that goes without saying. When you've got the Chief Justice of the Supreme Court of Canada saying litigation is too expensive for average folks, you can be certainly assured that it's too expensive for people without employment.

So my concern is: is the minister satisfied that, given those examples…? I want to hear from the minister specifically what he has to say about any steps he's taking with regard to this issue, with his counterparts in other provinces or the federal Minister of Justice. I'd like to hear some comments on that. But also, specifically, is this in fact really going to improve payment by simply making the default fees enforceable as if they were a court order?

[1055]

Hon. B. Penner: In response, a couple of points. The program does not enforce the default fees for individuals who are on social assistance. If you're a social assistance recipient, in effect, the fee is waived. The amount of the default fee is not being increased. It remains $400 or one month of the value of the maintenance order, whichever is less. That hasn't changed, but we do feel that this is an appropriate action to help recover these costs.

L. Krog: Again, I appreciate it may be a bit beyond the parameters of this debate, but if the Attorney General cares to comment on my general issue around the problem with Supreme Court orders being enforced in Provincial Court under the family maintenance enforcement program and no real ability to have those orders changed, I would appreciate his comments on that.

In addition, I'd also appreciate hearing what range of money we are talking about when we're talking about default fees.

Hon. B. Penner: I'll have to get the member to clarify his most recent question, because I'm still working on the one before that — just to give a more fulsome answer to that question.

I'm reminded that back in about 2003 the Legislature amended the definition of "maintenance" under the act to include "any annual default fee that is imposed under section 14.4." So there was a mandatory element there of having to pay the default fee as it became considered maintenance that was due and payable.

If I could direct the member's attention here to section 14.4(9), it's replacing the previous (9), which indicated…. It talks about the director signing a certificate and filing it with the court. That process is replaced by the new (9), which just makes it a debt that's payable.

What are we getting at here? We're trying to eliminate some unnecessary, in our view, administrative burdens that are imposed on the program. To be more specific for the member, I am told that in any given year the director may have to sign and file as many as 14,000 of these forms with the court. So this will eliminate that requirement and save a considerable amount of paper and ink.

L. Krog: Again, I would be curious, if the Attorney General had a moment and were interested to simply respond around the issue, as to whether or not he's had a chance to discuss this whole area of enforcement and Supreme Court orders being enforced in Provincial Court — variance and cancellation of arrears, etc. — with his counterparts or the federal Attorney General.

There are a number of my constituents — indeed, an organization in my community — that have raised this issue on several occasions. It is an ongoing issue, again, not for a majority of people registered with the program but certainly for a minority.

[1100]

[L. Reid in the chair.]

Hon. B. Penner: I'm advised that it's a constitutional construct and that the lower court, the Provincial Court, cannot amend or vary a Supreme Court order. It's unclear to me whether that can be remedied by way of a statute or if that is in fact a constitutional proviso
[ Page 7304 ]
that would require something greater than simply a legislature passing an enactment to change that well-established and recognized legal construct.

What we have done is provide people with some advice through — we've talked about this before — the justice access centres in Nanaimo and Vancouver. People can get some assistance there. We also have 27 Family Justice Centres where staff are willing to try and help people understand the process for amending a Supreme Court order. Hopefully, when they're first getting the original order, it will be pointed out to them what the process is if, in the future, they want to seek to amend a Supreme Court order.

Individuals, as you know, are also able to get orders in the first instance through the family court of the Provincial Court, relying on the provisions of the Family Relations Act. Some people do that at the first instance, whereas I know that others, often on the advice of their lawyers, initiate an action through the Supreme Court and then have to go back to Supreme Court in order to vary the order. Perhaps that's a practice that can change.

Section 17 approved.

On section 18.

L. Krog: With respect to section 18, I gather this, again, is just going to remove the requirement to file. So if the director is taking enforcement proceedings and attaches the wages of George Smith in Terrace, there's not going to be a filing in court, but George Smith's employer is still going to be paying the money to the director. Is that correct?

Hon. B. Penner: I'm advised the member is correct. This broadens the potential methods of payment to include electronic deposit or other means.

Sections 18 to 22 inclusive approved.

On section 23.

L. Krog: With respect to section 23, just so I'm clear, was the practice any different than the proof that's now required under the statute?

Hon. B. Penner: I wonder if the member could repeat his question. We just had some staff changing seats, and I didn't quite catch the full question.

[1105]

L. Krog: Happy to repeat it. This section talks about…. In the case of enduring power of attorney, a person appointed "for the execution of an instrument tendered for registration must have reached 19 years of age."

My understanding is that in order to sign a power of attorney in the province of British Columbia, enduring or otherwise, it has to be witnessed by a lawyer or a notary. The presumption is that they would be satisfying themselves during the course of that execution that the person appointed was in fact competent, therefore an adult.

I'm just curious to know: what's the reason for this section if in fact that is the case? Or am I not understanding this section correctly?

Hon. B. Penner: I'm advised that this subsection is an amendment intended to be consistent with what's contained in the Adult Guardianship and Planning Statutes Amendment Act, 2007, which created the opportunity for somebody to become an attorney even if they were under the age of 19 at the time of their appointment to become an attorney, but they're not able to exercise that authority until they reach the age of 19 or greater.

Someone can nominate somebody to become an attorney even before they turn 19 themselves, but that person who's nominated can't exercise that authority until they reach that age of 19.

Sections 23 to 30 inclusive approved.

On section 31.

L. Krog: If the Attorney General can just explain the reason for this section and the change, and the impact it'll have.

[1110]

Hon. B. Penner: I'm advised that anyone who is acting as a guardian and wants to seek some compensation or be remunerated — fancy term for being paid for their efforts — would have to go to court to get approval for that remuneration or payment that they're seeking.

This amendment makes it clear that that requirement to seek court approval of remuneration does not apply to the Public Guardian and Trustee. The reason for that is that there's already a regulation that sets out the amount of remuneration that the Public Guardian and Trustee can charge for looking after a matter. So there's already a cap set on the fees for the Public Guardian and Trustee.

L. Krog: That's certainly why I raise the issue with the Attorney General. The problem with that is that you have a situation where, in a sense, revenue that accrues to the Public Guardian and Trustee is arguably a form of taxes. It's arguably a form of fees and licences. It's arguably a charge to the public that is set by regulation by government without requiring any approval, if you will, by a court, let alone the B.C. Legislature.
[ Page 7305 ]

That is the very issue — that the Public Guardian and Trustee gets to act, if you will, as a court in a situation like this by being able to set their fees — through regulation, of course, through an order-in-council — and then collect them. Is there some provision likewise that allows a review of those fees?

Hon. B. Penner: Yes, I'm advised that the fee schedule — the member is correct — is set by order-in-council. There is a provision in the Public Guardian and Trustee fees regulation made pursuant to the Public Guardian Trustee Act, in section 3, that if there's determined to be hardship or unfairness arising from the payment of a fee, then that may be excused or refunded.

Section 31 approved.

On section 32.

L. Krog: I read this section to simply say that the representation agreement that may be published by the minister is not going to be required, but optional. The reason I raise this is…. As an example, the minister would be familiar with the old Short Form of Leases Act. You had a short document, but it made reference to a statutory precedent, if you will, that was much longer and more fulsome, and it was handy for people.

I'm just curious to know: why aren't we going to be relying on prescribed forms as opposed to simply optional forms, or perhaps an optional form that has a number of boxes that can be ticked or not ticked as the case may be? I'm just very curious to know: what's the reasoning behind this?

[1115]

Hon. B. Penner: I'm advised of a number of things. One, this is to provide for greater flexibility. Instead of having to wait your turn in the queue to take your proposed amendment to a form for consideration of cabinet, this allows the minister, on the advice of his or her staff, to publish a modified form.

It's similar to the authority that's already granted in section 41 of the Adult Guardianship and Planning Statutes Amendment Act, 2007, where it states that the "minister may publish forms that may be used in the making of an enduring power of attorney." This makes the language consistent or parallel in that regard.

I can advise the member that the ministry is working on the development of standard form representation agreements for both section 7 and section 9 agreements and enduring powers of attorney. We hope to be in a position to make these standard forms available prior to the implementation of the new incapacity planning legislation coming into force, which, as the member knows, is scheduled for September 1 of this year. So within the next number of months we'll have these standard forms available.

Section 32 approved.

On section 33.

V. Huntington: My reading of this section indicates that it leaves silent whether the borrower must inform an existing tenant or even a buyer that the financial obligation is being transferred.

[1120]

Could the minister point out where the borrower's obligation to inform an existing tenant or potential buyer is actually found? Section (7) requires notice to prospective tenants, but nowhere else do I find notice required.

Hon. R. Coleman: Under subsection (7), it's prescribed that the landlord must provide the notice. It has to be agreed to. Basically, when they sign the new tenancy, they would be taking on the obligation.

V. Huntington: Thank you for that. But there is nothing that indicates a landlord, a borrower, can't enter a financial agreement with an existing tenant in place. There is nothing that indicates he has to notify that existing tenant, unless there's something in here that I can't find that says it is only prospective tenants. But it does speak specifically to transferring obligations to tenants. Only in section (7) is a prospective tenant mentioned.

Hon. R. Coleman: I'll try and bounce it around here. A tenant, before entering into a financing agreement, would have to obtain the written consent of the tenant's landlord to enter into that financing agreement. That's under subsection (5). If a landlord wants to enter it, they can go into it on their own because these are commercial tenancies.

If a person is paying large utility fees and want to upgrade their building and they have a long-term tenancy and they see the benefit, they go to their landlord and say: "I'd like to do this. Can I do it by consent?"

[1125]

If you have an existing tenancy and a landlord chooses to save money on the operation of their overall building, it wouldn't affect the existing tenancy because the existing tenancy is in place. So the landlord can go and make a decision to upgrade their building if they're the ones paying the power bills, and they can actually get the benefit. Or they can sit down with their tenants and work out the benefit, but it has to be done by consent.

V. Huntington: I'm curious, then, why section (6) says: "If a landlord either transfers obligations…to a tenant…." If he is able to transfer the obligations to an existing tenant, is he required anywhere to inform that tenant that this is going to take place?
[ Page 7306 ]

Hon. R. Coleman: Basically, under section (7) there will be a prescribed notice to the tenants that will have to be done with regards to it, so that both parties have agreed to the transfer of the notice.

Section (6) basically deals with the landlord transferring the financing to the lease portion of his building. What happens there is the…. It could be a strata lot. It could be a building that's segmented by virtue of different meters. As a result, they can go into a way to save the power that actually pays for the loan, but it has to be by agreement with the tenants in all conditions under that type of tenancy.

Obviously, if the tenancy runs out, if the lease is up, you can't just force something on an existing lease. But when the lease expires, they would be negotiating that as part of a new lease.

V. Huntington: Well, thank you to the minister for that explanation. But if section (7) is so explicit and nowhere else do you find the notice required to a tenant, is it not possible that a landlord entered into a financial obligation and transferred that obligation to a tenant without advising him? Is that not possible?

Hon. R. Coleman: No, that is not possible.

J. Horgan: I thank the member for Delta South for her questions.

I just wanted to go through some of the definitions, if I could, with the minister, starting with the "eligible person" section and specifically "(b) has obtained an energy report from a qualified energy advisor."

Can the minister advise where we would find qualified energy advisers? What's the certification necessary? Are they in the Yellow Pages? Will the ministry have a list of qualified advisers so the public can take advantage of that?

Hon. R. Coleman: Under "qualified energy advisor," that will be defined in regulation. Right now we do have energy advisers out there. We have to define their qualifications in regulation. Those would be the people who would then be identified as qualified energy advisers.

J. Horgan: Further down in the definitions we have "energy report" means a report that is "made and signed by a qualified energy advisor" who will be defined in regulation. Would the parameters of that reporting be also outlined in regulation?

[1130]

Hon. R. Coleman: Right now when we're doing the LiveSmart program, we use federally certified people that the federal government has in a database for us. Most people that are certified as energy…. Basically, the eligible piece of it would be people qualified to do the report.

We also use the federal report, which is a report that is standardized, and we use their database. Our intent would be to bring that in as our reporting system under regulation or using the same reporting system and qualifications. Then we would also expand that, based on things we would learn over time that would help us with other energy efficiencies.

We may want to add things to the reporting system. That's why in the bottom of it, subsection (d) of the "energy report" definition gives us the opportunity to prescribe the requirements, if any. We may find over time that we may want to be adaptable as we go forward, but at this point we would be using the database and the qualifications that are presently used for the relationship in LiveSmart with the federal government.

J. Horgan: I thank the minister for his answer. I think I heard him say that the LiveSmart program certification will be similar, that it'll be just transferred over. That's what I was hoping to hear.

I want to just touch for a moment on the "financing agreement" definition. As we get down to sub (2), it says that "A prescribed public utility must establish and maintain a program to offer financing to eligible persons…" and so on.

I'm wondering if the minister could advise the committee: how many prescribed utilities under that section have signed on for this program? On the financing agreements, what are the terms? Who sets those terms? Are our utilities becoming lending agencies? Is the province going to backstop this, or is it strictly on the backs of the utilities?

[1135]

Hon. R. Coleman: Forgive me if I bounce a little bit through the legislation as I try and answer this particular question, hon. Member.

First of all, the only two utilities that approached us and are working with us are B.C. Hydro and Fortis. They would be able to finance it if they felt they could do it internally, or they could do it with a third-party financial institution.

The government will not be backstopping the loans, but we do have the power to set the caps, under section (8), and any of this would also still be subject to the B.C. Utilities Commission as it would look at how it would affect rates. They're going to have to make the business case with regards to the plan basically.

J. Horgan: Well, citizens not covered by B.C. Hydro or Fortis…. There aren't that many. I know there are some sitting right behind me though, for example. Are those citizens not able to access this program, then?

Hon. R. Coleman: Not initially, probably not. They would eventually. What we'll probably do first of all is do
[ Page 7307 ]
some pilots to make sure we sort out the stuff with the regulation and its operational side.

None of the municipal utilities have approached and asked to be a part of this. Certainly, if it's a benefit for energy efficiency and savings and renovations, we would encourage anywhere it would work. Obviously, there are significant benefits that come from it.

Initially, at this stage we've only had the approach from the two utilities. It was started, I understand, with Fortis, which thought that this would be a very good program for them to look at, and it has expanded into discussions. We would be able to deal with other utilities in the future if they wish to enter the program.

J. Horgan: I thank the minister for his answer, and I know my colleague from Nelson-Creston is pleased to hear that as well.

I want to ask a more generic, general question. Programs similar to this one have been in existence in B.C. in the past. I know in the 1980s and 1990s similar programs were in place. What differentiates this initiative from those previous proposals?

Hon. R. Coleman: I think the biggest difference would be that the borrowing is tied to the meter back to the home. Therefore, the efficiencies are actually paying for the improvement on the particular establishment without having grant programs and other things that are tied into it.

Now it's managed at a level where they can do the assessment of the home. They can say, for lack of argument: "Your bill is $300 a month. If you were to do this, this and this, it would come down to a hundred dollars a month. That $200 a month can now pay for the improvements you would make to save that energy over time." So when it's paid for, you're basically getting an improvement to the home being paid for by energy.

The only caveat to that would be if someone actually did all that work and decided to leave their windows open during the wintertime and their furnace was overworking. Those types of things you can't predict forever. So there's that sort of thing.

But the biggest difference is that it's actually between the utility and the homeowner, making the decision to improve their home based on what they could save in power to help pay down the loan. In the past most of the programs would have had some other grant program tied to it as well.

[1140]

J. Horgan: I thank the minister for his response. Again, on sub (2), the prescribed utility must establish the program. I'm not suggesting that B.C. Hydro or Fortis would set about to try and play interest rates against their borrowing and against their customers. But what steps will the province take to ensure that that doesn't happen?

Hon. R. Coleman: I'll take it as subsection (2) — or section (3), basically — where we're going to prescribe those requirements and regulations, so that can't happen unilaterally. We will build a regulation to actually match up to the program and say this is how those criteria will work, and the terms and conditions and the prescription of that.

J. Horgan: When I first arrived in this place, some of the lawyers told me to look for "musts" and "mays" in legislation. I see many musts and many mays in these two sections. I see that the utility must, and then I see that "a prescribed public utility may establish, in accordance with the prescribed requirements…."

I see a must and a may, then a must and then another may. I'm supposed to be concerned about that, and I'm wondering if the minister can put me at ease. Those would be subsections (2) through (4).

Hon. R. Coleman: I had similar advice, hon. Member, with "must" and "may" and "shall." People used to tell me that a lot of the words actually mean the same thing in legislation. The difference here is that the utilities have asked for us to set up, basically, the ability to do this, so we will prescribe what it is. We will prescribe what they must do.

Each utility may actually have different requirements with regards to regions or whatever, so there will be some flexibility under section (3). Under the terms and conditions they offer, the programs are to be made so that the size can be controlled for the particular utility. They may want to cap it.

We'll put some caps on the borrowing, but there may be some caps on what they want to do. They may select out of different opportunities what they feel in a particular region is the most beneficial under their energy adviser's reports as to what they're prepared to supply with regards to that, so that's why the flexibility.

J. Horgan: I thank the minister. I'd like to scoot now to subsection (7), and that's the notice issues that were discussed by the member for Delta South. I was satisfied upon reading the legislation that that was in place and that protections were in place for existing and future tenants. I just wanted to put on the record that my reading of it was as the minister described.

In section (8) where we talk about the cap, I wonder if you can expand on that. I assume that the Crown wants to have the ability to cap this in the interests of protecting the public utility as well as the private utility. What would be a point where a cap would be required? What situations does the minister contemplate that he would want to intervene?

Hon. R. Coleman: Through our discussions with the utilities, they felt that a cap would be appropriate for a
[ Page 7308 ]
number of things. One would be to basically control the pace of the program. The second would be that as long as it would get paid down, then it would create space for additional homes to come into it.

[1145]

The cap is really to make sure that we don't expose the utility to a level where it can grow on them, where it could affect their credit rating or other business cases. They felt that when you build a program, particularly of this nature, if we can carry a cap through a specific period that they can carry, it would allow them to work within that envelope. If they felt that they could manage more, they would come back with regards to expanding that cap if they thought there was benefit to it.

It also allows them to control the program from the standpoint of the uptake and also new entries after the program is up and running, once they've reached their cap limit as far as loans get paid down, and then they can add more people.

It's really about allowing the utility to basically carry the cap for a specific period to allow them to manage the program within an envelope. We have prescribed that in consultation with them.

J. Horgan: In that consultation, at least the consultation to this point in time, have the Crown and the designated utilities come to a figure in terms of the dollar amount that you'd want to see in the first 12 months of the program or a number of borrowers that you'd want to sign on? I mean, I'm assuming you're going to cap on the financial. But is there any plan to cap on the number of consumers that can access the program?

Hon. R. Coleman: No, we haven't picked a cap space for this yet, because the legislation isn't passed. We've been consulting with them. The two issues the member I think described — neither one is mutually exclusive of the other. Obviously, the number of homes and how much they borrow would affect the cap, and how much they borrow would affect how many homes.

The reality is that they think there's a great opportunity here for the program. We want to go at the right pace so that we don't put it in a situation where we have put the utilities, in any way whatsoever, in a place where they have such a successful program that they wouldn't be able to keep up on the financial side. That's why we're providing the cap. In providing the cap, then they would be able to come back, like I said, and adjust that later if they felt it was necessary.

J. Horgan: In subsection (9), "In setting rates under the Utilities Commission Act for a prescribed…utility that has entered into a financing agreement, the commission must incorporate the financing agreement into those rates," is this the only role for the Utilities Commission in this program?

The Chair: Hon. Members, the member for Esquimalt–Royal Roads seeks leave to make an introduction.

Leave granted.

Introductions by Members

M. Karagianis: In the House joining us today we have a group of 34 grade 6 students and a number of their parents from Ecole John Stubbs Memorial School in my constituency. I would hope the House will give them a warm welcome.

Debate Continued

Hon. R. Coleman: Actually, yeah, the B.C. Utilities Commission would still review this in the overall package of the utility. The only thing this does is that by saying they must establish a program, it clearly gives the message that government has made the decision that they can establish a program. But regulatory and the costs and all those things that would affect it — anything to do with rates or financing or whatever — would still be subject to the B.C. Utilities Commission.

J. Horgan: I'll just say it back, because as you know, sometimes people read committee stage debates to better understand legislation. So that I'm clear, this doesn't in any way curtail the ability of the commission to do its work on dealing with the normal borrowing that would happen at any of the utilities.

Hon. R. Coleman: That's correct.

Section 33 approved.

On section 34.

J. Horgan: This is the section which would be setting regulation, I suspect — the ability, as I read these clauses, for the Crown to set limitations and regulations by area, by region, by rate classification. Is that correct?

[1150]

Hon. R. Coleman: Yeah, that's essentially correct. It's really about trying to establish some flexibility for different areas, different regions of the province, as the member knows.

Basically, the regulations will cover the following items: qualifications for eligible participants in the financing program, specifications for energy assessment reports required of the program participants, qualifications for energy advisers and persons installing the energy efficiency improvements, specifying which public utilities are required to offer the program, specifying terms and conditions for financing agreements, content for disclosure and
[ Page 7309 ]
consent forms for new owners and specifying what types of retrofits can be funded under the program.

Those would be the types of things that we'd be covering. It is to give the flexibility to the utility, which may be operating in a different climate area in B.C. versus another and, like I said earlier, have higher priorities — what they think the biggest beneficial piece would be to affecting the utility bill.

J. Horgan: Just on that regional component, we talked about people getting the retrofits done, seeing energy savings and then leaving their windows open all winter long. I'm wondering, though, when it comes to regional classifications or classes of improvements, as I read in the ability to set regulations: is there any ability for the public observing this today, those in the gallery and the kids from John Stubbs…?

Is there any way that they could have a quick understanding from the minister where he anticipates regional changes? Would this be an urban-suburban-rural divide, the commercial versus residential customer classes and other interests as well?

Hon. R. Coleman: No, it's not a rural-urban divide. Basically, today under LiveSmart we already have two regions in B.C. — the south coastal region, which includes Vancouver, Vancouver Island and the Sunshine Coast, because it has a different climatic zone than the rest of the province, particularly the Interior….

You will have some areas where the effectiveness would be basically on how a heat pump is designed, particularly in an area where it's very hot in a particular time of year for air-conditioning versus heat. In other areas the high-efficiency furnace will be of greater value.

Obviously, windows and doors and those types of things are pretty much, I think, standard across the board. In some cases you might want to do things with regards to that. In addition to that, you have insulation levels which can be affected by regions. So the ability to have some flexibility there is important.

The other part is also to recognize that new products come into the market that could actually improve even what we're doing today as we get to better efficiencies under certain things — whatever it may be — something like solar heating, hot water, those sorts of things. As the prices come down, it makes some sense. The flexibility piece is the last piece of it.

Sections 34 to 36 inclusive approved.

Preamble approved.

Title approved.

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

Motion approved.

The committee rose at 11:54 a.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

Bill 7 — Miscellaneous Statutes
Amendment Act, 2011

Bill 7, Miscellaneous Statutes Amendment Act, 2011, 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. B. Penner moved adjournment of the House.

Motion approved.

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

The House adjourned at 11:55 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
TRANSPORTATION AND INFRASTRUCTURE

The House in Committee of Supply (Section A); D. Horne in the chair.

The committee met at 10:07 a.m.

On Vote 41: ministry operations, $806,922,000.

Hon. B. Lekstrom: It is a pleasure to stand here today to begin the estimates of the Ministry of Transportation and Infrastructure. I want to start by making a few introductions.

Joining me is my deputy, Grant Main, as well as Nancy Bain, finance and management services department. Also joining us I have Kevin Richter, who is ADM of infrastructure, as well as Kirk Handrahan, who is the executive director of the marine side, as we go through this morning.

It is quite a ministry. I won't take a great deal of time. I know you would like to hear me speak at great length,
[ Page 7310 ]
but I would rather answer your questions, and we'll get into that shortly.

The ministry really is the backbone to our ability to have an economically prosperous province. I think that it lends to everything that we do in this province — our ability to utilize our resources, which we are very rich in, in this province. The resources don't mean a great deal unless you can get them to the markets, unless we can get the workers to and from their homes and to and from their jobs.

Whether we're dealing with road or rail, whether we're dealing with our ports or our air, all of it combined is extremely important, and I think we have shown that over the last number of years.

As we grow our economy, we grow our transportation network. Also our B.C. Transit — we continue to increase that. It's very important to find that balance. As we see B.C. Transit, and we hear a call for more transit systems, whether it be in our large urban centres or our rural centres around the province, we do have to find the balance with our vehicles.

As much as some people would like to think that we could have the cars off the roads tomorrow, I think we have to be realistic and understand that the automobile is a big part of our lifestyle as well as our economy and how we move goods and services, but we try and enhance that, as well, with our public transit.

CVSE, our compliance side for our trucking associations, for the most part, and our industry, do a great job for us out there from one corner of this province to the other. Safety is what it's all about. Whether we're talking any of the things — air, roads, our ferries, our transit, the ports — we have to do it in a safe manner, and I think everybody would agree with that.

So I'm not going to take a great deal of time other than to really say thank you to the staff that I have here today and thank you to the over 1,400 staff in the ministry who deliver all of the programs and services that we all enjoy as British Columbians. It is a great honour to serve in this position, and I'm looking forward to the questions that you'll present to me throughout the day.

[1010]

H. Bains: Let me also, first of all, congratulate the minister for the new portfolio, and I look forward to working with the minister. It is a huge portfolio. There's no question about it. It can be the backbone of our economy, and it plays a major role in that direction as well. I agree with the minister.

But at the same time, it is one area of government services where I think we can play a major role and be the leader as far as the greenhouse gas emissions reduction program is concerned. At the same time, we are moving people, and we are moving goods to be a major player in enhancing our economy — to provide jobs; provide good, living neighbourhoods, going along the same way; and to have roads that are safe, roads that are conducive to moving our goods to help local economies as well.

I think, as the minister has said, the time is very, very limited. My understanding is that we do go until the end of the day today. We may go into tomorrow. We're still working on some of the schedules. As a result of that, I do appreciate the minister's initiative not to make longer speeches, and I won't make any, any longer than the minister — I promise — so that we could get to some of the very key questions in different areas. As we agreed, we're working with the minister directly and with the staff.

We will start the with B.C. Ferries this morning, and then in the afternoon we'll start in other areas of the ministry, which is the overall…. I guess you could talk about the revenue and the expenditure of parts of the public transit. We can talk about road maintenance. We can talk about all of these specific projects and, then, how they relate when it comes to greenhouse gas reduction programs as well. As far as how we're doing moving forward, the timelines, the budget — all of those questions we'll start in the afternoon.

So with that, I cede the floor to my colleague from North Coast, who will start with B.C. Ferries.

G. Coons: Thank you, Minister and staff, for being here today and having the opportunity to look at this huge, huge ministry. The total budget is $170.614 million, and so it's somewhere around $171 million. It is more than four other ministries, so when you look at it, it's a huge, huge budget expense to taxpayers — when we look at it being more than the Ministries of Aboriginal Relations and Reconciliation, Finance, Environment and Agriculture.

I appreciate the opportunity to have a few questions here. I have sent the minister a framework of where we're going and some of the questions that we might get in the next hour and a half or hour and 45 minutes.

I guess the first question is…. I'm just assuming that there are still the five FTEs in the marine aspect of the ministry, but I'm going to get into the budget. The budget, as I said, is about $171 million this year. Previously it was $169.7 million. The total basic transportation fee is what I'm looking at for the minor routes and northern routes. I'm just wondering: is this the same as last budget, at about $91.82 million, for the basic transportation fee for route 3 and the minor routes and the northern routes?

[1015]

Hon. B. Lekstrom: I'll start with a couple brief comments. He talked about the $170 million as the total, but we're talking B.C. Ferries only. The actual operating budget of the Ministry of Transportation is $806 million
[ Page 7311 ]
this year, which is an increase. As well, we will be spending a combined total of $5.3 billion over the next three years on transportation and transit.

You mentioned a couple questions. There is a total of 8.6 FTEs dealing with both the coastal and the inland ferries portion under the marine. The $91 million you talked about as a base did change. There was a $34 million increase in the sense that we now cover the payments on the capital expenditure for two vessels that service the north as well as the refit of the Chilliwack, and that began in '09-10.

G. Coons: Yes, and there's quite a few other sections that make up the $171 million, including the federal subsidy that goes up with the CPI and the social program and the non-regulated routes. But the issue out there that I'm sure the minister has heard about from a lot of the minor routes is that the basic fee has remained constant for the minor routes. Due to the situation…. I start off with the sinking of the Queen of the North, I guess, where there had to be some capital costs put in there due to legislation where it said that it was based on user pay, so there had to be some northern adjustment fees.

But I guess the answer to the question is yes, the basic transportation fee will remain at $91.8 million for this coming year, along with the northern adjustment fee. That is a problem that I think…. A lot of those with the ferry advisory committee chairs are stressing that it hasn't gone up since 2003 — the basic transportation fee for those routes, the minor routes and route 3.

I just want to talk about the net earnings of B.C. Ferries and some of the finances. It is very concerning. In 2008 the net earnings were $37 million. In 2009 it was $9 million. In 2010 it was $3.4 million. So there's a trend for net earnings going down. Interest expenses are up $17½ million over the previous year. In quarter 3 of '09-10 the interest expense was 55 percent of operational expenses, and in the third quarter, 2010-11, the interest expense was 62 percent of operational earnings.

So it seems to be a very concerning situation when you have net earnings down and interest expenses up, and I'm just wondering if the minister is concerned with the taxpayer subsidy of $171 million going into an entity where taxpayers may be put at risk.

[1020]

Hon. B. Lekstrom: Thanks for the question. A couple of things. You referred to the $91 million on the service fee. It's actually $126.3 million. I know that we may differ on the issue of the capital expenditure. If the government hadn't done what they did, the ferries would have been on the hook for those payments. It would have affected…. So I do count that as part of the service fee.

Actually, I don't share the concerns that you've raised. Really, I think it's the sustainability of what we're looking at right now. I know that we may get into discussions. The independent commissioner is embarking on a review to look at affordability and sustainability — two key functions that I hear very loudly and clearly from the residents of the coastal communities.

Just recently the major bond rating agencies confirmed the single-A rating and ranked B.C. Ferries as stable, which is very good news for B.C. Ferries. When you look at the organization, I think that they've done a number of good things. I think the key issue that we hear, though…. I would reflect, probably, the member's comments as well. The affordability is the issue that I hear from the public, saying: "Look, it can't continue to go up at this rate. We live here. It isn't only affecting our families; it's affecting the ability for tourism, for commerce, for business."

I'm hopeful that the review that is just beginning with the independent ferries commissioner is going to bring some recommendations back that can be considered.

G. Coons: Yes, I found it interesting about the review, also, and trying to look at the interest of ferry users with the main mandate of the financial sustainability of the corporation. He's trying to juggle that through whatever legislation he has to work with. But again, with legislation, it's legislated through the act that B.C. Ferries must have a reasonable return on equity. Return on equity basically determines the company's profitability or a company's efficiency, and it measures the corporation's profitability by revealing how much profit a company generates with the money that shareholders have invested.

As the minister knows, B.C. Ferries is required, through legislation, by the commissioner, to maintain a 13.6 percent return on equity. In 2007 they had a pretty good year — 17.5 percent return on equity. In '08 they missed it; it was 12.5 percent. In '09 it was 3 percent. In 2010 it was 1.1 percent. The expected projections by B.C. Ferry Services itself is that in 2011 it's going to be 2.7 percent and 1.4 percent.

Again, going through legislation, you know, they're mandated by the commissioner to maintain 13.6 percent. I'm just wondering if the minister shares the same concerns that I have about this trend and what the minister is going to do to ensure the return on equity is at the legislated percentage.

Hon. B. Lekstrom: With the review that the independent ferries commissioner is embarking on, the return on equity is one of the issues he's going to look at. When you look at the numbers, as you've just pointed out, the trend is obviously going down on the ROE of what B.C. Ferries has been able to do.

Costs associated with operating the ferries are significant, and I don't think that I have to tell the member. Fuel costs alone — we've just recently seen a new fuel surcharge put in place. The reality is that
[ Page 7312 ]
18 percent of the operation of B.C. Ferries is based on fuel prices alone.

[1025]

When we see the fluctuations that we've seen over the last number of years — it seems to rise and fall — it's very difficult sometimes to project around that. Overall, I know that as the independent ferries commissioner, Mr. Macatee, goes to work on this, the ROE is clearly one of the issues that he's going to be looking at.

G. Coons: Yes, and I believe the commissioner looked at other jurisdictions — I think Australia, Sweden and the U.K. — where they have somewhat similar situations in that they monitor or review it every five to ten years. We're coming into probably eight or nine years of a necessary review to look at some of the legislation, including the return on equity.

Now, one other issue is the debt-to-equity ratio. A high debt-to-equity ratio means a higher risk for shareholders. It seems that B.C. Ferries has a fairly high debt-to-equity ratio. Three years ago it was about four to one, then about five to one, meaning $5 of debt for every dollar of equity. Last year it was 4.21, and this year it's 4.35 — all very disturbing numbers because they're very, very high numbers for debt-to-equity and looking at whether or not they're taking on too much debt in order to finance their business. And there's a long-term debt of approximately $1.34 billion, which is quite a number.

So we have the net earnings down, a high long-term debt, increasing interest rates — you're probably at about up to 6¼ percent — a dismal return on equity and rising debt-to-equity ratios. I'm wondering if the minister or staff are monitoring the finances of B.C. Ferries closely. Is he concerned with the liability of the corporation?

Hon. B. Lekstrom: Although you've expressed your concern on the debt-to-equity, I mentioned in an earlier answer I gave you that they were just reconfirmed by the bond rating agencies at their single-A credit rating and marked as stable. So I know that they look at all of these things as well. They have gone through it. They believe it's manageable in the context of what's presented to them. I know that the agencies do a great deal of work when they look at setting the grades that they give them, whether they're going to increase or decrease that.

The other part of it, the $1.34 billion debt that you spoke about, is for vessel replacement. I mean, it's much-needed. I think that the travelling public appreciates the quality of the vessels that we have. There's always work ongoing. But as we've seen in the past and as we look to the future, it is not inexpensive to replace these vessels — that's for sure.

G. Coons: Thank you for that, Minister. I want to get into some fares. It's interesting that you talk about vessels. There's just something in the newspaper today about the Mayne Queen. They talk about the Cadillac service versus the Chevy service, and it seems that the upgrades to vessels are geared towards a certain group, the tourism industry, which is a short frame of time — two to three months — versus the residents that need it.

"Gone are the big, old-fashioned tables and crappy, comfy benches on which passengers would stretch out" on the Mayne Queen as it chugged along. Now they're crammed into these chairs. So there is a fine line between what routes you want the Cadillac service on versus the Chevy service just as a transportation network.

[1030]

As the minister knows, the reason the commissioner has gotten into a review, wholeheartedly supported by the minister, is fares. Just last April there was 3.8 percent on the majors and 6.7 percent on the minors and then the preliminary decision for the performance term three over the next four years of about 18 percent and 37 percent on the minor routes. I totally agree with the minister that they're too high or not sustainable by those who use them daily, and something needs to be done.

There's also a fuel surcharge coming up, 2.5 percent and 5 percent, in a couple of weeks. We've been in touch, whether it's through e-mail or letter or some hallway chatter, about this issue. I think six coastal MLAs sent you a letter about their concerns last week, saying that we need some intervention. I'm just wondering: does the minister have any strategies out there to help those who have been hit with huge fares that are unsustainable, and will he freeze fares until the commissioner has completed the review?

Hon. B. Lekstrom: Obviously, we do share the concern on the fares. But the fuel surcharge that's coming on…. I do know that it affects every one of us. Whether we're talking B.C. Ferries today or our home lives or our businesses, the price of fuel is something that certainly is not in the hands of government — or B.C. Ferries, for that matter. They do have to recover costs.

The commissioner will look at the capital plan as well. Are we driving Cadillacs when you need Chevrolets, as the member has put it, or vice versa? I know that will be part of his review — to have a look at those expenditures as we go through that.

The fares, as I said, are a concern. Is the ability to freeze those fares realistic? As I said earlier in the House, no, I don't think that is realistic. As much as all of the ferry users would like to see that while the review goes on, I do think that we have to be somewhat realistic. The costs have escalated tremendously for the operation of these vessels, and B.C. Ferries, I think, does an admirable job when you look at the on-time service, when you look at the satisfaction levels. I think that the numbers I'm seeing seem very good now at the end of the day.

[D. Hayer in the chair.]
[ Page 7313 ]

Can they be better? Every day, hopefully, that we're here, we think we can improve on what we've done the day before. That's my goal as a minister and my goal as an MLA. So can I tell the member today that I, as the Minister of Transportation, am going to have the ferry fares frozen for the first year of the performance term three as an evaluation is done by the commissioner? I can't realistically tell the member that. I don't think freezing those fares is realistic.

G. Coons: Thank you, Minister. I just wanted to confirm that answer. There has previously been a 33 percent fare reduction that the government put in to help out. I think it was in December-January with the previous Premier. There was a service restoration agreement for the majors in route 3 when there were some issues about restoring some of the service on those. There have been some opportunities that the government took to put money into the system when they thought it was needed.

At this point in time — and I know the minister has met with the ferry advisory committee chairs, who long and hard support what the minister is doing and support what the commissioner is doing and trying to work things out — what they're seeing are just horrendous impacts on their coastal communities and on tourism and businesses and families throughout the region.

Again, I want to look at fuel surcharges, and I did mention to the minister previously that there's one coming up. Previously, in July '05 there was a fuel surcharge of 4 percent on major and 6 percent on other routes. In February '06 there was 1.5 percent and 3 percent, and in June '06 there was 3.2 percent on majors and 9.6 percent on other routes. In April 2006 all of these were rolled into the base fare.

[1035]

When we start looking at fares, and you might just go to the commissioner and look at fare increases…. When you look at fuel surcharges, there was actually 8.7 percent and 18.6 percent rolled into basic fares, which sometimes gets lost in the shuffle.

When we, and especially I myself, start to look at the range of fares — I sort of use a mantra of 45 percent to 80 and sometimes up to over 100, depending on the route — the flexibility is somewhat in there with that. That is one of the reasons that there were significant fuel surcharges that were just rolled into the basic fares and not given back.

Again, in August and November of '08 there were fuel surcharges that were eliminated in December. But for the historic fares, as I said, it's 45 percent to up over 100, depending on the route, an average of 6 percent per year on the major routes and over 10 percent per year on the minors.

I did give the minister a chart there from the ferry advisory committee chairs that look at the minor routes. I think it's labelled there for you. It looks at Tsawwassen to Saltspring over the years from 2003 to 2011. Again, the problem here…. We're looking at round-trip peak, two adults in a car. They're round trips, and they're prepaid. In other words, these are the fares that they've used consistently to get back and forth for work, home, play, school, whatever.

If you look at some of the routes, on route 9 it's 79 percent in those years; Swartz Bay to the southern Gulf Islands it's 92.8; route 4, Crofton, it's 96.4; Gabriola and Thetis, it's 114.9; Denman-Hornby, it's a 128 percent increase over those years; Campbell River–Quadra, 124 percent; Alert Bay, 102 percent; Powell River–Texada, 108 percent increase over those eight years; Quadra-Cortes, 101.9; Bowen, 103.5; Comox–Powell River, 92; Skidegate–Alliford Bay, 125.2 percent; Brentwood–Mill Bay, 54.8; and Keats-Gambier, it's 57.8 percent.

When you start looking at a range, it's very difficult, and quite often when you're trying to talk to the media, you use the KISS principle — you know, keep it simple, stupid. But again, when you look at the impacts in the communities, I think what the ferry advisory committee chairs put together is very significant when we look at fares up to 128 percent over that time frame. That isn't for tourism and the travelling public. It's for those that live in the communities.

I would just like to also echo the concerns of all the surveys. I know that in Haida Gwaii they did a survey. The Association of Vancouver Island and Coastal Communities and the North Central Local Government Association all have resolutions about their issues.

Traffic — in the last five years a million less passengers, a 5 percent drop, and a 3 percent drop in vehicle traffic. On page 3 of Ominous Clouds I gave you, which was prepared for the previous minister by the ferry advisory committee chairs, they look at talking about B.C. Ferries.

In their business plan they forecast 2.3 and 2.7 percent growth in passenger and vehicle traffic respectively, whereas the ferry advisory committee chairs are looking at historic traffic, both vehicle and passenger, and are looking at a decline of 1 percent and 2 percent. We start looking at the rising fares and ridership, and we're seeing traffic decrease significantly, but B.C. Ferries is still predicting a 2.3 and 2.7 percent increase over the years to come.

[1040]

I'm just wondering if the minister has done research on price elasticity with ferries. I know he's quite knowledgable about foreign trade zones and such, so I'm just wondering if he had done any research into price elasticity and if it should come into play with setting fares.

Hon. B. Lekstrom: Member, you asked a number of questions, so I'll try to go through them.

You talked about the fuel surcharge and that it was just then left in and added. Actually, it goes into a fuel deferral account. So at the end of that, if there is excess money in the fuel deferral account, it would be rolled forward
[ Page 7314 ]
into the next performance term review, which would help offset additional costs. If there is more money spent on fuel than the fuel surcharge granted, then that would be recovered as well.

If you get, for simple terms, a 5 percent increase as a fuel surcharge, and at the end of that term you actually only needed 3 percent, it would go forward into the next performance term to help to offset the rate increases. It isn't a windfall by any means, and I think that as we look at the volatility in fuel pricing, it is pretty incredible to watch what's taking place there.

The ridership. I believe that B.C. Ferries has projected zero change on that as we look forward: no net growth and no decrease. Obviously, when we look at the numbers, as the member has said, there has been a trend downwards. I think that it could be reflective of a number of things: obviously, the global economic situation that we face; and I think that it's fair to say that tourism was down, not just in British Columbia but in other areas.

The elasticity. Is it taken into account? Most definitely. I do know that the commissioner has asked B.C. Ferries for information on that as well.

[1045]

Again, a lot of what we're talking about I think is very reflective of what we hear from the public out there, and at the end of the day the issue is: "My fares are going up significantly." You quoted some numbers on those increases. It's good having this discussion. Hopefully, as we move forward….

The ferry increases are not new either. I think the member realizes that between 1991 and 1999 there was about a 70 percent increase in ferry fares in British Columbia. Obviously, that trend has continued — I know we quote — between '03 and today.

There's no silver bullet that's managed to find that solution that says we can keep the ferry fares without an increase. The issue that we have to find is: what is sustainable for the families of this province — not just for the families but also for B.C. Ferries in order to maintain their operation?

G. Coons: I think I got out of there that elasticity is important and should be a consideration, and the commissioner has asked B.C. Ferries for some of that. The reason I have this…. Back in 2006 I asked the commissioner if he takes into account price elasticity when he is looking at fares. You know, I've been doing this for a few years. In 2006, five years ago, the commissioner said: "No, I don't. It's fairly complicated." I've sort of brought out the concept of that. In 1997 there was a price elasticity study based on what was happening. They, back in '97, said that for a 10 percent increase in fares, it leads to a 5 percent decrease in ridership on the main routes and a 3 percent decrease on the smaller routes.

I did find it interesting that B.C. Ferries actually says, and recently have said…. I think it was Rob Clarke that said that B.C. Ferries has been unable to establish any direct mathematical correlation between increased fares and a drop in ridership. That was recently, in the last month or so. But again, in the long-form prospectus in 2004 that they filed with the regulators…. So you have to scratch your head on this when all of a sudden there seems to be a denial going on, that they've been aware of it.

In what they filed with their regulators in 2004, they said: "Changes to toll levels impact the level of demand as customers react to price changes" — in other words, the higher the fares, the fewer the ferry riders. For every 10 percent increase in price, there will be a 7 percent drop in the number of people taking vehicle trips on the major routes serving Victoria, Vancouver and Nanaimo.

So when we start looking at price elasticity, I believe…. I think that many people that use the ferries, and especially the ferry advisory committee chairs who are seeing it daily, are looking at the importance of that, and it has to be taken into account. I think that the commissioner started to do something, and I pass this to you — or portions of it. It's the performance term three traffic forecasts. It was March 2011, and it was prepared for the commissioner by Perrin, Thorau and Associates. I thought: "Great. Finally, we're going to look at some forecasts for the next four years."

Their mandate was to forecast the traffic on B.C. Ferries between 2012 to 2016 and look at historical data, estimate the elasticities of cost of travel and use those to forecast traffic. It's a fairly complicated mathematical report. But in it there are two of them. There's the PTA model — the Perrin, Thorau and Associates Ltd. model — and the Compass model. They were estimating the elasticities and looking at the growth forecast.

I did find the chart here where they're going to talk about the growth forecast. They say that from 2010 to 2016 — that's on, I think, page 2; there's a chart there — the passenger and vehicle will go up 0.1 percent on the majors; on route 3 it'll go up 0.2 percent; on the minors it'll go up 0.1 percent; and on the northern it's going to go down 0.1 percent.

But in their forecast in this report they assumed that there are no changes in B.C. Ferries fares over the forecast period. Even though we know that there are preliminary decisions of 18 percent and 37 percent over four years, both the Compass and the PTA models that put in their forecasts assumed that there were no B.C. fare increases, which I sort of found ludicrous — that you would forecast a 0.1 percent increase in ridership and traffic but you aren't taking into account, in four years, any fare increases.

[1050]

So I'm just wondering if the minister was aware of this report. I'm sure he was, because I think he referred to it. It took me a while to sort it out. And I did contact the commissioner and ask him: "Is this right? Are they doing their report based on no fare increases for the next four years?" And he said yes.
[ Page 7315 ]

I thought that it was significant that they're looking at price elasticity finally, after five years of me trying to figure out how we can incorporate it.

I'm just wondering: if one were trying to, you know, forecast traffic patterns, whether it's passenger or vehicle, would the minister expect that piece of the information to be eliminated? Or does this imply that there are not going to be any fare increases in the next four years?

Hon. B. Lekstrom: The report you're referring to is an independent report, obviously. It is not the commissioner's report. I think you were talking about PTA, for example, as one of those.

When they looked at this, they obviously were dealing with the commissioner, who would have set the terms of reference for these reports. We didn't because he is an independent commissioner. Probably regardless of what happened — whether it be one year ago, six years ago….

Member, what I can tell you is that the commissioner, the new commissioner, is looking at this. He recognizes that there is an issue of price elasticity, and he has gone back to Ferries to talk to them about their ridership numbers and do some work on that. That will be part of — much of — what we're talking about today.

It would be ideal had the report been completed and the commissioner had that. We would have more answers on that. I do think that much of what we're talking about will be part of what he delves into with B.C. Ferries and the public.

The price elasticity thing. I think it would be fair to say that trying to pull numbers and put them together on ridership based on a zero increase would be difficult. But again, I know that the commissioner has recognized that and has gone back to B.C. Ferries to talk to them about that.

[1055]

G. Coons: Thank you, Minister. I just wanted to get the price elasticity story on record just so that people know there is an issue. I do find it interesting.

We talk about the review. I did come across B.C. Ferries' response to the commissioner's preliminary price-cap decision. It sort of took me back, because they hammer at the commissioner's jurisdiction — that he exceeded his jurisdiction in determining the price caps because he's legislated to do this and he's legislated to do that and he can't move on this. They cited three or four other Supreme Court cases with other regulators or commissioners. So I really think it was significant that the commissioner took this into play in trying to figure out his role as far as looking at the interest of ferry users and what he's mandated to do.

Again, I'm just wondering, and a simple question: does the minister see ferries as public transportation and part of our marine highway?

Hon. B. Lekstrom: I'll just maybe touch on the last one, on the elasticity, quickly. As part of the letter from the commissioner, one of the things he will look at, which is bulleted in his letter, is the adequacy of the methodology for forecasting ridership and demand elasticity. So that is, I think, something that will be looked at.

I do see B.C. Ferries as part of our transportation network in British Columbia. I think it is fair to say that as we travel, most British Columbians see it as part of our transportation network. The model has been successful in many ways. I do think that through the commissioner's delving into this now and looking at it…. Are there ways to improve it? Are there issues that need to be addressed? That is the answer and the recommendations that, I'm sure, we're all looking forward to seeing.

The whole goal of why we're here, whether it is government or opposition, is to take what we have today and try and improve upon it.

G. Coons: Again, I'm glad the minister sees it as a vital part, because in the core business areas, ferries come under public transportation, the same as public transit and TransLink, and comparing it to that. That's always been a questionable jurisdiction to put our marine highway under.

But should ferries be classified as an extension of our provincial public highway system? Should it be our marine highway? Or should it continue to fall under public transportation the same as TransLink and any other public transportation network throughout the province?

Hon. B. Lekstrom: To the member: as I said in my last statement to him, I see the B.C. Ferries as part of our transportation network in British Columbia — no question about that. I don't want to predetermine or pre-guess the report and recommendations that the independent commissioner will bring back. I'm sure there will be a great deal of work put into that, and then there will be a great deal of consideration that will have to be put into it by government as a result of this report.

But of the people I've spoken to — whether it be individuals in the north or on coastal communities, whether it be yourself, Member, or others — I think that most agree that it is time to have a look. Is this meeting the intent, and is it working in the public interest? As I said, I think that most people I speak to, since the announcement last week, are very excited about what the outcome of this is going to be.

[1100]

G. Coons: Will the minister commit, in any legislation coming forward — that he's going to put forward dealing with the review — to put coastal ferries back into the realm of the highways act?

[J. McIntyre in the chair.]
[ Page 7316 ]

Hon. B. Lekstrom: I certainly believe the member would know the answer to this. I can't make that commitment, Member. As I said, I'm looking forward to the results of this work that the independent ferries commissioner is going to do and looking forward to the recommendations he includes in that. Then there will be a full discussion and determination of what we can do to improve what we already have in what I think most would agree is probably one of the best ferry systems in the world.

G. Coons: I totally agree. The 50th anniversary of B.C. Ferries — I think we talked about that in the Legislature. The social and economic contract that we've had with island and coastal communities has been strong and forceful in many of those years. We're coming to a bit of a glitch, I think, with the Coastal Ferry Act as we start to look at it and revamp it. We've done it once, but just sort of some governance areas.

Again, I'm sure the minister is aware that B.C. Ferries, under the Highway Act, used to say that a "'ferry' means any vessel" — this is in the definitions — "(a) by which individuals or goods may be transported over water, and (b) that is part of the provincial public highway system."

That was there for many, many years, until 2003. What was added in 2003 was a clause, "but does not include." So "'ferry' means any vessel…that is part of the provincial public highway system, but does not include…a ferry to which the Coastal Ferry Act applies."

The questioning is very significant, because Ferries was actually physically removed from the Highway Act and is somewhere out there, I guess, put in under public transportation. We aren't really too sure. It's in this floating quagmire of something, some quasi-privatized model that we've got.

Those are the significant questions there, because it was physically removed and, therefore, not treated like any other highway system, as far as infrastructure and the necessities that people in your region rely on, whether it's roads or bridges or maintenance of those. So it's a significant question that I asked.

Also, the Tartan Group. I am sure the minister did his homework on that. I gave him a section there with the Tartan Group and what it was. "The Tartan Group is a leading PR firm which specializes in travel, tourism, real estate and resort development." They've been working with B.C. Ferries. B.C. Ferries is one of their clients.

They say, in "How we helped B.C. Ferries": "As B.C. Ferries has grown, we have repositioned it from an extension of the B.C. road system to a travel and tourism product that puts customers in the heart of B.C.'s coastal splendour."

I hope the minister can start to see the dots being drawn here, where all of a sudden in 2003 the government took Ferries right out of the Highway Act, put them somewhere out there and now, under the Tartan Group, this PR firm which specializes in travel, tourism, real estate and resort development, they've repositioned it from an extension of our B.C. road system to a tourism product.

I'm wondering if the minister would consider progressive legislation to stop it from becoming a travel and tourism product, our vital marine highway, and put it back under the highways act.

[1105]

Hon. B. Lekstrom: Obviously, the model was changed in 2003 under the Coastal Ferry Act, but I think what we deal with on a daily basis — if not daily, certainly very close to that — when it comes to ferries is the affordability question.

I don't get a whole lot of other issues. I do get some, and I don't want to sidestep those. But the majority of them is, boy, the cost of the ferry fares. So I'm kind of getting from the question by the member that if you took it back under the government and put it under the highways portion, that would change that. I don't think it would. I pointed out earlier that between '91 and '99 when it was under that model, ferry fares went up about 70 percent.

Under the new model, ballpark about the same, depending on which routes you're talking about. So is that the issue? I'm not sure. What I am looking forward to — and I keep going back to this and intentionally so — is that the independent commissioner is going to look at that. Is the model working? Has it met the intended consequence of good public policy? Is it working in the best interest?

I'm always a believer that we can do things better, Member, than we've done before. Gosh, if we ever get to the point where everything is just perfect in our day-to-day lives and in government…. I don't think we'll get there, certainly not this term, but there would be no need for any of us. All of us, regardless of whether we're on the government side or the opposition side, come to this House to do one thing, and that's build a better province for the people that we represent.

G. Coons: Again, we can look at time frames for fares over the years, but again, we've got to look at where we're going. We need a long-term vision and strategy for B.C. Ferries. Both the comptroller general and the commissioner have said that is missing, and that's been known for quite a while. I hope that as we move forward, we start looking at this monster we've created that is taking a big bite out of our island and coastal communities.

Yes, fares, fares, fares is a huge thing. I want to look at what B.C. Ferries is also getting into. I looked at their website, and it's just completely changed in the last week. I don't know if the minister has an opportunity to do it, but it's looking more like Tartan has got at it pretty heavily.

One of the highlights is the "Nails, Sail, Exhale" program, where the mod way to sail between Vancouver and Victoria is with your feet polished, fingers sparkling and body balanced, heading for a weekend wedding on
[ Page 7317 ]
the Island, if you can afford it, need a manicure, back pain, for a headache…. The C Spa is your mini-spa and your mini-escape.

I agree with the minister that the fares are the key component, but we start looking at some of the initiatives that B.C. Ferries is getting into. It's very mind-boggling. We look at the drop-trailer service that was deemed to have an unfair advantage, and that is still out there going back and forth between the commissioner and B.C. Ferries where he has determined that was an unfair advantage.

Pacific Marine Ventures, which B.C. Ferries got into in 2007, PMV Inc., is a wholly owned subsidiary to pursue strategic business opportunities with commercial traffic tourism and terminal management, like the drop trailer. They spent a lot of money on vehicles to move drop trailers. We don't know those expenses for PMV, but I'm sure that has impacted fares.

We look at: is there a board of directors? What are the impacts on fares with this Pacific Marine Ventures? Also, there's BCF Global Services, which they got into in 2008. It's a wholly owned subsidiary to provide consulting and management services both domestically and internationally.

When you start looking at B.C. Ferries as a marine highway and offering a service to communities, that social and economic contract…. Again, is there a board of directors? What is the cost to taxpayers, and what is the impact of fares on that?

[1110]

The B.C. Ferries Vacations Centre opened in May in downtown Vancouver — 2,700 square feet, an executive platform to launch it going on. Again, those costs must impact fares. I'm just wondering if the minister, with the Vacations Centre…. It says in their latest report: "The viability of opening an additional centre in another geographic area will also be considered." Does the minister think that opening vacations centres when you run a monopoly service — that that's the way to go? And does the minister know any of the total costs or yearly operating costs of the Vacations Centre?

Hon. B. Lekstrom: A couple of things. In the last week I have not had the opportunity to look at the website. I will go, now that you've tweaked my interest once more in that. The spa-like atmosphere that you referred to — it's my understanding that that is at no cost for ridership. That is a revenue generator, as is the drop-trailer service, all of which would, obviously, help to offset any future increases that were needed. Although I haven't had a spa-like experience on a B.C. ferry, I'm sure that many have enjoyed that.

A couple of the things that you talked about really go to the heart of what we're talking about with the commissioner and his review. Under the existing format and model, it says that ferry operators "be encouraged to adopt a commercial approach." Obviously, when they look at that, many people are saying: "They're doing this. They're doing that." My read of it, in reading the act as it presently exists today, is that they're doing what is asked of them under the legislation.

Some of the key issues. Bill 20, which was put forward last year, has now given authority to the commissioner to consider the interests of ferry users. I think it's a very, very key statement right there. The interest of the ferry users is very all-encompassing, and as I said, most of the primary focus is on fares.

There's also the issue under what the commissioner will be doing. He will look and assess "whether the act enables opportunities for cost savings or efficiencies in service levels" and "ancillary revenue maximization."

[1115]

All of these, at the end of the day, whether it's revenue optimization or efficiencies, go towards offsetting any fare increases that are needed to operate, as both of us would agree, one of the best ferry systems in the world.

G. Coons: Yeah. Again, just two more aspects before I get into a gas tax question for the minister.

Again, there's the $9 million Operations and Security Centre with nine people working there — nine in management. Management, you know, in 2001 was at 255. Now it's 412, a 61 percent increase, and even more planned with exclusions. We've talked about the exclusions, Minister, and the concerns that I have and that a lot of people have.

In 2001 there were 255 managers for 40 vessels, at 6.3 managers per ship. Now there are 415 for 36 vessels. That's 11.4 managers per ship. And as I mentioned, again, 155 or 157 more exclusions, pressed for by B.C. Ferries. Does the minister see a benefit of this huge ratio of management to workers?

Hon. B. Lekstrom: With these decisions, obviously, B.C. Ferries makes the decisions, independent of government, on their management model. Administrative costs, though, are not on the rise in that sense.

The other one is that a number of these — you quoted the numbers being 255 in 2001 and 412 today — are not new additions per se in the sense that they've gone out and hired all these people. Many of these are reclassifications. I know you've touched on the most recent one as not being part of these numbers — I think it's what I heard the member say — but many in that number are actually reclassifications from existing non-management to management positions within B.C. Ferries.

G. Coons: That issue is still out there. That's nagging a lot of people. Again, what's the impact on fares with that increase in management?

[1120]

The minister did talk about some of the issues out there, as far as the spa and the drop trailer and how it
[ Page 7318 ]
gets revenue, but only for certain routes, because there's no cross-subsidization. So when these big routes sort of have initiatives to make money, it does not pass into the minor routes.

I was just looking at a picture of the Bowen Queen with her porta-potty on it versus the spa on the big ships. This isn't the only case of porta-potties on some of the vessels on the minor routes and the inequity that is out there.

I don't know if the minister wants to respond to this at all, but the advertising…. I sent a picture over to you of the JumboTron with B.C. Ferries significantly imposed upon it — when the Canucks are scoring that goal — and on the boards. I'm just wondering if the minister thinks this is one of the best ways to put money into the system when we don't know the impact of fares and whatever.

Interjections.

The Chair: Members.

Hon. B. Lekstrom: The advertising spending. I am sure the member has looked at the commissioner's preliminary price cap, where he indicates that he would like to see $2 million out as an efficiency target from B.C. Ferries. Now, I don't know the price on the JumboTron, for example, or where that would get to. But another part of it — and you mentioned, I think, a key factor — is the "no cross-subsidization" from the major routes.

I would anticipate that as the commissioner looks at his review and looks to put recommendations forward, that may very well be in his mindset — that he is going to look at that type of issue and make a determination whether that would be a recommendation he would like to put forward or not, and at that time we would review it and determine what our plan forward would be.

G. Coons: Thank you, Minister, and we all look forward to that.

Before I get into the gas tax, I just have one question about children's or kids' fares on ferries. I got a letter from somebody that their 12-year-old is charged adult fares on B.C. Ferries — still in grade 6.

Again, I sort of compared that to public transportation, because it falls under public transportation. We look at TransLink, and they have student fares, significantly less than adult fares, and they're for students ages 14 to 19 or grade 12 students. But B.C. Ferries — as soon as a student turns 12, they're paying adult fares. The child fare is $7.25, and the adult fare is $14.25 — so nearly double the fare on B.C. Ferries when a kid turns 12. This parent is a bit concerned about that.

If the minister and the ministry are treating B.C. Ferries as a public transportation entity, as it says in their service plan, does he agree that B.C. Ferries charges a 12-year-old the same as an adult?

[1125]

Hon. B. Lekstrom: In looking at this, obviously, any change at 12 years old from $7.25 to $14.25 would be a concern. I share that concern. It seems like a significant increase. I know that a lot of my answers go back to the commissioner's review, but the reality is that I think much of we're talking about today is on the radar of the independent ferries commissioner. He is going to look at the affordability and the sustainability.

I would anticipate and encourage, as he begins this, for the public and yourself, Member, to make sure that issue is put forward to him as a concern that has been raised. How he deals with that and whether he includes that in a recommendation that comes forward is something none of us will know until we see that report. But is a $7.25 to $14.25 increase a pretty significant issue when you turn 12 years old? Most definitely. I would agree.

N. Simons: Thank you to the minister and his staff for being here.

Would the commissioner be open to suggestions as to what to include in his review? Could that include possibly contemplating residents' passes? In the old days, if you were a resident of the Sunshine Coast or Powell River, you'd be able to pay a certain rate, and you'd perhaps have some priority in boarding. I'm not sure how that would work.

Right now we see a lot of reservations, and residents, if they're travelling all the time, may not be able to afford the cost of paying more for reservations. So is it possible to say whether or not that could be included? If the public brings it up with the commissioner during the process of the review, would that necessarily mean that it's part of the review?

Hon. B. Lekstrom: Just to be clear, this is not my review as the minister. It is an independent ferries commissioner's review. But as he has said in his letter that he put forward, he is concerned. He has heard the same concerns, I'm sure, that the member has heard, as well as myself. So I would encourage people to be in touch with the commissioner, talk about what we've just talked about here — the affordability issue.

[D. Horne in the chair.]

Are there opportunities? I can't determine what his response would be, but I believe he is very open-minded. He's got a fresh set of eyes looking at this, and I think he would be encouraging everybody to put forward ideas such as what you've just suggested.

G. Coons: I just have one question — maybe two within one question — about the gas tax. I gave a copy to the minister. Back in bulletin 099 it says: "Effective April 1, 2003, the allocation to B.C. Ferry Corporation of 1¼ cents per litre tax on clear gas and clear diesel is dis-
[ Page 7319 ]
continued, and this tax will be returned to the general revenue fund." It says that the government will support services through an annual grant.

I'm just wondering if the government is still collecting the 1¼ cents per litre on the clear gasoline and clear diesel and if there's a possibility of an estimate of how much that is per year.

[1130]

Hon. B. Lekstrom: Just so I understand the question, Member. I think it was the 1.25 cents per litre on clear diesel, clear fuel, out of the gas tax, the provincial gas tax. If that's what you're referring to, Member, I don't have that answer here today. I will endeavour to get you that. It's a tax question. I will have to go through the Ministry of Finance, but I will get you that answer and get it over to you as quickly as I get it.

G. Coons: Thank you, Minister. There are probably a few questions that we aren't going to get through today, so I'll send them to you.

I had a few questions about prepaid cards and that issue, but I think that we've brought that up on numerous occasions. You know, British Columbians think that it was wrong. British Columbians think that the minister should get involved, and there's a probe by the commissioner.

He can't do much about it, and maybe this was the start to him looking at the legislation, realizing that, you know, for him to actually try to do a job for the public interest, he needs to move forward on this. But it appears to be a huge loophole in the gift card legislation that we brought forward. I'm just wondering if the minister has considered amending the gift card legislation to ensure consumers and families, especially those that rely on our ferry services, are protected.

Hon. B. Lekstrom: Obviously, the assured loading has been quite an issue in the eyes of the public. It was $1.2 million — the total number we're talking about. There was, I think, a great deal of confusion on this. When I first heard about this, there was indication from the public that there was no such thing as an expiry date on these and they would go on. In fact, I have looked into the actual documents themselves. There are expiries. I know that B.C. Ferries actually made an effort.

Now, that's not to try and sidestep the question of: is it a major issue? Yes, and I think that also our commissioner has heard that loud and clear, and he made comments on the public record that he would like to look into this issue. Again, going back, probably in most of my answers you will hear something about the independent ferries commissioner looking at this.

I think what we have embarked on here — I say we collectively as British Columbians but under the leadership of the independent ferries commissioner — is to look at what is working, what isn't working and try and make sure that what we have is a B.C. ferry system that works in the public interest, one that's affordable, one that's sustainable and one that meets, really, the needs of all British Columbians and the travelling public.

[1135]

I think that it's fair to say that as we grow as a province, those demands and needs grow as well. But many times the affordability issue is the fundamental question that we have to answer.

The commissioner, as well, has indicated that he is going to have a look at this. This is a decision made by B.C. Ferries — obviously, an operational decision. But where this will land, I can't speak for the commissioner at this point.

G. Coons: In the service contract that you have with B.C. Ferries under article 2, "Representations and warranties," it talks about: "B.C. Ferries represents and warrants to the province that on the execution of this agreement," they will ensure that they have "sufficient trained staff." Right now there have been many disruptions due to staff. I think, when we look at the FOI that came out with the overtime amounts and the huge numbers of, I believe, 976 people that made over $75,000, it was all overtime.

Then there's a huge concern with disruptions in the ferry service due to, in some people's opinions, lack of trained staff. Especially when we start looking at the exclusions that are coming up…. We went back and forth, and the minister responded to me, and he put it back onto Transport Canada, saying that they will recertify each year to ensure all safety requirements are met.

The problem that I had in the letter was that these exclusions may jeopardize public safety, contravene the service contract, have higher costs and are not in the best interest of British Columbians. With that 155 excluded, where 80 percent of them apparently are not going to take the management positions, it's a huge, huge concern. The officers warn that ferry safety will be at risk. It takes 18 years to become a chief engineer with B.C. Ferries, and there's a huge shortage.

Recently in Ontario there was the Algoma ruling. They tried to do the same thing with Algoma and the tankers on the Great Lakes — very similar. But it's a federal issue, and so the federal board denied Algoma's attempt to exclude the officers.

But is the minister concerned that B.C. Ferries is not meeting its contractual obligations or in the future will not be meeting the contractual obligations if the exclusions happen? Is he monitoring this and ensuring that they have sufficiently trained staff?

Hon. B. Lekstrom: I'm not concerned that safety would be jeopardized. I think that the men and women that work on our ferries and work at B.C. Ferries…. It would be fair to say that all of us share the same vision,
[ Page 7320 ]
and that is that safety is the utmost importance in our transportation network in this province.

You talked about the exclusions that were upcoming. In my study of this, in my term as minister so far, this was a binding arbitration decision. Binding arbitration is exactly that, in my understanding, and I spent 17 years in the labour movement. Parties go to binding arbitration. It's unfortunate that one side here is not agreeing with what the result of that binding arbitration would have been. But it is before the labour board, so it's very difficult to comment. I know they have challenged that decision of the binding arbitration.

[1140]

But as far as safety, no. We have, I think, one of the safest, if not the safest, ferry systems in the world, along with our transportation system that I have the honour of representing as the minister. Safety is our primary focus on everything we do, and that's the first lens that we put on things.

G. Coons: Noticing the time, I'd like to sort of assure the minister that there are quite a few other issues that I want to touch on. It's asbestos on some of the vessels, where B.C. Ferries has been fined on numerous occasions. There are some issues with that. I want to talk about some vessels and the importance of shipbuilding and building in British Columbia and a couple of specific vessels, the Chilliwack and then the Mill Bay. It may be that we can communicate and get some answers on that. Again, a handful of situations very similar to the fares for kids — you know, those types of issues that the minister should be aware of.

He is also aware of the Greyhound situation, where Greyhound used to go right on the ferry and continue on, but now they have to unload and load at both ends. Why? We don't know. All it seems to be is the pressure for whatever. We don't know, but we need to come to terms with that to ensure that it is a viable system.

But again, I started this session today talking about somewhat of a monster that was created with the Coastal Ferry Act. A bit of a visualization might be the teeth of the monster, whether it's fares or fuel charges; the ridership and the impacts on island and coastal communities; the issue of price elasticity; the management issues, whether it's executive and board compensation, which sort of has been dealt with, with Bill 20; exclusion; and we look at being exempt from FOI. It isn't now, but it's still exempt from the Ombudsperson, exempt from scrutiny from the Auditor General and from certain parts of the Labour Code, which are fairly significant.

Another tooth of the monster that has been biting coastal communities might be the removal from highways and part of public transportation, whatever that may be. Look at user-pay, the alternate service providers' mandate that no cross-subsidization…. And the public interest versus making money. The comptroller general had a real concern and said that the only purpose of B.C. Ferries seems to be to make money. So she had a concern with that. The monopoly status and all of the entities it's involved in: the Vacations Centre, the PMV, the BCF Global Services.

There's no long-term vision or strategy, and so all the teeth of this monster that was created in 2003 have taken a bite out of island and coastal communities and of the social and economic contract. A huge bite was taken out of that after 40 or 50 years that we've had with this.

What we need to do is tame the monster, and hopefully the monster is going to be tamed with any more legislation, with input, perhaps, from both sides of the House and stakeholders to ensure that we treat ferries as an integral part of our marine highway with safe, reliable, reasonable, affordable and predictable fares and make it the best ferry system we've ever had.

On that, Minister, thank you so much for your time, and we'll keep in touch with questions that we didn't cover today.

Hon. B. Lekstrom: I will assure you: any questions that we didn't have the opportunity to get to in dealing with B.C. Ferries — if you get them to us in writing, we will get you the answers back as expeditiously as we can.

Also, you mentioned a couple of things. The monster. I'm going to take a moment. It's a new model, without question. I think that with that new model, actually, we were taming the monster that was there. But we can go around that.

At the end of the day the one thing we do agree on — and you can correct me if I'm wrong, Member — is that we have a model. We have a B.C. Ferries system in our province. We agree that we think it can be even a better system and more affordable. I know that the independent commissioner is looking into that, and I think all of us will pay value to the report that we see, and the recommendations.

Also at this time, I am noting the hour. I would move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:45 a.m.

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