2011 Legislative Session: Fourth 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)

Thursday, February 16, 2012

Morning Sitting

Volume 29, Number 4

ISSN 0709-1281 (Print)
ISSN 1499-2175 (Online)

THURSDAY, FEBRUARY 16, 2012

The House met at 10:03 a.m.

[Mr. Speaker in the chair.]

Prayers.

Tabling Documents

Mr. Speaker: Hon. Members, I have the honour to present the Auditor General's report 11, February '12, An Audit of the Ministry of Forests, Lands and Natural Resource Operations' Management of Timber.

Orders of the Day

Hon. I. Chong: In this House I call continued second reading debate on Bill 20, intituled Auditor General for Local Government Act. Should that conclude this morning, we will move on to second reading of Bill 18, intituled Advanced Education Statutes Amendment Act, 2011.

Second Reading of Bills

BILL 20 — AUDITOR GENERAL FOR LOCAL
GOVERNMENT ACT

(continued)

M. Farnworth: The member for Fort Langley–Aldergrove says he has urgent business to attend to. I can well believe that's exactly what he's doing, because if I were him, I'd do exactly the same thing.

Where was I yesterday? Ah, yes. We were talking about….

Interjection.

M. Farnworth: That's right. I was concluding on Bill 20 before I adjourned the debate. The member for Surrey-Tynehead….

[1005]

He wasn't able to listen to what I was saying. He was busy in other conversations, but he did make some interesting remarks yesterday. I think it's important that I take a few minutes in my summation so that he understands why we are opposing this bill, why I am opposing this particular piece of legislation. There's nothing wrong with the concept of a municipal auditor general. It's a great idea. The trouble is the way this government is constructing it.

[D. Black in the chair.]

If they were to have come into the House with a piece of legislation that said we are giving or allocating $2.6 million to the existing Auditor General's office — who are already up and running, who have staff in place, who have experience and expertise — so that they could incorporate municipal auditing functions into their current activities, as was stated by the minister last spring in the estimates debate, that would have been, I think, acceptable to probably everybody in this House, because the existing Auditor General's office is completely and totally independent.

The structure that's being put in place under this piece of legislation is not that way, and the government has failed to provide any justification, rationale or logic as to why it shouldn't be part of the existing Auditor General's office. Instead….

Interjection.

M. Farnworth: The member from Kelowna says that he did in his speech, but the government has failed to provide any logic — no documentation, no studies, no cost evaluations, no value for audits, which the government is so fond of, or says they're fond of, to deal with that particular issue.

You don't need an audit council appointed by the government. That is not particularly independent. What we have right now under an Auditor General is independent. There's no room for bias. There's no opportunity for political games. There's no opportunity for any of that sort of thing.

What you have is an office that has the confidence of this House because the Auditor is chosen by this House. It has the confidence of the public because they understand it is completely and totally independent. That's the fundamental problem with this piece of legislation.

The minister stated last year, last spring, that that was the model they intended to use. Unfortunately, that's not the model that's before us. So we on this side of the House will be voting against second reading of the bill.

Interjection.

M. Farnworth: The member says: "What a surprise." Well, it shouldn't be a surprise. Or no. Actually, perhaps to the government it is a bit of a surprise, because that is one of the fundamental differences between that side of the House and this side of the House. We actually do believe in the independence of our independent officers. We do believe that they should be independent, and clearly that side of the House doesn't. It frightens them. They're not able to control things.

Hon. Speaker, my time is just about up. If I were the designated speaker I could go on for a couple of hours, but I'm not the designated speaker. So I'll just take my place and look forward to hearing what other members of the House have to say in this particular debate.

But we are voting against this particular bill — not because we're opposed to a municipal auditor general, but
[ Page 9200 ]
because we're opposed to a bill that puts in place something that is not truly independent, that puts in place something that…. The government has no business plan. They cannot tell you where the $2.6 million is going to be spent. They cannot tell you just about anything.

We have an Auditor General, their office existing now, up and running. That's the path we should have been following, and it's a shame that we aren't. With that, I take my place and look forward to hearing comments from other members.

[1010]

D. Horne: I am disappointed. I was hoping that the member for Port Coquitlam would go on for longer, but I guess he has concluded his remarks. Obviously, he gave many yesterday as well.

It's a great pleasure that I stand today and speak in favour of Bill 20, the bill that puts in place an auditor general for local government. I believe and, as the Deputy Chair of the Select Standing Committee on Public Accounts, understand the importance of accountability, the importance of a body that takes a hard look at value for money and how it is that government spends.

There have been a number of members that have stood and spoken about our Auditor General and about many of the issues that have been brought forward by our Auditor General. I think in dealing with local governments, it's a very good example of why an auditor general for local governments makes so much sense.

There have been hundreds of recommendations in the last couple of years from our own Auditor General — actually 273, to be exact. Unlike what some have suggested, a majority of those recommendations have indeed been implemented — either fully implemented, some other action taken in order to address the concerns raised or partially implemented.

This is progress. This is change forward. This is why many of the local governments that have been spoken about — Penticton for one, which one of the members brought up yesterday — have said that when this new auditor general is put in place, they are really interested in having this new auditor general, this auditor general for local government, come in and take a look at the way they are doing things because it's the advantage of a second set of eyes.

It's the ability to understand whether you're doing things right or whether you can do things better. I think in government, at all levels of government, we can always do things better. Having the ability to understand how we might be doing things well and how we might be doing things not so well is of great benefit and, quite frankly, can save not only millions of dollars but tens of millions of dollars in the long run.

Local governments in the province of British Columbia spend $4.4 billion each year, which is a considerable amount of money. That money comes from our tax base. That money comes from the people of British Columbia, whether it's in the Lower Mainland, in the Peace region, in the Kootenays or in the Okanagan. It comes from the people throughout the province of British Columbia.

We as government, we as elected people, need to make sure that money is well cared for. Putting in place an auditor general for local government, I think, is a positive step forward and a way that we can indeed make sure those funds are well taken care of.

I will say that similar to our own Auditor General, the way that this has been structured is not to question the policy decisions on what a local government is doing, much like our own Auditor General provincially. The Auditor General takes great care to not question the policy that brought upon the direction that we've gone. His job is to say: "Okay, you said you were going in this direction. Have you been successful in doing that? Have you accomplished actually what you set out to do?"

That's much the same as what this local government auditor general will be there to do — to take what local government is trying to accomplish, what their stated goals are, what they themselves have said they're trying to accomplish and basically making measures and making an assessment of whether or not they've actually accomplished the goals they've set for themselves. I think that's very, very important. It's a huge step forward and something that local governments and taxpayers themselves will cherish in the long run.

There are many things in politics and in government that we look at. It's funny the way that we assess whether we're successful and whether we're not.

[1015]

One of my pet peeves in politics is rather than whether we've achieved a goal, we're oftentimes measured by how much money we've actually spent. So we can spend a billion dollars and achieve very, very little and look at a program and say, "That's really not accomplishing what we wanted to do," and revamp it and spend less money — half a billion dollars, let's say, or $500 million — and actually accomplish something. The unfortunate part is that many groups would then step forward and say: "You've cut the budget by half a billion dollars."

Well, the difficulty is that the ability to assess the actual outcomes, I think, is huge. That's one thing that the Auditor General truly does. The Auditor General gets in, basically brings his audit team in, and assesses whether or not the body has achieved the goals they've set — the goals that they've stated — and whether or not they're actually getting the bang for the buck that they all hope for. In government that should be one of our primary goals.

I ran a business for many years, and it's tough even when you're in a management role because you'll oftentimes have a meeting with someone, a meeting with your colleagues and that, and you'll ask point blank: "Is this project going well? Is that project going well?"
[ Page 9201 ]

Oftentimes even when it's not going quite as well as they'd like it to, their response back to you would be: "Yes, sir, it's going absolutely fantastic. Everything is great." Then they go and struggle to try to get everything on track, but it's perhaps not going as well as everyone hoped. With oversight, even when you're trying your best to make sure you're staying on top of things, there are times when things aren't actually being achieved the way you hoped, the way you envisioned, the way you wanted them to.

You know, it's allowing a third party to come in and give advice and direction and make some recommendations that really can put things back on track, can actually achieve the goals that everyone had in the beginning.

I think that regardless of whether you're on the government side of the House or the opposition side of the House or in local government or a councillor or a mayor or a city manager, those that are in public service…. I think all of us believe that achieving our goals and that we can make our province, our cities and our country a better place…. That's why we're all here, and that's why we spend the time that we're doing.

I also find this auditor general for local government extremely important for the fact that while the auditor general for local government is spending time with different municipalities, the ability to find best practices and share those best practices is significant.

It was mentioned yesterday that UBCM is completely about sharing best practices with municipalities, and I agree with that. I think that UBCM has done some absolutely incredible work in accomplishing that. Quite frankly, the way that our municipalities work together with UBCM is exemplary, and they do great work.

That being said, you don't always necessarily share all of your best practices. Quite frankly, you don't necessarily always know what is working perfect and what's not working perfect. With the many things that our municipal governments — our local governments — deal with, there are many ways to approach things and many ways that they can actually deal with the things they are delivering to the people of their local areas.

When you're off on one tangent, you might not necessarily be thinking about another tangent. While you may be seeking advice during a UBCM meeting as to how to better the direction you're going, oftentimes you might not be thinking about the other directions and the other abilities to do that. So the ability for an auditor general at a local level to make recommendations…. I think it's important

It's much the same as our provincial Auditor General. Our provincial Auditor General makes recommendations. Our Auditor General provincially doesn't tell the government what to do. Our Auditor General makes recommendations, and the government actually has a choice as to whether to adopt those recommendations or not adopt those recommendations — and feels that they're not necessary.

[1020]

As I've said, the proof is in the pudding. If you take a look at what happens provincially, a vast majority of the recommendations by the Auditor General are indeed adopted. Our government says: "Yes, that makes sense. Yes, thank you for that advice. Yes, we want to make things better, and this is how we think we can improve and deliver services better for British Columbians."

So to say that that accountability at a local level, that ability to have that advice and those recommendations on how you're moving forward, doesn't make any sense and that we're simply going to vote against this because we don't like the way it's structured, doesn't make a lot of sense.

The Auditor General of British Columbia is independent in the fact that he reports to this place. He reports to the Select Standing Committee on Public Accounts. His reports are brought forward to this House. That independence is important.

Independence is on a number of different levels. This auditor general for local government will not be reporting to local government. This auditor general for local government will be reporting to the minister in our government. That being said, the recommendations will be made to those local governments, but the broader piece, the broader picture of how local governments operate in their totality, is important. Really, it's the independence from not making a report that is biased because of who is influencing you at that level.

I don't think the report, in the way this is structured, will be biased. I think that the best foot will be put forward. Recommendations will be made that make sense, and the local governments will have the ability to take those recommendations or not take those recommendations. But that being said, best practices will be put forward. Those that are interested in the ability and have the desire to try to improve — which, as I say, I think is really something that all elected people and all those in public service are trying to achieve — is very, very important and very, very good….

I'll take a couple examples of my local area and the people of Coquitlam. Mayor Richard Stewart, who is the mayor of Coquitlam, the city that I represent, has come out in full support of the auditor general for local government. He said: "The office of the auditor general for local government holds the potential for giving local governments an additional tool in ensuring that we are serving our communities as effectively as possible." That's what the mayor of my local area said.

I know that many of the councillors on Coquitlam council share that view. I know that they are indeed working very, very hard to serve the people of Coquitlam. We have a very good council in Coquitlam. We have some very good councils in the Tri-Cities.
[ Page 9202 ]

One of the things happening in the Tri-Cities that I think is a fantastic thing, as well, is more collaboration between Port Coquitlam and Coquitlam and Port Moody and Anmore and Belcarra. That collaboration also saves the taxpayers in the Tri-Cities considerable amounts of money.

I honestly believe that a study and some more work by a local auditor general could, quite frankly, save the taxpayers of the Tri-Cities even more money in making sure there's less duplication within the region, making certain that services are delivered the best they can, making sure that the local flavour of each of the communities that make up the Tri-Cities is still preserved, but making sure that the taxpayers' money that they pay in their property taxes is spent well.

I truly believe that's what this local government auditor general is there for. That's what this local government auditor general is going to accomplish.

[1025]

I look forward to the local government auditor general being put in place because I truly believe that for local governments across British Columbia, it will be a huge step forward. It'll be a huge advantage, and it will be something that, once it's put in place, municipalities — even those that are naysayers — will truly see the benefit and see the advantage of.

You know, I give an example — and it's been bandied about a number of times during this debate — of the member for Cariboo-Chilcotin who, a year ago, was quoted in the paper saying that she didn't necessarily think this was a great idea. I can tell you, she spent time in her local areas talking to her local mayors, her local governments, and she herself, as she said during the debate earlier, has changed her mind.

She sees the advantages of this. She sees the benefits of the auditor general for local government and sees how truly local governments can benefit by having this insight, by getting these recommendations, by being able to improve and to represent and really be more fiscally prudent with the resources that are given to them by their local tax base. As time moves forward, I see more local governments seeing the advantages over seeing the boogeyman in the closet which some are trying to put forward right now.

I see this as a huge advantage. I see the overall accountability that this provides as something that's an incredibly good and positive step forward, and that's why I fully intend to support this bill. I'm very happy that I've had this opportunity to be part of this debate today.

S. Simpson: It's always great to be back here in the Legislature for another session. I'm pleased to have the opportunity to stand in my place and add my comments around Bill 20, the Auditor General for Local Government Act.

The purpose of this act, as members of the House will know, is to create an office of the auditor general for local government — a municipal auditor general, essentially. This is a position or an office whose intention is to provide some — not entirely clear, but some — support to local governments around performance audits.

Now, the problem with this…. I would note, too, that the suggestion is that it will cost about $2.6 million to set up this office. I'm not entirely convinced that is a complete number. We'll talk a little bit about that as my comments proceed.

At the outset I think what we need to do is look at: why a municipal auditor general? What is the purpose for this? It's not about accountability. We know that the accountability measures in place for local government are pretty substantial. You know, we have an inspector of municipalities. We have a level of government that has to balance their budget every year, which isn't able to run deficits. We have a level of government that essentially reports, I believe, in a much more complete way, quite frankly, than the provincial government does.

This is especially true — and I think we'll see another incidence of this next week when our budget comes out — that the government here has continued to manage the budget presentation process that even makes it more challenging for British Columbians to know exactly what is and isn't in the budget. So transparency, the other issue that you might suggest this is about…. Well, it's not about transparency.

In fact, transparency and accountability and the ability to get at local governments are much more complete than what we see here, again, with the provincial government. Local governments — citizens generally have access to them. In most communities there's no question about the ability of citizens to come forward and speak to their local council, whether they're speaking about almost any project you can imagine that goes forward, any significant capital project.

[1030]

People in British Columbia who live in those communities get the opportunity to come forward to talk to their council about whether the projects are appropriate, whether the costing of the projects makes sense, whether it's being done in a way that seems efficient. All of these are things that are available to citizens at the local level.

Is it about good government? I don't see anything in here that suggests to me that this is entirely about good government in any way. What this is about — and it's become somewhat clear — is a half-baked idea that the Premier came up with in the middle of her leadership campaign to become leader of the government. That's what this is about. It was a half-baked idea after she was pressured by the chamber of commerce and the Canadian Federation of Independent Business. So she said: "Well, I'll give you an auditor general." Didn't think about it very much. Now, that's par for the course. We've seen that before, and we'll see it again. But the reality is
[ Page 9203 ]
that that's the situation we have.

So we have this situation. Now, of course, what we know about this is that it got folks, like the chamber and others, pretty excited. They thought they were getting what they really wanted, which is somebody with a stick to deal with the issue of tax policy and property tax policy and industrial property tax policy at the local level. That's what they were looking for.

I think that one of the most telling things…. The B.C. Chamber of Commerce, in a press release on January 18, commented: "The addition of a municipal auditor general is an important part of the B.C. chamber's policy on creating equity in the property tax system." That's what the chamber said, and it was the chamber's belief.

I believe that the chamber thought they were getting a body here who would give them the ability to have a different discussion about property taxes, industrial property tax and, ultimately, who would allow for recommendations to come back and for the government provincially to use those recommendations to be able to force or pressure local governments on property tax matters.

I don't know if that's going to happen or not. We know that the government suggested they were going to do a number of things with this and backed away — and a good thing. A good thing, I would note, that the government backed away from a number of what were initially the more onerous suggestions around this bill.

Now what we have is a situation where, in fact, the minister in September committed to the UBCM, who are not supporters of this…. The debate at the last UBCM made that pretty clear. Now the reality is this. There are some local governments that are very vocal in their opposition. There are others who are quiet about it because their hope is that it will be a body that they will essentially be able to largely ignore and that really won't do anything that will affect them negatively, especially if they stay quiet. Maybe that will work for them.

But what the minister did tell the UBCM in September of 2011 was that this auditor general would not make or overrule policy decisions of elected officials, would not set or order changes to tax rates, would not call into question the merit of program policies or objectives of local government, would not make binding recommendations or impose requirements or duplicate or displace existing accountability measures. Those are the things that it wouldn't do.

So you start to ask yourself…. Most of that is good. We look at the Auditor General here — I think members on both sides in their comments have spoken about the provincial Auditor General — and we know that he and his office do an excellent job. They're very professional. They have a high level of integrity. They're very firm in the work they do, and they do it in a very thorough way.

But for those of us who sit on the Public Accounts Committee, we will all know how many times the Auditor General has said to some of us on both sides, when we've tried to coax him into a policy discussion, that he will not comment on policy. That's not his role, to comment on policy. He tells members on both sides that on a fairly regular basis when we want to take him there. He's very firm about what his parameters are, and he understands them thoroughly, and he doesn't go there.

So if that's the case…. I would hope that this position will also not be commenting on policy. But the problem is that if that's not going to happen, if this is about performance, it raises serious questions about how this was structured and what the purpose of it truly is.

[1035]

In a comment we have seen…. The comments about whether this is appropriate or not…. Some members of this House, and certainly people who deal with municipal affairs, will know well the firm Young Anderson Barristers and Solicitors, one of the eminent firms when it comes to municipal law in this province, and Mr. Bill Buholzer, a lawyer whose specialty is municipal law and is well respected for the advice that he's given and the work that he's given at the municipal level.

It's interesting when you talk about whether or not this makes sense to do this. Mr. Buholzer talks about whether this makes sense in terms of value for money, and he points out some comments.

I'll read a comment from a newsletter that was produced by Mr. Buholzer for that September Union of B.C. Municipalities. He talks about how organizations like the Canadian Federation of Independent Business continue to talk about value-for-money audits and their hope, presumably, that this process will lead to more value-for-money audits. Mr. Buholzer says:

"In this regard, the first and most obvious point that comes to mind is the point correctly made in UBCM's context paper on the municipal auditor general, that under section 171(3) of the Community Charter, both the inspector of municipalities and every municipal council already have authority to require the municipal auditor to provide reports in addition to the annual financial statements.

"Under the charter, the municipal auditor has the power and duty to conduct the examinations necessary to prepare all such reports. This includes reports on, to use the language of the provincial Auditor General Act, whether the government is operating economically, efficiently and effectively in relation to any particular municipal program or project, or generally."

It goes on to say:

"If the province is willing to order these types of audits on particular municipalities or particular local government programs or projects, it already has ample authority to do so."

If that's the case, then we're spending $2.6 million to create an office here to do what the government already has the authority that it needs to do today. So there is no new authority being created by this legislation at all.

Mr. Buholzer goes on to say:

"If the establishment of a municipal auditor general were part of a broader provincial approach to local government finance, putting it on a footing more similar to that of the other levels of government, then having an auditor general similar to the Auditors General dealing with provincial and federal financial matters would make much more sense. As matters stand, however, estab-
[ Page 9204 ]
lishing a largely redundant office to examine expenditures that are already under the discipline of pay-as-you-go financing may be a purely symbolic provincial gesture."

That's what Mr. Buholzer, an expert in this field, has said in his comments — a purely symbolic provincial gesture.

We've seen a lot of purely symbolic provincial gestures over the last year or so, in a wide array of areas, from this government. I assume that this is another $2.6 million symbolic gesture by the government.

The problem with this, though, is that we also know that it can create challenges. Those challenges come in the way that this legislation and this office is structured. One of the most concerning things about this is the lack of independence of this municipal auditor general — the complete lack of independence.

The lack of independence starts with the appointment. This municipal auditor general is appointed by the minister, unlike the provincial Auditor General, which is a selection process from both sides of the House with a recommendation back to the Legislature, approved by the Legislature, to select the independent officer of the Legislature and to put that officer in place, who answers to us as a body — not to a minister and not to the government, but answers to us as the people's representatives.

[1040]

That is not going to occur with the municipal auditor general. The municipal auditor general will be appointed by the minister, will be essentially an employee of the ministry and will be accountable to the minister. That is a huge flaw in the independence of that office. It creates perceived or real problems for many local governments, and we will see that as this unfolds.

The difference here with the provincial situation is that we have an auditor general who is independent. We have an auditor general that we know…. Probably their best expertise is performance audits. I would suggest that's probably what Mr. Doyle and his staff do better than anything — their performance audits. We've been told that the primary purpose of this municipal auditor general will be to do a number of those over any given year in jurisdictions around the province, to be able to provide advice and best practices and those kinds of things.

Well, it does raise the question: if you wanted to invest this money, if you wanted to deal with the issue of supporting local governments, why wouldn't you take the $2.6 million or some portion of it — it may be that you could do it with less than $2.6 million — give it to the provincial Auditor General and ask them to establish a division within the Auditor General's office that would, in fact, accomplish the objectives of this legislation? An independent body, functioning independently — a body that most of us, I believe, in this House, if not all of us, would agree is the thing that they may do best in terms of the work that is done by that office.

But that's not what we're doing here. We're creating an independent office, an office that the government tells us is going to cost about $2.6 million. My suspicion is that $2.6 million is the floor, not the ceiling, when it comes to the cost of this office.

We know, first of all, that you have to put the people in place. We know what we pay for independent officers, and we know what we pay for senior officials. We don't know what we'll pay for this auditor general and for their senior staff — what this will look like in terms of numbers. We're not sure about that. But we're going to pay these people well because they're going to be highly qualified, presumably. They're going to expect to be paid well, and we're going to do that.

We're going to set up an audit council with five members, I believe, with a chair and a vice-chair, and a secretariat presumably to support the work of the audit council. Well, I'm not sure what that's going to cost when you start paying all those people, but it's not free.

We're going to set up an office for this municipal auditor general, and I understand that there already have been commitments made in Surrey to set that office up in Surrey and that those commitments have been made to the mayor of Surrey — that the municipal auditor general will be set up in Surrey. Well, offices aren't free, so we'll have to see what it costs to establish that office.

So my suspicion is when we talk about $2.6 million, we're talking about the low end of this. They may have to audit themselves to figure out what, in fact, they've done here at the end of a couple of years in terms of what the cost of this will be.

For this, as the UBCM said, we're going to create a solution that is in search of a problem. That's the reality. We have not seen the demonstrated problems here, I don't believe, in any general way across local governments that warrant the establishment of this office in this particular fashion.

You know, when we look at what the possibilities are here for this, and it's interesting…. I'll go back. I know the member for Kelowna–Lake Country has made comments about offering up examples from his days in local government in Kelowna.

[1045]

I was curious about that, so I went back to look at the member's comments in his representation over Bill 20. I wanted to go back and look at those examples that he presented up.

Now, let's be clear The member talked about his time. He talked about significant issues around new water facilities and sewage treatment in the Kelowna community and work that was done. What the member said is: "Having said that, after having referenced a couple of these projects, I'd like to say that all those decisions were made with the best intentions, with the best information we had, with excellent administrators who provided us that information." There's no suggestion here — and I certainly didn't hear the member make any suggestion — that there were any problems necessarily with any of those projects that
[ Page 9205 ]
he pointed out as being examples of why you would want to have this auditor general in place.

In fact, he talked about excellent administrators — I'm sure that's correct — and about best intentions and best information and the administration of the project being excellent. That's great. If there's nothing wrong with these projects, if there's no indication that there's anything about them that's a challenge, then is the member suggesting — and maybe he is — that what you want to do is have this municipal auditor general off looking for projects that he can in fact investigate?

Maybe we're going to have to give him a travel budget, because the member went on to say: "I see the role of the auditor general for local government doing exactly that, helping out by doing the research, looking at other municipalities not only in British Columbia but throughout Canada and maybe elsewhere as well."

So we may have to add to that $2.6 million a travel budget to allow them to fly around the world and look for examples throughout Canada and maybe elsewhere as well, which could advise municipalities on value for dollars — whether or not the decisions that have been made and are about to be made, for instance, like I said…. He goes on to talk about the project.

The reality is this. What the member talked about…. I think he talked about good work that was done by the city of Kelowna at a time when he was involved in political leadership there, doing some projects that were important and good projects for Kelowna — all a good thing. But there's nothing in here that indicates to me that, in fact, that's where you would want this municipal auditor general to be putting their time. There just isn't the time there.

We have here an office that you have to ask yourself: "How on earth did this come about?" What is it about this particular project that local governments didn't ask for it? They didn't ask for it. I haven't heard citizens in communities rising up to ask for this. We haven't seen examples that would suggest there is some chronic problem within local government and local government administration and expenditures that would tell us this is a requirement that we should in fact be looking to rein in or provide better advice, because local governments are careening from bad decision to bad decision in need of some support on their performance. There's no indication of that at all.

We have experts in the field who point out to us that the tools all exist today to do any of the things that could happen under this legislation. All those tools exist today without the creation of this office. We have a provincial Auditor General who does an excellent job and would have the capacity — I suspect at a smaller bill — to do this work if it's needed and do it independently — unlike this office, which is going to be appointed by the minister and then accountable to the minister, not to this House, not to local elected leadership, but appointed here and accountable to the minister. That's a very, very large problem if you want to talk about independence.

[1050]

It starts to raise a question about why on earth we are doing this at this time. What is the problem that we are solving? It's not at all clear. What is the value for money that we're going to get out of this that isn't available to us already? It's not at all clear.

The only thing that we know for certain is how this came about. That's the only thing that we can be clear about. This came about by the Premier, during the leadership campaign for her seeking the leadership of the B.C. Liberal Party, being lobbied, responding to that lobby by offering up this position, clearly without thinking about it very much and about what the implications are, offering the position up originally, I believe, to do what those who lobbied her wanted, which was to be able to pressure around industrial property tax rates, rightly or wrongly — to be able to put that pressure on.

Now, of course, in the comments — and I accept the comments of the minister to the UBCM — the government has backed away from that position. Kind of like Riot TV, we've backed away from that position and have said that none of that will occur. There will not be policy advice, there will not be recommendations around tax policy, and there won't be consequences, necessarily — though we'll have to see that. There won't be consequences for local governments based on these reports in terms of the province.

I accept the minister at her word. If that's true, what she told the UBCM, then clearly what those folks who lobbied the Premier-to-be at that time — the candidate for leadership, now the Premier — were looking for and thought they were going to get we now have been told they're not going to get, and that's a good thing.

That's a good thing, that they're not going to get their way to be able to influence policy in this way. But if they're not going to get it, if that's not what's happening, then you begin to say: "Well, then, why are we doing this? What is the purpose for this policy if it's not that?" When you start to then look, what starts to become evident with this, what I start to see, is a Premier who went out and made a commitment without thinking much about what the implications of this commitment were, walked out on that ledge, did that, and is now in a place where all of a sudden she's realized: "I went out and made this promise; I better deliver on this promise."

They craft up Bill 20, the Auditor General for Local Government Act. There's a big push-back — rightly so — by local government about this infringement on local governments' authority and right to do their job. The minister, the government, the Premier ultimately back away from imposing themselves unfairly and in an inappropriate way on local governments' ability to do their job. They back away, and we're left with this $2.6-million exercise. It's very hard to know what the real value of it will be.
[ Page 9206 ]

What we're not going to see here, it's my belief, in this expenditure in this way, is the kinds of solutions that we in fact might need. I don't think we're going to see the kinds of supports that local government might need.

Now, are there tools? Is there research? Is there advice that local government could use around how they do business? I believe that there is. I'm sure that there is. It's probably particularly true, maybe, for some of our smaller jurisdictions who don't have quite the capacity internally to do some of the things that, say, a Vancouver or a Kelowna, for example, could do — larger municipalities that have more resources and deeper staff complements with particular expertise that may not necessarily be available to other governments.

So there probably are a number of things that could be done to support those efficiencies and effectiveness of local government. This is not it, so what is it?

[1055]

Well, it might have been worthwhile at the last UBCM in September, instead of this flight of fancy to fill an obligation that was made by the Premier during a leadership race — without a lot of thought, I believe, behind it — to have said at that point: "We want to help you, local government. Let's have that conversation with the UBCM and the minister about what pieces might look like." If that had occurred, we might have come out with an investment of a couple of million dollars in some tools that would have had real value for local government, rather than the scramble to fulfil a leadership campaign promise.

I would hope…. I know that this will pass, because the numbers are what they are, but there are many, many questions about this. I know that my colleague the critic and my other colleagues will be raising those issues when we get to committee stage — will be talking about this, will be trying to dig down to figure out where exactly the government figures that this legislation is going to take us and how it's going to affect local government.

We will get to see that, but quite honestly, hon. Speaker, there simply is not enough here to justify the expenditure, because we can't see where the positive result is for local government and we can't see where this adds value that is not already there in terms of the ability of the provincial government to act if it sees the need to act around its relationship with local governments.

Sadly, it's not deserving of support. It isn't well considered. It isn't a piece of legislation that moves this province forward, moves our local governments forward or makes this a better, more efficient, more accountable, more transparent place to live, so it doesn't deserve the support of the House.

B. Stewart: It's a pleasure to rise here in the House again and welcome everybody back. I know that the people out there in TV land are watching this debate with interest, but I happen to have a special interest in it, having served previously as the minister responsible for local government. I have to say that I think that this is an outstanding piece of work in terms of what it represents, in terms of the things that we're not hearing, necessarily, from the opposition — the things that, I think, really do stand out. I have some very good examples here.

But first, I want to just thank the members of my riding in Westside-Kelowna and the constituents that continue to support me, even though it's been challenging at times with local issues, and my wife, Ruth, who continues to support me in this endeavour.

You know, first of all, I've got to ask the question: why does the opposition refuse to support safeguarding taxpayers' money? Their job is to oppose; I understand that. But this is particularly disappointing right now. You know, in today's economic climate, taxpayer dollars have to stretch further than ever to meet the demands of demographic change and aging infrastructure, so why has the opposition not voiced support for the auditor general for local government in B.C.? We've heard a lot of negativity, a lot of reasons why it was some sort of impulsive decision.

I can tell you that when you turn the clock back and you look at September of 2008 — and really, things changed for governments, not just the provincial government but local government — the reality is that the tax dollars coming into the provincial coffers were reduced because of the economic climate. The tax load on…. Many of the businesses that are in our communities were under significant pressure. Those communities raised the flag at that time that they needed help, and they asked for help. Of course, we took a very thorough approach to that, and we looked at, you know, local taxation on businesses that were the job generators in their communities.

I have to really say that some of the communities…. Take, for instance, mayor Stephanie Killam up in Mackenzie. They took reserves that they had, and they offset taxes against their industrial users to help lower the tax load, not only on them but on local taxpayers, just to be able to keep those businesses, hopefully, with the hope of them re-opening. It worked in Mackenzie.

[1100]

Powell River, another community, which the member for Powell River–Sunshine Coast represents, really was creative with Catalyst Paper in terms of trying to find innovative ways in their community to help offset and reduce that load.

But what about the other communities? What about Campbell River? Catalyst Paper shut down there, and that was because of an approach of inflexibility. What about Eurocan in Kitimat? Was taxation a consideration there, when they have the highest industrial taxation rates in the province of British Columbia? Are they getting value for money in all of those communities?

We need taxpayer dollars to stretch further. Auditors General ensure the public knows that they are getting value for their tax dollars. Income tax, business tax, prop-
[ Page 9207 ]
erty tax — the taxpayer doesn't care. It's still money coming out of their pockets. They want to know that their money is being spent wisely.

[L. Reid in the chair.]

Value-for-money audits have led to improvements that have literally put money into the pockets of taxpayers. The auditor general for local government would be able to help the 188 communities in British Columbia learn from each other by highlighting and sharing best practices to ensure that when one municipality gets it right, everyone can benefit.

It won't cost local governments either. The whole idea is to help them save money. The B.C. government will cover the expenses of the auditor general for local government. But as local governments save money, it's our communities that will reap the benefits.

There seems to be talk from the opposition that the inspector of municipalities can do the job of the auditor general for local government. That's not true. For the benefit of our friends across the aisle, let me explain.

The inspector's primary role is to approve local government's long-term capital borrowing and other financial instruments, such as development cost charges. It could be perceived as a conflict of interest for the inspector to approve borrowing for a project and then judge whether the local government has implemented that project most effectively and efficiently.

The inspector's role is supervisory, and it is focused on helping ensure the financial stability of local governments. The auditor general for local government's role will be advisory and focused on assisting local governments achieve efficiency and effectiveness in their operations. The auditor general for local government would be independent and report through the audit council. The inspector of municipalities reports to the minister through the deputy minister of this ministry.

Qualifications of the auditor general for local government are specialized in nature. For example, he or she must be a certified auditor. You know, there have been statements made about the lack of independence. Well, right now we're looking for five very qualified British Columbians to make up the audit council, and the selection process is open. Anybody can apply for it, provided that they have the qualifications.

I think that it's important that the qualifications are that they have experience in local government, auditing, accounting, a legal profession. Those are the people that are going to be guiding where the auditor general for local government looks, by looking at the service plan, approving it and providing the scrutiny that the auditor general for local government will have to meet.

The duties required for the auditor general for local government cannot simply be just added to one other position. Some might ask why it can't be added to the Ombudsperson to fill this role. Well, here's why. The Ombudsperson is an independent officer. However, his or her authority is to review administrative fairness in government processes, not matters related to the efficiency and the effectiveness of local government operations. As well, the Ombudsperson acts in direct response to citizen complaints. The auditor general for local government is not about increasing provincial supervision over local governments.

The auditor general for local government would provide an independent opinion about the effectiveness, efficiency and economy of local government programs and stewardship of local government resources. An auditor general for local government would decide independently on what audits to conduct and would not be fettered in its ability to report its findings.

[1105]

The auditor general for local government, with respect to autonomy and accountability for local governments, which is entrenched in legislation such as the Community Charter…. So it will not interfere with that.

I don't understand why the opposition would not support an auditor general for local government. Who can possibly be against accountability? Well, let me read you a quote. "Now, the idea proposed by Ms. Clark is that a municipal auditor general would actually make municipalities more accountable to taxpayers, which is a good idea, a great idea."

Deputy Speaker: Member, please refrain from using names of individuals.

B. Stewart: Sorry, I take that back. I apologize.

The transcript is from Hansard. The accountability to taxpayers. That was said by the member for Fraser-Nicola. Who can possibly be against keeping property taxes down? Who can possibly be against helping local governments make the best possible decisions? Unfortunately, the answer is: the opposition, our friends in the NDP.

So you ask: why is it required? It's required to keep property taxation affordable for families in British Columbia. The auditor general for local government will help us put families first, something that we are deeply committed to. Yes, property taxes are a municipal responsibility, but there is only one taxpayer.

Why would the opposition oppose every effort to ensure that all the levels of government are using tax dollars efficiently? Increases to property taxes have a direct and obvious consequence for families and businesses. There are lots of reasons property taxes increase, but one is very preventable: project cost overrun. Municipal governments, especially in small towns and regional districts, simply don't have the same staff and resources. Access to an auditor general would help them serve their community.

But I want to talk about something that's in my riding.
[ Page 9208 ]
There is a great example of this. The Central Okanagan regional district sought to build an arena. The district, approached by local citizens, held a referendum to approve construction. The referendum set the borrowing limit of just under $3.3 million to pay for it, on a $5.1 million construction budget.

The final budget for the arena was $12.7 million. That's more than twice the cost. And you know, that $12.7 million didn't include a lot of the finishes that were promised. It didn't include a working geothermal heat exchange plant. The bottom line is that taxpayers are still paying for that arena way more than what they'd approved in their referendum.

I'd like to quote Marshall Jones from the West Kelowna Journal from an article that he wrote on March 5, 2009. "The elected members of the district of West Kelowna council have been open and vocal critics of the expansion at Mount Boucherie arena."

Here's a quote:

"But the rising costs, management mistakes, disastrous decisions made by politicians that threaten to define the arena is the giant white elephant in the room no one can ignore.

"In a 2003 referendum taxpayers approved $3.2 million in long-term borrowing for a $5.1 million budget for a second sheet of ice and the clearly stated promise of no new taxes. Instead, taxpayers are on the hook for an additional million dollars per year in short-term borrowing, and every penny they have paid since the 2003 referendum has already been plowed back into the building….

"Where the millions in cost overruns came from, to be honest, I don't understand."

It was a quote from one of the regional directors.

"We have been pushing to get a review of what happened with a view to ensuring that whatever did go wrong won't go wrong in the future."

Mayor Doug Findlater and Coun. Duane Ophus are West Kelowna representatives to the regional district. They have staff on notice that they expect a full accounting of the cost overruns and construction delays. The regional district hasn't yet done that review because it's waiting for time limits to expire over litigation over the project.

[1110]

That's a total of $7.665 million in overruns — 150 percent over budget. Who's going to end up paying for this? The taxpayer. You know, that's an additional $650 per household for the 11,800 homeowners in West Kelowna. How does that happen?

Well, I have a report here from the chief financial officer of the district of West Kelowna. Let me read a quote in a public letter that's on the district's website from Jim Zaffino:

"Throughout the life cycle of each project, lessons can be learned and opportunities for improvement found. In striving for continuous improvements, documenting the lessons learned helps the project team discover the cause of problems, learn from them and minimize them in future projects."

Mr. Zaffino goes on to say:

"Among the causes of the cost overruns were construction delays, defaults by contractors, adverse weather conditions and a volatile construction market. As well, the scope of project changed both dramatically and frequently from inception to completion. The regional board had a number of budgets presented to it for approval with an original budget…of $5.112 million, and the last budget presented…October 10, 2007, for $12.774 million."

It's important to note or point out why this happened. Nobody in West Kelowna wanted this project to overrun. The district of West Kelowna's council report on the arena that they refer to as lessons learned — this is the type of performance audit that the local government auditor general will provide to communities so they don't make these mistakes and so they learn that when they set out to do a project, they know how to bring it in on budget and on time.

Those lessons that they've learned in obtaining the public's consent when the anticipated project cost increases…. Having senior staff directly responsible for completion, having success defined as on budget, having adequate controls and clearly defined accountability — none of these were spelled out or defined beforehand, and that's how a project becomes over two times more expensive than planned for.

These things are precisely the reason that we need an auditor general for municipal government. This is the kind of program an auditor general for municipal government might look at. Council made a decision to build an arena. The community approved the decision to borrow in a referendum.

The question is how well the council decision was implemented in terms of economy, efficiency and effectiveness, and the proper stewardship of assets. The scope of West Kelowna's arena project increased dramatically from the original referendum question. The auditor general for local government's role will be to provide objective, neutral and non-binding third-party advice and recommendations depending on what makes sense for their communities and the priorities of their citizens.

It's important to note that this is all voluntary. Local governments can decide whether or not to act on these recommendations. The district of West Kelowna's experience with Royal LePage Place is exactly why I support Bill 20. The district of West Kelowna inherited this problem. They didn't create it, but I can tell you that they looked and they've learned from this experience, and boy, they don't want to repeat it.

You know, they're a great district. They're new, and they're faced with lots of challenges, lots of infrastructure and lots of taxpayer dollars going into it. And of course, they're faced with the inevitable things of they're a new district and they lacked infrastructure. Just a week ago they had to raise property taxes.

The auditor general for local government will independently select local governments to be audited, which is one reason that the office's performance itself will be monitored by an audit council appointed by the province, helping to strike a fair balance between independence and accountability.
[ Page 9209 ]

I want to take a minute just to — from my own experience in business — talk a little bit about property taxation and what it really means. You know, when I started building my business, property taxes were not really a very big concern. Today the number of property taxes is well into the six figures on the operation that we built up, and I don't mind paying those taxes. All I really care about is the fact that we get good value and we use the money wisely.

[1115]

The other thing that concerns me is that if it's not used wisely, it affects the people that work there. You know, over a hundred people count on having a job at my former business. Some of those people — single moms that have a family at home; maybe they've bought a condo — have to pay those taxes too, and those increases come right out of their after-tax income. I want to make certain that what we do in the province is that every person that's working has that same opportunity to keep as much of their tax dollars so they can raise their families and put their family first.

Our caucus supports the municipal auditor general because of their own experience. There are nine former mayors and six former councillors in our caucus.

I spoke to our two mayors that are in the riding of Westside-Kelowna. Mayor Walter Gray met with the opposition in terms of their pre-meetings prior to this bill being debated in the House, and he was led to believe that this was something that really was unnecessary and that it was really about second-guessing the audits that were going on in their communities. I'm not certain that he was led to understand that it was about performance audits.

Now, the city of Kelowna, as my colleague from Kelowna–Lake Country mentions…. What a great community it is. It has won North America–wide awards for its governance, its performance and being able to bring things on. We want to highlight that so that other communities can share in the spotlight what the city of Kelowna and Mayor Walter Gray and his staff — very competent staff at the city of Kelowna — and his councillors provide to the city.

They know firsthand how valuable an auditor general for local government would have been in the situation, had they had the responsibility of the Royal LePage arena in West Kelowna. But it's a resource that wasn't there at the time. It's certainly about using best practices.

Consider these hypothetical examples. Is garbage collection picked up in the most cost effective manner? Can it find operational savings? Can a given municipality optimize its fire services by delivering the service itself or through a contract with an adjoining municipality? Did funding for the new water conservation education campaign achieve its objectives of reducing water consumption during peak summer usage?

There are lots of people that want to make certain that their communities do things effectively and make certain their tax dollars are being used. I mentioned the single mom that works at my business. I know that a friend of mine that's a retired senior manager from Farm Credit and his wife, a health care worker, are concerned about continuing property taxes and increasing taxes and the impact they're going to have on their retirement.

I know a small business owner that operates a bottle-return and recycling operation. He's taken an old business, and he's taken the opportunities that the government have given him to recycle everything from paint to batteries to electronics. He and his family recently arrived from Korea. I have to say that he understands taxes, and he's happy to pay, but he expects government to work as hard as he has had to work just to be able to make that money to be able to pay those taxes.

The auditor general for local government's role will provide objective, neutral and non-binding third-party advice and recommendations — recommendations that local governments can decide whether or not to act on, depending on what makes sense for their communities and the priorities for their citizens. British Columbians will be able to look at the audit reports produced by this office and see how their money is being spent so that they will know just how important open government is.

I think that one of the things, when we say that lots of councils have expressed opposition…. They said: "Well, we have audited financial statements." That is a requirement, but we're not looking at the audited financial statements. We're looking at the performance of how they spent the tax dollars to get to the point where those tax dollars are being spent.

Again, I want to conclude with the fact that I am supporting this Bill 20 because I think that it's good for taxpayers in British Columbia. I know it's good for families. I'm pleased to support this, and I look forward to this bill being voted on — hopefully, later today.

[1120]

R. Fleming: I appreciate the opportunity to rise and debate Bill 20. It's been an interesting debate. Members have made interesting comments. I think that at this point in second reading the observation I can make is that members on both sides of the House have spoken well to the merits and importance of the function of an auditor general in a system of government like ours at all levels — federal, provincial and municipal.

So there really isn't a disagreement about the function of the office, its importance, its record of achievements in improving government financial practices in its capacity and ability to make recommendations that when acted upon reduce government waste and improve practices that make politicians, for example, more accountable. All of those things have been spoken to well by both sides of the House.
[ Page 9210 ]

But, unfortunately, what we're dealing with in Bill 20 is a bill that this side of the House believes is critically flawed in many respects, that is radically different from models of how an auditor general ought to be set up for our level of government, but equally so at the municipal level of government.

It is radically different from the other models that we see in other parts of Canada. It's completely at odds with the principles of independence and transparency that British Columbia practises in the relationship that the independent officer, the Auditor General, has with this House.

So why would the Liberals, why would the government, support creating an auditor general model that does not meet the tests of the Auditor General that we hold ourselves accountable to here in this chamber? That's a question that that side of the House has failed to answer at this point in debate.

You know, when the Auditor General for British Columbia was created in 1975 or 1976, it was done with careful consideration and study. British Columbia was relatively late to the game, it must be admitted, in creating a provincial Auditor General. The House of Commons in Ottawa had had one for many, many decades, the House of Commons in the United Kingdom for hundreds of years, and other provinces in Canada had Auditors General. It was a critical function, a watchdog and an accountability mechanism that was missing from this place.

The government of the day in its wisdom sought to fix that problem. They engaged the public, they engaged the accounting profession, they engaged all of the stakeholders, and they engaged all of the parties represented in the Legislature. The legislation was considered, it was well-drafted, it was reviewed, it was redrafted, and it was put before this House for debate at considerable length. And you know what? We got good legislation.

We created a B.C. Office of the Auditor General that is now recognized in Canada as among the best, whose employees are called upon to serve in other parts of the world to make their audit offices function as well as the one in British Columbia does.

I can count on one hand the number of times that the B.C. Auditor General Act has been amended, because it was done right. It was drafted properly, it met the tests of independence and transparency, and the Auditor General in British Columbia has a history, because the legislation was well-written, of being able to do his or her job free of political interference, free of budget constraints set by executive in cabinet. Those are the things that are missing from this bill, and those are the reasons why this side of the House believes the legislation is flawed.

The best argument I've heard mustered from that side of the House — and it is not a good argument — is that it's better to do something and pass a bill that people vaguely understand, that at least speaks the language of accountability and transparency and that advances, in some form, performance auditing that is missing today in municipal government. That's the best they can do.

They're arguing in favour of legislation that they ought to know or that they do know is flawed. I've heard people from that side of the House, the government side of the House, who have backgrounds in local government speak in favour of this legislation, speak in favour of what it potentially could do to make local government more accountable. But they are not adequately scrutinizing the contents of this bill.

[1125]

I want to speak very critically of sections of this bill here this afternoon. I realize we're at second committee stage, but I think it's worth going through some of the sections to remind the members on the opposite side of the House that in the most crucial tests of whether this legislation is good or not, whether it's transparent and independent from politics, critical sections of the bill fail.

I think the best way I can put it of what is at risk in this debate and why passing flawed legislation is potentially going to be a big problem down the road…. I mentioned it rests on the test of independence and freedom of political interference.

The central problem here is that this municipal auditor general is appointed by, beholden to, reports behind closed doors and is essentially controlled in their workplan of what their purview is by a minister of cabinet, by the executive branch of government. That is radically and fundamentally different than the concept of the auditor general as we know it in Commonwealth democracies — radically different.

I think the problem with this legislation and what the government is going to have to explain and has failed to explain so far is how they are going to manage that risk that this municipal auditor general could become the minister's lap dog — not a watchdog for the taxpayers and the public but somebody who is controlled and sat upon by a minister of the government.

Now, we've seen the government act in recent years. In fact, last year it decided to appoint people that report directly to them to go and audit school boards — for example, performance audits looking at governance, looking at administrative practices in schools — and to make recommendations to government that are shared with the school board through the media — school boards that are politically at odds with the government. The selection of the audits and reviews are very suspect, and it has caused a lot of damage amongst the relationships between school trustees and their provincial organizations and this government.

We run the risk in this legislation of creating the same kind of rift with municipal governments because they do not have control or input, as they properly should, through Bill 20, as they do, for example, in Nova Scotia, where the provincial association of municipalities is directly involved in guiding and seeking input to the work
[ Page 9211 ]
of that office. Nothing like that exists in this legislation in British Columbia.

I find it interesting that we're having this debate in February 2012, just a few weeks after the Liberals, and the Minister of Transportation in this case, rejected a call by mayors in Metro Vancouver to use the independent audit powers of the Auditor General of British Columbia to come into Metro Vancouver and audit TransLink to see if the efficiencies and business practices of that corporation are performing well and to a standard that one would expect, to see if there is waste in the system that could be reduced.

The government side that is sitting here talking about problems in municipal governments and, in some cases, inventing some very bizarre situations is the same government that outside of this chamber is denying mayors the request to come and have organizations that they contribute property taxes to audited. That's crazy, Madam Speaker. That's crazy. The government could do that. They have the ability to do that under existing legislation. Why wouldn't they do that? Nobody so far has said, on that side of the House, why they've refused that request.

[1130]

I think that other members have spoken well to why we're talking about a municipal auditor general at this date and time. It's different than in the mid-1970s when this chamber was talking about a B.C. Auditor General. There had been a number of instances where British Columbia could no longer sustain not having an auditor general — bad practices by government. An agreement was reached by all parties in the House to pursue an auditor general. There's nothing of the sort that would form the context or background for why we're having this debate.

It is, as I think my colleagues have said quite rightly, an idea born of a leadership contest of a party that was forced into that situation because of the resignation of the Premier. It was an idea that was born out of a chamber of commerce breakfast where leadership candidates came to pander and pitch for votes. That's how we got here today.

What is interesting…. I think that when you look at the campaign of certain anti-tax lobby groups to create this legislation under this flawed model, what they want is an auditor general in name but clearly not in function. They want an office that will go in and second-guess and overrule policy decisions on taxes and other types of public spending by elected officials — elected officials who are voted in and accountable to their constituents. They want an office that can be politically directed by the province of British Columbia to go in and overturn local government decisions that they don't like.

Now, the Union of B.C. Municipalities clearly saw that as a warning and a risk, a gross intrusion into their jurisdiction, and pushed back. Their convention in September, I think I would be putting it mildly to say, was quite grumpy to this idea because there were a lot of outstanding questions about how this office would work and what would be in the legislation. They eventually hammered the government down to abandon the idea that there would be a so-called auditor general that would come in and do the bidding around tax policy decisions that are rightly the job of elected councillors at the local level. So that's off the table.

Still, these anti-tax lobby groups have captured the minds of the Premier's office, primarily, and set in motion a commitment, if you will, to check this off a checklist of things. The Premier, who doesn't have a lot of ideas about other things that are key priorities in British Columbia right now, is still living under the illusion that it will be able to do that.

Well, not according to the bill that we're talking about today. Tax policies, tax rates, financial decisions are not for an auditor general to second-guess. Performance, results and inquiries about how spending is done is the purview of an auditor general. But still, the government wants to maintain the illusion that they are securing something for interest groups who they are captured by, which is in fact not the case.

I think it's interesting. I said at the outset of the debate that in B.C. we're talking about a municipal auditor general model that has been rejected by other provinces. This is not the model they use in Quebec; this is not the model used in Nova Scotia or Ontario.

There, legislation was crafted to deal with the fundamentally important question of independence, to protect the Auditor General from being accused of bias, to ensure that the office receives the trust and respect it needs to do its work and does not have the appearance of being a political plaything. It's also the model that this government rejects by making this an auditor general that is really an appendage of the minister — hired, fired and privileged to the minister, in a special relationship with the minister.

That's a model that is rejected across the world. In fact, from my time on the Public Accounts Committee, one of the key things that was going on with parliamentarians around the world that were combatting corruption in government was to look at strengthening the role of audit offices in Commonwealth countries.

[1135]

The World Bank, the International Monetary Fund, the Commonwealth Parliamentary Association were funding projects on how to make government function better. One of the things that they discovered was a crucial problem — in places that were seeking to improve their governance from excessive abuses by the executive branch of government, in particular, and to reduce political interference and to improve accountability to citizens — was to take the Office of the Auditor General, get it out from being under the thumb of the political leadership of government and give it back to the entire legislation and, through them, the people of their jurisdictions.
[ Page 9212 ]

That's the common practice and thrust of parliamentary good practice around the world. It's going to be very interesting when other jurisdictions see that, contrary to all of the recommendations of how an office of the auditor general should be run, British Columbia is thumbing its nose at now decades of work to improve the independence and function of audit offices. We're moving away from that here in British Columbia.

Now, the other thing that is interesting too, and this speaks to the credibility of the government to even introduce this legislation in the manner that it has, is to look at the B.C. Liberal record on value-for-money audits and performance reporting. I want to talk about that audit product that the Office of the Auditor General performs.

This is a government that has been the subject of scathing value-for-money audits in recent years. It is a government that has not taken the advice and recommendations of the Auditor General in critical ways over the past several years.

We have, for example, $83 billion worth of debt obligations to every man, woman and child in British Columbia on the books in B.C. — and I say "on the books" — in a single notation that is not disclosed according to international generally accepted accounting practices, that the Minister of Finance continues to fight the Office of the Auditor General against providing more transparency to — $83 billion. It's twice as much as the other recorded debt on the books in B.C., twice the value of the annual budget of British Columbia — 200 percent of the budget, ballpark, that we will debate next week.

So for this government to have the gall to go out and tell mayors and councillors — who are scrutinized and borrowing money according to borrowing authorizations that often include referendums and electoral assent to build rec centres and community centres and those kinds of scale projects that are probably in the millions or perhaps tens of millions of dollars — to thumb their nose at generally accepted accounting principles and provide no transparency on $83 billion of contractual obligations, primarily contained in public-private partnership agreements not subject to scrutiny and disclosure, is incredible hypocrisy. It is incredible.

It says, I think, a lot about what the charade of this bill is. When British Columbians are looking at the performance of their provincial government on so many failed fronts, this is a bill that is designed to say: "Don't look here; look over there. Look at the municipal government." I don't know where they get this from.

Open a newspaper on a daily basis. You don't see scandals and financial misappropriations happening at the municipal level. Municipal governments have their challenges, many of them brought on by this government and its persistent efforts at downloading responsibility and costs to them — which, by the way, are driving the tax discussions that others are having around property tax rates. There is that. But as it has been said by the Union of B.C. Municipalities itself, the legislation and the manner in which it is introduced is really a solution in search of a problem.

[1140]

Let me go back to the B.C. Liberal record of value for money. I interrupted my flow by talking about the contractual obligations, although that is the largest sum of money that has absolutely nothing beyond a single-paragraph notation in the audited statements of the province today, and that is incredible.

But let's look at the dispute that the government had with the Auditor General's office on Olympic Games commitments. For years the government disputed audit practices that were used in Australia and other countries that hosted the Olympics to ascribe properly the global budget for hosting the Olympic Games. The government kept saying it was in the hundreds of millions of dollars for the total cost of the Olympics. The Auditor General said it was in the magnitude of $5½ billion.

That fight went on for years, and we still have not resolved it. That's an important piece of background information about this government that is introducing this legislation, because they have earned a reputation where they ignore the advice of the province's top accountant, the Auditor General.

[Mr. Speaker in the chair.]

There are so many important value-for-money audits in recent years, too many to mention, but one of them that I think is particularly important to local government is a very helpful audit on the homelessness crisis in British Columbia. It's only a couple years old. But it contained very stinging, difficult-to-hear findings for members of the government side.

The conclusion was that the province did not have any strategy for reducing homelessness. The Auditor outlined that there were no clear goals or performance targets or any accountability for results in its initiatives around housing and homelessness. So what the Auditor General said was that the government has not defined how it will be judged in terms of its success in reducing homelessness. This is a goal that everybody agrees to, but there was no performance plan or targets or anything to be held accountable to.

Now that was a key finding by the Office of the Auditor General. It was a performance report, and it was completely ignored. This is the government that is now saying, having ignored its Auditor General for almost 11 years in office, that they wish to create an audit office to do performance evaluations on our local government cousins. Well, having failed to listen to the Auditor General on so many occasions, it's incredible that they would prescribe this to local government at this point in time, Mr. Speaker.

I want to go through the sections of the bill that are problematic. I think members have spoken incredibly well
[ Page 9213 ]
to the points of why this bill fails the test of independence and transparency. Local governments are well-scrutinized in almost every aspect of their function. The one gap is around performance auditing. So this side of the House agrees in principle that we should have a municipal auditor or that we should have an auditor general that has the ability to audit municipal governments.

You know what? That could be done with two words being amended to the Auditor General Act of British Columbia. That could be done, and I want the member for Westside-Kelowna to hear this because he's talked about stretching tax dollars. The B.C. Office of the Auditor General has said that it can do and perform the function of a municipal auditor general, at this time of reduced resources to the province and a lowered treasury. It can do it for 50 percent less cost than this new bureaucracy the government proposes to create and locate in Surrey. Also, it can be done seamlessly and immediately.

Other members have said that British Columbia's audit office is recognized as the leader in Canada for performance-reporting audits. Who is going to come and get the training on how to do municipal performance audits? Where are they going to go? They're going to go to the Office of the Auditor General. Well, let's eliminate that step entirely and have them in charge from day one. We could put a new bill before this House which would have to include two new words in the Office of the Auditor General: add responsibility for local government.

[1145]

It would be done tomorrow without bureaucracy, without waste. It would be the cost-effective way, and it would be the most effective way to get the quality of audits that I think mayors deserve, the public deserves, taxpayers deserve.

The government side refuses to do it. They know it can be done because the Auditor General told them it could be done that way. They know it can be done because the Union of B.C. Municipalities told them that was the preferred way to go.

They know it's the right thing to do, because every parliamentary jurisdiction in the world either has or is being urged to create greater independence and transparency of their auditor general offices, and they're going to the old politicized version that has been condemned as one of the things holding back developing countries.

I want to make a few points on the bill itself and the sections here, and I'll be very quick.

I have said and other members have said that this legislation is flawed and not worth passage because it fails on the test of transparency and accountability. Let's look at it beginning in section 2, the appointment of the auditor general.

Who appoints the municipal auditor general? The cabinet minister responsible. The cabinet minister. Who dismisses the auditor general should it come to that? The cabinet minister. How do they do it? Do they do it in open session? Do they do it with a parliamentary committee? Do they do it in the plain light of day? No. They do it behind closed doors in the minister's office.

They can call this so-called municipal auditor general onto the carpet, dismiss him, tell him to pack up his things and go home if he does something that this government doesn't like and is against its political interests.

That is wrong, that is not transparent, and that is not independent. That's why this bill doesn't deserve passage.

Let's look at section 4, the workplan of this so-called municipal auditor general. Does the auditor general come before stakeholders and parliamentarians and others to explain what their workplan is and where their audit area of interest is? No. They go before the minister to present their annual plan — not independent, not transparent. The minister has the final decision on what the audit plan looks like.

When the auditor general needs a budget to perform their work…. And this government has been horrible at explaining what the costs of this will be. They continue to refuse to disclose how much this thing will cost. When the municipal auditor general is appointed after this legislation is rammed through, where do they go to get their budget? Do they go to both sides of the House and to a parliamentary system with checks and balances and scrutiny? No. They go behind closed doors, again, and they have to go talk to the Treasury Board. They have to go talk to the minister.

That is absolutely political. That is not independent, and that's not transparent.

So everywhere this bill is littered with opportunities for cabinet and for political interests to interfere with the work of the so-called municipal auditor general. This is an auditor general in name only. This is a so-called auditor general who in form and function and reporting relationships would be a laughing stock in any other Commonwealth jurisdiction in the world.

For that reason this side of the House says let the B.C. Auditor General do his work. He has the capacity and the interest in being responsible for municipalities. Throw this politically interfered, ill-conceived, garbage piece of legislation out of the House, and do it right.

Mr. Speaker: Seeing no further speakers, the minister closes debate.

Hon. I. Chong: I'm pleased to rise and close debate on this issue.

To be quite frank, I want to start by saying I have listened intently to all of the remarks made by all of the members on this side of the House, opposition members as well. The two independents who spoke I thought did a fairly reasonable job. I took notes on all of the issues that were raised and would have wanted to spend, I would tell you, perhaps an hour to respond to them. But I know the time is not available to do that at this moment, and I
[ Page 9214 ]
think it's important that we move on so that we can get to those questions during committee stage.

I will make some very, I think, significant remarks about what I heard from members throughout this debate.

[1150]

They question the idea of independence. It's really interesting. I don't understand how any of them can define independence on this particular role when the definition of independence can be altered based on the kinds of relationships that take place. The independence of the provincial Auditor General with how we interact is one role. The role of an auditor who by Revenue Canada comes and audits has a different level of independence with that citizen, with the taxpayers to their government officials.

What I just want to share with members is that while they wish this particular position to be in the office of the provincial Auditor General, you know, that does not imply that our provincial Auditor General cannot be independent with us. Our separate office can allow for that independence with the local governments this position will be auditing.

It's not entirely true, as well, when members have said that the Office of the Auditor General currently is ready and has the people trained in place. I think I did mention to the critic last year when we were in debates that I had actually had a discussion with the Auditor General, and he assured me that while he was interested in assuming the responsibility — his office was — he did not in any way suggest that he was ready and able to conduct the audits with the staff that he currently had.

It's really interesting. I think I heard one of the members quote me, and I said: "If this were to take place, certainly we would look at that." And that's what I did. I did look at it. But again, we'll get into that in committee stage.

What I do want to stress, though…. Time and time again members did talk about auditors coming into local governments and making sure that they had balanced budgets — no question. And I said that that will still need to take place. But that is one form of accountability. That is not the only form of accountability.

Accountability does not just mean: did you receive these dollars, and did you spend it all, and did you get to zero? It is also about: when you spent those dollars, was it really able to accomplish what you set out to do? Did it provide the value that you expected it to provide? That's why these are performance audits.

So I do take exception to some of the comments the members have made, and I would have liked to have spent a bit more time to discuss with them, but I know we'll have that opportunity during committee stage.

Let me just say that when I opened debate on this legislation, I did ask all members for their support, but it's clear we're not going to have that.

Suffice to say, hon. Speaker, with that, I move second reading.

[1155-1200]

Second reading of Bill 20 approved on the following division:

Hon. I. Chong: I move that Bill 20 be referred to a Committee of the Whole House to be considered at the next sitting after today.

Bill 20, Auditor General for Local Government Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. I. Chong moved adjournment of the House.

Motion approved.

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

The House adjourned at 12:02 p.m.

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