2013 Legislative Session: First Session, 40th 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, July 11, 2013

Morning Sitting

Volume 2, Number 6

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

THURSDAY, JULY 11, 2013

The House met at 10:03 a.m.

[Madame Speaker in the chair.]

Prayers.

Orders of the Day

Hon. M. de Jong: In this chamber I call second reading of Bill 2, the Budget Measures Implementation Act, and in Committee A — Section A, Committee of Supply — continued estimates on the Ministry of Environment.

[1005]

Second Reading of Bills

BILL 2 — BUDGET MEASURES
IMPLEMENTATION ACT, 2013

Hon. M. de Jong: I move that Bill 2, the Budget Measures Implementation Act, 2013, be read a second time now.

In summarizing the provisions of the act, I'm cognizant of the fact that members — particularly those returning members — will have seen most of the provisions contained within Bill 2 in a similar legislative instrument that was tabled in February — though not debated and passed.

The bill before the House today, Bill 2, consists of two parts. Part 1 amends several statutes in order to implement many of the legislative amendments necessary to give effect to Budget 2013 as updated in June of this year. Part 2 contains a series of technical provisions which validates that the estimates tabled on June 27 and the other documents tabled with those estimates are the ones to be used for the 2013-14 fiscal year. I'll explain that further in a moment.

Part 1 amends nine statutes to implement some of the taxation measures announced in this budget. Some of those measures, I should say, reflect some very difficult decisions the government had to make but that ultimately were necessary in order to achieve the objective of balancing the people's budget.

Going through them, Bill 2 amends the Income Tax Act to increase contributions from corporations and higher-income British Columbians. Specifically, the Income Tax Act is amended to increase the general corporate income tax rate to 11 percent, effective April 1, 2013, rather than in 2014, as was signalled in Budget 2012.

I will point out that even with this increase, the general corporate income tax rate remains 33 percent lower than it was in 2001, and it will remain amongst the lowest in the country behind only Alberta and New Brunswick. I wish also to emphasize that the small business corporate income tax rate remains unchanged.

Bill 2 also amends the Income Tax Act to temporarily — and this is spelled out in the provision — establish a new top personal income tax bracket. With this amendment, the portion of a taxpayer's taxable income exceeding $150,000 will be subject to a new provincial income tax rate of 16.8 percent, up from 14.7 percent.

It's a temporary measure that will apply for the 2014 and 2015 tax years. B.C.'s top marginal rate will nevertheless remain competitive with other provinces, and British Columbians with incomes up to $122,000 will continue to pay the lowest provincial income tax in Canada.

The tax credit rate for total annual charitable donations over $200 will remain unchanged at 14.7 percent for the 2014 and 2015 tax years.

Budget 2012 announced an increase in tobacco tax rates effective April 1, 2013, to avoid price reductions with the implementation of the HST. Bill 2 amends the Tobacco Tax Act to further increase the tobacco tax rate by $2 per carton of cigarettes and one cent per gram of fine cut tobacco, effective October 1, 2013.

[1010]

This tax rate increase builds upon our — I would suggest — successful multifaceted tobacco control strategy to encourage and help British Columbians to stop smoking. Again, I would say — I suppose immodestly — that I think the strategy is working. B.C. currently has the lowest smoking rate in Canada at less than 15 percent. We want to drive that number down further and are employing a number of strategies to try and achieve that end.

Tobacco prices are, I believe, an effective deterrent — particularly for young people — to a certain point. This tax rate increase will support our other smoking cessation programs, which cover prescription medications and free nicotine replacement therapies along with other supports and, we believe, help even more British Columbians to stop smoking. When they quit smoking, everyone is a winner — the individuals themselves, their pocketbooks. It's better for their families and better for provincial health care costs.

Agriculture has a unique place in British Columbia and is integral to the social and economic fabric of communities throughout the province. As previously announced, we are providing an exemption from carbon tax for coloured gasoline and coloured diesel fuel purchased by farmers for farm purposes, including in farm equipment such as tractors and in eligible farm trucks on the highway. Bill 2 amends the Carbon Tax Act effective January 1, 2014, to fulfil this commitment.

Bill 2 also includes amendments to expand the land tax deferment program and improve fairness of the property transfer tax exemption for family farms.

The tax deferment act is amended to expand the property tax deferment program for families with children. Currently the program allows eligible homeowners who
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financially support a child under the age of 18 to defer their property taxes. With this amendment, the program is expanded to allow eligible homeowners who financially support a son or daughter of any age to defer property taxes if that child is enrolled in an educational institution or is disabled. This will allow more families to defer their property taxes when family expenses may be at their highest.

The Land Tax Deferment Act is also amended to allow certain partial disposals of property under the property tax deferment programs without triggering the end of the agreement and, therefore, the repayment of previously deferred taxes. The deferment agreement will continue after a partial disposal of land, provided the homeowner continues to own the portion of the property on which the principal residence is located, continues to meet the minimum equity requirements of the program and retains no interest in the disposed property.

Bill 2 also amends the homeowner grant to provide relief to homeowners who in certain circumstances have claimed the grant incorrectly. Following the amendments, if passed, the eligible homeowners will be able to receive the benefit of the homeowner grant on their principal residence if they incorrectly claimed it on the wrong property.

The Property Transfer Tax Act is amended by Bill 2 to improve the fairness of the property transfer tax exemption for transfers of family farms to related family members on the death of an owner.

This specific issue was brought to government attention by an individual taxpayer whose mother was in a care facility prior to her death. Under the existing legislative provisions, the fact that the mother was not actively farming the land at the time of her passing made the family ineligible for the exemption. The expansion of the exemption will ensure that it is available to farm families as I think was always intended.

The Hydro and Power Authority Act is also amended. As a Crown corporation, B.C. Hydro is exempt from the payment of most property taxes, but it is required to pay grants in lieu of tax to taxing authorities and through its community development fund to make payments to non-treaty First Nations. The act, by virtue of this instrument, would be amended to provide equitable treatment to treaty First Nations by authorizing B.C. Hydro to pay grants in lieu to these First Nations for B.C. Hydro facilities located on their land.

Bill 2 includes a technical amendment to the Provincial Sales Tax Transitional Provisions and Amendments Act, 2013, to clarify the transitional rules for legal services, related services and telecommunication services.

[1015]

The provincial sales tax transitional rules set out when and how the PST applies to transactions that straddle April 1, 2013. The clarifications contained here will ensure that the transitional rules apply as intended and as we discussed in this House earlier this year.

Finally, part 1 of Bill 2 amends the Forest Act to enhance its revenue audit compliance provisions. A new penalty and the ability to obtain a compliance order will assist auditors in obtaining the necessary information to assess stumpage in instances where requests for information are refused.

These amendments that I have just mentioned reflect some of the admittedly difficult decisions that were taken to help balance the budget; at the same time provide additional support for families; and, I believe, improve, in some of the areas touched upon, elements of fairness. Given the need to live within our means, I believe that these taxation measures in the bill strike a fair and appropriate balance.

Now, part 2 of the bill is a transitional provision, again largely technical in nature, confirming the identity of the main estimates for the 2013-14 fiscal year. Due to the fact that the election was held this year, main estimates for 2013-14 have been presented twice to this Legislature — once in February and again in June. A number of statutes on the books prescribe information that must be included in the main estimates or be tabled within the main estimates.

Part 2 of this bill identifies the main estimates tabled in the Legislature on June 27, 2013, as those that apply for the purposes of the Budget Transparency and Accountability Act, the Balanced Budget and Ministerial Accountability Act and the Carbon Tax Act. Part 2 also establishes the carbon tax plan and other documents presented with June 27 main estimates as those that fulfil the requirements of the Carbon Tax Act.

That is my hopefully coherent summary of what is in the provisions of Bill 2, and I welcome comments from my friend.

M. Farnworth: It's my pleasure to rise and offer a few comments in response to Bill 2, the Budget Measures Implementation Act, the bill that will, in fact, implement the various measures as the Minister of Finance has outlined in the budget that was tabled in February and, in fact, was updated earlier in the last few weeks.

We will not be supporting this particular piece of legislation. We opposed the budget that the government tabled before February and then reintroduced after the election. We have concerns about the budget and its ability to actually be balanced, given the significant variations in the forecasts that the government placed before this House prior to the election and the deterioration we have seen since that budget was tabled in terms of the forecasts and the assumption that the government has used. It further reinforces our concern that the budget is, in fact, not balanced.

This particular piece of legislation does do a number of interesting things that I think are worth commenting on. For four years the government was adamant that
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under no circumstances…. They would not be raising taxes. They would never raise taxes. They were not going to raise taxes. There would be tax freezes.

The reality is that they are, in fact, raising taxes. They announced that just prior to February, and this budget does that — the high income tax, over $150,000. I am slightly puzzled as to how that squares with the oft-repeated claim of the Premier that we are freezing taxes, income taxes, for five years, because clearly that's not happening with this particular piece of legislation.

There are changes in the corporate tax rate. Again, this was a government that said they would not raise corporate taxes. That was a mantra that they kept repeating, that we could not do that, that it would jeopardize our competitiveness.

[1020]

The reality is, again, that that is what is taking place within this particular piece of legislation. Again, what the rhetoric is doesn't necessarily match the actions of the government.

The bill also contains a number of measures around increasing tobacco taxes. It deals with issues that are standard in every budget around the coloured, or agricultural, fuel tax, as well as issues around the homeowner grants — in particular, the raising of the threshold.

The one area, actually, I will add additional remarks on is the issue of the change in the homeowner grant and the case that the minister cited of the woman who had been in the care home and then subsequently was determined to not be eligible for the homeowner grant because she was "not farming." Well, she was in a care home.

Interjection.

M. Farnworth: Property transfer tax. That's correct. She was in a care home. That was an issue that had been raised in this House by the opposition, and the government had indicated that they would look into the matter, so I am happy that that particular issue is addressed within this particular piece of legislation.

Having said that — and I try and find a silver lining in every piece of legislation, and in this case that is it — the bottom line is that this is a piece of legislation designed to implement a budget that we did not have confidence in. It is designed to implement a budget that, we believe, will impact ordinary British Columbians in a host of negative ways. And we've already seen that, for example, with the wheelchair tax.

This bill will help implement a budget that, we believe, will see additional service cuts and reductions in areas such as health care and skills training. As a result, it's a bill that we are unable to support.

There are some questions I will have in committee stage. One of the challenges of speaking to this particular piece of legislation today is that after this we go into Finance estimates. I could speak for another hour, but that would come out of the Finance estimates time, which I know the minister is waiting for with great anticipation.

With that, I will take my seat. I will have a few questions in the committee stage, but with that, we are opposed to this piece of legislation.

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

Hon. M. de Jong: Thanks to my friend, the hon. critic.

I move second reading.

Second reading of Bill 2 approved on division.

Hon. M. de Jong: I move that the bill be referred to a Committee of the Whole House for consideration at the next sitting after today.

Bill 2, Budget Measures Implementation Act, 2013, 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. M. de Jong: I call Committee of Supply — Finance estimates.

Committee of Supply

ESTIMATES: MINISTRY OF FINANCE

The House in Committee of Supply (Section B); R. Chouhan in the chair.

The committee met at 10:25 a.m.

On Vote 22: ministry operations, $114,879,000.

Hon. M. de Jong: While I am on my feet, let me tell members that we are joined in the committee deliberations today by the deputy, Peter Milburn, and Deb Fayad and Marie Ty.

M. Farnworth: I half expected the minister to do a brief outline of the ministry. I see him shaking his head. That's just fine. He's definitely quite unlike a previous Minister of Finance, who took probably about half an hour to 45 minutes to expound upon the virtues of the ministry and the policies and the goals that it was pursuing.

One of the key areas that the minister is obviously responsible for is the budget and the presentation of the budgets. The passing of the budgets is the key object, of course, of government. So what I'd like to do is ask some questions related to the assumptions around budget-building that the minister used in the lead-up to the budget and subsequent to the financial update that
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was done in the House, particularly around some of the differences between the forecasts that were used back in February and the forecasts we're using in the update.

Particularly, I'd like to initially talk about areas of GDP — the GDP growth numbers that were used prior to February and subsequent to February. A couple questions I have are: at what point did the ministry decide that they needed to change; when did they become aware and why? What were the key factors for that?

Hon. M. de Jong: The member and I have been at this long enough for him to know it is true when I say that I can have trouble introducing myself inside half an hour. But I am also cognizant of the fact that time is limited. There is an exchange to take place, and we best get to it.

The short answer, as I understand the member's question, is…. The budget in February was introduced, built around a certain set of expectations on GDP growth. The budget update of June 27 utilizes a different set of numbers.

When did they change? The ministry consulted the Economic Forecast Council end of May — I think May 29, although sometimes the information comes in over the span of a couple days from various sources — gathered that information and then did the calculation on what the averages are. So I think that the answer to the question is: having consulted at the end of May and analyzed the forecast council adjustments, it was at that point that the ministry was in a position to consider that information in any changes that we wanted to build into the budget.

[1030]

Now, some of those agencies, as I recall — Conference Board being one — publicly released information several weeks before that, several weeks after that. But the report from the forecast council that the ministry formally requested was received in the last week of May.

M. Farnworth: What were the key drivers of the decline in the GDP forecasts for the coming year?

Interjection.

Hon. M. de Jong: The member may have heard a little bit of that exchange.

There are some areas that I can relay — and much of this material is laid out in the budget document itself — where the members of the forecast council and the ministry look at indicators. Housing starts would be an example of that, and retail sales.

I have come to learn that there are two ways this works. At the early part of the fiscal year, which we're still in, there's limited year-to-date data. In some instances year-to-date data drives assumptions about GDP. In other cases assumptions about GDP drive calculations about individual areas. So if there is, for example, slower GDP growth, there's an assumption made about slower housing growth.

It seems to me that as you move through the year and have more year-to-date information available in the individualized areas, one is able to rely upon that to make assumptions about GDP. Of course, the further you are through the year, the less risk there is or the more bullish people tend to be about their predictions for the remaining six or three months. Housing starts, retail sales are below what, I think, the forecast council was contemplating earlier in the year.

I should emphasize this, though. In settling upon the numbers for the June update, the ministry…. We employed the same methodology and process that we employed in February, but the forecast council numbers changed at the end of May, to be sure. That's why the assumptions around revenue in the budget changed. But it is, as I think the member knows, a regular feature of the quarterly updates that take place in any budget year.

M. Farnworth: I thank the minister for that answer.

In the GDP forecast from the forecast council they have an average. The minister then lowered that, on a conservative basis. That was, I think, by about half a point, if I'm not mistaken.

Interjection.

M. Farnworth: Yeah, since February. Then, from the February…. In the update it's lowered, but this time it's lowered…. The ministry has not lowered it by the same percentage as it did in February, which again would impact on your revenues coming in. Why was that, and how was that decision arrived at?

Hon. M. de Jong: I guess two short answers: confidence and risk.

[1035]

I suppose it's worth pointing out that what the forecast council did at the end of May was adjust their number to what we'd said it was going to be all the way along. The fact that we are now part of the way through the fiscal year — slightly less risk.

So the need to build in the same gap or the same level of prudence…. The advice I received and accepted from the officials at the Finance Ministry was that the gap didn't need to be as large. That struck me, for the reasons I've just mentioned, as being logical.

M. Farnworth: In terms of retail sales, again, it comes back, I think, to…. There were numbers presented in February, and I understand the minister's argument in terms of saying that you're further into the year, so you have a better sense of where things are at from receipts coming in. That I get.

But again, there was a further lessening of retail sales,
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when what the government was expecting, for example…. After the elimination of the HST and the return to the PST there was an expectation that there would be a bump in retail sales and that that would be reflected. Is that reflected? Is that expected bump reflected in the latest forecast? If so, what other factors, then, are contributing to lower retail sales?

What that says to me is that clearly, consumer confidence is not strong. When you combine the government's forecast around retail sales and the government's forecast around continued decline in housing starts, that tells me that consumer confidence is still weak, or is weaker than it was.

What other factors is the government now taking into consideration in determining its calculations in that area?

Hon. M. de Jong: Again, with this area of the economy…. First of all, I accept the proposition that areas like this provide a bit of insight or a bit of a window into questions around confidence. I think that's true of housing purchases and, I suppose, ultimately, housing construction. But what people are doing in terms of upgrading their homes is generally, in my view, also an indication of how they feel about their own future prospects. So I accept that proposition.

The second thing I want to emphasize is that the updated numbers are, again, a reflection of the information and the data that we have received — the consensus view of the forecast council and changes that they have detected or anticipate and are projecting for across Canada.

[1040]

It's perhaps complicated a little bit in British Columbia by something the member has mentioned. That is the significant transition that occurred on April 1 between the HST and PST and to what extent did that skew behaviour in British Columbia on the part of consumers who, in many cases, would have been aware that the purchase of a product on April 2 would attract a different tax liability than the purchase of that same product on March 30.

I expect that influenced some behaviour. Conversely, on the business side my expectation…. I suspect the data will reveal this at some point. In the business sector there may have been some accelerated purchasing. So to what extent those offset one another…. We're talking here about consumer purchasing.

I can tell the member that the numbers for April-May — for which there is, I'm told, some data available — match the projections that have been built into the plan very accurately, and that's heartening.

In his question the member also referenced housing starts, and this might be an opportunity for me to make this point again as well. The numbers in the budget and the forecast predict a slightly lower number of housing starts than in February by, I think, 800 or 900 units, if I'm not mistaken, below the average of 28,000.

The numbers we got a couple days ago for May showed what I would say for B.C. is a fairly dramatic increase, far beyond what we have been predicting and what is contained in the budget. Now, is that sustained on a go-forward basis? We'll see.

The last thing I'll say — and I say it not to be mischievous in the way that perhaps one occasionally is in this chamber — is on the uncertainty surrounding the electoral process and what impact that has. The budget document makes no attempt to try and quantify that. The numbers are what the numbers are, and we have budgeted on that basis.

But I have made this observation publicly. In the immediate aftermath of May 14, I have certainly been confronted anecdotally by a lot of information about pent-up energy and the unleashing of and moving forward of projects that in other circumstances may or may not have, depending who you believe…. We won't know the extent of that — to what extent that phenomenon is real or otherwise — for, I would say six months, when there is hard data for the member to critique and analyze and me to lament or celebrate.

M. Farnworth: I don't think the minister will be surprised if I say that I can assure him that I'm more than happy to check back in six months' time and see whether these anecdotes or anecdotal comments that the minister has mentioned have unleashed a flurry of economic projects in the province of British Columbia. One thing I'm pretty sure of is that people, consumers, make their decisions based on their own family needs and their family situations.

If you have three kids and you have outgrown your two-bedroom house, you're not waiting for the results of an election to decide whether or not you're going to move or buy a new house. You're moving because you need to. Or if you're a senior waiting to see whether you're going to downsize, for example, it's done because of your life and what's happening in your life and not on the basis of a provincial election.

[1045]

I say that because you know, as much as we talk about resource revenues in this province and the importance of them, consumer confidence, consumer spending and home building are significant economic generators in British Columbia. So when we see housing starts in a decline — and I accept the member's comments about the numbers in the past month, the increase — there's so much related to that. That can't help but have an impact.

One of the issues around the HST was the fact that, with its elimination, people were well aware of the changeover that was coming. There was an expectation that there would be an upswing in renovations and consumer purchases on a significant number of items that were not — we were hearing anecdotally — taking place prior to that.

To see a weakening of demand in the forecasts, I think,
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causes some concern that even with the elimination and the move to the PST, the consumer is not…. That uptick, I'm concerned, is not reflected in the statistics. But that's something we're going to have to wait for until the first quarter comes out, until we get later into the budget year.

On the issue of forecasts, one of the questions I have is around the forecast allowance. When we compare the February budget with the July update, we see that the forecast allowance for the next two years has been lowered. Can the minister explain why that is and why it is going to be the next two years?

Hon. M. de Jong: Although he didn't reference it specifically, the forecast allowance for this fiscal year has been drawn down, as well, by $50 million, the rationale there being that 25 percent of the way through the year is 25 percent less risk. That struck me as a reasonable exercise of the protection the forecast allowance provided.

With respect to the out-years, particularly for the next fiscal year, the short answer, I think, is that July is a lot closer to February than February was. The recommendation was that from a risk assessment point of view it was not an abandonment of the prudence principle to reduce by that amount and that one could budget safely on that basis going forward.

At the end of the day, a risk assessment exercise and a recommendation that I accepted.

M. Farnworth: I asked that question because, as the minister said, into the quarter you're slightly more certain of where you're going to end up. The next quarter you'll be even more certain, or one would hope. To see the forecast allowance two years out declining is raising: "Okay. We're not there yet." We're certainly not there in the third year.

Why you'd be wanting to make reductions at this particular point in time — I just wanted to get an answer from the minister.

Noting our time…. The one thing I know is we'll have a lot more time next February. There are a number of topics to get through. But another key area of the budget, on which the budget was built, was the issue of asset sales. That was very much a key component of this particular budget. I know that when the minister rises to answer, he will no doubt make note of the fact that asset sales occur under every administration in the province of British Columbia, regardless of political stripe.

[1050]

But I think the point that I want to make in this particular case is the sheer size of asset sales that are taking place in this particular budget in comparison to previous years. I think, over the last ten years, from 2001 to 2010, it's been around $381 million — over the full decade.

What I'd like to know is: has the ministry looked at…? Or can the ministry tell us: during the period, what has been the difference between what the government has set as its target for asset sales in each of the years and then the actual target, whether it was met?

I think that's a crucial question that needs to be answered in the sense that it's one thing to say we're going to spend or we're going to sell, you know, $100 million, $750 million worth of assets and that gets presented in a budget document, but if you don't actually realize those targets, then that calls part of the exercise into question. It says, you know, a lot about…. The budget ends up not…. It can be a major hole in the budget.

The minister has placed great…. A significant amount of emphasis has been made on the issue of asset sales in this particular budget — a key component of it. But what I'd like to know is: what's been the record, to date, in terms of targets and actualities realized?

Hon. M. de Jong: I guess — two areas I'll touch on in responding to the member's question. I think it's an interesting question, because it may, in part, explain the degree to which attention — attention from others, attention from the opposition — has focused on this. Whilst it is true, I am advised, that an agency like the transportation investment authority has in the past set a departmental objective or a departmental plan for the disposal of some of the assets that they have held from time to time, that hasn't happened corporately in government.

Again, not meaning to be mischievous…. I'm told that during the time of the 1990s the equivalent of about a billion dollars in publicly held assets from core government was sold. I'm not certain that there was a target associated with that. That's just the amount that was sold.

For the majority of the term of this government, assets were sold on a regular basis. What changed, to be sure, is a purposeful decision to identify across government and the SUCH sector…. And by the way, I've just been reminded that in quantifying the amounts, that is an important distinction, because we are including in these amounts the SUCH sector — school boards, boards of education, health authorities. So that now gets lumped in, in terms of quantifying the amount.

But we did say, "Let's take a purposeful look at the portfolio and identify what we deem to be surplus assets and embark upon the sale of those assets," and that process created the ability to actually lay out in detail what the government expected to realize from the sale of those assets.

[1055]

Heretofore, that was never the case. It would have been impossible for someone to look at the budget and say, with any measure of certainty: "Ah, I see. The Crown purports to generate revenue of X amount on the basis of the sale of asset." It never appeared as a separate item that was identifiable in the budget.

Now, one could say, in retrospect, that that was a foolish move politically. I don't agree. I actually think that it's fine to say to the people: "These are the revenues that we
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hope to generate from the sale of assets that to this point you own." So an interesting question. The short answer is that until this point there actually hasn't been a corporate number that says: "We anticipate and seek to sell assets and believe that they will generate X number of dollars."

That, of course, has made it possible — and I think appropriately so — for the opposition and critics to test the veracity of that number, to ask questions about what assets are involved here. I think that's fine.

M. Farnworth: I thank the minister for his comments. I think that the minister raises a really important point, then, in this particular discussion, and that is having set a target…. The minister is saying that previous administrations didn't set a target.

When a budget is tabled, it's now presumed, or the government is saying, that it's balanced because there is a target. That number is there. If that target isn't reached or that number isn't reached, that impacts whether or not your budget is balanced, assuming everything else doesn't change — that you don't get an increase in one area of revenue that wasn't expected — whereas before, that wasn't the case. You didn't have that target set. You didn't have that set.

There were governments that were going to sell assets, but the numbers that they presented, they had…. There wasn't a specific number assigned, but now we're saying that there is a specific number that's assigned, and if that target is not reached, then that has an impact on the budget.

The minister has said that there has been a conscious effort to identify and a conscious plan to go out and identify the properties and achieve a set financial target. So that raises a number of questions.

When did the process take place — over what period of time, I guess, in the lead-up to February — and who was involved?

Hon. M. de Jong: I'll get some information, but the timeline goes back some distance. I'll want to be as accurate as I can for the member.

The first part of his observation/question interests me, because there is a flip side to what the member is suggesting. He says, accurately, that in a budget where you have these assumptions, if the assumptions are not realized, you have a problem. That is true with respect to asset sales. That is true with respect to any dimension of the budget. It is by definition a statement of what we anticipate to occur on the revenue and expense side. But what happened previously?

As the member has rightly acknowledged, this government and other governments have most certainly made decisions about selling assets. They didn't lay it out. It was built into the budget. It wasn't enumerated as such. What's the flip side of the argument that says that it shouldn't be laid out in the way that it is? Well, aren't you left with…?

[1100]

If government has made the decision to sell surplus assets — or any asset, for that matter — isn't there an obligation, as part of the budgeting process, to disclose (a) that there is a decision in the forthcoming fiscal year to sell an asset and (b) what the expectation is about the revenue that that sale will realize.

[D. Horne in the chair.]

If you don't do that, isn't that every bit as inaccurate? Wouldn't that lead to the equally valid assertion that you are purposely underestimating revenues? So if government has made the decision, as we have….

This comes to the second part of the member's question, which I'll try to get some additional information on. If you have made the decision to sell certain assets, isn't there an obligation to try and estimate, as best one can, what the sale of those assets will realize and then disclose that somehow in the budget? Failure to do that, I would suggest, is every bit as manipulative and improper as the other.

I'll just take a moment and try to get the information about the member's second question about the time frame. It dates back in excess of a year.

The genesis of this very purposeful program dates back to the fall, September, of 2011. Some of this, I think, is referred to in the budget, in the topic box contained in the budget. Hopefully, what I'm telling the member is consistent with what's in the topic box, as I'm sure it is.

On September 2011 a decision around a purposeful program to dispose of surplus assets…. Yes, generally, we're talking about real estate here — not exclusively but generally real estate. What needed to occur thereafter, in advance of the February 2012 budget, was some basic work. What's the definition of "surplus"? What's the rationale for a sale? What is the economic generator? In compiling the inventory, if you will, what are the principles that will guide that? And then ongoing work thereafter around the inventory of properties.

I suppose that is an ongoing exercise, and as I said earlier, I think governments have, on an ad hoc basis, looked at assets in departments of government. Transport ministry properties have sold. The difference here is that there was a corporate-level program designed to bring some formality, and obviously, the result of that was the presentation in the budget of a specific amount that was anticipated to be derived on behalf of the taxpayer by the disposal of these assets.

I hope that helps a little bit in terms of identifying the timeline and when the formal part of this dates from.

[1105]

M. Farnworth: I thank the minister for his answers. I think one of the key questions that we're trying to get an
[ Page 376 ]
understanding of is…. I mean, it's fine that the government says, "Yes, we've taken this comprehensive review, or view, of a series of asset sales." They've set a target that they expect to be realized. The process started in September, and it's been more comprehensive and thorough than in the past.

A couple of questions that that raises, though, are: what are the key drivers? Is it a target that needs to be realized in terms of a goal, in determining that that's what we have that is surplus? Or are you saying, "Yes, these assets are surplus" or "Yes, we have to go out and find $750 million worth of surplus assets," for example? What's driving it? Is it the number, or is it the actual surplus assets themselves?

Hon. M. de Jong: The short answer…. I think this is what the member is…. I understand. It's a fair question. It is the definitions and, ultimately, the inventory that determine what the number would be, as opposed to the other way around. "Here's what's available; here's what we believe." And no question — no question — there's interest on the part of the government to maximize the return, because the state of the budget and the commitment that was made to balance added to that imperative.

But the inventory, the estimates of value around that inventory and the speed with which properties could be marketed in a responsible way are what ultimately determined the number that could be plugged into the budget, which is why the member detects less concern on my part than perhaps he and his colleagues have about realizing the number. If it had been arrived at in the way that the member might be suspicious of, then that would potentially be problematic.

If it had been a case of setting a number and then finding a way to realize on that number, that would be riskier. But that's not how this has come about.

M. Farnworth: In terms of the determination of what is surplus, and given that a number of these properties are in the SUCH sector, was consultation taking place with the SUCH sector around the particular properties? Was consultation taking place, for example, with local governments around a number of the real estate properties, given the fact that we know historically that what may be surplus today is not necessarily surplus tomorrow.

A number of communities are very fast-growing, and those particular parcels, for example, may be required for educational or health care purposes. So I'm wondering what level of consultation in fact took place, or was it determined by the needs of government, primarily?

Hon. M. de Jong: Again, the short answer is yes. I'll focus on one aspect of the SUCH sector that I have a little experience with directly, albeit many, many years ago — boards of education, school boards.

In fact, the triggering mechanism there is actually a decision by the school board that a property is surplus. I think the member knows there are ongoing discussions that take place about how the proceeds from a site can be utilized or converted or what the medium-longer-term plans for usage of that site are. In that case, maybe some of the best proof of this relates to the fact that as we move through this program….

[1110]

I'm always hesitant to make a statement like this for fear that an hour from now I'll be contradicted, but I've not heard a great deal of controversy about the properties — the school sites and the other properties — that have been included here.

That, at the end of the day, is probably the best indication that there is a measure of consensus around the decisions that have been made and, again, recognition that the proceeds realized from many of these sales are being plowed right back into the provision of important services, whether they're educational or whether they're social housing.

In many cases, although this reveals itself as a line item in the budget on the revenue side, this is an exercise in conversion, the conversion of an aged asset into something new and better, yet it is the ultimate result of the sale of a surplus asset.

M. Farnworth: The minister said that a number of these assets are surplus, that there has not been a lot of controversy around them. Would the minister, then, be willing to table the full list of assets? I know that we've heard some partial issues, but will he be willing to table a full list of assets and make them public so that people can see which assets are up for sale or looking to be disposed of?

Hon. M. de Jong: A fair question, but the answer is no. That derives in part from the question the member asked previously. We do want to protect market position. That's more important or less important, depending on where we are or where the property is located.

The other issue relates to obligations that we have to consult with local government and obligations that we have to consult with First Nations. I think the member would appreciate that the legal obligation to consult with First Nations in some cases can only be discharged in good faith if that discussion takes place before certain public activities are engaged in.

I could dance around this, but I think the member's fair question is: "Can we have the whole list?" I'm not inclined to disclose the whole list, although I have tried to disclose significant numbers of properties as they move to the marketing stage.

M. Farnworth: I've got a couple of questions relating to that. I come back to this issue of the minister saying that there has not been a lot of controversy. I can under-
[ Page 377 ]
stand the minister talking to school districts, for example, about determining surplus assets.

Well, I'll give you an example in my own community. During the election campaign I was talking with a school trustee. We were talking about the general school situation and the situation in the Tri-Cities and some of the issues they've had. We were talking about a school in my neighbourhood. It's getting overcrowded.

What I realized in the discussion was that there was a real disconnect — and I know it's not just unique in my district, but it happens around the province — between what local government is doing in terms of development and what the school district itself is expecting to be taking place in terms of development.

With this particular school, there is a series of townhouses in the area. That's great. There's land that has been in the community plan for a long time, identified as light industrial. Recently that has changed. There's now the construction going to be taking place of 850 townhouses and apartments. They're filled with young kids and families. So the reality is that there's going to be the need for either reconfiguration, a readjustment, or a new school. And where's that land going to come from? I think that's the question that concerns people.

[1115]

It's one thing to say, "Yes, it's surplus to a particular area and school needs," but the reality is that development may be taking place either on a basis that the district is not aware of or that the scale has changed, in which case there's a requirement for that land.

Particularly in parts of the Lower Mainland, that is an issue. We've seen that in the past with school closures because of declining enrolment. Subsequent redevelopment gets that enrolment up, and there's no longer a surplus.

I think that's one of the concerns in terms of selling off of assets and not…. When the minister says, "I don't want to disclose the list," well, I think that's a problem. A lot of these sites…. I understand the minister's comments about First Nations obligations, but that doesn't apply to every property.

What I would like to see the minister do is make a commitment to release as much as possible where, for example, First Nations issues are not impacted. I would ask: would the minister be prepared to do that?

You know, the more that people know there is a piece of property for sale, if you're looking to get a better price, you have the potential to attract more interest and more buyers. So there's a flip side to not letting people know what's for sale as well.

Hon. M. de Jong: Dealing, firstly, with the question around schools and the phenomenon that the member has described — which, by the way, is a tension that does exist and has revealed itself in various ways in various parts of the province over the years. It is not unique to this particular program, however.

We do ultimately rely upon the board of education, the local school board, to provide the information and advice in their ongoing discussions with the Education Ministry about what the needs are. And the member has correctly identified that depending on where you are in the province, the communication and level of intel that a board may possess about what a municipality or regional district's plans are for development can sometimes be good and not so good. But the board of education is the agency upon which one relies to proffer that advice.

I am not aware of any circumstance where the provincial Crown has stepped in, contrary to the wishes of a school board, and said: "Thou shalt sell this property." To my knowledge, it hasn't happened. There has been discussion, consultation about the best course of action.

Does that mean circumstances don't arise 20 years down the road, where people look back and say they wish a piece of property hadn't been sold? No. I think that happens occasionally, if land use plans change and a residential component developed in an area that heretofore has not hosted families and residences.

On the other question that the member has posed. I take his questions seriously, and I think I understand the rationale. He has, fairly, conceded that there will be some circumstances in which the obligation to consult with First Nations would trump the ability to reveal information about an intended sale.

[1120]

The other market-related circumstance that would have to be taken into consideration is: were there two or three properties located in the same area? Are we compromising the return by prematurely, from a marketing point of view, disclosing intentions about the sale? That is also an issue.

I have tried in the budget, in the topic box, to disclose a goodly number of the properties that are not just in the sales stage but are intended to be in the sales stage, and I will continue to do so. The properties will appear on the website of Shared Services B.C., and that will be updated on an ongoing basis.

Of course, to this point the member is quite right. When it comes time to market a property, the time frame for this fiscal year is relatively short. We have targeted the end of October — to have all of the properties slated for sale this fiscal year to be on the market by the end of October of this calendar year. At that point we want as many people as possible, as many potential purchasers as possible, to be aware of what those properties are.

M. Farnworth: Can the minister confirm whether the MFA, the Municipal Finance Authority, building is one of the properties that is deemed surplus and is up for sale?

Hon. M. de Jong: My best information is that it is not.

M. Farnworth: I believe my colleague from Delta
[ Page 378 ]
South has a few questions on this particular topic.

V. Huntington: I just want to explore the issue of the SUCH revenues anticipated in the budget a little bit further and, specifically, the school board funding. I note that on page 46 of the budget plan the plan speaks at some length about the reinvestment opportunities, the economic generation of some of the sales — particularly, it notes, in the school board district area.

If I take the example of south Delta, $1.2 million on the sale of school board land in Delta is showing up on the revenue side of the budget. That $1.2 million resulted from a land exchange between the school board and the corporation of Delta. The $1.2 million was fully allocated, with approvals from the Ministry of Education, for the restricted capital reserve of the school district.

I have talked to the minister's office and to the minister's office of community services to try and understand. That money is allocated and remains with the school district, yet it shows up in the revenues of the province.

How is the ministry balancing the budget through these asset sales when, in fact, that money is already allocated and committed in the Ministry of Education? Are you then looking at reducing the block funding of an equivalent amount to education? How is the sale of these assets assisting with the balancing of the budget?

[1125]

Hon. M. de Jong: It's a good question, because it can be difficult to understand. The short answer, again, is…. The sale occurs. The difference between book value and what's realized…. Where the cash is, is irrelevant because the board of education is contained within the reporting entity. The fact that the cash remains there, or if it were held by the Ministry of Education — which it is not, as the member has kindly pointed out — becomes irrelevant. It represents net proceeds held by the overall reporting entity and becomes reportable on that basis.

M. Elmore: I have a question for the minister in terms of asset sales. ICBC has a significant investment portfolio that it has shown to manage very effectively, generating returns that have gone into the pot to offset and to ensure that premium rates are kept at a manageable level. I was wondering, in terms of the asset sales, if there are any assets within the ICBC investment portfolio that are contemplated in the sale of assets this time around.

Hon. M. de Jong: No.

B. Ralston: This is a question about asset sales, particularly financial instruments.

I've given the minister a letter several days ago. I don't know whether his staff have had a chance to review it. In the topic box on page 47 there's reference to the sale of fixed-income securities, held in the sinking funds of the B.C. Transportation Financing Authority, for $1.447 billion in April 2013, realizing a net gain of $123 million.

The questions that I set out in my letter are: who was the purchaser; who was the broker of the sale, if there was one; was it sold on a public exchange or privately; and what commission was paid to the seller's agent? I've also requested a more detailed description of the nature of the securities themselves — the date of original issue, the rate of interest, the original purchase price and just how the $123 million was calculated.

Given the size of the sale and the size of the proceeds, I think this is a question that merits an answer.

[1130]

Hon. M. de Jong: To the member, I acknowledge and thank him for the letter and the inquiry. The transaction conducted on behalf of the government by BCIMC, with which I think the member is familiar…. The purchaser of the securities was National Bank Financial, and I have a ten-page document that chronicles, over 550 lines, the nature of the securities, the bonds sold. What I suggest is that the member have a look at that, as opposed to me trying to guess what features of that are of interest to the member.

B. Ralston: The minister has expressed earlier — I think in the House prior to the election — some concern about disclosure of an impending sale as jeopardizing the public interest. So was this sale, then, using BCIMC as the agent, a sale that took place on a public exchange, or was this a private sale?

Hon. M. de Jong: The transaction, I'm advised, involved publicly traded securities, but the decision by BCIMC was to conduct the sale transaction or negotiation directly with the single agency that I've mentioned, National Bank Financial. I will be, and am, relying entirely on the advice here from BCIMC. That was their determination as to how to exact the best return for British Columbia — to take advantage of the best interest rate spreads and to minimize the opportunity for market interference.

My sense is that in the earlier discussions we had — where I was, admittedly, fairly guarded about the nature of what was being proposed for sale by the BCIMC on behalf of the province — that opportunity for market manipulation in a way that would operate negatively to the benefit of the province is what drove that cautiousness.

I am told that BCIMC exacted a very positive return. By virtue of how this was done, the interest rate spreads and the return to the province were much higher than they would otherwise have been. That's the information I can provide to the member in addition to what I said a few moments ago.

[1135]

B. Ralston: I appreciate the assurance, and I'm sure this would be a pro forma position by BCIMC — that they got the best price they could. It is rather striking that it's a sale to a single purchaser of over $1.4 billion in securities. One wonders: were there other bidders, without disclosing who they were, and how was the market price arrived at? If it's essentially a private transaction that doesn't go through an exchange, one would certainly want that assurance.

Can the minister explain, without revealing other potential bidders who were, I'm sure, consulted in order to arrive at a competitive price, how that was worked?

Hon. M. de Jong: I'm just cognizant of the technical area we're in, and I want to ensure that my information to the member is accurate.

As I said a moment ago, the securities themselves are publicly traded instruments. BCIMC, as I think I said a moment ago, sold the assets over the counter as a portfolio by direct negotiation with National Bank Financial. BCIMC determined, largely based on market acumen and recognizing that the instruments….

This isn't like selling real estate, per se. The people involved in this, I am reminded, know with certainty the market value of these instruments. BCIMC determined the best price for the portfolio could be realized by that direct negotiation with the single purchaser as opposed to auctioning off parts of the portfolio, which in their view would have posed the risk of moving the market against the province and lowering the portfolio value.

[1140]

I am also told that one basis point in shift against the value was worth $1.8 million, so there was great sensitivity in calculating the effect of that.

I'm told that BCIMC selected National Bank Financial on the basis of their — that is, BCIMC's — market knowledge of which dealer in Canada was expected to offer the most competitive price for the portfolio. That, I am told, was based on intelligence and information flow with dealers across Canada and also the belief that National Bank Financial was expected to be the most competitive, because the TFA portfolio, which I referred to a moment ago, had a significant weighting in Quebec securities, which apparently plays to NBF's, National Bank Financial's, competitive strength as the lead manager for the province of Quebec and therefore with the deepest access to investors who want to own Quebec securities.

A really long-winded way of saying that in the opinion, apparently, of our experts and BCIMC, this was the agency with which to conduct this transaction, which would give British Columbia the best possible return. I've indicated the magnitude of a shift of a basis point or two on that return. I hope that helps.

B. Ralston: BCIMC — although the minister does appoint a number of the directors, he does not appoint the majority of directors, as I'm sure he's aware. So it is an arm's-length agency. Can the minister advise what commission, if any, was paid to BCIMC for their services in effecting the sale?

Hon. M. de Jong: I'm advised no commission is payable on this transaction. The remuneration to BCIMC is, I am told, calculated on the basis of a percentage: six basis points calculated against the value of the portfolio that they are managing.

B. Ralston: Perhaps in dollar terms, could the minister just do the calculation and put it on the record?

Then, finally, will the minister disclose, now that the sale is complete, the further information I requested, the nature of the securities themselves? I understand there's probably a lengthy list. He need not provide it here, but could he undertake to provide it in writing to me by the end of the session?

Hon. M. de Jong: The answer to the last question is yes. I am not going to endeavour to do the calculation the member asked for at the front end of his question on the fly. I can try and get him the number, but I am not doing that calculation in here.

B. Ralston: Clearly, I perhaps overestimated the capacity of those senior public servants who are advising him here, but the risk of an error might be embarrassing so I'll be content with that number being provided at the same time as the other information, prior to the end of the session.

[1145]

M. Farnworth: Can the minister let us know: is this the first time in terms of asset sales that the province has sold financial instruments?

Hon. M. de Jong: The short answer is no. I can at least tell the member that in '07-08, '08-09 there was actually, I'm advised, a purposeful decision taken to sell sinking funds. If the member asks me why, I can try to obtain that information for him. But during that period of time, the province engaged in the sale of most of the sinking funds that were held.

M. Farnworth: I will ask the question. Why did those sales take place? If the minister could get me the information, I would greatly appreciate it.

Hon. M. de Jong: I will endeavour to do so.

M. Farnworth: Just a further follow-up on that. We have sold financial assets, and the minister has indicated it in terms of: "No, we haven't sold them before, but there were the ones in '08." I accept that. The question
[ Page 380 ]
now becomes: is the minister or is the government planning on using the sale of financial assets in the coming fiscal year? Is that part of the coming — like, next year's — fiscal plan?

Hon. M. de Jong: No.

M. Farnworth: Just in terms of an understanding of the size of the sale in relation to the financial instruments that we continue to hold…. This sale was about $1.4 billion. What's the value of financial instruments that the province currently holds after this particular sale?

Hon. M. de Jong: I apologize to the member. I want to be clear that I understand the question correctly so that I give the correct answer. If the question is if the province holds any additional sinking funds, the answer is yes, and I can give a value for that. If the question is if the province holds any additional financial instruments, depending on our definition of that, the answer is a different one. So if the member can guide me as to….

M. Farnworth: Well, let's take the broadest thing and go both. Sinking funds and non-sinking-fund financial instruments would be helpful.

[1150]

While you're deliberating there, Minister, what would the nature of the others be? In terms of just an idea of what type of assets they would be — the financial instruments, that is, other than the sinking funds — what would their nature be?

Hon. M. de Jong: Apologies to the committee — again, appropriate technical questions. At page 126 of the budget the sinking funds are referred to. The estimated value of the sinking funds are referred to — $379 million. Then beyond that, there are instruments that would qualify or be captured by the definition of "financial instruments."

I'm wondering if the member might be satisfied if we endeavoured to summarize in some sort of digestible form for him what they are. That might assist him in pursuing those questions in the committee or outside of the committee. I fear this might not be the best mechanism for getting that information to him.

M. Farnworth: No, that would be great. That would be appreciated. Basically, what I think we want to try to understand is this is not…. You know, when we've talked about asset sales in government, it generally has been real estate. This time there are financial instruments. The minister stated there were some in '07-08, and he's getting the information for that. That's good to understand.

I think it's a case of wanting to have a broader understanding. If there are additional financial instruments that government has the ability to sell other than the sinking funds, to have an idea of what they are, given that this is a new method or has not been a typical transaction in terms of building the budget in previous years. If the minister can get that information for me, that would be great.

I think we probably have time, while we're on the topic of asset sales, to talk about the issue of the Little Mountain Housing sale. This is now the third budget where it is included, and there has been a history around that. I just want to have a good understanding of how the sale is being accounted for. In the print under chart 1 on page 6 of the budget documents, a footnote indicates that the proceeds of the sale of the Little Mountain property is part of net economic growth for 2013-14.

[1155]

Could the minister explain that categorization and say where in the revenue estimates the $300 million from that sale appears? And if we run out of time, we can pick it up after the House reconvenes.

Hon. M. de Jong: What page are you reading?

M. Farnworth: Page 6 of the budget documents, under chart 1.

Hon. M. de Jong: Oh, I see.

M. Farnworth: Yeah, it's in little print. It's in very tiny print under chart 1 on page 6 of the budget documents.

Hon. M. de Jong: Happily the transaction, I'm advised, has now closed — I think last week or the week previously. The revenues from that transaction actually are not accounted for within chart 1.1. Little Mountain was not included for budgeting purposes and was not included…. It predated the asset sale program that we have been talking about over much of the morning.

At page 18 of the fiscal plan documents, under "Miscellaneous" revenue, the member will see the fact that that budgeted estimate goes up in 2013-14 and then back down. That is largely due to the anticipated Little Mountain revenues.

And noting the hour, I move the committee rise, report progress and seek leave to sit again.

Motion approved.

The committee rose at 11:57 a.m.

The House resumed; Madame Speaker in the chair.

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

Committee of Supply (Section A), having reported progress, was granted leave to sit again.
[ Page 381 ]

Hon. M. de Jong moved adjournment of the House.

Madame Speaker: Hon. Members, this House stands adjourned until 1:30 this afternoon.

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF ENVIRONMENT

(continued)

The House in Committee of Supply (Section A); M. Bernier in the chair.

The committee met at 10:09 a.m.

On Vote 20: ministry operations, $99,946,000 (continued).

The Chair: Good morning. We are currently considering the budget estimates of the Ministry of Environment.

[1010]

S. Chandra Herbert: Good morning. Good to see everybody back and bright-eyed.

The question that we were working on yesterday before we had to leave this place, to our regret, was about fracking, Kitimat, LNG and airsheds. We had finished with a question around how it would be possible for companies to enter the environmental assessment process before the government had decided on what "the cleanest LNG in the world" meant before cumulative impact research into the Kitimat airshed had been done. I believe the response was that we would enter into the EA process and then try and deal with those questions later.

I'm wondering if the minister could clarify or expand on that answer a bit, since it's around certainty issues and environmental issues that people are concerned about.

Hon. M. Polak: There are two paths here that will lead to our ability to manage what happens in terms of air quality in the Kitimat airshed.

The first — and we've talked about this — is the subsequent permitting that would have to take place for any new infrastructure that was built. It's significant because the Oil and Gas Commission would issue the permits. But they are under the Environmental Management Act, so we would certainly have the ability to advance controls and regulations through an air emissions permit that would be granted by the Oil and Gas Commission.

[1015]

In addition to that, I don't want to leave the impression that nothing takes place on air emissions in the EA process. The EA has been very well informed by the work that's been done on the Rio Tinto Alcan process. In turn, they are also heavily involved, in the room developing the regulations, the standards, that would be put in place for the future. Those who are managing the EA process are not hidden from what's taking place. They're an integral part of it. Of course, that then informs what they decide around their EA decisions as well.

S. Chandra Herbert: To go back to the question of the cleanest LNG in the world, companies will want to know, as will communities all around the northeast and the northwest, what "cleanest LNG in the world" means and what the standards are that are set, as would the environmental assessment office.

I'm unclear how we can have the cleanest LNG in the world if we don't have an answer to that before people apply in the EA process. If people are putting forward proposals, they'll be going under the current standards. If they could proceed through that process, I don't imagine the government would want to then change the rules partway through once they've finished the studies, nor is it fair to communities who may be concerned around the current standards. So it doesn't make sense to me at this point.

Maybe the minister can clarify how we could get the answer to some of those questions post–environmental assessment, when people will already have been approved with a pre-standards certificate around the cleanest LNG in the world. It makes one wonder whether or not that could be just rhetoric as opposed to real standards.

What comes first? Shouldn't we have the standards before people go through a process and then have to respond to new standards after — which they may not even have to, if they have already been given a certificate and already have been into the development stage?

[1020]

Hon. M. Polak: I appreciate the member's question. It comes down to, in part, understanding how the EA process unfolds. With respect to any project that's in the EA process, it's not as though the project, as it's proposed, is then fixed in that state and never changes, and they'd have to start again if there are changes.

By and large, when projects enter the EA, it's a process whereby communication is back and forth, from the EA to the proponent, and the projects evolve and change as they receive feedback from the EA. That's maybe the overarching piece to take into this, thinking around how it would operate.

In addition to that, it's also important to note that these projects are all at very early stages. Just because a project…. If it did receive an EA certificate, that doesn't necessarily mean it would be permitted. The certificate
[ Page 382 ]
simply allows them to go further along in the process.

When it comes to the development of the standards, the proponents and the EA are involved in the development of what the standards are going to be. So everyone is at the table, aware of the development of the standards and in discussion. There won't be any surprise for industry. There also wouldn't be a need to deal with the standards retroactively on a project.

First of all, in the EA process, one of the decisions that the EA could make in providing a certificate would be to point ahead at the permitting and require that the project meet the standards that are set. That can be part of the certificate, even if, at that stage, the standards haven't been completed.

Nevertheless, the EA would rely on the permits from the OGC around air emissions, and that would ensure that the standards we have developed are then met by whatever project. But all the way through, the proponents are working with EA and with others in developing the standards. No one is going to be surprised.

These are proponents who work around the world. They are knowledgable with respect to standards that they must meet in other jurisdictions. They're knowledgable about the most modern technology that's at play in the industry. So all of that information is assisting as we work together to make this possible.

S. Chandra Herbert: The minister mentioned potential permits which could impact projects post-EA as a way to try and bring them into compliance with what would be new standards, potentially.

I'm curious. The minister mentioned air permits through the OGC. What other permits would be required? Of course, new LNG facilities will also be responsible for climate emissions, use of water, impact on the land and a whole range of things, including impacts on communities, and that kind of thing. What other permits would be able to be used if somebody got a certificate, and then…? For example, "cleanest in the world" could cost more money and probably will cost more money, as it needs to. What other permits would be able to be modified?

[1025]

Hon. M. Polak: Now, I'm going to be speculating. Of course, each project comes to us individually, with its individual circumstances, so this is speculative.

In respect of what permits they may require through the emergency management act issued by the Oil and Gas Commission, there would be air emissions permits, possibly; effluent discharge permits, possibly.

Then with respect to impact on the land, there would be permits under the Forests, Lands and Natural Resource Operations — so Crown land tenure, perhaps; maybe Water Act permits; perhaps Forest Act permits.

There would also potentially be federal regulations at play, as we understand that the federal government is developing base-level industrial emissions requirements.

As you can see, there's a wide range. Again, just to be clear, I'm speculating. Each individual project would have its own framework around it and would require various different permitting, depending on what their plans are.

S. Chandra Herbert: I'll wrap on LNG. I've got a whole bunch more questions — some I may just have to send in letter-form now — but a final question on it.

As the standards are being developed — the cleanest LNG in the world, as the government has committed to — will the public be consulted on those standards? What form of public consultation will that take? I understand the minister has spoken about working with industry. What other groups will be consulted, and how do we involve the public in this?

[1030]

Hon. M. Polak: First, I'll offer a correction. Apparently, I called the EMA the emergency management act. So no, I haven't switched ministries. It's just that I'm still tired from yesterday, I guess. It is the Environmental Management Act, and I'll try to get that correct as we go forward.

There is not broad public consultation with respect to the air standards, in part because what we're doing is setting standards based on the best available science and experience. So we are drawing heavily on the experience with Rio Tinto Alcan. We're working closely with First Nations. We're working closely with folks from Trent University and University of Guelph, folks who are experts in air dispersion modelling. We're working with other jurisdictions, like Australia.

It is important to note that there is always public consultation when we get to the permitting process. So each and every project that would be proposed would be open to public consultation as part of the permitting process. But on the standards themselves, it would be similar to asking the CSA with respect to the approval of standards for safety of car seats, for example. Rather than public consultation, you're looking for those who are experts in the field to tell you what is safe and then applying those standards. But there's always public consultation when it comes to the permitting process on these projects.

S. Chandra Herbert: Sorry. My colleague was going to ask a question. But my question was: what consultation is going into the standards of "cleanest LNG in the world"? Not on air emission standards. Cleanest LNG in the world, I would assume, would mean more than air. It would mean water use. It would mean climate emissions. It would mean land issues. There's a lot more than air there.

[1035]

If the minister could reflect on "cleanest LNG in the world," that would be helpful, because I know it's not just a few standards-setting agencies that would understand that. There are independent experts. There are environmental groups who would tell you what "cleanest" means — much more than the industry itself, who have their own biases and beliefs around what cleanest means. I would think that it should involve the public.

[1040]

Hon. M. Polak: Important to note that while we are talking here specifically about LNG development, standards that we develop — whether it's with respect to air or water or in other ministries, where they permit other activities…. Those standards apply, then, across the piece, across industry.

A really good example of the kind of consultation that has been underway, as we've anticipated, in increases in industrial development would be the Water Act and the modernization of the Water Act. That piece of legislation, as it goes forward, represents significant consultation with the public, with First Nations. It has been extensive. When the white paper is out for public comment, that consultation will be even broader.

When it comes to the Ministry of Environment, we have responsibility for the air and the water piece, in terms of our standards. We've already talked about the emissions. The water, for example, has gone through much consultation.

While the ministry that's responsible for natural gas development is the lead on ensuring that they have the cleanest LNG in the world, nevertheless, it's those of us who perform a regulatory function who set those. So in Environment — air, water, others — always we'll strive to have the highest standards. Those, as standards do, will change over time as science changes, as our technology changes and as our understanding changes.

To me, the consultation piece is always a big part of making policy like modernizing the Water Act. We would rely on that heavily in adjusting any other areas in other ministries.

A. Weaver: I have a few questions for the minister. I'd like to start by quoting from the minister's mandate letter, where it says that one of the goals is "to eliminate red tape so that we can get to yes on economic development without needless delay."

My question to the minister is: does that raise some concerns that it's in some sense precluding an outcome of an environmental assessment if your mandate is to get to yes, as opposed to determining whether yes is the appropriate answer?

Hon. M. Polak: It doesn't, because of the phrase "without needless delay." What we have seen in the past, at times, in government is process for the sake of process, rather than process that gets to an answer. I don't see that as indicating it requires a granting of a certificate or a permit. What it does require is that we get that answer without having, as the letter says, needless delay.

A. Weaver: Would the minister be able to provide information as to the number of projects that have applied to the environmental assessment process since 2011 that have been approved and the number of projects that have not been approved?

Hon. M. Polak: We can provide that. It's going to take staff just a couple of minutes to pull it together. When that's ready, I'll add that into a further answer.

A. Weaver: The mandate letter talks about the creation of a round table. My question here is: will the creation of the round table alluded to in the letter be mirrored on the federal version, of the National Round Table on the Environment and the Economy, where the group has had a clear independence from government direction; i.e., they'll be free to determine their own research topics and make recommendations on areas of their choice in place of being given directives by government?

[1045]

Hon. M. Polak: No, this group would be modelled very much along the lines of the former environment and industry stakeholder group — primarily advisory in nature. The terms of reference are in development, as we speak. But it would not be intended as a research body per se. Of course, with respect to that model, there would be the addition of those mentioned in the mandate letter, in terms of their involvement.

A. Weaver: As part of the environmental assessment, is there a plan to reduce the time provided in the assessment process for public consultation in order to get to yes in faster time?

Hon. M. Polak: No, our plans involve addressing our own processes to ensure that we are working as efficiently and effectively as we can.

A. Weaver: When does the minister plan to have the round-table committee set up?

Hon. M. Polak: We're aiming at late fall.

A. Weaver: Does the minister believe the committee will have input into the assessment process for future projects on LNG?

[1050]

Hon. M. Polak: No, we envision that the round table would have a broader role in terms of our policies —
[ Page 384 ]
not only in Environment, but across government — but wouldn't be specifically attached to the EA process.

A. Weaver: I have two more questions — one on the carbon tax. The question here is: will the ministry be conducting annual reviews of its implementation of the carbon tax? Why I ask this is: suppose that other jurisdictions like Alberta were to introduce carbon pricing, as they have mentioned, to the tune of $40 per tonne — or Washington State or Oregon or others. Will the B.C. government reconsider its approach in the next and further years of its mandate?

Hon. M. Polak: Our commitment is that, in terms of the price and scope of the carbon tax for the next five years, it would remain as it is.

In terms of ongoing review and response to the changing context worldwide, that would be the responsibility of the Ministry of Finance. The Minister of Finance would have to describe the approach that he's going to take for monitoring what happens in the global context and making those decisions around a review. It wouldn't be the Environment Ministry.

A. Weaver: The term "old growth" appears very infrequently, if ever, in the budget document or the estimates document. Preservation of old-growth forests on Vancouver Island is of particular concern. Two days ago the Ancient Forest Alliance released a statement calling on the government to establish a park acquisition fund to preserve our rapidly depleting old-growth forests on Vancouver Island.

I posed this question to the Minister of Forests, and the answer was that any acquisition would come through the parks fund through the Ministry of Environment. So I reframe the question to the Minister of Environment.

To what extent does the Minister of Environment put aside money in the budget to provide for the preservation of old growth through the acquisition of private lands, which are potentially the last few remaining resources of old growth on Vancouver Island?

[1055]

[D. Plecas in the chair.]

Hon. M. Polak: We don't use a dedicated fund for the acquisition of private lands into parks. What we do use, though, are Crown land exchanges and donations. Also — a very important part of this, I think — our forest carbon offset protocol is a very significant means by which we can assist in the preservation of old-growth forest, in particular on private land. Using these tools, we have added about $10 million in value to the parks system since 2009.

G. Holman: I had a question about the proposed marine conservation area for the southern Strait of Georgia. I'm wanting to confirm whether or not the province and the federal government support the NMCA in principle, and if so, what the status of the proposal is and the anticipated timing of implementation.

Hon. M. Polak: We are supportive. We are currently undertaking a feasibility study, together with the federal government, and we anticipate that we will have that complete this fall.

S. Chandra Herbert: Of course, the member before me was the member for Saanich North and the Islands.

I'm just curious if the minister can tell us what action is going to be taken to improve endangered species legislation. As the minister will know, the New Democrat opposition has moved bills numerous times to bring in stand-alone species-at-risk legislation, as many other provinces have.

The government has not responded to our bills and has argued that they have enough support within the legislation they have. However, I do note that in the election campaign, the government did say they may consider legislation. I'm just curious if I can get an update on where that sits and what actions are being taken.

[1100]

Hon. M. Polak: In response to the Species-at-Risk Task Force, the British Columbia government has put out a draft five-year plan for species at risk in British Columbia called Protecting Vulnerable Species.

It is intended to do a number of things: improve species conservation through management at the ecosystem and the landscape scale; provide the best available information to support identification, management and recovery of species at risk; encourage British Columbians to embrace stewardship of species at risk across all lands; apply protection for species at risk consistently across all sectors; and measure and report on government's investments in species at risk.

Now, that draft five-year plan was posted for public comment, and the public input will inform a revised version that we anticipate taking forward in the fall.

Important to note that one of the reasons we don't have stand-alone legislation in British Columbia is that first of all, the federal SARA legislation applies to all lands in British Columbia. Secondly, we already have on our books 28 different statutes that protect species and habitats.

S. Chandra Herbert: There has obviously been a huge discussion around pesticides, cosmetic pesticides. The Premier, when she was running to be leader and, indeed, running to be the MLA for Vancouver–Point Grey, promised to ban cosmetic chemical pesticides in British Columbia. A task force was struck. Many provided comments, and they were all largely supportive of such a ban.
[ Page 385 ]
The government, however, disagreed. The Chair did not agree with that stance and instead brought in fairly weak regulations — which don't, I believe, protect children, do not properly protect the public.

Within the plan there is supposed to be a set of pesticides regulated by government. I'm curious if the minister can provide us an update on when that regulation will take place, if it hasn't already, and what studies the ministry is doing to look into large-scale bee die-offs that are occurring, many believe, because of cannabinoids, I believe they're called, in pesticides that people in the European Union recently banned — whether or not that is considered as well, given that bees are vital for a healthy environment.

[1105]

Hon. M. Polak: The regulations are under development, and we hope to bring those forward in the spring.

Insofar as the honeybee population and some of the population trends, any studies around that would be conducted by the Ministry of Agriculture. You could inquire with respect to what they are doing to look into that.

S. Chandra Herbert: I'm just reflecting…. The former Environment critic, the member for Victoria–Swan Lake, just mentioned to me around endangered species.

Part of the answer I got to my question around endangered species was, the minister argued, that all land in B.C. is covered by the federal SARA act and so there was no need for the province to have its own endangered-species legislation. Eight out of ten provinces have endangered-species legislation. If it was not relevant, I'm not sure why they would do that.

My understanding had been that federal lands, migratory birds and marine areas fell under SARA but provincial lands did not. Can I get some clarification on that?

[1110]

Hon. M. Polak: The answer is that we have a Canada-B.C. agreement on species at risk that was signed in 2005, and it is the first of its kind in Canada.

S. Chandra Herbert: I guess I'm to understand, then, that B.C. has agreed that SARA applies to everything. Is that correct?

Hon. M. Polak: It's a cooperative model. The accord for the protection of species at risk in Canada came into place in 1996. As a result of our Canada-B.C. agreement on species at risk from 2005, it means that we prepare the recovery strategies for species under our provincial management, but then those are adopted under SARA with the feds.

It's a very cooperative model, rather than simply their legislation applying. There's a bit more complexity to it, but essentially, we cooperate as we move forward with plans for specific species, etc. Ultimately, the effect of that is that SARA applies across all B.C. lands, but it's in a cooperative framework.

S. Chandra Herbert: I've got a question. It kind of goes back to a project under the environmental assessment office.

I'm just curious about the Liberal platform commitment regarding consulting with communities, First Nations and industry to develop a provincially designated protected area in the Sacred Headwaters, otherwise known as the Klappan Valley. How will the government ensure this process is transparent and allows for public consultation, participation and engagement?

Hon. M. Polak: In the course of discussions with the First Nations involved — in particular, the Tahltan — if there were to be protected areas that were then to be designated, there is public consultation involved in the process for designating protected areas.

S. Chandra Herbert: The minister will know, certainly, from previous hats she's worn as well, that in mid-June concerns were aired around an open-pit coal mine in the Klappan being fast-tracked, which the Tahltan felt, or a number of people felt, broke their election promises around the Sacred Headwaters. The federal government has agreed to substitute the provincial assessment process in lieu of a federal one for the Arctos anthracite project that was introduced April 18, 2013.

I'm wondering if the minister can explain the current status of this, the government's position and how the government plans to reconcile the development of an open-pit coal mine in an area that they've promised to engage on with the local people and look at protecting.

[1115]

Hon. M. Polak: Firstly, let me say that this project is in no way being fast-tracked. It's going through the same process that any other mine of its type would have to undertake. It has just entered the preapplication stage of the environmental assessment, very early days, in April.

With respect to balancing those interests, that is, in fact, what takes place all the time when we're dealing with designating parks and protected areas. Virtually every time we do that — I would venture to say every time we do that — we have to deal with existing rights and tenures. That is part of our normal process when we designate parks and protected areas.

S. Chandra Herbert: Speaking of parks, I'm curious…. We've heard for many years — certainly we've raised for many years — concerns about maintenance of park spaces. On a recent Canada Day long-weekend trip to the Carmanah, I discovered the door of the washroom was falling off. Large chunks of the boardwalk were broken.
[ Page 386 ]
That is a park which people come to from all around the world. It did not reflect well on British Columbia.

Certainly, we've heard these questions raised around many parks across B.C. In the case of Carmanah, they're still distributing maps from 1997 which list trails which have been closed for quite some time. They talk about the Walbran area of that park — doing a consultation, a study into ecological values and into whether or not trails should be put in there. That's on the brochure from 1997. That same language is used on the website now in 2013.

That, to me, suggests…. It's certainly in keeping with what the Auditor General has said about B.C. Parks not having management plans and not having plans to deal with ecological concerns in there, in many of the parks. I'm curious if the minister can tell us what the plan is to ensure that every park has a management plan, a plan to deal with ecological issues in those parks, and what they're doing to improve maintenance of our parks, given that many are in a challenged state right now.

[1120]

Hon. M. Polak: If the critic will indulge me, I'll just answer a question from a previous round. To the member for Oak Bay–Gordon Head, since January 1, 2001, there have been….

Interjection.

Hon. M. Polak: Sorry, it's 2011. Yeah, I have the glasses, and it's still not helping.

Since January 1, 2011, there have been a total of 15 that have entered the EA, and 13 of those were approved, and two were not approved. Important to note, as we discussed the EA process previously: often it is the case that projects enter, and as deficiencies are pointed out they are corrected as the process unfolds. Hope that's helpful.

To answer the question at hand, certainly it has been recognized that there is a need to deal with some of the situations in the parks that have been described by the member. By the way, Lori is going to, certainly, look into what you discovered at Carmanah. As a result of that concern, the capital budget for parks was increased by 27 percent in '11-'12, to the tune of $13.98 million, for that very purpose: to help us fix the doors on the washrooms, etc.

When it comes to publications, brochures, it's true that we have lagged behind in terms of updating those — a conscious decision in tight times. We have directed our resources to the areas where we think it matters most, and that is, in fact, the park operations and maintenance.

S. Chandra Herbert: I'm curious if the minister can share with us what the plan is to deal with all of the management plans, ecological plans that are still left outstanding.

As I mentioned, I don't…. I guess tough times, maybe, from when the government took over in 2001 to now because in terms of…. I'm being facetious here, but there have been 12 years, for example, with that one park where they say that the government is planning a study and is studying it. That's actually been on their plans since 1997, and nothing has happened.

So how are we going to adjust the huge backlog of management studies, of ecological reports that are required in our parks to protect the species that we want to protect in them but also to make sure that they're there for the public who want to use them?

[1125]

Hon. M. Polak: Of course the member will know — but we're pretty proud of it, so I'll say it again — that we do have 1,030 parks in our system. That means that we have the third-largest park system in North America. In Canada we're second only to the federal park system. So it is a heritage for us to be very proud of.

The process unfolds as follows. You begin with a conservation risk assessment, and for 96 percent of our parks, those have been completed. Once that is done, there is public consultation. There is First Nations consultation around how the park ought to be used. That results in a management plan. Two-thirds of the parks now have management plans.

I suppose you can always speed something up by throwing more finances at a challenge like that, right? At the same time, I believe we're making steady progress, and really, the time it is taking has more to do with some very thorough work around the assessments and the consultation than it does with budgetary impacts.

S. Chandra Herbert: Well, I'm sure the management plan into the Walbran Valley, which it has been undergoing since 1997, will be a really excellent plan with incredibly detailed work, as the ministry has been saying it's doing that work since 1997 and still says it's doing that work today. It's going to be quite a considerable report, and I hope to see it soon.

Moving on to fisheries, I know the minister has said there are pieces of fisheries in her ministry. I'm curious if she can tell us what steps her ministry is taking to ensure that the Cohen Commission report and the recommendations therein are being followed to the fullest of government's ability. Of course, the elements that are within her ministry, I'm asking about.

[1130]

Hon. M. Polak: As it turns out, Agriculture is responsible for working with the federal government on the implementation of the Cohen Commission and the recommendations.

S. Chandra Herbert: I guess I'm curious. Freshwater Fisheries Society has been calling, for many years, for the full amount of funds to be given their way so that they
[ Page 387 ]
can continue to protect our fish but also introduce more people to the joy of recreational angling and fishing for food for their families.

I'm curious. I know it's in the minister's letter from the Premier. What steps are now being taken to ensure that that happens?

Hon. M. Polak: We are committed to making it happen. We are working together with Forests, Lands and Natural Resource Operations. I'm advised by staff that at this stage, they are taking a look at what exactly would have to be done in order to make that possible.

S. Chandra Herbert: Obviously, the federal fisheries regulations have been changed. The federal Fisheries Act has been changed. I'm curious what the government is doing now.

Maybe I've already asked this question. Actually, I think you're right. We did. So I'm going to sit down, because I asked this question yesterday and got the response, and I'm sure I would get the similar response today.

I'm going to turn it over to my colleague who has some questions, not about fish but about packaging.

G. Holman: I had some questions about MMBC, Multi-Material B.C., if I've got the name right. Some data here for container recycling fees — 183 percent increase from 2007 to 2010 in container recycling fees, which is a huge increase. Yet the recovery rate over that same period increased only a small percentage.

I guess the question is…. The data I have indicates going from roughly $20 million to $55 million. So the $35 million in container recycling fees, the increase from 2007 to 2010 — where is all that revenue going if it's not generating a higher recovery rate?

[1135]

Hon. M. Polak: A couple of things going on here. The Multi-Material B.C. aspect of this won't come into effect until 2014. In terms of the fees that are currently collected, those are collected by industry and then they are directing those towards efforts at recovery.

G. Holman: Minister, the question still stands, though.

A huge increase in cost recovery in container recycling fees of about $35 million over a three- or four-year period and yet only a tiny increase in the actual recycling rate. I guess the question is: what oversight is the ministry engaged in to ensure that there is value for money in terms of this sharp increase in container recycling fees?

[1140]

Hon. M. Polak: If I'm understanding it, the member is asking about beverage return — the type of beverage containers that a person would pay a deposit on and then, when they return their bottle or can from their pop or beer, would be able to get their deposit back. Is that the…? Okay.

That is a different area than the industry product stewardship, which is perhaps where the member is trying to go in terms of the Multi-Material B.C. I'll just say a little bit about that.

We have in British Columbia the extended producer responsibility programs, which is one of the most successful methods for waste reduction. In fact, we have in B.C. more programs than any other jurisdiction in North America. In July of 2012 we were actually given the highest ranking in the country for EPR programs. On EPR Canada's national report card we received an A-minus.

Our role in that case is to review and approve their stewardship plans. But it is the industry that sets rates, the industry that creates their plans. We simply approve them. Then, if there is a fee charged, they are required to produce independently audited financial statements, and they have to submit those to government for review. There are two streams here, if you will.

G. Holman: I think it would be good to get a fuller briefing from your staff on the recycling programs in British Columbia. That would be useful. I'm sorry for any confusion on the question.

I do have a question about MMBC and a letter written to you and copied to me from the Southern Gulf Island Recycling Coalition, which apparently received a proposal from MMBC regarding funding for their depots. This would include Saltspring Island and a number of other southern Gulf Islands.

Basically, non-profit groups running these recycling depots are very concerned that the funding proposal they're getting from MMBC is a small fraction of what they need to operate. They're concerned that if that proposal was supported, approved, they would no longer be able to operate.

My question to the minister is: have you received the letter and what can you do to address that concern?

[1145]

Hon. M. Polak: MMBC is currently negotiating with providers all across the province in order to establish the new operations. With respect to the specific letter, I'm not personally aware of it, but that doesn't mean it has not already arrived in my office. I'd be happy to look into the specific one for the member, and I think perhaps the questions around it will be better answered in that briefing that we'll provide to you.

D. Donaldson: My question relates to Highway 37 and the amount of development that is currently underway along that highway in regards to the northern transmission line, mining exploration and other resource-extraction activities.
[ Page 388 ]

There have been many concerns around the cumulative effects of increased traffic on Highway 37, and, as the minister knows, the environmental assessment process has to consider environmental impacts, social impacts and economic impacts of project applications. The transportation and increased vehicle traffic have implications on all three of those areas under environmental assessment.

My question is: what is the government's plan around how to address this impact issue along Highway 37? The plan right now is a one-off approach, where an assessment is done on a project, and if transportation is included, then it's specifically on the project, but that project scope can increase, and many projects can come on line after that. Is it the government's plan that the cumulative effects would not be considered all at once, or is the plan that it's a project-by-project basis, and therefore, the proponents who are attempting to put their project in at the last will be the ones who suffer the full consequences of the cumulative effects?

The Gitanyow First Nation had concerns around the cumulative effects of a project and wrote to the ministry in May. Their concerns, they were told, had nothing to do with the environmental assessment process around increased vehicular traffic on Highway 37 that might be associated with the project.

They asked at that time, and I would ask the ministry: is there a threshold around vehicles per day that would warrant the inclusion of transportation effects in the EA scope?

[1150]

Hon. M. Polak: I'm afraid…. I'm going to try to do justice to the answer in the short time we have left, but it's likely not a very short one.

It is true that currently, the impact of increased vehicular traffic is not a part of the EA review. Nevertheless, as we've canvassed earlier on in the estimates, because of the increase in resource extraction activity, we are turning our minds to how it is we are going to deal with cumulative effects. We talked a bit about the fact that while the current EA process deals with individual projects on their own, we have to sort out the appropriate way to leave room for all projects so that we don't end up in the circumstance that the member described — where the first in takes up all the regulatory room, if you will, and then you are left with blocking out other projects, potentially.

So we are alive to that. It may be that the environmental assessment process is not the right place to deal with vehicular traffic and the increases, but we have not reached that conclusion yet. We are at the stage where we are turning our minds to how best we could address that. But we're certainly alive to the challenge it presents, and it does need to be considered in some way by government in the process.

I move that the committee rise, report progress and seek leave to sit again.

Motion approved.

The committee rose at 11:53 a.m.

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