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)

Wednesday, July 17, 2013

Afternoon Sitting

Volume 3, Number 5

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

WEDNESDAY, JULY 17, 2013

The House met at 1:33 p.m.

[Madame Speaker in the chair.]

Routine Business

Prayers.

Statements

MESSAGES OF CONDOLENCE

Hon. M. de Jong: Madame Speaker, I begin with some sad news for members. I regret to inform the House that the Deputy Premier's mother passed away early this morning, and he is, of course, attending to the loss of his family. I know all members of the chamber will want to convey our condolences to him and his family, and we'll be happy to do so on behalf of the members.

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Introductions by Members

Hon. M. de Jong: On a happier note, I introduced, a few days ago, the first contingent visiting from the Kingdom of the Netherlands. The second wave of the invasion is here today. The van Boxtel clan from Holland is here. They include Albert, Joop, Bert, Jeanne, Netty, Thea and the patriarch of the clan, 88-year-old Piet van Boxtel. He is leading them through Victoria and through British Columbia. I know all members of the chamber will want to make the Fighting van Boxtel welcome here in Victoria.

Statements

MESSAGES OF CONDOLENCE

J. Horgan: I want to, on behalf of the official opposition, also offer our condolences to the Deputy Premier and his family. It's at times like this that we all recognize, all 84 of us, that we are the same. We are all mortal, and we will all pass. These are very difficult times. Just four years ago, after the last election, I lost my mother, and I certainly know exactly how the Deputy Premier feels. We have obligations here, but beyond that, we have human compassion for each other. So on behalf of the opposition, I'd like to pass that on.

Introductions by Members

J. Horgan: I'd also like to add, having Dutch in-laws, [Dutch was spoken] to my friends from the Netherlands and [Dutch was spoken], which is about all I've got.

Hon. S. Anton: Today in the gallery are a number of justice leaders from our neighbouring province of Alberta, who I'll be meeting with a little later today. First of all, the Hon. Jonathan Denis, QC, behind us here. Mr. Denis is the Minister of Justice and Solicitor General for the province of Alberta. He was appointed to cabinet in January 2010, making him the second-youngest person to be named to cabinet in Alberta history.

He's a second-term MLA from Calgary, has worked as a litigation specialist, the president of a communications firm and a director of the Institute of Public Sector Accountability. He's served as Minister of Housing and Urban Affairs, as Solicitor General and Minister of Public Security and parliamentary assistant for Energy.

He is accompanied by Mr. Ray Bodnarek, QC, Deputy Minister of Justice and Deputy Attorney General, who has more than two decades of experience with Alberta Justice. Mr. Bodnarek is co-chair of the Canadian Centre for Court Technology board of directors, and he sits on the provincial-territorial forum of deputy ministers responsible for justice.

We have here, as well, Mr. Tim Grant, Alberta's Deputy Solicitor General, with a strong background in policy development and program implementation. He is a retired major-general. He commanded the army in western Canada and received the Meritorious Service Cross from the Governor General for his leadership in Afghanistan.

Lastly, we have Mr. Josh Stewart, who is a communications professional who is press secretary to Mr. Denis. Would the House please make these guests from Alberta welcome to Victoria.

C. James: I have two guests who are here with us today from the Victoria International Development Education Association, otherwise known as VIDEA, and I'll talk a little bit more about that later. They are Lesley Palmer, who is the internship coordinator and project manager, and Summer Goulden, who is a summer student at VIDEA. Would the House please make them very welcome.

Tributes

Top Chef Canada WINNER
MATTHEW STOWE

Hon. S. Cadieux: Well, it's a real pleasure for me to introduce someone here today that we're all very proud of in my constituency of Cloverdale, and somebody every British Columbian can take pride in. For those of you who had a chance to eat in the legislative dining room today, you were able to enjoy some exquisite food prepared by chef Matthew Stowe, Canada's top chef.

Last month Matthew became the winner of the Food Network's Top Chef Canada program. Over 13 weeks he competed against 15 other chefs from across the country
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to win the title of Canada's top chef. He got his start in the culinary trades at Lord Tweedsmuir high school in Cloverdale and went on to New York's famed Culinary Institute of America before coming to British Columbia. Today Matthew is the product development chef for Cactus Club Restaurants and continues to live in my constituency, in Cloverdale.

He is a passionate advocate for grown-in-British-Columbia products and our hard-working B.C. farmers. I think anyone who had a chance to have lunch today will have enjoyed the incredible fresh fruits and vegetables that were presented.

I'd like the House to join me in congratulating Canada's top chef, Matthew Stowe of Cloverdale. Welcome him and his guest Trevor Pancoust to the House.

[1340]

Introductions by Members

N. Simons: Joining us is in the House today is Victoria Maxwell. After her diagnosis of bipolar disorder, anxiety and psychosis, she became proactive in her recovery, becoming an acclaimed speaker and educator, whose one-woman show, Crazy for Life, speaks to her personal experience of mental illness and recovery.

Her goal is to reduce the stigma and to give courage and skills to those affected by mental illness. Today she brings a message to the House about the importance of restoring funding to mental health programs she attributes to saving her life. Would the House please join me in making her welcome.

D. Horne: Madame Speaker, it's with great pleasure that I introduce a group from the Beijing College Student Film Festival, which you hosted for lunch yesterday, together with the member for Vancouver–West End.

The delegation is led by Zhou Xing, who is the president of the Beijing College Student Film Festival organization and dean of the college of arts and communications at the Beijing Normal University. Joining him is Tian Hui Qun, the director of the Beijing College Student Film Festival movie Tang Ka, which was played here in Vancouver as part of the festival here. She's also the associate professor and dean of the department of film and media at the college of arts and communications from Beijing Normal University.

Wang Yun is the secretary of the Beijing College Student Film Festival organization and a lecturer at the college of arts and communications at Beijing Normal University. He Wei is assistant professor of the digital media department at the college of arts and communications at Beijing Normal University. Wang Li-qun is the associate professor and associate minister of the art education centre at the Beijing Institute of Technology.

Christine Song is the president of Media Globe Film and Arts Broadcasting Inc. and was the organizer of the Beijing festival coming here to Vancouver for the first time and actually being hosted in Richmond at the Richmond Cultural Centre, as well as the Vancouver Film Studios. May the House make them truly welcome.

K. Conroy: It gives me a great deal of pleasure to introduce a delegation from the city of Castlegar. We have with us His Worship Mayor Lawrence Chernoff, Councillors Sue Heaton-Sherstobitoff and Dan Rye and their CAO, John Malcolm. Would you please join me in making them most welcome.

Hon. T. Wat: I am very pleased to introduce today in the House representatives of one of British Columbia's most valued trading partners, the government of Hong Kong special administrative region — Gloria Lo, director of the Hong Kong Economic and Trade Office in Toronto, and her assistant, Catherine Yuen. She is the principal consultant with the Vancouver liaison office of the HKETO. Would the House join me in making them most welcome.

H. Bains: Hon. Speaker, in the House today is my good friend, who was also a former member of this House — from Yale-Lillooet and later, Fraser-Nicola — for almost, I'm told, 18 years. By the way, that makes him the longest-serving visible minority member of all Canadian legislatures and parliaments. Please help me welcome my good friend Harry Lali.

Hon. A. Virk: We often speak in this House of the future leaders. Our future leaders are indeed our next generation, our students. We have a number of university students up in the stands, and the university student representatives. Would the House welcome a host of the future leadership, please.

G. Holman: I would like to introduce Anne McFarlane, who is vice-president of the Canadian Institute for Health Information, and her colleagues here today. Anne also happens to live in my constituency, Saanich North and the Islands. CIHI is an independent, not-for-profit corporation funded by federal, provincial and territorial governments, which provides unbiased and comparable information on Canada's health system and the health of Canadians. This information helps health leaders to make better-informed decisions. I'd like to ask the House to welcome Anne and her colleagues here today.

Hon. T. Stone: It gives me great pleasure to introduce some very special people in my life. It's not often that we get to welcome our parents to the Legislative Assembly. My mom and dad, Ken and Bernadette Stone, are here from Kamloops. They're accompanied by my aunt, who actually lives in Sidney on Vancouver Island here.

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While I know they do still have some reservations about my current career choice, I know they're all proud. I'd ask the House to please make them feel welcome.

A. Weaver: I'd like to welcome three visitors from my colleague the member for Powell River–Sunshine Coast's riding, who are here for some meetings and also to go on vacation to the member's riding here in Alberni–Pacific Rim. This is Noel Muller, his wife Georgia Cyr and their young daughter, ten-year-old, or eight-year-old, Elizabeth. I would ask the House to make them welcome, and also, to model the behaviour to this young daughter that they would expect their own children to model at their dinner table in QP today.

J. Thornthwaite: I'd like to welcome a couple of constituents to the precinct today, Heather Woolstone and Ray Stewart, from Parkgate, right in the heart of Deep Cove. Welcome, and I'm sure that everybody will welcome them as well.

M. Dalton: In the gallery today we have Gordy and Mary Robson. Gordy is the former mayor of Maple Ridge. Both Gordy and Mary are long-time residents and constituents of mine and are big volunteers in the community, whether it be Rotary or the food bank or the Webster's Corners Association.

He was telling me today that he is a former EA — executive assistant — here in the House, 1972, with Mel Couvelier. His son is following in his footsteps — Will. He works with Advanced Education. Would the House please make them feel welcome.

Statements
(Standing Order 25B)

SOUTH ASIAN FAMILY ASSOCIATION
SUPPORT FOR YOUTH

Moira Stilwell: British Columbians are blessed to live in one of the most diverse multicultural regions on the planet. There are many organizations across the province working to enhance our cultural mosaic by promoting inclusiveness and understanding. Today I'd like to single out one of those organizations.

The South Asian Family Association, or SAFA, was founded in 2011. Its mission is to help immigrants integrate into the Lower Mainland, overcome language barriers and learn how to access services such as health care and transportation.

Perhaps their most important function, however, is promoting positive role models for South Asian youth. Prior to the association's inception, it was often recognized that the media portrayal of South Asians focused heavily on violence, crime and gang activity.

The association works to change this by raising awareness of South Asian culture, its rich history and the importance South Asians place on family and community. By helping youth find a sense of cultural identity and by increasing the region's awareness of South Asian culture, SAFA hopes to bring positive change.

Each year SAFA offers scholarships to graduating high school students of South Asian descent. Three bursaries worth $1,000 each are awarded to students achieving excellence in arts, fine arts and community involvement.

The awards will be handed out this year at the tenth annual Sawan Mela festival, which takes place August 17 and 18 at the Plaza of Nations. This great event promotes cultural awareness and provides youth with a platform to showcase their talent.

I encourage everyone to attend and ask the House to join me in thanking SAFA for everything they do to make our region a better and more inclusive place to live.

VICTORIA INTERNATIONAL DEVELOPMENT
EDUCATION ASSOCIATION

C. James: What does solidarity mean to you? That's the question the Victoria International Development Education Association, or VIDEA, is asking citizens for its fourth annual Global Solidarity Challenge.

Last year the challenge asked participants to commit to living below the global extreme poverty level by eating only $1.25 worth of food each day. This year it asks: "What can we all do this week" — July 14 to 20 — "to show our commitment to creating a more just world?" It might mean not using hot water or electricity, getting around by only walking or cycling, walking to a public source for water, or eating only local and fair trade food.

The idea is to encourage all of us to think every day about the rights and privileges we all have and to act in whatever way we can to support those rights and privileges for all. Over the last three years, the Solidarity Challenge has raised more than $80,000 to support VIDEA's human rights and gender-focused programs.

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Based right here in Victoria, VIDEA is committed to ending global poverty and creating a more just and equitable world. It's guided by an exceptionally dedicated, small but mighty staff team and 180 volunteers. They make a difference with international education programs and initiatives to engage young people in communities abroad and right here in British Columbia. Their international youth internship program provides a range of work and learning opportunities for youth in Canada.

One of VIDEA's programs is currently running right here in Victoria. From the Heart is a theatre production that challenges non-indigenous Canadians to examine their relationships with indigenous peoples.

I'm part of a team this year. I'm taking action to raise awareness, to work with others and to fundraise for programs locally and globally. I would encourage all mem-
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bers of the House to go to videa.ca, learn about the creativity of the challenge teams and contribute to end global poverty, and to end poverty right here at home.

MAPLE RIDGE CARIBBEAN FESTIVAL

M. Dalton: Throngs of visitors and residents converged upon Maple Ridge's Memorial Peace Park this past weekend to experience the 13th annual Caribbean Festival. R & B soul, steel drums, Rastafarian reggae, mixed limbo and soca DJ were some of the various strands of Caribbean music that the crowds listened and swayed to.

Fifteen acts played throughout the weekend on two stages, including Juno Award–winning Canadian reggae artist Steele, backed by the Natural Flavas. Last year 18,000 came down to enjoy the music, authentic Caribbean food, arts and crafts. The numbers were just as strong this year in this popular summer festival on the Scenic 7 drive.

I want to thank the founders of this fantastic festival: Deddy Geese, Debi Pearce and Ineke Boekhorst. A great deal of planning and effort is put in by volunteers with the Maple Ridge Caribbean Festival committee. Special thanks go to Martyn Garner, Jessica Norman, Adela Patoni, Gloria Fox, Suzanne Drost, Kim Boekhorst, Peter Chan and also the many local business sponsors. They all helped to make this year's event a huge success.

This dynamic and upbeat festival is a fabulous way to celebrate summer in Maple Ridge. We have a wealth of artistic talent here in British Columbia, and events like this showcase our local provincial talent.

The Caribbean Festival energizes the downtown core, contributes to the tourism industry and helps boost our local economy. This lively outdoor event brings our community together and is the fun-filled place to be for all ages.

FIRST NATIONS MARATHON
FOR SUICIDE AWARENESS

G. Holman: I want to speak to the House today about the Heliset Hále Marathon recently run by three First Nations athletes from my constituency: Kelly Paul, Bernice Smith and John Sampson. Their 535-kilometre marathon from Port Hardy to Victoria was to commemorate several recent suicides among the Cowichan Tribes and to raise awareness about the shocking suicide rates among First Nations communities across Canada — about six times the national average.

I had the opportunity to attend a marathon event in one of these communities that these runners passed through. You might imagine that the event was a depressing one. It was not. The runners brought a message of hope and spoke of the need to talk publicly about a very difficult subject. Other members of the community also spoke about their own experience with loved ones who had taken their lives.

We've all heard about the root causes of First Nations problems — the continuing effects of residential schools, separation of First Nations from their traditional lands and resources, and a resulting disconnect with their own culture.

University of Victoria professor Chris Lalonde has just completed groundbreaking research in 150 First Nations communities across British Columbia, finding that language was the strongest determinant of suicide rates. In fact, the research showed that suicide rates dropped to zero in communities in which at least half the members reported a conversational knowledge of their language.

Related to this, the federal budget officer — at the request of Jean Crowder, the MP for Nanaimo — recently reported on the state of First Nations education in this country. The budget officer found that reserve schools in B.C. need 50 percent more funding to bring it up to levels provided for provincial schools.

Suicide among First Nations and its root causes are not partisan issues. While the federal government has primary jurisdiction, we all share in the responsibility to deal with these problems. An important and practical place to start would be to provide more funding to help preserve First Nations languages.

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CROSSROADS HOSPICE SOCIETY

L. Reimer: For the past 25 years the Crossroads Hospice Society has served my riding. This year they will be celebrating the tenth anniversary of their Crossroads Inlet Centre Hospice.

Historically, hospices were places where travellers would stop for respite before continuing their journey. The modern hospice movement continues this legacy by providing palliative care to people living with a terminal illness and support to their loved ones.

Crossroads is a place where caring, not curing, is the focus. It's a place where an atmosphere of love and concern is provided for people preparing for their final journey in life. They also support caregivers who are looking after their loved ones. Crossroads is home to an interdisciplinary team, including palliative physicians, registered and licensed practical nurses, social workers and therapists.

Their Labyrinth Healing Garden, located in Port Moody's Pioneer Memorial Park, connects patients, staff, volunteers and the community with nature. It's a place for reflection, thought and healing.

Like many societies, volunteers are the heart of the society, with over 132 active trained volunteers, 98 volunteer thrift store operators and a 14-member volunteer board of directors. These volunteers and board work very hard for the benefit of those receiving end-of-life care,
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hosting many wonderful fundraising events such as the Treasures of Christmas and Hike for Hospice.

To the staff, volunteers and directors of the hospice society, thank you, and happy 25th anniversary.

OPEN HOUSES AT VANCOUVER FIRE HALLS

G. Heyman: This summer the Vancouver Fire and Rescue Services are hosting open houses at various fire halls across Vancouver. It's an opportunity, as they say, to meet your local firefighters, learn what they do. I also think it's a great opportunity for us to look at the history.

Vancouver began with a volunteer fire brigade that was established in May 1886, just 16 days before the great fire burned the city to the ground. At that time, the firefighters had to proceed on foot because they were still waiting for their first engine to arrive.

Twenty-five years later, however, the Vancouver fire department was rated the world's best in efficiency and equipment, and soon after, Vancouver was the first fire department in Canada to use motorized equipment. Today over 800 men and women work at 20 fire halls, the training academy and two fire prevention offices in Vancouver.

Last Sunday I had the opportunity to attend the open house at Fairview, Fire Hall No. 4, in Vancouver. It opened in 1911 in an old craftsman building to serve the growing population south of False Creek. In the early 1990s the original building was replaced with the current one on West 10th, which also incorporates a local library.

It was great to be there and see the interaction between the firefighters, Captain Royce Jordan, the kids that came — of course, kids are always excited by fire engines and fire hats — and their parents, who were a little bit like kids that day. The firefighters talked about what they did. They talked about their programs. They showed the kids the ins an outs of the cabs of the engine. They all got a little red hat to try on with a picture, and I got a lot of information.

The captain and the crew talked about the other community engagement activities of the fire department: the annual camps they give high school students, where they get practical experience; fire safety and extinguisher use courses; workshops that teach practical fire protection, fire prevention, fire safety for kids and seniors; and home safety tips.

Madame Speaker: Thank you, Member.

G. Heyman: I urge people to go to the other open houses this Sunday in Fire Hall…

An Hon. Member: …Three.

Madame Speaker: I appreciate the innovation. [Laughter.]

Oral Questions

IMPLEMENTATION OF
MULTICULTURAL OUTREACH STRATEGY

A. Dix: Yesterday, when faced with questions about an e-mail that showed B.C. Liberal MLAs and B.C. Liberal partisan officials proposing to offer inducements for the silence of former staffer Sepideh Sarrafpour, the Premier said: "There was no evidence that it was ever acted upon." Just to remind the House what the e-mail said: "Have Harry Bloy meet with her and explain how doing anything would damage the Premier and the party. Have him say how he will try to find her work."

Last night the former staffer told media she was in fact approached by Mr. Bloy, who told her that "there was a job happening, that if I want to go and work for them, for Brian Bonney and Harry Bloy."

[1400]

My question is to the Minister for Multiculturalism. The e-mail says that Mr. Bloy would offer Ms. Sarrafpour a job. Ms. Sarrafpour said he did offer her a job. How does that square with what the Premier said?

Hon. T. Wat: As I said yesterday, the e-mail the members opposite refer to was wrong. The approach and suggestion in the e-mail was wrong and inappropriate. There is no evidence, no evidence whatsoever, that the e-mail was acted on by the government. That is what the Dyble report finds.

The Dyble report was fulsome. It was comprehensive. It was exhaustive. It showed that there were some individuals who clearly acted outside the guidelines for public servants and for political staff. The e-mail falls into this category.

Madame Speaker: The Leader of the Official Opposition on a supplemental.

A. Dix: The Premier said that the e-mail wasn't acted upon. It turns out it was acted upon by one of the Premier's closest and most important political supporters.

Interjection.

A. Dix: This is a fact. Surely her highest ranking supporter in the Liberal caucus, if the Government House Leader….

Interjections.

A. Dix: When the Premier was confronted about the B.C. Liberal plan to use public money to do party work, she insisted the plan was just a draft. She said: "It seems apparent at the moment that most of the document — particularly the things that most of us, including me, find
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most offensive — was not acted upon."

This scheme, which was developed in the Premier's office and paid for by the taxpayers, called for the use of public money to "identify people from within target communities to help build these lists," and to help the Liberal Party "bypass the media to get our message out" in target communities.

Can the Minister Responsible for Multiculturalism confirm that building those lists — and this is exactly in her area of responsibility — was exactly the work for which Ms. Sarrafpour was hired by the Liberal government?

Hon. T. Wat: As I have stated previously, all these matters were revealed by the Dyble report. If the opposition had taken the time to read the report, they would know that the report concluded that there was no database. No database was ever created.

Here's what the report said: "Every person interviewed was clear that no database was ever developed." The report goes on to conclude: "During the record search, no evidence was found of a database having been created."

I trust the finding of this distinguished public servant, and I suggest members of the opposition do the same.

Madame Speaker: The Leader of the Official Opposition on a supplemental.

A. Dix: Well, just on that particularly laughable argument about lists. A meeting was held in the Premier's office on Monday, August 13. One of the subjects of it…. This is an e-mail from Mr. Bonney to a cabinet minister — the minister's predecessor. It says: "Database management. Brian to update on liaison list. Alex to provide spreadsheet list to date. Sarah to oversee complete strategy plan for completion."

There was no evidence? That's what they were doing. That's what Ms. Sarrafpour was hired to do.

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And yes, they were trying to hide the fact. Of course the Liberal Party was trying to hide the fact. In fact, despite being paid by the taxpayer, her contract instructed her only to contact Brian Bonney, who was then director of communications for Multiculturalism, on his private e-mail account. The contract instructed her to deny working for the government and the party.

Given that the contract would break almost every rule about how government money is to be spent, can the Minister for Multiculturalism please tell this House: was Ms. Sarrafpour, in this comprehensive review, in this total review, ever interviewed in the review?

Hon. T. Wat: I can't understand why the Leader of the Opposition would like to refight the last election. The Dyble report was released prior to the election. The topic was canvassed extensively in the House prior to the election. You were all there.

Oh, some of you were not there, so some of you may not know the electorate said…. They gave our government a mandate to create jobs, to strengthen the economy, to secure a better and brighter future for British Columbia. As the Minister of International Trade, that is what I'm going to do.

J. Kwan: The minister ought to know that there is now new evidence that has surfaced. The Premier, in spite of the new evidence, continues to repeatedly claim that this unethical scheme to use taxpayers' resources for the benefit of the B.C. Liberal Party was just a draft. She said that it was never acted on. The new evidence shows that that is simply not true.

It has been confirmed by a former staffer, Ms. Sarrafpour, that the former Minister for Multiculturalism's fingerprints were all over the scheme. He was at the meeting, at the Premier's cabinet office, giving direction and asking questions about the status of the scheme.

Can the minister explain the discrepancy between the Premier's statement yesterday and the member for Richmond-Steveston's direct involvement in this sordid scheme?

Hon. T. Wat: As some members of the opposition are well aware, the Dyble report was conducted by four of the most senior public servants in the government. It was thorough, it was timely, and it was released prior to the election. They all looked at all the documents. The government went to the extraordinary length of publishing and posting all 10,000 pages that were revealed, as part of the report.

The report found no evidence, no evidence whatsoever, that the document in question was acted on. If there were evidence to suggest the e-mail was acted on by the government, it would have been included in the report and recommendations would have been made.

Madame Speaker: Vancouver–Mount Pleasant on a supplemental.

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J. Kwan: Yes, there is new evidence. We now have a witness who has come forward. We now have e-mails that were released after the election, showing the fact the former Minister for Multiculturalism's fingerprints were all over it, showing the fact that the government's claim that none of these sorts of schemes was ever acted on is simply not true.

Here's an e-mail from the former Minister for Multiculturalism to Brian Bonney. The e-mail says: "Have you got Sepideh's list yet?" That's the question from the member for Richmond-Steveston. He specifically asked for postal codes for the list so that it could be broken down by riding for the election.
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Given what we know now, how could the minister possibly say that it was never acted on? How could British Columbians possibly believe the Premier when she said the plan was never acted on?

Hon. T. Wat: I don't know how many times I will keep telling members of the opposition that all of these matters that you have brought up time and time again were reviewed by the Dyble report.

I'm going to tell you, remind you, once again: please take the time to read the report. If you really take the time to read the report, you would know that the report concluded that no database was ever created. Do you want me to quote the report to you once again?

Interjections.

Hon. T. Wat: Okay. I don't mind. Just one more time.

Here's what the report says: "Every person interviewed was clear that no database was ever developed." The report goes on to conclude….

Interjections.

Hon. T. Wat: Can you listen to me?

"During the records search, no evidence was found of a database having been created." I really trust the findings of our most distinguished civil servant, and I really urge members of the opposition to do the same.

B. Ralston: Well, clearly, Ms. Sarrafpour disagrees with the minister's characterization of what took place. The former Minister for Multiculturalism, the member for Richmond-Steveston, said his only offence was using his personal e-mail instead of his public e-mail to do this work. He claimed that it was a mistake. But this was no mistake. This was part of the scheme — a deliberate attempt — to avoid scrutiny by using e-mails that were not accessible through freedom-of-information requests.

To the minister responsible: if the plan was supposedly just a draft and never enacted, as the Premier claims, why was the minister sending any e-mails at all?

Hon. A. Wilkinson: We not only have the rich parliamentary tradition here; we have the rich tradition of the English language, which contains phrases like chasing your tail, catching a red herring and flogging a dead horse. That latter term, flogging a dead horse, must surely apply to this line of questioning.

There has been a wide-reaching investigation — 10,000 pages of documents reviewed by senior members of the civil service, who put this issue to bed and put it before the electorate two months before the election. This is truly a dead issue, and my friends, my colleagues, my opponents — the members on the other side — surely need to move on.

Madame Speaker: Member for Surrey-Whalley on a supplemental.

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B. Ralston: That's an interesting partisan answer coming from the former president of the Liberal Party, who in 2001 vaulted straight from the presidency of the Liberal Party to being a deputy minister.

The Premier's claim that this scheme was never implemented simply isn't believable. Ms. Sarrafpour has provided clear evidence that key elements of this plan were put into effect. She had clearly collected lists, and the former Minister for Multiculturalism was hoping to get those lists. Then when it became clear that the information in Ms. Sarrafpour's possession might be damaging to the Premier or the Liberal Party, they planned to offer her a job or money to shut her up.

These are multiple steps down the path of this so-called draft plan. Why should anyone — anyone in British Columbia — believe the Premier's claim that the multicultural outreach plan was never implemented?

Hon. A. Wilkinson: I, of course, take great pleasure in receiving the compliments of my friends about my earlier employment in the civil service of British Columbia, because it is an institution of the highest possible integrity. In stark contrast to that integrity displayed by the 30,000 employees of the civil service, we have a party across the way that paid $372,000 of taxpayers' money to a three-time-failed NDP candidate to do ethnic outreach work.

To steal another phrase from the old English lexicon, what's good for the goose is good for the gander. Where is this NDP investigation of that money? Where is the cheque made out to the taxpayers for $372,000? When will they come clean about their behaviour?

K. Corrigan: Well, I'm glad to see that we had another serious answer to a serious question from the other side.

I want to go back to specific facts and specific timelines. The Premier has repeatedly claimed and others have repeatedly claimed that this was a draft scheme and that it was never implemented. It was first cooked up in a meeting in November of 2011. But on August 7, 2012, nine months after the first meeting, there is an e-mail from the former Minister for Multiculturalism, who is now a Parliamentary Secretary to the Justice Minister. The e-mail is to Brian Bonney, Fiera Lo and Sarah Welch and copied to Mike Lee, and it lists all the elements of this so-called draft plan.

Another e-mail two days later confirms a meeting with the minister the following Monday, a five-hour meeting that took in the Premier's Vancouver office.

Can the current minister please explain how the Premier and the minister can claim this scheme was never implemented when there was a five-hour meeting at the Premier's Vancouver office to discuss the elements
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of this plan nine months after its inception?

Hon. A. Wilkinson: It is a testament to the strength of our democracy that the member opposite is able to read from a detailed report and from 10,000 pages of disclosed documents so that there can be full disclosure in this House of exactly what happened. That is what this party has done.

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It has engaged in appropriate disclosure within the statute, has engaged in the right kind of investigation, has paid back the taxpayer and has dealt with human resources issues by letting people go. It's high time the members opposite accepted the same standard for their own behaviour.

Madame Speaker: Burnaby–Deer Lake on a supplemental.

K. Corrigan: That information was released after the election. How transparent and open is that?

The former Multiculturalism Minister, now Parliamentary Secretary to the Justice Minister, said this all came about before he became the minister, yet here we have this e-mail from the former minister — to and from the former minister — talking about things like database management, multicultural community liaisons and multicultural community round tables. There is also a request from Sepideh Sarrafpour.

The Premier continues to insist the scheme was never implemented, and that sounds a lot like the former Multiculturalism Minister claiming this all happened before he was around. How does the current minister explain the widening gulf between what we see on paper and the Premier's claims about the quick-win scandals?

Hon. A. Wilkinson: Well, this horse truly has no skin left. It's been flogged until it is red and blue by my friends. The report speaks for itself. This has been a thorough investigation. We can now look forward to disclosure on a much more expensive matter from the other side of where the string of e-mail is. Where is the disclosure on, from their side, $372,000 of taxpayers' money?

We're now reduced to the point where the members opposite are stringing together tidbits into streams of innuendo to try and reopen a report performed by the civil service. It will not happen, because the civil service has done an excellent job and this government disclosed 10,000 pages of relevant documents.

CALL FOR INDEPENDENT
INVESTIGATION INTO MULTICULTURAL
OUTREACH STRATEGY

C. James: We've now heard two ministers stand up and talk about the thoroughness of the report. Well, I would suggest to both ministers and probably all members on that side of the House that they read the terms of reference for the Dyble report.

This report and this scheme was designed by the Liberals to be incomplete. It was designed to give the appearance of being complete without actually being complete. There was absolutely no authority to investigate the Liberal caucus, no authority to investigate the Liberal Party.

In fact, even Mr. Dyble admits his report isn't complete. "The terms of reference for this review does not extend to making findings with respect to cabinet ministers. It does not extend to making findings with respect to caucus employees. The public service standards of conduct do not apply to these groups. Therefore, the report makes no assessment of their conduct."

To the minister — any minister: will the Liberals stop pretending that this was a complete report, and will they order now an independent investigation on this quick-win scandal?

Hon. A. Wilkinson: Once again, the members opposite have decided to impugn the integrity and objectivity of the civil service. Once again, the members opposite have decided that it's time for a witch-hunt. How many days does it take to go through 10,000 pages of documents and pick off inferences to names, perhaps match them up with a telephone book, and come back into this House with innuendo? The investigation was thorough, professionally done, complete. The interviews included three elected members including the Premier. This matter is done.

Madame Speaker: Member for Victoria–Beacon Hill on a supplemental.

[1425]

C. James: I would remind the minister that those were Mr. Dyble's words. It is not Mr. Dyble's fault that he was not authorized to look at all of the issues that are here. What we've learned this week only highlights the flaw of the terms of reference of this report.

You have e-mails that refer to offers of hush money or jobs, yet the target of that offer was never able to be interviewed. Mr. Dyble didn't interview Lorne Mayencourt, who was also at the first meeting to plan this scheme. Mr. Dyble wasn't able to interview Mike McDonald, who was the Premier's chief of staff at the time of this scheme but then had moved on to run the Premier's election campaign at Liberal Party headquarters and, therefore, was beyond the scope of this investigation.

So once again, will the minister today admit that the Dyble report was incomplete because of the B.C. Liberals' terms of reference, and will they order a complete independent investigation into this quick-win scandal?
[ Page 625 ]

Hon. A. Wilkinson: Certainly, as a newly elected member, I'm going up the learning curve here. I am finding out that the processes of this House encourage democracy. The processes of this government encourage probity and transparency. That is what this party did immediately that this matter came to light. The necessary documents were disclosed to the necessary working panel, an objective panel.

Now the members opposite don't want to just flog the dead horse; they want an autopsy on the dead horse.

There has been an independent investigation. The matter is closed.

RETENTION OF RECORDS RELATING TO
MULTICULTURAL OUTREACH STRATEGY

S. Simpson: Recommendation No. 4 of the Dyble report calls on the legal services branch of the Ministry of Justice to "take appropriate action to secure any government records in the possession of former public servants and caucus employees named in this report and seek an undertaking that these records have not been used for inappropriate purposes."

Can the Minister of Justice tell this House: has this recommendation been acted on, and if not, why not?

Hon. M. de Jong: I've been, of course, listening with interest and trying to reconcile the manufactured outrage of the opposition with their own behaviour. There's a reluctance, of course, for the opposition to talk about Mr. Yiu.

I'm also looking at a document, which is interesting. Now, it is dated, to be sure. It is from the office of a minister in the NDP government. It's dated 1994, although….

Interjections.

Hon. M. de Jong: Yes, I thought I might get that reaction. But, of course, the minister involved has not disappeared from the political landscape, which I'll get to in a moment.

This minister on his ministerial letterhead says: "There needs to be a political management vehicle. Therefore, in terms of potential solutions, we discussed a management committee with staff and the aforementioned responsibilities, a campaign manager, a strategy to ensure that we can get government off our backs in terms of day-to-day work to focus on politics."

[1430]

Now, who might have been the author of that memo? Well, he's the president of the New Democratic Party today. That was Moe Sihota.

[End of question period.]

Orders of the Day

Hon. M. de Jong: I call, in this chamber, Committee of Supply — for the information of members, the estimates of the Ministry of Energy; in Section A, the Douglas Fir Room, Committee of Supply, the estimates of the Ministry of Transportation; and in the Birch Room, Section C, Committee of Supply, the estimates of the Ministry of Agriculture, which are to be followed by the estimates of the Ministry of Jobs, Tourism and Skills Training.

[1435]

Committee of Supply

ESTIMATES: MINISTRY OF
ENERGY AND MINES

(continued)

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

The committee met at 2:37 p.m.

On Vote 19: ministry operations, $19,219,000 (continued).

Hon. B. Bennett: With this ministry, the Ministry of Energy and Mines, we're doing estimates in segments. Yesterday we did mines. We did Core Review, which I'm responsible for as well. Today it's my understanding that we're doing electricity and alternative energy in B.C. Hydro.

Before we get started, I have a very, very few remarks that I'll make. To my right is the CEO and president of B.C. Hydro, Charles Reid. To my left is the assistant deputy minister in charge of the electricity branch of the ministry, Les MacLaren. Behind me, Dave Nikolejsin, the deputy minister for the ministry; Greg Reimer, vice-president of B.C. Hydro; and Cheryl Yaremko, also with B.C. Hydro, here to assist, because I'm sure that my critic is going to have all kinds of very difficult-to-answer questions.

Just briefly on this portion of the ministry, the ministry is responsible for developing and overseeing policies concerning electrical power generation, transmission and distribution, and the regulation of utilities. The ministry is responsible for initiatives that promote new energy technologies, energy efficiency and conservation, and alternative energy resources, including renewable and low-carbon transportation fuels.

In the last two years B.C. has been a net exporter of electricity. The amount of electricity exported under high-water conditions in 2012 reached 6,000 gigawatt hours, and that was a record volume.

Another part of this portion of the ministry that we're
[ Page 626 ]
involved with is the Columbia River treaty. We will conclude provincial consultations on the Columbia River treaty and present options to cabinet on any improvements in this fiscal year.

The ministry will also continue to work with the clean energy sector to ensure that there remain significant opportunities for renewable energy companies to provide power to B.C.

[1440]

In terms of B.C. Hydro, specifically, we'll continue to work with B.C. Hydro to find more efficiencies. We will work very hard to minimize rate increases to consumers and industry, while at the same time, ensuring that generation, transmission and distribution infrastructure is maintained, upgraded and replaced as necessary.

This is an unprecedented period of investment in B.C.'s public power system, with more than $2 billion per year planned over the next three years. Over half of that is to sustain aging assets.

Just some examples of what B.C. Hydro is building these days. The northwest transmission line and the Iskut extension, the Site C clean energy project, the Dawson Creek–Chetwynd area transmission project, upgrades to the Ruskin dam, the powerhouse in the district of Mission, and of course, the replacement of the John Hart dam at Campbell River.

These investments are significant. I'm sure that we'll talk a bit about them over the next few hours, and they're absolutely necessary. We have assets out in the province that have been in service, in some cases, for 50 to 60 years. In fact, I have heard stories of some assets being in service for even longer than that.

In some ways, the province has lived off the vision, if you will, of the W.A.C. Bennett government when that major investment in hydroelectric infrastructure was made in the '60s and '70s and in the '80s. I expect that we'll have a discussion about those investments as well.

I'm going to conclude my opening remarks by just saying that — and I know that the Energy critic is aware of this, understands this — it is no simple matter to balance our need to invest in hydro in those kinds of assets that I just mentioned, those kinds of projects; our desire to have a vibrant, clean energy industry as another component; our desire to have the capacity to support economic development in B.C. as a third component; fourthly, our desire to keep rate increases to an absolute minimum. That will be my job as minister, as long as I have it: to make sure that we achieve the proper balance amongst those four components.

J. Horgan: I thank the minister for his brief opening remarks. There certainly is much for us to discuss. I'm grateful to his staff, both from the ministry and from B.C. Hydro, for making themselves available today.

A couple of points just off the top. The minister suggested that B.C. Hydro has many responsibilities, many obligations, and he touched upon those — improving an aging infrastructure, meeting economic development objectives. He didn't mention providing a dividend to the Crown, but I'm sure that we'll get into that. They have a responsibility to pay taxes in lieu in communities across B.C. They have responsibilities with respect to keeping rates low not just for residential customers but for commercial and industrial customers.

One of the debates we've been having over the past number of years with respect to B.C. Hydro and energy policy broadly is the debate about whether we are a net importer or a net exporter of energy. I'm pleased to hear right off the top that we exported — if I understood the minister correctly — 6,000 gigawatt hours last year. When I look at the data from the load resource balance documentation that was provided to the environmental assessment offices in Ottawa and Victoria, with respect to Site C, we will have a surplus of electricity next year of some 5,000 gigawatt hours.

We developed — in 2010, in this Legislature…. It was passed with minimal debate. I know the vice-president will recall that, and the assistant deputy minister was very integral to the development of the Clean Energy Act. It had a number of obligations and commitments that Hydro was to follow through on.

Although I know we're not debating, redebating, the Clean Energy Act clause by clause — we didn't get that opportunity when the bill was passed by closure — there are some interesting elements to the act, and the objectives that are contained in here have become part of the mandate of B.C. Hydro.

One of those elements is to achieve electricity self-sufficiency. Now, I know there's been an amendment through regulation to the act. The former minister imposed that last year, I believe it was.

[1445]

I'm wondering if the minister could advise the committee what the consequence of that change has meant to B.C. Hydro's load resource balance going from what was prescribed in the act to what we have now. Perhaps we could start by an explanation of what we have now when it comes to energy self-sufficiency in British Columbia.

Hon. B. Bennett: The member will let me know if I don't address the question specifically. I think the question is: what are the implications to B.C. Hydro, of the changes? The most recent change is to the Clean Energy Act, with regard to the self-sufficiency target.

I am advised that the most significant…. There are really two significant changes, but the most significant implication from that change in the legislation was to change the water levels that are used to do that analysis of whether you're going to have enough power for the province to be self-sufficient from a critical level, which is a low-water level — the lowest possible water that you could have — to an average water year.
[ Page 627 ]

I suspect that the member is well aware of this change. But just to put a little bit more flesh on the bones, the self-sufficiency target under the previous legislation, before it was amended, had to be met under the worst, if you will, water conditions possible. That self-sufficiency target now can be met on an average water year. That made a difference, I understand, of around 4,000 gigawatt hours — just that one thing.

The second implication of the change to the legislation was that the so-called insurance requirement was removed. There was a requirement in the Clean Energy Act for Hydro to have available 3,000 gigawatt hours of extra electricity on top of meeting the self-sufficiency target.

With those two changes…. It has, obviously, relieved B.C. Hydro of some of the statutory obligation to generate electricity in a given year.

J. Horgan: I thank the minister for that, and I'll just correct him. He said: "B.C. Hydro's obligation to generate." Well, of course, it's B.C. Hydro's obligation to purchase as well. We all know…. Now that we've acknowledged that self-sufficiency in low-water years and insurance was bad form — not good for the company, not good for the ratepayers, not good for the government — we can get to the nub of the issue.

The previous government — not this minister's government, but the previous government — put these policies in place, in statute, to drive a policy of purchasing power when we didn't actually need it. The consequences of that, of course, are going to be rate increases over time.

We'll be talking about that, I suspect, for most of the afternoon. I'd like to keep with the theme on this as the minister and I both kind of find our way and staff are able to fill in some of the blanks. We both know a lot about this, but one of the advantages of this debate is that the public doesn't know a lot about this. The minister would agree with that, I'm sure.

[1450]

When Hydro is not required to attend the Utilities Commission, as laid out in the Clean Energy Act, for a host of capital projects, it doesn't provide the public with the opportunity to get a clear understanding of what the consequences are of various policy initiatives.

I don't for a minute disagree with the minister's opening statement that there are multiple requirements for B.C. Hydro. That is the first of many concessions that I will give to senior management and the entire crew at B.C. Hydro. They are tasked with many, many obligations, and many of them are in conflict. One of those, I believe, is to provide low-cost energy to their various tariff classifications when they're also required to be an economic development driver, when they're also required to subsidize industry, when they're required to build transmission that may or may not be necessary.

What I want to focus on is the minister's opening remarks with respect to 6,000 gigawatt hours of export. I'm wondering if the minister and staff can give us a calculation of what the cost of purchasing those 6,000 gigawatts was and what the actual revenue from the sale, wherever we did sell it…. Was that in balance, or did we lose money?

Hon. B. Bennett: Again, I know the critic knows this file very, very well, so I don't think I'm going to be telling him anything he doesn't know. But I said, mostly in jest, to my advisers: if you take the electricity generated on the Columbia River, it's generated at a very good price. I suspect the critic would rather not use that electricity to do the calculation. He'd probably rather use electricity that's more expensive to generate.

The problem with me trying to answer this is that we can't really identify where the electrons come from. There is electricity generated in the province; 6,000 gigawatt hours was exported, and I don't think anyone can really pinpoint exactly where it came from. So it's not really possible to do an analysis of how much it costs to produce that 6,000 gigawatt hours, compared to what was received for it.

J. Horgan: Well, putting aside the heritage power…. I appreciate that once an electron is created, we don't tag it and say, "This is its value" and send it off somewhere and what is the return. But I think we can do some pretty basic math, almost back-of-the-envelope math, and say: if we're paying this much for new sources of supply and if we were in excess of our requirements by 6,000 gigawatt hours, it strikes me that that's 6,000 gigawatt hours that we didn't have to buy. And if we're buying it at a price that's well in excess of the Columbia power or power from the Peace, then I think you can do a pretty simple calculation.

We have heritage assets that produce energy to meet the needs of our residential, industrial and commercial classes. We then purchased a whole bunch of energy, from 2006 to present, and continue to purchase energy that's well above that heritage rate or the cost of that heritage power, based on amortization and the long-term benefits that we accrue from the two-river policy. But we bought more power than we needed because of self-sufficiency. In their wisdom, the government recognized that the self-sufficiency policy was misguided at low-water years and put in a more reasonable and practical average water year.

What are the consequences, I guess, of that 6½ years of purchasing power at above the market rate and selling it below the market rate?

[1455]

Hon. B. Bennett: I know that the critic and the opposition always like to use the spot price for electricity to do the comparison. I suppose if I were in opposition, I'd probably want to use the spot price for electricity as
[ Page 628 ]
well, because it's the absolute lowest possible price that you can find. But you can't run a system that way. You can't run a system based on spot electricity.

This raises, I think, one of the major issues around electricity policy here in B.C.; that is, your electricity policy in the province can never establish the absolute lowest amount of electricity generation that you're likely to need. It always has to stay somewhat ahead of what your expectations are.

In fact, there are a lot of examples over the past 50 years in this province of the province actually investing in electricity infrastructure that eventually, it turned out, wasn't needed right then, that day, that year or, in some cases, even for ten years. But the infrastructure was needed, was used, is in place and is being used today.

To me, the premise of the member's question seems to involve some assumption that you can always have just exactly the amount of electricity that you need in a given year, and that's not practical.

It's not practical from another perspective — from the perspective of the inflow of water, the snowmelt. What are you going to have next year? Well, we really don't know what we're going to have next year or the year after. How can you have exactly the right amount of electricity ready to go for next year when you don't know that factor? You would certainly rather have more than not enough.

J. Horgan: Can the minister identify the cost of new supply, on average, since 2006?

Hon. B. Bennett: I don't think that the member asked for the average price of power from clean energy specifically. I think that's where he's going. I'll just mention this, because it's quite relevant to the question.

If you want to know what the average price of electricity is, or the average cost of electricity, you can look at components of the system, if you want. You can look at the clean energy component. I'm going to give the member some average prices from 2006.

Hydro was also making investments constantly in some of their other heritage assets and, in fact, is creating new modes of generation in the system that also produces electricity. The average cost of that electricity is…. I don't have it, but I can give the member the average price from 2006 for what we refer to as clean power.

[1500]

This is 2006. Large projects, $87.5 per megawatt hour. Small projects, $76.8 per megawatt hour. In 2009, the Clean Power Call then, prices were, in 2009 dollars, $124.30 per megawatt hour. That's as recent information as I have — 2009.

J. Horgan: I appreciate, and I know, that Hydro has floors of staff in two buildings now — many buildings, in fact — that are constantly working on what the cost of new energy supply is. They know to the penny how much it's going to cost to upgrade Mica. They know to the penny how much it's going to cost to update John Hart, although those numbers rise and rise for a whole host of reasons, and we'll get to that.

But surely to goodness, with the able staff available today, we can get from the minister a range of what it cost to buy the 6,000 gigawatt hours that we exported on, I assume, the average price in the United States of a fraction of what we paid in 2009.

The reason this is important is because of the consequences of those purchases after the meltdown of 2008, after the realignment of the economy. With the closure of mills, with the slowing of investment not just in British Columbia but right across North America, that had a consequence on the need for new sources of supply, but yet we kept on buying and buying — to the point, in 2009, of paying $124 a megawatt hour in 2009 dollars.

These are conscious decisions that were not made by B.C. Hydro. They were not made by B.C. Hydro; they were directed by government. If left to their own devices, I'm confident B.C. Hydro would not have purchased 6,000 gigawatt hours more than they need, to export to the United States at a loss.

I'd like to go back to ask a very specific question. When was the last time that there was a long-term acquisition plan or an integrated resource plan that was passed and approved by either the Utilities Commission or the cabinet or anybody else that would give a road map to the people at B.C. Hydro and the people of British Columbia as to what our actual needs might be long term — not based on starting an industry that may not have made it without that help? Exactly what was the last time that a plan was put forward by B.C. Hydro and approved by anybody?

Hon. B. Bennett: I'm advised that there was a long-term power acquisition plan that was submitted in 2008 to the B.C. Utilities Commission. While the commission had issue with some of the minor components of that plan, the vast majority of the spending proposed in that plan was actually approved by the B.C. Utilities Commission.

Interjection.

Hon. B. Bennett: In 2008.

J. Horgan: We talked about self-sufficiency. We've got the long-term acquisition plan. We have an integrated resource plan that was supposed to be, by statute, before government in December. The former minister pushed that to August — which is, of course, next month. We'll touch upon the integrated resource plan in a moment.

[1505]

I wanted to go to another element of the Clean Energy
[ Page 629 ]
Act, which is part 1, subsection 2(b): "to take demand-side measures and to conserve energy, including the objective of the authority reducing its expected increase in demand for electricity by the year 2020 by at least 66%."

Now, that's directed by legislation, drafted by some of your assistants today. We know, through the load resource balance, that DSM is factored into that. We have electricity surplus with DSM and electricity surplus without DSM.

Can the minister help me understand if we are going to achieve that 66 percent target that's in law? Or are we abandoning demand-side management so that we can use the surplus we have which, on balance, will be cheaper than investing in demand-side management?

Hon. B. Bennett: I am advised, once again, certainly from the B.C. Hydro side, that they are going to continue to invest in demand-side management to the same level that they have been investing and that that will involve the Power Smart program.

Certainly, we recognize in government as well as in B.C. Hydro that conservation is the least expensive way to meet demand. So we will continue with our commitment to demand-side management. There will be more detail on how demand-side management is delivered, encouraged and paid for when the integrated resource plan comes out on August 1.

J. Horgan: I'll just seize upon August 1.

An Hon. Member: The third.

J. Horgan: The third. That's the final report? Or is that the start of the final consultation?

Hon. B. Bennett: I got the date wrong for when the integrated resource plan comes to government. It is August 3, as opposed to August 1. With respect to where it goes from there, my understanding is that government will look at the integrated resource plan, with the primary focus being on whether sufficient consultation has been done in order to finalize what's in the plan.

[1510]

If government assesses that enough and the right kind of consultation has taken place, the document will then be made public. I don't really want to speculate on when that would be, except just to repeat what I just said — that the unknown factor is whether enough consultation of the right kind has been done. Government will make that assessment at the time.

J. Horgan: As part of the Clean Energy Act, the integrated resource plan is exempt, along with a host of other capital projects, from review at the Utilities Commission. I wonder if the minister could tell me what expertise currently resides in the cabinet that is superior to the expertise at the B.C. Utilities Commission in terms of assessing the plan put forward by B.C. Hydro to meet our long-term needs, particularly in light of the fact that their progress to date has led to the export of 6,000 gigawatt hours in the past fiscal year.

[1515]

Hon. B. Bennett: Interesting question, obviously. It took six of us to come up with an answer. And it's an important question.

As I said a minute ago, the IRP will come to government on August 3. The member knows that there was an extension of time given, I think, early last winter. I'll repeat what I said a minute ago. Government will look at the IRP, particularly from the perspective of whether enough and the right kind of consultation has been done. I think that's an appropriate thing for government to consider, representing the interests of the public.

I don't want to guess on how long that will take or what the result of that analysis would be. I don't want to get into hypotheticals as to whether the government might ask B.C. Hydro to do more consultation, but I suppose that might be one of the things that could happen when we do look at the IRP in August.

I should say, just from a purely practical point of view, that August 3 is probably not the very best time to receive a document that's going to be reviewed. I think that probably both sides of the House will be thinking about holidays and so forth. A lot of public servants take holidays in August.

So if there isn't an immediate announcement that the document has been received and is going out to the public, it's because there are no cabinet meetings in August or there are no public servants around to actually do the work. That's a very practical consideration.

I say that now because when the time comes, it might be that the opposition might be critical that we haven't dealt with it fast enough. So I just wanted to make that point about the month of August.

J. Horgan: Well, I'm not critical about your timing. I'm critical that you're dealing with it at all, when we have a fully capable and statutory body called the B.C. Utilities Commission, which has experts, which has an opportunity for open hearings, which has an opportunity for a transparent discussion about our energy needs — not just from the perspective of Liberal-appointed board members or from the perspective of senior managers at B.C. Hydro or from the perspective of senior officials in the ministry.

The challenge with having a publicly owned monopoly is that if you leave it in the hands of a few people and only allow them to look at it, then you're going to run into strife. That's what we're going to see over the next number of years. So I'm not trying to catch you out on the third, the 15th or the 29th. It doesn't matter to me.
[ Page 630 ]

My biggest concern is and my question specifically was: what expertise exists in the cabinet to take this important document that will break ground for the future and deal with the challenges of rising rates, runaway debt, deferral accounts we haven't even yet begun to discuss? What expertise exists in cabinet today — and I see them every day across the floor — that is superior to the expertise resident at the Utilities Commission and available to that commission through open hearings?

Hon. B. Bennett: Well, the member has never sat in cabinet. He's been there, no doubt, as an adviser to a minister. I suspect the ministers that he advised dealt with the same range of issues that the current cabinet deals with.

We deal with an amazing range of issues — some highly technical; some very complicated, from a financial point of view; some heart-wrenching issues, on the social side. Cabinet deals with an enormous range of issues.

The way our system is set up, our democratic system, people fight an election and somebody wins. Whoever has the most seats forms government, they form a cabinet, and they deal with a whole range of issues.

To suggest that cabinet wouldn't have anything to offer in terms of energy policy in the province is, I think, a bit rich, actually, because cabinet gets involved in all manner of issues and initiatives in the province. So that's the first part of my answer.

[1520]

The second part of my answer will probably be a bit more direct to the member's question; that is, when this side of the House decided that we were going to create the Clean Energy Act and that we were going to exclude certain things from the B.C. Utilities Commission, we didn't do that because of friends someplace in the business community or the fact that we as government happen to get to appoint people to the board of B.C. Hydro. We did that because we had a vision of where we wanted the province to go on energy.

We did that because, in fact, we are and were the duly elected government in this province and there were certain goals and objectives of that energy plan developed in 2007 that we thought were absolutely essential to the future of this province, to the future of the economy. So we excluded certain things from a certain portion of the oversight of the Utilities Commission.

I think we'll get into this a bit more as we go along here. The things that the member seems to think are excluded from the Utilities Commission are only excluded at the front end. They're not excluded at the back end. There is actually oversight on some of the items in the Clean Energy Act, which I've heard the member talk about, that do have scrutiny from the Utilities Commission. So I look forward to having that conversation with the member.

I think there is, obviously, a fundamental difference of view between the opposition and this side of the House in terms of the government's obligation to have a provincial energy policy and to make sure that they're achieving the goals that that democratically elected government has set for itself.

J. Horgan: Was it a goal of the B.C. Liberal government to purchase, on average, $94-a-megawatt-hour power in the two clean calls and sell, last year, 6,000 gigawatt hours at, I would assume, the spot market price — generously, at $30? Was it the government's objective to lose $65 a megawatt hour on that 6,000 gigawatt-hour sale? Was that the objective that the government set out in 2010 and 2006 when they started the new clean calls for private power?

Hon. B. Bennett: No, that was not the objective. In fact, that's not what happened. The 6,000 gigawatt hours of electricity that were exported in 2012 was due primarily, if not totally, to the fact that we had high water in 2012. Actually, the cost of that electricity is negligible. I'm told that it actually cost nothing to generate those 6,000 gigawatt hours. So every single penny that was earned from the export of that electricity was for the benefit of the taxpayer of British Columbia.

J. Horgan: We had power that cost us nothing. We sold that at $30 a megawatt hour. And we bought power that we didn't need — because we had 6,000 gigawatt hours in surplus — that we paid, in 2009, $124 an hour for. That cost something. We've already identified that today. That cost $124 a megawatt hour. The spot price, generously, was $30. So we gave away 6,000 gigawatt hours of high water, which historically has been a benefit to all British Columbians. That was a benefit to someone else, while we paid $124 a megawatt hour. Is that what the minister just said?

Hon. B. Bennett: You plan for average water. Since we changed…. We went through this already when we talked about the amendments to the Clean Energy Act. You plan for average water. When you have a high water year, like we did in 2012, you have more water than you need, more water than you can use. You can just spill it over the dams, or you can generate electricity and try to sell it.

There was a market. It was a spot market — the member is right — so the price wasn't hugely high, but B.C. Hydro was able to make a profit from the sale of those 6,000 gigawatt hours. So I don't understand why the member is so exercised over selling that power.

[1525]

The second part of my answer comes back to what seems to be an assumption or a notion on the part of the critic…. I can never tell whether he really thinks this or whether he's being mischievous.

There is no way for a jurisdiction like British Columbia or anywhere else, particularly if you're utilizing hydroelectric power with all that water and the management
[ Page 631 ]
of dams and so forth, to get yourself in a position where you're only going to have available in a given year the amount of electricity that you're going to need. It doesn't work that way. It's not that simple.

You're always going to have a variance. We are so fortunate in this province that we have those old heritage dams, and we're going to create another dam at Site C, if it gets its environmental certificate, so that we can actually manage through the variance from year to year in terms of what we need for electricity. I don't know what else to say to the member.

J. Horgan: Well, we've just determined that it was government policy to plan as if we were in a drought every single year — and not just to plan for drought conditions but to also have a 3,000-gigawatt-hour insurance policy. That was government policy.

You're now saying to me: "We can't help it if we've got lots of water. We can't plan for that." You deliberately, by policy, planned to have droughts. You bought more power than you needed at a very high price. When we had an abundance of water you were buying on take-or-pay contracts from private power companies, and you were selling that surplus that traditionally was making money for British Columbians. You were dumping it into the U.S. market. Isn't that what you were doing?

Hon. B. Bennett: Just as B.C. Hydro and government are unable to predict exactly to the gigawatt hour how much electricity they will need in any given hour and match that to what they have there for generation potential, government and B.C. Hydro also cannot predict what's going to happen to the economy.

When the Clean Energy Act was created and passed and when the provincial energy policy was created, everyone in the world saw that the economies of the western world were expanding. The U.S. was doing great, and there was a belief at that time in government that there would be significant opportunities for exporting electricity.

It turned out, with 2008 and 2009 and on into 2010 — it took a while for the impacts to be felt here in British Columbia — that that export potential wasn't going to be realized right away. Therefore, our government changed the Clean Energy Act and made the choice to not use the critical water factor and changed that to an average water factor.

If the member wants me to say that the act needed to be changed and that the original decision to use critical water levels as the factor to self-sufficiency…. I can say that in retrospect, probably if we had known what was going to happen in the economy, we would have used average water levels.

Perhaps the member knew what was going to happen in 2008 and 2009, but we didn't. I think we've done the right thing by correcting the Clean Energy Act.

J. Horgan: Well, the Clean Energy Act was tabled and passed in 2010, two years after the disruption in the international economy — two years, 24 months. I recall being in this place, hearing doom and gloom from the Minister of Finance at the time: "We had no idea. It's out of our control. There's nothing we can do." But at the same time in this same Legislature we passed, without debate of any consequence, an act that impaired and constrained B.C. Hydro's ability to manage its assets for the benefit of the people of British Columbia.

[1530]

I'd like to move to the Burrard Thermal plant, if I could. I'm not suggesting for a moment that Burrard Thermal become a baseload plant. I would not contemplate that under any circumstance. But the Clean Energy Act and the B.C. Liberal energy policy precludes using the Burrard Thermal plant for planning purposes.

One of the challenges we've just discovered, and the minister just acknowledged, is that it's tough planning. What are you going to do? Things go up; things go down. Deliberately in 2010 we had the low-water year and the insurance policies. The government, in its wisdom, has stepped back from that cliff.

Will the minister step back from the cliff with respect to Burrard Thermal and use that plant, which belongs to the people of British Columbia, to manage those difficult times when we do have low-water years and when it may be required to save ratepayers money? Will you use Burrard Thermal for planning purposes?

Hon. B. Bennett: A number of responses to this. Going back to the member's comment about the date that the Clean Energy Act was passed, if the member thinks back, he'll recall a special direction to the B.C. Utilities Commission that essentially established all of the policy that came later with the Clean Energy Act.

What was going on at the time, 2007, was that B.C. Hydro was already working on the basis of the policy that was established by this direction. The member is correct to say that in 2010 that policy was enshrined in legislation, so just a point of correction on that.

In terms of Burrard Thermal, I don't believe that the government has any plans or any interest in firing up Burrard or having it be part of the portion of the planning exercise that goes on each year in terms of establishing what electricity is going to be needed. In fact, it would take, I'm told, hundreds of millions of dollars to actually put Burrard Thermal into a position where all of the turbines could be used and all of the 900 megawatts could be generated.

There is actually a significant cost associated with having it available to go full bore. I think there are perhaps three units that are available, and we've said that they are available for emergency purposes.

[1535]

It's not the case that it's totally out of the picture, out of
[ Page 632 ]
the overall planning. Burrard Thermal is there for emergency purposes. In terms of planning for emergencies, it's actually there to be used. Again, government doesn't want to use it any more than is absolutely necessary, because it's dirty.

J. Horgan: A lot of stuff there. I'd like to go to the distance between 2007 and 2010, between policy and statute. Did the government not learn anything during that three-year period that might have moderated or modified or changed energy policy based on the downturn in the economy and based on the transformation of international financial markets? That had no impact on the thought processes to develop legislation to enshrine energy policy? That's part 1.

I'd like to speak a minute about the consequences of Burrard Thermal not being used for planning purposes. Is the minister saying that there is zero value for planning purposes in factoring in Burrard Thermal when B.C. Hydro looks at their load forecasts year over year? Is that what the minister's assertion is?

Hon. B. Bennett: Once again, the government's policy is that we want to see B.C. Hydro phase out the use of Burrard Thermal. It's there for emergencies, but it's not there for annual use as part of the annual plan. There were reasons for that that drove this decision at the time, and those reasons, I think, are still in place.

Number one, it is dirty energy. The province is trying to set a standard and set an example in the world on using and relying on clean energy. That was one of the reasons why we wanted to phase it out. There were issues and are issues with respect to airsheds that relate to the use of Burrard Thermal. Again, another reason why the province decided to phase it out.

It's not gone. It's not forgotten. It's there for emergency purposes. But it's not going to constitute part of the annual planning for electricity in B.C.

J. Horgan: We have generation stations great distances away from our population centres in the Lower Mainland and southern Vancouver Island, and we have a 1,000-megawatt generator in the backyard, and the government, by policy, is saying: "We're not going to use that generator. We're going to leave it to the fates of avalanches."

I know the minister's backyard is filled with big, big challenges with landscape and topography. That can be said right across the Kootenays, right across the Peace, right across the northwest. We're not going to allow B.C. Hydro to have as a peaking resource a backup generator in the load centre, but we're going to allow multinational oil and gas companies to burn natural gas in an equally sensitive airshed in Kitimat.

How do we reconcile the government saying: "Yeah, we'll burn gas to create liquefied natural gas, but we will not burn gas to keep rates down for people in the Lower Mainland and right across British Columbia"? What's the sense in that? Why two positions — one if it's to keep rates down for people in the Lower Mainland and southern Vancouver Island, and another to start an industry in the northeast and the northwest?

[1540]

Hon. B. Bennett: I'm actually surprised that the member seems to be so enthusiastic about using Burrard Thermal.

Interjection.

Hon. B. Bennett: The member states, "Well, it's just planning," but if you plan to use it, you're going to use it. If it's part of a plan, you're going to end up using it. The member described circumstances like, I think, avalanches and other natural disasters, potentially disrupting transmission of electricity from places like the Columbia River and the Peace River. If there was an emergency, Burrard Thermal would be there, and it would be used. So it would address those situations.

With respect to the member's reference to the northeast and LNG, when and if — and I, frankly, hope it's when — LNG plants go ahead and companies decide to generate electricity to drive their compressors by using natural gas, these power plants will be brand-new, state-of-the-art, gas-fired power plants that will be miles and miles above and beyond what you have at Burrard Thermal. In terms of technology, in terms of the emissions, in terms of the efficiency, they'll be miles ahead of what you have at Burrard.

I get what the member is suggesting for planning purposes. The government's position is clear. We'll use Burrard Thermal for emergency purposes. We're not going to include it in terms of annual planning for the province.

J. Horgan: I agree that combined cycle technology and gas-fired generation today is far superior to the archaic and antiquated infrastructure in Port Moody at Burrard Thermal. I don't disagree with that. But it's the double standard that I think I would like the minister to address — that it's okay to burn gas in one place and, in fact, amend the Clean Energy Act, which says 93 percent of supply will be green for industrial activity.

Again, it goes back to my opening remarks and the minister's opening remarks that B.C. Hydro has multiple responsibilities in the marketplace — to shareholders, you and me, and to economic development and so on.

I want the minister to be clear. Is he saying that it's his preference and the preference of the B.C. Liberals to purchase power at $120 a megawatt hour, which we may not need, rather than rely on Burrard Thermal in the event that we may need it for planning purposes?
[ Page 633 ]

That's the issue. It's not about clean. It's not about…. Let's put all that aside. This is a debate we can have later on. I know that my colleague from Oak Bay–Gordon Head needs to get up shortly to ask some questions. I'm going to give the floor to him, but this is a key issue. It's fundamental for B.C. Hydro's long-term viability.

You've got a 1,000 megawatt generator in your load centre, and you're not allowed to use it. You're not allowed to even acknowledge that it exists. You instead go to the private power marketplace and purchase power that you may or may not need at 124 bucks a megawatt hour. And if you don't need it, you've got to ship it somewhere, and at the market price, you're losing money. How does that possibly make sense?

Hon. B. Bennett: First of all, I'll just clarify, correct, one thing the member just said about Burrard Thermal.

[1545]

He used the number 1,000 megawatts. It's, I understand, capable of generating 900 megawatts when it's firing on all cylinders, and my understanding is that at the present time, if it was fired up for an emergency, it would not be able to generate that number of megawatts. It would not be able to generate 900 megawatts. My understanding is that — and I'm going to give the member what is probably a guesstimate — we're probably looking at about half of its total output in terms of what it could generate.

While the member disagrees with the government's policy about not including Burrard Thermal in annual planning, he might as well have the correct numbers and what actually would be available for planning purposes if the government didn't have the policy that we have.

With respect to the member's question about the price that's paid for power, I have no hesitation at all to say to the member that we're actually proud on this side of the House that we have started to develop a clean energy industry. It was a commitment that we made. It was something that we believed in. It's something that we think improves our overall brand and attractiveness in the world — to be some place that does focus on conservation and on generating clean power.

We know that the economy is going to continue to grow. We know that we have opportunities with new mines in this province like we haven't seen in probably 50 years.

We have got opportunities with liquefied natural gas that we have never seen in this province, all of which will require huge amounts of electricity. So it's our policy, our belief, on this side of the House that some of that electricity should come from small, clean, green energy producers.

I think the piece that is often missed in the debate that you see in the newspapers is that you are not going to be able to develop a clean energy industry if you say to the people who bid on the opportunity to be involved in that industry: "Well, you know what? You go out and spend a billion dollars, and you build yourself a run-of-the-river project or you build yourself a wind project up in Chetwynd or Tumbler Ridge. But I tell you what: we can only sign an energy agreement, an electricity agreement, with you for five years."

Their amortization is probably over 20 or 25 years — or maybe longer, in some cases — because some of this is pretty innovative stuff — sometimes even untested technology. So there is a business reality with developing a clean energy industry.

Frankly, I think that the hypothesis that the member has suggested here is like comparing apples and oranges. There isn't a comparison. If you want to have a clean energy industry, you have to allow people to invest in it, and you have to enter into businesslike agreements with those producers. Otherwise, you won't have a clean energy industry.

It actually puts the opposition in a position, I believe, over the last few years where we can say, on this side of the House, "They don't believe in a clean energy industry, because that's the only way to develop it."

A. Weaver: Thank you to the member for Juan de Fuca for granting me the time to ask the questions here. I have a number of questions on the clean tech sector in general — the clean energy sector.

The first is…. Financial support for the clean tech industry appears to have taken a large hit in the 2013-2014 budget, with support for the electricity and alternative energy going from around $18 million to just less than $3 million, and the innovative clean energy fund falling from $15 million to just more than $5 million. Can the minister provide greater detail as to where these cuts are taking place in the programs?

[1550]

Hon. B. Bennett: Thank you for the question. There was a $15 million reduction that's accounted for by a reduction of the LiveSmart program. We actually canvassed this yesterday with one of the other members of the official opposition. It's a $15 million reduction that's associated with the LiveSmart program, and about $9.9 million is associated with the innovative clean energy fund.

My advice on the LiveSmart portion of this is that the program will change. The efforts around conservation will continue, but they will be less reliant on public subsidy, taxpayers' subsidy.

On the $9 million that's associated with the innovative clean energy fund, I'm advised that that was a pretty straightforward reduction in budget for this ministry before I took it over but that there are no plans to do away with the fund. When we come by better times, we'll have more money back in the innovative clean energy fund to do the things that that fund has done.
[ Page 634 ]

A. Weaver: Thank you, Minister.

It has been common practice in British Columbia for any project proposed to estimate the number of jobs associated with such a proposal being introduced, both direct and indirect. Can the minister please provide information as to an estimate of the number of jobs that will be lost as a consequence of cuts to the LiveSmart B.C. and the innovative clean energy fund, either directly or indirectly?

Hon. B. Bennett: I'm afraid that I don't have that information for the member.

A. Weaver: Can the minister share any findings as to the potential economic impact and opportunity presented by the clean tech sector overall for British Columbia?

Hon. B. Bennett: I'm advised that that information is available, though probably not through the ministry. We would be duplicating the effort of organizations like the Clean Energy Association of B.C. But I am advised that it is likely, probable, that we can get that information from that association.

Perhaps other organizations like GLOBE will have it and supply it to the member, although I suspect that the member can probably get that just as quickly as we can. But we're happy to get it.

[1555]

A. Weaver: I was hoping for analysis from within the ministry itself, as opposed to the third-party analyses that I've actually got access to, but thank you.

The next question. One of the commitments of this government has been to provide a stable investment environment for business. However, over the past few years IPPs have faced a very challenging investment environment, making it difficult for the clean tech sector to strategically invest in B.C., especially when there's no certainty in the procurement or regulatory process for their power. B.C. Hydro's lack of transparency and regularity in issuing calls for power is also of concern.

Is the minister looking at creating a more transparent and reliable process to create certainty for this sector?

Hon. B. Bennett: I know we're not supposed to refer to where members are in the House, so I'll not do that. I'll just say, first of all, as the first part of the answer to that member, that the most negative force in the province that is aligned against developing the clean energy industry just was up asking me questions. I don't mean the individual. I mean the political party, the opposition. They just don't seem to understand how you would develop a clean energy industry.

In a more substantive way, I would say that the integrated resource plan, when that comes forward in August, will give us the kind of road map that will be very useful in determining when we will have new clean energy calls and will, hopefully, give the clean energy industry some more certainty around their industry. I think that will help. We still have the standing offer program in place.

I meet fairly regularly with the clean energy industry. I had a very strong relationship with them when I was Energy Minister in 2010. I believe in the clean energy industry and would like to see it more than survive. I'd like to see it prosper in the province. I think it's good for the province. I think they're good jobs. Many of the projects are built in rural areas, where communities don't have as many opportunities. For that reason, it's an important industry.

Many of these projects are built in areas where there are a lot of First Nations people, and those First Nations communities don't have that many opportunities. There are many examples of good, constructive relationships between clean energy companies and First Nations. For that reason, I think it's a good industry.

But the fact that it's a good industry and the fact that the Energy Minister happens to like it and the province happens to like the industry don't change the fact that we cannot justify putting out a call for new electricity unless we know that we're likely going to need it. Again, that's where the integrated resource plan comes up.

A. Weaver: I clearly share your enthusiasm for this nascent sector and its potential for economic prosperity for British Columbia. On the topic, two questions left. One is: will this integrated resource plan that B.C. Hydro is putting forward be passed to BCUC for review and approval?

[D. Horne in the chair.]

[1600]

Hon. B. Bennett: Hon. Chair, you've changed since I last looked over there.

To back up, the chair of B.C. Hydro just reminded me with great pride that B.C. Hydro acquires about 20 percent of its electricity today from clean energy projects. He didn't say this, but I'll say it. I doubt that there are very many places in the western world or anywhere in the world that can say that. It is, I think, a pretty significant accomplishment for our government, along with the public utility, to have gotten there.

In terms of the B.C. Utilities Commission and its role as related to the integrated resource plan, the integrated resource plan will be completed by B.C. Hydro. As I discussed with the opposition critic, it will come to government in early August. Government will assess whether there has been enough and the right kind of consultation done, and then the plan will be released to the public.

The plan itself will not be subject to an analysis by BCUC, but that plan will be used by the B.C. Utilities
[ Page 635 ]
Commission and by B.C. Hydro to plan what happens next in the electricity system: what projects should go ahead; what parts of the province; how much we're estimating the load to be; where we see economic growth — for example, the LNG opportunities in the northwest or mining opportunities someplace else. So the plan is used as a guide by B.C. Hydro and by the Utilities Commission as well.

In terms of the oversight that I think the member is referring to, which is supplied by the B.C. Utilities Commission, when B.C. Hydro or any other entity wants to do anything, essentially, after this plan is created that will impact ratepayers, the Utilities Commission will most likely be involved in that piece of oversight.

So the plan, no. What follows from the plan in terms of projects and growth and building and so forth, yes.

A. Weaver: My final question is on a topic that has become a theme of late. It's sewage in Victoria. The innovative clean energy fund is used to support clean energy products that promote energy efficiency, expanding the use of clean energy and promoting the commercialization of technologies.

If a submission were to be made to the ministry to consider waste-to-heat energy systems, would it be considered as eligible for receiving funds under this innovative clean energy fund if it were done as part of, and in addition to, the existing application before the province for a sewage treatment facility?

Hon. B. Bennett: We are, I understand, not taking applications at the present time. That goes to the earlier discussion I had with the independent member around the clean energy fund. Typically, it is my advice, there were calls, so to speak, for applications — the applications came in a bunch — and the ministry did not accept one-off applications. That addresses part of the member's question.

The other part of the member's question goes to the likelihood of whether such an application would qualify under the terms of the fund. I am advised that there is a relatively good chance that it would, but obviously hypothetical. One would have to see the application and understand the idea.

[1605]

Even if it did qualify at the present time, we're not assessing or evaluating applications under the clean energy fund.

R. Fleming: I just want to ask the minister a couple of questions about something that is very much a regional, potential project here in the greater Victoria area. I'll maybe give him the background, if he's not familiar with it, before I ask the question.

A very important part of the tourism industry — well, he'll know this, as the former Minister of Tourism in British Columbia — is the cruise ship industry. Victoria has emerged as a very important port for B.C.'s hosting of the cruise ship industry. It has grown exponentially in terms of cruise calls annually. This generally happens at the Ogden Point facility that is owned and managed by the Greater Victoria Harbour Authority.

They recently have sort of been advancing a project study of adding shore power capacity at Ogden Point that would reduce the amount of bunker fuel burned when in port, address some of the concerns that the Vancouver Island Health Authority had about particulate matter on warm days when there are northwesters blowing into the James Bay area, and also, of course, have a positive impact on reducing greenhouse gases and all of those other benefits.

My understanding is that B.C. Hydro recently completed a review of service requirements to support shore power at Ogden Point. I wanted to ask the minister — given that there were some cost estimates and some options of what kind of installation would be sort of the most feasible — about whether this project looks likely to proceed and whether B.C. Hydro will be working with the Greater Victoria Harbour Authority to look at the business case to further examine the feasibility study that has been done by the harbour authority and the review of service requirements that has been done by B.C. Hydro.

Hon. B. Bennett: I think good news for the member. B.C. Hydro has done this already with the harbour in Vancouver with the cruise ship industry. The member is correct that B.C. Hydro has done some work, some analysis here in Victoria, and is definitely interested in moving that forward.

There is no one here today who has the details on exactly where things are or where things may have been left in terms of the discussion with the port authority or the city or Tourism Victoria or whoever has been involved in this.

What I would say to the member is that the public utility is very interested in this. I suggest the member liaise with me, if he wants to, or my office, and I'll provide a contact at B.C. Hydro for him so that he can stay on this as the local MLA and try to make it happen. Perhaps he can share in some sort of a large, major announcement at some point.

R. Fleming: This is probably the best estimates I've ever had, Mr. Chair. I thank the minister for that answer.

I think he'll appreciate that Transport Canada, fortunately, has a standing program for shore power for ports that provides up to 50 percent of project funding. I suspect some partners from other levels of government could be involved in this.

[1610]

One of the things, though, that I think the harbour authority and other stakeholders, the city of Victoria,
[ Page 636 ]
would be keen to know…. This is sort of an equity question, and I'd just ask the minister to comment on it. He referenced Canada Place, the shore power that they have for the Vancouver cruise ship facility.

One of the things that made that feasible and achieved the green light for that project was that B.C. Hydro's rate for power was very affordable. The port negotiated an interruptible service standard. Their needs are last in line but almost always met.

I think the James Bay peninsula here in Victoria has a lot of grid demand, so an interruptible service requirement identical to that at Canada Place would probably be the preferred option. I just want to ask the minister: does he think it's likely that the Ogden Point cruise ship terminal facility could anticipate confirmation from B.C. Hydro of the same rate of power that the Canada Place cruise ship facility has, given that there would be the same standard of service?

Hon. B. Bennett: I'm advised that the answer to the member's question is maybe. I think the option that the member describes is certainly correct.

The interruptible power source approach in Vancouver is potentially doable, but there are so many unknown factors that my advisers here are not aware of. There's the business case. There's the transmission capacity. There are many, many factors that would go into whether or not the model utilized in Vancouver would work here.

I think the good news is that it doesn't sound like anyone here thinks that that option is off the table. I just don't think this has gone far enough down the road for people to have actually examined it.

J. Horgan: I'd like to take the minister back to the load resource balance documents that B.C. Hydro provided to the Site C environmental assessment impact statement. Those documents identify ten years of surplus electricity at B.C. Hydro, assuming demand-side management, assuming the capacity project at Revelstoke unit 6. I'm wondering: does B.C. Hydro have a calculation that can determine the cost to the utility of that surplus energy?

What I'm getting at…. I tried a number of different ways with respect to the 6,000 gigawatt hours the minister spoke about in terms of export last year, trying to balance that against cost of new supply. We've got the heritage assets in play as well. I understand all that. I know that the CEO understands all that. The ADM understands all that. The vice-presidents understand all that.

Can the minister, through them, tell the public what the cost to B.C. Hydro is of having a 5,000-gigawatt-hour surplus this year?

[1615]

Hon. B. Bennett: We're back, really, on the same issue — apples and oranges, I would suggest. There's no way that electricity generation facilities can be created to position B.C. Hydro and the province in a place where you are guaranteed to have exactly the right amount of electricity. I think that's the first point. I've said it a few times, and I'm going to keep saying it.

I've learned a new word since I became Energy Minister this time. It's "lumpy." The system is lumpy. There is sometimes lots of water and, therefore, lots of capacity. Sometimes there's not that much water, and there's less capacity. Those things are pretty hard to predict. In fact, they're even impossible to predict. So that lumpiness, I think, is always going to be there.

In terms of specifically what that…. The member referred to 5,000 gigawatt hours this year. We don't know if there's any excess this year, I don't think. What we were talking about earlier was 6,000 gigawatt hours in 2012. I've already stated that that excess power was generated for essentially no cost, because it came from a high-water year, and there was obviously revenue generated from that power.

If the member or my advisers have information that we are expecting excess power in 2013, I'll sit down and let the opposition critics ask me that question again, because I wasn't aware that we knew.

J. Horgan: What surprises me is that with the incredible expertise that you have about you and the enormous expertise across the water in Vancouver, B.C. Hydro cannot put a price on that surplus energy. What does it cost to buy high and sell low? There's got to be a number.

To say, "Well, it's lumpy…." I agree with the minister. It took me a long time to get my head around some of this jargon as well. I know he's a very quick study, and he'll be up to speed in no time, but I know he's surrounded by people who have the answer to the question.

What is it costing B.C. Hydro to dump power that it's paying a certain price for and selling for another price? It's not good enough to say, "We've got high water in the Peace, therefore everything's a wash," because that's just not so. If we're not going to go to the Utilities Commission ever again on these questions, then we should be able to answer them here in the Legislature.

Hon. B. Bennett: The only excess power that we have discussed — in my recollection, anyhow — is the 6,000 gigawatt hours that were exported last year. And I have answered the member at least twice on how much that power cost to generate.

My advice here today is that that power was generated as a result of high water. Therefore, the only real cost to generating that electricity was the cost, I suppose, of water rentals, which is fairly minimal.

I know what the member wants to do. The member wants to link the power that's generated by independent power projects and the cost that B.C. Hydro has with electricity that comes from those projects and say: "That's the electricity that constituted the 6,000 gigawatt
[ Page 637 ]
hours that were exported last year, and that's the electricity that's costing the ratepayer so much." But it's not possible to do that.

[1620]

J. Horgan: It's inconceivable to me that a company that's been operating in British Columbia successfully for the past half-century cannot calculate something as basic as money in and money out. If we're putting money out. If we're putting money out to purchase new supply, which we've done in clean calls since 2006, and we have a high-water year, which in history has benefited the people of British Columbia…. When it rains, we make money, unless we bought more power than we need.

The question is: did we buy more power than we need? Or we just had a big snowpack, everything's awash, rates are going down, and we'll be debt-free by the end of the week. Is that what we're doing here today?

Hon. B. Bennett: I really do want to provide the member with an answer to his question. I'm struggling with the premise of the question, or what I think is the premise of the question.

If the member is asking whether B.C. Hydro can provide an average cost per gigawatt hour of electricity generated in a given year, I'm told that they can. In other words, retrospectively, at least, they could do that. They could take all the gigawatt hours of energy generated in 2012, figure out their costs associated with that generation and come up with an average cost per gigawatt hour. I offer that to the member, if that's what the member is interested in.

It's not possible to do that for the future. You just can't figure out what your cost is going to be per gigawatt hour. You don't know what water levels are going to be. You don't know what demand's going to be. You've got per-unit issues. I don't know if that satisfies the member or not.

J. Horgan: I don't ascribe any motive to the minister, and I know he doesn't ascribe any motive to me. This isn't about catching anybody out. This is about the cost to ratepayers at the end of the day.

[1625]

We all know — and we're going to get to that as the afternoon progresses — there's going to be a significant rate increase this year, next year and the year after that. We'll talk about that, and then we can get back and forth on why and how and where.

But it is inconceivable to me that we cannot quantify what it costs to have surplus energy — why we're buying energy when we are generating sufficient energy to meet our domestic needs, to the point that now we have, in the past year, exported 6,000 gigawatt hours.

Now, that tells me that we have been acquiring new sources of supply since 2006. That is a fact. We know this to be true. We can quantify it. We have long-term obligations. On page 94 of the B.C. Hydro Annual Report 2012 we've committed to purchasing 15,000 gigawatt hours of electricity. We generate — at Shrum, Revelstoke, Mica, Kootenay Canal, Peace Canyon, Seven Mile and the Bridge system — 49,000 gigawatt hours. You put them both together, and we've got what we need and then a surplus.

The point is that we purchased more power than we need, and it goes back to the misguided self-sufficiency policy. Okay, fair enough. We made a mistake. The government acknowledges that. They've amended the self-sufficiency policy. I would argue that they should go to the Utilities Commission and ask specifically whether they should have a policy of that nature at all. Let's leave that aside.

The facts remain. We purchased power over the past seven years at a very high price relative to our heritage assets. When it rains and rains and the snowpack gets higher and higher, historically, we have all made bags of money, and that has been a good thing. We've all patted ourselves on the back, bonuses all around for senior managers. If Powerex traders can move that surplus energy and make a profit for us, they make a million bucks. Good for them. I'm fine with that.

But there's a cost to having more than we need when we paid more than the market will pay us for that power. That's the question. I'm absolutely certain beyond any doubt that someone on that side of the House has the answer to the basic question: what does 1,000 gigawatt hours of surplus cost B.C. Hydro?

Hon. B. Bennett: The 6,000 gigawatt hours that were exported in 2012 have been characterized by the critic as excess power. We sold it, we didn't use it here, so therefore, it must be excess. I think that's his logic. We were able to export that power, sell it for a profit to benefit the ratepayers of British Columbia because there happened to be extra water that year.

That's why we were able to export 6,000 gigawatt hours — because there was extra water. If there had not been extra water, there wouldn't have been any power to export. Therefore, there wouldn't have been any — what the member characterizes as — excess power.

I don't know how you can look forward and ask the utility to tell you exactly what the cost of that power is when you don't know whether it is going to be there — in total, more, less. You don't know what your demand is going to be. I get where the member is coming from, but I think he's barking up the wrong tree.

[1630]

J. Horgan: Sitting behind the minister is the senior vice-president for finance. Could the minister, through that senior executive, advise how many planners, how many forecasters, how many people working under her,
[ Page 638 ]
spend their entire day projecting what energy costs, how much we need and where we are going to get it from? How many people?

[1635]

Hon. B. Bennett: I truly tried to get a hard number for the member in terms of how many people there are at the B.C. Hydro corporation who do planning. There are many. They do all kinds of different planning in different divisions — some operational, some…. I mean, the planning that goes around reservoirs is different than the planning that the member, I think, is referring to.

What I was able to ascertain is that there is no one at B.C. Hydro that actually tries to figure out the cost of excess power in the future. They don't believe that that's relevant. They don't know from year to year whether there will be excess power. They don't know how much it's going to rain. They don't know what the demand is like. So they don't sit around trying to figure out the cost of something that may or may not exist. It's all done retrospectively.

Best I can do.

J. Horgan: I genuinely thank the minister. I know that it's been a difficult couple of months for him on this file, and we've got many more rough months ahead, and I hope I can contribute to that.

If we don't have anybody doing that work, then how is it that, as part of the Site C application, we have a document — 5-14, Table 5.8, "Energy deficit/surplus — gigawatt hours — with DSM target and Revelstoke unit 6, no LNG." We have numbers going out to 2031. Did we just throw a dart at the board? Did we use the Ouija board to figure this out? Or is there someone employed by the people of British Columbia at B.C. Hydro that created this document?

Someone had to do it. That suggests to me that we have people that plan for these eventualities. Or we just decided that we would put in fiscal 2012 to fiscal '31 and then fill in some numbers and put some brackets around a few and no brackets around some others. That's hard for me to fathom.

So why don't we try it this way. In 2012, the year just finished, we had a generating capacity of 49,784 gigawatts at our heritage assets. Question 1. Can we determine the cost of generating that electricity? Question 2. We had long-term contractual obligations for 15,000 gigawatt hours of electricity. Can we determine what the cost of that energy was? Then put the two together, come up with an average cost and put that up against what we would have benefited had we not purchased high-priced power between 2006 and 2012.

My point…. I'm hopeful that the minister and staff understand this. Historically, as I've said, when it rains and we've got a high snowpack, we all make money. And that's been a good thing. It happened on the Liberal watch. This is not new. This has been going on for a long, long time. But we've materially changed our ability to make money because of the self-sufficiency policy, and I would like to know if anyone at B.C. Hydro has attempted to even remotely quantify what the consequences of that have been. And I'm fairly confident that they have.

[1640]

Hon. B. Bennett: I can't provide the member…. I don't have the gigawatt-hour cost of energy produced by the heritage assets. I think that was the member's question.

I think that the member, no doubt, has copies of the annual report from last year. We know what the gigawatt-hour price was that was paid to the independent power projects. So the member has that. That's an all-in cost. Obviously, the producers' costs are in the price that's paid per gigawatt hour by B.C. Hydro to purchase the electricity.

Hydro apparently doesn't do its books in such a way as to allow me to stand here today and say what is the total cost of the electricity that's generated in the province aside from independent power projects. I would think that we could get that, but we don't have it here today.

J. Horgan: I thank the minister and his staff for at least making the effort.

I'd like to move on to deferral accounts. I just want to read a couple of comments from the former Auditor General, because they're quite surprising. In reviewing B.C. Hydro….

I know that the CEO attended the Public Accounts Committee and went through this for the benefit of members of that committee. It was some time ago, but time moves on. Deferral accounts blossom and grow, especially in high-water years, I suspect.

Some of the things that the Auditor observed at the time are the following. "Private sector companies usually pay dividends based on a history of positive financial results." "Over the last decade the impact of deferrals has been to consistently increase B.C. Hydro's reported net income." "B.C. Hydro's net equity — the funds available to invest — has been depleted over the last decade, in part by the dividends paid to the province." "It creates the appearance of profitability where none actually exists."

Now, I know we've talked about the budget that we're debating here through estimates. In that budget is a dividend payment from B.C. Hydro to the province in the form of a dividend. The principal over time has been that that dividend is a result of profit — profit by the corporation that is shared with the shareholders, all of us in this place and all of us in constituencies across British Columbia.

My question to the minister is: what is the current number of deferral accounts, and what is the current quantum of those accounts?

[1645]

Hon. B. Bennett: There are 27 regulatory accounts, valued in total at $4.3 billion.

J. Horgan: So 27 accounts at $4.3 billion. That's an increase from last fiscal of how much?

Hon. B. Bennett: Previous fiscal year balance sheets show that the regulatory accounts went up by $300 million — from $4 billion to $4.3 billion.

J. Horgan: Well, isn't life funny? In explaining why the government intervened in a rate hearing at the Utilities Commission….

I go back just for a moment, if I may, to the Clean Energy Act, which exempted some $12 billion worth of capital projects and the integrated resource plan from oversight of the commission. But it did say the following: "In setting rates under the Utilities Commission Act for the authority, the commission must ensure that the rates allow the authority to collect sufficient revenue in each fiscal year to enable it to recover its costs incurred with respect to…." Then it identifies the following.

When the government intervened in that rate hearing last year, the following was said by the then-minister, the member for Fort Langley–Aldergrove: "It came down in this particular cycle…. Let's stop this. Let's give them the rate, because that's what our numbers tell us."

This is what the Minister of Energy, last year, when he intervened and shut down a rate hearing and arbitrarily set a rate for B.C. Hydro to meet the objectives that are not only part of its mandate but in legislation…. He said: "We're able to do this and still put a quarter of a billion dollars against the deferral accounts. I think that's just good management."

End quote by the former minister. "Just good management."

I'm wondering: if the deferral accounts have increased by $300 million, how is it possible that the former minister called it good management and said: "We're going to knock 'em down by $250 million"? That seems to me to be a spread of about…. Well, what is it, former Finance critic? I think that's about $550 million off.

[1650]

Hon. B. Bennett: Well, specifically to the member's question, I am advised that the $300 million that I quoted a minute ago is a net number. In fact, the regulatory accounts were paid down, but there was growth in the regulatory accounts. The net number is $300 million.

I should say also that I know that the member and the opposition — in fact, so did the recently departed Auditor General — seem to get exercised about the use of regulatory accounts by B.C. Hydro, but the use of regulatory accounts by utilities across North America is common practice.

I mean, the basic principle of using regulatory accounts by utilities is that today's ratepayer shouldn't have to pay the full cost of an investment that's going to benefit ratepayers for ten, 20, 30, 40, 50, 60 years. That's why utilities use regulatory accounts as a common practice. Of the $4.3 billion that's in the regulatory accounts today, I'm advised that approximately 80 percent of that is currently being repaid as we speak.

Often, it seems to me, the regulatory accounts get characterized by the opposition in the media as a totally pure, unadulterated deferred debt that has no payments being made on it. That's not the case.

In fact, as I said, roughly 80 percent of the total money in the regulatory accounts does have a payment scheme attached to it. Most of it is, in fact, being paid back. The nature and purpose of regulatory accounts is something that is agreed to and utilized by utilities across North America.

J. Horgan: I don't disagree with the basis of the minister's answer. Regulatory accounts are common practice. But the Auditor General's observation, and my observation, I would say, observing energy policy for the past 20 years or so, is that it's become a fine art.

We went from a couple of deferral accounts at the turn of the century to 27. We went from a couple hundred million dollars that were used to smooth out the lumpiness that the minister referred to in terms of high water, low water, demand over time…. But I find it hard to understand, so maybe the minister could come at this question again or answer it in a different way. In the first question he said that the deferral accounts have increased by $300 million.

When I highlighted that it was the view of the Premier and the former minister that we were going to knock $250 million off the deferral accounts, somehow that is good news. But I would assume that if we're going to knock $250 million off the total, it would go down, not go up.

Maybe the minister can help me. Why is it that deferral accounts increased by $300 million at the same time we were knocking them down by $250 million?

Hon. B. Bennett: To repeat part of the answer I gave a minute ago, that $300 million number wasn't a net number. In fact, most of these regulatory accounts are being paid down.

[1655]

As I said a minute ago, 80 percent of the dollars in there are being paid down as we speak, every day. There are schemes attached to those accounts where they are paid down.

What's largely driving increases in the regulatory accounts is investment, certainly in infrastructure. Hydro is planning to spend in the neighbourhood of $2 billion a year for the next three years. They have a ten-year capital plan. It's very aggressive because it has to be very ag-
[ Page 640 ]
gressive. That's part of the reason that we have regulatory accounts and that they're increasing in size.

Another part of it is the investment in demand-side management. Hydro believes that they need to continue to work on conservation issues, and they invest in that. That money benefits ratepayers not just today but in the future. That investment also shows up in regulatory accounts, and I would suggest that a good purpose for that investment is to invest in demand-side management.

I think it is inaccurate and unfair to characterize all of the money that's in the regulatory accounts in the way that the opposition seems to characterize regulatory accounts. There was a day when B.C. Hydro had all-new assets, and wasn't that a great day. That was when W.A.C. Bennett built things.

Believe it or not, W.A.C. Bennett built dams and hydroelectric facilities even before he knew for sure that there would be a home for that electricity — wildly, outrageously irresponsible of him at the time to do that, apparently. But as we know, people bought that electricity. It drove our economy. It actually was the foundation for the mining industry and the pulp and paper industry in this province to invest, because they had access to reasonably priced electricity that came from the assets that the W.A.C. Bennett government invested in.

We are at a similar juncture in history, and I think the member knows this. We are 50, 60 years down the trail with a lot of these assets, and they have to be either replaced or, in some cases, modernized. In some cases…. The John Hart dam on Vancouver Island has to be replaced. It's a public safety threat. There are seismic issues with that. I can't tell you how old that dam is, but my memory is telling me it's in the order of maybe 50 years.

Interjection.

Hon. B. Bennett: It was built in the 1940s, I am advised.

The choice that B.C. Hydro has and the choice that government has is: do we borrow the money to restore those assets so that they can continue to be the foundation for our economy, or do we let them go to heck in a handbasket and deteriorate and not have access to reasonably priced power when and where we need it in the province? Regulatory accounts are utilized to allow that forward-thinking, visionary process to take place. I know what the member is getting at, but I disagree with the member that this $4.3 billion in regulatory accounts is all just a terrible thing.

J. Horgan: Isn't it just deferred debt? Why don't we just throw it onto the total debt of the corporation? We can't monetize it. No one would buy a deferral account. It's not worth anything except for changing the bottom line for the corporation so that it can continue to provide a dividend to the province.

I'd like to look at the 20 percent that the minister says is not being paid down. I'd like to do that in the context of other jurisdictions with public utilities. The minister has said that regulatory accounts are common practice, and I would agree that that's the case.

[1700]

Relative to other jurisdictions, are we comparable to Hydro-Québec, Manitoba Hydro? Do they use deferral accounts to the same degree? And the second part of that question would be: the 20 percent that aren't being paid down — what accounts are those?

Hon. B. Bennett: Well, once again, I'm happy to discuss the roughly 20 percent. I don't know for sure that it's 20 percent. It might be 18 percent or 22 percent, but I'm happy to discuss the 20 percent and will do my best to answer the member's question. It would be nice if the Energy critic would state, when he does all the interviews he does on this, that the majority of the regulatory account money is actually being paid back. That seems to me to be a fair thing.

In any case, I'll do my best to describe what constitutes that roughly 20 percent of the dollars in the regulatory accounts. B.C. Hydro — and British Columbia — is certainly in a unique position compared to other provinces in a number of ways. For example, B.C. Hydro invests far more in demand-side management initiatives than anyone else across the country. As I said a minute ago, that investment shows up in regulatory accounts. It doesn't show up in Quebec and Manitoba as much because they don't invest in demand-side management programs as much as we do here — is my advice.

Site C. Again, the initial expenditures around Site C are in regulatory accounts, and again, most provinces don't have the same opportunity for a Site C project that we do. Site C is an opportunity to utilize Williston Lake reservoir, which is already a significant environmental footprint. A third dam will generate electricity with far less impact on the environment than a dam in some other province in some new valley that's never been dammed up before. So that's an opportunity that probably…. If not unique to B.C., it's certainly not common across the country.

[1705]

B.C. Hydro invests in Power Smart, and that money also shows up in a regulatory account and constitutes a portion of this 20 percent. The smart meter program is another program that would comprise part of this 20 percent.

Another feature of our province — it's not unique but is, I think, borderline unique — is the extent to which our public utility consults with and makes business arrangements with First Nations. The rest of the country has their territory covered by treaties. We don't. Everyone knows that here in B.C. that presents us with some unique opportunities.
[ Page 641 ]

It means that our public utility spends a considerable amount of money and time and effort on things like economic benefit agreements, other costs associated with transmission lines and other activity on the traditional territory of First Nations that don't have treaties, which is most of the province. That's a cost that you won't see, to speak of, across the country like you will here in British Columbia. That cost also shows up in the regulatory accounts.

I've mentioned five different things that make up that 20 percent. I did actually want to say something else about regulatory accounts. I would bet money the member is aware of this, but I'll say it anyways, because it's important to get it on the record. Every regulatory account, all 27 regulatory accounts are initially approved by the B.C. Utilities Commission. Hydro can't just go and create these accounts willy-nilly whenever they feel like it. They don't wake up in the morning one day and say: "Well, I think we'll create another regulatory account, and we'll put a billion dollars in it."

That's not the way it works. They have to go to the B.C. Utilities Commission and present a case for the creation of a regulatory account. The B.C. Utilities Commission either says yes or no, and in this, obviously, they have said yes 27 times.

In addition to that, the B.C. Utilities Commission has oversight to determine the method by which that regulatory account, the money — the cost, essentially — is recovered from ratepayers. Ratepayers, ultimately, pay the cost of the operations of the public utility, and the extent to which ratepayers pay that regulatory account back is actually overseen by the B.C. Utilities Commission.

I know that the member has made quite a point of the fact that our government excluded items like the northwest transmission line from BCUC oversight and we didn't, in that case, require the certificate of public convenience. The member and the opposition generally have made quite a to-do about that, but in the case of regulatory accounts, the B.C. Utilities Commission is involved at the front end when they're created and also has oversight in terms of, as I say, the method by which the ratepayers will repay that debt.

J. Horgan: Well, I don't know a jurisdiction that doesn't engage in demand-side management of one form or another, and I don't know a public utility in this country that isn't always looking at new sources of supply through new construction projects. To suggest that somehow B.C. is unique in that regard is just contrary to the facts.

Interjection.

J. Horgan: It may well be the best place on earth. I've been here all my life, unlike the minister. So there you go. I know that Scarborough might have been a nice place at some point too, so I don't want to besmirch the people of Ontario.

The point is, hon. Chair, I asked the minister if he could tell me about the 20 percent that we don't have a plan for. He said that we've knocked down the deferral accounts by increasing them $300 million, and we have a plan. The "we," of course — and what's missing in this discussion; the minister touched on it just at the end — is ratepayers. The only place B.C. Hydro gets money is from its customers — the only place. Every time we incur debt or we defer debt to another day, someone has to pay it. That someone are the constituents of the people that reside in this House.

Again, in my world, retained earnings equals assets minus liabilities. I don't see how we can continue to push off and push off and push off so that we can change the bottom line of the corporation so that the Ministry of Finance can get a dividend.

[1710]

I've got a two-part question. I'll go back to the question that wasn't answered: tell me about the 20 percent. The second part is: how can B.C. Hydro continue to provide a dividend when they're not in a profit situation?

Hon. B. Bennett: I think that I provided quite a detailed answer to the member a minute ago on the 20 percent that we're discussing here. I mentioned five things. I mentioned the demand-side management investment money that ends up in those regulatory accounts. I mentioned Site C. I mentioned Power Smart and the smart meter program. And I mentioned the cost of the First Nations economic benefits agreement. That is, I am advised, what constitutes that roughly 20 percent of the regulatory account total.

It's not that B.C. Hydro lacks a plan for that 20 percent. They have a plan for that 20 percent. The reason that there is always a certain amount of money in these regulatory accounts that doesn't have a payment plan associated with it is because they…. There are a couple different reasons. In some cases, if it's a project like Site C, Hydro will not be going to the B.C. Utilities Commission to get their opinion on how ratepayers should repay that cost or how long it will take until the project is completed and they have a final total for the project.

That's one of the reasons why, again, using the Site C project as an example, the initial costs for that project…. Of course, no construction has actually taken place, but there is still lots of money that is spent for a large project like that in terms of environmental studies and so forth. That cost gets put into a regulatory account. When the project is complete, if the project gets an environmental certificate and is built, eventually B.C. Hydro would then go to the Utilities Commission and get some advice from the commission as to how the ratepayer should pay that cost back.

Back to my comment of a few hours ago, today's rate-
[ Page 642 ]
payer shouldn't be responsible for the full cost of a project that is going to benefit ratepayers 50 years from now. It is reasonable, I think, to have money amortized or costs amortized over a long period of time.

B.C. Hydro looks at these kinds of regulatory accounts as receivable from a future ratepayer. It's an interesting way to look at it. Where you've got a cost and a cost is associated with either a project or some sort of demand-side management initiative or some other conservation initiative that will benefit ratepayers in the future, the money and the cost is put into a regulatory account.

[1715]

Then the B.C. Utilities Commission is asked to provide their oversight on the plan that B.C. Hydro proposes for recovery from rates of that cost. That seems like a reasonable approach to me.

J. Horgan: Well, again, the regulatory accounts in most other jurisdictions are designed to smooth out rate shock as a result of new costs to ratepayers.

Can the minister advise the size of the Site C regulatory account? I have in my notes that it's up to $500 million, and we have no tangible asset for that expenditure.

Hon. B. Bennett: I'm advised that the amount spent on the Site C project as of the end of the fiscal year at March 31, 2013, was $258 million.

J. Horgan: So the Site C deferral account sits at $258 million. That's going to be pushed out. Whether environmental permits are realized, whether construction ever begins, we have already built up $258 million in debt for a project that has not yet even received stage 3 approval.

Hon. B. Bennett: Well, certainly, I think there's a piece of this that the critic and I would agree on to the extent that you don't want to spend any more money than is absolutely necessary at the front end of any project.

But if the member is suggesting that somehow or other you can build an 1,100-megawatt dam and power project and not spend $200 million in the first few years on all of the things that you have to do to get yourself in a position where you can actually have your project assessed by provincial and federal regulators…. I think that's impractical.

With a project this size, assuming that B.C. Hydro did everything right in terms of their procurement of services and supplies…. I'm not that intimately involved at that level, but I am advised that the $258 million was necessary to advance this huge project and that the project would not be advanced without that expenditure.

J. Horgan: So we agree, the minister and I, that energy variations and costs related to that are appropriately put into regulatory accounts.

Can the minister advise whether labour costs and other expenses at either Site C or on the DSM side, even though they could be and should be properly characterized as annual operating expenses, are being put into deferral accounts as well?

[1720]

Hon. B. Bennett: I think the member asked about two things. One was Site C, and one was demand-side management and whether labour costs were capitalized in these regulatory accounts.

To the extent that the labour was specifically targeted towards the demand-side management program, yes, that labour would be capitalized. To the extent that the labour was specific to the Site C project, the costs of that labour also would be capitalized in that regulatory account. Certainly on the project side, I don't think that capitalizing labour costs as part of a project cost is unusual.

J. Horgan: Well, it is if you're deferring it off to some time in the future and you don't have a plan to pay it back. That's unusual.

Let's look at the smart meter initiative. I understand there's a regulatory account for that as well. Can the minister, with his able staff around him, advise to what extent the smart meter program is on budget and to what extent costs are being deferred, to be paid in future years by ratepayers?

Hon. B. Bennett: I'll answer the question about whether or not the smart meter program is on budget, over budget or under budget. I am advised that it's currently trending under budget by the amount of $70 million. I know that the member will have…. I'm assuming he'll have other questions about the smart meter program, so I'll let him ask them.

J. Horgan: To what extent are deferral accounts being used to smooth the costs of these meters?

Hon. B. Bennett: There is, I am advised, $200 million in a regulatory account that's associated with the smart meter program. The difference between that $200 million and what has actually been spent on the program so far, I am advised, is already capitalized and on the balance sheet.

J. Horgan: This is a capital asset, one assumes. As I understand the bookkeeping at Hydro — and I know we've got the best person possible to answer the question — when a capital project comes into service, that debt comes onto the books and we start paying that down. I'm wondering: if that's the case on a project like this — a billion dollars, give or take, and we'll get a final number at some point — why would we be deferring that and not just putting it as debt and capitalizing it in
[ Page 643 ]
some other way?

[1725]

Hon. B. Bennett: The $200 million that's in the smart meter regulatory account — I'm sure that's not the name that it's given on the books, but the account that the member asked about — will be recovered from ratepayers over a period of time. Actually, it's exactly the same as the amount of money that is capitalized and on the balance sheet.

In terms of how it's repaid, there's no difference between the money that's in the regulatory account, the $200 million in the regulatory account, and that other number that I don't have which is on the balance sheet that's been capitalized.

I think the member is wrong when he suggests that there is no plan for that $200 million in the regulatory account. It gets put in the regulatory account. First of all, BCUC has oversight in creating the account. So the account can't be created without BCUC saying: "Yes, you can create this account." So they know the account is paid. The $200 million goes in over a period of time as the program is being delivered.

When the smart meter program, as I understand it, is completed, whatever the amount of that regulatory account that is over and above the $200 million that we're talking about, B.C. Hydro will once again have to trot along to the B.C. Utilities Commission with a plan and ask the B.C. Utilities Commission for their blessing to recover that amount from ratepayers over a period of time.

The member seems to suggest that there is no plan for any of these regulatory accounts, particularly the 20 percent, and that's just not the case.

J. Horgan: Well, I only said that because I thought that's what the minister said. I thought you said you had a plan for 80 percent and that 20 percent was out there, but we can go back and look at Hansard. Anyway, we can pick that up in a minute.

I'd like to go back to the dividend to the province, if I could. Maybe the minister could lift the veil from my eyes on this wonderful innovation of deferring debt through regulatory accounts by telling me why it is that when you've got a capital asset like a smart meter — something tangible, something physical; you've got to pay for it; you install it; it becomes part of your infrastructure — you would establish a regulatory account for that in a particular year.

Has it anything to do with retained earnings to the Crown corporation so that it can be demonstrated to the treasurer over here that the balance sheet is thus and, therefore, more money can be transferred from B.C. Hydro to the Minister of Finance?

Hon. B. Bennett: Well, my advice on this makes total sense to me. I don't know if it will to the member or not. My advice on this is that the smart meter account was created not because of the reasons suggested by the member. In fact, my advice from the utility is that that's absolutely not why the smart meter regulatory account was created.

There are some expenses associated with the smart meter initiative that cannot be capitalized. It doesn't mean that they don't have to be spent to deliver the program; it just means that under accounting rules, they can't be capitalized. That's why they end up in a regulatory account as opposed to being capitalized and put on the balance sheet.

Like I said a minute ago, they still get recovered the same way. They still get recovered from ratepayers over a period of time. That method of recovering — the timing, how long it's going to take, etc. — has to be approved by the B.C. Utilities Commission. So no nefarious conspiracy and no relationship or linkage to retained earnings and this particular regulatory account.

[1730]

J. Horgan: How did the deferral accounts impact the return on equity and, therefore, the dividend to the Crown?

Hon. B. Bennett: The answer is no.

J. Horgan: It was a "How?" question, so I don't know how we get a no, other than it doesn't. Maybe that would be the answer.

Interjection.

J. Horgan: All right. Return on equity. Dividends. How do they come together?

Hon. B. Bennett: I'm advised that the return on equity between B.C. Hydro, the public utility and its sole shareholder is established by a direction to the B.C. Utilities Commission and, of course, a direction to the corporation, which is no different than how any shareholder would ask for a dividend from the corporation. That dividend is calculated on the basis of what I've been told is the most comparable utility, which in this province is Fortis. That's how the quantum of the dividend is calculated.

That, I am told, is the relationship between return on equity and dividends to government. I'm happy to go further with this.

[1735]

J. Horgan: I thank the minister. It's difficult. The numbers that show up are not always the numbers that are actually transferred, so the number in the book and the cash that flows further complicate people's ability to understand just what's going on here. That's why I bring
[ Page 644 ]
up the deferral accounts, not for any reason other than that it appears, according to the Auditor General, that in some years, and particularly the last two years, moneys have been put in deferral accounts.

Labour costs, which would be a traditional operating cost when it comes to DSM; programs that are being delivered by Power Smart; employees of B.C. Hydro — those costs are being deferred even though the activity of reducing consumption has a net benefit over time but also immediately in the year that the savings are realized. Therefore, the retained earnings of the company are changed, and the dividend is paid, when we wouldn't necessarily do it otherwise.

That's the question I'm asking. I'm quite open to a reasonable answer back, and we'll move on to something else. But it's an issue that confuses me. So you'll very simply be able to confuse me more, probably, if we carry on with this line of questioning.

Hon. B. Bennett: After canvassing the experts I have on this side of the House, I can say to the member that these regulatory accounts actually have no impact on net income.

In fact, if this money was not placed in the regulatory accounts, there would be a horrible impact on ratepayers because the cost of whatever the project or the program was would immediately go to today's ratepayer, and there would be blood in the streets, I'm sure. That's why this money is put into regulatory accounts. As I say, I'm advised that there is really no impact on net income.

J. Horgan: Ratepayers are going to have to pay it at some point. We all agree on that. That's the plan. We'll defer it to another day, but there is always going to be a reckoning.

I'd like to come back to the dividend. On an annual basis the Crown corporation sends to the Minister of Finance an amount of money that's established by formula, the debt-to-equity ratio. We use, I think, 11.84 percent — the number that's the Fortis benchmark.

What I'd like to know…. I'm trying not to be circuitous about this, but by deferring costs that would normally be accrued to the company on an annual basis to future ratepayers, you are materially changing that debt-to-equity ratio in some manner. You have to be, I believe. If that's not the case, then please explain to me how.

[1740]

Hon. B. Bennett: The money in these regulatory accounts is not classified, from an accounting perspective, as debt. So they, therefore, can have no impact on the debt-to-equity ratio. I hope that's helpful to the member.

J. Horgan: Well, that's the point. If it's debt, but you are not calling it debt and moving it off to some other time, then you are materially changing what would normally be your debt-to-equity ratio, are you not?

Hon. B. Bennett: My understanding of this complex issue certainly has improved this afternoon. I've learned a few things myself this afternoon, I don't mind admitting.

In the case of the regulatory account money not being characterized as debt under accounting standards, what I am told is that if that money was capitalized and put on the balance sheet, it would have to be recovered from ratepayers immediately. That's why it goes into the so-called deferral account.

It's not to trick anybody. It's not to somehow or other help the Crown. It's because if you capitalized every penny of that money that goes into that type of regulatory account, as I say, you would end up having to recover it quickly from today's ratepayer, which is not fair. I'm sure the member wouldn't support that.

J. Horgan: Well then, it's not fish or fowl. It's not operating cost; it's not debt. It's in limbo. That seems to me to be what the minister just said. Like him, I'm learning something, and that's the value of this process. That's why it's so important we have these debates, and I'm grateful for the opportunity I have to participate in it.

If you are not capitalizing it as a capital asset…. In the case of smart meters, for example, you've got a tangible asset that's allegedly improving your distribution network. That should be paid, somehow, and it will have an impact on your debt-to-equity ratio because you're buying something for future use or for the extended use of your system and infrastructure, and that's debt. Isn't it?

[1745]

Hon. B. Bennett: The money that's in regulatory accounts generally is actually characterized…. I'm advised there is a term of art from international accounting standards that describes regulatory account money. It's not that it's in no man's land, as the member has suggested. It is a very particular type of asset on the books of a utility.

I don't know if this will help, but I'll try it. Look at some of the conservation programs that B.C. Hydro has delivered that have today's cost but the benefit is going to accrue not just to today's ratepayers but to tomorrow's ratepayers and ratepayers on into the future, maybe in some cases for a minimum of a decade.

If the cost of that conservation program was not put into a regulatory account, it would show up as an operating cost. What would happen then is that B.C. Hydro would go to the B.C. Utilities Commission and say: "Our costs were higher. We need to recover those costs from the ratepayer." The B.C. Utilities Commission would allow B.C. Hydro to raise their rates to recover the cost of that program.

The choice is made by B.C. Hydro to spread the cost of that conservation program out over the life of the benefits, I suppose, that come from the program, as opposed
[ Page 645 ]
to charging the cost of that to today's ratepayer.

J. Horgan: Thanks to the minister and staff for that.

I'll just wrap this section up. My colleague from Stikine, who is making his way to an appropriate microphone, has a couple of questions, and then we'll move on to rates.

I want to say that this is really hard to get people's heads around. I think that the public knows they are going to have to pay at some point. I bring up the dividend only because it seems to me — based on what we've said, and I'll go back and review Hansard — that it's in limbo. Therefore, it's not an asset; it's not a liability. No one will buy it. No one is going to buy a deferral account for DSM programs that have already been implemented or work that has already been done, so it's not really an asset, either.

We'll agree to disagree. I know that the minister in February, when we get to go at this for a longer period of time, will have even better answers.

D. Donaldson: Thanks to the critic for allowing me to ask a couple of questions to the minister and staff. Thanks to them for being here as well. The questions I have relate to the Tsay Keh Dene First Nation and a situation they've brought to our attention that relates to energy, and electricity as well.

[1750]

Tsay Keh Dene First Nation is located north of Prince George at the upper end of one reach of Williston Lake. They were relocated to that location after the Williston Lake reservoir was created. They are currently negotiating electricity service under the remote community electrification program. They're on diesel generators. They were originally attracted to this program and to be part of this negotiation because they felt it was an opportunity to sell biomass-based power to B.C. Hydro in order to sell to the band.

The idea and the plan was to collect the large amount of debris wood around the reservoir to power this biomass project, burn it in a clean power station, offer electricity to B.C. Hydro at below diesel prices and supply heat to the community. They've been working on this with B.C. Hydro over a two-year process to find the right technology and address various questions about how to go about setting up such a system.

What they've just learned is that B.C. Hydro has now refused to accept the band's plan for power generation, arguing that the project demand as assessed was too high.

My question is: why, after two years of work on this file, is B.C. Hydro now coming to the conclusion that the demand projections by the band are too high?

Hon. B. Bennett: I don't want to keep the member waiting any longer. I'll have additional information. The B.C. Hydro gentleman who knows most about this has just arrived, so I'll have a second part here in a minute.

What I can say to the member at this stage is that, obviously, what happens on First Nations reserves is federal jurisdiction. So the feds, if I can refer to them as the feds, end up being responsible to pay, some way or other. There is apparently an issue with this project around that.

I'm going to sit down and get some more information on it, but I would offer to the member the opportunity that I provided to one of his colleagues earlier — to link up, through my office, with B.C. Hydro so that he can get regular updates on where this particular project is at, so that he knows and can deal with his constituents from a more informed basis.

If I can just sit down and get a bit more information I'll do that.

[1755]

I'll provide some context and some specifics on the project. The remote communities electrification program was, as I understand…. I'm not sure that the program was initiated, created, by this government — I didn't ask that — but it sounds like it was. It is essentially a public service by the utility.

First Nations reserves, obviously, are federal jurisdiction, federal responsibility. Although INAC apparently contributes a share of the cost of that electricity that's generated for these isolated First Nations villages, it typically, in fact, never pays enough of the cost that the total cost is ever recovered by B.C. Hydro from the local ratepayers.

[R. Chouhan in the chair.]

It's a service, and sounds like a very important service, that this government, the former Energy Minister from Fort St. John, apparently initiated.

In this case, the First Nation has proposed a technology that is expensive. I'm told it's not necessarily fully tested-out, so there's some question about the technology itself. INAC is unprepared to increase its contribution to correspond to the reality that this is a…. It's a green technology, but it's a more expensive technology.

[1800]

The obstacles here — I'll do my best to list them off for the member: No. 1, the technology that's been proposed is expensive and perhaps not fully tested out or proven; and No. 2, INAC is not prepared to pay a fair share of the cost of delivering that electricity.

Let me be clear. B.C. Hydro is not asking to make a profit from that community. They don't make a profit from any of those communities that they do this for. But INAC should pay a higher proportion of the total cost for newer, cleaner, greener technology. So that's where it sits, and it has taken a while to make a determination about the technology.

I understand, just to be clear and fair to the member who asked the question, that there has been a no given to the First Nation. So I'm not sure whether there's hope
[ Page 646 ]
that the process could be restarted, that a different kind of technology could be suggested. But I'm happy to work with the member on that and work with B.C. Hydro on it, if the member wants to do that.

D. Donaldson: Thank you to the minister. Yes, I'd be happy to take him up on his offer of a briefing on the topic and the offer to work together to try to find a solution away from no and to yes.

I want to point out that B.C. Hydro is the entity they're dealing with, a provincial government arm's-length entity. The issue, as explained to me by the Tsay Keh Dene, is that the impediment to getting this project going was B.C. Hydro's assertion that the projected demand by the First Nation was too high.

I had another question. The Tsay Keh Dene tell me that they had secured almost $2 million in competitive grant funding that they've had to return to the federal and provincial governments over this project. I'm wondering if the minister can advise. I'm quoting from a Prince George Citizen article, July 24, 2011, where the former Energy and Mines Minister announced $1 million in funding to the Tsay Keh Dene to produce heat from wood waste: "A clean energy solution for this diesel-based community."

Is this $1 million that the then minister granted under the innovative clean energy fund part of the money that has been referred to that's having to be returned to the province?

Hon. B. Bennett: The First Nation in question apparently was successful in an application to the clean energy fund for a million dollars. My advice is that that money was never paid out because there wasn't sufficient progress to warrant payment. So at least the advice I have right now would indicate that there's no issue of the First Nation returning the money, because they've never been paid the money. If the member has information that contradicts what I just said, I'd be happy to hear it and we can check further.

J. Horgan: I'd like to thank the minister for offering detailed briefings to all of my colleagues. I'm sure at the end he's going to offer a similar one to me.

[1805]

I'd like to move now to the projected rate increases that are coming. I'll remind the minister of a comment he made on public radio, CBC radio, a couple of weeks back. When a question was posed about rates, he said: "I think we should have allowed hydro rates to go up on a more gradual basis." That, I think, was a direct reference to the interference at the Utilities Commission last year when Hydro came forward, requiring a rate increase to meet its operating costs for the fiscal year, and the government intervened and lowered those rates to 1.4 percent. Now the chickens will, I assume, come home to roost.

I'm wondering if the minister could advise the committee what his plan is, according to his letter from the Premier, to mitigate the rate increases, not just to residential customers but industrial customers as well.

Hon. B. Bennett: I have some colloquial expressions myself, and what comes to mind is the pot calling the kettle black here. When the member was advising the NDP government of the 1990s, they didn't increase rates. B.C. Hydro didn't increase rates between 1993 and 2001. That's a fact.

I get what the opposition critic is doing, and I get what he's asking. But faced with choices back in the days when his party was in government, they didn't allow rates to go up nearly as much as our government has allowed rates to go up.

With respect to his comment about the last B.C. Utilities consideration of rate increases, I have heard the member quite effectively characterize that whole episode as the government interfering with the BCUC's consideration of a rate increase and artificially keeping the rate increase down. And that's not accurate.

Actually, for the most part, what enabled B.C. Hydro to keep the rate lower, to 17½ percent over three years — which, again, is a whole lot more than what the NDP government ever allowed rates to go up — from the 32½ percent that was originally asked for, was a combination of things.

First of all, when the current Premier was elected as leader, she made a commitment to have the Crown corporation reviewed and find some cost savings that they could then use to justify not raising the rates as much. The Crown corporation, to its credit, found $391 million in savings. That was part of the reason why B.C. Hydro didn't need as large a rate increase: because the review was done at the instance of the Premier and the review found $391 million.

Another reason why the rates didn't need to go up the full 32½ percent was that B.C. Hydro found a way to push back $800 million in capital spending. That also was helpful in terms of not having to raise the rates by 32½ percent.

A third reason, a third foundation, for why the rates didn't have to be increased as much as originally thought was fortuitous. It was just a decline in interest rates.

So those were the three reasons, for the most part, that justified B.C. Hydro taking 17½ percent over three years rather than 32½ percent.

J. Horgan: Well, again, I think it was convenient for the government in power to keep rates low in an election year and let 'er rip the year after. So the $800 million the minister referred to is, I assume, coming home for ratepayers in the coming year.

I don't recall a significant shift in interest rates over the past 12 months. Maybe I have not been paying close
[ Page 647 ]
enough attention to my significant investments, but they've remained relatively flat. So I think that might be a bit of a stretch.

Again, I'll thank the minister for reminding the public that B.C. Hydro rates remained low during the 1990s, also in 2002, 2003 and 2004. They didn't start going up until, I would argue, the end of the first third of the B.C. Liberals watch. The issue at hand, however, of course, is not what I did as a young person in the 1990s.

[1810]

What's at point here is: what is the minister going to do to protect ratepayers — residential, commercial and industrial — from what will inevitably be a significant increase in costs? When capital projects come into service, that has to fire straight over to the rate base. We know that. We've gone around and around on deferral accounts. We'll leave that to one side.

There are going to be increased costs to the utility in the coming 12 months. Someone has to pay for it. How much?

Hon. B. Bennett: What will happen over the next few months is that B.C. Hydro will work hard, sharpen its pencil and find more ways to reduce costs. They will put together an application for the B.C. Utilities Commission that will be provided to the commission in February or March of 2014. That application will include a request for a rate increase. I don't know what that rate increase will be. There is a tremendous amount of work to be done between now and then.

I completely agree with the Energy critic when he says that it is the investment in capital that is driving the rates up. I've said that publicly many times.

Not only did the member, when he was a young man in the 1990s, not allow rates to go up; he apparently also didn't advise his ministers that they should invest in infrastructure for B.C. Hydro. Therefore, we find ourselves, as of 2001, with this huge need to invest in infrastructure.

We have a ten-year capital plan, which I've referred to earlier. We have places like the John Hart dam in Campbell River, which is a risk to the public. It's a $1.2 billion project. Maybe it should have been done ten years ago. It has to be done now.

So the member is absolutely correct when he suggests that what's really driving rates up is the need to invest in infrastructure to modernize our hydroelectric assets, to add turbines, to create new capacity. That is what puts the pressure on rates. But as I say, we don't know what the rate increase will be that will be requested by B.C. Hydro.

What I can say to the member — and I've said this to the member during other times here in this House — is that my mandate, given to me by the Premier, is to, first of all, do everything I possibly can as the Energy Minister to restrain or limit the increase in rates but at the same time balance that part of the mandate with the part of the mandate that includes investing in the infrastructure that is absolutely necessary in order to have a strong economy and to see a growing economy.

J. Horgan: Again, I appreciate the enormous power the minister gives me for my time in government, but I don't believe it's deserved. I see the assistant deputy minister holding back a smile under a perfect moustache. I'll leave him be.

I will instead say that it is capital amortization that will have an impact on rates. Water rentals will have an impact on rates. Dividend will have an impact on rates. Independent power purchases are going to have an impact on rates. There's a host of issues — operating costs, taxes in lieu to communities where Hydro operates.

Perhaps the minister could advise the House, if he has this information at his disposal, what we could ascribe to each of those areas as the reason for rates going up in the near term.

[1815]

Hon. B. Bennett: What I can say to the member is that the majority of what drives and what will drive B.C. Hydro rates up is capital investment in infrastructure. That's the majority of it.

All the items that he mentioned — and I didn't right write them all down — including return on equity, form a part of the overall influence on rates. They form a part of what drives rates, but they have a much smaller impact than the capital investment.

I'm advised that the utility doesn't actually figure out exactly what proportion of a…. For example, a 1 percent increase could be attributed to capital investment, return to the shareholder and all of the other items that the member mentioned. They don't have that information handy.

J. Horgan: I note that in the inventory I listed new supply, private power purchases, so there's that. There are water rentals, taxes, dividend, general operating costs. These are pretty basic elements of what it costs to keep the corporation going year over year. The requirement for a rate increase is to pay for all of that. There are many, many reasons, and you're going to be hearing more and more about them with each briefing.

[1820]

Can the minister advise what impact the cost of purchasing private power is going to have on rate increases in the coming year?

Hon. B. Bennett: A couple of points. Number one, the independent power projects that are currently contracted with B.C. Hydro…. Whatever the price is that's being paid for power in those various projects is already built into today's rate, so it's obviously not going to put any pressure to increase rates further. Those prices are
[ Page 648 ]
built into today's rate.

What I have been trying to ascertain over the past couple of minutes is what's on the horizon this year, next year and the year after for independent power projects and what is likely to be the price so that I could respond to the member and give him a sense of what the independent power side of the business looks like. That would potentially form part of the driver that will tend to drive rates up.

I'm sure we can get that information for the critic. We don't have it, I don't think, handy right now, but we can definitely get it for the member.

You know, you have a pie, and in that pie are all of the factors, all of the forces, all of the influences that the member has mentioned, including the big one, which is capital investment, and probably also IPPs — perhaps. I shouldn't say probably. I'm not sure that they will drive rates up.

[1825]

But what we need to do for the member is to give him our best assessment, or B.C. Hydro's best assessment, of what we see being plugged in from IPPs over the next couple of years. There is some uncertainty as to whether projects are going to get built, when they're going to be ready, those kinds of things. That's why that information is not at anybody's fingertips right here today.

J. Horgan: I thank the minister for that response.

On the capital assets, the minister talked about the ten-year capital plan and claimed that that's going to have an impact on rates. Is it not true that the impact on rates for these capital projects will begin at in-service dates, so that John Hart, Ruskin, the Interior to Lower Mainland transmission line, the list of projects that are currently underway, will not have an impact on the rate requirements until an in-service date? Isn't that how these things work?

Hon. B. Bennett: The member is correct, at least insofar as I understand his comment and his question. However, there are a number of projects that are coming into service in '15-16. Rates are locked in through 2014.

There are several actually quite large projects coming into the picture for '15-16. One is the northwest transmission line, which is a $746 million project. There is the Interior to Lower Mainland line that the member mentioned. That's a $725 million project. There is the Dawson Creek area transmission, $255 million. There is the Mica 5 and 6 project, $714 million, and then the G.M. Shrum turbine rehabilitation, which is a $272 million project — all of which I am advised will come into service in 2015-16, which really will constitute some pretty serious pressure on rates.

J. Horgan: Well, let's just fly right to some of these capital projects, then, from the service plan. The Keenleyside spillway gate reliability upgrade, forecast in-service date of 2016, with a cost of $80 million to $90 million. Is that project on budget?

Hon. B. Bennett: It's uncanny the way the Energy critic just seems to know the projects that are not on budget and seems to want to talk about those particular projects. That project, I'm advised, is trending over budget right now, and my information is relatively recent. It looks like it's about, right now, $33 million higher than expected.

I would point out to the member — and I'd be happy to list the projects — there are several capital projects underway today that are trending under budget. In fact, the majority of the capital projects underway today are trending under budget. As I have said to the member in other exchanges in this House, the three-year capital plan spending targets are expected to be met, with a couple of projects over budget, most of the other projects on budget or under budget. B.C. Hydro advises that they will meet their three-year capital budget targets.

[1830]

J. Horgan: Again, one of the challenges we have with projects is that you have the benefit of producing three-year service plans, and you update them annually. When scope creep enters into the equation and reassessments of capital requirements, there's what was approved by the board versus what's actually in play. There's a whole host of variables, so if you're just following along with one document, it's difficult to keep track of where we started.

The northwest transmission line is a very good place for us to land. According to the service plan, the northwest transmission line, projected to be $561 million to $617 million, started at $395 million and went to $404 million. Now we're up to $746 million, and we're not done yet.

I'm wondering if we could land here for a moment. I'm sure the minister was expecting a visitation here. Can he explain to me who is going to pay the difference between the service plan target of $617 million on the upper end and the $746 million we're-not-done-yet figure that the minister has been advising the public of.

Hon. B. Bennett: It took a little bit more time with that one.

[1835]

I would really like to sit down sometime with the member and go over the estimates of costs for the northwest transmission line, because I do think that the correct numbers have really not gotten out totally to the public. I guess, in terms of this process, that's probably not what the member really wants to do.

The one thing I will say is that the $404 million number was a base number. When that planning cost was put out to the public, it included a plus-30, minus-10. So if you add the 30 percent to the $404 million, it was $525 million that was actually budgeted for that project. So the
[ Page 649 ]
increase is considerably less than what the opposition has been indicating.

That, however, is not the focus of the member's question. The member wants to know who's going to pay, and he asked who's going to pay the difference between some earlier costs and some later costs. I think it's really all the same. Who's going to pay for it? The total cost has to be paid, and the total cost will be paid through a tariff that's been created to ensure that ultimately, at the end of the day, industrial ratepayers along that line will pay back the capital cost of the project.

J. Horgan: Well, I do know a bit about this project, and I do know that AltaGas has agreed to make a capital contribution. But in exchange for that capital contribution, B.C. Hydro signed a 60-year power purchase agreement with that company. A pretty good deal if you can get it — 60 years of guaranteed revenues if you put up some capital costs for a line that you're going to require anyway for your project to proceed.

I'm interested, though, in whether Red Chris and Imperial Metals agreed — in the discussions around a tariff, when the negotiations were underway last November, with the capital costs at that time in the $561 million range — to the unlimited upside if capital costs continue to escalate. Did Red Chris sign on to pick up the entire overrun, or did they agree that their contribution would be capped at $561 million?

Hon. B. Bennett: With respect to the rates and the tariff on the northwest transmission line and Imperial Metals, the company that owns the Red Chris mining project, their rates will increase as the cost of building the line is higher. Their contribution is commensurate with the amount of electricity that they use, so the proportion of the increase from the original estimate to the current estimate for the capital cost is not borne totally by Imperial or any other user along the line.

[1840]

Their rates will go up if the project costs more money to build, but their rates are based on the amount of electricity that they actually use.

J. Horgan: Once we get to Bob Quinn for $746 million, if we get there for that price, we've got to get another $112,000-odd to Iskut, for this to be of any value whatsoever to Red Chris. They are the anchor tenant, if you take AltaGas out, who are putting in, I believe, $90 million up front and $90 million over a long period of time in exchange for a 60-year power purchase agreement. I don't know the terms of that agreement. That's not been made public.

Can the minister advise who's constructing the Iskut extension, and is it on budget?

Hon. B. Bennett: The member has asked about the Iskut extension. There's a subsidiary of Imperial Metals that is building the extension line from Bob Quinn up to Iskut. Actually, the line will go all the way into the Red Chris mining project. So Imperial Metals or its subsidiary is building the line. They've taken the risk. They've signed a contract with B.C. Hydro that when the line is up and running, has been built to B.C. Hydro standards and B.C. Hydro is satisfied that the line has been built to its standards — everything is tickety-boo — B.C. Hydro will purchase that line from Imperial Metals at a fixed price.

If Imperial Metals and their subsidiary spend more money on the line than they anticipated spending, it's too bad for them. The risk has been transferred to the private proponent in this case by B.C. Hydro, and so cost overruns become a whole lot less relevant in this circumstance.

J. Horgan: If Imperial is building the line, are they building it to B.C. Hydro standards? Are the standards inferior to B.C. Hydro's?

I'm going to throw a couple of questions. I knew I shouldn't have wasted time on deferral accounts, because I've got about five hours more I want to ask you, and we don't have that quality time available to us, unfortunately.

Interjection.

J. Horgan: Yeah. I'm not casting aspersions. You have done a great job.

I want to know what role Partnerships B.C. played in the NTL. If board discussions took place, did Larry Blain recuse himself?

[1845]

Hon. B. Bennett: I think the member is aware that projects that require public money that are over a certain threshold must be reviewed by Partnerships B.C. That is a policy of this government. The threshold at the time, in 2007, was $50 million. Therefore, this project met the threshold for Partnerships B.C. to have a look at the project. In 2007 they did that.

The involvement of Partnerships B.C. ended after they reviewed the plans for the project. Just to be cautious, I'm going to say that, certainly, halfway through 2008, Partnerships B.C. wouldn't have had any involvement at all with this project. Even their original involvement was fairly minor, all things considered. Mr. Blain, as I understand it, was not on the board at the time and is also not on the capital review committee of the board.

J. Horgan: I thank the minister. My colleague from Surrey-Whalley had my back when he advised me that you did say that the Iskut extension was built to Hydro standards. I didn't hear you say that. I was reading at the time.

So Imperial is building a line from Bob Quinn to the
[ Page 650 ]
mine site at their cost. Hydro is going to buy it back at a fixed price. It's going to be built to standard, and any overrun is their risk. But the line from Terrace to Bob Quinn overruns the only significant anchor tenant, putting aside AltaGas — but a purchaser of power, not a purchaser of transmission services. The purchaser of power will be paying for the power they purchased based on the negotiated tariff from November 2012? Is that correct?

Hon. B. Bennett: That's correct.

J. Horgan: If there is an escalation in capital costs beyond what was negotiated, or beyond the $746 million that we know of today, there is going to be an increase in costs to that industrial customer for power purchased, but we haven't yet even got to the opportunity to discuss what the industrial rate review is going to realize. Maybe that is a briefing that you will offer me as a parting gift, as you did my colleagues.

Hon. B. Bennett: I don't want to use up valuable time that the member wants to use. I think that I'm certainly prepared to have a discussion with the member about the industrial rate review. Given his knowledge of this file, he may well be able to add some value to what we're doing there.

J. Horgan: Seven years as Energy critic, and the first minister to ever say I could possibly add value — I'm going to take that as a deep compliment. I appreciate it a great deal.

There is one other capital project that I'm concerned about, and that is the Dawson Creek–Chetwynd area transmission — the DCAT. Now, it has been up and down and all around.

I'm wondering if the minister can assure me…. There's a wide range here, when you consider that the area, which I know fairly well from my visits to the Peace country…. You are not going to have the blasting challenges that you had in the northwest, but yet, there is a significant range there, from $190 million to $300 million. Can the minister advise if we're on budget and why the range is so large?

[1850]

Hon. B. Bennett: I'm advised that the process that B.C. Hydro uses to estimate the costs of projects is similar, the same as most other large-project proponents, and that, in fact, the range is normal. That's what I've been advised.

I don't know what else I can say, other than I am also advised that they think they will meet their target; that the BCUC provided a certificate of public convenience on this one, which is different from some of the other projects; and that BCUC has actually approved the project estimates that they provided.

J. Horgan: And the board has approved that expenditure as well? The board of B.C. Hydro has approved the total expenditure?

Hon. B. Bennett: I think the member's question was as to board approval for the high estimated amount for the project. I'm advised that the board has actually, to this point, approved a relatively small amount for initial work around this project and that management will be going to the board very shortly for approval on the estimated total capital costs.

J. Horgan: I guess I should have asked that earlier.

I have a couple of other questions that I want to just get on the record in the time available, one of which is the lack, as I understand it, of a project labour agreement for the John Hart facility. We've talked about — the minister has, and I've not disagreed with him — how the two-river policy, and the work that's been done by B.C. Hydro on behalf of the people of B.C. over the past 50 years, has been a net benefit to the province. No question about that.

One of the elements of that has been bringing labour peace to projects. The project labour agreements, the Allied Hydro agreements that have been in place in almost every corner of the province, have been effective.

The previous minister would not answer yes or no to whether we would have a project labour agreement in this case, and if not, why not? That's question 1.

[1855]

I wouldn't mind getting one on the record that you can get back to me on. I don't want guys to be flying through their books at this late hour, but I would be interested to know the total cost — we can get this off Hansard, Minister; don't worry about hearing what I have to say here — of purchasing homes in Tsawwassen and the cost recouped from that. The transmission line to Vancouver Island was very controversial at the time. B.C. Hydro expended a significant amount of money purchasing property along the corridor on the assumption they would be able to recoup that cost by selling the properties again.

If we could, at some point, get a letter back to me about whether we actually met the budget on the purchase of those homes…. But the project agreement question I'd like an answer to.

Hon. B. Bennett: I received the questions from the hon. member. I'll make sure that my staff reviews Hansard to make sure that we have all the details, and we'll provide the answers in writing.

J. Horgan: As much as I really would rather just spend the rest of the week doing this, we can forgo question periods from now until the cows come home instead of having an opportunity to inform the public and members of this committee about a very important public utility. B.C. Hydro is the crown jewel. We're all very concerned about
[ Page 651 ]
the future, what the impacts of significant rate increases are going to be to our economy and to our residents.

With that, I'll let the minister wrap up.

Hon. B. Bennett: Very briefly, I just want to thank the opposition critic and his colleagues for the way that we did estimates this afternoon. I think it's the way estimates should be done — very respectful and difficult questions. We don't agree on lots of things, but we both have the right kinds of intentions to represent the taxpayers in the province as best we can. Thank you to the critic.

Noting the hour, I make a motion that we rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:57 p.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.

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

Hon. T. Lake moved adjournment of the House.

Motion approved.

Madame Speaker: This House at its rising shall stand adjourned until 10 a.m. tomorrow morning.

The House adjourned at 6:58 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
TRANSPORTATION AND INFRASTRUCTURE

The House in Committee of Supply (Section A); J. Thornthwaite in the chair.

The committee met at 2:37 p.m.

On Vote 45: ministry operations, $812,278,000.

The Chair: We're discussing the estimates for the Ministry of Transportation. Do you have a statement, Minister?

Hon. T. Stone: Yes, I do. It's a pleasure to stand before you today as we begin the estimates of the Ministry of Transportation and Infrastructure. I will keep my introductory remarks brief. I want to give as much opportunity to our opposition colleagues to ask as many questions as possible.

I would like to quickly introduce members of the ministry executive who have joined me here today — Grant Main, deputy minister; Nancy Bain, assistant deputy minister, finance and management services department. We also have Dave Duncan, ADM for the highways department; Jacquie Dawes, ADM, transportation planning and policy department; Kevin Richter, ADM for infrastructure department; and Greg Gilks, acting ADM, policy and program.

I have an incredible executive team working very hard on behalf of all of British Columbians, and I would like to recognize the many men and women across the province who work in this ministry each and every day to build our world-class transportation network for the benefit of all British Columbians.

It's all about ensuring that British Columbians can travel safely and that we can move goods and people throughout all corridors in the province. Allow me to thank all of these hard-working British Columbians who work for the ministry on behalf of all of us.

The Ministry of Transportation and Infrastructure is indeed a large ministry, and we cover a wide array of topics. I'm sure that we're going to dive into all of these topics over the coming few days.

Hon. Chair, I'm happy to take the members' questions now.

[1440]

C. Trevena: I thank the minister for keeping his remarks brief. I have very few opening remarks, but I also want to acknowledge the hard-working staff in the Ministry of Transportation. I usually deal with them at a constituency level, and they're always extremely helpful.

I have given the minister details of how the coming two days will unfold. His assistant has that, so, hopefully, we'll be able to keep pretty close to that running order.

I look forward to having the opportunity to go through a number of different areas and would hope that, because time is limited and the ministry is so large, those areas we can't cover in verbal questions, we can have written questions and get answers. At each stage where we're not covering them, I think I'll give a heads-up of which ones we'd like having written answers to, and maybe we can proceed that way and move this along quite quickly.

With that, the first area that we're going to be talking about is ICBC, so I'll hand over to my colleague from Vancouver-Kensington.
[ Page 652 ]

M. Elmore: First, I'd like to start and just offer congratulations to the member for a successful election and also congratulations for the assignment as Minister of Transportation.

As the critic for ICBC, it's a pleasure to be working on this file — and in terms of recognizing not only the great staff of ICBC but just the role of this important provincial Crown corporation, created in 1973 by the Dave Barrett NDP government to provide universal public auto insurance in B.C., also taking on driver licensing, vehicle registration and other responsibilities. I think it's an example of a very well-run Crown corporation serving the interests of British Columbians and also just a real value to the people of British Columbia.

I'd like to start with my questions referencing the internal audit that was done of ICBC last year. My first question is with respect to the finding in the audit of the bodily injury claims, that claims account for 75 percent of total costs for ICBC and that this is one track where the claims…. We have seen growth in terms of more payouts for higher bodily injury claims, with an increase in cost per bodily injury.

My first question is if you can give feedback in terms of what the increase in bodily injury claims has been over the last five years.

[1445]

Hon. T. Stone: I thank the member opposite for the question. I'll go back one step further and also congratulate the member for her successful re-election to the legislative chamber. I look forward to working with her in the months and years ahead.

With respect to claims, there is no question that one of the key challenges at ICBC — and this has been right back since it was created — is always doing everything that you can to keep the claim costs down. Historically claims at ICBC have increased year over year by about 2 percent per year. We have seen over the last year an increase to about 6 percent. The main reason for that is we've seen an increase in the frequency of collisions that are taking place on B.C. roads.

M. Elmore: Besides increasing…. It's the quantity, if I'm correct. There are more claims being made overall, as the main reason for increasing costs for bodily injury. That was one of the main areas of concerns recognized in the audit that was conducted.

I know that there have been significant steps addressing questions and concerns around excessive management, senior management. The other primary area that was identified was the escalating cost for bodily injury claims. Is that accurate in terms of your attributing the main reason to the quantity of claims being made?

Hon. T. Stone: Historically at ICBC the percentage increase year over year of the number of severities, typically, as I said earlier, has increased. Our bodily injury claims have increased by about 2 percent, 2½ percent per year.

[1450]

That was because when you separate the severities out from the frequency, the severities typically would be growing at about 5 to 6 percent per year, year over year, whereas the frequency was typically flat and in many years would be decreasing year over year.

What we've actually seen and what mainly accounts for the overall increase in the percentage of claims is that the frequency is no longer decreasing. The frequency is increasing. We think that there's a wide range of factors as to why that's the case. Large construction projects in the Lower Mainland are partly attributable; weather conditions. But one of the top factors is an increase in the number of distracted drivers, the use of mobile devices, which is why we're seeing a particular focus amongst law enforcement around the province to crack down on the use of mobile phones and texting while one is driving.

I'll also say that we're noticing a year-over-year increase in the number of claims that are represented. If lawyers get involved early in a process, early in a claim, the costs tend to escalate, and they can escalate rapidly.

So those would be the two key factors that would be attributable to an increase in the percentage of frequency, which is causing an overall larger increase year over year in the number of claims.

M. Elmore: I'd like to also follow up in terms of the second aspect of the rising costs — the increasing rate of representation; lawyers being involved in settling claims.

I noted in the audit that the rate for plaintiffs seeking representation has increased from 31 percent in 2000 to 40 percent in 2011. We're seeing that's increasing, as well, with more customers seeking legal representation. The increasing representation rate pushes up costs. On the one hand, ICBC must also use counsel. Also, when claims are settled in court, generally the amounts are higher.

Can you provide some insight in terms of the reason for this increasing rate of representation and also steps to address it?

[1455]

Hon. T. Stone: Well, let me first reiterate for the members opposite, ICBC — and indeed, our government — is as concerned as anyone else is about the rising cost of claims. We're very aware, as I said earlier, that part of that challenge is the increase in representation.

Just for the record, I will point out for the member, as well, that the average time to settle a bodily injury claim when the claimant is represented by legal counsel and the claim is not, therefore, in litigation, was approximately 484 days in 2012. That's more than double the average time when a client with a similar-type claim is not represented. In fact, when they're not represented, the approximate time is 176 days to settle the claim.
[ Page 653 ]

I think it's worth noting that British Columbia is the last province, the last jurisdiction in Canada, which still operates with a full tort system. The claims process, by and large, operates well for the people and the drivers of British Columbia. But a full tort system does invite increased involvement, increased participation, of lawyers in the process.

ICBC is trying hard to understand this and is working on a number of strategies to address this reality. At a high level, there are programs that ICBC is working on that focus on doing an even better job than I think they already do at explaining how the claims process works, making sure that people know that you will not be pressured to sign a document. You don't have to sign anything when you report a claim, until you're ready. That's very important.

I think it is important to also note that ICBC is deeply committed to ensuring that offers that are made are fair for those who are involved in the claims, that they're reasonable and that there's an opportunity for a settlement as early as possible.

[1500]

M. Elmore: If you look at the trajectory and the rising cost, not only the percentage of the representation rates, I'm wondering if there's a current number for the current representation rate for cases that go through and are settled.

I think we can also see a correlation in terms of where the representation rate climbs. For a number of years, I understood, it was relatively flat, and it has really been a steady increase for a number of years. I think that can be attributed to a change in service delivery model.

I'm wondering if that's a discussion, as well, internally within ICBC: the move away from the ability for adjusters in claim centres to make those decisions, of settling those claims, and moving to claims over the phone, number one, and just moving it out of that arena. I'm wondering if there are plans to address that in terms of containing those costs and looking at….

Ideally, for ICBC and also for folks who are involved, unfortunately, in accidents, it's a benefit for everyone all around when claims are settled earlier, sooner. Certainly, there's a benefit in that, in taking steps to address it.

Just a question: do you have a number on what the current representation rate is? Also, do you anticipate it to continue on the upward rise over the next couple of years? Are there specific plans to bring the representation rate back down, and an overall strategy to manage bodily injury claims and the escalating costs on the claims themselves and also one component of that, representation?

[1505]

Hon. T. Stone: To the first part of the member's question, the current representation rate at ICBC for 2011 was 40 percent; for 2012, upwards of 45 percent.

The next part of her question was: does ICBC anticipate the percentage of represented claims to continue to increase? Yes, we do believe that, certainly, the trend at the present time is that the year-over-year number of represented claims is anticipated to increase. By how much? We don't know yet. Obviously, this concerns ICBC. It concerns government, and it's why we're working hard in a number of areas to really wrap our heads around this.

The third part of her question, I believe, was with respect to any changes to the delivery model and whether there are impacts there. I will say that when the government's review was done and ICBC embarked on the recent restructuring, there were some significant changes made to the claims process and how claims are handled, with the goal being how we make sure that we're providing fair settlements in a timely manner for British Columbians.

Part of that is how we also focus on this trend of increased representation in those claims, which we all know participates, to a degree, in escalating costs. I will say that as part of that restructuring, one of the first things that ICBC did was they restructured the entire claims department in terms of how claims are handled. They separated the material damage claims from the bodily injury claims. Next, ICBC did a lot of work around making sure that the right people with the right skill sets were matched to the material damage claims versus bodily injury claims.

With respect to bodily injury claims, a further restructuring was done and how those claims were handled, and the represented claims have been separated from the unrepresented. Again, it's different skill sets, different people with different strengths that have been placed on those two different types of bodily injury claims.

I think it's also worth pointing out that at the adjuster level, ICBC has also provided, as part of this restructuring, the ability for there to be somewhat more appropriate authority for adjusters around the province. Again, this is all about ICBC trying to do its utmost to ensure that claims are settled in as fair a manner as possible for those effected and as quickly as possible.

[1510]

M. Elmore: Thanks for the response. I look forward, going forward, to learning more and hearing more in terms of the changes and, in particular, the overall strategy to move forward to address the service issues and also to manage the costs.

I'd like to ask about the rates and also with respect to dividends. Within the last ten years I think, generally, rates have been quite affordable and increases have been quite modest, with the exception of last year. I see the amount here, the increase — 11.2 percent increase, which is quite significant.

Just wondering if the minister can answer that and give
[ Page 654 ]
a justification of why British Columbians saw such a significant increase in their rates at the same time that ICBC provided a dividend of $226 million to the government. Certainly, I think the expectation would be that, you know, profits generated should go towards keeping rates down and affordable. The expectation is that that dividend going forward in the future should be reinvested in ICBC and go to keeping rates affordable.

[1515]

Hon. T. Stone: First off, with respect to the dividend. The dividend, as the member knows, comes from the optional side of ICBC's business, not the basic side. The optional side is competitive.

With respect to the rates for this last fiscal year, as the member knows, the basic rates increased 11.2 percent. But I think it's important to also note that optional rates were decreased by 6 percent. So on a net basis for about 80 percent of the driving public in British Columbia, the rates actually only increased $27 per year.

M. Elmore: Thanks for the response. I still contend that British Columbians have an expectation that if there are profits generated from ICBC, they should be reinvested back into ICBC to keep rates affordable and to also avoid unnecessary increases. It just doesn't square in terms of rates going up, yet increasing dividends are going to the province.

I have a question with respect to plans. We've seen the increased use of telephone claims customer service delivery. Are there plans within ICBC to close or consolidate claim centres outside the Lower Mainland? Are there also plans to close driver's licence offices?

[1520]

Hon. T. Stone: I'd like to respond to the member. Her question is: does ICBC have any plans to close any claim centres or driver licensing centres outside of the Lower Mainland? A very direct question. A very direct answer is no. There are no plans to close any claim centres or driver licensing centres outside of the Lower Mainland.

J. Kwan: I have a very specific set of questions about the B.C. Services Card for the minister. This new system, of course, provides an opportunity but also challenges as well for people who are trying to access new ID. Now, the rules regarding the primary and secondary ID to access the B.C. Services Card, I would argue, are quite stringent and in many cases present an almost impossible hurdle for many people — in particular, people who are marginalized. Seniors, for example. People who might have, unfortunately, had all of their ID stolen. People who might have lost their ID, as an example.

We know that these kinds of IDs are essential, as they help people access government services. For example, seniors who would need a certain kind of ID in order to obtain old age security and people in the province who might be needing some form of photo ID in order to obtain income assistance.

The list of primary IDs on this is interesting to note. Some of the primary IDs in order to access a new B.C. Services Card require that you have a photograph as a piece of ID in order to obtain it. Other pieces of ID do not. Also, it is complicated, because federal government changes in the new ID make the matter even more difficult.

Take, for example, primary IDs that are accepted for the B.C. Services Card would include Canadian birth certificates. Now, I note here that the birth certificates do not have either a name, a signature or a photograph of the individual, right? That's how birth certificates are made. But this is accepted as a primary ID. I'm not disputing it. I think that's good.

Another example: Canadian citizenship cards. The old ones — and I have one, where there's a photograph of me — are accepted. The federal government doesn't issue cards anymore. They only issue certificates, and those issued after February 2012 are not accepted. So, for example, if — and it is the case, actually — I lost my Canadian citizenship card, the one with the photo, I have to apply for a new one. I won't get a new card. I will only get a certificate. That certificate would not be recognized as my primary ID. Hence, there is a problem.

Even if you manage, somehow, with other IDs to get a replacement Canadian citizenship card or certificate, it is not recognized by the B.C. Services Card as a primary ID.

Canadian record of landing. Now, this document does not actually have a name and signature on it. It does not have a signature or a name and photograph, which is a requirement for the primary ID. That's a good thing that it is accepted, right? But there is a discrepancy here that this piece of document does not have that stringent requirement of both a name and a photograph, or a name and signature.

Secondary IDs. You can have a B.C. Services Card as a secondary ID without a photograph, right? You can go in and apply for that. This type of card does not have a photo or a signature. So even if you access that card — and you want to use that card to apply for other ID that's been lost or stolen — it's actually not particularly useful, because that card does not have a photograph or a signature on it.

[1525]

On to another piece of ID. Status verification is listed neither as primary or secondary ID. It's listed as either primary or secondary ID, and he has no photograph or signature.

Photo citizenship certificates are no longer available, as mentioned. And records of landing — sometimes people don't have their original landing papers, and they get from the federal government a record of landing. That is now not recognized either in terms of using it as a means of getting ID. So we have a situation….

Hence, all these discrepancies about what's recognized
[ Page 655 ]
as a primary piece of ID and what's not recognized as a primary piece of ID. There are discrepancies about it. Sometimes it's required to have a photo and signature; sometimes it's not so much. And the more stringent it becomes, the more it'll be difficult for people to access various forms of ID to obtain their photo ID.

I have a situation where a number of my constituents…. One of them is a 61-year-old physically disabled woman. She has very high medical needs, and she lives with her common-law husband, who is 72 years old and who actually receives old age security, guaranteed income supplement and the Canada Pension Plan. The two of them are currently living on his income, and they're not eligible for other benefits, such as income assistance, because their level of income is too high. She, however, is eligible to apply for old age security allowance, as her spouse is someone who is receiving old age security.

Now, the problem lies in this. She needs to get a copy of the federal government status verification proving that she came to Canada, immigrated to Canada, and her status in Canada. She's unable to get that verification because she does not have photo ID. And she's lost all her identification. So now we're back into this situation where she can't get any ID in order to access old age security.

I'm wondering if there is a way in which the minister can do two things. Work with the federal government to actually have them change their system or have some other system in place that would allow people to access this verification. Then also, in the minister's own area, the new B.C. Services Card — have stringent requirements of having a photograph ID or a signature ID relaxed so that in those instances people can actually get the ID.

This women, for example, has filed her income tax. She's clearly on the system somewhere and is real and is not a figment of anybody's imagination. Those documentations, for example, ought to be made acceptable by way of getting a photograph ID so that she can then access the other IDs in order to access other government services.

Another example is this. I have a 63-year-old disabled man, born in England but resident in Canada for many years. He wants to visit his elderly mother in England, who is very, very ill and will likely pass away soon. He wants to be able to visit her, but he cannot get the photo ID to get a passport. Without a photo ID to get the passport, he clearly cannot travel outside of the province, even though he's on, again, a range of systems, getting various supports. But he does not have a photo ID. This person is not a made-up person. His identify is real. He has been on the system for some time, etc., but he cannot get a photo ID in order to meet the requirements to get a passport.

I'm wondering whether or not that's something, again, that the B.C. Services ID could actually deal with — situations like that.

Another case to highlight for the minister. I have someone who is actually homeless at the moment. He was born in Vietnam, came to Canada as a child. Of course, as a homeless person…. All too familiar a situation. People often don't have their IDs. They are lost or they are stolen.

[1530]

Now, this person, as it happens, was able to get reproductions of his IDs from Alberta — the Alberta photo ID card, the Alberta health card. But they're not certified copies of those cards. They're photocopies, because he was in the system over there, so therefore he has some capacity to relate to that.

But that said, the ministry of social services — given that he doesn't have photo ID or certified copies of ID — will only put him on hardship. He cannot get on regular income assistance because he doesn't have a photo ID. So you keep on sort of chasing the tail, and people cannot get out of their situation unless they have some way to get a photo ID.

I happen to know that there have been times where…. In my constituency office we've had people who go in to ICBC to try to access a card, and I think out of the goodness of the good workers there…. Basically, they were able to produce all these other documents out of the goodness of their hearts. They show up every day trying to get this ID that they somehow manage to get a photo ID.

I just wish that there was a system that is more regularized to allow for people to do that. I mean, I could actually imagine myself in that situation if, for some unfortunate reason, I lose all my ID or it gets stolen. My citizenship card, my certificate, is no longer valuable to me by way of an ID. I'm pretty well hooped, you know? And I don't know how one can go about getting their IDs in those situations.

So I raise this. I know it's complicated and kind of confusing, about all the primary and secondary ID and so on. But I want to raise this with the minister, and I wonder if the minister would agree to (a) look into the situation about how to relax the requirements of the B.C. Services Card, both primary and secondary ID and to reconcile the difference.

Another example that I want to highlight as an example: people's Indian status cards. The old ones are now not recognized. The new ones are — right? — because there's a different design. By that, it virtually puts out a whole lot of people who rely on their status cards to get ID.

The other thing related to that is to talk to our federal government counterpart to get this thing resolved, because they have changed the system quite a bit. Social insurance number cards no longer require someone to sign it. Once upon a time my social insurance card required me to sign it; it would have been a primary ID. But now, because they do the card without the strip for people to sign, that piece of ID is useless, effectively, because they no longer require people to sign it.
[ Page 656 ]

I wonder if we can we have a normal conversation with the federal government, if the minister would lead the parade around that with the federal government, to reconcile these systems between governments to make this work for people.

Finally, I wonder if the minister would agree to actually meeting with advocates on the ground who are dealing constantly with people who have these challenges, so that he can hear firsthand what these problems are and then work towards resolving them. I'd be very happy to facilitate and organize these meetings for the minister. It's not partisan in any way, shape or form. It's just simply to help people get their proper IDs so that they can access various government services and get on with their lives.

[1535]

Hon. T. Stone: I want to thank the member opposite for bringing these questions forward. You know, I think that any time there are challenges for British Columbians, whoever they might be and wherever they might be, in accessing services, we do put politics aside. This is where we come together, and we do what we can together.

The services card certainly has been ICBC's responsibility to implement. The actual policies wrapped around the services card — the program itself and the related policy — have been entirely, from day one, the purview of the Ministry of Health. What I would say to the member is that I will absolutely take the question posed by the member to my colleagues, in particular the Minister of Health.

I will raise it with the minister, and I would encourage the member opposite to do the same. The Ministry of Health estimates, I believe, are next week, and the member may also want to direct these specific questions to the Minister of Health at that time.

S. Simpson: I'll tell the minister we're going to talk about the Pavilion Corporation for a little bit now. I know the minister maybe has some staff coming from the corporation.

We only have a short period of time, so I'm going to focus these questions into some specific areas. The first area relates to the financial situation of the Pavilion Corporation. I'm looking at page 29 of the revised service plan at this point.

[1540]

When I look at the service plan, at page 29, which is the summary financial outlook for the Pavilion Corporation, under "Revenues," I see "Sales" and "Other revenues" roughly running from about $54.6 million or $54.7 million in fiscal 2012-2013 up to about $59½ million, maybe $60 million, in fiscal 2015-2016. I see over those same years total expenses of about $116½ million in 2012-13 and then a little more than $125 million annually for the next three years.

What this shows me is that we're seeing a deficit here, an annual deficit of somewhere between $60 million to $70 million in actual revenues coming in. Those are offset here by amortization contributions, which are identified at about $51 million per year, that are added to revenues. Those are identified in the notes to the financial outlook as contributions provided by the Ministry of Energy, Mines and Natural Gas, including amounts to cover the costs of operations and the renewal of capital assets.

My question to the minister is: could he tell us what the nature of those contributions is, and how do they differ from, essentially, a government subsidy delivered through that ministry to offset the losses of the Pavilion Corporation?

[1545]

Hon. T. Stone: First off, before I answer the member's question, I wanted to acknowledge, from PavCo, here in support of this piece of the estimates today…. I'm pleased to be joined by Dana Hayden, president and CEO of PavCo; as well as Ken Cretney, chief operating officer; and Kim Campbell, their director of finance.

To the member's question. Thank you for it. If I understand correctly, what he was asking was in relation to the numbers under amortization contributions and exactly where those amounts come from. It's approximately $51 million, and really, they're broken down into two pieces.

The smaller piece relates to contributions from government towards the operations of PavCo. The larger piece, which is reflected in the summary financial outlook as deferred amounts, represents contributions made by the province towards the revitalization of both the convention centre and B.C. Place, contributions that were made in previous years but have been amortized over a number of years.

The amount you see for fiscal 2013-14 represents the portion of those previously committed provincial dollars to the revitalization project that we are showing for 2013-14.

S. Simpson: When I look at this and the way this is designed, I see the amortization piece here. Could the minister then tell us…? When I look further, I see significant losses for B.C. Place on an annual basis, with or without the contributions. Losses are projected out, before government contributions, of $13 million of loss in 2012-13, over $24 million in '13-14, $9 million plus in '14-15 and over $22 million in 2015-2016.

It appears from the numbers here — this is page 32 of the revised service plan — that we're looking at losses here of what may be $59 million for B.C. Place over the next four years, from 2012-13 heading on.

Clearly, there are some challenges around those costs, and it says that it's before government contributions. Should I expect from this that the government then provides the subsidy to make up the difference to cover the 60-odd-million dollars of losses that B.C. Place will real-
[ Page 657 ]
ize over the next four years?

[1550-1555]

Hon. T. Stone: Yes, PavCo is projecting the losses that the member mentioned, as detailed in the service plan. This is exactly why PavCo is working vigorously on attacking both the operations expense side of the equation — what more could be done to drive operating costs down? — all the while looking as vigorously at what can be done on the revenue side of the equation.

This is all about getting more butts into seats at existing events, attracting new events to B.C. Place and, really, ensuring that the shift from construction to marketing at PavCo takes hold as we showcase our two world-class venues, B.C. Place and the Vancouver Convention Centre.

I will also point out to the member…. I'm pleased to share these numbers. They weren't available at the time of printing the service plan, but we'll put them on the record now. In terms of the projected economic benefit to British Columbia of both of these facilities, PavCo is projecting a total economic benefit of about $327 million for fiscal '13-14, $348 million for fiscal '14-15 and $359 million for '15-16.

This government is going to continue to work closely with PavCo to showcase these world-class venues so we can further increase the total economic impact to the province of British Columbia.

S. Simpson: The minister might know that economic benefit is a bit of a mug's game. It can be played a number of ways. I'd like to get into that conversation about what is and isn't, but we don't have time to do that right now.

I'm going to ask another question here, but just as an add-on to that, we're going to have very limited time for this conversation. I know the minister is new in the file and taking some time to make sure he gets his answers correct, in consultation with his staff.

I hope the minister will agree. I'm going to submit a letter to the minister post these estimates with some of the questions that we'll not get a chance to entertain here today. Maybe the minister could agree to respond in writing to some of those questions so that we can get this information fully on the record — appreciating we're all in a bit of a time bind and that the minister is being conscientious, I'm sure, to be accurate about the information he's providing.

The minister talked, though, about revenue. A question I have…. The two primary tenants of B.C. Place are the Whitecaps and Lions. It is my understanding that the lease arrangements with them are based on royalty payments on ticket sales. It's the formula for the lease arrangement. If that's not correct, I'd be happy to be corrected by the minister. If that is the case, could the minister tell us: what was the total payment from the B.C. Lions and the total payment from the Vancouver Whitecaps for their last seasons?

[1600]

Hon. T. Stone: To the member opposite, first, on his initial statement at the beginning of that question with respect to providing me with a list of follow-up questions, I would be more than happy to respond to that. I do appreciate the patience in dealing with a new minister on this file. I will be certain to get back to the member on any questions that he has.

With respect to the specific question as to the nature of the revenue that comes in from the two main tenants of B.C. Place — namely, the B.C. Lions and the Vancouver Whitecaps — to provide absolute clarity on this, the revenue does not come to PavCo in the form of a royalty on ticket sales. The revenue comes from both teams in the form of rent.

In terms of what the actual dollar numbers in question here are from the two teams, I'm not able, PavCo's not able, to release those numbers due to the fact that they're commercially sensitive — both to the teams in question but also, frankly, to PavCo. I will say that the revenue of PavCo, as the member knows well, is detailed on a consolidated basis.

[1605]

In addition to the revenue that comes in, in the form of rent from the teams, PavCo also receives revenue in a variety of other forms. PavCo does receive a percentage of ticket sales through TicketMaster. PavCo receives revenue from food and beverages, as well as advertising.

S. Simpson: Thanks to the minister for agreeing to respond to some written questions following today. I appreciate that.

One more question that relates to this. When I look at the revenue streams from sales — the $13-odd million, almost $14 million, in 2012-13; and then about $12½ million for the next couple of years; and then about $13½ million projected out in 2015-2016 — they're not large numbers, not relative to the big picture here. They're about a little more than half the amount of the contributions that are made from, presumably, government sources.

Could the minister provide a little bit more detail on the question…? I'm going to ask two questions that relate to this. It's about revenue streams as well.

First of all, could the minister provide some detail about why it's not possible to release the numbers on these two teams? There are no other teams playing in this province. They're not competing with anybody. They are what they are. There's no competition for the Whitecaps or the Lions, so it's not a competitive question for them. I'd like a little more explanation about why it's a problem to release that information for PavCo.

Quite frankly, nobody is competing with PavCo on the questions of a stadium either. There are no other stadiums to compete with B.C. Place, so it's not like it's a
[ Page 658 ]
competitive issue. So I'd like an explanation as to why that information can't be released.

The second is related to this. We know the situation that occurred around the issue of the renaming of B.C. Place Stadium — I believe it was Telus — and the naming of that. Could the minister tell us whether there are any discussions going on now with Telus about naming rights, or is the expectation that the name will continue to be B.C. Place, as it is?

[1610]

Hon. T. Stone: Well, on the first question, as to why it's not possible to release the specific revenue numbers that PavCo receives from the B.C. Lions and Whitecaps, the most direct answer I can give on that is simply: the teams have requested that this not take place.

They've provided a variety of reasons. They're both members of sport leagues which are engaged in negotiations with stadiums across the country. They are not privy to details of each other's arrangements or deals with PavCo. They would prefer that those details not be provided, for commercial reasons.

Frankly — again, I've reiterated my last answer to the same question — it's not particularly in PavCo's best interest. As someone who comes from a long career in business, it is never a good strategy when you're looking for new tenants, as PavCo is, to show your cards and lay out contracts of existing customers that you have if you think that you're going to then be able to negotiate the best possible deal for your organization with new tenants. This is why PavCo has opted not to release those numbers.

On the second part of the member's question, with respect to the Telus naming rights issue and, more generally, the naming rights of B.C. Place, it continues to be the position of the B.C. government that the proposed arrangement between Telus and the B.C. government was not in the best interests of the taxpayers of British Columbia. The province, therefore, is not in any current discussions with Telus or any other party with respect to the naming rights of B.C. Place.

S. Simpson: I appreciate the minister's answer. I would note, though, that PavCo and B.C. Place are not any private company. They are publicly owned. They are essentially a monopoly for what they provide in Vancouver and in British Columbia. And they're a monopoly that the government, the taxpayers, are contributing $13 million a year to, and $24 million, $9 million, $22 million, over the next four years.

[1615]

That's a taxpayer subsidy to B.C. Place Stadium being paid for by taxpayers. Taxpayers might want to know whether, in fact, the business practice is a good business practice and what kind of revenue we're getting out of the long-term tenants who are there. So my view would be that the taxpayer has some right to know as well.

I'm going to move on from that, because we have limited time. I want to ask a question that relates to the media-reported agreement between B.C. Place, PavCo and Paragon. It's my understanding from news reports that an agreement was signed in March. I have read reports that suggest it's a 70-year agreement at a value of about a $3 million lease payment annually over a 70-year period.

I'm wondering if the minister could tell us whether, in fact, that agreement has been signed and whether those are accurate numbers or whether there maybe are different numbers that could be provided.

Related to that question: was this agreement with Paragon a sole agreement? Why was it not, since it's essentially….? The moving of the Edgewater Casino is largely what we're talking about. Why wasn't it put out to tender to see whether one of the other participants — Gateway, Great Canadian, somebody else — might have wanted to bid and maybe put a better offer on the table at this? Was it put to tender, and if not, why not?

Hon. T. Stone: The master development agreement indeed was signed in March of 2013. It does provide for a term of 70 years, as the member stated, and it does provide for an annual payment of $3 million per year from Paragon to PavCo.

I would say with respect to the second part of his question — was this tendered, was there a public tender for it? — that there absolutely was. In June of 2009 Paragon was selected through a competitive RFP process. Subsequent to that, in 2012 PavCo actually commissioned an independent assessment of the site to validate whether or not the $3 million payment that PavCo would be receiving was still a good value for the lease on that land, and it was confirmed.

S. Simpson: Thanks for that. The problem, of course, was that in 2009, when this was first done, the annual lease value of this was double that. About $6 million a year was the lease value at that time.

[1620]

So somewhere between shortly after the worst economic crisis in North America, if not the world, since the Great Depression, when we were going to get $6 million in lease payments, we have now agreed, after we're into a recovery, that $3 million is okay and that that's a good deal.

From what the minister says, that's based on an assessment of that site that made that agreement okay. Will the minister make that assessment available so we can all see for ourselves that, in fact, $3 million was good value?

[1625]

Hon. T. Stone: On the question that the member posed here, I think it is worth reminding the members opposite that it was the city of Vancouver that in 2011, when faced with a significant amount of public oppos-
[ Page 659 ]
ition…. It was the city of Vancouver council that declined Paragon's original proposal, which is where the $6 million number would have come from. It was double the number of slots. At the same time, the city of Vancouver did approve the moving of the Edgewater Casino licence, which provides for half the number of slots and, therefore, half the payment — the $3 million per year.

PavCo does believe that the $3-million-per-year payment is still very good value for B.C. taxpayers, in part because of what Paragon brings to the table in terms of the compatibility of this partnership. The proposed development, with the hotel right next to the stadium — there's a terrific win-win there for both parties.

Finally, with respect to the 2012 independent assessment that was done, this assessment was done by the firm of Burgess Cawley Sullivan and Associates. As I mentioned in my previous answer, this independent assessment did confirm that the $3-million-per-year lease payment was still a reflection of reasonable fair market value for that parcel of land.

I believe the specific question that the member asked was: would PavCo be prepared to release that opinion — a letter from the firm I just mentioned? PavCo would be prepared to release that letter.

S. Simpson: I've just got a couple of questions left around this. The next one relates a little bit to the issue of the roof. We've had this issue around the roof of B.C. Place and concerns that were raised about stains caused by cables. I know there's been a court case around this. I believe that lawyers for Canam told the B.C. Supreme Court that damage that needed to be repaired could be as high as $20 million.

My question to the minister is: who, essentially, is on the hook for this $20 million? If the insured don't pay or if there's resistance there, where's the $20 million coming from to do the repairs that are the fallout from this court case?

[1630]

Hon. T. Stone: With respect to the court case that the member opposite is referring to, it is scheduled to go to trial in October of 2013.

This is a case actually between two subcontractors of PavCo. The only reason that PavCo has been mentioned in this matter is because of claims against a lien holdback which was previously held by PavCo. That being said, I'm pleased to report to the member that there actually is no financial exposure to PavCo or B.C. taxpayers. In fact, PavCo will not even be a participant at this trial.

S. Simpson: One last topic here, and then I'll turn the floor back over to my colleagues.

This relates to a question about the floatplane terminal in Coal Harbour. I have had concerns raised to me by folks about the degree or the scope of environmental assessment that's been done on that terminal in the development of the terminal and any subsequent environmental assessments that have been done that have looked at potential health effects and other factors there.

Could the minister tell us: have there been any environmental assessments done of that terminal and its operations? What is the ongoing environmental oversight of the terminal to make sure that it's not having negative impacts on health and habitat and such? Any assessments or studies that have been done — would the minister make those available?

[1635]

[S. Sullivan in the chair.]

Hon. T. Stone: In fact, the matter of environmental assessment and ongoing environmental assessment is a matter between the floatplane terminal operator — in this case, Vancouver Harbour Flight Centre — as well as the operators of the floatplanes themselves. That being said, PavCo does continue to encourage ongoing communication between the residents of Coal Harbour and the Vancouver Harbour Flight Centre.

We supported the Vancouver Harbour Flight Centre in the development of their good-neighbour policy, which was all about ensuring that communication channels are established and that there's ongoing engagement with the local residents in Coal Harbour.

The Vancouver Harbour Flight Centre did ensure that all environmental processes were followed during the original construction of the floatplane terminal and, as part of the process, VHFC did obtain approvals from both Port Metro Vancouver and the Burrard Environmental Review Committee program. An environmental firm was also engaged to monitor the work in the floatplane terminal and dock extension from the outset.

PavCo will continue to encourage the floatplane operators and the local residents to be actively engaged on an ongoing basis. I will end by saying that floatplanes have been operating in and out of Coal Harbour for many, many years. So it's in everybody's best interests to keep those lines of communication open.

S. Simpson: I'm glad to hear that, and I would encourage PavCo to continue to have active oversight on those questions. We all know — we've all ridden those floatplanes enough times to know — that there probably is more focus and attention on environmental questions today than there ever was at the time when those planes first started operating.

That's the nature of the society we're in today. Environmental questions are much more in the forefront of people around habitat and health and those issues. So I'm glad to hear the minister's answer, and I am hopeful that PavCo will continue to see its role as ensuring that proper oversight moves forward.
[ Page 660 ]

With that, I want to thank the minister. We're running out of time here, and I'm having to move on. I do want to just confirm that I will be sending a letter to the minister — probably it's best through the minister's office to PavCo — with some specific questions that we weren't able to canvass today.

I very much appreciate the offer of the assessment or the valuation that helped to determine that the $3 million annual payment was an appropriate payment based on market. I appreciate the offer of that, and I look forward to receiving a copy of that as soon as it can be made available by his officials.

With that, I'll thank the minister and his officials for their time.

Hon. T. Stone: I'll really quickly thank the member opposite for the excellent questions today. Yes, please feel free to forward that letter directly through my office here. We'll do our best to get back to you as quickly as possible, including a copy of the opinion on the assessment.

C. Trevena: We're moving on now to B.C. Ferries, Minister, as outlined. While you're changing staff, I just wanted to, first off, ask really quite a broad question.

[1640]

We had the ferries consultation last winter — private companies brought in to go around the province and consult with people about B.C. Ferries. A decision on what the next stage was going to be was put off until after the election, so I wondered if the minister could just tell me what he is thinking of doing following that consultation.

Hon. T. Stone: First off, as with the previous members, I want to thank the member for what I'm sure is going to be a good exchange on ferries and highways and everything else that we do in the Ministry of Transportation and Infrastructure. Congratulations on your recent re-election as well.

I would also like to take the opportunity to introduce two gentlemen that are here in support of the ferries portion of our estimates.

[1645]

We've got Kevin Richter, who's the ADM for infrastructure department and major projects department; as well as Kirk Handrahan, who is the executive director of the marine branch.

In terms of the very extensive consultation that was done with coastal communities that the member referenced a moment ago in her question, this was a consultation that was done in November and December of 2012. It's one of the most extensive consultations that we have seen in quite some time, not just in Ferries, but I think across government. Over 2,000 people participated in 30 communities, and 40 meetings were held. In addition to the 2,000 people who showed up at the public meetings, there were over 2,000 written submissions as part of the process as well.

Now, as the member knows well — I'm certain that she has read the report as thoroughly as I have, coming out of that consultation process — the recommendations, the findings, were largely consistent with those provided by the Ferry Commissioner in his latest report. As a government now, we are working very closely with B.C. Ferries in reviewing the feedback that was provided, both through the consultation but also via the Ferry Commissioner, as we determine next steps.

At the end of the day, our government is going to step up to the plate on this file and do what needs to be done to ensure that for the long term, fares are affordable and the system is sustainable for coastal communities.

C. Trevena: One of the concerns that ferry-dependent communities have from the consultation is that it looked like it was going to be, effectively, just trying to pinpoint routes to be cut. I'd like the minister to confirm whether there will be any cuts in services. If so, does he have any indication where those cuts would be? My third question is: who would make the decision to cut services to ferry-dependent communities?

[1650]

Hon. T. Stone: The question with respect to the consultations — no, the consultations were not focused only on service reductions. In fact, if we go up one level, the consultations were really about two key things. One, let's engage with coastal communities and define the principles that will underpin service reductions to be made. Secondly, let's talk about strategies on how we can work together to achieve the vision that we have set for B.C. Ferries, which, as I mentioned a moment ago, is all about doing what we can — B.C. Ferries, the government, coastal communities — to ensure that fares are affordable for the long term and that the system is sustainable.

We have with B.C. Ferries one of the largest but also one of the best ferry systems in the world, and, as the minister responsible, I intend on doing what I can, and our government will do what it can to ensure that that continues to be the case.

One of the key pieces — if I can go back to the Ferry Commissioner's recommendations, which we largely built the consultations upon — was this recognition, which we happen to think is absolutely the right way to view moving towards a more sustainable future for B.C. Ferries. The view that was put out there was that the changes that are made to B.C. Ferries really need to reflect the taxpayers, users, as well as the operator, all coming to the table and doing their part. There will be service reductions, but that's one of the three pillars of the vision, moving forward towards an affordable and sustainable ferry service.

The other two components. One is that we have been
[ Page 661 ]
working with B.C. Ferries on ensuring that everything that can be done to achieve the $54 million of administrative cuts, administrative efficiencies, is achieved. B.C. Ferries is working diligently on that.

Last but not least, the B.C. government recently put another $79.5 million into the system. That's the taxpayer contribution. So you've got the $79.5 million from taxpayers, you've got B.C. Ferries working diligently on administrative efficiencies, and the third piece will be service reductions. It is the coming together of those three pieces and executing on that which will enable B.C. Ferries to be sustainable well into the future with fares that are affordable for the users who depend on the service.

[1655]

The final question was: who will be deciding on any route cuts? Yes, there will be service reductions. Who will be deciding where those route reductions are, and when? Those are decisions that will be made by government with B.C. Ferries. We're in the early stages of working through the details on that at this point in time.

G. Holman: Greetings to the minister, and thanks for the opportunity to ask questions here today.

Around the $80 million in contributions that have been made, I get a little confused by the numbers, whether it's a stock, whether it's a contribution for a fixed period of time or whether it continues through time. So the $80 million that was contributed to date, that was for a certain period of time. What I'm confused about is whether that level of contribution stays in the system, or was it a one-time contribution that gets pulled back at a certain point?

If it gets pulled back at a certain point, does that make the gap, the cost savings that you are trying to achieve…? Does that increase the gap?

I'm not sure if I've been clear about the question, but I'm trying to figure out whether the $80 million that has been put in…. That was just for a defined period of time, and that won't continue through time. It's going to be, essentially, not continued — which, to my mind, would increase the gap going forward that has to be made up. I'm trying to understand that.

[1700]

Hon. T. Stone: To the member opposite, with respect to his question on the $79.5 million of taxpayer contribution that this government has made, I want to make sure I clarify so that we're all on the same page here. The $79.5 million is actually provided through the totality of performance term 3. Performance term 3 began in fiscal '12-13 and runs through to the end of fiscal '15-16.

The achievement of the $54.5 million in operational efficiencies…. This $79.5 million taxpayer contribution is what's required for us to get through performance term 3.

The service reductions, again, are the third piece of that — right? So it's the operational efficiencies, the service reductions and this taxpayer contribution.

Beyond performance term 3 there are going to need to be additional strategies pursued. We're going to see where we are. These service reductions that are being contemplated now, along with this taxpayer contribution and the operational efficiencies, are what get us to that point.

Looking beyond performance term 3…. This is why part of the discussion and consultation around the long-term vision for a sustainable B.C. Ferries, beyond performance term 3, was so critical. It's why ideas that have been talked about within B.C. Ferries publicly — that were suggested by many, many individuals in these consultations, as well as by the Ferry Commissioner himself — are so important to examine.

Things like the interoperability of vessels, the standardization of vessels, potentially the use of passenger-only ferries on some sailings on some routes in conjunction with vehicle sailings, perhaps the conversion to LNG fuel propulsion as a strategy to drive down fuel costs. There is a whole wide range of additional ideas, again, that have been suggested by many folks who live in coastal communities, that have been talked about within B.C. Ferries for many years and that, indeed, the Ferry Commissioner himself talked about in his most recent report.

Getting beyond performance term 3, in terms of the sustainability of the ferry service, is going to require some big thinking on many of these other potential ideas.

[1705]

G. Holman: Thanks, Minister, for that. I think I understand the answer. Is it fair to say that beyond performance term 3, it's not at all guaranteed that the $80 million taxpayer contribution that you've made for this performance term would continue? I imagine you will be considering a number of things, including, of course, cost savings. But is it fair to say that it's not guaranteed or that there is no commitment to further taxpayer contributions at that level beyond performance term 3?

[1710]

Hon. T. Stone: To the member opposite, his question being: is the government committed to funding beyond the $79.5 million at the end of the performance term 3? I want to just again go up one level first.

The $79.5 million represents an additional amount of taxpayer funding that the government provided B.C. Ferries. In actual fact, over the past ten years over $1.4 billion of taxpayer dollars has been provided to B.C. Ferries. In the last couple of years, as I said, that's working out to about $200 billion per year. So the $79.5 is an additional to what has been provided on an annual basis to B.C. Ferries. I just think that's an important point to underscore — that the taxpayer contribution is far in excess of $79.5 million.
[ Page 662 ]

With that being said, to the question as to what happens at the end of PT 3. It's 2013 right now, so it is premature to speculate what level of funding will be required. But I will remind the member that the process is very clearly mapped out.

When we get to the final year of a performance term, the Ferry Commissioner renders a preliminary decision on price caps for the entire next performance term. The way this will work, looking at the actual dates in play…. On March 1 of 2015, the final year of performance term 3, the Ferry Commissioner will render his preliminary price-cap decisions. He will provide those.

It then is up to government to take a look at those preliminary price caps and determine what level of funding the government believes taxpayers will be willing to provide to B.C. Ferries through the course of the performance term. Government would then provide our position to the Ferry Commissioner on that.

The Ferry Commissioner would then factor that determined level of investment from the B.C. government, from the taxpayers, into B.C. Ferries, and the Ferry Commissioner would render his final decision on the price caps in September of 2015. The fares would then come into effect on April 1 of 2016, which again, would be the start of the first fiscal year of performance term 4.

With all of that in mind, again, I come back to the front end of my answer. At this point it would be far too early to speculate what level of funding the province, the taxpayers, would be making to B.C. Ferries beyond PT 3.

Interjection.

C. Trevena: We're both so eager to ask questions about B.C. Ferries that we're fighting for a place.

I just wanted to pick up here. The minister talks about the assessment and how the government will work through to assess how much taxpayer money should go to B.C. Ferries. I'm not asking this flippantly, but I'm wondering if it's a similar analysis when working out how much taxpayers' money — public funds, money that comes into public coffers — goes to pay for certain roads.

The minister is also talking about the price cap and how important it is to listen to what the commissioner has said on that.

[1715]

The commissioner, in his report — which came out, obviously, before the minister was elected — said very clearly that the prices had reached a tipping point, fares reached a tipping point, and that fares should not increase above the rate of inflation. Yet we're seeing a 4.1 percent increase year on year, which is obviously well above the rate of inflation. I wondered how the minister was going to include that in his equation.

But my prime question is going back to the statement the minister said about the $54 million in management savings that's being looked at. I'm wondering how the minister is going to equate this. We've seen an exponential increase in numbers and management at B.C. Ferries — approximately 600 — and 160 of those are excluded staff, so they were union members and are now put into the management category.

I wonder if the minister could tell me how much of that $54 million is going to be sought after at that level. And does the minister know what level bonuses the management get and how that could play against the savings that are needed?

[1720]

Hon. T. Stone: I think it's worth mentioning at this point — just for the benefit of, I'm sure, the many, many people that are watching us on television in this very vigorous debate here — that B.C. Ferries is indeed an arm's-length organization. They're not a Crown corporation.

When it comes to the operational expenditures at B.C. Ferries — including their complement of staff and the related HR costs, all the compensation and how they do what they do inside their head office — are decisions that are B.C. Ferries' decisions to make. Government can't order B.C. Ferries to do any specific things with their administration costs.

That being said, I'll make it very clear that as we move forward in this effort to get B.C. Ferries to a place where fares are truly affordable for the long term and the system is sustainable, the operational efficiencies that form a part of that vision are absolutely critical.

In the meetings I've had with the president and CEO at B.C. Ferries, I certainly have made government's position on this very clear. We expect B.C. Ferries to continue to work diligently, as they have been, on achieving additional operational efficiencies.

Now, let's also be clear that the operational efficiencies go well beyond staff levels. They go well beyond management salaries, although I will point out that since 2008 B.C. Ferries has indeed reduced the number of executives by almost half, from 17 to nine. The total dollar value of compensation for executives has gone down by 54 percent as well. Corporate costs at B.C. Ferries are down by over $1 million. They're making good strides on a number of fronts.

Another big piece of operational efficiencies is fuel consumption. That's one of the single largest cost drivers at B.C. Ferries. I know that the folks at Ferries are executing a number of plans to reduce the overall fuel consumption of the ferry fleet. All of these come together when one is looking at achieving operational efficiencies. I'll just again underscore that it's not just the compensation; it's these many other items which I've just spoken of.

C. Trevena: While I understand that B.C. Ferries is at arm's length of the government, it is a very strange, quasi-independent organization. It's been described as many things. Failed experiment is, I think, one of the ones that
[ Page 663 ]
I like as the really good descriptor for it.

[1725]

The minister has also been talking about how the long-term vision is to get fares sustainable and affordable. I might suggest that ten years ago fares were affordable, and now they're no longer affordable. I can see that the present route, the present approach that the government is taking is going to make the fares even more unaffordable, which is going to have a huge impact on not just coastal communities but on the economy of B.C.

The government has been talking very clearly, very loudly and very strongly about a jobs plan and growing the economy. One of the Premiers who really tried to grow the economy and had a vision for B.C.'s coast, I would say, was W.A.C. Bennett. He really put a huge effort into creating B.C. Ferries because he could see the value of having an open coastal economy.

I'd like to ask the minister…. We have — not just back in the late '50s or early '60s — people talking about the need to open up the coastal communities — the B.C. Chamber of Commerce. One of its policies for 2013 is charting a sustainable course for B.C.'s coastal ferry service. I'd like to quote from the B.C. Chamber of Commerce:

"The island and coastal communities represent one-third of the entire province's population, and the maintenance of services to these areas is paramount. The northern routes are an investment into remote locations on the coast of B.C. that will not in the foreseeable future provide substantial revenue to offset costs.

"The investment is made for the good of the province as a whole, and the total cost of operating these routes should be paid for by operating subsidy. It's inappropriate for residents of Vancouver Island and the Gulf Islands to pay for a ferry service being operated for the benefit of the entire province."

It goes on to say that the chamber recommends there should be a guiding principle to maintain affordable rates to protect the interests of ratepayers, users and communities.

I wondered if any economic analysis of the impact to B.C.'s economy by reducing services at the same time as increasing fares has been made.

Hon. T. Stone: When it comes to the whole question of affordability, we understand in government, and I know the folks at B.C. Ferries agree with us on this, that we all have to roll up our sleeves — taxpayers, the operator and users — and work together to ensure that this system is affordable and also sustainable for the long term.

[1730]

At the end of the day, there's an important principle that is central to this, as well, and that's being very respectful of the taxpayer. The member points out that way back when, in a different time, fares were affordable. Well, back in 2004 the total cost of fuel at B.C. Ferries was only $50 million. Today it's $121 million. The costs have gone up. You've got two key drivers on your cost side: labour and fuel. Fuel has gone from $50 million to $121 million in the past nine to ten years.

This is exactly why, building upon the principles that were outlined in the Ferry Commissioner's latest report, we determined that the most appropriate next step was to launch the most extensive consultation of coastal communities and B.C. Ferries in recent memory and to hear from the communities affected — not just about potential service reductions but also, as I said in a previous answer, about other ideas that people have, many of which have been talked about in many public venues.

They've been talked about in B.C. Ferries, which the Ferry Commissioner mentions in his report. They are ideas that may be worthy of consideration so that once and for all — again, working together with coastal communities and B.C. Ferries — we can put B.C. Ferries on a path to sustainability and affordability of fares.

That's the vision. That's what we're working with B.C. Ferries and in consultation with the coastal communities to achieve in the years ahead.

C. Trevena: I'd like to remind the minister that he didn't actually answer my question about the economic analysis of increasing fares and reducing services.

As a rider, he mentions about how taxpayers and users have all got a role to play and we've got to be respectful. Well, I think, being respectful to the minister, tomorrow we're going to be talking about other roads and pavement politics. Taxpayers are paying. Taxpayers in Alert Bay, in Sointula, in Powell River are paying for roads in the northeast of B.C. I think it's being respectful to the people who live in ferry-dependant communities that there should be a strong investment from the government in that highway.

I'd like an answer from the minister on whether there has been any analysis done on the economic impact to B.C.'s economy of increasing fares and reducing service.

I'd also like to pick up on the previous answer the minister gave. My colleague here and I were discussing it while he was having his analysis. He was talking about the staffing. We understand that there has been approximately a 600 increase in staff. Take out excluded staff, and that's still an increase of about 440 staff.

The minister talks about this arm's-length arrangement — that B.C. Ferries manages its own business — but we also have a strong subsidy from the government, and the government is the sole shareholder. There isn't really that much of an arm's-length arrangement.

I just wanted to really get a better understanding from the minister of where the cost savings could come through management. Say we're talking about an increase of approximately 440 people.

Also, the bonuses that went to managers. We understand that it's approximately $4 million a year in bonuses to managers for work in running B.C. Ferries. I wondered if the minister could confirm that. And if it is a confirmation, please give some explanation of it.

[1735-1740]

Hon. T. Stone: With respect to whether an economic impact assessment study has been done, no, there hasn't been a study done in the context as described by the member. However, this government, you know, did support the Ferry Commissioner in taking a broad look at the entire operation of B.C. Ferries.

I would remind the members that the Ferry Commissioner looks at the current level of operations, looks at fares, looks at all facets of the corporation and provides his recommendations on a go-forward basis. Building upon the Ferry Commissioner's recommendations, we then initiated the consultation — which we've talked about quite broadly already this afternoon — with 2,000 people in dozens of communities, and thousands of written submissions on top of that.

As I'm sure the members would agree, a large amount of those conversations were in relation to potential impacts of service reductions. That data, that information, has been collected, and it forms the basis of the recommendations from that consultation process. We're now at the point where we are reviewing that material with B.C. Ferries to determine the next steps.

C. Trevena: The minister seems to forget that his government has disregarded the Ferry Commissioner's recommendations on fares, which said that they have reached tipping point.

I just wanted to move on. The minister didn't answer my question about the management and bonuses. We understand that there is $4 million a year in bonuses alone going to management of B.C. Ferries. The figures are still very high. There are approximately 440 managers within B.C. Ferries. We're taking out the 160 excluded staff.

We do have very limited time. We would like to get this one cleared up so we can move on to other areas of the discussion.

[1745]

Hon. T. Stone: Again, when it comes to the numbers of staff at B.C. Ferries, whether they be executive managers or not, these are operational details that are internal to B.C. Ferries.

I would also remind the members that the Ferry Commissioner is responsible for looking at all operational costs, including the salary levels, to ensure that they're reasonable. In fact, it was our government that empowered the Ferry Commissioner with additional oversight on the B.C. ferry operational expenses.

I would also remind the member that if she's that interested about how much every single person makes at B.C. Ferries, B.C. Ferries regularly publishes on their website the salaries of all employees that make over $75,000. So she's more than welcome to take a look at that information.

Again, I would reiterate that as one of the three pillars of the vision moving forward and achieving the operational efficiencies moving forward, we're working closely with B.C. Ferries. We're continuously encouraging them to achieve additional not just administrative savings but operational savings across the ferry corporation.

Since 2008 Ferries has reduced the number of executives by over 50 percent. They've reduced the amount of executive compensation by over 50 percent. Are they absolutely where we would ideally like to see them? Not yet, but good strides are being made.

G. Holman: Just a quick comment on that response, and then I have a question about B.C. Ferries' refinancing of bonds. What we're trying to get at is not whether government determines the number of executives or what their pay scale is at. What we're trying to determine is the increase in management — not just senior management but management positions overall.

It's our understanding that there has been, even if you set aside the excluded positions that were brought into management, a tripling of senior management overall in the corporation over the past number of years. That's what we're trying to confirm.

We're not asking you whether you make the decisions about who gets hired and what they get paid. We're trying to get a sense of what those management costs are doing over time. Based on the information we have, they seem to be going up considerably. Senior management, even setting aside the excluded positions, seems to have roughly tripled in the last number of years. To us, that's a serious cost driver, and it seems to me that government and B.C. Ferries should be looking at those costs before they consider reducing services to users.

Also, the bonuses, again. If it is correct that in this year there were $4 million in bonuses paid to very senior staff, that, again, would be a concern to us and should be an area for investigating whether you can either reconsider or have some cost-efficiency there, rather than reducing services.

My question is about…. Our understanding is that B.C. Ferries has some bond refinancing coming up. It was our understanding that there are two bonds coming up in December and May of about $150 million and $250 million, respectively. Does government, does B.C. Ferries, anticipate there'll be any issues in refinancing and whether or not borrowing costs for the refinancing will go up, compared to current borrowing costs?

[1750]

Just one final question. Just out of curiosity, I'm wondering what B.C. Ferries borrows money at versus government — just as a point of information.

Hon. T. Stone: On the question with respect to the refinancing of bonds, indeed, he is correct. There are two early bonds that are coming up. We are not aware of any issues with these bonds. I will say that…. The member probably
[ Page 665 ]
will recollect that earlier this year two bond-rating agencies did reaffirm the credit rating for B.C. Ferries.

I would like to quote, for the record, that in releasing their reaffirmation of B.C. Ferries' credit rating, Standard and Poor's said the following. "We are also affirming our A-plus, long-term and senior unsecured debt ratings on the company. The outlook revision reflects what we view as an improvement in regulatory certainty." Furthermore, "the stable outlook reflects our view of increased regulatory certainty as a result from the recent favourable amendments to the Coastal Ferry Act." I think, again, we have no concerns at this point with respect to these two bonds.

[1755]

With respect to the other angles of the question that was asked — are the borrowed costs going up? Do we anticipate any increases in borrowing costs? How do they compare to borrowing costs of government generally? We can't speculate on that simply because there are so many different borrowing mechanisms that both B.C. Ferries and the B.C. government have.

But B.C. Ferries — their credit rating has been reaffirmed.

A. Weaver: I have a few questions outstanding. I recognize, in light of the time, I will not be able to have all the questions answered. I seek the minister's leave to pass the written questions along for a written response at a later date.

Goal 3 of the revised service plan is to reduce greenhouse gas emissions from the transportation sector. The plan states a clear performance measure relating to annual public transit ridership in B.C. but does not state a clear performance measure relating to greenhouse gas emission reductions in other areas, such as in the stated objectives and strategies to achieve this goal by improving supply chain efficiencies in the movement of goods by converting commercial fleets to natural gas.

The question is: does the ministry apply any other publicly available measures to assess its performance in reducing greenhouse gas emissions in the transportation sector? Subsequent to that, does the ministry have any plans to enhance or expand its measurement indicators in this area?

Hon. T. Stone: First off, to the member for Oak Bay–Gordon Head, please provide your questions in written format if you're not able to get to them today. I'll make the commitment to you that we will get back to you in a timely fashion. Absolutely no question there.

I'm just wondering if you could repeat your questions here. We had to change up our staff.

A. Weaver: The question was: does the ministry apply any other publicly available measures to assess its performance in reducing greenhouse gas emissions in the transportation sector? And does the ministry have any plans to enhance or expand its measurement indicators in this area?

[1800]

Hon. T. Stone: To the member for Oak Bay–Gordon Head: as he knows well, provincial measures to reduce greenhouse gas emissions are indeed the responsibility of the Ministry of Environment and the climate action secretariat. So I would encourage him…. He can certainly provide these questions through me and the Ministry of Transportation, and I will pass them on to the Ministry of Environment.

I will say that the Ministry of Transportation and Infrastructure is investing heavily in transit to increase ridership. As the member knows, we have a goal of doubling the ridership of transit in this province — making progress towards that goal through investments like the Evergreen line and transit improvements across the Lower Mainland. We have transit running across the Port Mann Bridge for the first time in 25 years and transit running out to Langley for the first time in 25 years. We're going to continue to invest, where it makes sense, in transit.

[1805]

As has been discussed extensively in the public domain with respect to B.C. Ferries, we're certainly encouraging of the potential movement away from diesel fuel propulsion to LNG.

We have a wide range of initiatives on reducing our footprint in the Ministry of Transportation. But again, the overall initiatives as well as the ongoing measurement are managed by the Ministry of Environment and the climate action secretariat.

C. Trevena: Unfortunately, to the minister, if we could switch back to B.C. Ferries for a moment. We wanted to switch away from the cost savings, although we'd still like to know whether the ministry is going to be looking at management as a cost saver — the management numbers. I still don't feel we got an answer to that.

The minister is obviously very well aware that we're going to be having, likely, three new ferries — one cable ferry and two multipurpose ferries. They are interchangeable ferries that we're looking at. I wanted to know, given the Premier's announcement in 2011 that the federal shipbuilding contract will ensure the province will never have to go offshore to build B.C. ferries again…. In fact, I can quote the Premier. She said in 2011: "It won't be just a matter of us building B.C. ferries. We want to build ferries for countries all over the world here."

I'd like the minister to please confirm whether these three ferries will all be built in B.C.

[1810]

Hon. T. Stone: I know the members opposite continue
[ Page 666 ]
to preface each new question with a statement about the management and the number of managers and so forth. My answer isn't going to be any different than what I have provided. So my answer may not be the answer they were looking for, but my answer is what it is.

Moving back to this issue of vessel replacement, yes, we are very pleased that B.C. Ferries is investing in three new vessels. Indeed, B.C. Ferries has issued an expression of interest for the construction of these three new vessels.

I'm pleased to say that my understanding is that Canadian companies have responded to this expression of interest. That's very good news. At the end of the day, however, out of respect for the procurement process, there are no further details that I'm able to discuss at this point with respect to the replacement of these vessels.

C. Trevena: In light of both the jobs plan and the Premier's effusive remarks back in 2011…. She said categorically: "It won't be just a matter of us building B.C. ferries. We want to build ferries for countries all over the world here." The Premier wasn't talking about Canada; she was talking about B.C.

We do have three ferries, and while there are obviously contractual negotiations going to be starting comparatively soon…. One of my later questions is specifically on the cable ferry and how far along we are on that. Can the minister not confirm that we are going to get thousands of jobs from the building of B.C. ferries here, as the Premier has promised and as the jobs plan would indicate?

[1815]

Hon. T. Stone: Again, my answer will be the same as I just gave.

B.C. Ferries has identified that these three vessels are nearing the end of their life. Again, just for the record, they are vessels that will serve the Tsawwassen to southern Gulf Islands and Comox to Powell River routes. We're pleased that B.C. Ferries has made as a priority in seeking out new vessels for these routes that they allow for interoperability of the vessels, standardization of the vessels and, as I've talked about a bit this afternoon, the potential for a movement away from diesel to LNG fuel propulsion.

All three of these vessels are in the expression-of-interest stage of the procurement process. As I said a moment ago, my understanding is that Canadian companies have responded, which is very good news. We'll see how the procurement process unfolds, but I certainly do not want to prejudice any aspect of the procurement process by making any further statements on the procurement of these three vessels.

G. Holman: A quick comment on our ongoing dialogue around senior management. Ultimately, what we're trying to determine is if government and B.C. Ferries are going to be looking at potential management savings as one of the operational cost savings of $54 million over the remainder of the service period. Or are you precluding management from that consideration? Really, that's all we're trying to…. Are management savings something that you're looking at or something that you're wanting B.C. Ferries to look at to reduce cost? That's the intent of the question.

Just in terms of the shipbuilding, it is indeed good news that there have been Canadian companies that have responded to that expression of interest. I'm wondering if the minister can tell us whether the choice of the successful bidder will be based solely on cost, or will B.C. jobs be a factor in choosing the successful bidder?

What I'm getting at is, is price to B.C. Ferries…? Aside from the other criteria you have listed, when it comes down to price, will the decision be made based on price only, or will there be some allowance or consideration of the possibility of building the ships in B.C., which of course would generate jobs and generate tax revenue for government?

[1820]

Hon. T. Stone: I said a moment ago I wasn't going to address the management question. I thought we had that behind us. But I find myself here feeling compelled to respond.

You know, as I've said several times, B.C. Ferries is an arm's-length organization, so they're separate from the B.C. government. As part of these three pillars of our vision moving forward, we have set with B.C. Ferries an operational efficiency target of $54 million. How B.C. Ferries goes about achieving those savings is completely and totally up to B.C. Ferries. What's important to government and to the taxpayer is that B.C. Ferries achieves those $54 million in savings in reduced operating expenditures.

I'll move back to the vessel replacement question and what the criteria is for this procurement. Again, the vessel procurement process is internal to B.C. Ferries as an arm's-length organization. I will reiterate that the model that we established with B.C. Ferries is one where we wanted to allow for the independence of decision-making on many, many facets of the operation of B.C. Ferries, including vessel replacement and, indeed, their entire capital plan.

Now, we did strengthen the powers of the Ferry Commissioner not that long ago, to provide for the Ferry Commissioner to actually review and approve capital plans at B.C. Ferries. That's what the Ferry Commissioner now does. That includes taking a look at specific capital expenditures.

B.C. Ferries will go through its procurement process for these vessels, and the Ferry Commissioner will weigh in on the reasonableness of the expenditures that are being made to replace these vessels.
[ Page 667 ]

C. Trevena: My last question at the moment, because I'll be passing over to the independents. We'll be writing a number of questions.

I just wanted to check: when we're talking about the three vessels, I'm assuming that one of the vessels is the cable vessel, the cable ferry that is being built for the Buckley Bay to Denman run. Just a very quick question on that. Is the minister aware of any other area where there is an oceangoing cable ferry?

We have a number of other Ferries questions, which will be included, and then after this we'll be handing over to the independent members.

[1825]

Hon. T. Stone: First off, as I said earlier, I'd be more than happy to answer any and all further questions that you provide me through my office — on B.C. Ferries and all the other subjects that we cover.

With respect to the question about if there are other ocean cable ferries around the world, there are many around the world. I think it's important to say for the record, however, that my understanding, our understanding as a government, is that B.C. Ferries has done and is continuing to do extensive engineering and related analysis to make sure that a cable ferry is indeed feasible.

I will point out again…. I think the member was looking for a clarification on whether this was in addition to the three other vessels I've talked about. It is. B.C. Ferries is looking at two new vessels that will be on route 9, which is the Tsawwassen to southern Gulf Islands route, and then a new vessel on route 17, which is the Comox to Powell River route. Then, in addition to those three vessels, there'd be this new cable ferry from Vancouver Island to Denman Island.

In addition to the extensive engineering analysis that B.C. Ferries is doing, obviously any cable ferry, as with all new vessels, is going to have to comply with all Transport Canada's regulations and, indeed, be certified.

Last, but not least, I will also point out for the members opposite that my understanding, in terms of where the cable ferry is at in the procurement process, is that the RFP is expected to be issued at some point this month or in August.

A. Weaver: For the record, as an independent member, I have not been passed the floor. I, as an independent MLA, am entitled to stand at any time and seek the floor from the Chair. So I thank the Chair for recognizing me here.

The question I have to the minister is: has the minister explored the option of transitioning the B.C. ferry fleet to natural gas? If not, does the budget provide for the exploration of this option in the immediate or near future?

[1830]

The reason why I ask this, of course, is that B.C. Ferries are not within scope, and they can actually be used as an offset according to Pacific Carbon Trust rules and regulations, which could be used within the carbon-neutral government mandate to actually find carbon offsets within the public sector itself.

Hon. T. Stone: Absolutely. This government is committed to encouraging a move away from diesel and a move towards LNG as fuel propulsion for the B.C. ferry fleet. I'm pleased to say that I communicated that quite directly to the president and CEO of B.C. Ferries not that long ago. His response was that they are indeed looking at it, and it is within the scope of the criteria that they've included in the procurement process for new vessels.

Obviously, there are many existing vessels that don't come up for replacement for varying times. We're going to look at that, the bigger picture there, and determine what the costs are with the business case for a potential conversion of fuel propulsion systems of existing vessels.

I think I mentioned this in a response to an earlier question from a different member. With the B.C. ferry fleet, the fuel costs have increased from $50 million in 2004 to $121 million today. That's because we're burning a lot of diesel. Not only is that one of the key cost drivers at B.C. Ferries, which is why it's challenging to keep fares down, more than we would all like to; it also is contributing to our carbon footprint and the greenhouse gas emissions that we're emitting as a province.

I am very much aware of the benefits of moving to LNG. Certainly, as long as I am the minister responsible, I intend on being a strong advocate for moving to LNG as a fuel propulsion at B.C. Ferries.

A. Weaver: I'm delighted to hear that the ministry is moving down that path. I thank the minister for his response.

The next question concerns B.C. Rail. The question is: does the B.C. Railway Co. have any funding allocated for the purpose of working with the federal government to expand oil or crude oil transportation along railway lines in B.C., including the possibility of laying a new track? Such a possibility has been put forward by a company in Alberta to suggest transporting Alberta bitumen to the Port of Valdez in Alaska for offshore shipping.

[1835]

Hon. T. Stone: The very direct response to this question: no. There are no plans at B.C. Rail for that. In fact, no funds allocated as well.

A. Weaver: According to the revised service plan, the goal of the provincial government, as was mentioned to an earlier question, is to double transit ridership in the province by 2020. That's on page 16 of the RSP. Current ridership in 2012 is forecast at 284 million. The target for 2015-16 is 297 million, a difference of 13 million over four years.
[ Page 668 ]

My question is: how does the government intend to meet its target of doubling transit ridership by 2020 to a total of 568 million per year, given that according to its own projections, meeting that target would require an additional increase of $250 million within six years, well above current rate increases?

[1840]

Hon. T. Stone: I would like to take this opportunity to first introduce the president and CEO of B.C. Transit.

Manuel Achadinha, thank you for being here.

To the member's question. First, a general statement that I would make is that British Columbia actually funds the operations of transit at a higher level than any other jurisdiction in Canada does. Is it where we want to be? No, we want to do more. That's why we've put, through our B.C. Transit 2020 plan, the goal of doubling transit ridership, which you mentioned in your question.

We believe we're well down that path. There are a good number of mass transit expansions that we've invested in. The Evergreen project is coming on line. There are a good number of success stories as well, where actual ridership was far greater than the original projections.

At the end of the day, the delivery of transit, and enhanced transit, in British Columbia is a partnership of the province and our local government partners and the federal government. We've got a good track record of leveraging federal dollars for transit expansion, capital expansion in the province. I will highlight two excellent success stories on the transit front.

The first is the establishment of a rapid transit bus service in Kelowna. The original projection on that service was that we would see an increase in ridership of 10 percent over three years. In fact, we have seen a 9 percent increase in ridership in the first year alone — so a good success story there.

[1845]

Secondly, there is a commuter service provided between Cowichan Valley and Victoria, which is extremely popular. The original projections have been far outdone by the actual ridership increases, and the demand for expansion of that system is significant.

In summary, we're driving as hard and as fast as we can towards the goal of doubling transit ridership in the province of British Columbia, and we believe we're well on our way.

A. Weaver: I will submit something in the order of six or seven written questions to the ministry, including specific ones on the riding of Oak Bay–Gordon Head that I have, if that's okay.

Final question. In the revised 2013-2014–2015-2016 ministry service plan, there's an oddity. The ministry seems to measure the performance of the development of Canada's Pacific Gateway in terms of "cumulative completed provincial strategic investment in Pacific Gateway supply chain infrastructure" — measured in billions of dollars.

In other words, it seems that the more money spent on the infrastructure, the better the performance. Now, this strikes me as a bit odd. According to this performance measure, major cost overruns, in the realm of millions to billions of dollars, would actually indicate higher performance.

Given the government focus on balancing the budget — which clearly, I'm in favour of — what other indicators are in place to ensure projects are first and foremost incentivized to be cost-effective? And why are these not used as primary performance measures?

In particular, for example, perhaps one could measure return on investment in supply chain infrastructure as it relates to meeting its trade goals, such as increased capacity to transport cargo containers, as opposed to money spent on infrastructure.

[1850]

[D. Horne in the chair.]

Hon. T. Stone: It's absolutely true that we do focus on measuring the performance of major projects. But I want to be really clear that we're not…. The key measurement here is not the total dollars that are spent. The measurements are against a defined transportation and infrastructure plan that has a specific list of projects that are a priority in British Columbia. I'd be very happy to provide the member with the specific list of those projects.

This is important. This is good, because what it has enabled us to do.… Certainly, we're going to continue with this approach moving forward. To date it has enabled us to leverage billions of dollars of taxpayers' money with even billions of dollars more of private investments.

So we've been able to be very deliberate in our planning on these major transportation and infrastructure investments by targeting investments in our own infrastructure, which has encouraged private companies to come to the table and make investments in their infrastructure. It's the coming together of the two that has resulted in a dramatic increase in capacity, for example, at our ports and the volume of cargo containers that can move in and out of our ports. All of that is about driving more trade and growing the economy and creating more jobs.

The specific numbers. We've been able to leverage about $5 billion of B.C. taxpayers' money to get about $3 billion of federal funds, but the private sector has come to the table with $14 billion, for a total envelope of over $22 billion that has been invested in transportation and infrastructure improvements in British Columbia. Hopefully, that answers his question.

Again, I'd be more than happy to answer any other questions that you have in written form, through my office. I would like to end on the note by acknowledging the
[ Page 669 ]
member's support for our balanced budget and standing up in the House and doing so recently.

With that, hon. Chair, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:53 p.m.

PROCEEDINGS IN THE
BIRCH ROOM

Committee of Supply

ESTIMATES: MINISTRY OF AGRICULTURE

(continued)

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

The committee met at 2:39 p.m.

On Vote 14: ministry operations, $66,702,000 (continued).

Hon. P. Pimm: We're going to continue today. I just want to say that we have the same staff that was here yesterday to help out. I won't go through the introductions again. I'm very happy to get on with the debate.

[1440]

N. Simons: It's good to be back. Thank you to the minister and his staff for being here. I hope we can get through a few things today. There'll be a number of people wanting to ask questions on various issues.

I just want to start with some questions on bees. I believe the member for Alberni–Pacific Rim will be asking questions on aquaculture following that. Then we'll talk about various other things. I think we have two hours right now.

What's the current administrative capacity of the Ministry of Agriculture with respect to inspections and bee inspections?

Hon. P. Pimm: There has been no change since last year. We have one apiculture specialist, 0.6 apiculture assistant, 0.4 apiary inspector.

N. Simons: I'm sure the minister recognizes there's concern over bee health worldwide. We're no exception here. We've seen recent die-off of colonies. We've seen above-average problems with respect to bee health. Recently in Oregon we've seen a huge die-off, blamed on an insecticide spraying. I'm sure that there's more study to be done before any firm explanation can be achieved.

I'm just wondering if the role of the bee inspectors has changed over the last couple of years.

Hon. P. Pimm: No, our role has not changed over the last number of years.

One thing I will say — I was happy to meet with this individual: we have one of Canada's foremost apiary specialists in Paul van Westendorp. He's on the staff. He's works out at the lab. In fact, just in the last week or so he was in Victoria talking about some of the issues around the bees. He's certainly somebody that has a huge amount of knowledge in that industry.

N. Simons: That's good to know.

I'm just wondering: could the minister inform this House what some of those issues affecting bees were?

Hon. P. Pimm: Obviously, we still continue to monitor the bee health in the industry. As you know, there have been some issues. We continue to be concerned and watch for any parasites or anything that's going to be affecting some of the areas in the bee industry. It's something that we are monitoring very closely.

[1445]

N. Simons: Was the minister informed, or was his staff informed, of any recent concerns with respect to bee health in British Columbia?

Hon. P. Pimm: In 2013 Health Canada announced a national initiative to have beekeepers submit samples in cases of suspected bee poisonings due to — forgive me if I don't get this word exactly right — neonicotinoid exposure and to have those samples analyzed. We do that — we continue to monitor it — and at this point in time we haven't found any scientific data to conclude that we have an issue here at all.

N. Simons: Can the minister inform us how many regional bee inspectors there are?

Hon. P. Pimm: We have six regions within the province where they have different amounts of bees. As I said earlier, for full-time-equivalents we've got one apiculture specialist, a 0.6 apiculture assistant and 0.4 apiary inspectors. Again, it is seasonal work.

That's the number, and it hasn't changed. It's been the same amount of people doing the job for the last several years.

N. Simons: My question specifically refers now to the Peace. Are there any bee inspectors in the Peace?

Hon. P. Pimm: Thank you very much for that question. At this point I don't have that information in front of me. We'll get back to you with the answer on that one.
[ Page 670 ]

[1450]

N. Simons: Has the policy changed with respect to the inspection of community bee yards?

Hon. P. Pimm: We're not 100 percent sure on what your terminology of "community bee yard" is referring to. But we can say that at this point in time that we certainly don't know of any changes that have been made.

N. Simons: It's my understanding now that inspectors are not going to attend at community bee yards for inspection. If necessary, private inspectors can be hired, but the government apparently is no longer involved in proactive inspections.

The issue around bee health is essential to the agriculture industry, as the minister knows about the birds and the bees — the bees, in this particular case.

I'm surprised he doesn't know whether there's a bee inspector in the Peace. Obviously, pollination is fairly essential to the propagation of fruit and vegetables. It's also one of the main honey-producing areas. I think the most important thing for me at this point is to perhaps ask the minister if we could meet at a future moment to talk about the importance of bees and the policies around bee health.

The European food agency has implemented a two-year ban on neonicotinoids, and I think there's an interest and there's a concern in the general public about bee health. I'm hoping that the minister can use his influence to ensure that all the scientific evidence — which, in the past, has shown fairly reliably that the impacts of those chemicals on bees and of those pesticides on bees are significant — is the determining factor and not necessarily the corporate interests of those companies that manufacture the chemicals and the pesticides.

I'd point out that the countries that have voted for a ban include Belgium, Bulgaria, Denmark, Estonia, Spain, France, Cyprus, Germany, Latvia, Luxembourg, Malta, the Netherlands, Poland, Slovenia and Sweden.

Just with respect to the answers given, I'm worried that perhaps we're not paying adequate attention to the health of bees in British Columbia. It's my hope that the minister will agree that future discussions could occur, perhaps, at a later date.

[1455]

Hon. P. Pimm: Just to get back to one of your earlier questions, there is no inspector in the Peace country that I'm aware of.

A lot of the inspection stuff is when it's complaint-driven. So if there are any complaints, or if any of the keepers are noticing that they're having issues, then we'll actually send the inspector. We'll send Paul, the professional, out to actually have a look on site. He wasn't up to the Peace recently, but he was just recently up to Terrace, where they had made one of those calls, so we took him out there.

As for a briefing of any description, I think at some point in time it might be very valuable for Paul to meet with you folks. If you're interested in that, we could probably set something up down the road on that, possibly.

N. Simons: Just to clarify, there's one bee inspector for the province of British Columbia?

Hon. P. Pimm: There's one actual specialist, and that's Paul, who we talked about earlier. There are actually six other part-time inspectors who add up to the 0.4 of a position.

N. Simons: Just to clarify. Dividing 0.4 into six, they'd have about 25 minutes each. I'm assuming that the minister meant six 0.4 positions.

Can the minister explain if there's been any change in the budget with respect to bees over the last couple of years?

Hon. P. Pimm: There has been no change to the budget. I think we've said that a few times. One thing that does play into the role a little bit is that there have been some constraints around travel. That's certainly something that plays into the equation to some degree. The inspectors are certainly more focused in their areas. When there is anything of any major nature, that's when we certainly get out and inspect as quickly as possible.

[1500]

N. Simons: So we've established that there are about 2½ bee inspectors for the entire province. The minister talks about the importance of agriculture and the wonderful crops that we produce here, all of which rely on bees and the health of bees.

I'm just wondering if the minister…. Even in the agrifoods strategy there's a picture of a beehive, but there's no mention of bee health. I'm just wondering if he thinks that's adequate when you consider the importance of bees in the agricultural production of British Columbia.

Hon. P. Pimm: Like I say, there have been no changes to the numbers. You're right that 0.4 of an inspector…. It's part-time work. It's seasonal-type work. This is what we've been utilizing over the past several years. Our specialist feels that that's adequate inspection, and he certainly stays monitoring the situations at all times. If anything serious comes up in any region, we're more than capable of getting him out to have a good look at things.

N. Simons: The minister mentioned that the inspectors are more focused and they're not travelling, or there are restrictions on the travel. It seems to me that maybe there has been a change in the role of the bee inspect-
[ Page 671 ]
ors. Maybe the minister could take this opportunity to perhaps correct what he said earlier, that there has been no change?

Hon. P. Pimm: I think I still stand by what I said in the past. I think we have adequate inspection. It's been no real change to what has been there over the past years.

Where there is some difference is on some of the travel, so maybe they might not get to a conference that's out-of-province or something like that. As far as the inspection goes, the legislative framework that the inspection works under, there have been no changes in that.

N. Simons: I'm just wondering, and I'll do a double-barrelled question…. So travel is restricted to within the province, I presume, from that answer. Are there any studies currently underway in the ministry's administration on the effects of GMOs on bees in the province?

[1505]

Hon. P. Pimm: On your first question, just getting back to it. Basically, essential travel — it's primarily within the province, but it's not restricted. We would look at anything that might have to be looked at. Definitely, the essential stuff in the province has been fine.

On your GMO question, we're not aware of any studies at this point in time. Certainly, as a province we're not doing that. It's federally regulated, as you know. At this point we're not doing any.

N. Simons: Okay. Just to wrap this up, my understanding is there are 2.4 inspectors for the province, and they only respond to calls. There are no routine inspections at all, and it's only seasonal. I find that a little problematic because there are things that the bee inspectors would do off-season, so to speak. I just want to confirm that I've got that information correct.

Hon. P. Pimm: I'd just reiterate that we have made no changes to the inspections over the past few years. It's the same as it has been. It's going to continue to be the same way. We think we're doing an adequate job. We continue to monitor it very closely.

S. Fraser: Thanks to the minister and staff for being here today and helping us with getting through the estimates process.

For something completely different, if we could move to fish for a touch here. I don't have a whole lot of time for this, unfortunately. We're kind of challenged with three Houses running at the same time. I'm going to try to make this as quick as possible so that my colleagues can continue with some of their questioning too.

Just to begin with, I thank the minister and staff for the briefing that we were able to get. I'd like to touch on something for the record — some of the changes in who's responsible for what. Certainly, recent court decisions and other things have sort of left the province in a different role in dealing with fish and fisheries.

If the minister could just highlight what the Ministry of Agriculture's main responsibilities are dealing with fish and aquaculture. Certainly, with one of the recent court decisions that Alexandra Morton was involved in with aquaculture, it removes a lot of the role of the province from that particular industry.

[1510]

Hon. P. Pimm: As you're aware, there's a line between the DFO and our fisheries folks. We're involved in policy for the fisheries. We're engaged in the international agreements on the fisheries side. We also are involved in inspections at some of the processing plants. We also have a fish pathologist on staff out at the lab in Abbotsford, and they certainly do sampling on, I guess, a more random type of basis.

S. Fraser: Thanks to the minister for that. Regarding aquaculture, then, our role…. Just as background here: I was on the Sustainable Aquaculture Committee, a special committee, a number of years ago — 2005-2007, I think — and there were 52 recommendations that came out of that parliamentary committee. Most of the role of the province since then has changed. I think that's been moved over to the federal government, in regards to aquaculture.

What's left, the role for the province in aquaculture, would be largely around siting. Even the tenuring, though…. I guess the licensing for the tenures would be…. I don't know if that goes through Forests, Lands and Natural Resource Operations, but again, if we could clarify the role of the Ministry of Agriculture in that regard too, please.

Hon. P. Pimm: As far as siting goes, that's mostly DFO. FLNRO — or Forests, Lands and Natural Resource Operations — have had some guidelines that they've passed on to DFO on the siting side. So there are provincial policies, you might say, for that.

As far as licensing goes, the Ministry of Agriculture has no licensing authorities, as well, for the facilities.

V. Huntington: The ministry is obviously aware that aquaculture is in the Right to Farm Act. What concerns me about that is that as we move closer and closer to the days when closed containment on land will be the norm…. I'm very concerned that because it's in the Right to Farm Act, closed containment will then start showing up on valuable ALR lands. Is the ministry looking at that issue at all? Does it have any concerns about that?

[1515]

I spoke briefly with, I think, the previous deputy. We did talk with some concern about the issue, and I'm
[ Page 672 ]
wondering if it is under investigation or consideration by the ministry.

Hon. P. Pimm: There are some closed-containment facilities on the land at this point in time, as you're probably well aware. They take up a pretty small footprint on the land, actually.

I can't tell you the exact status of the ones that are out there right now — whether they're on ALR lands or if they're not on the ALR lands. I can get back to you with that exact information.

It's something that we'll definitely have to monitor. I don't think it's going to be something that is going to take up a whole lot. But at this point in time usage of that land is valuable, and we'll monitor it.

V. Huntington: Just a very brief follow-up. I think there will be a movement.

That's what used to be said about greenhouses. I have seen Chinese land-based fish containment operations that are as massive as greenhouses. I think the ministry, with great respect, should be looking at an amendment to the act that restricts those land-based aquaculture operations to at least marginal, minimal classifications of soil or restricts them to industrial or other areas.

I think it could be a future problem, and it would make sense to monitor that problem through an amendment to the act as soon as you could get it going. That would be my recommendation to the ministry.

Hon. P. Pimm: Thanks to the member for that information. We're certainly going to pay attention to that as we move forward.

S. Fraser: If I could get clarification. I don't know if I heard wrong, but I think the minister said that DFO, the feds, are involved with the siting issue. Isn't the province still the primary…? Don't they hold the primary responsibility for siting? Isn't DFO just a…? They're basically a referral agency in the siting process. Or do they actually lead on the siting process for aquaculture tenures within the province of British Columbia?

[1520]

Hon. P. Pimm: Just to try and clear up that answer, DFO is the lead on the siting. What happens is that if an application comes forward, it actually comes in to FrontCounter B.C. through the FLNRO Minister, the ministry's office. They will send out a package that gives some guidelines on siting, that sort of thing.

Once that information has been collected, then there's another DFO team that actually analyzes it and then does the site inspections to make sure that it's going to qualify properly.

S. Fraser: Thanks to the minister for that clarification.

The Cohen Commission recently presented their recommendations on the Fraser River sockeye. I just want to see what role the Ministry of Agriculture has in liaising with the federal government in the implementation of those recommendations. I believe the province has agreed with the recommendations, at least in spirit.

So if the minister could advise just what role your ministry would have in the implementation or at least the monitoring of the implementation of those recommendations.

Hon. P. Pimm: There were basically eight recommendations that pertain to British Columbia, and we have agreed in spirit that we are going to be dealing with those eight recommendations. Our ministry will be leading that, along with FLNRO and Ministry of Environment, and certainly, we're going to be implementing those as quickly as we can.

All eight that pertain to British Columbia — we're going to be playing a role in getting those implemented.

S. Fraser: I'm wondering: do we have any update on the implementation of the eight recommendations that apply directly to British Columbia?

[1525]

Hon. P. Pimm: Out of the eight recommendations, there's one that has already been completed. The other seven are actively underway at this point in time. We're certainly going to be monitoring and tracking and making sure that they're moving forward.

There are some that are a little more complicated than others. Some are waiting around for new modernization of water acts and some of that kind of information. We can't comment on exactly when that'll happen, but we're certainly monitoring it. It's a priority. It's in my mandate letter to be on top of it, so I'm keeping it as a high priority.

S. Fraser: Thanks to the minister for the answer. Just for the record, can the minister highlight the one that has been implemented already, please?

Hon. P. Pimm: It's actually recommendation 54 that has been completed. If you like, I can read that recommendation out for you.

It's that Fisheries and Oceans Canada "should encourage the province of British Columbia to require users of pesticides in forestry and agriculture to record, and report annually to the province, the areas where pesticides were applied and the amounts used; and to develop and maintain a pesticide use database that includes information on location, volume/concentration and timing of use; and make that information publicly available."

S. Fraser: I had that in front of me, but I appreciate the minister actually reading it into the record. For anyone
[ Page 673 ]
watching, that would be useful, I think.

There is one recommendation I'd just like an update on. I don't have enough time to go through the rest of these in detail, but there's one that's very specific to B.C.

"The Department of Fisheries and Oceans should immediately create a new position in the Pacific region at the associate regional director level, with responsibility for developing and implementing the wild salmon policy implementation plan…and supervising the expenditure funds provided under recommendation 6 for the implementation of the policy."

That was recommendation No. 4. It's directly related to the Pacific regions of B.C. Is there any progress on that?

Hon. P. Pimm: That particular recommendation is with DFO. It's certainly in B.C.'s interests, but it's DFO that has that recommendation. It's not one that we're going to be dealing with. DFO is going to be dealing with that recommendation.

S. Fraser: I guess, an opinion from the minister. Wouldn't it be wise for us to take a key role in the development of that position? It has a direct impact on British Columbia. It's specifically aimed at British Columbia, so wouldn't it be wise for us to be intimately involved in the creation of that position?

[1530]

Hon. P. Pimm: As you're aware, all the recommendations are going to affect British Columbia in one way or another. There's no question about that.

DFO hasn't responded to the report yet. We're waiting for them to respond. We're hoping that they're going to respond in a positive way, and we're encouraging them to do that, actually. When they do respond, we'll be working with them on whatever recommendations they agree to work on, and we'll certainly make sure that we can get as much done as possible on all the recommendations.

S. Fraser: Thanks to the minister for the answer to that.

I guess one of the key recommendations in the Cohen Commission inquiry was that the government of Canada should remove from the Department of Fisheries and Oceans mandate the promotion of salmon farming as an industry and farmed salmon as a product. It was seen as a conflict of interest for DFO to have the dual role of protecting the marine environment, fisheries and wild fisheries at the same time as promoting the aquaculture industry. Cohen was quite specific on that.

Has the province pushed at all to see…? Is there any progress made on that separation? Whether or not it's real, the perception of a conflict of interest was enough that Cohen made it one of his key recommendations.

Hon. P. Pimm: What I'd just like to reiterate is that obviously, these recommendations are important. We have to wait for the federal government and DFO to respond back, to get their position out there on what they're going to do. Our staff are working with their staff. We're certainly trying to encourage them to respond to the report. We're hoping that they're going to do that in a timely fashion.

In the meantime, we are certainly going to move forward with the eight that we have agreed to work on. We've got seven left that we're working on, and we're going to make that a priority. Hopefully, the federal government and DFO get back to us with their position.

S. Fraser: Concurrent with the Cohen recommendations and definitely an influence on them would be Bill C-38, the federal omnibus bill, where there were some pretty drastic cuts to environmental protections and such that would directly affect British Columbia. Has the ministry taken a position on any of these? I know that in effect, by many interpretations, Bill C-38, when implemented, could be a downloading onto the province.

[1535]

It says, essentially, that fish habitat provisions will be changed to protect only fish with commercial, aboriginal and recreational value. Even those habitat protections are weakened, with protection only for waterways that contain such valuable fish. Thus, the law will no longer protect any water inhabited by fish and any habitat used by fish.

In the role of the ministry in promoting our world-famous fish, seafood, aquaculture products that…. These kinds of cuts — is the ministry or the province going to take up the slack to try to…? There are obviously going to be gaps now for the province of British Columbia.

Hon. P. Pimm: The regulations, in fact, haven't been drafted yet for C-38. We're not exactly certain on how it's going to affect us. The Minister of Environment is our lead on that file for the province.

I'm not trying to shrug off our duty. We're going to monitor. We're going to work with him however we can. But at this point in time — where, certainly, the staffs are working together — we're unclear of exactly where C-38 is going to take us to.

S. Fraser: I appreciate the minister's answer, but there's the Canada-B.C. fish habitat management agreement. That was June 29, 2012.

On April 2, 2013, the habitat management program's name was changed to the fisheries protection program. This is a government of Canada notice here about the joint fish habitat management agreement. It includes — it's going to be confusing here — the Ministry of Environment, Lands and Parks and the Ministry of Agriculture, Food and Fisheries. I know there have been changes in the ministries since then.

How does the recent…? I guess these are, essentially, amendments to the Canada–British Columbia fisheries habitat management agreement.
[ Page 674 ]

[1540]

The predecessor of this ministry is named here, so does the responsibility still stay with this ministry for this Canada–British Columbia fish habitat management agreement?

Hon. P. Pimm: The short answer to you is that FLNRO is actually the lead on that file now, that Crown lands…. It has actually moved over with them to that ministry, and we no longer have that in our ministry.

S. Fraser: Thanks for that clarification. It is confusing who gets — especially with these changes to ministries, even subtle ones…. When there are agreements signed previously that cite ministries with different names, it gets very confusing. I appreciate the minister cited that a lot of the Cohen stuff would be more the responsibility of the Ministry of Environment.

Something I find disturbing is that the federal government has not put forward any provisions to protect streams and wetlands that have no commercial fisheries value. That's in Bill C-38, still to be implemented, as the minister pointed out. It's late again. I mean, it passed another due date in June, so it's now moved to the fall for implementation.

The job of protecting wetlands and other fish habitat deemed to have no commercial value will be downloaded onto the provinces. I'm trying to figure out where that's going to be done. B.C. may not be…. We're going to be on the hook for doing reviews under the Fisheries Act in light of the cuts to DFO. In 2012, that budget, that was a $79 million cut, and between now and 2015 a 5.8 percent cut. With B.C., the environmental assessment continues frozen. They cut funds for that process. They're frozen at $8.75 million going right to 2015.

If DFO downloads this responsibility onto B.C., and the Ministry of Environment has no change in their budget till 2015, and now the implementation date for these changes will be the fall — so it could be still this year…. I mean, it should be this year. Will the Ministry of Ag play a role in picking up that slack? There are no resources, then, if the feds download it when the Ministry of Environment hasn't budgeted for it. Since the Ministry of Ag still has a role with fisheries — or promoting fisheries — are there any budget considerations in this budget for addressing the shortfalls that are no doubt going to happen?

Hon. P. Pimm: Thank you for the question.

[1545]

Again, this is going to fall under the Ministry of FLNRO. Agriculture is not going to have any responsibility. We have no money in the budget this year. The direct answer is: no, we don't have any money in our budget for it.

I think it's a little hypothetical. You're making some assumptions that this may happen or that might happen. At this point we don't know that that's going to be the case. Maybe when we know some actual facts, we'll respond at that point.

S. Fraser: Well, it may be too late. These things…. The federal government has been pushing back its deadline. Obviously, they're having some trouble. There's speculation, certainly, that the stall on getting the implementation of these draconian changes on fisheries habitat is because of cuts to the ministry. It's in federal ministries too.

We may want to play a more key role in there. I know that in the Cohen inquiry there are issues around recommendations around the siting of fish farms and such in migration routes. I think the province should be playing a role to make sure…. These are our interests.

I'm going move into a bit of shellfish aquaculture, because I'm running out of time. The role of the province, of the Ministry of Agriculture, is specifically around promotion of the product, I guess, internationally. Or is it a larger role than that when it comes to, let's say, oyster farms, shellfish farms, scallops — that sort of thing?

Hon. P. Pimm: Basically, our role really is to promote, both internationally and domestically, in the aquaculture and shellfish industry. It's one that's a very important role. We certainly value it. We want to increase it. We want to make that market larger.

We go out to international and national trade shows promoting the product. Again this year we're promoting that. I think we're going to be in four or five trade shows again around the world and are certainly looking to promote the industry even further.

S. Fraser: Thanks to the minister for that. I wasn't sure if domestic promotion was part of it too.

Just in light of that…. I am running out of time. Baynes Sound is the centre, or the heart, of the shellfish aquaculture industry in British Columbia. Certainly, Clayoquot Sound has some too, but the majority of the concentration of the oyster farms and shellfish farms in the province are in Baynes Sound.

If we're promoting these things internationally…. I'll go internationally here, because it has direct effect. There are other proposals in the mix, like mining proposals, that could liberate heavy metals, which could enter Baynes Sound directly where the shellfish are. There is a proposal in the Comox Valley for a coal mine, Raven coal mine, and the shellfish growers have been, I know, approaching government to try to get them to back down on these kinds of proposals that could shut down their industry.

The reason that it affects the Ministry of Agriculture is that as a promoter of this internationally, one of the big problems, potentially, with a coal mine being right
[ Page 675 ]
above the biggest shellfish industry is that coal mines tend to liberate heavy metals. Any heavy metals entering the marine environment are picked up by the shellfish. They're like the canary in the coal mine. No pun intended there.

[1550]

Right now Baynes Sound, in its natural geology, already has a fairly high natural concentration of one heavy metal known as cadmium. It's actually getting close to some of the international limits for export or import for those countries. If any amount of cadmium, which is one of those heavy metals that are often liberated through coal mining…. If this project went through and any of that were to leach into the sound, it could shut down all international trade with that product for British Columbia. It would be a devastating effect — hundreds of jobs, thousand of jobs. Future jobs too.

Does the ministry, since it has a role in promoting the product, knowing that another industry could shut the industry down for international export…? Do you ever take a position when solicited? Certainly, I know the B.C. Shellfish Growers Association has approached government on this issue a number of times, as well as have all the communities in the region.

Hon. P. Pimm: As you know, any process — any mining process or any major operation like that — would go through an extensive EAO process. That's a process that talks about socioeconomic issues, that identifies any issues that are going to come into play. We would play a role in that, as other ministries would play a role in it as well. I think that's left for that process.

S. Fraser: The problem with that is the EAO process — the highest, most stringent level of EAO process — was not delivered by the province. We're not getting the marine benthic studies. We're not getting the independent studies done on watersheds. Those sorts of things that would be able to…. It's such a narrow view of the coal mine itself as a footprint. It doesn't go far enough to address the interests of the industry.

I would ask the minister to have another look at that. Certainly, your role as a minister and ministry in promoting the product internationally could well be reduced if a competing industry were allowed to destroy the existing sustainable and very profitable shellfish industry. I just leave that, if the minister wants to take my advice on it. It's a problem, and I think there's a gap there.

I've got to be very quick here. I have a letter here addressed to the minister. It was dated July 9, 2013. I just got this. I didn't give your staff a heads-up, because I actually just got it sent to me today.

It's from the Nanaimo regional district, and it's around seaweed harvesting on the beach on the east side of Vancouver Island in my constituency in Nanaimo regional district area H. There are concerns. And I'm not judging the economic activity of collecting seaweed on the beach. I know there's a market value for that. But the fact that the ministry issued a licence here without any consultation locally is causing problems.

I will pass this on, just as a note. It's from Joe Stanhope, the chair of the regional district of Nanaimo. It may not have come across the minister's desk yet, because it's only July 9.

[1555]

There's a request for a meeting. I'd just like to get on record that you've received this and that you will consider that. It is causing, certainly, a lot of grief for a lot of residents that don't know what's happening. They have no warning. When they call their regional district director, Bill Veenhof, in area H, he wasn't consulted either. I think that's another gap, maybe in the ministry doing their licensing role or their oversight role in beach harvest of seaweed. It's good to give a heads-up to the locals about that. I will forward this through the staff here, if I can.

Then just the last question is something I raised with staff in our meeting. It was nothing to do with fish. It's antifreeze. I know that the ministry plays a role with cruelty to animals and the act that's involved with that. I introduced a private member's bill in 2007 in this House, a while ago now. It was the most supported private members bill, I think, in the history of the province. It was the Promotion of Safe Antifreeze Act. Actually, it's been supported by just about…. The guide dog association of B.C.; the SPCA, of course; the Sierra Club — any number of groups, hundreds of thousands of people when you put them all together.

The Ministry of Environment, in 2009, just before we went into election mode, issued a notice that they were going to make some changes to antifreeze legislation — woefully short, I believe. I haven't been able to confirm that that's happened, so I ask for clarification on that, if I could get that, please. Thank you.

Hon. P. Pimm: I haven't seen the letter, number one, that you bring up, first off. I'll be happy if you can pass that on to us and to staff. We'll look at it. If we have to have a meet, then we'll go further down that road.

As for your second issue, that has been done, in fact. B.C. was the first Canadian province to legally require the addition of this bittering agent. The new regulation came into effect on January 1, 2011.

S. Fraser: While I appreciate the sentiment of the changes, I want to note on record that there is a problem with this legislation. If the ministry had checked before they did it, they would find that Bitrex, the bittering agent, breaks down in one condition, and that's heat — the heat of an engine. So as long as it's in the bottle, yes, there's a bittering agent there. That agent breaks down very quickly under heat. Most of the poisonings of animals, wildlife and companion animals, happen from an
[ Page 676 ]
accident — you know, careless changing of antifreeze in the yard. The actual bittering agent is rendered ineffective after it's been used in the engine. Also, the American SPCA have indications that this would not work anyway. The underlying sweet flavour of ethylene glycol will still be an attractant in its own right.

People should not be lulled to think that they have safe antifreeze. Safe antifreeze is propylene glycol–based antifreeze. It's $3.00 more a gallon at Canadian Tire. That's what we should have done.

[1600]

N. Simons: Can I move to another area completely? I'd like to ask the minister: how many extension field service officers are in the province, and how are they allocated?

Hon. P. Pimm: We don't actually call them extension officers anymore. They're a combination of agrologists and industry specialists. We have on average about 20, but: 22. They are in different regions of the province. In some regions they might be product-specific. In other regions, where you have a different variety, they could deal with several different commodities.

N. Simons: So these agrologists and industry specialists — are there any, or how many are there dealing specifically with the organic sector?

[1605]

Hon. P. Pimm: Basically, we have one supervisory position that's not 100 percent responsible for organics, but it's certainly part of their supervisory role. Also, all the agrologists — there are 14 agrologists throughout the province — can also deal at a little higher level on organic issues and refer back to the specialist in that area.

N. Simons: Do these agrologists and industry specialists do on-site visits? What are the parameters of their role?

Hon. P. Pimm: Basically speaking, all of the agrologists could do farm visits if required. It's not something they would do on any kind of routine basis, but if they're called upon, they can certainly do farm visits if required. That's part of their job.

N. Simons: I'm just trying to get a picture of what their role is. I'm wondering how often they would be going out to farm visits and such. Is this an essential component of their work, or is it something that they would do only in extenuating circumstances?

Hon. P. Pimm: Most of these folks are pretty well known in their communities. So obviously, they do get out and about to some of the farming, especially in the growing seasons. If anybody needs to seek their expertise, they're more than able to call up, and certainly, they'll try to accommodate the best they can.

N. Simons: My question is, again, about these agrologists and industry specialists. How are farmers expected to contact and engage their expertise? What's the standard procedure for that? Are there limitations to these individuals' travel budget that may have any impact on their ability to do that work?

[1610]

Hon. P. Pimm: Basically speaking, they're located around the province. They're in 12 different offices around the province. So you could call into the office. You could talk to the folks. You could make an appointment. You can set up an appointment, and they would come out and see you.

Their role is part of the core business in agriculture. There are no travel restrictions around core business in the agriculture industry. So there is no restriction on getting out and about and seeing them.

Call your office, have an opportunity to talk to the folks, and they'll come out and see you.

N. Simons: How are they identified in the communities as the industry specialists or the agrologists? Do they just phone a 1-800 number? How do they identify where to find that service?

Hon. P. Pimm: Again, most of these folks are pretty well known in their regions, in the ag community. You can get a hold of them through the ag offices. I think they're in 12 different offices around the province. So certainly open up the phone book, go to the blue pages, the agriculture office, and give it a call.

If that doesn't work, you can go on line. There's that way you could do it. Or you can call the provincial office, and we can get the information out to you.

N. Simons: Does the minister know who the contact person is for residents on the Sunshine Coast, for my area?

Hon. P. Pimm: If somebody on the Sunshine Coast was looking for someone, they would probably go to your mid-Island office. There would be a woman there by the name of Jill Hatfield, so that would be a name that you could jot down. Or you could actually go to the Abbotsford office as well. That would be Orlando Schmidt.

Now, each one of those would need a ferry ride to get to the Sunshine Coast. Nonetheless, those are your contacts. Call the offices, and they'd be more than happy to help you.

N. Simons: Let me just get this correct. So a farmer
[ Page 677 ]
on the Sunshine Coast can access the service and get an on-site visit from an industry specialist or agrologist by phoning one of the numbers that the minister just mentioned. I think this is something that many farmers have been hoping for. If this is, in fact, the system that's set up, I think many will be very pleased to hear that. So I appreciate the minister's response.

A follow-up question would be: is there any service fee associated with this, or will that farm visit be part of their regular work?

[1615]

Hon. P. Pimm: The answer to your question is yes. They can acquire that service. Obviously, it's not something that they're going to do each and every time, per se.

I mean, if there's an actual good reason to go out and do an on-site visit, then you can have that access. They may try to help you out over the phone. They may try to help you out in different ways. They may try to put you on to a website. If they can work with you that way and solve your issues, obviously, that'll be probably the way that they'll deal with things. But at the end of the day, if they have to have a site visit, then absolutely, they're going to go that direction, and there is no fee associated with it.

I hope that's great news for you.

N. Simons: Well, that is great news. Thank you very much. I appreciate that.

My colleague my friend from Stikine has a few questions.

D. Donaldson: Thanks to the critic for allowing me to have a little bit of his time, and to the minister and the ministry staff for being available for these questions.

I had a question regarding genetically modified organisms — specifically, genetically modified canola. It has just been introduced into the Bulkley Valley. A farmer has decided to use this new genetically modified canola on hundreds of acres of his property, specifically, Dekalb 73-4 variety. It's a Roundup-resistant strain of canola.

The farmers who use this, then, generally use Roundup in advance of planting this genetically modified canola. Then after they plant the canola, they can use Roundup throughout the crop cycle — and use it more often, perhaps, than they would have beforehand. There are risks and concerns associated with Roundup, and there are also risks associated with cross-pollination of neighbouring crops from the genetically modified canola crop.

In the Bulkley Valley there are many organic farmers and bioagriculture-style farms where they use the natural background ecosystem balance to deal with pests and deal with invasive species and such. So there have been some concerns expressed regarding the new introduction of the GMO canola variety into the Bulkley Valley, and concerns from the nearby farmers who would say that they are concerned about the risk of increased use of Roundup and the risk of cross-pollination — which would, therefore, make their crops not fall into the organic category.

As the minister is likely aware, there's a thriving farmers market sector in the province and, indeed, in Smithers. Many of these small-scale farmers use the farmers market in order to sell their crops and subsist on the income from that. We're talking family jobs, family-supporting jobs, through the small-scale agriculture that the bioagriculture provides in the Bulkley Valley through things like the farmers market.

The questions I have are, and I'll put three of them together because of the concerns expressed to me, documented concerns: does the province track the use of genetically modified crops, such as this canola species I talked about? Does the province monitor the potential impacts of these genetically modified crops on other farmers in a region, or any kind of agriculture impacts? And does the province have any policy at all regarding genetically modified organisms?

[1620]

Hon. P. Pimm: Thanks for the question. It's a good one, obviously. It's an issue that's near and dear to most British Columbians. GE technology and agrifoods are an issue that most British Columbians hold strong views on, both in favour of developing GE crops and livestock in B.C. and in opposition to that particular device as well.

It is a federally regulated industry, as you know. At this point in time there are four crops that the federal government has approved. One is canola, one is corn, one is soy, and the other is beets. Those are the four that the federal government has approved.

To your exact questions, it would be no, no and no.

N. Simons: My question relates to the Animal Health Act that was previously on the table. I'm wondering if there are plans in government to retable that legislation and if it'll have changes, as some have been suggested by the opposition. Will that be retabled in the fall?

Hon. P. Pimm: That Animal Health Act that was brought in…. Certainly, government hasn't set its legislative agenda yet, so whether or not it's going to get into the priority picture is still up in the air. I know there were a couple of concerns that were discussed to some degree. We'll be considering those as we're going forward.

Quite frankly, I haven't been briefed on my legislative package yet, so I'm looking forward to that. I believe it's coming next week, in fact. I'll have a better idea after that.

N. Simons: We can come back to this next week, if you want. No? That's all right.

Thank you for that answer on the Animal Health Act.

With respect to other issues, the agricultural water reserve is something that has been contemplated or dis-
[ Page 678 ]
cussed and could, potentially, be part of a larger water modernization act. I'm wondering what the minister's stance is on that and whether we'll be able to, likely, see anything in the near future.

[1625]

Hon. P. Pimm: The idea of the agricultural water reserve — that's something that has been discussed to some degree. It's part of the discussion in the Water Act modernization. Where that's at right now, I'm not 100 percent sure. Obviously, you need to have water if you're going to have an agriculture industry, so it's something that's very important to us. We'll have to follow that very closely as that legislation works its way through.

N. Simons: I guess we're going to be wrapping up fairly soon. I have a question. I've heard the minister speak a bit about climate change in the House. I'm wondering, overall, what his perspective is on climate change as it impacts the agriculture industries, the agrifood industry. Would the minister perhaps outline his perspective on what changes or what plans are being made or what scientific reviews are being conducted by the ministry to address some of the impacts of climate change?

Hon. P. Pimm: There's an awful lot of work around climate change. I am going to read this whole thing into the record for you.

"Agriculture is a key driver for families, communities and the B.C. economy. B.C. agriculture is highly vulnerable to climate change and extreme weather. Successful adaption to climate change will be necessary for the agriculture industry to remain competitive and to grow.

"Climate change has serious implications for B.C. farmers. The government is committed to supporting adaptation by farmers. The ministry is working closely with the agriculture industry to support the adaptation of farm producers to climate change. The ministry has provided funding for regional agricultural adaptation strategies that have been completed for the Cowichan, Delta and Peace regions. Strategies will be developed for other regions in the next five years.

"The ministry has also funded a series of reports on selected farming practices that have the potential to reduce producer risk and increase producer resilience in a changing climate. Those key practices are water storage, conservation tillage, shelter belts, nutrient management, drainage and management-intensive grazing.

"In partnership with industry, the ministry will build on this work over the next five years with the new programming under the federal-provincial Growing Forward initiative."

[1630]

N. Simons: Does the minister agree that climate change is human caused?

[D. Plecas in the chair.]

The Chair: Minister.

Hon. P. Pimm: Thank you very much, and welcome to the discussion this afternoon.

The Chair: Good afternoon.

Hon. P. Pimm: I think there are many varying opinions on climate change, and we all have our opinions. I'm sure you have your opinion, I might have my opinion, and I think we'll just leave it at that.

N. Simons: Let the record show that there seems to be some hesitation on the part of the Minister of Agriculture in British Columbia as to an element of the causes of climate change. I asked if human causes could be part of the reasons for climate change, and the minister didn't answer. However, on that note, whatever note that is…. It's a discordant note. I'm somewhat troubled by that answer, but it does confirm some of the things I thought.

I would like to thank the minister. I'd like to thank his staff and everybody at the Ministry of Agriculture who, I hope, over the next number of months and next four years will be able to work in a really good, cooperative way. I think our goals for the province are similar. That includes making sure that we have a strong and robust industry, supported farmers and products that will be appreciated and consumed near and far.

[M. Bernier in the chair.]

I want to thank you. I know it's not always an easy job, but I appreciate it, and this side of the House appreciates the work of the folks in the Ministry of Agriculture. I'm looking forward to a positive working relationship. I know I get along fine with the minister. We'll disagree on a lot of things, but that won't get in the way of having good discussions about things. I appreciate his mostly straightforward answers.

With that, I'll leave it till the next estimates.

Hon. P. Pimm: Thanks to the opposition and to the critic for the good session that we had on my first estimates. It was very interesting and exciting. I'm looking forward to working with the members from the other side, actually, and growing the industry. I think we do have a great industry in agriculture in the province. I think we can build on it.

Our strategy is to build it to a $14 billion industry over the next few years, and I think we can do that. I think it's going to take some good work. I think we're heading in the right direction, and we'll continue to do that as we move forward.

I'd like to thank all my staff for the time that they've put in here for us, helping us get through the estimates.

Vote 14: ministry operations, $66,702,000 — approved.

Vote 15: Agricultural Land Commission, $2,905,000 — approved.
[ Page 679 ]

The Chair: A short recess.

The committee recessed from 4:34 p.m. to 4:37 p.m.

[D. Plecas in the chair.]

ESTIMATES: MINISTRY OF
JOBS, TOURISM AND SKILLS TRAINING

On Vote 30: ministry operations, $181,457,000.

Hon. S. Bond: If I might, hon. Chair, I want to just very quickly begin by introducing a number of people that are joining us today for the estimates process. I very much appreciate that we have a number of staff with us. We'll introduce them to you as we go through the process.

Most importantly, probably, my partner in the estimates today will be someone who is sharing the Tourism portfolio. That is the Minister of State for Tourism and Small Business, so depending upon the topic, it will be one of the two of us who will answer the questions.

We're really happy to be supported today by our deputy minister, Dave Byng, and George Farkas, who is the assistant deputy minister of management services.

Because we have shortness of time, I don't want to take time for opening comments. I do, however, want to request that as the members opposite move through this process, if they can foreshadow for us the next topic areas, that would be helpful to us, particularly since we are crossing two days with these estimates. That would be helpful so our staff doesn't have to sit and wait all day every day for their opportunity to participate with us.

Also, Dana Hayden, the current acting CEO of Destination B.C., is expected to join us. Unfortunately, she is doing double duty and is in another set of estimates as we speak. I'm hopeful she'll be here very shortly.

With those comments, hon. Chair, we're happy to begin.

L. Popham: It's nice to be in these estimates today. It's my first lead on this critic role. I've left Agriculture. I've led it for four years. Getting to know a new file is very interesting, and I'm glad to be a part of this file.

[1640]

I'm joined by my deputy critic, the MLA for Burnaby-Lougheed. She'll be assisting me today.

I think this is an interesting time to come into this critic area because of the large change and transfer over to Destination B.C. From my perspective, what I've been reading…. And I have some of a background in tourism in my past life, when I was involved in the wine industry and agritourism, so I do have some idea of the history of tourism in British Columbia and what our goals were as one of the stakeholders in tourism.

From what I see, there are two major issues going on right now. Tourism numbers are declining and have been for quite some time. I think tourism peaked in 2002. I'd like to get some confirmation on these numbers that I understand are true: around five million people per year in 2002, and they've been steadily declining down to about 800,000 in 2012.

The reason why I'd like to get confirmation on these numbers is because I think one of the reasons that we wanted the Olympics to come here was to get those numbers up. So it would help if I knew if those numbers were correct.

Hon. S. Bond: I think it will be important that we sort out at some point here what metrics the member opposite is looking at. If I look at the numbers from 2011, if you look at domestic visitor volume, the number was 11.4 million visitations. International visitor volume was 4.3 million. Our estimates show that those numbers for 2012 have actually gone up.

I'm not sure what metric the member would be using to come up with the number 800,000. Obviously, there are different measurements in a variety of different ways. Happy to work through that, but certainly, our international visitor volume alone was 4.3 million visits in 2011.

L. Popham: Sorry, what I meant to say was it has gone down by 800,000, not to 800,000 — so, yes.

The other issue that I see as potentially a problem is that Destination B.C. now operates at arm's length from the government as a Crown. But to me it doesn't seem to be at arm's length really, and I think there's an opportunity to create, I guess, politicization of events. We saw that with the Times of India Awards. Everything may have been fine, but there could be some suspicion that it's not.

When it operates at arm's length, I think it gives some protection. There are questions that don't necessarily get answered when you ask questions of a Crown. I guess I'm wondering: what would have been the motive behind transferring it into a Crown corporation? I think some of the feedback that I've been given is that it was working fine within government.

[1645]

Hon. S. Bond: I think the reason that, certainly, we moved to the Destination B.C. model is because industry asked for it. They actually believed that by having a Crown corporation that is governed by a board that is made up of industry members — and that's exactly who is on the board — they would have, in essence, the leadership of the organization.

There had been concerns expressed by industry. The member would be correct about that. But their request was that a new model be created. We agreed to do that and worked through it. It took a great deal of work, and some of the people who did that work are here today.

It's our view that it will operate as a Crown does. There
[ Page 680 ]
are letters of expectation created by the government for a Crown. They are agreed to mutually. But we should be clear. This will be an industry-led organization.

L. Popham: In the consultation with industry, can the minister break down which stakeholders were supportive of it and which stakeholders may have had doubts about that?

Hon. S. Bond: The tourism association, a representative group — the association for the province — actually formed a task force and came to government with a proposal asking for an arm's-length organization. So our government responded to that. It was the voice of industry, and we believe that we met the intent of the request that they had.

As with any change, there are organizations that are in favour and organizations that may not be quite as happy about it as others. But generally speaking, the voice of industry, we believe, came to government, asked for the change, and we accommodated that.

L. Popham: Thank you for that answer. I guess I'm asking the question because in any large reorganization like this, there are going to be stakeholder groups that feel that they're vulnerable within this type of structure. I'm just wondering if the minister knows which stakeholders would be vulnerable and if there's a different way that they could be addressed as this reorganization takes place.

Hon. S. Bond: Maybe it's the wording of the question…. I certainly don't want to not answer the member's question. In terms of vulnerability, we haven't received letters from organizations saying they feel like they won't be represented or are vulnerable. Certainly not vulnerability — that's not been something that has been expressed to Destination B.C.

There have, of course, been others who have expressed a concern, as the member opposite has, about the arm's-length nature and whether or not it is arm's-length enough. I think that's always a concern for people when you change the model of organization.

[1650]

So we've been clear. Our intent is for this organization to be industry-led, and our hope is that it will be an aggressive and vibrant voice for all of the tourism sector in the province.

L. Popham: Is there a certain profile of stakeholder that would worry that it wasn't arm's-length enough?

Hon. S. Bond: The team has worked very hard on this project. I'm advised that in writing, there is one organization that has expressed concern about the arm's-length nature of that. There hasn't been, certainly, a large number, and certainly not an overwhelming number. I think, generally speaking, it's safe to say that the industry welcomed government's response. They came to us and said, "We need a change," and we said: "All right. Let's make that change."

So we certainly haven't seen a large number of organizations that were concerned — certainly not in writing or in any formal way.

L. Popham: The mandate letters for the Minister of Jobs, Tourism and Skills Training and the Minister of State for Tourism and Small Business don't define how these offices will work together. Could the minister tell me how?

Hon. S. Bond: I couldn't be more delighted to be sharing the responsibilities with my colleague. We're in the process of sorting that out, and I think that's an important thing.

I think generally speaking, the minister of state will be handling the operational side of tourism. The connection between small business and tourism is very strong. The vast majority of tourism providers and operators are small businesses. So I'm very excited about the fact that my colleague will handle the operational side of things.

My responsibilities will include the overarching principles and the visionary process, dealing directly with Destination B.C. But generally speaking, my colleague will be dealing with the operational side. I will also be managing the legislative side. But we're going to work together. In fact, we're just working on a matrix right now that makes it easy for both of us and for tourism organizations to know exactly who to go to on which particular file.

L. Popham: The chart of how things work would be fantastic. I'd like to see that myself. I'm hoping that would lay out how the decision-making process would flow and who is the ultimate authority.

Hon. S. Bond: We're obviously interested in clarity. This is a large portfolio. There is a lot of work to be done. The minister of state will have some very specific responsibilities about things like the upgrades to visitors centres and looking at issues like that. I think we will clearly articulate for ourselves, for our staff and for the industry exactly who will be lead on each aspect of the file.

L. Popham: Will the minister please identify the areas of the ministry budget where planned spending in the 2012-13 to 2014-15 service plan for the '13-14 fiscal year has been reduced in the 2013-14, '15-16 service plan?

Hon. S. Bond: Since this segment is talking about tourism, we'll deal with the Tourism budget. It was reduced by $55,000, from $980,000 to $925,000. It was part of our mandated savings approach, and reductions will
[ Page 681 ]
not impact program delivery.

In fact, travel was reduced, operational contracts were reduced, and office and business support was reduced as well. So $55,000 in reductions, all managed through administrative cost savings.

[1655]

L. Popham: Destination B.C.'s service plan, on page 18, says $1.7 million to board and corporate support. Could the minister explain how the funds are broken down?

Hon. S. Bond: Perhaps the member opposite could just give us the number one more time. We're looking at the grid here, and I want to be sure that I accurately provide the answer for her. So I just want to be sure of the number that she was asking for.

L. Popham: I have $1.7 million.

Hon. S. Bond: When we look at the estimates, of course, these are estimated numbers of $1.7 million — $827,000, roughly. There's a bit more than that. I'm just going to give some general numbers so that the member knows.

If you add together base salaries and employee benefits, that adds up to $1.2 million of the $1.7 million. In addition to that, there are travel costs, operational contracts, systems and then board expenses, which obviously include their expenses — office and business as well. That adds up to $1.7 million.

L. Popham: Level of industry buy-in shows level of confidence and commitment to Destination B.C. How much for specific campaigns has been invested in countries — specifically Taiwan, China and Japan?

Hon. S. Bond: The investment in China is $1.9 million, and Japan is $800,000. We currently do not have a marketing allocation for Taiwan.

L. Popham: So then for China and Japan, how would return on investment be calculated?

Hon. S. Bond: Ultimately, the outcome we're looking for is obviously having more Japanese and Chinese visitors to our province. The opportunities in China are absolutely unbelievable. Obviously, since they've been granted approved-destination status, the pool of people who can now travel to British Columbia is significant.

[1700]

The very good news is that we continue to see very strong growth from China. In fact, it's up by 21.3 percent. We see that the possibility for that to grow is exponential. We're certainly seeing important connecting factors, like direct flights landing in Vancouver. That's one of the measures that the minister of state and I will be measured on in terms of our mandate. We have set a goal of attracting three new international flights to Vancouver. We're seeing Sichuan Airlines, for example. They've added direct flights to our province.

So for the market in China, the potential for growth is extraordinary, and that's why you see a significant investment and marketing campaign in China.

L. Popham: As far as attracting Chinese visitors, what exactly are they coming to see?

Hon. S. Bond: I should point out that we have increased the budget for the outreach to China.

Chinese tourists are typically on their way across the country, so they don't typically just come to British Columbia. They actually take in a series of experiences. They come on escorted tours, so we market to tour operators, for example. The additional funding that we've put into marketing allows us to reach out to more tour companies.

They, like most other people who come to British Columbia, want to see the Rockies. They love a shopping experience. There are a variety of reasons that Chinese tourists, like others, come to British Columbia. Vancouver is known as an incredibly cosmopolitan, culturally rich city, so it really is a very attractive place.

We have strong ties with Asia, and certainly, our government has made that a priority over the last 12 years. Those relationships are now paying off as we see those tour operators choosing to look at, as part of those tours, coming to British Columbia.

L. Popham: The attractions that attract Chinese visitors…. Would that be different than what attracts a Japanese visitor?

Hon. S. Bond: Probably not. I think there is a universal appeal when it comes to British Columbia. Certainly, there is a growing appetite for an experience in nature, but it needs to be safe and comfortable for those tourists. We don't see a significant difference between the desires of Japanese tourists and Chinese.

L. Popham: I guess why I'm asking is that I'm wondering if there's a way that we're measuring what attracts different types of tourists to British Columbia. One of the reasons that I'm interested in this…. When you look at a location or a province like Quebec, who has the green route going — la Route verte…. They have cycling traffic, and they know that cyclists spend more money than certain other types of tourists. So they're setting their tourism streams up to accommodate that and to have the opportunities available for them to spend money in those areas.

[1705]

For me, the relationship between the tourism industry
[ Page 682 ]
and small business, as you pointed out, is a very good one and a very strong one, but it's also a way that we would have indicators on what types of small business we need to support.

Hon. S. Bond: I appreciate the member's question, because it is very important. Candidly, you need to know what's going to sell.

We do have representatives on the ground in China and Japan, who are our eyes and ears. They do in-market research to determine what it is that the consumer actually wants. So we have physical representatives on the ground.

We also do research — again, in-market research — in conjunction with the Canadian Tourism Commission, where they go out and survey people. They say: "What are you interested in? What do you like?" We then, through our organization…. They actually determine what those packages look like to meet the needs.

I think it's a good question. We analyze, we research, and then we ask ourselves what's going to sell.

L. Popham: I guess my next question, then, would be: in each of these different countries, are we setting up tourism offices? If we are, how many employees do we have in different countries?

Hon. S. Bond: We have a variety of ways that we work on the ground. In Japan we have a stand-alone office, and it actually has three employees there. In the United Kingdom we have two employees, and we are co-located with the trade office there. The other locations where we have representatives or staff under contract are in Germany, South Korea, Australia and China.

J. Shin: I would like to extend my congratulations to the ministers. As a rookie in the House, I understand that some of my questions may be a little bit on the naïve side. I would appreciate your patience.

While we are on that particular note, I was hoping to get an idea of how much funding is allocated from the ministry to support these overseas operations the minister has mentioned and what the trend was for the past years — if it's been increased or decreased. That'd be great.

[1710]

Hon. S. Bond: I appreciate and welcome the member to her first session of estimates. We'll chat later about how efficient we think this process really is.

I just do want to clarify for the record that the investments that are made are made by Destination B.C. and not by the ministry, because it is a Crown corporation. But I can tell you that the budget is actually stable, with the exception of two increases. If you look at program costs and the total package, India has been increased by $100,000 when you look at the marketing program there, and I did mention the $800,000 to China that is additional. So that's actually an increase in the budget.

If I break that down, looking at things like rent, in-market agency costs plus the program, the total for Europe would be…. The budget for '13-14 is just over $2 million, and the budget for the Asia-Pacific is $4.6 million. Again, that does include an increase to India and to China.

J. Shin: My next question would be if the minister would please shed some light as to the rationale, the science or the evidence behind which countries the ministry or Destination B.C. will concentrate more on. For example, there's a lot of emphasis on China and India, but from what I understand, Korea is one of the fastest-growing economies in the world. So I would like some rationale behind how these decisions are made.

[1715]

Hon. S. Bond: When the tourism strategy was created, in fact, I'm told that the work was very extensive. To the point of the member opposite, 50 markets were actually examined in a very in-depth way. A number of things were considered, and the significant criterion was: where is the largest potential for growth in the tourism sector?

Some of the things that would have been considered would have been the number of visitors, the potential number of visitors that could come to the province; the highest spend — we want to encourage people to come who are going to spend their hard-earned dollars here in British Columbia; and also looking at jurisdictions where if barriers do exist, there was potential for the removal of those barriers. A list of things was considered; 50 markets were considered. That's how ultimately, after that analysis, the tourism strategy was determined.

I should point out to the member opposite that we do actually have a representative that works in South Korea.

J. Shin: My next question. I understand that there have been significant marketing research efforts done overseas in other countries. But locally here, given that we have some of the industries and businesses that depend on tourism and the people that we attract to B.C., such as the fishing and guiding businesses — those services, including skiing resorts, some of the things that B.C. is known for — I'm curious to find out what kind of work the ministry has done to support those advertising efforts.

Hon. S. Bond: Probably the best way to answer the question is that the research is done and the decisions are made in a very similar way. When we look at either Asia or Europe — and a certain number of destinations are considered — the same thing happens here in British Columbia and when we look at North America. The primary focus in North America has been on the two longer-
[ Page 683 ]
haul destinations — Ontario being one and California being another.

Having said that, we actually want to be sure that we're supporting small tourism operators and encouraging British Columbians to travel. So we work very hard — through Destination B.C., not the ministry.

Destination B.C. actually provides a great deal of support to tourism operators. One of the things they have is a very robust social media strategy, and hellobc.com is one of the most popular sites, where people can actually go and look at all of the opportunities that are available within our province. Destination B.C. also supports tourism operators with product development.

[1720]

There's a robust process for supporting those tourism operators within our province, but our primary focus in North America, as I said, has been longer-haul — Ontario and California.

L. Popham: The government letter of expectation for Destination B.C. says remuneration of board executive must be shown on an easily accessible website. I'm just wondering if this has been done yet.

Hon. S. Bond: The member opposite is correct. Board remuneration does need to be posted. Last year there was no remuneration. The board made no claim, so in fact there was nothing. The board did not claim any costs. This year the numbers become public in September through the reporting-out process. When that happens, the information will be published on the Destination B.C. website.

L. Popham: Thank you for that answer. I understand that — we're waiting for the numbers to be released in September — there would have been expenses incurred as far as hiring, salaries. Is that information available? Is the website set up to report out that specific information when September comes?

Hon. S. Bond: Destination B.C., as a Crown corporation, follows the same practices as other Crowns, so staffing salaries that are in excess of $125,000 are posted and also published in the broader government report. The requirement to publish board remuneration will also be in effect. As I said, that will be in September, because we had no board costs last year. Destination B.C. will be responsible for posting those on their website.

L. Popham: I noted that Tourism B.C. posted all of their board and executive salaries on their website. Will Destination B.C. be also doing the same thing?

Hon. S. Bond: I'm pleased to say that that was a unanimous yes from the staff behind me.

L. Popham: From what I understand, Destination B.C. will be meeting quarterly to review all of the financials. Is that going to be reported out quarterly as well?

[1725]

Hon. S. Bond: Destination B.C.'s board actually meets once a month. But as with other Crown organizations, they're required to report their quarterly results. That's exactly what they do. It is available on the website.

L. Popham: They meet once a month, but the information that I have says they will meet on a quarterly basis. How did that change happen?

Hon. S. Bond: The requirement is related to actually posting your quarterly results, and that's not negotiable. Having said that, this organization is in startup mode. In fact, the board has taken it upon itself to meet more frequently. There's a lot of work to be done — a very dedicated group. So the implication for posting is around the quarterly financials.

N. Simons: Thank you to the minister for the opportunity. I represent a riding that is entirely ferry-dependent, ferry-reliant. Tourism operators have expressed concern about the increasing ferry fares that have, in many cases, prevented a lot of people from being able to travel there.

I'm just wondering if the minister has any inclination to address some of these issues with the ferry corporation or with the Ministry of Transportation in order to perhaps mitigate some of those impacts on the tourism industry on the Sunshine Coast.

Hon. S. Bond: I appreciate the member opposite's concerns. I know how passionate he is about where he lives and represents, and I think that's important. We work very closely, actually, with B.C. Ferries to look at the kinds of routes that make it possible for tourists to take advantage of that mode of transportation. We also provide feedback to B.C. Ferries about the impacts of things like cost. We've had a very constructive working relationship.

So it's certainly not part of our primary mandate to deal with the issue of ferry fares, but we try to find ways to promote the use of ferries, without engaging in the actual details of ferry fare issues. The Minister of Transportation — having been there and done that, I remember how much of my time that took up.

[1730]

But I think it is an important reminder to us that there are a lot of factors that impact our ability to allow British Columbians to travel as well. So I appreciate the reminder and certainly am advised that we work very closely with them to try to minimize those costs and maximize the benefits.
[ Page 684 ]

N. Simons: Thank you. I appreciate that response.

There are some concerns raised by some tourism operators — and, in fact, travel agencies — about B.C. Ferries Vacations operating as a travel agency, perhaps in competition. Many people are wondering whether it's a subsidized competition to other travel agencies and other tour operators. I'm wondering if the minister has any comment on how that can be reconciled, I suppose, in terms of tourism operations.

Hon. S. Bond: Again, while I might wish to engage and discuss, the B.C. Ferries travel part of this is really not part of my mandate or our portfolio. I think it is important that we work constructively, and Destination B.C. does, with B.C. Ferries to maximize the benefits. If that line of questioning is to be pursued, I think that probably the most effective place is the Minister of Transportation.

L. Popham: Has there been a CEO hired for Destination B.C. yet?

Hon. S. Bond: I love it when there's a consensus behind me. No.

L. Popham: As far as I understand, the search has been underway for four months now, and an executive search company is being used. I'd like to know how much that is costing. And how long does the minister believe it would take to find someone who's suitable?

Hon. S. Bond: There is a search firm in place. The firm is actually Pinton Forrest and Madden. The contract has only been in place for two months, so it hasn't been a four-month contract. It's two months. It is a fixed-price contract. We don't have the exact numbers. We're going to work to get those for you. Thank goodness for technology. We're working on that as we speak.

The board of Destination B.C. is indicating — again, it's not government — they would like to have a CEO in place probably by the mid-fall. It's a very important position, as you can imagine. I want to make sure it's the appropriate person, and I'm advised the board would like to have that done, hopefully, sometime in October.

L. Popham: Not to be disrespectful to the search company, but why would it not have been done in-house by government?

[1735]

Hon. S. Bond: Obviously, a critical point here is the fact that the board made the choice, and the board had options. I'm told, I'm advised, that the rationale the board used to choose a private sector search firm was that this is a highly specialized position. They wanted to find an expert in marketing. The view was that a private sector search firm would have a much broader base of network and be able to reach out and find that exceptional individual that they wanted to lead Destination B.C.

L. Popham: Can the minister tell me what the salary will be for the CEO?

Hon. S. Bond: While the final salary has not been determined, it will be determined in the same way as any other Crown corporation. Private sector guidelines will be used for the salary for the CEO.

L. Popham: Yes, I understand that. But if there's a search on right now, that means to me that there would be a job description out there, and a salary would be a big part of that. Has Destination B.C. not already come to a decision on how much the CEO would be paid?

Hon. S. Bond: First of all, I want to correct the record. I guess you know I'm a fan of the private sector. I said "private sector guidelines." It's actually public sector guidelines in terms of wages.

What I think is important to recognize is that very often, large search companies actually cast the net very broadly with a general job description. No salary details have been included. The decision has not yet been made about where the CEO-level salary will land. But in fact, it's a very broad search at this point. That's why you're going to see the board hoping to make a decision by October. The salary level will be determined, and the search will actually be narrowed. Those details would then be provided to some of those prospective candidates.

L. Popham: Would I be able to get a copy of the job description?

Hon. S. Bond: It's actually on the Pinton Forrest and Madden website. We'd be happy to send the link.

L. Popham: How much did it cost government to transition to Destination B.C.?

[1740]

Hon. S. Bond: I think the first and most important point is that it was all managed within the base budget of Jobs, Tourism and Skills Training. The total cost of the transition was $834,000, but I hasten to point out that $400,000 of that total was actually in-kind staff time from the ministry.

For staff that were involved in that transition process, if you looked at the estimate of the hours they spent, $400,000 of that $834,000 was actually in-kind, across various government agencies, to support the transition.

J. Shin: I see that Destination B.C. has 140 staff. I was hoping to get some idea as to how those 140 staff are allocated for providing help for the local businesses so as
[ Page 685 ]
not to duplicate some of the efforts.

I understand that Destination B.C. largely works to do outreach, outwards, but I'm curious to find out if there is any synchronization between some of the local efforts that are made by the businesses themselves and the ministry or with Destination B.C.

Hon. S. Bond: Obviously, there are two numbers that we look at. One is the number of funded positions that are available. There are obviously a number of vacancies, so what I will provide are the number of actual employees that we have at the moment. That number would be 102. We have 102 employees.

I can give a general breakdown. In terms of corporate and executive positions, there are six. In terms of tourism marketing, there are 44. Probably the area that the member opposite is asking about, which deals with communities, regions, sectors, would be in the partnership marketing group. There are 45 in that part of the organization. In research we have seven. That totals 102 employees of Destination B.C.

J. Shin: Thank you for that.

My next question is: are there any funding programs or resources that are made specifically, by the ministry, toward some of the local applicants — for example, grants that local businesses can apply for, for advertising efforts, marketing efforts? If the minister can please comment.

[1745]

Hon. N. Yamamoto: As the minister said in introductions, the Minister of JTST is responsible for Destination B.C. and legislation. I'm looking more at the small businesses and how we can help the operators, obviously. Currently we actually do not have any grants directed to individual businesses. However, we do have co-op marketing programs to help communities and various associations.

L. Popham: The minister mentioned the number of employees. There is currently, we've read, information that says maybe up to 140 staff would be hired. Would Destination B.C. also be under a hiring freeze, as the rest of the ministry would be?

Hon. S. Bond: Destination B.C. is part of a managed staffing strategy. It would be potentially permissible to have critical positions, but those would need to be by application. It's part of the managed staffing process.

L. Popham: How quickly does Destination B.C. believe that they would go to the maximum number?

Hon. S. Bond: Obviously, one of the critical things that the new CEO will do is take a look at the organization. It is possible, and potentially likely, that all of the positions will not be filled. The CEO will come and take a look at the organization, potentially restructure it and may decide that the existing number of employees will work. They may just be redeployed, or the organization may be redesigned. There's no assumption that the maximum number of employees would necessarily be utilized.

[1750]

L. Popham: The number 140 — how did we get to that number?

Hon. S. Bond: The number came from the number of employees that were actually in the ministry that were then transferred to Destination B.C. We should for clarity, though….

I should have probably corrected this a little bit earlier. We're not 100 percent sure where the member opposite's number of 140 comes from. The number that we have of fully funded FTEs is actually 126. That's the fully funded FTE number. The number of employees currently working is 102, and the question is: would the organization ever staff up to 126? That will be up to the board and the CEO of Destination B.C.

L. Popham: I'll double-check my number, and I'll get back to you on that.

Can the minister tell me if there are two offices that are rented for Destination B.C., how much that rent is and where that would show up?

Hon. S. Bond: In order to save time, I'll provide part of the answer, and we're going to look for the second part.

There are two B.C. offices. The member is correct. One is at 510 Burrard, and the other is at 1803 Douglas. We're just going to attempt to get the lease costs.

J. Shin: While studying the ministry website, I came across an initiative called the federal-provincial-territorial culture/heritage and tourism initiative. It says that the initiative was established in 2003 and that in 2010 the ministers have reaffirmed their support for this particular initiative. I was hoping to get some idea as to what the works were and projects that were accomplished using this initiative. What were some of the performance indicators?

[1755]

Hon. S. Bond: To the best understanding of the team we have — because of the age of the program, 2003 to 2010 — we don't have any specific details. Our view is that it was actually managed through the heritage branch, which has been a part of the Ministry of Forests, Lands and Natural Resource Operations — not something that we have a direct connection to.

L. Popham: With this next question, I'm having a lit-
[ Page 686 ]
tle bit of trouble understanding it myself. So I'm going to need a bit of clarity. It's regarding the convention centre expansion.

My understanding is that Tourism Vancouver was going to contribute $90 million to that expansion. I understand that last year the payments were deferred. I believe they were going to be — and this is where I might be wrong — collecting money from a hotel tax in Vancouver, specific to Vancouver, to help pay for this.

I'm wondering why it was deferred and if it's going to be deferred again this year.

Hon. S. Bond: The member is correct that Tourism Vancouver is a partner, and in fact, there is a repayment schedule. They did contribute $90 million, and there's a repayment schedule in place. Tourism Vancouver faced some challenges with that last year. As government, we are committed to working with Tourism Vancouver to find whatever options we can work together to sort out.

Yes, Tourism Vancouver — there is a contribution agreement, and there is a repayment schedule. We're working very aggressively with Tourism Vancouver to look for options to support them.

L. Popham: Currently what does the repayment schedule look like?

[1800]

Hon. S. Bond: We don't have the repayment schedule in front of us, in terms of what the repayment process looks like. I'm certainly not going to speculate about that, so we'll do some homework and bring that back.

L. Popham: Okay, thank you. I'd appreciate that.

I still don't quite understand how this situation was set up and how far in advance it was set up before the hotel industry might have known that it would be having some financial struggles. I wasn't quite clear. Is it also being deferred for this year?

Hon. S. Bond: Tourism Vancouver entered into the agreement with the province in 2003. There was a discussion about options for the repayment process. To answer the member's question, there has not been a deferral for this year. We continue to be in discussions about Tourism Vancouver, about how we can look at options for the continued repayment.

L. Popham: The agreement was set up in 2003. When was the money actually spent?

Hon. S. Bond: The money was spent during the actual physical construction. The province's $90 million paid for that, and the repayment schedule is based on the fact that the province paid that. The agreement had been made, and now the expectation is that there is a repayment process.

L. Popham: Great. Can the minister tell me what year that was?

Hon. S. Bond: We're going to add that date to our to-do list, because we figure…. We're counting backwards from the completion date, which we believe was 2010, but we should probably get the correct information before I put it on the record.

[1805]

L. Popham: Let's just say 2010, then. So the province has paid the money covering the contribution that Tourism Vancouver would have made in 2010, which is three years ago. Where has this money been sitting within our debt?

Hon. S. Bond: More clarity — a new staff person, more detail.

The actual repayment schedule started in 2008, and Tourism Vancouver was in compliance with the contract. They made their payments. They started from a smaller percentage and are getting incrementally larger. The first year of challenge was last year, and we are working with Tourism Vancouver as we speak to work to ensure that they are in compliance and to find legitimate options to assist them with that repayment.

L. Popham: How much is outstanding at this time?

Hon. S. Bond: That will be much easier to determine once we get the repayment schedule. As soon as we have that, I'll be able to answer the member's question about what is outstanding.

L. Popham: Whatever the amount is that's outstanding, I'll be curious to know. But until we do, that's fine. For the amount that's outstanding, where does that show in our provincial books?

[1810]

Hon. S. Bond: The repayment schedule is managed by the Ministry of Finance. The actual accrual would be on the Ministry of Transportation. Obviously, that's where PavCo resides.

L. Popham: I don't quite understand. Does it show as a debt for the province at this point?

Hon. S. Bond: It would be shown as an account receivable through the Ministry of Transportation.

L. Popham: It's an account receivable through the Ministry of Transportation. It's quite a large sum of money. How does that affect the operations of the
[ Page 687 ]
Ministry of Transportation then?

Hon. S. Bond: It doesn't. It just sits on the books as a receivable.

L. Popham: Okay. So basically, if it doesn't get repaid, what happens to it at that point? It's money that the province has spent that we had, and so it's not a debt?

Hon. S. Bond: It's our intent that the agreement be honoured. There has been a consistent discussion with the board. Tourism Vancouver understands the obligation. We're not going to speculate about it not being repaid.

L. Popham: Oh, I understand that, and I don't mean to be disrespectful to the minister, but at this point it hasn't been repaid. So it should lead us to question: what if fiscal times don't turn around for the hotel industry? How much is the tax that the hotels are collecting right now specifically for repayment of this debt?

[1815]

Hon. S. Bond: Because it's managed through the Ministry of Finance, we do not have the specific details about that. But as we pointed out earlier, it is managed through the Ministry of Finance, and it appears as an accounts receivable with the Ministry of Transportation. It is our expectation that Tourism Vancouver will work with us on repayment options so that we can eventually see the repayment of that $90 million.

L. Popham: Does the ministry or the government normally enter into such agreements as this one?

Hon. S. Bond: I can't speak to whether or not government more broadly has entered into agreements like this, but I can say that in the analysis of the project that was being constructed, there was — and I think people would recognize — a fairly obvious benefit to the city of Vancouver.

It was a consensual agreement. There was a strong view that this had benefit for the city of Vancouver and that they needed to be a partner in this process. That was agreed to. They have made payments until very recently, and our goal is to work with them in a constructive way to ensure that the balance of that $90 million is repaid.

L. Popham: Yes, I understand that. So the revenue that Tourism Vancouver was generating through a hotel tax was supposed to address this debt. Is that correct?

Hon. S. Bond: There is language in the contract that does talk about the utilization of a portion of the hotel tax as part of the way to fund the repayment. The contract is also escalating. As I've said, Tourism Vancouver did meet their commitments until very recently. Our expectation is that we're going to work with them to find a way to ensure that they can meet the obligations of that contract.

L. Popham: It's my understanding that the hotel tax was increased by a certain percentage to cover this loan. Is that correct?

[1820]

Hon. S. Bond: The answer is no. In fact, we continue to look for options and work with Tourism Vancouver.

L. Popham: I guess my next question would be: why would the hotel industry in Vancouver be struggling if our tourism and our visitors that we're attracting numbers are going up? What would be the problem there?

Hon. S. Bond: We do need to note that accommodation statistics, when you look at year-to-date this year, actually show similar results to the same period in 2012. So I don't think I would necessarily…. Perhaps I stand to be corrected, but we're certainly not seeing…. I'm not sure we'd use the word "struggling." The year-to-date provincial occupancy rate was down slightly from 2012, and the year-to-date provincial daily room rate remained stable — again, down slightly compared to 2012.

We do have to remember that in the contract that was signed, there was not only the repayment schedule but there are interest charges on that repayment schedule. And it is a portion of their hotel room tax. But the amount is escalating, and I think that's where the challenge has developed.

We're continuing to work with Tourism Vancouver. We do believe that the convention centre has provided enormous benefit to the city of Vancouver and, certainly, to the province of British Columbia. We're partners, and we're going to find a way to try to work through this.

L. Popham: Yes, and I understand that, although it doesn't make a whole lot of sense to me that the tourism industry for Vancouver is doing well, yet the hotel industry is struggling to pay off the debt. I agree that the convention centre has been very attractive for many events and conventions, and I know there are a lot of people who appreciate it. But the cost of the convention centre, to me, just went up $90 million to the province. That's really what it looks like from my side of the House.

If there is a repayment schedule, I'll appreciate seeing it when it's available. It does bother me a little bit that we don't know exactly the amount that's outstanding. I understand it's at accounts receivable in the Ministry of Transportation, but this really is about Tourism Vancouver, which falls under the purview of this ministry.

Hon. S. Bond: To the member opposite: I do want to correct the record. The cost of the convention centre did
[ Page 688 ]
not go up $90 million, and neither will it. The contract and the published cost of the convention centre includes the $90 million, and the repayment schedule will actually see the government recoup $90 million. So the cost isn't going up. The published cost includes the $90 million contribution agreement.

L. Popham: So the cost to the province…. We included that $90 million. That's included in our portion, and really, the repayment schedule will take that away from the cost to the province?

[1825]

Hon. S. Bond: No. We've been clear about that. The published cost already includes the annotation of $90 million for Tourism Vancouver. So the entire project cost is public, and $90 million of that is attributed to Tourism Vancouver.

L. Popham: Yes, I understand that. I don't know how much is outstanding, but as it stands right now, it actually cost the province $90 million more because the accounts receivable hasn't been taken care of. It doesn't matter if it's sitting at the Ministry of Transportation or wherever it's sitting. Right now the cost to the province is $90 million more.

Hon. S. Bond: As we answered the questions earlier, the question from the member was: when was the money paid? The money was paid during construction, so this is a repayment schedule.

I think the member opposite's assumption is that Tourism Vancouver doesn't intend to pay. In fact, they do intend to pay. They are working constructively with us. There are enormous benefits to the city of Vancouver.

The total published cost includes Tourism Vancouver's contribution of $90 million. The province invested that money during the construction phase, and it is our expectation and Tourism Vancouver's indication that they will pay, and repay the $90 million.

L. Popham: Well, I take issue with the fact that the minister says that I believe Tourism Vancouver doesn't have the intent to pay, because that's hardly my job on this side of the House. My job is to look at the books.

Right now the fully published cost of the convention centre shows that Tourism Vancouver is responsible for $90 million worth of that cost, and yet they didn't pay. So from my side, I'm looking at the budget right now, and my job is to find out how much the province is spending, how much the province is in debt. This to me…. It's a line item that says that Tourism Vancouver is responsible for $90 million but they haven't paid yet.

I fully hope that they are successful and can repay that debt, but that's not what we're talking about right now because we haven't seen that debt repaid. But what we do see is that it's sitting in an accounts receivable line at the Ministry of Transportation. So my question from the start has been: is this a debt to the province right now, and does this make the province's contribution to the convention centre $90 million more?

[1830]

Hon. S. Bond: No, this is not a debt to the province. It's on the books of the Ministry of Transportation as an accounts receivable. Tourism Vancouver has been in compliance with their contract, their repayment schedule. That's how the process works. We have an agreement in place, a signed contract that requires Tourism Vancouver to pay the province of British Columbia $90 million. The published cost of this contract includes a $90 million contribution from Tourism Vancouver.

S. Simpson: Maybe the minister could tell us. I understand from these comments, and I came in a little bit late, but I understand…. There's a repayment plan in place currently. Could the minister give us a little bit of detail? What's the detail of that repayment plan? How much is being paid annually? How's this being paid, over what term?

Hon. S. Bond: We've canvassed this. In fact, the repayment schedule is not with us at this point in time. We don't have it here. We're happy to do that work and bring it back.

The point I did make was the repayment schedule started in 2008. There has been an escalating series of payments, and the repayment schedule does include interest costs. So there is no additional cost to the province of British Columbia. Tourism Vancouver is required to pay interest. The repayment schedule includes that, and in fact, they have been in compliance with their contract.

The point here is that they are a partner in this project. It has brought millions of dollars of benefit to the city of Vancouver, to the province of British Columbia. There was a consensual agreement that there would be a schedule in place for them to repay their contribution to the province, and they will be doing that with interest.

S. Simpson: I think that's great. So the minister, then, will make available that repayment schedule; information about interest rates on that; a list of payments — it commenced in 2008, I believe, was the comment of the minister — to this point; and the projected payment schedule out to full payment of the $90 million?

Hon. S. Bond: As I also stated earlier, the contract and the accounts receivable rest with the Ministry of Finance.
[ Page 689 ]
We've agreed to go back and to get what information is appropriate, in terms of the actual contract details, but the accounts receivable sits with the Ministry of Finance.

S. Simpson: Maybe the minister could just clarify. I heard the minister at first saying: "We have a payment plan in place. Everything is in order. Everybody is making payments on time. We're aware of that, and everybody's in compliance." I accept that. But if the minister is confident of that, then I'm sure it's because the ministry's officials have access to all that information.

Again, it would be helpful if maybe the minister could encourage her officials to get that information that the minister's basing her answers on and make that available. Since the minister's clearly confident about her position here — and I accept that — the minister should then make that information available, including the payment schedules and any of the legal documentation that supports that.

Hon. S. Bond: I have every confidence in the staff that works in this ministry, and I've only been here for three weeks. They're very good at what they do.

My previous answer was clear. We will go and look at the repayment schedule, and we will share whatever information is appropriate.

I need to correct the record. Thank goodness I have a colleague sitting beside me who was paying attention to my answers. After being asked the same question repeatedly, I actually muffed the answer. The repayment schedule sits with the Ministry of Finance and the accounts receivable with the Ministry of Transportation.

I made a commitment that we would go and look for the information that's appropriate to share. We will go and do that homework and do exactly that.

[1835]

S. Simpson: I appreciate that. Just so the minister knows, we had some of this conversation earlier in the PavCo estimates in the Ministry of Transportation. I'm sure that's where the receivable piece lands.

The minister there was very kind in agreeing — because we had a short period of time — that he was prepared to accept some written questions that he would respond to. We'll be happy to get the information on receivables, hopefully, from the appropriate minister there. But anything the minister can provide around the accounts payable, around those schedules, around those matters that the minister has been talking about would be very helpful to provide some clarity to this issue about the state of the $90 million.

L. Popham: We're going to go back to Destination B.C. at this point and talk about the funding formula. As far as I know, the funding formula hasn't been disclosed. I guess I'd like to know how that's going to work, how much it's going to cost business to be a part of this and just looking at the general model.

Hon. S. Bond: In fact, the legislation for Destination B.C. signals clearly that there will be a shift in how Destination B.C. is funded. The funding model will move to become a portion of the PST. That was clearly enabled in legislation. The work has not been completed. That is work that we are continuing to do.

L. Popham: That's good information. I guess that means we have to go back to a legislative session to complete that work. Is that correct?

Hon. S. Bond: A couple of things. First of all, I do want to make it clear that…. I think the member opposite suggested that it would be more costly for industry. This is part of the existing PST, so it's not expected to be more costly for industry.

Secondly, industry actually asked for a change in the model. This responds to it. The legislation is enabling legislation, so another trip to the Legislature is not required. In fact, the change can be made through regulation, and it will be done as part of the budget process.

L. Popham: Well, actually I didn't know if it would cost business more. That was just a question whether it would or not. But I gather that it won't.

So we just have to get through the budget process, I guess. When will that be introduced?

Hon. S. Bond: Well, one of the things I've learned in my 12 years is I'm always very careful when I talk about tax policy. That's not within my purview. My job and our ministry's job was to bring legislation to the House to enable that transfer to a new funding model.

[1840]

So as we work, it will work its way through the budget process. Ultimately, that tax policy will be determined through the budget process with the Minister of Finance.

L. Popham: The current budget for Destination B.C. will last till the next budget is introduced. I'm assuming that that would have to be introduced before Christmas, eh? Could the minister give me more of an indication, maybe a little bit more detail, on the plans?

Hon. S. Bond: Our three-year service plan actually has a budget number in it of $48.89 million. That is, obviously, an important consideration. As the changes to the model are made, those changes would be reflected, potentially, in future years. But the commitment was to look at a portion of the PST that remains consistent with this number at the beginning.

L. Popham: The Destination B.C. service plan financial summary states that there's over $3 million in "other revenue." I'm just not clear what that is. If I could have some details.
[ Page 690 ]

Hon. S. Bond: The breakdown of that revenue — there are a number of items: British Columbia Magazine provides $1.4 million; publications and listings, $1.015 million; revenue generated through visitors centres is $532,000; the WorldHost program, $325,000; sale of merchandise, $227,000; and commissions, $37,000.

L. Popham: The merchandise — can the minister give me some more details on that?

Hon. S. Bond: Those would be logoed items that promote British Columbia as a tourism destination. I am sure they include things like T-shirts, mugs and hats.

L. Popham: Just because I'm curious about this type of thing, would the minister know if these products were made in British Columbia?

[1845]

Hon. S. Bond: We don't have a list. There is apparently a fairly broad variety of products that are available. We don't know the sourcing of the individual ones, but we'll certainly ask the question more generally and try to get that information back to the member. We may not have all of this information for tomorrow, but certainly it's been my practice over the years to make sure that you get that information in a timely way.

L. Popham: Yes, I know that the minister does very good follow-up, so I'll look forward to that. But on that point, it's quite important, I think, when we are marketing our own province to also be marketing goods made in our own province. If it's not the case that those products are made in B.C., I would hope that the minister would take the direction and encourage that, because it's critically important to our small business industry and our tourism industry.

Now, I noted that Tourism B.C. brought in a revenue of $15 million, from what I can tell. Destination B.C. is only going to be bringing in $3 million. Can the minister explain the difference?

Hon. S. Bond: We don't have a comprehensive list that differentiates the revenue sources, but a significant piece of that would have been the B.C. Parks reservation system. That used to be part of the mandate of Tourism B.C., and there would have been significant revenue from that. That was transitioned over to B.C. Parks just before the transition to the ministry and then on to Destination B.C. So that would have accounted for a portion of that difference in revenue.

L. Popham: I think it's the end of the day, and I didn't quite understand. That would mean that $12 million would have been generated by fees for parks. That was moved over to B.C. Parks and then transitioned into Destination B.C. Is that what the minister said?

Hon. S. Bond: I certainly don't want to leave the impression that there was $12 million from the reservation system for B.C. Parks. That would have been a portion of it. Tourism B.C. used to take care of reservations for B.C. Parks. That transitioned out of their mandate and went to B.C. Parks. So that revenue would not have existed for Tourism B.C. or for Destination B.C. We don't have the list of what would have made up the rest of the difference.

Certainly, I can't imagine it was $12 million. It would have been a portion of that, but we don't have the breakdown of the differential between the $3 million of revenue for Destination B.C. and the $15 million of Tourism B.C.

L. Popham: I know that we're going to be continuing on tomorrow, so perhaps this will be my last question for this evening. Does Destination B.C. believe that there are other avenues to generate revenue within their formula of operation?

[1850]

Hon. S. Bond: Certainly, the government has given the ability of revenue generation to Destination B.C. I think that as we see the emergence of a new CEO…. It's a new board — a very hard-working, very dedicated board. As they do their strategic planning, there is the possibility for them to generate additional revenue.

That isn't something that's been identified or articulated at this point, but the possibility certainly does exit. I would imagine that with the kind of entrepreneurial spirit that this board has, that may be a possibility.

Noting the hour, I move that the committee rise, report resolution and completion of the Ministry of Agriculture and report progress on the Ministry of Jobs, Tourism and Skills Training and ask leave to sit again.

Motion approved.

The committee rose at 6:51 p.m.

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