2016 Legislative Session: Fifth Session, 40th Parliament
HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

official report of

Debates of the Legislative Assembly

(hansard)

Thursday, April 7, 2016

Afternoon Sitting

Volume 36, Number 7

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

THURSDAY, APRIL 7, 2016

The House met at 1:32 p.m.

[Madame Speaker in the chair.]

Orders of the Day

Hon. T. Stone: Here in section B, I call continued committee stage of Bill 17. In section A, the estimates of the Ministry of Energy and Mines.

Committee of the Whole House

BILL 17 — LOCAL ELECTIONS CAMPAIGN
FINANCING (ELECTION EXPENSES)
AMENDMENT ACT, 2016

[1335]

Section 3 approved.

S. Robinson: I have a couple of amendments, which I have on the order paper, to add to section 3, or after section 3, that will address some of the concerns that have been raised, certainly that I’ve heard and, I’m sure, that the minister has heard. The first one is section 13.1, to add the power to make contribution limits.

[SECTION 3.1, by adding the underlined text as shown:

3.1 Section 13.1 is added:

The Power to Make Contribution Limits

13.1 (1) The Lieutenant Governor in Council must enact regulations in order to

(a) establish maximum limits on campaign contributions to candidates or elector organizations;

(b) establish a limit or a ban on a contributor class; and

(c) establish fines or penalties, including disqualification, for violation of a bylaw enacted under this section.

(2) Establishment or alteration of regulations under this section are prohibited within a campaign period.]

On the amendment.

S. Robinson: The reason for this is that we certainly heard from concerned citizens and municipalities from all across British Columbia that are worried about the high effect that spending has on local election campaigns and what it has on democracy. We certainly heard from many witnesses who came to the committee and talked about their disappointment that there wasn’t a conversation happening around the amount of money that people can contribute to a local election.

We certainly saw it in Vancouver, with the donation of almost $1 million by one donor to that campaign. People were outraged. They were frustrated and angry that this was an abuse of democracy. They felt that money was power and that people were using money by making contributions to local government candidates and elector organizations.

They certainly were saying that just having some election expense limits, particularly for a 28-day limit, was not going to get big money out of politics. We heard that individuals from throughout B.C. wanted big money out of politics and that, without having a donation limit, that would not in fact happen.

Also, this proposed amendment allows government to ban a contributor class, like corporations or unions, from actually making a donation. Again, it’s one of those examples where you can have some big contributions from these groups. We’ve certainly heard from the public — I’ve certainly heard from the public, and the committee certainly heard from the public — that it’s time to focus on people to contribute to elections rather than big business and special interests like that.

If big business has something to say, they’re more than welcome to be a third party and to do whatever it is that they want to use their money for in terms of influencing a local election. There’s a role for them there, but it certainly wasn’t in contributing finances to a particular candidate or to a particular elector organization.

With that, I move that this proposed amendment be considered.

Hon. P. Fassbender: I do want to thank the member for bringing forward the amendment.

I know everyone in this House knows that the Local Government Elections Task Force considered contribution limits. Other than placing restrictions on anonymous contributions, the task force did not recommend contribution limits or bans. The task force balanced many interests and considerations in making the recommendations or not making any recommendations.

The task force recommended expense limits as a way to reduce the need for large contributions to finance expensive campaigns during a period and really looked at making it a level playing field amongst the various candidates who did file papers and nominations, without limiting the diversity of people and organizations who can participate in the election. The ultimate goal was to have as many people who wanted to be a part of the process be able to do that and be able to contribute, through those limits, in that period.
[ Page 11938 ]

I mentioned the task force did not recommend contribution limits. They felt that the political contributions are a way for all stakeholders — no matter who they are, large or small — that are affected by local government decisions to participate in the democratic process. I believe the changes that are here and the limits that have been established for the period do that.

[1340]

Through the disclosure requirements in the campaign financing legislation, voters in British Columbia now have the ability to find out who is supporting candidates with money, while protecting the legitimate participation in the electoral process. By implementing expense limits through the legislation that is currently on the floor and being debated here in committee, we are fulfilling our commitment to implement the task force recommendations, and therefore, we do not support the amendment.

V. Huntington: I’d just like to speak very, very briefly to the member’s proposed amendment to the Local Elections Campaign Financing Amendment Act. I feel that the House should actively consider supporting this recommendation.

It is time that this House considered limiting contributions to candidates and political parties during campaigns. The only way we can ensure that the voter is first, paramount, in the minds of elected officials is to ensure that all voters can be treated equally and that they feel that their vote is treated as deservedly as anybody else’s vote.

Especially at the local level, you find that the elected council is so close to a contributor, a group of developers for instance, that unless you start limiting what a developer or a corporation can give during a local election campaign, then you never have a voter who doesn’t feel that decisions are being influenced by the amount of money that a company, a development company, can contribute to an officeholder.

I do believe that the government is nearing the time when the public is going to force them to consider changing these rules, and I think that now is as good a time as any.

This is a perfect amendment for this bill. It is one that should be supported and I wholeheartedly support, and I would ask the minister and his colleagues to reconsider their position on this. It’s time that the voter felt they came first in the minds of elected officials.

S. Chandra Herbert: I, too, would like to join with my colleague from Coquitlam-Maillardville and the independent member for Delta South and everybody, I believe, on the official opposition side in supporting this amendment.

As a citizen of Vancouver who has been involved in local elections — I was an elected park commissioner — I know that this amendment is required. To suggest that one person should be able to donate $1 million and that that is somehow equal to somebody donating $10 or $5 or $2 is outrageous. It makes zero sense, and I think the minister knows this.

Unfortunately, in Vancouver that’s the reality. One person is allowed to donate whatever they want. To suggest that that somehow has no bearing on how somebody might treat that person I think is farcical. To think that one person who could donate a million dollars would be treated exactly the same as somebody who gave zero dollars — well, the minister is dreaming in technicolour.

We see this government acting in various ways to appeal to their supporters who give large contributions that I don’t believe, when you look at the evidence, would be dealt with in the same way.

In municipal campaigns, citizens want elections to be about people. They want them to be about themselves, not about who can donate the most money. Not about who has the biggest chequebook. Unfortunately, unless we bring in contribution limits, the cynicism, the lack of good public policy, the lack of putting the people first will continue.

I know in many campaigns, many candidates get donations. They do very well. There are no issues whatsoever. But unless you bring in contribution limits, you’re really suggesting that those who have the most can call the tune. Unfortunately, that’s how people are seeing the Wild West of British Columbia in local elections.

[1345]

This amendment is reasonable, it’s smart, and it’s one the public, I believe wholeheartedly, would support. The people want to know for sure that elections are about them, that their political parties and their political representatives are acting for them — that there’s no question that they’re acting for a special interest from somewhere else. There’s no question that they’re acting for somebody who can donate the most but that they’re acting for the citizens in their community.

With low election turnouts in municipal campaigns — some can be as low as 20, 30 percent in Vancouver sometimes — we know that it’s about getting people out to vote. Well, how do you do that?

In campaigns, you advertise. You pay people to go knocking on doors on occasion. You travel your community. You hold events. And what pays for those things? Money. Volunteers are very important too, but money pays for those things.

If one person can tap on a few insiders and give them assurances — “Nudge, nudge, wink, wink. Give us this amount, and you’ll get what you want” — that perverts what I think should be about democracy and local citizens.

There should never be a question about who a representative is acting for. It should always be the citizen that they would run to represent. When one person can donate whatever they want and others are stuck in a position where their voices should be equal, should be worth the same amount but aren’t because this government has
[ Page 11939 ]
allowed the super-rich to overwhelm the democratic process with their money, that’s not true democracy.

That’s plutocracy. That’s allowing the richest of the rich to set the tune, not the people. I will proudly support this amendment.

Hon. P. Fassbender: I listened to the comments. I’ve made my comments as to why we do not support it. I think there’s a basic principle here that gets lost. We live in a democracy where we have one person, one vote. It is the people who decide who they elect. The suggestion that money will sway people’s opinion when they go into the polling box is a stretch, in my opinion.

Having run in local elections, having had the support from a wide variety of people, I know personally — and I think I speak for most of the people that I’ve ever worked with in elected life at the municipal level or the provincial level — that people who want to support a candidate should have the right in a democracy to do that.

I think that the candidates that I’ve known…. And I know my own attitude is that if someone wants to support a candidate, it should be done because they believe in the values and the vision of that candidate, not for favours afterwards.

I believe the absolute suggestion that if someone donates, there is a “nudge, nudge, wink, wink,” as the member opposite suggested, is an insult to people who run for public office. Everyone takes their job seriously. When we run for elected office at the local level or provincially, we’re doing it for the interests of the people in our communities, in our province and in our country.

I’ve said it clearly. The government does not support this amendment and will not be supporting it.

S. Robinson: I wonder if I could just ask the minister if he could just clarify some comments he just made about money not having an influence in the outcome of elections. If that’s the case, if he truly believes that, then why are we even bothering with this bill?

Hon. P. Fassbender: I said to the member opposite that donations do not have an influence on candidates and the way they will operate. I clearly recognize that visibility in being elected is a key component.

The reason we have set limits during the campaign period…. I also strongly believe that most of the electorate doesn’t really think about the election period until candidates have actually filed their nomination papers, are in a race for a particular election date. That’s why the limits are in that campaign period.

What people do to get their name out there or their visibility prior to actually filing their papers is a totally different thing. It is a democracy and a free country where people can do that, and people can support those that might want to put a vision out there and to communicate that. The limits are clearly…. Until someone files nomination papers, they are not a candidate. They may be an aspiring candidate, but they may change their mind as well. Both are equally true.

[1350]

V. Huntington: I, too, would like to comment on an earlier phrase that the minister used. This is not about a voter going into the polling place influenced by money, one way or another. This is about money influencing the decision-maker after the election. The amount that’s contributed to a candidate, whether pre-election period or during a campaign period, especially if it’s a large amount, is absolutely known to that candidate. And if they become a decision-maker, they are influenced by the knowledge that that amount of money was donated to them.

If you limit the contributions, if you make no voter permitted to contribute more than a same amount that anybody is eligible to contribute, you take away that sense that the public has that a decision-maker is influenced. If you are receiving tens of thousands of dollars from a single company or a single individual, you will always be beholden to that person. Whether you know it or not, whether it’s in your pocket or not, you will always be making decisions with the knowledge that if this decision impacts that individual or company, you will be aware of that, and you will be thinking about that.

That is what this is trying to prevent: the feeling among the public, among the voters, that they are no longer paramount in the decision-making of their government, whether it be local or provincial. We have to bring the sense of democracy and the value of the individual vote back to the people, and until this government sees that, there is going to be increasing dissent in this province.

This issue is not going to go away. It’s only going to get harder and harder for the government to keep defending its position on this. The tide has turned, and if this government was smart, they would get on board the surfboard. They would lead the charge to changing the system and creating something that the people can start to believe in again.

Amendment negatived on division.

S. Robinson: I have another proposed amendment to the bill to move in the Committee of the Whole.

[SECTION 3.1, by adding the underlined text as shown:

3.1 Section 13.2 is added:

Prohibition on Corporate and Union Contributions

13.2 (1) Contributions to candidates or elector organizations from any class of contributors other than individuals is prohibited.]

On the amendment.

S. Robinson: This amendment is a prohibition on corporate and union contributions. It notes, specifically, that contributions to candidates or elector organizations
[ Page 11940 ]
from any class of contributors other than individuals is prohibited.

We’ve certainly been hearing lots about concerns about big money. We’ve certainly just talked about it here in this House. We also notice that a lot of money comes from corporations and unions. These are not voters. These are organizations that have a particular interest in an outcome of an election.

We certainly see that the federal government has eliminated this. They recognized that it’s not good for democracy to have those that can’t vote actually contribute to an election. There is an opportunity for unions and corporations, if they have a particular interest in a particular issue as third parties, they can register, and they could influence as much as they want within the limit, because now, should this bill pass, there will be an expense limit that they can pay.

There is a role for them to play, and that’s recognized, but when it comes to the actual candidate or the actual elector organization, we believe, and I know British Columbians believe, that there’s no place for a corporation or for a union to actually contribute in that way — that it’s individuals. Individuals vote, and individuals have a say, and part of the say is how much money the actual candidate can spend.

We believe — and I’m bringing forward this amendment that says it — that only individuals can contribute to candidates and to elector organizations because it’s their voices that matter the most.

[1355]

Hon. P. Fassbender: I think this is another way to try the same thing, and the same comments apply. I’ve heard the comments in this particular case — again, it’s targeting two specific groups — but ultimately, as I’ve said, it isn’t an organization that votes; it is individuals in our communities. Our democracy is based on the fact that individuals go into a ballot box with a secret ballot and make their decision.

I am just amazed, in a way, at some of the comments that were made by the previous speaker — that people who get elected will then be influenced afterwards. I think that is disrespectful to every person that I have worked with in my career in public life. I think it is very unfortunate that an elected official infers that if she had big donations, she would be subject to that. I suspect that her answer to that would be: “No, I wouldn’t.” I think that is the answer for every person that I have known over the years that I’ve been involved. Again, we do not support the amendment.

S. Chandra Herbert: I strongly support the amendment from my colleague in Coquitlam-Maillardville. I would say to the minister that if he thinks it is a problem that people are asking these questions, raising these suspicions, raising these concerns, then ban the donations. What’s the problem? Why should elections not be paid for and voted on by people? Is a corporation a person? Not in my view.

Interjection.

S. Chandra Herbert: Oh, I see the member opposite says: “Well, legally, they are.” So does he believe that corporations should have votes in all elections? Is that what the B.C. Liberals are arguing here — that not only do they think they should have money that runs elections, but they should have votes too? You know, that’s really what this seems to be suggesting here — that they want corporate power. It works for them.

But my citizens, the people that I represent, say to me that they don’t want to ever have to question if their city councillor, if their school board trustee or if their park commissioner would ever make a decision based on any other reason than what’s best for the city. That’s what they want to understand. They don’t want to feel that a development got approved because that same developer gave $200,000 to a political party. They don’t want to even have to ask that question.

Now, the minister can say all he wants about how people should be ashamed for asking such questions and that they should not ever do such things. But that’s what the people, our constituents, are saying to us. They have sent us here to represent them. My constituents in Vancouver, all over Vancouver, have been pleading for actions like this, calling for actions like this. The city council, of all political parties, has unanimously called for this. That’s B.C. Liberal members, Conservatives, Green Party members and New Democrat members. That’s people who have no political affiliation. That’s people who run away from politics. They all want this.

If the minister doesn’t want it for himself, I can understand. They voted against that yesterday because he wants to be able to continue to take corporate and big money donations. But my constituents want action. Citizens across B.C. want action for local elections, which is what this bill is about. The minister structured the review in such a way that the committee could not make a recommendation to ban corporate and union donations because he knew that that’s what the public were calling for. So they couldn’t actually say: “The public called for this. We think this is the right thing. So, government, act.” No.

That’s why we’re bringing this forward — because the government has done whatever they can to limit the ability of the public to have whole ownership of local elections, instead leaving it to plutocracy, to those with the most money, to corporations and entities which are not people.

Elections should be about people. Democracy — look at the root of the word. It is about people — not corporate plutocracy, not big-money individual donations, not union donations. It should be about people.

I’m proud to support this amendment. It’s responsible. It’s reasonable. It’s the thing that my constituents want.
[ Page 11941 ]
They want their governments to represent them and to get elected by them and have donations paid towards campaigns by them and no one else.

[1400-1405]

The Chair: It’s an amendment proposed by the member for Coquitlam-Maillardville. The amendment reads: “Prohibition on Corporate and Union Contributions. Contributions to candidates or elector organizations from any class of contributors other than individuals is prohibited.”

Amendment negatived on the following division:

[1410]

On section 4.

S. Robinson: If the minister could share with us what this amendment attempts to do.

Hon. P. Fassbender: The significance of this is that this section is really one of reworking existing sections 14 and 15. The new 14 consolidates into one section the definitions and the rules about what election expenses are subject to the expense limits and what expenses are not subject to the expense limits but still must be disclosed. New section 15 then classifies election expenses according to the time period. What it does: enhances the accessibility and compliance by making the rules much easier to understand.

S. Robinson: Does this list of expenses mirror the provincial campaign expenses?

Hon. P. Fassbender: This mirrors what is currently in LECFA and just makes sure that it is in alignment.

S. Robinson: Perhaps my question wasn’t very clear. I appreciate that the minister has said that one of the reasons why they’re writing the legislation this way is so that it mirrors the provincial expense limits. I’m just checking to see if there’s some consistency here in this list with the provincial list, as well, as for provincial campaigns.

Hon. P. Fassbender: This reflects what has been in the local government election act. This is what this act is all about and these changes. I don’t have the direct answer if it directly mirrors what’s in the provincial. What was intended was the expense limit period, which we’ve already addressed, but this does mirror what is currently in the Local Government Act.

S. Robinson: If the whole intention, the whole purpose, of not going with the agreed-upon, unanimous decision of the bipartisan committee that was established by this chamber, a bipartisan committee, I want to remind the minister, that was heavily weighted with members from his caucus…. There was a strong rationale for why that committee recommended an election period that started in tracking campaign expenses and limiting the expenses from January of that year. There was a very strong discussion and debate and a very thorough rationale for why that was part of our recommendations.

The rationale that we get back from the minister about why they’ve changed to 28 days was because we want to have some consistency. I guess that’s a principle that you could use. I mean, that’s fine. It’s not what I would choose. I would choose something a little bit different, but that’s the rationale that the minister provided: “We wanted be consistent with the provincial legislation” — with federal legislation, provincial legislation. He said that just here in this House right now.

[1415]

Fine. If that’s the rationale, if that’s the guiding principle, we’re moving in that direction. Yet there’s a list of expenses here — it’s in LECFA; I remember, certainly, debating that bill — that lists things like personal election expenses and legal and accounting services and services provided by a financial agent that need to be tracked but are not considered an expense.

That’s great, but I want to know if it’s consistent with the provincial legislation for provincial campaigns. If that was the guiding principle, then I think that ought to be looked at as well.
[ Page 11942 ]

Hon. P. Fassbender: I think I said it earlier, and I’ll say it again. Legislative committees are asked to look at issues, to debate those, to hear from people and then make recommendations. They’re not always accepted. It isn’t because we don’t value the work or the input. One of the reasons that we took the somewhat unusual step of putting an exposure bill there before was to get more feedback.

What I said…. I want to be very clear. The issue we were talking about before that I answered was on the campaign period and the limits within that period. When it comes to this section, as we looked at the existing act and we looked at practices that have been taking place for quite a while, we wanted to make sure that we didn’t make changes that didn’t make sense. These changes in this particular section reflect cleaning up that portion of it and ensuring that we make it consistent.

S. Robinson: The minister just mentioned making sure that it was consistent. Consistent with what was previously there, or consistent with provincial legislation?

Hon. P. Fassbender: Consistent with what was in the Local Government Act and what has been there for a long time — and practices that, quite honestly, we didn’t feel warranted making any other changes.

S. Robinson: Again, I’m just going to keep coming back to this principle of consistency. The whole rationale for changing the time frame to 28 days…. Why 28 days? Why not 46 days? Why not 37 days? It’s 28 days to be consistent with the provincial guidelines. Okay. Yet we don’t know that this piece is consistent with provincial guidelines.

Can the minister explain where these came from, perhaps historically, so that we have a context for understanding this?

Hon. P. Fassbender: When looking at the campaign period, I have said a number of times that once a candidate files nomination papers and nominations close and they are declared as a candidate, that’s the period. We felt that that being consistent with generally what is done in provincial and federal campaign periods was appropriate. That is why that change was made.

Other changes are either being made or not being proposed because the practice in the past and practice that had been employed for a long time didn’t need to be changed and shouldn’t be changed for just the sake of making another change.

This was all thought through, and clearly, the changes that are before us are to respect previous practice that we felt does not need to be changed. What we did change is that which we felt was in the best interest of the expense limits over the campaign period.

[1420]

S. Robinson: If I’m to understand the minister, then, the value or the principle of consistency is only important in some things. You don’t have to be consistent in other parts. I would have imagined that if you’re going to have a list of expenses that wouldn’t be considered, perhaps, an election expense or that would be somehow seen as a personal expense…. You would have lists, just to be consistent so that everybody….

I think, for example, of financial agents. People who are political are political. I’m sure the minister appreciates that. They might work for a local election person — you know, a local government person — and then they might work on a provincial campaign. There are these different sets of rules, and I would imagine that if you wanted to make it simple for people, you would make sure that there were consistent exemptions so that they wouldn’t have to relearn all of the rules.

That’s the only element of appreciation, I suppose, that I have for the minister’s explanation for 28 days. You want to be consistent, yet here we have some really difficult rules that are really niggly, and there wasn’t a check made to ensure that they were consistent with the provincial legislation that exists. I would hope that the minister would consider that at least worthwhile of consideration.

Hon. P. Fassbender: Again, in the advice that I’ve been given, under LECFA and the Local Government Act, the changes that we’ve made are consistent with both the Local Government Act and also the Election Act. We are not changing things that people have been used to working under. The way this is structured is to ensure that there is that understanding. Like anything, when we make changes, we are committed to ensuring that we provide good information and good education to those people who will have to operate under the new criteria.

S. Robinson: Well, I guess I’m not going to get any satisfaction around how this principle plays out, when it plays out and where the principle of consistency isn’t consistent. I guess that’s going to be mine to sort of just be frustrated with at this point.

In subsection (7), it says: “The following expenses, if they are reasonable, are personal election expenses….” Can the minister define “reasonable”?

Hon. P. Fassbender: The challenge in all of this is that, ultimately in this instance, Elections B.C. has to make the determination of what is reasonable. That is part of their enforcement responsibilities. What we’ve tried to do is to create that environment where Elections B.C. will look at them, and if they deem them to be reasonable, that’s their decision.

S. Robinson: I have just one final set of questions on this section, and it’s the use of language. In this whole section, it talks about election expenses, and we have a
[ Page 11943 ]
campaign period. I’m just wondering if there was a particular reason why they were called election expenses and not campaign expenses, just to be consistent in terms of wrapping your head around how we use election expenses and campaign periods and campaign expenses. We don’t talk about campaign expenses. If they’ve given any thought to just being consistent in language.

[1425]

Hon. P. Fassbender: The difference is that election expenses from January to the close of nominations have to be reported, but the campaign expenses are the ones that are subject to the limitations.

S. Robinson: I’m just wanting to be really clear. Is that reflected here in the legislation in terms of how it’s described?

Hon. P. Fassbender: Yes, it is.

Section 4 approved.

On section 5.

S. Robinson: Can the minister explain what this amendment is intended to do?

Hon. P. Fassbender: In section 14, the actual issues are defined. What this does is it ensures what election expenses are and what campaign period expenses are.

Section 5 approved.

On section 6.

S. Robinson: If the minister could explain what section 6 sets out to accomplish.

Hon. P. Fassbender: This section makes the rules about the valuation of campaign contributions and election expenses subject to regulations. Then a little bit further down, it also….

The use of this clause ensures that there are the necessary regulations that will determine the valuation so that they can be tailored to the circumstances by allowing for exemptions of provisions, limiting application of provisions, modifying the rules as identified through practice and specifying alternative rules.

S. Robinson: Can the minister provide an example so that we can have a real sort of flavour of what this section would do?

Hon. P. Fassbender: This is put here for unforeseen situations that may come up. It provides the framework so those can be dealt with. It’s hard to give an example, because they’re unforeseen. But it is here to ensure that there is a mechanism in the legislation to deal with those things as they arise or questions are asked about it.

S. Robinson: I appreciate the difficulty in trying to…. I’m going to guess…. This is about closing a potential loophole. I’m trying to imagine what might be…. To create a rule when something could happen, but we have no idea or it’s never happened….

[1430]

I’m just trying to wrap my head around why we would do this — to put in a rule when we haven’t had an experience of something that we didn’t know what to do with. Then you just write words on a page to sort of say: “Well, we’ll deal with that, in case this should happen.” I’m just trying to get a sense of how that is useful or helpful.

[R. Lee in the chair.]

Hon. P. Fassbender: One of the things that I think all of us have learned over time is that legislation can’t always anticipate every circumstance. Rather than trying to make the act totally prescriptive for things…. Let me use an example. If there’s a new piece of technology that comes forward that we don’t even know about today, but it has a direct relationship to a campaign expense, then we wanted to build in the flexibility for Elections B.C. to be able to look at that, rather than having to go back and add another item to the act.

This allows for that flexibility for those unforeseen things. I used an example that may or may not be true in the future, but only to give the member a context of wanting to build in the flexibility for the regulatory body to be able to interpret that under these provisions.

S. Robinson: I appreciate the example. It’s a fair one. Was this requested by Elections B.C.? Was that to identify that we needed to have this catch-all?

Hon. P. Fassbender: The practice up to now has shown that this is just good legislative drafting policy — to provide that flexibility. Elections B.C. didn’t specifically ask for it, other than, in other circumstances, they’ve clearly indicated that the more ability they have to use reasonable judgment on those things and to have the flexibility and not be hamstrung by the lack of something in an act — is the whole intent.

Sections 6 to 8 inclusive approved.

On section 9.

S. Robinson: Can the minister explain how this section changes the current practice?

[1435]

Hon. P. Fassbender: This provision ensures that third-party advertisers…. As an example, if there are three third-party advertisers, they have to share that valuation amongst themselves, rather than it being weighted one to the other. There has to be a sense of fairness across the board, and they all have to share in that application.

S. Robinson: I appreciate the explanation. I’m just, again, trying to make sure I understand it. It says: “…must be attributed to the participating individuals and organizations in accordance with the regulations.” It doesn’t say “evenly attributed.” Can there be one person who contributes 50 percent and two more that contribute 25 percent each?

Hon. P. Fassbender: It has to be done on a reasonable basis. That goes back to the other provision where Elections B.C. will look at that to ensure that it is reasonable amongst the parties, depending on what that contribution is.

It, again, is one of those provisions that ensures there is the flexibility to look at it on an individual case and to make sure that’s reasonable.

S. Robinson: Can the minister explain what the rationale was for bringing this particular piece forward into this legislation?

Hon. P. Fassbender: If I could use an example to make it very clear. If there were three third-party advertisers who shared in the placement of an ad, this will make sure that it is attributed to each of them on a fair and reasonable basis.

That is why this has been done. It is to ensure that that is shared amongst the three individual advertisers and becomes part of their total limit. If there is a single ad with three third-party advertisers, they will share the value of that ad against their limits. It is not contingent on how much they put into it; it is the total value of that particular ad.

S. Robinson: I do understand what it’s asking to do. I guess my question is, really, why is this important? Has this been a problem? Have we seen an imbalance? Has there been a misuse of influence — undue influence in some way, I guess — around not appropriately having it balanced?

I’m just trying to figure out: is there a problem here that we’re trying to fix? I’m just trying to understand if we’re trying to fix a problem that doesn’t exist.

Hon. P. Fassbender: It is a new provision, and it really is… Its intent… The special committee said that openness and transparency is one of the key principles. This actually reinforces that to ensure that that transparency is there and that the value is attributed to the three parties and that there is some consistency to this, which there perhaps wasn’t in the past.

Section 9 approved.

On section 10.

S. Robinson: Can the minister explain how this section here changes current practice?

[1440]

Hon. P. Fassbender: This particular section is the section that establishes the framework for third-party advertising. This is the one that really ensures that the cap and the issue of advertising spending is in the legislation. The regulations on the amounts, of course, will follow.

S. Robinson: The minister explained what it does, but I’m interested in why it’s important to have this piece in this legislation?

Hon. P. Fassbender: The reason for this is we wanted to be sure that third-party-advertiser limits have a cap on them, that they are regulated so that they can’t drown out individual candidates and you don’t see third-party advertisers being able to overwhelm individual candidates. If we have expense limits for candidates, it seems reasonable that you would have expense limits for third-party advertisers during that campaign period.

S. Robinson: In here, it’s very specific about the population size of communities, where 15,000 seems to be the marker. It talks about…. In relation to an election area that has a population of less than 15,000, there’s a prescribed amount, and over 15,000 there’s a different amount. Can the minister explain: why 15,000?

Hon. P. Fassbender: As the member knows, the special committee felt that there had to be some limits and a reasonable amount for communities that are smaller. I know that this was talked about a lot at UBCM over the years leading up to this. They felt that a flat rate was the appropriate amount. The committee’s recommendation, in terms of the amount, was actually lower than what will be in the regulations on the limits. But this is to ensure that that limit is something that is reasonable for communities under 15,000.

You know, the issue could be: why wasn’t it 10,000? Well, a number was picked when we looked across the province at the varying sizes of communities and felt this was fair. It does not mean that that has to be spent in a community of 1,000. The bottom line is that the amount was set to make it flat across the board.

S. Robinson: Can the minister tell me if…? I’m trying to recall, and I can’t. Perhaps, with his staff, he could help
[ Page 11945 ]
me. I don’t have a recollection of the population limits being in the exposure bill. I was wondering what happened between the exposure bill and this bill.

[1445]

Hon. P. Fassbender: The member is right. It wasn’t in the exposure bill. But when the bill was put out and the news releases and the information sent out to UBCM and anyone else — it was, I believe, on the website as well — the limits were put out so that people understood what was being recommended.

S. Robinson: Thank you for that. I’m still trying to understand: why wasn’t it put in the exposure bill? I mean, my understanding was that all the pieces were there and they were just looking for one last look. Is there a particular reason why this was left out of the exposure bill?

Hon. P. Fassbender: Clearly, when the exposure bill went out, we also put out the communication that the actual limits will be set by regulation, so it wasn’t in the legislation. The only thing that was in the legislation, and is reflected here, of course, is where the cap is on communities of under 15,000.

S. Robinson: I do recall reading the exposure bill and that the actual limits would be in the regulation, and there’s still regulation to come. I appreciate that, but that was a proposed piece of legislation, and now we have the actual legislation.

I’m still trying to understand what the change was between, I guess, July, when it came out — I don’t even remember; it’s all a blur now; maybe it was September; I think it was right when we first started our fall session — and now that would prompt putting it into this legislation?

Hon. P. Fassbender: I appreciate the member wondering how this got to where it is today. When we put the exposure bill out there, and with the feedback, there were two elements. One was to increase the limit from the recommendation based on the feedback from UBCM and communities. The other was based on that feedback, as well, to put the actual limit in the legislation here. The other limits will be in regulation, but in this particular case, it was put into the bill after the exposure bill went out.

S. Robinson: I appreciate the response. It’s helpful. Now I understand how it got put in here.

It says here that 15,000 people seems to be sort of the marker for what the regulation that’s forthcoming will use to determine expense limits. But then in section 21, it talks about populations of 10,000 and less, which is what the committee worked with. Now we’re working with two different sorts of population sizes. One is for third party, 15,000. One is for elector organizations and candidates at 10,000.

We don’t really have any consistency here. I just want to understand what the rationale was for having two different population limits — one for third party and one for candidates and elector organizations.

Hon. P. Fassbender: Again, this reflects the feedback, which was received from a number of sources, that in the case of third-party advertising for communities of 15,000 and under, the original recommendation was too low — that it would not allow for a reasonable campaign by them. That is why this change was made.

[1450]

In the case of individual candidates, the special committee’s recommendation of 10,000 was maintained. There is a difference between the individual candidates and third-party candidates, based on the feedback that we received.

Sections 10 and 11 approved.

On section 12.

S. Robinson: Section 12. Can the minister explain what this amendment does for the act?

Hon. P. Fassbender: This particular section allows for the get-out-the-vote tweets that we know are appropriate for people to encourage democracy to work by getting more people to go out and exercise their democratic opportunity.

S. Robinson: I saw this, and I smiled. I think it’s important that we continue to encourage people to get out and vote, particularly the day of the election, when they say: “Oh, right. It’s voting day.” Not the bus stop signs and all of the newspaper ads you’d been ignoring for all these weeks but the day of…. So I’m pleased to see these here.

Can the minister tell me if this is consistent with provincial legislation?

Hon. P. Fassbender: Absolutely.

Section 12 approved.

On section 13.

S. Robinson: Can the minister explain what this amendment attempts to do?

Hon. P. Fassbender: In the case of elector organizations, if they do not file, there is a responsibility to notify the candidate so the candidate can go to the elector organization and make sure that they follow up on their responsibility to do the filing.

S. Robinson: I’m curious about where this came from. Did this come up as a result of the last election and that became an issue that was noted?
[ Page 11946 ]

Hon. P. Fassbender: No. It wasn’t as a result of that. It is simply to ensure that there is good and appropriate practice and fairness so that no candidate or elector organization…. We know that in some elector organizations, they are volunteers, as well, that come together. We want to make sure that they’re treated fairly. By the same token, there is a mechanism to make sure they live up to their responsibilities.

Section 13 approved.

On section 14.

S. Robinson: Can the minister explain what this section is about? What is it supposed to do?

Hon. P. Fassbender: Under current legislation, candidates need to disclose their election period expenses as compared to the campaign. This now requires the disclosure of the campaign period expenses, which we have talked about before — why there are two different definitions there.

S. Robinson: This, if I understand what the minister is saying, requires individual candidates to track all of their expense limits throughout the entire year. But it’s just the campaign expenses that will be under this cap.

Can the minister explain why it’s important to track all the…? What’s the point of tracking all the expenses from January 1 to 28 days before? What difference does it make?

[1455]

Hon. P. Fassbender: The member, I’m sure, is aware that in the interest of transparency and total openness in what contributions and expenses have been made, it’s already in place for the election period — so from the first of the year to the 28 days before. This just defines the actual campaign period.

S. Robinson: I appreciate the importance of transparency. We certainly talked about that at the committee. It was an important principle that we certainly heard from all of those witnesses who came to us and shared that.

The minister mentioned it’s important for transparency to have a record of all the expenses and contributions. My understanding is that the Premier had said real-time sorts of contributions would be brought forward provincially. Is that something that we’re expecting to see come forward for local government elections in the name of consistency?

Hon. P. Fassbender: What I think is important…. The Premier made a comment about something that she feels is an important principle. Of course, it’s not reflected in this legislation at this time. Indeed, as other initiatives take place, we would be looking at that as it relates to local government expenses. I can’t speak to that at this point until we know actually where it’s going to go.

Section 14 approved.

On section 15.

S. Robinson: Section 15. Can the minister explain what the changes are here in this piece of the legislation?

Hon. P. Fassbender: The purpose of this is to ensure…. Let me use an example. If an elector organization spends $5,000, there is no requirement right now to identify what portion of that was spent on any individual candidate. In this instance now, they will — again, in an effort to be very transparent — have to identify how much of the total spending they do is attributed to each of the individual candidates. In some cases, it may be even. It may be attributed evenly. In some cases, there may be more contribution to a candidate, and they need to declare that.

S. Robinson: If I’m to understand this section, based on what the minister has said, the expenses that are spent when there is a slate have to be attributed to individual candidates, but the elector organization can choose how to do that. There’s no other guideline other than it’s up to them to choose how to allocate the expenses.

[1500]

Hon. P. Fassbender: Again, in an effort to ensure that there is clarity as to how the money is being spent…. Perhaps, for the member, I’ll give an example. A full-page ad was purchased for an elector organization in a particular campaign. One-half of that ad was for one of the candidates for a particular position, and the remainder was for five other candidates. The one-half would have to be attributed to the one candidate, and the rest would then be spread evenly amongst the other five.

S. Robinson: I pity the financial agent that steps forward to have to sort that out. Just following that logic, I would imagine if, let’s say, there was a straight flyer that just made mention of everybody on that list, that the cost of that flyer would then be divvied up equally among all parties?

Hon. P. Fassbender: That is exactly the point. It has to be reasonable. Elections B.C. will look at those declarations. Clearly, if they feel it is unreasonable…. If three-quarters of the flyer was, in the case of a civic election, for the mayor and the remainder was the other candidates that were listed on the back, then it wouldn’t be reasonable to spread that out amongst all of the candidates. That’s where judgment has to come in as to what is fair and appropriate.

S. Robinson: Again, by fair and appropriate and transparent…. I’m assuming — and I haven’t looked at the rules, so I’m going to ask the minister and his staff
[ Page 11947 ]
— that when filing with Elections B.C., you don’t file all of your flyers and ads. I’m assuming, then, it’s based on, you know, respecting that people are doing their due diligence and are being honest about their reporting out and are following the rules. Elections B.C., then, would just take a look and see if it looks reasonable, and at that point, if it looks reasonable, it’s acceptable.

Hon. P. Fassbender: I can assure the member that Elections B.C. does not want to get copies of every piece of work that’s done. What will be clear when and if the act moves forward is that with the training through UBCM to local governments and to candidates and the information that will be available, the expectation is that the rules will be clear. “Here are the rules. You need to abide by them.”

If indeed Elections B.C. receives a complaint or a question or they look at a particular group of declarations that come in and one has everything spread evenly, they may want to see that material. It has to be kept by the candidates or elector organizations for a reasonable period of time. They can then look at that and ask the question and then make what it is a reasonable judgment as to whether the declaration is correct.

Sections 15 to 17 inclusive approved.

On section 18.

S. Robinson: Section 18. Can the minister explain what this amendment does?

[1505]

Hon. P. Fassbender: This is, again, similar to a previous provision. If Elections B.C., for whatever reason they determine is required, asks an elector organization to provide a supplementary report, it ensures that the candidate is notified of that so they’re aware that that has been asked for so they can work with the elector organization to make sure it’s provided.

S. Robinson: I’m just trying to figure out how this is similar to current legislation or different. Can the minister explain how this is different from what currently exists in the legislation?

Hon. P. Fassbender: Currently, Elections B.C., in the case of a supplementary report, has to notify the elector organization, the financial agent and responsible officials within that structure. There is no requirement to notify the candidate that’s spelled out. This now ensures that the candidate is notified as well.

S. Robinson: I appreciate the answer. It helps to find out exactly what the change is. Can the minister tell me if this mirrors what is required provincially as well?

Hon. P. Fassbender: This act is intended to deal with local government elections. We have not attempted to absolutely mirror everything in the provincial Election Act. Nor do I want to debate the provincial Election Act as a function of this act.

Those things where we felt there was an appropriate tie that needed to be highlighted when we took the exposure bill out…. We did that. The campaign period was one of those major provisions that we felt it was important to look at. But in this particular case, I don’t have that answer.

S. Robinson: Well, I have to say it’s sort of interesting when the rationale for doing a piece of legislation is: “Well, we want it to be consistent with provincial.” Then, when you ask questions that are really in the details that I would have imagined would have been based on provincial legislation, it’s disappointing that that isn’t followed through.

To say that the whole reason for doing this change is because we want consistency, and then, to not follow through and say, “Well, because we think it is important that we’re consistent” is disappointing. At least it’s a principle that you could hang your hat on and you could defend throughout. But to say, “Well, we want to be consistent here, but it doesn’t matter for the rest of it,” that feels a little bit false, like it has nothing to do with actually being consistent.

If you wanted to be consistent with provincial legislation, then you would pull up the provincial legislation. You would take a look at all of the requirements that exist across the board.

The minister himself said we have lots of volunteers that volunteer at local elections. They volunteer in provincial elections. They’re often the same people. To confuse and make it difficult with different sets of rules isn’t a good use of our volunteer resources.

[1510]

I would have imagined that when you’re writing legislation and you’re saying, “We want some consistency here; it makes it easier for everybody; it makes it easier for Elections B.C.; it makes it easier for our volunteers,” that you would make sure that there’s some consistency.

I’m going to take it that at this point, this doesn’t necessarily mirror provincial legislation that governs our provincial elections. I’m not sure the message that this is about consistency holds a whole lot of water, because it’s actually not in fact the case. There really is no consistency, because it’s not what they’ve based it on. It’s rather disappointing to hear the minister’s response.

Sections 18 to 20 inclusive approved.

On section 21.

S. Robinson: Can the minister tell us what this chunk of legislation is about and what it aims to do?
[ Page 11948 ]

Hon. P. Fassbender: This provides the framework for expense limits for individual candidates.

S. Robinson: Can the minister explain why they use the cutoff on an election area of under 10,000 people?

Hon. P. Fassbender: I mentioned that previously. This was the recommendation of the committee, and we’ve honoured that recommendation when it comes to individual candidates.

S. Robinson: Does the minister expect that the anticipated regulations for expense limits are going to be similar to the ones that were proposed by the committee?

Hon. P. Fassbender: Yes.

S. Robinson: That’s very good to hear. I’m glad that at least one of our recommendations was accepted.

I have another question around that. Will this piece of legislation ensure that changes to expense limits will be limited to the increase in inflation, or does he anticipate that there’ll be some other criteria used?

Hon. P. Fassbender: There are provisions in the legislation that absolutely tie it to inflation. That is what is provided for in the legislation.

S. Robinson: Does the minister think there is any way that the expense limits could increase beyond the rate of inflation?

Hon. P. Fassbender: Indeed, one of the reasons the limits are being put in regulation is that if, through the next election cycle, there’s learning that shows us that we should reconsider any one of those, it gives us the ability to look at that based on the experience.

S. Robinson: I have a proposed amendment to the bill on the order paper. Basically what it does…. It’s rather thick, so I’m not going to read it through.

[SECTION 21, is amended by removing the text that is struck through and adding the underlined text as shown:

21 The following Part is added:

PART 5.1 — EXPENSE LIMITS

Division 1 — Establishment of Expense Limits for Elections

Expense limits — general local election

63.01 (1) Subject to any applicable regulations, in respect of an election for mayor to which this Act applies that is held as part of a general local election, the expense limit for a candidate during the campaign period election period,

(a) for an election area that has a population of less than 10 000, is a prescribed amount, and

(b) for an election area that has a population of 10 000 or more, is an amount determined in accordance with the regulations using an incremental adjustment based on the population of the election area for which the election is being held.

(2) Subject to any applicable regulations, in respect of an election to which this Act applies that is described in subsection (3) and is held as part of a general local election, the expense limit for a candidate during the campaign period election period,

(a) for an election area that has a population of less than 10 000, is a prescribed amount, and

(b) for an election area that has a population of 10 000 or more, is an amount determined in accordance with the regulations using an incremental adjustment based on the population of the election area for which the election is being held.

(3) For the purposes of subsection (2), the elections are as follows:

(a) an election for a councillor;

(b) an election for an electoral area director;

(c) an election for a Vancouver Park Board member;

(d) an election for a local trust area trustee;

(e) an election for a trustee on a board of education;

(f) an election prescribed under section 1 (1) (i) [other elections to which this Act applies].

(4) Subject to any applicable regulations, in respect of an election for a regional trustee of a francophone education authority to which this Act applies that is held as part of a general local election, the expense limit for a candidate during the campaign period election period is a prescribed amount.

Limits and adjustments to reflect changes in consumer price index

63.02 (1) In respect of each general local election that is called after January 1, 2019, the minister responsible in respect of elections under that minister’s responsibility must establish the applicable expense limits for the election by

(a) determining the ratio between the consumer price index at January 1, 2019 and the consumer price index at January 1 of the calendar year in which the general local election will be held, and

(b) applying the ratio determined under paragraph (a) of this subsection to adjust the amounts under section 63.01.

(2) For the purpose of making an adjustment under this section, the minister responsible has the discretion to determine

(a) whether to use a consumer price index prepared by the director under the Statistics Act (British Columbia) or a consumer price index published by Statistics Canada under the Statistics Act (Canada), and

(b) which consumer price index is applicable for a particular time.

Specific expense limits to be made publicly available in advance of general local election

63.03 (1) By April 30 of the year in which a general local election will be held, the minister responsible must provide to Elections BC the expense limits established under section 63.01 in relation to each election area for which elections under that minister’s responsibility are to be held as part of the general local election.

(2) By May 31 of the year in which a general local election will be held, Elections BC must make the information provided under subsection (1) publicly available on an Elections BC authorized internet site.

Expense limits — by-election

63.04 Subject to any applicable regulations, the expense limits made publicly available under section 63.03 in respect of the most recent general local election in relation to an election area are the expense limits in respect of a by-election for that election area.

Division 2 — General Restrictions in Relation to Expense Limits

Prohibition against exceeding expense limits

63.05 (1) The campaign period election period expenses of an unendorsed candidate must not exceed the expense limit for the candidate.
[ Page 11949 ]

(2) In relation to a candidate endorsed by an elector organization, the total of the following must not exceed the expense limit for the candidate:

(a) the campaign period election period expenses of the candidate;

(b) the campaign period election period expenses of the endorsing elector organization that are attributable to the expense limit for the candidate.

(3) An unendorsed candidate for whom the campaign period election period expenses exceed the expense limit as referred to in subsection (1) commits an offence.

(4) A candidate endorsed by an elector organization commits an offence

(a) if the total of the expenses in subsection (2) (a) and (b) exceeds the expense limit for the candidate, and

(b) if the campaign period election period expenses exceed the amount available to the candidate under the final campaign financing arrangement with the elector organization.

(5) An elector organization commits an offence

(a) if the total of the expenses in subsection (2) (a) and (b) exceeds the expense limit for the candidate endorsed by the elector organization, and

(b) if the campaign period election period expenses exceed the amount available to the elector organization under the final campaign financing arrangement with the candidate endorsed by the elector organization.

Prohibition against incurring campaign period expenses if expense limits will be exceeded

63.06 (1) This section applies to the following individuals permitted under section 30 [how payment in relation to election expenses may be made] to incur liability for payment in relation to campaign period election period expenses of a candidate or an elector organization, as applicable:

(a) subject to subsection (2) of this section, the financial agent for the candidate;

(b) an individual authorized in writing by the financial agent for the candidate or by the candidate if the candidate is his or her own financial agent;

(c) the financial agent for the electoral organization;

(d) an individual authorized in writing by the financial agent for the elector organization.

(2) Subsection (1) (a) does not include a candidate who is his or her own financial agent.

(3) An individual referred to in subsection (1) must not incur liability in relation to the campaign period election period expenses of the candidate or elector organization, as applicable, if this would result in the campaign period election period expenses exceeding the expense limit for the candidate.

(4) An individual who contravenes this section commits an offence.

Division 3 — Campaign Financing Arrangements
between Candidates and Elector Organizations

Written campaign financing arrangement required

63.07 (1) An elector organization and a candidate who is to be endorsed by the elector organization must enter into a written campaign financing arrangement that apportions the expense limit for the candidate by establishing

(a) the amount that is available for use by the candidate during the campaign period election period in the election campaign of the candidate, and

(b) the amount that is available for use by the elector organization during the campaign period election period in the election campaign of the endorsing elector organization.

(2) For certainty, a campaign financing arrangement may apportion the entire expense limit for a candidate to the election campaign of the candidate or to the election campaign of the elector organization.

(3) A campaign financing arrangement must

(a) include an acknowledgement that the candidate is aware of the disclosure requirements set out in section 49 (3) [required information in candidate disclosure statement],

(b) include an acknowledgement that the candidate is aware of the penalties under section 65.1 [endorsed candidate penalties for elector organization failing to file disclosure documents or disclosing false or misleading information],

(c) include a requirement that the elector organization notify the candidate as soon as practicable when the elector organization becomes aware that it has exceeded or will exceed the amount available under the campaign financing arrangement,

(d) include a requirement that the candidate notify the elector organization as soon as practicable when the candidate becomes aware that the candidate has exceeded or will exceed the amount available under the campaign financing arrangement, and

(e) address any other matters prescribed by regulation.

(4) The campaign financing arrangement must be dated and be signed

(a) by the candidate,

(b) if the candidate has a financial agent, by the financial agent for the candidate, and

(c) by the financial agent for the elector organization.

(5) A candidate and an elector organization must not enter into a campaign financing arrangement after the campaign period election period begins.

(6) An elector organization must not, at any one time, be a party to more campaign financing arrangements in an election for a particular class of office than there are positions to be filled for that class of office.

(7) A candidate or an elector organization that contravenes this section commits an offence.

Attribution of elector organization expenses to candidate expense limits

63.08 (1) If an elector organization endorses only one candidate, the campaign period election period expenses of the elector organization must be

(a) attributed to the expense limit for that candidate, and

(b) applied against the amount available to the elector organization under the campaign financing arrangement with the candidate.

(2) If an elector organization endorses more than one candidate, the campaign period election period expenses of the elector organization must be

(a) attributed to those candidates in accordance with the regulations, and

(b) applied against the applicable amounts available to the elector organization under the campaign financing arrangements with the candidates.

(3) For certainty, this section applies regardless of the campaign financing arrangement between an elector organization and a candidate.

Prohibition against incurring campaign period election period expenses unless campaign financing arrangement is in place

63.09 An elector organization must not incur a campaign period election period expense unless the elector organization has entered into, with each candidate that the elector organization endorses or intends to endorse, a campaign financing arrangement that provides an amount available for use during the campaign period election period in the election campaign of the elector organization.

Amendment to and termination of campaign financing arrangement

63.10 (1) Subject to this section and any applicable regulations, a campaign financing arrangement, including the apportionment referred to in section 63.07 [written campaign financing arrangement required], may be changed by written amendment.

(2) An amendment to a campaign financing arrangement is not effective unless the amendment is dated and is signed

(a) by the candidate,

(b) if the candidate has a financial agent, by the financial agent for the candidate, and

(c) by the financial agent for the elector organization.

(3) In the case of an amendment respecting the apportionment referred to in section 63.07, the amendment

(a) may be made no later than 3 days before general voting day, and

(b) may cover campaign period election period expenses that were incurred before the amendment became effective.
[ Page 11950 ]

(4) A campaign financing arrangement may be terminated in accordance with the regulations, by the candidate or the elector organization, before, but not after, the start of the campaign period election period for the election.

Effect of endorsement relationship ending

63.11 (1) This section applies in relation to a candidate and an elector organization if any of the following circumstances apply:

(a) the candidate withdraws from the election under section 101 (2) [withdrawal, death or incapacity of candidate] of the Local Government Act or section 52 (2) [withdrawal, death or incapacity of candidate] of the Vancouver Charter;

(b) the local election officer notifies the minister responsible under section 101 (4) of the Local Government Act or section 52 (4) of the Vancouver Charter that the candidate is incapacitated to an extent that will prevent the candidate from holding office;

(c) the candidate dies before the close of general voting;

(d) any other circumstances prescribed by regulation.

(2) The effect of the circumstances described in subsection (1) in relation to the campaign period election period expenses of the candidate and the campaign period election period expenses of the elector organization, and the application of this Act to those expenses, are those prescribed by regulation.]

On the amendment.

S. Robinson: This amendment to section 21 amends and alters the expense limit part of the Local Elections Campaign Financing Act to set expense limits for candidates and organizations from the beginning of the year till election day. The shortening of the campaign period means that candidates could spend heavily up to less than a month before the election but not have these expenses captured within their expense limit. This amendment that I’m proposing would close, I think, a loophole that is gaping wide open. It would limit and track all expense from the start of the year till election day.

[1515]

Again, I want to reiterate that the committee really struggled with putting real numbers in. When we were hosting public meetings and inviting people to come, everyone said, consistently: “We should have these limits. We should have campaign limits. We should have donation limits.” They wanted limits. People wanted limits because they saw that there was, in some communities, a ridiculous amount of spending. We’ve all agreed that that’s problematic.

There was also a ridiculous amount of contributions, but of course, the Liberals have decided that they weren’t interested in looking at contributions, so we’re only going to look at expenses. And the committee couldn’t get the public to come up…. Well, a few of them did. I can’t say that none of them did. A few members of the public came forward with some actual dollar amounts. It could be a dollar per person for the community — that that would be the limit. Just some structure.

We were really grappling with: how do we come up with a number? How is this committee going to come up with a number? The committee, I want to remind the minister, was made up of people from local government. I know that the minister himself is from local government. I’m from local government. We all know what it’s like when you’re running a kind of local campaign. And we grappled around and around and around on how to find some structure and how to find some recommendation.

We went to the 2014 expenses. We thought: “Here we are. We have this data now with Elections B.C. of what people are spending.” We were actually instructed. This House instructed this committee to go and use that data, so we went and we looked at that data. That data was expenses used from January to November. We thought, “Well, we know that the election is going to be a month earlier the next time,” so that would be to October. But we really felt it would be disingenuous of us to not use the same parameters. It would be…. It’s not accurate data, so the data is now thrown off. The data that we used is not thrown off.

I will also say that when we started this work, when the committee started its work, provincially there was a 46-day pre-election period, if I recall. So we were also thinking: “Well, would that be something?” We’d actually considered that. It was during our work that this provincial government decided that no, 28 days…. You can spend and spend and spend, and then 28 days before, you had a limit.

I have every reason to believe that provincially we are going to see megabucks pouring out of the Liberal machine, because they have it, and the more money you have, the more you get to campaign and the more money you get to spend. But the limit will only apply 28 days beforehand. Well, how is that fair? How does that bring fairness to all of this?

This amendment proposes to go back to what the committee had recommended, which is that this expense limit needs to start in January.

Now, I’ve been asking the minister a number of questions about consistency with the provincial rules. That actually isn’t a guiding principle here because there hasn’t been consistency. There hasn’t been a match. It’s only around the number of days, but it’s not around anything else in this legislation. So consistency as a principle just falls flat. Consistency isn’t consistent here. I don’t think that’s a good enough rationale for why 28 days.

I would ask the minister to join me in supporting the recommendation of the committee. It was a committee that was made up mostly of members from his side of the House. We had a good debate. I thought that they did a very excellent job in recognizing why this was important.

Hon. P. Fassbender: I’ll be consistent in my response to the member for Coquitlam-Maillardville in her amendments, because this is just another way of trying to get back to what was proposed earlier.

Clearly, after the committee made its recommendations after we took the exposure bill out, we had significant feedback on a number of the elements, which prompted some of the changes that are before us today.

[1520]

I think the other thing is that the ministry did a much deeper analysis of previous elections and expenses and clearly found that 80 percent to 90 percent of the spending takes place in the campaign period itself. As a result of that, that’s why the act, as it is before the House now, reflects that input and that research that was done. As a result, we do not support this amendment.

Amendment negatived on division.

Section 21 approved.

On section 22.

S. Robinson: This is a simple question. I don’t know if the answer is going to be as simple. I’m curious about why the heading was changed for this part.

Hon. P. Fassbender: It is simply a more accurate reflection of what the section represents.

S. Robinson: That’s fine.

Sections 22 to 24 inclusive approved.

The Chair: Shall section 25 pass?

S. Robinson: Can the minister tell us a little bit about what this section is doing here for the legislation?

Hon. P. Fassbender: This provides for the penalties, and it really is simply rewording existing provisions to bring them in line with the cleanup of the entire act.

S. Robinson: I’m very interested, in particular, in (e)(4.1). I’m wondering if the minister can explain that section in particular.

Hon. P. Fassbender: Maybe my eyes are failing me, but I don’t have an (e)(4.1), and if she could clarify what the question is.

S. Robinson: My understanding is that we’re on section 24.

The Chair: Section 24 is passed.

S. Robinson: I thought we were on section 24. Then I missed that. Can I ask the question? Are we done? Can I not go back and ask? Sorry. We’re on section 25?

The Chair: Yes, section 25.

S. Robinson: I had questions on section 24. Section 24(e)(4.1) was the one I’m trying to make sense of.

[1525]

Hon. P. Fassbender: If an elector organization is convicted of an offence, the only opportunity they have to collect money is to pay off debt, not to contribute to the election period. They’re not allowed to do that as a result of the penalties that would be assessed to them.

S. Robinson: I just want to make sure I understand this, because it’s not quite resonating very well. They can accept contributions but only if they have incurred debt from the previous election, but they can’t use it for anything other than that. I just want to make sure I understand that that’s what this is saying?

Hon. P. Fassbender: That’s correct.

On section 25.

S. Robinson: Now I’m standing for 25. Can the minister explain this section, what it’s about and perhaps a rationale for this section?

Hon. P. Fassbender: This section, again, reinforces what I just said in section 24. It allows for elector organizations to collect contributions to pay off debt but not to contribute to a new campaign.

S. Robinson: Did this not exist in the previous legislation? How is this different? Why are we seeing this here before us now?

Hon. P. Fassbender: Section (1) did exist before, 25(1). The only change is (1.1), which is the addition to deal with what I just mentioned.

S. Robinson: Can the minister explain sort of what prompted this change? What was the reason for bringing this forward?

Hon. P. Fassbender: I’m sure the member will agree that if an elector organization or third-party advertisers had debt and were not required or not able to pay off that debt, that would not be fair to the organizations that they owed the debt to. We wanted to make sure, in the case where they were convicted but couldn’t collect money for a new campaign, that at least they had the ability to collect money to pay off the debt in good faith to the people who provided services previously.

S. Robinson: I appreciate that this is a good thing to do, but I’m trying to understand if this existed in previous legislation in order to…. I guess the question is: why wasn’t this in previous legislation, or was there something that happened that made it clear that this hadn’t been included in the previous legislation?
[ Page 11952 ]

Hon. P. Fassbender: No, it is new. The reason for it is that they’ve never been prohibited from accepting contributions. That’s why it was put in here to make sure that that ability was there.

S. Robinson: I’m going to ask the minister a question he might find a little frustrating, but I think it’s important to get it on the record. Is this consistent with requirements for provincial campaigns?

Hon. P. Fassbender: I’m not frustrated. I am just simply reminding the member of my answer before.

[1530]

This legislation was drafted to deal with local elections. The one provision — and I emphasize the one provision — was the campaign period, which was intended to be consistent. But we are not going to deal with the Election Act while we’re debating this.

S. Robinson: In (1.1), it talks about: “a third party sponsor or an assent voting advertising sponsor is not prohibited from accepting campaign contributions” if they are in debt as well. I’m just trying to anticipate what could happen. If I am a third party — for that matter, I could even be a candidate — and I see that my contributions aren’t coming in and I can go into debt but I really might want to win and campaign afterwards to fix up that debt, can I do that? Does that allow me to do that?

Hon. P. Fassbender: I think the only way to describe this is that the intent of this legislation is for openness, transparency, to make sure that individuals and/or elector organizations who do something outside of the regulations or the act and are convicted of that…. If they have run up debt, they are not allowed to run again. They’re not allowed to collect for another campaign, because they have been dealt with under the penalties and are not able to run again.

But they can collect money, if people are willing to give it to them, to pay off the debt. Then, in fairness to the organizations that provided services in good faith, they will be able to at least be paid off for what they’ve done.

K. Corrigan: I have a question about section 25(1)(b). So 25(1)(b) says that the following penalties apply at the time of conviction. It says: “in all cases, the candidate is disqualified until after the next general local election from being nominated for, being elected to or holding office as a member of a local authority.”

I just want to be clear. Does this mean that in all of those cases…? In other words, if an assent voting advertising sponsor is convicted of an offence under section 84, that means that the candidate in that case would be disqualified until after the next general local election from being nominated? So in all of those cases, it would mean that they can’t be elected, not just in the case of the candidate.

[1535]

Hon. P. Fassbender: In answer to the member, if a candidate is convicted of an offence, they lose the opportunity to run in the next election. If an elector organization is convicted of an offence, they lose the opportunity to participate in the next election. In an assent voting situation, there’s not a candidate involved, and the organization that is convicted is prohibited.

In every case, the individual or the organization is prevented from running in the next election or participating in the next election.

K. Corrigan: Well, when I read the words “in all cases,” that to me looks like it’s referring to all of those cases or situations that are referred to. Perhaps assent voting was a bad example to use, so why don’t we go to the case of an elector organization or third-party sponsor? I guess the question would be, just to be sure: if an elector organization or a third-party sponsor is convicted of an offence under section 84, does that then mean that the candidate is disqualified until after the next election?

Hon. P. Fassbender: No, the candidate is not the organization, if convicted. The offence of the organization is not visited upon the candidate. It is only when the candidate is convicted that they will not be eligible in the next election.

K. Corrigan: Well, it’s a bit of an awkward sentence. Just on the natural reading of it, I would have assumed that when you said in all cases, you’re talking about all those cases that are described under subsection (1). Maybe, then, the question becomes: what do the words “in all cases” refer to?

Hon. P. Fassbender: Chair, (b) is tied to (a), so they are not separate. It is tied to the candidate, where the candidate is convicted or declared elected and then ceases to hold office as a member of a local authority. So it is that (b) is tied to (a). They’re not separate.

K. Corrigan: In the case of a third-party sponsor…. How about an elector organization? If an elector organization, then, is convicted of an offence under section 84…. In other words, I guess, if you had a local political party being convicted of an offence with regard to providing false or misleading information, then the candidate would not be disqualified for the next general local election.

[1540]

Hon. P. Fassbender: Indeed, if an elector organization — or if it’s called a party or whatever it might be called — are convicted, they are not, as an organization, permitted. Candidates who may be part of that organization are not prevented from running under another elector organization or independently in the next election. It is only when the candidates themselves are convicted.
[ Page 11953 ]

K. Corrigan: Just to be really clear, then, if an electoral organization is convicted of an offence under section 84, in the case — going back to (a) — then the candidate would cease to hold office, even though it is just the electoral organization that had been convicted.

Hon. P. Fassbender: Again, in consulting with staff here, this was written to ensure that it’s very clear. If a candidate is convicted, they are not allowed to run. If an elector organization is convicted, they are not allowed to participate in the next election. They have to skip one.

If, in an assent vote, because there aren’t candidates, that same rule applies for the organization, if they’re convicted of an offence under the act.

The entire section has to be read. As I said, sub (b) is tied to sub (a), but the rest of it speaks to the other situations that I just mentioned.

K. Corrigan: I appreciate the interpretation that the minister is conveying, but it could be read…. I’m wondering if the minister feels there is any lack of clarity, because this could certainly…. I would read it to be possibly interpreted to say that if any of those things that happened in (1) happened, then the following things happened to the candidate and then the electoral organization and the third-party sponsors.

You should be able to read each section of a bill independently and not rely on another section to interpret it. I would read that…. To me, the natural reading of it is: “(1) If a candidate, an elector organization, a third party sponsor or an assent voting advertising sponsor is convicted….”

The assent, obviously, wouldn’t apply in this case, but if a candidate, elector organization or third-party sponsor is convicted under an offence, it could be interpreted as that the candidate ceases to hold office. I’m just wondering whether the minister agrees that that is an interpretation that could be had from this piece of legislation.

Hon. P. Fassbender: No. Legislative counsel, when this was drafted, was very clear what the principles behind it are. The drafting reflects what is appropriate in the legislation, and needless to say, any application of any provisions in the legislation will be done with that lens that was put on it when it was drafted.

I have no concerns that a candidate would be not permitted to run because an elector organization that they may have been a part of was convicted under an offence. Or vice versa. If a candidate is convicted, an elector organization would not be prevented if they have not been convicted themselves.

K. Corrigan: I appreciate what the minister is saying, but I’m just reading it as it reads naturally to me. I think it very much could be interpreted that way, because it says all three of those things, and then it says: “…(a) in the case of a candidate who was declared elected….” I think it’s actually a more natural reading of the sections.

[1545]

If there is any question — the minister says there’s no question — I’m wondering why it wouldn’t have been separated, then. So to say: if a candidate is convicted of an offence under section 84, then if that candidate was declared elected, the candidate ceases, and the candidate is disqualified. Then it would be more clear to me.

Then another section: if an elector organization is convicted, then this is what happens to it. Then the third one. So instead of putting them all together….

I mean, I don’t want to disagree with the framers of the legislation, but I do honestly think that the reading of that could certainly be interpreted by a court to say that whoever gets convicted, the candidate is going to be held responsible and is going to be penalized. But the minister doesn’t agree with that.

Hon. P. Fassbender: No, I don’t. Legislative counsel, when drafting this, was very clear in what I said the principles are. It reflects that. That is their advice, and we accept that.

K. Corrigan: Well, I’ve read many a legal case where many pages of a decision have hinged on what it was or wasn’t that the framers intended, and I’ll tell you, there have been many thousands of dollars spent on lawyers in exactly this kind of discussion. I’ll leave that.

But I do want to ask one more question about subsection (b), where it says: “the candidate is disqualified until after the next general local election from being nominated for…elected to or holding office.” My question to the minister is: if the legal case takes a long time, and some of them do, and the conviction doesn’t happen until after the following election, does it mean it applies to the election that has just passed, or does it apply to the following election after that?

Hon. P. Fassbender: The sequence would be this. If there was an election, the candidate was elected, took office, a charge was contemplated and a conviction was levied against that candidate, they would be removed from office and they would not be eligible for the next election. It is always the subsequent election. If it takes time and they hold office until such time as a conviction takes place, then they would be removed because they’ve committed an offence, and they would not be eligible in the next election.

K. Corrigan: Sorry, I’m not really clear. If an election happened in 2017 — a local election. It’s not going to be 2017. It’s going to be 2018. Let’s say a local election happened in 2018. Some time after that…. It took a year or two, for some reason, for charges to be laid, so you’re up to 2020, and then it takes some time to go through the legal system, and you get up to after the election in 2022.
[ Page 11954 ]

My question is: if that conviction happens after 2022, the election in November of 2022, which election would that person be disqualified from, 2022 or 2026?

Hon. P. Fassbender: I don’t have the ability to turn back time. Neither does the member opposite. The reality is that whenever the conviction and whatever the status of that individual is, they are not eligible in the next election following that time.

S. Robinson: I thought the member for Delta South had a few questions, but I’ll stand.

In subsection (d) of section 25, it says: “in relation to a third party sponsor or an assent voting advertising sponsor, the sponsor (i) is disqualified from sponsoring third party advertising or non-election assent voting advertising until after the next general local election….”

[1550]

Now, third-party sponsors and assent-voting advertising sponsors are quite different from candidates and from elector organizations. They’re disqualified. But can they actually fund somebody else’s campaign? Whether it’s assent-voting advertising or third-party sponsor, can they just move money around?

Hon. P. Fassbender: That organization could not participate directly themselves. They could contribute to another third-party advertiser who has not been convicted, but that would be declared, as part of their responsibility to declare the sources of their contributions. But with that organization, as with a candidate, if they are convicted, they cannot participate in the next election.

S. Robinson: I hope that the minister can appreciate the kinds of questions that I’m asking around this. I think of some of the third-party sponsors or assent-voting advertising sponsors who might get into hot water during one campaign, and rather than put their name on it, they just funnel money, and another group pops up.

We certainly have seen — certainly in my community, and I’m sure it’s happened in the minister’s community — where groups just sort of pop up, and they give themselves a name.

I wonder what the minister’s intent is with this. Like, what’s the intent of this piece of legislation, and how will it make sure that these groups can’t participate once they’re penalized?

[1555]

Hon. P. Fassbender: In discussing this with staff…. Elections B.C. is going to be required to interpret every provision of this act. What is clear: any organization or any candidate who is convicted of an offence will not be able to participate in the next election.

The application of that particular section — in this case, Elections B.C. will be required to make that determination. It has been written this way to give that responsibility to Elections B.C. In discussions with legal staff…. It will maintain the integrity of the organization not being able to participate.

S. Robinson: I have to say that I don’t think that’s good enough. I think that leaving it up for interpretation is not what we’re here to do. We’re here to legislate. To me, this is a gaping big loophole that groups can easily just funnel money to and come up in some different way after they’ve been penalized.

Leaving it up to Elections B.C…. That’s not legislation. That’s just letting somebody else take care of this.

I’d like to hear from the minister about what he thinks about it. If he thinks it’s acceptable to have a group that gets penalized for good reason…. I think this a good piece of legislation to say: “You know what? If you don’t play by the rules, you can’t participate.”

But then we have this opportunity…. These can often be just impromptu, pop-up groups that don’t have a history. They just pop up. They form, they have a voice, they want to use it, and then they don’t play by the rules. And then we penalize them. But there’s a penalty here that doesn’t shut them down, necessarily. There’s an opportunity for them to come up somewhere else for the next election.

I would actually propose that this isn’t going to stop that and would like to hear a little bit more from the minister about how he proposes to fix that.

Hon. P. Fassbender: Again, clearly, if an organization is convicted, that organization is not able to participate in the next election. I don’t think any of us can predict what organizations might be formed. But clearly, Elections B.C. has the responsibility to review those things. Every situation potentially in the future…. We can’t prevent people from getting involved in new organizations. But we can ensure that the organization that was convicted is prevented. That is the intent. That is the interpretation, and that is the application.

[1600]

S. Robinson: All right. Let’s say we have a group of citizens in a community that want to protect the park. They’re the Against Pooches in the Park group. They don’t want pooches in the park. I like the alliteration. No pooches in the park. When the minister was mayor, I’m sure that dogs were never an issue in his community.

Let’s say they form an association, and they become a third-party sponsor. They become a group, and they spend money. They do a little bit of fundraising, or they contribute from the neighbourhood, and they heavily advertise and push for candidates who will support. They’d just become a third-party sponsor. They are very much interested in making sure that their voices are heard.

It turns out that they don’t file, or they don’t keep track of their expenses. They are in contravention of this legis-
[ Page 11955 ]
lation, and they’re now prohibited as a group. The “No pooches in the park” group is now prohibited. Fine. They walk away. No big deal.

The next election, there’s still a “No pooches in the park” sentiment. They form again, and they call themselves “Doggy-free parks association.” It’s the same people who contravened legislation.

Elections B.C. noticed this, penalized them and told them that they could no longer participate. They were not allowed to participate in this process. They just pop up as a different group, and now they register as a different group, but it’s the same people, the same money, same names. How does this legislation prevent that from happening?

Hon. P. Fassbender: If “Pooches in the park” is convicted, and then you have “Kitties in trees” at the next election, that’s a different organization. I think in fairness to the member’s questions, I would like to ask that we stand down this section for the moment. I’m going to seek more clarification and advice from legal counsel. Then we can revisit it a little bit later.

The Chair: The committee stands down on section 25.

V. Huntington: On 25, I wanted to comment on the minister’s request of the committee.

The Chair: Before we stand down on section 25, the member has a comment.

V. Huntington: I have no problem if the minister wants to stand down the section, but there are a couple of other issues I would like him to include in his discussion with staff. I don’t have the benefit of a definition of “general local election.”

I’d like to know whether the general local election is the election date upon which a general election is called. Or is it the full four-year period; i.e., is a candidate or an electoral organization just disqualified from participating until after the election date and then can start organizing again and collecting funds again? Or is the general election the entire four-year period, and is he or she prohibited from any involvement in activities for that full period?

I’d also like, therefore, to know whether a candidate or an electoral organization is prohibited from a by-election during that four-year period — again, that goes back to what the definition of “general election” is — and whether they can continue to solicit funds within that four-year period. That, again, goes back to the definition of “general election.”

[1605]

Hon. P. Fassbender: As we’ve stood this down, we will consider those questions at the same time and bring back a response on those as well.

Clearly, if they’re not allowed to participate until after the next election, my understanding — and we will clarify that — is that if there was a by-election in the interim period, that still would fall under that particular criteria.

Section 25 stood down.

On section 26.

S. Robinson: Can the minister explain what this section is intended to do?

Hon. P. Fassbender: In the event that an elector organization fails to declare, there are penalties under the act that are visited upon that elector organization, and a candidate is also subject to penalties under the act if the elector organization that they are with does not meet their requirements.

So there are provisions for penalties for candidates, because they have a responsibility to make sure that their elector organization meets the requirements under the act.

S. Robinson: In reading this, it’s a complicated read, because it refers to many other different parts. Can the minister explain…. I’m thinking about an elector organization that has to, let’s say…. I think of Vancouver, for example. They have school board as well as parks, as well as council. I expect that they file as one entity.

But if there was an issue, for example, around a piece of literature — I’m not quite sure — that had to do with just council, would that create some challenge? Would that then require everybody, whether they were on parks board or school board, to also be impacted by that? Is it everybody who is attached to this elector organization or only as it relates to one of the elections? In this example, we have three different groups.

[1610]

Hon. P. Fassbender: In the case of multiple candidates for multiple different offices, it depends on the offence that is involved. If it relates to, as an example, a council candidate or a group of council candidates but not to the school board or the parks board, then it would only relate to the candidates who are part of that offence, not all of the candidates who might be part of an elector organization.

K. Corrigan: Section 26 adds a part to section 65 of the Local Elections Campaign Financing Act. On my reading of it, what it says is pretty well the opposite of what the minister said when we were talking about section 25. I could be wrong.

Does this not, essentially, say that if an elector organization becomes subject to penalties for failure to file disclosure statements or for false or misleading disclosures, the candidate is going to be penalized as well and that those penalties would mean that the candidate, then, is
[ Page 11956 ]
not allowed to…? Whatever those penalties are. I think that they are…. Do they cease to have office or they can’t run in the next office? It seems to me that’s exactly what we were talking about with regard to this last section.

Is this not saying that if there is an elector organization that is penalized, then the candidate also is penalized?

Hon. P. Fassbender: The intent of this and the purpose are to clearly ensure that endorsed candidates have the same potential penalties as non-endorsed or individual candidates for any offences that come underneath this act. So just because a candidate is a member of an elector organization does not relieve them of the responsibility for any failure to meet the provisions of the act.

K. Corrigan: Well, I’ll have to go back and look at the transcript. It is fairly complicated. But I thought that the minister said, when we were talking about section 25, that if an elector organization was convicted of an offence, the penalties would apply to the elector organization. We had a long discussion about that. I thought that’s exactly what the minister said, that those penalties would apply only to the elector organization and not to the candidate. Or if there are penalties to the candidate, there would be no penalty to the elector organization.

This section seems to say just the opposite — that if there are penalties to, if there’s a conviction of the elector organization, then the candidate is going to, in fact, be removed from office. They will cease to hold office — because that’s what 64(2) says — and then they’re going to be disqualified until after the next general election. Is that correct?

[1615]

Hon. P. Fassbender: Again, I will repeat what I said a moment ago. Candidates who are part of an elector organization are not absolved of responsibility as it relates to the offences, the same as an individual candidate is responsible. This is to ensure that they understand they have a responsibility, as a member of an elector organization, to make sure that they and their organization comply with the act, as an individual candidate would.

[R. Chouhan in the chair.]

K. Corrigan: Just to be clear, then, what that says…. I guess the practical sense of this is that if you have an elector organization that has endorsed a candidate and that candidate gets elected and then the elector organization is convicted of failure to file disclosure statements or for false or misleading disclosure, that will necessarily result in that candidate who has been endorsed being removed from office and prohibited from running in the next election. I just want to be clear that that’s what that section is saying.

[1620]

Hon. P. Fassbender: The member is correct. If a candidate of an elector organization was elected and that organization was convicted — the same situation as a non-endorsed candidate — they would lose their seat, and they would not be eligible in the next election.

V. Huntington: Can the minister tell me whether he anticipates whether this is a nondiscretionary clause, or can the Chief Electoral Officer use his discretion in penalizing a candidate? Is there any discretion at all in this?

I note that there’s an anticipated discretion given to the court in section 28. Do the minister and his staff feel that the Chief Electoral Officer could under any circumstances exercise discretion here in saying that a candidate should not be penalized under these circumstances?

We all know that there are electoral organizations with naive or young or new candidates, who may feel and may have asked the right questions but, short of an audit, would not know, necessarily, what the electoral organization was doing in detail.

I can anticipate that a number of candidates, even though required to understand and be in charge of and responsible for the electoral organization, could certainly be unwittingly supporting an electoral organization that was failing to disclose. Is there any discretion at all in this?

Hon. P. Fassbender: As I think I said earlier in the debate, one of the things with this legislation that is important is the education and ensuring that candidates know their responsibilities. Ignorance is not an excuse when it comes to the regulations and the provisions of legislation like this.

Also, Elections B.C. will not have discretion. If there is a question, then ultimately, the relief is with the court.

V. Huntington: Is there anything in the act that exempts the electoral organization if it is an individual who is acting on their own — say, the financial agent — and the electoral organization does not know? Is there anything that exempts the electoral organization and, therefore, a candidate from penalty if it is the fault of a single individual and nobody understood or knew about it?

Hon. P. Fassbender: No. There is no provision. Candidates have a responsibility to understand the rules, to work, and if they’ve questions, to go to Elections B.C. and ask: what is the situation?

[1625]

Ultimately, if there is something that we can’t anticipate, the courts are the ultimate relief. If a candidate was disqualified, they have the ability. If they think there is something that is not covered, they go to the court, and the court will make that final determination.

S. Robinson: I’m following up on my colleague from Burnaby–Deer Lake. I’m trying to read section 25 and section 26 together. We’re on section 26.
[ Page 11957 ]

I heard similar to what my colleague heard around the penalties for the different groupings. In looking at section 25 and reading it together with section 26, there’s a group that’s missing from section 25. We have the candidate, the elector organization, a third-party sponsor and assent voting advertising sponsor. What’s missing is the endorsed candidate.

It looks like you have this second section, that this is the endorsed candidate penalty, but it’s not described in section 25. That’s why it’s sort of misleading that section 25 tries to capture everybody, but there’s this one group that’s missing.

If the minister can just take a look at that and share his thoughts about this one group that’s missing. It’s a separate section. I get that. But it’s missing in the list of all the people that will be penalized.

Hon. P. Fassbender: In legislation like this, one of the things that’s important is that each of the sections deals with a particular aspect. In this case, this deals with endorsed candidates specifically so that it is very clear that they are not given a free pass because they happen to be endorsed by an elector organization. That’s why that further clarity is required under this section.

K. Corrigan: I’m wondering if…. In framing these changes to the Local Elections Campaign Financing Act, did the minister seek to check out, do some research about how many cases this would have applied to? In other words, would there be a history of individuals who would have lost their office because of a failure to disclose, that it hasn’t happened to in the past and it will?

I’m just wondering what the numbers are, if there is any sort of understanding about how many people this would affect.

Hon. P. Fassbender: There were no offences that we’re aware of under the 2014 election period. This is new, and this is to ensure that transparency and accountability are the major principles behind this legislation. There are no numbers that I’m aware of on 2014, but it is clearly being put in here in order to ensure that this doesn’t happen in the future.

K. Corrigan: I wanted to just explore. The section refers to the penalties in section 64 and section 65 of the act. Section 65 talks about…. This is about false or misleading disclosure.

What section 65 is referring to is if a “candidate, elector organization, third party sponsor or assent voting advertising sponsor is convicted of an offence under section 84,” which is a “general offence in relation to false or misleading information.”

[1630]

The question that I have is…. In section 84, it creates the offence, under the “Offences” division of the Local Elections Campaign Financing Act. In order to be convicted under that section, does it take intention? Does there have to be a guilty mind there — in other words, if somebody mistakenly provided false information? I think I know the answer, but I just want to be clear about what constitutes enough of a guilty mind in order to lead to conviction.

Hon. P. Fassbender: In this case, both the candidate or an elector organization would have to show that they did the due diligence to ensure that there was no false information. That is what the requirement would be for them. Again, I think that that responsibility, when a question was asked, would fall on them to provide that information.

K. Corrigan: Just to be clear, if somebody had done their due diligence but they still filed an incorrect disclosure, as long as they had tried to do it, then there’s no chance that somebody would be convicted. Is that correct?

Hon. P. Fassbender: Suffice to say, if Elections B.C. has a question and they’re not satisfied with the answer, then, ultimately, that decision would rest with the court to hear the evidence and to hear from the party or parties. Then they would make that final determination.

K. Corrigan: Essentially what the minister is saying, then, is that there would have to be, essentially, a guilty mind in order for a conviction to happen, because if there is due diligence done and there was a mistake, then Elections B.C. would make that determination.

I’m wondering why it is that we would now be having a change to the legislation that says that where with, say, the elector organization, it has to be shown, or it must exist, that there is a degree of guilt and intention for them to be convicted, yet now we have an amendment that says that somebody, who just doesn’t know about that organization — has no guilty mind but just happens to be a candidate under that organization — can be convicted without having a guilty mind.

I’m wondering if the minister could reconcile that.

Hon. P. Fassbender: It is not Elections B.C.’s place to determine if there was a guilty mind or not. Their job is to deal with the provisions under the act and to make that determination based on the information that they have.

Again, ultimately, those kinds of determinations and the what-ifs, if it gets to that point, are in the purview of the court, not in Elections B.C. and definitely not in mine.

With that, Chair, I wonder if we might take a five-minute recess for a little break.

The Chair: The committee will be in recess for five minutes.

The committee recessed from 4:35 p.m. to 4:43 p.m.
[ Page 11958 ]

[R. Chouhan in the chair.]

K. Corrigan: I just wanted to follow up, with maybe another question or maybe two, on the questions I was asking just before we took the short break. If there is an offence, then the offence is contained in section 84 of the Local Elections Campaign Financing Act. It’s established there. The thing I want to establish is: in order for the offence to be made and for the conviction to happen, there has to be intent, does there not?

[1645]

Hon. P. Fassbender: The clarity here is that if Elections B.C. determines an offence took place, they will make that determination and they will deal, under the provisions of the act, accordingly. If there is disagreement with that, the ultimate opportunity is through the courts. The courts will then determine the evidence and make their determination — whatever criteria they want to apply to that. But Elections B.C. operates under the terms of the act.

K. Corrigan: Whether or not it is Elections B.C. or whether it ends up in a court, the question is…. When you’re talking about whether or not the offence has been committed, the question is not how it’s going to be dealt with. The question is: for an offence to be committed under section 84, does there not have to be intent? It’s very simple. It’s not about how it’s going to be dealt with. Does there not have to be intent, whether that’s decided at the court or at the Elections B.C. level?

Hon. P. Fassbender: I would like to read from section 84 and, I think, then just add one other comment. Section 84 says:

“(1) An individual or organization that does any of the following commits an offence: (a) provides false or misleading information when required or authorized under this Act to provide information; (b) makes a false or misleading statement or declaration when required under this Act to make a statement or declaration. (2) In the case of false or misleading information in a disclosure statement or supplementary report, the candidate, elector organization, third party sponsor or assent voting advertising sponsor for which the disclosure statement or supplementary report is filed commits an offence.”

Elections B.C. will operate under those provisions. It is not a question of intent. It’s a question of what actually was done, and that is the determination. Then the individual or organization will have the opportunity to go to the court if they disagree with that.

K. Corrigan: Well, law school was many, many years ago, and I haven’t practised for many, many years. But my understanding is that whatever the elements of what has to be committed, there also, with an offence of this kind, has to be an intent. There has to be mens rea, a guilty mind. I’m not saying they’re guilty of a crime or that that’s the standard of proof, but it is my understanding. And if it went to court, that would be an element, is my understanding.

[1650]

I think you have lawyers sitting beside you. I’m surprised they’re not telling you that. There has to be an intent. The point is….

L. Krog: Ask the Attorney General.

K. Corrigan: Yes, let’s ask the Attorney General. She’s studiously not looking up. I believe the Attorney General would probably know the answer to that question. An ex-prosecutor would know that there needs to be intent.

The point that I’m making is that it seems odd that…. If an organization would have to have intent in order to be convicted of providing false information or not providing information at all, false or misleading information, then why is it that we’ve created legislation that would then disqualify a candidate and have them penalized when they, in fact, didn’t have to have the same level of intent as the individual or the organization that committed the offence in the first place? That’s the point.

Hon. P. Fassbender: The issue here is that this section, and the intent, is to ensure that endorsed candidates have exactly the same responsibility as individual candidates. They cannot be absolved from their responsibility because they’re part of an elector organization. So this is to ensure that they are both treated exactly the same way.

S. Robinson: I appreciate the member for Burnaby–Deer Lake raising this. Now it has triggered my thinking about some of the what-ifs.

In this case, I’m wondering…. The way the minister described the process…. He explained that Elections B.C. would enforce the legislation. If that was a concern, they can then appeal to the courts, where the courts might have a different…. If I’m reading the minister right and understanding what he’s saying, the courts would then determine if there was mens rea, if there was intent, and they then might find for the candidate.

I’m sure the minister well knows that…. At this point, I would imagine that the penalties would have occurred in this case. So Elections B.C. would do the penalties, and then it would go to court. Is that how that would work?

[1655]

Hon. P. Fassbender: The challenge here is…. I think any of us could speculate on a whole host of what-ifs.

The simple answer is this. The act is clear. We want to ensure that individual candidates or endorsed candidates are treated exactly the same way. Elections B.C.’s job is to interpret the act when issues are brought or they raise issues themselves. If there is a disagreement on that interpretation and the consequences, then any one of the
[ Page 11959 ]
individuals who is involved has the ultimate ability to go to court and to challenge that decision.

Otherwise, I don’t think we would be able to ever finish an act because all of the what-ifs…. If we tried to spell them all out, we would never get it done.

S. Robinson: Well, I think this is a pretty important piece of legislation. If there’s a bit of the act that has a little bit of a hole in it and there is opportunity to tighten it up, I would imagine that the minister would be interested in doing that rather than worrying about the process of going through all the what-ifs.

I think we all bring something to the floor for debate. That’s why we do this — so that we can make sure that we don’t have problems with pieces of legislation.

Having said that, I’m just trying to make sure I understand that if there is a disagreement…. I think part of the concern here is that there’s no discretion for Elections B.C. This is it. They’re obligated to enforce this, but there’s no discretion. That’s, I think, part of what I’m hearing. Because there’s no discretion, this is what will happen. Even if there was an error made — there was no intent to mislead or to not properly disclose — then that person is penalized.

Yes, they can go to the court. Let’s say the court finds that they were not guilty of the offence, but years have passed. So it becomes this…. What’s the recourse at that point? They have had to give up a seat that they won fair and square. Now they can run in an election that maybe has already happened. They missed it because of the court dates taking so long.

We’re just looking for fairness here and making sure that some people aren’t penalized inappropriately. Perhaps there’s some room for a little bit of discretion when, perhaps, there isn’t intent. That’s what I’m hearing from my colleague here. I wanted to know if the minister has some final thoughts about discretion for Elections B.C.

Hon. P. Fassbender: Elections B.C. If something comes to their attention through the reports that are filed and they feel there’s a question, there is no doubt that they have the opportunity, and have in the past, to get in touch with the elector organization or the candidate and seek either clarification or a supplementary report. If they’re satisfied, through that process, no offence has taken place, then they take no further action. If they’re not satisfied — which is their job to make that determination at that point — then they will render the penalty under the act and the provisions of the act.

That’s not to suggest that they don’t have discretion to ask questions, to get in touch with organizations or candidates. No one wants to penalize someone for an honest mistake, but Elections B.C. has to go through their process under the act.

[1700]

If, at the end of that process, they feel that there was misleading or false information, then they take the appropriate steps. If they’re convinced, through a supplementary report or their communication, that there was an honest mistake made, I would clearly understand that they would then not impose a penalty for something that they determined was not misleading or false.

V. Huntington: If that’s the case — if, in this supplementary report, in determining that a mistake was made or, say, if they realized after investigating that the candidate had no way of knowing that there was a problem in the electoral organization — then what? What if they decide, after the investigation, that the candidate knew nothing about what was going on in spite of their best efforts at due diligence during the election process? This section still requires that candidate to suffer the same penalty. Is that not an exception that ought to be considered worthy of the election officer’s discretion?

Hon. P. Fassbender: The same answer applies. Elections B.C. will look at the circumstances for anything that is brought into question. They will determine whether or not it is false or misleading. If it is so deemed, either for an elector organization or an individual candidate, the same penalties apply.

V. Huntington: In other words, even if Elections B.C. finds out that a candidate had no way of knowing that the electoral organization had failed to disclose something, this section — does it not? — automatically requires the candidate to suffer the same penalties as the electoral organization will suffer. This says that if the electoral organization is penalized for failing to disclose, then the candidate becomes subject to those penalties, too — even though, during the investigation, it was determined that the candidate knew nothing and could have known nothing.

Hon. P. Fassbender: The reality here is that if an independent candidate and their financial agent filed false and misleading information, the candidate is responsible in that case. In this case, with elector organizations, exactly the same rules apply.

K. Corrigan: I just want to clarify whether the understanding and the intention of this legislation is as the member for Delta South indicated.

In the case of when it’s an elector organization having committed the offence — the minister may or may not agree — my understanding is that there would have to be intent. Is it the intention, in framing this, that the candidate, under section 65.1(2) — with or without intent or knowledge — would then become liable? Is that the case? There has to be no kind of intent of any kind? Is that correct? I just want to be sure on that.

[1705]

Hon. P. Fassbender: I’m going to repeat what I said before. It is not my intent to try and define intent or anything else. What’s clear is an individual candidate…. If their financial agent or they themselves file false or misleading information, as determined by Elections B.C., they then suffer the penalties under the act. If a candidate of an elector organization…. If that organization is convicted, that candidate is subject to exactly the same penalties. If they disagree with the penalties or they’re disqualified or removed from office, then the court is their final appeal.

K. Corrigan: The court will…. The question is: what is the intent of the act? It’s clear that the intent of the act is that the candidate…. At least, I hope it’s clear. I would assume that this government would not bring forth a piece of legislation without understanding what the standard of conviction is. Whether intent of either the elector organization or, by association, the candidate is supposed to be convicted….

This is not something you leave up to the courts. You know what it is that you want to do. You shouldn’t be bringing this legislation before the House if you do not know what the impact of the legislation is. It’s not appropriate, in my mind, to be leaving it for the courts later and saying: “Well, I don’t know what we meant,” and “I don’t know how it’s going to be interpreted.”

Is it the intent of this legislation to say that an elector organization has to have intent or doesn’t have to have intent? Is it the intent of this legislation that the candidate, by association, does have to have intent or doesn’t have to have intent? That’s up to the government, not up to the courts.

Hon. P. Fassbender: I’ve answered this I don’t know how many times, and I’ll say it again. The rules are clear. Candidates need to know the rules, whether they’re a part of an elector organization or not. Elections B.C. will receive reports. They will determine if an offence has been committed, and they will visit the penalties that are under the act on that candidate or the candidates of an elector organization.

At the end of the day, if anyone disagrees with that — and I totally disagree with the member — it is the courts that will make that determination and look at all of the factors. It is not this legislation that is going to do it.

Section 26 approved.

On section 27.

S. Robinson: In section 27, there is a change here. Can the minister explain what brought about this change and what the intent of it is?

Hon. P. Fassbender: I’ve spoken to this in previous sections. If an elector organization applies for court relief, it is the duty to inform the candidate of that so that the candidate is fully aware of what’s happening.

Sections 27 and 28 approved.

On section 29.

S. Robinson: This section is quite a thick section. What I’d like to do is, if I could, just ask some questions about them as they get sort of chunked.

[1710]

Section 68.01 talks about penalties for exceeding expense limits or amount available. Can the minister explain how the penalties were derived?

Hon. P. Fassbender: The purpose establishes the administrative penalties for exceeding expense limits or amounts available under the campaign financing arrangement between an endorsed candidate and an elector organization. So what it does is it adds that to the current provisions that are in LECFA.

S. Robinson: These penalties…. In deciding how to administer them, the administrative penalties, how were they crafted? Did it come from some other piece of legislation? How was the decision made that these would be the administrative penalties that would be appropriate?

Hon. P. Fassbender: It came from LECFA currently. We have penalties established in there, and these were derived on that same basis.

S. Robinson: Section 68.02 talks about monetary penalties for exceeding expense limits or amount available. In subsection (3), it says: “A candidate must pay to the BC chief electoral officer, (a) in the case of an unendorsed candidate, a monetary penalty equal to 2 times the amount by which the expense limit was exceeded, and (b) in the case of a candidate endorsed by an elector organization, a monetary penalty equal to 2 times the amount by which the amount available to the candidate was exceeded.”

Can the minister explain how two times the amount was derived?

Hon. P. Fassbender: This was modelled after the provisions in the Election Act, where it is, equally, two times the amount.

S. Robinson: The elector organization must pay the B.C. Chief Electoral Officer a monetary penalty equivalent to five times the amount. There are differing amounts, depending on whether or not it’s an elector organization. In here, it doesn’t have the size of elector organization — for example, an elector organization that maybe has 12 candidates versus an elector organization that perhaps
[ Page 11961 ]
has two or three. There is no distinction. Is there any rationale for why there is no distinction based on the size of the elector organization?

Hon. P. Fassbender: An elector organization is an elector organization. To suggest that we should be looking at different size, at different penalties…. It should be consistent no matter what their size.

[1715]

S. Robinson: I’m just thinking about the minister’s previous response — that it came from LECFA — but LECFA doesn’t have expense limits, which is what this is doing.

This is the new legislation. This is about two times the amount by which the expense limit was exceeded. If the expense limit was exceeded by 100 bucks, they owe $200. If there was no expense limit in LECFA, then this couldn’t have been in LECFA.

This is related to how much over the expense limit they spent, so it’s directly tied to their overspending. It couldn’t have been in LECFA, so I’m still trying to understand where this came from.

Hon. P. Fassbender: My previous response was based on those provisions that were in LECFA. This particular case — there were no provisions in LECFA, and it’s modelled after the B.C. Election Act.

S. Robinson: Thank you for that clarification. Here, once again, if we go back to consistency, this is the…. We went back to: “Well, this is what we do over here. We’re not going to worry about all this other stuff but only this stuff. This is where we’re going to go and make the decision.”

Given that there are very different limits with a local election, does it still make sense to do two times and five times, given that we’re talking about very, very different kinds of limits? It’s a very different kind of ball game, as the minister has said throughout this afternoon. I’m not quite sure that this makes sense, given the size and the context.

Hon. P. Fassbender: Again, I want to remind the member that I said that we looked at all of the provisions in a number of areas before we drafted this legislation. When we have new sections, what are the criteria we’re using?

It is not appropriate to suggest that the scale for a provincial election and a local election are the same, but the multiple for an offence can absolutely be applied against a smaller scale. If you have a local election that is $100, then it’s double or five times $100. If it’s $100,000, then it’s twice or five times that, depending on the scale and depending on the circumstance.

We did look at the B.C. Election Act on a number of provisions, especially for new things that we are putting in this act where there weren’t previous provisions.

Sections 29 to 31 inclusive approved.

On section 32.

S. Robinson: In section 32, can the minister explain what the changes are here?

[1720]

Hon. P. Fassbender: This section provides or adds provisions to clarify that disqualification and prohibition penalties cease to apply if an election participant has been granted relief by the courts and has complied with the court order for relief.

Again, the court will determine the relief, and it also provides that a candidate who has lost his or her seat as a result of exceeding expense limits or as a result of an elector organization’s non-compliance with disclosure is entitled to take office for the duration of the term.

It also provides authority to determine, by regulation, which seat would be resumed by a candidate, which individual would have to give up their seat, in the event that multiple candidates had lost their seats and been replaced prior to the court granting relief. So again, the ultimate decision on relief in that case, and the process, would be with the courts.

S. Robinson: I want to make sure that I understand how all of this plays out. I always find it very helpful to go through a what-if example. If the minister will bear with me, I want to make sure I understand how this plays out.

Somebody is elected. They have a big party. They put in all their paperwork. It appears that they are disqualified for some reason. They are no longer considered elected. They have to step down. There might be a penalty if they overspent. They have to pay their penalty. They are disqualified from office, currently, as well as for the next election.

Then they say: “Well, you know, that was an error. There was no intent. There was a program glitch in the computer that spit out the numbers wrong.” They go to court. That can take some time.

In the meantime, a seat is vacated. The local government has had to move on because, by law, they have to fill that seat. They hold a by-election. Somebody then spends money to do this by-election. They get elected.

In the meantime, this other person — person A — has gone through the court system. The courts say: “This penalty doesn’t apply. You’re entitled to have your seat back.” Now we have somebody who has run and has already won. They are also elected. Perhaps the minister can tell us how that plays out.

[1725]

Hon. P. Fassbender: The answer to the question, and then once I finish that I would like to table an amendment on Section 25.
[ Page 11962 ]

If indeed the court determines that a penalty was not appropriate, that individual would be deemed to have not lost their seat. They would be able to resume their seat. Under regulation, how that would be affected — in other words, what the steps would be — if there is someone who has filled that seat in the meantime, that will be dealt with under regulation.

S. Robinson: Thank you, Mr. Chair. I don’t have enough thumbs to keep my place, so I appreciate if we could finish this section off.

It would be determined under regulation, which means what exactly — that there is some other body that would determine what would happen? I’m just trying to play out…. Does that regulation exist somewhere?

Hon. P. Fassbender: The bottom line is that we are and have looked at a number of other jurisdictions and what steps have been taken, and there is a variety of approaches. I’ve even heard, and this is anecdotal, that in a case where that happened, the two people who held the same seat drew straws.

What we’re going to do is ensure that we look at…. Every one of them might be a little bit different, depending on the circumstances. So what we will do is…. Under regulation, decisions will be made as to what the steps would be to ensure that the order of the court — that that person would resume their seat — can be fulfilled.

S. Robinson: Does the minister expect that that regulation will be developed before the next local election?

Hon. P. Fassbender: Absolutely. Yes, we will.

Section 32 approved.

Hon. P. Fassbender: Hon. Chair, I’d like to go back to Section 25 and propose an amendment.

The Chair: Proceed.

On section 25 (continued).

Hon. P. Fassbender: Under Section 25, I would like to propose…. And I know we will provide copies to the member. In light of the comments that were made, the change in wording would now read “in the case of a candidate who is not declared elected, the candidate is disqualified,” and the words “all cases” would be taken out.

[SECTION 25, by deleting the text shown as struck out and adding the underlined text as shown:

25 Section 65 (1) is repealed and the following substituted:

(1) If a candidate, an elector organization, a third party sponsor or an assent voting advertising sponsor is convicted of an offence under section 84 [general offence in relation to false or misleading information] in relation to a disclosure statement or supplementary report, the following penalties apply at the time of conviction:

(a) in the case of a candidate who was declared elected, the candidate ceases to hold office as a member of the local authority, and the seat of the member becomes vacant and the candidate is disqualified until after the next general local election from being nominated for, being elected to or holding office as a member of a local authority;

(b) in the case of a candidate who was not declared electedall cases, the candidate is disqualified until after the next general local election from being nominated for, being elected to or holding office as a member of a local authority;

(c) in relation to an elector organization, the elector organization

(i) is disqualified from endorsing a candidate until after the next general local election, and

(ii) subject to subsection (1.1), is prohibited from accepting campaign contributions or incurring election expenses until after the next general local election;

(d) in relation to a third party sponsor or an assent voting advertising sponsor, the sponsor

(i) is disqualified from sponsoring third party advertising or non-election assent voting advertising until after the next general local election, and

(ii) subject to subsection (1.1), is prohibited from accepting sponsorship contributions until after the next general local election.

(1.1) An elector organization, a third party sponsor or an assent voting advertising sponsor is not prohibited from accepting campaign contributions or sponsorship contributions, as applicable, for the sole purpose of paying debts incurred in respect of the election for which there was false or misleading disclosure.]

[1730]

On the amendment.

S. Robinson: Thank you for the clarification.

Amendment approved.

Section 25 as amended approved.

On section 33.

S. Robinson: Can the minister explain what this section is intended to do?

Hon. P. Fassbender: The purpose of this section is to add additional sections to the list of penalties for which the B.C. Chief Electoral Officer must notify the local authority.

S. Robinson: Is there a requirement to list why the particular candidate was disqualified?

Hon. P. Fassbender: It’s absolutely obvious that Elections B.C. has a responsibility to notify a candidate of the reasons why. That just is common sense, if nothing else. If they make a determination, they have a duty to inform the candidate.

S. Robinson: Well, I appreciate that, of course. They would, I would imagine, tell the candidate but not necessarily the local authority. So I’m just trying to find out if there’s any requirement to tell the local authority about why they were disqualified.
[ Page 11963 ]

Hon. P. Fassbender: Again, in the spirit of openness and transparency, absolutely, Elections B.C. would have to notify the local authority. I’m sure the member knows, having participated in local elections, the communication with the local elections officer who reports back to Elections B.C. That relationship and that communication are paramount.

S. Robinson: I do appreciate that it’s paramount, but it’s a pretty new relationship. We’ve only had one election with Elections B.C., so I think that they’re probably still finding their way, I would imagine, on a number of things.

Is there any requirement anywhere that there needs to be some sort of public notification about why this particular individual was disqualified?

[1735]

Hon. P. Fassbender: What is very clear: Elections B.C. does post a list of disqualified candidates. It is imperative that the public knows that a seat is vacant or that a candidate has been disqualified. That is their responsibility. And Elections B.C., I’m sure, in terms of their legal responsibility, will fulfil that based on what the law requires in their ability to disclose details beyond the fact and the list of who has been disqualified.

S. Robinson: But this is the law that we’re creating right here, and I don’t see anything in here that says that they have to actually disclose the reason why someone was disqualified. At this point in my read of this — and please, I invite the minister to correct me if I’m wrong — there’s nothing that says here that there needs to be some public disclosure made of why somebody is disqualified.

Hon. P. Fassbender: I do apologize, but the provisions under the current act are that Elections B.C. needs to publish the list of disqualifications. It is silent on whether or not they should disclose the reasons why. I suspect that is silent because of the privacy issues and potential court challenges, and so on.

Section 33 approved.

On section 34.

S. Robinson: This is another change. Perhaps the minister can enlighten us as to what brought this about.

Hon. P. Fassbender: The purpose of this section. It provides Elections British Columbia with the authority to file a certificate with the Supreme Court of B.C. that makes a monetary penalty under the act enforceable as a court-ordered debt owed to the government.

S. Robinson: Does this mean that this monetary penalty is new to LECFA? There wasn’t a previous monetary penalty in LECFA?

Hon. P. Fassbender: This does not add a new penalty. What it does is it does support the enforcement of expense limits by providing a potentially more effective and efficient way to enforce the monetary penalties than by having to prosecute an offence.

[1740]

This can mean that Elections B.C., as I say, under the purpose of this section, is to provide the ability to file that certificate and make it the same as a court-ordered penalty.

S. Robinson: Was there anything specific? I know there’s been one election where we actually got to test out LECFA. Was there a specific incident, or a reason that it was felt that this was a necessary piece to add to the legislation?

Hon. P. Fassbender: No, there was no particular incident that prompted this. But while the bill was out as an exposure bill, legislative counsel and the ministry looked at all of the issues that were outstanding. This was seen as one where by putting in this provision, it would make it a much more efficient and effective way and would not drag the process out.

Section 34 approved.

On section 35.

S. Robinson: Section 35 repeals section 90(2) of the original LECFA. It repeals the extension order. Can the minister explain why it was felt that we needed to take that out of the legislation?

Hon. P. Fassbender: This is a case where in the last election, under LECFA, there were some candidates that were very ill after the election. They were not able to file within the time period because of that illness. This gives Elections B.C. the ability to extend that limit under those unusual circumstances, honouring the candidates and their inability to do that.

S. Robinson: I want to make sure I understand this correctly. By taking out that subsection (2), which has a very finite amount of time, it leaves it wide open now for Elections B.C.

Did the minister have any sense that maybe there needed to be some recommended time? Now it’s wide open. We went from a very finite 120 days, when it must be done, to nothing. I’m wondering if the minister considered something sort of in between that allowed a little bit of flexibility but not so much as to let it go for forever and a day.

Hon. P. Fassbender: As the member, I’m sure, knows, the filing period is defined in the act. If Elections B.C. de-
[ Page 11964 ]
termines that a candidate cannot, they have the ability to determine the extension and the length of it, depending on the individual circumstance.

It was felt, because of some of the unique circumstances we’re aware of, that that flexibility should rest with them. That’s why this has been done — to give them the ability to extend it to whatever they feel is appropriate in the circumstance.

Section 35 approved.

On section 36.

S. Robinson: In this section, there’s been an addition. Can the minister explain what this addition is for? What is the purpose of this?

[1745]

Hon. P. Fassbender: The most recent B.C. statswill determine the population for the next election, which will then determine the expense limits.

S. Robinson: I’m assuming that it means the most recently published, rather the ones that have actually just taken place. Sometimes we could get caught where they’ve done a census, but they may not be published. It’s based on “the most recent population estimates issued annually by the director under the Statistics Act.” That would be the ones that are published on a website. Would that be the place where the minister and his staff would go?

Hon. P. Fassbender: Indeed, this was done to use the numbers that were published and issued by the director and based on the most recent population numbers, not the census numbers. As we all know, the census numbers are much older and don’t reflect the change in population as accurately as the numbers that are published under the Statistics Act.

S. Robinson: I appreciate that clarification.

In subsection (2), it says: “The minister responsible may determine the population of an…area (a) if the population of an election area has not been established by a Census of Canada, or (b) in other prescribed special circumstances.”

The first question I have is: how would the minister determine the population of an area if we have no established census of that area?

Hon. P. Fassbender: This is an enabling section in the legislation. There may be instances where we have one…. Lake Country, as an example, has wards. In this instance, the minister would have to be satisfied — because we don’t have a census — that the numbers that are being provided are appropriate for that particular situation.

S. Robinson: It mentions “in other prescribed special circumstances.” I’m trying to rack my brain about what other prescribed special circumstances might exist. Perhaps the minister might have that. I also see he has a little white paper, so I’ll wait to see what he has to say.

Hon. P. Fassbender: Again, because it’s enabling, we would have to look at if there was a redistribution in communities, or whatever the case might be. This enables us to be able to do that. Again, the minister has to be satisfied that the numbers that are provided are appropriate.

With that said, I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:49 p.m.

The House resumed; Madame Speaker in the chair.

Committee of the Whole (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.

Hon. M. Polak moved adjournment of the House.

Motion approved.

Madame Speaker: This House, at its rising, stands adjourned until 10 a.m. Monday morning.

The House adjourned at 5:50 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
ENERGY AND MINES

(continued)

The House in Committee of Supply (Section A); S. Sullivan in the chair.

The committee met at 1:34 p.m.

On Vote 20: ministry operations, $25,912,000 (continued).

[1335]

A. Dix: Before lunch, we were having a discussion about the fact that B.C. Hydro and the government have
[ Page 11965 ]
allocated all of the contingencies for the Site C project in 2016 and that if you take the estimates for the cost of items that are not budgeted for — in particular, the spillway, intake and penstock — in the main works contract — that is, if you take the 1981 or the 1987 numbers — those numbers would add up to about 26 percent of the overall cost, or about $950 million. That appears to be confirmed here.

Essentially, the government has used contingencies which, if you look at Muskrat Falls or any other similar project, you know are for scheduling delays and geotechnical surprises. But in this case, it’s the contingency that’s trying to get the Liberal party through another election. In any event, that’s what we’ve concluded here.

They have allocated, unbelievably, all of the contingencies, based on the budget they offered the federal government and the budget they offered the people of B.C. in December of 2014. They’ve offered up all the contingencies already to pay not for costs that come up, not for costs that arise, not for geotechnical issues, but for the dam, because without these parts of the project — without the spillway, without the intake and without the penstock — there’s no dam. They don’t produce electricity. So this is not a contingency; this is at the core of the project.

What the government has done and what B.C. Hydro has done…. Having not vetted this proposal through the BCUC, they are not prepared today to tell us what they budgeted for those areas, as B.C. Hydro did in 1987 and 1981. What they’ve done is used contingencies now to justify an overrun on the project which may well be $950 million already. We’re in 2016. We’ve got eight years to go. That’s what they’ve done.

Is it not the case that delays, things that arise in construction, are the normal uses for contingencies?

Hon. B. Bennett: The NDP narrative for Site C continues on, regardless of what the facts are. Contingencies that are allocated to the various components of the project are still contingencies. They’re not spent. The contingencies are still there to be used as contingencies. They’re there in a different form. They’re there in a different place, let’s say. They’re there in the various components of this project that are bid out and then, ultimately, built. So the member’s conjecture or suggestion that somehow or other the contingencies have suddenly been spent is absolutely incorrect.

A. Dix: Well, the minister’s absolutely incorrect. It wasn’t me. It was B.C. Hydro that put forward only a partial budget. Remember, it was never reviewed before the BCUC. When it was, it was rejected. They didn’t want to do that. They didn’t want to risk that. It was based on demand forecasts that have already been demonstrated, alas, to all of our detriments, to be wrong.

They put forward this proposal. They didn’t vet it. They didn’t go through the legal process to get it approved. They didn’t answer questions from an independent regulator for independent people. They assert these things. They won’t tell us what these items cost in the budget, even though previous Social Credit governments were not afraid to do that. They won’t do that. We’ve had the discussion. They are covering up the facts, the specific budgetary facts of this project.

They’re refusing to answer basic details — not outrageous questions, not conjectures, but just basic questions. How much does this cost? “We can’t say.”

Well, they are the ones, not me, who said that this won’t cost a penny more than $8.775 billion. Outside the Premier and her cabinet and the executive of B.C. Hydro, I don’t know many people who believe that, and this is why.

This contingency is allocated. It is not intended to be used to pay the basic costs, like spillway, intake and penstock, and that’s precisely what it’s been used for in this budget.

[1340]

They used the entire budget line and hadn’t accounted for it. They were orphaned parts of the budget, and then they allocate the contingency. Believe me, anyone who’s seen any other dam project in Canada, including the ones in British Columbia, knows there are contingencies. They’ve allocated that money to pay for basic things.

Contingencies are not for things that if they weren’t built, the dam wouldn’t be the dam. They are for things that arise. The minister knows that. Everybody knows that. It is, in fact, the meaning of the word “contingency.”

They don’t provide any other detail here. There’s no detailed analysis of their costs as there would have been if they had sent this project, as the law provides, to the B.C. Utilities Commission — which they failed to do.

My question is…. The minister won’t provide any information to the Legislature. He won’t have this project reviewed by the BCUC. Will he provide, this afternoon, a detailed budget for the Site C dam — not six line items with everything melded together, including contingencies and inflation washed in to hide the fact that they’re over budget, but the budget for the key items on the Site C dam project? Will he do that this afternoon?

Hon. B. Bennett: The member is, again, just absolutely incorrect. I’m going to have to go back to my attempts earlier today to explain to the member why it is not considered to be good commercial strategy to tell somebody who will be bidding on an opportunity to provide services or goods how much is in your budget.

If the member wants detailed budget information on early works and clearing, on accommodation, on main civil, on turbines and generators, on upgrades to highways…. Those contracts have been let. Those automobiles have already left the lot. The deal was done. The member can have all the details on those portions of the Site C project.
[ Page 11966 ]

What we have said, using the example of buying a car, is that when you go on the car lot and the car salesman says, “How much do you have to spend…?” Normally, you don’t tell the car salesperson how much you have to spend. You want to make your deal and get the best price you possibly can. B.C. Hydro wants to get the best possible price they can on everything they do at Site C. That way they can stay on budget. I don’t know how else to explain it to the member.

We’re not going to be able to give the member specific numbers on items in this project that have not yet been contracted for.

A. Dix: Of course, the minister will agree with this. If this project had gone through the BCUC process, they would have had to have done that. They would have had to have provided the budget — as they did in 1981, as they did in 1987. There were a lot of car dealers in those governments, too, I’d say to the minister — a lot of car dealers in those governments. They understood that B.C. Hydro is a public trust and they had an obligation to tell the public the truth about the project.

Interjection.

A. Dix: They absolutely would have asked them, as they did in that process.

It is ridiculous to say that you can’t tell us what major elements of the projects are going to cost, when you have gone out publicly; when B.C. Hydro sends out propaganda emails every week saying they’re on time and on budget, but we won’t tell you what the budget is; when they’ve assigned the contingencies already — in 2016, assigned all the contingencies. I didn’t see that in any of the propaganda emails I received from B.C. Hydro and the Liberal Party on this project.

They do have an obligation because they’re a public Crown corporation. I know this is a novel notion. They probably would have had such an obligation as a public company. As a public Crown corporation, they have an obligation to the Legislature, to the Utilities Commission, to the public and to the ratepayers to tell the truth. What the minister is saying is that we don’t want you to know the truth, that competitive bidding isn’t competitive bidding, that people out there aren’t going to compete for projects. B.C. Hydro is going to be hooped because they told the public the truth.

[1345]

This is absurd. There is competitive bidding on this, just as there is, in the minister’s example, on houses. There’s competitive bidding on projects at B.C. Hydro, I think. We’re going to get into that in a couple of minutes and the consequences of competitive bidding.

If you look at ILM, the Interior–Lower Mainland line, $141 million over budget. That’s the record of competitive bidding. Similar budgets to this. Similar promises were made. On the northwest transmission line, $400 million over. On IT projects…. We’re going to wait till Monday to get into IT projects. But can you imagine? We’re in year 8 of a five-year plan. They’re not close to finished, and they’re massively over budget. Promises were made there.

They have an obligation to the truth. This is a central issue of discussion in British Columbia, and B.C. Hydro and the Minister of Energy in this House won’t tell us the truth about the B.C. Hydro budget for this dam project. He says he can’t tell us. We’re too sensitive, I guess, to know the truth — while he allocates all of the contingency.

It is, I would suggest, outrageous. The Social Credit cabinet ministers in the 1980s would have understood it to be outrageous. They wouldn’t have allowed it to happen. Of course, those cabinet ministers allowed this project to go to the B.C. Utilities Commission. That’s what they did.

Let me just ask another small question about Site C, because it’s of interest. It’s about fish habitat. I’ve heard a story about trucking fish — that B.C. Hydro plans to take bull trout and truck them around the dam. Can the minister give me an update about the fish issue as it relates to Site C and possible costs and mitigation costs on the fishery for the Site C dam?

Hon. B. Bennett: While my support staff here are gathering the information to enable me to answer that question, I’ll just take a minute to respond to the member’s continuing incorrect editorial. The next big contract that’s coming up for Site C….

By the way, $4 billion has been not spent but contracted for. Almost half of the project has been contracted for already. If the member wants to see the details of that $4 billion, as I said a minute ago, I’m happy to share it with him. It’s the contracts that have not been let yet, contracted for, that we are reluctant to provide specific dollar amounts. We can provide ranges but specific dollar amounts….

The next major contract that will be let is the generating station and spillway. What the member — and the NDP, who are so proud of themselves here today — is suggesting is that we should just say how much we have in the kitty for that contract. Let’s just tell the world how much is there. So when the world comes to look at bidding on this contract, they’re going to know how much is actually there for the contract. What do you think they’re going to do? They are going to get as close as they possibly can to that top dollar. Nobody does business like that except for the NDP, and they certainly did in the 1990s.

[1350]

The passage of fish was a requirement or a condition in the environmental certificate provided by the environmental assessment office in B.C. and the Canadian Environmental Assessment Agency. Hydro will be meeting their requirement. I’ll leave it up to the member to
[ Page 11967 ]
ask specific questions about whatever part of this he’s interested in.

A. Dix: Well, I asked for an update, and I guess that’s what amounts to an update on their most important priority.

The B.C. government has said that the province has “a global responsibility for the conservation of the species,” referring to the bull trout.

Is it the case that B.C. Hydro is considering taking the bull trout by watercraft to the Halfway River about 30 kilometres upstream from the dam where they spawn in watersheds and creeks? And Arctic grayling will be released at the Moberly River, just upstream from the dam. Other fish species will be released directly into the Site C reservoir. Is that the plan?

Will the bull trout travel in a fish lift to a sorting area? Is it, in fact, the plan of B.C. Hydro to truck thousands of bull trout for 100 years around the Site C dam?

Hon. B. Bennett: Again, this is a condition of the environmental certificate imposed by both environmental assessment offices, which means that the condition was imposed by the people with scientific backgrounds that work in both of those agencies.

This is not something that B.C. Hydro dreamt up. This is something that the joint panel asked Hydro to do. Hydro will do it, and they will do it successfully.

I’ll just quote from what the joint panel said. They said that, “The panel supports the proponent’s planned trap and haul program but notes that it must be combined with a successful management plan.”

Interjection.

The Chair: Minister.

Hon. B. Bennett: Not allowed to use these?

The Chair: You’re not allowed to use the screen while you’re….

Hon. B. Bennett: Okay. Sorry. My apologies.

In any case, the joint review panel consisting of federal and provincial environmental agencies suggested that this was the way to manage fish on that part of the Peace River system. So Hydro will do what it has been told to do, and it will do it well, as it does almost everything well.

A. Dix: Are the estimates for costs of this about $25 million? And is it, in fact, B.C. Hydro’s plan, as a result of Site C…? Three-quarters of the bull trout population, for example, of that species will be caught behind the dam. Is B.C. Hydro planning, as part of its mitigation measures, to truck trout for 100 years, and will it cost approximately $25 million, as has been reported, based on B.C. Hydro’s technical reports?

Hon. B. Bennett: I’m advised that the $25 million is in the range of what this endeavour will cost.

I want to continue reading — not off an iPad this time, but from what the joint panel said. They said the measures will “support a community of equal or greater productivity than the existing riverine” would do.

[1355]

What the scientists are suggesting is that, in fact, what’s been proposed and what Hydro will do should not only keep the populations of bull trout healthy but, according to the scientists at the federal government and at the B.C. government, actually enhance populations.

A. Dix: Of course, that’s not what the joint review panel do. That’s presumably what B.C. Hydro told the joint review panel, what they concluded it was. There’d be a profound change in the type and character of the remaining habitat, and the changes would be “probable, negative, large, irreversible and permanent so long as Site C remains.”

The minister is almost entirely wrong. I guess the question is…. I mean, this is the plan. This is the Site C plan. I don’t know if this $25 million is out of the contingency or where that might be. It might be. What we have is a plan because of this decision. Given the general approach to the Liberal party transportation plans, I suspect, in a referendum, the trout would vote for referring this matter to the B.C. Utilities Commission.

In any event, what we’re talking about here, then — the minister has said — is $25 million. He’s able to give me that budget. I guess there’s no competitive bidding on the bull trout budget. The $25 million is going to be spent by the ratepayers of British Columbia to truck trout for three or four generations.

Is the minister actually confirming? Is that exactly what has happened? He says, of course, that B.C. Hydro doesn’t want to do this. Presumably, B.C. Hydro would be happy to just wipe them out. Is this actually a scheme being put forward by B.C. Hydro — to permanently truck trout around the Site C dam at a cost, in the short term, of $25 million? Is he seriously telling me that this is their plan?

Hon. B. Bennett: I completely refute the notion that a Peace River trout would vote NDP. I don’t think that would ever happen, given what I know about the Peace region.

The member should get out more. I mean, the member…. I’ve fished all my life. I’ve caught lots of bull trout. I’ve let lots of bull trout go. I’ve eaten a few. The member should let me take him fishing in a few places around the province, and I could actually….

A. Dix: That would be a fun trip.

Hon. B. Bennett: We need to both come back.
[ Page 11968 ]

A. Dix: Let’s come back.

Hon. B. Bennett: We need to both come back from that.

What I could show the member are examples of where this trap and haul is actually a common management measure for upstream fish passage. This, I believe, is a quotation out of the joint review panel: “Trap and haul is a common management measure for upstream fish passage, particularly at high-head facilities” such as what you’ll have with Site C. Examples of successful trap and haul facilities include the Lower Baker dam on the Skagit River, which has operated since the 1950s.” They also transport bull trout from the Willamette River.

The quote goes on and actually mentions several different places in which this exact type of endeavour is very, very successful. I would suggest that the member and I, after session is out, get our fly rods. We’ll go, and I’ll be able to show the member how this is not really as extreme an idea as he seems to think that it is.

A. Dix: Well, of course, the minister misquoted the conclusion of the joint review panel. But that’s okay. It won’t be the first time.

We’re going to have a vote, I think, shortly. So I wanted to get to something, by way of illustration, about the Interior to Lower Mainland project and bring it back to Site C. The Interior-Lower Mainland transmission line, of course, as you know, was budgeted at $600 million. It ended up at $741 million. That’s well within the minister’s 50-30 formula for capital projects — 50 percent over, 30 percent under. So I guess that’s on budget — $141 million.

The contractor, who had no experience in transmission projects, was chosen in the tendering process by B.C. Hydro. Their subcontractors bailed out. The steel that they imported from India failed. B.C. Hydro itself had to take over 19.8 kilometres of the line. Those are what you’d call contingencies, and that’s how we got $141 million over budget.

Also, what happened is there are….

[The bells were rung.]

A. Dix: Oh, it’s a cliff-hanger. We’ll be back shortly.

The Chair: This committee will recess until after division.

The committee recessed from 2 p.m. to 2:11 p.m.

[S. Sullivan in the chair.]

A. Dix: I was, of course, discussing the ILM project. Just to review for the minister, because he experienced these events in real time. The project was budgeted at $600 million. It came in at $741 million. They chose a contractor for the main line work, at $284 million, that had no experience. This reflects on the tendering process, which we’ll be discussing a little bit with relation to this — and to Site C, for that matter.

The company, Flatiron-Graham, could not complete the project. Hydro had to take over the most difficult 19.8 kilometres of the line, near Spuzzum. The result of it all was a project that was late, over budget dramatically — $140 million is quite a bit over budget on $600 million. As I told the minister, it’s within his 30-50 formula or his 50-30 formula, but nonetheless, significantly over budget.

The question I had for the minister…. He and the president of B.C. Hydro held a press conference celebrating that they’d wrestled these costs down to $741 million on the completion of the line. What wasn’t told to the public at that press conference was that there was an ongoing dispute between the contractor and B.C. Hydro, with very significant amounts of money. I’m told, and the minister will, I’m sure, inform me about this, hundreds of millions of dollars at stake were in an arbitration process.

In fact, there’s a fundamental dispute, because what happened on this line was that Hydro changed the route of the line and changed it back. This is an argument the contractor makes to say that they should be paid more. B.C. Hydro has a different view.

Last year in estimates…. It was April 2015, halcyon days. In April 2015, the minister said the process was in arbitration. Can I ask the minister: where is the arbitration at, what has happened in the arbitration, when was the matter originally referred to arbitration, and when are we expecting a decision on arbitration?

[1415]

Hon. B. Bennett: The member is correct. There is an arbitration happening. The parties, of course, to the arbitration have signed confidentiality agreements, so there’s not a lot of detail that I can provide to the member. That’s not unusual. The arbitration was referred in the fall of 2014. I’m not sure when it will end.

The other part of the answer in response to some of the things the member said in his last question. I’m not sure if it was context or preamble or what it was, but they were comments I want to respond to.

The member is well within his rights, and I certainly applaud him for choosing projects where there are complications and projects that are over budget to talk about. That’s his job as an opposition critic. And it’s my job to try to explain those situations and acknowledge that on those situations, obviously, we would want to do better.

I do need to point out, however, that the member used the number of $600 million for this particular project, and the budget that was approved by the BCUC — the member is always saying that we should go to the BCUC — was $725 million, not $600 million. That’s about 2.5 percent over budget.

I think it’s worth mentioning, also, that over the past five years, Hydro has completed 563 capital projects, at
[ Page 11969 ]
a cost of $3.94 billion. All together, that $3.94 billion, 563 projects, all are actually P50 projects, so they have to work pretty hard to make sure they’re under budget. And they were under budget by 1.8 percent over the past five years.

It is the opposition’s job, of course, to focus on where matters have not been managed perfectly, but it is also relevant, I think, to the public, especially the ratepayer, to know that Hydro is actually doing a very good job on its capital program. Generally speaking, when you average it all together, it’s actually under budget.

A. Dix: Well, the $600 million figure — where does that come from? I know it’s unfair. To carry on the metaphor from earlier: “You have to fish where the fish are.” It’s unfair for me to quote B.C. Hydro’s own numbers, its own estimates, which, for this project, were $600 million. Those are the ones in the budget we passed in the Legislature.

The strategy here is the minister says: “Oh, it’s a $600 million project, but we decided to make that a $725 million project so we’re only $16 million over budget, at $741.” That’s what he’s saying.

But of course, the reality is that they’re $141 million over budget. That is about 23 percent over budget, which is very significant. Again, it’swithin the minister’s 50-30 formula for capital projects, but still well over budget.

[1420]

The issue on this project is that they chose a main contractor who didn’t do the work properly. And you know who told me that they didn’t do the work properly? It was the minister. He told me. He criticized them in the estimates of 2014 and the estimates of 2015. He said they were doing a lousy job. That’s what he said. He said they were doing a bad job.

In fact, what happened almost immediately after they got the contract…. They did not have transmission line experience. It’s not that they’re a terrible company. They’re not. They didn’t have transmission line experience, but they low-bid the contract, and Hydro awarded it. That’s what happened.

Doesn’t the minister think, given that the project was more than a year late — it delayed other projects, was $141 million over budget, and B.C. Hydro itself had to do the most difficult parts of the line — that this was a reflection that the tendering process on the Interior–Lower Mainland line was a disaster? Doesn’t he agree that this was a failure of B.C. Hydro tendering?

When you choose someone who’s inexperienced at this work, you get what you pay for. They were inexperienced with this work. It was all predictable. And it’s the minister who has been critical. He has been more critical than I am of the contractor in this case. He’s the one who’s critical.

We’ve gone through that process, and we have a matter that’s still in arbitration, now that the project is finished, between B.C. Hydro and the contractor. You know, it’s not the Liberal cabinet that pays for that, although they’re raising a lot of money these days. It’s not the Liberal cabinet that pays that. It’s the ratepayer that pays and that will pay for this process that didn’t work.

Does B.C. Hydro recognize that this is a failure and this project was a failure of the tendering process? They brought in a contractor with little experience, and the contractor wasn’t able to do the work, and they’re still fighting about it before an arbitrator — over hundreds of millions of dollars. Does the minister agree with me that this was a failure of B.C. Hydro tendering policy?

Hon. B. Bennett: Well, I can’t comment on the arbitration and what is being discussed. I, in fact, don’t know what’s being discussed at the arbitration. There are agreements, confidentiality agreements, that have been entered into by B.C. Hydro and the contractor.

What I do want to clarify for the member, though, is that, again, he’s wrong to use the $600 million number. That was not the budget for this project.

There was an application that went in, probably five or six years ago, to the commission with a $602 million figure associated with this project. But it did not include First Nations costs. It did not include environmental costs or provisions. It was a preconstruction planning estimate.

When Hydro took the final application to the B.C. Utilities Commission — that is the commission that the member so dearly loves to talk about — the B.C. Utilities Commission issued the certificate of public convenience saying: “A certificate of public convenience and necessity is granted to BCTC for the ILM project as described in the application, subject to the following…. The P50 cost estimate, 2014 dollars, that is to be filed with the update report is equal to or less than $725 million.”

The cost of the project was, according to the BCUC — not according to the NDP critic but according to the BCUC — $725 million. So when I say that it looks like it ended up a project that is being 2.5 percent over budget, that is an accurate statement. It is also accurate to remind the member that over the past five years, those 563 capital projects, generally speaking, were almost 2 percent under budget.

A. Dix: Let me ask the minister precisely. Have both sides finished making their arguments before the arbitrator? Are they simply waiting for a decision?

[1425]

Hon. B. Bennett: I don’t know, because B.C. Hydro has signed oaths of confidentiality, and they would be breaking those oaths if they told me or anyone else. We’ve made that pretty clear so far. I think the member has been around long enough to know that when there is an arbitration over a lot of money happening, the parties agree that they’re going to negotiate and contest one another’s
[ Page 11970 ]
position in confidence and not be talking publicly about the terms of their negotiations.

A. Dix: I’m simply asking whether they’ve finished making their arguments, which seems a perfectly reasonable question in an arbitration that’s 18 months old. Presumably, we’ll find out the results of the arbitration about June 2017.

The reality is that when B.C. Hydro had its news conference on this…. The minister can say, and I agree, when things go to the BCUC, they become more accurate than what the government says. The government said $602 million. They changed their…. That doesn’t change the fact that that’s real money paid by ratepayers. It’s $140 million more than they said it was going to be. That’s what happened.

Regardless, it was the minister, in last year’s estimates, who was highly critical of the contractor in the middle of the arbitration. It was the minister two years ago who was highly critical of the contractor. I’m asking the minister a specific question. I asked him a specific question about tendering policies at B.C. Hydro because he personally ripped the contractor in this case. He personally ripped the contractor twice in estimates.

If you’re an opposition MLA, that could happen any day from the minister, but when you’re a contractor on a B.C. Hydro project, its quite unusual for the minister responsible to tear a strip off you — in the middle of this process, I might add.

When they had their press conference, why didn’t B.C. Hydro say that there’s a pending arbitration and that $741 million is not the final cost? Why can’t B.C. Hydro tell the public? They said it was $741 million at the time, and clearly, the cost is $741 million plus whatever the outcome of the arbitration, which could be zero, and it could be whatever the maximum number is. Why didn’t B.C. Hydro inform ratepayers of the potential for significantly higher costs on this project when they announced the completion of the project? That’s the first thing.

The second thing is the question I asked the minister the last time, which I’ll repeat because he didn’t answer: does this not reflect badly on B.C. Hydro tendering practices? When you have a contractor who fails to do the work, is late, and the minister rips him in estimates, isn’t that an example of bad B.C. Hydro tendering?

[D. Plecas in the chair.]

Hon. B. Bennett: The member contends that the $743 million is more than what Hydro should have paid for this project — the original budget approved by the BCUC being $725 million. What I would say to the member is that there is an arbitration happening right now where the two sides and an arbitrator will determine who made any mistakes that may have been made, who is responsible for what.

It is Hydro’s position — not to go into any detail — that the $743 million is an appropriate cost for the project. Of course, the arbitrator will be the final arbiter of that amount. It is a difference between $725 million approved by the BCUC and potentially $743 million, which is about 2½ percent.

[1430]

The member made comments and asked a very, very general question about tendering practices by B.C. Hydro. I think the best answer I can give the member with respect to the tendering practices utilized by B.C. Hydro is to refer him once again to the fact that over five years, B.C. Hydro has been under budget on $3.94 billion of capital projects. So they’re obviously — obviously — doing a good job.

The Chair: Good afternoon, Member for Vancouver-Kingsway.

A. Dix: I’m so delighted to see you in the chair, hon. Member.

I had some questions about tendering, because the minister was asserting issues around tendering. Just to make the point, on the ILM project, as I say, it’s not me that said that they did a bad job tendering and they chose a bad contractor. It was the minister himself. He said it in….

Interjection.

A. Dix: Yes, he did. He said it in 2014. He said it in 2015. Fortunately, because of Dave Barrett, we have Hansard in this Legislature.

I wanted to ask him about important tendering work done by B.C. Hydro. It’s a challenging question, and if you’ll permit me, I’ll just take the minister through that. It’s the issue of whether when work is done on projects, it’s energized or a power outage is required. It’s an important question.

B.C. Hydro in fact does more energized work than most other utilities, which I think is a good thing in a broad sense, although energized work has significant safety issues that everyone has to consider. What it requires is contractors who are able to do the work and who are qualified to do the work, and workers who are qualified to the do the work.

It’s an area where qualification is critical. I mean, it has, obviously, huge advantages. When you have to do a power outage, it affects all of the ratepayers around there. It costs B.C. Hydro money. It may be slightly more expensive, I presume, to do energized work than non-energized work, but the societal costs, the economic costs, are significant.

I want to ask the minister about three projects that have been tendered, because when a project is tendered for energized work and people bid on it and then they
[ Page 11971 ]
can’t do the work, that’s a significant problem. And it appears, at least, to be an ongoing problem with B.C. Hydro. So I wanted to ask the minister about three pieces of work: one that’s from Port Alberni to Tofino, one that’s on the 500 kV circuit near Boston Bar, and the distribution upgrade near 150 Mile House that was in 2014 — these three projects.

The first one, which is circuit 60L129, was supposed to be done fully energized. In fact, it was late, and B.C. Hydro had to arrange multiple power outages. Obviously the company, when it won the contract and presumably low-bid the contract, said that it could do it energized and then was unable to do it.

The Boston Bar issue — the project was supposed to be finished actually last week, March 31, 2016. It remains incomplete. Even though it was supposed to be done energized, an outage is being arranged soon.

On the distribution upgrade, that was awarded to a company called Aerial Contractors. It was supposed to be all energized. They were unable to do the project, and B.C. Hydro arranged for no less than six outages to allow the work to be completed, months late.

I guess the question that the ILM project, where the minister trashed the contractor in the House…. That’s how he felt about it — I don’t know the contractor as well as the minister, so I can’t say — which shows a tendering process as bad. And these other contracts where people low-bid the contract — they say they can do it energized, and then they don’t follow through on the contract. What are the consequences of that?

Doesn’t B.C. Hydro have an obligation to pre-screen and qualify contractors to ensure that they can do this important work so it doesn’t interfere with every business in the region they’re doing the work?

[1435]

Hon. B. Bennett: The member has made reference to three separate projects around the province. We’ve been able to identify two of the three, but we’re wondering if he could help us identify the Boston Bar project, if he has any more specific information around that project.

A. Dix: Happy to. The Boston Bar project is a project that was on a…. It’s a 500 kV circuit. It was supposed to be completed March 31, 2016. I believe, and I’m not certain of this, that it was awarded to Rokstad, which is a major contractor, that it remains incomplete and that outages are going to begin, even though it was supposed to be an energized project.

I guess my question to the minister is…. I mean, there’s is a whole debate about whether work should be done, energized or not. In general, it’s a good thing, I think he would appreciate, for local businesses, for B.C. Hydro customers, as long as it’s done appropriately and safely.

The question is: when people bid a contract, have they been properly qualified? Is B.C. Hydro only low-bidding these contracts, as appears to be the case with ILM, with serious consequences that continue for the ratepayer? Or is B.C. Hydro doing sufficient pre-qualification in its tendering processes?

Hon. B. Bennett: It’s a detailed question and a fair enough question, but it’s going to take us a bit of time to get the details on the three separate projects.

The member did ask whether contractors had to be qualified before they could be awarded a contract, and the answer to that is yes. They’re all pre-qualified. They can’t bid unless they’re pre-qualified, so of course they do. We can get more detail on this. We’ll try to get more detail this afternoon, as we go along, and provide it to the member as we get it. If it takes a bit longer, then we should be able to get it to the member fairly quickly.

A. Dix: We’re going on, on Monday, so the minister does have some time in terms of those particular contracts. I think the issue is, though, in those contracts…. Fair enough if the minister wants to assess the situation with those contracts. But when you have contracts systematically being bid as energized, and then B.C. Hydro has to do power outages and projects are late because they can’t do them, that clearly should affect the qualifications of those companies for those contracts.

If you keep making the same mistake over and over, that’s a significant issue. So if a company, as in those three cases…. The minister can confirm whether the tenders did require energized work and whether the companies have been unable to complete the work in those cases. But isn’t it the case that if you bid a contract, say you can do the work energized and then you’re not capable of doing the work, that should affect your pre-qualification on future contracts?

[1440]

Hon. B. Bennett: We don’t yet have the information on the three contracts. What I want to do for the member, as opposed to answering a hypothetical question…. We don’t know the facts around these three contracts. The member has described things in his way. Maybe he’s right; maybe he’s not right. We need to look into these three contracts, figure out what the facts are and then get back to the member. We can certainly determine the basis upon which these contracts were awarded and how they were supposed to be fulfilled. We’ll do that for the member.

A. Dix: I’m happy to have the discussion about the consequences of failing to meet contracts at that time if the minister is up for that — probably on Monday, I would guess.

I wanted to ask the minister about the IRP. The existing IRP presented by B.C. Hydro, of course, is already well behind in terms of its estimates of domestic demand.
[ Page 11972 ]
What else is behind is that B.C. Hydro has failed to meet its self-imposed deadlines with respect to producing a new IRP and has sought further delays.

What I’d like to ask, specifically…. What tends to happen in IRPs is you get graphs without numbers. As we go forward…. I’m referring to the evidentiary update that B.C Hydro produced with respect to the load resource balance, which states that load is forecast at a lower level compared to the 2013 IRP and indicates, in fact, and reflects what is reflected in B.C. Hydro’s quarterly reports, which is declining demand relative to the IRP.

What I’d be interested to know, in the updated numbers, is to compare the numbers in the IRP for these years that we’re in — 2015, ’16, ’17, ’18, ’19; those numbers that were in the 2013 IRP — and how they confirm with updated estimates and actuals.

Hon. B. Bennett: You have to plan no matter what area of endeavour you’re involved in. The IRP, of course, is an effort by B.C. Hydro and government to have a plan, over a 20-year period, to know how much electricity is going to be needed, when and where. The IRP is an extremely valuable instrument for Hydro and for government.

The member is correct to suggest that things change. Commodity prices, for example. I have personal experience, as the Minister of Mines, with commodity prices tumbling into the basement and making mining a very difficult industry.

That’s had some impact on demand and on the forecast, bearing in mind that when Hydro does its forecast…. They’re very good at doing their forecast. Experts like Mark Gilbert, who have been retained to come in and examine their methodology, have indicated that they’re as good as anybody in the world at forecasting. But still, they have to forecast in a way that includes estimates as to what’s going to happen with commodity prices, what’s going to happen with business development. When is it going to happen? At what scale is it going to happen? Is it going to happen?

There’s always going to be some back-and-forth, some change, when you create something like an IRP, an integrated resource plan, in 2013. Commodity prices go down, or some other shift in the economy happens. There are always going to be changes.

That being said, we do anticipate population growth, not because we think the population necessarily is going to grow — we do think it’s going to grow — but because Statistics Canada and other organizations have indicated they think B.C.’s population is going to grow a lot over the next 20 years. In fact, it’s 1.15 million people from our current population of 4.6 million people.

[1445]

This is 25 percent growth, which would be like adding another city the size of Vancouver and a city the size of Surrey over the next 20 years. We hope that happens, and the experts have indicated that they think that’s going to happen. So we’re going to need more electricity. Is it going to be 38 percent growth over 20 years, as the October 2015 load resource balance said? Or is it 40 percent, as the IRP stated in 2013?

I think the best place for the member to get the information that he wants — this updated snapshot by B.C. Hydro that will show what their updated forecasts are, their load resource balance is — would be to wait until July, when they file their revenue requirements application in detail.

The member’s well aware that an application was put in for a one-year rate increase for the 4 percent that’s part of the ten-year rates plan, but that Hydro has committed to filing their revenue requirements application sometime in the summer, hopefully in July.

They’re working on that right now. I’m working with them on that right now. And it will be the very best job that hydro can do to show the public. The member will have an opportunity to attend public meetings. All of these documents will be filed on the BCUC website. Everyone will have a chance to see what B.C. Hydro sees over the next decade and beyond in terms of business growth and load demand and rates and so forth.

A. Dix: Well, this is B.C. Hydro’s…. The load resource balance is important because it is, really, the main justification for proceeding with the Site C project. The minister will know that.

Admittedly, this is a period when the Liberals have been in office, relative to periods of Social Credit in office and NDP in office. There’s relatively low economic growth; that’s true. But take the whole period from 2006 to 2016, and what you see is flat domestic demand. Essentially no change in domestic demand. If you take January 1, 2007, to January 1, 2016, there’s no change in domestic demand. If anything, down slightly.

This is actually true across the western United States as well. If you look at weather-adjusted loads, same situation — flat demand. So in 2012, they were justifying the Site C project, because the 2013 IRP is based on 2012 — just as this IRP, I believe, is based on 2014, these estimates that are done now. The minister can correct me. B.C. Hydro has decided to delay the IRP. They made a commitment to bring it forward. Then they delayed it because, presumably, the numbers aren’t very favourable for what they’re planning.

Here is the fact. This is B.C. Hydro. “It’s been flat, flat, flat, flat. We need Site C.” Boom. That’s what they’re saying. It’s been flat everywhere. B.C. Hydro’s estimates of domestic demand are higher than other jurisdictions around. This was with similar economies. They still have items in for LNG and the load resource balance that are, given what’s happened, a bit of a fantasy. Including in the balance for this coming year, if you can believe it….

What we have is a load resource balance, an estimate of a 40 percent increase, that’s no longer justified by the
[ Page 11973 ]
facts. So I want to ask a really simple question. It’s the one I asked that the minister, of course, didn’t answer, which is: what’s the difference between domestic load in the year just finished — is it a number that B.C. Hydro has? — and what they said it would be in the IRP?

[1450]

Hon. B. Bennett: I probably don’t have everything I need to answer the question fully, but I’ll answer it as best I can with what I have, and if the member wants more information, we can provide it to him.

First of all, I think when the member describes load as flat, he is doing so in a way that neglects to take into account DSM, demand-side management, or conservation. Demand actually isn’t flat. Demand is growing.

Interjection.

Hon. B. Bennett: The member doesn’t think he is, but B.C. Hydro thinks he is.

Demand is not actually flat, but when you do the work that Hydro does on demand-side management, fulfilling their obligation in the Clean Energy Act, it does look flatter.

If I could give the member some background on what’s happened over the last six years. When the recession happened, demand had been growing at a rate of approximately 2 percent per year. Then, of course, 2008 happened. The recession and a concurrent drop in newsprint demand have resulted in a 15 percent drop in large electricity load.

During the 2008-2009 recession, B.C. Hydro lost a number of large industrial customers, including its largest customer, Catalyst, Elk Falls. When you lose your largest customer, it’s going to take a while to make up that demand. Since that time, B.C. Hydro’s industrial load has largely recovered, growing by about 7 percent over the last five years — so not flat.

Since fiscal 2010, B.C. Hydro has experienced resumed electricity sales growth, although at a slower rate than prior to the recession. Several factors for that, one of which is the success of B.C. Hydro’s Power Smart conservation program.

Specific to fiscal 2015 and fiscal 2016, actual electricity sales were less than forecast. That was due to successive warm winters. B.C. Hydro’s residential electricity sales are very sensitive to temperature due to the large amount of space heating demand that we have here in the province.

[1455]

Looking ahead, B.C. Hydro continues to forecast long-term growth across all customer classes — residential, commercial and industrial — and expects overall load growth to grow by almost 40 percent over the next 20 years, very close to what’s in the IRP.

The last part of the member’s question, I think, had to do with our estimate for 2016 — how it compares, I guess, to what’s in the IRP. What I can tell the member is that the forecast domestic sales for fiscal 2016 have been lowered by approximately 2,300 gigawatt hours. Again, DSM plays into that, is part of that. That’s the difference between the IRP and what we’re now estimating for 2016 — 2,300 gigawatt hours.

A. Dix: It’s actually, of course, the contrary, because B.C. Hydro has failed to meet its demand-side management targets in the IRP.

Interjection.

A. Dix: They have. I mean, that was the minister’s response to the question last year. I’ll be happy to, maybe in the break, take him through what he said. They missed their targets last year, so that, I guess, mitigates the overall situation.

But 2,300 gigawatt hours — remember what we’re talking about. We’re talking about relatively flat growth — the minister can say net of DSM — which, shared with other jurisdictions that also use DSM, magically, demand-side management…. So we have relatively flat growth, and then it’s going to go like this. This is what the minister said. Instead, what the minister just told us was quite surprising. What he just told us was that there was a decline of…. The number, I think, was 2,400 gigawatt hours under expectations.

Now, remember, we don’t need all of the Site C power, according to the IRP, in the year that Site C is going to come on. So we’re going to lose billions of dollars if the IRP is true, which it’s now not.

What the minister is saying is that there was a decline equivalent to 40 percent of the energy from Site C at full operation this year. In other words, their estimates of demand are way off. This has, as I’ve noted, significant historical precedent. It’s why the minister was lauding the BCUC, which is good. One out of every ten times he lauds it. The other nine times he exempts projects. He was lauding them. One of the reasons why the BCUC rejected Site C the previous time was that B.C. Hydro — which, I think it’s fair to say, has been a successful Crown corporation over the years — gave its best guess to justify the Site C project.

What did they say? The actuals in 1978-79, and this included West Kootenay Power, 29,163 gigawatt hours. Actuals under the 28-year probable load forecast, 92,000 gigawatt hours in 1999-2000. Now, to put that in context, it is massively, catastrophically wrong. Had B.C. Hydro proceeded with Site C based on that forecast by B.C. Hydro at the time, B.C. ratepayers would have lost their shirts.

That’s why it was a good thing for the Premier of the day, Bill Bennett, to ensure that there’s a BCUC review. They didn’t agree with those numbers, and they were, of course, dramatically right. B.C. Hydro said that demand was going to increase by 300 percent. It increased by less
[ Page 11974 ]
than 30 percent. That’s a big difference, hon. Chair. I think you’d agree.

It makes a huge difference to the ratepayer if B.C. Hydro is dramatically wrong in its estimates. So far, in the IRP, they’ve been dramatically wrong in their estimates. I mean, when you say power is going to shoot up after ten years of flat results like that to justify Site C and then it goes like that…. It reduces by 40 percent the energy in Site C in one year.

I know the Liberals are in government, and it depresses economic growth. Nonetheless, that’s a big miss. It’s a big miss. We’re talking about estimates, so people can miss. But the significance of the miss is that the numbers that justify Site C include numbers for LNG, for example, that are completely unrealistic and that believed, I presume, what the Premier was saying in the election campaign would be true rather than reality. And the result is the result.

[1500]

I think that’s a very interesting fact that the minister has just revealed — that in fact, they’ve been off by 40 percent of the size of this massive project just this year and that demand is going in the opposite direction. That is what’s happening.

All the other forecasters, who don’t have to justify a cabinet-dictated process, are not arguing, in the electricity business, for a 40 percent increase over the next 20 years — only B.C. Hydro, which needs to justify this project. The difference is that if you believed the IRP, you’d know that B.C. Hydro was going to lose a ton of money, when Site C came on-line, for a couple years.

It makes sense. Domestic demand, even when it’s going up, goes up slowly every year, and then you get this big bolus of energy. No question, it’s hard to do that. It was hard with Revelstoke as well. But the reality is that we were going to lose, according to noted experts, $1.3 billion in the first years that Site C was going to come on line.

If you change the Site C graph to reflect the actuals, which I’ve done…. And the minister has helped me today by providing even more actuals which will show the gap between what B.C. Hydro said and what’s actually happening.

That difference, between those two lines — you think, “Boy, it doesn’t seem that big on the page,” but for taxpayers, for ratepayers, for those people who own B.C. Hydro, that’s a difference of billions of dollars. Because it can’t be sold for domestic demand in British Columbia, it has to be sold on the open market outside of British Columbia. That’s why the government is running around these days, like a caravan in search of an oasis, trying to find demand for Site C power. That’s why they’re doing it.

What the minister is saying is that the IRP in 2012 already has been shown to be dramatically optimistic — dramatically optimistic. It was based on 2012 numbers. It was the 2013 IRP based on 2012 numbers, just as the current one will be based, I think, on 2014 numbers. It was dramatically wrong.

The consequence for ratepayers of being wrong is dollars in the billions. Even though B.C. is a wonderful and rich province, we can’t afford to waste billions of dollars. What the minister just reported is catastrophic for the long-term future of B.C. Hydro, and it’s going to be coming in just at the time when we have to pay for the government’s deferral accounts for rate smoothing and other things.

In fact, what we have is a government that is wrong on the facts. It is already submitting B.C. Hydro ratepayer to massive increases, some of which they’ve deferred into the future through accounting tricks, directed by cabinet.

What is being exposed here with the Site C project is an estimate of demand which has not met the test of the real world. When you have an estimate of demand that is out of line with everybody else, which is 40 percent over the next 20 years, which doesn’t recognize how many people are going to come in behind the meter in these times, doesn’t recognize the impact of ratepayers, you can see why….

The Chair: Member, if we may have your question.

A. Dix: Well, actually, hon. Speaker, this is the debate in estimates, but I’m happy to have your encouragement to have the exchange.

But the fact of the matter is….

The Chair: I’m sorry, Member, your time is up.

A. Dix: My time is up?

The Chair: You get 15 minutes to speak, and you’ve used that.

A. Dix: Fifteen minutes to speak? I’m happy, then, to ask the minister what the estimate is for next year.

The Chair: If we may, with the agreement of the minister and the member, take a recess for five minutes.

Hon. B. Bennett: Can I answer the question first?

The Chair: Yes, Minister.

A. Dix: I’d be delighted.

Hon. B. Bennett: I won’t take 15 minutes. I might take more than a couple of minutes.

The member and the party that he’s with oppose the Site C project. It is their right to do that, and it’s very clear that they do. They have a story that they like to tell, and they bend the facts to fit the story, and that’s what the member just did.

Hydro’s forecasting has been assessed by a variety of independent organizations.
[ Page 11975 ]

Interjections.

Hon. B. Bennett: They don’t like the facts much. That’s why you hear them murmuring, although I always keep quiet when they’re speaking.

[1505]

For example, the joint review panel concluded: “B.C. will need new energy and new capacity at some point. Site C would be the least expensive of these alternatives, and its cost advantages would increase with the passing decades as inflation makes alternatives more costly.” That’s what the joint review panel said about need.

This question of need then went to the federal court. There were some folks that wanted to have this challenged by a court, so it went to the federal court. The federal court stated that “the difference of four years is not significant to the life of the project.” In other words, if the project is needed in 2024 or 2025, when you’re looking at a project of this scale, in trying to predict what’s going to be in existence a decade forward, a year’s difference or even four years’ difference is not significant in the life of the project. That’s a direct quote from the federal court decision.

There was also a third-party review of B.C. Hydro’s load forecast methodology that was commissioned by B.C. Hydro. They brought in an independent energy consultant who had 30 years’ experience. His name is Mark Gilbert. I referred to him earlier. He concluded: “B.C. Hydro is using state-of-the-art methodologies for forecasting sales,” and “the company utilizes several methodologies to produce peak forecast methods, all of which are state-of-the-art methods.”

For the member to suggest that, somehow or other, Hydro doesn’t know what it’s doing with respect to forecasting demand is demonstrably wrong. He does not have evidence to suggest that.

I think the other thing that I would say with respect to the need for Site C…. I know he understands the difference between energy and capacity, but it’s important for the member to remember that capacity is also part of this story. I can tell the member that by 2026, it is estimated that without Site C — and, frankly, without Revelstoke 6, which also has to be built — there would be a capacity shortfall of 1,164 megawatts.

Capacity is needed. That’s where you have the water sitting behind the dam that you can release over the dam and generate electricity upon demand. When you need that electricity at some point in the year, at some point during the day — maybe not as much at night as during the day…. Maybe you need more of it in the wintertime in certain parts of the province where people are heating with electricity. In some cases, you need more in the summer, where there’s a lot of air-conditioning. You need that capacity. Otherwise, you will not have a reliable system.

You also need that capacity to support the growth of the renewables industry. Renewables — not all renewables but the renewables whose price or cost is coming down, like wind and, to some extent, solar — are intermittent. Run of the river is intermittent. You need that firm capacity to back up intermittent electricity like wind and solar and run of the river. It’s another reason why we cannot be short of capacity, another really important reason why, in fact, B.C. Hydro is absolutely correct that we need Site C.

The Chair: Thank you, Minister. This committee stands recessed for ten minutes.

The committee recessed from 3:08 p.m. to 3:19 p.m.

[D. Plecas in the chair.]

The Chair: Good afternoon again, Member.

A. Dix: Good afternoon, Mr. Chair. Is this what it’s like to be in your class?

I wanted just to follow up on the question I actually asked the minister, which of course he didn’t answer. The minister talked about what happened. What happened last year was obviously a significant loss, especially in large industrial growth. It was across the board, but it was principally in large industrial growth where we lost.

[1520]

As you know, according to the service plan from 2015, the forecast for 2015 was the 9 percent load growth, and what happened was a reduction in load. Obviously, that’s the big difference. That has to do with Howe Sound and a lot of significant things that happened in the economy in the past year.

But we’ve seen load go in a different direction. The gap we’re talking about is the gap between the IRP and the actuals, which will be presumably reflected whenever B.C. Hydro decides to produce a new IRP. It might be July. But last year we promised the fall, so I think we won’t make more promises.

I want to ask the minister about some of this load, because what’s included in the load resource balance, which is an important element of the IRP — I understand that it’s not the only element — is a large expected load, a continuing expected load in LNG, including over the coming three fiscal years and then increasing dramatically in 2020. Are B.C. Hydro and the minister of the view that this will actually happen — in other words, that we will have 2,000 gigawatt hours of load growth as a result of LNG by 2020?

Hon. B. Bennett: The number of gigawatt hours and the IRP for LNG is actually 3,000, not 2,000, which doesn’t hurt the member’s argument and the point he’s trying to make. What will help the member is to know that when the revenue requirements application is filed — not the IRP, but the revenue requirements application
[ Page 11976 ]
— in late July, it will have an updated load resource balance, and it will do its best to update what we know about the LNG industry.

The member is correct. We know that LNG Canada has already announced publicly that it won’t be making its FID as early as we thought. I think there’s an eight-month delay. The member’s correct. Until they make a final investment decision, you don’t have a final investment decision. Hydro will have to account for that in its revenue requirements application. They will do that.

What I can say to the member is that Hydro is doing a lot of work right now assessing the whole LNG opportunity — what is likely, what is not likely, the probabilities, all those things. Again, in July, long before the election — nobody’s trying to cover up anything, hide anything — the member and the public will have an opportunity to see that revenue requirements application and see just what Hydro thinks they will need for electricity to serve the LNG industry.

A. Dix: I was trying to give the minister the benefit of the doubt. I was referring to 2020. It’s true that by 2023, the plan had you going up to 3,000. This is from the most recent evidentiary update.

B.C. Hydro also has a surplus of energy now, and this has important consequences for the hydro system. Obviously, when you have a surplus that you can’t sell domestically, you have to seek whatever market you can. The news from non-domestic markets, which are principally the western states and Alberta — or almost entirely — is not particularly good in terms of price.

Obviously, when your demand drops, as it has dramatically, and you keep adding on IPP power dictated by the Liberal cabinet — which, as you’ll recall, forced B.C. Hydro to buy much more IPP energy at high cost than it needed for a significant period by cabinet diktat — that has significant impacts.

[1525]

I wanted to ask the minister about that surplus, first of all, and second of all, re-ask him the question that I asked him two days ago that he took on notice. I may have missed it. I may have missed him coming back to the House and answering that question, but I don’t think I did. So I’ll ask him that question again, which, since he has it on notice, he knows already.

Hon. B. Bennett: Two parts, two completely separate questions, actually. Let me try to answer the first question, about imports and exports. I’ll start by saying that my advice is that what drives the fact of whether there’s a net import or a net export of electricity from or into B.C. is not IPP contracts. It’s actually water inflow into the reservoirs. That’s really what I am told drives it. The member doesn’t like that answer, but that’s what I’m told is actually the case.

What I can also tell the member is that over the past ten years, you’ve had five years where there were net domestic imports. You’ve had three years where it was basically even, right on the line. And you’ve had two years — including 2013 and this year, 2016 — where export is anticipated. Net imports for five years, net exports for two years, and really close to the line for three of those years. So there isn’t a particular pattern that supports the member’s contention here.

The second part of my answer goes to the question that he asked in the House. In fact, I was intending to put it in writing. I’d still be happy to put it in writing for the member if he wants me to. I assumed that he would ask it here during estimates, so I thought I would just wait and answer it here.

A. Dix: Cutting red tape.

Hon. B. Bennett: That’s exactly right: reducing red tape, streamlining the estimates process. That’s what we’re all about, the critic and I.

The member had questions about biomass IPP contracts. I don’t think I have a copy of his question. I did, but it’s not in my binder right now. I guess I don’t have the question, but the member knows what he asked, so let me answer it.

[1530]

These contracts with biomass IPPs have been around for a long time, a couple of decades. Some of them were signed in the ’90s. One in particular that was brought to my attention was Northwest Energy in Williams Lake, a contract for bioenergy, in 1993. It was secured as part of a 1988 call, but the contract was entered into, as I know, in 1993.

In any case, the way these contracts work…. This type of technology provides reliable electricity. It goes to my comments before the break about the importance of having enough capacity in the system to draw upon when you really do need the electricity and when you need electricity to supplement intermittent sources such as wind and solar and other sources like that.

These contracts do supply that kind of capacity. That’s why Hydro, over the last several decades, has entered into these contracts — in addition to there being the added benefit for the forest companies, who often generate this type of power. It adds to their business case, which enables them to keep the doors open and keep people employed, which I know the member is in support of.

In any case, the contracts allow B.C. Hydro to essentially turn down electricity. If they can acquire the electricity someplace else for less money, they can turn down the biomass IPP and say: “We’re not going to pay your electricity rate now. We’ll pay your fixed costs” — I think they’re called deemed charges — “but we’re not going to buy your electricity. We’re going to buy it over here.”

Typically, that happens during the spring freshet, when there’s all this water rushing down rivers and into reservoirs and so forth and there’s all of this really cheap
[ Page 11977 ]
electricity available. That’s when Hydro would avail themselves of their option under these contracts to turn down power.

The important thing for the member to know here is that when you look at the deemed charges and the amount of the deemed charges paid to any particular biomass IPP and you add those fixed costs to the value of the electricity purchased elsewhere, the total ends up being less than what B.C. Hydro would have paid for the energy purchased from the biomass facility. Ultimately, B.C. Hydro actually saves money for the ratepayer. Last year they saved, I’m told, in excess of $8 million — $8.6 million — for ratepayers by having these kinds of flexible contracts.

I think what the member was attempting to do was to characterize these contracts as Hydro paying to not receive electricity. In fact, what Hydro does is it acquires very cheap electricity, pays the fixed costs of the company and, ultimately, on a net basis, saves the ratepayer millions of dollars. So it does seem like the sort of program that the member might support.

A. Dix: Of course, what B.C. Hydro is doing is paying not to take electricity. My question, precisely, was on how much that is. The Liberal government has a lot of power. They can appoint Phil Hochstein the head of the Turkey Marketing Board, but they don’t move the freshet forward. We’re not in the freshet. We’re not. That’s not within their capacity yet. Climate change is moving the freshet forward. According to a B.C. Hydro report, it might be May instead of June soon, but that’s not where we’re at now.

The point is, and the question is…. I mean, I understand the advantage of these biomass contracts, as opposed to the numerous overpurchases of contracts with other IPPs. Many of these are from 2010; there are some older. It’s that you can do precisely what the minister says. In a way, what the minister is showing is just how lucrative these contracts are, just how much they cost B.C. Hydro. The right to not take the power allows us to save $8 million — no kidding.

[1535]

My question is very precise. There are penalty fees. They’re pre-negotiated. When B.C. Hydro asks whoever it is — Harmac, Canfor, whoever it is — to turn down the generator, what does that cost? What does it cost B.C. Hydro in total? And what is it costing now for them…? As I understand it, a number of these projects are down. So the question to the minister is: how many are down? And what does B.C. Hydro pay in penalty fees — in other words, money — not to take power? What did they take last year, and what are they paying now?

Hon. B. Bennett: The member asked: “What is the cost? What does B.C. Hydro pay?” He used the term penalty. There are no penalties. That’s not what they are. They’re called deemed charges. That’s what it states in the contract. They are the fixed costs, as I understand it, of the companies, the IPPs, that are prepared to produce this electricity.

In terms of what the cost actually is to Hydro, there is no cost to Hydro. At the end of the day, they come out ahead by $8.6 million. So I don’t know what about that the member is so troubled by.

Let me give a little bit more detail on the background of why this policy has been adopted by B.C. Hydro over the years. It’s not something that was created during the life of the B.C. Liberal government. It was created about three decades ago.

Under the province’s self-sufficiency policy, B.C. Hydro must have sufficient owned or contracted electricity resources to meet customers’ needs, assuming there are average water inflows into the system. That’s just a fancy way of saying that they need to have enough reliable capacity to have the electricity during the various parts of the year that they’re going to need it. B.C. Hydro needs to be able to meet both forecast peak demand, such as when there is an Arctic outflow in the middle of the winter, when heating and lighting needs are highest, as well as consumption over the entire year, which varies by season.

In planning the system, B.C. Hydro includes the maximum peak and annual output of contracted biomass and natural gas generation. B.C. Hydro’s load-forecasting methodology was reviewed by an independent expert. I mentioned him earlier, Mark Gilbert. And of course, he said that their forecasting methodology was state of the art.

More to the point, this program is beneficial to the ratepayer in two ways. First of all, it provides reliable capacity — reliable electricity when B.C. Hydro needs it — to service customers at various times of the year. Secondly, it actually saves ratepayers money over the course of the year — $8.6 million.

A. Dix: The reason it saves ratepayers money is that if B.C. Hydro had to take the power on and didn’t have a market for that power and had to sell it — right? — they would lose money. Which is what they’re doing in all kinds of IPP power they’ve purchased that they don’t have domestic use for now. And when the IRP is wrong and when you overpurchase for a low-water year as a policy directed by the Liberal cabinet that the minister was part of, this is a consequence of that.

But the minister says there are no penalties. I know that he’s not going to believe me, but here’s what, for example, Canfor said to a journalist in a written answer. “In the event that B.C. Hydro executes their right to ask the company to turn down the generator, there’s a penalty fee that was pre-negotiated.” The minister may say that there are no penalties. Anyway, he is, I believe, incorrect.

What I’m asking the minister is not what he saved by not taking on power we didn’t need into the system and then couldn’t sell. What I’m asking is: what do we pay in
[ Page 11978 ]
penalties for nothing? We can’t do this to run-of-river IPPs, for example. We can’t do the same thing because the nature of those projects is different from these projects.

[1540]

I’m asking: how many pulp mills that have energy contracts right now with B.C. Hydro are down or have been down in the last month? And I’m asking — and I asked these questions two days ago, so presumably there’s an answer — what is the sum total of the penalty fees that B.C. Hydro pays not to take power every year?

Hon. B. Bennett: Well, as I’ve said, the net out for the B.C. Hydro ratepayer last year was $8.6 million. That’s the extent to which the ratepayer benefited from this program.

[G. Kyllo in the chair.]

I’d forgotten to give the member this information. I think he asked me which of the IPPs had been involved in this program last year. I’m advised that B.C. Hydro exercised turndown rights with eight biomass plants: Canfor PGP, Harmac, Catalyst, Cariboo, Armstrong, Howe Sound Pulp and Paper, Domtar and Northwest Energy. That’s where we saved the $8.6 million that goes to benefit ratepayers.

In terms of the fixed costs and what Hydro paid for fixed costs before you net it out, it’s like a balance sheet or an operating statement where the member wants to know what the expenses are but doesn’t want to know what the revenue is. What’s really important is the bottom line. What is the net? Is there a surplus, or is there a deficit? In this case, there’s a surplus of $8.6 million. But he does want to know what the expenses are, too, and he has a right to know that. For those eight projects where turndown rights were exercised, it was $17½ million.

I would suggest to the member that an investment in capacity of $17½ million to save $8.6 million for the ratepayer is a pretty good deal.

Although there are eight companies involved, the total that was actually not taken…. Out of 18,000 gigawatt hours that are available to B.C. Hydro from these IPPs, only 300 gigawatt hours were turned down. That’s a pretty good return, it seems to me, for the ratepayer. If you can turn down 300 gigawatt hours and end up $8.6 million to the benefit of the ratepayer, that seems like a pretty good program, but I suspect that my critic may not agree with that.

A. Dix: I just want to make sure I understand, because I seek understanding from the minister always. The minister is saying that B.C. Hydro pays $17.5 million in penalties — or whatever we call them: turndown fees — and that B.C. Hydro saves $26 million in avoided losses related to taking the energy. Am I correct in understanding that?

[1545]

Hon. B. Bennett: Let me put it to the member this way. If Hydro didn’t have this opportunity, their costs would be, I think, about $26 million more. So he’s correct.

A. Dix: Net.

Hon. B. Bennett: Well, just more. The net applies to the $8.6 million after you’ve paid the $17.5 million to the companies, right? But the total amount — the member is correct — is around $26 million.

A. Dix: I’m just curious because what you’re not doing is taking power, I think. That’s what I understand. You’re asking them to turn down and not take, right? And you’re paying them $17.5 million under this contract not to provide any power — $17. 5 million to not get any power.

This is the arrangement. The situation is so badly mismanaged, there’s such a surplus because of the decisions made by a previous Liberal cabinet, that it makes more sense to pay companies $17½ million not to produce power but to take the power. I know the minister is saying that’s the smart thing to do for B.C. Hydro.

It says two things: (1) those are lucrative arrangements, and (2) we live in a strange world. B.C. Hydro, our Crown ratepayer, while people are paying massive rate increases, is paying $17½ million to some of our province’s biggest corporations not to produce power. This is the situation we’re in, in British Columbia — $17½ million. Money for nothing.

That is the minister’s answer, and that’s an interesting answer. He’s arguing that we’ve created such a mess. To quote him, before his speech to Clean Energy B.C., he said: “This is going to be a tough speech. It was tough last year, but this year the veil has been lifted.”

I think we’re still waiting on Site C for the veil to be lifted, but on clean energy, it’s been lifted. There can’t be much doubt about the dearth of opportunities for this sector, given the demand forecasts — which, of course, were dramatically wrong based on the 2013 IRP — and the surplus of electricity. This is clearly driving these decisions.

Just so that the ratepayer understands, B.C. Hydro has decided, for business reasons, that it makes sense for them, under these very lucrative contracts that they’ve signed, to pay $17.5 million to major companies not to produce anything. That’s the deal that we’re talking about. That’s the deal the minister has said is a good deal for British Columbians. I think British Columbians can be the judge of that.

We have the answer that I was looking for. I don’t need to proceed any further. I asked the minister in the House how much they are paying companies not to produce power. He’s provided that answer. That number is $17.5 million under these contracts. That’s a very interesting thing.

[1550]

The minister referred to 2015 when they paid $17.5 million for nothing. I’m asking him, in the current context, in the updated context…. I know that they’re up to date because I gave them 48 hours’ notice on this question. Right now, because we’re not in the freshet yet, how many projects are down, have been asked to turn off the power — right now, in March of 2016 or early April 2016?

Hon. B. Bennett: Two parts to the answer. B.C. Hydro folks are going to look up the answer to the second part of the question. Let me say to the member that, once again, in his attempt to spin his narrative, he is wrong on the facts.

Interjection.

Hon. B. Bennett: Well, he said that the B.C. Liberal cabinet, for example, somehow or other ordered all of these biomass IPPs to be created and all these contracts to be entered into.

Interjections.

Hon. B. Bennett: Four of the eight, actually, were done when the NDP were in government. Apparently, the NDP government…. I think the member was advising the Premier at the time. They apparently thought that this was a good program. It is a good program. When the ratepayer can benefit by the tune of $8.6 million from a program like this in one year, it’s a good program.

The other part of the answer, before I get the detail that I need for the third part, is that the member, once again, I think, is failing to understand the importance to the system and therefore to the ratepayer of reliable capacity.

This is a little bit like insurance. The member says you don’t get anything for it. You pay this money, and you don’t get anything. Well, you get the $8.6 million net for the ratepayer. That’s not bad. But you also get the assurance of knowing that that capacity is there. That’s why these contracts were created — probably by the Social Credit government and Hydro at the time, originally, and then were carried on with by the NDP government and by our government, because it works.

The system needs capacity, so you enter into these contracts. It’s like insurance. You need them there. It’s not like Hydro can’t say today, “We don’t want the electricity because we can get it someplace else for less money,” and then they’re stuck with that for the rest of the year. They can decide the next day they do want the electricity. That’s the beauty of the contract. They can’t do that with run of the river. They can’t do that with wind. They can’t do that with solar.

I’m not sure what point the member really is trying to make by focusing on the fixed costs for these eight particular biomass IPPs when, in fact, the important number here is the $8.6 million that the ratepayers benefit by.

In terms of what Hydro anticipates for the next year, they are pulling that number. That is highly technical information, but they’ll be able to get it for the member, and as soon as we get it, we’ll provide it to him.

A. Dix: I’m not asking anything technical; I’m asking: who’s down right now? Who’s been down over the last month?

Hon. B. Bennett: That information is being gathered as we speak.

A. Dix: That is excellent news. I am delighted, and I know the minister is by that situation.

Specifically on this, if you look at the provisional application to the BCUC by B.C. Hydro, they talk of these contracts. They talk about renewing these contracts. Since we’re at this point in the process, does the minister — and B.C. Hydro — envision cancelling existing IPP contracts at renewal times that are coming up? These are mostly the ones dated from some time ago since, obviously, many of the contracts that they signed in the great period of purchase that followed the Clean Energy Act are for many years to come and won’t be subject to that.

As I understand it, these contracts, principally pulp mill contracts, are going to be continued. The proposition is that they be continued. I think the price was $95, if I remember correctly. I only read the application quickly. Others may be in greater question.

Can the minister tell us what Hydro’s intent is with respect to the negotiation of these contracts?

[1555]

Hon. B. Bennett: The answer, with respect to renewals of IPPs, goes like this. After April 1, 2016, the BCUC will oversee all contract renewals. They will decide whether the contracts that have been negotiated between the IPP and B.C. Hydro are in the best interests of the ratepayer or not.

Will any contracts be terminated? That will be up to the proponent, essentially, as to whether or not they can produce electricity for the price that B.C. Hydro is prepared to pay.

Going back to those halcyon days of 2007, ’08, ’09 and ’10, we in this province decided that we wanted to have a renewable power industry. I think it’s pretty well accepted around the world that when you’re inviting in new technology and innovation, you often do have to pay a little more for the new technology, and a lot of this technology was new. We didn’t have much of an IPP, much of a renewable industry in the province — other than, of course, large hydro, which is renewable.

So the decision was made in those days…. The member doesn’t agree. Although, oddly, strangely, ironically, the NDP energy plan talks all about renewable electricity and: “Isn’t it such a good thing?” How they square that
[ Page 11980 ]
with their attitude about IPPs and renewable power that this government has incented over the years, I don’t know. I mean, the Leader of the Opposition actually referred to this renewable energy as junk power. It’s not junk power. It’s the kind of electricity that we all know the majority of people want. People want renewable electricity.

So we made a decision in those days, and we signed — Hydro signed — contracts. A lot of those contracts — I’ve got details, if the member wants them — are coming up for renewal, and they will be subject to the BCUC oversight.

I think it’s fair to say that prices will be down. And they should be down because, presumably, most of these businesses have paid off their capital costs, their amortization is at an end or close to an end, and they can afford to take less money for their electricity. That’s the way that’s going to go forward.

I suppose, worst-case scenario, if Hydro took a contract to the BCUC that the BCUC didn’t like and thought that Hydro was paying too much money for it, they would say so, and they’ll have the opportunity to do that.

A. Dix: I’m sure the minister will acknowledge that they didn’t have the opportunity to do that at the time that the policy was pursued, because the cabinet exempted itself from the BCUC review. He’s surely aware of that.

I just want to read in what he said about his clean energy speech again. What happened, as he knows, is…. B.C. Hydro, I think, admitted it was a mistake to force B.C. Hydro to assume that every year was a low-water year. I mean, they abandoned the policy, so I assume it was a mistake, and they desperately tried to get out of some of the worst IPP contracts they’d been signing in 2013, when the chickens came home to roost for the ratepayer.

Preparing for his speech, he refers to the surplus of electricity. Does he not agree that in that period, B.C. Hydro overbought IPP power and that ratepayers are having to pay the price for it now, not just now but in 2021, 2022, 2023, when they have to pay for the rate-smoothing account?

[1600]

Hon. B. Bennett: Well, once again, I’m going to have to poke a hole in the member’s balloon in terms of his narrative. I’ve heard the member and heard the Leader of the Opposition say this over and over and over again, that IPP electricity is driving up rates. It’s not true. What is driving up rates, for the most part, is the investment in capital at B.C. Hydro — $2.4 billion a year for at least the next ten years.

You know, the member laughs. He scoffs at that, but it’s not really funny, because one of the reasons why B.C. Hydro has to spend $2.4 billion on capital over the next ten years and on is because in the 1990s, when the member’s party was in government, they invested almost nothing in infrastructure for B.C. Hydro. That’s true. I can show the member the statistics. I can show him.

He doesn’t believe it, but I can show him the statistics and prove to him that, yeah, they bought a lot of votes by putting a freeze on rates. That’s what they did. They sent money back to ratepayers and all of those kinds of things, but they didn’t invest in the system.

We get elected in 2001. We’re trying to balance the budget, and we’re trying to restrain the growth and size of government. It takes us a few years, but within three or four years of having gotten elected, we then started to invest in B.C. Hydro. That capital expenditure has ramped up over the years to the point where it is today — $2.4 billion a year.

It’s not like Hydro hasn’t taken other actions to take pressure off rates. They have. You know, they found $370 million in operating costs over a three-year period. They have managed their executive compensation. They have restricted severely the growth in the operating costs. They’ve done a lot of really good work to try not to spend as much money and to take the pressure off rates.

So for the member to suggest here that rates are going up because of IPP energy costs…. It’s just simply not true. What I can say more specifically to the member is the average cost of IPP energy over the next three years is expected to be about $90 a megawatt hour, which is very comparable to the most recent call in Ontario. Projects there came in around 85 bucks a megawatt hour — very, very close.

Again, to couple that reality, that $90 a megawatt hour cost, with the fact that the BCUC is going to have oversight here and have the final decision, essentially, on these contracts…. I actually think that we are in a very, very good position going forward.

A. Dix: These are new high-cost resources. The Liberal cabinet forced B.C. Hydro to buy more than it needed, and B.C. Hydro is losing money on them. I mean, that’s not complicated. That’s what the annual report says. That’s what the minister’s ten-year electricity plan said. I suppose you can try…. Maybe we can green-screen those plans out of existence, but they still exist. It’s still a fact, and he acknowledges there’s a surplus as a result of that.

It was the Liberal Party that decided, in order to take ratepayer…. Yes, the NDP protected ratepayers, and the Liberal Party has decided to transfer ratepayer money to Liberal donors. But the reality of the situation is — and the minister knows this — that that is expensive power when you don’t need it. We have a surplus now, which the minister himself acknowledges, and that hurts B.C. Hydro’s balance sheet.

[1605]

Even if you can use what is called rate-smoothing to avoid the immediate political effects of that, it doesn’t mean that ratepayers don’t owe the money. They do — for mistakes made in the cabinet room, mistakes that this
[ Page 11981 ]
minister acknowledged when he changed the policy in 2013. We are paying the price for those mistakes today, and that’s just the way it goes.

I want to ask the minister about another set of projects, because he’s become oddly, strangely…. What were the three adverbs he used? Oddly, strangely, comically….

Interjection.

A. Dix: Ironically. Well, there’s irony here. I have to say that I don’t think of irony when I think of the minister.

Hon. B. Bennett: I was referring to you.

A. Dix: You were, eh? There you go.

I just had a question about two projects the minister has proposed exempting from BCUC review: what’s sometimes called DCAT2, which was the second phase of the Dawson Creek transmission line, the DCAT transmission line in Chetwynd, but is now called PRES — which is a better acronym, so don’t say I never praise B.C. Hydro; and the North Montney power supply transmission line.

The minister will know…. He, I believe, sent a letter in July or August of last year asking for comments on the suggestion that he would exempt those lines from BCUC review. He subsequently commented, I believe, that he still thought that was a good idea, although I think it’s fair to say — and maybe he might share the results of that consultation — that most people responded that it wasn’t a good idea who he consulted with. But that’s the way it goes.

Can the minister tell the committee whether he has made a decision and, if he has not, what the time frame of that decision would be on exempting those transmission line projects from BCUC review?

Hon. B. Bennett: No decision made on either one of these potential projects. What I have said publicly about these two transmission line projects is that if the case can be made that we can have gas extraction companies in the northeast use electricity to drive their equipment, as opposed to natural gas, there may well be justification. And if they have to be built quickly in order to meet the demand….

Let’s say, for example, that we have an LNG FID and, suddenly, there’s going to be an absolutely huge demand for natural gas. Now, I know the members on the other side don’t support the natural gas industry. They want a one- or two-year moratorium or something on fracking. I can’t keep them straight with the Green Party.

In any case, if we get an FID — or when we get an FID, more accurately — we’re going to need a lot of natural gas. If it turns out that these companies would be prepared to use electricity to drive their equipment and not use natural gas, not have all of that nasty carbon dioxide going into the air, we would take a look at doing a direction to the BCUC.

That’s what the authority is there for in the act. If the government sees that there is some goal that can be attained that is generally supported by the public and is in the best interests of ratepayers and the general public, then there is the authority for the minister to issue a direction. I’m sure that the member has some follow-ups on that.

A. Dix: I note that there was the previous transmission line, which admittedly was late and over budget, but the DCAT1 line had broader support than PRES or DCAT2. Often the original is better than the sequel. At the BCUC, people came forward and made arguments that were essentially arguments against PRES or against DCAT2.

[1610]

B.C. Hydro, at the time, made a formal undertaking. I know how seriously they take their formal undertakings with the BCUC. They made a formal undertaking that they would take those issues: “You don’t have to deal with those issues now, because we’re coming back with a second proposal.”

When the minister talked about this proposal back last summer, he said there was urgent need. “This is why we have to go. There’s urgent need to go ahead with these projects. We’ve got to consider this idea of not having BCUC review these projects, because we need to proceed now.” Now he’s saying, nine months later — that’s nine months of process with the minister and B.C. Hydro — that he’s not sure what they’re going to do.

I guess the question is: did B.C. Hydro make a commitment, when they sought approval for DCAT1, that they would bring the second transmission line back to the BCUC — that people in the area would have a right to speak about that? Did they do that? I think they did, on the record. The evidence shows that. That’s first of all.

Secondly, what has happened since the minister decided to proceed in August that seemingly delayed his approach to this issue? In fact, as I understand it, the transmission line has been significantly changed in terms of its route since the minister was going to order the BCUC to proceed. I guess my question is pretty simple. Does the minister have any time frame for his decision? Did B.C. Hydro and the government make a commitment to the region that this project would be reviewed? I’m referring to PRES, not the other project — not the North Montney project.

Thirdly, doesn’t it make sense to refer the project to the BCUC, given that past commitment by B.C. Hydro?

Hon. B. Bennett: In terms of whether or not B.C. Hydro, at the BCUC hearings for DCAT or through the documentation, made any commitments about a second transmission line — the member has referred to it as DCAT, or the son of DCAT, maybe — we don’t know yet.
[ Page 11982 ]
We’re going to have to pull transcripts to figure that out, and we’ll do that.

I do want to clarify or, I guess, correct what the member said. I have not said that we are building either one of these transmission lines. What I have said — I know I’m repeating myself, but it’s apparently necessary — is that if we find ourselves in a position where one of these lines or both of these lines need to be built on short notice in order to provide the opportunity for these gas extraction companies to utilize electricity to drive their equipment, we would consider directing that the transmission lines go ahead.

It is my preference and the preference of B.C. Hydro that you always have an orderly process where you take the application to the BCUC, and you get your certificate of public convenience. Obviously, that’s what we would do in this case. Right now we can’t take an application to the BCUC for either one of these lines, because we don’t know yet whether we’re going to need them. When we do know….

[1615]

There are issues with reliability in that part of the province. There is growing demand. Even without LNG FIDs, there is some growing demand there, and Hydro is looking carefully at that. But they’re not at a point yet where they can say: “Yes, we need one or both of these lines. Let’s take an application or applications to the BCUC.”

All I’ve been saying is that if we find ourselves, because of timing, in a situation where we have this opportunity with these companies, which are going to extract a lot of gas for the LNG industry, to provide them with electricity to drive their equipment, we may find ourselves having to direct those transmission lines to be built.

Again, we don’t know that. That’s speculation. I just wanted the public — and particularly the member, my critic — to know, over the past year, that yes, that is a possibility. It is not a decision of any kind.

A. Dix: The minister sought comment, the Ministry of Energy sought comment, B.C. Hydro sought comment from a number of stakeholders about the proposal to exempt the project. Would they be prepared to release the results of those consultations and what the consensus of those they asked was?

Hon. B. Bennett: I understand that there was consultation that was completed with First Nations, some with the general public and with industry. There would need to be more consultation if we get close to actually doing this. Again, we’re talking hypothetically at this point in time.

If we got closer to a decision — we saw that there was an FID, for example, or we saw that the price of gas came up and suddenly there was a lot more interest in drilling new wells — then obviously, we’d need to go out and do additional consultation, and we would create more of a formal consultation record.

What my advice is on…. This is at a very general level, probably not sufficient to satisfy the member. At a very general level, our interpretation of what we heard was that industry was quite supportive of having access to electricity. Of course, they would be. We obviously don’t want to build a power line or power lines and then wait for ten years before they need the electricity. It’s good that they’re in favour. That’s one part of the consultation.

First Nations — I’m told some were concerned about routes. Obviously, a lot of activity up in the northeast. The Treaty 8 First Nations, with good reason, are always keen to know what government and other agencies like B.C. Hydro have planned. We did go through potential routes with First Nations, and the best word to use to describe what we heard was “mixed.” We’ll have to do a lot more of that consultation if we decide to go ahead with this.

[1620]

A. Dix: The minister and the ministry also consulted Hydro’s major industrial customers and other, shall we say, regular participants in the BCUC review processes in general. It’s my understanding, having read some but not all of those contributions, that the consensus was that the project should go to the BCUC. It’s a public project that requires a public review, and the minister was just in the process of finishing or implementing or passing legislation with respect to the BCUC.

The minister himself, though, said in November, November 10…. This is in Business in Vancouver. Admittedly, it’s in the media, so I give the minister the absolute right to say he was misquoted. “My understanding right now is that if I do not direct the BCUC to allow these projects to go ahead, that we may lose some of the interest on the part of the gas companies…. They just don’t feel they can wait for a long BCUC process.”

That sounds like the minister had made up his mind. Now, he has a right to change his mind because he hadn’t made a decision, but what has changed between that very declarative statement and the present? The decision he has made, is that with respect to the BCUC? Has he decided not to proceed with the BCUC with these projects, he hasn’t decided whether to proceed with the projects, or is it the case that he’s made no decision at all and that his comments on November 10 don’t reflect his current thinking on the matter?

Hon. B. Bennett: I haven’t changed my approach to this file at all. I still think that it’s important to the province to be able to provide electricity to natural gas companies that are extracting gas and are prepared to use electricity to drive their equipment. I think, probably, we all…. It’s one of those rare things where we, on both sides of the House, think it would be a good idea. I haven’t changed my view of that.

What’s changed is the external factors around the oil and gas industry. I think everyone’s aware that the price
[ Page 11983 ]
of gas has been very, very low. It remains low. That’s part of it. There just doesn’t seem to be the same impetus, the same drive in the industry for these lines, even though I’m sure that they would be just fine if the government and B.C. Hydro decided to build the lines and have them ready. But we’re not accustomed to doing that.

The second thing that’s changed in terms of external factors — and I referred to this earlier — is the changing landscape around LNG. LNG Canada put off its FID for eight months. Petronas is not certain when they’re going to make their FID. It all depends on the federal environmental assessment agency. If they don’t make a positive decision, then we’ve got an additional delay there.

I would say that we’re not as convinced at this point in time about the need for the lines. That’s why I’m not as, I guess, enthusiastic today as I was back in November. Market conditions have changed.

B.C. Hydro has gathered some information for the member. I don’t want him waiting months and months and months this year. He will not be happy. The member wanted to know about active turndowns under the biomass IPP program that Hydro has. There are seven where turndowns are actually being utilized today: PGP, which is Prince George Pulp; Harmac energy; Cariboo Pulp; Chetwynd biomass; Fraser Lake biomass; Catalyst; and Williams Lake biomass. I read that pretty fast. I’m happy to give the member a copy of this.

[1625]

A. Dix: Thank you. So we’re going to take a run at $17.4 million next year too.

Just with respect to these projects, though, we had a process. I appreciate what the minister said about changing market conditions. I mean, it’s reflected in the fact that the LNG fund the government created doesn’t create any LNG money — and other things. But when the government proceeded with this initiative — I can’t remember if it was the minister or the deputy minister who sent the letter — the main driver for the project at the time for this transmission line wasn’t economic but environmental.

It was the main argument used at the time that there was a climate change benefit from proceeding with the project and that there was an urgent opportunity. I just make that point. I know that the minister, as a strong advocate for measures on climate change, knows that that situation hasn’t changed at all.

I want to just ask the minister about a perplexing situation, and this doesn’t happen very often, where the views expressed by the Premier and the views expressed by the president of B.C. Hydro are slightly, possibly, maybe in conflict. I’m referring to the inter-tie with Alberta which the Premier has said became, at some point, an urgent priority for British Columbia and the comment on that proposal by the president of B.C. Hydro. He essentially — if I may, hon. Chair — has said that no work has been done on the proposal.

In fact, to quote the president of B.C. Hydro…. In the same article where the Premier talks about this being a central issue for British Columbia, the president of B.C. Hydro says: “There really hasn’t been any work done, to be blunt, in terms of the costs or logistics of an expanded inter-tie with Alberta. You know that we already trade with Alberta. There are limitations, though, on capacity in terms of the existing inter-tie. We have not done any engineering or studies on cost.”

That doesn’t sound very urgent to me, so I guess that I’m asking the minister the old question, which is: who’s right, the president of B.C. Hydro or the Premier?

Hon. B. Bennett: Well, there is no conflict between what the CEO and president of B.C. Hydro has said about the potential for doing business with Alberta and what the Premier of this province has said. I think I can illuminate this situation for the member such that he’ll be much, much happier and relieved to get this insight.

I don’t know which month the NDP were elected in Alberta. You’d think I’d remember that, but I don’t. I think it was sometime in the spring.

I met with the Alberta Energy Minister in July, and the first thing I talked to her about was: “Would you like to talk about working with B.C., acquiring our clean, green and cheap electricity?”

[1630]

We had a very, very preliminary conversation, but we had the conversation. That was in July of 2015. Subsequent to that, there was a discussion between Powerex and some of the Alberta operators, and subsequent to that, there were three or four discussions, some recent, between my staff and the staff of the Alberta Energy Ministry. The last time that the provinces looked at a new inter-tie between Alberta and B.C. was 2009.

I certainly have learned in my time as Energy Minister that if there is a number floating around for a potential project, I should not say it out loud because somebody will, two years later, say: “You said that that project was going to cost X number of dollars.”

That work that was done in 2009 is useful work, but the president and CEO of B.C. Hydro declined, quite understandably, to provide a specific number in terms of what Hydro thinks it might cost to do a new inter-tie. But I can tell the member that we have had multiple discussions between the two ministries, and we will have more discussions with them. Why wouldn’t we? We export lumber, we export minerals, we export coal, we export ideas, and we export films and TV from our province. Why wouldn’t we export electricity?

We’ve got a way to go. When you’re selling something, it’s always about relationship, especially in the beginning, and we have to work hard at developing a good relationship with our neighbours there. But the facts are clear. The Alberta government has indicated it wants most of the renewable infrastructure on its
[ Page 11984 ]
soil, on its side of the boundary. We get that. We totally get that.

Most of it, if not all of it, is renewable. It will be intermittent electricity and will require this capacity that I’ve talked about several times here this afternoon — the backup. It’ll require electricity when the wind isn’t blowing and the sun isn’t shining, such as at night.

We think that our electricity is very clean, and we have, probably, the best capacity of any system in western North America, with all of our big reservoirs and the water that is stored behind those reservoirs. When Alberta needed some of our clean electricity to supplement the infrastructure, the renewable infrastructure they’re going to build, we’d be able to provide that electricity. We need the inter-tie to do that.

A lot more discussion has to take place. It’s a great opportunity to work with Alberta on this. It’s early days, but I know that the member will be very excited — elated, probably — if we can put this together.

A. Dix: It probably will take much more than that to make me elated.

[J. Yap in the chair.]

The Premier said that this is an urgent priority for British Columbia and federal-provincial relations. The Premier held press conferences, and she said that this is a major initiative of hers.

What the minister describes is not a major initiative. Almost no work has been done, in fact, on this question. That’s not according to me but according to the president of B.C. Hydro, who says that there really hasn’t been any work done. So there’s no misquoting there. There really hasn’t been any work done. “Urgent priority. We’re going ahead. We’re doing this. This is major for us.” That’s the Premier — a little like her Senate proposal.

What’s actually happening on the ground is a couple of meetings and “we’re thinking about” and everything else. For example, Manitoba, in this period, is looking at some of the same issues. They’ve signed an agreement with the Alberta government in that period, but B.C. has not done anything.

I take it from the minister’s description that the Premier’s enthusiasm has not been backed up with what we might call work, and that, in fact, what we have in this case, as in others, is the Premier getting through a news cycle and then moving on. B.C. Hydro is not preparing to deal with this, not moving forward to deal with this, says it doesn’t need to go forward doing this, and the Premier was just filling a news cycle.

[1635]

Does the minister not think there’s just a complete disconnect between the comments of the Premier, who said this is a major priority for British Columbia, and the comments of the president of B.C. Hydro, who said no work has been done?

Hon. B. Bennett: I am astonished at how cynical the member is to suggest the things that he suggests. It’s surprising.

You know, my boss, the Premier of the province, directs her ministers to focus on certain things and helps us create our priorities.

One of the priorities for me as Energy Minister is to work with Alberta to try to find a way to eventually sell electricity to Alberta. Bearing in mind that Alberta currently generates a great deal of its electricity — I’m sorry I don’t have percentages, but a lot of its electricity — with coal and a lot with natural gas, it’s going to take some time for the province of Alberta to shift away from coal.

They’re going to have to construct an enormous amount of renewable infrastructure — the wind and solar that I’ve talked about. So it’s not like we’re missing an opportunity. It’s going to take some time before Alberta is in the position to decide where they’re going to get this backup electricity that it looks like they’ll probably need.

In terms of whether we could or should be doing more, I would suggest to the member that we’re doing exactly the right amount of work with Alberta. We have time to get this right. We’ve had, as I said a minute ago, several meetings with staff of the Ministry of Energy over in Alberta. I was supposed to meet with the Energy Minister from Alberta in Ottawa not long ago and was unable to go on that trip. I really wish I could have gone, because she apparently really wanted to talk to me about this and other energy issues.

Just to give the member some sense of what Alberta’s going to have to do and how much time it’s going to take them to get into the position before they would actually be able to buy electricity from British Columbia, they have a target of up to 30 percent renewable generation by 2030. They are going to need to meet that target — 4,500 megawatts of new wind or other renewable resource projects built in the province to meet that 4,500 megawatts.

Just to give the member a sense of how much 4,500 megawatts is, Site C is about 1,100 to 1,200 megawatts. So that’s a lot of hardware. That’s a lot of steel and wind farms, so it’s not going to happen overnight. Again, you know, the variability that those renewable resources will have in Alberta’s system…. I mean, coal, as dirty as it is, and gas — again, not as dirty as coal but still a fossil fuel…. Those plants run 24 hours a day, 365 days of the year. They don’t have a problem with capacity.

These new renewable resources will have challenges around capacity. They’re the right way to go. Alberta will get there, but it’s going to take them a while. We’re going to work with them. We’re going to talk to them about re-establishing the existing inter-tie, which is actually in my riding, in the southeast.
[ Page 11985 ]

We’re going to talk to them about where else they might need our clean electricity. I think, actually, we’ll get there in due course. Someday, the member, perhaps, may even wish to join me when we cut the ribbon on a new inter-tie between B.C. and Alberta.

A. Dix: I think we’ll have to wait until after the fishing trip.

That would be fantastic. I’ll invite the minister along.

[1640]

I had a couple of questions about local hire with respect to Site C. The minister, when he announced the Peace River Hydro Partners civil works contract on November 25, 2015, said at the time that “80 percent of workers on the Site C project are from British Columbia. You hear there are lots of Alberta licence plates in that area. A lot of people who are working in the oil patch have now come over, and they’re working again and living in B.C.” Right now it’s 80 percent.

Except that an FOI released last week by B.C. Hydro to the B.C. building trade unions showed that, as the minister was making that statement, the number was 65 percent and lower. In its statistics, B.C. Hydro tends to also use head office staff and so on.

So when the minister said declaratively, on television, that 80 percent of people here are from British Columbia, and the actual number at the time from B.C. Hydro — these are their numbers; it’s not ambiguous here — was 65 percent, was he simply misinformed?

Hon. B. Bennett: We were just having a discussion here. The member is assuming…. In fact, he has stated as fact…. I don’t know how many times he has stated as fact something today that’s been inaccurate, but here’s another example. Hydro, in fact, does not include its head office staff in the count. They don’t include contractors’ staff. They don’t include the lawyers and the accountants and the surveyors in the count. So the member is wrong about that.

The member says: “Was the minister misinformed?” I don’t think the minister was misinformed. I think the member was misinformed.

The man is not here to defend himself, so I want to be respectful. Mr. Sigurdson came out with this announcement, if you will, that the number of B.C. workers on site was 65 percent. Mr. Sigurdson had the information, as I understand it, to show what the actual number is, averaged over a period of months. Every month is going to be different. He picked the month — it was November of 2015 — where 65 percent of the workers on site were from British Columbia. He went out and told the whole world: “Look at this. Everybody is lying.” B.C. Hydro…. I think he named me by name. I was actually quite hurt by it.

He picked this month that had 65 percent Canadian workers on the site instead of…. He could have gone…. August 2015 was 82 percent. September was 71 percent. October was 71 percent. There’s that November number, 65 percent. He liked that one because it was the lowest. December was 67 percent. Then it starts to ramp up nicely. January was 68 percent. February was 71 percent. The average was a little bit more than 70 percent.

Hydro is keeping track of the number of British Columbia workers on the site, and it will vary from month to month. It’ll ramp up a lot this spring with the main civil. There’ll be hundreds of people coming on to the site. Hydro and the ministry will report out to the public on what the percentage of B.C. workers is at the Site C project.

I’m just going to say one other thing about this, because I haven’t had the opportunity to do this until now. The B.C. building trades actually received an enormous boost yesterday with the announcement made by Hydro and government on the turbines and generators contract. It will be B.C. building trade unions who will get those jobs.

Several of those unions attended the event yesterday. It was heartwarming, very gratifying for me to see those unions there and to hear them commenting to the media after about how happy they were that the B.C. building trades had gotten so much work out of the Site C project. In fact, one of them even mentioned that he thought that the NDP was way off base in terms of its opposition to Site C. I’m not sure the member had heard that, but I wanted to make sure he knew about it.

The Chair: I call a short recess of this committee.

The committee recessed from 4:45 p.m. to 4:53 p.m.

[J. Yap in the chair.]

A. Dix: In the minister’s enthusiasm in his last response, he accidentally, I’m sure, failed to answer the question. He expressed shock that Mr. Sigurdson had chosen November because it was a month when there were only 65 percent B.C. workers. He felt that was unfair of Mr. Sigurdson to have chosen that date.

Of course, it was in November that the minister himself said: “Right now” — meaning November 2015, the very month that he referred to — “about 80 percent of the people working at Site C are from British Columbia.” And he just said a few minutes ago that right then, November 2015, the number was 65 percent.

I’m wondering, since the minister was clearly misinformed at the time, why he made those statements everywhere. Why were they repeated by B.C. Hydro everywhere, including in their emailings out to everyone else — that the number was 80 percent, when it wasn’t 80 percent? He just said it was 65 percent.

[1655]

Hon. B. Bennett: We went through this exercise yesterday on the mining file, where one of the members of the opposition was convinced that there was a conspiracy afoot. There’s no conspiracy afoot in terms of the numbers that we have for the average of B.C. workers working on Site C.

The November numbers obviously wouldn’t come in, certainly not until very late in November — maybe not even until December, was more likely. What I was using was the latest number, the latest average that was provided to me by B.C. Hydro, which, at that time, was accurate.

We have an obligation to be accurate, and we will endeavour to get the latest information so that we can calculate whatever the average is and make sure that we’re putting out accurate information. But that information at that time, based on what had happened up to that point, was, as I understand it, quite accurate.

A. Dix: Well, the minister is, I guess, saying that the most recent information at that time was from July, because it wasn’t anywhere near 80 percent in the months he was talking about.

He just said that the accurate information would have come in December. Yet the president of B.C. Hydro said: “I think just before Christmas, our count was 75 to 80 percent.” If they got that information, they were still communicating the minister’s message at that point — a message, by the way, that he never corrected.

In effect when he said, “right now,” he was wrong. Nothing wrong with being wrong, but when you use that line as a club in a political debate and you’re found out by your own material to be completely wrong and your supporters then repeat that message repeatedly, I think that’s a bit of a problem.

I had a few questions here on day 1 of estimates…. We’re running out of time, so I wanted to get to some of the basic budget questions to the minister, in this short period, which I’m sure will be relatively easy to answer. I want to ask the minister about…. This is really in his capacity as a minister of the Crown, Minister of Energy, and not as minister responsible for B.C. Hydro.

As he knows, prior to 2012, the benchmark return on equity by B.C. Hydro was based on the FortisBC benchmark, which is currently 9.15 percent, while Hydro is 11.84 percent. Why is it higher? Does he think it’s justified that it’s higher, especially considering his comment, when he was named minister, that B.C. Hydro needed to operate like a commercial corporation? Do commercial corporations inflate the return on equity to the shareholder unnecessarily?

[1700]

Hon. B. Bennett: I’m advised that the main reason why the return on equity is somewhat higher at B.C. Hydro than Fortis’s return on equity is that Fortis is a commercial corporation that pays taxes. B.C. Hydro is not. The return on equity at Hydro is calculated on that basis. It is somewhat higher, as I say, because they’re not a taxable corporation.

I may know where the member is going. Maybe I’ll just let him go instead of trying to give him an answer ahead of his question.

A. Dix: Well, it used to be based on that benchmark. It’s not any longer, so I think that’s a reasonable question. I’m not really heading anywhere. I just was seeking an answer.

The government forces B.C. Hydro to calculate the return on equity on an inflated equity. While B.C. Hydro moved to the IFRS system in 2013, it’s not in this area. They don’t use that defined equity, and the result is an inflating of net income. That’s what they do. They take more money, to send more money to government. As a result, I guess it’s good for the Minister of Finance.

Why does the minister’s current plan continue the inflated equity when all other regulated utilities use the national accounting standard definition? In other words, why does B.C. Hydro, which in every other way is supposed to follow these new rules and where in every other jurisdiction does…? Why do they continue to inflate equity at B.C. Hydro?

Hon. B. Bennett: I’m sorry to always be the bearer of bad news for the member, but he’s wrong again. I’m advised by somebody who I respect and knows a lot about finance that the international financial reporting standards have nothing to do with the return on equity.

A. Dix: I’ll come back to the minister, because I have a better question and one I am more interested in the answer to.

In March 2014, the government directed the Utilities Commission to approve a new rate-smoothing deferral account. The minister will remember that, remember its purpose and remember what he had to say about it publicly. This is a device that creates revenue out of thin air to allow Hydro to record higher profits in the near term. That’s not me saying that; that’s what it does.

Can the minister tell me what other regulated energy utilities in North America have a revenue acceleration account?

[1705]

Hon. B. Bennett: Well, to put this in context, we put together something we call a ten-year rates plan. It started with a complete review of B.C. Hydro by a deputy minister’s committee. It started, I think, maybe in 2011, 2012. There were a number of things that Hydro was ordered to do or asked to do.

I mentioned earlier that operating expenses were reduced by…. I don’t have the number, but roughly $350 million over three years. There were a number of other
[ Page 11987 ]
belt-tightening items that Hydro was responsible to do. Before we established what we wanted to do with rates over ten years, we obviously wanted to make sure the utility was doing everything it could to take pressure off rates.

That was done first, and then we put together the ten-year rates plan. As part of the plan, we needed to, obviously, calculate what revenue was going to be required over the ten-year period. We did that. Hydro did that. I shouldn’t say we. Hydro did that, and it was determined that we would have had to increase rates by a very considerable percentage the first year of the ten-year rates plan. The member’s aware of this, I’m sure. I think it was common knowledge.

So how you avoid that significant hit…. And I think there’s a name for this. It’s called rate shock.

How you avoid rate shock is…. And I know the member’s going to have fun with this. It’s like an amortization. You buy a house for half a million dollars — not in Vancouver, obviously — and you amortize it out over a long period of time, 20 or 25 years. You don’t pay it all, walking in, unless you’re wealthy. You’re certainly not a politician if you’re doing that. You create a rate-smoothing account so that rate shock, that big hit in the first year or two, doesn’t happen. You can actually reduce the rate increase and amortize it out over a period of time.

The member wonders whether other utilities use regulatory accounts for this purpose. I’m advised they do. I’m advised that utilities actually do rate-smoothing on a regular basis.

A. Dix: What the minister’s saying — because, of course, there’s a 28 percent increase we’re facing now which is the direct result of policy set in the Liberal cabinet room — is that the rate increase was dramatically more than that. What he decided to do was pretend to have money he didn’t have so that they could continue to pay the Ministry of Finance, the government of B.C., money — fictional money — to fictionally balance the budget.

That was what happened in 2013-14. Without B.C. Hydro and ICBC manipulation, no balanced budget. That’s what happened. I mean, it’s simply a manipulation.

B.C. Hydro uses and is addicted to deferral accounts. Compare the deferral account against equity of B.C. Hydro against anyone else. They’re addicted to them. It creates a false impression about the management and the performance of the government at B.C. Hydro.

[1710]

But the minister has been a source of interest on this question subsequent to that. In January 2015, on a slightly different question, he said that the real source of the annual Hydro dividend to the government is, of course, borrowing.

Thanks to an FOI request…. He’ll recall this well. There’s a beautiful picture of him somewhere in my files here from the new Vancouver Sun website where he announced this innovative thinking. He said that most of the $1.1 billion extracted from Hydro from 2011 to 2014 is borrowed money.

Can the minister tell me, because we’re now in 2016, how much of the $265 million of the 2014-15 dividend was borrowed, and how much of the $590 million planned dividend for 2015-16 and ’16-17 will be borrowed?

Hon. B. Bennett: Well, I’d like to correct the member. He stated that the cabinet raised rates and it was all the cabinet’s fault, all the politicians’ fault, that electricity rates are going up in B.C. As I told the member earlier, the reason why rates are going up is because of the $2.4 billion a year that Hydro is investing in infrastructure.

They’re building new transmission lines. They’re building some new generation, new turbines. They’re rebuilding dams. There’s a dam in the Fraser Valley that I went out and visited that’s 85 or 90 years old that they’re rebuilding. They’re rebuilding this dam while it stands there holding back water. It’s actually quite remarkable. But it costs money to do that sort of thing. They completely restored the powerhouse and put all new hardware inside it. I think it’s called Ruskin.

In any case, I mentioned earlier that one of the reasons why we’re having to spend so much is because, when the member’s party was in power, they didn’t invest. Virtually…. I wouldn’t say nothing, but compared to what’s been invested since 2001, there’s no comparison.

These are statistics that come from B.C. Hydro, and I give the member just a slice of this. I won’t read out all ten years of NDP government. In 1991, they invested $373 million in B.C. Hydro infrastructure. In 1998, they invested $319 million. The next year, in ’99, it was $387 million. In 2002 — I believe that we had been elected at that point — it really started to go up: $531 million. In 2003, $696 million. In 2007, $807 million. In 2008, over $1 billion. In 2009, $1.397 billion. In 2010, $2.4 billion.

The member is just wrong to suggest that electricity rates in this province are going up for any other primary reason than the fact that B.C. Hydro is investing in its infrastructure so that we can retain this reliable system that we have in this province — one of the most reliable systems in the world. If the member needs evidence of that, I can certainly provide that to him.

[1715]

Now, he’s correct about one thing. He’s correct that the money that goes to dividends is borrowed. Over the years that I’ve been Energy Minister, many times I’ve heard this member and many members of the NDP criticize the government for having this dividend, for having B.C. Hydro pay a dividend to the provincial government. I took it upon myself to find out: where did this practice start? Where did this come from, this taking a dividend from B.C. Hydro?

Well, as it turns out…. I found a really good quotation from December 1992 from the former president of the NDP party, who I think was a cabinet minister at
[ Page 11988 ]
the time. He said — this is Moe Sihota: “We’ve placed a challenge in front of B.C. Hydro saying that, yes, there are some dividend obligations to the provincial Crown. We’re proud of initiating that kind of reform with respect to rate structuring in British Columbia.”

I’ve got other quotes here. I’ve got one from my friend Anne Edwards from up in Cranbrook. She said: “We think it’s only fair that the people of B.C. receive a dividend from Hydro.”

Not only did the NDP actually start the practice of having dividends paid by Hydro back to government. They actually came up with the formula, which is largely still in place.

What have we done? Well, in the ten-year rates plan, we have agreed that we are going to start to reduce the dividend payable by B.C. Hydro to government. We’re going to tie it to inflation and drop it by $100 million a year starting in 2018.

Interjection.

Hon. B. Bennett: I don’t know what the member is laughing about. That’s actually in the ten-year rates plan. He can go on the website and look it up. It’s there.

The NDP started the practice of Hydro paying dividends to government. We are going to restrain the practice. We’ve laid that out in writing — how we’re going to do it. I’m certainly proud of the fact that we’re taking something that the NDP created and making it better for the ratepayers of the province.

A. Dix: I asked the minister two questions. How much of the $265 million of the 2014 dividend was borrowed? How much of the $598 million planned dividend for 2015-16 and 2016-17 will be borrowed?

Hon. B. Bennett: The member was so mesmerized with my previous answer that he missed my answer. It is borrowed. The money is borrowed.

A. Dix: It’s all borrowed.

Hon. B. Bennett: It is borrowed, yes.

I’m on my feet. The member had asked earlier about three projects he wanted some detail on. One was the Boston Bar project, one was the 150 Mile House project, and one was the Port Alberni to Tofino project. What I can say to the member, if he has his pen ready, is that the Boston Bar project, what happened there…. The RFP required suppliers to be able to do the work, energized or de-energized, based on B.C. Hydro’s needs — in other words, availability of outages and costs, etc.

The work was done with outages, de-energized, without customer impact, at B.C. Hydro’s request because this work method is more cost-effective. Two-thirds of something called the arcing horns work was done in February, and Hydro chose to schedule the work in April to allow higher priority work to proceed. Hydro has stated that this contracting approach saved ratepayers about 30 percent over previous rates.

The second project the member asked about was the 150 Mile House project — 28 kilometres of line being rebuilt due to the safety of that line. The original line was strung too tight, making it unsafe to do the work energized. A new line was built on the opposite side of the road, de-energized. There was a need for outages to cut the line over. Work was completed on time and on budget, and there were no impacts to customers as a result of the outages. That’s good news on both those projects.

[1720]

The third and final project the member asked about was something called the Port Alberni to Tofino project. So far, 344 structures have been replaced using live line methods. Another 31 poles are being replaced this year. Work was delayed because it couldn’t be completed during the wet winter season. Live line work requires dry weather. That makes sense. The plan is to complete — energized, in the case of this particular project — when it’s dry enough to do so.

We’ve discharged our responsibility to get the member that information on those three projects.

A. Dix: I’m sorry the minister…. I had understood that he was talking about the practice of dividends. But there it is. He said that $855 million worth of dividends to the province will be borrowed by B.C. Hydro. There’s the issue of the dividend, obviously, and the combination. I just think that the extraordinary, the preposterous blaming of the NDP for this government’s failure on Hydro, when their own ten-year plan shows exactly where the problem lay….

The overbuilding and the overpurchasing of power they have no market for is just extraordinary. They’ve lost $1.3 billion over three years that ratepayers have to meet when they pay off the rate-smoothing account so that we can cover up the extent of the government’s incompetence on the question and their mismanagement of the corporation. It’s an extraordinary conclusion that this is the fault of the NDP after 14 years. I guess they’ll get around to it in their ninth term or something.

These are Liberal problems. This is a Liberal failure. B.C. Hydro ratepayers are paying a very, very significant cost for it.

I’ll just finish. We’ve got some very important issues on Monday to address, so I’ll just ask a few sort of detailed questions. It may be that the minister will want to seek some of this information.

One of the ways that I reflect on how B.C. Hydro is managing, who’s getting more and who isn’t — it’s very dramatic at a place like Powerex, of course — is the number of employees making over $150,000. The minister
[ Page 11989 ]
talked about getting spending under control in 2006, as he knows, because we had this exchange last year.

The number was 222. That was B.C. Hydro, B.C. Transmission Corporation and Powerex, of course. As he will remember, the Transmission Corporation had been spun out. In 2014, that number, according to B.C. Hydro, was 631. I counted them from the Financial Information Act, the most recent filing, and the number was 726 at Hydro and 72 at Powerex.

We asked that question last year. I know that the minister will have his own numbers on that question, but I just note that that’s an increase of more than threefold in that category of employee.

Hon. B. Bennett: For the member’s benefit, the percentage of B.C. Hydro’s workforce that earns total remuneration over $100,000 continues to be less than other electric utilities in Canada. It’s actually 51 percent. For example, 57 percent of SaskPower employees earned over $100,000. Over 75 percent of employees at Hydro One and Ontario Power Generation earned over $100,000. Again, Hydro is doing a good job in this regard now.

Over 40 percent of the B.C. Hydro employees who make more than $100,000 in total remuneration are union employees. I’m assuming the member would not quibble with the fact that those union employees are making over $100,000. It includes many skilled tradespeople — many people, particularly after a big storm, who are working 24 hours a day and, in some cases, seven days a week to keep the lights on.

[1725]

The increase in the number of employees earning over $100,000 in fiscal 2015 is primarily attributable to an increase in the IBEW unionized employees earning over this threshold, mainly due to a full year of receiving the higher 2 percent wage increase that was allocated partway through fiscal 2014 and an increase in overtime for some employees, such as those working on construction projects.

I hope that is helpful to the member.

A. Dix: Well, not at all, of course, because it’s a different baseline. I used the baseline of $150,000 because when the minister voted for a surtax a couple of years ago — and I proposed the surtax — that was the threshold for the surtax, and $150,000 contains a lot less IBEW people. I can assure the minister of that. In fact, that number of people — people making $150,000 or more — increased from 222 to 673. By my count, if you count Hydro and Powerex, it’s up this year to 798. That’s $150,000.

That’s a very different figure than the $100,000 figure proposed by the minister. It’s the standard I asked him about last year. What we did…. Just to be clear, I counted them, and then the library counted them. That’s the number we came up with, looking at the Financial Information Act filing of B.C. Hydro — which is a dramatic increase of people earning over $150,000 a year.

[P. Pimm in the chair.]

The minister is right, to be fair, that it’s not employees in general who are seeing wages go up dramatically at B.C. Hydro. It’s contractors. If you look at the rate filing — the minister’s staff will have that — for the interim rate increase for fiscals ’17 to ’19 RRA, they provide operating costs by business group.

The minister will know that operating costs by business group from fiscal 2016 to fiscal 2017 increased significantly. All of that increase, really…. None of it comes from salaried employees. A very significant part of it comes from a dramatic increase in contractors. This isn’t, of course, the capital projects. This is operating costs.

I’m interested — I’m sure we’ll discuss this more on Monday — about what the numbers are for employees over $150,000, which is a very different level of income than $100,000 — it’s actually $50,000 more — and why that continues to go up, in spite of the minister’s comments, and why, as you can see dramatically, operating costs have gone up.

I’m just quoting from the documents from B.C. Hydro — from $826.9 million in the fiscal 2016 RRA. The forecast, which is the forecast for year-end, is $827.4 million. The fiscal 2017 plan is $896.4 million, which is a net increase that’s, I think, fairly significant. So $69 million on $826 million probably brings you around 8 percent.

I wonder if the minister can explain why operating costs were wrestled down to 8 percent.

Hon. B. Bennett: Two unrelated questions. We’re going to get the information for the second question relating to the revenue requirements application and operating costs. In the meantime, I’ll answer the first question that the member asked with respect to employees at B.C. Hydro earning over $150,000.

The increase in that group of employees, those who are earning over $150,000, since fiscal 2013 is primarily due to an increase in the number of IBEW employees earning over this threshold, for the same reasons cited earlier with the employees earning over $100,000.

[1730]

There is a second reason that I’ll get into. This is not the only thing. It is perhaps surprising to the member that IBEW employees do — lots of them, actually — make this kind of money. They work long hours, and they’re out there getting the power back on after storms and so forth. They’re able to work a lot of overtime. Apparently, that is one of the main reasons why the number earning over $150,000 has gone up since fiscal 2013.

The second significant reason why, as the member is probably aware, is that B.C. Hydro eliminated something it called its variable pay program. They converted everyone over to salary, but in doing that, there was a cost. The cost was in something called variable pay awards. They were not paid until the following year, so you had a lot of
[ Page 11990 ]
employees who had previously been on this variable pay program that received both their salary increase and their variable pay award all in the same year, which bumped them up above $150,000.

Those are the two reasons why the number of employees at B.C. Hydro earning over $150,000 has gone up.

A. Dix: Of course, that’s not the case. I mean, the minister tries to find statistics that somehow change what’s happening, but the number was 222 in fiscal 2006, and the number is now well north of 700. If you look at Powerex, which has seen declining results, the salaries have gone up exponentially. In fact, the amounts paid to employees under $75,000 at Powerex have gone down. The number paid to people over $75,000 has gone up exponentially, and of course, over $150,000 — it feels like it’s the majority of the group.

Those are the reasons. The minister knows this. It went from 222 to 798, which is a huge increase in people earning over $150,000 a year. It has nothing to do with the IBEW. It has everything to do with the growth of middle management at B.C. Hydro.

My second question, which seemed to cause some problems…. I just refer to appendix B of the Fiscal 2017 to Fiscal 2019 Revenue Requirements Application, Request for Interim 2017 Rates. That’s the document. It’s appendix B on page 17. There’s a page that shows operating costs and provisions, total company.

Amongst the line items are the service line items, which have together gone up very significantly. The services one and the overall increase have gone up significantly. So I think it’s a reasonable question to ask: why would it be that operating costs by business group would climb from $793 million to $826 million between ’15 and ’16 and are now proposed to be close to $900 million in fiscal 2017? That seems like a reasonable question to me.

[1735]

Hon. B. Bennett: I would point out, first of all…. I am going to give the member an answer to why the numbers change, why they go up between fiscal 2015 and fiscal 2016.

Before I do, I just want to say to the member that he is including not only the domestic base operating costs, but also a number of other costs that are not part of the domestic base operating costs. More specifically to his question — why has the number gone up? All of this will be available in July from the utilities revenue requirements application to the BCUC.

It’ll be there in great detail and available to everybody, but for today, I don’t want to read all the reasons, because we’d be here for another half an hour. To give the member some sense of why the costs went up, there’s something called mandatory fees, $4.7 million. External regulators such as the Western Electricity Coordinating Council, Peak Reliability and also the North American Electric Reliability Corporation have all increased their fees by $3.7 million in 2017.

We’ve also got exchange rate impacts there, so that’s part of the reason. That’s $4.7 million of the reason. Labour costs, excluding workforce optimization, of almost $5 million. It’s $4.9 million in fiscal 2017. Crane remediation costs of half a million dollars in 2017 was added to that.

As I say, I’m not going list all of the reasons why the number gets driven up. There’s something called capital project investigation costs. When you’re investing $2.4 billion in capital in your infrastructure, it’s going to have some impact on operating costs. That’s a lot of money to spend building things and fixing things, so it obviously is going to have some impact on your operating costs.

It’s all going to be laid out for the member and for the general public in the revenue requirements application that will go in, in July. If the member wants more information today on that, I can list some more reasons why the number went up, but it’ll all be there in July for his reading pleasure.

A. Dix: This is actually a budget process too, so I just think I’ll ask some other questions.

I mean, the big category, as I say…. Labour costs actually don’t increase much more than the rate of inflation. I mean, $11 million on 478 would be roughly 2.2 to 2.3 percent. What goes up is “services — other.” Dramatically, it goes up. Let’s not characterize it: $38 million on $427 million, which is roughly 8 percent.

[1740]

Why are service and contracting costs going up by 8 percent at B.C. Hydro? Again, these are operating costs by business group. If you take it by business group, the place that they’re going up most significantly, I would say, is not in the generation group, but in the transmission, distribution and customer services group, where they’re going up roughly 6 percent, and operations support, where they’re going up very significantly.

I’m just curious why those particular…. Why the customer service category is going up so dramatically, when the minister keeps saying they’re wrestling costs to the floor.

Hon. B. Bennett: We are very concerned that we provide only the most accurate information to the member. There is some discrepancy, with two different views of this particular question and what the right answer is. So rather than risk providing the member with inaccurate information, for which he would, obviously, hold me accountable, I hope that it’s okay that we wait until Monday for this answer.

A. Dix: Because I know a lot of preparation — or some preparation — goes into these issues, I’ll just go over a few of the things we’ll be dealing with on Monday.
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We’ll be following up on what we call business group questions at B.C. Hydro. We’ll be dealing with the smart-meter question. There’s some interest in the E-Plus question, which we’ll be dealing with. The minister knows, and B.C. Hydro knows, I have a special interest in information technology, so we’ll be dealing with some of those issues on Monday.

We didn’t get to some of the demand-side management questions that I have. Those will be the principal — I don’t know if it’s the right word; I’ll get the minister’s advice — foci on Monday. With that, I’ll move that the House report progress.

Hon. B. Bennett: Just while you’ve got the mike, is there a mining component Monday?

A. Dix: I may ask briefly about the mining question, but I understand that was covered in the Mining estimates to a great degree — the discussion.

Hon. B. Bennett: So Monday is yours?

A. Dix: Monday is mine. Columbia Basin Trust and Columbia Power — that’s what we’re proposing to do on Monday.

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

Motion approved.

The committee rose at 5:45 p.m.

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