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)

Tuesday, April 26, 2016

Afternoon Sitting

Volume 37, Number 9

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

TUESDAY, APRIL 26, 2016

The House met at 1:33 p.m.

[Madame Speaker in the chair.]

Orders of the Day

Hon. M. Polak: In this House, I call continued committee stage debate on Bill 19, and in the other chamber, I call consideration of the estimates of the Ministry of Transportation.

Committee of the Whole House

BILL 19 — GREENHOUSE GAS
INDUSTRIAL REPORTING AND CONTROL
AMENDMENT ACT, 2016

(continued)

The House in Committee of the Whole (Section B) on Bill 19; R. Chouhan in the chair.

The committee met at 1:35 p.m.

On section 4 (continued).

G. Heyman: I’m just following up on a rather truncated discussion on a question around funded units in section 4.

I believe, if I recall correctly, the minister was saying…. In response to my question of why there wasn’t consideration given in the first instance to allow additional people to participate in the funded units program, she responded that — and she will correct me if I’m paraphrasing incorrectly — prior to the introduction of the bill, there were no funded units, and it wasn’t until they existed in legislation that other people became interested in participating in the program. But a funded unit is substantively similar to a carbon offset. Certainly, there is lots of interest in that.

Again, I’ll repeat my question to the minister. Why was this not present in the original bill, and why is it present now as an amendment? What changed between the original bill and now? If the answer is, again, because people didn’t know that funded units existed before the original bill, now an act, was introduced, now they do and now they’re interested….

I will try to reframe my question, because it just seems to me that the funded units referred to in the act are a variation on something that’s well known and has been in existence for some time. This was either an oversight, or there was a clear expression of interest for a particular reason, or in the initial instance, the government thought it was unwise to expand the ability to participate in the program to others and now has changed its mind.

If the minister could clarify these issues for us, that would be welcome.

Hon. M. Polak: The funded units did not exist without the creation of them when the act was brought into place. The funded units are not offsets and not like offsets because one doesn’t have to develop a project that would then be the offset.

The funded units and the system under which they operate were completely constructed within the act. Given that there is interest, we think it is wise to take that opportunity to expand this. Of course, this section also makes changes to how the money is paid for the funded units, which is really just an administrative change — rather than the minister gets paid to the province.

Truthfully, there were no funded units for people to be interested in and no system under which they operated until the bill was brought in.

G. Heyman: Perhaps the minister could clarify, then, exactly how the funded units will operate, how they would have operated if the ability of others to purchase them had not been introduced in this bill and what difference that will make for the operators or the people of British Columbia.

[1340]

Hon. M. Polak: With respect to the way in which they would have operated, they represented the choice that an LNG proponent could make between either purchasing offsets to be in compliance or purchasing funded units.

Now, they are the only industry required to do so. Nobody else was obligated to do that. Since that scheme was introduced, there has been interest on the part of other industry sectors and other non-regulated industries to participate in that scheme where they could purchase funded units. It makes no difference to the way in which it will operate for those with an LNG facility. That remains the same. However, now other players will be able to voluntarily take part in that framework.

G. Heyman: The minister has said that a funded unit is not the same as an offset, and yet the bill itself says a compliance unit is deemed to be the equivalent of an offset unit. Could the minister elaborate on what the similarities are and what the differences are?

Hon. M. Polak: They’re equivalent. They’re not the same. You actually have to deem something equivalent if it’s not the same. The language actually makes the point.

In terms of the difference, of course, the single biggest difference is that an offset is funding a project that amounts to a reduction in greenhouse gas emissions that are therefore counted toward the compliance or offsetting of an industry that purchases those offsets. The units
[ Page 12374 ]
are not representing a project that’s being constructed. They’re simply a financial compliance that gets put toward a fund that can be used for various initiatives. The funded units aren’t directly tied to any project.

G. Heyman: So if the funded units or the compliance units are not required to be put to work in any particular project, what might they be used for otherwise?

Hon. M. Polak: The revenue from the funded units is placed into the technology fund and then decisions made as to how to allocate that funding. The member will recall from debate on the overall bill that the technology fund is there to fund projects that would see improvements and innovations in technology that would ultimately result in improving operations with respect to their emissions profile.

The funded units themselves are not directly linked to any one project. The money will go into the fund, and then decisions are made with respect to allocating money from that fund.

G. Heyman: What assurance does the public of British Columbia have that if an operator chooses to put money into the technology fund, as opposed to purchase offsets, there’s actually going to be a quantifiable reduction of carbon emissions at some point?

[1345]

Hon. M. Polak: It’s actually referenced specifically in the act as a requirement of how the funds are expended. One of the requirements is that that funding has to be focused on accelerated market adoption of innovative clean technologies that result in lower greenhouse gas emissions. That is part of the evaluation when granting decisions from that fund will be made.

G. Heyman: Pursuing this, there might be an innovative greenhouse gas reduction method that may work, may work a bit, may work substantially but may have no correlation whatsoever to the amount of carbon that was initially emitted, unlike an offset.

What assurance can the minister give, should money be placed into the technology fund, that it will actually have a quantifiable and directly correlatable relationship with the emissions from which the requirement to pay into the fund arose?

Hon. M. Polak: It could be substantial. It could be small. Those who will be evaluating the projects obviously will have some technical expertise to bring to bear to make some of those judgments as to whether or not they project that this will be successful.

Nevertheless, there is reporting out on that. Although it might not be an immediately apparent reduction, as you get with an offset, over time we will know whether or not the particular investment was successful in achieving its emissions reductions intentions.

We will hope that the decisions we make and the projections we make about the success of technology will be accurate. But we will be measuring and reporting those as well.

G. Heyman: We’ll have a fund, the purpose of which is to develop and promote technologies that can reduce carbon emissions. We won’t know until they’re evaluated by experts to what degree these technologies will be successful. But the technology fund is being held up as a proactive mechanism by which the government will require the LNG industry to reduce its emissions profile.

Given the uncertainty of the result — as opposed to, at least, the quantifiable result, barring some of the controversy around measurement that can be attained through an offset system — what is the rationale of the government for establishing this technology fund as opposed to concentrating on something immediately quantifiable?

Hon. M. Polak: Because we need two things to happen here. The one is offsetting, as is traditionally understood. But there’s something else that we need if we’re truly going to get to the place where we are having a chance of meeting the aggressive 2050 target that we have here in British Columbia and the targets that have come out of Paris. That is going to take long-term, very deep change. That is going to require innovation and new technologies.

Just in looking at the act as it stands around the technology fund, remember, as well, that one of the requirements is that it will have a board of directors that includes persons with expertise in clean technologies or the commercialization of new products, processes, services or technologies. They will also publish annual reports that include financial statements and any prescribed information. They have to have an objective, fair and rigorous process independent of government, the applicant and the technology fund for reviewing those funding applications.

[1350]

We have put in place what we think is every possible means by which we can ensure that there is the best possible chance of achieving some of these deep, transformational innovations that will provide us with long-term greenhouse gas emissions reductions of the type we will need to get to our 2050 targets.

G. Heyman: I want to clarify that I believe in investment in technology. I believe in promoting technology, particularly technology that can reduce carbon emissions. I certainly believe that those should be applied to any aspect of the oil and gas industry, because it’s emissions-intensive. But I am somewhat perplexed that it is linked so directly to what’s, in effect, an emissions charge.

My question to the minister is: should these investments in the technology fund not be successful or tech-
[ Page 12375 ]
nologies not be discovered that can substantially reduce emissions from the LNG sector or any other sector to a desirable level, would this impact this act in the future? Or has the minister thought of some way to ensure that this fund is successful and that the results that are achieved are substantial as opposed to minimal?

The Chair: The member for Surrey–Green Timbers is seeking leave to make an introduction.

Leave granted.

Introductions by Members

S. Hammell: In the gallery behind me are 30 fabulous grade 5 students from Creekside Elementary. They are accompanied by Peter Erceg, their teacher. I would do this class chant they’ve got going if I could remember it. They are truly engaged and creative and fabulous kids. They are also accompanied by five adults from their school population. Would the House please make them welcome.

Debate Continued

Hon. M. Polak: In order to achieve what we are hoping, which is the advancement of new and innovative technologies that will transform the way we operate our industries in British Columbia, we have to put in place, I think, first of all, the right people on the board of the technology fund. That’s going to be critical. Obviously, if it appeared that decisions were not being made well or to achieve appropriately what we’re aiming at, we could make changes with respect to who was on the board. We could place additional requirements with respect to how they adjudicate an application.

At the end of the day, we think, right now, that we have a very good process laid out. We can always make adjustments to it if it doesn’t seem to be performing as we would have hoped.

G. Heyman: How does the minister envision the price of the funding units being set or adjusted in the future?

Hon. M. Polak: The rate is set at $25, and it’s set in the regulation.

G. Heyman: Presumably, the rate could change based on experience?

[1355]

Hon. M. Polak: It’s possible. But as far as when that might occur…. If you think about the other organizations currently as part of carbon-neutral government that pay, they pay the rate of $25, and they have done now since we began down the path of carbon neutrality. The price has stood up. I don’t think we anticipate anything changing markedly in the near future, although it is possible. Hence, the reason the rate is set in regulation.

G. Heyman: In the case of public sector institutions, they have no choice with respect to the rate. We have a rate of $25 a tonne, which is almost, but not quite, currently double the market rate of offsets. I’m wondering what incentive there is for industry to choose funded units under these circumstances.

Hon. M. Polak: The difference that staff have recognized in proposing this in this manner is that it goes back to the discussion we were having about the immediate nature of the purchase of an offset versus the longer-term potential for reductions in purchasing funded units. Therefore, it was felt that a premium should be paid for what is essentially lengthening out the time period it’s going to take to realize those reductions.

The funding going into innovation and development of new clean technologies is going to take, longer term, a longer time to bear fruit than the immediate purchase of an existing offset. So it was felt that, really, a premium should be paid for that.

G. Heyman: Could the minister indicate how the quantum of the premium was determined and whether that involved any consultation with industry or looking at other jurisdictions?

[1400]

Hon. M. Polak: I’m advised there weren’t any consultations with industry with respect to this. Instead, it was modelled on our experience with carbon-neutral government.

G. Heyman: But carbon-neutral government is simply a charge to public institutions to put money into a fund from which offsets are purchased, so it’s somewhat different. I realize there’s been a shift in that model recently, but there hasn’t been a shift in the price. I don’t see a direct correlation there on which to base a model for something that’s effectively an investment in a technology innovation fund.

Perhaps the minister could elaborate a bit more about whether it was just: $25 a tonne is what we charge our own institutions, so let’s use that number because it’s consistent with something, or whether there’s a deeper rationale underlying it.

Hon. M. Polak: We’re not aware of any other jurisdictions that actually have this model. Therefore, we had to look at what we had experience with, and we looked to the experience we’d had with carbon-neutral government.

The member is correct. It’s not precisely the same, but there is a similarity in that what we were trying to achieve
[ Page 12376 ]
was price certainty rather than the fluctuation of prices that can occur with offsets. The $25, again, was something we had experience with in carbon-neutral government, and that was what we decided to recommend for legislation.

G. Heyman: The minister replied that they were trying to achieve price certainty by choosing a single number as opposed to the volatility of offsets. But there’d be quite a bit of volatility in an upward direction necessary in offsets to hit the $25 price.

Perhaps the minister can clarify for me if that was seen as a way of enticing industry to choose the fund over an offset program by saying: “We’re going to have the fund. It will have a long time horizon. The price is higher, but it will be $25 a tonne.”

Hon. M. Polak: It was an attempt to strike the balance. If you’re going to achieve some price certainty and if you’re going to be extending the length of time that it’s going to take to achieve those goals of reductions, then you should pay a premium for it.

They also don’t have to lock into one method or another. They can make the decision to have all or part of their purchases be the fund, be offsets, be a mix, and they can change that as they go. We know that there are companies that will prefer to use offsets; there will be companies that prefer to use the fund. They’ll have that choice to make, but there’s a premium to be paid if they choose the fund.

It’s not a desire to have them…. It’s not a preference for one over the other. It’s recognizing that each one is different and, therefore, ought to be priced differently.

[1405]

G. Heyman: The minister, whether wittingly or not, anticipated my next question, which is: given that proponents can have a mix and can change the mix and can opt from one system to another periodically, why is the price certainty of the funded units a benefit when, in fact, if there is price volatility with offsets, that can be addressed by switching to the fund at some point and vice versa?

Hon. M. Polak: But that is why they would pay a premium for it. If somebody was concerned about it, if they were concerned that they were looking ahead and expecting that in the carbon offset market there was going to be some volatility and they wanted the certainty, then they could purchase the funded units. It’s really a choice that they will be making.

G. Heyman: The minister indicated that there was no consultation with either the LNG sector or industry in general around the establishment of the funded unit program or the technology fund. Could the minister describe the process by which the idea was hatched and an ultimate determination was made to incorporate it in legislation, as well as any other options that were considered at the time?

[1410]

Hon. M. Polak: Firstly, let me be clear. We did not consult with industry with respect to the price point, but certainly, in discussions around how they would meet their obligations, what was indicated to us was a desire for there to be certainty that would allow them to calculate their maximum compliance costs.

As it stands with the fund, they can pay into the fund. That will provide them with some price certainty. They could purchase offsets. Of course, the best way would be for them to come in under the 0.16 and not have compliance costs at all.

In discussing with my staff, there really aren’t other means to accomplish this. We’re not aware of other methods that were explored. This was designed as a means of allowing for a calculation on the part of industry with respect to their maximum compliance costs.

G. Heyman: That partially answers the question. It’s actually quite a useful answer, although it does beg the question of what an answer that was given yesterday, which said there was no consultation with the industry on the bill, means. I assume now it means there was no consultation on the specifics of the bill, but there was consultation with industry about what they wished to see reflected in legislation. I’ll make that a question.

Hon. M. Polak: I think that’s fair to say. You know, we certainly understood what kinds of elements were going to be essential to making this legislation work. As far as the details, that was left to staff to direct around the drafting of the legislation. There was certainly no discussion with industry to that level of detail.

G. Heyman: I will thank the minister for that answer, which seems much more realistic to me than the words that formed the answer yesterday, which I took to be a categorical “there was no consultation, period.” I would think, as I go forward, about whether that changes any other questions.

There was consultation with industry about what kind of certainty they needed, what they wished to see reflected in legislation, and presumably some of that is reflected here. Were there other things that industry desired to see reflected in the bill that were rejected by the ministry in drafting?

Hon. M. Polak: I would say this. We’re getting quite far away from what we’re supposed to be discussing here. We’re not really discussing the overall bill and the development of it.
[ Page 12377 ]

Insofar as what may or may not have been included, I don’t have knowledge of that specifically. It predates some of the work of the staff that I have present. I wouldn’t be able to answer that without some time to check back with people who actually were involved. That does get to the broader bill, as opposed to the amendments that we’re discussing here today.

G. Heyman: I would prefer it, obviously, if the minister either had knowledge of the breadth of the consultation process that took place or had the staff here who had that and could answer the question, but that’s not going to happen today, apparently, which means it’s not likely to happen.

Let me ask, because I think the minister does have staff with her today who can answer the question, if there were concerns raised by the Climate Action Team within the ministry around issues to do with offsets, funded units, an innovation fund and how that should be structured; if there were particular ideas that were preferred over others, and any that they considered and rejected because they were thought unworkable.

[1415]

Hon. M. Polak: Staff are not aware of any discussions amongst the team with respect to the use of the offsets, the funded units. But I will say this as well. I’ll be very careful about answering questions with respect to discussions of the team, because, of course, they themselves had an internal agreement as to what they would discuss versus what they would put forward to the minister, what they would put in their report.

It’s one of the reasons they were able to arrive at a consensus. They were very respectful about not revealing publicly all of the discussions that they had throughout their work developing their recommendations.

G. Heyman: Do the staff who are accompanying the minister here today have any concerns about what may or may not serve to make the technology fund successful?

The Chair: The member for Surrey–Green Timbers.

Is leave granted?

Leave granted.

Introductions by Members

S. Hammell: In the gallery, I have another group of grade 5 students from Creekside Elementary. I have the pleasure of working with both these groups in the year teaching them about government, and they are really great people. This group is accompanied by their teacher, Mike Caplan, as well as five adults who are helping supervise. Would the House make these fabulous students welcome.

Debate Continued

Hon. M. Polak: I’m advised by staff that they have no concerns. They have a lot of confidence in this. They were involved every step of the way in designing how this would operate, so they have a high level of confidence and a high level of confidence in allowing this to be something that involves people with expertise outside of government, those who are in the sector. I think that’s a strength of how this is designed.

G. Heyman: In most development of policy or policy teams, some form of strength and weakness analysis is undertaken, whether it goes by that name or not. Am I to take it, from the minister’s answer, that no weaknesses were identified in the regime that is laid out in the bill and amended by this bill?

[1420]

Hon. M. Polak: Staff have a high degree of confidence in the work that was done. Of course, as you’re developing policy and developing drafts for legislation, you’re not only discussing amongst the team but you’re adjusting as you go to try and end up with the best product. They believe they have.

In addition, we have the amendment that now even widens out that opportunity so that more can take advantage of it than were originally contemplated — and then, of course, a small administrative amendment with respect to how the money is accounted for.

G. Heyman: A high degree of confidence is different from not having identified any weaknesses. Is the minister saying that no weaknesses were identified during the discussions?

Hon. M. Polak: I hope I’m answering the member’s question. I think I will be. There is, of course, in the development of legislation the ability for staff in one ministry…. Where they may need additional expertise or viewpoints from others on areas that are not their area of technical expertise, they can draw on other expertise from other ministries. They do that throughout the process.

Along the way, with the drafting of any legislation or the drafting of any regulation or policy, one will come upon areas that need more attention, that become very complex. That is part of the process. You identify something that needs more work; you do more work on it.

At the time that it arrives here…. Certainly, I don’t think anyone on my staff are claiming any godlike powers of perfection. Nevertheless, they don’t see any obvious weaknesses or things that they’re concerned about. They’re confident that that process was one that was rigorous enough to capture anything that needed to be addressed before it arrived for us to discuss in the Legislature.
[ Page 12378 ]

Sections 4 and 5 approved.

On section 6.

G. Heyman: Section 6 addresses authorization of “persons who are neither operators of regulated operations nor project proponents to hold accounts in the registry.” The minister indicated that the reason this was introduced as an amendment was because of interest from people who fit this very description.

Could the minister describe for us some examples of organizations that are neither operators of a regulated operation nor a project proponent who proposed to hold an account in the registry and what they saw as a benefit to them?

[1425]

Hon. M. Polak: I won’t name companies by name. We are aware of a credit union that has an interest in being able to show to their shareholders that they hold and have retired units in the B.C. Carbon Registry, something that is a value to them. We’re also aware of an air transportation company that also has an interest in working through the B.C. Carbon Registry in this way. Those are a couple of examples.

Again, important to remember that no other industry in British Columbia has the obligation to offset any of their emissions, whether by offsets themselves or by funded units, other than the LNG industry. It is the only industry that is obligated to do so. One can imagine that based on their company’s values, there could be very many industries across B.C. that would see an advantage to them in terms of marketing the products by being able to show that they indeed have offset their emissions.

G. Heyman: With these companies or institutions that saw an advantage to themselves of being able to show units in the registry, did they share with the minister or the minister’s staff how they saw that advantage working for them and precisely what it was, given that there is no requirement?

Hon. M. Polak: One of the distinct advantages is that under this system, it’s public and in a regulated way such that those who place a high value on reducing their carbon footprint have something to show to the world, to their customers, to their shareholders, in a very credible way that they are actually meeting commitments such as carbon neutrality across their operations. They can actually display that.

G. Heyman: How is that different for them than purchasing offsets or saying they’ve purchased offsets after purchasing them or having a program in place in which they simply allow clients to buy offsets, in the case of an air transportation company, or in which they purchase offsets themselves and built it into the price of a ticket or a good or whatever it is?

Hon. M. Polak: It’s their choice. For some, they want to be investing in those longer-term innovative technology solutions that will help the world’s transition to a less emitting society.

[1430]

For others, they will want to make the choice to purchase offsets themselves for a more immediate reduction and effect of reduction. It’s their choice, but they’re expressing this interest to us.

G. Heyman: Has the minister or the ministry given consideration to how an appropriate amount of funded units to be purchased would be determined? Would it be modelled on a formula similar to that which applies to the LNG industry? I have a hard time imagining how that would work. I’m not sure that’s the answer, but if it is, the minister could perhaps tell us how that would work.

Hon. M. Polak: There’s no upper limit. Take, for example, the case of a credit union that has decided that it’s an important value to them to be carbon-neutral, and in order to do that, it’s going to cost them, for the sake of argument, $1 million worth of funded units. There would be nothing prohibiting them from purchasing an additional $5 million worth, if they wish to — even go beyond their carbon neutrality. Ultimately, they could even trade those, sell them, as funded units to others.

It creates this whole mechanism for open trading in the public marketplace in funded units that, ultimately, will benefit the province of British Columbia — potentially more broadly than that, if you have innovative technology that is developed and potentially exported. For those who see the value in it, there’s no upper limit as to how much they could purchase.

G. Heyman: If I’m not misunderstanding this, the number of funded units required of an LNG proponent would be proportional to the excess of emissions over the intensity benchmark.

What would be the benchmark for these other entities that were permitted to purchase funded units? Would it be amounts exceeding carbon neutrality? Would that be measurable? Or would it simply be entirely voluntary? Someone would say, for instance, to the public or their shareholders: “I’ve purchased X number of funded units because I believe that’s what represents the equivalent of carbon neutrality.”

Hon. M. Polak: The LNG industry is the only industry with a benchmark and the only industry obligated.

[R. Lee in the chair.]
[ Page 12379 ]

For those who voluntarily wish to participate, that would be up to them what their goals were with respect to emissions reductions. If they chose to completely offset their emissions, that’s their choice. If they decided they were going to partially offset their emissions, that’s their choice. It’s up to them how they measure, up to them how they report. They’re not regulated by us.

[1435]

G. Heyman: Would it be correct or incorrect if I and the public of B.C. assumed that the focus of the technology fund in the original act was technology that would reduce emissions from the LNG sector?

Hon. M. Polak: I should just add to my previous answer, lest I’ve left the wrong impression. Although the LNG industry is the only one benchmarked and obligated to purchase offsets and/or purchase funded units in order to comply, there are, of course, reporting and monitoring obligations if a facility, if an operation, hits the threshold at which they have to monitor and report to us.

With respect to the next question, which I think I have just now talked out of my mind…. It’s on the tip of my tongue.

G. Heyman: My question was: would I or the people of B.C. be correct in assuming that the focus of the technology fund in its first iteration was emission reduction in the LNG sector?

Hon. M. Polak: I apologize. It was almost there, and it just refused to come forward.

The technology fund was created originally for the purpose of allowing that to be used for compliance in the LNG sector. However, investments from the fund don’t necessarily have to be targeted toward reduction of emissions related to LNG. They could be anywhere where there are emissions reductions to be had and where innovative clean technology can help.

Transportation is a great example. Thirty-seven percent of our emissions currently in British Columbia come from the transportation sector. It’s our largest piece of emissions in the province.

It could be anything. It doesn’t have to be related to natural gas or LNG production, but it does have to be something that will see a reduction in emissions.

G. Heyman: That precludes me from asking whether a change in focus of the technology fund requires any assurance that the application of the technology would be diluted to other sectors since it was never the intent to require the technology fund to focus on innovation within the gas or LNG sector directly.

Does the minister envision…? Will there be any requirements put in place on the fund, or parameters put in place for the fund, to focus research and innovation in areas with the greatest potential of greenhouse gas emission? Or will it be anywhere whatsoever?

Hon. M. Polak: We will still have the ability, in the regulations, to prescribe additional criteria like that if we wished. However, we do believe that, in all likelihood, you will see projects proposed in the areas where they’re likely to get the most substantial advantage in terms of emissions reductions. That would naturally put a bit of a focus on production of natural gas, liquefaction, things like that.

[1440]

We expect that there will be a significant uptake in and around the production of natural gas. We could prescribe that in the regulation — and would, if we thought there was an advantage to it.

This, of course, is intended to be in place for many, many years. We know, with what’s taking place on the climate action file — in British Columbia, in Canada, around the world — that that environment, that context, is liable to shift and change. We’ll be able to shift and change and adapt with it.

G. Heyman: Does the minister have any thoughts regarding what might be the parameters for governance and/or direction of the fund and its decision-making processes?

L. Throness: I seek leave to make an introduction.

Leave granted.

Introductions by Members

L. Throness: It’s great to have visitors in this House, and I’m so happy to welcome a group of students from Hope Secondary School today. We have 36 grade 7 students who are here for three days. They’re on sort of an educational tour of the House right now. I would like to welcome, in particular, some adults who are with them. Their teacher Ahlbert Dayrit is here — and Kim Hollman, Scott Wilkins, Laura Preston, Grant Freeman and Jesse James. Would the House please make them welcome.

Debate Continued

Hon. M. Polak: The technology fund will be a not-for-profit corporation.

G. Heyman: How does the minister envision the board of the not-for-profit being established?

Hon. M. Polak: We would not be establishing the not-for-profit corporation. We would first look to those that already exist and meet the appropriate criteria, as is listed out in the definition. There could be more than one.
[ Page 12380 ]
It could be that a new not-for-profit arises to be operating in this sphere, but we would first look to those that already exist.

[1445]

G. Heyman: I’m a bit surprised by the response. I recognize that there could be an efficiency in doing that, but presumably, in searching for a new not-for-profit board or an existing not-for-profit, the government would be looking for certain parameters regarding the expertise of that particular not-for-profit or the makeup of the not-for-profit’s board. That is, of course, most easily done by establishing a not-for-profit and establishing the qualities or qualifications or background of board members that will govern that not-for-profit.

But if the ministry and the government are actually considering looking at existing not-for-profits, either singly or severally, there must be some thought given to the parameters of experience or expertise that that not-for-profit should have with respect to administering a technology innovation fund.

Hon. M. Polak: It’s important to remember that their function isn’t the management of the money per se. It flows through them, but their primary function would be adjudicating the applications for moneys from the fund.

We do have, of course, criteria listed in the act, but there are any number of not-for-profits that I think would do a very fine job, in all likelihood, of working in that sphere.

G. Heyman: No, I did not think that the not-for-profit or the board would manage the money, but certainly it would be responsible for adjudicating and determining how the money was spent or allocated to researchers or research organizations. Can the minister give examples of not-for-profits that exist that she thinks are suitable?

[1450]

Hon. M. Polak: I’m going to put a big “Caution” sign in front of this answer, because I don’t want someone reviewing Hansard and popping into staff’s office and saying: “The minister said we’re approved.” Understanding that this is purely speculation that the member has asked me to engage in…. For the purposes of an example, it could be an organization like Sustainable Development Technology Canada, for example. We could link up with Alberta’s, as an example.

You could even envision that some of those who are very active in the clean energy innovation field, such as not-for-profits like Clean Energy Canada or maybe PICS out of the University of Victoria…. There could be any number of organizations who seek to take part and who then are judged to meet the criteria.

Sections 6 to 8 inclusive approved.

On section 9.

G. Heyman: Section 9 deals with the addition of “regulation-making powers in relation to new entrants and new entrant compliance periods.” Is there any methodology which the minister envisions for determining appropriate new entrant compliance periods, or is it simply wide open?

Hon. M. Polak: The director making the decision would consider the industry standard in that sector for the time it should take to reach a steady state of operations.

G. Heyman: Would those be standards of experience within British Columbia or internationally?

Hon. M. Polak: It would be open to the director to consider any number of indicators, be they international, local or regional. Of course, in applying an international standard, we would want the director to consider some of the unique aspects of operating in British Columbia. For example, if one were to apply expectations based on operations in a very hot part of the world, one would naturally have to adjust for some of the local circumstances if they were going to be operating in the north and in some extreme cold.

G. Heyman: Section 9 repeals subparagraph (iii) of section 47. Could the minister explain the reasons for this?

[1455]

Hon. M. Polak: This is being repealed because the section is no longer necessary. If you look at the powers added through paragraphs (b.1), (b.2) and (b.3), along with the definition of “transitional compliance period,” you’ll see that it provides the necessary powers to do what would have been achieved in the section that’s being repealed.

G. Heyman: Much has been discussed with respect to the LNG industry generally about the original claims that it would be the cleanest LNG in the world and the difference between including upstream emissions in that calculus or not including them. The government has made it clear that it is not including them. It is simply focusing on the intensity levels of the liquefaction process itself. Can the minister give the rationale for not including upstream emissions in the emissions to be covered by this bill?

Hon. M. Polak: At this time, it is certainly not as simple as it sounds to track and project what emissions there will be in the upstream resulting from the activities of a liquefaction facility. For example, there are some who will use natural gas from Alberta. There are no guaran-
[ Page 12381 ]
tees that a facility would continue to use gas from the location where it started to use natural gas. If a company changed hands, they may change who it is that supplies them over time.

In any case, our comparisons with respect to the benchmark that we’ve set certainly do put these facilities in line to be the cleanest of any of their counterparts anywhere in the world.

Insofar as the upstream, that’s an area where we have to do significant work to reduce emissions. No question about it. But it is not as simple as it sounds to draw a straight line from a liquefaction facility and to project out over multiple years what the emissions profile is going to be and where, in fact, the natural gas is going to come from.

G. Heyman: The Canadian Environmental Assessment review of the Pacific NorthWest LNG project says the project will result in 5.28 million tonnes of CO₂ equivalent per year, 0.27 tonnes of CO₂ equivalent per tonne of LNG, which is a marked increase of greenhouse gas emissions — that it is an 8.5 percent increase in provincial emissions, a 0.75 percent increase nationally and that upstream greenhouse gas emissions associated with the project of between 6.5 and 8.7 million tonnes of CO₂ equivalent per year would represent 10 to 14 percent of provincial emissions total and 0.9 to 1.2 percent of national emissions.

[1500]

The minister is right, I suppose, in pointing out that some of these emissions will be attributable to Alberta. Notwithstanding that, a very significant amount of the emissions will be attributable to British Columbia.

It seems to me that this act, both prior to amendment and with these amendments, doesn’t enable the government to address these very substantial emissions that will, understandably, have a huge impact on B.C.’s future climate action plan, either by making it impossible to craft a plan that meets the suggested targets of the climate leadership team, which were a reduction of 40 percent by 2030, or it will have a disproportionate, perhaps, impact on other sectors.

Could the minister indicate whether, within this bill — and the act, as amended — there will exist the possibility to address those emissions at a future date?

Hon. M. Polak: It is important to note that the overall act, while it only places compliance obligations on LNG facilities, does require the monitoring and reporting from any project that meets the threshold. It’s open to government to regulate in any way it sees fit in the future. But at this stage, insofar as compliance, the only industry that is required and obligated to meet those benchmark numbers is the liquefied natural gas facilities.

Now, it’s also important to remember, though, when thinking about the potential impact on upstream production…. Given the significant drop in the price of natural gas that has been experienced and the significant amounts of natural gas being discovered in the United States, it’s also entirely possible that rather than seeing an increase in production in natural gas, the result of the LNG facilities being established could merely be the maintenance of existing production. That’s also entirely possible.

G. Heyman: Whether that scenario plays out or not — i.e., whether the amount of gas being extracted and the emissions associated with that gas, therefore, remain the same — the whole principle of price-based incentives is to drive reduction in carbon.

In the case of the intensity benchmarks for the plants themselves, that incentive is clearly there. In the case of the feedstock for those plants and the processes by which that feedstock is taken, that incentive is certainly not incorporated in this bill, in the act that it amends, nor even in the failure of the carbon tax to apply to fugitive emissions and a number of processes associated with the industry.

[1505]

My question to the minister is…. This fails to incent the proponents and the industry to reduce emissions at every step along the way from wellhead to waterline, and it fails to contribute to the steps that were identified by the climate leadership team by which there could be, within a provincial climate action plan, room for an LNG industry. The minister herself referred to those aspects of the recommendations of the team.

The minister has said that it’s open to government to regulate at some point in the future. Does the minister see the act that will result should the bill be passed as being a vehicle, with future amendment, to actually take further action on the huge emissions associated with this industry that would enable British Columbia to have a meaningful climate action plan with achievable targets, or would it likely be a different vehicle entirely?

M. Farnworth: I ask leave to make an introduction.

Leave granted.

Introductions by Members

M. Farnworth: In the gallery today, visiting from my riding of Port Coquitlam, is B.C. Christian Academy. A group of students and their teachers are here to observe the proceedings. It’s a wonderful school in my riding, and I would ask the House to please make them most welcome.

Debate Continued

Hon. M. Polak: There is no question. We have to do much, much more if we are going to see reductions, and
[ Page 12382 ]
significant reductions, in upstream natural gas production — absolutely. Now, what form will that take? Will it be legislation? Will it be regulation? That decision has yet to be made. We will await the results of our consideration of the recommendations from the team and the new climate action plan.

G. Heyman: Well, the minister has introduced this Bill 19 to amend the act that was passed in a previous session, the Greenhouse Gas Industrial Reporting and Control Act. The impact of the emissions has been well known to government and the minister through reports and assessments.

Why has the minister not chosen to introduce changes at this time that would assure British Columbians that the government took the recommendations of the climate leadership team seriously, was prepared to bring in a serious plan to address climate change and set achievable emission reduction targets in British Columbia rather than leave it to the future?

It would be possible to do this without outlining the entirety of the plan. Is the reason because the industry has made it clear that it will not set up shop here if those controls are introduced by the government?

Hon. M. Polak: No, that’s not the case. The process is not complete. When the process is complete, we will have decisions announced and then resulting regulation or legislation, if need be.

G. Heyman: The minister has said that it’s clear to her that more has to be done to control emissions upstream in the gas extraction, transportation and liquefaction process. Does this mean that the minister is committed to introducing greater control over these emissions?

Hon. M. Polak: I don’t get to make those decisions all by myself. Instead, we have a cabinet working group on climate leadership, which ultimately reports to cabinet and will make decisions considering the recommendations that we’ve received.

G. Heyman: Does the minister believe that it is possible to achieve the targets the Canadian government has committed to and the climate leadership team has recommended without taking action to control emissions at every step of this process — extraction, transportation and liquefaction?

Hon. M. Polak: There’s no question what has to be achieved. The question becomes: how do you do that? What the cabinet working group wrestles with in looking at the recommendations is how to achieve the kinds of reductions that we’re going to need in the upstream.

[1510]

G. Heyman: The minister has said: “There’s no question what has to be achieved.” For clarity, did she mean that in reference to the natural gas industry or more broadly?

Hon. M. Polak: I’ve said it on a number of occasions, and I’ll repeat it now. We have to see significant reductions of emissions in the upstream. The question of how you do that, though, is not necessarily a simple one.

G. Heyman: It’s understandable that it’s not simple. In fact, it’s likely quite difficult. My question was simply for the minister to acknowledge that we needed to do that. I’m not sure if by how we do that she means what legislative or regulatory mechanism or what technological mechanism or innovation we would use to do that. Perhaps she could clarify that.

Hon. M. Polak: I don’t know, ultimately, where we will arrive at. We’re not completed with our deliberations, with our discussions. I would speculate that in all likelihood, over time, you will end up using a number of different tools, be it regulation, legislation, incentives, technology innovation.

When you think about the work that has to be undertaken to reach our 2050 targets, in all likelihood, you will see a range of tools be employed by governments to achieve the significant reductions we need to see in the upstream.

G. Heyman: Does the minister believe that these mechanisms, whatever they may be, or requirements to reduce emissions upstream in the LNG process will be introduced before or after there is a final investment decision by a proponent?

Hon. M. Polak: I don’t know the answer to that. We’re not complete with our process, so I don’t know the answer to that.

G. Heyman: Does the minister believe that a proponent would make a final investment decision without knowing what all of their requirements will be in future?

Hon. M. Polak: The member’s question supposes an awful lot of things. One of the things that the member’s question supposes is that there is a direct link between a facility and production of natural gas upstream in terms of ownership and in terms of company interest. That isn’t necessarily the case. I’m not going to speculate with respect to that.

We have been ranging quite widely with respect to our discussion, as compared to the topic at hand, which is the committee stage on the amendments. I think I do my best to answer as well as can be expected, but I’m not going
[ Page 12383 ]
to speculate on where investment decisions are going to be made or when. We’re here to deal with the regulation as it stands before us through this act.

G. Heyman: Section (b.2)(ii) says, respecting new entrance compliance periods: “establishing criteria a proposed regulated operation must meet in order to be accepted as a new entrant.”

Does the minister or the ministry staff with her have some sense of what some of those criteria might look like or at least some of the potential criteria that might be considered in the establishment of final criteria?

[1515]

Hon. M. Polak: Of course, it would likely look somewhat different, depending on the sector. But in particular, at this stage, we know it would have to be a new entrant, not a transfer. And there could be a relationship to size of the project as well. That could be another example.

G. Heyman: Sub (iii) says: “prescribing the matters the director must take into account in considering an application for acceptance as a new entrant.” Could the minister or the staff with her assist us with some sense of what some of those matters might look like or what was being contemplated that gave rise to this wording?

Hon. M. Polak: It’s hard to know, at this stage, without the detail of an application in front of one that describes a particular project that you could then analyze. We were throwing around ideas around what would happen, what might be different for a brand-new pulp mill or a brand-new cement production facility.

Some of the things that may be considered are the fulsomeness of the application, the timeliness. We’d certainly want them to apply before they actually started operating. It could be any number of factors that the decision-maker feels are appropriate — but again, tailored to the specific industry that was in question.

G. Heyman: Sub (iv)(B) says: “deem the amount of greenhouse gas emissions attributable per unit of production for a later discrete period to be attributable per unit of production for an earlier discrete period.” Could the minister clarify how this would operate in practice and if this is different from the extended compliance period for new entrants?

[1520]

Hon. M. Polak: This gives to the decision-maker the power to attribute emissions where they best feel they should be attributed. This would allow for the decision-maker to be able to deal with circumstances that may arise as a result of…. Perhaps, over time, there might be changes in reporting. There might be increased requirements. There might be new information that results. This allows the decision-maker to attribute emissions as they see would best reflect the reporting requirements, etc., in a case such as that.

G. Heyman: Is one of the possible results that there could, in effect, be a smoothing of emissions, so emissions for which an operator might be required to either purchase offsets or purchase funded units could be transferred to a different period that would lessen the impact? In effect, could this be a form of emission splitting?

Personal Statements

WITHDRAWAL OF
COMMENTS MADE IN THE HOUSE

A. Weaver: Hon. Chair, earlier today, you may have noticed, I made a comment that I wish to withdraw.

The Chair: Thank you, Member.

[1525]

Debate Continued

Hon. M. Polak: As an example, it could be that during the commissioning phase, something outside of the facility’s control could occur, causing a spike in emissions for a short time. The decision-maker would not be required to use this tool to then deal with that, but they could. They would have the discretion to use this tool, if that seemed appropriate.

Sections 9 and 10 approved.

On section 11.

G. Heyman: Section 11(i)(B) says: “establishing qualifications that a person must satisfy to hold an account.” What might the minister envision to be the kinds of qualifications a person would require in order to hold an account? Has the ministry given any thought to this, or is this just an enabling provision?

Hon. M. Polak: It’s a very broad enabling provision, especially when you consider that “person,” under the Interpretation Act, could also be an entity, not just an individual.

It could be something as simple as making sure that they’re of the age of majority. Perhaps you want to require criminal record checks. I don’t think we want anybody registering or being part of the registry if they’ve been convicted of some kind of terrible fraud. So you can imagine all manner of requirements one might place on that, but it is a very broad enabling.
[ Page 12384 ]

G. Heyman: The section goes on to talk about “establishing restrictions on the participation in the registry of a person authorized under that section to hold an account.” How might a person’s participation be restricted?

[1530]

Hon. M. Polak: As an example, if someone had been subject to penalties under the act, then this would provide the authority to restrict how they are able to operate within that context, such as restricting them from making transfers.

G. Heyman: Could there potentially be additional restrictions?

Hon. M. Polak: There could be. One could contemplate there could be a suspension, for example, from the registry, but that will be developed in the regulations, as this really just provides the authorities.

Sections 11 to 13 inclusive approved.

On section 14.

G. Heyman: So (a) says: “in subsection (4) by striking out ‘each reduction of one tonne of greenhouse gas emissions’ and substituting ‘a reduction in greenhouse gas emissions or atmospheric greenhouse gas concentrations.’” Is this simply housekeeping, or is there more substance to this?

Hon. M. Polak: It’s housekeeping. This is consequential.

G. Heyman: With respect to section 14 generally, what impact does the minister think this will have on government meeting its emission targets, if any?

Hon. M. Polak: It’s administrative. It shouldn’t have any impact, plus or minus.

Sections 14 to 16 inclusive approved.

Title approved.

Hon. M. Polak: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 3:33 p.m.

The House resumed; Madame Speaker in the chair.

[1535-1540]

Report and
Third Reading of Bills

BILL 19 — GREENHOUSE GAS
INDUSTRIAL REPORTING AND CONTROL
AMENDMENT ACT, 2016

Bill 19, Greenhouse Gas Industrial Reporting and Control Amendment Act, 2016, reported complete without amendment, read a third time and passed on the following division:

Hon. M. de Jong: Committee stage on Bill 2.

[1545]

Committee of the Whole House

BILL 2 — GREAT BEAR RAINFOREST
(FOREST MANAGEMENT) ACT

The House in Committee of the Whole (Section B) on Bill 2; R. Lee in the chair.

The committee met at 3:47 p.m.
[ Page 12385 ]

On section 1.

H. Bains: I just want to say thank you to the staff who are here to help us through this bill. We will try to put some questions. It’s a new bill. It’s not an amendment or change to the existing bills or legislation, so I think it’s an area that we need to explore.

If the minister could explain, under the definitions. We all know what AAC means. For those who are watching and don’t understand what the AAC is, it’s allowable annual cut. They talk about adjustment period, the definition of, and the definition of “AAC determined by the chief forester.”

If the minister could explain the first part: “‘AAC adjustment period’ means the period beginning on the date section 6…comes into force and ending on December 31, 2026.” When I’m looking at section 6, it talks about: “In this section, ‘official map’ means the map deposited in the Media Vault, GeoBC, Victoria as Map of Great Bear Rainforest Forest Management Area, reference number 577.3409711….”

The map is deposited, but how do we know what this map is? If we are passing this legislation, can the minister explain…? Perhaps in a rough form, you can explain what area we are talking about until we get to section 6.

[1550]

We could talk about it there. But I think it makes the reference of after section 6 comes into effect. To me, we’re talking about the map. We’re talking about the area. So could the minister explain what this area looks like?

Hon. S. Thomson: Before I respond, I’ll just introduce the staff that are here assisting — Rory Annett, who’s the executive director with the coastal projects; Deidre Wilson, who’s the senior legislative analyst; Colleen McKendry, our senior policy adviser; and Craig Sutherland, who is the assistant deputy minister for the coast area.

The map that the member opposite is referring to with reference to section 6 is the map that will officially outline the boundaries in the area of the Great Bear Rainforest. It’s the area that arose out of the north coast land use plan, the south coast land use plan. It’s the area that’s subject to the land use orders that have been in place. It’s really the official designation of the area of the Great Bear Rainforest.

By referencing the adjustment period in the definition, once the designation of the management area, which is the Great Bear Rainforest, comes into force, then that’s when the AAC provisions apply and take place from that and, as we’ve talked about previously, the ten-year AAC period for the set amount of the AAC — the limits for that time period, for the ten years.

H. Bains: Perhaps the minister could…. Maybe I’ll put it in a different way. Could the minister describe the geographical area of British Columbia that this map covers? So if the minister could describe from what end to what end. How many hectares are we talking about? What is this area? Where is it in British Columbia?

Hon. S. Thomson: The GBR area, 6.4 million hectares. It extends from the Discovery Islands in the south to the B.C.-Alaska border in the north and includes all of the offshore islands in the area except for Vancouver Island and Haida Gwaii. So it’s Discovery Islands north to the B.C.-Alaska border and inland in the areas that were part of the land use plan and the land use order area. From that point on the coast to the B.C.-Alaska border, 6.4 million hectares.

H. Bains: I’m asking these questions for the benefit of people who may be listening so that they understand the technical terms the minister and I and others in this House understand, so thank you for that answer.

Just to clarify, it does not include any part of Vancouver Island and Haida Gwaii islands. Is that correct?

Hon. S. Thomson: That’s correct.

H. Bains: Let’s look at the “Crown land” definition, in relation to timber supply area. It “does not include Crown land in the following areas: (a) a tree farm licence area; (b) a community forest agreement area; (c) a first nations woodland licence area; (d) a woodlot licence area.”

[1555]

What is the purpose, if the Crown land is there, but we are saying that it does not mean the Crown land in those areas? My understanding is that in those areas there is still Crown land, by definition. Why is this mentioned as Crown land not including these areas, when they actually are Crown land?

Hon. S. Thomson: This definition of Crown land only applies to the timber supply areas.
[ Page 12386 ]
What this does is it ensures that when the legislation is speaking to Crown land in the timber supply areas, it doesn’t include the other tenure types —community forest, tree farm licences, First Nations woodland licences, woodlot licences that could be located within the external boundaries of the timber supply area.

You punch out those areas, and then the AAC is determined on those other areas. Then that is all included in the overall limit of 2.5 million hectares in the area.

It allows for the specification of the AACs for Crown land in the GBR north timber supply area, land in TFL 25. TFL 25, for example, has blocks in both the GBR north, when that’s set up, and the TFL land. If they were not excluded from the definition of Crown land in the TSA, it would be difficult to work out how much AAC was interacted between both tenure types. So it’s really a process to ensure that the Crown land, for this purpose, applies only to the timber supply areas.

H. Bains: If the minister goes on to the next part of definitions: “‘GBR part’, in relation to a partial GBR timber supply area or partial GBR tree farm licence area, means the part of the area located in the GBR forest management area.”

I guess if you could explain the difference between GBR part…. Then there’s a non-GBR part, and then there’s a new non-GBR timber supply area. If you could explain what we are trying to explain here — the GBR part, especially, and non-GBR part.

Hon. S. Thomson: This definition is required because there will be some management units. Timber supply areas, tree farm licences have a portion of their area that are both inside and outside of the GBR forest management area. So the GBR part refers to those parts that are located within the GBR forest management area.

B. Routley: I have a couple of questions under definitions. In the first one, if you don’t mind, we’ll go back to AAC adjustment period. It does talk about a date. It says: “…the period beginning on the date section 6 comes into force….”

Now, is that the date that this legislation passes, or is that some other date?

[1600]

[R. Chouhan in the chair.]

Hon. S. Thomson: The area, both the depositing and the start of the AAC adjustment period, will be brought into force by regulation. That will be the date from which the regulation and the map that is part of the regulation process, the map defining the area, will be deposited. That sets the start point for that ten-year adjustment period. That period might be a little longer. If the act comes into force prior to December 31, 2016 — because this ends on December 31, 2026 — it could be a little longer than the ten-year period, depending on when the regulation bringing the act into force is brought forward.

B. Routley: GBR means Great Bear Rainforest. I’m not sure if you’ve ever seen a great bear or if you know the context from where that came. Maybe you could describe whether there actually is a great bear in the Great Bear Rainforest? Is this a term of endearment that you personally subscribe to? Or does this come from some other place?

Hon. S. Thomson: The GBR can take its origins back to, I think, a dinner of environmental organizations who led the market campaign. I think it was in a restaurant in Los Angeles. It might have been on the back of a napkin, that kind of process. As they moved forward with the market campaign, they knew they needed to brand their market campaign. It became the Great Bear Rainforest campaign, and as that evolved, it became what the area was known as. It was since adopted through all the Great Bear land use orders, the Great Bear Rainforest legislation now, the agreement — all of that.

That’s where it all started. I remember being at the celebration when we finalized, completed the agreement, and hearing that story of where the original name came from.

B. Routley: Thank you for that clarification. I, in fact, looked it up on Wikipedia to see what they had to say. They had to say that it was a name conjured up, essentially, by environmental groups and coined. I thank you for the clarification that it was actually penned on the back of a napkin in a restaurant somewhere. That’s worthwhile knowing.

[1605]

I know that the Great Bear somewhat relates to the fact that there are the kermode bears, often referred to as spirit bears. Apparently one in ten of them have cubs with a white coat. There are grizzly bears, and there are black bears. Do you know if there are any other kind of bears? Are there brown bears? How many other species of bear make up the Great Bear Rainforest?

Hon. S. Thomson: Again, the story about the napkin in the restaurant…. You know, that was the way they portrayed it. It might not have exactly happened that way. I’m not sure, but it was a good story anyway.

I’m just getting a quick lesson here. There are two bear species in the area. There are grizzlies and black bears. The white spirit bear is a variant of the black bear. Grizzly and brown are the same bear. So there are two species of bear in that area.

B. Routley: Well, I’m just going to skip forward to the special forest management area. I went to section 50 to look for further clarification on the special forest management area, which really isn’t all that helpful. Could you give us a brief description of what exactly you were trying to get at with the special forest management area? What’s special about it?

Hon. S. Thomson: The special forest management areas are areas within which commercial harvesting forest activity would be permitted. No further licensing or cutting permits would be issued for commercial harvesting purposes. Other commercial activities could still be permitted in those special forest management areas — e.g., mining or tourism activity.

They were specifically put in place. There are eight in the land use orders. Six were proposed by the joint solutions project team, and two were proposed by Coastal First Nations, for a total of eight. They were designed primarily to protect very specific First Nations cultural and spiritual values in those areas but also to allow the First Nations economic opportunities around tourism
[ Page 12387 ]
and other potential opportunities other than forest activities. So forest activities are prohibited in those special management areas.

Sections 1 and 2 approved.

On section 3.

[1610]

H. Bains: I think I’ve got questions. Maybe we could combine section 3 and section 4.

Section 3 talks about AAC specified by Lieutenant-Governor-in-Council, and section 4 talks about AAC determined by the chief forester. Why is it that the cabinet is taking over AAC determination from an experienced chief forester who has the science on his side? He’s an expert. He knows how the forest works, rather than the cabinet. Why are we making this distinction that there is some AAC specified by the chief forester and others by the cabinet? Why do we give this power to the cabinet?

Hon. S. Thomson: This is an important part of the legislation and the agreement. The amount, the AAC, which is being specified for the ten-year period…. The maximum for that time period is being set by regulation. It provides the certainty that was part of the agreement with the forest industry and all of the environmental organizations and groups that were part of the agreement. The chief forester was involved in all of the analysis that recommended the initial AAC of 2.5 million cubic metres. So that analysis and advice was taken into place.

This was a negotiated amount. The chief forester operates under section 8 of the Forest Act. Because this was a negotiated process, it specified set by cabinet and set through regulation. The chief forester will still be involved in the AAC on those where there are elements that are outside the GBR boundary, where they overlap and cross over.

After the ten-year period of certainty, the negotiated certainty, the role of the chief forester will come back into play.

H. Bains: Again, it may be negotiated. I get that. Why? Why would you take the authority of a chief forester, who is the right person to determine the AAC, based on a number of different factors…? Rather than the chief forester doing it, why was it felt necessary to sign on this agreement and take it from the hands of the chief forester — who determines the AACs, like I said, based on science, based on inventory, based on the area?

Where will the cabinet have that expertise to determine the AACs? Why was that right ceded in negotiations, taking it from the chief forester and bringing in the hands of politicians?

[1615]

Hon. S. Thomson: Again, the chief forester sets, in her role and under section 8, based on analysis and science and all of that work. In this case, this was a negotiated agreement with all the parties, with the chief forester involved in the analysis that helped determine what that negotiated amount was by all the parties. It sets it in place. It provides a certainty, which was a key part for the industry, for the ten-year period in place. It is, in a sense, implementation of a negotiated agreement for that ten-year period, a key part of the agreement. Then the chief forester role comes back into play after that.

But again, I need to point out clearly that the chief forester — her office — was involved in all of the analysis, along with the joint solutions project, the technical teams that came to that agreement in setting that amount for the ten-year period.

H. Bains: Two questions come out of this. I still don’t get the right answer, other than to say that it was a negotiated agreement. I get that. It was a negotiated agreement. Why? Why would you put that decision, which is science-based and based on numerous different factors — that the chief foresters determine the AACs — in the hands of the politicians when the chief forester could still do that, unless the parties feel that the chief forester may come up with a different conclusion than what the cabinet would?

There have to be some reasons behind it — some real, logical reasons — other than to say: “Well, it was a negotiated deal.” Was it because we are putting boundaries around this area — we call it the GBR management area — that some of the AACs and some of the tree farm licences and timber licence areas may require going around what the current existing rules are, established by the chief forester? Is that what we’re trying to do here?

Hon. S. Thomson: The recommended solutions and the amount recommended, negotiated, worked through all the technical analysis by the joint solutions project team, endorsed by government and First Nations, are negotiated AACs for the management units, for the TSAs and the TFL areas in the Great Bear Rainforest management area. As such, they have not been derived through the normal AAC determination process conducted by the chief forester under the Forest Act.

That’s why the Lieutenant-Governor-in-Council is establishing these numbers by regulation. To do so otherwise would fetter the chief forester’s normal AAC determination process. She’s a statutory decision–maker under the act. This process of setting a negotiated AAC by agreement with all of the parties would fetter her responsibility, so that’s why it’s left by cabinet, in regulation, to implement the agreement.

H. Bains: This also gives the cabinet the right to extend this to ten-year cut control rather than five-year?
[ Page 12388 ]

Hon. S. Thomson: The cut control provisions…. The member is jumping ahead to a further section in the legislation. The cut control periods set in the legislation…. There are and will be provisions for a longer cut control period in the northern part of the Great Bear Rainforest set within the legislation.

Sections 3 and 4 approved.

On section 5.

[1620]

H. Bains: Again, I think my question here is: why doesn’t this act protect, identify the vulnerable area of the GBR, rather than leaving it to the Lieutenant-Governor-in-Council to partition licences?

Hon. S. Thomson: Just to be clear, the partitions are not for the licences. The partitions are for the AAC. Given that the AAC is being set by the Lieutenant-Governor-in-Council, to be consistent, the partitions for that time period are set by the Lieutenant-Governor-in-Council as well.

Section 5 approved.

On section 6.

B. Routley: The official map is in a media vault. I’m just wondering if there’s…. Is this map available to the public in some way or on line? Is there something about the map storage that is unavailable to the public?

Hon. S. Thomson: Yes, the map is available, will be available, publicly on line. The depositing in the vault with GeoBC is the official record of it for archiving and for registration purposes, but it is generally available.

The map is consistent with the land use orders and what people and all of the companies and people participating in the process and the agreement generally know as the boundaries of the GBR.

B. Routley: Will that map be updated as roads are developed and as logging plans become clear?

Hon. S. Thomson: The map that’s being referred to here, the official map, defines the area. It’s the outer boundaries.

B. Routley: Now I am confused. It doesn’t include some of the areas that will be specially managed, within the map?

Hon. S. Thomson: Separate maps will be developed and deposited for the special management areas as they’re defined and the boundaries are finalized. Those will all be available, as well, and available publicly.

B. Routley: These special, separate maps that aren’t referred to in section 6 — are they referred to somewhere else in this piece of legislation?

Hon. S. Thomson: Those areas will be set by regulation, and then the maps will be deposited once the regulation sets those out within the land use orders.

[1625]

B. Routley: Roughly, what would be the geographical size of those areas? Is this the eight special areas that you referred to, and do you have an idea of the rough size of those geographical areas?

Hon. S. Thomson: The special management areas total 291,320 hectares. The proposed areas, if you know the areas, are Kitsault, Gil, Green, Braden, Kimsquit, King Island, Broughton and Thurlow.

Section 6 approved.

On section 7.

H. Bains: Here we’re talking about the AAC adjustment period, which seems to me, if this bill passes, will take you till 2026 — so a ten-year period. My question is: will the cap that we’re talking about here apply to the whole GBR area?

Hon. S. Thomson: For the TFLs and the timber supply area that are within the overall boundary of the Great Bear Rainforest area, that 2.5, the maximum allowable annual cut, will apply.

H. Bains: Would that be that based on science, or is this also based on negotiations?

Hon. S. Thomson: That’s the 2.5 million cubic metres that has already been established by negotiation.

H. Bains: Then it goes on to say, subsection (2): “If a maximum allowable annual cut for the GBR forest management area is in effect on the date the AAC adjustment period ends, the maximum allowable annual cut ceases to have effect when the AAC adjustment period ends.”

So when it ends on December 31, 2026, does this mean that there may be an AAC maximum allowable cut determined two years prior to that, but you still have five years?

[1630]

It’s not based on just year by year; it’s based on a ten-year period. If, during this ten-year period, you allow a maximum allowable cut which goes beyond December 31, 2026, does this clarify that that AAC, then, will end on December 31, 2026? If the answer is yes, how would you determine AAC for the future time?
[ Page 12389 ]

Hon. S. Thomson: The maximum annual allowable cut, the 2.5, applies to the overall area for that ten-year period. Within that, there will be AACs for the different management units, for the TSAs within that area and the TFLs. That will be in place for the ten years.

Once the ten-year period is over, then the responsibility for setting the AAC reverts to the chief forester. The chief forester will do those determinations from that point forward. That amount could be less than the existing cap, or it could be more, depending on the analysis of what’s available.

For the ten-year period, the maximum is the 2.5 million cubic metres. Then the role of the chief forester is reinstated at the end of that ten-year negotiated time frame.

H. Bains: I think the question that I was having…. I understand the 2.5 for the entire area for those ten years. But I’m talking about licensee by licensee.

If they are given AAC, a maximum allowable cut, during this ten-year period and if their cut control period ends, say, in 2024 and they go for another AAC determination for the future, what we’re saying here is that the maximum time that they will consider is going up to December 31, 2026. Anything after that will be determined, as the minister says, by the chief forester based on the science. It could be more. It could be less, right?

[1635]

Hon. S. Thomson: I’ll see if I can clarify and explain this. The AAC is set by negotiation for the ten-year period. Then that translates down to the licences in the operating under…. The combination of all of those licences and everything can’t exceed the 2.5 million cubic metres.

When the adjustment period ends and that negotiated period ends and the new AAC is determined and back within the role of the chief forester in setting that AAC, if there is a cut control period that straddles the time frame and the change, then they would complete the cut control under the level of the AAC and their licence that was determined previously. The new AAC would drive down to the licences, and then new cut control periods would be set reflecting the new AAC levels.

H. Bains: The minister says there are 2.5 million cubic metres of ACC within the GBR management area. What was the AAC before GBR comes into effect in the same area?

Hon. S. Thomson: It’s 3.3 million cubic metres.

H. Bains: So there are 800,000 cubic metres less AAC now than there was. Can the minister identify who’s losing the AAC in this exercise?

Hon. S. Thomson: Overall, as we pointed out, a 24 percent reduction. The reductions vary. We’ll consider each management unit’s forest profile; species that grow at the different rates; relative amounts of old growth, second growth; the amount of timber that is economically available for harvesting. Also, we’ll reflect the impact of where the special management areas are put in place by agreement.

It’s not proportional. The reductions will vary and consider each management unit, and the discussions are underway and continue with the licensees on how that will be set out for each of the licences in the area.

[1640]

H. Bains: Perhaps the minister could explain. AAC is one thing. What traditionally was the harvested volume in the past few years?

Hon. S. Thomson: As the member opposite knows, harvest activity moves up and down, reflective of market and economic conditions. But I think it’s fair to say that within the area, licensees have been adjusting and recognizing the changes that were under negotiation and under discussion. The average level of harvest in the last number of years is probably reasonably close or reflective around the 2.5 million hectares, varying from year to year but within the range of the new AAC that is being established or negotiated for the area.

H. Bains: Well, average is one thing. But if they’re able to harvest close to the AAC in a given year, it can be argued that it can be harvested every year, given all the different market conditions and the other conditions that are necessary to meet the harvested level — closer to the AAC.

What I’m trying to determine here is that there is 800,000 cubic metres of reduction. You’re looking at close to 100 jobs there. Will it impact on jobs? How many jobs will be lost as a result of this?

Hon. S. Thomson: As I pointed out, the harvest levels have been generally in the range of the amount of AAC that’s currently set by negotiation. We’re not anticipating any job losses as a result of this agreement. Companies have been involved in the process, adjusting their operations because of the disputes and the challenges in the area.

In our view and in the view of the companies, and as all part of the agreement…. I think what we have done by having the agreement providing the certainty, we’ve actually preserved and protected jobs and economic activity in the area by providing that certainty for the forest companies as part of the agreement. That was a key piece for them in the agreement.

H. Bains: Will those licensees who will see a reduction in their AAC as a result of this bill be compensated?

Hon. S. Thomson: No. The provisions here follow the provisions of the Forest Act. Adjustments in annual al-
[ Page 12390 ]
lowable cut are not subject to compensation. But there will be compensation provisions negotiated in those areas where the special management forest areas are determined — that impact harvest in those specific special management forest areas. Compensation would be provided for those because you’ve taken that area out of the commercial harvesting areas with those provisions.

[1645]

So there will be compensation negotiated in some of those special management area designations, but generally, no.

H. Bains: Will the compensation be based on the AAC level reduction, or will it be based on the harvested level, then — if there is any reduction in the harvested level? I’m looking at if there is an AAC and then their AAC reduction is a certain amount…. As the minister said, traditionally, they have been close to 2.5 million cubic metres, which means that there is no reduction in harvested level. Will their compensation be based on their traditional harvested level or based on the AAC? If it’s on the AAC, why?

Hon. S. Thomson: Under this, it would follow the provisions of the Forest Act. In those cases, in the special management forest areas, it will be compensation for the rights that are being taken. It takes into account many factors, and it will be subject to a negotiation with each of the impacted parties in those special management forest areas.

H. Bains: But we have a special rules here. An AAC determination is by cabinet. Normally, it is by the chief forester, because it is a negotiated deal. Again, when it comes to compensation, the minister wants to go back to the Forest Act and apply the Forest Act to determine the compensation.

If there is compensation…. I agree that, traditionally, if there is a reduction in the AAC, there is compensation. But here we’re talking about an area that, traditionally, they never harvested to the AAC level. It is actually at the level that is going to be the new AAC, and they have traditionally harvested at that level. So no one is losing anything.

My question is: how do you negotiate in this deal that they still are allowed compensation?

Hon. S. Thomson: Again, just to reiterate that the process here follows the provisions of the Forest Act. When there are fluctuations in AAC, we don’t pay compensation. What the situation is here in the special forest management areas is that it is, essentially, a taking. It’s an area where companies had harvest rights in those areas, because it was part of their area. We’re taking part of that to meet the interests and to set the special management areas, so that will be subject to the negotiation.

I said there’ll be a lot of factors that are part of that negotiation, but it is a negotiated process. It’ll depend on whether there had been activities started in the area, what the historical practice had been in the area and everything. That’s the standard process that we go through, on the compensation side of it, under the Forest Act. The same provisions apply here because it is a taking of an area where there were established harvesting rights.

[1650]

H. Bains: Can the minister explain which companies actually will be facing reduction in their AAC under that scenario?

Hon. S. Thomson: Maybe I can just get some clarification. Was the member opposite asking which licensees in the whole area will have an AAC reduction? If that’s the case, it is all licensees, because there’s a reduction in AAC for the total area. As I said, it’ll vary, but all licensees will see an AAC change or adjustment.

If you’re referring to the special management areas, then that’s a different question in terms of which licensees are impacted by the establishment of the special management areas. So maybe I can clarify what the member opposite was looking for.

H. Bains: That’s the question: the special management area. Which companies are impacted by that, and who would qualify for compensation?

Hon. S. Thomson: In the areas with respect to the special management forest areas…. Just to qualify this, the takings haven’t been done yet. They’re the proposed areas. They’re generally known, the boundaries of where they are, but at this point, it would probably be — in terms of the list of companies that would be impacted, of which there will be negotiation processes: TimberWest, Interfor, Western, Sonora and SWC Holdings.

H. Bains: From the combined list, how much AAC is the total, if there’s a total reduction for these companies together? Or is there is a list of the breakdown for each company of what their reduction would be in this situation?

Hon. S. Thomson: In these areas, the amount of volume impacted is not known yet. It’s part of the negotiation process, and it will vary in each of those situations. That’s part of the negotiation process.

[1655]

Once the taking is done and the areas are finalized, then those negotiations take place in order to determine what the appropriate compensation is in each of those areas.

I should add that there was probably one additional company in that list I provided earlier that I missed, which was Canadian Overseas.
[ Page 12391 ]

H. Bains: The minister knows that Interfor consistently argues that they cannot run their mills on the coast because they don’t have enough timber. They are one of the companies that will be seeing a reduction. How will it impact their mills?

Hon. S. Thomson: Each company will manage the process as the new AAC determinations come in. I can tell you that from Interfor’s perspective…. I’m, hopefully, not putting words in their mouth. They’re saying that given the certainty that this provides now, given the opportunity — because there will be increased opportunities for First Nations participation in the forest sector through this — to solidify the areas with B.C. Timber Sales, they believe they will be able to make up any impacts through those additional opportunities.

What they’re telling us — they were all part of this agreement through the industry representation in the joint solutions project — is that the increased certainty in the area for that time period is beneficial for their company.

H. Bains: I could see that they would be benefiting as part of the compensation they are receiving. Did the minister, during negotiations, get any commitment, any assurance — from Interfor, especially — that they will not use this as a reason to have more curtailments or reduction in production in their manufacturing plants?

Hon. S. Thomson: The industry has said through the process…. And if you know the history here with the market campaigns…. All the companies that have participated in this process, been part of this agreement, take the view and the position that the certainty going forward is beneficial for their operations. That’s why they worked so hard to be part of the agreement, why they worked so hard to achieve the certainty on the land base that will give them those longer-term operations. All say that it’ll be beneficial for their operations.

H. Bains: Obviously, there’s a reduction in their AAC, and they are saying that it should actually enhance their opportunity to continue to operate their mills.

If there is any job loss, whether it’s on the logging side or the manufacturing side, will they also be entitled to compensation, as the company is, under this circumstance?

Hon. S. Thomson: Again, as I said earlier, we’re not expecting any job losses. The increased certainty, which they’ve all been part of…. They were all part of the agreement, part of the process, part of the announcement and stood with environmental partners, with First Nations, to applaud and recognize the importance of this agreement. They’re all saying it’s beneficial for their companies.

[1700]

H. Bains: I understand that it’ll be beneficial to the company. They may be getting compensation for timber that they never harvest. According to the minister, traditionally they harvest only around 2.5 million cubic metres, although the AAC, in the same area, is 3.3 million cubic metres.

My question is: if Interfor…. I’m just using that as a name; I’m not picking on that company. If Interfor, after getting the compensation — because they’re receiving a reduction in their AAC in this special management area — ends up laying people off, will they then share that compensation with the employees in addition to what they’re entitled to under the collective agreement?

Hon. S. Thomson: Those decisions are internal to the company, but what’s important to point out is that within those special management areas, that is a very limited amount of volume in those areas that’s subject to that. The certainty around the 2.5 million hectares of opportunity in the balance of the Great Bear Rainforest area gives them that additional certainty around the amount of harvest that they will have.

I’m not quite sure where the member is going with this line. If he had talked to the companies, and I know he does, he would hear from them all that the certainty, the provisions, the ten-year certainty in the area is all positive for their operations and gives them the security that they can work in the area that will be under new ecosystem-based management provisions — but all beneficial for their operations.

B. Routley: My question is to try and clarify the volume of working forest land base that was lost as a result of this agreement. Prior to the agreement, what was the area in hectares of the working forest land base, including all of the licences that were involved, and what is it reduced to now? What’s the new number in terms of the reduced number of hectares? And could we have that in both hectares and the percentage reduction?

Hon. S. Thomson: I just want to check here and confirm which section we’re on.

The Chair: We’re on section 7.

Hon. S. Thomson: Okay. Thanks. I’m not sure the questions relate at all to the section that we’re currently on. I’ll just make that point.

In response to the specific question, I don’t have those figures available or handy here. It’s something we could follow up and provide as a follow-up, but I don’t have that specific information to respond to that question here.

B. Routley: Okay. Well, thank you. What I am getting at is directly related to the AAC adjustment period and how we got to an AAC adjustment at all. We once had a
[ Page 12392 ]
larger land base, the total — what I would refer to as the working forest land base.

[1705]

I’ve seen various figures given on websites about the amount of area that has now been taken out of what was the working forest land base and what is now left in the working forest land base. That’s what I’m interested in finding out. I think there are numbers around somewhere of the total loss. I think the government announced that they were giving up a certain percentage of the land base. I’m sure the minister knows how many hectares were given up for the use of harvesting.

You may not know, precisely, the special management areas loss yet, because it sounds like that’s still a matter of some negotiation and discussion. But the reason that’s important to me is that I’m trying to determine in my own head: has there been a larger reduction? It sounds to me like there has, okay?

Here’s my premise. My premise is: it sounds like there has been a larger reduction in the working forest land base that allows for a cut of 3.3 million cubic metres. Now we’ve come to this, now 2.5. I’m trying to determine whether 2.5 is a larger AAC than would normally be allowed by the chief forester for a ten-year period, and after ten years, it’s going to come down rather dramatically. I think the people of B.C. are entitled to know that.

Certainly, all of us would like to know exactly what is happening in terms of the intent of the negotiations that went on, because I’m not clear. For example, it sounds to me, in oversimplistic terms, that the new 2.5 million could be interpreted as, on average, a cut of 250,000 cubic metres per year. Over ten years, that’s roughly 2.5 million cubic metres. If all of the players were doing their AAC, and they were doing their average, I assume that’s what the average AAC per year would be.

But again, I’m not clear, backing up to the percentage reduction of the working forest land base, whether the remaining land base is sufficient to afford a cut of 2.5 million, or is that actually part of the negotiations? Is what was on the mind of the bargainers…?

I certainly don’t know that, but I think, in this House, we’re entitled to explore what the intent was. Was it to keep the cut at the highest possible level for ten years, knowing that it was going to have to come down dramatically to deal with the loss of the overall land base? Certainly, it sounds to me like it’s larger than a 24 percent reduction.

What I thought I heard the minister say is there has been a 24 percent reduction in the AAC from 3.3 million hectares down to 2.5. That’s what I heard: a 24 percent reduction in the AAC. But what was the actual reduction in the land base? Was it 50 percent? Was it 85 percent? I’ve heard some people talk about figures like that.

Can we get some kind of clarity on whether this was a negotiation to keep the cut up for ten years? Is there an expectation that it’s going come down rather dramatically after it comes out of this ten-year period?

[1710]

Hon. S. Thomson: As I pointed out earlier in my comments, the chief forester…. While the AAC is being set through the negotiation process and set by the Lieutenant-Governor-in-Council, the chief forester was involved in all the analysis and work that was done to support the 2.5 million cubic metres for the Great Bear Rainforest management area.

While the technical teams were doing all of that work around the technical side of it — did forward projections — and while they can’t…. That work will be done by the chief forester after the ten-year period. I’m advised that they are not projecting any significant reductions in the AAC in terms of the 2.5 million cubic metres. Again, that’s….

You can’t say that for sure, because there may be other factors that come in, in terms of disease or other factors. But the projections are that the 2.5 million cubic metres set for this period, with chief forester support in terms of the analysis and the technical teams involved — industry and the environmental organizations and all of that determination…. They’re not expecting significant reduction once the process goes back to the chief forester.

B. Routley: I think the minister suggested that he didn’t have some of this information at this time. Could I get a commitment from the minister that he would find out how many hectares were in the working forest land base prior to this agreement and how many have been taken out or lost, either with or without the special management areas? And what percentage of the total overall land base has now been taken out of the working forest land base? If I could get that somewhere down the road, I’m happy with that.

Hon. S. Thomson: Yes, I think we can undertake to provide that.

Sections 7 and 8 approved.

On section 9.

H. Bains: It seems to me — and maybe the minister can explain — we are talking about the adjustment and the partitions here. There seems to be some conflict here that the subsection….

If you look at (1)(b) and (c), it seems to me that certain areas within the GBR…. It allows the land to be designated a timber supply by the cabinet. That is as if they were made under the Forest Act. But then again, it expressly prohibits the minister from designating a timber supply area within the GBR. Am I reading correctly, or is that something that is not the case?

[1715]

Hon. S. Thomson: Can I just clarify with the member opposite the section that he was referring to — which section? I thought we had passed section 8.

H. Bains: No, I’m on section 9. Sorry.

What I’m looking at here…. I did have that question, but then I was able to clarify that myself. But, on section 9, will there be any potential gap between the end of the AAC adjustment period and, then, the chief forester determining new AACs — of up to five years? Will there be any gap in between that period?

Hon. S. Thomson: Just to confirm the process here, it’s our intention that the chief forester would start the work before the end of the adjustment period so that there would be a seamless transition to the new AAC set by the chief forester. I guess, theoretically, the situation could exist if there were priorities in other AAC determinations in other areas around the province. There potentially could be a gap, I guess, from an actual operational perspective.

If that were the case, then the AAC that was determined in the adjustment period would continue until the new AAC is set. The intention is to have a seamless transition and have the work started so that you would have a new chief forester set AAC determination once the ten-year adjustment period is over.

H. Bains: But the act is the act. You can’t say: “If this happens, then it will continue” or “No, we will try to have the chief forester start working earlier on so that we have a seamless transition.” I mean, there has to be some definitive language in here.

We know the language here. It says December 31, 2026. That is the end period. That’s the last date. But my question again is…. The minister said there could be a potential gap between when the chief forester comes in and starts to allocate the new AACs. The minister also says that in that situation, the existing AAC will continue on, which means it could go beyond December 31, 2026, although it clearly says that it ends on that date. There are two different interpretations here.

[1720]

Hon. S. Thomson: If the member looks forward to section 10 around the AAC status, the provisions are there that the AAC specified by the Lieutenant-Governor-in-Council for that area remains: “When the chief forester, after the end of the adjustment period, determines an annual allowable cut for the area referred to…(a) the AAC specified by the Lieutenant Governor in Council for that ceases to have effect, and (b) the annual allowable cut for the area is the AAC determined by the chief forester for that area.”

That’s where the provisions provide for the AAC set by the Lieutenant-Governor-in-Council to carry until the chief forester sets the new AAC. But the intention, and the intention has been in all of the discussions, is that the work would start before the end of that period, and a new AAC would be set by the chief forester.

H. Bains: But if you read carefully, (3)(a) says that “during the AAC adjustment period, the chief forester must not determine an allowable annual cut for that area.” Then it goes on to (b), which says that “within 5 years after the end of the AAC adjustment period, the chief forester must determine an allowable annual cut for that area.”

It gives you exactly the time here — that up until December 31, 2026, the chief forester must not determine an allowable annual cut for that area. Then it goes on to say that within five years after the end of AAC adjustment period — which means after December 31, 2026 — the chief forester must determine an allowable annual cut for that area.

That’s the confusion here. How do you determine, on the one hand, that the chief forester will not be able to determine up until December 31, 2026, but then it says that within five years after that, he is to determine? So there could be potential gaps. If there is a gap, how do you govern that particular area, then?

Hon. S. Thomson: The provisions, to clarify this, for the adjustment period, the ten-year period — that’s part of the negotiations set by the Lieutenant-Governor-in-Council.

[1725]

That doesn’t mean the chief forester can’t start or work in determining what a new AAC might be or would be following the end of that adjustment period. The intention is for that work to start during that time period — to do the analysis and the work so that you would have a seamless transition into a new AAC post the adjustment period.

The status provisions that are in section 10 provide for the AAC set by the Lieutenant-Governor-in-Council to continue in that time frame if the chief forester hasn’t completed the work and hasn’t set the AAC, the new number, for that time. That covers off that eventuality, in the case that there is more detailed analytical work that needs to be done, or anything like that.

So we’ve covered off the provisions, but I can say that the intention is that the work would begin and that nothing prevents that work from starting and being done so that there is a seamless transition to the chief forester’s determination following the negotiated time frame for the set AAC by the Lieutenant-Governor-in-Council.

H. Bains: I think that probably is what is going to happen, but the language is a bit loose here. It doesn’t say that the chief forester will make the determination effective the last day of the AAC adjustment period. It
[ Page 12394 ]
doesn’t say that. It says within five years. That’s where the confusion is here.

The minister is saying that the AAC adjustment period under this agreement ends December 31, 2026. We’ve got that established here, and the AAC determined by the minister applies. But is the minister saying that the chief forester will make the determination effective January 1, 2027 — that all AAC then will be determined effective January 1, 2027, by the chief forester?

If that’s what the minister is saying, then I think it can work. But right now there’s a potential gap here. So what is it, Minister?

Hon. S. Thomson: What I’m saying and what the provisions are is that the negotiated AAC is set for the adjustment period, set by Lieutenant-Governor-in-Council. The provision is that the chief forester resumes authority at the end of the adjustment period for setting AAC. But what it doesn’t say is that she has to set that AAC on that date. That’s the intention, to provide that smooth transition.

What we provided for are provisions that if, in doing the analytical work and everything, the chief forester, whoever it may be at the time, is not ready to set that determination on that date, her authority resumes, but the AAC set by the Lieutenant-Governor-in-Council continues until he or she actually makes that determination. The provisions are that she can’t do that before that ten-year period. She can do it afterwards.

The intention is that we’d have this smooth transition, but with section 10, we’ve provided for the circumstances under which the work may not be completed, may not be in a position to set that for the beginning of 2027. We’ve covered off all the eventualities, but the intention is to have a smooth transition.

[1730]

H. Bains: I’m sure there are a number of lawyers that were available to put the language together so that the true intention of the minister was reflected in the language. It isn’t. Even when you go to section 10, it says: “When the chief forester, after the end of the AAC adjustment period, determines an allowable annual cut for the area referred to in subsection (1),” that’s when “the AAC specified by the Lieutenant Governor…for that area ceases to have effect.” It says “after.” It doesn’t give any timelines. It doesn’t require that it will be on that date.

If that’s the case, will the minister go on record and say that the intention is what the minister has said — that effective January 1, 2027, the AAC determination will be in place, determined by the chief forester?

Hon. S. Thomson: Section 9(3)(b) says that the chief forester must, within five years after the end of the AAC adjustment period, determine the annual allowable cut within that. That’s the provision — that it must happen within that time frame.

As I’ve said, we’ve provided for the circumstances to allow that in the event that the work is not completed. What we didn’t want to do was force the chief forester to have to have all of the work done. Maybe it’s not complete. You don’t want to be forced into a position where you’re making that determination without all the complete analysis and information so that you have a gap where you wouldn’t have an AAC in place because the previous one, the Lieutenant-Governor-in-Council-set AAC, ended and you didn’t have a chief forester determination. Then you really would have a gap.

What the provisions are is to have that be able to be extended until that AAC is set. The intention is to start the work beforehand to have the smooth transition. But we wanted to make sure in the legislation that we had that flexibility covered, that you didn’t force it into that position in the event that there were circumstances that left the chief forester in a position where she or he didn’t have all of the work completed in order to be able to do it.

The intention is to start the work so that you can, but we wanted to make sure we covered it. And she must do it within the five-year period. Given the fact that the chief forester assisted in setting the sustainable harvest rate for that period and, as I said earlier, all the work going forward, we expect that the long-term sustainable cut can be in and around that area, although that will be the chief forester’s determination.

We don’t believe we put forest sustainability at a risk by having that provision that the existing AAC can be set by regulation, can carry for a period of time beyond that ten-year time frame.

[R. Lee in the chair.]

H. Bains: I don’t want to belabour this point too much. Again, it says, “within 5 years after the end of the AAC adjustment period, the chief forester must determine an allowable annual cut for that area” — within five years. It could, potentially, take four years before the chief forester determines the allowable annual cut for that area. What happens during those four years?

Hon. S. Thomson: The AAC set by regulation at 2.5 million cubic metres per year remains.

[1735]

H. Bains: So the AAC adjustment period, which was determined previously, which means the passing of section 6…. And December 31, 2026, doesn’t mean anything, then? It is only a guideline, then, because it could be extended another four years, potentially, as the minister has said. I think that if that’s the case, then the minister should say that it could happen that way, that the AAC adjustment period could be extended another four or 4½ years because 9(3)(b) allows the chief forester to take up to five years to make the determination for the same area.
[ Page 12395 ]

Hon. S. Thomson: Again, the 2.5 sets the cap for the time period during the adjustment period. There are AACs for the management units within that total area that can’t exceed 2.5. Once we go past that time period, it’s the AACs that are in place, in combination throughout the management units, that continue. That could be below the 2.5 if the Lieutenant-Governor-in-Council sets an AAC in one of those management units that’s lower.

Then the chief forester could come in and stage the process. She may look at one particular tree farm licence or timber supply area and set the AAC for that. That would be the one that would carry forward, and that may or may not be above or below the 2.5. The 2.5 cap stays for the ten-year period.

Sections 9 to 17 inclusive approved.

On section 18.

H. Bains: Under section 18, I’m looking at…. If the minister could clarify…. The company whose cut has been reduced by protecting the trees within the GBR — will they be given an area to cut outside of the GBR under this section?

Hon. S. Thomson: This section provides the provisions that allow for allocating available annual allowable cut to other licences.

[1740]

It’s the apportionment decision. It provides the ability, in a new timber supply area, to provide unallocated annual allowable cut volume to additional forms of licences. You could make provisions and provide for some woodlot tenures, more First Nation woodland licences and, potentially, more community forest tenures. It’s the ability to apportion the cut in the non-GBR areas.

H. Bains: Can the minister explain, then: how will this affect the overall AAC in British Columbia, by making these changes?

Hon. S. Thomson: The AACs are done at management level. It won’t affect it.

Sections 18 to 20 inclusive approved.

On section 21.

H. Bains: We debated Bill 12, which makes amendments to the Forest Act and amendments to this act to reflect those changes. This section, it seems to me, has the proposed amendments in Bill 12. Why aren’t those amendments being done now?

Hon. S. Thomson: The standard practice, as I’m advised, is that consequential amendments to other bills before the House are organized by the introduction date. As Bill 2 was introduced first, Bill 12 carried the consequential amendments. Bill 2 could not include the consequential amendments because Bill 12 was not before the House. But the fact that Bill 12 has passed sets up the appropriate consequential amendments so that when the bills are brought into force by regulation, those provisions in section 12 that are the consequential amendments apply here.

Sections 21 to 23 inclusive approved.

On section 24.

H. Bains: It says here that the chief forester must advise the minister if they think there should be a partition in the GBR. My question, then, is: how involved would the chief forester be in managing the GBR if they are not involved in setting the AAC?

It’s a cabinet decision, but then you bring in the chief forester to advise the minister if there should be a partition in the GBR. My question is: how and when do you involve the chief forester if the decisions on AACs are made by the cabinet?

[1745]

Hon. S. Thomson: What we wanted to do in this section and why it’s here is to…. As you know, one of the chief forester’s key roles is forest stewardship. What we wanted to do was respect that expertise and advice, so we put in a provision that the chief forester can advise the minister to consider an AAC partition for the GBR area or a timber supply or tree farm licence area. Given the authority for the Lieutenant-Governor to specify the AACs necessary, which was in place to bring in the agreement, what we wanted to do is ensure that there was a continuing advisory duty for the chief forester, to advise the minister around the potential recommendations around partitions.

H. Bains: If you see right through here, there is the LGIC involved. That’s mentioned. Then there’s the minister mentioned. In here, the chief forester will be making recommendations to the minister, not to the LGIC.

My question is: what is going on here? When they go to the minister, not the LGIC, who actually will be…? The LGIC is the one that is making the decision on AAC. Why is that different? Why don’t the chief forester’s recommendations go to the LGIC rather than to the minister?

Hon. S. Thomson: This is the process. The chief forester advises the minister. That’s the process. It’s the minister’s responsibility to deal with the advice that’s provided and take that forward, through the process, through to the Lieutenant-Governor for regulation through the regulation process — so advisory to the minister. The
[ Page 12396 ]
responsibility for setting it will be by regulation through the Lieutenant-Governor-in-Council.

Sections 24 to 27 inclusive approved.

On section 28.

H. Bains: Looking at section 28, it talks about the LGIC may, by regulation, specify an area within the GBR or, using section 8, outside the GBR, to harvest timber. My question is: shouldn’t there be more potential reasons for restrictions than just these?

[1750]

Hon. S. Thomson: This section is all set up to deal with situations where we have the licences which, when the GBR area set in, were operating partly within the GBR and partly outside the GBR. For example, in the Kingcome and Strathcona areas, part of that will be now in the south portion of the GBR and the other sections will be in the North Island TSA. What this does is provide the provisions for the regulation to set the licence within the GBR area and the licence outside of the GBR area.

Sections 28 to 33 inclusive approved.

On section 34.

H. Bains: It seems to me that the new authority will allow the minister to order an AAC partition at the licensee level. My question to the minister is: what sort of partition around different areas of the Crown land is envisioned, and would this be to protect wildlife or our natural ecosystem? Would that be part of that?

[1755]

Hon. S. Thomson: This section, 34, is the partition orders. The partitions can be set by regulation, by the Lieutenant-Governor-in-Council. This provides the orders provision, which allows the minister to order the partition of the licence. It is done….

They’re an important tool, and they deal with, for example, identifying upper limits of preferred timber that is available for harvesting — for example, cedar. These orders in this section here are the mechanism by which partitions can be enforced.

Sections 34 to 44 inclusive approved.

On section 45.

H. Bains: Here we’re talking about relief, the minister’s discretion to grant full or partial relief from the cut control penalty if the minister feels the contravention is related to the specified AAC volume assigned or an AAC reduction. Why does the minister feel that this provision was necessary — that the minister get the discretionary power to grant relief to those who contravene their AAC requirements?

Hon. S. Thomson: This section provides a reasonable safety valve, should tenure holders find themselves facing a cut control penalty where the contributing factor was caused by a change that was beyond their control for which they could not have planned — for example, an AAC reduction that is lower than the volume already harvested. It provides that safety valve for those situations that may be beyond the control of the licensee.

H. Bains: Who determines that it was beyond the control of the licensee? Why wouldn’t there be any specific guidelines that the minister may be guided by before the minister could consider relief?

Hon. S. Thomson: As I said, this provides that reasonable safety valve. Each situation would be considered under the unique conditions, but it is to cover off those situations where those penalty provisions would be something that was beyond their control, for which they could not have planned.

The factors could include: was it a result of changes that they couldn’t have planned for — whether or not it would create an undue hardship that was unreasonable in the circumstances because of equity and fairness in a situation that simply didn’t arise because the company was not being diligent about their practices?

[1800]

If it’s something that was beyond their control, we wanted to provide the provisions or needed to provide the provisions that provide that ability for the minister to provide that relief under those circumstances.

H. Bains: So one of the criteria is hardship? If that’s the case, can the minister explain? If that’s part of the criteria, that if anybody could convince the minister that there’s a hardship case…. What does that mean by having to comply with the AAC? Just because the GBR is broad and everything else is fine and they claim hardship?

Hon. S. Thomson: It’s a consideration of a number of considerations that would be taken into account in that. The principle is that it would be where it is a situation that was beyond the company’s control where that created a hardship — where it was something that they could not have planned. I think it’s an appropriate safety valve to have under those circumstances.

H. Bains: It obviously seems to me that all or part of this new bill, Bill 2, is written by the industry, as usually is the case during the regime of this government. The industry can write anything to protect themselves. They
[ Page 12397 ]
don’t really care about the communities or the workers that work for them. And here are all the different loopholes left for the companies who will be compensated if they lose, if they face reduction in their AAC in certain circumstances. And here, if they don’t comply with the regulations, the minister will grant them relief, as long as they can claim hardship.

That’s the way this government works. I guess that’s what we are seeing here again.

Hon. S. Thomson: The overall intent of this legislation is to bring in the agreements that have been developed and negotiated with all parties at the table to provide that certainty for the industry, which I think the member opposite should be supporting and recognizing in providing that certainty for the industry.

This brings forward the principles and the provisions that are in the Forest Act under the same circumstances. Where there is a situation where it is beyond their control and there is undue hardship, in those situations where it is beyond their control, then I think we should have the provisions that provide for full or partial relief from those circumstances. Again, it provides that overall certainty for the company’s operations within this agreement.

Sections 45 to 49 inclusive approved.

On section 50.

H. Bains: Under this section, 50, it says: “During or after the end of the AAC adjustment period….” What does that actually mean? Would it be safe to say that from the start of the AAC adjustment period — which could be any time soon until forever — that the LGIC will have the power to designate land within the GBR as a special forest management area?

[1805]

Hon. S. Thomson: Yes. What this section means is that it provides the provisions to establish special management areas beyond the end of the adjustment period only within the GBR area. As we move forward, if there are other areas of very significant value that would potentially benefit from that designation, it has the ability to do it during the adjustment period and beyond.

Section 50 approved.

On section 51.

H. Bains: It seems to me there are eight envisioned areas. Why aren’t they included in the legislation rather than requiring more regulations?

Hon. S. Thomson: This relates back to the previous section, where there can be additional special forest management areas designated by regulation. The principle is that they would be set by regulation.

As we’ve mentioned, we have eight, which are part of the agreement. There can be revisions for more. We wanted the ability to set those by regulation to be able to have any additional ones added by regulation. To maintain consistency, the provision is to have them all set by regulation.

H. Bains: What are the timelines? Maybe the minister will tell us about these areas that will be protected. How much of the remaining old-growth forest would these areas protect?

Hon. S. Thomson: The time frame is probably before the end of the year. This fall is the target to bring the regulations that would establish those special management areas. They are not, as I pointed out earlier, just to protect old-growth areas. They are to protect specific cultural First Nations values — areas of significance for them. Some of them, for example, are in a second-growth area only.

It’s not provision. But as we said, 291,000 additional hectares included overall collectively in all of those special management areas with a timeline to bring them in by this fall.

Section 51 approved.

On section 52.

H. Bains: This section talks about if a road permit would impair management or a conservation official would refuse to grant a road permit. The question is: who decides what impairs management and conservation of forest resources?

[1810]

Hon. S. Thomson: It would be the person who is delegated or authorized to provide the road permits — in this case, usually the district manager. What this does is give that official the authority to refuse that road permit in a special management area under certain circumstances.

There may be situations where access would need to go through a special management area in order to access an area. There may be another alternative. But what we wanted…. It is a new tool and quite an important one as far as…. The proponents of the special management areas wanted to ensure that there was the provision to be able to refuse those road permits under those circumstances where it would significantly impact the integrity of the special management area.

There may be others, given that it’s only forest activity that is prohibited in a special management area. There may be road permits required for some of the other purposes that could take place in a special management area. It’s only commercial forest activities that are restricted.
[ Page 12398 ]

Sections 52 to 56 inclusive approved.

On section 57.

H. Bains: I’m looking through the language here. It seems to me that, again, the opinion of the chief forester is excluded in here. Why is that? Why is the opinion of the chief forester excluded in this section?

Hon. S. Thomson: This section is because the chief forester doesn’t play a role in the specification in the AAC for that period. This provision says that the chief forester is not required to make the related determination under the Great Bear Rainforest (Forest Management) Act where we’re making those compensation negotiations and provisions around the impact of the deletion and the AAC. That will be done, as we pointed out earlier, by negotiation, taking all the factors into consideration.

Section 57 approved.

On section 58.

H. Bains: I just want to be clear that the one-year notice is still required before the deletion would be made. Is that correct, under this section?

[1815]

Hon. S. Thomson: No, there isn’t the notice provision here because of the circumstances where the special management areas are already known. In the event that there were further special management areas to be contemplated or to be provided for, that would be through consultation and engagement and would be known. So the one-year notice provisions were not required in the circumstances here within the GBR.

H. Bains: Why would that be the reason? You said it’s with consultation. Consultation with who?

Hon. S. Thomson: It would be First Nations, stakeholders, licensees, environmental organizations — in the event that there were to be additional special management areas established.

Sections 58 to 65 inclusive approved.

On section 66.

H. Bains: Section 66 talks about…. It authorizes the Lieutenant-Governor-in-Council, by regulation, to specify forest practices which include requirements for the GBR FMA that are different from the Forest and Range Practices Act. This authority will continue beyond the AAC adjustment period.

My question is: what process will the LGIC use to develop the unique forest practices for the GBR?

Hon. S. Thomson: This section provides the authority, as it’s pointed out, to establish regulations that may be different than the Forest and Range Practices Act. This is to provide for the implementation of the customized objectives of the GBR land use objectives orders, which require a variation from some of those provincial standards. It’s a critical aspect of the EBM management system — the appropriate balance of ecological, social and economic values.

It also would provide the ability to customize the content and process for forest stewardship plans. As an example, certain tenure holders — small First Nation tenures or tenures with rights to harvest hardwoods — may not be required to specify the results or strategies for the objectives, as it would be a financial burden to meet those requirements. It allows for the customized regulations that implement the GBR land use objectives orders.

Sections 66 and 67 approved.

On section 68.

[1820]

H. Bains: It says: “The Lieutenant Governor in Council may make regulations respecting any matter for which regulations are contemplated by the following provisions of this Act.” It goes on to talk about the sections that are already passed here: section 2(4)(b); paragraph (c) of the definition; section 57(2); section 58(2); and then section 60(2), reduction in AAC. If this whole business is to be conducted by regulations, then what’s the point of passing those sections in here?

We passed those sections, and now we are saying that the LGIC can make regulations respecting any matter for which regulations are contemplated. So what’s the purpose of this section here? What does it do? Because we already passed those sections?

Hon. S. Thomson: I’m advised that this is standard drafting practice, where you have a regulation referenced in a section or the ability to have that section dealt with by regulation. This section provides the regulation-making authority in order to enact the regulations under those previous sections where the authority is specified by regulation.

Section 68 approved.

On section 69.

B. Routley: I just see that this is another general regulation-making authority. It seems to be a bit of overkill. I’m wondering why it’s necessary to have duplicate
[ Page 12399 ]
or several…. I think it goes on in 70 to talk about transitional regulations. How many times do we have to have that? Is it really necessary? I guess that’s the question.

This will probably be…. It’s close to the end of the day, and I would like to ask a quick question about what isn’t in here. I don’t know whether that’s permitted or not.

In kind of a general way, I have heard that there is some ability to deal with carbon credits as a result of the Great Bear Rainforest. Is that to be found in a different piece of legislation that’s coming soon? Or is that a separate matter of agreement somewhere else that you may or may not be able to comment on? I’m just asking if you could clarify what we’ve heard about some matter dealing with carbon credits.

Hon. S. Thomson: To answer the first question quickly around this section. This is, again, standard regulation authority provisions.

With respect to the second question around the carbon potential, this is not in this legislation. Those are provided for through the agreements and the human well-being agreements with First Nations, and they’re established by existing protocols and provisions.

[1825]

I’d certainly be prepared, as a follow-up to this, to review that with the member opposite. But that’s not provided for in this legislation.

Sections 69 to 71 inclusive approved.

On section 72.

H. Bains: It says that the act comes into force by regulation of the Lieutenant-Governor-in-Council. Does it mean that the regulations will be brought in before this bill comes into force? Or is it the normal practice where the Lieutenant-Governor will come in and give assent?

Hon. S. Thomson: No. The act will come into force by regulation, and then the regulations provided for in all of the legislation will be developed or brought into place — the regulations to bring in the special management areas. The act itself will be brought in by regulation.

B. Routley: My final question is: does the minister have any idea of the approximate arrival date of this final commencement, about when this is going to come into force? Do you have some timeline?

Hon. S. Thomson: The anticipation is to bring all of the implementation in place in a suite — the special management areas that are provided for, the regulations, the regulations around the land use objectives and orders. Again, I think it would be in the same time frame of this fall.

H. Bains: Did I hear correctly that it will be this week? When will this come into force? I heard a question, but the answer wasn’t clear. When are we expecting this bill to be in force? What time frame? When?

Hon. S. Thomson: As I said, the regulation that will bring this act into force, a suite of regulations…. The anticipation would be this fall.

Section 72 approved.

Title approved.

Hon. S. Thomson: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 6:28 p.m.

The House resumed; Madame Speaker in the chair.

Report and
Third Reading of Bills

BILL 2 — GREAT BEAR RAINFOREST
(FOREST MANAGEMENT) ACT

Bill 2, Great Bear Rainforest (Forest Management) Act, reported complete without amendment, read a third time and passed.

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

Hon. N. Letnick moved adjournment of the House.

Motion approved.

Madame Speaker: This House, at its rising, stands adjourned until 1:30 tomorrow afternoon.

The House adjourned at 6:30 p.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
TRANSPORTATION AND INFRASTRUCTURE

The House in Committee of Supply (Section A); M. Dalton in the chair.
[ Page 12400 ]

The committee met at 1:40 p.m.

On Vote 43: ministry operations, $843,349,000.

The Chair: Minister, do you have any opening comments?

Hon. T. Stone: Sure. Just very briefly, I would like to acknowledge that I think this is the fourth year in a row that the member for North Island and I have engaged in the estimates process. As always, I look forward to what I’m sure at times will be a spirited discussion but a very important part of the budget process. I guess right up front I want to thank the member for the work that she does, the diligence that she puts into this process on behalf of her constituents and all British Columbians.

I would also like to acknowledge my deputy minister, Grant Main, as well as Nancy Bain and Deborah Bowman, who are both assistant deputy ministers and who will be here today. I believe we’re covering ferries and perhaps transit this afternoon.

A shout-out to all of the men and women in the Ministry of Transportation in every corner of the province for the great work that they do.

With that, I’m pleased to begin the estimates process for this year’s Transportation and Infrastructure estimates.

C. Trevena: I’d like to thank the minister and acknowledge also that yes, it’s our fourth estimates. Hopefully, we’ll be able to move through it at a faster pace than I remember our first one. We were both a little slow, both new to the file.

Just so the minister is aware, today we’re going to be looking at ferries, possibly transit. Tomorrow is major infrastructure projects and again, possibly, a bit of transit. Then by Thursday, we’ll be focusing on PavCo, emergency preparedness and then a bit of a scattershot approach from colleagues who have questions about their constituencies.

I’d just like to start off. I will have general questions about the ministry that may come up as we go along, but I would like to focus this afternoon, start my focus, on B.C. Ferries.

I have one question that keeps coming up, quite regularly, to me as the critic for B.C. Ferries as well as the Ministry of Transportation and Infrastructure. It is really a very simple one. The Ministry of Transportation and Infrastructure will fully subsidize the inland ferries — pay 100 percent — and the funding has gone up to the inland ferries this year. The funding that is going to B.C. Ferry Services is stable — not increasing — and is clearly not anywhere near the parities of the inland ferries.

So I wondered if the minister can explain, very simply and very shortly: why the disparity?

[1345]

Hon. T. Stone: The member is correct in that we have canvassed this issue each and every year over the last four years. As the member knows well, the coastal ferry system and the inland ferry system are very, very different and very distinct in their characteristics.

The coastal ferry system typically has routes that are much, much longer in length, and much more fuel is used. In the inland ferry system, the routes are very small. There’s much less overhead required. Often a number of the ferry routes actually don’t have staff on board the ships if they’re reaction-type ferries or whatnot.

What I will say, though, more directly to the member’s question: for this forthcoming fiscal year, the taxpayer investment in the coastal ferry system works out to about $21 per vehicle. The taxpayer investment in the inland ferry system works out to about $20 per vehicle. It’s actually on a per-vehicle basis. The level of investment that the taxpayers make in both critically important systems is actually a dollar a vehicle more for the coastal system than for the inland system. But for all intents and purposes, they’re pretty much on par.

C. Trevena: It’s very interesting — the last comment that it’s just a dollar difference. But at the same time, the ferry users are paying a substantial amount more than the inland ferry users, who are crossing lakes where they do have road alternatives, and they’re doing it for no cost to themselves.

Just to use my own example, as the minister well knows, I live on Quadra Island. I have my Experience Card, so I put my $115 on it. It gives me a small discount on the use of the ferries. That costs me $21, or $20.80 to be precise. There may be almost parity in investment from the public purse, but not parity when it comes to the usage of the ferry.

Hon. T. Stone: I will point the member to the top-line numbers in terms of the costs to run both systems. The coastal ferry system will cost, over the forthcoming year, about $750 million to run. The inland ferry system will cost about $29 million to run for the year.

Again, that is entirely due to the kilometres travelled on the coastal system versus the inland system — the types of vessels being much larger on the coastal system, by and large — the amount of fuel that’s consumed, the staffing requirements that are mandated and so forth. It’s a $750 million cost for the coastal ferry system and a $29 million cost for the inland ferry system.

G. Holman: Thanks to my colleague for allowing me some questions here.

I guess the way I see the inland ferries versus the coastal ferries — yes, there are differences in costs and distances — is that it’s kind of like a short highway versus a long highway, and it’s not clear to me in principle what the real differences are.
[ Page 12401 ]

I did want to ask, just in the spirit of getting into the swing of things: does the minister see an essential difference between a highway in British Columbia that has capital costs, that has operating costs, and a ferry route that connects, of course, many coastal communities with essential services?

What, in the minister’s mind, is the key difference between a ferry route and a highway? Does the minister think we should start thinking about both these systems in a similar way?

[1350]

Hon. T. Stone: The member for North Island and I have canvassed this topic many times. We, I think, generally agree to disagree on whether ferries should be declared as part of the highway system or not.

I think, fundamentally, at the end of the day, just saying that ferries are part of the highway system does not solve or address any of the real structural financial challenges that exist with the coastal ferry system. As I mentioned in my previous response, it will cost about three-quarters of a billion dollars this forthcoming year — $750 million to operate the coastal ferry system.

Just as a point of contrast, the rehabilitation and, essentially, the operations costs for highways in British Columbia will be about $450 million. That’s some 50,000 kilometres of highway across the entire province. So, very, very different systems with very different cost pressures and cost drivers.

I will go back to the level of investment. I think that’s what really matters. We will see another $200 million, roughly, of taxpayer investment in the coastal ferries this forthcoming year. The good news, as well, is that ferry volumes are up across the system, by and large. Not every single route, but we see, generally, that volumes are up 4 to 5 percent year to date, which is very good. That’s driving more revenue into the corporation, which will help apply more downward pressure on fares.

But fundamentally, it boils down to just how structurally different the true highway system is to operate and maintain in the province versus the coastal ferry system.

G. Holman: I would suggest that, really, the fundamental difference and the reason why the minister doesn’t want to go there in terms of naming our coastal ferry system the marine highway is because that leads to certain, I think, logical conclusions about how that system should be supported.

The three-quarters of a billion dollars — point taken. But as my colleague just pointed out, users actually cover, as I understand it, more than 100 percent of the operating costs. They cover about two-thirds to three-quarters of that entire three-quarters of a billion dollars.

If you’re looking for a real distinction between the two systems, that is the distinction, which is that ferry users pay tolls on all of their highways. Highway users pay tolls on a few bridges here and there. That’s what I would suggest is the real difference.

I did want to ask the minister if he had heard about the Islands Trust proposal to reduce fares on minor routes by 25 percent. If he has heard of that, has the ministry — has B.C. Ferries — looked at the implications of that, looked at what the cost would be, including the implications for ridership, if you reduce fares?

[1355]

Hon. T. Stone: To the member’s question, we certainly have reviewed the material that was provided to us by the Islands Trust, and we thank them for the work that they put into that. I’ve talked to a number of the members of the trust about the concept. At the end of the day, these are decisions about balancing a finite amount of resources that we have as government and where we feel we could best strike that balance, recognizing the pressures on health care and education and other facets of the budget, not to mention within Transportation.

Our goal all along, for as long as I’ve been the minister, has been to get the fares — the fare price cap, as it’s called — in line with inflation as quickly as possible. While we would have liked that to have happened a year ago or two years ago or three years ago, it has taken to this point, and arguably, a good three or four years ahead of schedule.

That 1.9 percent fare increase is being offset by a fuel rebate, which is good news, as a result of low oil prices. For the forthcoming year, and likely beyond, and certainly in the immediate future, it would appear that users across the system will not be facing a net increase in the fares that they pay, with the 1.9 percent price cap being offset by the fuel rebate.

I also want to point out that Ferries is aggressively upgrading its capital. The capital plan at B.C. Ferries is public knowledge. It’s out there for everyone to see. It basically calls for about one new vessel per year over the next 12 years. The next three vessels that will be plying B.C. waters soon are three intermediate vessels that are much needed and much anticipated. There will be many more after that, not to mention terminal upgrades and so forth.

I mean, we are seeing investment in capital within B.C. Ferries that’s really unprecedented in B.C. Ferries history — all as rightfully addressed, pointed out, by the Ferry Commissioner. It has to be accounted for somehow. It has to be paid for somehow. So while we would like to see fares begin to go down — and the sooner, the better; that’s certainly what we are working towards — all of this is about striking a balance.

We are going to see government investment, taxpayer investment, in Ferries at about $200 million again this year. So $21 per vehicle is what that works out to. That’s at a record level.

[1400]

We have been successful at maintaining that level of investment, getting the fare increase, essentially the out-
[ Page 12402 ]
of-pocket impact for consumers, down to zero moving forward. Ridership is up, which is driving more revenue into the corporation. All of this bodes well for the future of our coastal ferry system.

C. Trevena: The minister gave a little bit of fodder there, and I would like to pick up on it. One is that there’s a bit of a shell game that goes on with the fuel rebate and the no increase. I mean, we’d have had the almost 2 percent increase if there hadn’t been the fuel rebate. People are aware that there is a shell game going on.

I’d like to point out to the minister that the 1.9 percent increase is still over the rate of inflation, so people are still having to pay more. He did mention, though, the possibility — and something that his government is working towards — of bringing fares down, yet he’s just dismissed the, I think, very valid argument that was put forward by Islands Trust of a 25 percent reduction, which, in reality, brings fares down very minimally.

For instance, the 2016 fares would still be, for route 4, at about $25.30, even with the 25 percent decrease. I think that the minister…. It would be worth him looking at that again, if he is serious about his statement that he wanted to bring down fares.

I’ve got a question about, really, the benefit to the economy and the minister talking about the investment in B.C. Ferries. We’re going to be talking in a little while about the New Build program and the mid-life upgrades of other ferries. I don’t want to get into that right now, but he did talk about the history of B.C. Ferries.

I think we’ve had this debate too in the four years, about the history of B.C. Ferries and the fact that it was started as a marine highway by W.A.C. Bennett, a legendary, legendary Premier, and the recognition by the B.C. Chamber of Commerce of that.

I’m sure that the minister is aware of B.C. Chamber of Commerce’s position on the concept of fiscal fairness for ferry-dependent communities. They have written this many times over. I believe the first time was in 2013, possibly 2014.

In their policy document, they state — and I’d just like to quote a little bit from it:

“Many businesses on the Mainland lower coast, the midcoast, the northern and southern Gulf Islands, Vancouver Island and Haida Gwaii are facing serious financial hardship due to the increased costs of the B.C. ferry system. Alternatives may be more cost-effective for short runs connecting islands or Mainland communities, which could have toll bridges or water taxis. It is in the interest of businesses and residents of coastal communities and the government of B.C. to explore more affordable and reliable options. Impacts to local economies and the provincial economy as a whole should be analyzed with the…concepts of price equilibrium and price elasticity.”

It goes on to say:

“B.C. Ferries services an area with 20 percent of B.C.’s population, not including the greater Vancouver area, and a wide variety of industries and commercial enterprises, which provide tax contributions of roughly 36 percent of B.C.’s annual revenue. Yet the area benefits from only 6 percent of capital expenditure on highways, including the expenditure on B.C. Ferries.

“The region serviced by B.C. Ferries includes 51 municipalities and regional districts, including all of Vancouver Island, the Gulf islands, Texada, Powell River, Sunshine Coast, many island communities within the Mount Waddington region, as well as communities on the central coast, Prince Rupert and Haida Gwaii.”

Given that this is a policy of the B.C. Chamber of Commerce, and I know that the government often aligns itself with the views of the chamber and the need to invest in that, and also given what happens in other jurisdictions….In Alaska, I believe that every dollar spent — okay, it’s a U.S. dollar — on the Alaska ferries, which again, is a marine highway, brings back $2.30 in return. Would the minister not reconsider his approach and start studying, with a view to implementing, a price reduction to increase the usage of ferries, increase the fairness for ferry uses and for businesses in the province and for the returns, finally?

[1405]

I mean, it comes right back to provincial coffers. This is people spending money. It will come right back to the public coffers and would benefit everyone.

Hon. T. Stone: Well, I’ll do my best to try and address a few of the themes in the member’s comments. She packed a lot of punch into a question there.

First off, with respect to the fares. It is, and has been for three-plus years now, our intention to continue to do everything we can to apply as much downward pressure on fares as possible. Part of that was getting fares tied as closely to inflation as possible. We’re pretty much there.

I think what matters to most people is: what is the out-of-pocket cost? Yes, she’s correct. The 1.9 percent price cap is still in place, but it’s offset by a fuel rebate of 1.9 percent. So the out-of-pocket cost at the present time, in terms of an increase, is zero for ferry users. That’s good news and should be…. I think it was certainly welcomed by people who use the ferry system. That being said, of course, ferry users, rightfully so, I think will continue to advocate for fares to actually come down. We would like to see that too, but we’re going to be very responsible about that.

There are many moving parts here. Part of this continues to be to maintain the level of taxpayer investment that we put into the corporation. Government investment is in and around that $200 million mark per year. That’s very important. Part of this is continuing to encourage B.C. Ferries, as they’re exploring and beginning the early work on their new point-of-sale reservation system, targeted discounts. They’ve done three or four of those already, which has been very well received by ferry users. Specifically, they’ve had discounts on vehicles. They’ve had discounts on passengers. Some of these discounts have applied to all routes. Some have applied to specific routes. These are good initiatives that B.C. Ferries is testing out.
[ Page 12403 ]

As I mentioned earlier, the corporation is very heavily investing in capital to modernize and upgrade the fleet and terminals. That’s very important. We are seeing increases in the volumes of passengers across the system. That is very positive and will help apply downward pressure.

With respect to the member’s comments about the chamber of commerce resolution, certainly, I’m well aware of the resolution that she mentions. I would also point out that the chamber of commerce…. Just like the Union of B.C. Municipalities and many other organizations, they do a lot of good work, a lot of good policy work. They make lots of different recommendations to all levels of government, some of which governments are able to move forward with and some that governments are not able to.

There are any number of chamber of commerce resolutions which government respectfully disagrees with. There are many that we very much support. The chamber of commerce has passed resolutions calling for balanced budgets in British Columbia, keeping taxes low, support for the LNG industry and economic development across the province. So to simply extract one resolution and suggest that it’s odd that government is not endorsing that particular recommendation is somewhat interesting.

The last thing I would touch on is the Alaska ferry system. I’m not sure the last time the member was up there or had the opportunity to talk to folks in Alaska about their system. The Alaska ferry system is encountering some pretty significant challenges. It does bear pointing out — again, I think the member knows this — that the Alaska ferry system moves about 319,000 passengers per year. The British Columbia coastal ferry system moves about 20 million passengers per year.

[1410]

Alaska has a significantly more rapidly aging fleet than we do in British Columbia. Alaska’s current budget is actually projecting an 8 percent reduction in the investment that they make in ferries. We have kept our investments at a record high of $200 million. Alaska has raised fares twice in the last ten months. They raised them 5 percent last January and 4.5 percent in May. Fares in British Columbia are — because of the 1.9 percent price-capping offset by the fuel rebate — at zero percent.

While the Alaska ferry system is looking at reducing the budget for their ferry system, we’re continuing to invest in ours. While they’re looking at increasing fares, we are looking at opportunities to reduce fares. That is a comparison that I am very willing to embrace and to debate further with the member, if she so chooses.

C. Trevena: The opportunity the minister is providing — debating Alaska ferries…. We are here to debate B.C. Ferries. It was just the question of the return on the investment.

I’d just like to pick up on a couple of the things the minister has said and ask for a piece of clarification. We keep hearing about the fuel cap and how it’s offsetting and no increase in fuel prices. That means the 1.9 percent hasn’t gone into effect. What happens when fuel prices go up? We’re going to have our fares going up. That is an assumption, so I’d like the minister to clarify that — that if fuel goes up, we will be paying more for fares.

The second question I would like to raise with the minister in response to his answer is the…. He mentioned the targeted discounts. Targeted discounts are all well and good for the infrequent traveller, the tourist traveller, but do not help regular travellers. They do not help the people who live and work on the islands and who are dependent on the ferries.

We do not see…. When we had the last round, you go in with your experience card and say: “I’m going to get my discount.” The nice lady at the booth says: “Sorry, no. It’s just for the big ferries.” It doesn’t work. It’s a promotional tool that does not address the fundamental problem that our ferry system faces, which is that the fares — despite the 1.9 percent non-increase this year — are still too high.

If there is going to be a targeted discount, it should be…. Rather than a targeted discount, it should be an across-the-board discount to ensure that regular users can benefit as well as those who are possibly coming on vacation or choosing to make a trip at a certain time — not those who have no alternative but rely, simply, on the ferries.

[1415]

Hon. T. Stone: So two questions there. First, with respect to the fuel rebate, the fuel rebate is provided on an annual basis. What we have in place right now, which B.C. Ferries sought and received approval to proceed with for this forthcoming 12 months, is the 1.9 percent fuel rebate. Obviously, this will be reassessed when the one year expires, which is, I think, what most people would expect. If the price of fuel has gone up significantly, then yes, to the member’s point, that could result in the fuel rebate either being eliminated, in a year’s time, or potentially reduced so that maybe there’s not as much of a fuel rebate as is currently provided.

The alternative is also possible. Depending on what happens with the price of fuel, we could see the fuel rebate actually extended for another year at its current level or at a higher level or at a lesser level. We’ll have to see what that looks like in one year’s time, at which point we’ll be able to assess, based on international fuel prices and some other factors, what those numbers look like.

One last point on the fuel bears pointing out as well, just for the member’s benefit. The Ferry Commissioner actually baked right into all of his calculations — again, this is public information — a projected international barrel-of-fuel price. That is baked in his numbers, and while I don’t have the exact per-barrel price that the Ferry Commissioner projected, it was significantly higher than what is the current international price.
[ Page 12404 ]

There’s actually a little bit of buffer there in the numbers — those projected 1.9 percent price caps over the forthcoming three years. Part of the calculation in arriving at those numbers does assume a pretty significantly higher per-barrel cost for fuel than is the price at the moment. None of us have a crystal ball. We can’t project today what fuel will do. Will it go up or down or stay the same? Hopefully, that answers the member’s question on the fuel side.

With respect to the member’s comments about discounts, I had mentioned previously that there are…. B.C. Ferries did move forward with a number of limited discounts and special promotions. In March of this year, there was a 30 percent savings on passenger fares on select sailings on south coast routes and all sailings on north coast routes.

In September through October last year, there were 50 percent savings on passenger fares on selected dates and at selected times on major and minor routes. In October, it was for all northern routes. In November and December of last year, there was 50 percent savings on passenger vehicle fares on select sailings on south coast routes and 50 percent savings on passenger vehicle fares on all sailings on north coast routes. In June through September of this forthcoming year, there’s a 50 percent savings per additional foot on extra-length passenger vehicles. On and on it goes.

There are a number of ongoing discounts, as well, that the member, I know, is aware of. The child discount. Passengers under 12 years of age receive a 50 percent discount. The service is free for children under five years of age. There are group discounts for passenger groups of 15 or more. There are, obviously, the experience cards, which are very popular.

[1420]

Of course, there are off-peak fares offered year-round to residents in Haida Gwaii, Klemtu, Bella Bella, Shearwater and Ocean Falls. I won’t go into detail on all the social programs that are also provided, although that’s part of this story as well. I look forward to the member perhaps asking me about that. I’ll be happy to outline the wide variety and the scope of social program support from B.C. student discounts, disabled discounts, seniors discounts, medical travel assistance and so forth that is also provided.

C. Trevena: I just wanted to respond to the minister that among the discounts, the experience card is an essential part for those who live and work on the coast. It isn’t regarded as a discount; it’s regarded as really an essential tool. And when you have that experience card, you are not able to activate some of the other promotions that B.C. Ferries is having.

G. Holman: I wanted to pursue just a little further the proposal by the Islands Trust, to get a better idea of exactly what the ministry has done in terms of evaluating it. As I understand the trust proposal, they calculated the cost. I wanted to bounce this off the minister to see if this is his understanding. They’ve estimated that a 25 percent fare reduction on the minor routes would cost $14 million over four years. The Islands Trust proposal — $14 million over four years.

I wanted to confirm if that’s the minister’s understanding of the cost and then, also, to try and determine what exactly the minister did in terms of evaluating the implications of that. Did you look at demand elasticity, for example? Did you look at whether that might increase ridership? Did you look at whether there might be a return to provincial coffers as a result of that, which the UBCM study indicated, for example?

Was there any analysis done of the trust proposal, or was the answer, more or less, no? What specifically did the minister or the ministry do in terms of analyzing the trust proposal? What were the costs? We estimate $3½ million a year.

By the way, government takes a dividend, if you can believe it, from B.C. Ferries, of $6 million a year. So here the Islands Trust is proposing a fare reduction that might cost, for minor routes, in the order of $3½ million, about half that dividend that government takes.

I just want to be clear about what, actually, the ministry did in evaluating it. Did you actually evaluate, for example, the impact on ridership?

[1425]

Hon. T. Stone: Again, we’ve canvassed this particular question, I think, quite a few times in last year’s estimates as well.

The UBCM, in 2014, did engage a consultant to do an analysis, and that was released, I believe, at the UBCM convention in 2014. I certainly stand by, on behalf of government, my response to the consultant’s report. I found it initially most concerning that even the author of the report admits, in the very early pages of the report, that essentially, the entire report is, at best, an estimate because of such a limited data set that was available to the consultant.

It was astounding to us that, based on an extremely limited data set, the author of the report would have arrived at some of the conclusions that he did — including a grossly sensational and unsubstantiated $2.3 billion impact on the provincial economy, which was cited in the report.

[D. McRae in the chair.]

We went through, at the time, a number of the specific concerns that we had. The analysis in that report did not adequately account for a wide range of non-fare factors that, we think, very much influenced ferry traffic over the period in question — things like a massive global
[ Page 12405 ]
economic downturn, which British Columbia was certainly not immune to; the high Canadian dollar, relative to the U.S. dollar, during this time period; new laws that required passports for travel to and from Canada; much higher fuel prices during this period than we’re certainly experiencing now; an aging population; increased use of other modes of transportation, like air travel, due to the cost of air travel coming down.

There was a whole wide range of factors that, we believe, were conveniently not included, not assessed, as part of this report. As I said, the consultant acknowledges right at the outset in the report that essentially, you can’t really take this to the bank because he had a very limited data set to actually work with. As I said then, we acknowledged the interests of the UBCM, particularly their coastal members, in wanting to put forward this report, but we absolutely, categorically reject the report’s findings.

[1430]

What we have done is that we have gone out, over the better part of four years, and — I know the member for North Island is probably not going to like me saying this, because we’ve talked about it so much — we’ve done so much consultation and engagement in coastal communities up and down British Columbia’s coast to address the underlying challenges that face the ferry system.

Our vision all along has been a sustainable, affordable ferry system, which is what we’ve been working towards. That’s why we’ve maintained our record-level investment. That’s why we are continuing to work with B.C. Ferries to upgrade and modernize the vessels and terminals. That’s why we fought so hard for and were so excited earlier this week for the federal government’s decision to include ferry infrastructure within the Build Canada fund as eligible categories.

All of this taken together is going to help us achieve our goal of a sustainable and affordable ferry system.

G. Holman: I did mention the UBCM study, but the question to the minister was: what analysis did the ministry do in response to the Islands Trust request for a 25 per cent fare reduction on the minor routes? I understand the minister has a problem with the UBCM study. But my question to the minister was: what work have you done in analyzing the Islands Trust request for a 25 percent fare reduction?

I could broaden that question. I’ll just say, rhetorically, while the minister does seem to have problems with the methodology of the study undertaken by the Union of B.C. Municipalities, what I’d like to know is what the ministry is doing in terms of that kind of work to try to evaluate how important the ferry system is to our tourism industry.

But, specifically, what did the ministry do in terms of analysis of the Islands Trust proposal for a 25 percent fare reduction? Not what the UBCM study said. What did the ministry do, if anything?

Hon. T. Stone: With respect to the member’s question about the request from the Islands Trust for a 25 percent reduction in fares and what analysis was done on this, let me just say a couple of things.

[1435]

First, the Islands Trust estimated that this would cost between $11 million and $14 million per year. Secondly, the Ferry Commissioner, who is actually statutorily charged with the responsibility for setting price caps and approving any changes to price caps…. So a 25 percent reduction would need to be approved by the Ferry Commissioner.

His office did some extensive analysis on the proposal from the Islands Trust. Ultimately, the decision on whether to approve a price increase or a price decrease is a decision that is made by the Ferry Commissioner.

Now, the Ferry Commissioner reported out on this in his price…. It’s the B.C. Ferry Commissioner’s PT4 final price cap report. For the members’ benefit, it’s on page 9. It very specifically speaks to this call for a 25 percent fare reduction. I will read a couple of the sentences from it. This is in the Public Comments section. He says:

“Our related findings and determination are as follows. With respect to the rollback of ferry fares, several submissions called for a general rollback in ferry fares in the order of 20 to 25 percent over PT4 on some routes or on all routes. We have considered these proposals in the context of the role of the commissioner as set out in the act and have concluded that the proposals exceed the commissioner’s authority. The commissioner is required to balance the interests of the ferry operator, ferry users and taxpayers. Putting the ferry operator at risk of financial failure is not in any of those interests.

“A 25 percent fare reduction system-wide would create a revenue shortfall for the ferry operator in excess of $500 million during the term. If only applied to the minor routes, the rollback of this magnitude would create a $60 million shortfall.

“The proponents have not identified any new sources of revenue or service reductions to offset a rollback.”

He goes on and makes a few other closing comments on this.

As I said earlier in our exchange with respect to Ferries more generally, we are certainly aware of the desire amongst some for there to be an even larger taxpayer investment in B.C. Ferries. We are charged with the responsibility, however, of balancing the interests of all British Columbians and all modes of transportation.

When we look at the Ferry Commissioner’s analysis that a 25 percent reduction, even if just applied to the routes in question in the Islands Trust report, we would be looking at the requirement for either an additional $60 million over four years from the taxpayers, or service reductions of that magnitude or efficiencies of that magnitude or some combination of all of the above. We simply were not prepared to go there.

Again, I will summarize by referring the member for more details on the analysis that was done of these various proposals to the Ferry Commissioner’s PT4 final price cap report, where it is detailed as to the analysis that they did and the conclusions that they arrived at.
[ Page 12406 ]

C. Trevena: I’m going to move on. I’ll come back to a few more general questions as we move on. I would like to move on to the new Polish-built ferries that are going to be coming into service shortly.

My first question is: are they on schedule? If I might add, just to say for “on schedule,” B.C. Ferries stated that the first one was going to be in B.C. by this August.

[1440]

Hon. T. Stone: The new intermediate class ferries which she referenced will be arriving on a staggered schedule, and that has always been the case. Two of these ferries will arrive in 2016 to serve the southern Gulf Islands. The Salish Eagle will arrive in the fall of 2016 and will replace the Queen of Nanaimo. That vessel is expected to be in service in early 2017. The Salish Raven will arrive in the winter of 2016 and is expected to begin service in the summer of 2017.

C. Trevena: I thank the minister for his very succinct response.

The B.C. Ferries annual report stated that the first ferry — and pardon me for not knowing the names off the top of my head yet — was going to be here in August 2016 and the second ferry in October 2016. I assume that the minister means that August is the fall.

If that’s correct, that it’s not coming in August, I would like to know from the minister how delayed the on-time, on-schedule ferry is going to be.

[1445]

Hon. T. Stone: I want to just go back. I want to make sure I’m providing the member with the absolute accurate information.

I’ve got the latest B.C. Ferries news release. Remember, the province of British Columbia is not responsible for the capital program at B.C. Ferries. This is completely done by B.C. Ferries, so I’m going by the information that B.C. Ferries provides us.

The latest news release provides for three intermediate ferries being built in Poland. The first one that B.C. Ferries will take delivery of will be in August of this year, August of 2016. The member is absolutely correct about that. That ferry will be put into service on the Comox–Powell River route. That’s the first ferry, the Salish Orca.

The second two ferries, the Salish Eagle and the Salish Raven, are the two ferries that B.C. Ferries will, according to the information I’m being provided here, arrive in 2017. Both of these ships will sail in the southern Gulf Islands. Hopefully, that answers the member’s question.

C. Trevena: That does. While the minister is relying on B.C. Ferries information, he is the minister responsible for B.C. Ferries, so I’m very pleased that he is answering that.

Interjection.

C. Trevena: I just wanted the minister to clarify that he has just said that he’s not the minister responsible for B.C. Ferries. I wondered if he could clarify that.

Hon. T. Stone: The member knows full well that B.C. Ferries is an independent corporation that is run independent of government. It is not run by the government of British Columbia.

The government of British Columbia is a signatory to the coastal ferry services contract. We are B.C. Ferries largest customer. We provide taxpayer investment to ensure provision of service on routes that are detailed in that contract. The member knows that very, very well.

Interjection.

C. Trevena: As my colleague from Surrey, who is heckling…. We don’t usually heckle in estimates, but he’s heckling: “Who is the sole shareholder?” The government of B.C. is the sole shareholder; therefore, the minister is responsible. The minister is responsible for the expenditures of B.C. Ferries. I’m sure there are many more conversations in the passing over of press releases.

I’d like to continue the questions about the new bill, because this is part of the marine highway, whether the minister likes it or not. There are millions of trips by B.C. residents, and they’re used very much by B.C. businesses, so people are going to want to make sure that they are on good vessels.

The new vessels. B.C. Ferries said that they were going to be coming in August and October of this year and February of next year. According to the minister, they are on schedule. He has been told by B.C. Ferries that they are on schedule.

I’d like to move on from that, because there are questions about the life of the Queen of Burnaby and how long they could keep running on that.

I wondered….These are LNG-powered vessels. They are dual fuel. I know that we’ve had many discussions over the past few years in these estimates and in question period about the dual fuel.

[1450]

I just wanted to have an idea from the minister. We talked in question period the other day about the bunkering. I know that there are places to get LNG here in B.C., and B.C. Ferries has signed an agreement with Fortis. I wondered whether the minister can explain just how these ferries will fuel with LNG.

The first question is: will these ferries being running on LNG from the moment that they come into service? Secondly, how will these ferries be refuelled?

Hon. T. Stone: Again, these extremely detailed operational questions would be best directed to B.C. Ferries. The member can correct me if I’m wrong, but I believe she actually met with the VP of engineering for B.C.
[ Page 12407 ]
Ferries last week. They are always willing to meet with her if she has detailed operational questions. I would encourage her to do that.

That being said, my understanding is that it’s B.C. Ferries’ intention to have these vessels to be using the LNG component of their fuel structure on day one. That’s their intent. They are engaged in discussion with their regulator, which is Transport Canada. The member knows that very well also.

These will be the first LNG vessels in Canada, so Transport Canada is working with B.C. Ferries to develop the regulatory framework for ensuring that these vessels can and will be fuelled safely in British Columbia waters.

C. Trevena: I find it very interesting that the minister, who is not the minister responsible for B.C. Ferries, happens to know that I had a conversation with the vice-president of engineering at B.C. Ferries. You’d have thought that there’d be a certain amount of confidentiality. It’s just…. It’s that I think that….

Interjections.

The Chair: Members. The Chair will hear the question and the answer.

C. Trevena: While the minister denies it, I’m sure he’s also talked to the vice-president of engineering and has a very full understanding of how we are going to get the bunkering. There has been some concern that this is not safe. The minister is the person ultimately responsible for this part of our highway system, so I’d like to make sure that we are both on the same page on the fact that this is a new way of fuelling. These will be the first LNG vessels operating, carrying passengers, in Canada and B.C.

Yes, part of the responsibility is Transport Canada’s and part of the responsibility is with the minister. I would like to know from the minister whether, in his understanding, when we’re bringing these new vessels in…. They will be fuelled in a different way, as will most of the other vessels, because all of the Coastal class is getting mid-life upgrades and going to be dual fuel as well.

[1455]

A few of the basic questions. When we’re talking about bunkering, is this going to be…? We believe it’s going to be done on deck. I’d like to know from the minister whether he is aware of who is going to be supervising this bunkering, if it’s going to mean new infrastructure at B.C. Ferries terminals, if there is going to be any specialty training for this and who’s going to be doing this. Who’s going to be doing the training, if this is new to B.C.?

Hon. T. Stone: Again, I would direct the member to take up these detailed operational questions with the operator, which is B.C. Ferries.

C. Trevena: The minister is somewhat disingenuous in this, I have to say. He stands back and doesn’t want to answer questions about the operations of B.C. Ferries, for which he is responsible.

He says that his ministry has no involvement with that. Yet in our last estimates go-round — it was about a year ago — I asked the minister about his ministry’s involvement with the new scheduling that came up that caused much concern up and down the coast. At the time, the minister told me that he actually had ministerial staff involved in drawing up new schedules. He cannot, on the one hand, say that he is not involved and will not answer questions and, on the other hand, have ministerial staff absolutely involved in the day-to-day running of this.

If the minister isn’t going to answer questions about that, I would like to go on to the upgrades. I would hope that he has the courtesy to answer those questions. If not, I would like to ask him about the mid-life upgrades for the Coastal Cs. I’d like to know how much is being invested per vessel for these upgrades.

The Chair: Before the Chair recognizes the minister, the Chair would like to ask all members in this committee to, basically, be aware of their parliamentary language. The Chair does consider the use of words like “disingenuous” to be unparliamentary and not appropriate in this room. However, I do want to also add that I do find the word “jiggery-pokery” quite acceptable, if the member from Duncan is here. That being said, please watch our parliamentary language as we go forward.

[1500]

Hon. T. Stone: The member has asked if I have or am able to provide specific details relating to the mid-life upgrades for the two Spirit class vessels. Again, I’m relying on the information that is publicly available from B.C. Ferries. The last public news release on this from March of this year confirms this total contract value. The contract that’s been awarded is a $140 million contract.

This particular project will involve LNG conversion. Safety systems will be renewed or upgraded, including the marine evacuation systems, rescue boats, fire detection systems, public address systems, as well as the installation of a local water mist fire protection system.

Passenger areas will receive an interior design refresh, including new carpeting, renewed washroom interiors, an additional washroom on deck 5, an expanded gift shop, a new coffee bar on deck 6. There will be upgrades to passenger elevators. There will also be a planned renewal of navigation equipment, propulsion equipment components and so forth.

I do want to really highlight the LNG, the dual-fuel component of this upgrade. The member knows well that the Spirit class vessels are the two largest vessels in the fleet. They consume, I believe, about 16 percent of all of the fuel consumed, about $118 million worth of diesel
[ Page 12408 ]
every single year. By switching to LNG fuel — certainly, the member knows, we have a very significant reserve of natural gas in this province — we expect to reduce carbon dioxide emissions by 12,000 tonnes annually, by having these vessels run on LNG. That’s the equivalent of taking about 2,500 vehicles per year off the road. It’s just a significant environmental benefit to these vessels.

Again, this is part of the larger strategy to ensure that B.C. Ferries vessels are dual fuel, interoperable. These are examples of the types of strategies that are being employed to, again, apply as much downward pressure on the fares as possible and to continue to renew the fleet.

We are very proud — I think most British Columbians are proud — of the significant improvements that we have seen to the fleet over the last 15 years through new vessels and mid-life upgrades, just like we will see with the mid-life upgrade of the two Spirit class vessels.

C. Trevena: I would like to remind the minister that these are dual fuel; they’re not just LNG. If they were LNG solely, then the carbon emissions would be something to boast about. If these vessels do run on diesel, as they are also capable of doing, they actually use 10 percent more diesel than the conventional. I’m not saying that they should be using diesel, but I think we also have to build that into our equation.

There is still the fact that people are concerned about the bunkering of this. I have one more question for the minister on this before we move on to some questions from my colleagues. I did ask the minister about the bunkering, the other day in question period, and he wasn’t aware of this being an issue.

It was raised in a report in September 2014. I believe it was from B.C. Ferries themselves — yep, September 22, 2014. It was a very public B.C. Ferries report. The question about bunkering was raised there, and I was wondering whether the minister had read that report.

Secondly, also, I’ve got under my skin the fact that the minister has obviously had conversations with B.C. Ferries about — their conversations. I just wondered if he could tell me what my conversation with the vice-president of engineering was about.

[1505]

Hon. T. Stone: First, with respect to the meeting that the member had with the vice-president of engineering last week…. I learned of this meeting as a result of staff at B.C. Ferries advising staff in the ministry, after the member raised this very important safety-related question in question period, that B.C. Ferries, to their credit, had actually proactively reached out to the member and had offered to sit down with her to discuss with her the concerns that she had.

I was advised that that meeting took place. I was not advised as to the detailed blow-by-blow of the discussion, but that the meeting had taken place. Frankly, I was pleased to hear that there had been a meeting and that B.C. Ferries had proactively reached out to the member. The member knows that B.C. Ferries will meet with her at any time to get into whatever level of detail she would like pertaining to the operations of B.C. Ferries.

Back to the LNG fuel question. Again, the reality is this: LNG ferries are in use in other parts of the world, and they have proven to be a very safe and efficient method of fuelling ferry ships. They are not yet in use anywhere in Canada. There is a series of regulatory requirements that need to be developed. That is the work of Transport Canada. Transport Canada is the regulator here. I have said that many times now.

The province has no role in the safety regulatory environment of ferries. That’s entirely within the confines of Transport Canada. Transport Canada and B.C. Ferries have been having discussions for many, many months to ensure that Transport Canada is developing a regulatory environment to ensure the safe fuelling of these dual-fuel LNG ferries in British Columbia.

[1510]

The last point I will say on this is that B.C. Ferries prides itself on its safety record. It has an exceptional safety record, if you look at its SailSafe program, the very successful safety program it has with its union, if you look at the thousands of trips it provides, the millions of passengers it moves on an annual basis. They do a great job — the unionized staff, the management, everyone working together at B.C. Ferries.

There is no reason to expect that anything less than the current high level of safety will be expected with the LNG ferries. That work, again, is underway between Transport Canada and B.C. Ferries. Both parties will keep the province abreast of the development of those regulations as it unfolds.

N. Simons: My question is about the Queen of Burnaby and the North Island Princess and the plans for those two routes. Can the minister just describe what he’s been told by the people in charge of B.C. Ferries — what the intention is for vessel replacement for those two routes, how possible sailings might be reconfigured and if that’s been a discussion that he’s had?

Hon. T. Stone: To the member for Powell River–Sunshine Coast, the Queen of Burnaby, as he knows, will be replaced by the Salish Orca. The anticipated arrival of the vessel in B.C. waters is in August of this year. That’s good. I think it’s going to be a vessel that the people of Powell River and Comox are going to be very, very proud of.

As the member knows, the province sets the service levels that are provided on all routes. That is why this is detailed in the coastal service contract. B.C. Ferries is responsible for the actual schedule.

I can say definitively, at this point, that upon taking delivery of the Salish Orca and seeing that vessel go into
[ Page 12409 ]
service, there are certainly no plans to change the service levels for that route, nor am I aware of any plans, at this point, that B.C. Ferries may be contemplating with respect to any schedule changes for that route as a result of the arrival of the new vessel.

[1515]

I believe the member may have also asked about the North Island Princess and whether or not we are aware of any changes with respect to that route and that vessel. We are aware that that vessel is aging and is going to need to be replaced sooner rather than later.

We’re not aware, at this point in time, as to exactly what B.C. Ferries’ intentions or plans are with respect to the replacement of that vessel. There are certainly not going to be any changes to the service levels that are currently provided, and I’m not aware of any pending changes to the schedule on that route either.

N. Simons: When you talk about service levels and schedules, I’m not sure if you’re covering off the possibility that’s been raised that perhaps the Salish Orca is going to be doing a triangle route. If they do as many sailings as they’re doing now, they would be acting in accordance with the Coastal Ferry Act. I don’t believe the Coastal Ferry Act prevents the operator from making the routes take longer by adding another destination or taking over for a route already existing. There’s speculation, and I’m just trying to get clarification for the folks affected.

Is there contemplation, or are there active discussions…? Have you been involved in any discussions that contemplate the use of the Salish Orca to serve not just Comox but Texada Island as well, in a triangle-formatted route?

Hon. T. Stone: To the member’s question about whether or not there has been or is any active consideration of going into a potential triangle route, I can confirm that no, there isn’t.

There was some discussion, in previous engagements that B.C. Ferries had, where there were some members of the community — largely on Texada, I think — that made it very clear that they would like the ferry corporation to consider, upon delivery of the new vessel, looking at some kind of a triangle route. That is not what is provided for in the coastal ferry services contract.

What is provided for is the Comox–Powell River route and the Powell River–Texada route. The Salish Orca will soon be plying the waters on the Comox–Powell River route.

As I’ve mentioned previously, while I’m not aware of, and I can’t speak to, any immediate decisions that B.C. Ferries may have taken or may be taking with respect to replacing the North Island Princess, they are aware that it is an aging vessel and is going to need to be replaced sooner rather than later.

[1520]

N. Simons: The question around…. I know that there’s absolutely no political interference in B.C. Ferries. I know the minister is not in charge, technically, but I’m hoping that he can explain to the residents of Powell River, who for, I think, generations have been asking why the vessel that serves Powell River wouldn’t be home-ported in Powell River. It’s the only vessel in the fleet that isn’t ported in the community it serves, essentially.

The excuses in the past have been the direction and strength of the wind and the inability of the vessel to remain properly affixed to the dock in Powell River. We’ve had an upgrade. I know the minister can’t take credit for the upgrade because he has nothing to do with B.C. Ferries. But that being said, we have had an upgrade, and it actually now manages to hold the ship steady there, whatever the direction of the wind.

The question comes back again. Seeing this on the horizon, why would the company that someone controls — but we’re not sure who — contemplate changing the home-porting of the vessel so that it actually departs and serves the members of the community the way every other home-ported vessel does?

Hon. T. Stone: With respect to the question of home-porting that the member has raised — a very valid question and one that we have heard from Powell River, for certain. We also hear it on Bowen Island, and we hear it on Denman Island. Those are the three communities that I think feel, at the present time, the most aggrieved by the current situations that they have in place.

We encouraged — and again, it wasn’t our decision to make — the B.C. Ferry Commissioner, as part of his PT4 price cap decision, to have his office take a look at and dive deep into this question of home-porting arrangements.

He published a specific report, which I’m sure the member has read — again, this was in March of 2015 — entitled The Performance Review of B.C. Ferries’ Home-Porting Arrangements. He looked at home-porting defined as the location where staff report for their shifts and where the service begins.

[1525]

He went through and looked at all facets of this and determined that, in his opinion, there were no major concerns regarding the rationale or the efficiency of the current arrangements.

I think the most important piece, though, was that he estimated that for each of the three routes that he looked at — the Comox–Powell River being the largest one — there would actually be significant financial costs to the ferry corporation to change the home-porting arrangements. In the case of the Comox to Powell River route, route 17, he estimated total cost implications of up to $5 million.

It was on that basis that his conclusion was to recommend no changes at the present time to the home-porting
[ Page 12410 ]
arrangements and that this issue should be shelved for now but brought forward when and if there are any significant route changes considered for these routes in the future.

N. Simons: I have a few questions about the fairness of the fares.

I know that the Coastal Ferry Act sets all these up and puts the parameters around fare increases, etc., but I’ll remind the minister that it’s this government that’s responsible for the act that regulates ferries. In so doing, I would assume that the role of government in the management or in the overseeing of B.C. Ferries is to ensure a certain degree of fairness. And fairness would imply that there’s fare equity or that there’s some relationship between distance and fare.

What we’ve seen recently is that on the Langdale–Horseshoe Bay run, we all pay way more per nautical mile than other routes. Most recently we’re seeing announcements about specials on major routes that excludes the Langdale route, including discounts on the length of the vehicles for a limited time. But none of them apply to the Sunshine Coast. Why wouldn’t…?

I think it’s patently unfair that because of government policy, B.C. Ferries is allowed to promote recreational vehicles travel to Vancouver Island thus systemically reducing the opportunity for the Sunshine Coast to get the same kind of recreational traffic. We see these specials, and it annoys Sunshine Coast residents. Invariably, they don’t involve any specials for residents of the Sunshine Coast. So we see that we’re going to be subsidizing those specials.

If fairness is part of government’s responsibility in the management of the B.C. Ferries, can he commit to having a look at the fact that Sunshine Coast residents pay more than other travellers and that the specials that are offered by the company often are detrimental to the residents of the Sunshine Coast?

[1530]

[J. Martin in the chair.]

Hon. T. Stone: With respect to the question of whether the discounts have applied equally to the Sunshine Coast as on other routes, my understanding is that the most recent round of discounts that have been announced — and the most recent ones that were previously in place — did apply to the Sunshine Coast.

I will certainly endeavour…. I take the member’s point at face value. I get his point and certainly will ask B.C. Ferries to provide a more detailed summary of exactly which routes have been provided, which discounts, and we’ll get that information to the member.

I will say that at the highest level, B.C. Ferries’ strategy around these time-limited special promotions or route discounts is largely driven to try to rebalance loads on a particular route. It’s not necessarily driven from a place of providing discounts systemwide as much as it is trying to encourage people who may be waiting in long lines for a particular sailing at a particular hour to consider going on an earlier sailing on that same route, or a later sailing and, in deciding to do so, being provided with a discount for making that choice.

That being said, as I mentioned, I’d be happy to get the member more detailed information, as I have just indicated.

N. Simons: Well, thank you very much. I would say that that needs to be contemplated. You get two RVs coming down into the Horseshoe Bay terminal, and you have one route going to a beautiful place that says you get 50 percent off, and you get zero discount to go another route. You know, people make decisions based on those kinds of things.

I understand the importance of rebalancing certain routes, and speaking of that, the Langdale–Horseshoe Bay on-time performance could be another reason for people to make decisions around travelling.

The Langdale–Horseshoe Bay run on every single Sunday and holiday Monday in a four-month period ending in March…. Every afternoon sailing was late, and I’m talking more than ten minutes late. You have massive backups. We’re talking about 100 percent late, and “late,” as I said, only starts ten minutes after it’s late according to the Coastal Ferry Act. It’s only considered late if it’s more than ten minutes late.

We have something like 75 percent on-time performance on that route anyway, which is 10 percent worse than the other major routes. I’m thinking that somehow the Sunshine Coast, even at the regular rate — paying more per foot, paying more per mile — is subject to really what would be considered inappropriate service levels on Sundays and Mondays and Fridays. People’s lives are disrupted significantly by that.

I know there are some things in the system that the minister will be happy about and proud about. I think the role of the opposition is to point out where there are severe flaws. I think, and I hope, that the minister recognizes the impact of ferry service on our economy and that those kinds of disparities can be addressed if the minister speaks to the person responsible for B.C. Ferries in government, when that happens. I think he gets my point.

My hope is that the minister will take the concerns as expressed to B.C. Ferries and hopefully get a response.

[The bells were rung.]

The Chair: We’ll be taking a recess while we make our way over to the House, and we’ll resume shortly thereafter.

The committee recessed from 3:35 p.m. to 3:49 p.m.
[ Page 12411 ]

[J. Martin in the chair.]

Hon. T. Stone: The member for Powell River–Sunshine Coast had asked me a question. I will provide a response now. The issue related to the on-time performance of the Horseshoe Bay to Langdale route. That’s route 3.

[1550]

The member is quite correct. I think everyone is aware, not the least of which B.C. Ferries itself, that the on-time performance of route 3 is not where it needs to be. It needs to improve. B.C. Ferries is taking a number of steps to focus on improving the on-time performance of that particular route.

I will point out as well, for the record, that one significant improvement for that route was the decision that B.C. Ferries made. Effective April 3, they’ve added one round-trip sailing on Sunday mornings during the off-peak season. That will address some of the challenges that have been incurred on this particular route.

We will all be continuing to encourage B.C. Ferries to do whatever they can to improve the on-time performance of route 3.

J. Rice: I have a few questions in regards to route 11. This is the Prince Rupert to Skidegate, Haida Gwaii, ferry route. I wrote to the minister on March 17. I’m still awaiting a reply to this email.

This is in regards to restoring the ferry service on route 11, which has faced outright cancellations, when postponement of sailings is the norm, due to weather. I received numerous correspondence from mayors and councillors and residents and business owners from Haida Gwaii.

The letter from the mayor of Port Clements sums up the issue quite nicely, and I would appreciate a response to this. The mayor of Port Clements states:

“Recently B.C. Ferries made the decision two weeks in a row to cancel a ferry rather than postpone it — specifically, Thursday, February 25 ferry and Thursday, March 3 ferry. As we are on the winter schedule, with only two ferries per week, the decision to cancel one of the runs is very impactful for residents and other users.

“Historically, B.C. Ferries generally delays the sailings until the weather system has passed. Although this may still cause challenges due to doctor appointment times, medical professionals in Prince Rupert and Terrace are very aware of our situation and can often bump appointments to later in the day to accommodate a late ferry.

“By deleting the run altogether, it means that appointments have to be completely rescheduled, along with people having to reschedule with employers for alternate days off. Some specialist appointments are made months in advance. This could result in serious delays before another appointment can be secured.

“This is all assuming that the people in question have not left the island. If they were already off-island for an appointment and the ferry is cancelled, that leaves them stuck in Prince Rupert for many nights, incurring additional costs. If you go to Prince Rupert on the Tuesday morning ferry for a Wednesday appointment and expect to be coming home on the Thursday crossing, imagine the additional cost to be incurred if that ferry is now completely cancelled — or, as in the March 3 situation, postponed until March 7. That person is now required to spend an additional four nights in a hotel in Prince Rupert. With food, this adds hundreds of dollars in extra costs that are not covered.

“Additionally, both of the cancellations above also meant that two separate kids’ sporting events had to be cancelled. Tournaments planned by other communities do not get postponed because one of the teams competing can’t make it. Our children fundraise for months for this opportunity to compete off-island. Generally, a 12-hour delay in the ferry won’t impact this situation, but a straight out cancellation ends the opportunity.

“We feel that greater effort should be made to make the crossing as close to the time it originally was meant to run as possible to alleviate undue hardship for our residents, who must use this as our link to access fundamental medical services that are taken for granted by so much of the rest of the province.

“Sincerely, Mayor Ian Gould, the village of Port Clements.”

My question to the minister is: can he explain these cancellations this winter? What measures are put in place so that this does not continue to occur?

[1555]

Hon. T. Stone: Thank you to the member for North Coast for the question.

She and I actually did have the occasion recently to have a talk about the challenges that are faced by folks who live in Haida Gwaii with the changes in ferry service. I endeavoured to get back to her after that conversation, and I am aware that she has had a formal letter in with me as well. A response will be forthcoming on that too.

Let me speak specifically to the issues that the member has raised. First, it is my understanding that B.C. Ferries added sailings to the schedule during the shoulder season on route 11 — the Skidegate to Prince Rupert route — to reflect the increased demand experienced this past spring. We could certainly ask for more specific details from B.C. Ferries on that.

Obviously, the question of cancellation is a very important one and one that, I think, we all take very seriously. Regarding the cancellations that the member specifically mentioned, it’s my understanding that those particular sailings were cancelled due to adverse weather conditions, which — the member represents the area, and she knows all too well — can hit the north coast and Haida Gwaii very, very hard — unpredictable weather conditions. It was deemed, under those conditions, to be in the passengers’ best interests not to proceed with the sailing.

In several of these cases, again, my understanding is that B.C. Ferries offered additional sailings as soon as the schedule and the weather permitted. I’ll give the member a few specific dates. Additional round-trip sailings were offered on February 29 from Skidegate at 11 a.m. and Prince Rupert at 10 p.m. as well as additional sailings on March 7, which were delayed further due to weather and departed from Skidegate at 4:30 on March 7 and 1 a.m. on March 8.

[1600]

I certainly take the member’s point to heart and understand the hardship — realized by people as a result of a
[ Page 12412 ]
ferry sailing being delayed or, in some cases, outright cancelled — that that puts on people with respect to medical appointments, tournaments and those kinds of things. I do believe, and it’s my understanding, that B.C. Ferries, when they do arrive at a place where they have to make a decision to cancel a sailing, do endeavour, as much as possible, to try and schedule an additional sailing to try and meet the needs of folks as best they can.

J. Rice: I think what we’ve seen historically is that B.C. Ferries has endeavoured to sail by delaying ferries. Sometimes they actually phone people up, and they depart earlier, but this winter, that was not the case. The sailings were outright cancelled.

I received a letter from a teacher who was supposed to take a group of kids from Haida Gwaii between Prince Rupert and Terrace, not once but twice, for a ski trip. Well, he wrote me: “It was blue skies, sunny skies; flat, calm waters. But the ferry was outright cancelled. So they didn’t have that opportunity. The children of Haida Gwaii did not get to ski this winter whatsoever.” In this case, why I’m raising the question is not because things were postponed. Things were outright cancelled.

I’d like to move onto the parking situation at B.C. Ferries in Skidegate. The mayor of Queen Charlotte has written B.C. Ferries on a few occasions. We have a situation where the users of B.C. Ferries in Skidegate are parking dangerously along the side of the highway. In fact, they are parking exactly across from the largest shipping operation in Haida Gwaii. They are occupying the shoulder of the road, where a big, large, beautiful parking lot sits empty and locked up at B.C. Ferries. These people that are parking on the highway are in fact B.C. Ferries customers.

The council would like B.C. Ferries to accommodate people, so that they are not putting their lives at risk, by allowing them to park within the B.C. Ferries parking lot. There’s been some resistance to this. I’d like to know if the minister has an explanation for this, and if he would be taking into consideration the safety of Haida Gwaii residents and visitors and allow parking within B.C. Ferries property.

[1605]

Hon. T. Stone: To the member for North Coast. I’m certainly aware, at a high level, of the issue that she has raised. This was an issue that was actually raised with me by the community in question at the UBCM convention last year. We immediately set out to connect B.C. Ferries with the community, making sure that B.C. Ferries was aware of the community’s concern and the need for B.C. Ferries to sit down with the community and have a conversation.

My understanding is that they have done that. The community may not be entirely enamoured with the position that B.C. Ferries has taken. Again, at a high level, my understanding is that the area in question may be a space that B.C. Ferries needs for its drop trailers. In order to safely operate the drop trailers, they can’t have cars parking in this particular area.

Again, that’s an extremely detailed operational issue. While it’s been raised with me, I have highlighted it as something for B.C. Ferries — that they need to continue to dialogue with the community.

C. Trevena: I’ll move on a bit now.

Yesterday there was the announcement from the federal government that B.C. Ferries will be eligible for the New Build Canada fund. I know that there’s been a lot of hard work from Island MPs to make sure that this happened. There was a concerted lobby by all our MPs up and down the Island to make sure that B.C. Ferries was going to be eligible for this. I know that the minister also had a conversation with his federal counterpart about this.

I was wondering if the minister could clarify just what the money will be used for. Will it be used for the ongoing upgrades of the actual vessels, or is it going to be used for terminals and dolphins and so forth at the docks?

[1610]

Hon. T. Stone: With respect to the federal government’s recent decision…. In fact, it was just communicated to all of us in the last couple of days — their decision to expand the eligibility criteria of the Build Canada fund to include ferry infrastructure. As I said yesterday, we’re obviously very pleased that the federal government has made this change to the Build Canada program.

I am very proud of the fact that this is something that we have worked very hard to achieve through successive federal governments. This was a topic that I raised with the former Transportation Minister and the former Infrastructure Minister of the former Conservative government federally numerous times. This was something that figured very prominently in our province’s formal submission to the CTA review. That is a federal process. We made this very clear as a priority for British Columbia.

At the federal-provincial-territorial meeting of Transport and Infrastructure ministers that was held in Ottawa this last January, this was British Columbia’s number one priority. We worked really closely with our colleagues from the Atlantic provinces to come together to encourage the federal government to do the right thing on this. I’ve certainly taken every opportunity in my four meetings with the current federal Infrastructure Minister, Minister Amarjeet Sohi, to make this very clear to him as a key priority for British Columbia.

So we take our hat off to the federal government for doing the right thing. We were proud to have led the effort to see this change come about.

In terms of what it actually will mean, the criteria are quite flexible in terms of what ferry infrastructure will actually qualify. I want to be really clear with the mem-
[ Page 12413 ]
ber, though, that it is not for operating or operational expenditures. That is very clearly stated in the criteria. It is for capital investments. But on that front, again, they have set the criteria to be very flexible. At the highest level, that would mean investments in new vessels, potentially vessel upgrades — mid-life upgrades of vessels — as well as terminal upgrades.

Now, I have said very publicly that we have encouraged B.C. Ferries, as the independent company that they are, to submit a couple of applications. We did this with the former Conservative government and have refreshed that with the new federal Liberal government — to submit two applications for ferry infrastructure.

One would involve the replacement of the Nimpkish, which is a vessel that plies route 10S. That’s the Bella Bella–to–Bella Coola route. That has about a 13- to 16-car capacity at the moment. That would be replaced with a new vessel, likely in the 40- to 50-vehicle range. That would be B.C. Ferries’ top vessel replacement project that’s ready to go. Secondly, on the terminal upgrade side of things, we have positioned the Langdale terminal upgrade as the priority upgrade for terminals.

[1615]

There will be many other vessels and many other terminals that will require capital investment. As the members know well, there is a very detailed capital plan that B.C. Ferries is in the midst of implementing. It involves roughly the replacement of one new vessel per year over the next 12 years, not to mention significant upgrades in terminal capacity and safety improvements.

That was great news from the federal government to include ferry infrastructure in the Build Canada fund. It should have been done years ago when the Build Canada fund was first announced. Better late than never. We’re going to ensure that B.C. Ferries takes full advantage of the inclusion of ferry infrastructure in the Build Canada fund.

C. Trevena: B.C. Ferries, as the minister responsible is well aware, has chosen largely for its new builds to build offshore. It has gone to Gdańsk for three new vessels and for its mid-lifeupgrade of two other vessels.

This Build Canada fund is obviously to encourage building in Canada. I would like the minister, as the minister responsible for B.C. Ferries, to give the guarantee that those dollars would be used in B.C. shipyards.

Hon. T. Stone: Again, we’ve canvassed this issue many times. I’m happy to do so again.

Never have British Columbia’s shipyards been busier. Never in their history have they been engaged in so much activity. Our shipyards, at the moment, are vibrant and are engaged in a wide range of procurement projects. Our shipyards have never been as competitive as they are today.

Now, of course, it would be our government’s preference to see new ships built in British Columbia, to see refit work done in British Columbia by British Columbia workers. I should point out — because the opposition never acknowledges this fact — that B.C. Ferries invests $100 million a year in British Columbia’s shipyards. That is $100 million a year in refit work and, in some cases, new vessels as well.

The Denman Island cable ferry — I believe that was a $15 million project — was built in British Columbia. With respect to the intermediate vessels that we spoke of earlier, the three intermediate vessels, obviously, the procurement process was open and accepting of proposals from shipyards in British Columbia and around the world.

The shipyards in British Columbia, Seaspan, made the decision to voluntarily withdraw themselves from the procurement process. Why? Because they are at their maximum capacity in their shipyards at the present time. They are aggressively adding capacity, training more workers and investing in more infrastructure, which will enable them to take on more and more contracts and more and more procurement in the future. But it was their decision to pull out.

At the end of the day, with the three intermediate vessels…. It was the same situation with the LNG refits on the two Spirit class. The shipyards in B.C. pulled themselves out of that process due to capacity challenges.

Those were decisions that were made by the shipyards in B.C., not by any other party. I think that is a point that the members opposite, for whatever reason, choose to gloss over in this part of the discussion.

We will continue to see B.C. Ferries invest $100 million plus this year and next year in ferry infrastructure in British Columbia. We are confident that because the capacity is growing every day in our shipyards, we’re going to see more and more vessels built in British Columbia in the years ahead as well.

C. Trevena: The minister also glossed over the fact that the RFP system has changed so that the many other shipyards beyond Seaspan can no longer bid on the jobs from B.C. Ferries because they can’t work as consortiums. The job prospectus usually rules out the different shipyards working together. So there is more than Seaspan, and they would like to have some of the action, as it were.

[1620]

The minister didn’t answer my question about…. I think it should go without saying that the Building Canada fund is for building in Canada, if not in B.C. It is for building in Canada. So any of that money would go into either B.C. or Canadian shipyards, if we’re talking about the money going for vessel upgrades or new builds.

I wondered if the minister could also tell this House…. When he was lobbying in Ottawa…. And he mentioned he has had conversations in Ottawa. I know he’s not unaware of the issue of the different levels of funding given to the Atlantic ferry system compared to the B.C. ferry system. We’re well aware that the Atlantic ferry system
[ Page 12414 ]
got part of its operating funds as a part of Confederation. Their deal to join Confederation was that they were going to get lots of federal dollars for their ferries.

Our Confederation was the continuation of the railroad and the railroad on the Island. We no longer have the railroad on the Island, which is a whole other issue, but we also have very little federal funds coming into B.C. for the operating of our marine highway.

I wonder if the minister could explain what he did to lobby for more federal funds for operating costs for B.C. Ferries.

Hon. T. Stone: Two items that I will address that the member just raised. First off, with respect to the Build Canada fund. I would certainly hope that the member is not suggesting that if B.C. Ferries was successful at securing federal Build Canada fund dollars for the procurement of vessels or the upgrading of terminals in British Columbia — whether that be $10 million or $25 million or $100 million — B.C. Ferries should say: “No, we can’t accept those dollars unless there’s a guarantee of those vessels being built in British Columbia.”

I cannot imagine that the member, when she says, “Build in Canada should mean build in Canada….” Of course, we would all like to see the vessels built here in British Columbia, but as I mentioned previously, you can’t build something if there isn’t a capacity to build the vessel. Our shipyards have never been busier. They are loaded with federal contracts at the moment. They do $100 million plus of refit maintenance work for B.C. Ferries every single year.

They are growing their capacity so that they can take on more projects, but they are private enterprises. They make decisions about which competitive procurement processes they ought to engage in and which ones they don’t.

[1625]

Our shipyards in this province opted voluntarily to remove themselves from the procurement processes related to the intermediate vessels as well as the LNG refits on the Spirit class vessels.

I would go further, for the member’s information. Seaspan is actually in the process of having several LNG-powered vessels that they will use for their own purposes and are being built by a firm in Turkey. Seaspan is having vessels built in Turkey. Why? Why aren’t they building them themselves? Because they don’t have the capacity. At the moment, they are too busy to build those vessels.

I cannot fathom that the member would be suggesting — and be as simplistic as how she just sounded — that build in Canada means build in Canada, meaning keep your money unless there’s a guarantee that the vessels can be built in British Columbia. That is just plain silly.

I would….

Interjections.

Hon. T. Stone: Well, Member, you have to have somewhere to build them. There is no capacity at our shipyards in British Columbia at the moment. They are privately owned. They are busier than ever. Where do you expect…? Where? Do you think they should be built in Kamloops? They need to be built in shipyards. The shipyards in B.C. are too busy. They are literally laden with contracts.

With respect to the member’s…. The second part of her question — where she was asking for clarity on the position that we’ve taken relating to the level of direct federal subsidy in terms of what British Columbia gets, what the coastal ferry service gets in British Columbia and what the Atlantic ferry system receives — the member, actually, was quite correct in how she laid that out.

There is a very significant discrepancy, roughly $30 million received by British Columbia and considerably more received on the Atlantic coast. This is one of four key issues which I have, as the minister here in B.C., been actively lobbying the federal government to address.

We agree that it is not fair that British Columbia does not receive more direct federal investment than we currently receive, particularly when compared with the Atlantic provinces. We make that point, again, in every single interaction, every single meeting, that we have with the federal government. That figured prominently in the CTA submission from British Columbia. That figured prominently in our ministers’ discussions last January, and we will continue to raise it.

I want to just point out again, though, in summing up here, the four items that we’ve been working really hard with B.C. Ferries on. The Build Canada eligibility, which we’ve talked about, has been addressed. So we’ll put a check mark next to the item.

The second is duty relief on the import of vessels. That was included in the federal budget — again, largely because of the efforts of our government to encourage the federal government to do that. That will save B.C. Ferries $47 million, which goes right to the bottom line to help apply downward pressure on fares.

We’ve talked about the direct federal investment. That’s issue number 3. We’ll keep working on that one.

The fourth issue that we continue to raise with the federal government is that relating to crewing levels, and whether or not there is an opportunity to address the fact that our Transport Canada–mandated crewing levels are significantly higher on many routes in British Columbia for routes that are quite comparable to those in Alaska or Washington, where crewing levels are quite a bit lower. We think there is a path there whereby safety would not be compromised, but perhaps with more realistic staffing levels on some of those routes, that would also result in significant savings to B.C. Ferries which will be passed on to their customers through lower fares.

C. Trevena: I think that the minister’s arguments that I am either simplistic or silly by asking a very fundamen-
[ Page 12415 ]
tal question…. That is: are Canadian tax dollars likely to be spent overseas, whether it’s in Poland or in Turkey, if B.C. Ferries gets a build Canada fund grant?

[S. Sullivan in the chair.]

I don’t think that it is either. I think this is very important. As the minister who is still responsible for B.C. Ferries, even though he has tried to deny it, I would hope that he would have an answer.

[1630]

I would like to move on. I’d say that if we’re talking about simplistic, we have to realize — the minister, I would hope, realizes — that there is more than Seaspan as an alternate shipyard in B.C. As I discussed earlier, many of them haven’t been able to get the work because of the way that the RFPs are formatted — that you can no longer work as consortia. I know a number of shipyards that would like to get this work.

I’m going to move on. The minister has said that replacing…. He said earlier today in his estimates…. He said, quoted in Business in Vancouver, that replacing the 13-car Nimpkish is a high priority. It obviously is an important part of our marine highway for the central coast so people can actually access their homes and their communities. We did have the Chilliwack. The Chilliwack was sold for, we believe, less than $2 million.

I’d like to ask the minister why the Chilliwack, after an $18 million refurbishment of, again, public money was then sold for about $2 million when he has just admitted earlier on in this debate that the replacement for the Nimpkish is a high priority.

Hon. T. Stone: Certainly I’d be happy to address the member’s question respecting the Queen of Chilliwack. Before I do, she made a comment a moment ago about all of the shipyards in British Columbia, and she’s quite correct: Seaspan is not the only game in town. There are a number of shipyards in different locations around the province. They are all entitled and able to bid on whichever procurements, whichever projects they choose to. They make the business decisions for their respective companies based on factors that are specific to each of their respective organizations.

I’m always tempted to go here, and I hold back and hold back. We hear from the member opposite, in the way that she does it, how wrong everything is about the procurement of vessels in British Columbia today when, on the one hand, we are seeing, through B.C. Ferries, a remarkable refresh of the system, of the vessels and the terminals, faster than at any time in B.C. Ferries history, which the users very much appreciate. And we know that the member opposite, in her way and the opposition’s way of doing this — to mandate that vessels be built in British Columbia even if that doesn’t make sense from a market conditions perspective …. We know what the experience on that looks like.

We know that when they were in power, the fast ferry program…. A $70 million price tag on those fast ferries. The member gets uncomfortable when I talk about this, but these are the facts: a $70 million price tag for a couple of fast ferries. Those fast ferries were built, ordered to be built, in British Columbia. They were built for $462 million. The catch was that they were actually never used. They were never used in this province. They were sold, and they were sold for $19 million and change and sent off. They were never used.

I am not ever going to take any direction, any lessons whatsoever, from the members opposite on best practices as related to vessel procurement. We are proud of the work that B.C. Ferries is doing on that front to renew and refresh the fleet, to get good value for dollars spent and to do so as quickly as they possibly can.

It leads me to the Queen of Chilliwack. Again, this was a decision that was made by B.C. Ferries, who made the determination that the Queen of Chilliwack was surplus to the needs of B.C. Ferries.

[1635]

When route 40 was discontinued, the Queen of Chilliwack, which up to that point had served the route, was no longer needed elsewhere in the B.C. Ferries fleet. So the decision was to sell the Queen of Chilliwack through an open tendering process, which is what they did. B.C. Ferries has said that they will release the details of that sale once they conclude the sale of a number of additional vessels in the same class, which will begin to take place in the coming months.

G. Holman: I’ll rise to debate here. We’re asking questions of the minister. We’re not providing advice; we’re asking questions.

Our question…. The minister seems to be ignoring it. He hasn’t really addressed it. Obviously, I think everyone would agree that to the extent we can build ferries in British Columbia, it would be a good thing. I think we would all agree on that. We’re simply asking questions about if maybe there’s a way to build more ferries in British Columbia, fast ferries aside.

It’s our understanding — I just want to clarify this — that the bidding process for B.C. Ferries disallows consortia. That would be, for example, one way in which the shipbuilding industry — which, perhaps, as individual firms may not have the capacity — could cobble together capacity. That could be one strategy to build ferries in British Columbia, with more investments in training, for example, for shipbuilding workers, that kind of thing.

It seems to us that government could be more proactive in trying to build more ferries in British Columbia. We’re asking questions about that; we’re not necessarily providing advice. That is the question.

Then the other, on the Queen of Chilliwack. The minister is saying, “Well, the Queen of Chilliwack was no longer needed,” yet at the same time is saying that the top prior-
[ Page 12416 ]
ity for B.C. Ferries is to replace the Nimpkish, which, of course, replaced the Chilliwack.

That seems like a complete contradiction to us, when the minister is now saying the top priority for B.C. Ferries, and for federal funding, is to replace the Nimpkish. Well, the Nimpkish replaced the Chilliwack. It doesn’t make sense for us to sell off the Chilliwack for cents on the dollar. And now the minister is saying; “Well, top priority is to replace the ferry that replaced the Chilliwack.”

Perhaps the minister could clarify. We’re not giving advice; we’re only asking questions.

Hon. T. Stone: First, with respect to the member’s question relating to the use of consortiums, potentially, this is something that I know B.C. Ferries has considered. At the end of the day, their procurement process is their procurement process. My understanding is that on every new procurement process they enter into, they give consideration to any adjustments that might be wise for them to consider in that procurement.

But again, I come back to the balance that needs to be struck here. You know, the number one theme that I’ve heard for three years — rightfully so — from ferry users is that fares need to come down. Certainly, we need to arrest the increase in fares, and we need to see fares start to come down.

There are a whole wide range of things that can be done and that are being done to drive downward pressure on fares. We’ve talked about that at length. I’m not going to rattle off the list again, but one of those strategies is procurement — to ensure that, when you’re renewing the fleet, you’re actually getting the absolute best value for taxpayer dollars spent. That’s why that’s so important.

While B.C. Ferries…. I’m certain they would not quibble at all with the member’s desired intention, or mine, that it would be great if every ferry that B.C. Ferries procured, every one of those ferries, was built here in British Columbia by British Columbians.

[1640]

We very much, on the one hand, would love to see those ferries built here and to employ British Columbians in the process, while at the same time balancing off best value for taxpayers’ dollars. That’s the balance that is constantly being weighed as B.C. Ferries moves through each and every one of these procurements.

With respect to the Queen of Chilliwack, I just want to correct the member in terms of what he said. The Queen of Chilliwack served depending on the day of the week. Some of the days it served what was formally known as route 40, from Port Hardy as a direct shot into Bella Coola. Other days it would go from Port Hardy over to Bella Bella and then eventually make its way into Bella Coola.

The Nimpkish has never and was never intended to replace the Queen of Chilliwack on the direct shot, which involves going through a pretty good stretch of open ocean. The Nimpkish is not an appropriate vessel for the open ocean that exists from Port Hardy until you just start entering the islands.

The Nimpkish was put on to provide continued service on what is route 10S, which is from Bella Coola. It goes into Shearwater, then goes into Ocean Falls, and then it makes its way to Bella Coola. If the member hasn’t done the trip, I would encourage him to do it. I’ve done it. It was terrific — new bathroom, potable water, padded seats. Our family had a great time. We did.

We recognize that, actually, there is tremendous growth taking place, particularly in aboriginal tourism, on the central coast and Bella Coola. The Nimpkish is regularly booked solid. We recognize, with the Aboriginal Tourism Association of B.C. and other stakeholders, that a larger ferry would be preferable on that route 10S from Bella Bella to Bella Coola.

That is the priority that we have encouraged B.C. Ferries to establish with the federal government as the top vessel replacement. Replace that 13 to 16 car Nimpkish with a 30 to 40 car new vessel that will serve that 10S route from Bella Bella to Bella Coola. We think that that would be a more appropriate capacity to meet the demand that we believe is actually there today and will only continue to grow with the establishment of the Great Bear Rainforest and a number of other initiatives in the area.

C. Trevena: Moving on to the other new vessel of the fleet, the Coastal ferry. I’m sure the minister has used that ferry too.

I just wondered if the minister responsible for B.C. Ferries has any idea whether the Coastal ferry is running as expected. I understand that there is quite a number of engineer call-outs.

I wonder if the minister could let me know if he is aware of how many engineer call-outs there are and how much overtime is being paid to the engineering staff coming down from Little River to work on the cable ferry.

[1645]

Hon. T. Stone: With respect to the Baynes Sound Connector that serves Denman Island, as the member knows well, this is a new ferry — one of the ferries built here in British Columbia. I’m very proud of that.

It’s a ferry that is projected to save B.C. Ferries upwards of $1.75 million to $2 million per year, going forward. Those are operational savings, which will, again, help continue to apply downward pressure on fares. The savings, obviously, are derived from the use of much less fuel, which is also very good for the environment, reduced emissions and so forth, as well as slightly reduced staffing levels or crewing levels.

As with any new ferry, there’s always the potential for minor technical issues. That was the case with the Baynes Sound Connector on two occasions that I’m aware of. On February 24, I’m advised that there were some minor
[ Page 12417 ]
mechanical issues with a hydraulic pump on the ferry, and on February 27, I’m advised that there was a very minor electrical issue.

There were a handful of sailings that were affected as a result of these issues. Sailings were still provided for folks, however. We still had the Quinitsa there as a backup, which is very common standard practice when you’re cycling a new vessel into the fleet. But I’m very pleased to say that, as of today, the Baynes Sound Connector continues to operate very, very well. It’s performing very well, and it’s continuing to provide a safe and efficient service for the people who rely upon it.

C. Trevena: To the minister’s knowledge, there have only been two engineer call-outs. I take that as his answer — just two engineer call-outs.

I’ve had, as the minister is very well aware, a conversation with the vice-president of engineering for B.C. Ferries. We talked about the Baynes Sound Connector and the cables and the positioning of the cables and concerns that the local community has over those cables and the potential for accidents in the summer, when you get tourists coming out that aren’t really watching what is happening.

I was told that there is going to be advertising at various yacht clubs to explain to people about these cables and that they should watch out as they’re coming up through Baynes Sound.

[1650]

I wondered if the minister knows how much is being spent on advertising the fact that we now have cables going across Baynes Sound and a different way of operating in that area for vessels.

Hon. T. Stone: The member, I’m sure, would agree that seeing as this is a new vessel and a very different type of vessel, it has been and will continue to be very important to focus on ensuring that the awareness is there not so much for the locals anymore — the locals are well aware — but visitors. As we are approaching the very busy summer season on our coast, people visiting this part of our province can be aware of the fact that there is a cable ferry in operation in the area.

There has been a tremendous amount of awareness and education that B.C. Ferries has really focused on — a lot of earned media, a lot of speaking at community groups and being out in the community and meeting with stakeholders to ensure that people understand how the ferry works and understand the risks and the appropriate safety precautions to be taking.

That has involved acclimatizing people to the light system that’s used. When the light’s red, the ferry is in operation, and you’re not supposed to cross where the cable is; green, you can go. Ferries is exploring additional opportunities in the coming months, as I said, with the approaching busy tourism season, to continue to focus on education and awareness.

With respect to paid advertising, a couple of things. One, my understanding is that B.C. Ferries doesn’t have a specific budget for this particular item. They deal with any advertising for this within their global communications and advertising budget. Secondly, if the member wishes to have any further details on that, I would encourage her to direct that request to B.C. Ferries.

C. Trevena: I do have a number of other ferries questions, but I think that we have exhausted most of them. If we have time later on in the estimates process, I will come back to this.

I’m handing you over to my colleague from Vancouver–Point Grey now.

D. Eby: Just for the minister’s advice, my questions from now until the end of the day are going to focus almost exclusively on TransLink-related issues as they overlap with the Ministry of Transportation — so transit, Evergreen line, this kind of thing — so if you have staff you’d like to release.

I also have two or three questions about the UBC peninsula. So if there are any staff that you’d like to release or if you want to take a break — I don’t know how long you’ve been going for — I’m certainly open to that, Mr. Chair, if that’s something the minister would like.

Hon. T. Stone: I certainly appreciate that. If we could take a five-minute recess, we’ll swap out the staff, and we’ll be ready to go.

The Chair: Okay — a five-minute recess.

The committee recessed from 4:55 p.m. to 5:03 p.m.

[S. Sullivan in the chair.]

D. Eby: Now, the minister will be aware of some of the challenges that I had with the minister that we’re told is responsible for TransLink — getting answers about TransLink accountability, any information about the agency whatever. There were also a number of areas in which the minister directed me to come to this ministry to ask questions. Hopefully, we can get some answers today from the minister.

We’ll start with the U-Pass. I was told that the minister has allocated $12 million for the U-Pass program this year. When I asked about the trend line — whether this amount is going up or down and what the plan is for future years, given that the universities are going into negotiations with the ministry — the minister directed me to come to the Ministry of Transportation and Infrastructure for more information about this line item.

Can the minister tell me about the U-Pass program, the amount of funding dedicated to it and the revenue anticipated from it last year, this year and the coming year?

[1705]

Hon. T. Stone: The U-Pass program is obviously hugely important to those who use it and rely upon it each and every day. While the budgeted amount has been the $12 million number that the member mentioned, the agreement that we’ve just reached with TransLink, literally within the last couple of weeks, actually provides for the same service level, the same coverage as has been there in the past, but for $11 million per year. So we’ve entered into a two-year agreement with TransLink for $11 million a year to continue to provide the U-Pass program as those who rely upon it have come to expect it to be delivered.

[1710]

D. Eby: I’m just going to be a bit repetitive here, I guess, and ask the minister…. Just to make sure I understand. The funding was $12 million. It’s going down to $11 million, but the existing service level is guaranteed to the ministry to be maintained for the participating schools in this program. There will be no impact on service levels for the schools participating in this program as a result of that $1 million funding reduction. Is that correct?

Hon. T. Stone: Yes and yes.

D. Eby: A wonderful lack of ambiguity. I appreciate that very much from the minister. Let’s stay on this track. This is a great track.

Now, I understand the Ministry of Transportation has a combined B.C. Transit and TransLink ridership target in their service plan. Now, the forecast for ridership is 286.1 million people, which is 12 million below the target.

I would like to know what the breakdown is between B.C. Transit and TransLink for this forecast ridership, because I’d like to know which of the two agencies is responsible for the decline in ridership and if there’s any explanation for that decline.

Hon. T. Stone: To the member, and he’ll have to forgive me if this was not the period that he actually requested. He can clarify that for me when I’m done.

In terms of provincial transit ridership, he’s quite correct. We do track TransLink ridership as well as B.C. Transit ridership, and we roll it all up together. Now, provincial transit ridership is anticipated to increase for the forthcoming year. The combined ridership of both systems is anticipated to be about 291 million riders this forthcoming year. That will be up 1.3 percent from the previous year. Interestingly, since 2007, provincial ridership is actually up 33 percent — again, combining both systems. So that’s terrific.

The breakdown on those numbers is as follows: 291 million total riders for the forthcoming year. That’s a 1.3 percent increase over the previous year. That is represented by 240 million passenger trips forecast for TransLink. That’s up 1.5 percent from the previous year, and that’s up 37 percent from 2007.

[1715]

B.C. Transit is forecasting 51 million passenger trips. That’s up 0.5 percent from the previous year and up 15 percent from 2007. That represents a TransLink annual ridership increase, year over year, of 1.5 percent. B.C. Transit will be up 0.5 percent. The combined provincial total is a 1.3 percent increase in ridership.

D. Eby: The minister is talking about the forthcoming year. Does he mean March 1, 2016, to the end of April 2017 for those numbers that he just gave me? If that’s the case, can he give me the numbers for the year that we’ve just completed, in terms of any increases or decreases in transit riders, where we actually know how many people have been on transit, as opposed to projections?

[1720]

Hon. T. Stone: First off, I just want to clarify. All of the numbers that I provided to the member in my previous response are accurate projections. But they were not projections for the forthcoming year; they’re the projections for the year that’s just ended. We will have the actual finals on those within a few months. Again, the numbers I gave you were the numbers that were projected for the fiscal year that just ended. They’ll be adjusted a little bit, once we have the actuals, in a couple of months.

For the forthcoming year, which I think is what the member asked me originally, the projected ridership is as follows. For TransLink, we are projecting 244 million riders for this forthcoming year. That’s a 3.8 percent increase over the 235 million estimated total for the fiscal year that’s just ended. For B.C. Transit, we’re projecting a ridership of 51.8 million over the forthcoming year. That’s a 1.3 percent increase over the year that’s just ended, which was 51 million and change.

The total projected ridership for TransLink and B.C. Transit combined is 296 million. That represents a 2 percent increase. It’s a projected 2 percent increase for the combined numbers over the period for the fiscal year that’s just ended.

D. Eby: I thank the minister for that clarification. For ’15-16, the original projection for ’15-16 which was in the ’15-16 service plan, was that the number of transit riders was going to hit 298.1 million in that year. When I look at 298.1 million as the projection and at what was delivered, which was 291 million, it seems to be about seven million riders lower than what was projected.

First, do I have the right numbers here? The minister, I’m sure, will correct me if I’m wrong. Second, if I’m right, why were there seven million fewer riders than projected in the ’15-16 service plan?

Hon. T. Stone: That’s the combined number that you’re referring to?
[ Page 12419 ]

D. Eby: It’s the combined number, yes. There was a projected combined number in the ’15-16 service plan for B.C. Transit and TransLink of 298.1 million, and the actual ridership that was delivered, combined, was 291 million. I’m curious about why there were seven million fewer riders than anticipated in the ’15-16 plan.

[1725]

Hon. T. Stone: Two parts to the member’s question. The first was: were the numbers that he was quoting accurate? The answer to that is yes. He was reading the ’15-16 service plan, which projected the 298.1 million number, and the ’16-17 service plan, which reflects an actual of 291.2 million. So the member is correct. That would reflect about a seven million decrease in ridership across the whole province.

[1730]

What I don’t have for the member today is a detailed breakdown of how much of that is TransLink-related and how much is B.C. Transit–related. We are poring through those details now. They will form part of the work that we do for public accounts for July, so those details will be provided then.

Certainly, we’d be happy to also, separate from that, provide the member with a specific summary of how those numbers break down, once we have them.

Sorry, the member also asked what would account for the decrease. Again, at this point, it’s too early to speculate. We think that there may still be some lingering effects of TransLink’s fare increase in 2013. It may, in part, be due to historically low fuel prices and more people opting to drive versus taking the bus.

There may be a number of other factors. The staff in the ministry are working really closely with our colleagues in the Ministry of CSCD to try and understand what exactly accounts for what would appear to be a seven-million drop in ridership year over year.

D. Eby: I’m told that the responsibility for the Evergreen line remains under the Ministry of Transportation budget.

I note that the projected increased ridership in TransLink doesn’t seem to reflect the Evergreen line coming on service in the forthcoming year. I imagine if it did come on service, those numbers would be up fairly significantly for TransLink. Instead, there’s a 3 percent increase in the overall ridership for TransLink.

You know, I’m speculating there. I’m sure the minister will set me right if I’m wrong.

The question is related to the fact that the Minister for TransLink is in the media, saying that the Evergreen line is on time and on budget. The original date, given in 2008, for delivery of this project was 2014. Then it was changed to 2016, and now it’s changed again to 2017.

My first question is to the minister. Why is the Minister for TransLink saying this project is on time and on budget, when the original date was 2014, and now we’re being told it’s 2017? How does that work?

[1735]

Hon. T. Stone: The first item, just to respond to the member…. The estimated target, 291.2 million riders for the fiscal year that we have just entered, is inclusive of projected ridership associated with the Evergreen line. In terms of what was the forecasted ridership for the combined systems for ’15-16, the fiscal year that just ended, we just went over these numbers — 286.5 million. Those numbers will be confirmed soon. The delta between whatever that number is and what we’ve established as a target ridership for the forthcoming year is a difference of a little less than five million riders. A portion of that is attributable to the Evergreen line coming on stream next spring.

In terms of the member’s comment or question in regards to the budget for this project and the delivery date for this project, first, I’ll address the budget. When this project was first announced, the budget was announced at the $1.4 billion number. We know it continues to be the budget today. So there have been no changes in the budgeted…. The overall total project cost, the total budget, has remained static at the $1.4 billion number.

[P. Pimm in the chair.]

With respect to the question relating to the delivery time of this project, suggestions of it being on time, I think it’s been well canvassed and very much on the record that since the project was originally announced to today, there have been several delays related to the Evergreen project. I mean, that is no secret to anyone.

[M. Hunt in the chair.]

A couple of years’ worth of delays were directly related to the amount of time that it took to secure all of the partner funding — the federal contributions, the local share and the provincial contribution. I’m sure the member has been regaled by many other of his colleagues, as I have been by mine, as to the trials and tribulations that many folks, some serving in the Legislature now, actually were actually involved in, through those discussions to secure and lock down the partner funding required to move forward with the Evergreen project. There were a couple of years’ worth of delays directly attributable to that.

More recently, certainly in the time that I’ve been minister responsible for the Evergreen project, there has been about a year’s worth of delay directly attributable to the tunnel boring. The project team unquestionably encountered some very challenging geotechnical conditions and have done, I think, a remarkable job to continue moving forward with this project under those conditions.

The tunnel is now…. The boring is done. There is still a little bit of finishing work taking place within the tunnel.
[ Page 12420 ]
Most of the track work and the station work on either side of the tunnel is either done or nearing completion. We have seen a number of test trains actually running up and down sections of the track, which has been great to see.

[1740]

The project, as I understand it, to this point is about 85 percent complete and is now on schedule to be finished and in use in the spring of 2017.

D. Eby: In the budget envelope of $1.431 billion for this project, there was a shift of some elements of that budget from the P3 to direct procurement. Can the minister advise — he’s already told me that the budget remains the same — how much has been shifted internally in that budget from the P3 to direct procurement to date?

Hon. T. Stone: On the total project cost of…. The member correctly pointed out $1.4 billion. The funding breakdown is as follows: the province is in for $586 million of that; the federal government has committed $424 million of that; TransLink is contributing $400 million; and then there are some other smaller contributions that add up to the rest, about $21 million. So that’s how you arrive at the 1.4 number.

The member’s specific question about…. He alluded to a shift in funding from P3 to direct contract. I think direct award or direct contract were his words. To be frank, I think we need a little bit more explanation from him as to exactly what he’s referring to. The staff within the ministry, myself included, are not entirely certain what exactly his question is focused on. We’d be happy to answer it. We perhaps just need a little bit more context from the member if he’s able to provide it.

D. Eby: I will provide that to the minister while he’s investigating this next question.

There are media reports that the ministry is in mediation with the contractor for the Evergreen line. Can the minister advise what the issues are at play and what the potential exposure of the public is to any additional costs coming out of this mediation process?

[1745]

Hon. T. Stone: As the member knows well, projects of this magnitude are very complex. This was a project over many years — $1.4 billion and significant geotechnical challenges relating to the project. It is very standard to include provisions within the contract language for processes whereby the project team can and does sit down with the contractor and work through issues that arise during these types of projects. This is why you build contingencies into projects like this: to account for the unknown, those issues that arise that you may not have thought of at the outset of the project.

Again, because of the size and the scope and the complexity of this project, there have been some issues encountered. That is why you have a process built into the contract to work through those issues with the contractor.

What I can say is that the discussions with the contractor have been, and I’m certain they will continue to be, very constructive, very positive. There has been and will be no additional risk assumed by the taxpayer or the province of British Columbia. Any and all issues that are identified and that need to be worked through are done so within the contract and within the existing budget. So there’s no risk to the budget, no risk to the taxpayer, no risk to the province.

The last piece that is related to this is the delays associated with the tunnel. I think it’s worth repeating for the record that the contractor is 100 percent responsible for all risks associated with the delays incurred as a result of the tunnel-boring challenges that were encountered. Again, no risk, from those delays, to the taxpayer, to the province and to the project budget.

D. Eby: Again, thank you to the minister for the very clear and unambiguous answers. It’s very helpful.

In the TransLink estimates, I asked the minister about the provincial contribution to the mayors’ proposed transit plan — in particular, Surrey light rail and the Broadway corridor plan. I asked whether the contribution to the proposed mayors’ plan was included in this year’s budget and, if so, where it was included. He told me that it was included under Ministry of Transportation as what he described as notional money in the ten-year capital plan.

My question to the minister: is the money for these projects included in the budget for this year? If so, how much money is included in the budget for these projects? If you could separate that out, that would be helpful. Is there sufficient money set aside so that the ministry could go to…? I understand that the gap is 7 percent between the federal government, the municipalities and the province right now. Would the province be willing to pick up the additional 7 percent to complete these projects and get people moving in the Lower Mainland?

[1750-1755]

Hon. T. Stone: First, the member asked about whether the dollars have been set aside for the major rapid transit projects in the Lower Mainland. I will do my best to provide the member with a bit of a road map here in terms of how we see this all unfolding.

We have very clearly stated…. In fact, as the Minister Responsible for TransLink previously — and still of Infrastructure — two and a half years ago, I was the minister who stood up in front of the microphones and announced that British Columbia was pleased to formally commit to one-third funding on the rapid transit projects in the Lower Mainland — so Surrey and Vancouver — as well as one-third of the capital for a replacement Pattullo Bridge, assuming the business casework was done and assuming that would fit within the province’s fiscal plan.
[ Page 12421 ]

Our commitment on those projects remains fully intact to this day. In terms of specific allocations in the budget, I want to really shine a light on the Mayors Council’s plan. As the member knows well, the mayors did a very good job pulling together, putting a detailed ten-year transportation plan together, a vision for the Lower Mainland. They put that to the people of the Lower Mainland in the referendum.

It was a good plan. Our assumptions are largely built on the assumptions that the mayors included in that plan. Respecting the rapid transit projects, if the member were to go and take a look at the actual cash outlay that was projected on the build of those projects, he would know or would agree with me that the bulk of that spend takes place in the second half of the ten-year window.

[1800]

In fact, some of it — I think the last bits of the one of the Surrey projects — was projected to actually spill over into the next two or three years beyond the initial ten-year time frame. That is because it’s going to take, likely, another year, two years, for TransLink to complete the business planning work that they’re doing.

They’re the lead on pulling the business plans together for both the Broadway project and the Surrey rapid transit project. We’re obviously fully engaged and participating, as is the federal government, but that business plan work, that analysis, is going to continue to take some time. This, I think, is in large part why the federal government, in their recent infrastructure announcement, really made a conscious decision to focus on, in the next two years, rehabilitation in terms of infrastructure — recognizing that these major projects are going to take a little bit more time to plan.

To that end, I believe that when the member asked the question to the minister responsible for TransLink, the minister’s response was correct in that the province’s one-third commitment to Broadway, to Surrey and to Pattullo are included notionally in the province’s ten-year capital plan, recognizing that these projects — once they’re off the ground in another year or two — will get built. They, therefore, will require those provincial dollars to get built. We are actively engaged over the next ensuing period with TransLink to complete the business planning.

The second part of the member’s question was the delta between the 33 percent that the province has committed, the 50 percent that the federal government has committed and what remains. We’ve all heard the local governments, the Mayors Council, suggest that they would prefer a 10 percent local share as opposed to a 17 percent, so the member asked if we would be willing to entertain covering that 7 percent differential.

I want to say this. Because these projects are so big and because they involve so many dollars, you really have to look at the circumstances in place at the time that the partner-funding decisions are being made.

If we go back to the Evergreen project, the member would know well that what pushed that project over the finish line, at the end the day, was the province. In light of the fact that the federal government was not able and willing at that time to increase its allocation, its contribution, to Evergreen beyond the $424 million that they had already committed, the province, which had originally committed to $410 million on Evergreen, made the decision at that time, based on the circumstances that existed at that time, to increase the provincial contribution by $176 million to the $586 million which is on the books today.

That was a decision that British Columbia was able and willing to make at that time. It was a decision that the federal government wasn’t able and willing to make at the time.

Fast forward to today. It’s great news that the federal government is able and willing to increase its share from the more traditional 33 percent to 50 percent — all the while, the province maintaining our share of 33. That reduces the local share down to what will end up being amongst the lowest local contributions to a project of this size that we’ve ever seen in the Lower Mainland or anywhere else in the province. That’s good news, I think, for folks in the Lower Mainland.

We are focused on building some pretty significant pieces of infrastructure in every corner of the province. As a result of that, while we’re committed to one-third on Pattullo, Surrey and Broadway, we are not prepared to increase the provincial share beyond that 33 percent commitment that is currently on the table.

D. Eby: I just need to bring to the minister the overwhelming frustration of the Lower Mainland on the disastrous plebiscite — wasted millions of dollars, three years, while the chambers of commerce, the board of trade, the businesses, are crying out for the investment in transit in the Lower Mainland. Just unbelievable waste.

[1805]

Now to hear the rather heartbreaking news, frankly, that we’re two years away from a business plan from TransLink on these projects when we can do the Massey Tunnel bridge, apparently, without a business plan — billions of dollars in that project.

I try to understand the logic of the government on the transit file. There are major infrastructure projects where the federal government is literally standing at the border of B.C. with a bag full of cash, willing to pay 50 percent of these projects that will drive the economy in the Lower Mainland for decades to come, in a situation where people are passed by the bus every day trying to get to the economic engine of UBC, which brings in hundreds of millions in research dollars and tuition dollars every year. I don’t know what it’ll take. Two years now we’re from a business plan.

Anyway, what do you say? I don’t even have a question, actually.
[ Page 12422 ]

Moving along. I’m trying to understand the distinction between the Minister of Transportation and the Minister Responsible for TransLink. I’m getting some really helpful and direct answers. Although they may not be the answers I appreciate from the minister, I am getting answers.

I’m trying to understand: what is the responsibility that the minister maintains over TransLink? Do the board members for TransLink report to him? Does he have any other involvement with TransLink that he maintains, other than the Evergreen line and ridership number targets? Can the minister give me an idea about what aspects of TransLink responsibility he retains beyond the areas that we’ve already canvassed here?

Hon. T. Stone: In response to the member’s question relating to responsibilities for TransLink…. The Minister of Community, Sport and Cultural Development is, as the member knows, also the Minister Responsible for TransLink. He’s got responsibility for the act in question. His primary responsibility is in relation to the governance that exists with TransLink and the relationship between government and the Mayors Council and TransLink itself.

The Minister of Transportation is responsible for the infrastructure components that are operated by TransLink. The Evergreen project, which we’ve canvassed here today, is one example of that. The build of the future rapid transit lines in Surrey and Vancouver will be examples of infrastructure projects that will fall within the responsibilities of my ministry as opposed to the Ministry of Community, Sport and Cultural Development.

[1810]

I did want to touch on the member’s comment earlier, though. I don’t know how else to say it, other than to continue to highlight what is the best record in the country on transit. The member can say how exasperated he is. This government has invested $2.4 billion in the last 15 years, just in TransLink alone, in the Lower Mainland.

When you factor in the investments that we make in transit across the entire province, we spend double the national average on transit. I’m not sure if the member has gone and actually looked at those facts, but those are the facts. We spend double the national average on transit service in this province right here.

We are the only province where every single community with at least 10,000 population is served by transit. You cannot say that in Alberta. That is not the case in Ontario. That is not the case in any other province. We will continue to invest significantly in building out TransLink’s infrastructure.

Evergreen, when it comes on line, because of the investments of all of the partners…. The $586 million that the province invested is part of that. When Evergreen opens next year, we will have the longest rapid transit network in the entire country, right here in British Columbia. That’s great news.

We’re not going to rest on our laurels, though. We’re going to be there, with our one-third, for expanded transit in Surrey and in Vancouver. These investments complement the investments that we have made in highways, in ports, in cycling, in ferries and in every other facet of transportation: $18 billion since 2001 is the total.

I take exception to any suggestion that we are doing anything less than supporting transit very significantly, not just in the Lower Mainland but right across the country, to the extent that we are the leader in our transit investments and our operational support for transit right here in British Columbia.

D. Eby: Well, as always with this government, whether it’s schools or transit, you’ve got to check the facts against the delivery. I look forward to checking the minister’s facts — if they haven’t been deleted, hon. Chair.

Interjections.

D. Eby: Is it? Oh, interesting. Interesting. I know the members get uncomfortable when I mention that.

Now, my final set of questions. I notice we’re getting close to the end of the time. I don’t know who the minister has here with respect to this. It’s a local question for me.

There are two crosswalks, one at 16th and Hampton at UBC and one at Chancellor Boulevard and Hamber Road. The Chancellor Boulevard and Hamber Road crosswalk is very unsafe for the students crossing to UHill Elementary. The markings aren’t clear. There are no lights. It’s a high-traffic road. There has been an assessment of it by the Ministry of Transportation. I don’t know where that’s at. I’m curious about where that’s at.

Similarly, the sidewalks on 10th are very unsafe. They’re heaved. They are not safe for walking on if anyone has any kind of a disability or a challenge walking. There’s an assessment that’s been done by the Ministry of Transportation. I’m not sure where that’s at. I’m looking for an update.

Then the last piece. There’s been a request that the Ministry of Transportation drop the speed limit from 70 kilometres per hour to 50 kilometres per hour at 16th and Hampton — again, in the lead-up to the crosswalk, and I’m not sure where that request is at.

If the minister has the people here that are able to answer that question, I apologize for holding them here till the end. If not, I’d be glad to take those answers in writing as well, if that’s easier for the group that’s assembled.

[1815]

Hon. T. Stone: I just discovered something that I thought was completely impossible. The gentleman in question, the ADM responsible — who knows everything there is to know about every square inch of every road in the province of British Columbia — does not have the answers to these questions at his fingertips.
[ Page 12423 ]

A Voice: Let the record show. [Laughter.]

Hon. T. Stone: Let the record show.

We will endeavour to get the responses. Rather than writing it up and sending a letter — and several weeks and what not — what we’ll do is get the responses this evening. Then I’ll read them into the record tomorrow, if that is sufficient for the member, on all three of the questions he posed.

D. Eby: Just by way of wrap-up, I wanted to thank the minister and his staff very much. This has been a very constructive and useful estimates process.

I was incredibly frustrated and disappointed by the TransLink estimates process. I’m going to say that bluntly again, on the record, and to receive clear answers for the vast majority of my questions — yes and no answers, with actual numbers — the difference is night and day. I’m very appreciative of that, and I wanted to put that on the record.

They may not be the answers I want, but hey, at least they were answers. So thank you very much to the minister and his staff for endeavouring to provide that information with relation to the TransLink questions I was asking.

Hon. T. Stone: I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:18 p.m.

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