May 10, 2006 Alberta Hansard 1477 Legislative Assembly of Alberta Title: Wednesday, May 10, 2006 8:00 p.m. Date: 2006/05/10 head: Committee of Supply [Mr. Marz in the chair] The Chair: I’d like to call the Committee of Supply to order. head: Main Estimates 2006-07 Finance The Chair: I recognize the hon. Minister of Finance. Mrs. McClellan: Well, thank you, Mr. Chairman. It’s a pleasure to present the Ministry of Finance’s estimates for 2006-07, and I’m sure it’s a pleasure for everyone to know that this is actually the last department in estimates.

It’s been an interesting and I think productive and useful exercise. I have some staff in the gallery. As always, we have a little trouble seeing up there with the light behind them, but I believe Brian Manning, my deputy minister, is there. Bonnie Lovel ace is there. Bonnie is the senior financial officer. Nancy Cuelenaere is there. She’s the person we phone late at night when we can’t find something. She’s our acting c ontroller. Darwin Bozek from financial services is there. Marie Iwanow is our new communica- tions director. Maureen Osadchuk from my office I think is no stranger to any of you. Mr.

Chairman, as Minister of Finance I was proud, on behalf of my colleagues in government, to present Alberta’s 13th consecutive balanced budget. It is a budget, we believe, that addresses current needs while leveraging today’s very strong fiscal standing to help prosperity for future Albertans. We have a lot to be proud of in this province. Our accumulated debt has been eliminated. We still maintain the highest credit rating of any province in Canada, and we have the lowest overall tax load in Canada. This budget does build on Alberta’s tax advantage.

There are measures in this budget that will help us maintain our competitive position and enhance the fairness of the tax system. Albertans have already saved $1.5 billion from cuts to personal income taxes between 1999 and 2001. That is a significant number. That includes, of course, implementing the introduction of the 10 per cent single rate. These savings have been protected year after year by indexing our tax system to inflation. I think that’s very important.

Albertans will save an additional $77 million in 2006 as a result of the continued indexation of the provincial income tax system, along with an extra $100 increase to basic spousal and eligible dependants tax credits. As well, another very important program, the Alberta family employment tax credit, which benefits low- and middle-income working families, will be fully indexed to inflation beginning July 1, 2006. Mr.

Chairman, along with the enhancements to the personal income tax system, these changes mean a typical working family with two children can effectively earn up to $37,000 before paying any provincial income taxes. Another 140,000 low-income Alber- tans are also benefiting from chan ges to health premium insurance subsidies that were introduced in April of this year. The income threshold to qualify for subsidies was raised by $5,000, saving Albertans about another $30 million this year. We’ve heard some criticism about our reduction of the corporate tax rate.

I’m not sure that anyone in this House at this point would suggest that that was a wrong move, but it’s important to put on the record why we feel it’s important to continue our target of an 8 per cent corporate tax rate. We were able to move it to 10 per cent this year. What that does is recognize that Alberta and Alberta compa- nies compete in a global economy. It’s not just simply a domestic economy anymore. This will save our businesses about $265 million this year – $265 million, because there have been a lot of other numbers cast around – and it will help us in our world-wide competitive position.

What may be more important, it sets a foundation for tomorrow’s economic growth and job creation. Of course, just to finish the tax section, Alberta has no general sales tax, no capital tax, and no payroll tax. Maintaining a competitive tax regime isn’t the only way that we’re helping Alberta’s future prosperity. We’re also making very significant contributions to savings. Budget 2006 allocates another $1 billion from the estimated surplus into the heritage fund plus another $242 million for inflation-proofing.

That’s on top of $1 billion that was deposited as of third quarter and $345 million of inflation-proofing last year. We’ve also been able to add $750 million to the advanced education endowment fund in the 2005-06 fiscal year. We’ll also be adding an additional $150 million to the medical research endowment fund. I think that fund speaks for itself, and everyone would agree that that has been an amazing investment. The Alberta cancer prevention legacy fund is being established this year with a $500 million deposit.

Proceeds from that fund will go to support the fight against cancer, and as I said in our budget speech, this will be in collaboration with other countries, with other provinces, and maybe, just maybe, we’ll find a cure for some of the cancers that our citizens will face. I want to just do a very quick overview of our ministry key roles, just to remind all of us. There are a number of key areas and functions. They include the office of budget and management; pensions, insurance, and financial institutions; treasury management; and ministry support services.

The ministry also includes, of course, the Alberta Capital Finance Authority, the Alberta Pensions Administration Corporation, Alberta Treasury Branches Financial, Alberta Securities Commission, Alberta Insurance Council, the Credit Union Deposit Guarantee Corporation, and their subsidiaries. Alberta Finance’s vision is “financial leadership that strengthens Alberta.” We believe this budget speaks to that.

Our mission is to “provide corporate financial services and manage the province’s financial affairs and policies in the interests of [all] Albertans.” Our business plan, I’ll just touch on very briefly, has five high- level strategic priorities. These include Alberta’s fiscal framework, Alberta’s tax advantage, investment management, securities regulation, and pension plan governance. In addition to those priorities, of course, Finance will continue to do the day-to-day managing of the province’s finances. We have three core business goals that support our strategic priorities.

The first is fiscal planning and financial management. Our goals are to have “a financially strong, sustainable and account- able government”; to have “a fair and competitive provincial tax system”; and to administer revenue programs “fairly, efficiently and effectively.” Our second core business is investment, treasury, and risk management. Our goals there are to soundly manage financial assets and liabilities for current and future generations of Albertans and, of course, to demonstrate effective leadership in risk management. Our third core business is financial sector and pensions.

Our goals there are to effectively regulate private-sector pensions, insurance, and financial products and services; to ensure that Albertans and local authorities have accessible financial services; to ensure that the

Alberta Hansard May 10, 20061478 securities regulatory system is effective and efficient; and to ensure that public-sector pension plans in Alberta are sustainable. 8:10 Mr. Chairman, that’s a quick overview of our priorities and goals for 2006-07, and now I would just touch on a very few highlights from our budget estimates. Our ministry revenue is estimated at $12 billion, an increase from the for ecast of $11 billion for 2005-06. Investment income for 2006-07 is $305 million lower than the ’05- 06 forecast.

That is because public equity returns are expected to return to longer term averages which are lower than the projected returns for ’05-06 and the effectiv e rising interest rates on fixed income returns. Internal government transfers are $68 million lower than the ’05-06 forecast because of a reduction in the surplus available for transfer from the lottery fund. That is a result of increased funding to ministries in support of various public initia- tives. Personal and corporate taxes are estimated to be $1 billion more in ’06-07.

This is partially offset by the reduced corporate income taxes as a result of loweri ng the rate. In addition, revenue from premiums, fees, and licences is estimated to be $4.2 million higher, and net income from our commercial operations is projected to be $22 million higher. The ministry’s program expense is estimated to be $690 million. This is an increase of about $84 million from the ’05-06 for ecast, and I would like to take just a moment to explain those increases to you. This provides additional funding for the access to the future endowment, a $23 million transfer.

You would all understand that those transfers from that fund and others I’ll mention come out of Finance’s budget. A ccess to the future endowment, a $23 million transfer. Transfer to Health from the cancer prevention legacy fund, about $25 million. Research funded by the medical research and science and engineering research funds, $15 million.

Now, the department’s spending in Alberta investment manage- ment is another part of that, and that is to improve operation capacity, capabilities, and quality assurance, additional private investment capacity, and we are growing and we have to face relocation to address some space requirements. I want to also just take a couple of minutes to highlight a few other areas in our estimates that I think you will find of interest. Our capital investment for ’06-07 is estimated at $6 million.

Of that, $3.9 million is for the department for the administration of revenue and rebate programs, management of investments, and network infrastructure. Alberta Pensions Administration Corporation accounts for $1.3 million to undertake various strategic and operat- ing initiatives and, maybe most importantly, to replace computer equipment. The number of full-time equivalents is always of interest to members, and we do expect our ministry’s full-time equivalents to increase by 48.

Thirty-one of those are within the department, including 29 FTEs in Alberta investment management to sustain current investment operations, to meet private investing obligations, and to improve operation capacity, capability, and quality assurance. The remainder are increases for the Alberta Insurance Council, the Alberta Local Authorities Pension Plan Corporation, the Alberta Pensions Administrati on Corporation, and the Alberta Securities Commission. Mr. Chairman, this is a really quick overview of Alberta Finance’s business plan and budget estimates for 2006-07.

I look forward to hearing comments and questions and answering as many of your questions tonight as possible. However, as in the past if we don’t have the time to get all of the answers to you tonight or if I don’t have the answer, I will commit to getting back to all members in writing before our budget is passed. They heard that. Thank you, Mr. Chairman. I look forward to questions. The Chair: The hon. Member for Edmonton-Rutherford. Mr. R. Miller: Well, thank you very much, Mr. Chairman. It’s my pleasure to rise this evening and participate in the estimates for the Department of Finance.

I would like to thank the minister for her opening comments and particularly for her comment at the end of this evening’s dissertation, where she asked her staff upstairs to have answers to us before the budget is passed. That’s definitely a bit of a commitment on her part and on their part, and I appreciate that very much. The minister has always been good to her word in the past, and I appreciate that as well. I would like to begin by acknowledging my staff who is present here tonight. Dave Kincade is in the public gallery, and I share him with four other opposition MLAs, so you can imagine how hard he works.

He was here until well after midnight last night helping prepare me for this evening’s debate. So I’m going to start off, Mr. Chairman, and rather than editorial- izing a lot, which I am sometimes prone to do, I’m going to try to ask specific questions either to the fiscal plan as it relates directly to the Department of Finance and in some cases more broad questions as they relate to the government’s fiscal plans in general, similar to the comments that the minister made a few minutes ago.

I have to start off talking about the overall government liabilities, which is a conversation that began yesterday during question period and continued a little bit today during question period. The minister accepted that we would discuss it tonight, and I think it’s important that we get that out of the way. My questions yesterday were regarding the government’s total liabilities as represented on page 43 of this year’s fiscal plan tables. What I’m looking at there particu- larly is where it says: total liabilities, $18. 420 billion.

In the same book last year on page 39, fiscal plan tables, the number was $15.610 billion. Specifically, that is what I was speaking to in questions yesterday and today. It’s an increase of nearly $3 billion in total showing in this year’s balance sheet

summary as opposed to last year’s balance sheet

summary. My questions yesterday were if the minister could explain why that number is nearly $3 billion higher than it was a year before and why we’re exposing Alberta taxpayers to nearly $3 billion more in total liabilities given the current economic boom that we’re experi- encing. Whether it’s accounting 101 that the minister was going to share with me or accounting 505, I don’t really care, but I know what my eyes see. My eyes see a nearly $3 billion increase in that line item year-to-year, so that was the question as it related to that in particular. The other thing I want to point out is not a secret.

The minister has acknowledged it in the past, but I’m not sure that most Albertans understand. The minister talks about the net assets of the govern- ment, and I will acknowledge that the number is a pretty healthy- looking number, but we must always bear in mind that even in their own subnotes they remind us that the net assets do not include – in fact, under the Fiscal Responsibility Act they explicitly exclude – pension obligations. In this case that amount is $5.621 billion for this year, the majority of which is the unfunded t eachers’ pension liability.

I’ve mentioned in this House before that that liability will cost us somewhere in the neighbourhood of $30 billion to $32 billion over the lifetime of the agreement if we don’t address it now. So it’s not quite as rosy a picture as the graph would represent. 8:20 Now, moving on to a specific question. On page 59 of the fiscal plan there’s a reference under loan guarantees to Canadian Western Bank. That one in particular caught my eye, and believe me, I’m a big fan of Canadian Western Bank. I bank there. I’ve banked there

May 10, 2006 Alberta Hansard 1479 for years and years and years – in fact, long before they were Canadian Western Bank, when it was North West Trust – so this is no slight on Canadian Western Bank that I’m raising this issue. But I am curious. It shows $2 million as a forecast for a loan guarantee for Canadian Western Bank, and then under the estimated liab ility a negative $1 million, so I’m assuming that means a total loan guarantee for Canadian Western Bank of $1 million, and I’m curious as to why that is there. What is the loan for? Why is the provincial government issuing a loan guarantee in the first place?

I think it speaks once again to the question of whether or not the government is, in fact, out of the business of being in business, particularly since we all know that the Alberta government is the sole shareholder of Alberta Treasury Branches, so we have a major investment in banking to begin with. I would like some explanation as to that. Also, while I’m talking about the business of being in business, I noted that Order in Council 163/2006 this year approved the incorporation of not more than 40 provincial corporations under the administration of the Minister of Finance.

I’m wondering if I could have some explanation as to what those corporations would be and why we need them. Now, on to the issue of resource revenue, and I won’t spend much time here because I spoke to it earlier in the spring session. We see once again where the government is allowing themselves to use $5.3 billion of nonrenewable resource revenue as opposed to $4.75 billion.

Year after year we see this amendment to the Fiscal Responsibility Act where they allow themselves to use ever more of that nonrenewable resource revenue, and it always causes me concern – in fact, a great deal of concern, perhaps more concern than almost anything else in the budget – b ecause we all know that that revenue is not going to be there forever. Everybody in this House and, I’m going to guess, by now most Albertans have heard me rail on about that. I really do believe it’s important.

I believe not only should we have a solid surface plan, as the Alberta Liberals currently have, but it is time for a nonrenewable resource revenue savings plan as I have advocated and many others have over the last year and a half or so. While we are looking at that, I do want to just touch on the rebate cheques, which have been mentioned in the past. Although it wasn’t my first choice of a way to deal with surplus revenue, certainly there were some Albertans that desperately needed that money. I found it interesting, however.

The other day we had School at the Leg., that I spoke to, and I asked all of the kids how they spent their money, and but for a very few they purchased video games. I was disappointed to hear that. I really was b ecause I had hoped that a few might have invested the money a little more wisely. A few went on trips with the family, that sort of thing, and a couple actually had put it into investment savings, education savings plans, and so forth. But, unfortunately, as I was afraid, I’m thinking there will not be much of a legacy left from that particular program.

The minister acknowledged the other night when I was speaking to her in reference to some of the letters I’ve received as finance critic that, in fact, there were some cheques that went astray, particularly in Ontario where CRA, who had been hired to adminis- ter the program, had incorrectly entered some postal codes, so some Ontario residents were receiving cheques. I’m curious how many Ontario residents actually received that cheque and what the total cost to Alberta taxpayers was for that and whether or not there’s any effort being made to recover some of that money.

The minister talked about taxes, and I’m just going to touch on this really briefly. I know that I’m going to run out of time this evening, and I’m disappointed a bout that, but there are certainly a couple of points I’d like to make about taxes, both personal and corporate. Once again, way too much paper. I’m going to move on, and I’ll find that. In reference to taxes, then: certainly, the health care premium tax, which I’ve talked about, again, many times in the past, wondering why we can’t eliminate that. I’m well on the record for that, so I don’t have to spend much time there.

In particular, though, as far as personal income tax versus corporate income tax, she mentioned the $265 million cut for corporate income tax this year. When I add up the basic spousal and eligible dependent tax credit of $77 million and the $30 million in health care premium subsidy threshold improvements, it’s $107 million, so I see a 40 per cent difference in terms of tax cuts to corporations versus tax cuts to individuals. I’ve talked before about being a small business person, and I appreciate tax cuts for business.

My question really is: I’m curious as to why we’re giving more of a break to businesses than we are to individu- als. Now, also in terms of the amount of revenue that’s being raised by tax, there seems, again, to be a bit of an inequity in terms of not only the amount of revenue that’s being raised but also the for ecast for the future in terms of what’s going to be raised in the future when it comes to personal income tax versus corporate income tax.

Again, I think that should be causing some concern for Albertans given that, certainly, corporations are doing very well in this province right now, yet we’re collecting about 2.5 times more in terms of percent- age of income tax from personal income tax than we are from corporate income tax. I’m concerned about the inequity of that again, that perhaps individuals are bearing more of the brunt than they should be as opposed to corporations. A couple of specific taxes I want to talk about. There was a notice on the Alberta Finance website recently about the fuel tax and the taxability of kerosene.

Apparently it has been noted that tax collectors have been incorrectly selling kerosene without collecting the tax. I’m wondering how much tax is estimated to have slipped through our hands, whether or not the voluntary disclosure that is expected of those tax collectors is going to recover the amount that we think we’ve lost, and what step s are being taken to ensure that it’s not happening with other hydrocarbon fuels? We have a bill before us in th e House right now which is the Alberta Corporate Tax Amendment Act. In that there are two things that caught my eye.

One is an amendment to the Elections Finances and Contributions Disclosure Act where related corporations apparently currently have a loophole that allows them to go beyond the $1,000 total tax credit. So there are amendments being made here. Once again my question would be if the minister and her staff could identify for me how much tax has managed to slip through Alberta Finance’s grasp by not having corrected that loophole sooner. Then, likewise, there’s an amendment being made to the Insur- ance Act. Apparently, some insurance companies were avoiding paying their insurance tax.

This amendment is clarifying the way companies are defined by the Alberta Insurance Act to make sure that, in fact, that 3 per cent tax is collected. Again my question would be: how much tax has slipped through our hands over that period of time? There’s also a question about the special broker tax. I have to admit that I don’t understand an awful lot about this special broker tax, but if I go to page 203 of the estimates, the numbers in terms of what we’ve collected in the past and expect to collect in the future on the special broker tax jump around a fair amount. Budgeted last year was $750,000.

The for ecast is that we’re actually going to collect $1.75 million, and that’s also the estimate for this year. I’m curious about that because I’ve had some corres pondence from a person who has done some work with Alberta Finance. I will table the correspondence either this evening or tomorrow. I’m going to guess, however, that the minister is probably aware of it. This

Alberta Hansard May 10, 20061480 person is concerned that millions of dollars may be slipping through our hands because, again, of some l oopholes in that special broker tax and the way it’s collected and administered. So I’m curious about that. I’m wondering if maybe some steps may have been taken already to correct that, and maybe that’s why the number jumped from $750,000 to $1.75 million. I don’t know, but that is the question that I had in my mind. 8:30 Income trusts. I just want to go there quickly. Certainly, it’s recognized by the Alberta government.

In fact, in a document on their website called the Alberta Tax Advantage, they refer to the fact that Alberta may be losing an awful lot of money on income trusts. I think the number was about $400 million per year. It indicates on the Finance department website that as part of the ongoing review of the tax system this issue is being examined. I’m curious to know where that’s at now, whether or not there’s going to be some action on income trusts. While I’m mentioning it, I noted that the B.C.

Securities Commis- sion is warning their investors in British Columbia to do their due diligence, to be very careful with the homework when it comes to investing in income trusts. Th e alert cautions people to review carefully their current investments because in fact they may unknowingly or unwittingly be invested in income trusts right now. I didn’t see a similar caution on th e Alberta securities website. So I’m curious as to whether or not we should be at least cautioning people in Alberta about that, making sure that they’re aware of the risk that they may be exposed to unknowingly.

We had an exchange in the House today about a particular restaurant bill that was submitted and paid last year as it related to the automobile insurance review board. But I think that those questions, although they were very specific to one meeting, did speak to a broader issue, and the minister referred to a hosting policy. I think that was in reference to my questions about the purchase of alcohol. I’m wondering if I might have access to that hosting policy so that when we’re looking at these sorts of expenses in the future, we’ll have a better understanding as to exactly what the hosting policy is.

I’m also curious to know whether or not the policy is or was that a credit card receipt only is good enough when an expense for hosting is claimed. That’s all we got back from the access to information request that was sent in. There may have been more information although it wasn’t indicated in the response from freedom of information that anything was excluded in relation to a breakdown of expenses. I’m curious whether or not it’s department policy that a credit card slip is good enough.

If that is still the case, then I would certainly suggest that we should be amending that policy so that all Albertans would have an opportunity to know exactly what they’re spending money on when it comes to those sorts of hosting expenses. I’d just like to mention that th e Edmonton Oilers are apparently ahead 1-nothing. Both the minister and I are anxiously waiting to receive news, and I just had that passed to me. Now, the Alberta heritage savings trust fund. The minister mentioned the billion dollars that’s going in this year plus the billion dollars that was put in from last year’s money.

I could spend the rest of my time tonight talking about the heritage savings trust fund. But what I will say is that right now the Fiscal Responsibility Act mandates that the return on investment less the management fees and less the inflation proofing has to be put into general revenue. I would strongly suggest that we should change that piece of legisla- tion so that the return on investment minus those costs can stay in the heritage savings trust fund, where it belongs. I’d like to mention investing in tobacco. I’ve asked questions in this Legislature before.

I actually have a motion on the Order Paper, Motion 608, that would mandate that we divest ourselves of investment in tobacco companies. We specifically excluded investment in tobacco companies in the government’s Bill 1 this year, the cancer act that the minister was referring to. Unfortunately, with my motion being 608 and the session winding down – I think we’re at Motion 510 right now – clearly this is not going to be dealt with in the House this year.

But it’s important, I think, in today’s climate that we recognize that investing in tobacco companies, although it may return a profit, is certainly not ethical anymore. I think it would be prudent for us to divest ourselves of those invest- ments. Very quickly I’d like to touch on the payday loan companies. There has been some talk from the federal government that they may actually allow the provinces to regulate payday loan companies.

Right now they’re actually limited at 60 per cent interest, which I find incredibly high, but I’ve read some reports that at times on very short loans these companies are charging up to 50,000 per cent interest, which is incredible. So I’m curious whether or not there’s been any action taken on this matter by the provincial government, whether or not we’re preparing for that eventuality. It certainly looks like it’s going to go ahead, and I’m wondering where we’re at with that. I look forward to some answers either this evening or later. Hopefully, I’ll have another chance to get up and ask more ques- tions.

Thank you. The Chair: The hon. Minister of Finance. Mrs. McClellan: Yeah. I’m going to really quickly try and whip through some of these. I really appreciate the hon. member and the manner that he’s raised these issues tonight. Rather than long dissertations we’ve actually got some really good questions here, and I hope I can provide some really good answers back. On the heritage savings trust fund. You’re right: it was legislated that the dollars would go back to general revenue and, of course, also legislated that when we were debt free, we would begin to inflation-proof it.

Until that legislation is changed – and it may be at some future point – of course, we are investing dollars into the fund, which are about equal to leaving the money in the fund. To me, that was incredibly important, and we’ve talked about that. I want to see that fund grow. I want to see it as a revenue stream for future years when it may be needed. On tobacco companies. We did have this conversation, and we had the question at one point.

I believe I checked on how much investment there was in tobacco companies, and I believe the numbers – and my staff will probably be shaking their heads violently either up and down or back and forth – are about one- quarter of 1 per cent of the investments, so not significant. I don’t think it would be difficult to say that you wouldn’t have a direct investment in a tobacco fund. But you know that there are funds that are – I’ve been searching for the right word; I’ve lost it out of my head – a conglomerate of businesses where you might have a small portion of that that might be a tobacco company.

But the point made on direct investments into tobacco companies, I accept that recom- mendation, and we’ll certainly raise it with our investment manage- ment group. Hosting policy. You know, we talked about this in the House. I suppose that $75 a person is not a high cost for an entire meal at a rather upscale restaurant. I don’t eat those very often. Many of us in this House probably don’t. At times you’re compelled to. Most of my receipts are from Dairy Queen, Joey’s Only, and the pizza

May 10, 2006 Alberta Hansard 1481 places. Actually, in many ways I prefer their f ood. But I have a personal policy in that if there is wine used at a meal that I’m hosting, I pay for that separately. I don’t drink it myself, but I don’t object to anyone else having a drink of wine with their meal. In fact, physicians will tell you that a glass of red wine is probably good for you; it’s not good for me if I want to keep my driver’s licence. I haven’t learned the difference between a glass and a pail, so besides the headache not drinking it at all is a good thing for me.

I’ll get you the information on the special brokers’ tax. I suspect that your assumption is the correct one. I didn’t have time while I was trying to make notes to look that particular page up. Income trusts. I have nothing really new to report to you except to say that it is a part of our overall tax review. You’re right on the estimate. It was our number that it could be as much as $400 million there. As to whether we put anything in on a caution, I don’t think so. I think that perhaps my staff will help me there. That might be more in a consumer line than our role, but they’ll tell me.

On the tax slippage I can tell you that there’s not a lot. You know, it’s not impossible, but as soon as this is found, it’s rectified, and tax is collected as much as you can from companies that may have missed paying. 8:40 Kerosene. I don’t have the answer; I’ll get it for you. But I think we only collected about $5 million in total on propane, so I would suggest that kerosene would be a much smaller part of the sales. So the slippage there would be less, but of course you don’t want any. If you have a tax and it is to be collected, it should be collected in the manner in which it was put in place.

Health premium. We’ll continue to discuss that. I think you agree that the move we made this year to take another 140,000 Albertans off of that roll was a good move. I will just take some exception to the comparison between the corporate tax and the personal tax because while our personal tax saved about $107 million this year, we have saved Albertans $1.5 billion over a period of from ’99 to this year because we implemented those changes first. The same with small business: we reached our target on small business first.

I have heard from some small business owners that they would like us to consider revisiting that again and look at either increasing the threshold, which we raised to $400,000, or another part of the per cent or a percentage drop. Certainly, we said that we accepted their entreaties on that, and we would look at that as part of our overall tax review. On the cheques astray: not many. I don’t have the final figures. I’m sure one of my staff probably does. Canada Revenue Agency made every attempt to have those cheques returned, and I think they’ll probably be quite successful.

I do want to reiterate: it was a wise thing to use Canada Revenue Agency to deliver those cheques. We don’t have a database that is as complete as theirs. I have said that that entire exercise will cost us under $10 million. If anybody can administer a program of $1.3 billion to $1.4 billion for $10 million, I think we’d be overjoyed if all of our administration costs were that low. We have found Canada Revenue Agency in this case very good agents to work with.

They’ve been very accommodating with people who have been missed, have worked with them to get their ’04 tax return filed if they happened to be a spouse or someone who didn’t. If they were persons who had children and hadn’t registered for the child benefit because they didn’t qualify, they’ve been very accommodating with those folks. I think we’ve been able to address most of the concerns people had. The toughest one in that one were the people who had lived in the province who left at the wrong time or, indeed, who came back at the wrong time. You have to set a date. September 1 was our date.

That was our centennial date, if you wish, and we had to set a date. You have to set a time. The hardest one was to correspond or talk with those folks on the phone who just missed that deadline or date, but as I pointed out to them: when you decide to do this, you have to choose some dates. You have to put some parameters around the program. The Auditor General will be watching very closely to make sure that we stuck to those parameters. On the increase in revenue: we do have a surplus plan.

I think that using some of those revenues in savings, in the heritage fund, in our various endowments is a good way to save. I’m in support of saving more, but I’m also conscious every day in this Legislature of asks from the House – sometimes all sides, most times one side – for more money for health, for more money for education, for more money for seniors, for more money for continuing care. What we really do is try to strike a balance to ensure that we continue to have the best health delivery system, the best education system, the best system for caring for our people who are vulnerable.

I have some confidence in that because I happen to have had the responsibility of being the minister responsible for seniors, and I know that many of the programs that we have in this province are not available to people in other provinces at all. I speak of AISH for one, a program that’s very good but not available. So it’s a balance. As our economy grows, as our population grows, we will attract more people. We certainly find seniors coming to this province in record numbers. Our net migration of all people is still positive. We still continue to attract a large number of seniors from other provinces.

There’s a reason for that. We’re pleased and proud that they choose Alberta to be their home, some of them because they’ve followed their children that have come here to work, some of them because they just see the benefits of what’s available for seniors in this province. The other point I want to make is on the personal tax side.

I would just remind all members that our personal exemption is double anywhere else in Canada, including the federal government, and I remind all members that on the tax side, if we taxed at the same level as the province next to us, which is British Columbia, we would collect an additional $7.2 billion in taxes. That’s $7.2 billion that Albertans have that citizens in other provinces don’t have. I think it’s positive, and it’s good for our people. On the creation of corporations the simple explanation is that through our investment management division they set up those corporations for managing investments.

So if you watch the OCs, which I’m sure that you do, you will see periodically where we remove a number of those companies. They’re holding companies for investment, and when we’re finished with that particular investment, we pass an OC to end that company. So that’s really what that is. Canadian Western Bank. Nobody really told me, but I’m going to make what might be an educated guess. Ag Financial Services: sometimes the syndication on loans for our small businesses will take last position. Maybe that’s where it is. It’s a small amount.

But to our small businesses, particularly our value-added businesses, financing is sometimes difficult. We’re very happy in the agricul- tural sector, which is one of our largest manufacturing sectors, to be able to work with our companies and syndicate or broker a loan utilizing other banks with it. I’m sure that somebody in my department will give you the absolute on that. Overall government liabilities. We addressed that earlier today. I don’t have the last year’s figures, but if I look at the columns on page 43, I see a 2005 actual on liabilities of $18.687 billion.

I see a forecast for ’06 of $17.927 billion, and I see an estimate for ’07 of $18.420 billion. Those are the figures I’m looking at. I don’t know

Alberta Hansard May 10, 20061482 where – the $15.610 billion might have been an estimate of some- thing somewhere, or it might have been a calculation, but we will continue to have that discussion, and I’m sure we’ll be able to sort that out. That’s as far as I’m going to go there. I appreciate all of the questions, and for anything I’ve missed I’ll be sure to get the answer to you. The Chair: The hon. Member for Cardston-Taber-Warner. Mr. Hinman: I guess there’s a benefit to being here early. Thank you, Mr. Chairman.

I appreciate the minister and the answers that she has given so far and for the details that we received in the financial statement. There is no question that Alberta is the place to be. When you look at page 63 of the fiscal plan, it’s very encouraging to see our provincial tax rates there compared to the rest of Canada. That’s very encouraging, but the question always is: are we doing the best that we can do? 8:50 I just want to turn to page 65, first, on the historical fiscal

summary, and go over a few things there. On line 2, corporate income tax, it shows that it’s levelling off. I believe that in 2005 it’s about $2.6 billion, and it goes down to approximately $2.18 billion by 2008. This province, if my memory serves me right, promised a corporate tax reduced to 8 per cent. We haven’t reached that yet, though we’ve attracted many corporate headquarters and things here to the province, and I’m wondering if that drop is because there are future plans to drop it another 1 per cent per year. [Mr.

Danyluk in the chair] I guess I’m somewhat curious because, normally, when taxes are dropped, you see an increase. As we see in personal revenue tax, we’ve been lowering it, and you’ve raised the basic exemption, yet it’s continuing to rise, which is encouraging, showing good economy and prosperity. But it’s not showing up in the corporate income tax. That raises some curiosity for me there on why you feel it’s going in that direction. Another question. On line 7, other own-source revenue: I’m not quite sure I understand exactly what that is.

Trying to link that with previous pages, it seems like they don’t quite add up. If the minister could expound on that a little bit, I would appreciate what exactly is entailed on that line. Turning to page 62, Alberta being the place to be and the benefits that are there and the surplus that we’re having, I ask the questions on behalf of Albertans: why are our premiums, fees, and licensing charges all going up?

It just seems like we should be able to hold it where we’re at or even reduce it in some areas; for example, provincial camping and those areas where Albertans truly can go out and enjoy what the province has to offer and want to stay at home. Yet we’re edging those up and looking at further increases next year. I’d encourage the government to reconsider that on behalf of Albertans so that we could enjoy our home province and not see an increase in fees, especially at this time of fiscal surpluses. On page 61, full-time equivalents.

This is a question that I’ve asked before, and the Premier continues to keep saying many times during question period that we have 22,000, but on page 61 it shows that we’ve got 26,800. We’re looking at 27,000. I guess my question is on the accuracy, making sure that this is the accurate one, and perhaps understanding that a little bit better. Page 60, the allocation of lottery fund revenue. Something that’s been brought up many times and I think will continue to be debated is that we see under Gaming that the biggest allocation goes to horse racing and the breeding renewal grant program.

I believe I’ve asked once, and I didn’t get the answers on the actual revenue generated from horse racing and what percentage is going back to horse racing. It just seems lopsided that horse racing, a fairly small industry, is getting such a huge percentage when many of our municipalities and charities and other things really rely on the community facility enhancement program and community initiative program, which together is just barely $68 million, almost equalling the entire horse racing and breeding program.

I just wonder, you know, in having to set priorities, you’ve mentioned it in here many times before, including this evening, that it’s a tough balance. Everybody is wanting more money. I’m curious about what the actual gross revenue is from that because the Minister of Gaming always says: that’s just a percentage going back. If you could enlighten us on that, I would appreciate it. I also was curious about the Canadian Western Bank, and because it’s been brought up, I won’t worry about repeating that. That was something of a benefit for us to understand that.

The question that I have at this time is on the overall spending. I don’t have the page number written down here. Of a $32 billion budget, in a short period you’ve got the revenue going down to $30 billion, if my memory serves me right. Mrs. McClellan: What page? Mr. Hinman: I can’t find it. I don’t have it written in my notes. I apologize. I’ve got to go from memory now. I believe that we’re looking at a $1 billion to $2 b illion loss in revenue, that you forecasted two or three years down the road, yet our spending has already surpassed.

Maybe that’s going back to page 65, line 10, for a total revenue of $30 billion, which is already less than our current spending. That raises a great deal of concern that we’re already past a sustainable budget when by 2008 we’re down to $30 billion in revenue. One of the questions that I guess I have – on page 64 you have an excellent chart showing the changes in prices and, you know, how it affects the dollar, the natural gas prices, or the exchange rates going up and down.

But when I look at the production above that, it shows that production levels really aren’t going off and that we’re able to sustain those production levels. So I guess I’m concerned. What are we trying to show there? You know, is it: let’s not show that we have too much money so that we can restrain the budget? Yet we’re spending an enormous amount in the projections. So I worry a lot about that. It brings up a question. When I look on page 64 at the bitumen production, we’re going from 1.2 to 1.4 to 1.5. With that increase and the price holding there, I’m wondering if this government has a

schedule or an estimate on when that royalty relief that those big corporations are receiving to pay for their infrastructure is coming due. When will that kick into the budget? Is it after 2008, 2010? We’ve heard a lot about that, and I’m just wondering if you have some estimates. Because of the increased price and the royalty that they’re getting back, are we going to have a crossover there? Perhaps you could share that with us. That would be helpful. Just an aside, I guess.

With the dollar value and your chart on page 64, I’m wondering if you have any estimates – I’ve been told that in health care there’s a huge cost in U.S. dollars for equipment and things that we’re bringing in and drugs and whatnot. With the dollar rising, would that offset and show a significant reduction in our health care expenses? I’ve had many people from the Calgary health authority and other areas indicate to me that we should be seeing some balancing there between the two. If you could share something on that, that would also be helpful.

May 10, 2006 Alberta Hansard 1483 A question – and I can’t remember where I picked it out, so I apologize; it’s mentioned in a few places – about alternative financing. I’m wondering if that’s just P3s or whether the govern- ment has some other programs that they’re looking at.

My question in regard to that is: when we look at these P3s, and I guess I kind of look at P3s going back to some of our history, whether that’s the magnesium plant that the government got into or Swan Hills – it seems like there was another one, but I can’t remember now; I didn’t write it in here – we’ve learned that we get hooked for that anyways. I guess that Gainers is one that shows up in here, where we still have a debt that we’re paying for, and it’s been so many years. I was shocked to see that still coming forward. [interjection] Yes. He still smiles at us, thanking us.

With such a great rating, that you mentioned earlier, the triple-A rating, do we really do better? Do the studies show that rather than just going out and tendering it and having it done as opposed to a P3 where those people have to look at their expenses and overall, if they’re borrowing money to put that in place – what’s there? Are they at prime plus 2? Are they a double-A, a single-A rating? Are we really benefiting the province with the great triple-A rating that we have and the surplus that we have in entering into P3s? It’s just, I guess, a question that many people have asked me.

You know, if we have the money, why would we be going to second or third sources if in fact we can pay it and we’re not having to pay any interest? It does cost them more. They’re borrowing. They don’t have the good rating. It’s another area where curiosity definitely intrigues me. 9:00 I want to turn now to page 44, on the revenue again. One of the specific questions that I have is – we’ve had a tremendous sale on lands and, you know, a $3.4 billion forecast for this year on land leases and those areas, and then our income goes down significantly, almost to a third in three years.

I guess that I was wondering on those leases: how long term are those? Are we looking at a five-year lease? How do you estimate that and realize that it’s dropping that much? Is there the potential like the crude oil and everything else that it’s going to stay the same and that income could continue if the market stays where it is? Or are we definitely in a thing where this was the year where we put up a huge amount of our leases, and they were bid, and now we’re not going to have any income for five years? If you could tell us a little bit on, you know, what percent- age.

Do we have 10 per cent a year coming up and they just rotate through smoothly? Or is this cyclical and coming and going and there is no chance of an increased, I guess, revenue coming in from land sales like we’ve had this current year? On page 59 one of the things that caught my eye is the Agriculture Financial Services Act. We’re going down from $35 million to $30 million. In such a tough time for agriculture it raises my curiosity on why loans would be going down so much, what the forecast is. The loan guarantees are being reduced there.

I’m just kind of wondering if you could explain that bit of phenomena for us. I guess just a few things that I’d like to ask and repeat once again. What are the plans for reducing corporate income tax? Are you planning on fulfilling the promise of reducing it to 8 per cent? What is the schedule? It just seems that in such a time we really need to look at and address legislation on what to do with the surplus. It just seems wrong.

When we have such a tremendous amount of money coming in – and both you and the Premier have mentioned that it’s much harder to govern with so much money than it was without money – perhaps the best way to reduce that money and to not look like we’re so flush with it is to have legislation rather than policy on what we’re going to do with that surplus. Currently it just seems like there’s a policy, and policy is very easy to change;

whereas, we grabbed the bull by the horns, we passed legislation, and we said that all surplus was going to go to pay off the debt, and it served us very well to do that. It just seems like the right thing to do to pass legislation now on what we’re going to do with that surplus. We can have good budgets. We can look at, you know, infrastruc- ture, health, education, all of those things, and put in a good budget. Let’s stick to that budget, and then when we do have a surplus – and I do once again want to thank the government for always being conservative.

I see nothing wrong with pitching it in low and coming out smiling, especially if we have the discipline on what we’re going to do with that surplus. To me that’s very much up for debate. But it just seems like we should be putting 50 per cent of this surplus into savings and perhaps 50 per cent going back to the taxpayers. You know, like I say, I’m open for the debate wherever you want to go on that, but if, in fact, that was the law, then we wouldn’t have all of this tussling over who’s going to get it.

We’ve got this extra money, and it just seems like it causes us a lot of grief, as it does with most families when all of a sudden they have a windfall. Everybody all of a sudden is your best friend, and everybody has these special needs, and we’ve got to have it. So I think legislation would be in the interest of Albertans. The things that I want to point out and one that I brought up the other day: the propane tax of $5 million that you referred to earlier tonight. Propane is one of the green powers. It’s clean. Why don’t we reduce that?

We produce 10 billion litres of propane in the province, and we only use 2 billion, 20 per cent of our production. It just seems like that’s an area where we could put the incentive in and remove that tax off propane, which I believe used to be back in the ’80s or ’70s. If we could utilize that, what it would do to benefit Alberta and the pollution that we have. So I would encourage the minister to look into propane and see if there’s a way that we could increase the incentives. Once again, the number one concern is to eliminate health care premiums. That would be a great benefit. You’ve taken a step.

Everyone appreciates reductions, but we could reduce government size. You’d have full-time employees that you could utilize elsewhere by eliminating that whole area. We continue to encourage you to do that. Yes, we have the highest basic tax exemption, but we could continue to raise that and benefit those people, perhaps, to the low-income cutoff level of $20,000. I’m not sure how much. If you could tell us what percentage of that $5.8 billion we’d lose by raising it another $5,000, I’d appreciate that.

To look at when we have the surplus to actually refund – you’ve mentioned that Canada Revenue did a great job of distributing that, but do we not have our Alberta tax? We’re being charged at 10 per cent. It just seems like the logical thing: when there’s a surplus, that means that we’ve overtaxed. We’ve got a windfall. To me it seems like the first place it s hould be going back is to those people who have paid tax if we’re not going to put it into savings. We could do that on a refund on the personal tax. We collected $5.8 billion. You have the numbers.

You could’ve given $1.4 billion back, you know, 25 per cent refund back on our personal tax or, on the same point, on our property tax. Every town, municipal government is definitely struggling. We see the inflation there more than anywhere, trying to keep up with infrastructure, the roads in those areas. I’d encourage the govern- ment to look at refunding property taxes. I also would like to encourage the government to look at perhaps increasing the per capita payment to the different municipal governments so that they could look after more things on their own.

These surplus revenues: if there was to be a per capita dividend of, for example, the $400 that

Alberta Hansard May 10, 20061484 was given out this last year, if that went to municipal governments. There are many of those that still have debts that they’re having to address. It just would be great if, in fact, they could receive that money and that they could be out of debt and not have to look at increased property taxes. To close, there’s no question, I guess, that we’ve started many funds.

I’ve forgotten what page those are on now, but we’ve got the Alberta Cancer Prevention Legacy Act, the Alberta Heritage Savings Trust Fund Act, the Alberta Heritage Foundation for Medical Research Act, the Alberta Heritage Foundation for Science and Engineering, Farm Credit Stability Act, scholarship act, and the Financial Administration Act. We’ve got many of those that have been created and the one that has been mentioned twice here already, but we still have that liability for the teachers’ pension fund plus two others.

I’ve got my notes all messed up here now so I can’t remember which other pension funds they were but, basically, amounting to $4.8 billion, if my memory serves me right. Why do we not start a fund and at least put this surplus in there? If it takes us four years, one year, or 10 years to deal with the teachers, let’s put it in there now and have a trust fund. Thank you very much. Mrs. McClellan: Well, again, another great series of questions, Mr. Chairman. In the interests of making sure that other members can get in and make their comments, I’m going to try and rattle off a few of them pretty quickly.

On the whole issue of education property tax – I’m sure that’s what you’re talking about – I’m sure that the Minister of Municipal Affairs would want to speak to this, but I will just quickly remind you that there is an exercise occurring. The minister is leading with the AUMA, AAMD and C to establish roles, responsibilities, and relationships.

Once that exercise is done, I think we’ll all clearly understand whose role it is, whose responsibil- ity it is to pay, and maybe the more important discussions around there are the building of relationships because it is the same taxpayer. 9:10 We did reduce our mill rate by 7 per cent. As you’ve read in the papers recently, this was much appreciated by cities, I’m sure by all municipalities. Some of them will use that room; some of them will allow savings to taxpayers. On the Alberta tax, a 10 per cent flat rate, you have choices when you make tax changes. Raising the personal exemption is one way to do it.

It’s a way that we can do it that we can assure the sustainability of it. Remember that we index that, and remember that in Alberta it is double what it is for any province in Canada, including the federal government. [Mr. Marz in the chair] So you have a personal tax advantage there. I’ll be honest. I favour increasing that exemption. I think you’re absolutely right: if we don’t need the tax dollars, we shouldn’t collect them. They should stay with people.

But the one thing I want to make sure of is that when we make a tax reduction, it isn’t at the expense of funding important programs like health, education, support to seniors and those who are vulnerable. We depend on those revenues on a sustainability basis. While we’re enjoying high revenues now, I have been here when those revenues weren’t there, and I had to be a part of making some very painful decisions on reductions. It was not easy. Our entire civil service, our entire medical, teaching, universities: all of those people took rollbacks, which were not something that we would want.

In fact, the people in this House did too at that time. Better that you ensure that you could fund these things on a sustainable basis out into the future so that you do not have to face that. So we’re careful when we make our tax reductions, but you will not have to convince me to continue to do that as long as we can sustain it. It’s proven that if you leave more money in people’s pockets, Albertans will generate the economic growth here. That is well demonstrated. Should we legislate surplus?

Perhaps at some point that would be a good thing to do, but I would suggest that at this point, when we have just come off of debt elimination, it was important in this past year that we invest in infrastructure. So to tie your hands with those infrastructure pressures there might not be the wisest thing; however, as it turns out, when you look at saving, giving back, and investment in capital, we almost came to that point in the end of how much we saved through endowments, the heritage fund and how much we put into capital and then how much we gave back. It’s not that off.

So maybe there is a point we could do that. Propane tax. Certainly, I’ll look at that. As part of the tax review I know that my staff have done that. You make a good point on it being a green fuel. Health care and the rising dollar. Most people know that in my other life I’m a farm person, and we happen to buy equipment that is manufactured in the U.S., and most of the parts that we buy are manufactured there. We can never understand how long it takes for that change in the dollar to show an advantage in the lowering of the cost of machinery and parts. I expect it’s the same in medical equipment and drugs.

It seems to go really fast one way and not quite so fast the other. I would expect that there should be some change there because certainly we’re hearing that manufacturing businesses in this country are feeling it, so we would hope there would be some balancing. But we’ll do some investigation on that. P3s. We really have one P3, and it’s a darn good deal. If you could enter into another one of a similar nature, I would expect that most people would recommend it.

While it may seem that it costs you a little bit more at the outset, the fact that you can have a warranty and maintenance on a road for 30 years and get it in under the time frame, which is incredibly important in this city, where we’re seeing such, such growth, and have those access and ring roads is important and the same with Calgary. But remember that all of those are examined. There are no automatics there.

We have an external committee that gives us advice on those, gives advice to the Minister of Infrastructure and Transportation as well as Treasury Board, and that is a method of alternative financing that we will continue to look at as an option but only if there’s an advantage to us to do it. Although we have a triple-A credit rating – and, yes, if we were borrowing, which we’re not in a position of needing, we would borrow at a favourable rate – it may make the better sense in the long run to do a P3 if you’re getting things like maintenance, warranty, and coming in a year or two earlier certainly doesn’t hurt.

The provincial tax rate. You asked about the corporate tax rate on page 65. Remember that we started at 15.5 and we’re down to 10 per cent. Yes, we are going to 8 per cent, but that’s not what those figures show. It’s not an automatic. When you reduce the rate, you would expect that it would take two to three years for the economic advantage to start to show the benefit back. It may be sooner in this economy, but as always we’re prudent and conservative in our estimates. The premiums, licences, and fees going up. That’s a difficult one in some ways, but we really consider that that is a cost of doing business.

That’s really what it’s to cover. We’ve heard a lot about our campgrounds needing refurbishing, upgrading. Our campground

May 10, 2006 Alberta Hansard 1485 rates are pretty reasonable. In fact, for persons who don’t have a lot of disposable income, there are a great number of absolutely free camping facilities in this province. So it’s a balance. They need it to keep those campgrounds in good shape, to make sure that they’re good pl aces for people to visit. But our rule here is that your premiums, your licences, and your fees cover the cost of doing business. FTEs. I spoke to hours. I’ll check on what you asked on the numbers that are quoted to make sure that we’re quoting from the same thing.

I will give you that information at another point. Horse racing. It’s not going to help to explain this because this isn’t a rational discussion. The rational discussion is simply this. The Minister of Gaming got up in this House one day and answered this question as best as I’ve ever heard anyone do it. If you don’t put a quarter in a slot machine, if you don’t lay one wager at a racetrack, they will generate nothing. So what Horse Racing Alberta gets is what they earn. I think you understand that. However, you did ask a question on how much of that goes to the fund.

I checked the figures with the good minister rather than having him get up and do it. He said I could, so we’ll see how I do. Fifty-one per cent goes to Horse Racing Alberta, 15 per cent to the operator, and the balance to the lottery fund. So you can just do the math. You asked what the total was. I didn’t have time to do it. I will after I sit down. But that is it. I do want to mind everyone that 8,000 people are employed in that industry. I invite people to go over there, which isn’t very far, to Northlands Park, and go to the back stretch. I especially invite the member who has this in his constituency. I do.

I’d be honoured to go with you. I think that if you had the opportunity to go to that backstretch to talk to some of the people there who have gainful employment, who are so proud of the jobs that they have there – and these are people that wouldn’t necessarily have a job anywhere else. The self-esteem, the pride, and the joy that these people have in working with a beautiful animal like a horse to me is worth it right there. 9:20 But beyond that, the financial contribution to this province is significant. It’s a part of the proud history of this province.

Alberta has the most horses per capita, if you wish, of any province in Canada. The horse industry has been a very proud part of the Alberta history, not just in racing but saddle. You need the complete industry. You really do. Spruce Meadows. Who can measure the value of Spruce Mead- ows to Alberta and to Canada? The number one facility, above Aachen now. The number one facility in the world. Attracts people from everywhere who come for the beauty of show jumping and dressage to some point, but the international contacts that are made there and the emphasis on international is incredible. The pleasure of horses.

The stables that are just down the road here give so many people a lot of joy. I used to bring my grandkids to the zoo for a little while. You know, they live on a farm, and they’d come and go ride the horses at Valley Zoo. I said: what’s wrong with this? The horse industry in its entirety is so important to this province, and I think we all had a little thrill when Brother Derek was racing at Santa Anita and won and a little sadness when he raced in the derby last Saturday and came in fourth, but still some pride that an Alberta owner had a horse of that quality.

So if you have time some time, go over, especially on Alberta days, special races that are for Alberta-bred horses only, and just look at what this industry does do for the province. If everything that we were involved in had the type of return this one does, it would be quite great. Royalty relief in the oil sands. I think the larger part of the return will start to come in in ’08 and upward. We’ll get that information absolute for you from the Minister of Energy because I’m going off of memory. Uh-oh, I’m getting a letter on the horse, I think. Maybe not.

We’re starting to get revenue of some significance now, but that, of course, changes when the capital investment is paid. It seems to me that it starts in a more major way in ’08, and then maybe ’11 is the next larger part when this comes off. Production restraint land sales. Land sales are a function of the market, and we have a lot of land. We’re not selling it all, even though those were very high sales. But I think it’s a function of the marketplace today that encouraged people to make those invest- ments.

I will ask the Minister of Energy to give you the absolute, but when they buy a lease, they have to develop it in a certain time frame or it reverts. I don’t remember exactly whether it’s five years or what it is. That’s just a little bit outside of my bailiwick. I know that you had a few other things, but I know that there are others that want to get into the conversation. The Chair: The hon. Member for Edmonton-Highlands-Norwood. Mr. Mason: Thanks very much, Mr. Chairman. I appreciate the minister leaving me some time to get in on this discussion.

I’m going to, I think, just want to talk about some broad policy ideas, throw out maybe some of my ideas and ask the minister in sort of a broad sense what her thinking is with respect to some of these ideas. I’d like to start with the question of the resource revenues that the province receives and the royalty rates that we receive. I’m wondering how the minister sees looking at royalty rates on our oil and gas, which are the declining revenues, on the coal-bed methane, and on the oil sands side. I note that the royalty regime that we’ve got in place now was done I think when oil was about $15 a barrel.

Is it suitable for today’s market? I guess from our perspective royalty rates should return a maximum amount of the value of the resource, which does belong to the people of Alberta, without in any way significantly impacting the exploration and development of the resource. We want to see the resource continue to be developed and exploited for the benefit of the province, so we wouldn’t want the royalty rates to really interfere with that, but we wonder if you couldn’t sustain, actually, a significant increase in royalty revenue given the world-wide shortage that now exists. It’s apparent, Mr.

Chairman, that we’re either at or very near the world tipping point in oil, where the supply of oil will no longer be sufficient to meet the demand on a global basis. That’s the case that I think most economists believe, that we’re going to see sustained, almost permanent, upward pressure on oil prices. I see that the department is estimating in 2006-2007 a price of $50 a barrel. Well, it was past $50 a barrel some time ago, and I think most estimates are that it’s going to continue to rise. We’re at $70 now, and some people are talking about the days of a hundred dollars a barrel of oil being not too far off.

I see that in the budget the government lists a number of firms that are engaged in forecasting oil and gas prices and so on, and I saw the graph about the high, the medium, the low, and the aggregation, and some of the information is not publicly available because it’s proprietary and is purchased by the government on the understand- ing that they won’t release it. I for the life of me can’t understand how we’re expecting the price of oil next year to be $50 a barrel. I think being conservative in your estimation is a good thing, believe it or not.

You’d rather be a little under than a little over, but you don’t want to be way out either way. I think that we have often been way out. Looking back over the last 10 years or so, that’s been fairly common.

Alberta Hansard May 10, 20061486 I want to talk a little bit about tax policy. The government is continuing the policy which was announced by Steve West, when he was the minister, of taking the corporate tax rate from 15 per cent down to 8. I happened to be at the Edmonton Chamber of Com- merce luncheon as a newly elected MLA when Dr. West made that proposal. He also talked about a long-term plan for education property taxes, which I want to come back to as well. I guess the question I have for the minister is: what purpose is served by continuing to reduce corporate taxes? What is the policy objective?

In a hot economy, a very hot economy has the minister received any advice or suggestion that, in fact, cutting corporate taxes at this point may be very inflationary? We know and I know that not only municipalities in the public sector but small- and medium-sized businesses are very hard-pressed to find labour, and the cost of labour is rising very dramatically. Even McDonald’s is advertising for workers and has jumped up its hourly wage by at least a couple of dollars, as far as I understand.

I’ve talked to several mayors in the province whose engineers are being enticed away with very, very lucrative offers and contracts. So they’re losing their qualified people.

I guess this is just my take on it, but if you cut the taxes of the biggest corporations in the province, then how does small business and how does the public sector compete with them in attracting the necessary labour and as well the materials and supplies that they need? 9:30 I’m very, very concerned that this corporate tax, quite apart from philosophical differences, is not a g ood economic policy at this particular point in Alberta’s economy. I wonder if the minister has looked at that because we do have – and I could read from my notes.

We looked up some economists and so on who have said that there’s a real concern about the impact of this particular tax cut on the economic balance. It has the potential to create imbalances in the economy, and it could in fact wind up hurting small- and medium- sized businesses who can’t compete. The other thing that Dr. West talked about that time was a long- term plan for education property taxes. I know that the government has not followed through on that commitment. They’re moving sort of in the direction.

In other words, they’re reducing the amount that they take in the mill rate, but because of growth and so on, they’re actually taking more from the property taxes. I’m wondering if we’re ever going to get to the position where the province returns to a policy of gradually getting out of collecting property taxes altogether. I know that the Alberta Urban Municipalities Association, when I met with their executive a few weeks ago, indicated to me that one of the things that they’re continuing to be hopeful for is that the province will eventually vacate the property tax and give them the room that they need.

I know that the Minister of Municipal Affairs, although he didn’t promise that it would happen at the last conven- tion of the AUMA, did promise to work at it. So I am particularly interested in hearing about that and where we’re going. There was an increase in the amount of nonrenewable resource revenue that can be spent on program spending to $5.3 billion in this budget. I wonder if the minister is concerned that we are becoming too dependent for our ongoing program spending on nonrenewable resources.

From our perspective, we believe that the nonrenewable resources of the province and the revenues that flow from them really don’t just belong to us or our generation to be spent on the things that we want right now. These resources have to be seen as the property of all generations, including generations to come. There are a couple of things. There’s a philosophical point about how much you are prepared to expend from your nonrenewable resource revenues to sustain programs today.

The other question, of course, comes about from the narrowing of the tax base, and it ties in with the government’s approach of cutting taxes generally and specifically cutting corporations’ taxes. Has the minister looked or has she received reports from her staff saying that we’re becoming too dependent on this and that when these resource revenues are no longer available, we might once again have to make some very, very tough decisions in this province? You know, that’s certainly one of my big concerns. There are some things in one of the government’s documents. Here it is, Alberta’s tax advantage, on page 134.

It says that with no general sales tax, payroll taxes or capital taxes, Alberta’s tax base is relatively narrow compared to other jurisdictions. While this is [beneficial] to Albertans, it also comes with some risks. A broader range of taxes means more stable revenues. With relatively fewer revenue sources, predictable funding for key public services is at more risk in the event of an economic slow-down. Conse- quently, it is inadvisable to eliminate or dedicate more taxes.

In fact, we are continuing with this reduction, and I’m really concerned about the twin problem of overusing our one-time resource revenues and narrowing our tax base from more stable and ongoing sources. I’d like to ask the minister if she could just elaborate a bit on what the government’s savings policy is with respect to revenues that have been received from nonrenewable sources and how she sees that playing out in the future, the role of the heritage savings trust fund and so on.

Another concern – and it has come up a number of times in the House – is the whole idea of off-budget spending, which has been growing and growing. I think we heard the Minister of Education talk about dealing with the problems with school renovations and new school construction in terms of coming from the unallocated surplus. That was within a few days, really, of the budget being brought forward. Is there a policy to avoid doing that ? If there isn’t, what is the policy? What does the minister think it should be?

Can we get to the point eventually where we are actually trying to accurately predict our resource revenues, budget them not for spending necessarily but budget them and try to budget as accurately as possible for the full coming year, so rather than constantly being surprised by these massive surpluses, actually budgeting for the surpluses and identifying needs ahead of time? So that’s a concern. I had an idea that I wanted to suggest to the minister, and that was based on something that happened a couple of years ago at the Alberta Urban Municipalities.

There was a large surplus from the Municipal Financing Corporation. I’m not sure what its name is now. I know that it’s been changed. There’s a new name. It was appropriated by the Provincial Treasurer to be spent in terms of debt reduction, but the municipalities sort of rallied around it and got an agreement from the then Municipal Affairs minister, who is now the Minister of Environment. I was there, and I heard his speech, in which he said that this would be made available for municipalities to invest in energy reduction programs. It was called the ME First program. I thought it was a good initiative.

It represented a partial victory for the municipalities, but the problem with it was that it was sort of an incomplete plan because as they paid off their loans – they could borrow from the fund, invest in energy reduction programs, and then earn savings. They would earn savings, and they would repay the fund, but the money went back into general revenues rather than back into the fund. So it would’ve been preferable if the money was

May 10, 2006 Alberta Hansard 1487 repaid directly to the fund b ecause then the f und would become permanent. This is sort of our extrapolation of the ideas. We could take a billion dollars from the unallocated surplus and create a permanent green fund for municipalities and potentially also for universities and colleges and schools and hospitals, for the medical system, allowing those institutions to borrow money to invest in energy reduction, and then they take the savings from that and they repay the fund.

When they’ve repaid their loan to the fund, then they continue to benefit from the reductions in their operating costs, but the fund is intact and is available for further investment for the whole public sector. This idea, Mr. Chairman, could also be extended sometime in the future and be made available to farms, to small businesses, and to individ- ual homeowners. It’s something that we’ve been proposing, and we think that it’s something that has a great deal of merit. When I was on Edmonton city council, the administration came forward with a proposal for about a $350 million expansion of the E.L.

Smith water treatment plant. Instead, we established a water conservation strategy for the city, and we were able to defer that expenditure for 10 years and save people a lot of money on their water bills because the capital cost would’ve been added, of course, to their water bills. So it’s just an example of the value of actually investing in these kinds of conservation programs.

There’s big money over time that can be saved. 9:40 I’d like to ask the minister about the Alberta Securities Commis- sion, not about scandals or anything but really about whether or not she thinks that it’s advisable that every province has its own securities commission and whether or not it might make more sense – and she’s probably had some involvement with this – to negotiate with the other provinces. I’m not saying with the federal govern- ment when I say national. Rather than federal, have a national regulator.

We think that it might be a good idea rather than having a patchwork of regulation across the country. It really makes more sense in today’s financial world to have a single national regulator. We think it should be based in Calgary. We think that that would make a lot of sense. Calgary is a very important financial centre in this country, and I think it would make a lot of sense. So I wonder if the minister is pursuing that, what she thinks of it, what the progress might be.

I’d like to ask the minister also – and she doesn’t have to respond to this tonight necessarily – just what the state of the regulation of the auto insurance industry is and whether or not the program there has met the objectives of the government and what the upcoming review is going to entail and what her objectives are in pursuing that. Lastly, Mr. Chairman, I’d like to ask a little bit about the Alberta Treasury Branches and what the government’s plan is for the long run in that.

I know that it’s not exactly the most small “c” conserva- tive thing for the government to do, to have its own bank, but I advise them not to be embarrassed about it because we think it’s a good thing. One of the things I know in my area is that the banks have abandoned some of the lower income commun ities, and the only financial institution that’s available to many people is Alberta Treasury Branches, and it’s a valuable contribution. I think the same thing happens in many small towns and rural areas of this province.

That’s a really good objective from our point of view, the government continuing to own the Treasury Branches, because surely if they privatized it, then the shareholders would demand that the Treasury Branches do exactly what the banks have done, which is to leave the low-profit or negative – I don’t know – areas without financial services. I’m assuming that that’s why the government has resisted what would seem to be its natural ideologi- cal bent on that.

I just want to know from the minister if the government is going to continue to ensure that low-income areas in cities and rural areas and small towns continue to have financial services by maintaining the ownership of the Alberta Treasury Branches. Mr. Chairman, that concludes my list of questions and comments, and I look forward to the minister’s response. Thank you. The Chair: The hon. minister. Mrs. McClellan: Thank you very much. Very good comments. Alberta Treasury Branches is business as usual. They do provide a valuable service.

As long as they provide a valuable service and they’re still needed, I and this caucus will certainly support main- taining them. You’re absolutely right; they provide a valuable service in our rural communities but also in our urban communities. There’s one other that I just have to mention – I know you would agree – which is that credit unions have filled a very important role in many of our communities, urban and rural, and are an important part of the financial mix that’s available to people in this province. I was asked by my boss one time about Ag Financial Services, ATB, credit unions.

Credit unions, of course, are a little bit different. We don’t own those, but we do regulate them. The other two, we have a stronger, maybe, role in. My response was that the need is still there. They still serve a very valuable purpose and still have a mandate in this province. Auto insurance. There will be a review again this year. They’ll be looking at rates, of course.

They will be looking at about a year’s experience under the new system, a little over a year actually, and looking at it and making sure that if there are any adjustments, they’ll recommend them but make sure that it is meeting what we intended. I can tell you that the overall, general answer is yes. We see far fewer people driving uninsured, and that was a great concern to us. Very few people now are being picked up with no insurance, so that tells us that it is afford able for people to have insurance. Who wouldn’t carry insurance voluntarily if they could afford it? So it has worked on that side.

The rates are coming down. I won’t know for some time whether they recommend another rate reduc- tion, but that’ll be coming in the next weeks, I guess. So far so good. I think it is meeting its mandate, but we’ll have a better idea. On the Alberta Securities Commission. I know that you don’t want to talk about scandals. Neither do I, but I do want to put it on record that there have been three thorough investigations of the Alberta Securities Commission prompted by some different sources. In all cases the Alberta Securities Commission: there was no fault found.

I said consistently from the beginning that I was confident on the enforcement side that there was not an issue. That has been proven by an RCMP investigation, by an Auditor General investiga- tion, and by an internal investiga tion. I’m pleased to say that the human resource issues that did exist there are being dealt with and that the Securities Commission is implementing all of the Auditor General’s report, as I understand it, meeting with the Auditor General on a regular basis to make sure that the implementation of those recommendations is proceeding properly. You asked about the national regulator.

I’m not hung up entirely on this, but I do believe that going with the passport system, where all provinces with the exception of Ontario have signed on to it, has been a great exercise. In September of last year we implemented the first stage, filing a prospectus, and I was quite amazed at our securities ministers’ meeting to find the number of companies that were taking advantage of that. Whether or not it is deemed right in the end to go to a national regulator, I can assure you that all of the

Alberta Hansard May 10, 20061488 work that we’ve done on pursuing harmonization will be beneficial to that exercise. We had the opportunity to meet with Purdy Crawford, who did the report for the Ontario minister, Minister Phillips.

All of the provinces had a chance to dialog with him, and I think, in fact, that he and a member of that panel as well – there were two there; one from eastern Canada and one from Ontario – were surprised at some of the questions and concerns that some of the provinces had and realized that especially for our juniors, small companies, of which we have a lot and many other provinces do, there are some issues that they have to look at when they talk about a national regulator. Ontario, although they aren’t a signatory, have been at the table with us working on this.

Some of the amendments that we were putting through this House last night on securities Ontario was doing at the same time. It’s an exercise that’s great. I would agree with you entirely that if there was to be a head place, it should be in the most dynamic financial markets in Canada, which would be here.

It would seem to me that what they are talking about in the Crawford report is a national regulator, not a federal regulator – nobody agrees with that – and looking at it regionally as well, how you’d function understanding the difference in markets in this country, understanding the diversity of that, and some of the issues that some of the smaller provinces in particular have with this issue. So a good exercise. We’re meeting again in June, actually, in Ontario, the home of the one that isn’t a part of it, which I think speaks to how much co- operation there is among the provinces to see this done.

That’s a little update there, and we’ll have more of an update after that meeting. On savings and the heritage fund I don’t think we have any arguments there at all. I agree that we need to save where we can, but we want to make sure that we’re providing the right amount to our other programs as we do it.

I want to see more savings and something that has a revenue stream for us down the road. 9:50 The one thing I can tell you about forecasting energy that I’ve learned over 19 years is that you will almost always be wrong, and I’m always hoping that it’s on the right side of wrong, that we’re under in our estimate, not over. I think that I’ll add you to the list of eight that we have here and see where you fit. Mr. Mason: We’ve got a better track record. Mrs. McClellan: Well, we all have in hindsight. I have a better one, too, in some things. It’s hard to get energy analysts.

I mean, we’re having some saying, you know, that $50 is the right pl ace. Well, that is the middle of what the analysts said. Some are saying as much as $120, and some are saying: no, we think it will settle at $50. Some are saying: maybe $45. I think what we have to remember is that one of the reasons that Alberta has been so strong on not wanting revenue from resources in the equalization formula is how volatile it is. There is probably about a $5 billion risk factor in there now. That’s a lot higher than it was five years ago. We saw oil drop back to under $60 not very many days ago, it seems.

It’s been above $70, and it’s been below $70. You can have something happen in South America. You can have something happen in OPEC nations. You can have a Katrina. The only sort of stable way you have is on production and refining. Then we find that the refinery capacity has been estimated incor- rectly in some of our bigger using nations as well. One month we hear that they have more than enough supply, and then all of a sudden: oops, we’re short. So it’s a mug’s game, I think, but we’re going to do our best, and we’re going to be on the conservative side of it. A narrowing tax base: I couldn’t agree more.

I’ve said it publicly. One thing that came home to me in our tax review is that we have a very narrow tax base. We have to be extremely careful in making decisions as to reduction in taxes to ensure that we can sustain those reductions and still provide the do llars that are needed for our programs. There’s a

section in here that I think is a very telling one. It was referred to earlier. It’s page 65, and it gives you your income sort of blobbed together, your revenue and your expense for the depart- ments. If you just look at that, it’s a pretty interesting story. It speaks to the volatility of some of our revenue streams. Taxwise, pretty steady. We have growth, more people, more jobs, better jobs, higher taxes coming in. We’re able to lower them, but we do have to be careful on that.

I don’t use the words “nonrenewable resource” very much anymore if I can remember not to, because I’m more convinced than ever that this resource is going to be around for a long time. We know that we have at least a century in the oil sands, and we know that almost every year there’s a new technology, a new methodology of recovering that that is more environmentally friendly, that is more economical. I don’t think anyone would have predicted the change of technology that has transpired in that area. Of course, higher prices will dictate more aggression in getting better technology.

Something that I think we can contribute to Kyoto is sharing some of this technology that we are implementing here that is more environmentally friendly, and I’m talking about using CO2 and other methods for recovery. Coal: a tremendous amount of coal, the lowest sulphur burning coal probably in the world. I believe that our efforts in clean-coal technology with our partners will bear some fruit that will be beneficial to us. Coal-bed methane: a lot of deposits there, and again the technol- ogy is improving, and we see improvements in recovery there. Should the royalty structure be reviewed?

I think that the minister has already spoken to that and talked about looking at that. While we show some declining revenues, I think that we’re going to have an income from that long into the future. While we should be conservative and recognize that we do have a lower revenue on bitumen and some of those other heavy oils, it’s still an important resource that will be here. I believe that we need to value add more here and improve the technology for doing that and then sell that to the rest of the world, which is a good thing.

On the reduction of corporate tax in the hot economy, the real reason for reducing the corporate tax is to make our businesses more competitive in the global marketplace. Right around the city of Edmonton there are about 160 companies – small businesses, granted – that manufacture food and beverage, so agricultural products. That has grown from about 110 companies. Probably there are more than 160. The minister of agriculture might leap up and say: boy, are you behind. They ship to over 100 countries in the world, and they have to be competitive on that basis. So it’s really more of a global issue.

One of the things that we learned when we did our tax review, the first thing that hit me, was how narrow our tax base was; secondly, how competitive we are in Alberta within Canada but how uncom- petitive Canada is with the world. We have to look at that, remem- ber that we compete in a global economy. We want to make sure that these small companies that are all around our city here – I’ve visited some of them. They’re wonderful stories, whether it’s the beautiful little cakes that are being shipped all over from here. A

May 10, 2006 Alberta Hansard 1489 young man who was a chef in British Columbia saw a wonderful opportunity, built a business, and ships these chees ecakes not only in Canada but to the U.S., expanding all of those markets, and had to do a huge expansion on his plant recently. Mr. Mason: Does he qualify for the corporate tax rate, though? Mrs. McClellan: Well, yes, he probably is above the small business now. He probably started in one range and went to the other. That’s one of the reasons we did small business first, raised our threshold to $400,000.

I think there’s some real merit in looking at either raising that threshold or reducing that rate again to make sure that they’re competitive. I have something I’d like to share. The Canadian Bankers Association – love or hate bankers, they are the financiers in this country. I have a letter from them – it’s written to me – about our budget. I think it’s important that we share it, and I’ll just read a part of it. It says: On behalf of the members of the Canadian Bankers Association (CBA), I am writing to congratulate you on Alberta’s budget for 2006-07.

Largely due to your government’s sound fiscal policies, Alberta has one of the most robust economies in the country, no debt and is in the enviable position of having the fiscal flexibility to further strengthen “Alberta’s tax advantage.” You can read it for yourself, but it does talk in that as well about the important priorities of health, education, and infrastructure, and it talks about it in relation to the importance of a competitive personal and corporate and business tax regime. They did encourage us to work towards our anticipated rate of 8 per cent.

They say: We believe that the current and an ticipated reductions to the CIT rate will make the province’s business tax advantage very compel- ling and set the foundation for future economic growth in the province. That’s the point I want to make. 10:00 The corporate tax reduction is not all about today. It is about the future and down the road encouraging people to invest here, to bring your investment to Alberta: a good stable tax regime, a good quality of life, wonderful opportunities for your families. I’ll tell you, when people look at coming to Alberta to invest, they don’t just look at taxes.

They don’t just look at good government. We’d like to think that. They look at quality of life i ssues too. They want to know if there are good recreational facilities for their families, good educational facilities certainly first of all, good cultural activities. They want the whole enchilada, if you wish, and we’re proud to say that many companies large and small are saying: yes, this is the place to do business; yes, this is here for our family. Thank you. The Chair: I hesitate to interrupt the hon.

Minister of Finance, but pursuant to Standing Order 58(4), which provides for not less than two hours of consideration for a department’s proposed estimates, I must now put the question after considering the business plan and proposed estimates for the Department of Finance for the fiscal year ending March 31, 2007. Agreed to: Expense and Equipment/Inventory Purchases $1,129,463,000 Nonbudgetary Disbursements $65,793,000 The Chair: Shall the vote be reported? Hon. Members: Agreed. The Chair: Opposed? That’s carried. The hon. Deputy Government House Leader. Mr. Renner: Thank you, Mr. Chairman.

I’d move that the commit- tee now rise and report the estimates of the Department of Finance. [Motion carried] [The Deputy Speaker in the chair] Mr. Danyluk: Mr. Speaker, the Committee of Supply has had under consideration certain resolutions, reports as follows, and requests leave to sit again. Resolved that a sum not exceeding the following be granted to Her Majesty for the fiscal year ending March 31, 2007, for the following department. Finance: expense and equipment/inventory purchases, $1,129,463,000; nonbudgetary disbursements, $65,793,000.

I would like to table the document for the official record of this Assembly. The Deputy Speaker: Does the Assembly concur in the report? Hon. Members: Concur. The Deputy Speaker: Opposed? So ordered. head: Government Bills and Orders Second Reading Bill 40 Post-secondary Learning Amendment Act, 2006 The Deputy Speaker: The hon. Minister of Advanced Education. Mr. Herard: Thank you very much, Mr. Speaker. I must say that I’m very pleased to rise and move the Post-secondary Learning Amendment Act, 2006, for second reading.

In relation to this amendment I would like to highlight that our review of the advanced learning system has been completed, and the steering committee’s report has now been finalized and is under consideration. One of the outcomes of the review will be an affordability framework, and this framework will identify a broad sweep of initiatives to improve the affordability of Alberta’s advanced education system. A revised tuition fee policy is one of the initiatives within the framework. This amendment to the Post-secondary Learning Act is necessary to prepare for the introduction of a new tuition fee policy.

The amendment is proposing to repeal clauses in the Post-secondary Learning Act that set out the principles that guide tuition increases by public postsecondary institutions as reflected by the current tuition fee policy. Mr. Speaker, the repeal of these clauses will remove any legislative barrier to implementing the new policy by allowing the establishment of tuition fees in accordance with the regulation. We need to make these amendments immediately so that govern- ment can make true on its promise of a new tuition fee policy in place and working for students by the fall of 2007.

Failing to repeal and amend these sections would likely delay the implementation of a new tuition fee policy until September 2008 as public postsecond- ary institutions will have to follo w existing sections when setting tuition fees. If we were to allow that to happen, under the current legislation average tuition in 2007-08 would increase 6.5 per cent at universities and 9.8 per cent at colleges. My commitment as

Alberta Hansard May 10, 20061490 Minister of Advanced Education is to introduce a new tuition fee policy this fall so that we don’t have to see increases of this magnitude ever again. A new tuition policy for implementation in the fall is strongly anticipated by key stakeholders. They expect to see it this year. This amendment is about being responsive to stakeholder concerns and, in particular, those raised by students around the existing tuition fee policy.

The new policy will be developed through further discussion and dialogue with stakeholders as we realign the existing regulation to support the new tuition fee policy. That’s where I think most people who haven’t been there and done that would not understand that making changes to regulations is an onerous number of steps. You have to be able to demonstrate that you’ve had consultation with stakeholders. It’s not just a matter of preparing an OC for cabinet and, like magic, things change. You have to consult, and you have to prove that you’ve consulted w ith stakeholders.

So I think that that’s what maybe a lot of people don’t understand because they’ve not been there and done that. I strongly urge the Assembly to support this legislation as it paves the way for a new tuition fee policy for students, something which should not be delayed. With that, Mr. Speaker, knowing that we will be addressing Bill 40 in second reading on Monday, it’s my pleasure to adjourn debate. [Motion to adjourn debate carried] Bill 41 Unclaimed Personal Property and Vested Property Act The Deputy Speaker: The hon. Deputy Government House Leader on behalf of the Minister of Finance. Mr.

Renner: Thank you, Mr. Speaker. It’s my pleasure to stand today and move second reading of Bill 41 on behalf of the Minister of Finance. Bill 41 is the Unclaimed Personal Property and Vested Property Act. The first goal I’d like to accomplish with this legislation is to establish a primary repository and claim system for the unclaimed or abandoned property of Albertans. To accomplish this, Bill 41 would require all holders to pay or deliver assets that remain unclaimed after the end of a specified holding period together with all informa- tion on the apparent owners to a central repository.

Owners will be able to research a single registry to determine if the administrator holds assets that belong to them or that they are entitled to. A single-stop repository makes the process of locating unclaimed assets easier for all owners. To accomplish the second goal of establishing a clear process to manage and resolve issues relating to property that vests in the Crown after a corporation is di ssolved, Bill 41 proposes several measures. First, Bill 41 proposes a five-year limitation period during which a corporation can be revived.

Experience has shown that very few corporations are revived after five years. Once the deadline has passed, the corporation cannot be revived, and any remaining property vests permanently in the Alberta Crown. 10:10 It is anticipated that property that vests in the Crown would include land. The legislation proposes a process that will enable the Crown to take title to the land and remove existing encumbrances with sufficient warning. At the same time, creditors would retain the right to enforce any security interest they might have on the property. In both cases, Mr.

Speaker, claims for the return of such property or proceeds will be allowed for 10 years from the date the property is transferred to or becomes vested in the Crown. From an administrative perspective this legislation will empower the Crown to conduct searches to find vested property, administer and invest property, and minimize legal liability and risk. In

summary, Mr. Speaker, this legislation will establish clear rights, obligations, and procedures for managing vested property. With that, I would like to move that we adjourn debate on Bill 41. [Motion to adjourn debate carried] Bill 39 Energy Statutes Amendment Act, 2006 The Deputy Speaker: The hon. Member for Stony Plain. Mr. Lindsay: Thank you, Mr. Speaker. Today I’m pleased to rise and move second reading of the Energy Statutes Amendment Act, 2006. Alberta has recently become an economic force in Canada that is far beyond its size.

It is a Canadian leader in almost all economic indicators from growth to employment, from the education of the workforce to productivity, from average family income to standard of living. This is due in large part to the productive energy industry in Alberta. Alberta is increasingly being recognized as a global energy leader. Investors are clamouring to be a part of Alberta’s energy future. Activity in Alberta’s energy industry has grown to record levels across the province. Exploration, development, production, technological advances, improved environmental technologies, and protection: the list is long.

These amendments will ensure that Albertans’ benefits from resources are optimized and enable both industry and government to continue to operate efficiently and effectively. As we are all aware, Alberta’s competitive market is stimulating investments and growth in the energy industry. To ensure that the competitive natural gas retail market continues to operate with integrity, amendments need to be made that will enable comprehensive monitoring of the market participant behaviour.

The Gas Utilities Act will be amended in this b ill to allow the retail natural gas industry to operate with similar regulations to the competitive electricity market.

Amendments to this act include allowing Alberta’s Market Surveillance Administrator to oversee the retail natural gas market to ensure fair and efficient competition, aligning regulatory-making powers to reduce the number of regulations in place for both the electricity and natural gas retail markets, putting a mechanism in place to ensure that the MSA is able to recover its costs for m onitoring the natural gas market, improving alignment of the retail natural gas market with the retail electricity market to support convergence of the natural gas and electricity retail policy.

The energy industry in Alberta helps to ensure that Albertans enjoy prosperity and an extraordinarily high quality of life. Budget 2006 estimates that nonrenewable resource revenues will be $11.4 billion for 2006-2007. In addition, the Crown owns 81 per cent of the province’s mineral rights. Key amendments to the Mines and Minerals Act will allow the rules regulating taking and managing royalties in kind to be clarified.

Although the act currently provides for the Crown to take its royalty in kind, which means that the Crown collects a percentage of the hydrocarbon product that is produced under the current regulations, the Crown only takes royalty in kind for conventional oil. If the Crown decides at some point to take and manage royalties in kind for other minerals, the regulations setting out the rules for doing so will need to be clarified. Before making such a decision and before any changes are made to these regulations, consultations with the industry and further government reviews will take place.

May 10, 2006 Alberta Hansard 1491 Corresponding amendments are also being made to the Mines and Minerals Act clarifying the tec hnical rules with respect to the business of selling or swapping the products that the Crown receives as royalties in kind. For example, more revenue can sometimes by made from the royalties in kind by swapping one type of oil for another, which may attract a better price. By clarifying the technical rules within the act, the Crown will be able to optimize the value of our resources.

Other amendments to the Mines and Minerals Act will include increasing efficiencies such as allowing electronic transfers to take place and reducing red tape, such as eliminating the need for order in council approval for routine subsurface storage agreements, such as the storage of natural gas or petroleum liquids. It is important to note that in order to undertake the subsurf ace storage activity, all regulatory approvals and environmental requirements must be met. There are nine acts that are being amended in this bill, in many cases to ensure that the industry continues to operate efficiently and effectively.

Of these nine, there are two that are spent and being repealed, the Natural Gas Price Administration Act and the Natural Gas Pricing Agreement Act. These two acts are no longer relevant as they served to implement Alberta’s role during the regulated gas price environment prior to deregulation of the gas pricing in the mid- 1980s. It is important that this industry and the acts that guide it continue to evolve to ensure that it operates with the best interests of Albertans. Thank you. Mr.

Speaker, I move that we adjourn debate on Bill 39. [Motion to adjourn debate carried] head: Government Bills and Orders Committee of the Whole [Mr. Marz in the chair] The Chair: I’d like to call the Committee of the Whole to order. Bill 31 Health Information Amendment Act, 2006 The Chair: We are debating amendment A1. The hon. Member for Edmonton-Centre. Ms Blakeman: Thank you very much, Mr. Chair. I’m delighted to be able to join the debate on Bill 31, the Health Information Amendment Act, 2006, in Committee of the Whole.

Actually, if the chairman doesn’t mind, I’d like to make some general comments before I move amendment A1, but you’re free to circulate it at this time. The Chair: It’s already been moved, hon. member, on May 3. Ms Blakeman: Oh, is this the one that’s on the floor? The Chair: This is amendment A1. Adjourned debate on amend- ment A1. Ms Blakeman: Okay. So this is the one that’s removing something. Hang on. The Chair: The amendment reads as follows. The bill is amended in part A:

section 2(b)(ii) is struck out. Ms Blakeman: Okay. Thank you for the clarification. This is an interesting one. In the health information review committee that happened in 2004 the whole

section around health service provider information and how much of that information was given out was one of the major points of discussion, and in the end the committee asked that a second committee be constituted. That question got passed on to that committee, which has yet to be formed, to deal with because there were some huge issues that we just couldn’t deal with in the time that we had.

There was somewhat of a guillotine hanging over us as the election was looming in the fall of 2004, and there was urgency felt by the chairperson of the committee to pass certain parts of what we had reviewed in the Health Information Act. Things we couldn’t get to appropriately were just passed on to the next committee. As I said, one of the big issues there was around health service provider information, which at this point is very limited as to what information is released.

Now, a number of, in particular, pharmaceutical companies were very interested in getting access to more information a bout health service providers. Mostly what this is about is getting at prescribing information, so for marketing purposes they could see, you know, what kinds of drugs a doctor was prescribing, allowing them to analyze them and get at them to try and convince them to prescribe their particular version of an antidepressant drug, for example, as compared to the one they were currently using.

There was great resistance to adding on any more information than could be allowed under the rules right now. 10:20 So the idea that’s in this act of adding in the registration number after the licence number I found was very interesting, and for whatever reason – I don’t know why, and I can’t remember the member’s explanation for this – that has again caused some controversy, it appears, and that has been pulled out.

I have no objection to that happening at this time, so I’m satisfied to have the registration number removed and that clause deleted from the amending act, which means it would never go forward into the existing act. I’m sure we’ll hear about this again in the future, but at this time I’m fine with it being pulled. I think we have to go back and examine the whole issue of health service provider information, and I don’t think it should be done piecemeal, and this is somewhat approaching it from a piecemeal point of view. So removing the addition of the registration number is fine. Thanks.

The Chair: Are you ready for the question? Hon. Members: Question. [Motion on amendment A1 carried] The Chair: The hon. Member for Edmonton-Centre. [interjection] Ms Blakeman: I so enjoy working evenin gs with the Member for Drayton Valley-Calmar because he just gives me so much energy to speak longer and keep going. He’s just my own little version of the Energizer Bunny, just gives me lots of grist for the mill. [interjec- tion] Thank you so much. I appreciate your thoughtful consider- ation of my working evenings. What I would like to do. I have a series of amendments to progress through this evening, Mr.

Chairman, but I would like to set the context for them because they are all more or less related to the same originating point. Now, I had mentioned that I was one of two opposition members that sat over a period of about six months on the health information review committee. One of the issues that came up that I really

Alberta Hansard May 10, 20061492 objected to is contained in recommendation 31 coming forward from the committee. What I’m seeing in this amending bill is I think what I disagreed with so much in recommendation 31 is getting mixed in with recommendation 32, which was basically about prescription fraud, and recommendation 34, which was about individuals perpetrating fraud in the health service sector. What I’m seeing in addition in Bill 31 is the government sort of anticipating health service provider fraud.

So there are two different clauses there: one coming at it from the point of view that an individual is committing fraud, getting health services they shouldn’t be getting, and then there’s a second

section that deals with health service provider fraud, taking advantage of the system. We did not particularly deal with those separately in the committee, but they’re appearing separately in the bill. The concepts that I was disagreeing with so much that are captured in recommendation 31 are sort of sprinkled and mixed in with recommendations 32 and 34. That was the prescription fraud and the individual perpetrating fraud in the health services in obtaining it or dispensing it. I’m just going to go through this for you.

Recommendation 31 from the committee read that “the Act should be amended to mandate disclosure, without consent.” Now, let me put this in context for everyone. This is individually identifying health information, so from this information those involved can tell who it was, exactly what happened to them, where they live, all their health information, basically, and the individual is not able to give their consent and in many cases wouldn’t even be aware that the information has now been disclosed to somebody else. So those situations need to be very, very carefully laid out.

Essentially, the Health Information Act is

an act that sets out all the rules and says that you can’t disclose people’s personal health information, and then it goes through and says except. So it’s exception-based legislation, except in the following circumstances, and they try and keep a really tight hold on that. There are a number of provisions where it talks about, you know, the least amount of information being given out with the highest level of anonymity and a number of other precautions, but that’s how this is meant to work. So let me go back again.

Recommendation 31. “The Act should be amended to mandate disclosure,” individually identifying health information, “without consent, to police services” of the patient’s name, their address – that’s their home address – their location in the facility, the date of admission, the name of the physician, the nature of the injury. The reasons given at the time were “for purposes of obtaining a warrant or subpoena.” So the police don’t have the information. They’re fishing for it. You can’t get a warrant unless all the information is filled out.

When you go on the Internet now and you try and purchase something or ge t involved with something, it actually will not process unless you fill in all the blanks. Essentially, that’s what happens when you’re trying to get a warrant. You have to fill in all the blanks or the police have to present the warrant with all the blanks filled in or they can’t get it. If they’re missing information, they can’t get the warrant. So here they’re trying to get the information they want to put in the warrant. So the committee’s recommendation that I was so exorcized about.

Getting this information – that was the information – individually identifying, without consent for purposes of obtaining a warrant or subpoena, and when the police have reasonable grounds to suspect that the person seeking health services has been involved in some form of criminal activity; and makes a request for that information; or (

b) a custodian . . . Now, a custodian is someone involv ed in the health system that is what we call inside the arena, so they’re a custodian of health information. . . . has reasonable grounds to suspect that the person seeking health services has been involved in some form of criminal activity. So that was the original recommendation, and the reasoning behind it was fairly extensive. But let’s look at the situation that we have right now.

Essentially, the police are able to get this identifying health information without consent if the situation is life th reatening, if there is imminent danger, or if it is involving vulnerable people. So mental capacity – and they can do it under the Child Welfare Act, they can do it under the Protection for Persons in Care Act, and they can do it under the Fatality Inquiries Act. So there are already a lot of circumstances all covering urgency and imminent danger under which circumstances the police can receive this information. So I say: why else do they need it?

If they’re seeking this information, it’s not life threatening, it’s not urgent, then it’s sort of casual. Well, I’ve got nothing better to do right now, so I think I’ll wander in and bug the nurses to get this information. It’s not involving vulnerable people, so we’re not in danger of somebody we should be protecting as a society, you know, being imperiled in any way. None of those circumstances apply when we’re looking at changing this legislation because we’ve already covered it in the legislation. So why are we doing this? Never made sense to me.

This was to make it easier for police to get information on people. Well, we’ve got to be careful when we do that, and I think that in the interim, between when this committee met and now, we start to get a better understanding of why this becomes so important. Information once in a database in this day and age and with the electronic databases doesn’t disappear. There’s no time bomb that explodes or is programmed into a database that says: five years from now this information will be wiped out because we won’t need it anymore.

It stays in there forever, and every time somebody calls up that particular individual’s information, bingo, it all pops up on the screen, including, my friends, your individually identifying health information that was obtained without your consent. In some cases you won’t even know that they have it. Why would we be letting the police fish for that information? 10:30 Something else I want you to th ink about: is this really how we want our health professionals spending their time?

Considering how backed up we are in the hospital system – every day there are questions about overcrowding and difficulty getting people through the system and stressed hospital staff and people working overtime and not enough staff to cover this, and we’re now going to pass a law to change

an act so that the police can go in, pull a nurse or a doctor or a hospital administrator aside, and: I’m looking for John Doe, and I think he’s in this hospital, and I’d like you to give me all of this information on him. Now, it’s not life threatening. Nobody’s in imminent danger. We have other ways of accessing this information if it’s to protect a child or someone with a mental illness or an elderly person or a person in care. Why would we allow that? It’s a shopping trip. Yet that’s exactly what is being anticipated here. Let’s be clear.

This is a recommendation the committee passed, and I was on that committee. I voted against it, but the committee overall voted for it. Now, it’s not hard when in this configuration you always have an overwhelming number of government members on any of these committees, and they just vote it through. That’s exactly what happened here, but I still disagree with it. Okay. So let’s look at some of the other reasonings about why this isn’t a good idea. What you’re trying to do is find the appropri- ate balance between privacy rights of an individual who is seeking

May 10, 2006 Alberta Hansard 1493 care and treatment and, basically, police requirements for personal information. I’ve already argued about why the police shouldn’t be needing to get this personal information, because it’s a fishing trip and they should find that information through the other sources and other processes that are available to them. We had a number of people present to us, and each one of them was asked to sort of go through a survey of the issues that we had before us. A little less than half the people recommended no change in the existing law