1996 Legislative Session: 1st Session, 36th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, JULY 29, 1996

Afternoon

Volume 2, Number 7,

Part 2

[ Page 1069 ]

The House resumed at 6:36 p.m.

[The Speaker in the chair.]

Hon. J. MacPhail: In Committee A, I call Committee of Supply, and for the information of the House, they will be debating the estimates of the Ministry of Transportation and Highways, and then later the Ministry of Employment and Investment. And in this House, I call Committee of the Whole to debate Bill 15.

DISABILITY BENEFITS PROGRAM ACT

(continued)

The House in committee on Bill 15; G. Brewin in the chair.

section 6 (continued).

M. Coell: Before our break, I suggested that we had a number of questions regarding subsections (3) and (4). Last night the Minister of Education commented to my colleague that they would consider looking at this. They didn't guarantee that there would be any changes, but they would look at it, and if there were changes to this appeal.... This is the appeals act, the one we had a great deal of difficulty with. So I would be satisfied if the minister would talk with the Minister of Education, who's also affected by this, and if they are going to review it, we would be more than willing to sit as a committee to review this in the future.

Hon. D. Streifel: In fact, I'd be pleased to discuss this with the Minister of Education, Skills and Training and Minister of Labour.

V. Anderson: I go along with the opportunity to discuss this. As we've already made abundantly clear, this is not a

section that we're at all happy with, and it has created a great deal of consternation in the area of the whole B.C. Benefits appeal process that has been developed. I'm not sure it will be any better for those with disabilities than it is for anybody else. This is just to say that it's a

section which has to be worked over, we hope.

Section 6 approved on division.

Sections 7 to 9 inclusive approved.

section 10.

Hon. D. Streifel: I move the amendment that's in the hands of the Clerk on

section 10.

[SECTION 10, by deleting the proposed subsection (3) and substituting the following subsections:

(3) An information-sharing agreement may only be entered into under subsection (2) for the purposes of the administration of (

a) this Act,

(

b) the Income Tax Act or the Income Tax Act (Canada),

(

c) the Immigration Act (Canada), or

(

d) a social benefit program operated by a government, agency, public body or legal entity referred to in subsection (2)(c).

(4) In this section, "information-sharing agreement" includes a data-matching agreement but does not include an agreement to share (

a) information obtained by the minister for the purposes of another Act administered by the minister, or

(

b) information obtained by the minister pursuant to an agreement under this section.]

Amendment approved.

Section 10 as amended approved.

Section 11 approved.

section 12.

M. Coell: Does

section 12 also relate to the present GAIN Act? Are there any changes in this portion of it?

Hon. D. Streifel: The old provision was 18 months from the happening of whatever circumstance; this is 12 months from when we become aware of the circumstance.

Section 12 approved.

section 13.

Hon. D. Streifel: Hon. Chair, I would like to move the amendment to

section 13 that's in the hands of the Clerk.

[SECTION 13, in the proposed

section 13(2)(

q) by deleting "sections 7(4), 8(2) and 10(3)" and substituting "sections 7(4) and 8(2)".]

Amendment approved.

section 13 as amended.

V. Anderson: Could the minister say something about the Disability Benefits Advisory Council, which is listed under

section 13(2)(v) -- i.e., who might make it up, and what's involved in "the payment to its members"?

Hon. D. Streifel: This

section is one of those that seem to be all-inclusive in every bill I've ever heard discussed in this House, an enabling

section that authorizes.... We'll be able to establish and provide for the establishment functions and duties of the Disability Benefits Advisory Council, the specifics of the advisory council being left open at present at the request of the disability community. The specific nature of the council will be worked out in consultation with this community. So again, it's enabling; there is nothing preconceived. We'll be coming together with the community of persons with disabilities to decide which forum we'll be in on this council.

V. Anderson: We've asked this before. When the regulations are done, would the minister be kind enough to get us copies of the regulations?

Hon. D. Streifel: Absolutely. I'd be pleased to.

Section 13 as amended approved.

Section 14 approved.

section 15.

M. Coell: I just wonder if you could outline the timetable you are expecting for this. It's our understanding that this would come in immediately, but the wording of this item 15 gives us some problem, as it may be some time before it is all enacted.

Hon. D. Streifel: The expectation is that it would be by September, so it's very, very close.

[ Page 1070 ]

Section 15 approved.

section 16.

V. Anderson: It says, under "persons with disabilities": "...comes within the meaning given by regulation to that expression.... " Could the minister explain what that particular

section means by "regulation to that expression"? Is it something different from the definition that's in the front? Just what is meant?

[6:45]

Hon. D. Streifel: As I understand it, this is one of those language issues. We're getting rid of the old language within those acts mentioned in this

section -- for instance, persons with disabilities as opposed to handicapped people. We are changing that language in there.

V. Anderson: Could the minister just give a little explanation about the implication of

section 16(b)?

Hon. D. Streifel: It's the same change again -- a person with disabilities as opposed to a handicapped person or handicapped.

V. Anderson: If I understand

section 16(

b) rightly, though, it takes the word "relative" out and substitutes specific relatives instead. So the change in this

section is not with regard to handicaps or disabilities, but seems to relate to particular persons rather than relatives. It gives a list instead of the word "relative."

Hon. D. Streifel: It cleans up language within the legislation and has nothing to do with us in this context.

V. Anderson: Am I not right that it takes out the definition of relative and substitutes "the following"? I agree that it cleans up the language, but isn't it trying to be more specific about relatives who can be involved? Does it limit or expand the persons who are in relationship to a person with a disability?

Hon. D. Streifel: I'm going to try this word: it supplies more "specificity." It's more definitive. It actually describes -- the reference to the relative -- who we're dealing with here, if that helps the hon. member.

Sections 16 to 22 inclusive approved.

section 23.

V. Anderson: Here we have a definition of disability which has different connotations, if you like, from the definition of a person with disabilities which was in

section 1. Could you explain the reason for this particular definition in this

section as against the one in

section 1?

Hon. D. Streifel: For the information of the members, this is the Motor Fuel Tax Act, and we recognize their legislation here in this act. This is what they are doing, I suppose, to upgrade their language again. I think this is it. If I get a tug on my coat, then I'm going to know that I've kind of stepped off on this one. I'm sure that's what the process is: to identify "handicapped person" and substitute again "person with disabilities" to clean up the language in relationship to what we're doing. If we go down to subsection (g), it says: "has suffered the complete and permanent... loss of... lower limbs or....

" There are some "or"s before the word "March." Again it is language cleanup, and again, it's the Motor Fuel Tax Act that's included in here.

M. Coell: Regarding the Motor Fuel Tax Act, would there be no difference in the moneys being paid or claimed by people with disabilities because of this, or does this just recognize the act and what is in GAIN continues?

Hon. D. Streifel: I thank the member for the clarification. He's absolutely right.

Sections 23 to 26 inclusive approved.

Preamble approved.

Title approved.

Hon. D. Streifel: I move that the committee rise and report the bill complete as amended.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 15, Disability Benefits Program Act, reported complete with amendments.

The Speaker: When shall the bill be considered as reported?

Hon. D. Streifel: By leave now, hon. Speaker.

Leave granted.

Bill 15, Disability Benefits Program Act, read a third time and passed.

Hon. D. Streifel: I call committee on Bill 16.

BC BENEFITS (APPEALS) ACT

The House in committee on Bill 16; G. Brewin in the chair.

section 1.

M. Coell: The opposition was in favour of the last bill, as you know, and we made those points in second reading as well as at committee stage. With this bill, we are opposed. We made a number of statements in second reading at great length. I believe that we have the ears of the ministers involved, but we do have some points we wish to raise in opposition to this bill at this time.

V. Anderson: I think we need to start with the question of the minister deciding on "tribunal." It's appointed in accordance with the regulations, but I think it's important that we understand what the minister's understanding of tribunal is at this point. In taking over from the previous GAIN Act, is it the same, is it different, and what meaning does tribunal have under the regulations at this point?

Hon. D. Streifel: It's the same as was included in the GAIN Act.

[ Page 1071 ]

V. Anderson: Could the minister explain the tribunal to us? Is it voluntary? Is it still three-person, and is it required that only the chairperson is recognized as having taken the proper qualifications or study course or indoctrination -- however you want to call it -- to be chair of the tribunal? Or is it, as it was at one time, that the two appointees from the ministry and the client would be able to choose a mutually acceptable person?

Hon. D. Streifel: It's a three-member panel. One member is chosen by the appellant; the ministry chooses one. If there is a designated pool of chairs, then that's where the chair would come from; if not, then the chair would come from another source.

V. Anderson: When you say "a designated pool," where are those designated pools? How are they located? Are they available throughout the province? Where do they come from? What is the nature of the pools out of which a chair of the tribunal comes?

[7:00]

Hon. D. Streifel: We've been in the process for the last few months of very extensive training. These chairs are available throughout the province. I will get further information and specific locations for the member, if he wishes. I don't have that information right here, but if you require geographic locations or whatever.... I check the nod there. What we can get for you, we'll supply in the most expeditious manner possible.

V. Anderson: Along with that, can you give us an estimate of what it costs to train these people and what the cost of setting up the tribunals is?

Also, could you indicate to us, in regard to the tribunals, what kind of reception there is of the new system? Is any evaluation taking place as the old system and the new system, from the point of view of the ministry on the one hand and the client on the other hand... ? Is there some kind of evaluation of tribunals between the previous system and the new system?

Hon. D. Streifel: On the evaluation process, the answer is yes. We will endeavour to supply the information on the training costs when we bring forward the other information. I don't have it available right here tonight.

Section 1 approved.

section 2.

Hon. D. Streifel: The time has been expanded somewhat, hon. members, as the member mentioned in his presentation. The old system was seven days straight. Now we have seven business days, which could roll over into a weekend very easily; in fact, if there's a long weekend involved, it takes that into consideration as well, being seven business days.

But I do take the member's words to heart, and as we have expanded now -- of course, it only happens once the person is notified of the decision -- there are the seven business days. I take the member's comments to heart and thank him for them. But we have now made an expansion in this process, and I think we should see if this is adequate as we go along.

V. Anderson: I'm curious as to why the minister has put seven days in the act when they put all the other significant things in regulations. It would seem to me to be more reasonable to leave the time out of the act and just have a time limit for commencing the appeal, as done by the regulations. I'm not always happy about everything being done by regulation, but in this case, it would have been much wiser because it would give the flexibility.

Also, around the province, where you're having to deal with large travel distances and winter conditions and all the other things, seven days is just totally unreasonable. I didn't bring an amendment, but it would seem to me that if the minister were willing, a time limit to commence the appeal as set forth in the regulations would be a lot better way of doing it rather than listing a specific time. So many things work against the seven-day situation.

Hon. D. Streifel: It's a very important date, and we want to make it absolutely clear because there could be an effect on their benefits. There could be an effect on a number of issues here. So it was included in the legislation to make it absolutely clear that in fact that's the time.

Hon. D. Streifel: I thank the hon. member for his comments, but we did canvass this at some length in debate on other legislation.

The appeal process is seven business days, not seven days. There are appeal kits made available, as we discovered in examining other legislation, in multiple languages. The member has this minister's commitment to the openness of advocates and the use of advocates in these circumstances. The FAWs inform individuals right at the time of what the difficulty is and inform them of options. We've covered what can happen if the options aren't made clear under some of the

[ Page 1072 ]

other legislation. The member understands how I feel about that. I believe that this should be as open and accessible as possible. The seven business days have created a problem in other areas.... The appeal can be launched. There are administrative reviews, and there are other processes involved.

I think it's good that the member is concerned and brings forward these concerns in this manner, but we have made the process as available and user-friendly as possible. I will repeat: there are appeal kits in multiple languages in that area. There doesn't seem to be a difficulty with the seven business days. In fact, if the hon. member has specific cases where these difficulties have arisen, I would ask him to bring them forward so we could have at look at it. If there's a plethora of these, perhaps then we should be considering alternative time frames, but it seems to be working with the openness and the information that we supply.

V. Anderson: In helping the minister to understand the difficulty of the situation, I will make sure that low-income groups know that you would like to hear from them directly. I expect you will get a fair number of responses with very specific, detailed information. Might I ask, though, with the seven days, does it go by the postmark date or by the day it arrives in your office? That's a three- or four-day difference right there.

Hon. D. Streifel: In fact, it's the day the notice is mailed, but if there are unusual circumstances.... I think we did cover this in one of the other pieces of legislation. There is discretion. The FAWs do have discretion in these circumstances, and I would think that the discretion would be exercised, for instance, if someone receives something on the 12 and the clock has been punched for the 13. I mean, let's be reasonable. Even in three or four days, we would have to address this from a position of reasonableness.

Given the community I live in, if I were to mail myself something, I might wait five days for it. I recognize that problem, and I expect -- as I'm in this ministry longer and with the tone of the ministry and the protocols that are set up -- that our financial assistance workers would realize that there's a real difficulty here, particularly when something comes within that real short time frame, and there's no opportunity for decision or contact. Somebody could be staying at their mother's for two days, for Pete's sake.

They get the thing and get home, and the clock has been punched while they were looking after mom. That's just not fair, and we would like to think that this would be taken into consideration.

V. Anderson: I appreciate that. We ask these questions because in the past, it has not been fair. Those kinds of circumstances have worked against the appellant again and again. So if there's going to be fairness in here.... If there's leeway -- and I appreciate there is -- then I have even more difficulty with the seven days within that.

Are any of the tribunal members paid for the tribunal under this new system?

Hon. D. Streifel: The chair is paid $75 per, and the appointees -- the members -- are paid $50 per.

V. Anderson: This is $75 for the chairperson and $50 for each of the others. Up until a year or two ago, all of these were volunteer positions, which makes it an entirely different process than what we had before. This is regardless of expenses. Are there expenses over and above the $50 and the $75?

Hon. D. Streifel: There are no returned expenses over and above that.

V. Anderson: If a person has more than one appeal a day, is that per appeal or per day?

Hon. D. Streifel: I apologize to the members opposite for the time it takes to get clarification on these answers. The fee -- the $75 and $50 -- is per appeal for a maximum of three a day. The encouragement is to consolidate on behalf of different appellants. Similar cases would be done from different appellants. If it had similar difficulties or appeals, then it would be consolidated.

[7:15]

V. Anderson: It sounds to me like we're becoming more efficient and less fair. I think fairness and efficiency will work in opposite directions to each other, and it becomes more like a business operation than a concern with individuals. So I have a real concern with the direction in which it is going.

Hon. D. Streifel: I'd just like to point out to the member that when you use the word "fair," it's a large loop and it must include everybody. The process in the past was that somebody came down and kicked in their time and their parking wasn't returned, their meal expense wasn't returned and their mileage wasn't returned. I would suggest, hon. member, that it's not necessarily fair for individuals to give up their time and be out of pocket. If you want to park in downtown Vancouver, and you pop it off down there, you are dealing with $14 a day to park -- and give me a decent meal down there for $20.

So there is an issue of fairness; I agree with the hon. member completely. That's why we are at least returning a bare minimum to some of these folks who participate and who were, in the past, totally out of pocket. If we stroll around some areas of these cities -- and it's not necessarily just the city of Vancouver where these costs can be incurred, because there could be distances to drive, vehicle expenses to maintain.... So I agree that we have to be fair to all individuals involved in these processes.

M. Coell: I think this is the crux of why we're opposed to this particular bill. I'll give you an example. You now have a board where, I believe, the chair would get $150 a day and a member would have....

Interjection.

M. Coell: No, the board would have $150 for its chair, and a member of the board would get $100. With the tribunal, there's the possibility of the chair receiving $225 a day and a member of a tribunal receiving up to $150 a day if they heard three appeals.

We're saying that this is an awful lot of paid bureaucracy where in the past a great deal of this was done through the use of volunteers and community groups. We're trying to point out that there is a cost to this, including payroll clerks and a number of other people who have to put together the members' per diem bills. All of a sudden you seem to create a huge new bureaucracy to settle something as simple as someone appealing the need for homemaker services or glasses for two of their children and themselves. You might have someone on income assistance -- or on one of these other acts -- coming forward to appeal for $100 or $200 for a minor thing, and such

[ Page 1073 ]

a person has to deal with a whole bunch of paid people. The payment for them to listen to the appeal is far more than it would be just to grant the appeal of a couple of hundred dollars for a pair of glasses. That's the crux of what we're opposed to in this bill, and I hope the minister is hearing what we're saying.

Hon. D. Streifel: Would that we lived in a perfect world, hon. members. There has to be some avenue to consider or reconsider doubtful decisions on either side of a question. I hope the hon. member isn't suggesting that there should be no doubt about any decision that's made, that anybody who applies to get anything should automatically get it and that there isn't room to manoeuvre. I would hope that that's not what the suggestion is. I don't imagine it is, but I will suggest that that's what the member is suggesting, because that's what we're supposed to do here: you take one side, and I take the other.

In fact, if we don't have any forum at all to adjudicate, to take a look at or to reconsider decisions that you or I don't like, then I guess we've found perfection.

M. Coell: That's not what we're saying. We believe that there needs to be an appeal. What we're suggesting to the minister is that the minister is creating a very costly appeal process. Sometimes this government takes a good idea and makes it cost a lot more than it needs to cost. We're trying to point out that there was a system in place that was hearing appeals. We're not talking about the quality of the appeals, but their cost. We're just suggesting to the government that this is going to become a very bureaucratic and costly appeal process; it needn't be.

Hon. D. Streifel: I believe, in this whole avenue of about a billion-dollar budget... I don't know how far somebody may have to drive to attend one of these tribunals. Do we travel across country, from town to town? Somebody may call in an advocate or someone to be a winger, in the vernacular, at their tribunal 40 or 50 or 60 kilometres away. This is what we could be dealing with. There are serious expenses involved these days with operating a vehicle and -- who knows? -- perhaps finding accommodation for a while, perhaps meals in the interim, parking expenses and other expenses.

That's what this process is about: in order that it be done without out-of-pocket expenses. It would be wonderful if the world could operate on volunteers, but it doesn't always happen that way. We believe that this process is much fairer than expecting an individual to be out of pocket in order to represent the interests and the needs of an appellant or of the ministry. We believe this sets up a system that's much fairer when those concerns are protected.

V. Anderson: Are these same expenses available to the appellant for coming to the appeal, and if so, is it $50 or $75? What's available to the appellant for coming to the appeal?

Hon. D. Streifel: It's just for the appellant's nominee, the winger on the tribunal. The appellant's benefits carry on while the appeal process is in place.

V. Anderson: But the appellant also has expenses to come to that appeal process. The appellant has to have bus fare. If they are handicapped, they have to take a taxi to come to the process. They also have expenses such as meals, as many expenses as the members of the tribunal have. If you are talking about fairness, then, and if there are extra costs to the members of the tribunal, those costs are even heavier upon the appellant, who doesn't have money to begin with. That's why they are appealing. I am trying to find out if there are any extra costs to the appellant in coming to the appeal. Or is the appellant the only one that isn't getting paid for coming to the appeal process?

Hon. D. Streifel: I wonder if the hon. member would clarify how one cost is a higher burden on one individual than another. Who has the appellant chosen to be a winger or their representative on this tribunal? I don't know who an appellant chooses. I think it would be a mistake for us to presuppose that the appellant has chosen an individual of means to be there. In fact, the benefits for the appellant carry on during that process, hon. member.

V. Anderson: If I can clarify the question, hon. Chair, let's call the appellant Jane. Jane chooses her nominee, who comes and gets the payment; the minister's nominee comes and gets the payment; and the staff person who represents the ministry gets their expenses paid for coming. I am asking whether the appellant, who has expenses to come to that hearing, gets at least her expenses. Or is she the only one that doesn't get paid in order to come to the appeal? The three tribunal members get paid; the staff person for the ministry gets paid for making their presentation. Does the appellant at least get her expenses paid for coming to that appeal, when everybody else is getting paid?

Hon. D. Streifel: In fact, these appeals, which a client brings forward, are generally held locally on behalf of the appellant, but the appellant would not be required to have their representative on the panel from that local area. They could be from out of the way. But I take the member's words to heart, and I'll take them under consideration, actually, because the member has made a good point tonight. I've been involved many times with appeals and the appeal process, whether it's UI or WCB or labour arbitration, and the member has made a point. I'd like the opportunity to work on this with my staff and get some further clarification.

V. Anderson: We are dealing with persons who are coming to an appeal and who haven't the proper clothing to wear or adequate food in many cases. In many cases, they are appealing a medical prescription or transportation allowance that they are not getting. They are appealing for the bare necessities of life. So it's considerably different from union arbitration, because these are people who have the least of all. They are on the bare minimum, even if they get their full payments. So it's a very critical issue, and not only must it be fair but it has to be seen to be fair.

I can imagine there are people in dire circumstances who discover that the appeal process has cost $125 plus the staff, and everybody else is getting paid except the person who's most in need. They're not even getting their bus fare, their transportation or a meal allowance. I've gone to situations where, if the person didn't borrow money, they didn't get home from those events. It's very critical, and I highlight to the minister that being fair to the people who are volunteering also requires a different kind of fairness to the appellants who are coming to these appeals.

[7:30]

There needs to be a real relook at the tribunal itself, because, at this point, it's seen to be a process that has been hijacked by the ministry. The validity it has had over the years is being lost. That very awareness is something the ministry has to deal with, because it makes it difficult for the tribunal to

[ Page 1074 ]

be fair when there's that kind of impression about it. That's why, on the tribunal, I'm stressing that the trust and fairness that were there are lost, and they need to be rediscovered.

Hon. D. Streifel: The hon. member for Vancouver-Langara has made these points very eloquently many times in this Legislature. I appreciate your comments. My commitment is to work with my staff on some of the issues that are before us. I know we can find many avenues in life.... You may not like the analogy of labour arbitration, but this is very close to Workers' Comp appeals and to the circumstances of individuals in UI appeals. If we move into the court system, the plaintiff and defendant don't get witness fees, but witnesses do. Juries get paid and so do lawyers. I thank the member for his comments.

I've listened to them every time he has brought them forward in this House, and I take them to heart.

Section 2 approved on division.

section 3.

V. Anderson:

Whereas we had concerns about the tribunal, we have even greater concerns about the appeal board. Could the minister explain to us how many branches of the appeal board are being set up? How are these being set up across the province? How many people are on the appeal board, and what is the payment to those persons?

Hon. D. Streifel: There is only one appeal board with six members on it.

V. Anderson: And those six are to cover the appeals right across the whole province? There are six persons on an appeal board, and, in my understanding, they are to deal with all the appeals that come in right across British Columbia.

Hon. D. Streifel: The answer would currently be yes, but this act would allow us to expand that board.

V. Anderson: What is the process? Do you actually get to make your case to the appeal board? If you live in Prince George, Dawson Creek, Saanich or wherever, how do you get your appeal to an appeal board if there are only six of them to cover the whole province?

Hon. D. Streifel: For the hon. members, the mandate of this board is really quite narrow. It is to determine errors in law. The cases are written and submitted on forms, and in that manner they can be heard from any geographical area in the province, because they come in written form.

V. Anderson: It's an error in law, so no personal presentations are made. There are only written presentations made to the appeal board. Is that what I'm hearing?

Hon. D. Streifel: That's correct.

V. Anderson: So in the written presentation, the staff of the ministry make their presentation, I gather, to the appeal board when the appeal has been made, and then the appellant makes a written presentation to the appeal board as well. Is that what I'm hearing?

Hon. D. Streifel: Both are written -- from the appellant and from the ministry.

V. Anderson: If there's an appeal, there are two sides to the appeal. On one side it is the ministry making the appeal against the decision of the tribunal, which would be a supervisor or the minister himself asking for the appeal to be heard, and on the other side it would be the appellant making the appeal. Will there be legal aid services or lawyers available to the appellant to make that appeal, and are they paid for by the ministry, since it has to be a legal document that they're now presenting?

Hon. D. Streifel: Yes, usually there would be legal aid services supplied, and, of course, that comes from the AG's legal aid bill.

V. Anderson: So we've gotten into a semi-legal process in looking at these appeals. As I understand it, the only appeal that was available before was to go to court, for either the ministry or the appellant to take it to court. What we have now is a semi-judicial process which requires legal documents according to law and requires legal presentations. But in a court hearing, if you make a legal presentation and somebody wants to get clarification or understanding of that presentation, there's also a personal presentation. Are you saying that there's only the written document for the appeal board to deal with?

Hon. D. Streifel: There are only written presentations in this circumstance, and they're on a form that's supplied. We don't want to duplicate a tribunal, and we don't want to drive back through the court system on these issues. That's why this is in place. In fact, the documents are prepared, and the forms are filled out. There's assistance supplied to the appellant through the processes we already described to help make sure that the forms are filled out properly and that the error in law is pointed out, and the process goes ahead in that manner. The alternative is that we go to court.

M. Coell: The more we get into this, the more we see that this particular bill is going to create more jobs than B.C. Youth Works. It just seems to be from one bureaucracy to another, and now we're into court. I guess we have some more questions, but it's obvious that this particular piece of legislation is designed to create a whole new bureaucracy. I just can't see why the minister isn't considering scrapping this now and going back to what was previously there.

Hon. D. Streifel: I wonder if the members understand that this has been brought forward to stop these $50,000 court cases, as a matter of fact. We won't have to go to court. This is a much more cost-effective method of determining the outcome of error-in-law decisions. I wonder if the hon. members would prefer that we don't correct error-in-law decisions.

V. Anderson: Do I understand the minister to say that there is no longer an appeal from the appeal board to the court? It was my understanding when this was brought in, that there was still the opportunity to appeal to the court a decision of the appeal board.

Hon. D. Streifel: The member would know that you can always go to court as a final arbiter in these cases. If the concern is the law, it is always available.

V. Anderson: So there is still the opportunity. If I understand rightly, when it talks about panels of the board in another

section related to this, one person can be the appeal

[ Page 1075 ]

board. The whole decision can rest on one person. Is this right? Rather than a three-member or a six-member board, one person can hear, take those two documents, look at them and make the decision. The only follow-through to the decision of that one person is to go to court to take it further.

Hon. D. Streifel: In fact, that is correct, and it's not inconsistent with other tribunal processes that are heard by a single arbitrator -- for instance, labour or the WCB again. As we go forward in some of these circumstances, I believe it's available under the WCB, certainly under labour. These individuals are chosen for their high level of expertise and ability in these areas.

V. Anderson: Are we to assume that since the decision is made on a question of law, all of the board members will have legal training and therefore, presumably, will be lawyers? Who else would be able to make the decisions on a point of law unless they have that legal training?

Hon. D. Streifel: In fact, for the clarification of the members opposite, the chair has the capacity to determine the size of this panel, and if there are complex legal issues, the Chair can provide for that. As to qualifications, each member of the board must have either knowledge of the principles of administrative law or experience with income security programs, appeal or arbitration boards or commissions, or health education or community programs. There's a vast array of experience that's required in this area.

V. Anderson: Will the findings of these boards be public findings? They will go to the two parties involved, but will they be findings that are public, so that one can track the fairness, the justice and the nature of these findings?

Hon. D. Streifel: With the exception of possible confidential information, yes, the findings can be made public -- with some considerations for privacy and confidentiality.

V. Anderson: We'll leave it until we come to the next section. I think that's all on

section 3.

Sections 3 and 4 approved.

section 5.

Hon. D. Streifel: I have an amendment. Are there two amendments? I have amendments to

section 5 that are in the hands of the Clerk -- two subsections, 5(6) and 5(3). I understand they have been distributed to the members.

[SECTION 5, by deleting the proposed subsection (6) and substituting the following:

(6) If the parties notify the board that they have resolved the issue under appeal, the board, or a panel to which the appeal has been referred under subsection (5), must order that the appeal be discontinued.

(3) The appeal must be commenced and conducted in accordance with the regulations and must be decided on the basis of written submissions only.]

Amendments to

section 5 approved.

Section 5 as amended approved.

Section 6 approved.

section 7.

[7:45]

V. Anderson: Again, we have this

section where everything that is undecided is passed over to regulations. It talks in

section 7(2)(

b) about "...pre -qualified persons to act as chair of a tribunal in different geographic areas of British Columbia." I know we did discuss a little bit of that earlier, but could the minister indicate what "pre-qualified persons" means? What are the qualifications that people must have?

Hon. D. Streifel: I'm pleased to clarify that. Those are the individuals who have taken the training to secure the qualifications to be prequalified in order to sit there. We'll train them, hon. member, and we're going to pass that information over to you.

V. Anderson: Might I ask who is developing the training course, and who is undertaking the training? Do we have people from the Justice Institute? Are they external trainers? Are they internal trainers? There's a real concern that there's a bias in the trainers. How do we know that the bias is not trained in?

Hon. D. Streifel: We contracted through a contractor to develop the training module that we'd be using. This contractor developed the training program or module through research and through looking at other areas that have programs along these lines. The training is delivered by other contractors within the regions, so it's somewhat at arm's length from the ministry under this method.

V. Anderson: Is this one contractor who deals with it throughout the province, or is this a variety of contractors?

Hon. D. Streifel: It's put out for tender in areas of the province, so it could be multiple contractors by tender in the regions. Again, I'd stress that the program.... Can I call it a core program? Can I get away with that? The basic program, the basic contract, was developed by an independent contractor, and now it is delivered through regional contractors that are subbed out.

V. Anderson: Call it a contract or a core program, whatever you like. May we get a copy of the core program so that we could see it? That would be very helpful, thank you, so that we may share it.

There's a couple of things in the regulations that I wonder about in light of the discussion: "...respecting the status of decisions of a tribunal pending appeals.... " Regulations regarding the status of decisions of a tribunal: you either can appeal it or you can't, so I can't quite understand what kinds of regulations are involved there.

Hon. D. Streifel: For the first question, yes, to the core or the contract. Could you clarify the other question for us -- which regulation and where we're at with this? I can't find it here.

V. Anderson: Sub-subsection 7(2)(

i) is the regulation: "...respecting the status of decisions of a tribunal pending appeals to the board from those decisions."

Hon. D. Streifel: I understand that this refers to a decision that could be made without prejudice, so it wouldn't be precedential, I would suppose. Generally, with any decision

[ Page 1076 ]

I've ever seen that says "without prejudice," it's so that it doesn't affect you later on down the road, or whatever. I think that's what this reference is to.

V. Anderson: Sub-subsection 7(2)(

j) talks about the "consolidation of 2 or more appeals to be heard at a single appeal hearing of a tribunal or the board." With all respect, my experience with these tribunals is that they are all very personal and very individual. To try to do two personal appeals, which have very specific information, together would just turn everybody off. Does the appellant have the privilege of saying yes or no, that these appeals can be heard?

Hon. D. Streifel: It is sometimes difficult to understand all the nuances in the workings, and I want to make the information as clear as I can. It would appear that over the last week or ten days, clarity has been a difficulty.

In this case, it could be the consolidation of a number of legal issues by the board, or it could be the consolidation of a number of issues by the same individual -- so the same individual would bring forward multiple issues all at the same time. That would be the general happening. I hope that clarifies it for the member.

M. Coell: I realize the minister has some staff here that can probably assist. Before a person gets to the tribunal, what avenues to resolve a difference would they have? Let's say a client applies for something that is rejected by a financial aid worker. How many different opportunities would someone have to satisfy themselves before they got to the tribunal?

Hon. D. Streifel: So far, we've come up with at least two. The supervisor or area manager could work within an administrative review. As a matter of fact, if we go back to fiscal '95-96 -- if the members opposite would allow me the privilege of a written answer this time; it's awful how concerned we are about what others think, isn't it? -- a total of 4,788 decisions were reviewed. Of these, 3,933, or approximately 82 percent, were settled by administrative review. So that would be within those two processes in the ministry.

The remaining 855 appeals were resolved at the tribunal level, so that's 18 percent at the tribunal level. Those are fairly good statistics, hon. member, if 82 percent of these things don't even get out into this extended process but are handled at the admin level. I think that's remarkable, actually. I thought what we were discussing affected almost everybody in the system.

V. Anderson: I think the minister, without meaning to, demonstrated the point we've been trying to raise: that a good many of the appeals have been resolved at the tribunal stage. Most of them have been resolved to the benefit of the appellant coming forward. Many of the reasons for tribunals in the first place are because of the manner in which social workers or income assistance workers have had to use the regulations. So the fault has been in the system itself, which was corrected by the tribunal.

So to set up this whole appeal board process over and above that.... It would have been much more effective to have made the tribunal system 80, 85 or 90 percent effective and not to have had this whole other process, which has taken from the validity of what could have been a process in the first place. I think the minister, by his very figures, has demonstrated that we're going entirely in the wrong direction with this new creation of the ministry.

Hon. D. Streifel: I thank the hon. member for his comments, but I think I'd like to again offer some clarification of my words. In 100 percent of the cases, 82 percent of them don't get anywhere near the tribunal stage. They're done within. That's 82 percent. That's a tremendously successful rate within the offices and right within the ministry.

Only 18 percent ever proceed to the tribunal stage, so I guess I lean back on my first comments: that through the process of this debate around appeals and tribunals and who comes where, I was really under the impression that the hon. members were bringing forward virtually everybody within the system, not just 18 percent of those who have had a difficulty here and who would even proceed to the tribunal stage. I don't know if I even have the figures of those that get settled at the tribunal stage and those that actually have to go to the appeal board, but I imagine it would be considerably smaller.

M. Coell: We're almost ready to sum up our points. I just want to make the final point that if you had a client who was receiving income assistance at the lowest rate of around $500 a month, and they were appealing the $150 cost, whether it be a medical cost or housekeeping, they would have to go through about seven layers of appeal. We have a financial aid worker, we have an area manager, we now have a tribunal, an appeal and the courts, and we have subcontractors hired and contractors hired. So for someone making $500 a month on income assistance, this is a great make-work project for the bureaucracy.

There are people hired all through this to appeal very small amounts of money. We're trying to point out the cost of the whole appeal process, from the financial aid worker to the judge in the court. Why have we set up a process that allows appeals to be so expensive? I think it undermines the credibility of the ministry -- and all of us -- when we set up systems like this.

[8:00]

The Chair: Hon. minister, it's a little like second reading debate. You may want to take that under advisement.

Hon. D. Streifel: Thank you very much for the caution, hon. Chair; I will take your words to heart.

I thank the hon. member for his comments on this section, and take my place and wait for the yeas.

Section 7 approved on division.

Sections 8 and 9 approved.

Title approved.

Hon. D. Streifel: Hon. Chair, I move the committee rise and report the bill complete with amendments.

Motion approved on the following division:

YEAS -- 36

Evans

Zirnhelt

Cashore

Boone

Hammell

Streifel

Ramsey

Kwan

Waddell

Calendino

Pullinger

Stevenson

Bowbrick

Goodacre

Giesbrecht

Walsh

Kasper

Orcherton

Hartley

Janssen

McGregor

Conroy

Smallwood

Farnworth

Robertson

Gillespie

Doyle

Lali

Sawicki

Randall

Sihota

MacPhail

Dosanjh

G. Clark

Miller

Petter

[ Page 1077 ]

NAYS -- 32

G. Wilson

Weisgerber

Penner

van Dongen

Whittred

Nebbeling

Anderson

Coell

de Jong

Stephens

Plant

Hurd

Farrell-Collins

Campbell

Reid

Gingell

Dalton

J. Wilson

Reitsma

Hansen

C. Clark

Hawkins

Symons

Abbott

Jarvis

Weisbeck

Chong

Coleman

Masi

Krueger

Barisoff

Neufeld

The House resumed; the Speaker in the chair.

Bill 16, BC Benefits (Appeals) Act, reported complete with amendments.

The Speaker: When shall the bill be considered as reported?

Hon. J. MacPhail: By leave now, hon. Speaker.

Leave granted.

Bill 16, BC Benefits (Appeals) Act, read a third time and passed on division.

Hon. J. MacPhail: I call Committee of Supply, and for the information of the House, we will be debating the estimates of the Ministry of Finance.

The House in Committee of Supply B; G. Brewin in the chair.

ESTIMATES: MINISTRY OF FINANCE AND

CORPORATE RELATIONS

AND MINISTRY RESPONSIBLE FOR

INTERGOVERNMENTAL RELATIONS

On vote 29: minister's office, $348,000.

Hon. A. Petter: Before I begin, I'd like to introduce some of the members of my staff who are here today. Seated on my immediate left is Deputy Minister Garry Wouters; on the other side is Chris Trumpy, ADM, provincial treasury; and seated behind me is Brian Mann, director of finance and administration.

The Ministry of Finance and Corporate Relations occupies a pivotal position in maintaining the economic well-being of this province. The ministry's mandate and scope of responsibilities, especially since its amalgamation with the former Ministry of Government Services this spring, makes it central to the operations of government.

The ministry is the government's tax collector; banker and money manager; chief accountant; fiscal and economic policy-maker; budget and expenditure arm; central human resource and labour relations agency; corporate and personal property registrar; collector of statistical information; purchaser of goods and services; central post office; printer; deliverer of information technology services; administrator of public pension plans; regulator of utilities in the province; regulator of trust companies, credit unions and cooperatives, insurance and real estate; and provider of planning, communication and coordination support to the executive council.

To fulfil this broad mandate, the ministry has 2,638 FTEs and estimates that it will spend $277.5 million this fiscal year. In addition, the ministry provides other corporate services and supports other government entities, such as the Information and Technology Access Office, B.C. information and privacy office, Enquiry B.C., and the B.C. information management services office. I am also responsible for Intergovernmental Relations, the Provincial Capital Commission, the B.C. Gaming Commission and the B.C. Racing Commission.

Together, these additional agencies and functions employ 539 FTEs and will spend $63 million this year. Lastly, my ministry has recently become responsible for the Insurance Corporation of B.C. and the B.C. Lottery Corporation.

Leading by example, my ministry continuously looks for ways to cut expenditures. As a financial manager for government, the ministry is determined to streamline and cut its own costs. We are also searching for ways to increase government revenue, while supporting the objective of this year's budget of making government leaner but not meaner. Let me provide a few specific examples.

We have worked closely with the RCMP and Revenue Canada over the past year to curtail illegal tobacco smuggling and to ensure that the province receives the appropriate tax on all tobacco products coming into this province. We will continue to aggressively pursue this source of tax revenue. The introduction of new purchase cards will streamline government small-dollar purchasing, with an ultimate saving of $1.4 million. This program received the deputy minister's service quality award last year.

The government vehicle fleet will save an additional $1.1 million through a streamlined licensing and insurance process and a prenegotiated fuel discount program. An agreement with Canada Post will save $700,000 over four years on government mail delivery. A risk-sharing agreement for student loans with three major banks will save the province $10 million annually through a reduction in defaulted student loans. On the cash management side, the ministry has tapped into the U.S. market for the first time in three years with a very successful $500 million (U.S.) 30-year bond issue.

I'm pleased to say the auditor general has given the ministry a favourable review on our cash management operations and contributions towards minimizing borrowing costs. Ministry initiatives for the next fiscal year will continue to look for ways to increase efficiency and cut costs. We will also be working to find ways to produce more accurate and timely information on current changes to the provincial economy.

Certainly, the highest-profile function of the ministry is the production of the government's annual budget. This year's provincial budget -- introduced by my predecessor the day the election campaign began, and reintroduced after our government won a second mandate from the people of this province -- made some significant commitments. We committed to protect health care and education in this province, to provide a modest tax cut to middle-class British Columbians and small business, and to balance the budget while reducing overall government debt.

We have already begun to act on these commitments. The personal income tax cut took effect on July 1. Legislation has been passed to establish the B.C. family bonus, and the first cheques have been mailed. New capital spending by government has been frozen, and all government programs are currently being reviewed. We made a commitment to balance the budget in this fiscal year, and I am determined to do whatever is necessary to meet that commitment.

[8:15]

[ Page 1078 ]

I'll recap briefly some of the actions taken and planned by this government. The personal income tax rate has been reduced by one percentage point on income up to $80,000 a year. Personal income tax will be reduced another percentage point in 1997. The tax cut is supported by a freeze on all other taxes for individuals and families until the year 2000. The budget also freezes B.C. Hydro rates, ICBC premiums, and college and university fees. Taken together, these measures will mean a savings of up to $500 for a typical family, and the total savings for taxpayers will be $485 million annually by 1998-99.

We also made a commitment to protect health care and education for the families of British Columbia. We're increasing funding for hospitals by 2.5 percent to ensure quality services that all B.C. families and seniors can count on. A five-year health care funding guarantee means that health care spending will keep pace with population growth and cost pressures. This is a stronger commitment to health care than made by any other government in Canada.

The budget also protects education. We're increasing funding in the K-to-12 system to cover enrolment growth as families continue to move into the province. In colleges and universities we're adding 7,000 spaces in the upcoming academic year. This will guarantee a space for every qualified post-secondary student, and the budget also makes post-secondary education more accessible through freezing tuition fees for two years.

We're also working hard to create new jobs and protect the good family-supporting jobs that exist in this province. Based on our strong economy, we're forecasting 40,000 new jobs in B.C. in the upcoming year. According to Statistics Canada, 34,000 new jobs have been created in B.C. just since December, so our target is achievable. A 10 percent tax cut for small business in the province will also help stimulate job creation, and we've also been working hard to protect the jobs in B.C.'s coastal communities by protecting our valuable west coast fishery resource. The agreement signed last week with the federal government showed that we are making significant headway in this regard.

I think it's also known to members of this House that we have frozen all new capital spending by government, pending a review of capital spending. The objective is to reduce overall capital expenditures and the related debt while ensuring that we make the investments necessary to support British Columbia's priorities, and particularly our priorities with respect to health care and education.

Every government program is currently being reviewed through the program review, and we are asking the tough questions. Is this a program that's really necessary? If it is, can it be done better, cheaper and more efficiently? We're working to streamline bureaucracy, increase government efficiency and cut costs. The end result will be a government that serves the public, not the process of bureaucracy. This government is already well on its way to living up to its 1996 budget commitments.

In conclusion, my ministry has focused its resources on the priorities of British Columbians: cutting taxes, sound fiscal management, reducing the debt and reducing the size and cost of government. This ministry takes seriously its responsibilities for sound fiscal management, not only in the annual budget process but in our day-to-day activities. The ministry will continue, as we have done in the past, to serve the people of this province. We will seek out every way to ensure that every dollar of taxpayers' money is spent wisely. Like all parts of government, we can improve, and we must continue to do that.

I'd like to thank the staff for their hard work and dedication. I know they'll continue to provide excellent support as we meet the challenges of the next year together. I'd like to also indicate that as a new minister I'm very much looking forward to the challenges that lie ahead and to working cooperatively with the members opposite. I've certainly enjoyed the interactions I've had to this point with the critic for the opposition party....

An Hon. Member: Every one of them?

Hon. A. Petter: The chief critic for the opposition party, who's obviously well versed in these matters.

It has always been my philosophy in this House -- I hope I've managed to find an opportunity from time to time to disclose it -- that we do better when we work together. I look forward to the opportunity to work together with all members of this House -- with my opposition critic and even with some other critics from time to time -- on these and other matters, as I take on some of the challenges that this ministry affords and provide some direction on these important issues.

F. Gingell: Mr. Chairman, it was most interesting to sit and listen to the full extent of the minister's responsibilities. The reorganization that has taken place within government has placed a great burden, I think, on this particular ministry. It is a ministry that needs to be watched every hour of every day, and I just hope that by the adding on a whole series of other responsibilities from the Ministry of Government Services and some other transfers, I think, from the Attorney General, they haven't put too much of a load on this minister, to take him away from the very important task at hand.

It was interesting when he said that their effort was to make government leaner but not meaner, and the next thing he mentioned was all the work they're doing with the RCMP and the income tax department regarding smuggling and other such items. I can assure the minister that if he answered the phone calls in my constituency office and listened to local business people talking about the income tax department and the RCMP, he wouldn't describe that as a route by which they would become leaner but not meaner.

The first item that I'd like to deal with with the minister is the manner in which the estimates are produced. I'm sure the minister is expecting me to ask this particular question, and we might as well get into it right away. The estimates are produced and tabled. At some point very late in the year.... In this case, of course, the first budget was tabled on April 28 and the second on June 26, clearly after the end of last year, and this year has already started. Perhaps as a starting point, the minister could advise the committee who is responsible for making the billings for stumpage or royalty that come through Forestry revenues.

Hon. A. Petter: There was some ambiguity, at least in my mind, about the member's question, but if he's talking about the estimates for Forestry revenues as opposed to the actual billings.... I'm not sure which he was talking about.

F. Gingell: The billings.

Hon. A. Petter: I'll have to come back and answer that. I was ready to answer on the estimates side, which is done

[ Page 1079 ]

ultimately by the Minister of Finance, based on information provided by the Minister of Forests. Maybe the member could restate the question so I can make sure I get the answer.

F. Gingell: As logs are cut and brought to a booming ground, they are scaled. Those scale bills go to the Ministry of Forests, and someone at some point makes out an invoice for the stumpage or the royalty which is owing on those scaled logs. I was wondering if the minister could advise us which ministry is responsible for that process.

Hon. A. Petter: For the scale, that would be the Ministry of Forests.

F. Gingell: And the conversion of those fibre volumes into dollars is done also by the Ministry of Forests?

Hon. A. Petter: Yes. As I understand it, the conversion of the scale on the billings is done by the Ministry of Forests.

F. Gingell: Is it also true, then, that the Ministry of Forests mails that invoice out and that they are responsible for the collection of the receivables in their revenue division?

Hon. A. Petter: Yes.

F. Gingell: See, it's going along swimmingly.

Perhaps the minister could advise the committee of the means by which the Ministry of Forests advises the comptroller general's office about revenues and the amounts that should be recorded.

Hon. A. Petter: My understanding is that subsequent to the billing being done, the Ministry of Forests has a system for providing information to the Ministry of Finance. But if the member wants more detailed information about how that is done and the way in which it's done, I'd have to seek advice of other staff in order to get that for him.

F. Gingell: The issue I'm interested in is the issue of timing: when it happens. Can the staff help with that question?

Hon. A. Petter: I'm trying to get this as precise as I can for the member. As I understand it, there is a process of interaction between the Ministry of Forests and the Ministry of Finance in which estimates are sent from the Ministry of Forests, based on the actuals that they submit to the Ministry of Finance. This process goes back and forth in terms of reconciliation procedure until sometime in August, when there's a sign-off by the comptroller general, as I understand it.

F. Gingell: I wasn't interested in the issue of the final. What I'm interested in is the process. The Ministry of Finance is responsible for billing and collecting the majority of revenues that the province gets, and administering them. But the forest revenues are an exception, because they are administered, it was my understanding, by the Ministry of Forests. There must be some process whereby every five or ten days there is advice given by the Ministry of Forests or the Ministry of Finance about the value of the invoices they have sent out.

Hon. A. Petter: I can't give the member a precise time line, but I can try to get that from staff. My understanding is that it takes some time, in the normal course of events. It's not just the Ministry of Forests. Energy and the Ministry of Employment and Investment, as I understand it, are also submitting information back and forth. But this is, as I understand it, not an automatic procedure of simply submitting invoices, and they're totalled up. There is an interaction back and forth that culminates in a finalization of the actuals through the comptroller general.

In fact, I know a little bit about the middle of this process, because I myself fell into it as Minister of Finance. I don't know a lot about the beginning and the end of it, but I'll try to get that for the member.

I can tell the member that the draft of the comptroller general's report was only just being prepared when I became minister. The finalization of that report isn't done until August.

[8:30]

How the actual receipts come in, how much time lag there is, the extent to which they are then vetted and returned, and go back and forth.... I just don't have that detail, nor does staff, but I'd be happy to try to get it for the member.

F. Gingell: I would imagine, just from the point of view of common sense, that as the billings are prepared on the computer and mailed out, totals of those billings would be sent over to the Ministry of Finance. That's probably done automatically. The Ministry of Finance probably has a means of going into the computer of the Ministry of Forests and getting those totals. Now, the Ministry of Forests is also responsible for collecting the receivables, so there are going to be some arguments and discussions and, I'm sure, adjustments.

As I understand it, you receive an interim financial statement every single month from the comptroller general's office, and it contains revenues from Forestry, revenues from Energy, and all those other items. So the information must be available for the preparation of those monthly statements. At this moment, I would just like the minister to confirm that I'm not labouring under a misunderstanding.

Hon. A. Petter: I understand that there is a report done on actuals by the comptroller general on a monthly basis. But the report does not include the accruals, and it does not include the reconciliations that are necessary in order to take those actuals and convert them into what ultimately becomes the public accounts. So there are actual statements, but the actual statements are unadjusted and subject to review and change on an ongoing basis. That's where, of course, a lot of the uncertainty comes from until those various matters are resolved.

F. Gingell: Could the minister tell the committee what time of the month he gets the monthly statement for the preceding month from the comptroller general's office?

Hon. A. Petter: There's some confusion here. As I understand it, normally the results would come in in the second or third week of the month, but there is some uncertainty as to what the actual reporting around this is at year-end. As one moves from the monthly process to the preparation of the public accounts.... Certain reports are not, then, prepared at year-end as we move to public accounts.

If the member wanted to know precisely about reporting at a particular time of the year -- I suspect he may be heading in that direction -- I would have to go back to staff who aren't

[ Page 1080 ]

present and find out whether those reports are prepared and at what time they are received by the deputy. They aren't sent to the minister; they're sent, as I understand it, to the deputy.

F. Gingell: The point, of course, that I'm trying to make is that by the time April 28 came, when the estimates for this year were tabled for the first time this fiscal year, somebody had taken it upon themselves to increase the estimated forest revenues from the original estimate of $1.522 billion to $1.603 billion. Can the minister tell the committee which person was responsible for making that change?

Hon. A. Petter: Those final decisions were made by the Minister of Finance at the time, as I understand it. They were based upon two key factors. One was a ministry report that was prepared at the end of February, which showed that as of the end of February, revenues were about $5 million higher than projections to that point. Notwithstanding some decline in small business, there was a more-than-offsetting revenue increase in other areas, showing $5 million more than projected.

The other factor that influenced the minister's decision, as I understand it -- because I wasn't the minister at the time -- was that in recent years, the value of timber harvested but not invoiced had been, in the last two months, about $100 million higher than had previously been estimated. There was this upward trend of accruals that had emerged in previous years towards the last two months of the year.

Based on those two factors, I'm told, the minister was presented with a range of options and chose an intermediate option based on those two variables: the fact that we were, at that point, about $5 million ahead and the fact that accruals had been running about $100 million ahead and had been increasing over previous years. For that reason, the minister of the day felt that the revised forecast should be set at $1.603 billion. That was higher than the January forecast of $1.497 billion and reflected the expected accrual of about $100 million.

F. Gingell: Can you tell us which department and which officer within Treasury Board would have been responsible for making the assessments -- or if the assessments came from the Ministry of Forests for vetting, who would have advised the Minister of Forests?

Hon. A. Petter: It would have been the deputy minister of the day who would have taken all of the available information and presented it to the minister. Based upon that presentation, the minister would have made her determination.

F. Gingell: The minister knows that a ten-month report was prepared and issued by the Minister of Finance's office on March 15, before year-end. The forest revenues for that period, for the ten months, are about $260 million behind projection. If you take ten-twelfths of the estimated 12-month amount.... I just took the timber sales and the small business forest enterprise program. My calculation is that ten-twelfths would have been $1.557 billion, and revenues at that point were $1.289 billion. So with only two months left to go, they were $268 million behind. How does that reconcile with the suggestion that one month later they were $5 million ahead?

Hon. A. Petter: I think the answer lies in the fact, as I was mentioning earlier, that you cannot just prorate the revenue flow. The pattern over recent years has been that approximately 27 percent of total forest revenue is collected in the last two months of the year. Regrettably, that pattern didn't emerge this year, but it was the pattern that had occurred in recent years. In fact, it was about 30 percent in '94-95 and 26 percent in '93-94. So you have a pattern in forest revenues of a ballooning of those revenues in the last two months -- partly because of accruals, perhaps, and partly just because of the nature of reportings and billings.

I don't know the full details, but that was the pattern that, as I understand it, was in the minister's mind in making her determination. I think the member's mistake -- if I can call it that; maybe it's not a mistake but just his observation -- is based on this notion that there is somehow an even prorated flow of revenues. That has not been the pattern in previous years, regrettably, and this year the revenue in the final two months did not meet the pattern of previous years -- hence the shortfall.

F. Gingell: Even if there had been another $100 million to be accrued -- and I understand that there have been some changes in the way these are done -- you'd still have been running $150 million behind. When you came out with the final numbers, they were, in fact, virtually equal to the amounts that were projected for the ten months. Did the whole industry collapse for two months? Were there no net revenues? Did all the adjustments wipe out the billings that had been made?

Hon. A. Petter: It wasn't a complete collapse, hon. Chair, but there certainly was a substantial drop for the final two months from the previous year's experience. I haven't done the calculations based on the March numbers, but as I understand the numbers that were presented to the minister, they were based on the ones I cited from the end of February. If there had been this upturn in the amount I indicated, it might have produced -- and was, in fact the basis for the forecast.... It would have produced the ultimate number.

There was a substantial drop in the final two months of this year from what had been the experience in previous years, not only in the absolute value but in the relative value of forest revenues in those final months, to the point that they were about half, on a percentage basis, of what had previously been experienced. They were about 15 percent, rather than the 30 percent in the previous year.

F. Gingell: I must admit that as an accountant I have problems understanding how this could happen. Your income tax revenues are well defined. You send out invoices. They are mailed out and they come back.

Mr. Minister, when you were appointed Minister of Finance, you would have received a briefing book that would have a thorough review of the finances of the province and would give the current status. Having seen a couple of old ones, I've got a good vision of what's in them. Can you advise the committee if there was any reference to forest revenues in those briefing books?

[8:45]

Hon. A. Petter: I'd have to go back and review the book. There may well have been some general reference to forest revenues. There was an addition to the briefing book based on a briefing I received in the last few days before the budget. It was based on the first draft report of the comptroller general. It was the report that became finalized at the end of the week -- not finalized, but confirmed by ministry staff. So that was added the day before the budget. Beyond that, I don't think

[ Page 1081 ]

there was a specific reference to forest revenues. I've already said publicly that I was advised by staff that there was certainly uncertainty around forest revenue -- a concern about a shortfall in forest revenue. I was initially advised that that uncertainty would be resolved or be better addressed in July, when there were more certain numbers. When the OCG first draft report was prepared, I then received a briefing on that on the Tuesday before the budget, followed by a note that was added to my briefing book on that, which was the preliminary take on the report that became finalized later in the week.

F. Gingell: The impression I got from the public statements the minister made at that time was that during budget week -- I think the budget was tabled on June 27....

Hon. A. Petter: June 26.

F. Gingell: June 26. Yes, that's right; we dealt with interim supply on the 27th.

During that week, either on the 25th or the 24th, it was the first time you had been led to believe that there might be some shortfalls in forest revenues.

Hon. A. Petter: No, that's not correct, hon. Chair. I was informed shortly after becoming Minister of Finance that there was a concern, an uncertainty, around forest revenues that could result in a shortfall and a deficit. But it was an uncertainty, and it could also still come around to ending up in a surplus position.

What the member may be referring to is.... That was all a very general sense of concern. That concern became more concrete when I was briefed on the first draft of the comptroller general's report on the Monday or Tuesday before the budget. That report, then, in more concrete terms, had numbers which staff felt were still preliminary, that were subject to change and that surprised staff in some respects. Certainly, at that point the concern became more concrete than it had been.

It was not until the end of the week, on the Friday, that I was briefed that, having reviewed those numbers, staff now felt that those numbers could no longer be regarded simply as preliminary and that they provided the basis for staff's advice to me that we would likely forecast a deficit at that time in the range that I announced.

F. Gingell: I take it that the minister is telling this committee that even though the January 31 statements, which were prepared on March 15, showed two major items of forest revenue to be $268 million behind the pro rata portion of ten months out of 12, there was no concern expressed by anybody at any time that forest revenues could be substantially less than originally budgeted and included.... I mean, the real issue is that they had been increased in the 1997 estimates. There had been no indication before the election was called on April 28 that forest revenues could be down.

Hon. A. Petter: I guess I can only reiterate what I said to the member before. As I understand it -- because I wasn't the minister at the time -- the information presented to the previous minister, based on a Finance report of, I think, March 20, showed that revenues to the end of February were up $5 million. That, plus the fact that, contrary to the member's assumption, the flow of forest revenues was not a prorated flow in past experience, but had this buildup of accruals in the last two months, caused the minister to make that determination.

In respect of my own role, I think I've been clear that, yes, there were concerns expressed to me of the nature that I've expressed and in the way that I've expressed them. I have already gone through that sequence.

F. Gingell: You obviously now have a lot of analyses giving you a lot of information. Seeing as all of this is stuff in the past, I presume you would make that available to me in its fullness.

Hon. A. Petter: I've asked my deputy to review this and to assemble the information. I believe, in fact, that there are some freedom-of-information requests, and I anticipate that information will be made public in due course. Certainly the member will have access to it.

F. Gingell: I'd like to, quite honestly, get it as soon as we can. It surely must have been done by now; it must be finalized.

In dealing with the issue of whether this government or its predecessor government was aware that the supposed surplus of some $16 million that was in the revised forecast for the year '95-96 and tabled subsequent to that date -- within this current year, just to make sure it's discussable -- there are two other items. The first item is the issue of the $47 million which the federal government have withheld payments on for Canada Assistance Plan financing -- an established program -- over the issue of residency in British Columbia to qualify for Social Services things.

I understand that, at that particular time, British Columbia was proceeding to go to the Supreme Court of Canada to start an action against the federal government. Can you confirm if that is correct as of the end of April?

Hon. A. Petter: If the member's question is whether that $47 million debt owing, at least from B.C.'s point of view, was accrued in the estimate for the purposes of producing the forecast of '95-96 -- which is contained in the '96 budget, for the purposes of making this a relevant question -- my understanding is that the answer is yes, it was accrued based on the prospects of the legal case succeeding.

F. Gingell: I don't mean to sound like I'm lecturing a university professor, but one of the first lessons accountants should learn is that you provide for all losses and anticipate no profits. I'd like to suggest to you that you provide for all liabilities and anticipate no assets, unless they are certain. If you're having to go to the Supreme Court of Canada to collect this, I doubt if even your favourite firm of chartered accountants, who I won't name at this moment in time....

An Hon. Member: They know who they are.

F. Gingell: They know who they are, and you deal with them pretty regularly. I doubt if even they would give you an opinion that it is properly includable in revenue.

I'm wondering if the government did in fact seek an opinion from the comptroller general's office or the auditor general's office on the proper inclusion of this amount.

Hon. A. Petter: Well, one thing I'm finding as a Finance minister who is newer to some of these issues than the member opposite is that it's an accrual world. [Laughter.]

My understanding is that it was included as an estimate of revenues. But the matter of whether or not this ultimately should and will be accrued is one that is being reviewed with the comptroller general and, I guess, ultimately the auditor general as well, in finalizing the public accounts.

[ Page 1082 ]

F. Gingell: You're probably aware that the government makes, in its accounts, provisions for uncollectible receivables or questionable receivables -- valuation allowances, you call them. Clearly, this is an item that you would provide for 100 percent, even in these first estimates. Can you advise the committee if in fact an allowance was made on the expense side of the budget to provide for that $47 million?

Hon. A. Petter: No.

F. Gingell: Which leads to one more issue. After everybody had a party to celebrate us winning the softwood lumber dispute with the Americans -- well, we may have lost it since, but.... The first win provided for the refund of certain funds to Canadian forest companies, and my understanding is that in your revenue estimates you have made a provision for additional revenue that you hope to receive, because of these quite substantial income sums that will be flowing back to British Columbians, in the amount of $87 million. Is that correct?

Hon. A. Petter: Yes. I don't have the exact numbers, but there was an assumption -- I'm confused as to whether the member is talking about last year's budget, 1995-96; I think he is -- concerning the rebate of those collected tariffs in that budget.

[9:00]

F. Gingell: My understanding is that there is $86 million included in corporate income taxes that is purely and simply an accrual or an assessment resulting from income that will arise through the softwood lumber tariff refunds. Is it normal for your revenue policy group to think about these kinds of things and add those sorts of items into normally anticipated corporate income tax returns? Or do you normally work on the basis of estimates given to you by the federal government?

Hon. A. Petter: Again, this deals with matters that arose when I was not the Finance minister, so I am not as familiar with the practice as I would have been had I been minister. But my understanding is that in this particular case estimates were based on information that was gathered from the federal government and other sources. Ultimately, the forecasts that are made are those of the province, based on best information; in this case, best information included, but I'm sure was not exclusively, information received from the federal government.

F. Gingell: I can well appreciate the problem that the minister has in not being the minister who was responsible when all these things were happening. I hope I have his sympathy for my not having the minister who was responsible for all these happenings present here, either. I'm very pleased, in fact, that we have a new member for Oak Bay-Gordon Head. There are questions, however, that constituents bring to me every single day of the week.

I must admit -- and I say this to the Minister of Women's Equality, too -- that the people feel that these kinds of issues and numbers should have been better understood by a Ministry of Finance that has the staffing and resources that this one has. I find it inexcusable. I really don't want to put it down to incompetence, but either it's incompetence or people aren't being quite as straightforward as they might otherwise be.

I hold the bureaucrats in the Ministry of Finance in high regard. Up to now, I think this government has done very well in keeping political appointees out of senior positions in the ministry. All the people who have come up through the ministry into senior positions have been professional bureaucrats with a grounding in finance, and that's been good. But clearly, this is an issue that needs to be dealt with. This government, I suggest, needs to give us this information, because it's one of those issues that's not going to go away until the opposition is satisfied. People just fell down on this job.

I mean, how can forest revenues... ? You know, they're going along for ten months, and all of a sudden they simply collapse. That isn't logical.

I believe that the Ministry of Forests knows. Those people know about the price of logs, the price of 2-by-4s and the volume of timber being harvested. They know what cutting rights they have given out. They know what small business permits they have given out. They know who's working in the woods and who isn't. I just find it terribly difficult to accept that the minister can come along three months later and say: "I'm sorry, but we're out $235 million in an amount of roughly $1.5 billion."

G. Farrell-Collins: Just before we move on, I have a couple of questions, if I may. Perhaps I can approach this from a slightly different angle and run through the scenario of events backwards. The minister briefed the reporter from the Times Colonist on a Friday as to his finding -- his finally becoming aware -- that in fact the government was likely to run a deficit of some $235 million as opposed to a surplus of $16 million, I believe it was. I apologize if my figures aren't as dead accurate as the Finance critic's. It's not my purview, but the ballpark figures, I think, will stand. That was on a Friday.

If I recall correctly, the budget was tabled on a Wednesday and the minister had been advised on Monday or Tuesday of that same week that there was potentially a problem. Or was it the Monday or Tuesday of the previous week?

Interjection.

G. Farrell-Collins: Okay.

Perhaps the minister can run down the scenario of events of that week, and we can start from there.

Hon. A. Petter: I think I said that after becoming Minister of Finance, I was obviously briefed on a range of issues, one of which was that there was this uncertainty and concern around forest revenue, that that was being worked out by the Ministry of Finance with the Ministry of Forests, the OCG, etc., and that it could result in us being in a deficit -- but it might not result in us being in a deficit, and there would be more certain numbers in July.

Interjection.

Hon. A. Petter: Well, you'd have to go back to shortly after I was Minister of Finance.

It was just part of the general briefings, saying that the status of this stuff was still uncertain as between the ministries. It was only on the Monday before the budget, I believe, in an oral briefing and then followed up by a written note on, I believe, the Tuesday -- actually, I think it was the Tuesday-Wednesday, now that I recall, but in that period right before the budget -- that I was briefed. The reason I was briefed then was partly in preparation for the budget speech but also because there had been a first draft report prepared by the office of the comptroller general on, I believe, the previous Friday. I'd been away in Ottawa. I'd come back and was

[ Page 1083 ]

briefed when I got back on the Tuesday, in fact. I was told orally that that first draft report indicated there would be a deficit in the range of $200 million, that the numbers were surprising to some Finance officials, that they were still preliminary, in draft form and subject to change, and that I should not regard them as in any way determinate or final.

On the Friday I received a further briefing, this time in preparation for dealing with credit-rating agencies and the like, and I was told that as a result of a review that had taken place during the course of that week by Treasury Board staff, there was now a sense of confidence by Treasury Board staff in those forecast numbers -- still forecast, still subject to change, but the degree of uncertainty that had previously been there, and some of the surprise around the numbers, had been addressed, and these were numbers that the Treasury Board staff, Finance staff, now felt they had greater confidence in. It was at that moment that I felt it responsible to make those numbers public.

G. Farrell-Collins: A couple of points. Can the minister tell me what would have gone on that week? My understanding is that the minister said that the Friday before the budget was the day the report became available -- the first draft report was done. What would have taken place between that Friday and the following Friday that would have helped solidify those numbers? What is it that would have taken place back and forth? What sort of examination or revisitation would the Treasury Board people have done in order to come to a conclusion over that week that those numbers were more than anticipated, that in fact there was some pretty solid ground upon which they were based.

Hon. A. Petter: This takes me outside my realm of expertise, but my understanding, based on staff advice, about what they would have done is that they would have taken the numbers that were in the first draft report of the comptroller general, based on Forests estimates, gone back, reviewed those numbers and the accruals with the Ministry of Forests in light of the assumptions made, and satisfied themselves that the assumptions around those numbers and the accruals were in fact accurate in the draft report that had been prepared.

G. Farrell-Collins: The minister said that he was briefed orally on the Monday and in written form on the Tuesday.

Hon. A. Petter: Tuesday-Wednesday.

G. Farrell-Collins: Tuesday or Wednesday. I think you finally did say it was in fact Tuesday, but whatever -- in written form on Tuesday. Can the minister tell me who would have given the minister the oral briefing on the Monday? Would that have been the deputy, somebody from Treasury Board, the comptroller general himself or somebody from his office? And who would have prepared the written briefing which the minister got on either the Tuesday or the Wednesday, or both?

Hon. A. Petter: As I say, it was Tuesday, because there was a caucus meeting on Monday. So I remember now that it was on the Tuesday. It would have been a briefing involving the deputy, Mr. Trumpy and certain Finance staff -- a general briefing in which I was also informed about the first draft of the comptroller general's report.

G. Farrell-Collins: So the minister is telling me that he was briefed orally on the Monday and in written form....

Hon. A. Petter: Tuesday; before the Tuesday.

G. Farrell-Collins: No, no. The first time, you said you were briefed orally on the Monday and in written form on the Tuesday.

Hon. A. Petter: On the Tuesday I was briefed orally. On the Wednesday, before presenting budget, I was given a note, in the form of a question-and-answer kind of note, that reviewed the information that I had been briefed on orally, which I'd requested in a written form.

G. Farrell-Collins: I hope we have that cleared up now, because when I took notes the first time it was Monday and Tuesday. Now it's Tuesday and Wednesday. That's fine, as long as we're clear on what it is.

The written report that the minister got on the Wednesday, the very day the budget was being tabled, was in the form of a question-and-answer note, one paragraph probably: here is a question, here is an answer. We do those, and I know the government does them too. So that was the extent of the written background the minister had on the day he tabled his budget with regard to the forest revenue estimates. I see the minister nodding, so I won't ask him to state that.

He received the first oral briefing on the Tuesday. The minister said the staff was surprised, when they got the first draft of the comptroller general's report on the Friday, to see the change in forest estimates. Can the minister tell me if he was surprised on the Tuesday when he was briefed orally on the potential for the size of a drop-off in forest revenues, which we've seen?

Hon. A. Petter: I was not surprised by the potential for a drop-off in forest revenues, because I had been advised that it was a possibility. But I was surprised by the extent, yes.

G. Farrell-Collins: So the minister, when he was.... I'm just trying to get this chronology in order, because I think it's important. The minister, when he was advised orally on the Tuesday, the day before the budget, that the deficit was going to end up in the range of $235 million as opposed to a $16 million surplus, was surprised by that figure. Can the minister tell me the first time after he was sworn in as minister that he became aware there might be a problem with the forest revenues? Was it that Tuesday? Was it the day he was sworn in? Was it within days? Where did that information come from? Was that in the form of an oral briefing or a written briefing book or a note?

[9:15]

Hon. A. Petter: It would have been in the form and the context of oral briefings I received within days of being sworn in, as one issue -- the uncertainty around forest revenues and a caution that this could end up in a shortfall, and also advice that it was by no means certain and that, once the accruals were completed, it could also end up with the revenues still coming up to expectations.

G. Farrell-Collins: If we can go back to that week again, the minister received the oral briefing on the Tuesday, with a potential dollar figure attached to it, and the written question-and-answer on the Wednesday. Can the minister tell me why, if the Finance ministry officials were surprised on the Friday when they got some pretty firm estimate at that point of what the dollar figures might be -- at least as far as the comptroller

[ Page 1084 ]

general was concerned -- it took them until Tuesday to let the minister know the magnitude of the drop-off in forest revenues that he was potentially facing?

Hon. A. Petter: Well, I can only speculate, because I don't reach into the minds of Finance officials. But one reason would be that I had only returned from Ottawa around the weekend and had a all-day caucus meeting on Monday. This was the first briefing I had since returning. The other, as I've already told the member, is that the officials were very clear that these numbers were still regarded as preliminary, subject to change, and not in any way final, even insofar as they represented a forecast.

G. Farrell-Collins: I keep coming back in my mind to the Friday and the document -- the report on forest revenues -- that was presented, I assume, to Treasury Board officials by the comptroller general and that first surprised them, as the minister said. It raised their eyebrows.

Now, I would suspect that the minister was briefed, upon becoming Finance minister, to the effect that there was a potential for a drop-off in forestry revenues, that it looked like they could be dropping off. And now, not quite a month -- maybe three weeks later, two weeks later....

Interjection.

G. Farrell-Collins: One week later. Okay. The minister is sworn in, and a week later the ministry finds out an actual dollar figure has been put on this by the comptroller general -- one week later, and they're surprised by it.

It would seem to me that, knowing that the Minister of Finance is about to go and table a budget the next week, knowing that the Crown is going to be reading a Speech from the Throne on the Tuesday, knowing that's the kind of information the Finance minister would want to know pretty quick -- not hang around for the weekend, and then while he's in a caucus meeting on the Monday, not bother the minister with that information until some four days later.... It would seem to me that that's the kind of information that somebody would pick up the phone and tell the Finance minister about almost immediately.

It's a fairly substantial change. They were aware that it might drop off for some time, obviously, if they briefed the minister on it. They're prepared for a drop-off and then they're surprised by the size of the drop-off, so it would seem to me that that's something the brand-new Minister of Finance might like to know.

Can the minister tell me why it took from the Friday, when the report from the comptroller general came in, until the Tuesday before anybody even mentioned it to him, and the Wednesday before it even appeared in any sort of written form, in the form of a question-and-answer? It seems to me that a drop-off of that size, as critical as it is to whether a budget is balanced or not, is something the minister would expect to hear about from his staff very, very quickly.

Hon. A. Petter: Well, I guess I can only give the facts to the member as I know them, and he can draw his own views as to why things occurred the way they did. This is an ongoing process that takes place in reconciling the public accounts, as I understand it, according to a predetermined schedule. It was not done in light of the fact that I was introducing a budget. Remember, the focus on the budget I was introducing was on the coming year. This was part of the ongoing process that takes place normally over six months to reconcile the previous year's budget in public accounts.

The report in question was a first draft of a comptroller general's report. It was sent as a first draft to the auditor general, with copies to the Finance ministry. I can only assume -- but I don't know -- that it being a first draft, it being subject to further scrutiny and change, they brought it to my attention at the first opportunity they had to brief me. But that's an assumption on my part.

G. Farrell-Collins: Now we're sort of backing up. We've done the week of the budget; I'd like to go back to the previous week. Can the minister tell us what process the comptroller general would have gone through? Where would he have received his information to write his first-draft report which became available on that Friday?

Hon. A. Petter: I'm informed that this is the outcome of an iterative process back and forth between the comptroller general's office and the Ministry of Forests -- based on accruals and actuals and all that kind of stuff -- that finally crystallizes into a final draft of the report. But at this stage it had just crystallized, or not crystallized, into the first draft of the report.

G. Farrell-Collins: So at this point, then, on Friday, June 21, the comptroller general issued and sent to the auditor general, and c.c.'d the Finance and Treasury Board people, a report saying something to the effect of: "Boy, there's going to be a big drop in forest revenues relative to the estimates for the past year." And it's an iterative process.

Over what period of time would the back-and-forth have gone on between the comptroller general and the Forests ministry, before the comptroller general brought that information to the forefront? What form does that back-and-forth take? Is it in a written form, is it meetings, is it an exchange of figures and memos back and forth, or is it just something that they chat about, back and forth, over the phone?

Hon. A. Petter: I'm learning about this process as we go along, as I'm sure the members are, too. As I understand it in this case, ministries are expected to submit their final statements in May. Well, we don't have a specific date, but likely towards the end of May. Ministries are feeding in information which are actuals, not reconciled subject to accruals, etc., by late May. The comptroller general is therefore getting a flood of information from a range of different ministries.

It then takes the comptroller general's office the better part of six to eight weeks to go through that information from all the different ministries systematically, to reconcile that information, to go back and forth, to look at the actuals and the accruals, and to reconcile it in all the various ways, to come up with the reports that are then submitted in draft form and subject to further change along the way.

G. Farrell-Collins: From, let's say, the last week to the last two weeks of May, the information is coming in, not just from the Ministry of Forests but from all ministries that collect revenues in one form or another -- and I suspect most of them do. He's sitting at his desk -- visually, anyway -- collecting all this stuff, double-checking it and going back and forth to the various ministries over the ensuing approximately six weeks, the minister said.

Can I ask the minister just one question before we move on? I think it's crucial. The interim financial statements -- this one for ten months, which came out at the end of January,

[ Page 1085 ]

1996.... Could the minister tell me which department puts this out? Is it the comptroller general? Is it Treasury Board? Where does that come from?

Hon. A. Petter: The comptroller general.

G. Farrell-Collins: The figures that are contained in the document -- how firm are they? Are these pretty solid numbers by the time they get published in this document?

Hon. A. Petter: I'm informed that the precision on a document of that kind would not be of the same extent one would expect in the final public accounts -- in the range of $10 million to $100 million. In the effort to try to come up with the numbers, there could be that range of discrepancy.

G. Farrell-Collins: The minister is telling me that in the numbers that are published -- in this case, the ten-month financial statements issued mid-March, ending January 31, 1996 -- the total figure of revenue to that point could be in the range of $100 million up or down. Or is that $50 million up or down, for a range of $100 million?

[9:30]

Hon. A. Petter: I'm informed that it's plus or minus $100 million. In these reports, I understand, the comptroller general is trying as best he can, based on the information he has. The difficulty in processing information is to provide as accurate information as possible. There is the understanding that because of the reporting, it could come within $100 million -- high or low, either way.

G. Farrell-Collins: I didn't hear everything the minister said. I missed a sentence there somewhere. Was that $100 million plus or minus, for the total revenues for ten months, the total figure or just for forest revenues?

Hon. A. Petter: Just in the forest report that the member was referencing.

G. Farrell-Collins: The minister is telling me that after all that information comes in to the comptroller general.... I assume he's getting this information all the time, not just at the end of March. Is that correct? He gets this revenue for quarters, or however it works.

Hon. A. Petter: Monthly.

G. Farrell-Collins: Monthly. He gets this information at the end of every month, tabulates it and sort of comes up.... And there's a bit of back-and-forth. So really, every month there's all this information coming in and there's the back-and-forth that takes place, and then the comptroller general comes out with a figure about two weeks after the end of the month that gives you a fairly good sense.... Three weeks later, according to this, because it came out on June 21. So from the figures that he would have been collecting through the month of May, he had a pretty darn good idea, in the third week of June, what those numbers were.

When the budget was tabled in April.... I guess it was the end of April, early May, if I remember that highlight of my life, that period of time -- the beginning of May, the end of April. By approximately the third week of April -- ballpark again.... About April 21 -- somewhere around that period of time, if it's to be looked at as similar -- he would have had a pretty darn good idea of what the revenues were that he got in towards the last couple of weeks in March -- if the same six-week scenario works out, if that is correct.

We've said earlier that by the end of June -- the third week of June -- the comptroller general issued a first-draft report, with figures that turned out to be pretty darn accurate, on information that he had coming into him during the third and fourth week of May. So the budget that was tabled in the first part of May must have dealt fairly accurately.... Because it's not even six weeks -- it's now eight full weeks, at least -- from when the information started to flow in, which would have been mid-March or so, the latter half of March.

Would not the minister, the comptroller general, at the time the budget was initially tabled -- the first couple of days in May -- have had a pretty darn good idea of what the forest revenue figures were, up to the end of March?

Hon. A. Petter: I think I've already explained in questions from the previous member the basis on which the projections in the budget were made: monthly tables prepared by the Ministry of Finance on March 20, showing a $5-million-ahead-of-revenue forecast. I think the problem -- the member is confusing various reporting systems -- is that the comptroller general, as I am informed, does not have an accounting system that captures accruals.

So they get manually calculated estimated accruals from the ministries which vary in accuracy, and because of the historical lack of precision in forestry accruals, it was difficult to come to firm numbers. Hence we have the process we have been talking about, and that's the reason it traditionally takes six months or so to finalize and report out on the public accounts.

It's that method of accounting -- trying to capture accruals and come back with determinations based on the interaction of ministries -- that causes the uncertainty and requires the time it takes for the comptroller general to finalize his numbers.

G. Farrell-Collins: I'll come back to the details of the months in a second. Yes, historically, it probably has taken six months for all that stuff to come together. I would suspect that now, with some of the automation we have and the way information flows back and forth and the way reports are issued, it takes a heck of a lot less than six months for that process to work its way through. Or maybe nothing has changed in the last 20 or 30 years, in which case I think we've got a bigger problem.

If I can come back to my first comments, the minister said that -- if we look at the May-June period -- information on revenues would have been flooding into the comptroller general from various ministries in the last -- I think the word he used was "last" -- week of May. But I gave him a little bit of leeway and said it was probably in the last two weeks of May that information would have come into the comptroller general. Then by June 21, the Friday, the comptroller general issued his first draft as to what the revenues were likely to be.

Indeed, a full week later, the minister was pretty darn confident on those figures. They would be pretty close to what he eventually released on that date to the media. In fact, he felt that they were significant enough that he should make them public.

Essentially, what we have is.... In the last half of May, the information starts coming in, and it finishes coming in during the first three weeks -- let's give you the whole month of June. By the end of June, the Minister of Finance has a pretty sure dollar figure on what the revenues are going to be.

Interjection.

[ Page 1086 ]

G. Farrell-Collins: Well, the minister says, "Not true," but he said that.

Interjection.

G. Farrell-Collins: A forecast of what they are -- a pretty accurate forecast, a forecast that he's comfortable enough going to the public with. In fact, he feels a duty to go to the public with it.

Interjection.

G. Farrell-Collins: Backwards, whatever.

We've got a period of about half of May and all of June -- and I'm giving you a lot of space at either end of this thing. We've got a period of about six weeks from when the information flows in to when the minister has a pretty confident estimation of what those forecasts are going to be -- enough that he's confident to go public with it.

If I take the same six-week period, from the middle of a month to the end of the following month, and move that over to from mid-March to the end of April, I would also say that the Minister of Finance, at the end of the month of April, would have had exactly the same reliable estimation of revenues, based on the information that came in in the previous two -- and including the last two -- weeks of March, in order to give a pretty darn good estimate of what revenues were. If not, the minister can perhaps explain to me why not.

Hon. A. Petter: Well, it's just that the member is comparing apples and oranges. I already explained that the earlier reports -- which he is referring to and which I already referred to in the internal Finance report -- which were the basis for the budget, did not include an accounting of accruals in a way that would have satisfied the comptroller general to the degree of precision that the comptroller general would have found in the numbers that were provided to me. Ultimately I made them public on the Friday.

We're talking about the same flow of information here, but at different stages, to different degrees of reliability, leading to different conclusions. Look, my goal in all this, similar to the member's goal in all this, was to try to come to some accurate understanding, within about a week of becoming Minister of Finance, of what the picture was for the previous year. The information I received was hazy initially. Then I was informed about this draft report of the comptroller general, but it was still subject to serious questioning and uncertainty.

Then I was informed that the ministry had now gone through that report and felt the numbers were ones that they had some confidence in. I want to reiterate this: "had some confidence in" -- still as a forecast, subject to change. I don't want to give any impression to the member that, even at this point, these are certain numbers.

That's why we have a public accounting system that -- the member may want to believe in technology -- still takes a good number of months to come to finality and certainty, because there are all these complex issues around accruals and attribution of revenues to one year or another, and various accounting systems interacting, etc.

I felt, yes, on the Friday the member referred to, following the budget, based on the advice I received from staff -- it's more staff advice -- that the numbers that had been prepared by the office of the comptroller general now had enough degree of certainty to them in the eyes of staff to constitute a legitimate forecast. As the member said, I then felt an obligation to share that forecast information publicly, and did so.

G. Farrell-Collins: For this moment, anyway, I'm not questioning what happened in the period of time the minister is referring to -- from mid-May to the end of May to the end of June. I think we've established what's taken place there: the minister's version of what happened in that period of time and how that works.

The question I'm asking, where I'm taking this and why I'm raising this issue is.... If that's the procedure that goes on in the ministry, if that's the way the receipts come in, if that's the way it's accounted for, if that's the way the comptroller makes his report to Treasury Board and to the ministry officials, and if that's the way the minister finds out about it, then I'm saying fine. If that's the standard operating procedure, if that's the way it works, let's take that for a minute. Giving the minister all the leeway on either side -- I'm trying to give you lots of room here....

Giving you the full six weeks, from mid-May to the end of June, and taking that same six-week period, which is the latter two weeks of a month and a full month afterwards, and transposing that on the March-April period, one then has all the revenues previous to that. But the most current information, the most current revenues, come in in the latter half of March. The comptroller general sits there at his desk and does exactly what he did at the end of May: crunches those numbers and goes back and forth with the Ministry of Forests people.

They conference-call or exchange memos or do whatever it is they do, back and forth. Then, in about the third week of April, the comptroller general would have some sort of estimate, a forecast, of what the forest revenues would be. Towards the end of that month, something certainly could have gone to the Minister of Finance with some pretty hard estimates of what the forecast for forest revenues might be.

Hon. A. Petter: I think I've gone to pains to try to explain. The report the member is referring to is an interim reporting-out that does not have the same degree of accuracy or expectation of accuracy. It does not account for accruals in the way that the final year-end report would. In the procedure I'm talking about, in which information is shared, as the member says, towards the last two weeks of May and then assimilated, it isn't just the last two months of the year that's being shared. It's the entire year that's being shared by the Ministry of Forests and other ministries, regarding their revenue.

I think the member is making some kind of incorrect assumption here that somehow this same process goes on at each stage in which reports are produced. It doesn't. It's an end-of-year process that takes place to try to come to an accurate assessment of the previous year's accounts and ultimately does result in a final public accounts report. I don't think you can equate that process -- which takes place in that window we talked about, late May right through until August -- with the earlier report, which is simply a status report based on the information at hand to that time.

It does not have the same expectation or degree of accuracy or follow-up that takes place on the information that's shared towards the end of May.

[9:45]

G. Farrell-Collins: If I'm misguided in how that information flows in, perhaps it's because I asked the minister how often reports are made. I was told it was done on a monthly basis. Now, if there is a different process that takes place in the May-to-August period for the full year, then that's a different matter. But certainly there is information that comes to the comptroller general on an ongoing basis which goes into the makeup of these types of documents. This one comes out mid-March and gives us an estimate. Does the minister not believe that from the time this information comes out -- from the end

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of January, all of February and into mid-March -- there's a process that goes into place that determines what those figures are, plus or minus a certain amount?

Is there no ongoing monitoring at all by anybody in the Ministry of Finance or the comptroller general's office, from mid-March through to the end of April, of what the receipts are doing, what the Forest revenues are doing? Does nobody in the entire government of British Columbia pay attention to what the forest revenues are doing in that period of time?

Does the minister expect me to believe that from the day this thing comes out in mid-March until mid-May, when the year-end receipts come into the comptroller general's office, there's nobody in the province of British Columbia -- of the 30,000-some FTEs that we pay for -- who actually sits there in their office and monitors the forest revenues? Is there nobody who does that? Is there nobody in the Ministry of Finance who does that on an ongoing basis?

Hon. A. Petter: The Ministry of Finance did, as I've already indicated, produce a report on March 20 for the purposes of budget preparation. That report indicated that forest revenues to that date were $5 million ahead of projection. There's also the factor I've referred to a number of times before, in which the pattern over previous years had been for there to be a ballooning of forest revenues as a result of accruals towards the end of the year. Attention is certainly paid and was paid at that time. The same comment about the pattern of accruals would apply to the report that the member has referenced.

But the fact of the matter, as I'm informed by staff from the ministry and from the comptroller general, is that, yes, monthly reports are done, but they're not regarded as providing the same basis of accuracy as the year-end reports that are produced by ministries, forwarded to the comptroller general, and that then provide the basis for the production of the public accounts.

F. Gingell: Has there been any change in the procedures by which forest revenues -- billings -- are recorded from what was in practice in the first few months of 1995, and in 1996, that would have caused this difference, in this balloon having no gas in it this year?

Hon. A. Petter: No. I'm informed that in the general procedures.... Now, I don't know the specifics around the details of reports and things, but, in general, the flow of information -- the way reports are produced, all of that -- was done this year as it has been done in the past.

I may say that as a result of some of my own concerns about the flow of information, which I think is reflected in some of the members' questions, I've asked my deputy to look into this issue as well, to see if we can't improve the flow of information, communication and forecasting between ministries so as to avoid these kinds of problems in the future. But my understanding is that there has been no change in that pattern of information flow this year versus previous years.

F. Gingell: The diminishment of revenues that has taken place over and above the makeup of the $1.603 billion that's included in these estimates.... I don't have that sheet here. I was wondering where it is primarily -- in which of the four categories: logging tax, small business, royalty and stumpage, or other?

Hon. A. Petter: It's principally in small business.

F. Gingell: Can the minister -- I hope you have the information available -- tell us what triggers the preparation of an invoice for small business?

Hon. A. Petter: No, I'm afraid I can't, even with the assistance of staff, tell the member what triggers it. But I'm sure that the Minister of Forests, with his staff during his estimates, can provide that answer.

F. Gingell: The additional balloon that you expected to come along through year-end accruals, which I presume are.... What can they be? Well, they can be logs that are cut and scaled but have not yet been invoiced. Can the minister advise what makes up that normal balloon and whether it comes under the category of timber sales or the small business forest enterprise program?

Hon. A. Petter: I'm informed that it tends to be, or has in previous years tended to be, across the board -- that is, in all categories.

F. Gingell: When this statement for the ten months ended January 31 was prepared by the office of the comptroller general, did the comptroller general's office express to any of the officials around the Minister of Finance or to Treasury Board concern about forest revenues?

Hon. A. Petter: Again, not having been the minister at the time, I will do my best. The best answer I can provide is that in the preparation for the estimate for '95-96 provided in the previous minister's budget that was introduced, she was advised of the internal forecast of the Ministry of Finance, which I've already referred to, and by the deputy of the day, which would have come through the Ministry of Finance. My understanding is that that was the advice she was provided, and that additional advice would not have been provided based on the report referred to by the member, because of the advice she would have already received based on the internal documents.

F. Gingell: Something that didn't dawn on us until two or three days later was the fact that your budget speech of June 26 had expunged all references to a balanced budget. Can the minister tell the committee whether a first draft of the speech had been written that did include references to a balanced budget? Or did the speech at all times, in all its drafts, exclude any reference?

Hon. A. Petter: My recollection is that the original draft or drafts did include reference....

F. Gingell: Did?

Hon. A. Petter: Did include reference to the previous budget and being the second balanced budget.

F. Gingell: When was the decision made to expunge those references?

Hon. A. Petter: It would have been made in the finalization of the speech on Tuesday. Given my uncertainty around the state of the previous year's budget, my feeling was that I did not wish to claim the previous year's budget as a surplus budget in the face of uncertain information, so I removed it during the course of reviewing the draft. My recollection is that it was finalized and sent to the printer Tuesday afternoon.

F. Gingell: My recollection is that you delivered the speech on Tuesday afternoon.

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Hon. A. Petter: The speech was delivered Wednesday, but I'm not sure a lot turns on that. I likely would have removed the reference prior to the Tuesday because of advice I had received that the forest revenue forecast could end up being lower than previous, even before the Tuesday. But the speech, as I recall, was signed off in final form on Tuesday afternoon.

F. Gingell: The press relea