1994 Legislative Session: 3rd Session, 35th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, JULY 6, 1994

Afternoon Sitting

Volume 17, Number 10

[ Page 12811 ]

The House met at 2:08 p.m.

A. Warnke: It is my pleasure to introduce to the gallery today, in addition to my wife Geraldine, her sister Marilyn Patricia Byers of Thornhill, Ontario, and also her son James Willcock, who is exhibiting work at the Community Arts Council of Vancouver this week through Saturday. Would the House please make them very welcome.

J. Sawicki: It is my pleasure today to welcome some relatives from Fort St. John -- actually, the constituency of the member for Peace River North. They are Kent and Erla Billey and their children, Sabrina and Brennan. I would ask the House to make them welcome as they enjoy their visit to the Legislature today.

Hon. P. Priddy: It is a pleasure for me today to introduce to the House a group of people, some of whom have been part of my life before. I think that all of us learn from people who have shared our lives, and a lot of my learning has come from spending time with people with disabilities and their friends and family.

The people whom I would like to introduce are here today to meet with my colleague the Minister of Social Services. They are: Jane Donegani; Ralph White and his daughter Dessa, who will be joining them; Jeff Moulins and his friend Janet; Al Etmanski; Jeanette Holder; Claudia Meyerman; and a good friend of mine, Linda Perry. Because of people like this, the lives of people with disabilities in this province are better. I ask the House to make them welcome.

D. Mitchell: Visiting in the public galleries today is a person who is very important to me. She runs my constituency office. Her name is Norma Graydon, and she wanted to come over to see the session before we adjourned for the summer. I hope she hasn't come much too early. Would members please welcome her here today.

J. Beattie: I just recently, in the last half-hour, discovered that I have four constituents visiting in the House today. They are Rick and Sina Richardson, the parents of Sabrina and Blake, and I think they are sitting up behind me someplace. Would the House please make them welcome.

Introduction of Bills

MISCELLANEOUS STATUTES AMENDMENT ACT (No. 3), 1994

Hon. C. Gabelmann presented a message from his Honour the Lieutenant-Governor: a bill intituled Miscellaneous Statutes Amendment Act (No. 3), 1994.

Hon. C. Gabelmann: This bill contains amendments to nine statutes: Estate Administration Act, Industrial Development Incentive Act, Infants Act, Insurance Act, Legal Services Society Act, Notaries Act, Securities Act, Tobacco Tax Act and Trustee Act. I will elaborate on these amendments during second reading.

Interjection.

Hon. C. Gabelmann: It's housekeeping, entirely.

Bill 55 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

NANAIMO DETOX CENTRE CONTRACT

L. Reid: My question is to the Minister of Health. Last week U.TV ran a story alleging that Matthew Brown was profiting from his relationship with the Nanaimo Care Unit Society. The story alleged that Mr. Brown misled officials when securing a $129,000 contract with the government for a detox centre by representing himself as an employee of the Salvation Army. Would the Minister of Health indicate whether the contract for the detox centre has been renewed, despite allegations of the misappropriation of taxpayers' money? If it has, why would the government enter into a second contract with a society whose management and financial practices are currently being questioned?

Hon. P. Ramsey: I've asked officials in my ministry to investigate the situation at the detox centre in Nanaimo, and I will be glad to share the results of that investigation with the member when it's complete.

The Speaker: The member has a further question?

L. Reid: Once the investigation goes forward, I would ask you to come back and tell this House who from the government and who from the detox centre signed the contract for the pilot project.

GOVERNMENT ADVERTISING

W. Hurd: A question for the Premier. The New Democratic Party is sending out direct mail pieces quoting various forest stakeholders concerning the government's forest plans. One of the quotes is from Peter Bentley, the chief executive officer of Canfor. I wonder if the Premier is aware that Mr. Bentley was also quoted in the New Pacific magazine as saying that the Premier "has never been a decision-maker and I think there's a great element of doubt that he leads the government and that he's Premier other than in name." My question to the Premier is: why is the government quoting Mr.

Bentley in its forest renewal ads when clearly his impression of the Premier's leadership skills doesn't match up with the forest renewal information that is being peddled by the government?

Hon. M. Harcourt: It does indeed come as a great shock to me that Peter Bentley would say something negative about a New Democratic Premier. I might say that I did not ask for, nor do I expect, Mr. Bentley's vote or campaign contributions, which the leaders of the opposition parties are probably now wooing him for. All I asked Mr. Bentley to do is participate in the Forest Sector Strategy Committee and to participate in putting together one of the most imaginative and innovative forest renewal plans anywhere in the world. Mr.

Bentley can say whatever he wants about me personally, but he said that this is the first government in 40 years that has been willing to look at the long term of our forests.

[2:15]

The Speaker: Supplemental, hon. member.

[ Page 12812 ]

W. Hurd: I am certainly glad the Premier talked about campaign contributions, because this fundraising letter -- sent out under the name of the Minister of Forests -- was dated June 1. It invites $100 and $500 contributions to the New Democratic Party. What kind of government would send out a partisan fundraising letter and tie it to a partisan advertising campaign paid for by the taxpayers of British Columbia?

Hon. M. Harcourt: I would dearly love to invite the hon. member for Surrey-White Rock to a real fundraiser at the Pink Pearl Restaurant at $25 a ticket for a 13-course Chinese banquet. Those are the kinds of fundraisers that I like to put on, unlike the big corporate machine over there that invites people to beam in from around the province, at $175 a crack....

Interjections.

The Speaker: Order, please, hon. members. I presume this reflects on the imminent closure of the Legislature, but we still have some time to go yet.

EFFECT OF BILL 44 ON WAGE EARNERS

J. Weisgerber: My question is to the Minister of Finance. Last night we passed Bill 44, which dealt with amendments.... [Applause.] Just a minute, you may not be as happy. It dealt with amendments to taxation acts. The effect of that was to put government tax collectors ahead of wage earners in bankruptcy proceedings. Will the minister confirm that that is the position of her government -- that indeed taxes should come ahead of employee wages and other benefits?

Hon. E. Cull: I would be glad to invite the Leader of the Third Party to join with this government in urging the federal government to reform its bankruptcy laws so that they are fair.

The Speaker: Supplemental, hon. member.

J. Weisgerber: It is indeed incredible that this government would put tax collection ahead of workers. In 1992 the federal government recognized how inappropriate the practice was, and it made amendments to the Bankruptcy and Insolvency Act. This government has changed that with the shameful bit of legislation that was brought in in the middle of the night last night.

Hon. E. Cull: Since banks are ahead of everybody, I'm sure the Leader of the Third Party will be there along with me urging that that change be made as well.

PROPOSED LEGAL AID SYSTEM CHANGES

J. Dalton: I have a question for the Attorney General. As a result of the Attorney General's mismanagement of the legal aid system, legal aid lawyers are now boycotting it and not taking any new clients for July. The criminal courts of this province will grind to a halt as a result of this. There will be a gridlock, and it's the responsibility of this Attorney General. At the same time, the Attorney General is trying to find $9.7 million to fund his untested public defender proposal. How does the Attorney General defend spending public money in order to produce less service for the public?

Hon. C. Gabelmann: I think I heard several questions. I'll answer the first question and then see whether the member has any further ones.

There are about 3,000 lawyers in British Columbia who provide legal aid to the Legal Services Society -- which, I should remind the member, is independent of government. There are about 500 members of the Association of Legal-aid Lawyers of B.C., leaving about 2,500 other lawyers who are still available to do the work they always do.

The Speaker: Supplemental, hon. member.

J. Dalton: I think it's also noteworthy that the Attorney General's miscellaneous bill -- another one -- contains some amendments to the Legal Services Society Act. The Attorney General has appointed the directors who are pushing this untested plan, and his government is going to cut the cheques in order to implement it. Will the Attorney General stop playing politics with the legal aid system so that the public can be assured that people accused of crimes are not walking the streets, but are being processed in due course?

Hon. C. Gabelmann: The efforts being made at the present time are designed, in fact, to ensure that we can keep legal aid in this province. The increase in cost in the last few years created a real doubt in many people's minds as to whether that level of spending could be sustained.

The other part of the question relates to an alleged government scheme. In fact, this is a proposal of the Legal Services Society board, seven of whom are appointed by the government and seven of whom are appointed by the Law Society of British Columbia. In February of this year that board voted 12 to nothing in favour of this so-called untested scheme.

RELEASE OF REPORT ON BAMBERTON PROJECT

L. Hanson: I have a question for the Minister of Municipal Affairs. Four months ago the minister promised that the MacKay report on the Bamberton project would be released to the public as soon as it became available. Since it was completed over a month ago, can the minister explain to the House why she has not tabled it as yet?

Hon. D. Marzari: Although it's not the practice of this House or this government to talk about future practice or future policy, I would like to tell the House today that the MacKay report on Bamberton and the ministerial decision arising from that report will be available on Monday of next week.

The Speaker: Supplemental, hon. member.

L. Hanson: I might point out to the minister that there's a possibility we may not be here next week.

In any case, has the minister been keeping the report from the CVRD because she has some concerns that some of the present government's friends are involved in the development? Why won't she table it now, while the House is in session?

[ Page 12813 ]

Hon. D. Marzari: As much as this House would like to think that the business of the province closes down when the House is not in session, that is not the case.

I would like to inform this House once again that in the case of the Bamberton decision, I have done everything I possibly can and government has done everything it possibly can to ensure that normal protocols are observed and normal procedures are carried through. That is what has happened here. In due course, on Monday, the Bamberton decision and the MacKay report that goes with that will be made available in the form of a press release, and it will be available in the form of ministers having an opportunity to speak to the press.

There will be a full technical briefing for anyone who wishes to participate, and I will ensure that every member of this House receives a copy of the kit that goes with the Bamberton decision.

WORKERS' COMPENSATION REVIEW BOARD CHAIR

A. Warnke: My question is to the Minister of Labour. In September 1992, Dave Van Blarcom -- another longtime NDP friend, by the way -- was appointed chair of the Workers' Compensation Review Board. While the minister has announced that Mr. Van Blarcom has resigned, apparently this NDP friend is only on leave while another government job is found for him. Is the minister aware of that? And could the minister explain why B.C. taxpayers are footing the bill for yet another NDP patronage appointment gone bad?

Hon. D. Miller: Before the members opposite engage in the all-too-easy character assassination that they do, if they have any respect for individuals in society, perhaps they would check their facts. The member is absolutely dead wrong.

A. Warnke: A supplemental to the Minister of Labour. The fact is that Mr. Van Blarcom was appointed for his NDP credentials, not for his administrative experience. As a matter of fact, it's been a mess ever since he's been running that place. Many complaints have been received as to the administrative incompetence of his leadership. Could the minister explain why this NDP friend was hired in the first place? How many more NDP friends are going to be supported by B.C. taxpayers before this government finally hires on the basis of merit and experience rather than on NDP pedigrees?

Hon. D. Miller: Well, the member opposite has simply borne out my response to his first question. The member is wrong. Mr. Van Blarcom was hired through a public competition. He won the job quite honestly.

Secondly, having debated the Liberals over WCB issues, it's all too apparent that they didn't understand them in the first place. Issues at the review board are not in a mess. The member simply has to read the annual reports to discover that.

Finally, I would repeat that it is quite easy in this House to make allegations against individuals that are not borne out by fact and to not have any responsibility for the consequences of your actions.

RELEASE OF REPORT ON PERRAULT CASE INQUIRY

D. Mitchell: I have a question for the Attorney General. The report of the Prowse commission of inquiry into the very serious Danny Perrault case has now been completed. A copy of that report is in the hands of the Attorney General. Can the Attorney General tell us if he is prepared to table a copy of that report in this House today? It is a serious matter dealing with confidence in the corrections system of British Columbia. If he is not prepared to table it today, now that it has been completed, the only possible suggestion I might make is that the Attorney General may be withholding it until later in the summer when the Legislature is no longer assembled.

Hon. C. Gabelmann: The report of the inquiry was given to me the day before yesterday. It will be released as soon as possible. I haven't even had an opportunity to brief cabinet on its contents. I intend to do that at the earliest opportunity, and I intend to have the report released at the earliest opportunity as well. One of the things I'd like to do before I release it is have it printed.

[2:30]

Hon. A. Edwards tabled the 1993 annual report of the British Columbia Utilities Commission.

Orders of the Day

Hon. G. Clark: I call committee on Bill 33.

MISCELLANEOUS STATUTES AMENDMENT ACT, 1994

The House in committee on Bill 33; D. Lovick in the chair.

The Chair: I note that there are more members here than is normally the situation, especially for a miscellaneous statutes act, and I wonder if members would like a moment to depart these premises for their other duties.

section 1.

J. Dalton: It is appropriate that we are dealing with this amendment to the Correction Act today -- the day the Prowse report was handed to the Attorney General. As he just said, once he gets it printed he will be sharing it with us. I might remind the Attorney General that it was the official opposition who called for the Perrault inquiry. We are happy that he saw the good sense to accede to that request, and we are certainly looking forward to the results.

This investigative office is allegedly going to be independent from the corrections branch. This is an office under the Correction Act. I don't understand -- and hopefully the Attorney General can clarify -- how the office itself will be independent from the corrections branch.

Hon. C. Gabelmann: As members know, the inspection and standards branch was very much a part of the corrections branch of the ministry, thereby under the responsibility of the assistant deputy minister responsible for corrections. The decision that the House would be implementing -- should it choose to pass these amendments -- would take the inspections and standards investigations out of the corrections branch altogether and

[ Page 12814 ]

make that component responsible to the deputy minister, but reporting to the minister of the day. It is designed to establish in the minds of the public, in a very real way, a clear separation from the corrections branch.

J. Dalton: That does indeed clarify the concern that I had over the independence. Will people who are prepared to come forward -- whether working within the system or the general public -- have the assurance that any criticism or complaints that may be directed and investigated by this office will have the protection of things such as privacy and other considerations, if need be? As the Attorney General well knows, many corrections officers were concerned about coming forward to the Prowse inquiry for that very reason. Quite frankly, I don't know that some of those concerns were properly addressed and satisfied.

Hon. C. Gabelmann: As the member knows, the inspection and standards branch regularly reviews hundreds of reports and looks at hundreds of issues every year. That will continue. I have a very clear policy in the ministry that no one will be penalized in any way for coming forward as a public servant and reporting matters that require investigation. No one has been disciplined in any way for that to date; nor will they, as long as I am responsible for this ministry.

K. Jones: You are saying that corrections officers are protected under your operation. Punishments are being meted out -- and have been over this last year -- by officers who are under the direction of your ministry. Two corrections officers have spoken out. People are being transferred from one facility to another against their wishes because of the simple fact that they spoke out and expressed a concern about the way things were being operated. How can you make that statement?

The Chair: Just an observation to the member before we proceed. Please direct your comments through the Chair rather than directly to the minister.

Hon. C. Gabelmann: Transfers and promotions are a regular feature of government life; they happen every day. No one has been transferred, demoted or disciplined in any way for simply speaking out against a particular decision -- that has not happened. In any event, that's not part of this legislation.

The legislation we're dealing with should give the member greater comfort if he has any concern about how it operated in the past, because the inspection and standards branch heretofore reported to officials within the corrections branch, and those reports went internal within the corrections branch. Now they will come to the minister, not go to the corrections branch. I think that should give greater comfort if the member has any concern that somebody might be disciplined for reporting a matter that requires public attention.

K. Jones: I've been informed just this week that actions have been taken against persons in the corrections process who, out of frustration, have spoken out. I have information from people who are representing the workers in that area that they have had people moved and disciplined. I'm asking you to make an amendment to bring in some protection for those people. When you're making it separate like this, there is also a need for some vehicle for those people to come forward without fear of reprisal.

Hon. C. Gabelmann: The member knows my position on this issue. I have stated it a few minutes ago and on a number of occasions both in the House and in the hallway. I've been quoted publicly as saying there would be no reprisals for people coming forward. So the member knows what my position is on this issue and how strongly I feel about it. Now the member suggests that for the last week he has had information that my policy has been violated in some way, but the member has never come to me with any details or any information to back that up and asked me to have a look at the issue.

If the member isn't going to do his job and come to me when he has that information, then he shouldn't be raising it here in the House a week later.

The Chair: Before I recognize the member, I just want to suggest that we are directly dealing with amendments to legislation. In this case, the amendment is fairly straightforward, member. It is not an occasion or an opportunity to talk about cases that one has to deal with in one's constituency. The proper venue and avenue for that is, of course, to deal directly with the minister. I offer that simply as a caution, member. We are not going to have a long debate on what is alleged to be happening or not happening.

On the amendment to

section 1 of the bill, member.

K. Jones: I accept that. I was led in that direction by the minister saying that there was no action, and I was trying to respond to the fact that there were situations where this is not the case....

The Chair: Thank you, member. Shall

section 1 pass?

K. Jones: Speaking to this issue, I would like to ask the minister: under what deputy minister is this process reporting? It doesn't define which administrative deputy minister -- you have two in your ministry. Is this coming under the administrative or the operational deputy minister?

Hon. C. Gabelmann: First of all, there isn't an administrative and an operational deputy minister; there's one deputy minister in the Ministry of Attorney General, and there is the Deputy Attorney General, who has responsibility for the criminal justice branch and the legal services branch. The deputy minister is like any other deputy minister in government and is responsible for the operations of the ministry outside of those two branches. The deputy minister is also the commissioner of corrections, as defined in the Correction Act.

K. Jones: If that's the case, since you're saying that the deputy minister is going to be in receipt of this report, and this new structure is going to be reporting to that person, that person is also responsible for the corrections process. There would therefore be a self-interest and preservation factor involved there. Would it not be more appropriate to have this office report to the other side of your ministry rather than a party that is also going to want to make sure that their downstream operations also reflect positively because it will reflect on their future paycheques?

[ Page 12815 ]

Hon. C. Gabelmann: We're on

section 1, hon. Chair. When we get to

section 3, and when the member actually reads

section 3, he will realize that the branch we're establishing reports to the minister, to the Attorney General, not to a deputy or the commissioner of corrections. Any reference to the deputy is administrative and is not a reporting relationship.

The Chair: May I suggest that we deal with

section 1 before we go on to the others? Do you have further questions on

section 1, member?

K. Jones: I was just reflecting the statement by the Attorney General that this branch or office was reporting through the deputy minister to the minister -- and yes, we can take it to the next step.

Section 1 approved.

section 2.

D. Mitchell: When I raised the issue of the Prowse inquiry with the Attorney General earlier today, he may have been annoyed by the manner in which I raised it. He will know that I'm annoyed that I can't get a copy of the report yet. Having said that, the minister knows that I applauded his appointment of the Prowse commission of inquiry.

Under

section 2, a new, separate, independent office of investigation, inspection and standards is being established in the Ministry of Attorney General alongside the corrections branch. Can the Attorney General tell us if this office is intended to fulfil the kinds of obligations and responsibilities that the Prowse commission of inquiry had as its terms of reference? Will the establishment of this office mean that we won't need to have independent commissions of inquiry looking into these issues in the future? Will this office have the ability to conduct an inquiry similar to the one the Prowse commission just concluded?

Hon. C. Gabelmann: There may be occasions in the future when a government will feel it necessary to appoint an independent judicial inquiry into some matter. I won't say that that won't ever happen again as a result of these changes. Because it's not just inspections and standards but also investigation, these changes create some independence. Members of the opposition might argue that it's not independent from government, and that would be true, but it is independent from the branch itself. I think there will be greater public confidence in investigations undertaken by this branch.

Where that public confidence doesn't exist for whatever reason, or where there is a public issue of some great magnitude, then I think it's conceivable that inquiries could be appointed in the future.

[2:45]

All of us in this House have to be cognizant of the cost of inquiries. There are huge costs for taxpayers, and if we can deal with issues before they get to that stage by making these kinds of amendments and saving a lot of money, then I think we're doing the taxpayer a real service.

D. Mitchell: This question might deal with sections 2 and 3, but it will prevent me from asking it in the next section. I think I reflect the same concern as the Attorney General on the cost of these inquiries. For instance, it has been suggested that when the final bill is in -- we don't know what it is -- the Prowse inquiry may cost up to $1 million. We don't know what it is. For a short inquiry that took little more than a month to complete, I hope it's not. I think the Attorney General is right to be concerned about those costs. Lawyers are awfully expensive, as the Attorney General will know.

As far as this independent office is concerned, could the Attorney General tell the committee.... It's my understanding that the office will report to the Attorney General, but when a complaint comes forward, either from within or outside government, and it is directed to this independent office, who will the director of that office make a report to? Will it be to the Attorney General? How will the public learn of a complaint and how it has been dealt with by this office?

Hon. C. Gabelmann: Varying situations will produce varying results. There will be investigations on a regular basis into issues by members of the branch and perhaps by members of this independent body. They may undertake them on their own initiative in order to deal with a perceived problem. It would be up to the Attorney General of the day to make public whatever concerns he or she wanted to make public. If, however, a complaint were received by this new body -- from an MLA, let's say -- or if an issue were raised in the House, then it's in the public domain and it's for the Attorney General to decide whether or not to make public in some form the results of the investigation by this body.

I think that it's one of those issues where it's FOI-able in the long term, so it gets dealt with that way. But to me, that's not the way to deal with it. From my perspective, if it's an issue of public concern, then you put it out to the public. I've done that with every report I have had in my entire time at this job. Giving the material to the public is the appropriate thing to do.

D. Mitchell: I have one final question on these sections. There has been a concern -- the Attorney General is familiar with it -- of officials coming forward from within, for instance, the corrections system. An official may wish to come forward with a complaint, but may under some circumstances be concerned about coming forward for fear of reprisals or repercussions to the individual's career with the corrections system.

Can the Attorney General tell us whether or not there will be any protection for government employees working within the corrections system who wish to come forward to this new independent office? Can he assure the committee today that there should be no cause for concern or apprehension that coming forward to this independent office with a complaint will mean significant repercussions to one's career within the public service?

Hon. C. Gabelmann: I will say again that there should be no fear whatsoever. The member for Surrey-Cloverdale raised essentially the same question. The members should know that over the years the inspection and standards branch has received "complaints" from people within the corrections branch that have then been investigated. That has not led to anybody being disciplined for having brought it forward in the first place. Public servants are interested in having good public policy established, and if they see something happening within a part of the branch where this may not be the case, they will want to bring it forward. They do, they have and they should in the

[ Page 12816 ]

future, and no one should ever be disciplined for that kind of initiative. As far as I'm concerned, no one ever will be.

Section 2 approved.

section 3.

K. Jones: I just want to get a little more clarification on the process of initiating the investigation that is indicated by subsection (c). It says that it can be initiated on the director's own motion, and that's understandable. Is the commissioner in this

section the commissioner of the corrections branch?

Hon. C. Gabelmann: The proceedings can be initiated, as I think the member said, by the commissioner of corrections, who is the deputy minister, or by the minister, or on their own initiative. So it's wide open.

K. Jones: Does this mean that this is an internal investigation organization? If it's initiated by the

commissioner, does it still report to the minister, or just to the commissioner?

Hon. C. Gabelmann: In all cases, it is reported to the minister.

K. Jones: It's really pleasing to note that that will be the case. Now, what about the initiation of an investigation? You've indicated that if it comes to your attention from the public.... Can the public take it directly to the director of this commission?

Hon. C. Gabelmann: If a member of the public has a concern, they could contact the director in writing, by telephone or by a meeting and express the concern. Then, yes, the director could, on his or her own initiative, launch an investigation.

K. Jones: If a member of the public initiated an inquiry, or asked for an investigation through the director, would the director have to get the minister's permission to proceed with that? Or does the director have the authority to proceed on whatever investigation information is brought to their attention?

Hon. C. Gabelmann: The director can do it on his own initiative. It says so in the bill, where it says: "...or on the director's own motion."

K. Jones: We just need a little clarification on this regarding the process of a public inquiry or, say, an employee concern. I presume these investigations would be done in confidence and that the director of the institution being investigated would not be informed that he was under investigation as a result of a complaint from members of his staff?

Hon. C. Gabelmann: The well-established fairness tests that exist in our society would have to be followed by this branch, as with any investigating body. Police, for example, have rules within which they have to operate, and they mostly have to do with fairness. The same would apply here.

K. Jones: I understand that when an audit is done, the people who are being audited are not informed prior to the audit. That would really preclude the audit being impartial or formed on a valid basis because they would then have a chance to sufficiently prepare themselves to make sure they came through the audit looking good. Would that not also be the same basis upon which this type of investigation would have to be done? It would have to be done without giving people prior notice of the investigation; otherwise, it would have some question as to its validity.

Hon. C. Gabelmann: Well, the member wants to talk about the day-to-day procedural operations of a branch that hasn't yet been established. In fairness, I think we should allow that to develop. The agency will develop its own way of doing business, under rules of fairness. If the member has any concerns about how that's done, I would encourage him to contact the appropriate officials and have a discussion about it to make sure his concerns are properly dealt with.

K. Jones: Going back to an investigation that's initiated by the public or members of staff, would those people be given a copy of the report of the investigation so that they knew what came out of their enquiry? Or is this going to have to go through to the Attorney General who could actually sit on it without them being aware of anything that has transpired.

Hon. C. Gabelmann: Neither the old process nor this new process sets out by statute or regulation the procedures involved. Members need to remember that in many of these issues, there will be a report, a phone call will be made, and that will be the end of the matter. For the most part we are dealing with routine activities on a daily basis. It's not up to the statute to determine the procedures that are used by this branch. It has never been the case. There has never been the need for it, and I don't see one now.

K. Jones: The Attorney General hasn't given us much confidence in the process if he is going to hide the results of investigations from the people who have initiated the investigation. What I get from his response to that question is that he's going to hide it.

The Chair: Shall the

section pass?

K. Jones: I'm very disappointed that the minister is not prepared to give us an answer to something that is very critical. It really is a question of whether this whole process should be acknowledged as a suitable answer to the concerns that have been expressed about there not being a good process for handling concerns and complaints. It certainly hasn't been independent in the past.

We thought the minister was bringing forward an independent process that allowed the whole area of corrections to be better administered, based on being an independent organization within the branch. Now the minister is not willing to say that the people who initiate an area of concern are going to be able to find out whether that area of concern has been addressed. How do they have any confidence in that?

Hon. C. Gabelmann: I thought I'd answered the questions earlier. First of all, this is not within the branch; it is independent. It operates procedurally under rules of natural justice, and it reports to the minister.

[ Page 12817 ]

The member says he is disappointed with my answer. I am disappointed in the line of questioning, because the member is not dealing with the amendments; he is dealing with procedures that have been in place for years and years and have never been questioned.

What we're talking about now is changing two things, essentially. We're adding the opportunity for this group to do investigations, and we are requiring that the reports be made to the Attorney General rather than to the commissioner of corrections. The member is asking questions that should properly be asked at a meeting with officials.

K. Jones: I think the whole question is one of accountability and confidence. I believe the minister has given a direction that is intended to give the public confidence that there is an independent branch of his operation that will be overseeing this. Yet we really don't have a complete piece of legislation here; we have part of a legislation. It's a sort of mirrored piece of legislation that only part of it is visible through; we don't see the rest of it. I think it is incumbent upon the minister to give us all the information on how this is going to operate.

You've made a good start; you have part of a piece of legislation. Let's see the rest of the legislation before we put this through as full authority for you to act. I think you have be honest with the people of British Columbia in the full range of the operation, not just one portion of it.

The Chair: Member, excuse me. I must remind you, lest this be a harbinger of things to come, that this is a miscellaneous statute. We are talking about an amendment to one small

section of a much larger act. To suggest that the minister isn't putting on the table everything that should be put on the table is simply an unreasonable and illegitimate request.

[3:00]

Again, I certainly have no desire to impede the normal flow of debate that ought to be allowed in miscellaneous statues discussion, but I must caution that we should stay in order. It seems to me that we've canvassed

section 3 at considerable length, and the question would be in order. Surrey-Cloverdale, I hope you have something new.

K. Jones: I don't wish to belabour the item, but I do find that your comments at this time, hon. Chair, actually appear to be in the area of debate. I think you may have gone beyond your role as Chair. You may want to caution yourself.

The Chair: Member, please be careful. I would just ask you to please read standing order 9, and you will discover precisely what my obligations are and what yours are.

Section 3 approved.

section 4.

G. Wilson: I did serve notice in second reading that this was an area -- in fact, the only area -- in the bill to which I had any substantial objection. I served notice then that it was a

section that I would want to call division on, and I serve notice to those who may be listening that I think we need to do that. Unless the minister is prepared to yield on this section, or reconsider, I don't know that there's too much more we can do to debate it. We should just simply move to vote on it.

But it is important to recognize that what this effectively does is to remove

section 17 of the Election Act, which requires the government to have enumeration every three years, and puts into the hands of the chief electoral officer whether or not enumeration should occur. It removes from now forward any statutory obligation for enumeration of the voters list. I think that is completely unacceptable, because the voters list is the basis of our democracy.

Having said that, unless there's some provision to yield it or amend it, then we might as well go to division.

Hon. C. Gabelmann: Just before going to a division, let me say a couple of words. The member is right, there was a statutory obligation to conduct an enumeration in May of this year, an enumeration that would have cost about $8 million.

Interjection.

Hon. C. Gabelmann: What price has democracy? No price is too high -- I understand that. But nonetheless, it would have been $8 million, and what we would have had then is a voters list that would have been current in May 1994 and out of date again by the time an election comes some years from now. That's argument number one.

Number two, more importantly, is the fact that the chief electoral officer and the branch are developing what you might call a continuous list, or a rolling list, one which is constantly updated by a variety of mechanisms. It's my intention, in order to supplement and assist the branch in making sure that that continuous voters list is up to date, to make further changes to the election law, hopefully at the next session of the Legislature. Every jurisdiction in the country is moving to this kind of approach.

The old notion of conducting either an enumeration in the first three weeks or whatever of a campaign or a full enumeration at a fixed time between elections is rapidly disappearing. Given technology, given the ability to put voters lists together, this is now seen right across the country as an outmoded approach.

Nonetheless, there will be occasions and there will be areas of the province where a door-to-door enumeration is an appropriate vehicle, and there may be occasions when, in the judgment of the chief electoral officer, it is appropriate to have a provincewide enumeration in advance of an election campaign. It is still possible for that to be done, and spot enumerations will be done for sure.

So we're simply keeping up with the changing technology, the changing principle, which is not to have a fixed-in-time voters list once every four years but rather a continuously updated voters list. That's what this is in aid of, and I think it's very much in tune with the times across the country.

G. Wilson: Quickly in response, from a strictly philosophical point of view, the other problem we have with this bill is under

section 284(2). It says that "the chief electoral officer may arrange for and conduct a general enumeration of all electoral districts or a limited enumeration...." Well, clearly, if there is a decision taken that some ridings will be enumerated but others will not, or some areas within ridings may have enumeration but others may not, my guess is that there are going to be people left off those lists. There may be serious problems with that, and I would argue that it may even be

[ Page 12818 ]

challenged. I don't know what every other jurisdiction is doing with respect to these enumerations, but the provisions under

section 17 with respect to the third year as a time for enumeration may not be right. If that's the case, amend it to provide, again, a mandatory enumeration at some other time.

As the member will know, I have long stood in favour -- and still do, as a matter of policy within the Alliance -- of a fixed four-year mandate, so that we can have a fixed election day. That, in effect, would take care of the larger question, which is the manipulations that often take place -- all kinds of electioneering that goes on in various ridings. So this, to me, is simply removing a statutory obligation. Notwithstanding the fact that the list may be somewhat out of date as we get into the election, at least it's done.

We know there has been at least one court challenge with respect to the voters lists. Those lists are not only used provincially now; they are also used for municipal and regional district elections. We now recognize that those lists may not -- under a different statute that we have just passed in this House -- be released with respect to addresses, phone numbers and what have you. So what we're really doing is weakening the basic tool of democracy, which is to make sure that every eligible voter is able to cast a ballot and that those who are not eligible voters do not cast a ballot.

I just don't think this notion of freeing it up and doing as we see fit when the time seems right is a good enough response. That is the reason I take a strong position on it and will move to call division when we vote.

Hon. C. Gabelmann: Once again, the voters list is amended every day. The provision to allow for spot enumerations is to deal with.... For example, if an election is potentially to take place at a time when there are a whole new group of students in a student residence, it may make sense to have an enumeration in that particular poll, in that residence.

The member suggests that failure to have a fixed or a periodic full enumeration may mean that some people will be denied their eligibility. We passed in this House, two years ago now, amendments to the Election Act, which allowed for people to register and vote on election day if they were indeed eligible.

G. Wilson: And if any ineligible people vote?

Hon. C. Gabelmann: If ineligible people vote, then the weight of the law is available to do several things: one is to punish those individuals; another, if there are sufficient numbers of them, is to apply to have that election ruled null and void. The fact is that almost nobody votes when they are not eligible; that has not been a pattern of concern.

However, that's not what we're debating here now. The member and I disagree. I understood that when he made his comments in second reading and again now. We have a difference of opinion, and we can test that and see how the House decides to vote on this one.

D. Mitchell: I have a quick question to the minister on this. I guess I'm not clear: does the cancellation of the enumeration scheduled for this year, 1994, mean that if a general election were called earlier than the Attorney General has predicted...? He's predicted that we're two years away from a general election. That's interesting to hear from him; his boss may have a say in that, and it could be otherwise -- we don't know.

Or if this year there were a by-election, for instance, would there be a risk that certain citizens of British Columbia might be disenfranchised -- those who have moved, those who are new -- because the current voters list in a constituency or in the province may not be up to date?

I agree with the Attorney General that we need to move toward a permanent, continuous voters list, as some jurisdictions are now doing. I think that's the way to go, but we're not there yet. Wouldn't it be prudent to wait until we have established such a permanent voters list before cancellation of a enumeration, which could risk disenfranchising some voters in British Columbia?

Hon. C. Gabelmann: The elections branch already operates on the basis of a continuous list. It uses a variety of sources of information in order to keep the list constantly up to date. If there were a by-election and it appeared as if there were large numbers of people not on the list for one reason or another, which I doubt would be the case, then an enumeration could be conducted. The fail-safe, in the final analysis, is election-day registration.

No one will be denied their opportunity to cast a ballot as a result of passing this particular bill. To keep the old system would have meant, as historically it has in this province, that many people were denied their right to cast a ballot because they couldn't get on the list. The enumeration may have missed them, which it often does in any event, particularly in ridings like mine -- and, I assume, that of the member for Powell

River-Sunshine Coast, where people just don't get caught by enumerations because they're elsewhere. The system now being developed will catch those people and will have them on the list. There will be greater certainty that you actually will be on a voters list prior to an election.

M. de Jong: On the substantive issue dealt with by the section, I probably come down somewhere between the Attorney General and the member for Powell River-Sunshine Coast.

Interjection.

M. de Jong: He says that's why I'm a Liberal. I'll get to that in a moment.

There's another principle, though, that occurs to me as I go through the section. I recognize that the bill was tabled in April and the enumeration was to commence in May. Now, the Attorney General will say: "We proceeded on the basis that enumeration will never take place." There was a statutory obligation there. The government appears to be saying: "We will ignore our statutory obligations when it is convenient to do so." If it was that much of a priority -- I'll speak to this substantive issue in a moment, and I'm not that far removed from the Attorney General -- we're sending the wrong signal from this House.

We're saying the government of the day will ignore its own statutory obligations when it's convenient to do so. The matter could have been dealt with, or presumably the enumeration should have proceeded.

Hon. C. Gabelmann: The chief electoral officer was obliged to begin preparations for the enumeration that was required. He in fact began to do what he had to do to make that happen. We did make sure this miscellaneous bill was introduced prior to the date that had to occur;

[ Page 12819 ]

and we made it retroactive to that date. The whole House had the information. So that served as instructions to the chief electoral officer to not proceed, because he knew that this provision would be changed to April 30, as indicated in

section 12.

So if the member is saying the chief electoral officer should have spent the $8 million, because the Legislature hadn't had the debate and the bill hadn't passed.... I know the Liberals have a history of spending a lot of money when they don't have to; the country is in terrible debt as a result of that overexpenditure. But we weren't prepared to do what Liberals do, which is just to spend money when you don't need to.

The Chair: The member for Matsqui continues on this non-partisan debate.

M. de Jong: Thank you, hon. Chair. I'm terribly disappointed that the Attorney General would respond in that manner. It's not this piece of legislation; it's the principle. Principles only withstand tests if they can be generally applied. The government is saying, by virtue of how it has proceeded with this fairly straightforward section: "When it's convenient to do so, we will ignore our statutory obligations." It's not as if options weren't available. The bill was introduced and could have been dealt with in April.

Had the bill passed at that time, the government could have excused itself of the statutory obligation that it was under, pursuant to the existing provisions of the Election Act.

[3:15]

So the Attorney General can get up if he likes and cast aspersions on the official opposition and suggest that we're spendthrift. That is not the issue. He knows that's not the issue I bring up. What I bring up, and the reason I bring it up, is that it sets a terrible precedent. It sets a precedent of ignoring statutory obligations for expediency's sake and nothing else. I think the Attorney General, the chief law enforcement officer, has an obligation to address that issue and not turn it into a partisan political debate the way he has tried to do.

Hon. C. Gabelmann: I so rarely indulge in partisan debate in this House, but, given an opportunity, I can't resist. The member makes a point, which I understand. But the Legislature, on occasion, makes decisions to have a retroactive application of laws. We do it every year with all the budget bills. The taxes are collected as set out in the budget, prior to the passage of the legislation. And we do that with other legislation, in terms of retroactive issues in the Limitation Act, for example. So that's a principle which has been breached often in this House.

I acknowledge that in a perfect world, I would have preferred to have brought this in in March and had it debated before the middle of April. But we don't live in a perfect world, and it was done this way.

M. de Jong: I'll make one further point and then move on. I think it bears repeating that citizens in this province aren't permitted to ignore the law in some anticipatory way that the law will be changed. Government members on that side of the House and members on this side of the House would do well to remember that. What we expect of our citizenry is a standard we should be prepared to uphold here in the Legislature.

With respect to the issue itself, initially I think the matter was presented as a cost-saving measure. The figure of $7 million or $8 million was mentioned at the briefing. The information I subsequently received from Elections B.C. officials suggested that aside from that, they seem to be motivated by a concern that door-to-door enumerations just weren't feasible any more; they just weren't working. They cited examples of the reluctance of people in larger urban centres to even come to their doors at night after dark. Sadly, I am obliged to concur that there's probably something to that.

I would be less concerned -- and this is perhaps similar to what the member for Powell River-Sunshine Coast said -- if we weren't simply doing away with the general enumeration and vesting absolute jurisdiction in the hands of Elections officials. We've heard about the continuous enumeration, the continuous list. As I understand it, they are moving toward some fairly innovative ways of maintaining the currency of that list. Our society has changed. One thing that I know they did recently, particularly in the two most recent by-elections, was enumerate in the shopping malls.

In our society, those are the closest things we have now to a town centre or town square. My discussions with those people suggested that that was an entirely effective means of tapping into the population, and that is something they would explore in the future.

If there were some minimal obligation attached to this amendment to the act which set some minimal standard of enumeration that would assure us that contacts were taking place between the public and the Elections officials, the Attorney General wouldn't be hearing the concerns that are being expressed today. To some extent, he can legitimately say that election-day registration should have the effect of preventing anyone from being disenfranchised. Yet the value in ensuring that people are on that elections list is something that is beyond question and any sort of argument.

Hon. C. Gabelmann: I understand and respect the opinion put forward by the member, and I think there's some validity to what he says. This issue will be caught completely and properly by the Election Act when it's introduced, hopefully next session, as I said earlier. Meanwhile, we had to do something to deal with the fact that we were required by law to have the enumeration. I will undertake to make sure that in the process leading to the introduction of the bill next year, the comments made by the member on this particular point are taken into account by the people doing the drafting.

K. Jones: The minister has indicated that he's doing this because there's a process underway to make this more effective and efficient. Can the minister tell us if there is any process to amalgamate into a common database the municipal, provincial and the federal elections acts?

Hon. C. Gabelmann: The desire to come up with a common list is something many of us have talked about for many years. I know that discussions have occurred between various levels of government about that, but at this stage there has been no substantial progress. It's not part of this particular enumeration.

G. Wilson: I have a very brief comment with respect to next year's legislation, which we've been promised. It probably gives some credence to the minister's comments about election timing.

Having said that, the Attorney General made a couple of comments, the first being that the Legislature took the

[ Page 12820 ]

initiative to move this forward. The decision with respect to the cancellation of the enumeration on the first Monday of May was not made by the Legislature. I think that the Attorney General must recognize that it was made by government. That's the first point.

[3:30]

The second point is that there has to be an acknowledgement that while the Attorney General says there is an ongoing enumeration, it is not provided for anywhere in the Election Act, once this is passed. It's entirely discretionary, without any substance in legislation. Once you've removed

section 17, which is what this amendment does, the balance of it -- with the exception of the revision of the list under

section 19 and the rules for court of revision -- has nothing now, on the basis of actual collection and enumeration, that is obligatory to government. That's a real problem.

Hon. C. Gabelmann: I don't have the time to read right through the Elections Act to deal specifically with the question the member raises, but I can tell him that the chief electoral officer does continuously revise the list. The procedures are in place and are constantly being improved. There is no doubt whatsoever that there will be a full and complete voters list, as full and complete as it can be on any day, today or next week, because that's the way the system now works.

[D. Lovick in the chair.]

Section 4 approved on the following division:

YEAS -- 54

Marzari

Pement

Priddy

Edwards

Cashore

O'Neill

Garden

Dosanjh

Hammell

B. Jones

Lortie

Giesbrecht

Miller

Smallwood

Cull

Gabelmann

Clark

MacPhail

Ramsey

Barlee

Pullinger

Janssen

Evans

Randall

Beattie

Farnworth

Conroy

Lord

Streifel

Sawicki

Jackson

Mitchell

Serwa

Hanson

Weisgerber

Stephens

Gingell

Reid

Dalton

Tanner

Jarvis

Warnke

K. Jones

M. de Jong

Symons

Fox

Neufeld

H. De Jong

Hartley

Schreck

Copping

Brewin

Krog

Kasper

NAYS -- 2

Wilson

Tyabji

Sections 5 and 6 approved.

section 7.

K. Jones:

Section 7 relates to the fact that under the Motion Picture Act, adult films that do not meet regulations and are produced without authority or do not have proper certification are to be destroyed. The original films are also be destroyed. I say bravo to the minister. I think it's about time we did this, but this isn't enough. I think a lot more work needs to be done on the elimination of pornographic material. I'd like to ask the minister to continue to come forward with more concrete action against the items that degrade women and put thoughts into people's minds that are detrimental to our society.

Hon. C. Gabelmann: I thank the member for his support. This is an important initiative, and I'm delighted that we're able to proceed with it.

Section 7 approved.

section 8.

J. Weisgerber: I rise in opposition to

section 8. If the government wants to create a scholarship to commemorate the Commonwealth Games, I would applaud that. I think that's useful and commendable. But I don't like the notion that the government has decided to take an established scholarship -- one that's been around for a very long time and has some historical connection to British Columbia -- and simply rename it.

I think that some things in our heritage and in historical association with the United Kingdom and other countries around the world are worth preserving, and I think this decision significantly changes the recognition that was originally given in the naming and forming of this scholarship. I don't think it's appropriate, and I intend to vote against it.

Hon. C. Gabelmann: On behalf of the Minister of Government Services, whose amendment this is and whose whereabouts are unknown to me, I will attempt to respond to the member.

As I understand it, this amendment will give scholarship recipients an opportunity to pursue their studies in Commonwealth countries other than the United Kingdom and will give them greater flexibility. I am surprised that that would cause some concern on the part of the member. The speaking notes say: "Several of the past recipients of these scholarships have indicated that their studies could be best pursued at educational institutions located outside the United Kingdom." It is for that reason that these amendments are put forward.

J. Weisgerber: I understand the rationale put forward, but the effect is for government to take an existing scholarship created to commemorate a significant event in British Columbia -- that is, the moving of British Columbia from a colony to a province -- and recognize that ongoing connection with the United Kingdom.... I believe there is room for that kind of recognition, and I am sure that many people would be quite delighted to receive the scholarship and study at Cambridge, Oxford or some other university.

If government wants a Commonwealth scholarship that gives students an opportunity to study in Commonwealth countries, that should be fine, but I disagree with the idea of hijacking one for the purpose of creating another.

Hon. C. Gabelmann: I understand the member's point, and we just have a difference of opinion. Just for the record, it is important to note that the Queen Elizabeth II B.C. Centennial Scholarship Advisory Committee was consulted on this and supports the change. But that doesn't mean the member has to.

[ Page 12821 ]

M. de Jong: I view this more as an expansion of an existing scholarship plan than a replacement, as the Leader of the Third Party indicates. I cross-referenced the various sections, and the only concern I have is that there is nothing in that existing Scholarship Act that defines which countries would be applicable or provides for regulations that would allow those countries to be enumerated. In these changing times, I'm not sure that listing a Commonwealth country without some sort of list somewhere is sufficient.

Hon. C. Gabelmann: It is to all Commonwealth countries other than Canada. A list does exist, and it's my understanding that the list is being added to by one -- or will be very soon. I am sure that a list could be provided to the member or to anyone else who wants it. There is an existing organization of the former British Commonwealth.

Section 8 approved on division.

Sections 9 to 12 inclusive approved.

Title approved.

Hon. C. Gabelmann: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; D. Lovick in the chair.

Bill 33, Miscellaneous Statutes Amendment Act, 1994, reported complete without amendment, read a third time and passed.

[3:45]

Hon. C. Gabelmann: I call committee on Bill 53.

PENSION STATUTES AMENDMENT ACT, 1994

The House in committee on Bill 53; D. Lovick in the chair.

G. Wilson: Pursuant to advice received, would the Chair note that I have removed myself from this debate?

The Chair: Thank you, member. It's duly noted.

section 1.

F. Gingell: Perhaps one thing the minister could explain to the committee at this point is what the practical consequences are of bringing in the term "spouse" as defined by the Pension Benefits Standards Act, rather than the description that was used in the past.

Hon. E. Cull: Since this is a definition in another act, I'm taking a few minutes to refresh my memory on the Pension Benefits Standards Act. What this change does, in effect, is to make it clear that the precedence is given to a married spouse if the married spouse is living with the person eligible for the benefits. In the case where there is a married spouse no longer living with his or her partner, and a common-law spouse, then there is precedence given to the person who is living with the pension beneficiary.

F. Gingell: Does that mean that in the case where there has been a marriage breakdown but no settlement, and the annuitant dies, the continuing pension will be paid to a common-law spouse in preference to the legal spouse, with the matter not being subject to the court's determination?

Hon. E. Cull: The question that the member has given me applies to the post-retirement period. This definition and the answer I gave is actually pre-retirement, and it relates to rights for spousal pensions and other rights that accrue prior to retirement.

Sections 1 and 2 approved.

section 3.

F. Gingell: I'm not sure whether this is the right place to deal with this issue. It's the first time it comes in, but it will repeat itself later on.

Without trying to be facetious, this is purely and simply a change in the pension benefits that increases the amount of money an annuitant is paid. From a practical point of view, these have been paid by the plan since the beginning, unless the annuitant has wealth of his or her own from some other source of income. It just means that it was paid to them as pension and turned around, and they paid it out of the money in their pockets; so it was being paid before. Is this the first of a series of items that can be defined as needing to be brought in and paid out of this fund? I guess I might as well get into this issue at this time.

The more I come to understand this rather complex subject, the more it seems to me that if there is an unfunded liability, that liability has in the end arisen because there have not been sufficient contributions made -- that's obviously where it comes from -- or there hasn't been a sufficient amount of income earned on the fund's assets, or any of these things that would increase the amount of money.

In the normal course of events, before one deals with putting money aside to pay additional benefits -- whether they be these types of benefits or what I like to call, because I think it describes it better, a cost-of-living adjustment or an inflation account -- one would think that at least until the fund is fully funded, all the earnings and contributions would go into the basic account. After all, it is the basic account that we as responsible legislators wish to see safely there.

So I'd like to suggest that at any time we increase the benefits, which produce a cost -- the actuaries haven't dealt with that in their report, because it is paid out of the inflation account -- shouldn't we rethink this whole pension issue? Shouldn't our first concern be to ensure that the basic pension account is sound? We know that it isn't. The actuaries say it isn't; the auditor general says it isn't. I'm not particularly talking about the college fund, because I think it is a little better off than all the other funds. But rather than repeating ourselves four times through the course of this late afternoon, I think we should only deal with it once.

Although the actuaries have not dealt with this cost issue because it comes out of the inflation account, in the end it does detract from the assets available to ensure that these pensions are paid. I appreciate that I'm not going to get you to change your mind about this....

An Hon. Member: Keep trying.

[ Page 12822 ]

F. Gingell: I really do feel like trying. I think this government has shown some responsibility for the first time. I'm really pleased that you have taken the issue of the underfunding by the neck and got a grip on it. I don't think you've done enough; I think we needed to deal with the whole thing.

Don't you think it's time to rethink the whole issue? Our unfunded liability, particularly in the teachers' plan, goes up by huge amounts every year. We're not going to get this sorted out in a manner that can be afforded until we put a lid on all the benefits --

section 3's included -- and allocate all the assets to the basic fund until the unfunded liability has been evaporated.

Hon. E. Cull: The question of the unfunded liability and how we're dealing with it, and what policy decision should be made with respect to reducing it versus changing any benefits, is probably one that touches on a number of sections here. So with a little bit of latitude I'd like to just address this issue, knowing that some of the things I'm going to be talking about will be coming up specifically under certain sections as we move ahead.

Let me first of all say that the auditor general has not said that the plans are unsound; that would certainly be overstating my understanding of what he has said. What he has said is that we should have a funding strategy to deal with the unfunded liabilities. I have to say that many of the questions the member has just raised were questions I myself asked as I started to work through this pension legislation. There are some good answers to the questions he raised.

Yes, we are concerned about the unfunded liability. Now, the unfunded liability has actually been declining recently, and may be eliminated entirely within a year in the public service pension plan. Notwithstanding this, we need to put in place some firm policies to ensure that the unfunded liability doesn't increase and that, over time, it decreases. Ideally, it would be eliminated entirely for all four plans.

What has been in place in the past has been a policy which was never followed. In the sections we'll get to later this afternoon, this act puts into place in law various requirements that the unfunded liability can no longer increase, and a strategy for ensuring that if the liability does begin to increase, there is by law an increase in contributions to bring it down and deal with it over a reasonable period of time. The suggestion here is that these benefits are somehow adding to the problem. I think the member understands that this is a reallocation of benefits.

This is money in the inflation adjustment account that, instead of being spent on inflation adjustment, will now be spent on paying for these benefits.

The member is right. In some ways, you're not sure which option you would choose: to give you the money, and we'll pay for Medical Services Plan or extended health care ourselves; or to have it paid and get less money. From a dollar point of view, it probably doesn't make a lot of difference in the end to the pensioner.

The member also knows, however, that these changes have been brought forward as a result of 18 months of consultation with the advisory boards that are also being established through this legislation; but they have been in operation to look at the plans and to provide input. The plan members themselves, through these advisory boards, have made trade-offs. They would like to have everything, but they can't have everything. There's not enough funding in the plan, and there are the unfunded liabilities that have to be dealt with. We gave them some very clear guidelines.

We said to them that they couldn't increase the unfunded liabilities and had to make sure that what they were doing was actuarially sound. That's where they started to look at making some exchange of benefits.

There are two funds in each plan: a basic fund and the inflation adjustment account. The money that is in the inflation adjustment account has already been earmarked as benefits for pension indexing, and we can't unilaterally take it away and say that we want to move it over to pay down the unfunded liability. If the plan members agreed with that, we certainly would consider it, but I think the member can understand why the plan members would not agree with that.

That's why we have put together a number of things in this bill, including a strategy to ensure that if the unfunded liabilities start to grow again in future, there will be legal requirements to ensure that those liabilities do not grow and that contributions are increased.

To suggest that we can unilaterally take the funds in the inflation adjustment account and use them to pay down the unfunded liability is incorrect. We can't do that. All we can do is either leave the funds there, where they are building up a surplus that's not needed, for a number of reasons, or allow the members, clearly understanding the risks they are taking, to make the decision to reallocate those benefits. We have made very sure they do understand that, while it's a small risk, they are taking a risk in reducing that account and using it for other benefits. They have to evaluate this and weigh it in their decisions.

[4:00]

I think the member will agree that, in sum, the changes being made here are very progressive. They benefit people who have not traditionally benefited through the pension plan. They are therefore worthy of support because of the advantages they provide to more members in the plan who have been unable to benefit in the past.

F. Gingell: The minister mentioned trade-offs. What do you think the pensioners gave up in exchange for this additional benefit?

[W. Hartley in the chair.]

Hon. E. Cull: All the additional benefits that are contained in this act are paid for out of the inflation adjustment account. The money that has been accumulating in that account -- and there is a surplus, because inflation has not been as high recently as it was in the past -- now is being earmarked for improvements in benefits. So they're taking money that was there to index their pensions and moving it into other benefits under the pension plan. They know full well that if assumptions around inflation or earnings are not realized, there will not be full indexing of their plan.

But having worked with the actuary, they are satisfied that the risks are minimal and that the benefits are worth the small risk entailed in making this trade-off.

F. Gingell: I know we're only dealing with

section 3, but this really flows through the whole thing, and maybe we can just carry on with the issue. I'd like to suggest to you that if I were.... First of all, I accept what you say. You can't just take back the inflation account. I would like to, first of all to solidify the basic pension fund.

What happens now? We're saying: "Okay, under the way the plan exists, we have a contractual obligation at

[ Page 12823 ]

the moment to pay you a cost-of-living adjustment" -- or whatever term you want to use -- "out of the inflation account. We're going to continue to pay you that, but we're going to pay you some more; we're going to pay the premiums on these various benefit packages." What has happened is that you've just increased the amount of the benefits.

Who can suffer by this? Some person in the future who was anticipating inflation protection can, if there's no money left in the inflation account. All of these pensioners have inflation protection up to the point of their retirement, because their annuity is based on their best so-many years. As inflation has pushed their salary up, that inflation has been looked after in the basic salary -- which I'd like to suggest to you is the cause of the underfunded liability in the first place, in my simple mind.

That's what's caused the unfunded liability, because you've paid in for a teacher years ago who was earning $8,000 or $10,000 a year. When I was first on the school board, that was the salary; in fact, the teachers didn't earn that much to start. So you were paying into the fund on the basis of an $8,000 or $9,000 salary. As inflation, promotions and experience have pushed that salary up, you never go back and cough up the shortfall that you didn't pay in the early years.

So now we're saying okay, if we have a different investment mix, go into equities and do some of those things, we can earn a greater rate of return. Yes, I accept that from this greater rate of return, whether it is realized or not, you are going to push another half a percent, three-quarters of a percent -- it's something like that, isn't it? -- into the basic account before you cut off. With higher returns, it's higher risk; that's the way the world is.

If the rates of return come down so low that you don't make the agreed-to rate of return to go into the basic account, then it is probably the taxpayers -- who are perhaps not legally liable but morally -- who will have to make up that shortfall. In the end, if the fund runs out of money -- heaven forbid -- the taxpayers of this province will have to make up this shortfall.

I can't get rid of the interrelationship -- and the thread in my mind -- that runs through all of these issues, whether they be interest rates of return, additional benefits paid out of the inflation account, or changes in the division of the interest earnings between the inflation account and the basic account. Everything has a domino consequence. I can't say this too many times this afternoon, but I really feel terribly uncomfortable with this whole package.

I am pleased that you are bringing in a definitive statutory requirement to deal with the unfunded liability -- or at least to stop it from getting any worse. When one goes to the auditor's reports and the actuary's reports and you see the amounts of additional contributions that were recommended by the actuary to these four plans, surely the first thing to do is apply any additional earnings of the fund through better investment policies to looking after these additional contributions.

In the college pension plan, the additional contribution recommended by the actuary was an additional 2.14 percent per year. It seems to me that you should make the changes for dealing with the unfunded liability.... At least making sure that it doesn't get any worse, you should deal with the changes to the boards. I approve of the annuitants having a much greater role. But shouldn't you just sit back, not have any benefit increases, do nothing that has any cost, wait a couple of years, see how things go, and if the plan looks like it can afford it, make some change then?

Hon. E. Cull: We are taking a fairly broad debate here, and that is probably useful, because when we get to specific sections we will have covered a lot of the territory.

First of all, I have to address the concern that the member has with respect to diversification. Diversification of the investment policy results in less risk, not more. It's more risky to have all your eggs in one basket. Fixed income also entails a risk as markets change, so the diversification actually ends up with less risk to the plan over time. Diversification isn't new either. The teachers' plan has been diversified for two years now, and other plans will be moving in that direction.

It is important to know that as the investment policy pays off with greater returns, those greater returns do reduce the unfunded liability. They stay in the basic account because the inflation adjustment account is created by shifting an amount of money to the inflation adjustment account to create that account. Somewhat less money is going to be shifted as a result of this act and the decisions that have been made. But a very small amount is being retained in the basic account to pay for the additional benefits. In doing that, they have made a trade-off.

They could have put all the money into the inflation adjustment account and forgone the benefits. But that would not have affected the unfunded liability, and it would not have provided any benefits, particularly to women and others who are going to be benefiting from this change in policy. It is those people who have not been able to stay in the workforce for a long, consistent period of time.

So, again, it's primarily women who end up dropping out because of family-raising responsibilities, or those who have come into the workforce, or at least into that particular pension plan, later in life and may not have all the accumulated time necessary to be able to benefit from the current circumstances who will see increased benefits from this. I think that is a reasonable trade-off.

As the Finance minister, I suppose my very narrow interest would probably be to scoop those benefits and try to use them to reduce the unfunded liability, because that reduces the liabilities of the province. But having said that, I don't think that's fair to those who have paid in and have seen those benefits established for them. It's important to recognize that the benefits in the inflation adjustment account have been assigned to members of the plan.

J. Weisgerber: I've listened with some interest to the rather wide-ranging debate on this

section of the bill. I enter into the debate in the spirit of assuming that we're covering a whole range of issues and that that will allow us to move forward more quickly on other issues -- at least that's the anticipation.

Let me say, then, entering into my version of the second reading debate, that it seems to me that the bill has three areas in which it focuses its energies on reducing the unfunded liability: the one we're dealing with here, which is moving down the indexing when the unfunded liability increases; if that's unsuccessful, requiring the employer to pay a larger contribution into the plan, as the second part of that initiative; and, furthermore, looking then at another method of trying to make that contribution. I must confess that the third one slips my mind at this particular moment, but I'm sure we'll come to it.

While setting out, at least on the surface, to deal with the unfunded liability,

[ Page 12824 ]

the bill then moves into the area of expanding benefits and increasing the costs. The bill is as much about expanding benefits and increasing costs as about dealing with the unfunded liabilities, and I think the minister would probably acknowledge that.

This

section suggests that as the unfunded liability increases, the first action will be to reduce the amount put into the indexed account -- the account to deal with inflation. Can the minister give me a sense of the parameters that this

section of the act could deal with? What effects, over a year or over a period of time, does this

section have the potential to address on the question of unfunded liabilities? I have the sense that this is a pretty small move toward dealing with unfunded liabilities, which in some sections are as much as 120 percent.

Hon. E. Cull: I guess this last set of questions or comments illustrates some of the problems with allowing wide-ranging debate when we're dealing with a section, because we've gone well beyond this section. Specifically on this section, it doesn't address unfunded liabilities at all. All it says is that we can pay for group benefits -- medical services, extended health and dental -- out of the inflation adjustment account. That's simply what this

section deals with; it doesn't deal with the unfunded liability.

Let me just go back again and deal with the question of the unfunded liability. You said that there were three things that you thought were inherent in the bill. The first one was wrong; the last one you couldn't remember, so I can't comment on it; and the middle one was right. What we are doing with the unfunded liability is setting a limit which says we can't exceed where we are now; we can't make it worse. If it gets worse, there's a process for making it better, by increasing the contributions. It also provides that if the unfunded liability goes down, there's a benefit back to the employer as well, through reduced contributions.

[4:15]

The process for dealing with the unfunded liability is putting a policy in the act in a subsequent

section -- and I don't remember the number right now. Otherwise, the way the system works, if I can use it in its most simple format.... There are more subaccounts, but if I explain those, I think it might complicate the matter. Essentially there is a basic account and an inflation adjustment account. Money is transferred from the basic account to the inflation adjustment account to provide for the indexing of pensions. The conclusion of the actuaries and the plan members and the government is that more money than was needed has been transferred to the inflation adjustment account.

As a result of that conclusion, we will be transferring less -- on the order of 0.5 to 1 percent less, depending on which plan we're talking about. The money that will not be going into the inflation adjustment account will then become available for some limited but I think essential benefit improvements.

This case is probably not the best example, but if we decided not to reduce the penalty for early retirement from 5 percent to 3 percent or to make any other benefit improvements, then the money would continue to go into the inflation adjustment account. We couldn't keep it in the basic account, not spend it and reduce the unfunded liability, because we can't unilaterally change that. I hope that clarifies it. It's a somewhat complex issue, and I'm trying to boil it down to some fairly simple concepts. But that's really what it comes down to.

If we decided not to improve any of the benefits, we then end up with an inflation adjustment account that, in the opinion of almost everyone who's looked at it, has more money in it than it needs and will continue to have more money put into it than it needs. I don't think that's in the best long-term interest of the plan members.

J. Weisgerber: To make sure that I'm headed in the right direction on this -- I would then be willing to move on and deal very specifically with the

section -- the minister says this

section doesn't deal with limited transfers to the indexing account. But one of the three approaches that I see to dealing with unfunded liabilities is, if I understood the minister correctly, to put more money into the basic account and less into the indexing account. When we get to that section, we can deal with it. The other approaches are to look to the employer for greater contributions and to look for a broader investment diversity that would bring in more income.

The point I would make before moving to the individual sections is that I don't believe any one method, or all three of those methods, are going to deal with the unfunded liabilities, particularly in those plans where the unfunded liability exceeds 50 percent. If you're going to hear a theme from me during this debate, it's that there needs to be stronger action. This bill falls short of bringing in methods that we believe would deal in any effective way with unfunded liabilities.

Having said that, I am now led to believe that

section 3 simply provides an option to use money earmarked for indexing to purchase benefits rather than index pensions. If that's the intent of this section, I'd be willing to move forward.

Section 3 approved.

section 4.

F. Gingell: I'm wondering if the minister or the commissioner have in their notes the most reasonable, up-to-date number for the unfunded liability. Let's deal with the college plan, because that's the one we have here, as at this date. The information that was sent around indicated that it was something like 10 percent of the annual payroll. Could you tell us what the unfunded liability at the end of all these changes will be?

I appreciate and understand that you may immediately make a change, because you said that in the future you're going to make some increased contributions to look after the unfunded liability. Also, I thank the minister for letting me have copies of the actuarial letters, but nowhere in the letters does it deal with what the current unfunded liability is. Could we just get a feel for that?

Hon. E. Cull: For the college plan, the most recent estimate of the unfunded liability is $45 million. Although you didn't ask about the other plans, I'm going to give them to you right now in anticipation of future questions. The public service plan is $193 million, the teachers' plan is $2.093 billion, and the municipal plan is $1.411 billion. The second part of your question is: what is the change in those unfunded liabilities as a result of this act? The answer is that there is absolutely no change.

F. Gingell: From this point forward, doesn't a greater amount of the earnings of the fund now stay in the basic account than has in the past? I thought this was the one --

[ Page 12825 ]

the three-quarters or half a percent that we discussed. I know it is somewhat different for each plan, but isn't there an additional amount of earnings that in future years will stay in the basic account?

Hon. E. Cull: The member is correct. There is more money staying in the basic account, but there is more liability associated with it, so they offset each other on a present-value basis. That's why there is no immediate change in the unfunded liability as a result of bringing in this act. Obviously, over time, there may be a change in the unfunded liabilities. We hope that it will be a reduction as a result of the policy that is being put in place to deal with the unfunded liabilities. This

section requires that increased contributions be made if unfunded liabilities increase. Also, diversification may result in a reduction in the unfunded liabilities. I believe my staff have provided you with a copy of the cost certificate from the actuary, if that's the correct phrase for that. That tells us that this trade-off of benefits does not affect the unfunded liability. That was the number one concern for the government.

F. Gingell: The first one I happen to have here is the teachers' pension fund. It indicates raising the excess interest threshold from 6.5 to 7.5. What numbers are we using for the teachers., to save me looking it up? What number does the interest threshold in the teachers' plan go up to?

Hon. E. Cull: The numbers are from 6.5 to 7.5.

F. Gingell: So by putting it up from 6.5 to 7.5, there will be a cost saving of 1.79 percent as a percentage of payroll, right? That's what the actuary says here. I think that's correct.

Underneath it has listed the costs of the additional plans, and it talks about whether or not.... It measures the change in the cost, and it depends upon whether the funding continues at statutory rates or whether the additional unfunded liability, assuming future employee contributions are made at entry-age normal levels.... I'm not quite sure what that means, and which is the appropriate one. But in each case your actuary comes to the conclusion that the cost savings are 1.79 percent of payroll and your additional costs are 1.17 percent of payroll.

By these changes you are going to be 0.62 percent of payroll better off. When you extrapolate that over a number of years, doesn't that change the unfunded liability?

Hon. E. Cull: There are many factors at play here, so it's very difficult to add up all the numbers and come up with a precise number that is going to predict what will happen. But if I refer you back to the document that you're looking at, you want to look at the cost savings at 1.79 percent, but at a total cost of 1.51 percent of payroll. If you look to the very bottom of the page you will see what I am referring to; it's in the last line on that page. So there is a slight residual left in the basic fund, which may slightly reduce the unfunded liability.

We wanted to leave a little bit of room, because the unfunded liability will depend on the earnings of the plan, and some of the assumptions that are made with respect to the members themselves and retirement and all the rest of that. Because this is a bit of an art, not a precise science, we felt that it was necessary to leave some room to ensure that we were comfortable that the unfunded liability would not be increased. Theoretically you are right; there is a small potential that this may reduce it somewhat. It would not be a large amount.

F. Gingell: Good. You had me worried when you said there is no change. That was saying to me that if you reduce your costs you have a saving of 1.79 percent, and if you increase your costs by 1.17 percent -- I'm sorry, that should have been 1.51 percent; I understand -- then there isn't any change. But there is a change, and that was what my question was.

Seeing that you have an expert sitting next to you, what kind of effect will 0.28 percent of annual payroll have over the actuarial life of the plan? In this case we're talking about the teachers' fund, which presently has an unfunded liability of $2 billion, which to me is roughly about a third, isn't it? The fund has about $4 billion in it, so it has a liability of about $6 billion. What sort of difference would those 28 points make? Would it make a difference of $10 million unfunded liability or $1 million?

Hon. E. Cull: I don't have a precise figure, and I'm not even sure I can do the $1 million versus $10 million. But it is negligible; it's not a large amount.

[4:30]

F. Gingell: I have one last item in order to make sure I'm not thinking about this thing wrongly. The minister said that the unfunded liability would be affected by a whole bunch of things. One of the things she said it would be affected by is the earnings of the fund. I was under the impression that the earnings in the fund are assumed from this point on to be 7.5 percent, and that every additional penny of earnings goes into the inflation account. Therefore isn't it true to say that the future earnings of the fund -- assuming they are at least 7.5 percent, which goes back to the issue that I discussed on the earlier

section -- will not affect the unfunded liability?

Hon. E. Cull: This is rapidly going to get extremely complex, and we're going to get into those subaccounts that I was hoping we could avoid discussing, because it will be a challenge for me to explain them in a way that will convince the member that I thoroughly understand them myself.

The simple answer is that only a portion of the money gets transferred, and only a portion of the money remains in the basic account. It has to do with the fact that under the basic account, there is both an active account and a pension account, and 40 to 50 percent of the improved return is transferred from the basic account to the inflation account. I think that if we want to get into this much deeper, I will have to offer you a briefing with the commissioner, because it is rapidly going to get beyond the details that we can discuss in this chamber.

J. Weisgerber: My study of

section 4 suggests that the government has decided that as long as the unfunded liability remains static as an unchanged percentage, the government would be satisfied with that. If the unfunded liability starts to increase, the government will call on the employer to make a larger contribution. If it starts to fall over a period of 15 years or so, then the employer is entitled to make a smaller contribution.

I have two questions. Why did the government decide not to pursue reducing the unfunded liability through this formula? Why didn't it establish a formula that would

[ Page 12826 ]

have had as its goal a specific reduction in the unfunded liability?

Second, why did the government, as the employer, choose to make those additional contributions without looking to the employees to make a proportional contribution, perhaps, and accelerate the ability to bring down these unfunded liabilities?

Hon. E. Cull: First, before answering the two questions, I will just refresh this member's memory with respect to the policy that was in place for 12 years under the government that he was formerly a part of. That's the policy that we're now legislating. The policy was supposed to be that if the unfunded liability was increased, contributions would increase, and every time there was an actuarial report indicating this, the government of the day was supposed to increase contributions to do that.

Unfortunately, the former government failed to do that in each and every year they received advice that the unfunded liability was growing. I leave it to the member to answer the question as to why their government didn't increase the contributions and take action earlier so that the unfunded liabilities would be less.

Nonetheless, the government of the day didn't do that. To ensure that governments do that in the future, we're now putting it in legislation so that it is no longer a policy; it's a legal requirement that we do this. You asked why we don't change that policy, which, of course, would be an option we could pursue at this point.

When public sector employers -- hospitals, school districts, colleges, universities and others -- are receiving budget increases that are extremely tight, I think it would be impossible to ask them to do this at this point when they weren't asked to make those contributions by former administrations when budgets were increasing at 10 percent a year. We should have been having those employers make the increased contributions in those days.

Right now I just don't think it's fair to ask hospitals, which are doing absolutely everything they can to live within the tight budgets that have been given to them, to take on a problem that should have been addressed by a former government.

Your second question is why we're not asking plan members to pay the cost, just employers. That's because the plan member contributions are already high in relation to private sector standards. They're comparable with other public sector jurisdictions, but they're high with respect to the private sector. As I said a minute ago, the funding shortfalls are not the fault of the plan members; they're the fault of previous governments having failed to take the action they should have taken at the time. I think it's unfair to ask today's workers to contribute more, when they are already making very high contributions, to compensate for errors -- if I can be generous -- of past governments.

We have offset that, though, by ensuring that if employers have to make increased contributions as a result of this policy, they also benefit when the plan has reduced liabilities. Contributions may go up for the employer, but they also go down, so there is a quid pro quo, from the employers' point of view, that they benefit as the plan's financial situation improves.

J. Weisgerber: Indeed, this is taking a bit of a philosophical bent, but that's all right. It seems to me that while the minister is extremely critical of the former administration for allowing the unfunded liability to grow, now as government she's happy with the unfunded liability at the level it's at. I suggest to you, with all due respect, that you can't have it both ways. If you are unhappy with the unfunded liability as it exists today and you're critical of the former administration, then I think it would behoove you to take action to correct it.

I would argue that if the increases to public sector groups like school boards, hospital boards and other public institutions were overly generous over a period of time, they should be at the level now, even with very modest increases, where there should be lots of money in the pot. You know it's not true, and I know it's not true, and I think it only contradicts the original argument that was made.

The minister says she decided not to ask employers to make a greater contribution because the contributions were high, given comparisons with private sector plans. I would suggest that the benefits are also generous compared with private sector plans and that one offsets the other. Again, I don't think the minister, as much as she'd like to, can have both sides of the argument. If there is a commitment to reducing the unfunded liability, you would very well argue -- if it was in comparison with the private sector -- that one should either reduce the benefits or increase the premiums.

Hon. E. Cull: Well, I can't let that pass without saying that there are a lot of situations that I as the minister and our government find ourselves in which we inherited from the former government and we're not happy about. Unfortunately, decisions they made have really limited our ability to immediately change those. We are changing them in this respect: we are bringing down the unfunded liability; and we are putting into law something that the former government failed to do, so that we ensure that all governments in the future are required to deal with the unfunded liability in a timely and responsible way.

J. Weisgerber: I'm sure it's a tune we'll hear from the next Finance minister as the next government looks back on the actions of this government. It seems that it goes ever thus, whether it be in provincial politics or in Ottawa. We see the Liberal government singing very much the same tune about the Conservatives. I have no doubt that the government that succeeds the current one will find that, indeed, even though they were anxious to replace this government, they are handicapped by bad decisions made by the former administration.

With all due respect, I think that at some point in the mandate of a government, particularly when it moves past the two-and-a-half-year mark toward the three-year mark -- the last quarter of its mandate -- government has to start accepting responsibility for governing, for making decisions and for justifying them. I'm a bit disappointed that the government has simply chosen to accept the status quo. I believe they've been willing to trade off greater benefits rather than deal with the unfunded liability. I suspect that that's a problem paralleled in government in other areas.

Hon. E. Cull: Just to bring a bit of information into this debate, since we formed the government the unfunded liability has come down in all of these plans. So action has been taken by this government.

J. Weisgerber: Perhaps the minister would tell us what action her government took, other than to take advantage

[ Page 12827 ]

of changes to increases in inflation and payroll and interest rates.

Hon. E. Cull: Implementation of diversification strategies.

C. Serwa: I've been listening with considerable interest and substantial concern. Here again, the beneficiaries are friends and insiders of the current government, and the liability is incurred by the taxpayers of the province. Perhaps the minister could explain the rationale for her statement that the government couldn't make a unilateral decision to move moneys from the inflation account into the unfunded liabilities. I suppose the beneficiaries, who will receive the pension, would be unwilling to have that happen. Could the minister explain the rationale?

No one lost anything; neither the employer nor the public sector employee really lost anything. If we can get a greater return on the funds from the expansion of the type of investments, then why shouldn't that money go to guarantee that the pensions would in fact be available and that the unfunded liabilities would and could be attended to?

Hon. E. Cull: I think a lot of people listening out there today would find it curious to hear nurses and teachers, municipal workers, and people who work in the public service -- several hundred thousand people -- called friends and insiders of the government. I think they're a considerable part of the constituency that people in this Legislature have been elected to represent. I think the comments are somewhat insulting to those people who work on behalf of the citizens of British Columbia in various capacities.

[4:45]

The suggestion that we could move all of the inflation adjustment account into the basic account and use that to reduce the unfunded liability -- if that's what the member was suggesting -- would create a significant risk with respect to pension indexing that would be unacceptable.

C. Serwa: Again, from listening to the discussion on this particular section, it was my understanding that in fact you were going to expand the benefits -- to utilize those surplus funds that weren't required to expand the benefits to those who will be getting the pensions. Now you're saying we would jeopardize the inflation adjustment account. Again, as my hon. colleague from Peace River South said, you can't have it both ways.

There was certainly no insult meant. But the hon. minister knows full well that funding, financing and support for this government largely comes through the public sector employees. That's the reality. It's not meant to be any insult, but a recognition of the interest and the concern of this particular government of the day.

Hon. E. Cull: I thought the member had suggested we move all the money from the inflation adjustment account into the basic account. Now I understand that he is saying: "Why don't we do what we're going to do, move some of it" -- really, that we leave it behind and don't transfer it over -- "and not provide any additional benefits?" Well, the deal struck in 1982 with the pension plans precludes that. We cannot unilaterally violate that agreement with the plan members.

C. Serwa: Has any attempt been made by the government of the day to take a reasonable, reasoned, commonsense approach to it and discuss the situation with the public sector unions?

Hon. E. Cull: Yes.

C. Serwa: The last question, then, is.... I can only presume that the expanded benefits were more desirable than ensuring that the unfunded liabilities were not to undermine the future demands of the plan. So short-term expediency, for the benefits, rules the day.

Hon. E. Cull: I think the member would understand that it would be very difficult for plan members to agree to give up a benefit for which they would see no benefit to them offsetting it. While we may like to suggest that the greater good would be served by reducing the unfunded liabilities, plan members were not willing to give up something and incur a risk -- which they are doing with respect to indexing -- and not receive anything else. From their point of view, it's better to just leave it in the indexing account than to have it moved.

We have discussed all kinds of possibilities with them, but I think anyone would understand why plan members were not interested in making that trade-off. They wanted a trade-off that saw them no worse off at the end of the day. Your suggestion would not do that.

C. Serwa: Is the inflation adjustment account running at a surplus at the present time? Or will it be presumed to run at a surplus in revenue, from the expanded investment opportunities of the pension account?

Hon. E. Cull: Both. It is in surplus now, and it's expected to continue to be in surplus if we don't make these changes.

C. Serwa: How significant is the surplus in dollars and in percentage in relationship to the exposure?

Hon. E. Cull: The current inflation adjustment account has about $3 billion in it. To do indexing, we require $200 million to $300 million annually. This is across all four plans; that's why the numbers are very rounded. You can see that with that kind of draw on $3 billion, we have 20 years' worth of ability to do the indexing, which is in excess of what would be needed.

Section 4 approved.

section 5.

F. Gingell: I understand that what's involved here is the area that deals with contributions made when you're on leave of absence. All we've dealt with in the statute before.... This says that it repeals provisions now prescribed by regulations. First, I presume that the regulations are presently in effect. Second, do those regulations differ from the legislation that was in the four acts?

Hon. E. Cull: Regulations don't exist now; they have to be done subsequent to the act. This is the first step in simplifying the legislation by taking administrative details out of the legislation and putting them in regulation, where they should more properly be. It allows for more technical details to be dealt with in regulation than were formerly dealt with in the statute.

[ Page 12828 ]

F. Gingell: Is there an understanding that the regulations will not deal with issues that determine the amounts of benefits or contributions? Changes that could take place by regulation will not affect contributions, benefits and, our favourite subject, the unfunded liability.

Hon. E. Cull: That's correct. All of those have to remain in the statute.

Sections 5 to 8 inclusive approved.

section 9.

Hon. E. Cull: I move the amendment standing in my name on the order paper.

[SECTION 9, by deleting the proposed

section 9 and substituting the following:

Section 13 is amended

(

a) by repealing subsection

(1) and substituting the following:

(1) If an employee who has made or is making contributions under this Act is a person who

(

a) ceased or ceases to be employed in the service of a reciprocal employer and, on or after July 1, 1994, is or becomes employed in the service of an employer to whom this Act applies, or

(

b) ceased or ceases to be employed in the service of an employer to whom this Act applies and, on or after July 1, 1994, is or becomes employed in the service of a reciprocal employer,

that employee's aggregate period of pensionable service as an employee, within the meaning of the pension plan of the reciprocal employer and as an employee within the meaning of this Act, must be allowed in computing the employee's length of service for determining his or her eligibility for an allowance under this Act, but the amount of the employee's allowance under this Act must be based on his or her pensionable service and contributions under this Act. , and

(

b) by repealing subsection (3).]

Let me just explain the amendment.

Section 13 of the Pension (College) Act is amended to remove the three-year limit on a gap in service between reciprocal employers for service recognition purposes. This removes a potential source of conflict among several provisions of the Pension (College) Act. Terms for recognition of service between employers could be established by the commissioner, subject to the approval of the

Lieutenant-Governor-in-Council, under

section 12 of the Pension (College) Act, and also by the Lieutenant-Governor-in-Council under

section 32. Consequently, the amendment removes an inconsistency among the provisions of the act. There are three other amendments that are similar to this for the other acts.

Amendment approved.

section 9 as amended.

C. Serwa: There was talk about reciprocal benefits, and I have a question on leave of absence and pensionable time. Is it proper to talk about that in this particular section, or is there a

section that more closely refers to that?

Hon. E. Cull: That was dealt with in

section 4. I'm not sure what question the member wants to pursue.

C. Serwa: My question has to do with the reciprocal arrangements of other public bodies -- for example, an employee employed in the municipal area, then in the provincial area, or wherever. It also has to do with leave of absence. For example, take an individual who has a leave of absence -- that's not unusual -- from Municipal Affairs or perhaps from the Ministry of Education, and who left a position in the community or the school district to come to the province. Is that leave of absence pensionable time that could be added on to the time when the individual is already working for the provincial government?

Hon. E. Cull: Employees can't double-dip in this case. They can't be on a leave of absence and be working for another employer and purchase back pension time. From your nods, I think that's what you are wanting assurance on.

C. Serwa: That was my express concern: the potential years of service.

Section 9 as amended approved.

Sections 10 and 11 approved.

section 12.

F. Gingell: Pension funds are like insurance policies to a great extent. You have winners and losers. I have a friend who plays golf, Dr. Fahrni, who is 107. He is collecting an old age pension and has received one for so many years. You get people who live long periods of time, and they are losers as far as the fund is concerned. They take out far more from the fund than the amount of moneys that were paid in on their behalf, and you get others who, unfortunately, die early. Those people who die early make up for those people who live lengthy lives.

Actuaries use mortality tables to make their calculations. They must take into account those who die early and those who live a long time. All the benefits and contributions are based on the building up of all the calculations, using these things. Then we suddenly come in and say: "Aha! We will look after people we lose money on -- people who live a long time -- but if someone has a shortened life expectancy, we will perhaps have a different arrangement for them."

My first question is: has disability been within the act before? Second, from the point of view of an actuary, is it actuarially sound? Is it playing the game within the established rules to have these kinds of provisions?

Hon. E. Cull: The answer to both questions is yes. In fact, it is required by the Pension Benefits Standards Act, and it is there now. All this

section does is change "commissioner" to "board," reflecting the new management structure.

F. Gingell: Does the minister or the commissioner on staff have any idea of what historically this has cost the plan? When this change came in, perhaps because of changes in federal legislation, did that cause any change in the contribution rates?

[5:00]

Hon. E. Cull: No, there was no change of the contribution rates. Unfortunately, I don't have the information you are seeking with respect to the impact of this particular provision. But we could endeavour to get that for you, and I'll send it to you after this debate.

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F. Gingell: No, that's fine -- unless the amount is significant. We deal with these plans in such a highly technical manner, and all of these issues have an effect. Everything has a cost. It surprises me that it isn't incumbent upon the government or the administrators of the plan to ensure that everybody understands what the costs of these changes are. So there should have been a change in the contribution rate if you were going to have a change in the benefits. Does the minister agree with that statement?

Hon. E. Cull: In theory I agree with it, but this doesn't change the benefits. All this does is change the power to make the decisions. It already exists. That's why there hasn't been a cost analysis of the change; there is no change. It just changes it from commissioner to board.

F. Gingell: No, I understood that; that wasn't what I was saying. My first question was: has this been practised, and was it in the act before? Are we just moving the authority to determine the terms of payment from the commissioner to the board? I got the answer yes: that is all that has happened; nothing else has changed. So maybe I'm off on the wrong fishing trip here. Does this not, then, have anything to do with paying an increased pension to someone who has a shortened life expectancy? If that's not the case, what's the shortened life expectancy got to do with this?

Hon. E. Cull: No, it doesn't change the amount of the payment.

F. Gingell: What's involved here? What are the consequences of someone's shortened life expectancy that the board can now determine?

Hon. E. Cull: I'm somewhat reluctant to get into that, because it doesn't pertain to this act, in that the change being made here is simply to the form, not the amount, of the payment. It strikes out the words "acceptable to the commissioner" and substitutes the words "acceptable to the board." While it would be interesting to delve into the policies related to shortened life expectancy and what we do in that regard, it's not specifically in front of us in terms of the changes being made to the act right now. I certainly don't have briefing on all of the basic act, and I could not get into that line of inquiry at this point.

Sections 12 to 16 inclusive approved.

section 17.

F. Gingell: There's a whole series of sections here that talk, in this particular case, about the College Pension Advisory Board: the board shall do this; the board may, subject to this act...; the board must.... We get to the proposed

section 23, under

section 17 of this bill, which says: "

(1) The board may engage the services of an actuary for the purposes of this Act.

(2) The actuary must...." I actually spoke to the commissioner about this. I really would like the minister to accept a friendly amendment that would change the word "may" in

section 23(1) to "will."

Hon. E. Cull: I have spent many years as a public employee going over this. When does "may" mean "must" and "will" and "shall," and all the rest of it? After long arguments with legal counsel, I have been convinced that in this case the

interpretation of the word "may" means "will," so it's not necessary to make that amendment. Believe you me, as somebody who used to try to work with legal counsel drafting legislation, I raised the same question -- almost on an annual basis -- and received exactly the same answer.

Sections 17 to 20 inclusive approved.

section 21.

F. Gingell: At some point I wanted to raise the issue of the ability for changes to be made in this act through the Lieutenant-Governor-in-Council. At this moment we are dealing with the College and Institutes Act. In the end -- when you look all the way through it -- the provincial government funds it, so one understands. But when you look at the Pension (Municipal) Act -- which is also in here -- that is not funded by the provincial government. It's funded by the municipal government, and probably taxpayers. These same kinds of provisions, I believe, run all the way through each of the four acts.

Does the minister have any concern that she is removing from, in this particular case, college boards -- who, although they are funded by government, still have responsibility for determining the use of resources...? Does the minister have any concern that the Lieutenant-Governor-in-Council shall be doing things, the consequences of which are the responsibility of other people in authority?

Hon. E. Cull: There is no change in the powers that the Lieutenant-Governor-in-Council has in this regard. What happens as a result of the sections we have just passed is that there now is a board which is composed of representatives from municipalities, and that board will be making recommendations on any changes which would go before cabinet.

It would be at cabinet's peril to ignore those recommendations, particularly if something is being imposed, as you have suggested, because the goodwill of the board would be lost, all of this would be undone, and we wouldn't have the structure that we have just put in place. There are sufficient safeguards through the advisory board. Without the board, these provisions were still in the act. In fact, this improves on the access of municipal representatives to the accountability issues you're raising.

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The Chair: The member has drawn my attention to the noise level in the House. I would just ask members who aren't participating directly in the debate to please be mindful of that problem. Thank you, member.

Section 21 approved.

section 22.

F. Gingell: This is another place where the Lieutenant-Governor-in-Council gets to prescribe terms, conditions and costs to be paid. We talked before about regulations. I understand that we have a commitment that no regulations can change costs. But here there is a proposal that the Lieutenant-Governor-in-Council can take action in determining leaves of absence, etc. that could, one assumes, have costs on the provincial fund, unless it's all funded by whoever they've gone to for their leave of absence.

Hon. E. Cull: This particular

section only empowers the cabinet to make regulations respecting what constitutes service recognition, not to actually change benefits.

F. Gingell: I have one more question. Don't the benefits change when the service recognition changes?

Hon. E. Cull: The changes or recommendations that are coming into effect right now have already gone through the process that I just described to you. If there were to be a change that would affect costs in the future, it would also have to go through the same process, so there are safeguards there in that there is a process. It can't just be done unilaterally.

Section 22 approved.

The Chair: I understand that the bill is structured essentially as a rollover. So it's essentially a repetition, only for different pensions. Having said that, the member for Delta South.

section 23.

F. Gingell: I was wondering whether the minister and her staff, who are more familiar with this than we are, could point out any differences in the following three sections, so that we can cooperate with you in movi