1987 Legislative Session: 1st Session, 34th 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, DECEMBER 9, 1987

Afternoon Sitting

[ Page 2915 ]

CONTENTS

Routine Proceedings

Open Learning Agency Act (Bill 58). Hon. S. Hagen

Introduction and first reading –– 2915

Tabling Documents –– 2915

Oral Questions

"Gag order" to senior personnel. Mr. Lovick –– 2915

Information on decentralization. Mr. Lovick –– 2916

Funding for ministers of state. Mr. Blencoe –– 2916

Miscellaneous Statutes Amendment Act (No. 4), 1987 (Bill 59). Committee stage.

(Hon. B.R. Smith) –– 2917

Mr. Sihota

Mr. Williams

Mr. Cashore

Pension (Public Service) Amendment Act, 1987 (Bill 62). Committee stage. (Hon. Mr. Veitch) –– 2925

Mr. Clark

Mr. Lovick

Mr. Miller

Mr. Williams

Softwood Lumber Products Export Charge Compensation Act (Bill 61). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Parker –– 2938

Mr. Miller –– 2939

Appendix –– 2940

The House met at 2:10 p.m.

Prayers.

HON. MR. STRACHAN: In the precincts today are the members of

the Special Waste Advisory Committee. I'd like the House to give a

sincere welcome to three dedicated servants of the public process in

British Columbia: Dr. David Boyes, chairman; Mrs. Lael Hamilton; and

Mr. Ted Jefferys.

On a second introduction, Mr. Speaker, Members of the Legislative

Assembly will recall that last spring I introduced Father Greg Smith,

who is in the gallery. Father Smith was a good friend of this

Legislative Assembly, having served here as an intern and in other

capacities. At that time I told the Legislative Assembly that Father

Smith had promised me his ties when he entered his training; I'm

pleased to report now that a tie has been delivered, and I thank you,

Father Smith.

MR. HARCOURT: I have a combination of greetings and

congratulations. I'm sure we're all aware that yesterday the United

States and the Soviet Union signed what we all hope is a historic

accord for nuclear arms reduction. As we watched the summit in

Washington, we saw that Ronald Reagan and Mikhail Gorbachev have taken

an important first step towards constructive negotiations between the

two superpowers. I'm sure we all agree that our hopes for world

security through nuclear disarmament hinge on the commitment of these

two nations to move quickly towards a comprehensive nuclear arms treaty.

I would ask this House to join with me in adding our support for the

intermediate weapons nuclear force agreement that was signed yesterday

and for the continued discussions between the United States and the

Soviet Union on an immediate and effective strategic arms reduction.

MR. SIHOTA: I was looking at the member for Cowichan-Malahat

(Mr. Bruce), thinking that he was about to get up, because I have four

introductions to make and I'm sure he's got more than I do. In any

event, these are special introductions. My sister-in-law from Edmonton

and her husband, Daljit and Al Chaytors, along with their daughter,

Rajene, are in your gallery today, Mr. Speaker. They hail from that

socialist haven of Edmonton, and they're coining here to visit us and

spend a little time over Christmas with us. Joining them in the gallery

today is my wife Jessie. Will the House please give them a warm welcome.

MR. BRUCE: Mr. Speaker, I'm back because of popular demand.

You've all heard, of course, of that dynamic little community of

Chemainus, the little town that did and continues to do. Today in the

gallery is a group of students from the Chemainus high school with

their teacher, Mr. David Towner, and I'd like you to bid them all a

very warm welcome.

Mr. Speaker, my mother always wonders what I do in a day, and today

she's come down to just check on what I'm doing. I would like the House

to welcome my mother, Madge Bruce, and a very good friend of our

family, Mrs. Annie Philpot.

MR. MICHAEL: I would ask the House to give a warm welcome to a gentleman

visiting Victoria from my constituency of Shuswap-Revelstoke, a resident

of the Blind Bay community. Please give a warm welcome to Bryan Riley.

[2:15]

Introduction of Bills

OPEN LEARNING AGENCY ACT

Hon. Mr. Strachan presented a message from His Honour the Lieutenant-Governor:

a bill intituled Open Learning Agency Act.

HON. MR. STRACHAN: On behalf of the Minister of Advanced

Education and Job Training (Hon. S. Hagen), I am pleased today to

introduce Bill 58, the Open Learning Agency Act. This bill will

establish the Open Learning Agency, which will merge the operations of

the Open Learning Institute and the Knowledge Network of the West

Communications Authority. The legislation will ensure the coordination

and delivery of distance education to both urban and non-urban areas of

the province, improving access to education for residents in all

regions of British Columbia.

I move the bill be introduced and read a first time now.

Bill 58 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.

Hon. Mr. Richmond tabled the 1986-87 annual report of the Ministry

of Social Services and Housing and the 1986 annual report of the

British Columbia Housing Management Commission.

Oral Questions

"GAG ORDER" TO SENIOR PERSONNEL

MR. LOVICK: My question is to the Premier. Yesterday, before

the Highways minister (Hon. Mr. Rogers) had an opportunity to discuss

his department's gag order with the deputy minister, the Premier

intervened and publicly endorsed the memorandum. He stated as follows:

"It's a hell of a good one, and we should have more of these." Could

the Premier please inform the House what other ministries he has

decided to similarly gag?

HON. MR. VANDER ZALM: The member didn't really quote all of

the things I said. I also mentioned that the question as presented

would lead one to believe that it was something malicious, a gag order,

much beyond what in effect the memorandum contained. Upon reading the

memorandum, I realized that the question as phrased was misleading, I'm

sure, for a lot of the people here or listening on the outside, because

we're on radio. I said that as well and I say that again. Frankly, I

found it very unfortunate that the question had been phrased as it was.

The memorandum in fact recognizes that when we're dealing with

matters of major policy and legislative implication, not everyone in a

ministry of 6,000 people can somehow be responding to the media on

this. On questions of that nature, involving matters such as

legislation or something as major as privatization within the ministry,

the people who are asked questions should direct them to the public

relations officer responsible for those matters. Six thousand people

could not be providing all of the answers, because I suppose there

could be 6,000 different answers, and that would

[ Page 2916 ]

provide the citizens of B.C. with the wrong

impression of what the ministry is doing, and that's not fair to the

people nor to the ministry.

So I certainly support the memorandum. In answer to question two, if

we were faced with a similar situation in other ministries, I would

support such a memorandum.

INFORMATION ON DECENTRALIZATION

MR. LOVICK: This is another question to the Premier.

Interestingly, the Premier is apparently worried about the cause of

truth and providing full information, and therefore perhaps he would be

willing to explain to us another statement he made. He stated Sunday,

for example — again I'm quoting — that he purposely "withheld

details of decentralization to keep things cool." The question is this:

can the Premier explain to us how his ministers and his senior staff

can possibly communicate the correct information if he is going to

purposely withhold information from them?

HON. MR. VANDER ZALM: Mr. Speaker, the truth mustn't only be

in the answers; the truth must also be reflected in the questions. If a

question is posed in an untruthful manner, that certainly is terribly

misleading to the listener or to other people seeking to have answers

to questions as well.

With respect to the statement made, or the quote given by the member

regarding centralization, that was not the quote. I recall the

question; I remember the answer. What I said is that decentralization

is intended to provide people in the regions throughout the province —

and we must look beyond Victoria and Vancouver — with a voice in the

decision-making process, in that they can make their views known

through a process, a procedure, such as we've not previously seen. But

if we mean what we say about decentralization — and I do, and all

members on this side do — then obviously if we want the involvement of

the local community, we can't begin by spelling out a process and

saying: "We want your involvement; we'd like you to be a part of it;

but here is how you're going to be doing it." For that reason, Mr.

Speaker, we left that flexibility available to the regions, because

we're a government that not only professes and talks about democracy;

we show democracy in action.

MR. LOVICK: Mr. Speaker, I wish we had more time in question

period so that the Premier's answer could be longer, because the more

he says the more he corroborates the points I've been making.

One more question for the Premier: once more unto the breech with

yet another statement from the Premier. The Premier also stated Sunday:

"Had I come out with all the details of my program, everybody would

have been down on my head." Is the Premier telling us that the more he

explains his program the more confusion and concern will result?

HON. MR. VANDER ZALM: I did say that, and I mean it. Frankly,

if I had come out and laid out a total process for decentralization for

involving the people and then laid out all as to how it ought to be

done, I think then I would have deserved having things and people come

down on my head. That is not, as I said earlier, the democratic process

as we see it.

If we're talking about a democratic process involving the people, you can't

lay out, as the socialists might have it, some documents saying that this is

exactly how it is to be done. We want the people involved in the process. We

want the people to be involved in making the process.

I might add to this that I've just come from Fort Nelson, one of

those regions out there that wants to have a voice in that whole

decision-making process. I had NDPers coming to me and saying: "We want

to be with you, Mr. Premier."

MR. LOVICK: All of us in this House, I am sure, enjoyed the

Premier's candour — discovering that too much truth is sometimes

painful so we'll only give them a little of it.

The question, though, that I asked was whether he would agree that

this absence of sufficient information is causing considerable

confusion to the point that members in good standing of various Social

Credit constituency associations and others are now saying: "Please

tell us what's going on, Mr. Premier." Including your own riding.

HON. MR. VANDER ZALM: Mr. Speaker, you can't have

decentralization such as the members are talking about, because they're

talking about a very centralist approach, where everything is dictated

in advance from Victoria — the very thing that we're saying

decentralization will avoid.

I repeat: this process is for all the regions of this province. Our

government doesn't concentrate only on Vancouver East nor guide all

things in this province from what happens in Vancouver East. There are

many regions of this province — the Cariboo, the Kootenays, the Peace

River — where people want to have as much a say in the process as

though they were living in Vancouver East. They certainly deserve a

voice, and our system of government, a decentralized approach, will

serve all the people of the province.

FUNDING FOR MINISTERS OF STATE

MR. BLENCOE: Mr. Speaker, the Premier admitted last week that

the $8 million for the ministers of state was not needed right away,

and that seems to be a reasonable assessment of the situation by the

Premier. Would the Premier agree that all the funds were not

immediately required the day that the special warrant was issued?

HON. MR. VANDER ZALM: I agree that if in fact we had given

such a sum to an NDP minister — should there ever be such — he'd

probably go out and buy some industry for government. That's not the

case at all. This million dollars is to say to those regions: not only

are we providing you a means of having a greater input into the

decision-making process of government in Victoria, but we're backing it

up with the necessary resources. But, member, this government would not

be so irresponsible as to run off and spend the money the first day, as

you're asking.

MR. BLENCOE: Given that the Premier has admitted that there

wasn't immediate need — and he has admitted that — and given that we've

had no guidelines for the spending of this $8 million, and given that

not all the money has been expended yet, would the Premier agree that

the money allocated by the special warrant was not urgently required?

It may be needed in the future, but was the need urgent at the time the

warrant was granted, Mr. Premier?

HON. MR. VANDER ZALM: To the industry that is looking to have

a decision made very quickly in the Nanaimo region, because they want

to see people employed very

[ Page 2917 ]

shortly; to the industry in the Okanagan that is

before us seeking some participation by and support from government,

because they're able to employ people presently unemployed in the

Okanagan; to the industry in North Island; to the industry up the

Sunshine Coast; to the industry in the Kootenays; to all of these

people who are looking at jobs, at expansion, at creating economic

activity, I would suggest it was urgent. To the member, who has a job

and perhaps, after three terms, a pension from this House, it probably

wasn't as urgent.

[2:30]

MR. BLENCOE: Mr. Premier, you talk about wanting to serve the

industry in the economic regions of this province, but you have no

legislation before this Legislature. How can you do that? That is a

flagrant violation of the law of the province of British Columbia.

May I read to you

section 21 of the Financial Administration Act? It

states clearly that it must be urgent and immediate. Are you aware — do

you realize — that this special warrant amounts to a flagrant violation

of the law of the province and that it was recommended in 1981 that

this kind of abuse stop in British Columbia?

HON. MR. VANDER ZALM: Mr. Speaker, the member is hard of

hearing. Everyone on the floor here has a job, and there is a pension

plan. I would suggest that to all the people out there seeking

employment opportunities and employment security, what this government

is doing is extremely important.

Orders of the Day

HON. MR. STRACHAN: I call committee on Bill 59.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 4), 1987

(continued)

The House in committee on Bill 59; Mr. Pelton in the chair.

section 11.

MR. SIHOTA: It is certainly difficult to get back into the

cut and thrust of

section 11 and the whole issue of repeal of the

Investment Contract Act after that little sideshow we just had over

question period, as we now begin to see the return of the leopard with

respect to the Premier. All those analogies about the....

MR. CHAIRMAN: Hon. member, we're dealing with

section 11 of

Bill 59 –– I certainly can't find anything relevant in the comments

that are coming forth at this moment. Maybe you'd direct your attention

section 11.

MR. SIHOTA: I was just waiting for things to settle down, Mr. Chairman.

The provision that's before us is the repeal of the Investment

Contract Act, and that's

section 11 of the legislation that's before

the House today. Members of the House know....

Interjections.

MR. CHAIRMAN: Hon. members, we are in committee. The Chair

would appreciate some quiet in the room so the member for

Esquimalt-Port Renfrew can proceed with his questions on

section 11.

Please proceed, hon. member.

MR. SIHOTA: Thank you. Mr. Chairman. As I was saying, we're

here in the House today to deal with

section 11. I notice that the

Attorney-General (Hon. B.R. Smith) is here to cover for the Minister of

Finance (Hon. Mr. Couvelier). Because of the fact that yesterday the

Minister of Finance and I exchanged a whole series of questions with

respect to the Investment Contract Act, I'll provide the

Attorney-General with some comfort right off the bat by telling him

that I do not intend to ask a lot of questions. I view the comments

that I'll be making now with respect to this legislation as closing

comments on

section 11, subject to maybe one or two short questions for

the Attorney-General at the conclusion of my remarks.

The legislation before us is the Investment Contract Act. The

government has chosen to repeal the Investment Contract Act. As I was

pointing out yesterday in the Legislature, the Investment Contract Act

was introduced in 1962 to provide protection to individuals who were

caught up in a situation analogous to the Principal Trust situation. I

think all members of the House are familiar with the problems that have

been inherent and have flowed from the collapse of the Principal Group

of companies.

The recommendation before the House right now with respect to repeal

of that act flows entirely from the report of Mr. Robinson which was

commissioned by the Minister of Finance with respect to the Trade

Practice Act and the matter of the First Investors Corp., Associated

Investors of Canada Ltd. and Principal Consultants and Principal

Savings and Trust Co., and the other companies of the Principal Group.

In recommendation 17.2 of his recommendations. Mr. Robinson indicated

that he felt that it was about time that the government repealed the

provisions of the Investment Contract Act.

It's my submission that to repeal that legislation at this stage in

time after the collapse of the Principal Group of companies is an

admission of failure on the part of the government. It's an admission

and a recognition of the fact that the very legislation that had been

created in this province to protect investors and designed to give

investors some sort of comfort that there was a government agency out

there that was looking after their interests with respect to the

Principal type of situations — and there certainly have been others —

simply was not working, did not work and could not work. Accordingly,

the government has now chosen to repeal the provisions of the

Investment Contract Act.

The problem with repealing at this stage of the game is that it

provides little comfort, if I can use that word again, to the

individuals who were burnt in the Principal fiasco. I'm going to use

the example of Principal Trust because it is the most salient, relevant

and up-to-date example that all of us in this House are familiar with.

Please don't take my comments to be a diatribe on Principal Trust; it's

really dealing with the Investment Contract Act. I want to use that

experience as an indicator of what has transpired here, and why it is,

in my submission, that repealing this act amounts to an admission of

failure on the part of the government.

These people went to the offices of these companies. They were

provided with standard form contracts on the bottom of which the

provisions of the Investment Contract

[ Page 2918 ]

Act were reproduced. Upon witnessing that, the

individuals clearly felt — and the evidence that Mr. Robinson collected

during the course of his inquiry around the province was clear on this

point — that there was a government watchdog agency monitoring their

funds and monitoring the activities of Principal Trust. They were

provided with further assurance by the fact that

section 10 of the

Investment Contract Act was reproduced in the investment contract that

they signed. It was reproduced to tell investors who read it....

Unfortunately, some will argue now that you needed a law degree to be

able to understand what it meant, but according to Mr. Robinson's

report, the way in which it was translated to investors over and over

again — because the stories are so similar and consistent in their

patterns — led them to believe that the company was holding in hand

assets equivalent to the amount of money taken in; that if someone came

in with a $100,000 deposit, the company would go out and acquire assets

of a market value equivalent to that $100,000.

In other words, there was an equilibrium, as I referred to it

yesterday, a balance, as the Minister of Finance referred to it

yesterday, between the money that was taken in and the assets that the

company held.

Section 10 was the cornerstone of the legislation,

because

section 10 mandated that that be done, and then it was

reproduced in the contract. As a consequence of that reproduction, if I

can put it that way, a sense of assurance was provided to the various

investors. That

section also referred to the powers of the

superintendent of brokers. In all of the standard investment contracts

that these people executed, it was indicated very clearly that if that

equilibrium, that balance which I referred to was to be adjusted in any

way up or down, it could only be done when it was deemed to be

appropriate by the superintendent of brokers.

So not only were investors told that there would be a balance

between the money taken in and the market value of assets that the

company held, but on top of that they were told: "Look, if that balance

is disturbed in any fashion whatsoever, then rest assured that the

government — the superintendent of brokers, the province of British

Columbia; only that person — can allow an imbalance to occur." That

certainly provided additional security, if I can put it that way, to

the individuals who executed these contracts.

Yesterday I asked a series of questions of the Minister of Finance

with respect to the provisions of the Investment Contract Act, and I

now want to turn to his answers and point out to the House some of the

concerns we have with respect to what he said. The minister has

indicated that upon a second reading of that legislation, it turns out

there was first of all no requirement to approve application forms for

investment — and I'm paraphrasing what the minister said yesterday. So

there was no requirement in law that the superintendent of brokers'

office review those investment contract forms that people relied on to

make sure they comply with the provisions of the act; to make sure the

word "guarantee" is not misrepresented in some fashion; to ensure that

the usage of the companies being members of the deposit insurance

corporation was not misused. That was one of the flaws, according to

the minister yesterday.

The minister went on, during the course of the questions that I put to him

yesterday, to indicate that there were inadequate powers to value the assets

of the company. Let's step back and think about that for a moment. Here

are people investing in a company, Principal Trust. That money is being used

to acquire various stocks, bonds, real estate holdings and debentures. According

to the minister, there is no power under the Investment Contract Act to determine

whether or not $100,000 being taken in by the company is being used to buy

$100,000 worth of property — no power to value the assets, to ensure that with

that $100,000 the company hasn't gone out and bought $80,000 worth of

stocks, options, bonds, real estate or whatever, as the case may be.

Inadequate power to value the assets is the guts of the problem with

Principal Trust. This company had acquired assets.... In the case of

real estate, I know we've had this debate in terms of the falling real

estate market. But if one peruses the Principal Trust financial

statements, as I have done, one sees that the guts of the problem

started in 1983, when this legislation that the government now wishes

to repeal was intact.

The government is saying that all along it never really had the

power to go and check to make sure that these people were buying assets

equivalent to the amount of money coming in. Why is it that that

deficiency came to the attention of the government only now? Why would

that flaw or incompleteness in the legislation, which was introduced in

1962, come to the attention of the government when Mr. Robinson

prepared his report in 1987? What was going on in that 25-year period?

Was no one looking at the provisions of the Investment Contract Act?

Was the superintendent of brokers not sending signals to government

saying: "Hey, look, this legislation is flawed"? Who was sleeping at

the switch? That's a legitimate question that the investors are now

beginning to ask.

[2:45]

I said yesterday, during the course of my presentation on this

matter, that I didn't think the legislation should be repealed. I think

that other things should be done. I will get into those other things in

a matter of minutes. I want to go on now and take a look at what the

minister had to say yesterday. He indicated, during the course of his

response to the questions I asked, that there were limited powers to

freeze the assets of the company, limited powers to investigate the

affairs of the company, limited powers to appoint receivers over the

affairs of the company in the event they were deemed inadequate. Again,

who was sleeping at the switch? Where were all of the regulatory bodies

that are supposed to be telling the government what's going on.

I think my time's up.

MR. WILLIAMS: It seems to me we're just getting into the meat

of the outstanding presentation of my colleague from Esquimalt on this

matter that the government handled very badly and which deserves this

kind of thorough attention.

MR. SIHOTA: I'm delighted to learn that my good friend the

first member for Vancouver East wants to hear more. I'm sure the

Attorney-General over there does as well.

Who was sleeping at the switch? It seems to me that the basic

question the Minister of Finance ought to be asking, before he proceeds

with the repeal of this legislation, is: what was the superintendent of

brokers doing to protect the interests of those small investors

investing in these types of companies? I want to emphasize "small

investors," because the evidence that has come out of the Code inquiry

in Alberta — and I'll refer to that in a few minutes — is that four out

of ten investors, 40 percent, earned something less than $25,000

annually. The majority of the investors with this

[ Page 2919 ]

company were seniors who worked hard to save up

their money and were seduced — in a very deliberate and conscious way,

according to this report from Mr. Robinson — into investing with this

company.

Because of my own involvement as the critic for this party in this

area, I know of people, couples, who have worked all their lives

because they didn't have children, couldn't have children, and who

saved up in excess of $150,000, and who lost it all. Another is a young

couple who through an estate had received $200,000 and invested it,

regrettably, a month before the collapse and lost their money. They

don't want to know that the act is repealed. They want some hard

answers from government as to what was going on inside the

superintendent of brokers' office, what was going on within the

Ministry of Finance, and why it was that nobody was protecting their

interests.

It's not enough for the Minister of Finance to come before this

House with a provision of this miscellaneous — and, as the

Attorney-General called it, shortycoat — bill and say: "Well, we want a

repeal." That's not adequate. The point is that the act did not provide

the measure of security that it was held out to supposedly provide to

these people, and as a consequence of it, they've been burnt.

So what did the government do? What did the provincial regime in

this province do? I am delighted to see the Premier here, because I

know that the Premier has heard from some of the people who had their

financial security ripped out from underneath them as a consequence of

the collapse of this company. I could go through my newspaper

clippings, but I won't bother; suffice it to say that they were

offended by the comments the Premier made when he said: "Well, you take

a risk." These aren't people who play the stock market; these aren't

people who get into penny stocks and hope and pray that they'll go up

to dollars and hundreds of dollars. They aren't the speculators of the

world. If the Premier would take one moment to read this report, he'd

recognize immediately that it was a very conservative clientele that

Principal Trust had targeted. Mr. Robinson reported on that.

I won't ask for it — because I don't think it's appropriate for me

to ask for it — but the people who are offended by the comments the

Premier made have asked for an apology. Mr. Premier, I don't think it's

sufficient to smile. I think it's time to reflect on the comment you

made at that time. I really mean that. Apart from all of the partisan

flavour of the debate that goes on — and I know I'm one of the ones who

plays that game a lot — I mean that in all seriousness. It's time for

the Premier to reflect back on those comments.

So what did the government do? The government of this province

appointed a commission of inquiry, and I made reference to Mr.

Robinson's report. I want very quickly to quote from the terms of

reference. Keeping in mind that the Investment Contract Act was the

pivotal piece of legislation in this instance: "The terms of

reference," and I'm quoting Mr. Robinson here, "for this inquiry do not

explicitly provide for an examination of the application of the

Investment Contract Act." The pivotal piece of legislation that was

supposed to give comfort, assurance and security to the investors in

this province was not part of the mandate of the commissioner of

inquiry. Admittedly, he chose.... And the Attorney-General and I both

know the gentleman quite well. He is actually, like the

Attorney-General, a former professor of mine at the University of

Victoria and after that a dean.

He chose, in any event, to stray a bit and take a look at the

provisions of the Investment Contract Act, and out came his

recommendation to repeal it. So he also admitted that the act doesn't

work. That's an admission, as I said earlier, of failure on the part of

the government in terms of its ability to pass consumer legislation and

then to ensure that that type of legislation works in the interests of

the investors it's supposed to protect.

It's not sufficient in my mind. Mr. Chairman, for the government to

turn around and say: "Well, in response to the Principal Trust fiasco,

as a result of the collapse and the regrettable effect that it had on

the savings of people, the security that they had built up...." It's

not sufficient, in my view, simply to repeal the legislation. Instead.

It is my submission that a number of questions need to be answered —

I'll outline those questions in a second — and that there needs to be a

greater action on the part of the government, in light of its admission

of failure with respect to the legislation. I'll talk about that in a

second.

There are some specific questions that remain unanswered. Why, for

example, did the superintendent of brokers not issue a licence to

Principal Trust between April 1, 1986, and August 26, 1986? Was the

superintendent of brokers aware of something, which has not been

communicated to the public, that warranted his decision not to issue

that licence? If that was the case, Mr. Chairman, then why was that

information not made available to the public, so that that young couple

that I talked about a few minutes ago that invested $200,000 from an

estate that they had just inherited would have had the type of market

knowledge that I referred to earlier when we talked with the Vancouver

Stock Exchange?

I'm talking now about the type of market knowledge that they ought

to have had. If the superintendent of brokers had some information that

resulted in his hesitating to issue a licence over that period, then

the public ought to have known that so that they could have made a

decision, and decided on their own whether they should hesitate to make

those investments. Why was there no notification? That's one of the

hard questions that remain unanswered.

What about the role of the superintendent of brokers, pursuant to

section 10 of the legislation? The so-called security section, as I

call it, was reproduced at the bottom of these contracts. It's clear

from the financial statement.... And you do not have to be a graduate

of Harvard Business School to take a look at what those financial

statements indicated. In the period between 1983, 1984 and 1985, those

financial statements indicated that there were serious problems,

particularly with respect to the mortgages held by Principal Trust.

What was the role of the superintendent of brokers' office? And what

did it do at that time, in 1983, 1984 and 1985, to take a look at these

financial statements and communicate to the public that there appeared

to be some relevant concerns about the financial status of these

companies?

The investors want to know. Did the superintendent of brokers'

office, given its powers as they were under the Investment Contract Act

— and I've already talked about how the minister said that they were

lacking — act diligently? Was it negligent in any way whatsoever?

That's what the investors want to know. They want to know if there was

due diligence and the absence of negligence. They don't want to know

whether or not the legislation is being repealed now. What kind of

response is that? I've said it already; it's an admission of failure.

That's all it is. To turn around and repeal the legislation — what kind

of response is that?

[ Page 2920 ]

Indeed, did the superintendent of brokers upset that balance, that

equilibrium, that I referred to earlier? If so, on what basis? Because

if indeed the equilibrium was upset, it seems to me that first of all

the investors ought to have been informed, and I think there is reason

to believe that that equilibrium ought to have been upset. Whether it

was or not, pursuant to my comments yesterday, I don't know for sure.

But the investors want to know that. If it was upset, they want to know

why they weren't publicly apprised of that fact.

[3:00]

I'd say that it's not enough for this government to appoint a

commissioner, Mr. Robinson, as good as he is — to investigate the

Principal Trust situation. The government ought to expand the powers of

that commissioner to investigate the role of the superintendent of

brokers' office with respect to the Principal situation.

At this stage of the game we don't support repeal of the

legislation, because we refuse to see how that acts in the interests of

those investors who were burned.

MR. WILLIAMS: Mr. Chairman, we are clearly getting the best

presentation we've had in this House with respect to the Principal

Trust fiasco. There are many questions that have to be answered, and I

look forward to the member's continuing.

MR. SIHOTA: I shan't be much longer in my comments.

It's not enough to appoint a commission of inquiry and then to

repeal the legislation. That doesn't help out the investors. We want to

know, and the investors want to know.... If the government had any

sense of its obligation to the investors, it would certainly do this.

There ought to be an extension of the powers of Mr. Robinson as a

commissioner to investigate the role of government, to provide some

answers to the questions that investors are asking. There must be some

answers provided to the investors through the extension of the terms of

reference of the commissioner to ask one very basic question: if the

legislation introduced in 1962 was not adequate, then why was it that

the government did not either introduce amendments or, more importantly

from my reading of it, pass appropriate regulations pursuant to the act

to allow for the type of deficiencies to be remedied that the Minister

of Finance talked about yesterday? It's a simple matter of

order-in-council regulations.

It's not sufficient for the government to simply admit that the

legislation was inadequate. It's not sufficient for the government to

admit that the legislation was a failure. The government has an

obligation — if I can put it this way — to pay the price of that

admission of failure. The least it can do is to expand the powers of

the commissioner to delve into the role of government and ask the very

basic question of why the government — and particularly the

superintendent of brokers' office — let down the investors in this

regard. It's not an unprecedented request, Mr. Chairman. I know that in

Alberta the Code inquiry is doing essentially that job. If it's good

enough for Alberta, it ought to be good enough for British Columbia.

I want to end by asking the Attorney-General — and I appreciate the fact that

the Attorney-General does not have firsthand knowledge of these issues, which

fall more within the purview of the Minister of Finance — whether the government

is now willing to make a commitment to extend the terms of reference of the

commissioner to allow him to investigate the role of the government and the

superintendent of brokers' office with respect to the Principal Trust issue.

HON. B.R. SMITH: Mr. Chairman, we've had a very good debate on almost everything but this section.

The

section repeals

an act. A commissioner whose appointment the

member for Esquimalt-Port Renfrew lauds, former dean Lyman Robinson,

having spent considerable time and care on this matter, has recommended

that the protections given under the old Investment Contracts Act, an

act in place in this province since 1962, and in the years 1972-75 when

there was a government of that party that could have changed it, just

as a government of this party could have changed it.... He recommended

that that act should be changed or replaced and that additional

safeguards such as those available under the Securities Act should be

available to the innocent holders of this kind of contract. The

government has done that. Indeed, as soon as this report became

available, the Finance minister, on October 19, made a number of

promises with respect to the Alberta litigation that was underway. He

promised to provide information to investors. He promised to make

legislative repeal of the Investment Contract Act, the legislation here

before us. He also promised to make changes to the term of guarantee in

financial transactions in British Columbia and to consider placing a

statutory limitation on the use of the word "deposit," and I understand

that that will be the subject of further legislation in the spring.

He also undertook that the Canada Deposit Insurance Corporation

would be asked to change its policies and procedures to clarify which

investments are and are not insured, because there's no question from

Professor Robinson's report that many of these innocent investors —

very conservative investors, I agree with the member — believed that

they were covered by deposit insurance. Indeed, the staff of Principal

Trust, according to Dean Robinson's report, often blurred the

distinction between safe and unsafe investments, and a lot of these

people thought they were protected, and they weren't.

So the Minister of Finance agreed to ask the Canada Deposit

Insurance Corporation to make changes in those policies and procedures,

and I understand that he has done that and has pressed that. So all

these commitments were made in a straight-up way when this report came

in, and those commitments are being carried out. This side of the House

regrets what happened to those innocent investors just as much as the

other side does. There is no sense trying to take ownership of that

regret on the other side. Every member of this House regrets that these

innocent and often elderly conservative investors of limited means lost

their money or their life savings. It's a terrible tragedy. It is

regretted by all members of this House, so let's not try to take

partisan ownership of it.

MR. WILLIAMS: Some have more responsibility than others.

HON. B.R. SMITH: Yes.

We believe that this is a legislative first step: to get rid of this

legislation and bring about the better protections and the better

disclosure under the Securities Act. We also believe that there has to

be further legislation, such as the Finance minister indicated on

October 19, and that will be proceeding.

[ Page 2921 ]

MR. SIHOTA: I will be short, but I want to respond to what the Attorney-General had to say.

First of all, the Attorney-General talked about the undertakings of

the Minister of Finance when he responded on October 19, 1987 with

respect to the conclusions and recommendations in the report. Quite

frankly, those undertakings don't amount to a hill of beans. They

really don't. You take a look at what's said here.... I know this is

somewhat off the debate and has also been commented upon both by me and

others. The government will take legal proceedings against Mr. Cormie.

Big deal. The government will give legal advice to contract holders

with respect to proceedings against the companies. There are companies

that are delinquent, in some cases virtually bankrupt. So what? If

you're going to give people legal advice....

The director will provide forms and information to investors in

pressing claims. That's a great undertaking; there's a lot of substance

to that. The minister will ask that the contract act be repealed. Well,

that's what's happening here. Then he lists a couple of others with

respect to the use of the words "deposit" and "guarantee." Those may be

proactive changes, but they don't help the situation that these people

find themselves in. They don't amount to much and, as you say, that has

already been commented on. I commented on it back on October 19 in the

press, and the minister and I had a go at each other. But let me put on

the record that those undertakings do not amount to much.

If the government has regrets about what transpired — which the

Attorney-General says it has — then I say to the Attorney-General: put

some substance behind those regrets. Inject an element of

responsibility into that regret and provide answers to these investors

with respect to the role of the government. If you've got nothing to

worry about, then the commissioner will report as such, and there's no

risk to government to allow for the commissioner to investigate the

role of the superintendent of brokers. If, on the other hand, due

diligence was not exercised by the superintendent of brokers, then

clearly there is a risk and exposure to government with respect to

liability, and the investors have a right to know that. But if you have

regrets, put some substance behind those regrets.

The third point I want to touch on very quickly in one sentence is

for the information of the Attorney-General. In 1975 Mr. Macdonald

actually did amend the Investment Contract Act. So it's not as if the

NDP regime between 1972 and 1975 was oblivious to this piece of

legislation.

I want to again put the proposition to the Attorney-General: will

the government expand the terms of reference of Mr. Robinson to

investigate the role of government, in particular the superintendent of

brokers' office with respect to the Principal Trust fiasco?

HON. B.R. SMITH: I think we'll decline that invitation.

You've already done the job anyway. You've examined it and investigated

it and told us what we should do.

MR. WILLIAMS: I think we've had a fine case put here by the member

for Esquimalt. It's abundantly clear after you look at the range of fiascos

we've had in the financial sector in British Columbia, as in Alberta unfortunately,

that there has been less than adequate performance on the part of the ministries

involved — and that's being kind. Surely there's a need to go through

that, like what they're now going through in Alberta, in terms of determining

precisely where the weaknesses were, what the inadequacies were and what kind

of toothless watchdogs we've had all too often.

So many of these problems are predictable; it becomes apparent. I

think the member for Esquimalt has made the point, and it should be

underlined. They're at last dealing with this side of the question in

Alberta, and it should similarly be dealt with in British Columbia.

What does the minister have to hide? That's what you have to ask

yourself. What do they have to hide? Incompetence? Bungling? Well. If

that's the case, let's get to the bottom of it. Let's deal with the

people who are responsible. We have ministries here that are.... The

Minister of Finance is clearly stretched like elastic around 93

different administrative chores. It's impossible in some respects. But

these bureaucrats in the superintendent's office clearly have roles to

play. They have not been properly played. The public, the poor people

that have been consciously bilked, need and deserve an answer in terms

of non-performance under these provincial ministries.

[3:15]

Section 11 approved on division.

MR. CHAIRMAN: Hon. members, we have already dealt with sections 12 through 15, so the next

section in Bill 59 to be dealt with is

section 16.

section 16.

MR. CASHORE: First of all. I would like to ask the Attorney-General if he would speak to this change and give the reason for this amendment.

HON. B.R. SMITH:

Section 16, which is really part of

section

18, is to enable the Lieutenant-Governor-in-Council to provide by

regulation the fees of services that are rendered by the public

trustee. Where the public trustee now looks after a patient or a person

who used to be a patient, the public trustee is entitled to retain a

sum of 5 percent of the gross value of the estate to meet the costs of

administering the estate. That's the present state of the law. Such

funds are payable to the Ministry of Finance for the consolidated

revenue fund, and they can be waived also in the case of hardship if

there's no estate, or a very limited estate.

This would be repealed consequential to

section 18, which would

provide a new authority in allowing the cabinet to make regulations

prescribing fees to be paid for services rendered. So we're going to

try to do a fee-for-service administration instead of a flat percentage

fee administration. I can outline it further under 18 if you want, as

well.

The present provision for a fee would include services such as

approving infant settlements, for instance, under the Infants Act;

those fees are prescribed by regulations. Executors and administrators

of estates: those fees are set by statute under the act. The public

trustee is disqualified from collecting certain fees previously

collectable under the Estate Administration Act because the public

trustee is not a lawyer. Administrative trust funds for children is

another one. Approved payments out of court for children's trusts: no

fees are presently collectable, although the work may be significant

and take a lot of time. The audit of the accounts of mental patients is

required every two years under the Patients Property Act, and no fees

are collectable there. The work can be

[ Page 2922 ]

substantial, and often there is ready ability to

pay without hardship. In all cases where there is hardship, no fees

ixill be charged.

To put it very bluntly, we want to charge prescribed fees on the

basis of work done throughout the administration of this office,

instead of flat percentages.

MR. CHAIRMAN: Just before we proceed, hon. Members, it would

seem to the Chair that this debate would be much facilitated if we

could deal with sections 16 and 18 simultaneously. If the debaters have

no objection, we can deal with it in that manner, although I should

tell all hon. members that when it comes to seeking approval on the

sections, they will be dealt with separately.

As there are no objections, we can proceed on that basis.

MR. CASHORE: Some of the points that the Attorney makes could

in fact be reassuring in that it implies that in some cases where a

flat 5 percent ceiling is charged, in future it may not be charged at

all. So my next question is: under the present situation with the

Patients Property Act, is it automatic that 5 percent is charged in a

given year, or is it up to 5 percent that may be charged?

HON. B.R. SMITH: You're correct. It's only up to. It doesn't

mean that we have to charge 5 percent. One of the weaknesses in the old

system was that except by the statutory collection of up to 5 percent

on the gross value of an estate, if you acted as an executor or

administrator, the public trustee, having a lawyer doing that work,

often couldn't charge for the work as a lawyer even though legal staff

do the work. So we want to replace the percentage basis with a whole

set of fees which would be made public under regulations and which

would try to reflect the kind of work that this office does.

We've been trying to reorganize that office and cut down the time

taken in processing. About three or four years ago I used to get a lot

of complaints about delays through that office, and I think the office

has made quite an effort in the last year or two to improve the

efficiency of its operation. I think there should be some cost recovery

from it. It's one area of government where we can cost-recover and pay

for the operation of the office, always bearing in mind that where we

have a hardship case or no estate, we're not going to be able to charge

fees and wouldn't seek to do so.

MR. CASHORE: I would like to concentrate on

section 16 in

terms of the point that I want to pursue. That is, I could understand

this if it was stating that it was not absolutely necessary to charge

for certain services, but to take the lid off, to remove the statutory

requirement that no more than 5 percent can be taken from the estate,

seems to me a very inappropriate action on the part of this government.

If 5 percent was set at some time, surely there was reason for that.

Administrative costs do go up, but if it's on a percentage basis, it

still is reflecting a fair reality there.

What really concerns me about this is that we're dealing here with defenceless

people in our society: mental patients; mentally handicapped people; and certainly,

if we include sections 16 and 18, infants and persons in our society who have

come in some way under the care of various elements of government. It may be

within the milieu of Social Services and Housing; it may be within the milieu

of the Ministry of Health. But whatever it may be, what we're dealing with

here is a matter of trust. It is the public trustee. To be moving in a direction

that enables the government to remove funds from an estate over which it has

trust — the funds belonging to a defenceless person — is really inappropriate.

I do not think, notwithstanding all the points the minister has

made, that the case has been made to justify removing a lid in terms of

what may be taken. I understand when the minister says that of course

there are cases of hardship and there are cases where we would not do

that, but I can tell you, having worked extensively with mental

patients, that I have been aware of many patients whose estates are

under the stewardship of the public trustee and where, over a period of

time, the assets in those estates have diminished incredibly, even

under the present circumstances.

I would like to remind the minister and the members of government

that when we are talking about defenceless people, we're talking about

people for whom self-esteem is often an incredibly important factor in

terms of their sense of wellbeing and their ability to function to the

best of their potential. If those persons do happen to have an estate

there which might be able to help in some ways to provide for their

comforts, to enable them to buy Christmas presents for their extended

family and that sort of thing, that is a very worthwhile and wholesome

thing. What this is going to do is hasten the day when the assets

within such an account will be diminished, and when that will no longer

be available to that person, and when that person will be in essence

completely on the dole. I don't think that's socially responsible. I

think it's absolutely unnecessary. I don't think a financial or an

economic case has been built for doing this. It is simply wrong, and it

should not happen.

This government has seen fit to remove estate taxes. Why would this

government see fit to take the lid off its ability to tax the estate of

a defenceless person? I would like to hear the minister's comments on

some of the points that I've made.

HON. B. R. SMITH: I just must profoundly disagree with the

proposition that estates of patients or infants or people who are under

disability and are administered by the public trustee, or all the many

other works that the public trustee does, such as administering the

trust funds for children, proving payments for children's settlements,

dealing with the assets of former patients.... I profoundly disagree

that — save in cases of hardship where there should be minimal or no

fee charged, and there isn't under the act — the estate shouldn't bear

some reasonable cost of that. I don't see that that should be an

element of social service. I understand that there is a philosophy over

on the other side among some members who believe that everything should

be paid for by the state. But I do believe that that is not the

philosophy of the majority of people of this province. There is

absolutely no suggestion here that we're going to destroy the estates

of helpless people. That is just an absurd proposition.

What we are going to do is to try to modernize and have a fee

schedule for the services that are rendered. The fees now are full of

anomalies, because some of the fees are charged under specific statutes

— not under percentage figures such as the patients' estate act, but

under statutes that prescribe a fixed fee for service which the public

trustee can charge, or enable them to he set by regulation. But in

other cases, services are provided or even required to be provided

without any provision for fee, even though the cost of providing the

service may be considerable. In many of these cases, there is a clear

ability to pay on the part of the owners of that estate.

[ Page 2923 ]

We're saying let's get a modern fee schedule, covering all these

various contingencies, which has to be published in regulations, and

everyone can see it. If there is something unfair in that and the

member wants to address that, we'd be delighted to hear from him.

There's nothing more sinister than that in the legislation.

MR. CASHORE: The Attorney-General has not heard me argue that

the costs should be home by ministries such as the Ministry of Social

Services. The Attorney-General has heard me argue that there is already

a provision enacted for fees to be charged, and indeed, to be

consistent with the point that is being made, there could be an

amendment, there could be legislation enabling the trustee to charge

for certain kinds of services rendered. I notice that in

section 18 it

provides for some contracted-out services.

I'll say more about that later, but I'm not opposing that per se.

I'm saying: why not create the amendment to give you the opportunity to

do that, but recognize that you already have the opportunity in the

existing legislation to charge a fee? In the wisdom of some previous

jurisdiction a limit was placed on it. Now, through the act you are

seeking to enact at this time, you are taking that limitation off.

[3:30]

I submit that that is uncalled for. To have a limit on what might be

spent from the estate of one of these people is not to say that some

other branch of government should pay for these services. The way it's

written now, it's already built in that it can be charged for — it

always has been. The minister has not made the point. He has suggested

that I am suggesting it be paid by some other branch of government. I'm

not saying that. I'm suggesting that the minister continue to use the

powers the act now provides, and if he wants to add something to the

act to enable fees to be charged for certain types of services, as long

as it stays under 5 percent, so be it. Why haven't you gone that route?

HON. B.R. SMITH: As I've said three or four times, we're

going to a fee

schedule for everything, and if the fee

schedule should

take work over and above 5 percent, well then, we'll charge that in a

case that isn't hardship.

We've got to be able to do things fairly, and rationalize all these

various demands and fees for services by the public trustee. That

includes dealing with matters under the patient's estate act as well as

under the Infants Act and various other statutes that deal with the

fees — all in very different ways. The only way we can see to do it

fairly is to have one set of regulations for fees that includes them

all — patient's estate and the others.

MR. CASHORE: I don't think that we need to continue to belabour that debate. We've both had the opportunity to make our points.

I would like to ask the Attorney-General this: assuming that a

patient who comes under the Patients Property Act, or somebody acting

on behalf of that patient, felt that the fee being charged was unfair,

what recourse would that patient or person acting on his behalf have?

For instance, would it be to go to the ombudsman? What recourse is

provided within the opportunities the Attorney-General is aware of?

HON. B.R. SMITH: It's certainly open to that person to go to the

ombudsman. Any of us can go to the ombudsman if we don't like any act that

a provincial official of any kind does, and the public trustee is such an official.

So you would certainly have that right.

If you have a fee

schedule and that fee

schedule is charged, then I

guess it would boil down to the question of the number of hours or the

question of hardship, and that would be a matter that Von could go to

the court on, I would think. Or you could certainly go back to the

public trustee's office.

The safeguards that a patient's heirs have now are really no greater

than I can see them being under the new legislation. You still have the

right to go to court if you feel the charges are unfair. Or if it's a

case for hardship and you can't persuade the public trustee of that,

then you have the right to go to court. You certainly always have the

right to go to the ombudsman, which is a swifter route in many cases

than to go to court.

MR. CASHORE: I thank the Attorney-General for that. It would

seem to me, however, that any of those recourses would be after the

fact and that they would not have the effect of suspending the action

of the public trustee in charging that allegedly exorbitant amount. I

do not think that such a procedure would suspend the action of that

charge against that estate. Again, I think that's taking people who

often have the most difficult time in our society and putting them in a

very awkward spot.

I'd like to move on now to

section 18, which deals with the

Lieutenant- Governor-in-Council being able to "make regulations

prescribing fees or a scale of fees payable to the Public Trustee for

the performance of a duty or for services rendered by or on behalf of

the Public Trustee...." I have some mixed feelings as I come to this

part of the act. I can understand that in some instances a person who

is a mental patient perhaps may benefit, or an ex-mental patient whose

funds are being handled by the public trustee may benefit, by being

able to arrange to have a certain type of counselling that would be

paid for out of that estate. I can see how it might free up some

opportunities for that patient or for that ex-patient. I can also see

how it might be quite frustrating for people to have their funds tied

up, to feel there's something worthwhile that they'd like to be able to

use those funds for and not to have that access. I think there's an

effort in this to make that opportunity more available, and I find that

commendable.

One of the things that really concerns me about the wording is that

it seems to me that it's possible.... I would have to admit to a sense

of being suspicious of this government. It seems to me that this

wording opens up the door to the privatization of the public trustee.

I'm very concerned about that. I have not seen the privatization of the

public trustee announced in either phase 1 or 2. I have heard vague

generalizations about everything being for sale. But I would have to

object, on the strongest possible grounds, to anything, notwithstanding

the worthwhile aspects that I recognize the drafters of this resolution

are aiming at here.... I would have to oppose, on the strongest

possible grounds, the fact that this wording could be used to justify

the privatization of the public trustee.

It says: "...performance of a duty or for services rendered by or on

behalf of the Public Trustee under this Act or any other enactment." If

that is the intent, or even if it opens the door to that possibility, I

think that it is a cause for a very important dialogue with regard to

where we're going with this legislation. I'd like to hear the

Attorney-General's comments on that.

[ Page 2924 ]

HON. B.R. SMITH: I don't see that it changes the ability of

the public trustee to contract out some service over and above what he

could do now. For instance, the public trustee may decide to hire a

lawyer in private practice because of a very difficult problem that he

has, and that he can't have someone on his staff do; then he will pay

that lawyer his legal fees. Those funds can be paid now. Those funds

can in some cases be chargeable to an estate, as a disbursement.

I don't see how this new regulatory provision encourages or abets or

aids privatization. Privatization could be done now in the office

without legislation, I suspect. You'll be pleased to know that I

haven't been looking at it or had to consider it. Quite frankly, there

have been offers in the past, going back years, from people who want to

buy part of this operation. But I always noted that they wanted to buy

the lucrative parts and not to buy all the non-lucrative but public

service parts that a trustee performs for patients and for people who

are under disability, which are not money-makers and are not attractive

to the private sector.

I would rather doubt that anyone would, even if we put it out, come

up with the comprehensive protection that we would want to give. If it

ever was privatized, you couldn't privatize them all, I don't think,

commercially. As a service, the government would have to do certain

things to protect people under disability, to ensure that their estates

are intact and that people don't take advantage of them.

The public trustee has never been in the position of gouging anyone

on fees. He's the guy that prevents others from doing that. That's his

whole modus operandi: to make sure that somebody else isn't ripping off

a patient, that they're not getting overcharged. Those of us over the

years in private practice that dealt with that office knew that it was

very tough to get nickels and dimes out of that place. It was very hard

to get access to any of those funds. So people were well-protected. I

don't think these provisions cut one way or another on privatization.

I mean, privatization is not something that's on my drawing board

for this, but I would never say it isn't going to happen. You never say

"never," because you don't know — if there were some interest in taking

the whole thing on. But I suspect that you couldn't take the whole

thing on and perform that function in an economic way in the private

sector; only the good parts of it. It's like the air carriers who want

to move into a new route under deregulation. But all they want to do is

cream off the good flights at the prime times. They don't want to

provide all that service for the rest of us who have to get off an

island or a small community.

So I think that it would be attractive privatized if it was creamed,

but not the whole service. That's my off-the-cuff opinion on it. I can

tell you people have expressed interest over the years in buying some

of the nice attractive parts but never the whole.

MR. CASHORE: The concern that we have with privatization is

precisely the creaming. We think that that process is implicit within

the gradually revealed plans of the government.

On this

section 18, I want to say to the minister that I have not been raising

any issue with regard to a sense of trust of the public trustee. I agree with

you that the public trustee office does a good job. I think there's genuine

effort here; I just wish you would have let me help you draft the legislation.

I think there's a genuine effort here to give a little more leeway on some

of the kinds of services that might be made available.

I am a little bit reassured when the Attorney-General tells us that

he hadn't anticipated that in this legislation. But I still wonder

hypothetically if this legislation enables the privatization of the

public trustee. Does it enable it?

HON. B.R. SMITH: No, I think you can do it with or without

the legislation if you had a mind to do it. I don't think it would make

any difference. I don't think the legislation is key to it all.

MR. CASHORE: I would just like to go one step further and say

that my understanding of the comments the minister has made in this

discussion is that he really does not favour the privatization of the

public trustee. That's my understanding of what I heard the minister

say, and I'm glad to know the minister is against the privatization of

the public trustee.

Mr. Chairman, I notice that there are a number of sections in this

miscellaneous statutes act that deal with bringing the public trustees

together, and I have no problem with that. But I do say that I still —

it's not a matter of us not trusting the public trustee — have some

concerns regarding our trust of this government and its intent. I have

very deep concerns about removing the 5 percent. I will end with this,

but it leaves the opening for this government to reach into the pockets

of the disadvantaged, the weak and the defenceless. It's absolutely

unnecessary in terms of anything the minister has explained in this

discussion.

Section 16 approved on division.

Section 18 approved on division.

Section 17 approved.

[3:45]

Section 19 approved on division.

Sections 20 to 25 inclusive approved.

section 26.

HON. B.R. SMITH: I move the amendment standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 26 as amended approved.

Title approved,

HON. B.R. SMITH: I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 59, Miscellaneous Statutes Amendment Act (No. 4), 1987,

reported complete with amendment to be considered at the next sitting

of the House after today.

HON. MR. STRACHAN: Committee on Bill 62, Mr. Speaker.

[ Page 2925 ]

PENSION (PUBLIC SERVICE)

AMENDMENT ACT, 1987

The House in committee on Bill 62; Mr. Pelton in the chair.

section 1.

MR. CLARK: I want to make some introductory remarks to make

it very clear that on this side of the House we strongly support the

move towards early retirement. It's something that should be considered

across the board in British Columbia. It's something many of us have

argued for in the past.

We also think, however, that it's unfortunate that the government

would choose the initiative of privatization to bring forth this kind

of legislation, because it is no longer early retirement but really a

kind of economic blackmail to get people out of the civil service.

I'd like to move on to ask some very specific technical questions,

and I hope the minister has those answers for us, because I have a

great deal of concern about the magnitude of these changes.

The first question would be: has the minister got any numbers in

terms of the number of employees eligible in government to take

advantage of this plan?

HON. MR. VEITCH: No, I don't have numbers yet as to the

number of people who will participate in the plan. That information is

forthcoming, and we would have to wait until we saw the number of

people who apply for this plan.

MR. CLARK: This is not a very good beginning, Mr. Chairman. I

hope now that some staff are here that maybe we can get some better

answers, because the question I asked was not how many people will take

advantage of this plan, but how many people are eligible to take

advantage of it?

HON. MR. VEITCH: Mr. Chairman, 3,500.

MR. CLARK: Is that 3,500 in the civil service? Does that

include management? Is that the total number of people who are eligible

— in other words, are within the age bracket to take advantage of this

plan and have the commensurate service required?

HON. MR. VEITCH: Yes, that's the public service, hon. member.

It would exclude any Crown corporations that may or may not, through

order-in-council, take

part in this.

MR. CLARK: So that includes management employees as well as bargaining employees? The minister nods his head; that's fine.

Could the minister give us an indication — an estimate that they are

surely using to work on — as to the percentage of employees who will

likely take advantage of this plan? I say that because I think many

members of the House will know that actuaries work on estimates to

determine the costs, and therefore while I appreciate that the minister

will not know precisely how many employees will take advantage of the

plan, surely they have a range of estimates that he can inform the

House of with respect to the number of employees.

HON. MR. VEITCH: No, I can't speculate nor will I speculate on the

number of people who will avail themselves of this particular plan. I think

that that would be improper to do at this point in time. I can tell you that

there are 3,500 eligible. You can pick a number anywhere in between that, and

one would be as correct as the other.

MR. CLARK: Can the minister inform the House what the estimated cost per capita is to the government of this plan?

HON. MR. VEITCH: Again, these are hard things to average out.

It depends in which area the people avail themselves — whether it's at

the management level or whether it's at some other level. But if you

took a median right across the whole thing, it would be about $25,000

per capita.

MR. CLARK: If the Chair would just give me some latitude....

I'm trying to make some quick calculations here — I don't have a

calculator with me. I'd like to know, first, if every single employee

took advantage of the plan, and you multiplied that by $25,000, what

the cost would be to government for this plan. Do you have that number

handy?

HON. MR. VEITCH: That wouldn't even be relevant, because you

have to add some numbers back and you have to say what the costs would

be to government. You realize that the plan will be compensated over

time for whatever the cost is. So I guess the figure that would be more

relevant is the cost to government. You can't ascertain what that is,

because obviously some of these people may or may not be replaced, and

they may not be replaced in certain areas. So that is one that would be

pure guesstimation if you ever attempted to put a number to it at this

time.

MR. CLARK: Well. the minister has said that the cost to

government on the median average is $25,000. I think it's fair to look

at a range of possible costs to the government, based on the numbers

the minister gave, because those are numbers which I've also been given

by other people.

[Mrs. Gran in the chair.]

So let me just look at it. First of all, if 50 percent of the

employees took advantage of the plan — and that, one might argue, is a

low estimate; I would certainly argue it is a low estimate — then the

cost to government is $43,750,000. That's the minimum; that's 50

percent. If 2,500 employees took advantage of this early retirement

plan, then the cost to government is $62,500,000. Of course, if all

3,500 employees took advantage of it.... I don't have the number handy,

but it must be close to $80 million or $90 million.

HON. MR. VEITCH: $80 million.

MR. CLARK: The minister says $80 million, if all the employees....

I'd like it clarified about Crown corporations. Could the minister

tell us how many Crown corporations will participate in this initiative

and how many have decided to participate in it by order-in-council?

HON. MR. VEITCH: If ifs and ands were pots and pans, the

whole world would be tinkers, wouldn't it? You can put whatever number

you want to it. You can go from zero to $80 million.

[ Page 2926 ]

At this point there is an indication, at least, that the Buildings

Corporation and the Systems Corporation are interested in the plan.

There's been no formal request for an order-in-council. There can't be,

of course, until the act is passed. But there is an indication that

they may be interested.

MR. PELTON: Madam Chairman, may I have leave to make an introduction, please?

Leave granted.

MR. PELTON: On behalf of our Speaker, I would like to

introduce to the House Dorothy and Chris Hebb, who are from West

Vancouver, and I would ask you all to make them very welcome here this

afternoon.

MR. CLARK: Would the minister confirm that B.C. Hydro is also embarking upon a similar plan?

HON. MR. VEITCH: B.C. Hydro wouldn't apply under this plan.

They have their own pension plan, as you're probably aware, so it

wouldn't be covered under this program.

MR. CLARK: But the minister is aware that a similar plan has

been adopted by B.C. Hydro, and it was exactly the same parameters in

terms of the 5 percent penalty being waived and the severance pay being

applicable.

HON. MR. VEITCH: Yes, but it has no relevance to this particular

section of the bill we're discussing at this time.

MR. CLARK: I think it does have some relevance, and I'd like

to probe a little bit with the minister regarding it. I have here in my

hands a document dated November 16, 1987, which has been given to me.

"Strictly confidential," it says on it, and I'm sure the minister's

aware, as we know the Premier's aware, that we don't want this kind of

documentation in the public domain, because we don't want to tell

everybody what's going on, because the people will get upset.

But I have this document by William Mercer, actuarial consultant,

regarding the B.C. Hydro scheme, which I submit is very similar to the

scheme we're looking at here to be passed into law if the government

agrees to it. It's a very interesting document, because it makes a

number of assumptions. Unlike what the minister says and public

statements by the Premier and others about the cost of the early

retirement plan, we have estimated costs.... If only 50 percent of the

eligible employees take advantage of it at B.C. Hydro, then the cost to

government or to B.C. Hydro will be $15 million and the indirect costs

will be $5.3 million, for a total cost of $20.3 million to B.C. Hydro.

If 70 percent of the eligible employees take advantage of this plan,

then the cost to B.C. Hydro directly will be $21 million and indirectly

will be $7.9 million. Therefore the cost to B.C. Hydro, if 70 percent

of the employees take the plan, will be $28.9 million.

HON. MR. VEITCH: Madam Chairman, we are discussing

section 1

of Bill 62, the Pension (Public Service) Amendment Act, 1987. I

respectfully suggest that the rule of relevancy is being abrogated

here, and we should move on to the discussion of this section.

[4:00]

MR. CLARK: Madam Chairman, I will discuss this section, and I

think this is very relevant. I think the minister knows.... He said he

doesn't know how many people will take advantage of it; he said he

doesn't know what the cost is going to be. The only document we have

that deals with the cost of the early retirement plan is one that comes

out of B.C. Hydro, that's confidential, that was not released by the

government, but which I happen to have. I want to go through with the

minister the B.C. Hydroplan, and then we'll bring it back and make some

comparisons to the provincial government plan.

The high cost estimate to B.C. Hydro of the early retirement plan:

direct costs of $27.1 million and indirect costs of $10.5 million. So

B.C. Hydro will have to swallow $37.6 million if 90 percent of the

employees who are eligible take advantage of the plan. I just did some

very rough estimates of what those numbers would mean if we extrapolate

them to the entire public service. Those numbers are quite horrendous.

If we say that there are 34,077 full-time employees in British

Columbia in the public service, not counting Hydro, and that 3,500 will

take advantage of the plan or are eligible for the plan, if we use the

same actuarial assessment that the actuaries did at B.C. Hydro and we

work it out, then the cost to government of this plan that you are

about to pass is between $80 million and $150 million. That's the cost

of this early retirement plan. What's worse, Mr. Minister, is that the

document I have with respect to B.C. Hydro is dated November 16, 1987,

so the government has once again made an announcement about an early

retirement plan which is very generous to the employees and is only now

going to the actuaries and asking how much this is going to cost us.

We only now have it at B.C. Hydro, and the numbers are $30 million

to B.C. Hydro, for which the taxpayer is going to pick up the tab. If

we extrapolate and use those numbers in the public service, it's $80

million to $140 million. That's $80 million to $140 million that could

have been used, rather than to pay people to retire, to deal with the

kind of crisis we've seen in health care, in mental health and in other

services in British Columbia.

Using the minister's numbers, he says the estimate could range up to

$80 million, depending on how many people.... If we take the actuarial

estimates used by the same actuarial firm used by B.C. Hydro, then it

becomes, at 50 percent — which is the low estimate that he uses — $43

million of the taxpayers' money. If he uses the high estimate, it's

about $75 million. It's not acceptable, Mr. Minister, to come to this

House and ask us to pass a bill that's going to spend taxpayers'

dollars — $80 million by his own estimate, or $150 million if we use

the same assumptions as the B.C. Hydro actuary.

HON. MR. VEITCH: This has been quite an exercise in throwing

numbers around. You know, what we're talking about here is apples and

oranges, completely and absolutely. I don't know what the hon. member

is reading from. I am sure he is reading from something that pertains

to Hydro, and I'd like to have a copy of it. But if he is reading from

something that pertains to Hydro and their employees that's specific to

Hydro, the cost is based on demographics of that particular group, and

they have no relevance whatsoever to the public service group we're

speaking of here. So you can pick any number you want and bounce it

around, hon. member, but you won't come up with anything correct.

You've got

[ Page 2927 ]

to compare apples with apples or oranges with oranges, and you're not doing that, with the greatest respect to you.

MR. CLARK: Let me try to give a very conservative estimate of

the cost to government of this kind of legislation. If we use your

numbers, Mr. Minister — not the numbers from B.C. Hydro.... If we use

the $25,000 cost to government of early retirement plans as an average,

as a median, and we use the actuarial assumption — the conservative one

or the median one of 70 percent — then the cost to government is about

$62 million. If we add to that the B.C. Hydro plan, which is a cost to

government, to B.C. Hydro, and we use their friedian costs, the cost to

government is $29 million. So we're now up to $99 million as a cost to

government. If the B.C. Systems Corporation takes advantage of this

plan, if the B.C. Buildings Corporation takes advantage of this plan —

which is what the minister said they have every intention of doing — we

are in excess of $100 million of taxpayers' money to go to people to

retire early, to get out of the civil service to make way for this

crazy privatization scheme.

It doesn't make any sense. That $100 million could be used in so

many different ways in British Columbia, as any heart patient will tell

you, lined up for surgery: as hungry school children in Vancouver will

tell you; as unemployed people will tell you — $100 million to give a

golden handshake to civil servants all across British Columbia, using

your numbers, Mr. Minister, not the B.C. Hydro estimate, but your

numbers and the actuarial numbers. Can the minister defend the

expenditure of $100 million?

HON. MR. VEITCH: No, I won't defend the expenditure of $100

million, because the hon. member is picking numbers out of the air. But

I will tell you this: if you go through the bill further on and in

other sections, you will find that the government intends to replenish

the pension fund in the amount that it will cost.

Having said that, if all those people are not replaced, and we take

an amortization period from five to ten years — whatever you want — to

pay that back, you'll find that there is a saving in wages and that the

cost to government probably will be nothing. In fact, there will be a

saving to government. You have to go a little further than what you

consider the obvious, hon. member, and extrapolate some other numbers

and put them in place there so that you add all the factors. You're

grabbing at a pumpkin, and it's something else. It's a different kind

of fruit altogether. You've got to compare apples and apples, and

you've got to compare those savings.

If we knew at this time how many people were going to take advantage

of this particular plan, then we could take those numbers and work them

out and tell you how much the government will save over time. I can

assure you there will be a saving.

MR. CLARK: Maybe I should go through it just briefly once

more, because the minister is attempting to put the best light on what

is a very expensive proposition to the government. The numbers for B.C.

Hydro are from a real report, an actuarialy sound report, commissioned

by B.C. Hydro. The numbers I am giving you are net costs, after the

benefits accrue to the plan. Because you're right: there are some

benefits to pensioning off people earlier in terms of what it does to

the plan.

The net cost to the government, to the Crown corporation, that they

have to pay in are.... I will repeat them: if only 50 percent take

advantage — and that is a low estimate, which is not going to be the

case, from every indication — then it is going to cost the government

$15 million in direct costs and $5.3 million in indirect costs, and is

going to save the government $1.2 million.

That's what the actuaries say: that it costs the government about

$20 million if only 50 percent take advantage. If 70 percent take

advantage, which is a more realistic assumption, based on the actuarial

study, then the cost to government is $29.9 million, and it saves the

government $1.8 million. If it's 90 percent, which in all likelihood is

goina to be closer to reality in this province the way civil servants

want to get out of here — and with the kind of generosity that the

government's giving them to get out — then we're looking at a $37.5

million cost to Hydro and a saving of $2.2 million. That's a net cost

to government from B.C. Hydro of close to $30 million. The $25,000

figure you provided in this House is a net cost to government after the

benefits.

HON. MR. VEITCH: No, no.

MR. CLARK: Yes, it is, Mr. Minister. That's what

Superintendent Cook has said: that the cost to government that has to

be topped up is $25,000. If we extrapolate based on those numbers, not

the B.C. Hydro numbers.... For the minister's information, the numbers

of B.C. Hydro are $35,000 cost per job. Your analysis here is $25,000;

the B.C. Hydro actuarial result is $35,000, which one must assume means

that the average wage of B.C. Hydro employees is $10,000 higher than

the median wage of civil servants. So even if you use your estimate of

$25,000, which is $10,000 per employee lower than the B.C. Hydro

estimate, we're still looking at somewhere close to $60 to $70 million

of government money being used to top up the plan, plus the $20 or $30

million in B.C. Hydro, plus BCBC, plus B.C. Systems Corporation. At

least $100 million — conservative estimate — of government money has to

go into the plan to cover this cost.

HON. MR. VEITCH: No, the $25,000 is a gross amount, hon. member.

You're talking about topping up the plan. Whatever the dollar amount

that it costs to top up the plan, one would not top it up in that

particular year. You don't need to do that. If there's a saving as a

result of not employing so many people or employing them at a lower

rate — people will be coming in at different rates or different levels

perhaps, a different place on the grid — then one would amortize those

savings over a period of time in order to offset what it cost to top up

the plan and leave the plan whole. If you stretch that out beyond the

amortization period, whatever that might be, then you'll find that in

fact there is a substantial saving to government. That would be the

case unless a socialist government is re-elected — goodness forbid —

and you employ everyone in sight and double the size of the public

service. But if that didn't happen, as I'm sure it won't, you'll find

that in fact there is a saving over time.

Everything doesn't happen in a blinding flash of light in one year.

It takes time to amortize these things. There's no reason to — as you

say — top up or prop up the plan in the first year. You would do it

over a period of time. And you would take your savings over a period of

time, and one ought to offset the other.

[ Page 2928 ]

MR. CLARK: The answer given by the minister is simply not

acceptable. I say this advisedly, but there is a danger that that

answer is not correct, because the minister.... The minister had better

be very careful, because it comes out in Hansard

and we'll be following it up. This report is very clear. The kind of

money that government has to pay into this plan is significant. We have

employees who are eligible for the plan in all facets of government,

not all of which are being privatized, employees who are eligible for

$18,000 or more in severance pay — a lump sum payment by the government.

Maybe the minister would like to clarify his remarks in this

respect, because what this actuarial report does is break down the cost

in terms of the early retirement reduction waiver — the 5 percent

waiver — and the lump sum benefit cost. The lump sum benefit cost in

the various scenarios goes from $10 million to $16.9 million. That's

not a cost that goes out over time; that's a cost due and payable to

employees of a lump sum payment based on their years of service. So in

the B.C. Hydro plan that the government has to pay, it's from $9

million to $17 million now when they take advantage of the plan. Could

the minister inform the house what the lump sum payment will have to be

to those employees, not counting the 5 percent reduction waiver? What

is the lump sum payment only which is due and payable now to the

employees?

[4:15]

HON. MR. VEITCH: That's not part of this legislation. What

we're discussing here is the pension fund and how that will be

administered; how the government, if you will.... We're actually going

on further into the bill — it's in a different

section — how it will be

handled. The funding, of course, is to maintain the integrity of the

fund so that it will have a neutral effect on the fund. I don't know

what you're reading from there, obviously, and I don't know how Hydro

will handle their particular situation; I simply don't know about that.

But I can tell you that it's not necessary, under the situation we're

describing here, to top the fund up.

Now I'm talking specifically to this particular

section of this

particular bill. It's not necessary to top the fund up immediately. As

long as the commitment is made to the fund to top it up, to amortize it

over a period of time, then I don't know how long it will take, because

obviously I don't know how much money it will cost; I don't know how

many employees will avail themselves of this particular plan. But given

that, one can amortize one cost against the other, so that both effects

are neutral, as far as what comes out of the government's pocket in the

final analysis. In fact, there ought to be a saving to the government,

over time, if you don't reemploy the total numbers of people.

MR. CLARK: With all due respect, that is a ridiculous answer. It is

ridiculous to say that we're going to give employees an $18,000 severance

payment, a lump-sum payment, and that it's a saving to the government. If

that were the case, you'd have done it years ago. You can't say that

because we don't have to pay it now, we don't have to pay it. You can't

say that because it comes out of the fund, we don't have to pay it. It still

has to be paid. They still get the cash; they get the money. And it still amounts

to literally hundreds of millions of dollars for the taxpayers of British Columbia.

You still have to pay the money out. The lump-sum payment, whether it comes

out of the fund now and has to be paid in later or whether it comes out of the

government's bank account now, still has to be paid.

HON. MR. VEITCH: The cash incentive does not come out of the

fund. You're aware of that, aren't you, hon. member? What I'm saying —

and this is a pretty simple bit of mathematics — is that if it costs

you X number of dollars to do something, and you amortize that over a

given period of time, and if you're not employing a portion of those

people anymore, those savings then will accrue to government by way of

savings. What we're talking about is total cost to government, because

it will be government consolidated revenue that will be topping up this

fund over a given amortized period of time. They don't have to do it

the first day or the first week or the first year or the first number

of years; it can be done over time. One saving can then offset the

other. The savings will definitely not be immediate; no one has

suggested that. But over time there will be savings. If people are not

employed, not drawing wages from the government, then it stands to

reason that there is a savings there. God forbid that every dime that

goes to an employee...doesn't go into pensions. Surely you can see the

propensity of the thing, when you just multiply it out a little bit and

see that the savings can accrue over time.

I want to explain to you quite straightforwardly that the cash

incentive

part is not part of this particular plan. It doesn't come out

of the fund. It's not part of the fund.

MR. CLARK: The minister has made a number of statements

saying that there is no intention of filling all the positions that are

to take layoff and that that's where the savings are going to come out.

The minister is now saying that he's got no idea. The minister has

answered question after question, saying that there are going to be

savings to the government because we're getting rid of all these

employees and we may not hire them back. Does he have any estimate as

to how many employees will not be hired back after they're pensioned

off?

HON. MR. VEITCH: I don't know how many employees will be

leaving. If I knew that, I might be able to answer some of your

questions. You don't know that and I don't know that. You can guess

whatever you want. As I said before, hon. member, you can pick whatever

you want and add a multiple to it and come up with all sorts of

nonsense, which you appear to be doing today. You're reading also from

something you purport to be an actuarial report from B.C. Hydro that

has absolutely no relevance to this particular plan or this particular

situation.

MR. CLARK: It is indicative of this government that they make

announcements and make major plans like this early retirement plan, and

then come into the House and say they can't tell us how many people are

going to take advantage of it. They can't even give us an estimate as

to how many people are going to take advantage of it. When we put

forward actuarial propositions that other people have put forward, they

still can't answer the questions.

You said the cash incentive does not come out of the fund; that's

right. Can the minister give us an indication as to how much the cash

incentive plan is going to cost?

Interjection.

MR. CLARK: Oh, it's not part of the bill, so the minister's not going to answer.

[ Page 2929 ]

Can the minister give us an undertaking that he will give us an

estimate of how much the cash incentive plan is going to cost the

government?

HON. MR. VEITCH: Madam Chairman, I'll give the hon. member an

undertaking that I'll tell him how much will have to be expended over

time, with relation to this plan, when we know how many people are

going to avail themselves of it. I can't give you that number at this

point.

What I'm trying to do is to be relevant and relate my remarks to

this particular bill and this particular

section of the bill. I'll give

you an undertaking that when that information comes to us, it will be

made known to you. I could give you estimates now, but I'm not going to

do that, because I don't know the exact number of people that will be

availing themselves of this plan. When we know that, and we know what

it will cost, we will then know approximately how much the savings will

be over time. But of course there will be some costs at the outset to

the fund to be amortized over a given period of years.

MR. CLARK: The minister now says to the House that he does

have estimates, but he's not going to share them with us. What kind of

attitude is that on the part of the government? It's exactly along the

lines that the Premier has said: "Don't tell anybody; they might get

scared." They might come down on him, he said.

HON. MR. VEITCH: If there's one, it'll be $25,000.

MR. CLARK: So the minister's agreeing with me that the cost

of the plan is from.... If it's 50 percent, it's a $43 million cost to

the government; if it's 100 percent, it's an $80 million cost to the

government.

HON. MR. VEITCH: Gross.

MR. CLARK: That's only the cost of the plan; that's not the cost of the cash incentive part of the plan.

Well then, if we use those numbers.... The B. C. Hydro report says

that two-thirds of the cost of that $30 million is the lump sum

benefit. So if the minister is saying that the $25,000 could cost, if

only 50 percent of those eligible take advantage of it, the fund $43

million.... If the same ratio holds, then the cash incentive retirement

plan will cost another $60 million or more. Could the minister confirm

that logic: that the ratio of cost to the fund of the early retirement

reduction waiver to the lump sum benefit is roughly two to one, and

therefore we can simply make a rough estimate that it will cost the

government $80 million with respect to their lump sum payment?

HON. MR. VEITCH: No, Madam Chairman, I can't confirm his

logic, because he's dealing in apples and oranges. He's talking about

two very different things, and he's trying to superimpose Hydro on the

public service. With great respect to him, I don't think he can

superimpose those numbers.

As I said before, I'll give the undertaking that when we know how many

people are going to avail themselves of the plan, we can tell you what it will

cost the fund up front, and we can also tell you how much time it will take

to amortize that. So those effects will be made known in the fullness of time,

hon. member.

MR. CLARK: Madam Chairman, this is indicative of the kind of

answers we're getting from the government: "We're not going to tell

you. We've got estimates, but we're not going to tell you. When the

thing happens, we'll let you know." Surely, Mr. Minister, for the

purposes of budgeting, the government has some estimates as to the cost

of this program. Or is it just completely up in the air? "We're going

to just make a plan and say that whoever wants to take it can take it,"

with no idea of the cost to government. Because the kind of numbers

we're talking about here are.... Hundreds of millions of dollars of

taxpayers' money could potentially be used up in this endeavour. Surely

they can give us something more concrete than: "Wait and see. We'll

tell you after we know how many people are going to take advantage of

it."

Surely for the purposes of planning — if there's any planning at all

done on that side of the House — we would have an idea of an actuarial

estimate as to how much this is going to cost the fund, based on a

number of scenarios, and how much it's going to cost the government in

terms of the lump sum payment. Surely he could be straightforward in

the House and tell us what those estimates are.

HON. MR. VEITCH: I've told the hon. member time and time

again that the upfront draw from the fund, which will be topped up over

a given period of time — amortized — would be $25,000 per person. That

does not suggest that it would cost, over a given period of time,

$25,000, because the government will accrue savings as a result of not

employing all of those people, more than likely. So I can't tell you

what the exact cost will be. If you knew, you could do the mathematics

the same as I. Yes, it's up front from the fund, but the integrity of

the fund will be maintained. It will be topped up over time, and the

net cost to government over time will be amortized out as a result of

savings.

MR. CLARK: Then the minister will confirm that the cash

incentive bonus plan, which is not part of the fund, will be paid in a

lump sum payment and therefore be payable and due at the time — will

not be amortized over time, but will actually have to be paid out.

HON. MR. VEITCH: It's got nothing to do with this.

MR. CLARK: You don't answer that.

Maybe the minister could deal with a couple of other aspects of this

plan. We're talking about roughly 3,000 employees taking advantage of

this very generous offer on the part of the government that's going to

cost the taxpayers close to $100 million at least. Maybe the minister

could give us an indication of how, in terms of management — and this

is part of this bill — if 3,000 people or so take advantage of this

early retirement plan.... If, for example, in one unit there are ten

employees and all ten of them decide to take advantage of the plan,

what contingency labour adjustment strategy do they have to deal with

the kinds of people that are going to move off? Because quite frankly,

Mr. Minister, there are serious problems in terms of human capital, in

terms of literally thousands of qualified employees who have given

their life in service of the Crown, who are now 55 years of age and who

are going to leave as a result of this plan. What happens when there

are ten employees in a warehouse dealing with some sophisticated

purchasing arrangement and all

[ Page 2930 ]

ten of them leave? Is there a course of action that the government has in mind to deal with that kind of adjustment?

HON. MR. VEITCH: Madam Chairman, in any organization or

entity, if an employee leaves they have to find a way of replacing that

employee. He or she may or may not be more valuable than someone you

would bring in from the outside to take over that job. That's an

ongoing management situation. If something happened to you tomorrow and

you weren't here, we'd have to replace you. It might be very difficult,

mind you, but I imagine it could be done, possibly. There must be one

more socialist in Vancouver East, anyway. That could happen.

What you're talking about is an ongoing management situation. I'm

not going to superimpose myself into the labour relations side, nor is

it within my purview to decide what sort of contingency plans are in

shape. I trust the management and the administration of the public

service, and I'm sure they will look after that. You're saying, again,

that if everybody leaves.... If ifs and ands were pots and pans, the

whole world would be tinkers, my friend. I don't know how many are

going to leave, but I doubt they're all going to leave, and I'm sure

that there are other people around who, when they are hired, after a

little training period will be just as good as some of the ones who

have left. It happens even with MLAs.

[4:30]

MR. CLARK: Madam Chairman, this is not a normal management

situation where a few employees leave and we have to hire someone. The

minister has stated that 3,500 people are eligible for the plan. A

conservative actuarial estimate is that 50 percent will take advantage

of it; more likely, with this government, because they'll all want to

leave, 70 or 90 percent. So we're looking at 2,000 to 3,000 employees

leaving, not over time but now, right away. And we're talking about

lump sum payments of $18,000 to $20,000 per employee. We're talking

about $50 million or more paid to those employees, cash up front. We're

talking about $50 million or $80 million paid in terms of the pension

fund, up front. We're talking about the kinds of disruption to

government services that we're liable to see with 2,000 to 3,000 senior

civil servants in this province, who have spent their lives working for

this province, leaving all at once, right now. And the minister stands

up and says he has faith in the management to fill those positions.

Is there any analysis? Is there any understanding as to where those employees

are that are going to be leaving? Is there any understanding that in certain

segments of the public service — in Prince George, say, or in Vancouver and

other areas — whole workforces are going to be leaving and taking advantage

of this very lucrative plan? Has the government got any understanding of how

they are going to deal with that tremendous adjustment problem? Or are we just

going to go, as we are with the rest of this government, like a speeding train

out of control with no brakes — just keep going for it and wait and see what

happens? All of a sudden one day, 3,000 senior civil servants leave. Then the

government is going to say: "Oh my, how are we going to deal with that?

How much is this going to cost us? Oh, we didn't know that. Isn't that

a shock!" Nothing you've said in this House has indicated that you're

on top of this situation. The ramifications of this bill are quite significant,

in both cost to the taxpayer and loss of human capital in terms of senior management

people who are going to leave employment.

HON. MR. VEITCH: There are 35,000 employees, more or less, in

the public service. We're not talking about 35,000 people. There are a

lot of folks out there doing a lot of things, and there are a lot of

other folks around who can do those same kinds of things, if it be

necessary. The hon. member, with great respect, doesn't appear to have

any faith in management. I do have tremendous faith in the management

of our public service, and I would suggest that if you think that those

people who are eligible to take advantage of this particular plan....

If you think it's wrong, then I suggest you vote against it. Call a

division and call all your folks in here and vote against this

particular piece of legislation. Somehow I don't think you're going to

do that; I think you're going to support this. What you're doing right

now is engaging in rhetoric, and I guess that's all right.

MR. CLARK: It's not rhetoric. These are factual questions

that the minister is refusing to answer, or isn't capable of answering,

which is probably more likely. The fact is that up to 10 percent of the

workforce in this province could take advantage of this plan. What I'm

asking is: do they have any understanding? It's not one out of every

ten employees in every single division. There is a disproportionate

impact on different divisions. Can the minister give us any

understanding of whether it is 25 percent of the highways crew that is

going to leave or 5 percent? It's not 10 percent across the board. It

has varying consequences, depending on the age structure. Surely the

minister or the government wouldn't bring in a bill without any

understanding of where that impact is going to take place, so that they

can plan for it. Does the minister have any understanding as to where

this impact is likely to take place?

HON. MR. VEITCH: I can assure the hon. member that the

highways will be plowed, the ditches will be dug, the work will be

done, your paycheque will be ready on time and the services will be

looked after, regardless.

MR. LOVICK: I had some words to offer in second reading

debate on this particular bill. I said at the time that it was damage

control and that, properly understood, what this bill was doing, in

effect, was simply dealing with the casualties of war. I stand by that

claim and, having listened to the minister for some time now, I get the

distinct impression that there is no other real justification beyond

coping with and accommodating a crisis created by this government that,

I am afraid, is somewhat larger and wider and more frightening than has

been recognized and admitted to thus far.

I listened quite carefully to the minister's early justifications

for this, and I can't resist. I wasn't going to, but when I hear the

minister say to my colleague the member for Vancouver East that we

don't know what we are talking about, I want to suggest to the minister

that his early explanations would lead one to precisely that

conclusion, because the minister stated — and it's clearly on the

record — that "the purpose of this particular measure is to ensure

employees are treated in a meaningful way." I thought: what does "a

meaningful way" mean? I think, if we look at it carefully, that we can

fairly conclude that to treat people in a meaningful way

[ Page 2931 ]

can mean anything from treating them

compassionately, graciously and kindly to treating them viciously,

vindictively and cruelly. So I wonder precisely what the minister meant

when he said we're going to treat people in a meaningful way. That's

one question.

The other claim — and I'm starting with these questions to the

minister because I simply would like to establish the ground rules....

I hasten to point out that it is not my intention to make a long speech

on the subject. Rather, I simply want to remind people of what the

issue is and why we have indeed posed the questions we have, and then

deal with some rather specific, direct questions I will throw at the

minister.

That

preamble aside, the second general question I want to ask the

minister is simply whether he would explain to me what he meant when he

said that another purpose of this particular measure, this

section of

the bill, was "to rejuvenate the public sector," I thought, well, wait

a minute. Unless language has radically changed in my reckoning, or

unless something rather bizarre and strange has happened in the past

week, it is not the case that when you reduce the size of the public

sector by a very significant factor — which this bill is designed to

accommodate — we can say we are rejuvenating the public sector. In

short — to use a line from an 18th century writer — it seems to me that

the minister is in danger of saying that which is not. I wonder if he

would care to explain to me precisely what he means by "ensure that

employees are treated in a meaningful way," and secondly, how this bill

can possibly be construed as constituting a rejuvenation of the service.

HON. MR. VEITCH: I guess that the hon. member has asked me to explain what

section 1 of this bill.... We are dealing with

section 1, aren't we?

MR. LOVICK: Yes.

HON. MR. VEITCH: Good. The hon. member has asked me to

explain in a meaningful way what

section I is all about. So I'll do

that in a very meaningful way, in as meaningful a way as I can.

Section

1 sets out the eligibility requirements for the early retirement

incentive plan. That is the waiving of the reduction of five percent

for each year between five and ten years from a maximum retirement age

in the pension benefit formula. That's very meaningful to someone who

wants to retire early.

How will we rejuvenate? I know that when I first came into this

place in 1976 — I think I mentioned it before — I came in campaigning

on new blood. Now I'm campaigning on experience, of course. I do

believe that bringing new people into the system is rejuvenating it. If

a number of people take advantage of it, other people will be hired who

are not hired at this time — how many I can't tell you — but that will

certainly rejuvenate those areas. There's no question in my mind that

this is meaningful to those people who will take advantage or avail

themselves of this particular plan.

MR. LOVICK: Madam Chairman, I thank the minister for that

semantic tour deforce. This is an intriguing kind of quibble which has

gone on. But I think that I make my point, and that's why I ask the

question.

Before I get to some direct questions, I want to state — albeit briefly — what

it seems to me the member for Vancouver East elicited by his comments, and to

give the minister an opportunity to respond. I think the point that my colleague

is making — as I understand those comments; and I was listening carefully —

is that it seems clear that this so-called window of opportunity is perhaps

open too wide and open without sufficient concern and consideration about the

impact in financial terms — in short, the cost of this program. I think my colleague

effectively demonstrated that the ministry — the government — does not seem

to have done that kind of preliminary and preparatory work that would in most

circles constitute a reasonable preparation for making the announcement for

this kind of initiative. We're suggesting that there were a number of very

discrete and specific questions posed that, in a rational universe, ought to

have been given very direct and discrete answers. But we didn't get those

answers. I think that's what my colleague effectively elicited from the

minister, and I wonder whether the minister would like to respond to my rendition

of events. The minister's capacity to answer is obviously exceeded only

by his capacity to listen. Perhaps I will repeat the question.

I'm suggesting to the minister that my colleague was attempting to

demonstrate — and I think he succeeded — that this rather significant

initiative, which could represent millions and millions of dollars, has

not been effectively projected. We don't know what those figures are.

We don't, in short, know what the cost would be if only, say, 50

percent of those employees eligible by

section 1 of this bill were to

take advantage of it. We have not done that kind of projection. Is that

not the case?

HON. MR. VEITCH: With greatest respect, what your colleague

the second member for Vancouver East was doing was reading mostly from

what was purported to be — and I have no reason not to believe him;

he''s an honourable member — an actuarial report to do with Hydro. My

answer has been consistently that we must compare oranges with oranges

and apples with apples. You can't compare Hydro with the public service

or what that particular Crown corporation may or may not do by way of

benefits to employees who may be leaving.

I have given you a number, and I've said that the per capita cost to

the fund day one — remember it is to the fund — would be $25,000 as a

medium. It's an approximate average across the board. If you take

whatever number of employees who may avail themselves of the fund. and

subtract from that over a given period of time some of those who may or

may not be employed or coming into employment at a lower place on the

salary grid, savings will accrue to the consolidated revenue fund. The

consolidated revenue fund is a fund that will be topping up the pension

fund, in this particular case, so it preserves the integrity of the

fund at all times. Those savings amortized over time will offset,

hopefully, the cost to the fund. The government does not need to pay on

day one all the money it would cost to pay out those people, as far as

the pension is concerned. It doesn't need to do that. But it needs to

ensure that from a financial point of view some integrity is preserved,

and that is specifically embodied in another

section 1n this bill. If

you wanted to — it's up to you — you could get onto that and talk about

that at that point in time. It's covered specifically in another

section of the bill.

MR. LOVICK: The minister's suggestion that somehow actuarial

projections from B.C. Hydro are not relevant to this bill I frankly

find mind-boggling.

[ Page 2932 ]

Interjection.

MR. LOVICK: No, it isn't. What my colleague has done — and

it's a classic technique in any kind of economic analysis — is he has

extrapolated from and projected. Given that the government has

effectively told us that nothing is sacred, that everything is

concievably for sale, that all the Crowns are part of this process of

privatization, and given moreover that very clearly in

section 1 there

is a provision for employees other than Crown employees, we have no

choice but to conclude that there is in fact another larger agenda out

there.

[4:45]

I would suggest that given that relatively simple leap — certainly a

much shorter leap than the leap of faith we were asked to accept some

minutes ago from the minister — the conclusion my colleague derives is

eminently reasonable and eminently fair. I don't think there is any

question about that, but let the record show and let people read the

questions and the answers and determine for themselves.

What I want to do now then, if I might, Madam Chairman, is just pose

a couple of very quick questions. Firstly, will the minister please

inform us why this particular short window of opportunity was chosen,

namely the period October 20, 1987, to March 31, 1988? Why that

particular period?

HON. MR. VEITCH: It's obviously an attempt to gain a result,

and the result will be that certain numbers of employees will avail

themselves of this particular plan. It is precisely that. It's not a

great deal different from the teachers' plan, where there's a window of

opportunity given to the teachers to have some of those people retire

earlier than they would normally. The same thing is true here.

From October 20 to March 31 is quite a good period of time. As you

pointed out yourself, getting back to what you said, it's a large

window of opportunity.

It remains to be seen how many people will avail themselves of that

particular plan. I've been straightforward with you. I tell you there

are 3,500 who could. Obviously 3,500 won't. How many will? You put your

number to it, and I'll put mine to it, but we'll just have to wait and

see. We'll know a little better in the next short while.

MR. LOVICK: I wouldn't for a moment suggest that the minister

is being less than straightforward with me — by his own best lights, I

hasten to point out.

The minister is telling me, if I understand him aright, that the

reason for this particular window — as he says, a large one — is "to

gain a result." In other words, this is an incentive to downsize. Will

the minister accept that statement of it?

HON. MR. VEITCH: It's an incentive for people to retire who

wish to retire earlier than they would normally. In some instances it's

also an opportunity, as I pointed out, for government to rejuvenate

itself as far as the public service is concerned. It's certainly an

opportunity for those individuals who want to retire early or want to

move on to another career. It's a big world out there. They may even go

to a college; you never know.

MR. LOVICK: Is it correct that we are talking about a means to reduce

the size of government? The minister very carefully — adroitly, I am tempted

to say — said that some people will take advantage of this, not everybody. He

also said that some new people would come in. Now I would suggest that on the

basis of what's been happening to the public service latterly, that is a

tremendous leap of faith. It seems to me that there are many people seeking

to exit the public sector, but there aren't too many rushing to get in.

I would suggest that the morale in the public sector right now is at rock bottom,

partly because of the manner in which the government has chosen to treat its

employees. Indeed, Mr. Minister, I could present

chapter and verse to substantiate

that claim. Certainly it's the case in my constituency. I know of some Ministry

of Highways employees who are taking early retirement but are not at all happy

to be doing so. The morale is rather low, and I think that that's inexcusable.

I do not think that the government has been a good or model employer in this

exercise, with all due respect.

In asking the question about whether this is indeed about downsizing

government, my point is really to ask the government to come clean with

us, to be direct and not to pretend that this is going to rejuvenate

and bring in new people because we're getting rid of some others. It's

very clear that what we're talking about — to use the terminology from

the right — is downsizing government. I for one am getting a little

impatient with the rhetoric that argues the other case. If the

government wants to take a position and say that it agrees with Madsen

Pirie et al. that we should

dismantle the state or we should reduce the size and the scope of the

government — good old neoconservative agenda — fine; say so. Don't

continue to give us these kinds of things and say that this amounts to

rejuvenation, because by any stretch of logic, by any stretch of proper

imagination, by any normal rendering or understanding of what language

means, this bill is not rejuvenating the public service; it is

downsizing the public service. It's sweetening the pot for those who

have not otherwise been induced to leave the public service. That's the

point, and I don't think that's debatable; it's very clear from what

the bill does.

MR. MILLER: You know, there are a lot of things to consider

in this pension bill. Firstly, you can throw somebody in the ocean, and

then you can throw them a li