2004 Legislative Session: 5th Session, 37th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, MARCH 8, 2004

Afternoon Sitting

Volume 21, Number 9

CONTENTS

Routine Proceedings

Page

Introductions by Members

Speaker's Statement

Commonwealth Day

Statements (Standing Order 25 B )

Status of women in B.C. and

government policies

J. Kwan

French immersion in B.C.

R. Visser

International Women's Day

B. Locke

Oral Questions

B.C. Rail privatization process and

police investigation

J. MacPhail

Hon. K.

Falcon

Funding for B.C. women's centres

J. Kwan

Hon. I.

Chong

Sumas Energy 2 project

B. Penner

Hon. G.

Campbell

Closing of Crystal Garden

Conservation Centre

J. Bray

Hon. M.

Coell

VictimLink crisis line

K. Krueger

Hon. R.

Coleman

Committee of Supply

Estimates: Ministry of Health

Services (continued)

J. MacPhail

Hon. C.

Hansen

V. Anderson

B. Lekstrom

G. Hogg

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Community,

Aboriginal and Women's Services (continued)

Hon. M.

Coell

J. Nuraney

J. Kwan

R. Hawes

M. Hunter

J. Bray

R. Stewart

D. Hayer

Hon. I.

Chong

V. Anderson

V. Roddick

G. Trumper

[ Page 9169 ]

MONDAY, MARCH 8, 2004

The House

met at 2:04 p.m.

Introductions by Members

Nuraney: We have in the gallery today some very distinguished people. One of

them really is my mentor: Allan Emmott, freeman of Burnaby, former mayor of

Burnaby, former chair of the GVRD and a flight lieutenant of the Royal Canadian

Air Force. He is accompanied by his wife, Vivian. We also have Norman Emmott,

his brother, who is a retired squadron leader of the RCAF. With them is a very

distinguished gentleman, Harry Hardy. Harry Hardy is an inventor who has

invented various things for people who are disabled. He is also a member of the

Aviculture Hall of Fame and a retired commander of the Royal Canadian Air Force.

[1405]

All three

distinguished gentlemen are the recipients of the Flying Cross, a very

distinguished honour. May the House please join me in welcoming them.

Hon. G.

Campbell: I'd like to welcome the COFI members who are joining us in the

House today. They are chaired by Dennis Rounsville, and their president, John

Allan, is with us, with a number of members in the gallery. I hope the House

will make welcome this group of leaders in the province's number one industry

— forestry.

Sultan: I would like to acknowledge a guest in the House this afternoon

who's a fellow of the Institute of Chartered Accountants; who was a partner of

the distinguished accounting and consulting firm Deloitte and Touche; who was

chief financial officer of ICBC in its formative years; who was chief financial

officer of the first SkyTrain — the one that actually finished under budget

and on time; the fellow who organized the successful campaign against no-fault

promulgated by the previous regime — which, of course, we would never do; and,

as a capstone to a distinguished career, who became the chief financial officer

of my riding association. Would you please acknowledge Gordon Adair.

R. Lee: Today

in the gallery we have 27 grade 7 students from Westridge Elementary School in

my riding. They are accompanied by their teachers, Ms. Janet Pritchard and Mr.

Victor Austin, and six parents: Mrs. Crivici, Mrs. Brljacic, Mrs. Dean, Mrs.

O'Halloran, Mr. Li and Ms. Jacobsen. Would the House please join me in making

them welcome.

Hon. I.

Chong: Mr. Speaker, as you know, today is International Women's Day. This is

an important day, celebrated around the world to recognize the many

accomplishments of women in all areas. Our government is committed to promoting

and profiling women and their successes and creating an environment where they

can pursue their goals. We are creating opportunities for women by building a

strong economy and safe, healthy communities where women can make choices for

themselves and their families' future.

Our

government is committed to employability programs for women that teach life

skills and job training to help women enter the workforce and become

independent. To feel safe and secure, women must know that there are also safe

places for them to turn to in times of crisis, and that's why we commit over $33

million a year to transition houses, safe houses, second-stage housing and

counselling programs to help women who have faced violence to rebuild their

lives.

Our

province is improving health care choices for women. We are a leader in cancer

screening and survival rates for women. Government supports training for health

professionals that focuses on patient-centred care for women, and government is

working with the trades industry to increase girls' and women's awareness of

careers in those areas.

These are

just some of the accomplishments that we can celebrate today. I had the pleasure

of attending various events over the weekend to recognize International Women's

Day, and earlier today I was joined by six exceptional women to celebrate and

mark this day here at the Legislature.

Today we

recognize the contribution of women as mentors and learn from their protégés

how valuable it is to share and celebrate women's successes. We are privileged

to have four of these women here in the House this afternoon. Would you please

join me in welcoming Dr. Rebecca Grant and her protégé, Shona Sinclair; Ms.

Padi Mills and her protégé, Francesca Dappen. Would the House please make them

very welcome.

Anderson: I ask the House to join me in welcoming Angelle Desrochers-Rosner

from my riding, a very active parent in educational circles who's very much

involved in concerns for literacy, particularly among young children, and here

in Victoria today, privileged on her part to attend the innovation conference on

education, which she has found very exciting and interesting.

[1410]

J. Kwan:

I have wonderful information from the news. As the member for

Vancouver-Hastings I'm sure can attest to, she can advise the House that life

after 50 is no different from life after 20. She celebrated her birthday this

weekend, and as we will know and we will see today in question period, it will

not slow her down one iota. She will engage in practising her best traditional

parliamentary practice in question period today, I'm sure. Will the House please

belatedly wish the member for Vancouver-Hastings a very happy birthday.

Hon. P.

Bell: I see we are joined today in the House by three dedicated school

trustees from school district 57 in Prince George. I would ask the House to

please make Patricia Wick Thibault, John Rustad and Bill Christie very welcome.

[ Page 9170 ]

Hon. G.

Campbell: Pending question period, when I'm sure we'll see what someone

who's 50-plus can do, I wanted to say that there's someone who is not nearly

50-plus, who has just been born. The Minister of Education's new son, Fraser

James, has been brought into the world, and I hope we'll all wish the

Christensens all the best.

Mayencourt: I have in the gallery today three wonderful guests. They are

members of my family. I got the nomination for the Liberal riding of

Vancouver-Burrard on March 20, 2000, and that little girl up there was born on

that day. Her name is Olivia. She's just a beautiful little princess, and I want

to welcome her to the castle. She's joined here by her father, Todd, and her

mother, Tricia. Please make them welcome.

Speaker's Statement

COMMONWEALTH DAY

Mr.

Speaker: Hon. members, today is Commonwealth Day. It is a day set aside for

special recognition in Commonwealth countries throughout the world.

It is a

parliamentary tradition for Her Majesty the Queen's Commonwealth Day message to

be read into the record in those jurisdictions where the Legislature is in

session on this special day. It is my honour to read Her Majesty's message.

"Building

a Commonwealth of freedom.

"The

lives of many of my generation were profoundly changed by a world war fought

in the name of freedom. I have often reflected with pride on the huge

contribution made by the peoples of the Commonwealth to that cause of liberty,

in which millions perished. In the years following the war, a succession of

countries emerging into independence chose to join the Commonwealth as free

and equal members. As a result, the Commonwealth became rooted in all parts of

the world and developed into the modern organization we know today.

"Democracy,

national self-determination, individual liberty and human rights — all these

are fundamental to that which binds the Commonwealth together. The importance

of these principles was clearly in the minds of Commonwealth leaders during

their discussions at last December's summit in Abuja, Nigeria. Living up to

principles is never easy. It can involve difficult and painful decisions, but

the affirmation of those values provides common ground for the Commonwealth as

a whole to grow stronger.

"The

Abuja meeting also made the crucial link between democracy and development.

Democracy is important to sustain development, and underdevelopment can be

democracy's greatest threat. Nowhere is freedom perfectly realized, and its

enemies are not only those who terrorize and torture. They are also hunger,

poverty, disease and ignorance. That is why it is important for the

Commonwealth to do all it can to tackle these challenges directly, whether in

alleviating poverty or in promoting education and health.

"It

is also essential to strengthen the rule of law, protect democratic freedoms

and build strong civil societies. I firmly believe that if the Commonwealth is

to increase its role as a force for good in the world, strengthening

democratic freedoms must remain at the heart of its purpose.

Elizabeth

R."

Statements

(Standing Order 25

b) STATUS OF WOMEN IN B.C.

AND GOVERNMENT POLICIES

J. Kwan:

Today is International Women's Day. International Women's Day gives us all the

opportunity to celebrate women in our lives — women who have fought for

hard-won rights and freedoms and who have had a positive impact on the lives of

many. At the same time, International Women's Day should give us pause to

reflect on what steps need to be taken in order to achieve our ultimate goal of

true equality.

[1415]

While today

we may want to celebrate International Women's Day, there is little to celebrate

here in B.C. This spring, just one month before the government announced it

would no longer retain the zero tolerance policy on domestic violence, it cut

counselling funding for those convicted of domestic violence. On March 31, 2004,

this government will cut funding — 100 percent of funding — to B.C.'s 37

women's centres.

This

government seems to believe that gender disparities no longer exist within this

province. The Minister of State for Women's and Seniors' Services has stated

that women are better off as a result of this government's policies. However,

the government of B.C. has been singled out for criticism by the United Nations

Committee on the Elimination of Discrimination Against Women. This UN committee

stated its concerns about this government's disproportionately negative impact

on women and children in areas such as social assistance, legal aid, and support

for those experiencing sexual and domestic violence.

This

government claims that this is a new era for women in B.C. However, this new era

is characterized by increasing cuts and closures to services that are

predominantly used by women. These cuts and closures exacerbate the systemic

gender inequality that exists within our society, a problem often compounded by

other forms of discrimination. Rather than enabling women in our province to, as

the government claims, turn the corner into a new era of hope and prosperity,

this government has taken enormous steps backwards. Its cuts to social services

and to women's centres are a sobering reminder of the fight women still must

wage in this province.

FRENCH IMMERSION IN B.C.

Visser: Monsieur le President, I rise today to mark French Immersion Week

here in British Columbia. For the past century we as Canadians have been

building a nation based on two official languages. Here on the west coast,

quietly and steadily, we have been

[ Page 9171 ]

embracing that notion not through grand gestures or laws but through quiet

action and deed.

For the

past 25 years, school districts have been providing the opportunity for our

children to be educated through French immersion programs. It started in

Coquitlam, and it's grown steadily across the province to 47 communities —

from small rural places like Quesnel, Smithers and Terrace to big cities like

Vancouver, Victoria and Surrey. British Columbians should be proud of the fact

that we lead the country in French immersion participation. There are 33,400

students registered in the K-to-12 system — up 1,400 from last year — and we

have bucked the national trend for the past four years.

At this

point, Mr. Speaker, you may be asking yourself why I chose to highlight French

Immersion Week. There are two reasons. One is that of those 47 communities,

Campbell River leads the province in per-capita participation, having just over

700 kids enrolled in their K-to-12 system. This leads me to the second and most

important reason. My daughter Charlotte is one of the 90 kindergarten kids who

have begun receiving the gift of a second language this year.

Studies

show that the process of learning this second language can help children to

develop better concentration skills and better abilities to do separate tasks

and to discover that just as there are two ways of saying something, there are

at least two ways to solve a problem. As they advance through school, they learn

to be independent, because many of their parents — and I'm one of them — are

not able to really help them with their homework.

Some of

this is bound to rub off on the parents and all British Columbians who have kids

in this system. I know, for me, that on the long drives up north, my fellow

drivers can see me practising along with the French tapes in the car on the

drive.

INTERNATIONAL WOMEN'S DAY

Locke: It is my privilege as a woman, a mother, a daughter, a sister, a wife

and an MLA to rise in this House in celebration of International Women's Day.

This past weekend I had the privilege of celebrating with women from every walk

of life, both at my local women's centre as well as at a very large

multicultural gathering of women from every corner of the globe. Both stressed

the importance of volunteers, and both recognized the importance of services to

protect vulnerable women and children in a way that is void of any political

agenda.

[1420]

I'm a mom

who drives her kids to hockey and ringette. I care about my aging mom, and I

have a wonderful husband that I've been married to for 28 years. I am a woman

just like many other women throughout my community and throughout my province. I

work long hours, juggle family responsibilities, see friends and relations when

I can and participate in my community.

Lots of

things are important to me. Working to help make the lives of people in B.C.

better is important to me. Coming home and finding out that one of my kids has

had their heart broken at school and just wants to talk with mom — that's

important to me too.

At the end

of the day when I talk on the phone with my husband and my kids, I hope I can

say to them that I made a little difference in someone's life today, and usually

that person is really close to me. I think that's what we as modern women can

relate to — our friends and our family.

The person

who influenced me the most was my own mom. Today, as it is International Women's

Day, I want to recognize the hard work of the role models that are in homes

across the province — the single moms, the career women, the girls who are

learning how to grow up and be strong women, the family moms who are struggling

to make ends meet and the grandmas that are lovingly caring for grandchildren.

Women

understand that it is not the source of adversity but our response to it that

makes a difference, and we are women who respond gracefully, applying our

strengths to better ourselves, our children and our province.

Mr.

Speaker: That concludes members' statements.

Oral Questions

B.C. RAIL PRIVATIZATION PROCESS

AND POLICE INVESTIGATION

MacPhail: On a day dominated by news of internal strife and turmoil in the

government caucus, I want to focus again on one of the reasons for that turmoil

— the ongoing scandal related to the police raids on the Finance minister's

office and the tainted deal to sell B.C. Rail.

Last week

British Columbians discovered that the deal to sell B.C. Rail to CN is caught up

in an influence-peddling and breach-of-trust scandal that reaches right into the

Finance minister's office. Now the government admits that it released

confidential information to CN while it was negotiating to buy B.C. Rail, in

direct contravention of the bid rules. Last week the so-called fairness adviser

admitted in the media that there were actually three leaks when his report only

identified two.

Can the

Premier explain why he insists that the deal to sell B.C. Rail was fair when the

police are investigating and when now even the Minister of Transportation admits

that CN got confidential information and a leg up?

Hon. K.

Falcon: You know, even though it's that member's birthday, I just have to

say: is there ever a point where she cannot stop being negative about a deal

that brings such positive benefits to British Columbians? I just have to ask

that member: is it the expanded runway at Prince George she's against? Is it the

$17.2 million in containerization we're going to see at

[ Page 9172 ]

the Prince Rupert port? Is it the additional $8 million in taxes that will be

seen in communities up and down the line? Could it perhaps be the Chicago

express that will see goods get to important U.S. markets two days faster than

they do today? I don't know what it is, but this member constantly — every

day, day in and day out — tries to drive negativism on a deal that is going to

be positive for British Columbians all across this great province.

Mr.

Speaker: The Leader of the Opposition has a supplementary question.

MacPhail: Well, I guess that minister has had a visit to the Premier's

office again, because his story has changed once again. The whole deal stinks to

high heaven, and the Premier knows it. The mayors of the cities along the line

are worried about it. There's an asterisk in the budget that puts the deal at

risk, and of course now the confidence of investing in this province is eroded

as well.

Criminal

investigations, leaks of confidential information, angry bidders pulling out in

protest — for a party that promised to run government like a business, this

looks more like an episode of The Sopranos . Charles River Associates, the

good folks who got paid $300,000 to rubber-stamp the B.C. Rail deal, identified

two leaks. Now Charles River has said: "Oops, there were three leaks, not

two, but don't worry. The deal is still aboveboard." That report is a joke.

[1425]

When will

the Premier just admit that this deal to sell B.C. Rail stinks and should be

stopped before any more damage is done to his government's reputation, if that's

possible?

Hon. K.

Falcon: This member is unbelievable in the kind of accusations and

allegations that she'll make without even reading the report. In fact, if she

took the time to read the Charles River report, it actually acknowledged what I

acknowledged on the weekend. That was acknowledged back in December.

This member

continually tries to spread aspersions that are not based on fact. The fact of

the matter is that there was an evaluation team of the highest integrity that

worked on this project. The moment that inadvertent faxing of information became

available, it was made known to CN; it was made known to the fairness adviser.

All of that has been dealt with openly and forthrightly, and this member just

can't help but keep trying to deny the benefits this deal will provide for

British Columbians right across this province.

Mr.

Speaker: The Leader of the Opposition has a further supplementary.

MacPhail: Well, it was this past week that Charles River Associates had

admitted that there were three leaks, despite their report. Despite their

report, CP Rail still pulled out of the bid, calling it unfair. Last week the

Minister of Transportation became the first member of his government to tell it

like it is to the media — the first one — and got shot down almost

immediately by the Premier's chief of staff, by his army of spin doctors. He

then retreated to blaming the media. Shocking, Mr. Speaker — absolutely

shocking. They probably think it's a good strategy.

Given the

minister's new penchant for speaking only the party line, British Columbians

have no reason to believe a word this minister says when it's clear now that the

deal smells worse than just the broken promise in the first place. When will

this Minister of Transportation — because clearly the Premier ain't answering

for anything — cut his losses, halt the deal and wait for the police to finish

their investigation before he digs his government deeper into trouble?

Hon. K.

Falcon: I'll say to this member again: I hope this member's actually going

to go up and speak to some of the northern communities and tell them exactly why

she's against the benefits this deal is going to provide. I'd like you to travel

to Prince Rupert and tell them why you don't want to see a $17 million

investment in containerization. I'd sure like you to go to Prince George and

tell those folks why they ought not to have an expanded railway. It's day in and

day out of this member constantly being negative over a deal that provides

enormous benefits for British Columbians.

FUNDING FOR B.C. WOMEN'S CENTRES

J. Kwan:

Today is International Women's Day, and to celebrate, this government is forcing

women's centres across British Columbia to shut their doors. These centres cost

the government approximately $1.7 million, less than half of what this

government blew harassing British Columbians living with disabilities.

British

Columbians are pleading with this government to keep women's centres open. The

UBCM passed a resolution demanding the government restore the core funding. Can

the minister of state for women explain to British Columbians why her government

is abandoning thousands of women in need by forcing women's centres — and I

repeat the words, women's centres — to close their doors?

Hon. I.

Chong: Across the province this government is spending over $33 million

annually for direct essential services to women. That means…

Interjections.

Mr.

Speaker: Order, please.

Hon. I.

Chong: …$33 million across the province for transition houses, for safe

homes, for second-stage housing, for counselling programs — group and

individual counselling programs for women who have experienced abuse and for

children who have witnessed abuse. Our government is committed to providing

funding that focuses provincial dollars that will maintain these direct

essential services to women.

[ Page 9173 ]

Mr.

Speaker: The member for Vancouver–Mount Pleasant has a supplementary

question.

[1430]

J. Kwan:

This government eliminated the Ministry of Women's Equality, and they cut its

funding by close to 50 percent. The budget used to be $52 million, and it has

been cut to some $30 million by this government. From parenting support to

clothing exchanges to job re-entry programs to crisis counselling, thousands of

women in B.C. — many of whom are poor or trying to escape abusive

relationships — depended on women's centres.

The

government provided each women's centre with about $48,000 in core funding. For

the price of the consultant's report into the privatization of B.C. Rail that

missed the alleged activity by top Liberal staffers, six women's centres could

have been funded. Not only are the B.C. Liberals eliminating women's centres,

they are cutting funding to specialized counselling programs dealing with people

convicted of domestic violence. They have rolled back the zero tolerance policy

for domestic abuse, and they have cut legal aid, and they have been cited by the

UN for violating two international conventions on human rights. On Friday the

minister is meeting….

Mr.

Speaker: Order, please. Order, please, hon. member. It's time for the

question now, please.

J. Kwan:

Here's the question. On Friday the minister is meeting with the B.C. Coalition

of Women's Centres. Will she use that opportunity to restore every dime she's

cut to women's centres in British Columbia?

Hon. I.

Chong: Just so that the members opposite can hear this once again, we are

providing funding of over $33 million annually for direct essential services to

women. That will continue, and that will be maintained.

I just want

the members to know that I have heard from women, and what is important to them

are jobs — jobs for their children, jobs so that their children can return

back to this province. We said what we would do when we were elected. We would

revitalize our economy. We would get our fiscal house in order. We would protect

health care and education budgets. We've done that so families and women can

succeed.

SUMAS ENERGY 2 PROJECT

Penner: It's been about five years since the member for Abbotsford–Mount

Lehman first got up in this House and asked a question about a proposal by SE2

to build a project that would seriously jeopardize the air quality in the Fraser

Valley. What a long five years it's been.

Last

Thursday the National Energy Board ruled unanimously against the application by

SE2 to build power lines into the Fraser Valley in order to facilitate their

power plant. Can the Premier tell us how much the province has spent on this

project to date and what the next actions are that we can anticipate?

Hon. G.

Campbell: Let me first start by congratulating the people of the Fraser

Valley communities who stood up and fought this from the word go. Let me say it

was because of the leadership of their local representatives, of their MLAs,

that we were able to move forward on this.

The

government committed to help and intervene and try to stop SE2. Almost a million

dollars has been spent on that already. We have intervened with the National

Energy Board, with Washington State. We also intervened — as you know, Mr.

Speaker — with the USEPA.

What's

important to know is that this is not done until it's done. I will be sending a

letter to the Prime Minister encouraging him to continue to reinforce the

decision of the National Energy Board. I can tell you that in terms of British

Columbia, we are going to continue to work to maintain and improve the quality

of air in the Fraser Valley.

CLOSING OF CRYSTAL GARDEN

CONSERVATION CENTRE

J. Bray:

Recently the Provincial Capital Commission, a Crown corporation, announced that

it was ceasing operations at the Crystal Garden here in downtown Victoria. Since

that announcement I've heard from many constituents concerned both with the

attraction that was happening in the Crystal Garden and with the building

itself, which is a longtime heritage building in the capital region that has

become synonymous with Victoria.

My question

is to the Minister of Community, Aboriginal and Women's Services — if he could

let me know what the plans are for this building and its protection in the

future.

Hon. M.

Coell: As a former member of the PCC, I understand how important the Crystal

Garden is to the greater Victoria area. Indeed, it's important to the entire

province.

With a new

mandate and community members from around the province, the PCC is looking to

expand the role of the Crystal Garden in the capital region and the province.

They're going out to an RFP to see what people from around the province think

could be done with the building. The building will not close. It will have an

expanded use within the province, and I look forward to working with them in

their RFP.

[1435]

VICTIMLINK CRISIS LINE

Krueger: My question is to the Solicitor General. Last year this government

introduced a new program called VictimLink for victims of family and sexual

violence. There was some consternation in the city of Kamloops where there was

an excellent volunteer crisis line, although they were encouraged to bid on the

opportunity to provide the provincewide service. But also, there was hope in the

heartland communities that I represent, where people are very often far from

that

[ Page 9174 ]

kind of professional help when they need it and there are great distances

involved.

I wonder if

the Solicitor General could report to the House on the progress of VictimLink

and the effect it's having in the heartlands.

Hon. R.

Coleman: For the member's information, from April 1 of last year through to

the end of February, there were 9,600 calls taken at VictimLink with regard to a

whole variety of issues. I want to give you an example of the month of December,

because if I give you a month, it will give you a snapshot.

VictimLink

received 769 calls in December of 2003 from over 90 B.C. communities. A number

of them were actually callers from isolated and rural communities that before

had no access whatsoever to any type of victim services or emergency services

with regard to this. Thirty percent of those callers were victims of family and

sexual violence. What happened? VictimLink staff have made 867 referrals with

regard to that one month of the system to 48 different types of service

providers in the province. As you remember, we expanded the police-based victims

programs and we expanded the community-based victims programs so that we'd be

there for small communities when they needed it.

Actually,

the referrals went to police- and community-based service victims programs, the

crime victim assistance program, counselling agencies, transition houses, and

various justice, legal and community resources. We are now expanding some of our

literature to take in more languages. Mr. Speaker, I am very proud of the fact

that VictimLink is providing services and contact for victims all over the

province of British Columbia.

[End of

question period.]

Orders of the Day

Hon. G.

Plant: I call Committee of Supply in this chamber. For the benefit of

members, we'll be debating the estimates of the Ministry of Health Services.

Committee A, I believe that the debates of Community, Aboriginal and Women's

Services are underway.

[1440]

Committee of Supply

The House

in Committee of Supply B; J. Weisbeck in the chair.

The

committee met at 2:43 p.m.

ESTIMATES: MINISTRY OF

HEALTH SERVICES

(continued)

vote 25: ministry operations, $10,404,260,000 (continued) .

MacPhail: When my colleague the member for Vancouver–Mount Pleasant left

off with her questions around Mount St. Joseph Hospital and its future, the

minister was going to provide some information. I wonder if he's had a chance to

get that information.

Hon. C.

Hansen: There were several pieces of information that I endeavoured to get

back to the member with. I will try to go through those.

[1445]

First of

all, with regard to utilization rates at Mount St. Joseph, this is the number of

gynecological services provided at Mount St. Joseph Hospital on an in-patient

and day care surgery basis over the past three years. In 2000-01 there were 391

in-patients and 790 day surgery patients for a total of 1,181. In 2001-02 there

were 371 in-patients and 811 day surgery patients for a total of 1,182. In

2002-03 there were 428 in-patients and 827 day surgery patients for a total of

1,255.

The other

question that was asked of me was with regard to a…. Actually, maybe the

easiest thing is if I read this into the record for the member's benefit.

"In

April of 2002, Providence Health Care gave Children's and Women's Health

Centre one year's notice to end the existing lease of space at Mount St.

Joseph Hospital. The space and operating-room time were required by Mount St.

Joseph to implement their future redevelopment to fulfil their new role within

the Vancouver coastal health authority.

"Transitional

plans were developed, including strategies for C and W to determine the best

way to continue to meet the needs of affected patients and staff from the

closure of Mount St. Joseph children's centre. About 65 percent of the

patients seen at the children's centre were from Vancouver, and the remainder

from the rest of the lower mainland. Most required secondary-level pediatric

care in that they were not too sick to be managed from home. The majority, 90

to 95 percent of these patients, were admitted to the children's centre from C

and W emergency room.

"In-patient

services — ten to 16 beds — have been accommodated in existing space on

the third floor of the B.C. Children's Hospital. For the immediate future the

day care surgeries previously done at Mount St. Joseph children's centre are

taking place at B.C. Children's Hospital. However, B.C. Children's Hospital

and Vancouver coastal health authority are looking at the overall need for

pediatric services within the Vancouver coastal health authority. This

includes services most appropriately provided at B.C. Children's Hospital and

services that might best be provided and located at other hospitals —

specifically Richmond and Lions Gate.

"Since

the closure on April 15, 2003, B.C. Children's Hospital has partnered with the

Vancouver coastal health authority to re-establish the weekly newcomer

pediatric clinic at Vancouver coastal health authority's Raven Song Community

Health Centre, serving the same neighbourhoods as Mount St. Joseph Hospital.

The asthma education service has also been re-established at B.C. Children's

under the auspices of the emergency department and appropriate pediatric

clinics."

The third

one I have with me at this point is with regard to diabetes programs.

"The

changes at Mount St. Joseph Hospital are being undertaken with the context of

a larger consolidation of

[ Page 9175 ]

acute care services within the Vancouver coastal health

authority. Mount St. Joseph is receiving a number of new programs and services

as mentioned last week, including an ambulatory program, consolidated

ophthalmology program, more geriatric, psychiatric and geriatric medicine

services and more ER doctors and operating rooms.

"The

diabetes education centre at Mount St. Joseph provides support and services to

the Punjabi and Chinese communities. The centre has not closed, and there is

no plan to reduce this service. The diabetes education centre will be aligned

and integrated with the new multiple ambulatory program at Mount St. Joseph.

This integration will strengthen the menu of services available to

patients."

[1450]

MacPhail: The opposition was informed this morning that the court date for

the dispute between the Mount St. Joseph Hospital Foundation and the Providence

health authority or — I'm sorry; if the minister can tell me how to say that

properly when he stands up next — the Providence governance body is postponed

until March 24. I'm wondering whether the minister has thought about how he

can…. I know he made a commitment to my colleague that if it remains

unresolved, he will assist toward resolution. Given the fact that the court case

has now been delayed or postponed for about two weeks, what opportunity is

there, if any, for the deputy minister or the executive of the Health ministry

to intervene and assist toward resolution?

Hon. C.

Hansen: I think, as we discussed on Thursday, this is an issue that is

between two not-for-profit organizations. The Mount St. Joseph Hospital

Foundation is totally arm's length from government. I had indicated at one point

that I would inquire to see, given that it was before the courts, what role I

could potentially play or what the limitations may be on my role as a result. We

will certainly explore that.

understanding initially, as I mentioned on Thursday, was that the issue had been

resolved short of going to court, and then it was actually the member for

Vancouver–Mount Pleasant who advised me on Thursday that in fact it was going

to court. I had not been keeping track of it because, as I say, it is arm's

length from government. I will certainly explore with the deputy minister if

there is in fact a role that I or my ministry can play.

MacPhail: There's opportunity now because of the postponement of the court.

The postponement had nothing to do with either of the parties; it was a court

postponement. The issues still remain very, very current and very troubling, at

least to the foundation side. We urge the government and we urge the Minister of

Health to now get involved and try to stop this very, very troubling dispute.

I want to

start by discussing an area that I had a bit of a discussion with the Minister

of Finance on, and that was the Abbotsford Hospital and Cancer Centre. It was in

his estimates, the Ministry of Finance estimates, under discussion around the

role that the B.C. partnerships organization plays. It took a bit of

questioning. It took quite a bit of prodding for him to…. Well, where the

minister first started…. I'm not going to try to spin this at all. The

minister first started by saying no, the health authority or the province owns

the assets — both the building and the equipment. Then upon further prodding,

it became clear that the assets would be owned at the end of, I think, about a

30-year period.

Could the

minister tell me: what are the financial arrangements that the health authority

has made to pay the mortgage on this 30-year…? What I understand is that the

successful bidder, after they have designed and built and bought the equipment

and operate the hospital, will have a 30-year contract with the health

authority, at which time the health authority pays them not only for the

services provided but the equivalent of what I like to call a mortgage payment

for the building and for the about $60 million worth of equipment. How does that

get budgeted?

[1455]

Hon. C.

Hansen: The annual tariff, which is what includes all of the items the

member referred to, is in the bid documents at a rate of $39.7 million a year.

That amount will be part of the operating budgets of the two health authorities

involved.

MacPhail: I'm correct, I believe, about it being a 30-year contract under

the bid document? The minister is nodding yes.

We have a

situation where…. Forty times 30 is about $1.2 billion, I think, if I've got

my zeros right. It's $1.2 billion in current dollars. The hospital itself, I

understand, is…. The bid now is for $300 million. The Minister of Finance sent

me…. I asked what analysis has been done to compare this to if it were a

completely public sector deal, both financing and operating, and he said there

was a sort of test one can do — public sector versus private sector — and

that's part of any bid process. I actually went and looked for that in terms of

what it would mean for us to do our analysis, and of course it's not available.

It's just simply not available.

I wonder

whether the minister could tell us: what is his assessment? What studies has he

done — or the health authorities — to show that this model, which I'm going

to explore even further, is a better model than straight public financing,

public delivery?

Hon. C.

Hansen: Certainly, officials from my ministry have been involved with the

work that's been done by Partnerships B.C. to make sure that we as the

client…. In fact, the health authorities are the client to Partnerships B.C.

with regard to this particular file, but obviously that accountability is

through the Ministry of Health Services. We have worked closely with them.

Partnerships B.C. has in fact been leading that evaluation.

I'm sure

the information the Finance minister provided the member during Finance

estimates is probably more enlightening around that process than I can

[ Page 9176 ]

be, but I will share with the member how we evaluate the public versus the

private sector — as best we can try to compare apples and apples. I will read

you this particular section.

"The

evaluation will be focusing on the following: evaluation of the proposal

against the RFP to determine how well they have met the specific requirements

and to ensure nothing has been missed; assessment of value for money against

the public sector comparator; full multicriteria analysis that examines

clinical operations, efficiency and design; facilities management services and

human resources; construction, partnering and team integration; risk transfer;

and commercial considerations."

[1500]

All of the

above are set out in greater detail within the RFP document, which is appendix 2

of that document. That is, in fact, a public document that is up on our website.

I think if

you look at this annual tariff of just under $40 million that I referred to, it

is broken down into both…. There is a capital component to it, but there's

also a facilities management component to it. What that $40 million covers,

first of all, is the amortization of the construction costs that the private

sector partner will have to incur, but also the ongoing facilities management of

the building to supply all of the support services into that building. The

clinical operations will be directly provided by the health authorities with

staff engaged by the health authorities. In essence, the clinical spaces will be

run directly by the health authority within this larger facility that will be

owned — or will be managed — by the partner during that 30-year term.

MacPhail: Well, in effect, the minister didn't misspeak. It will also be

owned by the partner as well, until the 30-year payment is made, just the same

way the bank owns the houses of people who have a mortgage. It will be owned by

the partner until the contract is concluded.

Now,

Partnerships B.C. said there was only one bidder left, and I think the bid will

be accepted or rejected next month, as I recall him saying. If one has only one

bid left and that bid doesn't meet the test for the government, it seems to me

that the government has two options: to start negotiating with the one proponent

left, or to start over again and either issue a new request for proposal or

decide to build the hospital in the public sector. What is the backup plan if

this one bidder who is left doesn't meet the test?

Hon. C.

Hansen This has been a process that started out with four proponents that

Partnerships B.C. was working with. The intention at the start was to go from

four proponents to two and then work with those two proponents to determine a

final company. The two proponents, as part of the process, had to put up a

$250,000 non-refundable bond. It had to be determined that they could, in fact,

meet the hurdles that were there. We're now down to one company, and they have

certainly not given us any reason to believe they will not be able to meet the

hurdles that are set out in the process. We're optimistic that we will be able

to arrive at a successful process and a successful partnership at the end. We

are proceeding on that basis. If something were to come up, we would cross that

bridge when we come to it, but we certainly have no reason to believe we will

not be able to arrive at a successful contract.

MacPhail: There are all sorts of ways one can achieve success. My

understanding — and I think this is what the Minister of Finance told me —

is that two bidders dropped out, and then the third one…. It is not like the

ministry had control over saying: "Oh well. We've got four bids, and now we

select these two." Two bidders dropped out, and the third couldn't meet or

chose not to — I'm sorry; I don't mean to besmirch their reputation — file

the quarter-million-dollar bond.

[1505]

This hasn't

been a process that's been nice and orderly, that's been going along according

to what the ministry wants. In fact, it's exactly the opposite. They had four

bidders. Now they've only got one left, through no great work of the health

authority or the ministry. Yes, I'm sure there will be a successful contract if

the government enters into negotiations and has no choice but to negotiate with

the one proponent, the one bidder, left.

At that

point I would say that there are two ways to operate. One can say: "No,

we're not going to accept what the bidder wants." Or you're so desperate

and you have no other options, so then you have to accept what the bidder wants

to negotiate. The bidder seems to me to have the upper hand on that point,

unless there is a plan B the government has in mind that doesn't make them

beholden to the bidder. That's what I'm asking.

Look. I

understand that this is a situation where there are commercial interests here,

where there are negotiations going on — and they're delicate — but I don't

think it is against the public interest for the minister to at least say that

there is a plan B. I mean, that gives strength to the negotiations with the

bidder as well.

Hon. C.

Hansen: This is not a case of us going out and buying a bunch of supplies

and saying, you know, that whichever company can give us the lowest price is the

one we're going to go with, and then suddenly we're down to only one company

providing a bid. That's not the case at all.

This is a

case where we have gone out with a very, very detailed request for proposal. It

is on our website. It is a substantive document that sets out all of the

attributes of this new facility that must be provided by the private sector

partner. We also, in that, state the price we're prepared to pay for that.

The member

is right. We went through a process, starting with four. We actually thought we

would come to a point where we would have to eliminate two of the proponents. In

fact, they eliminated themselves, because they felt they couldn't meet what was

set out. We then went into a process where two companies put up the bond, the

moneys. Again, one of those compa-

[ Page 9177 ]

nies has now determined they cannot provide everything that needs to be

provided at the price we're prepared to pay for it.

The fact of

the matter is that one of the proponents has indicated to us that they're going

to be able to meet all of these provisions for this first-class hospital,

state-of-the-art facility — considerably expanded scope from where we started

on this process three years ago. They have certainly not expressed to us any

concerns with regard to the tariff we're prepared to pay for them to provide

these services. We are proceeding with the full expectation that this is going

to be a successful process and that the residents of eastern Fraser Valley are

going to wind up with a first-class hospital around the end of 2007.

MacPhail: Well, that's more information than the Finance minister was able

to give. Perhaps the minister could tell me how he knows things are going along

smoothly. What's happening inside the one bid that's left? What's happening

between the management of this on the government side and the bidder?

Hon. C.

Hansen: The project team that has been engaged to oversee this process is

working with the proponent. Essentially, they're sorting out the details, and

that will eventually lead to the contractual arrangements.

MacPhail: That's my point, though — sorting out the details. This is more

than $1.2 billion of tax money in today's dollars — $1.2 billion — so

sorting out the details is pretty important. How does one sort out the details

when one has only one bidder? What does the government have in its pocket for

negotiations? That's what I'm asking.

[1510]

Hon. C.

Hansen: What we've got is an RFP that's been put out. It's about 1,600

pages. It's a public document. The bidder has to be able to respond to the

details in there. We've left lots of room for the private sector partner to

bring innovation to the table, to determine the ways that they're going to avoid

the kind of cost overruns we saw over the last decade in typical hospital

construction.

There are

big savings to the taxpayer by taking this particular approach. I'm quite

confident that we're going to wind up with a very successful process. I think

we're well on the way now. We have set out what we need, and we have set out how

much we're prepared to pay for it. The private sector partner is responding to

that.

MacPhail: The minister himself brought up cost overruns. Let's look at cost

overruns. The one cost overrun I'm familiar with in the last decade was at the

Royal Jubilee, where it increased substantially in the scope. The scope

increased much more substantially than did the cost overrun.

Let's look

at this project. This project is going to increase by about 15 percent from the

original bid. Here's what the costs have gone up to. The project cost estimate

has gone up 94 percent to $1.4 billion. Yes, this is from the two auditors that

did the work on this project for the Hospital Employees Union. Yes, they are a

special interest. However, the government hasn't refuted any of these figures.

When I asked the Minister of Finance, he didn't refute any of these figures,

although he did say that the scope of the project has increased by about 15

percent.

Total

project cost has risen by 94 percent to $1.4 billion from $720 million over the

33 years of the contract. Construction figures have increased from $210 million

to $286 million. Annual lease payments to the private consortium have increased

from $20 million a year to $39.7 million a year for 30 years. These are the

figures from the original proposal put forward by this government. No, this is

all within their own little realm — no going back and blaming anyone else.

Then

there's a payout of $393 million to the private consortium. That's over and

above the $1 billion in expenses and debt servicing that goes to the private

consortium. That's all on the basis of a 15 percent increase in scope. What

happened between year 1 and year 3 of this RFP process?

Hon. C.

Hansen: I've got the Hansard from the Finance estimates. When the

member says this project has increased in scope by only 15 percent, she may be

referring only to the amount of square footage. In terms of overall space,

that's the increase that amounts to 15 percent.

The overall

scope of the project is actually quite a bit more considerable than just looking

at the square footage. For example, there is a 25 percent larger emergency area

to accommodate larger room sizes and more waiting space. There are more

stringent infection control measures. I think one of the lessons we learned from

last year's SARS outbreak was the need to incorporate a lot more in terms of

infection control. There are more than 100 rooms in the hospital that will be

set up as negative pressure isolation rooms. That was not part of the original

design.

The cardiac

care unit and intensive care unit, originally planned to be a combined unit, are

now going to be two separate units. A child rehabilitation space has been added.

There is more advanced technology that will be brought in, including

teleconference and video conferencing facilities, to allow more telehealth

opportunities there. There are plans now for a second CT scan procedure room to

be added and a PET suite for future use. There is a whole series — I could

read these all out; it goes on for a couple of pages here — in terms of the

expanded scope being added to this particular project.

[1515]

It's not

just a case of a 15 percent increase. It actually is a significant change over

what had been originally envisioned for this particular facility.

I think

what's important is that what is being provided for is still within the $39.7

million fixed tariff. We have set clearly how much we are prepared to pay for

[ Page 9178 ]

this facility in terms of both the amortization and the annual operating of

this facility for the next 30 years.

MacPhail: No, the tariff itself has doubled as well, almost. This project

morphed into this project, and then the tariff was set as $39.7 million. That

wasn't the original tariff. Let's be clear.

I think we

need some straight facts around this Abbotsford hospital. It's the only one in

Canada that's being done this way. The Minister of Finance referred to two

hospitals being done in a similar fashion in Ontario, but those two projects

have changed substantially since the election of that Liberal government from

the previous Tory government. This is a stand-alone model.

The

Minister of Finance referred me to examples in Australia. The Australian

examples that I went on line to find out about…. In fact, one of the lobbyists

working for this consortium actually did research on the Australian models.

Those hospitals have gone bankrupt. They've actually gone bankrupt. This is a

huge project — huge. All we're trying to do is find out some details.

All right.

If I'm wrong on the 15 percent expansion of scope, what is the scope expansion

since the original proposal?

Hon. C.

Hansen: If she'd like, I can read you through all three pages. The square

footage of the building has expanded by 15 percent. That's where she gets that

number from, because the Finance minister used that in his estimates. As I've

indicated from the examples I've read out, when we talk about what's going into

that building in terms of equipment and technology, there is a significant

expansion.

The $39.7

million tariff that we discussed has not changed from before this expansion of

scope. The $39.7 million was what it was projected to cost prior to this. What

they realized is that they could actually do more for the tariff that had been

set out. That is what is reflected in this expansion of scope, which we

announced in September of last year.

MacPhail: Is the minister saying the tariff has been $39.7 million since day

one of this P3 project?

[1520]

Hon. C.

Hansen: It is my understanding there was some change in the tariff to

reflect additional facilities management services that were being asked of the

proponent. The actual change in the scope that I talked about…. Those did not

result in an increase in the annual tariff.

MacPhail: What's the ministry's projection of the profit, or excess money

over costs, that the proponent will have over the course of the 30 years?

Hon. C.

Hansen: That's basically up to the private sector proponent. The private

sector proponent has to supply the services we have outlined, and they have to

do it within the tariff that we are providing. Obviously, they have to run their

affairs in a way that can bring in the innovations and efficiencies. It is out

of that that they will be able to determine what their profit level would be. We

certainly aren't guaranteeing them any kind of a fixed profit.

MacPhail: Well, whoa. I'm a little bit troubled by that. I can go and buy a

set of dishes at a store, knowing that the set of dishes meets my needs,

provides the service, but I may be paying a horribly high price for them in

terms of quality, durability and warranty against breakage. Surely this

government didn't say: "Oh, we've got $39.7 million per year that we want

to give away to operate this hospital." Surely they must have some idea of

what the profit is.

Is the

minister suggesting that he doesn't have a clue what the profit margin is, based

on the RFP and the payments he is going to make to this hospital? What if the

profit margin is 20 percent? Wouldn't taxpayers be horrified?

Hon. C.

Hansen: In the RFP documents that we've set out, in these 1,600-plus pages,

are the deliverables. That quality assurance is there, so we will have a

first-class hospital, a first-class provision of publicly funded health care

services in that facility. It is the private sector partner who, through their

innovations, has to be able to deliver on that first-class service and meet the

quality requirements that are there. Only then will they be able to realize some

of the profits that they obviously wish to.

I think the

fact that we have gone through a process with four proponents and the fact that

some of them have taken themselves out of the process probably indicates that

they felt there was not an adequate profit margin in there for them. Now we have

a proponent who is working within the RFP. They have certainly led us to believe

they can deliver not only on the number of services that are requested but also

on the quality of services set out in those agreements. We are confident we can

conclude a contract with this organization.

MacPhail: Based on this, I'm sure the bidder is thrilled that this

government has no idea what kind of profit is available with the payment — an

annual payment of $39.7 million. They're probably rubbing their hands with glee

now, being the only bidder and knowing that the province is willing to pay $39.7

million regardless and has no idea how much of our tax dollars will go into the

hands or into the pockets of the proponent or not.

What does

the RFP mean when it asks the bidders to search for opportunities "to

enhance the value of the project through entrepreneurial development

strategies"? What does that mean? Those are the government's words. That's

the government's words.

[1525]

Hon. C.

Hansen: Just to give some examples, that may be some retail functions that

may be off the lobby.

[ Page 9179 ]

It may be in the way that they can run their parking lot facility. It may be

in terms of even, say, a coffee franchise that may be interested in having an

outlet in this particular site.

I also want

to come back to something the member said earlier about the comparisons to the

Ontario models. The big change that happened in Ontario in the last couple of

months in their projects was to go from a facility that would be owned by the

private sector partners and only revert to public ownership at the end of the

term of the contract. What the Ontario government did is changed it so that in

fact the province would own the facility from the time it is being constructed,

and that is exactly the model that we have here in British Columbia. When we

start looking at it, what Ontario has done is change the nature of its project

to bring it in line with the direction we were already heading with Abbotsford.

MacPhail: Let's just test that model, because that's what the Finance

minister said, too, in terms of…. Here we are. We have a company, a

profit-oriented company — only one left, a big consortium. All these people

who are part of that consortium are big profit-makers. They're going to build

the hospital. They're going to design it, build it, operate it, and the

government owns it? Are they donating it to the government? The government is

paying $39.7 million per year, a portion of which, I assume, pays down the debt

servicing and capital costs. But the government doesn't own that hospital until

the contract is completed. Or am I wrong? Is this consortium doing charitable

work and donating to the taxpayers?

Hon. C.

Hansen: The health authorities will own this project. They will own the

facility for which there is debt that is carried on the books of the health

authorities right from day one. The annual tariff to the private sector partner

will basically pay down that debt and provide for the operations of the facility

in terms of the support services to the facility throughout that 30-year

contract. It is only at the end of the 30 years that basically the debt has been

paid off through this annual tariff. At that point the health authorities will

have the opportunity either to renegotiate a new operating agreement for that

facility or, in fact, to operate it themselves directly, but they will own the

facility right from day one.

MacPhail: I find that hard to believe. I find that real hard to believe. How

does it get booked under generally accepted accounting principles?

Hon. C.

Hansen: I know the member was there for the Finance estimates, but I'll just

read one of the comments made by the Finance minister. He says: "It appears

as an asset and a liability on our books because of the consolidation of the

entity." It is a capital asset. It appears as our long-term debt.

I know

there are some people who've said that the reason we were going the P3 route in

Abbotsford was in order to keep this debt off our books. That's not the case.

The debt will become part of the consolidated financial statements of the

province.

[1530]

MacPhail: If the health authorities miss a payment, what happens?

Hon. C.

Hansen: The health authorities will have an obligation to pay those, so

there is not really an opportunity for the health authorities to miss a payment,

as the member says. We fund the health authorities from this budget that we are

debating today, and there is really no opportunity for them to avoid their

financial responsibilities.

MacPhail: I'm just trying to figure out: if from day one the health

authorities own this, as the government likes to make out, what's the obligation

for them to make their payments? The government is really misleading on this. If

they're trying to say that this is exactly the same as the public sector model

where the government borrows the money and therefore gets to book it as a

government-owned asset from day one, and the only liability is the operating

cost…. That's not what this model is at all. There is an obligation…. Let me

ask this: is there no relationship between ownership and the tariff payment?

[K. Stewart in

the chair.]

Hon. C.

Hansen: The obligation is a result of the contract that will be signed. If

the health authority were to renege on their obligations under that contract,

that would have huge ramifications in terms of financial markets and

implications for that health authority and indeed for government.

I think the

member earlier on in this debate made reference to the fact that for some reason

this was like a mortgage on our house, and if we have a mortgage on our house,

we don't really own our house. It's the bank that owns it, because they're

holding the mortgage. If you want to look at your own home ownership from that

perspective, then maybe there are parallels with this one. The private sector

partnership is in fact financing this project. They will amortize their debt,

but just as I have a mortgage on my home in Dunbar and the bank owns a pretty

big chunk of it because of the mortgage, I still consider myself to own that….

It's actually my wife who owns the home, but I certainly consider her to own

that property, and so does city hall.

MacPhail: Let me tell the minister what the difference is between that kind

of analysis — which I agree with, by the way — and what happens when the

public coffers build a hospital. The minister is exactly correct that this is a

mortgage to a private operator, and the taxpayers do not own this hospital until

that mortgage is paid off. They simply cannot possibly have title or deed until

that mortgage is paid off. Otherwise

[ Page 9180 ]

it is charity for some profitable organizations, and I don't think Ledcor is

providing charity to our government. I think I remember Ledcor as being part of

this consortium.

Just the

same way that those who have mortgages…. They do not own their house until

they've paid the bank off. The bank owns it. Yes, the bank owns whatever the

mortgage is in the house. That's why when people default, they lose their

houses. Maybe it doesn't happen that often on the west side. But that's the

principle. You got a mortgage, you don't pay your mortgage for long enough, the

bank repossesses the house, and you don't own it. That's what this is. What's

the difference about the public sector, about taxpayers building hospitals?

[1535]

Up until

this government's tenure here, taxpayers would fund the debt of the hospital —

taxpayers' money. The government would borrow money on the public credit, so the

government was the owner, and the people who serviced the debt are the

taxpayers. They never had to worry if a hospital couldn't make its payment. They

didn't have to worry about being at default and losing the hospital, because the

public was the owner of it in the first place. That is not the case in this

hospital. The public does not own it from day one. If indeed the minister is

trying to say that there is no difference, then what the heck are we doing this

for in the first place and giving what others have predicted as a $300 million

profit to the builders?

Hon. C.

Hansen: First of all, the member is wrong. We will have title to this

building from the day that the foundations are first laid. It is the public

sector that will own this facility. I also think the member is wrong in the way

she characterizes a house mortgage. You may have a mortgage on your house….

Interjections.

The

Chair: Members, through the Chair, please.

Hon. C.

Hansen: If you buy a piece of real estate, you will have title to that

property. Then, if you default on your mortgage, there are ramifications in

terms of foreclosure. But I would suggest to the member that she check with her

bank manager with regard to who actually owns title to a private residence.

What this

arrangement does is…. The benefit it brings to the taxpayer is around

innovation. It is in the best interests of the private sector consortium to

bring the kinds of innovation to this project that will in turn drive costs

down. The risk, instead of being incurred by the public sector, is in fact

incurred by the private sector because at the end of the day they have to

deliver this building, and they have to deliver all of the support services

provided in this building within that fixed envelope of the tariff we discussed

earlier.

MacPhail: Well, wow. I can't believe there are not more consortia running to

bid on this project. It's such a good deal — not. Not for a moment do I accept

the characterization of this government in terms of who owns it. If indeed the

government gets title from day one, then Ledcor and that consortium sure are

silly. They're not very good business people. Why the heck would there be any

obligation whatsoever for the government to maintain its side of the contract?

Where are the risks, then? Who assumes the risk? What happens if the consortium

goes bankrupt?

Hon. C.

Hansen: I do want to clarify for the member who the corporate partners are

in this. It's referred to as Access Health Abbotsford, and it is a joint venture

of Brookfield LePage Johnson Controls, PCL Construction Group Inc. and ABN AMRO

Bank N.V. Canada branch. They are the partners to the consortium. If the private

sector partner, the consortium, defaults on their obligation, then the project

defaults to government. Certainly, in the contract that is put in place, and

already set out in the RFP, are the protections for the taxpayer should the

private sector partner at any stage during the 30 years not be able to deliver

on their side of their obligations.

[1540]

MacPhail: Thank you to the minister for clarifying the partners. I'm sorry.

My apologies to Ledcor. It's PCL. Thank you for that clarification.

There have

been examples. I know of two substantial examples. One is in Britain where

privatized energy companies went bankrupt. They were publicly owned energy

companies, and then they went bankrupt. That energy company actually owned

privatized energy operations in Ontario. I think it was a nuclear plant that

they owned. All of a sudden when that consortium went bankrupt, the future of

the assets run by that company in Ontario was at risk — one for operation or

one for quick sale, so that the British-owned company could pay off its debt and

get out of bankruptcy.

The other

example I know of is one we raised in estimates with the Minister of Education,

where the school board in Philadelphia…. The services, the schools and the

books are owned by a private operator. That private operator was at huge

financial risk with the collapse of the stock market at some point and had to

sell off its assets in that school, including books and computers, etc., in

order to get itself out of financial trouble. What is in the RFP to prevent the

consortium from using its asset — what I predict will be its asset — to

manage financial risks occurring elsewhere?

Hon. C.

Hansen: The bottom line is because we have the title, that gives us that

protection. What the company will have as their asset is in fact a contract that

provides for an annual tariff that would be paid to the company. If they default

on any aspect of their contractual obligations, then basically the terms of the

contract will dictate the protection that's there for the taxpayer.

One of the

things we're putting first and foremost, as we go through the negotiating

process and put these

[ Page 9181 ]

business arrangements in place, is to make sure that the interests of

patients get put number one. We are looking at all eventualities in terms of

what could happen and what happens if the company were not to remain financially

viable. Throughout that, we are making sure the interests of the patients get

put as the paramount interests in this province, and that will be written into

the contracts.

I think

what the member is talking about actually underscores the value of

public-private partnerships, because it is the private sector consortium bearing

the risks involved here instead of the taxpayer. Let's transfer that future risk

from the taxpayer to the private sector consortium. I guess in any kind of an

arrangement around the world there is a possibility of financial viability

becoming an issue. Well, let's make sure it is the private sector that bears

that in this case, not the taxpayers of the province. Those protections are

being built into the agreements.

MacPhail: Okay, then. Let's just concede that the public owns the building.

The equipment inside — the public owns the $60 million worth of equipment

inside too?

Hon. C.

Hansen: As I understand it, all of the medical equipment will in fact be

owned by the health authorities and will be part of their debt. I think the

example that the Finance minister may have used in estimates…. I wasn't there;

the member was, so she may recall this. He said perhaps the floor polishers, for

example, may be owned by the consortium, not by the health authority. That was

one example I think he gave.

MacPhail: Then I assume the health authority can move that equipment

outside of that hospital whenever they wish, if they own it?

Hon. C.

Hansen: As I mentioned earlier, the clinical operations — the direct

provision of health care — will still be done by the health authority, and

equipment will be owned by the health authority. Unless there was some other

provision written into the contract, I think around…. There may be things like

HVAC systems, or whatever, that are part and parcel of the building that would

have some obligations to stay at a particular site. Certainly, when it comes to

the medical equipment being used in direct delivery of patient care, that's

owned by the health authority, and they would have the right to move that to

another facility.

MacPhail: I'm sorry. During the term of the contract they will have that

right?

Hon. C.

Hansen: Yes.

[1545]

MacPhail: Let me ask, then: if indeed the financier, the project co, the

consortium is providing all of the risk and owns nothing, what do they get out

of it?

Hon. C.

Hansen: What the private sector partner gets is the $39.7 million tariff per

year. On top of that they would get what other revenue sources they could get

from the site. We talked earlier about retail operations, for example, or coffee

outlets in the main lobby of the facility. Those would also be revenue

opportunities for the private sector partner.

MacPhail: Well, if project co, the consortium, doesn't own the building,

owns no assets and has to absorb all of the risk, do they not get any financing

guarantees whatsoever? Like, they're just subject? I'm getting a little shaky.

I'm concerned about this hospital being able to operate under the consortium

now. If they don't own anything and the government's not providing any financial

risk security for them whatsoever, how are they actually going to be able to

operate the hospital? How are we going to know it's going to be there, if it's

such a good deal for the public sector and there's nothing being given in the

way of profit or a security against financial risk to the consortium? How is it

that they'll be able to even make a go of this?

Hon. C.

Hansen: The member said: why would they do this if they don't have some

financial guarantees? Well, they do have financial guarantees. They have a

30-year contract to provide them $39.7 million a year. Within that, that's the

cash flow they will be able to count on from a government agency that has an

extremely high credit rating. That's what brings the private sector consortium

to the table.

MacPhail: The minister can't possibly tell me whether that $39.7 million is

a break-even proposition, whether there's a profit margin. Or he refuses to tell

me. With that lack of information about whether there's a profit margin built

into it or whether there's a financing risk built into it, I can't see any good

news for the proponent here whatsoever. Or does the minister have that

information that he can now share with me?

Hon. C.

Hansen: Just as the member went out and got a mortgage from the bank or the

credit union at a certain rate, I'm sure she didn't find out exactly what the

profit margin was that the bank was going to get off that particular mortgage.

We have gone out with an RFP that sets out the range of services that we expect

to have delivered, which will be delivered, under the terms of this project. We

have said we will provide a tariff of $39.7 million a year in exchange for that.

Obviously,

there are three companies that took a look at this and that figured, well, maybe

they couldn't make a profit out of that $39.7 million a year, and they have

decided not to pursue their opportunities. One consortium has indicated that

they believe this is financially viable, that they can make a profit as a result

of the innovations they can bring to the table and still deliver on the quality

service that is set out in the RFP.

I believe

that is a win-win for patients. It's a win-win for taxpayers and hopefully is a

win-win for the private sector partner as well.

[ Page 9182 ]

MacPhail: Well, sorry, Mr. Chair. I hate the fact that the minister keeps

bringing up mortgages and that kind of stuff. Yeah, most people who do have a

mortgage know exactly what the profit margin is built into the bank. That's why

they shop around. That's why they get different terms, different rates. They

know exactly when a good deal is a good deal, and they know what they can afford

based on what the interest charges are and how that's going to change. At least,

most families do that. This minister can't even tell me whether the $39.7

million is a good price to pay. He can't tell me. He just says: "Well,

that's the price we established, and I'm not going to tell you what's behind

that whatsoever."

The

minister is 100 percent behind this model — is he? — and he has the fullest

of confidence that it's going to go ahead according to the RFP — no changes.

[1550]

Hon. C.

Hansen: Yes, but I can also come back to the member's point. When she used

this example of shopping around for a mortgage, you don't shop around to find

out which credit union or which bank is going to take the lowest profit. You

shop around for the bank or the credit union that's going to give you the best

price. I think maybe the member is confusing those two aspects of it.

Yes, I am

very confident that we will have a private sector partner who will deliver the

quality services as set out in 1,600 pages of public RFP.

MacPhail: I wish the minister all the best — all the best. I also predict

he won't be able to deliver the way that he said. I predict that the consortium

will negotiate, that the consortium will come back, that there will be changes

requested by the consortium to the RFP and that that will mean changes for the

taxpayer.

Who's

leading the negotiations for the province?

Hon. C.

Hansen: Partnerships B.C.

MacPhail: What role does the health authority play in all of this, in the

negotiations that I predict will occur?

Hon. C.

Hansen: Partnerships B.C. is leading this process, and their client would be

the two health authorities that are involved.

MacPhail: Yes, I understand that. When the consortium comes back and asks

for changes or asks to negotiate the deal, who gets to sign off? Is it

Partnerships B.C. who says those changes are acceptable? Who at the health

authority or in the Health ministry is making those decisions?

Hon. C.

Hansen: I have signed off on the RFP that went forward with all of the

requirements in it. If there were to be any changes necessitated, I would have

to sign off on them. I am quite confident at this point that the private sector

partner is going to be able to deliver on the RFP as it was developed. As they

go through negotiations, it is the role of the health authorities and their

representatives that are part of the process to provide oversight and make sure

they're in fact going to get the clinical services and patient care services set

out in the RFP.

MacPhail: What's to negotiate? There is one consortium, one RFP. If it is a

slam dunk, what's to negotiate?

Hon. C.

Hansen: What the RFP sets out is what the outcomes are, what the

deliverables are that this private sector partner has to deliver in terms of the

physical space and all of the requirements that go with that. In terms of how

they get there, they can bring innovation to the table.

These are

companies that have worldwide experience. I think the member earlier talked

about some RFP projects around the world that may have been less than

successful. There are many more RFP projects around the world that are

successful, and we are learning from that. What these international players can

bring are innovations, looking at how health care can and will be delivered in

the year 2010 or 2012 — or 2020, for that matter — and bringing that

innovative approach. As they bring an approach as to how they're going to

deliver on the requirements, the health authorities then have to be confident

that in fact that is going to meet the needs and produce the desired patient

care results at the end of the day.

MacPhail: Could the minister name the exact hospitals — models —

elsewhere upon which they're basing their optimism? Just name the exact hospital

and the country.

[1555]

Hon. C.

Hansen: I don't have a list of specific facilities, but we certainly have

been working with some consultants who have looked at this from a worldwide

perspective. They have brought examples that help and that we can learn from. We

can also learn from the examples that had problems to make sure that we don't

duplicate those problems. The experience around the world is one where there

have been some problems, and we've learned from those. But there are certainly a

lot more projects that would be considered successful, and we're going to learn

from those experiences as well.

MacPhail: This is my second go and the second set of estimates where I have

asked for examples of success and have had zero names from either the Minister

of Finance or the Minister of Health. Yet they keep standing up and saying:

"Don't worry. There are successful models just like this, and that's who

we're modeling our project after." Then when you actually ask them:

"Oh, sorry, we don't have any names." It's because there aren't any, I

would suggest, except private

[ Page 9183 ]

hospitals in the United States that operate strictly for profit and do not

have universal access.

Now, the

minister had to eat his words — and I thought it was very good that he did eat

his words — around freedom of information and access and what that means with

their privatization operation of MSP services. It was to his credit that he said

he would investigate that, even though on day one he said that no bloody way

would the Americans have access to any information because of the privatization

of MSP services.

What

aspects of freedom-of-information law apply to this Abbotsford hospital project?

Hon. C.

Hansen: As I understand it, it is set out in the RFP documents that our

freedom-of-information law will apply to this private sector partner.

MacPhail: There is an aspect of the freedom-of-information law — a

commercial exemption — that if this hospital were being built in the public

sector, that commercial exemption wouldn't apply. Under freedom of information,

government clients can exempt certain information because of the competition of

a private sector bidder. That would not occur if this hospital were being built

in the public sector. Does that exemption, in allowing information to be deleted

because the proponent is private sector and commercial — not private sector

and public, but private sector and commercial…? Will that information be

exempted from freedom-of-information laws?

[1600]

Hon. C.

Hansen: This particular contract is going to be a contract between a

supplier — this private sector consortium that's going to supply the

construction of a building and the facility operations…. We have all kinds of

contracts in place between the health sector and the private sector today. Yes,

if there is a contract in place for the supply of goods and services — let's

say between Vancouver Hospital and a private sector supplier — that

information is also available through freedom of information, and there is the

provision to hold back information that may be of a commercially sensitive

nature. This would be the same in that regard. Ultimately, as is set out in the

act, there's an opportunity to appeal any decisions to the

freedom-of-information commissioner in this province, and those will all be

considered under the existing framework of the act.

MacPhail: Yes, but if the government is saying that this is a private

operator with commercially sensitive information, the freedom-of-information

commissioner has to rule according to the law, and there are different

exemptions for that kind of information than for publicly offered services.

Let me ask

the minister this, just as an example. It's a little bit off topic, but I'm

concluding my questions around Abbotsford hospital before I move on to lab

reform, if the minister needs an indication of what I want to discuss next. Has

the minister's staff, the ministry or the health authorities received

freedom-of-information requests from newly contracted-out services that the

ministry must treat in a different manner than before the services were

contracted out?

Hon. C.

Hansen: Certainly, the same law would apply previously as applies now. In

that respect, the act has not changed in its applicability. The act will set out

what information needs to be provided. From the ministry's perspective, we make

sure we abide by the law.

MacPhail: Okay, let me try to clarify my question. The

freedom-of-information law treats commercially sensitive information differently

than information solely within the public domain. If — and I just use this as

a hypothetical — laundry services at VGH are totally within the public domain,

a person has the right to apply under the freedom-of-information law and get all

the information about that laundry service, and there's no exemption for it.

I'm asking

the minister, and I don't know whether…. If there's a contracted laundry

service, a privatized laundry service, that is now providing a service that used

to be in the public domain, do freedom-of-information requests about any nature

of that operation get treated any differently? Is it subject to exemptions based

on commercially sensitive information? That's my question.

Hon. C.

Hansen: We don't have a specific answer to the member's question. It's a

good question. I know that the branch within the ministry that handles all the

freedom-of-information requests that come in follows the act very closely and

makes sure it's abided by. The fact that one involves a commercial partner and

the other example may be two public sector partners…. Certainly, it will be

handled in the same way. Whether there is more information that may be blocked

in a commercial contract…. That may be the case, but I don't have that

information at my fingertips.

MacPhail: Well, I'm sure that over the course of the next couple of days we

can discuss that further, and the minister can get an answer for me. Thank you

very much.

My last

question around the Abbotsford hospital is this: what if there is a change in

demand at the Abbotsford hospital? What if there are closures of beds required

because of the per-population funding formula? What happens to the contract?

[1605]

Hon. C.

Hansen: First of all, there has been quite a lot of very good work done to

try to anticipate the demographic pressures. We know it's one of the

fastest-growing parts of the province, and we have tried to anticipate what

those demands will be not just for ten years but, indeed, over the 30-year span

of the project. Also written into the contract is the ability to change the

operational levels over a period of time. It's not

[ Page 9184 ]

something that sort of results in quick decisions or quick announcements.

It's something between the health authority and the private sector partner.

There is a provision that gets written into the agreement to allow for expansion

or contraction of services over time.

MacPhail: Who bears the risk on that?

Hon. C.

Hansen: Within the scope that is set out in the RFP, the risk is borne by

the private sector partner. If we decide to vary from that scope, then we would

have to negotiate that with the partner, but we are pretty confident that

there's been some good research and analysis done to determine the scope and to

anticipate the needs over the term of the contract.

MacPhail: I'm switching to lab reform now. Can the minister update me on lab

reform, please?

Hon. C.

Hansen: This an initiative that we embarked on — I guess it would be about

two years ago now — where we made it quite clear to those who are involved

with lab services in the province that we were looking at a process of lab

reform. If you look at all the provinces west of Quebec, I think we're the last

one to engage in this process of lab reform. There were a series of round-table

discussions with various stakeholder groups, including union representation,

private lab representation, some of the pathologists and health authorities.

They were all involved in those discussions over almost a one-and-a-half-year

period.

That

resulted in a report we released last summer. Along with the release of that

report, we announced that we were going to embark on a process to lead to a new

arrangement in providing lab services in the province. We felt that we were

paying considerably more than we should be paying for the services we were

getting, especially when you compare it to other provinces, where our total cost

of lab services is much higher than any other province in Canada.

initially indicated that we were going to reduce the fee-for-service around lab

fees. We had every indication that we could do that by order-in-council; at

least, that was the advice we received. When that was challenged in court, the

courts, on a technicality, indicated that we didn't have the necessary

legislative authority for that. We have now, first of all, filed an appeal, but

we are also looking at other options to ensure that the change can in fact be

implemented.

[1610]

We are now

proceeding on a process of lab reform to try to realize annual savings of about

$60 million a year in the short and medium term, and $25 million of that would

get reinvested into the lab system in terms of training, information

technologies and other services within the lab sector itself. The other $35

million we are allocating to patient-care cost pressures in other aspects.

We are now

working toward trying to, first of all, put in place some standardized clinical

approaches. We've established what's referred to as the provincial lab

coordinating office. Dr. David Pi, who is the director of clinical services

there, is working with all of the various players to try to make sure that our

clinical approach is standardized. We are also proceeding on an approach to a

new business model, which would allow for a competitive process to determine

which services should be provided through a private sector provider and which

should be provided through our public sector labs.

At the end

of the day, we want to make sure that the public get first-class lab services in

the province. We want to make sure that quality is enhanced and certainly not

compromised. We actually believe it can be enhanced through a standardization of

approach across the province. At the end of the day, we want not only that

quality of service, but we want to get utilization down so we avoid unnecessary

duplication of tests. We want to get all of that and get the most cost-effective

price for those services, whether it be in the public sector or the private

sector.

MacPhail: That was part of the announcement I think the government made

almost a year ago, August of '03 — okay?— so about eight months ago. What's

new? Dr. David Pi was heading up a committee eight months ago. What's been

happening? Who is on the committee? Who are they meeting with? Has the 20

percent cut been implemented? How is that going?

Hon. C.

Hansen: If the member goes back to look at the announcement we made last

August, what we indicated was that we were targeting to have this process

completed by October of 2005. It is an extremely complex process. Dr. Pi has set

up a whole series of committees to work with him. They've got a great website

that the provincial lab coordinating office has established. On that website he

lists all of the various committee members looking at various elements of this.

The last time I looked, I think there were certainly about 12 different

committees — I forget off the top of my head — with each having about 12

members from all sectors participating in some of the clinical work that Dr. Pi

is doing.

As far as

the 20 percent, what we had indicated initially was that as of September of last

year, we were going to reduce the fee structure by 8 percent. That was, in turn,

what was challenged before the courts. The court decision indicated we did not

have the legislative authority for the order-in-council that implemented that.

As a result of the court's decision, we have not been entitled to take that 8

percent, pending our appeal, unless we actually follow through with the appeal.

If that's the route we choose to go and if successful on appeal, then obviously

that would be in place. But we are certainly now looking at what other options

are there.

It is our

intention to realize a 20 percent saving in this short and medium term, because

it is that 20 percent that's going to fund some of this transitioning and the

new education programs for pathologists and the information technologies we want

to put in place so

[ Page 9185 ]

that physicians can get better access to lab results in a more timely

fashion.

MacPhail: I've looked at the website, but what I'm told is that the

committees aren't meeting. They're there, but…. Could I have a list of the

kind of committee meetings that are occurring and when they last met?

[1615]

Hon. C.

Hansen: Just to give the member some examples of the committees that are

there…. I may not have an exhaustive list here, but there's a committee set up

for each of the disciplines within lab services — a committee on chemistry,

for example; microbiology; immunology; transfusion medicine; anatomic pathology;

cytogenetics. There is also a committee on evolving technologies; there's a

committee of the operating VPs of the various health authorities; there's a

committee on information technology. These have been meeting on a regular basis.

They may not meet as often as…. I certainly have not heard complaints from any

of those who sit on these committees that they aren't meeting often enough. My

understanding is that the work of these committees is proceeding, and they're

meeting as necessary.

MacPhail: As of January, I'd heard they hadn't met at all, or they had

ground to a…. There was a two-week flurry of activity after the initial

announcement. Then as of January, they kind of had ground to a halt and they

weren't meeting, so I assume the minister is saying they've started meeting

again.

The $60

million of saving — in what year is that booked?

Hon. C.

Hansen: It is booked starting '04-05.

MacPhail: So that's starting in April '04-05. I'm just wondering: $60

million — that's, what, $5 million a month? You'd have to be getting going

pretty soon, I'd assume. Are we still on that game plan to save $60 million?

Hon. C.

Hansen: Yes.

MacPhail: I appreciate, as always, the minister's firmness in reply, because

it does have a way of ending debate on the matter. It also does set the bar

pretty high, but I am always encouraged by the courage of the minister in his

bravery in setting those bars so high.

What's

happening to the utilization rate of lab charges?

Hon. C.

Hansen: We expect there will be utilization savings as a result of this

initiative, but they will come from the information technologies. Part of the

information technology that we'll be putting in place is to give decision

support to the ordering physicians; also to make sure that physicians can access

the results of other tests that were done, hopefully reducing the amount of

needless duplication. I think most of us who have family who have had any

experience with the health care system will sometimes comment on how many

different blood tests or how many times blood tests are done. We know many of

those tests are not, in fact, necessary because they get duplicated by different

physicians who can't access the results of tests that were ordered by other

physicians.

As a result

of the funding we will save, that will be directed into information

technologies. That will in turn be able to lead to the kind of utilization

measures that will perhaps not help bring costs down but at least help to manage

rising pressures over time.

MacPhail: I was actually curious: from a historical perspective, what has

happened in '02-03, '03-04 — the utilization rates…? I mean, this has been

on the government's agenda for a substantial period of time. I just wondered:

what's the trend?

[1620]

Hon. C.

Hansen: This is an area where lab costs have been rising faster than the

rest of health care. B.C. lab expenditures per capita have risen at a faster

rate than anywhere else in Canada — 34 percent over five years. This actually

is from….

This would

be prior to the latest increase that was implemented as a result of the latest

round of increases with physician services in the province. Even prior to that,

it went up 34 percent over the previous five years. Compare that with

Saskatchewan, with the next-highest rate. They had an increase of 15 percent

over the same five-year period.

MacPhail: I want to outline a scenario for the minister on this. Of course,

our government was interested in lab reform, too, in the 1990s — well,

actually, right up until 2001. It had some controversial twists and turns to it,

but it also…. In fact, it ground to a halt because of concern by several

vested interests — not only the workers but the doctors.

I actually

think there is a solution to lab reform, and I want to run this by the minister.

I'm building on my experience as Health minister and now my time in opposition,

where people approach me with different information than they did when I was in

government. I don't in any way suggest that one is more valuable than the other,

but let me run this by. This is going to take a few moments.

This comes

at it from a physician perspective — no other perspective than physicians. I

admit this right upfront. It also starts from a perspective that there is a

place for both private and public labs. I think that in our government, what we

got bogged down in — although I may be too harsh in this — is that people

were trying to say there was no place for private labs. Then people did back off

on that.

I think

there is a place for both private and public labs. The private labs in this

province tend to be mostly urban, and they do, I think, all out-patient work.

There may be some arrangements where hospitals have ar-

[ Page 9186 ]

rangements with labs, but most of it is out-patient work with very little

in-patient work sent outside. Public labs do cover both the urban and the rural,

and they also provide the in-patient. There are labs that provide the in-patient

services inside hospitals for acute care facilities. The public labs do both

out-patient and in-patient work.

As I

understand it — I remember this from my day — there is a medical services

fee for every diagnostic test that's not in-patient. You could have a public lab

that does out-patient work and gets this fee as well — except for blood.

That's funded by MSP separately as I recall. You have a fee that's broken down

into two components. One is the technical component that covers all of the

operations, like the needles and the lab space, even the technicians, the

laundry, the machines. That's 85 percent. Then there's a professional component

of 15 percent as part of the fee. In fact, the 15 percent has never been….

It's not part of the BCMA fee plan as I understand it, but it is accepted. It's

a given — the 15 percent — although you won't be able to find it. There's

tacit agreement as I understand it.

This

breakdown of 85 to 15 applies to out-patients in both hospitals and in the

private labs. In other words, hospitals get the bill for out-patient, but for

in-patient it's part of their overall global budget. I also understand, and a

physician was quite forceful in this, that there are all sorts of qualitative

and quantitative measures that get reviewed in public labs about whether there's

overutilization by physicians doing tests — the quality of the tests is

studied; there's peer review on that — and there are on-the-spot tests, etc.

But that kind of accountability doesn't spill over into the private labs.

[1625]

One of the

physicians I talked to said: "Please, VGH is the exception to every rule

here." Just because of its size and all of that, part of this analysis

doesn't include VGH — not from a negative point of view or a positive point of

view; it just doesn't include it.

The Medical

Services Commission does audit physicians, and they audit the building. They can

intervene in the case of overbilling and fraud, but they only audit in the

public labs. Here's what happens in the one example of the private lab. I must

confess that I didn't check this information out with the private lab, but I'm

going to list them anyway, and feel free for them to fight back.

The MDS

billings that were not audited for '03 were $110 million that they charged to

MSP. That includes both the technical fee and the professional fee. All of their

billings have the 85-15 approach to it. The professional fee would be about

$16.5 million, which they would have got. The average pathologist rate is about

$300,000 per year, all in, so that $16.5 million at a professional rate of

$300,000 would have been 55 pathologists. They only have seven, maybe ten

pathologists at the most across their operations. If indeed they get a

professional fee equivalent to about $16 million and they only have about ten

pathologists, maybe that's an area where there's a problem in terms of

expenditure. I know that private labs are supposed to be able to handle their

professional component. Maybe the seven to ten pathologists work 24-7, but it

does seem to me a bit high that they get about 16 million bucks for ten

pathologists.

One of the

reasons why I investigated this was because it was reported at our Public

Accounts meeting. Maybe the deputy minister wasn't there, but it was an

astounding statement by a Liberal member from the Fraser Valley, when he said

the government caucus had been approached by MDS labs — this is all on the

public record — and MDS labs said: "We'll take the 20 percent cut; just

don't take our work away from us." I thought it was unfortunate that the

Liberal member described this on the record, because then it was open to

challenge by me, but he confirmed it again. I wasn't invited to that meeting.

The opposition caucus wasn't lobbied by MDS labs on that basis, but it was on

the record. MDS labs said: "Let us keep our contracts, and we'll take a 20

percent cut."

I kind of

figured: well, how could they afford to do that? And I started investigating. It

may be on the basis of this professional fee that they get at the same rate as

the public hospitals; yet they don't provide that professional service, or it

certainly seems suspect. I wonder if the minister has had a chance to look into

this.

Hon. C.

Hansen: Certainly, I think what the member underscores is how the process

and the arrangement we have in place right now is just so totally out of whack

with what the cost realities were if you go back historically, when every lab

test was done by a pathologist standing at the bench doing whatever pathologists

do. Now when we see these very high-volume tests done, from the moment the vial

— the sample — is collected, human hands don't touch it after that. It's all

done by robotics. I've been through both MDS's plant and B.C. Bio's plant, and

they are incredible organizations and good corporate citizens in B.C. I think

they provide an excellent service, but they're highly automated. To try to

compare that kind of highly automated service today to, historically, the work

pathologists may have done for a routine test is really a different world.

[1630]

Now, it's

true that a lot of pathologists still do the bench work, and there is still a

lot of very detailed work that must be done. It still is, in some cases, very

hands-on work. That is exactly why we're going through this process of lab

reform. We do not believe that lab services belong in the old fee-for-service

model that was there reflecting the hands-on work of the individual physician.

We want to go to a competitive process that allows us — whether it's a private

sector provider or a public sector lab — firstly, to make sure they guarantee

us a quality service; secondly, to make sure that they can provide appropriate

access for British Columbians. I think right now British Columbians enjoy very

good service, particularly in urban communities, to access the blood tests that

their physician may prescribe for them. We want to make sure that at the

[ Page 9187 ]

end of the day, we still have a system that has very good access for the

patients.

We want to

do that in a way that gets the best value for the taxpayer. I think we want to

look at this whole array of lab services that is provided and figure out: if we

want to get that quality service that meets the needs of the individual

patients, are we best to do that in the public sector? Or is it best done in the

highly automated environments of our private sector labs? How do we maintain the

quality at a level of excellence? How do we maintain the excellent access that I

think patients expect? The question boils down to: which sector can provide the

most cost-effective care? I think that's why we're going into this competitive

process. Instead of worrying about whether it's 15 percent to the pathologist or

85 percent to cover the overhead, let's just look at the price we need to pay to

get the taxpayers the best price for the highest quality and appropriate access

for patients.

That is

exactly why we are moving to an openly competitive process to arrive at that.

Now, in the interim, in the medium and short term, what we are doing is putting

in place the 20 percent reduction in the fee structure in order to fund these

other cost pressures that we have and to fund this transition to a new model.

MacPhail: Well, okay. Just a couple of things. One, even though the tests

are highly automated, they still have to be examined and diagnosed by a

pathologist. It doesn't matter whether you have 90 million vials going down the

line. Those 90 million vials have to be seen by a pathologist, whether it be

public or private. I appreciate the minister saying that they're highly

automated, but at the end of the day a pathologist is a pathologist and is able

to work only at a certain speed. I certainly don't for a moment believe that the

minister is in any way saying that public lab pathologists work less hard than

private lab pathologists. I know he's not saying that.

The 15

percent professional fee component is relevant at this stage and may be a

short-term solution to the minister's problem around money saving — the huge

difference in what bodies are attached to the professional fees claimed by

private sector labs versus what a pathologist gets paid in the public sector. I

mean, that might be an easy solution to the problem.

Again, I

was a bit taken aback by the information from the Liberal caucus that MDS was

willing to take a 20 percent cut as long as they were guaranteed their work. I

thought about that, and of course they would be able to absorb that because

there's a growing population and an aging population, and therefore volume would

expand to take care of that 20 percent cut.

[1635]

If indeed

there is a competitive process going on, how would that work when one of the

largest consortiums, B.C. Bio, is completely private? Again, this is what I'm so

curious about when you inject a private sector, for-profit model into health

care. How can I say this? The minister will rightly stand up and say these labs

have been in existence for a long, long time. If you inject a competitive

process that allows for a private sector company to build in a profit and that

private sector company doesn't have to demonstrate the profit margin, how do you

really get the best bang for your buck? I'm thinking particularly of B.C. Bio,

which is one of the largest consortia. They're completely private.

Hon. C.

Hansen: Just to give the member a perspective of how those rates have been

set up till now…. Basically, they are set within the B.C. Medical Association.

If you look back on this last increase that was provided to the B.C. Medical

Association — an increase in the physician budget of $392 million per year

over the course of this last working agreement we're currently in — within the

allocation, I believe, $185 million of that, if my memory serves me right, was

allocated to fee-for-service. The BCMA itself gets to sort out how those fee

structures are increased, and then they bring those recommendations to the

Medical Services Commission, which endorses them basically.

In the last

go-round, what they determined was that the fee-for-service for lab services was

going to go up by about 10 percent across the board. It's not based on anything

to do with cost. It has nothing to do with any kind of competitive pressures. It

was basically just an increase that was applied across the board. The way we get

the best value for the taxpayers with the level of service that we demand is to

go out to a competitive process. What we will say to the private sector

providers and the public sector labs is that we want them to determine what they

can provide the service for.

Obviously,

in the case of the private sector providers, they will build in a profit margin.

That's up to them. They can structure that in whatever way they think

appropriate, but at the end of the day, if they build in a profit margin that's

too big, somebody else may outbid them. In fact, the public sector lab sector

may outbid them in terms of the prices they can offer that quality service for.

One of the

challenges we have is to make sure that we are comparing apples to apples. I

think, as the member can appreciate, comparing a cost structure between the

public sector and the private sector is very challenging. It's one of the things

we're working on and trying to bring some good rigour to so that at the end of

the day, we can assure all involved that there is a fair process that is there.

I think if

you look at the way these private sector labs around North America have made

their profit, it's by bringing innovation and technology and making sure that

they can drive their cost structure down and still provide a quality service

within a cost — to government, in this case — that is competitive. If they

can't be competitive, then at the end of the day they won't get the business.

That's why we're heading in this direction.

MacPhail: Well, if it's a competitive model, how is the government levelling

the playing field? For instance, will private labs be subject to audit the same

[ Page 9188 ]

way that public labs are? How does one level the playing field in terms of

quality control and making sure the labs are responsible across the board for

complexity of testing?

Hon. C.

Hansen: In the contractual arrangements that will be put in place, there

will be provisions for quality control. That's part of the work that David Pi is

working on now. It's to make sure that we can, in fact, standardize some of the

quality assurance measures and the clinical side so that a top-quality lab

service can be provided in this province by what we fully anticipate will

continue to be a mix of public and private sector players. So we will build into

the contracts the ability to audit for quality assurance and to make sure the

terms of timeliness and quality and access will all be part of the contractual

arrangements that will be established.

[1640]

MacPhail: What about the Medical Services Commission's ability to audit

physicians? I was quite taken aback that the MSC doesn't audit pathologists

working at MDS or B.C. Bio in terms of volume and quality control.

Hon. C.

Hansen: There is — I'm trying to remember the exact title of it — the

Special Committee for Audit, I believe it is, that is established and that has

the ability to go in to audit all of the billings a physician may make to the

Medical Services Commission. To the best of my knowledge, that doesn't matter

whether it's a private sector organization or otherwise.

I did want

to come back to the member's comments about the Public Accounts Committee. I

wasn't at that meeting, so I wasn't there to hear what the member from the

Fraser Valley actually said, but I'm advised that he didn't mention any specific

company's name. I know that the member for Vancouver-Hastings was using a

specific company's name. I do not believe that was part of the transcripts.

MacPhail: Okay, I do stand corrected, but it was a company who said that

they would be more than happy to take the 20 percent cut if they got the

contract. My apologies if I named a company — but the wrong company. The

premise stands, though, so thanks for that. I guess it would have to be B.C. Bio

if it wasn't MDS, because those are the only two in the Fraser Valley.

The

minister says the private labs are audited the same way as the public labs. My

understanding of that is that's not the case, but if the minister is correcting

me, then great. If it isn't the case, then to do it would be very useful as

well. If one is taking this out of the BCMA fee-for-service, where does that

stand in terms of negotiations with the BCMA?

[J. Weisbeck

in the chair.]

Hon. C.

Hansen: I think the first point that the member made with regard to the

audits…. We do not go in and audit the company. What we do is…. We have the

ability to audit the physician billings. All of the physician billings that

would come into the Medical Services Commission are reviewable. There is an

audit process for that, regardless of whether those billings actually come from

a corporate entity or whether they come from a physician as a private

individual. They are physician-driven billings that we have the right to audit.

With regard

to discussions with the BCMA, there have been some discussions generally around

lab reform. I think, as I mentioned to the member, a year or two-plus years ago

when we started this process, the BCMA was one of the stakeholders that was

involved in the round-table discussions. They continue to provide input into

this process, as do other stakeholders. I and officials from the ministry have

had meetings with them on an ongoing basis. I shouldn't say "an ongoing

basis." "From time to time" is probably a better way to put it.

[1645]

MacPhail: When the minister says that these labs, the private labs

particularly, are highly automated, so are a lot of the public labs. The private

labs have a narrower range of services they generally provide. It seems to me

that the current practice…. If it is true that the Medical Services Commission

is auditing these pathologists at these private labs, then it must be that there

is an acceptance of principle that the benefit of automation goes to the owner

of the lab rather than the taxpayer. If it's easier to process these tests and

still have quality control and auditing ability of the pathologists, then it

means somewhere along the line there's accepted principle that the rapid pace

and the accuracy of the automation doesn't come back to the public sector.

I know this

is the problem the minister is trying to resolve. However, I'll be very curious

to see how the minister finds out what the benefit is of investment in

automation versus benefit to the taxpayer — how he's going to work that out in

the competitive process, I mean, and deal with the BCMA at the same time.

BCMA

probably should be looking at its cataract surgery. I understand the fee for

cataract surgery hasn't changed in ages. Yet it used to be a five-day time in

the hospital, and now it's a 20-minute time in the hospital. Yet that fee

remains relative or, as the minister is indicating, higher. Clearly, the benefit

of automation and technology has gone to the ophthalmologist in that case as

opposed to the patient.

Can the

minister just explain a little bit more in terms of the competitive process

about how this is going to factor in automation to the benefit of the patient

and not the private lab — or the public lab? Well, private lab, let's just

say.

Hon. C.

Hansen: Clearly, when you've got a company that can provide a service to the

public sector, and if they can bring technology to that that produces higher

productivity and reduces their costs, then there

[ Page 9189 ]

should be a benefit to the organization, the company that brings that

technology. At the same time we have a responsibility, I think, to the public

that we get the best value for money.

Through the

competitive process, it is incumbent upon those providers — whether it be a

public sector lab or a private sector lab — to look at the technology that may

be available to them today, new technology that may be emerging that may be

available to them over the life of this contract, and to bid their proposal in a

way that allows them to take advantage of that technology. I think the way we

make sure that the benefit comes back to the patient, as the member asked, is

through the competitive process, and that will ensure that everybody sharpens

their pencil at the end of the day. But they will still have to make sure they

deliver on the quality and on the access that we will set out in the contractual

arrangements.

MacPhail: Yes, and I can correct the record on my discussion with the member

for Maple Ridge–Mission, because I've got the Hansard here. The

minister is exactly right, and I do apologize to MDS labs.

Here's the

quote from the member for Maple Ridge–Mission: "…pathologists are

saying that they believe we're paying perhaps as much as 30 to 40 percent too

much. When the president of B.C. Bio tells a group of MLAs that he would happily

take a 20 percent reduction in the fees that he's charging, as long as we don't

tender out and look for a call for proposals from private labs…. He would be

very happy to see the 20 percent peel-back. To me, that sounds like we're paying

an awful lot too much."

The member

for Vancouver-Hastings: "Who said that and when?"

The member

for Maple Ridge–Mission: "Dr. Cooney, the president of B.C. Bio, made

that offer to a group of MLAs that had a meeting with him two months ago."

This is

from Monday, February 9, 2004. "You can take that from where it is, but I

would suggest to you that when…." The member for Vancouver-Hastings,

never wishing to miss an opportunity, said: "Well, it's on the record. I'll

certainly be making people know that."

Anyway,

thank you for the correction.

[1650]

Back to the

concluding questions around this, if there are $60 million of savings

anticipated from lab fees — lab charges — and that's '04-05, is the minister

assuming that there will be a front-end load of savings when this is initiated?

In other words, clearly it's not going to be in effect come April 1 — I would

assume. What's the anticipated rate of savings when the system is actually

implemented to meet the $60 million annual savings?

Hon. C.

Hansen: First of all, it would not be safe for the member to assume that

this saving will not click in as of April 1. As we have signalled, the member

talks about the $60 million in savings, and that's actually what we are saying

that we will realize in this coming fiscal year. That is almost a short-term….

In fact, the words I used earlier were short to medium term. Those are the

savings we will take from the system while we are implementing this competitive

process. As I indicated earlier, our time line is to have that in place by

October 2005.

When that

competitive process is completed, we will have to see what can be realized.

Perhaps the savings are greater than $60 million. We will only know that once we

get through the process. I think we also have to recognize that there are a

couple of other pressures at play here. On the other hand, when we get

information technologies in place, we believe we can at least keep some of the

demographic pressures down through better utilization of lab tests and better

utilization of the information that comes from lab tests. As we go fo