2001 Legislative Session: 5th Session, 36th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MARCH 27, 2001

Afternoon Sitting

Volume 22, Number 12

[ Page 17521 ]

The House met at 2:09 p.m.

M. Coell: I have a number of people to introduce to the House today.

It's a group of South Island Young Liberals: Katherine Bergen, Sonia Manhas,

Lisa Caroway, Janet Mackenzie and Ivan Watson. Also from my riding are a number

of students from Stelly's Secondary School. They're accompanied by five adults,

their teacher Ms. Hayashi and some friends from Japan.

I'd also like to welcome Paul Sam to the House, who's the NDP candidate

running against me in my riding. Would the House please make them all welcome.

[1410]

J. Reid: Jim Stewart from north Nanaimo is joining us in the gallery

today. I'd ask the House to make him welcome.

I. Chong: Today it is also my pleasure to introduce a number of South

Island Young Liberals who are here to watch question period. They are: Myra

Sweeney, Keir Wilmut, Kara Flanagan, Perry Prewal, Cheryl Maitland, Mike

Schroeder, Roger Doucet and Vince Haraldsen. Would the House please make them

all very welcome.

G. Farrell-Collins: I too have a group of B.C. Young Liberals who are

here today: Naveen Bains, who's the president of BCYL; Aneal Basi; Jag Bains;

Perry Bhaniwal; Kaleim Manji; Savik Sidhu; Nab Gill, who's the president of the

Camosun College B.C. Young Liberals club; T.J. Parhar; Bikrum Gill; Reet Bains;

Amar Bajwa and Jonathan Chau. I want the House to make them very welcome.

G. Campbell: I'd like to welcome an exceptional young British

Columbian, an incredibly good-looking young man. My son Nicholas Campbell is

with us today. Would you make him welcome, please.

R. Thorpe: I'm very pleased to have two guests in the House from

Penticton. Would the House please make Diane and Pat King very welcome here

today.

Oral Questions

ICBC COMPLIANCE WITH

BUDGET TRANSPARENCY AND

ACCOUNTABILITY LEGISLATION

G. Plant: I have a question for the minister responsible for ICBC. We

have obtained a copy of a confidential letter sent by the Deputy Minister of

Finance to the ICBC president on the subject of ICBC real estate investments.

The letter is dated February 27, 2001. I want to quote from that letter:

"Section 14 of the Budget Transparency and Accountability Act requires that

a capital project plan . . . be made public for major capital

projects undertaken by government organizations within one month after

commitments have been made. Major capital projects include real estate

investments made by the corporation. There has not been a capital plan released

for the Telus building purchase."

My question to the minister is this: why is her Crown corporation breaking

the law?

Hon. J. MacPhail: The purchase of the Telus building, which has

guaranteed renters for fully 15 years, was all released publicly when it was

purchased.

The Speaker: The hon. member for Richmond-Steveston has a supplemental

question.

G. Plant: Well, it's too bad that the minister didn't share the

capital plan with the Deputy Minister of Finance, because according to the

deputy minister, there was no capital plan. Frankly, if there was a choice, I'd

prefer to believe the Deputy Minister of Finance.

Mr. Speaker, the letter also makes it absolutely clear that as a matter of

law, ICBC is required to file any investment in its property development arm

within 14 days of the purchase. Yet the letter goes on to say that as of

February 27, these filings had not been completed for the November 2000 purchase

of the Telus building or the 1999 purchase of 910 Government Street.

Can the minister tell us again: why is it that she allows her Crown

corporation, ICBC, to break the law set by this government?

[1415]

Hon. J. MacPhail: It is interesting to note, hon. Speaker, that the

Liberals now choose to rely on the very Finance officials that brought in the

revenue forecast for this budget. They now uphold them as the bastions of good,

sound advice. And yet all the last month, they have been saying: "Oh, these

Finance . . . . " They've been besmirching the reputation of

these Finance officials, and now they say: "Isn't this grand." My God,

it's interesting how, when you become a Liberal, you learn to talk out of both

sides of your mouth.

These same investments that had ICBC get such good returns for last year have

all been released publicly. In fact, the information is within the public

purview. The Budget Transparency and Accountability Act will be complied with.

But I will say to you that if, for some reason, the Liberals are suggesting that

this isn't the most transparent financial transaction that exists in Canada,

then this would prove the point, hon. Speaker. Let me just say that all of the

documents are within the public purview and will definitely be provided to the

Ministry of Finance.

G. Plant: Mr. Speaker, what is perfectly transparent is that this is a

Crown corporation and a minister responsible for a Crown corporation that is in

breach of the law, and the minister doesn't even have the beginning of an answer

to the question.

There's no secret to any of this. These transgressions of the law identified

in this letter include the following statement: "My understanding" --

this is the understanding of the deputy minister -- "is that ICBC's board

is aware of this issue." In other words, ICBC's board knows that ICBC is in

breach of the law. The minister sits on that board. Why has she allowed the

Crown corporation for which she is responsible to break the law that this

government so constantly trumpets as being the cure to all the evils that have

preceded it?

The Speaker: The question was answered.

C. Clark: Let's remember that this letter was dated February 2001.

This was after a directive went to ICBC two years

[ Page 17522 ]

earlier, telling them what the rules were. In the letter, the Deputy Minister

of Finance clearly accuses ICBC of flouting the law. He says that as far back as

September 1999, ICBC was informed that Treasury Board wanted to review all

future real estate investments on a case-by-case basis. And he says that,

nonetheless, ICBC went on to go out and buy two properties since that date

without either Treasury Board or cabinet reviews.

Let's remember: these are the government's own rules. Can the minister tell

us why ICBC will break the rules -- just go ahead and flout them? Why does her

government even bother to make the rules if the guys over at ICBC don't even

want to bother following them?

Hon. J. MacPhail: All of this information was in the public purview,

and if the information isn't already with the Ministry of Finance, we will

absolutely ensure that it is. These are the most transparent rules that are in

existence.

Around the issue of ICBC investing, ICBC has a multibillion-dollar investment

fund. I think it would be interesting, if the government actually interfered

with that investment fund, what reaction the opposition would have if government

-- cabinet -- interfered with that investment fund. We simply do not do that.

The multibillion-dollar investment fund, $6 billion, is done independent of

government -- done following all of the rules.

But let me just tell you about Telus, hon. Speaker. Yes, it was an investment

by ICBC of $98.25 million. It has secured tenancy for 15 years. That'll be the

reason that wonderful investment fund of ICBC which . . . . If it

hasn't complied with the rules, we will absolutely make sure that it does.

[1420]

In terms of the transparency issue, it has complied with all of the other

rules. But let me just say: it's that kind of investment that has allowed us to

keep rates frozen for six years, give dividends and make sure that it all stays

within the public purview, unlike what they would do -- opening it up to

competition. That $6 billion investment fund would disappear overnight, hon.

Speaker.

C. Clark: The fact is -- and the Deputy Minister of Finance pointed

this out -- that the government's own agency broke the rules. And this minister

doesn't seem to care about that. You know, the only time this government cares

about breaking the rules is when they get caught. And guess what: they've been

caught.

The deputy minister says in his letter that it is his understanding that the

board was aware of the issue. Well, the minister sits on that board. So my

question is this: has she been taking lessons from the Premier, and did she (

a) miss that meeting, or (

b) was she not present for the meeting? Or (

c) is she

going to tell us that perhaps the inexactitude today of her comments is present?

Hon. J. MacPhail: Hon. Speaker, I answered the question.

The Speaker: The hon. member for Port Moody-Burnaby Mountain has

another question.

C. Clark: I somehow think that the minister is trying to avoid

answering questions about why this government wants to break the rules.

The Speaker: Order, member.

C. Clark: Now, why do you think that would be? Do you think it's

because this government's been caught breaking the rules so many times that they

don't even bother making excuses for it anymore? Or is it possible that on the

eve of an election, this minister doesn't want to stand up and demonstrate to

British Columbians once again just how and why this government is so bad?

The Speaker: Do you have a question, member?

C. Clark: Hon. Speaker, this is a board that is headed by Bob

Williams, the ultimate insider for the NDP. It's a board that's made up of

insiders from the New Democrats. So my question is this: when the minister makes

her rules, when the government makes their rules, are they rules they expect

everyone to follow except for the insiders on the NDP?

Hon. J. MacPhail: I guess if anyone's trying to obfuscate here, it's

the Liberals, who would actually have to admit that their platform -- their New

Era platform, which says that they would open up ICBC to competition -- means

that overnight that $6 billion investment fund would disappear. The return on

the investment fund that each and every ICBC policyholder gets each year is the

equivalent of $175. That means this Liberal opposition would be taking $175 out

of people's pockets.

Let's just deal with the issue about the poor financial management around

this. I will ensure . . . . If indeed ICBC hasn't complied with the

Minister of Finance's requirements under the Budget Transparency and

Accountability Act, I will leave this chamber and make sure that they do -- no

question about that. But what I will also say to the public is that firstly, the

investment committee is not a committee of which I am a member.

The Speaker: Thank you, minister.

Hon. J. MacPhail: That would be out of order completely. And secondly,

the investment committee is managed by the best people in the world, including

Andrew Saxton.

TRANSITION HOUSE FUNDING

R. Kasper: The Sooke Transition House provides valuable service, with

temporary accommodation, to women and children leaving violent homes or

relationships from as far away as Port Renfrew and also fills in the gaps that

are currently provided by other transition houses in the capital regional

district. The society that runs this service has been advised by the B.C. Gaming

Commission that no further funds will be forthcoming. That's a $37,000 reduction

from a $104,000 budget.

My question to the Minister of Women's Equality is: at a meeting on March 19

-- last week -- when this society had requested assistance for their coming

budget and their coming funding year, why did the ministry advise that there

were no further moneys forthcoming? And that's despite the fact that in the

current budget, it shows under this program area that there is a $6.4 million

increase in funding in your ministry.

[1425]

Hon. E. Gillespie: Every transition house in this province faces very

severe service pressures. There is a very

[ Page 17523 ]

strong need for transition houses across this province, as there is in Sooke.

My ministry has met with the Sooke Transition House Society, and my ministry

officials have met with me. We have offered our assistance to assist the Sooke

Transition House Society to provide the best possible service with the resources

available.

The Speaker: The member for Malahat-Juan de Fuca has a supplementary.

R. Kasper: The B.C.-Yukon Society of Transition Houses has used the

Sooke Transition House as an example of inequities in funding for transition

houses. I also have letters of support from Hill House Transition House, the

Sooke RCMP, the Ministry for Children and Families and the Sooke RCMP victim

services division. My supplementary question is this: why is it that when staff

in my office contacted the ministry, the 13.3 percent increase in the budget was

not an increase at all and the moneys that had been allocated, we were advised,

were going to go for pay raises within the ministry and for those program areas?

Hon. E. Gillespie: The additional funding in the budget for transition

houses under the Ministry of Women's Equality is for low-wage redress that has

been negotiated with that sector.

The Speaker: The member has a further supplemental question.

Hon. J. MacPhail: Are you in favour of low-wage redress?

R. Kasper: Well, hon. Speaker, I don't think there's any member here

who's opposed to low-wage redress. But more importantly, is that . . . ?

Interjections.

The Speaker: State your question, please, member.

R. Kasper: Well, I listened to you guys for nine years; you can at

least listen to me for 30 seconds.

My question to the minister is: what kind of message is she sending to those

women and children who are trying to leave a violent situation in rural British

Columbia, purporting to express the interests of those who live in the urban

parts of our province and ignoring the needs of those who are in rural British

Columbia? What is she going to do about the needs of the rural children and

women leaving violent situations?

The Speaker: Noting the time, minister . . . .

Hon. E. Gillespie: As I said in my answer to your first question, my

ministry has committed to working with the Sooke Transition House Society to

make sure that they are able to provide the services necessary in that

community.

The Speaker: The bell ends question period.

Tabling Documents

Hon. G. Robertson: I rise to ask leave to table a report.

Leave granted.

Hon. G. Robertson: I present to you the report of the aggregate

advisory panel, March 2001.

Hon. T. Stevenson: I also wish to ask leave to table a report.

Leave granted.

Hon. T. Stevenson: I have the pleasure of tabling two reports: the

first, the 1999 annual report of the Job Protection Commission, and the second,

the 1999-2000 annual report of the Ministry of Employment and Investment.

Orders of the Day

Hon. G. Janssen: I call Committee of Supply to debate supplementary

estimates. For the information of members, we will be discussing the

supplementary estimates for the Ministry of Education.

[1430]

The House in Committee of Supply; D. Streifel in the chair.

The committee met at 2:30 p.m.

SUPPLEMENTARY ESTIMATES:

MINISTRY OF EDUCATION

On vote 24(S3): ministry operations, $83,000,000.

[1435]

G. Hogg: I wonder if the minister could provide us with information

with respect to the provincial populations as they adjust it over the course of

the year and whether or not the projections that the year started with are

consistent with the projections as they went throughout the course of the year.

Hon. J. MacPhail: Just to be clear, these are supplementary estimates

about expenditures that have occurred, and I'd be happy to know under which

category he feels that question falls. It's an open-ended question that really

doesn't have much to do with the supplementary estimates.

G. Hogg: With respect to the minister's question, the concern is that

the projections with respect to the population have been declining over the past

two years. If, in fact, we're looking at supplementals and additional costs, I'd

like to be able to compare them with the number of students that we were dealing

with based on the original budget.

I'm expecting the minister, then, to advise me that the number of students

that are being addressed with this amount of money is irrelevant with respect to

it. I find that an interesting approach to reviewing a request for supplemental

dollars on top of what was originally budgeted for a number of students.

That aside, I see there is a cost of movement of teachers in terms of the

salary grid, and that cost is $4.5 million. I wonder if the minister could

advise whether or not this was something that was anticipated or if this was a

shift in the salary grid that was not anticipated and therefore not budgeted for

in this matter.

[ Page 17524 ]

Hon. J. MacPhail: With due diligence and prudent financial budgeting,

Treasury Board asked the Ministry of Education to look at the salary grid for

teachers and see whether there were any savings to be achieved. In the course of

that budgeting process, they put a ribbon around $4.5 million to see whether

those savings could be achieved. Indeed, upon close examination there were no

savings to be achieved in the salary grid, and so the money is released.

G. Hogg: It's my understanding that salary grids are able to be

projected for an extreme length of time, that there should be no surprises with

respect to the salary grids and the teachers who are receiving increments with

respect to those salary grids. Therefore I don't understand the answer to the

question, saying that the money was there and you were asked to find savings,

and now the money is being released. Does that mean that the $4.5 million is

being included as part of a salary grid that was unanticipated? Or does that

mean that it is being released back to some other place?

Hon. J. MacPhail: There was discussion by the Ministry of Education

about whether the projections about what would be the nature of the experience

of the teacher and what actually occurred . . . whether there were

any savings to be achieved there. That's very prudent; that's doing good due

diligence.

[1440]

Treasury Board asked to see whether the ministry could find $4.5 million in

savings based on the ministry's projections about how experienced the teachers

would be that the boards are hiring. However, at the end of the day, it's the

boards that do the hiring and determine the composition of teachers. That saving

was not achieved, and so instead of cutting funding for education, we restored

that savings.

G. Hogg: I understand the minister to say that we don't have a system

in place where we're able to anticipate the salary grids, the improvements as

teachers move up that salary grid, and that we don't have in place a human

resources system or financial system that can tell us exactly the amount of

movement there will be on the salary grid with respect to teachers. I find it

difficult to fathom that the system is not there for each one of our teachers

and that we don't have a system of being able to say, "This is the movement

that will occur on this grid this year," and that we are not able to

project that with considerable accuracy, with the exception of those new

teachers who come into the system. We may not know exactly what their experience

is or how they fit into the system. Is the minister telling me that we're not

able to project that salary grid with any more clarity and specificity than the

number here reflects?

Hon. J. MacPhail: Well, under an NDP government, Education's budget is

almost $3.7 billion. Of that, the salary budget for teachers exceeds $2.5

billion. It's almost $2.7 billion under an NDP government. I don't think that

would happen under a Liberal government; that's for sure. That salary would be

decreased to who knows what level.

But yes, under a $2.7 billion salary budget for teachers -- where the school

boards do the hiring; where the school boards don't know who's coming back or

can't predict exactly who's coming back the next year; where the school boards

can't, until the actual school year starts, determine the composition of

teachers -- yes, you're right: there is not a fail-safe salary grid prediction

in place. What a surprise.

However, in a $2.7 billion budget for teachers' salaries -- under an NDP

government, let me be clear -- which will be put at risk if the Liberals ever

get in, it was under prudence to say: "Is there about $4.5 million that you

can predict in savings?" However, because we protect health and education,

because that is a priority for our government, when those savings could not be

found because of the composition that the school boards hire in teachers, we

didn't cut funding for education. We restored it.

G. Hogg: The minister made reference to a question I asked earlier,

saying that it was irrelevant and not part of this. Certainly the ramblings the

minister has just provided us with are not a part of this review either. I would

appreciate having a focus on the questions that are being asked.

I'm willing to move on to the heating assistance for the schools. Could the

minister please advise us as to the projections shown by school boards across

this province in terms of their needs with respect to heating assistance and

what percentage of that total the $9.2 million represents?

Hon. J. MacPhail: It's the full cost of natural gas for the fiscal

year.

G. Hogg: Could the minister advise what the quantum is on that number?

Hon. J. MacPhail: It's $9.2 million. You announced it before. Didn't

you just say the $9.2 million?

The Chair: Before I recognize the member, I'd ask the minister to

direct her comments through the Chair.

G. Hogg: Is the minister advising me, then, that the full projections

with respect to the fiscal year that each school board of this province has

shown in terms of their increased heating costs are going to be covered by $9.2

million?

[1445]

Hon. J. MacPhail: For natural gas.

G. Hogg: Are there other heating assistance moneys being provided to

school boards beyond the cost of natural gas?

Hon. J. MacPhail: That's under review as we speak.

G. Hogg: When can we expect an answer to that?

Hon. J. MacPhail: Soon.

G. Hogg: I will go back to my office and look up the definition of

"soon."

With respect to the special education enrolment and the $100,000, could the

minister please explain the shift within the costing for the special ed

additions?

Hon. J. MacPhail: Under recalculations, special education funding

increased by $12.75 million -- $1.284 million for

[ Page 17525 ]

severe behaviour children, $10.464 million for severe handicapped children,

$806,000 for multiple handicapped children. In special education I have included

aboriginal education and ESL, but really those are separate categories as well.

language went down by $1.39 million. That's how you reach the $12.75 million

figure.

G. Hogg: And that figure, then, shows to be $100,000. The $100,000

that is reflected in the supplementals is the amount above that?

Hon. J. MacPhail: You asked specifically about special education, but

the puts and takes in recalculation is a net of $113,933. That's after we take

into account all of the puts and takes.

G. Hogg: Thank you. Well, I'm almost reluctant to ask this question,

hon. Chair, because of the response I received from the minister at the

beginning with respect to enrolment numbers. But perhaps she will interpret the

supplementary estimates actually to involve enrolment, because her papers

reflect enrolment buffer savings of $10 million. So I wonder if the minister

could respond, once again, to the question of the population of the students of

this province and how those have been adjusted, therefore providing the buffer

savings which is reflected in this. Can the minister please advise of those

numbers and the enrolment changes that have occurred to give this $10 million

buffer saving?

Hon. J. MacPhail: For this specific year in recalculation it's a 0.6

percentage enrolment decline equivalent to $15,880,325.

G. Hogg: Thank you to the minister for recognizing that the

populations actually are a part of the estimates process, or the supplementary

estimates process, and for focusing on those figures. With respect to the

independent school funding formula change, could the minister explain the $5.2

million?

[1450]

Hon. J. MacPhail: It would be interesting to note what would happen to

independent school funding if the Liberals ever brought in a tax cut of $3

billion. Independent school funding here of $5.2 million is $3.5 million to

ensure that grants remain status quo for independent schools and also $1.7

million for an increase of 258 students in group 1 schools and 231 students in

group 2 schools.

G. Hogg: I understand that the formula, then, for the calculations of

increases to the independent schools is the same formula that is utilized with

respect to the public school system, and the small increase over that is based

on an increase in student population. Is that in fact correct?

Hon. J. MacPhail: That's the first half that I described to you, and

the second half is the increase in category 1, group 1 students, and group .

. . .

G. Hogg: Well, that's the second half of what I stated as well. So

thank you for that.

In determining those percentages, is it true that the actuals are used for

the public school system and then the percentage that is developed for the use

of the independent school system is based on the initial grants, and therefore

there may be a different formula utilized, in terms of the numbers of students,

for calculating the funding?

Hon. J. MacPhail: I'd be happy to provide a technical briefing on all

of this information. The formula that's used is: for group 1 students it's 50

percent of the per-pupil amount for the district in which the independent school

is located, and for group 2 calculations it's 35 percent of the per-pupil amount

in the district in which the independent school is found.

G. Hogg: My question was with respect to the increases, not with

respect to the formulation that occurs with independent schools. My question was

focused on the way the percentage increases are developed for the public

schools, and then the policy is to provide that same percentage increase to the

independent school system. That's where there was a glitch in the budgeting

process last year, and then the government changed its mind and came through to

provide a similar percentage.

My question was on the formulation of that percentage. And that percentage,

when it's done with the public school system, responds to and is adjusted based

on the actual expenditures that occur,

whereas with the independent school

system it's done on the original grant, with no opportunity to change it. So

there's a slightly different inflection in the formula, and I was just asking if

that is, in fact, how this was developed -- using those original grants, versus

the actuals that occur in the public school system. Therefore, with that

practice of implementing it, the percentages do not reflect directly across for

the actual uses of the independent system versus the actual uses of the public

school system.

So my question is: has that percentage been developed on a grant with the

independent school system as it starts, at the beginning of the year, and with

the actuals for the public school system?

Hon. J. MacPhail: My answer doesn't change because the question was

asked again. The amount given to independent schools is a percentage of the

per-pupil amount that's established for the district in which the school is

located. The per-pupil amount doesn't change. The percentage is the same.

[1455]

G. Hogg: I guess I'm not able to ask that question in a way that it

can be understood in terms of the overall granting. My concern was not the issue

of how it's done with each student as a percentage of the school district in

which the independent school functions but of the overall projection of the

amounts. But it's apparent that I'm not getting an answer to that, so I have no

further questions with respect to this.

Vote 24(S3) approved.

The committee recessed from 2:56 p.m. to 3:01 p.m.

[D. Streifel in the chair.]

SUPPLEMENTARY ESTIMATES:

MINISTRY OF ADVANCED EDUCATION,

TRAINING AND TECHNOLOGY

On vote 11(S3): ministry operations, $228,000,000.

The Chair: I call the committee to order.

[ Page 17526 ]

J. Weisbeck: First of all, I'd like to refer to the Michael Smith

Foundation. This is a five-year funding project, yet we're giving all of the

$110 million in the first year. Obviously there's some great advantage to the

society to have all that money up front. They accrue quite a bit of interest

income over those five years. But I wonder if there's any advantage in doing it

this way or whether it wouldn't be a better idea to spread it over those five

years. When we start leveraging money to try to get some other funding, whether

it be from the Canadian Institute of Health Research or CFI or the knowledge

development fund, I wonder if there would be more of an advantage in having

those funds spread over the five years.

Hon. C. McGregor: I know there are probably a number of models that

could be proposed. This is one that suits the foundation and government as well.

In particular it suits the foundation from the point of view that they are able

to accrue interest on the full amount of the $110 million, and that can then be

used to supplement those investments in health research. So it serves a very

good purpose for them to have the full amount and be able to garner the benefit

that the interest accrued will provide.

J. Weisbeck: Is there any estimate of the amount of money that could

be leveraged using this fund with the other development funds, etc.?

Hon. C. McGregor: The estimate is that we will garner between $4 and

$7 of federal research funds for every dollar invested from the provincial fund,

so it's a very good return.

J. Weisbeck: I wonder if I could have a little explanation of how

that's going to work under the business plan. What happens to those moneys?

Right now I look at the business plan, and I see that they are spending -- $18

million, $20 million, whatever -- the full amount of the funds over the five

years. What happens to those extra moneys? Do they have plans for those?

Hon. C. McGregor: Those will flow to specific projects on the basis of

application to the federal funding mechanisms.

J. Weisbeck: In the briefing we were told that this foundation is set

up at arm's length from government. Yet I noticed that 34 percent of the board

members are being appointed by the government. I don't understand how that works

on an arm's-length basis when the government has such an influence on who sits

on the board.

Hon. C. McGregor: I think it's fair to note that 37 percent is far

less than half, so clearly government cannot cause the board to take a

particular direction. I think it's appropriate for there to be some

representation from government.

In

part it facilitates communication between the non-profit society and the

provincial government. There can be a transmission of information in both

directions in order to facilitate better access to information around funding

issues, things like the B.C. knowledge development fund, for instance, having a

representative from government who can speak to the nature of those criteria and

how the foundation might be able to access those dollars. This is just one

example of how communication might be facilitated by having a government

ministry representative. It is going to be the deputy minister who will sit on

that committee, and he's really looking forward to it.

[1505]

J. Weisbeck: The next item is a $46 million item that is split into

two parts, one of them being an equipment grant. I'm curious to know how you

arrived at that $23 million.

Hon. C. McGregor: Much as I love all the stakeholders that are part of

the Advanced Education portfolio, if they had their wish list, it would probably

include multimillion dollars' worth of equipment and library acquisitions.

What we did was we looked at the original budget, which was about $12 million

to $13 million annually, and we sought to double that. We doubled it on a

one-time basis in order to really supplement the support we've been able to give

institutions. Then, of course, that is assigned to institutions on a formula

basis in order to create fairness to institutions around the province. Also, to

make sure that the member understands exactly how the formula worked, there were

greater dollars that flowed to BCIT in particular, because of the very technical

nature of many of the programs they offer. They are in more need, in large part

for different equipment, as part of their basic programs.

J. Weisbeck: You've answered part of my question, how these funds are

distributed, but I would sure like to have a breakdown of the various

institutions.

I guess my concern always is that the rural communities get their fair share.

I've said numerous times that Okanagan University College doesn't think it's

getting its fair share of some of these dollars. If I could have your opinion,

as well, and a breakdown of that distribution.

Hon. C. McGregor: As soon as we're finished the final details on the

allocation formula and have talked to the institutions one last time to make

sure that we're meeting, as best we can, everyone's concerns on this question,

we'd be happy to give you the list for each institution.

Like the member opposite I want to make sure that those rural institutions

outside of the lower mainland get their fair share.

J. Weisbeck: The next part of that line is the indirect costs of

research. Can we leverage those funds, as well, to try to get more federal

dollars, or is that separate from those applications?

Hon. C. McGregor: These dollars are really designed to supplement the

federal grant dollars, because much of the federal grant program doesn't cover

many of the costs of the institution in order for it to do the research program.

As I understand it, the universities council in particular is continuing to

lobby the federal government on actually including indirect costs of research as

a part of their grant structure or to create some new formula through which

universities can be awarded those costs.

I think it's fair to say that it is a strain on the institutions to have to

pay fully the cost of overhead and staff salaries over

[ Page 17527 ]

and above the costs of the research. So it's a cost that we want to

recognize, and we think the federal government should as well.

J. Weisbeck: This particular funding is directed only at universities.

Once again, Okanagan University College does some research, yet it is not

getting a chance to apply for these funds. When I look at Tech B.C., for

example, where they've talked about some of these funds going to furniture and

equipment, I guess I would like to see some of these funds being directed to

some other research areas in the province.

[1510]

Hon. C. McGregor: With the $23 million we talked about earlier, the

equipment and library resource budget, the OUC or any other institution -- for

instance, Malaspina also does some very interesting applied research -- can take

those dollars and apply them to those programs, if they wish. We were trying to

be fair to all the institutions, so universities will get a share on the

indirect research side with their $23 million, and $23 million will flow to

colleges and university colleges.

J. Weisbeck: This is a one-time grant. What is the estimate of the

ongoing costs of the indirect costs of research? I know the university has

talked about a number, and I wonder if you could just confirm that for me. I

thought they said that it was around $20 million annually. This is obviously

just a one-time grant.

Hon. C. McGregor: At least in part, some of these costs come through

annual operating costs that are given from government to the institutions,

although we do recognize that there are those pressures, and we have those

conversations with them. As a result of that, they made the submission that the

member makes reference to that they believe the actual annual costs are $20

million. This is a step in the right direction. We fully acknowledge that it's

not all the way there yet, but we saw it as an opportunity to address one of the

university's concerns.

J. Weisbeck: One of the lines calls for post-secondary accords of

$19.3 million. I just noticed in our briefing that it says: "New costs

outside zero-zero-and-2." I wonder if I could have an explanation of that

number, please.

Hon. C. McGregor: First, hon. member, I think it's better to make

reference to these being parallel agreements, as opposed to outside of. These

were processes that went on simultaneously at the bargaining table.

There were a number of issues addressed through the accord process, including

at the university support staff level, a pay equity agreement that cost $6.252

million and an improvement to health and welfare benefits in that same sector

that had a cost of $6.276 million.

As well, there was the BCIT faculty and support staff accord, and they were

doing polytechnical advisory council workload analysis at a cost of $125,000.

The college support and technical staff accord agreed to a pension review

committee and a joint benefits trust, as well as a long-term disability,

short-term illness and injury plan, which had a full cost of $5.21 million.

Then as a part of the BCIT faculty and support staff settlement framework,

there was a short-term professional development leave provision that amounted to

$75,000 and the college support staff common agreement, which was another

low-wage redress implementation at $703,000, for a total of $19.317 million.

[1515]

J. Weisbeck: The last question I have relates to the natural gas. I

understand the $3.5 million accounts for a third of the actual cost of the gas.

I want to know how that difference is going to be made up. It seems to be a lot

of money, if it's another $6 million. It's a lot of money that has to be made up

by the institutions. I guess my concern is the impact it has on the dollars per

student and access and course selection. I wonder if the minister could respond

to that and if there has been any sort of allowance made for making up that

difference.

Hon. C. McGregor: When we did the original calculations, the actual

costs as the year went on came in higher than we had originally anticipated in

the initial survey with institutions. So clearly there's a gap there, and we

recognize that. We'd like to do some more work on it, and we hope that there

might be more we can do.

But I think in part we also are depending on the institutions to take

initiatives internally for savings, and that isn't encouraged if one fully funds

the full natural gas bills. So in other words, there has to be a reason why they

would want to reduce costs in that area. I know institutions are working very

hard on strategies they can apply that will save energy costs in their own

institutions, and have done so in the past as well. So we're going to continue

that work with them.

There's also the green buildings initiative in which we're using that

strategy with BCBC and our own institutions to make sure that future new

building designs and retrofits give us a capacity to reduce energy costs as

well. The member notes that this is an area of concern. It is for me as well,

and we're going to continue to work with the institutions on that.

Vote 11(S3) approved.

The Chair: We'll take another short recess while the ministers and the

officials change.

The committee recessed from 3:18 p.m. to 3:20 p.m.

[D. Streifel in the chair.]

SUPPLEMENTARY ESTIMATES:

MINISTRY OF FINANCE AND

CORPORATE RELATIONS

On vote 57(S3): seismic mitigation, $9,700,000.

G. Farrell-Collins: Perhaps the minister can tell us how this figure

was arrived at.

Hon. P. Ramsey: As I think the member learned during a briefing on the

supplemental estimates, during the last year ministry staff has been working

with the office of the comptroller general and the office of the auditor general

to make sure that we are treating both capital and operating expenses

appropriately. One of the things we discovered as we went

[ Page 17528 ]

through it was that the seismic program, which had been booked as a capital

expense in Budget 2000, should really be treated as an operating expense. So

this is simply the amount of the seismic program that was in the capital budget

now being moved to a voted appropriation in the operational budget.

Vote 57(S3) approved.

On vote 58(S3): B.C. energy rebate, $78,000,000.

G. Farrell-Collins: This is the portion of the energy rebate that

relates to the means testing as to whether or not an individual claimed and

qualified for the GST rebate, which is something that is administered by the

federal government.

There were some concerns, when the federal government did their energy rebate

using this mechanism, that individuals who had passed away were receiving

cheques and individuals who were in jail were receiving cheques. Now, I know

that there is a piece of legislation which we discussed this morning in second

reading and have not yet discussed in committee that had some provisions around

that. Perhaps the minister can give us some assurances that similar problems

won't arise with the program the provincial government is putting in place.

Hon. P. Ramsey: Without going into great detail about the energy

rebate program, as the member recognizes, this is one of about five different

components of the program that was announced in February by the Premier and

myself: the $200 B.C. Hydro rebate, increased energy audits through the B.C.

Hydro program, the green program, funds to schools and colleges -- which I think

we've debated in some previous supplementary estimates -- and this portion.

The member is right: the trigger for access to these funds is GST eligibility

during the 1999 tax year. It depends on income level, then, and family

circumstances, depending on who's eligible for it. A single person will be

eligible for $50, with a maximum family income of up to $32,000. If you're a

single parent with a child, that maximum goes up to $38,000, and you qualify for

$100.

The member asked two specific questions. I'll try to answer them. One is

about deceased persons. The two qualifications for the program are: (1) you file

the '99 return, and (2) you're a resident in the province from January 1 through

March 31, 2001. Individuals who are deceased prior to April 1, 2001, will not be

eligible for it; however, their spouse may be. So that is how we've attempted to

deal with this. CCRA is planning to deliver this rebate at the end of April or

early May. Anybody who was deceased before March 31, 2001, would not be

eligible.

[1525]

G. Farrell-Collins: Hopefully the minister will indulge me for just a

moment. There were other components of this, as he said -- five components to

this rebate. This is one of them that requires legislation. There are rebates

that were granted through B.C. Hydro, for example. There were rebates, as well,

that were just granted from general revenue -- the ones we spoke about earlier

that went to health care and education. There were no rebates given to the

social services sector in any way, shape or form, and I assume, therefore, that

they're not contained in this or any of the other votes. Can the minister tell

us why the decision was made to exclude them?

Hon. P. Ramsey: I'm not sure whether you're asking about recipients of

income assistance, who would obviously qualify for this rebate, or the social

services sector.

Interjection.

Hon. P. Ramsey: Okay. When we were looking at the rebate, we canvassed

ministries for pressure points where ministries felt that institutions were

going to be unable to meet the pressures of increased energy costs in the winter

of 2000-01. That sector did not identify this as a major pressure on their

budgets. Health did but not to a significant extent, having received, as the

member knows, the benefit of two large supplementary estimates in the fall.

Education certainly did, and I think the member heard concerns around the

province. Colleges and institutes did, and the minister spoke to that.

G. Farrell-Collins: Had the minister responsible for the social

services sector made the Minister of Finance and cabinet aware of pressures

within the social services sector, it may well have been considered in ways

similar to the Ministry of Health and the Ministry of Education.

Hon. P. Ramsey: And had Treasury Board staff ascertained that such was

the case. Treasury Board staff did a lot of due diligence on this to make sure

that the money was indeed needed and represented real incremental costs.

G. Farrell-Collins: It's amazing how much trouble government has

getting money from the taxpayers. Every year we amend legislation over and over

again, so it's not surprising that it's sometimes difficult to give it back to

them. Maybe that's a new area of study for legislators and legislative drafters

in the years ahead.

I do want to ask another question, because I've received calls -- as I know

other members of the Legislature have as well -- about these rebates. One of the

examples that I received -- and it's not directly with the GST rebate, but

rather the component of the Hydro rebate -- was one where households were to

receive, I think, $100 per household. Sorry, $200 per household?

I don't know. I don't think I've received mine yet. I don't know if I have or

not. I'll look and see. Actually, I had overpaid my Hydro bill, so I had a

credit anyways. That's one of the hazards of Internet banking; I hit the wrong

key.

But I had one example, and I know there are others out there, of a co-op that

purchased their power as a chunk and will receive one rebate despite the fact

that there are many people living in that co-op. Was there any attempt to try

and address those kinds of scenarios as well?

Hon. P. Ramsey: Yes, this was examined, as were many other scenarios,

including . . . . Actually, at one time the member for Peace River

South raised with me the fact that there were some families in his riding that

generated their own electricity from diesel and weren't on the grid and

therefore would not benefit from Hydro. So any program design that we tried had

flaws. We could have designed, I suspect, the absolutely perfect program, where

we would have asked individuals to identify their heating costs, the difference

from last year and their income level, and designed an absolutely smooth rebate

program that would have made sure that those

[ Page 17529 ]

who were the neediest and had the highest costs got the most rebate. And we'd

have probably been able to deliver a cheque sometime in August at a cost of $10

million in administration.

[1530]

We very deliberately chose measures that -- I will absolutely acknowledge to

the member -- are in some cases rough. We did it so we could get the money in

the hands of those who have been grappling with high energy costs as soon as

possible. Actually, I had hoped to beat CCRA back and have them deliver the

cheques a little earlier -- like the end of March rather than into April. In

spite of excellent work by staff, we were unable to persuade them to move any

faster.

So it is not -- and I will never say that it is -- a perfect program. It is a

program that puts some $300 million from Hydro and another $78 million here back

into consumers' hands, and I think that does provide some significant assistance

with high energy costs this winter.

G. Farrell-Collins: Can the minister tell me whether there was any

discussion or debate around rebates to small business that may have been

impacted by these significant costs as well?

Hon. P. Ramsey: We did look at that. One of the things we had a great

difficulty in doing was separating out small businesses. I use the greenhouse

sector as an example, because I think the member and I have both heard from them

-- huge variations in the actual cost of energy within that one sector. Some had

managed to lock themselves into long-term contracts at a relatively low cost and

were, frankly, doing fairly well. Others had chosen a different business

strategy, had exposed themselves to spot market prices and were facing $12 a

gigajoule for gas all of a sudden. So rather than do it with this route, we have

been open to working with businesses through the job protection commissioner,

which is what we did for the greenhouse sector, which resulted in access to a

loan program to help them over the winter and adjust to other sources of energy.

Vote 58(S3) approved.

Hon. P. Ramsey: I move that the committee rise and report the

resolutions.

Motion approved.

The committee rose at 3:33 p.m.

The House resumed; the Speaker in the chair.

The committee reported resolutions.

The Speaker: When shall the report be considered?

Hon. P. Ramsey: Forthwith, hon. Speaker.

I move that the report of resolutions from the Committee of Supply on March

27, 2001, be now received, taken as read and agreed to.

Motion approved.

Hon. P. Ramsey: I move that there be granted from and out of the

consolidated revenue fund the sum of $398.7 million. This sum is in addition to

that authorized to be paid under

section 1 of the Supply Act, 2000-2001,

section

1 of the Supply Act, 2000-2001 (Supplementary) and

section 1 of the Supply Act,

2000-2001 (Supplementary No. 2) and is granted by Her Majesty towards defraying

the charges and expenses of the public service of the province for the fiscal

year ending March 31, 2001.

[1535]

Motion approved.

Introduction of Bills

SUPPLY ACT, 2000-2001

(SUPPLEMENTARY No. 3)

Hon. P. Ramsey presented a message from His Honour the Lieutenant-Governor: a

bill intituled Supply Act, 2000-2001 (Supplementary No. 3).

Hon. P. Ramsey: I move that the bill be introduced and read a first

time now.

Motion approved.

Bill 16 introduced, read a first time and ordered to proceed to second

reading forthwith.

Hon. P. Ramsey: Since it has already been circulated, we don't need to

take that pause here. The use of supplementary estimates is consistent with the

way this government has been functioning since the passage of the Budget

Transparency and Accountability Act, in accordance with the recommendations of

the Enns committee and the auditor general.

This supply bill is introduced to provide supply for the operation of

government programs for the 2000-01 fiscal year, as outlined in the

Supplementary Estimates (No. 3) tabled earlier. The bill will provide additional

funds required to defray the charges and expenses of the public service of the

province for the fiscal year ending March 31, 2001. As required by the Financial

Administration Act, special warrants are also included in this bill.

Schedule 1

lists the warrant approved in the 2000-01 fiscal year.

The government has made a commitment to restrict the use of special warrants

to extraordinary circumstances. Clearly the circumstances relating to the

British Columbia student assistance program were extraordinary. The use of

special warrants in extraordinary circumstances is contemplated in the Budget

Transparency and Accountability Act, and the government has fully complied with

the enhanced disclosure requirements for special warrants.

In accordance with the established practice, the government seeks to move

this bill through all stages this day.

The Speaker: Thank you, minister. In keeping with the practice of the

House, the bill will be permitted to advance through all stages in one sitting.

SUPPLY ACT, 2000-2001

(SUPPLEMENTARY No. 3)

(second reading)

Hon. P. Ramsey: Hon. Speaker, I move that Bill 16 be now read a second

time.

[ Page 17530 ]

Motion approved.

Bill 16, Supply Act, 2000-2001 (Supplementary No. 3), read a second time and

referred to a Committee of the Whole House for consideration forthwith.

SUPPLY ACT, 2000-2001

(SUPPLEMENTARY No. 3)

The House in committee on Bill 16; D. Streifel in the chair.

Section 1 approved.

On

schedule 1.

[1540]

G. Farrell-Collins:

Schedule 1 is the $80 million which is

retroactively being granted as a result of the special warrant which was issued

by the government some time ago. Perhaps the Minister of Finance can explain to

us the particulars surrounding the discovery of the expenditure of $65 million

without legislative approval and how we came up to today, where we're asking for

$80 million retroactively.

Hon. P. Ramsey: Actually, the $80 million, I understand, covers the

program for the entire fiscal year, both retroactively and prospectively, since

the special warrant was approved. The circumstances are these. In the summer of

2000 the Ministry of Advanced Education, Training and Technology reassumed

responsibility for the B.C. student loans program as a result of the chartered

banks deciding they no longer wished to participate even with a risk premium to

administer that loan program.

At that time staff advice to both the Minister of Advanced Education and

myself was that this could be authorized and put in place by an

order-in-council, and that order-in-council was indeed passed, if memory serves,

on July 12. Anyway, it was July of 2000. There it rested. Loans were issued, and

it was not until early in 2001 that Treasury Board staff -- and I think staff in

the Ministry of Advanced Education also -- started puzzling about whether what

we had done was sufficient and whether a supplementary estimate of some sort

would be required once the House had been resumed.

It became apparent in the first week in March that this program was more

seriously out of line with the requirements of the Financial Administration Act

than I or the Minister of Advanced Education had thought. It was clear that we

could not wait for a supplementary estimate, and the program was indeed

suspended because it was not in accordance with the Financial Administration

Act.

At that time I canvassed ministry staff for options for dealing with it. The

options were essentially three: One, recall the House on the 7th or 8th, even

though the House had been scheduled to be recalled on March 14. Introduce a

supplementary estimate and pass it. That seemed to be an abuse of tax money,

since we were going to be reconvening the following week in any case.

Two, wait until the House reconvened and then pass a supplementary estimate.

This would disadvantage literally thousands of students who had approvals for

student loans but who would not get any disbursements because the program had

been suspended until a supplementary estimate was passed.

Having exhausted those two as inconveniencing the taxpayers' purses or

students, it was decided to use the extraordinary provision and put in place a

special warrant.

G. Farrell-Collins: The minister told me today -- and this is news to

me right now -- that government was advised that it can be done by OIC and that

that was done. I wasn't made aware of that, but I am now. My understanding is

that in the first week of March -- I think it was the 6th -- the minister

finally cut the cord for this program and put a halt to it. It was the first

week of March anyway, the 6th or 7th. Now, obviously it wasn't discovered that

first week. This had been known for some period of time. When did the Ministry

of Finance and the Ministry of Advanced Education first realize that this was a

problem and that this amount had not been funded properly?

Hon. P. Ramsey: Treasury Board staff and staff in Advanced Education

had discussions. Staff advised me in late January around this issue. The

Minister of Advanced Education became aware that further legal authorization for

the program would be required on February 21. My recollection is that I was

advised somewhere around the same time.

[1545]

At that time staff advice was that the program could continue until the

Legislature resumed, and we could do a supplementary estimate. It was not until

the first week in March that there was further review by staff, and their advice

to me and to the Minister of Advanced Education said: "This is a program

that is very seriously offside with financial administration." They were

not comfortable with having it proceed and wait for the House. I was not

comfortable, and the program was suspended.

G. Farrell-Collins: I think the minister said that the Ministry of

Finance became aware sometime in late January. I think that was what he said --

late January. The Minister of Advanced Education was made aware on February 21,

as the Minister of Finance himself was made aware at roughly the same period of

time. Then it was March 7 when the plug was finally pulled on the program. Can

the minister give us some detail of the original assessment and what changed in

that assessment in that intervening period of time that made the problem a much

more magnified one?

Hon. P. Ramsey: Actually, my understanding is that further work by

staff was ongoing within the Ministries of Finance and Advanced Education,

examining the issue and, I believe, starting to prepare for a supplementary

estimate. They consulted various other officials, including the office of the

comptroller general. Then at that point I think anxiety heightened all around.

I must say that had I known last December what I knew on February 7, we would

have introduced a supplementary estimate for this in December when we had that

one-day sitting of the Legislature. Had I known in September, the same thing

would have happened. Having been advised by the comptroller general and senior

staff that this was seriously offside and that action had to be taken and that

it couldn't wait for a supplementary estimate, we then suspended the program,

examined options and moved to the special warrant.

G. Farrell-Collins: This program previously was run by the government.

In the years it was run previously by the

[ Page 17531 ]

government, was it not required that an estimate be passed, a vote be passed,

that included the amount that would be required to grant the loans?

Hon. P. Ramsey: Staff and I are looking around for a finance official

from Advanced Education, and he has just arrived.

G. Farrell-Collins: He thought he could go home.

Hon. P. Ramsey: Actually, I thought they were going to take all the

questions on the warrant, not me.

My understanding is that what we authorized in the past, prior to the banks

taking it over, was an expenditure for losses, essentially. There is a loss

provision for this program. When the banks took it over, that became another

version -- the risk premium that we paid to the banks in order for them to pick

it up. But these are financing transactions that need an authorization under the

Financial Administration Act, and therefore we found ourselves, contrary to

anybody's expectations, without the correct authorization in place.

We can pursue this, but I'm quite willing to provide staff to brief the

member on the details of it. There is still a review internal to the Ministries

of Finance and Advanced Ed to actually discover how this slipped through the

cracks. This is a significant program, and yet it was not caught when we did the

OIC in July; it was not caught when we did supplementary estimates No. 1 in

September and supplementary estimates No. 2 in December. And the necessity for

prompter action was not caught when we started to review needs for supplementary

estimates in January, even into late February. How it slipped through the cracks

of what I think are highly competent staff, both in Advanced Education and

Treasury, is something we're now looking into so we can ensure that this

incident does not recur.

[1550]

G. Farrell-Collins: I'm glad to hear that that's ongoing. I don't

think anybody wilfully went out and spent $65 million without approval. I think

it's just one of those things. But I do think the special warrant is something

that happens behind closed doors. It is a little bit more transparent than it

was previously; however, I do think that there is a duty to ask these questions

in a public format, so that the public has some sense that we are closing the

loop on the accountability.

I appreciate the answer that the minister gave, and I'm glad that a review is

being done. I expect that we'll probably learn something from that review.

I do want to ask the question again, because . . . . Let me

paraphrase, if I can, the minister's answer to my question, and he can tell me

if I'm correct or not. The minister stated that previously, when this program

was operated by the government and not the banks, the practice was merely to put

into the appropriations an amount for loss risk -- for bad debts, so to speak.

That was the only provision that was given in appropriation. There was no

appropriation put in the estimates for the entire granting of the loans. Did I

hear the minister correctly when he made that statement?

Hon. P. Ramsey: I thank the member for his question. I agree with him

that special warrants are unusual, extraordinary, and that they should be probed

and explanations should be offered.

I have learned from staff that we actually have three different sets of

circumstances. Prior to '95 what we did was, really, guarantee loans by third

parties, and the appropriation made then was for bad debts. From '95 to 2000 we

had an agreement with chartered banks that was essentially risk-sharing. The

theory, at least, was that government would reduce its exposure to bad debts.

Banks would secure a relationship with clients who might be assumed to be

prosperous and well-heeled clients in the future, and that was worth some sort

of risk to the banks. As of 2000 the banks said: "No, it's not worth it to

us in a business sense. We're out of there."

From July on we have been engaged in direct lending, so it is different from

the situation before '95. Without presuming to forecast what the conclusions of

the audit may find, it may well find that that difference is one of the reasons

why it slipped through the cracks.

G. Farrell-Collins: I'm assuming, though, that prior to 1995, when

government was providing loan guarantees, the provision for potential bad debts

was included in the estimates, was voted upon and was not done by an

order-in-council. Is that correct?

[1555]

Hon. P. Ramsey: The member is correct. There was an appropriation to

cover bad debts prior to '95. When we went to the risk-sharing, there was an

expenditure in budget estimates devoted to the cost of risk-sharing, and that

amount actually continued into this budget. The issue with this budget and the

need for this warrant is not to deal with the issue of bad debts. That money was

in an appropriation already approved by this House. It is the authorization for

doing the loans, which was not a requirement prior to '95.

G. Farrell-Collins: Does government loan money to people other than

students?

Hon. P. Ramsey: This is fascinating. I thank the member for his

question, but we are getting into a seminar which is going rather far afield.

As far as loans to individuals, just off the tops of our heads, we were able

to identify two. One is damage deposits for income assistance recipients, and

the second is the reverse mortgage provision for property taxes for seniors,

which I think is treated as a loan on government books. There are at least a

couple of other programs there, and I'll bet if we scratched our heads a little

longer, we could find a couple more. But fascinating as this is, this is well

beyond the bounds of the special warrant.

G. Farrell-Collins: Just to give the minister some reassurance, I

intend to make it relevant, if he could just grant me a moment or two.

In those two instances that the minister just gave examples of, I'm assuming

that government provides an appropriation for the granting of the loan and an

appropriation for provision for bad debt -- loans that aren't repaid. Is that

correct? If so, is that done in the estimates?

Hon. P. Ramsey: An interesting question. You have now exceeded the

level of expertise of the staff I have with me in the chamber. I will take that

question under advisement and provide the member with an answer.

[ Page 17532 ]

G. Farrell-Collins: I have a couple of other questions that perhaps

the minister can answer either now or later. It is not as common a practice as

it used to be, but I understand it still happens that government actually

provides loans to businesses from time to time. I would ask the same question:

when government grants a loan to a business as opposed to an individual, is

there an appropriation for the loan and an appropriation that goes into the risk

side and that says in the event that the loan is not repaid, here's what the

charge might be?

[1600]

Hon. P. Ramsey: There are a number of programs around. The obvious one

is the industrial incentive fund, which operates under its own act, and then

there is a program in the Ministry of Small Business, Tourism and Culture where

you do indeed budget for both the loans and the risk. Again, you've pushed the

limits of our expertise in the chamber, and we will get back to you with that

information.

G. Farrell-Collins: So in all of the examples the minister has given

me that we've discussed so far, where government actually grants a loan to an

individual or business, it is done through an appropriation. Can the minister

give me any example other than this example -- i.e., the students loans -- where

the government grants loans to individuals or businesses based on an OIC?

Hon. P. Ramsey: Staff advise that loans under the industrial incentive

fund are done pursuant to OICs. There may well be others. The other thing I

would say, though, is that there are different provisions for different

programs. I would go back to what I said earlier about the fact that the program

prior to '95 does not look like the program post-2000. Prior to '95 we were only

guaranteeing loans -- no appropriation and appropriation for risk. In post-2000

we're both making the loans and covering risk. And I think, as I said, without

jumping to conclusions ahead of the actual audit work that's being done, that

may well be the source of the mistaken advice that led to this falling through

the cracks.

G. Farrell-Collins: With the industrial incentive fund as an example

that the minister used, that appropriation has already been voted by the

Legislature, and then it's merely the allocating of that appropriation which has

been granted by the Legislature.

In the case of the student loan program, which we inherited at the end of

July of the year 2000, there was no appropriation to be allocated. It hadn't

been made. I'm wondering if there are any examples that the Minister of Finance

is aware of where loans are made through order-in-council, where a previous

appropriation has not been made for those loans, and the OIC merely breaks up

and allocates those funds.

Hon. P. Ramsey: Staff don't know of any.

G. Farrell-Collins: I'll wait to hear the answer from the minister on

that one as well.

When it became obvious, first of all, that we would be inheriting this

program -- and that happened sometime prior to the end of July last year -- was

there any discussion between the Ministry of Finance and the Ministry of

Advanced Education on how government was going to respond to that? This was

essentially being dumped in our lap. Was there any discussion between Finance

and Advanced Education to try and figure out how we were going to manage this

new program which was dropping in our lap? Was there any discussion at that time

about it?

[1605]

Hon. P. Ramsey: The member's question provoked a good seminar for the

minister on what was going on back in June. Yes, there was contact between the

Advanced Education ministry and the Ministry of Finance, in terms of what

options were available to replace the risk-sharing that was there. One option

that was proposed was that we could pay a very high risk premium to a bank --

some 13 percent, rather than the 5 percent we had in risk-sharing. That was

thought to be not appropriate.

So we, again, took it upon ourselves. Staff satisfied themselves that the

vote that they had in Budget 2000 allowed them to pay for bad debt. The part

that was missed was the lack of an appropriation to actually acquire an asset --

i.e., make a loan. Just listening to staff, I think the review of how this went

wrong will be fascinating as people ascertain who knew what when and why this

slipped through the cracks.

G. Farrell-Collins: That review is a good exercise. I assume everybody

will learn something from that. I'm glad to hear it's progressing.

The reason I asked that is twofold. I wanted to be sure that the Ministry of

Advanced Education wasn't sort of left hanging out there with a program that

perhaps didn't have the knowledge base or the expertise to fire up and run and

wasn't as aware of the requirements and provisions as perhaps staff in the

Ministry of Finance might be. The minister assures me that as early as June

there were discussions between the two ministries as to how to deal with this. I

suppose that at that time, had the government been aware that . . . .

Let me put it this way: had it dawned on us that this would require a vote for

an appropriation for the actual program, we could have done it then, because the

Legislature was in fact sitting. Indeed, there were several other occasions --

September, December -- when this could have come forward as well.

I will be intrigued, as well, to sort of find out how this developed over

that period of time. It seemed to me that there was a fair bit of discussion

surrounding this, starting in June, at least, and perhaps before -- I don't

think this thing just sort of surprised everybody, but it may have -- right up

until February and March of this year. I will be intrigued to see what the

various stages were as a bit of a case study to see how that all came together.

Obviously had that dawned on us, there were opportunities back when the House

was sitting in the spring and summer of last year to deal with it, and there

were other options as well.

I can't think of any example -- but I'm not necessarily an historian and

haven't been here that long -- where this type of thing has happened. I don't

know if the minister is aware of the government making expenditures without

legislative approval in the past.

[ Page 17533 ]

I'm wondering how that actually happens. Having never been on the government

side of the House, I'm asking the question in a very frank way. How is it that

cheques get cut and at the end of the month somebody doesn't do the

reconciliation and say: "Hey, where did that money come from? Who

authorized that cheque?" I don't know how it works. Perhaps the minister

can enlighten me a little bit.

[1610]

Hon. P. Ramsey: The short answer is that ministries are not allowed to

make commitments without an appropriation. That's the rule. It happened in this

case. The review will ascertain why. Once you're able to make a commitment .

. . . Essentially, the program just proceeded as if an appropriation had

been in place. It just went. It wasn't until much later that somebody said:

"That OIC was not sufficient authorization. It may be sufficient

authorization for the making of the loans." And here's the crucial

distinction. Even with an appropriation, you still require an OIC to make the

loans. That part was done. What was missing was the foundation -- an

appropriation.

G. Farrell-Collins: I used to fly airplanes for a living, and I was

always leery of the autopilot, because once you engage it, you're allowed to

fall asleep. And airplanes sometimes fly into the sides of mountains and things

like that. It appears that this program was sort of operating on autopilot.

Somebody engaged it around the end of June, into July, and the pilots went off

and did other important things and let this plane fly.

I know the review will highlight what steps occurred that went wrong in this,

and I understand that. I guess my question was a little more on the other side,

as to why it wasn't caught. Or are there ways it should perhaps have been

caught? I don't want to do the review right here, but I do want to explore this

for a little bit. The government prepares reports every quarter and issued a

number of them prior to this being discovered. As the ministries were preparing

their quarterly reports, did nobody notice that there was a larger increase in

the number of dollar bills that were going out of the ministry for this program?

Is there no reconciliation along the way where that would pop up and appear as a

red flag?

Hon. P. Ramsey: I'm not sure the autopilot analogy is entirely

appropriate, but I think there are aspects of it that might be accurate. It is

not intuitively obvious that this should or could have been caught in

preparation of quarterly reports. In a $24 billion budget you're looking at

around $6 billion a quarter, more or less. Though this is a significant program,

$15 million or $20 million a quarter is significant but not a huge piece of what

you're dealing with.

I think we're going to have to wait for the review to do its work. I

recognize the member's interest, but frankly I'm feeling that I'm getting a

little bit out of my depth in trying to explain the intricacies of this. So with

the Chair's indulgence, I would say to the member: let's wait and see what the

review turns up, so that this does not recur.

[1615]

G. Farrell-Collins: I'm prepared to do that. I just thought . . .

. I wanted to explore for a minute how it is that in the normal course of

preparing those quarterly reports or monthly reconciliations -- I don't know how

they do it -- the expenditures versus the appropriation wouldn't have been out

of whack a little bit. I would think that if you were watching that carefully,

as you got toward the end of the fiscal year, you would start to realize that

the numbers were a little out of whack -- the cheques going out and the money

that had come in. Because there was no cash appropriated for it, it would seem

to me that that would have popped up at some point, and probably in an

accelerating way as each quarter went on, because it would be out of whack even

more as time went by.

It leads to a whole bunch of questions, which I won't ask here today. But it

does lead to a number of questions. What sort of monitoring of expenditures is

done in ministries on an ongoing basis throughout the fiscal year? Or when we

start to prepare next year's budget, do we just sort of look back at roughly

what was spent and find out if there are any problems? I wonder how closely

that's monitored on a policy basis. How closely are those expenditures

monitored, on an ongoing basis, so that this doesn't happen in other places? How

do we know that other ministries don't overspend their appropriation without

Treasury Board finding out about it, without the Ministry of Finance finding out

about it?

It would seem to me that there needs to be some monitoring throughout the

fiscal year, so that if something starts to get off the rails, it's picked up on

earlier. Perhaps we'll have to wait for the review to find out the answer to

that. But just as somebody looking from the outside who has never been on the

inside, it's baffling to understand how $65 million can be spent without anybody

knowing that there's no money there to spend. I just find it odd that that

wouldn't have popped up somewhere along the way. Perhaps the review will focus a

little bit on that. I would think that of all the things we may learn from this,

that may be the most valuable -- as in, how do we monitor expenditures

throughout the fiscal year and catch erroneous figures or inflated numbers or

money that, as the minister says, just goes without being approved? I'll be

interested to hear what the minister has to say or what the review will deliver

when the time comes.

But I must say that there were a lot of eyebrows raised in British Columbia

when they found out that $65 million had been spent with nobody approving. That

just baffles the taxpayers' minds when they see that happening. I think they

know that in their homes or in their businesses, if a significant chunk of money

just went, they would notice it, and they'd notice it by the end of the month or

pretty quickly thereafter. I'm intrigued by it. I await the review to see what

we can learn from it, but I must say that my head shook for a little while when

I heard that as well.

Schedules 1 and 2 approved.

Preamble approved.

Title approved.

[1620]

Hon. P. Ramsey: I move that the committee rise and report the bill

complete without amendment.

Motion approved.

[ Page 17534 ]

The House resumed; the Speaker in the chair.

Bill 16, Supply Act, 2000-2001 (Supplementary No. 3), reported complete

without amendment, read a third time and passed.

Hon. J. MacPhail: I call Committee of the Whole on Bill 2.

CHILD CARE BC ACT

(continued)

The House in committee on Bill 2; D. Streifel in the chair.

section 4 (continued).

The Chair: Would the members please take their seats so we can effect

the count.

[1625]

Section 4 approved on the following division:

YEAS -- 38

Conroy

Zirnhelt

Doyle

Gillespie

Kwan

Waddell

Hammell

McGregor

Giesbrecht

Farnworth

Lovick

Petter

Mann Brewin

Pullinger

Randall

Sawicki

Priddy

Cashore

Orcherton

Stevenson

Robertson

MacPhail

Dosanjh

Bowbrick

Janssen

Evans

Ramsey

Smallwood

G. Wilson

Miller

Sihota

Calendino

Walsh

Boone

G. Clark

Lali

Kasper

Goodacre

NAYS -- 34

Whittred

Hansen

C. Clark

Campbell

Farrell-Collins

de Jong

Plant

Abbott

L. Reid

Neufeld

Coell

Chong

Sanders

Jarvis

Anderson

Nettleton

Penner

Weisgerber

Weisbeck

Nebbeling

Hogg

Hawkins

Coleman

Stephens

J. Reid

Krueger

Thorpe

Symons

van Dongen

Barisoff

J. Wilson

Roddick

Masi

McKinnon

G. Farrell-Collins: I just noticed that the member for Rossland-Trail

joined us in the House today, and I want to extend to him a welcome. It's good

to see him.

Section 5 approved on division.

Sections 6 to 24 inclusive approved.

Schedule approved on division.

Title approved.

[1630]

Hon. M. Farnworth: I move the committee rise and report the bill

complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 2, Child Care BC Act, reported complete without amendment, read a third

time and passed.

Hon. G. Janssen moved adjournment of the House.

Motion approved on division.

The House adjourned at 4:33 p.m.

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